199 comments on Peak Oil Update - December 2006: Production Forecasts and EIA Oil Production Numbers
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Demand destruction is fascinating with a futures market. Naively we assume it causes prices to lower but I think it actually just increases price instability. Demand destruction initially leads to two things first lower price but also to resources being allocated to the higher bidder. This aspect is not normally taken into account. Thus the winner in a demand destruction scenario gets more product for a lower price as the looser is knocked out of the game for a finite amount of time.
For example take a tanker on the high seas open to go to Africa or to the USA. The USA "wins" the price war sending not only that ship to the US but additional tankers at lowering the prices. The reason is that the bidding is not just on the current tanker but also future shipments. Price lowers more future contracts are not bought and the loser can now play again getting a few shipments until knocked out again.
If you look at it this way it makes since for nominally lower prices to exist for a bit after price hikes since the loser cannot compete for a finite amount of time after a demand destruction style bidding war if your allowed to buy future shipments.
So if you cycle through a demand destruction scenario you see that overall the winner on average pays far less than the initial price spike to ensure demand destruction.
So overall demand destruction simply leads to spikes and ever higher valleys as depletion forces another bidding war.
Note it takes several rounds before the demand destruction is permanent.
I think this is exactly what we are seeing.
How about we say
"waste destruction"
and
"conservation incentivation"?
These are both way more true to the problem and they also suggest that what is happening is not really a bad thing.
When Muffy can't drive her Hummer to the hair salon, it is a good thing.
And true... keeping the African family from buying kerosene is a crime... and it does nothing to solve the problem. Each and every Hummer on our roads is the equivalent of a dozen families living in misery in the developing world.
In reality Muffy will continue to drive her Hummer and that family will suffer. It happens everyday now, what makes you think that'll change after peak?
What an idiotic thing to say. Use your brain, that "waste" being destroyed is what's keeping that african family alive.
Muffy, I am afraid, is a hopeless case. But there are enough people out there who are not. And the question is how to reach them.
But we are not really on the same page.
Ha!
Good luck with that. Humans (like any other animal) have evolved in such a manner to us all available resources. Its natural. If my tribe didn't use the maximum of resources available the other tribe would have and my tribe would be history.
You will never ever teach people not to consume the maximum. Sure some individuals will, but never humankind as a whole. There are far too many Muffys out there and not near enough InfinitePossibilities to make a difference.
Sorry
"You will never ever teach people not to consume the maximum."
I don't think that is really a problem for most. One third of the US population lacks basic health insurance. Like I said... quality of life is first and foremost not a matter of how many boxes you get to unpack for Christmas. We just tend to forget that beyond the usual Christmas present avalanche is a core of unsolved social and economic problems.
Some primitive socieites developed social norms that mitigated over use of local resources. Australian aboriginies, for instance, had as relatively 'sustainable' society for some 40,000 years.
True, most of these societies were wiped out by more advanced, i.e. productive, Europeans, but they indicate that, in isolation, appropriate social norms can create the underpinning needed for the development of something that looks like a permaculture.
The question is whether a technologically-advanced sustainable society is possible, not whether any society is sustainable. Clearly, before the Europeans came, Australia had a 'no'-tech sustainable society.
If I recall correctly the Australian aborigines were pretty much protected by geography. The more advanced farmer societies that swept though SE Asia displacing the hunter gathers couldn't get a toe hold in Autralia. Their agriculture didn't work in that enviroment.
Basically the aborigines survived because they were the most efficient consumers in that environment. They used more resources better. Hunting and gathering let them consume more than farming ill-suited crops. It wasn't until the Europeans came in later was another group able to out consume the aborigines in that environment.
Now you said their lifestyle was sustainable. I think describing it as at equilibrium is more accurate. After all don't all societies reach equilibrium at some point? Didn't the Easter Islanders after their crash? Won't we after our crash?
Are you sure that the aborigines never overproduced their lands/food sources and suffered a die off? Off course they did.
If aborigine tribe A left some food source for future use. What is to stop aborigine tribe B to come in and use it? Wouldn't tribe B have at least a temporary advantage over tribe A? Tribe B would prosper at Tribe A's expense. When the next drought or the next inter tribal war came along which tribe was in a better position? The tribe using the most resources.
Its not just humans but all animals follow this pattern. If two groups are competing for the same recourse, the group that utilizes it more wins.
I don't think its fair to say the aborigines had no technology. They did. It was the technology best suited for that environment ie technology that allowed them to consume the most (or at least more than the invading farmers).
You make a good point about isolation and equilibrium, and your point about societal adapation to existing conditions is what I was getting at. But the difference, I think, is in perspective. Local tribes may have overproduced and died off, but Aboriginal society as a whole, i.e. at the Macro, 'whole Australia' level was seemingly at a sustainable equilibrium - i.e. it could have concievably kept going on as it was for another 40,000 years.
You mention Easter Island, but there is another island (I forgot the name) that had developed strict population control norms that kept the island at a very stable population level. You could argue the 'earth is holy' norm that some Native American tribes developed are a societal reaction to resource constraints - i.e. Take/Hunt only what you need because taking/hunting more will result in a tragedy of the commons type outcome.
It would be interesting to correlate these type of cultural norms against resource contraints. I would think that would be strong evidence for the Marxist argument that the 'means and forces of production' shape everyting else in society.
Meanwhile, most at tod think the world has too many people. The only way for this to be corrected in the near term is for some of them to leave, whether through disease, wars, starvation or whatever. Most that leave earlier than expected will be miserable on the way out.
Sure, when gas hit $3.50 dollars a gallon Muffy cut back on her driving. But she still drove the maximum her budget allowed.
The same will happen at $5.00 a gallon and at $10 and $25 etc etc. Muffy will conserve, but she'll always drive the maximum she can.
IP envisions Muffy driving less than she can afford. He plans to do this by raising taxes on gas to force her to conserve. But Muffy isn't stupid. She'll vote for the politician that'll lower gas taxes so she can afford to drive more.
And that doesn't even begin to touch on the growth in India and China. How are you going to force them to not consume the maximum.
I can see that happening in the US, too. Mostly with hardware imported from Europe and Japan, though...
Yes Muffy won't change. Its unrealistic to expect Americans to raise gas taxes on themselves.
But Muffy's kids? Even if that is possible (and I doubt it) do we really have time to wait an entire generation before we start mitigating PO?
I think everybody would be much better served if we concentrate on plausible senarios. Sure we could mitigate PO with outragous gas taxes, but it just aint gonna happen.
When you keep insisting that all we have to do, its offputting. Please don't downplay the magnitude of the problem. Its counter productive.
It is also the basis of Campbell/ASPO's Uppsala Protocol. A measure to make certain that rich nations do not out bid the third world in a post peak environment.
But energy is less than 4% as a component of CPI in most g-20 nations. Thus, no matter how much they rise, they cannot bring about Recessions. There are many graphs at TOD and elsewhere that imply rising crude brought about the last dozen Recesssions. In actuality, this is an illstration of a correlation ... not causation. As mentioned last year, the usa would need twenty four months of plus $70/barrel oil acquisition cost to bring about a Recession from 3.5% norms in Real GDP. It is one of many forings, but rising interest rates is the biggie in deterring consumer spending.