The key point is that it’s not the last drop that matters. The moment that really matters is when oil “peaks”. The peak is the point when it becomes more and more expensive and difficult to find, extract and process. The economic law of supply and demand works like this: when something is in high demand and there’s lots of it, price is low. When something is in high demand and the supply is low, price goes up. This is what happened to oil this year. A barrel of oil in August 2008 was nearly $150 a barrel. In 1988, it was $12 a barrel. As we have been told many a time: the age of cheap oil is over.
Why does this matter? The answer is simple. We have become oil dependent. Most things around the house are made from or depend on oil: housing, furniture, entertainment, recreation, food, household appliances, cosmetics, clothes, medicines and, of course, transport. Not only have we become oil dependent. Our demand for oil has increased over the years, as can be seen from the graph below.
The line of red squares shows the continued growth in the consumption of oil at present rates while the green bars show the probable decline in the discovery of oil.
Source: www.energybulletin.net
Further, there is also a growing gap between the discovery of oil and its production: see the graph below.
Credit: the Association for the Study of Peak Oil
The two graphs look remarkably similar: the discovery of new oil sources and its production is decreasing, while consumption is increasing.
- Planned relocalisation (building local resilience)
- Tradable energy quotas
- Decentralised energy infrastructure
- Re-skilling communities
- Localised food production
- Energy descent planning
- Local currencies
- Local medicinal capacity