free html hit counter Peak Oil Debunked: 367. TELEPRESENCE

Wednesday, July 09, 2008


My model of peak oil is the biological process of succession. As Joel E. Cohen writes in his classic "How Many People Can the Earth Support?":
Different species have different requirements for a given element, as Liebig knew. Consequently, when one element is limited in a community of species, population growth typically does not grind to a halt; rather, a species that is less constrained by that limiting element replaces another that is more constrained in a process called succession.(P. 242)
The technological/industrial analog of this process is becoming increasingly obvious in many areas. As oil prices rise, truckers are getting hit hard, but rail and barges are booming. SUV sales are plummeting, but electric and gas scooters are on the rise. Fishermen are suffering, but aquaculture is thriving. It seems that for every "species" (i.e. industry) that is withering under high oil prices, there is always a less dependent corresponding industry that is surging to fill the vacuum. The dinosaurs are dying, but scurrying little rodents are rapidly breeding in their vacated niche.

Another good example is the rise of telepresence as an adaptation to the decline in airlines and business travel. Cisco has developed a new system called "TelePresence" described in this video (and many others on youtube):

This product is growing at a phenomenal rate, and saving Cisco very large sums of money:
Charles Stucki, vice president and general manager of Cisco Telepresence Systems, said the teleconferencing technology is their fastest-growing new product in the company's history.

Of the companies that have implemented use of this new technology, Hsieh said it has likely paid for itself multiple times over just in travel cost reduction.

Cisco CEO John Chambers, said Cisco has cut its own global travel budget by $180,000,000 over the past year using the aforementioned technology.Source
And that is just one company and one application. A similar technique is being developed for use in medicine:

Clearly this technology has a bright future, and is only going to get better. It's also going to save massive volumes of wasted transport fuel. It inspires the imagination -- a futuristic world where people are even more mobile than they are now, even though no one is actually moving.
by JD


At Wednesday, July 9, 2008 at 5:49:00 PM PDT, Blogger JD said...

As usual, please use the Name/URL option (you don't have to register, just enter a screen-name) or sign your anonymous post at the bottom. The conversation is better without multiple anons.

At Wednesday, July 9, 2008 at 5:52:00 PM PDT, Anonymous benny "peak demand" cole said...

What is interesting is that once these technologies get established, they don't tend to go away...even after oil prices start to slide. A guy has his scooter, even if gasoline goes down to $2 a gallon. He will still use it, maybe just on nice days etc., but his consumption is permanently crimped....Costco won't want spend money on travel, even if airflights become cheaper again...
That is why we may yet see The Mother of all Oil Price Collapses...the demand never comes back, even as supply keeps going up....

At Wednesday, July 9, 2008 at 7:51:00 PM PDT, Anonymous sniperslaststand said...

benny "peak demand" cole said...

"What is interesting is that once these technologies get established, they don't tend to go away..."

Some reasonable technologies grounding employers' cost cutting practices will certainly stay 4ever.

"[...] even after oil prices start to slide. A guy has his scooter, even if gasoline goes down to $2 a gallon. He will still use it, maybe just on nice days etc., but his consumption is permanently crimped...."

By no means this is going to be the case provided oil prices are down in any imagineable future.

Consumerism and conspicuous consumption are born again anytime prices allow them to exist on a large scale, since they remain deeply in mankind nature and were there thousands years ago with us as well. So the bloke from your story would trade a moped for a big V8 ASAP.

"[...] Costco won't want spend money on travel, even if airflights become cheaper again...
That is why we may yet see The Mother of all Oil Price Collapses...the demand never comes back, even as supply keeps going up...."

Same here. People will jet set if only prices allow this. Recall any crises in the past, oil or stock related and take a look back what followed them.

PS. The raise of telecommuting was expected and intense developments in this area just simply fit the big picture of where we are in terms of oil reality.

At Thursday, July 10, 2008 at 2:17:00 AM PDT, Blogger FR said...

This is very promising technology, but it makes me worry about something. For those of us that live in the developed world, are we still going to have any jobs? This allows companies to outsource so many jobs to developing nations with cheap labor. For example, why would an American company hire an American to be, say, a software engineer or financial analyst? With technology like this, it seems like someone in India can do it just as well.

Don't get me wrong: I want the developing nations to get rich. Fifty years from now, the whole world will be a better place with a strong global middle class. In the meantime, however, it seems that the middle class in the developed world will be gutted.

I hope I'm wrong. (And yes, T. Friedman's book does freak me out sometimes, thanks for asking.)

