Are we witnessing the arrival of "Peak Oil" or just a speculative surge in energy & gold prices...? The vast majority of Americans don't usually follow the trends of the crude oil futures market. But the global "Oil Shock" has now finally caught their attention after gasoline prices suddenly jumped 15 per cent at the pump this month.

Last week, West Texas Sweet crude oil surged to an all-time high of $98.62 per barrel, greasing the skids under the Dow Jones Industrials for a 4 per cent plunge to the 13,000 level, zapping the value of investors' 401k accounts.

Guy Caruso, head of the US Energy Information Administration, told reporters on Nov. 12th that the average price US consumers pay for gasoline should rise by another 20c per gallon over the next two to three weeks.

"We haven't seen the full pass-through of high oil prices yet," warned Caruso.

The stunning rise in the price of crude oil, up 56 per cent this year and up 365 per cent in a decade, to within a whisker of the magical $100 per barrel level, has some traders wondering whether "Peak Oil" is finally here.

If correct, is the spectacular bull-run for global stock markets - now four-and-a-half years old - building a major "rounding top" pattern?

Until recently, high and rising oil prices didn't disturb the bullish psychology among global stock market operators. Instead, the spin surrounding rising oil prices helped describe a positive story: an unprecedented boom in the world economy.

But historically, global "Oil Shocks" have always tipped the global economy into recession. For example, the Arab oil embargo of 1973-74 - as well as the Iranian Revolution of 1978-79 - triggered unprecedented increases in oil prices and were associated with worldwide recessions shortly after.

Depending on how the adjustment is calculated, $38 per barrel for crude oil in the 1970s would be worth around $96 to $103 per barrel today. Most US recessions in the post-World War II era were preceded by just such a sudden spike in oil prices.

Because oil is a finite, non-renewable resource, the concept of "Peak Oil" refers to the inevitability of a peak in global oil production.

Once half of the original reserves are depleted, oil production is likely to stop growing and begin a terminal decline.

Back in 1956, a US geologist named M.King Hubbert figured that the rate of global oil production would follow a bell curve. Once "Peak Oil" production had been reached, output would begin to decline and oil prices go up. Hubbert estimated that "Peak Oil" would arrive around 2010.

Today the OPEC oil cartel sits on about 75 per cent of the world's total proven oil reserves of 1.21 trillion barrels, according to British Petroleum's annual Review of World Energy. "Global reserves are more than sufficient to meet current production levels for more than 40 years, although accessing the oil is getting tougher due to high exploration and production costs, and reserves are also falling under more state control," BP says.

Some of the biggest proven oil reserves lie in Saudi Arabia (264.3 billion barrels) and the Canadian oil sands (up to 163.5 billion barrels). But other big sources of crude oil are under the control of the "Axis of Oil" - namely Iran, Russia, and Venezuela, an informal alliance designed to counter US influence in the Middle East.

State-owned oil companies already control three-quarters of the world's crude, dwarfing the holdings of major oil companies like Exxon Mobil and BP.

The OPEC oil cartel, which accounts for 40 per cent of the world's production, is gaining enormous power and wealth. OPEC provides almost half of total US crude oil imports, and is expected to rake in a record $658 billion this year from oil exports and $760 billion next year. Russia's foreign currency reserves have soared to $450 billion this month, even after paying off $125 billion of foreign debt.

Iran's Ayatollah Khameini is also the first OPEC leader since Saddam Hussein to demand Euros instead of US Dollars in return for payment of its oil exports. That threatens the US Dollar's status as the world's reserve currency.

On July 19th, Iran asked Japanese refiners to switch to the Yen when paying for all crude oil purchases. Russia plans to open the Energy Stock Exchange in St. Petersburg in the first half of next year; it will trade Urals blend crude oil in Roubles.

"Peak Oil", meantime, draws nearer. Of the 65 largest oil-producing countries worldwide, 54 are past their "Peak Oil" production. They now face terminal decline - including the United States (down 11 per cent since 1971) and the UK's North Sea oil reserves (down 27 per cent since peaking in 1999).

Other big oil producers - those producing more than 500,000 barrels per day - that are now also in decline include Australia (down 26 per cent since 2001) and Norway (down 13 per cent since 2001). The Cantarell oil field in Mexico, its largest, has also peaked with its output falling to 1.7 million bpd in 2007, down from its peak output of 2.1 million bpd.

The United States, meantime, remains the world's biggest guzzler of crude oil, consuming 21 million barrels per day, while importing 14 million bpd.

But instead of proposing ways for Americans to conserve energy � and so reduce their reliance on foreign imports - the Bush administration is leaning on Saudi Arabia, the central banker of oil, to pump more "black gold" from its dwindling spare capacity of roughly 2-million barrels per day.

In a Nov. 12th interview with the Financial Times, however, Saudi oil minister Ali al-Naimi said "there will be absolutely no discussion of a production increase" by heads of state or their oil ministers on short-term supply when the Riyadh meeting of OPEC convenes this weekend.

"This is a summit that is dealing with strategic issues and longer views. You have seen the themes. And you will get a declaration after it. OPEC ministers are not going to meet to discuss supply and prices and the heads of state definitely are not going to discuss it."

"We are of course concerned about high oil prices," added OPEC chief Mohammed bin Dhaen Al Hamli on Oct 30th. But the market is increasingly driven by forces beyond OPEC's control. It's driven by geopolitical events and the growing influence of financial investors," said Hamli, who is also UAE oil minister. "We have to stay alert. If the market needs more oil, we will supply it," he added.

Even a possible increase in oil output by OPEC at its Dec 5th meeting, designed to put a lid over the crude oil market at $100 /barrel, might only buy a few extra months of time, before the next Global "Oil Shock" emerges, and deals another major body-blow to the economies of big oil importers.

Riyadh's ability to keep the crude oil market under wraps, by pumping more oil might be drawing to end as early as 2008. The International Energy Agency is forecasting that global demand will climb by 2.1 million bpd to 88 million bpd next year. Global supply however, is forecast to rise a scant 200,000 bpd to 85.6 million bpd, leaving a growing shortfall that would exhaust Saudi's spare capacity.