[joeltrout]

Say the credit issues continue to worsen much more than they are right now and the global economy does go into recession, how much will that affect worldwide oil consumption and also affect peak oil timing? Does it matter as a whole or does the world still continue to grow consumption? Could it push back peak oil for a short time (2-3 years)?

Is there any data that can be used as an example from the past or is it irrelevant because of the tightness in the supply of oil now?

I have heard people talk about a perfect storm. Could this be the first step towards a perfect storm? Or is that overreacting?

Please share your thoughts.

joeltrout

[benzoil]

I'm not even going to pretend to be an expert on this, but my recollection is that a recession will curb or reduce growth, but probably won't kill demand as much as you(we) would like. There was a mention on theoildrum.com today about how even in the face of a strong recession, oil only dropped to $89. The reason seems to be that countries that were priced out at $99 will jump back in at the lower prices. Thus, although prices are lower, demand stays steady.

Now, I'll pull a prediction out of my arse:
Lower prices and reduced growth will camouflage the peak for some time, perhaps as long as the 2-3 years you mention. I'd say more like 18-24 months though. It will become apparent as we try to exit the recession that the oil ain't there and we'll begin a second leg down. In essence, we'll buy some time, but not much overall.

That's the good news. The bad news is that non-functioning capital markets will not be able to support speculative ventures like wind and solar, so it will fall to cash strapped governments to fund it. Result: who knows?

In the meantime, I'm glad I put my 401K money in bonds aways back. Stocks look to be bad news for some time.

[seldom_seen]

Peak oil and the current economic implosion are not occurring in two separate vacuum chambers.

There is a relationship between the fact that world oil production has been on a plateau for years now with oil prices arcing towards the moon and our economy starting to wobble.

An economic collapse does not push out peak oil. Peak oil manifests as an economic collapse. Is peak oil the only factor? No, but an ebb tide of cheap and abundant oil starts to expose all of the rot in the system.

Yes, the precise moment in time when oil peaks will be influenced by consumption rates, and consumption rates are influenced by economic activity. This is mostly a technicality though. What matters is that we're "in the window" where shit should theoretically start falling apart based on the evaporation of cheap oil. It's worth remembering that the US economy was designed to run not just on oil, but cheap oil.

The cheap oil is now gone, and the banking system has seized up.

[joeltrout]

$this->bbcode_second_pass_quote('benzoil', 'T')he bad news is that non-functioning capital markets will not be able to support speculative ventures like wind and solar, so it will fall to cash strapped governments to fund it. Result: who knows?

[Nicholai]

Yeah I think that a global economic recession based on the credit crunch and/or banking woes will buy us some time. We may be able to ride the plateau for a little while longer, but the problem will still persist.

Now the problem for me will be finding a job to save up the money to travel to an ecovillage during a recession. Best of times, worst of times.

[jato]

I think (in my little pea brain): Oil production has been (more or less) flat. No oil alternatives are in place. Growth can’t continue without cheap energy inputs. The economic system is buckling.

Will the world pump more oil so the party can continue for a few more years?

Will other fossil fuel production increase to fill the oil gap?

Will we have a crash program to build nuke, wind and solar power?

I don’t think so. I think during a big recession, oil prices will fall and the “alternative fuel” investments will not be made.. I think this is the beginning of the long emergency. I think we will be on an economic roller coaster ride (which has always been the case). Except this time the economy will shrink instead of grow.

I hope I am wrong and John Denver is right.

[americandream]

I can't see demand for oil falling much inspite of any downturn. We're addicted to our cars and toys.

In addition, the incidence of conflict will probably lead to an increased usage by militaries across the world.

[Tyler_JC]

$this->bbcode_second_pass_quote('americandream', 'I') can't see demand for oil falling much inspite of any downturn. We're addicted to our cars and toys.

In addition, the incidence of conflict will probably lead to an increased usage by militaries across the world.

[TheDude]

"Fig 1. Year-on-year variations of the GDP per capita (in blue) and the consumed oil barrels per capita (in red). The light dotted gray lines indicate recessions."

