Like the illusion of Wall Street, with its vast and powerful investment banks, now shuttered, China too is an illusion perpetuated by the Globalists that gave us the 15,000 mile Caesar salad, poisoned cat food and lead based paint on babies' pacifiers. Like the illusion that money would come from thin air to always push housing prices higher, China has spent a generation pursuing its illusion. Pursuing an unattainable dream to be like the West, while 6000 years of its carefully shepherded top soil blows into the sea.
Joined: Jul 02, 2008 Posts: 591 Location: Canterbury, UK
Posted: Thu Jul 24, 2008 3:36 am Post subject: Re: how long will demand destruction keep oil at bay
OK, let me get this straight: we've hit the Economic Peak Oil. From now on, there will be readjustments - say, between $100 and $150 per barrel, until the next big problem (war, hurricane, whatever) causes it to go over that problem. Point is, there's no real demand destruction. Demand destruction would be so bad, shrinking economy and halting capital for alternatives, that it'd grind the economy to a halt, with major problems - perhaps those 50% unemployment?
So, we ride the wave. How do you think a real, sustained, efficiency-based demand destruction would help if it were to stretch for some, say, 30 years? Do you think there would be capital enough to invest in alternatives without an enormous pain for everyone? _________________ Environmental News and Clippings:
http://www.google.co.uk/reader/shared/10279555364898696533
Posted: Thu Jul 24, 2008 6:29 am Post subject: Re: how long will demand destruction keep oil at bay
Carlos,
Not much demand destruction YET. Search back to the DD caused by the late 70's oil price spike and you'll see it took a couple of years to hit. Only a guess but I would say we're currently looking at the economic fall out of $80 oil right now. Economies move very slowly in both directions especially compared to our conversations about them. I'm not expecting to see the full DD of $130+ oil for another 12 to 18 months.
Joined: Oct 12, 2004 Posts: 612 Location: The Pit of Despair
Posted: Fri Jul 25, 2008 12:59 pm Post subject: Re: how long will demand destruction keep oil at bay
ROCKMAN wrote:
Carlos,
Not much demand destruction YET.
...
Economies move very slowly in both directions especially compared to our conversations about them. I'm not expecting to see the full DD of $130+ oil for another 12 to 18 months.
From the most recent inventory report, demand has declined by 2.4% over last year's similar 4-week period. I think that a large amount, considering that the demand-side response is slow. More demand-side response to $4/gallon gasoline is on the way.
Posted: Fri Jul 25, 2008 1:08 pm Post subject: Re: how long will demand destruction keep oil at bay
JoeW wrote:
ROCKMAN wrote:
Carlos,
Not much demand destruction YET.
...
Economies move very slowly in both directions especially compared to our conversations about them. I'm not expecting to see the full DD of $130+ oil for another 12 to 18 months.
From the most recent inventory report, demand has declined by 2.4% over last year's similar 4-week period. I think that a large amount, considering that the demand-side response is slow. More demand-side response to $4/gallon gasoline is on the way.
Gasoline dropped to $3.81 from $3.95 in my local area. As I was putting some fuel in my car I stated to the guy next to me filling up his truck "its been awhile since I've seen gas go down" He replied " I know what you mean I am filling up both my tanks".
Demand is waiting in the shadows. _________________ It's a cold cold world when a man has to pawn his shoes.
