Uk Facing 1970S-Style Oil Shock

[Injin]

http://www.guardian.co.uk/environment/2011/mar/03/chris-huhne-oil-prices-green-economy

Britain is facing a 1970s-style oil price shock that could cost the UK economy £45bn over two years, the climate and energy secretary, Chris Huhne, is expected to warn in his first intervention on the issue since the start of Middle East political crisis.

In Thursday's keynote speech on the impact of the oil crisis, Huhne argued that an $100 (£61) a barrel price for oil transforms the economics of climate change in Britain.

He disclosed the Department of Energy and Climate Change's (Decc) economists have warned that if the oil price rise turns into a 1970s-style shock the cumulative loss to the UK economy would be worth £45bn over two years. Decc's economists made the calculation on the basis of oil prices rising from $80 a barrel last year to $160, according to Huhne.

At $102 a barrel, oil is at a two-and-a-half year high and there have been predictions that if the political turmoil spreads across the Gulf, the price will rise considerably more.

Huhne will say: "If the oil price doubled, as from $80 last year to $160 this year, it could lead to a cumulative loss of GDP of around £45bn over two years. This is not just far-off speculation: it is a threat here and now."

The speech is an attempt to galvanise public support for tough measures to create a green economy, after recent setbacks including attacks on the science of climate change and stalled international negotiations. .

The speech could also be seen as an attempt to burnish the coalition's green credentials after months in which the Department for Transporthas declared an end to the war on the motorist.

Drawing on research conducted for the previous government by Lord Stern, Huhne argued that a $100 a barrel price is the exact point at which the economics of climate change pivot so that it becomes cheaper for British consumers and businesses to invest in green technology than remain with the status quo.

He said that if oil only reaches $108 a barrel by 2020 as predicted by the US Department of Energy, which would also lead to higher gas prices, then "the UK consumer will win hands down". He said the UK consumer would be "paying less through low-carbon policies than they would pay for fossil fuel policies".

This is the moment to invest in green infrastructure, homes and transport, according to Huhne. Fossil fuels are now the costly, high-risk option for energy: it is "crazy" not to prepare for a low-carbon future.

more at the link...

Theres nowt greener than putting another jumper on and living almost solely off swede, apparently.

[gravity always wins]

http://www.guardian....s-green-economy

Theres nowt greener than putting another jumper on and living almost solely off swede, apparently.

Bankster sets the seed for more money printing after previous money printing causes price shocks its all going so Weimar.

$45 Billion shouldn't take too long to print.

http://mises.org/boo...ioninfrance.pdf inflation in france.

And, first, in the economic department. From the early

reluctant and careful issues of paper we saw, as an immediate

result, improvement and activity in business. Then

arose the clamor for more paper money. At first, new issues

were made with great difficulty; but, the dyke once broken,

the current of irredeemable currency poured through; and,

the breach thus enlarging, this currency was soon swollen

beyond control. It was urged on by speculators for a rise

in values; by demagogues who persuaded the mob that a

nation, by its simple fiat, could stamp real value to any

amount upon valueless objects. As a natural consequence a

great debtor class grew rapidly, and this class gave its influence

to depreciate more and more the currency in which

its debts were to be paid.

The government now began, and continued by spasms to

grind out still more paper; commerce was at first stimulated

by the difference in exchange; but this cause soon ceased

to operate, and commerce, having been stimulated unhealthfully,

wasted away.

Manufactures at first received a great impulse; but, ere

long, this overproduction and overstimulus proved as fatal

to them as to commerce. From time to time there was a

revival of hope caused by an apparent revival of business;

but this revival of business was at last seen to be caused

more and more by the desire of far-seeing and cunning men

of affairs to exchange paper money for objects of permanent

value. As to the people at large, the classes living on fixed

incomes and small salaries felt the pressure first, as soon

as the purchasing power of their fixed incomes was reduced.

Soon the great class living on wages felt it even more sadly.

Prices of the necessities of life increased: merchants were

obliged to increase them, not only to cover depreciation of

their merchandise, but also to cover their risk of loss from

fluctuation; and, while the prices of products thus rose,

wages, which had at first gone up, under the general stimulus,

lagged behind. Under the universal doubt and discouragement,

commerce and manufactures were checked or

destroyed. As a consequence the demand for labor was

diminished; laboring men were thrown out of employment,

and, under the operation of the simplest law of supply and

demand, the price of labor—the daily wages of the laboring

class—went down until, at a time when prices of food, clothing

and various articles of consumption were enormous,

wages were nearly as low as at the time preceding the first

issue of irredeemable currency.

The mercantile classes at first thought themselves exempt

from the general misfortune. They were delighted at the

apparent advance in the value of the goods upon their

shelves. But they soon found that, as they increased prices

to cover the inflation of currency and the risk from fluctuation

and uncertainty, purchases became less in amount and

payments less sure; a feeling of insecurity spread throughout

the country; enterprise was deadened and stagnation

followed.

New issues of paper were then clamored for as more

drams are demanded by a drunkard. New issues only increased

the evil; capitalists were all the more reluctant to

embark their money on such a sea of doubt. Workmen of

all sorts were more and more thrown out of employment.

Issue after issue of currency came; but no relief resulted

save a momentary stimulus, which aggravated the disease.

The most ingenious evasions of natural laws in finance which

the most subtle theorists could contrive were tried—all in

vain; the most brilliant substitutes for those laws were

tried; "self-regulating" schemes, "interconverting" schemes

—all equally vain. All thoughtful men had lost confidence.

All men were waiting; stagnation became worse and worse.

At last came the collapse and then a return, by a fearful

shock, to a state of things which presented something

like certainty of remuneration to capital and labor. Then,

and not till then, came the beginning of a new era of prosperity.

Just as dependent on the law of cause and effect was the

moral development. Out of the inflation of prices grew

a speculating class; and, in the complete uncertainty as to

the future, all business became a game of chance, and all

business men, gamblers. In city centers came a quick growth

of stock-jobbers and speculators; and these set a debasing

fashion in business which spread to the remotest parts of

the country. Instead of satisfaction with legitimate profits,

came a passion for inordinate gains. Then, too, as values

became more and more uncertain, there was no longer any

motive for care or economy, but every motive for immediate

expenditure and present enjoyment. So came upon the

nation the obliteration of thrift. In this mania for yielding

to present enjoyment rather than providing for future comfort

were the seeds of new growths of wretchedness: luxury,

senseless and extravagant, set in: this, too, spread as a

fashion. To feed it, there came cheatery in the nation at

large and corruption among officials and persons holding

trusts. While men set such fashions in private and official

business, women set fashions of extravagance in dress and

living that added to the incentives to corruption. Faith in

moral considerations, or even in good impulses, yielded to

general distrust. National honor was thought a fiction cher-

ished only by hypocrites. Patriotism was eaten out by

cynicism.

Thus was the history of France logically developed in

obedience to natural laws; such has, to a greater or less degree,

always been the result of irredeemable paper, created

according to the whim or interest of legislative assemblies

rather than based upon standards of value permanent in

their nature and agreed upon throughout the entire world.

Such, we may fairly expect, will always be the result of

them until the ñat of the Almighty shall evolve laws in the

universe radically different from those which at present

obtain.

And, finally, as to the general development of the theory

and practice which all this history records: my subject has

been Fiat Money in France; How it came; What it brought;

and How it ended.

It came by seeking a remedy for a comparatively small

evil in an evil infinitely more dangerous. To cure a disease

temporary in its character, a corrosive poison was administered,

which ate out the vitals of French prosperity.

It progressed according to a law in social physics which

we may call the "law of accelerating issue and depreciation."

It was comparatively easy to refrain from the first

issue; it was exceedingly difficult to refrain from the second;

to refrain from the third and those following was practically

impossible.

It brought, as we have seen, commerce and manufactures,

the mercantile interest, the agricultural interest, to ruin.

It brought on these the same destruction which would come

to a Hollander opening the dykes of the sea to irrigate his

garden in a dry summer.

It ended in the complete financial, moral and political

prostration of France—a prostration from which only a

Napoleon could raise it.

Edited March 3, 2011 by gravity always wins

[uncle rogi]

oil shock= excuse for the double dip which was coming anyway, one option among a few that i (and others) postulated (in my first few posts on this forum) would be used to cover the fallout from the biggest bust in human history.

the fallout from the "oil shock" will be the unwinding of the totality of the whole post war fiat ponzi (unfunded liabilities etc) and a clampdown on the people only to be avoided by genuine change and reform of the monetary system and geopolitical landscape, still going to hurt like a bast@rd though, though the earlier the bust (iceland ) the sooner and faster the recovery/rebirth.

[erranta]

http://www.guardian....s-green-economy

Theres nowt greener than putting another jumper on and living almost solely off swede, apparently.

It's all caused by the UK Establishment - there is no "oil shock".

The Govt b'stards have ratcheted tax up to 80% of the cost of a litre of fuel

It's a deliberate policy to force the poorest off the roads along with the rip-off road tax (an establishment modern 'toll' - which is NOT spent on keeping up roads) and rip off unregulated insurance companies of which the Establishment are 'shareholders'

(The Establishment "fuel escalator"(another of their rip-off 'ladders') forces up the prices of everything that is shifted by transport in this country - your food etc)

Edited March 3, 2011 by erranta

[aa3]

It's all caused by the UK Establishment - there is no "oil shock".

The Govt b'stards have ratcheted tax up to 80% of the cost of a litre of fuel

It's a deliberate policy to force the poorest off the roads along with the rip-off road tax (an establishment modern 'toll' - which is NOT spent on keeping up roads) and rip off unregulated insurance companies of which the Establishment are 'shareholders'

(The Establishment "fuel escalator"(another of their rip-off 'ladders') forces up the prices of everything that is shifted by transport in this country - your food etc)

Its going to be interesting to see how long the poor can stay on the roads. Right now most people are still driving, although as noted in the other thread it appears there is less traffic on the roads lately. Many people are already looking at £100 a month in insurance, £200 a month in cost of the car and maintenance, and £200 a month for fuel. You need a pretty good income to comfortably support that.

[chronyx]

£25 to not even totally brim the tank on my Honda 750...even at 50mph however I ride it made me wince!

[interestrateripoff]

I seriously doubt the global economy can deal with a global oil price shock.

Luckily the recovery is in full swing so it will all be fine.

[interestrateripoff]

oil shock= excuse for the double dip which was coming anyway, one option among a few that i (and others) postulated (in my first few posts on this forum) would be used to cover the fallout from the biggest bust in human history.

the fallout from the "oil shock" will be the unwinding of the totality of the whole post war fiat ponzi (unfunded liabilities etc) and a clampdown on the people only to be avoided by genuine change and reform of the monetary system and geopolitical landscape, still going to hurt like a bast@rd though, though the earlier the bust (iceland ) the sooner and faster the recovery/rebirth.

I'm guessing this is what Bernanke is aiming to achieve if the ponzi system collapses, get everyone one to blame the oil price for the financial collapse rather than the bankers.

Dangerous game as the outcome is unknown.

[uncle rogi]

I'm guessing this is what Bernanke is aiming to achieve if the ponzi system collapses, get everyone one to blame the oil price for the financial collapse rather than the bankers.

Dangerous game as the outcome is unknown.

as you have noticed with your thread on the coming muni bond catastrophe the bust is being pushed by the pensions and other running costs balloning while tax revenue collapses this is mirrored in the whole of the US over the next few years (and the uk etc) as the boomers retire and draw more and more out of the system until the tax take in no way is enough to even service the interest payments on the cumulated debt etc

for anyone who is unaware of the scale of the problem please watch the 30 min version of the film I.O.U.S.A on youtube.

[200p]

Not a "shock" for most of us on here, to be honest.

[longtomsilver]

Human behavious must lag the reality.

For the first time today, I set off in the car on a mission that should have taken at least an hour fifteen in rush hour traffic (and it was 5pm). It took only 45minutes and there were no tailbacks at the usual 3 choke points.

[Charlie The Tramp Returns]

From The Telegraph.

Link To video

Niall Ferguson, historian and author of Civilisation, tells Robert Miller that the Middle East political unrest could push the price of oil to $200 a barrel.

$200 a barrel this would IMO cause massive Global Recessions.

[Wol]

From The Telegraph.

Link To video

$200 a barrel this would IMO cause massive Global Recessions.

I seem to recall ?...! estimating an oil price of more than $200 would wipe out about 20% of industry across the globe.

[gravity always wins]

From The Telegraph.

Link To video

$200 a barrel this would IMO cause massive Global Recessions.

Not necessarily, it depends how much the local currency has revalued against the dollar assuming the reason oil is rising in Dollars due to the fact Ben is conjuring up so many of them.

Money printing has caused the price of food to rise across the Middle East this has caused unrest. its not an oil crisis its a dollar crisis.

