$this->bbcode_second_pass_quote('shady28', '
')My guess is that 2007 will see $2.90 - 3.00/gal gas in the states become the norm. That's roughly $75 / bbl for oil. I think the real question now is not when the peak is, but when the post-peak decline will start.
PeakOil is You
Energy costs and ramifications Post 2007/2008
Re: Energy costs and ramifications Post 2007/2008
by perpetrator_unknown » Wed 23 Aug 2006, 11:53:48
How did you work that one out ???
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perpetrator_unknown - Wood
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Re: Energy costs and ramifications Post 2007/2008
by MrBill » Mon 30 Oct 2006, 04:07:07
I see this thread has been bumped up in the rankings since it was started in February 2005? Well, 2007 is almost upon us here. What have we learned? We are obviously not burning less petroleum.
World growth is booming or shall I say motoring along at a brisk 4-5% per year pace lead by Asia that is growing even quicker. Crude at $78 a barrel did not crush the US economy or in the words of Jim Kunstler cause many Americans to burn Granny to keep the house warm last winter. Heating oil and natural gas stocks heading into this our winter of discontent seem historically high, and price premiums do not indicate any particular nervousness in the market to deal with physical demand. Unfortunately, for Amaranth’s investors that is.
In the good ol’ USA, Ford did not stop producing BIG cars and trucks. They even bolstered their F350 Series and introduced a newer and even larger F450 Series. Big and powerful enough to give a Red Neck a hard on. An aspirational purchase for them when Ford offers them on no money down, no interest for 6-years, and a 6-year or 100.000 mile road service guarantee. This will only ensure that Toyota continues to gain market share and stay the most profitable car company in the world.
Total crude demand in America is up 4.1% year on year despite higher interest rates, and a softer US housing market, plus those higher pump prices. And where is the price of crude? Falling or flat despite OPEC production cuts to defend the $60 a barrel region. We may see a US recession yet in 2007, but it will not be peak oil induced or even related to high pump prices.
Meanwhile, China and Japan are so scared to disrupt their export lead growth that they continue to keep their currencies artificially low in value and therefore continue to export capital to the US to help America remain the Consumer of Last Resort. A dubious honor no doubt. Probably storing up problems for the future. We know that the US can consume 70% of the world’s surplus savings, $1 trillion per year, but can they consume 100%? Where is the limit? We know they cannot consume more than 100% of the world’s accumulated savings. Just like China cannot consume all of the world’s base metals either.
And where are the solutions? Japan has manipulated their currency lower, not just against the dollar, but at a record low against the euro as well. Despite the second largest foreign exchange reserves in the world that have recently been eclipsed by China’s own. China Inc. continues to follow a jobs at any price strategy despite its costs in terms of environmental damage stored up for the future. And yet even some at PO admire their wanton destruction of their own country while exporting environmental degradation around the globe as being somehow an economic model that other nations should aspire to as well? Shall we all run trade surpluses? With whom shall we trade?
Where should Asia invest their export earnings? They do not seem very keen on developing their own capital markets or stimulating domestic demand. Not to mention future pensions and healthcare benefits that some of you moan about have to be paid by saving and investing today for a future return that is greater. No capital markets. No ability to save for the future. Buying non-interest earning assets like gold or silver are simply delayed consumption today (i.e. saving) for consumption tomorrow. No wealth has been created. Just consumption postponed.
Where should OPEC invest its oil revenue? Again they show little interest in developing their own capital markets. Having learned from their past booms and busts they are not interested in consuming their surplus today either. Therefore, those funds have to flow somewhere. Some to real estate in London no doubt, some into European financial markets as well, but the rest will find their way back into US markets and dollar instruments simply due to the size of the US market.
In many ways, the EU looks better than it is if you take away Germany’s huge contribution to exports and the EU budget, plus faster growth in the former CIS countries of CEE. Otherwise, old Europe looks, well, old and tired. The more they try to protect their workers the more uncompetitive they become, and the social safety net looks like a sick joke to the long-term unemployed while factories are built abroad. Meanwhile European consumers have been happy to abandon their excellent public transport infrastructure for big box stores and private autos despite paying almost twice for gasoline and diesel than in America. Newly affluent Asians have also become aspirational consumers and new autos, foreign vacations and travel are all a part of that.
So where are we today? Another year gone and most of the world, not just America, still heading in the wrong direction. US mid-term elections in a few weeks and not one word about any of these problems or any solutions proposed on how to solve them. At least $100 a barrel oil may have gotten someone’s attention, but alas the post peak oil world has been hastened not postponed by the events of the past year, and collectively we have learned very few lessons from the experience of Katerina/Rita/Wilma etcetera. We are like frogs in the pot and the temperature has gone up a manageable one degree so no cause for alarm. Will 2007/2008 be any different?
World growth is booming or shall I say motoring along at a brisk 4-5% per year pace lead by Asia that is growing even quicker. Crude at $78 a barrel did not crush the US economy or in the words of Jim Kunstler cause many Americans to burn Granny to keep the house warm last winter. Heating oil and natural gas stocks heading into this our winter of discontent seem historically high, and price premiums do not indicate any particular nervousness in the market to deal with physical demand. Unfortunately, for Amaranth’s investors that is.
