Did high gas prices trigger a global recession?

Wild Bill · November 18, 2008

I hate to be a conspiracy nut but this idea has been bubbling under my tinfoil hat for some weeks now. Only a couple of months ago I remember wondering how our economy could stand having gas prices jump so high so quickly. Not that long later the world goes into a financial crisis. Gas prices immediately drop like a rock, almost as if some Illuminati financial troll had muttered "OOPS! Guess we pushed things a bit too far! Hopefully, if we make gasoline cheap again the economy will re-start ok."

I know better than most that you shouldn't confuse cause with effect and that you can't plot a curve with only one data point but still, the timing seems SO suspicious!

Then I thought, "Gee, if anybody could answer this question they would hang out on MapleLeafWeb!"

So here's my post. Hopefully somebody can give me some "edification".

Wilber · November 18, 2008

Combined with the sub prime fiasco, I don't think there is any doubt about it.

Topaz · November 19, 2008

I think he helped push the Big 3 automakers into the this position they have found themselves in. What the Detroit news is reporting that the Mayors of the cities where the automakers are located throughout the US are also going to DC to relay to them if they don't help the auto sector then they better help the communities that are going to be come "ghost towns" when the automakers leave. Some of the government in the US are telling the Big 3 they put themselves there and they should get themselves out but as the same time didn't Wall Street them its self there also, and what part did government create this mess themselves for both, the Big 3 and Wall Street with their laws and rules??

Oleg Bach · November 19, 2008

Now gas prices are dropping because the oil merchants figured out that the billions they gouged and stored were becoming like a stagnant stinking lake of uselessness - so now after milking us cows to the point of collapse they are feeding us again - what a bunch of jerks - gas prices are down because the oil merchants figured out there is no point in being rich if you have no place to spend the lucre...and with recession and depression looming they are panicing...people are the service and the money - what use is a depressed and dysfunctional world of humans - they make terrible slaves. :blink:

eyeball · November 19, 2008

I hate to be a conspiracy nut but this idea has been bubbling under my tinfoil hat for some weeks now. Only a couple of months ago I remember wondering how our economy could stand having gas prices jump so high so quickly. Not that long later the world goes into a financial crisis. Gas prices immediately drop like a rock, almost as if some Illuminati financial troll had muttered "OOPS! Guess we pushed things a bit too far! Hopefully, if we make gasoline cheap again the economy will re-start ok."
I know better than most that you shouldn't confuse cause with effect and that you can't plot a curve with only one data point but still, the timing seems SO suspicious!

Then I thought, "Gee, if anybody could answer this question they would hang out on MapleLeafWeb!"

So here's my post. Hopefully somebody can give me some "edification".

Remember when people were edifiying how high oil prices were good for us? I'm just afraid when the cheap gas trick doesn't work the gnomes will try to crank the economy over the old fashioned way, with a war.

Oleg Bach · November 19, 2008

Remember when people were edifiying how high oil prices were good for us? I'm just afraid when the cheap gas trick doesn't work the gnomes will try to crank the economy over the old fashioned way, with a war.

Looking in an old history book way back from 1984 - I noticed that the price of a barrel of oil was almost in comparision to the new dropped price - You are damned right that the recession was caused by oil merchants taking one last stab at the population and accumulating a abhorant amount of money...now that they have enough to maintain intergenerational wealth for the next 200 years they have given us poor trolls a break - how nice of them.

blueblood · November 20, 2008

Looking in an old history book way back from 1984 - I noticed that the price of a barrel of oil was almost in comparision to the new dropped price - You are damned right that the recession was caused by oil merchants taking one last stab at the population and accumulating a abhorant amount of money...now that they have enough to maintain intergenerational wealth for the next 200 years they have given us poor trolls a break - how nice of them.

Except your oil merchants spend their wealth paying shareholders and looking for and processing more oil. Quit taking all the tinfoil, your causing the aluminum merchants to gouge the poor people and are affecting machinery prices.

eyeball · November 20, 2008

Except your oil merchants spend their wealth paying shareholders and looking for and processing more oil. Quit taking all the tinfoil, your causing the aluminum merchants to gouge the poor people and are affecting machinery prices.

So what about the times like now, when oil merchants get together and limit production to force prices higher ao they can gouge us? Tin foil by the way does not contain aluminum but ironically enough bull feces does.

Oleg Bach · November 20, 2008

So what about the times like now, when oil merchants get together and limit production to force prices higher ao they can gouge us? Tin foil by the way does not contain aluminum but ironically enough bull feces does.

I am glad that the last of the aristocrats (best to rule) are finally calling these guys what they are MERCHANTS...The are not noble in the least -noble (generous) A noble mind generates ideas and wealth...merchants just accumulate money and power generated by fiat currency - and once they own the planet don't have one damned creative clue on what to do with the power.