At Thursday, July 10, 2008 at 5:00:00 AM PDT, Anonymous Bill Carter said...

Don't worry, fr. Even incompetent and sociopathic college professors will always have tenure, and government employees have sinecured work. We will all be working for the government soon, at current rates of government growth.

Peak oil isn't the problem. Peak stupidity--lack of imagination, creativity, ingenuity, innovation, inventiveness etc.--is the problem.

At Thursday, July 10, 2008 at 7:54:00 AM PDT, Anonymous mdf said...

I dunno, Mr. Carter, "Peak Stupidity" suggests that we are in for a decline ...

sniperslaststand: "So the bloke from your story would trade a moped for a big V8 ASAP."

Would people rip the insulation out of their homes if the price of heating oil or gas dropped? Would they sell their house and buy a less efficient one instead?

Would they demand less efficient houses, simply because they cost less up-front?

Prius sales were pretty good even before this year's spike in fuel costs.

Naturally, there are going some give and take as the external cost environment changes, but there is a built-in hysteresis, and (more importantly) there are many other benefits to energy efficiency than simple cost. Super-insulated houses are much more comfortable, HEV/PHEV/BEV vehicles are quieter, more low-end ooomph, last longer, easier to maintain, and so on.

So I predict that guy with the moped won't be buying a stupid V8. Instead, he'll be getting some fancy BEV thing instead.

At Thursday, July 10, 2008 at 9:39:00 AM PDT, Anonymous jd was right said...

"So the bloke from your story would trade a moped for a big V8 ASAP."

no he won't. you see he has to think that gas prices will go down and stay down. peak oil will cause the mindset of conservation to exist for longer than the price stays down.

At Thursday, July 10, 2008 at 11:24:00 AM PDT, Anonymous kaptain krinkly said...

bill carter,

well said about the stupidity. though, i'm not sure we've peaked yet. i think there's still room for growth in that area.

At Thursday, July 10, 2008 at 1:25:00 PM PDT, Anonymous Brother Cadfan said...

Speaking of 'sociopathic college profs'

Today I was bored in work writing a grant application (to take me to 2012 so if the doomers are right I will be diverting some money into ammo... Oh, in Britain we're not allowed that. Damn)

I ran a Scopus search for peer reviewed articles on peak oil/coal topics. Interesting results. There is actually a massive dearth of material in peer-reviewed material on oil reserves, Ghawar, peak oil. The doomer fav is of course EROEI. Funny there is a dearth of material on this. Curious. There is a good (peer reviewed, unlike theoildrum) article on economic simulations of peak oil, I'm sure JD would enjoy if he has not read it. (I will gladly summerise any papers people are unable to access, if I am subscribed)

Meanwhile, oil prices are going up because the oil trader cowards are worried about that great world power, Iran (go get youselves some backbone.) So I am designing a Faraday cage to protect me from the microwave weapon the Daily Mail says will be deployed soon. You think Im joking!!?? :)

At Thursday, July 10, 2008 at 2:48:00 PM PDT, Blogger bc said...

There is actually a massive dearth of material in peer-reviewed material on oil reserves, Ghawar, peak oil.

Unlike GW, PO seems to fall between disciplines. It just doesn't attract widespread academic interest.

At Thursday, July 10, 2008 at 7:35:00 PM PDT, Blogger Kirk said...

Imagine the pornographic uses for "Telepresence"....

As for attitudes regarding gas prices, we had a gas crunch 30 years ago -- yet when prices receded, we went back to our old ways. Instead of big cars, we drive big SUV's to skirt around EPA mileage requirements. As for homes, they're 2.5 times larger than they were 50 years ago -- big homes requiring lots of power to heat and cool, along with big commutes that guzzle gas even if you're driving a hybrid.

Some technologies won't go away, but they'll have to make a lot of economic sense in order to do so.

At Friday, July 11, 2008 at 8:39:00 AM PDT, Anonymous Brother Cadfan said...

Its interesting to speculate with this idea:

Is it possible that, in contradiction to those who wish us Pol Pot fantasies on us, that we will instead evolve into some form of (even more) sedentary life form in the ultimate future?

At Friday, July 11, 2008 at 12:41:00 PM PDT, Anonymous Benny "peak demand" cole said...

