<Making the case for wind, again The Oil Drum DrumBeat: October 22, 2008>

56 comments on Prepping for a Repeat of 2006/2007?

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PolR on October 22, 2008 - 5:51pm Permalink | Subthread | Parent | Comments top

Thanks for the reply.

Was it you that first posted this graph? It is the history of US VMT since 1983.

There has been some periods of relatively high unemployment and/or high foreclosure rates since 1983. I think of the recessions following the stock market crashes of 1987 and 2001 for example. But there is nowhere a plateau similar to the one we have in the 2005-2007 period. There is nowhere a decline similar to the one we have in 2008. So the correlation between VMT and either unemployment of foreclosure rates do not appear to be an overriding factor. At the very least it is not confirmed by a plain eyeballing of the graph.

I am under the impression we both have to think again.

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memmel on October 22, 2008 - 8:00pm Permalink | Subthread | Parent | Comments top

It was the mother of all housing bubbles far beyond anything we ever experienced in the past. By any metric this housing bubble was far larger than any preceding ones. Also its the peak of not just the recent bubble but the overall housing bubble since WWII.

Its the big one.

In other cases not sure why you don't see correlation VMT flattens or slows inline with previous recessions even 2001. There is a very clear plateau.

If you read my post here I jumped threads sorry.

http://www.theoildrum.com/node/4672#comment-425025

This is I believe the correct relationship between energy demand and the economy.

The key economic part is the number of transactions and how many are for new stuff that uses a lot of energy or in our particular case oil.

The Eused = Ntrans*Eembed
is quite similar to food.
Foodeaten = Number of people * calories desired (required)

The reason I point this out is people generally have a hard time reducing the number of total transactions either because of a growing population or that they feel the transactions are required. Going to the store to buy less food uses almost the same energy as going to the store to buy more. Going to KMart to buy one toy is almost the same as going to KMart to buy two toys. Most of the embedded energy in the form of oil lies in the trips themselves not the products purchased. You buy more coffee and drink it at home instead of at starbucks on the way to work the embedded oil is not all that different. The starbucks closes but the people go work at the grocery store because of higher demand stocking coffee.

The point is you have to look at transactions*energy cost of goods bought. You can readily save a lot of money and still surprisingly not change the overall energy equation by that much.

The embedded energy in new housing construction is HUGE and thus its not surprising that the end of the housing bubble of all time results in a drop in VMT.

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roflwaffle on October 22, 2008 - 11:15pm Permalink | Subthread | Parent | Comments top

The difference in the price elasticity of demand and the income elasticity of demand. The smaller plateaus during the last couple downturns are indicative of the income elasticity of demand, since oil prices were relatively stable, while the recent downturn has been indicative of the price elasticity of demand up until recently.

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PolR on October 22, 2008 - 11:15pm Permalink | Subthread | Parent | Comments top

I am with you up to the consequences of the equation

Eused = Ntrans*Eembed

Beyond that I must disagree.

In other cases not sure why you don't see correlation VMT flattens or slows inline with previous recessions even 2001. There is a very clear plateau.

Let's take a look at a few graphs from shadowstat.com. Whats is good with this site is they correlate the official statistics with an adjusted version that takes into account changes of methodologies that occurred over time.

Let's look at the GDP here

Source: http://www.shadowstats.com/alternate_data

I can relate the small 1991 plateau in the VMT graph with the recession. Likewise for 1995. But looking at the 2001 recession, I just don't see any plateau until 2003. And the magnitude of what happens starting in 2005 doesn't even compare any of the above VMT events.

You argue this is the housing collapse. Well this doesn't chime with this graph:

Source: http://economistsview.typepad.com/economistsview/2007/10/subprime-forecl...

In this graph, the foreclosure rate was at a low in 2005 when the plateau started. In 2007 the foreclosure rate was just returning to the level observed in 2001. The timeline just doesn't match. The VMT plateau was started well before the housing collapse had even begun.

Another graph from shadowstats.com is unemployment:

Again I would be hard pressed to see a correlation between unemployment level and the plateaus in the VMT graph. The 2007 to 2007 period doesn't have especially high unemployment. And I don't see a VMT plateau comparable to 2005-2007 in the periods of high unemployment.

I agree that correlating transactions with energy used to perform the transaction is a good idea. I don't believe we have identified which transactions are being avoided or optimized to justify such an impact on VMT. The candidates being brought forward by both you and me don't correlate with the VMT data.

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56 comments on Prepping for a Repeat of 2006/2007?

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