New book out today:
"The Fox Effect"
"The Fox Effect follows the career of Ailes... consultant for Richard Nixon, Ronald Reagan, and George H.W. Bush... president of Rupert Murdoch’s flagship conservative cable news network... political operative... extraordinary power and influence to spread a partisan political agenda that is at odds with long-established, widely held standards of fairness and objectivity in news reporting."
In the conversations leading to the creation of Fox News, the project was referred to as "GOP T.V.", "Grand Old Party Television".
When you are trying to hold a rational conversation with a heavy consumer of Fox product, there arises a great difficulty in agreeing on matters of simple fact.
http://www.amazon.com/Fox-Effect-Network-Propaganda-ebook/dp/B0051ANPQK
http://www.ushistory.org/gop/origins.htm
February 22, 2012
February 21, 2012
Are electric trucks now viable?
Yes, it looks that way, after a long period in which very low volumes made costs look high.
Here's an electric truck whose battery must cost less than $500/kWh: 80kWh @$500/kWh gives $40k, more than half of the sales price of $70k. This plumbing company expects their new trucks to reduce operating costs by about $7 per year, and capital costs must be dropping as well, as they last 3x as long:
"It's been a couple years since we first saw the Boulder Electric Vehicle prototype in action but now comes word that the company has delivered its very first production vehicle. The initial DV-500 (as it is affectionately called) has been sold to Denver-area Precision Plumbing,Heating & Cooling who have made a commitment to buy 20 of the all-electrics at a very reasonable-sounding $70,000 apiece.
In addition to obvious changes in appearance, its performance also differs slightly from the original. The production version boasts an 80-kWh battery pack made up of China-sourced lithium iron phosphate (LiFePO4) cells that weigh in at 1,300 lbs and are said to be good for 120 miles of range. Power comes from an 80-kW AC motor that gives the 7,000-lb truck a 70 mile-per-hour top speed. Charging can take up to eight hours.
Precision Plumbing's Tom Robichaud says that despite the higher up-front costs, he expects to save $6,000 to $8,000 per vehicle per year in lower operating costs and anticipates the trucks to be good for 300,000 miles. Currently, he says, the Sprinter vans he uses now are replaced after 100,000 miles. In anticipation of the electric fleet, the company has also installed a solar array at its facilities.
Boulder Electric Vehicle reportedly has five production lines set up and is busy building the vehicles for Precision and other customers. The company also has plans for a bigger truck that doubles the 500 cubic foot capacity of the DV-500. Hit the jump for a couple clips featuring Mr. Robichaud and his new promotionally wrapped plumbing van."
http://green.autoblog.com/2012/02/03/boulder-electric-vehicle-delivers-first-truck-to-precision-plumb/
"electric vehicles can markedly lower the costs of a fleet of delivery trucks. That’s the conclusion of a new MIT study showing that electric vehicles are not just environmentally friendly, but also have a potential economic upside for many kinds of businesses.
The study, conducted by researchers at MIT’s Center for Transportation and Logistics (CTL), finds that electric vehicles can cost 9 to 12 percent less to operate than trucks powered by diesel engines, when used to make deliveries on an everyday basis in big cities.
...there have been “no real surprises from a reliability perspective, but I was surprised by the drivers’ acceptance, to the point where they do not ever want to drive a diesel [truck] again.”
http://web.mit.edu/newsoffice/2012/ctl-electric-powered-trucks-0201.html
Here's an electric truck whose battery must cost less than $500/kWh: 80kWh @$500/kWh gives $40k, more than half of the sales price of $70k. This plumbing company expects their new trucks to reduce operating costs by about $7 per year, and capital costs must be dropping as well, as they last 3x as long:
"It's been a couple years since we first saw the Boulder Electric Vehicle prototype in action but now comes word that the company has delivered its very first production vehicle. The initial DV-500 (as it is affectionately called) has been sold to Denver-area Precision Plumbing,Heating & Cooling who have made a commitment to buy 20 of the all-electrics at a very reasonable-sounding $70,000 apiece.
In addition to obvious changes in appearance, its performance also differs slightly from the original. The production version boasts an 80-kWh battery pack made up of China-sourced lithium iron phosphate (LiFePO4) cells that weigh in at 1,300 lbs and are said to be good for 120 miles of range. Power comes from an 80-kW AC motor that gives the 7,000-lb truck a 70 mile-per-hour top speed. Charging can take up to eight hours.
