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The Oil Conundrum Explained
Submitted by Brandon Smith of Alt Market
The Oil Conundrum Explained
Oil as a commodity has always been a highly valuable early warning indicator of economic instability. Every conceivable element of our financial system depends on the price of energy, from fabrication, to production, to shipping, to the consumer’s very ability to travel and make purchases. High energy prices derail healthy economies and completely decimate systems already on the verge of collapse. Oil affects everything.
This is why oil markets also tend to be the most misrepresented in the mainstream financial media. With so much at stake over the price of petroleum, and the cost steadily climbing over the past year returning to disastrous levels last seen in 2008, the American public will soon be looking for someone to blame, and you can bet the MSM will do its utmost to ensure that blame is focused in the wrong direction. While there are, indeed, multiple reasons for the current high costs of oil, the primary culprits are obscured by considerable disinformation…
The most prominent but false conclusions on the expanding value of oil are centered on assertions that supply is decreasing dramatically, while demand is increasing dramatically. Neither of these claims is true…
The supply side of the oil equation is the absolute last factor that we should be worried about at this point. In fact, global oil use since the credit crisis of 2008 has tumbled dramatically. This decline accelerated at the end of 2011 and the beginning of 2012 all while oil prices rose:
http://www.energyasia.com/public-stories/markets-world-oil-demand-fell-3...
In its February Oil Market Report, the International Energy Agency (IEA) forecast a reduction in the growth of demand into the Spring of 2012, despite reports from the mainstream media that oil prices were spiking due to “recovery” and “high demand”. Simultaneously, the IEA reported that petroleum inventories rose to the highest levels since October, 2008:
http://omrpublic.iea.org/currentissues/full.pdf
The Baltic Dry Index, which measures global shipping rates and the demand for freight in general, has fallen off a cliff in recent months, hovering near historic lows and signaling a sharp decline in world demand for raw materials used in production. A fall in the BDI has on multiple occasions in the past been a predictive indicator of stock market chaos, including that which struck in 2008 and 2009. A sharply lower BDI means low global demand, which should, traditionally, mean decreasing prices:
http://investmenttools.com/futures/bdi_baltic_dry_index.htm
So, supply is high across the board, inventories are stocked, and demand is weak. By all common market logic, gasoline prices should be plummeting, and far more Americans should be smiling at the pump. Of course, this is not the case. Prices continue to rise despite deflationary elements, meaning, there must be some other factors at work here causing inflation in prices.
Ironically, stock market activity in the Dow has now come under threat from this inflationary trend in oil. Rising energy costs have essentially put a cap on the epic explosion of equities, and many mainstream analysts now lament over this Catch-22. The problem is that these investors and pundits are operating on the assumption that the Dow bull market is legitimate, and that the rally in oil is somehow an extension of a “healthier economy”. This version of reality, I’m afraid, is about as far from the truth as one can stretch…
In the candy coated world of Obamanomics, high priced stocks are a valid signal of economic growth, and oil is rising due to demand which extends from this growth. In the real world, stock values are completely fabricated, especially in light of record low trade volume over the past several months:
http://money.cnn.com/2012/01/19/markets/trading_volume/index.htm
Low trade volume means very few investors are currently participating in active trade. This lack of investment interest in the markets allows big players (such as international bankers) to use their massive capital to swing stocks whichever way they choose, even to the point of creating false market rallies. Throw in the fact that the private Federal Reserve (along with helpful hands-off approach by our government) has been constantly infusing these banks with fiat printed from thin air, and one can hardly take the current ascension of the Dow or the S&P very seriously.
Another issue which should be stressed is the renewed tensions in the Middle East, namely, the very distinct possibility of an Israeli or U.S. strike in Iran, and the possibility of NATO involvement in Syria (which has extensive ties to Russia and Iran). Certainly, this is a tangible danger that would have unimaginable consequences in global oil markets. However, the threat of growing war in the Middle East is in no way a new one, and has been ever present for the past decade. It hardly explains why despite hollow demand and extreme supply, the price per barrel of oil has been an unstoppable rising tide. Attempts by Saudi Arabia to reverse inflationary trends by promising increased production in the wake of Iran turmoil has so far been ineffective.
Simultaneously, large oil reserves have been discovered off the coast of Greece:
http://www.balkanalysis.com/greece/2010/12/08/greek-companies-step-up-offshore-oil-exploration-large-reserves-possible/
Off the coast of Ireland:
http://www.independent.ie/national-news/ireland-on-the-verge-of-an-oil-and-gas-bonanza-679889.html
Massive fields in Mongolia have been uncovered:
http://www.chinadaily.com.cn/bizchina/2009-08/08/content_8544985.htm
And of course, the vast shale oil fields in North Dakota and Montana are finally being tapped:
http://www.mtpioneer.com/archive-July-oil-reserves.htm
Oil supply has been ample and large oil reserves are being discovered yearly. Speculation would be the next obvious assumed culprit, and there are certainly some signals of such activity. Oil speculators traditionally use the forced accumulation of oil inventories to reduce market supply and artificially increase prices. Inventories have indeed been high. However, as previously stated, demand for oil has been static or fallen in most countries around the world since 2008, and there has been NO petroleum shortages due to manipulated markets. In fact, there have been no petroleum shortages period. Speculation has the potential to cause sharp but short term shifts in markets, but one must take into account the long term trend of a particular commodity to understand the root cause of its increasing or decreasing value. Again, inadequate supply is NOT the trigger for the ongoing oil price problem, whether by threat of war, or by reduction through speculation.
This schizophrenic disconnection between the stock market, and oil, and true supply and demand, is, though, a symptom of one very disturbing illness lurking in the backwaters of the U.S. fiscal bloodstream; dollar devaluation.
