One of my theories on the economic times we live in.

[AllentownJake]

These are the nations of OPEC

Algeria
Angola
Ecuador
Iran
Iraq
Kuwait
Libya
Nigeria
Qatar
Saudi Arabia
United Arab Emirates
Venezuela

add Russia as a major exporter but not an official member of OPEC.

In all honesty, I think this economic malaise as Jimmy Carter said could be ended in 6 months if these nations simply produced more oil.

They won't. I don't really blame them. It isn't in their interest and well I can't really name a country on that list we've been particularly nice to. They've done this to us before and quite frankly there is nothing we can do about it, because we've over extended ourselves in two wars. They aren't dumb they know this.

See the 1970s, we just didn't have a deflationary banking crisis hit at the same time.

Could be peak oil as well :shrug: but my guess is that this is more a political statement based on some of our past and current behavior. China has the reserves to pay the increased price, and they are more than happy to pay it if it weakens us.

They'll open the pipes again if we get serious about alternative energy like we started to do in the late 1970s under Carter.

[ananda]

1. Why do we need oil?

We don't.

It's time to move on from fossil fuels.

[AllentownJake]

2. There is a transition period

It takes times to build battery cars, farming equipment, industrial machinery, and public transportation.

[Fumesucker]

6. We wouldn't if Reagan hadn't shitcanned Carter's initiatives..

We lost thirty years of moving to alternative sources of energy, that would be making an immense difference by now.

[Possumpoint]

Dreamer

When and if the oil spigot is turned down or off you will learn all the impacts of that action. From the food you eat to every product you wear or use, is in some way oil involved. Just how do you intend to move product to market? Natural gas will take up some of the uses but we're in for a bumpy road when the world starts to run out of oil.

[DJ13]

3. ended in 6 months if these nations simply produced more oil.

If they were smart thats what they would do.

Until the world's economy begins growing their market for oil will remain stagnant (or decline further), and trying to speculate the price higher to make up for lost revenues will only further damage the economy long term, further restraining their own growth.

[AllentownJake]

4. Something tells me they are mad at us

Might be that Iraq war and that entire banking fraud thing...quite a few of them had significant investments in financial services in the US.

The other part of the equation is China is willing to pay the higher price right now to fuck with us.

They can't hit us with a missile or send an army into our space, but they certainly can starve us on a commodity we need.

[pscot]

17. China's oil imports in January

were up 28% year to year. They built 10.3 million cars in 2009, and the Chinese people bought 13.5 million cars in 2009. They are building 80,000 kilometers of new freeways. They're buying up oil production capacity all over the world. World oil production peaked in 2005 and will probably never reach that level again. If the Ghawar field in S.A.is in decline, prices may go a lot higher a lot quicker than anyone imagines.

[DJ13]

20. Theres a difference between using and storing

Sure they increased purchases, but they might be taking a page from our strategic reserves and storing it.

Exports from China had declined by 45% last year, barely rising in the first quarter, so their immediate need for oil isnt close to past needs as yet.

[northernlights]

19. the world market for oil isn't declining or stagnant

China is more than making up for our decline. Their use increased 28% last year. They will soon overtake us as #1 user.

[FarCenter]

5. Oil in the ground is appreciating faster than other assets

They would be daft to pump it up and invest the profits in bonds paying a few percent interest. Especially US Treasurys.

[AllentownJake]

7. Good point

throwing oil out there and than taking the profits and giving it to Citigroup for a high return on debt isn't exactly an option right now.

[Tierra_y_Libertad]

8. China is buying up oil fields, oil contracts, and increasing it's storage capacity.

http://www.consumerenergyreport.com/2009/08/18/china-on-a-shopping-spree-for-oil/

And, why not? They're awash in money, their economy is growing, and their need for oil is expanding.

[Mike 03]

12. This is an excellent and important point. NT

[havocmom]

9. Off the top of your head, how are US refineries doing?

Last I read, their tanks were full but they weren't selling enough fuel to drop the levels and make room for more.

Maybe it isn't just OPEC nations? The big multi-nationals do not have allegiance to any nation, only money.

And yeah, peak oil. We will run out of oil.

[AllentownJake]

11. They keep closing refineries

As far as the multinationals I blame Bill Clinton here. His justice department was sold on the idea of them merging.

[havocmom]

15. Closing because they don't want to do the environmental work

I know that is why new ones haven't been built.

Re Clinton, oh yeah. Bill's pro-business over nation views are my big beef with him, and probably the reason I could not support Hillary in the primaries. I think she is a brilliant person and have a lot of respect for her, but the family business of too pro-business scares the crap outta me.

Lived close to the border in the Clinton years. NAFTA was not a help. Lots of Mexican female workers got put in the position of being virtual slave labor to the local bosses of factories built by US companies just over the border. Sex, drugs, rocked and rolled. Ugly treatment, ugly environmental conditions (hey, paying wages is not the only thing motivating companies to move abroad, they don't face much regulation if they go where pols are cheaper to bribe).

[pscot]

18. U.S.Oil demand is down 3 million barrels a day

from pre-recession levels, and will probably never recover as we switch to electric, bio-fuels, natural gas. Meanwhile, China's oil use is up, so is India's. Opec countries are using 20% more of their own oil than they were a few years ago. One needs to actually think about this stuff if one hopes to understnd it. There are a lot of moving parts and the situation is changing rapidly.

[laughingliberal]

10. It is a bit anxiety provoking

I did read a couple of months ago an analysis by an economist who was nervous as oil was approaching $80 per barrel. His contention is that we suffer recessions every time oil reaches 4% of GDP and he put that level as oil reaching $83 per barrel.

Couple that with a still ailing economy (to put it mildly) and I think we're sitting on a powder keg.

On edit: rec

[AllentownJake]

13. We all know what I think about the current economic conditions

:nuke:

[hfojvt]

14. I don't think oil prices are that high now

at least for gasoline prices were are lower now than we were for most of 2005, 2006, and 2007, when we did not have the same economic troubles that we do now. The gas price in 1986 of $1.58 is the inflation equivalent to $3.14 today. So I don't think gas prices are all that.

[AllentownJake]

16. I think since 1986

We have actually grown more dependent not less dependent...that added with the wage deflation that has occurred the past 30 years. We also import more than in the 1980s.

As someone said up thread, when gas prices sky rocketed, they had trouble paying their bills.

Every $1 of imported gas is something that was not purchased or saved.