Reaching Peak Oil: Something to Fear

In today’s global financial crisis, people are looking for ways to fix the mistakes that led to the current disastrous situation. Fixing the problem is always second best, however, to making sure the problem never happens in the first place. It is important not only to learn about past global economic catastrophes, but also to anticipate coming ones. Oil will definitely have a major influence on the next global financial collapse. The United States now accounts for about a quarter of world oil consumption (with more than half that total imported from OPEC and other overseas producers). On the other hand, annual oil consumption in China is growing seven times faster than in the United States. America is entering an era of unprecedented growth, as well as a dwindling supply of its bloodline to the industrial world. This is where the theory of “peak oil” comes in.

Peak oil is the notion that concerns the inevitable moment when world oil production will hit its peak; from that point on, reserves will be on an ever-dwindling downward spiral. Prices will be pushed higher and higher in the face of surging demand, which in turn will have a disastrous impact on oil-addicted economies around the planet. Major oil companies worldwide know very well about peak oil, which is why they are scrambling to secure as much global reserves as they can, and why the number of oil-based company mergers has steadily increased over the past 15 years.

The International Energy Agency (IEA) says that peak oil will arrive “sometime between 2013 and 2037,” with production thereafter expected to decline by about three percent a year.

“Most of us who are worried about this issue would say definitely it will happen sometime this decade,” said Dr. Jeremy Leggett, a member of the UK’s Renewables Advisory Board and a former oil geologist.

The Sandspur