As a UK citizen and business owner I am extremely pleased to see a 'High-high' price scenario in your new predictions, particularly on the price of oil which is of most concern to me. However, you completely fail to appreciate and comprehend 'peak oil'.
Your worst-case 'high-high' scenario is based upon: " ...strong oil demand, a lack of investment and a fast decline in spare capacity is assumed to drive prices upwards until the point of demand destruction—when alternative energy sources become competitive and oil consumption declines. The oil price is then assumed to remain around this point in the long-term. "
My problems with this are as follows:
1. You mention 'a fast decline in spare capacity' but you do not suggest that global oil production/extraction may peak and then fall regardless of the level of investment. Many countries - UK included - have already reached peak production, and it is impossible to increase our production again to above the peak regardless of the level of investment made. This is for predominately geological and physical rather than economic or political reasons. Yes, masses of oil is there, but the extraction rate cannot be increased, no matter how big a straw is used.
2. You also suggest that 'alternative energy sources become competitive' however you make no mention of why/when/at what price they become competitive or the lead-time in bringing them to market. You give no indication of the possibility that alternative energy sources will not be sufficient to fully replace oil supply decreases.
3. You close with 'oil price is then assumed to remain around this point in the long-term'. Again, you fail to appreciate that oil production may be in rapid decline at this point (or even any level of decline) and that as a result the price will go up rather than stay steady in the long term. It even appears as though - but I must be misreading - that you're assuming that the world is flat and oil is in limitless supply at the correct price. If this is the basis for your claim, then it is impertinent that you understand that our world is round and limited, and our supply of oil finite and already approximately half gone.
I ask that you thoroughly review the assumptions used in your report as they are currently being used to misguide government agencies and businesses such as mine into assuming that energy prices are going to be far, far cheaper than the eventuality that I predict. The extreme danger of doing this cannot be underestimated.
I suggest that you either revise all your prices upwards by quite a jump, or that you include a 'high-high-high' and 'high-high-high-high' predictions, and state that these are based upon an appreciation of 'peak oil' theory.
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