It's easy to see a world where the US dollar is 40% devalued (such would be logical, and should have happened, bar domestic Chinese and other South East Asian policies, which prefer to hold down their domestic currencies by holding USD assets).

But a really big devaluation beyond that, when roughly half the world's economy is denominated in dollars, is hard to see.

Also Europe is in a relatively worse position in a PO scenario.  Yes we consume less, but we import 80% of our energy (coal mines in eastern Europe, and some renewables, plus of course the North Sea, but that is about it).

The US by contrast is the world's largest or second largest coal producer. Plus it has access to Canadian tar sands, Arctic gas etc.  And it has big biomass resources (wood for heating etc.).

Another factor (the same for CO2 emissions) is that the US would find it relatively easy to reduce energy consumption-- simply switching to diesel powered cars, ditching SUVs etc.  By and large, Europe has already made those sacrifices.

Eventually Italy will find a way to exit, and Greece also-- both countries are effectively having their economies strangled by deflation.

I don't think many of the EU25 countries that are not in the Euro (UK, Denmark, Hungary, Poland etc.) are likely to rush to join it-- the ones who would benefit (Hungary) are precisely the ones in the worst fiscal position and break the ECB rules.

The euro will revert to what it always was: a Franco-German currency union, with Benelux (and maybe the Irish and the Spanish) along for the ride.

I am no fan of the Euro, but Europhiles do finally have one coherent arguement now for the UK joining - to prevent the pound taking a caning as the trade balance begins a one way trip south.

If you're really interested in the answer to that question, look here...

http://uk.theoildrum.com/story/2006/9/17/135527/399

... a lot more than they'll be importing any time soon. Of course, back then they were building oil-fired thermal power stations (Grain, Fawley, Ince, Pembroke).

Never could afford the 1275cc Cooper S...

Then, as now we drove ~12,000 miles a year... on mostly empty motorways... but then petrol at decimalisation in 1971... was 30p...

You can find others by searching under authors for Jeffrey Brown.

Yep, even Genesis are getting back together!  Soon long hair (maybe because many people won't be able to afford a haircut) ... and long lines at the petrol pumps will be back too.  

And if you think hydrocarbons don't matter to the Uk economy, consider that 28,000 people opted for bankruptcy in the second quarter of this year - multiply x5 for a US equivalent.  If continued that would be 0.5% of the working population per year.  There is a big chance IMHO that the personal debt and housing bubbles are going to burst horribly in the next 2-3 years.

In retrospect, the period we are living will be seen as a brief golden age between the self-destruction of the European imperial powers and whatever phase of conflict comes next. Might be a battle for the remaining oil, probably not: much more probably, oil will be one aspect of a series of big sphere-of-influence conflicts between Eurasia (Russia/China) and the West (US/EU) starting sometime in the 2030s. All that silly Islamist troublemaking will be swept aside once the real fighting begins.

My two grandfathers were intimately involved in the mass industrial killings of the two world wars, came home, and got on with their lives, job or no job. Our descendants will do the same.

Two hundred years from now the human population of the world could be anything between 1 billion and 25 billion (I'd bet on 4-8). And oil supply will be the last thing on their minds.

I welcome a return to reality.

It's one of the reasons why I don't think people should cry 'peak oil' too early: when the sky really is falling, no one will be listening.

It denegrates everybody and everything, and David Smith has the inside track on everything, correcting everyone.

He attacks Stern's superfical analysis of Peak Oil (URR, vs production capacity (declining) and increasing demand, and inflated estimates of URR).

Coal is not usually included in reserves for Peak Oil and Peak Gas.

"There is enough fossil fuel in the ground to meet world consumption demand at reasonable cost until at least 2050," the report said.

While I don't think we are at an oil peak now, there is something close to an industry consensus that we could reach that point in 20 years.

I mention the oil point because it illustrates what I think is the problem with the Stern report.

But look at his conclusions:

I also believe there is more we should be doing than just adapting to climate change. Weaning ourselves gradually off fossil fuels makes sense, not just for climate reasons but because of security of supply and the eventual oil peak.

But nobody will do anything !

Just marvel at David Smith's perspicacity (look it up, my ego needs stroking too :P

Looked at more closely, the report's headline message -- spend 1% now to avoid 20% damage later -- does not stack up. I don't want to debate the science again, but the numbers given prominence are at the high end of what even scientific believers expect.

At this point, environmentalists will cite the precautionary principle. Better to be safe than sorry. Act now just in case there is a catastrophe later -- the millennium-bug principle.

