Will the Arab countries stop selling oil to the U.S. or do you think oil will be so heavily taxed so that it is unaffordable?
The US can produce 12M/day so it can meet the 10M/day target without imports.
It’s a US initiative so what ever plays out is US controlled. In the 70s embargos occurred against the US as a result of US initiatives with Israel.l which lead to shortages. However important to note US oil consumption still rose sharply over that decade before blowing up and dropping roughly -25%. Similar with the GFC.
The US consumes roughly -1.5% oil per day from pre pandemic. We pay roughly +50% fuel prices which are record highs. So we have 6yrs to make a 33x reduction of what sent us +50%.
Now, fuel really fucks with CPI and sends it rocketing so the US can’t afford for it to blow up too much. So my opinion is they’ll cap fuel maybe around USD9-12 and let shortages happen. By cap prices I mean it could be anything, govt intervention, storms, war, rationing coupons etc where supply/demand won’t full determine pricing. Think of natural disasters where fuel stations simply ran out, prices didn’t suddenly 100x.
During the 1940s downunder fuel and food was rationed and claimable with coupons. Military and necessary vehicles were fine. Work vehicles received rations. If you didn’t need a car for work, you did not receive a fuel ration. You cycled, walked, caught the bus to go longer distances. This is probable.
We know climate lockdowns are coming so that is the event/trigger. We also know from major events they cause a -20% to -25% reduction in oil consumption over the next 5yrs that follow. Therefore with 6yrs left to the target window we need oil to hit a high enough level it basically blows up at the same time we have an event/trigger to assist with a solid reduction to the target level.
