This is one of those moments:
The markets - and I don't care WHICH market; stocks, bonds, commodities, banking, housing etc... - and the economy, specifically the U.S. economy (but considering that the U.S. is 25% of the world's economy) and Western Europe, and politics all hinge, right now and at this moment, on whether or not the Oil Import Decline is real.
Do the exporting nations have the ability to increase their exports? Or NOT? If their exports are in permanent decline the next question is the RATE OF CHANGE. Over the past 30 months or so, imports of Oil into the U.S. have declined at roughly .70% per month. Does that rate of change continue? If it does, the economy will crack - big time. If it does not continue, and imports level off for a few years, we will limp along. If imports INCREASE, the economy will actually grow.
Ergo, its ALL ABOUT OIL.
I am going to flesh this out over the next week or two... so check in...
Libertariananimal (at) gmail (d0t) com
4 comments:
Not sure if you read “The Oil Drum” and Westexas “Export Land Model” he has a Wiki page on it. They also have a Mega projects page and I can't remember where the spare capacity is, maybe in the “Oil Watch Monthly”. There is a poster Memmel that has a theory of how much decline = game over. Like to read your take on it.Typing on a BB so no links.
I trade emails with Jeffrey Brown now and then. Hell of a nice fellow. Smart, too.
My fellow analyst and I came to the same conclusion as Westexas did on imports - and at roughly the same time. Only Jeff Brown was smart enough to coin a phrase for it... he is also a geologist, while we we were mere math geeks...
I haven't spoken to Jeff in a while, I think I will check in with him...
Regarding the decline in oil imports over the past year or two and as to whether it's the real thing - I say, if it walks like a duck, and quacks like a duck...
(It's certainly not a porcupine.)
The wailing in the 70's always seemed like a load of crap to me. This time the numbers look real. OPEC has never had the discipline to actually restrict supply very much or for very long. The floodgates are probably already open.
The independent estimates of remaining reserves within the OPEC bloc are even worse cause for worry. Its odd that the official reserve numbers never go down.
Regards,
Coal Guy
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