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June 2004 Contest Entries and Prize-Winners
What will the end
of cheap oil mean...
as a permanent state of affairs for the U.S. economy?
For the world economy? What will it mean for gold?
Boilermaker
(6/24/04;
05:19:02MT - usagold.com msg#: 122461)
******The
End of Cheap oil********
The end of cheap oil is at hand. For more than 100 years we
have been the heirs of a wonderful store of wealth. Much of this
wealth has been well used in the pursuit of improving man's life.
However, like the spendthrift heirs to a large fortune we have
used billions of barrels of this ancient gift in frivolous pursuits.
Now the oil bank's reserves are dwindling and we will be forced
to adapt to higher prices.
First let me establish what I mean by cheap oil. Cheap
oil is a commodity that supports my transportation, heating, and
hydrocarbon-based material lifestyle in the US at a relatively
small fraction of my total expenses.
The most obvious expenses are for gasoline, heating and diesel
fuels but nearly all other products and services have an oil component.
Americans have grown accustomed to "cheap" oil, natural
gas and coal. The end of "cheap" oil (and its cousin,
natural gas) means that we will need to devote a greater share
of our income for oil and/or find ways to conserve and substitute
other forms of energy.
Oil priced in US$ has been "cheap" for more than 100
years. Producers have been able to stay way ahead of demand on
a global basis. Production has historically been limited by agencies
such as the Texas Railroad Commission and more recently by OPEC
as a way to secure more stable prices and prevent wastage and
rapid depletion. Now we have OPEC calling for all-out production.
This is reminiscent of The Texas Railroad Commission's similar
order in 1971 when a test was conducted to demonstrate Texas's
capacity to produce two million extra barrels a day. The test
failed, revealing that the reserve capacity was only one-tenth
that amount.
The dollar has been the world's reserve currency due to its perceived
strength and the absence of an alternative "strong"
currency. The dollar is used for most oil sales. There is ample
evidence that the dollar's long rule is being challenged and that
it will have to weaken substantially to bring the huge and growing
trade deficit back into balance. The introduction of the Euro
portends the alternate strong currency that will end the dollar's
dominance and its unwarranted "value". This
means that we face the double-edged sword of declining oil reserves
and a declining dollar.
The price of oil will be like a candle burning at both ends, fueled
at one end a shrinking dollar and at the other end by a shrinking
supply.
Oil and the other fossil energy resources are the result of the
marvelous natural process of growth, concentration, refinement
and entrapment of our planet's flora and fauna over countless
millions of years. The source of all this stored energy is the
sun. The sun rains energy on the Earth. This energy is the source
of life that becomes stored energy. The release of this stored
energy occurs when it is combusted. Oil and other forms of fossil
energy are like bank accounts that do not draw interest. They
are finite. There is a balance to be drawn upon but it cannot
to be exceeded. We have been drawing down our accounts at an accelerating
rate for more than a century with no regard for our heirs. The
big, easily accessed accounts have been found and many of them
are depleted. There's very little "easy" oil to be found.
Once combusted, oil and other fossil fuels are gone. They cannot
be recycled like steel, copper, gold or paper. They cannot be
grown like corn, wheat or soybeans. They are consumed and oxidized
to water and carbon dioxide. Do not look for these by-products
to be returned to oil in your lifetime. There are hydrocarbon-based
materials such as plastics that can be recycled but these are
a small fraction of oil consumption. The sun provides our daily
dose of energy and we must learn to harness it and use it wisely.
Oil production in the US has been declining for more than 30 years.
The North Slope Alaska pipeline started out at more than two million
bbls/day in 1977. Now it's below one million bbls/day. North Sea
oil, first discovered in the 1960's, has reached a peak and started
its decline in 2000. Some OPEC producers are in decline and the
others are nearing that point. Russia, the world's second largest
oil exporter, may have undiscovered fields but their production
may be nearing a peak. Recently the Russian Government reduced
its forecast of 2004 production from an increase of 10% to 2.5%.
Whatever the real situation is for Russian oil they are clearly
beginning to husband their existing reserves presumably to support
market prices and increase their life span.
One of the most disturbing facts regarding oil is that 45% of
the world's known reserves are located in three of its most unstable
and hostile countries, Iran, Iraq and Saudi Arabia. When the Saudi
Kingdom falls to the Muslim militants there will be panic in the
oil pits. This event could be days, weeks, months or at most a
few years in the future. If the US steps in to support the existing
regime they will face another guerilla war and more explosive
retaliation from the Arab world.
War
is the dark side reaction to the disappearance of cheap oil. Powerful oil consuming
nations will be tempted to expropriate the reserves of weaker
nations by force or by coercion. This could get ugly as we have
already seen in the Middle East. The desire to keep oil prices
at cheap levels may in fact lead to the death and destruction
of many people and lands. The sooner we confront the need for
higher oil prices the more likely we will achieve technical solutions
and avoid the dark side solutions. The end of cheap oil is highly
predictable and the market should be allowed to stimulate peaceful
solutions. Make oil not war.
But the oil sky is not falling and we needn't panic at the thought
of shivering in the dark. As the world's oil balance declines
and the dollar shrinks the market will respond with increasing
prices that will stifle demand. Consumers will conserve. Energy
suppliers will apply old and new technologies for converting one
fossil fuel to another. The production of alternative/renewable
fuels such as ethanol will expand. Suppliers of energy consuming
products will increase the efficiencies of their products. There
will be oil and other fossil fuels for the rest of our lifetimes
but it will become dearer in our family budget. We will adapt.
The challenge of finding ways to obtain oil and to make its use
more efficient can be met. We have the example of Germany during
WW2. With virtually no oil reserves they produced enough oil from
their abundant coal resources to support their highly mechanized
war machine. We also have the more recent example of South Africa.
Sanctions applied by other nations to SA during the period of
apartheid compelled this oil-poor but coal-rich country to utilize
its coal resources to make oil and gas. The technology and investment
illustrated by the examples above need to be applied on a worldwide
basis and they will when the market price provides the incentives.
There will be no gap between oil production and consumption. The
above ground oil inventory is only a few month's supply and it
will not support an unbalanced market. We might assume that world
oil consumption would grow at 2% per year under the "cheap"
oil scenario. As it becomes relatively more "expensive"
the growth rate will decline, production will be stimulated and
the market will remain in balance. This is a simple economic supply-demand
balancing function.
Oil
in the ground is a form of wealth. As it is produced it is converted
to fiat currency, mostly dollars, which is not a form of wealth. Producers will
begin to prefer the Euro as that currency supplants the dollar.
Producers who wish to convert their fiat to a reliable form of
above ground wealth will look to the ancient numeraire
of wealth, gold.
In the Middle East and perhaps in Russia there will be an increasing
desire to convert
oil wealth into gold wealth.
National oil companies recognize that their diminishing in-ground
stores of oil must be converted to the age-old store of wealth,
gold, else they be lost
in the decline and fall of fiat currencies. As the in-ground stores
of oil wealth are depleted some are being converted to gold. As
the price of oil grows so will the demand for gold. Oil producer's
revenue converted to gold is a strong catalyst for releasing gold
from its paper harness.
Oil will cause the death of the dollar as we know it. Oil will
cause the rise of gold to its historic standard of wealth. The
transition will be extremely stressful for the US as its currency
is devalued and its people adapt to a pay-as-you-go lifestyle.
The transition will cause an economic upheaval at least as serious
as the Great Depression. With good leadership the challenge can
be met and the US will recover but it will take two decades or
more. Without good leadership, all bets are off.
Anyone wanting to avoid the dollar "abyss" needs to
make a substantial transition from fiat to gold. There will be
no second chances when the dollar curtain closes.
Tevye
(6/22/04;
20:48:06MT - usagold.com msg#: 122401)
**** The End of
Cheap Oil ****
The
end of cheap oil will reveal ourselves as we really are, just
as the loss of any significant thing will highlight our values.
Those who believe that government is the solution will advocate
Government programs
to ration oil according to their definition of fairness,
to 'recover' windfall profits from those that produce, trade or
sell oil,
to raise taxes on oil so as to reduce consumption (this logic
in particular escapes me),
generally tell somebody else what to do,
and perhaps if we are fortunate, will advocate tax incentives
for those who rebuild city centers, so that less comuting is required,
or invest in energy efficiency.
Those who work in the energy fields will shift their investments
to new sources of energy, including its delivery and merchandising,
to new exploration, driling, or recovery efforts
to recycling efforts
Those who believe in self reliance will
reduce consumption to match our means, be it carpooling or thermostats
or telecomuting or mail-order / on-line shopping or victory gardening
or turn out the lights when leaving the room or ...
purchase energy alternatives when the price and payback is right
produce products locally and revive local economies since they
no longer have to compete with cheap transportation that "imports"
lower cost labor,
help each other from the preparations we've made
What does the end of cheap oil mean to Gold? Not much directly.
But all those dollars floating around the world will find a home
at the oil producers. That may reduce impending dollar inflation
effects. It may also cause a liquidity crunch and an economic
slowdown. If those dollars purchase paper gold, then that trade
may florish. If they seek metal they will be wiser. If they seek
new energy technologies they will be wiser. If they seek to export
enforced religion or values, then conflict will not end.
The end of cheap oil is a mirror unto our soul.
As for Tevye, I want to get my horse re-shod since I am tired
of pulling the cart (and can't yet afford oil based motors). I
want my 5 children to have a better life than I. And perhaps they
will, by living closer together and closer to the land, and inheriting
a few gold coins.
Gold. Its Tradition.
Tevye
TheJuniorMiner
(06/16/04;
17:37:18MT - usagold.com msg#: 122163)
*******
The End of Cheap oil ***********
What will the end of cheap oil mean as a permanent state of
affairs for the U.S. economy?
For the world economy? What will it mean for gold?
There will be much whining, grousing and gnashing of the teeth
by the American public as the cost of energy rises. It will be
blamed on Arabs, Oil Companies, Politicians and Environmentalists
and few will understand that larger more powerful vehicles, bigger
homes, decades of undervalued oil and natural gas and our carefree
attitude toward energy, are to blame.
It will mean disruptions in our way of life and complete lifestyle
changes. Real Estate prices will react, as homes in those distant
subdivisions will be traded for ones close to the city. Smaller
homes will be in vogue and cost of utilities will be a strong
selling point. Vehicles must get smaller and more efficient and
leisure travel will slow. Some will brag about gas mileage
The US economy will struggle as it copes with the never ending
rising dollar price of oil. The public will be uncomfortable.
Inflation will be a national topic.
World unrest, now high, will rise to a new level, as the Arab
Nation's portion of world oil supply will grow. Many will try
to prevent it and many will try to profit from it. Some may try
and take it.
At some point China will have to let the dollar go and float their
currency, as it will be the only way for them to alleviate the
inflation pressure of rising dollar priced commodities.
The Japanese will finally get totally disgusted with supporting
the dollar as they too need price relief in the commodity sector.
They will have serious debates with what they must do with a half
a trillion FRN's.
And the dollar price of gold and will keep rising. Expect extreme
volatility, as this will be a power struggle not easily relinquished.
But I do not believe we are at the end of cheap oil yet. Though
production will peak soon and world oil demand keeps rising, there
is still a lot of oil sloshing around out there.
As long as we can print FRN's to trade for oil, oil will be cheap.The
end of cheap oil won't come until those that produce it start
demanding something real in return. What would happen if we really
had to trade something worthwhile for our energy, gold, silver,
copper, nickel and lead? When the producers wake up and realize
they need something for their prized non-renewable resources besides
a stack of worthless paper, then we will have The End of Cheap
Oil.
