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As US Energy Secretary Expresses "Great Concern" Due To High Oil Price, OPEC Oil Shipments Decline
With the market now only capable of kneejerk headline reactions which end up being immediately priced in, in the pursuit of the mythical Russell 36,000, it completely ignores the actually important news (whose interpretation has not been programmed into the algos trading the S&P) such as input costs and their derivatives, which will inevitably crush margins and lead to the same market reaction as that seen in the summer-fall 2008 transition. And since leverage on all cash flow producing assets will be at the same level as US banks circa 2008, the result will be an even worse wipe out. It has gotten so bad that US Energy Secretary Steven Chu was dragged out of his office to present his version of the "irrational exuberance" speech so pervasively ignored by the stock market until it was proven to be the only sensible thing ever uttered by the maestro. At a news conference on clean energy, Steven Chu said on Thursday high oil prices posed a threat to the global economy. "The oil producer countries and the oil consuming countries are concerned because it does have an impact on a very fragile economic recovery. There is great concern," Chu told a news conference while attending a clean energy conference. "There's ongoing discussions ... I'm not going to go into any of the details of the discussions. There is a concern about trying to stabilize prices. There is a concern about rising prices," he said." There may be a concern, but according to the president there isn't really much that can be done about said prices. The best people can do is learn to cope. Especially since there is no chance that the commodity complex will be declining any time soon: to many today's ECB decision was a potential catalyst. And instead the market took one look at the number, listen for 2 minutes to Trichet's rambling remarks and bid everything up.
From Reuters:
Oil prices vaulted to their highest level since September 2008 this week, stoking concern among analysts and economists that the higher cost of fuel will crimp consumers' spending.
OPEC ministers, however, have said the organization cannot do anything to stop the rally as the market is already well supplied.
OPEC is not due to meet to discuss output policy until June, although Saudi Arabia has increased its own production to help compensate for the loss of Libyan oil exports amid fighting between rebels and forces loyal to leader Muammar Gaddafi.
Chu said he was aware that the Libyan rebels had been able to sell a cargo of crude oil but he did not have any details on the transaction.
"We know it has occurred. The United States is supportive of that sale and is supportive of the Libyan transitional government for that sale," he said.
Chu was in Abu Dhabi for the second Clean Energy conference along with ministers approximately two dozen other countries. Chu said the ministers made progress on international cooperation for the development of smart electricity grids, home appliance efficiency and electric vehicle deployment.
What is concerning is that according to Oil Movements, OPEC was set to ship 1.6% less oil in the 4-week period. Well, since prices have only been going up, obviously OPEC is not chasing a drop in demand. Instead, OPEC may have well reached the proverbial peak in production. Sure enough this does include the offline capacity from Libya, although that conflict is far from over. What is troubling is ongoing preponderance of free money in margin accounts: with the market topping at the 1,330 level, the only asset classes that continue to push ever higher is the energy space and of course, precious metals.
Expect to see even more buying of oil as speculators keep their mouth shut for fear of breaking the trade and end customers keep their mouth shut for fear of upsetting the status quo.
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Equity market volume now approaching a gaseous level slightly lower than vapor. Nice. Confidence inspiring. After all, HFTs are long and strong...30 seconds at a time.
Joke. What a complete joke. They have killed the damn market!
And what is with MSM...every 1/2 hour giving stock market scores. It used to be at the end of the day. Someone is influencing this hype reporting it can not be by accident.
It isn't like Obama stuttered when said his energy plan included "... necessarily higher prices..."
chu obama and the libs want higher gas prices
Just buy crude futures, and chill...Who gives a shit what Steven "pinhead" Chu has to say, anyway?
Did increasing amounts of money, debt, energy and people
enable the world to consume more raw materials in the last 75 years than in recorded history?
If US mainland oil discovery peaked in the 1930’s
leading to a production peak in the early 1970’s
and world discovery peaked in the 1960’s
when should global oil production peak?
well lets think about all that.
