The political class and their mouthpieces in the corporate controlled mainstream media are desperately trying to spin the oil price surge as a temporary inconvenience that will not derail their phony recovery story. Brent crude closed at $116 per barrel yesterday. West Texas crude closed at $104 per barrel. Unleaded gas has risen by 22% in the last month and 60% since September 1, 2010. I’m sure this slight increase hasn’t impacted Ben Bernanke or Lloyd Blankfein. Their limo drivers just charge it to their unlimited expense accounts. Joe Sixpack, driving his 15 mpg Dodge RAM pickup, is now forking over an extra $1,200 per year in gas expenditures, not to mention more for everything impacted by oil such as food, utilities, and anything transported to their local Wal-Mart by truck (everything). Luckily, the Federal Reserve and crooked politicians only care about their comrades in the top 1% elitist society, for whom oil is an investment, not an expense.  

               UNLEADED GAS 

The “experts” speak as if they know what will happen, even though they never saw the rebellions coming in Tunisia, Egypt or Libya. They assure the masses that Libya doesn’t really have an impact on U.S. oil supply. It’s as if these shills never took Econ 101 in college. World oil demand is 88 million barrels per day. Oil supply is 88 million barrels per day. If 1 million barrels of oil supply are taken off-line, it doesn’t matter that the U.S. doesn’t get their oil from Libya. The Italians need their oil. Do the talking heads understand that oil is fungible? The supplier will ship the oil to the highest bidder. Presto!!! – $116 a barrel oil.

With Friends Like This, Who Needs Enemies

Let’s assess the probability of things getting better in the near, medium, long term or ever term. Take a gander at the chart below. These countries account for 29% of the daily world oil supply. Does it strike you as a list of stable countries with happy populations of employed young men?  Egypt, Libya, Yemen, Syria and Iran have already experienced revolution or are on the verge of revolution. Algeria is dead man walking. The Saudi royal family is trying to buy off the masses to stay in power. The revolution genie is out of the bottle. It can’t be put back. Mix 40% unemployment, with millions of young men, no hope, and some Muslim fundamentalism and you’ve got yourself an out of control situation. No amount of public relations spin will create a positive outcome for the United States. The existing world order of despots, kings, and military juntas was just fine for Washington DC. They poured hundreds of billions of “aid”, tanks, helicopters and missiles to these “freedom fighter” despots who diverted the billions to their Swiss bank accounts and fell into line with U.S. policy. No matter who takes power when these revolutions succeed in toppling our puppets, the new regimes will not be friendlier toward America. And they still have the oil. 

  Proven Oil Oil
Country Reserves (bil barrels) Production Per Day
Saudi Arabia 265 8,400,000
Iran 137 3,700,000
Iraq  115 2,700,000
UAE 98 2,300,000
Kuwait 102 2,300,000
Libya 46 1,600,000
Algeria 12 1,300,000
Qatar 25 820,000
Oman 6 810,000
Egypt 4 742,000
Syria 3 376,000
Yemen 3 298,000


One look at the chart of self reported world oil reserves paints a picture of woe for the United States. Countries in the tinderbox of the Middle East and Africa control 65% of the world’s oil reserves. Saudi Arabia controls 20%, Iran and Iraq control 11% each, Venezuela controls 7%, Russia 5%, and Libya 3%. So, countries that can barely stomach our existence, hate us, or just despise us, control 57% of the world’s remaining oil. Sounds like a recipe for lower oil prices in the future. The two countries on our border are the only dependable suppliers for the U.S. Canada controls 13% of the world oil reserves, mostly in its tar sands. Mexico controls just over 1% of the world’s oil reserves, but supplies 13% of the U.S. daily oil supply.

File:World Oil Reserves by Region.PNG

Drill, Baby, Drill

Now for a reality check on the “Drill Baby Drill” propagandists like Larry Kudlow and the other dishonest Republican shills. The United States controls a full 1.58% of the remaining oil reserves in the world. We have 21.3 billion barrels of reserves versus 264 billion barrels in Saudi Arabia. We are currently producing 9 million barrels per day. At that production rate, the U.S. will deplete its proven reserves in the next 6 to 10 years. New discoveries will not be able to keep up with depletion of existing wells. The good news just keeps coming. Mexico’s oil production has been dependent upon one giant oil field since 1976. The Cantarell oil field produced 2.1 million barrels per day in 2003 at its peak. It is currently producing 464,000 barrels per day. Peak oil has arrived in Mexico. By 2015, the country that currently supplies 13% of our daily oil supply will become a net importer of oil. Drill Baby Drill. 

File:Mexican Petroleum Production.PNG

Based upon the monthly import data below from the IEA, it would appear that, to paraphrase Chief Brody in Jaws, we’re going to need more corn. As the Obama administration operates in denial of these simple facts, they will continue to push ethanol and Chevy Volts to save us from dirty oil. We are already diverting 40% of our corn crop to the ethanol boondoggle. I’m sure that has nothing to do with the 98% increase in corn prices in the last year. Maybe tax credits for solar panels on SUVs and rubber band propeller cars will save the day.

We know for a fact that Mexico’s 1.2 million barrels per day will evaporate in the next few years. But, at least we have that solid dependable 2.7 million barrels per day (30% of our daily imports) from those stable bastions of democracy Nigeria, Venezuela, Iraq, Angola, and Algeria. Makes you want to go out and buy a Hummer. The storyline being sold to the American people is that there is no need to worry. Saudi Arabia will step to the plate and make up for any shortfalls throughout the world. Just one problem. Saudi Arabia is lying about their reserves and their ability to increase production. They’d fit in very well in Congress and on Wall Street.

Crude Oil Imports (Top 15 Countries)
(Thousand Barrels per Day)
Country Dec-10 Nov-10 YTD 2010 Dec-09 YTD 2009

CANADA 2,064 1,975 1,972 2,104 1,943
MEXICO 1,223 1,229 1,140 1,063 1,092
SAUDI ARABIA 1,076 1,119 1,080 870 980
NIGERIA 1,024 806 986 1,020 776
VENEZUELA 825 884 912 772 951
IRAQ 336 340 414 325 449
ANGOLA 307 263 380 266 448
BRAZIL 271 188 254 181 295
ALGERIA 262 379 325 336 281
COLOMBIA 220 489 338 179 251
ECUADOR 192 188 195 86 181
RUSSIA 158 85 252 168 230
KUWAIT 125 170 195 160 180
UNITED KINGDOM 124 80 120 67 103
ARGENTINA 85 35 29 33 53


Lies, Obfuscation, Misinformation & Denial

The late Matt Simmons made the strong case In his book Twilight in the Desert that Saudi Arabia has been lying about their reserves for years. Documents released by Wikileaks give support to this contention. Cables from the U.S. Embassy in Riyadh , released by WikiLeaks, urge Washington to take seriously a warning from senior Saudi government oil executive Sadad al-Husseini, a geologist and former head of exploration at the Saudi oil monopoly Aramco, that the kingdom’s crude oil reserves may have been overstated by as much as 300bn barrels – nearly 40%.
The UK Guardian reported:

According to the cables, which date between 2007-09, Husseini said Saudi Arabia might reach an output of 12m barrels a day in 10 years but before then – possibly as early as 2012 – global oil production would have hit its highest point. This crunch point is known as “peak oil”.

Husseini said that at that point Aramco would not be able to stop the rise of global oil prices because the Saudi energy industry had overstated its recoverable reserves to spur foreign investment. He argued that Aramco had badly underestimated the time needed to bring new oil on tap.

One cable said: “According to al-Husseini, the crux of the issue is twofold. First, it is possible that Saudi reserves are not as bountiful as sometimes described, and the timeline for their production not as unrestrained as Aramco and energy optimists would like to portray.”

The US consul then told Washington: “While al-Husseini fundamentally contradicts the Aramco company line, he is no doomsday theorist. His pedigree, experience and outlook demand that his predictions be thoughtfully considered.”

A fourth cable, in October 2009, claimed that escalating electricity demand by Saudi Arabia may further constrain Saudi oil exports. “Demand [for electricity] is expected to grow 10% a year over the next decade as a result of population and economic growth. As a result it will need to double its generation capacity to 68,000MW in 2018,” it said.

It also reported major project delays and accidents as “evidence that the Saudi Aramco is having to run harder to stay in place – to replace the decline in existing production.” While fears of premature “peak oil” and Saudi production problems had been expressed before, no US official has come close to saying this in public.

The overstatement of reserves by Saudi Arabia and most of the OPEC countries should be abundantly clear to anyone with a smattering of critical thinking skills. This eliminates just about everyone on CNBC or Fox News. Essentially, the self reported, unaudited declared oil reserves from OPEC members are a fraud. Production quotas for each member of OPEC are dependent upon their oil reserve amount. When this was instituted in the early 1980s, shockingly OPEC countries miraculously added nearly 300 billion barrels to proven reserves in a six year period with NO NEW DISCOVERIES of oil. The chart below shows the unexplained jumps in reserves in red. Do you honestly believe any self reported number from Iran or Venezuela? Dr. Ali Samsam Bakhtiari, a former senior expert of the National Iranian Oil Company, has estimated that Iran, Iraq, Kuwait, Saudi Arabia and the United Arab Emirates have overstated reserves by a combined 320–390 billion barrels and has said, “As for Iran, the usually accepted official 132 billion barrels is almost one hundred billion over any realistic estimate.”

Using some common sense, someone might ask, “How could Saudi Arabia’s oil reserves remain above 260 million for the last 22 years despite pumping over 60 billion barrels during this time frame, and not making any major new discoveries?” Maybe their statisticians did their training at Goldman Sachs or the Federal Reserve. The monster Saudi oil fields are over 40 years old. They will deplete. Oil is finite. They will not refill abiotically like some crackpots contend. Saudi Arabia’s production peaked in 2005 and it has been unable to reach that level since. The spin sheiks in Riyadh and spin doctors in Washington DC cannot spin oil out of sand. Peak oil is about to choke the American way of life.    

