Topic: Peak Oil
I have recently become more aware of the issue "peak oil" from listening to radio shows and reading on the Internet. The concept of "peak oil" refers to an oil extraction curve which roughly resembles a bell curve. The peak is the top of the curve where oil extraction is at a mid-way point in terms of how much supply is left.
To paraphrase Matt Savinar, (http://www.lifeaftertheoilcrash.net/Introduction.html): "On the upslope of the curve, production costs tend to be significantly lower than on the downslope when extra effort (expense) is required to extract oil from reservoirs that are emptying out. Put simply: oil tends to be plentiful and cheap on the upslope, scarce and expensive on the downslope."
Some of the proponents of the idea of peak oil are Matt Savinar, Michael Ruppert (publisher and editor of "From the Wilderness"), and Richard Heinberg (author of "The Party's Over" and the "MuseLetter" http://www.museletter.com/recent-issues.html). In my opinion, they are suggesting that the global peak oil point is most likely in a range which goes from a couple years in the past to within the next few years in the future.
Given that global demand is increasing and global supply is decreasing, one can use a simple model of supply and demand, and suggest that price will increase as supply decreases and demand increases.
The price of oil affects many other fundamental prices such as transportation and food. Basically, a rising oil price may be a major trigger which may lead to significant economic dislocation.
According to the following source: http://www.wtrg.com/prices.htm
the average world crude oil price from 1947-2003 (in 2000 dollars) was $21 per barrel. The maximum price in the period 1947-2003 was about $58 per barrel which occurred in approximately 1981.
According to the same site, the price of a barrel of oil (NYMEX crude) on May 14, 2004 was $41.38 and about a year ago on May 1, 2003, it was $26. There has been a significant price increase in the past year, and if this continues it may have a large economic impact.
For example, if there is a large stock market decline in fall of 2005 and associated economic dislocation, then rising oil and energy prices may be key contributing factors.