Peak Oil is a self-evident truth, if you aren’t a stickler about just when it should happen.  Most experts agree that petroleum and fossil fuels are exhaustible resources.  They are nonrenewable unless you’ve got millions of years to spare.  Peak Oil is the point in time when the maximum rate of global petroleum production is reached, after which, the rate of production enters its natural decline.  In laymen’s terms, we start to run out of (cheap) oil.  If consumption isn’t reduced and/or alternatives discovered and developed in time before the peak—whenever that happens, it is simple economics that prices rise, and an energy crisis will ensue. 

As you might imagine, lots of variables intervene.  The moment you predict Peak Oil, you’ve got a laundry list of caveats to make.  But let’s consider a few that might affect things.  Take consumption rates.  Do you think those are coming down?  Nope.  Has the world’s population stopped growing?  Nope, it more than doubled in the last fifty years.  World crude oil demand has increased far above predictions a few years ago, driven by an insatiable need from China and India.  China’s oil consumption has grown 8 per cent per annum since 2002, and its economy is still experiencing oil shortage.  As huge energy consumers impact the market, they will compete for a dwindling, nonrenewable supply and hence drive up energy prices.  As many other economies enter a similar stage of economic development, energy needs will skyrocket and add to the pressure. 

I’m sure run-of-the-mill monetary inflation is much to blame for price increases at the gas pump, but folks you need to start getting a little more sophisticated (or at least read the big print writing on the wall!).  Don’t wait for the government to tell you, much less do anything about it.  The Bush administration isn’t exactly known for its candor with the American people (it’s all a state secret, or Executive prerogative); or for that matter competence and being proactive (Katrina, War in Iraq, etc.).  Global oil production actually already hit plateau in 2005, when Texas oilman T. Boone Pickens predicted that we probably reached the proverbial Peak Oil point. 

Even if you don’t buy that, and many experts don’t, we’re just quibbling over the next ten years and your favorite colored deck chair on the Titanic.  At an energy conference in Houston this past month, the Peak Oil prediction was 2015.  Nine of the world’s twenty-one largest fields show decline, and some fields are beginning to accelerate downward.  Even more skeptical observers will concede that discoveries peaked around 1961 and have long since failed to replace the full amount of oil produced.  Oil is being depleted in other words, we just can’t say how fast; the train is careening, but it may not go off the tracks for a couple more presidential election cycles.   

It is important to consider what we’re talking about: Peak Oil for Le Monde, the World.  We already passed it for the United States back in 1970, for North Sea oil production in 1985.  In fact, Peak Oil production has been reached in almost every oil-producing country in the world, except three notables: Iraq (may not reach it until 2018); Kuwait (predicted peak in 2013); and Saudi Arabia (predicted peak 2014).  Of course, I didn’t mention another big oil producer—Iran, because we don’t really know, and probably won’t get to the supply short of military invasion (which could happen).  Moreover, Kuwait and Saudi Arabia and other OPEC countries have every reason to overstate their proven reserves and probably have.  If you look at the frantic pace at which Saudi Arabia and the entire Gulf is diversifying economies, one wonders if the United States and other developed countries shouldn’t be reducing dependency on Middle East oil at least that fast.     

Hurricane Katrina initially wiped out 15% of U.S. refining capacity, which was strained and still is.  This resulted in a price spike of 100% as the price of gasoline went from $1.50/gallon to $3.00/gallon in just a few days.  When the Iranian revolution occurred in 1979 and crude oil prices doubled, world oil consumption dropped 15% and a worldwide recession lasted until 1982.  There isn’t much resiliency in the energy supply chain, and domestic storage capacity is less than two months.  And we’re really talking about a much bigger problem. 

Civilization probably won’t end short of a big meteor hitting the earth, but if you’re going to do anything constructive to mitigate problems our economy will face after the world hits Peak Oil, you need at least ten years to get busy.  Suggesting a bigger picture, consider that most farm equipment depends on oil and diesel, what that means to food prices and food availability.  Nearly all fertilizers and pesticides are made from oil too, as well as most plastics—used in everything from computers, mobile phones, to pipelines, clothing and carpets.  Metal production, such as aluminum, depends on oil; and even things like cosmetics, hair dye, ink, and common painkillers.  The construction of a single car takes at least 20 barrels of oil. 

It behooves us therefore to have an energy policy, unless your policy is simply to endure economic upheavals.  You might want to foster conservation, R&D, transition to alternatives—particularly other liquid fuels (alcohol, esters, vegetable oils, etc.; and liquefied petroleum products from natural gas and coal).  You might want to invest in infrastructure too, say, in storage, pipelines, rigs and rail transportation.  You should at least want to talk about it.  Now I’m not really one to run around like Chicken Little, yelling “The sky is falling, the sky is falling,” but oil production really is.  Our country faces an immense and unprecedented risk management problem, yet no presidential candidate seriously addresses it.  To the Republican candidate, it is probably a state secret like everything else.  To Democrats, it just makes their heads hurt.  Which leaves our national policy, deliberate or otherwise, essentially to suck it up: the easy oil first, and the economic consequences that follow for failure to prepare for anything else.  

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