Wilber · November 20, 2008

So what about the times like now, when oil merchants get together and limit production to force prices higher ao they can gouge us? Tin foil by the way does not contain aluminum but ironically enough bull feces does.

Lack of demand and low prices will limit production and exploration, resulting in an even greater spike when demand recovers because no one will find it worthwhile to invest in finding more oil while prices are low. Buy your energy stocks soon, when the economy recovers you will make a killing.

Oleg Bach · November 20, 2008

Lack of demand and low prices will limit production and exploration, resulting in an even greater spike when demand recovers because no one will find it worthwhile to invest in finding more oil while prices are low. Buy your energy stocks soon, when the economy recovers you will make a killing.

Lack of demand is a direct result of gouging. So sad that we are victims of lunitics that can not control their greed. People refuse to deem greed as a mental illness. In fact the corporate world internationally has propogated the myth that greed is good. It is evident that they were incorrect. Even if you make a "killing" when the economy "recovers" all you will be really doing is healing a self inflicted wound - and will not learn from your mistakes. So it becomes a cyclical hell that one gets caught in. Stab yourself in the face - heal - stab your self in the face...and so forth - sure sounds like crazed behaviour if you ask me.

blueblood · November 21, 2008

So what about the times like now, when oil merchants get together and limit production to force prices higher ao they can gouge us? Tin foil by the way does not contain aluminum but ironically enough bull feces does.

Do you have any idea how much it costs to produce oil and go looking for it and to develop new technologies, plus to pay back the investors who are bankrolling these ventures? No profit means no production, those oil companies have to be profitable.

August1991 · November 21, 2008

I hate to be a conspiracy nut but this idea has been bubbling under my tinfoil hat for some weeks now. Only a couple of months ago I remember wondering how our economy could stand having gas prices jump so high so quickly. Not that long later the world goes into a financial crisis. Gas prices immediately drop like a rock, almost as if some Illuminati financial troll had muttered "OOPS! Guess we pushed things a bit too far! Hopefully, if we make gasoline cheap again the economy will re-start ok."

World crude oil prices peaked at about $147/barrel in July 2008. Well, a barrel of crude was about $10 in December 1998.

Prices go up and down.

Unless OPEC is organizing a cartel (as it did in 1973 and 1979), I would say that crude oil is not a leading indicator of economic conditions. IOW, the fall in the price of oil is a consequence (not a cause) of the apparently impending world recession/depression.

----

Your idea of conspiracy is not entirely misplaced however. Many pro-Obama US journalists had an interest in claiming that the US economy/society/government, after 8 years of (Republican) Bush, was on the edge of collapse (if it had not already fallen into the abyss).

I doubt however that US journalists can change prices or even opinions in such a way. As Abraham Lincoln famously said, "You can fool all of the people some of the time, some of the people all of the time but you cannot fool all of the people all of the time."

There is something called the truth, or reality. Reality is not a "social construct". We (and even markets) can stray away from reality for awhile but reality (i.e. gravity) has a way of imposing its truth. If you are a Christian (I am not), you can take heed by these words.

Edited November 21, 2008 by August1991

Wild Bill · November 21, 2008

World crude oil prices peaked at about $147/barrel in July 2008. Well, a barrel of crude was about $10 in December 1998.
Prices go up and down.

Unless OPEC is organizing a cartel (as it did in 1973 and 1979), I would say that crude oil is not a leading indicator of economic conditions. IOW, the fall in the price of oil is a consequence (not a cause) of the apparently impending world recession/depression.

----

Your idea of conspiracy is not entirely misplaced however. Many pro-Obama US journalists had an interest in claiming that the US economy/society/government, after 8 years of (Republican) Bush, was on the edge of collapse (if it had not already fallen into the abyss).

I doubt however that US journalists can change prices or even opinions in such a way. As Abraham Lincoln famously said, "You can fool all of the people some of the time, some of the people all of the time but you cannot fool all of the people all of the time."

There is something called the truth, or reality. Reality is not a "social construct". We (and even markets) can stray away from reality for awhile but reality (i.e. gravity) has a way of imposing its truth. If you are a Christian (I am not), you can take heed by these words.

Well, I too always tend to take an 'objectivist' view. A is A, after all. Still, I think it would be wrong to deny that some individuals and groups in high places do have a lot of power. They may have their own agenda or they could simply be inept, as with George Bush once he had occupied Iraq or Pierre Trudeau with our economy.

Or Bill Clinton's use of cigars! :lol:

Still, discussion is always worthwhile. It may not prove the original premise but often it will reveal other interesting ideas.

