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Peak oil and other things to keep you up at night
At TerraPass, we’re always going on about carbon this and global warming that. But environmental concerns are just part of the case for alternative energy. So today I’m going to kick off a series of posts that more closely examine the issue of peak oil.
First, a definition: peak oil refers to the notion that at some point in the future we will reach a peak in the rate at which we can pump oil out of the ground. Regardless of the size of the world’s remaining oil reserves, limits exist to the speed with which we can actually extract the liquid from the rock. Once we hit that peak, daily production rates will decline gradually over time.
Why does this matter? Because no such limits exist on the growth in demand for oil, particularly as the huge developing economies of China and India continue to go gangbusters. At some point daily demand for oil will outpace daily production capacity. And we all know what happens when these trend lines cross. Adam Smith’s invisible hand moves in to set things right, giving the world economy a brisk slap in the form of an oil shock.
Peak oil is not a new idea. Shell geologist M. King Hubbert got the conversation started back in 1956. And unlike climate change, the dynamics underlying peak oil are not in dispute. Exxon Mobil understands them; Dick Cheney understands them; and scaremongering web site owners understand them. It is a very simple thing to look at the trend lines and apply the relevant lessons from Econ 101.
What is new is that the concept of peak oil is breaking into the mainstream discourse. An increasingly public debate is taking place over when exactly we can expect to hit the peak and what a post-peak world will look like.
Estimates of peak oil range from 2005 to 2035 and beyond. The details get rather devilish, but also very interesting. More soon.
P.S. If you can’t wait for the punchline, check out Kevin Drum’s superb six part series on peak oil, from which my own posts are liberally cribbed. Or take a look at this recent article in the New York Times Magazine.