I've spent quite a bit of time investigating the relationship between recessions and oil prices, and, to do so appropriately, you really have to use monthly data.

It depends whether you are looking for a smoking gun or an argument.

The only sure thing on Planet Earth it death, taxes are avoidable. Certainly recycled Chinese dollars traded for crude are finding their way into offshore tax havens by way of Saudi Arabia, the US Treasury (via bond sales), thence to US banks and the Federal Reserve ... and from there offshore. These dollars are certainly not driving anything other than business owners to drink.

Drink offers a better return which is both the comedy and tragedy of the situation. Think about it;

You drive to work at a decent (not a minimum wage) job. What you produce on that job is of less value than the cost of your car, plus the house that you drive from (in the suburbs), the highways you drive on plus all the land- use and space gobbling junk that goes along with the highways, the office building that the job is located in, the energy carrier required to 'use' the house, as well as the part of the office your job represents, the factory your car was made in, the building your car was sold in, the ahips and trains your car was transported on from Japan: all associated foreign- exchange losses, the interest charges on the loans that allowed your purchases of these items to take place, the parts of the buildings/infrastructure that your part of the various transactions took place within ...

All of this together amounts to a collective suspension of disbelief! True costs are lost in the accounting! The accounting is lost within a context of overwhelming sunk capital. The fact of the house/car/office/factory/ships/trains/banks/cities/loans represents 'necessities' spun out of thin air ... out of petroleum energy. What crashes and booms take place within is a charade, basically. There is no organic reason for any of it, just busy work that is designed to lose money since 'money' comes out of holes in the ground (not trees.)

Opaque money (cost) laundering (tabulating) if you will.

The entire economy of the industrialized world is playing the float. It means nobody can 'prove' that fuel shortages relative to demand cause recessions, just as nobody can 'prove' that funding surges trigger recoveries. There is too much momentum and too many lags. The big picture is a fur ball, you'll never come to a conclusion.

Avoid taking sequences in isolation. The big picture includes institutional strategies. Companies, countries and individuals are hoarding cash for a reason, since cash is the next best thing to petroleum it indicates that 'production' is worth less than the cash. Of course, oil as a 'stock' is not worth anything (just like gold) but the strategy is indicative of the attitude; it is observable.

Not a 'bullish' sign at all, IMHO.

1) Local governments have recently proposed additional gasoline taxes on referendums but the voters said no (every time). This is not going to change.

2) Most people do not change their behavior. Folks who cannot afford to drive will continue to drive and let their credit lapse. I see this with smokers now.

It didn't occur to me that there was anything wrong with it at all!

I'd say we all have our own extrapolation of events in the future, the degree of fragility we each see within the complex systems that make up the modern world, how far the dominoes stretch...

I'd also object to the term 'Doomer'. Definitely, there can be a tendency to over-extrapolate a trend, especially as a newb; at its friendliest, calling someone a Doomer would mean "Hey, double check your thinking here". But at its worst it throws someone's position in the trash, the peak oil equivalent of "Whatever." with the hand-flip. And I don't really get it either - like if someone's position is too depressing it therefore cannot be correct?! What?

This is serious stuff and uncharted terrain, I wouldn't risk ruling anything out!

...especially considering exactly nothing has been done on PO in the last decade, and next to nothing has been done on AGW in the last 20 (except some fine reports). I was really expecting some change by now... are we not tracking the worst case scenario here? I think I'm becoming more Doomer' the closer we get with still no real preparation, but to me that's only logical.

I do expect unemployment in the U.S. to rise above the twenty percent level before 2020.

Ah, but why? Why is oil so essential to our economy, when there are many good substitutes?

We can transition from oil fast enough to deal with Peak Oil. We need to be clear: we have two separate problems: climate change, and liquid fuels, not a general problem of peak energy. If wind and natural gas are inadequate, we have more than enough coal to keep the lights (and whatever else we want to power with electricity) on during a transition (for better or worse). See Are we running out of coal? and Are we running out of coal? - part 2

You might ask:

During a transition to what?

Wind would be the biggest, with (in rough descending order) nuclear, solar, hydro and others.

how long it would take?

