A one-page simple explanation of peak oil, hitting just the highlights. Kind of dry, but definitely not hyperbolic. The back page normally has a graph of oil discoveries by decade, and a graph of energy sources with a breakout of renewable sources from the Energy Information Adminstration, but Blogspot is being finicky today and does not want to upload my graphs.
Why is oil so important?
Forty percent of our energy comes from oil. Our entire economy and way of life run on oil, including the vast majority of transportation fuels, fuel for agricultural machinery, raw materials for plastics, chemicals and roads, and heating oil to heat our homes.
How is oil so different from other sources of energy?
Unlike electricity, which can be generated from many different sources, oil is virtually our only transportation fuel. Oil has an incredible return on energy - just one unit of energy is required to extract and refine 20 to 30 units of oil (1:30 ratio). Compare this to corn ethanol, which has an energy return ratio of 1:2-3 (90 to 95 percent less net energy than oil). Additionally, petroleum can easily be shipped all around the world (unlike natural gas or energy from wind).
What is peak oil?
Every oil field reaches a point where the production rate starts to decline, like a bell curve. Oil continues to be produced, but less and less comes out every year. Countries that produce oil experience the same phenomenon, when oil production can no longer be increased and starts to decline. For example, oil production in the U.S. peaked in 1970-71. We are not “running out of oil”; however, we are getting close to the point where we have used half of the world’s oil, which means we are running out of the easy-to-find and cheap-to-produce oil. The term “peak oil” refers to the point at which we can no longer grow world oil production.
As oil gets more expensive, won’t we just find more oil?
Oil must be discovered before it can be extracted. World oil discovery peaked in the 1960s and has been declining in recent years. Experts estimate that we are now consuming six barrels of oil for every one we find. We will continue to find more oil - but the oil we find tends to be difficult, expensive to produce, the finds are much, much smaller, and the process of producing oil is environmentally destructive and often located in places that are hostile to the United States. The U.S. has to import more than 60 percent of the oil that we use.
When will world oil production peak?
Estimates vary, but estimates from independent petroleum geologists tend to cluster around 2008 - 2015. Several government reports, including the Hirsch Report, and the 2008 report from the International Energy Agency (IEA), conclude that peak oil will occur before 2020-2030, and they also conclude the world needs to begin preparing for the peak in world oil production at least 10 -20 years in advance.
What are some likely effects of declining oil supplies after world oil production peaks?
Our economy and financial model are based on the idea that we can, and should, grow our economy forever. Without a cheap and expanding supply of oil, this will be difficult to accomplish. Most analysts predict recession/depressions and volatility of oil prices as the hallmarks of reaching the peak of world oil production and traversing the downward slope after the peak.