Is Jeff Rubin right ... or is there ANOTHER Saudi Arabia?

[GRG55]

Re: Is Jeff Rubin right ... or is there ANOTHER Saudi Arabia?

Jeff Rubin at the The Business of Climate Change Conference 2009

"...Now, at the end of the day, this is their resource, and they can do whatever they want with their resource. My point is only this – stop thinking about what the Middle East is producing, and start focusing on what the Middle East and Venezuela is consuming. Because exports from OPEC are going to be steadily declining, not just because of depletion, but because, every year, more and more of that production gets cannibalized by domestic consumption. Instead of higher oil prices restraining oil demand, higher oil prices boost oil demand in oil producing countries, because you just have that many more billions of petrodollars chasing 50 cent a gallon gasoline and 7 cent a gallon diesel fuel..."

The above excerpt from the transcript is the one thing about the oil supply situation that most of the world still hasn't noticed, or figured out.

But it's nothing new for iTulipers...

[ST]

Re: Is Jeff Rubin right ... or is there ANOTHER Saudi Arabia?

What if peak cheap oil is an issue which will seem distant, once the world wakes up to the fact that the debt engine is not going to restart global growth and that bubble economies like China & the U.S. simply aren't going to be demanding as much energy as they were before, because there won't be a return to the status quo?

iTulipers buy into the thesis that we won't return to growth, yet we think that global demand for energy just chugs along, even after China's bubble economy pops and reverbarates around the world?

There are so many things to ponder here: Does global growth reduce at a rate which is quicker than the reduction in demand for oil? Does oil rise due to gov't attempting to avoid a deflationary price spiral once they realize this is not a recession?

At present, the markets seem to think we are on the cusp of a global economic recovery, with their caveat being 'yes, things have run to fast in equity markets, correction likely'.

That is simply not we think and surely the demand dynamics impacting the cheap peak oil cycles are exceptionally complicated under the scenario of reduced demand and monetary driven eventual inflation from gov'ts attempting to overcome debt limits to economic growth.

[raja]

Re: Is Jeff Rubin right ... or is there ANOTHER Saudi Arabia?

iTulipers buy into the thesis that we won't return to growth, yet we think that global demand for energy just chugs along, even after China's bubble economy pops and reverbarates around the world?

Not all iTulipers . . . .

I have been saying for some time that demand destruction will have its way with oil prices, i.e., lowering them.

IMO, demand destruction and peak oil are opposing forces, and their effects will cause oil prices to oscillate.

My guess is that, after the coming global economic crash, oil prices will be down for quite awhile. Then, the peak oil effect will cause a rise. This rise will slow demand, once again lowering prices. And so the cycle continues, but always on an upward trend for oil prices due to peak oil.

Also, there are other short-term forces that will act on this cycle, for example, if everyone believes peak oil will cause prices to rise, there will be a speculative-caused trend to higher prices.