Precision Plumbing's Tom Robichaud says that despite the higher up-front costs, he expects to save $6,000 to $8,000 per vehicle per year in lower operating costs and anticipates the trucks to be good for 300,000 miles. Currently, he says, the Sprinter vans he uses now are replaced after 100,000 miles. In anticipation of the electric fleet, the company has also installed a solar array at its facilities.
Boulder Electric Vehicle reportedly has five production lines set up and is busy building the vehicles for Precision and other customers. The company also has plans for a bigger truck that doubles the 500 cubic foot capacity of the DV-500. Hit the jump for a couple clips featuring Mr. Robichaud and his new promotionally wrapped plumbing van."
http://green.autoblog.com/2012/02/03/boulder-electric-vehicle-delivers-first-truck-to-precision-plumb/
"electric vehicles can markedly lower the costs of a fleet of delivery trucks. That’s the conclusion of a new MIT study showing that electric vehicles are not just environmentally friendly, but also have a potential economic upside for many kinds of businesses.
The study, conducted by researchers at MIT’s Center for Transportation and Logistics (CTL), finds that electric vehicles can cost 9 to 12 percent less to operate than trucks powered by diesel engines, when used to make deliveries on an everyday basis in big cities.
...there have been “no real surprises from a reliability perspective, but I was surprised by the drivers’ acceptance, to the point where they do not ever want to drive a diesel [truck] again.”
http://web.mit.edu/newsoffice/2012/ctl-electric-powered-trucks-0201.html
February 11, 2012
Are fossil fuels better than wind, solar and nuclear?
No.
Fossil fuels in general, and oil in particular, appeared to be great in their day, but they are much more expensive than they appear (IOW, they have large externalities) and they can and should be replaced ASAP.
So, what's wrong with the common view that they are?
First, green house gas emissions are important. The scientific consensus is that GHGs are a big problem, and there is a large risk that they are a very big problem. That alone would push fossil fuels down below solar, wind and nuclear.
Second, fossil fuels are not reliable. The US is still fighting a $2 trillion war to make access to oil slightly more reliable. An oil shock was a significant contributor to the 2008 recession, and has contributed to many recessions before that.
The US is effectively at war with the Middle East, albeit at a very low level of intensity. That means a war mentality, with circumscribed civil liberties, a vastly expanded military-industrial complex, an enormous diversion of engineering talent away from productive uses towards war technology (UAVs, etc).
Roosevelt struck a Faustian bargain with KSA, and the US has been embroiled in the ME ever since. Look at the US intervention in Iran in 1954, which caused so much grief starting with the anti-US/Shah uprising in 1979. The US has been the Great Satan in Iran ever since, with pretty good justification.
Have you ever wondered why US television is dominated by gory police procedurals (CSI, CSI-Miami, Naval-CIS, Law and Order in many flavors, etc,etc)? Americans live with a strong background anxiety, due to fear of terrorism (aka guerrilla warfare, aka asymmetric warfare), and that kind of programming conveys reassurance that the "authorities" have everything under control.
Third, oil is very, very costly right now. The US, and other oil importers, is transferring vast income and wealth to exporters, every day. The war discussed above costs somewhere above $500B every year: that's around $150 per barrel of imported oil! Just as importantly, the kind of background anxiety discussed above exacts a very, very high cost.
Fourth, the problem of renewable intermittency is not so important. In the medium term Demand Side Management and fossil fuel backup will work just fine. In the long term , overbuilding, and geographic diversity will provide most of what's needed, and synthetic fuels are perfectly viable for the small remaining percentage (they can be produced with current tech, at a price premium).
Fifth, oil isn't hard to replace. Land travel is very straightforward: freight can go to rail and short-haul electric trucks; passenger travel can go to EREVs (with ethanol for the remaining 10% of fuel needed for longer trips) and/or rail with car-shared EVs.
Water shipping and air travel is a small percentage of fuel consumption. They can be made much more efficient; wind and solar can provide a large percentage of water shipping energy; and synthetic fuels and biomass can provide the relatively small amount of fuel still needed.
Sixth, life without fossil fuels will be rather better: cleaner, just as affordable, nicer in many ways. For example, EVs have better handling and performance, are quieter, easier to own and maintain, longer lived and overall rather cheaper. I use relatively little FF, and feel my life is rather better for it. My well insulated house needs less noisy HVAC; my electric train is safer, and has a "chauffeur" who allows me to relax and meditate, work or read for enjoyment.
