Who has to conserve how much?

Percentage change in oil consumption over prior year, for various countries and grouping of countries. Click to enlarge. Believed to be all liquids. Source: Table 2.4 of EIA Internation Petroleum Monthly..

In influential posts over at Graphoilogy, Khebab and WesTexas argued that the four largest oil exporters were more than half way through their eventual production, and that since their internal consumption was bound to increase, therefore the amount of oil available for export was certain to plummet. WesTexas has been making increasingly dire warnings about lack of export capacity ever since.

I don't 100% agree with this way of looking at things, though it's a piece of the truth. The part I agree with is that net oil exporters are going to have their economies helped by high oil prices, and that might lead to some increase (or at least reduced decrease) in oil uage relative to everyone else. However, I think just assuming that consumption in exporting countries will increase in line with their historical GDP growth or population growth, and only what is left over after internal consumption gets exported, strikes me as probably a bit simplistic.

I think firstly we can divide oil exporters into two groups. In countries like Norway and Canada, oil is not internally subsidized, and consumers will face the same price incentives as consumers elsewhere. High gasoline prices will have Canadians and Norwegians conserving just like Americans or Germans. In countries like Kuwait or Venezuela, internal oil usage is heavily subsidized. However, even here I expect economics will have some potent effects. The more the differential between the internal price and the external price, the more powerful will be the incentives to find a way to export more and consume less internally. This will lead to political pressure from the national oil companies, and their political patrons, to export more. If that doesn't work, it will lead to corruption and smuggling of oil. The oil will start to leak out of those exporting countries one way or another. I think these economic effects will tend to limit, though not eliminate, the degree to which exporting country consumers will feel able to increase their consumption while the rest of the world is being forced to conserve like crazy. The graphic at right shows some prices from last year to illustrate the variety of price incentives consumers face.

The more natural way to think about the situation to me is to consider what has happened in the last year or so, and assume that the future will be like the past, only a little less so when it comes to oil consumption. That is, countries that were able to sustain a high growth in their oil usage from 2004 to 2005, will probably have some oil usage growth from 2005 to 2006 also, though perhaps not quite as much. Whereas countries that were obliged to reduce usage in 2005 over 2004 will probably have to reduce even a little more in 2006.

To look at that data, the ideal source will be the new version of the BP report, but that's not out yet. In lieu of that, the EIA has Table 2.4 in the International Petroleum Monthly. It has consumption data, but unfortunately doesn't break out all countries, just some of them. However, I still think this is more useful than considering BP data only through 2004 (when the plateau hadn't really started to bite).

Anyway, I took the following countries and groupings: here is their share of 2005 oil usage.

Allocation of 2005 oil consumption to various countries and grouping of countries in this piece. Click to enlarge. Believed to be all liquids. Source: Table 2.4 of EIA International Petroleum Monthly..

Besides the named countries, "OECD Europe" is Britain, France, Germany, and other OECD countries in Western Europe. "OECD Australasia" is Japan, Korea, Australia, and New Zealand. "Other Asia" runs the gamut from rapidly industrializing countries like India and Thailand to less economically successful countries like Bangladesh and Myanmar. "Other Non-OECD" includes both almost all the OPEC countries, and also a mix of developing countries from Africa and Latin America. Obviously, this is far from the ideal way to group the countries for this purpose, but it's the best I could make of the data available.

Let's remind ourselves of what the global production curve in the last few years looks like:

Average daily oil production, by month, EIA and IEA (corrected) estimate averaged. Also a nine month centered moving average of the monthly series. Click to enlarge. Believed to be all liquids from January 2002 through January 2006. Graph is not zero-scaled. Source: IEA, and EIA.

So from 2002 to 2003, global production increased very healthily. It started to slow down in 2004, and the brakes really came on hard in 2005. So now let's look at who got to increase/decrease their oil usage by how much as we came into the plateau. This graph shows percentage increase/decrease in usage over the prior year for 2003, 2004, and 2005.

Percentage change in oil consumption over prior year, for various countries and grouping of countries. Click to enlarge. Believed to be all liquids. Source: Table 2.4 of EIA Internation Petroleum Monthly..

Look particularly closely at the yellow bars, which represents the 2004->2005 transition as production plateaued out. You can see pretty clearly who had to do the conserving: the US, Europe, and Canada. I.e. Western economies with modest growth and non-subsidized domestic use of oil. The more car-intensive US and Canada had to conserve a shade more than Europe on a percentage basis.

China, and to a lesser extent the rest of Asia, continued to grow oil usage, though less than in 2004. Meanwhile, oil exporters like Mexico and the USSR increased oil consumption growth slightly from 2004 to 2005. Obviously the "Other Non-OECD" grouping hides a mixture of oil exporters who are probably growing consumption for the most part and oil-consuming developing countries who are probably having to conserve. But on average, that group increased it's oil consumption into 2005.

My guess, again, is that this will set the pattern for 2006 and 2007. Europe and North America are going to have to tighten their belts further still, and Asia and the oil exporting countries are going to continue to grow their usage. In the Asian case it will be less than they otherwise might have, and in the case of OPEC countries, it will be more than they otherwise might have.

But absent major oil shocks, the conservation required in the next few years should be relatively modest and manageable percentages. Of course, the risk of major oil shocks seems to get worse by the day, so who really knows?

Hello Stuart,

Thxs again for your work!  So the US consumption dropped just a little, but I surmise it was mostly 'painless' conservation where, for the large part, people just planned their auto errand trips around town just a little more carefully.  If instead, a huge Energy Reform Policy [ala Hirsch Report] had been passed in Congress to rebuild the railroads and mass-transit [ala AlanfromBigEasy]-- the energy required to start accomplishing this, on top of the normal economic activity--would have probably reversed this percentage change bigtime.

The converse of this is China.  If China had resisted the auto-craze, and instead, kept on the path of bicycles and mass-transit-- their percentage growth in oil consumption would have been much less.

It will take huge amounts of energy to re-engineer for the next paradigm if we wish to do it peacefully, yet every day we globally build and enlarge this faulty infrastructure.  It would be much better for the world to proactively start choking production; to force an early Hubbert downslope vs. continuing the Fiesta, then having the geologic downslope imposed by detritus entropy. The production plateau, although reassuring, is just a short timeframe abberration-- it cannot last the twenty years or more that the SAIC Hirsch Report recommends to achieve maximum mitigation.  The population Overshoot continues too, which is probably the worst force of all.

Solid and wise world leadership is required to peaceably guide the masses in the optimum Powerdown direction and voluntary population controls.  As mentioned before by some other poster--we need a bunch of Winston Churchills who can only offer us 'blood, toil, sweat,and tears'.  Since this does not seem likely, I fear the Thermo-Gene Collision is only gathering strength.

Bob Shaw in Phx,AZ  Are Humans Smarter than Yeast?

but I surmise it was mostly 'painless' conservation where, for the large part, people just planned their auto errand trips around town just a little more carefully
I think probably the better picture is that the wealthier classes made no effort to conserve whatsoever, and the poor conserved because they couldn't afford gas. I doubt it was 'painless' to the latter. A tiny percentage of peak-oilers and environmentalists were probably conserving beyond what they had to.
Hello Stuart,

Yep, that is the big question: what is the best way to help those that have economically fallen off the bottom rung of the detritus ladder?  Bereft Indian farmers self-ingesting pesticide, newborns being found dead in the Zimbabwe sewers, the crisis in Sudan, people freezing from lack of natgas heat...on and on until the mind reels.  Yet, detritus entropy dictates that this will only get worse with the passage of time.  The 'trickle down' theory doesn't apply to energy as it can only be burned once.

When the US welfare and Social Security system collapses: how will we treat our elderly, sick, and disabled?  The recent EnergyBulletin article talks about the possible future difficulty in replacing a worn-out water heater--How about the decision of choosing between feeding Grandpa or feeding your child?  Will it be wiser to spend your money on family health insurance vs. spending it on heating oil when it is bitterly cold outside?  What percentage of Americans will take in another family that cannot afford their own housing and the energy to run it?  How willing are we to decrease from using 25% of the world's oil to the world average?  Isn't that inherently fair?

Bob Shaw in Phx,Az  Are Humans Smarter than Yeast?

If only the pope and other influential Christian leaders (e.g.: Jerry Falwell, Pat Robertson, etc.) would thunder from the pulpit about these things....  After all, compassion for the vulnerable, and a stern insistence that the privileged make personal sacrifices on their behalf, WAS a core teaching of Jesus of Nazareth.

I've been frantically trying to get the attention of influential Christians in my own little corner of the world, but, alas, to little if any avail.

People that live in desert cities should probably think about leaving. They are one of the most energy intensive places to live and property values are probably going to plummet once oil shortages begin.
Are you suggesting that, with oil production at a plateau, if the U.S. poor, middle and/or upper class, and industry conserved say 2% to 6% a year we could have a reasonable chance of avoiding a catastrophic situation?

Or is the plateau model one that leads to a cliff?

Also, sometime would you update the above 9-month center moving average graph.

Your work and wisdom is much appreciated. Your hard data balances off a lot of the doomers' speculation.    


Internal political pressure for subsidization from countries that do NOT subsidize must grow as price pressures hit home to producing countries. As an example see: Bolivia. This is the equivalent of bread and circuses for the Romans.

Do you really believe that Norwegian and Canadian governments would be able to stay in power as the squeeze for their energy sources becomes more intense while at the same time they maintain an equivalency between foriegn and domestic consumers?

