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October 3, 2005

Oil and Conflict

By: Rowan Wolf

As price goes up the potential for conflict increases. Such is the case at this time in Indonesia. Indonesia was once a major exporter of oil. They passed peak production and now import much of it (similar to the situation in the U.S.. However, during the "boom" years they had set up a subsidy program. That program has become inadequate. In an effort to divert an uprising, they are increasing subsidies for the poor to help with the dramatic increase in fuel costs. This doesn't seem to be working as the protests continue.

Back in the U.S., there have been howls over the increasing fuel costs, but no protests (yet). However, Matt Simmons is saying that gasoline could go to $10 a gallon this winter. Since this would bee about a 130% increase over the current inflated prices, howls may turn to action.

Of course, as the cost of fuel goes up so does everything else. That is what having a global petroleum based economy in effect means. Of course it doesn't mean a 130% increase in everything. Some things will go up more than others, but overall the trend will be noticeably upward. Since U.S. "consumer confidence" was down in August - before the hurricanes - then September's numbers are likely to go down even further. There are those saying that the rebuilding across the Gulf coast will stimulate the economy. This is not necessarily so as the cost of construction materials are off the charts. Further, both insurance companies and the Federal Flood Insurance program are proving to be much less reliable than advertisements would have you believe. Instead of rebuilding causing an economic "boom," it may course an economic "kaboom." This is particularly true if gas prices go up to even half of Simmons projections.

Posted by Rowan at October 3, 2005 6:18 AM Category: Peak Oil --- Social Implications





Comments

I think we should all do as much as possible to save gas, carpool, take the bus, the train or even buy a motor cycle, or an electric car.

I plan on buying a motor cycle before the gas goes up to 5.00 a gallon. It makes me sick that this is happening and I will not contribute to it. In not contributing to is will also help the environment in the end.

Posted by: Gina at October 3, 2005 11:37 PM