Peak Oil is the common term for Hubbert Peak Theory, a relatively simple idea with potentially catastrophic consequences. Simply put, Peak Oil Theory predicts that the world will reach the peak of its oil production capacity very soon, with most experts’ predictions coming in at anywhere from 2005 to the end of this decade.
This is not to say we are running out of oil. Peak Oil tells us that the production of oil more or less follows a Bell Curve (more properly referred to as Normal Distribution). In fact, by this definition we have used a little less than half of the oil in the earth, meaning we have about half left, which is at least 30 years’ worth.
But the real problem is not that we’re running out of oil, it’s that we’re running out of cheap, easily extractable oil while the demand for it is rising thanks not only to the US, but now also to China. After we pass the peak, supply will slowly start to lose ground to demand, at a rate of about 2-5% per year. This will quickly lead to skyrocketing energy prices, which will in turn trigger inflation (or even deflation in some extreme scenarios) and a rapid decline in the stock market. Unless we start developing cheap and plentiful alternative sources of energy to bridge the impending supply/demand gap, we will experience an economic shock unlike anything our generation has ever seen.
Many of us would expect the free market to respond to such a scenario by quickly developing alternative sources of energy to meet a rapidly growing demand for it. And perhaps it will. But we have a very long way to go and not very much time left. We simply can’t afford to wait for the crisis to happen before we react.
Many experts believe that we would need to start preparing at least ten years before the peak to avoid most of the worst effects of Peak Oil, and the fact is we haven’t even started, not to any significant extent anyway. In a best case scenario the peak will occur in 2015, which means we need to start preparing now. In the worst case scenario, the peak already occured in 2005 (due to the difficulty in obtaining good data, it is impossible to know when peak occurs until many months or even a year later). If this is so, it is too late to do anything but prepare for the worst.
To get an idea of just how far we have to go, consider this: the big three non-renewable sources of energy we depend on to drive to work, heat our homes, keep the lights on, and deliver our groceries to the local Stop n’ Shop, are oil, gas and coal. They currently provide over 85% of our energy. How do we get to the point where a 2-5% decrease in oil production won’t wreak havoc on our economy, as it did during the oil shocks of the 1970s? How many years of this type of economic shock can we take knowing the situation can only get worse and not better?
And what if peak oil occurs in 2015? Will we have enough time to build the additional nuclear power plants and wind power generators we will need to power our homes and businesses? And what about getting to work? We can forget about hydrogen cars until we have a renewable source of energy with which to produce the hydrogen with. Maybe ethanol will save the day, but will we have enough time to install an E85 infrastructure to fuel our cars without mortgaging the house for gas money? How about if the peak occurs in 2010? Will we have enough time? And what if the peak occurs this year?
These are the questions we should be asking ourselves but aren’t. I can’t speculate on why, but I would sooner point the finger to complacency than conspiracy. We need to build awareness of this issue on a national level so we can begin dealing with it as soon as possible. It is also important to consider how Peak Oil will impact the generation that will be at the front lines of this issue in the coming decades.
Let’s get going. The time to act was yesterday.
– R. Lyons Noir