[ReverseEngineer]

There is a certain amount of talk going on now about the "decoupling" of the Chinese and Indian economies from the US economy. In other words, these folks aren't so dependent on us to buy their goods, their economies can motor onward without us from internal demand and consumption.

Somewhat true, but not entirely true. First off, we are saddled with mountain of debt, no doubt, but who holds a lot of the paper? The Chinese. Who is investing in that economy at a mile a minute because the perception is that these "emerging" economies hold more growth potential than the American economy? Pension funds and Hedge funds of course, problem being these sources of capital are ALSO generally speaking insolvent, any money they are investing is mostly funny money, its leveraged up to beat the band. As more of these financial giants go belly up, so also does the source of capital driving the expansion of the Chindian economies.

So yea, for a year maybe the "decoupled" economies of China and India slog onward, but really they have exactly the same problem we do which is that as a multiplier of wealth, oil doesn't work so well anymore because now it actually COSTS too much to produce all sorts of stuff, including of course food. An Investor looks at this HUGE "undeveloped" market and chomps at the bit, and a million new Tata's are produced for Indians to drive around, but hey, they gotta gas them up just like we do! Does your average Indian actually make so much more than your average American that he can afford to gas up his Tata and drive from Bombay to Calcutta to visit Uncle Mahatma every weekend? He's gotta cut back also. LOL.

If we are having trouble filling up the gas tank, so is everybody else. Our economy is crashing sure, but despite "de-coupling" its all so interconnected that everyone gets drawn down into the same sewer. There are political problems going down in China now that make Tiananmen Square look like a Square Dance. Not to mention they got a million people or so displaced out of Guangzhi and Guangzou provinces as a result of THEIR flooding problems. I'm sure FukDumSucker Bernanke, the Chinese Central Banker has at least as many problems as his brother Ben here trying to print up enough funny money to keep China floating. Not like China is awash in Oil Fields you know, and neither is India. So the paper wealth actually is flowing about entirely in the direction of anyone producing and exporting oil, their general problem is that those same countries don't actually produce a whole heck of a lot of food, and you can't actually EAT oil. Anybody who produces food efficiently gets a good deal of money BACK from the oil exporters if you price up the food correctly. This is the symbiosis between the economies, and it doesn't decouple all that easily.

The fact is, while oil is getting expensive, food is getting MORE expensive, and the quantities produced will shrink faster than the oil fields go dry, because food has a tendency to go bad if its not moved around in a timely fashion. You might buy Corn Futures, but if the supplier can't deliver at ANY price, what are you gonna do? Sue him? Ask Ben Bernanke for a Government Bailout? LOL. Betting in the commodities market is outta control as big money flees equities in search of a safe haven, but commodities are NEVER safe. The freaking weather alone can run up a 20% shortfall in any given year for agricultural commodities. Oil is a better bet, you know the stuff is in the ground somewhere and it doesn't spoil or get tainted with Salmonella, but it does have the problem everybody is FIGHTING for it in the literal sense, strikes in Nigeria and threats of war in Iran and Tropical Storm Dolly working her way toward Oil Rigs in the Gulf, you can buy a contract but no sure bet there that its gonna get delivered.

The idea that oil consumption can rise inexorably in China and India is preposterous. They can't afford the stuff any more than we can, and they can't bootstrap up an industrial economy the way we did either, because when we did it, Oil was CHEAP. They might run a year or two behind us in crashing, but no doubt, they will crash also, and in some senses harder, because the bigger you are, the harder you fall, and these countries have some BIG populations to deal with.

ReverseEngineer

[HKFarmboy]

The idea that oil consumption can rise inexorably in China and India is preposterous. They can't afford the stuff any more than we can, and they can't bootstrap up an industrial economy the way we did either, because when we did it, Oil was CHEAP. They might run a year or two behind us in crashing, but no doubt, they will crash also, and in some senses harder, because the bigger you are, the harder you fall, and these countries have some BIG populations to deal with.

