The Oil Drum

Naah.

I expect "the airlines" to survive indefinitely even if they shrink considerably. Even in very poor countries, certain things are untouchable. In the present-day USA, two sacred cows are "home" "ownership" and the tourist "industry". Congresscritters will step in as needed and loot everything else to bail them out, as they have done many times at huge expense in the past, and as they are doing again right this very minute. When it comes to feeding sacred cows, there is always more "financial wizardry" to be had, even if it opens a road to everyday banknotes running far into the quintillions.

Congresscritters are, after all, incapable of ignoring yelps from Very Important And Connected People. And heaven forbid that Very Important Business Persons, their deals already made without human intervention by computers and spreadsheets, had to seal said deals over the phone rather than by physical visits to ultra-upscale hotels and restaurants on the far side of the world. The whines would be deafening and unbearable. And imagine the inhumane deprivation suffered by Very Important Academics made to read papers on their own, rather than vacation someplace nice like Bermuda on the pretext of pretending to listen in person to the absolutely incomprehensible mumbling of the authors. Our universities would collapse to dust instantly.

That's to say nothing of all the carrying on, some of which I'm already hearing, from the vast army of otherwise unemployable zero-marketable-skills persons who comprise the overwhelming bulk of the tourist "industry". The Chicago radio stations have been running unbranded ads, apparently from the hotel industry association, every now and then. These ads seem to be intended to scare people that if they aren't "being there", at $300 a night or whatever, they're toast. [And United Airlines continues to make the same point (PDF) more subtly in their print ad campaign.]

Even when there were long lines in the 1970s at the gas stations, flying somewhere for no particularly vital purpose was not a huge problem. Fares may go up, airlines may consolidate and lay off workers - but have no fear: ordinary people will forced to break their necks riding bikes to work on winter ice if that's what it takes to keep airlines going.

I agree with Leanan that the US has been in a slow decline since our oil production began to decline (benefits decreasing from employers, more folks working 2 or 3 jobs) but I agree with BrianT that now it is turning into a freefall. By 2012, I think we will be living in a much different world.

I would agree if the reduction is evenly distributed.

But I don't think it will be. I think we'll continue to outbid most of the rest of the world for the remaining oil. Even with our funny money.

I suspect a lot of Third World nations are near the breaking point. They can't afford to keep subsidizing energy costs. They're going to be forced to reduce consumption. We're still a far way from that point.

Also, we are so profligate in our energy use that we could cut back quite a bit without serious pain. People who have two or three or four cars will drive the little Toyota instead of the big Explorer more often. My office has not (yet) returned to the energy conservation measures they took a few years ago during the last recession.