However long we choose - we could do it in 20 years if we want, or we could do it in 50. 50 years would be no more expensive than BAU, but terrible for AGW mitigation.

What would be the cost of both producing those renewables

For wind: about $7/average watt capex, giving about $.07/KWH wholesale cost, or about $.12/KWH retail. That's a little more expensive than old, dirty coal plants, but it's competitive with any form of new generation (including new coal, even without sequestration). We can see in Germany and Japan that $.12/KWH is more than cheap enough to support a strong economy.

What would be the cost of converting everything that now uses oil to use those renewables?

Very little, if we did it through attrition. An EREV like the Chevy Volt will cost about the same as the average new US vehicle, with large volume production, and reduce liquid fuel consumption by 90% (that's the range that biofuels can scale to - ethanol production is about 10% of gasoline volume right now).

Don't you have to add in the cost of all those batteries and inverters?

Like the Prego commercial, "that's in there". In other words, wind power costs include inverters and transmission, and EREV costs include batteries.

The wind doesn't blow all the time

Actually, it does, somewhere. It just takes some geographic diversity to take advantage of that fact, and a moderate amount of long-distance transmission.

the sun shines only in the daytime.

Isn't it convenient that's when we use the most?

The transition target has to be vastly scalable

Which wind is.

but cost less than existing energy sources, else the effort to switch alone will cause significant disruption.

Not if the transition is long enough. We could transition over 30 years, and that's more than enough time to amortize the capex of existing generation. Personal vehicles, of course, last a much shorter time: we can replace about 10% of VMT per year with no pain at all.

How could we replace about 10% of VMT per year - wouldn't that require new car sales of 25M per year (50% more than the all time record)?

The thing you have to keep in mind is that some vehicles travel many more miles than other: Commercial vehicles like taxis drive much more, and newer personal vehicles drive more. Vehicles less than 1 year old account for roughly 10% of US Vehicle Miles travelled.

An aggressive transition to electric would accelerate that tendency, both in terms of sales and in terms of preferential usage of new vehicles. After all, what difference is there between current new vehicles and those from 50 years ago, when automatic transmissions were introduced? Sure, electronic stability control and ABS are nice, but 95% of new vehicle sales come from a desire for the latest fashion - that's part of why people can so easily defer purchases during times of uncertainly, like the last 2 years.

Any transition to more expensive energy, which is the only reasonable expectation, will cause significantly greater pain.

A little, but we see in Japan and Germany that electricity twice as expensive as that in the US can easily support a strong economy.

Can renewables really make up the difference?

There's at least 5x as much easily usable wind resource as we need, and 1,000x as much solar.

And there is more elemental hydrogen in the universe than any other element, but this does not make the hydrogen economy any closer.

This doesn't really relate. I was answering a question about scalability, and wind does scale.

But a great acceleration would be necessary.

That's the thing - it wouldn't. First, wind is already "here" - it provided 42% of new generation in the US last year. 2nd, we have enough coal to cover any transition (unless, of course, we want to do something about climate change, as we should - but that's a different problem).

can we afford wind?

An investment of about $2.6k in wind power per vehicle could provide all the "fuel" needed for personal transportation (13k miles per year/4miles per KWH/8760 hours per year x $7 per watt = $2,597). For 100k miles, that's about $.03/mile, much less than gas or diesel. It will be easy and cheap to power EREV/EVs (either bicycles or Volts). As this article stresses, that's the big kahuna.

That assumes $2 per nameplate watt, at 30% capacity factor. The US has more than enough of that, at that price, to supply 200% of our current electricity consumption. Heck, either N. Dakota or Texas alone could provide 30-50%.

What role do you see conservation, efficiency and simple doing without playing in your future scenario?

Really, we haven't converted to a renewable electricity economy already because it would hurt the careers and investments of too many people. When we get to the "tipping point" where the overall society demands solutions to AGW and PO, we'll move very quickly to EREV/EVs and wind power - there will be some temporary personal conservation on the way, but that won't be the primary thing.

Heck, why do without when you can just buy an EREV/EV?

if we put all our energy into producing enough solar and wind energy to power a world of Prius cars and don't have enough resources to upgrade the grid or supply charging stations we have wasted our remaining fossil fuel resources.

