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"Oil May Drop To $25 On Chinese Demand Plunge, Supply Glut, Ageing Boomers"

Tyler Durden's picture




 

By Paul Hodges of International eChem via Russell Napier's ERIC

We have forecast since mid-August that Brent oil prices would fall to “$70/bbl and probably lower”, and the US$ would see a strong rise. As Chart 1 shows, Brent has now reached our target, falling 40%, whilst the US$ has risen 10%. We believe this represents the first stage of the Great Unwinding of policymaker stimulus that has dominated markets since 2009. This Note now takes our oil price forecast forward into H1 2015.

Astonishingly, most commentators remain in a state of denial about the enormity of the price fall underway. Some, failing to understand the powerful forces now unleashed, even believe prices may quickly recover. Our view is that oil prices are likely to continue falling to $50/bbl and probably lower in H1 2015, in the absence of OPEC cutbacks or other supply disruption. Critically, China’s slowdown under President Xi’s New Normal economic policy means its demand growth will be a fraction of that seen in the past.

This will create a demand shock equivalent to the supply shock seen in 1973 during the Arab oil boycott. Then the strength of BabyBoomer demand, at a time of weak supply growth, led to a dramatic increase in inflation. By contrast, today's ageing Boomers mean that demand is weakening at a time when the world faces an energy supply glut. This will effectively reverse the 1973 position and lead to the arrival of a deflationary mindset.

CONTENTS Page:

1. Oil prices continue bouncing down the stairs to lower levels. Page 2
2. Financial players have destroyed price discovery in oil markets.  Page 4
3. OPEC’s high prices have accelerated move away from oil to gas. Page 5
4. Gulf countries risk losing US defence shield if oil prices stay high. Page 7

1. Oil prices continue bouncing down the stairs to lower levels

Chart 2: Brent prices are now in a steep downtrend

Brent oil prices have reached the “$70/bbl and probably lower” level that we forecast in August. So we now need to think about where they go next. Luckily, Chart 2 above can still guide us, as it has done since September 2010. We first forecast the collapse on 18 August, and then followed this on 27 August with a detailed analysis and specific price forecast:

“How low will prices go? We can have no idea, as prices have never been this high for so long. Nor can we rule out a further massive stimulus effort by the central banks at some point. But "technical trading" logic would suggest they will fall to at least the 200-day exponential moving average, currently around $70/bbl, and probably lower (red line)”.

Unfortunately, conventional wisdom completely missed this move, believing that prices would always stay at $100/bbl. Many companies and investors have lost large amounts of money as a result of wearing these rose-tinted glasses.

WHAT HAPPENS NEXT?

There are 2 parts to the question of ’What Happens Next?’:

  • Why is this happening?
  • will tell us when the price move is ending?

The “Why” question is easy to answer:

  • China’s stimulus policy has ended. Instead, President Xi is moving to his New Normal concept. He intends to improve income levels for ordinary people, not to create wealth effects for a minority via a property bubble
  • The US Federal Reserve’s Quantitative Easing (QE) policy has paused. Many investors are preparing to ‘dash for the exits’ just before interest rates rise, as they know prices for financial assets are well out of line with fundamentals

This means that the stimulus policies that pumped air into China’ s demand bubble and the US financial asset bubble have stopped pumping. And a child knows what happens to bubbles when you stop pumping more air – they deflate very quickly. The initial catalyst for this was the unwinding of China’s ‘collateral trade’. As we warned in June, this is now opening the fault lines in the debt-fuelled ‘ring of fire’ created by central bank stimulus.

The “What” question relies on the chart for an answer. We are still in the Great Unwinding phase of these stimulus policies, so we cannot yet rely on supply/demand fundamentals to guide us. Instead, as the chart shows:

  • The ‘triangle shape’ extended for 5 years before prices finally fell (red, green lines)
  • Prices then collapsed rapidly through support at $90/bbl and $70/bbl (purple)
  • $70/bbl was also the 200-day exponential moving average price (red)
  • Our August forecast has thus been realised, and prices have indeed carried on falling

We are now in a classic falling formation, bounded by the blue line. We think of this as a rubber ball bouncing down stairs. The ball falls off one stair, bounces to the next, and never quite manages to bounce back to the higher stair. Then it bounces down to the next stair, before eventually reaching the bottom.

Market traders instead call this a “Lower highs, Lower lows” pattern, where sellers continue to dominate. Buyers appear at the lows, but then give up as more sellers appear and sell into the rally. So we will only know when the selling is finished when the price finally makes a ”Higher high” again, and bounces back onto the stair above.

In terms of supply/demand fundamentals, however, little has so far changed. There have been no major production cutbacks or demand increases. As expected, Saudi Oil Minister Ali al-Naimi, wants the market to decide, saying Wednesday, ”Why should we cut production? Why?”. Equally, many developing countries have been busy removing subsidies that supported demand.

It is therefore hard to see what will stop prices continuing to fall towards $50/bbl in H1.

CHINA WILL AGAIN BE KEY TO THE NEXT MOVE

What happens then will be the key question. Geopolitical disruption cannot be ruled out. Russia, for example, might cut gas supplies to try and boost energy prices. But otherwise, the key to the future will continue to be China.

Asian producers and traders now have large inventories of almost every oil-related product. Buyers have simply stopped buying in recent weeks as prices have collapsed. So the question is whether China’s demand will now increase in January, before markets close for Lunar New Year in mid-February. A lot of money is now riding on this issue.

If these hopes prove false, and the West enjoys a mild winter, there would seem little to stop prices heading back towards historical levels of $30/bbl – $40/bbl. This would be good news long-term, as $30/bbl is an ‘affordable’ price for the global economy, at 2.5% of GDP. But it would be very bad news for investments based on the two myths that (a) oil will remain at $100/bbl forever and (b) China’s demand will increase exponentially as it becomes middle-class. Equally important is that a sustained price fall will mean deflation becomes inevitable in the Eurozone and Japan, irrespective of any further QE initiatives.

Financial markets will also be impacted as a new ‘Minsky moment’ develops, and investors suddenly realise, as in 2008, that they have overpaid for their assets and rush for the exits.
The International Energy Agency’s December Report suggests OECD stocks “may bump against storage capacity limits” in H1, and confirms our own fears that we risk “social instability or financial difficulties” in H1. This highlights why we have long feared the Great Unwinding will be a very bumpy road, as we described back in June.

2. Financial players have destroyed price discovery in oil market

Chart 3: Volumes in financial futures markets is now many times physical production.

