Demand for crude oil in the U.S. is growing at about 2.2% per year and demand for natural gas is growing at 3.2% per year (U. S. Department of Energy). Global oil demand is projected to rise from 81 million per day to 87 million barrels per day by 2008 (Javad Yarjani - OPEC). This is a 6.6% rise in demand over three years.

The world uses 27 billion barrels of oil per year, but in recent years new discoveries from exploration efforts have averaged 7 billion barrels per year (Youngquist 2001). Major oil reserves are simply not being replaced at a rate that will meet future consumption needs. Existing production from previously discovered fields makes up the difference.

Dr. M. King Hubbert (1903-1989) was a well-known authority on the predictions and patterns of oil discovery and depletion. He was a researcher for Shell Oil Company and later worked for the U.S. Geological Survey. To predict future production and declines, he used a combination of principles of geology, geophysics and mathematics. In 1956, he predicted that U. S. oil production would peak in the 1970s. Although his prediction was overlooked at the time, he was proven to be correct as U.S. production began its decline in 1970. Again in 1982, Hubbert predicted that world oil production would peak sometime in 2001 to 2004.

Columbia believes that with the growing demand for petroleum, prices will remain strong and the market for oil and natural gas will continue to improve.