$3/gallon gas, $100/barrell oil, and US foreign policy

[akarunway 1]

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One used to hear that if oil hit $90/barrel, the US (&/or oil-importing nations) would descend into recession, e.g., from the Wall Street Journal in 2005 (after oil rose to >$50/barrell): http://online.wsj.com/article/SB111270255444198252.html.

We’re at $90 and probably heading for $100/barrel without strong indicators of recession. (The sub-prime mortgage market collapse seems to be impacting the economy more than $90/barrel oil.)

If for whatever the reason, one begins to question the ‘common assumption’ that some $$$/barrel price of oil will push the US into a recession, what are the implications for US foreign policy?

Energy security and access to global energy sources, including concern w/r/t China’s energy demands, are part of the US National Security Strategy (p.19+, http://www.whitehouse.gov/nsc/nss.pdf). See also remarks by Under Secretary of State Alan Larson as part of State’s comments on the U.S. Foreign Policy Agenda, (http://usinfo.state.gov/journals/itps/1202/ijpe/pj7-4larson.htm):

“We need to secure reliable supplies of energy at reasonable prices in order to foster economic growth and prosperity, and to ensure that oil cannot be used as a weapon. We must deal with some hard facts about the international oil markets. Two-thirds of proven world oil reserves are in the Middle East. Europe and Japan, like the United States, rely on imports to meet a growing portion of oil needs. Aftershocks from global oil supply disruptions will ripple through the global economy. Finally, problem states control significant amounts of oil.”

From Former Special Assistant for Strategic Futures, Office of the Secretary of Defense (OSD), Pentagon, Tom Barnett's book The Pentagon's New Map emphasized the importance of parts of the Middle East, energy globalizatization, and the importance of bringing tint the world community those Middle Eastern oil-producing countries that are part of the "non-integrating" gap. Excerpt at: (http://www.theglobalist.com/StoryId.aspx?StoryId=3964): "Six OPEC members located in the Persian Gulf — Iran, Iraq, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates — control two-thirds of the proven, "conventional" oil reserves and over 90% of the excess productive capacity in the system."

VR/Marg

I predicted $100 barrels by the end of last yr. Guess I was only off by a yr. Wish I had the money to buy oil futures.

I hold it true, whate'er befall;
I feel it, when I sorrow most;
'Tis better to have loved and lost
Than never to have loved at all.

[NCclimber 0]

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I predicted $100 barrels by the end of last yr. Guess I was only off by a yr. Wish I had the money to buy oil futures.

Aw, come on. This after the fact, Monday morning quarterbacking is kind of weak.

One year ago, crude was at $54.00/barrel. In early '07 it dipped below $50.00/barrel.

[NCclimber 0]

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Right shoulder top this week, then Katie bar the door.

And so it goes.

Tick tock

tick tock

[nerdgirl 0]

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Right shoulder top this week, then Katie bar the door.

And so it goes.

Tick tock

tick tock

Did Fed Res Chairman Bernanke say something specific in his testimony to the JEC today say about the state of the US economy and causal factors?
Did he indicate that he foresees indicators of a recession ahead?

VR/Marg

Act as if everything you do matters, while laughing at yourself for thinking anything you do matters.
Tibetan Buddhist saying

[Whoopdeedo 0]

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Right shoulder top this week, then Katie bar the door.

WOW. Talk about a good call.

[billvon 2,396]

Wow, remember the good old days of $3/gallon gas and $100/barrel oil?

[Whoopdeedo 0]

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Wow, remember the good old days of $3/gallon gas and $100/barrel oil?

Is another $40 a month really that big of a deal?

[jcd11235 0]

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Wow, remember the good old days of $3/gallon gas and $100/barrel oil?

Is another $40 a month really that big of a deal?

For people on fixed incomes, yes. Especially when increased fuel costs are coupled with price increases for most other things due to increased shipping costs. Add in the increasing price of healthcare, and things start looking pretty gloomy, indeed.

Math tutoring available. Only $6! per hour! First lesson: Factorials!

[billvon 2,396]

>Is another $40 a month really that big of a deal?

For some people it's another $160 a month - and that's a bigger deal.

More importantly, it's a lot more money for airlines, farmers, shippers and freighters. That's reflected in prices, which means people spend less money on things like airline flights, which depresses the economy in general.

[nerdgirl 0]

Today the President of OPEC speculated that oil could reach $150-$170 (US)/barrel this summer.

The world passed $100/barrel in March, surpassing even the 1980 price when adjusted for inflation.

