Gail the Actuary has another short overview of peak oil at The Oil Drum today. Great stuff as always from her. The summary section has the good stuff, and I agree with her assessment that the global peak in oil production helped trigger the financial crisis we’re in currently and that low oil prices reflect a temporary glut in supply due to demand destruction, not a permanent state of cornucopian bliss due to magical new supplies of light sweet crude making it to the market.
For all of the hacks (both political and ‘journalistic’) that are calling bottoms to the equity and housing markets, all I can say is bullshit. Banks are keeping large numbers of foreclosed homes off the market to avoid further scuppering house pricing. Likewise, the largest banks are being intentionally opaque with regards to their balance sheets to avoid having to show what levels of toxic crap they’re still holding on to. It is impossible to truly call a bottom until all of these assets are ‘marked to market‘ and cleared off the books. That is unlikely to happen willingly anytime soon, so we’ll continue to bumble along in what looks to be a prolonged, jobless ‘recovery.’
Our entire economic and monetary models are based on perpetual growth, therefore we cannot have economic growth without energy supply growth. Without a real economic recovery starting, we’re stuck in a holding pattern at best. For those people that can hold on to their jobs, there will be deals to be had in the retail sector as the pool of willing shoppers contracts. Like everything else happening right now this will be a temporary phenomena. Eventually we’ll hit some tipping point where we’ll be forced to adapt to the new market conditions. Whether this will be an immediate result of decreasing oil production or some other trigger remains to be seen.