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Guest Post: Growth Is Obsolete

Tyler Durden's picture


Submitted by James H. Kunstler via Peak Prosperity blog,

The word that sticks in the craw of many who cogitate over economics is growth. The condition that the word refers to has proven disturbingly problematic in recent years, especially as world’s population continues to expand exponentially and the global ecology suffers in response. In fact, Thomas Carlyle (1795 – 1881) called economics “the dismal science” in direct reference to the work of the Rev. Thomas Malthus, because the Malthusian conclusions were so unappetizing - that sooner or later rising human populations would outstrip the world’s capacity to provide for them.

Now it happened that the Reverend Malthus’s notorious Essay on the Principle of Population was first published in 1798, which was about exactly the take-off moment for the industrial revolution. That extravagant melodrama was about marshaling mechanical invention with fossil fuel. The first act ran on coal and allowed populations to expand because it extended the extractive reach for resources by colonialist nations. The second act featured exploitation of oil, which was more powerful and versatile than coal. It also lent itself much more directly than coal to being converted into food for people. The use of oil powered farming machines, oil and gas (an oil byproduct) based herbicides, insecticides, and fertilizers, and oil based long distance food transport, has allowed us to convert oil into food pretty directly. This has led to the “hockey-stick” swerve of population growth that took human numbers worldwide from under 2 billion in the year 1900 to more than 7 billion today.

We are in the third act of the industrial melodrama now where the dire sub-plot of peak oil has taken stage. Despite the wishful thinking and happy-talk propaganda lighting up the media-space, we have arrived at the problematic point of the story: the end of cheap oil. This is poorly understood by the public and, apparently, by leaders in business, politics, and the media, too. They misunderstand because they insist on thinking that peak oil was simply about running out of oil. It’s not. It’s about running out of the ability to extract it from the earth in a way that makes economic sense — that is, at a price we can afford in terms of available capital and energy invested (and also ecological destruction). That dynamic is now exerting a powerful influence on modern civilizations. We ignore it -- even at the highest levels of intellectual endeavor -- because we have made no alternate plans for running the complex operations of everyday life, and because the early manifestations of the dynamic present themselves in the realm of finance, which is dominated by academic viziers and money-grubbing opportunists who benefit from obfuscating reality.

The sad, stark fact is that oil is now too expensive to permit further expansion of economies and populations. Expensive oil upsets the cost structure of virtually every system we need to run modern life: transportation, commerce, food production, governance, to name a few. In particular expensive oil destroys the cost structures of banking and finance because not enough new wealth can be generated to repay previously accumulated debt, and new credit cannot be extended without a reasonable expectation that more new wealth will be generated to repay it. Through the industrial age, our money has become an increasingly abstract and complex product of debt creation. As Chris Martenson has put it so succinctly in The Crash Course, money is loaned into existence. Thus, the growth of debt (allowing the growth of money) has played a crucial role at the heart of our banking operations, and the very word “growth” has become shorthand for this process in the lingo of current economic discourse.

It is quite clear that the banking system has been thrown into great disarray as the price of oil levitated from $11-a-barrel in 1999 to the great spike of $140 in 2008, and then settled into a range between $75 and $110 since 2010. Most of this disarray is a result of attempts to offset the failure to create new real wealth with fake wealth generated by accounting fraud, "innovative" swindling, insider chicanery, high frequency front-running, naked shorting of securities, and the construction of a vast untested network of derivative counterparty wagers that give every sign of being booby-trapped. All this private monkey business has been abetted by public mischief in central bank interventions and market manipulations, fiscal irresponsibility, political payoffs for favorable legislation, statistical misreporting, and the failure to apply the rule of law in cases of blatant misconduct (e.g., the MF Global confiscation of segregated client accounts; the Goldman Sachs “Timberwolf” CDO scam… the list is very long).

In short, a society with deeply impaired capital formation has turned to crime, corruption, fakery, and subterfuge in order to pretend that “growth” — i.e. expansion of capital — is still happening. The consequences are many and profound. The chief one is that the manufacture of fake wealth is such an alluring activity that some of the smartest people in society have devoted their waking hours to making a profit off it. It absorbs all their energies and they are simply not available for other work, such as figuring out a sane and practical way to run civilization in the absence of cheap energy. Added to this is the administrative effort and the work-arounds needed to support all this corruption and dishonesty, which occupy the hours of another class of smart people who work in government, academia, public relations, and the media. The sustenance of these parasitical cohorts more and more continues at the expense of everybody else in society, who cannot find work, or cannot make enough money to pay their living expenses, and who have become deeply discouraged, disappointed, demoralized, and disengaged in their losing struggle to thrive. Hence there is little public vigor to even mount a discussion of these vexing problems and the final result is the greater wholesale failure to construct a coherent consensus about what is happening to us and what we might do about it.

Another consequence to these disorders of capital is the massive malinvestment directed into things with no future in themselves or, much worse, things that actively undermine the future of everything needed to support any civilized future. For instance, the "innovation" in securitizing and repackaging mortgages -- which continues to be a boon for the giant banks in concert with the thoroughly dishonest and technically bankrupt "government sponsored enterprises" Fannie Mae and Freddie Mac -- expresses itself in the activity we call "housing starts." Economists overwhelmingly agree that a higher number of housing starts is a good thing for the economy and hence for society. But what do housing starts actually represent? These days they mostly take the form of new suburban housing subdivisions, which are inevitably joined by the kit of the strip mall, the big box store, and all the other furnishings of the highway strip. In short, all that glorious "innovation" by the banks produces more suburban sprawl and destruction of rural land, which is about the last thing this society needs when faced with the realities of peak cheap oil, since it is absolutely certain to make these things obsolete, and very soon. It is not any better, either, if the nominal capital -- nominal because it is sure to someday represent a loss for some bond-holder or stockholder -- gets invested in a 30-story high rise apartment because, contrary to a lot of current delusional thinking, skyscrapers also have no practical future for reasons I have explained in other essays here.

Similarly, the public investments going into "shovel-ready" highway projects, although the fiscal outlays are more transparently based on money that doesn't really exist. The public, as well as leaders all across society, serenely believe that the Happy Motoring matrix will find a way to go on forever, and that therefore we must make provision for it, not to mention the beneficial side of effect of "job creation" for all the additional workers. Yet the dynamic at work must be obvious: oil will never be cheap again; it will impair future capital formation; there will be far fewer car loans; there will dwindling public funds to maintain the roads; and there is no practical substitute for gasoline that scales to the existing system, nor any prospect of one within a time frame that makes sense -- not to mention the gigantic background problem of pouring evermore carbon into the sky.

If these things I mention -- highways, tract houses, condo towers, strip malls -- represent our current idea of "growth," and if they are self-evidently bad investments, then we can infer that our current concept of "growth" no longer applies to a reality-based model of our economic prospects. We ought to junk the term and what it implies about the daily business of mankind, and come up with a new way of understanding the place we're at.

In Part II: Getting To a Future That Has a Future, we take a hard look at the critical task facing humanity if we want to enjoy a future of any worth -- and that's managing contraction. We have to reorganize all the major systems of civilized daily life. We have to produce our food differently, we have to do commerce differently, and so on with any number of ongoing endeavors including transportation, manufacturing, governance, banking, education, health care, and more.

