Wednesday, December 24, 2014

Year End Review of the Data

The furious bear market in world Oil prices took market participants by complete surprise. That's how markets work. Calling tops and crashes is impossible. Bottoms and recoveries are much easier.

Saudi Arabia, Goldman Sachs, the U.S. Treasury, The Federal Reserve Bank, Russia, The U.S. Department of Energy et al... all employ cadres of Mathematicians, Statisticians, and Analysts - and not one of them saw this bear market in Oil coming. Zip. Zero. Nada. Bupkis. Ugatz.

I have had nothing to say for most of this year. Speculating in the commodity markets requires discipline - sometimes you have to stay away from the table. When the markets do not jive with ones sense of the world it is better to keep your mouth shut and your hands in your pockets. I fear boom times. The end always seems to come when you least expect it and you are rolling (temporarily) in profits. Busts can be wonderful things - if you have any capital left to take advantage of them, that is.

So what happened with Oil?

In short: Too much Oil at the moment.

This moment will pass. It might take a year or 2... but $50 Oil assures $120 to $150 in 5 years or less.
$30 Oil will assure $200. That's how commodity markets work.

I spent the last couple of months talking with the Mad Scientist & Westexas and others, particularly folks working on the ground in the Bakken and Eagle Ford, asked for and was kindly granted by Darwinian vast amounts of data that he used for his assertions at his excellent site (thanks Darwinian!).

Before I get to my personal anecdotes and the observations from my contacts in the industry here is what the production data says (to me):

  • "Peak Oil" happened to conventional Oil sometime between 2005 and 2010. (Scroll down to graph showing "World Less USA Left Scale). The peakniks - Hubbert, Deffeyes, Simmons, Heinberg got this part right. 
  • There is a lot more non-conventional Oil and other liquid fuels than the peakniks had counted on (enough to move the needle on "peak" 8.3 years for 500 billion extra barrels), and in the final analysis it is ultimate recovery/production of every atom of liquid (or gas to liquids) hydro carbons, right down to ear wax, that really matters. (I bet you didn't know that ear wax is a hydro carbon. It is. No kidding!)
  • There is a lot more non-conventional Natural Gas than the peakniks had counted on (of this the "peak" needle might have a great deal more than 8.3 years to move... though I have not gathered enough data to give me great confidence to say more).
  • There was a great deal more "efficiency" that could be wrung from the system in the U.S. than the peakniks counted on.
  • It was non-conventional Oil production in the U.S. that kept the world from "Peak Liquids", which we may or may not be at or close to. Peak Liquids has happened in the Rest of World Ex U.S. (so far). If someone comes along and figures out some technical solution to really and actually improve fracking technology and recovery (despite claims, this has not happened yet. The technology has been around for a while, and improvements in recovery have been tactical and economic not physical) and raising ultimate recovery of Tight Oil from X to 3X or 5X, well, that will move the needle another decade (or 2).
  • "Total liquids" consumption in the U.S. peaked some years back (2008 give or take 6 months) and subsequently declined by several million barrels - even with the production increase of 4 MILLION barrels per day of tight oil and nearly 1 MILLION barrels per day of ethanol domestically. The economic "recovery" during this period was anemic at best, and we should be "thankful' (not really, but I will get to that shortly) for that and give all of the credit to increased production and consumption of Natural Gas to offset the decline in liquid hydro carbons.
  • Whatever industrial processes that Oil could be replaced with Nat Gas has happened for the most part. 5 years+ of $100 +or- Oil and $25 barrel of oil equivalent Nat Gas has likely been long enough and incentive enough to make what substitutions were economically possible . There will not likely be much more of this (in the near term, say 5 years) as we have increased our production and consumption of Natural Gas greatly - and yet our inventories have not risen. By mathematical necessity the "days of supplies" number must have declined precipitously - and cut our use of coal. Since all new power plant additions have been Nat Gas (little new coal power added of late) the 25% increase in Nat Gas production is spoken for and any discussion of exporting Nat Gas is just political posturing.

OK, there's the supply data. Back to the Oil price crash.

Oil prices are not sufficient to provide profit incentive to the U.S. Tight Oil production market. Ergo, these folks are going to lay down rigs, and in so doing they are, for now, going from the Well Manufacturing Business ("WMB") to the Pump and Collect ("PAC") business for a year or 2. Maybe 3. This means that Oil prices could literally go down to the cash flow costs of pumping and collecting - doubtful, but certainly possible. Which means Oil COULD go to the $20's! But fracking WILL come back to whatever extent is physically possible, and that will require $100+ Oil. For people with capital, foresight, and courage this is an important moment. Bear markets in Oil typically last 20 weeks. This Bear market is already 28 weeks old. Remember, the commodities futures market is a "zero sum game" - for every winner there is an equal and opposite loser. The folks selling or "shorting" oil have made a killing. At some point they take their football and go home. We are close to that point in time (if not in price).

How much is ultimately recovered from the Tight Oil fields? Is it 20 Billion barrels or less, as the critics contend? Or is it 200 Billion, as the Oil industry contends? Good question. I don't think it matters over the next 5 years, but I do think that that question will be answered in that time frame. I rather doubt the industry's assessment - for as long as the U.S. is not a command economy. (Think about the possibility that I am hinting about there.)

(BTW... all of these conspiracy theories of the U.S. and Saudi Arabia conspiring to destroy Russia/Putin... or Saudi Arabia purposely destroying the U.S. tight oil production... whatever... are all complete nonsense. Rubbish. No one saw this coming. This price decline caught EVERYONE by surprise and EVERYONE is running around trying to optimize their outcome. Nothing more. Nothing less. And in the process of trying to optimize their outcomes the powers that be will negotiate internally and externally and change their mind several times. That's just the way it is. 

Now, the unintended consequences of  all of this, and the parties abilities to benefit from these are another matter altogether.)

Cap Ex budgets of the North American Exploration and Production companies are being cut deeply, and North America is (or was) responsible for ALL of the growth in world Oil production for the past 5 years. This will not be undone overnight. Production growth in North America is going to come to a halt. The longer (and lower) the price of Oil stays the higher the inevitable rally will be. Peak conventional crude Oil is here. If Peak Non-Conventional Oil is here the ride back up will be the stuff of legend.

Peak Oil is NOT the end of the commodity price cycle. So far, Peak Oil has meant that the commodity price cycle for Oil is far more pronounced. I think that that will continue, if I may make use of understatement, for at least one more turn of the cycle.

Oh, and for those of you that think "Peak Oil" has been discredited, I would like to say that I have thoroughly reviewed the data from the US Department of Energy's EIA and the European IEA. The data completely supports the theory. The political and financial media, having not even bothered to look at the data, disagrees.

Here life long Oil man T. Boone Pickens takes CNBC journalists to task, telling them to look at the data (they don't) and further reminding them that he is an Oil man and they are a bunch of talking heads wearing pancake makeup. You can skip to the 4 minute mark. By the 6 minute mark Pickens looses his patience and reminds them, "I'm the expert, you guys, not you."

This is your media at work. Its not the price cycle of a commodity... its the proof that Peak Oil is a failed theory irrespective of what the data that that U.S. Department of Energy compiles might say

But let me take Pickens to task now:

"The world got along fine with $100 Oil."

People like me got along fine. But for the people occupying the lower 25% income strata in the U.S. $100 Oil was an unmitigated disaster for their economic and financial well being - but ONLY because we have constructed a system whereby people that cannot afford to own and operate a car are "non-citizens" (I just read Kuntsler's "The Geography of Nowhere". That was his term.) The world that these people occupy was not "fine" at $100 and will be even less "fine" at $175 - which is sure to come. Not that I have an answer - I don't. I do suggest that "we" think about a new living arrangements for people that will absolutely, positively be even worse off "non-citiznes".

And for the "drill baby drill" crowd - Here is your world:

Not exactly heaven on earth.

More soon.

