Declining Russian Oil Production Could Lead to $200 Oil and “Global Recession,” Says Deutsche Bank

"Two-hundred dollar oil would break the back of the global economy," Adam Sieminski, chief energy economist at Deutsche Bank AG (DB), told Bloomberg News in an interview yesterday (Wednesday) in Tokyo. "Next step after $200 would be global recession and bad news for everybody."

There has been considerable discussion on this list as to what $300, $400 or $500 oil would do to the economy. Perhaps we do not need to get that high before we create a global recession, perhaps $200 oil would do it. And of course a global recession would kill enough demand to keep oil from going any higher…for awhile.

The problem would be, of course, that we would never come out of that recession because the supply of oil would never increase. Global oil supply will continue to gradually decrease. And the global recession will simply get a little worse each year until it is a full scale depression. And the recession will get a little worse each year until it turns into a complete global meltdown, a total collapse of the world as we know it.

Of course that is the best case scenario. It may not be gradual. Hoarding and warfare may cause the decline in oil supplies to be rather dramatic instead of gradual. In that case the collapse would be sudden and dramatic rather than gradual.

Ron Patterson

Very soon after learning about Peak Oil, I came to the realization you just summarized. Expensive oil (whether technically peak or not) will put the breaks on the world economy. However, even if demand is reduced, depletion continues, so any equilibrium point will only be temporary until it is eroded by depletion and the decline continues. Any atttempt at recovery will kick up demand, which will kick up prices and strangle the recovery.

I think this will happen to a greater or less extent, even if we're successful at developing alternatives. Alternatives will take time and money, and both are going to be hard to come by. The transition is going to be painful.

We do, however, have a lot of control over how painful it is going to be. I'm just not very optimistic that we will do the right things as a society. I'm pretty sure we'll panic and make the problem worse, maybe a lot worse. I hope I'm wrong, but I'm trying to be prepared for the worst.

This is partly why I have always favoured power-down scenarios (having less children to achieve smaller populations, working towards low energy life-styles, etc (note: that does not mean anti-technology or not using technology as some people seem to get fixated on with power-down talk)).

Every time we try to find alternatives to power and supply raw material for BAU, we will be strangled by the continuing depletion and erosion of the very system upon which we DEPEND for survival. As one article above notes, we are not separate from our environment. The techno-fix ideas always come across as very simplistic, and seem to willfully fail to take into account the complexity of the systems that drive our economies...

I am in favour of many technophile ideas, but only if they are not being touted to keep BAU ticking along in what appears to be an unrealistic and deluded way.

The problem with this Deutsche Bank release, like so many similar, is the two zeroes.

Because it means that they have no idea what price the market will sustain before collapse. If they had a model to feed $200 into, and analyse the results, they could ask the model about $190 and $180 as well.

Whether the motivation is name recognition for Adam Sieminski, 'advertising' for the bank, or some sort of market influence, I have no idea.

What it's NOT about, is the bank having any idea how the market will react - the two zeroes prove that much, at least.

Thanks for pointing out what is not obvious to many-these are advertisements for Deutsche Bank.

Jaymax, everything is just an estimate. All Deutsch Bank can possibly hope to do is just get it in the ballpark. If Deutsch Bank said something like "$205 oil will cause a worldwide recession" we wood whoop to the high heavens and ask "how can they be that precise?" We all realize that the $200 figure is just a wild ass guess. We all know they really mean "somewhere around $200 oil will cause a worldwide recession".

Come on, quit nitpicking and give them a break. I appreciate the estimate even if they cannot be precise.

Ron Patterson

Hmmm, I disagree - I think they pretended to provide information, which doesn't entitle them to a break - but anyhow - this is much less interesting than the remainder of your post which it triggered, so I shall shut up anyhow :-)

Whilst oil is at the highest price it is still not as high as the previous oil shock when compared to GDP of the world. To reach that it would have to go to about $195 and of course then we had a pretty serious recession. Of course supplies of oil increased soon afterwards which they probably won't this time round.

"People will wonder why every new recession is a little worse than the previous one"

Richard Heinberg in "the end of suburbia".

BTW, I see an upbeat in war retoric towards Iran.

