This was taken off of a forum on the latoc(lifeaftertheoilcrash)

Trust me CJR, it is very real.

So I got a chance to have a long sit down with my dad. He gave me some interesting inside perspectives on the situation.

He is the GM of one of Pensylvania Power and Light's Oil and Natural gas pipelines. So he is privvy to most of the business decisions that are going on. Basically behind closed doors, they are talking supply/demand fundamentals, and the rise of india/china. He never used the words peak oil, but it was like a broken record the stuff they have been talking about.

He described to me how in the early 90's, PP&L bought out a whole bunch of HVAC companies. The solution back then was natural gas. They were going to put a natural gas generator in every persons house and use the hvac companies to service it. The govt at the time was pushing all of the oil companies to install natural gas rig's in there stations. Here is the problem. That happened across the country, and in a matter of 3 years, demand went so high for the natural gas, it was now more expensive than oil. The entire project was scrapped.

He explained to me how they are going to build there first nuclear power plant, and that 10 years ago if the CEO had mentioned nuclear, they would have forced him to take a drug test. They are also planning on building 5 coal powered plants. Something they havent done in 30 years.

Here is the catch, for everyone thinking nuclear will save our ass. He said it normally takes about 10 years to get a nuclear plant built. About 3 to go through all the red tape, and 7 to build one.

So I asked him, if the SHTF and they removed all the red tape, we would be looking about 7 years? He said, no... If the SHTF and the red tape is removed, we would be looking at around 15-20 years per plant. Apparently there are only a couple of companies in the US that can build these things. So you would have every utility across america competing for these two companies. You cant just expand operations like making cars, it takes years and years to train the engineers and the construction companies to build a nuke plant.

He also said something else that scared the frig out of me. He said that as prices go up more and more for oil, you will see a mass flux of companies moving over to coal. The only problem, is we have so far scaled back our coal production and rail transportation, the only way to get the coal to its destinaion is by truck. So the price of coal is affected by oil as well. But even further, it wont be a slight trickle for companies wanting coal plants, it will be a mass flux of companies, driving the price of coal through the roof with everyone competing over the coal. He said his company thinks the same thing will happen to coal prices that happened to natural gas prices.

So I asked him why they are even bothering building the coal plants. And he said, "THEY ARE DESPARATE".

He also discussed with me the means by which power plants are brought on or offline depending on the load. He said the most efficient power plants always run, and then when demand gets high, they bring online the less efficient plants, the last being the oil fired plants. So as oil prices continue to go up, they expect demand to fall off a bit. Which will allow them to take the less efficient plants offline, and keep prices stable until a point. Once the prices get so high that the efficient plants no longer provide a cost buffer, thats when all hell will break loose. He described it like an avalanche of higher prices all of the sudden.

Something even more disturbing he was talking about is the deregulation. He was saying that PP&L has two sides to it, PP&L and PP&L utilities. The utilities side is the one that brings the electricity to peoples homes. The other side is the power generation side. Basically what happened was the power generation side had the utilities side sign a contract stating they had to provide electricity at a certain cost. Right now the utilities side is losing money. The contract expires at the start of next year. He was saying prices will go up for people 20-30 percent next year, and then another 40 percent the year after. And those prices had nothing to do with oil going from 50-90 a barrel. He said the current prices will make them go even higher.

He said this is indicative of the rest of the deregulated companies in america.

So after our four hour talk, we both came to the conclusion that it will be a hard crash. What we will likely see is a longer peak than alot of us had thought. The peak should last another 1-3 years, oil prices will climb drastically, but home heating will not follow suit at least for a year or two. Gas prices will climb, and force the economy into a deep recession. Once all of the demand has been killed and the less efficient plants are taken offline, and oil prices rise to where the efficient plants no longer offer any benefit, thats when all hell will break loose.

We think 1-3 years, then a hard fast crash.
Better get your preps done quickly.

This is if there are no geo political events. If we attack Iran, he said he expects oil prices to double on the attack and cause a nice fast crash NOW.