4%, 11%, Who the Hell Cares?

Who cares about the depletion rate? It's some small fussy number that we don't know, right? Peak Oil is PEAK OIL! Once we hit the peak all bets are off.

Wrong, I say. Once we are post-peak, the depletion rate is going to be the single most important variable by far. I argue it controls whether peak oil is minor unpleasantness, or Overshoot-style die-off. If we understand these issues, I think it can help to clarify exactly why one might choose to live at one or other end of the peak-oil spectrum - complacency or panic.

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I'm going to argue that there are three rough regimes that we can distinguish. If the depletion rate is below the contraction threshold, then the economy can continue to grow despite depletion (green zone above). If depletion goes above this threshold, then we will have sustained economic contraction, but still in a mostly orderly manner (yellow zone). Finally, I argue there's a collapse threshold - if the depletion rate goes above this for a sustained period of time, then society will not be able to adjust and will go into collapse (red zone) until some new form of society can be constructed from the ashes of the old (much as happened to the Soviet Union, the Mayans, the Roman Empire, and Easter Island in various guises).

The picture assumes a near-term 2.5% annual growth in all-source, quality weighted, liquid hydrocarbon supply. This culminates in a peak in 2008, for the sake of illustration, followed by various depletion regimes. The boundary between the green zone and the yellow zone is constant 4% depletion (my estimate of the US contraction threshold). The boundary between the yellow and the red is constant 11% depletion (my guess at the collapse threshold).

Of course, I'm not saying I know the date of peak oil, or that the true curve of supply is going to be neat and constant depletion as shown here. There could very well be a bumpy peak, and there's likely to be a somewhat fluctuating fall that starts off slow and then speeds up. It will probably be punctuated by various kinds of shocks induced by conflict, hurricane, or earthquake. Nor am I saying there are absolutely hard lines between the varying regimes of adaptation, contraction, and collapse. I don't exclude scenarios where society lives in one zone for a while and then crosses into another. What I'm proposing here is a a very idealized and simplified view, but I think it helps us gain greater insight into the basic dynamics of a post-peak economy.

The Contraction Threshold

As a rough approximation, good to 10% or so, the following things are true of the US economy:
  • All transportation runs on oil
  • The economy is entirely about the creation and use of material goods.
  • All material goods are transported from creator to user via oil-powered transport
  • Everyone gets to work by oil.
  • Oil is not used to power making stuff, electricity is (ie coal, nuclear, hydro, natural gas).
Ok, ok, I'm simplifying - there's electric trains. There's software downloads. There's petrochemicals. There are natural gas powered vehical fleets. I'm sure some stores are right next to some factories. 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. Only a small portion is going into downloaded software, Internet service, and other primarily intangible goods. And the other third is businesses, and they're mainly buying tangible stuff too. And all that stuff is getting moved by oil, as Ianqui reminded us the other week. Not only that, the raw materials used to make the finished goods are also being moved by oil. And the labor to make the stuff is getting to work in oil powered vehicles.

So, since if goods can't be moved there's no point in making them, the simplest possible model of the oil economy is that GDP is directly proportional to oil usage. More GDP means more oil usage, and if oil supply shrinks, GDP shrinks proportionately. I think this model is probably correct to first order on short time scales (months to a year or two). If this model were absolutely true, then with an oil depletion rate of X%, we would have X% annual economic contraction.

However, by now, the free market economists are champing at the bit and Schumpeter is spinning in his grave. Adaptation, substitution, creative destruction, they cry. Yes, yes, and yes. Up to a point. We can replace oil with coal or natural gas. We can switch to plugin hybrids. But only so fast. And that switching speed is what sets the contraction threshold - which by definition is the amount of oil depletion required to make economic growth be zero.

The nice thing is, there's data that will allow us to get somewhere at estimating the contraction threshold, at least very roughly. The excellent Transportation Energy Data Book, on page 3 reveals that the average increase in the size of the US vehicle fleet is 3.6% from 1992 to 2002. Since this corresponds fairly well with the 3.2% average increase in real GDP over the same period, our approximate "GDP is proportional to oil usage" in the short term is not looking too wrong.

Now page 9 reveals that the average age of a car on the road is 9 years, and a truck is 7.9 years. Let's split the difference and say the average age is 8.5 years, and thus about 70/8.5 = 8.2% per year of them per year are new - about 3.6% being growth, and about 4.6% being fleet replacement. I'm going to assume that in a somewhat but not horrendously stressed zero growth economy, people buy the same number of cars, but they buy smaller much more efficient vehicles. I'm going to assume the fleet stops growing, and the full 8.2% goes into replacement.

Now, what gets replaced with what? I'm going to assume that the best that can be done is to replace vehicles with ones that are twice as efficient. Eg, in the near term, that corresponds with replacing a 27.5mpg CAFE average passenger car, with a 55mpg Toyota Prius. In a decade or so, we'd need to be replacing Prius's with 110mpg plug-in hybrid hypercars, but that seems long enough for the auto companies to get with that program (or go out of business in some cases). Obviously, the factor 2 is an approximation. Hypercars might very well become available sooner, but also some people could afford to keep guzzling away in big conventional SUV's and would do exactly that. Let's assume those effects wash out to the factor 2 overall.

The situation with trucks is probably roughly similar. Semi-truck fuel efficiency can be about doubled by cleaning up their aerodynamics, and beyond that we'd be moving increasingly to railroads to get the next doubling in energy efficiency (which would require significant investment in the decayed railroad infrastructure).

There are a whole pile of second order effects which we will proceed to assume are smaller and roughly cancel each other out. These include:

  • People might try to use their vehicles more efficiently. However, this basically requires rearranging the the building stock (or at least the use of it), which is extremely long lived (decades) and has been sprawling as average household size has gone down and population has gone up. We assume zero economic growth is only enough to arrest these trends, not reverse them.
  • More economically inefficient uses of oil might be eliminated first. It's true that low income households (ie ones that don't create much value in an economic sense) will have to conserve more. However, it's also true that high income households use a lot of gasoline for purpose that have no economic significance and would not stop. We'll assume these effects cancel.
  • Electricity might be substituted for oil to some degree. This can only happen slowly since the lifetime of the electricity generating equipment is extremely long (decades), and we assume it just helps us to make that factor of 2 average reduction when we replace a vehicle.
  • People could telecommute. But telecommuting has been an option for a decade at least, and hasn't reached much penetration, presumably for good reason. I assume zero economic growth is not enough to radically change this picture.
So my rough estimate of the contraction threshold - the depletion rate in total liquid fuels that will result in zero economic growth is 8.2%/2, or four percent, to good enough precision here.

The Collapse Threshold

The reasoning about collapse is going to be a bit fuzzier. In fact my estimate of the collapse threshold is going to be what we scientists know by the technical term SWAG (scientific wild-assed guess). But I think I have something to offer in the way of insight on the dynamics of collapse. I define the collapse threshold to be the depletion rate at which society collectively loses enough faith in the future that they are no longer willing to risk investments to preserve that future. This appears to be one of the fundamental characteristics in past societies that collapsed. The Easter Islanders gave up their intensive rock gardens, the Chaco Canyon people stopped building new Great Houses, the Mayans even stopped keeping track of their Long Calendar. (See Jared Diamond's excellent book Collapse, or Joseph Tainter's slightly more academic but also excellent The Collapse of Complex Societies for more detail.)

In our case, consider a potential investor in a company that is raising capital to open a lead mine to make batteries for anticipated future demand for plug-in hybrids. Let's say it takes five years to get the thing producing, and then the initial capital will take five more years to repay before it starts to really make money. So this investor has to believe society will hold together well enough over that time for his investment to really be worth it. Otherwise he's investing in gold instead (or vodka!).

Obviously, if our hypothetical investors do not feel enough confidence to make this investment, now society is in real trouble - the batteries needed to power the plugin hybrids are not going to be there when they are needed. And so on, across a thousand similar decisions across the economy.

Not only that, but the point at which wealthy investors are giving up hope about the future is also probably similar to the point at which the rest of society gives up hope too, and starts looking for alternative ways to survive. One of the leading effects of that is likely to be a loss of law-and-order. Things go downhill very rapidly from there as we have seen in the last week in New Orleans. We also know conflict was a major factor in the decline of Easter Island, Rome, and the Chaco Canyon Anasazi. Human beings can turn into bands of looters, and even cannibals (as at Chaco Canyon), with amazing speed once they lose faith in society.

I don't really know how to estimate this threshold with precision. But I note that each percentage point of depletion over and above the 4% contraction threshold results in a percentage point of annual economic contraction. By that reason, 11% oil depletion is 7% annual economic contraction which is halving the economy in a decade. That would sure scare the hell out of me from making any investments in anything except fruit trees and vegetable gardens. So my SWAG is the collapse threshold is eleven percent oil depletion.

Remember, I defined that depletion rate to be the depletion in all-source liquid fuels, quality-weighted (ie after we've included whatever can be gotten from slowly ramping up oil sands, coal-to-liquids, etc, but discounted by the increasing mix of less useful heavier sourer oils).

Summing It Up

I stress that I know all of this is a crude approximation. I'm not claiming my numbers are any more than rough guides to the general neighborhood. But I hope it helps us move the debate forward. I think the hoariest die-off proponent would have to agree that evil earth-destroying capitalism could probably adapt for quite some time if depletion was only 1% a year. I think even Julian Simon would have had a hard time arguing that human ingenuity could overcome 50% annual depletion in oil supply. I think since we've survived oil-shock induced recessions in the past, it's clear there must be some survivable middle zone of modest contraction.

So given the zones must exist, now we're just arguing about the numbers. The peak-oil-is-a-non-issue crowd need to either argue that depletion will be slow (which is an argument that kind of needs to be based in geology and reservoir engineering), or that the contraction threshold is high (in which case they need to explain how the relevant infrastructure could be turned over much faster than today under conditions of economic stress.

Alternatively, die-off types need to explain either why the total depletion rate will be very high, or that the collapse threshold is low (society will lose the confidence to invest in the future even at depletion rates that are quite modest).

I'll offer my own best guesses for the depletion rate in a future post, but in the meantime, let the debate begin!

This is a reasonable framework for thinking about life after an oil peak, but I would make two points to challenge it.

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.

What if we don't have 13 years of steadily higher oil prices?  What if prices swing down every time some third world country drops out of the game.  Someone will say, "Look, it's getting better!"

Also, it seems pretty clear to me that the powers-that-be won't admit we've peaked until well afterwards, when they can't deny it.  So some people might not be surprised, but most will.

As you say, a lot depends on transparency, and accurate information.  Looking at the photo-ops and back-slapping in the aftermath of Katrina, I'd say we are being pushed, blindfolded, into the abyss.

You are right that I neglected to analyze the degree of warning carefully. My view is that, as long as the current lack of transparency into reserves holds, there won't be lots of warning. People only pay any attention to peak oil (and resource constraints in general) when prices are high (as in the 70s, which concern dissipated through the 80s and 90s, and now). Current prices are pretty much constrained to be not much lower than the future prices (via storage arbitrage). Historically, future markets have had extremely limited ability to correctly predict future oil prices (unsurprising given the lack of transparency into most sources of supply). Not only that, it's human nature to only respond to things after they've happened (no-one took very seriously that terrorists could fly planes into buildings or that New Orleans could flood until after those things had happened). If we are near peak now, we are starting to respond. If it turns out we are not, and there's some big new supply somewhere, we'll all go back to sleep until we are near peak (as we did in the 80s/90s).

Overall, I sort of assumed the warning of the decline rate is enough to set in place those 2x improvements in transportation efficiency, but not more. If we were to start constant decline next year, we obviously would not achieve 2x for some years because manufacturors would need to design new models (except Toyota and Honda), and rejig factories (in all cases).

Great post.

I'm also very dubious about whether effective warning signals will actually occur. The classic economic assumption that markets receive perfect information, including warnings, can't possibly be correct under these circumstances because:

  1. We don't have good information on production and reserves now.

  2. We will not have good information on the timing of the peak: it can only be verified some time (2 years?) after the fact.

  3. Oil companies, as we've seen already, are unlikely to tell their investors that they are in a long-term decline.

  4. Governments aren't talking either. The Jimmy Carter experiment in telling the truth about oil was intellectually and ethically correct, and politically disastrous. It won't be repeated anytime soon.

This means that the warnings will come primarily from third party commentators in the peak oil community. This group has brains and passion. Unfortunately, we have no significant communication budgets. And we compete for credibility with a shadow--"they," as in "They who will find a solution."

We need to keep getting the message out, but most are not ready to really take it on board. So the warnings will be weak.  

What I find interesting is that over 50% of European cars are diesels and the ave mpg is about doble the US fleet. The trend is in place already. Almost all European manufacturers make diesels now, so the technology could be shifted over here quickly. I also think the service stations could be switched over pretty quickly, so it boils down to refinery retools or new builds to convert coal to diesel. I see a lot of new capacity coming on in Qatar, Iran, Nigeria, Australia, Algeria, Turkman/Russia, Trinidad. Ramping up battery manufacturing, lead mines alone tells you that hybrids could hit a wall quickly.
"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."

