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Frank Hovis

Oil Shock, Stagflation

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Correct me if I'm wrong but I just do not recall this sort of forward-looking economic thinking from Gordon Broon ever.

Vince nails oil in a piece many of this board could have written. That's not to demean it; it's great.

Oil - the next shock waiting in the pipeline

Some choice gems:

Even in a recession, there is the danger of inflation for some essential products such as petrol.

Stagflation is back - and perhaps, not too far off, another 'oil shock'.

But why should we have to worry again about high oil prices? It doesn't seem to make sense.

The United States, Britain, Europe and many other countries are still experiencing recession.

There is less demand for oil: fewer company cars travelling to work, fewer lorries on the road, fewer flights. The price should be falling, but it is doing the opposite - rising to $65 a barrel last week.

One reason is that the big Asian economies - China and India - haven't been too badly hit by the global slowdown.

China has offset its decline in exports to the West by launching vast infrastructure projects, sucking in more oil.

And anyone who has been to an Indian city recently will have been struck by the explosion of middle-class car ownership on top of the millions of scooters.

There is even a new car on the market costing little more than £1,000. So oil demand is booming there, too.

Yet, with the exception of Saudi Arabia, the main oil-producing countries are unable or unwilling to produce more to meet demand.

There is violence (Nigeria, Iraq until very recently), nationalism (Russia, Venezuela, Mexico, Iran) and depleted supplies (the UK).

We squandered our oil reserves in the Eighties and Nineties when prices were very low.

There is still plenty of oil in the world but it is very expensive to produce - as in the vast Saudi-sized fields recently found off the coast of Brazil - or very dirty and polluting, like the Canadian 'tar sands'.

Private companies such as my former employer, Shell, and BP are investing in these new fields, but they will make money only if prices are even higher than today's.

So with rising demand in developing economies, rising production costs and restrictions on supply, it is clear where prices are heading - up.

Exporting countries are tempted to squeeze supply even more to profit from any speculative spike.

Labour's scrappage scheme for old bangers is largely a waste of taxpayers' money.

You tell 'em Vince!

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Correct me if I'm wrong but I just do not recall this sort of forward-looking economic thinking from Gordon Broon ever.

Vince nails oil in a piece many of this board could have written. That's not to demean it; it's great.

Oil - the next shock waiting in the pipeline

Some choice gems:

Even in a recession, there is the danger of inflation for some essential products such as petrol.

Stagflation is back - and perhaps, not too far off, another 'oil shock'.

But why should we have to worry again about high oil prices? It doesn't seem to make sense.

The United States, Britain, Europe and many other countries are still experiencing recession.

There is less demand for oil: fewer company cars travelling to work, fewer lorries on the road, fewer flights. The price should be falling, but it is doing the opposite - rising to $65 a barrel last week.

One reason is that the big Asian economies - China and India - haven't been too badly hit by the global slowdown.

China has offset its decline in exports to the West by launching vast infrastructure projects, sucking in more oil.

And anyone who has been to an Indian city recently will have been struck by the explosion of middle-class car ownership on top of the millions of scooters.

There is even a new car on the market costing little more than £1,000. So oil demand is booming there, too.

Yet, with the exception of Saudi Arabia, the main oil-producing countries are unable or unwilling to produce more to meet demand.

There is violence (Nigeria, Iraq until very recently), nationalism (Russia, Venezuela, Mexico, Iran) and depleted supplies (the UK).

We squandered our oil reserves in the Eighties and Nineties when prices were very low.

There is still plenty of oil in the world but it is very expensive to produce - as in the vast Saudi-sized fields recently found off the coast of Brazil - or very dirty and polluting, like the Canadian 'tar sands'.

Private companies such as my former employer, Shell, and BP are investing in these new fields, but they will make money only if prices are even higher than today's.

So with rising demand in developing economies, rising production costs and restrictions on supply, it is clear where prices are heading - up.

Exporting countries are tempted to squeeze supply even more to profit from any speculative spike.

Labour's scrappage scheme for old bangers is largely a waste of taxpayers' money.

You tell 'em Vince!

Prices up, wages down and the goverment want us all to buy, buy, buy. Madness!!!

Unfortunately we will repeat the tory/labour cycle of power ad nauseam; we are not ready for a bit of forward thinking.

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I paid 99.9 for unleaded yesterday and was shocked. The last time I filled up was a month or so ago and it was low 90's.

But the question is why? Crude oil per barrel doesn't correlate with this price does it?

Another aspect of rip-off Britain? Government not interested in intervention as it would reduce tax take?

No idea myself, but I'm putting the purchase of an old 5.5L v12 on hold for a while... :lol:

TFH

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Government is largely a waste of taxpayers money.

I wonder though, what about 20% of the population would do for a living if there was a serious reduction in government.

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Also fails to highlight some economists predict that an oil price of around $95 is recession inducing, this figure was given when we didn't have a massive freeze in credit. My own view is that this figure will have now altered downwards, maybe significantly, for many western economies oil at between $70-$90 could now be the trigger, petrol is already a £1 a litre again its going to have a devastating effect on the UK economy.

The growth in India / China I suspect will be temporary as they spend there reserves to try and avoid recession.

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I paid 99.9 for unleaded yesterday and was shocked. The last time I filled up was a month or so ago and it was low 90's.

But the question is why? Crude oil per barrel doesn't correlate with this price does it?

Another aspect of rip-off Britain? Government not interested in intervention as it would reduce tax take?

No idea myself, but I'm putting the purchase of an old 5.5L v12 on hold for a while... :lol:

TFH

Yes it's a shocker isn't it? Funny how just a few pence increase in a litre hugely reduces the number of miles you can get from a fixed amount of money.

Sounds like you were in the market for a SeriesIII E-Type. Don't do it! It'll try to kill you. Like 'Christine' crossed with Hazel Blears. Fast but as stable as Brown's personality in corners. Also 9mpg...

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Government is largely a waste of taxpayers money.

I wonder though, what about 20% of the population would do for a living if there was a serious reduction in government.

But I reckon when you take all the millions that are now also effectively part-state workers (all those that have very low wages and the rest of their income made up of tax credits and other benefits) you get to a figure of nearer 50% of the working population.

Maybe that leads to the government not intervening as well? Tax take is needed to keep the handouts going. I remember petrol wasn't cheap in Cuba either.

TFH

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Yes it's a shocker isn't it? Funny how just a few pence increase in a litre hugely reduces the number of miles you can get from a fixed amount of money.

Sounds like you were in the market for a SeriesIII E-Type. Don't do it! It'll try to kill you. Like 'Christine' crossed with Hazel Blears. Fast but as stable as Brown's personality in corners. Also 9mpg...

Hmm, no it was a BMW 750iL I was looking at. Claims 21mpg on a run, 17 on urban. E-type sounds nice though. I don't do corners if I can help it! :P

But it's all pipe dreams now as I hear LPG's cheapness is to end soon and be triple taxed like petrol is.

TFH

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Government is largely a waste of taxpayers money.

I wonder though, what about 20% of the population would do for a living if there was a serious reduction in government.

Perhaps we'll find out in a year or two.

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Correct me if I'm wrong but I just do not recall this sort of forward-looking economic thinking from Gordon Broon ever.

Vince nails oil in a piece many of this board could have written. That's not to demean it; it's great.

Oil - the next shock waiting in the pipeline

Some choice gems:

Even in a recession, there is the danger of inflation for some essential products such as petrol.

Stagflation is back - and perhaps, not too far off, another 'oil shock'.

But why should we have to worry again about high oil prices? It doesn't seem to make sense.

The United States, Britain, Europe and many other countries are still experiencing recession.

There is less demand for oil: fewer company cars travelling to work, fewer lorries on the road, fewer flights. The price should be falling, but it is doing the opposite - rising to $65 a barrel last week.

One reason is that the big Asian economies - China and India - haven't been too badly hit by the global slowdown.

China has offset its decline in exports to the West by launching vast infrastructure projects, sucking in more oil.

And anyone who has been to an Indian city recently will have been struck by the explosion of middle-class car ownership on top of the millions of scooters.

There is even a new car on the market costing little more than £1,000. So oil demand is booming there, too.

Yet, with the exception of Saudi Arabia, the main oil-producing countries are unable or unwilling to produce more to meet demand.

There is violence (Nigeria, Iraq until very recently), nationalism (Russia, Venezuela, Mexico, Iran) and depleted supplies (the UK).

We squandered our oil reserves in the Eighties and Nineties when prices were very low.

There is still plenty of oil in the world but it is very expensive to produce - as in the vast Saudi-sized fields recently found off the coast of Brazil - or very dirty and polluting, like the Canadian 'tar sands'.

Private companies such as my former employer, Shell, and BP are investing in these new fields, but they will make money only if prices are even higher than today's.

So with rising demand in developing economies, rising production costs and restrictions on supply, it is clear where prices are heading - up.

Exporting countries are tempted to squeeze supply even more to profit from any speculative spike.

Labour's scrappage scheme for old bangers is largely a waste of taxpayers' money.

You tell 'em Vince!

What is of further concern is the EU's reliance on energy imports

82% oil (8.6mbpd)

57% gas (5mBPD equivalent)

97% of the uranium used in power stations

And these figures are climbing as North Sea oil and gas production plummets.

Dunno what the figures are for coal but suspect the EU is a significant net importer

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Many have been taken aback by the recent upswing in oil prices. Is it a blip, as some producers fear, or will this trend continue? I suspect the latter.

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http://www.mirror.co.uk/news/top-stories/2...15875-21420950/

£1.15 / litre. OMG!

http://business.timesonline.co.uk/tol/busi...icle6433708.ece

Goldman Sachs raised its oil price forecast for the end of 2009 to $85 a barrel from $65, anticipating dwindling supply and rising demand this year and next.

Its forecast also put prices at $95 by the end of 2010, led by economic recovery in China.

Edited by gruffydd

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http://www.mirror.co.uk/news/top-stories/2...15875-21420950/

£1.15 / litre. OMG!

http://business.timesonline.co.uk/tol/busi...icle6433708.ece

Goldman Sachs raised its oil price forecast for the end of 2009 to $85 a barrel from $65, anticipating dwindling supply and rising demand this year and next.

Its forecast also put prices at $95 by the end of 2010, led by economic recovery in China.

Last year GS forecast $200 per barrel, and anyone who heeded that got a right kicking.

Are the figures coming out of China reliable? People tracking their declining energy consumption reckon Chinese claims of renewed growth are a big lie.

India looks interesting in the long term.

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http://www.mirror.co.uk/news/top-stories/2...15875-21420950/

£1.15 / litre. OMG!

http://business.timesonline.co.uk/tol/busi...icle6433708.ece

Goldman Sachs raised its oil price forecast for the end of 2009 to $85 a barrel from $65, anticipating dwindling supply and rising demand this year and next.

Its forecast also put prices at $95 by the end of 2010, led by economic recovery in China.

Some of these predictions are rubbish. If oil is $85 by end of 2009 im sure it will be higher than $95 at the end of 2010.

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