The Wall Street Journal [sub] reports: "The world's premier energy monitor is preparing a sharp downward revision of its oil-supply forecast, a shift that reflects deepening pessimism over whether oil companies can keep abreast of booming demand." Previously, the International Energy Agency had forecast an ever-increasing supply to match ever-increasing demand. Oops. The U.S. Energy Department's own forecasting shop, the Energy Information Administration, has long adhered to the same demand-driven scenario. Now, both agencies have been caught with their analytical pants down. While some blame oil speculators for rapidly rising fuel costs, most economists and oil analysts point to increasing world-wide demand combined with the difficulties of finding new oil and oil suppliers unwillingness to spend the money to find more of the stuff. Speaking on CNBC's Squawk Box, Dr. Robert Hirsch, Management Information Services Senior Energy Advisor, fueled speculators' speculation. "The prices that we're paying at the pump today are, I think, going to be 'the good old days,' because others who watch this very closely forecast that we're going to be hitting $12 and $15 a gallon, and then, after that, when world oil production goes into decline, we're going to talk about rationing."
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From MSN Money: speculation about life in the US at $10/gallon gas
I thought that supply was supposed to be OK and this was a speculation bubble, didn’t TTAC have an editorial saying as much?
Does this new analysis change any of that? I really don’t want to drive a prius/volt or whatever.
Steve_S: Different writers have different views on this hot topic.
John
Says smugly: I’m glad I moved to a neighborhood where I can walk/bike to everything.
Seriously, this is a sea change for these two organizations (IEA and DOE). They have perpetually been the optimistic cheerleaders of the supply-will-meet-demand theory, while independent analysts were sounding the alarms. That they are coming around to the painful reality is BIG (and bad) news.
BTW, the linked article was available to me without subscription. Good read.
We can bet there’ll be lots drilling everywhere E Alaska, off the coasts.
Uncle Sam is not going to allow that, because t’ll screw up everything here. Or some kind of alternative fuel system n place.
Invade Canada should be easy task.
Here is T. Boone Pickens’ take (he being one of the world’s premier oil experts):
“The main problem, Pickens said, is that 85 million barrels a day is as much oil as the world industry can produce. That’s it. More simply isn’t possible. The trouble is, in the next quarter, demand will be around 86.5m barrels each day”
He’s smart enough to not put a dollar per gallon figure “out there” but reading between the lines makes one think – ouch. This is going to hurt.
The “next quarter” starts July 1st, folks.
Any time you have demand of 86.5 million barrels and a supply of 85 million barrels, it is more than obvious that the price is going to increase – and rapidly. It’s simple economics, in fact Econ 101 (taught at the most basic levels of university, for those non-Americans reading this).
And, let’s not forget, this is worldwide. Not just the US.
Of course, what will happen is that the price will go to the stratosphere long enough to suppress demand down to 85 million barrels, to match the supply. Then prices will reach equilibrium, and could go down if supply increases or demand decreases further.
What are the chances of that? Pretty small, since most Americans don’t seem to understand the simple concept which can be described as “uh, the party’s over”. AKA “the age of cheap oil is done.”
“Invade Canada should be easy task.”
Better finish with the easy task of invading Iraq first.
Oil will reach a point were alternatives are less expensive. Of course we went through the same thing in the 70’s.
What I want to know, is if the Democrats will be willing to recant their claims of Iraq being a “War for Oil”? After all, we may have to actually have a war for oil if we don’t fix the problem.
Wow that is an environmentalists wet dream!
I recall the ’70’s under Mr. Carter. Life looked pretty bad then, but wow, look at the wealth America has created since then! Sure we had cheap energy, but Americans are great at solutions and at leading the world. We’ll do so again. Life is not over for America.
Barring a calamity event that creates distortions, I tend not to buy into any projection for drastic, permanent price increases for any commodity. Barring a nuclear and chemical war, mass influenza or something of the sort that produces a doomsday, the market usually adjusts to self-correct for massive short-term price changes before they occur.
A lot of the growing oil demand in Asia is rooted in western demands for cheap imported manufactured goods. If the price of oil shoots up at the level to support this $12 US gas price, then the cost of making and shipping those goods to us spikes accordingly.
With a US downturn and higher import prices, we buy less. We buy less, they produce less. They produce less, they both use less and earn less, so their own native consumption will also decline as the nouveau middle class gets stuck in the same bind that we’re in. Consumption declines, and supplies become more plentiful. Speculators get burned, markets calm down, prices settle down.
Over time, we surely will see the effects of peak oil or whatever you’d like to call it. But these things will happen slowly, like the proverbial frog in the pot of simmering water that has the heat gradually being turned up. They don’t occur within just a year or two.
Sharp spikes create sharp pullbacks. Markets are cyclical precisely because the sharp pullbacks naturally moderate the extremes, causing them to level out over the medium term. There’s no reason for oil to behave differently than anything else.
“Life is not over for America.” I agree, but the era of cheap oil is. Which, IMO is a long term good thing. Before the discovery of cheaply extracted coal and oil the world economy used a very diverse energy portfolio. Wind power was used to pump water and to power the world’s ocean fleets, horsepower fed by grain plowed the fields and renewable wood was the heat source of choice. Obviously today’s population is much larger and nobody wants to return to 1800s type living, but we will adapt. Cheap and plentiful oil is what has kept competing solutions on the back burner. Turn that upside down and things change.
We might also see a shift back towards more localized production. Transport costs had become so low that smaller, distributed factories and farms died off to be replaced by fewer mega-sized versions. All of that was predicated on the cost of moving stuff around being so low that you could almost ignore it. When the playing field changes, so does the game.
