Peak Oil News and Message Boards

Ayoob wrote:It means that the majority of the damage to our economy and our way of life, and of the supply chain that brings goods and services to us, will happen in the first half-life.

Ayoob wrote:By using the rule of 70, you can quickly figure out how long it takes your money to double. There were a couple of situations that brought this up to me lately, and I think it applies to oil.

You take the number 70, divide a percentage number into it, and that gives you the doubling time. So, a 7% CD at the bank doubles your money in ten years, a 3.5% cd at the bank doubles in 20 years, and a 10% CD doubles in 7 years. Pretty simple, no? Also, take your doubling time, add one dollar to that number, and that was where you made the majority of the return on your investment, no matter how long it had been invested. It's the last doubling time plus one dollar.

If you start with ten dollars and invest at 10%, then you double every seven years. At the end of 70 years, your money had doubled ten times. It's all in the last seven years plus one day that you made the majority of the money, even though the vast majority of the time the money was invested was not in the last doubling time. Make sense?

At the end of 63 years, the vast majority of the time, you end up with $10,240. But, only seven years later, it's up to 20,480. Leave your money in for another day or two to make it up to $20,481 and it's easy to see that you made the MAJORITY of the gains on your position in the last doubling time.

Now let's look at half-lives. In my pharmacology book (I'm studying nursing right now) drugs have a half-life. Your liver and kidneys break down drugs circulating in your system at a steady pace. There is a fairly well-known half life to drugs. My book happened to mention that after five half-lives, there is about 3% of the original amount of the drug in the patient's body.

It took me a minute to draw the connection, but there it was.

Five halflives until it's pretty much not affecting the body anymore.

Let's see what the halflife of oil is given various depletion rates.

At 8%, the halflife of oil is 8.75 years.
At 5%, the halflife of oil is 14 years.
At 3%, it's 23.3 years.
At 2%, we're looking at 35 years.

Let's marinate in this one for a moment. If we can agree that the majority of the gain on the way up is made at the final doubling time plus one day, then I would imagine that we can agree that the majority of the loss occurs in the first half-life plus one day. We lose more on the first half-life than we will lose for the rest of eternity.

Take a look at those time spans again. Do we see 50 years on any of them? No, we do not. If you are under 30, then it is likely that you will see the first half-life of oil come and then you will see it go. What does that mean?

It means that the majority of the damage to our economy and our way of life, and of the supply chain that brings goods and services to us, will happen in the first half-life.

Ivan_M wrote:i agree with PMS. the halflife model of decay works if you assume that production will remain at the maximum output possible all the way down the curve. for that assumption to work you have to believe that people will behave rationally and responsibly.

that makes it a very bad assumption.

Shannymara wrote:

Ivan_M wrote:i agree with PMS. the halflife model of decay works if you assume that production will remain at the maximum output possible all the way down the curve. for that assumption to work you have to believe that people will behave rationally and responsibly.

that makes it a very bad assumption.

This also means that the scary halflife model is the best case scenario.

Tanada wrote:

Shannymara wrote:

Ivan_M wrote:i agree with PMS. the halflife model of decay works if you assume that production will remain at the maximum output possible all the way down the curve. for that assumption to work you have to believe that people will behave rationally and responsibly.

that makes it a very bad assumption.

This also means that the scary halflife model is the best case scenario.

Excellent point, and a rather terrifying one at that.

jupiters_release wrote: Honestly I'm surprised we can still buy food and gas right now.

Ayoob wrote:It means that the majority of the damage to our economy and our way of life, and of the supply chain that brings goods and services to us, will happen in the first half-life.

kpeavey wrote:Makes perfect sense to me.

PenultimateManStanding wrote:

jupiters_release wrote: Honestly I'm surprised we can still buy food and gas right now.

As you know, JR, since you joined about a year after me which was quite a while ago, my contention has been all along that we are not going to have some long drawn out centuries long decline like Rome. Basically I'm just agreeing with Matt Savinar and other thoughtful people who have concluded that the moment we stop growing it all falls apart. I think this is the reason that TPTB are not letting the banks fail at all costs in spite of observers who say we have to let them fail and pick up the pieces afterward. I'm not an expert, but from what I've been able to gather it isn't going to work.