Plateau oil

Plateau oil, it’s the theory that conventional oil production is approaching its practical limit and will level off once it reaches that point. On the contrary, ‘peak’ oil is a similar theory that predicts that once oil production hits its peak, it will decline rapidly.

The issue with crude is not one so much of ‘running out’ but not having enough to keep our economy growing. The ramifications of not enough oil can be compared to the effects of dehydration for the human body. The human body is 70% water. Meaning a 200 pound man holds 140 pounds of water. The man doesn’t need to lose all his water weight to collapse from dehydration, a loss as little as 10-15 pounds of water may be enough to kill him. In a similar manner, an oil based economy, like the United States, doesn’t need to deplete its entire reserve of oil before it starts to collapse. A shortfall of even 10% would be enough to shatter the economy due to skyrocketing oil costs. In future decades, this problem will only be aggravated by a growing population.

In the 1970’s a 5% drop in production caused prices to triple in the 1970’s. Imagine what would happen if there were a 25% or even a 50% drop in production following an oil ‘peak’.

As an individual, you may wonder how bad it could really be. Maybe you will just start driving less, or start taking public transportation. But chances are, public transportation will become to costly for municipalities to provide. The effects of an oil shortage go far beyond your daily commute. The cost of nearly everything will rise as most manufacturing is done in some form of oil-burning factory. Think about it, in the United States, most of our food comes from massive farms and factories located in Middle America, where land prices allow companies to acquire such large parcels of land. This means much of the food reaching either coast will travel over 1,000 miles to reach its destination, usually, by means of a diesel-guzzling semi-trailer.

Modern medicine, water distribution, defense projects, and agriculture all require oil or petroleum derived chemicals to keep the industry moving. Plastics, computers and other high tech devices all need mass quantities of oil to be produced. Even the internet accounts for a whopping 10% of electricity demand in the U.S., according to a 2007 UClue study.

In fact, even alternative energy systems, such as solar panels and wind turbines, use petroleum and petroleum derived chemicals during manufacturing. In fact, all electrical devices use silver, copper, aluminum and platinum which is all discovered, extracted, and fashioned using oil or natural gas powered machinery.

The entire global financial system is dependent on an ever-increasing supply of oil. Beyond the creature comforts oil provides, this is arguably the key issue behind the ‘peak’ or ‘plateau’ oil theory. The world’s oil supply is finite and thus the foundation our global financial system lays on is unsustainable.