“Peak Oil” is spreading through the public consciousness, as more and more people are turned on by record gas prices, thrilling geopolitical movies, and innumerable cautionary books and websites. What is it that makes this two-word phrase so alarming?
Peak Oil is not an abstract speculation; it is a geological phenomenon observed every time an oil well is drilled. It does not mean that oil has run out in the well, but that after a certain point, usually about the halfway point, the well’s production capacity (the amount that can be drawn out in a specific amount of time) begins to decrease steadily and irreversibly. An oil well’s production, when charted over time, follows a bell shaped curve. When the well is first drilled production capacity increases quickly, eventually it reaches its peak and starts into permanent decline.
Average two wells together and they will make a larger bell curve. Average together all the wells in a country and the same peak and decline can be observed. The US, for example, hit its oil production peak in the early 70s and since then has had to import oil to fill the gap between our ever-decreasing production and ever-increasing consumption. Nationwide peaks have already come and gone for 60% of the world’s oil-producing countries including the UK, Norway, and Egypt. Now experts are even speculating that oil-soaked Saudi Arabia, with the largest reserves left in on earth, may have reached its peak, meaning that categorically, world production would have peaked as well.
The peak within the US and other oil hungry nations has already cost billions of dollars and many lives to supplement the shortage of domestic oil with imports. What options will there be in the near future when world-wide production peaks? Demand for oil increases by 2–4 million barrels a day every year. What happens when new production capacity slows down and then starts to decline?
Oil is a non-renewable, polluting energy source, but 40% of the American economy (transportation, food, plastics, and heating) is directly dependent upon this source. What would a sudden, exponential increase in the price of energy mean for the economy?
What would it mean for you?
Dan is a founding member of Lehigh Valley Beyond Oil