[MrBean]

The energy contained in a gallon of oil, which costs about four dollars, is equivalent of the energy of, say, about one month's manual labour, wich costs, say, about 2000 dollars. These numbers are approximates of a generalization, others can provide more exact versions. What is also of crucial importance, that as EROI (energy returned on energy invested) of oil keeps weakening, a gallon of oil replaces smaller and smaller time of manual labor.

However, what should be clear is that the upper limit of price of oil or other technologically produced energy is the amount of manual labor it replaces - ie, in the example above, gallon of gazoline could go up to 2000 dollars before hiring manual labour to do the same job would become more competitive. Also, the upper limit keeps coming down as the EROI of oil keeps weakening.

[vtsnowedin]

Its not as easy as that. You will of course get to a point where the EROEI is so low you wont want to do simple things like heat a house with anything derived from crude oil, but what about things that cannot be done with human labor, say fly a F-16.
You have to look at all possible substitutes, their EROEI and possible supply before you will get a idea of the upper limit to crude oil prices.
What was the price of whale oil in 1858 adjusted to 08 dollars? That would give you some idea of how prices of a scarce commodity might go. We have found a multitude of uses beyond lamp oil for crude so the comparison is far from perfect.

[idiom]

Often you first hit the point where not doing the job is competitive. The economic opportunity to put the money else where crops up first.

If what you produce with your gallon Oil is only worth $250 then it won't get done past that.

You wouldn't go on a cross country road trip if you had to pay people to pull your car. You only do it because you can do it cheaply.

[Quinny]

Your assumption is basically OK, but a major problem is the value of the dollar. It would be interesting to see what the 'true' price of oil is by factoring in currency values and 'true' inflation.

[ReverseEngineer]

Also not taken into account in this equation is that Oil isn't just a source of energy and replacement for Human Labor, its also the material source for many products we use. Any chemical in the Dow Pantheon has at least some of its source in oil. Kiss off home insulation from polyurethane of course, and kiss off nylon and lycra clothing materials and kiss off composites and fiberglass. Heck you even have to kiss off Duct Tape!

Paint, plastics, shampoo you name it, its all oil. Most certainly, the energy value is fundamental here in an economic sense, but the simple loss of all the products based on oil is culturally transforming.

Next time you throw away a plastic pop bottle, just think about how hard that is to replace in the future. Lightweight, waterproof, unbreakable container for liquids, its miraculous, or would be to a glassblower in 15th century Holland.

Its possible we might find ways to replace such products using cellulose as a substrate, but it will take a while. It will never come so cheap as it did in any event.

Reverse Engineer

[idiom]

For a lot of that stuffs we will have to roll back. Putting empty milk bottles out on the porch, rope made from hemp, clothes from cotton and shoes from leather.

All the plastics will be needed for items that require them.

Once you have made a glass coke bottle, you don't have to make it again. It just goes round and round and round requiring very little energy input.

[Pretorian]

The energy contained in a gallon of oil, which costs about four dollars, is equivalent of the energy of, say, about one month's manual labour, wich costs, say, about 2000 dollars.

well you are forgetting that the price of manual labour is very dynamic . There are some places in Africa where a gallon of gasoline is worth more than a month worth of manual labour already. These assumptions, i.e that manual labour is worth $2000 a month, or that worker has to have his own room,ets-- will go away pretty fast. A bunk bed in the barack (sack of straw on Sundays for good workers) and a quart of wheat per day -- that is more likely.

[ReverseEngineer]

For a lot of that stuffs we will have to roll back. Putting empty milk bottles out on the porch, rope made from hemp, clothes from cotton and shoes from leather.

Absolutely, you can substitute the products we once used for many of the products we now derive from oil, but you can never do it as cheaply as we did, or in the same quantities.

Getting a lot of leather to make shoes for 6 Billion people would require a LOT of cows. How do you intend on feeding all those cows? A gallon of oil makes a LOT of nylon rope. How many acres of hemp do you need to plant and harvest to make a similar rope from hemp?

Absolutely, we can return to a smaller economy with fewer people based on the technologies we had in 1750. However, at the time, the Earth supported a fairly steady state of slightly under 1 billion people. To make these technologies work again, you would need to remove about 85% of the current population.

Reverse Engineer

[idiom]

1750?

My Father remembers when a guy came round once a week with a big as block of Ice.

Because we haven't planned ahead, best possible scenario is still a massive hit in living standards globally.

First things we have to do is legalise the production of Hemp, and move back to glass packaging for a lot of things.

Also, I am a near total doomer for America, the rest of the world doesn't have nearly as far to fall.

[MrBean]

The energy contained in a gallon of oil, which costs about four dollars, is equivalent of the energy of, say, about one month's manual labour, wich costs, say, about 2000 dollars.

well you are forgetting that the price of manual labour is very dynamic . There are some places in Africa where a gallon of gasoline is worth more than a month worth of manual labour already. These assumptions, i.e that manual labour is worth $2000 a month, or that worker has to have his own room,ets-- will go away pretty fast. A bunk bed in the barack (sack of straw on Sundays for good workers) and a quart of wheat per day -- that is more likely.

I'm not forgetting, just making a huge oversimplification for (s)poilers to keep complicating.

Of course (the currency fuzziness noted but let's not go there in this post) in a world where many live for less than a buck per day, the 30 dollar limit to gallon of gas is much more likelier than 2000 dollars.

And if not speaking about energy but as an irreplacable resource for manufacturing plastics etc., there is no upper limit except how much the elite fat cats will pay for the status symbol of a plastic bag etc.

[cube]

Because we haven't planned ahead, best possible scenario is still a massive hit in living standards globally.

I don't have anything against "planning" per say but I think being adaptable is more important. You can plan all you want but lets face it, there's going to be 101 new variables introduced from now till post PO that will turn the most brilliantly laid out plans upside down.

The problem with "planning" on the society level is it requires something called an "agreement".

[idiom]

That is why I am a doomer with regard to most of the world.

It is unlikely that new plastic bags will be made from fresh super expensive Oil.

More likely it will become much cheaper to dig up old plastic and recycle it.

The big question is whether $110 per barrel has been significantly high enough to trigger a global economic collapse. Due to invisible AE depletion, a Barrel of Oil just Aint what it used to be.

[bkwillia]

I think the best way to price oil is the marginal cost of demand destruction. While car culture is popular, its is relatively cheap to free up oil supplies by jacking the price. $145 oil gave the world about an extra 1million barrels. Not bad, but in about 5 years we will need at least another 5 million bpd of demand destruction.

At some point, the price of oil will cause the collapse of car culture for popular consumption. People will simply not be able afford to drive to work in their own car, so they will find alternatives on a massive scale. At this price, demand will collapse and the price will pull back.

Assuming the average American drives 30 miles a day (its actually more) and their car gets 30 miles per gallon (lol), they have to be able to afford a gallon per day. If gas got to be $20/gallon, this would be $600 a month, which is comparable to low cost housing rates. At $20/gallon, I would think car culture could collapse, but it's alive and well in Europe even as prices approach $10/gallon.

I think oil will have a mid term peak around $500 a barrel. Long term (30 years+), the sky is the limit since oil will be a luxury/military commodity.