“A lot of the growing oil demand in Asia is rooted in western demands for cheap imported manufactured goods.”
China’s per capital oil consumption is estimated at about 5 barrels per person per year. The US is at over 68 barrels per person and the world average is 12.55 barrels/person/year.
http://en.wikipedia.org/wiki/Petroleum
Even if China’s manufactured exports slow and it’s people keep becoming more prosperous just by selling stuff to each other then the Chinese economy is going to continue to grow and energy demands will grow with it. China has over 1.3 Billion people. India has over 1.1 Billion people. The US is only about 0.3 Billion people.
http://en.wikipedia.org/wiki/List_of_countries_by_population
So, just between China and India you have over 2.4 Billion people becoming more prosperous by the day. Prosperity is the prime driver of energy demand. The effect of those 2.4 Billion people moving up the economic ladder is a geopolitical force which will not be denied.
Here in Oregon, farmers are beginning to go back to diversified food production for the local market, because they see a future of higher shipping prices (as well as a demand for locally grown food).
PCH said – “A lot of the growing oil demand in Asia is rooted in western demands for cheap imported manufactured goods. If the price of oil shoots up at the level to support this $12 US gas price, then the cost of making and shipping those goods to us spikes accordingly. ”
And he is right. Mark the calender :)
He is also right to be suspicious of any projections based on long term commodity price trends.
Buddy, you got up on the right side of the bed, ate the right breakfast, and are firing on all cylinders.
No need to invade Canada! Alberta is just about one tax increase away from seceding anyway.
And you might as well have Quebec too. No oil, but I will miss the women….. So well dressed, and how I do so love the accents.
Everything else can be given back to Great Britain and/or First Nations.
And you might as well have Quebec too. No oil, but I will miss the women…..
You mean the strippers, be honest.
The problem with expensive fuel is that people in developing countries turn to other sources, such as wood (read rainforests). So, the environment gets hurt either way.
Even if China’s manufactured exports slow and it’s people keep becoming more prosperous just by selling stuff to each other…
That’s the point — they won’t. When we slow down, they also will slow down, because our money creates their prosperity. If they earn less from us, they will provide fewer jobs to their own people and have less disposable income. Their short-run consumption would decline in response to their own reduced production output and reduced discretionary spending.
Over time, their populations and trend toward prosperity will put long-run pressures on supplies, no doubt. But that’s not the issue here. Here, we are talking about cycles and how they are created.
Trendlines shift upward, but the actual short-term results move above and below the trendline, so the path doesn’t go strictly in one direction. That’s why the price growth can be sustainable over lengthy periods, but tends not to happen overnight. We don’t make adjustments for how much prices have increased compared to three decades ago, but when they go up significantly over a month or a quarter or a year, then we modify our behavior accordingly. The Chinese and Indians are not immune to this.
If only all US cities and suburbs were built for pedestrians and bicycles….but hey wait wasn’t Beijing built that way? Now bicycles are being displaced by cars. oh well.. cars have a strong following hence our addiction to oil.
Mike,
NO WAY, give Quebec back to the french!
PCH,
Correct again. They cannot sustain a growing self supporting economy because they are still too government controlled.
What DID you have for breakfast? I want some of that stuff.
Well said, John. I was speaking to my wife the other day while we were in the food store and mentioned that in the (near?) future, we might not be able to buy fresh fruits out of season. Bottled water might be a thing of the past. Pizza deliveries will probably be thought of in the past tense, in the same way that we look back on our parents getting baby diapers and milk delivered to their doorsteps.
Correct again. They cannot sustain a growing self supporting economy because they are still too government controlled.
Well, I can’t say that I quite agree with that. While they should shed the government controls, their issue here isn’t with control, but that their money is being made from exports — the outside world has more money to spend than they do, so they cater to it, instead of each other.
Building an export-based economy is a fine idea for them, with the west having more money to spend. But the downside to that is that it exposes them to the downturns suffered by their best customers.
What DID you have for breakfast? I want some of that stuff.
Coffee and chocolate. I wouldn’t recommend it.
Hey Mike, we don’t WANT Quebec. We have enough trouble with illegal aliens and legal aliens alike who can’t/won’t speak English in our own 50 states now. Sorry if that sounds un-PC, but it is the truth.
Besides, none of us might get what we truly want in this rather terrifying future scenario:
http://www.learcapital.com/marketcommentary/6726.html
(Scroll down once you get to the page – the article IS there)
Well a huge natural gas field has been discovered in Quebec. They are going to be more popular.
http://www.nationalpost.com/related/links/story.html?id=436678
Bottled water might be a thing of the past.
Now there’s a hoax, but entirely off topic. Take water that costs fractions of a penny per gallon to produce, put it in a bottle, advertise the heck out of it, and make a pile of money. And, they point to “big oil” as a bunch of greedy so-and-sos.
Landcrusher,
It’s not just the Democrats talking about oil in Iraq. March 2001 Chenney pulled to together an energy summit to map the oil fields of Iraq. Coincidence or something else?
Interestingly enough, it wasn’t just Iraq they mapped in 2001, but Saudi Arabia and the UAE’s fields:
http://en.wikipedia.org/wiki/Energy_Task_Force
That said, it is a bit concerning that these two organizations are now trumpeting an oil shortage.
Those who are sanguine about the future simply don’t know how bad things are going to get. As everyone in the popular media understands, a long term trend is just a multiple of a short term trend. A forecast is the result of an undeniable arithmetic calculation.
Today I stopped at a gas station to refuel. The price of gas is up twenty cents since yesterday!
At that rate, a gallon will cost $73.00 [$.20 times 365 days) more in a year’s time. After ten years, $730.40 more per gallon. (It could be $730.60, depending on how many February 29’s occur during the ten year period.)
