Peak oil is the date when the world’s production of oil will hit its maximum, or “Peak.” A peak in production is mathematically inevitable for any finite resource.
Some commentators caricature “Peak oil” by saying it means we’re “running out” of oil. We’re not running out of oil, but it is getting more expensive as we burn the easy oil first. The real peak oil arguments are about timing, causes, and what we should do about it.
Conclusions about timing hinge on the definition of “oil.” Do we include biofuels? What about natural gas liquids, such as propane? Do we measure volume, or energy content? Answers to these questions can move the peak a decade in either direction.
New recovery techniques and unconventional sources, such as oil sands and shale, may delay the date of peak production a few years in the future.
Unfortunately, these come with increased costs, and often increased carbon emissions.
Hybrid and electric cars, better public transportation, bike lanes, and walkable neighborhoods can reduce oil demand, but they also have costs. High oil costs can provide incentive for these investments, or we can choose to make these investments before we can’t afford not to.
Proceeds of higher carbon or gasoline taxes might also be used to smooth the transition. Increased vehicle efficiency standards, and streets that are safe for bicyclists and pedestrians as well as cars would also help.
Eventually, we will be using less oil because there will be less oil to use. Will even higher prices reduce consumption painfully, or will better policy today make it easier to use less tomorrow?
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This piece was authored by Tom Konrad Ph.D. CFA. Tom also writes about green investing here for Forbes.
http://www.forbes.com/sites/tomkonrad/2012/01/26/the-end-of-elastic-oil/
Photo, taken on August 2, 2007, courtesy of Tsuda via Flickr.
Earth Wise is a production of WAMC Northeast Public Radio. Support for Earth Wise comes from the Cary Institute of Ecosystem Studies in Millbrook, NY.