(Six months ago you said the age of cheap oil is over and Americans would never pay less than $4 a gallon. So what's going on here?) Usually when I addressed this issue I said barring a major economic collapse and I certainly didn't anticipate that last summer but that's what we've had. This collapse suppresses demand and creates a temporary excess of oil bringing down prices. We should continue to see this into 2009 and maybe beyond, but this is temporary and it will disappear. (The International Atomic Energy Agency came out with a report, tell us what it said.) It said the world's largest oil fields, 800 of them that they surveyed, are running out of oil at twice the rate than previously estimated so we're coming closer to the end of the Oil Age faster than previously assumed. This wouldn't be an issue if we were coming across new oil fields to replace those in decline, but nobody is finding new oil fields to replace the declining ones. (But what about Brazil's new oil field findings or other new discoveries?) There are some new discoveries but we should distinguish between oil of the past and oil of the future. The past oil is close to the surface and large reservoirs on land, easy oil. That's all now gone. What's left is tough oil which is tough to produce and costly and bad for the environment. The new oil fields in the Gulf of Mexico or in Brazil are like that. It's going to take Brazil 5-10 years to get this new oil field started and they have to overcome all kinds of technological barriers. (So let's talk about China, where do they fit into this?) China's ravenous need for energy was a key factor in the rising price of oil last spring and summer when prices reached their peak. China stockpiled oil in the run up to the Olympics but their consumption dropped substantially after the Olympics and that's a big reason why prices went down. Now China's growth is slowing down and that further contributes. (What does this mean for alternative energy?) This is troubling because this is when investment in alternative energy would be most important to divert the problems of global warming, but the price of some of these new technologies like �clean coal� are quite costly and risky. So I fear there might be a setback in dealing with climate change.

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