This page has been archived and commenting is disabled.
Guest Post: The New Price Era Of Oil And Gold
Submitted by Gregor Macdonalds of Chris Martenson.com
The New Price Era Of Oil And Gold
"If society consumed no energy, civilization would be worthless. It is only by consuming energy that civilization is able to maintain the activities that give it economic value. This means that if we ever start to run out of energy, then the value of civilization is going to fall and even collapse absent discovery of new energy sources."
~ Dr. Tim Garrett, University of Utah
The New Oil Cycle is Suffocating Economic Growth
There was a time when central bankers used to fight high oil prices with interest-rate hikes. But we are now in a different era with that equation, and central bankers are more likely to lament, as Ben Bernanke quipped in his spring 2011 press conference, that "the FED can’t print oil.” Yes, precisely. At the zero bound of interest rates and with debt saturation coursing through the private and public sector, the developed world faces not an inflationary restraint from oil prices, but rather an additional deflationary barrier. Welcome to the new oil cycle.
In the old oil cycle, new supply of petroleum was brought online to capture rising prices. In the new oil cycle, declines from existing fields neutralize this new supply, for a net global supply gain of zero. In the old oil cycle, recessions benefited large consumer countries like the United States as oil prices fell, giving a boost to the economy. In the new oil cycle, the price of oil falls only for a short time before resuming a higher swing. In the old oil cycle, the developed world set the oil price through swings in its demand. In the new oil cycle, the developing world, with its much lower sensitivity to high prices now sets the floor on oil. Most of all, the new oil cycle caps growth in the developed world. The new oil cycle kills the economies of the OECD nations.
Peak Autos
This week, JD Power and Associates released its 2012 sales outlook for the US light vehicle market. I’m quite thankful that Calculated Risk, the long-time blog on the US economy, keeps an updated chart series of this data, because it will help set the context for JD Power’s outlook and where we are in the current oil cycle. The forecast? For the annual rate of US automobile sales to reach 14 million by the second half of 2012. That would make for a healthy advance in auto sales from the current rate, around 13.25 million. Let’s take a look then at the multi-decade chart for light vehicle sales from 1967-2011.
Anyone familiar with a chart of the US stock market or US employment will immediately spot the long-arc trajectory here that begins in a very familiar place: 1982. That was the dark place, after twin recessions and a rude (but healthy) Volkering of inflation, from which the great bull market in stocks was born. This reflects current discussions of 1) how much the stock market could recover, 2) how much the employment market could recover, and 3) how much wages or real GDP could recover. The JD Power forecast for next year, if it comes to pass, would only restore vehicle sales to levels last seen in the 1990s.
I won’t digress (much) toward the enormous mistake the US has made in continuing to invest billions of dollars in public capital into the Auto-Highway Complex. But let’s at least disabuse ourselves of the notion that automobile transport has been a free-market phenomenon for nearly all developed nations. Both in Europe and in the US, automobile manufacturing has been a key part of the industrial (and political) structure for decades. And I am merely using this sector as a current example of a beloved and favored means to economic growth that no longer works for economies now that we’ve entered the new oil cycle.
In the old oil cycle, higher prices would have triggered new gains in MPG standards from the automobile industry, no doubt unleashing a new round of higher automobile sales. In the new oil cycle, sales of new autos are hampered as car owners hold on tight to existing vehicles. There isn’t enough growth in the wider economy to turn the fleet over. This is precisely the analytical mistake forecasters of future EV sales (electrical vehicles) continue to make when happily predicting broad adoption of electric power. Adoption is glacially slow because fleet turnover is slow. And fleet turnover is slow because the economy has been reduced to a much lower level of operation.
I recently showed data which quantifies the dramatic drop in oil consumption since the 2007 highs in the US economy. As usual, the correlation between economic growth and energy consumption is nearly perfect. The drop in European oil consumption has also been quite pronounced. I might add that in the case of Europe -- which enjoys broad coverage in electrified rail transport -- the reduced oil consumption is more notable. The United States entered the current decade with a lot of discretionary oil demand that was fated to come offline, but that was not the case in Europe. The continent has been weaned from casual oil use for decades, mostly through high taxes. But that did not prevent a new low in consumption post-2006, when prices began to soar -- with predictable effects. Stuart Staniford of the Early Warning blog presents the chart below with the latest data. It’s notable that Europe’s economy, the largest in the world, has shed a million barrels per day (mbpd), from 15.5 to 14.5 mbpd.
The Rescue Myth
Let’s pause here and be as frank as we can be about a rather widespread belief in the Western world shared among economists, policymakers, technologists, and corporations: The price of oil will eventually drop, and the global economy will also grow. Is that right? Well, unless you’ve been living in a cave, OECD countries are currently in the throes of a debt crisis, with at least 15% of the population unemployed or underemployed. Meanwhile, North American oil prices, as measured by the WTI benchmark, have just rejoined Brent at levels at/above $100 a barrel. And Western economies are now supposed to recover from this position? What price of oil are we to forecast, should the vast spare capacity and idle labor of the OECD come back online? I spoke to this issue back in 2009 in a post called Overhead Crush:
A concept that’s key to resource depletion is the higher volatility phase, in which both price and supply start to hit ceilings and floors in accelerated fashion. This tends to appear first during the actual peak supply period, or peak plateau period. The pattern has been seen in previous eras in such things as wood, fish, and whale oil. When the post-peak phase gets underway the price amplitude increases even further, playing havoc with supply and demand. As demand gets killed, and then finally collapses, it causes confusion about supply. But then, as demand returns, any questions about supply are soon answered as demand once again bumps up against the supply ceiling.
V
isually, we can think of demand in this phenomenon as being in a kind of contracting triangle. Every time consumption resumes after a previous demand crash, it hits the ceiling at a lower level. This is the point where, if you find yourself living in the age of biomass and wood, you get rescued by coal. For example. This is also the point where, if you are living in the age of oil, it’s less likely you get rescued.
Normalcy Bias and the Problem of Growth
Normalcy bias, rampant in the West, leads most to conclude we’ll be rescued. Some magical combination of new technology, new policies, or miracle energy resources will soon arrive. Even on the conventional end of this spectrum, there is still a generalized belief in the inherent ability of the system to resume growth. In a recent paper from the New America Foundation, The Way Forward (Alpert, Hockett, Roubini), we find eminently reasonable solutions that target the system as it once was, but not the way it’s operating now. While the authors move beyond either purely Monetarist or Keynesian approaches in their solution set, their attention to energy inputs is far too moderate. Only a policy recommendation that foregrounded energy as the primary lever to apply to Western economies, rather than merely including it, would now have resonance. It is the energy-intensity of America in particular that must be confronted, not only in its domestic consumption but in the global energy inputs it commands through its outsourced production. Let's remember that oil, until it is eclipsed by coal, remains the primary energy source of the world, with a 33.56% share (2010, BP Statistical Review).
And now the question: If growth faces nearly insurmountable barriers, absent widespread debt writedowns or even a debt jubilee, then why are German Bunds or US Treasuries currently operating as safe havens? Do Germany and the US not occupy the same economic territory as broader Europe? A demand shock for Asian consumer goods, emanating from a collapsed Europe, would crush Asian demand for the infrastructure goods that Germany produces with such expertise. Global markets are therefore making an enormous mistake. In the midst of a sovereign debt crisis now hitting the developed world, they are pricing the risk as though this were like the 1980s crisis that hit countries in Latin America. But this is not a crisis in which banks in Boston, having lent billions to Brazil or Argentina, write down debt while engines of growth in Japan, Europe, and the US move forward. Rather, this is the endgame of post-war growth in the West.
And it would seem that even 'safe haven' bond markets have started to price in this reality. As Morgan Stanley shows in this chart of recent action in German Bunds, the price advance (and thus the yield decline) in bunds has started to slow as the recognition phase gets underway on system-wide EU debt.
(chart courtesy of Joe Wiesenthal at the Business Insider)
The developments in Germany’s “safe-haven” status were addressed by Ambrose Evans-Pritchard on November 17:
Andrew Roberts, rates chief at Royal Bank of Scotland, said Asia's exodus marks a dangerous inflexion point in the unfolding drama. "Japanese and Asian investors are for the first time looking at the euro project and saying `I don't like what I see at all' and fleeing the whole region." The question on everybody's mind in the debt markets is whether it is time to get out Germany. The European Central Bank has a €2 trillion balance sheet and if the eurozone slides into the abyss, Germany is going to be left holding the baby."
(Source)
The Vulnerability of Having Sovereign Debt As Your Core Asset
All across Europe, the sovereign debt of EU nations forms the core asset base of key institutions critical to systemic cohesion. This debt is a call option on future growth -- a call option that most assumed would never decline so catastrophically in value and that could presumably always be rolled over. In the old oil cycle, such sovereign debt problems were merely a function of profligacy. In the new oil cycle, a debt crisis is no longer solvable with growth. Devaluation or jubilee are the only options. The loss to society will be borne most directly by those who hold sovereign debt as their savings. But in our present situation, it will not be a sub-set of the West that bears the loss, but the entirety of the West. The time of Containment is over.
Gold's Critical Role at This Time
The recognition of dim, future growth has only now begun to unfold. In an earlier report, I explained that the framing of gold prices as insurance against future inflation was, at least for now, wrong. Instead, gold continues to trade along the contours of growth’s terminal phase and the unpayable debt now left in its wake. This impending instability, or discontinuity if you like, is what will drive the gold price over the next few years, along with policy maker’s response(s) to our decline.
