Do you think peak oil is going to be the beginning of the end for the car culture?

Do you think peak oil is going to be the beginning of the end for the car culture?
where's the poll?

Most people do not grasp the concept of "peak oil". When gas hits the point where almost everything gets too expensive ( food and energy....) or too cheap ( housing in the suburbs, SUVs....), THAT will be the beginning of the end of car culture. My guess, $10 a gallon.

On a seperate note, when the Katrina thing happened, people in GA were stressing out about gas. One of my co-workers asked me what I would do if Gas hit $10 a gallon. I said " i'm smile as I would have the road to myself"

When gas hits $10 a gallon I don't think you would be smiling abeyance. Think about how much your food bill will go up. Admit it your food bill is higher then a car drivers, this is not a bad thing it just a fact that you need more fule for your body since you are not driving everywhere. When the cost to move food to the stores go up, the trucking companies will just pass the cost onto the store, which will then just pass the cost onto you the shopper.

I agree with your post, at least most of it. I do realize that the costs of ALL goods will go up, due to the economics of the situation. I realize that I will also have to change careers, as working in a Steakhouse for tips will not be a good career when people have FAR less disposable income. even tips on Black Friday were bad due to the fact that most people overextended themselves at WalWart,BestBuy,the mall...etc.
I do believe that car culture will have a serious shock coming to them. If the gas prices continue at that rate for a long period, I would expect to see somedrastic changes, most for the better
1 increased centralization of good/ services
a schools that kids can walk to
b more locally grown produce
c more fuel efficient vehicles
d less vehicles on the road
e less harassment of cyclists, as it seems that those of a lower socio-economic class tend to do most of the harassment in my experience.they wont have as much money to drive.( keep in mind in my current career I am defined as living below the poverty line) more bottles thrown/ more yelling explictives from 84 honda civics and 92 chevy pickups than 05 hummers and 03 bmws
2 More Political Activism
a probably more people wanting us to invade foreign countries to steal their oil ( unfortunately)
b which might lead to an OPEC trade embargo
c Which might lead to America's global economic policy of bombing brown people to stop ( it needs to)
d maybe secession of a state or two that disagrees with the current ( in the future) problems, which could lead to lower gas prices in that soverign state)

Almost all of the above things I consider good. If I have to pay more for food, change my job, and have a garden to make ends meet. That is OK by me.

I do believe that car culture will have a serious shock coming to them. If the gas prices continue at that rate for a long period, I would expect to see somedrastic changes, most for the better.

I wish. More likely there will be a period of severe economic disruption, something like the great depression, but deeper and longer, followed by (or rather, evolving into) a new reality of lower standard of living.

I wish. More likely there will be a period of severe economic disruption, something like the great depression, but deeper and longer, followed by (or rather, evolving into) a new reality of lower standard of living.
ding ding ding... fellow ''soft landing'' idealist here. You better be armed to the teeth when the masses come looking for your producing farm.

One additional thing that came to mind is trash. Around here we have fairly good facilities for sorting, recycling etc. But that system relies heavily on trucks gathering the sorted trash and delivering it to recycling plants. Price for those services is going to go up too. Ideally that would be an incentive for less waste (products with less packaging, products that are more expensive but last longer and can be fixed when broken etc). Those again are changes that are basically good but can be difficult to adjust to.

--J

There are some indications that we may already be in the middle of this phenomena. When you consider the reasons for the war in Iraq, the current outcome as well as fluctuating prices, small supply issues from time to time, you could draw that conclusion. What alerts me most of all are the fluctuations in price, indicating that any spike in demand drives a shortage and there are few "reserves" left to fill the void. Wouldn't you define that as "peak oil"?

There are some indications that we may already be in the middle of this phenomena. When you consider the reasons for the war in Iraq, the current outcome as well as fluctuating prices, small supply issues from time to time, you could draw that conclusion. What alerts me most of all are the fluctuations in price, indicating that any spike in demand drives a shortage and there are few "reserves" left to fill the void. Wouldn't you define that as "peak oil"?

I think we are in the beginning stages of Peak Oil. There are several that say we hit peak back in '05 and others saying it is today. But regardless if you follow the more conservative economists you know that the US economy as it exists today is unsustainable for any long period of time. It is nothing but a shell game. I really do think we are headed for a long deep depression that will make the one of 1929 look like child's play. IMHO if you want a glimpse into our future, look at what happened to a lot of the smaller "republics" of the Soviet Empire when it collapsed. There were widespread shortages of many things, interruption of electricity supplies, gang warfare, general warfare and the like. On a worst case scenario look to Somalia and Mogadishu...not a pretty picture. I firmly believe hard times are coming and those of us that are forward looking enough and live below our means are going to be the future leaders and survivors.

Aaron:)

ding ding ding... fellow ''soft landing'' idealist here. You better be armed to the teeth when the masses come looking for your producing farm.

