A storm is quickly approaching, and the world is not ready for it.

The permanent end of the era of cheap oil is coming as soon as next year, according to a raft of official reports that have made their way into energy media over the last few months. Governments are now beginning to acknowledge the looming crisis. Yet, perhaps because they waited too long to prevent it, leaders are not yet alerting the public.

The entire world economy is built on cheap oil. A permanent oil production shortage will thus lead to The End of The World (As We Know It). What will come on the other side of this — will it be good or bad?

Public unaware

Except for a few stories in financial pages such as London’s Financial Times, this earth-shaking news has yet to reach the Mainstream Media. While “Peak Oil” researchers have long warned of approaching oil shortages, the difference now is these dire warnings are being validated by the highest government and oil company officials. Yet, no political leader has had the courage to make a major announcement to prepare the public for what lies ahead.

This public blindness is tantamount to the isolationism that gripped the U.S. in the years preceding WWII. While the highest government leaders did their best to prepare for inevitable war, they were hamstrung by the resistance of a public unable to accept what really lay ahead. Similar to today, some politicians advanced their own careers by feeding on the public’s desire to believe no coming storm could ever reach them. Yet, the storm came anyway.

The looming crisis we now face is often referred to as “Peak Oil” — a status where global oil production will reach a plateau, then begin its irreversible decline. 

Oil fields follow a production curve where output increases at first, then reaches a plateau or “peak,” after which a steep decline occurs. Because existing oil fields decline, oil companies must continually develop major new finds just to maintain existing production. If these new projects do not exceed the decline of existing fields, it becomes impossible to maintain oil production, let alone grow oil output to fuel economic growth.

The problem in recent years is that new oil finds have been smaller, deeper, and in more difficult to reach places. Cheap oil prices simply won’t support the investment needed to develop them, so oil companies have not invested heavily enough to keep up with demand. Lester Brown of Worldwatch Institute notes that major oil companies, awash in cash, have instead spent billions buying up their own stock, aware their existing reserves will soon increase greatly in value.