Danny/The Digger

Where Have All the Peak Oil Believers Gone?

I've heard that the Caspian Sea Depression has humongous amounts of oil and natural gas, and that during the early days of the US war against terrorism, the US built 19 permanent bases in Turkmenistan and Kazakhstan (just north of the Afghanistan border), defending those energy rich deposits. The leaders of those three nations have been bought-off by the US and are in much the same position that the Saudi Arabian royal family is;i.e. dependent upon the US military for their continued stay in power.

Why all the interest by the US in the Caspian Sea fields? Because drilling for deep sea oil is cost prohibitive and because China, Iran and Russia would like to develop/control those natural resources. The various branches of the US military are dependent upon diesel oil and aviation fuel to pursue hegemony around the world. They realize that "peak oil" will make it too costly, if not impossible, for them to perform their mission of guaranteeing western economic predominance.

No matter what day-traders and hedge-fund speculators do, "peak oil" is a fact. The current slack in the global economy provides a window of opportunity to develop renewable forms of energy. It also provides an
opportunity to stand-down from the relentless war of hegemony, and to redirect our nation's treasury and general revenue to more productive
uses than war and hegemony.

It's Only the End of the Beginning

"gramps2"

I agree with your observations. Unfortunately most citizens and corporations want to keep deluding themselves via debt. This country has to go thru tough times again for us to learn (once again) that it isn't wise to take on "unnecessary" debt.

Living beyond one's means (in debt) isn't just "immoral"; it's also economically impractical. Perhaps a society that does away with debtors prisons, almshouses for the indigent and much of the stigma for either personal or corporate bankruptcy, deserves a taste of depression.

How Bernanke Stunned Congress with the Truth

"gramps2", I'm with you. The older I get, the easier it is to look in my mirror and smile "at all the people putting on the style"!

My wife and I never bought anything on credit that depreciated; no not even a car. We lived within our means, put two sons thru college, saved and invested (but never on margin). We continue to enjoy life in a modest house on which we put 20% down and paid off in 7 years.

I once asked my oldest son how much equity he would have in his McMansion after 120 monthly payments. His 30-year amortization printout showed it would be $10,000. His monthly PITI was $1000.
I tried to explain that I believe in building equity, but that his way was about as hard a way to do it as I could imagine!

But his generation didn't want to listen. Now, you and I, "gramps2" sit high and dry with smiles on our faces while others who insisted on pampering themselves (via debt) are drowning.

Sure, its going to take time for our investments to bounce back, but its all discretionary "spending money" anyway. Hey, "gramps2,", I never earned more than $15K in any year I was working! How about you?
Do you remember 16% interest rates during Nixon's hyperinflation.
Guess what, I think they're coming back.

Time To Hedge Dollar Exposure

The thesis of Richard Nixon's book "The Real War" was that the U.S. could defeat (not just contain) the Soviet Union by forcing them into bankruptcy by making them match U.S. research and development of advanced armaments. The Soviet economic system simply could not produce sufficient tax revenue to win an arms race against the U.S.

I see a parallel in the Republican/Neo-Con effort to make it impossible for the Democrats to expand (or even maintain) social programs, which they see as an impediment to a capitalist economic system.

Am I reading too much into the recent economic debacle? Was it deliberately contrived or was it due to incompetence? Or does it make any difference, since social programs for the poor and middle class must be put on the back burner for a decade?

Senator Harry Reid: 'No One Knows What To Do'

Financial "welfarism" for the super-rich and social "welfarism" for those below the poverty line and "social-security/Medic... for the middle class. Oh, and lets not forget military pensions for those who haven't done a produictive day in their life (Eisenhower's words).

Who isn't at the trough? The system was designed for everyone to have a chance to "get their piece of the pie". Perhaps we need to start over and design a new system. Patching an old coat too many times isn't a reasonable answer.

Analyst: Oil Prices Inflated by 50%

I concur with Claude's observation that the price of oil is tied directly to the perceived value of the US dollar. If someone has a graph that shows the correlation, or lack thereof, I'd appreciate if you would share it with
SA readers.

Whither the Dollar? Currency Trends and ETFs

I simplify currency risk by investing in Vanguard Energy fund, which is comprised of approximately 50% US domiciled corporations and 50% foreign. The US based corporations are mostly multinationals that derive much of their revenues from operations in foreign countries.

Having invested since 1963 in international and global securities, I have observed the unpredictable and mysterious gyrations of the USD and precious metals. I'm content to "keep it simple stupid" (KISS) by investing indirectly in hard assets: oil, natural gas, coal, uranium for nuclear power, etc. and to employ patience to realize my gains.

Patience is as important as timing.

Oil Inventories

Oil trades for U.S. dollars. When the dollar is "worth-less", those who sell oil require more dollars per barrel. The reverse is also true.

Betting on the price of oil is betting on the future value of the U.S. dollar.
With record federal budget deficits, record trade account deficits, subprime residential and commercial property mortgage losses, frozen residential equity, increasing employment losses (not related to outsourcing), increasing federal "bailouts" of financial institutions, etc., I'm not betting that the dollar will either maintain or increase in value.

Whither Oil Prices?

