What is Peak Oil?

Peak Oil refers to the maximum rate of global oil production, after which production will begin to irreversibly decline. The production rate of oil always follows a bell-shaped curve: first oil is discovered, then the rate increases until it reaches a peak, after which it becomes impossible to pump oil at the same rate and production falls. Many countries have already reached their peak in oil production, and it is predicted that the others will soon follow. The peak in world discovery of oil was already reached in the 1960s, and discoveries have declined ever since. This means that there is no prospect of any significant discoveries of oil in the future.

A growing consensus from the scientific community, world leaders and the oil industry confirms that we are approaching Peak Oil. Since oil is a finite, non-renewable resource and we are now consuming more than six barrels of oil for every one that is discovered, it is inevitable that demand will outstrip supply, with a consequent decline in world oil. But we are not yet ‘running out of oil’, we are ‘running out of cheap oil’. Oil companies have extracted all the high quality oil and although there is plenty of oil remaining, its low quality means that it will take increasing amounts of money and energy to extract and refine. If it takes one barrel’s worth of oil energy to extract one barrel of oil, then further extraction simply isn’t economically viable.
 
Peak Oil is not a theory; it is a geological reality that describes the problem of energy resource depletion. Oil demand will continue to rise, supplies will become ever more limited, oil prices will rise and fossil fuel shortages will become increasingly widespread. Over the last hundred and fifty years, oil has fuelled incredible economic and population growth, underpinning every industry, and every aspect of our lives, from agriculture to transport to housing. If we do not prepare for Peak Oil, the consequences could be severe.