[erranta]

Not necessarily, it depends how much the local currency has revalued against the dollar assuming the reason oil is rising in Dollars due to the fact Ben is conjuring up so many of them.

Money printing has caused the price of food to rise across the Middle East this has caused unrest. its not an oil crisis its a dollar crisis.

The other thing is that millions of Middle Easterners use the dollar as unofficial 'dual' currency and also save in dollars (cash) as their retirement fund.

[Frank Hovis]

Human behavious must lag the reality.

For the first time today, I set off in the car on a mission that should have taken at least an hour fifteen in rush hour traffic (and it was 5pm). It took only 45minutes and there were no tailbacks at the usual 3 choke points.

Wrong smiley Tom, make that a:

A slower and less materialistic way of life beckons invitingly.

[Injin]

Wrong smiley Tom, make that a:

A slower and less materialistic way of life beckons invitingly.

A lot less, unless the banksters and taxmen sod off, cos they aren't going to take a decline in paypacket with out some considerable strain to fill it back up again from your pockets.

[chronyx]

Wrong smiley Tom, make that a:

A slower and less materialistic way of life beckons invitingly.

What a great thought for a Friday

[fluffy666]

Wrong smiley Tom, make that a:

A slower and less materialistic way of life beckons invitingly.

yeah, life was so much better for the average peon when they had no central heating or personal transport...

Still, I'm glad you'll be happy being a serf on Prince Charlie's (Organic) manor - and if you doff your cap in the correct manner, he may even let your wife have a day off to go into labour. But don't bank on it.

(Did I mention that this kind of comment winds me up a bit?)

[gravity always wins]

yeah, life was so much better for the average peon when they had no central heating or personal transport...

Still, I'm glad you'll be happy being a serf on Prince Charlie's (Organic) manor - and if you doff your cap in the correct manner, he may even let your wife have a day off to go into labour. But don't bank on it.

(Did I mention that this kind of comment winds me up a bit?)

Having spent some time in poor Sub Saharan Africa I can asure you that whilst food and energy is limited happiness is certainly not.

Depression, envy, greed etc etc. whilst not exclusive to our society are extremely prevalent.

I am not sure why a less consumptive way of life should lead to us all becoming tennants to Prince Charles though!

[aa3]

Would be pretty dystopian if people were working longer and harder than now, but having much less material wealth.

However if people worked less than now, and had less material things than now.. it seems that could be a better society in many ways.

Something tells me if people were free and had time on their hands, a lot of opportunity would emerge anyway.

[Injin]

Would be pretty dystopian if people were working longer and harder than now, but having much less material wealth.

However if people worked less than now, and had less material things than now.. it seems that could be a better society in many ways.

Something tells me if people were free and had time on their hands, a lot of opportunity would emerge anyway.

You are right, but that's not going to happen until the lots crashed.

Until it does you can expect higher taxes, higher inflation, longer hours, lower pay and sod all back.

[aa3]

You are right, but that's not going to happen until the lots crashed.

Until it does you can expect higher taxes, higher inflation, longer hours, lower pay and sod all back.

This is why I say the smartest people in the room are the young women who go on benefits and have a bunch of kids. I've gone to the recreation center in the day time and you see unemployed women there with kids enjoying themselves.

Meanwhile douchebags are working in highly stressed jobs in the Department of Redundancy Department, and probably will have to put in Saturday unpaid this week this weekend because the work they are doing is so important and time sensitive. But with all the money they get from their important job they can afford a vacation once a year.. where they can go down to the recreation center with their kid.

[Injin]

This is why I say the smartest people in the room are the young women who go on benefits and have a bunch of kids. I've gone to the recreation center in the day time and you see unemployed women there with kids enjoying themselves.

Won't last.

Meanwhile douchebags are working in highly stressed jobs in the Department of Redundancy Department, and probably will have to put in Saturday unpaid this week this weekend because the work they are doing is so important and time sensitive. But with all the money they get from their important job they can afford a vacation once a year.. where they can go down to the recreation center with their kid.

And soon their pay will start to fall because of the influx of single mums.

[aa3]

Won't last.

And soon their pay will start to fall because of the influx of single mums.

Thing is this has already been going on along time, and could on for decades. Today the workers at the department are waking up and heading in for another stressful day of being degraded in an Orwellian type of bureaucracy.

The single mums are.. because of their chronic fatigue disability, waking up at noon. And might go to the park if its nice, but probably will smoke pot with their friends.

Who is smarter in this equation?