perceptions_now

Have We Reached Peak Oil?

Whilst it is good that you are reducing your personal consumption of oil, I have some not so good news.

Even if you & I may reduce our personal consumption by say 10% each year, there are some 2.5 Billion in China & India, who are eagerly trying to become 1st world consumers.

So, if the current Oil based Energy economy were to continue in a status quo mode for another 10 years, what do you think may happen, as the current 1 Billion 1 world consumers save 10%, but the 2.5 in Chindia increase their comsumption by 50%?

And, yes, I know!
On Oct 28 02:08 PM sethmcs wrote:

> Forget Peak Oil and think peak oil consumption. Every year I consume
> less oil. Oh by the way there is no shortage of oil nor paper oil
> contracts. Looking at the price of bonds and the price of oil somebody
> is terribly wrong. Maybe we will find out who shortly.

Have We Reached Peak Oil?

Regrettably, I am of the opinion that Oil Production has already effectively Peaked in 2005, in that it has subsequently failed to keep up with inflation, Demand or Population growth.

There are no new sources of Oil, which will now prove sufficient in size to overcome the depletion of the existing, but decaying old super fields.

If we were just treading water, with no growth, we would need 1 new Saudi Arabia every 3 years, just to stay where we are!

If Production were to keep up with inflation, Demand & Population growth, then another 2 Saudi Arabia's would need to be found & put into production every 3 years.

Unconventional sources such as Canadian Tar Sands & Shale and the newer deep water fields are simply not significant enough to offset the depletion rates at the old super fields, such as Ghawar & Burgan.

I suspect the current Production plateau may continue, for a short period, but production will fall behind Demand. However, as Demand outstrips Supply and Prices rise, those very Price rises will trigger the Global Oil Cost/GDP Ratio to run ahead too much, thus triggering another Economic & Share Market pullback.

The old rules are changing, the return on Money & Energy are being irreversibly delevered. The EROEI (Energy Return On Energy Invested) was 100/1 in the early days of Oil, it is now less than 10/1 and falling. New Oil is going to be much more costly to find & Produce and the Investment return is not going to be anywhere near what it used to be.

When the general perception finally accept that Oil has Peaked, then the rush away from Oil will begin, into the search for something else, which may not be there. This process will also severely dilute the capital needed for Oil Exploration and the EROEI will be further eroded!

In fact, even though Demand and Price has been rising, the investment in new Exploration has already been falling!

In the interim, Oil producing countries, particularly OPEC, refuse to verify or even discuss their actual level of their reserves.

If that happened, then the conjecture & uncertainty would come to an end.

There are a few likely scenario's -
1) The levels of reserves are substantially UNDERSTATED, THE IS MUCH MORE OIL THAN COMMONLY THOUGHT.
Whilst this is a very unlikely outcome, in this instance the result would be the usual where Supply exceeds Demand, the Price of Oil would fall!
An outcome not favoured by major self interest groups!

2) The levels of reserves are substantially OVERSTATED, THE IS MUCH LESS OIL THAN COMMONLY THOUGHT.
This would be the likely outcome and in this instance that would spark a MASSIVE & URGENT MOVE AWAY FROM OIL, towards other possible Energy sources, particularly for the transport sector.
That would result in a massive fall in Demand for Oil, in the near term and as usual where Supply exceeds Demand, the Price of Oil would fall!
An outcome not favoured by major self interest groups!

3) The levels of reserves REMAINS UNKNOWN, UNVERIFIED & SUBJECT TO CONSTANT CONCERN.
This is the current Status Quo outcome and the result is as usual where Demand appears to exceed Supply, there is constant pressure on the Price of Oil to rise!
THE PREFERRED OUTCOME for major self interest groups!

There are no guarantees in life, but the likely outcomes suggest that in 5-10 years, the Global Economic outlook, will be significantly different to today and I am not talking of upside!

Understanding Energy: Professional Money Management and Peak Oil

Regrettably, I am of the opinion that Oil Production has already effectively Peaked in 2005, in that it has subsequently failed to keep up with inflation, Demand or Population growth.

There are no new sources of Oil, which will now prove sufficient in size to overcome the depletion of the existing, but decaying old super fields.

If we were just treading water, with no growth, we would need 1 new Saudi Arabia every 3 years!

If Production were to keep up with inflation, Demand & Population growth, then another 2 Saudi Arabia's would need to be found & put into production every 3 years.

