[alokin]

The financial crash gets more evident each day.
According to my information the main reason is/was dept.
Is this right or does peak oil plays a significant role in the economic downturn? (for me financial crash and economic downturn is more or less the same, no need to duiscuss ths further).

What impact will this have on PO?
Will it delay the peak day or will the economy be so weak that no one can afford pumping oil?
Will prices drop as economy weakens or will they stay high, as it is still expensive getting the crude out and delivered?

[sittinguy]

We will always be pumping oil. The debt people have is what is NOT allowing them to deal well with rising costs,, due to PO. Its the beginning of the vicious circle.
And Remember most sheeple don't even know about PO, the weak $, and why all this is happening. They just keep thinking It will all work out and be OK.
A couple years from now, they will all wake up one day and say.

OH SHIT, I'M SHEEPLE

[Armageddon]

A debt based monetary system needs economic growth to continue. It needs people to take out loans and use that money in the system. It's no coincidence that PO and a financial crises is happening simultaneously. You can't grow your economy without growing your energy supply and we have been at a plateua for a few years now. And without growing your economy, things come to a hault. It's also coming at a time when the masses are maxed out on credit also. We won't be able to borrow our way out this time. End of game.

[aflurry]

here's my overall layman's take:

debt's real reason for being is leverage, which allows growth beyond the immediate resource capacity. it requires some assurance of greater resource capacity in the future. this means that the resource base must by rising. not only that, but because over time, to continue growth you must further leverage already leveraged resources, the increase in resource capacity must be accelerating (1/compound interest) - that's the concave first 1/4 of the oil production bell curve. the tradeoff for leverage - just like in physics - is power, or economic resilience.

once the production curve reaches the convex second 1/4, when it is rising but with a decelerating rate of increase the debt ratio must expand to maintain the same level of growth.

even as the production increase slows to near zero, leverage is possible (as long as growth is expected), though as the leverage multiple rises the underlying power is greatly diminished. the critical point is that as the plateau is reached no leveraging is possible because 0X anything is still 0.

in this way peak oil and debt are really the same thing. and that de-leveraging is the real fear of peak oil, not just stagnation but a precipitous drop.

[BigTex]

High oil prices always lead to economic slowdowns. The problem this time is that I don't think that the recession-induced demand destruction is going to be sufficient to push oil prices down enough to get things kick started again.

$70 or $80 a barrel oil is still going to be a big problem if you are trying to get economic activity rolling again. We need CHEAP energy for that, like we've had for the last hundred years or so.

[alokin]

good explanation, afllury.
There was as well the stupid assumption that a service economy is an entire economy that works.
But what I still doubt is, that if economy severely goes down, there will be difficulties running expensive oil drillings like deep water, oil sands etc.I don't agree that the sheeples won't wake up, as soon you loose your job, your house you may ask what was happening ans maybe you'll have finally time to read newspapers.

[Starvid]

Peak oil doesn't have much to do with the current crisis. Of course, high oil prices are making things worse but they are in no way the cause for this. The financial crisis will eventually blow over. Give it a year or three. Or at the very worst five.

Peak oil will be much worse. That crisis might well last ten years, or twenty.

[LoneSnark]

The current financial situation has nothing to do with peak oil. It will blow over in a year or three.

That said, high oil prices are not here to stay. It is a fact of life that no economy can escape the occurance of corrections. While China is still in that happy position where wages are still substantially lower than productivity it will not be there forever. Real wages are growing 10% some years and have already reached parity with productivity in some regions. Meanwhile, both state-run industries and incompetently run private firms continue sucking up capital and wasting it, supressing productivity growth. It is only a matter of time before wages on-the-whole catch up with productivity, triggering escallating insolvency at inefficient firms, and thus a recession.

As China's current economy is heavily industry dependent any recession will cause resource imports to drop faster than suppliers are accustomed too. This event will cause oil prices to drop substantially, potentially crash as occued in 1998 when another Asian recession, which skipped China, caused oil imports to drop.

[benzoil]

$this->bbcode_second_pass_quote('LoneSnark', 'T')his event will cause oil prices to drop substantially, potentially crash as occued in 1998 when another Asian recession, which skipped China, caused oil imports to drop.