Your suggestion is probably not that far removed from reality. Consider our secular society; our culture's moral center continues to decay with each passing day. If peak oil hits at the wrong time and the country is thrown into a prolonged depression there will certainly be chaos and riots. Look at the LA riots over only a perceived social wrong. Furthermore, don't look to the fat government sow to bail us out either; our self-serving politicians have just about milked it for all it's worth. Look at how FEMA performed in just a small dress rehearsal (Katrina); I forget the exact quote, but the people of my state were recently told not to look to FEMA for help next time a disaster happens. Which is ok by me anyway; as I and my neighbors were prepared to look after ourselfs. However, I don't think anybody but a handful of elite--hiding behind a small army of hired security in their suburban strongholds--will be prepared for what could be coming.

These things don't happen in a vacuum. It's not as if folks will be driving a lot less, and we will have open roads upon which to cycle while everything else stays pretty much the same. To begin with, will roads be maintained if there are a lot less cars? Remember, the modern day city/town is built around the car. These ways of 'doing things' won't go away overnight (anthropologists refer to this as 'lag'). Thus, there will be a lot of turmoil as we are figuring out new ways of doing just about everything, while at the same time the power structure will be tying itself (and, unfortunately, society) in knots trying to maintain an outdated and utterly impractical staus quo.

As for the 'lower standard of living', perhaps we can begin to say 'different standard of living'. And, yes, it WILL be-or certainly seem to be-lower at first. There is an ecomomist (Easterlin, if I recall) who really shook up economics by presenting the notion that it's not how much people earn that determines happiness. It's how people FEEL about how much they earn that determines this. Can we feel good about ourselves, about life, about one another if our standard of living changes?

Consider our secular society; our culture's moral center continues to decay with each passing day.

I don't think it has to do with secularity. Medieval Christian Europeans dealt with the chaos of the reformation and 30 years war by burning or drowning 50,000 - 100,000 "witches", and some of the bloodiest wars in history were religious in origin, so there's no guarantee having a religious state will protect the public from large scale violence. The best protection will come from social and economic stability, and that will come from anticipating and adapting to the changing energy supply in a coordinated way.

I don't think it has to do with secularity. Medieval Christian Europeans dealt with the chaos of the reformation and 30 years war by burning or drowning 50,000 - 100,000 "witches", and some of the bloodiest wars in history were religious in origin, so there's no guarantee having a religious state will protect the public from large scale violence. The best protection will come from social and economic stability, and that will come from anticipating and adapting to the changing energy supply in a coordinated way.

Do you think moral relativism will be a boon in the times ahead? Personally, I would be comforted to know the starving fellow contemplating murder to feed his family with my supplies would possibly consider the ramifications of his actions in the next world.

I wish I could share your pessimism, but I can't. :)

I'm not a pie-in-the-sky optimist, I do see enormous challenges ahead.

Challenge=opportunity. We also have the opportunity to build a better human society. A new society should be built on the framewok of sustainable local communities. Economic structures need to be decentralized so that people are working for themselves and their communities, rather than working for global corporations and nation-states. I see several areas in which this is ripe to happen:


Bicycles and other slow and low-powered forms of transportation replacing cars.
Local production of food and other necessities.
Local or even household production of electric power.

Right. Thanks Roody; I didn't mean to take the thread into such deep dark waters. If I wasn't optimistic I wouldn't be engaging in my local efforts nor even in this forum.

Your suggestion is probably not that far removed from reality. Consider our secular society; our culture's moral center continues to decay with each passing day. If peak oil hits at the wrong time and the country is thrown into a prolonged depression there will certainly be chaos and riots. Look at the LA riots over only a perceived social wrong. Furthermore, don't look to the fat government sow to bail us out either; our self-serving politicians have just about milked it for all it's worth. Look at how FEMA performed in just a small dress rehearsal (Katrina); I forget the exact quote, but the people of my state were recently told not to look to FEMA for help next time a disaster happens. Which is ok by me anyway; as I and my neighbors were prepared to look after ourselfs. However, I don't think anybody but a handful of elite--hiding behind a small army of hired security in their suburban strongholds--will be prepared for what could be coming.

I've read all of the alarmist propoganda about peak oil, and if we look at the actual occurance, it's not a Katrina type event, where there is a large drop in supply over a short period of time, but a maximizing of supply, meaning that if we pumped 85 BBBL last year and only pump 84.9BBBL this year, and demand goes from 84.9BBBL to 85.1BBBL that will affect price, and price will affect affordability, and affordability will affect demand. Sure Bill Gates could afford to fill his SUV at $8/Gallon, but could Joe Sixpack who makes $8/hr, probably not, so he will trade the SUV in on a smaller car, if he can afford to, and quit driving if he can't.

