The Beginning of the End of Suburbia?
June 25, 2008 12:18 PM Subscribe
The New York Times article, Rethinking the Country Life as Energy Costs Rise , is just one of many articles documenting the apparent demise of suburbia. Unlike the notable Atlantic article which focused mostly on the mortgage bubble (previously), these more recent articles are beginning to focus of the rising cost of gas and transportation in general. (Previously) Is this the beginning of The End of Suburbia as predicted by the curmudgeonly James Howard Kunstler? (Discussed previously here and here.) Or are Americans simply readjusting their lifestyles to fit current economic limitations?
Seattle Bubble had some interesting analysis recently on their site, discussing this. The conclusion was gas would have to be very very expensive to make up for the generally higher costs of buying in a close-in neighborhood, at least around here.
Now psychological factors, that's different. As someone pointed out in the comments, mortgage is paid once per month, gas hits you several times. And for renters, whose choices should be much greater and more flexible, renting out in the sticks doesn't make much sense.
posted by maxwelton at 12:27 PM on June 25, 2008
Now psychological factors, that's different. As someone pointed out in the comments, mortgage is paid once per month, gas hits you several times. And for renters, whose choices should be much greater and more flexible, renting out in the sticks doesn't make much sense.
posted by maxwelton at 12:27 PM on June 25, 2008
I have been discussing this with quite a few people lately. The recentralization of society.
posted by a3matrix at 12:30 PM on June 25, 2008
posted by a3matrix at 12:30 PM on June 25, 2008
This thread is about to become a self-congratulating urbanite circlejerk. To forestall that:
If transportation costs go up but people still don't want to live in noiser, more crowded areas with higher crime, maybe telecommuting will take hold more. Or some compatible industries (internet based, ultra-light manufacturing, etc) will move in.
posted by DU at 12:31 PM on June 25, 2008 [1 favorite]
If transportation costs go up but people still don't want to live in noiser, more crowded areas with higher crime, maybe telecommuting will take hold more. Or some compatible industries (internet based, ultra-light manufacturing, etc) will move in.
posted by DU at 12:31 PM on June 25, 2008 [1 favorite]
Well wouldn't the jobs move to the suburbs? I think that's what happened in the 60's, the 70's and the 80's as city real estate became more expensive it just made better business sense to move to cheaper suburbs. So why wouldn't it make sense to move to the workforce. As Sam Kinneson said, well screamed, How can there be a famine? Just move to the food!
posted by Gungho at 12:33 PM on June 25, 2008
posted by Gungho at 12:33 PM on June 25, 2008
Quite a few people making a go of it in these newer suburban neighborhoods could only do so with every cost nailed down tight and a promise of rising equity, since the only real savings any of them had was home equity lines of credit. All rising gas has done is illuminate how tenuous their ability was to match income to cost of living. I doubt any of these people will really move into the urban "core" since those areas are just as high priced if they have any appeal. More likely is that they'll relocate into some smaller, older home that they wouldn't have deigned to piss on when they were intoxicated at the sight of their twenty-foot vaulted foyers and marble countertops and 4000 square feet of unfurnished purgatory.
posted by docpops at 12:35 PM on June 25, 2008 [1 favorite]
posted by docpops at 12:35 PM on June 25, 2008 [1 favorite]
Here's Kunstler's latest take on the situation, from his June 23rd column;
"All this reality content is beginning to penetrate the collective consciousness in the US, but the result is mostly panic or paralyzed disbelief rather than any set of intelligent responses. For example, I got a call from one of Katie Couric's producers at CBS news on Friday. Somehow, they had noticed that oil prices were becoming a problem in America. They called me for a comment. The scary part was they were clearly treating the issue as a "lifestyle" story. Did I think more suburbanites would move downtown? And would that be a good thing...? They have no fucking clue how broadly and deeply these dynamics will affect the life of this nation, or even our ability to remain a nation."
posted by The Card Cheat at 12:36 PM on June 25, 2008 [9 favorites]
"All this reality content is beginning to penetrate the collective consciousness in the US, but the result is mostly panic or paralyzed disbelief rather than any set of intelligent responses. For example, I got a call from one of Katie Couric's producers at CBS news on Friday. Somehow, they had noticed that oil prices were becoming a problem in America. They called me for a comment. The scary part was they were clearly treating the issue as a "lifestyle" story. Did I think more suburbanites would move downtown? And would that be a good thing...? They have no fucking clue how broadly and deeply these dynamics will affect the life of this nation, or even our ability to remain a nation."
posted by The Card Cheat at 12:36 PM on June 25, 2008 [9 favorites]
...the only real savings any of them had was home equity lines of credit. ... ...intoxicated at the sight of their twenty-foot vaulted foyers and marble countertops and 4000 square feet of unfurnished purgatory.
Oh, we're using "suburban" as code for "shallow, greedy, short-sighted bastards". Yeah, I hate them too.
posted by DU at 12:38 PM on June 25, 2008 [4 favorites]
Oh, we're using "suburban" as code for "shallow, greedy, short-sighted bastards". Yeah, I hate them too.
posted by DU at 12:38 PM on June 25, 2008 [4 favorites]
hackly_fracture, maybe some die-hard suburbanites will move to the inner city, but I think more of them will head to exo-cities (satellite "city-like" burbs) on rail lines like Evanston, IL or even to small un-intimidating cities such as Madison, WI. I like in such a place currently and I love it. Publics transportation, great arts culture, good restaurants, etc....all for a fraction of the price of Chicago. Job market is small, but growing.
posted by melissam at 12:39 PM on June 25, 2008
posted by melissam at 12:39 PM on June 25, 2008
This thread is about to become a self-congratulating urbanite circlejerk
maybe, and I probably didn't help with my comment, but really, the size and cost of these homes, especially in light of just how incredibly badly they are constructed, is sickening. It's not the fault of the buyer, really, imo. The allure of creating a spacious, safe place to raise your kids is an intense one, and I can understand what some of these people must be thinking. But for a lot of people these shit-boxes that went up in a few months in former swampland were surrogate dick size gauges where kids were long gone. I could care less that they're looking down the barrel of foreclosure.
On preview, DU, the article, which I just read over lunch, pretty much focuses on these newly minted suburban enclaves in the farmlands.
posted by docpops at 12:40 PM on June 25, 2008
maybe, and I probably didn't help with my comment, but really, the size and cost of these homes, especially in light of just how incredibly badly they are constructed, is sickening. It's not the fault of the buyer, really, imo. The allure of creating a spacious, safe place to raise your kids is an intense one, and I can understand what some of these people must be thinking. But for a lot of people these shit-boxes that went up in a few months in former swampland were surrogate dick size gauges where kids were long gone. I could care less that they're looking down the barrel of foreclosure.
On preview, DU, the article, which I just read over lunch, pretty much focuses on these newly minted suburban enclaves in the farmlands.
posted by docpops at 12:40 PM on June 25, 2008
This article is confusing the cost of energy with productivity, as do many other people. Yes, gas is very expensive. But that isn't the statistic to watch. The one to watch is the cost of driving a mile. A more economical car will have a lower per mile driving cost than a less economical one. So in the long run, technology advancements will allow more efficient use of these resources. You will see this in the next 3-5 years as older cars are replaced with hybrids, for example.
posted by Pastabagel at 12:46 PM on June 25, 2008
posted by Pastabagel at 12:46 PM on June 25, 2008
etaoin:
Fulltext of the JHK article that Card Cheat referenced. This is from JHK's blog "Clusterfuck Nation". Enjoy!
posted by Sam.Burdick at 12:48 PM on June 25, 2008 [1 favorite]
Fulltext of the JHK article that Card Cheat referenced. This is from JHK's blog "Clusterfuck Nation". Enjoy!
posted by Sam.Burdick at 12:48 PM on June 25, 2008 [1 favorite]
So why wouldn't it make sense to move to the workforce.
A lot of the commuter workforce is so sprawled out that many people would still be commuting relatively long distances to get to work no matter where you moved. The lack of density is the heart of the problem.
NB. There's maybe a pun to be made there about the 'central' issue being that there is no centre in the suburbs, but it's beyond me at this point.
posted by sevenyearlurk at 12:48 PM on June 25, 2008
A lot of the commuter workforce is so sprawled out that many people would still be commuting relatively long distances to get to work no matter where you moved. The lack of density is the heart of the problem.
NB. There's maybe a pun to be made there about the 'central' issue being that there is no centre in the suburbs, but it's beyond me at this point.
posted by sevenyearlurk at 12:48 PM on June 25, 2008
Is this the beginning of The End of Suburbia ... Or are Americans simply readjusting their lifestyles to fit current economic limitations?Would we be able to tell the difference? Would there be any difference?
posted by Western Infidels at 12:51 PM on June 25, 2008
Thing is, I moved to the burbs to be close to my job. A mere 7 miles away. I could bike to work. Then, 14 years later, the job was gone. Now, my job was a 60-mile commute back to the city I moved from in the first place.
posted by Thorzdad at 12:58 PM on June 25, 2008
posted by Thorzdad at 12:58 PM on June 25, 2008
Gungho: "Well wouldn't the jobs move to the suburbs? I think that's what happened in the 60's, the 70's and the 80's as city real estate became more expensive it just made better business sense to move to cheaper suburbs. So why wouldn't it make sense to move to the workforce. "
Which suburbs? My City has sprawl in four different directions. Move the jobs to the northern 'burbs and those folks are happy but the people in the southern 'burbs have twice the commute now. Or look at New Jersey; pretty much the whole state is suburban so people drive in all directions from one 'burb to another to go from home to work.
posted by octothorpe at 12:59 PM on June 25, 2008 [1 favorite]
Which suburbs? My City has sprawl in four different directions. Move the jobs to the northern 'burbs and those folks are happy but the people in the southern 'burbs have twice the commute now. Or look at New Jersey; pretty much the whole state is suburban so people drive in all directions from one 'burb to another to go from home to work.
posted by octothorpe at 12:59 PM on June 25, 2008 [1 favorite]
I saw this "End of Suburbia" movie in my video store and almost rented it. Then I decided that the warm glow of smugness and self-congratulation might still not be worth my hour spent watching it if it isn't objectively a decently made/researched movie.
Anybody seen this movie? Is it any good?
posted by gurple at 1:02 PM on June 25, 2008
Anybody seen this movie? Is it any good?
posted by gurple at 1:02 PM on June 25, 2008
In the Baltimore/Washington "Metroplex", about 10% of the people live inside the city limits of Baltimore and Washington. This is true for many cities around the US (in particular in the South). Suburbia is not going away because there is nothing to replace it with, it's all there is.
posted by stbalbach at 1:11 PM on June 25, 2008 [1 favorite]
posted by stbalbach at 1:11 PM on June 25, 2008 [1 favorite]
I can't pat myself on the back for urban living because I'm convinced that if there's a rush back to the city, then I won't be able to afford to live here.
posted by drezdn at 1:18 PM on June 25, 2008 [4 favorites]
posted by drezdn at 1:18 PM on June 25, 2008 [4 favorites]
Kunstler is so quotable: "We'd be left with a lot of empty big box stores, vacant highways, and houses inconveniently deployed too far from any place of utility." Shoes dropping, February 18
posted by falcon at 1:32 PM on June 25, 2008
posted by falcon at 1:32 PM on June 25, 2008
Increasingly, many people will be able to work from their homes via the net and tyhat will enable many to keep transportation costs down. But that said: education, schools is what drives marrieds to the suburbs...and it will keep them there so long as the schools continue to be as bad as they are in most urban areas. Singles, the divorced, separated and young can find all they want and need in a city, but once they marry and have kids, they tend to move out. and will continue to do so. After all, if the suburbs suddenly went into collapse, so too would the entire nation--there are too many homes, developments, etc etc and they can not be emptied without a major economic disaster. Let alone what would impact upon a huge influx into cities, already inadequate in transportation, schooling, etc
We are already seeing a strain upon public transportation because of gas prices, but this can be taken care of. The auto and gas industry made sure that public transportation remained underveloped by our railways will soon begin to see a spurt in growth, as will busses within the cities and perhaps those going further out of the city to bring workers to jobs in the cities.
Look at China and India and Seoul and Tokyo for charmfing city dwelling.
posted by Postroad at 1:34 PM on June 25, 2008 [1 favorite]
We are already seeing a strain upon public transportation because of gas prices, but this can be taken care of. The auto and gas industry made sure that public transportation remained underveloped by our railways will soon begin to see a spurt in growth, as will busses within the cities and perhaps those going further out of the city to bring workers to jobs in the cities.
Look at China and India and Seoul and Tokyo for charmfing city dwelling.
posted by Postroad at 1:34 PM on June 25, 2008 [1 favorite]
I just moved from the city, hopscotched the burbs and moved to a great little house in the country. I can't telecommute, but my wife can.
Paying these prices sucks, and I have to drive for everything now, but it's made me a much more efficient driver. I do everything in as few trips as possible, drive more slowly and really think about my gas usage.
It makes up for it in other ways, though - everything is cheaper here. I can grow my own food. Plus, I open my windows and hear hummingbirds, see fawns when I walk to my endless parking right outside my front door, and I don't have insane city people or hipsters as far as the eye can see.
And it can see far, man.
posted by nevercalm at 1:45 PM on June 25, 2008 [2 favorites]
Paying these prices sucks, and I have to drive for everything now, but it's made me a much more efficient driver. I do everything in as few trips as possible, drive more slowly and really think about my gas usage.
It makes up for it in other ways, though - everything is cheaper here. I can grow my own food. Plus, I open my windows and hear hummingbirds, see fawns when I walk to my endless parking right outside my front door, and I don't have insane city people or hipsters as far as the eye can see.
And it can see far, man.
posted by nevercalm at 1:45 PM on June 25, 2008 [2 favorites]
Oh, we're using "suburban" as code for "shallow, greedy, short-sighted bastards"
Well, considering that US suburban dwellers use over 10% of the world's resources while being less than 2% of the world's population, and who have been completely oblivious of the fact that their entire lifestyle's dependent on artificially cheap gasoline, I'd say that the burden of proof is on you to prove that suburbanites are not that way.
(The stats are approximate: based on the US consuming 25% of the world's goods, suburban dwellers being almost 40% of the US population in 2000, and assuming that these suburban dwellers consume only as much as your average USian.)
posted by lupus_yonderboy at 1:51 PM on June 25, 2008 [3 favorites]
Well, considering that US suburban dwellers use over 10% of the world's resources while being less than 2% of the world's population, and who have been completely oblivious of the fact that their entire lifestyle's dependent on artificially cheap gasoline, I'd say that the burden of proof is on you to prove that suburbanites are not that way.
(The stats are approximate: based on the US consuming 25% of the world's goods, suburban dwellers being almost 40% of the US population in 2000, and assuming that these suburban dwellers consume only as much as your average USian.)
posted by lupus_yonderboy at 1:51 PM on June 25, 2008 [3 favorites]
How much gas do city dwellers burn doing endless loops around their neighborhoods looking for a spot, I wonder?
posted by nevercalm at 1:53 PM on June 25, 2008 [1 favorite]
posted by nevercalm at 1:53 PM on June 25, 2008 [1 favorite]
Postroad/pastabegel/et al: I don´t think the issue is the cost of personal transportation. It´s the cost of keeping "5000-square-foot personal family resorts" (that quotable Kunstler again) cool and warm in areas that are otherwise alternately uninhabitable, paying for food manufactured from hydrocarbon on the other side of the continent in a system in which there is only a three day supply of food in the local stores, and avoiding mortgage default in a crashing financial system. No amount of efficiency gains in public transportation are going to compensate for an entire infrastructure hardwired around a finite, unsubstitutable fuel type which is about to undergo supply discontinuity.
After all, if the suburbs suddenly went into collapse, so too would the entire nation. Well, quite.
posted by falcon at 1:53 PM on June 25, 2008 [2 favorites]
After all, if the suburbs suddenly went into collapse, so too would the entire nation. Well, quite.
posted by falcon at 1:53 PM on June 25, 2008 [2 favorites]
How much gas do city dwellers burn doing endless loops around their neighborhoods looking for a spot, I wonder?
I hear you. I burn a lot of calories looping around the neighborhood looking for a spot to eat.
Oh, you said "gas". Never mind.
posted by gurple at 2:01 PM on June 25, 2008 [3 favorites]
I hear you. I burn a lot of calories looping around the neighborhood looking for a spot to eat.
Oh, you said "gas". Never mind.
posted by gurple at 2:01 PM on June 25, 2008 [3 favorites]
our railways will soon begin to see a spurt in growth
More like regrowth in many areas. For example, in the first half of the last century, there used to be three train stations within about a two mile radius of me. Now the nearest train station gets one train per day each direction and is about 25 miles away.
posted by TheOnlyCoolTim at 2:03 PM on June 25, 2008
More like regrowth in many areas. For example, in the first half of the last century, there used to be three train stations within about a two mile radius of me. Now the nearest train station gets one train per day each direction and is about 25 miles away.
posted by TheOnlyCoolTim at 2:03 PM on June 25, 2008
Actually life in Seoul can be quite charming - excellent public transportation, decent schools within the city, restaurant food and groceries delivered to one's door, at home car wash/detailing (they'll come to your house, you don't go to them), impromptu neighborhood markets, all things that happen through achieving a certain population density. And you know what? Having large numbers of people around also makes it safer for me to be out and about through most parts of Seoul even late at night.
There is no comparison in the quality of life of my mother in Seoul and her brother and his wife living in an Atlanta exurb. She leads an active life, volunteering, going to museums and performances with her friends, taking walks in numerous parks in the city, getting around by public transportation or on foot. In contrast, her brother and his wife are virtual prisoners in the home they share with their child in an Atlanta exurb, because they're too old to drive safely any more. There's no public transportation and there are no sidewalks in their subdivision. Nobody walks there. Everything is at least a 20-minute drive, and usually involves the highway.
Associating city life only with negative qualities seems to be a peculiarly American perspective. Maybe this will change a little in the upcoming years?
posted by needled at 2:05 PM on June 25, 2008 [5 favorites]
There is no comparison in the quality of life of my mother in Seoul and her brother and his wife living in an Atlanta exurb. She leads an active life, volunteering, going to museums and performances with her friends, taking walks in numerous parks in the city, getting around by public transportation or on foot. In contrast, her brother and his wife are virtual prisoners in the home they share with their child in an Atlanta exurb, because they're too old to drive safely any more. There's no public transportation and there are no sidewalks in their subdivision. Nobody walks there. Everything is at least a 20-minute drive, and usually involves the highway.
Associating city life only with negative qualities seems to be a peculiarly American perspective. Maybe this will change a little in the upcoming years?
posted by needled at 2:05 PM on June 25, 2008 [5 favorites]
This article is confusing the cost of energy with productivity, as do many other people. Yes, gas is very expensive. But that isn't the statistic to watch. The one to watch is the cost of driving a mile. A more economical car will have a lower per mile driving cost than a less economical one. So in the long run, technology advancements will allow more efficient use of these resources. You will see this in the next 3-5 years as older cars are replaced with hybrids, for example.
That won't matter much if energy prices raise the cost of making and transporting food from rural to urban distribution points, and from there to the suburbs, faster than people's wages. From a back-of-the-envelope calculation, I know our food costs have gone up 150-220% over the last six months, depending on what we're buying. For us, processed foods haven't gone up nearly as much as organic vegetables and meat, for example.
posted by Blazecock Pileon at 2:06 PM on June 25, 2008
That won't matter much if energy prices raise the cost of making and transporting food from rural to urban distribution points, and from there to the suburbs, faster than people's wages. From a back-of-the-envelope calculation, I know our food costs have gone up 150-220% over the last six months, depending on what we're buying. For us, processed foods haven't gone up nearly as much as organic vegetables and meat, for example.
posted by Blazecock Pileon at 2:06 PM on June 25, 2008
Move the jobs is not a new concept. In my large company we used to have three centers. One north of the city, one in the city, and one south of the city. When we sold off the one south of the city many were forced to go north. People with better jobs were able to finagle telecommuting jobs, and others just ignored the order and 'found space' in the central location. Others either left the company or sucked up the long commute.
