luisdias, I think you should consider that not only will most producing countries try their best to follow Westexas model but will be encouraged in that, as far as the US is concerned, by the decreasing value of the US dollar.

Personally I would not purchase US dollars right now and I do not see exporting countries trading their goods, as readily as previously, for those dollars.

Yes the US military may momentarily trump Westexas's model but judging by how things have gone in Iraq I would not expect something in that order to be very effectual in the long range in solving US oil needs. Bullying only succeeds up to a certain point. I think the action in Iraq has, as well, diminished US political power greatly, one has only to look to south America , half a world away from Iraq yet next right door to the US, to see how that power has been reduced.

I think we are in for interesting times as to who gets what and how.

USA has a lot of political power in the world, perhaps enough to bend many countries' will in these matters. USA government will be very aggressive in the meetings with these countries, and they will pressure the most these countries to supply the oil they need, even if that implies gas cuts in those countrieslike in Iran, to prevent gas cuts inside US. Remember Dick Cheney motto: American way of life is not negotiable.

Luis, you live in 1975. Wait, that's Vietnam, bad example. In a comment above you say the US has the most money. Where have you been the past 5 years?

The US government aggressive in meetings? Not those with China and Russia, I can guarantee you that. The notion that the present government and Fed are trying to keep the economy roilling as is, and hence try to get as much oil as possible, ignores the fact that what they've really been doing the past 7 years, and have succeeded in doing, is try and bankrupt that same economy.

Does anyone really still believe these people are in the business of making sure Americans are comfortable?

I posted this on the Drumbeat thread, but I have always thought that this essay was profound in its implications.

IMO, a key problem the Neocons are facing is that more and more members of the military--and their families--are beginning to realize that they are fighting and dying to keep the oil flowing a little longer to the US.

http://www.time.com/time/magazine/article/0,9171,1181629,00.html

Why Iraq Was a Mistake
Sunday, Apr. 09, 2006 By LIEUT. GENERAL GREG NEWBOLD (RET.)

Two senior military officers are known to have challenged Defense Secretary Donald Rumsfeld on the planning of the Iraq war. Army General Eric Shinseki publicly dissented and found himself marginalized. Marine Lieut. General Greg Newbold, the Pentagon's top operations officer, voiced his objections internally and then retired, in part out of opposition to the war. Here, for the first time, Newbold goes public with a full-throated critique:

Excerpt by Lt. General Newbold (Ret.):

With the encouragement of some still in positions of military leadership, I offer a challenge to those still in uniform: a leader's responsibility is to give voice to those who can't--or don't have the opportunity to--speak.

Enlisted members of the armed forces swear their oath to those appointed over them; an officer swears an oath not to a person but to the Constitution. The distinction is important.

Well, if China bought ANYTHING from us, that would at least start us on the path to solving the imbalance of trade. We are selling them our culture, but that turns out to be too copyable, so it doesn't actually send any funds our (or hollywood's) way.

Luis: 1. China 2. India 3. Germany 4. France 5. Canada- actually it is a pretty long list.

erm, Stalin was talking about the pope when he said 'How many divisions has he got', and incidently, the pope was a big part of the final push that collapsed his once mighty empire.

In answer to your question, Europe spends $300 billion a year on armed forces - so we have plenty of divisions.

you haven't disagreed with me in the entire repply you've made...

Luis... you said...

And USA is the country with the most money.

I said...

If the oil tipping point happens we may be in a situation, like the money center banks today, of having so-called "financial" assets that nobody wants.

meaning: running short of oil would queer the value of our money (our capital assets require oil to be productive). We've seen an identical situation with Triple A rated mortgage securities.

from: http://www.safehaven.com/article-8405.htm

American Consumers are Losing their Crown
by Peter Schiff

Assuming a 50% decline in the value of the dollar and a 20% fall in U.S. GDP, the above chart would look something like this:

Luxembourg 183,853.25
Norway 152,895.56
Ireland 114,326.14
Switzerland 108,933.54
Iceland 107,064.94
Sweden 88,908.73
Netherlands 85,525.93
United Kingdom 83,919.70
Canada 82,695.74
Australia 75,963.04
France 74,833.10
Germany 73,558.27
United Arab Emirates 72,361.73
Japan 72,042.44
Singapore 64,164.05
Spain 63,453.11
New Zealand 49,023.91
Greece 48,060.83
Israel 41,021.10
Portugal 38,575.02
United States 36,868.12
Saudi Arabia 33,224.32
Chile 16,671.40
Russia 16,366.03
Mexico 15,511.38
Argentina 13,097.61
Venezuela 12,787.97
Brazil 11,036.41
Peru 6,657.09

The above projection by 2010 gives 20 countries with per capita GDP above the US.

In three years if the world price is $120/bbl in todays dollars, the US price in 2010 dollars will be $240.

