akapital

Growing Fears in Oil

"The fact is the price of oil is up almost 62% this year."

That is certainly a fact that I will not dispute but to put in context oil is well below its all time high. But perhaps both of those price points (both the all time high and the price as of Jan 1) are anomalies. And that is why the short term oil trade is befuddled me thinks.

The Economic Impact of the G20 Ending Oil Subsidies

This is one of the most interesting articles that I have read on SA for some time. Granted it is speculative in nature (e.g. that the G8 will be ending subsidies for fossil fuels) but that is precisely what makes it so interesting. And further more, aren't we all here speculating about something or other?

I also happen to agree with most of the premises and conclusions of the author. Subsidies for fossil fuels are no longer giving us a valuable return on our investment. We need to diversify. Some might argue that it is not even a choice; we have to diversify.

I think the diversification argument holds as true for the individual investor as well as our gov't energy policy. We will see that played out in the coming years.

Talent shift: Could a high-IQ exodus from finance lead to stronger productivity growth and a more robust economy?

I concur with Annualgain. You are making a big assumption that there is in fact high IQs on Wall St. I think instead what you have is a lot of well intentioned people trying to make alot of money for themselves. Some of them may have high IQs.

I think the question that you really want to ask is will big money shift from Wall St. to finanancially reward genius of other fields (teaching, science, new technologies, etc.)

I do not believe that is likely however because of some very basic fundamental believes (that I don't personally share) of our society.

For example, we live in a society that appears to financially rewards great sport talent over teachers. But upon further inspectiion who is actually doing the rewarding? The private sector is giving out the big rewards. But that does not mean that they are attracting the best talent. They are simply attracting people that want to make money. Meanwhile tax payers certainly do not want to pay teachers more money for teaching their kids.



On Sep 18 11:51 AM Annualgain wrote:

> High IQ's on Wall Street? Where?

If free markets fail because humans are irrational, aren't the regulations we impose irrational too?

Cute but that is actually a faulty logic that you are working with there.

First off you are assuming a true premise, that humans are irrational. That may be true in some circumstances, but is it true across all circumstances and all the time? Smart people can do irrational things does that make them irrational? A .350 hitter can have a bad game does that all of a sudden make them a sub par hitter? Does the "irrational" description hold generally true and if so at what success or failure rate? If akin to baseball batters then maybe so.

Second, even if free markets fail because humans are irrational that does not then mean that regulation of those markets fails for the same reason.

One of the rationales behind free markets is human nature (if you believe in any such thing, that humans are innately or naturally selfish and that this has an overall beneficial effect for everyone, etc.). The argument for free markets is itself irrational but then the argument that they should be regulated does not then necessarily become irrational by virtue of this fact.

Thirdly, if free markets were a closed irrational system that were regulated from without (externally) then regulation could provide a sort of corrective mechanism immune to the irrationalism of that system. However, if both systems operate within a larger system of irrationalism (e.g. socio-political) which itself has no self-corrective system then all bets are off.

So to conclude, all baseball batters are sub-par and humans are not necessarily irrational but large numbers of them put in a certain context can surely ruin the world.

What's the U.S.'s Energy Policy?

Energy Policy is clear, the quesiton is how you spin it.

So called increase tax on traditional fossil fuel is merely a move away from subsidizing these forms of energy and moving towards subsidizing others (e.g. DOE grants and loan programs for alternative fuels).

Traditional fossil fuels have benefitted from billions in subsidies from the US govt (Did we ever call this socialism?). The move from traditional to alternative fuel subsidies has really nothing to do with "global warming" per se. Global Warming is not relevant to the new energy policy as much as clean air, water, and price stablization. The introduction of alternate fuels (albeit at a snails pace) is intended to bring competetiveness and an attempt to level the geopolitical energy playing field.

Call it socialism, call it Carbon Cap, call it a bad idea, good idea. There is clearly a policy there. Many don't agree with it. Quite frankly I think many don't understand it. As with most things, generally those that don't understand it or agree with it stand most to lose by it; those that stand most to lose by it, don't understand it. Those who lives might be impacted by it, don't agree with it.

If only this whole paradigm could be as simple as the ole tv tube being replaced by HD....of course I want a cleaner clearer picture of the world...

Countering Those Anti-Peak Oil Types

JeffDB, thanks for the very thoughtful reply. The 3.50 for biomass fuel is my recollection of one of Carlos Riva's (CEO of VRNM) quotes during a conf call. How accurate and optimistic it is I don't know but their technology is currently in use today.

As far as subsidies for oil, I don't have any literature per se and in any case I think historically the bulk of the subsidies have come in a variety of covert forms (e.g. various wars fought in the persian gulf for the last 20 years).

Interesting conjecture on the BP and Exxon Investments. I agree, it's a hedge against high oil. I would think the preferred alt investment from an oil company is going to be a liquid fuel that can be mixed and distributed along with existing fuel (gas, oil, diesel) infrastructure and I believe that both algae and biomass (both food and non-food grade) ethanol can be. I am only a proponent of the non-food grade type for the reasons you and others have pointed out (land and water uses).