"President George Bush intensified the rhetoric against Iran last week, accusing Tehran of putting the Middle East “under the shadow of a nuclear holocaust”. He warned that the US and its allies would confront Iran “before it is too late”."
http://www.timesonline.co.uk/tol/news/world/asia/article2369001.ece

"THE US military chief is to meet his Israeli counterpart in Tel Aviv this week in a move that gives new impetus to speculation about a pre-emptive strike against Iran's nuclear capabilities.

Tensions were further heightened by a suggestion from former US ambassador to the UN John Bolton that the US and Israel could attack Iraq's fledgling program between the time a new president was nominated in November and the date the incumbent, George W. Bush, left office in January. "
(That should not read Iraq, but maybe they copy-pasted from early 2003)
http://www.theaustralian.news.com.au/story/0,25197,23917181-2703,00.html

"The trip has been scheduled for some time but U.S. officials say it comes just as the Israelis are mounting a full court press to get the Bush administration to strike Iran's nuclear complex."
http://www.cbsnews.com/stories/2008/06/24/eveningnews/main4206201.shtml

"Tensions were further heightened by a suggestion from former US ambassador to the UN John Bolton that the US and Israel could attack Iraq's (sic) fledgling program between the time a new president was nominated in November and the date the incumbent, George W. Bush, left office in January. "

My, oh my! Let's hope George Dubya isn't too caught up in the 2008 holiday spirit. What a nice Hanukkah present to the Israelis and office warming Christmas gift to a new administration. Then again, if the general public is miffed over the dearth of sugar plums and play stations and SUVs under the yule tree b/c of struggles to pay fuel and transportation costs (if they have a place to live at all?) then what a wonderful light display to keep everyone festive and amused.

All cynicism aside, though, I don't think the US will attack Iran despite Ahmadinejad's rhetoric, the neo-cons ambitions, or Israeli anxieties. Yes, George Dubya may want to be remembered as a courageous war president who faced down America's enemies, but I suspect even he knows that this action would be a deadly genie for everybody, including Americans. Posterity is likely looming larger in the President's sights these days.

I hope, here, reason will prevail.

The US doesn't have to bomb Iran, Isreal has said they will. Just a matter of timing .

If Israel bombs Iran, Iran will launch various attacks conventional and unconventional near and far. At that point the US will have to bomb Iran.

Israel is a state of the US isn't it? I mean they will be bombing Iran with US Funded US built planes what the difference?

So by that logic, Iraq and Afghanistan are states of the US. We gave them weapons too.

If they were a state they would pay taxes. Israel is a very great net liability to the US.

I believe they pay us through intelligence information!

they are a co dependent state. we give them a billion of arm's and financial aid. while they keep the arab world divided so we can get cheap oil.

It is painfully obvious that what is about to happen on the macropolitical scene is of Biblical proportions. I am not one to blame any particular individual, like all of these demagogues on talk radio blaming everyone from the current Chief Executive to Rosie ODonnell; No, we are all to blame on this one. The grace period on payments for our profligate lifestyles is just about up and the only thing that will help us through this unprecedented period of time will be faith and hope. Faith that God will see us through it, and hope in the coming Kingdom of God that every human being will hear about before the end comes. It will not be by might or power that we will justify ourselves - that mistake is a constant axiom of history - it will be by the Spirit of God, if I may be aloud to say so.

"...Faith that God will see us through it,..."

IMO thats what got us into this mess, what allowed us to rape the planet, allowed us to forsake nature, indeed provided the mandate to over power, subdue, conquer nature.

Placing faith in God in light of what's about to come down will guarantee that the wrong paths will be followed.

Strip yourselves naked (metaphorically) and succumb to NATURE or NATURE will take care of you, but not in a nice way.

It's not nice to fool Mother Nature

Cheers!

Cool it on the rant, souperman2. For you, faith (trust) in humanity and reason may offer the best path to solutions ahead. Fair enough. Please bear in mind, however, that faith in God and the use of reason are not always estranged bedfellows. Some of the best minds in human history have been attached to very devote people. Intelligence and religious expression need not be seen as mutually exclusive.

Collectively, whether religiously minded or disengaged, we've all had a share in enjoying the benefits of the fossil fuel age. The pending fall-out from our over-indulgence and cavalier attitude towards nature could very well be severe. But how best we will be able to face that severity, even in a worse case scenario, will depend upon how well we treat one other. Our personal survival could well depend upon neighbourly values, order and decency. The best in human beings: love, gentleness, kindness, self-control, generosity, honesty, may in the end prove to be invaluable. Many people see these things as divine gifts.

