[sparky]

just found this report: European countries per dependence on oil
the top 5 are all in serious financial strife http://www.eurotrib.com/story/2010/4/8/55346/04864

well worth the read , it simply highlight that the countries the most dependents on oil imports are also those in the deeper financial strife .

I take it as a clear warning to all of the effect of Peak Oil

[shortonsense]

.European countries per dependence on oil
the top 5 are all in serious financial strife http://www.eurotrib.com/story/2010/4/8/55346/048

I didn't see any relationship to peak oil at all.

[sparky]

dependence on oil mean big trouble when oil is not so easy to come by

[dorlomin]

Without being an expert on them my guess is that they lack a nuclear component to their generating capacity and as they are generally weak Mediteranian states it it probable they have not had significant new gas power capacity installed over the past couple of decades unlike North Western states (many of whom are oil and gas producers). There oil dependence is more likely to be by product of the factors that meant they were the worst hit by the financial crisis rather than being the cause of it.

Off these Ireland has the least excuse as it had a huge boom economically and is geographically very close to North Sea exports. Italy has also a reasonably advanced economy and even Spain has surged over the past 30 years.

[cipi604]

I didn't see any relationship to peak oil at all.

It's called STAGFLATION. Maybe I should draw you a map, Ad hom deleted.

[Tyler_JC]

The UK is less oil dependent than Spain but has a much worse fiscal situation.

The Netherlands is only slightly less oil dependent than the PIIGS and it's economy is doing fine.

Latvia is not particularly oil dependent and its economy collapsed.

And what about Iceland?

The PIIGS countries are basically just a collection of weak, heavily indebted Mediterranean countries and one overly finance-dependent, newly first world country.

Becoming part of the Eurozone pushed up investment in Portugal, Spain and Greece. These investments never would have taken place without the stability and low interest rates that the Euro provided.

I'm sorry, but the peak oil specifically hurting PIIGS theory doesn't work.

Oil dependence could be the result of strong car-friendly economic growth (Ireland?) but the causation goes the wrong way. Oil dependence didn't cause the collapse, financial instability did.

[davep]

The article did not mention oil space heating. Could be a factor as well.

This data supports Hamilton, Rubin, Therramus, and Kopits demonstrating that modern post war financial crisies are a consequence of increasing oil prices.

Some here have erroneously suggested this mistakes correlation with cause and effect (and that one could say the same about wheat or housing prices causing recession). However, we know oil grows wheat and builds homes, not visa versa.

Groan. Oil does not build up massive speculative bubbles in real estate. Bankers did that.

[Plantagenet]

The article did not mention oil space heating. Could be a factor as well. This data supports Hamilton, Rubin, Therramus, and Kopits demonstrating that modern post war financial crisies are a consequence of increasing oil prices.
Some here have erroneously suggested this mistakes correlation with cause and effect (and that one could say the same about wheat or housing prices causing recession). However, we know oil grows wheat and builds homes, not visa versa.

Groan. Oil does not build up massive speculative bubbles in real estate. Bankers did that.

True.
But the large increases in oil prices in 2008 was a shock to the economic system that seems to have "popped" the massive speculative bubbles in real estate.

[shortonsense]

dependence on oil mean big trouble when oil is not so easy to come by

Oil has not been easy to come by since the days when wire rope was needed to drill deep with cable tool rigs. Certainly it wasn't easy when mankind started drilling in water, or wells required hydraulic fracturing, or horizontal wells to get it out.

All this happened decades ago...and had nothing to do with peak oil either.

[shortonsense]

I didn't see any relationship to peak oil at all.

It's called STAGFLATION. Maybe I should draw you a map, Ad hom deleted..

Unlike the younglings who haven't seen it before, I am perfectly well aware of what stagflation looks like, having lived through it before. I also remember the gasoline rationing which went on with it, and the peak oil which happened as well.....and as we go through another peak oil, I see neither stagflation nor rationing.

