I will believe the Saudis don't see any upcoming problems with Ghawar when they cancel one of their projects due to low oil prices. If they continue to be full steam ahead with increasing their capacity then I think they are aware that Ghawar may not be as robust in 5 years time as they would like us to believe.
Posted: Wed Jul 13, 2005 10:28 am Post subject: Does this seem fairly accurate?
I've been looking for a way to talk about peak oil with people who don't want to hear really the details of the problem, and want more of a 10,000 foot view. Basically they do the old smile and nod thing once I start to get into the weeds, and their eyes glaze over and I lose them. So I've been trying to get the thing down into some really concise bullet points. I'd welcome your thoughts about this line of discussion and peak oil topic introduction.
Basically, I ask them to consider the following "facts", and get them to agree with me on each point, trying to logically lead them to the conclusion.
1) Economic growth requires inputs (energy for maintenence, manufacturing, mining, transport, etc)
2) Capitalism (and its outgrowth, interest based investment) absoultey requires long term growth to exist.
3) Oil is a finite resource (and the basic energy currency of the planet)
4) Demand is ever increasing (with population and industrialization)
5) Demand will outstrip supply at some point (the exact date isnt important)
6) When energy inputs become expensive, growth will become extremely difficult.
7) When growth becomes extremely difficult (or stops), the current global economic model collapses.
8 ) Thats really, really bad. (aka, people are going to die)
Thoughts? Comments? Remember, this iis for the uninitiated, yet marginally educated 40 somethings who tend to grasp things like the stock market (or at least think they do) and yet have enjoyed a life completely in the midst of our energy glut (and tend to assume it will continue on into infinity)
Last edited by brobak on Wed Jul 13, 2005 11:41 am; edited 1 time in total
The big problem that I see is that the people that I talk with have their views shaped by the local news/TV. If these don't mention the problem then it is hard for them to internalize what it is that I am telling them. I have the professional background to understand the problem ( Petroleum eng. ) , but it seems to me that that is not enough for them. I am not the authority of the stature of the TV News or the Newspaper. The usual response is "They will find some solution to this if this were to happen.." _________________ Men argue, nature acts !
Voltaire
"...In the absence of the gold standard, there is no way to protect savings from confiscation through inflation."
Joined: May 02, 2005 Posts: 3524 Location: Oh really?
Posted: Wed Jul 13, 2005 11:00 am Post subject:
Theree have been a number of approaches posted. Your approach sounds fine, and is similar to others.
Generally you need to be prepared to engage your audience at their level of understanding and at a pace equal to their level of interest.
Ask questions relevant to the current conversation that will gently steer towards the topic you wish to discuss, while always listening to and adjusting to the response you receive. Be ready to abandon your agenda as there is a time for everything and the present conversation may be the wrong time.
The most successful sales person is never perceived as having sold anything. Let your customers sell to themselves, they always will if you have a good product to offer. _________________ "It's still all about energy!"
Joined: May 06, 2005 Posts: 98 Location: Weare, NH
Posted: Wed Jul 13, 2005 11:17 am Post subject:
I know the "eyes glazing over" phenomenon. Somebody out there phrased it as "their eyes glaze over like a donut". I like that one..
Americans, in particular, are so used to the concept that everything will always be fine, big daddy gov't will take care of us. News has become just another form of entertainment, not something that is likely to impinge on next weekend's camping trip. And of course the media=corporations=gov't realizes this and provides other explanations for the problems, like the currently completely contrived "war on terror". Clearly it has been set up so that when the energy shortages begin most will simply blame the Ay-rabs. Like when Saudi Arabia collapses, which I expect soon. The "King" seems to be actually dying this time (as if he hasn't been technically dead for the past decade).
Joined: Mar 18, 2005 Posts: 2690 Location: Minnesota
Posted: Wed Jul 13, 2005 12:10 pm Post subject:
The only way that worked for me was to have the film "end of suburbia" in the VCR and forwarded right to the point before the power outtage. Somebody drops by & i tell them i'm right in the middle of a documentary (they usually will sit down & watch it with me)...then the horror develops on thier faces
This method works pretty well and i don't have to say a word
Joined: May 15, 2005 Posts: 4142 Location: THE MATRIX
Posted: Wed Jul 13, 2005 12:47 pm Post subject:
I agree, "The end of suburbia" was very helpful.
I think the best thing to do is help people crunch the numbers.
80+ million barrels sounds like alot until you tell them thats what the world uses in one day.
1 to 10 billion barrels from ANWR sounds like alot until you tell them the world will use 1 billion in 12 days/10 billion in 120 days.