Kirk and Others-
Take a look at oil consumption in developed countries following the last price spike 1978-80, on the BP website.
US oil consumption peaked in 1978, and did not reach that level again until 1999 -- more than 21 years, and on a much larger economy, with more people.
Yes, we did start going up again when oil prices sank, sank, sank....still, we hardly use more oil now than in 1978, and soon we will dip below that amount.
This price crunch, if more sustained, will resukt in even longer and deeper declines in consumption....
I think we have seen Peak demand already in the USA, and for lower mpg cars are removed from the fleet, the downward rend will be rirreversible....sheesh, there are 18-wheelers coming to market with double the mpg of the ones on the road now....
If EVs (GM-Volt) become widespread, they will depress consumption for decades no matter what happens to oil prices...
there are only two ways to go from here: Either consumption keeps faling, or oil prices fall...

At Friday, July 11, 2008 at 4:35:00 PM PDT, Blogger JD said...

High Cost of Driving Ignites Online Classes Boom:

Like Mr. Gibbons, thousands of students nationwide, including many who were previously reluctant to study online, have suddenly decided to take one or more college classes over the Internet.

“Gas prices have pushed people over the edge,” said Georglyn Davidson, director of online learning at Bucks County Community College, where Mr. Gibbons studies, and where online enrollments are up 35 percent this summer over last year.

The vast majority of the nation’s 15 million college students — at least 79 percent — live off campus, and with gas prices above $4 a gallon, many are seeking to cut commuting costs by studying online. Colleges from Massachusetts and Florida to Texas to Oregon have reported significant online enrollment increases for summer sessions, with student numbers in some cases 50 percent or 100 percent higher than last year.

At Saturday, July 12, 2008 at 2:03:00 AM PDT, Anonymous Brother Cadfan said...

This might be of interest to some:

At Sunday, July 13, 2008 at 8:02:00 AM PDT, Anonymous watermelonpunch said...

"So the bloke from your story would trade a moped for a big V8 ASAP."

I disagree with this idea. I think, yes, SOME people in the moped bloke's position would trade it in for a V8 or god knows what... But I think at least some people in his position would be 'once bitten, twice shy', and worried that prices may again go up, and much rather be ready for that.

And I think of it this way... Once people feel pressured to invest in something to be more efficient... Many of those people won't be in a position to flip-flop back. And of those who can afford to, many of them will see the sense in not doing so, and choose to spend any extra caused by price dips in some other more efficient, more profitable, or more desirable way.

At Sunday, July 13, 2008 at 5:42:00 PM PDT, Anonymous stuck in shizuoka said...

I have two quick points to mention here. One of which, I would appreciate anyone--especially Benny Cole and/or JD to comment on.

Firstly, I agree with the idea of telepresence having the potential to lower gasoline demand and, simultaneously to offer new business potential and even a pardigm shift. Two cases in point. I encouraged my wife to approach her company to allow her to work from home and from the computer. The head office accepted and is now allowing several staff to do the same. It's a win-win situation. She goes "to work" just once every two weeks but works primarily from home using the internet, telephone and Skype. One less person using ICE transportation.

Also, my university in Japan is now conducting classes in English with its sister school in Ohio, through two-way "telepresence" technology. I am flying to Canada this summer to approach two other schools to enter the same partnership agreement. Less students will be flying overseas to attend foreign universities but they can still "attend classes" in universities overseas. It looks promising. I also hope this will allow me to keep my job here and I'm presenting on this very topic at an upcoming conference to promote the idea.

As for my second point--and to address Benny and JD directly (or whoever else). Previously, in JDs posting on demand dropping in the US, I wrote

"are the figures here related to lower imports of crude or an actual rise in gasoline stocks, because of lack of demand?

To put it another way, how much of this drop in demand could be attributed to use of existing oil in storage (with less crude being imported to refineries)"

No one addressed this but, in a recent CNBC broadcast, Matthew Simmons addressed this idea--that current inventories are dropping and that THIS is being attributed to demand destruction;


Opinions? I thought about this weeks ago but no data from the EIA seems to clarify HOW we measure demand destruction. And, should the measurement be tied to gasoline/diesel inventories, could we not be in a whole lot of trouble, under the right (wrong?) circumstances?

Stuck in Shizuoka.

At Monday, July 14, 2008 at 5:24:00 AM PDT, Blogger JD said...

SIS: "are the figures here related to lower imports of crude or an actual rise in gasoline stocks, because of lack of demand?