If US mainland disclosed oil discovery peaked in the 1930’s
leading to a policy enforced production peak in the early 1970’s
and disclosed world discovery peaked in the 1960’s
when should policy enforced global oil production peak?
and how much oil is actually there? no thats a real question that actually changes all the time...
yes, let's start out with the OBSERVATION that the perpetual ponzi growth society has been astoundingly GREAT for the upper crust and then jump to the conclusion that they want to kill it.
FOR WHAT? This makes NO FUCKING SENSE whatsoever!
What fucking enterprise WILLINGLY sells less product than they can? Why in the hell would "TPTB" want to DESTROY the system of perpetual growth that has made them masters of the world?!??
I have to laugh... It amazes me that people even have to have this explained to them..
people are fucking stupid.
They will not contest that growth in oil production can't go on forever. Nor will they argue that oil is infinite in quantity.
Just NOT NOW. Not in MY LIFETIME. So, they persist in a state of denial because it just can't be that we will be the ones to cross this epoch. Please, let it be a future generation.
Everyone implicitly knows that the world runs on oil and a scarcity in that product or even a failure to grow its availability will be incredibly disruptive. So they invent psychological devices to permit themselves to remain in denial. This isn't even dissonance; it's straight out self-delusion.
Never. Abiotic oil, baby. It's the new black gold.
-Do you really believe there were that many dinosaurs?-
http://en.wikipedia.org/wiki/Abiotic_oil
Sorry to break it to you sparky, but decaying Dinos didn't create the oil. It was shallow sea algae.
Heathen! Gawd will provide!
Our new energy policy is Abiotic Theism.
Abiotic oil.......bwahahahhahahahahahhaha. Also, there is a nice bridge in Alaska for sale.
There may be a concern, but according to the president there isn't really much that can be done about said prices. The best people can do is learn to cope.
He's right, oil prices have been rising since 2000, and especially since 2003. Americans have had plenty of time to prepare and buy/trade for fuel efficient vehicles. I have a hard time feeling sorry for anyone. Newsflash, it's not your god given right to drive a gas guzzler just cause you're 'merican.
your name suits you well....
wouldn't it be nice if this is the only aspect of family finance high oil prices affected...?!
You are correct idiot. Moreover, isn't it odd that oil prices have been TRENDING for 11-YEARS, yet is still considered too "volatile" to include in inflation? Shouldn't it be volatile both above AND below the mean to be discarded?
Just sayin'
Agreed 100% actually. I don't feel the gas prices. I bought 1/4th an acre from a farmer near where I live and I put a 600 gallon storage tank there. I bought a ton of gasoline from a fuel processing plant for wayyy under what other people were paying (I got it for 2.28/gallon and it was I think 2.69/gallon at the pump) but I had to buy a minimum of 300 gallons, but who cares? So I spent $1400 or so + some fees for a few friends to help and I've had gas (35mpg from my Honda) for months now.
Good for you. Make sure you read about long term fuel storage or you'll loose your investment.
Stabil Buy it, use it in the 300 gallons.
Gas Preservative
Is there by chance another 1/4 acre for sale near by?
You need to buy fuel stabilizer.
Gasoline starts to go bad after six months in storage.
Yeah. I put several STA-BIL's in it. The one's I got from tractor supply only cured 55 gallons (made for the drums I think) so I had to buy several of those but it's good for 2 years.
Why was I forced to bailout GM?
Not because I am American, but IT IS MY GOD GIVEN RIGHT TO DRIVE A 6000LB 7.3L FORD POWERSTROKE WITH PROPANE INJECTION CRANKING 900 FT/LB OF TORQUE. As long as I can afford to fill it with diesel that is my right.
Shut your pie holes, whiners, and trade your gas guzzler in for an energy efficient, gas saving Volt like our President sagely recommends. He remembers what it was like when he had to pump his own gas, and pay for his golf rounds.