Oil prices should be set by the balance of supply and demand. But as Chart 3 shows, oil markets have instead become dominated by financial players, as pension and hedge funds decided to buy oil as a “store of value“.

Before 2000, financial market volume (red line) had equalled annual oil production (green). This worked well, providing physical players with sufficient liquidity to enable price hedging to take place. But in 2000, after the dot-com crash, central banks stopped focusing on the need to defend the value of the currency – previously their main role. Instead, they refocused on trying to maintain economic growth. And they began to use their new weapon created in the dot-com revolution, the power to print ‘electronic money’.

OIL MARKETS LOST THE POWER OF PRICE DISCOVERY

Chart 3 shows how this has played out. Unfortunately for all of us, central banks couldn’t resist the temptation to play with their new toy. They came to believe it had near-magical powers, and could control the economic cycle. After the Crisis began in 2008, they even gave it a new name “Quantitative Easing” (QE). And central banks around the world began to use it to print trillions of dollars. Unsurprisingly, of course, this had side-effects.

One was that US pension and hedge funds quickly realised that QE would also devalue the US$. They therefore rushed to invest in oil markets as a supposed ’store of value‘.
What they didn’t realise was that this created a massive imbalance of financial versus physical market demand. Producers couldn’t suddenly double their production at the touch of an electronic button. Financial sector demand simply overwhelmed physical supply:

  • Hurricane Katrina in 2005 had already shown the potential for this type of speculation to occur.
  • By the time US refineries were operating again after it, financial trading was 4x physical production.
  • By 2011, with the support from QE, financial players were trading the equivalent of 6x physical production.

Thus financial market demand came to dominate physical demand, and prices leapt skywards (blue line). The physical market’s key role, that of price discovery, was destroyed [ZH: same as the gold market, incidentally]

Many analysts failed to make the linkages, and instead claimed these high prices were justified by reduced supply or increasing demand. But as we know today, there has never been any physical shortage of oil since the Crisis began. Instead, what is now becoming obvious is that the collapse of the price discovery process led producers to over-invest and create an energy glut.

There are two key issues that will now determine future prices:

  • One is that gas has been increasing its market share at oil’s expense.
  • The second is Saudi Arabia’s need to ensure the 1945 US/Saudi ‘oil-for-defence agreement’ continues.

We are in for a very bumpy ride, as oil prices return to being based on their own supply/demand fundamentals.

3. OPEC’s high prices have accelerated move away from oil to gas

Does OPEC have a future? Or has it already disappeared as an effective force in oil markets? We are not alone in asking this question. Saudi Oil Minister Ali al-Naimi asked the same question in the summer, suggesting OPEC Ministers should instead meet once a year, and have occasional videoconferences, adding:

“We don’t need a meeting. People come and make nice when at the end of the day, Saudi Arabia carries the burden of balancing the oil market.”

Recent events have shown Naimi meant what he said. He understands that major oil producers need to monetise their product quickly, as it is likely much of today’s vast reserves will end up being left in the ground. This has already happened with coal, after all.

Nobody today worries about the potential for coal shortages set out in the Club of Rome’s famous 1972 Report, ‘The Limits of Growth’ . And the chart above, based on BP data, suggests oil will likely share coal’s fate:

  • Consumption of oil (red line) and gas (blue) grew at similar rates from 1965-75
  • Both gained market share versus coal in relation to total energy demand (green)
  • But OPEC’s high oil prices from 1973-1985 gave a sustained boost to gas demand
  • Record oil prices since 2005 have further boosted gas and reduced oil consumption
  • They have also reduced OPEC’s oil market share to 42% today versus 51% in 1974

Chart 5: Energy markets are now transitioning from oil to gas.

 Chart 5 from ExxonMobil’s 2013 ‘Outlook for Energy to 2040? places these trends in a longer-term context.

- Wood (brown) was the major fuel 200 years ago, but was replaced by coal (orange)
- Oil (green) has since replaced coal, but it is now being replaced by gas (red)
- In 50 years, gas may be replaced by renewables, hydro-electric or nuclear as a fuel

So OPEC faces a future where its product, oil, is now inevitably losing market share to gas. It made a terrible mistake by allowing prices to rise to unaffordable levels in 1974-1985. And since 2005, it has repeated the same mistake.

Energy users have choices, after all. Many have chosen to abandon oil for gas or other fuels. Those tied to oil have reduced consumption by improving energy efficiency.
Even the US has finally moved to adopt European fuel efficiency standards for its auto fleet. Since 1980, US passenger car fuel economy has risen 27%, from 26 mpg to 33 mpg. And this trend is accelerating as today’s more efficient cars replace older models. The standard for new vehicles will be 35.5 mpg (15.09 km/l) in 2016.

Equally important is that most OPEC countries have undermined the oil quota system:

- They have built large numbers of oil-based refineries, as well as oil/gas-based petrochemical complexes
- Those using oil effectively increase the country’s oil exports beyond its official quota
- Those using gas increase its total energy exports, effectively cannibalising oil’s share of the energy market

Naimi has another reason for abandoning OPEC today, namely the growing geopolitical threat to Saudi and the other Gulf Co-Operation Council (GCC) countries. The GCC are surrounded by potential enemies, all of whom would like a share of its current oil wealth.
In these circumstances, they cannot possibly continue to allow high prices to destroy the rationale for the US defence shield on which they have depended since 1945.

4. Gulf countries risk losing US defence shield if oil prices stay high

Chart 6: Canada now exports more to the US than OPEC

A version of Chart 6 must have been keeping ministers awake at nights in Riyadh and other Gulf Co-Operation Countries (GCC) in recent months. “How did we allow Canada to supply more oil than OPEC to the US?” they worry. ”What did we think we were doing?”

This might not be quite so critical if the GCC was able to defend itself militarily against its enemies. But Saudi Arabia, the main GCC country, has a population of just 27 million. The total population of the other GCC countries is just 23m. And they all remember very well what happened in 1990, when OPEC-member Iraq decided to invade GCC-member, Kuwait.

It wasn’t Nigeria, or Venezuela or Libya or another OPEC member that came to their rescue then. It was the USA, under the long-standing 1945 oil-for-defence deal agreed by President Roosevelt and King Saud. Roosevelt had needed Saudi oil to rebuild the US after World War II, and Saud needed someone to fight off his enemies.

