Roger Herrera $150 oil again

[pamela]

didn't see this posted.

http://www.petroleumnews.com/pntruncate/407143974.shtml

“It’s clear to me that $150-a-barrel oil was the trigger for the recession,” said Herrera, who has spent more than 40 years observing oil prices, initially as a petroleum industry geologist who started his career in Alaska, and then worked around the world, in places such as Peru, East and West Africa, Greece, Canada’s Arctic Islands, Colombia, Papua-New Guinea, Libya and Barbados before returning to Alaska in 1975, where he became increasingly involved in the federal politics of operating in the northernmost state.

I really tend to agree with his assertion that the high oil prices contributed to the crash.
It seems like it was the last straw for families that were already at the breaking point.

I hadn't heard of this person before, was wondering if some of you were familiar with him and his work and could shed some light on where he's coming from.
Personally, I feel that if gas prices go back up to 4.00 a gal. we just won't make it. There will be no stopping it next time.

[Bill Hicks]

I read somewhere that $300 per barrel is the number in which the entire world economy screeches to a halt.  At that level energy costs basically crowd out all other economic actvity.  I remember thinking last July, "well, almost halfway to doom."   

I don't think $4.00 will be the end.  Things will progressively suck when it returns to that level and moves up from there.  $300 per barrel puts us at about $10 a gallon.  That is more likely your complete collapse level.

[Jeromie]

What could be done on national level to   bust the price permanently in say  North America?

[pamela]

kill demand Jeromie?
is that right?
that, or ration gasoline. If I understand you correctly.

[Bill Hicks]

What could be done on national level to   bust the price permanently in say  North America?

Uh...nothing.  At least nothing that has any practical chance of actually being implemented.

[pamela]

oh wait, I know, die off?
is that it?
Jeremie, you'll just have to tell me, I don't know what the answer is.

[Bill Hicks]

oh wait, I know, die off?

Bingo.

I must add that I honestly wish this was NOT true.  But I see exactly ZERO evidence that our "leadership" will wake up in time to change course away from the precipice.  In fact, I fear it is likely already far too late.

[Chesyre]

What could be done on national level to   bust the price permanently in say  North America?

Uh...nothing.  At least nothing that has any practical chance of actually being implemented.

doing a pretty good job with unemployment so far , just wait till people have to start choosing starve or freeze. or drop off the uneployment rolls entirely. 

[Jeromie]

Not at all.  If  our economy would be busted by a huge oil price, fix the price in the US. Go over to GTL for gasoline as fast as possible. Force oil companies to expand domestically or nationalize them.  One reason why I am doing such a heavy look see at US physical energy facts is to look at just such a possibility.   Another is to exchange export grains at prices pegged to the oil value directly . The aim would be to stop imports from outside North America.   There are some very mean ways of countering an  social collapse from high oil.  For one, make Treasuries  legal tender thus paying them off. They are only good, if held  by foreign holders for US products at prices  pegged to US oil  import costs.    But, in the end, we thrive from our own fossil fuels.  A  society in collapse from oil prices would demand things like this be done and the Caesar that could do it.


In the financial collapse, the conversion to " socialism" was palpable and sought by all the free market types virtually immediately.  Think what Joe Six Pick would insist be dealt with immediately. The experience of so called " bail  outs" of the rich and the bonus  hoopla will not be forgotten. The last year has changed things.  

So, in the period of emergency action to save our society, there would be things like rationing.


Here is where the pieces can be drawn together but a long thread to say the least.

[Jeromie]

The US has had similar problems about oil pricing,  collapses that is.  The Black Giant field coming in in 1930 destabilized the industry to the point of collapse and huge volumes of bootleg oil were being  traded around. A major story here that would take some time.

Anyway, the  loss of energy  production was perilously close in the summer of 1933.  After  the Schector  Poultry  case tossed the NIRA, the Connally Hot Oil Act replaced the oil aspects of NIRA and  brought about the effective cartelization of big oil  still with us.   

Congress and leadership nip this price problem immediately or their states of the union itself blows up.


http://en.wikipedia.org/wiki/Connally_Hot_Oil_Act_of_1935



An amazingly fast solution occurred to a far worse production problem than a price problem.

[Bill Hicks]

The Connally Hot Oil Act of 1935 was enacted in the wake of the Supreme Court's decision to strike down the National Industrial Recovery Act (NIRA) in Panama Refining Co. v. Ryan, the keystone piece of original New Deal legislation. Specifically, it revived the portion of the original legislation that regulated the flow of oil between states. Ostensibly enacted to protect the industry from "contraband oil", it was mainly a way of cartelizing the industry to stabilize falling prices.

Seems the law you cited was enacted to deal with the EXACT OPPOSITE problem from what we have now.  Back then there was too much oil.  Now we are running out.  Cutting off imports, even if we redirected all Alaskan oil to domestic markets would reduce our oil availability by two-thirds overnight.  The likely result?  Instant collapse, rioting, anarchy and mass starvation.

All of those things are coming eventually, but at least the way things are going now we have time to prepare. 

[Jeromie]

I said so above... collapsing prices. The point was that intervention was made. The circumstances were of an impending  financial collapse of all of the oil companies at or around the same time . Interdicting a price would  provide more avenues  of getting at the problem.  Then , we did not have the geopolitical possibilities we have now or frankly the ability for things like multilateral actions. 
 

 The big point is that we solved just as bad or worse an oil problem in the thirties.  The price collapse was  caused by loose law in the past . The " Rule of Capture" literally killed off  a field's primary production very early. Hot  Oil defeated the oil states attempts at allocation requiring  federal overlordship.    In a matter of weeks, the Feds had moved using NIRA to get at the hot oil bootlegging problem.   

A similar control, I   should think is contemplated in the " Carter Doctrine"  . But  it would have to be multifaceted.

We had the chutzpah before to solve shitty problems and would do so now. If not, we deserve what we get.

A neato fun story behind all this.  A long one though.

[Jeromie]

Oh, I did not say cutting off all our oil imports all at once. Be a little subtle with a big stick and carrot.   For openers, Canada and Mexico would  be forced into our boat. Those imports keep coming. There is the National Reserve.  Our own production could be rapidly increased  provided a national policy is in effect.    There are also things like joint central bank actions and joint seizures of oil companies.  All kinds of possibilities.

If a sudden price increase were allowed as happened last year it means all the major governments have not moved to see to it such a thing does not happen again. The  most rapid way  spike a speculative price rise is to shut down speculation trading using the central bank net work along with licensing of completion of buy / sell agreements. 

The experience last year undoubtedly has forced  contingency planning and  skeletal organization to be put in place. Certainly , among the G20. 

As I said, a sudden rise to $300 would be quashed violently by the states.  A rise back up to $150 would trigger some acts very quickly.

Then , there are  always things like excess profits taxes with proceeds withheld above a certain price at near 100 % rates.   That is the money comes out of the payment for the oil.    The payments are then rebated back in ways that forces offset at the retail level. 

 As I said, the whole area of price controls would be a long  thread.   

[Chesyre]

useing food as a weapon is a one trick pony.  tantamount to lighting off a nuke or worse.  it will have unintended consequences .  may as well see if there is any merit to that nuclear primacy theory cause the world is about tired of america's bullshit .  obey or starve will not go over well at all

[Doomerologist]

For openers, Canada and Mexico would  be forced into our boat. Those imports keep coming.

Could you expand on that? Are you saying forcing Mexico and Canada to keep exporting oil even if when and if they no longer want to do it for whatever reason?