I sure hope that will only be a small part of the solution, because otherwise we're just heading for peak coal and peak tar sands, and more global warming and air pollution.

I'd hope that massive investments would happen in solar, wave and wind technologies along with the extremely important efficiency and conservation sectors.

One thing I haven't seen anyone note is that once any element of the economy (commuter, company, whatever) converts away from petroleum for transport fuel, they are individually immune to further price increases or supply squeezes.  Their upstream suppliers and customers may not be, but the higher the cost of oil goes the more advantage the converted will have in their particular niche.

For instance, suppose you've got an oil crunch that starts in 2005.  By 2010, depletion is running at 5% per year but conversion has been averaging  2% a year and 10% are already converted away from petroleum.  Further productivity crunches will only affect the other 90%, so a 5% contraction in the oil-dependent sector is only 4.5% overall.  By 2020, 30% are converted and a 5% contraction is only 3.5% overall; if the converted are growing at 5% per year (likely if they are much better investments) the overall contraction is just 2%.  Eventually the converted are out-growing the dependent-and-contracting and the economy goes forward again.

The only way we'll have real problems with peak oil is if government tries to maintain the economy on it instead of getting it to switch, e.g. what the Republicans have been doing since cancelling the PNGV in 2001.

I agree with this, though I see it happening somewhat later in the process than you suggest given the sucky energy/weight ratio of batteries (my best guess is that in small to medium depletion scenarios, nuclear power and plug-in hybrids will prove to be the path of least resistance that the market picks, with the plug-in part getting more and more significant over time).
If you think batteries are inadequate, take a look at lithium-ion performance figures.  AC Propulsion did, and they made an electric rocket-car that can go almost 300 miles at freeway speeds.

The problems with Li-ion batteries will be overcome.  The expensive and runaway-prone cobalt oxide cathodes are eliminated by Saphion technology, and nano-fine structures by Altair Nanomaterials and Toshiba have radically increased the cycle life and charge/discharge rates.

I believe the Toshiba battery represents the true breaktrhough in EV technology. I'm surpries it received as little publicity as it did. Is there any reason to believe this batery will fail to live up to its promise? Is it too expensive.

For those who aren't aware of Toshiba's breakthrough in battery technology, here's the link:


One thing I haven't seen anyone note is that once any element of the economy (commuter, company, whatever) converts away from petroleum for transport fuel, they are individually immune to further price increases or supply squeezes.
I'm not so sure of that. There are a few cases to consider.

1) A switch from gas/diesel to natural gas. Well, hopefully it's obvious how one isn't immune to price increases in this case. For the record, it's a limited resource, it's peaked in North America and it's price is also increasing.

2) Any liquid/fuel cell fuel source. How well does it scale? Yes you can get waste oil to run your car from a restaurant down the street, but what happens when 5% of the population find out about the great savings? Suddenly the reataurant realizes that waste oil is a resource that s/he can sell for far more. And now you effectively have to buy the bio diesel (or algae oil) from a station. Growing demand, but will supply ramp up quickly enough? Sure, in the long term price should/might go down but when it's just becoming popular there could be wild price adjustments. Sure, some could be down, but some could be up.

3) electrical power. Whether compressed air or a battery is used for the energy storage mechanism, have you looked at your electrical bill? I'm getting yearly adjustments to the bill twice yearly for the last two years (better than the quarterly I seem to be getting from the natural gas company). How many new nuclear plants are being built in your area? Does your bill show what percentage of your energy comes from what sources? Odds are you'll see 50% from coal, some from gas, and then some from renewables. Coal will get more expensive to ship, and gas is going up. And without breeder reactors nuclear will also rise. When a lot of people are plugging their cars into the grid, there's going to need to be a lot more electricity produced.

I'm unsure what other categories there are, but one won't be immune from price increases. But hopefully the price increases will be less than the petroleum bound competitors.

Nobody in North America is going to convert from petroleum to natural gas for cost reasons.  At $65/bbl, crude is about $11.00/GJ; natural gas is around $14.00/GJ at the wellhead these days.  There may be fuels like landfill gas which are too expensive to upgrade to pipeline quality or are "stranded" by distance and thus go cheaply, but they're not big enough to turn things.

Waste-derived fuels (both crop wastes and post-consumer wastes) will come into play, but I don't think they're going to be very big over the next 5 years.  There's too much groundwork that's not done yet.

For the most part, the conversion is going to be to electricity.  Electricity can be generated by a host of things and co-generated from many processes which currently just eat the entropy increase in conversion to low-grade heat; if we moved aggressively to make more electricity for less fuel, the amount of low-hanging fruit would allow it with relative ease.

Wow!  Thanks for the great argument for defining the range of depletion versus stability.

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.

Here is a graph I made of the relationship between crude oil costs as %GDP and crude oil consumption per unit ($1000 Y2000 constant dollars) GDP.

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.

Sorry, Scoop ate my link.  This is the URL for the graph:
Nice graph and it certainly seems like a valid way to look at the issue. Presumably you would argue that since we managed 5% annual improvement in oil/GDP in the past, we ought to be able to do it again and therefore the contraction threshold must be at least 5%. In general, I'm quite willing to accept that my very crude calculation gets it wrong by a percentage point or two. I also point out the low-hanging fruit issue though - the very easiest things have already been done.
the very easiest things have already been done

ahhh... but have they?  What percent of homeowners use compact fluorescents that can afford to do so?  What's the fuel efficiency of new cars purchased today?  How many homeowners haven't replaced windows or upgraded insulation in the last few years?  How many businesses haven't looked into conservation to control electricity costs?

In truth, there are still lots of low-hanging fruit to grasp.  All we need is incentives - and rising costs (or profits) are the best incentives.

Exactly! The easiest way to get more usable energy is to use what we already produce efficiently!
Yeah, but switching to compact fluorescents is not nearly as dramatic as insulating uninsulated houses, which mostly got done twenty years ago. Fuel economy today is 22mpg CAFE for light trucks, and 27mpg for cars, with road averages a bit lower. In the early 70s, everyone in the US was driving around with V8 cast iron block engines that got around 10mpg. I'm not saying there isn't tons more to do, obviously my whole scenario assumes that there is, just that a lot got done already. There's a nice graph here - see the first figure.
Yeah, but there are a lot more houses and cars around now than there were in the 70s...
Looking at oil usage in isolation is a mistake, as is looking at oil or energy usage as a function of GDP.

The fact of the matter, we use essentially the same amount of total energy per capita as we always have.  It is down less than 5% from levels of the early 70s.  We reduced our oil usage in the late 70's because we switched from oil fired boilers to gas/coal.  Our total energy usage did not change.

As far as energy usage per GDP, that is simply because much of the goods production has been sent offshore.  The value of the product is still applied to the GDP, but the energy cost is now hidden.

We are no more energy efficient than we ever were, and I don't believe that we can reduce energy usage by any amount without significantly and adversely effecting our economy.  Thinking that we can reduce oil usage 5%/year without causing a serious recession is foolish.

Do I hear an Amen!

Michael Robbinson's graph is misleading, because it leaves the impression that we are using fewer actual molecules of crude than we were 30 years ago.  We all know that this is demonstrably false.  We use more crude than ever before.

Moreover, while we rely on crude less as a % of total energy consumed, we rely on natural gas much more (with its own peak and depletion curves).

So as far as I can see, sustained economic growth means sustained growth in energy consumption.  That is unless someone can tell me how to repeal the second law of thermodynamics as it applies to complex and growing societies.

Only two points to make:

  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.
We did have a program to get the cars and the factory capacity going for when we needed it.  It was called the Partnership for a New Generation of Vehicles (PNGV).

We were supposed to have them by MY 2009.  They would have been perfect for conversion to GO-HEV's, too.  The Republican majority which came in with Bush killed PNGV in 2001.

Excellent point and I'd add that here in the US--GM and Ford are basket cases without the financial wherewithall to handle shrinking sales while also reinvesting in major new auto or autoplant design and technology.
Thanks for this thoughtfull discussion. I wonder
how much we're missing by discussing "society"
in the singular. We don't even need depletion -
merely price rises - to throw some coutries
into economic and social chaos. At say 4% depletion
what would the global effects be and how would
that disruption reflect into wealthier countries
like the US? Even leveling is very sobering to
me on a global scale (let alone depletion).

Thanks for an illuminating post.


Interesting! For another perspective, read this charming essay. Leviathan can tolerate a diet, you think, as long as it isn't too extreme? Well, maybe so. It might give us enough time to build a zero-point energy weapon.
If we could harness ZPE we wouldnt need to make weapons since everyone could have access to as much energy as they wanted. For next to nothing. And that might lead to a nanotech revolution which could increase fanstastically the carrying capacity of this planet.
We wouldn't "need" to make wars? Wars are (usually) fought over a constrained resource. Now, in theory if there's infinite energy, then with decent engineering that opens up the door to infinite food, infinite manufacturing of neat little gadgets.

But there are a lot of things which still are not unconstrained.

Land. With infinite energy/food breeding could be unrestrained, but everyone has to live somewhere.

Mindshare. Memes want to spread, but some memes (a) innoculate their human host from other memes (b). Thus, meme A is a threat to meme B, and the only way for meme B to have an ensured future is to eradicate meme A. Jihad, crusade, civilizing the natives. Whatever you want to call it.

Creative works. Intellectual property. This is a combination of Land and Mindshare in some respects. With infinite energy and ostensibly peace, there will still only be so much main stream creative content. And in many countries that it rigourously controlled. Now it could be some "rogue" nation will weaken their intellectual property laws and others will flock to it, or at least flock to their websites. This could provoke outright war. At the very least, just as there was a (failed) war on poverty, and a (failed) war on drugs, there will be a (failed) war on filetraders.

"If you want a vision of the future, imagine a boot stamping on a human face - forever." - George Orwell.

"The peak-oil-is-a-non-issue crowd need to either argue that depletion will be slow (which is an argument that kind of needs to be based in geology and reservoir engineering)"

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).

Where do you see Eritrea, Nigeria, the Phillipines, etc. on that chart?  Yellow or Red?
Interesting post, but I believe the threshold will be substantially less than 11% for collapse.  The reason is that there are a number of "fixed" energy sinks that are much more difficult to make efficient than simply improving the mpg on a car.  For example:

  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.

Further, your fleet replacement level of 8.2% seems way high.  A car dies after someone decides to junk it, not necessarily when a new one is purchased.  By assuming the 8.2% number, you are effectively assuming people will junk cars at a rate roughly twice what it currently is.  How do you justify this?  If people were buying efficient cars at this rate, it would drive down the used price for less efficient vehicles to the point where it would make sense for folks to buy the less efficient vehicle and eat the fuel cost.  If you keep the current rate of 4.6%, that cuts your threshold down to the 7% range, and with the inflexibility outlined above, I can see 5-6% as being possible for a collapse.
By assuming the 8.2% number, you are effectively assuming people will junk cars at a rate roughly twice what it currently is.  How do you justify this?

This could be explained by people retrofitting existing vehicles instead of scrapping them. I'm thinking mostly along the lines of DIY conversions of gasoline vehicles into EVs. Might happen, or it might not, but it's a possibility. GDP doesn't take DIY into account so it's often misleading. Today there is a lot of wasteful economic activity associated with car conversions (teenagers "souping up" their clunkers) which may become useful (teenagers "souping up" their clunkers to use less gasoline).

Mmm. Except as Michael Robinson noted above, the US has a proven ability to adjust oil/GDP at 5% annually in a past era of oil shocks without collapsing (albeit with significant unpleasantness). I suspect there's a tendency for inefficient vehicles to get driven into the low mileage parts of the population, while the high mileage portions are the most likely to replace.
On fleet replacement, the Hirsch report estimates a far slower rate:
--Cars: average age 9 years, 10 to 15 years to replace half the fleet
--Light trucks: average age 7 years, 9-14 years to replace half the fleet
This implicitly assumes there is capacity to build enough efficient cars, and that people can afford to buy them. Both of those assumptions get shaky in a deep recession.
Well if there were a bit of intelligence in government, if they decided that a replacement of the vehicular fleet was what they wanted, then instead of spending billions bailing out the airline industry and billions on muscle flexing they could spend billions into the auto industry and billions on rebates to consumers, where the better the increase in MPG the bigger the rebate was. Maybe even an instant rebate so people would have less of a banking battle to get the loan/savings.

Think of the public works programs that FDR started, except it would be private works, and private companies would certainly get a penny or two. And while it might seem wrong to allow those who've helped get us into this pickle to make out like bandits to get us out, 1) it would help us get out, and 2) wrong or not, the republicans and democrats both love big business. One party is a bit less blatant about it, but until the populace realizes that we've got a new class or royalty and they bloodlines are now corporations they're likely to continue to consolidate power.

Sorry for the mini rant, but the point being that even in a recession, the government could invest if individuals no longer were willing.