In the good ol’ USA, Ford did not stop producing BIG cars and trucks. They even bolstered their F350 Series and introduced a newer and even larger F450 Series. Big and powerful enough to give a Red Neck a hard on. An aspirational purchase for them when Ford offers them on no money down, no interest for 6-years, and a 6-year or 100.000 mile road service guarantee. This will only ensure that Toyota continues to gain market share and stay the most profitable car company in the world.
Total crude demand in America is up 4.1% year on year despite higher interest rates, and a softer US housing market, plus those higher pump prices. And where is the price of crude? Falling or flat despite OPEC production cuts to defend the $60 a barrel region. We may see a US recession yet in 2007, but it will not be peak oil induced or even related to high pump prices.
Meanwhile, China and Japan are so scared to disrupt their export lead growth that they continue to keep their currencies artificially low in value and therefore continue to export capital to the US to help America remain the Consumer of Last Resort. A dubious honor no doubt. Probably storing up problems for the future. We know that the US can consume 70% of the world’s surplus savings, $1 trillion per year, but can they consume 100%? Where is the limit? We know they cannot consume more than 100% of the world’s accumulated savings. Just like China cannot consume all of the world’s base metals either.
And where are the solutions? Japan has manipulated their currency lower, not just against the dollar, but at a record low against the euro as well. Despite the second largest foreign exchange reserves in the world that have recently been eclipsed by China’s own. China Inc. continues to follow a jobs at any price strategy despite its costs in terms of environmental damage stored up for the future. And yet even some at PO admire their wanton destruction of their own country while exporting environmental degradation around the globe as being somehow an economic model that other nations should aspire to as well? Shall we all run trade surpluses? With whom shall we trade?
Where should Asia invest their export earnings? They do not seem very keen on developing their own capital markets or stimulating domestic demand. Not to mention future pensions and healthcare benefits that some of you moan about have to be paid by saving and investing today for a future return that is greater. No capital markets. No ability to save for the future. Buying non-interest earning assets like gold or silver are simply delayed consumption today (i.e. saving) for consumption tomorrow. No wealth has been created. Just consumption postponed.
Where should OPEC invest its oil revenue? Again they show little interest in developing their own capital markets. Having learned from their past booms and busts they are not interested in consuming their surplus today either. Therefore, those funds have to flow somewhere. Some to real estate in London no doubt, some into European financial markets as well, but the rest will find their way back into US markets and dollar instruments simply due to the size of the US market.
In many ways, the EU looks better than it is if you take away Germany’s huge contribution to exports and the EU budget, plus faster growth in the former CIS countries of CEE. Otherwise, old Europe looks, well, old and tired. The more they try to protect their workers the more uncompetitive they become, and the social safety net looks like a sick joke to the long-term unemployed while factories are built abroad. Meanwhile European consumers have been happy to abandon their excellent public transport infrastructure for big box stores and private autos despite paying almost twice for gasoline and diesel than in America. Newly affluent Asians have also become aspirational consumers and new autos, foreign vacations and travel are all a part of that.
So where are we today? Another year gone and most of the world, not just America, still heading in the wrong direction. US mid-term elections in a few weeks and not one word about any of these problems or any solutions proposed on how to solve them. At least $100 a barrel oil may have gotten someone’s attention, but alas the post peak oil world has been hastened not postponed by the events of the past year, and collectively we have learned very few lessons from the experience of Katerina/Rita/Wilma etcetera. We are like frogs in the pot and the temperature has gone up a manageable one degree so no cause for alarm. Will 2007/2008 be any different?
The organized state is a wonderful invention whereby everyone can live at someone else's expense.
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MrBill - Expert
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Re: Energy costs and ramifications Post 2007/2008
by MD » Mon 30 Oct 2006, 06:24:36
$this->bbcode_second_pass_quote('MrBill', '.')... Will 2007/2008 be any different?
Barring any major disrpuption, no it won't.
Great post MrBill
Stop filling dumpsters, as much as you possibly can, and everything will get better.
Just think it through.
It's not hard to do.
Just think it through.
It's not hard to do.
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MD - COB
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Re: Energy costs and ramifications Post 2007/2008
by Revi » Mon 30 Oct 2006, 13:13:40
I think that 2007/08 will be different here in Maine. People are barely hanging on here as it is. A recession will push a lot of them over the edge. Higher oil prices will really impact people who aren't able to make it now.
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Revi - Light Sweet Crude
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by Bytesmiths » Mon 30 Oct 2006, 14:20:07
$this->bbcode_second_pass_quote('Ludi', '')$this->bbcode_second_pass_quote('', 'A')lternates will come online,
What alternates do you see coming online to replace our petroleum-dependent agricultural system?:::: Jan Steinman, Communication Steward, EcoReality, a forming sustainable community. Be the change! ::::
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Bytesmiths - Tar Sands
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