Don’t worry, just a little bump - $70 is just around the corner. Short traders just keep making those margin calls, mortgage the house if you have to. Fortunes await you! PO is for pansies and doomers. At $70 short some more ..... it is going back to $22 .... the world is awash with oil ........ reality has nothing to do with it, its all in those charts!!!!!!!!!!
Posted: Sun Jul 13, 2008 7:53 am Post subject: Oil at $500/barrel? No problem, says Financial Times.
Quote:
None of this means a disaster for the US or any other part of the developed world. Even a $500 barrel of oil (in real terms) would reduce US real income (as conventionally measured) by no more than 10 or 11 percent compared to where it would have been otherwise. That’s 3 or 4 years of trend growth - nasty, but no disaster, if properly managed. And there would be considerable environmental benefits from a more energy-efficient lifestyle, which are not captured by conventional GDP- or consumption-based measures of real income. ...Certainly, truck drivers and taxi cab drivers will be hard hit. Their industries will have to contract....
Professor Willem Buiter has very impressive credentials. But this strikes me as counter-intuitive at the very least, and sheer lunacy at worst. Surely he must understand that oil is involved in much much more than simply taxi and trucking services? And for that matter, involved in much more than transportation.
Furthermore, he keeps reverting to the European example as case in point where people have adjusted smoothly to expensive gas, without mentioning that modern US society was practically built around the automobile since Day 1. It's really an apples and oranges situation.
Is it just me, or is this truly a bizarre statement from someone who holds impeccable credentials? If what he's saying is correct, then all this fuss is really much ado about nothing.
I have never seen a debate so polarized. (And my background is in law, incidentally, not economics.)
Posted: Sun Jul 13, 2008 7:58 am Post subject: Re: Oil at $500/barrel? No problem, says Financial Times.
I am dubious of many of his conclusions. But OTOH, there were many people who said $100 oil would be an apocalypse, and so far it really isn't. I wish everyone on here could have participated in the World Without Oil alternate reality game (http://www.worldwithoutoil.org). It was very instructive as to what might really go down as oil gets more expensive. _________________ Dismantle globally, renew locally!
Posted: Sun Jul 13, 2008 8:02 am Post subject: Re: Oil at $500/barrel? No problem, says Financial Times.
jdumars
Point taken, but bear in mind the pump price still has not yet caught up with the price per barrel. Prices per barrel have risen over 100% in the past 12 months; over the same time frame pump prices have increased approx. 20% to 30%.
So we're really still living in a 95-dollar-per barrel world right now.
(Someone feel free to openly correct me if I'm wrong on that. I'm on here to learn just like everyone else.)
I'm in no position to judge the correctness of his position but I do agree that it sounds bizarre. Just because we have adjusted to high fuel prices here in Europe doesn't mean we will readily adjust to empty supermarket shelves. We are just as dependent as any other urbanized society on oil-fueled transportation to bring just about all the stuff we need into the cities. Not to mention the involvement of oil in the production of all that stuff.
Joined: Oct 23, 2004 Posts: 5410 Location: New Jersey
Posted: Sun Jul 13, 2008 8:14 am Post subject: Re: Oil at $500/barrel? No problem, says Financial Times.
NoWorries wrote:
jdumars
Point taken, but bear in mind the pump price still has not yet caught up with the price per barrel. Prices per barrel have risen over 100% in the past 12 months; over the same time frame pump prices have increased approx. 20% to 30%.
So we're really still living in a 95-dollar-per barrel world right now.
(Someone feel free to openly correct me if I'm wrong on that. I'm on here to learn just like everyone else.)
My best WAG is that US consumers are effectively paying $85 for oil.
I would not argue if someone said $95.
While it's true that gasoline prices hit consumers almost right away, an even sharper rise in diesel prices has not. Diesel is more important to trucking and rails. Trucking/transportation companies have not fully pushed through all the their cost increases, and consumer product companies have not pushed through theirs.
Not to mention that most buildings and infrastructure were built wiith oil less than $40. _________________ It's already over, now it's just a matter of adjusting.
