 | CLK08 closed around $114 (Tres Yergins) yesterday..so, in the next 60 days, the front month price of CL will... | The Oil Drum | Hydrates updated |  |
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Geometric progressions in essential item prices end in bloodshed. Just because Mr. Gates, or a particularly successful hedge fund manager can afford to purchase 1 billion gallons of gasoline (at retail) with his 2007 personal income (John Paulson made $3.7 billion last year), doesn't mean that Mrs. B. Low Average will stand by idly while her children starve.
For example, North Korea is now sliding into another famine. And they have nuclear weapons now.
I would call it a Black Swan, if it weren't so obviously common.
I talked about this in response to a question last night.
When do scarce resources stop being allocated by price, and armies start marching--following the lead set by the US in the Persian Gulf?
I believe it is called "paying the ultimate price".
@WesTex
although I agree in General, I would disagree in progression. Price rises now are marginalizing the world's second fifth, the Wester World's first "fifth". Once that is accomplished, prices will stagnate again as demand falls. That all takes time. Then production falls will begin eating away at price again..
Just saying it'll happen more likely in observable steps, we being at the end of step 2 right now.
I never really understood this question. There have been dozens of wars fought since WWII - and that is just ones that the USA has been involved, at least 30 I think. All wars are essentially about resources, since land is a resource.
So we are not exactly looking at a new trend here.
I would suggest that the potential scale of these particular shortages, coupled with the increase in human population over the last 60 years (since the end of WWII) might give one pause to consider whether any resultant resource war might be a wee bit larger than past ones.
Perhaps the great irony is that the US hot war against Iraq, the economic war against Iran, and the proxy war attempt to replace Chavez have lessened the amount of oil on the market and driven up the price to the point where the aggressor is about to default financially--blowback I believe is the correct term. Any further resource wars will likely have a similar result, whatever the commodity. Campbell saw this eventuality, which is why he suggested the Depletion Protocol. IMO, either we arrive at such an international treaty, or we'll continue to have trouble caused by the country run by people who think they own the world imperilling all humanity. (Interesting the close relationship between imperil and imperious.)
New price of oil in soldiers per barrel?
Too far?
Only if calculating the price of Ethanol in Third World Refugees per mile is going to far as well. Thats the scale for the next 5-10 years, after that it just becomes the poor in general.
Hmmm... so in another discussion it was something like one barrel of oil does the equivalent work of 128 people.....so 128 less people equals 1 barrel of oil? Any volunteers?
The poll is difficult because of the $unit. Is there some sort of a market-basket in which we could price it? We can't price it in energy units - or can we? Pricing in dollars - well, bail out Citibank and yeah, it will be over $127. Is that or is that not exactly the issue? Soldiers per barrel, hmmm, what do we do about the fractions - an arm and a leg? And there is really only one Yergin - unless his family wants to get in on it - so that doesn't work as a pricing unit.
What I'd find much more interesting would be a poll on the EROEI for all liquids - assuming such a number could be calculated. Maybe there are ten different metrics ranging from soldier per barrel to failed bank per barrel and count-of-billionaires-on-planet per barrel. Like the caviar index.
cfm in Gray, ME
Should probably be lives per gallon as more than just soldiers will be hit.
duplicate
Actually from a reasonably well off and aware guy on the street's perspective this is the most important question to ask. At what point will my security be compromised if my lights are on and my house warm and my family well fed if there are hungry and cold people out there ?
If you look at a community like the wealthier suburbs of Johannesburg ( or any other high inequality country ) you can see a little into the future on this issue. I don't relish the prospect of electric fences and gating off whole streets but it is just a matter of degrees.
The majority in SA have never experienced home comforts and probably don't really know what they are missing but the masses in the towns and cities in the West most certainly would be peeved at finding themselves back in the position their grandparents were spending 20% of their income on heat, 30% on food and 20% on public transport.
These are the average families, those on GBP20-30k household income.
I'm talking about families on 200k+ with no mortgage or other debts and very large funds behind them. They aren't going to be crippled by energy at 50p kWh ( ie basis renewables / coal mix ) and food at 1950 real prices. They'll be able to pony up for an electric car, insulate their houses and install solar/wind micro generation. They'll be reasonably immune to anything. Remember you could buy a roast leg of lamb in Warsaw in 1944 you just had to have enough money.
