Reply #43: Supply/Demand

[rustydad]

Usually 'peak oil' folks talk of oil extration as represented by a curve with time across the horizontal and extraction as barrels-per-time-unit on the vertical. A graph. To really nail down the time when TSHTF one must overlay the 'Peak" curve with a similar graph of "demand" curve. Both curves are only approximations. Extraction depends on the geology of oil fields, number of wells, technology, and other factors. Many if not most oil extractors are secretive about the oil left in their fields. One sign of "peaking" is or will be when prices rise and production does not (sound familiar?).

Demand is even harder to pin down. Much depends on the economies of the importing nations. When oil prices rise too high economies are thrown into an inflationary cycle. This in turn usually causes recession. Recession leads to "demand destruction" as people cut back on heating, driving, etc. Eventually when oil is purchased by the highest bidder and their isn't enough to go round prices will double, triple, up and up. Economies will start to flounder (think Argentina). The timing of all this may be anywhere between now and a few years away. The really important issue is not when, it is coming, but whether the war nations will use military might to grab oil. In that scenerio all hell will brake loose. Keep those fingers crossed. Bob