I predict the vehicle market will turn even further toward economy cars and away from big SUVs when a tankful of gasoline costs $11,000.
50merc: I predict the vehicle market will turn even further toward economy cars and away from big SUVs when a tankful of gasoline costs $11,000.
But not until then?
Throwing around things like “supply will be 85 mbpd and demand will be 86.5 mpbd” is misleading. Both are a function of price; demand by itself is meaningless. Demand at $200/barrel will be higher than demand at $10/barrel. Pickens ought to know better than to feed this kind of economic illiteracy.
The review thread with the Toyota dealer slagging the Prius in favor of the Corolla is particularly relevant here. Back when we bought our 2004, part of the implied value was a hedge against higher fuel costs (back then I was using $1.80 as the average and imagined gas might go up to $2.50 for the hedge). Think about how much money Southwest saved by hedging on crude oil.
Today I stopped at a gas station to refuel. The price of gas is up twenty cents since yesterday!
At that rate, a gallon will cost $73.00 [$.20 times 365 days) more in a year’s time. After ten years, $730.40 more per gallon. (It could be $730.60, depending on how many February 29’s occur during the ten year period.)
I appreciate the sarcasm, and it illustrates the point. Trend lines increase over the long run, but they don’t go up consistently over the short run.
The belief that oil prices can only increase in the short-, medium- and long-run is similar to what we just had prior to the mortgage crisis. You had a certain subsection of prognosticators who explained why prices couldn’t possibly ever go down. (They don’t build more land, right?) So the sky was the limit, and prices couldn’t possibly fall, ever.
Of course, we know now how false this was. As it turns out, real estate prices can and do fall. Even though they will surely climb over the long long run (you’d be dumb to avoid buying a house with the idea that renting for a lifetime makes for a better investment), that does not mean that prices always increase at every moment and that demand doesn’t ebb and flow.
As pointed out elsewhere, oil demand is now basically flat, after some years of substantial demand increases. Yet despite the flattening demand curve, prices are soaring as if demand was rising exponentially. There is a disconnect between these two events, which suggests a bubble.
That does not mean that long-term consumption of oil is going to drop or that the future is bright eyed. But it’s nuts to think that gas could hit $12 for any length of time in the immediate term without consumers and producers radically modifying their behavior in response to price points that are below that level.
It goes back to random walk theory, which says that it is possible to predict trends, but not short-term price movements. The walk from A to B does not go in a straight line, but in a meandering wander, like a drunk staggering from the bar to home. He gets home eventually, but how he gets there, or when exactly he makes it, nobody can say, and you can know for certain that the route will not be the most direct.
As pointed out elsewhere, oil demand is now basically flat, after some years of substantial demand increases. Yet despite the flattening demand curve, prices are soaring as if demand was rising exponentially. There is a disconnect between these two events, which suggests a bubble.
And supply is likewise flat, with significant risk of gradually going down. Hence, increase in price. Not that hard to understand, as soon as you realize that the Saudis are lying, inasmuch as they imply they could supply more of the good stuff right now but just don’t want to.
In a previous thread, where the development in the price of oil was blown off as the result of speculation, and the usual tropes of “there’s lots of oil, we just gotta find it” were voiced, I entered the following, which is a rundown of what your government officials have been pondering, while putting on a happy face. I mean, the Army Corps of Engineers stating that “oil wars are not out of the question?”
This was in response to ppelico (sp?) who was quite adamant that things were hunky-dory and who spent some time berating various posters for their henny-penny the sky is falling attitude.
===
Go to theoildrum.com if you want statistics, you can swim in them. But I would seriously recommend that you read The Hirsch Report, for the official, government authorized and approved version of what’s happening to the US energy supply. There’s a reason why The Pentagon is paying think-tanks to ponder the make-up of Post Petroleum USA.
http://en.wikipedia.org/wiki/Hirsch_report
You’ll find the link to the report itself at the bottom.
And for Pentagon’s view on this, and the actual military writings, check this out. Then let’s talk:
http://www.energybulletin.net/18056.html
The literature listing at the bottom of the link is comprehensive, and once you’re through reading that, your hair should have a slightly greyer shade.
Excerpt, from a study by the US Army Corps of Engineers, famous for their “the sky is falling” attitude to reality:
“The doubling of oil prices from 2003-2005 is not an anomaly, but a picture of the future. Oil production is approaching its peak; low growth in availability can be expected for the next 5 to 10 years.”
The report depicts the likely shape of future geopolitics: “In conclusion, we are clearly entering a very different period for global energy markets and relations. We shall continue to face geopolitical risks and uncertainties and concerns around energy security will continue to rise. Petroleum will remain the most strategic and political energy commodity with natural gas running a close second. .…The roles of leading actors in the global energy system will also change as the center of gravity for oil production shifts back towards the Middle East and Central Asia….Oil wars are certainly not out of the question.”
You should also try to get a back-issue of this copy of Defense Technology International: The Military and the End of Oil, May/June, 2006 issue.
http://photos1.blogger.com/blogger/1705/1331/400/Slide1.2.jpg
And supply is likewise flat
Supply matches demand. There is no sound reason why prices should double with flat demand and adequate supplies.
If supplies were plummeting, then yes, you’d have a point. But here’s the rub — if you are correct that prices are climbing because speculators believe that supplies might plummet in the future, then you are blaming speculators for pushing up prices based upon what might happen, not for what has already happened. This is the dictionary definition of a speculator’s market.
So ironically, you agree that speculation is part of the problem. You just happen to believe that the speculators are correct.