We all understand that the Federal Reserve has been engaged in non-stop quantitative easing measures in one form or another since 2008. We don’t know exactly how much fiat the Fed has printed in that time, and won’t know until a full and comprehensive audit is finally enacted, but we do know that the amount is at the very least in the tens of trillions (be sure to check out page 131 of the GAO report below to find their breakdown of Fed QE activities. This is just the money printing that has been ADMITTED TO, in excess of $16 trillion):
http://www.gao.gov/assets/330/321506.pdf
The dollar is being thoroughly squashed. Why is this not showing in the dollar forex index? The dollar index is yet another example of a useless market indicator, being that it measures dollar value relative to a basket of world fiat currencies, ALL of which also happen to be in decline. That is to say, the dollar appears to be vibrant, as long as you compare it to similarly worthless paper currencies that are being degraded in tandem with the greenback. Once you begin to compare the dollar to commodities, however, it soon shows its inherent weakness.
The dollar’s only saving grace has long been its status as the world reserve currency and its use as the primary trade mechanism for oil. This, however, is changing.
Bilateral trade agreements between China, Russia, Japan, India, and other countries, especially those within the ASEAN trading bloc, are slowly but surely removing the dollar from the game as these nations begin to replace trade using other currencies, including the Yuan. I believe commodities, especially oil, have been reflecting this trend for quite some time. The consequences of the dollar’s ties to oil are detrimental to all nations that consume petroleum, and they are clearly moving to insulate themselves from further devaluation.
Even after the release of strategic oil reserves back in the summer of 2011 in an effort to dilute prices, and the announcement of an even larger possible release of reserves this month, oil has not strayed far from the $100 per barrel mark. High Brent crude price have held for years, even after numerous promises from government and media entities admonishing what they called “speculation”, and promises of a return to lower energy costs. Not long ago, $100 per barrel oil was an outlandish premise. Today, it is commonplace, and some even consider it “affordable” compared to what we may be facing in the near future, all thanks to the steady deconstruction of the last pillar of the U.S. economy; the dollar, and its world reserve label.
Ultimately, no matter how manipulated and overindulged the stock market becomes, no matter how many fiat dollars are injected to prop up our failing system, the price of oil is the great game changer. As inflation is reflected in its price, and energy costs burn out of control, the Dow will begin to fall, regardless of any low volume or quantitative easing. In all likelihood, this conundrum will be blamed on as many scapegoats as are available at the moment, including Iran, or China, or Russia, or Japan, etc. Each and every American, and especially those involved in tracking the economy, will have to remind themselves and the public that at bottom, it was the Federal Reserve that created the conditions by which we suffer, including currency devaluation and high oil prices, NOT some foreign enemy.
The one positive element of this entire disaster (if one can call anything “positive” in this mess), is the manner in which the high price of oil tends to dash away the illusions of the common citizen. It is an issue they simply cannot ignore, because it affects every aspect of their lives in minute detail. Costly energy awakens the otherwise ignorant, and forces them to see the many dangers lurking on the horizon. Hopefully, this awakening will not be too little too late…
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Just don't drill and we'll be fine.
What the frack are you talking about, Barry?
I'm talking solar and wind......in 50 years from now.......until then frack like hell.
Frack baby frack!
Regarding fracking and tar sands, this should make the water wars really fun this summer. Lots of simple solutions that will be ignored once the political puppets and the entitled sheeple get involved.
For christ's sake, water is going to be a problem for many. Better get some more popcorn for the show. Just glad we sold all or grains last year, not cathcin a bid this year, that's for sure. Water will definitely impact how fast the silos get refilled.
I'm good with water. I live in flyover country.
When we want water we just stick a drillbit in the ground and drill for it.
Sound crazy.......but that's what we do.
Well at least until they frack the ground that you are sticking that drill bit in. My mother-in-law lost both wells on her property in North Texas when they started fracking. Water smells and taste like shit. She has been distilling rain water from cisterns ever since.
And she only drinks pure grain alcohol, right?
Come on, you can troll harder than that. Ever been to north west texas and know what they do out there? Here, I'll give you a hint; "Beef, it's whats for dinner".
Come on, Brandon, you should better research your articles.
I don't think anyone who thinks we have reached peak oil believe that "supplies are declining dramatically". Rather, the easy oil is almost gone and to keep production from dropping dramatically requires much more investment than was required before, as well as the inevitable greater environmental damage that results. Due to higher investment costs the EROEI on the hard to get oil is much lower. This is all results in higher costs.
There is also the devaluation of the Dollar which contributes to higher costs, no doubt. But in many ways the monetary decisions that have been made over the past 40 years were due to oil. Don't forget that the US Dollar removed its last ties to gold at almost the exact same time the US oil production hit its peak in the early 70s. This is not a coincidence.
BRANDON FORGOT ABOUT NET EXPORTS
Brandon wrote a nice PUFF PIECE to keep us all Deluded into believing EVERYTHING IS JUST fine and we can continue driving around in SUVS and going to STARBUCKS all day long for the next 1,000 years.
What he failed to mention are two important trends:
1) GLOBAL OIL PRODUCTION HAS BEEN IN A PLATEAU SINCE 2005
2) NET EXPORTS ARE DECLINING EVERY YEAR
The most important trend to focus on is the NET EXPORTS. Oil producing countries want to live like WHITEY in the western world. So, to do this, they have to increase their own consumption to do stupid things like drive around all day in SUVS.
This increased consumption decreases the amount of AVAILABLE NET EXPORTS. Forecasts are for NET AVAILABLE EXPORTS to decline from 33-34 mbd in 2010 (minus china & India) to only 16-17 mbd by 2020.
I gather BRANDON forgot to mention this litle tidbit.
Here are four things the author needs to know:
1. BDI is affected by the massive over-supply of tankers
2. Oil demand surpassed pre-recession peaks in mid-2010
3. Modern oil discoveries are minute compared to the elephants that are about to tip into decline.
4. Modern oil discoveries are in extremely difficult to access locations.
From the article:
"As inflation is reflected in its price, and energy costs burn out of control, the Dow will begin to fall, regardless of any low volume or quantitative easing."
