{"id":12014,"date":"2015-09-09T06:56:57","date_gmt":"2015-09-09T11:56:57","guid":{"rendered":"http:\/\/olduvai.ca\/?p=12014"},"modified":"2015-09-09T06:56:57","modified_gmt":"2015-09-09T11:56:57","slug":"the-decline-of-oil-head-fake-or-new-normal","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=12014","title":{"rendered":"The Decline of Oil: Head-Fake or New Normal?"},"content":{"rendered":"

The Decline of Oil: Head-Fake or New Normal?<\/b><\/a><\/span><\/h3>\n

<\/i>When production does finally collapse, that will set up the “nobody saw this coming” ramp in the price of oil.<\/i><\/p>\n

In May 2008 I proposed the Oil “Head-Fake” Scenario<\/b>\u00a0in which global recession pushes oil demand down as oil exporters pump their maximum production in a futile attempt to fund their vast welfare states and thus retain their precarious political power.<\/p>\n

Oil: One Last Head-Fake?<\/a>\u00a0(May 9, 2008)<\/p>\n

 <\/p>\n

The terrible irony of the head-fake, of course, is that the exporters’ efforts to pump more oil exacerbates the oversupply, further depressing prices.<\/b>\u00a0As exporters receive fewer dollars for their production, they attempt to compensate by pumping even more oil. Perniciously, this suppresses prices even more, setting up a positive feedback loop which pushes prices to the point that exporters are no longer able to fund their welfare states and Elites.<\/p>\n

Something has to give, and thatsomething<\/i>\u00a0is the existing power structure in oil exporting nations.<\/b><\/p>\n

Another factor deepens the eventual crisis triggered by drastically lower oil revenues.<\/b>\u00a0The majority of exporting nations under-invest in their oil production and exploration infrastructures, essentially guaranteeing declining production once the easy oil has been extracted.<\/p>\n

This cycle of spending the fruits of current production while starving investment for the future is part of what is known as the\u00a0resource curse:<\/i>\u00a0nations with an abundance of resources rely on the income generated by the sale of their resources which effectively stunts the development of a diverse economy and the institutions which such a diverse economy requires as a foundation.<\/p>\n

The net result of the resource curse is national impoverishment as the resources are depleted.<\/b>\u00a0Diverting the majority of the oil revenues to support welfare states and Elites dooms the oil exporters to under-investment in future production.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

The Decline of Oil: Head-Fake or New Normal? When production does finally collapse, that will set up the “nobody saw this coming” ramp in the price of oil. In May 2008 I proposed the Oil “Head-Fake” Scenario\u00a0in which global recession pushes oil demand down as oil exporters pump their maximum production in a futile attempt […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,3],"tags":[127,4924,588,3044,8824,1775,595,596],"class_list":["post-12014","post","type-post","status-publish","format-standard","hentry","category-economics","category-energy-2","tag-charles-hugh-smith","tag-oftwominds","tag-oil","tag-oil-glut","tag-oil-head-fake","tag-oil-price-collapse","tag-oil-production","tag-oil-supply"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12014","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=12014"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12014\/revisions"}],"predecessor-version":[{"id":12015,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12014\/revisions\/12015"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=12014"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=12014"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=12014"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}