Right now, it's no longer ultra-cheap (at least the price begins to be noticeable), but it's still not expensive enough for us to really look for ways to do without (ie it's not painful enough, for large numbers of consumers).

So if demand is to actually shrink in any significant way, pain will need to spread a lot wider and deeper.

In the long run, we're all dead. John Maynard Keynes

It still won't help, because the genius of the markets has failed to offer any reasonable short or medium term alternative.

Rationing, power cuts, and a limited working week are the next stage, and will guarantee a wave of foreclosures and other financial mayhem.

We are, in fact, completely fucked already.

Only supersized alternative energy projects, like the Severn Barrage, are going to be able to make a dent in what's needed. Anything smaller is going to be cosmetic.

But it's going to take years to get those big projects legislated and built. And we don't have years.

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.

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.

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.


Facts, selfish little bastards. They don't even care about your feelings.

Of course, since I only fill the tank once every six weeks or so I don't really care. I'd hate to be trying to commute by car however - not that I would: we live next to a train line.

Which means that these volumes, however small, are enough to be absolutely necessary to eusure the balance of the market.

In the long run, we're all dead. John Maynard Keynes

Research is being undertaken, mostly at the university level, to produce ethanol or biodiesel from cellulosic feed stocks such as switchgrass, which is very fast growing and will grow well on land not suitable for crop agriculture.  Such land is abundant in Arkansas, eastern Oklahoma and other areas, The primary requirement being  30" or more of rain per year.

The holy grail of this research may well be identification or creation of biological processes for  rapidly digesting cellulose.  Termites have microbes in their gut that perform this function.  Good news/bad news: this approach may produce affordable fuels/it may involve genetically altered organisms or synthetic organisims.  It may also be a process that can be retrofitted to at least biodiesel refineries and it may be available relatively soon--3-5 years.

Sorry for the lack of references.  I am starting to keep track of significant items that can be used in ET comments and posts, but am not there yet.    

If sanity be culturally normative, then by the norms of this culture I claim insanity.

The politicians, or at least some of them, already know but their hands are tied.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

I am deeply concerned at what I believe to be a price bubble. It looks to me as though the physical market - ie the crude oil in the supply chain - has been inflated in some way (using forward physical contracts, actual purchases and storage in tank and on vessels) probably by a few of the major players acting in concert.

Something like this has been on the cards for years, as I said

Here

almost three years ago.

The risk is getting even more concentrated in single points of failure aka clearing houses than it was then.

The sublimely greedy ICEFutures - which is essentially the opaque market within which this Bubble has been inflated - is about to take on its own clearing, and this is at last raising a few hackles

Market questions clearing transfer

When this goes ahead on 1st July, not only will ICEFutures then cream off more profit a la Deutsche Borse but energy risk will no longer be "pooled" with other London commodity and financial futures risks as it is now.

The whole thing is an accident waiting to happen - I am irresistibly reminded of the Tin Crisis of 1985 - and IMHO if anyone cared to look they would find the relationship between Goldman Sachs and BP at the bottom of this bubble.

I am not saying that prices could or should return to previous levels, but I do believe that there is a speculative bubble sitting within the ICEFutures "Dark Star" and its membership.

Modern conservatives engage in one of man's oldest exercises in moral philosophy: the search for a superior moral justification for selfishness.Galbraith