The end of cheap oil has got governments panicking to control prices rather than planning for a post-oil era. Tom Levitt reports
They say rising market prices reflect a falling confidence in the ability of key oil producing countries to increase production to meet the rising demand for oil from emerging nations like China (already the world's second largest oil consumer after the US) and India.
David Strahan, author of The Last Oil Shock, says while not definitive proof of peak oil, 'it shows doubts amongst countries about oil supplies and suggests we may be very close to peak oil'.
David Korowicz, from the environmental analysts Feasta, explains: 'Firstly, rising prices squeeze out less essential consumption leading to business closures and unemployment. Secondly, higher oil prices mean more money flows out of oil consuming countries into oil producers. Less money flowing around the economy means less money for businesses, and less money for people to service their debts. Growing defaults further destabilise banks and government debt loads. The Eurozone, the US, and the UK are all suffering under massive debts, rising oil (and food) prices could effectively push them over the edge.'
Peak oil is 'getting closer' but the world is not ready
This is so typical of Big Business thinking:
The assumed 1.5 point drag on growth from the $40 price hike balances various factors. The main impact would be on the consumer. Because gasoline is a necessity for many people -- they have no alternative to driving to work -- and since it's tough to quickly reduce the amount consumed by very much, funds allocated to it must come from somewhere else. And that somewhere else could be savings or money that otherwise would be spent on clothes, restaurant meals, movies or iPads [emphasis mine].
Get Ready for $150 Oil
or Food, housing and other necessities?
The author concludes we don't need to worry about peak oil... also typical.
Opec Meeting Reveals Further Degeneration Of The MENA Region
Read more: http://www.theoildrum.com/node/8086?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+theoildrum+%28The+Oil+Drum%29#ixzz1QyHLojQc
Upon exiting the most recent Opec summit, the visibly frustrated Saudi Oil Minister, Mr. Ali Naimi, proclaimed it to be “one of the worst meetings we have ever had.” In the lead up to the meeting, oil traders had come to believe that Opec would increase production quotas to cover the shortfall of light, sweet Libyan crude going into Europe’s peak demand season. This led traders to the conclusion that tight markets would loosen (relatively), and as a consequence, oil traders bid down the price for ‘paper barrels’ (oil futures) by a couple of dollars.
Bringing this argument full circle, while the most recent Opec meeting had little lasting impact on oil prices, the real story is found in the analysis above. A troubling truth is revealed by considering Mr. Al Naimi’s words and actions in the context of the ongoing MENA crisis. As an x-ray reveals asymptomatic osteoporosis, Mr. Naimi’s words and actions reveal just how fractured and fragile the Middle East has become, and by extension just how perilous our economic recovery remains.
Read more: The Oil Drum
Read the comments there too. Great great source of information!