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Posted: October 15, 2007

Starting Wednesday the U.S. branch of a global group of oil experts who believe the world is at or very near “peak oil” production will hold a four-day meeting that could unleash an important new phenomenon impacting the price of oil.

Call it the “ASPO Effect,” after the group that will be holding the meeting, the Association for the Study of Peak Oil and Gas, commonly known as ASPO.

Conditions appear ripe for the ASPO Effect to send oil prices higher later this week. Organizers say registration for the meeting, which will take place in Houston, is running well ahead of last year. A number of speakers, including T. Boone Pickens, Matthew Simmons and Charley Maxwell of Weeden & Co., are likely to attract a lot of media attention which, in turn, is likely to influence the growing number of speculators and other purely financial players who have started buying and selling oil futures contracts and who are always on the lookout for a reason to send prices up or down in order to benefit from market volatility.

Peak oil is the perfect reason to send prices higher.

According to ASPO-USA, peak oil experts don’t claim that the world is running out of oil but, rather, that the world is running out of cheap oil as production decreases and demand increases. With oil markets eschewing the normal seasonal price decline on fears of an impending scarcity, recent trading activity suggests that peak oil has already gained a foothold. Other indications of growing acceptance that the world is at or near peak oil was the recent statement by former U.S. Secretary of Energy James Schlesinger that “we are all peakists now,” which he made at an ASPO meeting in Ireland.

The Houston meeting will feature three sessions on what conference organizers are calling “Smart Money & Peak Oil.” Since the sessions will also deal with investing in so-called unconventional oil sources, this week’s ASPO Effect could also influence trading in the stocks of companies involved in coal liquefaction and gasification, Canadian tar sands production, and oil shale. (Maxwell in particular has been recommending tar sands companies for a number of years.)

To be sure, the ASPO Effect, if one develops, could turn out to be short-lived, what with other potential market movers such as political tension with Iran and a late season hurricane in the Gulf of Mexico. Still, the lasting impact of this week’s ASPO-USA meeting likely will be to further cement in traders’ minds that oil prices are more likely to go up than down in coming weeks and months as supply-demand fundamentals continue to worsen.