The International Energy Agency (IEA) released a report in November 2008 detailing future energy production.  The report focuses on oil, of course.  Guess what?  We are entering a period of declining energy production:

The world’s energy system is at a crossroads. Current global trends in energy supply and consumption are patently unsustainable - environmentally, economically, socially. But that can - and must - be altered; there’s still time to change the road we’re on.[1] It is not an exaggeration to claim that the future of human prosperity depends on how successfully we tackle the two central energy challenges facing us today: securing the supply of reliable and affordable energy; - World Energy Outlook

The IEA estimates oil field production to fall 5.1% for every field with the top 3 falling 3.4%, 6.5% and 10.4% respectively.  This would be an issue if world energy use was stagnate, but it has been rising.  Admittedly, the economic downturn will reduce the percentage increase, but it is unlikely to completely stop increasing energy demands.

Along with a reduction in potential oil field output, major oil producers are starting to reduce production.  The producers are looking to drive prices back-up, as most see anything below $50 per barrel to be far too cheap. 

It said that Saudi Arabia had committed to trimming its crude output to around eight million bpd by January compared with more than nine million bpd in September. The Kingdom, the world’s top crude exporter, is also planning to reduce production by an additional 300,000 bpd this month. - Business 24/7

Saudi Arabia’s reduction in oil also means they are reducing their natural gas production.  As a result, Saudi Arabia is now a net importer of natural gas.  They knew a reduction in oil would force them to import natural gas, but to them it is worth a little extra cost in natural gas to force oil prices up.

All of this suggests oil prices will be heading far north of the mid $40’s where they are currently residing.  This makes oil and quality alternative energy companies valid opportunities over the next few years.