Bimbos

This is excellent (hat tip: the FT’s Energy Source). Stephen Schork, editor of the Schork Report, compares Americans’ spending on car fuel with their outlay on entertainment (the “bimbos”). Conclusion: energy costs, as a share of expenditure per head, continue to rise. It’s not quite as bad as 2008, when gasoline and other motor fuels took up 4.2% of consumer income (a record). But at 3.24% it’s getting closer — and is well above the historical norm. Meanwhile, Schork says, other costs have also gone up (like communications).

The wider point — one Stephen, among others, has been making for a while — is oil and products prices are probably too high given the fragility of the economy. This will surely encourage yet more demand destruction. Americans and others in the OECD won’t ever consume as much oil as they did up until 2007. But will it be a slow decline in oil consumption, or a fast one as, first, producers and refiners price themselves out of the market and, second, behaviour shifts rapidly and fundamentally. SUVs already feel sooo 2003. But what happens when combustion engines in the rich world also look a bit, well, passé? Opec and other producers say what happens in the sated West doesn’t really matter, because Asia (aka China) will make up for the weakening of demand elsewhere.

Isn’t that to expect that China will make the same energy-mistakes other nations made during their industralisation? Doubtful.

(I profiled Schork for Petroleum Economist a while back. There’s a link to the piece on this page.)
The wider point — one Stephen, among others, has been making for a while — is oil and products prices are probably too high given the fragility of the economy. This will surely encourage yet more demand destruction. Americans and others in the OECD won’t ever consume as much oil as they did up until 2007. But will it be a slow decline in oil consumption, or a fast one as, first, producers and refiners price themselves out of the market and, second, behaviour shifts rapidly and fundamentally. SUVs already feel sooo 2003. But what happens when combustion engines in the rich world also look a bit, well, passé? Opec and other producers say what happens in the sated West doesn’t really matter, because Asia (aka China) will make up for the weakening of demand elsewhere.

Isn’t that to expect that China will make the same energy-mistakes other nations made during their industralisation? Doubtful.

(I profiled Schork for Petroleum Economist a while back. There’s a link to the piece on this page.)

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