Peak Oil versus Peak Demand

I was listening to the Diane Rehm Show (NPR) this morning and there was a discussion about whether the energy industry has reached "peak oil,"--the point at which oil production peaks, subsequently leveling off, and then declining. While I did not have the time to listen to the whole discussion, the debate seemed to revolve around when oil production would peak. The years mentioned ranged from 2012 to 2030. However, I would propose that the argument is misguided. Debating when peak oil production will occur is a little like being in a leaky boat and debating when the volume of water coming into the boat will peak. It becomes irrelevant when one considers that the boat is adding people into the boat faster than water is being bailed from the boat; at some point the boat is going to sink, regardless of whether the boat has reached peak water intake. If people are coming on board faster than water is being bailed, the boat is going to sink. Indeed, if the water leak is fixed and people keep coming on board, the boat is going to sink.

In the same way, whether the oil industry has reached peak oil production is irrelevant: The "peak" point that is important to understand is when demand exceeds production. Once that point is reached (for world oil production, it has already been reached), what is important to understand is the "oil gap."

The oil gap is the difference between oil production and oil demand. As the gap increases, oil prices increase (price is determined by supply and demand). At some point, the price reaches a point were substitute energy sources become price competitive. This is the environment we are in today.

Therefore, the question becomes not when oil production peaks, nor when oil demand exceeds oil production. Rather the important question is when demand drives oil prices to the "tipping point" where alternative energy sources become cost competitive. At that point, those organizations developing alternative energy sources, particularly renewable or sustainable energy sources, become competitively advantaged in the market. Therefore, the debate should not be when oil production will peak, but when alternative sources become advantaged. At that point, those organizations that have been investing in alternative energy sources will be the hot stocks for the near-term future. The next Googles are out there ready to take off.

Closer to the Edge

Edge computing is all about moving computing capability to a variety of devices enabling users to perform a variety of activities when and where they need it. Most often, edge computing is interpreted to mean mobile devices, but it could just as easily be your refrigerator, your television, your entertainment system, your mobile phone, or the various systems in your automobile.

Much of edge computing is already in place, it is just not obvious. For example, the Tivo used to track, schedule, record, and playback television programming is nothing more than a media center computer that has been programmed to record broadcast programming. In this context, the AppleTV is nothing more than an alternative programming computer tied to the television. The Slingbox is another programming device that captures video and streams that video to a variety of devices--from your TV to your computer, to your mobile phone. In these examples, the device is a server providing services to edge devices.

Another is the OnStar system in your automobile. Through this system, your car's performance can be tracked, your doors unlocked, or automatic alerts can be sent to a centralized monitoring center. X10 and similar technology provides monitoring of your house, enabling you to remotely turn on and off lights, set alarms, and control edge devices such as a television or appliance. In these example, the device is a monitoring and control unit providing manipulation and control over remote devices.

All of this edge technology is available now. Add to this the ability to view television programming on mobile phones (VCast, SprintTV, MobiTV, YouTube, and the increasing number of streaming videos available on Web sites); the ability to listen to audio programming through tools such as iRadio and streaming sites on broadcast Web sites; and the increasing number of sites that enable word processing, spreadsheet manipulation, and presentation development (Google Apps is a primary example). All of these are providing expanded access to computing by any device that can access those sites and capabilities.

As a result, computing is no longer limited to the desktop or the laptop computer. Today, browsing the Web can be accomplished on your phone and your game console. Word processing can be accomplished on any device that accesses the Web. Is the computer dead? Not by a long shot. However, its central importance in information management is being reduced as processing is delivered through the Web and access and control devices become more incorporated into edge devices. We are moving closer to the edge.