Concern? WTF is wrong with these people? Oil prices do NOT MATTER...just ask The Bernank! He guarantees it (not an actual guarantee).
OIL approaching $110 as I type...booooo ya! So "bullish!"
Instead, OPEC may have well reached the proverbial peak in production.
Peak Oil
Deaf leading the blind in the USA. Its over folks. Yak Yak Yak is all one hears.
"Drill motherfuckers...we got oil..." Yes, we have oil......but can't produce enough of it at reasonable price (EROEI). That is what peak oil means. It doesn't mean we are 'running out'. It just means the world can not produce enough to keep up with demand and indeed the world has reached 'peak' production. This is one reason the world economy is on the rocks. The world needs ever more inexpensive oil to continue growth and to service debt. That is not happening and we are seeing the unhappy results. The world burns through better than 33 Billion brls of oil a year. So a find of 20 billions brls, although seeming large, really is less than a year's supply and that is assuming that all of the 20 bil brls is actually recoverable.
They'll never let J6P understand that the world is running out of oil and that the only option is a continuous downsize for a few decades.
Instead, a false flag attack on Saudi Arabia will occur, gas prices will go to 15 a gallon, there'll be rationing, and imaginary terrorists will be blamed for our dilemma, thereby perfectly setting up the expansion of the resource wars.
Am I really the only one to whom this end is obvious?
No, you're not alone. Have seen this coming for the last 5 - 10 years. Been watching Peak Oil unfold since then, had the same belief.
Good to know.
Many of the PO aware crowd irritate me because they believe that a day will come and the President and the EU president and the Chinese premien and Putin will all stand up and say, "people, Peak Oil is here and we have to talk about mitigation."
That's never going to happen. Ever. It's going to be skulduggery right to the last drop.
Perhaps some do, but I am not in that crowd. I believe they will continue to try to prop up the status quo as long as they possibly can. Then, when it is too clear that production can not meet needs, the problem will be blamed on other geopolitical or natural occurences.......oh, wait, that is happening right now........
Samsara....me too. Glad someone else has done their studying and is not buying all the distractions.
Do not expect much cooperation from the Saudi Arabian government concerning much of anything, including increasing their oil output. King Abdullah has been livid with Mr. Obama ever since the President backed the outer of Hosni Mubarak of Egypt. The Saudi decision to disregard Obama last month and send in troops to crush an uprising in neighboring Bahrain was a slap in the face to the U.S. administration. The Saudi's are currently embracing closer ties with Russia and China due to the inept, poll driven policies of the Obama regime.
Well, yes, absolutely, and I guess we should have invaded Iran at their bequest, just as wikileaks pointed out.
Of course, we should not seek energy independence in the form of electric cars, windmills, solar and, least of all, cutting back on energy usage, because, God forbid, we mustn't forget that Americans are God's chosen people to liberate and educate humanity, and even hinting that God failed to give his chosen people in the Western hemisphere insufficient means and resources, is, well, blaspheme.
"Higgins (Cliff Robertson) - It's simple economics, today it's oil, right?
In ten or fifteen years, food, plutonium, and maybe even sooner
Now, what do you think the people are gonna want us to do then?
Turner (Robert Redford) - Ask them
Higgins - Not now, then, ask 'em when they're running out
Ask 'em when there's no heat in their homes and they're cold
Ask 'em when their engines stop
Ask 'em when people who have never known hunger start going hungry
You wanna know something?
They won't want us to ask 'em, they'll just want us to get it for 'em"
Three Days of the Condor, 1975
There you go. Have quoted that numerous times in the last 10 years.
Prophetic shit there.
10 to 15 years after 1975 is 1985 to 1990. 1990 was 21 years ago. I'm pretty sure that the Jehovah Witness's have been predicting the end of the world for the last 21 years too.
So, who is going to spin this into higher gold, silver prices?
Help me! I'm hypnotized by your avatar. I can't stop looking.
