One of the top questions for our time: how will Peak Oil affect the economy?

Summary:  Peak oil might hit sometime during the next five years.  How might this affect the world economy.  We we examine important dynamics about oil prices, some misunderstood by many writing about Peak Oil — from doomsters to cornucopians.  The bottom line:  we cannot reliably forecast what will happen.  Peak oil might have little effect — or crush the economy.

This posts discusses the effects of rising oil prices on the global economy.

  1. Comforting news from the past
  2. The #1 factor and major unknown: the rate at which oil production drops
  3. Scenarios.  Some bleak, some hopeful
  4. Oil is not our only energy source
  5. The most important lost knowledge about oil
  6. For more information

Update:  Much of this is said better and with more detail in Oil Panic and the Global Crisis – Predictions and Myths by Steven M. Gorelick.  Here is an excerpt of the review in Science magazine.

(1)  Comforting news from the past

As oil prices rise, what happens to the extra money consumers and businesses spend on oil?  Many doomsters assume the money gets burned.  Not so.  Both history and theory show that the beneficiaries of higher oil prices spend the money.  They invest it to increase output.  Like everybody else, they spend some of their new wealth.  Some of that buying flows back to products and services produced by oil consuming nations.

Why then do higher prices slow the economy?  Oil producers (e.g., Gulf Princes) tend to have higher savings rates than consumers (e.g., me).  Their savings rate increases even more when oil spikes up (aka a form of the permanent income theory, as people save some of a windfall).   This in effect takes money out of circulation, slowing the growth of global real GDP.

New research shows how this has worked in the past:  “Oil Shocks in a Global Perspective: Are they Really that Bad?“, Tobias N. Rasmussen and Agustín Roitman, IMF, August 2011 — Abstract:

Using a comprehensive global dataset, we outline stylized facts characterizing relationships between crude oil prices and macroeconomic developments across the world. Approaching the data from several angles, we find that the impact of higher oil prices on oil-importing economies is generally small: a 25% increase in oil prices typically causes GDP to fall by about 0.5% or less. While cross-country differences in impact are found to depend mainly on the relative size of oil imports, we also show that oil price shocks are not always costly for oil-importing countries: although higher oil prices increase the import bill, there are partly offsetting increases in external receipts. We provide a small open economy model illustrating the main transmission channels of oil shocks, and show how the recycling of petrodollars may mitigate the impact.

(2) The #1 factor and major unknown:  the rate at which oil production drops

How will oil production change during peaking?  (peaking is a process, not a point)  This curve (production over time) might shape the 21st century and determine the fate of nations.

Often economic impacts result from rates of change more than levels.  A doubling of prices during a year means hyperinflation, but only trivial effects when occurring over 25 years.  Free markets adapt rapidly to changing circumstances; but the process takes time.  Rapid changes creates disruptions, even recessions.  Many in the peak oil community ignore this basic economics.  One exception:  Matthew Simmons frequently pointed this out.  He was ignored, of course.

(3)  Scenarios. Some bleak, some hopeful

Global peaking like that of individual oil fields would wreck the world (e.g., UK North Sea at 7%/year or even Cantarell at 30%/year).  Doomsters usually assume that world production will follow the same pattern.  Which is absurd.  Rising prices have spurred the rapid development of unconventional sources:  deep ocean oil, oil and natural gas from tight rocks (horizontal drilling and cracking), and alternative energy (e.g., solar, wind, biofuels).

A long plateau or slow decline might have little effect on the global economy, especially since the rise in oil prices during the past decade has sparked the adaptation process.  Price elasticity of demand measures how demand changes in response to price changes.  Over a year only large oil prices changes greatly affect demand (low elasticity).  But over a generation the elasticity of demand is far larger.  As we saw in the previous oil price cycle.  Oil prices spiked in 1972. By 1979 these dynamics kicked in strongly. After 7 years of rising oil prices, global oil demand was flat for the next 14 years.

Look out the window to see the same thing happening today.  Higher oil prices spark fuel shifting (e.g., electric cars, biofuels), capital spending to increase efficiency (e.g., hybrid cars), and demand destruction (e.g., driving less).   As a result  oil demand remains unchanged since 2004, despite the almost 30% rise in world real GDP (at PPP) since then.  Many confuse this flat demand with peak oil (an inability to increase productivity).

Oil producers also respond to prices.  Most producers have invested to increase production, as have developers of unconventional and alternative energy sources.  Offsetting this, OPEC (largely the Saudi Princes) have tightened their taps to keep oil prices near their break-even (i.e., point at which they balance their budget).

The effect of peak oil depends on the net effect of these factors.  Unfortunately we cannot reliably estimate them.

(4)  Oil is not our only energy source

Over short term time periods we focus on the supply and demand for liquid fuels (i.e., oil, natural gas, biofuels, synfuels).  Liquid fuels play a vital role in the world economy (e.g., transportation).   Over decades fuel there might be large-scale switching from oil to other sources.  For example, instead of gasoline cars will use electricity, or fuel cells burning natural gas from shale).  So the analytical focus will shift from oil to energy.

The result of these changes in energy production and consumption might be a plateau or a slow decline in energy usage — even after peak oil, if we are lucky and oil production drops slowly after peaking.  These things receive too little attention in the Peak Oil community.  They get too much from the cornucopians.  The future holds many surprises, despite the confident guessing that characterizes energy research (see examples here and here).

(5)  The most important lost knowledge about oil

Please read:  Recovering lost knowledge about exhaustion of the Earth’s resources (such as Peak Oil), 27 January 2011 — Summary:

One of the saddest aspects of the Internet is that it so often fails to make us smarter.  In a mutant version of Gresham’s Law, loud amateurs too-often drown out the voices of experts.  Here we an excerpt from a 1975 book that tells us more about Peak Oil than a typical dozen posts on most peak oil websites.  It’s an example of expert knowledge effectively lost to society by the proliferation of assertive ignorance.   At the end are links to more on this subject.