Perhaps as important, EVs won't require any oil wars, or anti-"terror" campaigns to keep viable. No more screening before flying, or worrying before using the subway. Yay.
Fossil fuels/oil are definitely not superior to the alternatives.
Legacy FF industries are using scare tactics to keep us addicted to FF. The truth is that existing technologies (efficiency; wind, solar and nuclear; rail, EVs, biomass and synthetic fuel) can provide energy that is cleaner, more scalable, more affordable and at least as reliable.
Oil is very costly, right now. We need to replace it ASAP!
Fossil fuels in general, and oil in particular, appeared to be great in their day, but they are much more expensive than they appear (IOW, they have large externalities) and they can and should be replaced ASAP.
So, what's wrong with the common view that they are?
First, green house gas emissions are important. The scientific consensus is that GHGs are a big problem, and there is a large risk that they are a very big problem. That alone would push fossil fuels down below solar, wind and nuclear.
Second, fossil fuels are not reliable. The US is still fighting a $2 trillion war to make access to oil slightly more reliable. An oil shock was a significant contributor to the 2008 recession, and has contributed to many recessions before that.
The US is effectively at war with the Middle East, albeit at a very low level of intensity. That means a war mentality, with circumscribed civil liberties, a vastly expanded military-industrial complex, an enormous diversion of engineering talent away from productive uses towards war technology (UAVs, etc).
Roosevelt struck a Faustian bargain with KSA, and the US has been embroiled in the ME ever since. Look at the US intervention in Iran in 1954, which caused so much grief starting with the anti-US/Shah uprising in 1979. The US has been the Great Satan in Iran ever since, with pretty good justification.
Have you ever wondered why US television is dominated by gory police procedurals (CSI, CSI-Miami, Naval-CIS, Law and Order in many flavors, etc,etc)? Americans live with a strong background anxiety, due to fear of terrorism (aka guerrilla warfare, aka asymmetric warfare), and that kind of programming conveys reassurance that the "authorities" have everything under control.
Third, oil is very, very costly right now. The US, and other oil importers, is transferring vast income and wealth to exporters, every day. The war discussed above costs somewhere above $500B every year: that's around $150 per barrel of imported oil! Just as importantly, the kind of background anxiety discussed above exacts a very, very high cost.
Fourth, the problem of renewable intermittency is not so important. In the medium term Demand Side Management and fossil fuel backup will work just fine. In the long term , overbuilding, and geographic diversity will provide most of what's needed, and synthetic fuels are perfectly viable for the small remaining percentage (they can be produced with current tech, at a price premium).
Fifth, oil isn't hard to replace. Land travel is very straightforward: freight can go to rail and short-haul electric trucks; passenger travel can go to EREVs (with ethanol for the remaining 10% of fuel needed for longer trips) and/or rail with car-shared EVs.
Water shipping and air travel is a small percentage of fuel consumption. They can be made much more efficient; wind and solar can provide a large percentage of water shipping energy; and synthetic fuels and biomass can provide the relatively small amount of fuel still needed.
Sixth, life without fossil fuels will be rather better: cleaner, just as affordable, nicer in many ways. For example, EVs have better handling and performance, are quieter, easier to own and maintain, longer lived and overall rather cheaper. I use relatively little FF, and feel my life is rather better for it. My well insulated house needs less noisy HVAC; my electric train is safer, and has a "chauffeur" who allows me to relax and meditate, work or read for enjoyment.
Perhaps as important, EVs won't require any oil wars, or anti-"terror" campaigns to keep viable. No more screening before flying, or worrying before using the subway. Yay.
Fossil fuels/oil are definitely not superior to the alternatives.
Legacy FF industries are using scare tactics to keep us addicted to FF. The truth is that existing technologies (efficiency; wind, solar and nuclear; rail, EVs, biomass and synthetic fuel) can provide energy that is cleaner, more scalable, more affordable and at least as reliable.
Oil is very costly, right now. We need to replace it ASAP!
January 12, 2012
Will EVs and hybrids take off quickly? (part 2)
Probably not soon. Even though hybrids and EVs are competitive with conventional ICE vehicles, they won't sell well until until they're clearly cheaper. Hybrids and EVs are much cheaper, if we include all of the external costs of oil - oil wars, pollution, etc, etc. But that's not priced into the vehicles:
Hybrids:
"The challenge with selling hybrids is that gasoline engines have become more efficient and the cost of hybrids haven't come down fast enough to justify the added expense for many buyers, said David Champion, senior director of the Auto Test Center at the Yonkers, New York, magazine Consumer Reports.