Click here to access Part II of this report (free executive summary; enrollment required for full access).



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Sun, 10/20/2013 - 16:06 | 4073986 Atomizer
Sun, 10/20/2013 - 16:13 | 4074004 debtor of last ...
debtor of last resort's picture

Came out a few days ago, 565.000 views.

Sun, 10/20/2013 - 16:43 | 4074044 max2205
max2205's picture

Note....a lot of momo stocks finished Friday with what look to me like bull trap spikes complete with very non confirming technicals on the daily charts....if Nflx flops and reverses tuesday after ER, we may have seen the highs....


Just saying

Sun, 10/20/2013 - 16:51 | 4074058 boogerbently
boogerbently's picture

Growth, by definition, would be, more people buying your stuff.

People need jobs to buy stuff. You would need to hire more, to keep up with the growth. (catch-22)

Al revs, now, are from reducing inventory and staff.

Sun, 10/20/2013 - 17:06 | 4074099 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

I understand the concept of Peak Oil and someday it will be a reality. Unfortunately, what author overlooks is the oil future's market is being manipulated in such a way that oil is vastly overpriced at this point in time. It is not a lack of supply, it is supply chain fraud. The author is correct in how this limits growth.

Sun, 10/20/2013 - 17:25 | 4074144 James_Cole
James_Cole's picture


the manufacture of fake wealth is such an alluring activity that some of the smartest people in society have devoted their waking hours to making a profit off it


The truth is it's also one of the only games in town these days. Everyone working for the bullshit economy, not that that's a particularly new phenomenon. Do your idiot job and collect your paycheque then enjoy the weekend and don't think about it.

To be fair, there's too many people and horrendously bad capital allocation though, so on balance maybe it's surprising how well things are actually going. Too many smart people doing dumb jobs though.   



We have to produce our food differently, we have to do commerce differently, and so on with any number of ongoing endeavours including transportation, manufacturing, governance, banking, education, health care, and more.

It's happening, just on the small scale. 



Sun, 10/20/2013 - 17:33 | 4074180 strannick
strannick's picture

Who needs growth when you monetize Treasuries (debt) and can then layer and leverage them up with repos (fictional, rehypothecated collateral)

Sun, 10/20/2013 - 22:29 | 4074820 Spigot
Spigot's picture

All I know is that the price of everything in BTC is falling fairly rapidly.

Sun, 10/20/2013 - 17:23 | 4074156 ejmoosa
ejmoosa's picture

Peak Oil is a theory, and we can assume that it might have some merit and we can take actions just in case.

But the cost of oil pales in comparison to the cost of government.

And we are not talking about Peak Government.  We are not making any strides to reduce the size or cost of government.

I can park my vehicles and I can walk.  I can carpool.  I can combine trips and order online.  All of those steps can reduce the impact of Peak Oil on me directly.

But there are no economies to be had when it comes to Peak Government.

And government is what this economy suffers from the most, from top to bottom.

Sun, 10/20/2013 - 18:42 | 4074312 Flakmeister
Flakmeister's picture

You are free to believe whatever nonsense you choose to...

Sun, 10/20/2013 - 19:25 | 4074389 NidStyles
NidStyles's picture

You are free to go kick rocks and take your religion elsewhere.

Sun, 10/20/2013 - 23:45 | 4075002 Flakmeister
Flakmeister's picture

And so are you... Don't you have some Von Mises circle jerk to attend to?

Sun, 10/20/2013 - 19:12 | 4074369 YuShun
YuShun's picture

Our miliary certainly uses a great deal of oil, so cutting that by two-thirds
would result in a substantial reduction in the price of oil,
maybe enough to allow for economic growth.

Sun, 10/20/2013 - 23:23 | 4074741 Element
Element's picture

Is the cost of production, transport, refining and distribution going to go up or down, if scale of production goes down by 65%? You realise existing invested infrastructure is a long term investment, that has to pay back its cost?

Pump 'gas' would become much more expensive, not less expensive, though hurdles to transitioning to other forms of energy supply may become a bit more viable (temporarily).



And I'm fracked if I know why merikans call petrol 'gas', wtf!? ... it's a bloody LIQUID you fools! ... you even call the liquidity a petro-dollar! lol </slaps forehead>

Mon, 10/21/2013 - 02:59 | 4075247 mkhs
mkhs's picture

Gas is the lazy word for gasoline, a petroleum product.

Sun, 10/20/2013 - 19:57 | 4074464 worbsid
worbsid's picture

I generally agree with your assesment that Peak Government is a problem but it is a soft problem that can be fixed and probably will be one way or another eventually.  OTOH, oil companies take the low hanging fruit first and most of the truly inexpensive oil is gone.  Now we are faced with getting oil from deep water, horizontal drilling and fracking, tar sands, etc. and it cost more.  This is not a theory, this is reality.  Peak oil has never been about 'running out of oil'.  A hundred years from now if you want some crude oil, you will be able to get it, someone will get it for you, unfortunately it will cost a million loaves of bread per barrel. 

Sun, 10/20/2013 - 23:58 | 4075028 ejmoosa
ejmoosa's picture

I disagree.  We've been running out of oil since the 1940's.  

And a car getting 50 MPG today replacing a car that gets 15 has just reduced the cost of oil by more than a third.  

So measued in the utility it provides, one could just about say oil is getting cheaper per mile, in real dollars.


And there is no sign that we are even close to peak government, or any signs that we are turning government around.  You may think it is a soft problem, but we are experiencing the hard outcomes from their poor decisions.

Government IS the problem as far as the eye can see.  


Mon, 10/21/2013 - 10:56 | 4075834 ElvisDog
ElvisDog's picture

Kunstler may ultimately be right on Peak Oil, but he has consistently overestimated when the true crisis will hit. He's been saying we're 1-2 years away from collapse since 2008 or so, and yet the oil-based system keeps humming along. My prediction - we will never give up our cars. Some people may not be able to afford them (and ride buses), the cars themselves may get smaller and more fuel-efficient (already happening), but we're not going back to walking everywhere and riding horses like Kunstler seems to think. 

Sun, 10/20/2013 - 21:35 | 4074698 Notarocketscientist
Notarocketscientist's picture

No - it's not a lack of supply - the problem is that we have extracted most of the cheap easy to reach oil. 


And now we are drilling miles deep in the ocean, fracking and ripping out tar sands.

These are all VERY EXPENSIVE processes.


The era of cheap energy is over ergo growth is over.


The author is dead right

Mon, 10/21/2013 - 04:13 | 4075295 Urban Redneck
Urban Redneck's picture

Growth would only be over when viewed from the rather limited perspective of CHEAP-OIL-CONSUMPTION.

If you have a relatively under-developed economy, and relatively inexpensive to extract and relatively high quality oil (net of local demand), you have all the fixins required for an economic BOOM.

The rest of the world gets understandably perturbed when people extrapolate "the World" from "the USSA" they are related, but not interchangeable, terms.

