The U.S. Dollar and Oil: Is an Endgame Near?

I'll keep this short. As I have been writing for the past year, those American policymakers (and I include here both Bush, Paulsen, Obama, Geitner and Bernanke) who think the solution to foreign oil addiction is financial tom-foolery are locked into a failed strategy and need to read this article by Robert Fisk in the Independent.

Please read my previous instablog post, "The Big Picture", (which SA decided not to publish for whatever reason, but which predicted Tuesday's market action) for more on this issue. Not only are Americans addicted to foreign oil, but we'll soon have a currency with which is so weak we won't even be able to purchase oil (at any price). Meanwhile, we sit on an abundance of natural gas and have readily available proven natural gas vehicle technology. As Boone Pickens said on CNBC yesterday morning, this country must be stupid.

What can Americans who see this coming do? Buy gold and/or pull a Jim Rogers and move your family out of the country.

Making matters worse, at this point I think the U.S. is planning to scale back in Afghanistan and attack Iran. Who knows what yet another oil war will do to the currency and gold markets, but I think I know what will happen to the oil market.

What a mess! American energy, foreign, fiscal, and monetary policies have been, and are still, simply a disaster. But it all starts with energy policy. American refusal to acknowledge its foreign oil addiction (and the resulting economic, environmental, and national security issues) and make the transition to natural gas transportation, has led to wrong-headed foreign, fiscal, and monetary policies which are coming home to roost now that emerging economies are vying for those same strategic oil reserves. The above referenced article isn't surprising. The real question is: what took them so long?

The solution to America's problem: a strategic, long-term, comprehensive energy policy.

Comments

[realold:]

Who is CS?


On Oct 07 11:47 AM Gravity404 wrote:

> Hey Fitzy, your my go to guy on Nat Gas. How come no article on the
> very large percentage jump back to $5?? I drank the Kool Aid.
>
> The CS downgrade of DVN and CHK was a laugh. That means strong buy.
>
>
> APA getting ready to hit 100 again. And MRO strong buy on valuation.
>
>
> Obama special interest delaying the inevitable power gen conversion
> from coal to nat gas...

Oct 08 12:51 AM

[ripskii:]

Fitz: Per your comment I read your instablog article and posted a response there. Sadly I have to agree with most of your conclusions.

Oct 08 12:55 AM

[realold:]

I have to question the inclusion of Japan as a low labor cost country. If that was true, they wouldn't be building plants in the U.S.
Otherwise, I generally agree.

The last thing we need is bailouts and healthcare reforms. We are not even getting meaningful infrastructure for our bucks - like railroads, aqueducts, nuclear power plants, and things that produce wealth. IEven France is smarter than we.

Instead we spend future money on replacing perfectly good cars (the only ones less fortunate among us can afford) with jazzy new models - America in a nutshell, borrow to pay for a new car. Borrow to reward idiots for buying houses they couldn't afford and didn't need. Borrow to decrease health care quality so people who don't want health insurance can have it shoved down there throat and (mark my words) a new batch of underqualified students can enter medical school to fill the empty positions that will be created. It is endless and all the fault of the people who continue to elect idiots and egomanics with agendas.
Wake up or learn to speak Chinese in a hurry.

On Oct 07 12:21 PM Old Wizard wrote:

