The Mendicant Bug

There is only so much oil in the world. We are consuming it an alarming rate and that rate is increasing as China adds millions of new cars to the mix. According to the Energy Watch Group in Berlin, the peak point of oil supply passed us last year, much earlier than anticipated. Peak oil is essentially the point at which supply and production levels can produce the maximum amount of oil possible for consumption. Oil supplies have always been diminishing, but by finding new supplies and increasing production, levels were able to increase. Imagine you have a milkshake. At first you use a small straw and can only extract a small amount. You keep increasing the size of the straw until you are drinking a large amount of shake per gulp. This is peak oil. Then you start to hit those pockets of shake where there is still shake in the cup but you’re sucking air. These are oil shortages. Finally you suck it dry. This is the end of the road for the oil industry.

So we are at the point now where we are sucking it to our heart’s content. Massive gulps. However, we’re going to be hitting pockets soon. Oil production is estimated to drop by about 7% per year. This would only be a small cause for concern if you consider rising gas prices something that we can work around. But here is the problem. Everything we make derives from oil. Solar panels need oil to fuel the machines that transport the supplies to the factories where they are made. For fish, we need boats that run on fuel to catch them or if they are farm raised, we need trucks to transport them. Many types of plastic are derived from oil. When the first shortage hits, and we find ourselves sucking air rather than oil, it will affect every industry in the economy.

So now the question is, how bumpy will the ride down be?