[vision-master]

$this->bbcode_second_pass_quote('Heineken', '')$this->bbcode_second_pass_quote('Byron100', '')$this->bbcode_second_pass_quote('Lumpy', '')$this->bbcode_second_pass_quote('Heineken', 'A')s important as the price itself is the rate of change. A sudden increase (over the course of, say, a few days or weeks) to $5 or $6 could well spawn panic and chaos.

[MonteQuest]

$this->bbcode_second_pass_quote('BigTex', ' ')We will probably get there, but I think that carpooling will be an intermediate mitigation effort that will probably relieve some of the gas price tension that would otherwise translate into social unrest.

[bl00k]

$this->bbcode_second_pass_quote('MonteQuest', 'C')arpooling is reduced economic activity.

[...]

So, the choice may be: pay the price of gas or no job.

[zzzpeakoil]

I am sorry to spoil the fun, apocophilic mates, but nothing of the sort you're all envisioning will happen until gas reaches +20$ gas or so..

I live in Romania and even if this country is not considered amongst the rich, people are used to paying something like 10$/gallon. It all seems normal. And we are poor. Of course the poorest people are the first to complain. Why on earth everybody is seeing doom everywhere if gas reaches 4, or 5 or 6$?? How silly!

Somebody mentioned it on a topic, and i'll second to that: people would much rather starve then stop buying gasoline.

Most gasoline consumers are addicted to oil like a drug . The only notable difference is that they inject it in their car instead of body.

Even Bush knows : "America is addicted to oil". (and not only america).

[joelcolorado]

The difference is the distances found in the USA as compared to European countries and lack of public transportation. I live in the middle of the nation and its 60 miles between even the smaller towns. And no rail or bus service etc.

We have to drive at least 50 miles to any shopping at all.
jk

[Homesteader]

Russian Motorists Stage Protest Against High Gasoline Prices


MOSCOW (AFP)--Russian motorists held protests across the country on Saturday against gasoline prices that are rising despite Russia's status as the world's second biggest oil producer.


The Echo of Moscow radio station quoted an organizer saying 30 motorists were detained at one protest in the northern city of St. Petersburg. A police spokesman said he had no information about any detentions.


Protests were held in dozens of other Russian cities, including in the Far East and Siberia, Interfax news agency quoted an organizer saying.


In central Moscow, around 100 motorists gathered near the Kremlin to demand lower gasoline prices.


"The price of petrol on the domestic market is too high for an oil exporting country," Vyacheslav Lysakov, the head of the Russian motorists association that is organizing the campaign, told AFP ahead of the protests.

Lysakov accused the government of "profiting" from price rises by imposing taxes of up to 70% on fuel and said the money should be used to upgrade Russia's notoriously poor roads.

Russia is the world's second biggest oil producer and exporter after Saudi Arabia but it has seen price rises similar to those in other countries.

Petrol prices has gone up 9% since the start of the year to an average of EUR0.57 per liter, official data published this week showed.

Link: http://www.lloyds.com/dj/DowJonesArticle.aspx?id=392666

Without putting pencil to paper that looks to be roughly the same as gasoline in the U.S. (feel free to do the math and correct me)

How do they cope?

Lower standard of living perhaps? More vodka?

[Heineken]

$this->bbcode_second_pass_quote('MonteQuest', '')$this->bbcode_second_pass_quote('BigTex', ' ')We will probably get there, but I think that carpooling will be an intermediate mitigation effort that will probably relieve some of the gas price tension that would otherwise translate into social unrest.

[Heineken]

$this->bbcode_second_pass_quote('zzzpeakoil', 'I') am sorry to spoil the fun, apocophilic mates, but nothing of the sort you're all envisioning will happen until gas reaches +20$ gas or so..

I live in Romania and even if this country is not considered amongst the rich, people are used to paying something like 10$/gallon. It all seems normal. And we are poor. Of course the poorest people are the first to complain. Why on earth everybody is seeing doom everywhere if gas reaches 4, or 5 or 6$?? How silly!

Somebody mentioned it on a topic, and i'll second to that: people would much rather starve then stop buying gasoline.

Most gasoline consumers are addicted to oil like a drug . The only notable difference is that they inject it in their car instead of body.

Even Bush knows : "America is addicted to oil". (and not only america).

[BigTex]

$this->bbcode_second_pass_quote('Heineken', 'B')ig Tex is a smart guy...

[Heineken]

I see inconsistencies in some of your stated positions, Tex. That's OK. I have them too. Adjusting to doom is not a linear process.

Good post. Interesting list.

[BigTex]

$this->bbcode_second_pass_quote('Heineken', 'I') see inconsistencies in some of your stated positions, Tex. That's OK. I have them too. Adjusting to doom is not a linear process.

Good post. Interesting list.

[MonteQuest]

$this->bbcode_second_pass_quote('BigTex', ' ') My playbook is what actually happened in the 1970s. The mitigation efforts didn't really fix the problem, but they did slow the economic damage being caused by high fuel prices.

[BigTex]

$this->bbcode_second_pass_quote('MonteQuest', '')$this->bbcode_second_pass_quote('BigTex', ' ') My playbook is what actually happened in the 1970s. The mitigation efforts didn't really fix the problem, but they did slow the economic damage being caused by high fuel prices.

[mos6507]

Decimation of a single industry has happened before. What happened to the buggy whip makers when cars took over in the first place? How about the makers of typewriters when computers took over? What tends to happen is the jobs lost in one sector pop up in a new or growing sector. There are going to be jobs for mechanics converting cars to electric, jobs for solar panel installers, jobs for people putting up windmills, jobs for people laying down tracks to restore rail lines, construction jobs lost to the housing crunch may be restored with people needing to retrofit their shoddy homes for energy efficiency. People just have to adapt. I went to college studying film production but I wound up making a career in the dot com space. I had to change with the times even without peakoil. That's the way it's been for a while now. It's generally expected that people have to be able to shift careers once or twice in their lifetimes.

