What is the Oil Breaking Point

I just checked CNBC's Futures page and oil is $108.56. People all talk about how real estate and unregulated investment vehicles caused the massive melt down, but I feel people forget that right before the markets collapsed, oil reached $150 per barrel.

How high do you fellow Global Meltdown ATS'ers think oil will get this year, and where do you think the economy's breaking point is. I for one do not believe that oil above $120 is sustainable, honestly, I don't think oil above $100 isn't sustainable for an economy that so heavily relies on trucking to ship goods.

reply to post by finemanm


I can only speak for myself, but gas is over $4.60 a gallon where I live. I'm well aware that people in Europe and other places pay far more than that. But it's already about as close to the breaking point as I would like to see it go.

As far as the actual tipping point, well, just keep watching. I have a feeling we may find out soon enough.

The tipping point would be when gas prices reach to $20 a gallon if the situation in the Middle East spreads to Saudi Arabia

$20 a gallon... wow. I doubt it could eve get that high, but I believe that anything over $5 is Armageddon for the US economy as much as we rely on trucks to ship goods. In Europe they have higher prices, but they also drive much smaller cars, and drive motorcycles and scooters a lot more than we do, and they have a much better freight train system which they use to ship goods throughout the continent.

We use trucks and airplanes for all of our shipping of goods. With high gas prices, we'll see higher prices for all the goods we buy. Additionally, I live in NYC, and generally have access to public transportation. In the burbs, were people need to drive to get anywhere, there will be a lot less discretionary driving and spending.

If gas goes to $20 per gallon a loaf of bread may go to $50. Getting to work isn't going to be as big of a worry as finding something to eat that you can afford. I would not want to be living in a large city at that time.

I personally think sustained $5 gallon gas in US states other than Hawaii and California is where it starts to fall apart. In 2008 we got close to that point and the wheels started to fall off the economy. If I'm not mistaken, Brent was running about $140-150ish a barrel. We've got a little bit of room to go before then but not much. Most of the rise in oil has been not on Mid-east political instabillity but from competitive currency devaluation. One thing that I don't think has been causing the rise in the price of oil, is demand. The storage facilities that hold the oil traded on NYMEX for those that take delivery are full to the gills. The rapid rise in oil will most likely facilitate a couple of things. First, since oil is a major input in almost everything in modern life, but particularly food, prices will rise or profit margins will collapse. Second, who the hell knows. My amateur economics says that following rise in prices, new producers/or technologies will enter at about the same time that demand destruction from the higher prices sets in leading to a collapse in prices. I say who the hell knows, because I think this might be why THE BERNANKE isn't concerned about the runaway prices in most commodities. I fully expect the demand destruction to happen giving THE BERNANKE the green light for QE 3+ at that time leaving the middle class and below paying even more than they do now for items like food and fuel that are excluded from official inflation figures.

On a personal level, when gas hits $5/gallon, all discretionary spending and activities stop: No eating out, no non-necessary travel, canceled vacations, and a general re-evaluation of necessities. At $8 gas without a 60% pay increase since $5/gallon gas nothing but necessities. At some point after $8 gas it's time for revolution which by that point after enduring the hardship caused by the rampant inflation I really won't care what type of dictator we get as long as he has Bernanke, Dimon, Giethner, Blankenfien, and Pandit publicly executed.

It completely depends on how much the dollar continues to be debased. The price is moving almost totally on the weakness of the dollar, not demand. I think it's going to get interesting, because the Feds ability to control inflation without an intrest rate increase is gone. Basically their ability to hide the truth is coming to a close.

I am expecting over 160 by the end of the summer.