Friday, February 05, 2016

Remembering Peak Oil

Randal O'Toole does a nostalgia post:

Remember peak oil? Remember when oil prices were $140 a barrel and Goldman Sachs predicted they would soon reach $200? Now, the latest news is that oil prices have gone up all the way to $34 a barrel. Last fall, Goldman Sachs predicted prices would fall to $20 a barrel, which other analysts argued was “no better than its prior predictions,” but in fact they came a lot closer to that than to $200.

Low oil prices generate huge economic benefits. Low prices mean increased mobility, which means increased economic productivity. The end result, says Bank of America analyst Francisco Blanch, is “one of the largest transfers of wealth in human history” as $3 trillion remain in consumers’ pockets rather than going to the oil companies. The Antiplanner wouldn’t call this a “wealth transfer” so much as a reduction in income inequality, but either way, it is a good thing...

See also this.

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At 1:27 PM, Anonymous Anonymous said...

Except for all the job losses in the oil industry.

And the oil services business.

And the fact the frackers are going bankrupt, leaving the banks with the distressed assets, which they then sell off to ... the frackers... for pennies on the dollar. The banks then recoup their losses by screwing over the middle class with low savings rates and increased fees.

And that pensions and 401k's that the middle class rely on are heavily invested in the energy sector and are crashing.

But the eloi think they have it so good because they spend 15 bucks less a month on gas.

At 7:58 AM, Blogger Mark Kaepplein said...

Rob, any comment on Obama proposing a $10/barrel tax on oil, about a 30% tax?
Do the math on gasoline taxes. Between federal and state taxes, its 35% or more based on the state.
Obama's tax will again hurt the oil industry that anonymous commenter worries about.

At 10:52 AM, Blogger Rob Anderson said...

Obama's proposed tax won't get far with this congress. Anon is right about the negative impact low prices have on the oil industry and the economy in general. Gas prices need to be high enough to encourage conservation and low enough to be affordable for people in the middle and the bottom of the system. I didn't mean to gloat by posting this on Peak Oil, which was always wishful thinking by the anti-car folks. There's trouble for a lot of people any way you look on the issue.

At 11:41 AM, Blogger Mark Kaepplein said...

Rob, gasoline prices being half of what they were a year or two ago has not resulted in a doubling of driving, but more like a 4 to 8 percent increase (region dependant, avg. about 6), mostly resulting from increased employment and economic recovery. So add "induced demand" to the list of failed theories.


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