Glenn
Smeagol
(6/17/04;
07:46:30MT - usagold.com msg#: 122187)
****
The End of Cheap Oil ****
Hold, precious... lissten... it's the Contesst-horn!... we'll
fissh later!
Smeagol likes the Contessts and considers it a great honor to
throw in sside by sside with such Great Ones here even if we doesn't
win the Precious, precious... after all we DID win not one but
TWO Silver Preciouses once (and if we can, anyone can! Thank you
again Sir MK!!)...we always come away with worthy inssight to
inspire us on the Trail, O yess...
So....what riddle does Sir Gandalf put to us now... yaiow! Three?
"What will the end of cheap oil mean as a permanent state
of affairs for the U.S. economy?"
sss... it all very much depends on jusst how 'UN-cheap' Oil gets
compared to everything else, eh? We will assume Oil will become
worth many times its recent price in other... staple commodities
(sstrange words if you look at them too long...).
Oil-use is sso long entrenched in the US country that it is involuntary...they
MUSST have it, a great many would be losst without it... but even
Hobbitses can give up their pipe-leaf in dire sstraits! Use of
Oil mercilessly demands a certain fraction of capital, vasstly
increases the rate of conssumption of other things, and affects
every endeavor... Up until now, they have lived in halcyon days
when that fraction was small and consisstent relatively...when
the size of that fraction HURRTS it will irresisstibly force change
to a more efficient or lesser Oil-use. The entire US economy is
an awesome bubble, inflated by more than a century of Oil-use
(and fiat besides)... and when it pops, O precious "watch
out below!"
Ssome possibilities - Oil ssubstitutes that were far too expensive
may become viable....much less consumptive motor-machines...more
use of Oil-thrifty transsportation like bicycles. It will mean
people living closer to where they work. More ssmall local farms
and gardens as high Oil-cosst imposes sstiff penalties on food
growth and transsport. More use of locally available resources,
like building materials, for the same reason. More use of Man-power
and Horse-power. More re-cycling. It will mean a return to a true
appreciation of what it really takes to produce ssomething, or
do work. It will mean 'cutting fat' and returning to a sstate
more in keeping with reality and natural design. The US government
musst either contract in size or become tyrannical to keep the
Oil-habit...if the US country refuses to accept the neck-collar
of high Oil-price; then it may do unthinkable things to and with
its and the resst of the World's peoples and resources in an attempt
to hold onto unsusstainable 'interessts' resulting from its Oil-addiction...and
lie upon lie upon lie will be told to jusstify.
"For the world economy?"
The less a country depends on Oil... the closer it is to the land
and to the old ways, the less the People there will be affected
by Oil's wiles...sss...these days there are few countries that
remain untouched. Like the US, developed countries will writhe
in withdrawal as they adjusst... some may go to war for thinning
slices of another's Oil-pie... The higher the Oil-price, the more
volatile, and this will reflect in all aspects of Oil-use. Like
the US country, the world economy will be forced awake from its
dreams to seek a realisstic existence proportional to remaining
Oil-use. Local production of food and things assumes more importance;
though trade will sstill happen, unpredictable transport cosst
will weigh on buying decisions (maybe the giant sailing-craft
of old will rise again in a new form?). Decentralization will
occur, as massive infra-sstructures are not ssmart. We thinks
that control of what Oil is left will become paramount among corporate
and government interests... like It, Oil is a Power, and who controls
a Power controls those that use it...ach! sss...(shudder... sorry
precious, this brings back memories of old bad times)..sss...and
lives of Men are of no concern if it comes to that pass... the
Elite consider Men peons, resources like Oil itsself, to be used
up and cast aside by the millions... unless they wise up and ssay
NO! in unison... but there are many on Earth now, perhaps more
than can fit in an Oilless society...ssurvival of the fittest
will be the law in many places. Only if Oil goes away ssslowwwly
enough, over generations, then mayhaps we will return without
war to a saner, if much less convenient, existence... but Smeagol
doubts this.
"What will it mean for gold?"
Ach! Ssss...that Wizard knows how to assk a tough Quesstion!...if
we could ssneak a look at that glass ball of his, we'd ssurely
see things to ssay... but Spot and Spike guard it too well...sss...
niiiiice doggies...sso we will jusst say...
...Gold is ancient... historically, Petro-Oil is a new thing to
Gold-demand. We doesn't think a higher Oil-price as ssuch affects
It... but Oil burnt is Oil gone, and society's REACTION to an
interrupted Oil-habit/Oil-flow can certainly affect desire of
It...sss... if there is Oil-shortage, and we mean a real one,
precious... then this will cause many economic sysstems, powers
and towers that were founded or benefit by Oil-use to collapse,
and of course, whenever there is chaotic rearrangement in the
world, people return to ancient realities, one of which is It.
So... It will do what It has ever done... shield It's owner against
wholesale wealth loss as a ssupreme wealth anchor in a stormy
world... no matter It's price in paper, Oil, soy-beans... or pipe-leaf.
S.
Liberty
Head (6/15/04;
01:01:46MT - usagold.com msg#: 122095)
****
The End of Cheap Oil ****
Oil is a true commodity and dollars are not, so the cost of oil
has no meaningful measure in dollars.
Oil will demand like for like, that is one commodity in exchange
for another.
The most precious commodity of all, our blood and our children's
blood, will increasingly factor into the price of oil.
Globally, freedoms will continue to erode, tyranny will continue
to expand and economies will take on more debt.
The global nature of this predicament means there is nowhere hide.
So, if our response choices are limited to flight, fight and fraud,
flight is no longer viable.
This leaves us with much more fighting and lying in the days ahead.
Ones survival will depend on fighting smart and discerning the
truth from the lies.
This is where gold starts to shine. Gold is the truth. Paper is
the lie.
Be smart, stay out of debt and get gold.
Best Wishes
Topaz
(6/15/04;
14:33:36MT - usagold.com msg#: 122117)
***The
end of cheap Oil***
Those
who look upon Mona Lisa or Guernica and see Canvas and paint are
truly the ultimate realists. This realist viewpoint, when considering
"the price of Oil", does not take into consideration
the undeniable attachment Oil has with our current monetary universe.
RELATIVELY Cheap might be a more appropriate statement and given
the obvious - every Barrel burned is a Barrel less - the "relative"
price would be expected to rise.
Enter 'ol Buckaroo!
As part and parcel of this $US/Oil reserve currency fiat system,
the "price" of Oil is quoted and traded through the
mighty Greenback and as such, said price is dependant to a very
large degree on monetary events rather than pragmatic S/D.
Let's revisit our "Artwork" and again gaze upon these
two "Masterpieces"
One takes little or no interpretation and has been revered through
the Ages as one of the top 3 artworks in history (akin to Gold/Standard)
... the other, a "surrealist" interpretation, takes
far more effort understanding/interpretation but is nonetheless
revered in the modern world (akin to Fiat/$/Oil)
Whether in 200 Yr's Picasso's masterpiece is held in similar awe
as is the Mona-Lisa today is anyones' guess ...tho I'd be pretty
safe in assuming our current monetary system will not gain too
much favour when compared to Gold.
DryWasher
(6/15/04;
16:21:12MT - usagold.com msg#: 122120)
****
The End of Cheap Oil ****
The Contest Question:
"What will the end of cheap oil mean as a permanent state
of affairs for the U.S. economy?
For the world economy? What will it mean for gold?"
When history provides answers to the above questions it will fill
volumes of books and will rank, in a negative way, on a level
of importance with the industrial revolution in the history of
mankind in my opinion.
Cheap abundant energy is an absolute requirement for our technological
society, and as that energy continues to become more expensive
and less available we will see corresponding negative changes
in expectations and lifestyles. The ultimate long term impact
will in large part be determined by how we all react to the situation.
In the most optimistic scenario, on a world wide basis, we will
all tighten our belts and work together to make the best of a
bad situation by sharing and making the best use of the remaining
resources, curbing population growth, and in general cooperating
and voluntarily curbing our life styles while working to develop
new sources of energy to replace the dwindling hydrocarbon resources.
In the most pessimistic scenario, we will not develop new energy
sources, we will continue to waste energy while looking out for
our own immediate individual needs and wants, resorting to war,
or even to nuclear war, to take and squander the remaining resources,
and ultimately putting an end to world wide civilization as we
know it.
What really happens will probably fall somewhere between the above
two extreme scenarios and will be very much complicated by the
impending financial debt crisis with the possible collapse of
the Dollar and other currencies. As I see it, it could become
the proverbial perfect storm.
As has been the case throughout history during bad times, those
who have GOLD will be far better off than those who do not.
Sorry for being so pessimistic, but I must tell it as I see it.
DryWasher.
Moegold
(6/15/04;
20:07:28MT - usagold.com msg#: 122125)
****
The End of Cheap Oil ****
"What will the end of cheap oil mean as a permanent state
of affairs for the U.S. economy?
For the world economy? What will it mean for gold?"
Since the dollar went off the gold standard, the dollar has been,
de facto, priced in oil. The world knows what a barrel of oil
costs in dollars and are able then to assign a value to the dollar.
When the US was on a gold standard, it had to actually hand over
gold that the US possessed; under the oil standard the US just
had to print the dollars and they were redeemed by oil producing
countries which in a magnanimous gesture delivered THEIR oil reserves.
The end of cheap oil means the value of a dollar will rapidly
deteriorate. It only had value when producers were willing to
take a modest amount of them for oil because they grossly undervalued
their oil. The oil producers will be unwilling to trade a barrel
of oil for a barrel of dollars. The emperor's (dollar) clothes
will be gone; the intrinsic value of the naked dollar will be
apparent. A replacement currency will be sought. It will unlikely
be another fiat currency; the oil producers have plenty of paper.
Another currency will be sought and the history will point to
the golden way. Gold won't be priced in dollars; most things will
be priced in gold. This will have a profound effect on the world
economic system.
Solomon
Weaver (6/15/04;
20:58:41MT - usagold.com msg#: 122128)
******the
end of cheap oil**********
The
end (time) of cheap (value) oil (energy). And of course, what
does that mean for Gold?
Mankind, beyond sharing the qualities of other mammals to seek
appropriate shelter and safety, forage for food, mate, sleep,
and spend idle hours sitting, has a number of important discoveries
or developments which in rough order of appearance in history
may be summarized as: The use of tools to extend the power of
the hand, the use of fire to pre-digest caloric value (diminish
forage time) and to reduce spoilage, the husbandry of animals
and plants, the invention of trade and accordingly money, the
invention of written word, the invention of civil government,
and the promulgation of warfare. Actually, both language and warfare
are probably first on the list, and have evolved accordingly.
One hidden aspect of all these developments is the ability of
mankind to "understand" himself, his clan, his enemies,
and the nature in which he is embedded.
The emergent use of gold as ornament and money may be a crowning
achievement of early civilization, as it allowed the concept of
a "unit of trade" to thrive and act. The power of gold
to facilitate honest trade, and create "value" eventually
creates a "value" of its own for gold, in each culture.
But although gold facilitates trade, it does not diminish the
"toil" required to plant and harvest a crop, sew a cloth,
or build a hut. Gold may pay armies to fight, but it does not
lessen their pain in death, nor assure their victory.
Since earliest of human times, mankind has used fire as a tool.
Fire does reduce the toil required to clear a forest, or the digestive
toil in eating food. Fire is an efficient form of shelter and
safety, and a potent tool in the hunt and warfare. After many
hundreds of thousands of years of use of fire, primarily by burning
wood, and in some cases coal, and after some brief flirtations
with wood-fired steam as a motive force, the near simultaneous
discoveries or inventions of oil deposits and the principles of
electrical power, approximately 150 years ago, allowed the introduction
of an age which has been predominantly an age in which the direct
toil of mankind is uncoupled from the benefits of toil. One glaring
example is that the poorest of America today live better than
many royalty in the earlier eras of toil.
