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Submitted by Cameron Hanover
again, oil...supply decline...no need for inflation.
Everything economists conditioned people to believe during the Era of Growth were merely transient, not permanent, conditions.
Higher prices will not lead to more supply.
b-b-b-but um, abiotic oil; yah! The earth's mantle just keeps creating more and more barrels every day! And higher prices will encourage research that will enable us to speed the process by shifting the earth's crust with nuclear explosions, effectively making the continents 'oil incontinent'! By next week we won't need Canada's dirty ol' tarsands anymore, that's what I heard!
Thanks I needed that ha! I am still shocked and grateful that so many people know so very little physics. Sadly in the end the not so well informed/ignorant will pay the highest price not changing their lifestyles in order to live what may be an even better experience with less energy. I have worked in high energy most of my life and still my family and friends think we will save them with some Star Trek anti-gravity, cold fusion and magic beans. We will not even fund a tool that will give us more understanding of how far we are away from fusion and higher quality nuclear power and that would be the muon collider.
Don't worry, "they" will come up with something that permits unlimited geometric growth. lol
EVERYONE, including Douchinger, accepts as a matter of basic logic that exponential growth cannot continue indefinitely. They just cannot force themselves to accept that NOW is the time and THIS is the place where the inflection will be.
They are in the bargaining phase, please oh please, let it be 50 years from now after I'm dead. Why couldn't oil have peaked in 2105!?!?
I've heard a milion times that someone will" just come up with something" to abey the laws of physics. Needless to say, these are not scientists and engineers that do it, although some otherwise intelligent people claim it.
The real problem here is that ordinary and even above-average people are too stupid to understand the problem, therefore they cannot be convinced that it is serious. Consequently, no collective action is taken.
No last minute , technological miracle save this time. The problem is simply too massive
"uncle buck" at critical support line now, but oil clearly getting overbought too.
and TA has been clearly flashing 'uncle buck' as 'oversold' for how many months now?
And if you like technicals: chart the dxy from mid-march to today: Looks to me like the USD has a head and shoulders lead in the fiat currency race to the bottom, and it only just crossed the neckline with a strong slope pointing to the finish line.
Just sayin' keep your eyes peeled. If TA can be considered of any value in our current rigged market environment the DXY still looks to have downside in it yet; maybe a lot if it can't hold here for a good portion of next week.
please - oil going up because of the strong "recovery?"
oil is up cause the dollar is TP and GS and the banks are pumping what they want; fundamentals, shumdamentals
they can take it where they want just like they did before - 147.90
That reminds me of a thought I had.. The USDX is sitting around 78.. Oil is 82
In 08 the USDX hit 72 oil pushes 150..
The math isn't right.. Oil producers are getting very little for their oil right now..
If I traded in such things, i'd be long oil.
I don't have a dog in this fight.. I'm just an engineer that looks at numbers and tries to make sense of them.
And doing a damn fine job too Max. Thanks for the recap and the point of discrepancy it illustrates.
Vindication for some of the big picture analysts like Mr Ruppert.
The only way to guarantee inflation is to pump energy costs.
Whitehouse: ring-ring (call to BP).
Whitehouse: we have a problem with the fat end of the baby boom pyramid. We can't afford them.
BP: Let's toxify the water they drink and use.
Whitehouse: Done, in return you can run energy to the stratosphere solving another problem of ours; deflation.
BP: We think this will assist your Healthcare cause also.
Whitehouse: Most excellent my brother.
One sure way to slow QE would be for oil prices to skyrocket. They can't afford to have the rabble paying $4 a gallon or Bennie loses control for sure.
I'm not sure if I agree. Have you seen the charts posted detailing the rise in consumer savings?
Bennie: "So, you think you can save do you?"
On average 50 cents per refined gallon is federal and state tax revenue. This will increase to 75 cents per gallon by 2011.
When the refiners see that they will push to close that gap. When the wildcaters hear of this they will push to close that gap.
Consumer spending by hook or by crook. Real price inflation as a result of higher energy costs.
