“What is Peak Oil” Part 2

Last week, I, peakguy, wrote a short post as a primer for people new to the concept of Peak Oil. I really encourage anyone new to the subject to read some of the links at the bottom of that post because they are quite compelling reads. As my second post on this series I want to focus a little more on timing since most people understand that oil is non-renewable and that “one day” we will “run out”.

Peak Oil is more of a series of events that in hindsight will represent the period of time when the world’s increasing demand for oil cannot be met by increasing supply as it has been for the last 150 years of industrial development. Saudi Arabia has managed the oil markets as the swing supplier ever since the US hit its own peak production in 1970.

Back in the Spring as oil prices were in the $50 range, Bush met with Prince Abdullah (now King Abdullah) and basically got a firm “No” that they couldn’t increase production to cool off prices. As Matthew Simmons has clearly laid out in his book Twilight in the Desert, Saudi Arabia has probably been operating at full capacity for the last few years and has no additional capacity to expand production. Without a swing producer and no production slack within OPEC or outside of OPEC, supply is now limited by geology, not economics or politics. That ends the first half of the oil age.

Peak Oil NYC