Now, fast forward to today. Can one imagine President Obama and Congress putting US armies into a modern-day Operation Desert Shield/Desert Storm? Or UK Prime Minister Cameron rushing to persuade the President to do this? Of course not. But Margaret Thatcher did in August 1990, telling President Bush “This is no time to go wobbly”. And Congress agreed, as we all knew we needed friendly regimes in Riyadh and the GCC.

Chart 7: GCC exports to the US are falling as Canada’s increase

The second chart highlights the key message. Of course, it wasn’t OPEC’s fault that oil prices went back to record levels over the past decade, as discussed in section 2. But they allowed it to continue, instead of increasing supply post-2008, and collapsing the whole charade. Sadly, they preferred to believe the story that the world could now live with $100/bbl oil - though it had never done so before, and they forgot that high prices encourage new supply:

  • GCC oil exports to the US had historically been on a rising trend (purple line)
  • But their volume peaked at 2.5mbd after 2004, and now risks falling below 1.5mbd
  • Canadian imports have instead been rising from 1mbd in 1993 to 3.5mbd today (red)
  • And Canadian volumes are continuing to rise, whilst GCC volumes fall

So what would happen today if the Caliphate or someone else decided to attack? After all, the GCC countries are immensely wealthy after a decade of high prices. Would the US, UK and other countries come to their rescue again?

The GCC countries have clearly woken up to this critical issue, that their position is extremely vulnerable without US support. This have suddenly begun to plan their own oil price strategy, independently of OPEC. Instead of agreeing to production cuts, Saudi Oil Minister Naimi has said that in future, “the market sets the price”.

* * *

Prices have so far fallen $40/bbl from $105/bbl since we first argued in mid-August that a Great Unwinding was now underway. And there have been no production cutbacks around the world in response, or sudden jumps in demand. So prices may well need to fall the same amount again, before GCC leaders can once again sleep easily in their beds at night.

 

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Wed, 12/17/2014 - 10:51 | 5562661 Senduko
Senduko's picture

BS, by the time it/if reaches 30$ the production process will be so damaged the output will decline thus increase in value.

Wed, 12/17/2014 - 11:03 | 5562734 Bell's 2 hearted
Bell's 2 hearted's picture

no arguement ... CHS covered this a week or so ago ... when oil rebounds ... it will REBOUND

 

just a matter of timing ... but i think oil will stay low till H2 2015

Wed, 12/17/2014 - 10:53 | 5562662 post turtle saver
post turtle saver's picture

Point #2: see where everything started going parabolic around year 2000? Guess what came on line then?

the ICE trading cartel, tied to Brent during peak Brent conditions, and set up to put a choke hold on the Euro supply chain and manipulate prices as a result

all of that is unwinding now, pool's closed bitchez... no surprises here

Wed, 12/17/2014 - 10:54 | 5562681 SelfGov
SelfGov's picture

Guess what happened just before the ICE trading cartel got involved?

UK production from the north sea peaked.

Wed, 12/17/2014 - 13:24 | 5563499 zjxn06
zjxn06's picture
 

"Point #2: see where everything started going parabolic around year 2000? Guess what came on line then?"

Alan Greenspan and his "Easy Money" band?

Wed, 12/17/2014 - 10:53 | 5562669 Calmyourself
Calmyourself's picture

Saudi Oil Minister Ali al-Naimi, wants the market to decide, saying Wednesday, ”Why should we cut production? Why?”.

More important than financials in this situation is the politics behind this statement and how and why those politics change.    I claim no special knowledge of them other than to point out their critical value to the situation.

Wed, 12/17/2014 - 10:54 | 5562675 SelfGov
SelfGov's picture

"OIL MARKETS LOST THE POWER OF PRICE DISCOVERY"

Yes because conventional oil production peaked in 2005-2006.

The price increases stopped increasing supply because no amount of additional money can pull from the ground what isn't there.

Wed, 12/17/2014 - 10:57 | 5562694 THE DORK OF CORK
THE DORK OF CORK's picture

Whatever the price may be there is no flow in Europe as all credit has been directed upwards..........

Price is not important ........unless you are a criminal with the law on your side.

The preservation of the stock of debt in Europe has led to the collapse of that society.

At this stage the price is of little importance.

The oil is unusable.

Wed, 12/17/2014 - 11:52 | 5562969 Monty Burns
Monty Burns's picture

Ah lay of with this 'collapse of society' shite. The vast majority of European countries have seen little practical impact, maybe GDP reduced by a point or two.

Wed, 12/17/2014 - 10:58 | 5562698 silentboom
silentboom's picture

At first I thought it was falling global demand due to recession but demand is slightly upward.  Production is nearly steady so it's certainly not a supply and demand issue driving these wacko prices.  Maybe higher interest rates are being priced in even though they will not be here in 2015 or 2016 by my estimation?

Wed, 12/17/2014 - 11:01 | 5562726 constantine
constantine's picture

Wow, everyone is a genius in hindsight.  Pretty nice when you get to take credit for the one article in which somebody called for lower oil prices, ignoring the constant stream of articles about currency crisis and skyrocketing energy prices.  At these prices, expect the Middle East to become an even bigger dumpster fire than before.

Wed, 12/17/2014 - 11:07 | 5562752 Irishcyclist
Irishcyclist's picture

Is the fall in the price of oil an attempt to jumpstart the world economy?

Notionally cheaper oil means cheaper production costs, transport costs leading to cheaper finished goods costs

Price of finished good should fall (relative to the cost now), thereby enticing people to buy more.

More people start buying and the world is put bang to rights.

 

Wed, 12/17/2014 - 11:06 | 5562753 THE DORK OF CORK
THE DORK OF CORK's picture

British energy trends publication.

Nat gas consumption declined 15 % in q 2.......relative to q 2 2013.

Napier is defending his motherland.

Nat gas consumption is fucked in Europe.

Wed, 12/17/2014 - 11:32 | 5562827 TomB
TomB's picture

It was an unually warm winter. My nat gas consumption was down 40% in Q2 2014 vs 2013.

Wed, 12/17/2014 - 11:57 | 5562988 THE DORK OF CORK
THE DORK OF CORK's picture

That was the excuse but if you look closely the energy saved in home heating was redirected into electricity generation , causing a reduction of coal use........

Wed, 12/17/2014 - 11:06 | 5562754 Shizzmoney
Shizzmoney's picture

I hope it goes to $10.  We need the pain.

