The pequists, as they have become known, appear to be on the defensive these days as they once again roll back their dating of the dreaded supply peak, confounded by the oil industry’s never ending ability to develop new extraction technologies and discover new sources of supply.

While conventional production may have peaked long ago in the lower 48 U.S. states as predicted by the father of the peak oil movement, geophysicist M. King Hubbert, new sources of supply have been found in Alaska and under the Gulf of Mexico.

And now oil sand production from Alberta and oil from the Bakken shale deposits may soon replace conventional oil in the mix of North American fuel.

Our definition of oil has changed so much the U.S. Energy Information Administration does not even refer to oil any more but rather energy liquids. This includes energy sources we would not have previously called oil such as natural gas liquids, liquefied refinery gases, and even corn-based ethanol.

But peak oil as it turns out isn’t about supply but rather demand. It is a concept rooted more in economics than geology. It doesn’t matter if there are billions of barrels of oil waiting to be tapped from oil sands or oil shales if the prices to extract them are beyond our economies’ capacity to pay.

The peak in our oil consumption will be determined by our ability to pay ever rising prices for the fuel, not by the ability of those same prices to drive new sources of supply.

The energy industry’s task is not simply to find new fuel sources but to find new supplies of oil our economies can afford to burn. While the energy industry has an impressive record on the first count, it has a much less impressive track record on the second.

It has taken successively higher prices to get that extra barrel of oil out of the ground. The price of Brent oil, the benchmark used for most of the oil traded on world markets today, has traded in triple digit range since the beginning of this year.

Maybe that is why the world economy seems to be teetering on the brink of another recession. But if our economies will no longer be growing, neither will oil production.

Some people might call that an oil peak. Others might say we are simply running out of the oil we can afford to burn.

That announcement may have gone over well with the class of Saudi students he was addressing at the time, but for oil consumers around the globe it was an explicit statement that the country with the world’s largest oil reserves has no plans to tap them further.

So much for the International Energy Agency’s forecast for huge production increases in the kingdom. Like so many of the agency’s previous optimistic projections, this one isn’t any likelier to pan out. But what does King Abdullah know that the IEA doesn’t?

For one thing, leaving oil in the ground in Saudi Arabia only makes production in the Gulf of Mexico, and the recent environmental disaster at the sunken Deepwater Horizon rig, even more critical to future supply. Even if the effective federal moratorium on drilling expires in November, the loss of drilling rigs and the uncertainty arising from the staggering financial consequences borne by well operator BP will have lasting constraints on Gulf production. Throw in a few hurricanes and production could soon be retreating again, as it did after the 2005 storm season.

And if suspending oil exploration in Saudi Arabia or new deep-water drilling in the Gulf of Mexico isn’t bad enough, check out the new ad campaign against the Alberta tar sands, next in line after deep-water wells to drive future global oil supply. The campaign, “The Other Oil Disaster,” recently rolled out, urging American tourists (and, before too long, British ones) to boycott Alberta, which is quickly becoming a bête noire to the world environmental movement.

So where exactly is tomorrow’s crude supply supposed to come from? Clearly not from Saudi or from the Gulf of Mexico, where there are moratoriums in place on either exploration or new drilling. And not from the tar sands, which is an increasingly contentious source, both environmentally and economically. No doubt the oil industry will seek out new frontiers.

Those drilling rigs soon to be pulling out of the Gulf of Mexico can always find safe havens where the regulatory burden is less onerous. There are, after all, far fewer film crews covering the environmental devastation from the countless oil spills in the Niger delta, or elsewhere in the developing world, where the crush of poverty compels different environmental trade-offs than the ones to be made in the Gulf region or Alberta.

But no matter where you look, it is becoming increasingly clear that tomorrow’s oil supply is going to come from very different places than today’s.

Providing, of course, that it comes at all.

Double standards aside, though, Congressman Waxman and Governor Schwarzenegger needn’t worry about growing American dependence on dirty tar sands fuel. TransCanada Corp.’s proposed Keystone XL pipeline, connecting as much as 900,000 barrels a day of oil from the tar sands to Texas refineries, isn’t going to have much flowing in it if oil prices stay where they are today.

Even without a cost for carbon emissions or water pollution, the economics of the requisite production increases just won’t fly. Not when the cost curve lying between today’s production of a little over one and a quarter million barrels a day and tomorrow’s target of three million barrels a day is steeply ascending, driven by the need to pursue ever-deeper bitumen deposits even further away from available water sources like the already heavily tapped Athabasca River. As energy guru Matthew Simmons once wryly observed, “In oil exploration, you don’t leave the easiest for the last.” It’s not a coincidence that two of the largest and oldest producers, Syncrude and Suncor, are located almost kitty-corner from each other across the banks of the Athabasca.

The Alberta tar sands are not a new discovery. As early as 1920, there was a pilot plant that first extracted oil from the bitumen. The only thing new about the tar sands is that they are now considered a commercially viable source of oil supply. Until the oil prices of the last several years, they most definitely weren’t.

