Peak oil a trigger for the current american economic woes?
Posted: 22 Aug 2007, 09:39
A very interesting article with some great graphics. Certainly puts the current economic situation into perspective. Thanks for that Jim.
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Peak oil a trigger for the current american economic woes?
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Re: Peak oil a trigger for the current american economic woe
Posted: 22 Aug 2007, 09:55
Posted: 22 Aug 2007, 10:21
I certainly think that PO has brought the US woes forward, however even if prices were in the $30 range - this situation would be inevitable anyway.
US debts would not be that much lower with oil at $30 , hell it would only knock $164 billion off their $880 billion trade deficit!
Consumer debt wouldn't be that much lower, nor government debt which is being driven by retiring baby boomers and Iraq/Afghanistan.
Inflation would be lower - so the interest rate rises may of been gentler, and over a longer time period. But, with all the debt they certainly would of had to rise anyway?
US debts would not be that much lower with oil at $30 , hell it would only knock $164 billion off their $880 billion trade deficit!
Consumer debt wouldn't be that much lower, nor government debt which is being driven by retiring baby boomers and Iraq/Afghanistan.
Inflation would be lower - so the interest rate rises may of been gentler, and over a longer time period. But, with all the debt they certainly would of had to rise anyway?
Posted: 22 Aug 2007, 10:38
Yes, a very good article.
Right at the end it makes the point that Peak Oil may pass without even being noticed during a time of possible comparatively low oil prices, due to a world-wide economic recession caused by the debt crisis. The timing may be such that if and when the world starts to climb out of that recession, it will suddenly hit a ceiling of oil production, resulting in massive oil price increases and killing off the potential recovery.
Unfortunately, this masking of PO will hide the full effects from the public and politicians, so no action is likely. Also the possible lower price of oil will discourage investment in alternatives. And following recession, investment will be short supply anyway.
Couldn't really be worse.
Right at the end it makes the point that Peak Oil may pass without even being noticed during a time of possible comparatively low oil prices, due to a world-wide economic recession caused by the debt crisis. The timing may be such that if and when the world starts to climb out of that recession, it will suddenly hit a ceiling of oil production, resulting in massive oil price increases and killing off the potential recovery.
Unfortunately, this masking of PO will hide the full effects from the public and politicians, so no action is likely. Also the possible lower price of oil will discourage investment in alternatives. And following recession, investment will be short supply anyway.
Couldn't really be worse.
Posted: 22 Aug 2007, 14:10
blimey.....i thought peak oil was enough to take on board until all this credit crunch stuff started to come out too. this just tops off what has been a rather overwhelming few weeks for me....PaulS wrote:Couldn't really be worse.
Posted: 22 Aug 2007, 14:20
Hehehehe. I feel for you mate I really do.
It's just par for the course though. As oil prices continue increase due to scarcity and cost of extraction causing supply to fall behind demand then we can expect inflation to ripple through our economies, causing a slowing of the economies, followed by a drop in oil consumption until the economy recovers and rebounds. It will then grow till it again hits the ceiling of oil production again and busts again, so we can expect the next 40-50 years to contain lots of boom's and bust's caused by the boom busting of oil demand.
Should only be slow at first though.... the CDO and debt issue is just the 'magic money token' this time, next time it could be something else (green technology anyone)?
Keep a long term view and don't worry too much about the bobble on the economy. Underneath it all, the main mover and controller will be inflation caused by increasing oil prices. Remove your dependency on oil etc and you can protect yourself from it to some degree.
It's just par for the course though. As oil prices continue increase due to scarcity and cost of extraction causing supply to fall behind demand then we can expect inflation to ripple through our economies, causing a slowing of the economies, followed by a drop in oil consumption until the economy recovers and rebounds. It will then grow till it again hits the ceiling of oil production again and busts again, so we can expect the next 40-50 years to contain lots of boom's and bust's caused by the boom busting of oil demand.
Should only be slow at first though.... the CDO and debt issue is just the 'magic money token' this time, next time it could be something else (green technology anyone)?
Keep a long term view and don't worry too much about the bobble on the economy. Underneath it all, the main mover and controller will be inflation caused by increasing oil prices. Remove your dependency on oil etc and you can protect yourself from it to some degree.
Posted: 22 Aug 2007, 14:40
that makes sense it's just a little hard when we've got the rather large issue of a ?115k mortgage and I'm just about to go self employed.SunnyJim wrote: Keep a long term view and don't worry too much about the bobble on the economy. Underneath it all, the main mover and controller will be inflation caused by increasing oil prices. Remove your dependency on oil etc and you can protect yourself from it to some degree.
we'll be attempting to finish the work that needs doing on our house (lived here for 5 years now, work should take about 2 months to complete) then considering selling up to either downsize our property or even rent.....thing is though if the potential house price crash occurs right now we'll be stuffed.
challenging times ahead indeed....
Posted: 22 Aug 2007, 16:09
Ah, yes. I can see you must be a little worried.....
So, do you think mortgage lending in the UK has been responsible? If so then you shouldn't have any worries....
Try a google search for "self certified mortgage". Only throws up 27,400 results on a UK only search.
