They’ll go up. “Peak oil” is a strangely elusive condition, largely theoretical but also terrifyingly real, where the world reaches its maximum amount of petroleum production and then begins a long and absolutely irrevocable decline. Although the concept is simple to understand, pinning down when peak oil will occur (or perhaps has already occurred) is not so simple as new oil fields are found and technology is developed to make extraction of known reserves economically feasible where it wasn’t before. Those discoveries may push peak oil out in the future, but probably not by much. Gasoline prices fluctuate due to a dizzying array of factors, of which the amount of available petroleum is only one. One of the major factors, arguably the most major factor in gasoline prices is refinery capacity. Finding a huge cache of crude oil isn’t much good to you if you can’t refine it into a usable product. For that reason I think that when peak oil hits, if it hasn’t already, it may be some months or even years before gasoline prices begin to show a direct demonstrable correlation, as the oil that has already been extracted works it wasy to the refineries and eventually to your gas tank. However, I don’t think there’s much doubt that if and when a peak oil condition is universally recognized as having occurred, gas prices will respond with a steady upward spike. At that point refinery capacity becomes less important than raw supply, and as we’ve seen from “oil shocks” such as the 1973 Yom Kippur war, 1990 Persian Gulf war and 2005 Hurricane Katrina, gasoline prices are extremely sensitive to events that impact energy resources and their availability.
As we rapidly come up on our last reserves of oil, prices will likely be lower than they have been for a while, as we operate at maximum rate for a bit. However, once the fairytale is over and we have truly used up the majority of the oil available to us, the rate of oil production will be in an eternal decline, driving gas prices higher and higher.
It is not correct as cafils44 suggests that peak oil has anything to do with our “last reserves” or have “used up the majority of the oil”. Whenever the global peak is reached, half of all the oil ever in existence will still be available – a trillion barrels, give or take. Seanm has a good explanation.
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