He pointed to Honda Motor Co.'s Civic, which gets 32 mpg in combined city and highway mileage, and the Civic hybrid, which gets 44 mpg. The hybrid version of the car saves a consumer $322 in fuel a year, according to the Environmental Protection Agency. Given the added sticker price, it would take more than six years to get the money back on a similarly equipped car at today's fuel prices.
Mike Jackson, chief executive of Fort Lauderdale, Florida auto retail chain AutoNation Inc., said that 75 percent of customers come into his showrooms and want to talk about hybrids. Only about 2.5 percent of AutoNation sales are hybrids. "What happens from the 75 percent consideration to the 2.5 percent commitment?" Jackson said in an interview. "They look at the price premium for the technology, which is already subsidized and discounted, and say 'the payback period is too long; not for me.' It's a back-of-the envelope conversation on the part of the American consumer."
EVs
"The battery in an electric car still adds $10,000 to the price of a car at current technology costs and it will be difficult to reduce that penalty in the near future, he said."
http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/01/10/bloomberg_articlesLXK78V6K50XT.DTL&ao=all
Change is difficult: for most people to move to something new requires a strong incentive, not something that seems roughly as good as what they have now.
An EV will save about $2,000 per year over the average US vehicle - the $20,000 savings over 10 years is clearly worth it, but a 5 year payback just feels too long for the average consumer.
Hybrids:
"The challenge with selling hybrids is that gasoline engines have become more efficient and the cost of hybrids haven't come down fast enough to justify the added expense for many buyers, said David Champion, senior director of the Auto Test Center at the Yonkers, New York, magazine Consumer Reports.
He pointed to Honda Motor Co.'s Civic, which gets 32 mpg in combined city and highway mileage, and the Civic hybrid, which gets 44 mpg. The hybrid version of the car saves a consumer $322 in fuel a year, according to the Environmental Protection Agency. Given the added sticker price, it would take more than six years to get the money back on a similarly equipped car at today's fuel prices.
Mike Jackson, chief executive of Fort Lauderdale, Florida auto retail chain AutoNation Inc., said that 75 percent of customers come into his showrooms and want to talk about hybrids. Only about 2.5 percent of AutoNation sales are hybrids. "What happens from the 75 percent consideration to the 2.5 percent commitment?" Jackson said in an interview. "They look at the price premium for the technology, which is already subsidized and discounted, and say 'the payback period is too long; not for me.' It's a back-of-the envelope conversation on the part of the American consumer."
EVs
"The battery in an electric car still adds $10,000 to the price of a car at current technology costs and it will be difficult to reduce that penalty in the near future, he said."
http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/01/10/bloomberg_articlesLXK78V6K50XT.DTL&ao=all
Change is difficult: for most people to move to something new requires a strong incentive, not something that seems roughly as good as what they have now.
An EV will save about $2,000 per year over the average US vehicle - the $20,000 savings over 10 years is clearly worth it, but a 5 year payback just feels too long for the average consumer.
January 9, 2012
What should energy books convey?
They should spend some time discussing markets.
Market critics need to be reminded of the virtues of markets: they're decentralized and can start working very quickly; they process an enormous amount of information into a simple price signal; with time to work, and with proper regulation they're extremely powerful, increasing supply, reducing consumption and implementing alternatives and substitutes; and they prevent the shortages, hoarding and misallocation of investment that can come from price controls, subsidies and rationing.
Market enthusiasts need to be reminded of the failures and shortcomings of unregulated markets: they don't include externalities like pollution (including climate change) and security concerns ($2T oil wars, anyone); price signals can take time to bring a response (i.e., short-term elasticity can be very low, and capital expenditure and turnover takes time); and poor consumers are affected by ability to pay.
Pigovian taxes (like a carbon, or fuel tax) are a marvelous compromise between the extremes of stifling regulation and the excesses of unbridled big business: they use price signals to direct investment where it needs to go.
Unfortunately, Pigovian taxes effectiveness means that the legacy industries that they would hurt fight against them desperately. They much prefer subsidies, and Cap and Trade's slowness and labyrinthian complexity and susceptibility to manipulation suits them just fine.
We need more democracy, to lessen the power of entrenched minorities that fight change behind the scenes. We need better media (internet?) to fight the misinformation broadcast by these minorities and their allies (Fox news, anyone?).
