Unfortunately, this is not a preference that can be set on a per-user basis, so we won't be able to make everyone happy.

That's exactly the issue that Fernando brought up at
http://www.theoildrum.com/story/2005/8/21/13643/8236#14

And my "fair and balanced" answer to that one can be chased round-robin style by starting at:
http://www.theoildrum.com/story/2005/8/21/13643/8236#41

Everything starts with how you "frame" the debate and what linguistic deceptions you allow each side to bring into the debate room.

You will never see a fair and balanced assessment.
Everyone has some weird agenda.
You need to dig for yourself to get to whatever truth suits your needs for the moment. Welcome to the burrow-hood.

And Happy DigDay to You
 :-)
http://lemmonledge.blogspot.com/2005/07/heather-at-home.html

http://www.usssp-iodp.org/Images/flaming_hydrate.jpg

Here's a video of some hydrate burning away, http://www.aist.go.jp/GSJ/dMG/dMGold/hydrate/burnhydr.qt

Methane hydrate is a potential source of natural gas, if they ever develop a good way to mine it and work with the gas in some way. "The worldwide amounts of carbon bound in gas hydrates is conservatively estimated to total twice the amount of carbon to be found in all known fossil fuels on Earth." This is usually spun as bad news because of the CO2 problem, but from the energy perspective it is a great opportunity.

People worry about methane because it is a more effective greenhouse gas than CO2, but of course if you burn it, it turns into CO2. Natural gas is methane and we burn plenty of that. Barring some catastrophic accident we would not be letting huge volumes of methane escape into the air, it would be a terrible waste of energy among other problems.

To support your argument, I'd add that US coal production has fluctuated within a 10% range from 1999 through 2004, between a low of 1.014 billion short tons in 2000 and a high of 1.111 billion in 2004. It's unlikely to be elastic in the short term. You'd need a lot of capital, people, equipment and infrastructure to increase output, and that can't happen very quickly.

I also doubt that coal miner is near the top of anyone's preferred occupation list these days. New Zealand is recruiting their new miners in Northern England.

I have seen this in Ukraine. There the average monthly wage buys about 200 litres of gasoline. But nobody drives a hybrid car there. Most of the new cars seem to be gaz-guzzling SUVs and like. They who can by new cars can afford the gas, too. Those who cannot don't drive at all. There are besides lots of old cars which are probably very energy ineffective. But the owners cannot afford to buy a new, with better mpg. The country is in constant energy crisis and the news are full of energy stories. This doesn't affect the consumption behaviour in any way. New shopping malls are planned. But the economy is starting to stagnate. Energy problems do affect industry and investments. Here we see how it works.

We can see it in the US, too. For example, the high natural gas prices have already killed much of the chemical industry. This is one of the reasons for the trade deficit. The energy crisis is already having structural effects but they are showing with a lag and indirectly.
 

It's like, oil is so expensive, there's no demand for it, so its price is low. That doesn't really make sense.

If oil is cheap, it's going to be used. If it's expensive, less will be used.

Granted there may be some time lag to respond to price. But that's mostly for unanticipated price changes. If people anticipate the changes they will respond to them ahead of time. We're not going to see constant wild changes in price. That assumes that people are stupid and can't learn from experience.

And really, I think that is a fundamental problem with the PO perspective. You're effectively forced to believe that people are stupid, because your beliefs are not widely accepted. Given that most people don't believe as you do, and given that you are smart and reasonable, it follows that most people are not.

Given this conclusion, you do an analysis of how a world full of unreasonable morons reacts to an oil shortage, and you get a pretty familiar Peak Oil scenario. The idea that prices won't go up until we actually hit a shortage is a classic morons-in-action scenario.

But actually, people are smart and flexible, and they respond creatively to challenges in ways that none of us can anticipate, because none of us can match the brainpower which will be applied to the problem.

I'll make 4 optimistic assumptions.

• The CERA projection of an additional 16.4 mbd supply capacity by 2010 is true
  
• Demand zeros out in 2006 due to prices and actually drops 2 mbd the next year (2007).
  
