Do you remember peak oil? It was all the rage a decade ago. Now, almost no one is talking about it. The funny thing is, the problem never went away. If anything, it’s gotten worse.
In this post, I take a deep dive into peak oil. I show you that the peak in the production of conventional crude oil isn’t some distant prospect. It’s already happened. What’s more, the model that correctly predicted this peak suggests that conventional oil production is about to collapse.
Yes, talk of peak oil went away. But the problem didn’t.
Peak oil — A brief history
If you use an exhaustible resource, you will eventually run out. This fact is so obvious that everyone understands it … at least in principle. But in practice, humans are shockingly bad at predicting resource exhaustion. Why? The reason, I believe, is that we don’t understand things that are big.
Here’s an example. Imagine you’re stuck on a desert island with a one-year supply of food. What would you do? You’d probably ration the food so it lasted as long as possible. Now imagine that you had 100-year’s worth of food? Now what would you do? To hell with rationing … you’d probably gorge yourself without worry. This change in behavior is important. Like the 1-year stock, the 100-year stock of food is still exhaustible. But it’s so large that it seems infinite. And so you behave like the resource is actually infinite.
When this behavior plays out in the real world, the results are always the same. We exhaust a seemingly inexhaustible resource — and we do so sooner than we expect. Here are a few examples. The bison of North American were once so plentiful that they seemed infinite. Yet by the end of the 19th century, only a few hundred were left.
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