Comment 27987

By Ted (anonymous) | Posted December 24, 2008 at 13:37:45

Just to be clear here, are we agreed on definitions?

Peak oil is maxing out the rate of production (barrels / day). If the demand rate is lower than production capacity, as it is now due to economic contraction, prices are low.

If the demand rate exceeds production capability, prices skyrocket. Because of course actual consumption can't exceed production, which is really not capable of significant storage or brief spikes in output.

SO the price is really determined by the difference in supply and demand, or a comparison of the rate of rates (acceleration?).

***

Because of the inflexibility (or stiffness) of demand (addiction) this means there will be steep price spikes whenever the economy decides to try growing again.

If the world doesn't do something to mitigate this, the global economy will continue sputtering in an endless recession.

Historically, technology has NEVER dealt with an energy problem like this - all sources maxing out near simultaneously. We've seen how the auto industry responded with engine efficiency gains- much larger and faster, but only a tiny bit more efficient.

If we continue to kneel at the free market altar I predict more of the same non-progress.

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