Like with your Lincoln quote. It reminded me of a 'quote' from the 70's we hippies were particularly fond of - "You can fool all of the people some of the time, and that's enough!" - Richard M. Nixon

Edited November 21, 2008 by Wild Bill

eyeball · November 21, 2008

Do you have any idea how much it costs to produce oil and go looking for it and to develop new technologies, plus to pay back the investors who are bankrolling these ventures? No profit means no production, those oil companies have to be profitable.

No innovation means no profits. So where is all the innovation from the profits made on barrels of oil that sold for $150?

You do realize we've probably blown the last chance we'll get to generate the kind of profits the oil companies needed to innovate? The next big oil crisis will likely be the realization that peak oil is here. By then it will be to late to innovate as the margins just keep getting slimmer.

I think that's the real cause of the economic meltdown, the human reach for yield has pretty much over-reached the ability of the planet to produce the sorts of margins people have become accustomed to. To fill the need to feed the invention of financial thing-a-ma-jigs that are just not based in any kind of reality represent an act of desperation.

I wonder if cancer cells experience any moments of fear or angst once they realize their host is breaking down? I recall watching fleas jumping ship so to speak when my dog was put down. Unfortunately we won't have that luxury.

Edited November 21, 2008 by eyeball

Oleg Bach · November 21, 2008

That's how cemo therapy works - it posions the whole body bringing you close to death - the cancer cells get fooled and jump ship. That was a very interesting concept you put forward - I have thought of it myself regarding a seemingly dying host. Now - oil - Imagine - drilling down though all sorts of blockage - kilometers under the ocean for instance and then sucking up a barrel of crude (and if you know what a barrel is, its a big container) This feat of determined engineering is severly under rated. It's not off side to say that a barrel of what is in fact rare because of it's inaccessablity - to sell for 300 dollars a barrel...a fifty dollar barrel of oil is like selling a Van Gough painting for cigarette money.

Wild Bill · November 21, 2008

No innovation means no profits. So where is all the innovation from the profits made on barrels of oil that sold for $150?
You do realize we've probably blown the last chance we'll get to generate the kind of profits the oil companies needed to innovate? The next big oil crisis will likely be the realization that peak oil is here. By then it will be to late to innovate as the margins just keep getting slimmer.

I think that's the real cause of the economic meltdown, the human reach for yield has pretty much over-reached the ability of the planet to produce the sorts of margins people have become accustomed to. To fill the need to feed the invention of financial thing-a-ma-jigs that are just not based in any kind of reality represent an act of desperation.

I wonder if cancer cells experience any moments of fear or angst once they realize their host is breaking down? I recall watching fleas jumping ship so to speak when my dog was put down. Unfortunately we won't have that luxury.

This all sounds a bit glib, to me. First off, sure profits are need for innovation. That's an obvious answer to an obvious question. How about asking how much of those profits are actually spent on innovation? Do we know if the oil companies have been making over $100/bbl profit and investing only $1/bbl on innovation? Maybe I've given an exaggerated figure but wouldn't the real figure be pertinent?

And as for speculation about having blown our last chance before peak oil arrives, shouldn't one first be expected to prove the idea of peak oil first? Otherwise everything is moot.

I think you've simply chosen to believe that "greedy, evil mankind" has hurt the planet and now Gaia is going to hurt him back. You're entitled to your belief but some of us need something more scientific to be persuaded to your viewpoint.

Oleg Bach · November 21, 2008

Innovations sounds like a nice and proper word. You have to remember that the toying with the gas eaters who are us - has been going on for years. Trillions upon Trillions have been generated by the Pavlovian conditioning oil guys. Price up - Price down - Price up - Price down - This kind of kiss you smack you stuff literally vacilated the human mind to mush - like banging around jello in a sphere....the publics will to live was liquified. This was planned phyicological war fare. Finally depression set into the driving public - and with emotional depression came - loss of productivity....The use of oil which is an addictive substance did cause the recession- You can not keep giving a herione addict a dose then taking it away the next day - let him go cold turkey for a while then jack him up again - eventually you will have a useless crazy man on your hands - who becomes disabled and can not work....I hope the oil guys are happy beating the crap out of us - real heros! :blink:

eyeball · November 21, 2008

I think you've simply chosen to believe that "greedy, evil mankind" has hurt the planet and now Gaia is going to hurt him back. You're entitled to your belief but some of us need something more scientific to be persuaded to your viewpoint.

Gaia? :lol: That certainly wouldn't be very scientific would it?

Peak oil, peak beachfront property peak bush meat...it all comes down to depletion and the curve looks the same in each and every case. Put it this way, if natural capital grew at the rates that people expect finacial capital to grow, aquifers would fill faster than we can pump them, more fish would return to rivers than were caught and trees would grow faster than you could cut them down. The fact is they just don't which explains why we've been reduced to believing we can fabricate wealth out of thin air, or paper as the case may be. Now that illusion has been burst and a crisis has set in.