I'm sympathetic to your values, but it won't happen. Even excluding costs in Iraq, the US is now running up enormous deficits in both govt spending and trade imbalances. Something like 77% of world savings are flowing into the US to support (among other things) the ability to drive the Excursion (dollars to OPEC) to Wal Mart (dollars to China).

The only way to approach what you'd like is a massive restructuring of taxation (more) and spending (huge cuts in the military). Then you have the question: do you want to spend the limited funds you have left on rebates for private vehicles, or on public transport, or on education and health care ...

It's going to be an intractable situation. Market forces, unassisted by government, won't solve it.

I also don't think that it's likely to happen, I was only pointing out that it could. Especially depending on the timing of when recession starts in, that could possibly give a non-republicrat party some power. Could. With maybe a 0.1% chance depending on random circumstances and people getting out and trying to raise awareness. There are two parties in power, and when it comes to the elections almost everything is bi-partisan. Note that that is "bi" and not "non".
I think this confidence threshold is very important and I agree that the human psychology will play an enormous part.

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.

Who are default homeowners going to sell to?  In the face of a collapsing economy, do you suppose a Mr. Potter-type* might step forward to buy up the mortgages?

*It's a Wonderful Life

Nice post.

Halfin makes a very point above: it really does matter when the peak occurs. Stuart, look at the scenarios for Figure 1 in Mitigating a long-term shortfall of world oil production by Robert L. Hirsch et. al. (a nice summary of the Hirsch report).
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.
Scenario I entails a collapse. Scenario II can be seen as an orderly contraction. Scenario III amounts to adaptation and continued economic success.

On another point, by tradition going back to Hubbert, the peak is strictly a subsurface, geological event globally expressed as an average depletion rate (4%, 11%) of all the world's production source (including so-called "non-conventional" sources like CTL, oil sands). So you and Duffeyes consider the decline percentage as the single most important determinant telling us when the peak occurs, not just what our future looks like in the post-peak world. However, I am beginning to question this simple idealized model. Decline rates are constantly changing as the mix of oil sources changes, meaning that new fields coming online are not declining yet -- this constantly changes the overall percentage. But perhaps more importantly, we might just consider this simple definition of "peak oil"
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)
All of these factors are important to consider vis-a-vis both when the peak will occur and what will happen afterwards in the post-peak world.
As usual, Stuart, nice post. I like the basic idea of looking for approximate ranges to bound the thinking rather than seek for illusory precision.

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.

Great comment!
An ever growing economy is a myth and Peak Oil is going to demistify it!
One wild card that I think we should all keep in mind is actually pointed out by many of the doom and gloomers (the apocalypticons, as I've often called them); We're in unchartered waters.  The G&D crowd likes to point out  how PO is an unprecedented event, and it is, which is precisely why so many critical factors, like the replacement/conversion rate for vehicles is impossible to predict with any certainty.

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

the debate shouldn't be, anymore, 1. when will PO happen, 2. will it be collapse or controlled contraction?  because i already think it's too late.  collapse is imminent.  besides, a controlled contraction means we're ok, and needn't worry.  the new debate should entail an exchange of ideas regarding "personal planning" and "get started today".  discussion that encompasses topics such as: what are your plans?  what are you doing personally to brace for collapse?  what are you doing to prepare?  backup plans? etc etc etc...  let's exchange ideas.
I dont think a "preparing for the inevitable collapse of society/civilization" thread would go over well on theoildrum, although that is not to say that collapse is not still inevitable :)

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?

Fascinating and enlighting article.

I've just printed it for detailed analysis later.

Thank you very much.


As a scientist, you know that a correlation does not necessarily imply a cause and effect relationship. It could be that the similar growth rates of GDP and vehicles are a coincidence. Or the causality could be the other way: an increase in GDP simply allows for an increase in vehicles. If my income and expenditures double, it may or may not lead me to double my vehicle usage. And it does not seem obvious that my suppliers would have to double their vehicle usage. Nor is it obvious that if I have to decrease vehicle usage that I will spend less in total.

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.

I'll try to address this in future posts.
I haven't read all the post below yet but agree with post on being careful in correlating consumption to transportation.  That would be a critical piece of data if you can prove the link.

If a large percent is for transportation than I do think we can make large gains in efficiency under duress by ramping up carpooling and not using cars for short trips.  These could really lower consumption and allow enough high milage vehicles (cars and trucks) to get to market and follow the depletion curve down.

But, if too much oil is used for non transportation uses than I'm skeptical efficiency of industrial processes can be ramped up fast enough to stay ahead of depletion.  All bets are off then on what is too rapid a depletion rate.

Great post and discussion!

Perhaps I'm missing something.  But let me drop a couple ideas into this analysis:

  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?

In the above scenarios, is the world going to end? Will people run out into the streets hunting down their neighbors to cook them for dinner on an open pit?  I'm really sick of hearing people in the peak oil community use Katrina as an example of anything.  It was a tragedy.  The coast of the US was hit with the energy of untold nuclear warheads.  And then the doomers and gloomers are saying "hah, told you so."  Told us what?  That most of the people got out?  That the poor suffered more than anyone else?

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.

In case you failed to notice, TOD is a peak oil website. That is why we gather here. We believe peak oil is the biggest challenge short of averting war, facing humanity in the short term. If you disagree there is a number of websites that vehemently deny our point of view.

As for the core of your argument, people moving back into parents' basements  wouldn't solve the problem in the long run and would be an indicator of exacly the type of depression all of us fear. Why? Because regardless of your middle class, suburbanite view of the world, a lot of people around the world would suffer tremendously, as well as many of your suburbanite friends whose jobs would be lost as a result of reduced economic activity.

Of course there are ways of downscaling the economy, it has happened before and may happen again. It's called recession or depression. And peak oil promises us this will be the one that isn't going away for a generation or two. How would you like to get caught up in that type of economic climate?

I'm feel I'm feeding a troll here but your other points are equally nonsensical. So what if we can reduce our fuel consumption by 20 or maybe even 30 percent by optimized driving and better fuel economy? If we face depletion rates of 10% a year, your fix will give us three whopping years of runway before we get to the cliff. You gonna turn down your thermostat? Sure, you can go from 20C down to 18, and down to 15C and to 13C... and then what? Can you bear constant temperature of say 13C through an entire Northeast winter? At which point is your body simply going to refuse to endure the progressively harsher conditions with progressively less medication? Can you see how energy literally keeps hundreds of millions of us alive?

I won't even mention how all those hurdles are going to affect poorer nations with far more vulnerable economies.

Cezar:  You can call me a troll if you want.  I'm not sure why you would do that.  I think my questions are valid.  I realize this is a peak oil site.  But what I've noticed is that they quickly devolve into rampant hypothetical speculation on survivalism and collapse and assorted matters which, though interesting topics--yes, I've read all the collapse literature--Tanter, Overshoot, etc--well, the nature of the speculation just becomes pointless.  Society is a complex system. Neither you nor I can accurately speculate what will happen.  No more than we can speculate the path of a hurricane by looking at a few data points.  We just can't.  We don't have the data.  So I'm simply expressing my opinion that people are more than welcome to engage in pointless and largely meaningless speculation, but the only real concrete issues associated with peak oil that people can get their hands around is the geophysics/geology of depletion, the capital required to transition to alternatives, demand destruction, etc etc.  In other words, modeling.  That we can get our hands around.  We cannot model how society will respond.  Past performance is no predictor of future performance.  A few words on these blogs about society and how it will respond--though perhaps of interest to many--is simply using language--a fairly weak modeling language, to try to model a complex system.  It won't.  So I don't bother. And the largely meaningless speculation tends to tie up bandwidth, somewhat smothering the useful information.

That said, I've read Tanter and all those like him.  And having read him, I fall more in line with what David Burn from the Talking Heads said: "Say something once, why say it again."  Tanter said all of this very well.

i love that song
I think you misread people and concentrate on the alarmist among us. I believe as many others here, that the collapse/chaos scenario is not a certainty and this article expresses it well and even tries to put it in some (very error-prone admittedly) modeling frame. It is surely flawed but it's much better than no forecasting at all. Assuming the main graph is fine we can discuss ways of refining it which is exactly what I and other commenters here have been doing.

It does make sense to model complex systems because modeling means reducing the immense complexity of the system to some manageable data trends so we can estimate our next moves as a society. Case in point, if based on such models, we discover we're well within the green zone of oil depletion, we can focus on improving vehicle efficiency, reducing wasteful consumption etc. If however, the red band is more likely to be in our near future then things like fuel rationing and other drastic measures aimed at providing the bare food and shelter necessities may be what is called for.

Economists do modeling all the time and make hugely important decisions based on simulated models. They are often wrong, but it's still a heck of a lot better than just walking into the future completely oblivious to the consequences of your actions.

"I won't even mention how all those hurdles are going to affect poorer nations with far more vulnerable economies."

Ironically, people in countries with less developed economies might be better off in some ways. They generally live in much more localised economies where people know how to, and have space to, grow their own food.

Go tell that to the people in Africa who are starving each day due to the oil-demand destruction there caused by high prices.....
Here's a very nice summary of the great depresssion. Annual real GDP drops were
The great depression was caused by problems in the fiscal system (stock market crash, credit crunch, bank failures, massive loss of liquidity and corresponding deflation) not resource constraints. However, by the bottom it did cause almost a complete cessation of investment in the future (that dropped tenfold from 1929 to 1932). So, I would argue that if it had been due to a resource constraint, and that resource constraint had resulted in ongoing similar drops in GDP, I think you would have seen collapse. Fortunately, since the causes were temporary, the economy recovered and by 1936-1937 loooked pretty much as it had in 1929 in terms of macro financial statistics (though employment didn't really recover till the war).

I should stress that I'm not saying oil depletion is going to be fast enough to cause collapse - I think the evidence is rather unclear due to the lack of transparency in the oil markets. I'm trying to point out that the depletion rate is the number one thing to think about, and there must be some depletion that is too much for society to cope with (feel free to present better ways of estimating what that is).

As to your first point (couldn't we replace all the vehicles much faster?) - the evidence of the great depression exactly makes clear what the problem with that is: investment in the future collapses during heavy contractions, which means that adaptive responses will be reduced, not increased if we end up towards the bottom of the yellow zone.

Here are some links on the increasing worsening of law-and-order during the great depression, and the improvement afterwards:

I just want to emphasize that you are not answering my questions.  And I'm not saying you need to immediately.  I'm asking what would be required to replace the entire transportation system in the US with high mpg cars.  If you can't answer that question--I can't--it doesn't help to tell me that investment will be lower after a decline.  I realize that.  I also realize that after the great depression the Govt put people to work.  And don't tell me we've not the energy to do it.  In my depression scenario, we're swimming in oil.  So I'm saying what if we took part of the oil we're swimming in and build a new transportation system.  I've asked a very concrete question.  I'm not saying we should do it.  But it's an interesting scenario.  What would the cost be, in GDP terms, energy terms, or otherwise to replace the entire commuting transportation fleet of the US with say 50-70 mpg cars and scooters.  I realize that many involved with peak oil want to instead spend time discussing looters and crime and the breakdown of society and related matters.  But as I said in my previous post, you cannot predict this.  You can't.  Please don't pretend that you can.  Fact #1:  Society is a complex system; Fact #2:  Complex systems are unpredictable.  Fact #3: Though many in the peak oil community use petri dishes of bacteria to prove their particular PO hypothesis on collapse, that does not a proof make.

I think modeling depletion, collecting data to substantiate depletion, and modeling possible economic effects and capital investments to adapt is useful.  Talking about restructuring society, though interesting, isn't that useful in my opinion because I have no clue how to make something like that happen.  Nobody does--the complex system problem mentioned above.  But even modeling the idea of sustainable communties, and tying that into depletion models, is useful.

But if someone thinks society is going to collapse, they should look at the models and data to tell them if it's going to happen, then just plain and simple bug out.  Do it.  Or if they want to hypothesize future scenarios for society, science fiction is probably a good route.  Though much has already been written.

So in summary, I see a couple options: (1) Focus on the geophysics and economics; (2) Bug out.  The latter can best be achieved by studying survivalist or self-sustaining community information.  Which I claim has nothing to do with peak oil.  They can largely be considered separate topics.

I agree with some of your argument in principle but not in practice.

Right now Toyota, Honda and Ford are having a very hard time obtaining all the components for hybrid vehicles that they need based on current sales.  Ford in particular is having problems getting regenerative braking systems and battery packs because Toyota and Honda were there first and are sucking up almost all supply.  Scan the archives at Greencarcongress.com for details.

This is at a time when only a small fraction of cars are hybrids.  I think currently <5% for all makes and models, but it is changing so fast I'm not sure of numbers.  Imagine the inability to meet demand if 25% or 50% wanted Priuses, Insights and Escapes.  Car companies don't make all these parts.  They outsource a lot to specialized manufacturers.  It will take years for suppliers to ramp up all the components to meet demand.  And all the suppliers that make a conventional car part (that is now not needed) have to go out of business or retool.  It takes years for this transition and it is not painless for everyone involved.  

