longoil

A Crude 10 Year Perspective: The DJIA, Oil and Gold

Fitz,

I have the highest respect for both Hefner and Boone, but both have their personal agendas.

1) I read Hefner book (the GET) and I find he is a bit too chummy with CEO Aubrey McClendon of Chesapeake that he glosses over all the serious issues associated with non-conventional gas. While the book is the most comprehensive I have read on natural gas, he is far from neutral.

2) T. Boone Pickens wants the federal government to pay for the cost transmission line infrastructure to his wind farms.

A Crude 10 Year Perspective: The DJIA, Oil and Gold

The stock market was artificially inflated in the late 1990's thanks to the internet boom. Normally stock market indexes appreciate anywhere from 10 to 12% per year on average. In the short period of 1995-2000 we saw the DJIA shoot up 150% and NASDAQ go up 500%. Anything over 15% gain per year is unsustainable over the long term. The current DJIA = 10000 is actually the value it should have grown to since 1995.

Although gold is a good hedge. I can live without gold.

I cannot live without oil, which is used in thousands of applications (besides transportation). I think my money will appreciate the most over the long run invested in oil and gas.

The 95% of the world's energy mix (according to the BP statistical survey and the EIA) comes from oil, gas, coal & nuclear. Oil and Gas will be the key energy sources from the next 40 years. Alternative energy is still in its infancy. Solar and wind account for only 1% of the world's energy mix. Natural gas would be a good transitory solution, since existing cars can be modified to run on it for only a few thousands dollars. This is a much cheaper alternative than hybrid, hydrogen or electric cars.

The End of the Oil Age? Not Quite

I recently read some interesting data on the "Cash for Clunkers" program. Over 16,000 people that bought new Ford F150 trucks qualified for the CARS program. Similarly another 16000 people bought Chevy Silverados and also got the CARS rebates. What did these people trade in ? Hummers, Sherman tanks ???

The most interesting fact was that more people bought new Ford F150 trucks than new Toyota Prius Hybrids with the CARS program. So much for encouraging fuel efficent vehicles.

The End of the Oil Age? Not Quite

Hybrids (gasoline/electric) have a long way to go , besides the $50,000 price tag. TV commercials claim hybrids have saved 1 billions gallons of gasoline since they were introduced. Assuming a 40% yield (17 gallons) of gasoline from 1 barrel of oil and factoring in that the US consumes 22.5 mbls/ day, we get the following result: 1 billion gallons of gasoline translates to an insignificant 59 million barrels of oil (2.5 days worth) saved in the United States over a 10 years period. Conclusion, hybrids technology is over-hyped.

I agree with you that natural gas transportation will help, but to a point.

But remember three things:
1) Natural gas will also exhibit "Peak Gas" one or two decades after "Peak Oil".
2) Conventional natural gas reserve declines are much steeper than oil reserves.
3) Non-conventional gas fields exhibit an even faster decline, up to 50% to 80% reserve decline after only one year. Larry Bellehumeur's SA article of August 18, 2009 had an interesting discussion around this point.

Why Is Congress Agnostic About Natural Gas?

Carter did lay the ground work for reducing oil imports by 50% with his spreadheading of the CAFE standard. It took 15 years though to get to the 50% reduction. CAFE was 15 mpg in 1976 and was gradually increased to 27 mpg by 1991.

Then Clinton and Gore butchered CAFE legislation with the light truck exemption clause to buy UAW votes in Detroit and it stayed plateaued at 27 mpg from 1992 to the present.

If the Obama rhetoric holds out, it will be increased again to above 30 mpg in 2011.


.

Oil Is Still the Key to U.S. Economic Future

Fitz,

Putting something on hold when you are 80+ years old is essentially giving up. He will live another 10 years at most (hopefully longer). Who knows when this economic crisis will be over. The 1929 depression offically ended in 1954. The stock market of the late 1960's stagnanted from 1965 to 1980.

The sad part is there is many excellent syngeries that can be implemented today with current technology to reduce foreign oil imports. The no-brainer is the Pickens plan of liberating NG for vehicular use. But with PHEV technology this can be taken another two notches higher. PHEV can use the wind generated electricity as per the Pickens plan as well as being capable of using several fuels such as gasoline, NG or ethanol as a backups.

Oil Is Still the Key to U.S. Economic Future

Fitz & Jonathan Swift,

There has been many new reports about Pickens putting the wind farm project on hold.

Here is a few articles from the last month from reputable sources:

edition.cnn.com/2009/T...

www.guardian.co.uk/env...

e360.yale.edu/content/...

