The entire peak oil theory is vast and sometimes overwhelming. I've attempted to simplify the concept below. This is by no means in-depth, but rather an introduction to the ideas with resources below should you wish to know more.
The term refers to the peak in extraction of oil followed by a decline of production and a dramatic rise in cost. Simply stated, we will reach a point in which we 'peak out', and oil will be at its cheapest and easiest to extract. As oil reserves diminish from that point, the peak oil theory is that it becomes increasingly difficult and more costly to extract until it's simply too difficult or expensive to extract anymore.
The fact that crude oil is a finite resource is apparent to most. Every nonreplenishible resource that comes from the Earth is likely to diminish, more quickly if our consumption continues to expand. Over the past decade, with the industrial age and increase of suburban development and automotives, the U.S. has experienced an astronomical increase of the use of and reliance on oil. We use approximately 21 billion gallons of oil per day, the top consumer in the world.
It's not just our personal transportation sucking down the black gold, although our gas-guzzlers do tend to get the brunt of criticism. But oil also makes up a huge portion of our modern convenience-based lifestyle: farming resources, from commercial pesticides and fertilizers to equipment and machinery and the shipping of our foods up to 1,500 miles to the local grocery store; our cosmetics and personal care items; construction; the manufacturing of plastics, the heating of our homes, endless streams of processing...the list goes on and on. It's difficult - and a bit scary - to imagine how we would survive without it.
North Americans consume approximately 35% of the world's energy resources, while only holding about 5% percent of the world's population.
"Transitioning" has become the buzz word when discussing peak oil theory. It simply means making immediate moves to wean ourselves from our 'addiction' to oil through the immediate use of alternative energies and lifestyle choices.
It also means a simplifying of our lifestyles to accommodate the shift in resources: Changing our means of transportation (bicycling, public transit, etc), supporting the local economy and agriculture, and rebuilding smaller, more efficient communities (those that are walkable are crucial).
Some advocates of transitioning say that we must begin transitioning to alternatives 10-20 years prior to the peak, while weaning ourselves simultaneously, to avoid detrimental social or economic consequences. If this is true, and it's also true that we could peak between now and 2030, we have little or no time to understand peak oil theory and make such crucial changes.
Along with peak oil, comes peak everything: coal, natural gas and even peak water. It's impossible to consider one, without consider the others, as they all point to an irresponsible consumption and willful ignorance toward the facts of nature: All are finite resources and each depletion comes with its own dilemmas.
Coal is our top finite commodity in the U.S. and is most damaging to the landscape during mining. So called "clean coal" is laughable by the environmentalist, as burning is only provides part of its usage problem and thus cleaner burning does little to mitigate its effects of strip-mining and mountain "topping" on the Earth. Natural gas is nearly impossible to measure the reserves of; it won't dwindle like oil or coal but will instead stop abruptly. But without feasible alternatives it is hard to image survival. Clean, drinkable water is being depleted or polluted and is predicted to leave thousands in dire conditions in the coming decades.
The details, criticisms and solutions to any peak reserves are complex. Nearly all of this website can be included in your search for peak oil solutions and what you can do.
There are a few resources which I suggest investigating for more in depth and interesting peak oil theory:
If you're wanting to dive deeper into more peak oil theory, there are many recommend books on the topic.

The End of Oil: On the Edge of a Perilous New World
by Paul Roberts
This book is a "geologic cautionary tale for a complacent world accustomed to reliable infusions of cheap energy."
The Party's Over: Oil, War and the Fate of Industrial Societies
by Richard Heinberg
"We are entering a new era, as different from the industrial era as the latter was from medieval times."

The Long Emergency: Surviving the End of Oil, Climate Change, and Other Converging Catastrophes of the Twenty-First Century
by James Howard Kunstler
"Industrial civilization is in big trouble, and the American people are sleepwalking into a future of hardship and turbulence."

World Made by Hand: A Novel
by James Howard Kunstler
A speculative fiction novel based on the author's ideas of worst-case scenarios and ingenious post-peak transitions.

**The Transition Handbook: From Oil Dependency to Local Resilience
by Rob Hopkins and Richard Heinberg
This book "shows how the inevitable and profound changes ahead can have a positive outcome."

The Transition Timeline: For a Local, Resilient Future
by Shaun Chamberlin and Rob Hopkins
This book "lightens the fear of our uncertain future, providing a map of what we are facing and the different pathways available to us."

Future Scenarios: How Communities Can Adapt to Peak Oil and Climate Change
by David Holmgren
This book "depicts four very different futures", each a "permutation of mild or destructive climate change, combined with either slow or severe energy declines."

The Long Descent: A User's Guide to the End of the Industrial Age
by John Michael Greer
Focusing on "constructive adaptation to massive change", the author explains how "change must come from individuals."

Peak Everything: Waking Up to the Century of Declines
by Richard Heinberg
"Heinberg...puts that theory in place alongside corresponding peaks in population, food production, climate stability and fresh water availability to paint a grim future of overlapping and accelerating global crises."

Peak Oil Survival: Preparation for Life After Gridcrash
by Aric McBay
A detailed guide on "how to survive after the oil runs out and there is no more grid."
For those of us visual learners, there are several media options for learning more peak oil theory.

**The End of Suburbia: Oil Depletion and the Collapse of the American Dream
A documentary on suburban life and how it could turn out to be the worst thing to ever happen to us.

A Crude Awakening - The Oil Crash
"An unforgettable and shocking wake-up call, A CRUDE AWAKENING offers the rock-solid argument that the era of cheap oil is in the past."

Crude Impact
"It took hundreds of millions of years for petroleum to form on Earth. It took just 150 years for human beings to bleed the planet of roughly half of this oil."

The Power of Community: How Cuba Survived Peak Oil
"This fascinating and empowering film shows how communities pulled together, created solutions, and ultimately thrived in spite of their decreased dependence on imported energy."
Here's an interesting infographic illustrating some of this information:

Provided by CarInsurance.org
All of this peak oil theory is great to help you understand and formulate your own answers regarding sustainability, but the most important part of knowing this is not your ability to argue your point; it's what you do to transition now.
If you're ready to get started, I'd recommend the following Steps first:
Have fun!
**Indicates resources I highly enjoyed and most recommend.
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