Oil, Food, Water: Is Everything Past Its Peak?

An unprecedented crisis faced America. Oil production was going to peak in just three to five years, resulting in foreign oil addiction and economic calamity. The scientist responsible for slapping the nation into consciousness implored industry and government to act: “The smug complacency that habitually blinds the American public must be torn,” wrote David White, chief geologist of the U.S. Geological Survey. It was 1920.

More than 90 years later, tempers still flare over the prospect of global “peak oil.” Last week a commentary in the prestigious journal Nature argued, “oil’s tipping point has passed.” It’s the most recent high-profile salvo about whether, or how soon, the petroleum extraction that drives the global economy will reach a plateau and then, inevitably, decline.

“Peak” alarms going off aren’t unique to oil. There’s peak coal: Production could top out around 2025, according to the Energy Watch Group, an international group of legislators and scientists studying long-term trends. Peak food: The U.N.’s Food Price Index reached a new high in February 2011, exacerbating poverty in developing countries and creating potential for civil unrest. “Peak water” entered the popular lexicon in 2010, after two scientists classified threats to human use of rivers and underground aquifers, and to ecological stability. Peak coffee, peak chocolate, peak rare earth metals, peak travel have all followed suit. It’s “peak” season.

Two simple trends are driving these concerns. The world has more people than ever, and more of those people than ever are breaking out of abject poverty and competing in a global market for goods and resources.

The human population passed 7 billion last year, and the U.N. projects it will top 9.3 billion by 2050. Most of the growth is occurring in Asia, where the population is on track to balloon 40 percent, to 8 billion, by midcentury.

An even bigger human accomplishment, and cause for worry, is the rise of the middle class. It’s expected to nearly triple in the next two decades, to 4.9 billion people in 2030 from 1.8 billion today, according to the Organization for Economic Cooperation & Development. The Global Footprint Network, which developed a resource-accounting tool for countries, puts it this way: At current consumption rates, we’ll need two Earths by 2030.

That’s a lot of new consumers. It’s the reason Starbucks is extending its franchise to India, U.S. beef exports may rise 11 percent this year, and Kraft is spinning off its sleepy U.S. grocery business and focusing on Brazilian chocolate. And those reports are all from just last week.

The private sector’s reaction to these global trends and others — including climate change — has a name: sustainability. It’s the global race among nations and corporations for secure, long-term access to strategic resources and burgeoning markets. Companies are preparing for this race by probing deeper into their operations to find sources of value and risk that had eluded them before. It’s not about do-gooder business. It’s about smart business.

The concept of peak oil, or peak anything, is imperfect. New technologies and new discoveries have proven most estimates of the world’s limitations to be overly pessimistic. Unconventional petroleum products such as tar sands and shale gas products show that even if the extraction of conventional oil in its purest form has peaked, “peak cars” or “peak electricity” aren’t yet on the horizon. But as a framework for anticipating the world’s resource needs, peaks are a good way to survey the horizon.

This article is written by Eric Roston and originally appeared on Bloomberg.com.


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