[Questionmark]

I think that by separating peak oil into unique stages that represent a process we can better understand where we currently are and where we're headed.

Stage 1: Divergence

Supply and demand diverge from one another and we begin to see prices rise above that which would be enough to adjust for annual inflation.

stage 2: Peak or plateau

This is the point at which production can no longer increase and the demand line & supply line continue to grow apart, driving prices even higher.

Stage 3: Decline

In this stage we see production actually fall. Assuming that demand stays high and continues to grow (not currently the case), we will see massive price increases.

Stage 4: paradigm shift

Soon after stage three we begin to see the high price of oil affecting business models, cost of living, and the unraveling of society as people are forced to adjust to life without cheap oil. It is in this stage that any doomsday scenario would play out and will most likely be the longest portion of the process.

Stage 5: Post oil

Years after stage 4 we will be in a world where oil has been replaced as the premiere energy source and demand may actually realign itself with supply. Resulting in a price drop and possibly the death of oil completely as it is forsaken by the worlds population entirely for cheaper and renewable sources of energy.

How long each stage will take and the ultimate outcome is still up in the air and will depend largely on how governments and people across the world approach the problem. Fighting for remaining oil supplies could make things worse and drag the whole process out while quickly giving up on oil and pooling resources could accelerate the process and bring about stage 5 in just a few years.

[davep]

You appear to have forgotten the stages where high prices cause demand destruction and subsequent economic decline, followed by a resurgence that will again be thwarted by lack of supply.

[Questionmark]

You appear to have forgotten the stages where high prices cause demand destruction and subsequent economic decline, followed by a resurgence that will again be thwarted by lack of supply.

I see no reason to expect any sudden demand destruction due to prices. We are too heavily reliant on oil for anybody to be able to simply give it up before it becomes too expensive of a habit to continue. There may be a small decline in demand as people give up frivolous activities (atv riding, boating, motocross, etc), but the vast majority of the demand is driven by peoples basic needs (driving to work, electricity, food, etc).

However, I do believe that there will be a steady erosion of demand as people either adjust to living without oil (being self sufficient) or switch to different sources of energy.

[Ludi]

There may be a small decline in demand as people give up frivolous activities (atv riding, boating, motocross, etc), but the vast majority of the demand is driven by peoples basic needs (driving to work, electricity, food, etc).

"frivolous activities" = jobs

What "work" do you see people driving to after they have given up the frivolous activities that make up our service-based economy?

[dsula]

You appear to have forgotten the stages where high prices cause demand destruction and subsequent economic decline, followed by a resurgence that will again be thwarted by lack of supply.

This stupid demand destruction stuff is something I can't hear anymore. As soon as something is not free you have demand destruction. Even if a gallon of gas is 5 cents you have somebody who won't buy because of the price. Hence demand destruction. And demand never outpaces supply assuming free floating prices.

[rangerone314]

There may be a small decline in demand as people give up frivolous activities (atv riding, boating, motocross, etc), but the vast majority of the demand is driven by peoples basic needs (driving to work, electricity, food, etc).

"frivolous activities" = jobs

What "work" do you see people driving to after they have given up the frivolous activities that make up our service-based economy?

Frivolous activities... non-essential would be more likely.

If I HAD to, I could probably find someone to carpool with into work (about 8 miles or so)... daycare might be an issue...

Technically non-essential (but not frivilous) would be visiting my parents every few weeks (they are about an hours drive). I COULD in theory visit my oldest son less...

So I COULD cut back in theory... maybe 30% of my driving...
My shopping for groceries is almost always after another trip (right after leaving work or dropping my oldest son off with my ex-wife) and not more than a mile out of the way.

[davep]

You appear to have forgotten the stages where high prices cause demand destruction and subsequent economic decline, followed by a resurgence that will again be thwarted by lack of supply.

This stupid demand destruction stuff is something I can't hear anymore. As soon as something is not free you have demand destruction. Even if a gallon of gas is 5 cents you have somebody who won't buy because of the price. Hence demand destruction. And demand never outpaces supply assuming free floating prices.

I think you should possibly relax.

