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Oil prices are VERY VOLATILE in the last 50 years the number of times the price of oil has either halved or doubled with a year is not uncommon. It has occurre

Oil prices are VERY VOLATILE in the last 50 years the number of times the price of oil has either halved or doubled with a year is not uncommon. It has occurred at least a dozen times. And more importantly, oil prices are less important to the economy than most people believe. TL: DR - Oil prices are not that important

csomar 7y ago
> TL: DR - Oil prices are not that important 50% is not very important if you are a software engineer in your average developed country. 50% is more than enough to wreck many countries and get them into chaos. Some countries will see their population go on strike full-retard for 5-10% price increases. Some governments will default because they are subsidizing oil and a 50% increase will wreck their budget. Such an increase will also cause food prices to skyrocket and some people in some places won't be able to afford food.
- xyzzyz 7y ago
  Oil prices were 50% cheaper not too long ago, and the food wasn't significantly cheaper, so I can't see how more expensive oil will make the food prices "skyrocket".
  - ry_ry 7y ago
    Depends if the whole industry decides to take advantage of the opportunity to increase prices and blame the cost of oil or not. It's the prisoners' dilemma, but applied to exploiting consumers!
    - xyzzyz 7y ago
      Yes, and in a prisoners' dilemma with thousands of players, someone is surely going to defect and sell their stuff cheaper to undercut the competition. I don't think I've ever heard about large scale collusion to fix prices in food industry, and I won't hold my breath for it this time.
- evrydayhustling 7y ago
  This just isn't true at all. Developed economies rely more on oil than less developed ones. Plus, more of that is driven by prices at source because in undeveloped countries delivery effort is a big price component. Here is some context on the volatility of oil: https://www.thebalance.com/oil-price-history-3306200 https://www.thebalance.com/oil-price-history-3306200 10y ago we were at almost twice the price and developing countries weren't "on strike full-retard" or seeing oil driven defaults. The closest to a country really being screwed recently by oil prices have been exporters, especially Russia which depends on higher prices to balance its budgets and had been harmed byow prices. That's not to say that oil prices "aren't important". It's just that every industry/economy/etc had been forced to learn to weather price volatility. That's. Why there is such a developed futures etc market.
  - barbasosi 7y ago
    Depends on how you define "on strike full retard", at least where I live (Indonesia), it is spot on. Some context: Indonesian govt. subsidizes fuel to quite a large degree, up to ~50% of relative to petrol prices. Over the years, they've been trying to draw down, but it's a touchy subject. Last year, ~10% of state budget was spent on fuel subsidies (to give us a sense of scale). sources: indonesian Ministry of Finance state budget 2018 https://www.kemenkeu.go.id/apbn2018 https://www.kemenkeu.go.id/apbn2018 CNN indonesia post saying fuel subsidies was over the alloted budget: https://www.cnnindonesia.com/ekonomi/20190102172609-532-358006/subsidi-energi-di-apbn-2018-bengkak-jadi-rp1535-triliun https://www.cnnindonesia.com/ekonomi/20190102172609-532-3580... - sub) edit: some posterity
