What is peak oil?

‘Peak oil’ is an expression that is widely mis-understood. It does not relate to a prediction that there’s no more oil left to extract from the earth’s oil fields (although oil is a finite resource and it must run-out sometime). Rather, it relates to the maximum rate at which we can extract oil - which, in turn, relates to ease of access and rates of extraction at the wells.

It seems inevitable that global demand will move to a point where it consistently exceeds supply, particularly with the growing demand from non-OECD (developing) nations. The effect must be a structural increase in oil prices, coupled with the prospect of oil shortages and a consequent increase in market volatility. The only questions are “how soon, and by how much?”

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Based on our assessment, we might expect to see the following effects reflected in our economy within the term of the next government:

• Markedly higher prices for all forms of travel (air, sea, rail and road)
• Increased food prices
• Increased general retail prices
• Increased domestic utility bills for heating and power

The effects that peak oil may have on different sectors are laid out in this website – please navigate using the icons below or the drop-down menu above.