Welcome to the New Digs...(an open thread...)

Ideas?  News items?  Discussion?  Thoughts?

Here's the place to do it.

Now the "There's more..." feature is even more annoying because it starts a new page load. Please remove it. :/
I believe that's something you can change in your preferences...isn't it SuperG?
Anonymous, what would prefer as an alternative? Would you like the entire contents of each story to be on the front page?

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.

Yes, I would. The old format worked just fine. And also, you don't need to show 30 latest posts, just a few and links for older ones etc... well, just a suggestion.
I'm loving the Google Ads that are popping up.  "how to profit from Peak Oil" etc.

Keep up the good work, y'all.

It would be nice to have a (regularly updated) graph of total world oil production. In other words, I'd like to see the real Hubbert's peak.
Hello all, peak oil is such a fascinating subject that it is easy for me to get lost among such an overwhelming quantity of information. So what I'm looking for is some sort of wiki site about peak oil with the arguments of both sides (pro and against) in the most impartial way possible.

Does anybody know about such site?

Yes, I know about peakoil.com wiki site, but this wiki do not address the arguments per si, it only explains the theory, lacking lots of issues.
For instance, we all have heard the argument that the market will provide what's in need at a given moment, as long as there is a demand in said market. We know that's not the case because we do not have sufficiently mature technologies to replace our oil economy with something else in short order. There are of course several other arguments.

Of course there is the Wikipedia entry, http://en.wikipedia.org/wiki/Hubbert_peak_theory.
Sorry, try http://en.wikipedia.org/wiki/Hubbert_peak_theory

I can't believe this stupid auto-html'er includes the period at the end of the sentence. The link in my previous message is broken as a result. I thought I tested it the other day and it was smart enough to ignore that, although commas fooled it. How many URLs end with periods or commas? Fix it!

"The Markets will provide."

That's exactly the issue that Fernando brought up at

And my "fair and balanced" answer to that one can be chased round-robin style by starting at:

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

Any thoughts on emerging shale oil processes (cooking in place)
http://www.9news.com/acm_news.aspx?OSGNAME=KUSA&IKOBJECTID=d17093f0-0abe-421a-000f-14ab536e0188& amp;TEMPLATEID=0c76dce6-ac1f-02d8-0047-c589c01ca7bf

or Hydrates http://pubs.acs.org/cen/news/83/i34/8334ebus1.html

More potential here to alleviate the transportation crisis (since peak oil should have little impact on our ability to produce electricity).

I thought this was a funny article posted by Jim Glass in a comment on Econbrowser. Jevons (of Jevons Paradox fame) was writing about the "Peak Coal" problem in 19th century England:

"The Coal Question: An Inquiry Concerning the Progress of the Nation, and the Probable Exhaustion of Our Coal-Mines"


"Day by day it becomes more evident that the Coal we happily possess in excellent quality and abundance is the mainspring of modern material civilization ... It is the material energy of the country -- the universal aid -- the factor in everything we do. With coal almost any feat is possible or easy; without it we are thrown back into the laborious poverty of early times.

"With such facts familiarly before us, it can be no matter of surprise that year by year we make larger draughts upon a material of such myriad qualities -- of such miraculous powers.

"But it is at the same time impossible that men of foresight should not turn to compare with some anxiety the masses yearly drawn with the quantities known or supposed to lie within these islands..."

Of course his concerns became completely irrelevant with the dawning of the age of oil. Which no one predicted!!!!

It comes back to what I've argued before. Predicting the future is pretty damn hard. No one seems able to do it reliably. Chances are we will be surprised, just like everyone else has been throughout history.

Well, yes.  But you can see why people would become a little concerned when the answer to "What is the next basis for industrial civilization?" is "Oh, we'll think of something, we always do.".  Until the "something" is thought of, fear is appopriate (and a helpful motivating factor to looking for that elusive new technology).
Re: Whether the market will provide: William Catton's OVERSHOOT (1980) offers a riveting perspective.  Europe was crowded in 1492, and since then mankind has enjoyed (a) a new hemisphere, (b) the industrial revolution and coal, and (c) oil.  Oil in particular is essential to the Green Revolution.  All have expanded earth's carrying capacity for humans.  The book basically says, when the oil supply stops growing, the expansion of carrying capacity stops.  While we don't know specifically and exactly how this all will work out, it certainly seems dire.  Add to this the chapter in Jared Diamond's COLLAPSE about Easter Island (and maybe the chapter on Greenland), and there's reason to fear that humans will be unable to deal with this intelligently.
Okay, but put yourself in Jevons' shoes. What would you have recommended be society's response to Peak Coal? Anything substantially different than what you think should be done today for Peak Oil?