Wednesday, April 23, 2014

Everything you have been told about your Health is Wrong?

For decades now the American public (and by extension the West and the OECD nations) have been bombarded with "information" regarding what one must do to maintain their heath. Eat right and exercise! Yet the industrialized West experiences hormonal cancers (and colorectal cancer) at 2X to 5X the rate that non-industrialized societies experience (the difference in breast cancer for a woman living in New York City and a woman living in the least developed parts of the world, say the mountains of Peru, is well over 5X. Pretty much the same for men and prostate cancer. Suddenly Peru has a certain appeal, no?). It gets worse for "shift workers", nurses, police officers, fire fighters, and others that work day and evening shifts. Hormonal cancers for this group are estimated to be 40% higher than for non shift workers.

This is true even though our diet in the Wealthy West is much more varied and nutritious.

What if everything you have been told about maintaining your health has been absolutely freaking wrong?

20 years ago we were admonished to never go in the sun. NEVER. There was no such thing as a "healthy tan". Now we know that the hormone Calcidiol and its resultant Calcitriol (commonly known as vitamin D, even though it is not a vitamin) is one of the 2 most important hormones in the human body for the regulation and support of our immune systems.

The other is Melatonin.

Vitamin D is only synthesized by the skin when exposed to mid day sunlight. Melatonin is only synthesized by the pineal gland in the absence of light (complete darkness).

The data is simply overwhelming, and the data says that you can veggie-juice yourself after your yoga-anti-stress class as you Namaste the universe while you cover yourself in pink ribbons and "March for the Cure" - but are at extreme risk of developing deadly, terminal cancers unless you get sunlight (or ingest Vitamin D, but there are some other benefits to sunlight - in particular the release of Nitric Oxide - that you will not get by relying on supplements) and turn off the lights completely for 10 or more hours every day. When I say "turn of the lights" I mean it in the extreme. No streetlight streaming in. No blinking router lights in the corner. No clock radio light. Darkness. As in the kind of dark that existed before the advent of commercial electricity generation.

This information is starting to leak out into the MainStream Media. In fact, you can't go near a Doctor now without getting a vitamin D shot, but the Melatonin thing? The need for darkness? If factual and accurate, and I think the data is powerfully convincing, the implications are simply mind bending. Articles covering this issue are now everywhere.

The question is this: Are we willing to turn off the lights to prevent cancer, MS, and other diseases? Are we willing to move from northern latitudes to prevent cancer? Or are we going to continue Marching for the Cure, getting Mammograms and Prostate biopsies?

If you knew that wearing a suit to work while living in brightly lit New York City was going to kill you, or cause you to lose your breasts or a working and operable penis, would you remain there?

I see the post "I F***ing Love Science" quite regularly. The internet has put the entirety of human knowledge at our finger tips - and now we know it is not the "Paleo Diet" but the "Paleo Circadian Rhythm" that governs most of our immune system. Hey, the Paleo guys were in the right church, just the wrong pew.

You can use search engines as well as I... I like "Google Scholar" but any one will do. How much reading time - and then action - is your life worth?

More soon on the mental health impacts of messing with Mother Natures natural rhythm of light and dark.

Tuesday, April 1, 2014

For What Its Worth

I am going to wander off of the subject of energy and muse a bit about health.

I LOVE my Life. This one. Not some wished for existence of perfection. I love the Life I have. Grey hair, flat feet, crooked teeth, only one chromosome or 2 away from Neanderthal... and I am good with all of it.

Life is not perfect and not all of us are going to get old, grey, and wrinkly. Those are the rules, but there is absolutely no sense in killing yourself slowly or permanently damaging your health and the quality of Life for the finite time we have for questionable objectives. 

Read this incredible article "We are giving ourselves Cancer". Its not directed at smokers or the obese. It is directed at the healthcare industry. The truth of it all can be found out there in articles like this.  And this.

For better or worse, and like it or not, there has been an ongoing "natural experiment" in "cancer" outcomes. While there are several forms of "cancer" with high cure rates - testicular cancer, anal cancer, leukemia, and Hodgkins lymphoma - there is precious little data to support any assertion that all of the other treatments for the 200 some odd other cancers extend the life of a cancer victim by a single freaking day. This does not mean that some people might not experience a "cure". Surgery in certain cases can be effective in removing localized malignancies. Chemotherapy? Not so much. The math simply says that some cancers are highly aggressive and they kill us no matter what treatment plan we take and others are not aggressive and won't kill you no matter how hard the healthcare industry tries to kill you. And it is impossible to tell which from which.

If it was about "money", "status", or "access to health care" Steve Jobs, Jackie Kennedy, and Hugo Chavez would still be here.  That means means that there is no point in "fighting" cancer. The point is to fight to not get cancer if at all possible.

Well, there is another point. NO ONE is getting out of here alive. You can go to Lourdes, douse yourself in holy water, doven at the Wailing Wall... and the outcome will not change. There will, however, be all sorts of folks willing to lighten your estate for a chance at a "cure". Worse, they may well be shortening your life unnecessarily. The brutal reality is that at any time on the north side of 40 you may get some very disconcerting news from a gent or lady in a white coat. If you are over 50 its no longer even a tragedy. If you are over 60 its to be expected. The only solution, or perhaps I should say the only rational response is to have fun. Right now. (Well, that's my response... I never concerned myself with "being happy". I figured if I was having fun the rest would take care of itself.)

There are a great many people that will do their damnedest to get you killed - even if they seem like they are "on your team". An old college team mate of mine has been stricken with cancer. I have not talked to him since our college days, but I mailed out a note to him this morning. He was always a nice fellow and a genuinely good egg. I could not help thinking about the fact that the Buffalo Bills owner just passed away at 95 while the players on the field are absolutely destroying their health, with literally dozens of CT scans and hundreds of X-Rays for those with long careers. 

The "Healthcare Industry" will happily irradiate you to death, pass you hospital-acquired infections, perform unnecessary surgeries, and "treat you" without benefit - and we are worried about who will pay for that? Seems something is amiss in that line of reasoning.

The ancient Spartans aspired to a "good death" (of course, their idea of a "good death" seemed to hold a great deal of bloodshed.) For some odd reason, a good death is no longer in our lexicon. We are no longer Spartan warriors. Now we are cancer "fighters". 

"Your arms are too short to box with G-d."

The system has worked hard to scare the living sh#! out of people regarding illness and old age - and in doing so has ruined the many moments of our lives when we are healthy and young. 


Wednesday, March 19, 2014

Malaysian Flight 370 Scenarios

While there is still little public hard evidence, that has never stopped us here at the AEC from going over possible scenarios...

I don't think that the pilots intended to crash that aircraft into the Ocean. The information released is that that Flight 370 climbed to in excess of 45,000 feet shortly after shutting off their inflight transponders. I think this was to render the passengers and crew helpless (dead) as part of the plan to steal the aircraft for use in a future terrorist operation (in 10 - 20 seconds at the altitude human beings are rendered unconscious... and very dead in the space of 3 minutes).

That does not mean that the plane landed intact someplace. Much could have gone wrong leaving the whoever was piloting the aircraft no other option with fuel running out but to accept the end, but I think the authorities are absolutely freaking out about the potential of having a Boeing 777 sitting around waiting for the next act in this tragedy. I would have little interest in spending time in some high value target in certain regions of Asia until it has been determined with certainty what happened to that aircraft.


The American administration and its European counterparts are wondering what the heck to do about Russia annexing a semi-autonimous region that overwhelmingly voted for annexation?

Perhaps they should "do no harm".

Thursday, March 13, 2014

Ukraine (Crimea) was about Oil, and its ALWAYS About Oil

To put the U.S. Oil circumstance into its proper perspective please take a gander at the following graphs:    

    24 months of data starting January 2012 and ending December 2013

Data from the U.S. Department of Energy's EIA website pages Here and here.

I make no representation here as to whether these trends will hold, but as they say on Wall Street: "the trend is your friend". My money says they hold even if my mouth won't commit.

