Peak oil can fuel a change for the better

The SMH has a rare mainstream media opinion piece on peak oil (albeit of the doomy circa-2005 variety) - Peak oil can fuel a change for the better.

The advent of peak oil means we should prepare for a downscaling of our highly energy and resource-intensive lifestyles.

What is peak oil and why does it matter? And what effect will it have on the Western lifestyles we take for granted? These are not questions that many people are asking themselves yet, but this decade is going to change everything. Peak oil is upon us.

Peak oil does not mean that the world is about it run out of oil. It refers to the point at which the supply of oil can no longer increase. There is lots of the stuff left; its just getting much more difficult to find and extract, which means it is getting very hard, and perhaps impossible, to increase the overall flow of oil out of the ground. When the flow can no longer increase, that is peak oil. Supply will then plateau for a time and eventually enter terminal decline. This is the future that awaits us, because oil is a finite, non-renewable resource.

The prospect of peak oil is no longer a fringe theory held only by a few scaremongers. It is a geological reality that has been acknowledged even by conservative, mainstream institutions such as the International Energy Agency, the UK Industry Task Force and the United States military. Even the chief executive of one of the worlds largest oil companies, Total, said recently he expected demand to outstrip supply as early as 2014 or 2015. Given how fundamental oil is to our economies, this signifies the dawn of a new era in the human story.

While the supply of oil is stagnating, demand is still growing considerably. China and India are industrialising at an extraordinary pace, requiring huge amounts of oil, and even in the Middle East and Russia – the main oil exporting regions – oil consumption is growing fast. What this means is that competition is escalating over access to the limited supply, and basic economic principles dictate that when supply stagnates and demand increases, oil is going to get much more expensive – a situation that is already playing out.

The problem of peak oil, therefore, is not that we are running out of oil, but that we have already run out of cheap oil. Currently the world consumes about 89 million barrels a day, or 32 billion barrels a year. Those mind-boggling figures are why oil is called the lifeblood of industrial civilisation. It should be clear enough, then, that when oil gets more expensive, all things dependent on oil get more expensive. Since almost all products today are dependent on oil for transport (among other things, such as plastic), the age of expensive oil will eventually price much global trade out of the market. Peak oil probably means peak globalisation.