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Saudi Arabia, Suddenly Desperate For More Bribe Cash, Says Will Boost Shipments (As If It Has A Choice)

Tyler Durden's picture




 

That latest entrant to the "whorism" political class, Saudi Arabia, is getting desperate. After yesterday's attempt to prostitute itself out to its people by literally handing out $37 billion in a glaring demonstration that it has never heard the "money can't buy you love" saying, now the FT is reporting that "Saudi Arabia is in “active talks” with European oil companies to meet the production shortfall left by Libya, the clearest indication to date that the leader of the Opec oil cartel is about to boost supplies to stop further rises in the oil price, which surged to near $120 a barrel on Thursday." The FT's commentary is partially correct: "You can only expect the price to go up. It is fear of the unknown. The risks are all to the upside,” one senior oil trader said. "Saudi Arabia needs to respond." It does, but not to fill the gap. Following the latest attempt at recreating Helicopter Ben's monetary policy, Saudi Arabia suddenly finds itself clutching at cash straws. As UBS' Andrew Lees points out: "Saudi's USD37bn bonus to the population equates to USD10.45bbl on its 2009 production of 9.7m bpd. Saudi already needed USD74bbl to balance its budget in 2008. In December last year the talk was that its budget deficit would be 40bn riyals having been 86.5bn riyals the previous year as it spent heavily on salary increases for soldiers. With this increased spending it seems Saudi will need about USD85 - USD95bbl to balance its budget, or it will need to ramp up production by about 10% (more capital spending) without prices falling." Oops. Do you see what happens Larry when a country hands out money it doesn't have? We hope for Saudi's sake that it has some POMO desk interns running things there as effectively as in the US. But until we get some confirmation, we continue to back the truck up with Saudi CDS, a process which started when these were first quoted in the double digits.

Full Andrew Lees must read note:

A few things worth considering on oil. 
 
1. Saudi's USD37bn
bonus to the population equates to USD10.45bbl on its 2009 production of
9.7m bpd. Saudi already needed USD74bbl to balance its budget in 2008.
In December last year the talk was that its budget deficit would be 40bn
riyals having been 86.5bn riyals the previous year as it spent heavily
on salary increases for soldiers. With this increased spending it seems
Saudi will need about USD85 - USD95bbl to balance its budget, or it will need to ramp up production by about 10% (more capital spending) without prices falling.

2. It is worth remembering that in the 1970's it was food prices that
initially rose and the Middle East rebalanced its finances with higher
oil prices just as they are doing today. The present political situation
should not therefore be a surprise particularly when Egypt's production
has fallen 20% since 1995 and its net exports have fallen 95%.

3. What is spare capacity? Whilst OPEC indicates on its website that
it has several million barrels of spare capacity (about 4m bpd rising to
6m bpd over the medium term) http://www.energybulletin.net/stories/2010-12-20/will-2011-be-rerun-2008 suggests it is not actually clear that they have any more than 2007/08.

A
lot of the spending appears to only be offsetting the natural decline
of existing fields. There is probably the ability to meet an extra
1.5mbpd of oil demand; beyond that prices will spike.

4. Saudi's oil production peaked in 2005 at 11.1m bpd. It averaged
10.4m bpd in 2007, briefly recovering for a few months in 2008 before
subsequently falling to 9.7m as of 2009. The initial fall came when
prices were making new highs in both nominal and real terms, which
suggests that if it was a voluntary cut as Saudi intimated, then it was
no less political than the "oil sword" of 1973/74. It seems far more
likely that with Haradh 3 well productivity thought to be down 60%
between 2006 and 2010 that they were struggleing to maintain output.

5. Over the last 10 years OPEC's production has risen by about 2.5m
bpd or just over 8% pa since 2000 but rising domestic consumption has
meant that exports have been flat. They grew until 2005 but have been
falling ever since. Last year Arab growth was expected to account for
11.7% of the global growth in oil consumption.

6. When people talk about higher oil prices acting as a tax on
consumption, what they really mean is that the oil producers are
consuming a higher proportion of the oil or the work done by that oil as
per Saudi's latest USD37bn bonus, leaving less available for the rest
of us.

7. http://www.epmag.com/WebOnly2009/item41209.php,
published in 2006, highlights that recessions correlate closely to the
annualised change in oil prices . Whenever oil prices have increased by
more than 50% y/y (trailing 12 month average divided by the previous 12
month average) a recession followed. Brent averaged USD80.34bbl last
year. That would need oil to average USD120.51bbl this year. The 12
month moving average is about USD84bbl so if this was just a spike that
lasted say 3 months rather than the whole year then it would require
prices to rise to about USD228bbl (3/12 *228 +9/12 *84) which is
possible, but I would suggest unlikely. It is also worth remembering
that in the 1970's oil induced recession there were no strategic
reserves. They were brought in as a consequence of that and the IEA has
already talked about releasing some of these on to the market if so
required, so when people talk about Ben Bernanke printing oil, he can
effectively for a few months by opening up the spiggots to domestic
stores. Ofcourse this would only be a short term fix and by lowering the
above ground reserves would increase the future volatility.

5. The real question to ask is whether high resource prices are a
consequence of imbalances in the global economy as most
commentators suggest - (ie unproductive and excessive consumption being
kept alive by increased debt accumulation) - in which case we are seeing
a repeat of the 1970's when resource prices will rise until eventually
this imbalance is sorted, or whether as I believe it is a genuine
resource constraint story that is playing out. Either way the result is
the same in the short term; removing the imbalance or finding new
supplies (North Sea and then later Chinese coal) to allow the imbalance
to continue further. The difference is that without
scientific advancement (nuclear fusion), more and more present
consumption will be determined as excessive and have to be destroyed
under my geological decline story, raising questions as to which are the
next dominoes to fall? First it was a few of the peripheries then
US subprime, European austerity and now slower Asian growth as it tries
to fight inflation. We also have to consider whether that demand
destruction is smooth or whether government's fight it through increased
debt and transfer payments until they can fight it no longer. If it is
smooth then oil prices don't need to spike hiker to cause demand
destruction; the transfer of capital from the rest of the economy can
smoothly match the higher oil prices. This goldilocks scenareo is
totally unrealistic however as governments can't completely abandon
unproductive assets when they are made redundant, and countries will
fight each other economically to determine who gets those resources and
maintains their standard of living and who dies.

h/t Ratscam

 

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Thu, 02/24/2011 - 09:22 | 992379 Michael
Michael's picture

The wealthy elite oligarchs are really banging the Al Qaeda scare bomb drum on the MSM to drive that oil price higher.

They are reporting Al Qaeda is backing the revolution in Libya like crazy. Where are these Al Qaeda bases located they speak of anyway? The MSM propaganda machine is going into overdrive in support bringing out former CIA agents parading them on CNN with their bull shit.

