Re: SC69

http://www.lifeaftertheoilcrash.net/SecondPage.html

Won't high oil prices motivate us to look for alternatives?"

To a certain degree, yes. Unfortunately, the situation is far too complex to be solved via alternative energy "plug-and-play" as is commonly believed. First, as explained in great depth later on this page, we really don't have any ready-to-scale alternatives that share oil's energy density, energy portability and high energy return on energy invested (EROEI).

Second, and perhaps more importantly, even if we did have alternatives that shared the characteristics of oil, we won't be motivated to invest in them on the massive scale necessary until it's too late. To illustrate this point: as of October 2007 a barrel of oil costs about $75. The amount of energy contained in that barrel of oil would cost between $100-$250* dollars to derive from alternative sources of energy. Thus, the market won't signal energy companies to begin aggressively pursuing alternative sources of energy until oil reaches the $100-$250 range and stays there for several years.

*This does not even account for the amount of money it would take to locate and refine the raw materials necessary for a large scale conversion or the retrofitting of the world's $50 trillion plus economy to run on these alternatives.

Once we do finally begin aggressively pursuing these alternatives, there will be a 25-to-50 year lag time between the initial heavy-duty research into these alternatives and their wide-scale industrial implementation. However, in order to finance an aggressive implementation of alternative energies, we need a tremendous amount of investment capital - in addition to affordable energy and raw materials - that we absolutely will not have once oil prices are permanently lodged in the $200-$300 per barrel neighborhood. Source

While we need 25-to-50 years to retrofit our economy to run on alternative sources of energy, we may only get 12-to-18 months once oil production peaks. Within a short time of global oil production hitting its peak, it will become impossible to dismiss the decline in supply as a merely transitory event. Once this occurs, traders on Wall Street will quickly bid the price up to, and possibly over, the $200 per barrel range as they realize the world is now in an era of permanent oil scarcity.

With oil at or above $200 per barrel, gasoline will reach $10 per gallon, assumming it is even available. This will cause a rapid breakdown of trucking industries and transportation networks which have all been built and financed under the assumption fuel prices would remain low. Importation and distribution of food, medicine, and consumer goods will grind to a halt as trucking and shipping companies go bankrupt en masse.

The effects of this will be frightening. As Jan Lundberg, founder of the Lundberg Survey, aka "the bible of the oil industry" recently pointed out:

The scenario I foresee is that market-based panic will, within a few days, drive prices up skyward. And as supplies can no longer slake daily world demand of over 80 million barrels a day, the market will become paralyzed at prices too high for the wheels of commerce and even daily living in "advanced" societies.

The trucks will no longer pull into Wal-Mart. Or Safeway or other food stores. The freighters bringing packaged techno -toys and goods from China will have no fuel. There will be fuel in many places, but hoarding and uncertainty will trigger outages, violence and chaos. For only a short time will the police and military be able to maintain order, if at all. Source
Although mentioned on the previous page, Oxford trained geologist Jeremy Leggett's analysis of the consequences of Peak Oil bares repeating:

. . . when the truth can no longer be obscured, the price will spike, the economy nosedive, and the underpinnings of our civilization will start tumbling like dominos. "The price of house will collapse. Stock markets will crash. Within a short period, human wealth -- little more than a pile of paper at the best of times, even with the confidence about the future high among traders -- will shrivel.

There will be emergency summits, diplomatic initiatives, urgent exploration efforts, but the turmoil will not subside. Thousands of companies will go bankrupt, and millions will be unemployed. "Once affluent cities with street cafés will have queues at soup kitchens and armies of beggars. The crime rate will soar. The earth has always been a dangerous place, but now it will become a tinderbox . . .

Under these sort of conditions, financing a large scale switchover to alternative energies will be, for all intents and purposes, impossible.

"What about all the various alternatives to Oil? Certainly there are replacements we can turn to?"

People tend to think of "alternatives to oil" as somehow independent from oil. In reality, the alternatives to oil are more accurately described as "derivatives of oil." It takes massive amounts of oil and other scarce resources to locate and mine the raw materials (silver, copper, platinum, uranium, etc.) necessary to build solar panels, windmills, and nuclear power plants. It takes more oil to construct these alternatives and even more oil to distribute them, maintain them, and adapt current infrastructure to run on them.

Each of the alternatives is besieged by numerous fundamental physical shortcomings..................