Chris on Yahoo! Daily Ticker – April 2013 (Part 1)
At last week's Wine Country Country Conference, Chris sat down with Lauren Lyster of Yahoo!'s Daily Ticker — who was there to moderate the event — and talked about his rationale for how structurally higher oil prices add such headwinds to the global economy that those hoping for a return to the "normal" economic growth of the past several decades will likely be very disappointed:
(click image below to access the video)
From Yahoo!'s write-up of the interview:
If you want evidence that the U.S. economy is rebounding, forget analyzing common economic indicators like home sales, retail sales, consumer confidence and manufacturing data. Economists and individuals need to track just one key measure of data: oil consumption. That’s the thesis of Chris Martenson, author of PeakProsperity.com and the “Crash Course” Series. Martenson says oil has always been very tightly associated with economic growth. Oil prices have not returned to their 2008 all-time highs and that’s not necessarily a good thing, he argues.
“If you want to have economic growth you’re going to need growth in oil consumption,” he says in an interview at the 2013 Wine Country Conference in Sonoma benefiting the Les Turner ALS Foundation. “Oil is the lifeblood of any economy.”
More demand for oil from businesses and consumers will drive up prices, which is symbolic of a healthy economy. Martenson points out that oil consumption in the U.S., Japan and Europe peaked in 2007 and has tapered off over the last few years. The decline reflects the slow growth and budgetary crises in these countries more so than the increase in fuel-efficient vehicles on the road, Martenson argues.
Oil companies have been pumping nearly the same amount of oil out of the ground since 2005 even though investment in oil production has doubled from $300 billion to $600 billion worldwide, Martenson notes. In 2012 U.S. oil production rose by 790,000 barrels per day, the largest annual increase since 1859. The Energy Information Administration (EIA) estimates that domestic oil production will rise to 815,000 barrels a day in 2012, a new record.
Oil consumption in the rest of the world has been on a steady uptrend with fast growing economies like China, Brazil and India using more oil than the U.S., Japan and Europe combined.
Martenson says he will be carefully watching weekly oil data for any upticks in U.S. oil consumption. Oil consumption also has a direct correlation with GDP. Growth in oil consumption powers economic growth, Martenson explains, and “without growth in oil consumption, GDP growth doesn’t advance.”
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