First, the date at which the peak occurs is important in terms of looking at society's response. A peak in 2008 as you assume is very different in its effects from one in 2018. The reason is that the latter date gives us 13 years of high oil prices to begin to adjust to a potential decline.

And that points to the second issue, which is that society in general and markets in particular are forward looking. The peak isn't necessarily going to be a surprise, and hopefully it will not be. There is enormous attention and analysis going into the question now. At this point the analysts don't agree, but hopefully with more research and perhaps an improvement in transparency among oil exporters, a consensus will be reached in a few years.

Once people know when the peak will occur and can anticipate its effects, including the depletion rate, that will allow society to adjust and adapt in advance. In particular it may allow even relatively large depletion rates to be handled without leading to chaos and disaster.

If a consensus grew that we were going to be facing, say, a 12% depletion rate, which Stuart predicts would lead to social collapse, I think that society would instead take drastic measures in advance to adjust to that. We'd see massive investments in coal to liquids and tar sands, which are known to produce replacements for oil, it's just that scaling them up in time seems infeasible under current circumstances. Well, under an emergency situation things would be different. We would see a crash program to develop these technologies, which are proven and known to work.

The point is that an anticipated decline is far different in its effects than one that comes as a surprise. My POV with regard to peak oil is that I don't know when it will happen or what its impacts will be, but that we should pressure oil exporters to provide more transparency so that society can know what it's getting into and prepare in advance. That could make the difference between a successful adaptation and Stuart's collapse scenario.

That is the whole point isn't it.  How steep is the back side going to be and what will be the effect on civilization.  I'm still digesting your data.

This illustrates the lag between the supply shocks of the 70's and early 80's, and the the resulting increased economic efficiencies.

From 1978 to 1985, the U.S. economy averaged a reduction of crude consumption per unit GDP of about 5% year-over-year.

1. Your scenario assumes that we would be smart enough to start now to get the factory capacity for high mileage cars available when we need it.

2. Turned around this says that if we had 0% depletion (oil supply remained constant) we would get 4% economic growth.  I suppose this is possible but nobody has actually shown it yet.

Again,
Thanks for an illuminating post.

Roy

Given that you've defined depletion to be net of coal-to-liquids, the peak-oil-is-a-non-issue crowd may alternatively argue that ramp up of coal-to-liquids production capacity will be fast (which is an argument that needs to be based in economics and politics).

1.  You've neglected the energy cost that it takes to construct vehicles.  While there may be improvements in manufacturing, I don't forsee a 50% drop in the amount of energy to produce a car with each generation.  Indeed, one of the beefs that I have with the hypercar is that the materials proposed are extremely expensive (forgetting about the dubious projections for hydrogen fuel cells) - for example, it's hard to find a carbon fiber bike frame for under $1000, which on a per pound basis makes its use in cars uncompetitive.  While some of this energy may be in the form of natural gas, that commodity should at best trade at parity with oil going forward.

2.  Gains in transport efficiency will not be as large as in automotive efficiency.  It is difficult to improve the efficiency of these beasts, as they weigh alot and necessarily have a large wind profile. The alternative would be rail, but the coal transport problems of this summer and overall decay of the rail infrastructure make this unlikely.

3.  Agriculture - for much the same reasons as semis - heavy equipment is simply difficult to make much more efficient, and the use of fossil fuels in fertilizers, etc. will outstrip the growth of the population.

I think (gut feel mostly) that the collapse is most likely to be triggered by large numbers of home owners losing their homes. Reposession of one's home is one of the most traumatic experiences, short of death within immediate family or serious illness. I believe that the economy contraction rate which causes a significant percentage of citizens to lose their homes due to insolvency, will trigger the loss of confidence of which you speak.

Now, as for the percentage of reposessions vs all mortgaged properties? I would imagine that 15% reposession rate would cause a confidence breakdown. 15% is high enough that you're virtually guaranteed to know someone who had their place reposessed and this will have a tremendous impact on your own confidence in economic stability.

Now, the next question that needs to be answered is "what sort of economic burden caused by increasing energy prices will result in a 15% reposession/bankuptcy rate"? In order to figure that out we must look at households that are barely making it and calculate what sort of oil/food prices are going to drive 15% of them into involuntary bankruptcy or force them to panic sell their places. This is the oil price point that triggers a societal collapse.

With that number in hand, we might be able to extrapolate the depletion rates necessary to sustain the long term oil price at that level... that or I'm totally out on a limb here.

