Are we heading for a massive global energy crisis? Are we running out of oil? Will energy prices skyrocket? Will lines at the gas station be 5-miles long again? Will we need to start drilling into places like ANWR (Arctic National Wildlife Refuge) and coastal waters just to sustain our way of life?
Sadly, the answer to all of these questions is – Possibly.
There are those who, citing a Peak-Oil causation, would have you believe that these scenarios are not only possible, but a near certainty. I have read numerous entertaining pieces espousing the post-apocalyptic Mad-Max world that will emerge in the Post-Peak future. In these episodes, oil dries up quickly, government resources get directed towards military conquests in order to secure the scarce sources left, riots break out across the globe as the line between the haves and have-nots gets extrapolated into a literal class warfare, and finally we all start living in a survival mode of the tribal hunter-gatherer variety. Very stark indeed.
However, the good news is that $10,000/barrel oil (which would translate into paying roughly $420/gallon at the pump) is not a foregone conclusion. The first important thing to understand is what scientists and geologists mean when they talk about Peak-Oil, and secondly, what are the logical consequences of this scenario.
First, Peak-Oil is not a theory! Its not a myth either, but rather it is simply the reality that we have a finite amount of oil locked inside the Earth and we cannot continue to increase our rate of extraction indefinitely. Peak-Oil states that the level of production, or the number of barrels we can suck out of Mother Earth will plateau and then start to meaningfully decline. The only real argument surrounding Peak-Oil is in the timing. Evidence suggests this may have already started. Take a look at the chart below from the Department of Energy, courtesy of a website called Planetthoughts.org:
Many people say that this chart shows the production of oil already hitting a peak and thereby it will not be long before this starts heading downward. They say that Peak-Oil is happening right now. The less dramatic scientific types say this will actually occur sometime mid 2020’s while others say not until 2035. For more in-depth price and production information, please check out the resources from the Sovestor website.
Whether Peak-Oil occurs now or in 20 years, what would be the implications of such an event? Well Econ 101 taught us that as demand for a good increases while the supply simultaneously decreases, the price of said good will increase markedly. We have all seen the results of sudden oil price shocks. Those around driving in the mid 70’s remember the long lines at the gas station. This same event occurred immediately following 9-11. More recently as the price of oil rose to $148 in 2008 we all thought it was the beginning of the end. Tourism slowed, sales of trucks and large cars came to a screeching halt, and people went longer in between trips to the grocery store. Unfortunately, if we see production of oil slow in the very near future we are all in for a similar type of scenario. Remember to re-up your Costco memberships!
My hope is that the onset of Peak-Oil will mark a watershed event in the course of human history, where we finally “end our addiction to foreign oil”! Like a meth-head in rehab, you can’t consume what you can’t find. This will give us the chance for that “moon-shot” drive to find sustainable power sources which can replace fossil fuels. Right now there are numerous promising research projects going on but unfortunately most are woefully underfunded. Companies like Exxon are spending hundreds of millions on alternative energy research right now, but when the price of oil sky-rockets, so will the demand for a lower cost replacement. When that occurs you will see several billions being put into alternative energy research, and then finally, maybe, a viable long-term solution.
That’s why its my opinion that when Peak-Oil arrives, if it hasn’t already, there may be a lot of serious stresses on society, however, like that recovering Meth-Head going through withdrawal pains, that’s what it takes to heal yourself from addiction. In the long run, society will be better off by getting cut off from the black gold addiction. My vision of the future is much less Mad-Max and much more Back to the Future II. I’m still waiting for the release of the hover boards!