Business are smart, at least in the short term. They will examine the statistics, believe the ones that please them and move to the area that has the best balance of talent and real-estate. It used to be that the businesses did that quite regularly. Massachusetts' Technology Highway and California's Silicon Valley are two quick examples. The biotech (and other tech) industries usually have small starter labs near the universities, but as they grow they have to move out if only just for the space.
I think the real problem is the two hour 16 mile commute. Traffic sucks.
posted by Gungho at 2:07 PM on June 25, 2008
Business are smart, at least in the short term. They will examine the statistics, believe the ones that please them and move to the area that has the best balance of talent and real-estate. It used to be that the businesses did that quite regularly. Massachusetts' Technology Highway and California's Silicon Valley are two quick examples. The biotech (and other tech) industries usually have small starter labs near the universities, but as they grow they have to move out if only just for the space.
I think the real problem is the two hour 16 mile commute. Traffic sucks.
posted by Gungho at 2:07 PM on June 25, 2008
More like regrowth in many areas. For example, in the first half of the last century, there used to be three train stations within about a two mile radius of me. Now the nearest train station gets one train per day each direction and is about 25 miles away.
Some passenger trains must share with increasingly crowded freight lines, because the cost of re-gaining lost right-of-ways for new or rebuilt tracks -- not to mention the cost of laying down track -- will simply be too great. Look for greater confrontations between getting people to work and getting food and goods between rural and industrial centers and cities, where government will need to step in and decide priorities.
posted by Blazecock Pileon at 2:09 PM on June 25, 2008
Some passenger trains must share with increasingly crowded freight lines, because the cost of re-gaining lost right-of-ways for new or rebuilt tracks -- not to mention the cost of laying down track -- will simply be too great. Look for greater confrontations between getting people to work and getting food and goods between rural and industrial centers and cities, where government will need to step in and decide priorities.
posted by Blazecock Pileon at 2:09 PM on June 25, 2008
The suburbs have always creeped me out. I had a friend who grew up in Richmond Hill (north of Toronto), and when I visited his place (when we were younger and still living with our parents), what always disturbed me was the fact that you never saw anyone outside unless they were in a car. No kids outside playing, no-one walking (there was nowhere you could walk to in less than 20 minutes), no-one out for a for bike ride, no joggers (and no trees, either, which in a way was the worst part). It was like a neutron bomb had gone off. It was quieter, sure...but it was too quiet.
posted by The Card Cheat at 2:29 PM on June 25, 2008
posted by The Card Cheat at 2:29 PM on June 25, 2008
Why is it presumed that all people living in the suburbs are in newly-built, enormous, energy-inefficient snout houses? I live in the suburbs, and none of the houses around here fit that description.
paying for food manufactured from hydrocarbon on the other side of the continent in a system in which there is only a three day supply of food in the local stores, and avoiding mortgage default in a crashing financial system
Neither of those are urban vs. suburban issues.
posted by The corpse in the library at 2:54 PM on June 25, 2008 [1 favorite]
paying for food manufactured from hydrocarbon on the other side of the continent in a system in which there is only a three day supply of food in the local stores, and avoiding mortgage default in a crashing financial system
Neither of those are urban vs. suburban issues.
posted by The corpse in the library at 2:54 PM on June 25, 2008 [1 favorite]
Is this the beginning of The End of Suburbia?
posted by you just lost the game at 3:01 PM on June 25, 2008 [1 favorite]
posted by you just lost the game at 3:01 PM on June 25, 2008 [1 favorite]
Why is it presumed that all people living in the suburbs are in newly-built, enormous, energy-inefficient snout houses? I live in the suburbs, and none of the houses around here fit that description.
That was the implied thrust of the article, THITL. I grew up in a long-established lovely suburb of DC. Our house was 2000 sq. feet if you included the garage and attic. While the commute is a bitch still, they long ago put in light rail and before that figured out the 'slug' system of picking up passengers before getting on the highway for the drive into DC. The McMansion phenomena almost by default could not happen unless it was in far-off rural areas, because the cost of land had to be cheap enough so people could pour their mortgages into Sub-Zero appliances and hardscaping and entertainment centers.
posted by docpops at 3:09 PM on June 25, 2008 [1 favorite]
That was the implied thrust of the article, THITL. I grew up in a long-established lovely suburb of DC. Our house was 2000 sq. feet if you included the garage and attic. While the commute is a bitch still, they long ago put in light rail and before that figured out the 'slug' system of picking up passengers before getting on the highway for the drive into DC. The McMansion phenomena almost by default could not happen unless it was in far-off rural areas, because the cost of land had to be cheap enough so people could pour their mortgages into Sub-Zero appliances and hardscaping and entertainment centers.
posted by docpops at 3:09 PM on June 25, 2008 [1 favorite]
The chumps who live in sucker cities like Los Angeles, New York and Chicago wish like hell the suburbs would go away so they wouldn't have to live with the nagging thought that maybe they are entitled to something better than a one-bedroom with noisy neighbors, barking dogs, and salsa music at 2 a.m., gritty air, having to go hear friends' friends' crappy bands at crappy bars, and maximum inconvenience in everything from going to the grocery to getting a plumber. Even the rich live like poor people in the city. But out here in delicious sprawland, we live Thoreau in the midst of nature, with the best of everything, clean public libraries not full of homeless people, good restaurants, trees fields, hills, rivers, sunsets, sunrises, silence... Best of all, you can get in your care and drive and listen to music, and drive and drive. About the only bad thing you can say about the suburbs is that you can't get drunk at a bar and walk or take the subway home. But, I mean, that's about the only bad thing.
posted by Faze at 3:22 PM on June 25, 2008 [3 favorites]
posted by Faze at 3:22 PM on June 25, 2008 [3 favorites]
we live Thoreau in the midst of nature, with the best of everything, clean public libraries not full of homeless people, good restaurants, trees fields, hills, rivers, sunsets, sunrises, silence
You just described rural areas, not sprawling suburbs. The trees, fields, hills, and rivers around me are being bulldozed to be replaced with the interstate, Wal-Marts, and McMansions, and there are a few good restaurants but many more TGI Fridays and Applebees.
posted by TheOnlyCoolTim at 3:29 PM on June 25, 2008 [1 favorite]
You just described rural areas, not sprawling suburbs. The trees, fields, hills, and rivers around me are being bulldozed to be replaced with the interstate, Wal-Marts, and McMansions, and there are a few good restaurants but many more TGI Fridays and Applebees.
posted by TheOnlyCoolTim at 3:29 PM on June 25, 2008 [1 favorite]
The suburbs have always creeped me out. I had a friend who grew up in Richmond Hill (north of Toronto), and when I visited his place (when we were younger and still living with our parents), what always disturbed me was the fact that you never saw anyone outside unless they were in a car.
I live just south of Richmond Hill right now, and there are kids playing outside, people walking to plazas and strip malls, and plenty of trees. The problem with suburbia isn't necessarily how many people you see on the streets, because despite seeing all these people around, it's still a pain in the ass to get anywhere and people still drive all over the place.
At least in Toronto, but probably for a lot of metropolitan areas, a crucial problem is that until recently (and arguably still today), the cost of buying a house in the suburbs plus the cost of maintaining a vehicle or taking long-distance transit is still cheaper than buying a place in the city. Lots of people want to live closer to Toronto or even in Toronto, and no one likes spending an hour on the highway; they do these things because it was more economical or they had no choice.
This isn't to say suburban life is better because it's cheaper (or was cheaper); just that we've managed to shove the costs of living this way onto subsequent generations, who at best will have to figure out ways of redeveloping suburbia to fit a scale conducive to people as opposed to cars. But you can't simply wish the problem away or "gate off the cities" as if suburbanites were the barbarians camped outside Rome.
posted by chrominance at 3:29 PM on June 25, 2008
I live just south of Richmond Hill right now, and there are kids playing outside, people walking to plazas and strip malls, and plenty of trees. The problem with suburbia isn't necessarily how many people you see on the streets, because despite seeing all these people around, it's still a pain in the ass to get anywhere and people still drive all over the place.
At least in Toronto, but probably for a lot of metropolitan areas, a crucial problem is that until recently (and arguably still today), the cost of buying a house in the suburbs plus the cost of maintaining a vehicle or taking long-distance transit is still cheaper than buying a place in the city. Lots of people want to live closer to Toronto or even in Toronto, and no one likes spending an hour on the highway; they do these things because it was more economical or they had no choice.
This isn't to say suburban life is better because it's cheaper (or was cheaper); just that we've managed to shove the costs of living this way onto subsequent generations, who at best will have to figure out ways of redeveloping suburbia to fit a scale conducive to people as opposed to cars. But you can't simply wish the problem away or "gate off the cities" as if suburbanites were the barbarians camped outside Rome.
posted by chrominance at 3:29 PM on June 25, 2008
I predict before the death of the suburb we'll see the death of the downtown office building. Quick poll rhetorical instapoll, how many people do you know that drive into work every day only to plug in their laptop so they can work in some cube farm?
posted by humanfont at 3:42 PM on June 25, 2008
posted by humanfont at 3:42 PM on June 25, 2008
It's annoying when people generalize suburbs to mean the McMansion enterprises. I grew up in a small rancher in a neighborhood with sidewalks. People walked, biked, kids played in neighborhoods. Of course this was in the early days of video games ;P
I now have a 50+ year old home in a suburb on the outskirts of Baltimore. My neighborhood is lower middle class. There are people walking, biking and whatnot. There are two convenience stores and a drugstore in walking distance. There is more that is in walking distance if you are up to walking 2 miles each way...
I loved living in Columbia, MD which is a planned suburban community. Each area has a central shopping center that is close to surrounding homes which was great! Each area has the local swimming pool, local schools, local park.
When I moved back to Maryland, I found that my two favorite areas were now out of my $ reach. I refused to hamstring myself with a large mortgage. My partner and I bought a house that we could afford on just my income.
I had to purchase away from the bulk of the jobs in order to afford a house! Most of the jobs are down towards DC, not up toward Baltimore. The situation sucks, but I still pay less in gas/mileage than I would in the increased mortgage. I am talking about double the cost! The cost seems to go up in both directions -- the outer rings of suburbia with 2+ acres of land, and in the good areas of the city.
I have seen those newer houses, they look "fake" to me. I don't know what it is about them, they are visually too large for the plots of land they occupy -- but there is something else about them I don't like. But I hardly think that they are representative of "suburbia".
posted by Librarygeek at 3:42 PM on June 25, 2008
I now have a 50+ year old home in a suburb on the outskirts of Baltimore. My neighborhood is lower middle class. There are people walking, biking and whatnot. There are two convenience stores and a drugstore in walking distance. There is more that is in walking distance if you are up to walking 2 miles each way...
I loved living in Columbia, MD which is a planned suburban community. Each area has a central shopping center that is close to surrounding homes which was great! Each area has the local swimming pool, local schools, local park.
When I moved back to Maryland, I found that my two favorite areas were now out of my $ reach. I refused to hamstring myself with a large mortgage. My partner and I bought a house that we could afford on just my income.
I had to purchase away from the bulk of the jobs in order to afford a house! Most of the jobs are down towards DC, not up toward Baltimore. The situation sucks, but I still pay less in gas/mileage than I would in the increased mortgage. I am talking about double the cost! The cost seems to go up in both directions -- the outer rings of suburbia with 2+ acres of land, and in the good areas of the city.
I have seen those newer houses, they look "fake" to me. I don't know what it is about them, they are visually too large for the plots of land they occupy -- but there is something else about them I don't like. But I hardly think that they are representative of "suburbia".
posted by Librarygeek at 3:42 PM on June 25, 2008
But I hardly think that they are representative of "suburbia".
That's what they build these days, though. They look fake because they bulldozed all the land and trees before starting construction, and because the houses are built with just enough construction quality to hold together until warranty expiration and maybe meet code.
posted by TheOnlyCoolTim at 3:47 PM on June 25, 2008
That's what they build these days, though. They look fake because they bulldozed all the land and trees before starting construction, and because the houses are built with just enough construction quality to hold together until warranty expiration and maybe meet code.
posted by TheOnlyCoolTim at 3:47 PM on June 25, 2008
nevercalm: "How much gas do city dwellers burn doing endless loops around their neighborhoods looking for a spot, I wonder?"
Actually since my inner-city rowhouse has a 10 car garage, the answer for me is zero.
posted by octothorpe at 3:58 PM on June 25, 2008
Actually since my inner-city rowhouse has a 10 car garage, the answer for me is zero.
posted by octothorpe at 3:58 PM on June 25, 2008
Cars are not necessarily dead/dying. Maybe using oil to power them is on the way out, but that's no reason for cars to die. There will be a painful transition, but eventually the economics will favor switching to something else, maybe just electric cars.
Energy itself is not really that scarce, it's a matter of what form its in. If we invested heavily in nuclear power and built electric cars, we could maintain a fairly mobile lifestyle. Will we do this in the short term? It's pretty clear the answer is no. But in 50 years? Quite possible. And in the meantime we'll have various transitional technologies like hybrids. Heck, by the end of the century maybe we won't even need nuclear, and can get it all from the sun or something. But there are technologies available today (nuclear+electric) that could allow a fair amount of people to still have cars (maybe not quite as cheaply as today).
The giant house phenomenon will have its own issues... aside from telecommuters, eventually you'll have a 4 hour commute each way, and you can't build out anymore. Then density in the suburbs that are commute-able will continue to increase.
Around SF, for example, the "suburbs" are pretty dense, as dense as many parts of Atlanta I've seen.
posted by wildcrdj at 4:03 PM on June 25, 2008
Energy itself is not really that scarce, it's a matter of what form its in. If we invested heavily in nuclear power and built electric cars, we could maintain a fairly mobile lifestyle. Will we do this in the short term? It's pretty clear the answer is no. But in 50 years? Quite possible. And in the meantime we'll have various transitional technologies like hybrids. Heck, by the end of the century maybe we won't even need nuclear, and can get it all from the sun or something. But there are technologies available today (nuclear+electric) that could allow a fair amount of people to still have cars (maybe not quite as cheaply as today).
The giant house phenomenon will have its own issues... aside from telecommuters, eventually you'll have a 4 hour commute each way, and you can't build out anymore. Then density in the suburbs that are commute-able will continue to increase.
Around SF, for example, the "suburbs" are pretty dense, as dense as many parts of Atlanta I've seen.
posted by wildcrdj at 4:03 PM on June 25, 2008
In most US cities, a lot of job creation is now in the suburbs, not in the center; similarly, much commuting is now suburb-to-suburb, rather than suburb-to-center.
The math at the center of the article still holds -- that higher transportation costs have to come from somewhere, and the housing budget is where that money will come from eventually (or rather, that eventually housing prices will internalize transportation costs). But it's not as simple as center/exurbs for many people -- their jobs aren't in the center, their friends aren't in the center, and many of the services they need aren't in the center. It's a choice of far out exurb vs closer suburb, or suburb A vs suburb B.
And needless to say, not all suburbs are equal -- some are very walkable, with good services and excellent multi-modal transportation connections. Others are mono-cultural in terms of transportation and infrastructure, and high gas prices will not be kind to those suburbs until or unless the slow process of reengineering them for the world of high energy prices begins.
posted by Forktine at 4:04 PM on June 25, 2008 [1 favorite]
The math at the center of the article still holds -- that higher transportation costs have to come from somewhere, and the housing budget is where that money will come from eventually (or rather, that eventually housing prices will internalize transportation costs). But it's not as simple as center/exurbs for many people -- their jobs aren't in the center, their friends aren't in the center, and many of the services they need aren't in the center. It's a choice of far out exurb vs closer suburb, or suburb A vs suburb B.
And needless to say, not all suburbs are equal -- some are very walkable, with good services and excellent multi-modal transportation connections. Others are mono-cultural in terms of transportation and infrastructure, and high gas prices will not be kind to those suburbs until or unless the slow process of reengineering them for the world of high energy prices begins.
posted by Forktine at 4:04 PM on June 25, 2008 [1 favorite]
The chumps who live in sucker cities like Los Angeles, New York and Chicago
You forgot San Francisco.
I've lived in urban, suburban, and rural areas. The suburbs I've lived in have all been of the older, established variety, with relatively small houses, sidewalks, and stuff within walking distance and/or easy public transportation. They were nice. I'd live there again.
But in a place like this? No. See all the cute street names (Wigeon Way, Blue Wing Dr., Wigeon Way)? All named for waterfowl that used to live in the marshes* that were drained and paved over and covered with houses. Progress!
*And let's not even talk about how much of those suburbs are going to be underwater when the levies fail. But, you know.
posted by rtha at 4:07 PM on June 25, 2008
You forgot San Francisco.
I've lived in urban, suburban, and rural areas. The suburbs I've lived in have all been of the older, established variety, with relatively small houses, sidewalks, and stuff within walking distance and/or easy public transportation. They were nice. I'd live there again.
But in a place like this? No. See all the cute street names (Wigeon Way, Blue Wing Dr., Wigeon Way)? All named for waterfowl that used to live in the marshes* that were drained and paved over and covered with houses. Progress!
*And let's not even talk about how much of those suburbs are going to be underwater when the levies fail. But, you know.
posted by rtha at 4:07 PM on June 25, 2008
> I live just south of Richmond Hill right now, and there are kids playing outside, people walking to plazas and strip malls, and plenty of trees.
My bad; his parents lived in Markham, not Richmond Hill...Richmond Hill is where he bought a house and lives now. So the aforementioned awful suburb was in Markham. The part of Richmond Hill he lives in doesn't have any trees with trunks thicker than my wrist, though.
> Even the rich live like poor people in the city.
I suspect you were being sarcastic, but if not...many of you who have to drive everywhere are going to be envying us "poor" people in the city pretty soon. Last year my wife and I spent a total of $2640 on a year's worth of public transit passes, approximately $600 on an AutoShare membership/rentals, and probably somewhere in the neighbourhood of $500 on car rentals for weekend trips out of the city. Gassing up those rental cars probably cost us another $300. So our transportation costs for the entire year came to about $4000, or $2000 each. Last month my sister and her husband spent $1500 on car repairs. Then there's gas. Then there's insurance. Then there are more repairs. Then there's gas. Then there's gas. Then there's gas...
YMMV, but I doubt it.
posted by The Card Cheat at 4:29 PM on June 25, 2008 [1 favorite]
My bad; his parents lived in Markham, not Richmond Hill...Richmond Hill is where he bought a house and lives now. So the aforementioned awful suburb was in Markham. The part of Richmond Hill he lives in doesn't have any trees with trunks thicker than my wrist, though.
> Even the rich live like poor people in the city.
I suspect you were being sarcastic, but if not...many of you who have to drive everywhere are going to be envying us "poor" people in the city pretty soon. Last year my wife and I spent a total of $2640 on a year's worth of public transit passes, approximately $600 on an AutoShare membership/rentals, and probably somewhere in the neighbourhood of $500 on car rentals for weekend trips out of the city. Gassing up those rental cars probably cost us another $300. So our transportation costs for the entire year came to about $4000, or $2000 each. Last month my sister and her husband spent $1500 on car repairs. Then there's gas. Then there's insurance. Then there are more repairs. Then there's gas. Then there's gas. Then there's gas...
YMMV, but I doubt it.
posted by The Card Cheat at 4:29 PM on June 25, 2008 [1 favorite]
Oh, and car payments. Can't forget those!
posted by The Card Cheat at 4:35 PM on June 25, 2008 [1 favorite]
posted by The Card Cheat at 4:35 PM on June 25, 2008 [1 favorite]
Mr. Boyle recently paid $121 to fill his pickup truck ... to drive to a job in the high-tech corridor of Denver.
Dude hasn't even traded his pickup for a small car yet, so maybe he's not quite ready to trade his house for a city apartment.
It was long expected that prices in the suburbs would decline faster than those in the city, this does not necessarily have anything to do with the price of gasoline. It is the usual pattern, so I am told by the real estate experts: First the prices rise in the attractive parts of the city centre, leading to the phrase "drive until you qualify". The outer suburbs are the last to see the price rise, and the first to see the decline. Makes sense to me, as I myself am one of the many who ended up leaving the city for the more affordable housing elsewhere.
