Article with chartsWas the current recession the result of a normal business cycle? If so, life will return to normal as asset and commodity bubbles are squeezed out of the economy.
The price of oil will remain manageable, US consumers will begin looking for ever more powerful SUVs, and governments can afford to ignore fossil fuels in formulating policy.
Or was the recession primarily a consequence of peak oil? If it was the latter, the world is on notice that oil has entered its twilight years and fundamentally new approaches to transportation will be required to maintain accustomed standards of living.
In the absence of new solutions in the short to medium term, periods of prosperity will likely be punctuated by recurring oil price shocks and painful recessions as the world adjusts to a shortage of oil.
The dominant view is that this recession was caused primarily by a housing price bubble tied to excess leverage. When the bubble popped, mortgage quality deteriorated, leading ultimately to a banking crisis unparalleled since the Great Depression.
Analysis by economist James Hamilton, however, tends to support a more nuanced view. Hamilton, well known for his macroeconomic analysis of oil markets, can attribute a substantial portion of the current recession to oil prices. In August 2008, oil prices could explain the entire downturn. Subsequently, oil prices would have led to a shallow recession, but clearly other factors — possibly the bankruptcy of Lehman Brothers — look to have deepened and possibly prolonged the recession. In many ways, this recession, like many before, can be attributed at least in part to oil prices.
But was it a peak oil recession or merely a boom-bust cycle seen so many times before in the oil and gas industry?
and for the record, I always sais it would be and was and is and will forever be, because of peak energy