Scenario I. Waiting until world conventional oil production peaks before initiating crash program mitigation leaves the world with a significant liquid fuel deficit for 20 years or longer.

Scenario II. Initiating a crash program 10 years before world oil peaking would help considerably, but would still result in a worldwide liquid fuels shortfall, starting roughly a decade after the time that oil would have otherwise peaked.

Scenario III. Initiating crash program mitigation 20 years before peaking offers the possibility of avoiding a world liquid fuels shortfall for the forecast period.

Peak Oil (def)
Historically, the year(s) that maximum available supply in the world market is reached expressed as N/mbd averaged in that year (or years).

For example, 91/mbd in 2009, 2010 or 99/mbd in 2013. Note that the peak is only known in retrospect, allows a so-called "undulating plateau" and can be due to 4 important factors, including

• overall depletion rates for producing fields (subsurface geology)
• geopolitical conditions (above-surface political stability allowing production)
• economic conditions affecting development of new sources (price and EROEI)
• natural conditions (climate and its affects e.g. hurricanes or new opportunities for drilling e.g. the Arctic)

Having said that I am somewhat more pessimistic about the ranges than you because, as I see it, this economy depends so much on growth. We expect GDP to grow based on increased population, and increased productivity (and consumption) per person. The whole economic and social structure would seem to depend on this. We need more output, every year, even though that would seem to become impossible -- are we really going to have an "infinite" GDP at some date, whatever that means?

Of course at some point we may have to reach a sustainable, steady state, where we limit economic (or at least, phsyical economic inputs) inputs to that which can be recycled. On the other hand, that makes life much more difficult for investors who assume that the economy as a whole is growing. They take for granted the wind at their back.

Zero economic growth would also impinge on the optimism and growth psychology which leads investors to invest and those without capital to aspire to wealth. Without a growth society all this becomes problematic. I can't see how we could avoid major psychological and social adjustments even at a steady peak, let alone a decline with a negative slope of any magnitude. After the oil shocks of the 1970s, our oil consumption continued to grow, it's just that for awhile we used less per unit of GDP. Are we really prepared to have our oil consumption level off, much less decline? I think not.

I understand that the hope is that with declining oil extraction we find ways to reduce oil consumption through greater efficiencny, and then replace oil consumption with sustainable sources of energy.That would also allow us to continue in our experience of expanding prosperity, with continuing economic growth. In that happy scenario, zero or negative oil consumption growth -- or even negative energy consumption growth -- would not lead to zero or negative economic growth.

I just don't know if we are well and truly prepared for the transition to lower oil consumption. I mean, are we Americans going to tell the Chinese that they can't have the kind of economic development they want? Are we willing to cut our oil consumption somewhat to buy them off or are we going to fight the Chinese (economically or militarily) to secure supply?

And if economic growth is limited by energy consumption growth (I don't know if it will be but that possibility must be considered) what will America's (and Europe's) legions of investors going to do if their retirement funds will no longer be expected to double every 10-14 years in real terms -- or increase at all unless they become truly astute investors? I hope the answers to my questions don't become necessary, but the issues might best be explored before the peak and not after. Because I don't want to see the disorder and collapse scenario any more than you do.

IMO, the critical details are 1) when PO arrives, 2) the rate of depletion (especially in the first few years post-peak), 3) how we prepare pre-peak, and 4) how we respond post-peak, particularly in terms of oil consumption.  Notice that none of those things are easily predicted, which is why I think it's so critical that we work together to educate people NOW.  

Interesting times, indeed.

In the context of todays events surrounding New Orlands, it is very apparent that the Government reacts to events instead of planing ahead.  I think it is completely unreasonable to assume that their is going to be a pre-planned wide spread cordinated effort to managed Peak Oil.  Something of that scale may come about as a reaction to peak oil, but it will not likely emerge before the peak, and probably not until after the peak when true crisis start to demand massive action.  

I think the best thing you can ask yourself is which one of these tracks you are going to take for yourself?  Controled, or Collasp? If you buy an Hummer SUV, well, then,,, I guess we know which way you are choosing. Which will it be for you personally?  I think society as a whole, along with Governments will take collasp road.  Lets be real about that, is there anything that demonstrates that they will not?  However, as individuals and even small communities, controled is possible.  I think there is a lot individuals can do to prepare themselves for the inevitble future.  

As to the date?  Probably sooner than later, and from my prespective of personal planning, get started today.  Don't wait, get a plan, make goals, and start acting on it.  Procrastination is going to be what leads to the eventual collasp of Governments, business and finance.  They simply do not react until they have a problem, and that is like not treating cancer until you have organ failure.  So, bet on sooner for Peak Oil, and if you are wrong, you still win in the scope of things.  

