The Chatelaine's Keys

Sharon June 8th, 2008

So oil went up $11 on Friday, while the stock market dropped 3%.  Unemployment is up, and reports of a recovery are greatly exaggerated.  And most importantly, the word bubble is started to get scraped off the oil price jump:

But many analysts say that fundamentals, not speculation, are driving prices.

“I don’t know how else to say it, this is not a bubble,” Jan Stuart, global oil economist at UBS, said. “I think this is real. There is a whole bunch of commercial buyers out there who are spooked and are buying. You are an airline, right now, you’re scared. I don’t see who would buy at these prices unless they need to.”

Jeffrey Harris, the chief economist at the Commodity Futures Trading Commission, who was speaking before a Senate committee last month, said he saw no evidence of a speculative bubble in commodities. Instead, Mr. Harris pointed to a confluence of trends that has contributed to the oil price rally, including a weak dollar, strong energy demand from emerging economies, and political tensions in oil-producing countries.

“Simply put, the economic data shows that overall commodity price levels, including agricultural commodity and energy futures prices, are being driven by powerful fundamental economic forces and the laws of supply and demand,” Mr. Harris said. “Together these fundamental economic factors have formed a ‘perfect storm’ that is causing significant upward pressures on futures prices across the board.”

Who’d a thunk it?  You mean peak oil is a real thing?  Shocked.  Shocked, I say!  Note that this is the New York Times, not me . 

But more seriously, let’s be blunt, even for the best prepared of all of us, this sucks badly.  All of us are feeling the scraping at our budgets, at least a little, and I know that some people are really hurting.  So I thought it would be worth doing an update on how this is looking in your neck of the woods?  How’s your family doing?  What you are seeing in your neighborhood that you haven’t seen before?

The New York State Budget strips the Universities pretty badly, so Eric is losing a lot of sleep about his job.  Now we made the choices we did pretty consciously – he doesn’t have tenure.  He’s been offered tenure track jobs at smaller Universities (he wants to teach, not do bench science), but turned them down because our long term estimate was that all of them were more likely to either dump him before he got tenure or go under completely if the economy tanked.  Eric teaches one of the largest classes at his University – 1/4-1/3 of all SUNY Albany students go through is class, so he makes the University literally millions of dollars a semester, and they pay him about half what they’d pay a similarly qualified research scientist.  Our bet was that Eric will look like a good deal to the University.  We may lose that bet – of course, we could lose the other way around.  But it is tough on him, because he loves, loves, loves his work. 

Otherwise, we’re not hurting too much, although we may have to cut back on stocking up a little.  We’re lucky – Eric’s off for the summer and so we’re hoping to go to driving only two or at most three days a week, and of course with the garden kicking in, and a reserve of stored food mostly bought at lower prices, we can economize.  The problem, of course is that I’m reluctant to dig into stores right now, since I think times are only going to get tougher all around. 

Lots of new gardens popping up around here, and lots more people asking me serious questions about energy and the economy.  The place I’ve gotten some plastic buckets from is saying they’re going to have to start charging me, and that’s ok - their costs are going up too.  A fair bit of economic strain among folks I know.  But mostly, a lot of hoping and praying that things will get better while there’s still a little hope of fixing the worst. 

 How about you?

 Sharon

• economy , oil , peak oil
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