Wed, 12/17/2014 - 11:17 | 5562804 alexmark2013
alexmark2013's picture
Eurozone Ends 2014 With Weak Growth. Us Manufacturing Declines. Housing Permits Decline, Signals An Implosion In Real Estate. http://investmentwatchblog.com/eurozone-ends-2014-with-weak-growth-us-manufacturing-declines-housing-permits-decline-signals-an-implosion-in-real-estate/
Wed, 12/17/2014 - 11:17 | 5562805 Shekels
Shekels's picture

Happy Hanukkah Judah.

Wed, 12/17/2014 - 11:18 | 5562808 zenon
zenon's picture

Compared to natural gas, oil should be trading around $25 or less. One barrel of oil produces the same energy as 6,000 cubic feet of nat. gas which cost around $22.5 (at today's price of $3.75 per 1000 cubic feet of nat. gas).

Wed, 12/17/2014 - 14:11 | 5563793 Omen IV
Omen IV's picture

cant evaluate on BTU equivalent for several reasons :

A - gas transport is restricted worldwide - even in US to some extent 

B - the downstream products from oil vs gas are enormously different so the margins are better

 

 

Wed, 12/17/2014 - 11:17 | 5562810 THE DORK OF CORK
THE DORK OF CORK's picture

At the same time British transport fuel use up slightly.

With aviation fuel up 4 %

This is a classic capitalistic vortice where energy is not used for basic production.......

Wed, 12/17/2014 - 11:20 | 5562818 deerhunter
deerhunter's picture

so a bottled water is 5 bucks at a PGA tour event.  It is 1.80 if you smuggle it in your backpack to the event.  It is free if there are no spectators in the stands for the high school kid manning the booth.  American consumbers and middle class are the high school kids manning the booth at the PGA event.  They have no money to spend it is why they are working for 8 dollars an hour.

Americans have been lied to,  stolen from and raped by the FIRE industries for so long we have begged for them to continue treating us like this.  When I took out a 180k mortgage someone just printed some numbers on a bank check and I signed my life away to taxes for the pension monster of government employees,   and interest on the principal for 30 years.  The only labor involved was charged extra for.  Closing costs.  Titel search,, etc  etc.

Are we tired of being fucked yet?  Do you know the insurance companies are now actively seeking to monitor the speeds you drive your car with your consent?  Just wondering,,, time to wake up.  VMT or vehicle mileage tax being debated in DC to augment the gasoline tax we already pay.  It will happen. They are changing a major east/west highway into a tollway here in chicago now as we speak.  Had enough yet?  Why does a 40 cent piece of metal with numbers on it cost 110 dollars.  License plate.

Gas and oil have a long,  long way to drop yet in priciing.  I remember 1973,,, shoe is on opposite foot now.

 

Wed, 12/17/2014 - 12:41 | 5563271 FeralSerf
FeralSerf's picture

First there was compulsory insurance to "protect" the public from uninsured motorists (and now users of health care too).

Then the insurance companies began tightening control and dramatically increasing premiums for allegedly risky behavior like driving 5 mph over the posted speed limit. Now they will charge for each mile you travel.

Where does it end? It is now nearly complete abject slavery with the slave owners -- FIRE "industries" and government -- fighting over the last remaining morsels of wealth generated or saved by the slaves.

Wed, 12/17/2014 - 13:05 | 5563407 UselessEater
UselessEater's picture

Agenda 21 baby.... get your micro apartment in a smart city where you can walk to your designated job, next to your designated shopping mall and watch the elite driving their private vehicle no average person can any longer afford.

Wed, 12/17/2014 - 11:22 | 5562823 THE DORK OF CORK
THE DORK OF CORK's picture

The goods produced are far too concentrated to be of any use.......

There is no local or national supply chains in Europe an

Wed, 12/17/2014 - 11:22 | 5562824 ThisIsBob
ThisIsBob's picture

The bear is out of the barn and very few saw him coming.  Now everybody and his brother has an opinion how far he will go.  Spare me.

Wed, 12/17/2014 - 11:23 | 5562828 Catullus
Catullus's picture

300k barrels/day come offline for production and the market is in balance.  Out of the 90M barrels/day global production.

Why does no one show a dollar index chart when referring to thing that's priced in dollars? If you're hedged at $90/barrel right now, and you're pricing this shit out in your own currency, this is like a 10-15% drop for you.

Wed, 12/17/2014 - 11:26 | 5562842 ben_bernanke
ben_bernanke's picture

You know who agrees with much lower oil prices? Dennis Gartman, the man this publication likes to trash as a fade. So, which is it this time? He's suddenly right about markets?

Wed, 12/17/2014 - 11:32 | 5562873 Irishcyclist
Irishcyclist's picture

More correct than you ever were, Ben, my dear boy.

Wed, 12/17/2014 - 11:25 | 5562844 Its_the_economy...
Its_the_economy_stupid's picture

This will effectively reverse the 1973 position and lead to the arrival of a deflationary mindset.

 

What this mean for PM pricing 1 to 2 years out?

Wed, 12/17/2014 - 11:27 | 5562851 anachronism
anachronism's picture

Petroleum is a vital commodity.

The Saudis especially have a vested interest in controlling how this commodity is distributed around the world. The oil majors -obviously- do as well. It is vitally important to these entities that they limit the competition. They have the financial resources to win a war of attrition against all other entities which compete with them to satisfy the global demand for oil.

That's what this is all about.

It may take 2 or 3 years to wipe out the upstarts (which, for the oil majors, entails buying out marginally profitable ventures at depressed prices). But once done and capacity has been reduced, oil prices will rise again.

Wed, 12/17/2014 - 13:47 | 5563642 Farmer Joe in B...
Farmer Joe in Brooklyn's picture

True, true.... provided we're not in some really nasty global depression by that time...

Wed, 12/17/2014 - 11:28 | 5562857 o01tac
o01tac's picture

Great timing of The Rockefellers, who made their vast fortune on oil, Sold and got out of a total of $50 billion US worth of fossil fuel assets in Sept before this oil crash. Also Warren Buffit selling all those oil stocks last spring. Someone knew something for sure


Wed, 12/17/2014 - 11:29 | 5562868 Ignorance is bliss
Ignorance is bliss's picture

How long before oil producing nations start to accept alternative currencies and trade goods for their oil? Low Dollar price is not a problem if you accept Yuan, Pesos, silver, Gold, Rupies, etc. that will be the next shoe to drop IMHO.

Wed, 12/17/2014 - 11:35 | 5562871 Monty Burns
Monty Burns's picture

All the "experts" are telling us that the oil price will drop even further. Drastically so. Six months ago most of these same "experts" were warning us about Peak Oil and its being at $150 dollars by early 2015. 

