Hoarding is exactly what the government is doing right now by filling the SPR, and frankly it's the best thing that could happen. It drives prices up. High prices encourage demand destruction. They also finance new well development. The hoarded oil gives us a buffer to fall back on once shortages become more prevalent. High prices are what we need in order to adapt to what's coming, and the sooner they happen, the better.
Posted: Mon Jun 20, 2005 2:54 pm Post subject: Jevon's Paradox Explained
Please forgive me if this has been done already, but I'm new and I keep seeing people stumble/fumble with this.
If I understand Jevon's Paradox, it basically says that as energy efficiency goes up so does energy consumption.
This is true assuming prices are relatively constant (if they are declining it only reinforces it). Here's an example to expain what is going on:
Pretend you drive a car that gets 10 miles per gallon. You drive 10 miles a day to and from work. If gas costs $1 per gallon you spend $1 per day communting. If you buy a car that then gets 20 miles per gallon and nothing else changes you are now only spending $0.50 per day. You now have $.50 more per day to spend on other things. The odds are that new thing will consume more gas. Hence as efficiency goes up so does energy consumption. At a macro economic level this is what is expected and observed.
Now if the price of gas goes up and you keep the car that gets 10 miles per gallon, unless your income goes up to compensate it, you have to cut something else - your commute distance or other expenses. This is Jevon's Paradox in the Post-PO world.
In a Post-PO world, the keys to whether we survive or mass depression hits is, how fast does oil go up in price, how quickly can we shorten our commutes or become efficent and how quickly can we substitute away from oil. Oh, and how likely are other disaster/economic shocks likely to interfere with any transistions.
Joined: Dec 07, 2004 Posts: 463 Location: Cheshire, England
Posted: Mon Jun 20, 2005 7:08 pm Post subject: Re: Jevon's Paradox Explained
Rochester wrote:
Please forgive me if this has been done already, but I'm new and I keep seeing people stumble/fumble with this.
If I understand Jevon's Paradox, it basically says that as energy efficiency goes up so does energy consumption.
This is true assuming prices are relatively constant (if they are declining it only reinforces it). Here's an example to expain what is going on:
Pretend you drive a car that gets 10 miles per gallon. You drive 10 miles a day to and from work. If gas costs $1 per gallon you spend $1 per day communting. If you buy a car that then gets 20 miles per gallon and nothing else changes you are now only spending $0.50 per day. You now have $.50 more per day to spend on other things. The odds are that new thing will consume more gas. Hence as efficiency goes up so does energy consumption. At a macro economic level this is what is expected and observed.
Now if the price of gas goes up and you keep the car that gets 10 miles per gallon, unless your income goes up to compensate it, you have to cut something else - your commute distance or other expenses. This is Jevon's Paradox in the Post-PO world.
In a Post-PO world, the keys to whether we survive or mass depression hits is, how fast does oil go up in price, how quickly can we shorten our commutes or become efficent and how quickly can we substitute away from oil. Oh, and how likely are other disaster/economic shocks likely to interfere with any transistions.
Jevons' paradox isn't a paradox.
A few hundred years ago the luddites smashed up machines which they percieved were stealing their jobs. They didn't realise that those machines were giving their owners a competitive edge. They couldn't comprehend the difference between what was good for the individual and what was good for macroeconomics. Jevons so-called paradox is an exact parallel. Why should I reduce my energy consumption if doing so will not reduce total energy consumption?! There's absolutely no point in doing that when energy output is increasing. However when energy output is falling it's a different story.
It's no paradox - it's common sense; both on the way up and on the way down.
Joined: Dec 16, 2004 Posts: 704 Location: Santa Monica, CA
Posted: Mon Jun 20, 2005 7:17 pm Post subject:
I'd like to add my own observation of Jeavon's Paradox at work:
In terms of specific applications of energy use, any efficiency in running such equipment causes more energy consumption in that specific sector. For example, advances in refrigeration efficiency lead to more liberal use of refrigeration. When this kind of equipment takes less energy to run, more people buy bigger refrigerators and air conditioners and use them more often.
This is why one of the worst thing that can happen in the face of oil depletion is for auto makers to be able to build and sell super-efficient vehicles. If oil prices go up and car efficiency remains constant, then many Chinese would likely slow down their conversion from bicycles to autos and may opt for less car dependent lifestyles. But if Toyota or others build some form of hypercar and sell it to the chines, then more of those 1.2 billion people will buy them, use them and eat up all of the energy savings done here in the US when we convert our fleet to the hypercar.
