[IslandCrow]

I tried to get my head around what price oil had to be to put the world economy into a slump---and found I was not up to it. I then worked on a simple spread sheet of my personal finances, looking at what might be the problem areas. This provided me with some surprises (more of this later).

At present I have a small financial cushion, with my fixed costs being a little lower than my salary. Classing expenses into fewer than 10 areas, I looked at how they might change if oil prices rise. [eg. in the highly taxed Europe a 10% rise in crude oil prices, would translate into a much smaller rise in the price of petrol, whereas heating oil follows the world price rises much more closely] Fortunately my mortage rate is fixed for a while so that is not a near-term problem. My initial reading of this was that if the world oil price reached $110 / barrel, I would start experiencing major financial difficulties even if I was able to keep my job.

One suprise was that rising petrol prices would not cause me too much problem (at least until the world price was well over $200 / barrel), this is because I mostly work from home, and make one trip a week into the nearest city (round trip some 150 km / 100 miles) where I also have a part time job. So petrol costs are not too high in my overall budget.

The second surprise was how soon rising oil prices would mean that I could not afford heating oil for the house. This means that realistically I could only afford my current system for one or two more years, without seriously reducing the heat in the house [doing this would put a massive strain on the marriage ] . It is clear that this has become the number one priority to work on.....Before this exercise I knew that this area would be a long term problem, but I did not know that it was so short term.

[rogerhb]

Alas not as simple as looking at your direct expenditure on oil based products as you also need to consider general inflation from transport used in all sectors of the economy.

[Doly]

$this->bbcode_second_pass_quote('rogerhb', 'A')las not as simple as looking at your direct expenditure on oil based products as you also need to consider general inflation from transport used in all sectors of the economy.

[IslandCrow]

$this->bbcode_second_pass_quote('rogerhb', 'A')las not as simple as looking at your direct expenditure on oil based products as you also need to consider general inflation from transport used in all sectors of the economy.

[SoothSayer]

Energy use is a complicated "web" of interactions ...

The huge increase in natural gas prices in the UK have led to hospitals diverting large chunks of their budgets into heating and/or insulation etc.

Public swimming pools have cut back working hours, water temperature, staff ... and may even close.

UK based glass & metal foundries are cutting back due to gas cost / availability problems.

In the US I noticed one town was moaning about how the fuel increases were hitting their road maintenance budgets ... they drive long distances checking & fixing roads.

And these are just random effects which I have noticed. So what is the effect on a WHOLE economy?

At what point do all these "minor" savings add up to a cascade of job losses and business closedowns?

I'm sure it will be "assymetric" ... supermarket staff travelling to work by car will be hit badly ... but the well paid software engineer working 1 mile from home in a small modern high tech business unit will do just fine.

[Andrew_S]

$this->bbcode_second_pass_quote('IslandCrow', '
')Initially I tried looking at individual items, and the oil heating indicated a serious problem at $130 / barrel, but this came down substanially (to $110 / barrel) when I tried to get a more complete picture. This is a sizeable and worrisome drop in what I think I can afford.

[alecifel]

Having known about peaking for some time, and seeing its imminence around 2002, I made adjustments to my lifestyle. My commute is long, 54 miles round trip per day, but my location is choice. My mortgage is on my land only and I am building my house with whatever I can come up with. I have a 15-year note that I can pay off in as little as 5 years.

My fuel consumption (for going to work only) is less than 20 gallons a week, and my "adjustable" income (the money I set aside for luxuries and fuel) is $100 a week, about a fourth of my salary. SO going with that, I'm looking at making cuts in grocery budgets at $5 a gallon, which will probably be about this time next year. Which is OK, since my garden and corn field are nearly finished and will begin producing for me this year, so my grocery needs will more or less consist of salt pork, coffee and flour anyway.

My employment is with a large construction firm, in the management side. I expect our business to pick up as the large city we're in experiences a great immigration from our rural areas (which will depress land values in my area, hopefully to where I can pick up some more) then drop sharply as the crisis sets in. I expect the construction industry to be viable through about 2010 or 2012, then go belly-up.

Of course, our firm is only 40 people, and cost of living raises are just a company policy, so rising fuel prices are largely offset by those. After all the boss has to fill his car too!

[IslandCrow]

[Can you convert to wood heating? How does the economics of that work out?
(I just pay €16 a month for "water" in a rented flat, so I don't have to think abut these things.)

Does anybody heat homes with coal in Finland?[/quote]

When this house was built (1959) it was heated with coal, but about 1983 the owners then changed to oil. I guess coal is on its way out.

Yes I will look at heating with wood, at least a wood burning stove in the kitchen {in addition to the sauna and takka (=brick fireplace) in the basement - which are fun, but not good for heating the living area}. I am also looking at ground heat exchange. The Finnish government has given a short window of time (until early May) to apply for a rebate of upto 15% on changing to different types of heating (mainly to reduce CO2 emissions) - I will apply for that, and hope to get the money together by the time they announce the results in early autumn - I guess the oil in my tank will last at least to then.

