[mmasters]

What signs are there to look for that an impeding oil shock is coming? By oil shock I mean when supply and demand are at odds. This last happened in 2007/2008.

[ralfy]

Given economic crisis, oil demand may be decrease given lower production of non-necessities, but this may be offset by increased production for necessities such as food and medicine, especially for a larger global population that requires them.

[John_A]

The Third Great Oil Crisis. In 2007. Apparently one happened a year before the 2008 spike and crash as well. So maybe that was the 4th Great Oil Crisis. How the Fifth might look in my opinion is exactly what you see now. Increased prices leading to accessing things we would never have used to make fuels with before.

leggett-po-to-hit-society-with-a-big-seismic-shock-t33878.html?hilit=oil%20shock

[BobInget]

pstarr took the words out of my brain. These 'oil shocks', like most calamities, aren't worldwide happenings. While oil exporting nations soldier on during the worst of times, its energy poor that suffer the most. It would be easy to blame Egypt's current difficulties on energy shortages.. But we know Egypt's problems are an amalgam and result of decades of crazy energy policy, corruption, unfettered population growth and on and on. Mobs need something tangible to focus on. Gasoline, electrical shortages sharpen that focus. Because yet another former oil exporter finds its economy in tatters, like Syria, Egypt, hanging does, as they say, 'concentrate the mind'. Is this a peek into the distant future for the US, we ask ?
I don't belied it is. Despite regressive forces constantly trying to pull us back to places we never were,
America remains a beacon of progress. Not the only beacon mind, but compared to Denmark that already get 30% of its energy from wind and hydro, we are behind the times. When Americans are pushed into action, we will find one or two vital arenas we can all unite around. Alternative energy, I'm certain will be first on the list if for no other reason, 'it's not that difficult to make small changes, gradually.

[Pops]

Keyword
"spare capacity"

[ralfy]

Thanks, Pops. I'm reminded of this chart from Morgan Stanley:

http://www.businessinsider.com/oil-spar ... 013-2011-2

[Loki]

The most reliable sign is the one at the gas station. Ignore the 9/10s part and just round up.

The Third Great Oil Crisis. In 2007. Apparently one happened a year before the 2008 spike and crash as well. So maybe that was the 4th Great Oil Crisis. How the Fifth might look in my opinion is exactly what you see now. Increased prices leading to accessing things we would never have used to make fuels with before.

Yep, oil crises are just a matter of nomenclature. Rational minds understand that price spikes are simply market incentives to raise oil production, they have no meaning beyond that. And as usual, the market has responded, without so much as a bump in the road. Today the US is producing more oil than ever before with the strongest economy we've ever seen, falsifying Hubbert's peak oil nonsense. Right?

[Quinny]

Don't know whether you are just being sarcastic, but 'strongest economy we've ever seen' Wrong!

The most reliable sign is the one at the gas station. Ignore the 9/10s part and just round up.

The Third Great Oil Crisis. In 2007. Apparently one happened a year before the 2008 spike and crash as well. So maybe that was the 4th Great Oil Crisis. How the Fifth might look in my opinion is exactly what you see now. Increased prices leading to accessing things we would never have used to make fuels with before.

Yep, oil crises are just a matter of nomenclature. Rational minds understand that price spikes are simply market incentives to raise oil production, they have no meaning beyond that. And as usual, the market has responded, without so much as a bump in the road. Today the US is producing more oil than ever before with the strongest economy we've ever seen, falsifying Hubbert's peak oil nonsense. Right?

[SeaGypsy]

Come on Quinny! Loki is definitely being sarcastic- took a serious wage cut, left his profession, comfort etc. to become an organic farmer on minimum- the guy is a prophet- just a humble one.

[John_A]

Today the US is producing more oil than ever before with the strongest economy we've ever seen, falsifying Hubbert's peak oil nonsense. Right?

No. Today the US is USING oil more efficiently than ever before with the weakest recovery we've ever seen. I suppose you could argue that this very peak in efficiency is itself a sign of reaction to a oil shock in progress, price driving inefficiency out of the system, but I doubt that most people here would like the idea that the leadup and consequence to an oil shock is just increased efficiency and poor growth while working through the transition.

[SeaGypsy]

I doubt that most people here would like the idea that the leadup and consequence to an oil shock is just increased efficiency and poor growth while working through the transition.

If the leadup and consequence are the same- no shock, right?

[agramante]

Increases in efficiency can only account for so much of a decrease in consumption. There is a limit to what efficiency can accomplish (the barest minimum would be the chemical energy required to do the physical work, but none of our machines are remotely that efficient). At some point, a decrease in consumption means a decrease in activity, which means shrinkage in the economy.