I agree.  Transitions are painful.  Here's my point.  When I see people modeling, or discussing peak oil, I'll say:  "Let's model reduced consumption for transportation."  And the response is "Americans will never..."  and before you know it the conversation is once again back to collapse and composting.  I kid a bit here, but you get my point.

Unless there is a consumption model, we're just not saying much.  And a start is to take a few SWAGs, for example, making an unreal assumption on what would happen if the US transportation sector, or the consumption associated with commuting,  were to be significantly reduced.   First assume it switches over by magic.  Devote the energy required to produce that capital (cars), but forget about all the other shortages.  Just to see what you get.  One can define policies (or regulations) and see how they pan out in the model.  E.g. enforced used of public transportation, e.g. buses.  Enforced carpooling.  I realize, there are practical side to all of these.  But right now, we're looking at a model that has no consumption component at all.  It's completely sucking up everything that is produced.  That's not realistic.  Yeah, I know, we've got Andrew McKillop sayig that the economy will keep chugging along at $100 a barrel.  Or something to that effect.  And it's true we've not seen a lot of demand destruction yet.  And we've seen a slew of SUVs going out the door--at a loss to automakers.  But there are large enough imbalances in the world economy, and enough debt, that a recession is most likely out there and high enough energy prices will likely bring it on quicker.

The world has not yet--recently--seen consumption run into a production constraint such that the market must be cleared (through price or some form of rationing).  Right now, we are simply seeing speculation driving up the price of oil (for good reason, I'm not saying it shouldn't happen).  But it is only when consumption runs into production, and in particular in the US, that we will see behaviors change.  Katrina may be the event that leads to that shortfall.  It's not clear yet.

If the consumption side of the equation is not considered, we can speculate all we want, but a paragraph description of "collapse" and then a guess at a depletion rate is not telling us very much at all.  That's my point when I say that the response of a complex society to energy shortfalls is described by a single number:  depletion rate.  I don't think it's possible to acquire much understanding without more complex models.

TRE. I don't feel we are communicating at all. I specifically model exactly the process I'm assuming for the transformation of transportation to more efficient forms. I regard that as the dominant process of adaption that reduces consumption post peak. You can quarrel with the details (and propose your own if you like), but it doesn't make any sense to say there's no such model been proposed here.

Stuart, I agree that seems to be what you're modelling. Heck, you even allowed the best case "magic" scenario which allows that all of the technology necessary for efficient conversion to higher mileage vehicles magically is in stock and well supplied.

What TRE seems to be asking is for a model of what would happen if the government mandated that ASAP all cars are moving to higher mileage. Something like "Next month no new cars will be legal to sell if they don't get 70mpg and in three years no vehicles will be allowed on the road if they don't get 70mpg." (TRE: these are of course not your words, but I can't think of anything short of a direct order of this magnitude which would get the conversion that you seem to be after).

And I don't think that such a strategy would work out well. I've heard it often quipped that vehicles could be made to get 90-100 mpg with today's technology. Well, that's probably for 2 person 40 horsepower cars with a $30-40K price tag. It might be possible, but I have yet to see the implementation sitting on a car lot ready for sale. Without a government mandate when there are more comfortable 4-5 person cars which get 30-40 mpg in the 20-30k price range people will buy the 20-30 k bigger car.

Without mandating that low mileage cars will not be street legal in the future I find it hard to believe that people in north America would buy a 70mpg car. And if it is mandated that low mileage cars won't be street legal, what happens to the people currently owning the low mileage cars? If they have to eat the loss, they won't have money to buy a new car. If they get a giant rebate, where's the money going to come from. The government probably had to spend/invest a lot in the auto industry to help them retool so quickly, (as well as to help the automaker's parts suppliers retool so quickly).

Am I correct that you are asking for the models for how to essentially retool all the parts suppliers and auto makers all at once? While we're rebuilding New Orleans? And in a war with Iraq, Iran, China and Eurasia? My WAG at the model is a flat out, "No."

I don't have the knowledge to inch to a SWAG, but I would also be quite interested to see someone's attempt at a SWAG for this. I'd like to maybe even consider this more myself, but I have a lot of library books, which I just got from interlibrary loan and I have to finish in three weeks. Damn I wish I read faster.

That's partially what I was asking.  And I realize the impracticalities as you mention.

But not really.  What I'm really asking is:  what is the response of the economy and energy consumption to repeated shocks.  Not to malign, but this is barely a model.  It's a production curve with several depletion scenarios.  It has no consumption side, other than some words in support of the consumption side, and without a consumption side, I'm not convinced that second order effects can be ignored, as Stuart says they can be.  We're dealing with a complex economic system here.  Second order effects may have significant effects.  Saying that consumption will ride down the prodution curve, as this model does, does not take into account the nonlinearities of the consumption response.  Perhaps second order effects are minimal.  I'm just not convinced that they are.

And here's another consideration that's been running through my head. The govt creates gas credits.  Forget all the practicalities right now (if we always worried about practilities nothing would ever be accomplished--death of an idea from a thousand practicalities so to say).

So now the govt has mandated limits to per capita energy use.  In addition, there is a crash program to develop buses.  Yeah, I know, buses are not popular. If you have a hummer, and you need to get to work, and you can't afford to purchase gas or a prius (in paticular purchasing the credits of others to get that hummer into the office), you'll drive your hummer to the local node in the bus transportation system.  Then you're off to work.  It's a pain, but hey, you still have a job.

Don't think it will happen?  Ok, fine.  But it should still be considered.  What would the reductions be. Over time, the suburbs would become less popular, but there would not necessarily be a crash, but an eventual move into the central population centers or out into the country. Not sure.  But I'd like to consider possibilities like this as well as "collapse."

Dumb idea?  Perhaps.  Perhaps not.  Needs to be considered.

The suburbs are much maligned, but I moved from Salem MA--perhaps the oldest small City in New England to a suburb of Richmond, VA. I am within two miles of anywhere I need to go (admittedly I work from home, but I did in Salem too). It is half the distance and I can walk or bike to almost everything too. My home is bigger but more energy efficient--the trade off between savings on my NE heating bill versus costs on AC are small. The efficiencies of cities versus suberbia are highly overstated, particularly if it is a well planned suburban community. The economy is a complex non-linear system that is very dependent on energy supplies, demand and prices, etc. Higher prices will force changes in behavior, auto and home design, transport alternatives, food production and distribution. My biggest concern is that the warning signs and voices have gone essentially unheaded until very recently. Complex systems take time to adjust, some of us our out ahead of the curve adjusting our behavior, investing in energy producers, etc. because we have heard and heeded warnings. It is deeply disturbing to me that almost all of our leaders (political and business) appear to have thought it best not to come clean with us and tell us it was time to start preparing for a big change in the cost and eventually the availability of oil and other energy sources.
IIRC, Ford's problem (if you can call it that) is that they were trying to buy from the same supplier that Toyota is using.  So they've got capacity problems; it doesn't mean that there's some shortage of the basics.

Consider what it takes to make one of these motor systems:  permanent magnet rotor, wound stator, power electronics to drive, digital electronics for control.  Is there some shortage of neodymium magnets that would prevent Ford from making motors?  Has the power semiconductor industry run into capacity issues?  No microcontrollers to spare from the dash cluster, trip computer, radio, door switch modules?

You can get rid of the permanent magnets if you're willing to go with induction motors.  WorldChanging had something about a new development along those lines.

What Ford needs to do is license the designs they want (or make their own) and start letting contracts.  That will fix their supply issues.

There's a place down the street from me that's selling Chinese scooters for about a grand apiece; they get about 80 MPG.

You can own one of those for about a year's insurance on a new car.

As one who used to own a motorcycle, and stopped after a 45mph accident where someone swerved into my lane (specifically made a right hand turn and aimed for the far left lane on a three lane road; I was in the middle lane) (and despite witnesses sticking around and saying the guy went into my lane without signalling this was considered a no fault collision?!) I will not be buying a scooter until laws and the car/scooter/bike ratio has changed drastically.

In the world I envision, if a car has an accident with a motorcycle/bike/pedestrian, unless there are multiple witnesses stating without a shadow of a doubt that it was the fault of the non-car, the car driver would have the car seized and lose their license for life. As is, if a car hits a motorcycle, or bicycle and kills the poor person they schmucked there's usually no criminal charges (they feel bad enough having done this), and often no points applied to the license. The worst that will happen is their insurance might go up (why I don't know, since I didn't even get the cost to replace the bike (it was no fault, and I didn't have collision as it didn't make sense from a cost perspective, especially since I thought if someone was at fault they'd have to pay it)).

This doesn't address the $3500 in emergency room fees (I didn't want to go, as while I had some bad road rash everything seemed to be functional. However the EMT's convinced me that it would be worth getting checked out (additionally, when they pointed out the "white tissue" I could see in my toes, that was the closer). At least I had health insurance, without that the $3500 "negotiated fee" would have been $6500 (they initially made a mistake getting my insurance and thus I came up uninsured. So great, the people without insurance have to pay even more when they likely can't afford it, and now emergency medical help isn't a condition for bankruptcy eligability). Insurance only covered 10% of the greatly reduced negotiated fee, the biggest saving was in the rates that they'd potentially have to pay.

Motorcycles and scooters might get great gas mileage, but while there are multiple ton metal cages flying around unable to see a little motorcycle (scooters are even harder to see/hear), one would be well advised of the risk to their health and life that they are taking. I was considered quite lucky to get off with as little injury as I did; as my bike high sided (flipped forwards) after the front tire was clipped, if I'd fallen slightly differently I could have been under the bike and not much more than a smear. My next door neighbor in the emergency room (curtain divider) was a pedestrian schmucked in a hit and run with at least a broken leg.

"Black box" cameras recording the last few seconds before a crash would obviate issues of witnesses.  Perhaps citizen submissions of incriminating recordings could also be used to issue tickets for reckless driving and nip the problem before anyone gets hurt.

That would be useful; cheap electronics used to improve traffic safety.

I couldn't agree more.  About 1979, I was riding my 250 on Forest Glen Road in front of Holy Cross hospital.  It was wet and drizzly.  An oncoming car turned left across my path, headlights on but no signal.  I went down and sprained both wrists.  My palms were scraped a bit, but would have been worse had I not been wearing thick-padded motorcycling gloves.  I couldn't draught normally for several days, so I sat there and slowly armed the pencil across the vellum.  

So I'm really looking for a more stable, viable vehicle than a scooter.  And now scooter and moto riders don't even have to wear helmets.  I do ride a bike, but I don't go more than 20 mph and I stay out of traffic as much as possible.  And I wear a helmet and gloves.

i would only like to reflect upon your "fact #1" from above...i think at this point that after watching the manifestation of events following katrina, society is not nearly as complex as anyone would believe. It is merely a patina, a thin gloss, on top of the animal competitive instincts that underlie our evolutionary path. We are locked into this series of events and as it plays out, I believe it will play out in much the same way that Katrina has except on a larger and even more unbelievable scale. Failures of authority will breed evil on vast scales. The power and drive of a mother trying to feed her hungry child will be the driving force of the future.

Account for that in your plans...if there is an equation for it...

The flip side of that is that if the financial system is running, the segments of the economy which get their energy supplies disentangled from the oil-depletion problem should see plenty of investment and rapid growth.  A general depression would require more than just a resource crunch.
On replacing the fleet, it's an interesting question with a depressing answer. The Hirsch report examined this issue in a slightly different way, assuming natural attrition (pages 23-24). They believed half of the fleet would be replaced over a 9 to 20 year period depending on the type of vehicle.

Estimated costs to replace HALF of the fleet, constant 2003 dollars:

   -Cars                           $1.3 trillion
   -Light trucks                 $1.0 trillion
   -Heavy trucks & buses  $1.5 trillion
   -Airplanes                       .25 trillion ($250 billion)

This totals to $4.05 trillion for half the fleet, or $8.1 trillion for the whole fleet. You'd have to increase this number to account for the fact you are investing soon, not up to 20 years in the future.

So, it's likely to take $10 or $15 trillion all told, and a number of years. There are 130 million cars and 70 million light trucks on the road. The US now makes about 12 million yearly, so it would take over 17 years to manufacture all of these unless you double or triple capacity.

And when you're done, years later, it's unlike there would be enough fuel to run them anyway. So we'd end up bankrupt, with a shiny new fleet that's out of gas, and a huge auto industry with no future prospects.

You're ignoring just a few salient facts:
  1. Vehicles wear out and are replaced.  Absent a collapse of the industry, that money will be spent anyway; it's a question of what kind of vehicles will be in the new fleet.
  2. The proper cost figure isn't the vehicle replacement cost, it's the incremental cost of the more-efficient versions over the current fleet.
  3. New vehicles account for a disproportionate fraction of VMT, so a Prius-equivalent economy level in the 2008 model year would reduce total demand by much more than their fraction of the total vehicle fleet.