Aren't we lucky that the world wasn't full of Peak Coalers back then, piling on carbon taxes and shutting down industries to force conservation? I guess there are still some people who wish the Luddites had won and we had remained mired in the wretched conditions of suffering and famine that were prevalent until the 20th century, and probably some of them are active Peak Oilers. But I count my blessings that such philosophies were not victorious in the early days of the industrial revolution.

I don't know what is going to happen in the future, but we should never forget the genuine costs which we impose on our posterity by embracing artificial scarcity and lowering economic growth. IMO the best way to face the challenges of the future is to see robust and vigorous growth of the economy, technology and science. It's a lot easier to deal with problems when you're rich than when you're poor, and that goes for the world as well as individuals.

Hindsight is 20/20, Halfin. What if you're wrong? And does your argument entail sitting back and waiting until the next big thing accidentially comes along? I'm not necessarily sure of the history, so did the discovery of oil come about because someone was looking for a coal alternative, or because oil just happened to be discovered?

We should expect that science and technology are making serious advances toward whatever the next step will be. Seems like the best solution is to take the potential scarcity of oil as a warning sign that we'd better start looking for alternatives. If we end up having too much energy available, well, great. We can throw ourselves a party.

Would conservation of known resources, population control and slower growth have been that bad?  Vigorous growth was exciting and made robber barons rich, but was it that great for everyone else?

Help us with the idea of "artificial scarcity." There has been artificial scarcity in the past--the Arab Oil Embargo was exactly that. Not today.

Scarcity is relative. We still have vast reserves of oil in absolute terms. But the world appetite is so gluttonous that oil is in short supply. A conservative assessment: Short-term, there aren't enough rigs to provide spare capacity. Longer-term, there's not enough oil to let us continue our consumption at current rates.

The world is on a knife-edge of supply and demand. We're burning every drop of oil we produce, and drawing down inventories in some quarters. The markets react to every little bump in supply.

It sounds like real scarcity to me.

Just to clarify, by "artificial scarcity" I mean measures that act to make oil less available, such as increasing the gasoline tax, mandating higher automobile mileage, lowering speed limits to save gas, and so on. These things distort the economic process and cause inefficiencies which ultimately leave us less able to respond to real problems.
I sort of think these kinds of policy choices are only minor tweaks to humanity's post-industrial-revolution approach to natural resources.  Both ends of the political spectrum (eg the US and the FSU) have taken the approach of using up the natural resource as fast as possible and hope for the best when it runs out.  Any society that didn't place high in that race got rather crushed, so it had a strong short term localized benefit, which makes it somewhat understandable as a strategy.  

Taking the long global view for the human race, it probably wasn't a particularly smart use of what may turn out to have been the best resource humanity ever gets access to.  If we have indeed started to deplete oil in a hurry, we are now going to experience the consequences of using it recklessly.  On the other hand, if we find a solution to this, we will no doubt use that solution to get even more numerous and even more impactful on the planet and then get in trouble a different way.  The speed and lack of warning with which peak oil is, it seems, hitting us and needs to get handled should give some clue as to what happens as exponential growth starts to approach finite limits.  The faster the whole globalized economy spins when it's operating at planetary scale, the faster it will run into massive unforeseen problems.  Increasingly it will run into multiple ones at the same time.

I can see no distinguishing features whatsoever between the way a set of yeast cells approach a vat of grape juice and the way humanity approaches the planet. I expect the same mathematical dynamics to play out sooner or later (but for narrow selfish reasons, I care quite a bit whether it's sooner or later).

I guess my personal favorite outcome would be peak oil with moderate depletion, so that humanity gets a good scare and gets real about how to use the planet in a way that can be sustained long term (millenia at least), but survives without really horrendous consequences for us.  However, at the moment, I can't see a way to rule out the scenario of peak oil with rapid depletion and very little warning, which I think will be horrendous.


Counting on new technologies is like betting on cards not yet dealt.  Why shouldn't I think, that the guy who is SURE the invisible hand is going to give him a new fuel, is just like the guy who is SURE the next two cards are aces?

Thank you for opening up a "New Digs".

As for this obssesive-compulsive Lemming, I'm still doing the Deep Dig into Freako-nomics because I believe it to be an important and inter-related side topic to the whole issue of Peak Oil and why there is a bug in "the system."

For an introduction to Lemm-Logic, ya all come and visit us at the Burrowing Center: http://lemmonledge.blogspot.com/2005/07/heather-at-home.html

After that, mosey on over to the Freako-nomics posts:

A question about tar sands and oil shale.

