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Peak oil crisis this year.

General discussions of the systemic, societal and civilisational effects of depletion.

Peak oil crisis this year.

Unread postby Sys1 » Sat 25 Jun 2005, 13:09:58

http://www.fcnp.com/516/peakoil.htm

" During the first quarter of this year, worldwide production was reported to average 83.8 million barrels a day. The International Energy Agency is now saying global demand is projected to reach 86.4 million barrels per day by the fourth quarter of this year— a 2.2 percent growth over last year. Given that reports from most producing countries talk of slowing or declining production, it seems almost certain a significant supply-demand gap will open later this year.

When this happens, we enter a period of “demand destruction”, when oil and gas prices rise and rise until they are high enough to bring demand back into line with available supplies. "

Note that peak oil crisis doesn't mean peak oil itself. But the result is exactly the same : Demand destruction.
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Re: Peak oil crisis this year.

Unread postby MicroHydro » Sat 25 Jun 2005, 13:23:06

Sys1 wrote:Note that peak oil crisis doesn't mean peak oil itself. But the result is exactly the same : Demand destruction.


Bingo.
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Unread postby oli » Sat 25 Jun 2005, 13:38:26

Am I the only one who thinks the apocalyptics on this board are getting slightly ahead of themselves?

With supply not being able to meet growing demand, as well as flexibility falling out of the market, I think what we should expect is a bit of a roller-coaster ride. I don't think we're at the peak just yet though, as it has been traditionally described. Even so, the economical effects may well overlap, to a certain extent, but in my view, the overall increase in price, and its consequences, will not be fully experienced until the flexibility in demand has been completely overcome. Which will take some time.

After that, demand-destruction will come into play (according to my crystal-ball), after which we, in time, will see what the decrease in supply (as per PO) will really mean.

Let's not prematurely jump at every "WOLF!" untill we can actually see its grey hide, shall we?
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Unread postby Sys1 » Sat 25 Jun 2005, 13:50:13

oli : You could accuse me beeing pessimistic if our governments were a little bit clever, but as USA or Europe are already very fragile because of massive debts and house bubble, we need not much to see an economy collapse.
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Unread postby BitterSweetCrude » Sat 25 Jun 2005, 13:57:12

Sys1 wrote:oli : You could accuse me beeing pessimistic if our governments were a little bit clever, but as USA or Europe are already very fragile because of massive debts and house bubble, we need not much to see an economy collapse.


I think what oil is saying is that peak oil is more of a fuzzy event (roller coaster) that doesn't just happen overnight, rather over a period of some years (lets say 5-7). He also indicated, and I think correctly, that the initial demand destruction (he called it flexibility in demand) will stave off the apocolypse that many see happening this year. I agree that there are problems with the US economy (CAD, Housing bubble) but I don't think the whole world is going to come crashing down by Christmas. Don't forget that world demand contracted by 10% in just a few years time between '79 and '83.
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Unread postby LadyRuby » Sat 25 Jun 2005, 14:03:35

With supply not being able to meet growing demand, as well as flexibility falling out of the market, I think what we should expect is a bit of a roller-coaster ride. I don't think we're at the peak just yet though, as it has been traditionally described. Even so, the economical effects may well overlap, to a certain extent, but in my view, the overall increase in price, and its consequences, will not be fully experienced until the flexibility in demand has been completely overcome. Which will take some time.


I agree, personally I don't think we're at the peak but have started on something that really signals the end of cheap energy. But I wouldn't be surprised if oil prices go up and down for a while until they really go up.
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Unread postby Sys1 » Sat 25 Jun 2005, 14:09:58

"Don't forget that world demand contracted by 10% in just a few years time between '79 and '83."
I don't think 10% cut in oil supply will suit well to a world economy now so much dependant with globalization and suburbia...
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Unread postby BitterSweetCrude » Sat 25 Jun 2005, 14:21:47

Sys1 wrote:"Don't forget that world demand contracted by 10% in just a few years time between '79 and '83."
I don't think 10% cut in oil supply will suit well to a world economy now so much dependant with globalization and suburbia...