The IEA are being cautious, while truthful. They know that their 120mbpd projection is history, but they also know that stating the truth, that we’ll never push above 90mbpd would have started a quite forceful reaction.
Their 100mbpd ceiling is bad enough.
I’ve still not sold my Jeep, and it is losing value as I’m typing.
@# Paul Niedermeyer :
May 22nd, 2008 at 1:29 pm
Here in Oregon, farmers are beginning to go back to diversified food production for the local market, because they see a future of higher shipping prices (as well as a demand for locally grown food).
===
Farmers are smart. Things will change – water from Fiji may not be the requirement it’s been for a while! :-)
As PCH points out, it’s the trend line that needs watching, not the short term fluctuations.
There’s no doubt about the long term trend line. Oil is a finite resource. Even if new oil fields are found oil is still finite.
China and India will continue to become wealthier. They’ll slow if we slow, but they won’t stop. It’s not necessary to have exports to wealthier countries to improve circumstances. It helps, but it isn’t required. Demand for oil will continue to grow in both China and India and many other places.
The rub is adequate supplies. Eventually the supplies we have will run out. When? I have no idea. But if the people pumping the oil know, then it stands to reason they wouldn’t want to pump more than they are now not only to keep making money, but to ensure they are able to profit for a number of years.
I still believe the only reason oil companies haven’t been allowed to tap much inside the US is that we’re saving it for when the rest of the world has been bled dry.
Orian,
No one from the right (at least the foreign policy right) is out screaming about how we went to war over oil (“No war for oil” and similar silly slogans). The reason is because we did not go to war to get the oil, which we have proven by not taking it. OTOH, you just wait until the voters clamor loud enough for oil and see if a democratic president doesn’t send our kids off to war to actually take it.
PCH,
I don’t believe an economy the size of china’s could possibly be an export economy without government interference. The increased domestic economy they now have is a result of loosening of government control in some areas. Maybe someone read the history of Spain over there. You can have all the money in the world, but your wealth and power will be tied to the status quo without a free economy.
Actually, China and India aren’t in as good shape as one would think. Yes, their economies are growing, but they’d dearly like to have oil be cheap while they grow.
The West, which came early to the petroleum party, got to transform its infrastructure with cheaper than tap-water oil. Fueling transportation, construction and development.
The catch-up we keep reading about which is supposed to happen in China and India will have to happen under an entirely different set of cost-to-result rules, and that’s going to be a handicap. The cost of steel has doubled in a year, and numerous crucial construction commodities are also going north — there are reasons to be skeptical about the growth projections in China and India.
@ Stein X Leikanger: “Farmers are smart. Things will change – water from Fiji may not be the requirement it’s been for a while! :-)”
We’ll be seeing plenty of fancy sled drivers sippin’ that fine tropical spring water in the future no matter what happens to oil.
How will it be, I wonder, when what we (and when I say we, I mean me, a middle class 42 year old who never really had to do without while yet not having a family fortune as a safety net) can now take for granted become luxuries that many will still be able to easily afford.
That is, I’ve always known my bosses have had nicer cars than I have, but suddenly they are gonna be able to afford water in a bottle and delivered pizzas (Bel Air Pizza – 30 minutes or less!) and I won’t. Potentially. I’m obviously bearish.
Not that it is that much cheaper on the eastside of LA, but the Benz was in Brentwood recently and I saw diesel at $4.99. F.
I don’t believe an economy the size of china’s could possibly be an export economy without government interference.
China has a labor price advantage, and it positions itself to take advantage of it. Hence, the aggressive export posture.
Implicit to that, of course, is that the labor cost advantage is an export-based phenomenon, i.e. the cost advantage is to its trading partners that have higher domestic labor costs, more so than it is for themselves. They need us to buy their stuff, and it’s logical that industrialists there would be catering to serve us.
Eventually, that will change as wealth permeates the Chinese economy enough that the home market is just as attractive as are the export markets. (That trend is clearly underway as we speak.) But they aren’t there just yet.
” But they aren’t there just yet.” Any slow down in China’s export markets will likely be met with domestic demand stimulation.
Nothing stops the Chinese government from printing up the equivalent of $300 per person and handing it out, just like the US has recently done. In China’s domestic economy that money would turn into demand almost instantly
China’s real production capability exceeds it’s local market’s ability to pay which is a classic example of an insufficient money supply. With government created money that is an easy imbalance to alter.
Nothing stops the Chinese government from printing up the equivalent of $300 per person and handing it out, just like the US has recently done. In China’s domestic economy that money would turn into demand almost instantly
That would be just smoke and mirrors that can work temporarily at best. Governments can’t just magically print money without consequences — that just creates corresponding inflation.
Governments are not large enough to violate market principles for long. They can try, but they never succeed for more than a short time. Inflation ultimately destroys buying power, it does not create it.
“Pizza deliveries will probably be thought of in the past tense”
Even at US$9.50/gal you can have pizza delivered in Rotterdam. They simply use 80mpg scooters instead of farm vehicles.
@# Praxis :
May 22nd, 2008 at 5:54 pm
“Pizza deliveries will probably be thought of in the past tense”
Even at US$9.50/gal you can have pizza delivered in Rotterdam. They simply use 80mpg scooters instead of farm vehicles.
===
That wins my Priceless Snark Award of the Year!
Yes, future historians will wonder what the h… we were thinking, driving around in utility vehicles that weighed twelve to twentyfive times as much as the occupants. (Hummers excluded, mileage may vary.)
Dr. Robert Hirsch… “The prices that we’re paying at the pump today are, I think, going to be ‘the good old days,’ because others who watch this very closely forecast that we’re going to be hitting $12 and $15 a gallon, and then, after that, when world oil production goes into decline, we’re going to talk about rationing.”
