Brown's oil

The oil price has hit $135/bbl. My car cost me £65 !!!! to fill this morning. There is most certainly going to be trouble, some of it obvious and other less so.

Gordon Brown, in his new listening to voters mode, has managed to resit saying he wakes up every morning thinking about the oil price, but he has broadcast some equally lame statements today.

Namely:

The OPEC cartel in a scandal.
He is taking action by raising it at the G8/EU.
He will ask the Saudi's to up production.

I note that he doesn't blame speculators. Given that oil has to be used and can to some degree be substituted for in some applications a long run on oil speculation without basis for that concern seems unlikely to me.

The Americans have been over to beg the Saudi's to up production - they haven't done so.

The following problems exits:

1. Everyone looks like they are operating at peak capacity for their given infrastructure.
2. The ability to supply new infrastructure is limited by the availability of the required skills.
3. Nigeria is still a basket case.
4. Nationalism in South American and Russia is actually casuing oil production to drop and inefficient state monopolies have taken over from the independents.
5. Maybe, just maybe, the Saudi can't increase production for much or any length of time.

5 - is the most important. The Saudi's don't publish their reserve estimates or associate geological information, but some people have speculated from information that is avialable that the Saudi oil production is at capacity and will soon decline. ( See Twilight in the Desert if your interested. )

Here as list of what this means:

A) The Saudi's are in big trouble - even at today's oil prices much of their money goes to supporting the unproductive but reproducing fast section of their population. This could lead to the collaspe of their society and revolution (most likely Islamic) and a blocking of their remaining oil production capability. ( Something the US would not stand for and would almost certainly seize the oil fields near Kuwait - see staying in Iraq isn't so dumb after all ... )
B) The economy is going to have a heart attack - Labour are doomed in the UK.
C) The Economic case for Scottish independence is going to look great on tha back of current oil prices and North Sea oil - Labour are doomed in Scotland.
D) We are going to have to compete with India and China, not just for jobs, but for food, oil and raw materials. Since they make things people want and we generally struggle to do so this look =s bad and will lead to a realignment of wealth. (A large amount of this may already have happened - just who do you think sits at the other end of all our national debt, mortgages etc etc).
E) Thanks to the Blair/Brown years of spin and abdication of responsibility our electricity generation network will not be able to supply the required power shortly. Nuclear can't be built fast enough ( too few resources / skills / competition for the first two from everyone else ). The lights are going out in a few years time - David Cameron take note - this will happen on your watch !

The way out of this is to change the terms of the trade. This means different energy sources ( i.e. Nuclear - lots of Nuclear in the long term ), coal ( yes coal ), even solar and wind. [ Nobody would touch British Energy with a barge poll two years ago - now there's a bidding war ! ] But its almost too late to start - Blair and Brown should have done this years ago.

We will also need to deal with the global shock waves of initial prosperous Arab societies that then collapse, India and China running against their limits and Africa being left behind again.

Or, the oil price could just come down the the $70/bbl that our Labour government predicts for 2020....

[Bit of a rant - but there you go.. ]