What happens when oil becomes unaffordable?

[Chuck]

In a world of triple-digit oil prices, the global economy will be very different from the one we’ve known.

Jeff Rubin - THEGLOBEANDMAIL - May 2, 2012

We should find alternatives without delay unless we want to cope like Cuba is now. --Ed.

When the first OPEC oil shock hit in the 1970s, President Nixon responded by lowering the national speed limit to 55 miles per hour in a bid to conserve energy. But speed limits aren’t the only thing that can change when oil prices go up. Right now, we’re seeing that rising crude prices can influence much more than just how fast you can drive your car. High oil prices change the speed at which your economy can grow.

Just as people require food, economies require energy. The relationship is straightforward: economic growth is a function of energy consumption. With national economies around the world once again forced to pay more than $100 (U.S.) for every barrel of oil consumed, a critical question must be asked -- what happens when the world’s most important source of energy becomes unaffordable?... [Read More]

[rhwinger]

Interesting. Our economy is based on energy, and a lot of it comes from oil. So when oil costs goes up, growth goes down. WIth "easy" oil (like $5-$20 a barrel to produce) not keeping up with demand (if not downright in decline) and more expensive sources required to make up the difference, energy costs go up. No wonder growth slows down.

When people say "there is plenty of oil", they are right only if we can afford to pay near or over $100 a barrel for the stuff. But it appears that oil at the $100 price point not only raises gas prices, it increases prices for many things a LOT. And then there is a general slowdown in the economy.

So some saw we have to find a way to change our economy from a growth model to a more sustainable model. I wonder what that will look like?

[herm]

We are at 1930s oil prices levels, we survived, the world will adapt and we will bypass expensive energy sources for cheaper ones. We just need the will to do it.

Drink a beer and stop with the doom&gloom

[ItsNotAboutTheMoney]

I think there's overstatement of the negative effects of high energy prices. There is a big difference between the effects of high prices and rapid price inflation. There's also a big difference for energy importers and energy exporters. The world makes money go around.

As herm suggests, we'll adjust. It's the adjustment period that really hurts. But, it's not just about shifting to cheaper energy sources. Humans continually increase productivity and efficiency and as fossil fuel and fissile material supplies are exhausted, we'll increase focus on renewables to replace them and efficiency to reduce demand.

[herm]

drilling tech is getting so advanced that the rock starts to become plastic at the depths they are reaching.. so geothermal tapping of the Earths core. I saw that in a Dr Who episode.

Back to my sci-fi novel..

[WriConsult]

No question high energy prices are hindering the economy, but in the long run we'll adjust -- as everyone has said above.

Meantime, gas prices are skyrocketing here on the west coast. Not due to the bigger underlying supply/demand issues, but constrained supply thanks to refinery outages. The refinery in Anacortes that blew up earlier this year is still offline, and we're pretty dependent on it.

Gas prices here had started to finally slip below $4 earlier this month. Now we're up more than 20c in the past week.. I paid $4.259 this weekend, about as much as I've ever paid except for a remote small town.

[ksstathead]

Wow, WriConsult! We have continued dropping here, now down to 3.389. A chunk of that is state fuel tax rate, but directionally it is interesting that you are currently bucking the national trend downward.

[herm]

There is a glut of oil in that state just south of yours.. thats why you are only paying $3.389 a gallon.. just wait until we get that drained down to the Gulf refineries.

[EdwinTheMagnificent]

Back to my sci-fi novel..

Herm , are you reading one or WRITING one ?

[herm]

I get confused sometimes