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252 comments on DrumBeat: May 16, 2006

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SaturnV on May 16, 2006 - 9:29am Permalink | Subthread | Parent | Comments top
westexas quote "One driver, a suburban mother of two, said that you could have the keys to her SUV when you pried them out of her cold dead fingers."

Jim Minter's eerily prescient assessment of the ramifications of peak oil back in 1996 in the classic piece Joyride to Global Collapse said; Here's a prediction for you. In the next two decades millions of Americans will begin a serious search for an alternative to the gasoline-powered automobile. It is not going to be a happy search. If you think trying to wean gun owners from their passion for firearms is a hornet's nest, try talking to the great majority of us about reining in our passion for the automobile. Lordy! And yet, most of us agree there is a problem, vaguely phrased as, "There are too many other people out there clogging up the highways and slowing me down." Otherwise our attitude is similar to the rabid firearms bumper sticker:

    "You'll get my car when you pry my cold, dead fingers from around the steering wheel."
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BrianT on May 16, 2006 - 10:03am Permalink | Subthread | Parent | Comments top
Fantastic article for 1996 (it could have been written in 2006). Having said that, certain parts of the oil depletion theory are not playing out as scripted. The theory that as oil goes up in price everything else goes up in price is simply wrong. In fact, as oil has gone from $10 in 1998 to $70 currently many expenditures have gone down in price. In Toronto currently for 1 barrel of oil you can buy: 1. a fine meal for two 2.a cheap TV 3.a DVD player. My point is that oil can go to $350 without everything going up in price. If everything went up in price as oil or gasoline went up, drivers would be faced with a different situation. As it is, the expense of driving a car is competing for the consumer's dollar with other expenses which are not increasing at the same rate. If this trend continues, it will affect driving habits. Everything (including driving) has a price. I know everyone loves to compare drivers to crack addicts but there is a difference between the two groups (hard as it is to accept).      
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ET on May 16, 2006 - 11:48am Permalink | Subthread | Parent | Comments top
A couple of points:
  1. There is a time lag for lots of goods/services for prices to rise because of underlying costs. I've seen many articles citing retailers who were straining to 'hold the line' on prices. The dam will break at some point and everything will go up.
  2. Goods/services that stay relatively cheap will be those that have a high labor component. Labor is the essential ingredient that is getting cheaper. Look at the declining real median income in the US, not to mention all the outsourcing to foreign sweatshops.
  3. The real crunch will IMO not be high gasoline price but unavailability of gasoline with increasing numbers of spot shortages. (ok, so it was more than a couple...)
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BrianT on May 16, 2006 - 12:43pm Permalink | Subthread | Parent | Comments top
The relativity is the important thing. Even though people love to drive, they only have one dollar to spend and at a certain price level they will decide that driving just isn't worth it (I am simplifying to make a point). Good point about wages- they are definitely not going to keep up with energy costs.
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ET on May 16, 2006 - 1:57pm Permalink | Subthread | Parent | Comments top
Yeah, relative income/purchasing power is sometimes forgotten in our focus on prices. If the unemployment rate goes up and/or wages creep downward, the effect is higher price for gasoline, etc. even if nominal price stays the same. If unemployment goes up drastically, even $1.50/gal could be expensive gasoline.
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tate423 on May 16, 2006 - 2:07pm Permalink | Subthread | Parent | Comments top
It's called the Purchasing Power Parity and it is available @ http://en.wikipedia.org/wiki/Purchasing_power_parity.

If things continued in terms of economic growth, by 2030 or so many countries will have passed us in PPP.

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crazypat on May 16, 2006 - 12:18pm Permalink | Subthread | Parent | Comments top
SaturnV -
Thanks for sharing this article. Fantastic! He states all the key elements of the oil depletion problem. I love reading articles from a decade ago that clearly see the problem.

I am stunned at this amazingly accurate prediction:


[As we reach the Peak] Vast windfall profits will be made by some, which will complicate the ability of leaders to explain the reality. And the supply-side religion will tune-up its highly paid chorus.
...
The economy will slow down but the prices of everything will keep on rising. We will then rediscover the age-old truth: money is not a real thing; it is only an accounting device. Congress can't print oil and they can't repeal the Second Law of Thermodynamics.
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