Why Oil Is Finally Declining
wallstreetexaminer.com
wallstreetexaminer.com
1. Strangling Russian economy
2. Straightening out Iran
3. Disrupt Shale Oil production rise
4. Create financial gap between cheap oil and other renewable alternatives ....etc...etc...etc...
It will be very interesting to see what happens in the countries where shale oil production is on rise .... somehow tax payers are going to pay because many shale oil companies may go bankrupt ... that means either you pay higher prices at gas pump & stores (b'cause oil is expensive) or pay for shale oil companies that cant sustain their economies.
Money is a government made artificial store of value made to make transactions and contracts easier. It has no intrinsic value in itself and it should not artificially keep value at a rate that makes it desirable enough so that it displaces private stores of value, such as private bonds, stocks, commodities, or even buying now what you will need later.
It is a sad state that a lot of countries currently let the risk adjusted value of their money have better returns than private market stores of value thus making people invest in fiat instead of in the real economy. This causes unemployment and low productivity.
When people, businesses and banks invest in government sponsored fiat instead of the real economy because fiat has a better return, it is a subsidy to economic idleness that jams the private markets. In Europe they desperately need inflation to overshoot a bit to unjam their markets.
Otherwise all this idle money that accumulates without sufficient production capacity to back it up will create problems in the future. Idle money that starts chasing few goods is a risk of spikes in inflation, that or painful corrective high interest rates. In general a little overshoot of inflation early in a recession prevents more inflation later by making money less desirable compared to private investments and preventing it from accumulating idly too much.
Right now our hopes, dreams, futures, and lives are pinned to the oil price graph. If it doesn't scare you, you haven't thought about it very much.
Though replacing coal with natural gas is a net win for the environment, and that might accelerate with natural gas prices dropping through the floor.
A good way to think about fossil fuel depletion:
Imagine that there is a planet killer asteroid heading toward us. We've known about it since at least the 1950s, and there it is... heading slowly inexorably toward us. But for various reasons our math isn't perfect, so we don't know exactly when it's going to hit. It might be in the 2030s, or the 2050s, but almost certainly no later than 2100. When it does we all die. Nobody is talking about it, and very few are doing anything about it.
Right now if we started to really run out of fossil fuels, everyone would starve to death. Our population is at least two orders of magnitude larger than what can be supported without that level of energy use. There would also probably be a global war, possibly thermonuclear, as every economy collapses at once and various warmongers and crackpots take over every country's leadership. There's an article about post-9/11 CIA torture on HN's front page right now... that was after an attack that just killed a few thousand people. Imagine the political lunacy that would ensue as the whole of modern civilization collapses in on itself, everyone's savings evaporates in a series of hyper-deflations, stock markets crash and then crash and then crash some more, etc. Every major nation would get a Hitler.
Like I said... if you aren't afraid of this you haven't looked into it deeply or thought about it very much.
Central bankers are wrong! Economists are wrong! This one blogger knows the truth!
Seriously, it makes me lose all faith in a writer if they so openly and freely trash-talk so many other people.
Their oil is cheap to produce because it is near the surface and plentiful and "good quality".
They probably figured they better halt development in other parts of the world by making it unprofitable for others to produce.
The question is how long they will keep it up.
Just imagine how much every extra penny on the cost of oil/gas squeezes out of the economy every day.
Add this to "why" list.