After the world’s production of oil peaks and begins to decline, there will be an ever-increasing shortfall of oil. This shortfall will be composed of two elements: the increase in demand not met by oil and the decline in oil production from the peak level. This shortfall is explained by the graph below.

Assume that:  Demand continues at the historic rate (i.e. people continue to want more of the conveniences oil has brought them in the past, about 2%).  World oil production declines at the rate that U.S. oil production declined in the past 40 years, about 1%.  Total = 3%/year compounded.

This inability of oil to meet our growing transportation and other needs will lead to a shortfall that will grow at about 3%/year – i.e. 3% shortfall the first year, 6% the second year, and so forth.  A plot of what this means to the U.S. over a twenty-year period, if oil production were to peak in 2007, is given below. The shortfall only ten years after peak production is 8 MBD (million barrels per day.)  This is a huge portion of the current 21 MBD U.S. demand.

Shortfall assumes: Demand grows 2%/yr and Production declines 1%/yr.
Only 10 years after oil production peaks, U.S. must “save/replace” 8 mbd.

The shortfall must be saved by Conservation and replaced by Oil Alternatives. We cannot “conserve” our way out of this problem because eventually we have to have a replacement for oil. But, we can conserve to give us more time to develop alternatives to oil. The graph below approximates the roles of conservation and alternatives in filling the oil shortfall.