Consider this: the total current US debt of $54 trillion or 385% of GDP (all sectors combined, Federal Reserve Flow of Funds Report) will increasingly show itself as unsupportable as energy costs burn out of control. Accelerating prices and the unsupportable debt burden will feed back causing a rapid decline in the economy amplifying the debt burden crisis.
Ultimately, the bond markets and then the currency will collapse driving savers into the stock market and commodiities to preserve wealth.
As illustrated in the BP statistical data here:
http://mazamascience.com/OilExport/
>>
The supply side of the oil equation is the absolute last factor that we should be worried about at this point.
>>
Why read further? This is not a petroleum geologist. He therefore has nothing to say.
It all boils down to ERoEI and flow rates.
Welcome to 'the bumpy plateau'.
The writer of this article is delusional. The 'facts' stated in the article must have been obtained with the help of the BLS. And, of course, any retort would not be complete without the 'No, no, no, oil isn't finite. It will increase in supply for as long as we need it to', Alice in Wonderland, Sesame Street, Leave it to Beaver utopic dream statement.
We need more gut wrenching anecdotal stories......as you pay $6.00 for a gallon of gas you'll happily switch from water to grain alcohol......beats crying into your wallet.
From the Institute for Energy Research:
"The answers lie in the data. In 1980, official estimates of proved oil reserves in the United States stood at roughly 30 billion barrels. Yet over the past 30 years, more than 77 billion barrels of oil have been produced here. In other words, over the last 30 years, the United States produced more than two and a half times the proved reserves we thought we had available in 1980. Thanks to new and continuing innovations in exploration and production technology, there’s every reason to believe that today’s estimates of reserves are only a fraction of what will be produced and delivered tomorrow—not only here in the United States, but across the entire North American continent."
there you go, and what is the capital and energy cost again? Innovation is not free. How many barrels worth of energy do you have to invest, and what is the energetic return on that investment (barrels in/barrels out)? This is all that matters my friend. Corporations care about one thing and one thing only, profits. We will stop using oil long before it runs out simply because it will become unprofitable to recover. I also like how you completely ignore oil flux through the world's system and what is required to maintain the current quality of life. Exponential equations are a bitch my friend, that's why you ignore the flux issue.
You guys have fun today, I have some real work to do (need more profits). Try to come out of your mother's basement at least once today so you get your vitiamin D.
I simply made the clear point that you guys were completely full of sh!t in 1980. You piled study upon study and argument upon argument. And you were wrong. You have no credibility, but you definitely have an ax to grind.
You spent a lot of time learning phrases like "energetic return" and "oil flux", but you've wasted your life stuffing your brain with marshmallow. Face it. Your investments in solar, global warming, etc. were wrong and are going to zero. You're going to lose everything.
My family didn't lose anything, except the bill for heating our swimming pool.
Once again you prove that you are an idiot. In 1980 I was ten and still learning how to drive tractors and combines. I have never made investments in solar or "piled study upon study".
Take your medication, it is now clear for all precisely who has that "ax to grind". What a moron.
Investments in solar are a recent development as you very well know, dumbfuck. I'm not surprised you were 10 years old in 1980. You have no sense of history. I've seen this ridiculous scam twice already and read about previous occurrences. You have no sense of history, and that is why you are blind and ignorant.
Again, "proven" USA reserves were 30 billion barrels in 1980. In 30 years 77 billion barrels were pumped. Do the math, fucktard.
I simply made the clear point that you guys were completely full of sh!t in 1980. You piled study upon study and argument upon argument. And you were wrong. You have no credibility, but you definitely have an ax to grind.
_________________________________________
That is right.
It is the same story since the beginning.
US citizens are split in duos, dancing for the same purpose.
The can kickers, they will deny all the way the oil limitation issue.
The tomorrow, it happens. They want to create a sense of emergency by claiming it will happen tomorrow or has already happened.
Yet the underlying issue is not addressed. Oil is limited.
One day, it will be tomorrow, no matter what.
US citizens work in duo so the tomorrow, it happens group weakens the basic fact that oil is limited, giving more room to the can kickers to keep going deeper in the essentialization of oil.
Every single oil discovery is then the opportunity of increasing the oil importance. Making the unavoidable future even more painful.
AnAnonymous said:
Yeah, sure. The impossibility to self indict in Chinese citizenism leads to the weirdest result.
Another strawsman you are building up here? Statements of power all over the place. Obvious facts are not obvious as long as Chinese citizenism citizens admit they are.
The sun goes down until the next day. Best pick of the week, month and year. At the moment, Chinese citizenism citizens have committed to course of depletion of resources around the world.
This is the future as brought to you by Chinese citizenism.
Do you have any solid element to offer comparison between what happened and what you predict would have happen if? Facts are facts. The depiction of a repeation of events grows a repeation itself. Do you have a way to beat that?
Same old song. Chinese citizenism and Chinese citizenism comments, as usual. Nothing new here.
Aren't oil reserves based on recoverable oil at market prices- much the same way as mineral reserves? Example, alot of the gold mining companies right now are not actually mining their high grade to take advantage of the high price of gold. They are mining their mid to low grade because it's profitable to do so. Their reserve base however will drop when the price of gold drops.
Mandrake, have you ever heard of fluoridation? Fluoridation of water?
careful with all that 'diverting rainwater' business. she may get her door kicked in...
http://www.naturalnews.com/029286_rainwater_collection_water.html
Texas not included here, but it might not be long.
If you even the slightest notion about geology or fracking, you'd realize just how rediculous you sound.
Does not change the fact that these wells went to shit. Why don't you enlighten everyone?
Thought you had real work to do
LoP
was there a seismic survey conducted on her property???
LoP, he can't tell you anything, just like what is in the frac'ing co.'s 'secret sauce', it's all proprietary knowledge, he'd have to kill you. Which I guess is why the industry schills living off your tax dollars and masquerading as regulators don't try too hard to find out either.