What gets interesting for the US, is that you have the big three, who build big cars and even bigger cars pretending to be trucks to get around fuel efficiency requirements laws. They have almost nothing in their product lines in the small car category, when we look at small GM cars like the Pontiac Firefly it's not a GM car, it's a rebadged Suzuki. While the Japanese now build cars in North America, it's mostly for cost reasons, a car is 95% air, and you don't get many in a shipping container, you can of course pack a lot of parts into the same container, and a 5,000kg container costs the same amount to ship as a 50,000kg container. The problem is that with small cars being all Japanese, and Japan needing to import raw materials to export cars (even in pieces), the price of a small car will be affected by more then increased demand. I expect that GM, Ford and Chrysler would step up to the challenge, and a whole new crop of small cars would result. The problem is, what do you do with an SUV that has 3 years of $900/month payments left on it, when you can't afford fuel for it. It's simple, you quit paying for it, and wait for it to be repossessed, expect the banks to not find this funny. The Bank doesn't want your Escalade, the Escalade that they loaned you $75,000 for, that you still owe $65,000 for, that isn't worth $650, because it costs more to fill the tank, then the monthly payment:D

People though are an inventive bunch, for example in Canada in the 1930's we had the Bennett Buggy, a Bennett Buggy was a car where the engine and windshield were removed and a wagon hitch installed so it could be pulled by a horse, typical Prairie inventiveness.

As fuel supply continues to shrink past the reduced demand, prices continue to increase, people become even more inventive. I'll leave it there for now, as you try and figure out how.

I've read all of the alarmist propoganda about peak oil, and if we look at the actual occurance, it's not a Katrina type event, where there is a large drop in supply over a short period of time, but a maximizing of supply, meaning that if we pumped 85 BBBL last year and only pump 84.9BBBL this year, and demand goes from 84.9BBBL to 85.1BBBL that will affect price, and price will affect affordability, and affordability will affect demand. Sure Bill Gates could afford to fill his SUV at $8/Gallon, but could Joe Sixpack who makes $8/hr, probably not, so he will trade the SUV in on a smaller car, if he can afford to, and quit driving if he can't.

[. . . . ]

As fuel supply continues to shrink past the reduced demand, prices continue to increase, people become even more inventive. I'll leave it there for now, as you try and figure out how.
Good analysis Wogsterca. :)

This is the main basis for my belief that we will not have sudden apocolypse secondary to peak oil. It's Econ 101. Decreased supply --> leads to higher prices --> leads to decreased demand --> leads to fairly stable prices as supplies dwindle at an ever slower pace.

Do you think moral relativism will be a boon in the times ahead? Personally, I would be comforted to know the starving fellow contemplating murder to feed his family with my supplies would possibly consider the ramifications of his actions in the next world.

He just has to convince himself you're a witch, or a heathen, or a Catholic, and you're out of luck. Henry VIII executed something like 70,000 Catholic priests, nuns and devout believers for refusing to convert to Anglicism. That's what religion leads to.

Peak oil will cause many, many people to stop driving, to start living close to work, to do many of the things we are saying they should have done years ago. If we can get them to stop driving so much, it may buy us a little time to adjust while still being able to put diesel in the food trucks and combines. An interesting question the pollsters never ask, one I would love to see is "Would you support the resumption of the draft if it brought back $1 gas?" What do you think the answer would be?

More likely there will be a period of severe economic disruption, something like the great depression, but deeper and longer, followed by (or rather, evolving into) a new reality of lower standard of living.


I totally agree with you here, and I don't think even a wholehearted leap into alternative energy sources can prevent it at this point. My greatest hope at this point is that we're all realistic about it, and the hard times aren't accompanied by a bunch of violence. My greatest fear is that, along with a series of disastrous wars over oil, we'll get desperate and rely more heavily on coal, which will only speed us along the path to that other impending train wreck, global warming.

OTOH, I tend to be just a bit pessimistic; maybe some miracle will occur, and someone will figure out how to suck CO2 from the air AND discover controlled nuclear fusion.

Do you think peak oil is going to be the beginning of the end for the car culture?

Peak oil was, or is going to be, caused by automotive inefficiency. Given that at peak, we'll still have about half of the world's reserves left to burn through. No. It won't be the beginning of the end of car culture in that sense. The difference between post and pre-peak in automobiles will be efficiency. With oil, like any resource, in order to make as much profit as possible, we must sell as much as we can, at as high a price as we can, while we can. So, pre-peak, when price is set by demand, inefficiency is/was encouraged as much as possible. Post peak is a bit more delicate, since efficiency and alternatives must be set at a rate that matches the drop in supply, while still maximizing the product of consumption and price.

Do you think moral relativism will be a boon in the times ahead? Personally, I would be comforted to know the starving fellow contemplating murder to feed his family with my supplies would possibly consider the ramifications of his actions in the next world.

This is so offensive on so many levels. You don't even know what you're saying when you use words like secular and "moral relativism" as pejoratives. The very idea that morality properly stems from what happens to you after you die is disgusting and it's exactly that sort of thinking that makes secular thinking the required foundation for any open society. The idea that your actions only mean something in the context of the hereafter is morbid and insane if you ask me. In contrast with looking at life on earth as just some sort of test, and all that matters is your relationship with a divine being you cannot know, secular thought devotes itself to people in the here and now.

