Wednesday, April 21, 2010

When All Else Fails

Today's Quote:

"Perfect numbers like perfect men are very rare." - Rene Descartes

The U.S. Oil Import data to compare 2009 to 2010 are in: Net imports for the first 105 days of 2010 are DOWN 8.9% as compared to the first 105 days of 2009. Domestic production of Crude, Natural Gas Liquids, and Ethanol were all up. Some of this is just good fortune (in the form of ethanol) and some random acts of nature (The Gulf hurricanes of a few years ago damaged production that has now been brought back on line). Where will the domestic production come from in the future to make up for the decline in Oil imports?


I dislike Goldman Sachs. I nick named them "The Anti-Christ". That does not mean that I want them indicted if they did not commit a crime. This was a politically motivated action, and win or lose, it won't hold up on appeal. It is EASY to get a conviction against a member of the elite if you stack the jury with regular Joe's and appeal to their sense of anger and resentment. Surviving the appeal process is another story all together. Just ask Rudy Giulianni (the OTHER anti-Christ). He won ALL of his cases that went to a jury in the 1980's Wall Street witch hunt. He lost 100% of those cases when they went up on Appeal.

You see articles about how people lost money in a Goldman CDO or derivative. What you DON'T SEE, and should, is that all derivatives, and all bonds (including CDO's), and all commodity futures contracts are zero sum games - for every winner there is an equal and opposite loser. OF COURSE somebody lost money! Somebody else MADE that money on the other side of the trade... and these were NOT widows and orphans. These are the most sophisticated folks on the bleedin' planet. Shed no tears for them.

We are a nation of laws - disgusting, mean-spirited, slanted, bought and paid for laws... but laws just the same. Encouraging the government to commit political prosecutions has not worked out in the past.


4.5% of the world's population sustains 50% of the world's military spending. That would be the U.S.

Does that sound like an imbalance to you? It sure sounds like one to me. Entrenched interests and the temptation to USE that power has all sorts of issues and unintended consequences. How much collateral damage do we and the ROW have to endure?


bureaucrat said...

As I have mentioned, someone is wrong about U.S. oil imports going down ...

EIA says, since the beginning of this year, oil imports have been INCREASING, as one of the middle graph shows.

If you look at the last 4 years, however, you are correct. Oil imports have been decreasing (noticeably), after having increased since 1980.

Greg T. Jeffers said...

Your data point is on crude ONLY. My link is for all net petroleum inputs.

PioneerPreppy said...

4.5% of the world's population sustains 50% of the world's military spending. That would be the U.S.
Does that sound like an imbalance to you? It sure sounds like one to me. Entrenched interests and the temptation to USE that power has all sorts of issues and unintended consequences. How much collateral damage do we and the ROW have to endure?

That is an amazing figure. I actually had no idea it was that high. This actually explains to me why so many Russian political experts have been predicting the breakup of America for so long.

Even Soviet Russia knew enough to enforce laws and regulations differently within their empire. The anti-gun ownership is a good example as they never really enforced it in remote areas. I think now they saw or see where America's big mistake lies in trying to enforce legislation equally even in areas it won't work. The cry for equality will force a police like state where it will be impossible to enforce.

Only cheap energy can allow this and it is coming to a head as cheap energy declines.

As Chris Martenson says "these will be interesting times".

I agree with you on GS Greg, I think this is more smoke and mirrors for the masses.

westexas said...

As of last year, the top four sources of imported oil into the US were Canada, Mexico, Venezuela & Saudi Arabia (CMVSA). Their combined net oil exports were 14.1 mbpd (million barrels per day) in 2005 and 12.4 mbpd in 2008 (EIA), down 1.7 mbpd (12%) in only three years.

In 2005, US net oil imports were 12.5 mbpd, and Chinese net oil imports were 2.9 mbpd.

In 2008, US net oil imports were 11.0 mbpd, and Chinese net oil imports were 3.9 mbpd.

US annual oil prices went from $57 in 2005 to $100 in 2008.

China's net imports, expressed as a percentage of CMVSA's net oil exports, were at 21% in 2005, and at 31% in 2008.

From 2005 to 2008, Chinese net imports grew at 10%/year (which is less than the US rate of increase in net oil imports from 1949 to 1977). At a 10%/year rate of increase, Chinese net imports in 2018 would be 10.6 mbpd.

If we assume that CMVSA's combined net oil export decline will be about 500,000 bpd per year (less than the observed 2005-2008 annual volumetric decline of 567,000 bpd per year), their combined net exports would be down to 7.4 mbpd in 2018.

So, if we extrapolate the recent increase in Chinese net oil imports and the recent volumetric decline in combined net oil exports from our top four sources of imported oil, then China's net oil imports, expressed as a percentage of combined net oil exports from Canada, Mexico, Venezuela & Saudi Arabia, would have gone from 21% in 2005 to 143% in 2018.

bureaucrat said...

If we are not talking about crude-only, what other petroleum inputs are we talking about dropping? It obviously isn't ethanol as we can't import much of that. What are the petroleum products that are not oil that are dropping? I think we can get by with a little less butane in our lives. :) You must mean natural gas liquids. If those levels are what is dropping, so what? We're in a recession/depression. Maybe we don't need the propane anyway.

Greg T. Jeffers said...


Finished products and bunker oil. The net number is the NET number.

Dan said...


Those are some astounding stats but how long can they hold? It appears that china’s economy is being held together with massive stimulus. What happens when the stimulus ends? Also what is the nature of the petroleum use? Is it being put to high value uses or fluff? It seems unlikely that their export led economy can keep expanding as the rest of the world contracts.

westexas said...

I tend to fall back on the 1930's model, when it appears that global oil demand only fell one year, in 1930, rising thereafter. And US oil prices rose, from the summer of '31 to the summer of '37, at 11%/year.

There were three million more cars on the road in the US in 1937 than we had in 1929. The US is to the Thirties as China is to our current predicament.

Anonymous said...


About GS, Lehman, Citi, et al., I'll agree that there should not be prosecutions, even though on the face of it the whole sub-prime, alt-A thing seems to be fraudulent. At the very least, those banks involved in those markets abrogated their responsibility to their stockholders. The whole scheme provided quick short term profits and certain bankruptcy. This was not caused by a lack of regulation. There is plenty of law around to stop this kind of thing. There was no law enforcement. The fact of the matter is that the Federal government wanted in the worst way to prolong the credit bubble. The treasury dept. even went so far as to change the whole model for bond ratings to allow AAA rating to be applied to complete crap. So now the same rats that encouraged the fraud are now going prosecute. HA!

I'd be all for prosecution if it also took out the top three layers at the SEC and the FED, but it won't. Hopefully this is just a lone prosecution for window dressing, so that Obama can say he's tough on Wall Street. That'll be just like his pro-nuclear sound bite and his offshore drilling sound bite. Hollow.


Coal Guy