Doly wrote:Peak oil operates in a system where future risk mitigation is built in naturally.
I don't follow you. Can you elaborate?
Sure. Let us say we use scarcity as a driver, classic peak oil. In the old days, like oil production to date, decreasing storage and market signals proclaim scarcity and first drives up price. Continue this trend, more scarcity, higher prices, and the demand/price balance shifts. In the old days, this would be the always true to date axiom of "the cure for high oil prices is high oil prices". But in a true scarcity scenario, no increase in supply can happen. Maybe you can hold production, maybe you can fight the decline with those high prices, but scarcity is scarcity, there will be no more. Consistently high prices can then be counted on to continue, demand will be forced in this case to be lower, the combination of the two will allow nothing to mitigate price except....demand destruction. High prices in the old days would lead to more supply, not in this case, so the only alternative is
forced demand destruction. Maybe rationing, society will be stretched in some places to the breaking point under high prices, and oil being primarily related to transport, transport habits will be forced to shift. The new price will then be established under two conditions, the overall natural decline of existing fields and wells and new ones that can fight decline (and will, under our high price scenario), and the speed at which adaption and overal demand destruction takes place.
It is quite conceivable that once this price/supply disruption establishes itself, and folks and governments are all initiating their long term mitigation efforts, they might balance against decline, or even outstrip it, and the normal supply demand relationship will be reestablished, just in a overall declining market.
I've already replaced 90% of my transport fuel use with 2 used EVs. EVs aren't required for everyone of course. CNG is popular locally, fuel cells, hydrogen, whatever. I am already irritated when I fill up an ICE antique, but when I need cross continent range, I currently have no other choice. In this hypothetical oil decline scenario, I imagine that price will drive me to fly instead of drive, a train or a bus perhaps. But locally, I'd still being EVing all around. Costs in general would go up, no different than how inflation works, as the new high price of crude flows through the economy. It will be disruptive, no doubt about that, but we need look no farther than a similar situation that happened with gloal peak oil in 1979. Stagflation, people changed their driving habits, prices were high and efficiencies took place on a grand scale, it took years to sort out as oil production dropped and then finally at least stabilized. Later, it began to increase again as the cure to high prices kicked in, because as we all know, 1979 was just one of the peak oils, not THE peak.
And with any understanding of global reserves and resources, there is no scarcity requirement this half of the century, which I believe I've mentioned before. The conditions of 1979, and solution to it, are still viable with existing reserves and resources. It is only a matter of price and our faux-concern about the environment, we talk about no more O&G investment and whatnot, but we are just lying to ourselves right now. Few are taking steps that a real peak oil would require, in the name of being green.
Just because we CAN do a thing, doesn't necessarily mean we will. We've shown no interest to date in chosing to decrease out overall crude use.
Plant Thu 27 Jul 2023 "Personally I think the IEA is exactly right when they predict peak oil in the 2020s, especially because it matches my own predictions."
Plant Wed 11 Apr 2007 "I think Deffeyes might have nailed it, and we are just past the overall peak in oil production. (Thanksgiving 2005)"