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Hundred would be a bargain.
It would raise oil prices, forcing the world to invest and implement in alternative energy sources.
It would also dramatically slow production, disrupting Hubbert's peak and saving more oil for after the peak.
Sorry if this is a threadjack.
We need more rigs, crews, and pipe, for starters. Leaky pipes might be a world wide phenom considering how old most fields and their infrastructure are.
The consensus at TOD is that higher oil prices need to be part of a long term Peak Oil solution.
However, a dramatic escalation of the Middle East conflict involving a conflagration in the Strait of Hormuz isn't without the potential for all sorts of other (not all that controllable or pleasant) consequences.
On balance, I think we'd prefer a different path to higher prices.
Agree!
A very interesting point. The irony is that Hubbert's peak is a model which reflects a world in which people may be dying for oil (the USA then) but not one in which they are not only dying for oil, but also killing for oil (the world now).
Paradoxically, overly rigourous adherence to the Hubbertian model makes the peak oil community too optimistic, in that they tend to believe that the resource-wars mayhem won't really begin until after the peak, since otherwise their model wouldn't fit as neatly as they would like it to. But as you suggest the mayhem may have begun already.
So any hope of you smart TOD guys designing an updated depletion model that factors in resource-war driven production mitigation as well as creaming curves?
WWI: Germany wanted the Baghdad-Berlin railway to deliver oil, the British didn't want them to get it.
WWII: Germany made runs at the North African and Azerbijan oil fields, Japan temporarily captured SE Asian oil.
The Cold War: ended in part with USSR peak oil plus Saudi Arabia flooding the market with cheap crude to cut off the USSR's hard currency supply.
US-Iraq War I (1990-1991): self explanatory
It never ceases to amaze me that over half of people who believe in geological peak oil deny that the constant warfare of this century is all about oil as well.
WWI is far more complicated; it was not about oil.
WWII was Nazi-Germany's quest for "Lebensraum", and oil was needed to fuel the war machine.
The cold war was about ideology. It was fought with oil, among other means.
http://www.amazon.com/gp/product/074532309X/
If the collapse of the Soviet Union is a reasonable proxy for a post peak global collapse (this could even be optimistic since there wasn't a serious war involved) then oil production could fall away very rapidly indeed. FSU production fell by 50% in under 5 years.
See this graph from Laherrere:
Click to enlarge.
I guess this was economic collapse leading to oil production collapse, but couldn't the global case see peak oil causing economic collapse which in turn destroys oil production?
Will OPEC still be producing ~30mbpd 3 years post peak? I wouldn't bet on it!
This is not necessarily true ... prices can get high enough that people can no longer pay at the pump - which means pumps can no longer be paid to pull oil from the ground.
That's intolerably simplistic, but everyone MUST keep very clear that petroleum does not follow simple supply and demand, as I noted in a previous post. It is perfectly feasible that the US will nationalize our oil ... it is possible that global conflicts may continue to spread and escalate ... we could all be back on rationing stamps for food and fuel ...
For every direction there are numerous outcomes, and this forces us to not only work diligently to accurately predict such things as global peak of production, but even things like; (1) how the market will work on developing alternatives and non-conventional sources, (2) how politics and foreign policy will shift and change to deal with changes in supply, (3) how domestic policy will change - with our "way of life" changing as well ...
There is only one thing that can simply be stated - production of hydrocarbon fuel and raw materials, necessary to the maintenance of the western world's current way of life, will begin to decline in the approaching years.
No one is certain how few or how many , nor can we accurately determine at what price per gallon the US economy, and even that of the world, will finally tip over into true depression, so we must all work diligently to make accurate predictions, while at the same time altering friends, family, local/regional/state/federal politicians of your concerns, and preparing for what may be the most challenging times you and your loved ones have ever faced - be that in 3 years or 15.
Many on this board miss the distinction between real GDP and nominal GDP. Nominal GDP will likely keep growing, real GDP will likely contract if we peak and don't plateau ( or even just grow supply slowly). Interest rates are likely to go a lot higher than people expect unless we get a housing crash.
The Dow Jones looks OK if you look at a chart of the 1970's (in nominal terms), until you inflation adjust it (real terms), then it looks remarkably similar to a chart of the 1930's depression.
Going forward the its likely to be a stock-picker's market like in the 1970's - index trackers are going to suffer, in my humble opinion. And most stocks will decline in real terms I suspect, with possible exceptions around energy, infrastructure, and mining related themes. Precious metals also did well in the 1970's.
"I guess this was economic collapse leading to oil production collapse."
AFAIK most contemporary historians contend that it was the glut of oil in the 80s that was the chief 'culprit':
Oil glut => collapse in oil price => collapse in Russia's oil revenue => collapse of Russia.
Today:
oil scarcity => increase in oil price => increase in Russia's oil revenue => Putin rules OK.
Tomorrow:
Russian oil all gone up in smoke. Russia in deep doodoo...
