What is Peak Oil, and why am I so excited about it? Peak Oil theory owes its start predominantly to the work of M. King Hubbert, who correctly predicted in 1956 that US oil production would peak in the early 70’s. Hubbert was a research geologist for Shell, and in his research noted a bell curve distribution in the rate of discoveries of new oil fields. He predicted that the later exploitation of these fields would follow a similar curve, wherein oil production would reach a peak rate at some point in time followed by a steady decline. While highly controversial, Hubbert’s theories proved correct in his own lifetime, and have spawned a generation of Peak Oil theorists who are predicting an imminent peak in world oil production.
As a matter simple logic, a finite resource must have a peak rate of production – simply because it is not being regenerated! The real question then, is when will the peak arrive, and what will its effects be? A range of predictions from 2005 to 2050 and beyond have been offered up by various prognosticators. An increasing number of researchers believe that the peak may be soon in the making; their thoughts can be found at sites like ASPO and The Oil Drum (a favorite of mine).
From an economic perspective, a peak in world oil production will have profound impacts. Petroleum has driven mankind’s progress for over a century, and the only thing that can end its dominance is the end of cheap supplies. Petroleum-based products provide the fuel for almost all mechanized transport, and provide for roughly 40% of the world’s total energy needs. When production peaks, the oil supply will be fixed in the face of steadily rising demand from a rapidly growing world economy. The net result: a rapid rise in oil prices that will likely be followed by a worldwide recession.
There’s another, more positive effect associated with Peak Oil. Rising oil prices will drive gasoline prices up, forcing us to finally confront our thirst for oil. As the price of gasoline rises relative to alternatives, plug-in hybrids, electric vehicles, and public transportation will see increased demand. Alternative electricity sources like wind and solar power will rise in use as well. Peak Oil will also force a cap on greenhouse gas emissions by limiting total oil use, which is something that no number of IPCC, UN, or Kyoto Protocol conferences have been able to accomplish.
So I look forward to the day when world oil production peaks, as it’s the first day of freedom from oil, freedom from dependence on dangerous and unstable oil suppliers, and freedom from a finite resource with many negative side effects. The faster we transition to a post-oil economy, the better.