The oligarchs are pulling out all the stops to get what they want. Look at the dollar taking a nose dive too.

Lindsy Williams discloses where there are 2+ trillion barrels of untapped oil on US soil; Braken, Sainsberry, Gull Island, ANWAR.

He is on right now on rebroadcast with Alex Jones. You must listen to this.

http://www.infowars.com/audiobox.html

Thu, 02/24/2011 - 09:45 | 992453 LawsofPhysics
LawsofPhysics's picture

Sweet, then we become Saudi Arabia.  Hedge accordingly.

Thu, 02/24/2011 - 09:50 | 992467 Canucklehead
Canucklehead's picture

Any thoughts on what the cost would be to obtain those 2+ trillion barrels of untapped oil in the US? $70 a barrel? $90 a barrel? Over $100 a barrel?

The Russians believe oil is available everywhere in the world, if you can drill deep enough...

Thu, 02/24/2011 - 09:55 | 992490 Michael
Michael's picture

Lindsy says $16/ barrel and a lot of it, especially in the Bracken Dakota reserves is light sweet. That would be 60c at the pump.

Thu, 02/24/2011 - 10:03 | 992508 LawsofPhysics
LawsofPhysics's picture

Are you correcting for dollar devaluation?  By then the pumps might only take silver and gold.

Thu, 02/24/2011 - 12:03 | 993177 Bicycle Repairman
Bicycle Repairman's picture

The truth about the peak oil scam, the green energy bubble and the global warming fraud.

Governments, investors and even the World Bank are rushing for the exits in the Great Escape from the green energy bubble. Solar energy appears to be the worst affected sector so far. Dow Jones reports on a startling U-turn by Britain’s ultra-green government has caught investors off guard and shock waves across the markets will likely precipitate the further rush from green energy projects to shale gas. The UK’s Department of Energy and Climate Change made the shock announcement as it revealed a comprehensive review of its Feed-in Tariff (FIT) program. Indications from data provider, Prequin are that over $1bn in earmarked funds may be lost as Britain now promises it will only hold tariffs until April 2012. Green Investors Feeling Betrayed by European Governments Britain’s decision is another nail in the coffin for Europe’s tottering green energy market. Last year the first of several crushing body blows was dealt to environmentalist dreams when the Spanish government retrospectively cut the value of its tariffs in its own U-turning energy review. The devastated Spanish Solar Photovoltaic Industry Association, with mass bankruptcies on the cards, is accusing their government of utter betrayal is yet to carry out a threat to sue over the ruling. As the green house of cards collapses Netherlands-based investment manager DIF and BNP Paribas and venture capitalists such as Future Capital Partners are rumored to be extremely fearful of further repercussions coming at a time when European public opinion is bored and fatigued after two decades of endless global warming hype. UK Energy Minister Charles Hendry made the starkly ominous admission, “one third of Britons think the science on climate change has been exaggerated.” Not helping the green cause has been a succession of brutally cold Northern hemispheric winters which an increasing number of scientists fear may be the harbinger of the onset of a mini-ice age. Abundance of Shale Gas Deflates Green Energy Bubble Causing green lobbyists and environmentally focused investors to cry bitter into their carrot juice comes the news that China is making its move to become pre-eminent in shale gas investment. Peter Foster in the Financial Post (February 11, 2011) reports that energy company Encana is to get a proposed $5.4-billion investment by PetroChina in its shale gas operations. The move he says “confirms the soaring importance of a resource that 10 years ago was hardly on the commercial map.” The market obviously liked the news of the Chinese investment as Encana shares jumped 4.5% to close at $32.02. Savvy shale gas investors are also looking most eagerly at Canada where the discovery that Quebec has considerable shale gas potential has dealt another blow to the idea that the world’s energy resources are anywhere near a so-called “peak.” A strident Quebec Oil and Gas Association has hired former Parti Quebecois premier Lucien Bouchard to help lobby for provincial development to exploit the unexpected huge find. With so many known large deposits of shale gas in countries such as Poland, Germany, France and the U.K. economic strategists are finally waking up to the fact that this monumental new resources could help free Europe from the threat of disruptions from its main natural gas supplier, Russia. Andrew Orlowski reporting for ‘The Register’ (February 10, 2011) reveals Holland has also joined the rush away from green by becoming the first country to abandon the EU-wide target of producing 20 per cent of its domestic power from renewables. The Dutch are now putting their long-term faith in nuclear. Netherland’s only nuclear reactor, the Borssele plant, scheduled for closure by 2003 is now planned to operate at least until 2034. World Bank Joins Rush Away from the Green White Elephant Top line international bankers also appear to be abandoning ‘big green’ according to a report by climate scientist Roger Pielke Jr. who highlights two recent research papers published by influential thinkers inside the World Bank. Economics papers by Robert Mendelsohn and Gokay Saher (here in PDF) and Medelsohn, Kerry Emanuel and Shun Chonabayashi (here in PDF) chop the legs from under the pro-green Stern Review (2007) and affirm that no human impact may be inferred on global climate. With economists plainly joining an increasing number of scientists in global warming skepticism its little wonder there’s now a mass flight away from ‘renewables;’ such that both investors and governments are compelled to follow suit in the clearest indication yet that green energy won’t live up to its promises. The key to long-term economic success now appears to be safely premised once again on solid market innovation, not ideologically driven government subsidies; such subsidized ventures have a long and notorious history as lame duck enterprises. It seems ‘green renewables has become the latest of these white elephants.

Thu, 02/24/2011 - 12:14 | 993258 Flakmeister
Flakmeister's picture

Cutting and pasting the same old shit I see. At least have the sense to break it into readable paragraphs. Just a bit of advice.

Thu, 02/24/2011 - 12:35 | 993389 DaveyJones
DaveyJones's picture

helluva oil authority you're quoting there

Thu, 02/24/2011 - 12:40 | 993426 Thomas
Thomas's picture

Peak oil and a green energy bubble are not mutually exclusive. There are many of us who believe what makes peak oil so ominous is that the tech-based alternatives are, as you suggest, a bad joke. One also should not view a push toward shale gas and peak oil as mutually exlusive. The latter prompts the former. I submit (as evidenced by my NG rich investment portofolio) that NG will be the go-to energy source for awhile.

As to global warming, I am agnostic (apathetic even). What I can tell you, however, as a scientist (chemist) that the warming crowd's scientific debate looks more sound than what looks decidedly like a counter attack from the non-warming crowd. Arguments based on brutally cold winters in some location are particularly offbeat because pumping energy into the system (heating) will also cause increased turbulence. I find the notion that warming is accompanied by wilder oscillations to be compellingly logical. With that said, I am still agnostic.

