What will happen when we start hitting the peak oil? Inflation or deflation?
Category: Business & Finance > Investing
Answer:
Countries that are dependent on oil importation, if and when price of oil increases to unreasonable level, these countries will experience inflation.
Cost of goods, will increase as what you have mentioned, it will trickle down to even the smallest businesses. Many countries are dependent on oil for power genereation, so just imagine how much it will cost to generate power.
Also in transporting goods from farm to market. all these things are inflationary. The effect may be short term if gov't are not fast on counteracting the effect of oil price increase.
As to bankruptcy of some companies, well maybe, but that would depend on what they are providing. A severe effect on a country will not only cause what you have mentioned, the worst effect would be civil unrest and may lead to chaos.
No such thing as "Peak oil". Several old fields that were shutdown as "pumped out" have refilled from oil deeper down. Including one off Louisiana. Proving there is abundant oil. Who is getting rich(er)? The ones selling the oil and gas.
gas prices will drop so i say deflation for us...inflation for big money companies
I assume you mean increasing oil PRICES, not volume of oil PRODUCTION.
Massive inflation and hoarding of commodities. Realignment of the mobile society to favor older block neighborhoods with proximate shopping and schools. Local increase in food production and opportunities for production of all goods closer to market.
Oh, least I forget, massive poisoning of the environment from all the nuclear reactors built to meet our voracious energy appetites which policy makers blindly refuse to see the abject dangers in.
well i assume you mean what will happen when oil runs out.
first of all we are quite far from that because as prices rise there will be new methods of collecting oil that with lower prices werent as economically efficient because prices werent high enough to cover the costs of production.
however when oil does run out this will probably eventually lead to an overall price reduction however it wont be as rapid as people would have you think because the transition from oil to other energy sources will be gradual and not as abrupt and scary as people want you to believe. the transition to this cheaper form of energy will mean an aleviation of costs for firms and an eventual reduction in overall prices. for more info check the link below for a very good bbc article and a commentary on it
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