Gabriel Rotello: Every once in a while history reaches a point of real cognitive dissonance.
I'm beginning to wonder if we are such a point right now. I'm referring to the astounding rise in the price of oil over the last couple of years, the concept of 'peak oil,' and the strange silence surrounding that concept in the media.
The 'peak oil' idea is pretty simple. Petroleum is a finite resource. Since the first well was drilled in 1859 we have been pumping it out of the ground in ever increasing amounts. According to the peak oil theorists, most of whom are oil geologists, at some point we will have pumped about half of all the oil on earth. At that point, the remaining half will become increasingly harder and more expensive to pump, and so two things will happen.
First, the amount of oil we pump will level off and start to decline, by about two percent per year. And second, since demand by a growing world population will keep rising, the market will respond by pricing the decreasing amount of oil higher and higher.
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