World Economy Would Collapse If Oil Hit $200, Deutsche Says
By Shigeru Sato and Yuji Okada
June 25 (Bloomberg) — The global economy would collapse if oil hit $200 a barrel, said the top energy analyst at Germany’s largest bank.
“Two-hundred dollar oil would break the back of the global economy,” Deutsche Bank AG’s Chief Energy Economist Adam Sieminski said in an interview today in Tokyo. “Next step after $200 would be global recession and bad news for everybody.”
Sieminski’s comments come after Goldman Sachs Group Inc. forecast oil may rise to between $150 and $200 within two years as supply growth, especially from producers outside the Organization of Petroleum Exporting Countries, fails to keep pace with demand. Deutsche Bank is due to release its oil-price forecast on June 27.
Oil doubled in the past year, touching a record $139.89 a barrel on June 16. Crude oil for August delivery was at $136.84 a barrel, down 16 cents, at 7:08 p.m. Tokyo time in after-hours trading on the New York Mercantile Exchange.
Russia, a non-OPEC producer and the world’s biggest oil exporter after Saudi Arabia, faces its first annual decline in production in a decade. Prime Minister Vladimir Putin pledged to reduce taxation on the industry to stimulate investment in aging fields and new regions. Output fell 0.9 percent to 9.76 million barrels a day in the first five months of the year.
“Growth last quarter fell on a year-on-year basis, and this has to do with the policies implemented over the prior year to raise taxes on oil industries,” Sieminski said. “This made it difficult for foreign capital to come in.
“If Russia could reverse some of these policies and get their own oil industry back on, this will help very much.”
To contact the reporters on this story: Shigeru Sato in Tokyo at ssato10@bloomberg.net; Yuji Okada in Tokyo at yokada6@bloomberg.net.
Last Updated: June 25, 2008 06:43 EDT
http://www.bloomberg.com/apps/news?pid=20601072&sid=am42p9xBTXh4&refer=energy
The End of Capitalism 
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June 29, 2008 at 1:09 am
Sid
This idea of collapse is ridiculous. I took a course in college last year called “collapse” and let me tell you: its just a myth. most societies that “collapse” change their social hierarchies — not disappear or descend into chaos. Most people don’t think that a highly advanced civilization with a state hierarchy could revert to a pre-state form. Well it has happened with the Maya and Easter Islanders. Same amount of people over time — one decade a civilization, the next autonomous tribes. How about the Soviet Union? This is the biggest shame of a collapse — counter-revolution is not collapse. (Not to say the Soviet system was desirer able, but it wasn’t capitalist either). The current “decline” of Soviet society is due to capitalist reforms, not the failure of the state economy.
The idea that capitalism will collapse is silly. Its the sort of unhelpful apocalyptic prophesy that allows for the existence of “armchair revolutionaries.” It ain’t going away on its own — so get off your duff and do something about it.
June 29, 2008 at 1:40 am
endofcapitalism
Hey Sid,
Thanks so much for contributing your thoughts! I really liked what you had to say, it’s clear that you’ve studied this subject.
I wanted to agree with you that what the reporters/bankers are suggesting here is not particularly grounded in an understanding of social injustice or how societies and empires collapse. Please notice also that my intent in re-posting this article is not to scare people or discourage people from taking action, it’s actually the complete opposite.
I recognize now that I should probably have written a short introduction to this article in my own words, to clarify why i thought it was important.
However, I think that you’re wrong about capitalism being invulnerable to collapse. It’s actually incredibly vulnerable, and although it’s “not going away on it’s own”, it WILL go away if the economic and material conditions for it evaporate, which is exactly what I think is happening now with Peak Oil.
Now that doesn’t mean it’s necessarily a good thing, because global capitalism could break down into all kinds of stuff, including fascism in a lot of places. But as activists and people with consciences enough to be revolutionaries, it’s our responsibility to move things in a more human direction, and fight for justice with the same vigor that we do in times when capitalism is strong.
It’s just that when the oil shortage breaks the back of the market system, we may have an opening that I think we need to take full advantage of.
Thanks again for posting! Keep up the fight!
alex