> Hi Fitz, I agree with T Boone, we are stupid. Our energy policy was
> muddled before and with this group it's not only muddled, it's even
> more dangerous. Look at the contradictions, we are borrowing vast
> amounts of money from the very people who would move away from our
> currency, while they use our dollars to lock up basic commodity sources
> around the world. Instead of investing in the generation of our own
> new sources, we invest large amounts in things like new batteries,
> electric cars which depend on lithium supply most of which will come
> from China and south america. On top of that, more than half of our
> battery investments are going overseas to places like china, korea
> and japan who 1] currently lead in lithium battery technology and
> manufacture and 2] generally have much less labor cost and environmental
> regulation. We talk eloquently about going to alternate energy, like
> wind and solar but set up trivial goals with no sense of urgency,
> while the chinese, indians and europeans move in these directions
> on a large scale and we do nothing to remove the kind of destructive
> environmental and legal constraints that restrict a more significant
> progress. We watch places like france and even sweden move to increase
> nuclear power while we drag our feet and then we are agnostic about
> natural gas to drive our vehicles, a resource we have now and China
> doesn't. On top of not drilling for oil here on the grounds of environmental
> purity the ex-im bank makes a 2.5b investment in Petrobras in Brazil
> to drill for oil, the very country that is part of this discussion
> to replace the dollar as the oil currency. Not having a comprehensive
> energy policy is bad enough, but borrowing money from your potential
> adversaries to invest in activities that make them stronger, while
> you do things that have negligible effect on your own economy and
> rely increasingly on war fighting power to stay afloat is really
> dangerous. Falling apart economically will lead to our demise quicker
> than losses on the battlefield.

Oct 08 01:00 AM

[realold:]

Pretty idealistic. Taxes that will be spent properly. Where have you seen that done effectively?


On Oct 07 01:03 PM Jimbo wrote:

> When I look at what might laughingly be called "energy policy" in
> the U.S. it seems like a death wish. I would exempt oil imports from
> North America and Columbia and place an import tax on oil coming
> from elsewhere (including especially our amigo of Obama, Hugo Chavez).
> The taxes would be very strictly earmarked to a publicly audited
> corporation tasked to improve all manner of alternative sources for
> energy. This program would include biofuels, natural gas, EVs, methanol,
> etc. We also need to develop DOMESTIC sources of petroleum as a bridge
> to the future. There are a great many unknowns in the energy future
> and we must be flexible.

Oct 08 01:02 AM

[realold:]

Yes, and last I heard we had plenty of uranium for power plants. What we lack is an electorate who can read between the lies (I mean lines). Try even discussing this stuff in person and you will be an instant "crazy, right-wing, racist, nazi, etc.) The country is 100% fooled by huggy fuzzy political correctness. I don't see an end to it.

On Oct 07 09:50 PM Michael Fitzsimmons wrote:

> cycling scholar: well, the problem with keeping the government out
> of it is that decades of bad energy policy has gotten us to the point
> at which no entity but the government can finance and regulate us
> back to an energy security. the only way we can solve our foreign
> oil addiction is by reducing oil (gasoline) in the transportation
> sector. the only fuel that can do this is natural gas, but we have
> the chicken-n-egg problem of NGV and CNG refueling station availability.
> the government must (via HR1835 or some piece of intelligent legislation)
> get in the game. just as the government did for the interstate highway
> system, the telegraph and telephone systems, and man-on-moon projects,
> a natural gas infrastructure will cost money up front, but the payback
> in saving will be very quick, and then it will pay dividends back
> for decades into the future.
>
> fran: i don't see how we can seperate the debt of the country from
> the energy issue. in august alone, the U.S. imported 355 million
> barrels of oil at a cost of over $25 billion dollars. that is just
> one month and oil was only in the upper $60/barrel range. and we
> have been doing this for years...decades in fact. wouldn't you agree
> that the huge trade deficits we have been running, as a result of
> our addiction to foreign oil, is responsible for the huge outflow
> of wealth from our country? further, one must factor in the pentagon's
> budget as a large part of the military complex is devoted to obtaining
> and securing this foreign oil. i agree we need to work on balancing
> the budget, but balancing the budget alone simply won't do it. we
> are heading into an era when:
>
> 1) worldwide oil supply won't keep up with demand
> 2) we will be vying for that oil with countries (china for one) that
> are much wealthier than we are.
>
> we can either stay addicted to foreign oil, and chaos will surely
> result (i fear sooner rather than later...certainly before 2020,
> and probably by 2015), or, we can be SMART, and reduce foreign oil
> imports by leveraging domestic natural gas in the transportation
> sector. it really isn't rocket science...as boone pickens says, this
> country looks more and more STUPID every day. to think energy isn't
> our BIG problem after 2008's $145/barrel oil, an oil war in iraq,
> china buying up oil supplies all over the world, the coming war in
> iran, and the huge trade deficits we've had for decades, is, well,
> with all due respect, not being very observant. however, you are
> certainly not alone, there are a bunch in washington DC who don't
> think it is a problem either.
>
> Old Wizard: i agree completely. the problem was already bad enough
> in the last century, but certainly starting off the 21st century
> with Bush's strategy of doubling the deficit in 8 years and enabling
> the Chinese to flat out own us, well, that's going to be hard to
> recover from. then enter obama, and his strategy appears to be to
> double it again and bank on "clean coal" and electric cars. what
> a friggin mess. did you read my earlier instablog "The Big Picture"
> about the Harvard/Yale plan? it's happening before our eyes at a
> much accelerated pace...
>
> Jimbo: biofuels are not the answer - not only do they use up precious
> water resources and compete with food, but why on earth do we need
> biofuels at all when the country is simply awash with enough natural
> gas to fuel not only home heating and industrial use, but also to
> replace all coal fired plants and power half the cars and trucks
> in america for the next 100 years? biofuels will never have the volume
> to do that, nor can they do it as cheaply. biofuels is simply a distraction
> to keep us addicted to dirty liquid fuels instead of transitioning
> to cleaner gaseous fuels.