Cuba

Good points, garyp.

Still, I'll play devil's advocate on you. Remember, I only posted what I speculated, its not a full prediction.

1. The dollar is going down, but the gas price is way higher in europe. The oil's price will rise much faster than the dollar will plummet, as it has been. This means the difference between the eurozone and the dollarzone won't be that much. Remember, if the dollar tanks, all the world tanks: the euro isn't still a clear alternative.

2. I live in an european country where gas enters in family budget like 10%. USA is still 3%. Who's gonna plummet first? That's right, I am. And so will many countries.

3. Yeah, sure you feel. But when it enters in your family budget in like 10%, in my country perhaps it only has elevated to 15%. I'm still going to plummet first.

4. There are a lot of countries in the developed world. Remember, USA only accounts for smth like 25% of oil usage. There are 75% under you. Doesn't that count? Remember too that oil will skyrocket when in two, three, four mbd gap between demand and production. Many developed countries will feel the hard pain much before the US. The Shit Will Hit The Fan before it gets too hard on Americans.

Now, this is speculation. Ponder that it will also depend on the intelligence in the oil secure dealings, luck in the sources you chose to buy oil, etc. etc. What I mean, it is not as simple as I've put it. I know. But abstracting that, USA seems just fine.

5a) Oil is a weapon of politics, and the US isn't loved. Supply or withholding of oil is a political weapon; that's why BigOil is part of government, whether openly or covertly. There are no "private" oil co.s. [except short-lived or insignificant].

The three key factors which determine how fast a given net export decline/crash occurs are: consumption as a percentage of production at peak production; the production decline rate and the rate of change in consumption.

What is striking is how similar the UK/Indonesian net export crashes are to the ELM: Same time frame 7/8 years versus 9 years and in both cases the net export decline rates accelerated with time, just like the ELM.

Note that the ELM indicated that only 10% of post-peak production from Export Land would be exported. Again, the percentage of future production that will be exported by a given exporter is a function of the three variables outlined above.

In the end, it will be messy and hard to model.

I agree. Concerning the question of how hard the US will be hit and when, consider these cumbersome and conflicting factoids.

If the US dollar tanks then US exports become much more competitive.

The US is the wealthiest nation on the planet, but the average savings rate is negative.

The US uses more oil per capita and per unit of economic output than the EU, thus the US has a greater ability to conserve than the EU. Similarly, the average US consumer spends 3% of their income on energy vs. 10% EU ( 3% vs 10%, I am quoting from up thread, I don't know if this is fact) giving the US more room to weather the storm. But, the US consumer is stretched thinner and the economy is far more dependent on consumption which will be reduced to pay higher energy costs.

One could go on but I think you get the point.

I think a simpler analysis is in order. The US is less efficient and less sustainable than the EU. Therefore the US will be hurt more than the EU. Be it recession, depression or collapse.

Tim

Especially as the price of food, namely wheat and corn, goes through the roof because it is being turned into an energy sink...

Oy, the increasing variance and number of deflationary and inflationary pressures once you start thinking about this are amazing...makes it a lot harder to walk along the knife edge.

The Fed is in the same spot. Do you cut rates, make money cheaper and feed the inflation fire, or do you keep rates stable and hope that the wind doesn't blow while you're on the high wire?

We have an export land crisis in wheat as former exporters turn importers. Australia, Argentina and Ukraine no longer export wheat. Looks like Russia will soon follow their footsteps. India - one of the biggest producers of wheat in the world - is an interesting case. Last year they imported 3 million tonnes of wheat for the first time in decades. This year are going to import 5 million tonnes - a 66% increase in just one year!

As less and less food is available for import in the face of rising demand and declining exports, US & Canada will make a lot of money. The question is: will the US earn enough money to pay for crude oil imports by exporting food? Will it make more money by exporting food compared to turning it into bio-fuels at home?

The US became a net importer of food last year or the year before. I'd have to go look up the specifics. While we could still export some food, to do so in order to get oil means we would have to do without in some other part of the economy. So you rob Peter to pay Paul or you rob Paul to pay Peter. Take your choice.

"The greatest shortcoming of the human race is our inability to understand the exponential function." -- Dr. Albert Bartlett
Into the Grey Zone

What about agricultural production?

Bing! We have a winner! I find Maslow's hierarchy of needs usefull to think about the problem. In a collapse situation those that can fufill the bottom the pyramid (food, water, etc.) will be in the drivers seat (or having to fend off those who can't). I wonder how long it would take to calculate a subsistence ratio (food grown over food needed to support current population at subsistence levels) for various regions of the world.

Fufilling ones self-esteem with the latest Hummer wil be history.

I believe the saying actually goes: if you owe the bank $1000, you have a problem. If you owe the bank $1,000,000 THEY have a problem. Not that that conflicts with what you said, but perhaps it retains some important subtlety.