Remember they do count paying down debt as savings. Paying debt does leave more ready discretionary income at a reduced level over time. Lived that dream already:), the increase now is going directly to income buffer savings, practicing what I preach. No mortgage, auto loan, credit card, debt. I still have student loans @ 4.1% (my sons ed).
Equities, oil, gold, bonds all up? Is that not classic "inflation"?
The dollar may be "devaluating or debasing" however if everything goes up, that is inflation of prices.
Thanks, Helicopeter man. ALl we need now is for the EU to blow up or the rest of the mortgage mess and we will be in the middle of a shit storm and all out of paper towels.
We need nuclear fusion and electric cars. Right NOW! It sucks that you need oil in order to manufacture plastic products.
- fuck plastic. Glass jars and tin cans.
How about fertilizer? Fuck that too?
we will have too. We've been harvesting plants for 700,000 years, we have fertilized with oil in the last 100.
I read somewhere that a higher oil price eventually puts upward pressure on the DXY because 'oil is priced in dollars' and any increase in price/bbl ups demand for USD to pay for the stuff. Or is Mish right and the fungible nature of currencies altogether negates that argument? (now wouldn't that be ironic!)
Today it costs $80 + XXX amount of gold.
It was once said that "gold and oil can never flow in the same direction". If the current price of oil doesn't change soon we will no doubt run out of gold.
This line of thinking is very real in the world today but it is never discussed openly. You see oil flow is the key to gold flow. It is the movement of gold in the hidden background that has kept oil at these low prices. Not military might, not a strong US dollar, not political pressure, no it was real gold. In very large amounts. Oil is the only commodity in the world that was large enough for gold to hide in.
Apologize for the info stream.
Another WAR to cause you & I to pay more,import more.......
11 Billion barrels....on CONUS.( ANWAR) is in the process of being declared a Federal National Wildlife Preserve), = NO DRILLING EVER.
Also, in case you haven't follwed Congress has mandated(back pocket legislation $$$), a Minimum of 15% Ethanol mix in our cars starting next year.
Any vehicle (esp older than 2001) will basically implode on short order.
Right now the mandate is 10%, sometimes you get slipped 24%, and the number of engines blown has reapir shops going strong.
Any vehicle using 15%+, is a repair job in the making........guaranteeed.
Where is your incentive to buy a new car/truck, knowing it's going to tear itself to pieces on Congressional mandated gas, not checked by independent labs, to back these FACTS up.
I live in Tejas,major metroplex area, and the dealerships and garages are getting rich off of the overage of Ethanol already in fuels.
OBTW, the Ethanol(CORN) lobby is paying big bucks to get these levels raised, even further than 15%,who is going to pay YOUR tab?.
Do you have ANY idea how TINY a resource 11Bbbl is?
If that produced like similarly-sized surface deposits have, it would produce at best 1/15th of the US's daily current consumption. If it produced like a deepwater field, it would produce at half that rate.
You oil polyannas really need to STFU and listen. The oil situation really IS intractable as a matter of the basic mathematics of growth, but nobody wants to hear it.
umm... world wide comsumption is about 85 B bbls pa.. US is 25% of use...
Alex, I'll take 6 months for $200
I think your numbers are wrong, world consumption is 28 billion per year 76 million per day.
mea culpa... had a good old fashioned brain fart ( I am well aware of the rates)
doesn't really change things... 6 months of U.S consumption becomes 1.5 yrs..
right. because this field will produce 18mbpd, huh?
And AGAIN I have to play the STFU card.
Dude, you CANNOT divide URR by consumption to get lifespan.
IT DOES NOT WORK THAT WAY.
An 11Bbbl resource will produce at most around 1mbpd. This is 1/18th of daily US needs.
Not 6 months. Not 1.5 years. Not ANY AMOUNT OF TIME. Oil is produced at a RATE that has very little relation to URR.
Relax.... I am not one of the asshats you are used to talking to. I use the conversion of the URR to show how insignificant 11 B bbl is.
