Peak Oil: The real reason behind deep water drilling
Peak Oil is a concept that’s been a cause of concern over the past few years. It’s basically a reference to the steady decline in oil supplies after production levels peak. There are a variety of studies out on this and various estimates of when this will occur, but most estimates put Peak Oil occurring within the next decade, if not sooner. There are even some estimates that suggest that we’ve already reached Peak Oil. This is the main reason behind drilling in increasingly difficult areas on the earth. Up to now, oil prices have been a function of some of the same sort of financial alchemy that’s driven Wall Street, but we will soon reach a time where scarcity alone will drive the price. That will spawn resource wars (which have begun already) and mean profound changes in a nation like ours. We represent only 5% of the world’s population, but consume about 25% of the world’s oil resources. That sort of profligacy is unsustainable particularly as China and India compete for the same resources.
Our economy is tied to oil in a couple of ways; our lifestyles and our currency. The 1970’s era agreement with OPEC allows for oil to trade on the world market’s in dollars. Effectively, this means that our currency is backed by oil and that every nation on the planet must maintain some level of dollars to buy oil. Because of this, our federal reserve has been able to follow a loose monetary policy by printing up dollars whenever they feel it’s necessary without the attendant result that normally accompanies that—price inflation (although we did see inflated values in homes and securities). This state of affairs will likely come to an end owing to our fiscal problems and the onset of scarcity. After all, why should anyone give up their increasingly valuable commodity for an increasingly worthless piece of paper?
All of this is well known, which is why everyone is scouring the globe for the last bit of oil. The only thing is that most Americans are blissfully unaware. After the price shock of 2008 receded from pump prices of $4.00 a gallon, people have gone back to their SUV’s and trucks. The smart folks are in their hybrids or are trying to figure out a way to cut down on driving.
The unfolding disaster in the gulf, as horrible as it is, is more than just an ecological disaster. It’s also a mirror of our profligate lifestyles.