They're also quick to remind us of the few forecasts they got right but neglect to mention the large numbers they got wrong.

Wed, 12/17/2014 - 11:39 | 5562905 Magnum
Magnum's picture

Peak Oil zombies were going berserk a few years ago, with reasoned charts and reports and studies suggesting we were on the cusp of running out of oil and entering a new stone age.  

Wed, 12/17/2014 - 11:46 | 5562933 SelfGov
SelfGov's picture

Please link to any serious biophysical economist that suggests that oil will, "run out," and that the new "stone age" is upon us.

Please.

Wed, 12/17/2014 - 14:23 | 5563856 Magnum
Magnum's picture

Start here, and yes the belief has been that very soon it will be too expensive to fetch oil therefore the stone age is upon us.

peakoil.com

 

Wed, 12/17/2014 - 11:47 | 5562941 FieldingMellish
FieldingMellish's picture

Peak Oil is not about running out of oil, its about production peaking. Cheap conventional production peaked in 2005.

Wed, 12/17/2014 - 11:42 | 5562918 SelfGov
SelfGov's picture

Global production of crude oil (excluding natural gas liquids and lease condensate) has been flat for the past 5 years despite extremely high oil prices.

Now prices are going down which will drag production numbers down as well.

If these low prices remain then we're literally seeing the right side of Hubbert's peak forming.

Wed, 12/17/2014 - 11:31 | 5562874 HowdyDoody
HowdyDoody's picture

1) Our plan to destroy Russia's economy by slamming the price down to $60 didn't work. What do we do now?

2) Let's slam it down to $30. Guaranteed to work. It's different this time.

1) Go for it.

Wed, 12/17/2014 - 11:37 | 5562891 Magnum
Magnum's picture

Wow the cross-country RV trip this spring with my kids is getting extended with each drop in price...

Wed, 12/17/2014 - 11:37 | 5562892 moarwoar
moarwoar's picture

Low oil prices are the key for the comming gold collapse due to following factors:

1) Less USD available to recycle by the oil exporters - when you sell oil only for half of its price as 5 months ago then you have only half the USD available to recycle. Also you need to spend a bigger portion of the income in order to maintain the country budget. All oil producers are facing this problem right now

2) Key buyers are in trouble: India, Russia and other EM countries are now facing the collapse of their currencies. They will be buying less gold or even not at all because they simply cannot afford it in the current situation. They need USD for interventions and also for avoiding insolvency...

3) Gold selling by institutions: the strength of the USD across the board will make gold sales necessary in order to maintain the overall asset diversification

 

Wed, 12/17/2014 - 11:44 | 5562922 GetZeeGold
GetZeeGold's picture

 

 

Where do you think the 303 trillion in derivatives the American taxpayer is on the hook for figures into that?

Wed, 12/17/2014 - 12:16 | 5563088 FredFlintstone
FredFlintstone's picture

So this could cause some more inflation for other necessities?

Wed, 12/17/2014 - 11:36 | 5562895 orangegeek
orangegeek's picture

oil weekly shows support near 47

 

http://bullandbearmash.com/chart/wti-oil-weekly-tanks-forecast-58-suppor...

 

and then support near 34

 

25 has some time to go, but yes, we'll probably get there - good job on the deflation setup yellen

Wed, 12/17/2014 - 11:43 | 5562927 madcows
madcows's picture

not a chance it goes to $25.  What utter nonsense.

Wed, 12/17/2014 - 11:47 | 5562946 wissen dass scheiBe
wissen dass scheiBe's picture

This isn't just an attack on Russia, some pencil neck honesty thinks by driving oil down that it will rob isis of a base for revenue.  Look for discounted American war surplus to be the next for a major decline in prices....

Wed, 12/17/2014 - 11:48 | 5562950 Peak Finance
Peak Finance's picture

Hopefully I will have taken delivery on this before oil goes back up:

http://www.eliomotors.com

Wed, 12/17/2014 - 14:07 | 5563777 PT
PT's picture

Why mess around with half measures?  Go the whole falcon:

https://duckduckgo.com/?q=suzuki+hayabusa&iax=1&ia=images

Wed, 12/17/2014 - 16:35 | 5564675 Matt
Matt's picture

Ever do a grocery run, in the rain, at night, on one of those? I'm betting most people prefer an enclosed vehicle that doesn't slip and tip so easily.

Wed, 12/17/2014 - 22:27 | 5566446 PT
PT's picture

You're right.  Actually, gravel roads are the worst - scary as scary shit.  Shopping is second (I don't have that particular bike but I have something similar and I do have boxes attached to put stuff in).  Followed by rain.  Apart from that, I'd rather the bike.  Commuting to work, visiting friends etc? I'd rather the bike.  Long country trips?  I'd rather the bike.

Wed, 12/17/2014 - 11:48 | 5562952 NoWayJose
NoWayJose's picture

I'll remember this garbage article next June when I pump $4.00 a gallon gas into my car...  It seems more like a desperate attempt to drive oil down one last time before they cover and go long.

Wed, 12/17/2014 - 11:53 | 5562965 NewAmericaNow
NewAmericaNow's picture
Beyond Collapse - When the Global Sh#t Hits The Fan, You'd Better Have a Plan

http://newamerica-now.blogspot.com/2014/02/beyond-collapse.html

Wed, 12/17/2014 - 11:53 | 5562970 Fed-up with bei...
Fed-up with being Sick and Tired's picture

Where is Barney Frank when we need him?

Wed, 12/17/2014 - 12:03 | 5563015 Consuelo
Consuelo's picture

Page (ing) - Barney Frank...    Who was the fellow Congresscritter who called him Barney-Fag some years back...?

Wed, 12/17/2014 - 11:53 | 5562976 NoWayJose
NoWayJose's picture

But boomers are getting older and are taking lots of blood pressure medicine to thin their blood - so they feel colder - and the Polar Vortex keeps coming and making them even colder - so the boomers have to turn up their thermostat to stay warm - and that burns more energy - and boomers are retiring and staying home all day so they cannot lower the thermostats during the day like when they went to work and that burns more energy - and the boomers now have time and lots of money in retirement so when they are cold they drive or fly to someplace warm and use more energy to get there -- and, and, and... the big banks and White House want to drive down oil prices to kill Russia -- OH - Nuff Said...

Wed, 12/17/2014 - 12:13 | 5563080 Shitgum Suicide
Shitgum Suicide's picture

Wasn't global warming supposed to keep them warm?