Sure enough, "5000-square-foot personal family resorts" are not so easy to maintain no matter where they're located, and Kunstler may be right eventually. It will take more than $5/gallon for gasoline, even if that does really hurt people who drive an F150 for a one-person 60-mile commute to work or something. Perhaps I am just in the usual phase of denial, but I maintain some hope he's not yet right about peak oil being about to really fuck things up in the very near future, because it would seem a cruel joke to have that whole problem reach its worst just as the world economy might otherwise be thinking about starting the process of recovery from the largest credit bubble in history. There is plenty of room for conservation. Mr. Boyle can start by geting a fuel-efficient car to cut his gasoline use in half, then insulate the house and arrange to heat only the parts that really need heating to a lower temperature than they're used to. People like me can telecommute. The vast majority of commuters can at least use "the 'slug' system" or something like it. With any luck, getting by with 50% less liquid fuels would not be the end of the world; in theory it ought to be pretty easy. Long as the decline in gasoline availability is gradual, this sort of response could keep the suburbs working pretty much as they do for quite some time yet.
I had a friend who grew up in Richmond Hill (north of Toronto)
Yeah, quite a place there. I spent some time in another of Toronto's northern seas of suburbia, once upon a time. A strangely inhuman environment, like you say. There was a small patch of forest nearby on unused land where later they built highway 407. I used to hang out there once in a while and just ponder the incredible fact that one could sit by the side of the stream there, a perfectly nice place for a picnic, a few acres surrounded by millions of tasteless suburban houses for many miles, and pretty much nobody else ever went there. Driving three miles to the shopping mall seemed to be the local idea of a fun thing to do on a summer afternoon.
... and now, to get all bold and visionary and crazy in a futile attempt to match Kunstler, I say the people who can't afford gasoline and heating oil will be forced to move out of the suburbs and into the city; not only from the suburbs but from all over the place. With the housing bubble having destroyed all their wealth, and tent cities of exiled suburbanites forming everywhere public transport extends to, the wealthy people who previously were the only ones who could afford to buy a house in the city will flee to the suburbs, where they tear down the McMansions and build luxurious countryside villas with housing for the servants. I mean, just look at one city where already most people have trouble affording gasoline, Harare. Where do all the rich folks live? Out in the suburbs like Borrowdale, naturally, or so google tells me. If inequality of wealth keeps getting worse in America and the economy goes straight to hell, at least a few select suburban locations ought to do relatively well, as the city centre gets all crowded, and they can't afford to pick up the garbage or keep the electricity running any more. At least out here while we presently have to drive a long way to get sushi, and although it's not exactly your stereotypical suburb, there's enough forest around that we could cut enough firewood to keep warm forever, or more likely cut the whole forest down to sell to you poor city-dwellers to heat your shanty-town hovels, in exchange for enough trillion-dollar bills to buy a tin of beans, before starving to death ourselves. So I for one refuse to give in to the temporarily slightly stronger than normal appeal of life in the city.
posted by sfenders at 4:37 PM on June 25, 2008 [1 favorite]
Dude hasn't even traded his pickup for a small car yet, so maybe he's not quite ready to trade his house for a city apartment.
It was long expected that prices in the suburbs would decline faster than those in the city, this does not necessarily have anything to do with the price of gasoline. It is the usual pattern, so I am told by the real estate experts: First the prices rise in the attractive parts of the city centre, leading to the phrase "drive until you qualify". The outer suburbs are the last to see the price rise, and the first to see the decline. Makes sense to me, as I myself am one of the many who ended up leaving the city for the more affordable housing elsewhere.
Sure enough, "5000-square-foot personal family resorts" are not so easy to maintain no matter where they're located, and Kunstler may be right eventually. It will take more than $5/gallon for gasoline, even if that does really hurt people who drive an F150 for a one-person 60-mile commute to work or something. Perhaps I am just in the usual phase of denial, but I maintain some hope he's not yet right about peak oil being about to really fuck things up in the very near future, because it would seem a cruel joke to have that whole problem reach its worst just as the world economy might otherwise be thinking about starting the process of recovery from the largest credit bubble in history. There is plenty of room for conservation. Mr. Boyle can start by geting a fuel-efficient car to cut his gasoline use in half, then insulate the house and arrange to heat only the parts that really need heating to a lower temperature than they're used to. People like me can telecommute. The vast majority of commuters can at least use "the 'slug' system" or something like it. With any luck, getting by with 50% less liquid fuels would not be the end of the world; in theory it ought to be pretty easy. Long as the decline in gasoline availability is gradual, this sort of response could keep the suburbs working pretty much as they do for quite some time yet.
I had a friend who grew up in Richmond Hill (north of Toronto)
Yeah, quite a place there. I spent some time in another of Toronto's northern seas of suburbia, once upon a time. A strangely inhuman environment, like you say. There was a small patch of forest nearby on unused land where later they built highway 407. I used to hang out there once in a while and just ponder the incredible fact that one could sit by the side of the stream there, a perfectly nice place for a picnic, a few acres surrounded by millions of tasteless suburban houses for many miles, and pretty much nobody else ever went there. Driving three miles to the shopping mall seemed to be the local idea of a fun thing to do on a summer afternoon.
... and now, to get all bold and visionary and crazy in a futile attempt to match Kunstler, I say the people who can't afford gasoline and heating oil will be forced to move out of the suburbs and into the city; not only from the suburbs but from all over the place. With the housing bubble having destroyed all their wealth, and tent cities of exiled suburbanites forming everywhere public transport extends to, the wealthy people who previously were the only ones who could afford to buy a house in the city will flee to the suburbs, where they tear down the McMansions and build luxurious countryside villas with housing for the servants. I mean, just look at one city where already most people have trouble affording gasoline, Harare. Where do all the rich folks live? Out in the suburbs like Borrowdale, naturally, or so google tells me. If inequality of wealth keeps getting worse in America and the economy goes straight to hell, at least a few select suburban locations ought to do relatively well, as the city centre gets all crowded, and they can't afford to pick up the garbage or keep the electricity running any more. At least out here while we presently have to drive a long way to get sushi, and although it's not exactly your stereotypical suburb, there's enough forest around that we could cut enough firewood to keep warm forever, or more likely cut the whole forest down to sell to you poor city-dwellers to heat your shanty-town hovels, in exchange for enough trillion-dollar bills to buy a tin of beans, before starving to death ourselves. So I for one refuse to give in to the temporarily slightly stronger than normal appeal of life in the city.
posted by sfenders at 4:37 PM on June 25, 2008 [1 favorite]
What I'm wondering is why there's never any discussion of going back to small 'main street' towns in these articles--most of the niceties of living in the suburbs, but with more of the walkability of a city. You know, the way most people in America lived before the age of the automobile.
Though I suspect jobs moving to the suburbs would have this type of effect.
The exurbs are doomed, but how many people really liked them anyway?
posted by dinty_moore at 4:40 PM on June 25, 2008 [1 favorite]
Though I suspect jobs moving to the suburbs would have this type of effect.
The exurbs are doomed, but how many people really liked them anyway?
posted by dinty_moore at 4:40 PM on June 25, 2008 [1 favorite]
Wow interesting article and set of links. Many thanks. Oh! And especially for the Kunstler article.
You know it seems like every economic period where we see significant change has it's oracle; a predictor who gets the event itself correct, and maybe a few things right after that then? Well, almost nobody has a perfect record of prediction. Even folks like Buffett and Lynch and the others revered for their track records admit failure time and time again. But the list of market oracles who have gotten one prediction correct and the rest wrong wrong wrong is long long long.
And that's ok. There are just too many damn variables, too many possible outcomes for anyone to predict the future 100% of the time. The path of all possible future outcomes is far too dense for anyone to make reasonable probability adjusted predictions of the future from our present, our now.
And something else - you know, sometimes we all get lulled into a sense of complacence, we just don't pay attention . Look at oil prices - now. Who predicted the bubble - then? I've got a good sense for the market and I can tell you my own view - I don't think anybody did. At least not full on, maybe some speculative positions but sell the farm / mortgage the house / let's go long this $40 a barrel oil 'cause it's gonna be $140 in about eighteen months? I'm not so sure anybody did, except maybe for a few small speculators, taking positions on a lark with money they could easily lose.
Sure, there are lots of folks, enormous sums of money playing the momentum trade - now. A nice big bubble has blown up. But before the oil bubble started inflating, before the sharp run up in price? I don't think anyone predicted this. Again, at least not where it is now. So how can anyone reasonably predict wide social change based on rather narrow market changes?
Yes, I admit it. I'm dubious.
And that nearly ten month old subprime crisis which, of course, was caused largely by FASB 157 (my own private view, which I've posted many times here and previously was published internally at a couple banks) at the outset? Again, I don't think many of us in finance really knew what the outcome would be so severe. Troublesome? Yes. To this extent? No. (and let's not talk of FASB 159 either, which I've posted about previously).
Yeh, I'm old enough to remember Newsweek's 1975 predictions of a new ice age [.pdf] , where they grimly warned that "a major climatic change would force economic and social adjustment on a worldwide scale".
Sound familiar?
Now I'm not taking a view on for or against global warming. I've been watching the markets for most of my life, and have seen the same themes played out, repeated time and time again, almost like pressing rewind then play. In the markets, of course. But for better or for worse, the financial markets reflect us, each and every one of us, whether we're a market participant or not.
I had several good bosses during my formative time working on a trading desk. One of my bosses used to repeatedly tell me "When everyone is thinking the same, no one is thinking".
So yeh. New York Times, LA Times, The Atlantic, Kunstler, lots of other folks, all predicting the death of suburbia?
Until I see more evidence I'm not buying it.
Of course I own a flat in Zone 2, postal code E1, Central London, so I'd have everything to gain if demand suddenly spiked, if everyone wanted - no needed - to live here, in walking distance to pretty much everything that London has to offer (as if The East End hasn't already gotten insufferably upscale enough since I moved to The Ghetto in 2001 - now we've got a Tesco Express!!).
But even so, I always try to profit from situations like this, when everyone is thinking the same, when everyone knows some outcome is inevitable. In one of his annual reports (you really should own a share of Berkshire Hathaway Class B as he is one interesting guy that I can't get enough of) Warren Buffett said "We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.".
So here's how I'm gonna play it: wait for the rich bastards living in suburbia to panic, start to dump their houses out in Kent and Essex and move into the cities. Then sell my inner city flat and move out to suburbia. I don't know what the hell I'll do once I get there and that's not the point.
But this business of making long view, decades in advance predictions of widespread social and economic change?
Sorry. I'm not buying it.
posted by Mutant at 5:12 PM on June 25, 2008 [5 favorites]
You know it seems like every economic period where we see significant change has it's oracle; a predictor who gets the event itself correct, and maybe a few things right after that then? Well, almost nobody has a perfect record of prediction. Even folks like Buffett and Lynch and the others revered for their track records admit failure time and time again. But the list of market oracles who have gotten one prediction correct and the rest wrong wrong wrong is long long long.
And that's ok. There are just too many damn variables, too many possible outcomes for anyone to predict the future 100% of the time. The path of all possible future outcomes is far too dense for anyone to make reasonable probability adjusted predictions of the future from our present, our now.
And something else - you know, sometimes we all get lulled into a sense of complacence, we just don't pay attention . Look at oil prices - now. Who predicted the bubble - then? I've got a good sense for the market and I can tell you my own view - I don't think anybody did. At least not full on, maybe some speculative positions but sell the farm / mortgage the house / let's go long this $40 a barrel oil 'cause it's gonna be $140 in about eighteen months? I'm not so sure anybody did, except maybe for a few small speculators, taking positions on a lark with money they could easily lose.
Sure, there are lots of folks, enormous sums of money playing the momentum trade - now. A nice big bubble has blown up. But before the oil bubble started inflating, before the sharp run up in price? I don't think anyone predicted this. Again, at least not where it is now. So how can anyone reasonably predict wide social change based on rather narrow market changes?
Yes, I admit it. I'm dubious.
And that nearly ten month old subprime crisis which, of course, was caused largely by FASB 157 (my own private view, which I've posted many times here and previously was published internally at a couple banks) at the outset? Again, I don't think many of us in finance really knew what the outcome would be so severe. Troublesome? Yes. To this extent? No. (and let's not talk of FASB 159 either, which I've posted about previously).
Yeh, I'm old enough to remember Newsweek's 1975 predictions of a new ice age [.pdf] , where they grimly warned that "a major climatic change would force economic and social adjustment on a worldwide scale".
Sound familiar?
Now I'm not taking a view on for or against global warming. I've been watching the markets for most of my life, and have seen the same themes played out, repeated time and time again, almost like pressing rewind then play. In the markets, of course. But for better or for worse, the financial markets reflect us, each and every one of us, whether we're a market participant or not.
I had several good bosses during my formative time working on a trading desk. One of my bosses used to repeatedly tell me "When everyone is thinking the same, no one is thinking".
So yeh. New York Times, LA Times, The Atlantic, Kunstler, lots of other folks, all predicting the death of suburbia?
Until I see more evidence I'm not buying it.
Of course I own a flat in Zone 2, postal code E1, Central London, so I'd have everything to gain if demand suddenly spiked, if everyone wanted - no needed - to live here, in walking distance to pretty much everything that London has to offer (as if The East End hasn't already gotten insufferably upscale enough since I moved to The Ghetto in 2001 - now we've got a Tesco Express!!).
But even so, I always try to profit from situations like this, when everyone is thinking the same, when everyone knows some outcome is inevitable. In one of his annual reports (you really should own a share of Berkshire Hathaway Class B as he is one interesting guy that I can't get enough of) Warren Buffett said "We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.".
So here's how I'm gonna play it: wait for the rich bastards living in suburbia to panic, start to dump their houses out in Kent and Essex and move into the cities. Then sell my inner city flat and move out to suburbia. I don't know what the hell I'll do once I get there and that's not the point.
But this business of making long view, decades in advance predictions of widespread social and economic change?
Sorry. I'm not buying it.
posted by Mutant at 5:12 PM on June 25, 2008 [5 favorites]
> It´s the cost of keeping "5000-square-foot personal family resorts" (that quotable Kunstler
> again) cool and warm in areas that are otherwise alternately uninhabitable, paying for food
> manufactured from hydrocarbon on the other side of the continent in a system in which there
> is only a three day supply of food in the local stores
I do wonder what the time depth of the food supply is in, oh, midtown Manhattan, if the perpetual, relentless, 24-hour-a-day resupply ground to a halt. I politely doubt that reliable food supply is a point in favor of urban living as against suburban. (Unless you're ready to count rats and street urchins as part of the supply, as a significant number of cityfolk certainly would--y'know, in the event.)
> "5000-square-foot personal family resorts" (that quotable Kunstler again)
Quotable sho'nuff, but what proportion of suburbanites live in these? It's a bit like imagining (charmingly) and stating (quotably) "They're doomed, they all live on ortolan and Peak Ortolan was last April." My own house is 917 sq ft and it's a bit tight, what with the grand piano and all, and there are no ortolan--none! But pigeons are plentiful and they're always in season, if the shelves at Kroger start getting that Uncle Joe Mugabe look.
posted by jfuller at 5:18 PM on June 25, 2008
> again) cool and warm in areas that are otherwise alternately uninhabitable, paying for food
> manufactured from hydrocarbon on the other side of the continent in a system in which there
> is only a three day supply of food in the local stores
I do wonder what the time depth of the food supply is in, oh, midtown Manhattan, if the perpetual, relentless, 24-hour-a-day resupply ground to a halt. I politely doubt that reliable food supply is a point in favor of urban living as against suburban. (Unless you're ready to count rats and street urchins as part of the supply, as a significant number of cityfolk certainly would--y'know, in the event.)
> "5000-square-foot personal family resorts" (that quotable Kunstler again)
Quotable sho'nuff, but what proportion of suburbanites live in these? It's a bit like imagining (charmingly) and stating (quotably) "They're doomed, they all live on ortolan and Peak Ortolan was last April." My own house is 917 sq ft and it's a bit tight, what with the grand piano and all, and there are no ortolan--none! But pigeons are plentiful and they're always in season, if the shelves at Kroger start getting that Uncle Joe Mugabe look.
posted by jfuller at 5:18 PM on June 25, 2008
They keep showing things from the GTA (aka Greater Toronto Area) in an otherwise American documentary. I'm only a few minutes in, and I've seen a GO train and a TTC streetcar. It's odd. Not that I mind Canada being included (it's nice), but the people keep talking about "this country" and clearly mean the US.
It reminds me of the time I saw a nature documentary discussing "American" racoons, while showing them eating of a Metro Toronto garbage bin in front of a Second Cup.
posted by jb at 5:27 PM on June 25, 2008
It reminds me of the time I saw a nature documentary discussing "American" racoons, while showing them eating of a Metro Toronto garbage bin in front of a Second Cup.
posted by jb at 5:27 PM on June 25, 2008
Okay, it turns out that the filmmakers are Canadian. Which explains yet more footage of the Pickering and Missisauga power plants, and the Toronto-based story of the power outage.
But then why "the American Dream"?
Yeah, I know, I sound petulant. But we aren't the 51st state, even if we do share a powergrid. They probably did it because they hoped to sell it to the US, but didn't think the American audience would watch a documentary subtitled "the (every settler colony settled primarily in the last two centuries) Dream".
posted by jb at 5:46 PM on June 25, 2008
But then why "the American Dream"?
Yeah, I know, I sound petulant. But we aren't the 51st state, even if we do share a powergrid. They probably did it because they hoped to sell it to the US, but didn't think the American audience would watch a documentary subtitled "the (every settler colony settled primarily in the last two centuries) Dream".
posted by jb at 5:46 PM on June 25, 2008
Yes, this is the beginning of The End of Suburbia as predicted by the curmudgeonly James Howard Kunstler.
Who knows how long it will take, but an energy transition quick enough to maintain current (and increasing levels of) usage seems highly improbable. Automobiles are already dead, they just don't know it yet. It will reach full-blown panic/riots/national guard long before it costs $1 to drive one mile.
posted by mrgrimm at 5:48 PM on June 25, 2008
Who knows how long it will take, but an energy transition quick enough to maintain current (and increasing levels of) usage seems highly improbable. Automobiles are already dead, they just don't know it yet. It will reach full-blown panic/riots/national guard long before it costs $1 to drive one mile.
posted by mrgrimm at 5:48 PM on June 25, 2008
> Not that I mind Canada being included (it's nice), but the people keep talking about "this country" and clearly mean the US.
Well, see, according to the documentary, everybody who lives in the suburbs of the US (e.g. Mexico, Canada) will soon be desperate to move to Alamogordo and Detroit. Start packing now, beat the rush
posted by jfuller at 5:56 PM on June 25, 2008
Well, see, according to the documentary, everybody who lives in the suburbs of the US (e.g. Mexico, Canada) will soon be desperate to move to Alamogordo and Detroit. Start packing now, beat the rush
posted by jfuller at 5:56 PM on June 25, 2008
But in a place like this? No. See all the cute street names (Wigeon Way, Blue Wing Dr., Wigeon Way)?
On the other hand, who in their right mind wouldn't want to change their name to Hattie McBoob and get an address on Honker Lane?
posted by ROU_Xenophobe at 6:08 PM on June 25, 2008 [2 favorites]
On the other hand, who in their right mind wouldn't want to change their name to Hattie McBoob and get an address on Honker Lane?
posted by ROU_Xenophobe at 6:08 PM on June 25, 2008 [2 favorites]
that's not to take away from the fact that everything they are saying about suburbia is true. It's just that it's not just an American or especially American issue. Canada, Australia and New Zealand are all in the same place.
But we are so not your suburbs : )
posted by jb at 6:11 PM on June 25, 2008
But we are so not your suburbs : )
posted by jb at 6:11 PM on June 25, 2008
I think this urban-suburban divide is overblown as the cause of many of our problems, especially when it comes to the oil crisis. Sure us out in the 'burbs drive a lot more than we would if we lived in the cities, but while I lived in Seattle I enjoyed a lot of imported luxuries that required the use of thousands of transportation miles to get to my hand. I think we all need to get back into the spirit of localism.
