Tag Archives: Depression

Newt Gingrich can’t Count (oil) he’s dangerous.

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Today the House Energy Committee got a visit from Al Gore… and he ruffled some feathers… especially those of Mr. Gingrich.

Here’s his response

He says that Al Gore presented “misleading ascertions”.

Newt says…

[Al Gore] said for example, the rate of new discoveries, is falling for energy. That’s factually not true.

Actually, Newt, it is true. And it has been true for over 60 years… and here’s the proof Newt:

Discoveries

In 1965, 60 Billion barrels of conventional oil were discovered.

But Newt goes on:

In the last 3 years we have found (who is we?) have found 100 years of Natural Gas in the United States

That’s nice Newt. If I took only one sip out of a coke bottle every day then it might last 100 years as well. The question Newt, is not the amount, it is the rate. How much of the 20 million barrels of oil that the US consumes in a day can that “new natural gas” displace.

The answer, according to the US Energy Information Administration (PDF), is very little.

From 2004 – 2007, 46 Trillion Cubic Feet of “Proved Reserves” were added. Yet Estimated Production only grew by 0.2 Trillion cubic feet a year… the US consumed 23 Trillion Cubic Feet of Natural Gas in 2007

The picture for oil and oil substitutes like Natural Gas Liquids is even more grim:

From 2004 – 2007, 1.6 Billion Barrels of Crude Oil Equivalent were discovered of Natural Gas Liquids reserves. Yet estimated Production grew by 4 million barrels a year. That equates to 11,000 barrels of oil a day… roughly 0.06% of the daily 18 million barrel consumption in the US.

And finally, for crude oil…

From 2004 – 2007, -547 million barrels. Repeat. Negative 547 Million Barrels of crude oil were “discovered”….. in other words, we used it up faster than we discovered new stuff. Which brings us back to the graph above, the graph that matters.

Production of crude oil in the United States was 1.8 Billion barrels in 2004, and 1.7 in 2007. That’s a drop of 100 Million Barrels of oil a year or 0.5%.

……….

I hope that clarifies things for you Newt. The party is over. I know you’ll never accept it… probably not even when either your country collapses under its own debt to oil producing countries, or riots erupt from gas shortages and skyrocketing prices… but at least there are some who get it.

And by the way, from 1997 to 2007 total estimated production of Crude Oil plus Natural Gas Liquids went from 3 Billion Barrels of oil a year, to 2.5 Billion Barrels. A drop of 16%.

Brazil can’t save you Newt. Even without the current global recession, production from the new Brazilian finds wasn’t going to reach its full potential of 1.1 Million barrels a day (400 Million a year) until, wait for it, 2017.

Lets see.. in another 10 years we will likely drop another 16%… another 500 Million a year… much more than Brazil could provide, if even it all went to the US, which it won’t.

You’re dangerous Newt. You’re Dangerous!

Here we go again… Oil Price Speculation or Real?

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CNBC.com this morning has an article that I wasn’t expecting until at least August this year. But here it is all the same. The topic? Oil Prices Resist the World’s Recession Trend

Their main point:

The resilience shown by the oil markets is not because of any improvement in the global economy or rise in oil consumption. Global demand remains on course for its steepest drop since the early 1980s, and oil inventories are at their highest levels in 19 years.

Instead, analysts said, oil is once again being sought by investors as a refuge against a slumping dollar and rising inflation.

Lets stop right there. Slumping Dollar? The US Dollar has gained over 20% over the Canadian dollar since July and the same can be said for the Euro and Yen. INFLATION? Last month, the US officially experienced DEFLATION (negative inflation)… so I’m really not sure what planet CNBC is on!

But then, the very next sentence, they take a different tone:

Stabilization of the oil price is also a victory for the OPEC cartel, which has succeeded in cutting output sharply to match lower demand.

and so, once again, it’s all evil OPECs fault. Because, you know, it has nothing to do with plummeting oil production in Mexico (World #3 Super Giant field Cantarell is now producing less than other Mexican fields).

Oh.. but wait…

The perception remains well ingrained in the market that oil supplies, while plentiful today, may prove insufficient once demand picks up again.

Huh. So you mean investors don’t buy the “drill drill drill” mantra? You mean investors have looked abroad and seen conventional production in Mexico, Canada, the UK, Russia and Norway declining even while prices skyrocketed over the past 5 years? You mean investors have seen Saudi Arabia hit a wall, unable to pump more oil without damaging it’s fields.

Investors know this.

The OECD knows this.

So why the “speculation” talk? We have been given a great opportunity during this recession… depression, the first shrinking of the world economy since WWII (OECD), demand is knocked down. The pressure is off… people are LOOKING for work. We need to put them to work creating a new economy… low energy, high efficiency, low carbon.

If we wait until “recovery” happens, then we are doomed to be right back here within 2 years.

G20 Leaders must create new Reserve Currency… or face decade of hardship.