If we use the most optomistic 10 billion figure - ANWR will supply the USA's oil needs for approx. 480 days total.
Another thing I notice is that many people like to talk in barrels/apples while others (the guber-ment) like to talk in gallons/oranges!!!
Brobak:
You will find that no one reacts exactly the same.
We (people who are trying to inform others) need to be PO educated so we can continue to be helpful in the conversation regardless of the direction it may take.
An understanding of human nature and addiction is also helpful
That's true, although we are steadily improving in the amount of economic growth we can get per unit of energy. We are much more energy efficient these days and able to grow more on less energy.
brobak wrote:
2) Capitalism (and its outgrowth, interest based investment) absoultey requires long term growth to exist.
No, I don't think that is true at all. Capitalism is merely a state where people are free to make their own economic decisions. It can work just as well in a stable society as in a growing one. Problems arise if everyone assumes there will be growth and makes decisions on that basis, and then there is no growth. They will regret their decisions and it will produce inefficient results. But this is no different than when any other unforeseen event ocurs. And if the transition from growth to nongrowth is slow enough to be anticipated, then the negative consequences can be small.
brobak wrote:
3) Oil is a finite resource (and the basic energy currency of the planet)
It is finite, and at present is one of the basic energy currencies (natural gas and coal make considerable contributions as well).
brobak wrote:
4) Demand is ever increasing (with population and industrialization)
There is no such thing as demand per se. Economists see demand as a function of price. In a free market, the price changes to the level at which demand and supply are equal. So what you are really saying is that recent demand/supply patterns have produced prices at which demand and supply have grown steadily.
brobak wrote:
5) Demand will outstrip supply at some point (the exact date isnt important)
This is impossible and represents a fundamental misunderstanding of economics. As stated above, the fundamental principle is that the price adjusts to the level at which demand and supply are equal. What you mean is that as supply becomes harder to get, the price is expected to grow.
brobak wrote:
6) When energy inputs become expensive, growth will become extremely difficult.
Yes, this is fair, although I think "difficult" is not quite the right word. Nobody is out there trying to grow the economy. Nobody wakes up thinking, what can I do to make the economy grow today - jeez, it sure is getting "difficult"! A more objective statement is that higher prices will tend to suppress economic growth.
brobak wrote:
7) When growth becomes extremely difficult (or stops), the current global economic model collapses.
Nonsense.
brobak wrote:
8 ) Thats really, really bad. (aka, people are going to die)
People dying would be bad. But you have failed to provide the slightest evidence for this position.
brobak wrote:
4) Demand is ever increasing (with population and industrialization)
There is no such thing as demand per se. Economists see demand as a function of price. In a free market, the price changes to the level at which demand and supply are equal. So what you are really saying is that recent demand/supply patterns have produced prices at which demand and supply have grown steadily.
brobak wrote:
5) Demand will outstrip supply at some point (the exact date isnt important)
This is impossible and represents a fundamental misunderstanding of economics. As stated above, the fundamental principle is that the price adjusts to the level at which demand and supply are equal. What you mean is that as supply becomes harder to get, the price is expected to grow.
Ah, yes, the Libertarian counter-arguments! I know them well (I could have re-listed them all, but why not save space).
brobak, the only thing I would change in your list of arguments is to substitute "our current economic system" for "Capitalism." Then you won't get derailed by counter-arguments such as those listed above. The highly theoretical "free market" does not exist, not even remotely, and therefore any reference to this particular pipe dream is the ultimate "straw man" argument. The world economic system is a rigidly-controlled, highly rigged game for the wealthy and powerful. And, in fact, our current economic system is absolutely based on growth! The banking system, or, more properly, "Big Debt", is constantly creating money out of thin air by law, and therefore, absolutely, needs to expand or else it dies. And without an ever-increasing supply of energy (for the argument about the benefits of our modern "energy efficiency", reference this thread on Jevons Paradox) it cannot expand.
As for the notion of supply and demand with regards to non-renewables, simply put, Peak Oil theory is the crack in the armor of classical (and modern) economics. The debate on this point is very long, but the best introduction to these ideas is found at the DIE OFF website.
Peak Oil theory is the crack in the armor of classical (and modern) economics.
There is also another chink in the armor. The economic system in place cannot cope well with a declining working population. The result = pensions crisis.
