By Bruce Luyendyk

The world is running out of cheap oil. When this happens our lives and society will change dramatically.

Over the next few years, global oil production will peak. Nations will compete for remaining supplies under the threat of war. We are entering a new era, as different from the industrial era as that age was from medieval times. Three dollars a gallon will soon be considered cheap gasoline. How did this happen and what can be done?

The problem is not that there is no more oil in the ground—about half is still there. Rather, the problem is in the rate of supply. For a finite, non-renewable energy resource, such as oil, the rate of production in barrels per day reaches a maximum—a peak—then begins a steady decline when about half of the resource is used up.

Many of the world’s giant oil fields, such as in Arabia, Mexico, and the North Sea, have peaked or are now peaking in production. Worse, the maximum in oil discoveries worldwide was over 40 years ago; the world is burning oil now at a rate four times the rate we discover new reserves.

The United States currently consumes about 20 million barrels of oil each day, about 25 percent of the world’s daily use. With the worldwide demand rate increasing, as it is now, particularly in economies such as China and India, a decrease in the supply rate results in a supply–demand gap, and that is the crux of the problem.

When will the world peak occur? Most geologists studying the problem say it is upon us now or will be by 2015. The optimists say either another two decades or it’s not in sight yet. The signs of an approaching supply rate peak are escalating prices, large swings in prices, and a lack of excess production capacity. All of these are apparent now. Either way, increasing demand on a non-renewable resource results in a scarcer supply over time.

Limited supplies of expensive oil would have consequences in transportation, electrical power, heating, and industry, and in a shortage of over 7,000 products, including plastics, fertilizers, and drugs. Inflation, recession, and war are possible outcomes.

A complex web of activities needs to be put into motion to address this coming crisis. Some of the solutions, such as developing oil sands in Canada or oil shale in Colorado, have significant environmental risks and impacts, including more greenhouse gases. In fact, the production rate from these sources is likely to be small for the foreseeable future: 5 million to 10 million barrels a day—not enough to fill the supply-demand gap. More coal and nuclear energy facilities would have their own problems, not withstanding that these also use non-renewable resources.

The solution will have to be a managed combination of conservation, higher efficiency, development of solar, wind, ocean tides and currents, and waste-to-energy power, hybrid vehicles, hydrogen and biofuels, and enhanced recovery methods for existing oil fields.

There are two things to remember as we withdraw from dependence on oil. First, we will need oil to supply the energy to produce the infrastructure of the new energy age. Second, the longer we wait to get started, the higher the risk of a larger supply-demand gap.

We will need not only political will and corporate responsibility to make the transition to the new age as painless as possible, but the will of the people must be committed to a new world beyond oil.