Thursday, April 10, 2008

Peak Oil

The authors of Transport Revolutions: Moving People and Freight Without Oil were interviewed by the CBC about Peak Oil. "The likely outcome of not dealing with this issue is not an environmental catastrophe. It's an economic and social catastrophe that may leave us unable to deal with the environmental catastrophe," The gushers are gone and that's significant. Big oil discoveries aren't happening any longer. Global society has followed a pattern of depletion tactics, and we have depleted the available oil far enough that we are in danger of losing this beautiful society because of running out of oil.

They describe the effect of $250 per barrel oil as being equivalent to the hurricanes that hit the Gulf Coast in 2005 (Katrina and that other one). Those hurricanes were devastating to the U.S. economy, and high oil prices are always devastating to economic health. The price of oil can only increase from where it is today, because the supply of oil is not increasing while the demand for oil is increasing.

The tactic of making products in far away countries because of cheap labor, depends on the ability to cheaply transport the products around the world. So long as the transportation cost is less than the savings due to cheaper production, then production is incentivised to be done wherever it is cheapest to do so. But this practice of transporting goods all around the world is hastening the end of the oil age.

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