Oct 08 01:07 AM

[Freya:]

You know Fitz, I think its time to light up one of my Instablogs. Let everyone see what sort of person has the Gall to Print the Following in this article:

" As Boone Pickens said on CNBC yesterday morning, this country must be stupid."

I left the Link to the TBoone Interview in your Instablog before you printed this "Article".

HTL saw the Video and concurs with my opinion. You are Lying.

TBoone also said that the Correct Energy Policy would be to Replace The 6.5 Million Trucks on the road with CNG Engines as they Were Replaced.

"Obama will be the First President to Reduce OPEC Oil Imports by 50%". This is a TBoone Quote.

Can you Possibly Publish somehing that doesn't require the Involvement of Lying about something?

Oct 08 05:36 AM

[Freya:]

Old Wizard:

"Hi Fitz, I agree with T Boone, we are stupid."

Anyone who had any doubt that you are just "Mirror" of Michael Fitzsimmons, should realize that with that comment, you have identified yourself.

Oct 08 05:51 AM

[Freya:]

Boaz: This is the second time I've given a Thumbs Down to MF's comments today. I must be in Iran. They take care of their own.

Oct 08 07:47 AM

[Gravity404:]

Credit Suisse


On Oct 08 12:51 AM realold wrote:

> Who is CS?

Oct 08 09:59 AM

[Responsibility:]

There are so many angry words directed at various things. Could it be that there are many things that need to change?

The facts seem to be reflected in words such as these: " - - -placed ourselves in jeopardy through years of fiscal delusion and self indulgence as policy. The worth and credibility of the US dollar reflects us and our national standards. We are the problem, not our choice of energy."

We over-consume, we indulge in blaming everyone but ourselves, we take advantage of others, we choice to take short term profits for personal gain over the well being of the public, we - - - -

Take for examples:
1. When we can afford, do we engage in excess consumption with no regard to environment, social effects, - - - needs of other who are less fortunate?
2. When we cannot afford, do we restraint from over-borrowing with no regard to responsibility to pay back?
3. When there are various means to solve this energy problem, do we help each other to use these means (gas, coal, nuclear, wind, solar, bio-fuel, - - - ) instead of opposing each other into inactions or costly competitions?

Let's take the first step by ourselves: reduce our energy consumption to a minimum (Believe it. Minimum is the right goal and remember it next time when you fail to car-pool or not take public transportation or turn up the heating or turn down AC or drive tens of miles for eating out or take air flights for distant vacation travels or throw out food or fail to encourage others to reduce their energy consumption or - - - ). Americans remain the top energy consumer on average, by a big margin.

