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Cheap oil powered global growth for most of the last century, but the price of oil has...

Cheap oil powered global growth for most of the last century, but the price of oil has quadrupled in the past decade, a shift that will permanently shackle the growth potential of the world’s economies, Jeff Rubin writes. Big budget deficits and low borrowing costs can't be long-term substitutes for cheap oil because "an economy can’t grow if it can no longer afford to burn the fuel on which it runs."
Comments (12)
  • Assuming oil is indeed the fuel of the future...2002 was a lot different from today and the same can be said about 2022.

     

    Solutions are out there - we just need infrastructure and innitiative. Not to say some countries won't fall along the way...
    24 Sep 2012, 07:08 PM Reply Like
  • Uh, Rubin is talking about cost, something that won't decrease because of 'infrastructure and innitiative'. World oil is being burned at 1,000 barrels a second, every second, and oil exploration and recovery costs are continually increasing as discoveries occur in more and more remote situations. If oil use declines (as in a depression), prices can and will drop temporarily, but if growth resumes, prices are simply going to go up again and slow the economy once again.
    24 Sep 2012, 10:53 PM Reply Like
  • I'm aware as to what he's talking about...the passage was pretty simple and I think my response was too. Fact is human behavior changes with time - of course oil will affect economies in the new term, but there are solutions out there with a 10 year investment time-frame could produce meaningful results.
    25 Sep 2012, 11:31 AM Reply Like
  • Probably a largely true observation about oil. Guess the oil producers have decided not to let the serial money printing and inflation biased central banks get away with devaluing their oil resources any longer.
    24 Sep 2012, 07:19 PM Reply Like
  • Producers costs have risen, Saudi Arabia needs $90-100 Brent to pay for their social programs. They have no other industry of note to support the population.....or the graft. Elsewhere, deep water drilling is expensive. What the US has, is a lot of cheap NG, produced domestically, to drive our economy. It's beginning to do so and will continue to do so as long as we don't screw it up.
    24 Sep 2012, 09:13 PM Reply Like
  • fully concur with Rubin. The question is where to put your money in such an environment? XOM?
    24 Sep 2012, 07:39 PM Reply Like
  • And KIOR.
    24 Sep 2012, 10:54 PM Reply Like
  • Nat Gas?

     