-
Mmmm... compelled to post here just so I'd be surrounded.
What planet is this? This is not real, is it?
Of course higher oil prices make that Chevy Volt that Obombhead pitches more appealing to the ignorant that don't see renewable subsidies...
GE to build nation's largest solar power plant
http://finance.yahoo.com/news/GE-to-build-nations-largest-apf-148170312....
All the little obedient serfs are going to buy one except for those riding that incredibly fast, convenient, reliable, and efficient light rail.
I'm glad he's concerned but his concern does jack and shit for me when I'm filling up my whip with premium at $4.25 per. I give it another 50c before Americans start to get riled up.
Jeez...look at new highs in WTI at 109.90:
http://finviz.com/futures_charts.ashx?t=CL&p=m5
brent 122.+
110.02 $ @ DX 75.81 bitchez
110.21 - run for the hills
i gonna be practicing my boxing. I';m pretty sick of this bullshit, day after day. Chu...you stupid bitch...oil is up because we are attacking everyone in the Mideast! All lies. All bullshit day after day. Are Americans even paying attention?? Someones gonna get cold-cocked for this charade.
Tyler, a comment and request Sir.
The comments section, while very important and useful to vent and distribute one's ideas has moved closer to the gutter with all the foul language. Now I know most of us are fairly intelligent and have a good command of the Kings English, so do we have to resort to 4 and 5 letter words to make our point.
I think it takes away a bit from the site and there is no doubt in my mind that this is the best site on the web for the truth.
Can we clean up our act a little bit? Go ahead and junk me guys if you want, just needed to get that out. It is so easy to get your thoughts published without joining the gutter. Been here for almost 2 years and the language has clearly deteriorated. And you know the Squids will use that against us.
Have a good one All.
i'll be happy to unload on you...nicely. You are definitely indoctrinated, whether by schooling or religion. You have been told that certain words....are bad, dirty. And that's the ONLY reason you get upset when you hear them. How about darn-it? How about oops? They're words for gods sake...that's all. What you read into them is your choice based on your programming. profanity is a religious and government thang. Get over it. They wouldn't be "bad" words if you didn't go gaga everytime you heard it.
That's my feeling anyway.
We hit the motherfuckin' peak! Deal with it.... :~\
"bitch." "Deal with it bitch"
The thing is, you two guys know the score, but you can't accept the extrapolation.
Flakdood knows the depth of my perspective.
Summing it up is this:
The Party Is Over and The Cops Are Coming.
They are on horseback. Four of them.
Small adaptation and you will be right. The Party is Going Strong for those invited. The Cops Are Coming. The party won't stop till that first one shows up.
I #uckin agree!
Buddy. Go take a break.
Fuck that shit.
TPOG
This cockface used two 4 letter words and two 5 letter words (that's 4 total! Count 'em) to make his point.
I really, really fucking hate hypocrites.
The folks on CNN are never profane - well not in the actual words they speak. Go there if our purity has been tinctured with swears.
mono, you make a very important point, we expect that you will lead by example such that your posts will not contain any four or five letter words.
Now to change the subject, I saw my 1st Tesla today. It's a real small little car, looks to me almost like a kit car overall pretty bland.
http://bit.ly/fuWswW
Can I say "#uck"? It's only 3 letters?
Please advise.
Maybe from now on we should use 'Frack', @$$, and 'Schmidt' instead of their better known cousins?
7/10
Probably, to cope (save) is the best strategy, as there is more to come in price hikes as Autumn nears:
http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&start=0#p30486
And it will derail economic recovery, leadin to the recession in the USA in q1 2012:
http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&start=0#p30485
As there is correlation between DJIA and GDP, GDP drop in q1 2012 will be minus 2-4% compared to q1 2011.
Here is a simple chart that explains a lot of stuff
http://mazamascience.com/OilExport/
Select Saudi Arabia...
You see the rising consumption?