Humans chose to exploit gold as money because it was an efficient
means to create useful, durable, concentrated purchasing power
(due to the high level of toil to mine gold). Humans chose to
exploit oil because it became the most efficient means to harvest
useful, abundant, concentrated energy. Note the word choicefor
Gold, durable..for oil, abundant. Gold is valuable because it
is rare, oil is valuable because it is abundant. Unlimited supplies
of gold will not reduce human toil, unlimited supplies of oil
(energy) certainly would.
It might be worth noting that the amount of sunlight falling on
the state of Texas on a sunny afternoon is just about the same
as the total electrical generation capacity of the USA. Hydroelectric
and nuclear power are already reasonable alternatives to natural
gas and oil for power generation. Current developments in wind,
tidal, and solar energy are still young but promising.
The "end" of cheap oil will lead to the beginning of
"other forms of cheap energy". Of course we have an
emerging energy crisis.but mankind will manage through. Of course
energy conservation (per unit of non-toil) is an important half
of the equation, but we will continue to be amazed by the capability
of mankind to discover new ways to work with energy.to create
(or harvest) it, and to conserve its use.
We all know of the hypothesis (by Another, FOA, and others) that
the United States has been able to move from a gold backed currency
to an oil backed currency.the so called black gold. The most likely
longer term outcome of "the end of cheap oil" will be
"even more abundant energy" from a multitude of sources.
The problem facing humanity will not be how to distribute limited
resources, and diminishing energy supplies, it will be how to
distribute the abundant economic output of low-toil industries
in an equitable manner (which does not resort to outright socialism).
Fiat monies are not simply a convenient unit of financial account
(a good thing), they are also a now global system by which large
and growing governments and associated elites are able to confiscate
wealth through the hidden taxation of inflation (a bad thing).
Most of the confiscated purchasing power that does return to the
poor is returned because it buys votes. There is almost no country
which has an own central bank where government is considered to
deliver better "bang for your buck" than freely operating
private industries. Governments are inherently pork politics and
corrupt (even if many honest folk work in them). An emerging class
of world citizens generating new wealth will demand their change.
Gold will return, mainly in digital trade units, to replace much
of the fiat world. Oddly enough, it will be the "end of cheap
oil" which, after a period of crisis and adaptation, will
usher in the abundant globally economy where gold will once again
return to center stage as a financial anchor.this is assured,
as the emergent classes will demand a currency in which they can
save.
I think of the old wisdom. "praise Allah, but tie your camel
to the post". I say "toil for the true abundance of
humanity, but keep some gold in your back pocket". Or perhaps
a twist on the old American saying."Gold helps those who
help themselves".
Goldendome
(6/16/04;
00:58:24MT - usagold.com msg#: 122138)
*********
The End of Cheap Oil ************
Impending
declines in the production of crude oil, coupled with increasing
demands for it's derived products, will pose serious challenges
for the world's population, as we face further price increases
in the near future. How mankind deals with the end of cheap oil
may be as critical a challenge as any that we have faced since
the Ice Ages, with the threat of war always lurking about, while
desperate nations attempt to corner supply.
The modern world industrial economy has been fueled largely with
cheap oil for over a century. And, it will be those nations, including
the United States, most dependent upon cheap oil, that stand to
suffer the greatest decline in living standards.
Will governments around the world ration the use of petroleum
products as was done during World War 2? Determining for its citizens
the greatest marginal utility for the increasingly rare commodity.
Or, will market driven prices simply determine who or what group
will use the oil, as it sees fit?
How these questions are answered, along with developments in new
technologies that replace oil, will help determine where we live
in relation to our work. The type of work that we do, and our
general living and travel standards.
The continuing decline of marginal productivity (brought about
by increasing oil prices) will likely continue the manufacturing
drain from highly developed societies; placing increasing stress
on government benefit programs in these countries. The United
States will likely see increased competition from Asia, not only
in easily manufactured items, but increasingly, from higher tech
production.
Unless mankind is able to develop newer technologies for farming,
heating cooling and lighting, and in transportation-everyone,
around the world may face severe changes; including the very real
possibilities of starving or freezing to death.
What will the end of cheap oil mean for Gold? I believe that we
will see increasing inflation; both in monetary aggregates and
in goods prices. With the dollar still the world reserve currency
and oil still priced and paid for in U.S. dollars, we can rest
assured that the United States will create as much free buying
power as it can get away with, in order to- bring home the oil.
As the public finally realizes that savings held in paper are
decreasing rapidly in value, we are likely to see a larger movement
away from paper assets and into Gold, as people attempt to conserve
the dwindling value of their paper money savings and investments.
specie-man
(6/16/04;
03:12:01MT - usagold.com msg#: 122141)
****
The End of Cheap Oil ****
What
will the end of cheap oil mean as a permanent state of affairs
for the U.S. economy?
For the world economy? What will it mean for gold?
USA gold will be used to buy oil.
No one will know until a few gold billion turn up missing.
The Sitting Buck will finally get picked off.
Bonds away !!!
Bush will be sent to the Bush League.
Kerry will be sorry he got the job, just like Carter.
Father Guido Sarducci will make sure of it.
Terrorism will continue unabated, and horrorism will grow unabashed.
The House of Saud will be forced into exile in Texas where they
will start a ranch.
The media will call their spread "Howdy Arabia".
But as luck would have it, they'll discover the last remaining
drops of US oil on their land.
The Middle Beast will rear it's ugly wellhead (again and again
- but to no avail).
Japan will be in a no-gold situation.
Goldzilla will attack and destroy Tokyo unreal estate.
The Chinese will buy anything they can with their Federal Reserve
NOTs.
A Stupid Trinkets (ST) factory will be set up in Newark.
It will manufacture endless unneccessities for the Chinese market.
But the Chinese won't buy any because they prefer to make their
own and sell them to US.
But we will sell them scrap recycled plastic from toys made in
China and sold years ago at Wal-Mart -
for 5 times what we paid for it.
Toro D'Oro will run rampant in the China shop.
The NAS-DAQ stock exchange will be NAS-TY.
The DOWn Industrial Average will go way down - it won't even be
"average" any more.
The DOW will be positively Dour.
Toilet paper investments will get flushed.
They'll pull the peg on the Dollar.
No one will want to buy US Tragedy Bonds.
When convicted of "GSE" (Government-Sponsored Embezzlement),
Freddie & Fannie executives will go directly to jail.
Do not pass gold.
Diesels will be scrapped in favor of donkeys. Donkey carts will
be big.
Genetically-engineered donkeys will be able to pull 25% more than
ever before.
But they'll be 50% more stubborn.
The Baby Doomers will not be able to retire on time (if at all).
Many will have to get jobs riding shotgun on donkey carts (or
cleaning up after them).
American cities will smell like everyone is passing the gas (pumps).
"Road Rage" will take on a decidedly different tone.
Everyone will finally realize that the Soylent Greenback is made
out of people's debt.
And Americans and Asians will be forced to eat Soylent Greenspam
for years to come.
But in the Gold Folks home we'll still eat real strawberry preserves
-
which will cost $500 in Federal Reserve Nots (or two silver quarters)
per jar.
He who has lots of "stuff" will prevail.
We all have a gold mind in the back of our heads.
But only a select few listen to it.
Thing King will rule.
For he is the "Dude Uncommon" who now holds gold.
specie-man
(6/23/04;
15:34:03MT - usagold.com msg#: 122446)
The
End of Cheap Oil - part two
Cut
off the supply of oil lubrication to an engine and it will grind
to a destructive halt. The economy will do the same.
And when it does, all the TV financial pundits will be left shaking
in their mute. All the really important economic facts will slip
through the quacks. Stock cheerleaders will choke on their pom-poms.
The S & Pindex will leave investors Stranded & Poor.
Interest rate derivatives will vaporize. Insurers will sue. Counter-parties
will counter-sue. James Bond Vigilantes will not help matters.
Checks can not be cashed. The issuance of cash can not be checked.
Trash will be burned in empty 55-gallon oil drums to generate
heat for increasing numbers living on the street. The Snow job
will just make it worse. Cash will be like trash. "Throw
it all in the cash can".
The government-issued medium of exchange will become almost all
digital. The new refrain on the street will be: "your imperial
credits are no good out here !". Digital petrodollars will
be about as popular as diesel fumes.
A nefarious mastermind will increase the value of oil even further
- simply by not selling. The few remaining oil suppliers (including
this "Oilfinger") will desire something more substantial
for their crude - like gold. Or platinum. Or palladium. Or plutonium.
Talk of a renewed Gold Standard will increase. "Opportunity
[Ft.] Knox !" Some Gold Certificates will be issued (secretly).
Then too many will be issued (secretly). Gold reserves are mobilized
to cover commitments. Then the velocity of gold increases to hide
the shortfall. Velocities increase until the tangible world of
gold collides with the intangible world of digital credits. Here
stops the Buck.
The Credit Suisse First Boston bank (CSFB) will be given a new
nickname - the "Commercial Signal Failure Bank"
(CSFB).
In the competition for scarce oil, the good (desired) money will
push aside the bad. Digital credits are like a static charge.
When they come up against a good economic conductor like gold,
they discharge into nothingness.
The Argent at Arms will run the Fiat off a cliff.
Dislocation pressures are building, due to continued manipulations
of all markets in the name of "stability". The result
will instability. The "Big One", when it comes, will
rip like a perfect 10.0 on the San Andreas.
We will find out if "deficits don't matter". Oil deficits
matter.
slingshot
(06/17/04;
00:36:15MT - usagold.com msg#: 122174)
*******
The End of Cheap Oil *******
"
EVERYTHING IS GOING TO COST MORE!"
More for cars. More for Televisions. More for food.
I do not want to take away from this contest, but this is very
elementary for those who have been here awhile reading Sir Black
Blade's posts and the many who have supported his veiws. Oh! Oil
is forever. Like water from the tap to be consumed at our leisure.
The Europeans can teach the Americans a few tricks on this subject.
To extoll the difference between the US and world economy is futile
for it is too interdependent. Yes , some will go to war to claim
finite oil fields only to extend their economies a few years out
and they will resort to other forms of energy.
How much FIAT will be printed to finance these OIL WARS?
Shall we say,"These be the good old days" when everything
was plentiful and cheap? Including, GOLD!
Very basic and I hope Joe Sixpack will understand what I have
said here.
Slingshot-------------<>
NTgeo
(06/17/04;
21:55:22MT - usagold.com msg#: 122209)
*****The
end of cheap oil*****
The
proposition to be discussed is what will be the effect of higher
oil prices on the US and World economies, and on the price of
oil. Perhaps a more important question is what will the increasing
scarcity of oil reserves mean for the world economic order. None
of the major world economies have sufficient indigenous oil reserves
to satisfy their needs. They will need to import a growing portion
of their requirements. The new economic powerhouses of India and
China will require increasing amounts of imported oil and will
have to source this resource from oil producing regions in competition
with the US, Japan and Europe. A lot of smaller poorer countries
are going to suffer from the higher prices and reduced availability
of oil. This will cause increasing resentment against the larger
richer countries. Although there may be some reduction in oil
demand in the developed world as prices rise with the introduction
of fuel-cell and solar powered vehicles, in the developing world
it is doubtful whether any significant substitution will occur.
The oil-rich countries will be under great pressure from the competing
blocs for their oil production. One can envisage scenarios where
bilateral agreements may occur between countries to tie-up oil
production. As the supply of oil gets tighter wars may be fought
over significant oil reserves which are located in border zones.
