I think I get it now - and continuing some thoughts about The Price of Oil Fuels Web Development that I wrote about yesterday.
The reason why the price of Oil per barrel is going to continue to go up has little to do with us, anymore, and that's what has fundamentally changed from the World Market that was to the World Market will live in today. The New York Times tries to explain the price of Oil in Why Is Oil So High? Pick a View
For example, it took five years, from 2002 to 2007, for oil to go up by $60 a barrel. In just the last year, it galloped another $60 higher. For the first time since oil drilling began in the 1850s, the price has climbed for seven consecutive years.
If Oil goes to 165 dollars a Barrel, we'll continue to cut back (United States) but China and India, and the rest of what used to be called the "Third World" due to the spreading and redistribution of Global Wealth, won't. That takes Economic Theory, the kind Economists use to forecast stuff, and Governments use to decide policy, out the window - The World Economy is not going to act according to Supply and Demand - because there is no way to lower Demand - it's growing, no matter what we do - and it's the success of redistribution of wealth, of the Internet, of Global Entrepreneurs, or rising living standards, that's caused this.
According to a source that Paul Krugman quotes in his blog (Vertical specialization and the impact of oil prices on trade), the CIBC study suggests that Global Trade, which fueled the increases in living standards, may slow down, as a result of higher energy prices - especially in certain sectors (higher costs won't affect everything equally).
Actually, if you look at the Google Trend chart above, it's hard to argue that, at least at the perception level, interest in Global Trade is going down as the Price of Oil is going up:
Food inflation isn’t about the US economy
any more than triple-digit oil prices are about
motorists driving on interstate freeways.
They’re instead about hamburgers replacing
rice bowls and millions of new Tata and
Chery drivers on traffic-choked roads in
China, India and the rest of the emerging
market world.
Oil will continue to be consumed, at a fast and faster pace regardless of how much the United States cuts back consumption; even if we drill offshore, it's not going to many any real difference in our prices -(unless we just produce Oil for ourselves and don't buy it on the World Market - but I don't think that's possible - there's probably a zillion trade treaties against that kind of thing - besides the fact we could not produce enough Oil to supply this country based on what is under the ground in US Properties).
The cost of shipping a standard 40-foot
container from East Asia to the US eastern
seaboard has already tripled since 2000 and
will double again as oil prices head towards
$200 per barrel (see pages 4-7).Unless that container is chock full of diamonds,
shipping costs have suddenly inflated the
cost of whatever is inside. And those inflated
costs get passed onto the Consumer Price
Index when you buy that good at your local
retailer. As oil prices keep rising, pretty soon
those transport costs start cancelling out the
East Asian wage advantage. They already
have in steel. Soaring transport costs, first on
importing iron to China and then exporting
finished steel overseas, have already more
than eroded the wage advantage and
suddenly rendered Chinese-made steel
uncompetitive in the US market.
There's no way out save gradually moving to a new energy source (not Coal, that's just going backwards).
But first we have to figure
out what that new Energy Source is going to be (it may not have been invented yet, or maybe it has).
BTW, Google Trends was just released for Websites, and I wrote about it yesterday in
Google Trends takes on Alexa and Compete with Google Trends for Websites
I tried to look at Google Trends for Websites in terms of the price of Oil, but that would not be easy to do, unless we associate the demand for Oil to a specific set of websites - which I don't think we can do (unless some one has some ideas about this, let me know).