You see the decling/flat production?
Draw the obvious conclusion...
Note: what is called oil here includes Natural gas liquids....
well its interesting that their is no inherent value in natural gas since the crude/natgas ratio is above 25.
NGL comes mainly from wet gas... if it is an oil well, it is called condensate. NGL is big aspect of the Shale plays here. It consists of hydro carbons that are above boiling point until the reach the surface, e.g. propane, ethane etc.....
Excellent link Flak - anybody who can interpret a graph should be able to look at that graph and see why the oil age is rapidly coming to an end.
I still believe we can maintain an undulating plateau for twenty years, maybe thirty with an all out moonshot-type.effort, but essentially you are correct.
We have held the plateau for 5 years.... I give it at most another 5...
I don't give it 2 years.
No argument... 5 is an upper limit
The best one is if you click United Kingdom....Thatcherism explained..
Also very important to look at Mexico.
Its future (or now) is UK's chart.
Production peak against level or rising consumption and you see a DRAMATIC decline in exportable oil. As a gigantic net importer, the US (like all importers) is critically dependent upon the availability of oil for export (a surplus between production and consumption in oil producing nations).
It may come to having to force steep consumption declines in nations like Mexico. I'll leave it to your imagination as to how that would be accomplished.
The export land model is what this is called i believe. This is why we have to drill the fuck out of caribou land and the coasts and triple nuclear power as distasteful as that may seem.
How can this be? Didn't his boss just say that he remembered how to pump gas (or was that Kal Pen), and we'd just have to get used to it?
+1 BHO, said " get used to it Bitchez!"
Those pricks expressing faux concern over high oil prices are the same pricks who wanted high prices, and gas at $9/gallon, and are doing everything in their power to make it happen.
Drill baby, Drill -- you f*ckers!
Drill early. Drill often.
DRILL BITCHES DRILL!
WE will worry about peak oil later when we are out of our current financial mess
The socialist police staters wanted it high from taxes and carbon trading.
This was not their plan.
You guys really don't get it do you.... There is no conspiracy, shit like peak oil happens..
It's all fine. The Saudis will up production... they are the Saudi Arabia of oil after all... er..wait.. what?
Just obey the president and go trade in your gas guzzler for a Volt, it will stimulate the economy.
Tyler how bullish for stocks is 110.00 oil? Is it slightly less bullish than $115.00?
Inquiring minds want to know.
Dp
The maestro's irrational exuberance speech was at s and p 640. Those who ignored him and hung on have done well.
Energy particularly oil is probably at an intermediate top. Vde at 118 was probably the peak for now. I shuda.got out. I will.definitely be.getting out soon, but if u want to hang onto something.for the long haul and not trade, then energy is the place to be, particularly stocks.
not in my back yard, USof A†
Oh yes velo... and it's USS of A.
Department of Energy??? They consume huge piles of resources and never produce a speck of energy. All of the DoE programs that were leading to great alternative energy sources were cancelled by Bush. The DoE needs to go bye bye.
"Of course, we should not seek energy independence in the form of electric cars, windmills, solar and, least of all, cutting back on energy usage, because, God forbid, we mustn't forget that Americans are God's chosen people to liberate and educate humanity, and even hinting that God failed to give his chosen people in the Western hemisphere insufficient means and resources, is, well, blaspheme."
that's pretty funny considering how many times G-d put the smack down on Israel. just because you're "chosen" doesn't mean you don't have to follow the rules.
The music's starting to wind down. Got a chair?
We closed well above $110 today. Can you say "RECESSION"?
Crude oil closes above $110, and the Dow is down only modestly. Breaking point coming, dead ahead!
The green tyranny movement behind this White House keeps telling us that even if we drill today, we won't have oil anytime soon. They rationalize that we therefore shouldn't drill at all!
That's like a farmer saying that because he can't plant a seed today and have food tomorrow, we should therefore never bother to plant the seed at all! That line of reasoning suggests that we should just starve ourselves to death today because we can't harvest immediately tomorrow!