Posted: Sun Jul 13, 2008 8:36 am Post subject: Re: Oil at $500/barrel? No problem, says Financial Times.
Idiocy.
Couple things to keep in mind . . .
The U.S., and by extension the world, has entered into a major economic downturn. So even without the pressures of oil price increases, we're already hurting very badly.
The current price of oil (145) has not been priced into products you're buying right now.
For example, iron ore to China just went up 95% in price.
It'll take a long time for that increase to totally work its way into the system.
I think that today's price of oil will only be felt, totally, at this time next year.
I never thought 100 dollar oil would be the end.
200, I think, is the end of commercial air travel and the cheap life.
300 is the end of modern life.
Lots of steps in between, of course.
keep in mind that also working against the author is depletion/scarcity/rationing.
Maybe 15 dollar a gallon gas could be survived.
But NO gas will not be survived by the modern world. _________________ Massive Human Dieoff must occur as a result of Peak Oil. Many more than half will die. It will occur everywhere, including where you live. If you fail to recognize this, then your odds of living move toward the "going to die" group.
Joined: Oct 23, 2004 Posts: 5410 Location: New Jersey
Posted: Sun Jul 13, 2008 9:01 am Post subject: Re: Oil at $500/barrel? No problem, says Financial Times.
Cashmere wrote:
But NO gas will not be survived by the modern world.
The availability of oil is much more important than price.
Shortages could occur at well less than $200, and then the economy goes into a tailspin.
Even without shortages, and even if the price rises more or less steadily, at a certain point the suburban way of life becomes unsustainable. That may be about $300 in today's money, although by the time that happens (barring a war) the Fed will have inflated so much that it will probably be around $500 when things fall apart. _________________ It's already over, now it's just a matter of adjusting.
Posted: Sun Jul 13, 2008 9:04 am Post subject: Re: Oil at $500/barrel? No problem, says Financial Times.
Thanks for all the replies.
Incidentally, does anyone know what Prof. Willem Buiter was predicting (in terms of the price of oil) 2 years ago? That might give us a better insight into his overall rationale, and whether he is of an overly-optimistic mindset or not (where the price of oil is concerned).
Posted: Sun Jul 13, 2008 9:14 am Post subject: Re: Oil at $500/barrel? No problem, says Financial Times.
NoWorries wrote:
jdumars
Point taken, but bear in mind the pump price still has not yet caught up with the price per barrel. Prices per barrel have risen over 100% in the past 12 months; over the same time frame pump prices have increased approx. 20% to 30%.
So we're really still living in a 95-dollar-per barrel world right now.
(Someone feel free to openly correct me if I'm wrong on that. I'm on here to learn just like everyone else.)
I think the oil and gas price rises wouldn't be proportional since the price of gasoline also is related to refining and transport costs. My rule of thumb is about $70 per barrel increase in oil is about $1 rise in gasoline.
Posted: Sun Jul 13, 2008 1:39 pm Post subject: Re: Oil at $500/barrel? No problem, says Financial Times.
You have to love a view from an Ivory Tower. Does our dear professor think that 10% income cut would occur evenly across the board for all income brackets?
The reality will be the top continues their 20% increases, or may a little slowdown in increase, and the bottom 2/3 of income brackets will suffer a 80% drop in income, and be eating clay and cardboard like they do in Haiti.
The resulting society will not be apleasant place for anyone.
Last edited by Fiddlerdave on Sun Jul 13, 2008 1:40 pm; edited 1 time in total
Posted: Sun Jul 13, 2008 1:40 pm Post subject: Re: Oil at $500/barrel? No problem, says Financial Times.
At the same time USA is probably the country in the world which has the biggest potential to reduce consumption. Millions of Americans are able to switch to lighter/more efficient cars that could reduce their consumption by 50%. In Europe and Japan people are already driving 40 MPG cars.
Could we handle $500/barrell? It depends on WHEN. If it happened tomorrow it would be chaos, if we see a steady, linear rise to $500 in 2015 we would be able to adapt.
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