Yakkity-Yak

[peebeebaynut]

http://solarbird.livejournal.com/885364.html?thread=4809076#t4809076

Aside from wondering what she's going to say I did enjoy looking back at the GS superspike report from March 2008...New 'super-spike' might mean $200 a barrel oil - Goldman's projections foretell

Comments

[theheretic]

Goldman lies more than the Saudis, as history shows us. You can make reasonable money betting against them. I don't disagree that oil prices are going up, but I think we'll see a plateauing effect with a long pause at each level as people in the economy adjust to this more permanent rise. My take on things is the price will rise and mostly stay high this time. Its not shock and awe like 2008. Its "What the market will bear". I don't think it will come down without a viable alternative to replace it, something cheaper and scalable, and we don't have that. Thus Goldman's claims about the price dropping are completely unsupported. So are their claims about the rise, unless they think people will believe them AGAIN, when they lied so much last time. People are stupid, I'll grant you that, but are they still rich enough to matter when they got taken so badly last time?

I think the new spike will be around $10/month-or-6-weeks, with most of the gain in a week or two and the rest of the time after that fluctuating down and back up again as the economy settles and accepts this new price. I think the most the economy can handle is $100/bbl, and that will cause major layoffs, end of all new car sales in the USA (particularly non-essential heavy vehicles like SUVs). I think this time around people will go for carpooling right off the bat, like when it passes $85/bbl, so starting in a couple weeks, probably. I happen to think we'll stay wobbling around $80/bbl for a few weeks first, but we'll see. If the Chinese market can bear this more expensive gasoline faster than we can then the price will rise. Otherwise it needs time to adjust.

I also think that for every dollar of price rise in oil, that's another 0.1% rise in unemployment, roughly speaking. It goes to higher expenses and shrinking profit margins, and cutting off the affordability of a commute for a certain percentage of employees. They will find jobs closer to home but the business they were specialized in will lose them and that will hurt their production. That's what happened last time. These long commutes have to pay for themselves and be profitable or the specialist doing them will quit. Businesses have NOT yet reached the point where they realize losing their specialists has hurt them, nor have they realized they must be proactive about this so they let them go, and then see bankruptcy for themselves follow. Excellence is about employees, not managers who ignore reality. The higher the price of fuel, the more excellent employees will quit due to the commute costing too much, and managers pushing back on options to keep them around (like raises or hotel vouchers). I call this financial inertia. Managers, like generals, are always fighting the last war, not the one they're in now. That's why they lose. Managers lose employees, they lose money, they ignore proactive measures because they aren't creative or perceptive enough to see the future or understand what they must do to take advantage or survive that change.

I think 2010 will be the start of the new National Fuel Rationing Plan. Obama will probably call it something cuter, swapping Conservation for Rationing. Be prepared to be forced into carpooling because your ration isn't enough fuel to get you there solo every day of the week. That's where this is going. The upside is it will get the SUV's full of passengers or off the road. The downside is it will directly impoverish the rural poor and destroy the rural middle class FIRST.