Except that, as the report makes clear, the precautionary principle is highly sensitive to assumptions used, about the risks and the relationship between current spending and future benefits (the discount rate). If the cost now is low but the risks of future severe economic damage are high, that argues for action. If not, action may be unjustified, certainly on economic grounds. Spending 1% of global GDP every year from now, to avoid the loss of 2% or even 5% of global GDP in 2200 does not seem a great bargain.

1. the first paragraph is not correct.  Scientific knowledge has moved very fast in the last 5-6 years.  We have become aware that

• a number of the 'damping' factors in the earth's system are now under threat (plants reduce their CO2 intake at higher levels of atmospheric CO2, the Amazon is threatened with severe drought, the methane release from the permafrost is much higher than expected, the Greenland and Antarctic ice sheets are in worse shape than we thought, oceanic acidification is rising)

• We have also become aware that climate changes are not long and slow (always) they are also, according to the glacial and sedimentary record, extremely violent and short.

There seems to be a 'point of no return' where positive feedback loops will generate climate change without 'anthropogenic forcing' ie without human hand.  We might be quite close to that level (ie it could be as little as 600ppm CO2+ other greenhouse gases, v. 380m ppm CO2 now, and 430ppm adjusted for other gases).

2. 'Millenium Bug' is a straw man.  One was an entirely human-defined and scoped problem.  This is a systemic problem, of which only a small part can be seen by us.  the consequences of our actions are deep and far-reaching, and we don't know what they might be.

3. Global GDP in 2200 will be 32 times what it is now (2% pa real growth ie less than the last 50 years).

But Stern is very careful to outline why he thinks we should value the future pretty much as the present.  ie on ethical grounds, we should assume that future generations exist, and they have as much right to the planet as we do.

He suggests a low, positive discount rate (to reflect the chance that the world might not exist).

The other thing Smith raises is the old Bjorn Lomberg Canard about how we could fix the other problems of the world with much less money.  But:

1. we aren't prepared to do so.  There is no way the rich countries of the world are going to commit 1% of GDP to foreign aid (nor, necessarily, would it be well spent).

2. If the planet itself is significantly less habitable (the precautionary principle) then you can spend all of 1, and still have a massive environmental crisis.

• those of us who think we are running an uncontrolled climate modification experiment on the planet (remember Michael Crichton testifying to the US Congress criticising the absense of 'double blind tests'?  And being told that since we had one Earth, this was difficult?) and that there is an increasing body of evidence that this is unsustainable, and that the consequences will be sooner, rather than later

• those who think it's too much money and too difficult to worry about it now*

* to be fair, there is an argument that since the bulk of the solution will be about new technology, we ought to wait for that technology to emerge before doing anything precipitate.

However we aren't doing a lot to speed the progress of new energy technology.  One of the strengths of the Stern Report is a thoroughgoing review of energy R&D (less than half the level of the 1970s, across government and industry) and the slow speed at which new energy technology is taken up (50-100 year life cycles of major technologies and capital assets like powerplants).

Not in quantity. Less than 1 million b/day scheduled (enough to slow downslope) for speciality refinery.  And low % recovery is to be expected.

Alan

http://tinyurl.com/y7j7dy reports that the manifa oil field will aim at production of .9mm bpd when fully developed (by 2011). - so 5 years from now, its expected to account for less than 10% of the saudi oil production - this will probably not even account for natural decline of existing fields.

Andrew

I think some predict rising production because they don't want to hurt stock prices. Others, like Exxon VPs (who I have heard joking about not wanting to offend the Saudi's in the audience) do it to please the Saudi's (the joke is to maintain some level of personal credibility.

Others, just think like Pollyanna.

Apparently, Daqing in china is now under 1 million bopd

I saw a report last fall that Kuwait can no longer maintain 1.9 million bopd per day for Burgan and they dropped it to 1.7 million.  I was in a talk at the Soc. of Exploration Geophysicists, where a Kuwaiti was talking about a new fracture production trend in Kuwait.  I was amazed that they were talking about targeting such quickly depleted zones.  The author actually said they were doing it becaue 'there were no more Kuwait-scale opportunities' in Kuwait.

And of course, there is Cantarell, which the Mexicans ahve said has started plummeting.   It accounts for 2/3 of Mexican production.  

The fun and games of gloom and doom are just about to begin.

Another note, a few years ago, I went to a broker and told him I wanted to invest heavily in energy. I told him what was about to happen.  He didn't beleive me, he went and talked to a bunch of pollyannas in the oil industry and came back to me telling me that no one else in the industry believed what I did.  I told him I didn't care what they thought because they hadn't studied it like I had.  He is now a believer in Hubbert's messsage.