• Depletion is constant at 4.1 mbd/year.
  
• Nothing bad happens (terrorism, big wars, coups in oil producing countries, big hurricanes in the gulf, etc.)
  

It has quickly become conventional wisdom around here that the CERA reports about increased supply did not take depletion into account. Hence you have it that their 16.4 mbd supply increase is completely swallowed up by depletion.

I am skeptical of this interpretation. Of course I haven't read the multi thousand dollar report, I gather that nobody here has. We are getting some second or third hand interpretations, sometimes by people who have axes to grind, positions to push and even books to sell. But on its face a report which predicted oil supply increases and forgot to consider that old fields were depleting would be a farce, and I'd think CERA's clients would be pretty unhappy with that.

The projections I have seen from places like the EIA, or the Exxon report, show continued increase in oil production in Saudi Arabia (which was backed up by the Times article through about the 2010-2015 time period), increases in the rest of OPEC, and increases in non-OPEC through about 2010. These are net forecast increases that take depletion into account. Your "optimistic" scenario shows oil production stagnating. In effect you assume we have hit the peak already. How you can call this optimistic, let alone realistic, is beyond me.

OK, using my assumptions then, demand = 83 mbd and supply capacity = 85 mbd in 2007. Well! The worldwide economy is depressed but prices are no longer rising because supply now easily meets demand. In fact, prices are falling a bit. But as Levitt said, people respond to incentives. Usage will rise starting in 2008 because of dropping prices but can not exceed 85 mbd anytime before 2010 without shortages.

Here's another problem with your scenario. You are using an over-simplified model of supply and demand. Prices of storable commodities like oil do not reflect just today's supply and demand. Rather, they reflect the expected future course of supply and demand. This means that although a temporary recession may reduce demand, prices won't necessarily fall because people anticipate increased demand in the future. You won't tend to see this oscillating pattern of cheap oil leading to a boom leading to expensive oil leading to recession leading to cheap oil. That's making the mistake I mentioned earlier, of thinking that people are stupid and don't learn from the past. Only unanticipated changes can lead to these effects. But if the oil shortage is real and the situation is understood, even an economic slowdown will not lead to significant price changes.

But I will say this, we will never see $10/barrel oil again.

Not until we have switched over to a non-oil economy. How much for a barrel of whale oil these days?

Remember that the markets don't react only to spot prices. The are also the investments that include long term planning and decision making. Structural changes need time. The effects of oil crisis may be very complex and we might not be able to see them clearly even afterwards.

The energy supply is only a constraint of economic activity,  the energy supply (not only oil supply) restricts economic growth but this doesn't prevent economy from shrinking more than the energy supply. There are many financial factors that can trigger an recession and make it deeper.

By the way I see as quite pointless to try convict non-believers of the Peak Oil. It will come anyway. And there really isn't anything much to do. It is more important to find out how to adapt to living with much less oil and energy.

And there are people who know how. Take Ukraine. There the consumption of oil per capita is 12% of the American consumption. But Ukraine is an industrialised country with a lot of heavy industry and completely mechanized large-scale agriculture. And the population is shrinking by 0.5% a year. Now there are 47 million people, in 2100 there will be only 7 million. This is what we need everywhere. Sounds awful? In reality it is not so bad. In fact this is much better than most Peak Oil scenarios.

Paradigm shifts proceed in a well defined sequence.  There are initially a small number of wild-eyed radicals who are ignored (Campbell etc in this case).  If the new paradigm is truly more accurate than the old one, it spreads and attracts more and more adherents.  The old guard defenders attack and belittle it.  The paradigm spreads like water between islands of an ice sheet melting in antarctica.  The last of the old guard have to die or retire, they never get persuaded, but eventually the new paradigm takes over.

His advice is not to focus much energy on persuading die-hard adherents of the old paradigm.  Instead, look for undecided/thoughtful people, especially influential ones.  Work on them.  In short, attack at the weak points (undecided people), not the strong points (die-hard Julian Simon types in this case).