In short, Jeavons paradox is a historic trend that tells us that conservation through technology is no answer for the depletion of oil. The only way it can work is if the energy is saved on one end is used to build energy harvesting equipment such as wind turbines, nuke plants, solar cells and permaculture developments (given that EROEI is positive).
I don't think there is such an issue as Jevon's Paradox. The fact is every drop of a resource will be consumed if that resource can be extracted for the right price. Improving energy efficiency, while it will never reduce the quantity of energy consumed, will increase the productivity of energy. You will get more out of the same amount of energy. This means that the fuel savings you get driving a more efficient car can be spent on air-conditioning or a bathtub, but it's ultimately meaningless for the phenomenon of oil depletion.
As much as possible the improvement of energy efficiency in every technology should be encouraged by public and private investment if we want to maintain civilization through oil depletion. Some things cannot be made more efficient however, like the continental trucking system, and will have to disappear, but they will be replaced by more efficient systems of transportation, like sea shipping and rail. The fuel savings can then be invested in other sectors of the economy, like energy generation in nuclear and renewables.
This is why one of the worst thing that can happen in the face of oil depletion is for auto makers to be able to build and sell super-efficient vehicles. If oil prices go up and car efficiency remains constant, then many Chinese would likely slow down their conversion from bicycles to autos and may opt for less car dependent lifestyles. But if Toyota or others build some form of hypercar and sell it to the chines, then more of those 1.2 billion people will buy them, use them and eat up all of the energy savings done here in the US when we convert our fleet to the hypercar.
This isn't how the economics of demand work however. What's most likely to happen is that fuel will become increasingly scarce (expensive) such that regular cars will become next to useless for the average motorist. Automakers will then sell super-efficient vehicle so that regular folks can continue to drive at the new paradigm of fuel scarcity. This will mean that the price of oil will be slightly lower, but won't affect the quantity produced. All the oil that can be extracted will be consumed, and the price will sort out who gets to consume how much.
Joined: Dec 16, 2004 Posts: 704 Location: Santa Monica, CA
Posted: Mon Jun 20, 2005 10:28 pm Post subject:
jaws wrote:
This isn't how the economics of demand work however. What's most likely to happen is that fuel will become increasingly scarce (expensive) such that regular cars will become next to useless for the average motorist. Automakers will then sell super-efficient vehicle so that regular folks can continue to drive at the new paradigm of fuel scarcity. This will mean that the price of oil will be slightly lower, but won't affect the quantity produced. All the oil that can be extracted will be consumed, and the price will sort out who gets to consume how much.
I agree completely, but my emphasis is about how the popular notion that technological efficiency will save us from the perils of peak oil and bring us to some new energy regime. The opposite is more likely true. If energy efficiencies reinforce consumption whether than the building of costly alternative energy systems, then it is likely GAME OVER for civilization. Cars are energy sinks that encourage consumption. If in China increases auto-mobility, their economic activity in other forms of consumption will go up too. Think of all the economic activity that is inspired in the US & UK surrounding the car culture. This very lifestyle paradigm has not only made the US the worlds largest consumer, it has become the economy of the nation itself. If made more efficient, this lifestyle of consumption will translate toward China very well. Jeavons Paradox?
Furthermore to build and invest in a car, is to NOT build and to NOT invest in a wind turbine or solar panel. The repair of a metro highway system is to NOT build a nuclear power plant or series of micro hydro systems. Remember, resource scarcity is a economically difficult time to build new energy capacity and feed high consumption at the same time. Suburbia has to sacrifice to save itself for at least some period of time. .
It won't do that though. There is way too much vested interest and inertia to allow it. Its full speed ahead at the wall in a hyper-hybrid-bio-ethanol-diesel. China will come along for the ride too.
Considering the US uses less oil per capita now than in 1980, I would say improvements in efficient do help. The US uses about 15% more oil now than in 1980 but has about 30% more people. Not to mention how much our econonmy has grown. How much oil would we be using now if we hadn't improved efficiency? Well, in 1974 it took ~17000 btu to produce $1 of GDP today it is ~9000 btu. We would have to consume almost twice as much energy than we do now to have the same size economy without improved effiency. So imagine, if you can, Americans still driving around in 8 mpg cars( like we were in 1974), since improving fuel efficiency is so silly. The avg. car in US is now about 21 mpg.
http://angrybear.blogspot.com/2005/04/oil-impact-on-us-economy.html http://macroblog.typepad.com/macroblog/2005/04/energy_prices_n.html
You may want to note the graph that breaks down the use of oil by sector and the quote:
Quote:
The industrial sector has never returned to the 1979 consumption levels
Even the historitic low price of oil (adjusted for inflation) of the mid-late '90s never brought our per capita use of oil back up to 1970's level.
