What is 'peak oil'?

'Peak oil' refers to the maximum extraction point of oil, which is a critical concept in understanding global energy dynamics and resource management. When a region or the world reaches its peak oil production, it indicates that the maximum amount of oil has been extracted and that any further production will likely decline. This is significant because it highlights the finite nature of fossil fuel resources and raises concerns about energy sustainability, economic implications, and environmental impacts.

The concept emphasizes the importance of understanding not just the available reserves but also the rate at which oil can be pumped from the ground. After reaching this peak, production levels are expected to decrease, which can lead to increased prices and potential energy shortages, influencing energy policy and consumption habits globally.