Interesting article if you don't mind the length.

Oil Atricle...finite resource. VERY INTERESTING

I would really like some feedback on this article and its predictions of a global depression.

Well, there is a true SME on this board who can comment. While waiting for him, I'll throw this out:

1. The logic is sound that if peak oil were reached, the potential for a depression is high. The whole world has been growing its use of oil. However,

2. It's not clear that we've really hit peak oil. Yes the OPEC reserves numbers increased, but the article spins it like those were fictional. But it is well known that technology has improved recovery, and more oil can be obtained. It's not a given that those revised reserve quantities are false.

3. The oil equivalents of natural gas may well be indicative of declining oil, but the point is those equivalents are used for a reason. Oil is very useful, but it isn't magical. There are CNG engines readily available. Few people use oil for heating anymore. They're both hydrocarbons, and it's semantics to say we're leaving an oil-based economy.

4. In response to point 1, there are alternatives to oil, or even hydrocarbons. Doesn't mean that the changeover wouldn't be painful, but it's not clear we should be rioting in the streets (about this anyway).

The flaw in the article is that it assumes several factors will remain static (population, consumption, fuel sources) while allowing for only one variable, oil use. Humanity has switched fuel sources for a multitude of reason, from wood, to coal and to gas. To assume that such a transition won't happen again willfully ignores the dynamics that lead to change.

First, Energy is the commodity, more-so than oil. Oil is the cheapest way to harvest energy in a transportable mode. When the availability of oil makes it prohibitively expensive, there exist other options - converting coal to liquid fuel, as well as various battery systems (a/la Chevy Volt), "the hydrogen economy", etc. Ultimately price and economics will spur innovation, development, etc that are necessary for those new technologies to come into being.

One line of argument that I heard recently is that mandates for fuel economy actually serve to make gasoline cheaper (by reducing demand) and in the end may serve as a disincentive to move away from fossil fuels (at best, that may offset other realities of the modern world including declining production and increased demand from China, India, and the rest of the world).

I believe that the response and ultimate impact from "peak oil" will be driven from the bottom up rather than through central planning, but we are doing all of the things that would maximize the damage from decreased oil production, including balking at nuclear power at the same time that we will be demanding that we shut down coal plants. We will be left in a situation where the electric power grid is inadequate for what will will need in order to respond to an oil crisis.

I actually look at it the other way with oil going away it is going to lead to global economic growth. There is no one resource that will be able to replace oil. It will be a combination of solar, wind, natural gas, hydro etc. With the transition from one main energy industry to several you will see a surge of growth to support those industries. Solar may eventually become the wave of the future but that will be when man can create a battery that can store more than a fraction of the solar energy we are able to collect.

As far as peak oil I am no expert but we are still some time away from that. It will eventually come but by that time man should have developed enough alternatives to see either little or no downward change.