(6)  For more information

Posts about the coming energy crisis”

  1. Important:  Peak Oil Doomsters debunked, end of civilization called off , 8 May 2008
  2. What does $120 oil mean for the global economy? , 15 May 2008
  3. An urban legend to comfort America: our massive reserves of unconventional oil, 29 August 2008
  4. An urban legend to comfort America: crash programs will solve Peak Oil, 5 September 2008
  5. An urban legend to comfort America: demand for oil creates new supply, 8 September 2008
  6. An urban legend to comfort America: oil is oil, even if it is not oil, 10 September 2008
  7. An urban legend to comfort America: alternative energy will save us, 16 September 2008
  8. Another example showing how energy research is just inspired guessing, since America prefers being blind, 23 September 2008
  9. Could a new “Manhattan Project” produce radically new energy sources?, 29 June 2010
  10. Coal-to-liquids as a case study of how excessive optimism is our enemy, 14 February 2011
  11. Eventually we’ll have unlimited cheap clean energy. But that will not help us or our kids., 15 February 2011

Posts about peak oil:

  1. Important:  When will global oil production peak? Here is the answer! , 1 November 2007
  2. Peak Oil, part 3: discussing the solutions , 10 November 2007
  3. Myths about Peak Oil – part I: There are not enough petro-engineers! , 15 November 2007
  4. The most dangerous form of Peak Oil , 8 April 2008
  5. The three forms of Peak Oil (let’s hope for the benign form) , 23 April 2008
  6. The world changed last week, with no headlines to mark the news, 25 April 2008
  7. Nigeria, a weak link in the global oil supply , 2 May 2008
  8. When the King of Saudi Arabia talks about oil, we should listen , 2 July 2008
  9. Red Alert: the Saudi Princes have announced the arrival of Peak Oil , 11 July 2008
  10. Good news about oil, but for our grandkids – not us , 14 July 2008
  11. Colonel Lang shows us why the 21st century might prove difficult – even painful – for America, 26 August 2008
  12. What caused the Spring 2008 spike in oil prices?, 22 April 2010
  13. Science: “Oil Peak or Panic?”, 20 May 2010

62 thoughts on “One of the top questions for our time: how will Peak Oil affect the economy?

  1. I strongly recommend Out of Gas by David(?) Goodstein(?)

    The short book takes a tact of understanding the issue using physics and the laws of thermodynamics. It addresses the issue of scale and the challenges we face in replacing our relative cheap access to oil without causing massive societal upheaval.

    This blog is usually right on but I find your argument belongs back in the 70’s were you have got some of your information. Peak Oil is here folks and society/markets are behaving as they should when the peak has already crested. The peak is not a smooth arch but bumpy. The fasll off will not be like the rise up either. More like cliffs, sharp drop offs and small ledges before the next cliff.

    For those of you feeling adventurous, look at agroecology. This is one of the new game changers, or so I hope. On the issue of sustainability and survival, it all gets back to what is going on locally. Do your own Thought Experiment. At what point do you exist without your energy costs and carbon footprint eating up most of your income? When food prices skyrocket, (12/11?), what will you do.

    1. “Peak Oil is here ”

      Say it loudly and often. Then perhaps people will believe you.

      … Just kidding! You have to provide evidence and analysis. For example, this post is 1400 words, and builds on material in still other articles (links provided). Try reading the post and writing specific rebuttals, citing supporting facts.

      Re: David Goodstein

      For a brief look at his work, see “THE END OF THE AGE OF OIL“,CalTech News, 2004. It’s a nice intro, but does not discuss the complexities involved. Or even hint at there are complex depths to the subject. Also, here are the slides from a presentation to the Calif Air Resources Board on 30 November 2006. This is instructive, even without the transcript. It illustrates three of the signals that suggest one is being conned.

      1. Describe one side of an issue in which experts disagree, in a way that suggests that only one side has a valid position.
      2. Pretend to show that your conclusion rests upon basic laws of science. Believers in AGW frequently use this con, pretending that one can forecast global warming because the the CO2 caused greenhouse effect; in fact increased water vapor (a complex phenomenon) provides most of the heating).
      3. Ignore the track record. In this case the long history of wrong past predictions of peak oil.
    2. Ummm…Fabius, I read several of your posts from ’08 and I hate to be the one to point this out, but it seems like you’re falling prey to point iii (ignoring your own track record) yourself. A lot of the old posts that you link as “important” are humorous to read today since your predictions for economic growth in the face of plateauing oil production were obviously off-base.

      Let’s look back at one comment you made in 2007:

      “This may account for the flat global production since 2005. Note this has apparently not harmed global growth; in 2008 real gdp will probably rise over 4% — a total surprise to folks relying on the confident forecasts of doom on TOD.”

      Care to revise that in 2011?

      I would also suggest that you are missing many of the complexities involved in the energy/economic/political equation yourself. For example, a transfer of wealth from oil importers to exporters may not seem like such a bad thing on the surface since as you point out in some of your prior posts, they will just recirculate that money to buy other things from the importing nations. In reality there is much more complexity at work. The US, being the largest oil importer, is also the largest global importer for everything else…so whatever wealth is transferred from West to Mid-East is not really flowing back in net import/export terms. In fact, the outflow of capital only exacerbates the consumer-driven credit crunch (Round 2) that we’re currently seeing in the US and Europe. Next up, currency wars, trade wars, and perhaps shooting wars?

      I would say high oil prices have definitely played a significant role in shaping today’s failing Western economies, and I think you may be missing that.

    3. “would say high oil prices have definitely played a significant role in shaping today’s failing Western economies

      You can assert whatever you want, but need some supporting facts. Most of the ones you mention are wrong.

      The current economic downturn is unrelated to oil prices. The cycles in Japan, Europe, the US, and the emerging markets all have well-understood causes (all different, with the cures unfortunately not so well understood) — none related to oil. An easy proof of that: oil (WTI) was above $140 at the start (early 2008) and is down one-third — with no boost in GDP (which we should expect if oil price was the primary factor).

      The US is not the largest importer. Meaningful national comparisons are ratios like oil imports/consumption or imports/gdp. The US produces roughly half of its oil and natural gas — unlike, for example, Japan.

      Nor is the US “also the largest global importer for everything else”. Imports are a small fraction of GDP compared with our peers (e.g., Japan, Germany). BTW — exports/gdp have been increasing since the 1950s, and are now one of our fastest growing sectors. A welcome decline of the US dollar will further reduce (or slow) imports and boost exports.

      BTW — In 2008 gross world product rose by 3-3.5% (estimates vary). The forecast I gave in 2007 was quite close, as such things go. You imply that world GDP decreased, which is false.

      I could continue, but that probably makes my point.

    4. Unfortunately, most of the “facts” you mention are wrong, but in more of a mainstream way.

      1) I reject your use of GDP as the denominator for any meaningful economic measurement. As I’m sure you know Fabius, though your readers may not, GDP is inflation adjusted and the calculation of inflation has been gimmicked to death (excuse me “improved”) for decades. Therefore if inflation is an unreliable, politically-controled, pseudo-scientific measurement (I “assert” in the strongest sense that it is and would refer you to John Williams’ Shadow Government Statistics website for thorough documentation of government reporting abuses) – GDP as measured by mainstream economists is equally invalid.

