[bud4wiser]

I've read many PO studies and articles describing the future with respect to current petroleum consumption and supply technologies.

Many of these articles predict significant shortages as early as 2009-2113 while many others believe that synthetic fuels can forestall petroleum shortages to 2025-2040.

Most of these studies leave "wiggle room" in their forecasts because of the uncertainties associated with unknown middle-eastern reserves or the practicality and feasibility of deeper off-shore well-drilling and other enhanced oil "recovery" technologies.

My questions for discussion are these:

Does anyone know of a recent PO study that addresses the possible effect of a severe economic contraction that is NOT directly attributable to oil supplies? How much can it affect a PO time line, months, years, decades? In other

My own hunch is that the economic downturn is a "goodthing" with respect to any chance for adjusting to the onset of PO. I figure any contraction in the economies of the developed world can buy time for additional innovation. What do you think?

[mos6507]

It's only good as long as you keep your job. Once you assume your spot on the bread line you won't feel like you're being spared any suffering.

So if we have a recession rather than a depression AND you keep your job AND we "attempt" to break out of it in another year or two, then we've just been given a nice little "gift" of time to prep. But those are a lot of ifs.

[Tanada]

Personally I don't think we will know until such time as raction ends, however long that may take. I beleive that just as we can't know the exact date of peak oil until some time after looking back we also can't know how much a slowed economy will mitigate the impacts while we are in a slowed economy. It will only be when the economy tries to grow and oil is insufficient to meet demand that we will be able to realize the full scope of the situation.

[Ludi]

No, because the effects of economic downturn and peak oil will look the same to most people. There won't be resources available to develop alternatives (see "employment" above). Without financial resources, new sources of energy or even existing sources of fossil fuels won't be developed. If not developed, they might as well not even exist as far as most people are concerned.

[Micki]

Nobody can predict exactly how a an economic downturn will affect energy consumption. We did see however in the early 80s that oil production fell noticably and as a result delayed peak production.

Have we however passed the peak, a down turn in economy will just hide the fact that supply isn't going to be able to surpass previous peak.
For this reason I started commenting already back in 05, that it is possible we'll pass the peak not knowing it is the real one, go into recession and only discover we are on the downslope when the economy tries to recover. The impact will be more severe if low oil prices results in shutdowns of projects and cancelled exploration and development of alternatives. (I am sure inflation will be blamed at first for increasing prices even if it is because oil production can't be ramped up to surpass previous peak.)

The other 'prediction' I have made is that supply issues will be further obfuscated by the fact that different countries will recover at different pace from the economical debacle. If for instance US remains in recession or inflationary depression, oil consumption will be dropping whilst emerging economy, say for argument sake China, can continue to increase oil consumption. One offsets the other until the oil production downslope is hit.
The harder the currently high consumption nations are hit, the more room there is for recovering economies to increase consumption. Especially if they start from a very low base.

[bud4wiser]

Thanks for the comments. I believe the current "kind" of economic crisis could lead to a lengthy plateau-ing of oil consumption that will change the time frames for peak down slope. My position is based upon the extraordinary amount of "discretionary consumption" of western nations used in recreation and travel.

These quantities currently surpass increases in developing nations.

"go into recession and only discover we are on the downslope when the economy tries to recover. The impact will be more severe if low oil prices results in shutdowns of projects and cancelled exploration and development of alternatives."

This is a real possibility, but for whatever reason, alternative recovery hasn't been keeping pace with the predictions I'm aware of anyway.

My own melding of published PO predictions seems to see 2013-2015 as the years for the first very real oil shortage "shocks."
But with recent events, I'm entertaining the idea that a lessening of demand can push the scenario back to 2018-2020....

Thanks again for any earnest remarks.

[joewp]

This economic contraction is an effect of peak oil.

Just wait until the lowish oil and gasoline prices induce consumers to resume consuming. The price run-up will take your breath away.

[Micki]

This economic contraction is an effect of peak oil.

Just wait until the lowish oil and gasoline prices induce consumers to resume consuming. The price run-up will take your breath away.

I have to disagree. It is a natural outcome of bubblenomics.
We cannot yet see a downslope and can therefore not conclude that peak has occured. Any link to oil production would be the fact that they didn't or couldn't ramp up production so much that it flooded the market with cheap oil and instead inflation made itself noticed through higher oil prices.
Independently of that, the Austrian school of economics teaches us that there is no means of avoiding a collapse brought about by credit expansion. i.e. fiat bubbles cannot keep inflating forever, so it was just a matter of time.

