conserving oil and gas
What happens when oil does peak? by Joel Bainerman
Peak oil is often referred to as "Hubberts Peak", a geophysicist who observed that oil well production followed a bell curve. According to the mainstream, convention view, peak oil is set to occur around 2006-2008. When peak oil occurs, production will decline approximately 3% per year at a time where global demand is increasing at 3% per year.
What will all this mean for you and me- the average folk? Which industries will suffer the most- and which will strengthen as the new situation takes hold?
If and when oil prices start to rise substantially, it will undoubtedly translate into strong commodity based inflation. Ultimately, as the price of oil rises it will cause a severe contraction in the world economy. Most observers of this occurrence agree that this will translate into higher prices all the way down the food chain- literally- right down to bread and fruit- as not only road and air transportation will be affected directly but the price of nearly ever commodity and product consumed in the world economy will be impacted indirectly.
When world petroleum production peaks, energy prices will go up dramatically. There will be a recession similar to the recessions that followed the energy price increases of 1974 and 1979, but with one difference: the US Federal Reserve Bank is much more active in setting economic policy than it was then, and its main focus is fighting inflation, so we can expect much lower inflation and much higher unemployment than in the 1970s. As interest rates soar, housing prices will fall and the stock market will suffer.
Eventually, the rest of the decline in oil production would have to be absorbed by a prolonged economic depression. Whenever energy prices soar, the Fed will raise interest rates until they have slowed the economy enough to stop inflation. To keep the demand for energy from exceeding the physical supply, they might have to reduce the GDP by 10 or 15 percent over 15
Peak oil is often referred to as "Hubberts Peak", a geophysicist who observed that oil well production followed a bell curve. According to the mainstream, convention view, peak oil is set to occur around 2006-2008. When peak oil occurs, production will decline approximately 3% per year at a time where global demand is increasing at 3% per year.
What will all this mean for you and me- the average folk? Which industries will suffer the most- and which will strengthen as the new situation takes hold?
If and when oil prices start to rise substantially, it will undoubtedly translate into strong commodity based inflation. Ultimately, as the price of oil rises it will cause a severe contraction in the world economy. Most observers of this occurrence agree that this will translate into higher prices all the way down the food chain- literally- right down to bread and fruit- as not only road and air transportation will be affected directly but the price of nearly ever commodity and product consumed in the world economy will be impacted indirectly.
When world petroleum production peaks, energy prices will go up dramatically. There will be a recession similar to the recessions that followed the energy price increases of 1974 and 1979, but with one difference: the US Federal Reserve Bank is much more active in setting economic policy than it was then, and its main focus is fighting inflation, so we can expect much lower inflation and much higher unemployment than in the 1970s. As interest rates soar, housing prices will fall and the stock market will suffer.
Eventually, the rest of the decline in oil production would have to be absorbed by a prolonged economic depression. Whenever energy prices soar, the Fed will raise interest rates until they have slowed the economy enough to stop inflation. To keep the demand for energy from exceeding the physical supply, they might have to reduce the GDP by 10 or 15 percent over 15