I happen to be in Madrid, Spain at the moment, and I have a few observations. I wandered extensively this morning and noted that Madrid is just the same as any other big city – no surprise there – with crowded streets, a lack of parking, and cars everywhere. While I was envious of all the small cars, especially those with diesel engines (not available in the US, for some strange reason) that probably get close to 60 mpg without involving the massive technology of a hybrid, I only noted a single bicyclist braving the traffic flows.
by
Gregor Macdonald
How To Position For the Next Great Oil Squeeze
by Gregor Macdonald, contributing editor
Monday, November 14, 2011
Executive Summary
- Why smaller, independent oil companies should thrive as America struggles to increase domestic supply
- A breakdown of often-touted ‘new sources of domestic supply’ (shale oil, kerogen, offshore fields, other Western Hemisphere finds) and why they won’t come close to meeting US demand needs
- How to hedge against the next great oil price spike
- The wisdom of adopting a slower-based oil consumption lifestyle now
Part I – Selling the Oil Illusion, American Style
If you have not yet read Part I, available free to all readers, please click here to read it first.
Part II – How To Position For the Next Great Oil Squeeze
Using the latest data from EIA Washington, I made the following chart of actual imports of crude oil against production. This is a simple and direct accounting of what can become a rather complex topic filled with obfuscation and bad math. For example, by counting biofuels, ethanol, natural gas liquids, and the use of our own natural gas inputs to refine crude oil into gasoline, you can produce rather misleading accounts of net imports, such as this piece from EIA Washington titled How Dependent Are We on Foreign Oil?
Just so that we are very clear on the facts, natural gas liquids (NGLs) contain only 65% of the btu of oil, and, of course, they are not oil. As Jeff Rubin likes to say, “NGLs can go straight to your butane cigarette lighter, not your automobile.” But by adding NGLs and ethanol to “oil supply,” we can delude ourselves into thinking that the US produces not 5.596 mbpd of crude oil, but rather 10.037 mbpd of liquids.
Despite any legitimate conversation we could have about the usefulness of various energy resources, it would be silly to say (for example) that “we need not worry about expensive oil and its effect on the economy, because we can just switch to ethanol.” The vastly smaller btu content of biofuel feedstock makes its inclusion in the accounting unhelpful, to say the least. As one Oil Drum commenter said to my previously cited post:
If the goal is to highlight the decline of crude oil production over time then including all other fuel sources is improper. You can’t project a future production trend of one commodity by including other commodities in the analysis.
(Source)
Yes, precisely. To that point, let’s now look at the chart.
How To Position For the Next Great Oil Squeeze
PREVIEW by Gregor MacdonaldHow To Position For the Next Great Oil Squeeze
by Gregor Macdonald, contributing editor
Monday, November 14, 2011
Executive Summary
- Why smaller, independent oil companies should thrive as America struggles to increase domestic supply
- A breakdown of often-touted ‘new sources of domestic supply’ (shale oil, kerogen, offshore fields, other Western Hemisphere finds) and why they won’t come close to meeting US demand needs
- How to hedge against the next great oil price spike
- The wisdom of adopting a slower-based oil consumption lifestyle now
Part I – Selling the Oil Illusion, American Style
If you have not yet read Part I, available free to all readers, please click here to read it first.
Part II – How To Position For the Next Great Oil Squeeze
Using the latest data from EIA Washington, I made the following chart of actual imports of crude oil against production. This is a simple and direct accounting of what can become a rather complex topic filled with obfuscation and bad math. For example, by counting biofuels, ethanol, natural gas liquids, and the use of our own natural gas inputs to refine crude oil into gasoline, you can produce rather misleading accounts of net imports, such as this piece from EIA Washington titled How Dependent Are We on Foreign Oil?
Just so that we are very clear on the facts, natural gas liquids (NGLs) contain only 65% of the btu of oil, and, of course, they are not oil. As Jeff Rubin likes to say, “NGLs can go straight to your butane cigarette lighter, not your automobile.” But by adding NGLs and ethanol to “oil supply,” we can delude ourselves into thinking that the US produces not 5.596 mbpd of crude oil, but rather 10.037 mbpd of liquids.
Despite any legitimate conversation we could have about the usefulness of various energy resources, it would be silly to say (for example) that “we need not worry about expensive oil and its effect on the economy, because we can just switch to ethanol.” The vastly smaller btu content of biofuel feedstock makes its inclusion in the accounting unhelpful, to say the least. As one Oil Drum commenter said to my previously cited post:
If the goal is to highlight the decline of crude oil production over time then including all other fuel sources is improper. You can’t project a future production trend of one commodity by including other commodities in the analysis.