It's also like saying that if we can't start a business today and be profitable tomorrow, we should therefore never bother to start the business.
Drilling for oil is like planting the seed. The sooner we plant/drill, the sooner we can harvest the crop. And the less likely we'll face energy starvation when there's a crisis!
But the green tyranny people want us to believe that their preferred forms of energy can't be used without government compulsion. Excuse me, but there's nothing to stop you from putting windmills and solar panels without government redistribution of resources. The only limitations are that those forms of energy aren't economical or sufficient in quantity. People won't therefore voluntarily buy them! People should choose what energy they will use, NOT elitist educated derelicts in the government!
I'm all in favor of renewable energy. I put solar panels on my house. But they aren't cost effective and they don't produce sufficient quantities of energy to maintain our lifestyle or economy. If they were viable, they wouldn't need government force; Americans would choose them without coercion because they would be cheap and abundant. They're NEITHER!
Sbenard - We'd be better off leaving the oil in the ground for now, and extracting in 10 or so years when we get used to a world with a lot less.
As it is, if we drilled in every promising spot in the U.S. with every available rig, we wouldn't substantially change the price of gasoline over the next 10 years.
The key to understanding that is understanding the huge volumes we're talking about and how little can be pulled up at a time in the U.S..
No worries, "Wall Street" at the end will do "Wall sheet", and the end is coming of the current abomination of "a free market" and the crimes they are committing.
No one can stand against the LAWS of NATURE, unless of course one lives in the Matrix.
The deal with the Devil, Chairsatan, Yamani and the US 5th fleet.
Looking around the oil ZH commentary, there seem to be two prevailing thought divides- the existence of a grand conspiracy, and the impact of Peak Oil.
I don’t look around the industry commentary (Oil or Finance) for anything beyond facts, because everyone has either a legal obligation or profit motive to talk there own book, and the people on the other end of my speed dial answer the phone, which is frankly quicker than digging through crap in search of truth.
Looking around this thread there are 2 posts that jump out at me 1) a reference to Yamani’s public description of the grand oil bargain, and 2) this quote” We'd be better off leaving the oil in the ground for now, and extracting in 10 or so years when we get used to a world with a lot less”
There are some faint echoes of other transient activity such as petro dollars chasing EUR instead of USD.
All are pieces to the oil puzzle.
Fuck the disclosures it’s original (if recycled) thinking time-
The Deal with Yamani
There are actually three parts to the Saudi bargain, which is with Saudi Arabia, and by extension the GCC, it is not with OPEC. Anyone who tells you that an OPEC Minister’s first loyalty is to an OPEC TPTB conspiracy, and not his home country, has never met an OPEC Minister. OPEC is not like the US Congress, a more apt analogy would be NATO. Even internationalist douchebag-extraordinaire Wes Clark would never lead the French Foreign Legion troops in a siege of the White House. The deal with Saudi Arabia was straight forward, but actually has three terms- the US gets a dependable supply of oil from an undependable neighborhood, but it has to pay for it, and it has to keep the riff-raff out. Hence, the Battle of Kuwait, since (for the benefit of those with HFT-scale memory) at the time no one was sure if Saddam was going to do an end-zone dance in Kuwait or keep running until he hit the Saudi spectators with end-zone tickets.
Chairsatan
The Bernank is a master paper pimp. Unfortunately, Chairsatan is also an academic, whose primary business community interaction is with the banking community- which coincidentally also specializing in pimping paper. To save the bankster brigades, and perhaps the global economy, from the 2008 ponzi scheme collapse, Chairsatan ran the FED printing presses to create more paper to keep the ponzi scheme alive. Armed with a fresh supply of paper, the bankster brigade went looking for new paper to trade, on which they could record a paper profit, in order to pay themselves paper bonuses. To oversimplify things slightly- the bankster brigade could not find anyone interested in the old toxic paper anymore, and the margins on Turbo Tax Timmy’s paper aren’t as good when they must compete with Chairsatan for business with his other client, Turbo Tax Timmy (who is coincidentally also a trustee for Uncle Sam’s other paper ponzi schemes). So the new paper that the bankster brigade found to trade, to book paper profits, and pay paper bonuses, was stock paper and commodity paper. And now both stock paper and commodity paper are rising while US$ paper is falling because of Chairsatan’s can’t/won’t unplug the printing press.
