Insider
by
Gregor Macdonald
Executive Summary
- Peak Oil is a multifactorial concept
- Why the IEA forecasts aren't credible
- Why the data shows Peak Oil is alive & well
- Where oil prices will head in 2013
If you have not yet read A Tale of Two Forecasts, available free to all readers, please click here to read it first.
The U.S. is currently experiencing its second oil production recovery since 1971, when its supply peaked over 9.5 mbpd.
The first recovery took place over a nine-year period from 1976-1985. That renaissance took U.S. production back up from a low of 8.0 mbpd to nearly 9.0 mbpd. And then, over the next twenty years, U.S. production would fall steadily to its recent nadir of 5 mbpd in 2008. Over the past four years (owing to onshore production in North Dakota and Texas), the U.S. has built back an impressive 1.5 mbpd and is currently producing over 6.5 mbpd of crude oil.
Before we get to the IEA Paris forecast for the future U.S. production, let's take a look at our own Energy Information Administration (EIA) Washington forecast. The IEA Paris forecast is more difficult to understand, as it conflates oil and natural gas liquids. By contrast, the EIA Washington forecast is more specifically focused on oil production, which is easier to compare to U.S. production history. (Remember: Natural gas liquids (NGLs) are not oil. More importantly, they do not contain the same energy as oil. A barrel of oil contains 6 GJ (gigajoules) of energy, but a barrel of NGL contains just 4 GJ.)
Here is the forecast to 2040, from the EIA's (Washington) recent Annual Energy Outlook:
Dissecting the Energy “Boom” Story
PREVIEW by Gregor MacdonaldExecutive Summary
- Peak Oil is a multifactorial concept
- Why the IEA forecasts aren't credible
- Why the data shows Peak Oil is alive & well
- Where oil prices will head in 2013
If you have not yet read A Tale of Two Forecasts, available free to all readers, please click here to read it first.
The U.S. is currently experiencing its second oil production recovery since 1971, when its supply peaked over 9.5 mbpd.
The first recovery took place over a nine-year period from 1976-1985. That renaissance took U.S. production back up from a low of 8.0 mbpd to nearly 9.0 mbpd. And then, over the next twenty years, U.S. production would fall steadily to its recent nadir of 5 mbpd in 2008. Over the past four years (owing to onshore production in North Dakota and Texas), the U.S. has built back an impressive 1.5 mbpd and is currently producing over 6.5 mbpd of crude oil.
Before we get to the IEA Paris forecast for the future U.S. production, let's take a look at our own Energy Information Administration (EIA) Washington forecast. The IEA Paris forecast is more difficult to understand, as it conflates oil and natural gas liquids. By contrast, the EIA Washington forecast is more specifically focused on oil production, which is easier to compare to U.S. production history. (Remember: Natural gas liquids (NGLs) are not oil. More importantly, they do not contain the same energy as oil. A barrel of oil contains 6 GJ (gigajoules) of energy, but a barrel of NGL contains just 4 GJ.)
Here is the forecast to 2040, from the EIA's (Washington) recent Annual Energy Outlook:
by
Chris Martenson
Executive Summary
- Don't bet against gold, especially right now
- Collective thinking and shifting baselines are putting us in great danger of a surprise we're not prepared for
- When the next disruptive event happens, it will happen faster than the system can react
- Where I recommend allocating capital right now
If you have not yet read QE 4: Folks This Ain't Normal, available free to all readers, please click here to read it first.
My Thoughts on Gold
Bluntly, anybody selling their gold here does not understand what is happening. These are the most extraordinary and unique times that anybody has witnessed because the entire world is engaged in an attempt to print our way to prosperity.
Maybe that will come to pass, but the odds very much do not favor that outcome. It's never worked before, and I really have not yet seen any articulate description of why it might work this time. From a betting perspective, it's like facing a roulette wheel where every slot is black except for that solitary green bin. People selling gold here are placing their chips on green.
But I don't really think that gold's current market price or recent behaviors have anything useful to do with gold's value here. As I noted in a recent Insider, in the run up to the QE4 announcement and then in the days right after, some entity has been selling literally thousands and thousands of gold contracts into the thinly traded overnight markets so rapidly that we have to use millisecond charting to see it for what it is. Again, there is no other legitimate explanation for this activity of which I am aware besides having an intent of pushing the price down.
Whether there is some motivation for this activity besides 'making money,' I remain convinced that the gold market, like many others, is no longer sending useful price signals. Instead it is telling us that some entity has found it useful to sell thousands of gold contracts all at once.
The interesting part of this story is that this has been the most sustained, intensive, and yet ineffective gold-selling that I have yet seen. In the past, such bear raids, as they are called, would have resulted in a sharply lower gold price. Right now, that has not yet really happened.
I am wondering if a big up move is not right around the corner for gold. I can tell you that if even one fourth of the recent QE effort was announced five years ago, markets would have exploded and gold would have absolutely launched…
It’s Better to Be a Year Early Than a Day Late
PREVIEW by Chris MartensonExecutive Summary
- Don't bet against gold, especially right now
- Collective thinking and shifting baselines are putting us in great danger of a surprise we're not prepared for
- When the next disruptive event happens, it will happen faster than the system can react
- Where I recommend allocating capital right now
If you have not yet read QE 4: Folks This Ain't Normal, available free to all readers, please click here to read it first.
