thanks for the link.
that really hits the nail on the head.

the fact that even now I'm having to carefully consider whether I'm flying out to PA to visit friends and family in August really had me thinking about the fact that there's a very real possibility that wherever a lot of us are in 4 or 5 years might be where we're staying for a while.

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...had me thinking about the fact that there's a very real possibility that wherever a lot of us are in 4 or 5 years might be where we're staying for a while.

Yuppers. Been thinking about that a lot too. Kinda don't mind it, although it sucks to have it imposed upon you. It's good to start contemplating now though, from a proactive sense.

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Hanging out with Greasers for the last 5 years or so I've seen a lot of the Peak Oil doom and gloom. I think we have issues but it is a bit over hyped. As oil supply decreases price increases and business and people invest in alternatives. As gas goes over $4 a gallon in the US tons of money is pouring into alternatives because they are or may become cheaper. Don't get me wrong, its seriously effecting some folks standard of living especially is you were a consumer of large amounts of fossil fuel (or products requiring a lot). It will effect people somewhat dramatically short term and have some long term effects as well, but I don't think the sky will fall or the economy will collapse. IMHO, we are a bit more resilient then that. I think you'll see a lot more good then bad, return to walking towns and communities, more biking and walking, more mass transit, more alternative energy, more efficiency in our businesses and systems.

My biggest fear is actually that it'll also reduce international travel pretty dramatically (since planes are harder to run alternatively and extremely inefficient). I think international travel is essential in teaching people to think about the global community, look at humanity from a different perspective and not be able to demonize other nations so easily.

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Yeah, I see both sides of it: the doom and gloom and the hype. And I agree that it can result in some pretty positive changes (communities, efficiency, etc.)...but I still think it's going to be a shock and potentially have some very destabilizing effects globally.

And yeah, the international travel thing looks set to happen and is seriously depressing, both from your (more lofty) perspective, and a more selfish perspective of wanting to see things.

Le sigh.

We'll adapt though...I'm sure...but it stands to be potentially painful.

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Excellent piece. Thanks for pointing to it. Ok, so I had to go to the Post website after I had just spat my refusal at them... but it's a columnist, not really the Post.

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:)

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agriculture needs to return to the center of economic life.. .We'll also have to occupy the landscape differently, in traditional towns, villages and small cities

Seriously. Ummm, I guess that's one approach. Kinda along the lines of "killing all the humans makes the world a better place"

Me, I think Urbanism is the way to go. For many of the reasons articulated by this guy who does a local free flashmob-style dance party here. I particularly like his line of:

* to all my fellow enviros who talk about living out in the country by yourself? Talk to the hand! What happens when everyone on the planet wants to do that? What makes you get to & no one else?

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I'm seeing more of "urban farming" coming up.
As farm land has gone away, due to the exurbs,
city space has opened up, due to the population shift.
Basically, crops getting grown, In the cities.
Of course, this works in areas that have adequate resources.
I'm curious as to what new mexico, and other areas which rely on cheap energy and water , will be like in 10 years.

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Sorry... while there are parts of the story I agree with, I think for the most part it's a load of horseshit. I'd rather not waste my effort refuting individual parts of his argument... I'll instead post my own take, and you can contrast/compare.

I'm so sick of the defeatist, we'll all have to tighten our belts, the sky is falling bullshit, I can hardly stand it any more. So what follows is a rant, and is not great evidence for the massive amount of personal time I have invested in my own education, particularly in economics.


1) No big solution is needed or forthcoming. The reaction to higher oil prices will be many and varied. The larger trends being the aggregate of countless individual spending and planning decisions. Those reactions will be in proportion to the pain/reward they represent.

