[CAMWEST-discuss] Why 2012 is looking more and more like the crunch year

Danny Hannan danny_hannan at yahoo.com
Wed Apr 28 22:25:00 UTC 2010

G'day all,
Why 2012 is looking more and more like the crunch year.  That is if the debt problems, particularly in Europe don't cause an economic crash first.

Within a week of each other, two sobering reports were released about the tenuous state of the global oil market.
On April 11, the U.S. Joint Forces Command released a report stating "by 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day."
In its April 13 report, the IEA said:
Global oil demand will hit a record high this year, revising up consumption estimates as the world economy recovers from recession. 
>We are raising our forecast for world oil demand growth this year to 1.67 million barrels per day (bpd), up 100,000 bpd. 
>World oil demand will reach an average of 86.60 million bpd this year, up from 84.93 million in 2009. 
>The previous record high for world oil demand was 86.5 million bpd in 2007 before the onset of the global financial crisis and economic slowdown. 
We may not make it to 2012 before the price of oil again reaches levels that are negative for economic growth.  I personally don't think that oil will get much above US$150 a barrel before the global economy again crashes.  It is not just the cost of petrol or fuel for your motor vehicle.  Oil supplies the energy for almost all transport, all mining, all agriculture and all petro-chemical/plastics.  So all costs raise proportionally with the price of oil; undermining profitability and the ability to service the high levels of debt around the world.  That's exactly what happened in 2007-8 and we are almost locked on the road to repeat that same scenario in the next few years.
Several different analysts including myself have come to the same conclusions as the US Joint Forces Command (the report is available on the web and not hard to find).  We are all working from the same data sets.  My surprise is not that we all come to similar conclusions but that so many government agencies including our own ABARE and the IEA do not.  It smells of government intervention with their own agencies to keep the general public complacent.
The only solution is an organised reduction in both population and economic effort or negative economic growth, if it is not done in an organised way now; both will be forced on us by energy shortages in the near future, as early as 2015.  Remember the food riots around the world in 2008 when the price of grain was beyond the capacity of the people in many poorer countries.  Worse will happen!
We have one of the members of the board of Infrastructure Australia warning that the federal government must take steps to prepare for peak oil production and the coming oil shortages.  But is anyone listening?
Nothing will happen unless there is a large portion of the population demanding change.  If you are not demanding that our politicians change direction you are complicit in their none action.  Like "Thelma and Louise" we are heading for the cliff at full throttle, to descend rapidly to a "Mad Max" World.
danny_hannan at yahoo.com 

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