Total U.S. domestic production and imports remains at or under 14mm bpd for the past 2 years, and had been as high as 18mm bpd in 2005. The downtrend of the last 4 months in net petroleum imports has overwhelmed the increase in domestic production that had kept this metric static for the past 2 years. A peak to trough decline of 1.7 million bpd.

As I have asked before: Where is the Oil that did not show up in the U.S.? Did the exporters cut exports? Or did the other importers import more than they had been? Every data point I read tells me, in so many words, that the other importers did not increase their imports (though everything cite's another source that cite's another source, etc... which leaves me cold. Of course, the EIA leaves me cold, too, but that and the IEA are the only sources we have).

So what's this have to do with Russia/Ukraine/Crimea?

Putin made a remark in the press that he could ruin the financial system of the West with a wave of his hand (pen). At first, I thought he was talking about the US$ and Russia's customers in Asia. Maybe. Or maybe Russia agreed to cut exports to keep the price high enough so that the fracking boom does not fall on its face. The U.S. actually finds itself in the position of desiring high oil prices! If Oil is $70, still very expensive historically, the fracking fields in North Dakota and Texas go bust and billions of $$ in capital equipment rusts in the rain. Was Putin reminding the U.S. of some such deal? Such a deal would be in both parties' interests... but far more so for the U.S. in the short term.

I cannot see how it is to Putin/Russia's advantage to undue the U.S.$ trade settlement for Oil at this moment or in this fashion. I can see how increasing domestic Oil production could collapse West Texas Intermediate prices in Cushing, OK, due to their unique pipeline and storage issues if helped along by international prices. I could see that outcome very easily. That would not be in the U.S. OR Russia's interests - but it is Russia that holds, and deals, the cards in that game.

The U.S. economy has proven that it can handle $100 Oil, even if 40% of the population cannot. (Not a single f**k is given in the U.S. about those people, and some of that attitude is rightly so: that population is busy consuming heroin, meth, and tattoos; does it really matter if they don't have enough fuel to get back and forth to the tattoo parlor? Lest you think I am being elitist... I am a product of the lower portion of the working class. The way up and out of that is not drugs and tattoos - but that is another issue for another time.) What the U.S. economy cannot handle is a collapse in domestic production caused by low Oil prices.

Tuesday, March 11, 2014

Suicide and Commercial Aviation

The possibility that one of the pilots of the missing Malaysian jet committed mass murder/pilot suicide is an ugly prospect - and evidence increasingly points in that direction - though clearly no one knows what happened at this time.

If this is indeed the case it would be, at least, the 5th mass murder/pilot suicide on a commercial airliner  (the SilkAir crash was not a slam dunk, but certainly highly suspicious) in the last 15 or 20 years (including 9/11). Wrap your mind around that for a minute.

Not "pilot error". "Pilot Suicide", but instead of hanging himself in the garage he decides to go out with a bang - and take hundreds of other innocent people along with him.

Spy satellites show no mid air explosion, but they do show a sudden turn in the aircraft. Could some mechanical failure have occurred? Sure, and if that was the case the crew would have had plenty of time to communicate a problem... but there was no such communication and no distress signal.

That's disconcerting.

Wednesday, March 5, 2014

The Oil Export Cat is out of the Bag

Regardless of whether or not Putin pushes the Oil export/US$ issue at this time is not the issue. To me, the issue is now reasonably clear.

I pointed out in 2 earlier posts, here and here,  that something very big has happened in "Export Land". During the past 5 months, Oil imports into the U.S. have fallen steeply. Its a zero sum game. Either the exporters are exporting less or the other importers are importing more; given the $10 to $15 rise in Oil prices during the period, I am going with less Oil exported. I could be wrong, but if Oil was backing up from non U.S; deliveries I would expect Oil to have fallen by $10+, not gained $10+.

We are talking 1 million bpd from Q3 to Q4. Where would that kind of drop come from? Saudi Arabia or Russia.

Is this part of Putin's set up? If I were working for CIA/ONI/NSA I would know. They have the tanker data (there are 4000+ Oil tankers plying the world trade. Data collected via satellite makes clear, down to the gallon, how much Oil is going to who) so I don't think there is any question about this among the top brass in D.C.

Putin launches an ICBM test? And tells the West (thru an underling, but believe me, there are no undisciplined leaks when you work for the former head of the KGB) that he has them by the Gishga's (that's a yiddish technical term for important parts of the male human anatomy) and that he can demolish the Fractional Reserve Banking system with a wave of his pen?

At this level, I do not believe in coincidences. I believe that Putin wants the Federal Reserve, the U.S. Congress, the intelligence agencies, and the Pentagon to know where he stands because he does not want the Administration to make a serious mistake and force his hand. Putin thinks like a chess player/Judo competitor. He is not a Low T, botoxed, metrosexual American. He is a genuine tough guy.  The real deal. You don't rise through the ranks of the KGB without tolerating quite well the smell and screams generated when blow torches are applied to human flesh .

I am not trying to paint a boogey man here. Bobby Fisher, chess master and world champion famously quiped that you play the man, not the board. This is my understanding of the man and I would play chess with him accordingly.

I don't think Putin wants to end US$ hegemony this way, but I do think he wants to end it because it is in his best interests to do so. What is the point of US$ hegemony in a world without Oil exports and the massive social programs' impacts on a currency created via lending? There is none! Putin has the Oil. Japan and China want Putin's Oil. Why would these parties wish to involve the U.S.'s paper currency in these transactions if they can come up with a new arrangement?

The U.S. continues to build a massive military. Those weapons are pointed at who?

China and Russia.

Why would those nations be interested in continuing to fund a weapons system that has them in the cross hairs? These 2 political cultures are dominated by chess players, mathematicians, scientists, and intelligence officers. They think differently than our political culture, dominated as it is by word smiths and people concerned with flag burning and gay marriage.

I don't know when Putin will end the US$ settlement of Oil in the world markets. I am absolutely convinced that he will end it, because it is in his best interests to end it, and because he holds all of the cards.

When this happens the fireworks will be of the shock and awe variety, though I do not know if it will be deflationary or inflationary. I can make an argument for it both ways.

Tuesday, March 4, 2014

U.S. is in the Hands of Putin

The U.S., like it or not, irrespective of whether one is rich or poor, dumb as a bag of hammers or razor sharp, is in the hands of the Oil exporters. Particularly Saudi Arabia and Russia. Especially Russia.

I have my doubts about what is being reported is what is really going on inside of Ukraine. Dmitri Orlov's analysis has merit, but ultimately, and at this moment (and I reserve the right to change me mind on a dime), I think Dmitri is incorrect; or perhaps I should say that I think my scenario is just slightly more probable.

Of course, I lack Dmitri's native Russian experience... in this he has it all over me... but I think Putin just put (most of) his cards on the table, and I think that this has been in the contingency plan playbook for some time now. Please keep in mind that I do not think Putin is a boogey man like much of the U.S. establishment does. In fact, I think he is a first rate SOB with a serious talent for chess. I grew up in a "chess home". Chess players are simply better at combinational game theory than Lawyers. President Obama is a nice guy. His staff is bright. They probably see what has happened here, maybe even saw it coming... and realize that they can't do a damn thing about it.

The Russian political establishment are ALL chess players; the U.S political establishment are ALL lawyers. Please don't take this as a shot at lawyers. It is not. Lawyers make fine wordsmiths, and sometimes that's what you need. An experienced trial lawyer would be the next best thing to an accomplished chess player - those guys can think many steps ahead - but that's not what the U.S. has running the train set. In the final analysis, Russia and the East just won't be doing as much business with the U.S. and will be much more keen on doing business between themselves in the future and will be more interested in cutting the U.S. out of the transaction than supporting U.S.$ hegemony.

Russia, unlike Saudi Arabia has the means at its disposal to defend its Oil, Nat Gas, and Coal resources. But we are really talking about Oil.