    - simonh 7y ago
      Fuel subsidies in a lot of developing countries are politically weird. They mostly benefit wealthier people, but are most ardently supported by poorer people. It's difficult to disentangle.
      - esyir 7y ago
        People like free stuff, and after some time, it becomes expected. Moreover, think of it in the opposite direction. Imagine a getting hit with a 10% tax increase even if a richer guy gets 15%. Him being taxed more doesn't necessarily make that 10 feel much better.
- romwell 7y ago
  Any basis for your claims? Oil prices were about 2x of what they are today in early 2010's, and I recall nothing of the sort.
- nostrademons 7y ago
  Some data: https://www.macrotrends.net/1369/crude-oil-price-history-chart https://www.macrotrends.net/1369/crude-oil-price-history-cha... Oil prices were double what they are today in 2014, and triple in the depths of the 2008 recession (before falling to roughly current levels in 2009). They were roughly half current levels in the 2000 recession. They were roughly equal during the oil crisis in the 1970s. Sudden shocks to oil prices seem to be able to cause recessions, like the 250% increase in 1973 or the 200% increase from 2007-2008, capping off a 500% (!) increase from 2002-2008. But these are a lot bigger than the 50% increase postulated here. We've withstood 50% increases (1994, 2004, 2016) or even 150% increases (dot-com boom) with no ill effects.
  - wiz21c 7y ago
    But don't the overall price just increases (on a long scale), and makes oil harder to buy over time ? See https://www.macrotrends.net/1369/crude-oil-price-history-chart https://www.macrotrends.net/1369/crude-oil-price-history-cha...
BlueTemplar 7y ago
So, it's a coincidence that oil prices peaked during the 2008 crisis?
- linkregister 7y ago
  Once the housing crash occurred, demand plummeted and the price of crude dropped. So yes?
  - hackerbabz 7y ago
    I remember a high school policy debate in early 2009 when my opponent prepared an argument that horrible things would happen if the price of oil dropped. Fortunately for me, they hadn’t read the newspaper lately. It was a lot of fun to quote the collapsed oil price from a newspaper I found lying around and then relax the rest of the debate.
  - BlueTemplar 7y ago
    You're proving my point that they are tied ?
    - diffeomorphism 7y ago
      Correlation does not equal causation.
      - BlueTemplar 7y ago
        You don't think that steeply increasing gasoline prices, and the resulting squeezing of discretionary (and not so) income could have popped the US housing bubble ? https://www.energy.gov/eere/vehicles/fact-915-march-7-2016-average-historical-annual-gasoline-pump-price-1929-2015 https://www.energy.gov/eere/vehicles/fact-915-march-7-2016-a...
jayalpha 7y ago
"And more importantly, oil prices are less important to the economy than most people believe." ROTFL https://oilvoice.com/Opinion/24972/Our-Finite-World-Why-We-Get-Bad-Diagnoses-for-the-Worlds-EnergyEconomy-Problems https://oilvoice.com/Opinion/24972/Our-Finite-World-Why-We-G...