    Why not?
    24 Sep 2012, 07:43 PM Reply Like
  • agree..ung, lng
    24 Sep 2012, 07:46 PM Reply Like
  • Many S&P Companies are to miss or their earnings lowered as we see the rise of DBA DBC from food, energy, insurance, education and MUCH MORE.
    Innovation has been lacking for years at best and to bow down and thank China and the Middle East your multi billion dollar contracts FXI Chinas market has underperformed but they have TRILLIONS in Surplus and own many tangible assets such as OIL UNG USO stockpiles of CU JJG DBC Commodities as we have already met peak OIL and yet we already have the proven technology with using other BIOF and propulsion systems.
    Yet companies such as BA NOC RTN sign multi billion dollar deals with China YINN YANG which I would look to trade but do not trust them as THE GREATEST TRANSFER OF WEALTH IN HISTORY of China taking our INTELLECTUAL PROPERTY and has already become our competitors.
    This is not rocket science when you take away market share and eat at earnings Corporations first step is employment which many jobs will never come back. Just look at GE MSFT INTC CSCO ORCL GM AA X etc and basically from every industry except for the American Companies that are Innovators Ex. AAPL GOOG FB who have opened new markets and created wealth from GRASS ROOTS.
    WE ARE MISSING GRASS ROOTS GROWTH. Plain and simple.
    LNVGY.PK Lenovo is just one example That China has used our technology and taken away market share in the PC industry away from HPQ and DELL making them the No.3 largest PC maker in the WORLD and yet many have never heard of them.
    China is also No.1 in owning the most PMs mines GDX GDXJ GLDX GLTR GGGG RING (All ETFs) in Precious Metals that are operating and even ones that have yet to drill with GLD PALL PTM and one of my favorite SLV which I believe is the most undervalued at this point.
    China cut SLV exports by 5% this is by no accident and are also cutting back on REE s REMX which is Rare Earth ETFs
    They are increasing in their technology and have the fastest super computer in the WORLD that even surprised the brightest here in America
    USO UNG UGAZ DBA JJA all commodities will increase in price due to higher demand and as wages here in the U.S. have been flat since the 80s there are more Millionaires in China then there are in America and China has a rising middle Class where we carved out ours.
    I'm all in favor of Free Market Capatilism but there is nothing free when you cut out a middle class and small business who cannot get loans from XLF BAC WFC USB JPM etc to grow their business while we have rising OIL UNG Gas which was almost 1/2 the price several years ago.
    We devalue the USD and the day will come when China Economy will become larger than ours and the USD will no longer be the World Reserve Currency. Where will GOLD be then? And we played right into Chinas hand to replace it with the CYB Yuan which will appreciate all on its own because their Currency will be PHYS backed by GLD so imagine the outflows of money and the inflows into China.
    One must understand the Chinese. They do not care about where their stock market goes. They think Long Term and we have iceos who come and go pinching pennies each quarter to appease Wall
    We need A MANHATTAN PROJECT. Even bigger. If The Fed wants to take 3 Trillion than CREATE A NATIONAL SMART GRID INFRASTRUCTURE PROJECT. This will spark innovation with many college students who cannot get work, this will CREATE JOBS, INCREASE CONSUMER SPENDING, INCREASE THE NATIONAL SAVINGS RATE AND HELP PAY OUR DEFICITS DOWN OVER THE LONG TERM.
    American Energy Indepence did a study, If we were to take 6% of AZ land mass or Southern region of The U.S. and cover it with Solar this would electrify America and help SECURE AMERICAN NATIONAL SECURITY ON ENERGY!
    If they are off a bit then you have wind turbines that should be on each side of our coasts which NOC can use OPTT to protect our shore lines from Russia or Chinese Submarines that have come across our shores.
    China tries hacking into EVERY aspect of Americas Ecosystem both Military and Industry and Even our Politicians including The U.S. Chamber of Commerce and they do it Daily and buy out our smaller companies that trade like AONE who has joint ventures with TSLA GM F and several others to gain and advance in Chinas Ecosystem and the cutting edge in technology.
    Just think about this, China manufactures not only Hi Technology components for the U.S., they also have the EU and Japan so we certainly cannot count out Europeaan Engineering and Japan's technology and OURS.
    THEY HAVE ALL OF THE WORLDS TECHNOLOGY inclduing Russia RSX and now they have their own Stealth Fighter Jets.
    Our CORRUPT Government gave OIL Entitlements over NASA.
    By 2040 China is estimated to have a GDP of 120 TRILLION Dollars and make up 40% of the WORLS ECONOMY.
    The U.S. is estimated to make up only 14% of the World Economy. THE BIG QUESTION. What would happen if the USD was no longer The World Reserve Currency? Then a PHYS GLD SLV bubble may come along as we loose grip and alliances in our New Geopolitical Landscape.
    My investment thesis is DBA JJG JJA DBC GLD SLV PPLT PALL GDXJ GDX GLTR GLDX GGGG RING and the best performer so far this year NUGT which I bought @7.92 premarket and you can see it in my stock recs.
    We have a broken house of government that no longer has the luxury of party politics whether your a Dem or Rep. THE PARTY IS OVER!
    It's so bad they had a Special on CNBC about it.
    We built The Hoover Dam almost 100 years ago and it produces 4 BILLION KWT of Electricity a Year and yet We have a QUANTUM LEAP IN TECHNOLOGY and there has not been anything on the drawing board nor have we built anything in over 1/2 a Century with a ROTTING Infrastructure.
    Instead of utilities companies charging for Natural Gas UNG it can be based on a flat rate depending on the amount of square footage a home or business would have and this is an INVESTMENT where America will gets its money back as a NATION.
    I'm tired of the can't can't can't crowd. Those are CORPORATE LOBBYISTS who bought our Government and own it filled with CORRUPTION and THE STATUS QUO HAS TO GO otherwise we will have our own GREEK TRAGEDY!
    24 Sep 2012, 11:19 PM Reply Like
  • Long winded but essentially on target. China is a black hole for IP. in the US, corporate interests have pretty much bought the Congress by way of lobbyists, PACs, Chamber of Commerce, Norquist et.al. We descend into a sort of corporate oligarchy.
    25 Sep 2012, 03:00 AM Reply Like
  • 10 years from now global oil consumption will be decreasing....

     

    China's consumption growth is declining and may indeed start receding within 5 years...

     

    Most other potential targets for oil growth are migrating away from it due to cost.

     

    Unless oil comes back down to reality, the demand destruction occurring right now, and prospectively going to continue, in oil is tremendous. I suspect oil price will have to snap back sooner or later but I'm not taking that suspicion to the bank yet. I am mostly waiting for a little more clarity on Iran and China's situations.

     

    There's a lot of folks on the other side of this trade - expecting the other energies to pull up to oil, but I don't buy it.
    25 Sep 2012, 02:00 PM Reply Like
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