From How Probable is a US Recession if the Oil Supply is Shrinking? Makes a case, you gotta admit.

[benzoil]

Tyler_JC-
I've seen the chart. After the Oil Crises of the 70's people actually conserved. We'll do that again, too. I'd be interested to see a Global GDP vs. Oil Consumption chart. Like I said before, I don't claim to be an expert on the issue, but IF oil prices go down substantially, I expect poorer countries to jump back into the market, placing an effective floor under global demand. If the U.S. doesn't use it, I'll bet someone else does.

The problem is that this time we've already insulated our homes. We already increased the fuel efficiency of the auto fleet (even with all the SUVs!). We already switched the power plants to natural gas (oops!) and installed programmable thermostats. We've already picked the low hanging fruit. WalMart built a warehouse on wheels. People live further from their jobs on average. Can we cut? I dunno. You can cut out your Netflix, extra cell phone minutes and eating out, but if you need to drive 50 miles one way to work, you'll keep feeding the beast.

[Tyler_JC]

The Chevrolet Volt.

40 mile battery range and a 150 MPG fuel economy at 60 miles/day.

Is your commute less than 40 miles both way? You'll never burn a drop of oil getting to work.

That's 80% of America, folks.

And this baby hits the streets in a year or two with a starting production capacity that is 10 times the level of the starting production capacity of the Prius.

Moreover, it can run on E85 ethanol (if you want to bother) and I'm sure that later models will include other forms of biofuel as well. That assumes that anyone actually needs to drive more than 40 miles one way on a daily basis.

Cost to build/retool the ENTIRE US auto manufacturing capacity AND all of the manufacturing capacity of the plants that we import our cars from?

$60-$80 billion. Also known as a rounding error in the broaden scheme of things. We spend about a trillion dollars per year on cars already, what's another 6%? Especially when you consider that it's a one time charge.

We haven't touched our ability to conserve oil.

[seahorse]

How many extra power plants will we need? LNG facilities? More coal?

[Heineken]

Peak oil is the point at which permanent supply constraints begin to damage the world economy. This is happening NOW. Demand destruction isn't the answer to the problem because it's synonymous with economic destruction. Conservation isn't the answer either because it's essentially the same thing as demand destruction (and because of Jevon's paradox, which ensures that any gains produced through efficiency get rapidly spent down).

And remember, it isn't just Peak Oil. It's Peak Everything.

[benzoil]

Looks great. Where do I put the hay bales?

[drew]

$this->bbcode_second_pass_quote('Tyler_JC', '
')


Am I the only one who knows about this chart?

US oil demand fell for years and it took more than a decade to recover to 1980-level consumption.

In the mean time, the economy grew tremendously, unemployment plummeted and inflation was tamed.

This recession is going to force people to cut out the waste and be more efficient with their use of energy.

We may cut oil demand faster than oil supply leading to a glut. I just hope that China/India are dumb enough to keep wasting oil so that prices don't fall too far, leading to a repeat of the late 1980s oil glut and the abandonment of efficiency.

[alokin]

I think the economic downturn is only partly due to expensive oil. The big factor is depth and/ or printing money.

No one answered the central question of the thread. "How much demand destruction can we expect from an xx% economic downturn?"

[Heineken]

$this->bbcode_second_pass_quote('alokin', 'I') think the economic downturn is only partly due to expensive oil. The big factor is depth and/ or printing money.

[seldom_seen]

$this->bbcode_second_pass_quote('alokin', 'I') think the economic downturn is only partly due to expensive oil. The big factor is depth and/ or printing money.

[jato]

+



Hey! Why didn’t we switch to the electric car back in 1980? Why are we going to switch to them this time?

I think Peak Oil is over. John Denver was right, (most people will believe) Peak Oil was a non-event. Most people will blame the “economy” and not “Peak Oil” for the lower oil consumption.

[Tyler_JC]

We're going to do it this time because production is going to fall down and stay down.

The decline in global oil production is going to put a floor under oil prices and force us to get serious about alternatives.

And not a minute too soon.