Thanks Undertow, this one is a keeper. Growth in GDP, or industry in general requires growth in the energy supply. As the oil supply declines then the use of coal and natural gas must increase, just to stay static. But in a debt based society, a static economy is impossible. If there is no growth then the economy must decline.

Since we have reached peak oil, in my opinion anyway, then to avoid a never ending depression coal and natural gas use must increase quite dramatically. That is not likely to happen. Natural gas will likely peak about ten years after oil.

Coal has a different problem. As it has been pointed out, several times on TOD, the supply of coal is not really what it is cracked up to be. Also it is quite spotty. That is the supply is limited to a very few countries. I expect "Net Coal Exports" to shrink even faster than net oil exports. After the shock of peak oil sinks in to the average citizen, they will demand that their precious reserves of coal be kept for themselves.

Thats partial substitution at work. I wish someone with a better grasp of economic would take a stab at the implications of partial substitution. My own result is that it will lead to energy prices in general reaching equality with a fixed discount for energy quality.

Effectively no energy source provides any advantage over the other once the quality discount is in. The only differentiating factor is the quality which is basically the use for the energy. This includes renewable sources in this model they would be expanded to maintain the total energy levels not because they provided any inherent advantage from a energy/cost stand point. Basically they don't don't cause expansion but slow the decline in overall energy levels. This has nothing to do with how "good" renewable energy sources are just that a economic model of partial substitution ends with energy itself becoming a more unified concept i.e you start paying for joules/btu's.

I'd love to see your japan graphs with prices per btu over layed on top. You should see that partial substitution was unable to prevent energy costs from converging.

This of course brings up the current unprecedented flattening of the price differential between oil and NG worldwide and in North America esp. If this differential remains closed and the price of oil increases we are effectively entering and unknown era of converged energy costs.

In my opinion the biggest thing thats happening right now is that the advantages of partial substitution have come to and end. The economic impact of this is hard to gauge but from what I can tell its the biggest untold story in the history of modern energy.

From a EROEI perspective what this means is that using energy from coal or NG to extract oil or vice versa offers little intrinsic advantage financially. Its not clear to me yet what the full implications are of the tango between EROEI and partial substitution but the result regardless is not good and its not a small factor. Declining overall i.e total energy place a role also.

Merry Christmas and enjoy each and every holiday we have from here on out. It may be the last one you enjoy in reasonable comfort.

Thats a doomer variant of good cheer :)

Congratulations on your excellent charts. But doesn't this underline a point? That people and businesses adapt? That it is possible to progress, while using less oil? I didn't say they used less of other energy sources.
Moreover, Japan achieved these reductions in oil demand while oil was cheap.
Since Japan taxes gasoline, I assume oil demand will continue to fall in Japan, with the introduction of much higher mpg cars, such as hybrids and PHEVs.
The point stands: Several nations, largely in Europe, are obtaining higher GDPs per capita while reducing oil consumption. If France adopts PHEVs in the future, and gets more than 80 percent of its power from nukes (as it already does, and it is building yet two more huge nuke plants), does not that mark a successful adaptation to scarce oil?
I confess to not knowing the full range of outlooks for coal and natural gas, although there seems to be plenty of it, judging from prices. China just discovered yet another huge seam of it, and is building CTL plants as we speak.
Maybe fuel-switching can't last. Maybe we run out of fossil everything (though probably not nuke, solar, wind, geothermal, biofuels or gains through efficiencies). Seems like we still have a lot of options on the table.
Enough option to drive oil down to $10 in 2009? I think so. Down to $33 a barrel today, for the best grades. In the $20s for heavy stuff.
That's cheap!

Here is Japan's total energy consumption, through 2005 (EIA). From 1983 to 2005, it grew at +2.2%/year.

We will undoubtedly use less oil because production will decline and there won't be any other choice.