If our consumer economy was primarily based on businesses in our local area, think of how much oil would be saved just by cutting back the supply chain.
posted by Parallax.Error at 6:14 PM on June 25, 2008
If our consumer economy was primarily based on businesses in our local area, think of how much oil would be saved just by cutting back the supply chain.
posted by Parallax.Error at 6:14 PM on June 25, 2008
I think it's a mistake to concentrate only on energy shortages, because that's just one facet of the problem. There are lots of others. Heck, I'm not even sure that petroleum shortages are the biggest issue facing Western-style civilization.
In addition to petroleum depletion, you have freshwater depletion, decreases in arable land (due to desertification or erosion secondary to poor farming techniques, deforestation, salinization, etc.), air and water pollution, climate change (whether anthropogenic or not), and political instability thanks to a growing population and per-capita ecological footprint, to name just a few obvious ones.
It's myopic to look only at one of them, since we're never going to have the luxury of dealing with just one. We're going to have to figure out all of them, simultaneously, if we want to have any shot at all of maintaining our quality of life. There are going to be a lot of very hard choices (or else a lot of denial followed by some very grim realizations, one or the other).
It's easy to come up with glib, dismissive responses to any one of these problems by themselves (e.g. "there's no food shortage, it's just a distribution problem"), but not when they're all combined, and especially not when you take into account the reality of the situation we must start from.
It may be that the petroleum depletion (or "extractable volume access," if you prefer, not that it matters) problem is a good thing, if it prepares people to start making bigger, more drastic changes. Because I don't see any alternative to that; the lifestyle practiced widely in the West -- and to which billions of people across the world aspire -- is so grossly unsustainable that it can't possibly continue unabated for more than generation or two longer at best, and probably a lot less than that.
posted by Kadin2048 at 6:19 PM on June 25, 2008 [2 favorites]
In addition to petroleum depletion, you have freshwater depletion, decreases in arable land (due to desertification or erosion secondary to poor farming techniques, deforestation, salinization, etc.), air and water pollution, climate change (whether anthropogenic or not), and political instability thanks to a growing population and per-capita ecological footprint, to name just a few obvious ones.
It's myopic to look only at one of them, since we're never going to have the luxury of dealing with just one. We're going to have to figure out all of them, simultaneously, if we want to have any shot at all of maintaining our quality of life. There are going to be a lot of very hard choices (or else a lot of denial followed by some very grim realizations, one or the other).
It's easy to come up with glib, dismissive responses to any one of these problems by themselves (e.g. "there's no food shortage, it's just a distribution problem"), but not when they're all combined, and especially not when you take into account the reality of the situation we must start from.
It may be that the petroleum depletion (or "extractable volume access," if you prefer, not that it matters) problem is a good thing, if it prepares people to start making bigger, more drastic changes. Because I don't see any alternative to that; the lifestyle practiced widely in the West -- and to which billions of people across the world aspire -- is so grossly unsustainable that it can't possibly continue unabated for more than generation or two longer at best, and probably a lot less than that.
posted by Kadin2048 at 6:19 PM on June 25, 2008 [2 favorites]
Sure us out in the 'burbs drive a lot more than we would if we lived in the cities, but while I lived in Seattle I enjoyed a lot of imported luxuries that required the use of thousands of transportation miles to get to my hand.
There's a lot of suburban rationalization going on in here.
That is maybe some sort of false dichotomy, but I'm no logician. I.e. "Sure I like to eat meat every day, but I don't own a car and I'm sure vegetarians drive more than I do or use air conditioning or non-post-consumer toilet paper." The premise has nothing to do with your conclusion, i.e. living in urban areas has no correlation with buying imported goods. (Maybe I'm wrong there. I think suburbanites buy as much crap from long distances as the rest of us, but I have no data.)
I do certainly agree with you about localism. I've always been frustrated by the fact that our country exports the exact same goods that it imports. Perhaps the market benefits (sellers and/or buyers, depending on current trade policy), but we all lose in the long run because of the external factors.
I also agree with Kadin2048 completely. We've been living unsustainably for far too long. Production will change radically at some point.
posted by mrgrimm at 6:26 PM on June 25, 2008
There's a lot of suburban rationalization going on in here.
That is maybe some sort of false dichotomy, but I'm no logician. I.e. "Sure I like to eat meat every day, but I don't own a car and I'm sure vegetarians drive more than I do or use air conditioning or non-post-consumer toilet paper." The premise has nothing to do with your conclusion, i.e. living in urban areas has no correlation with buying imported goods. (Maybe I'm wrong there. I think suburbanites buy as much crap from long distances as the rest of us, but I have no data.)
I do certainly agree with you about localism. I've always been frustrated by the fact that our country exports the exact same goods that it imports. Perhaps the market benefits (sellers and/or buyers, depending on current trade policy), but we all lose in the long run because of the external factors.
I also agree with Kadin2048 completely. We've been living unsustainably for far too long. Production will change radically at some point.
posted by mrgrimm at 6:26 PM on June 25, 2008
people still don't want to live in noiser, more crowded areas with higher crime
See, I grew up in the suburbs, and I can say - it was noisier, dirty and had higher crime than where my friends grew up in the semi-urban neighbourhoods in Toronto. It wasn't more crowded, but that's a bad thing in January when you are waiting at the bus stop in -20 degree weather as the wind whips across the empty parking lot, or in August, as the sun bakes off the ashphalt and the wind (still whipping, because there is nothing to break it) with dust and drit from the highway.
posted by jb at 6:35 PM on June 25, 2008
See, I grew up in the suburbs, and I can say - it was noisier, dirty and had higher crime than where my friends grew up in the semi-urban neighbourhoods in Toronto. It wasn't more crowded, but that's a bad thing in January when you are waiting at the bus stop in -20 degree weather as the wind whips across the empty parking lot, or in August, as the sun bakes off the ashphalt and the wind (still whipping, because there is nothing to break it) with dust and drit from the highway.
posted by jb at 6:35 PM on June 25, 2008
But that said: education, schools is what drives marrieds to the suburbs...and it will keep them there so long as the schools continue to be as bad as they are in most urban areas.
this is not a function of the area being urban (aka having high population density), but because in so many American urban areas middle and upper class people with higher levels of education moved out, changing the balances in schools. Perhaps this is also because of the American history of white flight and sunset towns (discussed in several recent threads). Certainly, Canadian cities (which have a very different racial history) tend to have very good state/public schools, as do British cities, generally much better than rural or even suburban schools. But cities like Toronto also have large areas of upper and middle class housing relatively close to the centre, as well as centres which are themselves very mixed economically - we never had the same gutting of our cities in the 60s-80s, despite the rapid growth of our suburbs (which tend to be, as pointed out above, filled with middle and lower middle class people who could not afford to live in the more desirable interior areas of the city).
posted by jb at 6:50 PM on June 25, 2008
this is not a function of the area being urban (aka having high population density), but because in so many American urban areas middle and upper class people with higher levels of education moved out, changing the balances in schools. Perhaps this is also because of the American history of white flight and sunset towns (discussed in several recent threads). Certainly, Canadian cities (which have a very different racial history) tend to have very good state/public schools, as do British cities, generally much better than rural or even suburban schools. But cities like Toronto also have large areas of upper and middle class housing relatively close to the centre, as well as centres which are themselves very mixed economically - we never had the same gutting of our cities in the 60s-80s, despite the rapid growth of our suburbs (which tend to be, as pointed out above, filled with middle and lower middle class people who could not afford to live in the more desirable interior areas of the city).
posted by jb at 6:50 PM on June 25, 2008
Indeed, jb. The implosion of urban education systems is due to the rise of suburbia, not the other way around. But even in Canada, our unfortunate method of funding education (largely through municipal property taxes) results in the obvious: the richer the neighbourhood the better the education, and so like flocks to like.
posted by mek at 7:17 PM on June 25, 2008
posted by mek at 7:17 PM on June 25, 2008
Well, the trouble with your argument, Mutant, is that I don't see any reasonable path that doesn't lead to collapse.
Perhaps you can sketch out a plausible scenario where we reach 30 years from now and the United States is still where it is now or better? Because I tell you, I cannot see it without people here becoming an awful lot smarter and more responsible than they are.
Your argument, "People predicted doom and it didn't happen before," was used to me in a similar form by my late friend about drinking Coke and smoking cigarettes with diabetes. And he survived for a surprisingly long time till his second or third heart attack took him out.
posted by lupus_yonderboy at 7:44 PM on June 25, 2008
Perhaps you can sketch out a plausible scenario where we reach 30 years from now and the United States is still where it is now or better? Because I tell you, I cannot see it without people here becoming an awful lot smarter and more responsible than they are.
Your argument, "People predicted doom and it didn't happen before," was used to me in a similar form by my late friend about drinking Coke and smoking cigarettes with diabetes. And he survived for a surprisingly long time till his second or third heart attack took him out.
posted by lupus_yonderboy at 7:44 PM on June 25, 2008
We moved from the Upper West Side of Manhattan to rural Ohio about 40 miles east of Columbus ten years ago and live in a house built in 1865 surrounded by corn and soybean fields.
For the first few years out here we were alarmed by the suburbs spreading westward towards us, huge ugly developments (often perversely named after the farms they had supplanted) composed of those godawful putty-colored mini-McMansions. The huge cornfield just north of our land was put up for sale. A developer bought the horse farm five miles west of us.
Then last year it all stopped dead. The half-built developments just sat there over the winter, the fancy signs faded and fell down, and the model homes were sold off to real families. There's one a mile or so away, one little house sitting in the midst of two dozen bare lots. Weird.
Now the people who did move out here planning to commute to Columbus are stuck, unable to sell their homes and desperately trying to sell their boutique pickup trucks and SUVs.
What's funny is that in th early 20th century there actually was a light rail line running east from Columbus that stopped in our town. If it existed now a lot of people wouldn't be contemplating bankruptcy.
posted by words1 at 8:03 PM on June 25, 2008 [4 favorites]
For the first few years out here we were alarmed by the suburbs spreading westward towards us, huge ugly developments (often perversely named after the farms they had supplanted) composed of those godawful putty-colored mini-McMansions. The huge cornfield just north of our land was put up for sale. A developer bought the horse farm five miles west of us.
Then last year it all stopped dead. The half-built developments just sat there over the winter, the fancy signs faded and fell down, and the model homes were sold off to real families. There's one a mile or so away, one little house sitting in the midst of two dozen bare lots. Weird.
Now the people who did move out here planning to commute to Columbus are stuck, unable to sell their homes and desperately trying to sell their boutique pickup trucks and SUVs.
What's funny is that in th early 20th century there actually was a light rail line running east from Columbus that stopped in our town. If it existed now a lot of people wouldn't be contemplating bankruptcy.
posted by words1 at 8:03 PM on June 25, 2008 [4 favorites]
clean public libraries not full of homeless people
It's a bug, not a feature, of cities. See your local and national social welfare policy.
posted by metaldark at 8:04 PM on June 25, 2008
It's a bug, not a feature, of cities. See your local and national social welfare policy.
posted by metaldark at 8:04 PM on June 25, 2008
Anecdote:
When I grew up in San Jose, CA, I lived in a suburb (San Jose is technically a Suburb with it's own suburbs....miniburbs? I dunno) in which my house was a 5 - 10 minute walk from:
A supermarket
An independent video store
A 7-11 with prominently displayed booby-mags behind the counter (this is important when you're 12)
A library
My school
Several parks
A creek ("Where the police find dead bodies," my friends said. Way cool!)
A McDonalds
A pizza place
Various and sundry independent neighborhood stores
Several bus stops that will take you to anywhere else in the Bay Area
Now, at the age of 25, I live in West Houston, where my house is a 5 - 10 minute walk from:
Nothing.
No, really.
The nearest supermarket is probably a 20 - 30 minute walk, which isn't bad, but you also need to consider that there aren't any sidewalks here. You couldn't walk anywhere if you tried. You basically need to get on the freeway to go just about anywhere.
My point is: there are different ways to do suburbs. Good ways and bad ways.
posted by Avenger at 8:14 PM on June 25, 2008
When I grew up in San Jose, CA, I lived in a suburb (San Jose is technically a Suburb with it's own suburbs....miniburbs? I dunno) in which my house was a 5 - 10 minute walk from:
A supermarket
An independent video store
A 7-11 with prominently displayed booby-mags behind the counter (this is important when you're 12)
A library
My school
Several parks
A creek ("Where the police find dead bodies," my friends said. Way cool!)
A McDonalds
A pizza place
Various and sundry independent neighborhood stores
Several bus stops that will take you to anywhere else in the Bay Area
Now, at the age of 25, I live in West Houston, where my house is a 5 - 10 minute walk from:
Nothing.
No, really.
The nearest supermarket is probably a 20 - 30 minute walk, which isn't bad, but you also need to consider that there aren't any sidewalks here. You couldn't walk anywhere if you tried. You basically need to get on the freeway to go just about anywhere.
My point is: there are different ways to do suburbs. Good ways and bad ways.
posted by Avenger at 8:14 PM on June 25, 2008
Mutant:
Sure, there are lots of folks, enormous sums of money playing the momentum trade - now. A nice big bubble has blown up. But before the oil bubble started inflating, before the sharp run up in price? I don't think anyone predicted this. Again, at least not where it is now. So how can anyone reasonably predict wide social change based on rather narrow market changes?
Is June of 2004 early enough for you? A friend of mine (kaibutsu in fact) had recently put me on to Metafilter. One day I see a post by troutfishing about peak oil. The first link of the post is a BBC article about the coming problems of peak oil. The BBC article he linked to quotes Matt Simmons as saying "Oil is far too cheap at the moment. The figure I'd use is around $182 a barrel. We need to price oil realistically to control its demand. That is because global production is peaking."
From that summer on, I was a believer in peak oil. If I had had any money at that point I would have invested in oil. Anyone who was at all curious about the world's energy situation and had a little time to research things on the internet could have discovered that Saudi Arabia is running out of the stuff, and no one else has the reserves to make up for the upcoming shortfall.
I think you are confusing "everyone" with "the investors you know in the finance community". But then, the more familiar I've grown with that community, the less respect I have for its average member's intelligence.
Of course, at the same time, I'm certainly not willing to say that we're at the end of civilization. Wind farms, natural gas, and better electrical batteries will get us through the dark times ahead. But to say that no one predicted this crisis is to say that your circle of acquaintances is a bunch of dunderheads.
posted by A dead Quaker at 9:10 PM on June 25, 2008 [2 favorites]
Sure, there are lots of folks, enormous sums of money playing the momentum trade - now. A nice big bubble has blown up. But before the oil bubble started inflating, before the sharp run up in price? I don't think anyone predicted this. Again, at least not where it is now. So how can anyone reasonably predict wide social change based on rather narrow market changes?
Is June of 2004 early enough for you? A friend of mine (kaibutsu in fact) had recently put me on to Metafilter. One day I see a post by troutfishing about peak oil. The first link of the post is a BBC article about the coming problems of peak oil. The BBC article he linked to quotes Matt Simmons as saying "Oil is far too cheap at the moment. The figure I'd use is around $182 a barrel. We need to price oil realistically to control its demand. That is because global production is peaking."
From that summer on, I was a believer in peak oil. If I had had any money at that point I would have invested in oil. Anyone who was at all curious about the world's energy situation and had a little time to research things on the internet could have discovered that Saudi Arabia is running out of the stuff, and no one else has the reserves to make up for the upcoming shortfall.
I think you are confusing "everyone" with "the investors you know in the finance community". But then, the more familiar I've grown with that community, the less respect I have for its average member's intelligence.
Of course, at the same time, I'm certainly not willing to say that we're at the end of civilization. Wind farms, natural gas, and better electrical batteries will get us through the dark times ahead. But to say that no one predicted this crisis is to say that your circle of acquaintances is a bunch of dunderheads.
posted by A dead Quaker at 9:10 PM on June 25, 2008 [2 favorites]
We can consume substantially less energy and enjoy the same high quality of life we have today. Look at California where energy consumption is 40% of the rest of the US. The same can be said for transportation fuels. Those who postulate doom and gloom underestimate the amount of waste in our system and overestimate the costs of transition. If you have a 60 mile commute, you can raise your gas milage by 20% just by telecommuting 1 day / week, or shifting to a 10x4 schedule instead of an 8x5. You can increase your fuel economy four fold by sharing a ride evey day with 3 passengers in your SUV. Look at the DC slug system. It isn't much of a leap for that to replicate itself and have volunteer commuters share gas costs, or adopt a system of driving one day per week. We simply setup a social convetion like the last digit of your phone number / 2 is the day of the week you drive, and if your phone number ends in zero you drive on Fridays (e.g. 1-2 is monday, 3-4 is tuesday etc). Employers will have no choice but to accept telecommuting and flexible work schedules as the costs of commuting rise. Furthermore public transit will expand as riders arrive. Solutions like BRT which have been largely ignored because buses are seen as low status transit, will takeoff like wildfire when people demand instant transit solutions.
posted by humanfont at 9:34 PM on June 25, 2008 [1 favorite]
posted by humanfont at 9:34 PM on June 25, 2008 [1 favorite]
Here's the thing... we've all been quoting Kunstler but ya'll have been missing one of his biggest points:
SUB-urbia is not going to go away. EX-urbia probably will as will the super-urbanized city centers (think; NYC, Chicago, LA etc) because you MUST rely on fossil fuels to maintain ex- and urban centers.
What Kunstler advocates is a return to pre-urban small town environments. Where population centers are dense at a few thousand people in a few square miles centered around a town square or at most a city center that you might see around the turn of the century with few buildings much bigger than 6 stories. Lots of green space, lots of room for rail (as a distance transportation) and yet with small trucks doing intra-zone shipping (say, getting a sofa from one side of a 5 mile box to another). Also, lots more land close by for vegetable farming, smaller schools decentralized (Except for records keeping which can now be done anywhere).
Basically he'd like to turn most/all urban centers into those "quaint" antiquing communities where it IS possible to live and work in under 5-10 square miles.
Fuck EX-urbia, fuck Mega Cities. Neither of them are where its at. decentralize, revitalize local farming, revitalize rail service and get people to live in the densities we saw in 1940s suburbs. The ones you folks who live in 40+ year old suburban homes like.
posted by Sam.Burdick at 10:01 PM on June 25, 2008 [3 favorites]
SUB-urbia is not going to go away. EX-urbia probably will as will the super-urbanized city centers (think; NYC, Chicago, LA etc) because you MUST rely on fossil fuels to maintain ex- and urban centers.
What Kunstler advocates is a return to pre-urban small town environments. Where population centers are dense at a few thousand people in a few square miles centered around a town square or at most a city center that you might see around the turn of the century with few buildings much bigger than 6 stories. Lots of green space, lots of room for rail (as a distance transportation) and yet with small trucks doing intra-zone shipping (say, getting a sofa from one side of a 5 mile box to another). Also, lots more land close by for vegetable farming, smaller schools decentralized (Except for records keeping which can now be done anywhere).
Basically he'd like to turn most/all urban centers into those "quaint" antiquing communities where it IS possible to live and work in under 5-10 square miles.
Fuck EX-urbia, fuck Mega Cities. Neither of them are where its at. decentralize, revitalize local farming, revitalize rail service and get people to live in the densities we saw in 1940s suburbs. The ones you folks who live in 40+ year old suburban homes like.
posted by Sam.Burdick at 10:01 PM on June 25, 2008 [3 favorites]
Look at California where energy consumption is 40% of the rest of the US.
But how much of that is due to our lovely local climate?
posted by ryanrs at 10:04 PM on June 25, 2008
But how much of that is due to our lovely local climate?
posted by ryanrs at 10:04 PM on June 25, 2008
Energy itself is not really that scarce, it's a matter of what form its in. If we invested heavily in nuclear power and built electric cars, we could maintain a fairly mobile lifestyle.
Don't even need the nuclear! We have plenty of coal, hence plenty of electricity. (There are downsides to coal, of course.)
posted by ryanrs at 10:07 PM on June 25, 2008
Don't even need the nuclear! We have plenty of coal, hence plenty of electricity. (There are downsides to coal, of course.)
posted by ryanrs at 10:07 PM on June 25, 2008
Etaoin, the Kunstler quotes are coming from his website.
posted by BinGregory at 10:55 PM on June 25, 2008
posted by BinGregory at 10:55 PM on June 25, 2008
In the Baltimore/Washington "Metroplex", about 10% of the people live inside the city limits of Baltimore and Washington.
