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Martenson Report Ready - Oil Shock III

Sunday, April 5, 2009, 5:41 PM

A new Martenson Report is ready for subscribers.


Link:
Oil - The Coming Supply Crunch (Part I)


A snippet from the opening:

This is one of the most important Martenson Reports I will write this
year.
In this report, I explain
why the global stimulus plan will not succeed at returning the global economy
to a path of sustainable growth or even to its former heights, seen in
2006/2007.

A snippet from the conclusion: 


The assumption by the G20 that money printed out of thin air is both necessary and sufficient to return us to a renewed path of global economic growth is deeply flawed. Trillions of dollars in new stimulus money will soon “find their mark” and stampede off looking for something to do. The energy to support all this money does not exist, at least if the independent efforts of three diverse institutions that have studied the data are to be trusted (and I do because their conclusions are so similar).


The combination of rapid declines in existing fields and a collapse in oil field investment means that it is extremely unlikely that we’ll have enough oil to return the globe to robust growth.


While it is possible that we’ll close some of the energy gap with efficiency measures, a decade or more of lead-time sits between the development of more efficient technologies and their full market penetration, which means that efficiency is unlikely to play anything other than a bit part in this developing drama.


Any plan to stimulate growth that does not take this energy reality into account is highly suspect and is probably flawed. Why this most obvious of all connections is not being openly discussed will be for future historians to dissect. For now, it is up to each of us to define for ourselves how much importance we place in this line of thinking.

 

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64 Comments

Nichoman's picture
Nichoman
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Re: Martenson Report Ready - Oil Shock III

Chris, et al

Thanks!  This is what I was looking for...clarification of the type of information in my post below about the Oil "Wild Card" in your Where Do We Go From Here post. 

http://www.peakprosperity.com/comment/24076#comment-24076

Review of the data of oil production and reasonable analysis is truly scary.

You've reinforced key points I've had.  Agree we need more discussion.

The data points, are so robust, plus collapse of investment would state were toast.   Add financial debt...very burnt toast.

 

Nichoman 

 

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Re: Martenson Report Ready - Oil Shock III

Fantastic Report Dr. Martenson. I can't wait for Part II. Thanks a million (or is it "Thanks a Trillion" these days?).

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Re: Martenson Report Ready - Oil Shock III

Credit crunch will lead to oil shock

26 Mar 2009, 1622 hrs IST,
REUTERS
             
LONDON:
The global financial crisis and collapse in the oil market have stalled vital
investment in oil exploration and production and are likely
 

soon to lead to a
sharp spike in prices, an energy consultant and financier says.

Matt
Simmons, founder of Houston-based investment bank Simmons & Co, argues the
underlying rate of decline of the world's ageing oilfields is as much as 20
percent a year and only high levels of investment can reduce that to single
digits.

With credit tight and oil prices almost $100 a barrel below
their highs last year, oil companies are unable to sustain previous levels of
spending and the result is falling production, he said in an interview on
Thursday.

"We are three, six, maybe nine months away from a price
shock. We are not talking about three to five years away -- it will be much
sooner," Simmons told Reuters in London.

"These prices now are
dangerously low. The lower prices fall, the less oil will be produced and the
greater the chance of an oil spike," he said.

Oil prices hit record
highs of almost $150 per barrel last July but have tumbled since then as the
global economic downturn has cut energy consumption by consumers and companies
alike.

Prices have rallied from lows below $35 a barrel in December
to above $50 but remain well below what many oil companies and producing
countries say they need to invest in new production.

Simmons is a
proponent of the "peak oil" theory, and has argued for years that world oil
output is in irreversible decline because oil industry infrastructure is getting
too old.

He says the cost of rebuilding the oil industry is colossal
-- "closer to $100 trillion than $50 trillion" over decades: "The industry's
asset base is beyond it's original design
life."

Malden's picture
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Re: Martenson Report Ready - Oil Shock III

I highly disagree with Chris. There is plenty of energy on Earth. We just need to improve or promote allready existing but forgotten or censored technology to harness it.

Also, when country is facing a shortage or deflation of money, what`s the problem with printing it out of thin air? How money came into a existence in the first place? Money is just a register or receipt that some work has been done or various goods delivered (or will be, if it`s in a form of state credit). I must emphasize state, because the main problem of western economies is privately created money system. Those who control the money issuance are controling everything else in a society, because money is a bloodstream of economy. To put control of money issuance to private banks is like letting vampire to suck your blood hoping it will not drain it all. Even so, you are still in slavery position to such parasite.

Money should be a gift created by Government (or Congress) and spent into the economy to promote general wellfare, rather than issued and lent by some privately control bank to cripple the society with debt and taxation.

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Re: Martenson Report Ready - Oil Shock III

Hello Malden:

I'd watch "A Crude Awakening," and I'll try to recall which book had the story of the seashell currency and the gold miners who hired the natives and flew in plane loads of shells to pay them for their labor.

Take care 

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Re: Martenson Report Ready - Oil Shock III
Malden wrote:

I highly disagree with Chris. There is plenty of energy on Earth. We just need to improve or promote allready existing but forgotten or censored technology to harness it.

 

Such as?

