Dan: What do you think about the Peak Oil theory?

I actually StumbledTM across a Peak Oil web site two weeks ago. It is actually very good in detailing what kinds of things are made from petroleum. Peak Oil theory has two tenets which have some merit: first, that there is a limited amount of oil on the earth, and second, there will be an economic collapse when the world runs out of oil, and we should be prepared to be self-sufficient about our energy.

One email floating around seems to indicate that oil is in fact renewable, and the Gulf of Mexico is making more at insane depths. I’ve not seen evidence to back that up, so let’s assume it’s not. Coal can be converted into oil, though I doubt it would be as efficient as converting oil plants to burn coal. Given that the mass of the earth isn’t changing that much, one can say there is a limit of petroleum.

We do not know where that maximum production limit is, or whether we are even close. We have allowed our legislators to restrict where we can get our resources. There is still much exploration to be done both inside and outside the country. Deeper exploration is also yielding results. Despite developing sugar-based ethanol, Brazil is now reported to have a monstrous field in its Atlantic waters.

Will it cause an economic collapse? A change, possibly, but not a collapse. As the price does get higher, large scale operations that can switch to alternatives will do so, if government allows them. A main power company in Italy is switching from coal to oil, instead of nuclear, because Italy has banned nuclear power plants.

If there is a crash rather than free movement to alternative sources of energy and material, it is because we have brought too much regulation upon ourselves.