[burtonridr]

You have watched oil prices sky rocket this year just as I have. Basically we are the point where supply just barely keeps up with demand. Because of this it caused the price of oil and fuel to rise.

It was only one aspect of the reason we are seeing problems, PO has just "flamed the fire" so to speak. For a lot of businesses, higher gas prices equals a higher cost to do business. Well combine that with a credit crunch and the businesses are having problems absorbing those extra costs as well as passing the extra cost on to the consumers. So this is a big part of the reason why so many small businesses are having hard times.

When small businesses have a hard time it affects larger businesses. Small businesses lay off employees to stay alive, or go out of business. That results in people missing house payments and going into foreclosure, combine that with adjustable rate mortgages and it is hard for a lot of people to get by.

Basically in a nut shell, higher gas prices means a higher cost of living for everyone and a higher cost to do business. Without available credit to help people absorb those extra costs PO has fueled the fire. It has helped raise the price of everything from food, water, electricity, fertilizers, pesticides, shoes, tv's, road construction, coffee mugs, you name it. As long as oil fields begin to decline in supply the cost of living will continue to rise until our society creates a way of living that doesnt so heavily depend on oil.

[Nano]

$this->bbcode_second_pass_quote('hermit', 'I')'d like some help understanding the way in which PO has impacted the current economic collapse. To most, the collapse has come from our own financial and lending practices, but I'm sure that there is a PO aspect.... Can someone help me connect the dots?

[BigTex]

Read Gail the Actuary's analysis over at the Oil Drum.

She had it nailed way back in January. Her discussion of the connections between resource constraints, deleveraging and the current financial mess is outstanding.

It all comes down to debt and leverage being based upon the assumption of an economic tomorrow that will be bigger than today. Post-peak oil, this assumption will be shown to be false, and the role of debt will have to be reassessed in a fundamental way.

If I can only borrow today based upon the belief by the lender that I will have more in the future than I have today, what happens when the lender figures out that I may NOT have more in the future than I have today, and that I may even have less?

The credit mess is sort of the economic equivalent of peak oil. Maybe call it something like "peak leverage."

And remember who is the most leveraged of them all--the U.S. government. Russia, China and Japan hold the keys to our future. If one of them gets spooked and starts dumping their U.S. debt, it could get ugly.

We're 25 years into this 30 year treasury bond bull market. Every bull market ends soonder or later. I fear that this bull market will end in a disorderly manner--i.e., rates won't gradually drift back up to the 7-9% range one might expect, they might spike to 10% or higher over a very short period. But many people have lost a lot of money on this bet, so who knows what will happen?

[Carlhole]

Analyst: Oil Prices Inflated by 50%

$this->bbcode_second_pass_quote('Oppenheimer Oil & Gas Analyst', 'M')ike Norman, anchor, HardAssetsInvestor.com (Norman):
Today my guest is Fidel Gheit, managing director of Oil and Gas Research at Oppenheimer.

Fidel, you follow the oil markets and the energy markets obviously very, very closely. Let's talk about the period we're in right now. Obviously we saw a huge run-up in the first seven months of this year, culminating at almost $150 a barrel in mid-July. Now we've had a very big price decline, almost at 30%. What is behind it, in your opinion?

Fidel Gheit, managing director of Oil and Gas Research, Oppenheimer and Co. (Gheit): Well, to start with, the $148/barrel peak was an artificial peak because oil prices had been surging on really no changes in supply-and-demand fundamentals. They'd been driven by speculation, the fear of potential supply disruption and all these things. Nothing obviously happened; we had plenty of supply. Demand has been coming down in the U.S. and slowing down in China, India and elsewhere. So all of a sudden, the idea of oil shortages has not obviously panned out, and traders look the other way, and that's why the oil price is lower...

[vision-master]

$this->bbcode_second_pass_quote('Carlhole', '[')url=http://seekingalpha.com/article/95949-analyst-oil-prices-inflated-by-50]Analyst: Oil Prices Inflated by 50%[/url]

$this->bbcode_second_pass_quote('Oppenheimer Oil & Gas Analyst', 'M')ike Norman, anchor, HardAssetsInvestor.com (Norman):
Today my guest is Fidel Gheit, managing director of Oil and Gas Research at Oppenheimer.

Fidel, you follow the oil markets and the energy markets obviously very, very closely. Let's talk about the period we're in right now. Obviously we saw a huge run-up in the first seven months of this year, culminating at almost $150 a barrel in mid-July. Now we've had a very big price decline, almost at 30%. What is behind it, in your opinion?

Fidel Gheit, managing director of Oil and Gas Research, Oppenheimer and Co. (Gheit): Well, to start with, the $148/barrel peak was an artificial peak because oil prices had been surging on really no changes in supply-and-demand fundamentals. They'd been driven by speculation, the fear of potential supply disruption and all these things. Nothing obviously happened; we had plenty of supply. Demand has been coming down in the U.S. and slowing down in China, India and elsewhere. So all of a sudden, the idea of oil shortages has not obviously panned out, and traders look the other way, and that's why the oil price is lower...

[RedStateGreen]

$this->bbcode_second_pass_quote('Shannymara', '')$this->bbcode_second_pass_quote('BigTex', 'R')ussia, China and Japan hold the keys to our future. If one of them gets spooked and starts dumping their U.S. debt, it could get ugly.