 I see Venezuela using it's reserves for political diplomacy, SA keeping the blooming youth population at bay, Nigeria in civil/piracy war. When the benefits are not seen locally chaos reigns. The fungibility of energy MUST lessen as supplies grow tighter and costs increase simply because the local politics are what controls the well heads.

Yes, there will be black markets, wars, trade 'agreements' but it all just adds up to making the energy just a little bit harder to get, a little more expensive as each producer must use more and more of it's resource to assuage the pain at home in order to not be replaced by a more inward looking regime.

Westexas is more on target than even he dreams.


Don't know about Canada but Norway seems to keep a tight rein on domestic consumption: "The $6.66-a-Gallon Solution; Oil-Rich Norwegians Take World's Highest Gasoline Prices in Stride" By SIMON ROMERO (NYT) April 30, 2005, Saturday.  Probably well over $7 by now...
The Canadian Federal Government signed away its rights to legislate preferential access or pricing of Canadian crude oil and natural gas when it signed the FTA and successor NAFTA agreements. Further, under clauses in Chapter 6, Canada cannot reduce its exports to the US to meet a shortfall in supply unless it reduces its own consumption in direct proportion.

While Canada produces more than it consumes, it exports most of that production (about 70%) to the US. To meet its own requirements it imports about half of what it consumes from off shore suppliers, primarily Europe. This liability is shared unequally. Western Canada is supplied wholly from Canadian sources (primarily Alberta), while Eastern Canada is supplied primarily from imports. There is currently no crude oil pipeline connecting western and eastern Canada that traverses wholly on Canadian territory; the only east-west connectors pass through the USA.

When it comes to energy, geopolitics can override national self interest, especially for a small nation adjacent to the world's greatest military power. In theory Canada could take  back control of is energy supplies by withdrawing from NAFTA, but at what cost? If Canada were to attempt to curtail exports to the US, would the US invoke the Carter Doctrine?

To misquote Mao Tse-Tung (or so I was told when I previously posted this quote):

"The only kind of power that ultimately matters in this world is the power that comes out of the barrel of a gun."

Hello WKO,

Your points are extremely valid, and as a US citizen: I apologize for what our misguided leaders have done.  I encourage Canada to withdraw from NAFTA if your country starts a huge biosolar habitat effort to do your best to extend your remaining supplies for internal use only for decades.  This shrinkage in energy shared carrying-capacity to the US will help jumpstart conservation and the building of biosolar habitats in the NE & NW parts of the US, maybe elsewhere inside the US, too.  The Carter Doctrine is only enforceable if our military has lots of energy, and the military knows that attacking Canada would be pointless because you could easily have detrito-terrorists constantly blowing up the pipelines and powerlines running south.  The US & Canadian military should both understand that setting up mutual Earthmarines to protect the biosolars is much more energy efficient, humane, and protective of biodiversity and existing infrastructure than a continental war.

Bob Shaw in Phx,Az  Are Humans Smarter than Yeast?

Hey man, a deal's a deal.  Why even talk about invading Canada?  Doesn't it mostly just seem to be another State anyway?  Dare I say "puppet on a string?"

Why apologize for US actions?  If Canada perceives it's sitting on the short end, who's to blame?

It is possible US usage could be inhibited by a currency collapse. Canada has to sell to the US at the market price-demand destruction on a major scale will occur in the USA if the currency collapses. It is unclear at this point if US citizens would support a military attack against Canada to seize oil reserves (it is felt to be unlikely).
Hello Brian T,

I cannot imagine the average US citizen being for our B-52s doing cluster-bombing runs on Canadian cities ala Dresden, nor for a blitzkreig military thrust to secure the Canadian energy resources.  I would rather sweat to death in Phx than see our military attack Canada.  The US should first prefer internal detrito-civil war between native-energy exporting states [Tx,La, etc] and non-energy states [Wa,Ma, etc] than to us attacking Canada or any other country cutting off our imports [as they inevitably will].  If our country adopts the 'Nuke their Ass--I want Gas' mindset of the '3 Days of the Condor' scenario and is willing to kill Billions for the non-negotiable American way of Life--I am ashamed to be an American.  If all Americans understood Peakoil, we would proudly Powerdown from the 9gal/day avg to the Bangladeshi avg of 2cups/day, but Powerup biosolar energies to the maximum.  Our wasteful burning of 25% of the world total detritus energy is unsustainable:  America has a moral obligation to use this wealth to peacefully lead the world into the next paradigm.  We can do it the easy way, or the world will impose it upon us the hard way.  How much blood for oil will be lost before we get smart?

Bob Shaw in Phx,Az  Are Humans Smarter than Yeast?

If America's politicians were on the ball they would attempt to bring Canada's resources into the US economy by annexing Canada peacefully. I'm not sure if it would be successful, but a large percentage of Canadians would vote to join up with the USA (mainly the ones that hate the weather).Having said this, the percentage (whatever it is) was far higher before GWB came on the scene.

Surely you are joking!!

Give up our funded health care?? Give up our funded pension system? Give up our system or elected representatives who are actually elected by we the people rather then appointed by wealthy corporate lobbyists and then formalized via the electoral process?

What does the USA have to offer? A society engaged in class warfare where the top 25% of the earners get tax breaks and the bottom 25% go homeless? A country overrun by wacky religious fundamentalists? A country that turns its back on science and such scientific findings as global warming? That undermines its educational system, that has the highest incarceration rate in the world, that has a corrupt and biased press, a militaristic society that engages in jihad and crusade, one that condones and encourages state sponsored terror and undermines global institutions and conventions? Why would we want to be part of this?

My fear is that global warming and NG shortages will combine to make the southern states uninhabitable and Americans will migrate north. But you will not like it here at all, honestly. We are all gay and have abortions on demand, we drink mostly tea and we all speak french and our money looks funny.

Given the billions you are investing in Iraq, I suggest you move there.

Do you understand that if Canada was annexed by the US, that the Canadians would control American policy by being the swing voters?
We would have the Candian medicine program overnight. Think what more than a dozen senators would do to the Democratic/Republican balance in the Senate.
No more than Iraq is a swing state now.

Regarding the healthcare - wish I had your optimism! The elites are already busy dismantling the safety net worldwide. USA becoming like Canada - wish that was possible... No, Canada will become like USA, guaranteed.

Americans may find it hard to believe, but few Canadians want to join the US. You should remember that many of the early immigrants to the eastern provinces were "United Empire Loyalists", refugees from the American Revolution. There is a quiet but strong sense of rejection of American vision of the world in many Canadians. If there weren't Canada would have long ago been absorbed into the American Union. We do things diffently here. And don't forget Quebec. Quebecers are more interested in leaving than joining!

Even if Canadians were interested in joining the US, it's unlikely that the current administration would welcome them, since most Canadian provinces would enter as "blue" states. That would upset the current balance of power in the US. It's easier and cheaper for the US to get what it wants by indirect means. Simply threating to slow or halt Canadian (non-energy) exports is enough to terroize Canadian politicians and businessmen into making concessions, but we do tend to be stubbornly difficult about it. There is no need for military intervention.

Most Canadian politicians do not know or are not yet willing to acknowledge it, but energy prices and security are about to become major, divisive issues. When the Canadian government attempted to introduce a two price system and energy security strategy in response to the seventies energy crisis -- the National Energy Policy -- Alberta rose up in arms. There is no dirtier word in Alberta than "NEP".

At that time Albertans promised to "let the eastern bastards freeze in the dark". In a sense, NAFTA has become the instrument to make good on that promise. Albertans may yet get their wish.

    Why should Canada be expected to obey NAFTA agreements when the US has not met agreements on the importing of lumber from Canada?
Until this clause in NAFTA is actually challenged it is difficult to say whether it will be honoured or not. Energy has already been invoked as a possible means of retaliating against US' softwood trade barrier - it is very very unilkely to be used. Most operations in ALberta/BC are US owned and the simple fact is that Americans have the cash to pay top dollar and, oh yeah, pipelines in place to ensure prompt delivery payment and return on investment. There just ain't no better customer. Personally I don't see the NAFTA deal as much of a problem for Canada. So long as we are a net exporter high domestic energy prices will encourage further conservation. This is simply necessary given the eventual realities all human society will face. Of course it is possible that the US will seek to control Canada more directly than it already thinks it does. Any increase of political control will be heavily resisted by domestic US industries since they are the primary shareholders in our economy and don't want to be undermined by their own government's market intervention. Then there's the fact that like any proud citizen of a distinct nation there will be resistance. Some may say we'd fight for oil, water and wheat but this would only be a means to the end of self determination. When push comes to shove over material resources could our red, white and blue brothers engineer a little 21st century Anschluss of Canada? They haven't won a war against us so far...
This is what I think WILL happen -- the middle class will carry on as usual -- the only difference is that the middle class will shrink, hunks dropping off like pieces off a melting glacier. What life will be like for those at the bottom -- well, not to worry, Katrina shows that we have a government that cares.
Bob, not sure if you spotted them but I posted some links for you at this other thread on water savings.

On this...
If China had resisted the auto-craze, and instead, kept on the path of bicycles and mass-transit-- their percentage growth in oil consumption would have been much less.

Are we really sure that its all down to China adopting a car culture?
I have a hazy recollection of reading somewhere (I'll try to find later) that it might be the mechanisation of Agriculture in China that accounts for a large proportion of fuel use. As people move from the country to the city in search of a 'better job' those fields need a labour replacement - anyone with better info?
And, all that plastic in US shops comes from somewhere...
I think we also need to check what Chinas progress/policy on rail actually is.

