2012 is an election year in the U.S.; 2020 is another one. My picking of these dates for attention is mainly because they are election years.

The good news is that in my opinion, TSHTF is not this year or next year nor even the year after. The bad news is that Peak Oil is not a "theory," it is an inevitability--and one not far in the future. The sheer economic and social and human pain that will result from Peak Oil puts it into the Great Depression or Black Plague or "fall" of the Western Roman Empire category.

The only qualification I'll add at this time is that it is conceptually possible for there to be several nearly simultaneous technological advances ("breakthroughs") that would mitigate the consequences of Peak Oil. Not likely, but not totally impossible.

I am not now and never have been a Doomer. But hard times coming . . . you can bank on it.

The effect of US$5 & $10/gal is largely psychological rather than economic, and thus does not translate to other currency areas. They each have their own magic numbers, I'm sure.

I forgot to mention those irrelevant (to the CORE) food prices.

Well first I don't give a rip about core inflation. The problem is your looking at price inflation in commodities as a simple result of increased transport and production costs Thus more money is being poured into basic living costs. Food/Energy/Housing. Decreasing prices for discretionary goods and services simply cause unemployment since so much of our economy is now based on these discretionary goods and services. So its a net loss even though prices are decreasing not to mention these goods have the same pressure from increased transport costs so profit margins effectively evaporate. Its a variant of WT exportland model.

The latte economy is very fragile in the face of increasing commodity prices.

The intrinsic problem is far to many people are now employed in the service/luxury item parts of our economy so once this start contracting job losses here will lead to lower consumption of these items leading to more job losses. The commodity/core manufacturing parts of the economy which are fairly inelastic in the face of rising energy costs no longer play the role they once did.

Its well known that areas that depend on vacation money are hard hit during and economic down turn well today most of the American economy can be considered a vacation driven economy.

So a recession is unavoidable monetary inflation cannot hide increasing energy costs forever and massive deflation in discretionary goods and services is almost certain.

Its better to think in terms of Wealth not inflation deflation what your looking at as far as I can tell is a massive loss of real wealth as consumers focus on basic needs. I see no way that the commodity or basic economy can grow to employ the number of people who will become unemployed in the discretionary economy. The fact that luxury items are dropping in price is not really that important if the pool of buyers is dropping even faster.

So the real problem is your losing consumer purchasing power because of job losses stagnant wages and increasing commodities prices far faster than you can use monetary inflation to keep the economy going. The combination of monetary inflation real commodity price increases and decreasing prices for luxury items is a very nasty scenario.
The net result is the American consumer is for all intents and purposes bankrupt and this is true right now.

By any economic measure the US no longer has any money its amazing that we are able to use monetary inflation to keep the party going right now I just can't see this lasting.
Debt defaults which force and accounting now instead of many years in the future will eventually halt the ability of inflation via creation of debt to drive the economy. In effect money will disappear as fast as the central banks try to pump it in.

The American economy as far as I can tell is not capable of ELP as its now configured. If you want to start moving our economy to one that works with high energy costs and slow or effectively no traditional growth the first order of business is to slow it way down instead we seem to be doing the opposite and using increasingly desperate measures to keep growth going.

I have always assumed that the goal of the new global economy was to create a larger pool of consumers and specialization of various regions in certain aspects of the global economy. This vision is not the right answer post peak. In short although I'd like to see a nice slow recession I'm not sure that we can change economic policy fast enough to keep our world economy from effectively running into a wall as whole groups of consumers fail to continue to simply be able to consume. We should have been cooling the worlds economy slowly over the last several years not pumping it.

BrianT:

I don't know if you're considering in your price calculations the enormous twin deficits (ie budget deficit and trade deficit) that the USA has. This situation would continue to get worse even without peak oil, but rising oil prices are very inflationary and drive both deficits higher. I can't see any way that the US government can deal with this except to print more money, thus triggering inflation, eventually hyper-inflation.

Alternatively, the USA could just say "we won't pay our debts", but that would result in an immediate collapse of the banking system, and nobody overseas would accept US dollars, essentially devaluing it to toilet paper. So I'm willing to bet that the US government will turn to the printing presses to "solve" the problem.

However, in addition to the above, we also have huge levels of private debt (credit card, subprime home loans) that are in trouble. I would think that if people can't pay their bills, start defaulting on loans, that would be deflationary. It would also cut energy consumption - homeless people consume less.

Not a pretty picture.

Another energy penalty in the suburbs will be the services required to support them. Postal service, police, plumbers, UPS and pizza deliveries all require more transportation, much of it oil. More street lights/capita. More pavement and sewer lines per capita as well.

I agree that some suburbs will survive, but likely in changed form.

Others will not IMO.

Best Hopes for TOD,

Alan

Umm...Don, I thought you weren't a Doomer. You're sounding a bit on the Doomie side above.

Zero economic growth means that the pie stops growing, and thus the issue of income redistribution rears its too ugly head.

