Like the illusion of Wall Street, with its vast and powerful investment banks, now shuttered, China too is an illusion perpetuated by the Globalists that gave us the 15,000 mile Caesar salad, poisoned cat food and lead based paint on babies' pacifiers. Like the illusion that money would come from thin air to always push housing prices higher, China has spent a generation pursuing its illusion. Pursuing an unattainable dream to be like the West, while 6000 years of its carefully shepherded top soil blows into the sea.
1. I need to get out more.
2. Before I go out, I would like to understand the above.
(Yes the chart is a little out of date, and yes this question has been debated a few months back, but the world moves on, people change, opinions change, and anyway no consensus was reached last time so I think it's worth revisiting.)
Joined: Aug 13, 2004 Posts: 1185 Location: Richmond, VA, Pale Blue Dot
Posted: Fri Jun 24, 2005 12:28 pm Post subject:
if this is a two part question, i do not understand the second part. _________________ "If you are a real seeker after truth, it's necessary that at least once in your life you doubt all things as far as possible"-Rene Descartes
"When you have excluded the impossible, whatever remains however improbable must be the truth"-Sherlock Holmes
I think crude is going to spike upwards to about $100 in the near future give or take $10, then it will settle back to around $65 and begin a slow steady rise. As this happens, recognition that we will HAVE to do something about our oil consumption will take hold seriously in the mainstream news.
...wait a sec, my crystal ball is fogging up, oh crap, it's showing me pictures of genetically modified human beings with big large eyes and no genitals. _________________ "May you live in interesting times"
yes.. and they are walking into large.. silvery saucer shaped vehicles theat fly.. flying.. saucers yes! they. are. in. "flying saucers".
I see them travelling through time, gang-probing country-folk and stealing cattle.
And one is talking to me.. his name is freh.. no fred yes and he is hungry there is a famine on his world or the world to be and he must replenish his hunger with mountains of Straw Berry Ice Cream They are stealing dairy cows and ransacking strawberries from our present earth!
Such visions and horrors!! Enough!!!
This is not a gift but a curse...why lord whyyyy!!!
By looking at the graph, it appears that the US was able to withstand almost 4 years of $60 and above oil prices (inflation adjusted from late ’79 – ’83). Also, we were able to withstand almost 3 years at $70 and above. By ‘withstand’, I mean society not completely collapsing.
It took about a year to spike from $50 to $94.48.
I would postulate that we could withstand higher prices but for shorter durations. I would say that oil at $95-$100 in current dollars would put the brakes on rampant demand. The wild card in the equation is just how leveraged the typical consumer is. We have far more personal and government debt than we did in the mid 70’s to the early 80’s.
On a back off the envelope calculation, $100 oil would equate to about $4 per gallon gas. I think we could only sustain that for a sort period of time (maybe a little over 6 months). _________________ If ...'If's' and 'But's' ... were Candy and Nuts ... we would all be happy and fat !
Joined: Apr 28, 2005 Posts: 3915 Location: West shore Lake Eire, MI, USA
Posted: Fri Jun 24, 2005 3:14 pm Post subject:
I think there is a boiling frog effect at work here as well. What I mean is, to boil a live frog you start out with a pan of cold water, the frog doesn't notice the gradual change soon enough to jump out before it cooks.
If the price keeps rising $10.00 US per year, or even $15.00, I think people will adjust, the economy will slow but not stop and alternatives will move in as the price crosses profit thresholds for each substitute.
Moving from $27.00 to $ 60.00 over 24 months has not slowed the world economy much at all, if we had jumped from $30 straight to $60 I think we would be in a deep recession right now, because consumer spending is based in large part on confidence in the future. A gradual rise is not thrilling, but it isn't terrifying either, and people make mental adjustments.
The real problem is, will the price continue to grow in a survivable manner, or will it be a case of TSHTF and panic buying drives the price sky high in a month, stalling the world economy and crashing us into depression? _________________ Always appeal to a man's enlightened self interest, you can trust him to look out for himself honestly, It's when you appeal to his Honor or the Common Good that he stops paying attention.
