Here’s an excerpt from Kunstler’s new book:
“It was not a coincidence that the global financial system wobbled and crashed in mid-2008, the same moment that oil shot up to $147 a barrel. Underlying the price event was a growing recognition by buyers, users, and traders in oil that oil had reached an inflection point, which was, of course, peak oil. Among this group were airlines, chemical and plastics makers, big agriculture, trucking companies, heating oil distributors, and electric power utilities. The public might have been asleep at the wheel but these industrial-scale oil buyers ran gigantic enterprises and rising prices had been playing havoc with their business formulas for several years.
Since 2002, for instance, Delta and United Airlines had been operating in bankruptcy, until they merged, respectively, with Northwest and Continental. Japan Airlines went bankrupt in 2010. In the fall of 2011 American Airlines entered bankruptcy. They all had to worry continuously about securing large amounts of oil based jet fuel, which rose from between 10 and 20 percent of their total operating costs in the 1990s to between 30 and 50 percent in 2008. All big buyers of oil in the OECD countries also found themselves bidding increasingly into the market against China and India (Chindia!), which were seeing economic growth rates around 10 percent in recent years. Fear and greed drove the oil markets in the spring and summer of 2008, egged on by speculators, including Wall Street banks and investment firms, who took advantage of the anxious mood. In turn, oil prices ramping above $100, then $120, then $140 in July very decisively crushed economic activity. It wasn’t long before these troubles moved to the heart of the economy, with job losses mounting and mortgages going bad at a frightening rate.”
It should be interesting to find out how BRA’s economy is performing with oil collapsing in the middle of the summer driving season.