[Subjectivist]

Tikib - So true. Imagine if they had increased the motor fuel tax just one penny per year since then. Besides having beaucoup revenue for highway repair the govt wouldn't have to mandate fuel efficiency for vehicles...the market place would have taken care of it. Even with that gasoline would be selling for around $3.20/gallon today...still much cheaper then the EU.

Been there done that, here is how I think it would work out.


http://www.todayinah.co.uk/index.php?st ... inah.co.uk

[ennui2]

It drove the prices and dumped us into the Great Recession.

No-money-down liar ARM loans, the failure of credit agencies to properly vet borrowers, and collateral debt obligations dumped us into the great recession.

[GoghGoner]

One thing that never was pointed out in the 2000-2007 oil price run up is that it was a commodity super-cycle. It had nothing to do with oil supply. It was a spike based upon high money supply and the resultant fast global growth.

That suggests general inflation . . . of which there was little or none at the time.

The 'commodity super-cycle' is the economists equivalent of unobtainium. It is an imaginary driver of the economic engine. Hint: all commodities including wheat, precious metals, oil and the rest are extracted, harvested/refined and delivered with oil. It drove the prices and dumped us into the Great Recession.

You are correct about the inflation not being there, too. Oil does not drive the price of metals, though. Simple to tell this by looking at a chart. It usually leads grains but not always. The speculation argument doesn't work when looking at the charts either. I think oil supply constraints may have shown up in recent prices and probably will be obvious in the next few years.

http://www.indexmundi.com/commodities/

[kublikhan]

trillions are invested in FFs themselves and tens and hundreds of trillions in the "Fossil Way Of Life" if you include all the built environment that is profitable only with cheap energy. The only way to de-fossilize is to divert bucks from the consumption economy to the "renewable" economy, and that obviously is not happy-making.

It's already happening in the power sector. Over 3/4ths of investments in the power sector between now and 2040 are projected to go to non carbon investments.

Annual investments in renewable generation like solar, wind, and hydropower exceeded fossil fuel technologies for the first time in 2011, and it looks like there’s no going back now. Fossil fuel’s share of power generation is set to fall from 64% today to 44% by 2030, primarily on the basis of market forces and economics.

Overall, countries are predicted to spend a total of $12.2 trillion in global power generation [between now and 2040]. Renewable energy will draw $8 trillion in investment. Even so, nonrenewable fuel supplies will still attract $4.1 trillion in total investment through 2040. About 40 percent of the pie will go to coal plants, while nuclear and natural gas projects will receive 32 percent and 29 percent of investments, respectively.

Renewable Energy To Topple Fossil Fuel With $8 Trillion Investment Surge By 2040

So between now and 2040, $9.4 trillion is projected to be invested in non fossil fuel capacity and $2.8 trillion for fossil fuel capacity.

[Tikib]

The title of this discussion isn't relevant now. We are at peak oil right now. I don't think oil will ever be as cheap as this again.

Do I think we will all be eating each other soon? No I don't.

Do I think the next ten years is going to be tough? Yes I do.

[Tanada]

The title of this discussion isn't relevant now. We are at peak oil right now. I don't think oil will ever be as cheap as this again.

Do I think we will all be eating each other soon? No I don't.

Do I think the next ten years is going to be tough? Yes I do.

You may be right, this could be the dawn of the post peak era. On the other hand I thought the same thing when I was having Thanks Giving Dinner in 2005 because I had read Kenneth Deffeyes books and that was what he had predicted. Then again in 2008 when everything came to a head that august. Then again in 2010 and 2013. By now I am counseled to patience, events will take place in due course that will settle the matter. As has been so frequently pointed out Peak is only identifiable in the rear view mirror.

[ROCKMAN]

T - " As has been so frequently pointed out Peak is only identifiable in the rear view mirror." True...if you're just talking about the date of global PO. But look what you, Tiki and others have been describing: the negative impact of our liquid hydrocarbon situation. Folks don't need to speculate what will happen when we reach that unimportant PO date: it's already happening and. as you pointed out, has been happening for years. The GPO date may or may not have been reached yet. But the f*cking problems have been slapping us upside the head for a long time already. LOL.

