I know a lot of you out there are quite apprehensive about peak oil and what it means for the future. The cost and availability of oil have been all over the news the last few months and we are all witness to the rising oil prices. We'll see something similar with natural gas in the next few years as we hit peak natural gas soon, too.
The short story on this is that there is or will be a decline in availability of easy-access and inexpensive energy sources. This doesn't mean that we will be stepping off a precipice suddenly and there will be NO MORE OIL like, next year, in spite of what you may be reading on other sites and blogs.
On the contrary, what it means is that there will be a decline in production of light, sweet crude oil (we'll call this "easy" oil) and an increase in production of heavy, sour crude oil, oil shale and tar sands (we'll call this "difficult" oil). The whole concept of the term peak means that we've used 50% of the oil known to exist, mainly the easy oil.
The issue with extracting the difficult oil, is that it is, well, more difficult and more costly. There are also issues with more environmental degradation (particularly with the oil shale and tar sands) in extracting the more difficult sources of oil in addition to the massive energy and water inputs required as well. But, all that said, it is oil and it can and will be extracted one way or another as long as it remains profitable.
As the return on investment of oil production goes down you'll see an increase in usage of natural gas and coal and a whole lot more investment in energy alternatives such as wind, solar and geothermal, among other things. And, as the cost of energy goes up, you'll see a lot more innovation in energy efficiencies from manufacturers and conservation from consumers.
We are already seeing this with investments in new energy and in the market as manufacturers try to switch gears to adjust to higher oil costs. Some industries will be hit harder than others, and some may go out of business, but there are plenty of new opportunities to take their place within the new energy economy as well as in the restructuring to more local, community-based businesses.
The worst case scenario with peak oil is that this transition will be bumpy and we'll see some economic fall-out. I'm hoping for a little turbulence (or as my brother would say "light chop") as we slowly ease off petroleum and gear up on alternatives. It all depends on how willing people are to let go of their old habits. And that starts with you.
So, should you be panicking? Well, no, my take on peak oil is far from theskyisfallingweareallgoingtohellinahandbasket reaction. Will it affect our way of living and economy and food supplies? Well, yes, but not in the drastic manner many are purporting. Since it will be more expensive to produce food and manufacture products you will have to modify your behavior. In other words, you'll have to drive less, travel less and use less energy.
What merchandise and services you do buy will most likely be more locally oriented. The massive economies of scale (aka Walmart, chain restaurants and the like) will lessen considerably with higher costs of petroleum since these businesses rely on cheap oil to keep costs low. So, expect a return to local businesses to provide goods and services. Why is this? Mainly due to lesser energy intensive transportation costs.
In my next post on the topic, I'll discuss in more detail some of the issues with over-reacting to peak oil and what you can be doing to limit the impact. So, in the meantime, take a deep breath and try to relax. The world isn't going to end tomorrow or even next year. You've got some time to get a handle on this.