Demand destruction does happen as price increases. We've already seen it happen. It can then be followed by lower economic activity (i.e. a recession). Demand then picks up as prices drop, yet again to be foiled by decreasing supply and higher prices. This will show an overall increase in price over time, but with a jagged up-down shorter term trend.

This is not the same thing as the fabled 'peak demand' which is a crock of bullcrap. So kindly take a chill pill and be less aggressive when you post.

[davep]

You appear to have forgotten the stages where high prices cause demand destruction and subsequent economic decline, followed by a resurgence that will again be thwarted by lack of supply.

I see no reason to expect any sudden demand destruction due to prices. We are too heavily reliant on oil for anybody to be able to simply give it up before it becomes too expensive of a habit to continue. There may be a small decline in demand as people give up frivolous activities (atv riding, boating, motocross, etc), but the vast majority of the demand is driven by peoples basic needs (driving to work, electricity, food, etc).

However, I do believe that there will be a steady erosion of demand as people either adjust to living without oil (being self sufficient) or switch to different sources of energy.

Also, people may switch to fuel efficient cars rather than pickups for the commute, as well as car pooling, cutting down on non-essential travel etc etc. French demand dropped pretty heavily during last year's price hike, for example.

[Questionmark]

You appear to have forgotten the stages where high prices cause demand destruction and subsequent economic decline, followed by a resurgence that will again be thwarted by lack of supply.

This stupid demand destruction stuff is something I can't hear anymore. As soon as something is not free you have demand destruction. Even if a gallon of gas is 5 cents you have somebody who won't buy because of the price. Hence demand destruction. And demand never outpaces supply assuming free floating prices.

I think you should possibly relax.

Demand destruction does happen as price increases. We've already seen it happen. It can then be followed by lower economic activity (i.e. a recession). Demand then picks up as prices drop, yet again to be foiled by decreasing supply and higher prices. This will show an overall increase in price over time, but with a jagged up-down shorter term trend.

This is not the same thing as the fabled 'peak demand' which is a crock of bullcrap. So kindly take a chill pill and be less aggressive when you post.

The only reason demand fell as much as it did during the recession is because the root cause of the recession was a housing bubble. The housing sector is one that relies heavily on oil and now that credit has become difficult to come by and construction projects have ceased the demand fell. It had nothing to do with price and It's unlikely we'll see demand fall a second time or any further down than it already has. Like I said before, most of the demand is driven by peoples needs and it will simply be impossible for demand to fall below that.

[frankthetank]

Americans drove ~2,922 billion miles in 2008... About 235 million cars/trucks... I would hope there is room to cut a few of those. That is about 12,000 miles a vehicle... Say consumption needs to drop 50%, avg needs to drop to 6000 miles...or 500 miles a month... i would hope i could exist on 500 miles a month... I'd garage my car for 8 months out of the year (warm months) and save on gas/insurance if i needed too.

Plenty of "fat" to cut out of the system, all we need are more job cuts (in progress) and another super spike.

[Questionmark]

There may be a small decline in demand as people give up frivolous activities (atv riding, boating, motocross, etc), but the vast majority of the demand is driven by peoples basic needs (driving to work, electricity, food, etc).

"frivolous activities" = jobs

What "work" do you see people driving to after they have given up the frivolous activities that make up our service-based economy?

Those are your words not mine. I defined frivolous as leisure activities. People will still need to go to work, which accounts for a large portion of oil demand. Although I suppose "non-essential" would be a better term to use.

[davep]

You appear to have forgotten the stages where high prices cause demand destruction and subsequent economic decline, followed by a resurgence that will again be thwarted by lack of supply.

This stupid demand destruction stuff is something I can't hear anymore. As soon as something is not free you have demand destruction. Even if a gallon of gas is 5 cents you have somebody who won't buy because of the price. Hence demand destruction. And demand never outpaces supply assuming free floating prices.

I think you should possibly relax.

Demand destruction does happen as price increases. We've already seen it happen. It can then be followed by lower economic activity (i.e. a recession). Demand then picks up as prices drop, yet again to be foiled by decreasing supply and higher prices. This will show an overall increase in price over time, but with a jagged up-down shorter term trend.

