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15 months ago, I wrote a diary about Energy Economist Jeff Rubin's prediction that within 15-18 months, we would see $100+/bbl oil prices.  

A large percentage of responses to that diary was complete scoffing at the notion that it was possible.  

Now, Rubin's prediction has come to pass and within the time frame he predicted.  This makes him a consistent and credible economist and it is time to really listen to what he has to say.  We should take to heart his dire warnings about what life will be like for us in the future.  We can choose to wither away or we can make a positive future for ourselves without the dependence on oil.  

Below the fold, I'll re-embed the video that I referenced in my year old diary because it is as relevant today as it was then.  

To Recap his predictions:

1. Oil will cost over $100-200/barrel in the next 10-15 months because of demand by OPEC countries PREDICTION COMPLETE
2. We have plenty of oil in many places, but the cost of extraction is very high e.g. oil shale, undersea etc.
3. $200/bbl oil means $7/gal gas
4. This means Distance costs money disrupting the global trading economy of the past 30 years.
5. The title of his book is: Why Your World Is About to Get a Whole Lot Smaller: Oil and the End of Globalization

6. He theorizes that we will see a return of industry to our shores by market forces.  

It also means "DRILL BABY DRILL!!" ain't gonna work.  

Poll

Will high oil prices trigger another recession?

95%21 votes
4%1 votes
0%0 votes
0%0 votes

| 22 votes | Vote | Results

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Comment Preferences

  •  Tip Jar (1+ / 0-)
    Recommended by:
    monkeybrainpolitics

    --Mr. President, you have to earn my vote every day. Not take it for granted. --

    by chipoliwog on Fri Mar 11, 2011 at 02:44:54 PM PST

  •  The title of the book should be "Why the world (2+ / 0-)
    Recommended by:
    wu ming, wilderness voice

    is going to get much larger". Cheap oil folds time and space ala the "Spice" in Dune. Remove the Spice and distances are more formidable, travel time longer.

    “Do what you can, with what you have, where you are.”, Theodore Roosevelt

    by the fan man on Fri Mar 11, 2011 at 02:51:03 PM PST

  •  Poll is out of it, as is your conclusion. (0+ / 0-)

    The average tarot deck reader is right more than once, hence they must all be excellent economists by your standards.

    Let's look at what he predicts - $100 to $200 = real specific, not!

    Then $200/bbl oil means $7/gal gas = error, loses all economist cred because he obviously hasn't bothered to learn how the petroleum industry works.  Read THIS

    That, in its essence, is fascism--ownership of government by an individual, by a group, or by any other controlling private power. -- Franklin D. Roosevelt --

    by enhydra lutris on Fri Mar 11, 2011 at 03:39:08 PM PST

    •  So, he's been right multiple times... (0+ / 0-)

      And you call him a tarot reader.  That statement tells me more about you than what I already know about him.

      It is probably true that speculators and manipulators abound in the oil market, but the pricing mechanism has been consistent and by the behavior of that mechanism the correlation between price per bbl and the price at the pump will remain consistent.  $104/bbl WTI is translating to $3.50+ at the pump.

      The article you link to referred to oil prices at $42/bbl.  When I wrote the article a year ago, people claimed it couldn't happen again and look here we are!  

      The key is that we need to acknowledge this fact and actually make choices about our future instead of leaving it to the whims of the oil industry.

      --Mr. President, you have to earn my vote every day. Not take it for granted. --

      by chipoliwog on Fri Mar 11, 2011 at 04:29:17 PM PST

      [ Parent ]

      •  You don't read very well, do you. I never said he (0+ / 0-)

        was a tarot reader, and in the diary I linked to it is perfectly clear that the $42/bbl is an example, a hypothetical.

        the correlation between price per bbl and the price at the pump will remain consistent.

        consistently variable.

        Do you know what the cost component per gal of $200 WTI is for a pure refiner?

        That, in its essence, is fascism--ownership of government by an individual, by a group, or by any other controlling private power. -- Franklin D. Roosevelt --

        by enhydra lutris on Fri Mar 11, 2011 at 04:57:26 PM PST

        [ Parent ]

    •  Actually His Prediction Was Wrong... (1+ / 0-)
      Recommended by:
      enhydra lutris
      1. Oil will cost over $100-200/barrel in the next 10-15 months because of demand by OPEC countries

      "because of demand by OPEC countries" is NOT the reason.  The reason is speculation due to turmoil in and near major oil producing countries.

