[prajeshbhat]

Here's something I've been pondering over.
USA consumes 19 million barrels of crude oil. That means oil companies buy 19 million barrels of crude oil a day for refineries.
19 x 365 = 6935 million barrels per year or 6.935 billion barrels per year.
At $ 100 , that equals 693.5 billion dollars for crude oil.

That oil is refined and then sold to consumers to recover the cost of crude and refining process. Primarily in the form of gasoline and diesel.
According to recent data, USA consumes 3 billion barrels of gasoline a year.
A barrel equals 42 gallons. So that's 3 x 42 = 126 billion gallons a year.
@3.6 dollars a gallon that would be 126 x 3.6 = 453.6 billion dollars a year for gasoline

US consumers also buy 3 million barrels of diesel a day. That's 3 x 365 = 1095 million barrels or 1.095 billion barrels of diesel a year. Or 1.095 * 42 = 45.99 billion gallons a year.
@ 3.8 dollars a gallon that would be 3.8 x 45.99 = 174.7 billion dollars a year for diesel.

When you add it all up, 693.5 + 453.6 + 174.7 = 1321.8 billion dollars or $ 1.321 trillion

I am sure all of this is added to the GDP numbers. So, almost 1.4 trillion dollars goes into the oil business alone. I don't know the situation with coal and natural gas. Add to that what consumers spend for electricity.
According to wikipedia, USA consumes 3,741,485,000,000 KWh per year. At 12 cents a unit that amounts to $ 448,978,200,000 or 449 billion dollars for electricity.

I'n no economist. But I think the less money businesses and consumers spend on energy, the more money they have to spend on wages and discretionary spending. How can one expect a roaring economic recovery in these conditions. Not everyone can work in the energy companies.

[prajeshbhat]

Here are the numbers for gas:-
652,900,000,000 cubic meters . At $ 152 per 100 cub.m that's:- $ 99,240,800,000
Almost a 100 billion dollars.

America also consumes 1 billion tonnes of coal per year.
@ $ 122 per ton that equals 122 billion dollars.
This is without considering externalities.

[prajeshbhat]

Here where the real problem lies.
I read this article titled "Oil Discovery Under Shallow Gulf Waters Estimated To Be Biggest In Decades".
http://www.businessinsider.com/oil-discovery-under-shallow-gulf-waters-estimated-to-be-biggest-find-in-decades-2010-1

So if they look for decades and the best they can do is to find a months worth of supply for US, you've got a problem. Maybe that's why the economy is solely focused on creating housing bubbles. Because housing is the only sector left where exponential growth is still possible. Every other industry is subject to energy limits. If you build a crappy house for $ 30,000 and some bank is willing to lend some unemployed guy a NINJA loan worth $200,000 to buy that house, well congratulation, the GDP just grew by 660% !!!

[davep]

The housing collapse and resulting financial crisis were a direct consequence of $147/barrel petroleum, and specifically began in distant exurbias (deserts of California and Las Vegas). Not only was new construction too costly, but the long-distance commutes became difficult for the low-income customers who bought the homes.

Not that old crap again... Are you saying the banking crisis and subsequent housing collapse had nothing at all to do with the dodgy mortgage derivatives?

[prajeshbhat]

When i said exponential growth in the housing sector is possible, i meant exponential growth in prices. Housing still remains the easiest place to speculate in. When house prices rise , GDP grows.

[davep]

The housing collapse and resulting financial crisis were a direct consequence of $147/barrel petroleum, and specifically began in distant exurbias (deserts of California and Las Vegas). Not only was new construction too costly, but the long-distance commutes became difficult for the low-income customers who bought the homes.

Not that old crap again... Are you saying the banking crisis and subsequent housing collapse had nothing at all to do with the dodgy mortgage derivatives?

Listen Dude. If you and Mos want to continue imbibing the BAU-consensus conspiracies, that is fine with me. I'm really so sorry peak has arrived and your preps are not finished. Mine are.

Try answering my question instead of coming out with wisecracks.

[prajeshbhat]

Here's another way of looking at it. The US national debt is $ 14.3 trillion . If you had to pay back that debt in crude oil alone, @ $100 a barrel, that would cost you 143 billion barrels. If you consider all the unfunded liabilities, the amount comes to $ 54 trillion. That would cost you 540 billion barrels of oil!!!!!! Compare that with the current known easily exploitable reserves of 25 billion barrels. Unlike the national debt, oil once burnt is gone. Poof. Something doesn't add up here.

[davep]

Not that old crap again... Are you saying the banking crisis and subsequent housing collapse had nothing at all to do with the dodgy mortgage derivatives?

Listen Dude. If you and Mos want to continue imbibing the BAU-consensus conspiracies, that is fine with me. I'm really so sorry peak has arrived and your preps are not finished. Mine are.

Try answering my question instead of coming out with wisecracks.

kidding right?

Why would I be kidding? Do you or do you not think the toxic mortgage derivatives played a part in the housing collapse? If you don't, you're a pretty lone voice. Of course the price of crude had an impact on ability to pay, but it wasn't the primary reason for the sudden collapse in the market. We've got plenty of time for that sort of thing to unfold in the future without the need to cry wolf over 2008.

[davep]

You apparently still don't believe IEA that crude oil, the primary energy for our industrial world, is in decline.

Stop putting words in my mouth. It's a poor argument.

I saw the high price of gasoline crush personal incomes and consumer optimism. I saw personal assets of all kinds including real estate decline in value. I saw the drama unfold. Sorry for your denial. Surprising given the effort you have gone into personal mitigation. Perhaps you have fallen behind in your preps?

Again, stop the lame ad-homs. The collapse was too sudden. As I said, oil prices were a factor, but the main one was that the mortgage derivatives were basically valued at zero (despite the underlying mortgages having a value) as people who had got mortgages which they should never have been given in the first place suddenly had their repayments go up and started to default. This brought the banks to their knees as they lost collateral. This then brought the broader housing market down because the banks couldn't and wouldn't lend.

Why does it have to be so black and white with you?

I'll ask you for a third time, do you think the mortgage derivative market had no role to play in the housing collapse?

[prajeshbhat]

Back to US debt, the 25 billion barrels oil reserves are currently worth $ 2.5 trillion dollars. US has 6,928,000,000,000 cubic meters of natural gas. @ $163 per 1000 cubic meters, The natural gas reserves of USA are worth $ 1,129,264,000,000
or about $ 1.13 trillion. US also has 246,643 million tonnes of coal. At $ 127 per ton,
the coal reserves are worth $ 31,323,661 million. Or $ 31.324 Trillion dollars. So, Adding them all together all energy sources in USA are currently worth :- 31.324 + 2.5 + 1.13 = $ 34.954 Trillion dollars.

[prajeshbhat]

Any other bright ideas?

Nopes. I don't intend to give lessons anyway. I was just curious to know how the global economy will return to hyper-growth if energy prices remain high. I believe there is an inverse relation between energy prices and growth rate.