Specifically, supplies of the cheap "sweet" light crude oil, on which the economy of the modern world is based, are set to decline. Exactly when this will occur is the matter of debate, but my own prediction is that within 10 years fuel will begin to run short. A society that is unable to travel easily will inevitably fragment into small communities, and that might work out fine - it is the transitional powering down to a lower energy economy which worries me, since it might amount to serious civil disorder and strife. At worst anarchy! If we look around, we see plastics, synthetic fibres, and all of them made from oil, in addition to its vital importance as a fuel. It is ironic that when petroleum was first encountered in quantity, particularly in the United States, the material was regarded as rather a nuisance.
In Pennsylvania, wells were sunk to extract brine (salt-water) which was allowed to evaporate in salt-pans, for salt production. Often, however, the brine was found to be contaminated with petroleum. Generally the oil was skimmed-off and thrown away, usually onto fields, but so the story goes, in one area where there was rather a lot of petroleum coming-up with the brine, the "salt-miners" began to throw it into a canal. One day, a boy threw a lighted branch into the canal, whereupon the entire waterway erupted into flame, so the locals got the idea that petroleum might be useful after all. It was marketed as a replacement for whale-oil used in lamps, and also as a medicine. In the latter aspect, "rock-oil" as it became known was applied externally to burns and internally for conditions ranging from tuberculosis to its application as a laxative.
The first commercial oil-well was sunk in Pennsylvania in 1859, and yielded an initial 25 barrels a day, but this had fallen to just 15 barrels a day within a year, making the point that oil-wells have a finite supply - i.e. they run-out eventually. Henry Ford, of the "Model-T Ford", the first car to be produced on an assembly-line, thought the world supplies of petroleum were actually highly limited and so the "Model-T" was originally designed to run on ethanol. Interestingly, Rudolph Diesel, in his original patent for the "Diesel Engine" intended the device to run on coal dust or vegetable oils. A couple of his prototype engines did explode when fired with coal-dust, however.
The car industry expanded hugely and more petroleum was discovered all the time, so it became the fuel of choice. World War I resulted in a massive growth in the number of vehicles run on oil-based fuels, worldwide, and all powers began to realise that securing adequate supplies of oil was key to ensuring their economic prosperity. Lawrence of Arabia (T.E.Lawrence, who wrote the novel, "Seven Pillars of Wisdom", describing his experience) led the Arab revolt against the Ottoman empire, in the Eastern flank of WWI. We are familiar with the fighting in France particularly during WWI, but there was also a war being fought in the east, some historians say to secure oil supplies for the Europeans. Sadly, some of the soldiers who survived Galipoli were sent off to fight in the Somme. This led to an effective partitioning of what was "Arabia" and the creation of Iraq, Saudi and the other Arab states. I wonder what future historians will conclude about the true purpose of current military action by The West in Iraq and Afghanistan (and God forbid, Iran).
More oil-wells continued to be sunk (especially in the US) and the peak in the number of oil deposits found - "Peak Discovery" - occurred in 1930. A man called M. King Hubbert (the "M" stood for "Marion", so perhaps that's why he chose "King" as his first name), a very famous geophysicist, predicted mathematically that the peak in oil production - "Peak Oil" - would come 40 years after peak discovery. This proved to be spot-on for US oil production, which peaked around 1970, and now the US needs to import 2/3 of the oil it consumes, much of it from the Middle East, but mostly from Canada. Altogether, the US uses one quarter of the entire world's output of oil, and demand rises inexorably there and increasingly so in other countries like China and India, to fuel their unprecedented economic expansion. It is predicted that by 2020, China will match the US in terms of its thirst for oil, but by then half the remaining oil will have gone, and it is almost certain that production of natural petroleum will be well down by then. Hence, if this "target" is to be met, much of it will need to derive from synthetic oil, e.g. as produced from tar sands or from coal-liquefaction.
World oil production is around 84 million barrels a day, or just over 30 billion barrels per year. However, the amount of oil in the ground is finite, and believed to amount to around one trillion (one thousand billion) barrels. Hence, if we could extract all of it at 30 billion barrels a year, there is enough for about 30 years or so. If demand grows we simply get through the stuff faster. There are also suspicions that e.g. Saudi may have revised its reserves optimistically upward, and so there may be less oil in the ground that was thought. Indeed, it is debatable just how much oil can be extracted from an oil-well. An oil-well is not like a water-well: that is to say that you can't simply drain it to bottom with a bucket. Some wells yield only 5% of the oil they contain, though 30% is more usual, especially with enhanced recovery methods.
The amount of oil recovered depends on the precise geology of the well, i.e. if the rock is highly fractured then its permeability may be impaired. Hence, the rate and volume of oil that can flow out of it is reduced. It is speculated that the enhanced recovery methods used in Saudi to meet world demand may have damaged the rock and so less oil will ultimately be recovered from its oil-fields. Only one well out of every hundred sunk produces a major source of oil, and consequently oil exploration is very expensive and laborious. World oil discovery peaked in 1965 and no "elephant" (giant) field has been discovered since 1980. If Hubbert is right about the 40 year "lag" between peak discovery and peak production, we can expect oil production to peak around now.
Mathematically, according to the Hubbert analysis, the point at which Peak Oil is reached corresponds to when half the oil has been used-up. It is estimated that the world has got through a little over about 1 trillion barrels since 1859, and so if there are one trillion barrels left, that would fit with Peak Oil being with us now. The upshot is that the cheap light crude oil , which is most easily refined, is running out. The remainder is a dirtier, heavier oil that takes more energy to purify and process. The EROEI (Energy Returned On Energy Invested) is about 8 for light crude (it was 100 in the days of the original "gushers"!) but can be as low as 3 for heavy oil and that extracted from cracking bitumen in shales and oil-sands.
Burning oil also contributes CO2 to the atmosphere, which many believe is causing global warming and climate-change, so finding a substitute for oil is imperative on grounds both of its looming short supply and curbing CO2 emissions. Obviously, as oil runs-out, we will be emitting less CO2 - it's just that we may not have much of a civilization left without finding an alternative source of fuel to run it! Since hydrogen is a complete non-starter (as I describe in the immediately previous article) and biofuels are unlikely be produced in a quantity to match 30 billion barrels of petroleum per year, that alternative "fuel" will be mostly a re-localisation of society - "The Global Village" will be a matter for future historians to discuss. We can expect a return of local farms and horses and carts! Fuel will be too precious to waste on personal cars, but reserved for tractors and lorries.