Now I think I understand how GDII will rhyme with the Great Depression 1929

[metalman]

Re: Now I think I understand how GDII will rhyme with the Great Depression 1929

I don't think Brazil or Russia can afford LOW commodity prices.

High taxes and subsidies may suppress demand, but the biggest effect is to shift demand. In most cases total consumption just keeps going up as population increases. Is energy demand in England less today, with $8.00 petrol, than it was 10 years ago? I doubt it.




Well Hitler sold the German people on the idea that they needed room (land) to grow, and it was their right and destiny to annex Germany's neighbours to secure that land resource.

And I believe some historians make an argument that Japan's far flung efforts in the Pacific Theatre were motivated, at least in part, to secure raw materials and resources, including oil, for the homeland.

no need to hypothesize here. recall a certain nuclear weapons capable country headed by a certain autocratic style leader, who just rigged elections to secure long term political dominance, recently planting a titanium flag on the bottom of the arctic claiming land/oil that at least two other countries believe is theirs. some day it'll be "let us take our oil or else." mark my words!

[c1ue]

Re: Now I think I understand how GDII will rhyme with the Great Depression 1929

Is energy demand in England less today, with $8.00 petrol, than it was 10 years ago?

I'd guess probably not, but then again what was the price of petrol in England 10 years ago?

According to this: http://www.parliament.uk/commons/lib...9/rp99-111.pdf

1999 average cost was 346 pence per gallon.

Present price? 102.9 pence per liter = 391 pence per gallon

From: http://www.whatprice.co.uk/petrol-prices/

Hardly a huge jump. Why should demand moderate when cost remains constant (especially accounting for 10 years of inflation)?

I don't think Brazil or Russia can afford LOW commodity prices.

4 of Brazil's top 10 exports are agriculture related. Another one is leather footwear.

2 others are machinery: aircraft and cars

only 2 are a non-perishable commodities: iron ore and petroleum products.

It would hurt, but Brazil could survive a low commodity environment so long as it is not the agriculture commodities.

Russia on the other hand definitely is vulnerable - as of 2001, 72% of export revenue was oil/natural gas. 14.6% was metals.

Russia is the non-perishable opposite to Brazil's perishable export model.

Well Hitler sold the German people on the idea that they needed room (land) to grow, and it was their right and destiny to annex Germany's neighbours to secure that land resource.

True, but Germany was not looking at Peak oil, long term worldwide demand growth for grains, or any of that.

It was just Hitler's way of distracting the German people from their daily problematic lives of rebuilding while paying off war reparations.

And I believe some historians make an argument that Japan's far flung efforts in the Pacific Theatre were motivated, at least in part, to secure raw materials and resources, including oil, for the homeland.

Actually this is closer to the truth. The impetus for Pearl Harbor was from the US embargoing Japan for oil - which the Japanese rightly regarded as an attempt to stunt Japan's growth economically.

The oil embargo was because the US wanted China to withdraw from their mainland adventures.

But the mainland adventures were an attempt to procure a security zone from Russia (recent war) to the north, China freeing itself from centuries of stagnation under the last dynasty and in a civil war to the west, and numerous British, German, etc possessions in SE Asia to the south. East is basically empty ocean.

Talk about being surrounded!

Thus the Japanese behavior was indeed prompted by resources, but the resource constriction was artificially induced.

[GRG55]

Re: Now I think I understand how GDII will rhyme with the Great Depression 1929

I'd guess probably not, but then again what was the price of petrol in England 10 years ago?

According to this: http://www.parliament.uk/commons/lib...9/rp99-111.pdf

1999 average cost was 346 pence per gallon.

Present price? 102.9 pence per liter = 391 pence per gallon

From: http://www.whatprice.co.uk/petrol-prices/

Hardly a huge jump. Why should demand moderate when cost remains constant (especially accounting for 10 years of inflation)?...

Now this is an interesting bit of info...

1999 marked the bottom of the two decade secular decline in crude oil prices from the 1979 Iranian revolution instigated all-time high. I notice in the first reference you gave above that it also states:

"Since 1990, the increase in petrol prices can be partly attributed to rising taxation. And during this period the spot price of a barrel of North Sea crude oil has fallen by about 30%. Despite this fall in oil prices, retail petrol prices have risen significantly."

As crude oil is priced in $US I did a quick calculation using the numbers in your post. Using the average interbank exchange rate for f.y. 1999 ($1.6167/Pound) a gallon of petrol in the UK cost the equivalent of $5.5938. Today that gallon costs $7.8153. A good example of how the strong European currencies are helping to keep the cost of energy down for those consumers. And you are completely correct, that if the Pound denominated price was adjusted for inflation and incomes, petrol costs as a percent of household budgets has probably gone down. Pretty amazing, and certainly counter-intuitive, considering what has happened to crude oil since 1999.

Can you imagine if "retail petrol prices (had) risen significantly" in the USA at a time crude oil was falling 30%? There'd be politicians being turfed out of office all over the republic. Either that or some group in Idaho would be plotting the next Boston Tea Party.

Thanks for digging this out.

[c1ue]

Re: Now I think I understand how GDII will rhyme with the Great Depression 1929

GRG,

You're the expert in the oil field - I just wanted to point out that prior to 2003, even low oil prices did not itself contribute to cheap oil in Japan, UK, or Europe.

The reason for that is those governments have chosen to minimize car transport oil demand by maximizing taxes on gasoline.

It can be argued that this was social pandering in the vein of 'sin' taxes, but on the other hand at least some of the money was spent on public transportation - creation/maintenance of same.

Thus the lifestyles of Japanese, British, and European citizens are very little affected by oil price.

Certainly high oil prices will impact industry at some point, but I would bet that this is more due to the impact on the US and concomitant spending reduction impacting Japanese, European, and British trade rather than internal effects.