Yes, following that analogy further, both the Food Industry and Drug/Pharma are feeding off eachother. One causes the disease and the other cures it. You can have your cake and eat it to. I think things will initially be the same with our fuel conversion....shades of green...gotta walk before we can run...

Again, thanks for the thoughtful dialogue.




On Sep 09 06:30 PM JeffDB wrote:

> On Sep 09 05:38 PM akapital wrote:

Countering Those Anti-Peak Oil Types

Yes, for the record, the comparable point on peak whale blubber is apt, since the equivalent would be the extinction of the source - extinction of the whale. And all data indicates that technological efficiency of whaling would have surpassed the evolution/reproductive efficiency of the whale species (e.g. ya, they would have eventually killed off most if not all whale species in time).

The analogous/comparable point is also apt because whaling was not stopped for the reason of extinction or high prices but rather because another source was "found."


On Sep 09 12:52 PM goldbug101 wrote:

> You are spot on with the efficiency argument.
>
> The issue with peak whale blubber, however, is that oil replaced
> whale blubber before peak whale blubber would have been possible,
> if such things are possible.
>
> Peak oil may or may not be a problem. The problem is that we won't
> know it's a problem until it's a problem!

Countering Those Anti-Peak Oil Types

Ah ha, the "problem" as you "understand it" is not correct. Biofuels can be produced closer to $3.50 without subsidies and further more have you considered how much gas/oil would be if it were not subsidized!?

Why else would BP invest in a company like VRNM? That is a rhetorical question.

Don't worry though your precius Oil will be ok (I am long oil myself) Oil will stil fetch a high price for a long time to come...THE POINT is this (and very few people are getting it) this is not a matter of either/or, the smart money is on both sides, Oil and alternatives because (as with most things in life) we reacted too late, we're going on a diet after we have already been diagnosed with diabetes and heart disease...we won't be quitting oil cold turkey, it will be a long time coming.



On Sep 09 01:33 PM JeffDB wrote:

> On Sep 09 01:25 PM akapital wrote:

Countering Those Anti-Peak Oil Types

Good point. And further, why is BP investing in VRNM Biomass fuel enzyme technology? And why are other oil companies investing in algae to oils technology? And othe hybrid fuels.

Oil companies are hedging and positioning themselves for the inevitable. And that is why we will likely see a hybrid oil/gas/ethanol fuel in widespread use as we transition away from oil. A hybrid fuel (85% biomass, non-food grade ethanol) can use the current infrastructure (distribution, vehicles, etc) and this is happening now. There is already 10% ethanol in most gas and this is the most likely scenario.


On Sep 08 08:24 AM bartpr wrote:

> peak oil is here. make no mistake. why would bp commit to finding
> oil in the gulf that is 35000 ft down from the well hed to suface.
> is it becuse they like the challenge and have nothing beeter to do.
> no, its because they have no choice. the easy stuff has been used.

Are We Headed for a Green World or Business-as-Usual?

Any so called "free marketer" who believes that prevalent fuel sources are more a function of cost and accessibility rather than political forces is an idealist in the worst sense of that term, while those who are looking to even the playing field when it comes to energy subsidies is an idealist in the best sense. One has an idealized view of the current state of affairs, the other has an ideal view of the future. One lives in a deluded state of an objective reality which exists independent of human forces e.g. (invisible hand) while the other understands that reality is created by individuals, sometimes very powerful individuals who join together and form oligarchies and cartels...and sometimes not so powerful individuals who have a great idea that might threaten those very powerful individuals...

Oil to Retest $40/Barrel by Year-End?

ok, that's cool but if you think the dollar will be brought to its knees (as you state in the first part of your article) would'nt the price of oil in dollars rise?

Repaying TARP and the Myth Behind 'Taxpayer' Money

um, yes, they have always called it taxpayers money, this is just one of the few times that they called Corporate Welfare taxpayers money...but "they" (as if they are always the same people) called it taxpayers money when used for war, for free choice, for food stamps, for unemployment, for police, for firemen, for teachers, for postage...the list goes on...we hear it all the time when "they" complain about this or that...

Is Oil Going the Wrong Way, Or Do We Need to Adjust Our Perceptions?

I am long alternatives and I am long Oil and other natual resources and I was buying at what in hindsigh turned out to be the bottom (at least as of now) because I believe the following:

1. Peak Oil
2. Supply Destruction when oil is sub-50
3. Foreign Demand will far eclipse any decline in US demand
4. Falling dollar

Of course I am not betting the farm (already lost it), but a could chunk of change.

Checking in on Oil's Fundamentals

...a discussion on oil prices without any mention of peak oil production...isn't that convenient. There is a whole other side of the story here that people don't want to consider, oil is finite, the easy oil is gone. Ergo, even if demand does wane, price still could continue to rise. Ergo, I am long oil and all alternatives....but I don't have the energy to explain..hint hint nudge nudge.

Biofuels: No There, There. Government Should Focus on Other Alternatives

wow, juding from this article and most comments most people really don't understand the massive potential of alternative fuels. It's kinda like Copernicus all over again. You are all still a member of the Church of Big Oil and think the world will always revolve around oil and really don't get it. Irony is that you claim the science and economics just don't substantiate it.

I'm invested in both oil and alt fuels and believe both have a long run ahead. We shall see...