All industrialized societies are based on oil. It is, in fact, quite difficult to overstate just how dependent on oil human civilization has become. Oil is not only the lifeblood of most means of travel, but is also relied upon to make pesticides and to harvest and transport most of our food. Indeed, every calorie we eat on average now consumes about ten calories of oil. Many products are also manufactured in whole or part from oil, including all plastic bags, casings and containers, DVDs, nylon clothing, many medicines, and the tarmac on our roads. It should therefore be of great concern that we are fast approaching the situation of "Peak Oil" where there is less oil left in the ground than we've taken out.

Peak Oil refers to the point in time when global oil production reaches its maximum, when new oil discovery starts to lag behind current oil production, and after which there will inevitably come a point when demand for oil starts to exceed supply. Whether we are very nearly at this point, or will reach it later this decade, next decade, or the one after that, is a matter of debate. However, there is now widespread agreement that Peak Oil will occur by the 2030s. A good article highlighting the growing gap between oil discovery and oil production -- and the pending gap between oil demand and oil supply -- is available from PlanetForLife.com.

The Peak Oil Curve

For more than half a century it has been known that the rise and fall of oil production in a particular region follows a so-termed "bell curve". The first such curve was drawn in 1956 by geophysicist Marion King Hubbert to predict when oil production would peak in the United States. Hubbert estimated this would be between 1966 and 1972. Most people at the time dismissed Hubbert's meticulous work as ridiculous. Nevertheless he was right, with the actual peak occurring in 1970.

The diagram below charts a bell curve for global oil production as things currently stand. The historical data on the left-hand side of the curve has been significantly approximated for clarity. As has been noted, the exact dates on the horizontal axis are also a matter of debate. This said, the diagram is very much indicative of most current predictions.

Peak Oil Implications

When Peak Oil becomes a reality the result will be a gradual fall-off in production, with estimates ranging from 2 per cent to 13 per cent a year. A significant rise in the price of oil - maybe by a factor of ten by 2020 - is therefore exceedingly likely. In turn, when Peak Oil hits we will experience an Oil Crash. This is because, as LifeAfterTheOilCrash.net explains, "An oil based economy . . . doesn't need to deplete its entire reserve of oil before it begins to collapse. A shortfall between demand and supply as little as 10 to 15 percent is enough to wholly shatter an oil-dependent economy and reduce its citizenry to poverty".

We should also be aware that Peak Oil and a resultant Oil Crash may be even closer than we think. Quite alarmingly, a recent report from TheOilDrum.com notes that "Only 14 out of 54 oil producing countries and regions in the world continue to increase production, while 30 are definitely past their production peak, and the remaining 10 appear to have flat or declining production". Indeed, we should keep in mind the fact that total oil depletion -- let alone Peak Oil -- may not be that far away. For example, figures from the 2011 edition of the highly respected 2011 BP Statistical Review of World Energy indicate that proven global oil reserves will last until 2057. And in the grand scheme of industrial civilization, this really is not that far away.

Highly reputable organizations are now entering the debate that surrounds Peak Oil and a looming oil crash. For example, in July 2010 Lloyds of London and the Institute for Strategic Studies (Chatham House) published a white paper on strategic energy security which warned that we need to be ready for Peak Oil and disrupted energy supplies as we have now "entered a period of deep uncertainty of how we will source energy for power, heat and mobility".

More information on Peak Oil can be found in my book 25 Things You Need to Know About the Future. A list of Peak Oil web references can be found here.