What is peak oil?
Peak oil is the concept that worldwide oil production will hit a peak and begin to decline thereafter.
The model and term, peak oil was first introduced by M. King Hubbert in 1956. This term should not be interchanged with oil depletion, as that is when oil reserves become depleted, whereas peak oil describes the point at which we will hit maximum production, the peak of oil production.
Though there is great debate as to when peak oil will occur – economists, environmentalists, and petroleum industry experts all have different theories and calculations – the undeniable truth is that we will hit a limit to our oil production. Regardless of when that time arrives the consequences of peak oil will be widespread and very serious considering our entire economy is founded on this non-renewable resource.
Consider, for instance, the following related sociopolitical mechanisms that will be impacted by peak oil:
- Oil shock: As oil become scarcer oil prices will rise rapidly and unsustainably, creating economic challenges for those not able to afford the price increase on anything that requires oil for manufacturing and transportation.
- Political unrest: As you can imagine, the balance of power on a global scale could significantly shift with an oil crisis, which will likely lead to political unrest and global insecurity as countries vie for the last drops of oil.
While there are those who believe that peak oil is only a year or two away, some estimate that it will arrive sometime between 2020 and 2035. To add to the controversy, there are also those that believe peak oil is a myth, arguing that with new technologies and exploration methods, new reserves will be found that will solve our global energy problems. Most scientists, however, disagree with this notion.
The good news in this picture is that peak oil could have a positive impact on our economies. Savvy politicians and business leaders see the potential for the negative impacts of peak oil and are preparing by developing alternative forms of energy while also becoming more and more energy efficient (or even energy independent) in order to mitigate the coming risks and maximum on the opportunities awaiting them in a green economy.
Frequently asked questions (FAQs)
What is the peak oil concept?
Peak oil is the concept that since oil is non-renewable, there will be a point in the future at which the rate of extraction will hit a peak and thereafter will decline.
Has peak oil been reached?
Most forecasters believe that peak oil has not yet been reached and place the hypothetical point of peak oil production between the mid-2020s and the mid-2030s.