Not a very good sign I'm afraid if the world can't stomach $120 oil (OPEC Basket) for a month. I wondered whether we might actually be more resilient after the punctuated evolution event we saw at $147 killed off some of the weaker consumers and we could stand $160 or $180 for a while. Looks like that idea may turn out to be wrong.
Compounding the problem this time around, the housing ATM has shorted out and there's the knock-on effects of the commodities bubble last time as meat & dairy producers have gone bust and the resulting fewer animals increasing prices - and of course we're still mandating the burning of subsidized food in our bailed-out cars, 40% of our corn crop now. One little hiccup in the weather and corn could easily go to $10/bu. and corn is in everything. And that's on top of an already bad wheat year.
Rents aren't going down, food is going crazy, all FF products of course are going up... and wages?
LinkReal average hourly earnings fell by 1.0 percent, seasonally adjusted, from March 2010 to March 2011.
A 0.6 percent increase in average weekly hours combined with the decrease in real average hourly earnings resulted in a 0.4 percent decrease in real average weekly earnings during this period.
Wouldn't it be a kick in the pants if everyone were wrong and the world economy pooped out at $125/bbl? And wouldn't it be even crazier if instead of the oil price stair-stepping up with each cycle, the economy just kept getting less resilient...
and each go around the high price was actually lower than the last time?
And so instead of higher prices enabling greater efforts at extraction and encouraging alternatives, we wound up going in the other direction and simply couldn't afford the cost of deploying 10,000 fallout generating plants or hundreds of square miles of thermal solar ovens or even the development cost of deep water or kerogen cooking or any other "unconventional" oil source for that matter...
naw
.