ReverseEngineer

the problem in china is that petro products at the retail level are still heavily subsidized. here in hong kong, gasoline is HK$17.50 per liter. that works out to be about US$8.50 per gallon.

in china it is RMB 6 per litre or about US$3.30 per gallon.

China is building an interstate highway system on the US model and is adding 25,000 cars to the road per day. 9 million new drivers in 2008. sounds like a big number and it is, by US standards, but not by chinese standards. There are probably 300 million people in china that could afford a car at today's gas prices.

destroy all the demand in the US you want and China will still soak it up pretty fast, decoupling or no.

and india is in the process of wrecking the value of the Rupiah, largely due to it's oil subsidies.

decoupling is a myth. we go down, they all go down, eventually. but not right away, and in the meantime, there will be upward pressure on oil prices from Chindia.

[ROCKMAN]

There’s another factor that may have a bearing on China’s net cost of oil. For quit a few years they have been buying interests in producing oil fields as well as supplying capital for expansion projects. Venz was an early target. Lately they have been shifting towards Angola, which has now become their No. 1 oil supplier replacing Saudi. I haven’t been able to quantify the net magnitude of such deals yet. And probably won’t be able to for lack of details on individual deals. But their share of the oil they’ll receive from these fields won’t be a current market price…..it will be at the net cost of their investment. I can only make a wild guess but that cost could be around $60/bbl for investments in the last year. Years ago the Chinese gov’t sunk over a $billion in Venz. That oil maybe making it to them today at a net cost closer to $30/bbl. Again, the difficulty is estimating how much of their imports are coming from these lower cost sources. The Chinese gov’t has one big advantage over traditional investors: they don’t measure the rate of return on these investments as a tradition buyer would. Their prime motivation is more the access to this oil then the profit side of the picture.

[yesplease]

China and India are adding thousands of new vehicles to the roads every day. Not to mention a blizzard of smaller ICEs like lawn mowers, water pumps, chainsaws, you name it.

Most of the new vehicles added to China's roads will be electric, if they already aren't.

[yesplease]

Price goes down, consumption goes up, price goes back up again.

EXACTLY.

Well said, essex. Any demand destruction will be temporary until the price of oil falls again. It seems that many here don't understand this basic concept.

It also depends on consumer spending power, ie the income elasticity of demand. People were able to take price increases when the economy was "better" w/ free loans for all and alla that, but now that the economy has slowed the same oil prices will hit 'em harder. Probably why we're seeing a downturn even though as a percentage of GDP oil prices aren't as high as they were the last time demand slowed.

[threadbear]

The idea that oil consumption can rise inexorably in China and India is preposterous. They can't afford the stuff any more than we can, and they can't bootstrap up an industrial economy the way we did either, because when we did it, Oil was CHEAP. They might run a year or two behind us in crashing, but no doubt, they will crash also, and in some senses harder, because the bigger you are, the harder you fall, and these countries have some BIG populations to deal with.

ReverseEngineer

the problem in china is that petro products at the retail level are still heavily subsidized. here in hong kong, gasoline is HK$17.50 per liter. that works out to be about US$8.50 per gallon.

in china it is RMB 6 per litre or about US$3.30 per gallon.

China is building an interstate highway system on the US model and is adding 25,000 cars to the road per day. 9 million new drivers in 2008. sounds like a big number and it is, by US standards, but not by chinese standards. There are probably 300 million people in china that could afford a car at today's gas prices.

destroy all the demand in the US you want and China will still soak it up pretty fast, decoupling or no.

and india is in the process of wrecking the value of the Rupiah, largely due to it's oil subsidies.

decoupling is a myth. we go down, they all go down, eventually. but not right away, and in the meantime, there will be upward pressure on oil prices from Chindia.

If demand increases in these countries, the more the price increases. The piling on effect of speculation, together with the fundamentals, assures this. This puts a ceiling on growth. Or...the pie doesn't get bigger. It can't. Through several layers of abstraction we are finally discerning the outline of peak oil, and peak everything else. The planet is exhausted, and it doesn't appear to be getting any bigger, so we have to tailor our understanding of economics to match the new reality.

[Heineken]

China and India are adding thousands of new vehicles to the roads every day. Not to mention a blizzard of smaller ICEs like lawn mowers, water pumps, chainsaws, you name it.

Most of the new vehicles added to China's roads will be electric, if they already aren't.

Great, then they'll have to build even more power plants and burn even more of that nasty dirty coal they have.

[yesplease]

China and India are adding thousands of new vehicles to the roads every day. Not to mention a blizzard of smaller ICEs like lawn mowers, water pumps, chainsaws, you name it.

Most of the new vehicles added to China's roads will be electric, if they already aren't.

Great, then they'll have to build even more power plants and burn even more of that nasty dirty coal they have.

Could be, but at an order of magnitude+ better efficiency than the average American vehicle, that isn't a whole lot of coal.

[Fiddlerdave]

The idea that oil consumption can rise inexorably in China and India is preposterous. They can't afford the stuff any more than we can, and they can't bootstrap up an industrial economy the way we did either, because when we did it, Oil was CHEAP. They might run a year or two behind us in crashing, but no doubt, they will crash also, and in some senses harder, because the bigger you are, the harder you fall, and these countries have some BIG populations to deal with.

This is not necessarily so. If Chindia make products the oil suppliers want to spend the Chindia oil money on, there are no problems at all, its the normal wealth generation world trade can create, and it can go on until the oil runs out. There's quite a bit of available oil if USA consumption is priced out of the market.

The problem for the USA is, as a net importer, the dollars leave the USA and don't come back as payment for products, free of the interest payments our biggest product generates (T-bills). This is the small detail our fricking, gd'd Free Market financial brains simply didn't bother to think about.

People better shake the condecension towards Asia out of their heads in their planning. THEY MAKE THINGS, the only true wealth besides resources.

[derekj]

it seems to have fallen just in time for me.. Im doing a 4033 mile road trip in a few days in a diesel powered car. Maybe fuel prices can drop a few cents or atleast stay where there at.

[Ayoob]

Wind and sun and wave can all make their contributions, but nuclear is where the biggest strides can be made. The U.K. gave up an early lead in nuclear and only in 2008 gave the go-ahead for a new generation of reactors, though funding remains an issue. France is the most enthusiastic devotee of nuclear, with around 60 working reactors. Whatever progress can be made in turning crops into power, scale will make nuclear the fuel of the future. But governments need to wake up to the urgency with which it may be required.

http://online.wsj.com/article/SB1000142 ... opCarousel

[TheDude]

But the members of Jersey's production department disagreed with Page.
After all, they were geologists, and as far as they were concerned, discovering
and developing new reserves were what the game was all about. Their ambition
was to find new elephants, and they were very excited about Oman. "I am sure
there is a 10 billion barrel oil field there," a geologist who had just returned
from Oman told the executive committee.
"Well, then," replied Page, "I am absolutely sure we don't want to go into
it, and that settles it. I might put some money in if I was sure we weren't going
to get some oil, but not if we are going to get oil because we are liable to lose
the Aramco concession." With that logic, Jersey stayed out of Oman. The
geologists, however, were right. Oman did become a significant oil producer,
with Shell in the lead.

From The Prize, pg. 535. This was in the 60s. Sure don't see that kind of attitude anymore.

[Revi]

Well it's about time they discovered peak oil. You would think that the big money people would be intensely aware of world oil supplies.

Branson is shouting to the world, Pickens made some noise, but most people continue along blissfully unaware of what's coming.

Almost everyone has settled upon 5 years as the amount of time we may have before peak oil really hurts.

I think it's hurting already, but within 5 years we'll really feel it.