We can see in the vertical line up in the monetary base and with the move into quantitative easing that they are tying to reflate the balloon again. Increasing prices will will be a result of this UNTIL such a time that production no longer can be increased. Given that some production now is held back we should therefore see inflation before hitting production ceiling.

[TheDude]

Thanks for the comments. I believe the current "kind" of economic crisis could lead to a lengthy plateau-ing of oil consumption that will change the time frames for peak down slope. My position is based upon the extraordinary amount of "discretionary consumption" of western nations used in recreation and travel.

These quantities currently surpass increases in developing nations.

IEA nevertheless predicts 400k increase in consumption this year. And US VMT (my favorite benchmark for consumption) was up sharply for Oct.

Purely a hunch, but Obama will no doubt come out strong in favor of renewables in all their flavors - his cabinet and stated positions are heavily weighted towards addressing GHGs - and I wonder what the impact on hydrocarbon industries will be if this is the New Bubble; and Bubbles are all investors know, they're like dogs and fire hydrants. Got to get in on the ground floor, and they've lived their whole lives without a thought regarding macro externalities like global energy supply, as is so often pointed out it's a base or background those in the developed world consider fundamental to their lives, and an inarguable birthright. Like I said just a hunch, and unquantifiable.

Looking further down the road, how will hydrocarbon power coexist with renewables? Certainly we can have dams and coal plants, but if we're selling 10 million PHEVs per year where does that leave gas stations, which are so economically marginal they've been described as retailers of snacks that sell fuel on the side? So I think at some point governments will have to intervene more forcefully at various levels, just to retain the economic viability of these essential services.

[bud4wiser]

So I think at some point governments will have to intervene more forcefully at various levels, just to retain the economic viability of these essential services.

Well, I think that is what is going to happen - but by an altogether different, diabolical means.

The US Federal Reserve has essentially pumped at least three trillion dollars into the financial sector through the buying and otherwise guaranteeing of many severly overpriced, or just plain worthless securities. Some of these "dollars" will evaporate - but most are going to be rended away from these obligations and find their way into various areas of the economy.

The resulting inflationary pressure of these monies will price many recreational and travel opportunities away from millions of Americans. This depression or contraction of activity could significantly roll back North American consumption of ALL commodities as well as oil.

I still contend that knocking down the consumption of thirty million Americans resets the Peak and could lengthen the plateau for a decade.

[Micki]

One thougt that occured to me;
With the drop from 150 in just a few months that we have seen.
There was a lot of investments made along the way and that created a lot of extra output that then helped push down prices.
So basically their investments worked against them.
So besides the fact that some supplies aren't economical at these prices, what are the chances that oil suppliers this time will continue to hold back capacity just to avoid similar trap as now?
In the long run that is of course better as oil will be available for a longer period of time, but that type of development would push prices further up early on already and ensure there is more constant high demand that isn't met.

I think this was the scenario most old PO.com posters would have envisaged already earlier on as oil producers should have realized that that their product is too valuable to just dump on the market at any price.

[mididoctors]

economic contaction=post peak

[ROCKMAN]

bud,

You've already gotten a bunch of good answers. Just saw you post so I'm jumping in a little late. I'll add another factor I didn't notice which might effect the degree/timing of the down slope. Though new oil development projects were never going to prevent PO but they had some ability to delay and lessen to rate drop. With the price collapse comes the delay/cancellation of projects

If you've read about chaos then you might be familiar with "complex adaptive systems. Even though we often tend to describe the situation in absolute terms I see matters as just that: a system that adjusts in ways difficult to predict but also just as inevitable. You probably see a number of the feed backs existing in the oil production/comsumption theater. IMO one can only predict one aspect or another by making numerous assumtions which are not truly independent of each other.

[Pops]

I'm surprised at the responses here.

Of course demand destruction via economic contraction will have an impact on the future availability of oil and the price of energy in general.

You don't need to take my word, just look at the price of gas and the usage of oil.

It's been long speculated here that a big run up in price would be the impetus for many to make a big change.

So my question is:

Have the events of the last couple years prompted you to make any change?


If not, why are you even hanging around here?