      2) Although declining stocks of cheap energy were the primary factor to the downturn of 2008, once again you’re missing the complexity. Saying oil prices declined from $140 to $X so the economy should be zipping along again is far too simplistic…allow me to break it down for you.

      Cheap oil is the foundation of our modern global economies. Globalization has led to the current state we find ourselves in where the developed world is in a debt-trap from decades of over-consumption and the emerging world is dependent on the same dying paradigm of fiat-fueled excess. (I will need to dedicate an entire separate response to explaining that, if you so wish.) Of course somehow inflation has remained “low and stable” during all of this…courtesy of those helpful adjustments in part 1 above.

      The oil price spike of several years ago was simply the straw that broke the debt-laden camel’s (consumers) back. Bernanke et al managed to put the camel in a “body cast” of sorts courtesy of QE1, Lite, 2 and soon 3 (Operation Twist if you prefer), but have continued to pile even more weight on the poor beast by failing to tame unemployment (another rigged statistic BTW) and increasing prices for those pesky food items (who needs to eat anyway…) that always seem to mess up the rosy core-CPI. It really makes little difference to the consumer if oil prices fall by a third when you’ve got no job, your credit card is maxed out, you can’t sell the McMansion, etc…

      3) Oil prices have not really fallen as much as you suggest. Quoting WTI is misleading, since the price at Cushing doesn’t track the price at the pump very well. Look to Brent or LLS instead (although it doesn’t help your argument much).

      4) Again, I won’t attempt to argue against a manipulated ratio like oil imports/GDP, but the US does import more oil than Japan (at least in 2009 which was the latest data I could find on short notice…please correct me if I’m wrong for 2010), and we have the largest negative cumulative current account balance (trade deficit) in the world…correct me if I’m wrong on this too as the only stats I could find are dated by a couple years.

      5) A decline of the US dollar at this late point in the debt game is unlikely to do anything but inflame the conditions we see building across the globe: (if you’ll forgive my repetition) currency wars, trade wars and shooting wars. As my facts I reference the Arab Spring revolutions and recent riots in China (a product of the one thing we’re great at exporting…our inflation) as well as the game of chicken being played out through the euro, swiss franc and gold.

      So yes, I think you have made your point, it just doesn’t work without referencing statistics for which the definitions are changed to suit the desired outcome.

    5. Whenever people reject the use of standard economic metrics, saying that they are “manipulated”, I lose interest in the discussion. Whatever, dude.

      As for your confident forecasts, I’m uninterested until you show me your super accurate forecasts from 2001 about 2011 (or 2006 about 2011) Or at least relate them to some standard body of research about economic history and theory. On this website appear cautious forecasts (often labeled as guesses), either repeating or based on some sort of expert work. It’s a methodology that has worked well, as shown in the “past predictions” reference page (link at the top menu bar). It’s not been updated lately, as there are quite a few accurate predictions to add.

    6. As a followup, I wasn’t picking on your comment from ’07 because it missed the 2008 GDP by too much. As I said, GDP is a laughable statistic the way it is currently calculated and the 3 – 3.5% number is no more accurate than your 4% prediction.

      I WAS picking on your comment because it implied that rising oil prices would have no detrimental effect on our economy…which was pretty clearly not the case if you simply step outside government reports and into the real world for a second.

    7. Likewise, when people choose to shrug-off arguments without actually attempting to refute them I tend to lose interest myself. Whatever back at ya, sir.

      I’d say we’re at an impasse and will have to agree to disagree. I’m also totally uninterested in having a prediction pissing contest using “some standard body of research about economic history and theory”. I’ll leave the cool-aid drinking to you, Fabius.

      My economic theory is Keep It Simple Stupid. When something seems too good to be true – like running out of CHEAP, light, sweet crude which is the lifeblood of global trade while simultaneously thinking life will go on mostly as it has in the past – the word that comes to mind is delusion. I am confident of my conclusions, and “history will absolve me”.

    8. False. I have given quotes from you comments to which I made specific replies, showing that you are claiming I said things which are the exact opposite of what I said. That’s all that I can do.

      You have not bother to respond, just repeating your statements. As you have done in this comment with your opening line. You’re shadowboxing.

    9. Huh?!?!? So on planet Fabius a numbered list of counter-arguments doesn’t count as responding? I did respond in a separate comment to your claim of getting pretty close to your 2008 GDP prediction. I’ll say it again, congrats on correctly predicting a BS statistic and simultaneously incorrectly implying that the economy doesn’t need cheap oil.

      And speaking of responses, how about explaining to me WHY gdp or inflation are valid statistics without referencing anyone…just your own thoughts? Explain to me why it’s better to calculate inflation excluding food and energy, when they are highly inelastic commodities and are essential to real people. Explain why an ever-shifting basket of products makes for good long-term predictability or why hedonics makes any sense whatsoever.

      You, sir, are the one who is dodging arguments here…I’m open to discussing anything as long as we truly discuss it. If you’re going to tell me “you don’t agree with modern economic theory so I’m taking my ball and going home” then it’s not worth anyone’s time.

    10. Whoop — that was my mistake. My apologies; I am writing on the road from an IPad. I thought your reply was from KJMC. You are correct, my reply does not make sense applied to your last comment. You might be correct about economic stats, but
      * in the last 30 years I have seen many many such assertions about US data, all proven wrong,
      * I have contacts in those departments, who deny this (I have discussed this in some detail elsewhere)
      * the stats are all we have, whatever their limitations.

      So it’s not a subject I have any interest in discussion. That does not mean that you are incorrect.

    11. Thank you, after I wrote that I thought maybe you had just missed my other reply.

      We’re all entitled to our opinions on government stats, peak oil, etc…and I don’t want to make this into a bitter personal feud which is why I suggested before that we would have to agree to disagree.

    12. I agree. It is, like so many important issues these days, something about which we can only guess. You could easily be correct about the accuracy of the government’s stats. I don’t believe so, but cannot offer any proof. Other than the past record, which (as we all know) provides no guarantees about the future.

  2. oh, come on, this has been going on for centuries. My God, is there still WAR? How many great teachers warned us? Folks are “programed” and we’re no more than clever big “bugs”.