[For those not from Finland the "16€ a month for "water"", is a charge in flats for use of hot water, and is worked out in each housing company on a per capita basis.]

[Windmills]

Of course it won't be, but if it were just an increase in the price of gasoline, I could probably afford $6.00/gallon gasoline. I do need to pay down a few credit cards and other bills, but we can probably pay off all but our small mortgage in the next 12 months.

My biggest concern for the future is water. As long as I have access to water at a price my future budget can sustain, then I feel alright. It's the essence of life. I can figure out how to grow everything I need if there's water. Unfortunately, the upcoming climate changes make it difficult to predict where there will be water in the future.

[strider3700]

Gasoline seriously impacts me seriously at about 12 times it's current cost if we're talking gas alone. Of course given how everything else goes up lets cut that in half and say 6 times or roughly $400/barrel. Of course my job vanishes long before that is reached and thats where I end up screwed.

Basically if I'm working I'm fine.

[jdmartin]

Well, to some extent it's already impacted me. I'm spending a lot more in gas every week and my wife has mentioned that groceries are really starting to climb. My standard of living is reasonably high enough that I can absorb quite a bit of impact before it starts to push me out of the middle-class strata. That's not to say it won't be somewhat painful.

My job, though, is somewhat depression-proof (I run a municipal water district) - if we get to the point that we can't provide drinking water anymore and my job goes away, we're pretty much in total anarchy anyway.

I figured out today that I could reasonably withstand the effects of $10/gallon gasoline without making many changes in my life. I figure for sure at that point there's going to be mass chaos anyway, so it may not matter anymore.

[LadyRuby]

$this->bbcode_second_pass_quote('Andrew_S', '')$this->bbcode_second_pass_quote('IslandCrow', '
')Initially I tried looking at individual items, and the oil heating indicated a serious problem at $130 / barrel, but this came down substanially (to $110 / barrel) when I tried to get a more complete picture. This is a sizeable and worrisome drop in what I think I can afford.

[LadyRuby]

$this->bbcode_second_pass_quote('Andrew_S', '')$this->bbcode_second_pass_quote('IslandCrow', '
')Initially I tried looking at individual items, and the oil heating indicated a serious problem at $130 / barrel, but this came down substanially (to $110 / barrel) when I tried to get a more complete picture. This is a sizeable and worrisome drop in what I think I can afford.

[dissimulo]

The price of oil will only impact me in a noticeable way if the price stops rising and plateaus for a long period of time. Right now, with the price rising, my investments are making me much more money than I am spending on gas. As long as the price continues to rise, I will continue to make more than I spend on oil products.

However, if the price should plateau at a high price, my investments will stagnate while I continue to pay the high prices for gasoline and diesel. At that point, I will fret more about the price I pay.

[greenworm]

I would go with a wood stove! My house is huge and the last time we heated it with oil (2003/2004), the bill was $2000 plus. My total expenditures on gas/oil this year is roughly $450, which isn't bad at all. However, I don't drive because I really can't stand being in a car, anybody wanna buy a ford truck?

[marko]

My income is much greater than my spending, so in my case, oil would have to reach more than $500 a barrel before it wiped out my monthly surplus. (This is including transportation, heating, and the implicit cost of oil in food.)

Of course, I expect the economy to collapse and to lose my job at a much lower price. ($100 a barrel sustained should wipe out the US economy, I think.) Without a job, I cannot afford current oil prices.

[grabby]

The cost of oil means nothing to me, I would buy the same at 10 a gallon as today.

that is not my worry, my worry is that with peak I will not be able to get as much as I need.

I already drive a Geo metro and at 120000 miles I am going to put a new motor in it.
We just sold our sand toys and boat, not for oil price, but because thesse toys will not be sellable in a few months at all. and it will be sad to look at them.

there will be very big shortages soon. we have hit peak.

my worries are not the price of gas, but the whole economy and my job and your job.

there is a point when the economy goes into recession (like in Carter days) and you just stay home and hang tight.

I am not going to try and survive with electric cars or hybrids or that, just wont make any difference at all.

If we all go hybrids the teeter point comes at nearly the same time.
why waste money. we arent going to save the economy by severly cutting back you nknow it.
we are cutting way back just to get used to the future without too much pain.
when gas lines are three miles long, I plan to be in bed.

when unemplyed it is hard to drag everything behind you.

[grabby]

I am thinking of ordering a couple tons of coal, we have a wood burning stove and coal burns in there just fine.
very very cheap compared to wood.

[Doly]

$this->bbcode_second_pass_quote('grabby', 'I') am thinking of ordering a couple tons of coal, we have a wood burning stove and coal burns in there just fine.
very very cheap compared to wood.

[MrBill]

$this->bbcode_second_pass_quote('grabby', 'I') am thinking of ordering a couple tons of coal, we have a wood burning stove and coal burns in there just fine.
very very cheap compared to wood.