2008 Energy Crisis

[96Qowner]

I wonder if any posters have mulled over the effects of the 2008 energy crisis.

We all remember that summer, don't we? Gas broke $5/gallon. It became apparent to everyone that we had bumped up against the worldwide production limits. I know that I, for one, started to imagine what the world would be like if there truly was not enough petroleum product to keep it all going. Everything would be affected. Real estate values would have to be recalculated, because of the increase in utility costs. The current distribution model of just-in-time warehousing would have to be scrapped because of excessive shipping costs and diesel shortages. Those same shipping costs and uncertainties would increase the cost of everything, including food. In fact, many foods like fruits and vegetables would skyrocket, because almost all of them come from other countries.

Most importantly, every business model would have to be adjusted because of rising costs, AND all future growth would have to be adjusted downward because of the limit on available fuel. No new fuel, no growth.

Then, coincidentally, in the fall of 2008, the economy crashed. Huh. Go figure.

With such a drastic reduction in business activity, energy demand fell, shortages disappeared, and prices fell back to normal.

Is it just coincidence that the economy crashed a few months after world demand reached its energy production limit?

[stebo0728]

What do you propose? Was the economy intentionally crashed as a means to this end? Is that what you are inferring? If so I dont know, I think I hear a "conspiracy theory" post coming from IB shortly.

[96Qowner]

???

Where'd you get conspiracy theory out of that?

There wasn't enough petroleum to supply the world on its growth path. That affects the value of everything. If the value of your business is based of a growth rate of 6%/yr, but you you may not be able to find enough energy supply to support that growth, or those energy prices will be higher, then you find you now can't meet your debt payments. That's just one example.

[stebo0728]

No no I didnt mean conspiracy theory as to the supply of oil, I meant consipiracy theory if there is a notion that the economy was allowed to intentionally crash in order to reduce the demand. If that was not the intended implication I apologize, I was not necessarily implying that it was, more asking.

[audtatious]

Bush did it.

[dusred]

Hate to say it but I actually benefited from the energy crisis. I picked up a $15,000 truck for $3,500 because it cost $250 to fuel the thing.

[AZ89two4Tsx]

Many factors contributed to the 2008 economy crash. This just happened to be one of them.