  3. I think we are getting a taste of Peak Oil right now in the US. Gasoline prices are being kept artificially high (by about 25-50 cents per gallon) because US refineries are getting very good prices from overseas customers and so are exporting their excess production (possibly plus a little more). we seem to be surviving pretty well with these prices, lots of complaining but no catastrophic pain. I do wonder if another recession might change that picture.

    I’m sure FM will request that I prove this so here’s the link: “Gasoline prices are rising for the Labor Day weekend as refineries run hard and export millions of gallons“, Cleveland Plain Dealer, 2 September 2011

    1. First, some data:

      1. Here is a nice breif explanation of the factors affecting gasoline prices.
      2. Here is the EIA data on retail gasoline prices.

      Second, your comment doess not make sense to me.

      1. US oil and natural gas prices are below world levels because our production is surging — the opposite of peaking.
      2. The US runs a scary large trade deficit, which will eventually go to zero. Either because we drastically cut imports (i.e., we become poorer) or we increase exports. Exports/GDP have been rising for decades (yes, we do sell things abroad), but too slowly. Finding something new to export is good news for America — that’s a change in our thinking we best make if we wish to survive in the globalized 21st century.
    2. I was solely looking at the fact that we’ve frequently been told that high energy prices would cause major social turmoil in the US but here we are at nearly $4.00 per gallon of gas (over in some locations) and people are handling it pretty well. This implies that the US could handle peak oil with minimal social and distribution problems (hoarding), which is good.

      Your information on US oil production and trade deficits are completely valid but outside the scope of my comment.

    3. My mistake, as I misunderstood your point. I agree, the reaction to the 4x increase in oil prices from the 1990’s average appears to have had far less effect on US GDP than the doomsters predicted — and even less impact on inflation than they expected. Both were accurtaely predicted by people relying on history and economic theory.

      However, as I describe in this article, peak oil might be a different animal. The current cycle was one of economic growth with no corresponding increase in oil consumption. A short (or no) plateau and a sharp decline almost certainly would have severe effects. Esp if it happened fast!

  4. Yes, much of the peak oil crowd is lame, with many of its loudest proponents neither scientists nor researchers. They say the same thing over and over. On the one hand, they have little grasp of social theory and social change. On the other hand, as is pointed out here, they have no grasp of the facts and figures we might expect from something based on science.

    Yet, peak oil is real, with the only real questions being when will it happen and how fast the decline will be. And the real issue during the decline will be how we marshal energy resources to continue society as we know it.

    One of the key arguments put forth by Howard Odum in his scientific book “Environment, Power and Society for the Twenty-First Century: The Hierarchy of Energy” is that energy is transformed as it flows through any system, including ecosystems, such as our planet, and the various human societies that inhabit it. This flow is an energy hierarchy.

    For example, sunlight energy causes plants to grow. Or, sunlight is transformed into plant life. However, the transfer is not perfect. Much of the energy of the sunlight is lost in the process. As the Second Law of thermodynamics explains, “in all energy exchanges, if no energy enters or leaves the system, the potential energy of the state will always be less than that of the initial state.” Further up the hierarchy, animals eat the plants for their energy, but not all the plant energy is transformed into animal energy. Further up still, humans eat the animals and use the plants, with energy transformed and also lost. By the way, each superior energy level can affect the lower levels, as when animals eat plants and people eat animals. (For a quick overview of energy hierarchies, go here: .)

    Odum explains that human society is governed by the same transformative process and the same energy laws. Today, though, we also use fossil fuels as energy to power our society. And one of the central products of human society at the top of the energy hierarchy is information, which is another form of energy. For example, the plans for a radio save you energy and help you organize your energy because if you use its information, you do not have to use all that extra energy in rediscovering what radio waves are, how to generate them and develop the technology to use them for communication.

    Another way to look at this transformative information hierarchy is to look at Ph.D.s in geophysics. Neither they nor their universities are generated in a vacuum. They are the end result of an energy hierarchy that begins with a transformative energy chain in K-12 schooling. Some of that K-12 information is transformed in undergraduate bachelor’s degree scientific information. Some of that bachelor’s into the master’s level. Some of that master’s in Ph.D. information.

    Bear in mind that all the information in that educational hierarchy is sustained by fossil fuel energy.

    Odum points out that once we reach peak oil, we will begin to have less energy, which means we will have less information. This means less information to tackle a daunting problem the likes of which runs counter to a grand assumption underlying all of our knowledge base—namely, society will always become bigger and technologically better.

    Alas, as the cliché says, “Houston, we have a problem.”

  5. “As a result oil demand remains unchanged since 2004, despite the almost 30% rise in world real GDP (at PPP) since then.”

    However, that leaves open the possibility that while things aren’t so bad overall, they will be bad in particular places. VoxEU published an article by two IMF staff economists late last month, “Oil shocks around the world: Are they really that bad?”, that points out that oil shocks have tended to be positive in many places, but bad in some particularly large importers. As they put it, “Our recent research indicates that oil prices tend to be surprisingly closely associated with good times for the global economy. Indeed, we find that the US has been somewhat of an outlier in the way that it has been negatively affected by oil price increases.” Article here: http://voxeu.org/index.php?q=node/6905.

    So it’s possible that the doomers are wrong overall, but right in the case of the US. However, if the doomers are *in* the US, from their perspective, they may be right.

    1. Another “failure to read the pst” FAIL.

      Pleaes note that section #1 of this post features that exact same study (I refernence the actual study; VOX publishes a summary). The paper also says the exact opposite of what you attribute to it — suggesting that you did not read even the VOZ summary or the abstract.

      Your point about the US is also likely wrong. The US has large supplies of oil and natural gas, and as such seems an unlikely candidate for “doom”. In fact, our oil and natural gas output is rising — which explains why US wholesale prices (e.g., WTI) for both are below global averages.

      This shows another interesting phenomenon seen on the many posts on the FM website about peak oil: the doomsters tend to have great confidence in their forecasts, but little knowledge about energy.

    2. Not being much of a doomster, I wish you’d keep your suppositions to your self a bit.

      Here’s a quote from the paper, “In this respect, the U.S. appears to be an outlier in that we, consistent with findings in the literature, see that its economy has been relatively hard hit by oil price shocks despite net oil imports averaging a relatively low 1.2 percent of GDP over the sample period (albeit increasing from 0.3 percent in 1970 to 2.3 percent in 2010).”

