Rumors of protests in Saudi Arabia, Libya production cut in half, and trouble in Algeria have caused the oil market to go parabolic. If Iran or Saudi Arabia join the revolutionary party taking place in the other dozen or so countries that are currently in revolt, say goodbye to the false recovery the US has been enjoying.
Algeria oil production:
Iran oil production:
Saudi Arabia production:
2009 7,300,000 (exports)
Libya oil production
Production problems in Libya alone have caused crude to spike to $99.50. Just imagine when the unrest spreads to the big producers. If you are not well acquainted with the theory of peak oil, now is the time to learn about one of the most important issues of our generation.
Peak oil charts:
An intro to peak oil from Wikipedia:
Peak oil is the point in time when the maximum rate of global petroleum extraction is reached, after which the rate of production enters terminal decline. This concept is based on the observed production rates of individual oil wells, and the combined production rate of a field of related oil wells. The aggregate production rate from an oil field over time usually grows exponentially until the rate peaks and then declines—sometimes rapidly—until the field is depleted. This concept is derived from the Hubbert curve, and has been shown to be applicable to the sum of a nation’s domestic production rate, and is similarly applied to the global rate of petroleum production. Peak oil is often confused with oil depletion; peak oil is the point of maximum production while depletion refers to a period of falling reserves and supply.
M. King Hubbert created and first used the models behind peak oil in 1956 to accurately predict that United States oil production would peak between 1965 and 1971 His logistic model, now called Hubbert peak theory, and its variants have described with reasonable accuracy the peak and decline of production from oil wells, fields, regions, and countries, and has also proved useful in other limited-resource production-domains. According to the Hubbert model, the production rate of a limited resource will follow a roughly symmetrical logistic distribution curve (sometimes incorrectly compared to a bell-shaped curve) based on the limits of exploitability and market pressures.
Some observers, such as petroleum industry experts Kenneth S. Deffeyes and Matthew Simmons, believe the high dependence of most modern industrial transport, agricultural, and industrial systems on the relative low cost and high availability of oil will cause the post-peak production decline and possible severe increases in the price of oil to have negative implications for the global economy. Predictions vary greatly as to what exactly these negative effects would be. If political and economic changes only occur in reaction to high prices and shortages rather than in reaction to the threat of a peak, then the degree of economic damage to importing countries will largely depend on how rapidly oil imports decline post-peak.
Optimistic estimations of peak production forecast the global decline will begin by 2020 or later, and assume major investments in alternatives will occur before a crisis, without requiring major changes in the lifestyle of heavily oil-consuming nations. These models show the price of oil at first escalating and then retreating as other types of fuel and energy sources are used. Pessimistic predictions of future oil production operate on the thesis that either the peak has already occurred, that oil production is on the cusp of the peak, or that it will occur shortly. The International Energy Agency (IEA) says production of conventional crude oil peaked in 2006. As proactive mitigation may no longer be an option, a global depression is predicted, perhaps even initiating a chain reaction of the various feedback mechanisms in the global market that might stimulate a collapse of global industrial civilization, potentially leading to large population declines within a short period.
It is extremely important that you learn about peak oil as it will have profound implications for our world and our lives.
UPDATE: due to the debate that this post has stirred I have posted 3 videos from Dr. Martenson's website, Chrismartenson.com. Dr. Martenson is the author of the crash course which discusses the theory of peak oil in great detail. I recommend that the crash course is watched in its entirety. Here are the clips: