[Blech]

Hi,
Has anybody compared the bell curve (upside so far) of the DOW with the upside curve of oil production/consumption? It's instructive. I'll admit I haven't charted one on top of the other (I should), but a brief comparison shows remarkable similarity. Well, maybe it's not so remarkable.

If we take this as a testable assumption, that the stock market (and by proxy the global economy) roughly tracks available energy, what does the future hold? Most of the future energy (oil) charts I see show a nice, long tail on the Gaussian. Which makes perfect sense when you look at the first half, and knowing a few things about bell curves. Using this assumption I expect that to call this 'The Long Emergency' is very appropriate. Disruptions, inflation, some civil unrest - yes indeed. TSHIF, precipitous extinction, nuclear war: unlikely.

Don't forget, if true the tail is slower and longer than the upswing, and we have a lot of nice technology (yes) to cushion it.

Blech

[gt1370a]

Why would anybody leave their money in the stock market if there was no potential for growth? If the Dow is correlated to energy supply, does a long, slow depletion of your investments sound appealing? And once people realize this and pull their money out of the market, the Dow will not follow a slow, long decline. It will fall off. So will oil demand.

[gnm]

However saying that oil demand will fall off is like saying that food demand will fall off. Perhaps you can eat a little less but demand destruction can only go so far before it REALLY starts to hurt. I agree about the stock assesment though. But perhaps some stocks (oil refining?) will gain in the interim while the others fall... But in the long term (10-20 years) they will all fall...

-G

[aahala]

If you pick the right timeframe, just about any two things will move together.

If you think oil and the stock market are inherently tied together, I suggest
you look at a particular week in 1929, to see if oil available dropped about
30%.

[MicroHydro]

Before PO, oil supply was effectively unlimited, so oil consumption was driven by economic activity. Since the Dow anticipates economic activity, there is no mystery why oil consumption was a smoothed and slightly delayed mirror of the Dow.

In the depression, oil was $0.10/barrel. Thus 1930s America produced for the first time the spectacle of homeless starving people who owned cars and could afford gas. You won't see that again.

[spudbuddy]

In the depression, oil was $0.10/barrel. Thus 1930s America produced for the first time the spectacle of homeless starving people who owned cars and could afford gas. You won't see that again.[/quote]

Fascinating.

Something else that bears strong consideration is the sheer number of things that are by-products of oil.
All plastics. Chemical fertilizer. Much processing of food...especially the kind of food products that are basically blown apart (from their natural state) and then re-constituted.
Other than making perishables more non-perishable, for convenience's sake...we shouldn't be too unhappy to see these things go.

I find myself wondering how this will ultimately effect Globalization, outsourcing, offshoring, the proliferation of giant box stores, franchising, and basically the whole corporatizing process that has happened over the past 50 years.

Obviously, transportation costs will hit everyone.
How will this affect communications and "instant money" flow around the planet?
Will paper value disappear, and be replaced by real value?
And finally...the real estate bubble...(I'm thinking about the plunging assessments of suburban property)...will the value of this land take a deep plunge once people find it increasingly difficult to cover the cost of living there? (again - transportation costs.)

To contrast your quote...imagine owning free and clear an exburban McMansion, and not being able to afford to heat and cool it?

[cube]

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Don't forget, if true the tail is slower and longer than the upswing, and we have a lot of nice technology (yes) to cushion it.

Blech