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Stockman's Prescient Prediction
This weekend, I was thumbing through my highlighted copy of David Stockman's The Great Deformation (about which I wrote a lengthy and over-the-top laudatory review last September here) when this passage caught my eye:
In case you've been helping Elon Musk establish the new Martian Colony over the past nine months, you might have missed what's been going on with black tea:
(Incidentally, I wouldn't get too excited about the bounce we've seen over the past couple of weeks; unlike Cramer, I don't think this "smells like a bottom" - - but that's probably a field of study about which he's better acquainted than me. But I digress..........).
On the one hand, oil has indeed fallen to $50 (and well below it) as Stockman anticipated; on the other, if there's a worldwide recession going on (and perhaps there is, the very beginnings of one), it sure isn't yet apparent from the mass media.
Perhaps, as in 2008, commodities are a very large canary in a very crowded coalmine. I am highly confident Mr. Stockman's prediction about North Dakota is going to come all too true. And, as a parting shot, I must suggest (nay, insist) to those who haven't bought and read the book - please do so. It is excellent, from beginning to end. There are many other predictions in the book which will probably unfold much as the one regarding crude oil has.
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Again, what makes Stockman think he can sum up the entire shale drilling business in a single paragraph without any data to substantiate his claim. The evidence of the quality of shale wells flies in the face of the claims of the shale doubters and outright haters.
Of course you read the book, right? I haven't, but I intend to do so prior to making any judgments about his research.
Elon & Barry - dumb African dopers
When does the movie come out? What's the title going to be? "What Fools Do With Other Peoples Money?"
How about "The day two fools met"
Save yourself reading Stockman's book and instead read this -- if you start from the beginning you will understand what QE and ZIRP has been all about --- in a nutshell growth ended in 2008.... and these policies are trying to keep it going for a while longer...
THE PERFECT STORM (see p. 59 onwards)
The economy is a surplus energy equation, not a monetary one, and growth in output (and in the global population) since the Industrial Revolution has resulted from the harnessing of ever-greater quantities of energy. But the critical relationship between energy production and the energy cost of extraction is now deteriorating so rapidly that the economy as we have known it for more than two centuries is beginning to unravel. http://ftalphaville.ft.com/files/2013/01/Perfect-Storm-LR.pdf
Great link. This quote from the PDF is priceless:
According to the US Energy Information Administration one (US) gallon of gasoline equates to 124,238 BTU of energy, which in turn corresponds to 36.4 kwh19. Since one hour of human physical labour corresponds to between 74 and 100 watts, the labour-equivalent of the gasoline is in the range 364 to 492 hours of work. Taking the average of these parameters (428 hours), and assuming that the individual is paid $15 per hour for this strenuous and tedious activity, it would cost $6,420 to get the car back to the start-point. On this rough approximation, then, a gallon of fuel costing $3.50 generates work equivalent to between $5,460 and $7,380 of human labour.
It helps explain why, even though the price of gasoline (benzene) is double in Germany compared to the USA, the Germans still insist on driving at insane speeds (V^2 for energy consumption BTW). The comparison of the fuel price with the "real price", i.e. human labor, is SOOOOO off the scale cheap that German drivers won't care until the price hits who knows how many Euros or D-Markevers and then finally slow down a bit to save gas.
By that, you must mean EROEI. It's governed by that part of Physics known as the Laws of Thermodynamics.
The Laws of Physics and Thermodynamics care not how slick politicos are at repeatedly public lying, arm twisting behind the scenes, spending other peoples money and other, much more unpleasant, acts tyrants resort to in order to bend the world to their will.
Of course, the world, and the Universe, don't care what a tyrant wants. Their Laws are not subject to bribes, amendments, fudging, faking, cheating, etc. That why I like science and engineering so much more versus say, the legal profession.
thank you! saved and reading..
Thank you very much for posting the link. Very important reading.
informative read..
How many guys here have ever drove thru Parachute, Colorado?
Back in the 80s they had some kind of shale plants there, but they were mothballed.
Just wonder if anyone remembers that boom.
I live near Parachute, about 60 miles away in Aspen. The oil and mining pinch is beginning to be felt. Both Rifle and Parachute have seen a beginning surge in lay-offs. Whether you love or hate fracking is irrelevent. The Sauidi's have won and are calling check-mate.
Table Rock, Wyoming, was my favorite. All the buildings have been demolished now.
Stockman saw what is coming long ago... 'All hell is going to break loose."
http://www.globaldeflationnews.com/stockmans-warning-on-the-global-econo...
It has been clear since I was a young man in the 1960's and 70's that with the tax and legal liability burdens, rules and regulations, domestically debased fiat currency, criminal-organized and controlled unions, incompetent free trade agreements, and devolved educational standards, that Americans cannot compete in manufacturing and productive endeavors with the rest of the world.
If this mess would have occurred by accident, somethings would have, at least occasionally, accidentally gone right for us. This diminishing condition for the vast majority of the middle class has been planned for a hundred years by the Babylonian Chosenites,....beginning with the initiation of the FED in 1913.
If you don't understand that, you are part of the problem.