Sometimes people just have such a negative vibe about peakoil that they can't comprehend the idea that the downward trajectory might not be as steep or as universal as their internal vision. It's not mutually exclusive. We can still experience zombie hordes and die offs but pass through transitional stages along the way.

[Cashmere]

$this->bbcode_second_pass_quote('', 'W')e can still experience zombie hordes and die offs but pass through transitional stages along the way.

[TreebeardsUncle]

Ok.
As stated many times, for every 14% rise in the price of gasoline, demand in the states falls just 1%. Thus at $8/gallon, demand will drop about 7% and at $10/gallon demand will drop about 11%. Let's see what will that entail. Well, at that point the suv fad will break. That alone will do it. Add in a fall off in the driving of pick-ups, vans, jeeps, giant cars etc and add in car-pooling and the situation is easily dealt with. Yes, rural poor commuters will have a rough time of it. The urban and suburban working class, can ride motorcycles and use public transit and bikes a bit more.

Ok. At $20 to $25 a gallon, which corresponds to a rise in price of 400% to 520% (500 to 620% of the current price) or so, which will lead to a decline in demand of around 28 3/7% to 37% or so.
Ok. At that point, things get interesting. The poor can't drive. Much of the working class can't either unless they car-pool, are lent vehicles, use them just for emergencies or the most urgent concerns, or get their costs paid for by employers etc. Airlines and trucking go down. Highway strip malls and suburban housing tracks suffer and go into decline. I don't think there will be rioting in the streets that much, because other than urban black youths and hispanic gangs, the population is quite passive and compliant content to maintain their video-induced torpor. One of the few things that gets them excitied is not being able to speed all the time as much as they would like.

Yes, the rate of demand destruction with price increase will vary over the range of prices. However, rather than necessarily becoming more elastic with price due to declining economic activity leading to recessions and unemployment etc, there are regions of higher price which are more inelastic. For example, people are more willing to give up an suv and drive a 4-door sedan than to get a 2-seater, or a motorcycle, or just rent a car when needed.
Expect to see demand inelasticity to soften in the $6 to $11/gallon range as people give up their suvs, vans, and jeeps for 4-door sedans. However I expect it to harden in the $15 to $20/gallon range as folks resist making the next step to coupes and motorcycles and scooters. There will be another range of hardening demand farther down the road, up in the $30s and $40s gallon range, as folks will be relucant to give up their motorcycles, and rely exclusively on public transportation, biking etc.

The behavior will be a bit like a spring whose coefficient of compressibility varies from Hooke's constant, but rather than becoming simply softer or harder as it is pushed farther from equilibrium, the coefficient of elasticity of demand will show more intensely varying behavior, changing from regions of softer than linear to harder than linear behavior.

Geoff

[cube]

$this->bbcode_second_pass_quote('mos6507', 'D')ecimation of a single industry has happened before. What happened to the buggy whip makers when cars took over in the first place?

[Cashmere]

TBU - you're making the HUGE assumption that your demand destruction curve will be linear. It will not be.

What your calculations don't take into account is that . . .

1. People have not seriously had to cut back on gas yet - they are cutting back on other things first.

2. They will run out of other things rapidly, and your linear progression won't hold.

In other words, at 2 bucks a gallon it was business as usual. At 4 bucks a gallon, 1 in 5 Americans are being pushed to break even (my guess). At 8 a gallon, 2 in 5 Americans can't pay their bills and live life as usual.

It's like having a linear progression for CO2 content of blood when you are being strangled. At some point, the CO2 level is toxic, and you die - end of linear progression.

[MrBill]

Why do so many posters state or assume that Europe is some tiny place where people do not need to drive farther than in the USA? Just because they have invested in public transport does not mean they do not have roads and freeways. People still drive. But even within the USA most people have a commute of less than, say, 25-miles or 40-kms. I know Europeans that commute that far everyday and still pay $7-8 per gallon. And public transport is certainly not free. On top of high taxes, Europeans also pay for public transport as well. How many Americans drive coast to coast on a regular basis? What Europeans do have is fuel-efficient cars and transportation alternatives. Americans could too if they were not still in denial.

Physical shortages matter more than prices. People adapt to higher food and fuel prices by cutting back on discretionary spending elsewhere. That slows down the economy and causes unemployment to rise until a new equilibrium is found. If they all go on welfare then either taxes have to rise or governments have to go deeper into debt by borrowing to pay for those income transfers. Higher taxes reduce discretionary spending for wage earners. And too much debt debases the currency reducing purchasing power that makes food and fuel prices higher in real terms and further reduces discretionary spending. Higher prices, higher taxes, slower economic growth, unemployment and loss of purchasing power all equal lower living standards. Get used to it and plan accordingly.

I think the biggest mistake is waiting for some big event to happen instead of individually making plans to deal with these eventualities. I sincerely doubt there will any widespread Marshall Plan to deal with national energy shortages. Only local and regional initiatives to deal with these problems. If you think there will be widespread unemployment and disruptions then it matters critically where you decide to live and what you choose to do about it. Just because everyone else does not want to carpool does not mean you cannot start one. That's money in your pocket today to help prepare for tomorrow's economic uncertainties. A house closer to work is even better.

[Heineken]

$this->bbcode_second_pass_quote('Cashmere', '')$this->bbcode_second_pass_quote('', 'W')e can still experience zombie hordes and die offs but pass through transitional stages along the way.