Things were bad then, but it wasn't the end of the world. We have a few more years yet. I wouldn't be surprised if oil runs up to $75-80 by the end of this year, but then we hit a mini recession next year and oil prices might actually go back to the $40 range as demand destruction sets in. Rinse, repeat. In other words we are going to have a bumpy road for quite some time (5 years++) before things start to get really bad. I dont disagree that globalization will take a hit, but even with 10% less (and a decline of 10% would certainly happen over several years) there's still room for 90% of what was being done. What I'm getting at is that we aren't going to drive off a cliff this year. I disagree with your assertion of the pace that peak oil sets in, not the consequences.
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Unread postby oli » Sat 25 Jun 2005, 14:23:18

Sys1 wrote:oli : You could accuse me beeing pessimistic if our governments were a little bit clever, but as USA or Europe are already very fragile because of massive debts and house bubble, we need not much to see an economy collapse.


First, I think BSC hit it on the spot.

Next over to your comment: Yes, things may well prove to be more fragile than we could possibly imagine - and this goes for both soft- and hard-landers.

But what I think the hard-landers (and the apocalypticals in particular) are overlooking, is the "infinite" bag of tricks which states have at their disposal. Bringing down a nation's (fuck, especially the US') economy, is no easy feat. Fair enough, one could well argue that it is held together with hope and expectations... but the "hope"-part is very, very huge, and the "expectations"-part pretty much form the backbone of the entire globe's economy.

I don't see the US going down in flames any time soon, if for no other reason than were else would other nations invest?

But I must confess, it all is very cloudy at present, like mud being stirred up from the bottom of a dam.
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Unread postby lateStarter » Sat 25 Jun 2005, 16:13:31

I tend to agree and hope that it will be a few more bumpy years before we go off the cliff. However, the US is in such a precarious situation for so many reasons, that it is not hard to imagine a 'Great Depression' like setting happening almost overnight. Not the end of civilization, but a major disruption to the 'favored/preferred/aspired to' lifestyle of most Americans. Not sure I am going back...
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Unread postby Jack » Sat 25 Jun 2005, 16:32:00

I suspect that - for most of us - all we'll see is some inconvenience, and increased costs. If gasoline is $3 per gallon, we'll cut back on a few trips, maybe eat out less, but we'll cope.

As with so many things, it's more interesting at the margins. The low end, particularly. So, what does a minimum wage worker do? A few extra bucks for gas may be significant to them. True, they can go to mass transit - assuming they work a shift that is covered. But they'll spend a couple hours on the bus each way instead of 30 minutes in their car. They may be able to buy a motorbike - but for the low-end people, even that may be difficult.

So, do they keep working, even though costs start getting close to revenues? Do they ride bikes, the bus, and so forth? Does this have an effect on business that cater to the low end of the market?

I expect to see somewhat more crime, more family violence - including child abuse, and more pressure on governmental bodies to "do something", along with stronger resistance to ever-increasing tax loads. I'll probably notice more bikes, motor bikes, and scooters.

Of course, for those of us driving, or who look affluent, there may be increased risks...

But, as others have said, not the end of the world. Most of us have a few years to party on.
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The biggest short term danger is inflation

Unread postby Novus » Sat 25 Jun 2005, 16:55:54

Higher oil could cause inflation to spike. Higher inflation would lead to higher interest rates which would really hurt all those fools maxed out in debt. Think of all those variable interest rate loans out there. If your morgage payment is $1000 on 4.5% interest and the interest goes 9% the morgage payment would double to $2000. (Note: that in the early 80s interest on morgages was near 20% so it could go even higher.) The doubling of the interest rate is far more damaging then $3 or $4 gas. This could lead to an imposion of the housing sector which employs millions of people and damage the banking sector as well if people start defaulting on their debt. If the housing bubble burst and a few banks went under it could feel like the Great Depression real quick.
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Unread postby BrownDog » Sat 25 Jun 2005, 17:08:24

Novus, on a 30 year loan, going from 4.5% to 9% interest will increase the payment by about 1.6x, not 2x. The principal portion of the payment won't double, just the interest portion.

Not debating your point, just clarifying the math.
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Unread postby Zentric » Sat 25 Jun 2005, 18:17:27

Assuming that things don't change for the better in the very near future, I'm betting more on an apocalypse this year, which I fear is something our present born-again leader is all too comfortable with.