VR/Marg

Act as if everything you do matters, while laughing at yourself for thinking anything you do matters.
Tibetan Buddhist saying

[speedy 0]

You can place your bets here.

I voted for $154 within the next 60 days. All we need is a hurricane in the gulf and we will easily reach that price.

Dave

Fallschirmsport Marl

[lawrocket 3]

Oil closed below $94 per barrel today - over a $50 drop since July 11 high of $147.

A drop of more than a third in less than three months. At least there is SOME decent news.

My wife is hotter than your wife.

[Andy9o8 0]

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Oil closed below $94 per barrel today - over a $50 drop since July 11 high of $147.

A drop of more than a third in less than three months. At least there is SOME decent news.

Crude down a third? Prices at my local gas stations have gone down about 11% in the past few months.
When Lundberg says crude may or may not go up due to an upcoming storm, gas prices jump right away, before it even happens. But when crude goes way down, gas just wiggles down slightly. It's almost enough to turn me into a conspiracy theorist.

[nerdgirl 0]

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Oil closed below $94 per barrel today - over a $50 drop since July 11 high of $147.

Thanks for bumping this thread, which was originally posted almost a year ago (29Oct07).

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One used to hear that if oil hit $90/barrel, the US (&/or oil-importing nations) would descend into recession, e.g., from the Wall Street Journal in 2005 (after oil rose to >$50/barrell): http://online.wsj.com/...270255444198252.html.

We’re at $90 and probably heading for $100/barrel without strong indicators of recession. (The sub-prime mortgage market collapse seems to be impacting the economy more than $90/barrel oil.) [!!!! -- nerdgirl 04Oct08]

If for whatever the reason, one begins to question the ‘common assumption’ that some $$$/barrel price of oil will push the US into a recession, what are the implications for US foreign policy?

Energy security and access to global energy sources, including concern w/r/t China’s energy demands, are part of the US National Security Strategy (p.19+, http://www.whitehouse.gov/nsc/nss.pdf). See also remarks by Under Secretary of State Alan Larson as part of State’s comments on the U.S. Foreign Policy Agenda, (http://usinfo.state.gov/...ijpe/pj7-4larson.htm):

“We need to secure reliable supplies of energy at reasonable prices in order to foster economic growth and prosperity, and to ensure that oil cannot be used as a weapon. We must deal with some hard facts about the international oil markets. Two-thirds of proven world oil reserves are in the Middle East. Europe and Japan, like the United States, rely on imports to meet a growing portion of oil needs. Aftershocks from global oil supply disruptions will ripple through the global economy. Finally, problem states control significant amounts of oil.”

I’m still curious about the meaning & implications for US foreign policy. If Tom Friedman is right (& the world is flat), why does the Middle East still matter geopolitically? (Excepting Iran w/nascent nuclear program.) That's why I referenced the National Security Strategy & the Under Secretary’s words, because according to the current US National Security Strategy, energy security is very important. The calculus w/r/t the rising energy demand of China & India has had implications on defense and foreign policy.

Energy security is necessary but not sufficient alone w/r/t foreign policy. If the perceived impact on US economy is removed (i.e., what the experts and models predicted), how should that impact US foreign policy?

VR/Marg

Act as if everything you do matters, while laughing at yourself for thinking anything you do matters.
Tibetan Buddhist saying

[nerdgirl 0]

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Prices at my local gas stations have gone down about 11% in the past few months.
When Lundberg says crude may or may not go up due to an upcoming storm, gas prices jump right away, before it even happens. But when crude goes way down, gas just wiggles down slightly. It's almost enough to turn me into a conspiracy theorist.

The last week of September I was in Monterey (‘hardship TDY’ [/sarcasm] ). Drove down 1 south of Carmel to Garrapata State Park (fabulous 1900ft rise hike through Redwoods to chaparral overlooking coast). Gas was cheaper south of Carmel along PCH than in Atlanta.

Of course, Atlanta (& Nashville … & other areas in the southeast) has had gas shortages resulting from disruption/damage to oil refineries and pipelines from Hurricane Ike. At its worst, observed only ~ 1/10 stations had gas (no data city/state/region wide). Brought forth speculations and conversations on the level of connectedness of daily function to infrastructure and how tenuous that can be. More ponderous speculation than even well-formed questions or hypotheses.

VR/Marg

Act as if everything you do matters, while laughing at yourself for thinking anything you do matters.
Tibetan Buddhist saying

[Whoopdeedo 0]

This is from 10/30/07, when the DJIA was 13800.

