Three months ago, when oil was around $108 a barrel, a few Wall Street analysts began predicting that it could rise to $200. Many observers scoffed at the forecasts as sensational, or motivated by a desire among energy companies and investors to drive prices higher. But with oil closing above $140 a barrel Friday, more experts are taking those predictions seriously -- and shuddering at the inflation-fueled chaos that $200-a-barrel crude could bring. They foresee fundamental shifts in the way we work, where we live and how we spend our free time. "You'd have massive changes going on throughout the economy," said Robert Wescott, president of Keybridge Research, a Washington economic analysis firm. "Some activities are just plain going to be shut down." Besides the obvious effect $7-a-gallon gasoline would have on commuters, automakers, airlines, truckers and shipping firms, $200 oil would drive up the price of a broad spectrum of products: Insecticides and hand lotions, cosmetics and food preservatives, shaving cream and rubber cement, plastic bottles and crayons -- all have ingredients derived from oil. The pain would probably be particularly intense in Southern California, which is known for its long commutes and high cost of living. "Throughout our history, we have grown on the assumption that energy costs would be low," said Michael Woo, a former Los Angeles city councilman and a current member of the city Planning Commission. "Now that those assumptions are shifting, it changes assumptions about housing, cars and how cities grow." Push prices up fast enough, he said, and "it would be the urban-planning equivalent of an earthquake."
But with oil closing above $140 a barrel Friday, more experts are taking those predictions seriously -- and shuddering at the inflation-fueled chaos that $200-a-barrel crude could bring. They foresee fundamental shifts in the way we work, where we live and how we spend our free time.
"You'd have massive changes going on throughout the economy," said Robert Wescott, president of Keybridge Research, a Washington economic analysis firm. "Some activities are just plain going to be shut down."
Besides the obvious effect $7-a-gallon gasoline would have on commuters, automakers, airlines, truckers and shipping firms, $200 oil would drive up the price of a broad spectrum of products: Insecticides and hand lotions, cosmetics and food preservatives, shaving cream and rubber cement, plastic bottles and crayons -- all have ingredients derived from oil.
The pain would probably be particularly intense in Southern California, which is known for its long commutes and high cost of living.
"Throughout our history, we have grown on the assumption that energy costs would be low," said Michael Woo, a former Los Angeles city councilman and a current member of the city Planning Commission. "Now that those assumptions are shifting, it changes assumptions about housing, cars and how cities grow."
Push prices up fast enough, he said, and "it would be the urban-planning equivalent of an earthquake."
What does $200.00 bbl do to it, I wonder? "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
An adventure in Iran? Not for too long.
It was written written before today's prices, but it gives insight into where the Pentagon gets one aspect of its baseline theory.
What has changed since I completed this book in mid-2004? The world was then a less dangerous place. Thousands of Americans and tens or hundreds of thousands of Iraqis had not yet died to settle empirically the question whether Iraq would become Singapore on the Euphrates or Yugoslavia with oil. North Korea's and Iran's nuclear ambitions were not yet so clear. Terrorism driven by an intolerant and totalitarian ideology had not yet metastasized so widely around the world. Climate change had not yet shifted from an apparent controversy to a broadly accepted global emergency. And the United States, the nation most responsible for creating these problems and best equipped to solve them, had not yet squandered so much reputation and goodwill.
Amory has blind spots in his analyses, but one has to respect the breadth of his efforts. (the above quote comes from the introduction to the Chinese edition.)
If anything in this study seems to you too good to be true, please remember Marshall McLuhan's remark: "Only puny secrets need protection. Big discoveries are protected by public incredulity."
"Only puny secrets need protection. Big discoveries are protected by public incredulity."
Sadly, only too true. Big discoveries imperil big vested interests. Often paradigm shifts are required for their potential to be realized. But we appear to be poised on the edge of such an event.
A letter to the editor of the Arkansas Democrat Gazette today said:
"Changed my voting. Now independent. Not voting for candidate when he, running mate or relatives have ever been in Big Oil....They stall. It is a conflict of interest. We don't need this."
Just one small sign of shifting attitudes. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
On July 1, the cost for refined fuel used by troops will jump from $127.68 a barrel to $170.94 - an astounding 34 percent increase in just six months and more than double what the Pentagon was paying three years ago.
One hundred years of poverty? As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
