Peak Oil and Financial Markets

by Michael Weinberg, Contributing Writer

Inside This Section:
Peak Oil Overview
Lower Oil Production Equals Trouble
Peak Oil and Financial Markets
Peak Oil, Global Clashes and Uncertainty

Peak Oil and Financial MarketsPrices Rise. Prices Fall. What More Is There To Know?

Financial markets and the connection to oil dates back to the turn of the century. This connection, in fact dependency, is the most serious threat to the economy. This connection has even more potentially devastating consequences than the lack of development of alternative future fuels, sources, and technologies.

The massive debt incurred by banking industry has assumed the status of enormous investments and dividends. The role of oil as an inexpensive and available energy source fueling worldwide expansion and growth has been sufficient collateral over the past century to maintain and support global financial markets. As the production output of oil slows with ever increasing demands for affordable energy prices will soar. The effects will have vast breadth and depth on the very global financial structure developed and depending upon since the Industrial Revolution.

Real Wealth = Real Cost = Real Value = Real Problems


Real wealth represents immediately available and useable energy.

Real cost reflects the energy cost of producing a product or providing a service.

Real value represents the procurement or exchange of a product or service for either human or machine propelled work.

The problem is that human muscle or manpower provides an ever diminishing diminutive portion of labor for production of goods and services globally. Machines, non-human entities, providing such power are predominantly, even overwhelmingly, fuel driven. As the ongoing struggle to secure fuel sources continues through global conflict and other means prices will reflect both emotion and tangible reality: panic and scarcity, respectively. The collateral basis for the value of large portions of Stock Exchange indexes will begin to crumble as the costs of production reveal overvaluations due to the availability of inexpensive fuel becoming less and less available and higher and higher in price. The obliterated Stock Exchange could become an economic dinosaur rather instantaneously. The current economic framework for pensions, insurance, interest rates, even determining criteria for basic cost of living indexes and costs of basic food items and housing are dependent on future economic growth predictions.

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