If the current year's vehicles account for 8% of miles driven and we double the economy, that's a 4%/year drop in fuel consumption at the same level of VMT (more if you assume that VMT decreases).  It's going to be more difficult to bring the economy down than you think.

This is one reason why we need a gasoline tax increase; we've got to get the fleet-economy increase ball rolling right away.

The bozos in charge now will probably decrease gas taxes if anything.  I don't hold out high hopes for preparation.  Just don't think it will happen.  A shock, or a few shocks, will be necessary to wake people up.  Then it's always a question:  will shocks drive the US into a more socialistic, common good type of society, or a fascist society.  Start flipping coins.
I agree with your points. I was attempting to answer the hypothetical question, "What if we scrap the whole fleet now?" which would involve a lot of immediate unplanned replacements in lieu of normal attrition.

It will be a long, slow battle to get consumption down. For comparison, Europeans pay over twice as much for gasoline than the US, on lower incomes. If my recall is correct, Europe as a whole has about the same number of cars as the US, far more with small engines and diesels; drives shorter distances, and uses about half the amount of gasoline as the US in total. A higher price for gas (purely because of taxation) has a lot to do with it. And it's taken them years to achieve this.

What does that mean for the US? It's a very sticky problem. Once a Ford Excursion gets built, it will be driven by someone for a long time to come. What's the biggest selling vehicle in the US? The Chevy Silverado, selling about triple the units of a Camry or Accord. It will be a while before the public taste and manufacturing capacity can adapt. My guess is that Hirsch's numbers for fleet replacement are about right.

A higher US gasoline tax is essential, and politically impossible at a time of high prices. It's not a tax that's essential, it's high gas prices. So if US demand continues unabated, and oil output doesn't, it will drive prices up anyway, thereby spurring conservation. The differences: high market prices are uncontrolled, and all the extra revenues go to OPEC. I'd rather be proactive with a tax.

I think it would clarify this and future discussions if posters here would define what they mean by peak oil. Depletion rates (geology) only? How do we know these on a globally averaged percentage basis? What about new production? Non-geological constraints on existing production (Katrina, political disruptions as in Ecuador, etc.)?

Thinking about depletion and production, I also think, as Matt Simmons does, that there are ought to be greater transparency in the numbers. Monthly reports on a country by country basis (sum of fields) of actual production, independently verified.

I'm proposing some sort of reality check.
I think the most important part of all this is the willingness of investors to continue to keep their money invested. My personal reaction to peak oil was to immediately rearrange my stock portfolio. I took about half of my money and invested in alternative energy and other energy sector stocks (including oil). The other half went into gold and commodity based companies. There is a strong possibility of spooking investors if PO happens too quickly and society collapses before alternatives can be found. I watch South East Asia as my canary in the mine.

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...

why do you choose south east asia as your canary?
and what about that region are you specifically looking for? (i.e. what numbers?  gdp?)
South East Asia will probably be most exposed to higher prices affecting demand - the developed world will be able to outbid them - thus the % decline in oil will be greater. I worry most about not just economic activity (GDP), but about social indicators - health conditions, crime, malnutrition, education, malnutrition. Mostly I could see civil wars or deep social unrest or a breakdown in law & order cause collapses.
What a great discussion.  Going back to the original and several comments, my reading of Twilight in the Desert (Simmons) and The End of Oil (Roberts) and Collapse (Diamond) suggests that the depletion rate will be high -- we'll try to maintain our familiar patterns and we'll extract the last oil as fast as we can, resulting in faster and sooner depletion.  I worry about the next generation.  We're teaching them to buy the latest in cell-phone gadgetry and they'll need to know how to recognize edible plants.
Another try (sigh....)

How can we talk about depeletion rates if we don't have any reliable data to tell us what they are?
Easy.  Speculate. :-)  Just pull 'em out of the seats of our pants.

This is one of the problems I have with peak oil discussions.  While trying to get good hard data, someone butts into the room to scream about collapse, dieoffs, pandemonium--and did you see what happened with Katrina?  Before you know it we're trying to completely restructure society, something that has evolved over the past 10,000 years but some armchair sociologist, having read a couple books on collapse (or more likely a couple web sites) is going to say "we don't need numbers, we need to discuss firearms."

Then we respond:  but we're really just trying to figure out the depletion rates.  Not figure out whether I need hollow point bullets.

TRE, you're building a strawman here. Nobody besides yourself is talking about aramgeddon as a certainty. Far from it, the main article discusses the possible scenarios and even implies that the collapse scenario is the least likely to occur. It also adds to the peak oil discussion because it looks at the significance of depletion rates being of greater importance than peak oil itself. An assessment that I tend to agree with. As far as doomsday crank websites go, I think Latoc is far closer to "shotgun and canned food in the basement" websites than The Oil Drum.

This site has been a fairly balanced Peak Oil discussion save for a few alarmist comments, but you'll get those everywhere in far greater numbers. Most of what I see here, are thoughtful and insightful comments. Not all, but most. By going and lambasting every comment you consider alarmist, you become part of the noise problem, rather than part of a solution.

TRE, no one, not USGS, not Saudi Aramco, nor Matt Simmons, KNOWS what the depletion rates will be. Therefore all we can do is scenario analysis. That is, pick a set of reasonable best, worst, and "likely" cases -- and see what results could be expected. That sort of analysis has proved very fruitful in disciplines as disparate as engineering and finance. The value of scenario analysis is not in the prediction, but rather in the ability it gives us to react and prepare, in situations where precise prediction is not possible.

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.

I have just joined the site and this is my first post.  I an in Strategic Management at a university and will be posing for the first time questions to MBA students that relate to this debate.  So the tipping point hopefully is coming such that people will wake up.  No, I cannot discuss the questions until after the students get them and answer them.  Also, Sunlight, very good discussion on your part as well as many others.  As for TRE, does the following help?

first, our way of organizing our society economically is predicated on continued growth.  Secondly, oil and other non-renewable sources of energy form a VERY interrelated value chain, having wide-ranging impact on everything we do (not just cars).  A change to flat or decline in oil/gas production will have a very major impact regardless of the depletion rate.  This is why heads are in the ground or as some might say stuck up their *** -- at least with respect to public debate (I think this is beginning to change).  Thirdly, growth in oil demand is currently exceeding supply and this is a problem by itself, regardless of whether it represents peak or not -- also, lack of investment in capacity (refining) is to me a strong indication they know the peak is coming soon -- economists would say it is irrational for incumbant not to increase capacity in a profitable industry in the face of growing demand since it invites new entrants and thus intesified competitive rivalry will result -- UNLESS, they believe the supply will not be there and the alternative is maintain capacity  and let there be demand destruction through higher prices.  Note if they believe in steady falling supply of oil, then they will go into harvest mode -- that is, not invest fully to maintain exisitng capacity.  Does anyone have info on this?

Lastly, I do see the beginnings of public debate.  This is probably due to the tightness of supply with respect to demand (this cannot be hidden by PR doctors).  If you peakoil people are correct, and I think you are, the debate is going to quickly intensify since the problem will be a chronic one

I look forward to continued debate and given what I know (or think I know) about how our economy ticks, the scenarios discussed are not unreasonable

Excellent discussion. Here are my contributions:
1)We are soon to enter an age of reduced total energy quantity and quality - Peak Oil might as well be called Peak Energy, because already Sasol, SYNM and others are gearing up large scale CTL operations and others will follow. We need immediate energy data reform as well as an apples-to-apples consistent methodology to compare EROI and any environmental externalities (maybe ecological EROI?).

  1. 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.

  2. 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

  3. 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?  
What's been happening so far with natural gas is displacement of fertilizer and petrochemical production overseas to places that still have lots of natural gas. Not good for the balance of payments, but avoids outright shortages. Fertilizer prices have gone through the roof and farmers are using less. There's still some domestic industry of this kind to kill - after that it gets very inelastic and sketchy I agree. No doubt that's why the recent energy bill included giving the feds the right to plonk down an LNG terminal wherever they feel like without agreement from the state and local level.
RE: TRE questions

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.  

OK, I've constructed straw men.  I was overboard.  I was responding to the one poster who said that collapse is a foregone conclusion, so start discussing plans.  Before you know it, I'm afraid I'll be reading about composting.

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.

I did define fairly carefully what I meant by collapse. Go reread it. And I am a modeller with considerable experience and I do disagree :-) Any model is about trying to take a complex situation, finding the key variables that are most important, and then producing an abstraction that captures the qualitative behavior of the system, though one can never be perfect.

I sense that the idea of collapse is extremely uncomfortable for you and so you are trying to place that part of the spectrum of possibilities off limits for discussion. I personally think that however unpleasant some of the possibilities, we are best served by thinking as rationally and objectively as possible about them all and then going to try to gather more evidence to clarify the situation and improve models and thus improve our ability to predict the future, and thus respond usefully in time. This is intended as a step in that ongoing process, that's all.

With respect to modeling, we may have something similar to look at already.  See also my comment earlier after Sunlights latest and good commentary.  Since growth is a fundamental part of our functioning capital markets, anything that puts the breaks on growth for a sustained period of time (even flat supply let alone decline would likely result in this) would require a transformation of our economic system to adjust.  I will not go into details on why I feel that way at this point in order to be brief.  However, the transfomation would likely be of such a magnitude to be similar to the transformation attempted in Russia after the collapse of their command economy and attempt to move to a new economic system.

We see how painful it has been for Russia and for this reason, I hope a long range plan to guide the transition is put in place sooner rather than later.

Lastly, the other alternative to achieve growth is to destroy demand in other countries - i.e. war -- This is hopefully not the route chosen for reasons I think are obvious.

Richard Heinberg (Party's Over) and others have argued that the economic system is fundamentally incapable of sustained contraction because of the debt-created money system. At this point, I don't buy it. As far as I can see, there's no reason why high inflation and even higher interest rates won't take care of devaluing money to the contracting real economy while still allowing a real return on investment on loans to those projects that are essential (eg tar sands expansion). I don't see why it would be different than the response to the oil shocks before (a series of transitory contractions in oil supply). Not saying that would be fun, but I don't see why it would be impossible. I'm interested to hear other POV however if/when you care to elaborate.
I completely disagree with your disagreement.  Your model has no consumption component.  You assume that consumption equals production.  That is not a model.  All you've got is a production model and then you've guessed at what might be "collapse" and colored accordingly.

Am I wrong?  Is there something else here I should read into it? Unless you have a consumption model, you cannot consider the response of the system to production constraints.

So with all due respect--I have friends who tell me they hate that phrase but I'll use it anyway--it really doesn't tell me much.

And your definition of collapse is a reasonable attempt to define it in words and then a final grab at a number.

Please believe me.  I'm not trying to be overly critical.  I have no fear of collapse or any such occurrence.  Those who fear collapse, in my mind, have a fairly narrow and unrealistic view of life.  Many do, if they've been brought up in a consumer society with limited view outside of what is presented to them.  I am not that person.  I am simply speaking to the facts as I see them.  You have no consumption component to your model (other than consumption == production) and therefore I believe it really doesn't tell us anything other than production of consumption equals production.

Please point out my errors.

Nice writing. You make me feel stupid without being condescending. ;]

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.

Something we need to watch is what the oil companies do with these big profits.  What they haven't done for decades is build refineries in the US. Will they start buying companies not in the energy business? Will they increase investments in PV production and windfarms? Will they even bother with exploration since the odds of it paying off are too small? Watch what they do not what they say. What they do will tell us if we have already hit the peak.
See my comment above after Sunlights comment (7:57pm) could not agree more with you!  Would like to know more about what they are doing.  Please tell.
As I said, I enjoyed the abstract modelling of the post-peak oil world, but I found it wanting, based on
  • a narrow definition of peak oil (geology only)
  • uncertainty about depletion rates based on lack of good production data
Now, to go a bit further in our long slog toward reality on this thread, I said above (following Hirsch et. al.) that determining (more or less) when the peak will occur -- and therefore how much mitigation we can do before it happens -- will also largely determine what we can do about it in the post-peak world.

If the peak is soon (now to 2008), a collapse of some kind is almost inevitable. If it is further out (2009 to 2012), we have some time to make adjustments with respect to efficiency in transportation, including conservation, light-rail, biofueled buses, etc. If the peak is even further out, as CERA believes, then we have probably enough time to change things around to get on a more sound energy foundation, assuming that prices rise high enough to change behavour and policies.