So manufacturing wind/solar might use so much resources that we wouldn't have enough to upgrade the grid or supply charging stations? The answer: we have more than enough energy to do both. First, manufacturing (of solar panels, wind turbines, grid equipment or charging stations) mainly uses electricity, and we have plenty of that from coal (see how useful it is to deal with things one at a time?), if needed. 2nd, wind has a very high E-ROI, meaning that it will pay for itself. 3rd, HEVs don't need grid upgrades or charging, and the grid is just fine as it is for a pretty large buildup of EREV/EVs.

Isn't the statistic that matters how much of our current FF fired electrical generation has been replaced by wind or any other source?

No, it really doesn't. Nobody's retiring generation at the moment, unless it's seriously functionally obsolete. People often get confused by that point, but it's a red herring.

There is a difference between having enough power, and decarbonizing our power. We should decarbonize our power, but that's very different from the question here of whether we're running out of energy.

We are at least as dependent upon FF for for energy today as we were 5 years ago. And possibley more so. Isn't that the big issue?

That's the issue for decarbonizing. But it's not the issue for our economy running out of power We have plenty of coal - enough to bake the planet. Will we do so? I'm afraid we probably will...but we won't run out of electricity.

But isn't our economy going to grind to a halt because of oil scarcity?

No. The food-and-goods freight transport network of the modern world uses about 25% of oil consumption in the US. Light vehicles overall account for 45% of oil consumption: their utilization could be doubled with carpooling in a matter of months, freeing up whatever fuel was needed by the freight network.

What about historical examples of societies that didn't recover well from economic transitions, like the US South after the Civil War?

I don't think the South is a very useful model for most of the world. It might be a good model for oil exporters.

First, it needs to be said that the South had just lost the first modern war of total destruction. 30% of all white males aged 18-40 were killed (http://en.wikipedia.org/wiki/American_Civil_War) - there are usually more injuries than deaths. Very likely only 20% of the white adult males were left healthy at the end of the war. Both ex-masters and ex-slaves were left without financial, industrial or technological capital with which to rebuild. Transportation, industry and even agriculture were laid waste - think of Sherman's march to the sea: everything was systematically destroyed.

The impact on human capital may have been the worst: slavery left a cultural heritage of passivity and violent authoritarianism (classism, racism, sexism, domestic violence, etc, etc) for both ex-masters and ex-slaves that cannot be underestimated (as discussed above regarding West Point traditions). To work (expecially with your hands) was dishonorable for ex-masters, and to think and take responsibility for oneself was terrifying for people who had been publically tortured and killed for centuries, and who now faced a similar lynching campaign. The lack of more practical human capital can't be underestimated: ex-slaves didn't know how to read and write, how to run their lives (handling money, land titles, etc), how to raise their children or relate to spouses, etc, etc.

2nd, the South was a commodity exporter, like Russia and Saudi Arabia today. It was devastated by the "resource curse". "During the time of the Civil War, there was a dramatic slowdown in British cotton demand. As the textile industry matured, its rapid replacement of traditional methods naturally slowed. While the industry was still growing, its rate of growth slowed to match the relatively natural growth of population and incomes. The drop in demand growth, coupled with the tremendous cotton supply coming from the Southeastern states, led to falling prices. As poor conditions persisted for South Carolina’s cotton producers, no viable alternative crop could be found. The now relatively stagnant cotton economy remained until the end of the 19th century, as industrialization reached the state."
http://www.strom.clemson.edu/teams/ced/lgp-reports/Economy.PDF

All in all, the South had a uniquely frozen culture, due to the violence, abuse and misinformation required to maintain a slave society, and the "resource curse" created by it's dependence on a single export commodity (cotton) in a single industry (agriculture). Despite the availability of capital from the North, the South was in a uniquely unfavorable position for adaptation to a new world. It may be a model for oil exporters like Russia and KSA, but not for dynamic, educated countries in the OECD.

Wouldn't rich oil suckers used to a consumerist lifestyle have comparable problems to face new realities?

