Are we seeing the first shocks of Peak Oil?

One issue that I’ve kept close attention to - basically since I heard the notion - is Hubbert’s Peak Oil Theory. The Wikipedia article on it is pretty good, but in summary, Peak Oil is the point at which half the available (and easiest to find oil) is depleted, and the rest of the oil requires greater energy inputs to extract, up to the point that the energy required to extract the oil is equivalent (or greater) than the energy received from the oil itself.

What this “peak” will look and feel like is a subject of significant debate. Some people think that we’ll simply replace our petroleum dependence with other alternatives as the issue becomes relevant. Others (such as James Howard Kunstler) take a more dramatic tone: famine, chaos, plague, war, and finally a return to the small town and village model. I tend to float somewhere in the middle - peak oil will shock our very foundation, but at the same time we are a resilient and creative bunch. Solutions can be found.

What are some of these first shocks that I’m seeing? Well, obviously $110/barrel gasoline is one of them. In looking at Bloomberg.com today, the price of a barrel of future sweet crude (the stuff we refine and make in to gasoline) closed at $110.21 on Friday afternoon. I found an interesting website, called WTRG Economics, that has a lot of great information regarding oil pricing, production, and where things are heading. No matter how you look at things, we are at an unprecedented peak in our current pricing / supply & demand situation.

Other headlines are starting to appear more frequently. Just the other day I read, “United, Continental Boost Airfares.” Just like the family SUV, these fuel-guzzling organizations are finally putting the burden of fuel pricing (which is the majority of the costs of running an airline) back on the consumers. I predict this is just a first round of moderate pricing hikes, which will continue through the foreseeable future. The promise of extreme efficiency gains may come with the introduction of the Boeing Dreamliner - but even that only gains a 20% efficiency advantage. We’ve watched fuel prices rise by 20% in just the last decade, which means we’ll need to achieve those sorts of advances in the efficiency of our transportation choices as well. Another article titled “UPS, other delivery companies increase efficiency to save gas” points out further evidence that efficiency is becoming a big deal.

We’re involved in a very important (and interesting) time in the progress of industrialized society. We have a huge population in the world’s developing countries that are seeking to apply the same inefficient routes to prosperity that the United States (and other 1st world nations) have taken. Unfortunately, the way things seem to be going, I would not be surprised if, in their struggle to become members of the 1st world, they look around and realize there’s no more cheap and abundant oil supplies to help them get there.

More, obviously, to come…