[burtonridr]

$this->bbcode_second_pass_quote('Shannymara', '
')So many people keep saying that, and it makes sense - but WHEN is it going to happen? I mean, what are they waiting for at this point? What's stopping them?

[Eli]

$this->bbcode_second_pass_quote('Shannymara', '')$this->bbcode_second_pass_quote('BigTex', 'R')ussia, China and Japan hold the keys to our future. If one of them gets spooked and starts dumping their U.S. debt, it could get ugly.

[la2al2tex]

$this->bbcode_second_pass_quote('hermit', 'I')'d like some help understanding the way in which PO has impacted the current economic collapse. To most, the collapse has come from our own financial and lending practices, but I'm sure that there is a PO aspect.... Can someone help me connect the dots?

[BigTex]

$this->bbcode_second_pass_quote('Shannymara', '')$this->bbcode_second_pass_quote('BigTex', 'R')ussia, China and Japan hold the keys to our future. If one of them gets spooked and starts dumping their U.S. debt, it could get ugly.

[aflurry]

$this->bbcode_second_pass_quote('hermit', 'I')'d like some help understanding the way in which PO has impacted the current economic collapse. To most, the collapse has come from our own financial and lending practices, but I'm sure that there is a PO aspect.... Can someone help me connect the dots?

[The_Virginian]

De Facto PO to me is the most critical factor in all of this.

The manipulated price of the main world economic engine (OIL! /Petrodollars) drove the economy to tatters, and exposed the corruption in the financial markets when they could not fake things anymore.

[shortonsense]

$this->bbcode_second_pass_quote('hermit', 'I')'d like some help understanding the way in which PO has impacted the current economic collapse.

[mos6507]

$this->bbcode_second_pass_quote('la2al2tex', '
')The stock bubble of 1999 was basically the idea of limitless growth and cheap resources.

[aflurry]

$this->bbcode_second_pass_quote('mos6507', '')$this->bbcode_second_pass_quote('la2al2tex', '
')The stock bubble of 1999 was basically the idea of limitless growth and cheap resources.

[la2al2tex]

$this->bbcode_second_pass_quote('mos6507', '')$this->bbcode_second_pass_quote('la2al2tex', '
')The stock bubble of 1999 was basically the idea of limitless growth and cheap resources.

[BigTex]

$this->bbcode_second_pass_quote('la2al2tex', '')$this->bbcode_second_pass_quote('mos6507', '')$this->bbcode_second_pass_quote('la2al2tex', '
')The stock bubble of 1999 was basically the idea of limitless growth and cheap resources.

[karras]

Yes, Peak Oil is inextricably tied to the current economic collapse in the financial sector.

The subprime mortgage orgy was no problem as long as home talues kept rising. However, the fly in the ointment was the approach of a global oil production plateau that caused prices to rise in the past couple years. This price rise shed light on the true "value" of all of that suburban tract housing we have built in the past few decades. Our suburban landscape (specifically all of that housing bought with "creative" mortgages) is worth next to nothing without cheap oil.

So, the imminent approach of peak oil has exposed the vulnerability of the entire financial system which put all of its eggs in one basket, that basket being the mortgage "securities" and "derivatives". Now that housing prices are in a free-fall, people can no longer refinance and foreclosures are about as common as housing starts.

Thus, I believe that the onset of peak oil (or at least a plateau of global oil production) as well as the greed and divorce from Finance 101 has not only played a key role in the current economic collapse, but is actually the ROOT CAUSE.

[dohboi]

This is essentially what BigTex had in his first post on this issue, but here is a recent post from JP at TOD that is quite succinct:

"Hmm, let me see.

"Advancing" "credit" means that money is given that will have to be paid back.

Money that has to be paid back is a debt.

Therefore, credit increase implies debt increase.

Debts are collectable in the future.

Therefore, debt increases imply increasing burdens on the future.

Therefore, increasing credit implies increasing burdens on the future.

As long as there is a belief that the future will be able bear the burden of the total of the credit advances, everything chugs along.

When it comes to be feared that the future will not be able to bear the burdens that have place on it. Suddenly, you can't short sell.

I am of the mind that obviously ample energy supplies/surpluses would be adequate to generate a faith that the future could bear its burdens ( environment be damned - too long a time horizon ).

I suspect that the financial bubble found itself constrained by the developing notion that energy is now constrained."

It's always more complex than this, but basically, you can do a lot of stupid things and get away with it for quite a while when you know there will always be more energy=capital to play around with tomorrow. When that certainty is shaken, suddenly all the funny money games fall to the ground.

No one anywhere in the MSM has said anything like this to my knowledge, even though it is patently obvious to anyone who thinks about it for more than a moment.

If anyones sees any such analysis in the MSM, I would be very interested to hear about it.

[kpeavey]

An ever increasing economy demands an ever increasing energy supply. Without increased energy, growth stops. This is a rule and can not be broken.

Take a look at energy production over the last 4-5 years. We have been on an undulating plateau. Peak Oil occurred in September 2005. Prices have risen, as predicted, which has destroyed some demand, again as predicted.

Take a look at the leading economic indicators, unemployment, inflation, GDP. I recommend shadowstats.com for a view of the figures calculated without having been bastardized by politics. You will see increased inflation, increased unemployment, and a declining GDP since 2004-5, with some lag time involved.

Collapse is progressing exactly according to the script. Overpopulation is the root of it all. PO is the root of resource consumption. Economics will be the trigger for collapse, and that trigger has just been squeezed.