If either the bankster brigade or Chairsatan had to take delivery of a Suezmax load of oil or a 40’ ISO container load of iPads they would have no idea what to do. Chairsatan’s evil cohort might even try to eat the iPads.
The Devil (as usual, is in the details)
Oil is a business. The oil business is about pulling raw material out of the ground, transporting the raw material to a factory, adding value to the raw material, and transporting the finished product to a distributor or retailer. If this is done successfully, a profit is generated which is then either retained (saved), invested back into the business, or distributed to the shareholders.
Oil is a BIG business. The business generates BIG profits and cash flows, even though the margins are relatively small. The cash flow model for an OPEC nation trading with the US is relatively straightforward. Paper is received in exchange for Oil. Some of the paper is invested back into the business to allow for future oil to be pulled out of the ground later and exchanged for paper. The bulk of the paper is often used to finance government operations, as the IRS does in the US (but when the IRS doesn’t collect enough paper, then the treasury must borrow paper, by selling paper bonds to cover government operations).
The remainder of the paper is either saved for a rainy day and for future generations benefit or it is invested in assets outside of the oil industry. In Venezuela, the remainder of the paper is often traded for Russian arms. In Saudi Arabia, the paper has often been invested into new industries (steel, construction, agriculture) to reduce the Kingdom’s reliance on spending paper to import things. In some countries, that will remain nameless, the paper goes to line the pockets of despots, much to the consternation of the masses there. In the “good old days” much of the remainder of the paper went into Turbo Tax Timmy’s paper (Uncle Sam’s Bonds). However, beginning with Alan Greenspan’s first ZRIP, Turbo Tax Timmy’s paper started to become an unattractive form of paper. Coincidentally, ZRIPs in the US tend to coincide with birth and explosion of Sovereign Wealth Funds in oil producing nations (SWFs often play the bankster brigade’s game of trading for stock paper and commodity paper).
Stepping back from paper and oil for a moment, a (long) while ago someone came up with the brilliant insight that one day we might run out of oil. And the theory of PEAK OIL was born. Perhaps, but oil is not paper, and oil is not susceptible the flash crashes. “When the barrel gets low, the spigot runs slow.” Oil wells have lives measures in years and decades. In the interim, the producers have ironically adopted Chairsatan Sr.’s (Alan Greenspan) mantra of productivity gains, the mentally challenged, albeit richly rewarded by the evil Nobel PTB, US regulators have adopted the tree-huggers’ efficiency mantra, and as usual the bankster brigade is practicing the “outbid the competition” free market mantra, with a fresh supply of Chairsatan’s finest paper.
All three of the responses to either peak oil or rising prices have a common strategic assumption: that the spigot is in the FLOW position. By choice or by force, this can be changed. There is currently a fear premium priced into oil. Either because of domestic uprising among the MENA State, or action by Iran in the Straight of Hormuz, the spigot can be turned OFF. What no one on the consumption or bankster side of the trade wants to write about is a change from the FLOW to OFF position by the choice of producers. There is precedence for this in the 1970’s oil embargo. However, the current threat is not one of political differences resulting in an embargo, it is one of financial differences resulting producer conservation. There are two drivers for this choice. Ironically, the first is actually conservation- the OPEC model is to get as much oil out of the ground as quickly as possible and convert it to paper, the “excess” of which will be passed on to future generations. The drivers for this choice can be Naturalist, Paternalist, Bankster, or Machiavellian, even indolence. Regardless, what was once only very discretely discussed is becoming more acceptable conversation. The other, albeit related, driver is entirely financial, as developing OPEC economies diversify their revenue streams, and as the excess paper profit of the oil revenue stream increases, the issue of where to put it becomes problematic.