Russia is the second largest Oil exporter in the World - over 7,000,000 bpd, or about 20% of the world export market. Putin knows, with absolute certainty, that the end is coming for Oil exports, Russian or otherwise. He knows, with certainty, that the end is much less than 20 years away. Not the potential end - the real end. As a chess player, he must know that it is better to make your move when the board is not forcing your hand. Russia has been waiting for the West to move king's knight to Ukraine, and we just did. That knight has been beheaded. Will Russia now go directly for the Queen (Checkmate is not as valuable in this case and at this moment)? We shall see.

Russia does NOT have to remove all of its exported Oil from the market. 3mm bpd would be enough, me thinks, and allow them many more years of net exports and acceptable internal conditions. But just for sh**'s and grins, Putin could, to make his point, hold up all 7 million bpd for just a week, smash asset prices the world over, and restart negotiations with a much weaker adversary. Or something like that.

(For those that think that with U.S. imports declining that this is no big deal: The removal of several million bpd of Oil exports might well firm oil prices as it weakens Russia's political adversaries. If they cut their exports by half, and the price of Oil rises 50%, Russia is still getting 75% of what it was getting on a current basis, but will dramatically increase the total take over the life of the exportable resource.)

Russia (Putin) is going to do what is in their best interests. Nothing more, nothing less. Ergo, the big question is:

Is it in Russia's best interest's to do this now? If so, they will do it, and they will do it now, and everything else is just freebee negotiating. They can make all kinds of demands, all of which the West will acquiesce to, and then will do whatever is in its best interests anyway. Its just cold, calculating chess. If it is not in their best interests to do this now, then they won't. I don't know exactly what is in their best interests at the moment... I am going to noodle it, but that doesn't mean much. We will find out soon enough. If they pull the Oil from the market it will be far more interesting than 1973's oil embargo.

And all of that nonsense, shouting and screaming, huffing and puffing, sucking and blowing you hear from the U.S. political class? They have no power to do anything about this and are merely posturing for the next political election cycle here. They will blame Obama, G.W. Bush, the Right, the Left, the Middle, the Up, the Down... but its just chess.

Monday, March 3, 2014

Sick of "The Economy"

Personally, I am absolutely sick of hearing about "The Economy".  I cannot conceive of a sillier meme than this thing that gets tossed around as if it was actually of some real importance and that mankind must serve this monster always; like its your patriotic duty to "help" the economy. WTF??!!

Granted, I am over 50, very comfortable financially, so one might think I am just "Old & in the Way". Perhaps. But stay with me for a minute while I lay this f&^%$# mutt bare.

Our system has convinced people that there is no other way; they must delay maturation/adulthood until age 18 + 4, 6, 8, even 12 years of "education" (snicker) During which time the system neuters, indoctrinates, and finally "approves" you for "elite employment" ("EE"). And, as a newly minted member drone worker of the Corporate/Government plantation system of EE, with your approval sticker stuck to your forehead, you can now look forward to 10 to 20 years of student loan payments (unless your parents had money; more on that later); 60,000 hours of cubicle/office time under florescent lights while sitting all day in the absence of sunlight; 20,000 hours commuting (which in less than 10 years will turn your sleek and youthful body into something that looks like a bald-yet-hairy, triple chined, bag-for-a-belly cross between Humpty-Dumpty and Cecil the Dinosaur), and;  3,000 (I am being generous here) boring sexual experiences - that is, before you kill yourself with a stout rope in the garage while the car is running and you hold a gun in your hand as a backup because you just can't take it anymore, while the spouse you are not sleeping with watches under the influence of Big Pharma's cocktail of anti-depressants and anti-psychotics... but only if you don't get prostate cancer first. Or, fat f*** that you (now) are, die of sleep apnea.

Did I mention that you will be so exhausted from the above that you will take the majority of the 6 waking hours you have left each day (55,000 hours or so during your working career) and plant yourself in front of a TV for your daily dose of political/social/economic propaganda? Yep. That, too.

And please... I am not a cynic (though I am a Cynic/Hedonist/Stoic). I skipped all this crazy sh#!. Did I miss anything? Oh, yea. And we can't seem to raise a kid into a functioning adult contemporaneously with shaving.

The system has convinced people not to have children (look, the Corporate Drone, EE, types are either 0 or 1 child producers) with the Drones now believing that on their death bed they will feel good about a life of Corporate EE Drone work and the occasional industrial vacation... and while dying on that death bed the Drone can keep a copy of his/her business card with his "title" on it and his net worth statement handy to comfort him...  along with a box of airline receipts proving that he/she had been to Club Med 10x and Europe twice. Such a Cosmopolite!!  And since he has no heirs, the healthcare system will be happy to take care of his net worth....

I know a bunch of folks enamored with the "Paleo Diet" lifestyle... well, sort of. Have you heard of the Paleo Diet? It is supposed to recreate the diet of man during our period as hunter-gatherers...

See, the real Paleo man hiked mountains, swam rivers, ran deer into the ground, speared fish... and then stopped by his lover's hut with a chunk of meat, food for sex style, contributed to the gene pool and kept his prostate healthy and his lover happy (anti-depressants were not available) - multi tasker that he was - before heading home to the family cave (just after his genetic competition finished the process of food-for-sexing his own gene pool contribution). Is that what your day looked like? I didn't think so. No, modern man might have walked from the kitchen table to his garage, and then from his parking spot to his cubicle for a day of sitting and porn surfing (and I got nothing against porn. I am just a real thing kinda guy).... and when his day is finished modern man is off for hearth and home to deal with the propaganda affected modern woman... well, either that or he's a dead beat dad. What a choice.

Modern man has been reduced to a fury, fat, childless cubicle dweller that gets none and after a while is too unhealthy to want any... scheming all day to make more money while his arteries harden and his wedding tackle softens - but at least his religious belief system, the Right, the Feminists, and the Corporatocracy, and several other special interest groups approve of his swollen prostate & pasty skinned life style! Hey! Its good for the economy!! Its for the kids! For the children! Every time I hear that I reach one hand to hold onto my wallet and with the other hand I hold onto my junk.

Sometimes I think I am the only normal person left.

I cringe when I see force or control being applied to the kinds of relationships and social contracts that cannot flourish - nay even exist - in that environment, yet our entire system is built upon this notion. Oprah tells her flock how to be a wife and mother (she has never been either). Celibate clergy exert control over men in their relationships. The family "role models" in our Movie and TV media are created by people that have no experience as a role model or operating within a family. Corporations themselves end our family lines with their demands.

And a never ending drumbeat of media propaganda in lives made fake by convenience. Our lives would have made entertaining science fiction just 2 generations ago.

To be continued...

Saturday, March 1, 2014

Why Bother Driving when you could "take the bus or train and be Online"?

 Everything covered in this NYT article I have covered before, except this incredible nugget that most of us have over looked:

A study last year found that driving by young people decreased 23 percent between 2001 and 2009. The millennials don’t value cars and car ownership, they value technology — they care about what kinds of devices you own, Ms. Sheller said. The percentage of young drivers is inversely related to the availability of the Internet, Mr. Sivak’s research has found. Why spend an hour driving to work when you could take the bus or train and be online?
The new material competition for sexual selection for young adults is now devices and not cars?

If so, I think that that is a wonderful development. It seems the over-40 crowd takes exception to the following generations tendency to see only the screen in front of them (and certainly we have a point, but just hold on for a second while I get to the "benefit" associated with this "cost"). Fair enough. But if those devices ease the transition away from cars and the concomitant pollution, deaths,  and catastrophic injuries associated with automobile use that input really must be factored into the equation. (Of course, this is on my mind as today would have been the 53rd birthday of one my closest childhood friends lost in a car crash 28 years ago. His was the first of many funerals I have been to as a result of car crashes.)

If given the option wouldn't any rational parent prefer their teen and young adult offspring to take a train to a rock concert and stare at their smart phone rather than drive? 4 college students in a car on their way to a rock concert is a disaster waiting to happen. 4 students on public transportation texting like mad just does not concern me very much.

