08/13/2008 05:12 am ET | Updated May 25, 2011

Oil Prices and the Media: Why the Blackout on Peak Oil

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.

An oil geologist named M. King Hubbert predicted this phenomenon for the continental USA back in the 50s. In those halcyon days, US production seemed limitless, but Hubbert predicted that sometime between 1966 and 1972, the USA would reach peak oil production and American production would thereafter decline.

People laughed at Hubbert. Then, in 1970, right on schedule, production of US oil peaked and began to drop. Hubbert had been correct. So he and a host of oil geologists attempted to replicate his prediction for the whole world.

Some used modifications of Hubbert's formula to determine when global peak oil would happen. Others used different formulas. What is interesting is that many of them came up with remarkably consistent predictions: Peak oil would happen for the whole world sometime between 2005 and 2010.

And you would know it was arriving, the Cassandras warned, by the market. Sometime between 2005 and 2010, markets would see what was occurring and the price would begin a dizzying rise.

It is now August of 2008, smack dab in the middle of that long-predicted window. And as we have seen, prices have skyrocketed.

If the peak oil folks are correct -- and I'm not saying they are, but their predictions seem to be coming to pass, so they deserve a decent hearing in the world media -- it constitutes a story of immense importance.

The world runs on oil. The prosperity of the middle classes of the industrialized world was built on it. So was the green revolution that allowed world population to increase from two billion to six and a half billion. So was globalization, which allows the flow of goods from everywhere to everywhere on a magic carpet of cheap oil. So was air travel and mass tourism. The list goes on and on.

Indeed, as writers like Robert Heinberg point out, you can make the case that the entire structure of modern industrial civilization is an artifact of cheap, limitless, almost free energy, thanks to the 'treasure in the basement' discovered in 1859 and exploited ever since.

Some would argue that if this treasure is indeed about to level off and decline, that's a very good thing, since we need to phase out fossil fuels anyway to combat global warming. In a perfect world, they would be right.

Unfortunately, many peak oil folks warn that there is no energy source or combination of sources on the horizon that can fully compensate for the decline of oil over the next few decades -- though we should obviously be racing to come up with alternatives and to embark on massive conservation.

They also caution that many of the cheapest and easiest alternatives to petroleum are other fossil fuels, particularly abundant and dirty coal. If economies start tanking, the pressure around the world to increase the use of these climate-busters would be immense. So in some scenarios, a decline in oil could actually make global warming worse.

Don't get me wrong. I'm not saying the pessimistic peak oil geologists are right and their critics are wrong. They have very serious critics, and there are several other plausible explanations of the current price run-up, from a classic bubble to old-fashioned fear mongering.

But I can say this. Many of the most prominent peak oil geologists predicted oil prices would skyrocket between 2005 and 2010 and oil prices did indeed skyrocket. They may be wrong about the reasons. It all may be just a coincidence.

But if the fate of the world economy hangs in the balance, it's a story that deserves significant attention and analysis by the media. If I were an editor at the NY Times or the Wall Street Journal, Time or Newsweek, I would want to analyze it, write about it, inform my readers and viewers about it. I would hate to go down in history as having missed possibly biggest energy story in a hundred years.

Until, of course, it was obvious. And too late.