I agree with Jim Vaughn above. Let's look at a few numbers.
1. In 2004 Total Oil Production of The Oil Majors was 10.76 Mb/day 2. In 2012 Total Oil Production of The Oil Majors was 7.98 Mb/day 3. Global Net Exports of Crude Oil from 2005-2011 have declined -0.7%/yr. All of the above despite Brent Crude Prices going from $25 to $55 between 2002 and 2005, and then in 2011 to $111/barrell. Regardless, between 2005 and 2011 Worldwide Crude Oil Production was flat, going from 73.8 to 74.1 MB/day. 4. Per XOM, in 2010 45% of the Earths' Total Oil Endowment had been used. During the next 27 years we will pass the milestone of having used 50%. Simply stated, all the easy oil has been used and humanity is slip sliding down the net energy curve. Extraction costs are $45/barrel and rising inexorably. The world oil market price is set at the margin, meaning the price is for the last most expensive barrell produced. Econ. 101. 5. World population is rising: 2010-6.896 Billion people. 2011-7.000 Billion people 2050-9.000 Billion people 6. Norway's Crude and Condensate & NGL production -50% in last decade. 7. By 2016 OPEC will have exported 50% of all the oil exports it will ever ship. 8. Saudi Aramco's Ghawar field (world's largest) has been on secondary water flood recovery for years with an increasing annual water cut. Extraction costs there will only continue to rise. 9. Global oil production:
2008-75 Million Barrels/day 2009-73 2010-75 2011-73 2012-75
10. Estimates are the USA's oil imports will drop from 10 million to 4 million barrels/day within 10 years. From 2020 to 2025 the USA might even be the world's top oil producer, slightly ahead of Saudi Arabia. Those 5 years will be the sweet spot for the USA. After that, production will drop continually.
My suggestion is to buy oil producers such as LINE and LGCY with long lived assets and good hedging programs, not to waste time looking for a conspiracy to fix oil prices. The only real conspiracy is from the politicians who prey on psychological weaknesses to win votes from the uninformed.
What Inflation Means To You: Inside The Consumer Price Index [View article]
So, let's look at the actions of the Federal Government from the vantage point of a retiree who worked their entire adult life and played by all the rules. Such a person would see a central government trying to increase the inflation rate of increase while simultaneously reducing cost of living protection (such as it currently is-completely inadequate for retirees because they cannot decrease health care expenses such as Medicare Supplement Insurance rates rising at triple the core CPI) by substituting a "chained CPI" for the current problematic statistic. Meanwhile, interest rates on savings have been reduced to virtually nothing so income streams from savings are minimal.
If President Obama meant what he said in running for reelection, that he would be primarily concerned with the plight of the vanishing middle class in his second term, I for one would suggest it's time for a policy rethink.
The USPS lost $1.9B in Q1 of 2013 as Congress continues to fiddle with the agency burning through cash. The read-through to UPS (UPS +0.3%) and FedEx (FDX -0.4%) from the plight of the USPS is sometimes murky, but in general analysts think that if the USPS continues to raise rates while cutting services it will help maintain the pricing power of the two freight companies. [View news story]
Geez, the dumbing down of our political system seems to know no bounds. Here we have the finest Postal Service on the planet with mail rates approximately 1/2 those of any other OECD country, and a significant minority of people want to destroy it and replace it with what?
If you don't believe the US Postal Service is the world's finest, try mailing something of value from the vast majority of other countries and see if it ever gets delivered. The Postal Inspection Service is the world's best investigative agency and has kept our mail system secure in the face of any challenge. No private enterprise would consider adding such a fixed cost.
No longer can we take seriously these knee jerk "let's privatize it" reactions. Instead, let's look at what economically comparable nations such as Germany and Japan have done. What you ask? They have recognized that many of the fixed costs associated with a universal postal delivery systems remain in the face of falling first class mail volume, and adjusted first class mail rates upward to compensate for the exogenous variable that is the internet. Problem solved.
