Not to worry, prices will increase until prices are actually passed on and cause new consumption patterns; the fact is that the current "boiling frog" price increases are unlikely, it would seem, to lead to shortages or rationing in the short term, because that's not where the problem is.
CNN Money, April 27, 2008
Sales of large SUVs plummeted 28% in the first quarter this year, while subcompact sales rose 32%, according to Autodata Corp. [snip] Small cars are now the largest segment of the U.S. auto market, accounting for 18% of new car sales. Last year, U.S. consumers bought a record 2.8 million of them, and with sales up 4% in the first quarter this year, the record almost surely will be shattered.
[snip]
Small cars are now the largest segment of the U.S. auto market, accounting for 18% of new car sales. Last year, U.S. consumers bought a record 2.8 million of them, and with sales up 4% in the first quarter this year, the record almost surely will be shattered.
Kansas City Star, Apr. 21, 2008
U.S. drivers are doing something they haven't done for nearly two decades -- consume less gasoline. Gas consumption so far this year is down about 0.2 percent compared to last year, according to the Energy Information Administration. The federal agency is predicting that gasoline demand will be down 0.4 percent this summer and 0.3 percent for the year. That may not sound like much, but it would be the first time since 1991 that there's been a decline in annual gas consumption. And it would be only the eighth year since 1951 in which demand for gasoline has declined.
Gas consumption so far this year is down about 0.2 percent compared to last year, according to the Energy Information Administration. The federal agency is predicting that gasoline demand will be down 0.4 percent this summer and 0.3 percent for the year.
That may not sound like much, but it would be the first time since 1991 that there's been a decline in annual gas consumption. And it would be only the eighth year since 1951 in which demand for gasoline has declined.
The boiling frog is jumping all right.
Higher fuel costs are being worked into the economy like they were in the 70s and the 80s. Individual-level, consumers are already taking the options which are available to them. At the infrastructure level, there are no huge technology obstacle to substitution by GTL, CTL, BTL, augmented xTL by renewable or nuclear electricity. Same with EVs, etc. If the consensus among the economic "elites" is that oil prices will stay very high, alternatives will show up, late and way above cost like everything else, but it will show up if there is money to be made. I trust the markets to get there nilly willy, two steps forward, one step backwards.
The real issue is whether the governments of consumer countries will just bob around with the flow of the market for solutions - at the cost of lost opportunities, huge wealth transfers to producing countries and the occasional riot - or if they will tackle the issue proactively through taxation and direct public investment.
huge wealth transfers to producing countries
The plans and landing sites for marines and paras where drawn up during the Carter administration, and they just have to be dusted off.
That should give the Saudis et al an extra incentive to increase production. Peak oil is not an energy crisis. It is a liquid fuel crisis.
No. Very bad idea. Like always with war unless you really have to.
It's a very bad idea because, if a country can tie its shoelaces on its own, it has much better things to do at home to solve the issue than going around blowing up things and killing people. And if it can't tie its shoelaces like a grown up, well, going to war is a bad move anyway.
The US has blown about $540 billions in direct expenditure on the Iraq war so far.
Now, take the Oryx GTL plant in Qatar: 1 billion for 11 millions barrels/yr. It's still in start-up phase with teething problems but just 4 years after ground-breaking, it's perfectly normal. That's about $90 per bbl/yr capacity.
Two things:
121.5*0.8).
A CTL plant is about 60% efficient in energy conversion and self-sufficient for its utilities. Assuming 25 MJ/kg for a mix of sub-bituminous coal and lignite and 35 MJ for a mix of LPG, gasoline and diesel, 1 m3 of liquid fuel takes 2.3 tonnes of coal ( 35/0.6/25) or, for the non-metric folks, 0.4115 short tons per barrel of liquid fuel.
I don't count the cost of the coal extraction equipments - not very expansive or it wouldn't be so popular for electricity - nor take into account the fact that pure CTL is butt-ugly for CO2, but hey, global warming or war, the choice is easy, and a CTL plant actually produce its CO2 as a fairly pure, separated stream, ready to pump if CO2 sequestration ever becomes reality.
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So, if, instead of going to war with Iraq and pissing away $540 billions in the wind, the US had built CTL plants with those $540 !@#$&^* billions, it would have on-line or in the pipeline a production capacity of LPG, gasoline and diesel in the order of 5.4 billion barrels a year for an annual consumption of 7.6 billion barrels of crude (which means less in products after refining).
It would use ~2.2 billions short tons of coal for that, a 180% increase of its current production (~1.2 billions short tons), which is a lot but not a jump in order of magnitudes, so we're still within the bounds of physical reality.
With that CTL capacity and local oil production, the US would not be importing a single drop of crude. Oil would be $15 a barrel. That would hurt the producing countries far more than any war.
So, tell me, if something as inelegant and crude as CTL works, why would anyone (Republicans set aside) go to war?
a CTL plant actually produce its CO2 as a fairly pure, separated stream, ready to pump if CO2 sequestration ever becomes reality.
http://www.eurotrib.com/story/2008/2/28/19644/7315
I'll note that Stavrid didn't say he thought it was a good idea. I tend to agree with him that it's not an unlikely scenario.
It's just that even from a purely utilitarian point of view, all morality set aside, war is darn stupid.
I obviously think it is madness. Peak oil is not an energy crisis. It is a liquid fuel crisis.
And as I clarified, I believe an invasion, an armed robbery against the UAE or KSA would not only be immoral but also stupid, which is why I think it might very well happen. Peak oil is not an energy crisis. It is a liquid fuel crisis.
Well, you are right that that doesn't have much to do with Darfur or Zimbabwe. I guess that's why no one has intervened...
No oil=no intervention.
Why, there is oil in Chad... And French and Swedish troops are deployed there. What a surprise. Peak oil is not an energy crisis. It is a liquid fuel crisis.
There is always a lag between price signals and infrastructure changes. With cars, it takes about 20 years to renew the fleet although strong pressures like gas prices can accelerate that.
Actually, you should read that too:
http://www.greencarcongress.com/2008/02/median-vehicle.html
What's interesting in the US is that both the median age of the fleet and the scrappage rate are going up. What it suggests is that recent vehicles are going to the scrapyard - cars sold during the gas guzzling madness of the past 10 years - but older vehicles, which tended to be pretty sober, are staying in the fleet. It would actually match a bit what I see around me, with friends churning through new fancy cars but also hanging dearly on their old Honda Civic 1989 for commute. So, I wouldn't be surprised if we see a reduction of a couple of percents a year in the US. Just because of market inelasticity, it could end up moving oil prices quite a bit.
But at short term, I agree. Demand destruction will mostly happen on the margins, in weaker economies where energy is a much bigger share of income, hence much more sensitive. It's already happening in countries that cannot sustain subsidies against current prices - Nepal, Africa, etc.
What it suggests is that recent vehicles are going to the scrapyard - cars sold during the gas guzzling madness of the past 10 years - but older vehicles, which tended to be pretty sober, are staying in the fleet.