This may seem like a dumb question, but does the stuff in Alberta and Colarado actually burn?

I mean, a crude but I think useful indicator for the quality of a carbon based fuel resource is what happens when you put a match to a sample of it.

Natural gas: fireball

Light sweet crude: ditto

Coal: Won't light from a match, but once you get it going gives a long hot fire.

Wood: Doesn't burn well at all when wet, but after drying burns a bit less well than coal.

So if we were all sitting around the fire in a freezing cold Alberta winter, and wood was running low, and we started throwing on handfuls of tar sands, does it put the fire out, or do flames leap up?  Ok, maybe the sand kills oxygen to the fire.  So if we suspend a basket of the stuff right above the fire, does the dripping bitumen help? Or does the cold soggy black mass of sand so close to the fire just hinder it?

Somehow, it seems like the answer would be more illuminating than shelves full of Shell and Chevron technical reports, yet I can't find it on the web.

Anybody know?


Stuart -- Look at the oil shale page at Wikipedia. There you will find that oil shales are a "group of fine black to dark brown shales [sedimentary rocks] rich enough in bituminous material (called kerogen) to yield petroleum upon distillation".

Looking further, we find that "Oil shales are reported to have been set afire by lightning strikes" in this (pdf) document SHALE OIL--THE ELUSIVE ENERGY published by the M. King Hubbert Center For Petroleum Studies at the Colorado School of Mines.
Thanks!  So oil shale does burn, but is a significantly lower grade fuel than coal (so CTL is probably a better bet).  Also, the process requires lots of water, and there is none to spare in Colorado (the Colorado river rarely reaches the sea any more).

Tar sands we still don't know.


You get the rock hot enough and a flame will self-sustain.  A match wouldn't do it for most shales.
Not quite what you were asking for, but here's a cool picture of methane hydrate, "the ice that burns"... burning...


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.

Terry Gross interviewed Peter Maass today on Fresh Air. If you don't already know it, Maass wrote the article "The Breaking Point" published in yesterday's NYT Magazine. The interview on Fresh Air is excellent. You can read and listen here.
Maass did note more strongly that OPEC enforces an "informational blockade."  When Gross asked, "Where is the truth?" Maas noted that the Saudis were "in a bind," in that they don't want to kill the goose that is laying the golden eggs by encouraging their clients to develop alternative forms of energy.
I'm sure there's a goose joke in there somewhere...
I always assumed BS is just BS.
Guess I was wrong:
Some numbers about coal. Let us assume that global oil production will decrease by 10% and the resulting energy deficit should be covered by coal. This would mean using more coal-generated electricity for transport and freeing natural gas from electricity production for transport use. This is a rather fair assumption because the only other readily available alternative would be natural gas and it will probably peak in 10 - 20 year. So, how much coal would be needed?

This would mean a shift of 3.5% of all energy consumption to coal (the share of oil is now 34.9%). The share of coal is now 23.5%. But because lignite production has stagnated for years the growth would happen in hard coal. Hard coal production was 4036.5 million short tons in 2003 (all numbers are here: World Coal Institute - Coal Facts
http://www.worldcoal.org/pages/content/index.asp?PageID=188). Replacing oil with coal would mean raising the world hard coal output by 20% or by about 800 million tons. This is more than the total volume of hard coal trade today (coal is fairly local). Would this be possible by 2020? Maybe, if the Chinese could increase their output by about 500 million tons. The projected US output in 2020 would be only 163 million tons more than now.

If 10% of oil should be replaced by synthetic oil from coal the coal production should increase 40% or by 1600 million tons. This is because producing 1 unit of energy as synoil uses 2 units of coal energy. Is this possible? Absolutely not.

But replacing oil would not be enough. After the peaking of oil production it would be mostly up to coal to maintain energy growth (ie. economic growth). This would mean 6.3% growth a year (hard coal production growth now is 3.3% and replacing oil production growth of 2% by coal will mean 3% - without synoil). This would mean doubling the hard coal production in 11  years. And we should add here that coal needed as replacement for decreasing oil production. This is clearly impossible with or without synthetic oil.

World coal production is already now not far from peak. Many major producers are already meeting depletion problems (Europe, India). How long can the Chinese keep up their record production growth of 7 - 10%? Probably no longer than 10 years. We might have peak coal sooner than we think. The usual view that the world has ample coal for 100 - 200 years more is based on the assumption of stagnating coal production. This is now changing. And in any case the global growth rate of coal production cannot be high enough to compensate fully the rapid decline of oil.

