FORTUNE MAGAZINE: Here Comes $500 Oil

[Rashiminos]

I hear next summer is to be particularly devastating...

 

[innonimatu]

Good to see that sanity is finally taking hold: oil will not last forever, and will not be cheap again. Economies supported by debt must collapse. And the "free market" never existed and cannot exist.

Now I just want to watch the collapse of the last world empire. I'm beginning to believe that it may go down without starting a big war, after all. Paul Kennedy was proven right again: between the trillion-dollar occupation of Iraq and the debt insanity at home another great power has gone bankrupt, and there will be worldwide political consequences.

If we're predicting what will happen with oil we might as well predict how the world will change. My predictions:
Russia is going to regain its old territories - all the former USSR minus the Baltic states will merge into another centralized multi-state polity.
The EU should immediately seek to bring Turkey in (or watch a competing regional multi-state organization rise in the eastern and south Mediterranean).
Israel must negotiate a true peace, there is no other prospective patron to keep financing it.
Middle eastern nations will gradually become democratic, back on the track they were derailed from in the 1950s (political islam will disappear, just like political christianism did in Europe).
China will get Taiwan back, and probably peacefully.
South America will either shift further left or become the battleground where a weakened great power will try to retain part of its influence by force.
Africa will continue to be Africa...

A truly multipolar world, without any war required. Yes, I'm insanely optimistic, I know.

 

[Neomega]

Chinese theory sees 3 major poles

US, China and EU

and 5 economic poles

Japan, Russia, Brazil, India... and one I am forgetting.

 

[LordRahl]

Where's the problem? The more expensive the oil, the more incentive there is to research alternative sources of energy?

 

[Neomega]

Where's the problem? The more expensive the oil, the more incentive there is to research alternative sources of energy?

But the more American dollars go up in.. uh... carbon dioxide emissions, leaving less money for alternative energy sources and R&D. Also, everything else becomes more expensive, due to transportation costs. All that money becomes unavailable for building the alt energy infrastructure we need.

 

[emzie]

Where's the problem? The more expensive the oil, the more incentive there is to research alternative sources of energy?

Last time I filled my tank, I paid the equivalent of (USD)$4 a gallon. Oil was ~ 100.00 at that time. I know it's not as simple as taking what I paid and multiplying that by the factor oil increased by, but I couldn't afford to drive at 20 / gallon.

 

[Cutlass]

We can get off oil. But it won't be fast or easy. And not that cheap either, in up front capital.

 

[El_Machinae]

Where's the problem? The more expensive the oil, the more incentive there is to research alternative sources of energy?

There's a huge problem with this mindset. We've always had a huge demand for alternative energy. Since 100,000 BC, there's been a market for fusion energy.

We just haven't had sufficient wealth or time to research the technology. In proper economics theory, we use the profits derived from intelligent consumption of resources (e.g., oil) in order to fund R&D into alternative energies. The key being invested profits. Yes, expensive oil is a motivation. But the key to supplying that motivation is R&D gained from profits.

The only way we're going to get fusion is if we make proper (i.e., sustainable profits) use of the nonrenewables that we have. Fusion doesn't just appear by magic, it's funded by surplus funds via R&D. If people are too poor to afford surplus/investment funds, then there will be no R&D.

 

[GenMarshall]

Drill Drill Drill!! We need cheap oil!

 

[Alpine Trooper]

All of the oil the U.S. ever needed is in Canada and China can't put its hands on it because American corporations have pushed them out so the problem is solved for the next 100 years. Stop making threads about the price Canadians will charge you.

 

[DNK]

Chinese theory sees 3 major poles

US, China and EU

and 5 economic poles

Japan, Russia, Brazil, India... and one I am forgetting.

Aussies or UAE probably. There's a lot of money the UAE is throwing around - they don't have much else to do with it other than buy US arms for some war that they'll never see.

I'd say Russia will probably be a less major pole. It's just too militaristic and expansionist to be purely economic anymore. It'll probably be more militarily active than the EU by all means. Without the US guiding Europe into war, who are they going to fight? Algeria. Been there, done that.

 

[innonimatu]

Aussies or UAE probably. There's a lot of money the UAE is throwing around - they don't have much else to do with it other than buy US arms for some war that they'll never see.

About military power - when push comes to shove, finance without substance (which is to say, without industry and technology) is worthless. The UAE may buy all the weapons they will, they'll be of no use unless they can develop an industrial base. And that won't happen, geography is against them. Likewise for the rest of Arabia - when the oil is gone it'll all go back into being a backwater.

 

[Mercenary82]

I wonder if Americans will be willing to pay the high gas prices $500 oil would bring, or if we would just invade countries like venezuela and take the oil for free instead.

 

[Perfection]

There's a huge problem with this mindset. We've always had a huge demand for alternative energy. Since 100,000 BC, there's been a market for fusion energy.

We just haven't had sufficient wealth or time to research the technology. In proper economics theory, we use the profits derived from intelligent consumption of resources (e.g., oil) in order to fund R&D into alternative energies. The key being invested profits. Yes, expensive oil is a motivation. But the key to supplying that motivation is R&D gained from profits.

The only way we're going to get fusion is if we make proper (i.e., sustainable profits) use of the nonrenewables that we have. Fusion doesn't just appear by magic, it's funded by surplus funds via R&D. If people are too poor to afford surplus/investment funds, then there will be no R&D.

Fusion is the only renewable source?

We are not experiencing a general energy crisis, energy is cheap and plentifully (generally, there's some issue there but it's far from a crisis). What we are experiencing is a specific energy packaging problem, how the heck to make energy portable, and supply/demand shocks.

 

[Shylock]

Well, they finally got their wish.

CIA's been agitating like hell in Bolivia and Nigeria, and they had the nice windfall of Ike.

 

[El_Machinae]

Fusion is merely used as an example. LordRahl seems to think that burning all the gasoline will guarantee eventual fusion power. It might, but only if we get proper economic return (and investable profits) from the consumption.

You can swap 'fusion' with any other good energy source. There's always been a demand for high-efficiency solar power. There's always been a demand for hydrogen fuel cells. We can't have them unless we're wealthy enough to put some effort into R&D, and the only way to do that is to burn our nonrenewables wisely.

 

[Perfection]

Well, nonrenewable electricity has plenty of reserves (coal).