David Tribble

But basically, 2/3 of the economy is consumer spending and most households spend the great bulk of their budget on stuff - houses, cars, food, etc.

I think you need to justify this statement. Not the consumer part of it, but the assertion that most household budgets are spent on stuff rather than services. The Economist's World in Figures (2004) says 78.3% of US GDP is services. They include utilities, which probably should be counted as stuff for the most part. Guessing utilities at 8.3% of GDP, and our current net imports at 6% of GDP and mostly stuff, then all the spending on "stuff" is only 36% of GDP. Even if none of business spending is on stuff, this would still require nearly half of household spending to be on "pure" services. Since we know that businesses do indeed  buy stuff, it seems likely that more than half of household spending is going for services. Assuming the business and household spending percentages are roughly the same, the services:stuff spending ratio for households would be about 64:36, about 1.78.

What effect does this have on your analysis?

I've just printed it for detailed analysis later.

Thank you very much.

Fernando

Intuitively, it seems to me that you may be right, that a large decrease in vehicle availability, because of a large decrease in liquid fuels, will lead to a GDP collapse. But I don't see where you have shown or in way justified the causal connection to a skeptic.

1. What would be the costs for the US to replace the entire transportation system that is used for commuting to and from work, replacing the current automobiles with those that, similar to the honda insight, but with further effiencies,  with perhaps two diesel cylinders, two seats, a small seat in the back to stuff kids, and a hatch for throwing some junk.  Set the national speed limit to 55 mph.  I can get 70mpg easily in my current insight at 50 mph tooling down the freeway.  With improvements, I think they could easily hit 100mpg.  But we can use 70 mpg as a figure.  Also consider replacing part of the transportation system with scooters.  Let's also throw into the equation a 50% dropoff in plane travel, with only the wealthy and businesses using that route.  No more daughters flying to Aruba for absolutely no reason at all so I have to watch damn reports that's she missing every single night on the evening news.

2. How much energy would this require to produce the efficient transport fleet?  I always hear the argument that producing cars requires energy.  Yeah, I know.  How much.  Suppose we had a national effort to replace 100% of the transportation system. Not saying it's wise.  But suppose we did.

3. Let's suppose we have a great depression type economic setback.  GDP drops by 25%.  Unemployment goes to 25%.  Kids living with parents much longer.  Grandparents living with their kids.  God forbid we'd have to do that (end of the world, end of the world, we'll all be eating dollars sky is falling sky is falling).  Let's also say that oil consumption drops by 25%.  What does that do to your depletion?  To the depletion of existing wells?

So to those who want to talk about post-peak survival stuff, please please go somewhere else.  Find a survivalist site that allows you to prepare for every untold disaster.  Hurricances.  Peak Oil.  Bird flu. Volcanoes.  Global warming.  Hoards of insects.  Strange silicon based creates from another planet.  Just please let's not waste time discussing how to composte one's shit to grow vegetables.  Not the place for it.

The worst situation is if societies/civilizations go to war over the remaining oil supplies. What happens if the oil markets simply close altogether? Oil is only fungible if politics/military allow it to be traded.

There could be situations where 3rd world countries simply do not have access to oil at all...talk about instability...

Because we can't know the future completely, you would throw up your hands and let the future do what it will do to you. I would say that society has been doing precisely that for far too long. I think the Katrina price shock has given us a hint of what to expect if we confront -- excuse me, submit, to the future in the way that we have customarily done. In this website we are trying to think, understand and prepare, while maintaining our humility about the precision of any particular forecast. My portfolio has already thanked me.

2. Richard Duncan, who has written many papers on Olduvai theory has forwarded me his oil models and I am busy learning STELLA to make them more public. As you probably know 48 countries account for 98% of oil production - his is a model of the /production/depletion rates of these countries - his latest run suggests that 2005 is the peak for oil, but that it isnt a real 'peak' but rather a plateau lasting until 2012. I will update this forum once I complete the work.