Wed, 12/17/2014 - 11:56 | 5562989 NoWayJose
NoWayJose's picture

Can we get one of those 'shale oil is fake' articles about how shale oil is not going to have any effect on the world supply?

Wed, 12/17/2014 - 12:01 | 5562999 Consuelo
Consuelo's picture

PRI-G - or PRI-D (for diesel), if anyone here is worried about their (upcoming...?) $.95/gal. Rotten Robbie going bad...   Stuff is excellent, keeps the juice good for at least (3) years (I know, cause it's all I have used for the last 10 years).   Put (4) 55 gal. drums on a skid, fill 'em all and rotate out whenever you feel like it.   Just keep those suckers full, Ok...?

Wed, 12/17/2014 - 12:02 | 5563016 noben
noben's picture

Several observations:

1. Just when did the Boomers age so fast and die off, to cause the sudden and dramatic drop in price?

2. US Shale is screwed. Which begs the real questions:
- How could the banks have financed them in the first place?
- Whatever happened to "Drill, baby, dril1"? Weren't all the US politicos behind Shale? SOMEBODY got duped.

3. The GCC, the DOD and the Fed are the unholy Trinity that moves the world, and the CBs run the whole sh*tshow.

4. "Chess players" just got their asses handed to them. Chess is chess, war is war, business is business and life is life.

5. Last but not least... How come TD and ZH didn't shout this price manipulation from the top of the ZH pulpit on a regular basis? Given that everyone here and in the oil markets had a $80-110 price paradigm in their minds?

And if Oil gets whacked down to $25-50 range (just above GCC production costs), then we can expect PMs to experience a similar event, unless or until... Some GeoPolitical event causes a tectonic shift. But I'm not holding my breath on Russia doing much of anything, other than play defensively, talk about diplomacy and civility, and huff & puff -- while the US+NATO keep rolling forward.

Not at all what I expected, but I can't say I'm overly shocked. Just disappointed... had hoped that China and Russia had more balls.

Wed, 12/17/2014 - 12:08 | 5563039 SelfGov
SelfGov's picture

Wow it seems somebody has been calling bullshit on this Shale Bubble since at least 2012...

http://whois.domaintools.com/shalebubble.org

 

 

Wed, 12/17/2014 - 12:14 | 5563074 JR
JR's picture

Here’s the Israeli connection to the targeting of Russian energy, assaulting the ruble.

The US/Israeli Empire is destroying Russia’s economy by targeting her energy exports to directly benefit Israel, Big Oil, and the bankers’ NWO. Thus, after “gassing Russia into submission,” Israel today is proposing her own natural gas pipeline to Southern Europe.

This, after "Palestinian gas fields were de facto confiscated by Israel in derogation of international law."

When energy is a monopoly, that’s the road to world government.

And it's left to Americans to finance this war and aggression to confiscate and boost markets for Big Oil and Israel’s stolen natural gas reserves. Why? It is a result of Israel’s and Big Oil’s hammerlock on the U.S. Congress and Israel’s goal to be the master nation in the Middle East, not only to be able to share in the oil profits but to be able to expand into Greater Israel.  

Writes Glen Ford of Black Agenda Report:  Seventy-six percent of Russia’s natural gas exports are bound for Europe, the bulk of it to Germany, Italy, France and the United Kingdom. Russia’s weight in the world is largely derived, not from its economically burdensome nuclear arsenal, but as an energy giant. The U.S.-engineered coup in Kiev sets the stage for a protracted assault on Russia’s energy trade, which accounts for more than half of Moscow’s federal expenditures. Without its huge oil and gas exports, Russia deflates like a leaky dirigible.”

The State of Israel was created in a British-backed Rothschild grab for Palestine’s rich resources. The motive was greed and power. Today’s events are bringing that power grab to full fruition.

Robert Valence ·Wandsworth boys school wrote sarcastically this week:

Yup. Golda Meir was on record as complaining that Moses brought the Children of Israel out of Egypt to the only place in the Middle East where there was no oil!

While Doyley's Travels wrote:

It is Palestinian gas.............. this does NOT belong to Israel! Thieves!

To be answered by Laurence Son · Hasmonean Grammar School

So sue me, fool. Possession is nine points of the law.

And Laine Frajberg · McGill University

The "Palestinians" are an invented people with a non-existent state. As such, they have claim to NOTHING.

If the United States Congress is to stand behind and support Israel’s barbarism then as Americans we have a duty to pull these leaders out of their offices and replace them with civilized people. If we do not, we will suffer the same fate as the Palestinians under the coming “new world order.”

Colonel Curtis Dall, the son-in-law of Franklin Roosevelt, revealed the real truth behind establishment of a Jewish homeland in Palestine in his book Israel’s Five Trillion Dollar Secret, published privately in 1977: “The well-veiled objective of the Zionists backed by the Rothschilds’ financial interest was to acquire valid title to the Dead Sea and its vast, inexhaustible deposits of potash and other valuable minerals, estimated by experts to be worth several thousand billion dollars.”

The report of the value of the Dead Sea mineral deposits was made by the late Ben Freedman, prepared for Lord Rothschild in 1917.

War and Natural Gas: The Israeli Invasion and Gaza’s Offshore Gas Fields

By Prof Michel Chossudovsky

Global Research, August 10, 2014

Global Research 8 January 2009

More than five years ago, Israel invaded Gaza under “Operation Cast Lead”.

The following article was first published by Global Research in January 2009 at the height of the Israeli bombing and invasion under Operation Cast Lead.

In the wake of the invasion, Palestinian gas fields were de facto confiscated by Israel in derogation of international law

A year following “Operation Cast Lead”, Tel Aviv announced the discovery of  the Leviathan natural gas field in the Eastern Mediterranean “off the coast of Israel.”

At the time the gas field was: “ … the most prominent field ever found in the sub-explored area of the Levantine Basin, which covers about 83,000 square kilometres of the eastern Mediterranean region.” (i)

Coupled with Tamar field, in the same location, discovered in 2009, the prospects are for an energy bonanza for Israel, for Houston, Texas based Noble Energy and partners Delek Drilling, Avner Oil Exploration and Ratio Oil Exploration. (See Felicity Arbuthnot, Israel: Gas, Oil and Trouble in the Levant, Global Research, December 30, 2013

The Gazan gas fields are part of the broader Levant assessment area.

What is now unfolding is the integration of these adjoining gas fields including those belonging to Palestine into the orbit of Israel. (see map below).