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Right shoulder top this week, then Katie bar the door.

Hopefully, we'll see a reversal today. It won't be the bottom, but it will be a temporary reprieve.

[pirana 0]

$2.88 yesterday.

" . . . the lust for power can be just as completely satisfied by suggesting people into loving their servitude as by flogging them and kicking them into obedience." -- Aldous Huxley

[skydived19006 4]

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$2.88 yesterday.

Under 2.25 in Wichita today.

So, since the price of gas is now back down to a "normal" level, and oil has came back down, do we still need to drill? I guess we can do nothing, wait until gas is back at $4 a gallon, then say "drilling will not help, it'll be 7 to 10 years before anything we do now gets to market.

My guess is that we'll do nothing now, then a couple of years down the road say "We should have done something in 2008! What were you guys thinking?!?! And continue the typical blame game. "You guys did it." "You guys didn't do what you should have!"

I'm going to quit monitoring my tire air pressure now that gas is cheap again! Fuck it! Back to my old ways!

Martin

Experience is what you get when you thought you were going to get something else.

AC DZ

[downwardspiral 0]

It won't be this low for that long. In fact I'm predicting at least $7 maybe $8 per gallon next summer in SoCal.

www.FourWheelerHB.com

[rwieder 0]

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OPEC seaborne exports, excluding Ecuador, fell 900,000 barrels per day (bpd) in the four weeks to October 5 with Gulf producers accounting for most of the shrinkage, Lloyd's Marine Intelligence Unit said on Tuesday.

The London-based consultancy that tracks oil tanker shipments from 12 OPEC producers, including Iraq, said exports fell to 22.766 million bpd, down from 23.666 million bpd in the four weeks previous to September 7.

OPEC decided at a meeting in Vienna on September 9-10 to comply strictly with its formal output target, a move officials said would result in the group trimming crude supply by about 500,000 bpd from world markets.

LMIU said supply from big Gulf producers dropped 660,000 bpd, down from 18.323 million bpd to 17.660 million in the same period.

The consultancy said West African supply -- which includes Nigerian and Angolan exports -- fell 170,000 bpd, down from 3.548 million to 3.381 million bpd in the same four weeks.

LMIU has reported week-on-week falls of seaborne exports on average since early September when OPEC decided to stick to formal targets, tightening up supply.

Anytime OPEC decreaese peoducion, they shorw up the price by increasing the price of oil. In short oil prices will come back up, how high, who knows. A lot of things depend on the price of oil, largely by Wall Street.

-Richard-
"You're Holding The Rope And I'm Taking The Fall"

[kelpdiver 2]

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So, since the price of gas is now back down to a "normal" level, and oil has came back down, do we still need to drill? I guess we can do nothing, wait until gas is back at $4 a gallon, then say "drilling will not help, it'll be 7 to 10 years before anything we do now gets to market.

That oil will only continue to appreciate in value. Are we going to be stupid, and use it now, or are we going to still be in control of our destiny in 50 years when supplies become scarce?

[skydived19006 4]

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So, since the price of gas is now back down to a "normal" level, and oil has came back down, do we still need to drill? I guess we can do nothing, wait until gas is back at $4 a gallon, then say "drilling will not help, it'll be 7 to 10 years before anything we do now gets to market.

That oil will only continue to appreciate in value. Are we going to be stupid, and use it now, or are we going to still be in control of our destiny in 50 years when supplies become scarce?

So in 50 years the "It's a world market..." argument will no longer apply?

I know, I'm now arguing both sides.

How about Nuclear and clean coal? Will Obama still be an advocate of these if/once he's elected? Or, next time oil goes up, will we be saying "should have done it years ago, doesn't help right now?

Martin

Experience is what you get when you thought you were going to get something else.

AC DZ

[kelpdiver 2]

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So in 50 years the "It's a world market..." argument will no longer apply?

In 50 years, we could see a world where all oil resources are nationalized and yes, are a significant measure of a nation's power. Certainly not have oil will hurt - look at Japan in the late 30s when the US cut them off.

[warpedskydiver 0]

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It won't be this low for that long. In fact I'm predicting at least $7 maybe $8 per gallon next summer in SoCal.

I would agree with that assessment.

[kelpdiver 2]

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It won't be this low for that long. In fact I'm predicting at least $7 maybe $8 per gallon next summer in SoCal.

I would agree with that assessment.

Is that if Obama wins?

sorry guys, ain't going to happen. (the $7 gas, not the Obama victory)