[cipi604]

A good read on TOD, again. Plain and simple.

http://www.theoildrum.com/node/6226#more

[Ferretlover]

IMO, the Debt payment section would remain the same approximate size for a short term only; then, the need for clothing, medicines, etc., would begin to influence, then, force a change to blowing off debts owed to others.

[Ludi]

We need to wean ourselves from the whole "jobs" idea.

[AgentR]

I've suggested many times that the notion of "Oil/Gasoline will be X-odd dollars in the future, thus causing Y result." to be quite off the mark. People try to simplify the supply & demand thing as a 2D graph, mostly, I think, because its the limit of what they can conveniently draw or explain.

As we've seen with the current depression, demand can fall as a result of other factors, supply is manipulated by producers to sustain a reasonably stable price, the current supply, combined with economic activity level, serve to drive price up or down.

We could be headed towards an environment where Gas costs $10 US2010 and no one cares, or $1 US2010, and no one can afford it.

The real measure is how much oil can the economy process, and how much end product can it get out of that processing. If the amount of product per barrel stays the same, but we can only process half as much, for whatever reason, there are going to be some very unhappy people.

nb(product as in end economic activity, food, typewriters, etc; not just refined result of oil)

[GoghGoner]

Let me tell you what I think the symptoms of the arrival of peak oil are

1. Higher default rates on loans
2. Recession

This is something I have been thinking about a lot lately. Since the price corn is arbitraged to the price of oil --> the price of Aunt Jemima syrup should exceed the price of maple syrup when the effect of peak oil is fully realized.

The price is $3.29 USD for 12oz of corn syrup.
The price is $10 USD for 12oz of maple syrup.

I wish I had historical prices...

EDIT: The deliveries of HFCS peaked in 2002. Personal choice, product substitution, or too costly?
Excel Link

[GoghGoner]

I am satisfied with economic analysis by Hamilton, Rubin, and Therramus demonstrating that modern post war recessions are a consequence of increasing oil prices. Some would suggest this mistakes correlation with cause and effect, and that one could say the same about wheat prices causing recession. However, we know oil grows wheat not visa versa.

Now we have Steven Kopits noting that oil-expenditures/GDP ratio of 4% seems to be the recessionary spark

Yes, GDP is an interesting metric, however, it is influenced by so many factors. What other metrics?

The price of cotton is one I am considering. I would expect that less plastic should increase the cost of textiles. Last time I checked this hadn't happened, yet.

[mos6507]

I am satisfied with economic analysis by Hamilton, Rubin, and Therramus demonstrating that modern post war recessions are a consequence of increasing oil prices. Some would suggest this mistakes correlation with cause and effect, and that one could say the same about wheat prices causing recession. However, we know oil grows wheat not visa versa.

Now we have Steven Kopits noting that oil-expenditures/GDP ratio of 4% seems to be the recessionary spark

Must we go down this road yet again?



When looking at 2008 you should redraw the pie chart so that the "debt" section grows enormously after the ARM resets, far outweighing the oil-induced inflation. Meanwhile, the food and gasoline would not have been as big an increase as people were already powering down (driving less, getting rid of SUVs, bagging lunches). But a mortgage payment is an unavoidable fixed cost unless you mail in the keys, which is what people did!

[Outcast_Searcher]

Come Mos. You have to respond to my points, not just rehash yours. You still haven't responded to the timing (Oily did ) of the Japanese and German recessions. And that the crash began in new exurban developments, with very long commutes, and higher gasoline prices. What is that conventional wisdom? god only made so much good real estate. Well, the good real estate suddenly looked bad when folks who made $400/week suddenly had to spend $100/week on gasoline.

Pstarr, I agree 100% with your basic premise that oil affordability is key to how the future looks as oil demand exceeds oil supply whenever the global economy gets healthy. (However, I do agree with MOS that housing was a BIG part of the hit last time -- the vast majority that got it rolling. However, next time and/or the time after that, Chindia/3rd world induced high oil prices will do the job).

However, you seem to be mixing up Exurban families with lower-middle income families, IMO.

The folks who tend to live in the exurbs tend to be upper middle class, so the family income (2 salaries, generally) will probably average more like $2000 per week. So, it's not the absolute percentage spike in oil/gasoline that nails these people's finances -- it's that the idiots live SO close to the EDGE with total debt and expenditures. (Also, considering it's heating, cooling, delivery, raw materials, etc. etc. along with gas when oil spikes -- per The Economist, the actual burden on such Exurban families with 2 SUV's, a 4,000 square foot McMansion, etc. is more like a $400/week hit on even these relatively well-off folks).

Now, the kind of folks that live in MY neighboorhood (lower-middle-class apartments on the cheap end of town) that do make maybe $400 per family per week have a more direct hit. I talked with many such folks, who were often eager to share their woes, when gas got over $4.00. (I was curious about the economic effect, and this was before I'd heard of peak oil). These people were buying tiny cars and parking their SUV's. They were buying all their gas on credit (how long could that last?) They were doing without, and doing much less discretionary spending.

There are a LOT of these lower-middle class folks, especially in this economy (and for years that will continue, even if we have "big" recovery, given the pressures of outsourcing, IMO) -- how long can such folks take that kind of economic pressure -- and how well can the economy take THAT kind of hit over time, and the trickle-up effects that (IMO) MUST ensue?

And that was $4.00 gas. What about, say, $10.00 gas that folks like Rubin envision?

[GoghGoner]

Hmmm... I think maybe I could list unsustainable data points against there corresponding sustainable data points. This will be based on my interpretation of what is sustainable.

Unsustainable vs. Sustainable
Large Farms vs. Small Farms
Airlines vs. Sailboats
Asphalt streets vs. Dirt roads
Plastic bags vs. Canvas/Jute bags
Aunt Jemima vs Maple Syrup
Non-farm Workers vs. Farm workers

[Carlhole]

Energy Bulletin

I like the comment by one of the editors at EB at the end of their posting of this article.

~~~~~~~~~~~~~~~ Editorial Notes ~~~~~~~~~~~~~~~~~~~
A problem with Gail's analysis is that it doesn't have the sex appeal of Mad Max and crazed mobs cleaning out vegetable gardens.

On the other hand, I think she's probably right - we will experience peak oil as economic problems rather than dramatic shortages of fuel and goods.

If so, then it would be more realistic to plan for economic troubles than to spend energy on extreme survivalist strategies.

-BA

[shortonsense]

Mos you decry "doomers" for their scare tactics, hysteria, and irrational scenarios that dilute this site's impact. Yet you seem to refuse a moderate peak scenario, the one playing out right now--disequilibrium and slow decline.

I hate to say I agree, but I believe I do.

And it all happened in the US after the 1979 global peak, so there is even historical precedent.

[shortonsense]

So you are still ranting on about multiple peaks?

Rants are not required of historical fact.