Also, what is the most appropriate statistic to compare countries?  The frequently displayed 'country consumption' type graphs or a 'per capita' graph? Or both?

On oil consumption in China:

According to Societe Generale, a major French bank, the spike in chinese oil consumption in 2004 and less so in 2005 was due to running thousands of extra diesel generators to meet zooming electricity demand. As China rushes to complete 500+ coal-fired power stations before the decade is over, such demand will certainly diminish and eventually reverse.

Also, is it correct that oil consumption increased in 2005 in China?  Article from "People's Daily":



"China's oil consumption and dependence on imports decreased last year as a result of the government's energy-saving efforts. The National Development and Reform Commission said recently that China's dependence on oil imports was 42.9 per cent in 2005, 2.2 percentage points lower than in 2004. It also said China consumed 318 million tons of oil last year, 1.08 million tons less than in 2004....."

Re: "As China rushes to complete 500+ coal-fired power stations before the decade is over...."

As far as climate change goes, I guess we can kiss the Planet goodbye (a least as we've known it).

China plans to quadruple the size of their economy by 2020, while "only" doubling their use of coal.
I guess they plan to sequester the CO2 emissions as soda pop fizz...burp.
I think they need to expand their rail system.

Adult Diaper Sales Soar in China

Alongside food and fire crackers, Chinese are adding a new item to their lunar New Year shopping: Adult diapers. Sales have soared ahead of the holiday as travelers prepare for long trips home aboard trains so crowded that even the toilets are jammed with people, newspapers said Tuesday.

In Foshan, a southern industrial city with a large migrant population, supermarkets report diaper sales have risen 50 percent since the main travel season began on Jan. 14, the papers said.

The problem arises from the need to sell twice as many tickets as there are train seats to accommodate the crush of travelers. Those without seats must find some place -- any place -- to put themselves, including in overhead racks, between cars, and in the usually stinking toilets.

Just purchasing a ticket can mean lining up for hours.

China Daily reports that some passengers have mental breakdowns from the conditions on the trains, and throw themselves from the cars.

Let's bring in another 100 million immigrants so we can be more like China.
Recognising the strain that the system is under, China plans to increase the rail network (NB: older report)

The plan envisages (i) building 6,000 km of new lines to access
previously unserved areas, with the network reaching 74,000 km; (ii) providing 3,000 km of
double lines, and electrifying 5,000 km of key lines to increase capacity; and (iii) increasing
operating speeds on 5,000 km, with the total length of such lines reaching 15,000 km.

While it is true that there are large investments in the Highway system

Also, China is building a superhighway system, "which is where the bulk of the world's concrete is going today," says Schwartz. China, by one estimate, is now putting $40 billion a year into road construction. At the same time, China is overhauling its rail system, building separate lines for freight and passenger traffic.

In some cities they are introducing Rapid Buses with dedicated lanes, while encouraging smaller car use as...
... private cars in China nearly tripled between 2000 and 2005, from 6.25 million to 17 million. These vehicles now account for one-third of all oil imports. High vehicle fuel consumption has also contributed to the nation's oil shortage, with Chinese models manufactured before 2001 guzzling 20-30 (?) more fuel than their foreign counterparts.

66% of cars have a capacity less then 1.6 L and recently a consumption tax of 20% has been applied to large capacity (ie over 4 L) cars.

Not saying it's rosy, but... what's happening where you are?

As long the world's superpower is controlled by greedy criminals there isn't going to be any humane solution. We just have to have faith in the free market. Actually it isn't a free market because the government's $2.7 trillion budget is an energy burning machine. It needs to be seen as a genocidal dieoff machine. TPTB's greed for wealth and power is going to kill us. What if yeast had nukes?
There is another element to factor in: large corporations taking note of the price of oil and changing how they operate.  Retailers and manufacturers shipping more by train than truck. The freight rail companies making changes of their own, and so forth. I can't quantify it, but a cursory read of the Wall Street Journal finds all sorts of stories about companies changing their ways.
Nobody is going to conserve 'cuz they know this is just a run up like we had prior to iraq2.  Oil went from $22 to $40 and back down to $26 promptly after the 21-day war.  In 2005, pickups and SUV sales rose in Canada where we pay a buck more than americans.  Until gas prices hurt disposable income habits will not change.  In the big picture, there is no pain yet...

For those interested, i released our April USA Reserves Report tonite.

Nice to have you in these parts again, Freddy!  I know it's a bit off-topic, but I was wondering whether you might be willing to comment on the following sub-thread from the other day.  The issue concerns the causes of other world-liquids production plateaus from recent years, and whether these causes are fundamentally different from those of the present plateau.


Phil, let me repeat an oft made comment that i make in these discussions.  We have seen year-over-year production go down 9 x's since 1974. It would be in the dozens if he included the quarterly comparisons that the Peakists are micro analysing.  As in any other sector, oil extraction has its annualy cycles and vulnerabilities to natural and political forcings.

We track the 11 best modelers on the planet.  With prices increasing over the last five years, almost all of them agree that URR is expanding rapidly due to both technological and financial (feasibility) developments.  In short, we are on the way to 110-mbd due to the critical mass in exploration and investment.

Those in the USA are getting a rude awakening on prices that is somewhat related to currency exchange moreso than supply/demand.  Your dollar has fallen 50% against our Canadian dollar this decade.  You have a current acct and trade deficit problem and economic affairs are showing up in your import prices.

But even having said that, oil & gasoline are only now attaining their historic averages from an inflation adjusted point of view with your country and many otheres.  Gasoline and oil have been an incredible bargain for several years.  That caused cutbacks in exploration and refining dollars just as we saw in nat'l gas.  

It's all about business cycles and the return to norms...

I dunno...I think it's slowly dawning on people that this time, it's different.  

Across the globe, oil and gas supply at risk

VIENNA, Austria (AP) - Unrest in Africa. Mideast insurgency and terrorism. Iran's nuclear brinkmanship. Russian pressure politics. South American resource nationalism.

Piece by piece, the global energy puzzle reveals a bleak horizon for a world frantically searching for secure oil and gas supplies.

..."While most supply threats in the past had never lasted more than a few months, the security of supply has become more of a ... (permanent) issue" since the al-Qaida attacks nearly five years ago, says Ehsan Ul-Haq, chief analyst at PVM Oil Associates in Vienna.

It ends with this:

Worse may lie ahead, as the world's hunger for energy grows, the tussle for oil and gas intensifies -- and the turmoil perpetuates itself.

"Instability is contributing to higher prices and that makes the seizure of oil and gas assets even more attractive," says [Michael] Klare.

"We have to brace for more conflict."

The NY Times has a sobering piece on the hurtles Big Oil faces in the New World Oil Order.

http://www.nytimes.com/2006/05/06/business/worldbusiness/06oil.html?hp&ex=1146974400&en=7b2f c59ec4c5551b&ei=5094&partner=homepage

While they don't use the words PO most of the article discusses it.

Indeed, in most cases where governments nationalized their oil industries in the 1970's or have tightened the fiscal terms more recently, production has sagged: Iran today is nowhere near its peak production, nor is Libya, nor Iraq, and until last year, Saudi Arabia had not increased its production capacity in more than three decades. More recently, output from Venezuela and Russia has been stagnant or falling.

"The 1990's was the reverse of what we have today: there was competition for capital rather than competition for reserves," said Michelle Billig, director of political risk at the PIRA Energy Group, a consulting firm in New York. "Now that bargaining power has shifted."

"This totally affects the supply outlook for the future," she said.

"The world is depending on the continued growth of production. If there are fewer incentives to increase production, you will have continued tightness in the market."

There was a blurb in the news last week about how the price of oil is high now because of rigs down in the Gulf of Mexico, but other reports say that the threat of Iran is the reason.  What is the real reason?  Peak Oil in actuality?
I see you are new. Keep reading. The answers are here. They are more complicated than you want to hear.
Hello from Australasia where I am consuming less petrol (RON 91 at NZ$1.719/litre) in favour of LPG (NZ$0.737/litre).  It doesn't help the planet at all, but it pays to be an opportunistic detritovore.  Also there will be a tad more petrol left over for North America and Europe to burn so we can all go over the climate cliff faster.

Well, MicroHydro has given me a segway into my topic, complete with example...
It is always amazing to me how, even when showing charts of all the regions of the world, and discussing concerns and events of a "global" nature, the good old fashioned "America-centric" logic still creeps in, almost without notice.  

The Americans seem to have a certain way of partitioning all existance:  There are "conservatives" and "liberals", nothing else.  There is Baseball in summer, and Basketball in winter, with Football in autumn, because that's the way the good Lord intended it, and dancin' is for sin and prayin' and worship is for Sunday (no real American believes in dancin to worship, and prayin' for joy, you got to have rules and catagories, you know....)

Such is it with our energy....propane is used to grill burgers, gasoline to run the lawn mower, and Diesel to get stuff to Wal-Mart, and natural gas?  That's the heater, right?...there SIMPLY IS NO OTHER CORRECT ORDER OF THINGS!  

Recently, I told a freind about something I had seen that didn't seem to be a bad idea, a propane lawn mower running on LPG.  I wish you could have seen his face!  I might as well have told him I found Martians in my yard!  Then the look of bewilderment...will that actually work?  A female friend looked at me when I talked about it, and just smiled with amusement....she was sure I was pranking her...and she waited for the punch line!