In the final analysis, the next generation of young Americans do not have a choice. If these device makes the transition seem like their idea? Mazel Tov!


Like most professional New Yorkers, I used to ski in New England every winter. I always loved the idyllic quaint charm of the place, particularly the home architecture. Clearly, at one time the people living there had a sense of the human need for grace and beauty. (If you have only lived in the Northeast you might not appreciate how interesting and appealing that is, but having spent some time in the Southeast - and its never ending style of what I call "Early American Air-Conditioned Brick Bunkers" - I can tell you first hand that, for the most part, Dixie just does not get the grace and beauty thing. Restaurants here are often lit with florescent lighting; Someone smart once said the experience is like eating in a used car show room. I wish I knew who to credit. SPOT ON.)

Yet it seems that the demoralization and dispiritedness which I thought was limited to the fly-over-land middle of the country (It occurs to me that many people might not have heard the term "fly-over-land": Coined by the coastal elites, fly-over-land is the territory between JFK and LAX that the elites fly over to get to the other coast. A land and culture not worthy of touching down in... for the most part, unfortunately, the elites are right. There is good reason that the Louvre is in Paris and the Country Music Hall of Fame is in Nashville and Hooters is considered "fun family dining") of the South and Midwest has taken firm hold of New England. That's disconcerting to me... kinda bummed to hear about this.


The obesity topic is everywhere in American Media; and well it should be.

Want to read an article governed by the very definition of "specious"? The writer raises enough reasonable questions to make the average American feel better about the state of their self-inflicted poor health. (Although the issue of industrial chemical exposure certainly is deserving of significant funding and research.) The fact is that obesity does not exist, for the most part, among the coastal elites and it is rampant in fly-over-land. This does not jive well with the argument that it is something in the environment that is doing this to us (but of course does not preclude that, either). My experience, for the most part, was the professional women of Wall Street and the trophy wives in Boca Raton. They all seemed to be 36-24-34 marathon runners, and not a single tattoo or odd body piercing to be found... In Nashville its more like 58-74-83 (hike! Sounds more like a football audible than a human measurement) with enough ink and perforations thrown in with their ponderous heft to cement the image of human defeat and arrant loss of dignity. So what gives?

Poor, uneducated, white American women have lost 5 years of life span expectancy. From my perspective, and keen observer of the human condition that I strive to be, their health span (the span of life where people live free of chronic disease) has lost 20 years or more. The social isolation that accompanies obesity disability should not be overlooked, either. These people are functionally disabled and incapacitated in their 20's and 30's. While they may possess existence I cannot conceive of that existence as a "life", so the loss of 5 years in life expectancy is small potatoes compared to the loss of the ability to live.

I would bet dollars to donuts (boy, that's an old one... from a time when a donut was 5 cents. Memes are hard to kill) that obesity in America is much more a function of cars, media, and government social programs than industrial chemicals or any of the other assertions contained in the AEON article, or at least I hope so... because that would be much easier to address.


U.S. Natural Gas storage could actually approach ZERO next month. Nah, its not the end of the world... but it does seem to indicate that the idea of bigger homes, industries, agriculture, etc... might not jive well in a different world. Change winter average temps by an average 2 or 3 degrees, which is not out of line with natural oscillations of weather patterns, and POW!

The Nat Gas thing is small potatoes. A change in the weather (extreme drought) for a couple of growing seasons in the world's grain producing regions will put that in perspective. Of course, our policy makers are always fighting the last crisis/war, i.e. there will be PLENTY of propane next winter. Using grain for fuel while having a Strategic Petroleum Reserve and not a Strategic Grain Reserve is exactly the kind of policy we can expect from lawyers, which is the profession dominating elected office. 

Better days ahead.

Thursday, February 27, 2014

The Re-Birth of the Small City

Here is an interesting article about the future of cars in our society. The end of the automobile is in sight. Certainly in the lifetime of the Millennials. Maybe in the Life time of the last of the Boomers/Gen X'ers (like me). Oh, there will still be some cars around... but not very many (compared to now) and there will be a whole lot less driving going on.

(And for your corporate cubicle drones, something to consider.)

It is a mathematical necessity that as fuel availability declines (forget the price for a moment) that total vehicle miles will decline (even with increasing efficiency - it is simply not possible to replace the installed fleet in less than 15 or 20 years, and it will prove far more cost effective to simply drive fewer miles and keep the ICE car you have than to buy a new, more efficient vehicle. The less one drives the longer their vehicle will last (as measured in time) so my bet is that instead of a turnover of the fleet in 20 years, the fleet will last longer and drive less... but I reserve the right to change my mind!).

That means commuting is dying (Can I get a Halleluja???!!!!) and with it Suburbia... and the death of Suburbia means the rebirth of the livable, small city. Of course, we don't have many of those here in the U.S., but we will.

(I can think of no worse investment than single family housing dependent on automobile transportation. NOTHING could possibly be worse. I know perfectly rational, intelligent, successful people buying up houses in suburban developments in places like Florida and Texas... it is painful to watch. Want to buy Real Estate? Downtown. Center city. And even then, you need an eye for the future and a bit of luck.

Worse. I cannot imagine trying to evacuate, without cars, 8,000,000 South Floridians in the face of a catastrophic hurricane/storm. Think about that for a minute. Think what it would be like (for the survivors; and then think about the loss of life) in the aftermath of a hurricane in a low lying area in which 8 million people live and where there are 2 train tracks in and out. Are there that many buses in the U.S.? Would we use them every time we had the threat of a storm? I shudder to think of the post event living conditions for a metro area literally 20X the size of New Orleans with a Katrina type storm. This is not an investment opportunity; it is a trap - and a very dangerous one at that.)

When I say "small city" I am not talking about a million person plus metropolis which looks small next to New York or Sao Paulo. Most of these were designed and built around the automobile. No, I am talking about livable cities that have been arranged around walkability and public transport. That counts out Houston, Miami, Nashville, Ft. Lauderdale, et al...

So who's left? There are lots of them... complete with walkable downtowns and conceived with trollies and such in mind.... you've just never heard of them. Some of them you have - Savannah, Ga. Richmond, VA. Concord NH., but for the most case no.  There will be great opportunities to make a fine living and to live a fine life - provided you are not spending 10 years of your life unwinding the dead weight in your pockets invested in "a way of life that has no future" (to quote James Kuntsler).

But there is another process going on here.

Crime really does not pay any more. Technology destroyed the Mafia in New York, and it is in the process of destroying the inner city thug element. People can (now safely) move back to the cities, and the cities will be infinitely safer without cars zipping, in close proximity, past pedestrians (especially children. Remember those?) at 55 mph.

(There will always be crimes of passion, and nothing can be done about that irrespective of how much those that want bigger law enforcement budgets try to scare the sh#! out of the easily scared; there will always be crimes committed by the really stupid, and the mentally ill, too, but the rest of the population understands with great certainty that they are being tracked, that DNA, cell phone triangulation, and video cameras, and financial transactions (who uses cash anymore?) create a never ending alibi or link you to the scene of the crime. Just watch a movie about/involving (a) crime from just 10 years ago... it is almost laughable now!)

Like it or not, this is the environment we live in. Drones will be replacing police officers just as surely as they are replacing fighter and bomber pilots as well as boots on the ground (I think the idea of paying for a "criminal justice" degree (SNICKER) is a poor use of capital). I used to hate the idea of this. Some of it still scares the sh#! out of me. But on further reflection, much of the abuse of those in the system (not all) is being removed. I absolutely LOVE dash cameras on police vehicles and look forward to cameras on the lapels of police uniforms. If I have to choose between being watched by a camera or an individual that wants to carry a gun and is willing to use that gun on a human being for non-violent crimes I will take the camera every time. Of course, it is probably not long before those "cameras" are also armed, but at least the person operating the camera cannot claim that he felt his "life and lives of my fellow officers/"cameras" were in danger", so I had to shoot the guy that we were called on to render assistance to". There are some benefits to drone technology as well as costs.

