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Peak Oil

What is peak oil?

Oil is, for all practical purposes, a finite resource. It takes millions of years to form out of rotting vegetation etc. Oil was discovered in the late nineteenth century. Oil is an incredibly useful product; it contains a phenomenal amount of useable energy in a relatively small volume. The first oil found was the easy oil to produce – drill down a short distance on land (Texas, Saudi Arabia) and the oil came gushing out. Annual consumption of oil grew dramatically during the twentieth century because it was so cheap to obtain and it was so useful. Twentieth century western civilisations flourished because of easy access to cheap oil.

Production is now struggling to keep up with demand. Peak oil is the point at which production starts to decline. Once it starts to decline, the inherent demand will push the price of what is left sky high. Oil is not going to run out completely in the near future. But it is going to keep getting more and more expensive.

Have we reached peak oil yet? There are different opinions on this, but the answer is probably yes. But even if peak oil does not occur for another 5-10 years, we are still in a very serious situation.

What are the consequences of peak oil?

The era of year-on-year economic growth, globalisation, flying cheaply around the world for individuals, relying on cheap labour on the other side of the world to produce all our manufactured goods will come to an end. We have never had it so good; and we are never going to have it so good again. Everything that involves the use of oil in any stage of its production or delivery will get much more expensive.

What about the alternatives to oil?

There are alternatives to oil, but they all cost much more in terms of price per unit of energy acquired. Tar sands would be incredibly expensive to turn into useable oil and will have catastrophic climate change consequences. The same is true of coal. There is no magic bullet that will solve the problem of providing a replacement energy source for oil.

Read more about peak oil

There is a vast amount of reading material on peak oil. Just search on Google for peak oil. A good place to start is the energy bulletin.

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