My Daughter

My Daughter
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Monday, August 22, 2005

The Near Term Economic Effects of Peak Oil

If you don’t know it by now, peak oil means the end of cheap, readily available oil. This price increase will flow through our economy like a pandemic disease, causing higher commodity prices, economic decline and rising unemployment. But not just commodities; there will be inflation in the price of everything. We are seeing it already.

The most dependent countries on oil will be the most affected, and the least affluent countries will bear the first wave of economic onslaught as they will be the least able to afford the higher prices. Affluent countries like the US will have conservation and energy efficiency to initially fall back upon, followed by a decline in the standard of living. The poorer countries will just do without, having no huge gluttonous fat belly to sustain them for the harsh winter of oil decline.

Foreign aid and subsidies will fall to the wayside, and there will arise conflict between the natives and immigrants, especially the illegal ones. Homes and jobs will be lost, spurring competition for the remaining occupations that manage to survive the downsizing. As unemployment rises, there will be a migration into the military for work to support families. Families will double up in one home, while others will take in boarders to help cover expenses. Marginal business will fail and the rising dissent amongst the people will be squashed.

I have been trying to think of what I would cut out of my budget when it gets tight. I think most people will pay whatever price gas is, until they no longer can. The more affluent, and those more forward-thinking will buy more efficient vehicles. Maybe, like in the phrasing of James Howard Kunstler, there will be a “decanting” of the suburban population back into the city as the 150 mile per day commutes become foolish and totally unaffordable.

How chaotic will this transformation get? And remember, we are not talking about shortages yet, just higher prices. In the short term, I think we will see more rage at the pump. They sure fought in the gas lines I was in during the gas crisis of the 1970’s. I read the other day that a gas station owner had been run over and killed for $52.00 worth of gas in a “drive-away” incident.

The end of cheap fossil fuels is going to have some dire repercussions. And let’s hope we don’t have a Murphy’s Law event right away to start a domino effect that leads to utter chaos.


EntropyFails said...

Heya Monte. Love the new look.

I personally worry most about losing liberties with the quelling of dissent. I believe we can see this trend in societies around the globe even pre-Peak which serves as a cautionary note to the future and causes me to redouble my efforts to get sound science and reason behind how we live our lives.

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