Forget about the economists. It's politically unacceptable. Politicans can't promise LESS to the voters and they certainly cannot mention redistribution to their own backers in the developer/looter/plundering class.

Liberalism itself is founded on growth, precisely because it gets to finesse the distribution question. No need to challenge the rich if a rising tide will lift all boats. That's certainly not true now where the marginal cost of growth now seems to exceed the marginal return. [It's just that the people getting the returns are different from the people getting the shaft.]

cfm in Gray, ME

Growth is key and growth can happen by more efficient use of resources, consumers starting to like goods and services that need less raw material and in some regions and countries there are possibilities to increase production of biomass and electricity in a sustainable way. I live in such a country, Sweden, and I dont think the era of growth is over.

But we do need fairly long term public and private planning to start up more niches that has the ability to grown when fuel prices double and so on. I am slowly learning the insides of our own governmental system and some of the interfaces between the public and private world and it makes me optimistical. We got the potential to gets lots and lots of things to happen, we only have to get the private money flows to shift their courses a little and hopefully not by taxation since markets with people with medium and long term thinking are more efficient then governmental decisions.

Handling peak oil and global warming seems locally to be an effort comparable to the cold war and handled well it ought to be a lot cheaper in public funds. Since it isent a war preparation effort most of the investments will be productive one way or the other. I am sure our culture can get thru this and keep all its key elements that makes us happy and often nerdy swedes. ;-)

1. Zero real economic growth implies a relentless increase in the number of unemployed and the rate of unemployment.

Zero real economic growth and zero population growth need to go together. You are right that a growing population with an unchanging economic pie is going to leave increasing numbers with small or no pieces. If both the economy and the population are both stable then there is no inherent reason why unemployment must increase or decrease.

Of course, if the fortunate few continue their habit of taking ever bigger shares of the pie, then a non-growing pie does indeed result in increasing numbers of people with smaller or no pieces, even if the population overall is stable.

I would argue that once an economy settles down into a sustainable steady state, the premium would be on minimizing waste of any and every type. If you can't count upon growth, then you really do need to make the most of what you have. The example of Japan in the Edo period is somewhat suggestive of this. If the minimization of waste becomes one of the key organizing paradigms of the zero-growth economy, then minimization of waste of human capital and labor would also become important. A zero-growth economy really would need to make efficient use of everyone that was capable of work.

2. Zero economic growth means that the pie stops growing, and thus the issue of income redistribution rears its too ugly head. So long as the focus is on economic growth, we can hold out the realistic possibility of upward social mobility to many--perhaps a majority--of the population. Zero economic growth will bring up the "untouchable" topic of income distribution and redistribution, and the even touchier topic of wealth distribution and redistribution. Thus, the powers that be will fight to the last gasp (and beyond) to assert that growth is just around the corner, that Peak Oil is nonsense, that technology will save us, that growth can continue even as fossil fuels diminish in availability, and so on and so forth.

Exactly right. Of course, that dream of upward mobility never came anywhere close to being realized for more than a minority of the population, and as we all know we are now seeing a wholesale slow-motion slide back down the ladder.

There is no inherent reason why a zero-growth economy must be a rigid, frozen economy. There can and should be some social and economic dynamism operating within the overall stability. As I indicated above, I believe that there will be considerable incentive to make the best possible use of each and every worker. A more interesting and important question, though, is: How much of a return is possible on investments in human capital in such a no-growth system? A big part of the upward mobility myth has included the idea that investments in the improvement of workers through education will result in more valuable workers, which in turn will enable them to earn more and work their way up the socioeconomic ladder. In a zero growth economy, the only real possibility for a substantial return on investment in human capital that I can see would be investments in human capital that result in workers that are able to further reduce waste or enhance resource utilization efficiency. If the big slice of the non-growing pie going to "waste" can be reduced, then that leaves more pie to be distributed even if the pie isn't growing.

This in turn suggests that in such a zero-growth society the education system would look very different than it does today. The existing system, at least in the USA, is extremely wasteful. A zero-growth economy cannot afford to invest resources in educating future workers that leaves them incapable of working up to at least a minimally acceptable level. Nor can such a system afford to deliver education to people that are not going to be able to make the most of it. A lot of nonesense and crap would have to cut out of the educational system.

If you prefer to believe that we will see higher crude oil exports, I hope that you are right. Who knows--perhaps Congress will repeal the Thermodynamics laws?

However, I expect to see a continuation of the lower net export trend that I warned about last year.

http://www.themoscowtimes.com/stories/2007/07/10/042.html
Tuesday, July 10, 2007. Issue 3695. Page 5.
The Moscow Times: Alfa Report Sees Trouble Looming in Russian Oil Sector
By Anatoly Medetsky
Staff Writer

Alfa Bank warned on Monday that "production stagnation is unavoidable" at the country's oil fields and further downgraded its target prices for shares in most Russian oil companies.