Just trust him: flaming taps and poison wells are just a 'rediculous' coincidence; any out of court settlements regarding them are nothing more than acts of the purest altruism by the frackers, shining out like shafts of gold while all around is dark. Or streams of batz piss, depending on whether or not it's you that can turn your kitchen sink into a makeshift pressure cooker.
"your highness is like a stream of bat piss...."
http://www.youtube.com/watch?v=UxXW6tfl2Y0
I was just about to edit that in.
Appy polly logies MP: <obligatory hat tip>
Well stated by a paid troll with a BA in communications or some similar crap.
Speak to an actual geologist who isn't on the payroll of an exploration company and you'll find out that fracking isn't so nice and clean and wonderful.
The stupendous irony is that fracked wells rarely make any financial sense, ignoring externalities, given their cost and depletion curves. They are negative for their owners and massively negative for society.
Your mother's wells drill how deep ?
Fracking is how deep ?
Thousands of feets of concrete rocks are in between.
No links whatsoever. Fracking chemistry is not gamma rays.
almost two thousand feet, unfortunately. Water consumption is high (cattle) and she needs the pressure.
'concrete rocks'
Thanks for the larf.
Outsourced trolling to the ESL markets?
Enough about your mother in law... The drilling company fcut up if they got into the water table
It looks to me like peak oil is bullshit. I called bullshit on it long ago.
Peak oil is calling bullshit on the American Dream.
yeah, mother nature should know better
My mother-in-law lost both wells on her property in North Texas when they started fracking. Water smells and taste like shit.
same thing happened to my parent's house in a small town in se oklahoma. they're fracking the shit out of the area and the water is not palatable.
Natural gas is SOOO plentiful, the only reason we aren't using it is because no one can make enough money on it.
Pathetic!
Nationalize natural gas, the govt. would make all the profit, to be put towards the deficit. ALL Americans would use it, just to ruin OPEC. The excess could be used to fund all the socialist entitlement programs....
So, there is the "possibility" of water table involvement with the extraction process.
(Invest in Brita)
We can all wear our Birkenstocks, and ride our bikes to work....or enjoy a cleaner, cheaper, energy independent life starting TOMORROW!
There's nothing oil can do that NG can't do cheaper......other than that inconvenient Shell, Exxon, Chevron multi BILLION$$$ quarterly revenue thing.
NG is losing because they aren't bribing....er....lobbying effectively.
GOP is losing because they haven't bought enough media control.
You know, Physics, you guys are always going on about Peak OilTM. But when it is pointed out that there are plenty of undrilled places, then it's "water is running out", or "EROI". Or if the endless supply of NatGas is considered it's "frackings bad". Then when the oil shows up in the marketplace anyway it's "global warming!!".
I'm starting to see a pattern with you guys.
Yes.....I see a pattern......I think it's called Peak Stupid.
From the article:
Really? So just ignore that the first, second, and fifth largest oil fields on the planet are all past peak?
So, just ignore that Prudhoe Bay, the largest oil field in North America, is past peak, and monthly Alaska production is 1/3 of peak production?
I am seeing a pattern, too. It is called denial.
Greece can easily take up the slack. Along with the use of Nat gas.
Nat gas can be used to make chemicals, solvents, plastic and jet fuel
'Greece can fix it' lol
From the article:
Large? Really? Where? Because, although I am no expert, I don't see how the "large" Greece, Ireland, Mongolia, and Dakota fields he mentions, combined, can replace the production of Mexico's Cantarell field.
http://www.theoildrum.com/node/6363
If anyone wants to beat any sort of drum here, population growth is the scariest chart ever. Then consider that the majority of it was because of oil and centers around oil. Peak oil is a fact when viewed from the perspective that the world has no other viable substitute and populations in developed nations are skyrocketing. It is just a matter of time.
Of course we are in a perfect storm scenerio. Financial system is bust. The current reserve currency ponzi is coming to an end like every other one before it. The baby boomers are retiring en masse and expect the promises made to be kept (which cannot be kept). Oil production has been shifting over the last several decades - tipping the balance of trade and power, and now it seems is beginning to roll over. Demand destruction helps keep oil supply issues in check - balancing the price along with currency devaluation. But, who the hell can really divine what of many effects plays a greater role and another.
There is a quick and easy fix to every over population problem.
Once the use of NG becomes more wide spread in the US, see how quick oil prices "magically" drop to compete.
Remember, oil price isn't rising due to to any capital market fundamentals. It is only rising due to speculators. It is as false as the diamond market. Nothing "rare" about diamonds, other than the limited amount DeBeers allows into circulation every year.
oil wells and oil fields will have peak production
but world reserves are growing yearly
check opec's report and you won't find any declining anything, except for refining capacity and demand
http://www.opec.org/opec_web/static_files_project/media/downloads/public...
Sorta like dieing polar bear population explosion.......an inconvenient fact.
Couple that with the glaciers that aren't actually melting........were's Al Gore when you need him?
When you close off prime drilling sites.....production goes down......there's a freakin shock.
You are absolutely right, none of the glaciers are melting at all. Besides the fact that we had over 200 glaciers here 50 years ago and there are less than 20 now. Nope, no warming at all.
the glaciers have been melting for hundreds of thousands of years
i think they say we still technically live in the ice age, they receed and expand on a geological timeframe
astological studies show all the planets in our solar system are warming, it's not just an earth thing. it's more related to solar activity
if some could get their way and instantly turn the clock back to where glaciers were more prevalent, most of us would be living under ice right now
Ah another troll. Where in my post do I say "peak" anything. Troll harder. I live in the real world and speak from personal experience when I talk about oil and water issues. This is my contribution to ZH and the information is for all (mostly those who trade commodities - this is a trading site idiot). When producing agricultural commodities (especially near large cities- that have their own water demands) water becomes a real problem. People say, produce them furhter away, fine, then diesel becomes a problem. Many ag commodities have gotten crushed this year, partly because people sold out at the high prices last year. This does not change the need/desire to refill silos. Personally I see more local producers doing well this year. No so much for the larger operations.
