[Hegel]

What do you expect to happen in 2006 regarding Peak-Oil-Theory?

[gt1370a]

I expect a decline in the US housing market to set off a chain of events leading to global recession, in which oil demand will drop well below 80 Mb/day, accompanied by a price drop into the 30s or 40s, and concerns about an imminent peak going away. Unless there is a catastrophic supply disruption, such as war with Iran, in which case it will be an oil price spike which sets off a chain of events leading to global recession...

[Hegel]

I expect the same as you do. Only 2 "roads" are left in this great adventure. Sad, isn't?

[The_Toecutter]

As we get further past the peak, the mainstream might reveal that we passed peak in 2004 or 2005 next year, and the governments seeking to maintain control from the growing unrest will resort to even more fascism. Oil is their source of control, and the government and the corporations running it will not take too kindly to those pushing alternative fuels, either, as that threatens the lofty profits the oil industry will be pulling post peak when the prices really soar...

Of course, I should clarify it doesn't apply exclusively to 2006, but is a process that is already in process and takes time to complete. 2006 is very likely to look much like 2005, only just slightly worse.

[MonteQuest]

I think a economic crisis is likely, but I expect demand for energy to increase even in the face of a recession.

Why?

Chindia. Lots of inertia there with 9.5% growth. Over 2 billion people engaged in a larger economic and industrial expansion than the Industrial Revolution is a huge hungry maw.

[crapattack]

I think this is the point at which we will notice the toboggan tilt and start to run downhill. Hope you got some pillows up front 'cause it's gonna be bumpy ride to the bottom.

[bobcousins]

I expect a repeat of what happened in 2005. Some hurricanes, some gas queues, ups and downs. Lots of PO hysteria. No change really.

[Omnitir]

I also think 06 will be similar to 05. A potential problem though is that 06 could be a complete smooth sailing non-event, in which case many people will have a false sense of security. If 06 is non-eventful, complacency is a real danger. Hopefully there will be some ups and downs to at least keep awareness of the issue growing.

It seems like prices need to constantly rise to get people’s attention. If prices remain stagnant for too long, even at a high price, it just seems like people will relax and forget that it was ever cheap.

But I seriously doubt it’ll all fall apart for another few years at the very least.

[GenghisKen]

1) I expect in 06 to see housing continuing to slow .
2) More inflation (food prices and everything else rising in price).
3)Steady rise in oil prices as everyone has to refill their SPR's after helping the USA out after Katrina.
4)Chindia growth continuing(because they have all the productive jobs).
5) Gold will go up large(wish I was a goldbug, or at least had some) as housing continues to slump money has to find an asset the only asset around right now is PM's.
6)March will be horrid for the dollar or perhaps the month after(Iran oil bourse hope isreal doesnt do a strike on em) after all a dollar that is only worth the oil ya can buy with it now. If ya dont need the dollar to do it....(get rid of 24% energy use by only 5% of pop)easy way for rest of world to buy more time before full awfullness.
7) Everyday life will be a little harder..everyday...(Everything will drain yer wallet just that little bit more.)
MORE news coverage that says EVEN less.
9) Market worries cause greenspan going in a bad time(now).
10) More strikes by people that are reliant on cheaper than now oil prices for their living.
so all in all I see last year, only a bit worse with the exception of a major oil spike around march april. after that its anyones game.

Merry xmas all, enjoy it as the "good ole days"

[gt1370a]

$this->bbcode_second_pass_quote('GenghisKen', '1')) I expect in 06 to see housing continuing to slow .
2) More inflation (food prices and everything else rising in price).
3)Steady rise in oil prices as everyone has to refill their SPR's after helping the USA out after Katrina.
4)Chindia growth continuing(because they have all the productive jobs).

[trespam]

Weren't people posting predictions for 2005 at the end of 2004? Why not just get those and cut-paste them into this thread? Or better yet, just cross-reference? It would save lots of time. They'd be just as accurate--or inaccurate, as the case may be.

My prediction. Yes, there is a lot of debt. Yes, energy is tightenting. Yes, energy is more expensive. But...drum roll please....

2006 will not be that different than 2005. Housing will finally top. The stock markets may go up or down (they always do). Energy prices will stay pretty damn flat, oscillating around current prices (excepting case of large-scale problems in middle east).

And people will continue to post and repost the same speculative stuff ad-nauseum on peakoil.com. It's good entertainment, mind you, if you've got nothing better to do. And I suppose provides some people with the largely fallacious idea that they are "doing something about peakoil." Particularly if they are a moderator.

[Sys1]

Back in august, i thought that we would have reached now 80 to 100$.
I was wrong, so i won't do prediction any more.

Oil could reach 100$ in march, or get down to 45$ until winter 2007, i would not be surprised. But... Is oil price a good indicator of peak oil? SPR, market manipulation, so much ways to hide the truth !

Well, anyway, i'm still pretty confident in one thing from what i observed this year : oil and natural gaz prices get higher, food prices too. More and more people are getting deep into debts, many more homelesses in streets, house bubble becoming pretty fat, some politics starting to speak like fascists and population eagger to vote for them...
Peak oil is very real. Like the Titanic, we sink slowly still thinking we are so much invincible that it's useless to care about global warming and the absurd economic paradigm every media hug : GROWTH.