Since peak oil (at least as I defined it above) is certainly inevitable before 2020, the sooner mitigation efforts begin, the better off most people will be when the peak is reached. In this sense, it is like climate change. But as far as progress goes, humankind is doing abysmally on both fronts.
"Humankind is doing abysmally on both fronts". Exactly. Humanity generally does squat about a problem until it is up to its collective neck in it. That's why, in contrast to Hirsch, I don't think the warning time is the most important variable - the warning will be ignored until peak is almost on us, regardless of when peak is. If CERA is correct that peak is after 2020, and in between supply will be plentiful, then people are going to do close to nothing to help the situation between now and 2020. Oil will go back to $20 for a while and people will continue buying ever bigger SUVs, not switching to light rail. Thus the depletion rate after peak will be more important because it controls whether we can adapt once we finally wake up and decide to try. As to best guesses as to how to estimate it, I'll save that for a future post.
Re: "That's why, in contrast to Hirsch, I don't think the warning time is the most important variable - the warning will be ignored until peak is almost on us, regardless of when peak is"

Of course I agree about human nature but we're also screwed at that point, Stuart, despite your model. No way there will be any adaptation to new circumstances as you think -- the recession (depression) will be too deep, think of the Great Depression in the 1930's. Or, for that matter, think of what's going to happen to New Orleans in the future -- to use a more timely and specific example.

Especially since you're thinking strictly in terms of geological depletion and not all the other geopolitical shit that's gonna go wrong -- Iraq, Iran, Saudi Arabia, Venezuela, not to mention Chad, Sudan, Ecador, Nigeria, etc. Also not to mention continued intense hurricanes in GOMEX and other disruptions that a poor mind like my own can not yet forsee...
Ok - this seems like magical thinking to me (albeit magical pessimism rather than magical optimism). For the sake of argument, say the global depletion rate after peak is 1/2% annually. Why would that cause a huge recession/depression exactly? It seems clear to me that we can make conservation measures much faster than 1/2% per year with only modest effort. As Michael Robinson pointed out, we have done much better in the past (not just the US - the global economy, so the "it's only because of outsourcing" argument won't fly).

I agree (and emphasized in my post) that things are likely to be punctuated by various kinds of shocks, just as they have been in the past.

So, now you're down to 0.5% annual depletion on production sources? I thought we were talking about big numbers with exponential decline functions (or worse) like 4% or 7% or something like that, although I have pointed out that we really can't get a handle on this data, can we?

I stick to my original point. Conservation -- how quick? Depends on the elasticity of demand which in our suburban sprawl ridden culture is not much, with no infrastructure in place to alleviate the pain and no money anywhere in sight to put it in place. When the peak occurs allows us some time for mitigation that we obviously need and therefore has an effect on what happens afterward. So the Hirsch position and my own are basically the same...

Magical thinking? me? you've got to be kidding me... Maybe you?

Don't get me wrong, I respect your view, I just disagree with it
Ok, so I think you're agreeing that we probably could adapt to 1/2% depletion rate, right?

So your argument really comes down to you suspect that the depletion rate will be higher than that, and that the collapse threshold is low (even a little bit of depletion will cause "no money anywhere in sight" for infrastructure, which is equivalent to how I defined collapse, if it's a sustained condition). Now, what evidence would you offer for that particular point of view? (Which from my perspective fits in the range of scenarios I suggested).

This is getting a bit thin, so I'm replying here.

I can only repeat what I said. If the peak occurs quickly (now to the 2008 time frame), then we're on the downward slope and investment in new resources in oil supply and conservation becomes harder more difficult in a shrinking economy in my view. Why do I have to produce evidence for this and you don't? I think it's your opinion and mine at this point....

Furthermore, I am the one here (following Matt Simmons) calling for more transparency in the numbers so we can evaluate depletion rates, actual reserves and daily production on a country-by-country basis. That is so important not just up to the peak but afterwards as well so we know where we stand....

I'll send you an e-mail on this.

Without creating a model that ties energy production into energy consumption, taking into account the energy that is required for capital necessary to reengineer (or take apart) society, I just find little more than empty speculation.  Guesswork.  Not progress.
someone here mentioned we gotta educate the public.
and i was thinking on my drive home from work, i have not seen any public service announcements on peak oil.  may be there ought to be one.  what if oil drum spearheads a public campaign to buy some airtime?  funding will come from peak-oil-ists' donations.  just a thought.
I think a shock will be necessary before people will be able to listen.  I don't think Katrina is it.  Might be.  Depends on how things stabilizes in the coming weeks.
Tre, I replied to your 6:52 post concerning hybrid cars a bit ago showing difficulty in changing complex systems quickly.

With respect to the discussion tonight I think we all agree that we can't know the future very well.  But this should not be preventing us from doing things now we know will have beneficial effects.

My favorite founding father was Ben Franklin who coined the phrase a penny saved is a penny earned.  The Colonies were poor then and didn't have the luxury of a world currency.  The point at that time was to maximize resources.

At this point in U.S. history I don't see us doing much as a nation to maximize resources including oil.  There has been no national policy showing the virtue (for lack of a better word) of maximizing efficiencies and husbanding oil.

If we were on this track, than I believe people would chase efficiency through technology advances.  This would allow us to substitute something with less energy density than oil for transportation, farming, etc. when we get to peak oil.  But since we are definately NOT on that track now, waiting until we get to peak oil is asking for collapse.  There will not be enough brains, engineering or expertise trained in how to maximize efficiency or a track record of capital returns to risk investment.  

If we don't start chasing conservation and efficiency now, when do we start?  Whay would we ever change our behaviour if no one ever points out that we should?  These are the tough questions.  Glad you have contributed tonight.

Chasing conservation, efficiency and new resources is what The Ergosphere is about.  ergosphere.blogspot.com
As I have occasionally mentioned, it's actually good for the world (assuming Peak Oil happens) to buy oil futures contracts on the futures markets. This in effect moves some oil from the present day into the future, sending a signal of increased future demand. Of course one person's impact is miniscule, but the same could be said for conservation. Conservation can actually have negative effects, by reducing demand, therefore decreasing prices, and discouraging investment in alternatives.

The great thing about this strategy is that if you're right, it will make you rich. Of course, if you're wrong, it will make you poor, but at least then you will have the compensation of living in a world that is not falling into the Dark Ages.

Halfin - I halfagree with you.

If you buy oil futures (which I have) you could be both poor and live in the dark ages based on the markets propensity to price at the marginal barrel.  If we witness demand destruction, even in the year of the Peak - Oil could go to $30 - lots of oil, slow demand.  This would say nothing about the amount left in the ground (less) but everything about the amount currently available (lots). If demand growth slows considerably, I will get out of my 2008,2009 contracts and reload later.

The part I agree with is that the sooner oil goes to triple digits and beyond, the better for the planet, because it initiates renewable research at profitable levels AND leaves the magic in the ground for future non-marginal uses.

Conservation pushes the collapse-price higher, though.  By making more output from a given amount of input, the price of that input figures less in the cost of the product; the price is thus likely to be bid higher.  People have been talking about it here; it's called Jevon's Paradox.

A world of conservation will be less rather than more likely to have a collapse of prices.  Substitution, on the other hand, will have a depressing effect on prices.  Conclusion:  we need to find substitutes for energy supplied from oil.

after reviewing this article..........


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.

SJM, thanks so much for the appreciation! Regarding the question you and Tom raised about what the oil companies are doing: as best I can tell they are fighting what I call the Battle of 'Eighty-one. Recall that in that year oil company stocks fell because oil prices did, and because investors began to realize that the companies had thrown away too much of the then-record profits they had earned in the Seventies, on foolish investments outside their expertise. In this regard Mobil's ill fated purchase of Montgomery Ward comes to mind.

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.

wow, we are getting up there in terms of contributors.  There is defintie growth going on here.

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)
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...

Re: "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"

You have seen the stony Greenspan face! You have no respect! The laws of mathematics -- especially statistics -- do no apply here! How dare you come up with this blasphemous table!

This is the Spanish Inquisition and you are under the interdiction, Tedman!
Stuart and I are out of sync to the degree that the model we see here is not realistic and I don't think tells us much.  I've said that this model mandates that consumption = production and that consumption will follow production all the way down the depletion curve.  At some price point, as some point along the depletion curve, I believe demand destruction will set in far beyond that of the depletion curve.  And that is not considered at all.  And therefore I call it incomplete.  Stuart:  Why do you think consumption will follow production exactly?
I don't. Clearly cumulative consumption cannot exceed cumulative production, but both the peak and the ride down could be bumpy. However, I think these oscillations will be second order effects. At times, consumption might undershoot production as the economy engages in more demand destruction than necessary just to meet the production curve, but if that happens by a huge proportion then the price will drop and efforts to reduce demand will slow down until the production curve is hit again. You could argue the 1970s/1980s was this kind of phenomena on the front side of peak (demand was trying to grow faster than supply could in the early 70s, resulting in vulnerability to shocks, big price increases, followed by a permanent change in the growth rate of oil demand.

I agree this will happen on the backside of peak too. But the oscillations of consumption around the production curve are less important than the basic shape of the production curve. So in my simple idealized model, I ignored them (along with a lot of other things I think are second order effects and which I explicitly listed).

Ok.  Now I understand your thinking.  I'm not sure I agree.  I don't disagree.  It's the second order part I'll have to consider.  I'm just not sure.  I'll have to consider it and poke around the 1970s/80s data a little more.
In the scenario you outline, you need 2.2% additional efficiency gain each year to maintain the same rate of growth. That is comfortably less than the proven adaptive capacity of the economy in the past. Hence it's unlikely that depletion that small would pose a massive problem. Now, depletion is pretty unlikely to be that small for very long... but that's a subject for another day.

I exactly outline my consumption assumptions - that the dominant response to reducing oil is to replace transport with more efficient transport, that vehicle production stays the same, but that all new vehicle production goes into replacing existing vehicles with 2x more efficient vehicles (ie the fleet stops growing). I would argue that's a fairly radical reponse on the part of society (but not completely off the scale, given what was achieved in the late 70s, early 80s, and we already have Priuses etc to point to). You can argue for different assumptions, but it makes no sense to say I didn't propose any.

I sent you an e-mail, Stuart. As to your remarks here, about the auto-magical responses of the market to make transportation more efficient, that would ignore completely the whole political power structure of this country (USA) and the ability to respond to changed energy circumstances....

This is where ideal economic forecasting (modelling) and reality start to part ways. We don't live in a world that comes out of textbooks! We don't live in a world that is predictable (e.g. Katrina). We live in the real world where for the most part humans are self-aggrandizing self-defeating fuck-ups who have only the narrow picture (themselves) in mind. There is no invisible hand as Adam Smith thought. This needs to be taken into account. Models are nice, as climate scientists would say, but they need to be continually verified against available paleoclimate or recorded data. Just so with peak oil.
Also, Lou Grinzo awarded me with a Alan Greenspan Secret Decoder Ring not so long ago. Do you have one of these? :)
Interesting that so much of the commentary about increased efficiency focuses on transportation, and personal transportation at that.  Up here in the frozen north (Canada), where we mostly live stretched out within a couple of hours of the Canada/US border (an inefficient model for sure), secondary energy use (2002) breaks down like this:

Industrial               38.65%
Residential              17.03%
Passenger transportation 15.91%
Commercial/institutional 13.75%
Freight transportation   11.04%
Agriculture               2.5%
Off-road                  1.1%
Total energy use (2002) 8,217.22 PJ   source: Office of Energy Efficiency, Natural Resources Canada

Now energy efficiency (defined as the amount of work or activity generated per unit energy consumed) increased in Canada by 13% in the period 1990-2002 (see  http://oee.nrcan.gc.ca/neud/dpa/data_e/Trends04/Trends2004.pdf) or almost 1.1% per year. At the same time, energy use grew by 18%, or 1.5% per year, while the population grew 9.9%, or 0.88% annually. Collectively, the trends suggest that doubling the efficiency of personal transportation is unlikely to resolve much.  It would save 7.95%, or just over 5.3 years growth in consumption, and would take over a decade to implement, as others have pointed out.  

I have trouble believing that all the efficiencies have been wrung out of the industrial sector. The economics of investing in energy efficiency measures must be changing very substantially and seem a more likely place to look for effective savings.  But I hasten to add I'm not an economist.

I was just looking at oil, not oil and the various sources of electricity (which are a whole separate set of issues).
Oil and gas directly fuels about 70% of total secondary energy consumption in Canada and over 60% of that is oil. While hydro power produces a bit over 60% of Canadian electricity, energy savings in industry will more likely reduce the need for conventional thermal generation than for other sources. In any case, industry is a substantial direct consumer of oil and gas.

I guess the trouble is that industry groups have stronger political influence than a disconnected gaggle of SUV drivers and other motorists, but it doesn't make sense to leave industrial efficiency gains out of the picture.  

In the US, industry is a long way behind transport in oil consumption. Sounds like Canada is different.
Could you explain to me how you are applying the second law of thermodynamics here? I'm not following how it supports your statements. (Fair warning: I have a PhD in Physics specializing in thermodynamics/statistical mechanics in phase transitions and I haven't forgotten it all yet).
Great work Ted. My interpretation of your calculation is, even Stuart's "magical thinking" optimistic case would require that we start obviating large chunks of energy consumption altogether. As in, telecommuting, bicycling, solar hot water... wow! I might replicate your calculation, based on a 3% decline rate but not before I go to bed -- I could do without the bad dreams.
Ok, think about it this way. Do Europeans, with 3x gas prices versus the US, telecommute to work, or bicycle to work? Not a whole lot more than Americans do. The main ways they use less oil per capita is smaller more efficient vehicles, and much higher urban densities, making commutes shorter and public transportion much more viable. For Americans, shorter commute distances and higher density requires moving buildings or all moving in with each other. The first is a very slow process, and the second most Americans will only do kicking and screaming (after 20 years of cohousing development, we have like 5000 cohousing residents, proving that it does not have mass appeal). To get to a society where most people bike to work, you have to go to rural parts of developing countries where GDP/capita is rather less than here and most people work in the same village they live in.