      Maybe you should explain how we both look at the same paper, and as I pointed out, you note the overall case but say nothing about the specific US result, but I’m the one who failed? I said, “that points out that oil shocks have tended to be positive in many places, but bad in some particularly large importers”, and quoted their VoxEU article directly in saying, ““Our recent research indicates that oil prices tend to be surprisingly closely associated with good times for the global economy. Indeed, we find that the US has been somewhat of an outlier in the way that it has been negatively affected by oil price increases.”” Where, exactly, did you point out that they found the US has “been negatively affected by oil price increases”? Isn’t stating part of what they found and ignoring the rest known as “cherry picking”?

      Next, you now need to explain how the study you cite is wrong in noting that oil price shocks seem to be negative for the US economy. Saying that we have ample supplies is just hand-waving, isn’t it? Suppose you’re right, I’m not saying you’re wrong, how do you explain the study’s finding that oil shocks have a negative effect on the US?

      It’s fine to say you know better than two IMF economists who have published a peer-reviewed article, but shouldn’t you then demonstrate why they’re wrong?

      Finally, I have no idea what you’re talking about in your last paragraph, as I didn’t forecast anything, or claim any knowledge about energy. I was just talking about the VoxEU article and IMF study and wondering if the doomers might turn out to be right wrt, specifically, the US. So where’s the forecast in that?

    3. I have lost the thread of what you are saying. It appears to be a strawman attack, rebuttal to things I did not say. Examples:

      (1) “It’s fine to say you know better than two IMF economists who have published a peer-reviewed article, but shouldn’t you then demonstrate why they’re wrong?”

      That is daft. I cite them as evidence. I don’t say that they are wrong.

      (2) This post discusses the range of effects of rising oil prices, which range from minor to severe based on various factors. I did not say that rising oil prices had no ill effects. I said the exact opposite: “why then do higher {oil} prices slow the economy?”

      As for the effect on the US — It’s a common (and usually daft) criticsim to say that an author should have mentioned “x”. There’s always more detail I could have included. Readership drops with length, and over a thousand words it drops fast — and this post is roughly 2x that. Far too long as it is.

    4. Allow me to clarify.

      1. Maybe you should explain how we both look at the same paper, and as I pointed out, you note the overall case but say nothing about the specific US result, but I’m the one who failed?

      2. Where, exactly, did you point out that they found the US has “been negatively affected by oil price increases”?

      3. Next, you now need to explain how the study you cite is wrong in noting that oil price shocks seem to be negative for the US economy.

    5. I have lost interest in this, as you are repeating the same mistaken points without noting what I have said in response. The post is quite clea; you are making stuff up and giving rebuttals to it.

      The one correct thing you say is that there are other things I could have added to the post. It’s a daft criticism, but technically correct.

    6. Well then, allow me.

      “1. I’m sorry for the fail comment, though as you agreed you were mistaken in thinking the VoxEU article was different from the source I already cited. You’re also right that I probably should have mentioned that while the study found oil price shocks are not a problem for the world economy, they are a problem for the US economy. Mea Culpa.

      “2. As noted, I didn’t specifically mention the negative finding for the US, and while it doesn’t change the overall world-positive GDP result, the effect on the world’s largest economy was worth pointing out. Mea Culpa.

      “3. I didn’t say this in the post, though I may have implied it in my first response to you. [“Your point about the US is also likely wrong. The US has large supplies of oil and natural gas, and as such seems an unlikely candidate for “doom”. In fact, our oil and natural gas output is rising — which explains why US wholesale prices (e.g., WTI) for both are below global averages.”]

      I’m not disagreeing with the results of the study, which in general support my position. I do agree that the study says that the effects have been negative for the US, but repeatedly falling GDP due to repeated oil price shocks is not necessarily “doom.””

      How’s that?

    7. This is exactly your methodology, to write things I did not say and reply to them. Thank you for the explicit demonstration.

      I seldom say this, but it’s accurate here: your method of writing comments is dumb, and warrants no further replies. If you do wish to comment, give a quote and discuss it.

    8. I do agree with you that I should have noticed that you were referring to the study, while I was referring to the article. Mea culpa. However, you should apologize for leaving out the finding that the US and Japan were found to be negatively effected by oil price shocks in the year of the shock (fig. 4), and the finding that the picture changes significantly the year after the oil shock, when quite a few countries have significant reductions in GDP compared to median (fig. 6)

    9. I never said that rising oil prices had no negative effect. In fact discussing such impacts is the primary focus of this post (as I said, you give no sign of reading the post.

      As for the article, I follow the standard practice of quoting in full the author’s abstract, which they consider an adequate summary — and giving a link for people who would like additional detail. No apologiy is required for this practice.

    10. Wait, so you included the abstract, but never mentioned a key finding that in the world’s first and third largest economies there was a negative impact, and in the year following the shock the negative impact was more widespread. Those were discussed in the paper, but not really mentioned in the abstract. Actually, your first point seems to fairly closely follow the abstract, but not mention any of the important details not included in the abstract.

      You did read more of the paper than just the abstract, right?

      Just to clarify, I did read your post, the article at VoxEU, and I skimmed the study. And I thought most of your post was excellent. So you can stop with the insults.

    11. I have no idea what you are attempting to say. Yes, I gave the author’s summary — which related to a general point I was making about the global effect of Peak Oil. No, I did not discuss their findings in detail, as that level of details was not essential to my already too-long post. No, I don’t care what extra material you think I should have included in this post. No, repeating the exact same thing again and again does not make me care what else you think I should have included in the post. Yes, I am done repeating myself to your comments about this.

  6. Espically the doomer Mike Ruppert who constantly calls for the imminent collapse of industrial civilization when peak oil hits.

    1. For the real story about Ruppert see Peak Oil Debunked, with several hard looks at Ruppert’s claims. Here is a good place to start. That so many peak oil belivers pay attention to people with such poor track records suggests that their belief has non-analytical roots. Perhaps they find doomsterism exciting (like reading King’s books or watching horror flicks). Or attention to doomsterism might fill some other role for them.

  7. How nice that a new study was published regarding this. I was getting real tired at energy economists parroting out the same bullshit about the economy being sensitive to oil prices.

    The IEA was still hosting an old study from 2004 on their website a while ago, but they seem to have removed it (it was suggesting high sensitivity to oil prices). I guess someone noticed the numbers didn’t add up.

    Just by looking at oil price development and Chinese and Indian GDP numbers (and the fact that these countries largely have a poor relation of economic output per unit of energy used) one should conclude oil price sensitivity in the economy isn’t all that big.

    1. You should look again at the study. In general oil price shocks haven’t been a serious problem for the world economy. However, FM left out the finding that past oil price shocks have indeed been bad for the US economy.

