[MD]

From our front page:

"Five years ago we got the energy crisis wrong."

"But while our understanding of the energy crisis five years ago may have been flawed (or more correctly, less than prescient), our appreciation that there was a crisis was not. We just misunderstood its details.

The real energy crisis is neither a geologic crisis nor a strategic crisis. The real energy crisis is a slow growth crisis. Although the oil industry has figured out a way technologically to recover large quantities of unconventional oil, the cost of doing so will be staggering. Conventional oil, which may cost $4-6 per barrel to lift out of a Saudi Arabian well, may cost more than $100 per barrel to lift out deep water deposits off the coast of Brazil. And the lift costs will only go up, as each barrel of oil becomes progressively more difficult and expensive to recover.

The result is a hyper-inflation of energy costs, as the fixed, structural cost of petroleum spirals ever higher. As more and more resources must be invested in petroleum production, fewer and fewer resources will be available for other productive parts of the economy."

Really? Five years ago YOU got it wrong, along with the rest of the world that seemed to find it impossible to get past the "we're running out" strawman. Today you've written a very nice definition of peak oi. Welcome to the club!

[evilgenius]

$this->bbcode_second_pass_quote('MD', '
')
The result is a hyper-inflation of energy costs, as the fixed, structural cost of petroleum spirals ever higher. As more and more resources must be invested in petroleum production, fewer and fewer resources will be available for other productive parts of the economy."

[Plantagenet]

$this->bbcode_second_pass_quote(' ', '
')
The real energy crisis is neither a geologic crisis nor a strategic crisis. The real energy crisis is a slow growth crisis.

[Tanada]

How much longer can the world as an average continue to grow? Growth is stagnant in the USA and in Europe at least as far as I can tell. Growth in China and India is slowing down. When do we hit that magic tipping point where not enough growth is taking place on a planetary whole? What is the Global GDP? Or should that be Gross Planetary Product?

[KaiserJeep]

It's all just complaining about prices, further currency inflation, and general economic malaise right up until the various fuels become too expensive to use for cultivating and transporting food in the Third World.

Then when the famine is widespread, people will start to get worried. Then we will change politicians once, twice, perhaps three times. By then, famine will be entering the First World countries. Large cities will be becoming untenable.

Then we will understand why one of the quickest adopters of renewable energy sources over the last decade has been the US Military.

I'm thinking, this starts to get bad in 2-3 decades. But until then, just misery for people on fixed incomes, higher and higher taxes, further erosion of the Middle Class, more hysteria over GHG's, AGW, and TEOTWAKI.

But of course TEOTWAKI will never replace football as the most important topic on the nightly news.

[Tanada]

$this->bbcode_second_pass_quote('KaiserJeep', 'I')t's all just complaining about prices, further currency inflation, and general economic malaise right up until the various fuels become too expensive to use for cultivating and transporting food in the Third World.

Then when the famine is widespread, people will start to get worried. Then we will change politicians once, twice, perhaps three times. By then, famine will be entering the First World countries. Large cities will be becoming untenable.

Then we will understand why one of the quickest adopters of renewable energy sources over the last decade has been the US Military.

I'm thinking, this starts to get bad in 2-3 decades. But until then, just misery for people on fixed incomes, higher and higher taxes, further erosion of the Middle Class, more hysteria over GHG's, AGW, and TEOTWAKI.

But of course TEOTWAKI will never replace football as the most important topic on the nightly news.

[Pops]

GDP has always been a problem to me. Even without getting too sentimental vis a vie environment, poverty, etc, one still needs to look at the direction of growth. Just a couple of examples:

What about churning of the markets, High Frequency Trading, etc?
(This paper (http://papers.ssrn.com/sol3/papers.cfm? ... id=1641387) shows HFT involved in approximately 74% of all trades for the stocks in the author’s sample.
This paper (http://papers.ssrn.com/sol3/papers.cfm? ... id=1686004) shows that inventory half-life of HFT firms in the e-mini S&P500s is less than two minutes.) H/T http://www.ritholtz.com/blog/2010/10/av ... 1-seconds/

Or putting houses on stilts in New Jersey / rebuilding NOLA / corn - ethanol ?

There are a million examples I suppose but it boils down to; If it's profitable, we count it and if we see growth we say it's good.

Don't get me wrong, I think profit is a good thing as far as it goes, markets ferret out the efficiencies; but only the monetary efficiencies. They can't tell you whether the things bought are worthwhile in a larger sense. IOW, you can be very efficient in your purchasing and still go broke.