What this means:

a) oil exploration and oil production will rise in response to the high demand/prices. This will take a number of years, but it will happen (just as it did before.) I expect it may overshoot again, but with the current rates of global GDP growth there will be enough demand to soak it up.

b) demand for oil will be attenuated in proportion to its rising costs. Miles driven dropped for the first time in 20 years in March. Americans are also a huge bunch of pussies. Over here we're paying $10/gal for gas and still driving a lot. Transportation costs are still only <6% of household income (previously being 4-5%.) If this is pushing you over the financial edge, you fucked up.

c) cross price elasticity will see higher prices in a wide range of other commodities, notably natural gas, electricity, wood, coal, (coal is WAY up... double since January.)

d) as producers/consumers adjust to the new prices, consumption and investment patterns will change. Where sensible new transport options will be used, growing/production patterns will change, etc.

...and so on. If you notice, all of this will happen by itself.

2) We have shitloads of oil, the earth contains even greater shitloads of untapped oil. Our proven reserves are sufficient to meet 100% of our projected demands for the next 20 years. That's sweet crude... oil shale is a fucking huge number, proven coal reserves are unimaginably huge. The US is the Saudi Arabia of coal.

a) that means the earth has plenty of conventional fuel to carry us to the next stage...


3) Forecasting is not taking a ruler and extrapolating current trends. Every soothsayer predicting our doom has done the same fucking thing, and has been and will continue to be wrong.

a) The guy who said "those who fail to learn from history are doomed to repeat it" was a fucking genius. We were running out of whale oil when we tapped the first commercial oil well in the Quaker state.

b) Have some fucking optimism when it comes to human ingenuity and talent. Do you really think 50 years from now we won't have come up some new disruptive technology? Don't forget the power of compound interest either... a few percent of gains compounded annually are pretty amazing... 5% over 50 years is 1140% better than today. I think Kurzweil is a loon, but our current pace of technology, on all fronts, is pretty jaw-dropping when you step back and look at it. If I wasn't so disappointed by 80% of our population, I'd be completely giddy about the future.

c) what forecaster predicted the mobile phone? when did they predict that every school kid would be carrying the damn things? do you think there's another mobile phone idea taking root right now?


4) No optimism for human ability, but near total belief that we need the government or collective action to save us... despite an endless string of futile and wasteful efforts from same. What solved the last "gas crisis"? Do you think GM started making smaller more fuel efficient cars because of CAFE standards? or because Toyota couldn't make enough cars to meet demand.

a) Trains suck. Will continue to suck, and only don't suck if you get someone else to pay for it... I'd elaborate, but I'm at the max character count for a comment.

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nice. "have some fucking optimism" very nice. love your rant.

Here's something I've been wondering about: oil barrel prices are up 300-400% from last year or so. Somehow I don't think demand has increased 3 or 4 times in the last year or so. So, FTW ?

I was at some massive oilfield conference last month the Majors are still budgeting new projects around $45 per barrel. Hmmm.

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My econ-geek-friends and I have been trying to answer a similar, but related question (actually we're not the only ones... this is the big question of the moment.):

Is speculation the cause for the huge run-up in commodities across the board. Is there a commodities bubble? It's not just oil that has seen a run up, but rice, iron, wheat, you name it...

There seems to be no consensus, and the more I learn the more I'm unsure of myself. There was a Harry S. Truman quote about wishing to find a one armed economist... he was tired of hearing "on one hand... but on the other hand..."

I wouldn't be surprised at all to see oil precipitously drop in the next 3-4 years. It will take a while for the effects of the initial price jump to ripple outward. It's certainly happened that way before. But the world is becoming a much richer place... plenty of potential demand building.

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I've been meaning to respond to all of this, but haven't had the time as of yet.

That said...

I was at some massive oilfield conference last month the Majors are still budgeting new projects around $45 per barrel. Hmmm.

This doesn't surprise me, for two reasons:

(1) the majors are risk averse, oil prices have historically been volatile, and there's a fair amount of global uncertainty regarding energy. Obviously, we're still going use oil, but the capital requirement for some of these projects is boggling (as you well know) and a lot of people lost their shirts in the 80s budgeting around high oil prices.

(2) i've heard that production costs are still hovering around $40-45/bbl (for heavy stuff), with delivered costs ranging in the $60s to $70s after tarriffs, etc.

Based on this, I can totally see budgeting around $45/bbl. Thoughts?

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