In Part II: Understanding Where Gold & Silver Go From Here, I offer two distinct price pathways for gold, specifically in light of the great threshold that we’re now crossing in developed-world debt saturation and the end of growth. These two price pathways will be greatly influenced by how policy makers and central banks respond to this final phase of the crisis. In addition, I also offer a view as to silver’s relationship to gold along the two pathways I define. Timing is of the essence, because oil prices have just punctured the great reflationary recovery of 2009-2011.
Click here to access Part II of this report (free executive summary, enrollment required for full access).
»
- 21492 reads
- Printer-friendly version
- Send to friend
- advertisements -
The car count in China will only rise as long the Chinese at the margin can afford to own and operate said car. Otherwise they'll ride motor scooters, bicycles, public transit or rickshaws. It will be no different in America or Europe. Americans and Europeans, and Chinese too, don't need cars. They need food, water, air and shelter, but not cars. They want cars. The same thing can be said about animal sourced protein. Sometimes we don't get everything we want.
Without such a large percentage of the planet's population owning and operating autos, there does not need to be as much oil production. This should be obvious.
Yet we have never had a military conflict that actually closed an oil route. Imagine what happens when percentages of flow are taken offline. This will affect price, availability, supply in large areas due to where the lost oil was due to arrive, extreme privation, conflict for existing supply, for what remains, extreme expense or ability to keep supply flowing.
We learned from WWII. We learned from the Japanese. That is what the aircraft carriers are for. We had our convoys and fleets at risk of destruction until the aircraft carrier. Think how many tankers the fleets can protect? Exactly like the last 65 years. And it isn't any good irradiated. And the producers have always had enough to buy the dirty bombs and hold the world hostage (or protect their asses from attack)
Why would the manly man George the Wth, kiss a terrorist in public more often than his wife? The same guy that was Bin Laden's illegitimate grandfather, or 2nd cousin, whatever.... on camera and hold his hand swoon and smile like his girlfriend waiting for later. What did Tony the Poodle do for Kadaffy that he won't ever want to talk about with his wife or the press?
History tells us a different tale about the crude.
Because after they got through buggering each other, they were in love? Or maybe it was just for the money (fucking whores).
Everybody??? horseshit.
I explained peak oil as sustained global recession like 8 years ago.
@Crash
Outstanding analogy. O2 sat of 50% and mammals are TOAST.
But wait! It can't be dead, there's still 50% left....
Note: squid is alive and well at 5%!
The wonderful thing about economics is that if the supply of a product is stagnant while demand is rising the price increases until demand is equal to supply. Unfortunately, since oil powers 95% of land transport, and 99% os sea and air transport (not to mention it literally IS asphalt, tar, pharmaceuticals, paints, cosmetics, plastics, lubricants, synthetic fibers, etc.) reducing demand requires economic stagnation.
So stagnant supply leads to higher prices leads to recession which causes price crashes and high volatility. Remember when prices went from $147 per barrel in Jully 2008 to $33 per barrel in March 2009... then back up to $126 per barrel this summer. Peak oil isn't about perpetually skyrocketing prices because economic systems respond to the higher prices. Its been predicted for quite a while that peak oil would lead to incredibly price volatility, and higher yearly average prices, not higher prices every day of every year.
rosexx... Perhaps you missed my comments waaaay up thread?
The spike in oil price to $147 per bbl was caused by speculators. I am a small oil speculator and follow the industry fairly closely. When the price spiked to $147 there were dozens of fully loaded oil tankers sitting in the Persian Gulf, near Iran, that had NO MARKET for their oil. IOWs, the refiners, storage tanks, pipe lines were full to capacity.
What is missing from this conversation is the effect of too much funny money chasing return on investment. When no credible investments are available, the money turns to commodities speculation and commodities manipulation. The same happens across the commodities complex, including PMs.
It so happens that a price spike of crude caused by a real shortage of crude and a price spike of crude caused by speculation are all placed into the "This is it! Peak Oil! End of the World as we lumpens know it!" catagory.
Precisely why I stopped listening to the oil doomers at The Oil Drum.
In my post above I said that I have a problem with this sentence: "In the old oil cycle, such sovereign debt problems were merely a function of profligacy. In the new oil cycle, a debt crisis is no longer solvable with growth."
The sentence above is chock full of assumptions that have not been proven. The azz hats at The Oil Drum will not admit, to this day, that the $147 oil price spike was driven by speculators. And, if anyone goes to their site and questions their pet peak oil theories they are promptly banned from the site.
One of the great attributes of ZH is that a discussion, even a heated discussion, can take place without some azz hat board monitor banning those that disagree with the majority opinion of the site.
Kudos to ZH and all the Tyler Durdens.
you weren't on that flight we're the Captain asked all the passengers to "chip in an extra hundred bucks for gas" were ya? Imagine if he'd said "folks, we gotta land this sucker right now cuz i didn't have enough money to fill 'er up back at the you know where. Sorry 'bout that...
Uh, methinks that was a shortage of cash, not gas.
