Does Irrational Panic Fade with Experience?

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I have not yet panicked while diving, though I believe experience will reduce the panic cycle. I have been doing "extreme" things pretty much all my life which may be why I haven't panicked while diving. I have panicked once or twice while climbing a couple hundred feet off the ground, but as you did, calming reminding yourself that your are "as safe as possible" and taking a moment to think rationally always works, in my experience.

As g1138 said, I think some of us are more prone to panic than others. Those who are will definitely need more time to "acclimate" themselves to new experiences.

So far it sounds like you're doing a good job of recognizing and controlling your panic, and that's the most important thing. I would agree that based on your experiences so far, if I were you, I'd take it slow moving to deeper depths or night diving or "scary" situations.
 
There are really two questions running here . . . One is whether the panic response can be desensitized, and the other is whether the issue on the deep dive was panic or more multifactorial.

As far as the former, there is no question that one can expand one's sphere of competence. Panic tends to occur when the person's perception of the problem is that it is way outside what they can comfortably handle. In scuba, this is often enhanced by the fact that there is a high baseline level of stress (especially for new divers, who are trying to handle everything about diving at a conscious level, and are rather overwhelmed to begin with) AND a tendency to retain CO2, which causes a truly physiological panic response (adrenaline outpouring). The OW student may panic when he floods his mask, but 100 repetitions later, it's routine.

However, the TENDENCY to panic may not be extinguishable. Some people have much higher anxiety trait than others. For them, a "panic" type response may always be one of the first -- but they learn to inhibit it. Even those of us with very low trait anxiety can experience situations where the first response is a startle response -- but repeated exposures to that have taught us that we CAN override it. (In my second year of residency, we spent most of the year in the intensive care units and emergency rooms -- we joked that by the end of the year, your panic button had been pushed so many times that it didn't work any more. There's a lot of truth to that!)

Regarding the second question, I wouldn't be at all surprised if there was some narcosis playing a significant role. I know that, early in my career, I had a dive to 90 feet where I became convinced that my regulator was not delivering gas normally. Luckily, I'd had a prior, very embarrassing experience with narcosis, where I became convinced I was starting an uncontrolled ascent, and therefore I dumped all the air out of my dry suit and wing, and went splat! into the silt. So I was able to tell myself, "Your reg is FINE, you're just narced," and resist the temptation to abort the dive.
 
Let's take a look at a couple of highlights from your post:
Hi,
Looking up at 70' I was suddenly overcome by a desire to breathe out of my nose and wanted to rocket to the surface. I exhaled deeply and told myself how irrational I was being and it faded.

The second dive there, we went to the bottom which was cramped and black if not for our lights, and I felt panicky again. This was at less than 90 ft. Started breathing rapidly, mouth got really dry, felt like it was hard to breathe. .

When some people are in an uncomfortable situation, it affects their breathing. They will breathe very quickly and very shallow, or they may hold their breath. Both scenarios cause a buildup of CO2 in the system. Your body has almost no signal that it needs oxygen; the level of CO2 in your system is what gives you the urge to breathe. If someone holds his hand over your mouth and nose, that panicky feeling that will overcome you is cause by the CO2 buildup, not the lack of oxygen. CO2 = panic. Consequently, people who go to altered breathing patterns in uncomfortable situations frequently go into a panic cycle. They CO2 buildup makes them feel more anxious, and they alter their breathing pattern even more, which causes more CO2 and more panic.

The way to avoid this is to practice long, slow breathing that starts with the diaphragm to ensure that the old air sitting in the bottom of the lungs gets eliminated when you exhale. The most important part is the long exhale--just as you did on that first incident.

Whenever things get a little "juicy" for you, remember that diaphragmatic breathing--it just may take care of the problem altogether.
 
\ It sounds like Deep and Dark isn't what you enjoy right now. But that may come later.

I know that if you took me into a cave right now, you'd have to knock me out and drag me through! It's funny that my back yard is the cave diving capital of north america and I'm completely ignorant of it! I have some acquaintances ( a couple) who are about to start training. They're already avid divers and are about to drop 6 grand on more equipment for caves. I'll have lots of experience with open water by the time I'm ready to do that!
 
Looking up at 70' I was suddenly overcome by a desire to breathe out of my nose and wanted to rocket to the surface.
Reading this sentence triggered a memory for me. I also was afraid I would panic when I first started out. (My fear is more related to claustrophia...I don't enjoy feeling "closed in") I can tell you definitively that yes, it does get better with experience. You have already demonstrated that you can manage your emotions and reactions well and the more you practice, the better it will get.One thing I wanted to point out is that when you "look up" (as stated above) you may restrict the flow of air from your regulator. I have altered my behavior - when I want to look up I just roll over (so I'm facing the surface) and look up. I haven't had a restricted feeling again. :)
 
The closest I've come to panicking was my first ocean dive after certification. It was first dive without my instructor and was with a dive club who were all strangers. We were doing a shore dive and as we kicked out to the drop down point the shore was blanketed in thick fog. When we finally reached the reef I could no longer see the shore. As I looked around all I could see was ocean and fog. I had a fleeting sense of panick, and I immediately wanted to drop my weights and kick back to shore aborting the dive. At that point I took a couple of deep breaths, looked down into the water, and felt that if I could just start the dive I'd be okay. That was about as close to panicking I've experienced.

Since then I've pursued AOW training. With more dives comes more comfort. I didn't think I would have gotten as much out of the underwater navigation class but it was easily one of the most beneficial classes for my own diving. I remember the night dive portion was more of a fun type of dive, wasn't nervous at all and couldn't wait to start the dive. Night dives are just awesome! But, need to know how to use that compass especially in the dark.

Have fun. Welcome to the addiction.
 
Experience and training are your friends. Even experienced divers can feel anxiety or panic if they encounter a situation where they lack training. A little anxiety, which is what you appear to have experienced, is not necessarily a bad thing and helps you set your personal limits or recognize where you need additional training. When you start cave diving you will experience a little anxiety, but it is a very pleasant anxiety (a cross between "this is really cool" and "WTF am I doing here").
 
Another one in the "too deep, too dark, too soon... Hey, what the hell are you doing in an overhead environment" school of thought.

No wonder you are feeling a bit freaked out!

Stay outta the caverns, stay shallower than 18 metres/60 feet and things will start to come together! Honest.
 
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