The price of petrol seems to be creeping up fairly rapidly. I noticed yesterday it's $1.88/litre.

Not that long ago it $1.68/litre. 

I'm reading "The Long Emergency" by James Kuntsler. He makes a compelling case that once we have seen the production peak of oil, the price will begin to rise fairly rapidly thereafter as demand continues to outstrip supply....and there is no longer any "swing" producer who can open the taps to keep a lid on price. 

There is evidence to suggest we are currently at the peak or just past it. The Saudis are pumping 7 million barrels of seawater into the Ghawar oil field every day to flush out the oil....and what is coming out of the pumps is reported to be 55% water.....which means there is still a lot of oil coming out.....but the proportion of water is steadily rising. The German military is moving to reduce dependence on fossil fuels as they see major economic and social disorder in the decade (only 10 years!) ahead. 

Kuntsler says the peak will be bumpy and it will only be seen in hindsight to have been the peak. He's not talking about running out of oil - that wonn't happen for decades. He's talking about what happens when there isn't enough to go around...and that could happen this year or next or the one after....very soon, once production peaks and the population and demand continue to rise. Around the peak, the price or oil will go up and down for a time until the downward trend on production capacity is undeniable....at which point things will become interesting....as our entire way of life - our civilisation  - is underpinned by the availability of cheap, portable, versatile oil. 

Virtually every major field currently in production is already known to be indecline: North Sea, Venezuela, The US has been in decline since 1972. 

He also goes through all the likely alternatives in detail, one by one, and explains how and why they won't fill the gap that will open up in the economy of the planet once demand for oil finally outstrips supply. 

His particular concern is around food production which has enabled the world to have almost 7 billion people.....and he takes the view that this is number is unsustainable should the supply of oil fall very far from the demand for it. 

He calls it the Long Emergency and says the invasion of Iraq was a sign that it was underway as the leaders of the US have known since the 1970s that global oil demand would eventually outstrip supply....and they have done very little about it as it is political suicide to tell Americans they can't have their SUVs in their far-flung suburbs. 

So, with this in mind, when will the price of petrol hit $2 / litre? Beyond that, when will it hit $3 / litre? 

I'd say $2 / litre is likley in the next 12 months.

$3 / litre may occur in the 12 months beyond that....or perhaps as much as two years.

Much will depend on perceptions. Once "the markets" have decided peak oil is in the rear-vision mirror, the sky could be the limit for pricing.  

Any takers on rationing? I'm picking about 10 years from now. Maybe less.....

Makes Steven Joyce's "Holiday Highway" between Puhoi and Warkwarth look like a huge waste of money...and resources.