[KevO]

Wall St Journal

Against the gloomy economic backdrop that Europe currently provides, siren voices shrieking that a potential energy crisis is imminent and could be worse than the credit crunch are liable to be dismissed as scaremongers

http://online.wsj.com/article/SB10001424052748704140104575057260398292350.html?KEYWORDS=peak+oil

The Guardian

Oil CEOs are now sounding the alert

http://www.guardian.co.uk/environment/cif-green/2010/feb/10/oil-crunch-peril

Who'd of thought, here at peakoil.com that we'd see headlines like these and soooo soon!

even more here
http://peakoiltaskforce.net/download-the-report/2010-press-coverage/

I remember when somebody posted the first ever press mention of PO here and there was nearly a party.
Imagine in a few years from now - if you have the energy to power your compuker

[Plantagenet]

It was always inevitable that peak oil would gain more and more attention from the mainstream media and become more accepted in the business community and throughout the general public.

That process is happening now.

[eastbay]

One would think a good clue was when half of North American corn crop was burned in ICE. Wait until people, corporations, the media, and God all find out it happened five years ago and np one bothered to mention it. Except us, of course.

[TheDude]

Imagine in a few years from now - if you have the energy to power your compuker

Typo?

This was what I had in mind with the "peakoil.com" thread a couple years back - amazing to be here at the domain name. Would be like owning...planesasterrorismdevices.com? invasionandoccupationofiraq.com? I don't really know what you'd compare it to.

Here's Peak Oil - Google News Archive Search. You get a little graph when searching for a term; this one plateaued '05-08, has declined since. Appropriately enough. Colin only coined the term in '02 so early hits are coincidences.

Used to be just Simmons and Rainwater, now it's Branson and buddies. I don't think that indicates a general movement towards considering us as anything other than narrow visioned cranks. I wonder who was sounding the alarm about peak whale oil?

[Outcast_Searcher]

From the article:

A shortage of oil could be a real problem for the world within a fairly short period of time.

Notice, they don't mention the issue is CHEAP oil. Most serious (non-doomer) folks aren't saying there will be insufficient oil to be found (AT ANY PRICE) soon for geographic reasons. It's that a huge proportion of world populations won't be able to afford to BURN oil once it gets too expensive via the coming supply/demand imbalance.

Of course, many folks here can't even agree (remotely) on what the consequences, timing, severity, etc. are, so it's not like there is a coherent and consistent message for the world to hear, IMO.

Later in the article it talks about an official projection of demand at 110 MBPD by 2030. I think a big issue is that TPTB assume it will take so long for demand to increase to an alarming point. It isn't at all hard to imagine a REALLY nasty price spike in 2 to 5 years if global growth manages to surge.

2030 - really. As though Chindia doesn't exist. As though they weren't building roads, buying cars, and expanding the Nano-affordability class in China at frightening speed. As though the 3 billion and counting 3rd world folks aren't going to want as much oil as global growth will allow them to consume, ASAP.

If a serious/curious reporter strays onto a site like this, they see so many "zombies are coming soon" and similar alarmist posts that they don't then take the time to garner enough info to take the issue seriously, IMO.

One would think that thoughtful people would at least give being CAUTIOUS some credibility.

If global growth resumes apace, 3rd world demand growth is likely to way outstrip CHEAP supply growth, whether we are at "peak" or not.

I guess folks like Rubin, who are convincingly spreading this message, in a calm, measured way, are just ignored/dismissed?

[KevO]

One would think a good clue was when half of North American corn crop was burned in ICE. Wait until people, corporations, the media, and God all find out it happened five years ago and np one bothered to mention it. Except us, of course.

you know people would vote for us.
We could be the next government. Let's face it the Climate Change blindfold is now no more. Whether you 'believe' (and it is now only a case of belief) in CC or not, it's a stuffed argument. Greenland could melt next week and the world still won't blame humans for it.
But we all knew 5 years ago about peak oil and news of that will get round.
Any politician wanting to 'overthrow' Obama would do well to have this info in his top drawer. Indeed telling the world that 'they',including Obama, knew all along about PO but tried to cover it by getting people to cut emissions for CC would see him out of office pronto. And as no other politician mentions it, they will all go. Imagine a revolution brought about by denying the knowledge of peak oil!? You never know.

everyone seen this? -
http://tinyurl.com/yhw94vn

[sparky]

.

The way I look at it , post peak there is a good chance there will be cheap plentiful oil available

For the few rich ,

most folks will have been pauperized , thus depressing their demand


.