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by
Chris Martenson
Preparing for a Future Defined by Peak Oil
Wednesday, February 22, 2012
Executive Summary
- How the math shows that the Bakken will not make us “energy independent”
- Why the harsh constraints of Peak Oil are a near certainty for the US and its economic growth
- What a world impacted by Peak Oil will likely be like
- Why 2013 looks like the year Peak Oil will become globally acknowledged
- What you should be doing (with your investments and lifestyle) in advance of the full force of Peak Oil’s arrival
Part I: Dangerous Ideas
If you have not yet read Part I, available free to all readers, please click here to read it first.
Part II: Preparing for a Future Defined by Peak Oil
In Part I of this report , we discussed the odd push by some media outlets and Citibank to declare Peak Oil ‘over’ based on the exciting results coming from the Bakken shale oil play. While I, too, think the shale oil plays are exciting, and they certainly will help to mitigate the impact of Peak Oil to some extent, the idea that we can now relegate Peak Oil to the dustbin is a dangerous idea.
Since I have been asked by many of you to analyze the Bakken results, I will do so here with enough context and data to estimate its impact on future oil prices. Then we’ll cover the implications of all this on our responses and actions.
Preparing for a Future Defined by Peak Oil
PREVIEW by Chris MartensonPreparing for a Future Defined by Peak Oil
Wednesday, February 22, 2012
Executive Summary
- How the math shows that the Bakken will not make us “energy independent”
- Why the harsh constraints of Peak Oil are a near certainty for the US and its economic growth
- What a world impacted by Peak Oil will likely be like
- Why 2013 looks like the year Peak Oil will become globally acknowledged
- What you should be doing (with your investments and lifestyle) in advance of the full force of Peak Oil’s arrival
Part I: Dangerous Ideas
If you have not yet read Part I, available free to all readers, please click here to read it first.
Part II: Preparing for a Future Defined by Peak Oil
In Part I of this report , we discussed the odd push by some media outlets and Citibank to declare Peak Oil ‘over’ based on the exciting results coming from the Bakken shale oil play. While I, too, think the shale oil plays are exciting, and they certainly will help to mitigate the impact of Peak Oil to some extent, the idea that we can now relegate Peak Oil to the dustbin is a dangerous idea.
Since I have been asked by many of you to analyze the Bakken results, I will do so here with enough context and data to estimate its impact on future oil prices. Then we’ll cover the implications of all this on our responses and actions.
by
Chris Martenson
Are You Prepared for $200 Oil?
Wednesday, January 11, 2012
Executive Summary
- Higher oil prices caused by an Iran conflict could very well be the trigger for the next major economic downturn
- Where oil prices will likely go, and how quickly, if a conflict erupts in the Persian Gulf
- The prudent steps you should take now, in advance of a potential conflict
- How the financial markets will react, and likely safe havens
- Why a war with Iran will be much messier than the Iraq war
Part I: Iran: Oh, No; Not Again
If you have not yet read Part I, available free to all readers, please click here to read it first.
Part II: Are You Prepared for $200 Oil?
In Part I, we connected a few dots and made the point that Iran remains the last unconquered oil province within the last great deposit fields left on the planet. Perhaps it is coincidence that Iran now finds itself in the crosshairs, but that is unlikely. Instead, the oil treasures of the Middle East remain the last great prize, and Iran is unlucky enough to be standing in the way.
Once one understands where we are in the Peak Oil story, all of these maneuvers make sense and conform to a brutal but coherent logic: If oil supplies are dwindling as fast as the data suggests, then controlling the last, best supplies will be considered essential by every interested party.
While such speculation is interesting to engage in, there’s really nothing you or I can do to alter these events. Instead, our job is to prepare as best we can.
The larger set of world events is grinding inexorably towards a lower standard of living, with the squabbling at present really being over who eats the first sets of losses. However, the next leg of the downturn will be precipitated by some event, and a war with Iran that spikes oil prices would be a perfect catalyst.
Are You Prepared for $200 Oil?
PREVIEW by Chris MartensonAre You Prepared for $200 Oil?
Wednesday, January 11, 2012
Executive Summary
- Higher oil prices caused by an Iran conflict could very well be the trigger for the next major economic downturn
- Where oil prices will likely go, and how quickly, if a conflict erupts in the Persian Gulf
- The prudent steps you should take now, in advance of a potential conflict
- How the financial markets will react, and likely safe havens
- Why a war with Iran will be much messier than the Iraq war
Part I: Iran: Oh, No; Not Again
If you have not yet read Part I, available free to all readers, please click here to read it first.
Part II: Are You Prepared for $200 Oil?
In Part I, we connected a few dots and made the point that Iran remains the last unconquered oil province within the last great deposit fields left on the planet. Perhaps it is coincidence that Iran now finds itself in the crosshairs, but that is unlikely. Instead, the oil treasures of the Middle East remain the last great prize, and Iran is unlucky enough to be standing in the way.