What you mean when you say "relativism" is consideration of context, and all that is is reason. Reason adn empathy are the cornerstone or moral thinking. Religious morality, on the other hand, is a jumble of supposed absolutes that change every election cycle, or every pope, or every cleric, and depending on exactly which branch of which religion based upon which collection of texts that person has decided to interpret according to what fits in their own head.

There is no reason nor empathy is modern religious thinking. Even though all Jesus really talked about was reason and empathy, modern religious thought resembles the ravings of a death cult more than anything. Anything the movement leaders can do to seperate themselves and their followers from reason and empathy they do it. How else could our nation be so incedibly obsessed with homosexuality if not for the lunatic ravings of regligious movement leaders? The largest, most powerful congregations in this country believe science is anti-god. They think evolution is an affront to their faith (in other words they believe observation of physical phenomena is an affront to their belief in what cannot be known). They're trying to get schools to teach creationism in science classrooms. Why? Because science is secular. It does not concern itself with God. But for the religious, believing life is just some litmus test for death, there's no reason to concern yourself with anything but god and no reason for reason. You want to search for a locus to all the discord in the world look no further.

What does this give us? This aversion to "moral relativism" (context and consideration) and "secularism" (concern for the known, not the unknown)? A firm moral center from which to pattern our lives and avoid a degenerate civilization? Hardly. It gives us a balkanized society made up of groups of experts who know with 100% accuracy what it correct and what is incorrect, each more sure than the last that only their group will ultimately be rewarded.

Literally it gives us a society made up of factions that believe everyone not like them will burn in hell, and good riddance because everyone not like them is a sinner. If that's not a sick, demented basis on which to build our moral structure, I don't know what is.

Not to mention there's no reason to give a crap about the environment if all that matters is getting into heaven. The earth is just a stepping stone, after-all.

Do you think moral relativism will be a boon in the times ahead? Personally, I would be comforted to know the starving fellow contemplating murder to feed his family with my supplies would possibly consider the ramifications of his actions in the next world.

Regardless of the merits (or lack thereof) of being non-religious... religion or "moral absolutism" didn't prevent the crusades, 9/11/2001, the inquision, the killing of tens of thousands of Iraqis in the last 5 years, etc. "Thou shalt not kill," a moral absolute if I ever heard one, has yet to become a motto of the U.S. Army, even if it is one motto of the predominant religion among the Army's people.

"Peak oil" was supposed to be upon us in 1972 and prices shot up as we experienced short-lived supply shortages. Something less dramatic hit again in the early 1990's, but any real peak still doesn't seem to be near. The price varies mostly due to nervous markets, but even at $3/gal isn't much changed from 1972 in relation to the cost of living, average disposable incomes, etc. Motor fuel and vehicles are much more expensive in Europe (due to high taxes) and demand is still strong and growing. The private motor vehicle is such a huge part of the world economy, it's hard to see any scenario that would cause drastic changes in the situation. I wish it, but I doubt it.

The price varies mostly due to nervous markets, but even at $3/gal isn't much changed from 1972 in relation to the cost of living, average disposable incomes, etc.
I'm pretty sure the "floor" now is based on supply and demand. If it was based on nervous markets, we'd see a $10-20/bbl increase with news that Iran had captured British personnel, etc...

That aside, consumption is set by vehicle efficiency. And vehicle efficiency as a whole is set by vehicle manufacturers. Certain vehicle manufacturers are owned (http://www.ev1.org/gmoil.htm) (Ford (http://finance.yahoo.com/q/mh?s=F) and GM (http://finance.yahoo.com/q/mh?s=GM) here in the states) by the same financial groups that invest in various oil co's. Supposedly, the ratio is 10:1 oil to auto in GM's case. Given that controlling interests can influence a co's product line, and gasoline is far more inelastic (http://www.nber.org/papers/w12530.pdf) nowadays (Guess what gasoline is derived from? ;)), compared to the previous oil spikes, guess how much profits increase when consumption increases? ;) What's the best way to rip people off? Legally of course! Artificially stimulating demand isn't new in any way, but it is effective, and is seen in many other industries imo.

As you can see (http://www.iht.com/articles/2007/03/26/business/bxgm.php), GM is very concerned with the direction the company is headed in.

General Motors has urged investors to reject all 10 of the shareholder proposals for its June 5 annual meeting and to re-elect its board.

The proposals include requiring disclosure of political donations, cutting emissions of greenhouse gases and making it easier for smaller shareholders to elect directors, GM said Friday in a regulatory filing.

Wow. How'd this thread get hijacked into a rant about religion vs. secularism? :rolleyes:

I guess I have a bit more trust in the invisible hand than most of you folks.

Supply and demand are wonderful spurs for human ingenuity, and a (relatively) free market will let a lot of ideas get tested and re-tested. Will our lives be different in 10/20/50/100 years? Of course... time marches on.

And it won't be so drastic as some fear - remember it took over 100 years to get where we are now (when was Spindletop? Model T was intro'd in 1906, right?)