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Re: Martenson Report Ready - Oil Shock III

A sharp eyed reader caught a basic math error of mine that impact the tables on the oil production needed by level of economic growth. I have already fixed the errors in the version of the report on the site...but unfortunately the newsletter has already gone out.

I value accuracy and regret the error...I dropped a critical "$" sign in the excel table and didn't catch it in time.

The fundamental conclusions of the article are unaffected.

Best,
Chris

 

 

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Re: Martenson Report Ready - Oil Shock III

Davos, I will certainly watch that movie, but oil is not the only source of energy on Eart. Oil means monopoly, and monopoly means power, it is so simple.

And for the other part, i must say it is not a good analogy. Shells are easy to counterfeit (colect) and also those natives were completlly unaware of a real nature of money, but Government or Congress created money and educated people are totally different story. Amount of money in circulation should be consistent with demand. In that way there would be no inflation or much worse - shortage or deflation of money like we have today. It shouldn`t be confused with price inflation, because reason for that is interest on privately issued money (continual debt) which push some prices up even in the period of deflation (shortage of money).

Total debt is allways higher than existing amount of money in circulation because of interest charge, and also we have harsh taxation. No wonder prices goes up.

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Re: Martenson Report Ready - Oil Shock III

The question of "quantity of energy" ignores the more important issue of the rate of production.  The so-called alternatives make up a pidling percentage of the whole.  It will be years and possibly decades before any of them make up a significant portion of the whole energy budget.  Going over the peak on the Hubbert's curve means production rates in conventional hydrocarbons will begin to diminish.  Coal is only one, possibly two, decades away from the same dilema.  Since the 1970's, exploding human populations have forced global per capita energy consumption on a downward slide.  The era of growth in energy production rates has ended.  And the rate of energy production is key.  All else depends on it.  There can be no economic growth in the conventional sense without a coresponding growth in the rate of energy production.  Debt based currencies depend on a promise of greater future wealth in order to service the debt obligation, that is, the repayment of the principle plus interest.  Future weath is tied to future energy production.  No matter how much Monopoly(R) money the G20 spill into the system, it can't revive a depleted resource in and of itself.  Moreover, as the rates of discovery have fallen ahead of the rates of production, the probability of finding more diminishes accordingly.  The tree huggers and bird watchers are not keeping us from solving our energy dilema.  They are not keeping us from oil that isn't there.  Even the unconventional kerogen and bitumen, quantities notwithstanding, cannot fill in the gaps.  The capitalization required and the comparatively small production rates are a roadblock to the rescue.  Capitalization is an important issue in another sense.  The oil companies realize that hydrocarbon energy is a sunset industry.  They see no point in building multibillion dollar facilities that will never return a profit.  By the time a new refinery comes on line, oil production may fall by 12%*.  It's cheaper and easier to buy refined gasoline abroad rather than build another refinery here.  There is no rare butterfly or toad keeping a new refinery from being built.  It's simple economics.  It's rates of production, not the quantity of produceable hydrocarbons that provide the incentives.  Unfortunately for the plans of the G20, geology rules.

* 2.5%/year for five years = 11.8% decline.

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Re: Martenson Report Ready - Oil Shock III

Hello Malden:

I'd be most interested in hearing what you think about "A Crude Awakening." For me, the fundamental problem with our dependency on oil is that, as the movie and Chris point out, it is engrained in everything and not only in the transportation of everything but in the actual production of everything.

I think we will see many new techknologies very soon with respect to transportation and energy. How we make things is my greatest fear. Seeing an administration say build roads to get 4 million jobs just makes me say $140 a barrel oil will be cheap - do these guys have any idea how many gallons of oil it takes to do a foot of road? When that oil price domino falls on the consumer who is filling up his/her SUV what will that do - again - to the economy?

I enjoyed reading your inflation perspective. I respect your opinion even though I don't agree with it. I do agree that inflation and deflation should just apply to the amount of money in circulation. I think your point about debt creating money is a valid one, of which I have read only once before via an email. I don't see any difference between shells and Ben's printing press and I question the education level, many well educated folks I talk to think the dollar is backed by gold. Time shall tell. Take care.

PS Chris, great read, one of the best to date. As always, thank you! 

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Re: Martenson Report Ready - Oil Shock III

Malden, yes there are other forms of energy on Earth besides oil but none are as convenient as oil and, as Chris has noted in the past, none seem to pass the tests of time, scale, or cost in terms of being ready in time to offset the decline in oil supply rate.  Just to build alternative energy systems will take enormous amounts of oil.  Show me a plan that might work and I'll review it; I truly hope one is possible.  I can only conclude today that massive reduction in energy use and changes in our way of living must be main components of the long term solution.

Second, the problem with printing money out of thin air seems to me to be when there are not corresponding increases in goods for it to represent.  More money chasing the same number of goods means money loses value and prices rise.  It's a hidden tax by government that does not help us in the end.   

I spent this entire past weekend at home planning and expanding my veggie garden this year and after reading this report am glad I am!