3. As a student of evolution, it is apparent (as many have mentioned) that we are not, as a species programmed to think too far forward, but are reactionary by nature.  Everything anecdotally suggests to me that we will squeeze as much current oil from wells as possible, leaving them more vulnerable to rapid depletion. That is why C Campbells and Rimini Oil Depletion Protocols make so much sense - but first we need to know what we have - that is task #1

4. Finally, although this is 'The Oil Drum', (Henry Hubble Fiddle sounds much less sexy), IMO the real weakest link to global malaise and conflict isnt oil, but natural gas - I know that has been talked about periodically here but US has more than twice the number of rigs currently drilling for gas as last year yet the production has not increased - we cannot import (other than Canada-who needs nat gas for in situ and their own heat) until/if we create LNG ports - I dont think there is any price that would short term clear the market if we were to run dry due to a cold winter - the switching mechanisms are too slow -home heat and electricity generation -particularly in Michigan - In the summer, utilities are allowed to shut off power to those customers who dont pay - in the winter, most states have bylaws which dont allow utlities to stop service to non-payers - am I missing a less pessimistic case on nat gas?  

I think some of the ideas are very good, and could work.  I live in Sacramento, and I am seeing more people ride scooters everyday.  They get 100 mpg.  Basically, at 40 MPH, there is no place in Sacramento you can't get to on a scooter.  

As gas goes up in price, it has, and will continue to drive this consummer behavior.  

However, if politicians or business continue to keep gas low, then this reduced that amount of time people have to make a transition, and removes the motivation for both customers and business to make that transition.  

So, here is my reason for concern.  It appears that the car industry and oil industry want to do everything they can to protect their base of customers, and the Government also appears to be with them on this stragetic interest.  It appears under those conditions, that we will not do what we should do soon enough to avoid very difficult times ahead.  Some will, for sure, but it is not going to be a very large number, because what you are really describing to me appears to be a complete revolution in transportation, and with out $10 dolllar gas, and rationing, I just don't see enough crisis to create that revolutionary move.  

Otherwise, I completely agree with the scootter concept for city travel.  Due to the magnificant job of our government responding to a crisis, I am now more than ever convinced we have trouble ahead.  

Whatever happens, probably will not be fun.  

The line of thought in this thread is great.  This is exactly what needs to happen.  But then again, we have to define our terms.  What is collapse?  Is the Soviet Union the definition?  I think the term is highly charged and misleading.  In addition, collapse of what?  World economy?  US economy? (yes, I know, they're all linked).  Again, a single term is used to describe a very complex set of possible scenarios.

I find it very useful to discuss depletion, new production, demand destruction, modeling of alternate social organizations--in terms of their energy requirements.  There is a lot of modeling to be done.  But a chart that shows regimes of collapse and sustain as above, though perhaps a step to help people think, is pure speculation.  I think the focus should be on as little speculation as possible.  What that implies is that there is a lot less to say.  Much less noise.  Much more progress.

And yes, I was adding noise.  Sorry.  But I think it legitimate to put into concrete terms a scenario with a sharp contraction in GDP.  I am not sure at all that I agree with the Simmons of the world that we'll suck it out as fast as we can.  That's doesn't make economic sense to me.  If the US goes into recession and/or depression, the world will follow.  And there will be a lot less activity.

Modeling peak oil as a set of depressions/recessions followed by some repair/growth is a much better approach in my mind.  Easy for me to say, since I've not modelled anything about peak oil.  But I've been communicating on the side with some folks who are trying to produce just such models.  I think it will lead to more accurate results.  Collapse is simply not defined, is not understood, and if its not defined you can't model it.  The graph looks good, but let's face it:  this single graph is trying to make a statement about the response of industrial society to energy depletion.  I think you'll agree with me that this just is not possible.  I don't think any modeller would disagree with that assessment.

You highlight the complexities of forecasting the post-peak world. After reading thousands of pages about this subject over the last two years, my conclusion is: I'm still ignorant. I have no idea whether there will be a crash nor when it will be. Things don't feel so good now, though.

Hence, I've taught myself to be as self-sufficient as possible, in preparation for the worst. If the worst doesn't happen, food preservation and farming are still very fun.

• a narrow definition of peak oil (geology only)
• uncertainty about depletion rates based on lack of good production data

http://americas.irc-online.org/am/386

I have concluded the USA is well aware of peak oil and it's consequences. as a result the USA is preparing for such a thing (securing resources). China is very aware of peak oil too. China is agressively seeking oil deals, ie: currently Iran, and recently a failed attempt at Unocal.

Be Prepared.

In any case, the oil companies have sworn up and down (see for example, comments on Exxon Mobil website by recently retired chairman Lee Raymond) that they will be more careful with shareholders' money this time. There have been reports in such places as the Financial Times that western oil majors have pulled back from investments in Central Asia because these investments no longer meet strict hurdle rates. Then CNOOC moved to purchase Kazakhstan Petroleum.

