I'm thinking that commute from the new ex-burb 40 miles out of the city in that shiny new Hummer H2 paid for by the refi money is about to get reallllly expensive (while the price of that new stucco home just dropped even faster)... Like past housing bubble bursts, it's the homes on the fringes that'll lose their value even faster.
Funny how our actions (and others') are creating record oil prices, thus record oil company profits, right when we have two oilmen running the show, eh?
Also, doesn't it seem all tied together in some way? Housing Bubble. Oil. Geo-politics. Trade deficit. Wal-Mart. China. Iran. Bush. Follow the money some smart guy once said. Follow the money.
Will Iran dispute push oil to $130?
While the U.S. imports no Iranian crude, worries about Tehran's nuclear program are boosting prices. It could get a lot worse if the spigot is shut off.
Not a drop of oil from Iran reaches the nation's gas pumps. But escalating tensions about Iran's nuclear program are already being felt in oil and gas prices in the United States.
"If this leads to the shut-off of Iranian oil, I think it would probably mean we've got bigger problems than the price of oil," said Jason Schenker, an economist with Wachovia. "But if we end up with a 1970s-style oil embargo, we could see prices go markedly higher into uncharted territory."
"You have almost no spare capacity in the market. OPEC has only about 1.7 million barrels a day (of excess capacity)," he said. "I think it's highly unlikely they would stop supplying oil. But if the situation escalates, and Israel bombs Iran, it may not be their choice."
March 09, 2006
What happens to gas prices (and far-flung ex-burb housing prices) when Iran pulls their oil and blocks the Strait?
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Uh huh. And that means more demand for housing in the cities and inner suburbs, right?
actually, yes. location, location, location
you'll see drops everywhere in housing prices, but you'll see much much worse drops in the exburbs. see the denver post below this one for a snapshot
The Oil Drum
Spend just a week following this website. Try to find a single coherent, credible argument from the skeptics, that oil is plentiful or replaceable or that it will return to cheap prices. We are in collective denial. Just like with housing, only in reverse.
Oh those Chicken Little Hedge funds! You know, the George Soros fan club who at the slightest burp in the oil industry run up the oil market futures contracts. GOOD THING WATER IS NOT TRADED ON THE FUTURES MARKET! When Hurricane OPAL devistated the Gulf Coast with similar damage to the oil infrasture the price of oil remained constant. Now with the SPECULATORS in the hedge funds you get PETRONOIA which drives up the oil futures, and jacks the price at the pump and gives MOBIL EXXON the biggest profits in history!
Now we have our tidy war on TERROR thanks to the Neo-Cons "missionaries" who want to march on to Iran and Syria spreading the joy and love of DEMOCRACY to an area mired in the tribal primative religion of ISLAM.
Oh what the HELL maybe we can solve it all by moving Israel to MEXICO!
VIVA-NUEVO ISRAEL en MEXICO! Hire the Disney Company to create all the historic attractions like the Bethlehem and the Temple Mount.
You say what about the people that will be displaced in Mexico.... Don't worry they are alread up HERE!
The building BOOM in Neuvo Israel would be sure to bring them back down south of the border and best of all they are not MUSLIM!
IT WOULD BE A WIN WIN! Just imagine if Moses had seen Acapulco or Can Cun!
Iran needs to sell oil. The country is broke. In the midst of their nuclear threats they've promised to continue exporting oil. They aren't doing anyone any favors. They need the $.
When the bourse opens, if Iran does not provide their oil, the bourse will be in trouble. Once the bourse is open, Iran's economic credibility is on the line.
Then there's the Housing Bubble. When bubble bursts people cut back on spending, they even cut back on buying oil. Industrial demand for oil drops. Prices drop.
Prices are dropping now.
We'll see $50 oil before $130.
Keith;
Like past housing bubble bursts, it's the homes on the fringes that'll lose their value even faster.
Where did you get this? It sounds a lot like one of those unquestioned assumptions.
robert - personal experience. in denver in 1990, the homes outside the city (especially condos) dropped like rocks. but homes in the central core held up
I don't have #s - could do some googling for that - you're welcome to research
Y'know I've come to the conclusion that the dollar value of oil may eventually be irrelevant. Put another way, going forward I expect prices to convey less and less reality based information - as in gasoline is only $0.82/gallon! (but it's only available on alternate Tuesdays).
Keith,
You observe correctly but draw the wrong conclusions. High growth areas regardless of urban extent are the places that fall fastest and furthest. The exurbs are no more energy wasteful than are the cenurbs and so won't suffer disproportionately from oil price increases. Indeed transit dependent areas will suffer more.
As to anon 5:37:05 and the Oil Drum. You won't find any cogent oppostion because the site will shout it down and remove the evidence. No reputable dissenting speaker would expose themselves to the toxic atmosphere there. This doesn't saying anything about peak oil one way or the other.
Keith is right.
It's the homes further from the jobs that fall faster. People say "Forget this" I'm not going to commute to my job anymore. I'll give my house back to the bank and rent something very close. That further accelerates the droppoff.
Anonymous said...
Keith is right.
It's the homes further from the jobs that fall faster. People say "Forget this" I'm not going to commute to my job anymore. I'll give my house back to the bank and rent something very close. That further accelerates the droppoff.
I'll try this again from a different direction. Keith is wrong BECAUSE It's the homes further from the jobs that fall faster. Over 80% of all jobs created in the last 25 years have been outside the cenurbs a ratio that is widening. It's simple. If the cost of mobility goes up it isn't the housing that is going to move inward it is the jobs that are going to move outward. This will be exacerbated by the tremendous costs of public transit and the high degree of elasticity exhibited by the commuter users we are discussing here.
lots of theory on this suburbia / central argument - anyone find anything concrete please post it
Gas prices are so high everyday they get higherwws prices are going to be beyond whats money worth. What are gas prices are $2 to $5 per gallon.
Oh boy, not this argument again. Mr. Cote, I continue to disagree with you. BW did a post called "Living Large in Exurbia" back in the fall (i'll see if can scrape up the link). Their conclusion was that in the era of rising prices exurban living looks a lot less appealing. Therefore it stands to reason the exurb areas will decline faster than the inner city.
In Tampa the majority of coporate employers are located along an interstate. Very few jobs are located in the true suburbs. St. Louis is similar.
I'd put my money on $130/brl gas over $30/brl gas.
Stupid H2 drivers.
By the by, it's nutty to say that not a drop of Iranian oil reaches American pumps. Oil is highly fungible. Once a tanker is at sea, few questions are asked about its source. If questions are asked, "This is Iraqi oil," (wink, wink).
Refined gasoline is also imported at times. You can't claim that a load of gasoline imported to Hawaii from a Singapore refinery can be guaranteed to be free of Iranian sources.
And by the way, if the mullahs did shut of the taps, exactly what would they then live on? Pistachios and saffron only buy you so much.
Here it is. "Living TOO Large in Exurbia"
http://www.businessweek.com/magazine/content/05_42/b3955060.htm
A good read.
Everyone objecting to my comments are using a set of assumptions that are outmoded. The exurbs are not any less efficient than the cenurbs. Energy or any other shock is not going to affect either disproportionately. Exurbs have an advantage of also being flexible in that trhey have not invested in fixed infrastructure. There will be dislocation and adaption. It is far easier for an exurbanite to buy a flex/fuel or hybrid than it is for the MTA to buy a new fleet of buses or trolleys.
All this dissent stems from the false assumptions that transit and the cenubs are more energy efficient. They aren't. you are welcome to posit other reasons why you think the exurbs would be impacted but lets move on from these two canards.
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