No, Robert Shiller: In The Long Run, Land Prices In Some Areas Can Go Up And Stay Up [View article]
In my opinion there is plenty of wisdom in this article! Even in "The Biggest Little City in The World" (Reno, NV), it's clear there is a remarkable difference in median single family house prices among various ZIP Codes based upon the criteria listed by the author.
In fact, Reno has a remarkable example of "While land overall may not be scarce, land in particular neighborhoods is". The Caughlin Ranch community, while not immune to all the impacts of the great housing collapse, is now in such demand that realtors often don't even have to put up a sign when a house comes on the market. The mere "whisper" that one might be available for less than $350,000.00 is often enough to bring 5 or more cars to the suspected address with occupants looking to make an offer. Such is not the case in most other neighborhoods.
Linn Energy (LINE -0.8%) is downgraded to Reduce from Neutral with a $34 price target (from $38) at Global Hunter after disappointing Q1 results. The firm is cautious given the reduced guidance, high decline rates, move away from the Hogshooter and general inability to drive growth in DCFPU despite massive development spending and acquisitions. [View news story]
Hmmm....if I wasn't such an old coot I'd submit my resume for a position as an MLP analyst at Global Hunter!
The Curious Case Of Benjamin Bernanke [View article]
Adam,
I'm a new follower of yours. I agree with your overall thesis expressed in this article-this time only.
Ten or more years from now when we look back we'll realize how fortunate we were as a nation to have a FRBoard Chairman who was a brilliant student of economic collapse and depression. He stands in opposition to conservative economists and politicians in understanding the unique nature of the collapse the nation endured during and after the Bush Presidency. Ben Bernanke and his brilliant staff devised, and have the courage to implement, the one sequence of moves that is propelling the American economy on an upward trend. Bernanke's actions are akin to a chess Super Grandmaster who realizes that under a certain set of quite unusual circumstances on the chessboard (analagous to the rare balance sheet depression we just experienced) the normal dynamics of the game of chess [read: our macroeconomy] in which normally more than one course of action can lead to positive outcome(s) are virtually inoperative and one and only one sequence of moves (called a series of "only moves" in chess) can lead us back fairly quickly to prosperity without additional episodes of economic recession or collapse. That's one of the characteristics that separates a Super Grandmaster from a Grandmaster
Don't misread me however. I'm a political independent who voted for George W. Bush twice because at the time he ran I thought he was best overall. I'm also unhappy with President Obama because he failed at the outset to conduct "an FDR moment" by informing the nation and world of the truth regarding our economic predicament by calling The Great Recession what it really was, a Modern Day Depression. Failing to properly label our circumstances has led him to entertain certain austerity policies (Sequester for example) which are as counterproductive as those recently foisted upon the citizens of nearly every European country. Just as Franklin Roosevelt faltered in this way and tried to balance the budget just as the USA was beginning to emerge from Depression which led to another deep recession, President Obama has been unable to be unwavering too. Additionally, he is a conciliator through and through and this has proven to nearly be his undoing when trying to work with Congress.
So, it's not a political issue nearly as much as it is a scientific one. Let's hope the economy reaches "ignition" and stands on its own very soon because there are (as Conservatives rightly argue) limits upon how long any nation can continue to give the patient steroid injections before they become counterproductive.
Why Does Anyone Listen To Conservative Economists Anymore? [View article]
They are listened to because, sadly, human nature includes a very powerful impulse toward confirmation bias. Our very being does not allow us to be truly objective, except through the exertion of sustained significant effort, and it's much easier not to work at identifying and understanding facts in opposition to what we currently believe to be true. So, when we suffered a very rare balance sheet recession after the housing collapse, conservative economists were unwilling to view it as such, in part because the fastest path back to modern day prosperity involved actions they had invested lifetimes opposing.
