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Friday, January 28, 2011

HAS DOOMSDAY BEGUN?

When Peak Oil finally happens, you will know about it months, if not years, after the true peak.  As the Second Energy Crisis led to the almost great recession of 1980 and the $147/barrel oil spike of 2008 caused the Great Recession, the next oil crisis could well trigger another depression.

However, when was the beginning of this new world crisis?  I would identify the Jasmine Rebellion, which resulted in the end of Zine el Abidine Ben Ali, as the spark that catalyzed the fall of Arab dictators.  Still don't know what I'm talking about?  Well, on 17December2010, Sidi Bouzid, street vendor and unemployed computer technician, immolated himself (he passed away on 4January2011), leading to the fall of President of Tunisia Ben Ali.  

The shock was that Tunisia is one of the most successful of African nations, for Ben Ali in two decades of rule built up the educational system, protected women's rights, stamped out Islamic radicalism and expanded tourism.  His problem was that his personal family flaunted their dominance.  The educated are highly unemployed.  A stable government finds jobs for its college graduates.  China is beginning to run into this problem, for it is the younger generation with computer smarts that can instantly turn around a country.  Twitter and Facebook have made a monster out of civil protest.

Now we have Egypt, and President Hosni Mubarak, who might have abdicated by the time you read this posting, for his family has already left the country.  (Right President Mubarak and below a photo by Peter Macdiamid of Getty Images.)  Next, perhaps, Yemen, Sudan, Algeria, Mauritania, Libya and Jordan.  If Saudi Arabia goes, look for $150/barrel oil.  Three things are inevitable:  Muslim extremists will strengthen their position, oil prices will jump and the world economy will again tumble.  Who knows where this will lead.  Doomsday? 


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The Dow Jones Industrials reflected the above doomsday notice, falling 166 to 11,824, as did virtually all world markets.  Gold, of course (people are taking money out of the market into a commodity), jumped, +$25/toz to $1336, and oil, as would be expected, will go up, the NYMEX approaching $90/barrel and Brent spot could reach for $100/barrel.  (See the NYMEX petroleum price to the right.)

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Tropical Cyclones Wilma and Bianca in the vicinity of Australia are weakening.

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