Do you have any real information to add? My guess is no, again, troll harder.
" Where in my post do I say "peak" anything."
Why you g-ddamned disingenuous slob. You've been all over this blog for months spreading the Peak Oil lie. Who do you think you are kidding? Weak attempts at scoring debating points do not cut it at ZH. Go back to the Oil Drum, bozo.
Links? Thanks for revealing your true intellect.
No real work to do after all we see.
It's the response you deserve. You're a disingenous slob.
Will you please shut the everloving fuck up. Don't you have some kids to go tell to get off your fucking lawn or something?
We value intelligence, not cheap shots. Some food for thought below, to build a stronger and clearer mind. May the force be with you. Don't be crushed. Smart, rich, and influential people know the truth, are concerned, and have spoken.
Energy tsunami coming, ex-policymakers warn - USATODAY.com
A bipartisan group of 27 elder statesmen is sending an open letter to both presidential candidates and every member of Congress saying the country faces "a long-term energy crisis" that threatens the security and prosperity of future generations if swift action isn't taken.
The group includes Henry Kissinger, Colin Powell and six other former secretaries of state or defense, former senators of both parties and a half dozen former senior White House advisers and other Cabinet officers for both Republican and Democratic presidents.
"There's an energy tsunami coming, and when you see it coming you better get on top of the wave, or you're going to get crushed by it," he said in an interview.
No-Growth Capitalism’s post-crash manifesto - Paul B. Farrell - MarketWatch
Yes, capitalism is wrecking the planet … is using up resources … creating poverty, starvation, disease … epidemics, inequality, climate failure … and yes, warfare … remember the Pentagon prediction that by 2020, the planet’s “carrying capacity” will be so drastically compromised that they’re already planning military defense systems for the coming “all-out wars over food, water, and energy supplies.” Yes, by 2020.
http://www.usatoday.com/life/movies/news/2010-09-24-laboeuf24_CV_N.htm
"We'll be the first generation that has less to look forward to than the generation that preceded us," he says. "Game over. Our biggest export is consumption, and now we no longer have money to consume. Contagion is coming. People think we can't have soup kitchens here again? It's going to get rough."
All I got in response from the dark side was a down arrow, and no rant. I feel so left out.
When that's all they have, that's all you'll get.
IE a downtick with no response is worth two upticks, which means you have to finish your whole beer or do two shots of Bushmills
Capitalism/greed can't survive without consumers.
ZH has really turned doom and gloom, recently.
Are you ALL "short" the market? LOL
I have an increasingly short position on overprivileged narcissistic fucktards who think it is their god-given right to take whatever they want, shit in the punchbowl, and get rescued from their stupidity by their imaginary friends, Mr. Market and Mr. Technology.
Supposing there were a way to take care of the energy issue, regardless of actual technology/physics/etc., which are irrelevant for my point, IF that solution or technology is not necessarily of such nature as to REQUIRE centralized control as facilitating centralized social control systems, such as money/wealth, it will NOT be funded by any entity operating within the pyramidal system. No-one in a position of power, or anyone who seeks power, will have any desire for the dissemination of any technology that eliminates scarcity. IF free/ridiculously cheap and decentralized energy/material sources could be found or created they would be visciously oppressed as they would mean the end of the entire societal structure as it stands, although generally only the crap parts. No solution will be 'found' at this point, because any solution of sufficient magnitude means the end of both slavery and the useless over-class.
...Stockholm syndrome
Peak oil is as much a lie as gravity.
Disbelief won't prevent either from crushing you if you're not careful.
I don't understand how if you're a bicycle repairman - your little heart should go pitter-patter over peak oil.
Learn the farrier trade and your in like Flynn! Not to mention the real inconvenience called science, pointing to resource scarcity. Just Sayin'
The undrilled places have low EROI, and fraking has low EROI, so they are only profitable above $100/barrel. Fraking does use up a lot of water, NatGas is useless compared to light crude without a compeletely new infrastructure, and global warming is the least of our problems. Got it?
Anyone who attempts to argue against peak oil is 1. Brain-washed 2. Brain-dead 3. Both
Everyone of your points has been debunked here endlessly. You look like a newbee. Still around and get educated.
Must be why oil is so cheap then, Links to peer-reviewed facts?
Nat gas is under $3. That will bring down crude
How can you talk with someone who has been effectively rebutted numerous times and still pops up aking the same questions?
You keep talking about having "debunked" and "rebutted" the "Peak Oil Myth" many times but have yet to see you post a link.
And really, if you couldn't hold your own at The Oil Drum I doubt you have any kind of convincing evidence.
As far as arguing at the "Oil Drum" goes. Making an argument based on lies is a syllogism. There's plenty of that going on there. It is mental masturbation and a waste of time. And, frankly, I don't care if the people at the "Oil Drum" wallow in ignorance.
As far as posting a link goes, these discussions have already taken place here. You are a complete noob. The onus is on you to get educated. If you don't, I don't care.
If you truly don't care, then, to further the point I made above, will you kindly shut the fuck up?
We, especially you, don't know shit about energy.
Read : The botomless well.
And stop looking for unicorns.
I don't know everything about energy, but the subtitle of that book is "We will never run out of energy" so it sounds like the unicorns have already been found, unless he was talking about the sun... but i doubt it.
It's true, we'll never run out.
http://thechive.com/2012/03/22/free-electricity-for-the-rest-of-your-life-you-say-video/
/sarc necessary?
Let's hope not.
+1MM on The Bottomless Well
I'm pretty sure TSHTF will preclude any threat from Peak Oil, whether it ends up being true or not. Cannibalism has a way of trumping filling up the gas tank, ya dig?
99% of TSHTF scenarios are energy related.
Solar flares, no. Pretty much every other SHTF scenario can be traced back to energy use.