Let's take the second step by educating ourselves and our children in means of energy saving/producing science and technologies, and by working in these industries.

Let's take the third step by not engaging or at least reducing in irresponsible actions: speculative investments in energy wasteful industries, participation in purposeless recreations (e.g. TV, movies, recreation parks, - - sorry that much of these have become meaningless), - - - - .

I sense certain awakening: this article's initial goal is apparently to promote speculative investments in natural gas for personal gains. The readers' responses turn into a debate on fixing the energy problem more than on investments for personal profit.

Oct 08 12:57 PM

[Michael Fit...:]

Albertarocks: whoa doctor! wow...well, i have to say there is alot of truth in what you said. isn't it interesting that the biggest ponzi schemes have been by milken, madoff...and that the regulators that let it happen are connected to the inner-circle. people like mary shapiro who now heads the SEC. people pulling the handle like greenspan and bernanke. you mention rothschild. is there a trend here?? harvard business school seems to be involved too, as well as yale and the boys in the skull and bones. it's a pretty privy crowd isn't it?

realold: please sir, refrain from copying previous comments with your reponse - doing so makes the comment section overly long. we can read the previous post, just address your question/comment to the specific user you are addressing. thanks!

ripskii: ok, thanks. i commented back to ya (on the instablog).

responsibility: although i agree with much of what you said, i must take exception to: "this article's initial goal is apparently to promote speculative investments in natural gas for personal gains." that is simply not true. if you read my energy policy, which i have worked diligently on for years:
thefitzman.blogspot.co...
perhaps you would change your mind and realize i am doing this for my country and our kids' future. as far as personal gains go, i have most all of my investment dollars invested in oil stocks. why in the world would i have been pushing natural gas transportation for years now if all i wanted was personal gain? if that was the case, i would be *against* natural gas transportation so that oil prices will go higher (and thus my oil stocks). in the future, perhaps you may consider being a bit more sure of such an accusation prior to making it.

Oct 08 10:03 PM

[Freya:]

COP, Natural Gas
STO, Natural Gas
PBR, Oil.

These were the disclosure Items from the previous articles.

The first 2 are very heavy Nat. Gas. The last is Oil.

I am sure of what I see in Print. Years???

The first comment ever uttered by MF on Seeking Alpha was in Apr. of 2008. He was pushing the use of Clean Coal in his "Energy Plan" in his first Articles.

Oct 09 08:12 AM

[Michael Fit...:]

freya: once again, you are wrong. your faulty assumption this time is that the video you referenced contains everything pickens said on CNBC that morning. pickens was the guest host and was on the show for an entire hour. the "stupid" comment was said, and was said in pickens' closing comments. as for your comment regarding obama being the first president to reduce foreign oil imports, this is incorrect. jimmy carter was. i've already shown you the data on the government's energy website which proves this to be fact.

Oct 09 08:36 AM

[Michael Fit...:]

freya: every company you listed makes more money on oil than on natural gas. as far as the oxymoronic "clean coal" that was taken off my energy policy almost a year ago when i discovered there is no such thing.

Oct 09 08:40 AM

[Freya:]

"mean one thing: natural gas transportation IS the right policy. as for your comment regarding obama being the first president to reduce foreign oil imports, this is incorrect. jimmy carter was. i've already shown you the data on the government's energy website which proves this to be fact. however, as we all know, you prefer not to look at data or facts because they would then prove how disastrous your insistence that 100% electric vehicles are the "future" when"

You are altering what I said again. The Obama Quote was Made By TBoone in that Video that You say Is incomplete.

I watched the Video. I heard what TBoone said.

"obama being the first president to reduce foreign oil imports"

Watch it Folks, From TBoone's mouth to the World's ears, If Obama were to convert The Trucking Fleets, He Would Be the First President to reduce...yadda, yadda.

I Quoted TBoone above. Try Turning His Words Around.