It should be noted that the entire Eastern Mediterranean coastline extending from Egypt’s Sinai to Syria constitutes an area encompassing large gas as well as oil reserves. (IE, Netanyahu’s Greater Israel)

And today:

Israel Proposes Natural Gas Pipeline to Southern Europe

By Steven MacMillan

Global Research, December 17, 2014

Israel is pushing for the European Union (EU) to approve the construction of a pipeline running from the Middle Eastern country to supply Cyprus, Greece and Italy with natural gas. The proposed EastMed pipeline will carry gas from the Tamar and Leviathan gas fields located in the Mediterranean Sea, to Southern Europe.  As the Times of Israel reported in an article titled, Israel pitches “massive” natural pipeline to Europe:

Israel has proposed that EU countries invest in a multi-billion euro pipeline to carry its natural gas to the continent, noting that the supply from Israel would reduce Europe’s current dependence on natural gas from Russia… The project would require a multi-billion euro investment from Europe to build a pipeline from Israel’s Mediterranean cost to Cyprus, from where the gas would be carried on to Greece and Italy. …

http://www.globalresearch.ca/israel-proposes-natural-gas-pipeline-to-southern-europe/542030

http://www.globalresearch.ca/war-and-natural-gas-the-israeli-invasion-and-gaza-s-offshore-gas-fields/11680

http://www.globalresearch.ca/u-s-prepares-to-gas-russia-into-submission/5374500

Israel finds more gas - but will it be extracted? | The Times of Israel http://www.timesofisrael.com/israel-finds-more-gas-but-will-it-be-extracted/#ixzz3MAIfcJgf

Wed, 12/17/2014 - 12:19 | 5563101 Meremortal
Meremortal's picture

"The US/Israeli Empire is destroying Russia’s economy by targeting her energy exports to directly benefit Israel, Big Oil, and the bankers’ NWO. Thus, after “gassing Russia into submission,” Israel today is proposing her own natural gas pipeline to Southern Europe."

I hope this is correct as it would be awesome. I didn't bother to read the rest, did you work in the reptillian shape-shifting aliens too? 


Wed, 12/17/2014 - 12:35 | 5563213 JR
JR's picture

Shape-Shifting aliens? No, they are human, the Zionists who have taken control of the American government and have covered American foreign policy with Israeli foreign policy, and clear control of the American Congress, the Administration, and the printing presses of the media and of the Federal Reserve, directed toward wars and Israeli control in the Middle East.

By the way, how are you able to discuss these momentous events by using Hollywood reality?

Wed, 12/17/2014 - 13:31 | 5563528 PT
PT's picture

Lizard People?  Is that the best you can do?  Francis Sawyer was right.  No-one could prove he was wrong.  You had the opportunity to enlighten us all but all you could do was try and obscure the narrative by dragging Lizard people into the equation.

For the record:
1.  I've seen enough weird shit that if Lizard People are real then I won't be too surprised.
2.  Whether they're real scale-skin shape-shifters, slightly modded DNA, or just plain ol' euphemisms.
3.  But all I've done now is help you distract from the narrative.  Congrats.  Hope you're proud.  Next time bring some Jaffas and roll them down the aisles.  At least we'll get some Jaffas out of it.

Wed, 12/17/2014 - 12:14 | 5563077 falak pema
falak pema's picture

A contrary view to US MSM on the Russian OIL/Ruble crisis :

http://www.nakedcapitalism.com/2014/12/oil-ruble-ideology.html

Wed, 12/17/2014 - 12:16 | 5563087 wrs1
wrs1's picture

Gee, you don't think it's possible futures followed the price?  More post hoc fallacy articles on oil by people who know nothing about it.

Wed, 12/17/2014 - 12:16 | 5563089 Meremortal
Meremortal's picture

Static model fallacy. Consumers react to low gas prices by driving more. Boomers be taking more road trips, and so will everyone else. Oil went from 147 to 37 a barrel just 5 years ago, how did we survive?

 

We're all gonna die!

Wed, 12/17/2014 - 13:09 | 5563437 falak pema
falak pema's picture

Your last line is biological. Its got nothing to do with oil.

 

Wed, 12/17/2014 - 12:20 | 5563110 surf0766
surf0766's picture

Only an idiot would burn his food for fuel.

So the global population increase is not offsetting the U.S. baby boomer deaths... MOAR bullshit.

 

Wed, 12/17/2014 - 12:20 | 5563111 Fred123
Fred123's picture

I've talked to several young Chinese (all nice kids) and they believe real estate only goes up, that the Chinese GDP is real, and that it will continue to grow. I think they will be angry soon.

Wed, 12/17/2014 - 12:33 | 5563197 John Law Lives
John Law Lives's picture

Here is a sobering excerpt from a recent news article re. oil prices:

"In Houston, Texas, where the first oil industry layoffs have been declared, property developers expect a decline of up to 12% in home sales next year."

http://www.ibtimes.co.uk/us-oil-states-hit-by-early-slowdown-signs-post-...

Wed, 12/17/2014 - 12:34 | 5563218 solgundy
solgundy's picture

DOE Crude Oil Inventory Report shows a decline of 847,000 bbls for week ended December 12.

Oil inventories normally go down in December because
1. Refiners are making a lot of heating oil
2. Refiners do not want to pay the property taxes on the inventory (calculated as of 12-31).

Chart: http://www.oilandgas360.com/analytics/crude_oil_inventory121214.pdf?utm_...

Wed, 12/17/2014 - 12:43 | 5563272 Livermore Legend
Livermore Legend's picture

Notwitstanding the Primary issues of EROEI and Thermodynamics, Bottom Line on Oil Price:

$ 200 Oil = WAR.

 

 

Wed, 12/17/2014 - 12:44 | 5563278 forputin
forputin's picture

Oil only 25$ !!!??? You mad bro! You mad bro! What will our leader do? No! Please! Don't do this to dear leader and guider of all russian world who has lived for thousand suns - Mr. Putin!

What will he do?

Wed, 12/17/2014 - 12:52 | 5563318 Atticus Finch
Atticus Finch's picture

I thought blaming the boomers was laughably ridiculous. Really, the boomers?

 

Wed, 12/17/2014 - 13:50 | 5563652 PT
PT's picture

46 years of age =, on average, age at which someone makes their highest income.  Remember, that figure is an AVERAGE, not a specific.

Baby boomers = unusually large segment of the population.

2012 = first of baby boomers start retiring.  Now more baby boomers retire.  They start drawing from their pension funds - funds need to get cash to pay boomers.  Cash taken out of financial system is not available for investing or rehypothecating.

