[roccman]

$this->bbcode_second_pass_quote('MD', 'Y')eah, that's the long version. Me I like the short and sweet version: we're about done.

Thanks for the link though I'll have to read through it.

[Polemic]

$this->bbcode_second_pass_quote('', 'T')he decline in trade is a key issue. In a scenario where the US monetary system collapses, there will be oil somewhere in the world, but we won't be able to buy it. The inability to buy the oil will cause the problems, not the lack of oil itself. We also will find ourselves unable to buy most of the other goods we currently import.

[KillTheHumans]

$this->bbcode_second_pass_quote('roccman', '')$this->bbcode_second_pass_quote('MD', 'D')ude!

The economic impacts of peak oil are driving peak oil.

See my thread. That's just what I'm talkin' about!

Listen to the machine. The engine's making very bad sounds right now. She's about to blow cap'n I can'na give a bit more sir!

[MrBill]

Roccman, please include your source when quoting others. I am sure we are well aware of where to find The Oil Drum, but if it is just quoting their text without adding your own analysis and comments then we may as well just read the original articles over at that website. Thanks. MrBill.

[roccman]

$this->bbcode_second_pass_quote('MrBill', 'R')occman, please include your source when quoting others. I am sure we are well aware of where to find The Oil Drum, but if it is just quoting their text without adding your own analysis and comments then we may as well just read the original articles over at that website. Thanks. MrBill.

[MrBill]

Okay, points accepted. Thanks. MrBill.

[Ache]

http://www.energybulletin.net/37822.html

$this->bbcode_second_pass_quote('', 'T')here is a large and expanding economic literature that seeks to explain why the steep oil price rise since 2003 has not led to a recession. The common conclusion, arrived at by different models and analysis methods, is that the U.S. economy is now mostly immune to oil prices hikes and has been so since the mid-80's.

...

Here is a partial list of recent academic studies or web articles that claim that oil price shocks alone are not sufficient to cause economies to tip over into recession. Some of these are referenced in Hamilton's recent Econbrowser story cited above, others are not.

1. Why Do Oil Prices No Longer Shock? — Paul Segal
2. The Macroeconomic Effects of Oil Price Shocks: Why are the 2000s so different from the 1970s — Olivier J. Blanchard and Jordi Gali
3. Declining Effects of Oil-price Shocks — Munechika Katayama
4. The Economic Effects of Recent Increases in Energy Prices — Congressional Budget Office
5. Not All Oil Price Shocks Are Alike: Disentangling Demand and Supply Shocks in the Crude Oil Market — Lutz Kilian
6. Be Not Afraid — Jerry Taylor and Peter VanDoren

[roccman]

$this->bbcode_second_pass_quote('Ache', 'h')ttp://www.energybulletin.net/37822.html

$this->bbcode_second_pass_quote('', 'T')here is a large and expanding economic literature that seeks to explain why the steep oil price rise since 2003 has not led to a recession.

[mark]

With monetary expansion running 14% in the US to 50% in Russia, is it really a surprise that price doesn't matter. A year ago gas prices in Chicago were higher than now even though oil is up from 65 to 95. Who's eating that increase, not the end user. If you can still buy gas at the corner station, the price of oil doesn't matter.

Dutifully, all the talking heads who wish to impress are out to show the PTB that they can be a team player. The only thing that matters is to keep the illusion alive.

When it dies, it's likely to take most of us.

[KillTheHumans]

$this->bbcode_second_pass_quote('roccman', '
')
We are and have been in a recession for years.

[roccman]

$this->bbcode_second_pass_quote('KillTheHumans', '')$this->bbcode_second_pass_quote('roccman', '
')
We are and have been in a recession for years.

[Kingcoal]

As long as the supply is there and unhindered, all the US has to do is print more money. The oil shocks in the 70's were artificial and the result of OPEC literally turning off the spigot.

Of course in the long run, the spigots will start drying up one by one.

[roccman]

$this->bbcode_second_pass_quote('HydroLuver', 'R')occman, he has a point. For you to state that we have been in a recession for years is a stretch. It would be more fair to argue that we have been in a recession for months.

Most indicators would seem to point to the housing slowdown starting within the past 12 months. The credit crisis clearly started this past summer.

[Tyler_JC]

Roccman, when economists talk about GDP, they mean the entire nation as a whole unit, not the average individual in that economy.

The entire economy as a whole can grow (adjusted for inflation) and yet most people can see absolutely no benefit.

For example, if there are 100 people on an island earning $100 a year, the GDP of that island is $10,000. ($100*100)

Now let's say that half of those people enslave the rest and put them to work in the sugar fields. Work in the sugar fields creates $500 worth of wealth per worker.

The 50 enslaved folks would earn $0 each and the 50 masters would earn $500 each.

The economy has grown from $10,000 to $25,000 (50*$500).

And yet, a rather large chunk of the population is worse off than before.

