On one hand we have the absolute non-believers. These people have paid their subscription money to the “peak oil” club, and refuse to consider a glut of any sort because liquid fuels, in their mind, are drying up.

On the other, we have a small but growing band that appears to include Wood Mackenzie arguing that alternative liquids will fill the gap created by a flat, to falling, outlook for conventional oil-based fuels.

Slugcatcher, being a complete coward when it comes to choosing sides, reckons the fence is a good place to sit and watch his betters debate a subject which is so profound he suspects most oil people are yet to understand its importance.

If Wood Mackenzie is right, then members of the peak oil club really do have a problem, even if the UK-based consultancy does not appear to have drilled down far enough in its argument about the effect of rising alternative liquids.

If, heaven forbid, Wood Mackenzie is wrong, then a heap of investment decisions might be built on weak foundations.

Time will determine accuracy and, until we get to the nominated year of 2010 as the arrival of a “potential liquids over-supply”, it’s best to look at why one of the world’s best informed petroleum consultancies has decided to swim against the tide of popular opinion and tell its customers, including the world’s biggest oil companies, that the game is changing.

In its well-publicised analysis Wood Mackenzie suggests the new crop of biofuel projects (ethanol and diesel), plus liquids from natural gas conversion, is growing faster than most of us suspect.

“The growth in total supply is far beyond that required for demand growth,” is how Aileen Jamieson, research manager at the consultancy summed up her report: “Global Refining in 2010 – Out of Balance”.

The central purpose of her report, as implied in the title, is about refining capacity, rather than oil (or alternatives) production – and most comment on the findings has been focussed on the impact of excess refining capacity on the economics of refining, and the potential for some refining projects to be delayed, or cancelled.

So far, so good.

But from where Slugcatcher sits (comfortably on his fence) there is a seamless line drawn between refining and production.

As the old song about horses-and-carriages, love-and-marriage, goes: “You can’t have one without the other”.

Let’s consider what it means to the upstream industry if biofuels and natural gas liquids really do create a glut of refined products by 2010.

Surely, and despite what they say in the famous Castrol advertisement about “oils ain’t oils”, this is a case where “liquids are liquids”.

A refining glut caused by excess production of biodiesel from soy, or ethanol from corn, is a glut which will affect the entire market for liquid fuels – including conventional oil.

It could be that Slugcatcher is missing something there but the Wood Mackenzie report quite clearly says “a global oversupply of gasoline is expected to reduce prices, which may demand and promote overall refinery supply optimisation.”

It’s been a few years since anyone suggested we were headed for a global oversupply of gasoline, but there it is.

The next step, which only Slugcatcher seems to be taking at this stage, is that a global oversupply of gasoline can only mean a global decline in the oil price because a glut-is-a-glut-is-a-glut.

If nothing else Wood Mackenzie has provided plenty of food for thought which might eventually lead to pressure being placed on all sorts of investment plans – if it’s right!