Comment 459

By Tom (registered) | Posted May 03, 2006 at 07:48:22

Reid,

Nice summary post. As our economies are set up to best run on 2-3% expansion per year, a decrease of available cheap energy will necessarily provoke a recession that will grind on and on until things get worse. We're going to have to develop an alternative to the "expand or die" motif for our businesses and everything else.

One small detail on your depletion examples. Your depletion calculations are a tad off because a constant "rate" does not apply to the original number, but to the successive remaining amounts.

An example: a 10% annual depletion rate starting from 100 units. First year you lose 10 (10% of 100). Now you have 90 units left. Second year you lose 9 (10% of 90) and you have 81 units left. Third year you loose 8 units (8.1 actually) and you have 73 units left. Etc.

So a 2.5% depletion rate will not yield 0% remaining in 40 years (as in your calculation 2.5% x 40). Instead it will leave about 37% of the original amount.

It helps - but only marginally. Our economies are not geared to run backwards.

Again - nice summary, especially the links and references.

Cheers,

Tom

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