SEARCH BLOG: OIL
Exactly one year ago I wrote this.... One doesn't have to be an economist to see the effect of these macro disruptions and the inevitable outcome. Actually, an historian might have an advantage in that arena since economists always seem to be analyzing last year's data.
Global oil demand will collapse next year and commodities will not return to the highs they reached this summer in the foreseeable future, two authoritative reports said on Tuesday as they forecast a long and painful worldwide recession.
The stark conclusions came as the World Bank’s chief economist predicted that the world faced “the worst recession since the Great Depression”.The US energy department said global oil demand will fall this year and next, marking the first two consecutive years’ decline in 30 years.
“The increasing likelihood of a prolonged global economic downturn continues to dominate market perceptions, putting downward pressure on oil prices,” it said, forecasting that demand would drop 50,000 barrels a day this year and a hefty 450,000 b/d in 2009. US oil demand will drop next year to the lowest level in 11 years.
Meanwhile, the World Bank’s Global Economic Prospects report said the commodities boom of the past five years – which drove up prices 130 per cent – had “come to an end”.
The irony is that this creates a terrible dilemma for the alternative energy folks... the same ones who were screaming about the automobile companies not recognizing that everyone wanted small cars when the market... with the exception of less than a year... had demanded just the opposite.
With gasoline headed toward $1.50 per gallon and lower, there are a lot of people who will soon forget about the "energy crisis" and move on to the next issue... survival. How will the AE people convince the rest of us to shell out thousands of dollars more when oil is cheap again. They'll have to convince us it was the Saudis and Wall Street manipulators who are trying to "hook" us again.Still, those who hate big oil and big cars have an opportunity to force the issue. GM and Chrysler have been brought to their corporate knees before the Council of Congress. Now, despite what might happen in the marketplace, those companies will be forced to do what the Council proclaims as the "correct path of the marketplace"... a path determined by the $100 billion CAFE and Carbon Credits Contingent from California. After all, the Council will "own" them.
Well, sooner or later the Council will be proven right... when there is not enough energy development for a global economy that can't be fully revive without enough energy. But we can exchange Carbon Trading Cards and drive golf carts to the next 2-hour plug-in 100 miles down the road. Maybe we can just live a "virtual" life on Xbox.
Besides, the rest of the world will start using that oil even if we decide that we are going to have an "alternative economy."I think Poland had one of those after WWII