What Are the Issues?
 Fossil Fuel Depletion (Peak Oil) • Peak oil theory suggests we are nearing the point at which half of global oil reserves have been used, at which point scarcity will gradually increase and prices rise at and exponential rate. • In 1956 geologist M. King Hubbert came up with the principle of peak oil, and predicted, accurately, that the United States would hit peak oil in the 1970s Global Warming • Widely accepted that the rate of change in the earth’s climatic conditions caused by industrialization & that CO2 gas levels in the atmosphere are unsustainable • Consequences of this include: rising sea levels, increasing frequency of extreme weather events, changes in agricultural production patterns (leading to starvation)  Energy Demand will Continue to Grow World market consumption expected to grow by 50% by 2030. 30 years ago, 80% of oil consumption came from developed world. Today much more demand is coming from emerging mkts where: 1) population growth is much faster and, 2) per capita consumption is growing faster as those countries industrialize As countries like China and India continue their trend toward industrialization, just as in other industrial revolutions, per capita demands on natural resources grow as populations migrate toward urbanize and as the standard of living improves for their populations 
| Oil Supply: The low hanging fruit is gone
Even with new technology, it is becoming more expensive to find the "incremental" barrel of oil (BOE) (barrel oil equivalent). The main problem is that the "low hanging fruit" or "easy oil" has all been produced. We are much more reliant now on unconventional resources and methods to exploit. WTI or "West Texas Intermediary" is the benchmark oil index for light-sweet crude oil. This type of oil is relatively easy to produce and refine, but as oil becomes heavier and more sour, causing production and refining costs rise significantly. Most global reserve additions are coming from areas like the Canadian Oil Sands, where oil is very viscous and production costs make it more difficult to extract. New discoveries in the Middle East and in South America, are also heavier and sour blends that require significantly more refining than the light-sweet blends that were so plentiful 20 years ago.
 As Hubbert's model predicts, this is because we are approaching that peak level where, even though technology is improving, we are having to drill deeper and in more challenging terrain, and explore in more remote, adverse deep-water locations to discover new barrels  Geo-Politics of Oil Supply
Not only is discovery and production becoming more challenging, geo-political dynamics and the lack of transparency in some oil exporting nations weakens our ability to know what the true level of reserves are around the world. While OPEC insists that their supplies are abundant, many experts have questioned the reliability of their reserve estimates given that many of their largest reserve discoveries coincided with periods of policy changes within OPEC that would incentivize these national oil companies to over-state their reserves (annual production quota based on % of reserves).
 Complicating Matters: The Export Land Model Another, underappreciated phenonmenon is known as The Export Land Model, introduced Dallas geologist Jeffrey Brown. It is conceptually more complicated but essentially it models the decline in exports that result when an exporting nation experiences both a peak in oil production and an increase in domestic oil consumption. In such cases, exports decline at a far faster rate than the decline in oil production alone.A graph showing that rising domestic consumption of a locally produced resource will have a large negative effect on exports of that resource. The Export Land Model is important to petroleum importing nations because when the rate of global petroleum production peaks and begins to decline, the petroleum available on the world market will decline much more steeply than the decline in total production.
 A simple example of this would be if you could imagine a world in which there were three nations - Country A, which is an oil exporter, with fast growing population, and its own citizens are increasing consumption faster than their increase in production. Country B, an oil exporter, but its population growth is stable and production is flat. Country C, imports oil from both Country A&B, and its population growth is stable and production flat. At some point Country A reaches a level where its consumers are demanding more oil than the country is exporting, and so rather than being a net exporter - it suddenly, is now a net importer. While countries B & C are not growing as fast you can see how the demand for exports from Country B is now much more competitive, driving prices upward.
  Indonesia is now an importer, will Egypt be next? Other countries such as Argentina, Mexico, Syria, Yemen, Vietnam, and Malaysia, are all on seeing export capacity drop significantly and will soon become net importers of oil.
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