Oct 09 08:57 AM

[Freya:]

I watched the Show Live, then I read your Instablog, Then I watched the Video, read the associated Text and posted it on Your Instablog.

"TBoone said First President to..."

Your so called data has already been debunked by others. Our Oil Imports this year have already gone down by Hundreds of Billions, lets give Obama the Credit for that. He did it the same way Carter did, with a severe Recession.

Oct 09 10:22 AM

[Freya:]

MF, This is your comment Located up above:

"...as boone pickens says, this country looks more and more STUPID every day."

The video may have been incomplete but the Comment made by TBoone is printed in the Accompanying Article:

"That borders on being stupid, as far as I'm concerned," he said.

© 2009 CNBC.com"

You seem to believe that you can just take anything you want, change it to whatever you want, and expect it to go Unnoticed.

TBoone Never Said it was Stupid. And Most certainly, TBoone Never Said this:

"...as boone pickens says, this country looks more and more STUPID every day."

Oct 10 01:52 PM

[Old Wizard:]

Freya, I didn't see the video and just assumed the quote was essentially correct. No matter, I think the country's energy policy is stupid, muddled and because it is concentrating on the things which are too far in the future without taking care of the next 5 and 10 years, dangerous. The only reason the dollar doesn't really drop like a rock in my mind is that we have the most powerful armed forces and therefore will keep foreign investment relatively secure. Borrowing monet from potential adversaries while making investments in their economies makes absolutely no sense to me and issues like which president was the first to decrease our imported oil and why is an issue that deflects attention from the main questions: HOW WILL THE USA USA DRIVE ITS OPERATING CASH FLOW TO ZERO OR POSITIVE AND DOES OUR ENERGY POLICY SUPPORT THIS GOAL IN FIVE AND TEN YEARS?

Oct 11 11:53 PM

[Freya:]

Sorry about not responding to your Msg. sooner OW but I just got back.

The Quote was incorrect but then that doesn't matter does it.

The Fact that you haven't made an appearance since my disappearance is revealing as well.

You say it doesn't matter: "issues like which president was the first to decrease our imported oil and why is an issue that deflects attention from the main questions."

Of course, It matters. The USD did Not go Down 50% under the Bush administration, The CNG Infrastructure Will not Support Hydrogen, The CNG Transport System will Not be viable without Alaskan Gas, Current Shale Gas extration Will pollute the Water, Clean Coal Technology is here. Diesel from Coal is Here. Brazil Did not use Nat. Gas Vehicles to get to its Oil Independence, TBoone did Not say "stupid".

Credibility is the Issue.

Last year with Oil above $140, the USD was around 72. Today the USD is around 75 and oil is around $80. Find the Correlation for me, Please.

You want the USD to get stronger? So do I, Pumping money into a No return Rat Hole when so many Trillions are already being wasted is not my Idea of USD support. Diesel is being used in Europe and we can get it from Coal here without altering a Damn thing. We have the Largest supply of Coal on the Planet. Use it.

Oct 20 01:52 AM

[surfgeezer:]

After reading your article and the comments afterward I am distressed at the lack of understanding of currency exchange. Yes the dollar is going down. Yes that will mean oil goes up with most other commodities.
That is NOT a bad thing. It will HELP our trade deficits. It helps manufacturing and agriculture or any exporters and hurts Wall street power. It does not make our debts easier to pay, they are still priced in dollars. Low interest rates make the debt/interest load easier and weaken the currency relative to high interest currencies is the only real link. It does NOT mean a collapse is evident. The only way to keep their products affordable in the largest consumer nation is to try and counter that trend by buying debt of that country as Japan and China have been doing for years. They DO NOT buy our debt because it is "safe" and we do NOT need a strong dollar as some sort of patriotic crud.
All credit addicts have a period of credit withdrawal where their standard of living comes down from the artificially high credit financed standard. We have in fact been receiving a "discount" on consumption and debt
These are all "duh" and I am surprised at the political twists attempting to be applied. Good luck following ideology with your investment dollars.

Nov 22 03:38 PM