So look at it another way, what did we do to reduce oil usage after the oil shocks? A modest contribution was using less for industry/electricity generation (which is much reduced at this point except for agriculture and petrochemicals), but the main adaptation was a huge improvement in vehicle economy. So that seems to be what we do when circumstances force us to conserve oil, and that's what my model assumes we will do in the future.

Again, you guys who are unhappy with where I drew the collapse line: feel free to propose what you think the dominant adaptation would be, and then let's talk about how fast that adaptation might be doable.

Actually Europeans DO bicycle and walk a lot more than the US, even in the UK

           US            GB
POV driver    63.1    37.1
POV passenger    26.1    21.1
Bus    1.2    6.6
Rail    0.5    1.6
Bike/walk    6.8    32.3
Other    2.3    1.3
N    395157    66737

Germany and Holland have many cities with bike mode share over 25% and single-occupant vehicle (SOV) mode share of less than 30% (compared to US usually above 70% SOV).

As you mention, a dense urban form makes walking/biking/transit much more practical. But US cities, such as Boulder, Colorado have generated substantial bike mode share by improving bike facilities (our bike commute mode share is currently about 12%). Long before suburbs are abandoned, mixed use zoning and redevelopment could allow local business to replace the big box model, reducing trip length and making non-auto modes more practical throughout the US (even $3 gas makes a corner grocery more competitive and a CostCo with a 40 mile diameter tripshed less competitive).

Do you have a source for your table? And is this on a per-trip, or per-mile basis? (I'm guessing per-trip).
Embarrassingly, I could not relocate the source of that table (some scholarly work on travel demand management I googled up).
But here are similar numbers with a reference and a URL.
Percent of Trips by Travel Mode (all trip purposes)

Country bicycle walking public transit car other
Netherlands 30 18 5 45 2
Denmark 20 21 14 42 3
Germany 12 22 16 49 1
Switzerland 10 29 20 38 1
Sweden 10 39 11 36 4
Austria 9 31 13 39 8
England/Wales 8 12 14 62 4
France 5 30 12 47 6
Italy 5 28 16 42 9
Canada 1 10 14 74 1
United States 1 9 3 84 3
Source: John Pucher, Transportation Quarterly, 98-1 (from various transport ministries and depts., latest avail. year)
from http://www.ibike.org/library/statistics.htm

Since these numbers are from 1998, my guess would be that the % of car travel would have increased most places, except for newly established carfree zones in many city centers. Just goes to show what is possible, but I would be the last person to argue against the influence of urban form, Kenworthy & Fox have a great book (called Sustainability And Cities: Overcoming Automobile Dependency) which graphs transit use versus density and many other parameters. Not surprizingly, relative speed of transit/auto modes is also a major determinant, so that a less dense city with auto gridlock but a fast train system will have high transit use. Wealth was not that well correlated with transit, which makes some sense anecdotally (Swiss bankers on the tram, HongKong merchants on the subway, while poor people in the US drive beaters).
My point was that changing urban structures is necessarily slow, but changing uses can be very fast, which would allow relocation of work,home, and business to reduce trip length quickly.

With respect to the consumption component.  This is a factor but it is not a long term one with respect to conservation as it is subject to diminishing returns (conservation efforts pick the low hanging fruit and then moves onto less effective means to reduce consumption and so on) while at the same time, if oil supply remain flat we still run into a long run problem of growth hitting the wall -- growth is an exponential function and increases energy use while conservation is increasingly less effective - exponential in the opposite direction.  Technology will require long time lines to have appreciable impact.  If we have depletion (supply is dropping) then we have a snowball effect and what the depletion rate is I think is important as it will tell us if we can transition (with difficulty) or will we face potential collapse.

Quinn said he/she is a student of evolution.  How many species have survived?  The answer is very very few.  Let us not be arrogant about the impossibility of engineering our oun demise.

Another physicist.  I've got a bachelors from UCSD in physics/math and a masters in applied physics/EE.

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.

Physicists, mathematicians - lend me your ears!

The "peak" for oil takes place in the real world of human beings and politics, geology and stuff we can't predict. It's so clean to talk about peak oil models, you know, but we have no data to verify them outside some very unclean trends in the past that may or may not be statistically significant and are historically not like the present.

Peak oil is an historical event and history in this case does not repeat itself. There have never been 6.5 billion people on the planet. Demand has never been 85/mbd. New demand has never been this large on a yearly basis. New oil discoveries by volume have never declined as they have since the 1980's without hope for large new supplies (outside some unproven "non conventional" sources). There is not a magic elixir. Our times are historically unique. This is not 1973 nor is it 1982! Circumstances are different now, we are now depending (without major new fields) on supplies from many little places (Trinidad, Chad, Sudan, Equatorial Guinea) being dependable. All this has to work or we're all screwed and peak oil is here before we have a chance to adapt to or mitigate the effects. Its a political problem that affects us all.

How can you model that?
How to model:  You watch the model called the real world I suppose. The answer is:  you can't.  All you can do is to consider some possible scenarios and then, from them, make policy recommendations and statements to the public in order to provide as much information as possible so people can at minimum make informed choices going forward.  Other than that, what can one do?  Nothing--to change the response of society to this historical event.  One can then take personal actions, which in my mind are a whole different conversation.  E.g. investment decisions, where you will make your home, occupation, etc.

I know that's not saying much.  But that is pretty much all one can do.  For example, the only way to deal with the cornucopians, if that is even possible, is to create a model that can realistically deal with all their "what ifs", e.g. "what if we create a hydrogen economy" and then you point to the model and say "here's your hydrogen economy" It don't work.  And then the response is "ok, coal liquifaction" and the response should be "ok, here's a model showing the ramp-up of coal liquifaction, taking into account capitals costs, etc."

I'm not saying one can do this in entirety.  And I take my hat off to the folks here--and the look that James Hamilton has made--to put some concrete numbers to this problem.

And, politically speaking, I just mentioned the little people. I did not even mention geopolitical instability in Iraq, Iran, Nigeria, Saudi Arabia, the Caspian Sea areas, Russia, ... I could go on.
Stuart, of course you are right, the big adjustment in the 'Seventies was the shift to more efficient cars.

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.

I find your's and SJMStrategy's comment the most interesting.

I am also a Physicist and a european one at that.

Living in the EU, this whole interesting discussion make the problems america will face plain to me.

Stuart Staniford said
"Ok, think about it this way. Do Europeans, with 3x gas prices versus the US, telecommute to work, or bicycle to work? Not a whole lot more than Americans do. The main ways they use less oil per capita is smaller more efficient vehicles, and much higher urban densities, making commutes shorter and public transportion much more viable."

Well I disagree. Bicycle use in a lot of german cities (I don't talk about Holland) is on the 20%-30% range. That sure is a LOT more than in the USA.

So an extremely important thing (apart from american-way-of-life-is-not-negotiable-attitude) is urbanism. That is something you cannot change in a couple of years, and will spell doom for a lot urban sprawl regions.

As you pointed, Sunlight, in EU less families own more than one car. Only since the late 90s did a lot of families start to own 2 or 3 cars.

I find the discussion about fleet efficiency not very useful. It is important to impose NOW stringent CAFE standarts to the US car makers. But when the gas price really goes up, there are 2 changes that will take place:

  • People will drive less
  • Families will own first 2, and then 1 car

THAT makes a difference in consumption. I think discussions are too focused in technology solutions and too little in attitude solutions.
Interesting about German bike use - do you have a link to any statistics? My experience is with the UK where I grew up, and where bike use is not that prevalent.

Your assertion that Americans will drive less and then own fewer cars as their chosen response to dropping oil consumption is not well supported by past experience - what they did in the past was improve the efficiency of their cars. Americans cannot adopt European patterns of car use without a great deal of pain because the built environment is so different (much lower density). By the time Americans are abandoning large tracts of the suburbs, I think we will be in collapse mode.

Hi, Stuart.

I didn't find the statistics I read, and certainly It's difficult to find some not in German, but here an interview on the issue. Very interesting (bear in mind my percentages were for some cities, not an average).


Of course even if Americans wanted with the current infrastructure it often wouldn't be possible. That's the urbanism tragedy and what I meant with "the problems the USA will be facing". Nontheless, I think even in the US there is room for less car ownership. Surely not all the kids need to have a car as soon as they become 17 (I'm exaggerating).

I dunno if this is relevant or not, but the trucking industry went through quite a trauma with the new emissions engines in October 2002. Operators saw a worsening of Fuel Economy of 3-10%.



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


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.

TRE, I don't know what to think of your comments.

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.


- 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.

- 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

You may point out, that you need a lot more energy than Renewables can provide. I agree, the current first world society needs more energy. But in the end, before fossil fuels there was only Renewables, and after fossil fuels there will only be that. That means, if they can only provide 25% of nowadays energy use, we'll have to adapt to that.
Drive less, use the bike, bioagriculture, more regional economies, population control, etc...

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?

Mike:  There are several ways to consider this issue of peak oil. (1) What should I do?  (2) What should society do? (3) What will society do?  I'm not adding a "what will I do?" because if I cannot control my own actions to turn a "should" into a "will" then I might as well just quit thinking about peak oil and go buy one of those employee-cost sold-at-a-loss SUVs.

On the societal level, the "should" and the "will" are entirely different matters.  Getting a "should" converted into a "will" is nearly impossible.

Modeling can tell us what society should do.  It backs everything up.  Puts it on a firm footing.  It helps with the "shoulds."

Then there is the question of how you can translate that "should" into the "will", into actions.  In that case, facts may not be that important.  It's a political question.  Sad to say, but how does one market peak oil?  I know very intelligent people who won't give this whole idea of peak oil a second thought.  Hah they said.  People were saying that years ago.  Stuff like that.  We've got purportedly intelligent people writing books about bottomless wells telling people the way to solve the problem is to waste energy.

How do you make any progress with people like that?  And then of course, you've got a whole segment of society that is just struggling to get by.  Peak Oil means nothing to them when they're struggling to make the next car payment.  Or find the next good fix.  Whatever form that fix may take.

Someone mentioned advertising.  I've long considered the need for a nice hubbert's curve on billboards at major traffic interchanges.  A "you are here" for emphasis.  But then where do you send them?  Before you know it, depending on where they end up on the internet, they're reading about survivalism and hollow points bullets and 9/11 conspiracy theories and the likes (I exagerate for effect).  No credibility.

A shock is the only answer.  With an appropriate message from credible people. Matt Simmons has credibility.  T. Boone Pickens, who I suspect has said some pretty outlandish things in his days--how can a guy like him not have--has credibility.  Does Heinberg have credibility? I'm not convinced he does.  He's a 9/11 conspirator.  Was 9/11 a conspiracy?  Doesn't matter.  He's published his beliefs that it was. Kunstler, in my mind, has no credibility.  He's been talking the same line for far too long and hates modern society--or suburban culture--too much.  Ruppert:  zippo. So who belongs in the peak oil credibility club?

One approach is to build at least a quorum of people with credibility who can carry the message.  And one way to do this is to have a credible model that demonstrates--"this is your GDP on coal liquifaction," "this is your GDP on the hydrogen economy." Etc.

Now, marketing an idea like peak oil--because what we're really talking about is marketing a different lifestyle to people, getting them to buy into it--marketing an idea like peak oil does not need the models and the facts as discussed above.  But it will help.  It will help to gain credibility.  Just as I think the global warming folks have gained credibility through their modeling.  Are there people who are blathering still about how the models are wrong, etc etc.  Yes.  But I think the global warming folks are gaining credibility.  The possibility that increased water temperatures will lead to stronger hurricanes may open some people's eyes.  But even here, scientists really aren't sure whether we're looking at a natural cycle in hurricane activity or global warming.  But having the models helps.

Peak Oil is more likely upon us, but the models, in some ways, have not been developed.  There exist economic models (the limits to growth types) that could be tied into depletion models, allowing us to better understand the interaction between the economy and energy depletion.  Now one could say that we'll oil out of the ground as fast as we can. Why model? Is that true?  I'm not sure.  I'm not convinced.  All I've seen are words to indicate as such.  Perhaps it's just as good an argument that we're going to soon see a price shock that will send the global economy into a major recession as imbalances unwind.  If that happens, there may immediately be a huge decrease in demand.  Perhaps I am wrong though, and the shock will simply result in cheaper oil and people pulling it out just as fast.  Perhaps.  I'm not convinced.  Because the whole point of dropping demand is that there are a lot of people who can no longer purchase oil.  The idea that an economy can just automagically restructure itself to produce demand that equals to new, decrease supply, may not be true. Because demand destruction will happens in ways that we don' necessarily understand.  It will undershoot.  By how much?  Don't know.  The recession or depression will wreck segments of the economy. Perhaps.  That's the whole second order thing, if I understand correctly, that Stuart referred to.  I'd just love to see better models to convince me.  Mainly I have verbal arguments.  Analogies--1970s/1980s.

