The Next Big Disruption: Peak Oil

What happens when the demand for oil clearly surpasses suppliers’ ability to provide it? No industry will escape the disruption of so-called peak oil.

“Peak oil” is a term that resonates very little with about 95 percent of the population. I discovered this by asking a lot of people and getting blank stares. A few hardy souls ventured a guess, and those guesses were not far from reality. If you take those words to a search engine you will be surprised by the number of hits you get. I got nearly 5 million hits the first time I searched on the term.

The online community is awash in blogs and publications from experts in the oil industry, economists, investment bankers, geologists, scientists and many others. Nonetheless, the term has not penetrated the mainstream yet beyond a few ads on TV that talk about the expense of imported oil.


If you are part of the 95 percent, “peak oil” simply refers to the fact that the flow rate of the world’s oil fields is at or near its maximum. In other words, there might be plenty of oil “down there” but bringing it to the surface for processing and use is limited by geology and physics (in some cases, politics too). More importantly, rising demand and decades of poor exploration results indicate that demand will be outstripping supply in the not-too-distant future.

The experience of the oil industry is that once a peak occurs, the next move is downward, and many of the same experts are predicting a decline of available oil at a rate of as much as 4 percent per year. Add to that demand increases of, say, 2 percent worldwide, and you can see that oil availability will be a major challenge in the years ahead.

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