Secularists, regardless of background, do not have a monopoly on virtue. Atheists can be as obdurate, narrow-minded, and zealous in their treatment of others and as blinded to wise decision-making as anyone else. It doesn't matter if you're an Osama Bin Laden, an Ian Paisley, a Stalin, or a Robespierre, the result is the same. Fanaticism can show itself in many forms and in many guises.

Meanwhile there are devote people everywhere who are keenly aware that humanity has much to answer for in its stewardship of creation.

My final thought. All the power to you as you place your hope in the faculty of reason and common sense. But to others, if faith in God will see you through this, then all the power to you too. Respect is a good first step in building and bridging those relationships that we many come to count on.

Right on, Souperman2.

Zadoc seems an excellent guy and a smart poster, but since he has asked you to cool your rant, I'll ask you not to. Thus do i refute the up and down arrows.

Human delusional thinking and ability to rationalize anything that feels good has laid waste to the planet, and this continues apace. Airing one's delusions makes them fair game for comment.

And if you want anyone to listen to you about anything, first, they have to respect you. A belief that telling someone they are delusional is somehow going to help, is considerably more delusional than the very beliefs you are attacking.

At the very least the delusion that treating someone's belief as 'fair game' is likely to somehow influence those beliefs can much more easily be shown to be a delusion than the beliefs attacked, and is therefore less rational.

I stand by my up-arrow :-)

EDIT: 'cos I'm revising for an exam tomorrow on Science Communication, here's the slide that just popped up:

Conclusions
• Your goal is to have your intended message be the message that is actually communicated.
• It is your responsibility to deliver your message in a way to prevent or reduce the message from being distorted
• The only message that matters is the one that is received
• You must become audience focused

Fundamental truths. How does attacking someone's beliefs, even if you can prove they are delusional, achieve anything, other than build a tighter and smaller in-group with those who already vigorously agree with you?

If humanity is delusional, why follow?
Did I say follow humanity, or follow God?
I think you missed the point.The Bible teaches to deny yourself and that the greatest is the one who serves others.Does that sound like feel good rationalizing.

Thats alright greenish, God will give you a chance to put your money where your mouth is, if you really care about the earth and the well being of humanity - when TSHTF you will have a choice - conform or be cast out.
Better to be cast out, believe me.

"... IMO thats what got us into this mess..." i.e. Religion.

Believe it or not souperman, If you are referring to man made religions I would agree with you to a point - secular humanism is a religion likewise - people who put their faith in men.

I do not adhear to either one however, for in truth both are very similar to one another. They both have a misguided faith in men. Yeshua (Jesus) was perhaps the most anti-religious human being to ever walk the earth. If you carefully read the accounts in the Gospels He consistantly went against the prevailing man made systems that were in place, because in reality, these systems are always at odds with the truth.Religions of every kind, be it Christian, Judaism, Islam, Buddism et. al. may start of with knoble intentions but always invariably morph into man made systems that glorify men and follow mans principals and not God's.Humanism likewise follows this axiom of history.Communism, though atheistic, was a cult based upon the personality of one individual - first Lenin, then Stalin.Shall we even mention the Nationalist Socialist movement in pre war Germany.We should not deceive ourselves into thinking that we ourselves are immune to this kind of deception.

You could say however, that I myself am in this category by putting my complete fath in Yeshua (Jesus) and what He taught.And honestly you would be correct.But as Bob Dylan once said "you gotta serve somebody."

Now the American form of Christianity is perhaps the most misguided of all, but they, in reality, are not faithful Christians, but faithful Capitalists.Again, whether it is Capitalism, Socialism, Communism or any other so called civilized order of government, they are all man made and in the end will not work in bringing true egalitarianism to the world(which is the goal God has established by bringing Yeshua into the world).Read Zbigniew Brzezinski's new book "The Choice", and this eminent statesman will bring you too the same conclusion. Unfortunately, he leaves you hanging with a fatalistic point of view concerning the future if you wish to ever see true egalitarianism.

Ones politics IS ones religion.

One thing that you will never hear on your television, or radio, or any other form of religious or secular outlets is a scripture found in the Book of Revelation chapter 12 - "...God will destroy those who destroy the earth..."
When I read these words they convict me, for I know that, realistically, I have played a part in the systematic disorder of the balance God has established in creation by my own consumerism.And no green movement of any kind - unless it means going back to the horse and plow (producing, not consuming) - will ever work.