I suppose if those mortgages weren't sold with a 2 year discount then we may be in a better position than the US of A, but if they were, and our 'liars loans' started after the US of A then I guess when we catch up with them we can expect the same kind of trouble.....
Bear in mind I know nothing about the housing or credit markets in the UK though.
So, do you think mortgage lending in the UK has been responsible? If so then you shouldn't have any worries....
Try a google search for "self certified mortgage". Only throws up 27,400 results on a UK only search.
I suppose if those mortgages weren't sold with a 2 year discount then we may be in a better position than the US of A, but if they were, and our 'liars loans' started after the US of A then I guess when we catch up with them we can expect the same kind of trouble..... Bear in mind I know nothing about the housing or credit markets in the UK though.
Posted: 22 Aug 2007, 16:16
?115K is nothing these days. What's that - a large terrace, or a small semi?
It's the families with household incomes of ?60K who have stretched themselves for ?250K+ mortgages who will get it first I reckon.
It's the families with household incomes of ?60K who have stretched themselves for ?250K+ mortgages who will get it first I reckon.
Posted: 22 Aug 2007, 17:15
Yeah, I expect you're right Andy. ?110k isn't much relatively speaking, but then if your giving up a career to start buying and renovating houses for a living, now might not be the best time 
Posted: 22 Aug 2007, 18:44
no no....that's not what i'll be doing self employed....although reading back i can see how it looks like that.
i'm going self employed as a plasterer...with a little carpentry on the side (stud partitions, hanging doors, skirting, kitchen fitting, flooring etc etc).
not that i'll be any less buggered doing that than the property renovation! 
Andy: it's a small-ish victorian terrace actually. Supposedly worth around 210k at present......not for much longer though eh......
i'm going self employed as a plasterer...with a little carpentry on the side (stud partitions, hanging doors, skirting, kitchen fitting, flooring etc etc).
not that i'll be any less buggered doing that than the property renovation!
Andy: it's a small-ish victorian terrace actually. Supposedly worth around 210k at present......not for much longer though eh......
Posted: 22 Aug 2007, 22:40
Having skills like plastering and carpentry won't go amiss post-peak surely.cake wrote:no no....that's not what i'll be doing self employed....although reading back i can see how it looks like that.
i'm going self employed as a plasterer...with a little carpentry on the side (stud partitions, hanging doors, skirting, kitchen fitting, flooring etc etc).
not that i'll be any less buggered doing that than the property renovation!
Andy: it's a small-ish victorian terrace actually. Supposedly worth around 210k at present......not for much longer though eh......
Smallish Victorian terrace eh . . . that's a good value (if correct) - mind you I suppose Bristol is pretty 'des res'. Our reasonably large end-terrace in Bury is probably worth about ?90K-?100K (allegedly).
Posted: 23 Aug 2007, 00:37
Did you ever watch the film "Fight Club"? They attempt and I think (can't 100% remember) succeed in bringing down the American economy by blowing up the computers containing all cerdit card debt details. This made me sit-up at the time and think that's how easy it could be to alter society as we know it and bring it to it's knees!cake wrote:blimey.....i thought peak oil was enough to take on board until all this credit crunch stuff started to come out too. this just tops off what has been a rather overwhelming few weeks for me....PaulS wrote:Couldn't really be worse.
Posted: 23 Aug 2007, 07:50
Hehehe, great film that!
I read an excellent article on the break down of complex systems the other day, with specific reference to how complex our society has become.
http://peakoildesign.com/blog/peakengin ... odern_life
It hypothesises that the more complex the system the more spectacular and unpredictable its failure mode.
I think this is true. It sounds true. The response of such complex and interlinked systems as our will be unpredicatble. The input is rising oil prices, followed by scarcity etc, but the affects of this will be bizzare and diverse at times. It made me think of the Douglas Adams situation where everyone gets ill from a disease contracted from phone mouthpieces.....
I read an excellent article on the break down of complex systems the other day, with specific reference to how complex our society has become.
http://peakoildesign.com/blog/peakengin ... odern_life
It hypothesises that the more complex the system the more spectacular and unpredictable its failure mode.
I think this is true. It sounds true. The response of such complex and interlinked systems as our will be unpredicatble. The input is rising oil prices, followed by scarcity etc, but the affects of this will be bizzare and diverse at times. It made me think of the Douglas Adams situation where everyone gets ill from a disease contracted from phone mouthpieces.....
Posted: 23 Aug 2007, 08:32
It's true that our society is very fragile. I think Thom Hartmann points out that every civilisation in history has failed where as tribes are still living sucessfully nowadays and have been for thousands of years.J.R.Ewing wrote:Did you ever watch the film "Fight Club"? They attempt and I think (can't 100% remember) succeed in bringing down the American economy by blowing up the computers containing all cerdit card debt details. This made me sit-up at the time and think that's how easy it could be to alter society as we know it and bring it to it's knees!
Maybe.....perhaps a return to the traditional plastering materials such as lime, clay, horsehair etc.Andy Hunt wrote: Having skills like plastering and carpentry won't go amiss post-peak surely.