Just as the estimated national or global oil reserves have been lies, so to are the long range viabilities of the US and global economies -- all based on the assumption that oil is plentiful now and into the foreseeable future. Economic competition for that oil is now heating up, leading to, it would seem, a military competition for the same. The goodwill, cooperation and institutions that have rather successfully managed our peace and prosperity in recent years are being dismantled at breakneck speed right before our eyes. Examples: Geneva Conventions, US Constitution, generally-accepted principles of accounting, accountability and the serving of public interest, social security, war as a last resort, and even the pretense that words like "patriotism", "democracy", and terms like "support our troops" still have real meaning. And I'll even throw in "the UN" for contentiousness.

Personally, I think it worth the effort to somehow instill humility into all who presently live in excessive material comfort, allowing us to power down and still live well, but largely saying good-bye to reckless consumption. But it's mostly the US government and the heads of the foreign central banks who control the worldwide US dollar hegemony, and therefore it is they who largely dictate the tempo of consumption worldwide. And many of these PTB are criminal and worthy of jail time, should the rest of the world ever get the wherewithal to seek them out and punish them for their crimes (e.g., Iraq War) against humanity.

The selfish question for Bush Inc. then becomes, simply, how do we hold on to power such that we, and our children, can go on living without humiliation or incarceration? Where the clear answer, from one perspective, is to crash the Republic, to institute such chaos and suffering that the people then must beg for the present government to step into their lives to save them. People thus would surrender their freedoms in exchange for food. And many recipients of the government's largesse would then gladly aid the new, Orwellian order if it meant more perks for them; like ratting out the next-door neighbors for crimethink or some such to increase their own heating allotment. It's historically demonstrable human nature.

America and its denizens are, by just about any measure, broke. Or, worse than that, in debt. We build or manufacture almost nothing that will have value in the new world we must live in, and we are in great need of other countries to provide the money and natural resources required to maintain our doomed excessive standard of living. Given where we are and where we appear to be going, I'd say we are like an 800-pound gorilla in need of a tranquilizer dart. I predict the moment it would appear to others that we are irredeemable, the world will proceed to cut and run from us, having decided beforehand how to shoulder and distribute the economic burdens from so doing.

A few ideas on how Bush Inc. could bring or are bringing about the hard times:

1) As the result of a plunge in dollar confidence -- largely under their control -- nobody will want to hold US bonds anymore. Instantly, we could no longer continue the arrangement of paying for our homes or cars or to afford the cost of driving them for that matter. All this could lead to a huge disruption, dislocation, questioning of the American-way-of-life, pandemonium, martial law crackdown (but whose side would the troops really be on? Hmmm..)

2) Because the present admin doesn't particularly like ordinary Americans, in the same way they apparently didn't like ordinary Californians a few years ago during that Enron/Energy Taskforce-inspired electricity crisis, a combination of arrogance, ineptitude and, yes, supply-destructive collusion would cause fuel/natural gas shortages, intended to create the same havoc, as above.

By the way, if this "conspiracy theory" sounds wacky to you, ask yourself why the administration remains silent on the idea of voluntarily cutting back on unnecessary or outright wasteful consumption (these guys apparently don't mitigate damages - they exacerbate them!) If Americans joined together on the conservation front, we'd buy ourselves some time to begin transitioning away from this crisis, and the rest of the world would also like us more and even join in with our efforts. But this administration only wants us to unite in hating "evil" leaders of foreign nations who refuse to do our exact bidding, or have the temerity not to die during one of our friendly pro-democracy coup attempts :roll: .

3) We could also attack such an oil-rich nation, as mentioned in scenario #2, causing a domino effect leading to scenario #1. Just install Bolton into the UN, and watch as the admin then proceeds to make its best effort, amidst near-universal condemnation, to carry out such a plan.

Bottom line, the writing is on the wall, at least as long as the Republicans remain in power, that America is growing increasingly-toxic, both to itself and to the rest of the world. While the rest of the world wants and to some extent *needs* America to stick around, the price tag for allowing us to continue prancing around the global stage is getting far too dear.

America, it seems, can do little but to fall into the abyss, or, through a fluke of military genius, steal some other country or region's oil (while killing a lot of their people at the same time), or *soon* get itself some new constitutionally-provided leadership that will put the rest of the world at ease.