There is only one way "...Do unto others as you would have them do unto you..."

"...earn your bread by the sweat of YOUR brow..."

If everyone lived by these rules, the world would be a much better place wouldn't you say?

God is very fair with mankind, and He will provide a way out for individuals who seek the truth.To find the answer, however, you have to read the Bible for yourself. No one can seek God and truth for you but you yourself.

Atheists versus Believers

This is an unfortunate topic that keeps rearing its ugly head up on TOD.

While I am squarely in the atheist camp, I used to be in the believer camp and understand how it "feels" to those who remain committed to their beliefs.

To my fellow atheists I say:

Forgive them for they know not what they are
and they have no free will over it anyway.

It does no good to preach truth to those who were born and raised in the lie. Their brains cannot absorb the noises that you make. So why waste your time?

Do you actually believe that your fellow species mates are "rational" and can be changed by speaking rationally to them? If so, you are the irrational one. All of human history, the wars, the overpopulating, the rise and fall of grand civilizations points to one conclusion:

We are no more rational than yeast.

So if some yeast mates in our petri dish choose to believe in the great Yeast-oh-whoa, or whatever name their deity goes by (and the miracle of the unleavened yeast), then I say, God bless them. Let them go on in their stated state of mind. Converting them won't really change the outcome. Yeast will be yeast. Just as beast will be beast. They are all merely trying to be fruitful, to multiply and to gain dominion over the Earth. Why agitate our petri dish with some more of this useless noise? Let it go.

Our last energies should be focused on how to survive without the spice, not on how to convert them that can't help themselves anyway.

Good advice and well-said.

But as a matter of aesthetics, kowtowing to the insane leaves much to be desired. Those with imaginary friends are free to listen to the voices, but if they inject them into conversation, they DO become fair game for comment.

I'll meet folks halfway, though: don't tell me about your deities and I won't say you're delusional. Can't say fairer than that.

Yep. It's been cooking for a long time, but the window in which it can happen is narrowing. Fallon the unwilling was replaced by Petraeus the willing. Plus many other pieces have been put into place.

This will throw all our linear and not-so-linear projections into the wastebasket. Chaos and disaster. Which some apparently believe they can find advantage in. Woe betide us.

Interview with Ray McGovern:
http://www.radiodujour.com/people/mcgovern_ray/mp3/20080625_alexjones_ra...

Yes, unfortunately Congress is in the process of abdicating it's Constitutional right to declare war.

Right now their are 208 cosponsors on HR 362 that calls for a blockade of exported petroleum to Iran. This is a brilliant measure to put pressure on the Iranian regime. What could go wrong?

The bill also calls for boarding ships departing from Iran. This is it. The bill passes through the House and the Senate tag along bill SR 580 passes. Bush forms a blockade. The clock begins to tick. Iran runs the blockade- shots are fired. Bush orders a bombing. Not only did Bush not start the war but Congress is the one that called for the action. The missiles fly from Iran and destroy the sitting duck fleet in the Gulf. Now anyone that opposes this war is Un-American.

Game, set, match Cheney---- unless the American people can stop these bills from going through.

I think BushCo. waited too long to move against Iran. Anything aggressive done between now and the elections will be viewed as a 100% political maneuver to help McCain's campaign. The US mood will not go as before with Iraq guaranteed and would only help Obama. I don't think for a millisecond that Obama couldn't turn any of that into a win for him. He's a pretty savvy framer in his own right.

Yes Bush's approval rating going down to 23% does make the possibility of an attack on Iran less likely BUT not outside of the realm of possibility.

This is a stealth plan---HR 362-- read the bill and marvel at the evil genius of it made by a very desperate group of individuals who have billions of dollars riding on an invasion of Iran.

Cheney can not be counted out yet. As long as he is in power he will hatch plans to bomb Iran. This current bill in the House and Senate is absolutely masterful.

The American people are absolutely against invading Iran but they want to put pressure on the country. Therefore HR 362 will go through. AIPAC doesn't waste so much time and energy on frivolous bills. This is important to them and they have sunk a lot of effort into this.

Explaining the logic of the bill involves going over a lot of history that is old hat for TOD readers but oh well---

While FDR was on vacation Dean Acheson passed the law that made it difficult for the Japanese to buy petroleum.