Economic warfare may also be fought to force oil producing countries
to supply certain countries.
The higher oil prices will cause increased research into alternatives
to oil. Further success in developing fuel cell and solar technology
may lead to the development of greener vehicles.
On the economic front the rising oil prices will lead to increased
price inflation in all countries. This will cause the price of
gold to rise.
Life,Liberty,Property
(6/18/04;
21:13:42MT - usagold.com msg#: 122247)
****
The End of Cheap Oil ****
I
am going to take a stab at this out of left field (or perhaps
not, since I don't always have time to peruse these pages). The
end of cheap oil may just mean the return of coal's prominence
for power generation. Though it has lost the cache it held from
the beginning of the industrial revolution, in part because of
the cheapness of oil and the pollution it generates, it has the
attraction of being far more plentiful. Especially in the United
States, in areas that are currently out of bounds for mining (thanks
to the same administration that received donations from Indonesian
coal interests. Also made oil reserves out of bound as another
hint). New advances in software and controls is increasing power
generation in OLD plants by 10%. Improved scrubbers, and catalytic
converters are even cleaning emissions. The end of cheap oil?
Look for the rise of existing alternative energy resources. You
can't run a car on them, but power generation is a significant
part of the oil equation.
Nomad
(6/19/04;
20:57:09MT - usagold.com msg#: 122266)
Peak
Oil Contest Essay - Part I
Peak Oil Landmarks
(with no apologies to 'HomeLand' Insecurity)
(to be laminated and placed in your wallet :)
---------------------------------------------------------
---------------------------------------------------------
condition Green
crude oil price: $ 50 / barrel
US gas/diesel price: $ 3 / gallon
---------------------------------------------------------
condition Green symptoms
reported US govt inflation rate: 3 percent
gold price: $ 430 US$ / oz
reported US govt unemployment rate: 6 percent
real estate bubble: average US house price drops 5 percent
stock market bubble: DOW 9000
10 year US Treasuries: 6 percent
---------------------------------------------------------
---------------------------------------------------------
condition Blue
crude oil price: above $ 70 / barrel
US gas/diesel price: above $ 4 / gallon
---------------------------------------------------------
condition Blue symptoms
reported US govt inflation rate: 5 percent
gold price: $ 600 US$ / oz
reported US govt unemployment rate: 8 percent
real estate bubble: average US house price drops 10 percent
stock market bubble: DOW 8000
10 year US Treasuries: 8 percent
---------------------------------------------------------
---------------------------------------------------------
condition Yellow
crude oil price: above $ 90 / barrel
US gas/diesel price: above $ 5 / gallon
---------------------------------------------------------
condition Yellow symptoms
reported US govt inflation rate: 7 percent
gold price: $ 800 US$ / oz
reported US govt unemployment rate: 10 percent
real estate bubble: average US house price drops 20 percent
stock market bubble: DOW 7000
10 year US Treasuries: 10 percent
---------------------------------------------------------
---------------------------------------------------------
condition Orange
crude oil price: $ 110 / barrel
US gas/diesel price: $ 6 / gallon
---------------------------------------------------------
condition Orange symptoms
reported US govt inflation rate: 9 percent
gold price: $ 1000 US$ / oz
reported US govt unemployment rate: 12 percent
real estate bubble: average US house price drops 35 percent
stock market bubble: DOW 6000
10 year US Treasuries: 12 percent
---------------------------------------------------------
---------------------------------------------------------
condition Red
crude oil price: $ 130 / barrel
US gas/diesel price: $ 7 / gallon
---------------------------------------------------------
condition Red symptoms
reported US govt inflation rate: 12 percent
gold price: $ 1500 US$ / oz
reported US govt unemployment rate: 15 percent
real estate bubble: average US house price drops 50 percent
stock market bubble: DOW 5000
10 year US Treasuries: 15 percent
---------------------------------------------------------
Nomad
Nomad
(6/19/04;
22:46:13MT - usagold.com msg#: 122269)
Peak
Oil Contest Essay - Part II
For decades, the Texas Railroad Commission was primarily responsible
for setting US oil production quotas. In 1970 (perfectly in line
with King Hubbert's prediction of a domestic US oil production
peak) the TRC, for the first time, lifted production quotas completely.
Those of us who lived through the 1970's (remember WIN buttons
? :) KNOW that this single event clearly signalled to anyone with
half a brain, that the era of cheap domestic oil was offically
over.
In 2005, worldwide oil demand of 80 mbd has, for the first time,
matched maximum worldwide oil production, thanks to violence in
Iraq and Saudi Arabia, and the rise of American-style consumerist
lifestyles in China and India. OPEC announced recently that they
will continue to 'limit' members' production by setting oil production
quotas equal to the maximum amount of oil each OPEC member is
physically capable of delivering to the market. In other words,
OPEC quotas are a thing of the past. Again, a clear signal has
just been sent to those of higher intellectual function that the
era of cheap WORLDWIDE oil production is over.
Of course the question we all want answered is what will the future
bring ? The chart I posted in Part I consists of my personal,
basic, educated-guess scorecard. While it may be fashionable to
quibble about the details, I think the bottom line is that the
fat lady, has in fact, taken her spot center-stage.
I have posted before about the importance of the book, 'The Fourth
Turning' (http:///www.fourthturning.com) and how it provides a
blueprint for making such educated guesses for the future. I have
been gratified in seeing others take up the torch in support,
both in this forum and the Peak Oil forums which I frequent.
I believe that we will see two primary areas of fallout from Peak
Oil. The first and most obvious will be in the financial arena.
Undoubtedly, inflation, unemployment, and gold prices will rise,
while real estate prices will fall. In many ways it will mirror
the Great Depression, but for the great mass of sheeple it will
be much worse this time around. In the 1930's the US general population
was still concentrated on farms and had the capability (if all
else failed) to feed, clothe and house themselves. Can you imagine
what the reaction of the SUV-driving, road-raging, TV-addicted
public will be if even a fraction of their 'quality-of life' is
compromised ?
4T notes that when the highly self-absorbed Boomer generation
reaches the peak of it's political power, they will wreak havoc
on all around them in their effort to hang on to the life they
have come to expect as their birthright. The Iraq Quagmire is
just a taste of what they are truly capable of. And this brings
us to the second area of Peak Oil fallout, military empire building
in a doomed effort to sustain the greedy, energy-sucking American
'lifestyle'. Look for 'interventions' to continue in all areas
of the Middle East for decades to come.
One of the funniest thing I hear in the media and the Internet
is the idea that Democrats and Republicans constitute the 'left'
and the 'right' wing. Just different shades of Boomer gray, you
know. Clearly Bush and the neo-cons are committed to the 'War
on Terror'. And what is our 'other' choice ? Why a presidential
'left-wing' candidate whose stated goal is to DOUBLE the number
of American troops in the Middle East. A choice between dumb and
dumber.
To add fuel to the fire, the first of the Boomers is beginning
to move out to pasture. As they move through their retirement
years, this generation (like any other) will unload as many of
their assets as possible, both to keep their heads above water
and in an effort to live out their Snowbird dreams before passing
on to the big TV network in the sky. In the federal government,
estimates are that more than 20 percent of federal workers are
planning on retiring within the next 5 years. Remembering that
the Boomers were both the largest and (are still) the richest
generation in Amercan history, consider that their efforts to
unload their incredible store of assets could easily turn a fairly
asset fire-sale into a blind panic. Those with gold and other
hard assets should be able to pick the cream of the crop. One
clear sign of the impending flood of retiring Boomers is the announcement
by Winnebago of record sales and profits. Onward to Arizona, old-timers.
Peak Oil also has much in common with Y2K. While I think that
a lot of people might be embarrassed to admit that they took Y2k
seriously, I consider it to have been a watershed event in several
ways. It was the first event in my lifetime that I remember so
many people making serious preparations for what they thought
might be a serious social/economic problem. I, personally, learned
a lot, not just about the basics and importance of being prepared,
but also about my own personality and anxiety levels :)
I have the distinct feeling that many of the people who feel they
got burned by Y2K will let their personal anxiety pendulum swing
to the other extreme and do their level best to convince themselves
that Peak Oil is Y2K the re-run (boy who cried wolf and all that).
I admit that I prepared VERY seriously for Y2K and when I found
out I was WRONG, I drove a rather large truck to a food bank and
helped feed a whole lot of people. Then I went on a long vacation.
In September, 2001, thanks to 4T, I knew that the Catalyst had
arrived and I began to rearrange my personal and professional
life. I have a solid job, multiple sources of financial assets
and live in a small, very isolated, relatively warm weather city,
with a tradition of hard-working, independent-thinking people
(no I won't tell you where it is :) I also have a spouse who supports
my efforts to secure our life in every way possible. In other
words, I put as many of my ducks in a row as I could possibly
manage.
While the fixed date (no pun intended) aspect of Y2K could be
compared to a frog getting hit by a sledgehammer, I believe Peak
Oil is going to be much more like the famous slow-boiling frog
experiment. By the time most people realize that they are in serious
trouble, I think it's going to be too late for them to do much
about it. For Y2K we had the incredible luxury of having a concrete
date to prove/disprove our theories.
Peak Oil is NOT Y2K.
I hope the 4th Turning Crisis/Peak Oil finds each of you in a
comfortable place, with lots of economic, social and emotional
support.
Nomad
Black
Blade (6/20/04;
21:19:17MT - usagold.com msg#: 122289)
****
The End of Cheap Oil ****
Crude oil prices have rebounded within striking distance of new
record highs (unadjusted for inflation of course). Still US manufacturers,
businesses, and consumers are quaking in their boots as they are
becoming aware that prices will not be retreating significantly
anytime soon (if ever). Last week there where four major explosions
on Iraqi pipelines and attempts to disrupt domestic power generation
in that country by foreign terrorists. The President of the Governing
Iraqi Council was assassinated on May 17th and there were several
attempts on the lives of other Council members since.
This disruption of over 1.5 million bbl/day has been mitigated
some by Saudi Arabia's Minister of Petroleum and Mineral Resources
Ali I. al-Naim's "jawboning" that his nation's paper
reserves (mot known to most outside the Ministry as it's a state
secret). The simple fact is that the Middle East has been producing
"flat out" (OPEC quota cheating) since reaching "peak-production"
over two years ago and rising decline rates. According to the
OPEC 10 conference president Purnomo Yusgiantoro, OPEC has been
running at 2 million bbl/day over the 25-million bbl/day quota.
The same is said of the North Sea and the Caspian Play has been
a bust so far in spite of high expectations.
The IEA Paris-based International Energy Agency recently revised
their worldwide demand estimates from 77 million bbl/day in 2004
to 80.6 million bbl/day. The first quarter demand from China alone
increased 1 million bbl/day according to the IEA May report. The
IEA stated that suppliers must increase investment and drilling
to secure production for tomorrow.
Cambridge Energy Research Associates claimed, "Global oil
demand is not being dampened by these prices primarily because
the strong euro (and high tax component on major fuels) is insulating
European countries from their effects. And the strongest growth
market -- China which has a huge surplus in its balance of payments
-- is not materially affected by high dollar-denominated prices
because it has the financial reserves to off-set them".
Analyst Douglas-Westwood ltd., Canterbury, England said that depleting
oil reserves, coupled with growing energy demand, will result
in sustained oil prices near the $40/bbl level with greater investment
in Natural Gas. China's rising oil demand will likely continue
and has five times the U.S. population and is industrializing
rapidly with vehicle demand rising as well (but we already knew
that over two years ago). Westwood supply specialist Michael R.