 

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Re: Martenson Report Ready - Oil Shock III

Malden,

You might also try reading Richard Heinberg's "Peak Everything".  It is very much a compliment to some of the things Dr. Martenson discusses in the crash course. Heinberg goes much deeper into the environmental impact of peak oil and many of the associated environmental issues that overuse of oil has wrought.  According to Heinberg, we're going to have a lot more to worry about than the loss of our money. Try not enough food, predictable weather, and lack of good, clean water supplies. To round things out, Heinberg also has suggestions for ways that we might begin to deal with the coming decline. 

Davos excellent recommendation of "Crude Awakening" will scare the living bee-jeebers out of you.

 -BB

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Re: Martenson Report Ready - Oil Shock III

There are three things that should be added to this thread: 

1.  Think of what a currency collapse would mean for the price of oil.  Add that to the "risk of high oil prices" equation..

2.  Living in an urban area, I wonder what it would take to set off the spark of civil unrest.  At the top of my list is a sudden spike in gasoline prices which, to date, has been the only "ray of light" in this economy.  If gas prices trippled in a few months, I don't think it would go over too well.

3.  Chris, are you confident enough of an impending oil shock that you would put you rmoney where your mouth is and buy oil futures?

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Re: Martenson Report Ready - Oil Shock III
billy-bob wrote:

Malden,

You might also try reading Richard Heinberg's "Peak Everything".

or Kunstler's "The Long Emergency". Especially Chapter 4, BEYOND OIL, Why Alternative Fuels Won't Rescue Us.

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Re: Martenson Report Ready - Oil Shock III

I would also recommend 'The Dollar Crisis' by Richard Duncan. This will hit on all problems with printing, and then some. This book is one that was written before things got really crazy (many graphs and stats in the book are from 2002 and prior) but I must say about 99% of it has come to light, and been surpassed.

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Re: Martenson Report Ready - Oil Shock III

If seeking book recommendations, check out Chris' Essential Books:

http://www.peakprosperity.com/EssentialBooks

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Re: Martenson Report Ready - Oil Shock III
Ron Shimshock wrote:

If seeking book recommendations, check out Chris' Essential Books:

http://www.peakprosperity.com/EssentialBooks

we were just reccomending a few items for maldin to look over. He seems to not agree with multipul reports/math (which is ok) and thought I would add a book for the currency side of the house.

 

Dr.Martenson,

Great report as always, I am looking forward to the follow up. To be honest, I wasn't sure I'd be happy paying for the special reports, but I plan on renewing on at least a 6 month subscription (year if I can afford it, lol).

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Re: Martenson Report Ready - Oil Shock III

I'm trying to put together the complex relationship between energy and the economy.  

I note the IEA estimate of a 1.5% drop in global oil demand is for 2009 compared to 2008, but we won't know the actual numbers for another year.  Also, the IEA estimates there was a 0.4% drop in 2008 vs 2007.  I don't see final numbers for 2008 available yet at sites like www.bp.com but will be interested to see. 

I accept that global GDP growth is tied with oil consumption.  These oil consumption estimates indicate we are not headed for a recovery anytime soon!  

In contrast, I hear from a lot of folks "the stock market leads the coming economy, alway has always will".     We've seen in the last four weeks a stock market market rally, albiet small compared to the big drops last year.  Is it a Bear market rally just fueled by invester sentiment, and is energy the better indicator for the future economy?

1.5% drop in demand vs 4% to 6% drop in oil supply capacity of existing sources plus declining investment in new sources suggests to me the supply and demand curves are going to cross soon and high oil prices will spike.  But the relationship between energy and economy is complex; e.g. which comes first?, hence the undulations Chris anticipates seem likely to me.  We saw a big one already in 2008.

Look forward to the next part of this Report!

Tom

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Re: Martenson Report Ready - Oil Shock III

Tom,

as always, great questions and observations. All are worth hunting down and staying on top of.

I am exceptionally critical of the notion of the stock market being some all-knowing, infallible "great discounting machine".

Below I post a chart of the Dow Jones marking two events. The box shows the start of the recession (now that the NBER has finally, a year late and a dollar short backdated the recession start to 4Q 07).

The arrow shows the period 6 months prior to the start of the recession which is when any decent discounting machine worth its salt should have begun to signal 'reality'.

Instead we might note that it rose into the start of the recession and then failed, utterly, to predict the severity of the the recession/depression. It almost seems to be following, not leading.

Dow_Jones.jpg

Given this, I don't put much stock in what the Dow is now telling us because it hasn't proven to be all that reliable lately.

Just my take.

 

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Re: Martenson Report Ready - Oil Shock III

SteveS,

For example, radiant (electromagnetic) energy generated in Earth`s ionosphere on which Tesla was successfully working on in his experiments in early 20th century. Most of documentation was stolen after his death, by oil and banking cartel, i can bet on that. 

Then, we have two-stage mechanical oscillator technology based on gravity and huge difference between input and output energy, i.e. useful work, up to 12 times with much possibility for further improvement. See this link: http://www.veljkomilkovic.com/OscilacijeEng.html

Also, there are hydro energy, coal, sun, wind, tidal power, geothermal, biomass, etc.

But to explore and improve all those sources, society must regain control of money issuance. Now it is completlly in private hands and that situation produce all kinds of monopoly, injustice and concealed slavery system based on debt.