You can see this demonstrated in real life in a verbal exchange between Ben Bernanke and Senator Corker (R-Tennessee) recently. The following quotes are not exact or precise, but they give a flavor of what happened in recent testimony by Mr. Bernanke before a Congressional Committee. Mr. Corker listed the typical list of conservative complaints about current monetary policy and The Federal Reserve Board Chairman told him "....but unfortunately Senator, everything you just said is wrong". Whereupon Senator Corker said "No it's not" and Mr. Bernanke said, "Yes it is" and went on to explain factually why this recession was not similar to those the senator had experienced in his adult lifetime. For the Senator, it was just easier not to study, understand, and assimilate into his political philosophy facts in opposition to those which have been held by his electorate for generations.
That's just one tiny illustration of "confirmation bias" at work. Every single human being on this planet suffers from this aspect of human nature, but it helps investors to be aware of it when making their investment decisions.....and when voting.
Social Security Changes: A Recipe For A Demographic Disaster [View article]
Haven't too many to count studies demonstrated that the government has failed over decades to properly adjust the "poverty line" upward to properly account for inflation? I have to agree with BennyProfane on this one.
Will Obama's Chained CPI Help Keep Inflation From Eating Into Your Savings? [View article]
Right on the mark! So, here we are living in a country that spends more on national defense than Russia, China, England, France, Germany, Iran, North Korea, and the next TWO DOZEN highest countries combined and we want to make the poor and elderly shoulder the burden of cuts. Yet, our global domination strategy is never, never discussed in relation to the "chained CPI". Why is that?
Why doesn't the news media cover that indisputable fact that the "chained CPI" makes the flawed assumption the elderly and disabled can substitute lower cost health insurance etc. when those increases are running at anywhere north of 10% per year?
Our nation is in serious danger of shattering the social compact through ignorance, misunderstanding, and deceipt. We took the first significant step down that path when President Lyndon Johnson transferred Social Security Trust Funds to the General Fund to pay for the Vietnam War disaster and a truly moral country would reverse course.
Brilliant article because it describes a rational perspective of our economic condition and outlook. Should be required reading for many in the political class!
Chained CPI Vs. The Standard CPI: Breaking Down The Numbers [View article]
If the intent of the government is to keep the promises it made to those who played by the rules (provide an adequate and reasonable cost of living adjustment) for those aged 62 years and over; the appropriate measurement is CPI-E, which includes and takes into consideration the larger proportion of elderly spending on health care costs than the general wage earner in The United States.
If, on the other hand, the intent of the government is to break the promises it made to those who played by the rules (because surplus Social Security Tax Revenues were being wasted on unwinable wars; trying to impose Jeffersonian values in Islamic countries; and providing defense to countries that can afford to provide their own) the Obama proposal to shift to a Chained CPI has some logical foundation.
When one considers the basic psychological motivation for a Democratic President proposing such a change one must wonder what would cause him to sell out precisely the voter segment that reelected him. The magnitude of the betrayal is nearly without precedent because it includes those already retired, not just beginning at some time in the future for those still working who have some options and flexibility to adjust.
Fragmented already, this kind of cynicism is likely to have far reaching implications for our entire population, not just those directly impacted. If I was a Democrat, I would feel the Democratic Party's brand is under assault by the leader of the party. There is a word or phrase to describe such behavior but they escape me at the moment.
Oil Market Manipulation Reaches Absurd Levels [View article]
1. In 2004 Total Oil Production of The Oil Majors was 10.76 Mb/day
2. In 2012 Total Oil Production of The Oil Majors was 7.98 Mb/day
3. Global Net Exports of Crude Oil from 2005-2011 have declined -0.7%/yr. All of the above despite Brent Crude Prices going from $25 to $55 between 2002 and 2005, and then in 2011 to $111/barrell. Regardless, between 2005 and 2011 Worldwide Crude Oil Production was flat, going from 73.8 to 74.1 MB/day.
4. Per XOM, in 2010 45% of the Earths' Total Oil Endowment had been used. During the next 27 years we will pass the milestone of having used 50%. Simply stated, all the easy oil has been used and humanity is slip sliding down the net energy curve. Extraction costs are $45/barrel and rising inexorably. The world oil market price is set at the margin, meaning the price is for the last most expensive barrell produced. Econ. 101.