Declared reserves of major Opec Producers (billion of barrels)
BP Statistical Review – June 2009
Year Iran Iraq Kuwait Saudi Arabia UAE Venezuela Libya Nigeria
1980 58.3 30.0 67.9 168.0 30.4 19.5 20.3 16.7
1981 57.0 32.0 67.7 167.9 32.2 19.9 22.6 16.5
1982 56.1 59.0 67.2 165.5 32.4 24.9 22.2 16.8
1983 55.3 65.0 67.0 168.8 32.3 25.9 21.8 16.6
1984 58.9 65.0 92.7 171.7 32.5 28.0 21.4 16.7
1985 59.0 65.0 92.5 171.5 33.0 54.5 21.3 16.6
1986 92.9 72.0 94.5 169.7 97.2 55.5 22.8 16.1
1987 92.9 100.0 94.5 169.6 98.1 58.1 22.8 16.0
1988 92.9 100.0 94.5 255.0 98.1 58.5 22.8 16.0
1989 92.9 100.0 97.1 260.1 98.1 59.0 22.8 16.0
1990 92.9 100.0 97.0 260.3 98.1 60.1 22.8 17.1
1991 92.9 100.0 96.5 260.9 98.1 62.6 22.8 20.0
1992 92.9 100.0 96.5 261.2 98.1 63.3 22.8 21.0
1993 92.9 100.0 96.5 261.4 98.1 64.4 22.8 21.0
1994 94.3 100.0 96.5 261.4 98.1 64.9 22.8 21.0
1995 93.7 100.0 96.5 261.5 98.1 66.3 29.5 20.8
1996 92.6 112.0 96.5 261.4 97.8 72.7 29.5 20.8
1997 92.6 112.5 96.5 261.5 97.8 74.9 29.5 20.8
1998 93.7 112.5 96.5 261.5 97.8 76.1 29.5 22.5
1999 93.1 112.5 96.5 262.8 97.8 76.8 29.5 29.0
2000 99.5 112.5 96.5 262.8 97.8 76.8 36.0 29.0
2001 99.1 115.0 96.5 262.7 97.8 77.7 36.0 31.5
2002 130.7 115.0 96.5 262.8 97.8 77.3 36.0 34.3
2003 133.3 115.0 99.0 262.7 97.8 77.2 39.1 35.3
2004 132.7 115.0 101.5 264.3 97.8 79.7 39.1 35.9
2005 137.5 115.0 101.5 264.2 97.8 80.0 41.5 36.2
2006 138.4 115.0 101.5 264.3 97.8 87.3 41.5 36.2
2007 138.2 115.0 101.5 264.2 97.8 99.4 43.7 36.2
2008 137.6 115.0 101.5 264.1 97.8 99.4 43.7 36.2


The denial, accusations and misinformation have already begun. Congressional hearings will be called to blame Big Oil and the dreaded speculators. Americans always need a bogeyman to blame for their mindless decisions and willingness to be led to slaughter by corrupt politicians. Big oil companies do benefit from higher oil prices. Big oil companies spend millions buying off Congressmen. Big oil companies cut corners, ignore safety procedures, and seek profits by any means possible. But, they do not control the oil. Nations control the oil. Many of these nations are led by lying, corrupt, evil despots. That is a fact. Blustering moronic Congressmen going after oil executives and phantom speculators is just a sideshow. It will divert the non-thinking masses from the truth that our leaders haven’t allowed a refinery or nuclear power plant to be built since 1977. These leaders have promoted and subsidized corn based ethanol that requires more energy to produce than it creates and has driven the cost of our food sky high. We are more dependent on foreign oil than any time in our history.

The real speculators are the Americans who clog our highways every morning driving monster SUVs, turbocharged sports cars, gas guzzling minivans, and pickup trucks that make them feel like salt of the earth tough guys despite living in their 6,000 square foot energy sucking McMansions in suburban tracts 30 miles from their jobs, if they have one. The ignorance of the average American car buyer knows no bounds. The recent bounce back in auto sales was led by SUVs and pickups. The green clean cars are nothing but hype and bullshit. GM expects to sell about 10,000 Volts this year, and Nissan expects to sell about 25,000 Leafs in the United States, a piss in the ocean compared with the millions of sport wagons and SUVs purchased by Americans annually. Americans have the attention span of a gnat and are already dazed and confused by the surge in gas prices to $3.50 per gallon.

When oil prices spiked to $147 barrel in 2008, Americans were spending $467 billion per year for fuel. By early 2009, the collapse in energy prices due to the worldwide recession reduced the annual expenditure to $265 billion, freeing up over $200 billion for consumers to spend on other items, pay down debt, or save. Expenditures for fuel had already surged back to $400 billion before the recent spike in oil prices. Next stop $500 billion. That should do wonders for the faux economic recovery that has been touted by Obama and the MSM for the last year. The years of denial, lies, indecision, bad decisions, and inertia have left the country vulnerable and at the mercy of countries in far off lands that despise our way of life.

There are no good outcomes, only bad, really bad, and catastrophic. Take your pick. Could gas prices drop below $3.00 per gallon if the world sinks back into recession? Yes. But it would only be momentary. The easy to access supply is dwindling. The medium and long term direction of gas at the pump is up. There is nothing that can be done in the next five years to prevent significantly higher oil prices. A full court press of realistic ideas like converting our truck fleets to natural gas, a major effort to build nuclear power plants, more drilling, greater use of wind, geothermal, and solar would take at least a decade to have an impact. There is no consensus or resolve to undertake such an effort. Therefore, Americans will suffer the consequences. Be a good American and take advantage of GM’s no interest for 7 years deal on their biggest baddest SUVs and buy two. What could go wrong?

153 thoughts on “THERE ARE NO GOOD OUTCOMES”

  1. While i admit the demand for oil is high,,there are places in the usa where there is oil,alaska is one.oil shale is available in many western states.Natural gas should be an alternate fuel source.I also admit were kinda slow about developeing all of this,i mean look at all those new nuclear plants!You sure are right about all those big pu trucks,almost everyone in my small town seems to drive one,lucky to get 10 mpg,of course theres knothing in the bed and no trailer hitch.People could all be driving a small car getting 30 plus mpg.I think there should be a push to get folks to stop buying pu trucks.Tell people we should make pu trucks a commercial vehicle and folks just about get violent,must be something in the water!I was in holland in the late eightys and watched a tv program about the kayoto treaty and the europeans were mad at the usa,they actually stated the idea was to drive up gas prices so high that people would drive less and thus saving the earth from humans.RW

  2. “Big oil companies do benefit from higher oil prices. Big oil companies spend millions buying off Congressmen. Big oil companies cut corners, ignore safety procedures, and seek profits by any means possible. But, they do not control the oil. Nations control the oil. Many of these nations are led by lying, corrupt, evil despots. That is a fact. ”

    One of the best overall assessments that I have read regarding the factors driving oil prices.

    Fucking nailed it.

  3. Admin Says: “By early 2009, the collapse in energy prices due to the worldwide recession reduced the annual expenditure to $265 billion, freeing up over $200 billion for consumers to spend on other items, pay down debt, or save”

    $3.99 a gallon today at a Unocal… Pouring our money into the tank instead of saving, paying down debt, or spending will revive the grumps. I have no charts but back when this shit was going on I saw more stress, roadrage and overall grumpiness from all walks of life.

    Any hopes of economic recovery are inverse to the pump price. With tuition, health insurance and food costs already eating at any surplus income these prices at the pump will spell disaster when the surplus becomes deficit income. Then the shopping stops. Then the loans aren’t paid. Then the shtf and we all wake up to find that even gold is being sold off. Then more layoffs.

    Not good.

    Smokey and Admin: I want a front row seat at a war for oil battle royal! It’s been a little too civil around here, no?

    1. Colma

      I agree. This site is becoming a lovefest. Too much agreement. Too little anger and foul language.

  4. Administrator,

    Indeed, that rumble looms large. I will show you no mercy. It will go down in history as the most complete thrashing ever administered on this forum. I’m going to drag G.W. Bush into it, Dick Cheney into it and your throngs of sycophants will be pleading with me to ease up.

    I can hear them now—“Come on Smokey, it’s not worth it. Lay off. You’ve annihilated him, what else do you want ? This brutal beatdown is despicable. We get it Smokey, damn. You won already. Geez, what’s with the overkill ? We’re begging you. Leave the Administrator with the tiny amount of dignity he has left.”

  5. Excellent summary Jim.
    All should know who the other HUGE beneficiary of high oil prices is. FEDERAL Govt.
    Taxes and Royalty on production at the well head is 12.5 – ??%, effective tax rate on oil companies is “about” 20%, State and Federal tax at the pump is combined ??%. Tax on truckers and pipelines hauling refined products is ??%. Sorry about he unknowns, as do not have time to research the facts, but you get the issue of BIG numbers when combined. Combined it will be pushing 50% of gross, not net.

    The big hit is going to be the impact of diesel and jet fuel. Head of common lettuce at Wal Mart as of last night jumprd from 90 cents to $1.50. Pickens is right to convert the entire fleet of semi trucks to LNG. A permit for a new refinery, pipeline, power plant or new transmission line is either hopeless or a lawyers dream come true.

    It is not just the Mexican decline curve, but as Simmons laid out ALL the elephant fields look the same. Pull the decline curve for Alaska, looks the same.

    The mega deal that no one dare speak off is the Saudis maintaining a relatively flat decline curve by water injection, ie, doing tertiary recovery on the aging reservoirs. When the salt water hits the well bores it is instant stop to oil production. The last I saw was Simmons or another professional documenting the Saudie leaks of information of water poduction accelerating from nil to 35-40%. Simmons passing was a huge loss.

    As usual it will take a crisis to get the moron blood sucking pollies to do anything at all. We can only hope they do not do something more stupid than usual.

  6. Administrator said:


    I agree. This site is becoming a lovefest. Too much agreement. Too little anger and foul language.”

    i think that is the natural result of intelligent, knowledgeable, factual discourse. um, sorry.

  7. Admin:

    I agree. Time to trade the beads and bongs for boxing gloves.

    Pimp slaps, groin shots and gratuitous sucker-punches. Now THAT’S customer service!

  8. I have come to the conclusion that we are fucked. We have seen this oil crisis coming for years but government has yet to address it as a concern. This issue will be addressed when it is too late and there is chaos.

  9. Howard in NYC:

    I’m about to call some dipshit truthers and tell them about a new truther website they’d just love: TBP!

    When they arrive here we can watch Smokey and Admin blast their dumbasses. I will relish in the fact that I have set a trap for my own viewing enjoyment.

    Koombaya and hari krishna EAT SHIT


    Saudi Arabia Bans Demonstrations As Its Plunge Protection Team Sends Stocks Surging

    Submitted by Tyler Durden on 03/05/2011 12:43 -0500

    Proving that Saudi Arabia is a fast learner from both China’s and America’s experience, today Saudi’s interior minister announced he is banning all protests, marches and strikes following the world’s realization courtesy of the clip posted on Zero Hedge yesterday, showing that not all is well in the kingdom in which protests are banned. Dow Jones reports: “Top oil exporter Saudi Arabia has banned all protests, marches and strikes in the kingdom after small protests continued over the weekend in the oil-rich Eastern province towns of al-Ahsa and Qatif, interior ministry said Saturday, according to state-owned channel al Ekhbariyah. These activities don’t conform with the Islamic laws and harm the interests of the nation and the society, the Saudi channel quoted the ministry as saying.” What does, however, comply with Islamic law is openly using your plunge protection team to bid up the market: “Saudi stocks rose for the first time in three weeks, rallying the most in more than two years, after the finance minister said the Arab world’s largest economy is benefitting from higher oil prices and in “excellent” shape… The state-run General Organization for Social Insurance also purchased stocks, according to Ajeej Capital’s Fuad Aghabi.” Not letting a crisis go to waste, Saudi has quickly learned Econ 101 and is now advising its citizens that America’s massive economic contraction is its personal gain. And if that doesn’t work, it will just use its pension fund to bid up stocks, as a massively Marked to Myth market is apparently in everyone’s interest: just ask the Chairsatan.

    More on the demonstration ban from Dow Jones:

    [The interior ministry] said any attempt to cause public disorder will be prevented by security forces.

    Saudi Arabia’s authorities on Thursday night detained 22 people in Qatif, the main Shi’ite town in the Eastern Province, after they staged a demonstration demanding the release of prisoners they say are being held without trial.

    “About 200 people took to the streets in Qatif on Thursday night. The protests were peaceful, but still the authorities interfered, they tried to stop them and arrested 22 people,” according to Human Rights First, an independent human rights group.

    Look for a kind but firm request for all foreign journalists to depart the country next week ahead of the planned days of rage, as Saudi confirms it had also learned from the USSR in dealing with social discontent.

    And while Saudi Arabia is now openly using its pension fund to bid up stocks, thereby setting its own Plunge Protection Team loose to stabilize the market, this time learning from the US, we wonder just how widely the same scheme has been used in the US, as various pension funds receive a command from the New York Fed to do just that… or else mutual assured destruction. Not only that, but Finance Minister Ibrahim al-Assaf pulled an Obama, and told the general population “stocks are attractive now, the economy is in “excellent” shape” and that “with my trust in this economy and this country, I also seized the opportunity” and bought shares, Finance Minister Al Assaf said. “I am a long term investor.” Poor guy doesn’t realize nobody is a long-term investor any more, especially not the GETCOs of the world, whose only job is to stabilize the market from plunging (alas, it didn’t work too well for GM).

    From Bloomberg:

    Saudi stocks rose for the first time in three weeks, rallying the most in more than two years, after the finance minister said the Arab world’s largest economy is benefitting from higher oil prices and in “excellent” shape.

    The rise in oil prices will boost the “strong condition” of the kingdom, Finance Minister Ibrahim al-Assaf told Al Arabiya TV. Stock prices in Saudi Arabia, which holds about 20 percent of the world’s proven oil reserves, are attractive now and the Saudi Public Pension Agency bought shares last week, he said. The state-run General Organization for Social Insurance also purchased stocks, according to Ajeej Capital’s Fuad Aghabi.

    “Assaf’s comments have had the biggest impact on the market,” said Aghabi, Ajeej Capital’s investment director in Riyadh.

    Stocks tumbled across the region last week, sending the Bloomberg GCC 200 Index of Persian Gulf shares to the lowest level since 2009 and propelling the Saudi benchmark down the most in two years, on concern the turmoil in Libya will spread through the Middle East.

    “With my trust in this economy and this country, I also seized the opportunity” and bought shares, Finance Minister Al Assaf said. “I am a long term investor.”

    Stocks are “attractively valued and the moves by government agencies signal continued confidence,” said Asim Bukhtiar, an equity analyst at Riyad Capital in Riyadh.

    How much this latest bout of totalitarian market control (so welcome by market overlords such as Larry Fink) and centrallized planning calms people ahead of next week’s days of rage is unknown. After all Saudi Arabia is quite a few months behind in spinning the “wealth effect” to its citizenry.

  11. u doran

    Avalon said there was sign in our supermarket yesterday that there was a lettuce shortage. the case was empty.

  12. Smokey

    You can even bring along your friend Cancer Hating Gingrich. Looks like he is running in 2012. He fits the Prophet leader profile to a tee.

    When I’m done thrashing you on the war for oil post, you will slink away like a mangy cur with its tail between its legs.


  13. Serious subject. I’m really contemplating shorting my IRA PM holdings for a burp. That was my big regret in the bust. I have physical holdings there and like the hands-off long term gains but if the next dip, due to these rising pump prices, is anything like the last dip, a quick short position at the right time could nearly triple the holdings.

    Knowing my luck, I’d fuck it all up. I’m not in front of a computer or near a fax machine to play the dips anyway.

    Something tells me the next dip is going to be a bit different too.

  14. Colma

    I’ll post a 9/11 thread next week and I’ll unban David Pierre. We have a lot of new members who’ve never experienced the redneck brilliance of that American traitor David Pierre.

  15. I want to hear fellow TBPers voice their opinion on what alternative energy idea they think would be most efficient as a fuel and power source for the future. Matt Simmons was a firm believer in ocean energy. Boone is in favor of natural gas but he has a massive financial stake in natural gas. Where should we be focusing our attention? This is a very serious issue. Oil is used in so much of our daily lives. We may not ever be able to get completely off of our oil addiction but we have to find a new energy source to make up for future supply imbalances and higher prices we are experiencing now and will be experiencing in the future.

    1. jmarz

      I don’t think there is one answer. Nuclear plants could supply more of our electricity, freeing up more natural gas to power truck and bus fleets at first. Battery technology will improve as oil prices rise. We will be forced to use less energy to run our country. If it is gradual we could adapt. If it is rapid then we will have chaos. The longer we do nothing, the more likely we have chaos.

  16. Admin:


    I’m grumpy today and would love a crack at that dicknugget. He posts at ZH? I just lurk there…

    I’m going to register here because TBP is just better than ZH in my opinion. Plus the likelihood of being snatched up by goons in a black suburban for joining is lower.

    1. Colma

      ZH is my go to site. I love it. They’ve done wonders for TBP by posting every article I send them. This article already has 122 comments on ZH.

  17. jmarz:

    I’m with you on that one. This subject must be adressed in a big way.

    The alternative energy market isn’t enough, at least that’s what I’ve been convinced of by Admin’s charts and realistic observations. That being said, nickel and diming the dependence on crude with the alternatives will help, even the small percentages…

    Nuclear for sure. Solar farms. Natural Gas. Yes, even coal. Hybrid cars. Diesel. All the dirty options must remain on the table. As we have been shown, though, these are just drops in the bucket.

    When the pump prices jump, people will again clamor for efficient vehicles. We don’t need the gov mandates for that.

    I’m sure we’ve all heard how energy companies have supposedly bought off patents for alternatives and hidden them away. If this is at all true, the books must open on that stuff. If it eats the big boys’ profits then we’ll have to figure out how to let them continue to profit. That may be unpopular but when push comes to shove we need big oil’s support and that comes from lining their pockets. Even if we could draw energy from the atmosphere for free they’ll have to run the meters or there will be no incentive for their implementation. That’s IF the patent conspiracy even exists.

    Really… I don’t have a clue. Estamos Jodidos…. We’re all fucked.

  18. Check out the link below. This Italian physicist has got something going – tested, reproduced and is being studiously ignored by the MSM. His stuff is starting to be printed in the tech journals but very cautiously considering the last cold-fusion fiasco.

    I’ve been following his efforts and have a feeling it just may not be a hoax… If it isn’t, here’s a technological game changer just in the nick of time.. We’ll see..


  19. MuckAbout:

    That would be a gamechanger. If the 1 Megawatt generator works we shall see… clean, safe and smooth. How much do you think he’d be offered for the technology and by whom?

    Something’s got to give. Billions of people are depending on what oil delivers.

  20. U Doran-Interestingly, federal gas taxes (taxes at the pump) are not a percentage of sales price. They are a fixed tax of 18.4 cents a gallon for gas, 24.4 cents for diesel. Last time the tax rate went up was under Clinton, when fuel prices were much lower (what, about $1.50?). Why don’t they raise the rate? FHWA says increasing fuel taxes is politically unpalatable. So instead, the intend to switch to VMT (vehicle miles travelled) taxes. They will still tax drivers more, it will just be based on how far you drive, and in some scenarios, when and where you drive. For some reason, they claim that drivers won’t object to paying more, as long as it doen’t happen when they buy their gas. Sounds a little fishy to me.

    Yes, most plans do involve on-board tracking of your vehicle’s position. But don’t worry, the planners ensure us that our privacy will be respected. And we can trust the gov’t, right?

  21. Muck

    Thanks for that link. That is an interesting website. Oil elites will make it hard for anything that will affect their industry to make it MS.

  22. The subsidizes housing units where residents pay $13.00 a month for rent will no doubt need more help to buy gas for their SUV’s and Escapades.

  23. All these protests have been promoted to/by Facebook members and each country has responded on a regular schedule!

    Saudi Arabia is set to have demonstrations on Friday March 11

    May want to buy some OIL contracts or Call Options before then.

    Regular newscasts do not seem to mention this easily identifiable prognostication.

  24. Muck and Colma

    Thus far, not one claim of achieving cold fusion has proved to be legitimate. Not one. We shall see where the current claim by Italian scientist Andrea Rossi goes. He’s already been refused a patent for the device, nor has he released any scientific data on how it works, which is probably why he didn’t get the patent.

    I note that there are plans to build a 1 megawatt power plant with Rossi’s cold fusion technology. In terms of power produced, that’s a pin prick. A single, modern nuclear reactor produces 1,154 megawatts of power.

    I remain skeptical.

  25. Even if it’s true (and we won’t know that until someone else does the same experiment and duplicates his efforts) it may never see the light of day because of several factors.

    Big Energy will literally kill to maintain their vig. Governments will also suppress it to the detriment of their citizens and the world. Why?

    There are two things that governments in this day and age cannot abide by. One, cheap energy – doesn’t fit their plans for dominance. Two: real money.

    If a man has an independent power source, controlled by himself and none other and real money that cannot be inflated away then what? He becomes ungovernable, liable only for his behaviour, responsible for his own well being.

    The thought of a citizen with an independent power source that costs pennies a day to run and real money terrifies the ruling illuminati because it rips the legs out from under what they use to control the peons and loot them.

    Gee whiz, cold fusion (if and when), gold and silver money, dig a septic tank and dig a well and where are you? Totally independent except through force of arms against you.

    I wish the Prof. all the luck and hope he doesn’t get too greedy or end up in a ditch with his lab torched and all the research “vanished”…

    I wouldn’t be so cynical or such a “conspiracy theorist” except for Admin. It’s all his fault.


  26. Admin: That referenced article is a killer. First the Big Banksters and their fraud, mark to fantasy and robbery. Now the SEC in cahoots with Big Oil to overstate and mark reserves to fantasy to drive up stock values.

    We need a knight on a Big White Horse with a very sharp weapon to mow ’em all down and start over.

    What causes this evolution of fraud and dishonesty in the USA? I cannot be imagining the fact that it is growing and getting worse all the time because no one is ever thrown in jail for 15-20 years. They are fined a minuscule amount of the infraction,lying, cheating, fraud amount – perhaps 1%, don’t admit culpability and off they go to do it again.

    WTF can we, as citizens, do about it?


  27. It doesn’t matter if we produce 9 million barrels a day–it’s my understanding that the oil companies can sell that oil to anyone anywhere. So calls of “drill, baby, drill” don’t exactly help our situation unless we nationalize the oil companies (and fat chance of that).

    We need to subsidize wind, water and solar. Every damn gov’t building should have had solar panels decades ago. But our congress is too corrupt so, I repeat, fat chance of that. We are screwed.

  28. Re gas taxes – the US pays some of the lowest in the world. Three or four dollars a gallon is common. It is both a revenue raiser and a curb on usage. The politicians haven’t dared do it in the US.

  29. Admin:
    How long, would it take to get a Nuk Plant up and running? Gas lines at our local Stop and Shop have been long anytime I drive by, luckily I have always driven smaller, cars and wonder how much longer those SUV’s will be around. Told my wife years ago they should of raised the price of taxes on gas to get people into more efficient cars and used that tax money to pay down the debt (yes, I did live in a fairy tale world). I left a job paying slightly more back in 1995, commute was 35 miles one way, job now is 11 miles round trip , thinking just what I save in gas each week.

    1. Viet Vet

      From start to finish it takes 10 years with today’s approval process to get a nuke plant built.

  30. You’re kidding right? Some Wop descendnt of Nicholas Tesla comes up with working Cold Fusion RIGHT when the M.E. Oil is going up in flames. How fucking convenient, the Cavalry arrives JIT here! LOL. Please SPARE ME and just buy into Abiotic Oil with the rest of the Cornucopians! EVERY time we have an energy crisis some Jackass has the KEY to Cold Fusion! It is WAY more likely there is a relationship between Magnetic Pole Shift and Global Climate change than some Itie Inventor came up with Cold Fusion JUST in the Nick of Time here. LOL.


  31. Viet Vet-70 asked, “How long, would it take to get a Nuk Plant up and running?”

    Average estimated time in today’s bullshit bureaucratic world is 7-10 years. Actual construction time for the physical plant is less than 3 years. You can always count on the federal government to fuck up a wet dream.

  32. SSS, so what you are saying is we are screwed, blued and tattoed when it comes to setting up any new nuk plants to help out our energy efficiency?

  33. Sharonsj

    You need to do a lot of research on solar and wind energy. And I mean a lot.

    Solar makes some sense in places like Arizona (where I live), California, Nevada, New Mexico, And Texas. But you know something weird about even those good places for solar energy? The fucking sun sets every day!!! And I mean every damn day. No exceptions.

    And you know what else happens at the major solar projects that generate significant amounts of power. When the sun sets, the natural gas turbines kick in so that the power generated remains at a constant state. Did you know that, Sharon?

    The largest solar project in the U.S. is in California, and it covers over 6,000 acres. That’s just shy of 10 square miles. Big chunk of land, Sharon. And the project produces only 350 megawatts of power for just two-thirds of the day. A single nuclear reactor produces 3 times the power, 24/7.

    Have you thought about getting solar power from a sunny, but remote, desert spot to where it’s needed, ie. where people live? It’s moved by high-voltage transmission lines, and the cost could run as much as $3 million a mile. I’m sure you’re 100% behind the copper mining industry in the U.S. (you know, those nasty open pit mines that dig a really deep hole in the Earth), because that’s what gonna be needed to make those transmission lines.

    I could go on, but I think you catch my drift.

  34. “There are no good outcomes”, it depends on what outcome you are after. For those of us who are “betting the farm” on the economic collapse of the United States and the end of the euro, the rise in oil is fantastic news as is the relentless upsurge in the economic collapse hedges (Gold and Silver). Having said that “vulture swooping” relies on some semblance of law and order. During Argentina’s collapse you could snag bargains, you could not in the case of SOMALIA or ZIMBABWE.
    How bad will things get when the can slams up against the wall? That is the 5000 oz question.

    Regardless, having Wall Street hover up EVERYONE’S wealth (with the exception of the Ruling Class elite and select Multinationals) will RESULT in serfdom and eventual violent revolution ala France in the 1800’s or the American Civil War.

    I for one refuse to live in bondage. Let the dice fly…

  35. Viet Vet-70

    No, we’re not screwed, at least not just yet.

    The nuclear power industry has actually gotten together and funded an entire company devoted to addressing the maze of paperwork and permits required by the federal and state governments to build a nuclear plant. This bewildering process is estimated to add about $55 million to the cost of the plant, but it does take years off the start to finish time.

    Just how much time has yet to be seen. We’ll know more when the nuclear plants are finished in Alabama, Georgia, South Carolina, and Florida.

  36. What’s all the hoopla about? This is just what the doctor ordered. Time to get the grand die-off going. Clear out those third-world dung heaps and reduce it by a few million here too. I say, get on with it. Maybe we’ll be lucky and have a few secondary plague outbreaks as well. Kill ’em all and sort ’em out later. Better stock up though, SHTF is coming…Grim Reaper Time!

  37. JMarz – RE alternative energy, for powering cars and trucks natural gas IS the only short term alternative to oil. In the very long term future (when we have battery technology that EQUALS or exceeds the energy density of gasoline/diesel/petrol AND the energy infrastructure to handle it) electric vehicles WILL become viable (at this time gasoline will be at ~ $20 a gallon and oil at ~ $500 a barrel).
    For baseload power we burn fossil fuels (coal, oil, Natural gas) or better yet atoms (Nuclear). Alternative energy will be a bust, it’s energy density is both lousy/unreliable and the cost of getting it to where it is needed will make it very expensive (triple your power bill cost).
    Room temperature superconductors and fusion power are both theoretically possible, having said that I give myself 50/50 odds of seeing it in my lifetime. (I’m 28).

  38. MuckAbout – Google “Polywell fusion”. Is it a crank? Who knows, the Department of Defense is kicking the tires as we speak. Having said that if it works…

  39. llpoh “Re gas taxes – the US pays some of the lowest in the world. Three or four dollars a gallon is common. It is both a revenue raiser and a curb on usage.” Exactly. But seriously, are you telling me the spinmasters of the universe can’t convince the drivers of the US to pony up another 50 cents a gallon? But that instead, they will welcome, with open arms, deleting the 18.4 cents a gallon tax, installing tracking devices to the OBD-II diagnostic ports that report their movements and automatically deduct the VMT taxes from an electronic account?

    The last time the federal gas tax was raised, it represented over 10% of the cost of gas. Now it is less than 5%. Everyone (except the FSA, I suppose) recognises that taxes are usually a percentage of the price of the commodity. (Which was the misconception by u doran I began trying to clarify).

    Nope, the VMT is a red herring-taxes WILL go up for virtually every driver (especially those who use less gas, like Admin). That is clear in the TRB proposals-no effort to hide the fact. It will just be collected differently, with the coincident “benefit”(?) of allowing TPTB to easily monitor your vehicle’s location in real time. Paranoid? Or just cautious?

  40. SSS-Are you serious about a 7-10 year start-up time? That seems ridiculously optimistic to me, but maybe that’s just my cynical nature and living in Alaska. It takes longer than that to start a gold mine up here, I can tell you that.

    There is a local entrepreneur who proposed building one of these “pre-fab” mini-nuke plants near Fairbanks. The guy probably has the cash and the connections to pull it off, too. DOE told him at least 20 years to get it permitted-he said screw it, he wouldn’t live that long. Oh well.

  41. SSS et al-IMO, the only way solar or wind makes sense is A) In the right location (as you described) and B) used for electrolysis to produce hydrogen. As you accurately describe, the problem is energy storage and hydrogen is the most viable medium IMO. Now what you do with that hydrogen is a whole separate issue-use as a vehicle fuel would require large infrastructure investment. You could also use to generate electricity in the dark. And yes, I realise there are inefficiencies doing that. But it is better than having a black out at night or when the wind stops blowing (isn’t that when you are supposed to recharge your electric car?).

  42. Blah Blah Blah, end of the world. Peak oil. I saw the meltdown in RE coming back in 03-04. I shorted the big banks before they went down. Sure, oil is going to surge again but it’s going to do the same damn thing it did last time. It will skyrocket briefly and collapse. That’s how this market behaves. It’s not the end of the world. Gas isn’t permanently going to 5 or 6 per gallon. I mean think about that? This price is essentially controlled through a variety of mechanisms. Do you really think they’re going to let it sit at the high of a price while panic devolves into an outright revolution. One thing the powers that be know is they can only take so much away and the powder keg blows. I assure you they have no interest in having it blow. They’ll pump it up, siphon off the profits and collapse it as everyone runs for the exits. Count on it. this market can easily be controlled for another decade or more. Easily.

    1. Jmac

      Try reading for comprehension. The U.S. has 1.58% of the world’s oil. Do you really think we are in control? Do we appear to be in control of what is happening in the Middle East? Open your eyes and try thinking.

  43. My point is that they needed to do something to discourage consumption long ago. We are well and truly addicted to cheap gas and withdrawal will be a bitch.

    Your point is well taken re congress spending the money. All research indicates that govt will spend all they collect and then some. Dirty bastards.

    1. Saudi Arabia, Which Allegedly Hiked Output, Just Raised Crude Export Prices To Asia And Europe

      Submitted by Tyler Durden on 03/05/2011 21:12 -0500

      Two weeks ago Zero Hedge claimed that Saudi Arabian “gestures” to hike crude output were about as hollow as the heads of those suggesting that dealing with surging oil prices involves reducing interest rates even more (which just happen to be at zero already), mostly as a result of the country’s recent adoption of “whorism” or its doomed strategy to buy the love of its citizens. The reason is that as UBS’ Andy Lees noted, Saudi “will need to ramp up production by about 10% (more capital spending) without prices falling” to fill the suddenly gaping budget hole left from literally throwing $37 billion out of Bernanke’s leased helicopter. Yesterday, BusinessWeek’s Peter Coy essentially reaffirmed our theory verbatim in the piece “Saudi Arabia Must Keep Pumping Oil to Buy Stability”… needless to say we completely agree with this. Obviously, the bigger issue here is that as WikiLeaks recently suggested, and was reconfirmed by Jim Rogers, Saudi Arabia is simply lying about its excess capacity. Because if Saudi had indeed raised output as many have hoped for, and as Saudi has represented, it would have made up for the funding differential simply by the hike in export volume. Instead, as Reuters reports, Saudi Aramco just hiked prices on oil to customers in Asia and Europe up substantially. This, at least to us, does not appear like the rational action of a player seeking to moderate surging oil prices to avoid further social conflict, and one who can plug offline capacity.

      From Reuters:

      Top oil exporter Saudi Arabia has raised the price of its flagship Arab Light crude oil in April to customers in Asia, State oil giant Saudi Aramco said on Saturday.

      Aramco set the price at Oman/Dubai plus $1.95 a barrel, up 65 cents from March.

      The price to the United States was reduced by 30 cents to parity with Argus Sour Crude Index and the price to northwest Europe was raised by 80 cents to BWAVE minus $3.40.

      Saudi term crude supplies to the United States are priced as a differential to the Argus Sour Crude Index (ASCI).

      Good thing Saudi reduced its export price to the US. Too bad Canada, which exports far more to the US than Saudi did not follow suit.

      And more on the April changes in carious price schedules:

      April March Change

      Arab Extra Light +2.60 +2.70 -0.10

      Arab Light 0.00 +0.30 -0.30

      Arab Medium -2.20 -1.85 -0.35

      Arab Heavy -3.90 -3.65 -0.25

      Prices at Ras Tanura for Saudi oil destined for Northwest Europe are set against ICE Brent crude weighted average (BWAVE):

      April March Change

      Arab Extra Light -1.10 -1.75 +0.65

      Arab Light -3.40 -4.20 +0.80

      Arab Medium -5.90 -6.10 +0.20

      Arab Heavy -8.45 -8.55 +0.10

      Saudi term crude supplies to Asia are priced as a differential to the Oman/Dubai average:

      April March Change

      Arab Super Light +6.05 +5.80 +0.25

      Arab Extra Light +3.95 +3.30 +0.65

      Arab Light +1.95 +1.30 +0.65

      Arab Medium -0.45 -1.10 +0.65

      Arab Heavy -2.55 -3.05 +0.50

      Prices at Ras Tanura for Saudi oil destined for the Mediterranean are set against the ICE Brent crude weighted average (BWAVE):

      April March Change

      Arab Extra light -1.60 -3.15 +1.55

      Arab Light -3.75 -4.75 +1.00

      Arab Medium -7.70 -7.30 -0.40

      Arab Heavy -10.05 -9.70 -0.35

      And to see how a cartel deals with supply demand imbalances, Bloomberg summarizes:

      Aramco this week offered European refiners additional cargoes of Arab Light crude for loading this month, two officials involved in the negotiations said. The official prices for light grades to Northwest Europe and the Mediterranean Sea gained as oil prices rose and as lighter Libyan crudes were taken out of the market.

      One can only hope, and the ruling oligarchy surely is, that the combination of increasing output and prices will be able to offset next week’s planned demonstrations in Saudi. Look for many more billions to be thrown at Saudi’s discontents over the next week as D-day approaches. And on, and on…

  44. Jmac

    “They” don’t have enough control over things to create new oil out of thin air. There is a finite limit to the amount of it on the Earth and it doesn’t help matters if a revolution breaks out in some oil-producing state that leaves the oil rigs burning, as in Libya.

  45. RE: get yer head outta yer ass. NIKOLA Tesla was not Italian, he was Serbian. One of the most prolific and brilliant inventors in the field of electricity.

  46. Admin and AKAnon

    I said it’s an ESTIMATED 7-10 year process to build a nuke plant. Plus, I gave an example of how the nuclear industry is trying to reduce this ridiculous time frame.

    We haven’t opened a new nuclear plant since the 1990s in Tennessee. Who fucking knows what the irrational bureaucrats have done since then. I’m betting the sane state governments now in power in the southern states which have contracts to build nuclear plants will kick this bureaucratic bullshit to the curb, but they can’t control the NRC, EPA, and God only knows what federal court the environmentalists will file suit in.

    One more thing AKAnon: Alaska is bought and paid for by big oil. Has been for over 40 years. I’m surprised that any DISCUSSION of nuclear power isn’t a felony in the state. Period. Punto.

  47. Jmac,

    Yeah. I believe that. You were smart enough to see the RE collapse coming and shorted the big banks before the bailouts.

    But you are too fucking stupid to wrap your small mind around peak oil.

    Short my dick you fucking lying asshole.

    1. Smokey

      DP has arrived on the ZH thread with his usual BS about you and I being the same person. Mental illness is a terrible thing.

  48. Admin

    Ok, over 486 comments on this article on Zero Hedge. If I stay up all night and get the comments on this article to over 400 (easily a TBP record), what is my prize? No one week stays with RE!!!

    Let’s make it more fun. I choose Door Number 2. And you also have to tell the audience what’s behind Door Numbers 1 and 3.

  49. So what abot lowering the speed limits to 55 and using double-daylight savings time? Any other old rationing tactics anyone?

    We are so fucked.

    I lurk no more I finally registered.

  50. Colma Lurker/Rising


    Now knock off the Jimmy Carter 55 mph bullshit. Arizona has gone to a 75 mph limit on the Interstates (you can get away with low 80s), and it still feels like you’re crawling in most places. Many cars get around 28-29 mpg at that higher speed. We own two of them.

    55 mph may be fine for Rhode Island. It makes no sense in the western states.

    1. SSS

      Have I mentioned that my Honda Insight gets 44 mpg? I bought it one year ago. Administrator saw the future.

  51. Admin – how many members at ZH? Versus your 4700 or so (less the couple of thousand the grumpy bastards have driven off). I bet per member you are doing ok. And just how many paid staff do you have to keep this thing running? Do not despair – your day will come.

    1. llpoh

      My paid staff is a fat ass guy siting in his bed with a laptop pecking away while watching TOSH.O

  52. well, off the top of my head, marconi; volta; fermi; and of course, zamboni (both the priest who was also a physicist, and the american inventor of the ice resurfacing machine);

  53. About the Italian Alleged Cold Fusion Reactor.

    It’s going to have an abnormally high maintenance costs. The Fiat of the energy sector…

    It could add jobs to the italian economy. Fix It Again Tony.

  54. Administrator,

    I just commented over on ZH.

    I wouldn’t mind another Truther article, but I’m not sure DP should ever be allowed back on this site.

    He’s such a fucking piece of shit.

    1. I know people bitch about the comment feature on TBP, but I have to tell you, it is better than ZH. This article has 630 comments on ZH and they are all nested within various threads. It is impossible to distinguish new comments from old comments. Here the comments are in order of old to newest. Another reason to love TBP.

    2. Smokey

      DP is ignored or scorned on ZH too. He desperately wants me to respond to his cut and paste blather. I ignore him. That infuriates him. I feel sorry for the sheep in his barn.

  55. Peak Oil + Collapsing Dollar + Crashing Economy + Corrupt Government = Revolution/Lower Standard of Living

    I’m getting really depressed right now. I see the big picture and I get it but I feel so powerless in opening the eyes of others. Most are clueless and refuse to deal with reality. They rather hear lies from our politicians then hear the truth. It comes down to leadership and execution and we have neither. If you look at the formula above, can you imagine what will happen as all these variables occur at the same time? The consequences will be epic and the changes will be beyond rough. The only positive that can be taken away is that we revolt and take our country back from the strong grip of big government. Effective change can’t occur with big government and change that occurs with even BIGGER government will cripple our economy. In a few years, people will wake up because they can no longer take it. It will be too late. Our government is like a heroin addict. It rather overdose on heroin then face the withdrawals and reality of life. Can someone please provide some optimism because I’m not feeling much of it right now?

  56. i have similarly been depressed at my failure to convince many people around me. especially when the market crashed and the financial system seized up, after i had sounded the warning. but i got used to it, and came to grips with the fact that it had nothing to do with me. people are more willing to believe their myths, their conditioned ways of thinking, and their feelings, constantly reinforced by society and the media, rather than believe their own damn eyes.

    gratefully, my family believed me. even before they understood my ravings, or before they had confirmation in the market crash and the layoffs/unemployment, they heeded my warnings and protected themselves. paid off debt, incurred no further debt, rented instead of bought, and got good government jobs.

    i got used to folks not listening. it took some time. it still bothers me, but it no longer depresses me.

  57. nice article. What I don’t understand is why natural gas continues to decline in price. Even with a dollar devaluation of 10% in the past year and oil climbing higher, natgas price goes lower? Regardless of the commodity, all of them have risen strongly over the past year…everyone except natgas. Isn’t that odd?

    1. MrFlaherty

      The new fracking process that has opened up the Marcellus Shale region of the country has resulted in a huge supply of natural gas coming onto the market in the US. It is purely supply and demand. This is why the argument for converting our truck and bus fleets to natural gas makes sense.

  58. no need to worry. i heard jim cramer and erin burnett on cnbc say that there is so much “oil” in the bakken region, that we have hundreds of years of supply, and that we can in a short time be major exporters. when cnbc’s “the call” finally goes off the air, it’s going straight to tvland in syndication.

  59. jmarz: Feeling a little “Cassandra”? (

    The big-picture outcome may seem bleak, but being an outcome, that very bleakness is speculation. There is no reason to acknowledge defeat in the face of such conjecture.

    Find the optimism in the fact that you are NOT a fucking idiot. Find optimism in a pantry with many months worth of food. Find solace in mental and physical preparation. Excercise. Stockpiles. Self-Defense training. If you own a weapon, spend some time training with it. I’m not talking about that freak-out militia kind of shit but real self-defense and weapon training from and with active and budding law enforcement officers and soldiers. Believe it or not, these people train with real-life scenarios- including the minimization of collateral damage- and are mostly family men.

    All of this preparation… if it turns out to be for no reason? FUCK IT. It’s education, at worst. It’s a donation of canned food to a food bank at worst. It’s confidence in your own abilities and knowledge at worst.

    At best, well, you fill in the blank. If tshtf you’ve done what you can. You weren’t stupid. You have food. You can, to the best of your ability, take care of your family, and of yourself. Best of all, you’ll be far better off than most… and probably better off than the average nuerotic doomster who I think doesn’t really get with the program of realistic preparation. By realistic I mean doing what YOU can to be the BADDEST motherfucker in the room at the drop of a dime.

    Doom without dysfunction is like a fucking Zen garden. The object of the game with a zen garden isn’t the finished product. It’s not about making your rocks and raked sand the finest fucking rocks and raked sand ever seen. It’s about picking up the rake and raking sand around the rocks untilll you’re done for.

    Hope that makes sense. Doom prep isn’t abnormal and whiney, it’s wise.

  60. Colma

    Well fucking said. Nice comment in regard to being the BADDEST motherfucker in the room at the drop of a dime. Welcome to TBP and I think you will fit right in here.

    1. howard

      You are the baddest MF in the room when you have that gas mask in your hands. Is there any way we can have Bernanke come to your office for a “procedure”?

  61. When the Titanic is going down, make sure you have a Lifeboat and stock it with MREs. Then get off the ship ASAP so your boat doesn’t get dragged under with it. Be prepared to Navigate your little boat through stormy seas before you find safe harbor. Pick places far away to navigate to. Tristan de Cunha would not be a bad choice.


  62. Howard in NYC:

    You can’t be THAT old. You’re up at… what is it… frickin 1 am in NY?

    I’m not exactly prime sparring age, either. There’s a reason 18-25 year olds go first in a draft.
    That’s not an excuse to be punked by some hoodlum. There’s people who can’t use their legs who aint getting punked, I’m not getting punked, and neither should you or your loved ones. I don’t know you but even if you look like Fat Albert there’s plenty you can do towards that aim.

  63. i’m a big boxing fan. a couple of fights on tv tonight. and a documentary on the jfk assassination, with a ton of raw news footage i’ve never seen.

    one of my clearest early memories, at age six, is seeing lee harvey get his on live television. i can’t get enough of hitler and kennedys. i’m the history channel’s target demographic.

  64. Howard – lmfao. You are the history channel’s demographic – an educated, successful black man. Bwahahaha. All 4 of you is who the History Channel targets? Hahahahaha. You are funny.

    I like boxing too. I made a killing on the first Leonard-Duran fight. I ducked any involvement in the second one. Better luck than sense.

  65. the legs are going with age, but i know where to kick/stomp.

    here is a story for quinn. i went down to philly for game six of the playoff series, giants/phillies. in the bottom of the ninth, the giants leading and about to close it out, for the first time in my life, after about a thousand ballgames/boxing events/soccer matches, i feared for my safety. and i was not about to remove my giants cap.

    for many years i’ve been too old to fight. but i realized i was too old to outrun anything, especially pissed off philly fans after a heartbreaking loss. i left my seat in the stands early, and watched the last two batters on a tv monitor near the gate, so i could beat the crowd to the parking lot.

    1. howard

      Wearing an opponent’s jersey or hat in a Phila stadium reduces your life expectancy dramatically. I had Flyers season tickets for 20 years. I saw a NY Rangers fan tossed down the steps from the upper level to the middle level and he was booed while he rolled.

  66. The media blames Middle East conflict for gas shortages that lead to higher gas prices. Those Ay-rabs have dun it agin! Did they cause a gold and silver shortage as well?

    Seems everything is exploding in price except the deflating Real Estate market ballooned up from decades of easy fiat currency crack credit from the Fed.

    Here is how we were conquered. First the foreign bankers bought out and black mailed enough of the American government to change our money from gold and silver to fiat paper. Then the attackers slowly bled us dry through constant devaluation of the dollar through inflation – something not possible under a hard currency system. The banksters used our own labor constantly culled with inflation to buy up all of the media and gain control of the education system. Currently, they install all of our national leaders using their network media assets to nominate our candidates for us and to demonize or blackout and marginalize ones who would be good for America. All of our secret police leadership are under foreign bankster control. They use these traitors to attack us like on 9/11 to boogie man us into sniveling cowards crying for protection from the very scoundrel attacking us. Everything is in place to make the big power grab this year. It will include another big staged event that should dwarf 9/11 or the Oklahoma treason again blamed on a lone nut or two or 19.

    But if the American people ever awaken to this thus far successful attack we would put our differences aside, rout out the bankers and their faux currency, abolish all debt connected with the central bank (meaning Americans would own the homes once again like before 1913 and not foreign banksters) and turn over the central bankers to their largest creditor – the Chinese who will not be getting paid back. So if they want their pound of flesh let it be Ben Bernanke’s and Timothy Geithner’s.

  67. Interesting article. It’s all pretty much true. The only question is, what do we do about it? We all know who controls the media and who controls Congress. We all know most Americans think that driving around in a big, low mileage truck is a God-given right. And let’s not forget the effect of all the Fed’s money printing. Inflation in the price of just about everything, including oil.

    I don’t look for any major change anytime soon. Turn on the news and what do you see? Bozos arguing about minuscule budget cuts, runaway Wisconsin senators, and Obama’s birth certificate. Interviews with Charlie Sheen. Major issues? No. And yet the news of the Middle East is on the back burner.

    1. John Boehner is addressing the oil situation by proposing an all out effort to defend the ban on gay marriage. Fox News has endoresed his stance.

      Meanwhile, Rome burns.

  68. Terrific article. And the comment thread is worth the price of admission.

    From above:
    “Look for a kind but firm request for all foreign journalists to depart the country next week ahead of the planned days of rage, as Saudi confirms it had also learned from the USSR in dealing with social discontent.”

    None of that necessary her in the FS of A, as the stump-broken whores of the MSM have learned their place and what is expected of them:

    “Turn on the news and what do you see? Bozos arguing about minuscule budget cuts, runaway Wisconsin senators, and Obama’s birth certificate. Interviews with Charlie Sheen.”

    Weapons of mass distraction.

  69. Tomas-
    “If the American people ever awaken to this thus far successful attack we would put our differences aside . . .”

    It is the purpose of our toxic and pernicious MSM to insure that such a thing never happens. If the Charlie Sheen meltdown won’t hold you, then there’s the Runaway Bride, or two months of coverage of a murder in Aruba, and if that doesn’t work, we’ll just make shit up to keep your blood ma-boil all day so that, after listening to us, you’re ready to take a knife to the throat of anyone who doesn’t agree with you on every particular.
    or . . . they’ll come up with something else.

    The last thing the elites want is people discerning their own true self-interest and making common cause. Bad for profits.

  70. We have tried wind, solar, corn, sweet grass, to no effect except more government handouts. benefitting only the lucky few recieving the hadout. It seems the only thing we haven’t tried is to increase domestic production of the only energy sources that actually power our cars and heat our homes (especially those severence acres estates in undisclosed wealthy resort hideaways) oil and gas. We are the only country that purposefully impoverishes itself in regards to oil and gas. Oil reserves are available in Alaska that we are saving for the caribou. Reserves in the gulf will go to the Chinese and the Castro Brothers. Furthermore tons of natural gas in New York and Pennsylvania are off limits due to the economic genius of their governors and their cherished green lobby. I’m not pollyanish enough to believe that we can drill ourselves out of the peak oil dilemna but every barrel produced is a positive step.


    As US Prepares To Tap Strategic Oil Reserve, Crude Prices To Surge On Asian Disaster Preparation

    Submitted by Tyler Durden on 03/06/2011 10:28 -0500

    With ICE and CME margin hikes – that last bastion of supply/demand imbalance suppression – no longer having an impact on crude price, it was only a matter of time before the last theatrical measure in the price arsenal was used. Per Dow Jones: “White House Chief of Staff Bill Daley said on Sunday the Obama administration is considering tapping into the U.S. strategic oil reserve as one way to help ease soaring oil prices.” Speaking on NBC television’s “Meet the Press,” Daley said: “We are looking at the options. The issue of the reserves is one we are considering. … All matters have to be on the table.” There has been support among Senate Democrats for tapping the reserves. Senator Jay Rockefeller on Thursday became the third Democrat to ask President Barack Obama to tap America’s emergency oil supply to cool prices that have risen past $100 a barrel on the strife in Libya.” What our esteemed politicians fail to realize that tapping the SPR is analogous to Lehman filing an 8K declaring to the world it is now tapping directly into the Fed’s discount window for its liquidity – that didn’t end too well. The problem with the SPR is that as a non-marginal replacement of supply it is largely a puppet: with a capacity 726.7 million barrels, the SPR holds a 34 day reserve at the US daily consumption of 21 million barrels. The picture is slightly better when considering that the US only imports 12 MMbd, meaning there is a 58 day supply. But the biggest issue that nobody is considering, is that the maximum total withdrawal capacity is physically limited to just 4.4 million barrels per day. In other words, should the MENA escalation flare up, there is no way to physically replace all the lost output. Yet what is most troubling is that even as the US is about to start using up its reserves, Asia is actively shoring up its oil, meaning that as our own oil buffer gets ever smaller, Asia could easily dictate economic terms over the OPEC cartel as soon as a few months from now if the Bernanke liberation wave does not end any time soon.

    More on the last ditch attempt at preventing all out desperation at the oil pump as gas now moves solidly into $4 territory across the country.

    In a letter to Obama, Rockefeller said a “limited draw-down” from the nation’s 727-million-barrel Strategic Petroleum Reserve “can protect our national security by preventing or reducing the adverse impact of an oil shortage.”

    On Wednesday, U.S. Energy Secretary Steven Chu ruled out releasing oil from the reserve, saying ramped up oil production in Saudi Arabia should lower the crude price.

    “That’s going to mitigate the price increase,” he told reporters on Wednesday. “We’re hoping market forces will take care of this.”

    Just as market forces took care of Lehman once it became known that the bank was a zombie, solely reliant on the Fed for liquidity. This time the liquidity is of a different sort, but the reaction will be the same: how long before our idiot politicians finally understand how the market operates?

    In the meantime, CHina’s response is by far the more logical one (from Dow Jones):

    China will start work on building strategic oil reserve tanks at the north-eastern port of Tianjin by May, China Daily newspaper reported Saturday.

    Work will be completed before the end of China’s 2011-2015 five-year economic plan, and filling this reserve will start when the oil price is “appropriate”, Tianjin city official He Shushan was quoted as saying.

    China’s efforts to build up oil stocks are closely watched by energy market analysts, as its demand for oil is a key driver of global prices and huge amounts of crude are needed for the project. China imports more than half the oil it uses.

    The reserve site in Tianjin is among eight stockpiling bases being prepared in the second phase of China’s strategic petroleum reserve project.

    These eight sites will have 26.8 million cubic meters of capacity, able to store the equivalent of 169 million barrels of crude oil.

    The western countries’ energy watchdog, the International Energy Agency, has repeatedly criticized Beijing for not publishing national oil stock volume figures, which are needed to calculate global oil demand.

    Sites for other second-phase bases include Zhanjiang and Huizhou in Guangdong province, Lanzhou in Gansu province, and Jintan and Jinzhou in Liaoning province.

    China’s petroleum reserve capacity was enough for 39 days of consumption by the end of 2010, with this comprising the SPR oil and a further 168 million barrels of commercial reserve capacity, state energy giant China National Petroleum Corp. said in January.

    It is not only China: all of Asia is taking the prudent step of preparing for a very long storm. From the FT:

    As oil prices spiral higher amid turmoil in Libya, developing countries across Asia are taking evasive action, shoring up their strategic petroleum reserves against the risk of a prolonged supply shock. Their actions could propel crude even higher.

    The Philippines, citing events in the Middle East, announced on Wednesday that it would require oil companies in the country to maintain 15 days of reserves, and refineries to keep enough oil to last for 30 days.

    Manila’s move is the most visible sign yet of how Asian countries are seeking to improve their oil security amid what is shaping up to be the worst supply crisis since the invasion of Iraq in 2003. Other big regional oil importers are likely to follow suit.

    China is the world’s second-largest oil importer after the US. India is the world’s fifth-largest, ahead of countries such as South Korea, France and the UK. But the pair lack a strategic petroleum reserve that can be tapped during a supply crisis similar in size and scope to the ones held by western countries.

    Unlike industrialised countries, which built up their stockpiles three decades ago in the wake of the 1973 oil crisis, China only recently began its strategic reserve programme, starting to fill reserves in 2006 and completing a 102m barrel build-out in “Phase One” two years later.

    The second phase of the programme will build a further 168m barrels of reserves by the beginning of next year.

    When China finishes filling its reserve, which it is expected to do by 2020, it will hold about 500m barrels, equal to roughly three months of imports and the second-largest stockpile in the world.

    China’s strategic stockpiling “is likely to be a feature of the global oil market not only this year but this decade”, says Soozhana Choi, head of Asia commodities research at Deutsche Bank in Singapore.

    Although purchases are kept secret, analysts and oil traders believe that events in Libya and the prospect of further supply disruptions in the Middle East could boost strategic buying of crude.

    “With the expectation that prices are going to rise, they will accelerate the pace of tank-filling,” says K.F. Yan, director at energy consultants CERA in Beijing.

    Here is a brief lesson in FIFO/LIFO: as the US is about to use up a whole lot of low cost-basis oil, the expectation of surging Asian demand for crude will send prices skyrockting even more, forcing the US to use up increasingly more cost prohibitive oil. Of course, all of the oil in the SPR will have to be replaced, as the US then suddenly become a marginal buyer of oil at the next price of $100+/barrel, which will also be factored into expectations, which in turn will send the oil price even higher, and by the time this horrendous attempt at damage control is over, gas at the pump will be well over $5/gallon.

    But somehow none of this made Meet the Press…

  72. This article posted over on Zero Hedge has 684 comments.

    On a fucking weekend ! Comments run much slower on weekends.

    Just think how many comments would be generated on ZH if they posted Reverse Engineer’s articles on that site.

  73. jmarz

    You asked, “Can someone please provide some optimism because I’m not feeling much of it right now?” Good news: My proposal for 100 new triple-reactor nuclear power plants will radically change the nation for the better for at least four or five generations. Bad news: No one is listening.

    Admin and howard

    Try baseball at Camden Yards. Orioles fans are among the best in the country. I went there dozens of times wearing my Indians ball cap and never once had any problems, even when sitting behind the Orioles dugout totally surrounded by Orioles fans.

  74. Administrator said:

    You are the baddest MF in the room when you have that gas mask in your hands. Is there any way we can have Bernanke come to your office for a “procedure”?”

    dude, this whole economic mess is my fault. well, i could’ve prevented it. once upon a time, when i was just a little toddler doc in my residency, it was my shift to oversee the recovery room. one of the nurses mentioned that a patient they had just wheeled in was a big shot in the administration. robert someone.

    i go over to the bed, expecting to see the 4-foot tall munchkin sec of labor robert reich. instead, it is some wall street looking douche, who a nurse said was treasury secretary or something. i thought, ‘that isn’t lloyd bentsen’, but this guy was chief of the counsel of economic advisers, or some such thing. i didn’t know shit about economic policy or anything like that.

    if i knew then. mr bob rubin could’ve gotten a little potassium chloride mixed in with his morphine shot. and all this never would’ve happened.

    i consider my giants’ cap like a marine color guard considers the stars and stripes before foreign royalty. i lower it for no one. easy to say when the vehement rival is the pussy los angeles dodgers. i’ve never had any real trouble in philly over the years, or anywhere else. even when wearing a raider jersey into the vet (well, i was much younger). the folks i was sitting near were cool throughout the game. but that night was special circumstances, crushing frustration. shit, i would’ve pummeled myself.

    frank zamboni–american born to italian immigrant parents, invented the ice machine. in the hockey hotbed of los angeles.

    guiseppe zamboni–italian priest and physicist who developed a type of battery, following up on work by countrymen volta and galvani.

    1. Smokey

      We were feeling sorry for New York. It is tough rooting for teams that suck across the board. We threw them their only victory of the season out of 6 games.

  75. Thanks to the handy Gold Shark feature, I see that silver’s almost at $36. What shoe’s going to drop THIS week? What’s going to drive oil to the moon this time? Ghadoofy? Kim Dong? The Sauidis?

    Maybe I don’t quite have enough in the pantry…

  76. Don’t fret. This recovery isn’t a “phony recovery” like Jim Quinn claims. Look at the government’s February statistics. ” THE EMPLOYMENT SITUATION — FEBRUARY 2011……..Nonfarm payroll employment increased by 192,000 in February…the U.S. Bureau of Labor Statistics re-
    ported today. Job gains occurred in manufacturing, construction, professional and
    business services, health care, and transportation and warehousing.” You Chicken Littles, who are always wailing that the sky is falling, should have more faith in the Republicans and Democrats you voted for and in their administrators. Business is improving, there aren’t angry people rioting, and society and the economy seem vibrant. Life is good. Don’t worry, be happy.

  77. I may misunderstand things a bit, but I believe that many more jobs are required than were created in Febr. just to maintain the status quo. That the reported unemployment figure dropped means that something is seriously amiss – that people are exiting the work force (too discouraged, etc.), or the numbers are being gamed, etc. There has been no major turnaround.

    1. llpoh

      The working age population goes up by 180,000 per month. The government reported 192,000 new jobs. One problem. 112,000 of them were calculated using the birth/death model. They were phantom jobs created by an excel spreadsheet.

      Non thinking morons like Jackson are like sheep. They believe without thinking or trying to understand. There are millions of Jacksons.

  78. [email protected] says:

    @Admin: Yes, Yes! Thank you for pointing out the TOTALLY BOGUS birth and death stats that are baked into the TOTALLY BOGUS cake that is the BLS’s jobs stats. Why can’t the fucking MSM understand that?

    Where I sit, in the Houston Metroplex, allegedly here in Texas which led the nation in job creation last year, the job situation sucks the big one.

    As to the oil “problem”. Matt Savinar, whom I forgive for banning me from his site because the whiny crybabies complained about me, has an excellent discussion about how THERE IS NO SUBSTITUTE FOR OIL. When I read his analysis, laid out in as in a perfect legal brief, like the Bolt School of Law trained lawyer he is, my brain just about exploded.

    I wish I could refer you to his most excellent analysis, but Matt has gone off the fucking deep end and he is totally into astrology these days, sorry. Since the planets have all shifted around I don’t know how much “truth” there is in deciding your fate by tracking big balls of gas in the heavens, lol. Try or where a lot of the refugees ended up.

  79. [email protected] says:

    So did mine:

    And for those that missed the lyrics, just as funny and as nonPC now as they were back then:

    Rock The Casbah lyrics:

    Now the king told the boogie men
    You have to let that raga drop
    The oil down the desert way
    Has been shakin’ to the top
    The sheik he drove his Cadillac
    He went a’ cruisnin’ down the ville
    The muezzin was a’ standing
    On the radiator grille

    The shareef don’t like it
    Rockin’ the Casbah
    Rock the Casbah
    The shareef don’t like it
    Rockin’ the Casbah
    Rock the Casbah

    By order of the prophet
    We ban that boogie sound
    Degenerate the faithful
    With that crazy Casbah sound
    But the Bedouin they brought out
    The electric camel drum
    The local guitar picker
    Got his guitar picking thumb
    As soon as the shareef
    Had cleared the square
    They began to wail


    Now over at the temple
    Oh! They really pack ’em in
    The in crowd say it’s cool
    To dig this chanting thing
    But as the wind changed direction
    The temple band took five
    The crowd caught a wiff
    Of that crazy Casbah jive


    The king called up his jet fighters
    He said you better earn your pay
    Drop your bombs between the minarets
    Down the Casbah way

    As soon as the shareef was
    Chauffeured outta there
    The jet pilots tuned to
    The cockpit radio blare

    As soon as the shareef was
    Outta their hair
    The jet pilots wailed


    He thinks it’s not kosher
    Fundamentally he can’t take it.
    You know he really hates it.

    (Although why the hell there is a a 9 banded armadillo in this video I have no fucking clue. There are no 9 banded armadillos in the ME as far as I know.)

    Hell, this cracks me up so well, I may replace my current ringtone of TinaTurner’s “What’s Love Got to Do With It” with THIS, ha!

  80. America has trillions of untapped oil reserves under the rocky mountains and areas close to canada. The elitists have been using up the eastern countries supplies and have succeeded. The oil corporations are awaiting a time to mine these and this will be soon. Listen to Lyndsey Williams ex-BP informant and get the true reason behind the turmoil. I live in NZ and I am shocked at how little Americans know about there own country, is it because reality shows are more important ?

    1. Angee

      You live in NZ and I’m shocked that you can’t read. We have 1.58% of the world’s oil reserves and use 22% of the world’s oil. Facts sister.

  81. Angee

    With all due respect, are you serious or joking around? Where did you get the idea that we have trillions of barrels of oil that can easily be extracted? Also, if we had as much reserves as you say and that oil companies are just waiting around before they decide to produce, why have they waited so long? The US peaked in production in 1970. We wouldn’t be importing 70 percent of our oil today if we were sitting on Saudi size oil fields. Finding new large oil reserves is a thing of the past. Secondly, if you are talking about oil companies mining oil shale, this is a very intense process and is only feasible with high oil prices. Trillions in reserves is insane. What are you guys in NZ reading?

  82. ha, i’ve been needing a new ringtone. perfect. i was blasting ‘casbah’ during the egypt action, disappointed i didn’t think of using it.

  83. Interesting, especially in view of what Lindsey Williams (via Alex Jones) has just come out with.
    I don’t really follow Lindsey or even like him much but I’m forced to concede his claims do explain the big picture very well indeed, so until a better explanation comes along…
    The next few weeks should prove or disprove his claims…

  84. Admin – thanks. That was my point more or less. I believe jobs nned to go up 300k to keep things more or less even but do not have the stats at my fingertips. In any event the whole thing is a fucking farce.

    Hope – one of my all time favorites. The Clash were way cool.

    Jmarz – here is an alternative way of responding to Angee:

    Angee, please don’t be such a fucking ignoramus. You have been breathing in way much sheep flatulence and need to get a fucking clue. Ignorance and stupidity is not welcome here.

  85. What about all the undeveloped oil fields in North America that havent even been drilled? I’m very skeptical about how much oil we have left, people who rant about ‘Peak Oil’ always have the same cultish mindset as the AGW freaks, they will brook no dissent from lesser mortals. I don’t think its oil itself that it rare and precious but rather the petro-dollar, without that arrangement the US is finished but its got nothing to do with how much oil is actually in the ground

    1. RCT

      Ignorant non-thinkers like yourself love to call people with facts cultish. You offer no facts to back up your drivel because you are a clueless dupe.