To put it another way, how much of this drop in demand could be attributed to use of existing oil in storage (with less crude being imported to refineries)"

The data I gave on demand destruction comes from the following Table.
Calculating from the table, we get the following year-on-year drops for U.S. oil consumption so far in 2008:

Jan.: Down 445,000bd
Feb.: Down 756,000bd
March: Down 797,000bd
April: Down 811,000bd

Jan. - April: Down 700,000bd

For comparison, US oil consumption was basically flat from 2006 (20.687mbd) to 2007 (20.698mbd).

The above data itself is enough to indicate demand destruction -- i.e. reduction in product consumption. I'm not sure why you think inventories or imports are relevant to demand destruction, or why you think use of stocks would somehow count as demand destruction. The term "demand destruction" simply means reduction in oil consumption. Can you explain your concern more clearly?

At Monday, July 14, 2008 at 8:42:00 AM PDT, Blogger Barba Rija said...

JD, I think his idea is as follows:

If by "product consumption" of oil, the charts mean "how much did the refineries buyed to refine oil", and if gasoline inventories are dropping, the consumption dimming could only mean that the refineries are halting production of gasoline and thus diminish gas inventories, with the intent of only buying oil when the price gets lower (or some other reason). It wouldn't mean that people are actually buying less gasoline, because, like the gas inventories supposedly are saying, people are still buying faster than what the refineries are producing right now.

I'm not endorsing any particular view, it seems a straight forward question. Don't have time to investigate it, though.

At Monday, July 14, 2008 at 9:10:00 AM PDT, Anonymous benny "peak demand" cole said...

I agree with JD. Not sure the importance of imports or stocks. The main story is demand is falling, and can continue to fall for years, maybe even decades, even as we improve living standards. A guy driving a Volt will not endure any meaningful decline in living standards, yet may reduce liquid energy consumption by 90 percent or so.
The guy on a scooter may suffer a bit (especially in an accident), but usaally he also cuts consumption by 90 percent, and might even enjoy the ride a bit ore.
The TOD crowd has never answered these observations. Probably, the TOD is just a front for oil speculators.

At Monday, July 14, 2008 at 2:01:00 PM PDT, Anonymous billybeer said...

To fr:
Well I'm glad someone finally realizes this. The Software & IT industry in particular seems very vulnerable to outsourcing since they have very little interaction with customers and physical products. Microsoft is notorious for hiring "perma-temp" contractors (no benefits) and H1-B employees (who work for significantly less pay than their peers). Perhaps the white collar worker's attitude toward unions will change in the near future? This seems more and more likely as the middle class transitions from mostly blue collar to mostly white collar jobs.

To bill: ignoring the aside on government workers, how exactly do you suggest we increase our "inventiveness, ingenuity, and innovation"?

I agree that this technology is very promising and I use it several times a week to attend and conduct meetings with coworkers spread out across the country. But other than meetings or quick conversations that need visual information, it does not replace the physical presence of other employees/customers for the majority of my work. In other words, I couldn't do my entire job at home and I would fear having a job that allowed me to do this.

At Monday, July 14, 2008 at 2:36:00 PM PDT, Blogger David Grenier said...

As a scooterist, let me say a few things.

First, a moped is not a scooter. Moped sales are not up that I can see. Scooter sales are. Mopeds are generally motor-assisted bicycles and don't go very fast. Scooters tend to go anywhere from 30-65+ mph and are therefore more practical for commuting outside of your own neighborhood.

Second, people who buy decent scooters (not the cheap chinese crappiles that won't last a year) during a gas crisis will not likely trade them in for a SUV when the price of oil goes down because RIDING A SCOOTER IS FUN! They're more likely to only ride it on nice, sunny days, but they're unlikely to just get rid of it.

At Monday, July 14, 2008 at 3:58:00 PM PDT, Anonymous Brother Cadfan said...

I think there have been a few reports from Mastercard showing demand destruction on 'gasoline'.

Don't have time to fish out the refs Im afraid!

At Monday, July 14, 2008 at 6:36:00 PM PDT, Anonymous otherjustin said...


At Monday, July 14, 2008 at 10:14:00 PM PDT, Blogger JD said...

Thanks for the link. Notice that the wsj piece does not cite any hard numbers, but simply refers to massive growth from the Middle East and China with a hand wave. That's not enough. The essence of the issue is the hard numbers. Is growth in the Middle East and China enough to cancel out the ongoing demand destruction in an increasingly depressed US, and the rest of the OECD? The rough figures say it is very unlikely. Drop in product demand has been averaging around 700kbd in the US alone this year, even at prices less than $120/barrel (as cited above). In the last few years, demand growth in the Middle East and China has been around 200kbd/year and 500kbd/year, respectively (Source:BP Stat Rev 2008). So even on a rough accounting we get (US decline) - (China and Middle East growth) = 0. Furthermore, the oil price remains very high and rising, and the US economy is looking increasingly weak. So the core question is: Can China and the Middle East grow enough to overcome plummeting US demand? I think the answer to that will turn out to be "no".

