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Peak Oil Passnotes: Knock-Through (economic hysteresis)

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phantom power Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-08-08 10:08 AM
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Peak Oil Passnotes: Knock-Through (economic hysteresis)
Another contribution to hysteresis is that businesses always try to ride out expense increases as long as possible, to avoid losing business by raising their prices. They eat their cost increases for a while, in the hope that they are transient. I get the impression that a lot of inflation is being swept under the rug this way, and some kind of inflation cascade is coming as businesses are finally forced to pass on these costs, or go under.

All along we have pointed out that there is a correlation between general all round inflation due to rising energy costs, but with a significant time lag.

In other words we are feeling the impact of energy costs at for arguments sake around the $70 per barrel range we had a year ago. Things like capital goods big stuff such as plant and factory equipment takes a good while to manufacture. So the estimated cost of say a smelter will rise as energy prices rise, even if the contract was signed when energy prices were lower.


Cutting dollar power so that the U.S. becomes some kind of bargain basement shopping mall for the rest of the world I mean there is only so many pairs of trainers and flats in Manhattan a boy can have - is not going to be the answer. Many people around the world do want to see a smaller less powerful U.S., but a collapsing one is not something anyone is particularly after.

But what happens if that $106 oil takes 18 months to kick through into the U.S. economy? What will happen then? Who will warn us?

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Dogmudgeon Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Mar-10-08 10:02 AM
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1. There's going to be some major Iraq War hysteresis, too
A similar set of circumstances kicked in around 1973, too, IIRC. It took until the 1990s to straighten out.

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phantom power Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Mar-10-08 11:07 AM
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2. There is such a list now.
Inflation, war cost, national debt, ocean acidification, collapse at the base of the food chains, atmospheric GHGs, topsoil loss. Even if we magically halted all those varieties of damage tomorrow, the effects would continue to play out for decades. And none of it is halted. All of it is still accelerating.
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