The next few months will probably not witness new record global prices due to low recession demand almost everywhere (even China had 1.1% lower 3rd quarter GDP growth, though it was still at 9%). But the quick declines must be noted by our Presidential candidates as they prepare to govern over the next 4-8 years. Assuming the next President lasts for both terms, it is highly likely that the harsh reality of peak oil will become apparent under their watch. By the end of Obama or McCain’s Administration, imports from Mexico, Norway, Russia, and the UK (the source of almost 2.5 Mbd [18% of our imports] last year) will likely disappear as their production declines more than our 2007 import level. Sure, there are some prospects to replace these lost imports such as Brazil, Azerbaijan, Kazakhstan and Canada. But China, India and many others will be clamoring for their oil as well. Thus, modernizing our transit systems and becoming a leader in efficient and electric vehicle production should be a substantial focus for the incoming Administration.

Richard Heinberg wrote last week that he thinks July 2008 will be the global peak of crude oil production, due to the credit crisis slowing financing for new projects and OPEC’s upcoming cuts. He says the rapid decline of Mexico’s Cantarell will be mirrored in a growing number of other large mature fields worldwide in the coming years. Replacement fields will likely be smaller and more expensive to develop, ultimately yielding a lower global output.

Whether Heinberg proves correct, most oil analysts I follow believe that peak production will occur by the end of our next president’s second term, 2016. Obama’s platform concentration on demand reduction makes more sense than vain attempts to “drill, baby, drill” for significant increases in US production. Within a few short years, we will likely need to lower our oil demand faster than oil production declines, a rate as high as 5% per year though probably lower at first. Without success in lowering our demand, 2008′s record prices and Southeast gasoline shortages are likely to be eclipsed by the end of McCain or Obama’s Administration.

The silver lining: lowering oil demand not only fixes the oil crisis but it is also a critical element of our climate change mitigation to slow the melting of ice sheets around the world.

One of those symptoms is an increase in the intensity of hurricanes. We got lucky that Hurricane Gustav went over cooler water during part of its march to Louisiana or it may have been a repeat of Hurricane Katrina. Global warming will increase the temperature of our oceans, leaving less cool spots to slow down mighty hurricanes of the future. Just look at the row of Tropical Storms Hanna, Ike and Josephine in the Atlantic right now. If the ocean waters were warm enough, they could all become catastrophic Category 5 hurricanes (as long as the wind shear was also favorable). Good policy must take the potential regularity of such storms into account to ensure we don’t choose new coal plants to save millions in the short-term, a move that could cost us billions in the long-term. The Stern Review published in late 2006 showed the cost of mitigation today is cheaper than the consequences of unmitigated climate change tomorrow (and that was without today’s high fossil fuel prices making mitigation relatively cheaper). To start, we can follow climate scholar James Hansen‘s advice and refrain from building any more coal power plants without carbon capture and sequestration.

We must accelerate the sustainable energy transition to keep Greenland’s water locked up in ice rather washing away millions of homes from Bangladesh to Louisiana!