But Alexandria and Arlington in DC, Towson and environs in Baltimore, etc, are not your typical modern suburban towns. They're more densely populated by far than the norm and have the look and feel of larger cities, in many respects. Laugh if you will, but they look more like cities than much of what you'll see in places like Atlanta, Phoenix, and as much like cities as places like, oh, most of Columbus OH. I don't want to defend most suburban over-building, I find the arguments in favor of gobbling so much land up typically too contrary for their own sake. Atlanta is going to run out of water eventually in part due to paving over and developing so much land. Still, it's hard to say exactly what sprawl is, or what a city is, when you start looking at details.
Kunstler, I take it, is talking about the post-1970 type suburbia that became dominant first in the south and southwest, primarily. His idea of suburbia is about as all-inclusive, however, as the "white people" tag is for an entire race as described in Stuff White People Like, if that makes sense. In his blog's world, there are no mostly black, run-down suburbs like Prichard AL (north of Mobile), no white working class 'burbs without giant Costcos, no cities with suburban mall-like places in their downtowns a la Minneapolis or Seattle. I read him once call Plano TX the typical "white bread" place he was talking about, despite its having much more racial diversity and more population density than Saratoga Springs NY, where he lives, and public transportation and light rail besides.
Oh, before I forget. here's a map showing population densities for the Washington-Baltimore metro area.
posted by raysmj at 11:17 PM on June 25, 2008 [1 favorite]
But Alexandria and Arlington in DC, Towson and environs in Baltimore, etc, are not your typical modern suburban towns. They're more densely populated by far than the norm and have the look and feel of larger cities, in many respects. Laugh if you will, but they look more like cities than much of what you'll see in places like Atlanta, Phoenix, and as much like cities as places like, oh, most of Columbus OH. I don't want to defend most suburban over-building, I find the arguments in favor of gobbling so much land up typically too contrary for their own sake. Atlanta is going to run out of water eventually in part due to paving over and developing so much land. Still, it's hard to say exactly what sprawl is, or what a city is, when you start looking at details.
Kunstler, I take it, is talking about the post-1970 type suburbia that became dominant first in the south and southwest, primarily. His idea of suburbia is about as all-inclusive, however, as the "white people" tag is for an entire race as described in Stuff White People Like, if that makes sense. In his blog's world, there are no mostly black, run-down suburbs like Prichard AL (north of Mobile), no white working class 'burbs without giant Costcos, no cities with suburban mall-like places in their downtowns a la Minneapolis or Seattle. I read him once call Plano TX the typical "white bread" place he was talking about, despite its having much more racial diversity and more population density than Saratoga Springs NY, where he lives, and public transportation and light rail besides.
Oh, before I forget. here's a map showing population densities for the Washington-Baltimore metro area.
posted by raysmj at 11:17 PM on June 25, 2008 [1 favorite]
Mutant, I love ya, man, but let's talk about this for a minute. If the current oil price is a bubble (presumably driven by speculation?), then what price do you think it should be at?
Also, I'm curious. I've been looking at the Nymex futures chains the past couple of days, and the curve is flat. There's been hardly a dollar's wiggle room between the Aug 08 price and the Dec 16 price. Does the market seriously think that the price of oil won't change at all in 8 years? Is it an admission of just not knowing what in holy hell is going on with prices? Am I simply looking at/interpreting it wrong? I have no historical data to fall back on, as I've only been tracking it for a couple of days now.
posted by adamdschneider at 11:22 PM on June 25, 2008
Also, I'm curious. I've been looking at the Nymex futures chains the past couple of days, and the curve is flat. There's been hardly a dollar's wiggle room between the Aug 08 price and the Dec 16 price. Does the market seriously think that the price of oil won't change at all in 8 years? Is it an admission of just not knowing what in holy hell is going on with prices? Am I simply looking at/interpreting it wrong? I have no historical data to fall back on, as I've only been tracking it for a couple of days now.
posted by adamdschneider at 11:22 PM on June 25, 2008
raysmj,
was this during his civil engineering lecture days? if so he was probably complaining about bad building design.
posted by Sam.Burdick at 11:27 PM on June 25, 2008
was this during his civil engineering lecture days? if so he was probably complaining about bad building design.
posted by Sam.Burdick at 11:27 PM on June 25, 2008
No, it was on "Clusterfuck Nation." I stopped reading the site regularly given comments like that, but still check it out occasionally.
posted by raysmj at 11:46 PM on June 25, 2008
posted by raysmj at 11:46 PM on June 25, 2008
But how much of that is due to our lovely local climate?
Very little. California has held energy use constant per capita since about 1974 through high prices and regulations to force conservation (as the linked article explains). A high quality of life can be maintained with substantially lower oil usage. The only reason we use so much oil and energy so wastefully is because it has been cheap and we are lazy.
posted by humanfont at 11:50 PM on June 25, 2008
Very little. California has held energy use constant per capita since about 1974 through high prices and regulations to force conservation (as the linked article explains). A high quality of life can be maintained with substantially lower oil usage. The only reason we use so much oil and energy so wastefully is because it has been cheap and we are lazy.
posted by humanfont at 11:50 PM on June 25, 2008
Sam.Burdick: In hindsight, it may have been this interview, and I may be putting that together with his use of "white bread" elsewhere. It's certainly true, however, that his idea of suburbia and suburban sprawl confirms to what I suggested above. The use of Plano to describe what he's talking about is a dead giveaway. (For the record, Plano had a higher population density per square mile in 2000 than New Orleans, where I now live, did in the same year. That's about 3,100 for Plano compared to 2,700 for NOLA. Whether that's a result of more parkland or something, I don't know. Even so, which would you consider the quote-unquote real city?)
posted by raysmj at 11:57 PM on June 25, 2008
posted by raysmj at 11:57 PM on June 25, 2008
The price of oil is fixed in dollars (at least by OPEC), and we all know the slide the dollar has taken recently. So part of oil's high price is the weak dollar.
That does not mean strong dollar = cheap oil. China and India each have a billion people and all of them will want to be middle class eventually. More and more oil is going to be demanded by them each year. Even if we aren't at peak oil we need to get away from our addiction to it, the supply and demand curves are not in anyone's favor.
posted by Parallax.Error at 12:06 AM on June 26, 2008
That does not mean strong dollar = cheap oil. China and India each have a billion people and all of them will want to be middle class eventually. More and more oil is going to be demanded by them each year. Even if we aren't at peak oil we need to get away from our addiction to it, the supply and demand curves are not in anyone's favor.
posted by Parallax.Error at 12:06 AM on June 26, 2008
California has held energy use constant per capita since about 1974
Oh, hey, we're even more awesome than I thought. Yay California.
posted by ryanrs at 12:10 AM on June 26, 2008
Oh, hey, we're even more awesome than I thought. Yay California.
posted by ryanrs at 12:10 AM on June 26, 2008
People are people are people.
House prices rose because of speculation. Houses have very little intrinsic value, because their prices are so closely linked to a very uncertain cash-flow, someone's income. And while there are certain supply/demand issues involved, houses aren't scarce, per se, since you can just build more.
Now come to oil. Did oil's demand suddenly double in the last year? No. I defy anyone to point to a study, or report, that suggests this. And yet the price doubled, and then some. Oil has a slightly greater intrinsic value since its supply/demand issues are far more clear. But oil, as of yet, is not a scarce good in the sense that we know how much is left on the earth. So what could possibly drive prices so high? Speculation.
Did the world suddenly start eating twice what it ate from last year? No. Then why did wheat prices shoot through the roof? Why did rice prices shoot through the roof? The dollar is depreciating...sure. But it didn't lose half it's value in the last year. Speculation.
Why is it so hard to spot speculation? Because for inelastic goods, speculators can profit significantly because people gotta get their good. But at some point the price gets so high that the once inelastic good becomes elastic (due to substitution, conservation, etc.), and that's when the bubble pops, prices come crashing down, and the world is right again.
Take a look at Chinese and Indian stocks as further proof of speculation. Last summer international stocks, especially in China, were all the rage. Take a look at how their equity market is doing now. Ya'll putting your money in oil are suckers. Suckers that speculators anticipate will buy their low purchased oil from at ridiculously inflated prices, making them all the richer, making you that much more burned from the markets, and thus starting the cycle all over again.
(Want more proof? A couple of years ago CNBC touted real estate. Last year CNBC and the rest of the financial news channels were all touting China and India as THE place to put all your money. Then the crowd shifted to commodities. And soon it'll shift to a new bubble. These news channels only prove one thing: Mainstream media, and retail investors, only figure out where to make money when it's too late, and when they ultimately transfer their wealth to institutional investors and very rich people, starting the cycle all over again.)
posted by SeizeTheDay at 4:51 AM on June 26, 2008 [1 favorite]
House prices rose because of speculation. Houses have very little intrinsic value, because their prices are so closely linked to a very uncertain cash-flow, someone's income. And while there are certain supply/demand issues involved, houses aren't scarce, per se, since you can just build more.
Now come to oil. Did oil's demand suddenly double in the last year? No. I defy anyone to point to a study, or report, that suggests this. And yet the price doubled, and then some. Oil has a slightly greater intrinsic value since its supply/demand issues are far more clear. But oil, as of yet, is not a scarce good in the sense that we know how much is left on the earth. So what could possibly drive prices so high? Speculation.
Did the world suddenly start eating twice what it ate from last year? No. Then why did wheat prices shoot through the roof? Why did rice prices shoot through the roof? The dollar is depreciating...sure. But it didn't lose half it's value in the last year. Speculation.
Why is it so hard to spot speculation? Because for inelastic goods, speculators can profit significantly because people gotta get their good. But at some point the price gets so high that the once inelastic good becomes elastic (due to substitution, conservation, etc.), and that's when the bubble pops, prices come crashing down, and the world is right again.
Take a look at Chinese and Indian stocks as further proof of speculation. Last summer international stocks, especially in China, were all the rage. Take a look at how their equity market is doing now. Ya'll putting your money in oil are suckers. Suckers that speculators anticipate will buy their low purchased oil from at ridiculously inflated prices, making them all the richer, making you that much more burned from the markets, and thus starting the cycle all over again.
(Want more proof? A couple of years ago CNBC touted real estate. Last year CNBC and the rest of the financial news channels were all touting China and India as THE place to put all your money. Then the crowd shifted to commodities. And soon it'll shift to a new bubble. These news channels only prove one thing: Mainstream media, and retail investors, only figure out where to make money when it's too late, and when they ultimately transfer their wealth to institutional investors and very rich people, starting the cycle all over again.)
posted by SeizeTheDay at 4:51 AM on June 26, 2008 [1 favorite]
California has held energy use constant per capita since about 1974 through high prices and regulations to force conservation
Which is all fine and well (and I really do applaud some of the measures CA has taken), but you're speaking of a region that's politically much further left than almost anywhere else in the country, and which never dips below freezing. That's quite a combination--you can legislate for that kind of progress when the electorate is inclined that way in the first place, and you won't draw too much ire from the people least able to afford it, because it won't cost them $5K a year to keep their houses at 60 degrees. Try that in rural New Hampshire or Minnesota some time, and see how it goes--if you raise home heating costs by the amount they've been hiked to keep that per capita usage down in CA, you're going to box out the lower class (and maybe even the lower-middle class) from being able to survive the winter. It would never fly with the state government, and even it sailed through on fiat, it would be a pretty evil thing to do to people.
Tangentially, I'm kind of surprised that LA is the public transit wasteland that it is... everyone drives, and the city sprawls endlessly in every direction, which runs counter to the philosophy that's driving energy policy everywhere else in the state. Does anyone know how that schism developed?
posted by Mayor West at 5:54 AM on June 26, 2008
Which is all fine and well (and I really do applaud some of the measures CA has taken), but you're speaking of a region that's politically much further left than almost anywhere else in the country, and which never dips below freezing. That's quite a combination--you can legislate for that kind of progress when the electorate is inclined that way in the first place, and you won't draw too much ire from the people least able to afford it, because it won't cost them $5K a year to keep their houses at 60 degrees. Try that in rural New Hampshire or Minnesota some time, and see how it goes--if you raise home heating costs by the amount they've been hiked to keep that per capita usage down in CA, you're going to box out the lower class (and maybe even the lower-middle class) from being able to survive the winter. It would never fly with the state government, and even it sailed through on fiat, it would be a pretty evil thing to do to people.
Tangentially, I'm kind of surprised that LA is the public transit wasteland that it is... everyone drives, and the city sprawls endlessly in every direction, which runs counter to the philosophy that's driving energy policy everywhere else in the state. Does anyone know how that schism developed?
posted by Mayor West at 5:54 AM on June 26, 2008
lupus_yonderboy -- "Perhaps you can sketch out a plausible scenario where we reach 30 years from now and the United States is still where it is now or better? Because I tell you, I cannot see it without people here becoming an awful lot smarter and more responsible than they are.
Your argument, "People predicted doom and it didn't happen before," was used to me in a similar form by my late friend about drinking Coke and smoking cigarettes with diabetes. And he survived for a surprisingly long time till his second or third heart attack took him out."
Well, I don't understand the relevance of your friend's poor health practices to my observation that self appointed market oracles repeatedly show themselves to be unable to be consistently or even broadly correct over a sufficiently long horizon - so let's put that to the side (bless your buddy's soul though).
The crux of my argument is historically, the ability to predict such epochal events so far into the future is rare. Very rare. So I certainly can't sketch out the scenario you've asked for and no, hard commodities such as oil aren't my market. I actively trade equities, bonds, and derivatives based on those instruments (ok, I've also got lots of exposure to Gold & Silver, but that doesn't really count as I've only done that since the US is hell bent on inflating their way out of their economic problems and have been for some time now). But commodities? Not me, however there are some professional commodity traders here on MeFi, so hopefully they'll add their views.
But my markets - well, do you want to know the price that a share will be trading at tomorrow? I could give you the price within a specified, statistical degree of confidence. Next week? Sure, but with less accuracy. One year? Again, I can tell you but the variation of possible outcomes within the specific confidence intervals will be so wide as to render the results of this analysis almost unusable. But I'd still be technically correct. And that's only one year, 252 trading days out. My point is, lots and lots of things can happen in markets over years. Even more over decades.
So maybe it's just me - I'm driven by data and models - but I just don't see these wide ranging predictions of social change over long time horizons of much practical use. After all, everyone "knew" in the 70's that a new ice age was upon us. Newsweek wasn't the only publication predicting that England would be covered in glaciers by the year 2000, and parts of the North Eastern United States would be close to or even below freezing for most of the year and thus largely uninhabitable. And these predictions didn't come to pass. Other similar, wide ranging predictions before and since have failed. So why should we give much credence to this prediction, to a reverse diaspora of people from suburbs to the cities?
Once again, the track record of people making apocalyptic predictions is very poor.
I've recently been reading a fair amount about the last time we hit peak oil. So a little background.
Historically we started out using plant based energy sources to provide lighting in homes, businesses, Universities; vegetable oil derived from various sources. Only problem was, vegetable oil was a rather low store of energy so the light provided was dim. But there was an alternative - Whale Oil - which was rather difficult to burn. However the invention of the Argand lamp in 1780 provided an efficient vehicle for the use of Whale Oil for illumination. In fact a single lamp provided the same light output as six or seven candles, and demand for Whale Oil surged.
Everyone's homes and businesses now all brightly lit, all good. But for one problem nobody had foreseen when the Argand lamp had been invented. Whale Oil was a finite commodity (only so many Whales in the world at any point in time) and demand was so damn high that for all intents and purposes the supply of Whale Oil could be modeled as a non renewable commodity (similar to petroleum, for example).
And that Hubbert Curve that we're hearing so much about during this Peak Oil?
Well, it perfectly fits the supply curve observed during the decline of Whale Oil, the last time we hit Peak Oil. Because we were hunting them to extinction. Yes, we've been through Peak Oil before. Just most folks don't realise it. And just as now, many folks predicted back in the 19th Century that it would be lights out, a return to tallow and vegetable based candles once Whale Oil ran out. In some American states curfews were imposed, forcing folks to extinguish their lamps at 10PM in an effort to preserve oil before it ran out.
But a funny thing happened: the increased price of Whale Oil rendered petroleum cost effective.
In the book Energy Resources Simon describes the frantic search for a replacement for Whale Oil as the price spiked from $0.43 / barrel in 1823 to $2.55 / barrel in 1866. Well, the higher cost of Whale Oil drove investment into the petroleum industry.
Keep in mind, before this price spike forced innovation oil was extracted ONLY from surface pools; nobody drilled for oil - all you needed was right there, on the surface. Sharply increased demand changed all that.
The first production oil well was drilled in 1859 by E. L. Drake in Pennsylvania (although I've recently seen a paper that disputes this claim, saying that someone in Tennessee had previously drilled well two years prior), and shortly after kerosene in the form of paraffin supplanted Whale Oil as a source of energy for lighting (amoung other purposes).
So I can't provide a 30 year forward looking forecast as you've asked.
But I can advise, as I always do in these posts and in my comments, that we can gain some idea of what's going to happen in the future by looking to the past.
The problem with many of these proponents, these market oracles is they base their predictions solely on extrapolating to the future from the present state. If they incorporated prior observations back I'd be far more comfortable.
Needless to say, I'm still not buying what these folks are selling.
A dead Quaker -- "Is June of 2004 early enough for you? A friend of mine (kaibutsu in fact) had recently put me on to Metafilter. One day I see a post by troutfishing about peak oil. The first link of the post is a BBC article about the coming problems of peak oil. The BBC article he linked to quotes Matt Simmons as saying "Oil is far too cheap at the moment. The figure I'd use is around $182 a barrel. We need to price oil realistically to control its demand. That is because global production is peaking."
Sure, I'm familiar with Simmons as he wrote Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, an excellent read. But we'd all have to agree that just by writing that books he's hardly objective on this topic.
But let's go a little deeper and I'm sure this will be revelatory for most reading: Simmons runs the oil industry largest single investment bank, Simmons and Company International. An interesting outfit, they've got the largest share of M&A activity and the largest share of public offerings in the oil industry. So they not only bank roll the big players but I'd also bet they've got some proprietary trading going with large positions in oil.
This conflict of interest isn't really publicised by Simmons' and I'm willing to bet that out of 100 people who know about Peak Oil, maybe only one or two know about his investment banking activities on the side, as it were.
Anyhow, the crux of his book (as well as speaking tours, press interviews, etc) is the argument the Saudi oil fields are depleted, already sharply in production ramp down. Oils running out, prices should be higher - much higher!
But I've always been intrigued that the Saudi's have not only been able to maintain production levels since 2005, when Simmons' published his book, but actually increase them when pushed to do so.
Indeed, the Saudi's added 300K bpd production in May, and will add another 200K bpd in July, bringing their production total to 9.7 million bpd. By 2009 they've committed to increase overall production to 12.5 million bpd, or an increase of about 28%.
Simmons' is very adept at spraying FUD about, and in his book repeatedly challenges the Saudi's current output figures and planned increases. The Saudi's have been saying all along they're figures are correct and Simmons' says they're figures are wrong but I'll be darned - the Saudi's do seem to keep pumping and, from time to time, increase output.
Simmons' is, of course, very well plugged into Washington. And he does indeed have private audiences with various people very high level people, as well as access to a large part of the military industrial complex down there. So like most of these situations I like to look at things very critically, looking for input from the most disinterested parties. And as I started out this comment, Simmons' is hardly objective on the topic, nor - as we can see from his investment banking business - indifferent to economic changes.
In fact, I'd go so far as to argue that as a Principal of the Oil Industry's single largest investment bank, he's going to benefit far, far more from higher oil prices than from lower oil prices.
So maybe I'd concede that he called this. After all, many of us suspect there is a speculative bubble, and regardless, we all know some group is profiting from the sharply increased prices.
"think you are confusing "everyone" with "the investors you know in the finance community". But then, the more familiar I've grown with that community, the less respect I have for its average member's intelligence."