csomar 7y ago

> TL: DR - Oil prices are not that important 50% is not very important if you are a software engineer in your average developed country. 50% is more than enough to wreck many countries and get them into chaos. Some countries will see their population go on strike full-retard for 5-10% price increases. Some governments will default because they are subsidizing oil and a 50% increase will wreck their budget. Such an increase will also cause food prices to skyrocket and some people in some places won't be able to afford food.

xyzzyz 7y ago
Oil prices were 50% cheaper not too long ago, and the food wasn't significantly cheaper, so I can't see how more expensive oil will make the food prices "skyrocket".
- ry_ry 7y ago
  Depends if the whole industry decides to take advantage of the opportunity to increase prices and blame the cost of oil or not. It's the prisoners' dilemma, but applied to exploiting consumers!
  - xyzzyz 7y ago
    Yes, and in a prisoners' dilemma with thousands of players, someone is surely going to defect and sell their stuff cheaper to undercut the competition. I don't think I've ever heard about large scale collusion to fix prices in food industry, and I won't hold my breath for it this time.
evrydayhustling 7y ago
This just isn't true at all. Developed economies rely more on oil than less developed ones. Plus, more of that is driven by prices at source because in undeveloped countries delivery effort is a big price component. Here is some context on the volatility of oil: https://www.thebalance.com/oil-price-history-3306200 https://www.thebalance.com/oil-price-history-3306200 10y ago we were at almost twice the price and developing countries weren't "on strike full-retard" or seeing oil driven defaults. The closest to a country really being screwed recently by oil prices have been exporters, especially Russia which depends on higher prices to balance its budgets and had been harmed byow prices. That's not to say that oil prices "aren't important". It's just that every industry/economy/etc had been forced to learn to weather price volatility. That's. Why there is such a developed futures etc market.
- barbasosi 7y ago
  Depends on how you define "on strike full retard", at least where I live (Indonesia), it is spot on. Some context: Indonesian govt. subsidizes fuel to quite a large degree, up to ~50% of relative to petrol prices. Over the years, they've been trying to draw down, but it's a touchy subject. Last year, ~10% of state budget was spent on fuel subsidies (to give us a sense of scale). sources: indonesian Ministry of Finance state budget 2018 https://www.kemenkeu.go.id/apbn2018 https://www.kemenkeu.go.id/apbn2018 CNN indonesia post saying fuel subsidies was over the alloted budget: https://www.cnnindonesia.com/ekonomi/20190102172609-532-358006/subsidi-energi-di-apbn-2018-bengkak-jadi-rp1535-triliun https://www.cnnindonesia.com/ekonomi/20190102172609-532-3580... - sub) edit: some posterity
  - simonh 7y ago
    Fuel subsidies in a lot of developing countries are politically weird. They mostly benefit wealthier people, but are most ardently supported by poorer people. It's difficult to disentangle.
    - esyir 7y ago
      People like free stuff, and after some time, it becomes expected. Moreover, think of it in the opposite direction. Imagine a getting hit with a 10% tax increase even if a richer guy gets 15%. Him being taxed more doesn't necessarily make that 10 feel much better.
romwell 7y ago
Any basis for your claims? Oil prices were about 2x of what they are today in early 2010's, and I recall nothing of the sort.
nostrademons 7y ago
Some data: https://www.macrotrends.net/1369/crude-oil-price-history-chart https://www.macrotrends.net/1369/crude-oil-price-history-cha... Oil prices were double what they are today in 2014, and triple in the depths of the 2008 recession (before falling to roughly current levels in 2009). They were roughly half current levels in the 2000 recession. They were roughly equal during the oil crisis in the 1970s. Sudden shocks to oil prices seem to be able to cause recessions, like the 250% increase in 1973 or the 200% increase from 2007-2008, capping off a 500% (!) increase from 2002-2008. But these are a lot bigger than the 50% increase postulated here. We've withstood 50% increases (1994, 2004, 2016) or even 150% increases (dot-com boom) with no ill effects.
- wiz21c 7y ago
  But don't the overall price just increases (on a long scale), and makes oil harder to buy over time ? See https://www.macrotrends.net/1369/crude-oil-price-history-chart https://www.macrotrends.net/1369/crude-oil-price-history-cha...

BlueTemplar 7y ago

So, it's a coincidence that oil prices peaked during the 2008 crisis?

linkregister 7y ago
Once the housing crash occurred, demand plummeted and the price of crude dropped. So yes?
- hackerbabz 7y ago
  I remember a high school policy debate in early 2009 when my opponent prepared an argument that horrible things would happen if the price of oil dropped. Fortunately for me, they hadn’t read the newspaper lately. It was a lot of fun to quote the collapsed oil price from a newspaper I found lying around and then relax the rest of the debate.
- BlueTemplar 7y ago
  You're proving my point that they are tied ?
  - diffeomorphism 7y ago
    Correlation does not equal causation.
    - BlueTemplar 7y ago
      You don't think that steeply increasing gasoline prices, and the resulting squeezing of discretionary (and not so) income could have popped the US housing bubble ? https://www.energy.gov/eere/vehicles/fact-915-march-7-2016-average-historical-annual-gasoline-pump-price-1929-2015 https://www.energy.gov/eere/vehicles/fact-915-march-7-2016-a...

jayalpha 7y ago

"And more importantly, oil prices are less important to the economy than most people believe." ROTFL https://oilvoice.com/Opinion/24972/Our-Finite-World-Why-We-Get-Bad-Diagnoses-for-the-Worlds-EnergyEconomy-Problems https://oilvoice.com/Opinion/24972/Our-Finite-World-Why-We-G...