You will find nothing "for dummies" on this site. But let my try to cut through the wonk: We face a high-cost energy future. I usually try to phrase it this way to avoid the stigma that the oil industry's well-paid/well-placed propagandists attach to the term "peak oil." (Rather like "climate change" vs. "global warming"). America has done nothing to prepare for this future. It's going to get rough.
In fact, peak oil is well known within the oil industry (which I covered as a journalist). It means simply that half of this one-time gift of geology is gone. It doesn't mean "we're about to run out of oil." The clever conflation of these ideas has helped to confuse and distract even the dwindling number of Americans who are paying attention. The other bad news: When applied to a nation or world, peak means the "easy" oil is gone, and the remainder will be more difficult and expensive to recover and refine. National peaks go along with economic trauma. Hence, America hit national peak in the early 1970s, helping to cause the recessions and stagnation of that decade. These peaks are hard to predict in advance, clear in the rearview mirror.
The oil industry and our leaders know that we are headed for, or have reached, global peak. As with climate change, the debate is over details: Essentially when and what next. And as with climate change, the consequences will be profound. Not for nothing has the government kept then-Vice President Dick Cheney's energy task force meeting minutes secret, and not for ideology's sake alone did we commit so much treasure to creating and sustaining the Army of the Euphrates.
This inconveniently coincides with a sharp rise in global demand as emerging nations industrialize and want an American-style supersized "lifestyle." Thus, in the worst recession since the Great Depression, the price of light sweet crude didn't fall from historic highs to...$10 a barrel. It fell to the fifty dollar range and rebounded. Recall that during the height of the 2000s, producing nations were actually withholding exports for domestic use, demand was growing so fast. Note where the geopolitical hotspots are: Where countries are trying to lock up energy reserves (e.g., the South China Sea).
Thus we are left with the remaining half, including heavy sour crude, tar sands, etc. All are high in impurities and costly to refine. Much of it is in places "where they don't like us much," as George W. Bush, failed oilman but oilman nonetheless, put it. These supplies will not power the world that West Texas Intermediate built at the old WTI prices. Bakken is not Spindletop. Natural gas brings an additional set of obstacles, including its own rapid rates of depletion and the cost of retrofitting suburbia to run on natural gas (pace my old pal T. Boone Pickens). Fracking, horizontal drilling and deep-water drilling all add costs, as well as huge environmental costs. Most alternatives require more fossil fuel inputs than the energy they produce. An electric car is not a power source. All will be more expensive. And in every case, we will be bidding against the world for an increasingly scarce resource. Where do the energy cheerleaders think the TransCanada Pipeline will take the pricey tar-sands crude once it reaches Houston? The world market.
Do not be fooled by claims of "reserves." These can be cooked and falsified — they are a state secret in Saudi Arabia, and Saudi claims are increasingly dubious. What matters is actual production. Do not be distracted by media claims of XX million barrels being suddenly discovered. Can that oil be recovered and at what cost? What cost to refine it? And remember, even recessionary America consumes about 20 million barrels of oil every day, 57 percent of it imported and 70 percent used for transportation, especially a single-occupancy vehicle sprawl society. Those "authoritative" graphs showing rising demand but the ghost "fluids" that will fill the gap as conventional oil trails off? Hahahahaha.
Peak oil and recession are closely intertwined. It's not just fraud, "fixed" government and deindustrialization that are holding back growth. So is the reality of high energy prices. They're not as high as they might/will be. But the new reality is a millstone around the economy. Sure, gasoline prices might be cheaper for the holidays, as USA Today chirped. That's a sign of weakening demand and more recession, not a return to 1921. When oil prices rise, they will similarly add costs and dampen demand. This could go on for years, but the trajectory is unforgiving.
As I've written before, we could have used the recession as a gift to retrofit the economy for this future. Among the job-creating items: Rebuild our conventional passenger rail network, high-speed rail, commuter rail and transit, especially retrofitting the parts of suburbia that could be most helped by transportation options. Trains move people much more efficiently, and could reduce car dependency significantly, as well as supplement the fuel-wounded airline industry. We didn't. Nor did we meaningfully invest in new research and tax carbon, thus making alternatives attractive. Nor did we change land-use patterns to stop energy-wasting sprawl, although $10-a-gallon gas, debt and a ruined middle class will do so, not happily.
But even if the "deniers" are right and we have enough oil for 300 years!!...That just moves us into the express lane of planetary destruction from greenhouse gases.
I don't doubt that we will pay any price, bear any burden and harbor every illusion in attempting to sustain the unsustainable, especially to keep the cars and sprawl going. It won't work. The reality of a high-energy future is happening whether Americans like it or not, whether most can even conceive this discontinuity or not. Our dreamwalk will merely make the landing harder.