"Baby boomers enter their peak earning years - We are going to have the biggest boom the world has ever seen, then starting 2012 it will all wind down as they all start to retire."

All of the above was explained to me back in 2000.

Baby-boomers vs oil?  Gotta admit, even with the above it still sounds like a stretch.  That's alot of pension money tied up in oil.  Feel free to add some finer detail if you've got any.  I don't know everything.
What about China / India?  A few years ago I was told China would have a 20+ year boom, now everyone sez they're up to their eyeballs in debt and about to fall over.

How about plain ol' "People Don't Stop WANTING Things" - you know, the difference between colloquial "demand" and the Economists' definition of "demand"?  How about, "There's still plenty of people who want stuff and are willing to work for it"?  How does that fit into the equation?  How about technological gains?  I don't know.

Hope I said something useful there.  Likewise, if you've got anything to add, I'll be glad to listen.

Wed, 12/17/2014 - 13:05 | 5563409 GFORCE
GFORCE's picture

The OPEC plan is to let high-cost producers go bust or cut production. It's clear from price action and supply picture that a bounce won't last long. With the next OPEC meeting in June, the best you can hope for is geopolitical price influences.

http://otdon.blogspot.co.uk/2014/12/dont-hold-out-for-saudi-arabia.html

 

Wed, 12/17/2014 - 13:13 | 5563450 yt75
yt75's picture

"This will create a demand shock equivalent to the supply shock seen in 1973 during the Arab oil boycott."

 

Boycott ? Wow !

Did you know this "boycott" was extremely relative ? (Not from Iran, not from Irak, towards a few countries, never effective from Saudi Arabia towards, the US) ?

Have you ever seen below :

http://upload.wikimedia.org/wikipedia/commons/c/c5/US_Oil_Production_and...

How about putting this story straight a bit ?

Which is :

- end 1970 : US production peak, the energy crisis starts from there, with some heating fuel shortages for instance (some articles can be found on NYT archive on that), or :
http://upload.wikimedia.org/wikipedia/commons/c/c5/US_Oil_Production_and_Imports_1920_to_2005.png
- Nixon name James Akins to go check what is going on.
- Akins goes around all US producers, saying this won't be communicated to the media, but needs to be known, national security question
- The results are bad : no additional capacity at all, production will only go down, the results are also presented to the OECD
- The reserves of Alaska, North Sea, Gulf of Mexico, are known at that time, but to be developed the barrel price needs to be higher
- In parallel this is also the period of "rebalance" between oil majors and countries on each barrel revenues (Ghadaffi being the first to push 55/50 for instance), and creation of national oil companies.
- there is also the dropping of B Woods in 71 and associated $ devaluation, also putting a "bullish" pressure on oil price.
- So to be able to start Alaska, GOM, North Sea, and have some "outside OPEC" market share, the barrel price needs to go up (always good for oil majors anyway) and this is also US diplomacy strategy
- For instance Akins, then US ambassador in Saudi Arabia, is the one talking about $4 or $5 a barrel in an OAPEC meeting in Algiers in 1972
- Yom Kippur starts during an OPEC meeting in Vienna, which was about barrel revenus percentages, and barrel price rise.
- The declaration of the embargo pushes the barrel up on the spots markets (that just have been set up)
- But the embargo remains quite limited (not from Iran, not from Iraq, only towards a few countries)
- It remains fictive from Saudi Arabia towards the US : tankers kept on going from KSA, through Bahrain to make it more discrete, towards the US Army in Vietnam in particular.
- Akins is very clear about that in below documentary interviews (which unfortunately only exists in French and German to my knowledge, and interviews are voiced over) :
http://www.youtube.com/watch?feature=player_embedded&v=fQJ-0jAr3LQ
For instance after 24:10, where he says that two senators were starting having rather "strong voices" about "doing something", he asked the permission to tell them what was going on, got it, told them, they shat up and there was never any leak. The first oil shock "episode" starts at 18:00
The "embargo story" was in fact very "practical", both for the US to "cover up" US peak towards US public opinion or western one in general, but also for major Arab producers to show "the Arab street" that they were doing something for the Palestinians.

In the end, clearly a wake up call that has been missed, especially at a time when we are around global peak and the omerta about it is almost complete.

Note : About Akins, see for instance :
http://www.washingtonpost.com/wp-dyn/content/article/2010/07/26/AR201007...

And his famous foreign affair article :
http://www-personal.umich.edu/~twod/oil-ns/articles/for_aff_aikins_oil_c...

His report to Nixon in 71 or 72 is still classified to my knowledge though, would be interesting to know if it can be declassified now.

Wed, 12/17/2014 - 13:29 | 5563525 22winmag
22winmag's picture

Yeah right... bombs will rain down on certain cities and countries before oil hits $25.

Wed, 12/17/2014 - 13:36 | 5563557 random999
random999's picture

Ah yeah I really see how a lower demand can crush the oilprice from 90 down to 60 within a few months. Because all of a sudden the world dont need any oil at all anymore... makes total sense!

And stupid me thought the petrodollars conflict with russia had anything to do with it.

Wed, 12/17/2014 - 13:37 | 5563572 Stay Frosty
Stay Frosty's picture

"Come and listen to a story about a man place named Jeddah"

Wed, 12/17/2014 - 13:56 | 5563693 Nawaralsaadi
Nawaralsaadi's picture

Whoever wrote this article is totally clueless. There are such key misunderstandings about the fundmentals of oil supply and demand, it will take a comment as long as the article to address all the shortcomings. 

 

 

Wed, 12/17/2014 - 14:26 | 5563870 Irishcyclist
Irishcyclist's picture

I see ZH removed Russell Napier's name from the title headline of this blog entry.

 

 

Wed, 12/17/2014 - 15:02 | 5563989 Jano
Jano's picture

am all for it.

but how to do it? $25 is average price at well.

Of course, saudis have $5 pb at well, but others are not so lucky, for example norway has 40 at well, as they drill under the sea....

other guys have 55 under the sea...

http://www.eia.gov/tools/faqs/faq.cfm?id=367&t=6

Wed, 12/17/2014 - 16:57 | 5564856 SmittyinLA
SmittyinLA's picture

Most of the wealthy CHICom factory owners I know have wives not interested in having even 1 kid, serious bribes are being paid to these bitches to reproduce, imagine the leverage the $100/ a week guy has in trying to convince a woman to have kids, none.

China's gonna have to force their 1 child policy, not an "up limit" but a "down limit".

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