I'd have thought that Solar Flares would be the ULTIMATE energy use SHTF scenario :-)
Overall, the discoveries and fields coming online are at best keeping the first derivative of oil availability around 0 for a while, but the second derivative is definitely negative at this point. They are deeper, in more inaccessible areas, and generally far more speculative, even given significant advances in oil extraction technology. Once we start getting into TSHTF territory (and there's a lot of evidence that we're well on our way) the available capital for new production declines fairly precipitously. Then it becomes an infrastructure issue - refineries go longer and longer without renovation until they have to be decommissioned even as there is less money to build new refineries, ships sitting idle rust out or get scrapped, pipelines spring leaks and lose pressure. It ends up costing more each year just to keep even, so even if there is more oil being extracted (there isn't) the processing infrastructure is becoming obsolescent.
The fundamental flaw of the OP is that he's determined to make inflation the culprit here (through money printing). If the money was actually making its way out of the banks and into the economy, he'd have a point, but it's not, at least not yet. Right now all that's happening is that banks are moving around IOUs, and trying to position themselves when the SHTF. The arguments that there are shortages rather misses the point - this isn't an issue of a sudden supply disruption, but rather a gradual supply diminishment, combined with deteriorating infrastructure, not just in the US but globally. There are in fact localized gluts, but they are eddys, places where the pipelines are going in the wrong directions or not getting into the system. Releasing new oil from the SPR won't help, because the network is congested - it can't get to where it needs to go fast enough to make much difference, and in fact will only end up tying up holding tanks that can't support the volume. Because these are generally across private networks held by people who are trying to both keep the infrastructure going and eke a profit, massive new infrastructures aren't going to happen any time sooner either.
I believe this will be proved the next time we have a major hurricane in the Gulf. Then there will be supply disruptions that take much longer to recover from than they have in the past, and that will affect far wider regions of the country. It won't be "directly" due to Peak Oil, but peak oil means that oil companies are increasingly going to be stretched in both recovering and processing the oil.
Demand dropped precipitously after 2008 as global economies all froze, but oil prices remained in the upper 70s and 80s through most of 2009, and have been in the 90s-100s since 2011. In other words, even as global economies have slowly been recovering, the price of oil has been steadily increasing as well - albeit reset to much lower baseline of activity. This to me seems less a speculation issue than the result of a Peak Oil sawtooth trap - the economic system has been damaged globally and has not fully "recovered", meaning that economic activity is now more like it was in 2002 than it was in 2008. However, supply has also peaked, demand met it late in 2009, and it's actually been tracking pretty closely ever since. Of course, that implies that given the prices involved, the next crisis will end up with us at any even lower level of activity ... hmmm.
Bicycle, unlike that ol' saying that goes up here on the surface, when it comes to fracking: what goes down, must come up.
If these companies are really interested in garnering the trust of the people whose land they are drilling under from miles away, an excellent place to start would be to disclose a full list of the ingredients that make up the supposedly benign 'stuff' they pump into the ground to split it apart.
'Proprietary' indeud.
"Frack babies", an excellent appellation for proponents of repugnant combustification.
OK, here's the plan:
(1) Buy up mineral rights from the desperate folks who have lost their jobs and otherwise seen their home values disappear;
(2) Frack the shit out of the underlying ground and rock structures by pumping huge quantities of the most toxic cocktail of chemicals imaginable into the ground;
(3) Permanently and irreversibly contaminate all groundwater supplies for miles in all directions from each fracking well;
(4) When anybody bitches about the water coming out of their faucets catching on fire, and their hair falling out, explain to them that it is a natural phenomenon only coincidentally related to the nearby fracking activity;
(5) If that doesn't convince somebody, tell them to prove that any particular gas well owned by any particular company polluted their water well;
(6) Go to Congress and lobby for a law exempting fracking activity from all federal regulation. No...wait...scratch that one...it's already been done.
(7) Run commericails in prime time explaining that fracking is a novel, safe, and non-polluting technique that will provide energy independence for America;
(7) Get rid of the toxic shit in your effluent pools by misting it into the air on sunny or windy days, and channelling it into nearby streams in the middle of the night;
(8) Sell natural gas and its by-products, keep all the money for yourself, and shift the clean-up costs, and the costs inherent in making huge parcels of American lands uninhabitable except via trucking in clean water, to the taxpayers.
(9) Suck all the money out of the dummy corporations actually doing the fracking and then shut them down before anybody actually wakes up and files suit.
(10) Form new dummy corporations to frack the shit out of the ground somewhere else in the USA.
This should work really well for us until folks have to start trucking in water from 500 miles away.
I'm sorry. I'd like to believe you and empathize with this madness but, you see, a nameless, faceless "Bicycle Repairman" told me all your points were "debunked" countless times and it's time to stop thinking. So... you know...there's that.
Never seen you here before either. So what do you know about anything?
BTW the name is Repairman, Bicycle Repairman.
You're a democrat, aren't you? LOL
http://theeconomiccollapseblog.com/archives/saudi-arabia-and-china-team-...
Saudi Arabia And China Team Up To Build A Gigantic New Oil Refinery - Is This The Beginning Of The End For The Petrodollar?The largest oil exporter in the Middle East has teamed up with the second largest consumer of oil in the world (China) to build a gigantic new oil refinery and the mainstream media in the United States has barely even noticed it. This mammoth new refinery is scheduled to be fully operational in the Red Sea port city of Yanbu by 2014. Over the past several years, China has sought to aggressively expand trade with Saudi Arabia, and China now actually imports more oil from Saudi Arabia than the United States does. In February, China imported 1.39 million barrels of oil per day from Saudi Arabia. That was 39 percent higher than last February. So why is this important? Well, back in 1973 the United States and Saudi Arabia agreed that all oil sold by Saudi Arabia would be denominated in U.S. dollars. This petrodollar system was adopted by almost the entire world and it has had great benefits for the U.S. economy. But if China becomes Saudi Arabia's most important trading partner, then why should Saudi Arabia continue to only sell oil in U.S. dollars? And if the petrodollar system collapses, what is that going to mean for the U.S. economy?
