Exploring Hydrocarbon Depletion
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Of course this is not the way the Feasta study is being discussed over much of the peak oil blogosphere. The fascination with sudden collapse—call it the Seneca cliff if you must, though it’s only fair to note that Seneca was talking about morality rather than the survival of civilization, and the civilization to which he himself belonged took centuries to decline and fall—is to the peak oil scene exactly what the fixation on Bakken shale oil and "effectively infinite" natural gas is to the collective imagination of industrial society as a whole: a means of denial. It’s just one more way of pretending that we and our grandchildren’s grandchildren don’t have to endure the long bitter centuries of decline and fall that are waiting for us—a future that, let’s face it, is considerably more frightening than a sudden collapse. Claiming that it’ll all be over in a flash is not that much different, all things considered, from claiming that it won’t happen at all.
Not exactly tandem. The economy can achieve low levels of growth with zero or negative growth in oil consumption. But high oil prices do put a drag on economic growth, even pushing it negative if prices go high enough.seahorse3 wrote:It would seem to me the economy would have to decline in tandem with oil production, as the economy can't ever grow faster than oil production and thus both would have to decline in tandem.
Has the Global Economy Become Less Vulnerable to Oil Price Shocks?the world economy can grow at approximately 2% a year without requiring any increase in oil consumption(when world economic growth rate falls below 2%, it is commonly considered to be a deep global economic recession). This might be called the “breakeven” world economic growth rate for oil consumption purpose. However, beyond 2%, an increase in world economic growth rate by one percentage point needs to be associated with an increase in oil consumption by near 700,000 barrels a day. For example, if the world economy grows at 3.5% a year, the above equation implies that the world daily oil consumption needs to increase by 1.06 million barrels a year.
A regression that only uses the data from 2001 to 2011 finds that The slope on the economic growth rate is now somewhat smaller. But note that the “breakeven” economic growth rate now falls to about 1.6%. Evaluated at 3.5% economic growth rate, the associated annual increase in oil consumption is 1.01 million barrels a day.
The above simple analysis suggests that any economic growth rate above 2% a year (an economic growth rate that would be required to lower unemployment rates in most countries in the world) would require positive growth in oil consumption.
Figure 3 compares the historical world economic growth rates with the share of world oil spending in world GDP. Historically, 4% of world GDP appeared to be a dangerous threshold. Whenever the world oil spending rose above 4% of world GDP for a sustained period of time, global economy had suffered from major instabilities. unless the world oil supply curve becomes flattened in the coming years, the world oil supply does not seem to be able to sustain a global economy expanding at a rate of 3.5% a year or above.
These findings suggest that if the world oil production does peak and start to decline in the near future, it may impose a serious and possibly an insurmountable speed limit on the pace of global economic expansion.
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