Thu, 02/24/2011 - 12:49 | 993477 Flakmeister
Flakmeister's picture

Yes, I like NG, but be very careful about some of the shale gas juniors. HGT and SBR should be core holdings. Am not so crazy about SJT.

Thu, 02/24/2011 - 15:31 | 994202 PuppetRepubl1c
PuppetRepubl1c's picture

wall of text = do not read

 

FAIL

Thu, 02/24/2011 - 10:11 | 992519 snowball777
snowball777's picture

It's Bakken, dimwit.

An April 2008 USGS report estimated the amount of technically recoverable oil using technology readily available at the end of 2007 within the Bakken Formation at 3.0 to 4.3 billion barrels

 

That represents a 6 month supply at current consumption rates. Please grow a brain and stop linking to people who do NOT know what they fuck they are talking about as if they are experts.

 

http://www.theoildrum.com/node/3868

 


Thu, 02/24/2011 - 10:14 | 992538 quasimodo
quasimodo's picture

Yes, because we all know the USGS is the bastion of reliability, dimwit

Thu, 02/24/2011 - 10:40 | 992650 snowball777
snowball777's picture

It's independently verified by many sources.

http://www.worldlingo.com/ma/enwiki/en/Bakken_Formation#History_of_Bakke...

You want to believe that a pipe dream promulgated by a preacher will save you? Be my guest. There's no law against stupid.

And don't forget to account for energy density rather than sheer volume of hydrocarbons. They don't burn equally.

Thu, 02/24/2011 - 10:52 | 992718 DaveyJones
DaveyJones's picture

pipe dream, I get it 

Thu, 02/24/2011 - 10:50 | 992703 Bicycle Repairman
Bicycle Repairman's picture

On cue the "peak oil" (tm) gnats have arrived.

Say, have you read the entire 10 years of the oildrum (tm)?

Thu, 02/24/2011 - 10:54 | 992725 snowball777
snowball777's picture

On cue, John O'Sullivan, Exxon Bun-Boy, has heard an opportunity to shill for shale.

Fuck you, ignorant.

Thu, 02/24/2011 - 11:01 | 992778 Bicycle Repairman
Bicycle Repairman's picture

Temper, temper....

Thu, 02/24/2011 - 12:19 | 993296 tarsubil
tarsubil's picture

Thou shalt hath useth Shakespearian soundeth wordseth.

Thu, 02/24/2011 - 10:54 | 992734 DaveyJones
DaveyJones's picture

and on cue, here comes BR/S with his book of "facts" Say, how's that perpetual motion device going?

Thu, 02/24/2011 - 11:04 | 992789 Bicycle Repairman
Bicycle Repairman's picture

It's going well.  If you told the 1970s peak oilers about the SUV and its coming popularity, they would have thought you were insane.  But it happened now didn't it?

Thu, 02/24/2011 - 11:16 | 992862 LawsofPhysics
LawsofPhysics's picture

Yes it did, thanks to cheap paper and nothing else.

hedge accordingly.

Thu, 02/24/2011 - 12:25 | 993338 Bicycle Repairman
Bicycle Repairman's picture

Those SUVs did not run on paper.

Thu, 02/24/2011 - 12:40 | 993420 LawsofPhysics
LawsofPhysics's picture

No they don't and you need a lot more fiat to fill the tank don't you?  What is your point fucknut?

Thu, 02/24/2011 - 12:48 | 993471 Bicycle Repairman
Bicycle Repairman's picture

My point is peak oil is BS.  Did you just join the discussion?

Thu, 02/24/2011 - 12:49 | 993484 Flakmeister
Flakmeister's picture

My point is that you have presented nothing to show that you are not full of BS.

Thu, 02/24/2011 - 13:20 | 993654 tmosley
tmosley's picture

That made me giggle.

Thu, 02/24/2011 - 11:19 | 992878 DaveyJones
DaveyJones's picture

your logic sucks, along with your bag of "facts." As other honest posters have pointed, 1970 was the US peak. Nearly sixty countries have now peaked. SUVs prove nothing but stupidity, something you should relate to. It's a good thing you're paid by the post and not the convert 

Thu, 02/24/2011 - 12:27 | 993353 Bicycle Repairman
Bicycle Repairman's picture

My logic is dead on.  Go back to the oildrum.  You'll hear nothing but pleasant chirping there.

Thu, 02/24/2011 - 12:37 | 993409 DaveyJones
DaveyJones's picture

you're logic is dead on...arrival. Amazing work discrediting the oildrum.

Thu, 02/24/2011 - 12:46 | 993460 Bicycle Repairman
Bicycle Repairman's picture

Too bad this isn't the oil drum, eh compadre?  Then you and your comrades could form a circle around me and scream at me until I was "re-educated".

This is ZH, bitch.

Thu, 02/24/2011 - 12:50 | 993489 Flakmeister
Flakmeister's picture

You wouldn't last a minute at theoildrum

Thu, 02/24/2011 - 13:23 | 993664 tmosley
tmosley's picture

Why?  Do they ban any dissenters there? 

Thu, 02/24/2011 - 13:37 | 993726 Flakmeister
Flakmeister's picture

 No, not at all. But you are required to come up with real analysis and not simple posturing. If you read the contributions very closely you will see that there is dissent about the state of affairs and interpretation of the data. It is far less monolithic that you would think. It is a good honest discussion with all political stripes represented.

I recall one serious contributor (R. Rapier) ripping a new one for another contributor about misinterpreting Hubbert Linearization.

Thu, 02/24/2011 - 12:21 | 993309 tarsubil
tarsubil's picture

If you don't believe peak oil is here, you believe in perpetual motion. If you don't believe in global warming, you believe the world is flat. Amazing how similar you burning sticks are.

Thu, 02/24/2011 - 12:31 | 993376 Bicycle Repairman
Bicycle Repairman's picture

None of your statements make any sense at all.

Thu, 02/24/2011 - 12:42 | 993441 LawsofPhysics
LawsofPhysics's picture

Neither do any of yours. 

Thu, 02/24/2011 - 13:24 | 993670 tmosley
tmosley's picture

Wow, you sure do put a lot of stock into "belief".  Perhaps you should try thinking instead?

Thu, 02/24/2011 - 10:02 | 992505 serotonindumptruck
serotonindumptruck's picture

The Russians have evidently excelled with their ultra-deep oil exploration technology. However, as BP unfortunately learned, deeper wells are generally under much greater pressure, thus the extraction process carries increased risk.

Hopefully, there's an engineer or two lurking around these parts who might generalize further.

Thu, 02/24/2011 - 10:16 | 992546 DaveyJones
DaveyJones's picture

...see: gulf of mexico

Thu, 02/24/2011 - 10:51 | 992711 Bicycle Repairman
Bicycle Repairman's picture

No, you screwed up the talking point.  If the Russians are right, and there is oil below 10,000 feet, then oil is not made up of dead dinosaurs.

Thu, 02/24/2011 - 10:55 | 992732 snowball777
snowball777's picture

a) It's dead plant matter, not dinosaurs.

b) Plants were around for a looonng time before T-Rex.

Thu, 02/24/2011 - 11:04 | 992799 Bicycle Repairman
Bicycle Repairman's picture

And these plants ended up 10,000 or more feet below the surface?  How?

Thu, 02/24/2011 - 11:21 | 992891 snowball777
snowball777's picture

Geology...you can learn about it at your local community college, if they accept you.

Thu, 02/24/2011 - 11:26 | 992928 tarsubil
tarsubil's picture

Well, if it is community college geology, I'm sure a genius like you would have no problem summing it up for us.

Thu, 02/24/2011 - 12:13 | 993245 Bicycle Repairman
Bicycle Repairman's picture

I don't need to know any geology to know that dinosaurs 10,000 feet below the surface of the earth is utter BS.

Do you have any idea how stupid you appear to be?

Thu, 02/24/2011 - 12:41 | 993434 LawsofPhysics
LawsofPhysics's picture

See my earlier post regarding how the oil got there fucknut.

Thu, 02/24/2011 - 12:44 | 993452 LawsofPhysics
LawsofPhysics's picture

"I don't need to know any geology to know that dinosaurs 10,000 feet below the surface of the earth is utter BS."

 

Boy I hope you are not an engineer.  I can see it now "I don't need to know any facts about engineering to know how to build a bridge".

What's up fucknut, the X-box still broken?

Thu, 02/24/2011 - 15:35 | 994218 PuppetRepubl1c
PuppetRepubl1c's picture

Bicycle Repairman  

 

From your post i am guessing you believe Jesus rode on dinosaurs and people lived to be 900 years old?

Thu, 02/24/2011 - 13:27 | 993678 tmosley
tmosley's picture

How did it get a kilometer below the Atlantic plate, thousands of miles from any subduction zone?

Yes, there is such a think as "abiotic" oil (rather, hydrogen and short chain hydrocarbons that are converted by deep dwelling bacteria into long chain hydrocarbons).  The only question is the rate at which they do so, and where does it collect?

Thu, 02/24/2011 - 16:07 | 994405 Flakmeister
Flakmeister's picture

Just to nitpick, if the short hydrocarbon chains are converted via bacteria, then by definition, it is a biologic process, i.e. biogenic. But your other points are very relevant.

Thu, 02/24/2011 - 11:22 | 992908 tarsubil
tarsubil's picture

Mother Gaia put them there, dimwit. And you evil industrialists are raping her! Poor Mother Gaia!

Thu, 02/24/2011 - 12:14 | 993265 Bicycle Repairman
Bicycle Repairman's picture

You may be kidding here.  But in any case you make a good point.  Ultimately all this peak oil crap is just another religion.

Thu, 02/24/2011 - 11:25 | 992929 LawsofPhysics
LawsofPhysics's picture

Numerous geological events over billions of years.  Very simple really.  Plus numerous microbes that were capable of both phototrophic life on the surface and chemotropic life under the surface.  Either way, the oil we are currently consuming for fuel and cracking for a myriad of commodity chemicals to sustain our currently quality of life is not being replaced.  My company is currently working on engineering algae (good at capturing the only semi eternal energy source, photons) and using the light energy to drive production of biodiesel.  

But no matter how you slice it, even if we could capture photons with 100% efficiency, there is not enough energy to keep up with the demand.  Several good papers from MIT and Cal Tech on this.  Thermodynamics are what they, energy is finite (first law only so much enthalpy out there), worse still, you can't even break even (entropy is a bitch). 

Thu, 02/24/2011 - 11:26 | 992940 tarsubil
tarsubil's picture

Energy is finite? Like the universe?

Thu, 02/24/2011 - 11:41 | 993047 LawsofPhysics
LawsofPhysics's picture

Exactly.

Thu, 02/24/2011 - 11:42 | 993053 Flakmeister
Flakmeister's picture

Easy killer, faulty logic is frowned upon. As far as the earth goes, the available energy is for all intents and purposes finite. 

 FWIW, the data points to the universe being finite.

Thu, 02/24/2011 - 11:55 | 993121 LawsofPhysics
LawsofPhysics's picture

The second law is the bitch.  Finite energy in an expanding Universe=cold dark future.  Really need to harness that escape wormhole.

Thu, 02/24/2011 - 12:17 | 993279 Bicycle Repairman
Bicycle Repairman's picture

Well there is certainly finite energy in the sun.  And someday, wait for it, the sun is going to wink out.

Thu, 02/24/2011 - 12:39 | 993418 DaveyJones
DaveyJones's picture

it's a little bigger than the earth

Thu, 02/24/2011 - 15:51 | 994310 PuppetRepubl1c
PuppetRepubl1c's picture

if you believe (correctly) that the sun is a finite energy source, then why can't you understand that oil is also a finite energy source?  seems like a logic disconnect to me

Thu, 02/24/2011 - 17:09 | 994694 Flakmeister
Flakmeister's picture

Shh... syllogisms were never his strong point.

Thu, 02/24/2011 - 21:24 | 995487 serotonindumptruck
serotonindumptruck's picture

 

 

 

Our sun (Sol) is only around six and a half billion years old, and will still be in primary sequence for another few billion years.

Photovoltaic (PV) technology could be massively expanded, and at least provide a small cushion against the coming fossil-fuel energy crunch.

Thu, 02/24/2011 - 12:06 | 993192 SilverRhino
SilverRhino's picture

>> As far as the earth goes, the available energy is for all intents and purposes finite. 

 

Uranium and thorium will make that finite amount go up considerably if we ever get around to efficient extraction and utilization.

Thu, 02/24/2011 - 12:15 | 993274 Flakmeister
Flakmeister's picture

Doesnt change a thing... The energy available is finite, I did not say that we had exploited all sources yet.

Thu, 02/24/2011 - 13:31 | 993696 tmosley
tmosley's picture

You'd best qualify "all intents" and "all purposes".

Don't make the mistake of saying "the universe will die, so we must die tomorrow".  The universe will be around for a LONG TIME.  There will be plenty of energy available, for those willing to accumulate the capital required to harvest it efficiently.

