Peak Oil - best way to prepare

J

jrewing

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I'd like to ask a hypothetical question and get your thoughts on it. I have started a separate thread, as I believe it deviates too much from the original post.

Let's assume we believe the people who tell us that the world's oil production will peak in 5-10 years time. This will cause the price of oil to double or triple. Stock markets will suffer hugely and the world economy could go into recession. Energy prices and inflation will rocket. Interest rates will go up, increasing mortgage repayments. People will curtail their car travel because of petrol prices.

If we assume this is true, what would be the best way for an individual to prepare him/herself in the coming years in the following areas (or any other you can think of)? Apart from stocking up on SPAM and beans in the garden shed, that is....

1. Lifestyle
  • Move to city where public transport is more available...?
2. Housing
  • Energy-efficient, well-insulated house using solar/wind power where possible.
  • Location on public transport route.
  • Invest in energy-efficient appliances - A-rated, smaller TV etc.
3. Transport
  • Hybrid car, or car with very low consumption. Bicycle instead if feasible.
4. Investment
  • Reduce exposure to stock markets over 5 year period (if you expect a sudden big crash down the line) ? Move this money into safer investments...(savings a/c ?)
  • Reduce mortgage as quickly as possible in next years in expectation of increased interest rates, or buy smaller house ?
  • Invest in alternative energy companies ? Oil companies (will share prices increase because of higher oil price or decrease because of reduced oil quantities) ?
JR
 
Why not post this on the existing thread, maybe therefore bringing the thread back on topic? Seems pointless having 2 parallel discussions on separate threads.
 
I felt that the existing thread was more aimed at the effect on the economy. My question relates to how a smart individual might prepare him/herself for such an impending problem, assuming that the scenario will play itself out as the doomsayers expect it to.

Feel free to merge threads if you can.
 
jrewing said:
This will cause the price of oil to double or triple. Stock markets will suffer hugely and the world economy could go into recession. Energy prices and inflation will rocket. Interest rates will go up, increasing mortgage repayments. People will curtail their car travel because of petrol prices.
Click to expand...

What you are saying here makes no sense. An increase in the price of oil is no more inflationary than an increase in the price of soybeans due to crop failure. In any case, how would increased interest rates help in a peak oil situation? Would increased borrowing costs help discover more oil?
 
I do well on most of things and others are within my control.
I live near a dart station, but cycle to work(have an old car also).

The only thing I fall down on, is the €400k mortgage that I have!
This could really start to hurt if interest rates hit the roof. The idea of moving to smaller house it not ideal.

How bad could interest rates get 10-15% ??
 
room305 said:
What you are saying here makes no sense. An increase in the price of oil is no more inflationary than an increase in the price of soybeans due to crop failure. In any case, how would increased interest rates help in a peak oil situation? Would increased borrowing costs help discover more oil?
Click to expand...

Hi room305,
I am only paraphrasing the doomsayers. Please feel free to correct any misrepresentations or false ideas.

I guess the inflation part comes from the price of almost all goods increasing due to much higher energy costs. Along with fuel for transport, electricity, anything made of plastic, all imported goods (due to the increased cost of transport) should rise in price.

Also, the price of transporting potatoes from Chile and kiwis from NZ may mean that locally-grown produce enjoying a resurgence, as it will become more competitive.
 
jrewing said:
Hi room305,
I am only paraphrasing the doomsayers. Please feel free to correct any misrepresentations or false ideas.

I guess the inflation part comes from the price of almost all goods increasing due to much higher energy costs. Along with fuel for transport, electricity, anything made of plastic, all imported goods (due to the increased cost of transport) should rise in price.
Click to expand...

I'd say the problem stems from the redefining of inflation as a rise in the general level of prices, rather than an increase in the supply of money. Although that is really a debate for another day or thread. Certainly it is possible that the price of many things will increase as a result of increased transport costs.

However, the market will find a solution if left unfettered as it always does. Vertical farming, local produce, alternative energy sources, reduced consumption. There are plenty of solutions and I certainly don't see a doomsday scenario playing out.

As for what to do? Just brush the dust off your "The coming apocalyptic collapse Y2K" manual and I'm sure there'll be some helpful and still relevant tips in there ;-)
 
Why not go out right now and buy a MASSIVE car like a Hummer and enjoy it while you can!
 
