[nth]

If US economy goes in a recession, will the world fall into recession?

If yes, won't oil demands drop? If yes, PO effects get minimized?

[maverickdoc]

yes

yes

Most definately NO

[bantri]

If a recession caused by global resource depletion appears, everybody will feel the effects... starting for those locations that use more of it or have less access to it...

Assume for example that from now on we have a global popcorn depletion... woudn´t you rush to the supermarket for the last ones to enjoy in your favorite movie?

For the last question... If you look individually at all depletion curves that passed the peak you will notice a sad coincidence... the jittery part happens on the left side...

[threadbear]

The effects of a global recession on demand will be significant. The price should drop. But what if we've entered into an era where oil is so scarce that the oil companies can offer it to the highest bidder and screw the rest? It won't be so much demand destruction as demand restructure. It will hasten the process of restructuring the classes. The middle class will no longer exist, the lower upper will also be destroyed. There may be a few very wealthy people driving cars, everyone else on mopeds.

[hawkeye0]

With our economy so reliant on oil, it seems that a major recession/depression would just stave of the inevitable for a bit longer.

[Eteonian]

A severe recession is the most elegant way to make sure there is enough oil for those who really need it, the super rich for all eternety and none for the rest of us. If they wait too long with the recession that wouldn't work. Expect it sooner than 'technical depletion'.

[RdSnt]

I love the way even the people on this site skirt around the word Depression, it's like whistling-past-a-graveyard.
When the US economy falls, it's going over a cliff, straight into a disasterous depression. There isn't going to be any transition or soft landing. The entire economic world is just waiting for the ax to fall and most foreign countries are scrambling, as discreetly as possible, to isolate themselves from the damage.

[nth]

$this->bbcode_second_pass_quote('RdSnt', 'I') love the way even the people on this site skirt around the word Depression, it's like whistling-past-a-graveyard.
When the US economy falls, it's going over a cliff, straight into a disasterous depression. There isn't going to be any transition or soft landing. The entire economic world is just waiting for the ax to fall and most foreign countries are scrambling, as discreetly as possible, to isolate themselves from the damage.

[Kingcoal]

The world economy will grind to a halt. Right now, it's much cheaper to transport raw materials into China, India (via dirt cheap oil), then transport finished products into the US and rest of the world, again via dirt cheap oil. As transport makes up a bigger and bigger part of off shore manufacturing, the Chinese will feel an ever-tightening squeeze on their already ultra thin profit margins. Prices will inevitably go up and demand will fall. I think it will be a gradual process. In the future, China might wish it had developed its agricultural resources instead of its industrial base.

Transportation, which accounts for something like 70% of world oil usage, will be severely curtailed. In America, driving two hours each way to work in a gas-hogging vehicle will become non-economically viable. Unemployment should increase in sectors that are now booming. Local manufacturing using local resources might see resurgence, however.

The electric grid should stay up and running, however. Coal plants require constant deliveries, usually via trains, but that will be prioritized. Geothermal heatpumps might become the new craze as home heating oil and NG goes through the roof.

I see a back to basics with food. Just look down the aisles of a modern grocery store in the US. Most of the space is taken up by processed food. Processed as in manufactured with lots of hydrocarbons. I think grocery stores will go back to basics selling mostly produce, meat and grains. Processed foods will become too expensive and demand for them will wane.

To sum up, I see a future world with electricity, but not very mobile. We lived like that in the pre-oil days (minus the electricity.) The biggest difference was that there wasn't so many of us back then.

[nth]

Yeah, you are calling for a soft landing, but I was trying to get at a recession not caused by oil.

$this->bbcode_second_pass_quote('Kingcoal', 'T')he world economy will grind to a halt. Right now, it's much cheaper to transport raw materials into China, India (via dirt cheap oil), then transport finished products into the US and rest of the world, again via dirt cheap oil. As transport makes up a bigger and bigger part of off shore manufacturing, the Chinese will feel an ever-tightening squeeze on their already ultra thin profit margins. Prices will inevitably go up and demand will fall. I think it will be a gradual process. In the future, China might wish it had developed its agricultural resources instead of its industrial base.

Transportation, which accounts for something like 70% of world oil usage, will be severely curtailed. In America, driving two hours each way to work in a gas-hogging vehicle will become non-economically viable. Unemployment should increase in sectors that are now booming. Local manufacturing using local resources might see resurgence, however.

The electric grid should stay up and running, however. Coal plants require constant deliveries, usually via trains, but that will be prioritized. Geothermal heatpumps might become the new craze as home heating oil and NG goes through the roof.

I see a back to basics with food. Just look down the aisles of a modern grocery store in the US. Most of the space is taken up by processed food. Processed as in manufactured with lots of hydrocarbons. I think grocery stores will go back to basics selling mostly produce, meat and grains. Processed foods will become too expensive and demand for them will wane.

To sum up, I see a future world with electricity, but not very mobile. We lived like that in the pre-oil days (minus the electricity.) The biggest difference was that there wasn't so many of us back then.

[Euric]

$this->bbcode_second_pass_quote('nth', 'N')ow the idea that US recession automatically leads to depression is not the case. There is a chance of depression, but it doesn't have to be the case. Currently, there is enough consensus that US is the engine of growth.