Sun, 10/20/2013 - 17:17 | 4074085 Future Jim
Future Jim's picture

Thanks for the heads up on the World-Systems video. I'm SHOCKED that RT is claiming all the world's problems are caused by greedy capitalist countries exploiting other countries. This oversimplified asinine video explains nothing. It is just more FUD.

I think we here at ZeroHedge know the real problem, which I was able to write a few days ago thanks to the second video giving me the final impetus I needed.

Sun, 10/20/2013 - 17:16 | 4074139 lakecity55
lakecity55's picture

R Paul, Bill Still for prez and VP!

Hoist the Flag of Black Bart, Mates!

We sail on high tide!!

Sun, 10/20/2013 - 19:27 | 4074394 NidStyles
NidStyles's picture

Captian Morgan was better, he didn't get caught.


Not sure why everyone cheers the losers of the Pirates...

Sun, 10/20/2013 - 17:55 | 4074223 Cloud9.5
Cloud9.5's picture

What Kunstler is saying is backed up by the German Army.  They put peak liquids at some where between 2015 and 2020.

Sun, 10/20/2013 - 18:03 | 4074239 Baldrick
Baldrick's picture

dod says 2015

Sun, 10/20/2013 - 16:06 | 4073991 RafterManFMJ
RafterManFMJ's picture

My debt, my belly and my sense of entitlement are all still growing, so what's the problem? - JQ Public.

Sun, 10/20/2013 - 17:17 | 4074068 knukles
knukles's picture

Isn't this what's supposed to happen, anyway?
Too many people taxing too few resources, prices rise such that there is lesser to no access.  That's whats supposed to happen
And if people be-spoil the ecosystem and we all choke to death, so be it.  If we cannot be responsible custodians of our planet then we deserve to become extinct.
And no I don't wanna hear a Goddamned thing about saving the planet.  It'll  be here long after man's gone away

Sun, 10/20/2013 - 16:09 | 4073997 Sleepless Knight
Sleepless Knight's picture

So the US is lying. What's new about that?

Sun, 10/20/2013 - 16:09 | 4073998 NoWayJose
NoWayJose's picture

Excellent article, and sadly it is true.

Sun, 10/20/2013 - 20:18 | 4074506 emersonreturn
emersonreturn's picture

peak people


fukushima can help us there.

Sun, 10/20/2013 - 18:13 | 4074254 duo
duo's picture

Peak topsoil = peak people

The soil we are depleting today took 10,000 years to form since the last ice age.  90% of it has blown away or as been washed into the gulf.  No amount of oil can bring it back, only time, with wild grasses and maybe some buffalo to trample it down.

We will reach a point, soon, when all the nitrogen fertilizer and Monsanto GMO seed won't do crap because the soil, planted with corn for ethanol every year for 20 years, has not one bacteria or fungus in it that the plants need to grow (or minerals, for that manner).

Sun, 10/20/2013 - 16:13 | 4074002 Ironmaan
Ironmaan's picture

Malthusian hogwash. The only things peaking are taxes and regulation and dollar printing. That is what is causing a decrease in capital formation and squelching growth.

Sun, 10/20/2013 - 16:18 | 4074015 Spastica Rex
Spastica Rex's picture

"Limits to growth" has to be a lie, or capitalism can't work in the future. Or maybe growth can be ephemeralized into infinite phone apps that we write and sell to each other.

Regardless - It's not Nice to fool with The Invisible Hand.

Sun, 10/20/2013 - 16:37 | 4074036 Professorlocknload
Professorlocknload's picture

"It's not Nice to fool with The Invisible Hand."


Yup. We may not like the method, but left alone, a free market would/will eventually fix it.

At least that might make more sense than financializing the climate, along with every other aspect of life on earth. Lot's of potential, exponential growth for Squids there, though.


Sun, 10/20/2013 - 16:49 | 4074054 Spastica Rex
Spastica Rex's picture

If they had a fight, The Invisible Hand would kick Mother Nature's ass. Like Superman vs. Batman.

edit: I didn't mean "kick" literally.

Sun, 10/20/2013 - 18:07 | 4074244 GeorgeHayduke
GeorgeHayduke's picture

Not sure about that logic. Nature can easily exist without man or the mythical invisible hand. An invisible hand without nature would not exist at all, except maybe in religion and science fiction.

Sun, 10/20/2013 - 18:26 | 4074290 Harbanger
Harbanger's picture

The invisible hand of central planners exists outside of natures laws.  That's the mystical hand that appears to override physical laws.  Fuck Logic.  I fully expect you to find nationalism, not because of understanding or love, but because the well intentioned plans of the globalists start affecting you personally.

Sun, 10/20/2013 - 19:30 | 4074402 NidStyles
NidStyles's picture

The invisible hand is a byproduct of nature, and I find silly that people continually remove humans from nature as if they were in fact separated from it's influence. 

Sun, 10/20/2013 - 19:49 | 4074438 Spastica Rex
Spastica Rex's picture

You cannot go against nature, because if you do go against nature, it's part of nature too.

No new tale to tell.

Sun, 10/20/2013 - 21:41 | 4074713 Notarocketscientist
Notarocketscientist's picture

The invisible hand is bullshit.   Our current system is bullshit and it will be short lived - the reason we live as we do is because we have had cheap oil for 150 years.

That era is OVER. 

We are at the cusp of a new revolution - one in which energy is rationed because it is expensive - no more SUVs - no more fresh fruit in the winter - no more flying around the world on a whim.


Sun, 10/20/2013 - 22:18 | 4074788 Miss anthrope
Miss anthrope's picture

when i read your stuff I feel you just jamming out at your keyboard to this....


and I see you BELIEVING, that what you are saying is the God's own purity of truth.......pristine clean!. 


Boy what interlocking clandestine missive will you unleash next.!


Sun, 10/20/2013 - 16:43 | 4074045 MisterMousePotato
MisterMousePotato's picture

They're not mutually exclusive. Your response has that same feel as the Hegelian dialectic.

Sun, 10/20/2013 - 16:45 | 4074049 Spastica Rex
Spastica Rex's picture

What isn't?

Sun, 10/20/2013 - 16:13 | 4074006 FeralSerf
FeralSerf's picture

Joo-Kunstler is a shill for Big Oil. Kunstler was claiming ten years ago there wouldn't be any oil for the proles and their pickup trucks due to the Dreaded Peak Oil. What we have instead of Peak Oil is the (Big Oil) Dreaded Peak Oil Consumer. Thankfully for Exxon and Chevron they still have Goldman Sachs manipulating the price and supply.

Big Oil loves high oil prices.

Sun, 10/20/2013 - 16:26 | 4074019 Spastica Rex
Spastica Rex's picture

God would never have created oil as a finite resource. Or if He did, God will uncover our eyes to the miracle of [Nuclear Fusion] [Zero-State Energy] [The Hydrogen Economy] just as soon as our one ton pickups really need it.

edit: "High" oil prices are just a deception of Satan. Like dinosaur fossils.

Sun, 10/20/2013 - 17:01 | 4074082 lakecity55
lakecity55's picture

Ga-ran-tee "they" have all sorts of devices and inventions to create energy with after oil is not economical.

Will there be huge dislocation, though? Probably.

This will not effect those of us who hunt, fish, have small gardens, woodstoves or variants, and who are not interested in money for money's sake.