(Source)
Yes, precisely. To that point, let’s now look at the chart.
by
Adam Taggart
by
Adam Taggart
The Europe Disaster
by
charleshughsmith
The Transition to a Post-Friction Economy
by Charles Hugh Smith, contributing editor
Tuesday, November 1, 2011
Executive Summary
- Entrenched interests keep our markets from being free
- We’re living in a fool’s paradise (but for how much longer?)
- The forced choices headed our way
- What the post-friction economy will look like
- 2012-2105: The Era of Transformation begins
Part I – How Much of the US Economy Is Friction
If you have not yet read Part I, available free to all readers, please click here to read it first.
Part II – The Transition to a Post-Friction Economy
In Part I, we pursued the idea that much of the US economy is, in essence, unproductive friction that is overcome with vast borrowing — itself a form of friction — and the importing of fossil fuels. We also noted that the Central State/cartel “capitalism” partnership has greatly expanded the unproductive, uncompetitive “friction” segments of the economy and has limited consumer “choice” to purposely-selected menus designed to appear like a “free market” while benefiting State fiefdoms and private-sector cartels.
Entrenched Interests Keep Our Markets From Being Free
Looking at the sources and costs of friction gives us some insight into issues that are often seen as political — for example, the costs and benefits of borrowing trillions of dollars into existence every year and the costs/benefits of State regulation. Once we recognize how rising systemic friction will eventually freeze the system, then we also recognize that the path we’re on is unsustainable, and the political “rightness” or “wrongness” of increasing debt to fund the forces of friction becomes irrelevant.
The same can be said of State regulation. Given that one of the purposes of government is to protect the nation’s “commons” — air, water, public lands, and other shared resources — then some regulation is necessary to limit exploitation and predation of the commons by either private parties or the State itself.
But we have confused productive regulation with regulation that achieves little beyond diverting funds to unproductive segments of the economy. There are hundreds, if not thousands of examples in every sector from criminal justice to farm subsidies to health care.
How about the enormous expense of the “war on drugs” and the resulting prison complex and criminal justice system? Are the benefits being reaped — marginal, or even counterproductive, in many analyses — worth the expense? Those employed in these systems naturally feel the benefits far exceed the costs. But self-interest is simply not an accurate measure of friction; ultimately, only a free market of free citizens can make that assessment.
The Transition to a Post-Friction Economy
PREVIEW by charleshughsmithThe Transition to a Post-Friction Economy
by Charles Hugh Smith, contributing editor
Tuesday, November 1, 2011
Executive Summary
- Entrenched interests keep our markets from being free
- We’re living in a fool’s paradise (but for how much longer?)
- The forced choices headed our way
- What the post-friction economy will look like
- 2012-2105: The Era of Transformation begins
Part I – How Much of the US Economy Is Friction
If you have not yet read Part I, available free to all readers, please click here to read it first.
Part II – The Transition to a Post-Friction Economy
In Part I, we pursued the idea that much of the US economy is, in essence, unproductive friction that is overcome with vast borrowing — itself a form of friction — and the importing of fossil fuels. We also noted that the Central State/cartel “capitalism” partnership has greatly expanded the unproductive, uncompetitive “friction” segments of the economy and has limited consumer “choice” to purposely-selected menus designed to appear like a “free market” while benefiting State fiefdoms and private-sector cartels.
Entrenched Interests Keep Our Markets From Being Free
Looking at the sources and costs of friction gives us some insight into issues that are often seen as political — for example, the costs and benefits of borrowing trillions of dollars into existence every year and the costs/benefits of State regulation. Once we recognize how rising systemic friction will eventually freeze the system, then we also recognize that the path we’re on is unsustainable, and the political “rightness” or “wrongness” of increasing debt to fund the forces of friction becomes irrelevant.
The same can be said of State regulation. Given that one of the purposes of government is to protect the nation’s “commons” — air, water, public lands, and other shared resources — then some regulation is necessary to limit exploitation and predation of the commons by either private parties or the State itself.
But we have confused productive regulation with regulation that achieves little beyond diverting funds to unproductive segments of the economy. There are hundreds, if not thousands of examples in every sector from criminal justice to farm subsidies to health care.
How about the enormous expense of the “war on drugs” and the resulting prison complex and criminal justice system? Are the benefits being reaped — marginal, or even counterproductive, in many analyses — worth the expense? Those employed in these systems naturally feel the benefits far exceed the costs. But self-interest is simply not an accurate measure of friction; ultimately, only a free market of free citizens can make that assessment.
