The Oil Drum | What happens when...

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Halfin on December 7, 2005 - 3:42pm

That's a great chart. Imagine that you were someone from 1970 wondering what would happen with U.S. oil consumption, and a time traveler from the future came and showed you that chart. You'd see the exponential growth which had gone on for most of a century coming to a sudden and lurching halt, with nothing but ups and downs for the next 30 years.

You'd think, my god, the U.S. must have gone to hell. All those decades and centuries of thinking the world was getting better, that each generation would have more than the one before, must have come to an end. The U.S. must have descended into a turmoil of suffering and bitter fighting over who gets the next barrel of oil. It must have been 30 years of stagnation, of no economic growth, of no technological progress. The world of 2000 must be far worse than the riches we have here in 1970.

This is basically what Peak Oilers have been predicting when they imagine the same thing happening on a worldwide scale. This is what lifeaftertheoilcrash and similar sites are predicting.

Yet we know it is not true. U.S. economic growth over the past 30 years has been robust. Productivity is increasing faster than ever. Technology has made incredible advances. The U.S. today is so far ahead of 1970 that it is unbelievable. Longevity continues to grow as medicine improves, technology has given us new tools that were not even imagined back then, and we are on the verge of even more dramatic changes in these areas. By any objective standard, the U.S. today is far richer and has a far higher quality of life than it did in 1970.

Who is to say that the same thing can't happen to the world as a whole, even if oil does peak soon? Suppose a time traveler from the world comes to you and shows you a chart of world oil consumption over the next few decades that looks much like what the U.S. experienced from 1970-2000? A general leveling off, with lots of ups and downs?

Are you going to assume that this is a world of suffering and hardship, a dog eat dog struggle for survival with an ever increasing desperation to grab the few remaining dregs of oil? A world with a lower lifespan (or even a population "dieoff"), a world without the wealth to expand technology and solve its problems?

Or are you going to assume that human intelligence, creativity and productivity will rise to the challenge, as it has done before? Look at the lesson from 1970 and think hard before you bet against the intellectual power of six billion people working to improve their lives and those of their children. I would never bet against humanity in such a challenge.

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NC on December 7, 2005 - 3:59pm

In real GDP (goods manufactured) who says we have continued to grow since the mid 1970"s? We have jobs and we have goods but we don't make as much as we used to.

Maybe we just borrowed our way to prosperity the last 25 years?

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TJ on December 7, 2005 - 4:04pm

The U.S. got where it is today on cheap energy. Yeah, I would bet against 6 billion people doing what the U.S. did. It took 25% of the world's energy consumption to get 300 million people this well off; it's a pretty safe bet that the other 5.7 billion can't do it on the rest.

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Twilight on December 7, 2005 - 4:47pm

One difference - in 1970 only the local supply of oil had peaked, worldwide the supply was still growing. That means that the energy supply which our existing infrastructure was designed for did not need to change all that rapidly, as there was plenty of oil to supply it - we just had to pay more for it for a while. The infrastructure changes that did occur (moving electrical generation from oil to coal and NG, etc) were driven mostly by price rises.

It seems to me that this may be different if we face the prospect of decreasing supplies of oil at any cost. Of course, it is all related to how fast worldwide depletion occurs. Also, our demand is much greater now, so it will be harder to transfer it to other sources. Of course, if depletion happens slowly, then societal disruption will not need to be great, which is a point many have made before. It's all about the rate.

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LevinK on December 7, 2005 - 5:32pm

Let me tell you a story.

A poor man approaches a heavily dressed rich man (a famous economist BTW) and asks him for a dollar. The rich man stops, looks at him and lights a luxury cigar.
-"Do you see this cigar, my friend?"
-"Yes, what about it?"
-"It costs 100$. If I only quit smoking I can earn $3000 per month and live wealthy and happily. So, why can't you just stop smoking?"

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step back on December 7, 2005 - 5:57pm

By any objective standard, the U.S. today is far richer and has a far higher quality of life than it did in 1970.

I thought only Sith Lords speak in absolutes. By "any" obective standard?

Talk about your freak-o-nomics. Halifn's argument leaves out the HUGE HUGE externality of fossil fuels coming in from foreign sources to save the US economic glutonmaximus. I guess those time machine aliens are going to come to our global rescue the next time around and bring us extra-galactic oil. Right. Well yea..eh..aah. You never know. There's sound logic for you.

As for "far richer":
I don't know if being in debt up to your eyeballs (2 Trillion) makes you "richer".

As for "quality of life", it's a complicated subject:
http://www.rspb.org.uk/birds/sotukb/wildbirdindicator.asp

http://www.flynnresearch.com/indicators_sochealth.pdf

http://www.co-intelligence.org/y2k_upnotup.html

http://www.flynnresearch.com/calvert.htm

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Agric on December 7, 2005 - 9:44pm

I have sympathy for your argument, step back, and hope to find time to properly read the flynnresearch links, they look interesting.

It's quite hard to evaluate USA personal wealth, let alone quality of life, over the last 20 or 30 years, many of the official stats have been so messed with. I have seen credible data that indicates the income of the lower 80% of the US population has declined fairly steadily in constant $ terms since the late 1970s. I think that US per capita wealth in constant $ terms peaked in about 1978.

The truth for more than 50% of the US population is probably: life is worse now than 30 years ago. Despite economic growth, despite the extra consumption of fossil hydrocarbons, despite the extra money bouncing around. I'm not talking relatively (they feel poorer but are actually richer) I am talking in absolute measures of life quality. Is a child richer for watching hours of cartoons on TV or for interacting with a parent?

Later, when we or our descendents look back, I think they'll conclude that somehow we bought a delusion and went off the rails in many ways. It will seem so obvious then, in retrospect. They will find it hard to understand how we couldn't see it.

There are many inaccuracies in Halfin's post. US oil consumption was exponential to 1973, corrected by 20% by 1980 then grew on a linear basis to date and is forecast by the EIA to continue so.

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igrebnev on December 7, 2005 - 7:43pm

The problem that oil comsumption may not level off, it may start to decrease.

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snuffy on December 8, 2005 - 12:08am

Sir,I would very much like to belive in your benevolent analisis...however haveing looked at history,and knowing what I know of mankind,I would ask you to consiter Rome,at her glorious height.....and the thousand years of darkness after before you lay your bet

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