Peak Oil

Over the past couple of months, I have been following the relentless rise in energy prices (petrol is now $3.50/gallon). Seeking the cause of this, I unearthed some troubling news which is an epiphany of sorts.

“Peak oil” – a term used by some geologist who foresee the imminent peaking of world oil production. A good reference is the Hirsch Report. The report forecasts that geological constraints will result in falling oil production as most of the major oil fields are past their peak production lives.

Given that the past three generations have grown up in a world of increasing mechanization driven by the availability of cheap fuel, the peak oil seems like the end of a golden era. Oil is probably the most convenient form of energy that makes possible modern transportation – especially automobiles and air travel. It also drives the wheels of industry allowing for mining of minerals and agriculture on a scale unprecedented before in human history. But the earth’s largesse is now reached its limits – what will this mean for the future?

While noone can predict how fast the supply of oil will be reduced, or what it’s exact effects will be, any rational analysis will conclude that the effects cannot be rosy. The worst case scenarios include a total breakdown of civilization and a return to pre-Industrial society. Optimists might hope for technological advances that will yield efficiencies and allow us to retain a semblance of modern life.

In the past year, since Al Gore’s “An Inconvenient Truth”, the attention of the media has been fixated on Global Warming. What is likely is the reality of reduced oil production will likely force a reduction in carbon emissions anyway, and that the impact of that happening will hit us far sooner than rising ocean levels or climate changes. I am fearful that in the next ten years, oil prices will increase ten-fold. Air travel will be hard hit and other fuel-intensive sectors of the economy slow down.

What can I do? Well, some events are likely to happen. Higher inflation, as the cost of goods are pushed up by rising fuel prices. Commodity and energy prices will rise driven by shorter supplies and inelastic demand. Renewables can only meet a fraction of our current needs, and even then the generation of wind turbines and solar panels require a technological infrastructure that itself will be heavily strained.

This is a life-changing realization that I must act now to protect my family and our future. Nothing like this has ever happened before and I can’t believe how few people are aware of this impact.