But I don't believe that our standard of living will be "lower" as long as we protect our basic freedoms.

Of course the risky alternative is to collectively curl up into a fetal ball and hand the umbilical cord to a self-appointed savior, whether religious, technical, or governmental.

Me, I'm an optimist, I think life will be different in large and small ways, but it'll be better too.

Creak.

Hmmm, a lot of food for thought. I see this playing out in a few different ways.

1) The Doomsday scenario
If people like James Howard Kunstler (The Long Emergency) are correct, suburbia and the car culture will collapse like a house of cards. Not only have we apparently reached peak in terms of oil, but natural gas is not far behind. This really sucks for those of us in cold climates who rely on natural gas to heat their homes. Those who use heating oil aren't really any better off. Of course those who live in desert climates (Phoenix, Las Vegas, etc) will also be screwed since we likely won't be shipping food thousands of miles and it's hard to grow food in the desert.

Kunstler also argues that a lot of alternative energy sources are highly reliant on having a petroleum infrastructure to get established. If we don't start conserving oil as a platform to be put towards alternative energy instead of burning it driving everywhere, bad things are going to happen. Needless to say, not only might we be dealing with peak oil, but there might also be a convergence with climate change, flu outbreaks, resource wars, and an economic crash. Don't forget to add lots of layoffs and millions of firearms to the mix. Fun times...

2) The "Technology will save us" scenario
We're seeing more research and adoption of various alternative energy sources. Unfortunately, they currently provide a very small percentage of the present usage. I believe we'll simply have to rethink our standard of living and energy consumption, and that the transition to other sources will not be as easy as some claim. Get ready for a bumpy ride, please keep your hands in the vehicle and remain seated until the ride has come to a complete stop...

3) The "Capitalism will save us" scenario
Cynical bloke that I am, I believe that there is too much money and too many fingers in the pie for the automotive industry to just quietly die off. I don't have any exact figures, but worldwide this industry must be worth hundreds of billions if not trillions. My guess is that as gas prices go up, we are going to see small vehicles becoming more common, a large increase in hybrid models with electric vehicles also becoming available, and the bottoming out of truck and SUV sales. Yet with current corporate inertia, don't be surprised if some companies get caught with their pants down and go bankrupt. The Big Three may become the Big Two, with tens of thousands losing their jobs.

As I think about it, perhaps the likely outcome may combine portions of all three scenarios above. Cars as we know them may change, but as much as I'd like to see it are unlikely to disappear. Yet none of us really knows for certain. Only time will tell, in the mean time, keep riding your bikes and shopping at local stores.

Most likely, we'll end up in a "Mad Max" scenario...people love their cars too much to even think of conserving gas like that. They might stop driving one day out of six, but I think they will kill for their petrol if they have to in order to keep the car runnin'

Another reason peak oil will be less catastrophic than many predict has to do with global warming. Compared to more expensive fuel, I think environmentalism will be a bigger factor in the future decline of the automobile.

More people, especially people who study policy, are realizing that if we do burn the other half of the oil, we're genna be in some real hot water, so to speak.

Do you think peak oil is going to be the beginning of the end for the car culture?
Not peak oil per say, but oil 'depletion' will be the end for the car culture. Right now the world produces about 85 million barrels of oil. Something like 65 to 70 million of that goes to commericial, industrial use etc. the rest goes to private automobiles and light trucks. By 2020 the demand for oil is expected to be around 100 million barrels a day, roughly 75 to 80 million will be needed for non automobile use, (trucks, ships, plastics, heating oil etc.) the problem is, oil production will decrease to about 60 million barrels or so. The entire world oil production will be needed for non auto needs. And there will be a 15 to 20 million barrel shortage for non auto use at that.There won't be any oil for cars.

Peak oil in the U.S. was supposed to have in in 1971 and if you look at the data, you'll see it's been in decline ever since. World wide peak oil is a larger target of course and so, harder to predict, with some saying we peaked in 2006, some saying it'll be 2009 and if you listen to some government sources we have until 2030 (but if you look at the IEA report they seem to be basing it off some absurd production numbers showing production going up for almost every country (including the U.S.) for the next 10 years!). Peak Oil, when it really hits will be a 'rear-view' mirror occurrence and personally, I'm one of those that believes 2006 was the year and we'll see that evidence in the next year or two (some evidence now is the fact the Saudis said they could increase production last year and instead came up short even of their previous year, Mexico's in decline, North Sea is too, and Venezuela is as well.)

I'm pretty sure the "floor" now is based on supply and demand. If it was based on nervous markets, we'd see a $10-20/bbl increase with news that Iran had captured British personnel, etc...

That aside, consumption is set by vehicle efficiency ... <edit> As you can see (http://www.iht.com/articles/2007/03/26/business/bxgm.php), GM is very concerned with the direction the company is headed in.
I am curious; why are your thoughts restricted to the USA. I see no mention of the trade deficit with China (it has rather a lot of US dollars). Also no mention of the number of new cars hitting the roads everyday in China and the concomitant increase in demand for oil. And no mention of the minor fact that the USA et al has no control over China. Global peak oil has occurred, we are just waiting for the markets to react - and when gas is $15, $20 or $25 a gallon, massive increases in efficiency (not that they seem technically feasible or able to arrive in a timely way) - will not address the dire problems. Also average personal debt levels in the USA preclude spending money on gas once the nightmare unfolds.