The dramatic worsening in its outlook was the result of the government's reluctance to consider lowering taxes on oil firms and a higher proportion of water in the declining output, the bank said in a research report.

Alfa has led the way in cautioning investors about oil sector profits over the last six months, with other brokerages following suit in reducing expectations. . . .

. . . Alfa Bank first downgraded its projections in the sector in March, saying that oil majors were depleting existing fields while heavy taxes on the industry were preventing the development of new fields. In Monday's report, the company described the situation as "substantially more dangerous" than it had suggested four months ago.

The increasing proportion of water in total output was a major source of concern, the bank's analysts wrote. This causes a quickening in the rate of natural production decline at most fields.

I personally think that Gore/Obama would be a dream ticket, especially since they both opposed the war, at a time when most other Democrats supported the war.

As time has gone on, Al Gore, compared to Bush, looks like some kind of reincarnated combination of George Washington and Abraham Lincoln.

Gore deserved to lose. If he'd carried his home state, Tennessee, there would not have been the Florida...

Do you think COAL INTERESTS might have had something to do with losing Tenn. and W.VA.?

Nobody wants to go there... but Gore's environmental record sunk him in 2000.

Right on, Gunga, Beggar, et al!

I have no regrets about EITHER of my votes for Nader!
I paid close attention, and Gore, Kerry and the DNC threw voters like me away in droves! They elected Bush even if the RNC hadn't stolen it in 11 diff't ways.

I was in solid Dem states anyway, but it was a protest vote both times, and a vote for someone I could listen to and hear a real human being with his own thoughts.

Kicking out the PEACE signs at the Boston DEM Convention was pretty much the last nail in the coffin for me, but there were plenty of others ahead of that one.

RRF

Hello SlicerDicer,

Thxs for responding, but I am no expert on any AG topics [hopeless desert city lifestyle]: I prefer to defer to those with more tech expertise.

What everyone seems to forget about the three laws is that most Asimov robot stories were based on finding loopholes in the laws which alowed robots to lie, disobey orders and kill.

Yes, that's the thing about going down that path. With good enough robots, the super rich don't need us. But sooner or later the robots figure out that they don't need THEM!

With sufficiently intelligent machines (that make and fix other machines)

My all-time favorite with this theme is Stanislaw Lem's Cyberiad. The guy was a genius.

Your knowledge of history is akin to that of Ned in the first reader.

National socialisim is a misnomer. It never existed. In fact, the first thing the Nazis did when they came to power was to eliminate socialists. Well, that is not quite correct because the very early Nazi party did incorporate some socialists in a radical wing of the party...Gobbels was one of the few socialists that lasted with the party although he conveniently lost his socialistic tendencies...But when push came to shove and the Nazi Party needed the big bucks to fund their political campaigns and huge rallies they went to the big corporations for the money and promised the corporations that they would hammer socialsts and the labor unions...which they did once they gained power. In the early Nazi Party Hitler employed every sort of thug, murderer, crook, con man, rapist, homosexual, etc, that was willing to do his bidding. Once he came to power and needed the military to swear allegiance to him he had to rid the party of all the riff raff. The corporations thought they were in the drivers seat and could control Hitler. Boy, were they in for a surprise. If you havent read 'The Rise And Fall Of The Third Reich', you will find it all there. There are lots of good books on the subject and much has come to light since 'The Rise' was written but it is still the best imo.

How do you square what 'you think' with these poll results? The error in your premis is that Americans have already been told the 'big lie' but even though they went along with the 'big lie' their life styles continued to decline. Bush/Cheney have failed to deliver on their promise of cheap oil from Iraq to off set the costs of the war. As one administration wonk put it prior to the Iraqi invasion '$20 oil will be better for our economy than any tax cut.' The failure of the current admistration to make good on their promises has created a backlash among the public and the legislative branch of government, which is facing reelection in 2008. Although both parties are bought and paid for by the same corporations the legislators still have to go through the election process, therefore they will continue to move away from the administration. Had the current administration been successful in delivering on their promise of cheap oil from Iraq they could have easily have continued to move to the right, toword a more fascist system, their incompetence in Iraq and elsewhere has cost them that opportunity. It will take a brilliant and competent leader to continue the move toword fascisim now that Bush/Cheney have missed their opportunity. I dont see any brilliance in the current crop of presidential wannabes but there could be a dark horse. To sum up I will say that this swing of the pendelum has gone as far to the right as it is going to go and backlash will cause the pendelum to swing somewhat to the left. How far? My crystal ball isnt that good. I will say that an attack on Iran will not help the cause of the right in America...but it would help the cause of Israel in the short term.

In a Gallup poll earlier this month that asked, "All in all, do you think it was worth going to war in Iraq, or not," 56 percent said it was not worth it and 42 percent said it was. (Full story)

A poll taken in December 2003, shortly after the capture of Saddam Hussein, found that 62 percent of Americans believed the war was worthwhile.
http://www.cnn.com/2005/POLITICS/06/20/poll/