This is not the same thing as the fabled 'peak demand' which is a crock of bullcrap. So kindly take a chill pill and be less aggressive when you post.

The only reason demand fell as much as it did during the recession is because the root cause of the recession was a housing bubble. The housing sector is one that relies heavily on oil and now that credit has become difficult to come by and construction projects have ceased the demand fell. It had nothing to do with price and It's unlikely we'll see demand fall a second time or any further down than it already has. Like I said before, most of the demand is driven by peoples needs and it will simply be impossible for demand to fall below that.

I was referring to the demand falling when the price sky-rocketed. This was prior to the recession. People can and will adapt to a certain extent. Let's not get too dogmatic about this. But I agree that in the longer term, it will really become a problem.

[shortonsense]

The only reason demand fell as much as it did during the recession is because the root cause of the recession was a housing bubble. The housing sector is one that relies heavily on oil

Since when? You think the minor volumes used in the American Northeast in the form of heating oil is significant when compared to transportation?

[Ludi]

Although I suppose "non-essential" would be a better term to use.

What essential jobs do you see people driving to? What about all the people who work in "non-essential" industries? What jobs will they be driving to?

[Questionmark]

Although I suppose "non-essential" would be a better term to use.

What essential jobs do you see people driving to? What about all the people who work in "non-essential" industries? What jobs will they be driving to?

I don't think you understand the discussion.

We were talking about demand for oil crashing as price increases. My claim is that demand for oil cannot crash sharply or quickly because the majority of oil demand is driven by peoples needs. Oil demand can only decline by the amount of it that is driven by leisure activities. Other than that, demand will hold steady and even grow until prices are driven to a point where current business models fail and we experience an economic collapse (PO doomsday/stage 4).

[shortonsense]

Although I suppose "non-essential" would be a better term to use.

What essential jobs do you see people driving to?

Now THAT is a good question. What job would be considered "essential" in the context of, you have to DRIVE to it? Certainly, an ambulance rushing to save someone, thats pretty essential, time is of the essence. But do construction workers HAVE to drive to work? Certainly they don't use their cars much once they are there. I certainly don't NEED to drive to work, anything which gets me there is fine, from my feet to a gas guzzling SUV. Doctors? Not unless its an emergency. College professors? Nope. Burger flipper? Nope. Unless someone is a delivery person using their own vehicle, is having a fossil fuel powered car essential somehow?

[shortonsense]

I don't think you understand the discussion.

We were talking about demand for oil crashing as price increases.

Yeah..but that already happened. Happened during the last peak oil in 1979 as well. Demand destruction is GREAT.

My claim is that demand for oil cannot crash sharply or quickly because the majority of oil demand is driven by peoples needs.

So....the people that actually used less, thereby crashing demand, you want to pretend...it didn't happen?

Oil demand can only decline by the amount of it that is driven by leisure activities. Other than that, demand will hold steady and even grow until prices are driven to a point where current business models fail and we experience an economic collapse (PO doomsday/stage 4).

PO doomsday is nonsense, we're 4 years in and can't even sustain a decent price spike. There was a study referenced around here a few months back which claimed that 1/2 of all crude use was discretionary in the US, certainly those "leisure activities" could come to a halt and suddenly we've put 9 million barrels a day back on the open market, and crashed it in the process. Hard to buy into doomsday fairy tales when a simple change in behavior is all thats required to turn the market upside down.

[Ludi]

I'm mainly curious about what jobs are considered "essential" (non-"frivolous", non-"entertainment") and once those are eliminated, what jobs will those people be driving to (or taking the bus, train, etc).

<<<<works in a frivolous industry, doesn't drive to work

[Ludi]

I don't think you understand the discussion.

I don't think you understand my question.

[Questionmark]

I'm mainly curious about what jobs are considered "essential" (non-"frivolous", non-"entertainment") and once those are eliminated, what jobs will those people be driving to (or taking the bus, train, etc).

<<<<works in a frivolous industry, doesn't drive to work

If a demand crash were to occur it would be before an economic crash. What people do after a PO doomsday doesn't influence the events leading up to the PO doomsday. So your question is irrelevant and off topic.