As people move to cities and give up cars:

  •  Citizen interaction with armed government extortionist personnel (the police) will decline precipitously - and with it the expensive burden of this government "service". Those nice people can see just how valuable they are in the mart of competitive commerce.
  • Traumatic brain, spinal, and other injuries now common place for commuters and drivers will not be the burden to society that it was. Deaths in car crashes will decline.
  • Pollution, particularly of the air, will not be the issue it was... especially if we can get over the idea that we need 5 bathrooms for a family of 4.
among other positive development. There will be some tough transitions for certain segments of the industrial landscape. Think Detroit.

Better days ahead.

Wednesday, February 26, 2014

A "4" Handle

For the first time in decades, U.S. net petroleum imports is sporting a 4 handle for the week (very bottom, first number on left - 4,825,000 mbpd). The 4 week average is the lowest that I can find, too, at   5,321,000 mbpd (not by much, November was 5,344,000 mbpd net petro imports).

I know domestic production is up for the 4 week period year over year about the same as imports are down (easily found on that table)... so the system is balancing via an $11 per barrel price increase since this time last year... it then follows that all of that cap ex spent by the domestic E&P industry kept price increases to only $11 per barrel?


The U.S. leads the world in criminalizing acts that its citizens had no intention of committing? We really need to do something about this.

This is ALL about government budgets.

Crime is in free fall in the U.S. While Law Enforcement is nearly breaking its arm patting itself on the back, this has almost nothing to do with "better policing strategies". The vast majority of the nation's violent crime is in just over a dozen counties. DNA, Technology, Smart Phone Tracking, Ubiquitous Security Video, et al, has made it impossible to get away with anything. People are not stupid. They know they are being watched. The police know they are being watched. So everybody has to be nice.

So cut the budgets already.

Sunday, February 23, 2014

To the Heart of the Matter

The tumultuous 20th Century came to a close in the giddy environment of the "internet boom". While the Web has caused some to be incredibly wealthy its real and lasting effect, me thinks, is that it has caused the demographic of informed people to surge. Of course, propaganda efforts have also been employed to sway the opinion and develop belief systems in the less intellectually gifted demographic but I think that though this demographic has the more votes it cannot match the power of the informed.

The internet still holds incredible promise to free us of the drudgery that evolved from the Corporatocracy. Meme's like this show up on a regular basis on my FaceBook news feed:

Clearly, many understand the inconsistencies regarding our well being, satisfaction, personal growth, and humanity of this situation and condition. The fact that the collective "we" continues on in a life arrangement that we find questionable is a topic worthy of examination.

I think the "we" needs a definition. I would suggest that ethnicity or religious affiliation is not who "we" are as discussed here. I think "we" are the heirs of a system of "property rights" that evolved in Europe beginning with the early Roman Empire but which really took off with the advent of Feudalism. The crazy thing is that in real terms, not much has changed.

There is a Meme going about in the Libertarian circles that I travel in that the early U.S. was an egalitarian and equalitarian place for people of European ancestry. Nothing could be further from the truth. More than half of the European colonists arrived in the Colonies as indentured servants. Their lives and living conditions were essentially the same as the those of the African slaves, though most would eventually regain their "freedom", if you want to call it that. The fact is that in 16th Century Virginia less than 50 families controlled all of the land and all of the power of the State. The meme that John Locke, the hero of Thomas Jefferson, was a benevolent, just, and impartial supporter of the idea that all men were created equal is hardly supported by the facts on the ground at the time. Locke was more of the "some animals are more equal than others" stripe.

But I digress.

The convoluted process that has evolved for defining "property", especially intellectual and abstract property, will needs be reexamined (me thinks it will happen one way or another) along with the brutal fact behind each violent war/nationalist/ideology death of the 20th Century - with all of these killings committed in the name of "national interests" but were really just the use of murder to aggregate oil, coal, copper, timber, land, water, etc... into the hands of the political masters of the time -  must be tallied on the "cost" side of the balance sheet. Yet that exercise seems never to be done precisely because all the individuals that paid that cost are dead. This is "Survivor Bias" at its finest.

The Web holds such promise in all of this. The idea that it is sill necessary for information workers to assemble in office buildings in order to labor effectively is being undone, much as the idea that students need to assemble at college campuses in order to study the Liberal Arts (of course this does not apply to car mechanics, for example. They will still have to commute to work in order to share in the capital goods required for the trade). The idea of working in a particular physical space for the purpose of earning enough to maintain the physical space (your home) you left empty that morning and to risk your life and limb traveling in a vehicle at speeds that the human body cannot withstand the force of (in a crash) as well as to pay for the maintenance of that instrument (your car) cannot be undone quick enough, me thinks. But it is being undone.

(Of course, for those that have only known one paradigm, the shift to a different paradigm (I can't believe I am using "paradigm shift" here... so 1980's of me) can be disorienting and stressful, especially since many special interest groups will use the media to scare the daylights out of certain demographics, but I think on the whole we stand to make real progress in the quality of our lives when compared to the lifestyle expressed in that meme photo above. How the banking and commercial mortgage system responds to the loss of the sunk costs of empty office space - many office buildings will simply become "stranded assets" and the mortgages and property taxes associated with these properties will simply go unpaid - will, I think, prove to be a very difficult problem to work out. Think about Detroit and apply that outcome to most of the office complexes in suburban America - and the impact to the banks of the loss of those mortgage assets as well as the secondary impacts, such as the local support businesses for those office parks.)

Think of what "capital" is in our system: "Capital" is an abstract license controlled by the establishment class and conferred upon those accepted by the establishment to aggregate and control the natural resources that make the "real economy" run. Simple as that. Want to dig a gold mine? Drill an oil well? Buy and operate a commercial fishing boat? Run a dairy farm? Open a "Technology Start Up"? You will need the permission and the approval of the establishment (they control the banks, venture capital, and hedge funds) in order to gain the "capital" required to do any of these things. The establishment exercises a number of methods to control who among the population is granted this "license":  Occupational and professional licenses. Bona Fides. Qualifications. Of course, Web entrepreneurs were not bound by these limitations and accordingly ran around these limits to construct their own "establishment", which is now being inculcated and assimilated by the original establishment. My sense is this is all for naught. The Corporatacracy's control mechanism of knowledge and information workers will be strained in the extreme when these people are no longer forced to commute to the office.

(There are 2 forces at work here: The Petroleum used to commute in that meme photo above is in permanent decline in the U.S., AND; technology is making commuting unnecessary for a number of workers.)

Once the umbilical chord from the "office" to the "employee" is cut, there will be no reattaching it. The "employee" will be free to make more than one "arrangement" for his or her skills, they will be paid more because without the expense of the physical plant of the office they will cost less  per unit of production, they will have more disposable income as the costs of business dress and commuting will decline, and they will have a great deal more free time because as anyone who has ever worked in an office as an "information employee" (or their support staff) knows only a few hours of each day are actually productive and the amount of time spent commuting is usually more than the time spent in productive work.

As the availability of transportation continues its inexorable decline there is lots of low hanging fruit to pick that will improve the quality of our lives immeasurably. The issue for the banking/financial system and those interested in expanding credit/money supply is that the demand for vehicles, retail space (think of the future of "retail" in this new world!), office space, a number of other commercial space types is going to go down like a rock in a pond, and with it the need for credit to finance that stuff (sh#!). While I think the financial system will shake, rattle, and roll I think that there is every opportunity for a better set of circumstances and arrangement as an outcome when compared to the current circumstances and arrangements.

(And it could very well be suburbia that goes valueless and the city office buildings are reconfigured as living space.)