Some actual data from today and last week:
Retail gasoline prices fell more over the last week than they have in months in both California and around the nation, but don't get too excited. They still have to drop a lot more in the coming weeks to fall below historic highs for this time of the year.
Patrick DeHaan, senior petroleum analyst for GasBuddy.com, said prices have finally fallen, sinking to their lowest levels since February. But he added, "Many motorists may be giving thanks for the lower gasoline prices -- until they realize that average prices will still easily exceed prior Thanksgiving Day records."
http://latimesblogs.latimes.com/money_co/2011/11/retail-gasoline-prices-...
The primary reason for the stubbornly high prices is demand in Latin and South America, which is driving record U.S. exports of fuel to those parts of the world, particularly in the form of diesel. U.S. refiners are also making more diesel at the expense of gasoline production, Kloza said.
"Demand for gasoline is down in the U.S. by 4% compared to last year, but global demand has more than made up for that," Kloza said.
http://latimesblogs.latimes.com/money_co/2011/11/gasoline-prices.html
Price of gasoline Nov 2010 in the US: approx $2.86
Price of gasoline Nov 2011 in the US: approx $3.40
Increase: 19% in 12 mos. And it doesn't matter.
http://www.gasbuddy.com/gb_retail_price_chart.aspx?time=24
Growth is dead. Get over it.
And even if the EV sales and fleet turnover would be higher/quicker, where exactly would the electricity to power those vehicles come from?
The greenies want us to use electric cars but don't build any nuclear power plants to charge them. I guess the average joe doesn't know that coal fired plants are still the king of AC in the USA.
Fact is that electricity generated by distant equivalent "fossil" sources transmitted over lines to homes/charging stations is less efficient than energy delivered by petroleum liquid to localized service stations due to friction/coronal loss/etc. during transmission.
Wind, solar, natgas peakers when it was cloudy/calm?? Wave farms?
Go on treating a finite resource like oil as an infinite resource. It'll run out one day but before it does, you'll pay through the nose to get a gallon.
http://www.oildecline.com/
No man, stop thinking like a central planner. Just use what you need. When it becomes too expensive, you will figure out (or someone will) a different energy source that will suit you, and will turn a profit for its producer. Everyone wins.
well...not "everyone." i like where you're going with this though Martian brother!
While I have nothing but contempt for central planners, your "the tooth fairy will bring us magical energy boxes" theory is magical thinking at best a suicidal myopia at worst.
What, you don't have a magical box? You mean to tell me that new age thinking isn't real? That you can't get something for nothing? Even if you just think about it?
The problem here is that too many people live in the box, have barely stepped outside of it, and can't rub two brain cells together to figure that things actually do and can change. This has been an empire of oil and will not be replaced by natural gas as the energy required to build up that hydrocarbon source into our everyday living products would be monstrously expensive both in monetary and energetic terms, even if we could do it.
Yes, just bet your children's lives on the idea that despite about 30 years of intense search for something better than oil, we have jack.
Just sit them down and tell them that even though they had to move back home and can't get a job, someone is going to invent superdooper oil and fix their lives for them.
Please stop telling the truth, you're scaring the children!!
how can you increase interest rates in his environment? if interest rates increase gold will still go up because of the flight out of dollars ill bet gold in greece is relatively way higher. think about it, the interest rates ont the 2 year greece is somewhere around 130%. is gold cheaper?
I'm not seeing it either. The issue is money velocity, which raising interest rates won't help with (as much as my limited understanding leads me to believe).
It's really a struggle between needing to attract $$ and in getting $$ to more rapidly circulate. The financial sector is basically the black hole: as it fostered the bubble, so too it fosters the contraction.
Really? Total sales of Chevy volts is like 7 simply because people aren't ready to replace thier current fleet? It has nothing to do with the fact that for 80 grand I get car that wont run in the winter, leaves me stranded for if I run out of juice, takes like 8 hours to fill up, will probably set my garage on fire, and is built by drunken paid off union thugs.
It won't set your garage on fire. Only models with Lithium batteries do that.
http://www.examiner.com/green-transportation-in-national/a-third-chevy-v...
And when fully charged under optimal conditions gets a whopping 35 miles total. As in then runs out of charge and off to the gasoline engine. Plus, the transmission of electrical energy to charge a vehicle is an energy sink due to transmission loss.
PS, the feds have ordered something like 40K to 70K of the shits.
Well... that's the car end of things, not the charging infrastructure: how many shoddy electrical jobs will we "discover?"
At any rate, people are BROKE. They're upside down in their existing car loans and we're expecting them to afford these things?
Can't push on a string. Economies of scale just aren't there, and never will be: if you cannot eclipse sales by the existing products then you're not going to make it; yes, existing is in decline, but consider that their sales have quite a bit of existing infrastructure to support them.
I remember the late 80's . We were just starting to legislate ourselves into oblivion. The spirit of the law was starting to become "zero" tolerance. Civil war was "30" years away. I owned my first business, started out of my bedroom in a garage.