Furthermore: while Stuart notes that the companies have secured Federal pre-emption of state and local regulations regarding the siting of LNG terminals, they did NOT get such pre-emption for refineries. I assume that they could have secured such pre-emption from this Administration and this Congress had they cared enough. Ergo, the industry has telegraphed that they believe in peak oil too -- if they anticipated a need for new refining capacity this was the time to have made it easy to build.

Right or wrong, the companies will win the Battle of Eighty-one this time; they will not throw shareholders' money away. Is this in fact the best strategy? If the price of oil falls back significantly, it certainly will be. If Indian and Chinese companies secure key properties, and then the price of oil continues to increase steadily, this strategy will be found wanting.

And that leads to my comment on Stuart's fine work.  As TRE has said, their is no consumption component to the model.  But this aspect is crucial.  Say global growth in crude consumption is and has been somewhere around 1.7%.  If  you are going from this scenario to even a modest .5% depletion rate.  Then, to get the same amount of economic growth out of the current situation with .5% depletion we need to acutally improve effeciency by an increasing amount every year.  

I ran a quick calculation that assumes the modest .5% depletion rate at current consumption trends (assuming that the second law of thermodynamics has not been repealed by the UN or the current congress or Alan Greenspan's Fed by then).

          Approx.      Approx             Needed
              Production    Consumption    additional efficiency
                                (in equivalent     (bbl/day equivalent)
                                 energy/bbl)
2005         84000000    84000000   
2006         83580000    85428000     1848000
2007     83162100    86880276            3718176
2008         82746289    88357240     5610951
2009         82332558    89859313     7526755
2010         81920895    91386922     9466026
2011     81511290    92940499     11429209
2012         81103734    94520488     13416753
2013         80698215    96127336     15429120
2014     80294724     97761501     17466776
2015         79893250    99423446     19530195

If the modest rates of depletion started next year we would need to come up with the energy equivalent of 19.5 mbd crude in the year 2015!  This is more than driving at 55 MPH...

I've bumped up my comment to the top level as there were so many levels to the right.

Yes, I see the your discussion of oil consumption and the reductions that might be possible with a prius or similar car.  But I'm still just looking at production curves.  Here I'll say again, I think consumption will interact with production in a way not represented by these curves at all.  Therefore I'm not sure that we should not try to read too much into them.  I do not believe the economy will move smoothly move along one of these curves.  It's going to oscillate.  And that would be better demonstrated--though more difficult--through the modeling of consumption that interacts with the declining production limits.

I highly suspect that there will be a great deal of demand destruction--read unemployment and lower standard of living--much sooner than later.

Depletion will still occur.  But I think the demand destruction may create more of a set of production steps that decline over time and will draw the whole thing out to the right.  How far, I don't know.  But without more in-depth consumption modelling, we might know.

And just as a note, I've done a lot of modeling myself, e.g. having modeled the propagation of low-frequency seismic waves following an approach not that dissimilar from solving the schroedinger equation for the hydrogen atom, but the seismic solution produces tensor fields from a vector potential field whereas the schroedinger equation is much simpler, only requiring the production of vector fields from a scaler potential.

Regarding biking: even before we get to having adults bike to work, what about kids biking to play dates and soccer games? I biked almost everywhere when I was a kid, and it was a great way to learn about independence. It would save a lot of energy, both of the gasoline kind and that of overstressed soccer moms. I don't know if people are too entrenched in the SUV/minivan lifestyle -- which did not exist during the 'Seventies oil shocks -- to even think of this obvious adjustment (we don't have children and I simply am not plugged in to a lot of this), but I bet alot of today's overweight kids at least own bikes even if they don't use them very often. Is it too farfetched to wonder if a campaign to promote biking for kids -- the self reliance, exercise, and a break for mom -- might actually catch on if gas prices stay high? Or am I dreaming?

Regarding Europe's urban density, and how that counts for so much in cutting per capita energy consumption:  I would conjecture that far fewer European families have more than one car than is common in the US, and that would seem to count for a big difference in per capita energy use, all by itself. Of course, in our spread out patterns of residence, having a second car feels darn necessary for many of us Americans.

http://www.ttnews.com/summit2/chattranscript.html

http://www.ttnews.com/chat/diesel/

Also since October 2002 diesel has gone up about 45% in cost (probably close to 50% right now)

http://www.oregon.gov/ODOT/CS/FS/diesel_prices.shtml#2002

SO the per mile fuel costs have increased about 50% and trucking companies are still in business and growing (not without a lot of pain and dislocations mind you).  So I am not sure how much increasing fuel costs will slow demand.