Regarding what caused the Soviet Union collapse was the collapse in oil production, thus a collapse of hard currency earning.
You can find a communication done by Marek Kolodziej during the ASPO IV International Workshop on oil and gas depletion in Lisbon, Portugal. The document is entitled : Former Soviet Union Oil Production and GDP Decline: Granger Causality and the Multi-Cycle Hubbert Curve
You can find all the presentation there
In the case of petroleum, demand destruction only works so far, because you're talking not only about the raw materials that lend to the creation of everything in modern society (everything made of anything synthetic that your mind can dream of - and a million more that you won't) but petroleum also is the primary fuel source powering how those things are grown, manufactured, mined from the earth, transported by land, sea, and air ...
... when you hear someone talking about how demand destruction will ultimately help to keep the prices down, you have permission to slap them, because the "demand" cannot go away unless you take away the demand for food, for fresh water (pumped thousands of miles from the Colorado, Columbia, Mississippi, Missouri), for more than 98% of all pharmaceuticals (including the anaesthesia that will allow your child to sleep during an emergency surgery), for the fuel to power massive earth moving machinery after any kind of natural disaster ...
Do you see? There can be no demand destruction without destruction of those with demands - a horrible thought, and one that can certain inspire nightmares - but as the cost per barrel inches higher, those are the kind of nightmares we'll all be having.
I appologize for interrupting the thread any further - but when someone asks a question - I think an answer is appropriate. While some may disagree with an element of one point or another - the concepts are all there - we all have seen basic discussions like this - so let's save the thread from an ongoing barrage of "how I'll survive" posts afterwards.
... when you hear someone talking about how demand destruction will ultimately help to keep the prices down, you have permission to slap them, because the "demand" cannot go away unless you take away the demand for food, for fresh water (pumped thousands of miles from the Colorado, Columbia, Mississippi, Missouri), for more than 98% of all pharmaceuticals (including the anaesthesia that will allow your child to sleep during an emergency surgery), for the fuel to power massive earth moving machinery after any kind of natural disaster ...
Do you see? There can be no demand destruction without destruction of those with demands
------------------------
Au contraire.
Demand destruction is a very useful concept and it explains why oil will be available for essentials long into the future.
If one believes in an early peak, it is not unreasonable to believe that one can personally take steps with a decent chance of reducing the affects of future scarcity.
In fact, a decent understanding of how demand destruction works could help avoid the panic evident in Gargoil's post.
Significantly higher rates of demend destruction (= depletion) as predicted by some on this site can IMHO only lead to acceleration of these trends and successive bouts of economic crises. As Chris Vernon says, the actual decline rates and oil prices once we are clearly past peak are essentially unknowable as all sorts of political aspects (oil producing countries restricting exports, wars, recessions, lack of investment and expertise, collapses of some economies) will come into play and push the purely geological considerations into the background.
Can you elaborate?
How can you have "demand destruction without destruction of those with demands?"
I am trying to gather a "decent uderstanding" of all things Peak Oil.
Please educate me.
Can you elaborate?
How can you have "demand destruction without destruction of those with demands?"
Demand destruction means that people's capacity to consume oil is diminished, not that they themselves are destroyed.
Essentially there is currently an immense cushion against real hardship in the way we live. Much of what we use could be used for other, more essential, things.
ie. energy and resources consumed in entertainment, comfort and luxury can be redirected for basic sustenance. eg. Fuel used in trips to Vegas could go to running tractors and combines and irrigation systems, milling flour and baking bread.
So, for one simple example, tourism and entertainment could whither away completely without anybody starving. But it is much broader than that. Very few of us work in industries that could not be pared back massively without threatening survival.
Note that by starving I mean actual starvation, not unemployment, income loss, poverty etc.
So what happens to the growing number of unemployed in a nasty peak oil situation?
Remember that even ancient Rome, never noted for compassion, doled out free food for the poor on a very large scale: as much as 30% of the population at some points in its history. (reference: "Collapse" by Tainter) Why? As far as I can discern this was done because the urban poor become very dangerous when hungry. They can easily trash your society. But it's also likely that they are fed because they are a useful pool of manpower at times and simply because they are fellow citizens.
Currently, if you haven't noticed, the poor in America are actually fat! Never before in history has this been the case. An utterly astonishing development. And another indication of the huge cushion we have against real hard times that actually threaten life and limb.
So, to get back to the idea of "demand destruction":
Say someone with a nice job in the airline industry loses their job because high oil prices wipe out air travel for fun. When savings are exhausted, they join the ranks of the poor. Their demand for automobiles, luxury goods, restaurant meals, steaks, movies, McMansions etc has been destroyed. But they live on, getting by on the dole (perhaps a ration of rice and beans) and casual labor.
It's possible that such people could learn to enjoy neighbourhood soccer games in vacant lots and open air performances by local musicians. i.e. They may discover their lives don't completely suck even though they have no money.