The law did not declare war on Japan. It did not authorize force. It did not even call for an embargo on Japan.

But the result was that the U.S. that provided 80% of Japan’s petroleum disallowed the Japanese from purchasing oil from the U.S. Thus Japan needed to invade the Dutch West Indies or pull out of China. In order to protect themselves from an American countermeasure they destroyed the fleet at Pearl Harbor.

The neocons know their history. They know that Iran doesn’t refine their own oil. They know that once we stop petroleum shipments the clock is ticking for Iran. They either run the blockade or their military is inoperable and their economy is destroyed. They will commit force first which will allow the U.S. to “defend itself.”

That is the brilliance of the bill. Of course the bill does not authorize force. The authorization will be given by Iran.

Or... Iran experiences enough unrest to shake off the control the Mullahs have over the troubled country (Iran is barely 60% Persian, and the Mullahs have antagonized most of the minorities there for a long time),

Or... Iran's junta decides to stop funding its puppet militias in Iraq & Lebanon, and retreats from antagonizing the US.

Iran's junta decides to stop funding its puppet militias in Iraq

You mean the al-Maliki government? I guess we'll have to step up funding if Iran cuts back.

No, I refer to al-Maliki's competition.

Apuleius

After all we know about the run-up to Iraq you think that there is anything the Iranians could do to appease Bush. As McClellan has said: once he decides to do something he doesn't listen to anybody.

This is not about nukes or militias this is about controlling the Persian Gulf after we have gone over the peak.

As much as I enjoy reading West Texas I know that the neocons are not going to allow the ELM to play itself out. They are not going to be caught looking stupid and incompetent after the peak. We will blame the Mullahs for the gas lines not the incompetency of Bush/Cheney.

It's more like the CGM--- the Chaos Gulf Model. Create war in the Gulf- cut off the Chinese and play a game of last man standing.

"cut off the Chinese and play a game of last man standing."

I'll one up you. New virulent strain of Bird Flu cycles through Asia and the third world and we rapidly deploy a vaccine to ourselves and allies. Too bad we did not have the ability to make more and share. Theres some demand destruction.

The al-Maliki coalition is comprised of the most pro-Iranian forces in the country. His competition is anti-Iranian (Sunnis) or neutral towards Iran (Sadr). The latest version of the neocons "big lie" is that Iran is opposing the al-Maliki government. Bush has in effect handed Iraq (at least the non-Kurdish part) to Iran on a silver platter. That's why US troops can never leave. That's why the neocons are so adamant about attacking Iran: they've done nothing since day 1 that didn't benefit Iran.

And what makes the irony meter go entirely off the scale is that Chalabi (who sat behind Laura Bush at the 2nd inaugural and who was telling the neocons the US would be welcomed as liberators with flowers in the streets) was an Iranian agent all along. In effect Iran suckered the US into taking out Saddam for them -- not that the neocons needed a lot of encouragement. But then that's the source of the old saw, "you can't cheat an honest man".

None of the Shia factions in Iraq harbors overt pro-Iran sentiment. The Iranian regime has been racist towards its Arab minority, and all the Iraqi Shia know this. Iranian militia sponsorship has been purely for reasons of expedience, to make sure nobody in Iraq gets a monopoly on the use of force. Hence their back&forth on that with the different factions.

Al-Maliki rules at the pleasure of the Supreme Council of the Islamic Revolution in Iraq (SCIRI), which has changed its name recently to hide its ideology better from its new American allies. SCIRI was formed in Iran, and organized Iraqi exiles to fight for Iran in its defensive war against Saddam Hussein. These exiles now form the Badr militia that murders opponents of the current government. SCIRI is taking money from both Iran and Bush to pretend to deliver their agendas, and stealing money from the Iraqi people. People are rising up against such a treacherous government and taking aid from anyone they can.

America is the imperialist. Do you understand? We were the bad guy in Vietnam. We are the bad guy in Iraq. We will be the bad guy in Iran. We are starting wars that would not have happened without us. Saddam Hussein attacked Iran years ago thinking his buddies in Washington would approve. He attacked Kuwait after clearing it with the US ambassador.

Do you think everything would be great in the world if we had gone to war in 1979 to keep the Shah in charge? I say the world would be better if we had not overthrown Mossadegh in 1954. The only way to begin to make up for our past crimes is to stop committing new ones.

Bases in 120 countries is an empire. We are imperialists.