Tuesday, February 19, 2013

Oil, Solar, Wind, Money, Life

Oil continues to do its thing to the U.S and Europe.

In the case of Europe it is doing its thing faster, harder, and deeper. The U.S. has had the benefit of the salubrious lubricating effects of "Tight Oil" production and ethanol. Still, those resources and the .2 miles per gallon per year gains in fuel efficiency were not enough to increase Total Vehicle Miles Traveled.

Will domestic production increase 700k bpd in 2013 over 2012? That's the EIA's position. Will that come to pass? I think a pretty good chance. Will it be enough to overcome the decline in imports? It should at least come close (for that year). Vehicle miles traveled might actually go up year over year 2012/2013. If so I would bet that that would be the last yearly increase for a while.

Either way, Peak Oil imports, and with it Peak Oil, likely came and went for the U.S. The question now is will the rate of change be slow enough to allow the increase in wind and solar electricity generation and battery technology to overcome the decline in Oil? To my mind, that is a far more important question than will the world's central banks over or under do whatever the heck it is that they are doing.

World Oil supplies are being contested for right now, with the productive societies out bidding the less productive societies. The Oil will flow to the most productive, and the less productive will have to get used to less and get more efficient (like Greece, Spain, and Italy are doing right now).

The thing is, I never concern myself with societies, or countries, or peoples, or however people divvy themselves up. I concern myself with No. 1, 2, 3, 4, & 5, (and "Gramma") along with my extended family of 6 through 50 or so. In order to look out for No. 1, it really helps to know what it is that No. 1 wants. This is a big thing. It is absolutely impossible to get to where you want to go when you don't know where you want to get to. Seems absurdly simple.

Oh, yea? Ask any college student what it is that they really want to do (exactly), where they want to live (exactly), what they expect to pay for housing/healthcare/automobiles/insurance over a lifetime, how many children they want to have, when they want to have them, how much money they think they need to save each year and at what compounded rate of return they expect... they have no freaking idea.

Why is that?

Now if you really wanna f**k with their heads, ask them what their plan "B" is just in case their non-existent plan "A" doesn't work out the way they are NOT thinking about.

We are at one of the largest inflection points - on politics, energy, technology, debt, war, health (obesity) - in the history of mankind - and many young people are operating without a plan.

This goes for grown ups, too.

"That which is not measured is not managed."

"1/4 by the end of the first quarter." For those people working on commission or in some kind of quota job this is self-explanatory. For young adults under the influence of the university-industrial complex this might not be self-anything.

Family/Household income in America is a disaster. So the Federal Reserve has been successful at re-inflating asset prices. That's great - for me and other Wall Street types.

Along with Household/Family income real household wealth is in the crapper, too. People cannot sell their houses for what they are "worth" and the value of their financial assets won't take them very far.

Columbia University Economics Professor Joseph Stiglitz had this to say today about the lack of economic mobility here in America. This is an incredibly bright and thoughtful guy that just cannot put 2 and 2 together. His conclusion is f***ing spot on. His "why' is just FUBAR. The U.S. has never spent more on "education". The U.S. has never had a higher percentage of college educated adults in its population. The result? Far worse mobility than at any time in our history. His recommendation? We need to spend even more on "education", despite the fact that 2/3 of the over $1TRILLION in student loan debt is in default or deferment (not paying down their loan balance). Stiglitz might be a brilliant economist but I can tell you he has obviously never managed an investment portfolio. You see, any investment that does not yield enough cash flow to cover debt service is to be avoided like the freaking plague. It never occurs to these guys that there might be something else going on. WTF??!! To be fair... I think this guy is pretty smart - but he works for Columbia and is writing for the New York Times. "No man can understand that which his salary requires that he not understand". Or something like that.

Dear Professor Stiglitz: What the U.S. economy needs is the termination of all barriers to entry for any and all services (and goods). Stiglitz mentions how mobile things were 100 years ago. Wanna know why? Nothing required a license from the State!! Want to be an "accountant"? 100 years ago you hung up a shingle and went to work, usually after working for another guy that called himself an "accountant". Same with dentistry, lawyering, electricians, doctors, plumbers, carpenters. Let the market decide if it wants to pay $50,000 for a medical procedure because you went to Harvard, rather than $5,000 to a guy that learned how take out Gall Bladders from his Dad. The result will be fast and furious repricing of all of the things The People cannot afford.