Joined: Dec 20, 2004 Posts: 890 Location: Scotland
Posted: Fri Jul 15, 2005 10:29 am Post subject:
all you really need to say is that we're about to pump less oil out of the ground year on year, meaning the price of petrol and everything made from oil is going to go up and up.
thing is though - why bother? would you want to know that your whole world is crumbling in front of you? i know i would, but a lot of people dont want to hear it. my wife is one such person. tell her about what's coming and she goes 'Yeah i know... but can we talk about cheerier things now..!'
of course, i agree to an extent with my wife. there's no point dwelling on bad news, and you do really need to try and see life for what it is - wonderful - in most cases! I'm simply enjoying each day as it comes - checking the oil situation, having good family times with my wife and 2 boys and my extended family, and just trying to survive and fit in a wee luxury now and then such as beer and some junk food occasionally.
Joined: Jan 31, 2005 Posts: 451 Location: Massachusetts
Posted: Fri Jul 15, 2005 2:30 pm Post subject: Re: Does this seem fairly accurate?
halfin wrote:
brobak wrote:
2) Capitalism (and its outgrowth, interest based investment) absoultey requires long term growth to exist.
No, I don't think that is true at all. Capitalism is merely a state where people are free to make their own economic decisions. It can work just as well in a stable society as in a growing one. Problems arise if everyone assumes there will be growth and makes decisions on that basis, and then there is no growth. They will regret their decisions and it will produce inefficient results. But this is no different than when any other unforeseen event ocurs. And if the transition from growth to nongrowth is slow enough to be anticipated, then the negative consequences can be small.
Halfin, you are confusing market allocation with capitalism. Capitalism generally uses markets and market-based prices as allocating devices, but markets can exist (and have for centuries) without a capitalist economic system. Capitalism is not merely a state where people are free to make their own economic decisions. That is laissez-faire liberalism (in the classic sense of the term "liberalism," not in the American political sense of that term).
Capitalism is an economic system in which the means of production are privately owned and in which owners expect their ownership stake, or capital, to appreciate in value. What makes capitalism unique is this expectation of growth. If a capitalist enterprise does not grow, owners will want to liquidate their holdings and invest them in another enterprise that is growing. For capitalism to work, the economy as a whole has to grow, or else growth in each enterprise comes at the expense of other enterprises and eventually reaches a limit due to the static size of the economy.
When economic growth permanently stops, or goes into reverse due to a sharp decline in available energy, we will no longer have capitalism in its classic form. The business models of our financial institutions will no longer work. The stock market will crash hard, as prices will depend almost completely on divident yields rather than on expectations of growth.
So yes, we can have a market economy after peak oil, but it will not be classic capitalism, and it will entail a steady decline in the value of assets as well as in standards of living.
Joined: May 23, 2004 Posts: 201 Location: Charlottesville, Virginia
Posted: Fri Jul 15, 2005 2:49 pm Post subject:
It might be instructive to answer this question: What if the Great Depression had not ended? What if the GDP had remained at depressed levels? What would have happened to Capitalism in the long term?
Joined: Jan 31, 2005 Posts: 451 Location: Massachusetts
Posted: Fri Jul 15, 2005 3:12 pm Post subject:
We have a historical model for something close to a steady-state economy with widespread market allocation. This was the European economy of the late 17th century (or roughly 1660-1700), a time when there was little growth in population or energy supplies. A few wealthy people made money, basically by exploiting farmworkers as landowners or by providing capital for commercial ventures and collecting a risk premium as merchants. Most people just eked by at a low standard of living.
However, we really don't have a historical model for what happens to a market economy when the economy is shrinking and the population is growing, which is where we will be at peak oil.
Every time in the past when economies have shrunk in a substantial and sustained way, populations have stopped growing and started shrinking. For example, the population of Europe is believed to have dropped by about half between A.D. 350 and A.D. 650.
In a market setting, I would expect prices of essential goods to rise sharply relative to wages due to the shortage and high price of energy, while the prices of assets will decline relative to wages, because in a shrinking economy there will no longer be an expectation of asset appreciation.
Another crack in the armor of classical economic theory: The human genome is evolving MUCH more slowly than the economy is intensifying.
Huh? Basically, we have evolved to function mentally in a wide-open savanah landscape with minimal crowding and low intensity of all factors. An economic system built upon the principle of intensification will eventually reach the limit of humans to tolerate this intensity. Many, myself included, will argue that modern industrial economy is perilously close to that limit right now, and we are already seeing the effects. Enter depression, apathy and a wide variety of other symptoms.
Is this irrelevant to the thread's topic of "how do we explain Peak Oil"? I don't think so... alienation, apathy and other symptoms of humanity's inability to cope with the modern environment represent the key problem in explaining peak oil, because one of our most effective coping mechanisms is "faith" and "belief" (as opposed to the rational analysis of available information)... especially the "belief" that everything "is" OK.
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