Bill W.

Winter's Coming for the Boomers: Part 2

James, you said:
" Peak oil does not mean we are running out. It means we are discovering less than we are extracting. The easily obtainable fuel has been obtained. Now we need to use tar sand, shale, and deep water wells. To even undertake those projects at a profit you need $100 oil or greater. Demand will grow. That is a given. Supply will not be able to keep up."

Thank you sir for responding. I take exception with your statement that the "The easily obtainable fuel has ben obtained". If memory serves, it took about 5 years to construct the Alaskan Pipeline. I'm sure if this nation had the political will, the oil in Anwar and the natural gas stored in the ground at the north slope of Alaska could be made available in 5 years or less. Again, if memory serves, the oil companies obtained the permits for "right-of-ways" for the natural gas pipeline when they got them for the oil pipeline. Whether they did or not does not really matter, the point being the Alaskan pipeline was built in remote areas, so obtaining permits will be no big deal.

I think what is really needed is a comprehensive energy plan, one that uses a mix of energy resources until such time that alternative energy can be phased in as our main energy source.

I do agree with your premise regarding energy that if things don't change, this country is looking at a very bleak future. That is why we need a different perspective on this issue.

James, please let me say that your writing style is enticing, you do make one think, and I thank you for that.

















On Jul 14 01:58 PM James Quinn wrote:

> Peak oil does not mean we are running out. It means we are discovering
> less than we are extracting. The easily obtainable fuel has been
> obtained. Now we need to use tar sand, shale, and deep water wells.
> To even undertake those projects at a profit you need $100 oil or
> greater. Demand will grow. That is a given. Supply will not be able
> to keep up.

Winter's Coming for the Boomers: Part 2

James, with all due respect, I must disagree with some of your premises regarding peak oil. Yes, we do in fact have a peak oil situation if, and it's a big IF if you believe the oil companies numbers. Why do I make such a statement? It's because I've learned to never discount my own experiences.

Let me explain. In 1975 and 1976, I was a Project Planning Engineer on working for Brown and Root at the North Slope on the Alaskan Pipeline Project. I helped plan and schedule the gathering units (the pipes running from the wellheads to pump station number one and the separation units, the purpose of the separation units was to separate the natural gas, water, and oil, the natural gas was injected back into the ground, water was discharged into Prudue Bay, and the oil was sent to Pump Station One.

While at the North Slope, I stayed at the BP Hilton, a facility that provided lodging. While there I got to know more than a few geologists from Standard Oil and BP. Anyway, one evening over a few beers I made the statement that the world was running out of natural gas and oil. Well I had these guys ROFLAO. They were amazed that I was that naive. They essentially told me that there is enough natural gas and oil to last the lower 48 states for the next 500 years.

Too Much Supply, Too Little Support

Karl,

Excellent article, as usual! Just read some news the banks will be tickled pink to hear: The Government today announced that first time home buyers can, effective imediately, use thier $8000 tax credit to reduce the price of the home. So, instead of waiting until they get thier tax returns next year, the money will be used in the near term.

God help us all.

Dennis Gartman: Go Long Infrastructure, Short Everything Else

Sir, your basic premise is seriously flawed. The Obama plan does not see spending a trillion dollars on roads, bridges, schools and general infrastructure building. It includes a host of other projects such as nuclear, IT, and alternative energy to name just a few. Not to mention the Alaska Gas Pipeline. Sure, there will be some new demand for steel, but it is difficult to say how much. The problem with forecasting is the lag time involved from the start of a project to procurement of commodities.

Catching the Next Bubble

As a follow-up....housing is in a deflationly spiral right now, what with all the money the fed is injecting into our economy, I would'nt be surprized if housing was not in an inflationly spiral again, in 2009.

Catching the Next Bubble

You said: "In my personal situation, my wife and I don't currently own a home, and I'm looking at 2009 as a time that we might start looking for a house."

I don't see any reason to wait until 2009 to buy a house. Last week my son, called and said that a house across the street from him has just gone on the market for 64k, a house that 3 years ago sold for 200k. The deals are out there right now, no need to wait.

