Friday, May 28, 2010

Obama Speaking (Almost) Candidly about U.S. Oil situation

I received an email from a reader with this Link. Skip the first 49 minutes and listen from that point for just a few minutes. That is the President of the United States acknowledging "Peak Oil"... just not in those words.

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I am running out of love for the US$. The US$ has now gone vertical, as measured on the Dollar Index... assets that go vertical ALWAYS wind up like Wiyle E. Coyote (Super Genius)... they notice at some point that they missed the Road Runner and are standing on thin air.

10 year Treasury notes were one of my biggest positions (personally). No longer. I shortened the maturity's down to 1 to 3 years, and used some of the proceeds to reestablish positions in energy equities, which have been beaten to smitherines by the BP debacle. The risk is is that these companies really need to be discounted because they are environmental time bombs... I reserve the right to change my mind... but I think that U.S. energy companies in particular, and energy companies in general, are cheap (that does not mean that they could not get cheaper... I am NOTORIOUSLY early...) Some of these are trading back down near their March 2009 lows... here's your second chance... but only for "Risk" capital... if you don't have any of that, this is not for you. My bet is, this sector will look very cheap when we look back on it in a couple years.

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I will be happy to take the "Over" on that trade. It will be a lot more than 500k bpd and it will last a lot longer than 2017.

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Obama is taking a great deal of political heat for the Horizon blow out. It reminds me of the heat GWB took for Katrina. This is what our political beliefs and passions has been reduced to - "The Blame Game." It has to stop somewhere. I know a lot of folks that were and are FURIOUS at the Left and their media dogs for what they did to GWB over the Katrina story. "Two wrongs don't make 1 right". For the good of the country, it is time to stop this silliness. Obama did not cause or improperly handle the GOM leak. GWB did not cause or improperly handle the Katrina response. Sh*t, in fact, DOES HAPPEN.

Unless somebody has to be blamed so that someone else can benefit politically.



27 comments:

kathy said...

Since I don't have what I consider "risk" capital to invest, I am going with the sure bet. I am replacing my aging chimney. I already bought a fabulous, used wood stove that was never actually been installed at an amazing price. We are also getting a new furnace and a diesel truck to replace the old one. Along with new bikes for everybody in the family and panieres for all of them I feel I will have invested in what is the most usful to me.

Donal Lang said...

I think the US dollar is high at the moment, treading air. But if all western currencies are falling at once, who's to say which one is worth backing?

The 'real' value is compared to something outside the currencies. It would be the Yuan except its tied to the dollar. How about we say gold is the baseline and measure how fast each currency is falling relative to the baseline?

Oh shit!

bureaucrat said...

I have been watching the Gulf leak thing since the beginning. Obama has been President throughout. I myself look back and think "I was kinda lazy in my own thinking on this one." The Gulf is a big place, and could absorb a little oil. BP thought there wasn't much oil leaking. No political bigwigs were on TV screaming.

After Katrina, and that botched approach, I guess I figured every single possible disaster from then on would be hit immediately -- loud, hard and fast.

But it has all been very lackadaisical, hasn't it, from the lady Coast Guard admiral "face" we never see on TV anymore, to BP as the guys who can't shoot straight.

Bubba Clinton would NEVER have allowed this to go on without making it into a big thing and throwing everything at it. Those were the days. Mr. Obama, what a letdown.

Anonymous said...

Some are making hay of Obama's response and him going on vacation, and not physically going down to LO etc soon enough. I think similar issues were made with Pres. Bush as well. Clearly neither can either prevent oil disasters, nor stop hurricanes--its sheer nonsense and taking personal responsibility for something they had no real control over is just 'the buck stops here' gesturing.

Pres. Bush did put "Browny" in charge of FEMA, a man with a resume' that did not support such a placement, and by many accounts he reacted poorly, just giving credence to his lack of experience.

I think going to the Casino and playing blackjack might be a better way to 'invest' money right now. I have limited experience in the stock market, and it was small potatoes. I did buy Airline stocks after 9/11, since they tanked massively, I didn't believe that air travel was going to stop from that tragic event/s. That paid off fairly well, if only I wasn't a poor grad student and could have invested 100k, instead of 5k. I'm not an investor, but I wouldn't look to put money into much of anything, unless you see an upside within the next 2 years.
-Meiyo

Greg T. Jeffers said...

Meiyo:

What the Dems and the Media did to GWB in the Katrina debacle was DISGUSTING. Many now see this as payback time. Both sides are out of bounds and out of their freaking minds...

For a sitting President to travel requires a logistical effort beyond the comprehension of most regular folks- Bush, and now Obama, have been wrongly lambasted for doing the right thing - keeping their traveling circus from causing MORE problems. The Media and the House Dems knew this very, very well - and threw GWB under the bus because they wrongly thought that "by any means necessary" was the appropriate action - they should eat sh*t and rot in hell. That does not mean that WE need to behave like that. We are better than that.

