No massive increased demand (indeed the opposite showing)
No signs of economic growth
Governments printing money
Massive instability of the financial markets
Is this the beginning of Peter Schifs prediction?
Despite massive deflation and drop in commodities demand, the commodities are showing an increasing-price trend.
If this is the start of the hyperinflation then boy I am scared.
Oil up, dollar down. I got a bad feeling about this one
Moderator: Peak Moderation
I suspect we are seeing the start of the spiky plateau before the final drop in production of oil. Production was increased at $140 per barrel then demand dropped and the surplus supply was dumped at $40 per barrel. Both prices were overshoots. Now the price is creeping up towards whatever the Saudis want it to stabilise at, say $70 per barrel, or maybe $80 if they allow for dollar inflation.Tess wrote:Me too. If we start seeing hefty commodity price inflation while demand is still falling away, we're in serious trouble.
I'm not suggesting the Saudis can hold whatever price they want indefinitely. No doubt their favoured price will be exceeded in future and then the spiky bit restarts.
This is my interpretation. Feel free to criticize/flame as per your personal style 
Oil prices have been at cost plus levels since the mid-eighties. OPEC (read SA) has managed to maintain enough spare capacity and self-restraint to keep the supply of oil fairly close to global demand levels but with supply low enough to keep the price reasonable to sustain further investment.
However, since about 2000, the cheap credit fueled boom in demand has steadily eroded that spare capacity faster than OPEC could expand it, leading finally to the price spike last year, where we got some indication of how much the industrial world was prepared to pay for oil (ie. it's real economic value, rather than its cost) if it had to , at least in the short term. The price spike helped pop the credit bubble. OPEC re-instated quotas but it couldn't be fast enough to stop the price collapsing.
So now, we are (temporarily) back to BAU with modest OPEC ( read SA) spare capacity and enough self restraint to keep oil prices stable, albeit at a somewhat higher price, to some extent reflecting the increased cost of oil infrastructure as the cheap stuff gets steadily depleted.
So far, so RGR. The problems start because the BAU is only being maintained in the middle of the worst global recession in 80 years. We are still benefitting from the heavy infrastructure investment undertaken in the last 5-10 years as the price run-up was underway. Now with the price collapse (and worse the credit crunch) we are seeing investment in the marginal barrel of production being cut heavily, at least outside OPEC.
It seems inevitable that supply capacity must fall in the 3-5 year time frame as we face a gap in the cycle of investment. If this is a normal economic recession, that would coincide with the next major up-tick in global demand (think Tata Nano -Jevon's paradox writ large) and must inevitably lead to another price spike and recession.
However, I think we are in a much more fundamental depression that. We are hitting many other resource constraints as both the global population and first world per capita consumption continue to expand exponentially. I can , at a pinch, see the world GDP continue to fall, along with oil demand, faster than the oil supply falls due to depletion. Oil prices may never again reach the (inflation adjusted) levels we saw last year.
In a sense they cannot, because the true value of a fiat currency can only be the resources it can command. The value is increased by the efficiency with which we use those resources, but in a prolonged depression it is hard to see the social investment needed to increase overall energy efficiency being deployed widely. At least in our current social model, we are chosing to collapse.
Does any of this prove that we are at PO? No. But it is certainly entirely consistent with it (and, at a pedantic level with RGR. He claims oil supply will peak due to lack of demand. We may have seen peak oil demand because we have hit other limits to growth.)
Oil prices have been at cost plus levels since the mid-eighties. OPEC (read SA) has managed to maintain enough spare capacity and self-restraint to keep the supply of oil fairly close to global demand levels but with supply low enough to keep the price reasonable to sustain further investment.
However, since about 2000, the cheap credit fueled boom in demand has steadily eroded that spare capacity faster than OPEC could expand it, leading finally to the price spike last year, where we got some indication of how much the industrial world was prepared to pay for oil (ie. it's real economic value, rather than its cost) if it had to , at least in the short term. The price spike helped pop the credit bubble. OPEC re-instated quotas but it couldn't be fast enough to stop the price collapsing.
So now, we are (temporarily) back to BAU with modest OPEC ( read SA) spare capacity and enough self restraint to keep oil prices stable, albeit at a somewhat higher price, to some extent reflecting the increased cost of oil infrastructure as the cheap stuff gets steadily depleted.
So far, so RGR. The problems start because the BAU is only being maintained in the middle of the worst global recession in 80 years. We are still benefitting from the heavy infrastructure investment undertaken in the last 5-10 years as the price run-up was underway. Now with the price collapse (and worse the credit crunch) we are seeing investment in the marginal barrel of production being cut heavily, at least outside OPEC.
It seems inevitable that supply capacity must fall in the 3-5 year time frame as we face a gap in the cycle of investment. If this is a normal economic recession, that would coincide with the next major up-tick in global demand (think Tata Nano -Jevon's paradox writ large) and must inevitably lead to another price spike and recession.
However, I think we are in a much more fundamental depression that. We are hitting many other resource constraints as both the global population and first world per capita consumption continue to expand exponentially. I can , at a pinch, see the world GDP continue to fall, along with oil demand, faster than the oil supply falls due to depletion. Oil prices may never again reach the (inflation adjusted) levels we saw last year.
In a sense they cannot, because the true value of a fiat currency can only be the resources it can command. The value is increased by the efficiency with which we use those resources, but in a prolonged depression it is hard to see the social investment needed to increase overall energy efficiency being deployed widely. At least in our current social model, we are chosing to collapse.
Does any of this prove that we are at PO? No. But it is certainly entirely consistent with it (and, at a pedantic level with RGR. He claims oil supply will peak due to lack of demand. We may have seen peak oil demand because we have hit other limits to growth.)
on the oil drum there was a posting commenting that the current demand destruction is the easy stuff and what will follow will be more volitle as cutting back won't be so easy.
Question is how many Nanos will it take to negate the lower consumption in the USA....
Cheap cars for indiabecause the demand that is destroyed first in a free market is the demand that is easiest to eliminate, the resulting consumptive system is more inelastic, more brittle, and more susceptible to systemic shock from supply disruption.
Question is how many Nanos will it take to negate the lower consumption in the USA....
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RenewableCandy
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