Maybe in 10 years, the world can depend on EU or China to foster consumer led growth, but until then, US consumer purchasing power is the driving force behind developing nations industrialization, and so if US slows purchasing, these economies will consume less oil.

[Jack]

$this->bbcode_second_pass_quote('Euric', '
')There needs to be less emphasis on growth and more emphasis on balacing the economies of the world. Whatever happened to tarifs, that helped compensate for economic imbalances between countries? When you create a world economy where nations trade more fairly, you don't have a need for some of the policies that don't work. Growth is one of them.

[chris-h]

$this->bbcode_second_pass_quote('nth', 'I')f US economy goes in a recession, will the world fall into recession?
If yes, won't oil demands drop?
If yes, PO effects get minimized?

[nth]

$this->bbcode_second_pass_quote('chris-h', '')$this->bbcode_second_pass_quote('nth', 'I')f US economy goes in a recession, will the world fall into recession? If yes, won't oil demands drop? If yes, PO effects get minimized?

[Jack]

$this->bbcode_second_pass_quote('chris-h', 'T')he oil producing region will become very rich.

[nth]

$this->bbcode_second_pass_quote('Jack', '
')Truly, I wonder. I'm not sure they're going to get rich...they may just put off the day of reckoning for when their inheritance runs out.

[Jack]

$this->bbcode_second_pass_quote('nth', '')$this->bbcode_second_pass_quote('Jack', '
')Truly, I wonder. I'm not sure they're going to get rich...they may just put off the day of reckoning for when their inheritance runs out.

[wildmanj]

won't oil demands drop?

i read somewhere recently but can't remember where there a barrel of oil had an $18 fear factor within the cost of that barrel of oil-----is there somewhere daily that one could check the "fear factor cost" of a barrel of oil------

[marko]

As I've predicted in other posts, a graph of global economic output post-peak will look like the path of a slinky down a staircase. A graph of oil prices will be the reverse, with a general uptrend punctuated by short declines.

There will be a small rise in output. This will drive up oil prices to the point where they trigger a recession/depression. There will be a sharp drop in output, and a corresponding slight drop in oil prices to a point where oil prices level off. As soon as the recession moderates, oil prices start to rise again. There will be a slight improvement in the economy until prices spike, and then another sharp drop in output, accompanied by a slight drop in oil prices.

I predict that the current rise in oil prices will trigger a US recession when oil prices reach the neighborhood of 75-80 dollars a barrel, either late this year or perhaps in the summer of 2006. However, due to the highly leveraged nature of the US economy, the recession will spark a debt crisis, as millions of consumers, laid off or their salaries cut, fail to make payments on their mortgages or credit card debts. This will pop the real estate bubble and cause a financial crisis, including bank failures. Interest rates will rise as the amount of money in circulation drops. The rise in interest rates will lead to a renewed debt crisis and a collapse of the US financial and retail sectors, followed by other sectors. Ultimately, we will have a depression that will make the 1930s look easy. Oil prices will drop in real terms, but Americans will not be able to afford to import much of it even so.

The loss of the US market and the flow of dollars to Asia will push East Asia into a depression that mirrors that in the US. The financial crisis that I described will include a selloff of dollar assets and a plunge in the value of the dollar. So that even if the depression causes oil prices to drop in solid currencies like the euro, prices will still soar in dollars. Meanwhile, Asians will no longer be able to lend the US dollars. At the same time, the depression will swell the Federal budget deficit, partly because revenues will drop sharply in real terms, partly because domestic expenditures (poverty relief, etc.) will rise, and partly because debt service, with soaring interest rates, will skyrocket. Where will the Federal government get the money to fund its deficit? Ultimately, the only ways out are debt repudiation or hyperinflation, which will wreck what is left of the financial sector and destroy the savings of those who have not already gone bankrupt (except for the rich who hold valuable physical assets like coal mines).

Meanwhile, Europe may get by with only a deep recession, though the financial crisis will hit the UK especially hard. Canada, Australia, and New Zealand are likely to suffer along with the US and East Asia, since their economies are dependent on the US and/or East Asia.

Finally, after years of hardship, there may be a meager economic improvement. To the extent that the economy still relies on petroleum-based energy, any improvement will send oil prices skyward again and lead to another economic decline.

[threadbear]

Excellent Marko-- Your understanding of perpetual recession where a ceiling is imposed on a full "recovery" by a finite (planet) energy supply is poetic. The revenge of the natural world, a return to homeostasis, Giia. It's something I've thought about often. And even if cheaper energy is somehow found, we have peak water, peak clean air, peak this, peak that. Oil is just the most apparent manifestation of an exhausted planet, and that will create either a laissez-faire world where only a small percentage of humanity can lead a middle class Western style life, while othere starve, or a quota system where everyone just barely gets by.

This article describes the situation in China, without really getting into the issue of peak oil.

From Der Spiegel- English translation

"Pan: This miracle will end soon because the environment can no longer keep pace. Acid rain is falling on one third of the Chinese territory, half of the water in our seven largest rivers is completely useless, while one fourth of our citizens does not have access to clean drinking water. One third of the urban population is breathing polluted air, and less than 20 percent of the trash in cities is treated and processed in an environmentally sustainable manner. Finally, five of the ten most polluted cities worldwide are in China."

http://service.spiegel.de/cache/interna ... 94,00.html