What a great book that would have been! The best of it all, was a " SPADE was a SPADE"... None of this , we will vote to vote on it CRAPOLA!
funny that, i was thinking I may go long spades.
Florida is a complete disaster. It's a dead rotting mule of a carcas. Drove through Orlando nobody is at Disney land or Epcot center. Trams weren't even running. Disneyland Looks like an empty Chinese city.
This is going to make 1929 look like a cake walk. The entire coastal area at least 50% of the homes are vacated. Oceanfront mansions abandoned. Oceanfront high rise condos maybe 10-15% occpancy.
Wow is it really that bad down there? That is insane.
It's beyond bad. You definitely don't want to drag your CA ass here.
Go infest WA.
You are about 3k miles off but thanks I will heed your advice and stay away.
More like 4K for mileage, but you should stay away.
Especially if Watterman-Schultz gives you a hardon.
Why would anyone go to Disney World in November right before Thanksgiving?
Plus kids parents spent the money on a HDTV, so they can just watch travel channel coverage on Disney World for this year.
Tell your kids to use their imagination. It is free.
FL sux. Stay away. We don't need your corrupting influence.
Heat, humidity, bugs, strange foreign animals, crocodiles, Cubans, drug gangs, people hurrying up to die.
Sounds like a fucking thrill.
And, hasn't been politically dominated by the party of Mr. Party Pussy?
you should try it in the middle of hurricane season. You've havn't ridden the "Rock'n Rollin' Roller Coaster" until you've done it in 200 mph sustained winds, man. It usually has the added benefit of being "gay pride week" as well!
it's so bad the seagulls are panhandling for crackers.
Frigging pelicans hang outside of Starbux begging for cups!
Caffeine withdrawal is a mutha! :>D
He's full of it. I have a home there, and it's not that bad. Things are cheap, but costal property is still in demand, and it's not vacant. Not sure where he lives, but our house is on the west coast of FL.
Destin, the the Redneck Rivera, beaches and tourists covered in oil.
Panama City.
Never mind
You visit JWinFL?
On fire tonight.
I live in Florida (Tampa Bay to be specific). Orlando is only 2 hours from me, and I go through there several times a year. Last month when I drove through there was (as always) a massive traffic jam of cars on I-4. I actually wish what you said was true because then I wouldn't be stuck moving 3 mph every time I enter Orlando.
Used to be 20 minutes away. God bless pre-ODummer construction!
Unless your taking a high speed train 90 minutes is the fastest you'll get to Orlando.
High speed trains are a perfect example of how responding to peak oil was needed BEFORE it occurs. There were plans to build a high speed rail from Tampa to Orlando (the Federal Govt was even going to through $500 million into it to help out), but it turned out that state revenues would never be high enough to take up the rest of the bill.
Once oil supplies stagnate there is less ability to maneuvor, and your more constricted in your ability to act. To make a major transition (like building a high speed rail network) requires surplus energy; with stagnant oil supplies and thus economic discomfort there's no spare funds to put toward transitioning to a new energy source.
Soon (very soon... very, very soon) as oil supplies decline it will be impossible to fund even current programs, much less propose expensive new infrastructure to transition away from oil.
In other words, we're stuck. I moved to Florida from Minnesota because you can bike all year long, grow crops all year (if you plant the right fruiting trees for summer harvests), and infrastructure maintenance is cheap because of the rduced temp variation (roads will last longer w/o maintenance). I chose Tampa because it has an astonishingly low chance of being hit by a hurricane (last hit was 1927). Don't expect the world to bail you out. Act intelligently, and you can avoid the worst of whats coming.
High speed trains for what?
Again, the entire paradigm is changing.
I argued this point with folks in my area wanting the sexy "high-speed" train. Now those folks are out of jobs. Get to the unemployment office faster, perhaps...
Freight trains are the important thing, and these you don't want doing 100+ mph. NOTE: if I were to ever invest in stocks again I'd be looking to invest in rail, but only after the trucking industry gets fully hammered.
How's the water situation in Tampa?
Best friend took the family to Dizzyworld the first week of this month. They gave away the mealplan! Nobody at the park and no wait on the rides. No money, no vacations, no Florida, no mouse....
It is a very slow time of year...all the way up to Christmas, so if you want to go, now is the time.
If we get rid of Libs, it would be more oil for the rest of us.
Take Algore, for example.
Please do.
Pull on his string and listen to him recite the ONLY phrase that he knows... Mr. Party Pussy, conserving energy as best he knows how (by confining his vocabulary).
Peak humans. Bring back the dinosaurs.
Think CONgress has a patent on those.
Step outside your virtual world of playing Party Pussy and you'd see that Mother Nature calls the real shots. Obviously you're free to continue lobbying for your group of criminals, but the end results will be the same (only a matter of timing).
That was a good remark. Albeit it is human related, the culprits are the scumbags we voted into office when the wave was rolling.