I mean, this whole modelling thing.

Well, I'll tell you something. Society's behaviour and culture are the most important factors. Hell, in the USA even a clear fact (not in the details, but the fact) that Humans are changing the climate is not widely recognised. If you can mud discussions about that, what can't you do about PO?. So numbers and models only bring you so far. Here are some answers.

- Nuclear Power: This is something witch will get a lot of attention away form the real problems, giving the impression that there is some alternative. But there are some studies, that analyse the cost of the Uranium enriching cycle, and conclude that once the rich uranium ores are depleted Nuclear Power could consume more energy than it delivers.
As a sign, a doubling of the oil prices in 2004 was followed by a doubling of the uranium prices. So that could be the most useless investment humankind ever made.

http://afr.com/articles/2005/06/23/1119321845502.html

- Hydrogen economy: not working. Not relevant. Where the hell are you going to get Hydrogen from? we are talking about energy sources. Even as an energy carrier/petrol substitute it faces gargantuan problems to become feasible: energy conversion = energy lost, problems of scale, a lot of yet to be resolved technical problems.
http://www.energybulletin.net/3203.html?PHPSESSID=f076f7cedde75cd5abd9373e9d25fb3d

- Coal liquefaction, tar sands, etc: first, no way they'are to be scaled up to the size of our oil (and natural gas) thirst. Second, if it comes to that, no need to worry about anything any more. Economy growing as usual (everybody happy) and climate meltdown (our retirement and kids won't be as thrilled).

So, am I saying there is no alternative?. No.

Here is my "model":

• Efficiency
  
• Electric cars
  
• Biogas for certain tasks
  
• Renewables (solar, wind, biomass, etc...) providing all energy needs
  
• Learning to live with less

That's the plan. And there are studies about such a change and transition.

Now, go and tell the US government, the Oil companies, and the car makers, we need to do that. And while you are at it, try telling that to the SUV, urban sprawl citizens out there. Do you want more numbers and models?

There are simply too many variables involved and a little bit of catastrophe theory thrown in too make things a little bit wild.

For example, no account is made of the fragility of the economy in question. The debt-based and highly systemic-prone economy we have today is more susceptible to peak oil than say one in the 1950s or even 1970s.

It could be that 4% depletion is enough to push us into depression.

Also, population growth is not accounted for. After all, economic growth of 3% doesn't sound as good if the population is also growng at 3%. You are basically running just to stand still economically speaking.

In a post-peak society, populations will drop, so by zero economic growth you may actually mean GDP contraction of 4% with 4% annualized drop in working population.

The solution to our post-peak depletion-GDP relationship may in fact have to be heuristic rather than a well defined equation. In the end we can pick our depletion rates but we can also choose a different economic scenario.

After all, Peak Oil is as much a catalyst as a disaster. It is a disaster in itself as well as the mother of many others as a domino effect reminiscent of catastrophe theory takes hold. My bet is that a sustained 4% depletion after a few years will be enough to cause systemic and cascading defaults across our monetary systems and roll on something Peak Oil could not achieve on its own.

You need to think beyond oil, oil is not per se the bringer of doom.

New Era Investor.

www.newerainvestor.com

Hybrid vehicles are fine to consider for the US and European markets, but I do not see them being affordable to us here in the developing nations. It was mentioned that the average life of a passenger car in the US was 9 years. Here in SE Asia, I have never seen a car junk yard that has more then 10 cars in it. It seems that all the cars ever on the roads here are still on the roads. Total wrecks are pulled straight, repainted and back on the roads. Fair enough, the total vehicle quantity is not nearly as much as in the US, but I would think the same usage of old cars would be true for China.

Without a government initiated reduction in taxes on new cars, there would be no chance to sell hybrid cars here. Those who have money to buy them, have money for the expensive fuel. Will it be the same for India and China?

I would venture to say, not until the petrol price becomes prohibitively expensive or petrol simply becomes unavailable, will the demand drop. The Asian crisis certainly reduced the amount of consumption here, but this was due to lack of available income. As long as a strong economy is providing the income for the purchase, people will use the fuel.

Can models accurately forecast effects of global interactions in this case? People do not always follow what could be considered a logical course of action. How is a model accounting for that?

Don't miss the graph "Fuel economy trend line" at the bottom of the page.

I must say, there is nothing more effective than (oil) high prices. Either through taxes or real like know.

I still think fuel economy will only bring as so far (diminishing returns), and more important is behavioural change.

