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Chapter Five: The End of Oil

From a geopolitical point of view, peak oil can be thought of as the day on which world demand has increased, and world supply decreased, to the point that there is not enough oil available to fill existing orders. The moment the market understands that this is the case, several things will happen immediately. First, the price of all the remaining oil will increase exponentially. Second, all suppliers will be forced to choose between bidders based on factors other than price. Whether one sells to China or the United States, for example, will depend to a large degree on one's relations with and proximity to one country or the other -- or, more specifically, to their armed forces. Third, bidders whose citizens' welfare and governments' stability depends on oil will use whatever means they have to persuade sellers to take their offer. And as Al Capone once observed, “You can get a lot farther in this world with a smile and a gun, that you can with a smile.”