 

 

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Re: Martenson Report Ready - Oil Shock III

Hi Tom,

With regard to energy and the economy, I think of it as a chicken and egg type riddle that is ultimately moot. Let me explain.

I typically argue that it's a no-brainer that energy must precede the economy and is its primary impetus for growth and expansion. How else could it grow? And because of this the economy as a whole is extremely sensitive to the price of energy. However, inherent in the human race is the drive for expansion and growth and we would still have done things like tried to make flying and swimming and driving machines. This is one way to look at it -- with the desire for energy pre-existing within the human psyche.

On the other hand, you could argue, in more philosophical tones, that perhaps ingenuity itself was the result of a lot of energy simply being at hand. And if there weren't a lot of it lying around we would have never been pushed to design "things" that harnessed said energy. 

Yet in both examples energy is needed for human beings to grow the complexity of their civilizations with, so I really don't see much difference here. This can tend to chafe some people because it makes the potential of humans a mere function of available energy and the ease with which that energy can be circulated within a given groups of humans. But biologically speaking it seems so clear.

Oodles of energy in various stored forms were present long before humans were even a twinkle in the eye of the cosmos. What we decide to do with it and in what manner is up to us and carries with it a set of consequences we simply have to live with if we aren't adept enough to analyze what they might be and react appropriately to them.

Now it's 2009 and we've failed spectacularly at anticipating the troubles that were headed our way, and, at least for a few decades to come, we're hopelessly tethered to the sinking ship of fossil fuel dependence.  We need it to expand our economy and, subsequently, to dispense prosperity -- at least what people today consider prosperity to be.  

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Re: Martenson Report Ready - Oil Shock III

This business of oil is a fateful reminder of the California or Yukon Gold Rush... everyone dropped what they were doing to get a piece of the action, thinking that with minimal investment, they were sure to get rich.

Seems obvious that the oil industry (especially with regards to oil exploration) will follow the same path as other mineral resources have; gradually dropping off until very few are interested in them at all.

Funding growth seems to undermind the 2nd key concept - Growth does not equal prosperity.

Fixation on growth will probably resolve in a dramatically lower standard of living - not that anyone here didn't know that, but to hear it coming from the "leaders" of the world... it makes for a pretty grim forecast.

This definately requires a lot of contemplation, thanks CM.

Aaron

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Re: Martenson Report Ready - Oil Shock III

I think there also needs to be a discussion about the broken mechanisms of price signals and the supposed law of supply and demand. I rarely see this discussed except by Matt Simmons and some folks over at the Oil Drum.

Also, with regard to supply and demand, I never see anyone talk about the two kinds of demand -- at least theoretically for some people. They escape me at the moment. I think, at least according to Adam Smith, they're effectual demand, which is the demand that can be acted upon -- so people who want/need something and can actually buy it -- and some kind of absolute demand. So, for example, someone who's starving and is poor cannot act upon (purchase food) that impulse but the demand they internalize still exists as a metric within the economy.

So in terms of oil, our effectual demand has gone down (but only due to extreme price as opposed to true non-demand) but our absolute demand is actually increasing. And oil is the food of our economy. Without it, it dies.

Just some ideas.  

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Re: Martenson Report Ready - Oil Shock III

Oh, I wanted to add this rhetorical to the silliness of relying on price signals.

If the price of food dropped enough, would we stop farming?

That's exactly what we're doing with regard to oil at this very moment.

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Re: Martenson Report Ready - Oil Shock III

I do appreciate all the insight & info posted to this board by everyone (especially Dr Martenson)  I do have a nagging concern in the back of my head.

 Maybe this isn't the correct place to post this concern but here it goes.

 I would be interested in bringing a bit of balance to the equation.  My concern (generally speaking) is a question in the back of my mind which asks " Are "we" focusing only on finding the reasons why the 'best laid plans' are doomed to fail? 

I do think & hopefully most here agree -- There is no one single plan / solution or action that is going to get us out of this mess.  I would be curious to see if anyone agrees that ANY action taken by ANYONE is a step in the right direction or are things going completely the wrong way.

  It is a bit of this lack of objectivity or only focus on the negative aspects that are going to pull subscribers of CM into some sort of 'pessimist bubble' unable to acknowledge or see any merit in any action other than a NWO type of scenario.

 Don't get me wrong...I'm not saying being critical is bad & I do AGREE that there is a general concenus of 'over-optimism' in the 'main stream' & things are a lot worse than most people acknowledge but .....has there not been one shred of a positive move?

I do agree with the metaphor of  - if your house is on fire then you have to put the fire out before you figure out why & change the code.   Again, this said, many of the things already done are only putting the problems off until later & quite possibly making them worse when things do crash.

 Maybe what I'm saying is that from a purely objective & analytical point of veiw - What are the risks to our views that could prove us wrong?. (maybe not entirely but ....to a degree)

Interested to see what happens.

 

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Re: Martenson Report Ready - Oil Shock III
chris_m wrote:

Maybe what I'm saying is that from a purely objective & analytical point of veiw - What are the risks to our views that could prove us wrong?. (maybe not entirely but ....to a degree)

Interested to see what happens.

