Instead of talking about Oil Bubbles we should be talking about Oil Burden: Véronique Riches-Flores of Société Générale measures the “oil burden” – the volume of oil consumed, multiplied by the average price and divided by nominal gross domestic product. This gives the proportion of the world economy devoted to oil and accounts for the way the world has reduced its reliance on oil since 1980.
The oil burden so measured has risen about 75 per cent during the past year, to its highest level in almost 25 years. This must soon have an economic impact if prices do not quickly reverse. But prices would need to reach about $190 before the burden regained its peak of 1980. It is not clear that prices are at a point where demand will fall.
In the The Post-American World, Fareed Zakaria argues that a "post-American" world order is beginning, in which the role of the United States of America will be diminished, but not irrelevant. Economic, diplomatic, and social power is rising in the rest of the world, a phenomenon he calls, "Rise of the Rest". Although the U.S. remains the supreme military power, the spread of capital, labor, innovation, ideas and information continues to bring down the level of influence the U.S. once had in world affairs.
Mr. Steve chapman concept of an oil bubble and The Chicago Tribune subsequent editorial is not only misleading, but also irresponsible. America no longer controls the price of oil, and while it is still its largest per capita consumer, China, India, and other developing countries that subsidize their oil consumption will continue to raise the price of oil. Most annalists believe that $200/barrel is not out of the question.
We need to solve our oil dependency once and for all. At this junction I consider it to be the highest national threat to our country. Editorials that speak of “oil bubbles” will hinder our efforts for real solutions.