But long before we return to the horse and buggy, or to Ken Deffeyes "stone age by 2025" we will all become what you so elegantly called "opportunistic detritovores".  It is easy to forget that for most of the world, natural gas will still be fairly common for quite a while (as will the LPG that can be produced from it) and despite the dream of a "fossil fuel free" utopia of happy aging boomers trying to steer plows behind mules, a generation used to having Starbucks down the street having to catch rainwater and make tea from Sassy' frass leaves...I don't think so... most will be overjoyed to go over to LNG, CNG, LPG, and even coal before they go back to the stone age....even if it means breaking out of the the above listed blockhead "catagorical" frame of mind....yes Virginia, you can use propane in a lawn mower, they do it China and Europe, because it makes sense...propane is counter season on demand in the summer, with the heating demand reduced...and you have a damm grill with a propane bottle on it sitting right on the porch a few freakin feet from the lawn mower!

Yes, you can run natural gas OR propane in a car, and it is counter seasonal too, as the vacation driving season starts just as the price of nat gas and propane go down.
America may be peaked on natural gas, but the world is not, at least not yet, and places like Australia have more gas offshore than people to burn it, their only problem will be trying to keep Americans from hogging it up....likewise South America, and much of Asia....it's the Europeans and Americans who are hurting on this one...

The Americans never get used to the idea that YAHOO (You Always Have Other Options) applies....it has to be GASOLINE IN THE CAR, PROPANE IN THE GRILL, IT JUST FEELS RIGHT!!  It's either/or to us, never multiple options....the other day, I actually heard a poster on one of these boards saying that conservation of natural gas was cool, but had no application to the transportatin industry (!!!!)

If America installed readily available high efficiency appliances and lighting, insulated homes, and used solar hot water where it works, throw in a bit of wind, we could run cabs, buses and efficient cars on natural gas and LPG (which comes from BOTH oil and natural gas production anyway) and greatly enhance our market position...BUT THAT'S NOT THE WAY IT'S DONE.

Our whole society is organized this way....Buckminster Fuller once said "we have a very interesting arrangement...at the end of the work day, the people go back to the slums and sleep with the rats and the bad heating, while our office machinery sleeps with the good plumbing and climate control."

As I sit typing this post, I am glancing to an ad on TOD to the left column, "WHY WALL STREET IS WRONG ABOUT OIL!  Click here to download!"  It has a stunning photo of the oil industry at work, with three giant flarestacks flaming off millions of BTU's of....(?), gas, naptha, butane, acetane, who knows...but one can BET that it would burn in a lawn mower or a gas grill or even a car if there was a market for it....I worry less about "Peak Oil" than I do about "Peak brains"...we live in a world of totem and taboos worse than any ancient village people, where we would rather rail about "PEAK OIL!" than simply change a few habits.

Roger Conner  known to you as  ThatsItImout

And in an ideal world, anyone who uses Segway(tm) to mean segue, is made to ride around on one for a month and look like an utter berk.
Did you ever stop to consider that the choice of the word 'Segway' was deliberate, given the tone of the post? To move seamlessly from one mode to another- to substitute - and even if it wasn't why the pointless nit picking? The intention was clear. Why not pick up on the other spelling mistakes?

On this...
America may be peaked on natural gas, but the world is not, at least not yet, and places like Australia have more gas offshore than people to burn it, their only problem will be trying to keep Americans from hogging it up....

My parents recently went to some kind of investment seminar where the speakers had the opinion that for the first time in 200 years Australia was in a good geographic position... ie WRT India and China. The Gas mentioned above is mainly in the north west of Western Australia... I would suggest that none (or very little) will make its way to the US or Europe. You only have to consider the sailing times across the Pacific (to the US) as compared to under a week to India and maybe a little more to China. Other views?
(I hoep I splet everhtying corerctly?)

Yes, but the word is spelled "segue" not "Segway".

"Segway" is a brain-dead Amurrikan phonetic Newspeak version of the word, copyrighted and used to mean a commercial product.

I guess it's true that the only difference between Americans and non-Americans is the non-Americans are those who were not raised within the Empire and are differentiated only by their desire to be Americans. To live in a culture with no history, to speak a language where trademarked products are held holy, and to disencumber themselves from the baggage of irony, subtlety, and humor.

Welcome! Start processing your papers now, and here's a hint: Tell 'em you're Hispanic or something if you can "pass" at all, there's something about the Anglo-Saxon ideas of individualism (real individualism) and freedom (real freedom) that make the rulers of the Empire uncomfortable, so if you can seem to be an ignorant and enthusiastic 3rd worlder it's much easier to become a real Amurrikan.

I think using the lawnmower as the example here was a poor choice.  We don't need any kind of artificial power simply to cut the household lawn. A late model push-mower, of light-weight construction, taken to the sharpening shop every year or so, will do the job just fine, unless one's lawn is very large.  And we all know that vast expanses of suburban lawn are soon going to become unfashionable.
Actually, LPG mowers are available in the US - they are large commercial ones.  In fact, there was a recent article in Turf magazine about them.  And, LPG forklifts have been around almost forever.

What is going to undercut any switch to other fuels is cost.  Take something as simple as switching back to coal for heat.  I grew up with coal heat.  First, you need a coal furnace.  I'm unaware of any residenetial ones currrently available other then box-type heaters.  Second, today's houses are not designed to house them.  Third, no houses are built with coal bins and, of course, there are no longer any (perhaps a few still survive) residential coal suppliers.  So, our esrtwhile aging yuppie has to build an addition for the furnace and coal bin and buy an appropriate furnace and re-do the ductwork. Lots of bucks.

The same high costs are encountered were someone to decided to switch to LPG for their vehicle.  Sure, it's doable at a high price.  Further, the only reason LPG is cheaper then gas today is that it's not loaded with taxes.

I honestly don't anticipate any of these changes occuring.  It isn't that the changes are impossible but rather few will be able to afford them.  To me it would make more sense to take the equivalent of these funds to improve transit, etc.

BTW, I heat with wood that I cut off my land using a, gasp, gas-powered chain saw.  But if push came to shove, I do have a couple of 6' two-man saws - misery whips as the old-timers called them.

Allow me to segway (hee,hee,  what real Amur I can would use some French lookin' word like, what was it, seque?  That sounds like a food, "I'll have the pasta la'seque, please..." :-) back to the issue of price and cost...in one way, I think your right....if gasoline hangs around the $3.00 to $4.00 mark, and nat gas stays under $7.00 to $8.00 a MM/btu, not many folks are going to bother with change, it will still be a small part of overall income anyway...BUT, if it goes over $4.00 bucks, people start looking....and the cost factor comes in favor of flexibility....take the industrial/commercial propane mower you mentioned...Dixie Chopper makes one, it costs more than their gasoline model, but it is cleaner, easier on the engine....and here's the important part (even moreso than the taxes you mention) it is running propane out in the summer months when propane dealers are having to discount (especially after a couple of mild winters back to back).  The cost of the mower becomes not such a bad deal.

Here in KY, a good number of natural gas/propane suppliers run LPG in all their delivery and service trucks, (our local dealer even uses in farm equipment on a small farm), because he has volume tanks and knows what the cost to him will be for the next year out in front, because he already owns the LPG.  The costs are not that great, if the conversions are done in even moderate volume (in the older days, when there were real mechanics around, a lot of them built the kits themselves)

On the idea of using coal to heat a house, your absolutely right, it would be idiotic to try that...and an environmental nightmare to boot....so what to do?

Install a geo-thermal or ground coupled heat pump and good insulation.  In many parts of the country, that effectively puts you on coal to heat with, from the utility.  It costs, but if nat gas takes off again, it may not be such a bad deal.

But, if fuel (gasoline and Diesel) stay cheap, no, there will be no changes simply for the sake of gaining market leverage, and for having other options available in the case of emergencies, or for smoothing out the seasonal demand peaks and valleys....that would make too much common sense, and give us the consumer some clout in making the gas/oil/electric/coal suppliers compete against each other at least to some degree.

America seems to like to be a one store town.
(by the way, ignore any mispellings, I am in a hurry, and my Mac has a crappy sppell cheque! :-)
Roger Conner known here as ThatsItImout

ThatsItImOut says:
"if gasoline hangs around the $3.00 to $4.00 mark, and nat gas stays under $7.00 to $8.00 a MM/btu, not many folks are going to bother with change, it will still be a small part of overall income anyway...BUT, if it goes over $4.00 bucks, people start looking....and the cost factor comes in favor of flexibility"

I heard this when gas went over a dollar in the '70's. I heard this when gas went over $2 last year. I heard it last month when gas went over $3. We know many people pay 5 to 6 dollars a gallon and still drive.

What proof do we have that increasing costs will dramatically reduce use? WalMart sales up 6% last month!

There is a wealth effect at play here for the middle-to-higher middle class. For as long as they feel "rich" from higher stock prices and the (still) high value of their homes, paying a few cents more for gas won't matter greatly. Their behavior won't be altered greatly until they start feeling "poorer". Their signal is the DJIA.

But for those who live hand to mouth...they are cutting down already. Take a look at a chart of the ratio of unspent personal income to personal fuel expenses and you will see what I mean...

Why cut the grass in the first place? Just let it go through its natural cycle of growth when it rains and whither when it's dry. Or better yet, why plant the stuff in the first place? It's a pretty useless invention. For those who live in Arizona, get yourself a cactus garden instead -- you can make tequila out of it.

Actually a lot of home owners associations require lawns as part of the CCR's of the development - can't have a scruffy looking yard; home values will go down.

In any case, I agreee with you.  What is unfortunate is that most of these lawns are on crap, back-filled soil that aren't particularly useful for anything else.