So I think modeling should continue and should become a significant focus of one or more university departments.  I think a university should create a combined economic/energy-physics modeling team that addresses this very problem.  There is a university in the south--forget which--that has created a program to evaluate new energy technologies.  They would provide the inputs to the models.  Letting the modelers know the characterisics of a particular technology.

I think that is one tract.  There are also political tracts.  But until the American public, or at least a quorum, wakes up to the fact that the free market nirvana that the RepubloCrats have been selling them is heading into a blind alley, nothing will change.  So that has to be dealt with as well.  Having a credible message with credible people when the shocks happen is important.

You make some points with the "credible people", but such things usually happen by chance, or someone's initiative. And what makes you think that once such a group is established, the Powers-that-be won't discredit it. It is so easy when the media collaborate to just make everything look so complicated and convoluted, that no one (much less uninformed six-pack Joe) knows anymore what to think about a particular person/group.

But yes, having a credible message would be important. Any ideas how to achieve that?

Do I think such a group could make a difference?  Haven't a clue.  Good sound reasoning doesn't seem to win the day.  If it had, in my mind, we'd have a super conducting supercollider and not an overpriced six motel in the sky (with transportation problems getting there).  But who am I to say.

Do I have any ideas?  No.  Not anything I've thought about enough.  Hence the importance of sites like this and the work that folks are doing.  In particular, I highly commend the efforts to bridge the gap in some way with folks like James Hamilton.  That discussion is constructive.  Looking hard at the numbers.  Knowing where we are.  And demonstrating the problems we face.  The graph in this thread is part of the solution.

What I would like to see--easy for me to say--is a way to quickly answer the "technology will provide a solution" comments (read "miracles" or religion or prayer) with a very concise--ok, give me the EREOI on that thing.  Give me the capital expenditures associated with deploying it.  Pop it into the model and presto:  "Here's your GDP Mr Cornucopian.  Kind of sucks, huh?"

More later.

Housekeeping note: Getting rid of anonymous comments helps us see the TREs in the forest.  Good move.
Calculating depletion rates may be possible but correlating this to zero or negative economic growth is a very tough task.

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.


The point about population growth is well taken - we should be subtracting it from the GDP growth rate, as GDP/capita is more relevant to human material quality of living. The only reason I didn't is because economists don't usually talk about it that way.
Great discourse. However, there seems to be a focus on US conservation and economic impact. How fragile is our global society to any of the depletion rates discussed?

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?

I'd think you'd want to categorize the consumers of energy into a couple different classes in terms of per-capita consumption.  Then one can model the behavior of these different consumption populations differently, in other words model the response of these consumption centers to energy depletion.  Other than that, I'm not sure one can model it.  One cannot model society.  Economist and sociologists have failed--in my opinion--to do so under the best of circumstances.  I'm not criticizing them.  It's just difficult to model people or collections of people.

There is no question though, using Russian as an example: deaths will go up.  Crime, alcoholism, suicide, etc will increase the death rate as life becomes more difficult.

I think the discussion began US centric because that's where many contributors to this site are (and I am), although this thread has gotten a fair amount of international participation as it has gone on.

I think the risks in developing countries are somewhat different. The case I'm most familiar with is India which I've visited a number of times. I agree that vehicle turnover must be much lower, and so the option to change the vehicle mix is less. On the other hand, behavioral responses are much more feasible, since the infrastructure is not nearly so oil-centric, and urban density is much higher. On the third hand, developing countries are very vulnerable to an unwinding of the Green revolution as the fossil fuel inputs become less and less available. On the fourth hand, I expect the outsourcing trend will continue for quite a while because shipping is so energy efficient (for China), and BPO type outsourcing to India is not that energy intensive. An Indian software engineer living in a small apartment and going to work on his scooter can probably cut more lines of code per megajoule than a Silicon Valley engineer in a big house with a Porsche.

Cuba is an interesting model for developing countries as they lost cheap soviet oil after the soviet collapes. They went to buses for transport plus wholesale conversion to intensive organic agriculture. Their standard of living dropped but there was very little loss of life.

Interesting article: "Gas prices too high? Try Europe."

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.

By the way, we see by now that all models should probably include an ongoing fenomen. As PO gets close, poor countries are being dropped. Priced out of the market so that the wealthy countries can continue to even increase their oil consumption. That way, PO has allready arrived at the poorest countries, and will be delayed for the richest (the "West").

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

That's why I asked if those countries were yellow or red on the graph.

I'm thinking that there might be circumstances between orderly contraction and collapse.  I presume orderly contraction means that the government endures.  'Dis-orderly contraction' could mean regime change, but eventual stabilization and a bearable life for the survivors.  Or is that necessarily part of 'collapse'?

I say it again: Great discussion here.

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 :-)

Good comments.  Being new to the peak oil debate, I have only come to the point of concluding a need to shift to a non-growth oriented economic system.  But I have not thought much on what it might look like.  Perhaps others could comment of give ideas here.

As for relevance.  Consider economic growth as crucial to political fortunes and how U.S. and other powers' foreign policies are shaped by access to strategic resources -- if supply goes flat, let alone declines, history suggests that war is often an acceptable option.  Unfortunately, the powers vieing for scarce strategic resources often have nuclear capability.  Thus, we do not have to have 'collapse' to entertain unpleasant scenarios.

On an optimistic note, for those familiar with change management theory, we may finally be emerging out of the 'denial' phase.

I guess I'm laughing again at a lot of the comments in this thread, but not maliciously. It's just that the blog has now come full circle. It was only a few months ago that old J brought up many of these issues (incessant growth, fiat monetary system, etc.) and proceeded to explain how they could be interrelated to Cheap Oil. He got bashed really hard for being a D&G guy, and had a lot of people come down on him. Yet he is also one of the VERY FEW people I have seen that actually practices what he preaches in terms of lifestyle and investing. A lot of this thread echoes his previous posts.

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!!

Globaly, the trees are dying, the animals are getting whiped out with unprecedented speeds, the water tables are shrinking and the depletion of natural resources sets in. At the same time the human population is growing with exponential rates.

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.

It is crucial in thinking about the possibilities for making a transition to a more energy-efficient transportation fleet to know something about the amount of energy embodied in each of the automobiles that are on the road.  Fortunately, there are various published studies that can give us the information we need to make the calculation.  In fact, using two slightly different methods and sources of numerical values, I arrive at remarkably similar results: the manufacturing of a car represents an oil-equivalent energy consumption of about 20 barrels.  Several previous estimates have appeared of the energy (in terms of barrels of oil) embodied in the manufacture of an automobile; here I present a fully referenced pair of calculations.

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.

OK.  More on the consumptionless side of the above graph (in my opinion) and I why I still have heartburn with it. Went for a run on the beach and pondered this.

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 pretty much agree with you that contraction will go in fits and starts, but I don't think it makes a huge difference. Here is the feedback argument. We get a big depression, the economy contracts much more than it needs to, most adaptation stops (all privately funded adaptation anyway). Oil usage shrinks. Ok, now we are swimming in oil relative to usage. Oil prices drop, the economy and oil usage starts to pick up a bit and the consumption curve comes closer to the production curve again. Burnt by the experience, people do a surge of adapting. Now aware of the problem, the markets pay close attention to the depletion curve, and start looking further ahead. The feedback loop is prices - the further below the production curve the consumption curve gets, the lower prices will get, and the less conservation signal the economy gets. If people forget, then the consumption curve will get out of hand again, and there'll be another recession. That's why I don't think the consumption curve can get too far below the production curve. And it can't get too far above either since cumulative consumption must be less the cumulative production.

Some economists might make the argument that once depletion is clear, the futures market will tend to make oil companies and speculators store oil. I think this is true, but only up to a point. If you look at what is going on in the political system right now, people start to get extremely bent out of shape if they think oil companies aren't supplying the market as much as possible, and take political responses. That feedback loop will prevent the oil companies from deliberately storing more than a certain amount for later (they'll have to do it secretely to the extent they do it.

If anything, going in fits and starts reduces the comfortable adaptive capacity of the economy (since investment will stop during the fits).

We cross commented.  I saw your response after posting.  I do agree that it's quite possible that (a) the economy could structure itself to adapt to the depletion curve and that (b) governments will step in to help us deplete as fast as possible.  So you'd see the effective demand (or consumption) curve drop below the depletion curve occasionally but quickly adapt.
Another thought:  markets are always said to clear.  When demand (effective demand?) rises above supply, prices increase, effective demand decreases, and demand and supply are happily in balance.  The problem, in the case of energy, is that the growth of the economy is contingent on that energy that is no longer available, growth stops at some point, debtors default (meaning the money supply starts to implode), and the effective demand then drops below supply.  Now, I suppose one could argue that the price of oil will drop to the point at which effective demand will rise to meet the supply.  But will it?  That's the question I keep raising.  And if it does, how long will it take?  And is the experience of the late 1970s applicable?

So consider this from a different perspective.  Take the red collapse depletion curve (above) and, for the heck of it, consider what would happen if consumption dropped very dramatically in the very early period.  In other words, integrate the amount of oil produced over the period and distribute evenly year by year (to first order as a WAG), just to see what would be available year by year.  If we've got 10 trillion barrels left, and assume it's available for use over a 100 years, that works out to be about 10 billion barrels a year, what the world was consuming around 1964 (eyeballing the ASPO production curve).  That's about 27 mbpd.  The world had about 3.2 billion people at the time.  Most of course not using much oil.  But this implies that with the red depletion curve, we can have 27 mpbd (give or take some depletion at the end) if we cut back earlier.

Will the world be better off with some fairly substantial crashes early on and then move into a more sustained (non growth) mode afterwards.

Another thought:  it seems that at some point, globalization will start unraveling.  Wealthy countries (relatively speaking) may distribute goods and services as necessary to prevent starvation of the unemployed in their own countries, but the poor countries that currently survive on outside help will be on their own.  No united nations efforts.  Nothing.  No food programs.  Because who will be willing to send resources to another country when one is forced to redistribute internally.

And that raises the next difficult question:  as oil depletes, will humans simply create versions of Haiti everywhere. Visitors in the year 2200 may find a large dirt planet surrounded by carbonated oceans.


Really good discussion here. I'd like to make the following points that I hope make some contribution:
1) The discussion is quite US-centric. The main problem here is that in USA there is a lot more "low hanging fruit" that could absorb the initial decline in terms of efficiency and conservation. In poorer countries the decline rate that can/will cause a collapse could be much less - maybe 1 or 2% and it should not be determined by analyzing the private transportation sector because of it insignificant contribution.
By irony (or maybe because of the history repeating law if there is such) rich countries like US will be the last that will start large-scale effeciency/conservation programs because they can easily afford much higher prices thus indirectly sweeping away poorer countries economies - and this process has already begun. It would by very short-sighted though to ignore this problem especially in a globalized and full of dependancies (or shall I say imbalances) world.
2) The benchmark sector that takes the burden is assumed to be the private transportation. However the oil usage is much more versatile with motor gasoline for cars/trucks accounting for just about 40% of the total in the US(http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/petroleum_profile_1999/profile99v 8.pdf). Other end usages (except maybe jet fuels) can not be considered as elastic as the motor gasoline. Assuming 0% economic growth we should expect at least in the near term that these 50% of petroleum used by the industry and for transportation of goods to remain constant or to decline insignificantly. For most of these there are not even theoretically proposed replacements. So I propose a discount factor by 2 of the initial post estimates - that is 2% for contraction threshold and 5.5% of the collapse threshold.
3) The accumulated effect of decline is not accounted properly. I have no doubt that the economy can handle 2,3 or maybe even 10 or 20 years of declining energy availability at moderate rates. But eventually we will hit the ground of such essential components as food production or maintaining the whole infrastructure we take for granted (law&order, water, electrical etc.) that will make the G&D people most probably right.
The problem is that there are so many factors envolved and so many in practice unpredictable variables (including a possible "technofix") that modeling the future in this way is just a little more than guesswork... But thousand times better than the close-to-nothing thing we witness in the goverment response to the problem.
hi Stuart, interesting analysis.

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.  

There's a rule of thumb that says that when there's an X% annual change in a thing that's growing or declining with a constant exponential, the doubling or halving time is given by 70/X (because ln(2) = 0.693). I'm using that rule, and making various crude approximations (like treating the mean like the median) given the overall uncertainty in the calculation.
thanks for the explanation, Stuart.  it clears up a lot.  however, i'm not sure about the doubling in size.  to solve for X, you seem to be assuming that the fleet will double in size every 8.5 years (the average age of a vehicle).  is there evidence for this (or is this just a statistical equation that i am missing)?