Culture Change was asked about the impact from the Gulf oil gusher on the price of gasoline in 6 months, 12 months and 18 months from now:
It might be an interesting question for debate, with many
possible opinions. There are too many variables to make forecasts with any
certainty, so prognosticators would have to exclude all but one or
two factors. There are these non-textbook questions: Will hurricanes
wreak havoc? Will there be migration and refugees from the Gulf?
Could a BP bankruptcy result, triggering broader corporate failures?
The dismantling of BP or the massive downsizing and selling off of its assets are possible if criminal penalties plus anticipated fines prove as
devastating for the corporation as its behavior has been for the Gulf of
Mexico.
We should anticipate that any tightening of supply in the oil
market (as opposed to supply in terms of crude reserves), for whatever reason, will
result in higher prices. This usually results from a robust and
exuberant economy (causing more oil demand), getting us to around $4
a gallon for gasoline for a time, possibly. Or, we can imagine prices
going down due to a shrinking economy. With the latest news on
unemployment, economic contraction seems more likely. If there's a
stable floor to this recession we could imagine $2 per gallon
gasoline for a time.
This all assumes that the nation continues to stupidly subsidize
low oil and gasoline prices, and that no reasonable carbon tax is
added to our artificially low oil & refined product prices. We
can assume that the government will print yet more money to throw at
(1) environmental clean up of the oil gusher, as BP will eventually
fail utterly to measure up, and (2) Gulf coast unemployment and
subsequent bankruptcies. There may be major strife there, worse than
from Katrina. Real solutions will be avoided at all costs: the gov't
and corporate media will continue to shun both car-free living and
minimizing car dependence. My mitigation proposal, for cutting back
on oil production and consumption so as to offset the Gulf pollution,
is not taking off (see The Only Answer for Counteracting the Gulf Oil Gusher).
I am not certain the Gulf oil disaster will directly affect oil
prices, in accordance with any particular time line, but we do know
this event is historic, so effects will be life-altering albeit
indirect.
Recalling our steep climb up Hubbert's peak, we witnessed oil and
gasoline prices rise with economic and population growth. When
there's a spike of skyrocketing prices due to shortage, depending
upon severity it may be either a blip or a turning point. If the
latter, this will be the final, massive shortage (due perhaps to a
disruption in the Persian Gulf) triggering full-blown petrocollapse.
What will happen is this: after a few days of people not getting to
their jobs by car, and trucks not pulling into businesses (including
supermarkets) we will see panic, confusion and total economic
collapse. Then as the consumer lifestyle evaporates, and petroleum
and its infrastructure are abandoned, the price of oil and gasoline
will become meaningless. I don't see a "recovery" or
endless supply-demand cycle coming into play after the next (and
last) major shortage. Therefore, extremely low prices will not
stimulate demand as before
The main reason for this is that the oil industry has never shrunk
in an orderly fashion, or otherwise, nor can it easily become a small
version of itself or cater to a rapidly vanishing market. Population
drop-off from lack of petroleum-grown/delivered/preserved/cooked food
will ensure no return to "growth" or major consumption of oil again. A
new culture based on subsistence and cooperation will take hold in
the most industrialized countries, especially the hyper-petrolized
U.S. Older, traditional cultures won't see much change. They are
there now for us, as I recently discovered in Bolivia. There, less
than a fifth of the population is dependent on petroleum and
significant levels of imported stuffs. Bolivians, though low-income,
enjoy more intimacy and free time.
My overall answer to the question of the Gulf gusher's impact on
oil and gasoline prices is: when we're thinking about oil prices or
the economy, we have to look at the big picture and anticipate major,
sudden change. The U.S. is ready for only expansionist growth, and
that has become untenable now that peak oil has likely hit.
* * * * *
This report was done in answer to a query on June 4, 2010.from Steve Schmitt, Car Free CAT Director, Coalition for Appropriate
Transportation, in Bethlehem, Pennsylvania.
Contact: Office phone: 1-610-954-5744 www.car-free.org
Background reports:
Our Post-Peak Oil Future, from Bay Localize, Oakland, California, featuring petrocollapse scenario versus staircase collapse idea.
"The oil spill is a shameful outrage! Oh, and fill 'er up!" - Joe Consumer
Note: the above report was revised on June 6 after being circulated on June 4 and posted on Culture Change on June 5 at 3:50 PM Eastern Standard Time - U.S.
Culture Change mailing address: P.O. Box 3387, Santa Cruz, California, 95063, USA, Telephone 1-215-243-3144 (and fax). Culture Change was founded by Sustainable Energy Institute (formerly Fossil Fuels Policy Action), a nonprofit organization.
Some articles are published under Title 17 U.S.C. Section 107. See Fair Use Notice for more information.