And they still won’t be if prices retreat to where American motorists would like them. If you doubt that, just look at what happened in Alberta’s tar patch during the last recession, when oil prices plunged to $40 per barrel. Some $50 billion of capital spending was cancelled overnight. The stampede to the exit doors was as frantic as the earlier rush in, when oil rose to almost $150 per barrel.

America isn’t the only customer for the fuel, either. Sinopec and the China National Offshore Oil Company (CNOOC) have made substantial investments in the tar sands recently. And Enbridge wants to circumvent American carbon opposition and build a pipeline to get things flowing to the Pacific coast at Kitimat, B.C., for transoceanic shipment to China.

Many have questioned whether the expansion plans for Alberta’s tar sands are environmentally sustainable. But what potential American or Chinese customers must realize is this: without their paying ever-rising prices for that fuel, the tar sands may not even be economically sustainable.

In case you’d forgotten, blow-outs of deep-water wells aren’t the only strike against Gulf of Mexico oil production. It was just five years ago that the impact of severe hurricanes took an even heavier toll on the region.

Back then, BP and the other majors were confidently predicting that their offshore platforms could withstand all but “storm of the century” hurricanes. Those assurances turned out to be as valid as their more recent ones about the likelihood of deep-water spills. BP’S marquee Thunderhorse platform was easily toppled by Hurricane Dennis, leaving the billion-dollar rig leaning drunkenly in the waves—a premonition of worse disasters to come.

It took almost five years for Gulf production to reach to pre-Katrina levels. Consider how much longer it will take Gulf production to recover, if it ever does, from the fallout of devastation caused by a blown-out deep-water wellhead that could remain uncapped over an entire storm season as severe as that of 2005.

Even the impact of a single storm would be catastrophic, forcing BP to disconnect its containment system for a minimum of ten days, thereby allowing the unfettered discharge of 600,000 barrels. That’s a couple of spills the scale of the Exxon Valdez. And storm conditions would also suspend drilling activity of the relief wells, which are still months away from completion.

Even more devastating is the way a hurricane could disperse the existing oil slick. There have already been reports of oily rain in some locations along the coast. Imagine how many barrels of spilt oil a Category 5 storm could scoop up before it moved inland.

If raining oil on New Orleans doesn’t curb America’s appetite for crude, the resulting price shocks may. Not only do hurricanes threaten almost a third of the US’s oil production, they also jeopardize some 40 per cent of the country’s refinery capacity. That’s a double-hit to motorists at the pump.

The shut-off of Gulf production during the 2005 storm season raised oil prices by about 10 per cent, but that was only a fraction of how much pump prices rose. With refinery capacity also sidelined, crack spreads (the difference between crude prices and refined gasoline prices) went through the roof. Actual pump prices rose by 50 per cent to $3 per gallon. Three years later, when Hurricane Ike laid a direct hit on the Houston refining area, a spike in crack spreads sent gasoline prices in surrounding states to as high as $5 per gallon.

The environmental consequences of Deepwater Horizon will take millions of barrels of oil out of future production. But the hurricane season threatens to rob us of even today’s production. Between the two of them, America will no doubt be looking elsewhere to meet its energy needs.

President Obama won’t lift the moratorium on deep-water drilling until the Macondo gusher is, at minimum, fully capped. But whether he lifts it after that may not matter. BP has already lost over 40 per cent of its market capitalization. If Chapter 11 bankruptcy protection is the ultimate sanctuary from the staggering economic and environmental costs the firm will face, how eager will other oil companies be to follow in its deep-water footsteps?

As the days of rupture flow by, not only is the area no longer the answer to tomorrow’s oil demand, but before too long it may not even produce the 1.6 million barrels per day that it currently does. Without accessing even deeper fields, like BP’s Tiber field, almost six miles below the ocean, the rapid depletion rates of offshore wells on the much shallower continental shelf spell declining production for the Gulf region and for the United States as a whole.

Hopefully Canadian tar sands aren’t Plan B. If they are, someone should tell Governor Schwarzenegger and the growing list of other US politicians who claim that fuel is too dirty to burn. The real problem isn’t that it’s too dirty—at least not for the vast majority of American drivers, who would be happy to burn it—but rather that it’s too expensive. That’s why BP and the rest of the oil industry were drilling in deep water in the first place.

In the end, Plan B isn’t more tar sands production from Canada or Venezuela, or more deep-water production from Brazil or Africa. Whatever comes from those sources will barely cover depletion, and what’s left over will be gobbled up by the exploding oil appetites of the BRIC economies.

Plan B can only be less oil consumption. Whether Americans realize it or not, they are already on that path. The disaster in the Gulf is just putting that reality into sharper focus. Last year there were four million fewer vehicles on the road in the United States than there were the year before. In the next decade, there will be 40 to 50 million fewer cars than today. In the process, an economy that once consumed over 20 million barrels of oil per day will find a way to run on 15 million barrels or even less.

Peak supply defines peak demand. That, in a nutshell, is Plan B.