Peak Oil and the Great Recession
May 26, 2011
The year 2008 will be remembered as a major turning point in industrial history, for it was the first year when the world got a taste of the unpredictable price spikes that come from inadequate oil supplies. The first half of the year was marked by a steady increase in the weighted average price of oil, which started the year at about $90 a barrel and finally peaked in July just shy of $150 a barrel. At the same time, the global economy was contracting rapidly with falling industrial production, falling exports, and rising unemployment. By July 1, 2008, many industries that are dependent on oil, especially the airline and trucking industries, were desperate and in danger of being forced out of business. With the average price of gasoline above $4 a gallon in the United States (above $5 in California), car sales plummeted, leading to bankruptcy for much of the U.S. automobile industry and eventually massive government bailouts.
This is a chapter from The Post Carbon Reader: Managing the 21st Century’s Sustainability Crises (2010).