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By JonC (registered) | Posted April 06, 2009 at 16:32:25
An elastic response is impossible for oil as the market can't make quick changes to infrastructure or rapid changes to where food and goods are produced or where people live.
Building society on the low cost of a non-renewable resource has a predictable result (ask me how I feel about nuclear power as an alternative, hint, even more limited than oil/coal). Now the world is criss-crossed by highways and we expect a constant supply of tropical fruit and to have everything made in China on the cheap. Most people don't even consider walking or biking or even taking transit to work a possibility. You don't even see car-pooling in the midst of rush hour. Hell, SUV sales are going back up.
It's uncomfortable for individuals to consider the future, because then they might have to think about not owning as much stuff or living in the city. So the media and politicians (by and large) don't discuss it (because who likes a buzz kill) and no one is going to bother planning for the future. But when the time finally comes (and it will), society can't change itself instantly (which supply side models assume). It will take decades and as we saw not so long ago, it sure as hell doesn't take that long for the cost of oil to ratchet up.
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