THE Oil Demand Thread (merged)

[I_Like_Plants]

I know 80-mile commutes are fairly routine in the greater Phoenix area, and a fair number of people are doing them here in the bay area too. And we all know it's often 100+ in southern california. And these are one-way distances!

[Specop_007]

I heard a guy talking about how his new car "was a lifesaver with the gas milage!'
His old cars milage? 15 or so.
His new one? 23.

Thats right. Anything even approaching 30 MPG is considered "economical" to Americans.

We're screwed, in a big way.

[Liamj]

That demand is not very elastic at prices to-date seems apparent, though 2yrs at $65/b is different to 1 month. There are some signs of change down under anyway:

Petrol price pushes 4WDs off the road
Sydney Morning Herald
Fewer new four-wheel-drive passenger vehicles were registered in Sydney during the first half of this year than in the same period in 2004, as a result of higher petrol prices.

The Roads and Traffic Authority recorded 14,330 new registrations over the period, compared with 16,817 a year earlier. In June there were 2511 new registrations, compared with 3162 in June 2004.

Car dealers said high fuel prices had forced many owners of 4WD vehicles to sell them. "I've had people come to me and say, 'Look, I'm over driving this car and spending $100 on fuel. Get me something cheaper,' " said one northern beaches dealer, Mark Booth.

The owner of Cars Wanted, Andrew Nischler, said there had been a 20 per cent jump in people trading in 4WD vehicles this year. "There's definitely a heap of them going on the market," he said. "The prime reason is the price of fuel. There's just less people wanting them, period." ...
http://makeashorterlink.com/?E20D516AB

We're guessing obviously, but prices must surely be moving into more-elastic ranges by now. Few will act of course until it hits their pinch point, but imagine if everyone had at least heard of Hubberts peak and could be channelled into big push for public transport.

[jdmartin]

I was just in the southeast on vacation. How can people LIVE there??!!! The heat/humidity was unbearable. It's not going to be fun for those people trying to do without all that air conditioning. On the other hand I guess they don't have to worry too much about heat in the winter. Northeast I guess has the worst of both.

The answer can be found by taking a tour of old homes, anywhere here in the Southeast. Homes were built with deep front porches to block out the summer sun, huge windows for ventilation, aligning doorways to draw air through the house, shutters for blocking out the sun, etc. McMansions don't work very well in the Southeast without air conditioning.

Also, in the hottest places (read: Charleston, Savannah, etc), people with money actually left the area and headed to the mountains for the hottest months. Not only to escape the heat but also to escape malaria, for example. Pre-civil war, that is, because after the War there wasn't any money left in the South for people to go cruising into the mountains.

[AirlinePilot]

One gets a really special perspective on all this "inelasticity" when you fly over all these suburban hells. When you see a place like Los Angeles, or the greater Atlanta area, you just step back and shake your head. After becoming peak oil aware this has really struck me as a nightmare when I see the sprawl on such huge scales. One of the places which really sticks out is flying up and down the Northeast Corridor. Taking off from Boston headed for Atlanta the sea of suburbia doesn't end until you get south of the Washington DC area and into the eastern foothills of Appalachia. At night it really jumps out at you with what seems to be a continuos carpet of bright light. Those traffic jams in Atlanta are particularly noticeable as ribbons of white and red as you see the stopped streams of thousands of idling, crawling cars, most with single drivers in them

We got a LOT of work to do and little time left to do it.

[eric_b]

One gets a really special perspective on all this "inelasticity" when you fly over all these suburban hells. When you see a place like Los Angeles, or the greater Atlanta area, you just step back and shake your head. After becoming peak oil aware this has really struck me as a nightmare when I see the sprawl on such huge scales. One of the places which really sticks out is flying up and down the Northeast Corridor. Taking off from Boston headed for Atlanta the sea of suburbia doesn't end until you get south of the Washington DC area and into the eastern foothills of Appalachia. At night it really jumps out at you with what seems to be a continuos carpet of bright light. Those traffic jams in Atlanta are particularly noticeable as ribbons of white and red as you see the stopped streams of thousands of idling, crawling cars, most with single drivers in them

We got a LOT of work to do and little time left to do it.

Thanks for taking the time to post. Appreciate your perspective, literally.

First hand experience.

Just looking at satellite imagery and growth maps it looks bad. So it's
disheartening, though not surprising, for you to confirm how bad these
regions look from the air.