There are a few reasons why our economy now is much more efficient than it was, say, 40 years ago. Notable among them is that we've outsourced much of the manufacturing to countries like China, which are only too happy to burn coal to make it happen. The growing disparity in incomes has left many (or most) Americans with dramatically reduced, or entirely nonexistent, budgets for things like travel and discretionary purchases. This disparity is one of the prime reasons for the illusory nature of our recovery.

[Quinny]

I did think that, but a bit confused by recent posts!

Come on Quinny! Loki is definitely being sarcastic- took a serious wage cut, left his profession, comfort etc. to become an organic farmer on minimum- the guy is a prophet- just a humble one.

[Loki]

Today the US is producing more oil than ever before with the strongest economy we've ever seen, falsifying Hubbert's peak oil nonsense. Right?

No. Today the US is USING oil more efficiently than ever before with the weakest recovery we've ever seen. .

Agramante is correct that efficiency doesn't explain much of the decline in our oil use. Gail Tverberg estimated that improved vehicle efficiency accounted for 7% of our reduced use, the rest was mostly demand destruction:

A small part of the decline in oil consumption comes from improved gasoline mileage. My analysis incidates that about 7% of the reduction in oil use was due to better automobile mileage. The amount of savings related to improved gasoline mileage between 2004 and 2012 brought gasoline consumption down by about 347,000 barrels a day. The annual savings due to mileage improvements would be about one-eighth of this, or 43,000 barrels a day.

Apart from improved gasoline mileage, the vast majority of the savings seem to come from (1) continued shrinkage of US industrial activity, (2) a reduction in vehicle miles traveled, and (3) recessionary influences (likely related to high oil prices) on businesses, leading to job layoffs and less fuel use.

http://ourfiniteworld.com/2013/01/31/wh ... e-mileage/

I doubt that most people here would like the idea that the leadup and consequence to an oil shock is just increased efficiency and poor growth while working through the transition.

A crap economy as a result of peak oil is exactly what many peak oilers have been arguing for years. I predicted the Great Depression II back in '06, but all we got was this lousy Great Recession. Close enough, I suppose.

Not sure what transition you're talking about, though. The transition of the US into an impoverished Third World country?

[Loki]

Come on Quinny! Loki is definitely being sarcastic- took a serious wage cut, left his profession, comfort etc. to become an organic farmer on minimum- the guy is a prophet- just a humble one.

You're right, I am a humble prophet. And a genius. I'm also handsome

Anyway, back to the OP, I doubt there is a reliable way to predict an oil shock. Maybe some of the older folks here who remember the '70s oil shocks might know different. Actual shortages and formal rationing schemes usually take place after unexpected political events or natural disasters.

The price spike of '08 may have been predictable, but I doubt many accurately predicted the exact timing. I think it's safe to say future price spikes are certain, but who knows when they'll happen. Best to make yourself as immune to them as possible.

[ROCKMAN]

I suppose to be analytical about it we would break demand destruction into two components: increased efficiency and voluntary/involuntary consumption reduction. I would think increased efficiency would require a significant change in infrastructure like autos, heating/cooling systems, insulation improvements, etc. Obviously this takes time along with capital. But once in place the effect remains even in the face of lower energy costs.

The voluntary/involuntary portion can happen almost instantaneously. OTOH as prices decrease this effect of this component could reverse very quickly. Like many dynamics easier to see in the rearview mirror than in real time

[POBox]

I have to think that any voluntary consumption reduction is more the result of bad economic times than intentional change. If you can't afford to replace an old car, you drive it less to avoid major repairs, or to save gas money.

I do believe electricity usage has decreased due to use of CFLs and a few LEDs. These and added insulation are low-hanging fruit, within the range of the frugal consumer.

The intentional reductions have more to do with establishing new habits, combining trips, working from home or finding local work, leaving the lights off, etc. I've adopted these new habits, but has the average adult consumer done anything significant yet? I hate to be pessimistic, but I don't think so...

[John_A]

I doubt that most people here would like the idea that the leadup and consequence to an oil shock is just increased efficiency and poor growth while working through the transition.

If the leadup and consequence are the same- no shock, right?

Pretty much, unless you define shock as widely as some people appear to do with collapse.

Then the price alone can be "shock", instead of the kind of reaction I would expect from someone, "wow that stuff is expensive! I am sure going to do everything imaginable to use less!"

Undoubtedly a perspective from a rich country, but then it is the rich countries wasting all the crude oil, we really should stop just for the good of the rest of the world.

[Pops]

Thanks, Pops. I'm reminded of this chart from Morgan Stanley:

http://www.businessinsider.com/oil-spar ... 013-2011-2

Thanks Ralphy, hadn't seen that, I was thinking of this one from Gold Sacks back when: