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Steve St. Angelo: Prepare For Asset Price Declines Of 50-75%

When the debt bubble pops, it's taking everything with it
Monday, July 3, 2017, 4:00 PM

Any sense of prosperity in today's economy is based on a falsehood, claims Steve St. Angelo, proprietor of the SRSrocco Report website.

Like we here at PeakProsperity.com, Steve is a student of energy. He shares our worldview that net energy per capita has been in steady decline, and a result, future growth will be limited. Also like us, he notes that the "growth" seen over the past several decades hasn't been due to surplus net energy (which makes being able to do more possible). Instead, it has been fueled by debt  -- which essentially steals prosperity from the future and consumes it today.

Any third-grader with a crayon can quickly tell you that kind of scam can't last forever. And it can't. Once the can can't be kicked any further and the next economic and/or financial crisis is upon us, Steve sees today's over-inflated asset prices quickly dropping by a gut-wrenching 50-75%. » Read more

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Preparing For The Coming Shock

The economy -- and EVERTHING -- will get smaller
Friday, June 30, 2017, 10:11 PM

Executive Summary

  • The importance of understanding the difference between depleting vs declining
  • Why the shale "miracle" can't rescue us from this predicament
  • Why 2019 will be a seminal year
  • How high will oil prices go when the shock arrives?
  • Why the next oil shock will force the economy -- and EVERYTHING we depend on -- to diminish

If you have not yet read Part 1: The Looming Energy Shock available free to all readers, please click here to read it first.

There are two words that are related but important to understand the distinction between. One is depletion, which refers to the amount of oil that is removed from a reservoir. The other is decline, which refers to the amount of oil flowing from a given well or field.

Depletion is a relatively straightforward process. If there are 100 units of removable oil in a field and you pump out 3 of them, the field has depleted by 3%.

But you might be able to hold the rate of pumping constant for a long time by injecting water or performing other stunts to force more oil out of a given well. If in our example we kept removing those same 3 units year after year, our decline rate would be zero. But the depletion rate would be increasing, because 3/100 = 3% but 3/97 = 3.1%. And after ten years the rate would be 3/70 = 4.3%.

That is, all efforts to keep oil flowing out of the wells at a maximum rate results in increasing rates of depletion. But we should also point out here that fighting decline rates is an expensive proposition. And that funding, too, has dried up of late.

The bottom line is that depletion is what really matters. Because once the oil gone, baby, it’s gone. All of the MSM headlines will keep you focused firmly on rates of extraction but only rarely on the rates of depletion.

So where is the world in the story of depletion? This is where our various sphincters should be involuntarily tightening. Rates of depletion are increasing, and they are substantial as seen here in... » Read more

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The Looming Energy Shock

The next oil crisis will arrive in 3 years or less
Friday, June 30, 2017, 10:10 PM

There will be an extremely painful oil supply shortfall sometime between 2018 and 2020. It will be highly disruptive to our over-leveraged global financial system, given how saddled it is with record debts and unfunded IOUs. » Read more

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Joseph Tainter: The Collapse Of Complex Societies

What history predicts about our future prospects
Sunday, June 25, 2017, 11:20 PM

By popular demand, we welcome Joseph Tainter, USU professor and author of The Collapse Of Complex Societies (free book download here).

Dr. Tainter sees many of the same unsustainable risks the PeakProsperity.com audience focuses on -- an overleveraged economy, declining net energy per capita, and depleting key resources. 

He argues that the sustainability or collapse of a society follows from the success or failure of its problem-solving institutions. His work shows that societies collapse when their investments in social complexity and their energy subsidies reach a point of diminishing marginal returns. That is what we are going to be talking about today, especially in regards to where our culture is today, the risks it faces, and whether or not we might already be past the tipping point towards collapse but just don’t know it yet. » Read more

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Off The Cuff: The Approaching Minsky Moment

The world is unprepared for the reset heading our way
Wednesday, June 21, 2017, 9:00 PM

In this week's Off The Cuff podcast, Chris and Mish Shedlock discuss:

  • A Study In Failure Of The State
    • Chris shares his on-the-ground observations from So. America
  • It Can Happen Here
    • Mish shares his on-the-ground observations from Illinois
  • Virtually All The Macroeconomic Data Is Miserable
    • Yet the Fed & the markets are acting like everything's great
  • The Approaching Minsky Moment
    • It's a matter of if, not when

This week's Off The Cuff discussion is an interesting one. Both Chris and Mish have front-row seats to two failing governments -- Chris in Argentina, and Mish in Illinois. It feels to them like they are getting a preview of the economic pain soon to come to the rest of the world.

Both are *very* concerned that citizens and investors across the globe are being duped by the (lack of) signals and messages today's ""markets"" are providing. Looking at the steady drumbeat of bad & worsening macroeconomic data, as well as the immense gap between fundamentals and asset prices, Chris and Mish are as confident as they have ever been that a massive painful reset is nigh. But too many of our leaders, and too much of the public, remain complacent/ignorant (willfully or not) regarding this risk. 

Their conclusion? The world is woefully unprepared for the Minsky moment headed its way.

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio and other premium content today. » Read more

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Art Berman: Don't Get Used To Today's Low Oil Prices

They're a temporary anomaly. Higher prices are ahead.
Sunday, May 7, 2017, 3:00 PM

Oil expert and geological consultant Art Berman returns to the podcast this week to address head-on the question: Was the Peak Oil theory wrong? With the world "awash" in sub-$50 per barrel oil, were all the warnings about persistently higher future oil prices just a bunch of alarmist hand-wringing?

In a word: No.

Art explains how the current glut of oil created by the US shale boom -- along with high crude output by both OPEC and non-OPEC  producers -- is a temporary anomaly. Fundamentally, we are not finding nearly as much oil as we need to continue our demand curve; and at the same time, we are extracting our reserves at a faster rate than ever. That's a mathematical recipe for a coming supply crunch. It's not a matter of if, but when. » Read more

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Get Ready... Change Is Upon Us

The 'economic peace' we've enjoyed for decades is over
Friday, November 11, 2016, 9:05 PM

At certain times, it’s really not that hard to predict "what" is going to happen next after disastrously short-sighted and self-interested policies are enacted. Predicting the "when", with precision, is much tricker. But obvious misguided economic policies are destined to have a limited period of apparent (but false) prosperity, after which they end with a nasty Bang!.

We have entered just such a time. This isn't a Trump vs Clinton thing; I'd make this claim regardless of who won this week's presidential election -- as our plight is much bigger than a single Administration. And my observation is that neither political party had much interest beyond some temporary election year lip-service to the economic plight of the middle class.

And by “middle class” I mean anybody not in the top 5% economic bracket. For those doing the math at home, that leaves the remaining 95% of us stuck in the meat grinder. » Read more

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Gail Tverberg: Why There's No Economically Sustainable Price For Oil Anymore

Producers need higher prices that the public can't afford
Sunday, October 23, 2016, 1:33 PM

Actuary Gail Tverberg returns to provide an update on where we are in the global energy story. Her outlook is not rosy: she doesn't not see a path for society to transition to an affordable, plentiful substitute to petroleum as a transportation fuel. The physics as well as the funding do not pencil out, at least with today's known technologies. » Read more

Insider

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Off The Cuff: Death By Status Quo

The establishment has become the enemy
Friday, September 30, 2016, 12:56 PM

In this week's Off The Cuff podcast, Chris and John Rubino discuss:

  • Debate Debrief
    • A Rorschach test for the nation
  • Death By Status Quo
    • The establishment is feeding itself on everyone else's future
  • Higher Oil Prices On The Horizon?
    • The turn back up may be nigh
  • Deutsche Bank Debacle
    • How bad could it get?

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio and other premium content today. » Read more

Podcast

Standing Rock Protest is Powerful

Mark Morey on the Social Revolution Taking Place
Sunday, September 25, 2016, 1:40 PM

Largely out of the headlines, the ongoing protest on Standing Rock is shining a bright light on how the big-moneyed interests with political clout steamroll the disadvantaged in order to get what they need. 

But in a rare David-vs-Goliath standoff, the Sioux tribespeople of Standing Rock Reservation are learning that they are not powerless. Their refusal to roll over and allow an oil pipleline to be built on their lands is growing into one of the largest resistance movements in recent years, drawing supporters from all over the country, and forcing the discussion of "Where do we draw the line?" in regards to our pursuit of depleting natural resources. » Read more