Smith added that 52 of 99 producing countries have passed "peak
production", 16 are at 'peak production" and the rest
are rapidly drawing down resources. Once oil supplies approach
peak and scarcity prevails, prices will double within 3-4 years
as they did during the shocks of the 1970's.
In the US there are a mere 146 operating refineries with some
in the process of closing down due to high maintenance costs and
ever-changing environmental regulation impossible for some to
maintani profitable margins - even at current prices. There are
also several grades of oil specific to certain refineries. As
those crude oil supplies deplete so will some of those refineries.
The "real" inflation rate of 12%+ (not the BLS cover-up
of 3-4%) is highly dependent on high petroleum prices and the
prices of other staples. The higher prices will wipe out the savings
of many and devalue the US dollar more and more. Meanwhile, hard
assets like Gold and Silver have always been a form of portfolio
insurance even as equities and the fiat currencies devalue, the
precious metals (an alternative hard currency without government
"faith and credit") have always moved higher.
- Black Blade
Buongiorno!
(6/21/04;
09:06:29MT - usagold.com msg#: 122293)
*****THE
END OF CHEAP OIL*****
"Nothing cures high prices--like high prices."
(What is high? IMO, $4.00 per gallon is still less than our European
friends pay, and they get along.)
The shock of higher oil (energy) prices has not yet really hit
the average American, IMO. We just put it on the credit card,
write a check and go on. Can't be bothered (at this level).
However, give it three months at $3.00 per gallon or more, with
no relief in sight, and we will become serious. There could be
an easy 10-15% reduction in energy use by just doing common-sense
things like combining shopping trips, car pooling, and turning
down the heat. Permit "jitney cabs" to operate (An SUV
looks great with five persons inside, going to work), and encourage
telecommuting. Easy stuff. Price rationing works! Perhaps production
companies would find more resources, increasing supply some...perhaps.
Now the hard stuff--Cities will be designed to permit citizens
to live close to work. Schools will be down-sized and located
within walking distance of most students. Efficient transportation
(steel-on-steel) will be stressed. The five car family with motorboat
and powered bikes needs to go. Much of this stuff, we just do
to ourselves....
The world will realize less relative advantage for cheap labor.
Higher shipping costs on that China-made sofa will make it less,
though still, competitive. Produce, which needs quick shipment,
along with any bulk, low value items may become very much less
profitable. (That "victory garden" is looking better!)
"Inflationary Depression" is a tough concept to understand,
tougher still to live with. Basically it means that "much
of what we must buy is gaining in price, while much of what we
own is worth less". Government will neglect many duties except
that of printing money--trying to make it all "seem OK".
As our dear mentors, Another, FOA, MK, Black Blade and others
have stated--it all gets down to oil and gold and dollars and
euros--and a world which will desperately seek a medium which
is a store of value, unit of exchange, and means of accounting.
Government will, as usual, subsidize energy prices for our benefit--and
hammer at the price of gold--BUT NOT FOR LONG!
Chin-chin---ting!
Buongiorno!
Lady
Liberty (6/21/04;
13:29:50MT - usagold.com msg#: 122311)
****
The End of Cheap Oil ****
"Think
gas is expensive now? Just wait. You've heard it before but this
time its for real: We're at the beginning of the end of cheap
oil."
What will the end of cheap oil mean as a permanent state of affairs
for the U.S. economy? For the world economy? What will it mean
for gold?
I will put on my rose-colored glasses. The end of cheap oil will
translate into increased usage of solar power, wind power, water
power, hydrogen fuel cells and the like. We will be hurtled into
the future with the wonderful advantageous uses of these "new"
technology feats and Earth will get cleaner since oil-related
emissions have been cut out. The US Government and the rest of
the world (read: developed countries, actually) will have no choice
but to embrace a new power, whatever that be, once the oil supply
is exhausted. They may be dragged into this kicking and screaming
but they'll adopt a new strategy and a new fuel power to exploit
yet again.
Camel
(6/22/04;
09:31:55MT - usagold.com msg#: 122348)
*****
End of Cheap Oil *****
The
end of cheap oil is not necessarily something to be feared. Most
of us have despaired at seeing the endless lines of traffic more
numerous than the buffalo ever were, urbanization devouring the
remaining countryside, and solitude only possible for a few.
What would it be like with a President that asked the American
people to reduce its population or an environmentally aware Pope
urging the large Catholic population of Latin America to curb
its birth rate?
Other parts of the world such as China have had population reduction
measures for years and Japan's population has started a slow decline
.When the Soviet Union imploded in the late 1980's its population
growth stalled dramatically and while there was hardship there
was not a wide spread die off.
Except for the the huge influx of Middle Eastern minorities growth
rates in Europe have been declining for years and the US might
well have achieved stability except for so many new immigrants
with a high birth rate.
With instantaneous global communication the world will finally
stop its runaway growth in a much more rapid rate than any thought
possible bringing it down from its current 6 billion to a much
smaller number that is sustainable and does nor exhaust the remaining
resources so rapidly.Surely the world would then be a better place.
We will see solar collectors on every roof heating our water and
golf cart type electric vehicles able to get the equivalent of
200 miles per gallon. The streets will be full of bicycles and
we will live a healthier more easy going lifestyle. Food grown
in our front yards with water captured from our roofs will supplement
what has been lost due to higher costs of fertilizer and transportation
We will.live more in harmony with nature as in ages past.Gold
will soar in value as all countries borrow and print in a vein
attempt to maintain the status quo.
mamoose
(6/22/04;
16:40:37MT - usagold.com msg#: 122379)
************The
end of cheap oil*************
Firstly, it might be argued that in inflation adjusted numbers,
the price of oil has been steadily declining (not-with-standing
the recent price surge), however, the title presupposes that the
Hubbert's curve is inherently accurate, and total supplies of
oil (or oil equivalents, which when I use the word oil, I mean.)
will decline. So effectively we are asking what the world will
be like when we have much less oil than we now have?
First, let us look at those industries that rely on oil. In fact,
directly and indirectly, almost every facet of modern life, with
the exception of certain aspects of the less developed areas,
relies heavily on energies existence. And a great percentage of
energy available today, directly and indirectly, is obtained through
oil and oil equivalent use. A few of the greater users of oil/energy
are;
1) The transportation industry
2) Chemicals (including Pharmaceuticals, fertilizers, and especially
plastics)
3) Metals refining (such as pure copper, pure aluminum, etc.,
etc.)
4) Any of the large heat users, such as smelters, glass making,
concrete making, paper making, home heating, year round food production,
etc., etc.
5) Food production and processing.
6) War, domination, and the administration of power.
So, if these industries were to disappear, what would life be
like? Two models where energy levels used are way down from present
spring to mind. 1) Life in "less developed" countries,
in areas where energy per capita use is minimal. 2) Life in the
late 1800's.
When you look at both, they are remarkably similar.
When you look at 1890 vs today, some differences immediately jump
out. Population density was much less, and the percentage of the
population was much more heavily skewed toward food production.
When you think about this, it makes a lot of sense. Every great
civilization in history was built on the backs of slaves, and
this time our slaves were energy and the computer chip. (Not human
or animal.) Take away our energy slave, even in part, and conditions
must trend back to what they were before we gained that slave,
ie, the 1890's, and more reliance on at least animal slaves. Either
that or replace the oil based energy slave with something else.
While we may be able to do so, it will not happen overnight, since
little infrastructure exists for the new thing, and infrastructure
building takes time, and other input.
These population shifts have come about over the years, largely
because of our enhanced ability to produce and transport food
and other items. Population has become more concentrated in the
cities, ensconced in hi-rise apartments. Even in the 1930's and
40's, half a century later, nearly every family had a backyard
garden. Mini farmers, as it were.
To see the effect, let's assume that oil availability falls to
half overnight. Immediately the production and processing of food
is going to go way up in price, because surely the price of fuel
to do these things is going to go up. In fact, if one considers
a loaf of bread, and disregarding the amount of energy included
in the production of the grains, the price of a loaf of bread
is going to skyrocket because so much of the price of a loaf of
bread is made up of the processing and distribution. Surely as
well, the price of grains will also skyrocket, further complicating
the issue.
Further, the transportation/distribution system is now geared
towards "just in time" delivery. And we rely on 'just
in time' hugely. Think of mama in her hi-rise apartment. She needs
milk for her baby. If milk and other essential commodities have
suddenly quadrupled in price, how will she be able to re allocate
a sufficient portion of her disposable income toward these basic
necessities? And that question does not even consider the questions
of 1) food for herself, since she may not even have a balcony
on which to grow a garden, 2) the now much less efficient farmer,
and his ability to produce, using the same acreage, but augmented
by fertilizers and equipment, an equal or greater amount of food
product. Nor does it consider that the transportation sector may
not be able, at any price, to deliver 'just in time'. (or even
at all.)
This too is interwoven into some of the other ills of society.
*The American consumer is tapped out with debt. If mama has to
allocate substantially increased percentages of income toward
survival, how will she service the astronomical debt that has
been accumulated? How will 'en mass' default on a massive scale
affect the financial system? How much is pesonal debt now? 8 or
9 TRILLION dollars.
*Will the far flung administration of power by the US government
be possible at a distance, or will the several hundred or so foreign
armed forces bases scattered around the world have to be closed?
How will this affect the administration of power? How will American
society cope with a flood of new unemployed workers, whose only
training is to hurry up and wait, and how to kill?
*Will the rape of our planet accelerate as survival will take
precedence over abstract notions such as ecology, and the now
protected wildlife preserves, etc., are opened up for development?
*Will we be able to build the high tech plastic and metal and
concrete aids to the better life that increasingly exacting specifications
for purer metals, etc., require just to maintain our current population
and standards of living?
*And, speaking of AIDS, where will 'the powers that be' find resources
to throw at a possible cure for some of the new super and exponentially
growing diseases? Or will mankind shrug and go about the process
of trying to survive today, leaving whatever does not kill us
right away, (just as smokers do.) for someone else to solve? (and
the disease expands unchecked.)
*Will the instant services such as information survive? Will enough
power to serve a small city be diverted toward some internet farm,
or will that energy be judged to be more necessary for other uses,
more essential to survival? How will slower or non communication
of information affect our ability to cope with increasing problems
elsewhere?
*How will the mass of the obese, under achieving, populace react
to having it's comfortable life style interrupted, especially
those trained to assume that "gummint" has all answers
to all problems, (and that if I want something, I need it, and
if I need it, and if I cannot obtain it myself, then somebody,
preferably the 'gummint', should give it to me.)? Will civil disturbance
or even civil war be possible? Just how will the populace react
to negative change? If there is civil disturbance, how will this
aid in a solution to the various problems facing us?
*Is there any development currently in the works, that promises
to be developed enough, easy and cheap enough to install, to take
the place of our current infrastructure and reliance on cheap
energy? And if so, WHY is it not taking over the energy field
by storm now? Yes, we can talk of solar power, and wind power,
etc., etc., but what percentage of our current energy needs are
currently being met in that manner now? At what cost will development
of alternative delivery of energy come?
*Can our system survive if not fed ever increasing amounts of
energy, or even the current amount?
All of these potential answers point towards a vastly changing
world as we know it. By and large, that change will not be pleasant.
Deaths will occur. Our financial and economic system will collapse.
What exactly will take its place? My crystal ball is murky.
Historically, mankind has always run towards precious metals as
a store of value, and medium of exchange in times of turmoil.