This is oddly judgmental, and unrealistic. OECD economies show a much greater ability to change. Look at Japan post 1870. Look at Germany and Japan post-WWII. Look at the US post-WWII. Look at the world car industry, which is gearing up to produce EVs, something which they found anathema only 5-15 years ago.

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Didn't it take a couple of generation for horse transportation to be replaced by street cars and ICE vehicles?

Yes, and difficulty of the transition contributed at least a bit to the Depression. The difference: hybrids, EREVs and EVs are being built by the same companies that built ICE vehicles, operate the same way, cost the same over their life-cycle, and need very little new infrastructure (90% of US vehicle owners have access to off-street parking, and more than 50% have private garages). The difficulty of the transition is orders of magnitude smaller.

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Doesn't an energy transition require heavy investment which is not easily forthcoming under crisis conditions?

On the one hand, that's assuming the premise that Peak Oil will cause economic crisis. On the other, it's precisely under crisis conditions when investment is easiest - look at WWII: the US Depression ended because the war provided a good excuse for massive governmental spending and investment.

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The most important element of a transition from oil is the electrification of transportation. Surprisingly, the first part of the EV revolution has been here for years, in the form of the Prius. The Prius cuts fuel consumption in 50%, and in the US they're 3% of new sales, and there are 1,000,000 on the road.

And now, the Leaf and the Volt are coming out, and it is really clear that we have all the technology we need, we just need to use it.

Exactly my thoughts!
But don't expect Gail to respond to your rebuttal. She just makes assertions and goes away when they are rebutted. Then in a few days she comes back and makes the same assertions again.
Somehow she never sticks around to defend her statements.

Anybody who doubts that speed is exponentially expensive

See my comment above.

I believe we should all take Gail's misgivings as seriously as a heart attack.

Oh, I agree that we should get rid of our excessive reliance on oil ASAP. Heck, hasn't our recent $2T oil war taught us anything? It would have been much cheaper just to convert to EREVs like the Volt many years ago, no matter what the premium (although in fact there is no premium - an EREV will be cheaper over it's lifecycle).

Taxes are more popular than speed limits??

People who are spending lots of time in their cars one way (ideally, multiple ways) or another have to be massively inconvenienced to convince them to find alternatives or to carpool. Saying that you are against speed limits because they inconvenience the driver is giving away the whole show before we've even started.

I think I agree on the remedy - but the what's-my-time-worth analysis can lead you to some pretty silly places with small cars that get good gas mileage. Suppose you were on a relatively aerodynamic motorcycle -- that might have you commuting at 120mph. Eventually, you have to work into this the expected negative value of the increased risk to your life.

There's a nifty graph at the Wikipedia page -- engine effects at lower speeds give you some interesting efficiency results. A 1997 Toyota Celica has local mpg maxima at 25, 47, and 60mph. I'm curious how a car with a CVT might do; it ought to shine.

There's also the issue of how you multitask, or don't. Experimentally, I have found that I cannot get (laptop computer) work done on a bus, not if I want to retain the contents of my stomach. But a train, no problem (the Acela is particularly lovely). Bicycling is plenty slow compared to freeway speeds, but you get (usually desirable) exercise. And of course, plenty of people do their best to multitask in automobiles.

I've DRIVEN a Prius at 80, and let me tell you this - in Florida (flat as a board), you get 45 mpg instead of 50 mpg. You're not dropping to 30 mpg. Same with conventional cars, actually, I've been driving a Subaru Outback that gets 30 mpg on the highway at 70-80 mph but 25 in city driving.

Speed limits are a silly issue, the real gains are in city driving and the easiest way to achieve that is with light hybrid setups - basically stop-start systems. Unfortunately in the US, the EPA mileage tests don't realistically replicate sitting in front of stop lights for 5 minutes of every 30 minute drive.

I guess we're going to have to agree to disagree on this one.

You admit that you don't like limits. The limits we have exceeded and are exceeding on the physical earth are not generally immediately visible to us, so we have to impose such limits on ourselves--impose what will seem to us spoiled moderns as "arbitrary."

Such limits in traditional cultures were known to anthropologists as taboos, which served a variety of functions, but one important one was to avoid disrupting local ecological balances.

