Why Do Higher Gas Prices Anger You?

The thing is Thomas, M King Hubberts work is now accepted as mainstream. The only dispute is the timing of the peak, not whether it will happen or not.

Regarding oil production drop = steam engine production drop.

You are far too intelligent to use arguments like that.

Coal and uranium are available in sufficient quantities to substitute crude oil for centuries. Even if no one invents anything new, these energy sources are readily available already.

When I wrote the post you responded to, I had in mind a shift in the US from oil production to coal production as a result of the oil crisis. After cross-checking this against the Statistical Abstract of the United States, this shift doesn't look as impressive as I'd thought it would. But it happened, and it could happen again. (The relevant snipped from the Statistical Abstract is here (PDF). Refer to table 884: "Energy Supply and Disposition by Type of Fuel".)

I agree -- and the world will eventually come to an end, which the doomesday cults predict it will. The only question is when. My point here is that the "when" question is almost everything. It isn't the petty detail as which you implicitly treat it.


Apparently not, since I remain convinced that oil is just another commodity for producing energy, like coal and wind. I also remain convinced that the internal combustion engine is just another technology for harvesting this energy, as, correspondingly, are sails and steam engines. But I do admit to some apples-to-organges-ness in comparing oil to steam engines and sails. It would have been proper to use either internal combustion on the left side of the comparison, or wind and coal on the right side.

In that case we agree on quite a lot. If you agree with me that Hubberts work is mainstream, I will agree with you that the timing of Peak Oil is "almost everything". But I should have added that expert opinion only disagrees as to whether peak oil is upon us now, or will hit us sometime from now to +30 years maximum.

Steve -- I am not an expert on the economics of energy. I can't say whether Hubbert's work is mainstream or not nor, more importantly, whether he is right or wrong. But I emphatically do not believe that there is necessarily a peak in energy production, which strikes me as an immensely more important issue. I don't care about the composition of the world's energy mix per se. Consequently, I also don't care if and when any one component of that mix reaches a peak in production. As long as we can extract energy from other sources, we will have energy, which is the most important thing. Also important, as long as those alternatives exist, oil will remain affordable for users who specifically need oil (think plastics). If we extract and consume less of it in the future than we do today, that won't matter much to anyone except the few who currently work in the oil industry.

spoken like a true economist

Of course I have to be honest and say I dont KNOW either. There are very few things in life one can be sure of except as someone famously said Death and Taxes.

But peak oil makes sense to me. Moreover it explains certain things that are going on in the world, which seem inexplicable without taking it into consideration, in particular the behaviour of the American government.

meanwhile the French seem to be taking the notion of peak oil seriously

http://news.bbc.co.uk/1/hi/business/4077802.stm

A French government report on the global oil industry forecasts a possible peak in world production as early as 2013.

With the US the biggest consumer of oil, and the price of gas about $3/gallon, it would seem that demand would drop in sufficient amounts to reduce prices, but that isn't happening. I wonder why?

c.i. writes :
"With the US the biggest consumer of oil, and the price of gas about $3/gallon, it would seem that demand would drop in sufficient amounts to reduce prices, but that isn't happening. I wonder why? "

i doubt that prices will drop much - though today i paid CAN 97.5 cents per liter, down from about CAN $ 1.25 two weeks ago. i have read in the automotive news that sales of big SUV's and other gas-guzzlers have started to go down and sales of fuel-efficient cars have gone up in the last three months. assuming that the gasoline price will be in the $2.50 - 3.00 per gallon range, i would guess that within the next three years we'll see a larger shift in the purchase towards more fuel-efficient cars.
i also think that automobile manufactures will start to intrduce cars with better mileage performance - not necessarily smaller cars (even cadillac now has a 2.8 liter car - probably gets better mileage than my six year old, 3.5 liter olds-intrigue. since we are only driving about 12 - 15,000 miles a year, trading at this time wouldn't make much sense. even assuming that we'd reduce cost of gas by 30% wouldn't save more than $500 a year. so i guess we'll hang in for a while - always can get the bicycle out, but not in the winter !!!). hbg

hbg, My car is over ten years old, and it still looks and runs like new. No sense in buying a new car that'll cost $45,000 to save a few dollars on gasoline. Not only that, but the insurance will sky-rocket from about $500/year to over $2,000/year. While my car runs without problems with 57,000 on the odometer, I'm keeping it for another ten years.