      •  Yeah, I decided to let that go rather than (0+ / 0-)

        argue about it.

        That, in its essence, is fascism--ownership of government by an individual, by a group, or by any other controlling private power. -- Franklin D. Roosevelt --

        by enhydra lutris on Fri Mar 11, 2011 at 09:31:44 PM PST

        [ Parent ]

      •  if you follow the oil drum at all (1+ / 0-)
        Recommended by:
        chipoliwog

        they have tons of graphs showing that, in fact, many oil producing countries tend to consume a growing % of their oil as oil export income filters back into the local economy and translate into more economic demand. thus, less oil available for export.

        flat oil production + increased demand = price spikes. throwing revolutions and speculation on top of that makes it worse, but they're not what's driving the fundamentals. the reason the price came down in 2009 was because global demand plummeted down to where flat global supply was adequate.

  •  Mr. Rubin doesn't impress me... (0+ / 0-)

    I predicted in August 2005 that oil would cost $61.05 on December 31, 2005. It was actually $61.02. A lot of folks at the same time predicted in the neighborhood of $98 or $99.

    At a time (last January) when oil was going for $78 a barrel, Rubin predicted it would fall within a $100 range 15-18 months down the road? That is one helluva big bullseye.

    But, while giving him credit for coming in under the wire (with four months to spare), why talk about $200 a barrel now? We are nowhere near that. His next prediction is that oil will hit $225 a barrel in 2012.

    Want to make a wager on that? I will bet oil does not exceed $150 a barrel at any time during 2011 or 2012.

    Don't tell me what you believe. Tell me what you do and I'll tell you what you believe.

    by Meteor Blades on Fri Mar 11, 2011 at 05:17:49 PM PST

    •  somethings to consider... (0+ / 0-)

      As I see it, the primary claim that Rubin has been making was that oil would hit "triple digit" pricing within 15-18 months.  This was at a time after the last price spikes and oil had declined to sub $60/bbl prices. He also said, a pattern of price spikes would be the more likely pattern. e.g. we hit mid $100/bbl and it goes down only to rise again and it would repeat until something changes the equation such as getting off oil as a primary means of energy in countries such as the United States.

      In his book, he also indicates what the economic consequences for our economy that these prices entail and that includes making it uneconomical for our system of trade arbitrage to continue.  That is very profound because our entire system of trade in the past 40 years is based on this.  It will also make conditions such as commuting from far flung suburbs un-affordable.

      I'm sorry Mr. Blades, but this only makes sense to me. For those who want the status quo to prevail, they would want this phenomena to not be true.  But the conditions and consequences that Rubin describes did occur for a time in 2008 and as I can see it will likely happen again as these price spikes return.

      Countries like Brazil, who have strategically moved their energy supply to biofuels have reaped the reward of being off the dependence of imported oil.  They save all of that foreign exchange and they can invest that in themselves.

      Like it or not, our world Is going to get smaller. Let's make the best of it.

      --Mr. President, you have to earn my vote every day. Not take it for granted. --

      by chipoliwog on Sun Mar 13, 2011 at 10:50:46 PM PDT

      [ Parent ]

  •  Thanks for this (1+ / 0-)
    Recommended by:
    chipoliwog

    very interesting presentation.  I think he's right, but it will be toward 2015 before this really starts to bite.  The cost of keeping the increasing population of the Middle East and N Africa happy is clearly going up, and that will lower the amount of oil available for export, exactly as Rubin projected.  This is one big reason why China is pouring money into alternative energy and nuclear energy, and electric cars.  They see this coming.  Americans refuse to think about it.  And they will be VERY unhappy when it hits.

    America needs a UNION NEWS channel. We (unions) have the money, we have the talent. Don't buy 30 second time slots on corporate media, union leaders; fund your own cable news channel and tell the real story 24/7/365

    by monkeybrainpolitics on Fri Mar 11, 2011 at 05:47:46 PM PST

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