  86. In places like China and Russia they have announced massive new oil finds in the last ten years. Yet the Peak Oil crowd still quote the same statistics they did in the 1970s. Calling someone ignorant because they dont agree with you is just facile. I’m no fan of Big Oil, its a dirty business that rapes the environment, but a bit of research will show that its actually Big Oil who are pushing peak oil, artificial scarcity is a tactic as old as time, because it pushes up prices to who’s benefit? The petro-dollar is the real issue for the United States because if they lose that, they lose the ability to continually expand the money supply,while exporting the inflation to the rest of the world, because you can only buy oil in dollars.

    1. RCT

      Please document the “massive” new oil finds in China and Russia. Facts please. You got nothing. Ignorance is bliss.

  87. Back in college in the late 70’s I was sitting next to an older Austrian couple on a flight from Frankfurt to Chicago. They told me they planned to pick up a rental car in Chicago (flight came in at 8 p.m.) and were going to drive all night so they could be in Salt Lake City by dawn to visit their daughter. When I told them they would be in S. Dakota at dawn, they just laughed at how little Americans knew about their own country.

    All you need to know about Bakken: EROEI


    Oil at $110 May Trigger Pain U.S. CEOs Weathered at $100

    A recovering economy helped U.S. chief executive officers weather crude’s surge past the $100 mark. At $110 a barrel, the pain would start to kick in.

    As oil traded at 29-month highs last week on concern that violence in Libya would further crimp Middle Eastern supplies, CEOs said they were waiting to see how much the price rises, and for how long.

    “Any time something like oil goes up dramatically overnight, it becomes very hard to adequately plan,” said Samuel Allen, 57, chairman and CEO of Deere & Co. (DE), the world’s largest maker of agricultural equipment. “It has caused us to be more careful or cautious in watching the outlook, but we have still moved forward with all our plans.”

    Corporate assumptions would have to start changing when oil reaches $110 a barrel, according to economists such as Chris Low of FTN Financial in New York. Crude at that price would offset the benefit from the tax cut approved by Congress in December, and begin to slow economic growth, Low said.

    “As long as consumers are willing to pay up a little more, there really isn’t going to be a significant impact,” Low said in an interview. “But we’re pretty quickly running out of time there with oil through $100 a barrel. We’re getting to levels where we have to think about taking our forecasts lower.”

    Oil Rises Again
    Oil for April delivery rose 1.9 percent to $106.42 a barrel in New York today, the highest since Sept. 26, 2008. That pushed the gain to 24 percent since Feb. 18, when crude began climbing as Libya’s civil strife stoked concern that energy exports elsewhere in the region might also be at risk. Brent crude, the London benchmark used to price many European and African oils, was up 1.6 percent at $117.81.

    As manufacturers such as Deere assess how prices may affect business, consumer companies already are adapting. U.S. airlines have enacted six broad fare increases in 2011, and General Motors Co. (GM) is tightening the stock of autos in case buyers shun showrooms as they did in 2008 when gasoline peaked at $4.11 a gallon before the financial crisis.

    “We worry about $100 oil all the time,” Vice Chairman Stephen Girsky said in an interview. “We’re war-gaming that all the time. Part of the strategy is to keep inventories low.”

    GM’s supply of 517,000 vehicles at the end of February represented about 2.5 months of deliveries, compared with about 2.9 months’ worth a year earlier at the Detroit-based automaker. The clampdown came amid industrywide sales running at the fastest annual pace since 2009.

    Gasoline’s Rise
    Consumers’ response to costlier gasoline is pivotal because they account for about 70 percent of the U.S. economy and feel oil-market disruptions with every fill-up, economists said. At $3.51 a gallon yesterday in a survey by Heathrow, Florida-based motorist group AAA, the average U.S. retail price for regular unleaded gasoline has risen about 14 percent this year.

    The duration of higher prices will determine how consumers react, said Daniel Yergin, chairman of IHS-Cambridge Energy Research Associates Inc. in Cambridge, Massachusetts, and author of the 1991 oil-industry history “The Prize: The Epic Quest for Oil, Money and Power.”

    “If it’s a short term, then take it in stride,” Yergin said in an interview. “If it’s longer term, if it extends out weeks or months, then it really becomes a very big question mark for economic recovery.”

    ‘Main Conduit’
    A $10-a-barrel increase in crude would “reduce growth by somewhere between 0.2 to 0.3 percentage points per year in each of the next two years,” said Drew Matus, senior economist at UBS Securities LLC in New York. “It’s basically an overall impact on the economy, but obviously the main conduit through which it would act would be the U.S. consumer.”

    While that kind of drag wouldn’t come close to pushing the U.S. back into a recession, it would slow the rebound from the worst economic slump since the Great Depression. For 2010, the world’s largest economy expanded 2.8 percent, the most in five years, after shrinking 2.6 percent in 2009.

    Oil at $125 would be “really a crucial tipping point,” pushing gasoline to $4 a gallon, said Carl Riccadonna, senior U.S. economist at Deutsche Bank Securities Inc. in New York.

    “That would be the level where we start to significantly downgrade our economic projections,” Riccadonna said, including a 50 percent slash in his forecast for growth of about 3.1 percent in household consumption.

    ‘Stall Speed’

    “Suddenly we’re looking at GDP right around 2 percent,” he said in an interview. “At that 2 percent level on GDP, we’re very close to stall speed on the economy.”

    Some pullbacks are under way. American Airlines parent AMR Corp. (AMR) and Delta Air Lines Inc. (DAL) are trimming planned growth in seating capacity to blunt fuel expenses, even with the boost from more fare increases this year than in all of 2010.

    “Rising gas prices and still-high unemployment levels weigh on the minds of our customers,” Bill Simon, CEO of U.S. operations for Wal-Mart Stores Inc. (WMT), said on a conference call on Feb. 22. “These issues affect discretionary spending and figure into our assessment for guidance.”

    The Bentonville, Arkansas-based retailer has posted seven straight quarters of declining same-store sales in the U.S., and it forecast a drop in such revenue this quarter of as much as 2 percent from a year earlier.

    Boyd Gaming Corp. (BYD) expects that gamblers eventually may need some reassurance to help overcome any reluctance to pay more to drive to one of the Las Vegas-based company’s casinos.

    ‘Psychological Aspects’

    “I’m sure you’ll start to see promotions around gasoline and other things as part of a marketing campaign,” Chief Operating Officer Paul Chakmak told analysts on a conference call on March 1. “People are generally fairly resilient, other than the psychological aspects of it.”

    Pump prices in some states are approaching the $4-a-gallon mark, topped by the $3.90 average in California and $3.88 in Hawaii through yesterday, according to AAA’s website. Retail diesel fuel climbed to $3.88 a gallon, up 17 percent this year, according to AAA.

    “Our near-term concern is more for our customers,” Deere’s Allen said in an interview. The product lineup at Moline, Illinois-based Deere includes lawnmowers, grain harvesters and construction equipment, some running on gasoline and others on diesel fuel.

    For Boise Inc., a maker of paper and packaging, each 50- cent increase in diesel fuel means the loss of $8 million in earnings before interest, taxes, depreciation and amortization, Chief Financial Officer Samuel Cotterell said.

    While the Boise, Idaho-based company doesn’t build fuel surcharges into contracts, it may be able to pass along some costs, Cotterell told analysts on a March 2 conference call.

    Job Growth
    Recent indicators suggest that the economy has been strong enough to handle the march toward $100 oil that began last month. The Bloomberg Consumer Comfort Index, formerly the ABC News U.S. Weekly Consumer Comfort Index, was minus 39.3 in the period to Feb. 27, little changed from the minus 39.2 reading the prior week that was the highest in almost three years.

    Joblessness fell to 8.9 percent last month, and employment climbed by 192,000, the Labor Department reported on March 4.

    Growth in payrolls and income should shield the nonfuel spending crucial to the economy, said Frank Badillo, a Columbus, Ohio-based senior economist for Kantar Retail.

    “We won’t see a falloff in nonfuel spending,” Badillo said in an interview. “It will be affected, but it’s not like we are going to see huge declines. They are going to continue to spend more, it just may not be as much more.”

    ‘Blip Up’

    Oil supplies in Saudi Arabia also are sufficient to ensure that oil at $120 or even $150 a barrel from disruptions elsewhere in the Middle East would only be a “blip up” that wouldn’t last long, said Nayantara Hensel, the U.S. Navy’s chief economist.

    “Oil prices would need to exceed $125 per barrel for more than four years to substantively limit economic growth,” she said in an interview.

    Like Deere, manufacturers such as Caterpillar Inc. (CAT), the world’s largest maker of construction equipment, haven’t made any changes yet to investment decisions in response to the jump in crude.

    “We take a long-term view,” said Jim Dugan, a spokesman for Peoria, Illinois-based Caterpillar. “The prices of various commodities are a small piece of that.”

    Drill-Bit Parts
    At Dover Corp. (DOV), about a quarter of annual revenue comes from the oil and gas industry, where rising demand for equipment such as drill-bit parts buoys results. About the same amount is tied indirectly to consumer spending, because the Downers Grove, Illinois-based company also makes refrigerated display cases.

    “For us, the increase in oil isn’t any different than the increase in steel, or nickel or copper or, goodness gracious, even the increasing cost of health care,” CEO Robert Livingston said in an interview. “When we can’t cover it with productivity initiatives, yes, we do pass it on to customers.”

    Manufacturers tend to absorb energy-cost increases as long as they’re confident that the new levels are only temporary, because they don’t want to change their prices too often, according to FTN Financial’s Low. Unlike price surges triggered by market speculation, which tend to fade more quickly, oil- market fallout from the Libyan crisis may not end soon, he said.

    “We’re talking about revolution that has spread across borders that is, if anything, getting hotter over time,” Low said. “It will likely be many months before the situation in the Middle East has calmed down.”

  89. Fossil fuel, gotta love it. Bio-diesel, gotta love it more. Uncle Sam is subsidising this brilliantly green and horrendously unprofitable technology as if it will make a difference. Up to $1.50/gal for bio-diesel and they still can’t make a profit. They are even selling the credits (called RINS) like carbon credits.

    My advice to you all is to find a way to make ALCOHOL. It is cheap, you can make it out of anything, gas engines are easily converted. So what if it doesn’t make your beemer go from 0-60 in 8 seconds. It works and we can do it at home. Oh yeah, did I mention the government doesn’t get to tax it? Ever wonder why they don’t offer alternatives to fossil fuels.

    The pig of a government is there to suck you dry, so go on bitch about $4.00/gal gas. By the time they are through none of us will have any money, gas, homes or food. The last time gas hit $4.00 we had a subprime mortgage crisis. I wonder why? You gotta have gas to go to work. Let the mortgage ride, the government will bail you out. Yada yada…

  90. All this…
    While Obama talks to tapping the strategic petroleum reserve now for political gain.
    Is now really the time to be tapping the reserve? Before all hell breaks loose and when we don’t actually have a supply interruption?
    Par for the course actually.

    1. Darwin

      It all depends on your definition of strategic. Obama’s definition is whether it will help him get re-elected in 2012.

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