Should We Be Concerned About Peak Oil?


Peak Oil is the idea that the peak production ability of the world’s oil reserves comes to a peak, meaning that oil production will gradually decline once that peak is reached. The timing of this is known in hindsight, and it may already have happened. To add to this, new reserves are becoming harder to find. Demand for oil is assumed to rise indefinitely due to population growth, economic growth and global auto use. Given that the Earth is a finite planet, resources like oil will eventually run out. Does new oil in fact exist, but in forms that are harder and harder to extract, making oil more expensive? I believe this statement is true to an extent. I am not in the oil industry, and my opinion is based more on belief than on actual statistics, however I have provided a number of sources on peak oil so you can judge for yourself whether this is really an issue or not.

SOURCES:

http://money.cnn.com/2008/09/15/news/economy/500dollaroil_okeefe.fortune/index.htm

http://www.peakoil.net/publication-tags/peak-oil

http://www.theoildrum.com/

http://www.thepeakoilquestion.com/

Peak Oil focuses on the supply of oil running out. What about the demand side of the equation? If world oil demand were drastically reduced, would peak oil be an issue? I don’t believe it would be, because the known supplies would last much longer. The major uses of oil are transportation, heating, agriculture and industrial uses. Could we redesign our methods of making products, and use less oil?  This is a huge question that will encompass many aspects of the economy, but it is something we need to think about. Below are sources on agriculture and oil use, which is the most crucial part of the peak oil question.

SOURCES:

http://watd.wuthering-heights.co.uk/mainpages/agriculture.html

http://www.ers.usda.gov/Publications/WRS0801/WRS0801.pdf

http://www.cigrjournal.org/index.php/Ejounral/article/viewFile/1044/1037

http://www.countercurrents.org/po-church0700405.htm

http://www.fromthewilderness.com/free/ww3/100303_eating_oil.html

http://www.harpers.org/archive/2004/02/0079915

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About joetheinvestor
Joe Barbieri has Bachelors degrees in both Civil Engineering and Commerce from the University of Toronto. He has worked in the Financial Services field for over 12 years, covering positions from Retail Customer Service and Fund Accounting, through to Investment Research on the Institutional side. He has worked in 5 companies, spanning banks, a mutual fund, a Consulting Firm and a Large Canadian Pension Plan. He currently has a Chartered Financial Analyst designation (CFA) from the CFA Institute. He has recently published articles in Pension and Benefits Monitor Magazine as well as the Internet.

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