Peak Oil refers to the peak in oil production, so if oil production does in fact decline, oil prices should rise significantly as well as XOM's dividend. However, if trucking companies can't deliver food to supermarkets because diesel fuel is too expensive, then it doesn't matter how big XOM's dividend is -- nothing will be on the store shelves to buy.
What's important to the economy is how much oil people are consuming RIGHT NOW and how much oil is produced RIGHT NOW. If oil production declines by 5% to 10%, it will be very difficult for people to voluntarily reduce their oil consumption by the same amount, so the oil price has to go up to ration oil supplies. Now, taking this a step further, if oil production enters TERMINAL DECLINE (which is what the term Peak Oil means), then the world will find itself over time having to consume less and less oil. It's easy to see that when the world consumes 85 million barrels of oil per day to maintain its current standard of living, it will be a lot harder to maintain that same standard of living on 75 million barrels per day, or 65 million barrels per day or ....
Rationally, people should have started worrying in the early 1980s when oil discoveries began to lag oil consumption. It's analogous to a company that takes from its cash reserves after it begins losing money. The world has been burning more cash (oil) than it has been taking in for almost 30 years. At some point, you have a big problem. |
