Peak oil is the theory by M. King Hubbert that oil production will peak at a certain level then decline. He predicted to the year when production in the US peaked, and he has done the same for worldwide production. His theory is that oil demand will exceed production, thus driving the price up and forcing exploration into harder to extract sources of hydrocarbon energy. The difference in the supply curve and the demand curve is the peak.
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www.hubbertpeak.com Yes, that's the theory, but I don't know anyone who goes by that set definition of peak oil these days. In the days when geologists were telling people we're running out of oil, that was the model. But today we know that we won't "run out of oil" per-se, but our demand for oil will outstrip our ability to get it out of the ground. This will happen LONG before oil production begins declining each year; yet will still have the same effect.