At Monday, July 14, 2008 at 11:29:00 PM PDT, Anonymous stuck in Shizuoka said...

Firstly, thanks to JD and Benny for commenting on my question and for Baba for reformulating the question--which I think was a more succinct phrasing of Matthew Simmons' prediction of a scenario for a future gasoline shortage.

To clarify my question again. I haven't been able to find any information on HOW the EIA measures US gasoline demand. It would seem to me that it would be largely guesswork. Ridership on mass transit is up, scooter sales are up and subcompact/compact car sales are up. It would stand to reason that demand is down. But that's not how the EIA would measure demand--obviously. Mastercard/VISA sales could show a drop but that might only be a matter of people purchasing less amounts at one time, rather than filling the tank. This leads me to the question of refinery orders/sales. If the EIA measure a drop in demand through less refinery sales, then it could stand to reason that, gasoline and diesel stocks are either higher or lower than usual. Higher would be the case if sales were low and the stocks were simply awaiting further orders. Lower stocks, in my mind anyway, could mean that refineries are ordering less because demand at the pump is down and they are trying to protect their margins.

I asked the question originally because it seemed to me a risky scenario. If stocks were lower, and then some area of the US (or..who knows..Eastern Canada even) is unable to procure crude for refining, there could be a shortage. A shortage would cause some panic buying and we would see a repeat of the early 70's ....except that there is no embargo to lift. I think this is closer to what Simmons was saying in the link I provided above.

Anyway, to reiterate, the idea of demand destruction makes me wonder how it is being measured...and if it is at all accurate.

It would obviously be a good thing to find that people are carpooling, using transit and the slow death of the SUV are the sources. But, I don't see how such things can be used as measurement. It would seem to me that only refinery sales would be accurately measurable....and that is where my concern came from. I think it's worth discussion.

Sorry bout the long-winded post.

At Tuesday, July 15, 2008 at 3:04:00 AM PDT, Blogger Barba Rija said...

JD, you still didn't adress stuck's issue in the manner that I've understood it.

Is it possible that some of the demand destruction in the figures be not only demand destruction in the refineries's demand, and not exactly gasoline demand destruction? This would explain downfall of gas stocks.

They are fast losing their own profit margins. They will have to crack or even implode. The only alternative is to rise gas prices, but demand destruction is proving to be a pain in the ass for them.

At Tuesday, July 15, 2008 at 9:48:00 AM PDT, Anonymous Brother Cadfan said...

Just a thought: People may like this website:

At Wednesday, July 16, 2008 at 2:01:00 AM PDT, Anonymous Anonymous said...

I think the EIA uses a number of sorces to determine demand destruction.

We know it's happening here in the U.S. for sure.

Also how come no one ever asks how it is the EIA or the IEA are able to accurately determine world demand?
They give a number but how do we know if that number is accurate?

Great post btw JD. While this technology will have an impact, not too much, but this is another step in the right direction.


At Wednesday, July 23, 2008 at 11:42:00 PM PDT, Blogger wchfilms said...

>As for homes, they're 2.5 times larger than they were 50 years ago -- big homes requiring lots of power to heat and cool

Yes, but I've known people for years in TN that have sealed off sections of their house in the winter that they didn't want to pay to heat, and this was during very cheap energy, although that area was poorer. Obviously such behavior would easily spread as energy became pricey relative to income.

>Microsoft is notorious for hiring "perma-temp" contractors (no benefits) and H1-B employees (who work for significantly less pay than their peers).

They are indeed, and while I have little doubt about about our Indian brethren's abilities to produce quality code, I do doubt that you will get it from practices such as that. Microsoft is obviously on the decline because it's clear too much of their product is "just get it out the door" versus other vendors who actually care about quality. Quality is not cheap no matter where you get it.

At Tuesday, August 26, 2008 at 4:14:00 AM PDT, Blogger DB said...

JD you rock.
This is exactly right.
The process you are referring to is called "creative destruction" and it's a fundamental flaw in the "growth cannot continue" argument espoused by doomers.
The reason is quite simple:
growth even now is NOT continuous.
An industry booms, matures and contracts and is replaced by another. This is really what growth means and it can go on for ever.


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