Despite a steadily improving economy in the US, the same cannot be said for much of the rest of the world. And while there are strong and growing economies in places like China that can literally give the US a run for its money, there is one undeniable fact that many believe can and will eventually bring the world economies to a devastating state – we are using far more energy than the world’s oil reserves.
Dr. Stephen Leeb, who holds degrees in economics, mathematics, and physics, writes in his book, The Coming Economic Collapse, “The crisis is energy-related and will be brought about by the conflict between rising global demand for energy and our growing inability to increase energy production.” The supply and demand dynamics of oil are so out of balance that Leeb predicts it will not be long before we see crude oil at $200 per barrel!
In Dr. Leeb’s first book, The Oil Factor, which was written several years ago, he predicted the price of a barrel of oil would go to $100. It did reach a high of 113.00 in 2011. And while prices have dropped since then — largely due to stepping up in US production — they are trending back upward and are currently around 75.00 a barrel.
Professor Leeb’s concepts are still valid — oil is still a limited resource. He just may be off by a few years, just like Orwell. 2018 is right now looking a hell of a lot like his “1984.”
Most of us are woefully in denial about how much oil there really is remaining in the world’s oil reserves. We have been lulled into this ridiculous notion that the supply of oil is limitless. But the truth of the matter is, the world’s oil supply has been declining for the last 30 years. We will very soon reach something that is known as “Peak Oil.”
The term “Peak Oil” was first introduced by an American geologist, Marion King Hubbert. Hubbert graduated from the University of Chicago and would later work for Shell Oil and the US Geological Survey (USGS). He also worked as Professor of Geology at a number of different universities including MIT. In 1956 Hubbert presented his theory that US Oil Production would “peak” between 1966 and 1972 and start a steady drop-off after that. Hubbert came to this theory by studying individual oil fields and how their output production curve changed over time. Hubbert’s estimates for American oil production proved to be eerily accurate, even though very few of his colleagues believed him in the ‘50s.
Hubbert was right about a peak in US oil production, and now we are rapidly approaching Global Peak Oil. Many individual countries, along with the US, have reached their own peak in oil production, and are now on the downside of the equation. These include: Canada, Iran, Nigeria, Norway, Venezuela, Great Britain and as many as 40 other countries across the globe. The big question is, when will the major oil producing nations, such as Saudi Arabia, reach peak, and subsequently, when will a decline in total World Oil Production start? Estimates vary greatly. Some researchers believe that the peak may have already begun. USGS estimated in a report from 2001 that it may take another 20- 30 years. Saudi experts claim it will be 100 years or more before it happens. But it is an undeniable eventuality. Oil is a non-renewable resource.
The closer we get to peak oil, the closer we will get to Professor Leeb’s prediction of $200.00, maybe even $250.00 a barrel of oil. Global demand for oil will increase, while oil production will not be able to meet the demand. Russia, China, and India, along with the U.S., will require more and more energy to fuel their economies. When their requirements cannot be met, havoc will be the result – and the financial crisis will be upon us.
Runaway inflation will begin, because rising oil prices add to the costs of the production and delivery of EVERYTHING. High and increasing energy costs will discourage the start of new business — or expansion of existing businesses. America’s skyrocketing debt will explode, causing a collapse in housing values, and a crash in the stock market –in short, Global Financial Meltdown.
There is a great deal of uncertainty when it comes to Peak Oil, mainly because it is difficult to get an accurate picture of the exact amount of oil remaining in the current reserves. It is further complicated by countries like the OPEC nations that are not forthright with their oil production data, because they have a vested interest in overestimation.
About the only thing that is certain is that all the oil that exists on the planet right now, was created by processes millions of years ago, and what is there will be used up – and not replaced for another few million years or so!