Saturday, March 5, 2011

Oil Prices and the Economy

Peak oil simply means that oil production peaks relative to the costs of inputs (that is, the cost of producing it).

Many people believe we are post-peak oil. I don't know the answer to this question but it is clear that oil production and distribution have all kinds of costs that are not payed at the pumpt, including the lives of soldiers who die overseas in oil wars, the citizens of developing countries forced to live and die with their "resource curse" of oil deposits, and environmental destruction on scales truly difficult to comprehend (as in Nigeria and the Gulf of Mexico, among other oil damaged locales).

Oil is a terrible addiction.

What happens if the pump cost of our gas goes up further because of instability in the developing world or simply because of rising global demand?

There goes our economic "recovery," if you can call unprecedented declines in the percentage of the working population a "recovery"

There is a good article today at zero hedge examining the issue of peak oil and the costs of rising oil prices. The comments are worth reading as well:
http://www.zerohedge.com/article/guest-post-there-are-no-good-outcomes

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