Thu, 02/24/2011 - 15:07 | 994085 Flakmeister
Flakmeister's picture

Please, do not misinterpret what I have written and leap to erroneous conclusions. As to your second point, fairly obvious, but you do agree that the capital required will not be sufficient for all? (And no, I don't think it should be for all, just pointing out the logical conclusion)

Thu, 02/24/2011 - 11:28 | 992952 DaveyJones
DaveyJones's picture

here, this one's just at your level

http://www.eia.doe.gov/kids/energy.cfm?page=oil_home-basics

 

Thu, 02/24/2011 - 11:32 | 992981 tarsubil
tarsubil's picture

Oh, now I see where you get your education. Wow, you guys are geniuses. I mean, just look at the cartoons! What else do we need to convince the Gaia rapists?

Thu, 02/24/2011 - 11:39 | 993037 DaveyJones
DaveyJones's picture

a little slow on the joke?

Thu, 02/24/2011 - 11:26 | 992913 Flakmeister
Flakmeister's picture

There is problem... we have drilled over 100,000 wells and not one has ever found oil that was not biological in origin... So even if abiotic oil exists, it does not matter.

And what is your fixation about dinosaurs? Are still bemoaning that the toy in your cereal went missing?

Thu, 02/24/2011 - 11:41 | 993046 DaveyJones
DaveyJones's picture

was wondering when you'd grab some coffee and try to help the abiotics annonymous 

Thu, 02/24/2011 - 11:43 | 993062 Flakmeister
Flakmeister's picture

Was travelling yesterday....

Thu, 02/24/2011 - 12:24 | 993330 Bicycle Repairman
Bicycle Repairman's picture

Deep water horizon was built to drill 30,000 feet below the earth's surface. It was over 15,000 feet below when it struck oil under tremendous pressure. No plant life has ever existed down that far. The source of the oil is not rotting dinosaurs.

Thu, 02/24/2011 - 12:50 | 993482 LawsofPhysics
LawsofPhysics's picture

Does not have to be plant-based (although much of it is).  Lots of chemolithotrophs can live quite far below the surface.  Guess what, they produce the fatty-esters that become "oil" too.  Moreover phototrophic microorganisms get buried or become chemotropic over billions of years of geological turmoil and evolution.  You really are one dumb fucknut aren't you?

Thu, 02/24/2011 - 13:35 | 993712 tmosley
tmosley's picture

Think about what you just said.  Hopefully you will realize that since bacteria can live deep underground, and are in fact producing oil right now, then you will see that there are likely other deep sources of oil to be had, which are being produced "abiotically".  Quotes are used because there are bacteria involved, just not on the surface.  The conditions where these bacteria exist (high pressure, fairly high heat) convert biological material to oil pretty quickly.

The only questions are how fast do these things grow, and where does that oil accumulate?

Thu, 02/24/2011 - 15:41 | 994237 PuppetRepubl1c
PuppetRepubl1c's picture

LawsofPhysics

Thank god there are people who understand science on this board, sometimes it gets over run by the "Dinosaur bones where planted on the earth to trick people" crowd

 

 

 

Thu, 02/24/2011 - 10:41 | 992656 aerojet
aerojet's picture

You can't trust anything said on the Alex Jones show, no matter how much it fits your particular world view.  That's the problem with media these days, it is totally schizo and everyone with access to it is trying to promote their agenda.  There may be 2 trillion barrels, but imost of it is tied up in hard to extract deposits such as shale, correct? 

Thu, 02/24/2011 - 11:47 | 993075 Flakmeister
Flakmeister's picture

Correct, about 1 trillion of liquids and goo. The game that some like to play is to confuse and conflate oil shales and shale oil. One is oil in low permeability rock, like the Bakken, the other is kerogen. Kerogen is the geologic precursor to oil. It has been known of for a long time and no one knows what to do with it. In Isreal and Estonia, it is burned as the equivalent of low grade coal. It has the energy density of a baked potato.

Thu, 02/24/2011 - 10:46 | 992677 tonyw
tonyw's picture

"The Russians believe oil is available everywhere in the world, if you can drill deep enough..." no some Russians believe... but all their oil comes from normal oil fields that run out as the oil is extracted.

and some Americans believe that unicorns gamble in these hidden oil fields tanded by members of the Texan communist party. And Gaddafi believes bin Laden and jihadists have given hallucination pills to young Libyans and compares himself to the queen of the UK and people have no reason to complain whatsoever.

If you really want to know the facts about tar sands or pretty much anything to do with oil i suggest you head over to the oildrum.com and settle down for some serious reading.

 

Thu, 02/24/2011 - 10:53 | 992727 Bicycle Repairman
Bicycle Repairman's picture

Yes.  Go over to the oil drum.  No discussing oil here.  They're serving kool-aid at the oil drum.  Go get a cup and say 'hi' to Gail.

Thu, 02/24/2011 - 11:08 | 992782 DaveyJones
DaveyJones's picture

thou dost protest too much. More "facts" discrediting the oildrum?

Thu, 02/24/2011 - 11:07 | 992811 Bicycle Repairman
Bicycle Repairman's picture

Hopefully we have now reached peak Shakespeare .

Thu, 02/24/2011 - 11:21 | 992895 snowball777
snowball777's picture

But our dipshit reserves appear to be bottomless.

Thu, 02/24/2011 - 11:21 | 992901 DaveyJones
DaveyJones's picture

living proof that clothes do not make the man

Thu, 02/24/2011 - 10:41 | 992653 Ratscam
Ratscam's picture

repost: some remarks by Andrew Lees from UBS London that might shed some light into your question:

A few things worth considering on oil. 
 
1. Saudi's USD37bn bonus to the population equates to USD10.45bbl on its 2009 production of 9.7m bpd. Saudi already needed USD74bbl to balance its budget in 2008. In December last year the talk was that its budget deficit would be 40bn riyals having been 86.5bn riyals the previous year as it spent heavily on salary increases for soldiers. With this increased spending it seems Saudi will need about USD85 - USD95bbl to
balance its budget, or it will need to ramp up production by about 10% (more capital spending) without prices falling.

2. It is worth remembering that in the 1970's it was food prices that initially rose and the Middle East rebalanced its finances with higher oil prices just as they are doing today. The present political situation should not therefore be a surprise particularly when Egypt's production has fallen 20% since 1995 and its net exports have fallen 95%.

3. What is spare capacity? Whilst OPEC indicates on its website that it has several million barrels of spare capacity (about 4m bpd rising to 6m bpd over the medium term)
http://www.energybulletin.net/stories/2010-12-20/will-2011-be-rerun-2008
suggests it is not actually clear that they have any more than 2007/08.
A lot of the spending appears to only be offsetting the natural decline of existing fields. There is probably the ability to meet an extra 1.5mbpd of oil demand; beyond that prices will spike.