5. World population is rising: 2010-6.896 Billion people.
2011-7.000 Billion people
2050-9.000 Billion people
6. Norway's Crude and Condensate & NGL production -50% in last decade.
7. By 2016 OPEC will have exported 50% of all the oil exports it will ever ship.
8. Saudi Aramco's Ghawar field (world's largest) has been on secondary water flood recovery for years with an increasing annual water cut. Extraction costs there will only continue to rise.
9. Global oil production:
2008-75 Million Barrels/day
2009-73
2010-75
2011-73
2012-75
10. Estimates are the USA's oil imports will drop from 10 million to 4 million barrels/day within 10 years. From 2020 to 2025 the USA might even be the world's top oil producer, slightly ahead of Saudi Arabia. Those 5 years will be the sweet spot for the USA. After that, production will drop continually.
My suggestion is to buy oil producers such as LINE and LGCY with long lived assets and good hedging programs, not to waste time looking for a conspiracy to fix oil prices. The only real conspiracy is from the politicians who prey on psychological weaknesses to win votes from the uninformed.
What Inflation Means To You: Inside The Consumer Price Index [View article]
If President Obama meant what he said in running for reelection, that he would be primarily concerned with the plight of the vanishing middle class in his second term, I for one would suggest it's time for a policy rethink.
The USPS lost $1.9B in Q1 of 2013 as Congress continues to fiddle with the agency burning through cash. The read-through to UPS (UPS +0.3%) and FedEx (FDX -0.4%) from the plight of the USPS is sometimes murky, but in general analysts think that if the USPS continues to raise rates while cutting services it will help maintain the pricing power of the two freight companies. [View news story]
If you don't believe the US Postal Service is the world's finest, try mailing something of value from the vast majority of other countries and see if it ever gets delivered. The Postal Inspection Service is the world's best investigative agency and has kept our mail system secure in the face of any challenge. No private enterprise would consider adding such a fixed cost.
No longer can we take seriously these knee jerk "let's privatize it" reactions. Instead, let's look at what economically comparable nations such as Germany and Japan have done. What you ask? They have recognized that many of the fixed costs associated with a universal postal delivery systems remain in the face of falling first class mail volume, and adjusted first class mail rates upward to compensate for the exogenous variable that is the internet. Problem solved.
No, Robert Shiller: In The Long Run, Land Prices In Some Areas Can Go Up And Stay Up [View article]
In fact, Reno has a remarkable example of "While land overall may not be scarce, land in particular neighborhoods is". The Caughlin Ranch community, while not immune to all the impacts of the great housing collapse, is now in such demand that realtors often don't even have to put up a sign when a house comes on the market. The mere "whisper" that one might be available for less than $350,000.00 is often enough to bring 5 or more cars to the suspected address with occupants looking to make an offer. Such is not the case in most other neighborhoods.
Linn Energy (LINE -0.8%) is downgraded to Reduce from Neutral with a $34 price target (from $38) at Global Hunter after disappointing Q1 results. The firm is cautious given the reduced guidance, high decline rates, move away from the Hogshooter and general inability to drive growth in DCFPU despite massive development spending and acquisitions. [View news story]
The Curious Case Of Benjamin Bernanke [View article]
I'm a new follower of yours. I agree with your overall thesis expressed in this article-this time only.
Ten or more years from now when we look back we'll realize how fortunate we were as a nation to have a FRBoard Chairman who was a brilliant student of economic collapse and depression. He stands in opposition to conservative economists and politicians in understanding the unique nature of the collapse the nation endured during and after the Bush Presidency. Ben Bernanke and his brilliant staff devised, and have the courage to implement, the one sequence of moves that is propelling the American economy on an upward trend. Bernanke's actions are akin to a chess Super Grandmaster who realizes that under a certain set of quite unusual circumstances on the chessboard (analagous to the rare balance sheet depression we just experienced) the normal dynamics of the game of chess [read: our macroeconomy] in which normally more than one course of action can lead to positive outcome(s) are virtually inoperative and one and only one sequence of moves (called a series of "only moves" in chess) can lead us back fairly quickly to prosperity without additional episodes of economic recession or collapse. That's one of the characteristics that separates a Super Grandmaster from a Grandmaster
Don't misread me however. I'm a political independent who voted for George W. Bush twice because at the time he ran I thought he was best overall. I'm also unhappy with President Obama because he failed at the outset to conduct "an FDR moment" by informing the nation and world of the truth regarding our economic predicament by calling The Great Recession what it really was, a Modern Day Depression. Failing to properly label our circumstances has led him to entertain certain austerity policies (Sequester for example) which are as counterproductive as those recently foisted upon the citizens of nearly every European country. Just as Franklin Roosevelt faltered in this way and tried to balance the budget just as the USA was beginning to emerge from Depression which led to another deep recession, President Obama has been unable to be unwavering too. Additionally, he is a conciliator through and through and this has proven to nearly be his undoing when trying to work with Congress.