And another chokepoint in a very unfree market falls.
"then why should Saudi Arabia continue to only sell oil in U.S. dollar?"
Military hardware and protection for the royal "family" (untill a better offer comes along)
flag as a bingo (1)
There is no doubt that currently (at least) the Saudi royal family exists at the sufferance of the U.S. military.
Of course, China also has a big interest in selling munitions, tanks, aircraft, etc., and may very well offer a sweetheart deal there. Most people tend to forget that Osama Bin Laden was a Saudi Prince. The king and his successor are both well into their 80s (succession is formally brother to brother, not father/son, but given the political climate, any transition represents a potential weak point for the House of Saud). All of this means that Saudi Arabia could very well decide that US "protection" is a bigger liability than it's worth. When that happens, the dominos will fall FAST.
You think China won't protect their investment in that refinery? Or that they can't easily raise a 10 million man army?
The Fed will call for war and then it will be war's fault.
A tragic boating accident with oil this time... oh wait
KBH new orders for homes down 8% fucking ouch
Let me add the following for consideration;
The petro-dollar and American consumption are becoming less relevant every day. Once you understand that, the "liberation" and "wars" in the middle East make a lot more sense.
Before we end the Fed, we need a very extensive and complete audit of the Federal Reserve. Where did all the money go and who/what corporations are on the other side of all those interest payments? If none of the Fed's actions are criminal, then these entities should have no fucking problem being exposed to the world.
Hedge accordingly.
EXACTLY! Proponents of big brother spy operations always claim "if you have nothing to hide, you have nothing to fear." Except the contents of my phone calls with friends and relatives, my emails, and my web history do not, in any manner, affect the rest of society.
The Federal Reserve wants to maintain its coercive monopoly on the creation of the medium of exchange, with no oversight and that is somehow ok? The consequences of depreciatiating the purchasing power of the money is felt by all who are forced to use FRN's. If they have nothing to hide, they have nothing to fear!
M1 is up 18.2% Y/o/Y and M2 is up 9.9% Y/o/Y
http://www.federalreserve.gov/releases/h6/current/
Not helping with our buying power.
Like all predictions about future economic events, based on some sort of "cause/effect" speculation, the article is useless. For all we know, WTI could be $75/bbl by June, or not.
In other respects, the analysis is informative, providing good supporting links.
It's capitalism...
Excellent article. Of course commodities will be the first place to find evidence of inflation. Oil would be the first place because unlike gold, oil cannot be manipulated by the inner elite cabal. Oil shows the effects first, then food, then manufactured goods. When wages start rising then inflation will have gained its momentum. The 'Nanke is mumbling about inflation now, but still committed to ZIRP. The Fed's reaction/time lag seems to be about six-eight months behind developments. Fun!
"When wages start rising then inflation will have gained its momentum"
Umm, US wages in real terms have been falling since the 70's. Wage inflation can cause price inflation, but that's not currently why you pay 10% more for a 30% smaller box of cereal.
Now if you meant GLOBAL wages - spot on, but those have been rising already. Hence all the food inflation we are experiencing currently. Going from $1 to $2 a day ain't much, but there are a lot of people in china that want the rest of the chicken, not just the feet.
That whole wage inflation causes price inflation crap pisses me off, since it is completely misleading.
Plus, the US has currently has excess capacity in terms of labor. People are still more concerned about losing their job, not getting a raise.
Best bet, buy some long term storage food while it's still relatively cheap.
Canned food is the best commodity play that J6P can make right now. Even with out a TEOTWAWKI event, rampant food inflation makes it a no brainer.
Do you have a recipe for chicken feet soup? I might need it soon.
Dim Sum style!
http://www.myseveralworlds.com/2007/01/24/dim-sum-style-chicken-feet/
Mess nonster: That's where your theory falls apart and what makes this time different than others. There is NO method for American wage inflation right now whatsoever. Global wage arbitrage effectively squashes any way to pass on this inflation to the American wage. Nope, we get hyperbiflation.
+100
Not sure 140 million tons is 'massive' but we can safely say, should it get developed, it will be consumed regionally --Eurasia.
'The dollar is being thoroughly squashed. Why is this not showing in the dollar forex index? The dollar index is yet another example of a useless market indicator, being that it measures dollar value relative to a basket of world fiat currencies, ALL of which also happen to be in decline.'
That is quite the meme you got there fella... ALL currencies must be discredited because the petro$ is now under pressure. An all out media driven attack on the euro and even the commodity currencies isn't exactly 'proof'.
We've got ample oil available, but Ben printed way too many dollars so now you pay out the ass, even though WE dont have any more of the dollars ourselves. Damn aint central banking great!
Good luck telling the sheep that. Whenever I tell anyone the REAL reason why their gas and food is expensive they look at me as if I just cut a loud wet fart in their vicinity.
Yea and when some moron looks at you funny for telling the truth I tell them 'Hey have fun starving to death pretty soon idiot' and walk away.
The sheeple are irrelevant, dont waste your time with them, they'll assimilate you.
As with anything. flood the market with it and it gets cheaper.
Same with the dollar. Print up a whack of doolars and it gets cheaper.
Devalued. Require more of it to buy things.
This is known as devalued currency induced cost push inflation.
When you need more dollars to buy something - means that the manufacturer/supplier has got to spend more to get it to you.
Simple. Oh, and by the way, thats why gold and silver prices are crushed by the powers that be. They don't want higher PM prices casting aspursions on their con game!
Well, ALL their little 'appearances games' are about over because when people cant buy food it doesnt matter what the perceived reason for it is, theyre just pissed.
However, 'appearances games' do influence the target of all that righteous rage.
Who caused all this? Demopublicrats, Banksters, Communists, Witches, Terra'st? Whoever gets branded with the popular epithet is likely to suffer.
precisely, unfortunately it is a lot harder to print up a bunch of commodities and flood the market.
it's the speculators. save a unicorn, buy a volt.
