Peak oil

During the current run-up in the price of oil, you may have heard commentators referring to "peak oil" and may have wondered, as I did, exactly what this meant. A prescient article published a year ago -- Ashley Dawson, "The Return of Limits," New Politics, Summer 2007 -- puts the answer succinctly:

... [P]redictions by a group of leading geologists suggest that we are quickly approaching the global peak in oil reserves.... While the exact date is a matter of extremely heated dispute, there is an emerging consensus among geologists that the peak will occur close to 2010.... [T]his does not mean that wells in Saudi Arabia, Angola, and other oil-rich countries are nearly empty of oil. Instead, the bell-curve pattern described by M. King Hubbert, who accurately predicted the U.S.'s own oil peak in 1970, indicates that we will soon be extracting the greatest amount of crude that will ever be extracted. From this point on, reserves will begin to diminish and the oil that remains in the ground will be both far more difficult to extract and of inferior quality to the oil already extracted. Since the American economy is based on constant expansion [as is capitalism generally--LFC] and because...countries like China and India are industrializing at a hectic tilt, the economics of supply and demand suggest that this increasingly scarce resource will very quickly become dramatically more expensive. It is not so much the age of oil that is over, then, but rather the era of cheap crude.