c.i. : as long as your ashtray isn't overflowing - keep driving ! hbg

ps. i recall that my brother used to say : "time to buy a new car; the ashtray is overflowing" . that was sometime in the 60's LOL !

c.i. just remembered something from canadian history (not that i was in the "land of milk and honey" at that time - more laughs !). hbg
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Bennett buggy
From Wikipedia, the free encyclopedia.
A Bennett buggy was a term used in Canada during the Great Depression to describe a car pulled by a horse. The term was named after R.B. Bennett, the Prime Minister of Canada from 1930 to 1935, who was blamed for the nation's poverty.

Cars being pulled by horses became a common sight during the Depression. During the boom years of the 1920s, many Canadians had bought cheap vehicles for the first time, but during the depression, many found they did not have enough money to operate them. This was especially true in the hard-hit Prairie Provinces. The increased poverty played an important role, as the farmers could not buy gasoline. The price of gas also increased. Gas taxes were also one of the best sources of revenue for the provincial governments. When these provinces went into deficit, they increased these taxes, making gas even harder to buy.
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c.i. perhaps on your next trip to canada we'll see you driving a "bennett buggy" - even more laughs !!!

giddy up, canada is waiting !

thats the future for N America.

How does it steer/change gear btw

the driver doesn't even have to worry about DUI, the horse knows where to go.
btw the world has - so far - survived two world-wars, the atom bomb, the depression and dirty thirties ... all within the last 100 years ... our current "energy crisis" seems hardly worth worrying about.
hbg, aka the oldtimer

Since I don't smoke, it means I'll never buy another car. My only regret is the simple fact that I've dreamt of owning the MBZ sports car for most of my adult life (since the late fifties when a guy gave me a ride in one of those with wing doors, and we were going 140mph on the roads in New Mexico).

BTW, when Walter drove us from Amsterdam to Lippstadt, we were going over 120mph, so I guess that'll have to satisfy my speed in a car in my "senior" years.

http://www.popularmechanics.com/specials/features/1762911.html?page=5&c=y

Solar power is gonna get a lot cheaper, real quick.

Cycloptichorn

cyclo : about a year ago i read an article in "popular science" re. solar power. the claim was that an area the size of arizona could supply all the energy for the united states. re silicon the article stated that an inexpensive silicone was being developed to built these panels. apparently most of the silcone produced was high- grade and expensive, but for solar panels a very much cheaper kind would work fine. i also read that for solar panels to work, direct/full sunlight is not required but that even on overcast days the panels would pick up plenty of solar power.

(i'm afraid solar power won't help c.i. power his MBZ - shedding tears !) hbg

Because rising demand was the reason prices rose in the first place. Assuming normal demand and supply curves, the quantity of oil demanded is now lower than what it would be at the old price, but higher than it was at the old level of demand -- which is consistent with what we observe. To see why the expectation is reasonable, you can draw a supply and demand diagram for the oil market. The demand curve (quantity demanded as a function of price) will slope downward -- the more expensive oil is, the less consumers will buy. The supply curve slopes downward -- the more expensive oil is, the more producers will supply. The point where the curves intersect represents your price at market equilibrium. Now, consider an unexpected increase of demand from India and China: At any price, the quantity demanded is higher, shifting the demand curve to the right. At the new equilibrium, the price is higher. The quantity supplied and demanded is also higher; but because of the upward sloping supply curve, this extra quantity is smaller than the ofiginal shift of the supply curves.

All of this is much harder to explain in words than on a drawing board, but I hope I have made the point reasonably clear.