But the better off people are so much better off that they offset the losses of the losers.

And we wonder why they call economics the "dismal science."

[clueless]

$this->bbcode_second_pass_quote('Ache', 'h')ttp://www.energybulletin.net/37822.html

$this->bbcode_second_pass_quote('', 'T')here is a large and expanding economic literature that seeks to explain why the steep oil price rise since 2003 has not led to a recession. The common conclusion, arrived at by different models and analysis methods, is that the U.S. economy is now mostly immune to oil prices hikes and has been so since the mid-80's.

...

Here is a partial list of recent academic studies or web articles that claim that oil price shocks alone are not sufficient to cause economies to tip over into recession. Some of these are referenced in Hamilton's recent Econbrowser story cited above, others are not.

1. Why Do Oil Prices No Longer Shock? — Paul Segal
2. The Macroeconomic Effects of Oil Price Shocks: Why are the 2000s so different from the 1970s — Olivier J. Blanchard and Jordi Gali
3. Declining Effects of Oil-price Shocks — Munechika Katayama
4. The Economic Effects of Recent Increases in Energy Prices — Congressional Budget Office
5. Not All Oil Price Shocks Are Alike: Disentangling Demand and Supply Shocks in the Crude Oil Market — Lutz Kilian
6. Be Not Afraid — Jerry Taylor and Peter VanDoren

[threadbear]

Ravi Batra--Understands inflationary depressions pretty well. Roccman is correct that we actually are in a major recession and have been for years.

Ravi:

BATRA: The main reason is that we don't have a free enterprise economy. It is touted as a free enterprise economy but we really don't have that. In fact, what we have are regional monopolies or a monopolized economy.

Some people call it "Crony Capitalism." The main feature of a monopolized economy is that the fruit of rising productivity goes to owners of capital, not to the employees. So there occurs a rising gap between productivity and wages. Wages are the main source of demand and productivity is the main source of supply so with the rising gap between wages and productivity there is a potential for a gap between demand and supply.

And that has been occurring in the U.S. for many years now. So the question is how have we stayed afloat for so long with supply rising faster than demand? The answer is demand has remained artificially high through the creation of debt, either from government, consumers, corporations and foreigners.

All this debt has combined to lift up demand to the level of supply. But debt created prosperity cannot last forever. So we have gotten into this mess by: First, allowing wages to lag behind productivity and secondly by artificially bolstering demand by creating a tremendous amount of debt. All we have done is simply postponed the problem. And, since this postponement has been going on for many years, the mess is potentially catastrophic

http://www.usagold.com/taylorbatracrash.html

[Ache]

$this->bbcode_second_pass_quote('', '
')
1. Why Do Oil Prices No Longer Shock? — Paul Segal


This paper surveys the literature on the relationship between oil prices and the macroeconomy in order to explain why high oil prices over the past three years do not appear to have led to a slow-down the world economy. It makes three arguments. First, that oil prices have never been as important as is popularly thought. Second, that the most important route through which oil prices affect output is monetary policy: when oil prices pass through to core inflation, monetary authorities raise interest rates, slowing growth. It is argued that the direct effect of high oil prices on output is relatively small and that the microeconomic mechanisms proposed in the literature are insufficient to explain the historical impact of oil prices. Based on the second argument, the third argument is that high oil prices have not reduced growth in the past three years because they no longer pass through to core inflation, so the monetary tightening previously seen in response to high oil prices is absent.

[venky]

We peak oilers tend to equate decline of oil with the sky is falling. Perhaps that is why we dont get taken seriously in the mainstream as much as we should; because depletion is a serious problem.

The only previous scenario we have to go by is the oil shock of the 70's; the author in the original post makes the argument that things are different now. And we need to develop economic models that more adequately predict the effects of oil depletion instead of assuming that we are screwed.

[Temperedoil]

I recall it having been previously suggested (both here and elsewhere) that the real rate of inflation - in the USA at least - may have been significantly higher in the past twenty years than the official figures would state. With this being the case, the price of oil would need to rise much higher than the current $100 per barrel to have the effects that were experienced in the 1970's and early 1980's.

It has also been suggested that the price as it stands is pricing poorer countries out of the market altogether, thereby leaving a greater slice of a declining overall oil pie for wealthier importing nations such as the USA, much of Western Europe, and elsewhere.

This second point, plus the falling value of the US Dollar, would lead to there not yet being the level of shortages experienced in wealthy nations outside of the USA that caused the related problems of the past two oil shocks.

If the above are accurate appraisals of the current situation, particularly in comparison to the previous oil shocks, then we may have a bit more time left before we get hit to the same degree as was the case in the 1970's and early 1980's. More so for the wealthy nations outside the USA than for the USA itself. Suggestions in the media of the price of oil no longer being relevant to economic activity, growth, prosperity, that economies have changed considerably to the point of no longer being beholden to the vagaries of oil price rises, would seem to me to be a little premature at this stage.