I read Simmons in 2005 and have been registered at the Oildrum for
so just fucking chill, will you.. And in case you are wondering I have Ph.D. in physics and understand thermodynamics a fuck of lot better than you ever will.
Bravo! Bravo! Well said my friend!
My favorite saying (quoting myself) " The last 30% is worth far, far more than the previous 70%! What part do people not understand about the great Adam Smith's proclamation of supply and demand at the base level of all economics? The really sad part of population reduction is, war is the most likely outcome from resource scarcity. I would not be at all surprised to find crude oil behind the wild gyrations in all currencies? How can we ever know if that is a link. I analyze the numbers and quickly come to the chicken and egg moment. Please help.
You should do a small amount of research before you comment. 15% means nothing to any engine, other than far fewer BTU's in the tank per fill. Ethanol is a loser all the way around and will end of it's own failure on an energy level alone, not to mention the rise in corn prices. Without massive subsidies ethanol is a lose lose situation. When it takes 1.25 gallons of ethanol to make 1.0 gallons of ethanol that logic is self defeating and doomed to failure, stop thinking about it. Nuclear power is a powerful tool, although the only real drawback is lack of fuel. At the current rate of fuel consumption we will be out of Uranium in less than 10 yrs., mining production has fallen to the floor. Fusion, ITER , International Thermonuclear Experimental Reactor was just cut back and will not begin until 2017 enough said on that topic. Algae ha, don't make me laugh at the cost of btu ha! Solar not enough polysilicon in the world to move us to 15% world wide. Wind turbines another hoax, 20 yr payback with a 20 yr. lifetime ha! Norway now understands this haulting their program. There is nothing in the pipeline (pun intended) to remotely control the rapidly depleting lightoil reserves. With most oil exporting countries consuming at an even higher rate than export, that is a done deal also. We spent the time we needed to convert to low energy life styles debating if there was a problem, now there is no time left without massive pain and suffering foisted on those at least deserve it. Half the worlds population will end without cheap crude oil? Friends and I debate this and there are no estimates that don't require large numbers in population reduction. Very sad it is, I will say I don't count myself as one that should be valued any more than anyone else just because I understand where we are going as a global population. I know for most of you, you will say oh another doomer, he just doesn't get it, Jesus will save us. I take great comfort in your peace of mind and hope when push comes to shove, you will remain at peace. Peace be with you all.
There were 1 million people in NYC in 1900 with 300,000 horses to haul food in from the surrounding suburbs (that were then farmland).
Those farms are now gone. They are concrete parking lots. NYC is now 8 million people. And those horses were also hauling hay for themselves, from those same farms that are no longer there.
The average calorie travels 1500 miles to reach your mouth.
The cities will not survive this. Any dense population area will not survive this.
Not half. About 900 million will survive -- out of 7 billion. It won't be gentle. It won't be a 50 year process of discouraging babies. It will be wars and starvation, and it will be soon, and there is nothing that can be done about it.
I think you have forgotten food production efficiency since 1900 affords fewer acres planted with increased production. Crop production will be produced to eat rather than animal feed. You can feed eight people with the same grain it takes to feed one person meat. The remaining crude supplies will be used for Ag, fertilizers, transportation etc. We will alter our living standards in compromise saving more people I believe.
That increased efficiency is all oil based. It comes from 10,000 acre farms instead of 1920's 20 acre farm, because of agricultural tractors. It comes from potash fertilizer extracted via oil powered machinery. It comes from insecticide that is itself almost all oil.
Remaining crude used only for Ag, saving everyone's life? What % do you think is squandered now . . . on Sunday afternoon drives with the kids -- at $3/gallon. There's not 6 billion humans worth of oil wastage in the world. That's just absurd.
And you envision some global cooperation about all this? One where the US agrees to a 20% reduction in GDP so that oil can be sent to India and China in a population-based apportionment of it?
Your days, your kids' days, and my days are numbered. The number is small.