Evidence? -> http://www.energybulletin.net/8416.html

SJMStrategy, I am with you.

People don't realise this whole "economic growth" business. Everything is based on that, even country budgets. There is no way for the actual economic system to survive even a flat (no) growth. The only way it has to solve the conundrum is through destruction (usually war). Hell, look at the Katrina aftermath, they are allready speculating about the forth quarter upswing that the catastrophe could bring. Well, a REAL GDP, should have reflected that a 2 Million people economiy region has been wiped out! If it represents 2% of the US economy, the that would be a 3 quarter 2% recession. But no. Something is destroyed, and that's good for growth. That's a crazy economic system for God's sake.

Am I saying collapse is inevitable?. No. What I'm saying is, the current economic system only works with infinite growth. In order to cope with the right side of Hubbert's curve, the only chance is to change that system. But wait!. This doesn't have anything to do with capitalism. It could still be capitalism (or not, I don't know). Most in America (and most European economists, I dare say) think the way things are now is the only possible way. But capitalism was not first described by Adam Smith. It was "invented" by the Chinese 2000 years earlier!:
Ssu-ma Ch'ien in his "Historical Records" in 100BC about the Han Chinese economy: "There is no need to wait for government orders; each man will play his part, doing his best to get what he desires. So cheap goods will go where they fetch more, expensive goods will make men search for cheap ones" and so on. Adam Smith's "Invisible hand" is Ch'ien's "Water Flowing downhill".

What is flawed are a lot of other systemic things, like debt based currencies (where Stuart doesn't agree), petrodollars, new colonialism and imperialism, consumption frenzy, infinite profit for business even on items needed to live allowed ,way of life, etc.
Even the "Bretton Woods arrangement" was way better than today's arrangement.

Sorry, I didn't want to hijack the thread :-)

I'm with J on one thing for sure - the human race is staring upwards at a 10 ton weight on a string, kind of like Wylie Coyote on a Roadrunner cartoon. In order to survive this, we will have to bring the best parts of us to the fore. It isn't a government problem - it is a societal one. It is and always has been about our choices, and each of us needs to start changing our decision-making criteria.

What happened to him?            WHERE ARE YOU, J?

Us old guys need to stick together!!

Our society is like an airplain in complete free-fall. Because of the flying sensation, most people think we're flying. But some of us know we're just dropping and see the ground comming on to us, fast. They're trying to get the message out there, hopefully some more will see the ground comming.

The first method used to arrive at this number relies on results in a paper published in 1998 by Heather L. Maclean, and Lester B. Lave entitled "A Life-Cycle Model of an Automobile," which appeared in the journal "Environmental Science and Technology" (vol. 3 no. 7, pp. 322A-330A).  In this case, the calculation is particularly simple, being just a conversion of units.  Maclean and Lave estimate a manufacturing embodied energy of 114 MBtu (120 GJ) for a Ford Taurus.  Using the energy conversion factor of 139,000 Btu/gal for crude oil, with 42 gallons per barrel, we come to the above result.

A second method uses data that can be found readily on the web.  For example, from the U.S. DOE Energy Efficiency and Renewable Energy site, Fact #310: March 8, 2004
"Average Material Consumption for a Domestic Automobile" we can find out how much of various types of material is present in an average car.  From there we can look for the embodied energy in different types of materials.  This information is a bit more difficult to pull together, and usually seems to be found in the context of the housing industry.  In any case, two sources are http://www.tececo.com/index.php and http://www.greenhouse.gov.au/yourhome/index.htm.  Making some slight assumptions about materials that appear in automobiles but not in housing, I arrive at very nearly the same number of 20 barrels of embodied energy.

Two points should be made here.  According to the work by Maclean and Lave, the energy used to manufacture an automobile of the type discussed in their paper, with gasoline usage of 21.8 mpg, is only about 10% of the energy the car will use during its assumed lifetime of 14 year; roughly 85% of the energy used is in fuel and fuel production costs.

Second, let's therefore imagine there were a mandate to make a switch to cars with double the fuel efficiency of this average Taurus.  An estimate shows that replacing about 10% of the cars presently on the road each year (roughly equal to the total production of vehicles presently and similar to the rate assumed by Robert Hirsch in his DOE report) would save roughly a half-million barrels of oil each day in the first year, compounding in future years. This number does not, however, include the energy costs of retooling and changing of assembly lines and many other factors.  

