donsutherland1

ashurbanipal

In this case, perception is reality.

True as far as it goes, but OPEC doesn't have any spare capacity to speak of. Their recent inaction is a sea change from their other decisions about oil supply since their inception. They would like everyone to think, for as long as possible, that they can increase production substantially. But they can't.

Sure he did. Hoover dismissed notions that there was a depression. Chamberlain dismissed notions that those Nazi fellows might be a threat. Nixon dismissed notions that he might be a crook. Etc. Etc.

Every time this comes up I have to have a laugh, even though there is a kind of half-truth to it. Part of what makes peak oil so bad is that on the upside of the production curve, we tapped all the easy to find, easy to produce, easy to refine oil. On the downside, we have left all the hard to find, hard to produce, hard to refine oil. Increasingly, there is less light sweet crude available and more heavy sour crude available. So of course, if we want to continue to use petroleum products for very long, we need to have refineries that can handle heavier oil with a much higher sulfur content. But we have to build them in the face of declining energy availability.

You won't find El-Badri acknowledging this side of the issue.

I also tend to look at the falling dollar as a symptom of oil production having slowed its growth and eventually plateaued, though there are other factors to consider.

Generally, it's just worth mentioning that many peak oil theorists have noted that it would be bringing severe economic problems with it. While we can trace the current liquidity issues all the way back to the dotcom bubble, and even further back to World War II if we want, let's not forget that the cost of producing goods has been steadily increasing since the late 90's. Prices have therefore been increasing. The Fed responded by simply putting more money into the system, and it's begining to look evident that banks cooperated in the scheme by packaging the excess liquidity in SIV's and the like and selling them to each other through repo agreements or other Byzantine systems that make my head hurt when I look at them.

We might ask whether this would be a problem if oil production were expanding by 10% per year. I think probably not (though I suppose it's possible). The oil could be used to increase the production of goods, and this would soak up the increased liquidity. The problem for the dollar, once all the technospeak is cut, is that there's more money than there is stuff to buy with that money, so it takes more dollars to buy something. This is not a separate and distinct phenomenon from the increase in the cost of production, which has also contributed to price increases across the board. The issuance of more money and the subsequent attempt to hide it was the predictable response.

We're stuck between Scilla and Charybdis on this one--how would we address those budget deficits? We could cut entitlements, but in a very real sense that's like defaulting on a loan. People have paid taxes with the expectation of those entitlements. We could cut the military budget, but at least a third of the world doesn't like us so much. Russia and China would both love to walk into the Middle East and usurp our position there. So we can't really do that. We could increase taxes, but people are already strapped. We could take the money from the super-rich, but any politician that proposes that won't be in politics for long.

I suspect increased taxes on the middle class and an increasingly beligerent attitude in the middle east will be the solution. Not the one I favor, but that's what is likely.

This last bit is not really true, it's just not widely reported. This past year, for the first time since 1979, there were sustained shortages of oil and gasoline in remote parts of the country. I suspect this will just tend to get worse.

The old saying is that GOD is "Gold, Oil, and Drugs." Purchasing commodity futures, or commodities themselves, especially these three commodities, as a hedge against inflation, is nothing new.

Ah, geez...let me translate that into terms that reflect reality:

A comprehensive approach would include restoration of sufficient fiscal discipline to address its short-term and long-term fiscal challenges

Read that as meaning increasing taxes, decreasing services. Social Security can go away. Medicare can go away. Education gets less. The Forrestry service gets less. Etc.

(so as to maintain the value of the dollar on world markets and assure that it retains the capacity to safeguard its geopolitical interests and advance its geopolitical objectives)

Read that as meaning we hope to maintain world hegemony at any cost. This is what the Romans did.

improvement of its trade position through increased marketplace competitiveness (which will require investments that enhance future productivity, e.g., education)

We'll need to drive wages down-way down-and "educate" the people in the same way China and Russia have "educated" their people in the past. Getting an F means getting your head blown off in front of a brick wall by a couple Blackwater guys.

reduction of its contribution to increased geopolitical risk by returning to a pragmatic Realist approach to foreign policy that is centered around the national interest and is constrained by balance of power considerations

Machiavelli would have been proud. Let's go back to realpolitik and acknowledge that it's sometimes necessary to just outright kill a whole bunch of people.

and development of a credible energy policy that reduces its dependence on imported oil (to reduce long-term demand imbalances that could result as developing nations consume an increasing amount of oil for their energy production and exposure of risk associated with nationalized oil industries whereby countries such as Venezuela and Iran might well use energy resources to advance political objectives at the expense of market needs).

Even after we've forcibly taken oil from other nations, we have to acknowledge that eventually it's going to run out. Now that we've built the police state, we're going to have to figure out how to maintain it for centuries to come. Those surveillance cameras and "citizen processing facilities" take a lot of energy to run, you know.

ashurbanipal

I'm starting to see some rumblings from some of my insider buddies that the OPEC increase isn't going to happen...they're going to blame it on a weakening dollar and a reassessment of the global economy, but the truth is that they have no spare capacity. I guess we'll know for sure in another few days.

Vader

We need to make it affordable to covert all cars to E-85 capable vehicles. We then need to tell the middle east to take their oil and shove it up their *** one barrel at a time.

Once we're no longer dependent on the oil apes -- we can tell them in no uncertain terms --- funding Al Qaida will result in Riyad being reduced to cinders.

The apes will learn to stop supporting terrorism or their ape-lands will be decimated.

This is harsh --- I know -- but violence is all the Islam-o-facist apes understand.

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Goldenboy219

To bad this is impsossible with the use of corn.

Yet with Hemp....... Hmmmm, an economic idea like none other

__________________
"An elective despotism was not the government we fought for" Thomas Jefferson

ashurbanipal

The story I'm hearing now is that apparently Aramco did manage to increase their output, but the increase was offset by sudden declines in the UAE. The increase was something like 150,000 bpd, but the overall effect has been that OPEC production declined after November 1st. No official position from OPEC seems to be forthcoming (no one is expecting one). Tar sands production improved slightly, making more crude available to American refiners, which is keeping costs lower here.

donsutherland1

donsutherland1

donsutherland1