The crest of the wave is upon us, and 2-3 million what ever you want to call them, can't stop 330 million! Technology is is great tool. The Romans loved it. ( DOUble edgED ) <>
TAM, is that you?
“You cannot solve this world’s problems with the same thinking that created them”
Albert Einstein
And we can fly faster than the speed of light. Good old Albert>< http://www.telegraph.co.uk/science/science-news/8905322/Speed-of-light-e...
We can, and the Bullshit is skewed again!
http://www.youtube.com/watch?v=eSptqzfTSSE
Algore no comprehende Englaish.
Nor does the Kenyan.
It's OK, really.
Agent Anderson will turn the drones into batterries soon enough.
Problem solved.
Sigh.
I don't get it. Know Pamela Anderson is a big consumer of batteries, but who made her 'Agent'?
I don't think that it's related to your favorite fetish (Al Gore), that's why you don't get it.
Ah, Mr. Party Pussy, only good to pull out of the closet for special events...
http://www.youtube.com/watch?v=DvQwXOCKNLY
Genius.
Huh?
Maybe he will post all my cit.
http://www.youtube.com/watch?v=X3iFhLdWjqc
For those of you who invest in an IRA or for long term goals, theres a better approach than buy,hold,hope. Stocks follow the economy so analyzing the economy, specifically the factors that are "leading indicators" and having exposure to equities only when the economy is headed in the right direction and avoiding equities in favor of safe haven baskets is a much more logical approach. And missing the major drawdowns is the only way to help ensure meeting your goals. If you are interested in investing in a portfolio that tactically invests in equity and safe haven baskets via ETF's automatically, please email me at:
eclark@breakaway-partners.com
and I'll add you to the weekly market commentary & portfolio update distribution list. Its free to add you and you can follow along our model and our views. We have been RISK-OFF since 6/30 so have missed all this wicked volatility. Currently invested in short duration treasury baskets as flight to safety drives interest in our debt.
Your post sounds familiar. Is this, like, the 20th or 21st time you stuck it in threads?
http://www.youtube.com/watch?v=QM7LR46zrQU
Damn these blogpimp trolls.
They are giving us regular trolls a bad name.
Petroleum prices, especially gasoline and distillates, are a key driver of our great Biflationary economy.
DOT reported today that miles driven are down 1.5% yoy. That's progress. And at the same time, CA reports gasoline prce records for the Thanksgiving week.
In other news, Saudi Arabia announced premature termination of a large program to increase crude production at 12mbd, lower than the goal of 15. Although Aramco said that they think supply is sufficient, they have also diverted most of the funds to social programs to quell the restless natives that are threatening to revolt.
Ok, but citing anything from CA is meaningless, except to Robo.
Need a wall to block of CA, heck with Mex.
CE, Read my post above(?) I expand on the saudi budget problems.
Haven't they been claiming 15mbd capabilities for at least 10 years or so? Happens every time oil prices go up. They don't have it. Their handlers (US) prod them into spouting this stuff every time people start complaining of high prices. If they don't recite this then the US threatens to yank their military (good by House of Saud).
http://www.blogcdn.com/www.stylelist.com/media/2008/10/christina-hendric...
http://www.youtube.com/watch?v=VLnWf1sQkjY
Oil is the new world's reserve currency.
Oil is the new world's reserve currency.
Wo ist die neue Welt?
Thorium reactors and / or fusion reactors to make synthetic oil and fertilizers (via electricity).
Thoughts?
Incinerate Libs. Plenty of supply.
Not good for Soylent Green use.
LOL, that reminds me of this game:
http://www.addictinggames.com/strategy-games/oiligarchy.jsp
In the end you get "human to oil" processing plants...
That would be an ideal way of mitigating the effects of peak oil. The unfortunate thing is that these reactors take over a decade to build, so they have no effect on whats happening now, and an awful lot will happen between now and 2021. In reality, even 2021 is an optomistic date since there has been such a backlash against nuclear after the March earthquake.
So hypothetically thorium and/or fusion reactors (thorium's more realistic) are an ideal solution to these issues, but a quickj glance at current political impediments and length of implementation brings us right back to square 1.
Ah geez, peak gold, bitchez!
Fricking Libs are the biggest consumers of hydrocarbons, and the greatest impediment to developing more, so peak oil is crap.
http://www.youtube.com/watch?v=BHFUH_frhBw&NR=1
Control of major energy sources is the method that the Power Elites control the proletariat (that's us, BTW). They control the major sources of petroleum, gas and coal, the politics of energy, nuclear power and they intend to not allow either thorium reactors or low temperature fusion (if it works) to become widespread. They are willing to fight wars sacrificing your children and money to keep their energy franchise.
All the rest is just bullshit. Energy could be much more plentiful and cheaper if it were not for our owners' needs to keep us under their control.