Donal:

I meant the US$ vs the other currencies in the Index. Versus Gold, or Oil, or Corn, etc... your guess is at least as good as mine.

Kathy:

Good to hear from you. You are certainly making the better investment absent risk capital.

I am happy to report that our farm is really producing enough to make me feel the endeavor was worth the effort - it only took me 5 growing seasons, and thousands of hours...

It is my bet that one day, small family farm economic will once again make sense - in other words, crop and livestock prices will have to rise significantly. This will be a happy development for some and a disaster for others.

There is ALWAYS somebody on the other side of EVERY trade. Even in feel good, localized, community based, feel good, blah blah blah... environments.

Greg T. Jeffers said...

Anybody listen to Obama at the 49 minute mark?

Anonymous said...

I'm got dinged for using too much "bandwidth". A major drawback to living in the country, ancient phone lines not capable of DSL, no cable lines through the farmlands...so I'm stuck with crappy/overpriced Satellite internet. I can't watch videos that are very long without using up my usage limits, you mind sharing what happened at the 49th minute mark with me? :)
-Meiyo

Anonymous said...

Sounds like a "peak" statement to me. If I were the reporters I would have asked for clarification on " we are going to have a problem" at about 51 min. mark. Just maybe that would get a few people taking it for real. Also, MSM has begun televising the new estimate of the spill, to date is closer to 12,000- 19,000 Bar. per day.

Bur,

add the oil spill to the already dead zone of the delta and this makes for a enviromental mistake they will read about in 100 years.

peace

PioneerPreppy said...

Yep that was a peak oil statement not as harsh or up front as a Chris Martenson quote but the same statement just sugar coated and given with an implied longer term till impact dialog.

We can't drill are way out... oil companies going 1 mile under water and another 3 miles below that.. there will be accidents.. etc.

It also speaks to your right vs. left, Bush vs. Obama, Katrina vs. GoM controversy in that Obama couldn't resist a stab at the right or Palin as he said it. Which in turn means the right will fire back. I can't say who pushed politics to the complete nastiness it has become but that is the new rule book they all play by now. It is mirrored in all forms of political opposition these days from gender to race and since Arizona's immigration law geographical.

As for...

"it is my bet that one day, small family farm economic will once again make sense - in other words, crop and livestock prices will have to rise significantly. This will be a happy development for some and a disaster for others."

That was the conclusion I came to a few years ago as well and the main reason I follow your blog actually.

Have a good weekend all...

Anonymous said...

Yeah Obama's remarks at the 49th mark was a peak oil statement. He kinda hesitated going into it but he did. What really caught my attention was how quickly the next reporter changed the subject to Arizona's immigration law.... talk about DENIAL!

I didn't vote for Obama but now I can respect him for the crap he has to put up with and I wonder if going through all that shit just to be remembered being President is worth it.

Dan said...

Obama is weak because of his response to the financial fraud crisis. I realize it all isn’t fraud, but fraud IS the driver, and we will not and cannot recover until it is dealt with. As far as the GOM I think Obama should get a pass for now, this is a technical issue and no one knows how to deal with this. After Katrina there was a complete breakdown of government that was not GWB’s fault; however, the sorry performance of the federal agencies after the event was primary a management issue and we know how to deal with that. GWB was either unwilling or unable to act when his top managers froze up, that is simply unforgivable in a crisis.

Dan said...

Listened to Obama at the 49th. He definitely knows that there is a problem, question is will he follow through.

That reporter changing the subject seemed par for the course. People always obsess about X off to one side as Y is mercilessly bearing down from another vector. Happens all the time.

Stephen B. said...

Bur:

Yes, lackadaisical is the word. But... it's not just Obama or Bush. I have to say, looking around at so many people I know, so many, it seems today, are plodding along as if they really don't give a damn. I'm not just talking about the down and out, the unemployed, etc., but almost everybody. Where are the sharp, motivated, smart people? I don't seem to run into nearly as many anymore. Granted, in my line of work (residential treatment/social services) I wouldn't really expect to, but even allowing for that, man, America doesn't seem to have any fire in its belly any more to work hard and to face things. It's all party, TV, and denial. Yeah, I know how fashionable it is to itemize the ways America has gone soft, but I always hoped we'd still rise to the occasion. Now, however, I'm really not sure.

About 49 minutes: Yeah, it was funny how the reporters just sat there, and nobody wanted to try a follow up. Personally, I cannot stand Obama, especially for the thinly veiled way he hides his activist, international, racial agenda, but he's all over peak oil personally it would seem.

But then again, Bush was well briefed and versed on it too by Simmons, Rep. Bartlett, etc. The presidents - they've all known for a good, long time. But will it make any difference in the government's response? I don't think so. I mean, what can the government really do when it's the people that drive the agenda, and as I said, people don't give a damn about much of anything anymore, it seems.

bureaucrat said...