You dodged my question on the cost of alternatives.  Sure, ground source heat pumps are nice.  But, if you are strapped to pay the bills, as many of the McMansion ownwers will be and some middle class people currently are, do you seriously think they are going to give something up in order to pay for a system like this?  And, if they choose to give up buying new junk (assuming they can), the economy goes to hell.

Here's a question for you:  I have a 3.6kW PV system.  The parts cost $40+ grand  (However, I should mention that $6K of this is batteries).  Are you ready to install a similar system?

<Here's a question for you:  I have a 3.6kW PV system.  The parts cost $40+ grand  (However, I should mention that $6K of this is batteries).  Are you ready to install a similar system?>

I live in Kentucky where electricity prices are so cheap no one even looks at alternatives, it would be pointless (I once did price a PV system and at current electric rates in KY the payback period exceeded 60 years, but that was not including the fact that most PV panels only have an expected lifetime of 20 years, so the payback time was NEVER...Kentucky is not the place to look for alternatives to electric power as a first option, but instead look for options away from natural gas and and gasoline....ole KING COAL rules here, whether we like to admit it or not, and a plug hybrid in KY would be so cheap to run it boggles the mind (of course the CO2 issue will have to be discussed separately since most Kentuckians rank it right up there with killer bees as a real threat.... you asked,
<You dodged my question on the cost of alternatives.  Sure, ground source heat pumps are nice.  But, if you are strapped to pay the bills, as many of the McMansion ownwers will be and some middle class people currently are, do you seriously think they are going to give something up in order to pay for a system like this?>

Sorry, I ain't buying into that...it never amazes me how we can justify that nobody can afford alternatives, but they can afford everything else, and the predictions of the soon to be collapse have now been running for 25 years...let just try to give you a thought....I was at a convenience store fueling up my Diesel the other day, when a white Caddie rolled onto the lot....and I hear this POP, followed by, "PHHHHHHSSSSSSSS!!!"  I thought I was in the middle of a drive by shooting...but then I see the Caddie drop about 5 inches to the pavement....oh, that's what it is....hydraulics.....
Now for those of you who are not familiar with the youth culture, Hydraulics are placed on the suspension of a car to make it rise, fall, bounce, wallow from side to side, and other odd tricks for cosmetic effects and showmanship.  It consists of at least one hydraulic pump, and at least 2 to 4 recieving servos or shocks, and electronic switch gear and control valves, plus yards hydraulic high pressure hose.  At least the above is required for only a minimal system, and to repeat, this is for "special effects" cosmetics only.

The above is a multi million dollar industry, and along wiht other "cosmetic" after market enhancements for autos, this is a multi BILLION dollar industry.

And yet, it is argued, that the Americans cannot, repeat, CANNOT afford any device that will save fuel or move people to more flexible alternatives.

Hybrid cars?  Too expensive, we are told, too complicated, nobody can pay....
Hydraulic hopping suspensions?  Too cool....have money, will hop!

What a pack of idiots.
Roger Conner  known to you as ThatsItImout

Damn, forgot to plant Sassy Frass again.  Will have to stop at WalMart on the way to Starbucks tomorrow AM.

Thanks for the reminder.  Thanks also for generalizing.  "The Americans" all fit your mold perfectly, simple-minded sheeple that we are.  Baaaaaaaa.

There's another aspect of the oil importer/exporter issue that will come into play and which will give the arguments of WesTexas a bit more leverage than Stuart is currently allowing.

First, Stuart is correct in making a distinction between oil exporters that subsidise domestic production and those that don't.  In places like Canada & Norway, the population is fully exposed to the rising price of oil (I won't say high, because it would be cheap at twice the price), so they have a definite incentive to conserve.

Secondly, he is correct when he says there will be political pressures to reduce the gap between domestic & world prices for oil in the countries that subsidise it.  One way that this may play out might be for governments to move away from a fixed local price & towards a fixed subsidy, so that local prices move in line with world prices, but at a lower level.

There is, however, a third consideration.  This is that oil imports are a growing factor in the balance of payments of countries around the world. Countries importing oil will face balance of payments constraints and, in time, crises.  This will reduce economic growth markedly.  In exporting countries, however, higher prices will cause a boom.  This means that people in oil exporting countries will, in aggregate, be more able to afford world oil prices than people in oil importing countries.  The share of oil consumption will therefore shift towards those countries which are oil exporters and away from the importers.

Finally, the effect of oil prices is not confined solely to oil exporters.  It will also, though to a lesser extent, be found in net energy exporters like Australia.  Australia is an oil importer, but a major exporter of coal & natural gas.  Rising oil prices will also raise, to an extent, coal & natural gas prices.  This will protect the balance of payments of Australia & other countries in the same situation and, therefore, allow economic growth to continue - at least for ten years or so until things get really drastic.

What a great insight, Ablokeimet. In Australia, oil imports have grown from almost nothing to the second largest part of our monthly current account deficit. The nett balance is we pay about AUS$4 billion more for importing oil and oil products, than we get exporting oil & gas. Out gross import bill is now more than AUS$17 billion per annum, and we are sure to feel the macro-economic impacts of these imports before we go to less than 50% self-sufficiency.
It should be kept im mind that many oil exporters which subsidize gasoline, have to import the gasoline, since they haven't the distiling capacity.  I'm thinking especially of Iran.  One of the best arguments against Iran reducing exports is that they need the money to buy the gas that keeps the citizenry's criticisms to a dull roar.  Reducing their exports is a double whamy as it not only reduces their income, but makes the imported product more expensive.
Good point. If half of their exports go for gasoline imports, and they cut their exports in half, the resulting increases in world oil and gasoline prices will balance, so they will be unable to finance their current total imports...

So, the solution to the iranian nuke crisis is simple, just as we could have earlier quickly, and bloodlessly, solved the hostage crisis - bolckade their oil exports. World oil prices will increase, but not drastically - say to $100/b - because some oil will leak through the blockade via pipelines. Meanwhile their economy will slowly collapse, and time is probably on our side.

Who wins? There are many beneficiaries; higher prices will promote conservation and reduce current consumption - leaving more for later - and slowing gw, as we all want; and, Bush's oil patch backers will be mightily (but very quietly) pleased. Meanshile, iranians will have less money for many things (not least terrorism), which their young and restless will not find amusing.

Will Bush seize the nettle? Does he retain sufficient political power to engage iran economically, when the engagement raises pump prices? Would the anti-bushies at tod support him on this issue, and would they help, or hinder, him in the mid-term elections?

Which leads to an interesting conclusion ..
Governments which most heavily subsidize
domestic energy costs are the most likely
countries for future civil unrest ..

Triff ..

I agree that balance of payments is critical - that's really the key issue on who's going to conserve how much. To the extent a country has something to export that others want, it can buy oil (and other key commodities).

I guess this reframes the ethanol question in an interesting way: is it better to grow ethanol for domestic use, or better to grow food to export in exchange for oil?

Hello Stuart,

...or is it better not to export any food at all?  Exporting food is essentially the same as exporting our topsoil-- not a good idea for the long run, and detritus entropy will eventually preclude this from happening anyhow [calories to move the food > food caloric value forcing localized farming].

If any country needs to import food to survive--they are in Overshoot and should be drastically reforming their agricultural methods and birthrates [if they are smart].  Abundant biodiversity, with clean, easily available water, and rich, loamy topsoil are the primary ingredients of security, whether at the family level, or scaled up to the national level.  Then having huge PV installations to power the move of the foodstuffs and cotton from farm to walkable cities for processing, along with the return of humanure and other recyclables, is the next step.  Biosolar generated energy slaves are vastly preferable to human slaves.  I hope America has the wisdom to lead the way.

Saudi Arabia, and other ME countries, which are highly reliant upon food imports and high energy inputs for water desalinization are making a terrible mistake by not heading off these issues:
A burgeoning population, aquifer depletion, and an economy largely dependent on petroleum output and prices are all ongoing governmental concerns.
...desertification; depletion of underground water resources; the lack of perennial rivers or permanent water bodies has prompted the development of extensive seawater desalination facilities; coastal pollution from oil spills.

SA could quickly be brought to its knees, within mere days, if someone attacks these desalinization plants, and cutoffs food imports combined with some aerial defoliants.  I could easily imagine SA trying to trade two barrel of oils for one barrel of potable water in a worse case scenario.  SA, wealthy as it is, should stop deluding themselves and start building biosolar sustainability forwith.  This would eventually allow them to become financially and militarily impregnable vs. their very exposed current condition.  But sadly, I think that maybe the US milgov elite are counting on this SA weakness for some future time.

Bob Shaw in Phx,AZ  Are Humans Smarter than Yeast?  


I'd really like you to post an expansive review of what you consider to be "biosolar" living/a biosolar society.  It comes up in your posts on a regular basis.  Maybe the TOD PTB would let you be a guest poster.

I've been arguing that society needs a new paradigm.  Unfortuately, the world is full of warm-fuzzy buzz words.  So, what is biosolar living?

I'd like to know how it differs from my life.  I have a highly energy efficient house. A PV system.  Solar hot water and grow (and preserve) a lot of food.  My heat comes from trees on my property and the water from my well.  What am I missing?  I want to be clear that this isn't trolling.  I am very seriously interested in this.

There is a fourth consideration which WesTexas needs to incorporate in his model.

This fourth consideration is the fact that energy intensive production will tend to migrate to nations with the greatest energy reserves.

If you want to run a wafer fab which requires significant amounts of energy to maintain and manage the prodcution environment will you locate you $10 billion investment in a region of potential energy shortages or will you locate in a state with an assured energy supply?