Rationing??? Is the above PinHeaD an economist? What’s wrong with letting the market work? All $15-$20 gas will do is force people onto scooters or into carpools.
Other than that, I think Mr Montgomery’s piece on oil prices was more inline with reality. Oil (and other commodities) are the new bubble…
Is conspicuous consumption that kill us.
So if people can ride around with motor bikes, scooters why a Tata Nano cannot be sold here?
We need buyer’s beware.
Are those 10-15 mpg SUV are a necessity to get around for 1 person?
We had it too good for too long.
When I first came to Canada in 72, is hard to find any small cars, a few mini coopers 1275 cc, the rest are all V8 with at least 5.7 litres.
The sad part are some folks who had bought nto these big fuel hogs with negative equity. Hope they can find some money to buy a bicycle thats all.
Large Part of N America is either snow bound 1/3 – 1/2 fo the yr, or hilly terrain that rendered bicycle impossible.
The other day saw a bicycle with a small 2 stroke engine mounted on it. Blasting uphill at 30-35 km/h that can be fun too.
That can be a trend in the very near future.
Should N America’s economy slowed down, China , India are not going to be going full tilt with pedal to the metal any time soon.
Go look at WalMart, Dollar stores most of the items are not necessities for our everyday lives.
Should your wallet feel pnched then u’re not going to spend lke no tomorrow in these frivolous goods.
A healthy serving of Kool-Aid from The Oil Drum … actually a very good overview of the dissenting views on Peak Oil, bubble or no, and when is it all going South. Today – or forty years from now? First of three parts – the next to be posted over the coming days.
http://www.theoildrum.com/node/4020
So easy-to-extract, light sweet crude is almost gone. What, oh, what are we to do?!
The US has plenty of natural gas, coal, and solar, wind and nuclear potential. If we start adjusting now to an electron economy versus an oil one, there will not be rioting in the streets–I hope.
Coal-to-gas was used extensively by the Germans in WWII: it powered the Luftwaffe. Think of what we could achieve today with our technology!
Build a few hundred nuclear power plants in the Nevada desert next to Area 51. Hell, put in a few more refineries now for the oil we’ve got left. Not many NIMBY’s out there. Pipe in cooling water from Canada or Alaska (they’ve got plenty) and let the pipeline parallel–then branch off–the NAFTA highway which has already been planned and engineered. Use the nukes for electricity or hydrogen generation
MIT has invented a membrane that increases fuel cell efficiency by 50%; IBM has developed a concentrator for solar cells that increases output from 20W to 200W per cell.
There is a lot of money to be made at the dawning of this energy revolution…
menno :
May 22nd, 2008 at 2:06 pm
Hey Mike, we don’t WANT Quebec. We have enough trouble with illegal aliens and legal aliens alike who can’t/won’t speak English in our own 50 states now. Sorry if that sounds un-PC, but it is the truth.
You speak English over there? We’ll I’ll be…. who’d a thunk.
Does this make anyone else think of the printer industry? Can you imagine in 2060 that shell, bp, etc are giving away chevy aveos for free so you can buy gas?
Also: re pizza delivery:
IN brazil, the equivalent (income ratio to gas prices) would be $30-$40/gallon here. Sure there are tons of delivery boys everywhere, they just ride 125cc motorbikes. IT’s not uncommon to see bottled water guys with 20+ gallons of water in on the back of their bike. for delivery to offices.
Landcrusher,
Of course they weren’t saying that – they knew they couldn’t get the war under that premise. It was WMD, then that didn’t pan out after the war started. Then it was to remove a dictator when there are far worse leaders in the world. It doesn’t really matter at this point since we’re stuck in this mess we created, but they knew full well they couldn’t sell the US public on a war for oil.
Orian,
How about we compare the two likely stories.
1. They were worried about WMD, knew he was an SOB, compared the pro’s and con’s, started a campaign to sell the idea to the people, and invaded. They then found very little WMD, so they started spinning, because just cutting and running would have terrible results and really be unfair to the Iraqi people.
2. They wanted to invade Iraq to take over it’s oil fields and give them to their friends in the oil business so they made all that stuff up. Only they can’t now figure out a way to steal all the oil, and instead are having to pay the Iraqi’s for it and the net loss is insanely huge.
Sorry, until we actually TAKE the oil, none of the “WAR for OIL” slogans make any sense. I suppose you could say they went based on a misguided idea that the invasion would stabilize oil prices and guarantee the free flow, but I think they weren’t that stupid.
Now, you wanna have the whole argument about whether they are evil geniuses or just idiots? Hint, you can’t have it both ways. Hint number two, I can actually play devils advocate and destroy the right wing’s stupid propaganda as well. Please, don’t repeat crap, it’s just crap.
When I see some antiwar protestor chanting “No war for oil,” I feel like going up to him and saying, “Why not? Sounds like a great reason to me!” After all, a reliable and affordable supply of oil is critical to any economy more developed than Lower Slobbovia. Interrupting commerce in oil is akin to blockading purchases of food.
And sadly, lots of oil comes from the Mideast, a region run by fanatical and/or thuggish regimes, and rich (from oil) and crazy (from ideology) enough to produce much more terrorism and other mischief than can be consumed locally. It was for good reason that Bush and everyone else, from Clinton and Gore to Chirac and Putin, were alarmed about WMD in Saddam’s hands. Mideastern oil itself isn’t a life-and-death matter for the US, but a conflagration in the Persian Gulf would be devastating to many countries and therefore to America. So we, the world’s policeman, are there. Believe it or not, there really are people who want to do harm to us, and their demands are non-negotiable.