No, I'm not confusing folks I know in banking with "everyone". There is an overall view that I'm disagreeing with, as I originally posted. New York Times, LA Time, etc all making the same prediction, all thinking the same. Well, in that case, nobody is thinking. More just going along with the crowd, agreeing with each other and in their own little group making self referential arguments. I don't buy it.
And I don't really know what part of the finance community you've become acquainted with. Or how, for that matter as your posting history certainly doesn't show any strong interest in finance. So maybe you can expand on your comment?
But getting back asset bubbles and the price of oil?
Yeh, I tend to think we're seeing a bubble with respect to oil prices right now. I've read a fair number of academic papers recently supporting this view. To be fair, there have also been some published against this conclusion, but I'm not really keeping score
As I keep saying, I don't trade this market but I do tend to believe this is a bubble.
adamdschneider' -- "If the current oil price is a bubble (presumably driven by speculation?), then what price do you think it should be at?
Also, I'm curious. I've been looking at the Nymex futures chains the past couple of days, and the curve is flat. There's been hardly a dollar's wiggle room between the Aug 08 price and the Dec 16 price. Does the market seriously think that the price of oil won't change at all in 8 years? Is it an admission of just not knowing what in holy hell is going on with prices? Am I simply looking at/interpreting it wrong? I have no historical data to fall back on, as I've only been tracking it for a couple of days now."
Yeh, I don't really trade this market myself so I don't have a view (that wouldn't reflect personal opinion that is) regarding fair value or the slope of the curve you're observing.
But personal opinion: well, OPEC always screws up. Commodities, because the markets are so huge and slow moving, is a tough market to target prices in. And then you've got speculative pressure - not just NYMEX that CFTC can see, but the OTC contracts that are traded as well - also impacting prices.
The Saudi's are increasing production at the same time the demand side is weakening. Not good, and they know this. They've screwed it up like this before, increasing production while many members of the G20 drifted into recession or mitigated demand.
The market knows this and futures prices are beginning to price in this oversupply and eventual decline in price. Its also factoring in the increased attention speculative activities this market has attracted (and that SeizeTheDay cites as well), and we're beginning to see some positions unwinding.
When structured positions head south they can move very, very quickly. Wouldn't surprise me to see this market crater hard.
posted by Mutant at 5:57 AM on June 26, 2008 [9 favorites]
Your argument, "People predicted doom and it didn't happen before," was used to me in a similar form by my late friend about drinking Coke and smoking cigarettes with diabetes. And he survived for a surprisingly long time till his second or third heart attack took him out."
Well, I don't understand the relevance of your friend's poor health practices to my observation that self appointed market oracles repeatedly show themselves to be unable to be consistently or even broadly correct over a sufficiently long horizon - so let's put that to the side (bless your buddy's soul though).
The crux of my argument is historically, the ability to predict such epochal events so far into the future is rare. Very rare. So I certainly can't sketch out the scenario you've asked for and no, hard commodities such as oil aren't my market. I actively trade equities, bonds, and derivatives based on those instruments (ok, I've also got lots of exposure to Gold & Silver, but that doesn't really count as I've only done that since the US is hell bent on inflating their way out of their economic problems and have been for some time now). But commodities? Not me, however there are some professional commodity traders here on MeFi, so hopefully they'll add their views.
But my markets - well, do you want to know the price that a share will be trading at tomorrow? I could give you the price within a specified, statistical degree of confidence. Next week? Sure, but with less accuracy. One year? Again, I can tell you but the variation of possible outcomes within the specific confidence intervals will be so wide as to render the results of this analysis almost unusable. But I'd still be technically correct. And that's only one year, 252 trading days out. My point is, lots and lots of things can happen in markets over years. Even more over decades.
So maybe it's just me - I'm driven by data and models - but I just don't see these wide ranging predictions of social change over long time horizons of much practical use. After all, everyone "knew" in the 70's that a new ice age was upon us. Newsweek wasn't the only publication predicting that England would be covered in glaciers by the year 2000, and parts of the North Eastern United States would be close to or even below freezing for most of the year and thus largely uninhabitable. And these predictions didn't come to pass. Other similar, wide ranging predictions before and since have failed. So why should we give much credence to this prediction, to a reverse diaspora of people from suburbs to the cities?
Once again, the track record of people making apocalyptic predictions is very poor.
I've recently been reading a fair amount about the last time we hit peak oil. So a little background.
Historically we started out using plant based energy sources to provide lighting in homes, businesses, Universities; vegetable oil derived from various sources. Only problem was, vegetable oil was a rather low store of energy so the light provided was dim. But there was an alternative - Whale Oil - which was rather difficult to burn. However the invention of the Argand lamp in 1780 provided an efficient vehicle for the use of Whale Oil for illumination. In fact a single lamp provided the same light output as six or seven candles, and demand for Whale Oil surged.
Everyone's homes and businesses now all brightly lit, all good. But for one problem nobody had foreseen when the Argand lamp had been invented. Whale Oil was a finite commodity (only so many Whales in the world at any point in time) and demand was so damn high that for all intents and purposes the supply of Whale Oil could be modeled as a non renewable commodity (similar to petroleum, for example).
And that Hubbert Curve that we're hearing so much about during this Peak Oil?
Well, it perfectly fits the supply curve observed during the decline of Whale Oil, the last time we hit Peak Oil. Because we were hunting them to extinction. Yes, we've been through Peak Oil before. Just most folks don't realise it. And just as now, many folks predicted back in the 19th Century that it would be lights out, a return to tallow and vegetable based candles once Whale Oil ran out. In some American states curfews were imposed, forcing folks to extinguish their lamps at 10PM in an effort to preserve oil before it ran out.
But a funny thing happened: the increased price of Whale Oil rendered petroleum cost effective.
In the book Energy Resources Simon describes the frantic search for a replacement for Whale Oil as the price spiked from $0.43 / barrel in 1823 to $2.55 / barrel in 1866. Well, the higher cost of Whale Oil drove investment into the petroleum industry.
Keep in mind, before this price spike forced innovation oil was extracted ONLY from surface pools; nobody drilled for oil - all you needed was right there, on the surface. Sharply increased demand changed all that.
The first production oil well was drilled in 1859 by E. L. Drake in Pennsylvania (although I've recently seen a paper that disputes this claim, saying that someone in Tennessee had previously drilled well two years prior), and shortly after kerosene in the form of paraffin supplanted Whale Oil as a source of energy for lighting (amoung other purposes).
So I can't provide a 30 year forward looking forecast as you've asked.
But I can advise, as I always do in these posts and in my comments, that we can gain some idea of what's going to happen in the future by looking to the past.
The problem with many of these proponents, these market oracles is they base their predictions solely on extrapolating to the future from the present state. If they incorporated prior observations back I'd be far more comfortable.
Needless to say, I'm still not buying what these folks are selling.
A dead Quaker -- "Is June of 2004 early enough for you? A friend of mine (kaibutsu in fact) had recently put me on to Metafilter. One day I see a post by troutfishing about peak oil. The first link of the post is a BBC article about the coming problems of peak oil. The BBC article he linked to quotes Matt Simmons as saying "Oil is far too cheap at the moment. The figure I'd use is around $182 a barrel. We need to price oil realistically to control its demand. That is because global production is peaking."
Sure, I'm familiar with Simmons as he wrote Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, an excellent read. But we'd all have to agree that just by writing that books he's hardly objective on this topic.
But let's go a little deeper and I'm sure this will be revelatory for most reading: Simmons runs the oil industry largest single investment bank, Simmons and Company International. An interesting outfit, they've got the largest share of M&A activity and the largest share of public offerings in the oil industry. So they not only bank roll the big players but I'd also bet they've got some proprietary trading going with large positions in oil.
This conflict of interest isn't really publicised by Simmons' and I'm willing to bet that out of 100 people who know about Peak Oil, maybe only one or two know about his investment banking activities on the side, as it were.
Anyhow, the crux of his book (as well as speaking tours, press interviews, etc) is the argument the Saudi oil fields are depleted, already sharply in production ramp down. Oils running out, prices should be higher - much higher!
But I've always been intrigued that the Saudi's have not only been able to maintain production levels since 2005, when Simmons' published his book, but actually increase them when pushed to do so.
Indeed, the Saudi's added 300K bpd production in May, and will add another 200K bpd in July, bringing their production total to 9.7 million bpd. By 2009 they've committed to increase overall production to 12.5 million bpd, or an increase of about 28%.
Simmons' is very adept at spraying FUD about, and in his book repeatedly challenges the Saudi's current output figures and planned increases. The Saudi's have been saying all along they're figures are correct and Simmons' says they're figures are wrong but I'll be darned - the Saudi's do seem to keep pumping and, from time to time, increase output.
Simmons' is, of course, very well plugged into Washington. And he does indeed have private audiences with various people very high level people, as well as access to a large part of the military industrial complex down there. So like most of these situations I like to look at things very critically, looking for input from the most disinterested parties. And as I started out this comment, Simmons' is hardly objective on the topic, nor - as we can see from his investment banking business - indifferent to economic changes.
In fact, I'd go so far as to argue that as a Principal of the Oil Industry's single largest investment bank, he's going to benefit far, far more from higher oil prices than from lower oil prices.
So maybe I'd concede that he called this. After all, many of us suspect there is a speculative bubble, and regardless, we all know some group is profiting from the sharply increased prices.
"think you are confusing "everyone" with "the investors you know in the finance community". But then, the more familiar I've grown with that community, the less respect I have for its average member's intelligence."
No, I'm not confusing folks I know in banking with "everyone". There is an overall view that I'm disagreeing with, as I originally posted. New York Times, LA Time, etc all making the same prediction, all thinking the same. Well, in that case, nobody is thinking. More just going along with the crowd, agreeing with each other and in their own little group making self referential arguments. I don't buy it.
And I don't really know what part of the finance community you've become acquainted with. Or how, for that matter as your posting history certainly doesn't show any strong interest in finance. So maybe you can expand on your comment?
But getting back asset bubbles and the price of oil?
Yeh, I tend to think we're seeing a bubble with respect to oil prices right now. I've read a fair number of academic papers recently supporting this view. To be fair, there have also been some published against this conclusion, but I'm not really keeping score
As I keep saying, I don't trade this market but I do tend to believe this is a bubble.
adamdschneider' -- "If the current oil price is a bubble (presumably driven by speculation?), then what price do you think it should be at?
Also, I'm curious. I've been looking at the Nymex futures chains the past couple of days, and the curve is flat. There's been hardly a dollar's wiggle room between the Aug 08 price and the Dec 16 price. Does the market seriously think that the price of oil won't change at all in 8 years? Is it an admission of just not knowing what in holy hell is going on with prices? Am I simply looking at/interpreting it wrong? I have no historical data to fall back on, as I've only been tracking it for a couple of days now."
Yeh, I don't really trade this market myself so I don't have a view (that wouldn't reflect personal opinion that is) regarding fair value or the slope of the curve you're observing.
But personal opinion: well, OPEC always screws up. Commodities, because the markets are so huge and slow moving, is a tough market to target prices in. And then you've got speculative pressure - not just NYMEX that CFTC can see, but the OTC contracts that are traded as well - also impacting prices.
The Saudi's are increasing production at the same time the demand side is weakening. Not good, and they know this. They've screwed it up like this before, increasing production while many members of the G20 drifted into recession or mitigated demand.
The market knows this and futures prices are beginning to price in this oversupply and eventual decline in price. Its also factoring in the increased attention speculative activities this market has attracted (and that SeizeTheDay cites as well), and we're beginning to see some positions unwinding.
When structured positions head south they can move very, very quickly. Wouldn't surprise me to see this market crater hard.
posted by Mutant at 5:57 AM on June 26, 2008 [9 favorites]
Thanks, Mutant. Regarding that 12.5mbd of promised KSA production, it's being reported uncritically in the media as 12.5mbd of crude oil, but it appears to include a significant amount of Natural Gas Liquids as well. That TOD piece goes into it in some depth.
posted by adamdschneider at 6:43 AM on June 26, 2008
posted by adamdschneider at 6:43 AM on June 26, 2008
Mutant: The market knows this and futures prices are beginning to price in this oversupply and eventual decline in price.
Huh? Which futures prices are you looking at? The nymex december 2016 contract is up in price year-to-date by a bit more than is december 2008, for example. It was backwardation, not long ago. Technically, the price hasn't even broken the up-trend of the past few months yet, let alone the longer-term trend.
"The Saudi's are increasing production" back towards the level it was already at two years ago. "The demand side is weakening" back towards being merely strong as opposed to exceptionally voracious. Keep in mind also that a decline in quantity demanded in the US for example does not equal a decline in demand, though it might lead to some.
It's far from obvious whether or not there will be "oversupply". The market has no more consensus on this than does metafilter. If Saudi Arabia and Russia manage to keep their promises to increase production, if things get better in Iraq and Nigeria, or don't get any worse in Iran, if demand elasticity in China turns out to be greater than one might guess, or if there's a nasty global recession, ... I guess any three of those ought to do it, in the absence of other bad news.
posted by sfenders at 7:12 AM on June 26, 2008
Huh? Which futures prices are you looking at? The nymex december 2016 contract is up in price year-to-date by a bit more than is december 2008, for example. It was backwardation, not long ago. Technically, the price hasn't even broken the up-trend of the past few months yet, let alone the longer-term trend.
"The Saudi's are increasing production" back towards the level it was already at two years ago. "The demand side is weakening" back towards being merely strong as opposed to exceptionally voracious. Keep in mind also that a decline in quantity demanded in the US for example does not equal a decline in demand, though it might lead to some.
It's far from obvious whether or not there will be "oversupply". The market has no more consensus on this than does metafilter. If Saudi Arabia and Russia manage to keep their promises to increase production, if things get better in Iraq and Nigeria, or don't get any worse in Iran, if demand elasticity in China turns out to be greater than one might guess, or if there's a nasty global recession, ... I guess any three of those ought to do it, in the absence of other bad news.
posted by sfenders at 7:12 AM on June 26, 2008
But even in Canada, our unfortunate method of funding education (largely through municipal property taxes) results in the obvious: the richer the neighbourhood the better the education, and so like flocks to like.
You oughta see what we do in America.
I grew up in the suburbs of Detroit (born in Mt. Clemens, raised in St. Clair Shores). I have lived in the suburbs of Louisville off 22 and "downtown" off Broadway. I currently live in San Francisco, near Dolores Park.There are good people and bad people in the suburbs; there are good people and bad people in the cities. There are very different kinds of suburbs and exurbs. There are very different kinds of cities and towns.
However, the reason that many "suburbs" (speaking generally) were developed was because white people didn't want to live with black people (see homeowners associations). So they took themselves and their capital out of the cities. They didn't want to pay for black kids' education, so they passed laws that tied school funding to property taxes (though the tradition dates back). When the courts ruled that HOAs couldn't discriminate anymore, and black people got too close to their neighborhoods, they packed up and moved farther out, to the exurbs.
It is fascinating (and enlightening) to read your opinions, Mutant, but you're evaluating the oil market. (Maybe I'm deluded here but) most of us aren't managing investments. We're trying to figure out how to live a "good" life without destroying the environment for future humans.
I.e. regardless of whether oil production is peaking right now or global warming is reaching a critical stage, do you think that oil will peak at some point in the future (it could be 1,000 years from now), or that global gas emissions will become a critical danger to our survival? If so, I think we should be working to prevent negative fallout from those events now, long before they even become real threats. (If you don't think that oil production will ever peak, or that gas emissions will never be a threat, that's a different story.) Then again, the sun's gonna supernova in a few billion years, and we got no plan for that yet either. ;)
posted by mrgrimm at 12:59 PM on June 26, 2008 [1 favorite]
You oughta see what we do in America.
I grew up in the suburbs of Detroit (born in Mt. Clemens, raised in St. Clair Shores). I have lived in the suburbs of Louisville off 22 and "downtown" off Broadway. I currently live in San Francisco, near Dolores Park.There are good people and bad people in the suburbs; there are good people and bad people in the cities. There are very different kinds of suburbs and exurbs. There are very different kinds of cities and towns.
However, the reason that many "suburbs" (speaking generally) were developed was because white people didn't want to live with black people (see homeowners associations). So they took themselves and their capital out of the cities. They didn't want to pay for black kids' education, so they passed laws that tied school funding to property taxes (though the tradition dates back). When the courts ruled that HOAs couldn't discriminate anymore, and black people got too close to their neighborhoods, they packed up and moved farther out, to the exurbs.
It is fascinating (and enlightening) to read your opinions, Mutant, but you're evaluating the oil market. (Maybe I'm deluded here but) most of us aren't managing investments. We're trying to figure out how to live a "good" life without destroying the environment for future humans.
I.e. regardless of whether oil production is peaking right now or global warming is reaching a critical stage, do you think that oil will peak at some point in the future (it could be 1,000 years from now), or that global gas emissions will become a critical danger to our survival? If so, I think we should be working to prevent negative fallout from those events now, long before they even become real threats. (If you don't think that oil production will ever peak, or that gas emissions will never be a threat, that's a different story.) Then again, the sun's gonna supernova in a few billion years, and we got no plan for that yet either. ;)
posted by mrgrimm at 12:59 PM on June 26, 2008 [1 favorite]
With an increasingly infocentric society, telecommuting seems to be one of the more ideal ways to reduce energy consumption, and that works pretty much wherever you live, as long as you've got some broadband.
I personally like the idea of millions of one-acre plots with small houses, where each person grows a goodly amount of their own food on their own land. My grandma did that, canning and freezing excess for the winter months. She was by no means wealthy, but she always had food, and in the growing season it was always fresh and healthy.
My significant other and I have a small house (2.5 bedroom, 1.5 bath), on a small 1/4 acre plot. We're urban, though only one block from one of the nicer urban parks in the country. I'd personally like to move way the hell out of the city and find 10+ acres of privacy somewhere with a lot of trees (I love trees!), but the woman likes the conveniences of the city.
Still, stuck in the city though I may be, I have converted the back yard into a garden, and I'm starting to eye the side and front of the house for more growing space too. Italian beans, various kinds of peppers, a buttload of broccoli, several variants of blueberry bushes, hazelnut bushes, apple trees, several kinds of lettuce, it's amazing how much food you can grow on even a very small plot, and it takes little effort or time or money. And every pound of food I produce is a pound of food that didn't need to be trucked to us, and each is also a pound of food that cost us as close to nothing as you can get. (A $1.09 pack of lettuce seeds probably produces 30 pounds of lettuce, for example.)
It seems to me that if more people would invest the little time and effort it takes to produce at least some of their own food, and if more businesses would allow telecommuting at least one or two days a week, we could really cut down on fuel usage in this country. That'd buy us some time to build a buttload of nuclear plants. By the time the plants come online, we should have plenty of electric cars being manufactured, and we'll be well on our way to a post-fossil fuel society.
posted by jamstigator at 6:43 PM on June 26, 2008
I personally like the idea of millions of one-acre plots with small houses, where each person grows a goodly amount of their own food on their own land. My grandma did that, canning and freezing excess for the winter months. She was by no means wealthy, but she always had food, and in the growing season it was always fresh and healthy.
My significant other and I have a small house (2.5 bedroom, 1.5 bath), on a small 1/4 acre plot. We're urban, though only one block from one of the nicer urban parks in the country. I'd personally like to move way the hell out of the city and find 10+ acres of privacy somewhere with a lot of trees (I love trees!), but the woman likes the conveniences of the city.
Still, stuck in the city though I may be, I have converted the back yard into a garden, and I'm starting to eye the side and front of the house for more growing space too. Italian beans, various kinds of peppers, a buttload of broccoli, several variants of blueberry bushes, hazelnut bushes, apple trees, several kinds of lettuce, it's amazing how much food you can grow on even a very small plot, and it takes little effort or time or money. And every pound of food I produce is a pound of food that didn't need to be trucked to us, and each is also a pound of food that cost us as close to nothing as you can get. (A $1.09 pack of lettuce seeds probably produces 30 pounds of lettuce, for example.)