Just count the bodies bags and the loss of $'s by taxpayers/consumers due to the global oil situation.

[ennui2]

Reality check. Oil is currently cheap and the stock market is still soaring (in the US at least). Store shelves are fully stocked. Maybe I'm just jaded by endless visions of what Malthusian catastrophe is supposed to look like, but it's really not...that...bad.

[Pops]

When you say "reality check" you need to check reality, not just your viewpoint

NA is importing 5mb/d less oil because oil was scarcity priced for 5 years and this is the overshoot brought about by the high price
The dollar is soaring today, because we're exporting less of them in exchange for oil than we have in decdeds
plus everyone wants some... because they are soaring... which makes them soar even more

Oil gets even cheaper in dollars, but more expensive to everyone else, which makes other economies soft and our's boom, which makes our stocks hot — because everyone else's are not.

but it is a global economy now, not like 1950, I expect things to equalize rather quickly. Not sure which way they may equalize but I'm pretty sure they will.

[GoghGoner]

Let us not forget since the 2008 spike, we have had unprecedented measures by the central banks to keep economies functioning. You could make the connection between oil supply constraints and QE. Where does ZIRP leave us? What tool can the Fed use if China spreads to us? Can we go back to higher interest rates? Etc... A new world dawned in 2008, we are beginning to see what we the ramifications of our initial solution are.

[Pops]

right. I think you could argue that low interest caused increased risk taking and pretty directly led to the shale boom.
not sure what happens from here, boosters say costs are coming down, guess we'll see

[Subjectivist]

Cross Pollination this thread just got mentioned on Facebook!

https://www.facebook.com/groups/2213264857/

[Pops]

Still no explanation as to how oil future contracts did all that?

Explanations won't affect your beliefs or B/W little model, but here is another study for you to ignore.

I'll even pull out a picture to save you the work:



https://www.stlouisfed.org/publications ... n-to-blame

[Outcast_Searcher]

Still no explanation as to how oil future contracts did all that?

Explanations won't affect your beliefs or B/W little model, but here is another study for you to ignore.

I'll even pull out a picture to save you the work:



https://www.stlouisfed.org/publications ... n-to-blame

Good post Pops. Interesting how small the speculative demand effect is gauged to be, given all the histrionics about how "evil" speculators cause (almost) all the pricing problems (but only when oil prices spike, of course), by Joe Six Pack, by clowns on Capitol Hill, and by many of the folks who hate big business and its "evil profits".

I am going to send a copy of this to my (generally very smart Ivy League educated friend) who keeps insisting it should be illegal for anyone to trade ANY oil futures contracts if their primary business isn't involved in producing oil or consuming oil in large quantities. (He is assuming the orange part of these charts is very big).

[Pops]

I think forward markets are good, they add liquidity and predictability, both are beneficial. I don't mind the gamblers (as long as they are playing with their own chips)

What I don't know is at what level the position limits should be set. Should they be somewhere around the same number of deliverable contracts? 10 time as many? 100? 1,000?

[ROCKMAN]

"Ask ROCK. When the speculators tell him to hide the oil" What's rally hilarious is the notion that I decide how much oil I'll sell in based upon the futures market. Or that I'll demand $X/bbl from my crude buyers based upon the futures market. Like the vast majority of US oil producers I sell every f*cking bbl of oil I can produce and thus have no choice but to accept the best f*cking price I can get from my oil buyer.

[Pops]

It ain't brain surgery;
Speculation drives up (down) futures prices,
producers sell futures contracts at those prices
they deliver oil on those contracts
= speculation drives price


Futures demand exploding from $13 billion to $250 billion post-clinton, the only argument to be made I guess is that supply and demand doesn't apply in futures and derivatives markets or that actual producers and buyers don't participate.