GM, Ford, and all domestic USA airlines are Dodos (extinct bird) waiting for the oven.

And if oil was to be priced in Euro's - the USD would be reduced to a heating source.

And if oil was to be priced in Euro's - the USD would be reduced to a heating source.

in due time, in due time.........it is coming

in due time, in due time.........it is coming
What's going on with a Euro market for oil? A few months ago I read about Iran trying to set this up, i haven't seen anything recently. Why would this be so devestating for the US?

What's going on with a Euro market for oil? A few months ago I read about Iran trying to set this up, i haven't seen anything recently. Why would this be so devestating for the US?
Devastating because as the USD falls relative to the Euro, the price of oil and all else goes up accordingly. This is also a great buffer for all the US borrowing that goes on. Since the funds borrowered are in USD, there is near zero impact from currency fluctuation. Until the lenders want to peg their loans to the Euro.

Hmmm, a lot of food for thought. I see this playing out in a few different ways.
1) The Doomsday scenario
2) The "Technology will save us" scenario
3) The "Capitalism will save us" scenario
As I think about it, perhaps the likely outcome may combine portions of all three scenarios above. Cars as we know them may change, but as much as I'd like to see it are unlikely to disappear. Yet none of us really knows for certain. Only time will tell, in the mean time, keep riding your bikes and shopping at local stores.
I like it! I sure hope it's a combination of # 2 and 3 - the rational way out. though if we look back at history, we as a species seem to be pretty good at building up an unsustainable situation till it explodes in a million pieces...
I really think much will depend on how quickly oil gets expensive. If it's over a few decades, technology and the free market may be able to adjust. if it skyrockets overnight, well...

What's going on with a Euro market for oil? A few months ago I read about Iran trying to set this up, i haven't seen anything recently. Why would this be so devestating for the US?

I agree with gerv. I see considerable co-dependence between the USD and oil. The world runs on oil, and oil is priced in USD. Since the USD is no longer a gold backed currency, it is at the mercy of the international currency speculators (think of a bunch of thieving mercenaries that would kill themselves to make a buck).

If oil markets start pricing and trading oil using the Euro, then the USD will go into free-fall.

On the one hand this would be good because USA exports start to look like a bargain (what were those exports again? hmmmmm) - also, the USD held by China become worth considerably less. Alas, there will also be the kind of domestic inflation that would cause a meltdown and general diarrhea at the Federal Reserve.

Behind the scenes the US has leveraged the "special relationship" with the UK to keep the UK out of the Euro - because if the UK joined the Euro, the Euro would be considerably stronger and currency speculators would only have the USD to take a dump on. Look at 5 year graphs of the USD against any currency and the trend is not good. It will be interesting to see how many years elapse between the collapse of the USSR as a super-power and the loss of that status for the USA - some might say it is happening now.

If oil markets start pricing and trading oil using the Euro, then the USD will go into free-fall.
I don't know if I agree with that - I suspect traders sell oil for whatever they can get for it in any currency, and commonly state the price in USD because for the next (short?) while, that is the currency most commonly used to buy it.

If the price of oil starts getting quoted in EUROs, it will because the USD has lost importance, not a cause of it.

I agree with gerv. I see considerable co-dependence between the USD and oil. The world runs on oil, and oil is priced in USD. Since the USD is no longer a gold backed currency, it is at the mercy of the international currency speculators (think of a bunch of thieving mercenaries that would kill themselves to make a buck).

If oil markets start pricing and trading oil using the Euro, then the USD will go into free-fall.

On the one hand this would be good because USA exports start to look like a bargain (what were those exports again? hmmmmm) - also, the USD held by China become worth considerably less. Alas, there will also be the kind of domestic inflation that would cause a meltdown and general diarrhea at the Federal Reserve.

Behind the scenes the US has leveraged the "special relationship" with the UK to keep the UK out of the Euro - because if the UK joined the Euro, the Euro would be considerably stronger and currency speculators would only have the USD to take a dump on. Look at 5 year graphs of the USD against any currency and the trend is not good. It will be interesting to see how many years elapse between the collapse of the USSR as a super-power and the loss of that status for the USA - some might say it is happening now.

umm, hate to break it to you but the Fed is corporate owned and run, and in cahoots with every other central bank on the planet, and the monetary inflation is already running at up around 12% per year !! ---> this is why M3 is no longer published

the banksters do not care much what happens to the money, they make their juice off of providing money at almost zero cost to themselves, even after a crash, once things are reset they continue on as if nothing happened, and if it gets bad enough, they just flee to another stable currency and/or country.........been going on for centuries, ever since usury has been permitted

when a govt has a negative account balance and runs up its debt, the banks simply add more money to the money supply and dilute the problem, when that becomes no longer enough, they let it crash

the US ceded partial control in 1913, then gave up complete control under nixon when faced with insolvency and a run on gold, now we have a 100% worthless fiat currency which the govt does not control

if you look up the principal controlling shareholders of the central banks you will see the same uber rich families that have been around for many many generations, oldest scam man has ever invented and easiest way there is to generate wealth

I don't know if I agree with that - I suspect traders sell oil for whatever they can get for it in any currency, and commonly state the price in USD because for the next (short?) while, that is the currency most commonly used to buy it.