So how scientific is it to believe that a human economy can grow any faster than the natural ecosystems that support it?

M.Dancer · November 21, 2008

So how scientific is it to believe that a human economy can grow any faster than the natural ecosystems that support it?

If the natural eco-sytems aren't up to the job they can be replaced. Afterall ever since we;ve been sowing the fields with cattle poo and minerals we;ve been modifying the eco system....no ned to stop now.

eyeball · November 21, 2008

If the natural eco-sytems aren't up to the job they can be replaced. Afterall ever since we;ve been sowing the fields with cattle poo and minerals we;ve been modifying the eco system....no ned to stop now.

If what you say is true the gnomes should be able to pump liquidity until the cows decide to come home.

blueblood · November 21, 2008

No innovation means no profits. So where is all the innovation from the profits made on barrels of oil that sold for $150?
You do realize we've probably blown the last chance we'll get to generate the kind of profits the oil companies needed to innovate? The next big oil crisis will likely be the realization that peak oil is here. By then it will be to late to innovate as the margins just keep getting slimmer.

I think that's the real cause of the economic meltdown, the human reach for yield has pretty much over-reached the ability of the planet to produce the sorts of margins people have become accustomed to. To fill the need to feed the invention of financial thing-a-ma-jigs that are just not based in any kind of reality represent an act of desperation.

I wonder if cancer cells experience any moments of fear or angst once they realize their host is breaking down? I recall watching fleas jumping ship so to speak when my dog was put down. Unfortunately we won't have that luxury.

Innovation? Have you not heard of horizontal drilling and offshore oil platforms? That sounds pretty innovative to me. That's where a lot of their profits go is coming up with new ways to explore and drill as well.

Other innovation includes biofuels, and all the small business's that benefit from the oil patch. Lots of innovation, time to leave Ontario. Don't worry in a couple of years things will be back to normal and the energy industry will be back to figuring out ways to satisfy energy needs for the growing world.

eyeball · November 21, 2008

Innovation? Have you not heard of horizontal drilling and offshore oil platforms? That sounds pretty innovative to me. That's where a lot of their profits go is coming up with new ways to explore and drill as well.

Can you provide a source that shows how the profits from last summer went into innovation? There must have something to show for all that profit.

Other innovation includes biofuels, and all the small business's that benefit from the oil patch. Lots of innovation, time to leave Ontario. Don't worry in a couple of years things will be back to normal and the energy industry will be back to figuring out ways to satisfy energy needs for the growing world.

If economic growth from innovation is so certain why can't the gnomes pump liquidity until the innovators come home?

Presumably they'll be riding on the backs of cows sowing poo when they do.

blueblood · November 21, 2008

Can you provide a source that shows how the profits from last summer went into innovation? There must have something to show for all that profit.
If economic growth from innovation is so certain why can't the gnomes pump liquidity until the innovators come home?

Presumably they'll be riding on the backs of cows sowing poo when they do.

shell

Can you provide a source that shows the energy companies don't participate in innovation.

They do have something, the Alberta oilsands were until now been heavily invested into, shareholders got richer which means better for retirement earnings.

The gnomes can't pump liquidity because the Americans took your stupid socialist advice and forced banks to loan money to people who can't pay their bills instead of big companies and people that can pay their bills. The banks ran out of money and voila the crisis.

msj · November 22, 2008

shell
The gnomes can't pump liquidity because the Americans took your stupid socialist advice and forced banks to loan money to people who can't pay their bills instead of big companies and people that can pay their bills. The banks ran out of money and voila the crisis.

Ah, yes, this myth of the big bad government forcing the private sector to loan money to people who can't pay it back through the CRA and GSE's (for those who don't know what these abbreviations stand for - well, read the links below).

Stop spreading this nonsense:

It Wasn't Fannie and Freddie

CRA and Fannie and Freddie as betes noire

Private sector loans, not Fannie or Freddie, triggered crisis

Oh, and those hypocrites who like to only blame Clinton for this:

President Bush and Home Ownership

-------------------------------------------------

Fannie, Freddie, Clinton, Bush - none of them forced people to lie about their income to get a loan.

None of them forced banks to accept no doc loans.

None of them forced banks to turn a blind eye to appraisal fraud.

None of them forced banks to have ridiculous incentives for mortgage brokers to get more deals.

None of them forced rating agencies to give AAA ratings to bundled loans that were not even close to AAA.

None of them forced investors to stupidly believe that these AAA rated "investments" were sound.

The list is endless.

The government did not force banks or people to do this.

Yes, they did/do allow it to happen with lax regulation which allowed the market to practice such shoddy practices in the first place and through easy money to make it all seem like it would last forever.

Sure, the government/Fed provided the long piece of rope; but, it was the free market that chose to hang themselves with it.