4. Saudi's oil production peaked in 2005 at 11.1m bpd. It averaged 10.4m bpd in 2007, briefly recovering for a few months in 2008 before subsequently falling to 9.7m as of 2009. The initial fall came when prices were making new highs in both nominal and real terms, which suggests that if it was a voluntary cut as Saudi intimated, then it was no less political than the "oil sword" of 1973/74. It seems far more likely that with Haradh 3 well productivity thought to be down 60% between 2006 and 2010 that they were struggleing to maintain output.

5. Over the last 10 years OPEC's production has risen by about 2.5m bpd or just over 8% pa since 2000 but rising domestic consumption has meant that exports have been flat. They grew until 2005 but have been falling ever since. Last year Arab growth was expected to account for 11.7% of the global growth in oil consumption.

6. When people talk about higher oil prices acting as a tax on consumption, what they really mean is that the oil producers are consuming a higher proportion of the oil or the work done by that oil as per Saudi's latest USD37bn bonus, leaving less available for the rest of us.

7. http://www.epmag.com/WebOnly2009/item41209.php, published in 2006, highlights that recessions correlate closely to the annualised change in oil prices . Whenever oil prices have increased by more than 50% y/y (trailing 12 month average divided by the previous 12 month average) a recession followed. Brent averaged USD80.34bbl last year. That would need oil to average USD120.51bbl this year. The 12 month moving average is about USD84bbl so if this was just a spike that lasted say 3 months rather than the whole year then it would require prices to rise to about USD228bbl (3/12 *228 +9/12 *84) which is possible, but I would suggest unlikely. It is also worth remembering that in the 1970's oil induced recession there were no strategic reserves. They were brought in as a consequence of that and the IEA has already talked about releasing some of these on to the market if so required, so when people talk about Ben Bernanke printing oil, he can effectively for a few months by opening up the spiggots to domestic stores. Ofcourse this would only be a short term fix and by lowering the above ground reserves would increase the future volatility.

5. The real question to ask is whether high resource prices are a consequence of imbalances in the global economy as most commentators suggest - (ie unproductive and excessive consumption being kept alive by increased debt accumulation) - in which case we are seeing a repeat of the 1970's when resource prices will rise until eventually this imbalance is sorted, or whether as I believe it is a genuine resource constraint story that is playing out. Either way the result is the same in the short term; removing the imbalance or finding new supplies (North Sea and then later Chinese coal) to allow the imbalance to continue further. The difference is that without scientific advancement (nuclear fusion), more and more present consumption will be determined as excessive and have to be destroyed under my geological decline story, raising questions as to which are the next dominoes to fall? First it was a few of the peripheries then US subprime, European austerity and now slower Asian growth as it tries to fight inflation. We also have to consider whether that demand destruction is smooth or whether government's fight it through increased debt and transfer payments until they can fight it no longer. If it is smooth then oil prices don't need to spike hiker to cause demand destruction; the transfer of capital from the rest of the economy can smoothly match the higher oil prices. This goldilocks scenareo is totally unrealistic however as governments can't completely abandon unproductive assets when they are made redundant, and countries will fight each other economically to determine who gets those resources and maintains their standard of living and who dies. 
The process we are seeing is just a continuation of a trend; to access the marginal fuel, prices have to rise higher.

Thu, 02/24/2011 - 10:48 | 992690 Bicycle Repairman
Bicycle Repairman's picture

Careful. If you keep on like that you'll draw the "peak oil" gnats out of hiding.

Thu, 02/24/2011 - 11:16 | 992849 LawsofPhysics
LawsofPhysics's picture

Sure bikeman, oil is magically appearing faster than human consumption for fuel and cracking to make the myriad of commodity chemicals that we need to sustain our current standard of living.

Just the same, I think I will hedge accordingly.

Thu, 02/24/2011 - 12:11 | 993234 tarsubil
tarsubil's picture

Do gnats believe they know everything also? And I thought the global warming people were full of shit.

Thu, 02/24/2011 - 12:18 | 993287 Flakmeister
Flakmeister's picture

Come up with some facts and analysis. You are chanting from the peanut gallery and your posts are devoid of any useful content.

Thu, 02/24/2011 - 09:34 | 992415 snowball777
snowball777's picture

Geithner, Obama's Butt Man, Now On Top; as Economy Jokes of No more Money

Thu, 02/24/2011 - 09:39 | 992431 DaveyJones
DaveyJones's picture

thought he was screwing us not the president

Thu, 02/24/2011 - 09:39 | 992432 cossack55
cossack55's picture

Very good.  LOL

Thu, 02/24/2011 - 09:44 | 992448 johnQpublic
johnQpublic's picture

++good

Thu, 02/24/2011 - 11:46 | 993076 Monday1929
Monday1929's picture

+  .618

Thu, 02/24/2011 - 12:12 | 993242 tarsubil
tarsubil's picture

What's your problem with Obama? He wants sky high oil prices and to crush the non-elites too.

Thu, 02/24/2011 - 14:23 | 993897 TBT or not TBT
TBT or not TBT's picture

That's plausible, tangentially at least, given his pre-election speech in which he said "under my plan electricity prices would neccessarily skyrocket"

Yeah, we the people with the help of them the media elected that guy.   High cost energy is just what the economy needs right?     I'm sure Krugman has already writtem such a column.

Thu, 02/24/2011 - 09:43 | 992445 LawsofPhysics
LawsofPhysics's picture

Un-fucking believable.  "The core of the financial sector is now strong again"

Looks like we lost bloomberg too.  Who gives a shit about the financial sector of the economy?  They create NOTHING of REAL value.  In fact I would argue that the financial sector of the economy has become a CANCER that the broader sectors of the economy can no longer support (via QE, taxes, inflation/deflation).  Let it all crash now, I am hedged properly.  Let it crash NOW and let us see compensation return to those that are really worth a shit.

Thu, 02/24/2011 - 11:48 | 993080 Flakmeister
Flakmeister's picture

Actually, I thought his most egregious comment was that the US is better positioned to weather any spike in oil prices. The guy is fucking shameless.

Thu, 02/24/2011 - 16:08 | 994411 PuppetRepubl1c
PuppetRepubl1c's picture

Geitner is a quick learner, his Newspeak is getting better

 

anyone who believes spiking oil prices will not damage the US economy is smoking crack, of course i don't think he believes this at all.  He is just repeating the official government line, after all he doesn't want to do anything to damage his future job working for goldman sachs....

 

Thu, 02/24/2011 - 09:24 | 992384 Turd Ferguson
Turd Ferguson's picture

Things will get out of control and we'll be lucky to survive it.

Thu, 02/24/2011 - 09:27 | 992395 Confused
Confused's picture

Unfortunately this seems to be the case. However, things have been crazy in the past, so it is possible that things will "get better." Or at the very least not get as bad as we think. 

 

I'm digging Tylers Lebowski reference. 