If the price of oil starts getting quoted in EUROs, it will because the USD has lost importance, not a cause of it.

oil is sold in dollars, not just priced in dollars

the accounts those dollars go into are few and controlled by the US and UK--petro dollar recycling, brought to the world courtesy of Saudi Arabia and the US, thats how that got started

this means that other countries must have dollars to buy oil, and since they cannot print dollars they must pay the exchange fee and have the dollars on hand, this acts very much like a tribute tax

if the oil isnt sold by the NYMEX or UK exchange in dollars then the US would have to pony up and have whatever currency is needed to buy its imported oil and it would no longer be able to cheat and run up massive debts without immediate problems

oil is sold in dollars, not just priced in dollars

the accounts those dollars go into are few and controlled by the US and UK--petro dollar recycling, brought to the world courtesy of Saudi Arabia and the US, thats how that got started

this means that other countries must have dollars to buy oil, and since they cannot print dollars they must pay the exchange fee and have the dollars on hand, this acts very much like a tribute tax

if the oil isnt sold by the NYMEX or UK exchange in dollars then the US would have to pony up and have whatever currency is needed to buy its imported oil and it would no longer be able to cheat and run up massive debts without immediate problems
You have neglected to mention derivatives like future contracts - if oil is purchased in a futures contract quoted in USD and there is a subsequent change in value of the USD (down) then this has an adverse impact on the seller of the oil. Given that the USD has been in a slide for 5+ years, I can see why moving to a stronger currency would be desirable for the sellers. As is, the seller is obliged to also hedge against the slide in the dollar.

I don't know if I agree with that - I suspect traders sell oil for whatever they can get for it in any currency, and commonly state the price in USD because for the next (short?) while, that is the currency most commonly used to buy it.

If the price of oil starts getting quoted in EUROs, it will because the USD has lost importance, not a cause of it.
Lets say your house (oil) in May 2007 is worth $250,000 and you know you will want to sell it in May 2008. The housing market has gone flat. I offer to enter into a future contract to buy your house for $275,000 next May and you agree. I stick 137,500 UK pounds in the bank (exchange rate is currently $2 to 1 GBP).

Over the course of the next 12 months the USD continues it's downward trend (did you even bother to look at any charts) - then i pick up your house for less than i set aside.

If you had agreed a price in a stronger currency you would have made a better deal. Its a chicken and egg situation - the only reason the USD does not slide faster, is because it is still the de facto currency. Once something significant like oil is available in Euros then the slide accelerates.

I am curious; why are your thoughts restricted to the USA. I see no mention of the trade deficit with China (it has rather a lot of US dollars). Also no mention of the number of new cars hitting the roads everyday in China and the concomitant increase in demand for oil. And no mention of the minor fact that the USA et al has no control over China.
Funny that you mention China. I was talking to someone today about this. China is pushing its population to petrol cars as fast as it can. There are many cities that forbid Bicycles from a number of roads. Other laws (that continually annoy me) are in place to discourage the use of bicycles.

The reason is simple; it goes like this. China is, and wishes to be seen as, a rich nation. Rich people dribe private Autos. Therefore, the Chinese should drive private autos.

Yes, I know that this is flawed, they are in an ideal place to skip a level of technology and go straight from the past to the future. But, they are not doing that. So, right before the big oil crisis they are going to tie thier society to petrol.

http://www.chinadaily.com.cn/bizchina/2007-05/16/content_873909.htm

Auto sales keep roaring
(chinadaily.com.cn)
Updated: 2007-05-16 14:21

China, the second-largest auto market in the world, continues to see an upswing in auto sales and production this year, with both sales and production reporting more than 20 percent growth in the first four months, according to an industry association.

Automakers produced over three million automobiles in China from January to April, of which 2,934,000 units were sold, a year-on-year growth of 21.36 and 21.46 percent respectively, as shown in statistics from the China Association of Automobile Manufacturers (CAAM).

In the first four months, over 2.1 million passenger cars, including sedans, sport utility vehicles, multi-purpose vehicles and minibuses, were manufactured, and over two million units were sold.

In April, China-made autos topped 815,200 units and sales hit 808,700, an increase of 18.48 and 19.78 percent respectively, compared to the same period last year. Passenger car production climbed 12.29 percent year-on-year to 544,600, while sales soared 15.98 percent to 545,800.