Markets sometimes seem to not work because market participants don't have good information: if communication about energy does nothing else but convince people that high oil prices are here to stay, and that they should move from short-term non-responses to long-term aggressive adaptation, it will have succeeded.
Market critics need to be reminded of the virtues of markets: they're decentralized and can start working very quickly; they process an enormous amount of information into a simple price signal; with time to work, and with proper regulation they're extremely powerful, increasing supply, reducing consumption and implementing alternatives and substitutes; and they prevent the shortages, hoarding and misallocation of investment that can come from price controls, subsidies and rationing.
Market enthusiasts need to be reminded of the failures and shortcomings of unregulated markets: they don't include externalities like pollution (including climate change) and security concerns ($2T oil wars, anyone); price signals can take time to bring a response (i.e., short-term elasticity can be very low, and capital expenditure and turnover takes time); and poor consumers are affected by ability to pay.
Pigovian taxes (like a carbon, or fuel tax) are a marvelous compromise between the extremes of stifling regulation and the excesses of unbridled big business: they use price signals to direct investment where it needs to go.
Unfortunately, Pigovian taxes effectiveness means that the legacy industries that they would hurt fight against them desperately. They much prefer subsidies, and Cap and Trade's slowness and labyrinthian complexity and susceptibility to manipulation suits them just fine.
We need more democracy, to lessen the power of entrenched minorities that fight change behind the scenes. We need better media (internet?) to fight the misinformation broadcast by these minorities and their allies (Fox news, anyone?).
Markets sometimes seem to not work because market participants don't have good information: if communication about energy does nothing else but convince people that high oil prices are here to stay, and that they should move from short-term non-responses to long-term aggressive adaptation, it will have succeeded.
December 18, 2011
Can the US raise oil production enough to make N. America oil independent?
Yes, that's very likely (although the most important factor, by far, is declining consumption) But, that's not good enough. The whole world needs to kick it's addiction to oil:
1) N. American oil independence isn't nearly good enough: imports from Canada and Mexico hurt the balance of trade just as much as Saudi imports.
2) US oil independence isn't nearly good enough:
a) import dependence for many other countries makes their economies vulnerable to oil shocks - that leaves the US almost as vulnerable as it is now.
b) import dependence for many other countries makes them militarily vulnerable - that's unacceptable to the US (that's realpolitik).
c) The US would still be vulnerable to the disruption of oil shocks in the form of high prices.
3) oil is too expensive, even if it's domestic.
4) oil is polluting.
------------------------------------------
That said, I think intellectual rigor/honesty demands that we acknowledge that US oil production is rising due to price incentives.
The Bakken oil's production peaked in 1992, and reached a low point in 2004. Anyone looking at that and looking no further than 2004 would see a classic peak. It hasn't peaked, like gold mining for instance: the current level is far above the peak, which the gold analogy wouldn't predict. https://www.dmr.nd.gov/oilgas/stats/statisticsvw.asp
Just as important, Bakken production is very profitable.
One might ask: "Haven't Bakken production increases only taken up the slack created by declines in Alaskan production? I'd say that it's misleading to pair those two things. It's a way of saying that we can't raise US production, and that's not realistic. Overall US liquids production has risen pretty significantly from it's bottom several years ago.
The lesson here: prices and market responses are still important, even for oil. it's not all geology: if the price rises, supply will respond in a significant way.
Again, we need to transition away from oil ASAP. Recent increases in domestic production don't change that at all.
1) N. American oil independence isn't nearly good enough: imports from Canada and Mexico hurt the balance of trade just as much as Saudi imports.
2) US oil independence isn't nearly good enough:
a) import dependence for many other countries makes their economies vulnerable to oil shocks - that leaves the US almost as vulnerable as it is now.
b) import dependence for many other countries makes them militarily vulnerable - that's unacceptable to the US (that's realpolitik).
c) The US would still be vulnerable to the disruption of oil shocks in the form of high prices.
3) oil is too expensive, even if it's domestic.
4) oil is polluting.
------------------------------------------
That said, I think intellectual rigor/honesty demands that we acknowledge that US oil production is rising due to price incentives.
The Bakken oil's production peaked in 1992, and reached a low point in 2004. Anyone looking at that and looking no further than 2004 would see a classic peak. It hasn't peaked, like gold mining for instance: the current level is far above the peak, which the gold analogy wouldn't predict. https://www.dmr.nd.gov/oilgas/stats/statisticsvw.asp
Just as important, Bakken production is very profitable.