If we look at Saudi Arabia we find a state with a growing population and an indequate number of jobs. Given current oil prices they would also be able to provide a subsidy to encourage industry to locate within their borders. The US has already lost a number of chemical plants which have relocated overseas to be more closer to an assured low cost supply of raw materials.

In the long run, I don't think oil exporters will be much better off than oil importers. The exporters will probably adapt slower to a post-oil society, and will thus be stuck with obsolete infrastructure when their domestic oil supply decreases, as will inevitably happen.

The importers, on the other hand, will get the shock treatment much sooner, and I think this is a good thing. The greater the initial pain, the better off you will be in the long run. For example, look at the economic performances of the contries of the former Soviet block. The ones that went for a quick, painful transition to a market economy are doing much better today than the ones who dragged their feet. For example, Poland is much better off today than Belarus.

The sad part is that the exporters, with their greater resources, would be in good position to transform their infrastructure. Today, only a few oil exporting countries are preparing for the inevitable, notably Norway and the UAE.

I'm not sure about elsewhere, but a large portion of the drop in consumption in Europe has been linked to the long switch underway to diesel engines, which consume less than gasoline engines.

Thanks to direct injection, low sulfur standards and particule filters, diesel cars are just as performing as gasoline cars, consume less and pollute less. And the movement is encouraged by taxes which are much lower than gasoline in a number of countries. So gasoline consumption is down significantly, and diesel is up - but by less.

Conservation in action, from Computer World:

IT Energy Costs: The Quiet Budget Killer  

Most IT organizations estimate their standard infrastructure expenses based on servers, telecommunications and desktops. Few consider the cost of the electricity required to power and cool the equipment. With today's rising energy prices, companies can no longer ignore the cost of power. In some markets, the electricity bill for a server facility can run four to six times the cost of renting the building space.

The ratio of power costs to hardware costs can be staggering. According to BusinessWeek , when Paul Otellini joined Google's board, he learned that electricity for its "white box" servers cost Google more than the servers themselves.

The rest of the article is a list of tips for saving energy.  Among them: switch to DC power.

I'm pessimistic about how much auto fuel demand in both Europe (where fuel taxes are high) and USA (where auto fuel is still cheap in absolute terms) will be destroyed by oil price rises of the rate and scale we have seen over the last two years - unless the % rate of rises persists or increases.  Most people in UK I've spoken to about fuel prices laugh when told of "hardship" caused by US prices of 3 dollars a gallon - a lower price in real terms than seen in UK for at least a generation, where almost 2/3rds of the price is taxes - see http://uk.theoildrum.com/story/2006/5/3/17236/14255
This has the maybe unwelcome side effect of shielding the public from the most obvious indicator of oil price rises as a 10% oil price rise only shows up as about 3.5% fuel price increase - about 3p/litre which is similar to the difference between different stations

Also there was a table recently - can't recall reference - that showed that in US fuel cost is still a small proportion of total car running costs - most is depreciation, interest on loans for purchase, etc.  So in either case crude oil price rises have a tiny impact on car running costs per mile, so people are not likely to drive a lot less.  Also with more fuel efficient cars remember Jeavons Paradox - if you buy a brand new, fuel-efficient car you might as well use it a lot, by spending the same amount on fuel but travel further.

I believe the biggest impact on motor fuel use in the near future is likely to be economic slowdown which we are maybe just beginning to see in the UK and concern for personal - mainly credit card - debt which is huge. Keep that going and it brings - recession.

Well, this new poll suggests that Americans are conserving.

WASHINGTON - Americans are driving less, trimming vacations and cutting back on heating and air conditioning, according to an AP-Ipsos poll taken as gasoline prices in many areas have topped $3 a gallon.

Seven in 10 say gas prices are causing a financial pinch. And that pressure is being felt increasingly by middle-income and higher-income families.

"Now, I'm just going to work and coming home -- not doing anything else," said Kathleen Roberts, who makes a daily, 100-mile round trip from York, Pa., to her teaching job in Baltimore.

Many aren't doing the tough things yet - moving closer to their jobs, and buying smaller cars - but that will come.  

I think the anecdotal evidence in recent news stories overstates the case. In February, vehicle miles traveled was basically flat over Feb 05, while in January it was slightly up, but not as much as a typical year-to-year increase. 2005 was roughly flat over 2004. So VMT conservation is not more than a couple of percent a year relative to business as usual. Helpful, but hardly the transformation that the quotes above would suggest. (It's possible April shows a more dramatic signal, but we won't know for a bit).
True, it's just a poll.  People don't necessarily speak truth to pollsters.

However, compared to the same poll taken a year ago, it's kind of interesting.  More details here.

_OVERALL: Seven in 10 adults expect that increases in gas prices will cause financial hardship over the next six months. Just over four in 10 say that hardship will be serious. A year ago, only 51 percent expected hardship. What has changed is the number of people in middle and higher income groups who are saying that gas prices will cause hardship. Almost two-thirds of those with household incomes between $50,000 and $75,000 expect hardship, compared with 41 percent in April 2005. And 58 percent of those with household incomes of $75,000 or more expect hardship, compared to 31 percent in April 2005.

_HIGH-INCOME CHANGES: Those in upper income households, $75,000 or more, are now more likely to say they are reducing the amount of driving they do (61 percent today vs. 46 percent in April 2005) and to report cutting back on other expenses (57 percent vs. 47 percent in April 2005). Those in households making $50,000 to $75,000 a year were already taking action to deal with expected hardships. The lower the household income, the higher the expectation of hardship. Eight in 10, 83 percent, of those with household incomes under $25,000 are expecting hardship, and fully two-thirds, 67 percent, expect serious hardship.

_CHANGING BEHAVIOR: Two-thirds, 66 percent, have reduced the amount of driving they do as a result of recent energy prices, up 8 percentage points from April 2005. Those with college degrees were much more likely to reduce the amount of driving compared with one year ago, 66 percent now to 46 percent then. Two-thirds said they have turned down the heat and air conditioning, slightly higher than the number a year ago. Women, Democrats and those without college degrees were more likely to have cut back on utility use. About half say they will change vacation plans to stay closer to home, compared with four in 10 a year ago. Women, young adults 18-34, those who don't have college degrees and those making under $25,000 a year were most likely to feel that way.

Even if they're just saying they've cut back, and really haven't...well, at least it shows they're thinking about it.

And therein lies a huge problem.

Americans who are "middle class" and "higher income groups" saying gas costs will be a hardship?

I myself at something around the scut working-class flying under the radar, and I don't worry about gas prices.

And this exposes the actual truth: Almost all Americans are working class. If you're worrying about gas prices, there's not a whole lot seperating you from the gardener you're paying to keep your yard neat while you're away working your 50-60-70 hour weeks. I'd say we have about the top 20% being actual middle class & higher and the "Haves" a subset within that top quintile.

I think the difference is that in UK and most of Europe, motorists appreciate that driving long distances and regular long commutes is goiung to take a big chunk out of their net income.  They are not used to ignoring the fuel costs of long journeys or - unless wealthy or motor-obsessed - driving cars that do under 20 mpg.  I think people will cut back a fraction but no more unless prices continue to rise.  I wonder if anyone would hazard a guess on how much fule prices and hence oil prices, would have to rise to reduce demand by say, 2% per year?
Re: How much would prices have to rise to cut oil consumption

In 1980-81, during the last oil crisis, the expense for personal consumption of "gasoline, fuel oil and other energy goods" (as included in the Nat'l Income and Product Accounts) was 5.1% of disposable income. In 2005 it was 3.5%. At current oil prices, the expense will rise to 4-4.5%, still below the high of 1980.

But there is a crucial difference this time: American currently spend 97% of their total income, vs. 86% in 1980, so they have less cushion to absorb higher energy expenses. Putting it another way, Americans' annual unspent income could buy them 30 mos. of fuel expense - today just 9.

Consumption is almost certainly being cut as we speak.

Hello Hellasious,

One way people are cutting personal auto expenses is to reduce auto insurance coverage to the state-mandated minimum, or going without insurance at all.  Thus, it is forcing higher premiums on those motorists, desiring to protect themselves, to pay for un-insured or underinsured motorist coverage.  It should be required that insurance is totally prepaid for a year upfront in order to get your license plate tags.  Instead, what happens is poor people setup their insurance on a monthly pay basis, get their license tags, then cancel the insurance a month later, but keep driving their cars.  If the ins. requirement was to prepay for the year ahead first, many would be forced to use mass-transit, taxicabs, or bicycles--helping to conserve energy and create walkable cities.  It would also help reduce the pollution and the carnage on the roads as most of these vehicles are old, poorly maintained, and many drivers exhibit bad driving practices.

So what happens as a result of the current plan is that a pedestrian or vehicle get hits by a non-insured motorist, then the driver leaves the scene of the accident.  If not, the driver has no networth anyhow to pay damages to the mangled accident victim.  The state has to pickup up the tab of medical and disability costs.

I like the idea of no fault insurance purchased at the gas pump.  The state could vastly increase the mandated minimum liability protection to help financially protect all citizens, and paying for both gasoline and ins. by the gallon prohibits any driver from not being covered.  A gas tax to further induce conservation could be included with this plan.  This might be the best way to setup a fair plan, and create walkable communities as gasoline could go to $10-15/gallon overnight.  The roads would be much less congested with all the car-pooling, buses, and scooters--making it vastly safer for increasing numbers of pedestrians and bicyclists.

Bob Shaw in Phx,Az  Are Humans Smarter than Yeast?