Once one understands where we are in the Peak Oil story, all of these maneuvers make sense and conform to a brutal but coherent logic: If oil supplies are dwindling as fast as the data suggests, then controlling the last, best supplies will be considered essential by every interested party.
While such speculation is interesting to engage in, there’s really nothing you or I can do to alter these events. Instead, our job is to prepare as best we can.
The larger set of world events is grinding inexorably towards a lower standard of living, with the squabbling at present really being over who eats the first sets of losses. However, the next leg of the downturn will be precipitated by some event, and a war with Iran that spikes oil prices would be a perfect catalyst.
by
David Collum
[Every year, friend-of-the-site David Collum writes a detailed "Year in Review" synopsis full of keen perspective and plenty of wit. This year's is no exception. Moreover, he has graciously selected CM.com as the site where it will be published in full. It's quite longer than our usual posts, but by any measure, 2011 offered an over-abundance of 'business as unusual' developments to summarize. We hope you enjoy David's colorful observations and insights, which are very much his own. — cheers, Adam]
Background
Governments gambled on a return to growth solving all the problems. That bet has failed.
—Satyajit Das—
Every December, I write a Year in Review. Last year's was posted at several sites including Chris Martenson’s [1]. What started as summaries posted for a couple dozen people accrued over 13,000 clicks in total last year. It elicited discussions with some interesting people and several podcasts, including a particularly enjoyable one with Chris [2]. Each begins with a highly personalized survey of my efforts to get through another year of investing. This is followed by a brief update of what is now a 32-year quest for a soft landing in retirement. These details may be instructive for some casual observers. I have been a devout follower of Austrian business cycle theory since the late 1990s and have ignored the siren call for diversification. I vigilantly monitor my progress relative to standard benchmarks. The bulk of the blog describes thoughts and ideas that are on my radar. The commentary is largely stream-of-consciousness with a few selected links that might be worth a peek. Some are flagged as “must see”. Everything else can be found here [3].
2011 Year in Review: Signs of an American Spring and a Fourth Turning
by David Collum[Every year, friend-of-the-site David Collum writes a detailed "Year in Review" synopsis full of keen perspective and plenty of wit. This year's is no exception. Moreover, he has graciously selected CM.com as the site where it will be published in full. It's quite longer than our usual posts, but by any measure, 2011 offered an over-abundance of 'business as unusual' developments to summarize. We hope you enjoy David's colorful observations and insights, which are very much his own. — cheers, Adam]
Background
Governments gambled on a return to growth solving all the problems. That bet has failed.
—Satyajit Das—
Every December, I write a Year in Review. Last year's was posted at several sites including Chris Martenson’s [1]. What started as summaries posted for a couple dozen people accrued over 13,000 clicks in total last year. It elicited discussions with some interesting people and several podcasts, including a particularly enjoyable one with Chris [2]. Each begins with a highly personalized survey of my efforts to get through another year of investing. This is followed by a brief update of what is now a 32-year quest for a soft landing in retirement. These details may be instructive for some casual observers. I have been a devout follower of Austrian business cycle theory since the late 1990s and have ignored the siren call for diversification. I vigilantly monitor my progress relative to standard benchmarks. The bulk of the blog describes thoughts and ideas that are on my radar. The commentary is largely stream-of-consciousness with a few selected links that might be worth a peek. Some are flagged as “must see”. Everything else can be found here [3].
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
Chris Martenson
This week's interview is one of the most important discussions we've had to date on energy, its supply/demand dynamics, and the tremendous impact it has on our economic and social identity. It is clear now that we are staring at a future of declining output at a time when the world is demanding an ever-increasing amount.
Nate Hagens, former editor of the respected energy blog, The Oil Drum, gives a fact-packed update on where we are on the Peak Oil timeline. But interestingly, he explains how he sees the core issue as less about the actual amount of energy available to the world and more about our assumptions about how much we really need:
"We’re not really facing a shortage of energy; we’re facing a longage of expectations. And the sooner that we as individuals or a nation recognize that the future is going to see much lower consumption than today and prepare for that, psychological resilience is going to be really important, because if no one is psychologically prepared, people are going to freak out when some of these freedoms start to go away.
Nate Hagens: We’re Not Facing a Shortage of Energy, But a Longage of Expectations
by Chris Martenson
This week's interview is one of the most important discussions we've had to date on energy, its supply/demand dynamics, and the tremendous impact it has on our economic and social identity. It is clear now that we are staring at a future of declining output at a time when the world is demanding an ever-increasing amount.
Nate Hagens, former editor of the respected energy blog, The Oil Drum, gives a fact-packed update on where we are on the Peak Oil timeline. But interestingly, he explains how he sees the core issue as less about the actual amount of energy available to the world and more about our assumptions about how much we really need:
"We’re not really facing a shortage of energy; we’re facing a longage of expectations. And the sooner that we as individuals or a nation recognize that the future is going to see much lower consumption than today and prepare for that, psychological resilience is going to be really important, because if no one is psychologically prepared, people are going to freak out when some of these freedoms start to go away.
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