New unconventional sources such as Canadian Tar Sands & Shale and the newer deep water fields are simply not sigificant enough to offset the depletion rates at the old super fields, such as Ghawar.

I suspect the current Production plateau may continue, for a short period, but production will fall behind Demand. However, as Demand outsrips Supply and Prices rise, those very Price rises will trigger the cost ratio to run ahead too much, thus triggering the next Economic & Share Market pullback.

The old rules are changing, the return on Money & Energy are being irreversibly delevered. The EROEI (Energy Return O Enrgy Invested) was 100/1 in the early days of Oil, it is now less than 10/1 and falling. New Oil is going to be much more costly to find & Produce and the Investment return is not going to be anywhere near what it used to be.

When perceptions finally accept that Oil has Peaked, then the rush away from Oil, into the search for something that may not be there, will also severely dilute the capital needed for Oil Exploration, as the EROEI will be decimated!

In fact, even though Demand and Price has been rising, the investment in new Exploration has already been falling!

There are no guarantees in life, but the likely outcomes suggest that 5-10 years from now, the Global Economic outlook, will be significantly different to today and I am not talking of upsides!


On Oct 27 06:46 AM User 353732 wrote:

> 1. The easiest prediction to make about oil is a statement regarding
> what will happen in 5 years. No one can possibly know...... and no
> will remember even a year from now who said what and when in the
> Fall of 2009. It would be far more credible and impressive if we
> could have actionable predictions about oil production, storage and
> prices for 2010.
>
> 2. Oil will "peak" when demand for oil is put in a cage by the combination
> of major increases in global natural gas supply and nuclear energy.
>
>
> 3. The planetary endowment of natural resources, especially hydrocarbon
> resources, is unknown and unknowable. Geo-strategic developments
> that impede or facilitate resource developments cannot be forecast
> with any consistency(otherwise there would not be constant "surprises")
> and transforming technological and business process innovation cannot,
> by definition, be anticipated. Resource base, geo-politics, technology,
> risk capital all combine to shape and determine oil, or natural gas
> or coal or uranium or thorium supply. Anyone who can correctly and
> consistently forecast all these variables and their interaction 5
> to 10 years from now, should have no difficulty at all in providing
> investors with very specific trajectories for oil, natural gas, electricity
> etc price, supply and demand in the US and worldwide over the next
> 2 to 3 quarters. Yet no one does, because no one can.

The Greatest Depression Is Coming

What you need to, is ask yourself, are the fundamentals still the same?

If the answer is YES, then the old cycles will return and it's just a matter of timing?

If the answer is NOt, then you need to ask what has changed or what is changing?

As I have previously said, two of the major economic drivers (Population Growth/Aging & Oil) have recently Peaked (2005),

That said, and save a currently unknown major INNOVATION, the US & Global Economy will not return to the usual, historically accepted cycles!

Roubini Hates Gold: Is He Wrong Again?

No one is right or wrong, all the time!

Roubini has made some good calls and some not so good calls.

I would think, on balance, Gold is likely to go higher and the US economy & stocks will go lower, quite a bit lower.

This economic downturn has a few down legs left, as does the UD$.

I suspect Energy (Oil) Production & Pricing will have quite some say about where the real economy heads over the next 2-5 years and there won't be much fertile ground there for any "green shoots"!

Mathematical Realities Will Trump the Dollar

Bartlet & Martenson are right, you can not operate exponential Financial/Economic systems, in a world of finite resources and exploding Populations.

Something has to give eventually and we are now facing major tipping points.

I suggest you hold onto you hat, batten down the hatches and await the storm!

The Panic of '08: Cause or Effect of the Recession?

Let's try that link again?

www.sitkapacific.com/f...

The Panic of '08: Cause or Effect of the Recession?

Following is a perspective on historical consumer levels and current trends and the authors take on the debt/markets situation.
www.sitkapacific.com/f... pital_Management_Septembe r_2009_Client_Letter.pdf
==================
This perspective suggests that the US economy is continuing thru a deleveraging process, which may take many years.

In addition, it provides a chart on the Employment to Population Ratio (EMRATIO) and the Debt to Disposeable Income Ratio (TDSP), which provides some useful insights.

In particular, I would suggest the PARTICIPATION RATE (EMRATIO) will continue to fall for some time yet.

