Outcast_Searcher wrote:Are we talking about the middle class, or people that earn $4 a day?
Those who earn around $4 a day, which make up the majority of the world's population. If we see most earning at least $10 a day, then we can probably argue that income levels have "soared."
The global GDP rises year after year. The global demand and consumption of oil rises year after year, whether oil is $45 a barrel or almost $100 a barrel.
The difference is that it had weakened for Japan, the U.S., and EU but increased for developing countries. I posted the data in another thread.
Again, people who earn $4 a day (or whatever the figure of the global poor is) aren't buying massive amounts of oil now, or did they ever.
Actually, it's the countries where they live that are buying more oil, in fact so much that they've offset drops in developed countries.
The middle class is paying off their cars over time. And they are affording higher housing costs instead of moving into cheaper housing. And they aren't declaring bankruptcy en masse over $2 gasoline.
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Because significant amounts of credit had been created to offset crashes. The problem is that how will new debt be paid? In the case of the oil industry, they had to borrow over $500 billion to increase oil production. Not only do they need oil prices higher to pay off the debt during the next five years, they will have to borrow even more to find less oil each time.
So I think your only valid point is that there is lots of debt in the oil patch. Yup. And if oil prices stay low and lots of oil companies go bankrupt, then stronger hands will hold the oil and will produce it when prices rise enough to justify the risk of producing it. In the mean time, there is a global glut, and people are doing just fine motoring with $2 gas (plus the taxes at various places, same as it ever was).
Actually, that's not how oil companies work. That is, they don't "hold the oil" and sell if prices go up, as they have to continue making debt repayments as well as pay for wages, rentals, etc. If they don't sell, then they will have to take on more debt to pay for these expenses.
And again, year after year, the global energy intensity per unit of GDP is declining in the first world, which means the middle class and wealthy get more energy for their money.
It should given funny money creation. The catch is that oil consumption for the developing world is offsetting demand destruction in richer countries. And given diminishing returns, it is highly unlikely that "the middle class and the wealthy" will "get more energy for their money."
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As Jesus said, the poor are with us always. That doesn't equate to people being unable to afford oil products moreso than in recent decades. The evidence is that people are MORE able to afford oil products and are stupidly buying large gas guzzling vehicles, larger homes, etc.
Exactly. And the ones who already have "large gas guzzling vehicles, larger homes, etc.", are relying on others to do the same because that's the only way they can continue generating income and returns on investment to pay for those vehicles, homes, etc.
Also, "large" and "larger" for more people worldwide means more energy and material resources, which is the opposite of diminishing returns.
Are you now starting to understand the problem?