Peak Oil and You: Looking Back, Looking Forward
Peak oil has been sneaking up on most of us, and yet it is already impacting us in many ways. The New York Times recently published one of the most essential graphics I've ever seen, which shows not only how peak oil is impacting us, but how it is impacting the economy, and how things will change in the near future.
Let's take a look at the past, and talk a bit about the future:
All of Inflation's Little Parts
First off, notice that this is a historical chart, which shows inflation over the past year. What has went up? What has went down?
Inflation Analysis
As a whole, we have been spending more money on:
As the oil price continues its climb toward untold heights, people employed in this later group of industries will see the jobs disappear. We've already seen this, of course, in the automobile industry, which appeared unable to plan for changes that were already underway years ago. Now, they have to announce layoffs, cuts in production, just to avoid the looming bankruptcy.
Interestingly, even though we are paying more money towards airlines, their expenses are going up much more quickly. Owning airlines is a losing position. Others have already suggested that as oil reaches (and stays above) $150 or $200 per barrel, that the airline industry will continue to fold up. What isn't realized is that $200 per barrel is just the beginning. Oil is worth over $200 per gallon, when looking at it's energy content. And there are 42 gallons in a single barrel of oil. I'm just hoping to take a few more flights before I'm priced out of the market.
Take a look at the chart again and imagine the section for gasoline and other transportation fuels, as well as the section for home heating, doubling in size. Then, imagine how the already shrinking areas will shrink even further, and ones that have been static begin to shrink as well. This is the shape of the future.
On March 7, 2005, the average price of gasoline in the USA was below $2 per gallon. Now, little over three years later, the price is over $4. It has doubled.
What happens as the gas prices double again, probably in less than three years, to $8 per gallon? How will that impact this chart? How will it impact the US and world economy?
What about the price of diesel fuel?
The price of diesel has doubled in less than three years, and the rising price is already causing truck drivers around the world to complain, protest, and start boycotts.
How will this play out in the USA as diesel doubles and reaches $10 per gallon in under three years? How will this impact all of the food prices? Right now we pay about 15% of our money for food. What happens when that goes to 30%? Will there be any money left for recreation, or apparel, or health care? What will the unemployment rate be then?
The vision of the future is one that we can see coming, simply by closely examining this one chart, with an understanding of peak oil and decline painting the picture. The chart is the shape of the past, but it tells the story of a world and an economy in a state of unmistakable, fundamental change.
Gas Prices Impact People Differently
The New York Times just published another chart that helps us see how see a bit more on what is going on...
The Varying Impact of Gas Prices
The Wall Street Journal recently noted, as a nation, we are almost to the point where we were during the worst oil crisis in our history, paying 8% of our income for fuel. From the chart above, notice that there already people paying above 10% of their income on gasoline. Their circle graph already looks like the one we have imagined.
These people are the "canaries in the coal mine" that will demonstrate what happens as we all get to this point. What can we deduce of the impact on the economies in these areas?
What we discover is a vision of the future for peak oil and you.
References
http://graphics8.nytimes.com/packages/flash/business/20080504_CPI/CPI3.swf
http://graphics8.nytimes.com/packages/flash/business/20080609_GAS_INTERACTIVE/gas.swf
http://tonto.eia.doe.gov/dnav/pet/pet_pri_gnd_a_epmr_pte_cpgal_w.htm
http://tonto.eia.doe.gov/dnav/pet/pet_pri_gnd_a_epd2d_pte_cpgal_w.htm
CNBC - Prices Decreasing in Some Purchases
CNBC - Airlines Prices Going Up -- 50% of income is business travel tickets - Fares to Orlando, Hawaii, Las Vegas will rise most - And there will be less orders for new airplanes
Let's take a look at the past, and talk a bit about the future:
All of Inflation's Little Parts
First off, notice that this is a historical chart, which shows inflation over the past year. What has went up? What has went down?
Inflation Analysis
As a whole, we have been spending more money on:
- Gasoline and other Motor Fuel
- Fuel oil, propane & firewood
- Plane Tickets
- Eggs, milk, cheese, & other dairy
- Flour, rice, pasta, bread, oils, and peanut butter
- Bananas and Tomatoes
- TVs, Audio & Video Equipment, Cameras & Computers
- Clocks, lamps, decorations, bedroom furniture, linens
- Outdoor and sports equipment, tools, and toys
- Women's and Girls clothing
- New cars and light trucks
As the oil price continues its climb toward untold heights, people employed in this later group of industries will see the jobs disappear. We've already seen this, of course, in the automobile industry, which appeared unable to plan for changes that were already underway years ago. Now, they have to announce layoffs, cuts in production, just to avoid the looming bankruptcy.
Interestingly, even though we are paying more money towards airlines, their expenses are going up much more quickly. Owning airlines is a losing position. Others have already suggested that as oil reaches (and stays above) $150 or $200 per barrel, that the airline industry will continue to fold up. What isn't realized is that $200 per barrel is just the beginning. Oil is worth over $200 per gallon, when looking at it's energy content. And there are 42 gallons in a single barrel of oil. I'm just hoping to take a few more flights before I'm priced out of the market.
Take a look at the chart again and imagine the section for gasoline and other transportation fuels, as well as the section for home heating, doubling in size. Then, imagine how the already shrinking areas will shrink even further, and ones that have been static begin to shrink as well. This is the shape of the future.
On March 7, 2005, the average price of gasoline in the USA was below $2 per gallon. Now, little over three years later, the price is over $4. It has doubled.
What happens as the gas prices double again, probably in less than three years, to $8 per gallon? How will that impact this chart? How will it impact the US and world economy?
What about the price of diesel fuel?
The price of diesel has doubled in less than three years, and the rising price is already causing truck drivers around the world to complain, protest, and start boycotts.
How will this play out in the USA as diesel doubles and reaches $10 per gallon in under three years? How will this impact all of the food prices? Right now we pay about 15% of our money for food. What happens when that goes to 30%? Will there be any money left for recreation, or apparel, or health care? What will the unemployment rate be then?
The vision of the future is one that we can see coming, simply by closely examining this one chart, with an understanding of peak oil and decline painting the picture. The chart is the shape of the past, but it tells the story of a world and an economy in a state of unmistakable, fundamental change.
Gas Prices Impact People Differently
The New York Times just published another chart that helps us see how see a bit more on what is going on...
The Varying Impact of Gas Prices
The Wall Street Journal recently noted, as a nation, we are almost to the point where we were during the worst oil crisis in our history, paying 8% of our income for fuel. From the chart above, notice that there already people paying above 10% of their income on gasoline. Their circle graph already looks like the one we have imagined.
These people are the "canaries in the coal mine" that will demonstrate what happens as we all get to this point. What can we deduce of the impact on the economies in these areas?
What we discover is a vision of the future for peak oil and you.
References
http://graphics8.nytimes.com/packages/flash/business/20080504_CPI/CPI3.swf
http://graphics8.nytimes.com/packages/flash/business/20080609_GAS_INTERACTIVE/gas.swf
http://tonto.eia.doe.gov/dnav/pet/pet_pri_gnd_a_epmr_pte_cpgal_w.htm
http://tonto.eia.doe.gov/dnav/pet/pet_pri_gnd_a_epd2d_pte_cpgal_w.htm
CNBC - Prices Decreasing in Some Purchases
CNBC - Airlines Prices Going Up -- 50% of income is business travel tickets - Fares to Orlando, Hawaii, Las Vegas will rise most - And there will be less orders for new airplanes