The Peak Oil Lexicon

ProfG has just shown us that the term "Peak Oil" has begun its climb to more common usage.

As it comes to pass we will start to hear a new set of words, different euphemisms that will be used to gloss over the worsening situation. I suspect that one of the first of these will be "Demand Destruction." It has already hit my attention twice this past week.

What "Demand Destruction" means, in simplest terms, is the reduction in demand because the price gets high enough to change people's habits, and their demand for, and use of oil is destroyed because they can no longer afford to use it. It is a coming problem because a decreasing supply at ever increasing prices may well destroy some demands permanently.

The graph posted the other day shows that the largest portion of the oil we use is for transportation. Of the total 19.7 million barrels of oil used every day (mbd) some 8.8 goes in motor gasoline; distillate fuel oil (mainly diesel) is 3.8 mbd and about 1.6 mbd is kerosine/jet fuel mainly used as aircraft fuel. By taking only the "mainly" bits we get a total of 13.1 mbd used for transportation.

So if the earliest impact of the Peak Oil arrival is the failure of supply to meet demand before the end of the year, it is the transportation sector of the economy that will take the biggest hit.

If the supply reduction in the world were say, a shortfall of 500,000 barrels a day (bd) then the US share may be about a quarter of this. A drop of 125,000 bd out of a total of 13.1 mbd is about 1%. We have seen a lot worse situations develop before. The difference this time is that this will be the marker to a period where each year the available supply will drop by at least this amount.

The Hirsch report (named after its chief author, referred to earlier as the SAIC report) points out that is going to take 20 years to counter its effects, providing this is all done before Peak Oil hits. The corollary to that is that if it arrives this Thanksgiving it may well take us 20 years to dig out of it.

So each year the supply will get smaller, perhaps initially in 500,000 bd jumps (and only then if the world demand now growing at 2.2 mbd totally stops). As I mentioned the other day from 1973 to 1983 the US dropped its oil consumption by 13%, but a fair bit of this was from the transfer of power supply to other forms of energy. Some also came from our slowing down on the highways. It can be done, and mandated, and initially it might be enough to give us a little breathing room. But it does not appear that it is being considered at this time. And under those conditions market price, on an increasingly rare item, will dictate who can afford to drive. Without Government controls to limit use, it will fall back on the American pocketbook.

And so we must return to the question - the Demand Destruction question - how much more must the price of gas go up before you change your driving habits?

Data, apart from the estimate of decline, is taken from the Hirsch Report
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Pernicious ideology makes both rationing and allocation unthinkable in this country today. Free market fundamentalism approaches cult status. Therefore we are left with demand destruction or price as a de facto rationing system based on what you can afford. In other words rationing is for the "not wealthy" but the serfs. That's the way feudalism works. There are different rules for the lords and ladies.

I don't know, most of the suburbs and exurbs look like they were designed to make lots of driving mandatory. I tend to believe that before gas prices rise high enough to curtail demand, the powers-that-be will try to institute some sort of gas rationing, and try to rig the system so that their voting base (the West and the South) get some sort of preference.

Well, gas could probably double in price before I change my driving habits much--I already get 30+ mpg and have a 20-minute commute.

The more interesting question is what's going to need to happen before suburban SUV owners change their driving habits.

Another factor in oil use besides price is peer pressure. I remember in 1973 that RVs suddenly became very unpopular, being seen as gas-guzzling vehicles driven for pleasure rather than necessity. I remember interviews with RV drivers who cut trips short (even though they could afford the gas prices), because they didn't want to face angry mobs each time they filled up their gas tanks.

Part of the unpopularity was that price controls had created an actual shortage of gas at the pumps, so an RV with big tanks ahead of you in line could make the difference between getting a fill-up today versus waiting a day or two to get gas.

Still, if we see much higher prices, and especially if we see lines at gas stations (either due to spot shortages or people queing up wherever there's slightly cheaper gas), I wouldn't be a bit surprised to see the same sort of angry behavior directed at SUV drivers. That could make a difference in behavior well before the higher prices alone would sting the wallets of affluent SUV driver.

