These coming hydrocarbon production peaks (firstly, of all non-OPEC oil; then of all oil; and finally of all hydrocarbons) will place massive strains on the economies of the world. Market signals alone will provide insufficient warning of the problems ahead. Mitigating the effects, and handling the political consequences, will require high levels of public comprehension, and international co-operation.
Oil resources are formed naturally over millions of years. Nations keep extracting them at an alarming rate. However, these resources cannot be replaced at the pace at which they are extracted. The production of oil wells would be at a fastly diminishing rate. When the production is no longer profitable, the geological circumstances, engineering practices, and government policies lead to a decline in oil production. A sudden stoppage on one day would result in the following consequences:
- World population has grown manifold due to an improved life span of human beings. Hence food production has increased in parallel terms. This entirely depends on fertilizers. The manufacture of fertilizers entirely depends on natural gas resources. Various other aspects of farming need oil resources- like running the farm equipment. Sudden stoppage in the supply of oil resources can hit food production. Rising food prices can result in widespread food scarcity and malnourished population. Use this link to know more on this issue.
- Depleting oil resources can hit manufacturing industries. This will lead to widespread unemployment. When manufacturing of essential commodities is halted, prices would soar. The imbalance between demand and supply would push the cost of living in an upward direction. This will further worsen the situation as most of the commodities will be out of reach of common people.
- Sudden stoppage of oil supply will hit the transportation and power generation industries too. Without power and transport, people would go back to the stone age era.
These problems can result in widespread unrest among nations. Nations would compete among themselves in an unfair manner to tap the depleting oil resources. This would lead to widespread violence and unfair practices like cartel formation, excessive pricing, hoarding, etc. From all the above reasons it is clear the depleting oil resource is not only a multi-national issue, but it is also a risk factor which can affect the very existence of this world.
For more detail on the coming hydrocarbon production peaks, and the historical context, see The Oil & Gas Situation