    2. Yea well, I tend to think such studies oversimplifies things anyway. Reminds me of global warming curve fitting where you have this theory and you’re trying to fit it into a model. I just thought that they had it completely the wrong way around before and there seemed to be few dissenting voices, so I’m glad someone is reporting the opposite now.

      I mean they are even commenting on their own inconsistencies in the study regarding the US already :P

      “We complement this analysis with dynamic panel regressions showing that
      the lagged negative impact of oil price increases on GDP in oil importing economies is statistically significant and depends on the size of oil imports relative to GDP.”

      “In this respect, the U.S. appears to be an outlier in that we, consistent with findings in the literature, see that its economy has been relatively hard hit by oil price shocks despite net oil imports averaging a relatively low 1.2 percent of GDP over the sample period”

      And I’d be willing to bet it doesn’t make sense regarding China either. I actually checked 2008 gdp to import ratios and they were pretty close for China and the US (2,9 for china and 3,3 for US) but the US exports seemed to rise with higher oil prices indicating stronger ties with oil exporting nations or other possible positive feedbacks which they also cite as a major variable. So the logic was where exactly?

    3. Thank you for posting. I agree, it’s important to remember that such studies are simplifications, and might apply to future conditions — or not at all.

      As for China: China is roughly the world’s fifth largest oil producer (we are #3). Their oil production is aprox half of ours, with an economy roughly 30% – 40% that of the US. This probably also insulates China to some extent from oil price swings. Note it is also the #1 miner of coal, but a large margin, and might be more sensitive to coal prices than oil prices (although both domestic coal and oil prices are controlled).

  8. FM the US;’s oil production only increased in 2009 and 2010, by 8% and 3% respectively. Despite that 2010 was still lower than 2002 and only 63% of the peak in 1970. This was after 36 years of decline at an average of -1.3% p.a.

    Natural gas is a bit more complex. Peak was 1973 followed by (roughly) 13 years of decline. Then a slow rising to another peak in 2001, then declined until 2005 and then has risen again. 2010 was still lower than 1973 though.

    Here is a list of countries that have peaked in oil production (though some have quite complex shapes and have had ups and downs, Russia and Iran being prime examples). Some have question marks due to questions about how reliable the data is (e.g Nigeria). Others whether the peak is due to deliberate decisions as to hold production, e.g possibly Saudi Arabia.
    For some others the peak may be due to lack of investment, such a Iraq.

    Source BP Statistical report 2011, production millions of tonnes. Sorry for the formatting, WordPress is terrible with tables. {table deleted by Editor, it formatted in unreadable form}

    1. And your point is what? These basic facts have been repeated a million plus times during the past decade, and anyone following the debate knows these things quite well. Trotting them out here like a new discovery is just odd, IMO. Try providing a brief quote indicating to what you are responding.

  9. With due respect to Tobias N. Rasmussen and Agustín Roitman, they are economists. When they see a fire, they measure the behaviour of the flames. They assume that the supply of firewood comes from an inexhaustible source and will grow perpetually in line with mankind’s ingenious fascination with all things that can be done with flames.

    The impact of oil price spikes on GDP is interesting but it tells us little about the fundamental issue of fossil fuel depletion, which is declining net energy (energy returned on energy invested, ERoEI). To use a non-fossil analogy: if you know you will consume a bucket of water while climbing a mountain collect nine-tenths of a bucket of water, you will have to dispose your personal economy so as to do without the mountain-top water.

    Tar sands have a much lower ERoEI than North Sea oil. Corn ethanol’s ERoEI is minute, possibly negative. The US and Canada might have abundant resources of oil and gas but they are by no means as useful as the far-higher-ERoEI oil from East Texas that permitted mass motoring, suburbanisation and the growth of the high-tech society in the 20th century.

    The economics of peak oil are a moveable feast. The physics are not. The difference between the two is why its both highly likely electric motors will entirely replace petrol/diesel engines in cars over the next 40 years but that a minority of people will be able to own one.

    Going back to the water analogy; In a slave society, perhaps you could force slaves to fetch the ‘uneconomic’ water for you, at the cost of their lives. That’s how the V2 rocket programme worked in 1944-5, to give just one example of short-term responses to an energy depletion situation (albeit localised in WW2 as opposed to increasingly globalised today).

    It’s very simple really. Those parts of civilisation that flourish as a direct result of high-ERoEI fossil fuels (mass motoring, airlines, industrial agriculture, final salary pensions, to name but four) will diminish in line with ERoEI. Other ways of disposing our societies, that don’t rely on permagrowth and massive inputs of energy will emerge.

    1. This is a big reading FAIL, both of their article and this post. Also, I’m don’t see to what you are responding as most of this seems pretty irrelevant.

      “The physics are not. The difference between the two is why its both highly likely electric motors will entirely replace petrol/diesel engines in cars over the next 40 years but that a minority of people will be able to own one. ”

      Making such a confident forecast about technology over a forty year horizon is awesome, at least in terms of displaying self-esteem. You must realize this is absurd, I assume? Attributing your forecast to the laws of physics is silly.

      Low oil prices kept research into alternative energy sources low during the post-WWII era; high prices have directed an increasing torrent of effort into the field. Assuming so little change over so long a period seems a bit pessimistic IMO.

  10. Peak Oil is real as it can’t be infinite. The real question is what do you mean by peak oil? There are 3 areas to consider:

    1. Reserves
    This is the wooliest area of all. What are the reserve amounts? The numbers appear to so distorted by political (etc) factors that it is impossible to say what is real.
    Take 2 examples: US and Iraq. The US’s production (apart from 2009 & 2010) has steadily declined, but reserve figures have hardly changed .. que? Iraq, its reserves tripled between 1980 and 1987 … again que? Plus what are the real extractable reserves? And at what price? The US may have found new reserves to make up its production since 1970, but what will it cost to get them out? Plus it is not an exact science. There is, even where there is good data, a considerable fuzz factor.

    But new reserves have not been found fast enough to replace depletion. When we tout places like off-shore Brazil or the Arctic then you know all the easy stuff has been found. Plus realistically whatever reserves are claimed are guesses or PR. Until you start drilling you never really know, there might be nothing really there at all.

    But we know that the estimates of production costs for Brazil means they are uneconomic until oil hits $120 a barrel. God knows what Arctic costs will be, we currently don’t have the technology to effectively drill there yet.

    2. Total Production

    We are on more stable ground here. But even here there are considerable variables.
    There are some basic principles of course. As an oil field ages it gets harder and harder to extract oil form it. At roughly the 50% depletion level, production, no matter what you do, starts to decline. Yes there are all sorts of technical fixes but they increase costs and increase energy inputs.