You can't take it with you. Try to build something for your kidz.

Mon, 10/21/2013 - 02:12 | 4075213 beaglebog
beaglebog's picture



You will not be permitted to hunt, shoot or fish.


You will, in fact, not be permitted to leave the confines of the Metropolis to which you have been re-located.


See Agenda 21, for details.

Sun, 10/20/2013 - 17:05 | 4074097 css1971
css1971's picture

1 ton would be a smallish European car. Your typical American pickup is closer to 3 (metric) tonnes.

Sun, 10/20/2013 - 17:14 | 4074128 Spastica Rex
Spastica Rex's picture

Payload capacity. It's an old fashioned American classification.

Sun, 10/20/2013 - 20:11 | 4074498 Axenolith
Axenolith's picture

Pretty meaningless these days too, I've gotten 1370 pounds into a Ford Ranger before and drove it to a waste processing facility with a passenger...

It wasn't my truck, and I wasn't going on any long road trips like that either ;-)

Mon, 10/21/2013 - 08:44 | 4075297 Urban Redneck
Urban Redneck's picture

Which means is it isn't "meaningless"

The spec is for "normal use" so if you load up a compact pickup with 3/4 of a ton and drive it over potholes and crappy road repairs DAILY, it (or most likely the ball joints) won't last very long... extra points for going to a quarry and having a big assed front-loader drop an over-sized load of gravel into it and snapping the suspension in mere SECONDS if they overshoot the spec, or the truck hasn't been maintained properly.

Sun, 10/20/2013 - 19:31 | 4074405 NidStyles
NidStyles's picture

My truck is a 3/4 ton truck. It weighs just over 6000lbs. :-)

Sun, 10/20/2013 - 18:00 | 4074227 GeorgeHayduke
GeorgeHayduke's picture

Uh yeah...sure. And if we're all good we can ask Santa to just bring us more oil too. It's fun to live in fantasy land.

Mon, 10/21/2013 - 00:06 | 4075056 NIHILIST CIPHER

+1  S. Rex      Good luck getting them to understand hydrogen fuel cell tech is only a couple of years from rollout stage. Oil is so last century don't you think?

Sun, 10/20/2013 - 17:25 | 4074029 Running On Bing...
Running On Bingo Fuel's picture

Exactly and the FED is committed to the overall success of Big Oil because it is the basis of their little baby US petro dollar.

Many look back at 2005-2007 and say, what were those fucking regulators and banks thinking? Handing out loans like water at a marathon.

Forced inflation folks.

For years Corporate Oil would make discoveries and misquote the amount in the reserve. It drove their stock price up and was thought to be a no big deal thing.

Then something changed. Getting oil was harder and it was being scrutinized by the fucking bean counters.

Your real estate boom(2003-2008) was in fact a move by the FED to cover up all those years of lying about underground reserve levels by Big Oil.

They gave out free money to force inflation at a rapid pace. The new inflation level would offset the spike in oil prices caused by Big Oil lying about the amount of crude that they owned, underground, in reserve, in the dark invisible underground well.

We are fucked. If you are under 60 years old and do not have a plan for complete collapse, please get one..

Why? You ask. Precisely because we are drilling-baby-drilling. Our state side reserves are the reserves of last resort.

Sun, 10/20/2013 - 18:55 | 4074339 FeralSerf
FeralSerf's picture

There's always DEEP OIL (the stuff that's below the biotic level), for those that dare drilling for it. BP may have lost some of its appetite for it, but there will be others.

Sun, 10/20/2013 - 19:31 | 4074385 Running On Bing...
Running On Bingo Fuel's picture

Good grief! Still with this?

There is no doubt my friend. But at what cost?

Why are we fracking the fuck out of the strata, poisoning potable water supplies, if we can just reach down a few feet deeper?

What bubble can the FED blow to get down that deep and still make it possible to joyride down route 66?

Sun, 10/20/2013 - 19:46 | 4074430 FeralSerf
FeralSerf's picture

They have to frack the fuck out now, because if they wait a few years politics may make it much more difficult (and expensive) to poison the water supplies. The deep oil will wait.

Some of the drillers may still be afraid too. BP still doesn't know what the bill is and I don't think RIG is done licking their wounds from the last debacle either. Deep water drilling technology is marching on though.

Sun, 10/20/2013 - 19:47 | 4074431 Running On Bing...
Running On Bingo Fuel's picture

Oh, I see. Ok, thank you.

Sun, 10/20/2013 - 21:54 | 4074735 Notarocketscientist
Notarocketscientist's picture

Lots of oil left - one problem - it is expensive to extract - we've picked most of the low hanging fruit.


Picture this:  Curiosity discovers an ocean of oil - as big as the Pacific Ocean - one metre below the surface of Mars.  Enough oil to power earth for 10,000 years.

Do you think that will solve the Peak Oil problem?   Of course not - because cost to extract that oil and put it to use outweights the outputs you get from burning it.


THINK!!!! PEOPLE!!!!   It's all about the cost.

Sun, 10/20/2013 - 23:56 | 4075030 Spastica Rex
Spastica Rex's picture

We'll build space tankers. And they'll run on oil. Or maybe coal, cuz we have a lot of that.

Sun, 10/20/2013 - 16:53 | 4074066 smartstrike
smartstrike's picture

And you posted all this just to call Kunsler a Joo?

Sun, 10/20/2013 - 18:45 | 4074316 Flakmeister
Flakmeister's picture

Sad isn't it...

Sun, 10/20/2013 - 18:57 | 4074343 FeralSerf
FeralSerf's picture

The frying pan without a clue is still calling the pot black.

Sun, 10/20/2013 - 18:50 | 4074329 FeralSerf
FeralSerf's picture

Nope -- just to give some of you an idea where he might be coming from. Some people are loyal to their tribe. Some aren't.

Sun, 10/20/2013 - 16:45 | 4074050 TheFourthStooge-ing
TheFourthStooge-ing's picture

Lumberjack said:

"Statoil says oil discovery off Newfoundland could yield up to 600 million barrels, in biggest find in years

A major oil discovery by Statoil ASA off Newfoundland opens a new frontier on Canada’s East Coast, as explorers move into deeper and riskier waters in search of undersea crude."

That pretty much says it all as far as peak oil. The "biggest find in years", even in the most optimistic terms, is only a meager 600 million barrels. That miniscule finds like this are considered newsworthy should tell you all you need to know.

In the best case scenario, it'll take at least five years to ramp up production, it might be productive for ten to fifteen years, and the total crude extracted will amount to about a week's worth of global consumption.

Sun, 10/20/2013 - 17:07 | 4074102 Lumberjack
Lumberjack's picture

Statoil was pushing offshore wind off the coast of Maine. They got shot down in part because like other firms doing the same on the eastern seaboard, it is a play for the oil and gas which are in huge quantities. Tho onshore wind and transmission projects are merely for pipeline ROW's

Sun, 10/20/2013 - 20:51 | 4074590 Coast Watcher
Coast Watcher's picture

There is no indication of oil or gas in the Gulf of Maine. Statoil got shut down because of Maine's dickweed governor.