Let's try another route to saving oil.  All numbers can be found in the Transportation Energy Data Book, 24th ed. Given average vehicle mileage (22.1 mpg for cars, 17.6 mpg for trucks), and the average number of miles driven per year (12,500 miles per vehicle per year), a quick estimate shows that if every car owner drove about three miles per day less, we would save around a million barrels worth of oil each day.  Or how about this possibility: using the same data source, typical mileage of a car decreases by more than ten percent for a speed increase from 60 mph to 70 mph.  If we assume that 25% of miles driven each year are at highway speeds, reducing driving speeds from 70 mph to 60 mph would save around two million barrels each day.  It seems that these are almost trivial changes in personal driving habits that would reduce oil consumption by 5% and 10%, respectively, and are much easier and faster to implement (not to mention more effective, at least at first) than the creation of new assembly lines.

Consider from an economic perspective. For years, the central bank of OPEC (read Saudis) have been supplying the the economy with oil, not too hot, not too cold, just right (like that bear family, but in terms of supply/price).  Now what happens?  Suddenly they are no longer the central banker.  We're all sucking on the straws as hard as we can.  Supply cannot meet demand.  So the market must clear. The plots above assume that the economy will restructure itself in just such a way so it can ride down that depletion curve.  There is no reason to believe that. It's that growth issue, which has been discussed above.  And debt.  Debt is consumption today and I'll pay for it tomorrow.  The world has an enormous amount of "I'll pay for it tomorrow" promises lying about.  At some point, as discussed above, it will be clear that those promises cannot be kept.  People will suddenly stop purchasing--TVs, Cars, you name it.  The economy will recess.  Now please note:  there is no central bank of OPEC any more.  And there is no reason to believe that modern economies are structured in such a way that they will recess in just such a way to match a depletion curve.  No reason to think it.  Demand destruction sets in, and it could be severe.

Also consider from a basic systems perspective.  We're essentially dealing with a feedback system of some sort (I've not looked at this in a long time).  And that's my general problem.  There is no feedback in the discussion and plots that originated this thread.  Oil production is a flow of energy into a machine that uses a portion of the energy to produce more oil.  Suddenly sectors of that machine are starved for oil when production cannot meet consumption needs.  Now the curves above assume that the machine (in this case, the economy) will be structured, or have been designed in such a way so it can reallocate resources or destroy portions of the machine so that demand for oil rides down or matches the depletion curve.  Again, there is no reason to think it will.  There are many arguments that could be made that the consumption function will undershoot, and perhaps by quite a bit.

And here's where I do get a bit annoyed with all the collapse discussion.  Not that I'm afraid of it.  Who cares.  Everyone's got to go sometime.  If humans are screwing up the earth, then we know what the solution is.

No, the thing that bugs me is what I mentioned before.  "Collapse" is a single symbol that is intended to represent the response of a complex civilization to energy deprivation.  Even if one puts together a whole book on collapse--and calls it say, "Collapse of complex civilizations" or some similar name--consider that the information contained in that text is still only a fraction of the information that is contained in a complex industrial society.

Here's the thing.  I think a good argument can be made that there will be lots of little collapses.  And this will draw the whole painful process out to the right much further.  And it will also provide opportunities for programs such as the Govt to build buses for people to use (if that makes sense) and other ways to bridge the transition through the bottleneck (as the recent scientific american calls it) to a sustainable or declining society.  It does argue that society and investment and debt will take on a new meaning. The govt role will change.  Perhaps some will polish off the Keynesian textbooks.  I'm not sure.  I don't know enough about it.

And of course, then the argument is made that people cannot handle a life without a better future for their children.  Well, given that people lived that way for most of history, and it's only a modern delusion that makes us think otherwise, I suspect people will catch on very quickly.  They'll catch on.  It's probably in our genes in fact.  Life pretty much sucks, and it will suck for my kids.  Once we jettison this modern concept and expectation of progress, we'll be in much better shape.

Anyway, a few things to throw out for consideration.

There is a very strong assumption amongst those who are considering peak oil that it is black and white, all or nothing.  Now I agree that the above curves demonstrate the grey area (I mean yellow area) of orderly contraction.

But there will be no orderly contraction.  I think modeling will probably show us that the response will be a set of little collapses.  The question is how long and how big.  And how to respond to them.

i have a question concerning the calculation where you get 8.2% of the fleet is new each year.  what does 70 represent and where does it come from?  and how does 70/8.5 equal 8.2%?  it actually equals 8.2 with no percentage sign.  i'm not even sure what "8.2% per year of them per year are new" actually means.  thanks for your clarifications.