You seem to be very angry.

Certainly not angry; skeptical, but perhaps a bit too dismissive as you seem to be still in the early stages of denial. Let's just say your measures won't simply make impacts from PO disappear unless most do them. And a main point is that the infrastructure won't change overnight to enable a full shift away from air transport to rail, and we are stuck for at least two decades to come with the current new auto fleet's dismal fuel mileage.

To respond to your questions: I don't have to convince anybody. The price of gas will do that for me.

Note that even with gas prices high, demand keeps climbing. Don't underestimate lifestyle inertia. Too many people will cling to what they know and how they were raised, until the pain becomes too great. By that time, the economy will be in the tank.

For instance: People keep their car on average for 5 years, so next time they buy a new one, they can decide: A big one or a small one. I'm very sure they will choose a small one, when gas prices are high.

Car last on average 18 years now, so that means someone would buy your car (as you said you would sell it). Your 'old' car will be in use for another 13 years to come. If not, a new car would need to be purchased. If this were the trend for all of the SUVs, Pickups, and less than economical cars on the road, automobile production would need to ramp up more than double, which we all know is not going to happen.

One small remark: Why is every PO'er convinced that when oil supplies dwindle, we will have mass unemployment? We didn't have mass unemployment in the middle ages. Wouldn't it be more logical that we will have less unemployment, because productivity gains will be smaller?

Massive shifts in employment modes (i.e., back to the land), would mean a tremendous flight from the city and tremendous amounts of new homes close to the fields where people would be working. Knowing that PO will result in inflation, likely stagflation, with all of the inferred economic impacts, where will the money come from for all of this new investment in homes for newly converted farmers? Certainly not from selling the homes they had to practically abandon.

Everybody wants to believe that a shift over to non-petroleum based fuels will be a painless one, but we have to face the fact that PO won't allow us to live in a such a fantasy world. Can people take steps now to insulate themselves from the worst of it? Absolutely...

Will,

as you seem to be still in the early stages of denial

Well, this weekend I bought one of these

My wife thinks I'm crazy, but my kids think I'm the coolest dad on the block! I rock!

;-)

The thing costs 2190 euro so I better be. Any idea how much beer I can get into this thing?

btw, why do you think PO will cause inflation? Milton Friedman said that inflation is always and everywhere a monetary phenomenon.

Same question: All PO'ers seem to be so sure that PO will cause inflation. Looks to me then to be the perfect time to buy a very large, very expensive house ...

My wife thinks I'm crazy, but my kids think I'm the coolest dad on the block!

I would agree!

btw, why do you think PO will cause inflation? Milton Friedman said that inflation is always and everywhere a monetary phenomenon.

Inflation is simply defined as the overall general upward price movement of goods and services in an economy, usually as measured by the Consumer Price Index and the Producer Price Index. When fuel costs rise, anything dependent on fuel costs will rise. As I believe you would agree, many, many items are affected in this manner, from the food we eat, to the price we pay at the pump, to goods delivered by truck, etc. The Netherlands are one of the least oil-addicted developed nations, so you may not see as much inflation as the US. $100 in 2000 dollars is $121 in 2007 dollars.

Many economists project oil price hikes to result in inflation, Stephen Leeb being one.

Buying a large house means you will need to buy lots of furniture to fill it up, but more importantly, it if is like most large homes, it will need much more fossil fuel to heat it.

Of course, if most developed nations lived like the Dutch, peak oil would have come 20 years later...

Will,

I know your explanation of inflation, it is the standard econ 101.

Milton Friedman, who won the Nobel price, argued differently:

Total amount of money
----------------------- = Average price
Total amount of goods

So if PO decreases the total amount of goods, that would cause inflation, right?

Well, only if the total amount of money stays the same. To reduce the total amount of money, the FED, ECB, BoJ, PBC, etc can sell state bonds and thus reducing the amount of money (and raising the interest rate in the process)

This is a very potent mechanism. We have been doing this the last 30 years or so and it works remarkably well.

Why should it suddenly not work?

While you are free to embrace the economic model of your choice, I don't invariably accept Friedman's explanation.

There are so many factors in play, such as the prime interest rate, liquid cash holding, amount of debt (national and personal), GDP, etc, etc.

Offering state bonds also presumes that they would be sold easily. The money acquired through bonds usually goes into government spending of some sort (roads, buildings, education, etc), which enters right back into the economy.

I must note that I am a staunch admirer of the Dutch low-energy lifestyle, and the large number carfree areas in so many of your cities.

I am a staunch admirer of the Dutch low-energy lifestyle

I think you give the Dutch too much credit. People look alike all over the world, the Dutch are no exeption.

Hello All,

2190 euros for that ? Sorry to criticize, but why not just by a mountain bike for 200 and a bike-trailer for 300?

But now to the point, i.e. PO causing inflation, Stoneleigh over on TOD Canada, the guy who puts out the excellent finance updates every week, thinks we will first go through deflation and he speaks of it lasting years. Followed by heavy inflation.

Check out his posts, they are very interesting.

Ciao,
FB

I just saw myself as a true Grizzly Adams riding his cargo bike through town. Have to grow a beard though.

It's what people do when they are waiting for their midlife crisis.

I already have the porsche & the harley ...