This is far from ideal. And I certainly have few moral qualms about living high on the hog the way most of us do now. So there is nothing redeeming, in my view, about having to give up the luxuries that we love.
But my point is: "demand destruction" at its worst means being involuntarily busted down to the simple life -- or, more likely just reduced to a simpler life. You lose some of your capacity to consume very large amounts of oil. It does not mean death and starvation, perpetual misery except in unlikely extreme cases. Most of the world currently lives in a state of demand destruction. Only in their case demand was never constructed in the first place.
Asebius.
Thanks for the clarification.
However I think there is only a fine line between your demand desctruction and the scenario described by Gargoil
... when you hear someone talking about how demand destruction will ultimately help to keep the prices down, you have permission to slap them, because the "demand" cannot go away unless you take away the demand for food, for fresh water (pumped thousands of miles from the Colorado, Columbia, Mississippi, Missouri), for more than 98% of all pharmaceuticals (including the anaesthesia that will allow your child to sleep during an emergency surgery), for the fuel to power massive earth moving machinery after any kind of natural disaster ...
I see the distinction you are making. What I don't see is any sort of mechanism or natural stop that keeps society from sliding right past your scenario into Gargoil's world.
How much oil do we actually use on trips to Vegas? Even if we cut out all such pleasure usage from our economy will there be enough oil to make fertilizer, plastics, gas for shipping/trucking, heavy manufaturing etc?
Or even if sufficent oil is available could we consumers still afford the end products? So even if insulin is avaiable can I afford it? Especially considering the huge world wide recession/depression?
This by the way is not a rehtorical question. I am genuinly curious.
One of the universal measures of general quality of life is time/income spent on leisure, as opposed to work. We have quite a bit of progress to show in the Western world in that area in the last century. Most of our economy isn't jobs devoted to the necessities of life or making tools that promote the necessities of life, but on frivolties like travel agents, priests, lobbyists, celebrities, the press, geriatric care, telecoms, phone sanitizers, what-have-you.
But in an emergency wherein our energy supply is removed, we could be plunged back to where most of the lower-middle class income is spent on heating our homes, putting food in our mouths, protecting ourselves, et cetera. Without the leisure spending, the large portion of the nation whose work has very low-order benefits to our lives will find themselves unemployed.
Basically, a recession of a magnitude we've never encountered fully.
It's what we're talking about when we say that if alternatives are not found to oil, great hardships will occur - the optimists among us who believe that it won't cause the fabric of society to be destroyed and result in massive die-offs.
What I don't see is any sort of mechanism or natural stop that keeps society from sliding right past your scenario into Gargoil's world.
Agreed. But even my example scenario is quite extreme and unlikely any time soon.
Even if we cut out all such pleasure usage from our economy will there be enough oil to make fertilizer, plastics, gas for shipping/trucking, heavy manufaturing etc?
I would argue that our "non-essential" use of oil is several times greater than our "essential" use. Bernanke pointed out recently that we use twice the oil per capita as some other developed nations (Japan, for instance). They live much like us, yet use half as much oil.
So it's possible that oil reserves could be stretched substantially without impacting lifestyle much. Once you get into a situation where lifestyle is impacted, the savings are even greater and the reserves get stretched further for essentials.
As noted by other posters, the pessimists believe that if the nation were forced into "powerdown" mode, the social fabric would soon rip leading to largescale collapse despite the fact that substantial resources remain.
I'm an optimist on this issue. But my optimism is not based on a positive view of human nature. Rather, historical examples like the Great Depression, WWII rationing etc, show the social fabric can take a lot of punishment. For a more extreme example look at the Cuban "Special Period".
So even if insulin is available can I afford it?
In very difficult circumstances, maybe not. But odds are you'll get it, anyway. During the Great Depression, America took a big lunge to the left and, in key ways, never looked back. Peak oil would almost certainly drive it further left as far as the average citizen was concerned.
I replied:
Agreed. But even my example scenario is quite extreme and unlikely any time soon.
What I should have said was that there is indeed a continuum with Gargoil's world further out on one end than the scenario I outlined.
But it is not easy to slide along that continuum. Reason: society has immense capacity to redirect resources and to adjust to shocks like diminishing reserves of cheap energy. Society is not a house of cards.
I see. Thanks for the reply.
I've read too many doom and gloom predictions lately. Its nice to hear a more optomistic tone.
Not likely at all!
In order to prevent the urban poor from "trashing the society" BOTH Panem et Circenses were needed.
Why would it be different today?
Tourism for the masses is a recent invention and may well soon disappear. Mass entertainment, however, cannot be dispensed with.
And if that happens there will be calls for rationing etc. - in itself a form of demand destruction. I wouldn't bet on free market pricing being permitted if supply ever gets tight.
With today's technology and better planning, they might get by with 0.1% of US oil use per capita.