Where will peak oil hurt first?

Some chap in the US has done an analysis of where peak oil is likely to hurt first. Or, as he puts it, where the stress of peak oil (or any oil shock) is likely to be greatest.

As he says, it’s just a first cut, based on two things: household income and travel time to work.

His reasoning is that as price of oil increases, those hit hardest will be those who have the furthest to commute, and the lowest disposable incomes.

Seems reasonable as a first approximation.

The picture he comes up with is shown on the right. (Click to enlarge.)

There are more explanations and more pictures, here: http://earlywarn.blogspot.com/2010/06/peak-oil-stress-map.html

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3 Responses to Where will peak oil hurt first?

  1. negconvexity says:

    Any discussion about oil prices over the next decade must include an attempt to quantify emerging economy demand as an important driver at the margin. Here is a simple thought experiment using Chinese demand to give some idea of the magnitude of the supply issues we face:
    – China moves from 3 bbls/person/year to the South Korean per capita consumption level of 17 bbls/person/year
    – Transition takes 30 years
    – No peak in global production

    In next 10 years we must find 44 million BOPD. If you superimpose peak production on top of this demand profile using the following parameters oil prices would increase approximately 250% in real terms over next 10 years:
    – Oil demand elasticity of -0.3
    – Current production 84 million BOPD, current price US$ 80
    – Peak production 100 million BOPD
    – Post peak decline rate of 3-4%

    If you want to try the model for yourself using your own assumptions it can be found at: http://www.petrocapita.com/index.php?option=com_content&view=article&id=128&Itemid=86

    • jimmy says:

      Could industrial hemp be a substitute for crude oil derived food/fuel/material

      • Finn Jackson says:

        Short answer is that it could be a partial substitute, yes. See: http://en.wikipedia.org/wiki/Hemp

        Longer answer is that there is a scale mismatch: the scale at which we use oil is enormous. The scale at which we currently produce hemp is tiny.
        Hemp could likely be part of our future, but the enormous energy concentration of oil means that even a massive ramping up of hemp production would still require a net reduction in energy use per person.

        Think about it this way: we already use about 1.4 planets sustainable resources (see WWF). That needs to reduce to 1.0. And if the resource consumption of other countries (India, China,…) increase, then our resource consumption (per head) will have to fall.
        Hemp can help to replace oil, but other solutions will also be needed, as well as a net reduction in energy usage.

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