You are so right.
Focus on the pie chart.  The U.S. has held on to its 25-26 percent share of world oil for decades.  Will this change in the future?  (One year of declining consumption does not a trend make.)  
Will the India/China slice be allowed to grow?  If yes, who gets a smaller slice?  EU or US?

I can't find one of your more outstanding posts.  My recollection is that it went up last summer or early fall.  Assuming a declinining oil production (peak oil), you projected what effects three different decline rates might have on the world economy (mild, moderate, severe).  

That kind of analysis seems to be missing from this article.  Am I missing something, or doesn't this article presume a continued plateau or a gentle decline?  You do raise the possibility of an "oil shock" but that is not the same as month over month decrease in oil supply.

You're thinking of 4%, 11%, Who the Hell Cares?. But it's also true that the best available evidence suggests that global decline rates will be modest. I agree with WesTexas part way that the US and Europe are going to see higher effective decline rates because we are going to have to make room for OPEC and Asian consumption that is going to continue to increase despite a global plateau/decline. But I'm still expecting us not to face more than a few percentage points annual decline in the near term (again with the caveat about major oil shocks being likely interruptions along that path). That's why I believe the problem of peak oil is soluble from a technical standpoint - all we have to do is conserve a few percentage points a year. That's not to say that the political classes may not completely screw it up despite that - the reaction so far is unbelievably dysfunctional, and it's hard to say whether it will improve or not.
Yes, that was the post, and still a classic, in my mind. (The search function didn't seem to go back past November.)

At any rate, your response is very helpful, and frankly not reassuring.  It does require a rational political response in the US.  I think there are any number of reasons why this won't happen anytime soon.

Not to disagree so much in this remark, Stuart, but did you read the note I made on Mexico (below) and consider the other major exporters to the US? In rank order below.

  1. Mexico -- consumption up, production declining
  2. Canada -- probably OK for now except there is growing resentment there. Tar sands slow to come online
  3. Saudi Arabia -- ??? recent attacks on oil facilities including Abaqaiq
  4. Nigeria -- enough said
  5. Venezuela -- talk about a stable producer! Not! Hugo! Buying oil from Russia to meet contractual obligations.
So, I am not as sanguine as you about our situation. Who are we going to invade next to keep the pumps primed? I know you are taking oil shock into consideration but still, this looks bad to me.

best, Dave

There was no leadership in the seventies that helped us through the embargo and 9x higher prices. Conservation, and switching to alternate fuels, occurred painfully as the hidden foot coaxed the us and world into becoming more energy efficient. There is no reason to think that future response to future shortages will be much different than the past.
Frankly, although the media is beginning to pay attention, joe public is not. In most of my discussions with others, all intelligent, well educated and generally liberal, I find that listeners a) have not heard of po and b) have no interest in it.
There is no reason to think that future response to future shortages will be much different than the past.

The past did not feature year over year oil production declines.  When this happens, we will have entered a new world requiring wise and cooperative planning, as Matthew Simmons argues.  For example, he argues for the switching from trucks to trains for the bulk of freight hauling.  This kind of decision would require nothing less than a huge government intervention in the status quo.

True, there will be adjustments by many, but many other "hidden hands" will be looking out for interests that will cause others great suffering.  We will be entering a zero sum game--if we haven't already.

RE low internal subsidized prices. Yeah, the oil will 'leak' from these countries. I can see a situation where gasoline is $0.50/gal but strangely unavailable. This could begin to apply when countries like Venezuela 'overshoot' in their purchases of foreign goods and services and have growing international debts to pay.
I was particularly struck by Mexico in your lead graph. Considering that Cantarell is tanking and with their consumption increasing, consider this EIA report on US Imports for February 2006.
Monthly data on the origins of crude oil imports in February 2006 has been released and it shows that two countries have exported more than 1.7 million barrels per day to the United States. Including those countries, a total of five countries exported over 1.1 million barrels per day of crude oil to the United States (see table below). The top sources of US crude oil imports for February were Mexico (1.774 million barrels per day), Canada (1.710 million barrels per day), Saudi Arabia (1.418 million barrels per day), Nigeria (1.342 million barrels per day), and Venezuela (1.178 million barrels per day).
Wonder how much longer that can go on? Also, we should consider that Mexico is also subject to shut-ins and damage from hurricanes.

This is definitely something to be concerned about from the American perspective when we also consider that Nigeria and Venezuela are #4 and #5.

Just to add a humorous note, I see that we got a whopping 450/kbpd from Iraq (that thousands folks) in February, down 82/kbpd from January. W, Dick, Karl, Don and Condy's plans are working out big time. Maybe it's time for W to bring out that codpiece and make another speech on an aircraft carrier.

Remember guys, you've got two choices, you can laugh or you can cry.

Re:  Occam's Razor & Net Export Capacity

Life is complicated.  Perhaps because of the vast unknowns that I face in oil and gas exploration, I try to simplify models as much as possible.    

There were two parts to my "Export Land Model," falling production and (slightly increasing) consumption.  Assumptions:  (1)  a country producing 2.0 mbpd, consuming 1.0 mbpd, exporting 1.0 mbpd; (2)  production falls by 25% to 1.5 mbpd over a six year period (based on North Sea); consumption increase 10% to 1.1 mbpd, net exports fall to 0.4 mbpd.   Therefore, as a result of a 25% drop in production and a 10% increase in consumption (over a six year period), net exports fall by 60%.   Note that increased consumption only accounts for one-sixth of the drop in exports.  Falling production accounted for five-sixths of the drop in exports.

IMO, falling production is going to be the big driver regarding falling exports, while increasing consumption will be a significant, but minor factor.  However, key point:  even if an exporter has flat production, rising domestic consumption = falling exports.   If production is even rising at the same rate that consumption is growing, this would equate to no increase in exports.

The Lower 48 and the North Sea reserves were developed by private companies.  The only restrictions on production were regulatory restrictions and  prudent reservoir management (Texas was politically constrained, but this was a minor factor on Total Lower 48 production).    Based on the HL (using crude + condensate) technique, the Lower 48 peaked at slightly less than 50% of Qt, while the North Sea peaked at slightly more than 50% of Qt.  

So, again using the simplest possible model, what we would we expect to see after the 50% mark worldwide?  Record high (nominal) oil prices?  Falling production?  Falling imports?

Again, the HL technique suggests that the top exporters are more depleted than the world is overall.  Just look at the ages of the top oil fields in the exporting countries.    IMO, we are only at the beginning of a ferocious bidding war for a rapidly declining net export capacity.    In the short term, we may be able to outbid some other importers, but increasingly the question that exporters are going to be asking is what thing of value can we offer them in exchange for their oil.

I cannot emphasize enough that you need get yourself on the side of the economy that is producing essential goods and services.  

Interesting News Item from 2004


Russia's Oil Exports Reach Maximum, Decline to Start in 2 Years -- Official

 Created: 09.11.2004 16:38 MSK (GMT +3), Updated: 17:11 MSK



 Russia has almost reached its maximum level of production, the head of the Russian Union of Oil and Gas Producers, Yuri Shafranik, said on Tuesday, Nov. 9.

Speaking at a press conference Shafranik, quoted by Interfax, said: "We are currently producing almost the maximum amount of oil possible. Further growth can happen only if the [world] prices continue to rise, but [since that is unlikely to happen for much longer] Russia's production and subsequent export will be automatically limited in two years' time."

The Russian official quoted experts from the International Energy Agency who predict that oil production in Russia will continue to grow for another two or three years, then the volumes of production will stabilize at a certain level, and then will begin to fall. "Only direct investment can change this situation," said the head of the Oil and Gas Producers' Union.

He did add that the IEA underestimates the fact that Russia has a number of unexplored oil deposits which can guarantee the growth of production for a while longer.

I see that Germany's oil consumption for 2005 is down 27.7% from their 1973 consumption. So, consumption-wise, Germany is well into a post-peak situation. The place is holding together. No Mad Max gangs, etc. Is it possible that the negative effects of diminished oil consumption have been exaggerated (I know I am speaking heresy).  
Exactly my thoughts. Also Germany's economy is much larger today than 1973. This simple fact demolishes the crazy notion of "energy per capita". Advanced economies can grow while using ever less oil - utter Peak Oil heresy, but apparently true.
Re: "Germany's oil consumption down 27.7%".  The Germans have gone in for wind power big time - but recent figures showed that actual average output from their wind farms was under 30% of the maximum rated output, i.e. A 1 MW turbine averaged under 300kW of output.  Even more unfortunately they have also gone in big time for unemployment and economic stagnation, both of which as I understand it, can only partly be blamed on reunification.
Doctorbob, fret not, wind turbines are costed on 30% capacity or less. Here in the UK it's 27% and about 22% in the USA, IIRC. Anything above 30% is exceptional. And 4.5c/kWh (including commercial insurance and hazardous waste disposal costs) for clean wind energy sure beats nuclear!
Nuclear now provides 20% of our elctrical power geneartion, and having it means we did not increase our coal burning by 1/3. What percentage of us electrical generation do you hope wind will eventually provide? And, consider we must almost immediately replace the 10$ of the total we get from ng.
/What percentage of us electrical generation do you hope wind will eventually provide? /

33% wind; 33% solar; 33% biomass. After a 25% overall reduction via efficiency and carbon tax measures (a la westexas).

Quick calc: 3,970,555 million kilowatthours -25% x 33% = 992,638 M kWh. This requires 340 M kW of generating capacity ie 340,000 MW. Latest wind turbines are 4MW (6MW are in the works) -> 85,000 turbines. But, only 21% availability -> 404,761 turbines required. At about $1m per MW, that works out at approx $100B. A few weeks in Iraq?

