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Page added on April 27, 2012
Breaking Point: The End Of The Cheap Energy Economy
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Americans consume 20 million barrels of oil per day and FutureMoneyTrends asks what will happen when the price of gas reaches $4, $5, or $6 per gallon. Between exponentially rising fuel prices and stagnant wage growth for those employed, American consumers were broken in the lead up to the start of the depression recession in 2008. The situation is massively worse now than at the bottom in March 2009 (from $2.00/gallon to $3.92 currently) and that is where they take up the narrative of where we go next as the cost to drive has more than doubled in the space of three years and is on an unsustainable path; either as a nation of consumers facing de minimus wage growth, or the lack of firms’ ability to pass this cost on to consumers leading to more unemployment. As the unreality of the S&P 500 passing back above 1400, a reflection back on the real economy is sobering to say the least.
9 Comments on "Breaking Point: The End Of The Cheap Energy Economy"
Rick on Sat, 28th Apr 2012 12:31 am
Gas is already over $4 in northern IL, and even with my high mileage car, I feel the pain. Of course $4, is still a bargain when you look to Europe.
Still, even though I’m saver, most folks in the US, don’t have any money, and drive stupid SUVs. It will really cut them off at the knees first.
DC on Sat, 28th Apr 2012 4:51 am
Well, think of the upside, there will a lot less of those morbidly obese amerikans stuffing cheetos and porkrinds down there gaping maws as a result right? Think of all the money in health care they will save. O wait a minute, treating morbidly or just plain fat amerikans and the related illnesses are actually a rather large profit source for a non-trival part of the ‘health-care’ system. Skinny amerikans would actually put a butt-load of gastric-bypass surgeons and there clinics out of business too. Which of course, would have a major impact on mercedes dealerships and country club revenue too.
Damn…
Mike on Sat, 28th Apr 2012 6:43 am
We seem to have an obsession with “breaking points”. A while back many were claiming $100/barrel was the ugly horizon. We’ve been there a while.
I think we will continue to see roughly linear effect as prices rise (as they have been). Slow economy becomes more sluggish. We have seen demand fall off in developed countries WITHOUT the usual drop in prices. Other demand (Chindia) is stepping in to fill the gap.
I don’t know what the breaking point is, but the broke point is back under $2.00 a gallon with few buyers…because the economy has failed in a big way.
BillT on Sat, 28th Apr 2012 2:16 pm
While the Us invades countries for profit, China builds relationships with Walmart dollars.
“EURASIAN ECONOMIC BOOM AND GEOPOLITICS: China’s Land Bridge to Europe: The China-Turkey High Speed Railway”
http://globalresearch.ca/index.php?context=va&aid=30575
Arthur on Sat, 28th Apr 2012 3:56 pm
BillT, I agree with Engdahl om many geopolitical and historic viewpoints, but not on this one: “The prospect of an unparalleled Eurasian economic boom lasting into the next Century and beyond is at hand.”
And I do not understand why you as a die-hard peaker would support him in this? Engdahl has denounced peak-oil a few years ago, based on some abiotic oil origin theory. So yes, if you reject peak-oil than one can dream about an Eurasian century. I could agree on a postponed collapse of industrial society by 2-3 decades, based on shale natural gas, but that is about it.
BS article by Engdahl on peak-oil:
http://www.engdahl.oilgeopolitics.net/Geopolitics___Eurasia/Peak_Oil___Russia/peak_oil___russia.html
Kenz300 on Sat, 28th Apr 2012 6:32 pm
Rising demand for oil from China and India are the driving force in oil prices. Only a global economic collapse can reduce demand enough to drop oil prices substantially. The era of cheap oil is over.
luap Simpson on Sat, 28th Apr 2012 9:40 pm
over population..the route of all your problems..to many poeple for to few jobs..the greedy are just getting greedier(this means mostly bankers like Bob Dimond 27million per year pay) ..the poor getting poorer..more poeple use more oil..it can only get worse yet we still we spend billions on weapons instead of renewable energy..cheap oil is finished and it will end it all..I notice we now have to go to the artic or poison water supplies to get oil..the madness must end soon..at least we had a good run..its been fun
BillT on Sun, 29th Apr 2012 3:02 am
Arthur, China is tapping into more than Iranian oil. It has or is gaining access to most of the oil in central Asia and is buying more and more of it from the Saudis and other Middle East countries. Then there is the untapped South China Sea sources that will mostly go to China. There is at least 10 years left at the present rate and that will give them time to complete their railroads, and ties all of the continent together, just in time to provide transport when shipping and air become too expensive or impossible. And trains can be energized from many sources, not just oil.
Don’t count China out just because it has internal problems. They are coming to the Us very soon. Then we will see how the Empire manages guns and butter at home.
Kenz300 on Mon, 30th Apr 2012 5:35 pm
Resources are finite….. endless population growth demanding more and more resources is not sustainable.