westexas, with the price of the crude oil ‘net exports’ obviously accelerating, especially in rapidly depreciating US$ which no sane exporter would want to hold for very long, I think there are some extra wrinkles to add to ELM.

I saw your comments on demand destruction starting with the poorest, and as the very poor drop out of consuming those people still consuming will have much more purchasing power so the price has to rise even more steeply to destroy some of their demand - I agree with your point of view. This will stress the price at the same time as the 'import land' countries such as the UK start to suddenly massively increase demand for 'net exports' as their own production declines sharply post their own peaks.

From a supply point of view, clearly ELM is already coming into play as exporting nations look after their own people first - putting a severe strain on available supply even before peak (ie:peak lite) - however now prices are rising steeply I expect the supply situation to become much worse due to hoarding , not just by exporters but by all producers, countries and consumers.

Why hoarding by producers? ... This is my scenario ... once we are past peak oil and supply is always constrained by very steep depletion rates and lack of adequate alternatives the price will probably always increase despite recessions. If this is the case it would be wise for any producer to make the resource last as long as possible to maximise profit and income – the exact opposite of normal economic theory.

For the case of countries like KSA they must make the oil last as long as possible by hoarding it, since without it they are literally dead.

For the case of individual oil companies such as Shell (or indeed a ‘good ol’ boy’ with a couple of ‘nodding donkeys‘) they are also economically dead once their reserves run out - so I would not expect them to pump at the maximum possible rate as economists seem to predict.

Since it is normal human behaviour, I expect producers to hoard as much of the oil underground at minimum cost for as long as they can get away with if the oil will be more profitable to produce in the future rather than producing it now.

Shareholders are trying to maximise profit. Hoarding pushes up the price today and tomorrow more than the costs, makes the reserves last longer, keeps the share price higher and avoids risky, hugely expensive, deep-water exploration until it is really needed.

As a ‘by catch’ not producing at maximum rate could be justified morally to the world at large by reducing the impact on climate change, saving some oil for our children and also by not making exceesive profits (subject to windfall taxes) this year but spreading the profits more thinly over a number of years.