Well there would not be a lot the average person could do. Oil has an impact on everything, not just transport.

Stockpile tins of tuna maybe.
 
jrewing said:
1. Lifestyle

[*]Move to city where public transport is more available...?2. Housing
Click to expand...

In the very olden days all power came from land ownership and the landowners and farmers were wealthy. In the city you wouldnt have any land to grow anything and maybe that would turn out to be valuable. Agricultural land close to population centres would always be valuable in a worst case scenario.
You can take the view that the world is going to go backwards in which case many business models may change or disappear totally or you can look for a new paradigm. Energy is not running out any time soon. Only fossil fuels oil and gas are running low any time soon. There is still a lot of coal and oil sands. Other forms of energy are all around us to be tapped into and I believe people will innovate to tap into these.



jrewing said:
[*]Energy-efficient, well-insulated house using solar/wind power where possible.
Click to expand...

That should be happening regardless of when peak oil arrives and is the direction society is heading in right now.


jrewing said:
[*]Move to city where public transport is more available...?

[*]Location on public transport route.
Click to expand...

Are all the people in the commuter belt and in the country suddenly going to move to the city ? I doubt it . For one thing theres no room for them.
I would see people being forced to live sustainable lives wherever they are,


jrewing said:
[*]Reduce exposure to stock markets over 5 year period (if you expect a sudden big crash down the line) ? Move this money into safer investments...(savings a/c ?)
Click to expand...

All you can do investment wise is invest for now and now is always changing. I would love to know what safe actually means within the context of lost opportunity and inflation.


jrewing said:
[*]Reduce mortgage as quickly as possible in next years in expectation of increased interest rates, or buy smaller house ?
Click to expand...

You could always buy a farm in Argentina/Brasil. if you had the money. Brasil is a world leader in Biofuel. They run a high percentage of their vehicles on it and they grow it themselves. I read this somewhere but dont have the source at hand. You can always google it. I also read (which you can google also) that some high profile successful investors had bought ranches/farmland there because it is some of the cheapest fertile agricultural land in the world. However I think they bought a few years ago and you may have missed the first or second wave there.


jrewing said:
[*]Invest in alternative energy companies ? Oil companies (will share prices increase because of higher oil price or decrease because of reduced oil quantities) ?
Click to expand...

This is similar to the question I have asked myself here.



I think the companies who can afford to employ talent will innovate. Good talented management will drive a company forward if they have enough cash to invest in their ambitions.
 
jrewing said:
I felt that the existing thread was more aimed at the effect on the economy. My question relates to how a smart individual might prepare him/herself for such an impending problem, assuming that the scenario will play itself out as the doomsayers expect it to.

Feel free to merge threads if you can.
Click to expand...

The intention of the thread was not only to discuss the economic impact but the impact on individuals as well. Can we merge the two? I don't know how to do it.
 
One thing that is never mentioned in relation to resources running out or greenhouse gases is world population. Clearly the world population as it now stands and its projected growth cannot be sustained with current world resources, so either living standards have to go down dramatically or world population has to go down. In many western countries fertility rates have dropped and this goes hand in hand with increasing wealth. In my opinion this should be welcomed yet many western governments are perplexed at this development and are trying to reverse it by encouraging women to have babies and by imigration. At the same time they are trying to reduce greenhouse gases and consumption of resources like oil. Surely reducing human fertility should also not be discouraged.
 
The best way to prepare is to ignore this red herring. As the oil runs out we'll see work being conducted by the large oil companies using all the patents they've been buying over the last few decades on alternatives to oil. We'll see smaller, lighter ultra-efficient solar panels. We'll see human innovation in action. When the chips are down humanity will prevail.

Now play national anthem of choice.
 
If the price of oil trebles next year (for arguments sake) it could still cost the same price at the pumps (around 1.20) if the government choose to reduce the level of excise duty etc. on it.

Personally I would car pool (couldn't be bothered at the moment, even though 3 of my colleagues live nearby) I would grow vegetables, potatoes, apples, blackcurrants etc. in the garden, keep chickens etc. At the moment I am not bothered but if oil becomes too expensive a lot of the old ways will return reducing demand for oil.

Others who have small holdings would start keeping pigs and other animals for food again.

People with long abandoned bogs would start cutting turf again and people would plant a few trees for fuel.

People will just adjust back to using less oil.
 
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