Wealth, property, and capital will go through a period of redefinition. I am very curious to see how that turns out because I hope that this new arrangement and the expanded "enlightened class" will not tolerate the enslavement of many for the benefit of a very few. With a little luck, the increasing enlightenment brought to us by the Web will assist us in this endeavor.

I think (hope?) that the Web is the new "Vienna" where this debate will take shape rather than in the corridors and halls of the structures owned and operated by the establishment for the establishment, and; let us hope that we get this done without pulling a Ukraine, which, while quite possible is also completely unnecessary.

Friday, February 21, 2014

Oil Tanker Daily Rates Tell the Story

After noodling the "where is the Oil" (from my previous post) if the U.S. is not importing it I figured that the tanker market would point me in the right direction. After reading this, I think we have our answer:

Something BIG has happened in Export Land. Really, really BIG. Don't bother looking through the EIA or IEA data. Their data simply cannot be correct if the shipping data reported here is accurate. I have much more faith in market driven daily rates, ship scrapping reports, and ship reported imports into the U.S., China, and the E.U. than the unaudited supply reports issued by the EIA and IEA. 

Daily earnings for the vessels, which haul 2 million barrels of crude, averaged $7,296 since the start of 2013, according to London-based Clarkson Plc, the biggest shipbroker. That’s the lowest level in Clarkson data that begin in 1997.

$7,296 won't even cover the insurance bill.

Rates plunged as much as 97 percent from their December 2007 peak of $229,484 a day as the surge spurred the most orders for new ships since the 1970s, just before the global recession began. That generated the biggest capacity surplus since the mid-1980s and drove Overseas Shipholding Group Inc. (OSGIQ) and General Maritime Corp. to seek bankruptcy protection. Freight swaps traded by brokers show rates won’t exceed Frontline’s break-even cost of $25,000 before at least 2015.

"Just before the Global Recession began"??!! Or just before Peak Oil/Peak Oil Exports occurred?

More from the article:

“It is on the ships’ supply side there is an imbalance,” Singapore-based Jensen wrote in an e-mail Oct. 2. “The only way to clear that is to remove tonnage -- scrapping is the way forward.” 
U.S. imports, representing about 14 percent of oil carried at sea, averaged 25 percent less this year than the peak in 2005, Energy Department data show. The nation’s crude outputis at the highest level since 1992 because of increased extraction of reserves found in shale-rock formations. 
The capacity glut is being compounded by contracting U.S. and European oil imports and the slowest expansion in Chinese purchases since at least 2005. The three account for about 52 percent of demand for seaborne crude, according to Clarkson.

"Scrapping is the way forward"??!!  From order to delivery a tanker is a 2 to 3 year project. Clearly the industry is aware of Peak Oil/Peak Oil Exports.

More from the article:

China’s imports this year are 3 percent higher than in 2012, poised for the smallest increase in at least eight years, customs data show. The nation’s economy will expand 7.4 percent in 2014, the weakest growth in two decades, according to the average of 57 economist estimates compiled by Bloomberg. 
The 28-nation European Union, representing 24 percent of demand, will import 2 percent less oil this year, the equivalent of about 18 fewer supertanker cargoes, Clarkson data show.

That answers my question from my previous post. The U.S. importing much less Oil in 2013. Nearly 2 million bpd from January compared to December... and China's net imports are only +3% while the E.U is a negative 2%? With Brent averaging over $100 for the year? I have a great deal of faith in these data points because I know that Bloomberg (the company, not the mayor) protects its trader franchise at all costs and is freakish about fact checking. You are free to doubt them.

Europe imports only down 2% yoy??!! Anything is possible, especially given how bad the 2012 yoy decline was... but I am skeptical. 

I am calling it here. Oil Imports into China have topped or will top in 2014. Upheaval to follow, most likely over food prices. The U.S., Japan, and Europe topped in 2005. Argentina is now an importer, and is the next Arab Spring/Ukraine. 

The exporters have the price incentive to produce all out, and it is my bet that they are doing just that - and Oil imports into the U.S., Japan, and Europe will only continue to decrease from here. It can't get much worse for the U.S., another 2.3 million bpd of imports and its all over - only Canada and Mexico will be left. And Mexico's 350k net bpd is over in 5 years. Maybe less.

Fracking Schmacking. The wheels are about to come off of a number of wagons. When China stops growing look for Copper and Steal to get crushed. My sense is Coal, too, but I am less confident about that. That means Chile (copper) follows Argentina into Ukraineville, and Australia is toast. Mexico becomes a failed state for real. Looking at the rate of decline for Oil imports I think this all happens relatively soon. Maybe tomorrow. Maybe next year. Not 5 years. Lots of opportunities in all of this.

While the U.S. (and Russia) is in the best position of all the major players (some might argue Russia but they would be wrong, me thinks), the rate of change here in the U.S. will, in my opinion, be a "and the folks was freakin'!" moment. The U.S. has big Oil production, Natural Gas, and Coal resources. We will get by, for now, but the financial system/markets as we now know it will not survive this. Simple as that. Inflation or Deflation? Could go either way. Tell me what the Fed's response is and I will give you a firm answer.

The key is to enjoy the ride. This should be exciting.

Thursday, February 20, 2014

It seems that something happened to World Net Oil Exports

Oil imports into the U.S. in 2013 fell rather briskly with the percentage rate of change increasing as the year went on. For Q4 and January 2014 Oil imports are sporting a 5 handle (5.6, 5.33, 5.5 million bpd for Q4 and 5.6 million bpd for January).

Oil prices have risen to over $110 in the world markets and $103 for WTI.


It then follows that if the exporters had been exporting as usual that some of the other big importers would have experienced a significant rise in imports. Only it did not happen.

The first place to look would be China, then Japan (actually, Japan is a bigger net importer), India, Germany, the Netherlands, South Korea, France, Singapore, and Italy - in that order.

Hmmm... China's yoy increase for 2013 was 4%. The (alleged) missing Oil does not seem to show up in Japan. Maybe India? I can't tell as data is only updated to May, 2013. From the article:

The change in net fuel imports was driven almost entirely by higher exports, with outbound product shipments rising to about 570,000 bpd from 2012's 484,000 bpd, while product imports were largely steady. 
Taken together, net crude and fuel imports last year were 5.83 million bpd, up about 160,000 bpd, or 2.8 percent, from 2012's 5.67 million bpd.

Germany imports are down, as are France and Italy (they are in Europe and Europe is having a h**l of a time). Netherlands, Singapore, and South Korea imports were flat using date that might be a bit old... but they just are not big enough to move the needle in any event.

So... did the exporters just export less Oil? If so, why? Prices are firm, well over $100 for Brent for 2013 and January 2014 so it isn't like "demand" (read: "desire". Demand can never exceed supply) was not there... or am I missing something? Look, if the U.S. cut its imports, either the exporters cut their exports or the other importers increased their imports. Its a zero sum game, and we are talking 500 million+ barrels here over the course of 2013. That's a lot of oil. $50 Billion smackers worth if Oil is $100.

The data for all of the other countries are not up to date, but the U.S. data is, and the U.S. imports fell nearly 2 million bpd from January to December. If the the exporters remained constant someone (some importer or importers) should have a bunch of oil/refined products in their storage facilities or some seriously increased total vehicle miles traveled internally.

What gives? Anybody?

Saturday, February 15, 2014

Living in a State of Fear.

"Man is born free, but he is everywhere in chains" - Rousseau

Every day, the average American - with an average IQ of 100 (meaning they can pass the written DMV test on 70% of the attempts) - is inundated with media manipulations designed to produce anger (anger is the easiest reaction... for some reason people can express anger much more quickly and with greater intensity than they can empathy. The same seems to me to apply to the ratios of jealousy/love, requesting forgiveness/offering forgiveness, negative thoughts/positive thoughts. I wonder if this is existential? Or is this part of the unintended consequences of media saturation or religious indoctrination?) with statements of half truths and outright deceptions.

Here's a couple obvious examples.