One might ask: "Haven't Bakken production increases only taken up the slack created by declines in Alaskan production? I'd say that it's misleading to pair those two things. It's a way of saying that we can't raise US production, and that's not realistic. Overall US liquids production has risen pretty significantly from it's bottom several years ago.
The lesson here: prices and market responses are still important, even for oil. it's not all geology: if the price rises, supply will respond in a significant way.
Again, we need to transition away from oil ASAP. Recent increases in domestic production don't change that at all.
November 9, 2011
Will developing economies get greater value from oil, and therefore out-bid the US?
Not really. Consumption of marginal value is...of marginal value. The US doesn't really lose much if it cuts down on fuel consumption that doesn't benefit the user very much.
For example, if people use a Prius instead of a Chevy Tahoe (reducing fuel consumption by 75%), they may have lost a little bit of status, comfort, acceleration and crash safety, but...they get to work just fine.
Similarly, if they move from a Prius to a Volt (reducing fuel consumption by another 75%, to the point that ethanol could provide all of the non-electric miles), they may pay a bit more upfront, but over the Volt's lifetime they'll come out ahead. A little frontloading of expenses seems like a pretty small price to pay, especially when a Volt (like EVs in general) has much better road performance.
There are many more examples: shipping companies may lose a tiny bit of flexibility by moving from trucks to rail; water freight may have to retrofit skysails, reduce speed a little (a 20% speed reduction gives a 50% fuel consumption reduction), and eventually go to specialized batteries which might require more stops in port for battery switching; makers of packaging may have to find ways to maintain structural strength while reducing plastic content; chemical companies may have to add a process step or two to use non-oil sources of hydrocarbons; middle income shoppers may go online, and consolidate a few trips while they're waiting for their Prius to arrive; lower income drivers will have to go to lower-status higher-mileage older small cars (whose depreciation cost is so low that it offsets higher repair costs) while they wait for Priuses to arrive in used car lots; telecommuting would make managers uncomfortable.
None of these are a really big deal - their development diverts R&D away from other productive uses, and slow the economy down a bit during the transition, but it's not TEOTWAWKI.
In the long-term, oil consumption will be strongly non-linear. Above about $80, investment grows in alternatives, especially batteries. As both R&D and manufacturing volumes increase, innovation and economies of scale are creating disruptive competitors whose costs will reasonably soon start to fall well below the old oil-based price norms - at that point oil consumption will continue to fall even if oil prices start falling.
At that point, oil exporters will be in deep trouble, and wish they had saved as many of those T-bills as they could....
For example, if people use a Prius instead of a Chevy Tahoe (reducing fuel consumption by 75%), they may have lost a little bit of status, comfort, acceleration and crash safety, but...they get to work just fine.
Similarly, if they move from a Prius to a Volt (reducing fuel consumption by another 75%, to the point that ethanol could provide all of the non-electric miles), they may pay a bit more upfront, but over the Volt's lifetime they'll come out ahead. A little frontloading of expenses seems like a pretty small price to pay, especially when a Volt (like EVs in general) has much better road performance.
There are many more examples: shipping companies may lose a tiny bit of flexibility by moving from trucks to rail; water freight may have to retrofit skysails, reduce speed a little (a 20% speed reduction gives a 50% fuel consumption reduction), and eventually go to specialized batteries which might require more stops in port for battery switching; makers of packaging may have to find ways to maintain structural strength while reducing plastic content; chemical companies may have to add a process step or two to use non-oil sources of hydrocarbons; middle income shoppers may go online, and consolidate a few trips while they're waiting for their Prius to arrive; lower income drivers will have to go to lower-status higher-mileage older small cars (whose depreciation cost is so low that it offsets higher repair costs) while they wait for Priuses to arrive in used car lots; telecommuting would make managers uncomfortable.
None of these are a really big deal - their development diverts R&D away from other productive uses, and slow the economy down a bit during the transition, but it's not TEOTWAWKI.
In the long-term, oil consumption will be strongly non-linear. Above about $80, investment grows in alternatives, especially batteries. As both R&D and manufacturing volumes increase, innovation and economies of scale are creating disruptive competitors whose costs will reasonably soon start to fall well below the old oil-based price norms - at that point oil consumption will continue to fall even if oil prices start falling.
At that point, oil exporters will be in deep trouble, and wish they had saved as many of those T-bills as they could....
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