Heh. Long post. :oops:

The foregoing, all hypothetically-speaking, of course.
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Unread postby PO_TimeCr0ss » Sat 25 Jun 2005, 18:37:36

Excellent post Zentric. 8O
" Previous energy transitions were gradual and evolutionary. Oil peaking will be abrupt and revolutionary"
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Unread postby shortonoil » Sat 25 Jun 2005, 21:13:42

.

Zentric said:

And many of these PTB are criminal and worthy of jail time, should the rest of the world ever get the wherewithal to seek them out and punish them for their crimes (e.g., Iraq War) against humanity.



Where as, the present junta has the propensity and the neccassary audacity to create a catastrophe to bring about a totalitarian state, we must also recognize that the US is a republic of fifty self governing states. These state not only have the ability to govern themselves and successfully negotiate with other states, they also provide the vast majority of services required by their constituents. As the present system begins to dissolve for lack of monetary discipline and sane management, the states will continue to provide government and structure as best they can in the face of the collapsing federal empire. The present upcoming crisis will undoubtedly bring about the downfall of the huge, mostly parasitic and increasingly repressive federal monstrosity.

As the multi-national corporations that now exercise the bulk of national power begin to crumble with the advent of Peak Oil, their bonded and supporting federal and military agencies will also disappear. I do not believe that we will die as a civilization in the face of declining energy availability. I do believe that much of the corruption, deceit and waste that it has supported will disappear with the present plague of criminals that now foster that corruption, deceit and waste. Washington, as the self proclaimed emissary to God will and should die. The American spirit won’t.

.
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Unread postby DantesPeak » Sat 25 Jun 2005, 23:30:27

Some good posts above.

While the price of gasoline may be on the minds of Americans, and they can pay that extra cost of gas on their credit card, the real cost increases are to be felt in the cost of goods and transportation costs. Diesel is going up faster than gas. It seems like some transportation companies did not raise prices to keep up with the high costs of diesel because 1. they don't like to shock customers and 2. they have been told by our leaders for almost three years that energy price hiles are temporary - although the Secretary of the DOE has only recently said high prices are hear to stay.

The ability to shrug off higher energy costs has been so far equal to the ability of the US to borrow more from foreign countries - commonly known as our current account deficit. See http://www.peakoil.com/fortopic9093.html

While the US is handling a $800 billion current account deficit right now, there is no guarnatee that the US will get the funds to finance a $900 billion deficit that may occur soon because of $60 oil.

Actually I believe that the US will reach its CA 'peak' limit before PO, because PO demand reduction may require $100 oil. Or in other words, the US is in such a bad situation already that soon it just won't be able to borrow enough to finance its all its imports. You will know that day has come when the dollar suddenly goes into a sharp fall for no reason. The drop coming because there is not one more marginal, incremental $ buyer left.

While the Euro and Yen seem weak, keep in mind that those countries do not have to raise $800 billion or more every year
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Unread postby Zentric » Sat 25 Jun 2005, 23:40:34

shortonoil wrote:Zentric said:

And many of these PTB are criminal and worthy of jail time, should the rest of the world ever get the wherewithal to seek them out and punish them for their crimes (e.g., Iraq War) against humanity.


Where as, the present junta has the propensity and the neccassary audacity to create a catastrophe to bring about a totalitarian state, we must also recognize that the US is a republic of fifty self governing states. These state not only have the ability to govern themselves and successfully negotiate with other states, they also provide the vast majority of services required by their constituents. As the present system begins to dissolve for lack of monetary discipline and sane management, the states will continue to provide government and structure as best they can in the face of the collapsing federal empire. The present upcoming crisis will undoubtedly bring about the downfall of the huge, mostly parasitic and increasingly repressive federal monstrosity.

As the multi-national corporations that now exercise the bulk of national power begin to crumble with the advent of Peak Oil, their bonded and supporting federal and military agencies will also disappear. I do not believe that we will die as a civilization in the face of declining energy availability. I do believe that much of the corruption, deceit and waste that it has supported will disappear with the present plague of criminals that now foster that corruption, deceit and waste. Washington, as the self proclaimed emissary to God will and should die. The American spirit won’t.