Sun, 10/20/2013 - 16:15 | 4074010 booboo
booboo's picture

"and new credit cannot be extended without a reasonable expectation that more new wealth will be generated to repay it"
Hence The Fed, that gargantuan black hole paper sucking machine where all bad paper goes to die, the sacrificial anode mounted to the bottom of the Titanic.

Sun, 10/20/2013 - 16:30 | 4074027 ebworthen
ebworthen's picture

Peak humanity.

Sun, 10/20/2013 - 16:30 | 4074028 0b1knob
0b1knob's picture

Growth is the result of investment.

ZIRP penalizes savings and investment.  

Therefore: Lack of growth is the result of peak oil?


Sun, 10/20/2013 - 19:34 | 4074410 NidStyles
NidStyles's picture

Don't worry about it. Thank Adam Smith for being a moron and creating all of these cute little logical fallacies for Ricardo and Malthus to expound upon and confuse the morons for centuries now.



Mon, 10/21/2013 - 05:58 | 4075335 falak pema
falak pema's picture

Name dropping again; after Rothbard and Mises now Adam SMith.

If you could string a cogent display of reasoning to make your point instead of talking vaguely in riddles, like a egghead sophist all absorbed in reading a soft porn novel; all rosy eyed and bushy tailed about competitive advantage from ozone layer decay; and show us how Adam Smith sucked on Joules and produced enuff exhaust gas to run a self perpetuating machine that creates more energy than it consumes when fracking wells who hit  high depletion and  burn out faster than a man loses his hard-on; when Viagra says Niagara is too hard to please as misty maiden.

If you can do all that, you can talk and think and you ain't Gerald Ford's ghost. 

Sun, 10/20/2013 - 16:30 | 4074030 Kirk2NCC1701
Kirk2NCC1701's picture

1. Big Oil just loves high oil prices. More profits for them.
2. The Fed and its Shareholders love high oil prices, insofar this increases demand for the USD and thus helps keep up its fiat Ponzi and Global Reserve Currency (GRC) status.

3. According to the Peak Prosperity crowd, it is not so much the price itself that matters, but the underlying physics: the EROEI (Energy Returned On Energy Invested).

Sun, 10/20/2013 - 16:43 | 4074046 Professorlocknload
Professorlocknload's picture

Big Regulation is also fond of all that gas tax revenue. Moar gallons, moar gallons!

Sun, 10/20/2013 - 19:37 | 4074414 NidStyles
NidStyles's picture

COnsidering that all three are profiting from the myth, I would have to go with all three.


1) It's obvious like the diamond industry they can make a fortune off of artificial demand curves and forged supply shortages.


2) They are just plain assholes and will rip off anyone they can.


3) Useful idiots. See Flakmeister for reference. The guy puppets the myth as if it were religion and to say anything counter or questionable towards it is blasphemy.

Sun, 10/20/2013 - 23:46 | 4075005 Flakmeister
Flakmeister's picture

You are entitled to your opinions, but not your facts...

I deal only in facts, it really is easier that way...

Sun, 10/20/2013 - 22:03 | 4074750 Notarocketscientist
Notarocketscientist's picture


Robert Ayres, a scientist and professor at the Paris-based INSEAD business school, wrote recently that a "mini-bubble" is being inflated by shale gas enthusiasts. “Drilling for oil in the U.S. in 2012 was at the rate of 25,000 new wells per year, just to keep output at the same level as it was in the year 2000, when only 5,000 wells were drilled."


Why America's Shale Oil Boom Could End Sooner Than You Think



Overinflated industry claims could pull the rug out from optimistic growth forecasts within just five years.  A report released in March by the Berlin-based Energy Watch Group (EWG), a group of European scientists, undertook a comprehensive assessment of the availability and production rates for global oil and gas production, concluding that: "... world oil production has not increased anymore but has entered a plateau since about 2005."  Crude oil production was "already in slight decline since about 2008." 

Sun, 10/20/2013 - 16:40 | 4074037 CrashisOptimistic
CrashisOptimistic's picture

It's a hard thing for people to accept, but there is no rule of the universe that says there must be a happy future.  There is no law of hard science that says all must turn out well for mankind.

Blaming oil scarcity on Big Oil sort of runs into the fundamental problem that privately owned oil companies like Exxon and Chevron are seeing oil production decline (check their latest quarterlies).  The oil is being sewn up by the big national oil companies like Saudi Aramco, Rosneft, Sinopec, Pemex and the list goes on. 

Exxon spent xx billion dollars just a few years ago to buy XTO Energy, who do not produce oil.  They are a nat gas specialist.  Exxon did it because they have to sell something, anything, and it's not going to be oil.  This is also why Buffett bought Suncor.  They have actual reserves to sell.  Exxon's are falling.

The numbers are largely suspect.  My favorite informative scenario is to just point out to people that in 1920 you carted a horsedrawn wagon of lumber to a site, built a 30 foot tall derrick, drilled down a few hundred feet and up gushed 15,000 barrels (42 gallons/barrel) per day.  Now, you build a 30 **STORY** tall structure, in segments, train ship them to a coast, barge them out into the harbor, bolt them together, install a 30,000 horsepower marine engine, then helicopter out a crew and drive the thing 10,000 miles to a site to drill down in the ocean 25,000 feet . . . to get 15,000 barrels per day (the same amount).

Does this sound like abundance to you?

Sun, 10/20/2013 - 16:57 | 4074067 css1971
css1971's picture

The only reason Americans think this way is they are on the winnng end of the PetroDollar.

"but there is no rule of the universe that says there must be a happy future."

I guess I should point out that entropy guarantees that the future can not be happy. You will die, everything you know or treasure will be ground into dust and forgotten. Nothing you say or do has any significance.

Sun, 10/20/2013 - 18:07 | 4074236 Dick Buttkiss
Dick Buttkiss's picture

Oh ye of little faith, or understanding of what's actually happening:

We're just getting warmed up, in other words, which isn't to say that we don't have hell to pay for what statism has wrought or that it's inevitable demise couldn't possibly take humanity down with it.

I don't think it will, however, and believe instead that this century will be to the last one what the last one was to, say, the arrival of our species.

Which is to say:

“The greatest shortcoming of the human race is our inability to understand the exponential function.” — Albert A. Bartlett


Sun, 10/20/2013 - 21:36 | 4074699 Seeking Aphids
Seeking Aphids's picture

Wow...very impressive...we are now into full-on existential angst....dust off the Sartre and Camus! As an existentialist I agree with the premise that everything will be ground into dust and is also true, however, that what we say or do is of very great importance to those of us sharing the planet at this point in time - and, in a way, that is all that matters. That is the essential message of existentialism...imho.

Sun, 10/20/2013 - 22:10 | 4074767 Notarocketscientist
Notarocketscientist's picture

From Steve Coll's book on Exxon:


During the decade leading to 2012 Exxon was only able to replace 95% of the oil it pumped due to scarcity of new discoveries.

Because of this they turned to acquisitions to replenish their oil and gas bank.


In 2010 Exxon purchased a pure shale play XTO for $41 billion dollars.