So, it's not a political issue nearly as much as it is a scientific one. Let's hope the economy reaches "ignition" and stands on its own very soon because there are (as Conservatives rightly argue) limits upon how long any nation can continue to give the patient steroid injections before they become counterproductive.
All the Best,
Phil
Why Does Anyone Listen To Conservative Economists Anymore? [View article]
You can see this demonstrated in real life in a verbal exchange between Ben Bernanke and Senator Corker (R-Tennessee) recently. The following quotes are not exact or precise, but they give a flavor of what happened in recent testimony by Mr. Bernanke before a Congressional Committee. Mr. Corker listed the typical list of conservative complaints about current monetary policy and The Federal Reserve Board Chairman told him "....but unfortunately Senator, everything you just said is wrong". Whereupon Senator Corker said "No it's not" and Mr. Bernanke said, "Yes it is" and went on to explain factually why this recession was not similar to those the senator had experienced in his adult lifetime. For the Senator, it was just easier not to study, understand, and assimilate into his political philosophy facts in opposition to those which have been held by his electorate for generations.
That's just one tiny illustration of "confirmation bias" at work. Every single human being on this planet suffers from this aspect of human nature, but it helps investors to be aware of it when making their investment decisions.....and when voting.
Social Security Changes: A Recipe For A Demographic Disaster [View article]
Will Obama's Chained CPI Help Keep Inflation From Eating Into Your Savings? [View article]
Why doesn't the news media cover that indisputable fact that the "chained CPI" makes the flawed assumption the elderly and disabled can substitute lower cost health insurance etc. when those increases are running at anywhere north of 10% per year?
Our nation is in serious danger of shattering the social compact through ignorance, misunderstanding, and deceipt. We took the first significant step down that path when President Lyndon Johnson transferred Social Security Trust Funds to the General Fund to pay for the Vietnam War disaster and a truly moral country would reverse course.
Gold Lied, Inflation Died [View article]
Chained CPI Vs. The Standard CPI: Breaking Down The Numbers [View article]
Your comment is a tautology.
Chained CPI Vs. The Standard CPI: Breaking Down The Numbers [View article]
If, on the other hand, the intent of the government is to break the promises it made to those who played by the rules (because surplus Social Security Tax Revenues were being wasted on unwinable wars; trying to impose Jeffersonian values in Islamic countries; and providing defense to countries that can afford to provide their own) the Obama proposal to shift to a Chained CPI has some logical foundation.
When one considers the basic psychological motivation for a Democratic President proposing such a change one must wonder what would cause him to sell out precisely the voter segment that reelected him. The magnitude of the betrayal is nearly without precedent because it includes those already retired, not just beginning at some time in the future for those still working who have some options and flexibility to adjust.
Fragmented already, this kind of cynicism is likely to have far reaching implications for our entire population, not just those directly impacted. If I was a Democrat, I would feel the Democratic Party's brand is under assault by the leader of the party. There is a word or phrase to describe such behavior but they escape me at the moment.
Why The Rate Of Growth In U.S. Oil Production Is Going To Slow Significantly [View article]
How Ivory Tower Economists Created the Housing Bubble [View article]
You Say You're A Homeowner And Not A Renter? Think Again [View article]