Fear is a great motivator. I suspect fear, more than anything else, has driven the US State Department to negotiate with Libiyan strongman Omar Khadaffi for rights to drill onshore for "his" sweet crude. Will he then nationalize the industry (like Chavez) after multinationals establish
"his" wealth? I understand that he has negotiated to receive 85-90% of the revenues from "his" wells ... so what does he realistically have to gain by later "nationalization"?

Khadaffi still hasn't funded the "repayment of loss" account that was established to compensate victims of his terrorist acts. Is that money to come from his cut of the hoped-for oil wealth?

China has successfully negotiated and corralled southern Sudan's limited oil reserves. Now the US has done likewise in Libiya. Who can truly understand how "superpower" economic hegemony impacts the present and future price of oil? Fear is the driving force and behavior based on fear is often irrational.

Oil, Stock, and Housing Declines

According to BusinessWeek (9/15 issue), Noble's diversified fleet of 62 deepwater and shallow drilling rigs ... are running flat out!

Now, why do you think that is ... IF oil is not as valuable today as it was at its July peak? Do you really think it is speculators that are "driving" the true value of oil?

Or, do you think it might have something to do with the rise in the value of the U.S. dollar? And what justifies the increase in the value of the dollar? Currency speculators????

My advice is that energy investors should keep their energy holdings, be patient, and enjoy future increases in the value of that sector.

The Two-Ton Wall Street Conflict of Interest Few Dare To Talk About

Costly military expeditions that must be paid for by future generations is one way to give the current economy a boost, but when it results in nothing positive or constructive, one has to question whether other ways of dealing with "evil" aren't more cost-effective.

I like Nixon's thesis in "The Real War" in which he suggested spending more on military research and technology; knowing that the Soviet Union would be bankrupted if they tried to match the US. Reagan implemented Nixon's thesis.

But instead of bankrupting our enemy, GW Bush et al have bankrupted our economy! And we the American people, swayed by the NeoCon fearmongering, have allowed this to happen We have no one to blame but ourselves.

Did we learn anything from Vietnam? No! Are we learning anything from Iraq? No! We're now going to beef-up war efforts in Afghanistan. If that doesn't work, we may invade Iran! Persians and Afghans aren't Arabs, but they are Muslims. And they are tired of our beating them over the head; ostensibly "to get Ben Ladin".

I didn't believe GW when he claimed during his campaigns that he wasn't interested in "nation-building". But I do believe him now! He hasn't built any foreign nation's economy and he certainly hasn't built the economy (main-street or Wallstreet) of our country.

But the Democrats were complicit with Republicans in what happened to our economy the past 8 years. Plus, Democrats did not impeach nor even attempt to censor Bush and Cheney. For that reason, I will NOT vote for either Democrat or Repulican candidates for President and V.P. It's time to vote for a third party's candidates and give them a chance to get our economy back on track.

McCainomics: What Can He Do?

Gotta agree with you junkyardog! I changed my political registration to (U) Unaffiliated this past February. Doing the same thing over and over and expecting different results is a sign of insanity ... so I'm voting for Constitutional Party candidates. If I voted for Democrat or Republican candidates, I'd be throwing my vote away anyway!

Megaprojects Predict Decline of Oil Production

Jim, your analysis adds alot to my comprehension of the international energy "predicament". For others trying to get a grasp of what we (the world) is facing, I recommend the following:

Plan B 3.0 "Mobilizing to Save Civilization" by Lester R. Brown, Earth Policy Institute, published by W.W. Norton & Co - Chapter 2: Deteriorating Oil and Food Security

"The Coming Economic Collapse - How You Can Thrive When Oil Costs $200 a Barrel" by Stephen Leeb, PhD, published by Business Plus, Hachette Book Group USA

As a small retail energy sector investor, I look forward to researching your archives and to receiving your e-mail energy alerts.

Energy Firms Should Look to U.S. Shale - Barron's

PA Governor Ed Rendell has been promoting coal to diesel conversion for a couple of years and has gotten nowhere with the idea.

There are literally miles upon miles of "mountains" of coal culm in PA that are unsightly, which would disappear if coal to diesel conversion could somehow "get off the ground".

China can use all the coal we can export to them, but they are "hell-bent" to develop the new tech "small" nuclear plants that can be readily installed in their myriad of towns.

I heard about the new nuclear technology while visiting Knoxville, Tn this past Spring, but haven't seen any "press" about its safety and cost-effectiveness. For some reason (conspiracy??), it is under the medias' radar!?

Guess we must contact the U. of Tenn - Knoxville for info. That is the source of this leading-edge technology.

Will Brazil Really Nationalize Oil?

So, is Libiya's Kadaffi a "socialist" for demanding up front an 85-90% cut of whatever revenues are generated by drilling for oil in Libiya? Or, is one a "socialist" only if he nationalizes "after the fact"?

Nationalizing "after the fact" isn't Socialism, it's thievery! "Good" muslims don't "steal", nor even practice "usury", but they sure can negotiate (haggle) a deal.

Muslim nations trade with each other using the gold dinar. It has a way of keeping them "honest". That's more than one can say for a nation that manipulates its dollar to the point that no one can even guess what its going to be worth from one day to the next!

Exploitation takes many forms. One is currency manipulation.