Recent reports of potential reductions in petrol prices will be welcome relief to many motorists.It was only about 10 or 15 years ago that petrol prices were less than half of what they are now.

Unfortunately petrol prices are not likely to stay down for long.

In fact I wouldn’t be surprised if within the next five to 10 years we are paying $5 per litre or more for petrol. When prices get that high, the cost of living will increase significantly.

At that time, today’s prices and living standards will be referred to as the good old days.

The reason petrol prices have risen and continue to rise is largely due to peak oil.

Peak oil is the period where the demand for oil is greater than the amount of oil being discovered.

When this point is reached petrol prices rise significantly to slow consumption and maximise profit.

Oil production goes through various stages from the initial discovery of light crude oil to various secondary and more expensive production methods such as oil sands, oil shale and heavy crude oil.

When it gets to the point that it costs a barrel of oil in energy to produce a barrel of oil, it is no longer viable to continue with that oil source.

Vulnerable people in the community already fighting to pay bills and keep food on the table are going to be severely impacted by this process, in fact they already are.

Peak oil is already here, but we do not hear about it in the papers or on the news.

We hear about the symptoms of it: increased food prices, higher electricity bills, ridiculously high petrol prices, bankruptcies, mortgage strain, depression and suicide.

The increased cost of production of goods due to increased petrol prices puts a strain on all areas of the economy and it’s only going to get worse unless consumption slows and alternatives are found.

Petrol price rises in the years ahead are going to make a carbon price seem like a drop in a bucket.

A carbon-pricing mechanism is perhaps the only realistic measure on the table that will slow consumption while putting a strong focus on finding alternatives.

The Advocate

5 Comments on "Economical and Social impacts of Peak Oil"

Poopypants on Thu, 7th Jul 2011 1:56 am 



“Peak oil is the period where the demand for oil is greater than the amount of oil being discovered.”

Close, but no cigar.

Makati1 on Thu, 7th Jul 2011 4:22 am 



“…puts a strain on all areas of the economy…”

That is like saying that the Titanic took on some water…lol. The end of oil will end the way we have been living for the last 150 years. It will basically return us to the 1800s with a bit of tech and medical left-overs. Capitalism cannot exist in a non-petroleum world.

Kenz300 on Thu, 7th Jul 2011 4:28 am 



We will all use oil more wisely as the price continues to rise. A smaller 40 MPG vehicle will be better than a 20 MPG SUV. An electric or hybrid will be even better. Some will walk more or ride a bike to school, work or play. Second generation biofuels made from algae, cellulose and waste will become a bigger part of the fuel supply. We will transition to increased conservation and higher fuel efficiency. The speed of the required transition is what might make it painful.

Savvas on Thu, 7th Jul 2011 4:44 am 



You said: “Peak oil is the period where the demand for oil is greater than the amount of oil being discovered.”
Unfortunately not true. If it was, all we’d have to do is reduce demand and the peak-oil problem would be solved.
Peak Oil is a geological and engineering phenomenon – has nothing at all to do with demand or rate of consumption. It has everything to do with a slowing rate of production capacity driven by an inability to maintain or increase rates of production. Simply put, the capacity of the earth’s crust to give up it’s oil is limited and eventually slows down, no matter how many more wells are drilled, fields are located or energy and dollars are poured into pumping activity.

Eric Smith on Tue, 12th Jul 2011 2:03 am 



@Savvas, regardless of what the Earth can “put out” oil peaks when we are discovering less than we are consuming… there is no measurement of peaking if all we are looking at is how much oil is being discovered. We have to look at consumption as well…

For the record, I am the original Author of this Article!