My Thoughts on Gold
Bluntly, anybody selling their gold here does not understand what is happening. These are the most extraordinary and unique times that anybody has witnessed because the entire world is engaged in an attempt to print our way to prosperity.
Maybe that will come to pass, but the odds very much do not favor that outcome. It's never worked before, and I really have not yet seen any articulate description of why it might work this time. From a betting perspective, it's like facing a roulette wheel where every slot is black except for that solitary green bin. People selling gold here are placing their chips on green.
But I don't really think that gold's current market price or recent behaviors have anything useful to do with gold's value here. As I noted in a recent Insider, in the run up to the QE4 announcement and then in the days right after, some entity has been selling literally thousands and thousands of gold contracts into the thinly traded overnight markets so rapidly that we have to use millisecond charting to see it for what it is. Again, there is no other legitimate explanation for this activity of which I am aware besides having an intent of pushing the price down.
Whether there is some motivation for this activity besides 'making money,' I remain convinced that the gold market, like many others, is no longer sending useful price signals. Instead it is telling us that some entity has found it useful to sell thousands of gold contracts all at once.
The interesting part of this story is that this has been the most sustained, intensive, and yet ineffective gold-selling that I have yet seen. In the past, such bear raids, as they are called, would have resulted in a sharply lower gold price. Right now, that has not yet really happened.
I am wondering if a big up move is not right around the corner for gold. I can tell you that if even one fourth of the recent QE effort was announced five years ago, markets would have exploded and gold would have absolutely launched…
by
charleshughsmith
Executive Summary
- Why the momentum for household formation is still downwards, despite the gains in recent years
- Why "rental price fatigue" is putting today's increasingly rosy housing valuations at jeopardy
- Why the fiscal and monetary stimulus that has boosted the housing market in recent years cannot continue further
- How housing may turn from the “can’t lose” investment into an anchor of debt and a “now I can’t move to a better job” debacle
If you have not yet read Real Estate: Is the Bottom In, or Is This a Head-Fake?, available free to all readers, please click here to read it first.
In Part I, we reviewed the fundamentals that have been pushing housing prices higher in 2012. Many of these forces are the result of explicit real estate-supportive Federal and Federal Reserve policies, while others, such as restricting the number of defaulted properties on the market, are implicit policies of the financial cartel that has much to gain from a recovery in housing.
What, if anything, could derail this manufactured housing recovery?
Before we get to specifics, we should start by discussing unintended consequences. What happens when politically expedient policies are imposed with a simplistic goal?
Exhibit #1 is the Federal Reserve policy of lowering interest rates and increasing liquidity to boost “risk assets” such as stocks. This had the unintended consequence of inflating a stock bubble that burst with painful consequences in 2000-02.
Like all central-planning agencies, the Fed followed this policy error by doing more of what had failed: It lowered rates even more, enabling an unprecedented bubble in housing, which subsequently burst in 2007-08 with even more devastating consequences, as that implosion nearly took down the global financial system.
With FHA having replaced the bankrupt Fannie Mae and Freddie Mac agencies as the mortgage-guarantor of last resort, the Federal government has also doubled down on the failed subsidies that enabled the housing bubble.
What are the unintended consequences of pushing investors into the “crowded trade” of rental housing? If we answer this, we will be closer to understanding whether housing has bottomed or not.
Let’s start by reviewing the fundamentals of supply and demand that influence housing and rentals.
Forecasting the Future of Rental Housing and Home Valuations
PREVIEW by charleshughsmithExecutive Summary
- Why the momentum for household formation is still downwards, despite the gains in recent years
- Why "rental price fatigue" is putting today's increasingly rosy housing valuations at jeopardy
- Why the fiscal and monetary stimulus that has boosted the housing market in recent years cannot continue further
- How housing may turn from the “can’t lose” investment into an anchor of debt and a “now I can’t move to a better job” debacle
If you have not yet read Real Estate: Is the Bottom In, or Is This a Head-Fake?, available free to all readers, please click here to read it first.
In Part I, we reviewed the fundamentals that have been pushing housing prices higher in 2012. Many of these forces are the result of explicit real estate-supportive Federal and Federal Reserve policies, while others, such as restricting the number of defaulted properties on the market, are implicit policies of the financial cartel that has much to gain from a recovery in housing.
What, if anything, could derail this manufactured housing recovery?
Before we get to specifics, we should start by discussing unintended consequences. What happens when politically expedient policies are imposed with a simplistic goal?
Exhibit #1 is the Federal Reserve policy of lowering interest rates and increasing liquidity to boost “risk assets” such as stocks. This had the unintended consequence of inflating a stock bubble that burst with painful consequences in 2000-02.
Like all central-planning agencies, the Fed followed this policy error by doing more of what had failed: It lowered rates even more, enabling an unprecedented bubble in housing, which subsequently burst in 2007-08 with even more devastating consequences, as that implosion nearly took down the global financial system.
With FHA having replaced the bankrupt Fannie Mae and Freddie Mac agencies as the mortgage-guarantor of last resort, the Federal government has also doubled down on the failed subsidies that enabled the housing bubble.
What are the unintended consequences of pushing investors into the “crowded trade” of rental housing? If we answer this, we will be closer to understanding whether housing has bottomed or not.
Let’s start by reviewing the fundamentals of supply and demand that influence housing and rentals.
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