It’s silly to think the administration would promote a claim about WMDs that it knew to be false. And it’s foolish to ignore the numerous other grounds (stated by Congress as well as the White House) for military intervention.
Now let’s get back to talking about the price of gas. My thinking on this is colored by the recollection that the oil business has had busts as well as booms. The 80’s were terribly hard on my part of the country. I fondly remember a bumper sticker that said “Oh Lord, please send us one more oil boom. I promise to not piss it all away next time.”
50,
You bet they didn’t piss away the last boom. They also didn’t suffer nearly as much in the late ninteties when the price hit rock bottom and they were shutting down wells and telling the US government they were not interested in any new offshore leases (which led to the present accusation that they get huge subsidies because Clinton made special deals to get them to go after those leases so he could get the up front money).
They also aren’t all that crazy about starting all sorts of new projects right now. Why? I dunno, maybe because every government in the world seems to renig on the deals. Maybe because they are being slandered in congress for making what is at best an average return on investment.
Lastly, the idea that the persent production is all we can get is a bit farcical. Almost all the hurdles to increased production are government created.
50merc, it’s about time someone said it, and bravo to you sir.
we’re talking about out Murican way of life here, and as Dick “shooter” Cheney sagely noted it’s non-negotiable, ie, no matter how many many swarthy people we have to murder, torture, rape, imprison, widow, orphan, dispossess or refugee, it goddamned worth it. when one of our brave freedom fighters mows down (sorry, liberates) a bunch of worthless Iraqi civilians from a safe distance while I’m stuffing my face at TGI Fridays do I notice it? of course not! fuck ’em!
In the first issue of Alan Greenspan’s memoir, the following sentence appears:
“I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil.”
Cue the hue and cry boys. This was “amended” in later editions.
http://www.timesonline.co.uk/tol/news/world/article2461214.ece
Bob Woodward has a lengthy article about this in the Washington Post:
Alan Greenspan, the former Federal Reserve chairman, said in an interview that the removal of Saddam Hussein had been “essential” to secure world oil supplies, a point he emphasized to the White House in private conversations before the 2003 invasion of Iraq.
Greenspan, who was the country’s top voice on monetary policy at the time Bush decided to go to war in Iraq, has refrained from extensive public comment on it until now, but he made the striking comment in a new memoir out today that “the Iraq War is largely about oil.” In the interview, he clarified that sentence in his 531-page book, saying that while securing global oil supplies was “not the administration’s motive,” he had presented the White House with the case for why removing Hussein was important for the global economy.
http://www.washingtonpost.com/wp-dyn/content/article/2007/09/16/AR2007091601287.html
Supply matches demand. There is no sound reason why prices should double with flat demand and adequate supplies.
When the market notices that supply isn’t going up despite increasing demand, the assumption is that the supply is very inelastic. Since the demand is obviously very inelastic as well, it’s not unreasonable at all to see very steep price increases for very small supply/demand imbalances. The market is, in a sense, trying to discover “how much do I have to charge you to make this chunk of marginal demand go away”?
Landcrusher,
The Bush administration admitted less than a year after invasion that Hussein had NO weapons of mass destruction. Not little. None. The country is roughly the same size as the state of California, but the general public was not aware of that little detail. As for SoB’s with WMD, North Korea has one that is much worse and is more of a loose cannon than Saddam ever was, yet we didn’t touch him.
As for your second scenario, they didn’t expect the insurgency that poured in. There is a good article in Time about one of the guys (Sanchez) that ended up taking a fall for Rumsfeld’s mistakes and the rapid pull out that resulted in the cluster that we’re dealing with now. Ideally this mess would have been in and out, but that didn’t happen. So yeah, it’s hard to get the oil out of there when you screw up the planning so badly you have to do whatever you can to save face both at home and abroad.
So, in a nutshell, we screwed ourselves to the point we can’t “Take” the oil.
The Clinton Administration believed that Saddam had weapons of mass destruction, too. So did Senator Hillary Rodham Clinton, who voted in favor of the war. Senator John Kerry and Vice President Al Gore also made public statements to that effect.
Did the desire to secure oil supplies play a part in the decision as to whether to go to war? Sure…Iraq is locacted in a region where a large percentage of the world’s known oil reserves are located. The ENTIRE DEVELOPED world depends on this oil, not just the United States. If anything, given that we only get about 13 percent of our oil from the Middle East, it’s the rest of the world that depends more heavily on the Middle East for oil supplies.
A case can be made that having this supply disrupted or in the hands of an unstable despot (as opposed to the more stable despots in countries such, as say, Saudi Arabia) is not a good thing for the WORLD, not just the United States.
Contrary to the image of Europe, Japan and, to a lesser extent, Australia, portrayed on this site, people in those countries do lots of driving, they heat or cool their homes with fossil fuels, too, and they use fossil fuels to generate electricity. When they aren’t driving, they use mass transit, which isn’t powered by hamsters or french-fry grease.
In short, their economies depend on a reliable, steady supply of oil, too.
The main exception is France, which relies heavily on nuclear power for electric generation. (Last time I checked, most of those concerned about global warming where also staunchly opposed to nuclear power, with a few exceptions.)
An unstable oil supply hurts them, too. They are also impacted by oil price increases. Just last week a co-worker brought in visitors from Wales, who were complaining about…rising gasoline prices in Great Britain.
Now, we can certainly argue that the Bush Administration botched the war. We can argue that the war should never have been waged in the first place. We can argue that the war has backfired and resulted in higher oil prices, along with a declining dollar (although a declining dollar HELPS American exports).
But the idea that we went to war to benefit Exxon or because Dick Cheney is a shill for the oil industry could charitably be described as what comes out of the north end of a southbound bull at the Pennsylvania Farm Show.