Thu, 02/24/2011 - 09:30 | 992408 Snidley Whipsnae
Snidley Whipsnae's picture

Without oil the world as we know it stops. The Mid East destabilization has the potential to speed up the slow motion economic train wreck that we have all been watching.

Thu, 02/24/2011 - 09:38 | 992428 tmosley
tmosley's picture

I would look for China to start subsidizing oil to their citizens with their massive Forex reserves.

Should those dollars make thier way back to these shores, we will have hyperinflation here quickly.  Quicker than anyone is expecting.

Thu, 02/24/2011 - 09:46 | 992455 LawsofPhysics
LawsofPhysics's picture

Excellent point.

Thu, 02/24/2011 - 10:37 | 992639 tonyw
tonyw's picture

"I would look for China to start subsidizing oil to their citizens" no need, they have been buying cars like they're going out of fashion even over the last year at the higher prices.

Thu, 02/24/2011 - 09:41 | 992436 cossack55
cossack55's picture

I feel a need for speed.  Pedal to the metal, baby.

Thu, 02/24/2011 - 09:36 | 992418 DaveyJones
DaveyJones's picture

good summary

Thu, 02/24/2011 - 09:50 | 992471 eigenvalue
eigenvalue's picture

However timing is the most difficult part. We don't know the tipping point.

Thu, 02/24/2011 - 09:27 | 992385 stoneman sacked
stoneman sacked's picture

If Saudi Oil production is levelling off they would want higher oil prices right? Middle east turmoil and Ben's money printing is a manna from heaven for TBTF banks and nightmare for ordinary peasants

 

Thu, 02/24/2011 - 09:27 | 992394 gwar5
gwar5's picture

We can still print faster than they can pump.

Thu, 02/24/2011 - 09:27 | 992396 Quintus
Quintus's picture

Surely this is just jawboning to keep the oil price down?  Why would they put even more stress on their already declining oil fields to find a paltry $37b?

I'll bet they could sell $37b of UST's tomorrow if they wanted to.  Of course Ben might not be too happy about that, since he's the only one who'd buy them.

Thu, 02/24/2011 - 09:37 | 992420 umop episdn
umop episdn's picture

This seems correct to me. I doubt there is much, if anything, to the promises of increased oil deliveries. If there was such 'surplus capacity' out there, we would have seen it in 2008. Since 2008 had less crude pumped than the all time record achieved in 2005*, I doubt the oil is there, or if it is, it is so heavy and/or sour nobody can refine it profitably.

*2005 had the highest totals of crude oil. 2008 was highest in 'all liquids' which includes stuff like ethanol. It's likely all downhill from here, folks.

Thu, 02/24/2011 - 09:37 | 992422 snowball777
snowball777's picture

They're fond of their heads being attached to their necks?

Thu, 02/24/2011 - 09:40 | 992435 Quintus
Quintus's picture

I suppose threatening anyone considering selling some of Ben's lovely debt instruments with beheading is one way to massage the yield curve.  

Surprised Ben hasn't formally proposed it at a FOMC meeting yet.

Thu, 02/24/2011 - 10:58 | 992752 snowball777
snowball777's picture

Anyone playing that bond game clearly isn't using theirs anymore.

Thu, 02/24/2011 - 09:28 | 992400 Devout Republican
Devout Republican's picture

I'm EXTREMELY interested to see if the CAN increase output appreciably.  This is a big deal.

Thu, 02/24/2011 - 09:38 | 992427 snowball777
snowball777's picture

Peak Oil Pop Quiz: FAIL

Thu, 02/24/2011 - 09:56 | 992494 LawsofPhysics
LawsofPhysics's picture

Sure, oil is being magically produced faster than humans are cracking it for a myriad of commodity chemicals that are required to sustain our quality of life OR faster than we are burning it.

Okay, sure, all the same I think I will hedge accordingly.

Thu, 02/24/2011 - 10:59 | 992763 snowball777
snowball777's picture

You misunderstand. I'm a peak oil proponent and the idea that they can defeat these logistics at will is the fail.

Thu, 02/24/2011 - 09:36 | 992416 Alcoholic Nativ...
Alcoholic Native American's picture

I stopped driving, it was only a matter of time before I got a DUI anyway.

Thu, 02/24/2011 - 09:36 | 992417 equity_momo
equity_momo's picture

If they can squeeze another 10% out of their fields , thats as much as they can do. Theyre running hot. They have no answer to global demand - the cure for higher prices is a collapse in the global economy QED.

Thu, 02/24/2011 - 09:35 | 992419 LawsofPhysics
LawsofPhysics's picture

Wait what?  Even Saudi Arabia's government is running a deficit?  The world is fucked for sure, peak everything.  Why do they need to see oil to raise the capital?  Can't they just sell some USTs?  What are we missing here (things really are worse than imagined)?

Thu, 02/24/2011 - 09:43 | 992447 cossack55
cossack55's picture

I would guess you have to own them in order to sell them.  They probably just fronted the purchases for the Fed at auction.

Thu, 02/24/2011 - 14:29 | 993914 TBT or not TBT
TBT or not TBT's picture

Yeah, wahhabi ideology emprisons half the population as baby makers, so they have had a rapidly rising population for a long while, ergo their GDP per head has been dropping.    Those lines are crossing on them, and clearly whatever they might have done to modernize and dynamise their economy, for example through widespread higher education, and ah, oh, finance(illegal under sharia) didn't happen.   So they're screwed, all of them.   Not just the regime there.

Thu, 02/24/2011 - 09:39 | 992429 dcb
dcb's picture

Ok tyler, I am getting a bit tired of all the hyperbole (sp) in the headlines lately. Lets see Saidi knows that oil induced recession bad for west, they depend much on the us for protection. TYhey know end result bad for them if oil goes up to high, so they come out and say this. No sprprise.

 

the next issue is of course the Saud's buy off their people once again with our oil money. different issue.

Thu, 02/24/2011 - 09:40 | 992434 Tyler Durden
Tyler Durden's picture

Read Lees bullet point #6. Explains all you need to know. Of course, if oil is indeed unlimited, then you are correct: hyperbole is unwarranted.

Thu, 02/24/2011 - 11:45 | 993052 CrashisOptimistic
CrashisOptimistic's picture

From the post (which I know it has become standard procedure for commenters to carefully not read before commenting)

>>

A lot of the spending appears to only be offsetting the natural decline of existing fields. There is probably the ability to meet an extra 1.5mbpd of oil demand; beyond that prices will spike.

>>

Yeah, he understands the relentless "running up the down escalator" issue, but he has no idea what the number is.  No one does.  Perhaps not even the Saudis.

