fletch_961 wrote:I doubt $300 oil means "smoldering ruins" for the world economy. A paradigm shift certainly.
If this paradigm shift isn't going to look like smoldering ruins, what will it look like?
People talk about demand destruction, but this isn't making much sense right now to me. Demand destruction for one person means trading in their SUV and for another means no heating oil in a northern winter. The person who traded the SUV for a push bike might consider the world has undergone a paradigm shift, the person who died of hypothermia might use different terminology (if they weren't dead).
Looking from an economic standpoint, what kind of paradigm shifts occur if oil hits $300 a barrel in the next 3 years? 10% of drivers can't get to work? That's ok if they are the same 10% who are made unemployed and no longer need to drive to work, but what if they aren't? 20% of home owners waiting for repossession because their expenses have risen by 25% with their wages rising 6%, which leads to a stock market crash and banks either going under or bailed out by governments somehow?
This just sounds like what the Hirsch report says... if you have a 25 year plan, you can make the adjustments necessary, but if peak hits tomorrow (or yesterday), you're screwed. You can't do anything because the public wants relief now, they don't want you to spend 10 years building a nuclear power station that ends up not working because of a drought, they might think they want you to open up ANWR but they don't actually want to wait eight years for that oil to come online. The public wants lower oil prices, but what they ask for is tax relief so they can carry on using the same amount of oil they're using today when they should be asking for help on how to use less oil. If the public uses less oil you invoke Jevons paradox and more oil goes into something else in an unplanned market driven way so we spend trillions on white elephants while not addressing the actual problems. If the public gets clued up and pays off their debts and buys less 'things' then the banks and stock market break down and the public lose their jobs (which saves oil but doesn't put it to good use in mitigating peak oil) and those jobs that are lost might be in industries that are needed for the 25 year plan.