[formandfile]

Atlanta is screwed
LA is screwed
Boston is screwed
Tampa is screwed
Miami is screwed
Phoenix is BIG TIME screwed
Las Vegas is a screwed sewer
Houston is screwed
New Orleans is a FLOOD ZONE
NY is actually not quite as bad, but is still screwed

I was just in the southeast on vacation. How can people LIVE there??!!! The heat/humidity was unbearable.

To be completely and totally honest, free undergraduate college education, assuming you can maintain a measly 3.0 throughout the whole thing. Otherwise i sure wouldnt be in Atlanta right now, family or not. I lived in Boston before and enjoyed the "T" daily, but had to go back to school (because of the IT market glut). My choices were to take out student loans (in addition to what i took out for technical training earlier) or go south and get a free merit based full scholarship. Two years remaining, im taking a gamble but i think it'll pay off. After that, Portland OR here i come.

And yes, Atlanta is totally screwed. Please avoid. If you have to do the south, please see North Carolina.

[Devil]

Experience in Europe, when a country has added a swingeing tax increase on motor fuel, is that the volume consumed drops immediately as drivers realise their purse is being hit hard. Three months later, the volume is back to what it was before. $100/bbl (which is possible this winter if the USA has cold weather) will mean about $4/gallon, as refining costs will not change significantly; it is not pro rata. So, within 3 months, this will be accepted as the norm, as $2++ is today and $3 is still controversial.

IMHO, I don't believe a $100/bbl, or even $200/bbl in 2 years or so, mark will make a blind bit of difference to consumption figures after a coupla months or so, unless you also change the mindset of consumers.

[The_Toecutter]

The sprawl was breath taking, the traffic horrendous and there is no easy fix for the problem. Major changes to our nations transportation system are going to have to start at full pace overnight just to make the problem not suck quite as bad.

Right on the money. We can do that today, but no one's budging. The bureaucrats have shown their incompetence. It's up to the individual to take matters into their own hands and end their oil dependence before attempting such gets too expensive from runaway inflation.

[MD]

Atlanta is screwed
LA is screwed
Boston is screwed
Tampa is screwed
Miami is screwed
Phoenix is BIG TIME screwed
Las Vegas is a screwed sewer
Houston is screwed
New Orleans is a FLOOD ZONE
NY is actually not quite as bad, but is still screwed

Actually, any city of over 150,000 or so is screwed.

The older cities with an intact and functional urban core can come through in better shape, as soon as the strip malls are torn down and retunred to farm land.

[Macsporan]

There are two catagories here:
1. Sheer waste, such as thousands of people going to work in their cars alone and the legendary 3000 mile Caesar Salads. Include also lack of insulation in buildings and people lolling around in their underwear with six foot of snow outside. This all adds to the total energy bill which will become very tight once cheap oil becomes expensive.
2. Luxuries, the most notable one being the US armed forces.
A nation that has a war budget equal to the next 16 nations, 300,000 men in bases overseas, 30,000 nuclear weapons and 9 carrier groups compared to zero of all other nations combined has a lot of fat to trim here. Defence forces use great quantities of oil. America could easily halve its military strength and still be powerful enough to deter or repel any enemy.

Another saving could be diet.
The US is infamous for its rampant obesity. Putting the population on the UN recommended daily diet would do wonders for heath and morale. It would also reduce energy costs as food production could decline. This would be particularly so if people ate less meat. Regardless of ethical considerations most experts agree that too much meat is bad for human health. The US could have, or even quarter meat consumption with no ill effects whatever. As meat production is a ludicrously expensive and energy-inefficient process this would lower the oil bill enormously.
No doubt there are many other savings that could be considered.

[Macsporan]

Could one of you numerate persons perhaps calculate the oil that could be saved by the two suggested trimmings?

Military halved, meat consumption down 75%

I would be curious to know.

[ChumpusRex]

Could one of you numerate persons perhaps calculate the oil that could be saved by the two suggested trimmings?

Military halved, meat consumption down 75%

I'll have a go at the meat one - lots of assumptions, probably not particularly good. In particular no distinction between energy intensity of farming different crops.

Agricultural oil consumption: 250k bbl / day

[1] - figures from http://www.eia.doe.gov/oiaf/aeo/supplem ... tab_32.pdf . Distillate and motor gasoline counted as crude oil usage.
LPG/natural gas, biomass, coal, electricity were not counted.