Exxon CEO Tillerson was criticized for the acquisition by the Society of Petroleum Evaluation Engineers in Houston because:

1. there are considerable risks in shale plays
2. reserves are overstated
3. costs are understated
4. the gold rush mentality destroys capital and rule of expediency over science and risk management

"Uncertainty and skepticism of this kind leached out from geological engineers in the form of unfavourable press reporting , some of which went so far as to ask whether the American shale gas boom was some sort of Ponzi scheme in which early investors bid up faulty assets and lured in big money suckers like Exxon"

"Unconventional gas wells behaved unlike other wells, and their decline and productions rates could be hard to calculate - an individual gas well might lose its productivity much more rapidly in the first year of drilling than an oil well would"

The PUNCH LINE - Exxon paid $41B for XTO.

Exxon's market cap dropped $40B soon after.



Sun, 10/20/2013 - 16:45 | 4074043 Jack Burton
Jack Burton's picture

There seems to be plenty of oil. That phrase is common enough in today's media scene. There is, and we keep finding more. But, the problem lies in how expensive this new oil is to get out of the ground and into refineries. I know of nobody who is claiming any of these new oil finds is "cheap oil". Fracking is going global, this promises lots of energy in France, Britain, Rumania, the USA and many other place. Yet even the frackers themselves admit they could not frack unless oil stayed high priced. Arctic seas are being drilled as the ice retreats. Russia is already at it, hopes are high for big finds. I bet they will find oil, lots of it. But I also bet it will cost a huge fraction of the potential profit to produce. Arctic sea oil os gonna cost real money. Brazil recently had a deep water find that was touted in all the blogs and press. It was huge, but, on closer examination, it is so deep that it is going to take decades and untold billions to produce. It ain't gonna be cheap oil. Britain is staking it's energy future on fracking, just getting underway. It will be expensive oil, nobody denies that fact, and it looks set to cause a huge row, as Britains fast shrinking countryside gets hammered by thousands of drill rigs and production platforms. No idea what the long term means, but the stuff pumped into the wells in such huge quantities, is not going to all stay down. So Britain also looks to the Falkland Islands economic zone, the costal waters. FInds have been made, but again, remote locations and deep drilling will make production's "energy IN versus energy OUT", a very expensive propostion.

I believe we will keep finding new oil all over. The nature of earth makes that likely. But when you see that Canada is all gaga over tars sands, a truely desperate form of oil production, then you know cheap oil is over.

Any honest person must conclude that economic growth for the last 100 years has been due to cheap oil, oceans of the stuff. It is basic physics. All that cheap energy allows masses of work to be done and almost no cost. That makes the profit from enterpise very high, thus capital formation was sky high. As Kunstler points out, those days are over. No economic or political ideology can produce cheap energy. Capital formation and the riches of the 20th century are down to cheap oil. I see no physics or geology that indicates a return to cheap energy.

When man is reduced to mining sand and using hot water to extract tar from it and then process that tar into useable oil, at great expense, then you know that cheap and easy oil is over. I dare anyone to compare energy IN versus energy OUT at the Canadian Tar Sands, versus the Texas oil boom of the early 20th century. There is no comparison as regards COST. In economic, COST of input is everything!  We'll have lots of oil, it is just gonna cost a hell of a lot to buy it at the pump.

Sun, 10/20/2013 - 16:52 | 4074062 El Vaquero
El Vaquero's picture

This.  And the depletion rates of the shale oil wells are horrendous.  Fields will require exponential drilling and other BS to keep production up. 


We do waste a bunch of oil though.  Modern agriculture unnecessarily sucks a lot of it up, and I do see a lot of people driving 1-ton pickups with 8" lifts rolling on 37" tires who might haul jet skis down to the lake 2 or 3 times a year, and other than that, heaven forbid the thing gets a speck of dust on it. 

Sun, 10/20/2013 - 17:02 | 4074086 swedish etrade baby
swedish etrade baby's picture

If you think farmers are wasteful you should buy some land since you will be able to produce at a lower cost.

Sun, 10/20/2013 - 17:15 | 4074137 El Vaquero
El Vaquero's picture

I know current farming practices are wasteful.  The problem is, it takes fewer dollars to be wasteful than it does to not be wasteful if you are growing food on a massive scale.  Especially when you're being subsidized. 

Sun, 10/20/2013 - 19:51 | 4074421 NidStyles
NidStyles's picture

The problem is that all of the assertions being made are made with an every declining value of the dollar, so there is no real way of being sure just how off some of these estimates and production figure are, or how wasteful they are.


You can not establish a clear trend by using an every changing perspective of measurement. All you end up doing is maintaining the exact same status that you started out with, or one that is marginally degrading over time.


Sun, 10/20/2013 - 17:20 | 4074150 css1971
css1971's picture

This is where the energy really goes

Yeah babe. 325 litre fuel tank.

We can always replace these things with a couple of hundred peasants though.

Sun, 10/20/2013 - 17:28 | 4074173 El Vaquero
El Vaquero's picture

IIRC, shipping and processing the food uses a lot more than the tractors.  Even if my memory is faulty, those peasants are going to be in for a shock in the future when food prices go up. 

Sun, 10/20/2013 - 17:34 | 4074182 CrashisOptimistic
CrashisOptimistic's picture

In the world of tractors, the issue is not peasants vs horsepower.  It's the calendar.

A planting season is only so many days.  A harvest season is only so many days or it rots in the fiels. 

This is why the huge horsepower tractors are needed.  The farms are 50,000 acres (to feed 7 billion) and you HAVE to get them planted on time or harvested on time.  The calendar doesn't care what the Fed is doing with dollars.  The calendar doesn't care if you want to bring peasants out who can't run as fast as a tractor.

The calendar DOES care that you got it all planted on time because the tractor had the muscle to do it.

Sun, 10/20/2013 - 17:27 | 4074167 CrashisOptimistic
CrashisOptimistic's picture

You're close, but you don't quite have it right.

There is always danger in "plenty of oil".  Plenty is English.  Oil is numbers and geology.

When you drain an oil field "dry", there is still oil down there.  You have to understand the geology.  The interconnectedness of the pores in the rock holding oil may not let it flow to a well already drilled.  Maybe there is a pore with 100 barrels in it and the surrounding rock sealed it from flowing to the well hole.  It's still there.  It will always be there, unless you spend the effort necessary to drill another hole and hope you hit that pore.  That will be lots of effort for 100 barrels. 

There are pores like this everywhere, and there always will be.  You will "never run out of oil" in this context, and the economists who say if price is high enough you won't run out are ALSO right in this context.  If the pore is 2 barrels in size and you drill a $10 million hole to get it, hey, you didn't run out of oil, and that oil had better be $5 million/barrel to pay for the hole.  That's what economics will tell you.  Boost the price high enough and you never run out.

Except it took more than 2 barrels of oil to drive the equipment to the site to drill the hole. 

THAT is when you have problems, because money's value is imaginary, even in gold form.  Money doesn't make this work.  Joules do.  And when it takes more joules to drill that hole, you die.  You haven't "run out of oil" but you still die.

Sun, 10/20/2013 - 20:01 | 4074474 FeralSerf
FeralSerf's picture

In 1960, I could buy a gallon of gasoline for a 1960 quarter. I still can. How has the REAL price increased -- not the one measured in FRNs?