Good point Chris. I have wondered about this as well. We criticise 'group think'  as a major reason we got into this mess. We must be careful not to let the same error cloud our analysis. I think CM's emphasis on facts and looking at underlying information is critical in avoiding wrong thinking. However we have seen several times over the past few months how, at least short-term, our expectations can be overshadowed by events. This occurs mostly when the governernment and the FED do things that seem to contradict common sense. And like gold dropping so much today; is it manipulation,and how do you account for that? I think, though, that clear-headed analysis will prove to provide correct long-term forecasts.

That being said,  there is one item in particular though that I am very curious about. What would have happened if, back last September, the crisis had not been handled the way it had? What if institutions would have been allowed to fail? The consensus I hear is that we would have had a short, very rough depression, and would recover fairly quickly. But I have not seen that scenario fleshed out by anyone. Maybe it's impossible to speculate with any authority, but as more information comes out about all the underlying finances, maybe one could take a stab at it. 

 

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Re: Martenson Report Ready - Oil Shock III
Malden wrote:

I highly disagree with Chris. There is plenty of energy on Earth. We just need to improve or promote allready existing but forgotten or censored technology to harness it.

Also, when country is facing a shortage or deflation of money, what`s the problem with printing it out of thin air?

Umm... One thought that comes to mind would be the fact that every single time in recorded history that printing has been tried as a solution, the result was a collapse of the currency in question.

Dude, watch the Crash Course or something. You're not making any sense and your comments about ionospheric energy sources only serve to underscore your failure to look at problems objectively with an eye toward what practical solutions could be implemented in the real world.

Erik

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Re: Martenson Report Ready - Oil Shock III
Quote:

Good point Chris. I have wondered about this as well. We criticise 'group think'  as a major reason we got into this mess.

The main difference between the "groupthink" mentality and the cast of CM.com is that most of us drifted here looking to simplify a range of possible outcomes of our teetering global socio-political empire.

While there is some "cross-pollination" of thought, there is a lot of dissent, and I don't think many people here really think a Mad Max situation will unfold, or come here just to validate their own opinions so they can gloat.

The difference is objectivity.
I think, as individuals we are objective and open minded, and as a group, we are objective oriented.

So I have to disagree with your assessment.

Cheers!

Aaron

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Re: Martenson Report Ready - Oil Shock III
Lemonyellowschwin wrote:

3.  Chris, are you confident enough of an impending oil shock that you would put you rmoney where your mouth is and buy oil futures?

Excellent question, LYS. But I'd like to propose a slightly different version of it (in hopes Chris might answer it in Part II). The reason I think your version needs to be changed is that the decision to speculate (as opposed to invest) is one that depends on many personal factors, and I don't think that whether or not Chris personally feels inclined to speculate on crude prices is relevant. What is relevant (in my never-humble opinion) is what factors those who are inclined toward energy price speculation should be thinking about. So I'd re-state your question this way:

For those who are inclined to speculate on crude oil prices in the futures market, how much risk do you think there is of a considerable price pull-back from current levels, due to the "undulation" factor described in the report? Specifically, if the current equity rally turns out to be a bear market sucker rally as many of us fear, could a major down-move in equities trigger the "correlation always goes to one in a panic" phenomenon, causing Crude prices to retrace their lows in the $30s?

Chris: Fantastic report, chief! I can't wait to read part II.

Erik

 

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Re: Martenson Report Ready - Oil Shock III

Aaron et all good to exchange ideas with you again....

My point here is not to discredit anyone to or take sides but rather to spark a discussion.

  I guess to oversimplify ...I would use a classic debate type model where there are 2 sides to any argument. Sometimes being forced to argue a point of view whether you agree with it or not can provide additional insight or expose 'seams' into your own beliefs.

No doubt many (not all) of the arguements on this website are cemented in fact but I'd be curious to look at it from a different angle. 

I'd be especially interested in Dr M's input.

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Re: Martenson Report Ready - Oil Shock III
Malden wrote:

SteveS,

For example, radiant (electromagnetic) energy generated in Earth`s ionosphere on which Tesla was successfully working on in his experiments in early 20th century. Most of documentation was stolen after his death, by oil and banking cartel, i can bet on that. 

Then, we have two-stage mechanical oscillator technology based on gravity and huge difference between input and output energy, i.e. useful work, up to 12 times with much possibility for further improvement. See this link: http://www.veljkomilkovic.com/OscilacijeEng.html

Also, there are hydro energy, coal, sun, wind, tidal power, geothermal, biomass, etc.

But to explore and improve all those sources, society must regain control of money issuance. Now it is completlly in private hands and that situation produce all kinds of monopoly, injustice and concealed slavery system based on debt.

I'm all for innovative methods to create energy, but....

- If Tesla had really happened onto something, I think over the past 100 years someone else would have re-invented it.

- If things like the mechanical oscillator or magnet driven motors or other 'free-energy' machines really worked than why aren't they hooked to generators and running houses, etc? They never seem to get past some crude prototype that doesn't perform any useful work.. 

- I am all for alternate energy, but even an all out effort will only make a small dent in our near future energy needs. 