Posted: Fri Jul 25, 2008 3:07 pm Post subject: Re: how long will demand destruction keep oil at bay
There's also the difference in long run and short run elasticities of oil consumption. If we're seeing a percent or two drop yoy in America, unless prices fall back significantly to the $60-80/bbl range, we will likely see further drops later if it stays at ~$120-130/bbl as the long run impacts of oil price increases come into focus. _________________
Joined: Nov 27, 2004 Posts: 249 Location: The District
Posted: Fri Jul 25, 2008 3:27 pm Post subject: Re: how long will demand destruction keep oil at bay
Demand is down, and may continue to decline in the next few months - those efficiency gains are just gravy... we're talking about Jack and Jane only taking 6 auto trips per day instead of 10. Prices may stabilize a bit, probably at $100 or so. When things get cozy again, demand is going to start coming back. This whole process is going to play out again. But next time, demand cuts will be a little tougher. Jack and Jane are going to cut back some more, but those efficiency gains are going to exact an 'economic pound of flesh'. And the same damn thing will happen again and again, and each ratchet will be tougher, and wring out less and less efficiency gains. And just wait until land export model takes prominence.
The only thing worth speculating about is how long it's gonna take for the wheels to come off the bus. I'm thinking Peak Oil will cancel Christmas in 2010.
My best guess. _________________ What fortune has made yours is not your own. -Seneca
Posted: Fri Jul 25, 2008 11:36 pm Post subject: Re: how long will demand destruction keep oil at bay
Duende wrote:
each ratchet will be tougher, and wring out less and less efficiency gains.
Yes and no. Certainly the initial response to higher fuel cost was to simply drive a little less. Easy fat to trim but only a small gain. As the cost increased yet more some folks started driving a lot less (public transit, bike, car pool, etc.) while others got out of their 12 mpg SUV and into a 28 mpg sedan. This is a much larger energy savings. The SUV to sedan example yields 2.3x greater efficiency. Change the 28 mpg sedan to a 48 mpg Prius and you get 4x efficiency. Still pretty easy fat to trim for those who are not upside down on gas hog auto loans. The next more difficult step for some folks is to make the move closer to work. Even in the current housing slump a small number of folks are taking this route, not only for fuel savings but also because they have discovered an extra hour or two with the family is better than a bigger plot of grass and an extended commute.
It is not just personal transit where fat is being trimmed. Earth moving equipment is also moving into the electric/hybrid arena. Caterpillar has a hybrid bulldozer and other outfits have their various gizmos moving in the same direction. Same goes for mass transit with hybrid diesel buses becoming popular where governments can afford them. Even DoT agencies are swapping asphalt for concrete these days. I've actually been impressed with how quickly $4 gas and $5 diesel clobbered U.S. oil demand. Kill the subsidies overseas and really watch demand crash. Some here postulate the U.S. economy is net yet feeling the full effect of $130 oil. Likewise demand destruction is a gradual process that is still ongoing and I suspect will continue. The more difficult steps will be funding large scale mass transit options like light rail and getting EVs produced on a large scale.
Christmas continues in 2010 but perhaps a few folks do away with the tree lights in the name of conservation.
Fuel theft explodes in Portugal! That's a way of messing up with the demand structure, without trimming the fat. My guess is people will try to move into this kind of scheme before changing anything.
Also, thanks to ROCKMAN for remembering economy takes a long time to react to sudden change. I've read in a business-related newspaper that demand for fuel had decreased 5% in Portugal compared to the same time last year. That, however, was domestic demand; more and more people close to the border with Spain go there to fill up, because gas is still a bit cheaper in Spain. Especially long-course haulers fill-up in Spain. Global demand destruction is probably a lot smaller.
Even if this was a 5% decrease in total portuguese demand, a 5% demand destruction for a 30% fuel price increase? Come on! _________________ Environmental News and Clippings:
http://www.google.co.uk/reader/shared/10279555364898696533
Posted: Mon Jul 28, 2008 5:27 am Post subject: Re: how long will demand destruction keep oil at bay
Carlos & Joe,
The DD of the early 80's cut global consumtion by 15%. If we were consuming 86 mmbopd at the height then I would say, just as a rough measure, we haven't seen the bottom until global consumption drops to 73 - 77 mmbopd. But, then again, there are some different factors at play now....with China and PO the biggest. That's why I think it's too complicated to predict with any certainly even though we have the 70's -80's price spike and DD model to go by..
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