Respectfully,

Bill W.

Talk of Recession is Just Talk

Todd, I'm seeing a recession every where I look....and believe me I'm not looking at Government numbers. I have a house in Florida on the water that a year ago was appraised at 1.3 mil, a recent appraisel reflects a price of 750K, a net loss of about 50%. This reduction has had an enormous financial impact on me, so therefore I'm not spending, nor do I plan on spending money as freely as I did in the past......and, Todd, I'm only one person, multiply me by a few hundred thousand and you might begin to see the impact the current financial crisis has on our economy.

Last Auguest I bought a 100 year old house in Jacksonville fl in a short sale for 260k, the previous owner walked away from a 400k loan so i got the property as a bargain at the time, I put about 150k into the house and now it's appraised at 300k. So, my friend you are saying that housing is only 5% of the problem? I chose to differ. The loss in housing is having a domino effect that is affecting jobs, credit card debt, employment, and on and on.

Respectfully,

Bill W.

Talk of Recession is Just Talk

Todd, you really need to get out more often!

Oh, Chicken Little: World Markets Aren’t Falling Apart

Another chicken little view:

1) Credit markets
What to look for: Libor, interest rate spreads.
The spread between the London Interbank Overnight Rate, or Libor, and an ultrasafe 3-month Treasury bill has recently been 75 basis points, but is usually about 10. If the spread returns to normal, the danger from the credit squeeze could be over and the economy might escape without too many scratches.
The biggest unknown in the economy right now is the condition of short-term credit markets that big businesses rely on for their immediate funding needs. Some of those markets are functioning well, but others are clogged up. Some firms, especially those in the mortgage business, can't sell commercial paper at any price. Other companies can't get funding from banks because banks are hoarding their reserves.
The basic problem is fear. After years of accepting almost any kind of collateral, lenders have turned super cautious. Anything that sniffs of exposure to subprime lending is shunned. And because of the way the subprime mortgages were leveraged up and hidden away in special investment vehicles and collateralized debt obligations, the toxic waste could be almost anywhere. Even in Aunt Bea's pension.
The Federal Reserve and other central banks have been trying to Roto-Rooter the system, flushing it with cash too cheap to pass up. The Libor rate should show how successful they are.

Oh, Chicken Little: World Markets Aren’t Falling Apart

You seem to forget, that in the end of the chicken little story, he was right, but no one believed him, to wit:

News Letters of the National City Bank of New York. (Now CitiBank or CitiCorp)

November 1929; The collapse of stock speculation has overshadowed all other events in business during the past month. We do not believe the fundamentals of the business situation have changed. The countries farms, mills and factories are intact. All over the country, general business is proceeding in a healthy and orderly fashion in marked contrast to the chaotic conditions in the stock market.

December 1929; The essential fact is that business itself is healthy and has not been involved in over expansion as in the stock market. There is no collapse of commodity prices. There is no inventory problem. There is no breakdown of the banking system. There are no great business failures, nor are there likely to be.

July 1930; Since the stock market collapse of last fall, the average business man has been more inclined to question his faith in the recuperative power of the country. From most other quarters of the globe come reports of similar difficulties besetting trade and emphasizing the widespread character of depression.

November 1930; We do not believe that business will go much lower, and we think the next important movement will be upwards.

June 1931; The country is in the midst of a severe business depression and there is relatively little demand for money for either speculative or business purposes.

October 1931; Excess caution on the part of bankers in making loans is one of the reasons why business is slow to climb out of depression. Everyone seems to have a story of a worthy borrower who is unable to obtain a loan.

January 1932; Of all the markets, the decline in bonds has been most severe. Amid the confusion of the times, those who would buy bonds have been plainly uncertain as to what debts are good and what are not. This continues to make financing, and even refinancing virtually impossible.

Note, in fact the October 1931 statement was exceptionally valid. Bankers were losing money all over the place, and called loans in abandon. They were trying to save themselves, were frightened, and did not care what damage they did to others, only that they saved themselves. Just get the money back. A major reason for the depression.