The stakes are so high to find cheap energy, that I can't imagine a viable source would not be developed (unless it requires huge development costs - such as fusion). Look at the wind energy sector. These are (I believe) raesonably small, private companies that found a niche and are successfully exploiting it. I have installed solar hot water and am looking into PVs.

All that being said, I believe that conservation is probably the best method we currently have to offset the losses we will see in fossil fuels, and that is in everyone's reach.

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Re: Martenson Report Ready - Oil Shock III
chris_m wrote:

I do appreciate all the insight & info posted to this board by everyone (especially Dr Martenson)  I do have a nagging concern in the back of my head.

 Maybe this isn't the correct place to post this concern but here it goes.

 I would be interested in bringing a bit of balance to the equation.  My concern (generally speaking) is a question in the back of my mind which asks " Are "we" focusing only on finding the reasons why the 'best laid plans' are doomed to fail? 

I do think & hopefully most here agree -- There is no one single plan / solution or action that is going to get us out of this mess.  I would be curious to see if anyone agrees that ANY action taken by ANYONE is a step in the right direction or are things going completely the wrong way.

 

The way I see it, and I understand it is my opinion, nothing here is souly focused on the negative as much as majority focused on the statistical fact. There are definitely area's of debate, but unfortunately, most scenarios are on both sides of not good. The view is simply how the individual interprets the facts.

I personally dont claim to even remotely be an expert, but after many many books, and a number of sites (like many others that take part here) I am all but 100% convinced we are in for trouble. I don't have a crystal ball, but will major events coming to light in a range of 1-3 years apart from each-other, there is no way this is going to turn out good (I'm speaking of water, food, oil...pretty much everything, or peak everything as I have heard it referred to). Tie this in with the economic issues, means big trouble. Frankly speaking, every generation's congress/government has pushed the fiscal problems to the next generation. Now we are at the point where it can not be pushed up any longer.

On to your curiosity, I believe EVERY step the government has taken is a complete step the wrong way. Everything they are doing will prolong the problems, and make them worse when they finally come to light, which this time, wont take 70 years to come to light (I'm thinking more like within 10, but very possibly ALOT sooner).  

What action should they have taken? Personally, I am a proponent of cutting government, cut spending...I could go on a tangent here, but will save it for now I guess, but would be happy to go into detail if you would like.

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Re: Martenson Report Ready - Oil Shock III

Erik T.,

If crude retraces to the low 30s, even more woe is us.

Also, I'm not an investor or speculator, but if someone asked me about investing in crude (don't know why they would) I would pound the broken price signal drum -- mainly following Matt Simmons lead. It's not worth the risk. I think the volatility factor regarding crude is just immense right now. Now on the other hand, there are those who see crude priced in the hundreds of dollars/barrel again, so if you've got extra dough to sit on a bunch of crude, maybe you should.

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Re: Martenson Report Ready - Oil Shock III
Aaron Moyer wrote:

The main difference between the "groupthink" mentality and the cast of CM.com is that most of us drifted here looking to simplify a range of possible outcomes of our teetering global socio-political empire.

 

Just wanted to say I completely agree....well said

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Re: Martenson Report Ready - Oil Shock III

I also wanted to add that cutting government and/or spending is not at ment as an overnight fix, although Im sure most knew what I was getting at.... Tongue out

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Re: Martenson Report Ready - Oil Shock III

Chris_M,

I have the argument of "what if" nothing happens regularly... with the missus =)

She keeps both feet firmly planted in reality, but I am the "what if" thinker. I like troubleshooting problems and reverse engineering solutions. There are so many intelligent people here, it's literally like having a virtual symposium from which to draw on for the troubleshooting.

I'll admit, sometimes I get carried away. I suppose a "minimal impact" event is entirely possible. This shambling old beast might lumber on until I'm old and gray.

But what it comes down to in my mind is I like the "earthy" lifestyle, and no matter what happens, it'll make me healthier and happier - so there are goals common to both catastrophic and relatively unchanged living situations.

That1Guy,

Thanks for the compliment!

Cheers!

Aaron

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Oil/SHTF/Civil Unrest

I've mentioned it before:  What could be the trigger for social unrest? 

For those of us who live in urban areas in particular, when do we pick up the BOB (bug out bag) and get in the BOV (bug out vehicle) and head for our BOL (bug out location).  (Acronyms borrowed from Neil Straus's amusing book, "Emergency.")

I think the price of oil is the key.  Why?

I think urban dwellers can handle a lower standard of living.  They can handle some fairly high levels of unemployment before picking up the sticks and torches.  Heck, in my area, many of the folks in the center of our city have been living with high levels of unemployment for a time.  They have been relegated to the margin and are used to living on the margins and scraping by as best they can.  Many are dependent on state assistance.  They don't care so much whether housing prices decline (most don't own houses).  They don't care whether stocks decline (they don't own stocks).  They don't care about pensions (they don't have them).  What they DO care about is whether their dollar, whether from a state check or their low-paying jobs, will stretch far enough to buy them the basic necessities:  Food and gas.  As long as they have food and gas they're fine.  But they are already stretching their dollars to the absolute max.  And when they wake up one day and find that they can't afford to fill up their car and they can't stretch their dollar far enough to get what they need at Grocery Outlet (Lowest Prices!) then I start to worry.

