5 ms·

There are huge logistical constraints on the demand side too. Think of all the cars on the road, all the gas stations, etc.

abalashov 17y ago
Indeed, the very fundamental underpinnings of the overwhelming preponderance of the US economy, as well as that of other First World countries. Just about everything requires oil, and just about any growth requires more oil.
- Retric 17y ago
  uses != requires Oil is used for peak power generation that can quickly adapt to chaning demand, however, hydroelectric energy storage is used to do the exact same thing.
  - abalashov 17y ago
    Uses = requires right now. Uses also = requires in very massive quantities in order to produce and deploy whatever is going to (partially) replace it. Do you really think wind turbines, solar panels, hydroelectric dams, and nuclear power plants don't require oil to build, construct and, to a nontrivial extent, operate?
    - Retric 17y ago
      We use Oil for a huge number of things when there are direct substitutes, because it's incredibly plentiful and cheep. EX: Roads. Even in cases when you need Oil due to its chemistry, it's just long chain hydro carbons. And, you can make long chain hydro carbons from many things including Coal and water which are indistinguishable from Oil. The only real question is how fast the price of oil increases, and how long it takes to switch to other substitutes or synthesize it. PS: Even the worst case estimates say the supply will gradually decline over decades so there is going to be a long time to find substitutes. (Less than 25% decline in supply per decade is slow.) What happens to Oil’s price is a separate issue, but that’s far less important than you might think.
RyanMcGreal 17y ago
The past few years proved that demand for oil responds to price signals. Driving in the US fell some five percent between 2007 and 2008, and transit use rose by a similar amount. The main reason Europeans today consume half the oil per capita of North Americans is that Europe imposed stiff gas taxes after the 1970s oil shocks. Europeans drive almost as much as North Americans (some 17,000 km per capita per year compared to 18,000 km per capita per year) but they do it a lot more efficiently. But you're right that it takes a long time for price signals to drive a structural change in patterns of oil consumption. If the price of oil gets too high, many people are simply priced out of the market for oil - and in huge swaths of the USA, out of the market for jobs, homes, food, etc. as well. Unfortunately, the sharp recession that high oil prices trigger causes a rapid (if temporary) collapse in oil prices. The result of leaving the price of oil up to the market is volatile prices and wildly fluctuating price signals that periodically sabotage the incentives for individuals to change their energy use patterns.

abalashov 17y ago

Indeed, the very fundamental underpinnings of the overwhelming preponderance of the US economy, as well as that of other First World countries. Just about everything requires oil, and just about any growth requires more oil.

Retric 17y ago
uses != requires Oil is used for peak power generation that can quickly adapt to chaning demand, however, hydroelectric energy storage is used to do the exact same thing.
- abalashov 17y ago
  Uses = requires right now. Uses also = requires in very massive quantities in order to produce and deploy whatever is going to (partially) replace it. Do you really think wind turbines, solar panels, hydroelectric dams, and nuclear power plants don't require oil to build, construct and, to a nontrivial extent, operate?
  - Retric 17y ago
    We use Oil for a huge number of things when there are direct substitutes, because it's incredibly plentiful and cheep. EX: Roads. Even in cases when you need Oil due to its chemistry, it's just long chain hydro carbons. And, you can make long chain hydro carbons from many things including Coal and water which are indistinguishable from Oil. The only real question is how fast the price of oil increases, and how long it takes to switch to other substitutes or synthesize it. PS: Even the worst case estimates say the supply will gradually decline over decades so there is going to be a long time to find substitutes. (Less than 25% decline in supply per decade is slow.) What happens to Oil’s price is a separate issue, but that’s far less important than you might think.

RyanMcGreal 17y ago

The past few years proved that demand for oil responds to price signals. Driving in the US fell some five percent between 2007 and 2008, and transit use rose by a similar amount. The main reason Europeans today consume half the oil per capita of North Americans is that Europe imposed stiff gas taxes after the 1970s oil shocks. Europeans drive almost as much as North Americans (some 17,000 km per capita per year compared to 18,000 km per capita per year) but they do it a lot more efficiently. But you're right that it takes a long time for price signals to drive a structural change in patterns of oil consumption. If the price of oil gets too high, many people are simply priced out of the market for oil - and in huge swaths of the USA, out of the market for jobs, homes, food, etc. as well. Unfortunately, the sharp recession that high oil prices trigger causes a rapid (if temporary) collapse in oil prices. The result of leaving the price of oil up to the market is volatile prices and wildly fluctuating price signals that periodically sabotage the incentives for individuals to change their energy use patterns.