Is there any reason to assume they will not again?
mamoose
(6/25/04;
07:12:36MT - usagold.com msg#: 122515)
****End
of cheap oil**** Codicil to my post # 122379
I am astounded by the generally mild reaction to the looming oil
crisis. The price of oil and oil equivalents will indeed rise,
but that is because oil is running out. The world supply of oil
was finite. Huge, but FINITE. For practical purposes, we are approaching
the end of supply. There will indeed be more things like bicycles
in use, but that will effectively be not because the choice was
voluntary. However, it must be noted that even the supply of bicycles
will be somewhat limited, because steel making is a very energy
intensive business.
Oil and oil equivalents are interwoven into every aspect of our
life. Unlike our financial system crisis, where problems are systemic
and could be changed, albeit with great difficulty, much of the
worlds current population is fed and clothed courtesy of oil.
If we only consider the massive decline in food production that
will occur as fertilizer becomes unavailable, there will be no
doubt that food production will decline. Given the worlds population,
some (many) people will starve. As we consider more factors, such
as the farmers abilty to cultivate what is now huge acerages,
the future looks worse.
The reaction that "something" will develop in our high
tech world is simply wishful thinking. Anything that could develop
will take decades to become a fully blown system, and Hubbert,
who has made some pretty accurate predictions, says we will hit
the steep down part of the curve in 2007. If the world is in crisis,
from this or other reasons, we will be unlikely to have neither
the will nor the means to quickly develop new technology, even
if one is discovered. Even wind and solar generators are very
energy intensive to create. Consider the towers for a wind generator.
All steel and concrete, both high energy users to manufacture.
Even today, in a cheap energy world, that tower is one of the
most expensive components of a wind generator.
This does not consider the lubricating properties of petro products
that keep the wheels of the world turning. Yes, there are alternatives,
such as graphite, also energy intensive to produce.
In fact, for some essentials, for which we used to use things
like whale fat, price is almost irrelevant.
Some have dismissed the oil crisis by suggesting such things as
coal, grain alcohol, and steam. Most coal production is by now
difficult to produce, and ultimately, no matter whether one uses
newer techniques such as coal bed methane, or other techniques,
the supply is not only smaller than the supply of oil WAS, but
has been mined for centuries. Like the oil sands, shales, etc,
the supply is again, FINITE. Can you imagine how many mines would
have to be producing to generate the some energy that is now used
from oil? And how long they would last?
I once did a back of the envelope calculation to determine the
amount of oil sands that would have to be mined to produce as
much oil as the US IMPORTS annually. Assuming the oil sands are
12 a kilometer deep, (a very liberal estimate,) you would have
to mine 19&1/2 square kilometers PER YEAR. And that only considers
what the US IMPORTS, not China, or anywhere else.
Steam used to use coal or wood to generate heat. Since we have
denuded our forests, that leaves coal, with the problems discussed
above.
Alcohol derived from grain will take food producing acres away
from food production, discussed above.
We as a species, have been lured into VERY short term thinking.
"Humanity does not start bailing the boat till our asses
get wet" The time to start acting urgently on the oil question
was in the early 70's, at the time of the first oil crisis. We
might have been able to stretch our oil supplies out for 100 years
then. Now, according to Hubbert, for practical purposes we have
at most, 10 years. In the 70's, the neat gas guzzlers like the
SUV, 4 wheel drive which never leaves the pavement, were not the
style. True some effort was made in that direction. But how long
did it last? Only as long as it was fashionable. No concentrated
effort was made to do something, just a concentrated effort to
pay lip service to doing something. $5-$10 a gallon gas cannot
come soon enough to do much to help now.
So, I refer you back to the questions posited in my earlier post,
message 122379.
Cometose
(6/22/04;
20:31:18MT - usagold.com msg#: 122398)
********the
end of cheap oil********
The
end of cheap oil is also the end of Freedom because Corporations
and Government as we know it ran easily and efficiently .
Because there is so much pressure to stay on top and to manage
after bureaucracies get out of control , as in Corporate Life
during a recession we will have downsizing.
where Control of the power in Government and maintaining the Status
Quo will be paramount with those that are in control that want
to stay in control . They will continue taking care of their corporate
partners , vote themselves payraises and pass on more legislation
limiting the rights of the people while the people go through
another depression . A large chunck of the middle class will evaporate.
Feudalism will return . This is not the environment where great
innovation occurs and inventions spawned. Fearfilled , freedomless
, depressed environments may perhaps not be wise places to spawn
great innovation....Hope is a prerequisite for incentive to dream
and to plan and to invent....Hope is at stake in
the Policy and Current diplomacy vacuum created by
Representatives who think for their personal financial gain first
and Corporate associates second before thinking
about TOMORROW's AMERICA and WORLD.....
Great innovation may surface in a cleaner , less noisy ,
environment that will answer today's questions on energy .
I spoke with someone today who has a rich and diverse cultural
background . Her ancestors were German Immigrants to Russia at
the time of Catherine the Great (George Washington). THey homesteaded
in the Ukraine. Prior to WWI since the Germans had been their
long enough , the Russians decided to Conscript all these new
landowner's sons into Russian military service....The writing
was on the wall ....THe family in question left to go visit (with
papers) relatives in Germany on the premise they would be returning
in six months . They left everything they had established with
the shirts on their backs and went to Hamburg ,got on a boat and
came to the U S settling in IDAHO. Their first year there was
spent living in a CAVE.
History tells us what happened after that with the beginning of
WWI. Most of the German men in the UKRAINE were conscripted to
fight the Germans in WWI with the Russian ARMY and the rest went
to GULAGS. THey pretty much essentially all died.
Jim Rogers says the actions going to be in CHINA , Someone also
said that the usually before and during the emergence of new World
Economic Power , the GOLD GOES IN THE DIRECTION OF THAT ECONOMY
..Because the environment is necessarily going to be business
freindly there and in Geographic areas adjacent to CHINA, that
may be where the great innovations of the 21st century come from
and areas where that type environment/ atmosphere (forward looking
progressive , future oriented ) spawns hope . Big trading partners
with China for her Imports in south America may also be areas
of innovation and prosperity because or their participation in
the events precipitating the birth of a new world absent the new
world order.
Toolie
(6/22/04;
20:37:57MT - usagold.com msg#: 122399)
****
The End of Cheap Oil ****
What
will the end of cheap oil mean as a permanent state of affairs
for the U.S. economy?
It will mean different thing to different people. Today's shunned
power generation will become tomorrow's gold mine. Renewed opportunity
in coal mining. Wind, wave, solar, nuclear power will displace
oil and natural gas in heating and cooling of buildings. A Marshall
plan will be developed for the re-electrification of America.
Oil and natural gas will be appreciated for the perishable and
highly transportable energy that they are.
What will the end of cheap oil mean as a permanent state of affairs
for the world economy?
Those nations with a dense population centers will gain a productivity
edge as the efficient use of all energy becomes paramount to prosperity.
Copper exporting regions will flourish, as the world becomes more
dependent on electricity, look for Ocuec (Organization of Copper
exporting countries) in the not too distant future.
As a matter of national security, all major oil producing countries
will find it necessary to covertly acquire nuclear weapons.
What will it mean for gold?
The fate of fiat is known. The white-hot printing presses that
seek the remaining oil will bring an end to the paper games. Gold
takes it rightful place as the money of free trade (sorry Ari).
wehappyfew
(6/22/04;
21:08:58MT - usagold.com msg#: 122407)
****
The End of Cheap Oil ****
Cheap
oil is not actually cheap. The subsidy of about $300 billion required
to militarily defend our access to "cheap" oil means
the current full price paid by American taxpayers is about $140/barrel.
When this expensive, inefficient and cumbersome system collapses,
the dollar price for oil will probably go up, but not by much.
For the rest of the world, the price may even go down - for a
while at least.
When the last major new discoveries are brought on line in 2008,
and demand has recovered somewhat from the deflationary/inflationary
recession of 2005-2006, THEN the price will go up for all. It
will keep going up until demand is reduced, and agriculturally
based subsititues supply enough of our liquid fuel requirements
to balance the 5%/yr decline in petroleum after 2010.
The unfortunate side-effect of all this is a substantial decline
in available food per capita. Fertilizer shortages, diversion
of cropland to biodiesel vegetable oils, and continuing loss of
topsoil, phosphates reserves, and groundwater will reverse the
Green Revolution. People will die. Global stocks of grain will
run out at about the same time as oil peaks (2008-2010) - coincidence?
I think not.
Ultimately (by 2050 or so), the price of gold will fall, as a
slowly increasing stock of gold is available to a declining population
- classic monetary inflation.
otish
mountain (6/23/04;
23:52:37MT - usagold.com msg#: 122455)
*****The
End Of Cheap Oil*****
What
will the end of cheap oil mean as a permanent state of affairs
for the US economy? For the world economy? What will it mean for
gold?
Firstly to answer the above questions one should first ask why
is there an end of cheap oil? Increased demand by nation states,
with added supply constraints, resulting in political unrest.
Never mind the questionable currency that oil is denominated with.
The world is now cresting on peak oil production and increasing
demand is causing nations to position for continued and increased
supplies.
Oil=Energy. Nations with available cheap abundant energy enjoy
"growth" and reap the exuberances that growth provides,
as apposed to a static or depressed state. To this extent then
one could say that world growth has crested with the peak of oil
production.
Optimism is misplaced with the concept that alternate energies
will be available with the advancement of new technologies for
the future. Denial florishes in our society. Nothing can replace
the quality of energy that oil provides us. We live in a finite
world with finite resources
and oil (energy) is a finite resource.
"Growth" for the USA and for the world is peaking at
this juncture in time. Few realize the implications of this phenomena
and the ramifications that await us in the future. Governments
will mask the real reason citing a natural economic recession,
which will be cured with futher injections of currency (debasement).
Growth will be recorded but will be nothing more than inflation
of currency. A massive inflationary cycle looms ahead.
The economy of nations will fight a long downward economic spiral.
Financial markets will be in turmoil while inflation rules our
daily lives for the basic needs we require. Disillusionment for
the finacial system,a displaced and redundant work force, wars
fought over the remaining resources, and distrust of fiat currencies
will force gold to resume its role as the primary tangible king
of wealth.
Rocky
(6/24/04;
08:42:16MT - usagold.com msg#: 122468)
****The
End of Cheap Oil****
Q:
What will the end of cheap oil mean as a permanent state of affairs
for the United States economy?
A: Oil is a non-renewable resource with a finite limit on availability.
That statement alone exposes the fact that oil should never have
been cheap. Kenneth Galbraith has argued that Americans now live
in an affluent society. Taken literally, abundance means that
for every consumer and for all products, demand has figuratively
fallen to a low level. As long as the supply pipeline is wide-open,
the price remains at whatever levels the consumer can be induced
to pay while keeping the consumers wants well satisfied.
Elasticity of demand can be judged simply by looking at the demand
curve. Elasticity just means responsiveness. If a cut in price
increases sales, demand is highly elastic. Inelastic demand is
where the good is sold regardless of price. Obviously this cannot
go on forever; prices cannot rise indefinitely without having
some effect on sales. Generally, fuel is the least elastic product
for the consumer. It ranks below food and is regarded as an absolute
necessity by most consumers. Little change in consumption has
been noted with regard to the current price increase of gasoline.
Consumers continue to make their choice and will buy oil-based
products, consisting of fuel, clothing, plastics, and food, as
long as they have the ability to pay. The state of affairs for
the American consumer simply becomes a matter of how much each
family can budget for their real and perceived necessities. Until
the cost becomes so prohibitive that the consumer can no longer
justify the expense, the economy will continue to absorb the cost
of oil at the expense of other goods. Therefore, the consumer
can expect to see a greater portion of their funds expended into
heat, electricity, food, gasoline and plastics, which are all
a direct product of oil.