Hi Shortonoil: I agree the idea of the present admin precipitating a catastrophe to achieve its ends is not at all far-fetched.

And since we're speaking hypothetically, I must say that your idea of dissolving the American Union into 50 autonomous states is intriguing. I wonder what the ramifications of such an action might be. Possibly:

a. Civil War II? Would GWB strive to preserve the Union as did Lincoln, the first Republican?

b. Since oil will be scarce, there will be pressure to make people "energy slaves" again. Will different slavery laws apply in different states? For example will a state permit slavery by race, debt or criminal sentence?

c. Would the new monetary system(s) be based on precious metals? Or on the new currencies issued by 50 separate state governments?

d. How draconian would the devaluation of the Federal currency have to get to be acceptable to the states and/or foreign bond holders?

e. Would some states be able to form larger unions with contiguous states while comprising no threat to the people inside those states or to those in states who neighbor them?

f. Which states get to keep the nukes?

g. Would the states be "friendly" with one another like America and (I guess) Canada, or would they be unfriendly like, say India and Pakistan?

h. Would Washington, D.C, for example, remain to serve as a sort of clearing house for former federal government obligations?

Even with the obstacles, I do like the practicality of what you're proposing. And it's practical because regional *is* better than national, and the alternative would seem to be mutually assured destruction -- to people or to their spirits.

FYI, I just googled the term "deconfederation", and I found many hits relating to Canada versus Quebec. Nothing though regarding America. One wonders the extent of which influential people are doing academic research on this matter.

Finally, and perversely, I have to say that with your proposal, Ecotopia, in the Northwest, now has just as much possibility of coming into being as JesusLand, in the South. Praise Ecotopia!
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Unread postby pea-jay » Sun 26 Jun 2005, 03:24:08

The fourth quarter shortage should not precipitate doomesday.
I hope not anyway!

What it will do is make the formal begining of the end of industrialized civilization. It probably won't happen overnight, but it will happen. I agree with many posters that point out the first couple of years past peak will only see mild or moderate declines. Those geological driven declines will most likely not be recognized for what they really mean-Peak Oil-but be chalked up as demand driven economic dislocation. We went through past shortfalls and all lived to talk about it. Heck prices still havent reached their 1979 mark nor have the 2011 futures contracts taken into account any possible peak oil occurance.

My fear comes into play once people REALLY wake up and ACCEPT that oil is really never going to get cheap, continued growth impossible to continue. WHen you combine this with other brewing crises out there (Hello, natural gas anyone??) and the fact that our government like many households out there are bankrupted beyond recognition is an explosive mixture. Then you could see an outright panic blow up. At the same time, the Natural gas, food and electrical sectors (and if you live in the desert southwest, water) are all highly dependent on continued economic and energetic stability.

A crash will almost certainly occur. I do not think or hope it will set in at the first point where demand exceeds supply.
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Unread postby shortonoil » Sun 26 Jun 2005, 11:25:10

.

Zentric said:

Praise Ecotopia!


Vermont, my home state, was the fortieth state to join the Union. From 1777 to 1796 Vermont was an independent republic with its own currency and militia. Vermont reserved in its constitution the right to remove itself from the Union if it saw fit to do so. The old Yankee farmers probably weren’t sure that this new fangled Union thing would work. Ever since I was a kid, people in Vermont have joked about getting the state out of the Union. “Secede from the Union and apply for foreign aid” was commonly heard. It was considered a joke, but a joke that contained a certain amount of truth. While I was in college at UVM, (University of Vermont) a group of us actually spent a considerable amount of time planning the New Vermont campaign. A fantasy campaign to remove
Vermont from the Union. Now that things don’t appear well for the Union, there is a quite, but growing movement to reestablish the Republic of Vermont. You probably haven’t heard anything about it because Vermonters don’t traditionally say much about anything anyway. They did, however, finally put up a web site or two.

http://www.vermontrepublic.org/

Once I’ve finished my current book, I’ll be leaving my present outpost in Gaul and heading home. As to your question will there be conflict between the states. There won’t be with Vermont. We learned a long time ago, “that good fences make good neighbors".


Webpage Titlehttp://www.vermontrepublic.org/
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