[Graeme]

Oil Prices a Major Threat to Europe’s Economy, IEA’s Birol Says

$this->bbcode_second_pass_quote('', 'O')il prices are acting as a brake on the global economy, and harming Europe in particular, the International Energy Agency’s chief economist said at a conference in London today.

Europe will need to spend 500 billion euros ($668 billion) on oil imports this year, about 200 billion euros more than average levels, if oil prices remain near current levels, the IEA’s Fatih Birol, said in London at the start of International Petroleum Week.

“Prices are very high,” he said in a Bloomberg Television interview. The “current level of oil prices is a major impact on the global economy, but especially for Europe.”

Asked by reporters if IEA members are considering a release of emergency stockpiles, Birol said the agency doesn’t “discuss stocks just when prices are rising. We do it when there is a supply disruption.”

[Plantagenet]

$this->bbcode_second_pass_quote('Graeme', '[')b]Oil Prices a Major Threat to Europe’s Economy, IEA’s Birol Says

“Prices are very high,” he said in a Bloomberg Television interview. The “current level of oil prices is a major impact on the global economy, but especially for Europe.”

[dissident]

Reality is a threat to the EU economy.

[Tanada]

Reality is also a threat to most economists and every politician I have ever met or seen give a speech. The truth is you can not borrow your way into plentiful oil, and that is what our civilization is based upon. As more of the cheap supply dwindles the price will keep ratcheting upward, it has too to meet the demand with more expensive supply. We should see $500.00 bbl as still cheap because it is so useful to our civilization, but our entire system is set up for $35.00 bbl and we are having a horrible time adjusting to $115.00, let alone $500.00 bbl.

[John_A]

$this->bbcode_second_pass_quote('Tanada', '.')... but our entire system is set up for $35.00 bbl and we are having a horrible time adjusting to $115.00, let alone $500.00 bbl.

[Tanada]

http://ourfiniteworld.com/2012/10/25/an ... il-supply/

$this->bbcode_second_pass_quote('', 'W')e seem to hear two versions of the story of limited oil supply:

1. The economists’ view, saying that the issue is a simple problem of supply and demand. Substitution, higher prices, demand destruction, greater efficiency, and increased production of oil at higher prices will save the day.

2. A version of Hubbert’s peak oil theory, saying that world oil production will rise and at some point reach a plateau and begin to decline, because of geological depletion. The common belief is that the rate of decline will be determined by geological considerations, and will roughly match the rate at which production increased.

In my view, neither of these views is correct. My view is a third view:

3. An adequate supply of cheap ($20 or $30 barrel) oil is no longer available, because most of the “easy to extract” oil is gone. The cost of extracting oil keeps rising, but the ability of oil-importing economies to pay for this oil does not. There are no good low-cost substitutes for oil, so substitution is very limited and will continue to be very limited. The big oil-importing economies are already finding themselves in poor financial condition, as higher oil prices lead to cutbacks in discretionary spending and layoffs in discretionary industries.

[Outcast_Searcher]

I saw this IEA based article recently. What surprised me was how much the impact will supposedly be.

For the US with its car-centric economy and sprawl, definitely yes.

For Europe though, with already high gasoline taxes, and the resulting small cars, public transport infrastructure, etc. I would think not so much.

Given how poor IEA pricing forecasts seem to be on average over time -- I guess we'll see.

Big picture, I think it's 3rd world demand vs. rising first world efficiency, and the demand side certainly seems to have the strong grip on the rope.

[dolanbaker]

$this->bbcode_second_pass_quote('Outcast_Searcher', 'I') saw this IEA based article recently. What surprised me was how much the impact will supposedly be.

For the US with its car-centric economy and sprawl, definitely yes.

For Europe though, with already high gasoline taxes, and the resulting small cars, public transport infrastructure, etc. I would think not so much.

Given how poor IEA pricing forecasts seem to be on average over time -- I guess we'll see.

Big picture, I think it's 3rd world demand vs. rising first world efficiency, and the demand side certainly seems to have the strong grip on the rope.

[Econ101]

If they want expensive let them try electric cars for a while!$this->bbcode_second_pass_quote('Tanada', 'h')ttp://ourfiniteworld.com/2012/10/25/an-economic-theory-of-limited-oil-supply/

$this->bbcode_second_pass_quote('', '
')
In my view, neither of these views is correct. My view is a third view:

3. An adequate supply of cheap ($20 or $30 barrel) oil is no longer available, because most of the “easy to extract” oil is gone. The cost of extracting oil keeps rising, but the ability of oil-importing economies to pay for this oil does not. There are no good low-cost substitutes for oil, so substitution is very limited and will continue to be very limited. The big oil-importing economies are already finding themselves in poor financial condition, as higher oil prices lead to cutbacks in discretionary spending and layoffs in discretionary industries.