I have the impression that oil is going to go like housing went in most of the world. Now there is no such thing as “Peak Housing”, in the sense that you can build as many homes as possible in almost anywhere to satisfy the demand, but housing prices just kept (and mostly keep in most of the world) on going up and up. And even with a decrease of 20% in house values in some parts of America, the prices and rents are way too high compared to a minimum wage for example. And why is this ? not because you can’t build homes, not because there aren’t already enough homes available, but simply because the “free market” thinks it is a good thing to have a rent cost more than a minimum wage, like rent at 800 dollars a month and minimum wage (in the rich USA) at 800 dollars a month. So the same will happen with gasoline, the “free market” is a market that goes in one direction, increase the number of poor people, decrease wages, increase the price of everything and makes rich people richer.
So why shouldn’t gasoline become a hundred dollars a gallon? Who loses? the poor? who cares? even if there are trillions of barrels of oil in the world even if peak oil is not true at all, even if all natural resources last a billion years, the “free market” has found it convenient to increase the price of everything, it doesn’t matter what, to the sky.
In fact for many years the price of rents have been higher than the minimum wage, the “free market” didn’t “correct” this, so why should it correct the price of something even more fundamental, a single point of failure, a point that you can really squeeze out of people like gasoline, a basic good like a home. When rents got higher than the minimum wage, no one noticed, no one said anything, so why should anyone notice gas at 100 dollars a gallon?
That is the “free market” where hard work earns you a “decent” salary, especially if one rich king owns all the homes in the world and has all the oil fields in the world; that is the freest market possible.
Actually the lower the house prices the higher the rents, since more people will be searching homes for rent. So the market did actually correct this, the lower the prices of homes the higher the rents. So if your minimum wage was once 800 dollars a month and rent was 800 dollars, now you get minimum wage maybe 900 dollars a month (because you do need to get some wage increase don’t you?) but the minimum rent will go to 1,200 dollars a month since everyone is looking for homes to rent and bidding up the prices. So you make negative 300 dollars a month. Now that is what I call a very efficient and ethically correct free market!
It is a process vs. products situation. We are fundamentally limited by processes, that is a constant flow of food, energy and water to keep us alive and living. Who controls the bottlenecks, who can block the flow of basic needs like water and energy can control the price of these needs and condition everything else.
So part of this flow of energy creates products like cars, homes, TVs etc. but what is greatly more important is the guarantee of having a steady flow of food, water and energy. The products become useless if the processes aren’t guaranteed, and in fact the processes are much more important than the products. Consumerism feeds on expanding products, optional products that create a flow of money that everyone feeds off of. But this flow really serves to buy the fundamental processes that are needed, the “cristalized” products are mostly an excuse to make the money flow, an excuse to justify the exchange of processes. So energy and water are in this sense real single points of failure.
TVs, computers or other products are not single points of failure. Homes are both a kind of process as a basic need and a product as a cristalized item.
There are only 2 real limits to growth and wealth, the depletion of natural resources and labor. You can create an infinite amount of “debt” since debt is just a convention, a human made contract, an invention, an excuse to activate labor. Money is just a symbol, an imaginary entity. Just pay everyone a normal to high salary, build billions of homes, just consume like crazy, it is all ok, it all goes, it can be done. After all, all the USA debt in the last years was consumption with plastic, loans, home equity loans etc. It really doesn’t matter if it will never be paid back, in fact the system is a kind of infinite resource system where you could buy anything, McMansions etc. it can be done, it doesn’t matter if it never is paid back.
The real limits will hit when natural resources are depleted and you can’t have a billion McMansions full of consumerist stuff inside like TVs, computers and 5 billion SUVs. Then the problems will be that natural resources will no longer be left and that labor can no longer be activated. In fact the only other limit is labor, in the form that you can’t find people to do certain jobs anymore, you can’t bring a million workers out in the deep sea to create huge oil rigs, you don’t have enough specialized workers in a number of fields, so the system becomes self limiting.
So it may last another 50 or 100 years, but globalization at 5, or 10 or 20 % growth per year will hit two huge walls: the complete depletion of natural resources and labor that no longer can work, is too lazy, is spoiled, or doesn’t have the drive or skills to pull it off anymore. The richer a society the weaker the labor component gets, people relax and simply consume, poverty activates labor. But when you have gone through the 2 billion poor and motivated workers now available in the world, labor too will have “Peaked”.