You would think we were swimming in oil. The International Energy Agency's (IEA) latest World Energy Outlook forecasts that the United States will outstrip Saudi Arabia as the world's largest producer by 2017, becoming "all but self-sufficient in net terms" in energy production. While the "peak oil" pessimists are clearly wrong, so is a simplistic picture of fossil fuel abundance.

When the IEA predicts an increase in "oil production" from 84 million barrels a day in 2011 to 97 in 2035, it is talking about "natural gas liquids and unconventional sources", which includes a big reliance on "fracking" for shale gas. Conventional oil output will stay largely flat, or fall.

The IEA has been exposed before as having, under US pressure, artificially inflated official reserve figures. And now US energy consultants Ruud Weijermars and Crispian McCredie say there is strong "basis for reasonable doubts about the reliability and durability of US shale gas reserves". The New York Times found that state geologists, industry lawyers and market analysts privately questioned "whether companies are intentionally, and even illegally, overstating the productivity of their wells and the size of their reserves." And former UK chief government scientist Sir David King has concluded that the industry had overstated world oil reserves by about a third. In Nature, he dismissed notions that a shale gas boom would avert an energy crisis, noting that production at wells drops by as much as 90 per cent within the first year.

The rapid decline rates make shale gas distinctly unprofitable. Arthur Berman, a former Amoco petroleum geologist, cites the Eagle Ford shale, Texas, where the decline rate is so high that simply to keep production flat, they will have to drill "almost 1,000 wells" a year, requiring "about $10bn or $12bn a year just to replace supply". In all, "it starts to approach the amount of money needed to bail out the banking industry. Where is that money to come from?"

In September, the leader of the US shale gas revolution, Chesapeake Energy, sold $6.9bn of gas fields and pipelines to stave off collapse. Four months ago Exxon's CEO, Rex Tillerson, told a private meeting: "We're making no money. It's all in the red." The worst-case scenario is that several large oil companies at once face financial distress. Then, says Berman, "you may have a couple of big bankruptcies or takeovers and everybody pulls back, all the money evaporates, all the capital goes away."

Far from fuelling prosperity, the gas glut will generate an unsustainable debt bubble whose bursting precipitates a supply collapse and price spike. The New Economics Foundation estimates the arrival of "economic peak oil" – when the costs of supply exceeds the price economies can pay without significantly disrupting economic activity – in around 2014/15. Black gold is not the answer.