$50@bbl oil? Get ready

[Jim Warren]

the rest of the world is.

Ahuh, ahuh, like time to adjust my portfolio.

From the Asia Times:

How might this crisis unfold? Campbell makes it clear that the crisis will not look anything like the oil price shocks of the 1970s. Instead, Campbell refers to those politically motivated disruptions in supply as mere "tremors" compared with the "earthquake" that is about to hit the oil-consuming world. The first phase of the crisis, which has already arrived, will bring about price shocks. In the nearly three years since Campbell made this prediction, the world has witnessed several rounds of high oil prices. However, the onset of chronic shortages will begin around 2010, when the Middle East will be required to supply 50 percent of total worldwide oil production. More important, it is at this time that the Middle East will have reached its production midpoint and will head into decline also.

Clearly the scenario laid out by Campbell is not a pretty one. However, in every crisis lies opportunity. Astute investors should recognize the implications of declining worldwide oil production and adjust their portfolios accordingly.

http://www.democraticunderground.com/discuss/duboard.php?az=post&forum=104

[cliss]

1. Portfolio? How about a Care Package.

I will paraphrase Stan Goff's words: "when oil reaches $50.00 per barrel, our economy comes to a standstill".

Our economy is not able to support this price. Using a little simple math, I figured that $50/barrel translates to about $3.50 per gallon. This will cause the vast majority of independent truckers to shut down. It will cause every industry to dramatically raise its prices. The airlines will either stop flying or they will have to dramatically increase prices.

Now granted it's easy enough to pass on the price increases to the customer, but this is such a huge jump that the consumer will not be able to bear it.

Also, the US Navy is the biggest user of oil in the US. It will cause either an even bigger budget deficit, or they will have to raise taxes to keep up.

Either way, the Consumer who ultimately pays for everything anyway, cannot be squeezed this hard.

It's a Non-Starter, as Ari Fleischer would say.