Arable production:
Gross annual production: 750 million tonnes
Animal feed production: 227 million tonnes

[2] North americal complex animal feed study - http://www.unitedsoybean.org/studies_pd ... 040501.pdf

Animal feed used for meat: 66%

[3] http://www.londonswineconference.ca/pro ... _MGill.pdf

Arable production used for domestic meat production: 20%


Approx energy cost of meat production: 50,000 barrels/d

Saving if meat consumption reduced by 75% - 37,000 barrels/d

[MD]

A couple months ago I posted the US could reduce 1/3 without interrupting critical services. My only basis for that comment was in looking at per capita energy consumption world wide. If Japan and Europe can manage with their consumption levels, why can't we?

Granted it would be difficult, and deeply recessionary, but we could keep producing food and shelter along with other critical services. There are tremendous risks with that scenario in revolt from our population, but if that can be avoided I think we could do rather well.

I have posted before, and still have the opinion that when the world fully recognizes depletion as an ongoing and inevitable process, the United States will be forced to reduce consumption via new cartels and embargoes. More likely though, the global economy will go into recession first which will supress demand and therefore mask depletion behind more pressing issues.

[Caoimhan]

Speaking of aircraft carriers... they have some of the most powerful water desalinization plants in the world onboard. We had one off the coast of Thailand or Indonesia after the Tsunami pumping out potable water for the survivors (because the tsunami fouled the drinking water for many coastal communities).

With water such a big issue in Southern California, when these things are at their home ports in Cali, why not use their power to desalinate water?

[MD]

speaking of aircraft carriers? I think you missed your thread.

[Caoimhan]

Sorry... I didn't mean to take the thread in a different direction. Someone mentioned the U.S.'s vast military with "9 carrier groups". I was just using musing on that.

In a sensible world, we'd see nuclear powered merchant transports. I'm really beginning to dig a nuclear/battery powered world. We could do it.

[lorenzo]

I'm not an economist but it seems that, historically speaking, the elasticity of oil demand is getting ever greater, ever faster. After several oil shocks, a trend has begun to appear, namely that after a few years after such a shock, demand becomes considerably more elastic.

In general, the price elasticity of oil demand is still seriously low and steady because it's a very basic product. But the the time it takes for elasticity to rise after an oil shock, apparently becomes ever shorter.

:: After the first oil shock in 1973, it took about 5 years before a first considerable hike in elasticity occured.
:: Then, after the second oil crisis in 1979 the period after which the second serious increase in elasticity occured was even shorter, some 3 years.
:: After the third oil shock, of 1990, it took only one year to see the upward trend.

Apparently the return to lower elasticity levels is far more gradual and takes more time than the the upward "jumps" (seems logical to me, since - to give one example - once a mass of home owners have decided to switch to natural gas instead of heating oil to heat their houses, after such a crisis, one crucial element in the baskets of factors that make up the price inelasticity of oil demand has already been eliminated; of course, new ones may arrive, such as new petro-intensive industries or new and fast developing countries coming online). So I'm wondering how the situation is progressing now. Does anyone have any good numbers on this? And do you think this is a real trend, or is the correlation just a coincidence?

If there is indeed such a trend, then we should be seeing the first signs of a jump in elasticity right about now (because serious increases in oil price started about a year ago). And if elasticity is ever increasing, then what does this mean for Peak Oil?

[aahala]

I don't know if its a trend or not, and I couldn't explain it if it were true.

I don't see what you have seen. What is it that lead you to believe the
elasticity of demand had gone up after those three events?

[jaws]

Oil isn't immediately substitutable because it is a core input for infrastructure. To reduce our oil consumption we have to replace our infrastructure, and that tends to be a long-term enterprise. This is why doomers complain that we're doomed because everything runs on oil. Everything runs on oil right now because this has been so far the best input.

When a change in the price of oil takes place, the infrastructure building decisions change. It becomes more economic to build infrastructure adapted to electricity, or infrastructure that becomes less energy-intensive overall. People are looking to buy a car for the next five years, they decide to get a Mini instead of a SUV. They buy a house, they look for a smaller home instead of a faraway McMansion. This affects demand for final goods. Suburban homebuilders find themselves unable to make profits and must adapt. GM and Ford declare bankruptcy. Etc.

Infrastructure is perpetually being replaced by better infrastructure. As the process takes place, dependence on oil falls, therefore demand for oil falls as well.

The important thing is that oil demand is only inelastic within a short timeframe. Over the long-run it becomes more elastic. That's true for any point in time. If the oil supply were to suddenly fall by half, the price would still shoot up catastrophically. But if the oil supply we to fall by half over 20 years, we would see much more elasticity.