I have to agree, the number the planet supports falls off dramatically when cheap oil disappears. I do have hope that once the steep decline off peak production occurs governments will decide to work together rather then fight over remaining resources. I laugh when people talk of global warming, I tell them that problem is solved, the end of cheap energy solved it for us ha! I will live out my days reducing my energy needs through a vegetarian lifestyle ( I miss the steaks already), growing most of my food, not owning another vehicle past the one I own now, working to go off grid. Life can be better than chasing more dollars than you need. I will continue to work in energy research even if I have to work from home.
Trav and Andrew,
Any thoughts on geothermal? How far down do you have to dig on average to reach ~100C (ie boil water)? And how about ocean-wave electricity generating systems?
Not saying these will fill the gaping chasm left by worldwide oil stock depletion, but possibilities to add to the pool of wind/solar etc?
Well, you are others will hate this, but I'm going to ask and advocate that money not be squandered on "alternative energy". It fails Newtonian physics.
Go look at watt to horsepower conversions and find out how many watts you need to run a 500 horsepower agricultural gizmo for 12 hours a day in planting and harvesting season.
See, this is the crusher. The wave of the hand and the talk of oxen and horses fails utterly because Those Seasons Are Only So Long. You can't do 10,000 acres in a week or two with oxen (who have to eat, too). You have to get the seeds in the ground before planting season ends. You have to get the food harvested before the frosts arrive.
Geothermal. Nuclear. Solar. All crap. They won't push tractors around.
There is a very unfortunate tendency in the lexicon to pursue some aspect of elegance by talking about energy instead of oil. It creates error. There is no energy crisis. There is an oil crisis.
"Geothermal. Nuclear. Solar. All crap. They won't push tractors around."
Why not? I mean, you seem so certain. Electricity will run a car, a train, a submarine, why not a tractor?
heh, that quote reads like a song from REM:
"...offer me alternatives, offer me solutions, and I de-cline. It's the end of the world as we know it..."
Note that I didn't assert the techs I mentioned were the answer to the oil crisis, I was only asking a couple of questions about how far they had come to date; though I admit it seems to me it could hardly make matters worse to dig deeper, pun intended.
"There is no energy crisis..."
Indeed, the earth's mantle is plenty hot, last time I checked.
Over a beer, or few beers, I spoke with an engineering prof. from my local (respected) university and asked him if recent advances in drilling technologies developed by the oil exploration industry will allow us to go deep enough to hit ground temps of 100 C plus, he said ( I paraphrase),
"Sure, in some places, but (energy companies and the gov'ts they own) are not even going to start looking at that kind of power generation technology seriously until the oil is all gone or so expensive to extract that investment in the new infrastructure required will be considered worthwhile."
Because of physics. Electricity runs an under powered car for 40 miles and then can't recharge faster than overnight. An agricultural combine is 500 horsepower. A horsepower is 750 watts. That engine needs to be 375,000 watts of electric power to get 10,000 acres planted in a week or two. A watt is a volt - ampere. I don't know if you have the engineering capability to perform the calculations but a 375,000 watt engine will drain any imaginable battery in a few minutes and require days to recharge.
An electric submarine battery weighed 208 tons. It would drain in a few hours -- or less. You will never plow a muddy field with 208 tons on the wheels.
Is the earth going to get warmer?
people desperately need to stop thinking about replacement of only existing consumption and start thinking about the lost growth.
MAJOR changes are coming until the advent of a new energy input permitting resumed exponential growth.
As I have mentioned on a number of oil summaries....
Follow the Brent-WTI spread. If Brent is higher, it is reflecting a real world wide demand. Face it, the oil market is getting tighter and tighter. Brent reflects the true demand for oil deliverable anywhere in the globe.
High oil prices results in cost-push inflation, which almost paradoxically, is strongly deflationary.
inflation is always and everywhere a monetary phenomenon. [/friedman]
For more, see 99er Charts in todays' Market Commentary Forum. Have a great weekend.
Updated GOLD monthly chart:
do they count
"We don't have to pay the mortgage anymore
because JPM and Ally just stopped all foreclosures"
as increased savings? increased income?
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