End The FED!!!!
Milton Friedman summed up your argument succinctly and honestly...
https://www.youtube.com/watch?v=9Yg14cdcLoo
Agreed. The Great Deformation should be required reading for all ZHers.
North Dakota
should legalize cannabis
budget deficit solved..
Or Cannibalism,
Solves Multiple Problems...
North Dakotans are a little gamey for my tastse. Californians are nice and tender.
Wood chippers?
But then who would care?
I have the Greatest respect for Mr. Stockman. But he missed the boat on Shale gas. Completely. And ND isn't turning to a wasre land quite yet. If low oil prices hold for a year or so, there will be pain. But 2 - 3 years from now ND Shale will be the goto source for oil and will do fine. And OPEC can go Eff themselves.
But low oil prices will be a distant memory by YE 2015. Back to 65 or so and you can take that to the bank.
Agree with that. People think the Middle Eastern cultures and governments are on a slow road to stability. I think just the opposite. In fact, within say, 5 years, the situation there will be so volatile that it won't be relied upon for a steady source of supply, and we will pay a premium for secure and safe sources of oil, i.e. North America, Canada to Mexico. US production will continue to replace Middle East production, as our technology and expertise CONTINUE driving down the cost of exploration and production. Russia also gains from this. The Middle East and its great modern cities will look like those in the original post.
Nooo, he didn't miss any boats. What makes you so cocky sure about + 65 YE? Some would think thats simply hopeful thinking.
And where's your proof ?
Proof is in the production numbers and it makes peak oil WRONG.
ND is an absolute wasteland. Everyone is fat, it snows Halloween-April, and the two months of summer are as hot as a desert. The 600K people who live there are backward rednecks and it takes 6 hours to drive across ND, so it's conveniently close to exactly nowhere.
I live in a similar state (Oklahoma), except that it's hotter. Do us both a favor and stay away.
Sounds like you acquired your state bashing skills from LTER.
Jerk.
You obviously don't like sunflowers and pheasants.
We have seen the movie Fargo already--no need to elaborate--but overall when I was there in the Dakotas 3 decades ago (I suppose one visit was enough unless you really love the Badlands or Mount Rushmore), they were by and large really hardworking, kind people who were unfazed yet by the oil boom or greed mentality. Not sure how it is changed after another generation and a huge gold rush there by outsiders.
North Dakota is a decent state, I visit there often. Fresh air, friendly honest people, lots of wildlife, and the weather keeps fuckheads like you away.
And there's a beautiful woman behind every tree! ;)
Yeah, and they do have that state bank that is the envy of the sane.
Yeah.
+20
As long as you're not a resident there - sounds pretty good to me Bet the gun laws are non- existent too.
Please state your general residence and give me a chance to give you a general description along the lines of what you gave ND
BTW - I don't live anywhere near ND - just despise self righteous judgemental pricks
Our gun laws are "don't be a felon." You can walk into a gun store, fill out a piece of paper, and walk out with your gun.
We had huge budget surpluses and decided to put a good chunk away for the future, just in case something bad happened, instead of spending it all on pointless vote-buying nonsense. Another chunk went to lowering my property taxes.
There are around 100k people in our general area and there is maybe one murder a year.
I've seen about ten homeless people in the many decades I've lived here.
We have been consistently near the top in quality of education.
Our more restrictive banking laws meant that we escaped the housing bubble almost completely. My city has an unemployment rate of sub 3%.
I personally know multiple cops in town, and they are all decent, honest people who never use force unless necessary and give people the benefit of the doubt when they can.
And my thin wife and children would take exception at your stereotyping, though I could certainly stand to lose a few.
Everyone I know hates the Kardashians and favors small government.
But yeah, it gets cold in winter. Luckily, they have these things called coats nowadays, cigar. Small price to pay for living in what is seemingly the only part of this country that hasn't gone fricking nuts. Enjoy your dystopian craphole city, jerk!
I grew up living like that d_senti and thought it would always be around. I thought America was all gone now. Glad to hear it isn't.
Don't you have an injun bank there that does gold and silver?
No - that's Manhattan
Ouch. Please tell me that while it was posted under me as a reply it was directed at the Arnold wannabe
Yep! That's why I said "cigar" near the end. You get the ND Seal of Approval. It's a picture of Teddy Roosevelt burned into some lefse, but it still counts!
I'm so small minded I'm waiting for cigar guy to come back (you there?) as I'm betting he drives a Humvee, wears camo crap, works in an office and generally is a posser anyway - good on ya
P.S. sorry - Shite - scratch the camo bit - wife pointed out ......
I live there and I'll match my net worth against yours anyday my friend..........
Girls in ND are generally pretty hot. Lots of blonde hair blue eyed Nordic types.
best thing about nd. =hardly any fucking people and close to montana with some of the best hunting in n.a. jump over to mn for 10,000 plus lakes and a zillion mosquetos-ha...
Fair enough, but as far as I know there's no Arnold Schwarzenneggers waltzing around with impugnity. So that's something...
Wolf Richter said the same thing : Shale plays were financial sleights of hand with no sustainable economic basis.