There's only one social effect of increasing energy costs and that's a dramatic explosion in inequality. Back to roaring fires in the manor houses and scrabbling for lumps of coal in the damp huts.
Most families with 200k+ plus will lose their jobs.
Would you care to justify that statement ? Why ? At what oil price ? Through what mechanism ?
Anyway, I plucked 200k as a figure out of the air. I could have meant 2.5m.
I don't think you quite understand the perennial nature of the top 1% wealth; through wars and recession it just persists. I'm not talking about people with a few hundred k in their pensions or housing, I mean multi millions spread across all classes of investments from currencies, gold, t-bonds to commodities, land, businesses and stocks.
These kind of people don't lose it all in a recession, depression or currency collapse, they are too wealthy and too diversified. They have no idea what debt is and don't really need to budget.
Believe me I married into this and am constantly amazed at the casual nature of this kind of wealth. It's never flashed but quietly sits all around you, invisible to the public unless you care to check the stockholder register or the tax returns ( or lack of ).
My point is there is a sliding scale of the knock-out effect of peak oil ... starting with the 3rd world guy on $2 a day and working up to $20k america today and $100k middle america tomorrow.
My contention is that we will break through the other side of the turbulent 20-30 year journey to a non-fossil energy world with a radically changed social makeup. Only the wealthiest will have won out, most will lose.
You have to realize that many wealthy people depend on the poor people. My uncle once said to me, "Sell to a poor man, not a rich man, the poor people are poor for a reason." Rich people do depend on poor people. If the economy really falls apart, many wealthy people will fall out of wealthy and go do middle or lower class.
Also, in battery electric vehicles, it costs the equivalent of $1.00 per gallon of gasoline. Also, they are simpler and require less maintenance. Granted, they have range problems, but I'm assuming that will be overcome, literally thousands of engineers/scientists are currently working to overcome the range issue.
The bottom line is, battery electric vehicles are not just a replacement for the ICE and petroleum, they are an advancement . After battery electric vehicles become widely used, there will be a huge economic boom, much like the 1920s, 1950s, and 1990s in the USA.
Before then, there might be a large disparity between the rich and the poor.
The rich will be hung in the streets, if past history is a guideline. There is no French Aristocracy.
The rich got there by random chance, and most do not have the cognitive ability to see the predicament they are in now.
We have been living with a superstition based economic model that has rewarded the most morally corrupt of our citizens. The feedback may be a bit messy.
No one knows, the possibilities are beyond our imagination.
Madmaster
Thank you, I knew there was a way out of this mess, I just needed someone enlightened like you to help me see.
"Before then, there might be a large disparity between the rich and the poor."
That's my point. It would take something of the order of a comet hitting the earth before the people I'm talking about become working class.
Yes, rich people depend on poor people but then it is easy to argue the other way around as well. Poor people do not possess the leverage on societal needs to
On rare occasions has there been an absolute revolution and to be frank it the SHTF big time then it comes down to who owns the military and who feeds the military and that isn't the man in the street. Revolution happens through sudden change and a lack of control of the pivotal areas of media and information and there is no way Joe is going to know anything other than what he is fed.
Electric cars might be $1 gas equivalent but they cost $20-40k+ to buy and if living costs carry their recent trend then Joe isn't buying one before gas is out of sight for his income segment.
As long as the food keeps rolling in, even if it is expensive, and the lights are on some of the time then Joe will sit there and let the pot get hotter.
As for the rich being rich by accident - oh boy. yeah, of course they are, just clueless aristocratic buffoons waiting for the plucky peasant to stick his pitch fork up their behinds. This isn't 1789 or even 1917 !
Even if money devalues they own the land the means to protect it, or even seize it. There are plenty of legal mechanisms in place for this but in the crunch the soldier is asked 'would you like your family to be fed and protected ?' and he's no longer the flag bearer for democracy but the long arm of the self-preserving oligarchy.
Soldier then points gun at workers and they harvest and work - that's how it works.
The question is - do we commoditise non-fossils before we get to that point ?
Cars are just about a quarter of world oil consumption (US with 40% is something like a deviation).
For your optimism to come to fruition we will need to find ways to make all those trucks, ships, airplanes etc. run on something different than oil. Not that it is impossible but it is not that easy as you make it sound.