green_cheeks

$300/Barrel Oil Is Coming - Barron's Interview

Not every Chinese person has to use a lot of oil to throw prices into the $300 range. It just takes a small growing percentage. And a lot of Chinese are starting to make good money. But then again, a lot of their income is predicated on our consumers buying what they make. And if we can't afford to pay more for oil and start conserving (or are just unable to buy it), the demand destruction will prevent a gross escalation in the price save the dollar inflating like a balloon to the point that a snicker's bar costs $3 and a white bread is $6 (Wonderbread, not some Whole Food's "Rustica" or whatever)
People are just going to get used to colder winters and hot summers.
The only way we got up to 20mil barrels a day was due to easy credit. More people were able to afford and drive cars more. Now more people will be walking, taking mass transit and riding bikes. There isn't going to be an apocalypse, it will just be basic economics. I can be a mindless driver myself. But I know I could drive 50% less than I do if I needed to. Having a fridge full of yummy food and heating and cooling my home are far more important than taking 20 trips a day to buy things I don't need because I am bored.
Look at what is happening right now... Oil is dropping like a brick and so is our economy. Normally oil becoming cheaper would be helpful. The reason it isn't helpful is because it is still too expensive to help our sickly economy gain any ground. If oil went down to $30/barrel tomorrow, it would raise the economy from the dead like a defibrillator. But it would slowly descend and end up at point that makes economical sense. There is logic to all of this.
Honestly, if oil stays above $100 for a year, it would bleed us drier than we are. It might, but I doubt it.
The world uses 87mil barrels a day, right? We use 20mil of that. Well, we have been using less. But the argument is that world will use more. Not exactly. The worlds interdependence on us is tightly woven. We will see relative drops in the rest of the world's use.
If the world could truly afford $100 oil, then OPEC would put the floor in, but in all likelihood they are not.
And yes I am short oil right now. At least until it hits $80.