Then you have to consider the factors that play into a possible dramatic spike in oil prices:

1.  Supply -- classic peak oil problems.

2.  Garden variety inflation (albeit at high levels).

3.  Currency collapse.  (I see this as a slighly different issue than garden variety inflation -- an international panic that causes run on the dollar as opposed to sustained but more gradual increases in prices caused by 'too much money.')

4.  Some international flareup.

5.  The total inability of the government to do anything about a sudden gas shortage.  The government can always print more money; they really can't do anything to address a gas shortage except ration gas, which is the same thing as having a gas shortage.

When the price of gas doubles in two months and you start seeing the "No Gas" signs at the stations and some empty store shelves, then I think it's probably time to think about heading for the hills.

Everything we talk about on this site goes into the SHTF equation.  But if you're looking for the trigger point for social unrest, I think it's got to be the price of gas.  Don't you all?

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Re: Martenson Report Ready - Oil Shock III
ErikTownsend wrote:

Umm... One thought that comes to mind would be the fact that every single time in recorded history that printing has been tried as a solution, the result was a collapse of the currency in question.

Erik, you simply don`t understand what money is and with lack of other information, you draw false conclusions. Are you aware that private commercial banks "print" deposit or entry-book money all the time in form of debt? About 97% of all money in circulation in U.S. is that kind of privately created or should I say counterfeited money which brings society gigantic debt and harsh taxation. Another problem is FED which is also privately held.

Money in circulation is backed by people`s work and production of various goods and services. Exactly the same concept and great understanding of money nature which Founding Fathers of U.S. implemented with success to gain victory over England and promote their country in a bastion of freedom and welfare for its citizens. China does the same today with its "non-performing loans" (non-credit money actually) building itself in a prosperous superpower. But U.S. society was later manipulated by private bankers (mainly from Europe) to gave up their sovereignity over process of money creation.

I recommend you to visit American monetary institut website http://www.monetary.org/ and read Stephen Zarlenga`s "The Lost Science of Money" book or equally good "Web of Debt" by Ellen Brown. Both contains complete historical background and practical examples for understanding what money really is and why the Government (or Congress) should only have the right to coin or issue money.

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Re: Martenson Report Ready - Oil Shock III

Chris...

Three observations.

1.)  In your table "Growth In..." how can for Oil 1985-2007 be 1.6% while the two subsets intervals are 1.5 and 1.4 percent respectively?

2.) I note the way your chart of zigzags over a 4 year period shares commonality with the late Dr  A. S. Bakhtiari of the National Iranian Oil Company of his concepts of T1, T2,T3,T4 (particularly T2).  Maybe this is coincidence. If not, some of his comments he outlined a transition to demand outstripping supply starting in 2009 to 2010 which you and others share (including myself).  In your upcoming part 2 post, if you find value to his ideas, consider at least referencing his T2 stage which he projected to run circa 2009-2012.   They may enhance some of your analysis and points in your next post.  

His work I find most prescient and excellent quality.  For those not familiar with him, considering searching sites such as "Oil Drum" and "Energy Bulletin".

3.)  Agree on referencing the Hook, Hirsch and Alexlett report.  It all starts and stops with quality of data.  Your background and experience shines here...keep it up.

Curious in your next report how close I will be to what you post.

Again, keep up the good work!

Best Always, 

Nichoman

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Re: Martenson Report Ready - Oil Shock III

Aaron wrote:

"But what it comes down to in my mind is I like the "earthy" lifestyle, and no matter what happens, it'll make me healthier and happier - so there are goals common to both catastrophic and relatively unchanged living situations."

Amen to that.

That's the path I've been on for a few years now. In fact, I was on the earthy path long before I was terrified by the fragility of our way of life, now I've just kicked things into overdrive a little bit. But beyond that, the direction I'm taking is where I've always wanted to go. So not that I don't care what happens or that it doesn't matter because I do and it does, it's just that either way (if you want to look at this as a collapse/no collapse equation) my life makes sense.

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Re: Martenson Report Ready - Oil Shock III
Malden wrote:
ErikTownsend wrote:

Umm... One thought that comes to mind would be the fact that every single time in recorded history that printing has been tried as a solution, the result was a collapse of the currency in question.

Erik, you simply don`t understand what money is and with lack of other information, you draw false conclusions. Are you aware that private commercial banks "print" deposit or entry-book money all the time in form of debt? About 97% of all money in circulation in U.S. is that kind of privately created or should I say counterfeited money which brings society gigantic debt and harsh taxation. Another problem is FED which is also privately held.

Money in circulation is backed by people`s work and production of various goods and services. Exactly the same concept and great understanding of money nature which Founding Fathers of U.S. implemented with success to gain victory over England and promote their country in a bastion of freedom and welfare for its citizens. China does the same today with its "non-performing loans" (non-credit money actually) building itself in a prosperous superpower. But U.S. society was later manipulated by private bankers (mainly from Europe) to gave up their sovereignity over process of money creation.