[rockdoc123]

My view is what will happen is completely dependant on perception of demand....not the demand itself but the markets view. In late 2005 the perception was that higher oil prices would destroy demand....this does not appear to have been the case. As well the market has to get out of the mindset that the US consumption controls world markets....it did so unilaterally years ago but China is now a big player....and it appears that oil demand is price inelastic in China.
More oil will come on stream from large projects but we are also going to see declines elsewhere and likely some nasty surprises from oil fields. As a consequence demand or in truth what the market thinks demand is going to be in the next quarter will be what controls oil prices.

Detailed prediction:
WTI to stay in the $57 - $64 range through February....dropping to $50 - $58 range through April or May and then stabilizing in the $55 + range for the rest of the year. Of course I could be full of crap.

[donshan]

In 2006 I think we will see the the beginnings of a dollar/interest rate caused recession begin in the economy. The second year of a presidential term cycle is a common time for recessions anyway.

In 2006 we enter a period of rising inflation, rising interest rates and increasing housing foreclosures. A small stock market drop will occur. All the usual "tricks" of monetary policy will be applied, but we will never come back to the economic levels of 2005 again.

With a recession the economy will use less oil. If the US goes into recession China and the rest of Asia will slow down too. Thus, we could have a small world surplus of oil next year and dropping prices for oil and gasoline. Dropping demand will obscure the plateau in oil production capacity. This demand destruction will "prove" to the Peak Oil skeptics that there is no problem since they will not be concerned with the details, only the effects- lower oil and gasoline prices.The causes of this recession will only become evident slowly. Peak oil will have problems of credibility in 2006 if the recession happens.

By 2007 more and more evidence will be available that the world economy cannot get going back up again because of true shortages of fuel, even at the recession level economy. Oil prices will start to climb to new record prices as hoarding and stockpiling of oil supplies occurs worldwide. Peak Oil will be recognized as the source of the problem.

Then sometime in 2007 as the election politics for 2008 begins, the light will dawn on the American people of what has happened. A true stock market panic will occur. October 2007!

You can read the history of the next election here, with the approximate electoral vote count percentage- reverse the colors!:



http://en.wikipedia.org/wiki/U.S._presi ... tion,_1932
$this->bbcode_second_pass_quote('', '"')I pledge you, I pledge myself, to a new deal for the American people."

[GenghisKen]

GenghisKen wrote:
1) I expect in 06 to see housing continuing to slow .
2) More inflation (food prices and everything else rising in price).
3)Steady rise in oil prices as everyone has to refill their SPR's after helping the USA out after Katrina.
4)Chindia growth continuing(because they have all the productive jobs).


Ken, a couple of questions. How can there be inflation when consumers have already had a negative savings rate and maxed out credit since August? If energy/food prices go up, doesn't that leave less disposable income to spend on other stuff, reducing demand and driving the price down? In other words, might high energy prices be deflationary this time?

I cannot and willnot speak for anyone but myself MQ has his own opinions and much better writting skills than I. So I will answer only the questions directed to me and will say "This is only my Opinion"which is worth very little indeed.

gt1370a

First. the chinese economy is an economy they have factory workers they have accountants they have small business they have doctors lawyers and a middle class that is growining very quickly indeed. if your image is of peasants in a feild you are only seeing the PAST in china .http://www.nytimes.com/2005/12/20/busin ... -yuan.html
they are producing ..NOT just for the USA they are producing for a full on economy of their own now as well as the rest of the world.

As for why I think it will be Inflationary in the USA . Hmm greenspans replacement is Pro-inflation. inflation lowers debt what does the USA have alot of right now?(you guessed it DEBT) The fed will print more money .more money will find it's way into the system.http://www.financialsense.com/fsu/edito ... /1114.html
debt will increase untill the rest of the world pulls the rug out from beneath our feet. again just my opinion.. and I really do wish you all the best.

[gt1370a]

$this->bbcode_second_pass_quote('GenghisKen', 'A')s for why I think it will be Inflationary in the USA . Hmm greenspans replacement is Pro-inflation. inflation lowers debt what does the USA have alot of right now?(you guessed it DEBT) The fed will print more money .more money will find it's way into the system.http://www.financialsense.com/fsu/edito ... /1114.html
debt will increase untill the rest of the world pulls the rug out from beneath our feet. again just my opinion.. and I really do wish you all the best.

[Novus]

I believe 2006 will be seen by historians as year one post peak. Peak month was October 2004 and 2005 overall was the peak year for oil production. Don't expect the media to talk about it though. Peak oil will gain some traction in the public mindset but they will not reach the awarenss level that global warming has for many years to come.

Lower oil production in 2006 will yeild two types of inflation. We will see much higher energy prices which will show up in higher food costs and other living expenses.

The housing bubble will NOT burst in 2006. There will probably be a recession starting toward end of the year but housing will not be its cause. Higher energy costs will actually make housing more expensive because housing is a representitive of energy. It takes a great deal of energy to build a house and as those material costs up so does the value of the house.