I parked her when gas hit $2/gallon, just like I told my wife we should. Her SUV is being sold this week. I have switched to a 1974 VW bug for mileage and simplicity, and a motorcycle is being bought with the money from selling our jet ski. We have planned this for sometime, knowing the Peak was coming, or some other unacknowledged energy issue. The wife will buy a 1970 VW Ghia, and my kids are already in their 1970 era VW bugs.

Each of these cars get 35-45 mpg, and more can be wring from them with a little tweaking. They will burn almost anything you put in the fuel tank that resembles gasoline. They cost between $2000 and $4000 each, and my insurance reductions pay for them in a year... And the 35 mpg is city mileage, which is what we do here in Houston.

Yes, they emit higher amounts of greenhouse gases than other vehicles. But they emit much less than ANY 6-cylinder, can be fixed by any shade tree mechanic, tolerate bad fuel and they are incredibly reliable.

In addition, I drive 60, not 90, on freeways during my 50-mile commute for the mileage. Sure, I get honked at, flipped off, spit on and I have to accept tailgating as a way of life. But my gas bill is nothing like any of my neighbors. But they are changing too.

I have infected my neighborhood already. Two of my neighbors dumped their SUV's in favor of older Honda Civics (1980's) which are inexpensive and get good mileage. Another just punted his F350 4x4 hunting truck AND his 4-wheeler for a VW modified to run in the mud - this replaces two vehicles with one.

Why finance half the value of your home for a hybrid? Buying a NEW hybrid uses up more oil to make the car, they cost a fortune when you have ANY type problem, and their mileage is not that great in Houston traffic. I'm recycling by using the VW's! Now we're looking for a used golf cart to run in the neighborhood.

The problem is that we are taught to go out and BUY SOMETHING NEW at every opportunity....which uses EVEN MORE PETROLEUM...and puts us each more deeply in's the whole consumer mindset that has to change, NOT JUST FUEL CONSUMPTION!!

55 MPH mandatory speed limit will be the first government signature of acknowledgement we see. Politicians are big on recycling too - they will quickly recycle something the public has already swallowed before trying anything new.

If price is the only rationing that is done, it will simply be a tax on most Americans depending on their cars. Even if gas were $5 a gallon, people would still live their normal lives and not really conserve. The 3rd world is where this will become the difference between life and death sooner. Watch China, India and the rest of the 3rd world.

Has anyone thought of a list of priorities if the government does consider rationing? What did they do in the 70s besides the odd/even day thing? Obviously law enforcement, industry and food production / delivery are the most critical. Then what? Keeping the lights on, transportation to and from work?

Price is the cleanest way to reduce frivilous demand, but that's not going to shave more then 5-10% off miles driven. Fuel efficiency (55mph) would be a great start and something that would affect people everyday.

For short, single person, around the town trips consider an electric scooter for example the Z-20 from

Standard maximum speed 30 to 35 mph. Range approximately from 40 to 50 miles. Motor is a 2.0 kW electric hub motor. Electric consumption per full charges is under 2.0 KW-hours. Cost of electricity per charge is under 15 US cents in the USA. Front and rear disk brakes. Noise level is slightly above total silence. There is absolutely no emission of any sort. Two people can ride it at the same time.

Also for reducing the pollution and possibly increasing the mileage in those old VWs, consider the HYDRODRIVE ELECTRONIC CATALYTIC CONVERTOR from

"www dot hydrodrive dot 8k dot com slash ELECTRONIC %20 CATALYTIC %20 CONVERTOR dot htm" (remove the spaces) It really does work!

Guys - look for the "mileage tax" that they are testing out west (Oregon, I think?) to be added to your existing taxes. It was in the news right after the New Year.

Governments are not going to repeal any taxes, but the mileage tax will be added as an "emergency measure" to restrict driving.

When it gets really bad, rationing will go into effect like they had during WWII. You get to buy "X" gallons per household per week. Of course, government vehicles and employees will be exepmted from the rationing. Especially if we are "at war" somewhere.

And thanks for the website, Rajiv!

Don't wait for the government - other than taxing us and spending those frivolously, what has Big Daddy Gubmint done for you that you couldn't have done better yourself?

Make your own difference.

Take a stand.

Be thou not an ostrich...