[Plantagenet]

$this->bbcode_second_pass_quote('Heineken', 'R')ight now what we're facing more than environmental or energy-related collapse is FINANCIAL collapse. That's the immediate threat right now.

[Daniel_Plainview]

$this->bbcode_second_pass_quote('Plantagenet', '')$this->bbcode_second_pass_quote('Heineken', 'R')ight now what we're facing more than environmental or energy-related collapse is FINANCIAL collapse. That's the immediate threat right now.

[Heineken]

I disagree. I think the current financial crisis is far more complex than just energy-related, and has multiple causes. Adjusted for inflation, energy costs have not risen enough to account for the financial crisis. The chief causes were the real-estate mania, wild overspending by governments, and the overextension of cheap credit worldwide. High energy and food prices have contributed to the instability, of course, and exacerbated it.

[Ibon]

Is it worthwhile to debate the fine points here if knowledge gained bears no relevance in being able to effectively mitigate? Where many have perhaps lost interest in the power of the peak oil story is the understanding that the resilience of the status quo will remain firmly intact down the slow energy descent. In fact counter intuitively the resiliency of the status quo is directly proportional to the increase of instability. The exact opposite of what I had originally thought would occur.

[TheDude]

Hey Heineken et al.

Logged in to see how I was doing in the Price Challenge. Rarely see what's afoot anymore. I have a few Google News searches bookmarked, stuff like 'China oil demand' and 'OPEC spare capacity.' And I follow bloggers like Staniford and Summers. Basically peak oil comes down to only a few discrete factors. If OECD demand can shrink long term the developed world is free to burn all the oil they want. If not...China sold 18 million vehicles this year. US sales topped 2008, too. LEAFY Volts were about .1% of that total. Bakken or GOM remain very profitable bad jokes. Drowning in Oil, alright. Hence this $4/gal. C+C remains basically flat. They hit a marginally new high this year, but one within the scope of past revision. And where did that oil come from, anyway?

All of which could play out for decades, like others are saying. One step forward, one back. I don't find myself very gung ho about researching the minutia much anymore, let alone discussing, or vehemently arguing, about it.

[Pops]

Come on Heinie, adjusted for inflation, energy prices were almost 6 times higher in 2008 than the long term average and the lows in 2001. That's about $5,000 taken out of the the average household's stagnant income. Granted, there can't be a pop without a bubble and there were bubbles everywhere but to say it had nothing to do with oil is at least disingenuous.

This is the thing that I see most different here, the peakists have decided shorty et al was right in that the end of the world happened but everything is fine.

In fact, we haven't peaked at all, liquids supplied are still rising, albeit at much greater prices and lower net energy. My original WAG was that we'd not approach peak until the '12-'15 timeframe so all the falderal these last few years seems more like a glimpse of po instead of proof po is a non-event.

[Heineken]

$this->bbcode_second_pass_quote('Pops', 'C')ome on Heinie, adjusted for inflation, energy prices were almost 6 times higher in 2008 than the long term average and the lows in 2001. That's about $5,000 taken out of the the average household's stagnant income. Granted, there can't be a pop without a bubble and there were bubbles everywhere but to say it had nothing to do with oil is at least disingenuous.

[Heineken]

$this->bbcode_second_pass_quote('TheDude', 'H')ey Heineken et al.

[TheDude]

$this->bbcode_second_pass_quote('Heineken', '')$this->bbcode_second_pass_quote('TheDude', 'H')ey Heineken et al.

[eXpat]

$this->bbcode_second_pass_quote('Heineken', '')$this->bbcode_second_pass_quote('TheDude', 'H')ey Heineken et al.

[Pops]

Not to get to far afield but I think this is a big part of the change at po.com.

People look around and think they survived peak oil with only a $200 hit to the wallet - sorta like they look around and think the war in Iraq was no big deal because it didn't touch them. But oil production hasn't peaked yet - at least liquid fuels haven't.

Like I said, you can't pop a bubble that isn't overinflated, but cheap oil enabled those commutes and lots of the spending that let the economy inflate, even thought it obviously wasn't the driver of the explosion of the "financial" gambling sector, liar loans, liar appraisals, etc.

My point is simple, demand for gasoline is down but we're still spending twice as much for energy than a few years ago and the percentage energy takes of household budgets is up 50% and would be even higher if we hadn't been reducing our electricity use - and "oil" hasn't peaked yet.

If that's not "crushing" you, then good for you. But for the people who depended on that spending (that is now spent on energy) for their income, it isn't just $200 a month fewer lattes - it's the loss of their entire income.

And "oil" production hasn't peaked yet.