A favorite of the Left: The U.S., a massive country geographically, with a large population is often compared to countries like Norway or Canada - and why can't we offer free healthcare and college tuition like they do?

Because they have tiny populations and massive revenues for Oil exports per capita.

The Right will point to the "Miracle of Chile" to both support "capitalism" in the Latin American hot bed of Socialism and to lend an excuse for the murder of thousands of political dissidents during the Pinochet years.

Horse Sh#!. Chile supplies 35% of the world's (population 7.143 Billion) copper and has a population of less than 20 people. Even with that incredible metric Chile has its issues. I like a great deal of Milton Friedman's ideas... but I am quite sure that the strategy he caused to be executed in Chile would have been a complete failure in Ethiopia (or if China and India had not industrialized). And just as it is in the U.S., a very small elite have the population completely enslaved. So much for Libertarianism.

The progress humanity has made in the post-Enlightenment period is impressive. Unfortunately, the elites have reconstructed the very systems that the French and American revolutions were fought to overthrow. Forget the "1%" or the "elite". What the Fractional Reserve Banking systems of the world and their respective Central Banks have done

(and the military and police states used to enforce this despite most of the "enforcers" being "peasants" themselves. This is SOP in the enforcement business... the people volunteering or being forced into these activities never seem to see how they are manipulated into doing all manner of disgusting, disgraceful, and murderous actions and activities. Every establishment  uses the same strategy: Group young men together in places like military boot camps and police academies... beat them down to the point that, in order to survive this experience emotionally, they must depend on each other... "its all about the man next to you"...  instill an "us" versus "them" into these future soldiers and police against the people they are supposed to be serving in the first place with nonsense like: "green berets", "special forces", badges, medals... calling them "elite" (which insinuates that The People are inferior)... enlist help from propagandists in the media who then make movies like "Lone Survivor" (I read the book, did not see the movie, and had a completely different take away than those I saw posted in my Facebook feeds) to suppress dissent and to keep the recruits of "low information" very young men coming... this is the strategy that resulted in Black African death squads working for the White Apartheid regime, the NAZI SS and Gestapo, the Soviet KGB, Latin American "Death Squads", American DEA Agents, et al... all comprised of former human beings now capable and willing to participate in the murder and torture (prison is torture) of their fellow man in exchange for money, power, and status)

is to have effectively recreated an aristocracy and a peasant class. The only thing missing is the Monarchy.

One might argue that the "standard of living" for everyone in the industrial West has improved since the 1913 passage of the Federal Reserve Act (which the American victors then installed around the world in the period immediately after WWII). If measured by the number of cars, toasters, dishwashers, blenders, and electric toothbrushes, et al, that might be so. If measured in terms of free time, time spent outside in the sunshine, peace of mind, obesity, philosophical intellectualism, and personal security (how many MILLIONS died in the industrial wars from the American Civil War through Afghanistan? All of these wars were essentially fought over the idea of property rights derived from natural resources; and how many MILLIONS have been imprisoned by the elite for political or moral issues that were Malum Prohibitum rather than Malum In Se? How many of the young men drawn to or placed in those military boot camps or police academies even know what Malum Prohibitum means?) that system simply must be marked: "Epic Fail". When you throw in the enslavement of the masses via debt slavey to force the peasants to work on the Corporate and Government plantations (which, to be fair, are infinitely more pleasant than the plantations of the Antebellum U.S. South but which upon close examination bring the individual to the same place - a place where The People are controlled from birth through death by the establishment) controlled by the modern aristocracy I think the issue become incontrovertible.

The need to use force to control others seems to dominate our culture. That the "Sex Police" of both the Feminist Left and the Rabid/Fundamentalist Right engage in a never ending stream of propaganda to stop (great) sex from happening in a population of people that are TFTF (too fat to, well, fill-in-the-blank however you see fit) in any event never ceases to amaze me. Perfectly reasonable people that are soon to be TFO (too f***ing old) or just plain dead are busy having no passion, denying themselves the chance to actually live before they die, and are enraged by the very idea of other people engaging in such pleasures (Americans near universal, boorish, and provincial hatred of the French and their culture  is just another expression of this. It won't be long now before some Congressional boob from Billy Bob land wants to rename "French Fries" to "Freedom Fries" as seems to happen every 20 years or so. Think just how bizarre it is that the "fly over land" culture of obese beer drinking, hot dog and hamburger eating, NASCAR watching, tattoo ladened, pierced self-mutilators looks down their collective nose at a culture of grace, a taste for fine wine and excellent food (they wouldn't be caught dead serving what is offered at a typical American BBQ), a passion for love, and the discipline to enjoy all of that without seeming to wind up weighing more than their cars).

I think the problem can be summed up as a lack of philosophical examination of our existence because of the distracting drone coming out of the media/TV/movies for the most part, and by fundamentalist religious belief systems in certain pockets of the country. Think about it... do you know how many days, actuarially speaking, you have left to live? How many days you have left of health? Of physical beauty? Or whatever else is important to you? Not very many. Certainly not enough to spend any of those precious days unexamined and without fulfillment (however you might define that). How often do we consider our very existence? Me thinks that that is an important exercise, and that it is impossible to engage in this exercise when the TV is on. It is also impossible to perform this exercise while ensconced in a corporate cubicle irrespective of how much money you are making.

(Of all of the undeserving "heros" that exist in our media created national psyche, no more offending group exists than the cancer industry. From oncologists and radiologists to Big Pharma there has never been a greater "champion of exaggerated claims and false promises", well, with the possible exception of the Great Religions. Thankfully, this is making its way into thinking people's milieu. Many might even actually accept this and live and die accordingly. In the final analysis, you don't have a choice.)

When I first started blogging about America's energy predicament I missed the real issues and implications by a mile. 10 years+ of noodling the energy/economic/industrial/political model has left me with a sense that there exists in our society an endless supply of control freaks that get their jollies scaring the sh#! out of people and into living in a State of Fear: Feminists promote fear of men as molesters and rapists. Defense profiteers promote fear of Muslims (and why won't they just give us our oil?) as terrorists, the Left promotes fear of loss of health insurance and other economic issues of fairness and inequality, the Right promotes fear of the loss of "American values" (whatever the f*** that is), and certain dimwits in America are worried about immigration from countries that are no longer interested in emigrating anywhere.

What none of these groups seems interested in or capable of understanding is that whatever "problem" they identified that needed fixing either got fixed or can't be fixed or the ground completely shifted under their feet while they were standing on their soap box. That does not seem to end their enthusiasm or ire or their desire to see everyone else angry about whatever it is that they think people should be angry about instead of enjoying this precious day.

99% of the "Peak Oil" crowd seems bent on scaring people into supporting some kind of government action. While it appears that these people were absolutely right about the Peak in World Oil production, and maybe even world wide Natural Gas production, what they missed over the past decade is the implosion in the fertility rate of the industrialized world. To say this development is "unprecedented" is an unfair use of that word. Whether by luck or some invisible hand, that train has left the station and is hurtling down the track to its next destination. No doubt, some group somewhere will want to scare the sh#! out of people regarding that development, too... not to worry, there is nothing "we" can do about it and in the end it will take care of itself. Best to stop by the Jeffers Freedom Farm for some homemade dandelion wine with fresh mozarella and tomatoes, and then go off for some afternoon delight while still under the influence because in all of these matters we are our own worst enemy. There are no macro solutions. If one accepts that that is true, the rest is easy.

Of course, old habits die hard. I am interested in watching how Argentinians handle this, as I expect that they will lead the way, and not Spain, Italy, or Greece, for historical reasons. While the PIGGS got hit with peak oil (imports) several years before Argentina, its the picking of the low hanging fruit that jolts the tree the most, especially for trees/countries that have been in drought.

Our real dual tasks are to keep the scaremongers from using propaganda to motivate the people to give up their freedoms for security and to enjoy every precious minute of this very, very short existence.  I wrote this in July of 2008, right before the Great Recession began.

I am still comfortable with the ideas expressed in that post.