We moderns have come to look on any such socially imposed limits with suspicion, but we are social beings, and if we don't learn to limit ourselves, we will ultimately become "limited" taking down much of the living world with us--a process already well underway. (It makes me wonder whether you are against hunting and fishing catch limits.)

By the way, all your examples are meaningless--stop-and-go city driving is inefficient in standard ICE cars for reasons other than drag, as I would have thought would be obvious. And as someone above mentioned, the drag inefficiencies don't really start kicking in in a big way till you hit 45-50 mph.

Basically, our goals are different. You want to enable and perpetuate car culture; I want to end it. So we may not have much to learn from each other.

Lower speed limits, and long stop lights (I VERY much like the 4 way red lights we have added in New Orleans, an "all red" cycle for pedestrians :-) reduce the VMT (vehicle miles traveled) with all sorts of benefits, including safety.

I would advocate what works well in New Orleans, 25 mph speed limits on city streets (except those with a median/neutral ground, then 35 mph). Makes bicycling easier and safer.

And 50 mph for rural interstates would reduce the need for more lanes, give railroads an edge for freight business,reduce oil use directly (higher mpg) and indirectly (fewer VMT), save lives directly (fewer and less deadly crashes) and indirectly (fewer VMT), etc.

Best Hopes for Lower Speed Limits,

Alan

This is, of course, ignoring the forest for the trees. Crashes account for relatively few deaths; diseases of the unfit dominate. Consider "even after adjustment for other risk factors, including leisure time physical activity, those who did not cycle to work experienced a 39% higher mortality rate than those who did". (In another study of cyclists, crashes represented only 1.4% of all deaths, 20x less than the percentage due to heart attack in that study, and 17x less than the overall heart attack death rate in this country.)

Riding a bicycle is also many times safer for the people around you.

Add to your list, it is my hobby horse, but it is known cheap tech, proven elsewhere, bicycles.

One-third of our population lives in areas more densely populated than a Netherlands city with 40% bicycle ride share (Assen). Half of that 1/3 (i.e., 1/6) lives in areas TWICE as dense as Assen. They have infrastructure that makes it less annoying/scary/inconvenient, but we could do a lot by reallocating existing pavement. The people are there already, we could take a solid bite out of oil consumption fast, especially since the trips most suited to cycling are the least efficient for automobiles (less so for hybrids and EVs, but those are still a minority vehicle, and vastly more expensive even than a new nice bicycle).

(And the excuses that people give are insane. Bike on the snow? Done that. Heat? Done that. Rain? Less pleasant, but done that, too. Carrying a kid? Done that. Groceries? Done that. Safety? NON-bicycle commuters have a 39% higher mortality rate. And if you live in the boonies, no, I am not talking about you, yet, I am interested in the 1/3 of the population living in dense-enough places. And heat sucks most; you can add more clothing, but can't wear less than naked, and lycra's pretty close to that.)

(And for reference, my solution to most cycling problems is a cargo bike [Big Dummy], with fat tires [Schwalbe Big Apple 2.35"] or snow tires [Nokian W240], and winter gloves [just get good ones] and winter balaclava, and relatively upright handlebars [Nitto Montmartre]). Cargo bike alternatives: Big Dummy = Truck, Madsen = Minivan, Yuba Mundo = UPS Truck, Radish or Xtracycle FreeRadical = VW Microbus. Google it all, look it up, get the one that suits you, and ride it. Talk is cheap, you want to do something, get a bike, use it instead of your car whenever possible. While you wait for EVs to get good enough and cheap enough and electricity to not come from coal and gas, you could be riding a bike.)

Go have a look at cargobikegallery.com, or xtracyclegallery.com .

What I see happening is further decreases in oil demand.

I agree. Not as fast as we could or should move, but it's happening.

Manufacturing is being shifted from countries that drive cars to work, to countries that ride bicycles to work.

Have you seen any good statistics for that? As far as I can tell, that's not really true.

Conoco/Phillips sold its $4.7 billion stake in Syncrude Canada to China Petroleum & Chemical Corp (Sinopec) back in April.

Conoco/Phillips needed the money, and the Chinese need to get rid of all those excess US dollars somehow.

US oil production peaked in 1970. Chinese oil production hasn't peaked yet, but I think they're anticipating it.