Oil Is Still the Key to U.S. Economic Future

Fitz,

Your NGV idea will remain dormant (unfortunately) have for a while, until it is too late.

1) In Washington, we a PhD nobel prize winner (Steven Chu) that is totally ignorant on energy issues despite his many accolades.

2) T. Boone Pickens has essentially given up on his wind farm / NGV dream. I am wondering if the Democrats are deliberately ignoring his wind farm project as pay back for him funding "Swift boat" ads against John Kerry back in 2004.

My Thoughts on Oil

Thanks Fitz !

My Thoughts on Oil

Fitz,

I have been trying to order "The Grand Energy Transition". It seems to have been discontinued from Amazon. Where did you get your copy ?

In regards to recent books I have read, I would highly recommend Jeff Rubin's book "Why Your World Is About to Get a Whole Lot Smaller""and "The Party's Over" by Richard Heinberg. Both deal with post-peak oil scenarios and possible solutions. They have a more positive outlook than James Howard Kunstler's books like "The Long Emergency", where he only paints a dire post-peak oil world.

My Thoughts on Oil

Fitz,

I am not surpised with Obama ineptude in regards to energy issues. I suspected it all along (and hoped I would be wrong) since the Democrat debates, but it was confirmed officially when he appointed Steven Chu as energy czar.

There is a multitude of qualified individuals in the USA with a comprehesive knowledge of the issues involved that would have been a better choice by a quantum leap that includes the following people: Robert Hirsch, Matthew Simmons, Richard Heinberg, Kenneth Defeyes, Steven Leeb and Jeff Rubin (I know he's Canadian and would not be eligible, but he ranks with these individuals)

Peak Oil: China vs. USA

Fitz,

I have cross-checked the EIA data many times with non-USA sources like ASPO (Colin Campbell et al.) and the numbers are legitimate. One only has to look at the EIA data during the Bush-Cheney era for 2003-2008 and the supply side plateau confirms peak oil theory. If there was a conspiracy wouldn't Bush-Cheney have covered up the plateau that the EIA data explicitly shows.

I am really starting to see why you having a hard time selling the NGV solution. Check out the energy plan by Steven Pottle.

www.pottleplan.com/Hom...

He advocates an interesting comprehensive energy plan, but is anti-NGV and anti-Pickens Plan.

You have convinced me many months ago that the Fitzsimmons plan (i.e. using existing NG infrastructure and new NG sources from tight and shale reservoirs) combined with the Picken's plan (i.e. using wind to displace NG generated electricity and fuel cars with the saved NG) is the way to go.

Keep up the good fight !

Peak Oil: China vs. USA

Fitz,

There might be some hope out there. I found another politican, Dan Burton out of Indiana, that also advocates a more detailed energy plan (than that joke posted on the White house website). The link to his webiste is:

burton.house.gov/issue...

He has got the right idea, but the missing element in his plan is Natural Gas. You might want to send him the link to your energy plan and some of your NGV articles to enlighten him.

He also has an interesting Youtube video on the USA and Hyperinflation. He does a scary comparison between modern USA and 1920's Germany & Zimbabwe

Peak Oil: China vs. USA

Fitz,

There might be some hope out there. I found another politican, Dan Burton out of Indiana, that also advocates a more detailed energy plan (than that joke posted on the White house website). The link to his webiste is:

burton.house.gov/issue...

He has got the right idea, but the missing element in his plan is Natural Gas. You might want to send him the link to your energy plan and some of your NGV articles to enlighten him.

He also has an interesting Youtube video on the USA and Hyperinflation. He does a scary comparison between modern USA and 1920's Germany & Zimbabwe

Peak Oil: China vs. USA

User 357469,

I know you are anti-Republican, anti-oil, anti-nuclear, etc.
But anti-government (even with Obama in charge) too ??

The EIA was launched in 1977 by Democratic president Jimmy Carter at the height of the energy crisis as an INDEPENDENT goverment entity operating under the following legal framework.

By law, EIA's products are prepared independently of policy considerations. EIA neither formulates nor advocates any policy conclusions. The Department of Energy Organization Act allows EIA's processes and products to be independent from review by Executive Branch officials; specifically Section 205(d) says:

"The Administrator shall not be required to obtain the approval of any other officer or employee of the Department in connection with the collection or analysis of any information; nor shall the Administrator be required, prior to publication, to obtain the approval of any other officer or employee of the United States with respect to the substance of any statistical or forecasting technical reports which he has prepared in accordance with law."