Much of this thread demonstrates the abysmal failure of schools to teach basic economics, and the absurd rhetoric that follows from that failure as people grasp different aspects of the fundamentals.

"Supply" and "Demand" are not properly thought of as numbers. Both of these are curves or functions. "Supply" is the number of barrels of oil that will be brought to market at a particular price. "Demand" is likewise the the number of barrels of oil that will be purchased at a particular price. There are all kinds of nuances and special circumstances, but the basic principle remains that the price will be where these two curves cross.

In the short term, our individual actions reflect movement along the demand curve. The fact that more of us will take the bus instead of driving is why the demand curve is lower at $120 than at $80. And the fact that someone else will buy and use the oil we gave up is why the demand curve is not that much lower.

In the longer term, lifestyle changes result in a lower demand curve. These changes mean that the price will be lower and the total amount of oil consumed will be lower because the curves will cross at at lower point. But the new cross over will not be lower by the amount of your personal reduction - the new demand curve is lower by the amount of your reduced consumption, but the crossover moves to an intermediate quantity.

So much of the disagreement on this thread is just people grasping different aspects of the truth. Price will go down because usage goes down, but usage goes down by less than the amount you have changed because the lower prices bring in some new users.

Energy and especially oil is a limited resource. It makes sense therefore to use it sparingly. It is not because, in a perfect market model, lower prices will permit people with less means to use what was not used by people who can afford high prices, that it should go on be dilapidated in poorly isolated houses or in cars that have a very poor fuel efficiency. The argument "if I save energy it will be used by the Chinese, Indians, Cambodians, Congolese..." is equivalent to "I prefer to throw away petrol to seeing people from poor countries using it."

In my opinion everybody should urgently save energy, with the biggest consumers supporting the brunt of the saving and the costs. Of course the fact that I almost never use my car is not immediately visible on the global scale, it is not even measurable. But it remains true that global energy usage is the sum of individual usage, there should be global action for fuel efficiency and diminishing CO2 and other pollutants, but the efficiency will come from the individual usage. In other words one can not deny individual responsibility ; neither should one take global responsibility (except perhaps some politicians and industrials tycoons, which I will not name :-)

Jacob

Thanks :goodposting:, to both of you. Now that we know a little more about the actual economic theory, can we say that the theory supports my claim that almost all fossil fuels are eventually going to be burnt?

Let's talk about behaviour changes. We change our behaviour, and the demand curve will go down a bit. Or not, if other countries change their behaviour in the other way. Let's say that it will increase a little less than if we don't change. In the same time, the oil fields empty, and the supply curve goes down. The price goes up. So far so good.

As the price goes up, renewable energies become more competitive, and replace a bit of the consumption, slowing down the price increase.

But unfortunately, they don't play in the same league. It's just plain cheap to drill oil, once you have the drilling rights, and nobody pays for the bad impacts on the environment.

So it will be cheaper to drill oil (not to buy it, but to drill!) until most of the currently being exploited oil fields are empty, and some more.

If we change our behaviour, this moment will be a little later, and the exploited oil will be a little less, but I hypothesize that it will not be of a order of magnitude.

So, my reaction is apathy and resignation.

Of course I have energy saving light bulbs and don't open the window when the heater is on, and I think about installing new better isolated ones, but that's only a matter of decency.

And of course I have some ideas about how to save Earth. What about a global fossil fuel tax that just double the price orf the barril or so, and goes to a fund that supports renewable energy production, in other words, subventions.

Or the deliberate choice not to exploit promising oil fields and to put them on nature conservation. This will increase the price and make renewables more competitive. Heck, if we are able to get rid of Nuclear power in Germany, why not of fossil power?

Resignated again, H.