Trend: If political stability can be sustained, Iraq's oil production could keep oil prices relatively low for a decade, undermining many efforts to switch to alternative sources of energy.
Stuart Staniford at the Early Warning blog describes how Iraqi oil production could delay the grim impact of the end of cheap oil (Peak Oil). Click on the link below to see the supporting facts and logic.
Political and economic stability in Iraq is essential to this scenario.
A couple of years ago, Iraqi oil production was declining and it didn't seem too likely the country would stabilize any time soon to allow that to change. However, the post-surge stabilization of Iraq has now allowed Iraqi oil production to start creeping up, and in 2009 the Iraqi oil ministry has announced large numbers of contracts with major oil companies to bring production up from the current 2.5mbd or so to 12 mbd over the course of the next 6-7 years. It is also announcing a series of projects to increase the physical export capacity of the country in line with these oil production projects.
It seems to me that the possibility that Iraq may actually succeed in doing this should be taken seriously. If it did succeed, that would act to delay the final plateau of oil production by a decade (ballpark), make that plateau be at a higher level (95-100mbd ballpark), and significantly moderate oil prices in the meantime, with even some possibility of causing a serious breakdown of OPEC discipline and a period of significantly lower prices akin to the 1980s-1990s lull (though probably not as long or as deep a lull as that). If that were to occur, it would likely have profound consequences for alternative energy projects, biofuel companies, and automobile fuel efficiency. A period of lower oil prices will put adaptation projects on hold for the duration.
At the same time, even in this scenario, there's a real chance of another oil price shock before the main rise in Iraqi oil production arrives.