The top three automakers in terms of sales in the same period were Shanghai Automotive Industry Corp (SAIC), First Automotive Works Corp (FAW) and Dongfeng Motor Corp. In April, FAW topped sales, followed by SAIC and Dongfeng.

Domestic-owned brands were led by Chery, and Geely had a stronger presence than foreign brands this year. In the first four months of this year, sales of domestic autos reached 449,700 units, accounting for 29.31 percent of all passenger vehicles sold in China and ranking number one, up from second place last year.

In April, 116,200 domestic autos were sold, making up 28.22 percent of total car sales. China-made cars were trailed by Japanese, German and South Korean brands, with a market share of 26.88, 20.44 and 14.07 percents respectively.

Analysts said the growth in the auto sector in the first four months was mainly due to new model releases and price cut incentives by automakers.

Apart from the boom in the domestic market, automakers are penetrating further into the overseas market.

China exported 99,800 vehicles in the first quarter of this year, up 5.32 percent from the same period of last year, according to figures from the General Administration of Customs. The export of sedans soared up 49 percent from last year to 25,000 units.

In the first quarter of this year, China imported 59,100 vehicles, up 16.72 percent from the same period last year, according to the auto association. Among them, 28,000 were sedans, an increase of 30.93 percent.

China's top 16 auto groups reported a 70 percent increase in first-quarter profits boosted by brisk sales.

Post-tax profits totaled 12.8 billion yuan in the first three months of 2007, up 69.9 percent from a year ago, according to CAAM figures. SAIC Motor Corp Ltd, the biggest manufacturer by sales, posted a profit growth of 71.9 percent, while profits from FAW, the number two domestic carmarker, increased by one-third.

oil is sold in dollars, not just priced in dollars

OK, I see what you mean...the need for buyers to have US dollars on hand for oil purchases, tends to create demand and prop up the dollar. But at the same time, I can take from HoustonB's post that if buyers start to become confident they can hedge against the dollar by stockpiling euros or whatever for future oil purchases, and convert to dollars only at the last minute, or if Chavez sells all his oil for yen, that protective effect will be lost.

OK, I see what you mean...the need for buyers to have US dollars on hand for oil purchases, tends to create demand and prop up the dollar. But at the same time, I can take from HoustonB's post that if buyers start to become confident they can hedge against the dollar by stockpiling euros or whatever for future oil purchases, and convert to dollars only at the last minute, or if Chavez sells all his oil for yen, that protective effect will be lost.

to an extent your absolutely correct, BUT, that nasty exchange fee still comes into play and the other kicker is most of the actual oil $$ is held and run thru a very small number of accounts controlled by a very small number of people/companies

hedging against currencies does happen, happens quite a bit, but like a broker fee there's that exchange fee which makes the banks involved make money just off the activity, plus the interest they collect in the petro dollar accounts themselves

when Iraq was invaded and overthrown one of the first acts by Bremer was to put a halt to the sales of Iraqi oil in euro's and it was switched back to dollars, and they did this at a huge loss and still are....... while that in of itself isnt huge evidence it is interesting and does lend some credence to how this all works

Iran has talked about an oil bourse based on euro's, and even had a company actually start making plans to do it, unfortunately Iran hasnt been able to get its act together and actually do it, and last I heard it was dead in the water for now. Its not an easy thing to do, especially when the powers that be will be fighting it all the way. Other banks wont be cooperative, other countries will fight it at the behest of the US. As it stands now, Iran is already selling around half it oil in euro's but its still based on prices set in dollars against brent and WTI crude and against a basket of arab crudes I think.

Considering that oil only accounts for $1.5 trillion per year world wide, and the US GDP alone is $13 trillion, I don't think moving to the Euro and away from the dollar would hurt the dollar much more than the reason's why it's sliding in the first place.

^^^ it probably doesnt make a huge difference, but fiat currency is also valued alot on just faith too, all it takes a dip in confidence in the dollar and it drops quite quickly, and with the US having a deficit with domestic spending and a negative trading account balance it doesnt take much

plus there's also the recycling part of the equation, those dollars besides going round and round generating revenue just off the activity also get loaned out in the form of securities and notes the US govt sells to the oil producers themselves.......when those oil producers dont need dollars anymore and euro's instead they wont be so inclined to buy US debts, why would they?

From a relatively conservative forum's discussion on how eeeeevil liberals want gas prices to go up:

I've said it a million times, once they make a hybrid that will haul 5 horses and the trailer and the gear to go ridding with those 5 horses, and can haul say a couple tons of feed when I do my buys.... oh yeah, and fit 5 adults (let's face it a kid with a car seat needs as much room as an adult) I will GLADLY buy it!! Until then, leave me, my pickup and my Suburban ALONE. Oh yeah, that hybrid needs to negotiate through mud and snow with 4X4 engaged for at LEAST three months a year (more like 5).

Hoooooo boy! Maybe I should chime in by calling low gas prices welfare and see where that leads. Then again, supporting the basic needs of Americans should be our top priority, and hauling horses is clearly a basic need.