DEFINITION of 'Peak Oil'

A hypothetical date referring to the world's peak crude oil production, whereby following this day, production rates will begin to diminish. This concept is derived from geophysicist Marion King Hubbert's "peak theory", which proclaims that oil production follows a bell-shaped curve.

BREAKING DOWN 'Peak Oil'

Because oil is a non-replenishing resource, there is a limit to how much the world can extract and refine. Peak oil is the day that oil production reaches a maximum and will subsequently begin to decline until full depletion is ultimately reached.

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