    Pumping in water is one, but that takes energy, raises costs at both ends, as the oil produced has a higher and higher percentage of water, which has to be extracted. Plus it is always risky, stuff it up and you can crack the oil holding formations .. and then get nothing. Sometimes you face a choice between a long period of lower production vs higher but for a shorter time .. and riskier.

    There are fields awaiting production and fields where production can be increased with new investment. But this is where we come into economics. Business is ran by profit, if your costs are higher than your revenue you ain’t gonna do it (unless you are a bank of course where taxpayers bail you out).
    The Brazilian fields are a classic example, until oil hits and settles above $120 a barrel you wont see a drop out of there.
    Equally, with existing fields that could be ramped up, why spend squillions in investment dollars unless you can get a return? You could do that and your increased production lowers prices .. ouch. Better to wait until prices go higher.

    Another example, I remember my father telling me about all the oil in the North Sea in the 1960’s. But it took much higher prices before anyone would invest in the technology, drill, extract it and make a return.

    I could go on and on of course, but basically the easy to get and cheap to extract stuff is dwindling. What comes next is going to be far more expensive.

    Speculation makes money for speculators but actually decreases real investment. There is definitely a speculative impact on current oil prices. But producers know that this will end, therefore they will be risk adverse. Simply put, if oil goes above $120, but is driven by speculators then you would be a mug to invest hard money into developing the Brazilian fields. Imagine, spending billions based on a $120 prices … and then it collapses to $80 .. ouch. Speculators decrease real investment, they crowd it out by making the environment riskier. Sadly most western Govts are right behind their speculators, because they are mostly the bailed out banks, or are funded by them.

    Even worse .. war, the worst, most risky speculation of all. Seems easy, send the troops in (or organise a takeover) and grab the oil. The history of this is not a good one. Iraq being the current poster child (with Iran the previous one) and Afghanistan the future one. Apart from everything else, it makes real investment far riskier. Every time those clowns in Israel make some threatening statement about Iran it pushes oil prices up.. a risk premium as speculators pile on. God forbid the West goes to war with Iran .. you can pick your oil price $250, $500 … who knows.

    3. Exportable Oil

    This is the real kicker and the real peak oil. Exportable oil is that from countries that have a surplus over their own consumption. As many if these countries develop their own economies (and in many cases increase their population) their internal demand increases, leaving less available for export.The trend lines are clear. Take the BP statistical report and trendline their production and consumption numbers. In many countries the gap is closing, in some cases very rapidly.
    Do that exercise for Iran (both oil and gas), for example, and suddenly you see the real reason why they are investing in nuclear power.

    But even in Saudi Arabia the gap is steadily closing.

    Take the UK, there is still significant North Sea oil and gas production (peaked and declining), but their own consumption means that they are now importers of both. Stopping investment in nuclear power and ramping up gas powered electricity generation doesn’t seem quite so smart now. We have definitely hit that peak and freely available oil on the World market place is declining real fast. If you are an oil importer .. then you face some real issues over the next 20 years.

    Different countries are responding to this in different ways of course. China is putting in long term investment dollars all over the place.

    The West? We use war.

  11. As for Saudi Arabia, peak Gap (difference between production and consumptions) was in 2005. But it has basically plateaued since … 1991. Bit of ramp up in 2003 to 2005 then declining since. 2010 was lower than 1991! Whoops .. time to invade anyone?

    1. Do you even read the post? Why should the Saudi’s pump more — lowering the price of oil — when they can limit output and get the same income? They have been very clear (as I have documented previously) that they want to leave as much in the ground as possible for future generations. This is one of the very basic facts about current oil production. Referring to this as evidence of peaking shows someone that has not been paying attention.

  12. And I should add .. Iraq. The great white hope. “massive reserves”, pre the US/UK/Australian invasion “the oil revenues will pay for the war” (quote from US Govt).

    But why did Iraq go to war with Kuwait? Well they had disputes for ages about Kuwait extracting oil (using slant drilling) from Iraqi fields (they still do). If Iraq had all those reserves why would it care .. unless the original reserve amounts are more accurate?

    Diito why go to war with Iran and try to grab the oil rich region there? Most of Iran’s oil fields are quite concentrated close to the Iraq border.

    Perhaps, Iraq doesn’t have all the oil some people claim.
    .
    .
    FM reply: The comment requires these to be relevant to the post. It’s rude to pop in and talk about something quite irrelevant to the post.

  13. Oh, FM re: “The US runs a scary large trade deficit, which will eventually go to zero. Either because we drastically cut imports (i.e., we become poorer) or we increase exports. Exports/GDP have been rising for decades (yes, we do sell things abroad), but too slowly. Finding something new to export is good news for America — that’s a change in our thinking we best make if we wish to survive in the globalized 21st century.”

    You can’t. You are the reserve currency. If you have a surplus the rest of the World goes broke and starves. No US dollars to buy Oil (eg). So you have to run a deficit and whatever you do the rest of the World will make sure it has a surplus. The only way the US could have an export surplus is if the US dollar no longer is the reserve currency! Like, logically Keynes Bancor.

    But because the only way your banks and military can survive is because you are the reserve currency (which mean you can just print the money you need to pay for it all) then no US Govt will ever give up the US dollar .. no matter what it costs ordinary US people.

    So you just print and destroy you own economy and export inflation to everyone else. And we all respond by whatever means devaluing our currencies.

    Look at Switzerland as an example of what others will do. Safe Haven, over valued currency, destroying their industries. They have just announced that they will print whatever francs it takes to devalue their currency. Last look, dropped by 10%.

    As long as the US is the reserve currency you can never have a surplus (basic maths actually).

    1. A common identifier of crackpot writing is asserting that experts are all wrong because of basic math (or physics, etc). It’s a sign of educated ignorance. And wonderful self-esteem.

      “You can’t. You are the reserve currency”

      Do you really think the experts in global macroeconomics don’t know this?

      A glboal reserve currency is a recent development, only the UK pound and the US dollar. It’s not a necessary feature of the world economy. The basis for the US status as the reserve currency is gone, and so eventually will its role as a reserve currency. The world will roll on, and so will the US — perhaps after a difficult transitional period (but perhaps not). The reserve currency status is called a “poisoned chalice”, and its loss probably will be a net benefit to the US.