[Heineken]

Basically agreed, Pop. Energy costs and supply realities are reaching the stage where they are poised to make the final death-thrust. But this particular financial crisis---the event of 2008 and its aftermath, still unfolding---was in my opinion due primarily to the housing bust. That mountain of ridiculous home mortgages created a house of cards. There is little argument on that point among economists. It's even referred to as the "subprime mortgage crisis" by many. Had gasoline prices been lower, it would still have happened. I agree that the consequences for individuals would have been somewhat less severe.

[autonomous]

$this->bbcode_second_pass_quote('Pops', 'M')y point is simple, demand for gasoline is down but we're still spending twice as much for energy than a few years ago and the percentage energy takes of household budgets is up 50% and would be even higher if we hadn't been reducing our electricity use - and "oil" hasn't peaked yet.

[Plantagenet]

$this->bbcode_second_pass_quote('Ibon', ' ')Where many have perhaps lost interest in the power of the peak oil story is the understanding that the resilience of the status quo will remain firmly intact down the slow energy descent.

[Plantagenet]

$this->bbcode_second_pass_quote('Heineken', '.')..There is little argument on that point among economists....

[Pops]

$this->bbcode_second_pass_quote('Heineken', 'B')asically agreed, Pop.

[TheDude]

Pops - thanks for those graphs, I spent some time last night attempting to find it. Bookmarked. Don't know why, of course... thought I'd sworn off this place.

Someone has no doubt extrapolated that back further in time, I'm sure the basics of the series are in place. I did some futzing around with BEA or BLS numbers and they did show quite steep prices for energy 30 years back, as does the EIA, who show a peak of 13.7% of GDP being plowed into energy in 1981. How that broke out for consumers I forget; but I do recall being struck by how in the glory days of increasing US oil production the straits didn't seem much less dire for consumers, who still had to shell out more income for energy related costs. So why weren't those dirty hippies Occupying Wall Street et al more? You'd chalk all that up to greater purchasing power and lower living costs, I'd reckon. After all, the idea of women in the workplace was still on the drawing board, for instance, unlike today's norm of 42% or so.

Here's the EIA numbers on energy as %GDP:

$this->bbcode_second_pass_code('', '
1970 8
1971 8
1972 7.9
1973 8.1
1974 10.2
1975 10.5
1976 10.6
1977 10.9
1978 10.4
1979 11.6
1980 13.4
1981 13.7
1982 13.1
1983 11.8
1984 11.1
1985 10.4
1986 8.6
1987 8.4
1988 8
1989 8
1990 8.1
1991 7.9
1992 7.5
1993 7.4
1994 7.1
1995 6.9
1996 7.1
1997 6.8
1998 6
1999 5.9
2000 6.9
2001 6.8
2002 6.2
2003 6.8
2004 7.3
2005 8.3
2006 8.7
2007 8.8
2008 9.8
2009 7.5
')

Looks like when you go <8% you can hit that snooze button. Well, doubt they had snooze buttons in 1970. There's not data before that, and they're still working on 2010.

I'm in the energy spike = catalyst for recessions camp, too. Costs have historically declined, if slowly, post recession, so it will be interesting to see what 2012 reveals with the opposite happening.

[Heineken]

No one has to convince me that oil is plateauing or that high energy prices contribute to recessions or outright cause them. I am a hard-core believer in PO as any of you who know me know. But I am also realistic enough to recognize that not all current economic ills are due to oil peaking or plateauing.

In this PARTICULAR case, the collapse in real estate was in my opinion the chief, the direct, cause, or as they say in medicine, the proximate cause. The collapse occurred quite rapidly, and the financial crisis and recession followed very quickly. It's hard for me to overlook the orderly temporal proximity of the events.

The real-estate boom was long and deep. It transformed the country physically and the behavior of its citizens, massively. It altered the behavior and standards of banking, for the worse. It generated a gigantic turd of unpayable debt. It was a bubble, a mania, of epic proportions. It was the financial busting of America's chief business, the building out of endless suburbia. It collapsed because of the implosion of bank credit, not because of high gas prices. Suddenly there was no credit, and it's been tight ever since. And when real estate collapsed and many jobs were lost, income and property tax revenues were hit, suddenly throwing ugly light on the vast oceans of public and private debt.

Well, I won't try and write the history of the housing bubble. Wikipedia does a much better job . . .

http://en.wikipedia.org/wiki/United_Sta ... ing_bubble

It's a good, thorough article. I don't see any mention of gas or other energy prices. I concede they were a factor, a significant factor, but not the proximate cause. The mess was about housing, first and foremost, and has been morphing into an international crisis of sovereign debt.

People could not pay their mortages because many of them were entirely unsuitable for the loans they had been given. There was no reasonable expectation that they could actually pay those ridiculously inflated mortgages consistently and reliably over years and years. High gas prices contributed, but the real problem was that the mortgage was unaffordable across the board to these people in the first place.