I recommend you to visit American monetary institut website http://www.monetary.org/ and read Stephen Zarlenga`s "The Lost Science of Money" book or equally good "Web of Debt" by Ellen Brown. Both contains complete historical background and practical examples for understanding what money really is and why the Government (or Congress) should only have the right to coin or issue money.

Ok, so I know this isn't my debate here, but Erik is not wrong, and has a good understanding of money (from all posts I have read of his). 5000 years of history gives the debasement (printing) of the money supply a zero % chance of sucess. No empire in history since the beginning of money has ever succeeded at it....ever.  Although I do agree that the government is the only ones with the right to issue money and the fed sucks, That alone at this point will not fix the expansion of the money supply in play right now. The idea that 97% of all money "in circulation" was written in books is a bit  silly, especially with the fact the the government backs all deposits in the US through the FDIC, therefore out of all those banks that 'failed' no depositor lost their money. This isn't the great depression, the money didnt just all go away, some did, but not 97%, no way, not even close...nothing like the collapse of the money supply seen in the 30's.

The fact is  that money that was printed, and thrown at the problem is sitting out there, and the Fed is the only one that has to suck all those trillions back in, by selling the assets on their balance sheet, unfortunitly that window is small....if there is a window at all anymore, let alone the fact that half their balance sheet is distressed assets, and bonds (which I feel wont be as easy to offload in the future based off the intended yearly budget being proposed). Even if they do get 50cents on the dollar that still leaves trillions floating. If they raise interest rates (as they should, but wont) it will suck the little bit off life out of the economy.....but still leave t he trillions they have already pumped in.

Now that mark to market rules are out the window it seems to me a wild card is in play. Banks can manipulate their assets freely now, as well as the hundreds of billions (trillions) these banks are sitting on may more freely be lent, then deposited in another bank, then re-lent again, then deposited in yet another bank, and so on. Do I think this will happen right away? No clue, I dont have a crystal ball, but the idea that all that money is now gone is ridiculous, and to tell someone they just 'simply don't understand' when they are talking about historical fact is silly. Debasing money didnt work on a gold standard, and it definitely didn't work when governments came off of them, ever.

Mike

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Re: Martenson Report Ready - Oil Shock III
Davos wrote:

Hello Malden:

I'd watch "A Crude Awakening," and I'll try to recall which book had the story of the seashell currency and the gold miners who hired the natives and flew in plane loads of shells to pay them for their labor.

Take care 

Davos,

I would like to see this film, is there a place I can see the whole thing? I did a basic search on you tube and came up with a lot of trailers...

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Re: Martenson Report Ready - Oil Shock III

netflix has it

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Re: Martenson Report Ready - Oil Shock III
Jarhett wrote:

netflix has it

awesome, thanks alot...

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Re: Martenson Report Ready - Oil Shock III

Not only does netflix have the movie but it is available on play it now....

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Re: Martenson Report Ready - Oil Shock III
mainecooncat wrote:

So not that I don't care what happens or that it doesn't matter because I do and it does, it's just that either way (if you want to look at this as a collapse/no collapse equation) my life makes sense.

It strikes me that this is one of the primary goals for Chris and Company.......to facilitate preparedness and awareness that leads to this level of contentment.

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Re: Martenson Report Ready - Oil Shock III

Maybe what I'm saying is that from a purely objective & analytical
point of veiw - What are the risks to our views that could prove us
wrong?. (maybe not entirely but ....to a degree)

There are a few risks actually.

1.The biggest of all is to close your eyes but in the same time pretend you are open-minded

2.Looking at everything from the economic perspective. Forgetting about other aspects of our so little understood world. People, will, mind, intelligence and soul. That is what matters. All else is relative. Including time.

3.Applying conspiracy and mainpulatory judgements to the economics sector only and considering energy data as "reliable" and not manipulated. Believing that truth has not been hidden and cover-up tries have not been attempted regarding true and new revolutionary sources of energy.

4.Assuming that everyone in Washinton is plain stupid and especially not understanding thet sometimes BAD means GOOD. Including measures taken by Obama and others. Remember that you first have to distroy the old in order to be able to rebuild the new.

5.Believing that in science all you see now is all we have. Is like believing all that media tells you about banks. Tip of iceberg and nothing more. Try explaining the first guy you meet on the street about derivatives or Peak Oil. Ask him if he knows about CM and his great CraschC. Is the same thing with you trying to find out or understand Tesla or other inventor's work

And last but not least, disconsidering the guy that tells you that a gas engine can run 100% on water and electricity. Especially when the guy is one of the first that presented the demonstration on youtube by itself.

 

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Re: Oil/SHTF/Civil Unrest
Lemonyellowschwin wrote:

But if you're looking for the trigger point for social unrest, I think it's got to be the price of gas.  Don't you all?

I agree that would be one possibility, esp. if the prices increase very quickly and dramatically, which I seems entirely possible and confirmed by the latest Martenson Report.

But the scenario that would scare me the most would be Obama being assasinated. I think that would spark massive civil unrest almost instantly. I sure hope the secret service are on the ball!

Erik

 

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Re: Martenson Report Ready - Oil Shock III

Davos,

The seashell analogy is in "Mean Markets and Lizard Brains", by Terry Burnham. (You talked about this book back on December 31st).

becky

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