by MrBill » Wed 09 Aug 2006, 03:34:13
$this->bbcode_second_pass_quote('', 'I') think you will agree that the peaking of world oil production is a physical, geological problem.
Replacing the energy lost as oil production peaks could be described as an economic problem, provided that there is:
a) a single or group of alternates that can be called upon to not just replace the lost oil but also allow for growth and
b) that deploying these alternates in significant enough quantities in the short time frame required, is feasible
If a) is proved to be false, would the economist still argue that it is an economic problem?
If b) is proved to be false, I would argue that this is no different than not having the alternate available for harvesting in the first place. Not enough energy = not enough energy and the economists dogma is that we’ll always have enough energy.
No, supply = demand works just as well when supply = 0 or is a negative number.
Zero supply = zero demand (i.e. post peak oil depletion)
Negative supply = imported supply = demand (i.e. US current account deficit funded by Chinese current accout surpluses)
When there is no more oil, there will be no more demand to burn oil. There may be a latent need for energy to replace that oil. But the oil will not be available, so it will have no price. The replacement energy, whatever it is will be
replacement supply = replacement demand
There is no law that says the replacement energy has to be as good as the original source of fossil fuels.
There is no law that says that a given level of economic output has to be sustained. That is clearly false.
Less inputs = less growth
Zero inputs = zero growth
That may be an uncomfortable truth, but do not blame it on the laws of economics.
If you have based an unsustainable lifestyle based on living off your credit cards and you lose your job, that style of living comes to an abrupt end. Zero new inputs of cash or credit = zero personal economic expansion.
If you have an economy based on an endless supply of cheap energy and you lose that source of cheap, endless energy, then that style of living comes to an abrupt end.
Just like when it is minus forty degrees outside and you are burning your fire nice and hot because your wood pile is full. Life is great until you throw that last log on the fire because once that log is gone, so is the warmth against the cold outside. That is economics. No more fuel inputs, no more fire. Supply = 0.
No economist is going to build you a model that assumes that more firewood will magically appear, so if you have based your assumptions on that, it is you that is sorely mistaken! And the pipeline is full, there is no more supply, so prices will rise and demand will have to fall, until extra capacity is magically found....
$this->bbcode_second_pass_quote('', 'A')nalysts and market sources have speculated that Kinder Morgan Canada, Kinder Morgan's Canadian unit, might be able to take more crude through its 225,000 barrel-a-day TransMountain (TMX) pipeline, which runs from Edmonton, Alberta, to refineries in the Washington state, Puget Sound area. Crude can be shipped from Washington to markets in California, and Kinder Morgan currently loads about two tankers a month at its West Coast dock for Californian markets.
However, shipper demand is already greater than the pipeline can take, Kinder Morgan Canada spokesman Philippe Reicher said.
"We're actually seeing apportionment on that pipeline and there's no spare capacity," Reicher said. Apportionment is when nominations for the pipeline exceed its capacity to carry crude.
On Sunday, BP said that it would begin shutting down all production at Prudhoe Bay, the largest producing field in the U.S., after discovering severe pipeline corrosion and a small oil leak. The move will cut crude supplies by about 400,000 barrels a day, dramatically curtailing the pool of crude available to refineries on the U.S. West Coast.