Agreed. I myself successfully duplicated the "CFR" device on the JL Naudin web site. You can Google it. $1,000 for a nice power supply and got steam to the 12 foot ceiling... Sun in a bottle...
"All the rest is just bullshit. Energy could be much more plentiful and cheaper if it were not for our owners' needs to keep us under their control."
If one hitches oneself up to the wagon one shouldn't be surprised that one is expected to pull it.
Don't like it then don't rely on it.
However, supposin you have a "demand" for energy, just what are you going to do with it, and how MUCH is it you want? There's 7 billion more people out there waiting to submit their requests so you better hurry up with your demands...
True. The oil definitely can be substituted by liquified gas as a fuel for vehicles. Due to fracking technology , there is an abundance of shale gas in US. Boon Pickens suggested an excellent way to involve government in this process of "gasification" by mandating transfer of government diesel fleet to liquid gas fuel. The proposal was a part of energy bill, had bipartisan support but was killed by Obama. There are legitimate (and not well studied) environmental ramifications of using fracking technologies and most probably Obama was afraid to upset his environment base by embracing Pickens idea. Since , essentially, this is the only game in town to return US to growth (and provide energy independence), that alone is a sufficient reason to remove Obama from the office. At least, Obama could embark on serious study of environmental consequences of "gasification" but he did nothing. Gasification requires all new infrastructure that would provide hundreds of thousands nonoutsourcable, highly paid jobs. It would also contribute to agriculture (e.g. in Ohio, land owners sell licences on shale gas extraction and on obtained money buy a lot of agricultural machines from John Deer and restore efficient farms). In the end of the day it is the only way to go for US (and probably China which has even bigger supply of shale gas) but it will resolve the so-called oil crisis which in reality does not exist...
Sounds like you have a plan to make fart in a jar work, care to expound?
While the rest of you are waiting for him to consult his EU experts:
http://www.youtube.com/watch?v=KmQ_1sXZJxI
Obama doesn't give a shit about environmentalists. He does what his owners tell him to do and they don't want diesel replaced by LNG. Obama is smart. He knows what happens to presidents that don't do what their owners want. He saw what happened to JFK.
Obama cares about environmentalists because he cannot be reelected without their votes. But that is as far as it goes...
That's just a PR engineering problem and/or a vote counting problem. He (actually his owners) have people to take care of that. The captured mainstream media will do their part. Furthermore he can get reelected even if he tells them to fuck off, which he won't. Who would be their alternative? Ralph Nader? Al Gore? I don't think so.
How about sticking to real quantifiable things like physics?
If you claim that we can replace diesel with LNG then by all means provide the numbers for us. I'm just not seeing that those long-haul trucks are going to be able to haul much using LNG (fuel tank storage requirements).
Shale gas will simply transfer the notion of peak oil to peak water as it systematically trashes ground water which cannot be replaced or remediated. There may be a way for us to survive in the paradigm that we now do, albeit in the 'non-infinite growth model', without fossil fuels, but not without water and arrable land.
The claim that gas is 'cleaner' than coal is disputable, and using gas as a 'bridging fuel' to clean green renewables merely delays the inevitable and make more money for the majors at our (and the planet's) expense. So let's get onto that urgently before we waste trillions on MORE obsolete infrastructure, and sacrifice more of our chance to survive climate change.
Shale gas cannot replace diesel (think transport, trucks, trains, marine, mining), only gasoline, and there are many downsides of converting gasoline motors to gas, the principle one being that gasoline motors are designed to use a liquid, lubricating fuel. Most heads on gasoline motors wear out very quickly on gas, even with additives.
IMHO we should be recognising the developing reality that we now face, and using what relatively 'cheap' fossil fuels that are left to be making the transition to renewables urgently. The scale of getting of fossil fuels globally is absolutely mind numbing.
http://www.grist.org/article/2011-02-11-gobsmackingly-gargantuan-challen...
What is also missing from this debate is the fact that carbon dioxide is saturating the oceans (it's soluble) and acidifying them. This is chemistry, not theory (like Anthropenic Climate Change).
www.oceanacidification.net/ Dead oceans = dead homo sapiens.
No excess in Asia, no growth in Europe and unlimited US debt and this rectum is discussing higher rates and what I dont know because so much of the fuckin article is circular thinking. Goodbye, sell your $2 words to some suckers, we will listen to what Tyler has to say.
I don't get it. Aren't you ricers eagerly awaiting the results of the (Cuban) well off Key West?
I wish this writer would stop posting here. He says part 2 is free if you enroll, but it's not. Stop with the blueballs and lies, sir.
Peak Oil
Energy is the throttle that they can't print. As soon as the supply dips, prices go up, but the prices cannot go down below (about $80 or more. For the simple reason, at $90 and below, Saudi Arabia's national budget doesn't balance(all social programs included). They don't want an Saudi Spring, so prices WILL NOT go below $90 or they will cut supply till it does.