I don't know about other people, but my "zest" for exploration, trying new things and alternative problem-solving comes up against the "security wall" all the time, forcing me to back off and not be very energized about much of anything. They've passworded, camera-ed and security-guarded us to death, and anything outside the script is discouraged and threatened with zero-tolerance policies. Unless you're ready to take on the world (and it most cases, that is a bad choice), people are backing off from pushing the envelope these days. At least, that's what I've found. I'm always trying different angles and approaches, but they aren't appreciated by "management." Time for a REVOLUTION!!!! :)

bureaucrat said...

Uh oh ...

HOUSTON — BP engineers struggled Friday to plug a gushing oil well a mile under the sea, but as of late in the day they had made little headway in stemming the flow.

Amid mixed messages about problems and progress, the effort — called a “top kill” — continued for a third day, with engineers describing a painstaking process of trying to plug the hole, using different weights of mud and sizes of debris like golf balls and tires, and then watching and waiting. They cannot use brute force because they risk making the leak worse if they damage the pipes leading down to the well.

Despite an apparent lack of progress, officials said they would continue with the process for another 48 hours, into Sunday, before giving up and considering other options, including another containment dome to try to capture the oil."

Joseph said...

"Extraction is more expensive and it is going to be inherently more risky"
"Because we can't drill our way out of the problem"
"As a bridge to a transition to new technologies and energy sources..."
My biggest response to you and please do not be offended but so what? As was observed by anyone watching the interview and individuals following this blog the reporters didn't even flinch and moved on. 99.999% of the American public will do the exact same thing and that is assuming they watched the video. Unfortunately this is a non-event in the average person's life.

Are you looking for validation from someone in our government or what? You're a decent person and a bright guy Greg so what am I missing?

bureaucrat said...

Obama didn't even say we were at "peak oil." We want to think he did, by picking out words and reconfiguring them to say what we want him to say. Obama keeps on saying that the oil will be harder to get, but there is still a lot of it out there. He didn't say anything in that CSPAN clip that suggests a permanent plateauing of oil production. He still thinks (at least in public) that the oil is still out there. And it is. It is just going to be more expensive. We know better.

Joseph said...

@bureaucrat
So the part where he is talking about transitioning to new technologies what do you think he is talking about?

Anonymous said...

Since I am subject to ATT's "peak bandwidth" and I'm near the end of the month, I won't be looking at Obama's video either.
And I expect his familiarity with "peak oil" is only a matter of seeing a bell curve with some dates below.
Knowing about peak oil is meaningless unless you think about the subsequent results of peak oil such as the export issues, the relationship to growth in capitalist economies for the last 150 years and so on.
Looking at the bell curve just says no problem on my watch or I'll be dead before we run out.
Most Americans probably think like that also.

Anonymous said...

B,

At 51min 51sec. B.O. mentions that he sees what is on the horizon and that we need transtion to alts. or we will be in big trouble.

I imagine this refers to cheap crude ending. As you pointed out we can take his words to mean what we want. You thought something else?

peace

bureaucrat said...

Obama says it will be more expensive. He says we need to take more seriously the alternatives to oil.

He does NOT say anything about a peak/plateauing of oil production worldwide (even tho we've been on a plateau for 4 years). He does NOT say anything about running out of oil, nor that there is no chance that more oil can be found. He says it will be hard and expensive.

The Earth is a big planet.

The Hubberts Curve does not guarantee that there will be no more oil to be found past a certain point. You'd have to xray the Earth to make that statement. He studied how oil fields died, and extrapolated planetwide.

In the 1970s, it sure looked like the Earth was running out of oil (gas station lines, etc). Then, out of the blue, late in the 70s, they found Prudhoe Bay (130 billion barrels in Alaska) and the North Sea (49 billion barrels next to the UK). "Peak oil" was postponed for 40 years. Who knows what the Brazilians are going to come up with with their oil?

Obama is a lawyer. He is not going to talk in absolutes unless he can be 110% sure he is right. Everything he says will have an "out" for him.

bureaucrat said...

Oooops, sorry, Prudhoe had 13 billion barrels.

Dan said...

Has anybody seen this? When all you have is a hammer...

bureaucrat said...

I have been watching and reading Simmons since 2006, and he obviously is filled with information the oil industry and energy in general. However, ever since he turned his company over to the next "boss" and became "owner emeritus," he has been slipping a little.

The information is there, but the explanation of what he's trying to say isn't as sharp as it used to be. He's aging, like the rest of us. In one video last week, he mentioned seeing a fish swim thru one of the Gulf oil plumes and something about being now "white." Do fish even swim at 5,000 feet below the surface? Anyway, he is still a great source of peak oil knowledge. But he's not as sharp as he once was.

Dan said...

There are fish swimming on the bottom of the Puerto Rico Trench.

bureaucrat said...

How deep is that?

bureaucrat said...

I guess they can (from USA Today 2004) ...

"The trick is to keep the pressure inside the fish the same as that outside. Only pressure difference can crush. So, if the difference is essentially zero, the fish is OK. Fish tissue is at about the same pressure as the outside pressure and thus experiences little if any pressure."