  14. Noting the sharp rejoinders from FM I will try and stay on topic and refer to 2 points in the article. The first point I want to address in the article is depletion. The global number is crude and does not include the economic nuances this very article refers to. Net exports conflates the various figures and has declined by around 4m barrels per day (out of 45mbpd or so) since 2005. As another reader notes this is in fact the real issue. A 10% decline in 6 years is worrying, not only because exponentially declining exports lead to zero in short order but because the rate is accelerating. This ignores increasing resource nationalism such as that exhibited by KSA and other human response factors as oil becomes more “valuable”.

    The second point can be summed up as “price will fix it”. It then trots out all the wonderful stuff waiting in the wings as oil tapers off. This ignores a whole lot of constraints that impact every single one of the substitutes mentioned. Far more pertinent economically is the nexus between oil and the capital markets. It seems oil is the cap on the economy and is acting as the limiting factor according to Liebigs Law of the Minimum. Can the capital markets continue to fund investment in zero growth economies? Which suggests that instead of tying ourselves up in knots over this maybe we should be looking at a different model, such as ecology’s overshoot model.

    The article attempted to suggest that Peak Oil is just a Doomer issue and that human greed, need and ingenuity will win out. Maybe. But, looking not just at oil, but a large range of vital renewable and non-renewable natural resources and services from the biosphere, one is forced to conclude that ALL the trends remain in the wrong direction.

    The real questions are these: Are humans just another species to experience overshoot? If so what is the likely trajectory? Are we at or near Peak People? If so what will the decline look like? And how will it happen?

    1. (1) I love these rebuttals that discuss small technical points and leap to “Are humans just another species to experience overshoot”. Just kidding! I think they’re not useful.

      (2) I don’t see the relationship between what you are saying and anything in this post. Perhaps (as I have said so many times before) you could give a quote and respond to it.

    2. Sorry if I have to spell it out: Depletion or “(2) The #1 factor and major unknown: the rate at which oil production drops”. While depletion is an issue, more pertinent is the interaction of depletion in producer countries and consumption growth. This leads to very rapid reduction in export capacity. That is the issue; and it is not to hard to grasp.

    3. The change of production growth (a) is potentially a far larger number than consumption growth in the oil exporting nations (b). That a>b should not be “hard to grasp.” Worse, a is unknown (i.e., could be almost anywhere in a large range), while b is more of a constant (i.e., growing at a more or less stable rate).

    4. Let’s look at this in more detail. It’s a nice example of how people get information from peak oil literature, and learn quite a bit of misinformation. The subject is the export-land model (see Wikipedia), which is valid but exaggerated (e.g., SailDog, confidently asserting it is a larger factor than global production peaking).

      Let’s look at the numbers (since they’re uncertain, rounded to millions). Estimates of the global production decline after peaking range from 3 to 11 million barrels/day. For comparison, total demand in the Middle East is 6 million b/day, estimated by the EIA to rise to 8 million by 2030. No comparison which trend is more significant.

      Looking at the large population oil exports shows the comparison even more clearly. Production changes dwarf consumption changes.

      1. Mexico: production colllapse dwarfs consumption increase from its underdeveloped growing population.
      2. Canada: production increase dwarfs consumption rise from its stable rich population.
      3. Iran and Iraq: potential production increases dwarf consumption rise from its poor growing population (Iraq’s problem was the war; Iran’s the sanctions — both will end, eventually)
      4. Ex-USSR nations: too complex to say. Russia has a falling population and uncertain production potential.
  15. Other sources to consider: Two U.S. military reports about peak oil, One German military report about the same issue,,One Lloyd’s of London/Chatham House report about the same, The latest outlook report from BP, A Morgan Stanley forecast on spare capacity, Points from Goldman Sachs, Points from HSBC, and the latest IEA report that shows, at best, a 9-pct increase in energy from various oil and gas sources, assuming that production for present fields flatline.

    Finally, about oil production and consumption: “Running dry“, Economist, 9 June 2011. Apparently, demand went down because of the financial crisis, but has gone up again, and deficit between demand and production is being met by sources like biofuels, contributing to higher food prices. Also,

    Our Oil-Constrained Future“, Kevin Drum, 26 August 2011 — That is. as growing middle classes in BRIC and emerging markets require more resources, including oil, then we will see global oil demand increasing and hitting the production ceiling, leading to one recession after another. That is, demand will drop because of an economic recession (but the effects remaining the same as a drop in demand is coupled with a drop in income and employment), then increase once more with more credit and the need to use oil and other resources for basic needs, leading to another recession.

    And after that….

    1. Let’s summarize:

      * There have been many reports about the coming of peak oil. Estimates vary as to when this will occur, some as distant as 2020. But it is coming and will have serious effects. This post is a summary of that work, highlighting the likely range of outcomes.

      * The Economist shows why it is one of the most overrated publications in teh English-speaking world (mostly written by recent college graduates, I am told — and looks like it). As in their famous cover story in “Drowning in oil — “In real terms, oil now costs roughly what it did before 1973. … The world is awash with the stuff, and it is likely to remain so.” They nicely caught the trough in prices. However, it is the go-to magazine to see a good description of the consensus wisdom.

      * Mother Jones is an interesting magazine, and Drum a skilled journalist. It’s heavy ideological baggage make it an interesting source of insights, but unreliable (they show only one side of many issues).

      “And after that” nobody knows what will happen. There are too many variables, and too many facts we do not know (e.g., the extent of Saudi reserves). People giving false certainty are at best obstacles to our understanding and preparation.

    1. Thanks for posting this. It’s either an excellent parody of doomster silliness, or a fine example of doomster silliness. If the former, only appluause is needed. Let’s assume the latter for the purpose of this reply.

    2. Christchurch has a population of 376 thousand. In China they would not bother to put it on the map.
    3. The article cites no evidence of ANY inability to rebuild, merely some residents preferring to leave (an understandable emotional reaction, and rational if they’re moving to either a more vibrant economy ot a more geologically stable one)
    4. The history of the world’s cities consists of cities that die, live, and die. America has done well during the past two centuries, despite being littered with cities now a shell of their former self — and ghost towns. Doomsters inability to distinguish between the normal cycles of life and the End Times is fascinating to watch — for entertainment.
    5. More technically, what we see here is confirmation bias, the most common form of error on the fringes. People sift through the day’s information flow, snatching out the bits that support their world view. This allows even well-educatied and intelligent people to believe preposterous things.
    6. Update: an email from the commenter confirms that he thought that doomster silliness was accurate.

  16. Wonder why Ruppert, like to connect every disaster, economic trouble, etc with peak oil? And its always “we will not have enough energy to rebuild”.

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