The answer is MUCH more complicated than that…unless, of course, we prefer to base our worldview of foreign policy on slogans and protest signs. Although that doesn’t quite fit in with the idea that all of the war opponents are modern-day Adlai Stevensons, appealing to the “thinking” portion of the population.
People seem to forget that the Clinton Administration believed that Saddam had weapons of mass destruction, too. So did Senator Hillary Rodham Clinton, who voted in favor of the war. Senator John Kerry and Vice President Al Gore also made public statements to that effect.
Disinformation, to put it politely. A different level of proof is required to back up statements like this administration made in the run-up to the war than what were, essentially, things said by the folks you listed, along the lines of “we think he has some; he hasn’t accounted for his old ones”.
Los Alamos said they could manufacture gasoline from nuclear power at $5 a gallon. How’s that going?
I’m with Mr. Leikanger here, I just don’t understand the denial.
It’s pretty simple:
-The US has little domestic oil, and Norway is running out
-Much of the world’s reserves are in the Middle East and Caspian region
-Consumption in Asia is trending upward quickly
-The US government forecasts that the Chinese will be consuming as much oil as the US by 2035
-Between India and China, they have 1/3rd of the world’s population
-China is earning billions from exporting goods to the US and the west, and hasn’t quite armed up…yet. But once armed, it could field an army substantially larger than anything that the US could offer.
The writing is on the wall. Some day, there is a high likelihood that oil will stop being just another commodity available on the open market for everyone to buy like wheat and sugar, and will become a weapon to be used by these petro-dictators to play off the major powers against each other.
This region is of utmost importance to us. The Iraq war was clearly an effort to secure supplies and establish a presence in the Middle East on the border of Iran so that stable flows to the US and her allies could be ensured in the future. 9/11 provided the perfect opportunity to justify this presence.
If Iraq was exactly what it was, except it was located in a different neighborhood and had no oil, we couldn’t have given a rat’s back end about it. It’s really not complicated at all — oil is of strategic importance to the US and the west, and the powers that be are worried about what could happen, given current trends.
Frankly, they’re right to worry. The Carter Doctrine established that the US would go to war to protect its access to oil. It might have been a stretch to do so preemptively, but it is a longstanding, bi-partisan position that the US makes oil security a high priority.
I understand that the PR spin doesn’t allow the government to actually say this so clearly, but you would think that intelligent, analytical citizens could figure it out just through basic observation. The world is full of despots, but we don’t invade all of them. We need to have a compelling reason, and in the case of Iraq, most of it is because of that juice that lies beneath it.
M1EK: Disinformation, to put it politely. A different level of proof is required to back up statements like this administration made in the run-up to the war than what were, essentially, things said by the folks you listed, along the lines of “we think he has some; he hasn’t accounted for his old ones”.
Here is what they said:
Senator Ted Kennedy, on Sept. 27, 2002: “We have know for many years that Saddam Hussein is seeking and developing weapons of mass destruction.”
Vice President Al Gore on Sept. 23, 2002: “We know that he has stored secret supplies of biological and chemical weapons throughout his country.”
Senator Hillary Clinton on Oct. 10, 2002: “In the four years since the inspectors left, intelligence reports show that Saddam Hussein has worked to rebuild his chemical and biological wapons stock, his missile delivery capability, and his nuclear program…It is clear that, if left unchecked, Saddam Hussein will continue to increase his capacity to wage biological and chemical warfare, and keep trying to develop nuclear weapons.”
In all fairness, some of those Democrats favored continued sanctions, or limited military strikes, as opposed to an all-out war. But they did believe that he had those weapons, regardless of the “level of proof” required.
Which may explain why Senator Hillary Clinton voted in favor of the war, or why former President Bill Clinton was initially supportive, even though he was attempting to rewrite his own history during the runup to the primaries.
There was the real question as to whether we – or anyone else – wants a hostile, unstable despot who is sitting on a large part of the world’s oil to even have the possibility of developing those weapons.
The Bush Administration was ultimately wrong. Guess what – they weren’t the only ones.
My folks always said nothing was gained from arguing politics or religion (which are pretty much the same thing to some people), so I’ll hold my tongue–er, keyboard–other than to point out it’s contemptible to libel our men and women in the military.
And if anyone out there doesn’t know why the US Navy was created (hint: in 1800 a fifth of the US government’s revenues went to appease the Barbary pirates), or why the Marines sing of the shores of Tripoli and are called Leathernecks, I urge them to do a little research. Such as:
http://en.wikipedia.org/wiki/Barbary_pirates
On a lighter note, here’s another bumper sticker, which refers to the media-fed demonization of the oil industry: “Please don’t tell my mother I work in the oil business. She thinks I’m a piano player in a whorehouse.”
Another point to consider in this Iraq WMD shenanigan is that we armed Sadam way back in the day to fight Iran.
We also armed Bin Laden to fight Communism.
In hind sight, neither was a good idea.
Note I don’t hold our military in contempt or slander them. I have the utmost respect for the job they do.
What I don’t agree with is how they are treated most of the time.
WAS the Bush administration (and to be fair, Gore, Hillbillary, Kennedy and others) wrong about weapons of mass destruction in Iraq?
I honestly question that. I read a lot of online news from outside the United States. We have a LOT of censorship – and the internet just helps us to peek behind the curtain to the man with the levers that we’re supposed to be ignoring. Whether this is ultimately government censorship, or censorship by those media heads who have their own agendas and ensure we only see the news THEY want us to see, I can’t say.
