It seems to me there are two incompatible world views at work here. It comes down to whether you construct your reality based on a monetary/financial foundation, in which energy is merely another cost of doing business or whether energy/natural resources/environment is the fundamental base on which everything else rests.

physical reality > economic consequences > social reaction > political response > etc.

there is no disconnect. just different ways of looking at the same cause and effect relationships...

Thanks Mr. Bill. Excellent stuff, as usual. And clarifying.



Still. That leaves us with the prospect of a future global recession/downturn due reliably to PO.

or not?

Do you forsee the US managing to crawl out of this one in the long or short term?

I think so, but then this really has to be qualified by what we mean by a real recovery? If this is just another Japanese recovery where export segments recover, but the domestic economy stays in the doldrums of low, slow, no growth with intermitant on and off again recessions for the next 15-years then that is not in my opinion much of an economic recovery. Throw in America's public debts and unfunded future liabilities - like Medicare and pensions - and it does indeed seem overwhelming? Plus you have the wealth drain of having to import oil for example. That is a direct wealth transfer from consuming nations to producing ones. That consistant drain on foreign reserves is not going away. What is it that America exports anyway?



But in any case, its Miller time now, and this night belongs to Michelob, so take care and have a nice weekend. Do you Yahoo! ; - )

You've made my point for me. The schematic you presented merely represents one pathway through various feedbacks within a far more complex system. Organisationally I would place economics as an optional social construct used to manage resource allocation in large complex societies. Society itself operates within ecological boundaries. Every layer has feedbacks into each other, some more significant than others. The different ways of looking at things is a manifestation of only seeing or focussing on specific pathways.

Mr. Bill said: "That is a direct wealth transfer from consuming nations to producing ones. That consistant drain on foreign reserves is not going away. What is it that America exports anyway?"

Indeed. I have been wondering the same thing recently. Not many American cars on these roads ... what else, let's see ...Hollywood consistently outstrips those oh so excellent must see European Cinema productions. And on Spanish TV at any given time of the day or night you can be guarranteed to capture some old US TV gems. "Baywatch" was my five year old daughter's favorite during the summer. Now she's deeply into "Xena, Warrior Princess".

Can't think selling this dross provides much income to the US, but hey maybe I'll get me a 'Visor Organiser' ... hmmm. Have to buy me a 'visor' for that ...

Still and all, I'd agree with Tyler. While high prices may not guarantee a move to renewables, they are still the best tool we have for changing both usage behavior and production options.

Recessions come at intervals of 7 years or so. Every recession is blamed on whoever seems to be pulling the levers at the time, but the fact is people just seem to expand and contract their spending at the intervals described above. For some reason, historically there seems to be an oil price spike every 7 years or so as well. I don't know what to make of that.

Everyone is tempted to say "this time it's different" when something really good or really bad happens, but the regression to the mean always seems to overtake elation or despair.

Peak oil will undoubtedly give us a lot of trouble, but I don't think that this particular recession is a function of peak oil, though the recent price spike can't have helped things.

The larger long term problems are probably the retirement of the U.S. baby boom generation, which will probably move into high gear in 2012 or so (Twilight Zone music plays), and the wild card in the global doom deck, which is the bird flu.

In the next ten years, I don't think you can go wrong betting against the U.S. dollar. I think that 2008 is probably going to be a lot like 1968 (minus the hippies)--stagnant war sucking resources, inflation becoming a serious problem, change of administrations with no apparent continuity of policy (for better or worse), and an unlikely moderate Republican looking like he may become President. Lots of other similarities if you think about it.

What would have been a good investment strategy from 1968 through 1980 will probably be a good investment strategy from 2008 through 2020 as well.

I can't wait to see the consumer price index in about ten years. It will exclude everything except bags of dirt and used styrofoam cups, and will show the usual 2-3% rate of inflation.

PO didn't cause it but,, it will be the reason we never get out of this one. I also think this is the beginning of the slow slide down

What a pile of ......... uh, constructs. Except for SJN, Virgin Crude, and Seldom, who see our little global system for what it is; a world overpopulated with a plague of humans, powering on right up to the wall using a teeny bit of renewable resources, and sucking at the last yummy dregs in the storage tank of non-renewable resources.

Money's got nothing to do with it. Except that it's an inaccurate measuring stick for some human parts of the economy. Seldom's graph depicts Americans' response after 1970 to the impact of using up our storages in this country, and having to buy storages from other countries after our oil peaked. Our response was to deposit IOUs all over the world. I'm still amazed that everyone let us do it. So, did Peak Oil cause this soon-to-be-global-depression? Heck yes. Now that the world is Peaked, IOUs won't work anymore.

You guys are going to have to get past the "man rules the earth" fantasy. Your fossil fuel slaves have given you delusions of royalty. Maybe you will figure it out once the gas pump is empty.

The coming recession will last for decades, Iatto, due to diminishing resources and the ditching of the American petrodollar as reserve currency. It was kickstarted by phenomena that are somewhat independant of oil, though. If the world were still resource rich and oil very cheap, recessions would still occur.

I think what people are confused by, is the difference between cycles and a shift in status from a wealthy powerful nation, to one that is in decline and facing the future as a third world nation.

dark night of the usa? you do realise that usa is just another empire that eventually will fall?

no, what is at stake is our current (GLOBAL) economy fueled by our current (GLOBAL) technology and "guided" by our own ignorance...

Well any disease really, but the 'flu (bird or regular) is the most likely culprit.


One thing I like to think about sometimes is that everything is going to end. Using this, try and imagine how different (seemingly imortal) things are going to end. When will Microsoft bite the bullet? What about amazon? What about the desk you are currently using - nuclear war, burnt by freezing refugees in 30 years time, or dug up by archiologists from a dump in 400 years time? When will the US constitution (ie, the piece of paper with writing on it) end? 50 years? 200? 600?

Perhaps PO is at the heart of this mess. Let's face it, we've been on an oil binge with oil as cheap as $10 a barrel. Production appeared virtually limitless hence the money/credit creation machine kicked into gear. We thought we had all the natural resources to keep growing into outer space, promosing future payments. But we can't pay up anymore due to rising energy prices and the prospect of limited growth and a permanent contraction.

The causes of the credit fiasco had NOTHING to do with peak oil. It was pure greed, and wasn't predicated on anything other than procuring the goods (extension of credit and a cut from the transaction) and then quickly passing the toxic waste to another party. Nobody made decisions based on the price of oil, or the forecasted price. And the subprime crowd would likely have just as much difficulty making loan payments, regardless of oil price, though rising price of gasoline plays a role.