Oil jumped over $16/barrel on Monday, the biggest one-day gain ever. The price of oil had dropped below $100 for a short while, reducing gasoline and jet fuel prices a bit. While reading about the jump, I found an interesting article by one of the “peak oil” theorists, who believe that the world’s oil supply either already has or soon will peak and then level off or start falling. The author believes that the Saudis have significantly overstated their reserves. He also believes that growth in demand from India and China will continue so rapidly that the world’s supply will be unable to meet demand, sending oil prices up to $300, $400, or even $500 a barrel. $500 oil would transform our economy in ways we can only begin to imagine. If $140 oil sent gasoline and jet fuel prices up to $4/gallon, $500 oil might drive gasoline and jet fuel over $14/gallon. For me in my fuel-efficient Honda Fit, my 16-mile round trip to work would cost $7. A drive to Wichita Falls and back to visit family would cost over $100. Air travel might become so expensive that few could afford it, jeopardizing the entire industry and my job. The price of most goods would skyrocket due to transportation costs.

Now, are these peak oil theorists right or just a bunch of naive pessimists? Only God knows. I hope they are wrong, but I certainly don’t know enough about the issue to know which perspective is correct. Either way, we must become more efficient with our natural resources, both as a society and individually. Otherwise, my son and niece will have to deal with a mess they didn’t create.