Q: What will the end of cheap oil mean as a permanent state of
affairs for the world economy?
A: The world economy will, however, become desperate in its search
for reasonably priced energy. Goods exported from the United States
will dry up as more funds are directed into fuel and oil-based
products produced by local energy-using economies outside the
United States. In most countries, imported goods are in competition
with locally produced goods and the imported goods either have
to be perceived as superior in quality or less expensive in order
to sell. As US exports subside, the dollar declines in value and
as the dollar falls, the supply of dollars will also fall.
International trading and financial relations require a foreign
exchange market in which the currency of one country can be converted
into that of another. A country's foreign transactions are summarized
in its balance of payments. Deficits in a country's balance of
payments are met by transfers of gold or other reserve assets.
If the country has too large a deficit, the central bank must
intervene and raise interest rates thus dropping the value of
the dollar. Revaluation of major world currencies relative to
the dollar also de-emphasizes the dollar.
The paper dollars have, in the past, provided about three quarters
of the increase in world reserves. Gold has always been considered
an international reserve for currency transactions. This national
asset is dwindling and this means that the United States is obliged
to run a balance of payment deficit. As the deficit increases,
the value of the paper dollar declines even more. The result to
the world economic community is that higher oil prices will reduce
the value of the dollar and will force economic hardships on all
countries, excepting the oil producing states.
Q: What will the end of cheap oil mean as a permanent state of
affairs for gold?
A: Based upon the decline in value of the US dollar and the impact
on international trade due to greatly increased costs of oil products,
the end result is that gold will rise well above its current level
of valuation, quite likely reaching the $500 level in the near
future.
7nomads
(6/24/04;
09:56:49MT - usagold.com msg#: 122470)
**********End
of Cheap Oil*************
The
end of cheap oil.
Supply and Demand
Demand is increasing to some 80 million barrels a day. The U.S.
is importing some 65% of its oil. China has increasing demand.
That's all bad for cheap oil, but the worst is that even at best
supply is not growing. Most likely oil supply will continue to
decrease, as major finds of oil reserves are non-existent.
Discounted Oil prices by discounted Gold prices -- no more.
Those who have read "The Gold Trail" at USAGold understand
the link between European Gold Sales and cheap oil. These days
are drawing to an end. Even Germany is back peddling on their
commitment to these sales.
Decline of the Dollar in value -- rise in quantity
Two major event are yet to occur, but soon will. The first is
China's yuan will be revalued, most likely in stages, by 50%.
The second is the East's refusal to continue to subsidize America's
debt and high standard of living.
Displacement of the Dollar
This process has already begun with Russia dealing with Europe
in Euros, Japan and China dealing directly, and the Gold dinar
coming into use. Oil will sell against a basket of currencies.
Iraq-mire and other forms of Russian roulette.
Beyond the good intentions of our leadership and the noble efforts
of our troops and their commanders, the reality hasn't measure
up to the promises. I guess one could say that the oil brought
out of Iraq has cost billions of dollars, hundreds of American
lives, and thousands of Iraqi ones.
I figured we have pulled the trigger three times. The first, the
invasion, the second was the destruction of Muslim holy places,
and the third the abuse on Iraqis by a few of our soldiers. The
last one will be when we refuse to bring our troops home.
Perhaps expert analysists could learn a few things from the words
of Bob Dylan. "Democracy don't rule this world, this world
is run by violence, but I guess that's better left unsaid."
For free a few predictions of global adjustment to the end of
cheap oil. Europe will keep on going as the Euro increases in
value and their taxes can always be reduced to keep petrol about
the same. Japan will deal directly with Russia. China will revalue
their currency or go back to the bicycle. America will pay up,
the tap is dry and the tab is due, party over, it was fun while
it lasted.
Rimh
(6/24/04;
10:43:12MT - usagold.com msg#: 122474)
*******
The End of Cheap Oil *******
The
latest price jumps in the price of crude oil (or more specifically,
big gasoline and diesel price jumps at the pump) has forced a
great many to dust off their crystal balls to try and see the
future.
While we can't see to what heights oil may reach, I can only say,
bring it on. For years we have been lulled into a state of malaise
due to "cheap oil". This slumbering has driven our oil
exploration activity to all time lows, attempts at real conservation
minimal, and our desire to use renewable resources, like ground
heat, solar and wind energy, on the "back burner". Cudos
to those scientists and industrialists who have persisted in developing
new technologies for alternate energy when there has been little
incentive to do so!
The free market will be the great balancer of oil price, consumption
levels and the ripple down effects in the economy. As the price
rises it will be matched, at some point, by curtailing of consumption,
more efficient equipment and switching to alternate energy sources
whose technologies are now better and cheaper.
The evolution of world energy systems will probably be years to
decades in the making, and not without a certain level of pain.
Our world has been geared for so long to the use of oil and its
"abundance" that to shift gears will be very difficult.
It will take a whole new mindset, born of necessity. Economies
will suffer setbacks and we the people in the street will have
to adapt, each in our own situation, to "The End of Cheap
Oil".
SteveH
(6/24/04;
14:16:11MT - usagold.com msg#: 122485)
*******
The End of Cheap Oil *******
$$411.07.
Unlike the heart, which allows the owner to exercise to slow the
long-term rate down, the heartbeat of the World's oil demand can
not be exercised to slow down its consumption, because the corpus
demands nothing but more beats -- this despite its inability to
keep up. A beat or two now, will be a beat or two lost from the
end-of-life as it now more quickly approaches.
SteveH
CoBra(too)
(6/24/04;
15:07:27MT - usagold.com msg#: 122488)
***
End of Cheap Oil ***
Definetely!
- Not that it's expensive in real and constant Dollars. Huh, did
I say real dollars? - There's nothing real about dollars anymore
- at least since 1971 - and it was only 2 years later that we've
experienced the first of two major oil crises.
The future of energy is going to be "dirty" - as coal
is making a big comeback. The SE-Asian economic progress is taking
its toll on energy consumption. While the West's consumption is
somewhat stagnant the SE-Asian (and Africa) energy demand is going
through the roof, growing at more than 7% annually.
According to a symposium of IEA (Int'l. Energy Agency), BP and
Exxon, just wrapped up in Vienna, the world oil reserves have
kept pace with demand and consumption since the 70's of the last
century - and are still adequate for another 40 years. Wow, kind'a
lovely as the above experts have come to the conclusion that since
the 1980's oil reserves have doubled to 1.2 Trillion bbls!
Tsk, I personally wonder what kind of technological miracle has
pulled this hedonic rabbit out of the Stetson.
Even extrapolating, for instance China's insatiable hunger for
new cars - now 25 million and expected to grow to 125 million
in 10 to 15 more years. - That's not really the problem, as China
and the rest of SE-Asia will produce all and everything and will
not stop to use whatever energy, raw meterial and commodity they
may be able to lay their hands on. Just look at todays statistics
of the Chinese consumption of basic commodities...
... And yes it's going to become dirty! As the EU was at least
trying to subsidize alternate and renewable energy sources, the
rest of the globe doesn't even give a thought to destroying their
seed, uh base! The Chinese can't even care less to make headway
to prosperity ... and forget TAO!
Looks like we're creamed in the West - even gold is set to go
towards the real productivity - the producers of real goods -
as in contrast to Greenspan's productivity miracle of a hedonic
and solely financially based debt bubblemania!
...
Anyway, I'm wondering why gold and as it's less rich man's proxy
is still trading way below any equilibrium of its real worth?
As we all know this phantasy world is drawing near its end, it
might be prudent to protect yourself with some real substance
and some "deep storage" for leverage -and I'm talking
of firewood, of course (Aspen,Col. has pretty stringent rules
as to when you can fire up your coals).
Now, we got coal, Oil and Gas, Nuclear, Water and wind and sun
power - and the first three polluters make up anbout 95% of the
total. 30 years ago we thought about alternates and forgot, or
didn't really care or whatever! Now we're back to the same issue.
The only response was to occupy the # 2 oil country as a base
to control ... the uncontrollable ...
Go dirty and use coal, tar sands, shale, nukes and bovine gases
... love my steaks rare - cb2
Henri
(6/24/04;
16:35:05MT - usagold.com msg#: 122492)
*******The
End of Cheap Oil*********
The
US dollar global reserve status depended upon a stable currency
and the continuing flow of oil to world markets. Another has pointed
out that recently (5-10 years) maintenance of this status also
depended upon a continuing and increasing flow of gold to ME oil
interests. Increasing as the finite nature of the resource when
matched to the global growth engine indicates a rapidly dwindling
supply of that which no one works to create but everyone wants.
In short, a natural resource.
In order to accommodate this increased flow of gold and still
maintain a stable currency, agents of US govt interests and others
interested in global financial stability have not only colluded
in the increase of the daily volume of the London bullion market
beyond supply potential, but have also corrupted the other paper
gold markets and nearly driven some major goldminers into receivership
with tempting forward sales perhaps ultimately destined for the
ME interests.
It only stands to reason that these stop gap measures were instituted
(institutionalized) presumably only to buy time while other global
change initiatives came to fruition. Isn't it just fitting that
meddling with such sensitive matters sometimes is like walking
through a minefield without a mine detector. Obviously the thing
that needed to be accomplished is the deposement of those insisting
on gold for payment and replacing them with fellows of a more
accommodating nature.
Keeping the ME in political turmoil presumably served a purpose.
A recurrent theme being containment of rumored new supply (Caspian
sea/Russian oil/gas) to southeast asian markets that bypasses
the Persian gulf (through Afganistan/Pakistan pipeline) as a bargaining
chip to keep the ME interests in line while simultaneously arranging
for their deposement. The supply of arms to Saudi insurgents in
Afganistan (Osama) to prevent Russia from capitalizing on the
bypass served the muslim cause as well. Keep the ME interests
on the receiving end of global largess and befuddle the others
(Col/Ven) with insurrection so that their economic bases are always
considered weak and undependable. Was Saudi money at work here
as well?
They even almost suceeded in instigating a "limited nuclear
exchange" between India and Pakistan for urban renwal purposes
and clearing the way for the bypass to reach the sea without all
those troubling population displacement issues. Thank God that
India is basically a peace loving group full of admirable restraint.
Then Russia became a partner after a brief fling at going it alone.
Russia and European partners in pipeline prevents the alternative
China/Russia partnership in pipeline. And these things too shall
come to pass and alleviate the strain of unconstrained ME turmoil.
To topple the House of Saud from within a prime objective to the
release of accumulated gold to those who will harbor the fugitives,
one can only be acting in a very friendly manner while plunging
in the dagger.
On the global front, pressure of the financial partners to remove
the unbalanced circumstance of cheap oil for the US and all others
debase the buck at their own peril leads to an accommodation of
a new kid on the block (Euro) to absorb the backlash of financial
destabilization. A controlled slide that brings overindulgent
US economy back into fiscal reality with a lower buck. Lower buck
stimulates the rebuilding of the American manufacturing base and
with time the flow of gold back toward US shores. Meanwhile maintaining
the illusion that the US still holds 8000 tonnes, is paramount
to smooth transition of financial shenanigans into a whole new
game. This one has been over for awhileif they are lucky, no one
will notice when the new game begins and who got onboard first.
The end of cheap oil? You betcha! But only from a perspective
of global harmonization and equilibration of the cost of oil amongst
competitors by agreement.