So we will quite possibly have the global Peak Energy in 10 - 15 years! (It could come in 5 years.) And in any case rather flat total energy growth after the Peak Oil. The alternatives cannot help significantly in this time frame. And remember, the oil production will go down a lot mote than 10%. So here we are. Don't even think keeping up the present energy consumption level.  

What's the problem with lignite production?
Nice post, Anonymous Oil Drum Reader.

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.

Holy Crap.  China is already producing 3/8 of global world hard coal.  Wouldn't that make them close to the largest CO2 emitter?  I wonder what all that sulphur is doing to the Pacific.
This is kinda old stuff but I found audio of CSIS debate with Matt Simmons and Saudi Aramco in 2004. http://www.iags.org/n0331043.htm
I've read in some news stories lately that international medical authorities are 100% certain that there is going to be a global avian flu pandemic within the next couple of years, which will kill millions of humans.

Given that we peak oilers are perhaps less than 100% certain that there is going to be an oil shortage during about the same timeframe, how does that prediction square with the absolute certainty of millions of oil-burning consumers dying of flu?

It seems that, depending on the numbers, there might be plenty of oil. And a few more epidemics like that, and we won't have an energy crisis at all.


Well... a couple of hundred million of dead people won't do much, giving the fact that we have a couple of thousand millions of people running around. Specialy when the most people will be killed in the poor countries who don't use that much oil at all.
And they are allready cutting hard on oil use. Just do a www.news.google.com on "fuel shortage" or "oil crisis" and you'll know that in Indonesia, Zimbabe, Zambia, Nigeria, Iraq (yes Iraq), Equador, China, Namibia, Sudan, Malaysia, ShriLanka, Thailand, North-Korea, Yemen, Nicaragua and lots of other countries they are allready cutting hard on oil useage. Just caused by the high price. A price we can still afford.

So, no need for any kind of flu to cut oil-usage, the marktes will provide.

6.5 billion (and counting)
This is a good point. This is how it goes when oil prices rise. Rich counties and rich people can go on using more for a while but only if a lot of the poor use considerably less.

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.

I'm going to refer to some remarks made on the Duffeyes thread regarding Steven Levitt. PG said:
I think Levitt just framed his piece in a way that reinforced just about every stereotype that gets thrown around about economists.
Levitt says "nothing fundamental has changed in the oil outlook in the last decade". And he told peakguy
I know more than I admitted about oil. My point is that even if you take the numbers in the Maass article as true, there is no reason to think disaster is near.
Since I took some heat for calling him an ... ahhh ... idiot , I shall now proceed to demonstrate it. Let's start with this from the Maass article.
You look at the globe and ask, 'Where are the big increments?' and there's hardly anything but Saudi Arabia, he said. 'The kingdom and Ghawar field are not the problem. That misses the whole point. The problem is that you go from 79 million barrels a day in 2002 to 82.5 in 2003 to 84.5 in 2004 [demand growth]. You're leaping by two million to three million a year, and if you have to cover declines, that's another four to five million'. In other words, if demand and depletion patterns continue, every year the world will need to open enough fields or wells to pump an additional six to eight million barrels a day -- at least two million new barrels a day to meet the rising demand and at least four million to compensate for the declining production of existing fields. 'That's like a whole new Saudi Arabia every couple of years,' Husseini said. 'It can't be done indefinitely. It's not sustainable.'
Nothing fundamental has changed in the oil outlook? Levitt's faith in the market tells him higher prices will depress demand. I believe that, who doesn't? -- but see point 2. So, what about depletion and the nature of new supply? Due to much decreased discovery rates, the smaller size of the new fields that get produced and depletion in existing reservoirs, the oil outlook is always changing in a fundamental way. Apparently, the rigors of geology do not exist for Levitt.

Here's my little Oil Story

Levitt's "Oops, there goes the whole peak oil argument. When the price rises, demand falls, and oil prices slide... Now we are back to $10 a barrel oil". Current world supply and demand are dead even and no financial analyst, including the oil futures market, sees any significant price reduction for at least the next 18 months. Will we ever get back to $10/barrel oil?

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.)
Let's start at 85 mbd = supply = demand. But wait, 16.4mbd new supply averaged over 4 years = 4.1 mbd (new supply) = 4.1 mbd (depletion) = 85 mbd each year up until 2010!

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.

As my little story tells you, the period 2006 to 2010 represents what is commonly referred to as a peak in world oil production. What will happen after that is anyone's guess.

But I will say this, we will never see $10/barrel oil again. OK, now fire away.
Some of these scenarios remind me of Yogi Berra's comment about a restaurant: nobody goes there any more, it's too popular.

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.