A point made earlier this week is that the Saudis might have 4 million bpd of excess production capacity, but if they use it they damage the fields.  Water coning is lethal to fields.  If you pump excessively, you can draw water upward into rock and more or less never be able to capture the remaining oil.  There is speculation that this has happened to Thunderhorse, where their peak has arrived 20 years early.

If that is what is happening, the Saudis can talk about this excess production capacity, but if they ever try to use it they stop producing in a year.  As in zero from some fields and smaller amounts from others in a very short time.  There have been devastating production crashes from this scenario.  It could be the explanation of why they allow Russia to produce 10.1 mbpd and keep themselves at 8.5 mbpd.

Thu, 02/24/2011 - 09:43 | 992450 DaveyJones
DaveyJones's picture

history is full of hyperbolic moments and this one's special

Thu, 02/24/2011 - 09:45 | 992452 TBT or not TBT
TBT or not TBT's picture

The Saudis are running scared because their wahabbi twisted population only increases, driving down GDP per head, with no replacement economy to back up oil.   Educating women and treating them like humans would have kept that birth rate reasonable, and not quite doubled their workforce.   A faith based economy doesn't work as well as a knowledge based one.   

Thu, 02/24/2011 - 09:47 | 992459 bunkermeatheadp...
bunkermeatheadprogeny's picture

Our fractional reserve economy is a faith based economy.

Thu, 02/24/2011 - 09:54 | 992488 LawsofPhysics
LawsofPhysics's picture

even worse, it is one that has unleashed moral hazard- faith that fraud is the status quo as it were.

Thu, 02/24/2011 - 14:30 | 993918 TBT or not TBT
TBT or not TBT's picture

We still make things here, including FOOD.    Saudi Arabia, not so much.

Thu, 02/24/2011 - 09:59 | 992497 equity_momo
equity_momo's picture

You should look closer to home and see how the welfare tendencies of Western Govns , including America , has fuelled a far faster birth rate in the poorer , lower educated , culturally diverse , communities than the higher educated , producing communities.

Our gene pool isnt going to be very robust when TSHTF.

Thu, 02/24/2011 - 14:31 | 993928 TBT or not TBT
TBT or not TBT's picture

Well, fight as you train and train as you fight. 

Thu, 02/24/2011 - 09:44 | 992444 Josh Randall
Josh Randall's picture

Margins getting squeezed like a fat man's @ss in a Coach plane seat. Does this mean that the Best Buy syndrome goes ballistic now ? No way a US population with true 22% unemployment (and getting worse by the day) can afford higher prices for anything for the forseeable future

Thu, 02/24/2011 - 09:50 | 992474 LawsofPhysics
LawsofPhysics's picture

Spot on.  Black market capital flows getting a big boost from all of this.

Thu, 02/24/2011 - 09:46 | 992457 bunkermeatheadp...
bunkermeatheadprogeny's picture

Iran could really screw with the global markets right now.

Thu, 02/24/2011 - 09:49 | 992463 lbrecken
lbrecken's picture

Yet the rigging continues market wise.....

Thu, 02/24/2011 - 09:49 | 992466 ak_khanna
ak_khanna's picture

The only thing happening to Oil prices is that the big speculators and banksters used the events in the Middle East as an excuse to drive up spot oil prices which forced the traders on the other side of the trade i.e. the buyers of put options, the sellers of call options and futures to cover their positions resulting in a sharp spike in the Oil prices.

The only thing driving up commodity prices worldwide are speculators armed with cheap money provided by central bankers and super fast computers. This is causing a havoc in the lives of rest of the population and pushing them towards poverty as they can no longer afford the basic necessities of life.

The prices will fall only when the banksters have eliminated all the short positions and only they themselves have positioned themselves to profit when the market falls
OR
When an unexpected world event catches the banksters with their pants down and the softwares they use to rig the markets go berserk beyond their control.


Regulators are either hand in glove with the banksters or are too slow to react and take ages to identify and take measures to solve the problems.

Total ban on speculation and the reinforcement of Glass Steagall Act is strictly required to bring relief to the rest of the population.

http://www.marketoracle.co.uk/Article24581.html

Thu, 02/24/2011 - 09:52 | 992483 LawsofPhysics
LawsofPhysics's picture

Maybe, but it may also be too late.  I think both the banksters and regulators have decided that there needs to be some real pain to bring the peasants back in line.  Still find it amazing that they have let the second amendment stand as long as it has.  

Thu, 02/24/2011 - 11:01 | 992776 aerojet
aerojet's picture

There's no second fucking amendment in Libya and the people there have had zero trouble obtaining all of the Russian-made small arms either from the country's own armories or from somewhere outside.  It's Africa, after all.

Thu, 02/24/2011 - 11:43 | 993064 LawsofPhysics
LawsofPhysics's picture

Hence my comments regarding the boost in Black Market capital flows.  Gold and guns bitches!

Thu, 02/24/2011 - 10:03 | 992509 buzzsaw99
buzzsaw99's picture

Lies. They would get more money if they cut production.

Thu, 02/24/2011 - 10:13 | 992535 tmosley
tmosley's picture

But their "protection" expenses would go up.  They have no idea how much it would cost to defend themselves against their own population, or any possible invasions without US support.  Hell, they don't know if it is even possible.  They are stuck with the demon they know, until that becomes untenable, or until the royal family grows a backbone.

They certainly benefit from higher oil prices, but they MUST balance that against the cost of keeping the cloak of the US military firmly secured around their frail, flabby bodies.

Thu, 02/24/2011 - 10:21 | 992565 buzzsaw99
buzzsaw99's picture

I understand the protection racket but they still have to sell the idea to the angry mobs as if it is for them.

Thu, 02/24/2011 - 10:03 | 992511 Rodent Freikorps
Rodent Freikorps's picture

Well, it is true money can't buy love. It can rent it, though.

http://www.youtube.com/watch?v=3_iQZiVD_zA

 

Thu, 02/24/2011 - 10:57 | 992634 Zero Govt
Zero Govt's picture

Saudi bribing the people with funny money to cling to power, perish the thought Western politicians would ever learn this trick eh? ...it's not like we've been suckered by easy credit, easy mortgages, 'free' (cough) healthcare, easy pensions, social security or Govt stimulated car sales for oh about 25 years now is it?

Our parasites have soooo much to learn from the Arabs about staying in power by buying time and votes... easy $1 Trillion student loan anyone???

Answers on a Postcard to:  Zombie Me, Call it 'Free' & Make Me a Govt Debt Slave,  Dept for Clinging to Power, The Parasite Club, Washington (Postcode. IOU DEBT)

Thu, 02/24/2011 - 10:55 | 992731 Hondo
Hondo's picture

I doubt the Saudi's have much spare capacity to begin with......it's a verbal BS

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