The US imports more oil than any other country on the planet....and imports about the same amount now as it did back during those other times of stagflation, AND global peak oil. You can CLAIM any and all relationships you wish, such a claim does not constitute fact.

[shortonsense]

Some here have erroneously suggested this mistakes correlation with cause and effect (and that one could say the same about wheat or housing prices causing recession). However, we know oil grows wheat and builds homes, not visa versa.

Some here have erroneously suggested that we don't have trillions of barrels of oil left to produce. And then confuse an imaginary shortage with an inability to build homes and grow wheat when obviously such activities aren't what most oil is used for.

[Tyler_JC]

Spanish property bubble:



Irish property bubble:



And there's no need to discuss Greece's fiscal irresponsibility, rampant inflation, etc.

[shortonsense]

The original piece on PIIGS linked above is by Luis de Sousa, a well respected and much published (List of articles) contributor at theoildrum.com. I suggest folks here read his articles, he understands the obvious connections between world financial crisis and the oil peak.

Then perhaps he should have talked about them more in the article in question, because there certainly isn't the relationship you claim exists in it. If it were obvious, it wouldn't be so invisible.

And Tyler is a well respected poster at PO.com, and knows more about the economics of the given situation then most around here, and continually proves it with what I consider to be quite apropos examples. Right out of the box he knows why peak oil had nothing to do with the PIIGS...unfortunate that someone considered "respected" can't read more than a little of the information Tyler rounds up so easily prior to leading the wild goose chase straight to a preconceived conclusion.

In particular note his March 1, 2007 piece where he accurately predicts Spain and Greece's low gas taxes and their future difficulties.

When I came here five years ago, it was pretty well accepted the first symptoms of peak oil would be financial, not geological/social/military etc. Oil defines the limits to growth not debt, not financial systems, This was discussed over and over again. Some folks here remain in denial, deep deep denial.

So he did have a preconceived notion to pretend peak oil was the cause of...thanks for providing the exact example. He is certainly still incorrect.

[Outcast_Searcher]

Groan. Oil does not build up massive speculative bubbles in real estate. Bankers did that.

True.

But the large increases in oil prices in 2008 was a shock to the economic system that seems to have "popped" the massive speculative bubbles in real estate.

Read "The Big Short" by Micheal Lewis, for a clear and honest picture of the real estate bust. The real estate market in the worst subprime mortgages was going bad by spring of '07. This correlates well with the two European real estate collapse charts Tyler_JC has in a later post.

Certainly the 2008 commodity price surge, including oil, probably made things worse. However, the gigantic sea change in the system was the collapse in stupid mortgages, which just took time to wash through the economic system and take its toll.

[Tyler_JC]

Imagine Greece were still using the drachma. If oil prices rose, Greece would be forced to buy more dollars to purchase its oil imports. Over time, this would cause the drachma to fall in value relative to the US dollar. If Greece were also running major budget deficits, the drachma would fall further.

Eventually the weaker drachma would help Greek exporters, reducing the trade deficit and bringing the system back to balance.

However, Greece is in the eurozone and does not have to worry about the value of its currency being affected by reckless behavior.

Why?

Germany is such a big exporter that it sells more to the rest of the world than all of the PIIGS buy from the rest of the world. German workers also earn more than they spend, leading to ever-growing German savings accounts.

Where do these saved German euros go? To Greek borrowers, of course!

Germans work hard and save money so that Greeks may buy imported goods on credit. (Oil is one of these imports, yes)

Suddenly the US financial system implodes. Demand for German goods declines in the US and throughout the world. German trade surpluses drop and the German government starts running large budget deficits. German savings are being eaten up by losses in the financial sector and a German government which is sucking up more and more cash.

Greece wants to rollover its debts but it cannot do so because no one wants to lend Greece any more cheap money. Devaluation isn't an option because Greece doesn't control its currency. Greece is forced to cut public spending and raise taxes on a massive scale. Riots. Chaos. Etc.

Expensive oil is part of the story but it's just a small piece of a much bigger picture.