It seems to me that if more people would invest the little time and effort it takes to produce at least some of their own food, and if more businesses would allow telecommuting at least one or two days a week, we could really cut down on fuel usage in this country. That'd buy us some time to build a buttload of nuclear plants. By the time the plants come online, we should have plenty of electric cars being manufactured, and we'll be well on our way to a post-fossil fuel society.
posted by jamstigator at 6:43 PM on June 26, 2008
I think Simmons position in oil banking qualifies him to write his book. While I have no visibility of whether his bank is speculating in oil futures, peak oil is certainly a long term negative for his business. Better to be doing M&A work in an expanding industry, no?
Admittedly, I am sure he is making out like a bandit with all the current excitement in the energy sector, but I believe he can be right and making money. More likely than he is wrong and coincidentally making money?
I do think there is a speculation component to the price of oil, but frankly, so what? Do you really believe that it is *purely* speculation? That there are vast quantities of oil undiscovered that can power the developing world to a first world lifestyle, without nailing us via climate change?
I think the price of oil has moved from a cost-of-production-plus-margin pricing model to value-based pricing. The market demands more oil than is in supply at historical prices, so it comes to be valued at the price the market will pay. You don't need to believe in peak oil to agree with this, just capitalism.
The question is whether there is extra oil to come on the market in future to return to a cost-plus price. There are no more Da Vinci paintings being made, so they are priced by value. Similarly, if the oil market can't grow supply to exceed demand the price will remain comparatively high.
A question for Mutant and any others considering it is likely this is just speculation:
If this was the production volume ceiling for oil is what is happening be what you would expect to see?
I think it is, and the switch to value based pricing accounts for the gap up to current price levels. That also implies that future price increases will be more orderly as it will react directly to demand, which is likely to grow more linearly.
Other bubbles deflate by dot-coms issuing more stock, more houses being built or more tulips grown. If there is a physical limit on oil production volumes then there is no extra oil to come to deflate the bubble. Conceivably, a substitute for oil could burst the bubble, but I don't see any credible substitute available in the short term. Do you?
posted by bystander at 1:37 AM on June 27, 2008
Admittedly, I am sure he is making out like a bandit with all the current excitement in the energy sector, but I believe he can be right and making money. More likely than he is wrong and coincidentally making money?
I do think there is a speculation component to the price of oil, but frankly, so what? Do you really believe that it is *purely* speculation? That there are vast quantities of oil undiscovered that can power the developing world to a first world lifestyle, without nailing us via climate change?
I think the price of oil has moved from a cost-of-production-plus-margin pricing model to value-based pricing. The market demands more oil than is in supply at historical prices, so it comes to be valued at the price the market will pay. You don't need to believe in peak oil to agree with this, just capitalism.
The question is whether there is extra oil to come on the market in future to return to a cost-plus price. There are no more Da Vinci paintings being made, so they are priced by value. Similarly, if the oil market can't grow supply to exceed demand the price will remain comparatively high.
A question for Mutant and any others considering it is likely this is just speculation:
If this was the production volume ceiling for oil is what is happening be what you would expect to see?
I think it is, and the switch to value based pricing accounts for the gap up to current price levels. That also implies that future price increases will be more orderly as it will react directly to demand, which is likely to grow more linearly.
Other bubbles deflate by dot-coms issuing more stock, more houses being built or more tulips grown. If there is a physical limit on oil production volumes then there is no extra oil to come to deflate the bubble. Conceivably, a substitute for oil could burst the bubble, but I don't see any credible substitute available in the short term. Do you?
posted by bystander at 1:37 AM on June 27, 2008
One other comment, this more financial. The market *strongly* believes I am wrong, and oil remains very abundant. An oil company in Australia I have a small investment in is currently acquiring an interest in an Egyptian oil field at a value of $19 per barrel. Figure that the average production cost for US oil producers was about $11 a barrel last year and it is clear the equities market believes there is plenty of oil still to be had.
That said, production volume will peak at some point, very, very likely in the next decade at the outside. When that happens (if it hasn't) $140 a barrel prices will be largely justified.
I guess to summarise, I don't much care whether the current price run up is speculators or not, as it seems very likely in the reasonably short term we will be living in a period where we cannot grow the production of oil. Assuming substitutes are not substantially more available than they are now, it will mean grim economics all round.
posted by bystander at 1:47 AM on June 27, 2008
That said, production volume will peak at some point, very, very likely in the next decade at the outside. When that happens (if it hasn't) $140 a barrel prices will be largely justified.
I guess to summarise, I don't much care whether the current price run up is speculators or not, as it seems very likely in the reasonably short term we will be living in a period where we cannot grow the production of oil. Assuming substitutes are not substantially more available than they are now, it will mean grim economics all round.
posted by bystander at 1:47 AM on June 27, 2008
sfenders -- "It's far from obvious whether or not there will be "oversupply". The market has no more consensus on this than does metafilter. "
Agree fully, and thanks especially for your correction / comments on futures prices. Good thing you're around to keep me honest. That comment should have read "Perhaps the market knows this and futures prices are beginning to price in this oversupply and eventual decline in price."
mrgrimm - "...do you think that oil will peak at some point in the future ..."
Well, I don't really have a view on this that doesn't reflect personal opinion, but I wish I had more time as it's clearly a fascinating topic, and I'm sure the subject of some doctoral research somewhere.
Ok, talking Peak Oil. Well, one of the reasons I'm so critical of apocalyptic predictions (in all markets, not just commodities - just look at some of the comments on this site previously about the Sub Prime crisis ... ) is that we've been though this all before.
Fanning (1950) cataloged these (yeh, my copy is very old, very water damaged so if I mis type anything its not intentional) :
Full citation: Fanning, L. M., 1950, A case history of oil-shortage scares, in, Our Oil Resources, McGraw-Hill, New York.
I guess the thing that bugs me the most of all the FUD flying about these days is (besides the fact I don't trade commodities and boy howdy have I left some money on the table!!) Hubbert's curves assume limited, finite resources. Fair enough, oil is indeed finite.
But the size of all reserves?
That's the sticky wicket. We're implicitly talking about the size of all KNOWN reserves, a very critical qualification that seems to be omitted, at least by the mainstream media, all too often. Also relevant: I don't believe (again, personal opinion as this isn't my market) that the oil companies have properly invested in discovering new reserves.
So there you go. Is the Hubbert Curve, the entire Peak Oil argument so clear cut now? Again, I'm not sure.
And I always think back to the last time we hit Peak Oil, and Whale Oil was supplanted by petroleum. Keep in mind that drilling is a relatively new phenomenon, deep drilling even newer, non conventional so new as its still in infancy, that before all this oil was scooped right up off the surface.
So I guess I'm leaning towards unconventional - shale, etc - to pick up supply when the readily available deep wells indeed run dry.
Now I've got my hands on a presentation that Simmons' gave to Northern Trust Bank in Vero Beach, Florida on January 27th. It's interesting reading.
Slide 44 - from our current state Simmons' see four possible outcomes :
So even Simmons' doesn't totally buy into Peak Oil, at least not demonstratively - two fifths of his predicted future state is the status quo, and he admits "the other side" has an argument. So I won't trade on that data - I only make money in the markets 'cause I trade on sure things (or events with high probabilities in my favour). This outcome isn't clear to me.
Of course all of my musings, Simmons' arguments, and everyone else except for some Russian academics I know totally omit abiotic oil (I toss this in just to shake things up good).
I apologise for this being somewhat rambling, but Peak Oil? Well, I do read about it, gather papers and books, talk to folks at Uni (or here!) about it, but I guess haven't really made my mind up yet.
bystander -- "I think Simmons position in oil banking qualifies him to write his book."
Yeh, I agree, but my point was there is a fundamental difference between decision making based on objective, academic quality sources of information and decision making based on information provided by people who have a vested interest.
Simmons' isn't objective. Simmons' is selling something. Simmons' might be right, but I don't like to be sold to. I like to buy. I won't buy from Simmons' and while I know I'm a skeptical SOB and more than likely out to the extreme left of the act on proof / act on faith distribution, I'm especially critical of reorganising civilisation as Simmons' full body of work (you see, Twilight in the Desert wasn't his entire agenda, 'cause he identifies the problem and also has a solution in mind) is pushing us to do, based on the arguments put forward by someone selling something.
Full academic debate? Lots of funded research that leads to the conclusion of Peak Oil? I'm behind that 100%.
That being said, I do have a reading list that I'll post here for the benefit of those interested in this topic.
This is gleaned from academic sources (a few of us in my research group at Uni keep such lists, and this is from the gal who is interested in the energy markets), and should give anyone energetic enough to pile through it very qualified and strong insight into the question.
And if someone does push through this material please be kind enough to report back to the group!!
BP (British Petroleum), 1998, BP Statistical Review of World Energy June 1998: CTD Printers, England
Bird, K. J., 1989, North American fossil fuels, in, Bally, A. W., and Palmer, A. R., eds., The Geology of North America—An Overview: Boulder, Colorado, Geological Society of America, The Geology of North America, v. A
Campbell, C. J., 1991, The golden century of oil 1950-2050: the depletion of a resource: Dordrecht, Kluwer Academic Press
Campbell, C. J., and Laherrère, J. H., 1998, The end of cheap oil: Scientific American, v. 278
Clark, R. D., 1983, King Hubbert: Geophysics, The Leading Edge of Exploration, v. 2
Dolton, G. L., et al., 1981, Estimates of undiscovered recoverable conventional resources of oil and gas in the United States: U. S. Geological Survey Circular 860
Duncan, D. C., and Swanson, V. E., 1965, Organic-rich shale of the United States and world land areas: U.S. Geological Survey Circular 523
Dusseault, M. B., 1997, Flawed reasoning about oil and gas: Nature
Fanning, L. M., 1950, A case history of oil-shortage scares, in, Our Oil Resources (Second Edition), Fanning, L. M., ed., pp. 306-406: McGraw-Hill, New York
Fouda, S. A., 1998, Liquid fuels from natural gas: Scientific American
George, R. L., 1998, Mining for oil: Scientific American
Hatfield, C. B., 1997, Oil back on the global agenda: Nature
Hubbert, M. K., 1949, Energy from fossil fuels: Science
Hubbert, M. K., 1950, Remarks on Fuels and Energy, in, Proceedings of the United Nations Scientific Conference on the Conservation and Utilization of Resources, Volume 1, Plenary Meetings. United Nations Department of Economic Affairs, Lake Success, New York
Hubbert, M. K., 1956, Nuclear energy and the fossil fuels: American Petroleum Institute Drilling and
Production Practice, p. 7-25.
Hubbert, M. K., 1967, Degree of advancement of petroleum exploration in the United States: AAPG Bulletin
Hubbert, M. K., 1969, Energy Resources, in, Resources and Man, pp. 157-242, W. H. Freeman, San Francisco
Hubbert, M. K., 1982, Techniques of prediction as applied to the production of oil and gas, in, Oil and Gas Supply Modeling, S. I. Gass, ed., National Bureau of Standards Special Publication 631
IEA (International Energy Agency), 1998, World Energy Outlook.
Ivanhoe, L. F., 1995, Future world oil supplies: there is a finite limit: World Oil
Jensen, M. L., and Bateman, A. M., 1981, Economic Mineral Deposits (Third Edition): John Wiley, New York
Kerr, R. A., 1998, The next oil crisis looms large—and perhaps close: Science
Laherrere, J. H., 1999a, Uncertain resource size: enigma of oceanic methane hydrates: Offshore
Laherrere, J. H., 1999b, Data show methane hydrate resource over-estimated: Offshore
Laherrere, J. H., 1999c, World oil supply—what goes up must come down, but when will it peak? Oil and Gas Journal
Lynch, M. C., 1999, The debate over oil supply: science or religion? Geopolitics of Energy
Mast, R. F., Dolton, G. L., Crovelli, R. A., Root, D. H., Attanasi, E. D., Martin, P. E., Cooke, L. W., Carpenter, G. B., Pecora, W. C., and Rose, M. B., 1989, Estimates of undiscovered conventional oil and gas resources in the United States—a part of the nation’s energy endowment: U. S. Geological Survey and Minerals Management Service
Masters, C. D., Root, D. H., and Dietzman, W. D., 1984, Distribution and quantitative asessment of world crude oil reserves and resources: Proceedings of the 11th World Petroleum Congress, v. 2, p. 229-237.
Masters, C. D., Attanasi, E. D.,and Root, D. H., 1994, World petroleum assessment and analysis: Proceedings of the 14th World Petroleum Congress
McCabe, P. J., 1998, Energy resources—Cornucopia or Empty Barrel? AAPG Bulletin, v. 82
Meyer, R. F., and Schenk, C. J., 1985, An estimate of world resources of heavy crude oil and natural bitumen, in, The Third UNITAR/UNDP International Conference on Heavy Crude and Tar Sands: Alberta oil sands technology and research authority, Edmonton, Alberta, Canada
Miller, B. M., Thomsen, H. L., Dolton, G. L., Coury, A. B., Hendricks, T. A., Lennartz, F. E., Powers, R. B., Sable, E. G., and Varnes, K. L., 1975, Geological estimates of undiscovered recoverable oil and gas resources in the United States: U. S. Geological Survey Circular 725
Minerals Management Service, 1996, An assessment of the undiscovered hydrocarbon potential of the nation’s outer continental shelf: Minerals Management Service OCS Report MMS 96-0034
Moore, S., 1995, The coming age of abundance, in, Bailey, R. ed., The True State of the Planet: Free Press, New York
Nakicenovic, N., Grübler, A., and McDonald, A., 1998, Global Energy Perspectives: Cambridge University Press, Cambridge
Smith, J. W., 1981, Oil shale resources of the United States: Mineral and Energy Resources, Colorado School of Mines, v. 23, no. 6
U. S. Geological Survey National Oil and Gas Resource Assessment Team, 1995, 1995 national assessment of United States oil and gas resource: U.S. Geological Survey Circular 1118,
Weeks, L. G., 1948, Highlights on 1947 developments in foreign petroleum fields: AAPG Bulletin, v. 32
posted by Mutant at 5:54 AM on June 27, 2008 [2 favorites]
Agree fully, and thanks especially for your correction / comments on futures prices. Good thing you're around to keep me honest. That comment should have read "Perhaps the market knows this and futures prices are beginning to price in this oversupply and eventual decline in price."
mrgrimm - "...do you think that oil will peak at some point in the future ..."
Well, I don't really have a view on this that doesn't reflect personal opinion, but I wish I had more time as it's clearly a fascinating topic, and I'm sure the subject of some doctoral research somewhere.
Ok, talking Peak Oil. Well, one of the reasons I'm so critical of apocalyptic predictions (in all markets, not just commodities - just look at some of the comments on this site previously about the Sub Prime crisis ... ) is that we've been though this all before.
Fanning (1950) cataloged these (yeh, my copy is very old, very water damaged so if I mis type anything its not intentional) :
- The Model T Scare — 1916
- The Gasless Sunday Scare — 1918
- The John Bull Scare — 1920-23
- The Ickes’ Petroleum Reserves Scare — 1943-44
- The Cold War Scare — 1946-47
- The Cold Winter Scare — 1947-48
- Arab Embargo Scare — 1973
- Iranian Revolution Scare — 1979
Full citation: Fanning, L. M., 1950, A case history of oil-shortage scares, in, Our Oil Resources, McGraw-Hill, New York.
I guess the thing that bugs me the most of all the FUD flying about these days is (besides the fact I don't trade commodities and boy howdy have I left some money on the table!!) Hubbert's curves assume limited, finite resources. Fair enough, oil is indeed finite.
But the size of all reserves?
That's the sticky wicket. We're implicitly talking about the size of all KNOWN reserves, a very critical qualification that seems to be omitted, at least by the mainstream media, all too often. Also relevant: I don't believe (again, personal opinion as this isn't my market) that the oil companies have properly invested in discovering new reserves.
So there you go. Is the Hubbert Curve, the entire Peak Oil argument so clear cut now? Again, I'm not sure.
And I always think back to the last time we hit Peak Oil, and Whale Oil was supplanted by petroleum. Keep in mind that drilling is a relatively new phenomenon, deep drilling even newer, non conventional so new as its still in infancy, that before all this oil was scooped right up off the surface.
So I guess I'm leaning towards unconventional - shale, etc - to pick up supply when the readily available deep wells indeed run dry.
Now I've got my hands on a presentation that Simmons' gave to Northern Trust Bank in Vero Beach, Florida on January 27th. It's interesting reading.
Slide 44 - from our current state Simmons' see four possible outcomes :
- Supply meets IEA forecasts.
- Supply undulates at current demand level
- Supply declines by 5% per annum
- Supply declines by 10% per annum
- Supply meets IEA forecasts -- 0.001%
- Supply undulates at current demand level -- 40%
- Supply declines by 5% per annum -- 35%
- Supply declines by 10% per annum -- 25%
- Non conventional
- Undiscovered reserves
- Reserver appreciation (I'm reading this as mis judging the size initially)
- New technology increases recovery from existing wells
So even Simmons' doesn't totally buy into Peak Oil, at least not demonstratively - two fifths of his predicted future state is the status quo, and he admits "the other side" has an argument. So I won't trade on that data - I only make money in the markets 'cause I trade on sure things (or events with high probabilities in my favour). This outcome isn't clear to me.
Of course all of my musings, Simmons' arguments, and everyone else except for some Russian academics I know totally omit abiotic oil (I toss this in just to shake things up good).
I apologise for this being somewhat rambling, but Peak Oil? Well, I do read about it, gather papers and books, talk to folks at Uni (or here!) about it, but I guess haven't really made my mind up yet.
bystander -- "I think Simmons position in oil banking qualifies him to write his book."
Yeh, I agree, but my point was there is a fundamental difference between decision making based on objective, academic quality sources of information and decision making based on information provided by people who have a vested interest.
Simmons' isn't objective. Simmons' is selling something. Simmons' might be right, but I don't like to be sold to. I like to buy. I won't buy from Simmons' and while I know I'm a skeptical SOB and more than likely out to the extreme left of the act on proof / act on faith distribution, I'm especially critical of reorganising civilisation as Simmons' full body of work (you see, Twilight in the Desert wasn't his entire agenda, 'cause he identifies the problem and also has a solution in mind) is pushing us to do, based on the arguments put forward by someone selling something.
Full academic debate? Lots of funded research that leads to the conclusion of Peak Oil? I'm behind that 100%.
That being said, I do have a reading list that I'll post here for the benefit of those interested in this topic.
This is gleaned from academic sources (a few of us in my research group at Uni keep such lists, and this is from the gal who is interested in the energy markets), and should give anyone energetic enough to pile through it very qualified and strong insight into the question.
And if someone does push through this material please be kind enough to report back to the group!!
BP (British Petroleum), 1998, BP Statistical Review of World Energy June 1998: CTD Printers, England
Bird, K. J., 1989, North American fossil fuels, in, Bally, A. W., and Palmer, A. R., eds., The Geology of North America—An Overview: Boulder, Colorado, Geological Society of America, The Geology of North America, v. A
Campbell, C. J., 1991, The golden century of oil 1950-2050: the depletion of a resource: Dordrecht, Kluwer Academic Press
Campbell, C. J., and Laherrère, J. H., 1998, The end of cheap oil: Scientific American, v. 278
Clark, R. D., 1983, King Hubbert: Geophysics, The Leading Edge of Exploration, v. 2
Dolton, G. L., et al., 1981, Estimates of undiscovered recoverable conventional resources of oil and gas in the United States: U. S. Geological Survey Circular 860
Duncan, D. C., and Swanson, V. E., 1965, Organic-rich shale of the United States and world land areas: U.S. Geological Survey Circular 523
Dusseault, M. B., 1997, Flawed reasoning about oil and gas: Nature
Fanning, L. M., 1950, A case history of oil-shortage scares, in, Our Oil Resources (Second Edition), Fanning, L. M., ed., pp. 306-406: McGraw-Hill, New York
Fouda, S. A., 1998, Liquid fuels from natural gas: Scientific American
George, R. L., 1998, Mining for oil: Scientific American
Hatfield, C. B., 1997, Oil back on the global agenda: Nature
Hubbert, M. K., 1949, Energy from fossil fuels: Science
Hubbert, M. K., 1950, Remarks on Fuels and Energy, in, Proceedings of the United Nations Scientific Conference on the Conservation and Utilization of Resources, Volume 1, Plenary Meetings. United Nations Department of Economic Affairs, Lake Success, New York
Hubbert, M. K., 1956, Nuclear energy and the fossil fuels: American Petroleum Institute Drilling and
Production Practice, p. 7-25.
