Living in a world of $200 oil


	Living in a world of $200 oil

JICWyllie

5-10-2008 11:59 AM

263 views

tags:

economy, i-recession, i-forecast, energy, oil, i-price, i-increase, i-record, i-consequences

JICWyllie says:

This scenario is being painted in a Financial Times editorial. You can't be much more mainstream than that. Pity the SUV owner / driver. Or could it be Divine justice?

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<div style="margin: 12px 0px; font-family: arial; color: #333333; background: #ffffff; border: solid 4px #e5e5e5; width: 100%; clear: left;"><div class="CM_CTB_Content_Wrap" style="margin: 0px; padding: 0px;background-color: #ffffff;"><div style="border-bottom: solid 1px #dcdcdc; white-space: nowrap; margin-bottom: 8px; background-color: #eeeeee ;background-image: url(http://clipmarks.com/images/source-bg.gif); background-repeat: repeat-x; height: 24px; line-height: 24px; vertical-align: middle; padding-bottom: 4px; color: #666666; font-size: 10px;" ><a href="http://clipmarks.com/clip-to-blog/" title="see clips that are hot right now"><img src="http://content.clipmarks.com/blog_embed/a55936a1-e8cb-4b20-88a0-3ce49d7e0546/F853F0E8-EAB2-4456-8170-64E6AE673FA3/" alt="" width="19" height="19" border="0" style="vertical-align: middle; margin: 0px 4px; display: inline; border: none; float:none;" /></a>clipped from <a title="http://www.ft.com/cms/s/0/5bfc56d6-1df6-11dd-983a-000077b07658.html" href="http://www.ft.com/cms/s/0/5bfc56d6-1df6-11dd-983a-000077b07658.html" style="font-size: 11px;">www.ft.com</a></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.ft.com/cms/s/0/5bfc56d6-1df6-11dd-983a-000077b07658.html">An oil price above $125 a barrel, however, and speculation that the price <A href="http://www.ft.com/cms/s/0/94cc3612-1d32-11dd-82ae-000077b07658.html" title="Call options bet on oil hitting $200" class="bodystrong">could hit $200</A> are reminders that we have become ever more dependent on the black stuff. </blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.ft.com/cms/s/0/5bfc56d6-1df6-11dd-983a-000077b07658.html">because truck drivers and commuters cannot easily stop travelling, even a small deficit in supply can cause large moves in the oil price.</blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.ft.com/cms/s/0/5bfc56d6-1df6-11dd-983a-000077b07658.html">Expensive oil has economic effects. </blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.ft.com/cms/s/0/5bfc56d6-1df6-11dd-983a-000077b07658.html">Middle Eastern producers can buy more German cars, French clothes and US Treasury bonds in exchange for each barrel. Importers must buy less of everything else in order to keep up their consumption of oil.</blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.ft.com/cms/s/0/5bfc56d6-1df6-11dd-983a-000077b07658.html">Higher oil prices can, but need not necessarily, cause sustained inflation. A rise in the price of oil should be offset by falls in the prices of other goods for which there is now less demand. </blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.ft.com/cms/s/0/5bfc56d6-1df6-11dd-983a-000077b07658.html">Oil-intensive capital equipment may have to be scrapped: the useful life of all of sports utility vehicles, farm equipment and gas-fired power stations, for example, may be shortened. </blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.ft.com/cms/s/0/5bfc56d6-1df6-11dd-983a-000077b07658.html">when combined with higher food prices, it will mean more poverty. </blockquote></div><div style="margin: 0px 6px 6px 4px;"><table style="font-size: 11px;border-spacing: 0px;padding: 0px;" cellpadding="0" cellspacing="0" width="100%"><tr><td style="background:transparent;border-width:0px;padding:0px;">&nbsp;</td><td align="right" style="background:transparent;border-width:0px;padding:0px;width:107px" width="107"><a href="http://clipmarks.com/share/F853F0E8-EAB2-4456-8170-64E6AE673FA3/blog/" title="blog or email this clip"><img src="http://content6.clipmarks.com/images/c2b-foot.png" border="0" alt="blog it" width="107" height="17" style="border-width:0px;padding:0px;margin:0px;" /></a></td></tr></table></div></div>