[jdmartin]

Wow! I had no idea:

Oil really has little effect on the economy!

Well, that's a relief! Boy, were we worried for nothing!

I guess bafflin' em with bullshit is not working as well these days, so maybe we can just marginalize the issue. Yeah, that's the ticket!

[Bas]

they do have some good points explaining why these prices aren't hurting as much as they did back in 1980, but in the end that doesn't mean much more than that the economy will tank at a different price level; oil prices really do matter less than in 1980, but the reliance on the actual stuff is still the same.

[sicophiliac]

I think thats the wrong way to look at the issue in terms of "price" when it comes to oil and the economy. The real issue will be when there is a physical shortage of the stuff and the energy we need to drive the economy. If the price is 100 dollars a barrel and the economy is still running strong that means demand will still be there and in fact strong. Coping with 1000 dollars a barrel even still wont do anything to magically make more oil appear.

[joewp]

Gee, I don't know where you guys live, but I know a lot of people who are complaining about high gas prices, high food prices and already high heating oil prices. Many of these people are retired on fixed incomes. They're cutting back on everything else so they're able to keep warm and go to the supermarket for food. Many are fretting over Christmas presents for the grandchildren, fearing they won't have enough money to buy anything for them.

And that's not all. Many working class types have told me they're suffering because of the high gas, food and heating oil prices. One 55 year old told me it's just like 1979 without the gas lines. The fantasy economy of the elites may be humming along, but here in the trenches it's getting bad. Not that the elites care...

[auscanman]

The article conveniently ignores the role of the level of personal debt in the US. Although 14% of incomes might have been spent on energy back in 1980 there also wasn't anywhere near the personal debt there is now. It sounds great that we've reduced expenditure on energy to an average of 9% of income, but it's painful when that figure goes up slightly when you're struggling to make interest payments on your debt.

[Mechler]

$this->bbcode_second_pass_quote('', 'D')r. Hibbert: Now, a little [s]death[/s] peak oil anxiety is normal. You can expect to go through five stages. The first is denial.

Homer: No way! Because [s]I'm not dying[/s] we're not peaking!

Dr. Hibbert: The second is anger.

Homer: Why you little!

Dr. Hibbert: After that comes fear.

Homer: What's after fear? What's after fear?

Dr. Hibbert: Bargaining.

Homer: Doc, you gotta get me out of this! I'll make it worth your while!

Dr. Hibbert: Finally, acceptance.

Homer: Well, we all gotta [s]go[/s] peak sometime.

Dr. Hibbert: Mr. Simpson, your progress astounds me.

[Carlhole]

Back a few years, when oil was in the 30's. I thought that the economy would take a real hit when a barrel cost $60 - $70.

That turned out to be very wrong. And I think this surprised economists and professional market watchers too. Matt Simmons has said several times that if the economy continues to chug along even if oil is $80 or $100/barrel, that simply means that oil is still cheap.

So, it makes me wonder: what price truly signifies the end of cheap oil? Is it $90? $100? $120? Higher?

It's also been curious how gas prices at the pump have lagged per barrel prices lately. This wasn't the case in the first run-up. Gas pump prices more or less leapt in tandem. It can't be too much longer before pump prices begin to rise. My sense is that people will start of feel a little too much pain at around $4.50/gallon.

I thought we'd be there already frankly. Back in 2003 or so I estimated that pump prices would be $4.50/gal by mid-2007. That was based on a per barrel estimate of $100 and keeping the barrel/pump price ratio equal.

Outside of peak oil aware groups, no one seems to be particularly concerned about oil supplies.

[yull]

Give it time people! The average price taken over a long period is more useful, at the moment that's nowhere near the current price, more like $75 I think. Secondly, because the rise has been slower, people are probably not panicing so much as in the past - or rather, they are ignoring it - the boiling frog analogy. We aren't going to have a recession the second price hits $90 - it has cumulative effects over time that may take several months or even years to accumulate.

But boy, these people have seen nothing yet. The frog will get cooked eventually. The price is going up, the efffects are accumulating and the longer it goes on, the worse it will get, and when oil really begins to decline the prices will go as high as it takes to cause recession, even if that price is $200, 300 or even $400 a barel, and it will happen quickly. Not to mention that the shortages will add a whole new dimension.

There is a lot of denial going on now, but the party can't keep going on forever, not even at these prices. I never expected instant recession at these prices. If we have another 3 years of rising prices at the rates they have been doing so in the last few years - very likely I think - there will be recession by then, I am confident.

My opinion of the near future is that things will start off slowly but rapidly begin to pick up pace as time goes on and the strain builds.