Caradoc
(6/25/04;
04:57:09MT - usagold.com msg#: 122511)
****The
End of Cheap Oil****
Since
corporations and governments are staffed by human beings, it's
no surprise that corporate and governmental decisions are marked
by the same shortsightedness that we've been warned of ever since
Aesop told the tale of the grasshopper and the ant; i.e., tactical
decisions for the near term rather than strategic decisions for
the long term. True, some Asian corporations try to look five
years into the future and certain European governments require
new construction to include energy-related features that just
don't pencil out at current energy prices, but those two cases
are exceptions to the rule that decisions are made based upon
the next quarterly statement and the most recent poll or -- in
the best case -- the current fiscal year and the next election.
Faced with a tightening of oil supply (only "the beginning
of the end of cheap oil"), one might hope that the US government
would invest 3 or 4 years and a few tens of billions of dollars
in cash or tax incentives on strategic effort to reduce/eliminate
dependence on foreign energy sources:
* most importantly, establish sufficient grain production and
distillery capability to be able to use alcohol rather than gasoline
for our internal combustion engines. (Most people don't know that
when US forces took the Phillipines during WWII, all those barrels
of aviation fuel and truck fuel left behind by the Japanese were
of no use because our engines ran on fuel produced by Standard
Oil rather than by farmers.)
* distributed across agricultural areas, set up facilities for
anaerobic composting of crop residues and manure. These produce
methane (CH4), the active ingredient of natural gas and 88 to
90% of its volume. In addition to its use in heating homes and
generating electricity, natural gas can also be compressed and
used to fuel our vehicles.
* again distributed but across desert areas, set up photovoltaic
facilities to tap solar energy with the electricity used directly
or to electrolyze water into oxygen and hydrogen. High tech version
would be two-pronged: (1) on-orbit facilities with power beamed
to receiving antennas in those same desert areas and (2) with
expensive solar panels at 16% efficiency and super expensive ones
approaching 20%, we'd implement a Manhatten style project to put
our best and brightest at work coming up with a cheap photovoltaic
film of maybe 3 or 4% efficiency that could be squeegeed onto
flat surfaces across thousands of acres of sunlit desert.
* possibly pursue similar efforts to tap wind, geothermal, and
tidal energy sources.
These efforts would lead toward a future where a world population
measured in billions comes to adopt the Western mindset that light
comes from flipping a switch, drinking water comes from twisting
a faucet tap, and to go faster you just push down on the pedal.
They might even lead to a future where a kid born in Iowa could
hope to go where no man has gone before.
But gasoline packs more BTUs per cubic inch than any of the alternatives
so even if/when oil goes to $100 per barrel none of these efforts
can show a profit this quarter or this year or even before the
next election. What's worse, they don't fit with the unspoken
assumption that what's good for the "awl bidness" is
good for the USA. So, instead of those tens of billions being
strategically invested over the next few years we got a short
term tactical decision based on what's good for the oil business.
With Saudia Arabia (the #1 oil source) already on board as one
of the best friends that money can buy, with the Taliban unwilling
to have a new pipeline across Afghanistan, and with Saddam (the
#2 oil source) threatening to price oil in Euros rather than dollars,
we chose to spend a year (2003) and $84 billion to assure "the
free flow of oil at market prices." Which also assures that
Japan, Germany, and other non- oil producers will continue to
have to swap their currency for dollars in order to buy oil. It
turns out that pursuing the free flow of oil takes more than a
year and a lot more than $84 billion even though no oil flows
from Iraq and even though Saudi pipelines are now under attack,
but there's no indication of reversing course no matter who resides
at 1600 Pennsylvania Avenue.
Cheap oil means cheap food. As gasoline and diesel fuel pass four
or five dollars per gallon (and gold passes $1,500 per ounce),
the biggest change in North America will be that wholesale food
markets in urban areas will no longer see trucks arriving with
loads of vegetables from California, fruit from Chile, or wine
and cheese from Europe. In the first place, fertilizers and pesticides
are oil based so food will no longer be cheap even at the source.
And whether paying the freight for a ship from South America or
a truck from California, our current food sources will become
prohibitively expensive compared to eating what grows within several
miles of your kitchen.
Cheap oil also means cheap heat and cheap transportation. When
North Americans can no longer afford to heat their atrium-entried
McMansions or commute from suburbia to their urban jobs, we'll
see a initial period of workers sleeping in the parking lot and
commuting once a week to join their families in huddling around
the woodburning stove they installed in the family room after
putting up plastic sheeting to separate that area from the rest
of their unheated house. During this initial period, when it gets
warm they'll be planting vegetables in the back yard and hoping
their drafted son lives to come back from Venezuela. Depending
on how long it takes for them to realize that the pension they've
thought they were earning is imaginary (or will be so diluted
by inflation as to be meaningless), they may or may not harvest
that first backyard crop before they quit going to work and simply
begin trying to survive. The words "social disorder"
don't begin to describe what life will be like as gold goes from
two or three thousand dollars per ounce to being recognized as
a store of value not to be measured in dollars.
When the dust settles (maybe two years after what's left of US
central government gives up on pursuing what's good for the "awl
bidness"), the North American economy will be the same as
the rest of the world:
* local populations using mostly local resources
* worldwide population the same as in 1850 plus however many more
can be supported by the extent to which local populations succeed
in (a) recreating the age of the coal-fired steam engine and (b)
establishing alternative renewable energy resources
* an ounce of gold approximates the annual wage of a skilled worker.
Caradoc
PS: Perhaps going beyond the essay contest, I'll admit the above
paints a glum picture. But note that it's the outcome of shortsighted
decisions made by organizations, both corporate and governmental.
At the level of the individual, there's nothing to prohibit each
of us from heeding the lesson Aesop taught more than two thousand
years ago. Be an ant rather than a grasshopper. Instead of doing
what feels good today, do what's smart for tomorrow. Put away
some food for the coming economic "winter." Learn some
useful skills and acquire the tools to go with them. Consider
moving to an area where your new neighbors will already have such
skills. With less than one ounce of gold per person on the planet,
buy a few ounces of real wealth instead of that plasma television.
Finally, if you like flush plumbing, look into having a couple
solar panels and a 24-volt pump in your well.
Remarx
(6/25/04;
06:27:31MT - usagold.com msg#: 122513)
******
End of Cheap Oil *****
In
contrast to many who learned of Peak Oil from BlackBlade in this
forum, I am indebted to him for introducing me to the concept
of Gold Ownership in a petroleum markets discussion forum!
There is an urgency to the "what will happen" questions
set for this essay. The more people that come to understand the
questions, and the sooner they reach their realizations, the lesser
the impact of Peak Oil might be on the US and global economies,
and on the subsequent use and price of gold. Yet, without some
basic agreement on direction and lacking trustworthy leadership,
our collective realizations will be worthless.
So, what will be the extent of the impacts? It is tempting to
think of worst, middle and best possible cases, but I find it
difficult to construct a plausible middle case.
WORST CASE
The worst case scenario, of course, is one of total economic and
political collapse. As Joseph Tainter illustrates in his book
"The Collapse of Complex Societies", the reasons for
collapse historically have centered around declining marginal
returns on investment of energy due to loss of a key resource
that has been used to build a society in the first place. This
is true for oil in our culture, as was arable land for some cultures
of the past.
Civilizations bloom and die, starting out slowly, then growing
along an exponential path, much as ever widening generations of
microorganisms do within a petri-dish. When the medium for growth
is consumed, they begin to die off.
The insidious nature of exponential growth is described best by
the Club of Rome in "Limits to Growth" and "Beyond
the Limits to Growth". Simply put, exponential growth means
increasingly faster doublings in value. The example of a pond
filling with lily pads daily, doubling each day, is a good analogy.
On the day before the last doubling, the pond seems only half
full! As these doublings occur with respect to environmental decay,
financial decline, energy depletion and political disorder, they
go similarly unnoticed until it is too late. The massive last
doubling of debt, for example, seems to be happening now without
much mainstream attention. On Wall Street and in real estate,
market signals will be too late; too many people have failed to
notice the bubbles. Many still believe that global warming is
nonexistent or harmless, yet its curve is definitely exponential.
Most do not realize that world grain production peaked in the
late 1990's. And so on, literally ad nauseum.
What will make the case the worst is the interrelations between
the exponential curves of all the global variables affecting our
lives. Maxing out in some areas will exacerbate the problems in
others. Having large national debts, for example, will make it
even more difficult to bring alternative energies on line after
oil has peaked. Having already added substantially to the greenhouse
gases, it will be harder to use coal as a temporary alternative
without triggering significant environmental problems.
What makes the worst case likely is the fact that US culture,
and much of the rest of the world, embraces wholeheartedly the
idea that growth is somehow both good and necessary. Local town
council members, nationalist neocons and global neoliberals all
agree on that one point. Yet it is our economic growth that is
largely responsible for the exponential growth curves of many
of the other variables, especially the production and consumption
of oil.
It is relatively straightforward to spell out the general worst
case scenario based on the numerous historical examples in Tainter's
book. We can foretell some of the specific impacts on the US and
global economies by taking a look at 20th century experimentation
with fiat currencies. People of all ilks write about "the
coming fall" in websites around the net: global dieoff of
about two thirds of the world's population over a couple of decades
due to the lack of hydrocarbon-derived nitrogen for crops; economic
catastrophe in the US due initially to hyperinflation induced
by the high cost of the oil, then deflation and a subsequent Greater
Depression due to the fact that trade nearly ceases because the
oil lubricating its economic engine runs low; domino economic
catastrophe in developed countries around the globe, which have
become dependent on the consumption in the US; personal security
and national sovereignty jeopardized by the powerful seeking to
hoard the remaining energy resources. Add to this the complications
of dealing with global warming and pollution effects, stir well
and simmer.
In such a scenario, the US economy might never recover and the
global Depression would be broad and deep, an inverse of the preceding
run upward. China and Japan, dependent on mass production for
the US consumer, will likely decline along with the US. Other
countries not as strongly addicted to oil might fare better than
the US in the long run. Euroland, which has been investing heavily
in alternative energy research and deployment, and which does
not have staggering debts, may look to be the source of stability
in the future. For the duration, gold would have a good chance
of becoming a safe global currency, if the Euro does not take
the seat first. Although in deflationary times currency is held
most dear in the hope that it will continue to gain in value,
fiat currencies may lose all credibility, and it may be gold that
is held in trust.
BEST CASE
To my mind, the only possibility for a best case scenario would
be one in which all the economic preconceptions and habits we
have accumulated are simply thrown away - one in which we apply
our ingenuity to rethinking our historically competitive approach
to survival and prosperity. Although the physical limits of oil
cannot be ignored, our perceived economic limits are self-imposed
relics of our socio-economic heritage. By throwing them away and
starting fresh --by discarding the worship of growth in particular--
we may create a way out where none now exists.
The best case scenario would be one in which people come to understand
very soon the insatiable appetite of the market economy engine
and the flaws in the concept of infinite economic expansion. They
may ask why oil was consumed with such speed in the first place
and wonder what alternatives might exist to the consumption/production
growth engine. Looking back over a couple of centuries of industrialization
and ever increasing efficiency in exploiting resources, people
could come to value stability, sustainability and social justice
over and above acquisition and control. Looking forward to the
predicted growth in China and India, they may see a frightening
parallel, with all those new consumers vying for limited resources.
People might come to appreciate slower paced use and re-use of
the Earth's resources and the benefits of not exploiting other
humans as resources. They may see that corporations should not
be treated like individual people with rights, but as powerful
collective entities that have responsibilities and that must be
kept on short leashes.
People might choose something like the "Powerdown" approach
to long-term survival suggested by Richard Heinberg. Or perhaps
something more akin to E. F. Schumacher's "Small is Beautiful"
plan for a world of small sustainable communities. They could
physically reorganize their communities to minimize work commutes,
maximize the use of mass transit, incorporate natural areas in
urban planning, and make their environs mo