Reply #70: Hammer Hits Nail [View All]

[Strelnikov_]

Peak oil will result in demand for a price inelastic commodity chasing too little, and eventually declining, supply. Price transients will wreak economic havoc to capitalist economies similar to the 70' shocks. A persistent recession will ensue.

But it is the thermodynamic aspect of peak oil that will lead to the 2nd Great Depression. As the decline in conventional oil accelerates, EROEI (thermodynamics) will at a minimum severely depress, and probably destroy, capitalist economies.

All of the post-peak supply mitigation options have net energy returns well below those of even today’s conventional oil. This means we will have to work hard just to replace the Quads of conventional oil energy lost. Growth in energy supply will not be possible, therefore the economic growth required by capitalist economies will also not be possible.

That said, there is no reason that with sound leadership through the transition a vibrant economy with sustainability and quality of life as goals cannot emerge at the other end of the ‘Long Emergency’. This economy would probably be a fusion of socialist principles on the macro scale and free market on the micro scale.