If gasoline's so much more difficult to produce, why hasn't the inflation adjusted price gone up in the last 50 years?

Sun, 10/20/2013 - 22:51 | 4074872 Notarocketscientist
Notarocketscientist's picture

Oil was 12 bucks in 1998.  It was 147 bucks in 2008.  Inflation adjusted it should have been around 30 bucks.  Assume CPI is bullshit so lets make it 60 bucks.

Every increase of 10 bucks lops 0.5% off growth in a developed economy.

Oil's at around 100 bucks now - in good times we grow 3%.


End of Growth is fast approaching... and energy is not getting cheaper.

Mon, 10/21/2013 - 05:21 | 4075302 falak pema
falak pema's picture

The amazing thing is that oil was at 36 $ from 1979 to 1981, went down to 22 in 1984 and then to 15-12 in 1995-1998.

Why this regression? All politically engineered, by Ronnie (open the tap full Saud was his message to Fahd in 1982, they did it). He wanted to sink the SOviet ship and launch the WS FIRE ecstasy. So he needed prolonged cheap energy to fuel that. Saud and OPEC complied as they were hamstrung in the Saddam-Iran war divide.

And Maggie went bat shit frenzied and ordered to deplete UK North Sea in "fornicator maximus" orgy. It generated quick revenues and depleted UK reserves faster than Bernanke can print greenbacks. Thank you very much you Oil shills Shell and BP, who started buttering up Q Daffy and raping Nigeria to compensate as the French did in West Africa. Such a sweet club the oil oligarchy. Its worth writing a novel about. 

The head man of Shell had his head chopped off when he had to admit in 2004 the scam the DOE under RR encouraged the oil majors to proclaim for two decades. "Enuff oil out there to fry us all!" pointing at Cantarell. That "peak oily" tension became evident, like the blooming bubble, when Chindia emerged as super gas guzzlers.

They sing the same song today to please their political czars about Frack and Shale boom. Its gonna be as much a scam in the energy sector as the CDO and CDS were for finance; I'll wager my left hand on that! 

Those whom the Gods wish to destroy they make mad and delusional on derivative joys. What toxic toys for paranoid royals of sick finance. 

If the Oil majors who ran the world, in those halcyon days of 70s and 80s had had any sense of farseeing responsibility instead of being glued to quarterly report frenzy and shareholder dikksucking idolatory, they would have been good capitalists, true innovators and problem solvers, and taken the world down the renewable energy or alt energy route experience curve (instead of actively throttling it thru huge lobbying); an experience that the Hippie generation of Silicon valley exemplified for the electronics industry, to dethrone that king Oligarch IBM, top royal of those days.

Big oil is and stays a royal game played by the sons of Oligarchy spawned by Rockafella and consorts; the heart of US oligarchy big business; aka Seven sisters then Bush/Halliburton/Carlyle/saud/Koch. We now cry about entrepreneurial love's labour lost in WS orgies of fiat levitation! 

Sun, 10/20/2013 - 16:47 | 4074051 NIHILIST CIPHER

Peak bullshit !   Even James Bond films were showing hydrogen powered vehicles and a hotel powered by hydrogen. That is why water will be sky high soon, but hey you only need it to live. Oil will be used to make plastic crap from China and tires.

Sun, 10/20/2013 - 18:48 | 4074324 Flakmeister
Flakmeister's picture

You missed the /sarc tag....

Either that or you are one messed up dude...

Sun, 10/20/2013 - 19:38 | 4074416 Acet
Acet's picture

And your source of free hydrogen is where?

You are aware that to make hydrogen from water takes energy, right? Where do you think that energy will come from?

As for using hydrogen as fuel, not only is its energy density lower than gas (i.e. more space is used to store the same energy), but hydrogen has some pretty special properties that make it really hard to store: for example hydrogen will just slowly seep out of most containers (even metal) since H2 atoms and molecules are so small they can fit through the spaces in most crystaline structures.


Sun, 10/20/2013 - 23:01 | 4074902 NIHILIST CIPHER

FLAKMEISTER & ACET                   Just take a few minutes and do some reading about the 50K hydrogen Toyota to come out in 2015. Honda and Toyota in race to put hydrogen powered vehicles on the market.

Sun, 10/20/2013 - 23:48 | 4075010 Flakmeister
Flakmeister's picture

Let me know when there are merely 1 million hydrogen powered vehichles on the road given the wold vehicle fleet is the order of 500 million...

Mon, 10/21/2013 - 04:01 | 4075291 Acet
Acet's picture

Yes, yes, everybody is on a race to put hydrogen in vehicles and they have been in said race for 3 or 4 decades now.

The problem is that hydrogen storage is either heavy (for solid storage where the gas is stored inside a solid) or requires very, very low temperatures, so you don't get all that much milleage from a hydrogen car. The other problem is that transporting hydrogen around to fill in the gas stations themselves suffers from the same leakage problems as keeping it in a car's tank. Then there's the problem that there is no infrastructure for hydrogen production in the quantities need and last but not least, there's the small detail of where will the energy come from to make all that hydrogen.

Sure, when we're desperate with the lack of oil, hydrogen might be a viable alternative, but it most certainly will be a more expensive and less practical one than gas. At such a point, if we're using all that energy for producing hydrogen fuel to put in cars, we might as well just put the energy directly in the cars: i.e run around in electric cars.


Mon, 10/21/2013 - 11:05 | 4075878 NIHILIST CIPHER

@ ACET & FLAKMEISTER                       It is clear you are just a couple of half wits playing on your parent's computer in the basement. Does your mom know what you are doing? Please go play in the traffic.

Mon, 10/21/2013 - 13:06 | 4076448 Acet
Acet's picture

I do apologize: I though I was dealing with somebody who is actually capable of rational thinking and discussion but instead we seemed to have dropped into the 5-year-old kindergarten style of discussion ...

Sadly, I misjudged you. My apologies, it's entirelly my fault.


Sun, 10/20/2013 - 17:01 | 4074081 Racer
Racer's picture

In the UK, it isn't the fact that oil is too expensive... it is the tax on oil as well as all the other stealth taxes that are too expensive!

Sun, 10/20/2013 - 17:04 | 4074091 0b1knob
0b1knob's picture

On an inflation adjusted basis, oil is at the high end of the range but still well below the 1981 (!) peak.

On an inflation adjusted basis, natural gas is close to the all time low.


Sun, 10/20/2013 - 17:11 | 4074117 Shigure
Sun, 10/20/2013 - 17:53 | 4074215 spooz
spooz's picture

I keep reading about how fracking will make the US energy self sufficient.  So, I say nationalize the US energy resources and use the proceeds to benefit citizens instead of corporations. I expect, however, our natural resources will be put on the open market by corporations working for shareholder value instead of used by citizens to address growing inequality. 


Sun, 10/20/2013 - 18:50 | 4074328 Flakmeister
Flakmeister's picture

You have claimed to be a free market libertarian in the past, haven't you?

Any reason why you changed your religion?

Sun, 10/20/2013 - 21:01 | 4074617 Coast Watcher
Coast Watcher's picture

Fracking will have to double U.S. oil production to achieve energy self-sufficiency. Not. Going. To. Happen.