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That is one of the recommendations from a European Think Tank “LEAPE20/20″ in an open letter published last week. (hattip: The Oil Drum).

Your next summit takes place in a few days in London; but are you aware that you have less than a semester to prevent the world from plunging into a crisis that will take at least a decade to resolve, accompanied by a whole series of tragedies and ferment? Therefore, this open letter by LEAP/E2020, who saw the arrival of a « global systemic crisis » as early as three years ago, intends to briefly explain why it happened and how to limit further damage.

Until now you have merely been concerned with the symptoms and secondary effects of this crisis because, unfortunately, nothing prepared you to face a crisis of such an historic scale. You thought that adding more oil to the global engine would be enough, unaware of the fact that the engine was broken, with no hope of repair. In fact, a new engine must be built, and time is running out, as the international system deteriorates further each month.

LEAP’S THREE STRATEGIC RECOMMENDATIONS

1. The key to solving the crisis lies in creating a new international reserve currency!

2. Set up bank control schemes as soon as possible!

3. Get the IMF to assess the US, UK and Swiss financial systems!

Basically they’re telling the G20 to dump the US Dollar as the defacto reserve currency… which it has been since the gold standard was dropped in the 60s/70s.

There is no doubt this recommendation is as much a way to limit exposure to rising crude oil prices as well… because if the US Dollar goes into hyper-inflation due to the trillions of dollars spent bailing out the financial mess, then so will the price of crude, and the world will spin into an even deeper depression.

The US Dollar and economy are no longer capable of supporting the current global economic, financial and monetary order. As long as this strategic problem is not directly addressed and solved, the crisis will grow. Indeed it is at the heart of the crises of derivative financial products, banks, energy prices…

he solution to this problem is well-known, it is about creating an international reserve
currency (which could be called the « Global ») based on a basket of currencies corresponding to the world’s largest economies, i.e. US dollar, Euro, Yen, Yuan, Khaleeji (common currency of oil-producing Gulf states, to be launched in January 2010), Ruble, Real…, managed by a « World Monetary Institute » whose Board will reflect the respective weight of the economies whose currencies comprise the « Global ».

Would it help? Maybe…

Likely to happen? I certainly don’t think so.

For all of the good and proactiveness of President Obama in some respect… overall, he is still the cut from the same cloth as every other politician. He is a reactionary. Change like this will not happen on a global level until the we all have suffered immensely and there really is no other choice.

That is why it is so important for us, as citizens, to make these types of changes in resiliency *locally*. *We* must set the example for our governments to follow. www.transitiontowns.org

Economic turmoil a manifestation of hard-wired, human Darwinism?

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I had a great little discussion with a colleague yesterday about the economic troubles in the United States and around the world right now.

He mentioned that if you go to the Wiki for The Great Depression, many of reasons cited there correlate strongly with what is going on right now…. but more than that, apparently, and I don’t have confirmation of this yet, apparently in 2000, one of the last regulations on the stock market that was brought in by FDR and the New Deal, expired. 8 years later, here we are.

So that got me to thinking. Is this just a manifestation of human instinct? Left completely boundless, is our natural impulse simply to expand and grow and consume as much and as quickly as possible… moreover, is this Natures way of ensuring there is still some measure of Darwins theory of survival of the fittest embedded inside us? When food is bountiful, deer and caribou populations can explode, until finally when there is a lean year, a great percentage die, or are eaten by increased numbers of predators and in the end the deer or caribou diminish from their original number… humans do not have the benefit of that cycle to control population, so is this our built in cycle?

Humans are unique on the planet in being the only species capable of overcoming their instincts a great majority of the time through thought, desire, and most importantly, logic. When you really think about it, is it logical to have a stock market that is completely free of regulation?

Probably not right? Or at least not in certain ways.

So when we ignore that logic at some sort of level we remove one last barrier, and it sets off events in human interaction and behaviour that ultimately leads to our [economys'] demise.

Let us hope that the coming Recession, or Depression, does not take Darwinism any farther than our corporate beings.

Are the US Financial Networks propping up the US Economy

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And are they finally losing their grip?

CNN, CNBC, Bloomberg, FoxNews… one wonders… if this was 1929 would the psychology of the crash have happened?

Go read this link from Financial Sense.com:
http://www.financialsense.com/fsu/editorials/willie/2008/0702.html

Now the Intl Monetary Fund has decided to conduct an investigation into the financial management of the US banking system! This is totally unprecedented. The German journal Der Spiegel wrote that the IMF had informed US Federal Reserve chairman Ben Bernanke of its plans for a general examination of the US financial system. The IMF board of directors has ruled that a so-called Financial Sector Assessment Program is to be carried out in the United States. This, according to the German journal, “is nothing less than an X-ray of the entire US financial system… No Fed chief in US history has been forced to submit to the kind of humiliation that Ben Bernanke is facing.” For some reason, the entire story escaped the intrepid lapdog US press network system.