[vtsnowedin]

You have the priority list wrong. Ag and Ag transport will be the top of the list then the Military will be the top customer. An army without rations is useless.
Then we will stop talking about Gross domestic product and refine it to total Useful product. Face it millions of dollars made on a hi tech movie is not the same as producing millions of dollars of grain or steel. We can skip the movies but not the cheerios.

[KaiserJeep]

...none of which will be of as much interest to the average guy as who is playing the next football game and what the point spread is.

I'm not sure when TEOTWAWKI is, but I am sure that a fair number of people are only going to notice it after it happens, and be shocked when it does.

[Tanada]

$this->bbcode_second_pass_quote('KaiserJeep', '.')..none of which will be of as much interest to the average guy as who is playing the next football game and what the point spread is.

I'm not sure when TEOTWAWKI is, but I am sure that a fair number of people are only going to notice it after it happens, and be shocked when it does.

[ralfy]

One has to see peak oil in light of two other predicaments: a global financial crisis and global warming combined with environmental damage. Include "black swans" like social unrest due to high food and oil prices, false flags and the use of military and police forces to control civilian populations, the spread of disease due to combinations of warming, human movement to urban areas, wilderness clearing, a breakdown in sanitation systems, availability of food, etc., nuclear and similar disasters, and "slow growth" will probably be an optimistic view.

[ROCKMAN]

ralfy - A rather dynamic system you're describing there. If we just had a short acronym for it we could save so much space on our posts. If only. LOL.

Yesterday I posted one of my standard "the date of PO in meaningless" rants. I thought of another way to frame the message this morning. Let's assume an almighty and powerful being (we'll call him Dog) came forth and proclaimed we had just reached global PO yesterday. How would that knowledge change the dynamics you just described? But what if Dog says that GPO won't happen until 2020...what changes now? Or if Dog says GPO won't happen until 2050...what changes now?

Essential that "proof" of the GPO date changes absolutely nothing happening now. The dynamic is running its course based on the interactions you mentioned and others. In essence we are at "PO" now from a practical standpoint whether the date has already passed or is in the future IMHO.

[John_A]

$this->bbcode_second_pass_quote('step back', '')$this->bbcode_second_pass_quote('MD', 'F')ive years ago YOU got it wrong, along with the rest of the world that seemed to find it impossible to get past the "we're running out [of oil]" strawman. Today you've written a very nice definition of peak oi. Welcome to the club!

[John_A]

$this->bbcode_second_pass_quote('ralfy', 'O')ne has to see peak oil in light of two other predicaments: a global financial crisis and global warming combined with environmental damage.

[John_A]

$this->bbcode_second_pass_quote('ROCKMAN', '
')
Yesterday I posted one of my standard "the date of PO in meaningless" rants. I thought of another way to frame the message this morning.

[Strummer]

$this->bbcode_second_pass_quote('John_A', 'T')he IEA has already put the price of the next 6 trillion barrels or so at less than $150/bbl, in 2008 dollars.

[John_A]

$this->bbcode_second_pass_quote('Strummer', '')$this->bbcode_second_pass_quote('John_A', 'T')he IEA has already put the price of the next 6 trillion barrels or so at less than $150/bbl, in 2008 dollars.

[JV153]

$this->bbcode_second_pass_quote('John_A', '')$this->bbcode_second_pass_quote('step back', '')$this->bbcode_second_pass_quote('MD', '
')
Don't get me wrong, I think profit is a good thing as far as it goes, markets ferret out the efficiencies; but only the monetary efficiencies. They can't tell you whether the things bought are worthwhile in a larger sense. IOW, you can be very efficient in your purchasing and still go broke.

[John_A]

$this->bbcode_second_pass_quote('JV153', ' ')I do know that heavy mining of Canadian tar sands and extensive off-shore sea drilling means that conventional oil must be in a bit of a jam or else nobody would have gone after oil in these places.

[MD]

Another "It's Really Peak Demand" article flew by today. It's a laughable attempt to rationalize The Real Peak Oil into acceptable paradigms.

Or in other words it's "You were right, but I am going to say it my way, just to save face."

Supply and demand are just flip sides of the same economic coin. Of course demand will go down when faced with constrained and ever more expensive resource.

It's an easy concept. I don't understand the collective confusion over the matter.