What is Peak Oil?
So what exactly is “Peak Oil”? Simply put, it is the period of maximum global oil production, after which we go into permanent oil decline. And that’s it really. But wait a minute, we depend on oil for just about everything, don’t we? Perhaps we had better spend a few more minutes looking at this after all. Peak Oil is a term that was viewed until recently as essential territory for crackpots and conspiracy theorists, the sort of thing that the National Enquirer would feature alongside ‘Aliens Abducted My Grandmother And Made Her Wear Lederhosen.’ However, Peak Oil is not the work of aliens or German leather-makers – it has arrived on Planet Earth and is coming on now with full force. It is the unmentioned factor behind the rocketing price of oil, and it won’t go away – we simply have to face up to it. In order to understand Peak Oil we need to think about things slightly differently. Although the idea is simple in some ways, it is also counter-intuitive and has unpleasant implications
There are a number of competing definitions for Peak Oil, but here is the one we think is most practical: Peak Oil is the historical point at which the annual volume of oil production is the highest it has ever been or ever will be. Once we pass the peak, global oil production begins to decline, continuing a downward trend until finally, decades later, the oil that remains in the ground is unrecoverable at any price because it takes more energy to pump the oil than the one gets from its use.
Peak oil is a theory that global oil production will eventually reach a maximum rate, after which it will decline, possibly quite precipitously. The concern is that because most of the world relies heavily on petroleum products, the fall after the peak of production could spark a number of social, political, and economic problems with potentially far-reaching effects. There is some dispute as to exactly when peak oil will manifest, and what will happen when it does, but most people agree that the theory should be used as an incentive to develop alternative sources of energy before it is too late. This theory was originally posited in 1956 by M. King Hubbert, and it is sometimes known as the Hubbert Peak Theory. Hubbert was actually looking at petroleum production in individual countries, but it was clear that the theory could be extended to the world in general. Some countries appear to have already experienced peak oil, while others are still experiencing climbing production rates, th
Peak oil is the point in time when the maximum rate of global petroleum extraction is reached, after which the rate of production enters terminal decline. Because the world’s petroleum supply is effectively fixed, if global oil consumption is not mitigated before the decline phase begins, a world energy crisis may develop because the availability of conventional oil will drop causing prices to rise, perhaps dramatically. And as fossil fuel prices rise so do the costs of fertilizers both from transportation costs and from the increased costs of inputs like natural gas that are used to make NH3 http://en.wikipedia.
Peak oil is the simplest label for the problem of energy resource depletion, or more specifically, the peak in global oil production. Oil is a finite, non-renewable resource, one that has powered phenomenal economic and population growth over the last century and a half. The rate of oil ‘production’, meaning extraction and refining (currently about 84 million barrels/day), has grown almost every year of the last century. Once we have used up about half of the original reserves, oil production becomes ever more likely stop growing and begin a terminal decline, hence ‘peak’. The peak in oil production does not signify ‘running out of oil’, but it does mean the end of cheap oil, as we switch from a buyers’ to a sellers’ market. For economies leveraged on ever increasing quantities of cheap oil, the consequences may be dire. Without significant successful cultural reform, severe economic and social consequences seem inevitable.