Hubbert, M. K., 1967, Degree of advancement of petroleum exploration in the United States: AAPG Bulletin
Hubbert, M. K., 1969, Energy Resources, in, Resources and Man, pp. 157-242, W. H. Freeman, San Francisco
Hubbert, M. K., 1982, Techniques of prediction as applied to the production of oil and gas, in, Oil and Gas Supply Modeling, S. I. Gass, ed., National Bureau of Standards Special Publication 631
IEA (International Energy Agency), 1998, World Energy Outlook.
Ivanhoe, L. F., 1995, Future world oil supplies: there is a finite limit: World Oil
Jensen, M. L., and Bateman, A. M., 1981, Economic Mineral Deposits (Third Edition): John Wiley, New York
Kerr, R. A., 1998, The next oil crisis looms large—and perhaps close: Science
Laherrere, J. H., 1999a, Uncertain resource size: enigma of oceanic methane hydrates: Offshore
Laherrere, J. H., 1999b, Data show methane hydrate resource over-estimated: Offshore
Laherrere, J. H., 1999c, World oil supply—what goes up must come down, but when will it peak? Oil and Gas Journal
Lynch, M. C., 1999, The debate over oil supply: science or religion? Geopolitics of Energy
Mast, R. F., Dolton, G. L., Crovelli, R. A., Root, D. H., Attanasi, E. D., Martin, P. E., Cooke, L. W., Carpenter, G. B., Pecora, W. C., and Rose, M. B., 1989, Estimates of undiscovered conventional oil and gas resources in the United States—a part of the nation’s energy endowment: U. S. Geological Survey and Minerals Management Service
Masters, C. D., Root, D. H., and Dietzman, W. D., 1984, Distribution and quantitative asessment of world crude oil reserves and resources: Proceedings of the 11th World Petroleum Congress, v. 2, p. 229-237.
Masters, C. D., Attanasi, E. D.,and Root, D. H., 1994, World petroleum assessment and analysis: Proceedings of the 14th World Petroleum Congress
McCabe, P. J., 1998, Energy resources—Cornucopia or Empty Barrel? AAPG Bulletin, v. 82
Meyer, R. F., and Schenk, C. J., 1985, An estimate of world resources of heavy crude oil and natural bitumen, in, The Third UNITAR/UNDP International Conference on Heavy Crude and Tar Sands: Alberta oil sands technology and research authority, Edmonton, Alberta, Canada
Miller, B. M., Thomsen, H. L., Dolton, G. L., Coury, A. B., Hendricks, T. A., Lennartz, F. E., Powers, R. B., Sable, E. G., and Varnes, K. L., 1975, Geological estimates of undiscovered recoverable oil and gas resources in the United States: U. S. Geological Survey Circular 725
Minerals Management Service, 1996, An assessment of the undiscovered hydrocarbon potential of the nation’s outer continental shelf: Minerals Management Service OCS Report MMS 96-0034
Moore, S., 1995, The coming age of abundance, in, Bailey, R. ed., The True State of the Planet: Free Press, New York
Nakicenovic, N., Grübler, A., and McDonald, A., 1998, Global Energy Perspectives: Cambridge University Press, Cambridge
Smith, J. W., 1981, Oil shale resources of the United States: Mineral and Energy Resources, Colorado School of Mines, v. 23, no. 6
U. S. Geological Survey National Oil and Gas Resource Assessment Team, 1995, 1995 national assessment of United States oil and gas resource: U.S. Geological Survey Circular 1118,
Weeks, L. G., 1948, Highlights on 1947 developments in foreign petroleum fields: AAPG Bulletin, v. 32
posted by Mutant at 5:54 AM on June 27, 2008 [2 favorites]
Thank you very much for the historical perspective, Mutant. (We all need more history in our lives.)
But what most people are worried about is that even as the increasing price of oil makes alternatives more affordable (which is a good thing, which is why we shouldn't subsidize oil), the infrastructure needed for these alternatives is very different from that used by oil. Whale oil is more like mineral oil than many of our current alternatives are.
Also, your example is simply of lighting - we have come to rely on petroleum for much, much more than that. We have replaced coal & wood (heating, industrial energy), manure (fertiliser), animal power (transportation, most manufacturing), wind & coal (sea transportation - which is how most things are transported), and created new uses - such as flight and plastics. All from one substance. It's not a matter of finding a replacement for one small part of our energy needs, but the vast majority of our energy needs, in a society which is more energy intensive than any which has every existed in the history of the planet.
Personally, I'm more worried about the agriculture side - especially the fertilizers. We do have alternatives for energy, but do we have any for fertilizers? And any infrastructure to distribute them?
There have also been societies in history which have faced energy or resource crises like this and not survived, or survived only with great suffering to the people who lived in them during this period. Many areas of nineteenth century China, for example, faced dire energy crises which undermined their ability to feed themselves (because they were cutting down trees and losing soil, and elsewhere burning the stalks of their fields for fuel instead of using as fertilizer). Obviously, Chinese society survived, and is beginning to thrive again, but I would really not like to be a Chinese peasant in the 19th century. Any more than I would like to be a peasant in Europe in 1300, as their own major resource (land) grew dearer and dearer.
This is not the end of a society, but it is a major crisis which can go either way. And already those at the edge who are most vulnerable to the increased price of fuel are beginning to feel it. Those of us who are already in small apartments with low energy costs and who walk everywhere (often out of financial necessity) are only seeing these rising costs in groceries, and it has not been as half as bad there as in gas or heating prices. This will change how those people who live in suburbia think about their world and their choices. I can't say that I am sad at the loss of suburbia as it is currently conceived - I think it is a mode of building which is detrimental to community and human interaction, as well as environmentally horrendous* - but I am very sorry for those who will be most hard-pressed in the next few years. I would be most happy to see not a destruction of suburbia (with the loss of housing, crowding in cities and reduction in quality of life that might bring), but a redesign along more energy efficient modes, such as clustered towns and villages around train stations.
*and again, I am not saying this as an urbanite. I grew up in suburbia, only not in the nice parts. I have lived in the dark side of suburbia which must exist to sustain the beautiful houses and green lawns of the nice parts - beside the Walmart with its acres of parking lot, the strip mall, and the Sears Outlet store, next to the noisy and dirty arterial road which leads to the subdivisions with their nice quiet lanes, in the places where kids cannot play outside because there are too many cars. Many suburbanites don't see these places, because these are the places they drive through, windows up, on their way to somewhere else. But people live in these places, mostly people with no choice. They walk here, shop here, wait for buses here (no matter how long they take to come).
posted by jb at 10:28 AM on June 27, 2008 [1 favorite]
But what most people are worried about is that even as the increasing price of oil makes alternatives more affordable (which is a good thing, which is why we shouldn't subsidize oil), the infrastructure needed for these alternatives is very different from that used by oil. Whale oil is more like mineral oil than many of our current alternatives are.
Also, your example is simply of lighting - we have come to rely on petroleum for much, much more than that. We have replaced coal & wood (heating, industrial energy), manure (fertiliser), animal power (transportation, most manufacturing), wind & coal (sea transportation - which is how most things are transported), and created new uses - such as flight and plastics. All from one substance. It's not a matter of finding a replacement for one small part of our energy needs, but the vast majority of our energy needs, in a society which is more energy intensive than any which has every existed in the history of the planet.
Personally, I'm more worried about the agriculture side - especially the fertilizers. We do have alternatives for energy, but do we have any for fertilizers? And any infrastructure to distribute them?
There have also been societies in history which have faced energy or resource crises like this and not survived, or survived only with great suffering to the people who lived in them during this period. Many areas of nineteenth century China, for example, faced dire energy crises which undermined their ability to feed themselves (because they were cutting down trees and losing soil, and elsewhere burning the stalks of their fields for fuel instead of using as fertilizer). Obviously, Chinese society survived, and is beginning to thrive again, but I would really not like to be a Chinese peasant in the 19th century. Any more than I would like to be a peasant in Europe in 1300, as their own major resource (land) grew dearer and dearer.
This is not the end of a society, but it is a major crisis which can go either way. And already those at the edge who are most vulnerable to the increased price of fuel are beginning to feel it. Those of us who are already in small apartments with low energy costs and who walk everywhere (often out of financial necessity) are only seeing these rising costs in groceries, and it has not been as half as bad there as in gas or heating prices. This will change how those people who live in suburbia think about their world and their choices. I can't say that I am sad at the loss of suburbia as it is currently conceived - I think it is a mode of building which is detrimental to community and human interaction, as well as environmentally horrendous* - but I am very sorry for those who will be most hard-pressed in the next few years. I would be most happy to see not a destruction of suburbia (with the loss of housing, crowding in cities and reduction in quality of life that might bring), but a redesign along more energy efficient modes, such as clustered towns and villages around train stations.
*and again, I am not saying this as an urbanite. I grew up in suburbia, only not in the nice parts. I have lived in the dark side of suburbia which must exist to sustain the beautiful houses and green lawns of the nice parts - beside the Walmart with its acres of parking lot, the strip mall, and the Sears Outlet store, next to the noisy and dirty arterial road which leads to the subdivisions with their nice quiet lanes, in the places where kids cannot play outside because there are too many cars. Many suburbanites don't see these places, because these are the places they drive through, windows up, on their way to somewhere else. But people live in these places, mostly people with no choice. They walk here, shop here, wait for buses here (no matter how long they take to come).
posted by jb at 10:28 AM on June 27, 2008 [1 favorite]
Very well put jb. I had never connected the dots between the plastics industry and the oil industry like that. Imagine what the prolonged barrel/ gal cost could to do all those other industries.
Earlier this decade it already did. It was natural gas instead of petrol, but natural gas can also be made into fertilizer. By 2003, after three years in a prolonged price spike it caught up to the price of food.
The world needs to be careful and diversify or Humanity might be the next great Market Failure.
posted by Parallax.Error at 2:15 AM on June 28, 2008
Earlier this decade it already did. It was natural gas instead of petrol, but natural gas can also be made into fertilizer. By 2003, after three years in a prolonged price spike it caught up to the price of food.
The world needs to be careful and diversify or Humanity might be the next great Market Failure.
posted by Parallax.Error at 2:15 AM on June 28, 2008
Mutant:
First of all, I apologize for implying that your circle of acquaintances are dunderheads. I didn't mean to get carried away like that.
Second, I have no professional training or experience in the finance industry. I'm a software engineer. So from the perspective of finance, I'm a total amateur. But I've been reading about the state of the oil industry for the past four years, so I feel qualified to comment on it semi-anonymously on the internet. :-)
However, I was not trying to answer the question of whether or not we're in a bubble, which I am agnostic about. (But my hope is that the price of oil will continue to remain high and force the world to rely on renewable energy sources.) I was answering your question of whether anyone had predicted $140/barrel oil. The answer was yes.
As to the trustworthiness of Simmons (and for that matter most other peak oil/commodities pundits like Jim Rogers), I certainly agree that he stands to benefit from his predictions. And I too would love to see academic studies which measure our exact oil situation. Unfortunately too many countries that have large oil reserves are opaque in what they tell the rest of the world. I think the closest we're going to get is the IEA study on the state of giant oil fields, promised by November. There's also The Oil Drum, which has its share of doomers, but also has a lot of people in the industry commenting.
But I can see you applying the exact same argument about Simmons to these others, so I don't find it totally persuasive. Anyone who's in the oil industry stands to gain from higher oil prices. So you're implying that anyone in those industries who says that peak oil is upon us has a hidden agenda? Then, since the rest of the known data about oil reserves are partial at best, we can trust no one on the subject. Or at best, it puts us back to the situation I think we're already in, where most people have an opinion backed by some data, and we have to choose whose data we trust more. I happen to trust Simmons more than say Daniel Yergin (who said a while back that a fair price for oil was $38/barrel).
My current assumption, based on what I've read of the industry*, is that the supply of oil is going to start to decline over the next few years. In that case, it seems reasonable to me that the price of it should increase, perhaps by a good deal. But then again the market doesn't always follow logic in what it does.
*This includes Simmons's book, and also Paul Roberts's The End of Oil, which is perhaps too gloomy in its outlook but is pretty comprehensive in its treatment of oil and most other major forms of energy.
posted by A dead Quaker at 9:10 AM on June 28, 2008
First of all, I apologize for implying that your circle of acquaintances are dunderheads. I didn't mean to get carried away like that.
Second, I have no professional training or experience in the finance industry. I'm a software engineer. So from the perspective of finance, I'm a total amateur. But I've been reading about the state of the oil industry for the past four years, so I feel qualified to comment on it semi-anonymously on the internet. :-)
However, I was not trying to answer the question of whether or not we're in a bubble, which I am agnostic about. (But my hope is that the price of oil will continue to remain high and force the world to rely on renewable energy sources.) I was answering your question of whether anyone had predicted $140/barrel oil. The answer was yes.
As to the trustworthiness of Simmons (and for that matter most other peak oil/commodities pundits like Jim Rogers), I certainly agree that he stands to benefit from his predictions. And I too would love to see academic studies which measure our exact oil situation. Unfortunately too many countries that have large oil reserves are opaque in what they tell the rest of the world. I think the closest we're going to get is the IEA study on the state of giant oil fields, promised by November. There's also The Oil Drum, which has its share of doomers, but also has a lot of people in the industry commenting.
But I can see you applying the exact same argument about Simmons to these others, so I don't find it totally persuasive. Anyone who's in the oil industry stands to gain from higher oil prices. So you're implying that anyone in those industries who says that peak oil is upon us has a hidden agenda? Then, since the rest of the known data about oil reserves are partial at best, we can trust no one on the subject. Or at best, it puts us back to the situation I think we're already in, where most people have an opinion backed by some data, and we have to choose whose data we trust more. I happen to trust Simmons more than say Daniel Yergin (who said a while back that a fair price for oil was $38/barrel).
My current assumption, based on what I've read of the industry*, is that the supply of oil is going to start to decline over the next few years. In that case, it seems reasonable to me that the price of it should increase, perhaps by a good deal. But then again the market doesn't always follow logic in what it does.
*This includes Simmons's book, and also Paul Roberts's The End of Oil, which is perhaps too gloomy in its outlook but is pretty comprehensive in its treatment of oil and most other major forms of energy.
posted by A dead Quaker at 9:10 AM on June 28, 2008
Sorry Mutant, I have one more thing to add:
Indeed, the Saudi's added 300K bpd production in May, and will add another 200K bpd in July, bringing their production total to 9.7 million bpd. By 2009 they've committed to increase overall production to 12.5 million bpd, or an increase of about 28%.
My understanding is that most of this added production is thought to be heavy crude. It sounds like Saudi Arabia is also building refineries to process that crude, but it will be 2-5 years before they are ready.
And this is the one country in the world thought to have significant spare capacity still.
So in summary, I disagree with your argument that oil isn't really peaking. But I *agree* with your whale-oil argument, which is that oil will peak and we will move on to other forms of energy. And I'm agnostic about whether we're in a bubble, and probably not even qualified to judge.
posted by A dead Quaker at 9:57 AM on June 28, 2008
Indeed, the Saudi's added 300K bpd production in May, and will add another 200K bpd in July, bringing their production total to 9.7 million bpd. By 2009 they've committed to increase overall production to 12.5 million bpd, or an increase of about 28%.
My understanding is that most of this added production is thought to be heavy crude. It sounds like Saudi Arabia is also building refineries to process that crude, but it will be 2-5 years before they are ready.
And this is the one country in the world thought to have significant spare capacity still.
So in summary, I disagree with your argument that oil isn't really peaking. But I *agree* with your whale-oil argument, which is that oil will peak and we will move on to other forms of energy. And I'm agnostic about whether we're in a bubble, and probably not even qualified to judge.
posted by A dead Quaker at 9:57 AM on June 28, 2008
I'm not convinced by the whale oil argument, and I'm saying this not as an economist or financial person (which I am not), but as a environmental historian.
We've not always made such easy transitions when a resource becomes scarce. Land pressure in many places in Europe, for instance, hit hard in the early 14th century but there was no technological innovation which increased productivity - they just expanded out into poorer and poorer quality land, and suffered. Only a great plague which killed 1/3 of the population eased these pressures. The limits on population represented by the limit of agricultural population stayed until the 17th or 18th centuries in England - it took 300-400 years for technological solutions to be found. And even then, these technological solutions involved extensive social changes (the concentration of land in fewer hands, a reorganisation of how land was owned through enclosure) which were very disruptive and hurtful to many of the people who experienced them. There were clear "winners" and "losers" from these changes.
I don't know if anyone seriously argues the end of civilisation from peak oil, but since oil is finite, it will come (when is a matter of debate). But as prices increase (from falling supply, increasing demand, and speculation - probably all three) - this will cause great disruptions in many different sectors (because of the saturation of petroleum products). It will hit some people much worse than others. I don't know if it will hit sububan North Americans worse that it will hit developing countries - the effects of the last major increases in oil prices were worse in African countries which imported oil than they were in many developed nations. And it will hit poorer people in developed nations much worse than it will hit more well to do people.
I think to just argue about the details of peak oil is to miss the most important points. Does it matter if the world falls apart today, or twenty years from now? I would think what would matter most is that most of the developed world relies on finite fossil energy and chemicals for so many of our material needs, needs which include not only most of our energy (and that's already a huge amount of our resource usuage) but even the food we eat, and the plates we eat it off.
Technological solutions may come - but they could come much later than people think, and not fully replace what we have now, and the transition to these alternatives will itself cause great troubles, as all transitions do. It's worth talking about it now, thinking about how to a) find those technological solutions now, rather than later - and technology includes forms of organisation, like redesigning cities - and b) trying to make this transition the least socially disruptive one that we can.
This is leaving aside any environmental arguments on why one would want to lower dependence on fossil fuels, regardless of their supply.
posted by jb at 12:20 PM on June 28, 2008 [1 favorite]
We've not always made such easy transitions when a resource becomes scarce. Land pressure in many places in Europe, for instance, hit hard in the early 14th century but there was no technological innovation which increased productivity - they just expanded out into poorer and poorer quality land, and suffered. Only a great plague which killed 1/3 of the population eased these pressures. The limits on population represented by the limit of agricultural population stayed until the 17th or 18th centuries in England - it took 300-400 years for technological solutions to be found. And even then, these technological solutions involved extensive social changes (the concentration of land in fewer hands, a reorganisation of how land was owned through enclosure) which were very disruptive and hurtful to many of the people who experienced them. There were clear "winners" and "losers" from these changes.
I don't know if anyone seriously argues the end of civilisation from peak oil, but since oil is finite, it will come (when is a matter of debate). But as prices increase (from falling supply, increasing demand, and speculation - probably all three) - this will cause great disruptions in many different sectors (because of the saturation of petroleum products). It will hit some people much worse than others. I don't know if it will hit sububan North Americans worse that it will hit developing countries - the effects of the last major increases in oil prices were worse in African countries which imported oil than they were in many developed nations. And it will hit poorer people in developed nations much worse than it will hit more well to do people.
I think to just argue about the details of peak oil is to miss the most important points. Does it matter if the world falls apart today, or twenty years from now? I would think what would matter most is that most of the developed world relies on finite fossil energy and chemicals for so many of our material needs, needs which include not only most of our energy (and that's already a huge amount of our resource usuage) but even the food we eat, and the plates we eat it off.
Technological solutions may come - but they could come much later than people think, and not fully replace what we have now, and the transition to these alternatives will itself cause great troubles, as all transitions do. It's worth talking about it now, thinking about how to a) find those technological solutions now, rather than later - and technology includes forms of organisation, like redesigning cities - and b) trying to make this transition the least socially disruptive one that we can.
This is leaving aside any environmental arguments on why one would want to lower dependence on fossil fuels, regardless of their supply.
posted by jb at 12:20 PM on June 28, 2008 [1 favorite]
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