The recession will begin because of depressionary wage deflation. The true unemployment rate or under employment rate is actually going up. When companies like GM lay off workers the workers don't stay unemployed. They continue working at other jobs but at reduced pay and often no medical benifits. The transit strike in NYC was mostly over medical benifits which many workers will no longer receive. Even though heath costs are rising many Hospitals are cutting staff because fewer people can afford to pay or have benifits anymore. The retail and service sectors are also entering a depressionary stage. Even though the malls were all packed this Christmas many retailers did not make a dime. Seasonal layoffs this winter will be deeper because retail profits are down and the consumer is basically tapped out for the time being.

Overall life will be harder in 2006 for the average indebted joe but no socialtal collapse yet. Sorry Doomers. For the rich elite it will even be seen as another good year.

[marko]

My prediction is that 2006 will be a gradual slide into recession, though government statistics may obscure this. The reason is that government statistics underreport inflation, and therefore overreport real GDP growth. I think that GDP will begin to shrink in real terms. (It will continue to grow at a nominal rate around 4%, but real inflation will exceed this.) The reason is that this month, many lower income consumers will be hit hard by higher minimum credit card payments and by higher heating costs. The February heating bill (for January's heat) will be even worse. This is likely to lead to rising mortgage defaults. Meanwhile, millions of adjustable-rate mortgages will reset this year at higher rates. This will lead to more defaults.

This will be happening at the same time that millions of people who are not financially distressed rush to put their houses on the market to cash in on the market peak in the hopes of moving to someplace like Florida or Arizona to retire where heating costs aren't so high, and where they can live off the difference between their selling price in the Northeast or California and the lower buying price in FL/AZ/NV.

The flood of distressed and not so distressed houses will hit the market when virtually everyone who wants to own a home and can afford it has bought one. Meanwhile, speculative demand for "investment" real estate is drying up (except maybe in FL and AZ) as the news gets out that prices aren't rising any more. So demand will drop as supply increases. Guess what that does to the price?

In terms of the real economy, the increase in fuel and mortgage costs, coupled with higher interest rates for consumer credit and the loss of housing appreciation as a source of perceived "income," will mean stagnant or falling household consumption. This is what will send GDP growth negative in real terms, even as mushrooming money supply growth and higher fuel prices continue to bring price inflation. Corporate earnings will fall, and there will be a consequent selloff on the stock market.

By the end of the year, the financial sector will be stressed due to the loss of the carry trade (in which banks earn money by borrowing short-term and lending long-term at a higher rate, no longer possible now that long-term rates are below short-term), the loss of the mortgage refinance trade, and rising rates of mortgage losses (due to forced sales at prices less than the amount owed on the mortgage). This could even lead to a derivatives meltdown, which would accelerate and deepen the slide into recession.

Either way, it will get worse in 2007 due to layoffs and rising unemployment, which will further cut consumer demand, increase mortgage foreclosures, lower housing prices, etc., in a vicious cycle.

I expect oil prices generally to rise to around $70 by March or so, but then to begin a slide toward $50 by the end of the year as demand slows. Prices will drop sharply, maybe as low as $25-30, during 2007 as the severe recession/depression spreads globally and sharply cuts demand. Peak oil skeptics will feel vindicated and there will be a consensus that oil prices simply reflect the state of the economy.

This forecast assumes that the US does not attack Iran in 2006 and that its euro-based oil bourse has little effect on the dollar. If the US (or Israel) does attack Iran, we could be in for a truly harrowing year. Iran would turn the Persian Gulf, and particularly its mouth (the narrow Strait of Hormuz) into a war zone, and oil supply from the Persian Gulf would drop sharply, sending prices to around $200 and throwing the world into a severe depression rather quickly. China, Russia, and Europe would put great pressure on the US to negotiate a truce with Iran, but it is hard to imagine terms that both Iran and the US would accept.

As a last resort, late in 2006, China, having already lost much of its US market to the depression, might well decide that its best option is to try to stop the US war machine by selling off its holdings of US treasury debt, which would send the dollar plunging, and US interest rates soaring, and bring a collapse of the global financial system. The US government would be facing something like bankruptcy, which it could try to avert by hyperinflationary money creation (the Fed buying up US government debt). This would send oil prices through the roof in dollar terms, though they would be lower in terms of the euro. There would be massive unemployment and unrest around the world. The consequences of this would be really impossible to predict at this point.

[Sunspot]

It's likely that Israel will attack Iran before March when Iran's oil trading "bourse" is, the last I know, scheduled to open. These will be "surgical" strikes on suspected uranium enrichment sites, some of which are in residential areas. If Iran retaliates - and they may not - this will likely lead to the closing of the Straits of Hormuz, cutting off 25% of the world's oil supply. This will lead to instant "oil shock". I doubt we will ever recover after that.
If none of this happens this year, I think we may squeak through, at least here in the US. It looks like the real crunch time for oil starts in 2007 when the number of new projects coming online - a known quantity - starts to really dwindle.
Then again, the climate may flip and start the new ice age this year. That'd be interesting...