Wednesday, July 02, 2008

"A bolt of pecuniary fire"

I'm reading "Netherland" by Joseph O'Neill. This takes the events of 9/11 as its hinge, as does most contemporary fiction, it seems. In years to come they'll start teaching this as a distinct period. The hero's a Wall Street analyst. Here he is recalling what it was like in New York in 1998.

It was quickly my impression that making a million bucks in New York was essentially a question of walking down the street - of strolling, hands in pockets, in the cheerful expectation that sooner or later a bolt of pecuniary fire would jump out of the atmosphere and knock you flat. Every third person seemed to be happily struck down; by a stock market killing, or by a dot-com bonanza, or by a six-figure motion picture deal for a five-hundred word magazine article...I too became a beneficiary of the phenomenon, because the suddenly sunken price of a barrel of oil - it went down to ten bucks that year - helped create an unparalleled demand for seers in my line.

I've just checked and the price of oil is $141.75 this morning. Now if it's gone up by a factor of fourteen in the last ten years, that means it clearly can't do that again, can it?


  1. Pardon the long boring answer, but it is possible but unlikely. Another 14 fold increase would mean roughly £2000 per barrel, or £48 per gallon (before tax). At that price a couple of things would happen - demand would plummet (because we couldn't afford it and the world economy would crash), and all sorts of other technologies would become economic (such as oil shale) increasing supply. You could only maintain the price for the short gap until the new technologies came on line - maybe a few years? The Middle East might be tempted if they feel the end of the oil boom is coming anyhow - why not get as much money as you can before we all move onto (say) hydrogen fuel cells. As Sheihk Yarbouti once said "the stone age did not finish because we ran out of stone, and the oil age will not finish because we run out of oil".

    I'm off to the Middle East on Friday, and they are using the bonanza to invest in real estate (7 new cities in Saudi alone). Could it drop back - maybe, but why would they do that? If we can afford $140 without a world recession, why not keep it high? More profit for the oil producing companies.

  2. How will these new cities in Saudi etc be funded when the oil runs out? This also always seems to be the flaw in Dubai's business plan who's going to afford to fly to their fancy hotesl when oils fantastically expensive?

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  4. You may not have noticed - most of us haven't - but the Saudis and UAE are steadily buying up large chunks of European and American Business with the money we pay them for oil. The intention is that when the oil runs out they will already have diversified. Will it work? Who knows. But be worried that it might.

    Dubai's oil has already run out to all intents and purposes. Their major tourist market is not us in Europe or the USA, but the Middle East. We are nice but don't spend enough money. You can drive there from Saudi...
    And the tourism is a sideshow in Dubai - the real money is in Trade.

  5. TOB
    cheers for that I always wondered seeing all these fancy hotels how it would work still seems odd. Thankfully I never intend going, not that they'll miss my shilling, I bet you can't get a decent pint their either.

  6. Anonymous10:44 am

    Unbelievably, they have a snowdome in Dubai, with real snow.

    Ecologically speaking, this is on a par with hunting polar bears with neutron bombs.

  7. A bit harsh - it's pretty much the same as the ones in Manchester and Castleford (and no doubt other placees). So, I would say ecologically as bad as hunting polar bears full stop.