Mon, 10/21/2013 - 02:34 | 4075228 Non Passaran
Non Passaran's picture

Like Healthcare, sure, why not.
By 2015 you may be able to register for a gallon of "affordable" ObamaOil.

Sun, 10/20/2013 - 18:57 | 4074344 Dre4dwolf
Dre4dwolf's picture

This article is very important, it will be looked back upon in history books I assure you.

Sun, 10/20/2013 - 19:27 | 4074398 Took Red Pill
Took Red Pill's picture

Great article! It's true, all the low hanging fruit is gone.

Sun, 10/20/2013 - 19:59 | 4074468 Axenolith
Axenolith's picture

The premise is false.  Oil, silver or gold adjusted, is cheaper than it's been just about ever.  Gasoline was as low as $2.88/gallon in New Mexico and Texas on a recent trip.  That equates to a historical equivalent of about $0.20/gallon.  The spread over higest to lowest nation wide is about $0.20 to $0.28 silver adjusted.

Until that skews over approximately $0.35/gallon silver adjusted for more than 6-12 months there is NO indication whatsoever that oil is in some type of crisis.

Just get a piece of graph paper and construct an on going chart if you don't believe it.  When oil is $300/barrel, the silver adjusted price will be right there in lockstep because IT'S THE MONEY that's the problem... 

It's not hard to get oil, and if conventional sources actually decline to where the silver adjusted price slews up over the ~$0.35 area, people will MAKE oil out of something with available hydrogen and carbon sources and that process will eventually be refined enough to bring the equation back into balance.

Sun, 10/20/2013 - 19:50 | 4074443 Hubbs
Hubbs's picture

What about the big new "Saudi Arabia size" oil field discovered in south central Australia?

Sun, 10/20/2013 - 19:55 | 4074458 alamoillini
alamoillini's picture

peak oil is the myth!

Technological progress applies to oil and gas as the capacity to evaluate reservoirs is improved with better technology more oil and gas is located and new development technologies are developed to extract the resources.....


Sun, 10/20/2013 - 22:50 | 4074851 Element
Element's picture

Maybe so, but gas is bad, mmkay

We have psycho 'greenie' morons pretending to represent an intelligent and informed 'wise'-view and public response, whilst playing absurd twisted propaganda games, where lying douches want us to pretend with them that natural gas's extraction is equivalent to a chemical gas-attack on humanity and Earth.

When I see people doing that, clearly they don't feel their opposing 'facts' alone (scant and dubious as these are) can cut it, or are sufficient to win support for their view, claims and propositions. So they have to act emotively and in clearly deeply dishonest ways, to misrepresent the situation as much as possible, to get media traction for their curious baloney.

People going along with that muck are useful idiots, at best, and a danger to themselves.

There may be valid objections to process, procedures and techniques (that need to be addressed), but any person with real objections and points to make, are not going to be found among that bunch of muppets.


(btw, peak-oil is not a theory or a myth if oil production declines, even as gas production rises)

Sun, 10/20/2013 - 22:53 | 4074877 Notarocketscientist
Notarocketscientist's picture

Peak Stupidity is NOT a Myth.... as you have just demonstrated

Sun, 10/20/2013 - 19:51 | 4074448 alamoillini
alamoillini's picture

Peak oil is a myth!....Technological progress has ALWAYS trumped the "peak oil" doomsday.....shale oil and gas is just the latest technological innovation that has the capacity to drive economic progress.

The problem is GOVERNMENT.   Specifically, Centralized government control which limits economic freedom.  What the 20th century has been is an increasingly growing, intrusive centralized goverment which limits economic freedom and therefore limits economic prosperity.  

Society has chosen the "security" of centralized government planning over the risk of individual entrepeneurship, ambition, creativity and labor.  What the world needs in the 21st Century is the repeal of the Centralized Government model and a restoration of the individual liberties as written in the US Constitution.

The only way to restore economic prosperity is to restore individual freedom as written in the US Constitution. The way to do that is to have 2/3 of the State legislatures, as written in Article 5 of the US Constitution, assemble for a Constitutional Convention which provides a way to amend the Constitution with the following amendments

1) Term limits for US Representatives and Senators.

2) Balanced Budget Amendment which restores the gold standard for USD and requires the Fed to be limited to powers as written in the original 1913 Federal Reserve Act.   The Fed will cease centralized monetary policy, open market operations, and all other duties that are not part of the original 1913 Federal Reserve Act  and return to being a lender of last resort for the US banking system.   The US Treasury will be the source of all monies.




Sun, 10/20/2013 - 20:33 | 4074538 Poor Grogman
Poor Grogman's picture

Managing contraction is already underway.

Check out Southern Europe, the banks now control those people or countries that over borrow.

The experiment is underway to see what level of "austerity" will be tolerated before people go mad max.

First the debt fuelled growth, then the over indebted contraction, then the printing, but only enough to control the decline of the real economy. If they miscalculate the whole thing blows up in confetti, but Japan hasn't yet, that's why politicians will never be allowed to grasp the real levers of power.

So the real economy keeps contracting, real wages shrink, living standards fall. But the illusion is maintained that the CBs are doing all they can, in fact most say they are doing too much and should not be doing anything at all?

Can the lowering of living standards for the majority be continued? Even while the Banksters enjoy more and more?

Will the central banks eventually own everything along with a handful of the elite. Or will they end up as cultural curiosities of a bygone era?

Sun, 10/20/2013 - 22:03 | 4074748 Notarocketscientist
Notarocketscientist's picture


Robert Ayres, a scientist and professor at the Paris-based INSEAD business school, wrote recently that a "mini-bubble" is being inflated by shale gas enthusiasts. “Drilling for oil in the U.S. in 2012 was at the rate of 25,000 new wells per year, just to keep output at the same level as it was in the year 2000, when only 5,000 wells were drilled."


Why America's Shale Oil Boom Could End Sooner Than You Think



Overinflated industry claims could pull the rug out from optimistic growth forecasts within just five years.  A report released in March by the Berlin-based Energy Watch Group (EWG), a group of European scientists, undertook a comprehensive assessment of the availability and production rates for global oil and gas production, concluding that: "... world oil production has not increased anymore but has entered a plateau since about 2005."  Crude oil production was "already in slight decline since about 2008." 

Sun, 10/20/2013 - 22:07 | 4074758 ComputerNerd
ComputerNerd's picture

The answer is the molten salt thorium reactor.


Sun, 10/20/2013 - 23:49 | 4075013 Flakmeister
Flakmeister's picture

If you think that is the answer, you clearly missed the question...

Mon, 10/21/2013 - 02:54 | 4075237 Non Passaran
Non Passaran's picture

Didn't that peak oil doomer site Oil Drum go away because less and less people subscribe to its assumptions and predictions?

I don't disagree with author's premises, but the West spends way more oil than necessary and our living standard is unjustifiably too high.
We'll do just fine with more expensive oil, it just takes some getting used to.

Mon, 10/21/2013 - 03:28 | 4075264 falsificatordotcom
falsificatordotcom's picture

Popular article obviously. The resource-scarcity vs. population size has been going on for a while. It is a longer term trend.


Do NOT follow this link or you will be banned from the site!