Shady what is the word on the RSI reading these days?

Unbeleivable. The new floor is $62. When the market cannot even have a proper sell off it means we have hit peak oil. We may never again see oil under $60.

It really depends on how demand destruction.
If the world goes into a recession, then we can be sure that prices will drop. If a big recession, oil can surely drop to low 40's.

I think last time there was a recession, demand drop like 2mbpd. Combine with new production coming online, prices will definitely drop quite a bit when you get 4+ mbpd of excess capacity. Unless OPEC can control their quotas, then this won't happen.

Many experts don't believe OPEC can control quotas, but I think they can now because they don't need that much oil money to keep balance budgets.

Those are the same experts who think we have 70 to 100 years of oil left. Us Peak Oilers know better. OPEC can't even meet there quotas. They are pushing their fields too hard right now so if demand dropped 2mbpd supply would contract 2mbpd or more because they need to give their over worked feilds a rest. They may need to contract supply anyway to manage the decline of their feilds.

Anyone care to guess how much demand destruction can occur reasonably before the serious pain point? 2mbpd, 4, 6? - Because even though demand destruction will occur the excess only will last until the relentless declining of fields catches up. And on down from there...

-G

1974 to 75 saw a 4.85% reduction in oil usage
79-80 4.2%
80-81 5.3%
81-82 4.2%

Based upon that, it would appear that the world can adjust to 5%/year reductions in oil supplies, at least for several years. Granted, it did cause a global recession when it happened before, but it was not the EOTWAWKI.

Now those were'n't cumulative though right? We weren't using 18% or so less oil in 1982 than 1975 were we? I think total usage should be looked at as well. Didn't the world usage go up in that same time period? This time total usage has to go down worldwide. I wonder how many years of 4% reduction we could handle....

-G

According to EIA, global production dropped from 66,973 thousand bd in 1979 to 58,017 thousand bd in 1983, a total drop of almost 9 million barrels/day or 13.4% of the 1979 production.

this is global, not US.

And the world was using less oil in 1983 than it was in 1974

OPEC not meeting quota?
You are exagerating here. Look at the facts.
Some countries are not meeting quota, but others are exceeding quota. You should go look up their production numbers. It is good for you.

Also, these same experts predicted high oil prices for 1990's and peak oil in late 1990's. They were wrong!

So many people here think oil experts don't ever believed in PO. That is so wrong from the truth. Before 1970, many don't believe in PO, but after US went into decline, they changed their minds and the consensus was that PO will happen, but after 1990's and the new GOM and West Africa, they changed their minds.

So it is a back and forth movement.

Yay someone who did their research!

I'ved pointed this out several times, but it seems to fly right by most. The fact is, peak oil or not, won't matter much for the next 5 years or so. Demand destruction will quickly outpace any decline in maximum production levels. The economy, and hence consumers, tends to get into reinforced feedback loops with either rising or falling conditions.

With all the excess debt and high levels of economic activity required to sustain that debt, if the economy begins to decline and those bubbles begin bursting I suspect the declines in oil usage of the 70s and 80s will look relatively tame. PO will become a total non-issue as most will be too busy trying to survive in an economic sense.

[url=http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20050819\ACQDJON200508191520DOWJONESDJONLINE000732.htm&selected=9999&selecteddisplaysymbol=9999&StoryTargetFrame=_top&mkt=WORLD&chk=unchecked&lang=&link=&headlinereturnpage=http://www.international.na]source[/url]

Good information - you learn something every day! So that would imply that demand destruction flexibility is somewhere in the neighboorhood of 10mbpd or so... just a wild guess.

Yeah I fear the economic fallout more than the actual decrease in oil supply...

-G

I'm not sure what happened in the 1970s is a good model for what will happen post-peak. The problem, as always, is that lowest-hanging fruit is picked first. We were Saudi Arabia until 1970. We were OPEC, so flush with oil we controlled prices with quotas. Conservation wasn't on the radar at all, until the oil shocks. So there was a lot we could do to improve our efficiency.

But due to the laws of thermodynamics, there's a limit to how long you can continue to get improvements this way. To use an example I used earlier in this thread, airlines can save a lot of fuel if they cut from 4 engines to 1 engine while taxiing, but they can't cut back to less than 1 engine. They can try to improve the efficiency of that engine, but that won't be the easy fix just turning off the other three was.

For this reason, it will be difficult to repeat the cutbacks we did in the '70s. Homes, appliances, and office buildings are much more efficient than they were 40 years ago, and it won't be easy to get further big improvements.

In the '70s, my dad, then a poor student, drove an 8-cylinder Chevy BelAir station wagon. Nowadays, few people drive 8-cylinder cars. Dad now drives a Ford Explorer. They have the 6-cylinder model, but even the 8-cylinder gets better mileage than the Chevy BelAir did.

It's true that we have slacked a bit. We've dropped the 55mph speed limit. The popularity of SUVs and minivans has reversed some of the gains we made in the '80s. But I still doubt we can make the huge improvements we managed in the '70s and '80s.

And we're much more sprawled out now. It will be harder to cut back. People live an hour's drive from work. It's harder to carpool, when everyone's so spread out. Public transportation has declined. The local Main St. has died, killed by far-flung suburban malls and big-box stores like Wal-Mart. Meanwhile, Wal-Mart and other companies are dependent on far-flung distribution networks, just-in-time delivery, etc., which will exacerbate the problems.

I do believe we will see a lot of demand destruction, but it won't be as easy as it was in the '70s.

"I do believe we will see a lot of demand destruction, but it won't be as easy as it was in the '70s."

Especially because this time it will get permanently worse and worse.

Yup. I also suspect we are starting from a worse position.

My parents dealt with the inflation of the '70s by borrowing. We were driven to the brink first, because my dad did not want to borrow, even though he was eligible for low-interest student loans. He did not want to get in the hole, not even for something that would increase his earnings later, such as a graduate degree. Eventually, though, he was forced to take out a loan.

Now, I suspect the most vulnerable people are already deep in the hole. Borrowing won't be an option for them.