Remember we are not yet at the peak. Total global oil output has yet to fall, all we have seen is a deceleration in supply growth and rapid acceleration in demand growth. The big spikes in prices and economic hardship come when the decline begins. It will be like the 1979 event every year.
Joined: Apr 28, 2005 Posts: 3915 Location: West shore Lake Eire, MI, USA
Posted: Fri Jun 24, 2005 4:19 pm Post subject:
jaws wrote:
Remember we are not yet at the peak. Total global oil output has yet to fall, all we have seen is a deceleration in supply growth and rapid acceleration in demand growth. The big spikes in prices and economic hardship come when the decline begins. It will be like the 1979 event every year.
I will beleive it when it happens, and not until. That doesn;t mean I won;t take reasonable precautions, but I am not going to jump on the doomer bandwagon either. _________________ Always appeal to a man's enlightened self interest, you can trust him to look out for himself honestly, It's when you appeal to his Honor or the Common Good that he stops paying attention.
I've noticed that recent news reports that have compared today's prices to the record highs of the early eighties have steadily ratcheted those inflation-adjusted records higher. Some have used a figure as low as $65, most have said crude traded for about $80 in 2005 dollars. Now stories are quoting the mid-nineties. The variance is the result of people using different inflation-factors.
I wonder what figure a very rigorous analysis would arrive at for the all-time record price of crude adjusted to 2005 dollars? _________________ "May you live in interesting times"
I've noticed that recent news reports that have compared today's prices to the record highs of the early eighties have steadily ratcheted those inflation-adjusted records higher. Some have used a figure as low as $65, most have said crude traded for about $80 in 2005 dollars. Now stories are quoting the mid-nineties. The variance is the result of people using different inflation-factors.
I wonder what figure a very rigorous analysis would arrive at for the all-time record price of crude adjusted to 2005 dollars?
Very true. I was reading yesterday how the government has modified the equation for calculting inflation since the 90s to show less inflation than there is. It is done by weighting prices of different sectors of the economy differently and other such games. That's why you find finance people saying there is only 2% inflation but you find your dollars purchasing less every time you go to the market. If the above is true, than the actual rate of inflation is higher than what it is typically represented as. Which means the inflation adjusted price in the 80s would be higher as well. Which probably means while you might see a recession with higher oil prices, we may not be close to a 30s style depression.
Besting the 1979 price is a large milestone. Until then, every two-bit economist will keep refering to the fact oil is still cheaper than 1979 in inflation adjusted terms, so shut up and stop bitching.
Going above that really does put us into uncharted territory. I also agre that how we cross it also makes a difference. Bolting across 1979 in a fit a panic has whole different implications than inching across it on a quiet tuesday afternoon's worth of trading on NYMEX. _________________ UNplanning the future...
http://unplanning.blogspot.com
Joined: Dec 07, 2004 Posts: 483 Location: Cheshire, England
Posted: Mon Jun 27, 2005 6:08 pm Post subject:
RiverRat wrote:
By looking at the graph, it appears that the US was able to withstand almost 4 years of $60 and above oil prices (inflation adjusted from late ’79 – ’83). Also, we were able to withstand almost 3 years at $70 and above.
Yes (assuming inflation adjusting works in practice).
RiverRat wrote:
It took about a year to spike from $50 to $94.48.
But dont you think that the situation now is slightly different because that spike was political whereas this spike will be due to peak oil?
RiverRat wrote:
I would say that oil at $95-$100 in current dollars would put the brakes on rampant demand.
Going on gut instinct, I think the same; somewhere between $60 and $100 there's a balance point.
It feels like the markets are becoming more and more aware of the price of oil - like they're testing various levels and seeing how each one feels. Where we are now feels slightly odd, but the world hasn't ended so we'll carry on up to the next range and see how that feels...
Joined: Dec 07, 2004 Posts: 483 Location: Cheshire, England
Posted: Mon Jun 27, 2005 6:35 pm Post subject:
Tanada wrote:
I think there is a boiling frog effect at work here
Yes.
It's the price that matters not the rate of change of the price. The price shot up rapidly in 1973, then didn't fall back, instead it shot up again just as rapidly in 1980, but then it did fall back.
The system copes with fast changes in the price but cant endure long term price changes. Long term price changes get fed back into the system eventually.
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