“Gas prices will never go down.”

“The price at the pump can only go higher.”

“High prices are here to stay.”

This seems to be the current wisdom. I hear it everywhere. There’s no need for a specific citation, for you’ve heard it too.

But why should we believe it? Gas prices have gone down in the past. Why not again?

Two words: Peak Oil.

Or make that three: Peak Oil blather.

In a Wikipedia article on gas prices, we are told that “there are now very few parties who do not acknowledge that the concept of a production peak is valid.” So what is “peak oil”?

It’s the notion that at some point the sources of petroleum in the Earth’s crust will suffer so much depletion that production must gradually grind down, spiking prices and putting a substantial crimp on oil usage. “Peak oil” would seem to be simply an obvious extrapolation from the idea of scarcity. “Few parties” deny scarcity.

Like the Laffer curve in supply-side economics, however, the relevance of Peak Oil Theory all comes down to timing. Are we quickly reaching that peak oil point? Is there any reason to believe we are there yet?

Not really. Take the assessment by William J. Cummings, an ExxonMobil spokesman: “All the easy oil and gas in the world has pretty much been found. Now comes the harder work in finding and producing oil from more challenging environments and work areas.”

The trouble, here, is what gets covers up: The almost certain-to-be-huge reserves to be found in less convenient places, like the deep ocean. Once perfected, techniques to retrieve deep-ocean oil will themselves come down in price, and the vast reserves we can expect to find (and are finding) will likely work to mitigate the “ever-upward” trend in prices.

And not all new sources need be in the deepest ocean beds, or the coldest Siberian plains. Higher prices have already spurred new exploration; new sources are now being prepped for exploitation. And these near-to-present supplies will likely affect prices. (When? My crystal ball is in the shop. Sorry.)

Several years ago, a year before the dot-com bust, a friend of mine heard a major speculator pooh-pooh talk of a downturn in the stock prices. “Prices will only go up and up and up.”

My friend came away from the conference with one word on his lips, repeated: “Sell, sell, sell.”

Not long after, NASDAQ collapsed along with much else. It couldn’t happen. And yet it did.

Normal cycle of boom and bust. Or boomlet and bustlet. Continued...