The transnational companies, depend on volume at negligible shipping costs. I get blackberries that are shipped in overnight from Columbia. Same with flowers. Food travels thousands of miles. At what price for energy will it stop being profitable to ship macadamia nuts from Hawaii to the east cost?
Without Growth, The whole whole interrelated supply chain goes down. Like hoses that go flat with no water in them. Letters of Credit problems and the problems cascade. One supply chain desrupting another's
Saudi output is big, but they aren't necessarily dictating the markets. Well, the US + the House of Saud basically do, but...
"Without Growth, The whole whole interrelated supply chain goes down. "
The entire game is based on growth. Growth gives us economies of scale. Reverse economies of scale and things can (and will) unravel pretty quickly.
Dr Tim Garrett is a complete FuckTard.
I just want to say three things:
1. Love the comments on ZH.
2. We need to invest in nuclear fusion.
3. Black people are useless because they purchase cars such as the Cadillac which burns crude oil like nothing.
It's good you numbered your thoughts so you could keep track of them. Three? Wow! Three is obviously a record for you. Well done! Next time challenge yourself and try for one significant one.
Awwww...It looks like someone is offended by number 3.
...
Lots of whites and at least one black (OJ Simpson) drive Ford Explorers (they suck down gas). And who drive civilian Hummers?
Perfect reasoning : the current financial bubble is the expression of the self fulfilling philosophy of Reaganomics that was INSTITUTED by the western Oligarchs in 1979, in the preliminary combination of "Thatcher Union bashing" and "Volcker Inflation bashing", to stifle the inflationary spiral of the old US eurodollar fed cum salary indexed mid-east oil dependent economy and the impending shock of its unilateral OPEC decided 1979 second oil hike.
The success of the Thatcher-Volker plan execution killed the old economic cycle and launched the new economic cycle of deregulated, financialised, risk asset hyperinflation based REAGANOMICS, initially fed on CHEAP OIL HYPE, to allow its launch off; as peak oil was there and industry recognised in real hard Seven Sister statistical terms but conveniently hidden under Reagan's ORDER to King Fahd to open the Saudi oil tap in 1982 full blast. Political sleight of hand of first magnitude that has come back to bite us big, 'cos now we have ALSO Chindia to feed plus OECD as cheap oil depletion cannot be hidden any more.
REAGAN AND Thatcher wanted the fat, overfed, OECD middle class to pay, for their outrageous welfare state construct, legacy of FDR and Euro 'socialism'. As the Oligarchs who paid for their election knew their corporate profits were unsustainable without building the outsourced, corporate welfare state model, aka pre 1929 days. And we fell into the same deep hole of greed and hubris as then. Now we are big into crony capitalism; it having imposed abandonment, under duress, of the welfare state 'peanut butter spreading all around' model, to history. Greece the first domino to go bust. America's and Europe's horizontal social constructs are now in the dust bin. Equality of opportunity a pipedream; as the verticality goes to 99/1 region. Talk about fast, brutal swings n balances!
How the chickens come home to roost. WITH A VENGEANCE.
I hear talk of finiteness? You say we are limited by our confines here on this rotating, revolving rock? Really? The only thing that is finite are some peoples ideas, goals and imaginations. OK, answer this. What is the last whole number? When you get to the end of space, what is after that? Remember when you were in grade school and your teacher let you round off to make it a finite solution. What is the real value of pi? People limit themselves foolishly. There are no limits. Yes we are probably going to run out of oil someday. Guess what, when we were riding around on horses the thought of a motorized vehicle propelling us around was just crazy. It is easy to get very cynical about our situation especially financially but i am not that cynical. THe world isn't going to end tomorrow and if it does, WE will go on. That's because nothing is finite. We live in an infinite world. THere are no boundaries. Only in our minds.
Kill yourself and let us know how it turns out.
Learn the diffrence between the virtual and the physical. Or, well, Darwin will come a callin...
The problem is not lack of a new energy source. For sure it is available. The problem is getting it developed and put into use in time to transition to running out of oil. Governments who are supposed to orhchestrate these things have failed completely. Jimmy Carter was the only guy who even thought of it in recent decades (syn fuels).
Potentially we still have time, but we better get moving.
I heard someone say oil is the earths lubricant and when it does actually run out, there will be no more lubricant for the tectonic plates. Interesting concept for earthquake lovers.
Predictions time:
1. The Dow will crash in 2012, again.
2. The USA will dick the can as far as 2016 until total default.
Look on the bright side, you've got 1-4 years to get your ass in gear.
"Look on the bright side, you've got 1-4 years to get your ass in gear."
Or, like so many others, 1 to 4 years to keep whining that it's all a conspiracy, that it's all someone else's fault (for why they'll end up fucked).
If society consumed no energy, civilization would be worthless. It is only by consuming energy that civilization is able to maintain the activities that give it economic value. This means that if we ever start to run out of energy, then the value of civilization is going to fall and even collapse absent discovery of new energy sources and SEO UK
.