How is it that the Israeli government has been talking about how the Hussein government moved literally tons of WMD’s to Syria prior to the US invasion, and nobody else listens. Perhaps because nobody wants to hear about it (there is an agenda in place to ensure virtually no such news gets into the mainstream of consciousness), and perhaps because if Israel ignores such facts (if indeed they are true), it is an existential threat.
Next, I distinctly recall seeing Russian news showing American GI’s destroying Iraqi WMD’s IN IRAQ about 2 years go. I mean, I saw photos and saw quotations by US military officers! In fact, I saw similar news reports online from another source, as well. (Can’t recall the country).
As to why these facts are not pointed out by the Bush administration, if they are also true, I can only conclude that there must be some other factor in play here which causes the administration to be mum about it. Obviously, yet another hidden agenda. So much for transparency in government (we can all stop laughing hysterically now…) As to what this could be, I have no real idea, but obviously keeping this agenda quiet is more important to them than just proving themselves to have been right about WMD’s.
It seems we are dancing around a bit of willfull miscommunication.
“War for Oil” is meant to stir up anti war protests be giving the impression that the US is nothing other than a bunch of raiders in long boats coming to take the wealth of others.
“Taking” is “stealing”
If you want to say that we went to Iraq partly because we wanted to ensure that the region’s (not just Iraq’s) oil supplies continued to flow without being held up or robbed by terrorists or potentates, then go ahead, I will agree.
HOWEVER, I don’t think that will look good on a bumper sticker. If you want to cry “No War for Oil,” then you can go talk with the “No appeasement” crowd until you are all blue in the face.
If you want to say “No War for Free Markets, Private Property, or Liberty,” then I don’t think you will get many supporters. Go ahead though.
Lastly, Orian, if you want to sway my mind, don’t quote the Bush adminstration OR the NYT as if they mean anything. Truth is better found by flipping a coin.
I can only surmise that the small wmd caches that were found have not been enough to win the war in the press over wmd. Therefore, it may have been the administrations plan to not try to fight that fight anymore.
If they pointed to what they found, it may only have caused another round of attacks from the left over the original reports being overstated instead of just wrong.
When both sides are fighting over power rather than results, who knows about anything coming out of that rat’s nest.
• 50merc :
May 23rd, 2008 at 12:17 am
When I see some antiwar protestor chanting “No war for oil,” I feel like going up to him and saying, “Why not? Sounds like a great reason to me!” After all, a reliable and affordable supply of oil is critical to any economy more developed than Lower Slobbovia. Interrupting commerce in oil is akin to blockading purchases of food.
• Pch101 :
May 23rd, 2008 at 10:34 am
I’m with Mr. Leikanger here, I just don’t understand the denial.
It’s pretty simple:
-The US has little domestic oil, and Norway is running out
-Much of the world’s reserves are in the Middle East and Caspian region
-Consumption in Asia is trending upward quickly
-The US government forecasts that the Chinese will be consuming as much oil as the US by 2035
-Between India and China, they have 1/3rd of the world’s population
-China is earning billions from exporting goods to the US and the west, and hasn’t quite armed up…yet. But once armed, it could field an army substantially larger than anything that the US could offer.
The writing is on the wall. Some day, there is a high likelihood that oil will stop being just another commodity available on the open market for everyone to buy like wheat and sugar, and will become a weapon to be used by these petro-dictators to play off the major powers against each other.
This region is of utmost importance to us. The Iraq war was clearly an effort to secure supplies and establish a presence in the Middle East on the border of Iran so that stable flows to the US and her allies could be ensured in the future. 9/11 provided the perfect opportunity to justify this presence.
If Iraq was exactly what it was, except it was located in a different neighborhood and had no oil, we couldn’t have given a rat’s back end about it. It’s really not complicated at all — oil is of strategic importance to the US and the west, and the powers that be are worried about what could happen, given current trends.
Frankly, they’re right to worry. The Carter Doctrine established that the US would go to war to protect its access to oil. It might have been a stretch to do so preemptively, but it is a longstanding, bi-partisan position that the US makes oil security a high priority.
I understand that the PR spin doesn’t allow the government to actually say this so clearly, but you would think that intelligent, analytical citizens could figure it out just through basic observation. The world is full of despots, but we don’t invade all of them. We need to have a compelling reason, and in the case of Iraq, most of it is because of that juice that lies beneath it.
Ding..ding..ding..ding, we have couple of winners here, with abolutely no sarcasm intended.
50merc and PCH, you guys have absolutely hit the nail on the head.
These “No War for Oil” jerks completely have their heads in the sand. Yes, we as a country need to be pursuing alternatives to being dependant on foreign oil and reducing our consumption. Nationally, we should be pursuing this with an effort that would dwarf the race to reach to moon.
However, until we have achieved that, in order to secure our way of life, we have to secure our sources of oil.
Unless you are going to go and live 100% off the grid and subsistence farm, live off the land etc. you are being a hipocrite to yell “No war for oil”.
Unless you are going to go and live 100% off the grid and subsistence farm, live off the land etc. you are being a hipocrite to yell “No war for oil”.
Yes, but there is plenty of hypocrisy to go around. The administration pretended that it was about democracy and weapons of mass destruction, when it wasn’t about either. Ever since, they have continuously lied about the progress of the war and the tenuousness of the US position. All of that dishonesty sets up Bush and his team for fair criticism.
There is something to be said for the benefits of a stable oil market – even at the cost of war.
Chaotic and/or failed governments are not good at efficiently using oil and other natural resources. At least the Saudi’s seem to know when to ask for foreign help in running their fields. (They’re probably better managed than Mexico’s or Venezuela’s). Hell, I’ve heard that Iran IMPORTS gasoline because of limited refining capacity.