/sarc
Crash JPM: Ride a bike and buy physical silver.
i think that the oil price is so high, mostly because of speculation from the financial industry, the money making bussines.
and printing trillions of lollars and euros and punping them into ths system, will create more speculative capital and will cause an even higher oil price.
there are probably other factors influencing the price of oil, but speculation is the most important.
the samen goes for food by the way.
It isn't speculation, It is investors trying to convert their fiat money into something that central banks can not print. Oil is trading more like a currency now instead of a commidity. Once you understand that, you understand it takes more of our devalued dollars to convert into oil.
I don't see how fat fingers on the keyboard can turn dollars into lollars but you may have coined a new word for fiat funny money. LOL-lars.
The more Bernanke and the Fed print the higher commodities/food/oil go. A better indicator than the dollar index.
Thats why I keep daring Bernankenstein to go ahead and make good on his rumors and 'ease' more LOL go for it.
I hope he does. The next easing will be the last with oil where it's at and treasuries where they are.
This article is bull of BS. The guy starts out by saying that he wants to talk about supply. But he doesn't talk about supply. Instead he talks about demand for oil being down when he's supposed to talk about supply.
Demand for oil being down has nothing to do with supply. Supply has hovered around 74 million barrels a day for the past 6 years.
The author also does not talk about Saudi Arabia's oil export going down. People like to talk about Saudi production. But what we should be talking about is Saudi oil export. The Saudis are burning up a lot of their own oil by subsidizing their gasoline to an unbelievable price of about $1 a gallon. Russia is the world's largest oil exporter, not Saudi Arabia.
Oh, the guy also does not talk about decline in existing oil fields. We have to spend billions of dollars a year in bringing new production online just so stay even!
Peak Oil is here. Accept it. You can profit from it.
Really the argument that SA is burning more of their own oil affecting world demand / supply is preposterous. There are 27 million people roughly half of whom cannot drive. There is virtually no heavy industry other than oil pumping, the argument is relevant only if you discount the numbers..
Does anyone here happen to have the numbers on domestic consumption ?
Roughly 18 million barrels per day.
Global production (extraction) has never exceeded 85 million barrels per day and it's maximum extraction rate was in 2006.
domestic consumption of Saudi Arabia ?
Saudi oil consumption trends
http://www.theoildrum.com/node/7767
Look at this graph
http://www.theoildrum.com/files/Saudi_Arabia_oil.png
Interesting cheers !
I guess you haven't seen the graphs of internal usage superimposed on Export quantity.
But it's easier to make your point not having seen the actual data.
Doubt that you will, but if you look it up, take a look at Mexico's graphs of the same subject. Same results.
Less oil on the market to export.
So when I turn off the faucet in the kitchen, does that mean we have reached "peak water", or does it mean that my demand for water has been sated?
Falling demand causes people to produce less. This is the most basic principle of economics. But the peak oilers don't get it. They don't bother to look at the price of oil in terms of gold, which shows that the price of oil is BELOW AVERAGE. It is just that the DOLLAR has fallen.
Texas oil productoin (extraction) peaked in 1973. Is that when oil demand stopped or when they just decided they had enough money?
Hmm, what happened just one year prior in the US?
http://en.wikipedia.org/wiki/Clean_water_act
Cursed regulations. I mean look how well the free-for-all 'dilution is the solution' meme worked out for the great lakes... but that is totally out of context, I know.
So: great point, I guess.
1. Ghawar SA - Decline
2 Bergen Kuwait - Decline
3 Canterell Mexico Decline...
We are past Peak. Period End of story.
No amount of new discoveries can mathematically make up for the 3 above going into decline.
CON ... U ... N ... DRUM
'nuff said
So we don't need to worry about oil because the short-term demand picture hasn't been horrible (never mind that on the longer run people fuck faster than we can find oil and get it out of the ground). If only we could have a global depression all the time, our oil problems would be solved for....well....ever so slightly longer than now.
This is some incredibly poor analysis. Oil is still a dead-end resource that the world depends on for food (call it anti-riot grub, if it helps), plastics, and dipshits in SUVs who whine about how shitty their chosen vehicle performs every time gas approaches a non-subsidized price in the US.
We need to change and soon. Sticking our heads in the tarsands now will cost us dearly within a couple generations.
This may be true, but what shall the change be. Since there is NOTHING (besides the ever toxic nuclear) that delivers the power the petroleum products delivers the only solution is for people to stop moving around. Only live in places where you can walk to what you need, or ride a bike to, or a pedal car or horse and carriage. Then of course, we need to have everyone that lives far out move back to the cities, unless they can produce their own food and take care of themselves medically, etc. Then, of course, we'll have to figure out how to get food and supplies to people out of the major seaports. Then, we'll need to find a way to alternately fuel our power plants, lest we go back to candles and oil lamps (would you allow those?).
There is plenty of oil to carry the world UNTIL a true alternative source is devised, or better sun panels etc. But, those things don't exist now.
It's less about people being forced to ride efficient animals for short trips and more about everyone riding an Ox today driving a Hummer tomorrow, mathematically speaking.
If you think the global traffic in goods consists solely of necessary medical supplies and off-season veg, you're playing Yahtzee with two dice; take a look at what portion of any big-box store is consumed by useful supplies (stuff you would hurt to go without) and what portion is discretionary plastic crap...assume approximately the same ratio comes to the US by boat in aggregate.
I didn't say "stop using oil". I said "you better have another plan before you need it" because the infrastructure for whatever that might be won't magically appear overnight. Thorium, fusion, orbital solar with energy beamed back to collectors on Earth...doesn't matter...they will all take time to roll out. The same is true of adaptation to a lifestyle that is less ravenously dependent on (frankly sometimes stupid) energy consumption. Moving towards more local generation and self-sustained economies for food supply seems a wise move, but we wouldn't want the globalists to get hurt so we better not.
In a sense, I think we vehemently agree, at least in part.