The G-20 has so many elephants in the room the summit should be held at the Seoul zoo. Perhaps the biggest is what’s behind the continued rise of oil prices, particularly for future delivery beyond this year. It could have many causes: Rising demand in China and India, and speculation among them.
But what has received barely any coverage in the mainstream media is a report by the International Energy Agency conceding that conventional oil production peaked worldwide in 2006. The IEA is the most sober and conservative outfit, so this analysis should put to rest any doubters except the industry cheerleaders over at Cambridge Energy Research Associates.
As happened when the U.S. hit peak around 1973, the precise point can only be seen in the rearview mirror. This doesn’t mean “the world is running out of oil.” It means we’ve used half of this one-time gift of geology and the remainder will be more difficult to find and refine, hence more expensive. (And, no, space aliens or Google aren’t going to give you a magical hydrogen car). Prepare for more instability as nations jockey for energy sources. And defunding high-speed rail, Amtrak and transit? Smart move, America.
Interesting data and commentary from the week:
- The numbers of people unemployed for a year or longer has risen sharply, according to the Bureau of Labor Statistics. In the second quarter, some 46 percent of the 14.6 million unemployed persons were jobless for 27 weeks or longer. But 31 percent were unemployed for 52 weeks or longer.
- Beware of any bank reform based on Basil III trumpeted by the G-20, writes MIT economist Simon Johnson on his Baseline Scenario blog. “So here are the deepest thinkers — founders and mainstays of the entire field of finance — finally standing up and saying: Enough of this nonsense. You may wish to pretend that keeping capital requirements low is a good idea, but you should understand that this is pretense and bad science, pure and simple.”
- Bill Gates in Rolling Stone on China’s lead in renewable energy: “In order for the United States to do the right things for the long term, it appears to be helpful for us to have the prospect of humiliation. Sputnik helped us fund good science — really good science, the semiconductor came out of it. And in the 1980s, we were driven by state-sanctioned racism — the idea that Japan was going to take over everything. But look at consumer electronics today — it’s Xbox, iPhone. Sometimes you overestimate your rival, and that can actually help.”
- Moody’s Analytics lists 63 metro areas nationally still in recession, including Tacoma and Mount Vernon-Anacortes. Olympia is listed as “at risk” of slipping back into one. Seattle-Bellevue-Everett is recovering. In Oregon, Portland is recovering but four out of six metros are in recession.
- Former Labor Secretary Robert Reich digs into budget-deficit mania, finding big holes in the Bowles-Simpson Commission recommendations. “Our biggest problem isn’t the size of pending federal budget deficits or debt but an anemic recovery that may drag on for years. And unless we’re careful, budget-deficit mania may further slow economic growth – thereby making future debts even less manageable.”
- If you missed it, here’s an interesting piece from Slate on Boeing’s pivotal role in American trade. “Part of Boeing’s strategy for growing its export business is to be a cheerleader for American exports in general and small-business exports in particular.”
Today’s Econ Haiku:
Gee, twenty, delay
Work on world imbalances
Hope the food was good