The market rally in response to the European bailout of Greece seems a bit premature, if not overdone.
by
Gregor Macdonald
How the Coming Decline Will Play Out
by Gregor Macdonald, contributing editor
Thursday, October 27, 2011
Executive Summary
- Understanding The Economics Driving Energy Transition
- California Is Serving As The Canary in the Coal Mine
- Why The Middle Class is Getting So Squeezed While Corporations Are Flush With Cash
- Why America Won’t Change Course Until The Status Quo Becomes Too Painful Not To
- Predictions on How The Coming Decline Will Play Out (Until We Get Our Act Together)
Part I – The Great American False Dilemma: Austerity vs. Stimulus
If you have not yet read Part I, available free to all readers, please click here to read it first.
Part II – How The Coming Decline with Play Out
Understanding The Economics Driving Energy Transition
Robert Allen of Oxford University has done some of the best work on the Industrial Revolution but he has also helped us understand the historic energy transition from Wood to Coal, in England. Along with the work of Vaclav Smil, Allen has shown that energy transitions are long, drawn out affairs that do not comport with the faith in efficiency that defines contemporary economic theory. This chart of BTU prices shows that natural gas is being offered each day in the bargain bin to the economy, but the economy is so inextricably tied to oil (liquids) that its existing infrastructure cannot take advantage of the opportunity.
How The Coming Decline Will Play Out
PREVIEW by Gregor MacdonaldHow the Coming Decline Will Play Out
by Gregor Macdonald, contributing editor
Thursday, October 27, 2011
Executive Summary
- Understanding The Economics Driving Energy Transition
- California Is Serving As The Canary in the Coal Mine
- Why The Middle Class is Getting So Squeezed While Corporations Are Flush With Cash
- Why America Won’t Change Course Until The Status Quo Becomes Too Painful Not To
- Predictions on How The Coming Decline Will Play Out (Until We Get Our Act Together)
Part I – The Great American False Dilemma: Austerity vs. Stimulus
If you have not yet read Part I, available free to all readers, please click here to read it first.
Part II – How The Coming Decline with Play Out
Understanding The Economics Driving Energy Transition
Robert Allen of Oxford University has done some of the best work on the Industrial Revolution but he has also helped us understand the historic energy transition from Wood to Coal, in England. Along with the work of Vaclav Smil, Allen has shown that energy transitions are long, drawn out affairs that do not comport with the faith in efficiency that defines contemporary economic theory. This chart of BTU prices shows that natural gas is being offered each day in the bargain bin to the economy, but the economy is so inextricably tied to oil (liquids) that its existing infrastructure cannot take advantage of the opportunity.
by
charleshughsmith
Contributing editor Charles Hugh Smith notes that markets are at an important inflection point. The direction things take from here may likely be apparent within the next few days.
As I noted in my previous exploration of the U.S. dollar and the technical evidence for a long-term uptrend in the dollar index DXY, global markets for stocks, commodities and currencies are on a simple see-saw: On one end is the U.S. dollar, and on the other are all other major currencies, global stock markets, commodities, etc.
The U.S. stock market has been recently surging on hopes of a comprehensive settlement to the European debt/banking/euro crisis. Technically, this surge exceeds the recent trading range, and thus is seen by many traders as a valid breakout; i.e., the signal a new Bull market is underway.
This aligns with the views of many experienced technical analysts, who expect a strong rally to start from here and last into early March. The reasons many expect such a rally, despite the headwinds of global recession, are seasonal and cyclical: Stocks almost always rally strongly in Nov.-Dec., and the third year of the presidential cycle (2011) is generally positive for stocks. In addition, various timing tools and indicators can be interpreted as supportive of a major rally from this point.
A much smaller number of analysts (including Chris) see increasing probabilities of a global stock market crash.
Massive Rally or Crash?
PREVIEW by charleshughsmithContributing editor Charles Hugh Smith notes that markets are at an important inflection point. The direction things take from here may likely be apparent within the next few days.
As I noted in my previous exploration of the U.S. dollar and the technical evidence for a long-term uptrend in the dollar index DXY, global markets for stocks, commodities and currencies are on a simple see-saw: On one end is the U.S. dollar, and on the other are all other major currencies, global stock markets, commodities, etc.
The U.S. stock market has been recently surging on hopes of a comprehensive settlement to the European debt/banking/euro crisis. Technically, this surge exceeds the recent trading range, and thus is seen by many traders as a valid breakout; i.e., the signal a new Bull market is underway.
This aligns with the views of many experienced technical analysts, who expect a strong rally to start from here and last into early March. The reasons many expect such a rally, despite the headwinds of global recession, are seasonal and cyclical: Stocks almost always rally strongly in Nov.-Dec., and the third year of the presidential cycle (2011) is generally positive for stocks. In addition, various timing tools and indicators can be interpreted as supportive of a major rally from this point.
A much smaller number of analysts (including Chris) see increasing probabilities of a global stock market crash.
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