We don’t. It is only an estimate, until either more oil fields are discovered or the cost benefit of find new ones are not worth it any more. Recent studies showed that at current rate of increasing demand major oil fields will be empty by 2060.
We certainly DO know what peak oil is – it is the point at which half the existing oil will have been produced, and half will remain. It is the point at which production of oil reaches a high point (peak) and cannot increase. In the face of increasing demand, it means that demand will exceed supply, and the supply will be continually declining. (If demand on a global basis were to decline significantly, it could push the peak back some, but not much.)
What is more difficult to say is WHEN will that point be reached. Because we cannot know with certainty (though we can make reasonable, narrowly defined estimates) how much oil is left, we can’t know for sure. Most estimates of the time of the peak range from about 2007 to 2020. We will not know when the peak has occurred until it has passed. (The peak of US oil production, in 1970, took almost everyone by surprise.)
It is nothing remotely connected to “running out” or being empty, whether on a field basis or for the whole planet. When the peak has unarguably been reached, likely within the next 10 years, then there is no choice (with current consumption rates) that the price of oil will soar and remain high. During the transition period it is likely that we will see significant price fluctuations, such as the $147 a barrel in July 2008 to $35 a barrel in Winter 2009. Such price changes will probably impact (or even drive) recessionary reactions at least in the US – high price, recession. Low price, slow recovery. Until the irreversible decline in production begins, together with demand that cannot reasonably get any less.
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