The options for placing significant excess paper have significantly diminished since the 2008 credit freeze. Turbo Tax Timmy’s paper was ugly enough with Chairsatan Sr.’s 9/11 ZIRP, throw on Chairsatan Jr.’s TARP, POMO, & QE∞ and she’s now a two bagger. The bankster brigade’s toxic paper still hasn’t found its half life while the underlying physical property still hasn’t found the basement. The public equity game is as crowded as a three-digit gang bang, and P/E ratio of the starlet is still measured in paper. Commodity paper is literally a circle-jerk for a commodity producer. Even the comparatively poorly endowed Oracle of Omaha publically complains about the lack of paper opportunities for the measly cash flow from his little insurance syndicate.
The ultimate twisted irony of the credit crisis may well be that the evil bankster brigade brings bout a tree hugger’s wet dream, resulting in mutually assured destruction as they are both woefully unprepared for the ensuing reality.
The US 5th Fleet & the Nutjob Curveball (Ahmadnutjob)
recycled & reprinted with my own permission.
After our first Muslim president managed to piss off the Custodian of the Two Holy Mosques with the Mubarak fiasco (thereby eliminating the possibility that the Custodian of the Two Holy Mosques would cover the US's ass in Libya by supplying arms or relocating the Saudi Air Force's current Bomb the Locals & Rock the Casbah Tour from Yemen. King Abdullah now has a Shiite problem (thanks to Barry's schitzo MENA policy/comedy routine), so does Abdullah's little buddy, King Khalifa. King Khalifa's Shiite problem is located on some prime waterfront real estate right off the Iranian Shiite coast. In fact, the Iranian naval base on the disputed island of Abu Musa is close enough for an MJ/Larry Bird free throw contest sponsored by the McDonald’s at the 5th fleet’s PX. It is also strategically located such that it allows the Iranians to literally and figuratively assemble a circular firing squad for tanker targeting practice. Per the US domestic/energy policy clusterfuck AND tree-hugging-circle jerk, King Abdullah now has a de facto carte blanche to implement some "final solution" to the Shiite problem on the Arabian peninsula, perhaps someone at State should have written a memo? Right now Mahmoud Ahmadnutjob is going to get a close up view of a Shiite smack down, and it’s giving him a headache. In response, he wants give the world a headache. For this month’s migraine he sent part of his toy navy to the European bathtub. The piss storm begins if the “Save Gaza” rubber duckies and Iranian toys happen to float over to the Israeli sovereign territorial water side of the tub. Since Ahmadnutjob has been so insistent on building excess reserves of radioactive crap (if he had just waited he could have picked up a lifetime supply on the cheap from TEPCO), on top of his already guaranteed supply for civilian power from the Russians, the Israelis have one of those existential quandary things. It wouldn’t really matter who fires the opening volley, since the return volley is likely to come from the other bathtub- the Persian Gulf, where the US 5th fleet are hostages in the line of fire. A US retreat beyond the Straight of Hormuz, or a Suezmax sinking there would double oil prices faster than you could get a backup Suezmax to the US to offload a cargo of Yamani’s boss Abdullah’s New Deal (see rich & spoiled US strategically screwed above for further info).
these talking heads are lying thru their slimy green teeth when they say $4 gas won't impact the recovery - unless they mean there's no recovery anyway!
Or maybe their other hedhe "as long as it's not long lasting"...$4 gas won't be long lasting because it's sprinting to $5 gas, and with
and that will be the Fed hedge when inflation gets too big to ignore "unimaginable infltionary effects from political discord in the iddle east"all the food & commodities in it's wake