But what is it?
We all know that oil will run out someday. But, that day will come far after we stop using oil for industry and transportation. More important than when we run out of oil is when maximum oil production starts decreasing. Ever since oil was discovered, world wide oil production has been increasing along what geologists/economists call a Hubbert curve.
The idea behind this curve is that obviously the world's biggest oil fields were discovered first and companies grew efficient with experience so initially production quickly multiplied. As time went on, smaller and smaller fields were found and growth in production slowed down. There's plenty of untapped oil in the world (although clearly exhaustible), but the amount of easily produced untapped oil shrinks every year. As new oil fields get smaller, growth in production decreased, and at the same time, reserves in the biggest oil fields decrease. This means that at a certain point production hits its max, and then starts to drop.
The theory goes: a drop in oil production (supply) will lead to higher prices assuming that demand keeps growing at its current rate. In order to avoid the high prices, you want to extend peak oil as far in the future as possible by consuming less oil today, so you can buy some time to figure out how to use less oil tomorrow.
Peak oil is still considered a theory. And, so is evolution. Furthermore, everyone gives a different date for when they believe that oil production will hit its peak. Some scientists say it has already happened, and some say it won't happen for twenty years. In a Freakonomics blog post, Levitt, points out that there are three questions to Peak Oil: "1) will the cost of supplying oil jump, (2) If it does jump, by how much, and (3) how elastic is demand." According to Hubbert's Peak Oil theory the answer to number 1 is yes. The answer to number 2 goes to someone with data (which no one has because production numbers are all fudged throughout the world due to oligopolistic competition). The answer to number 3 is totally up to us. How quick can we adapt. We want to make that demand as elastic as possible. How do we do that? An energy revolution. How do we do that? Well, there are some good ideas Friedman's new book Hot, Flat, and Crowded about creating energy infrastructures and moving away from fossil fuels. A lot of his solutions involve government action. Fortunately, in America, the politicians are accountable to the people, so as long as an energy revolution is salient among American citizens these solutions can come about to not only protect America or any other country or the world from peak oil, but climate change and less oil dependent politics.
Anyways, here's a funny youtube video on peak oil
