by Mircea » Thu 17 May 2007, 14:58:13
$this->bbcode_second_pass_quote('Geko45', '')$this->bbcode_second_pass_quote('Omnitir', 'T')he death of the railroads in the US didn’t trigger economic collapse because alternative industries appeared. This is what must happen to survive the decline of the auto industry.
That is not a valid comparison. It's not like the railroad industry was dying due to peak coal and we were forced to switch to some other mode of conveyance. The new modes were discovered and developed (airlines, trucking, etc) and were superior to railroads so railroads were abandoned. That is not what will happen with Peak Oil. Rather, we will have the auto and air industry violently ripped away from us and we will be forced to revert to inferior methods of transport. The difference will be night and day.
Of course it's a valid comparison. Capital, including labor, and resources are constantly shifting and being re-allocated to meet the demands of the "market." That's basic market economics.
With respect to the railroads, the Teamster's Union undersold its contracts to lure away business from the railroads, and for a while, highway cartage was more efficient that rail, plus the railroad unions acted stupidly, but the situation has now reversed itself.
Rail is now far superior to trucking. Rail can operate 24/7, trucks are limted to a maximum by law of 14 hours per day. Rail is not subject to road, traffic or weather conditions, except in rare cases where heavy snowfall may impede rail movement. A single truck has a maximum weight of 88,000 pounds, a single train can transport 260 times that.
Rising fuel costs will result in a reallocation of capital, labor and resources rail, which has been happening for some time now.
The auto and air industry will not be "violently ripped away from us" as you put it.
You don't seem to be able to grasp the economics of PO.
As oil prices rise, demand decreases, not increases, and that will delay the onset of PO for decades.
Each player in the game, households, business/industry and states, have a
finite amount of money they can spend on oil/fuels (something many on this forum totally ignore or are totally oblivious to the fact).
Once that finite limit is reached, they're out of the game.
As each household reaches its limit, it will not consume any more fuel/oil. Many will abandon the suburbs to move into the cities so that they can have access, or cheaper access, to goods and services, as well as having more available disposable income. That will reviltalize the cities, because as people come, so do goods and services. The end result is a reduction in consumption and reduced demand.
Sure, business/industry can raise prices, but not too much, lest they price themselves out of existence. As their prices rise, the demand for their goods/services drops, resulting in reduced consumption, which results in less demand for oil/fuels.
It's no different for states, especially those that have mostly state owned or state-controlled industries. They have only a limited amount of money to spend on oil. Once that limit is reached, they must choose between spending money on oil, spending money on other required energy sources like coal, or spending money on raw materials/semi-finished goods to purchase for production in their industries.
They can get by without oil, but not without coal to run their electric power plants, or raw materials/semi-finished goods for their industries (which provides the governments with revenues).
Everyone will have to make adjustments, but it will happen over one or two decades (maybe three), but not "suddenly" or "violently."