[dohboi]

Oh, and do see the neighboring thread on increased corrosion problems pointed out by Simmons. As others have pointed out, the further down we go on the slope, the more acidic the product which of course means it eats away at the equipment more rapidly, equipment made for the more ph neutral light, sweet crude. Replacing all that infrastructure would cost trillions, if it's even possible at this point.

Maybe we need a whole new thread on the feedbacks that could accellerate the price curve of oil in the near future?

[dohboi]

Let me be try to be clearer on my reply to Smudger. He is right to point out that demand destruction is at least this negative feedback to the multiple positive feedbacks driving prices upwards.

But like the poor (in fact, equivalent to the rapidly expanding numbers of the poor), demand destructions is always with us and has always been. Yet it has had no measurable effect in dampening the exponential growth in oil prices we have witnessed over the past eight years. Why should it now play any more of a roll.

It is as if economists just have this one-horse show--demand destruction/stimulation of supply--that they say is all powerful and will always have the same result--lowering or stabilizing of prices. These have worked very well in certain markets, especially in an era when energy was ever more available and could be expected to be ever more available.

That era is now over.

The "positive" feed backs I mentioned and the simple geological fact of depletion are proving far more powerful than the much-touted mechanisms of neo-classical economics.

If it weren't so terrible, it would be interesting to see what if any models and ideas developed on the up-slope of energy availability will work on the down slope. I fear it will be very few.

[emersonbiggins]

$this->bbcode_second_pass_quote('Forney2008', 'I') heard awhile back that during the Great Depression global oil demand fell like 90 percent.

[Forney2008]

Well, that graph kinda shoots that whole demand destruction thing out the water, when oil production apparently rose sharply from the mid 1930s on, which is impressive considering the deep depression we were in at the time. So if a depression did not drop demand in that case, then what would? I do know that increased production does not necessarily always mean higher demand, but why increase production if demand is flat or down?

[yesplease]

$this->bbcode_second_pass_quote('Forney2008', 'S')o if a depression did not drop demand in that case, then what would?

[AirlinePilot]

$this->bbcode_second_pass_quote('Smudger', 'T')otal - five years to switch car production to high efficiency and electric cars/ max out on solar/wind/wave and avoid a stepchange event......not overly long people...

[Smudger]

$this->bbcode_second_pass_quote('AirlinePilot', '')$this->bbcode_second_pass_quote('Smudger', 'T')otal - five years to switch car production to high efficiency and electric cars/ max out on solar/wind/wave and avoid a stepchange event......not overly long people...

[jeffvail]

Along the lines of another record, I posted an article to The Oil Drum this morning discussing the move from backwardation to contango in the oil futures market. Oil is now in contango from Dec. 2011 on, and the Dec. 2016 contract is trading over $130/barrel...

[emersonbiggins]

$this->bbcode_second_pass_quote('Smudger', '
')On the great depression point, oil consumption in the US actually dropped massively. you have to remember that at the time the US was the swing producer for the world so was exporting oil across the world (note how imported oil dropped to almost nothing through the 1930's as it was not needed)

[Gandalf_the_White]

$this->bbcode_second_pass_quote('emersonbiggins', '')$this->bbcode_second_pass_quote('Smudger', '
')On the great depression point, oil consumption in the US actually dropped massively. you have to remember that at the time the US was the swing producer for the world so was exporting oil across the world (note how imported oil dropped to almost nothing through the 1930's as it was not needed)

[emersonbiggins]

True, I would surmise that most of the oil consumption increases in the 1930s were due to activities considered "necessary" to the function of the government at the time, e.g. WPA, CCC, the military, etc., or at least a government charged with the function of employing the unemployed.

Cheap oil provided the necessary "liquidity" (pardon the pun) for the government, in a time that financial liquidity was at a premium, if existing at all.

[Smudger]

emmerson
You make the point yourself that you can hardly make out the great depression in the graph. but interestingly enough supply and consumption both fall.

P.S. I think a 30% drop in oil consumption is massive...imagine if supply drops by that amount in the next decade...and I'm an optimist!

[dohboi]

Smudger, thanks for the thoughtful reply. Your quote: "..the extra disposable income in the US built up over the past century will now pass to the oil producers as the US century comes to an end." is truly priceless, my latest vote for quote of the month.

According to Andrew Simms in Ecological Debt: The Health of the Planet and the Wealth of Nations (which I recommend), "Between 1938 and 1944 there was an enormous 95% drop in the use of motor vehicles in the UK." (p. 159) He cites a 1945 report: The Impact of the War on Civilian Consumption in the UK, the US, and Canada.

I don't know if any such reduction in use driven by anything other than price would be possible today in the US or anywhere else. We've all bought into the notion that we should never be asked to sacrifice anything for any reason. On the other hand, just as people pointed out about the depression in the US, probably far fewer people then were completely dependent on ICE cars for daily commutes...

[vision-master]

$this->bbcode_second_pass_quote('dohboi', 'S')mudger, thanks for the thoughtful reply. Your quote: "..the extra disposable income in the US built up over the past century will now pass to the oil producers as the US century comes to an end." is truly priceless, my latest vote for quote of the month.

According to Andrew Simms in Ecological Debt: The Health of the Planet and the Wealth of Nations (which I recommend), "Between 1938 and 1944 there was an enormous 95% drop in the use of motor vehicles in the UK." (p. 159) He cites a 1945 report: The Impact of the War on Civilian Consumption in the UK, the US, and Canada.

I don't know if any such reduction in use driven by anything other than price would be possible today in the US or anywhere else. We've all bought into the notion that we should never be asked to sacrifice anything for any reason. On the other hand, just as people pointed out about the depression in the US, probably far fewer people then were completely dependent on ICE cars for daily commutes...

[dohboi]

Right, so what the hell was there to cut back on, I wonder?

[emersonbiggins]

$this->bbcode_second_pass_quote('Smudger', 'e')mmerson
You make the point yourself that you can hardly make out the great depression in the graph. but interestingly enough supply and consumption both fall.

P.S. I think a 30% drop in oil consumption is massive...imagine if supply drops by that amount in the next decade...and I'm an optimist!

[ohcomeon]

Just saw $128.09 on CNBC.

[idomar]

I thought nobody was playing today......

$128.36

[idomar]

make that $129.25

[olekriri]

light: $129.00