by TheOtherSide » Tue 10 Jul 2007, 12:39:43
$this->bbcode_second_pass_quote('MonteQuest', 'I') see this assumption written here often. If the price to access food, air and water went up, how much less would you use?
Not much, you say, you would cut other things as those are essentials.
Same goes for energy.
The depression caused by peak oil will cause people to cut out other things from their budget, in order to continue to afford oil, NG, and coal.
Just like they are doing now.
Some, in the third world, will be priced out of the oil game.
But, you say, these cuts in other things will reduce the demand for energy.
Enough to offset the increase in demand to meet population growth and allow for economic growth?
The house of cards will come down.
Don't stand near the economic exits, as you can expect a stampede.
Allright, I think I should explain my scenario completely now, because there is some confusion. I expect PO to have to separate, and quite distinct stages. Be forewarned though, I am not an economist.
Stage 1. We've already entered this stage. Oil prices increase due to a supply plateu. Since everything is linked to oil, other prices and inflation steadily rise. As you say, there is no demand destruction (I'm talking about the first world). Slow economic growth is still possible due to the increases in efficiency and other energy sources. Bankrupcies increase, but not to dangerous levels. This stage will probably continue through the first year of actual production loss. At that time, all previous trends will accelerate exponentially.
The Crash. At some point, enough businesses will fail that you will get a domino effect. Someone on this forum made a good example of oil trucks supplying tanks and the tanks themselves. Just because the tanks cost more doesn't mean that if your supply trucks get destroyed you will come out ahead. In a similar way, if company A folds, and it's been supplying companies B, C and D, you will lose more than just company A. The problem is made 10 times worse by just-in-time supply systems. It will be October 29, 1929 on an even bigger scale. In the US economy, 99% of small and medium businesses are wiped out in a week. The world economy follows after it.
This brings us to Stage 2. 90% of the population is unemployed, so there is no demand on anything besides food, water and a box to live in. This is the point when energy will be cheap again. NG and coal, like I said in the previous post, but even oil will be inexpensive because nobody has to drive to work or afford to drive to recreational facilities. This is the time for any corporation still standing to make big profits on cheap energy and even cheaper labour. This is the time for responsible governments to take command of the economy and ensure that starving zombie hordes don't destroy the country.
Sorry for derailing this thread.