This arises from a mixture of the GFC causing layoffs in the US employment market, as well as employers NOT HIRING due to the state of the economy AND the cummulative effects of increasing RETIREMENTS in the Baby Boomer generation.

The combination of higher Debts, higher savings rates and less total jobs, means there is less real disposable income circulating in the US economy.

The net effects of these issues, plus Peak Oil, other Baby Boomer effects (Social security & Health costs) & Climate Change, means that THIS TIME IS DIFFERENT!

Is Capitalism in Its Death Throes?

I have not yet read the Market Watch article, but assuming your report is accurate, I would agree that the current economic system is indeed dying.

Further, there has been a systemic failure that has not properly provided for three Black Swan events, which are currently working their way thru the economic system.

Those events relate to Population Aging, Energy (Oil) & Climate Change.

However, these events are not just economic, they also go to the core of the current Political systems, with both the so called Democractic & Communist systems likely to undergo enormous stresses & change, in the next twenty years.

The prognosis being that the next twenty years, will bear little resemblance to the last twenty years!

Finally, I would agree with the last line of your article, the FED & inded the entire Banking/Finance/Insurance sector, needs to be audited, with intent!!!

Oil Price Rises to Highest Level in 2009

Peak Oil Pricing

There are good reasons that Oil producing countries, particularly OPEC, refuse to verify or even discuss their actual level of their reserves.

If that happened, then the conjecture & uncertainty would come to an end.

There are a few likely scenario's -
1) The levels of reserves are substantially UNDERSTATED, THE IS MUCH MORE OIL THAN COMMONLY THOUGHT.
Whilst this is a very unlikely outcome, in this instance the result would be the usual where Supply exceeds Demand, the Price of Oil would fall!
An outcome not favoured by major self interest groups!

2) The levels of reserves are substantially OVERSTATED, THE IS MUCH LESS OIL THAN COMMONLY THOUGHT.
This would be the likely outcome and in this instance that would spark a MASSIVE & URGENT MOVE AWAY FROM OIL, towards other possible Energy sources, particularly for the transport sector.
That would result in a massive fall in Demand for Oil, in the near term and as usual where Supply exceeds Demand, the Price of Oil would fall!
An outcome not favoured by major self interest groups!

3) The levels of reserves REMAINS UNKNOWN, UNVERIFIED & SUBJECT TO CONSTANT CONCERN.
This is the current Status Quo outcome and the result is as usual where Demand appears to exceed Supply, there is constant pressure on the Price of Oil to rise!
THE PREFERRED OUTCOME for major self interest groups!

On Trillion Dollar Deficits and Zero Interest Rates

Trap set, prey approaching, clock is running down!!!

Bank Earnings: Reality Check Ahead

You mean like this -
www.dailymotion.com/vi...


On Oct 11 09:04 AM NOTEMAN wrote:

> You forgot 2012 the end of the world

Bank Earnings: Reality Check Ahead

ON TOPIC!!!

When &/or if, real Bank figures are allowed or able to surface, including Mark to Market asset allocations, then many will be truly shocked!

U.S. Consumer Credit Continues to Contract

All of which suggests that consumer spending continues to contract , the real economy continues to shrink and the Recession rolls on!

The Arithmetic of Gold: Why Its Price Has No Ceiling

Let me offer a thought or two?

Gold is not and Island, it is part of the mix.

If Gold hits $1500-$2000 or more, in 2010 or the near future, it will have had reasons that influenced events to make that leap!

Most of the reasons behind Gold making such a large jump in price, in a short period of time, would have adverse effects, which is one of the main mover of Gold.

For that sort of price jump, there would likely have been one or more of the following -
1) A large DEVALUATION of the US$.
2) A Massive shift OUT OF THE US$ AS THE WORLD CURRENCY.
3) Another large FALL ON GLOBAL SHARE MARKETS.
4) Confirmation that OIL PRODUCTION HAS PEAKED.
5) Confirmation that there will be NO RECOVERY FROM THE CURRENT ECONOMIC SLOWDOWN.
6) Confirmation that DEBT HAS SPIRALLED OUT OF CONTROL.
7) Confirmation that INFLATION HAS SPIRALLED OUT OF CONTROL.
8) Another 9/11 type event takes place, with longer term consequences.
9) A more serious form of Global Pandemic has come along.
10) Some other serious factor has intervened?

So, perhaps the Gold price will go up, but we may not like all that comes with that?