[MD]

The First True Energy Recession Has Started
The evidence is becoming clearer by the day. The only question in my mind is just how deep this first dip?

[MicroHydro]

$this->bbcode_second_pass_quote('MD', 'T')he evidence is becoming clearer by the day. The only question in my mind is just how deep this first dip?

[linlithgowoil]

i dunno. from the looks of the FTSE and all the guys on tv, its as if things can only get better and better... forever!

i dont get why they are like that though after you see all the profit warnings and job cuts. weird.

[lapulapu]

GDP, payroll employment, ISM manufacturing index, housing starts, stock market, all points to 'sustainable' non-inflationary growth of about 3% real GDP over the immediate future. What econometric data are you seeing that points to a recession?

[oilluber]

Are there any economists or financial professionals that would like to comment on the price of oil in the event of a major recession caused by the collapse of the US housing market ??
How much temporary demand destruction would there be to offset the tight oil situation we have today??

[Heineken]

I don't think that most financial experts and economists are qualified to answer that question. They tend to be among the idiots who've gotten us into this fix. But who knows, you might get lucky.

[oilluber]

so can i have anyone's educated guestimate on
the price of oil considering all factors, 1-2 years into
a housing collapse in the US ??
I would assume that oil prices would retreat during the
deflationary phase... but it all depends on how
the supply situation is.

[drattom]

I have an economic degree but I don't work in economics. I never got the marks to begin a master. Take your guest, I'm more idiot than average economist or I wasn't good in class because I wasn't able to understand stuff like economic growth. I always prefered Malthus and Kondratieff to Friedman and Keynes. This is not exactly what economic teachers like.

The house bubble will not crash fast by itself, without an external event, this is a slow decline. You will not sell at any price after one month, you can lower the price but, it take sometimes to realize that there is no buyer at all.
I think the gas shortages in the US or Europe will be the external event.

Because of the debt level in the US, you can see a panic by foreign investors to get their money out of the US. The US governement will default or more likely print money like crazy. The dollar will lose a lot of value if not collapse.

The recession will reduce world demand of oil but, for the price I think there is 2 possibilities.

1)the price can be lower in actual dollar but the drop in the dollar will make a price higher. Something like 400$ but it's worth 40$ in actual value.

2) The actual price don't take into account that it's not renewable, traders think how they can make money next week not in 5 years. Maybe they will finally wake up and in that case, the price will be higher.
If that happen, I think you can see something like Gold=Crude=Dow.

Don't forget that I only follow this as an hobby, this is only my guest in this and I can be more idiot than a professional economist. At least, you will never see me on tv trying to encourage people selling some stocks so I can cover my short positions.

[seldom_seen]

Under the current economic paradigm, whenever there is a problem with the economy there is only one solution. That is to grow our way out of it.

So whatever the problem with the economy, recession, depression, inflation, deflation, stagflation, constipation. The talking heads of media and government will present one solution, "We've got to get the economy back on track and grow our way out of this."

As we know, it takes energy to grow the economy, so it seems there will always be demand for oil. As for price predictions...hmm...erm...I guess if I knew that I'd quit my job and just trade oil futures.

My prediction though would be up (genius huh?) even if there is periodic demand destruction events that reduce oil demand. With future depletion rates combined with that desperate and futile attempt to grow our way out of our economic woes, it seems that we are in for a damn long bull run on oil prices.

[jaws]

Something like that happened in the mid 90's. Back then there was a bubble in 'emerging markets' in Asia. Shortly after it crashed the price of oil hit its all-time low around 10$ since the emerging market nations could no longer afford oil. But things are different now. For starters there is no spare capacity, so should a recession cause a fall in demand it would likely be matched by a fall in supply. All the oil infrastructure working overtime would revert back to normal operations. I would guess that oil prices would then maintain their current levels. By current level I mean in terms of average currencies, in U.S. dollars it might well go to triple-digit prices if the U.S. economy crashes.

$this->bbcode_second_pass_quote('seldom_seen', 'A')s we know, it takes energy to grow the economy, so it seems there will always be demand for oil.

[seldom_seen]

$this->bbcode_second_pass_quote('jaws', 'I')t doesn't take energy to grow the economy.

[Lehyina]

$this->bbcode_second_pass_quote('seldom_seen', '')$this->bbcode_second_pass_quote('jaws', 'I')t doesn't take energy to grow the economy.

[seldom_seen]

$this->bbcode_second_pass_quote('Lehyina', 'G')uess you can argue whether energy consumption drives economic growth or whether economic growth drives energy consumption but either way the two are surely very tightly coupled.

[linlithgowoil]

$this->bbcode_second_pass_quote('', 'j')aws wrote:
It doesn't take energy to grow the economy.

You're joking right?

[shady28]

$this->bbcode_second_pass_quote('jaws', 'S')omething like that happened in the mid 90's. Back then there was a bubble in 'emerging markets' in Asia. Shortly after it crashed the price of oil hit its all-time low around 10$ since the emerging market nations could no longer afford oil. But things are different now.

[Lehyina]

$this->bbcode_second_pass_quote('linlithgowoil', '')$this->bbcode_second_pass_quote('', 'j')aws wrote:
It doesn't take energy to grow the economy.

You're joking right?

[MD]

In 1980 oil production/consumption fell off due to the world wide recession that had some basis in energy cost.

If the current energy prices, along with other factors, drive the world economy into recession, then you could expect oil prices to fall significantly as soon as a capacity cushion emerges.

rinse and repeat.

Thus you get the downward spiraling "roller-coaster" scenario to a semi-soft landing.

[aahala]

$this->bbcode_second_pass_quote('oilluber', 'A')re there any economists or financial professionals that would like
to comment on the price of oil in the event of a major recession
caused by the collapse of the US housing market ??
How much temporary demand destruction would there be
to offset the tight oil situation we have today??


thanks

[skyemoor]

$this->bbcode_second_pass_quote('MD', 'I')n 1980 oil production/consumption fell off due to the world wide recession that had some basis in energy cost.

If the current energy prices, along with other factors, drive the world economy into recession, then you could expect oil prices to fall significantly as soon as a capacity cushion emerges.

rinse and repeat.

Thus you get the downward spiraling "roller-coaster" scenario to a semi-soft landing.

[markam]

$this->bbcode_second_pass_quote('', 'Y')ou dont need to increase energy use to increase GDP. That is self evident. The US doesnt use an enormous amount more oil now than it ever has,