It is not me, Halfin, who assumes people are morons. It is Levitt who assumes they are morons. Prices go up, they use less. Prices go down, they use more. I gave an optimistic scenario based on Levitt's own assumptions and found no way out.

Speaking of Yogi, he said "If I didn't wake up, I'd still be sleeping"
I've got Levitt's book and I assure you he doesn't think of people as morons. The whole point of his analyses is to look at incentives and how reasonable people will respond to them. You are misreading his argument if you think that is what he is suggesting.
I wrote above about how Peak Oilers are forced to believe that people are stupid (which I think is incorrect) and I just noticed that the front page of the site has the following quote:

"So one may almost say that the theory of universal suffrage assumes that the Average Citizen is an active, instructed, intelligent ruler of his country. The facts contradict this assumption."

I rest my case.

Wow, I'll tell you, its frustrating posting this stuff. I try to come up with a thoughtful scenario based on some very optimistic assumptions about oil supplies in the next 5 years and basically I could be just whistling in the wind as far as responses go.

Now, do we take this peak oil situation seriously or not? Is year-to-year depletion really going on, as Husseini talks about with Maase, or not? (Not to mention Simmons, Duffeyes, other APSO guys, etc.) Even if Yergin's CERA report is correct, depletion equals new supply capacity in this decade. Or is everybody just so off in "never-never-land" now that the excrement is about to hit the air-conditioner that nobody wants to make the case anymore? I believe its part of our job here at The Oil Drum to make the case. If my simple scenario is seriously flawed, I'd like somebody to tell me so.

Are we making a solid case for the peak or not? You guys know that over 95% of people in the US think we're crazy and that some mysterious force (or "invisible hand") will intervene to save us from oil depletion, some Deus Ex Machina will save us from our own demands. But I don't believe that's so and neither do most of you.
Okay, Dave, I will try to give you some specific responses to your scenario.

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?

Your example is quite nice, but it is of course just an exercise. It no point to argue about market mechanism. It will work. That is not the problem but the outcome of its workings.

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.

I don't know if it has been mentioned in another thread, but I have some good news and some bad news.  The good news is that "peak oil" is sitting in the Technorati "Top Searches This Hour" as I type.  The bad news is that most entries seem to be knee-jerk "no we aren't running out of oil" things.

... to be expected I suppose.  If you haven't been tracking details it does sound like a replay of previous high gas price hysteria.  Unfortunately, such allergic reaction to "peak oil" might slow things down a bit ...

I'll re-iterate my standard micro-Kuhn lecture.  (Thomas Kuhn was the very famous historian of science who studied how science goes through periods of incremental progress, which he called normal science, and periods in which the existing paradigm gets thrown out and replaced with something new - relativity and quantum mechanics replacing classical mechanics, that kind of thing).

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).

should I bring Lakatos into this?  do I have to?  nuanced falsification anyone?  need I take off my protective belt?  

of course, many here are probably Lakatos-intolerant.  Ha.  Imre, you crazy bastard.

(hey, it was funny in grad school.)


I had to look him up in the Wikipedia as I hadn't heard of him.

I tend to see science as a social process that somewhat has a flavor of economics to it.  The research community in some field has a lot invested in a good paradigm and so the costs of throwing it out are pretty high.  So they're not willing to abandon it for a few lousy inconsistencies that can be brushed under the carpet.  Only once they start to get the sense that there's a really qualitatively better paradigm (in terms of its ability to explain novel facts - and advance careers) will they pay attention to the anomalies.  Ie the benefits of the new paradigm have to substantially outweigh the switching costs (learning a whole new way, losing painstakingly acquired expert status in the old way, etc).  It's very similar to the business/marketing problem of displacing an entrenched leader from a market - the new product has to be much better to get customers to be willing to risk the investment they have made in the old product.

Applying the same idea to Peak Oil, society has an enormous psychological investment in the optimistic/exponential-growth-forever/free-markets-are-wonderful paradigm.  We shouldn't expect them to abandon it for a peak-oil/how-the-hell-do-we-survive paradigm until the evidence for the new paradigm is overwhelming (by which time society will probably be f*d).  Think of how people hold onto their houses when the housing market is dropping - they just will *not give up the idea that their house is still worth $peak, when the market says it's only worth 80%$peak now; they'd rather keep trying to sell it at $peak for 12 months, grudgingly dropping the price a little at a time until eventually it sells.

No doubt this is why we have collectively paid essentially no attention to peak oil until *after light sweet crude production has already peaked (JDH cost me much of a night's sleep last night by revealing that fact yesterday).  A pretty damn big inconsistency to sweep under the carpet, but we managed it.