PS: I know, excludes storage costs and transmission lines, but isn't this imaginable?

PPS: That's one turbine every 9 square miles. On average :)

21% availability implies to me that there are periods when the winds are quiet over large geographical areas. Wind works ok when it is not depended on to do much, say 1% or less today, but will not be so good when we need it for 1/3 of production. Note that grids do not perform well when demand exceeds supply by as little as 5% - longer able to cut demand with reduced voltage (brownouts), the grid begins to dump load by resorting to rolling blackouts. And, this sometimes over stresses the grid such that the blackouts spread to regions not originally stressed, as happened a year ago in the midwest.

Solar is better in many ways because it is more reliable and, just as good, generates power during peak air conditioning demand. The problem here is the cost, which will hopefully continue to decline at a hopefully more rapid rate. However, even solar does not work so good in the morning, at night, or during winter. Solar may indeed some day provide 1/3 of elctrical generating power, but I doubt much more.

Bio has been debunked on this site as a myth. The cost, both in energy and $, of hydrocarbon fertilizers implies it will never produce significant net power.

So, we need large, dependable plants for most of our electrical generation for the forseeable future, just as we do now. We can continue to depend on coal, as we do now, for a while, but will probably lose much low lying land over time, including FL and much of the gulf states, as well as quite a bit up the atlantic seaboard - it would be sobering to see a map of the us when the sea is 100 ft higher. The alternative is nuclear, specifically those that burn all the actinides as opposed to those that only utilize a fraction of their uranium fuel. I suspect that gw will be widely accepted by 2010, as well as the slim number of alternatives available to us. Sadly, there are not enough trained professionals to run a large number of new nukes, certainly not of the new types that will ultimately be necessary, and current professionals are nearing retirement.  I would advise graduating hs seniors to take up nuclear engineering studies - they will be able to name their price, just as oil field workers do now.

Never mind trying to run vehicles on gas.
How about doing something really stupid, like
borrowing hundreds of millions of dollars to
cover some prime agricultural land with a
chemical conversion plant that turns natural
gas into petroleum at around 50% energy
coversion, and then depletes the nation's
biggest gas field, just to keep the current
transport system going. Be in such a frantic
rush to build it that you pay over the odds
for everything and run into massive cost overruns.
Borrow so much money you cannot pay it back and
have to endure a currency crisis. Deplete the gas field so much
you have to shut down the plant and write off
the investment. Is that stupid or what?
Yes, it's exactly what NZ did after the
late 70s oil crisis, when it would have been
cheaper to have given every motorist a CNG
conversion kit. It tends to suggest that
corporate big business in conjunction with
corrupt/inept government will implement
whichever energy solution maximises short term
corporate profit at the expenxse of the
ordinary citizen.

And don't get me started on global warming,

The methanol plant had a negative cost. Think how much you didn't have to pay for a navy and army to keep access to Middle East oil! It was a good deal for thirty years.
The 05 (yellow) bars in your graph for the us and china are more similar than they appear. The us gdp rose around 3%, china's was up 9.5%. So each country, goaded by higher prices, reduced consumption/unit gdp around 3.2%. It would be interesting to see the change in oil consumption plotted against their respective change in gdp for each group.

As you know, the us has traditionaly wanted another 2%/year while gdp rose around 3-4%, so even a small decline in consumption shows that higher prices are guiding us towards greater efficiency. I confess I am by nature optimistic, but I think we can cope indefinitely with flat or modestly declining supplies, in part because both the us and the undeveloped world waste so much.

I'm not as optimistic as Jeremy Leggett about replacing most conventional electricity generation with renewables - especially in more northern latitudes.  What do you tell people on a still, heavy-overcast winter day - "sorry people, you have to sit and shiver in the dark"?  The more such renewables you the have, the more gas-fired pwer stations need to be on standby to fire up at a few hours notice.  But yes, it is better than nuclear.

I wonder what the UK public's reaction will be to the government's likely forthcoming plans for a new fleet of nuclear stations, when they have just had a hiding in the local elections?

Will GWB try to follow the UK Conservative leader's success in going green? (some humour!).

Good analysis by Stuart. A simpler approach is to remember the economic maxim, "the price of anything is the foregone opportunity."

What this means is that what something really costs you is what you give up in order to get it. We think of costs in dollars but it makes more sense to think of the costs as all the other things you can't get because you spent the dollars on this.

From this perspective, an oil importer has a choice between dollars and oil. He can hold onto his dollars, or he can give them up and get oil. A bushel of dollars or a barrel of oil, that's his choice. The price of the oil is what he gives up to get it, the foregone alternative: the bushel of dollars he could have had instead.

But if you think about it, an oil exporter faces the same choice: dollars or oil. He can hold onto his oil, or he can give it up and get dollars. It's the same choice: a bushel of dollars or a barrel of oil. The price of the oil is the foregone alternative: the bushel of dollars he could have had instead.

Therefore, the incentives for oil exporters and oil importers are much the same. Both are part of the same market system, which allows them to exchange dollars for oil. It's like they all have a magic wand that can turn dollars into oil or oil into dollars, at the current market price. Faced with the same incentives, their decisions, if they are economically rational, will be much the same.

Some Thoughts on Net Energy Producers Versus Net Energy Consumers

Consider the top two net oil exporters, Saudi Arabia and Russia (SAR),and the top two oil importers, the US and China (USC).  

I know energy prices are subsidized in Saudi Arabia, and I believe that energy prices are somewhat subsidized in Russia, i.e., less than the world market price in both cases.  This will of course cause demand to increase faster than it would have otherwise, especially when combined with the torrents of cash flowing into SAR from export sales. However, IMO declining production will be the biggest driver of falling exports.

At least while SAR is still exporting oil, it's probably better to be a net energy consumer in SAR, than in USC.  

In USC, it is far better to be a net energy producer than a net energy consumer.  In USC, the energy producers are facing an interesting challenge, trying to meet a demand that can  never be met (absent a massive economic collapse, which is possible).  

I was at Kinko's yesterday making some color copies, and I ran into a landman working the Barnett Shale Play.  I asked him what day rates were up to.  He said $500 per day, plus expenses.  He is working seven days a week, $15,000 per month.  (A landman secures oil and gas leases for oil and gas companies, acting as an agent for the oil and gas companies.)

I have suggested ELP as a response to Peak Oil--Economize; Localize and Produce.  By produce,  I mean be a producer, or work for a producer, of essential goods and services--especially food and energy.   In the food sector, I think that you should aim toward organic farming/gardening, since conventional agriculture is a huge energy consumer.

In regard to energy, almost anything makes sense--oil, gas, coal, wind, nuclear, (some) biofuels, energy conservation, the list goes on.   But the key point is to put yourself on the producing side of the ledger.  

Cheap energy has made it possible for the majority of Americans to live off the discretionary income of other Americans (think of all the entertainers getting multimillion dollar salaries).  We are facing wrenching changes as American's discretionary income falls, and as Americans are going to be forced to look for work producing essential goods and services.  The sooner that you adjust, the better off you will be.

The anger of the formely well off energy consumers is going to be something to behold.  We ain't seen nothing yet.

Therefore, the incentives for oil exporters and oil importers are much the same. Both are part of the same market system, which allows them to exchange dollars for oil. It's like they all have a magic wand that can turn dollars into oil or oil into dollars, at the current market price. Faced with the same incentives, their decisions, if they are economically rational, will be much the same.

you've named an equilibrium condition, when both parties feel they have balanced quantities of oil/dollars, and are deciding at the margin.

in a dynamic situation, in which a developing country starts with much oil and few dollars, and a developed country starts with much dollars and less oil, it is a lot more complicated.

certainly that complexity is compounded by the oil being consumed (converted to "goods" that are often transitory) more quickly than the dollars (which are often invested in equities).

so no, i don't see the motivation as being the same at all.  the oil holder is primarily diversifying long term investments (oil or equities).  the dollar holder is primarily funding current operations.

That would be true for oil sellers who sell more oil for dollars than the dollar value of their imports. For oil exporters selling around the same as they import, they are trading one kind of transitory good, oil, for others, eg food and manufactured goods, and see little option. SA has a choice, they could sell much less and fund their economy, so either a) they are being nice to us, or b) they want to hold various types of securities (oil for future goods), or c) they wish to fatten swiss accounts in the sad event that existing rulers are exchanged for others.
So, the US, Canada and Europe managed to lessen their oil usage while growing their economies! If this trend continues we can forget about all those gloomy predictions of mass famine and resource war.
As long as populations and "economies" continue to grow while reliant on the phantom carrying capacity of fossil fuels, it doesn't matter how efficient we become at it, we're in overshoot, which by definition preceeds collapse.  Read Catton for the definitive ecological analysis of our situation.  Read Daniel Quinn for another interesting perspective.  I'm all for conservation/efficiency/renewables - have done much to change the personal reliance on FF recently.  But we aren't going to technofix our way out of this one.  Totonelia - I second the request earlier for an expansion of your biosolar scenario...
Sorry I haven't heard of Catton or Quinn, but there are so many like them such as Paul Ehrlich, Jared Diamond, Matthew Simmons, even Malthus. I have read all those and they were all definitive, well respected and wrong. I'll look Catton and Quinn up. In return may I suggest you expand your bookshelf with Julian Simon, Bjorn Lomborg and Richard D. North.

The point remains. The largest and most advanced economies in the world have shown in 2005 (a boom year) that they can reduce their reliance on oil. Could it be that oil is a real commodity after all, sensitive to price?