How true would you say this article is?

[LondonBroil]

Sounds kind of depressing.

An Economy on Thin Ice


EDIT: Actually I meant to link this article instead, but both are kind of depressing...

The Long Emergency

[natedogg]

I've read the Long Emergency article. It is pure nonsense. It's mostly wild baseless speculation fueled by his own personal wish that suburbia would burn, with very few facts to back up anything he says.

natedogg

[DesertCat]

Yawn. There were many articles written like this in the 1970's and oil is substantially cheaper now.

There are two problems with alarmism like this. One is that commodities and energy keep getting cheaper over long periods of time. So they keep pushing out their endpoints, like catastrophy cultists everywhere.

But the even bigger problem is that if their predictions ever turn out to be true, it will lead to substantially higher energy prices. This would reduce worldwide demand. This means many people would stop buying and driving SUV's. Hybrids would become much more cost effective. More people would take mass transit. Airconditioning and heaters would be used less, etc, etc.

The doomsday cultists are frustrated because oil is still cheaper than ever. Average gas prices have peaked at $2.25. In 1990 they peaked at $1.35 (both according to DOE). In 1990 median income was $14,387, in 2003 it was $23,276 (according to U.S. census). That means we should be around $24,300 right now.

So in 1990, the median person earned enough to buy 10,657 gallons of gas per year. This year it's 10,800 gallons.

And this analysis is actually understates how cheap gas is. Gas taxes are about 16 cents on average higher now than in 1990. Add another ten cents of MTBE requirements.

So gas is still cheap and plentiful and it drives those who believe in the coming apocalypse crazy.

[Rotating Rabbit]

I agree with you guys that I think the author is too apocalyptic, but his basic point that lifestyles will change significantly at some point because reserves are finite is still true. More reserves keep getting found, and its hard to estimate what you can extract, so its a tricky business forcasting when that time will be.

There's potential one day for a big war over oil. It would be prudent all round if more was invested in nuclear power and fusion research.

[Your Mom]

How many times has Paul Ehrlich predicted the end of the world?

[Scuba Chuck]

OP, interesting article you've selected. As usual, by the comments of our posters, most of Americans are not able to come to grips with this reality. If you read any of the the fine research by Chief Economist at Morgan Stanley, Stephen Roach, you'll hear similar echoes.

In fact, the list of very reputable economists doesn't end there. Merril Lynches Bernstein, and Smith Barney's economist (can't remember name) have all stated very similar "end game" realities. Furthermore, if you move beyond these types of professionals, you'll also find very similar articles from other very respected investors like Sir John Templeton.

As a financial professional, it's very interesting to watch this unfold. I've been reading articles just like this one for over three years now. As I tell my clients "you are watching history unfold. This period will be studied more than any other financial period in recorded time."

[natedogg]

The tightening supply of oil will of course be a problem. The speculations about total civ collapse that were put forth in that article were sheer nonsense.

natedogg