_________________ "We shall not cease from exploration
And the end of all our exploring
Will be to arrive where we started
And know the place for the first time." - TS Eliot*
Joined: Jun 12, 2005 Posts: 4190 Location: 1st territorial capitol of AZ
Posted: Tue Jun 21, 2005 5:26 pm Post subject:
I use much more oil now because in 1980 I didn't use it at all. Or hardly, I guess taking the bus was using some oil, although most often I took my bike because I saved bus fare that way. Now, I use oil because I live where I use heat in the winter and I drive a car.
I'm hoping to go back to using as little oil as possible.
Joined: Dec 16, 2004 Posts: 704 Location: Santa Monica, CA
Posted: Wed Jun 22, 2005 10:26 am Post subject:
fletch961 wrote:
Considering the US uses less oil per capita now than in 1980, I would say improvements in efficient do help. The US uses about 15% more oil now than in 1980 but has about 30% more people. Not to mention how much our econonmy has grown. How much oil would we be using now if we hadn't improved efficiency? Well, in 1974 it took ~17000 btu to produce $1 of GDP today it is ~9000 btu. We would have to consume almost twice as much energy than we do now to have the same size economy without improved effiency. So imagine, if you can, Americans still driving around in 8 mpg cars( like we were in 1974), since improving fuel efficiency is so silly. The avg. car in US is now about 21 mpg.
If the American auto fleet would have remained at the same energy efficiency per car average, say because of technical limitations, then the US consumption of oil would be less than today. Why? Simple. The inability to run the car dependent lifestyle cheaply enough would have forced the de-democitization of the auto. That means less car dependent urban development would have taken place and more walkable cities would have been built along high efficiency transit routes. When the poor or lower middle class can no longer afford the long car commutes, then the regime of suburbia would have been abandoned for the most part.
The spread of suburbia in the US is what has made this county the largest consumer of oil in the world. Compared to Western Europe where the per capita driving is about 2/3 of ours, we get only 2/3 of GDP as they do.
For Jevon's claim to be effective, the efficency in question must
bring in new users or new uses. Otherwise, it can not possibly be
correct, because of marginal utility.
Unlike a straight reduction in price, which will cause an increase
in demand, an efficency increase will only cause an increase
in the result, not a proporational increase in demand of the underlining input.
For example, switching from regular to CFL bulbs, a 75% reduction
in price. The demand for lighting within the this group in aggregate
will increase, but it's the lighting not electricity that is directly affected.
It is totally unreasonable that the demand for lighting will increase
300% because of the fact of marginal utility.
Joined: May 15, 2005 Posts: 37 Location: Harrisburg, PA, USA
Posted: Tue Jun 28, 2005 11:05 pm Post subject:
From a global point, man needs to be paid "interest" on something he claims [as his own], then lends [to elevate himself].
The paradox then is resolved, if someone fails to pay the [demanded] price, someone else [in their self interest] will; someone else on the planet. Said this way; like gravity, someone will pay the interest [while there is energy to do so].
Now, when the "smartest" overall investor is constantly searching for his best investment, he overlooks the very bestbecause he is using his mind (i.e. he's a dumbshit). So the paradox is really not - it's merely man's rebellious rule coming apart.
That's the piece Jay missed; I know so from what he wrote.
That was the problem Luke was made to overcome in one of the first Star Wars.
I use much more oil now because in 1980 I didn't use it at all. Or hardly, I guess taking the bus was using some oil, although most often I took my bike because I saved bus fare that way. Now, I use oil because I live where I use heat in the winter and I drive a car.
I'm hoping to go back to using as little oil as possible.
The best bet is to stop eating and go naked. _________________ Gravity is not a force, it is a boundary layer.
Everything is coincident.
Love: the state of suspended anticipation.
To get any appreciable distance from the Earth in
a sensible amount of time, you must lie.
Posted: Sat Nov 26, 2005 10:28 pm Post subject: Re: Jevon's Paradox Explained
Aaron,
Your graph, and your bringing to most of us the atttention to the "Jevons" Concept; makes me wonder why we have an "Efficiency and Conservation" Section?
Is it not a lack of Efficiency and conservation into of itself? Keepingg in mind it's useless flab? _________________ Eickhorn Daggers!
www.pistolanddagger.com
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