Do you know why we have so many toothless people out in rural America? Because the Dentists have a very powerful lobby that has priced millions of Americans out of the ability to pay for dental care. So now instead of a hygienest on every corner doing cleanings and drill and fill repair work (do you really think it would take more than 4 weeks to learn how to drill and fill a cavity in a tooth?) we have dozens of people on every corner with gaping holes where teeth should (and would be, if they could afford dental care) be. This is the case for every other occupation that requires a "license" to work.

So how the hell did I tie Oil and State contrived barriers to employment together? Easy. I got that kind of mind.

Just kidding.

Actually, it was the Oil issue facing the U.S. that got me to thinking about the "system". As it turns out, while the Oil situation is and has been a disaster to the U.S. economy (if Oil was still $20 per barrel and imports were continuing their multi decade growth patter does any one in their right mind think that the Household income, net worth, and employment would be the nightmare they are?) it has not brought the world to an end. It did, however, bring to an end the silly narrative that people born into poor and working class families were going to move up the economic ladder (by screwing up the economy) or that middle class people would achieve financial independence sometime before trying to figure out what Medicare, Part B meant to them personally... and, coincidently, combined with the incredible volume of knowledge and information now available at everyone's fingertips (not just ivy tower academics) thinking people are starting to question the very foundations of the "system" - The Federal Reserve. Income Taxes. Deficit Spending. Social Security & Medicare. Property Taxes. And more - and the conclusions they are coming to are most discomforting.

I have pointed out in excruciating detail why (and here, and here) even "rich" people will never, ever have financial security and can only ask why is it that they willingly waste 40 years of their lives striving for something that simply cannot be had? Giving up children & family, their health, their precious time on this earth... to concentrate their efforts on advancing in a system that concentrates all of the rewards in the top couple percent of the people? In what universe does that make sense (for the average individual)? And yet we do it.

We do it because the system has power over us. Food comes from the grocery store. Water from the tap. "Services" come from the government. We "need" insurance for Life, Health, and Liability - even though the combined take of this insures that we are stressed, unhealthy, and worrying about losing assets we don't really have. You can't make this stuff up. A Martian coming here and examining the lives and motivations of people living in the suburbs and commuting into Manhattan (or pick your city) would phone home wondering WTF is going on here.

Some of us will try to break free, but we won't make it. Our spouses, kids, friends, and extended families live in that universe, and some force akin to gravity wants us to live there, too. It pulls on us. It distorts.

But the garden is going in, the hams are hanging, and I put in a wood stove to heat the house and a cistern to supply our water. Maybe I can pull free... I wonder what the escape velocity (philosophy) of this particular gravitational field is?

You Grok?


guy11976 said...

hygienist; can not help correcting, Greg
just corrected Granddaughter's spelling on reading report. I agree that there is too much emphasis on a degree. an article today in the times had comment that to be a file clerk, you needed to have a BA. We need the three tiered education as in my post about german education.

Anonymous said...

You need to write more.

westexas said...

5,000 word essay, with 24 graphs, on global net exports:


Greg T. Jeffers said...

Thanks Jeff. Excellent.

tweell said...

Summing up: we're screwed.

I'll admit that planning didn't work that well for me. I planned to be a nuclear engineer. Since money was lacking, I went to the Navy and became a reactor operator for the knowledge and training, so I could work in the field and make money while learning more. Yeah, Three Mile Island happened, no more nuclear plants were built, and the job market for NUCs disappeared.

I did have a plan B, amazingly enough. I had learned to repair typewriters, figuring that this would serve if plan A went astray. Oops.

I managed to pick up computer, telephone and networking while scraping by, that has (mostly) served to support me and mine. My recent attempt to learn and continue the family machining business failed, so I'm back to PC's short term and looking for another way to opt out of the rat race long term.

From my experiences, flexibility in thinking and acting is worth as much or more than decent planning.

Greg T. Jeffers said...

For sure, Tweel. The exercise of planning is just that - an exercise. It forces one to think.

Sun Tzu said "no battle plan survives contact with the enemy". Ain't that the freaking truth. In my personal experience NOTHING turned out according to plan... but thinking about it will help one adapt when things go astray - and they will!