DOUG CASEY DOES SELF IMMOLATION & OIL

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Posted on 14th July 2011 by Administrator in Economy |Politics |Social Issues

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Doug should have been reading TBP and he would have known about Thomas Ball the day after it happened. He has the same questions I had. Why was this story completely ignored by the MSM. This convinced me once and for all that the corporate MSM is in bed with the government and will report whatever they are told to report and coverup what they are told to coverup. It is up to sites like ours to report the truth.

Doug also agrees that oil prices are headed to $200 a barrel. I disagree with his unconcern with fracking. He assumes that corporations will do the right thing, follow proper safety guidelines, and be good corporate citizens. That is ridiculous. They only care about short term profits and will use their armies of lawyers to fight legitimate claims by the poor people being victimized by their greed and incompetence.

Doug Casey on Self Immolation – Individual and National

(Interviewed by Louis James, Editor, International Speculator)

L: Labas, “Dougas,” as we might say in Lithuania — sure is beautiful here! It’s 11:30 p.m. and the sun is below the horizon, but the sky is still smoldering. Where are you, and what’s on your mind this week?

Doug: It’s afternoon here in Aspen, a nice little communist town in the Rockies. From here the world seems to be turning as usual, but that’s only because the place is full of people who are so rich that they’re largely insulated from the real world, as are the parasites who live off them. We’ll have to talk about the politics and sociology of Aspen sometime. But out in the real world, the engines are grinding toward a halt on the American Titanic – but it’s still moving, so everyone thinks everything is fine. There are signs that the 2008 iceberg was bigger than the crew is telling us, however, for anyone paying attention. Did you hear about that man who set himself on fire in front of a courthouse in New Hampshire?

L: I did, but only through email from friends.

Doug: Yes, the same with me; we have the same friends. It’s truly shocking that a story like this got absolutely zero major media coverage, even though it went out on AP. In Tunisia, a fruit and vegetable street vendor sets himself on fire to protest his government making his life impossible, and it sparks a revolution that doesn’t even stop at his country’s borders. Something similar happens in the U.S. and no one even hears about it… at least not this time. In February 2010 there was a guy who crashed his plane into an IRS office: That did make the national news. But perhaps since then the word has gone out that these things shouldn’t be reported for fear of encouraging others, “national security,” or whatnot.

L: Thomas Ball wasn’t a fruit vendor, but a divorced man who apparently felt that the court system had put him in an impossible situation. [Editor’s note: Ball’s last statement is available online, subscription required.] I’m not a conspiracy theorist, but it defies belief that every single major news editor across the country decided on his own that such a striking story wasn’t news.

Doug: I know. Not a lot surprises me anymore, but this truly is shocking. In my entire life I can only remember two previous instances of self-immolation. The first was that of Buddhist monks during the Vietnam war. I didn’t know what to make of it at the time, but it sure caught everyone’s attention.

L: Why did they do it? U.S. troops on the temple steps?

Doug: No, they were protesting the rule of Ngo Diem in the south, who was Catholic and giving them a hard time. The U.S., of course, was supporting the terminally corrupt Diem regime. When, I’d like to know, has the U.S. ever supported anybody but the worst criminal available in Third-World countries? The second instance was the one in Tunisia earlier this year that touched off the Arab Spring – which is far from over, by the way. Thomas Ball is the first case of it in U.S. history – first one I’ve ever heard of, at any rate – and it received no press whatsoever, outside of acknowledgement in the local papers. The Internet picked it up, of course, but to me it seems extraordinarily serious that an event like this can transpire and not even get noticed. Instead, the headlines were dedicated to such urgent matters as that stupid congresscreature, Weiner.

L: So, are you saying that the powers that be censored the story?

Doug: If they didn’t, it’s certainly further proof of how degraded society has become in the U.S. that something like this could go unnoticed. It’s appalling – disgusting, actually. And scary, on a couple of levels.

But get this: When I was in Dubai a couple of weeks ago, a guide I’d hired to show me around had heard of the event. It was big news there that everyone heard about – it was in all the papers. So you could make the argument that the average Arab may know more about what’s happening in the U.S. than the average American does. That’s a turnaround…

L: What were you doing in Dubai?

Doug: It had been a while, and I wanted to see how things had changed since the crisis. I also went to Israel, Egypt, and Lebanon. I’ll have some articles on my findings in the Middle East in the next few issues of The Casey Report. Obviously, the area being prime oil hunting ground, I was thinking about energy-related speculations a great deal. In practical terms, energy really means oil, coal, gas, and nuclear – green energy is nice, but hydrocarbons and nuclear are the only forms of mass power that can satisfy any need, anywhere, anytime. Most particularly oil. Developments in oil affect the Middle East, and developments in the Middle East affect oil.

L: Hm. Speaking of nuclear, we haven’t talked about that since our conversation on Fukushima, and there’s been time for new market trends to become visible. What do you think?

Doug: Well, as we speak, I see that the price of uranium is $54.25 per pound. It was about $70 before Fukushima, dropped to about this level, bounced back to the high $50s, and is now fluctuating in the low $50s, so it’s definitely cheaper than it was before. But it was over $140 a pound in 2007, so it’s much cheaper than it has already been in this cycle. On the other hand, it’s still roughly six times what it was at the end of the 1990s, when it bottomed around $9. That’s pretty good performance for a commodity. Still, I’ve got to say that I think it has a lot of upside yet ahead – although keeping track of prices in dollar terms is becoming ever more tricky, as the dollar itself fluctuates wildly – mostly down – and the official CPI statistics become ever more unreliable.

The reason I’m still bullish on uranium is because, as we said before – and Fukushima notwithstanding – nuclear power is still the cleanest, safest, and cheapest type of mass power generation available. I find it quite ludicrous that the Germans have announced that they will phase out all of their nuclear plants over the next decade. Where are they going to get the power to replace the approximately 22% they get from nuclear now? Windmills aren’t going to do it. Solar doesn’t have a prayer in northern Europe. Are they going to burn more coal? That’d be great for their environment.

L: Aside from pumping sulfur into the air, coal plants emit C-14 too, and that’s radioactive. Nukes emit less. Maybe they plan to wear thicker coats and eat more cold food?

Doug: There’s a lot of radioactive material released from burning coal, including uranium. Geothermal would be nice, but Germany is not Iceland. Maybe they think they can burn more natural gas, but that’s a greenhouse issue – although the whole greenhouse gas/global warming hysteria has always impressed me as something in between a political scam, a fraud, and a new age religion. But we covered that in a prior conversation; no need to beat a dead horse. Anyway, it seems to me that the global warming hysteria actually peaked a few years ago, and will soon be just another idiotic embarrassment everyone will be anxious to forget. Especially when another hysteria catches their attention.

L: The Russians would love to see the Germans burning more natural gas.

Doug: Of course. And they wouldn’t be shy about demanding political concessions as well as higher prices when they can shut off the pipelines to Europe in the middle of the winter. The Germans will get what they deserve. But then, most everybody eventually does. I’ve got no sympathy for them; stupidity is its own reward.

L: That would literally be a cold war. No need for ballistic missiles. Looks like national self-immolation on the part of the Germans.

Doug: Right – the German reaction is clearly political grandstanding pandering to hysteria. I wouldn’t count on the policy ever being carried through to completion, and wouldn’t be the least bit surprised to see it reversed after the first winter when there’s not enough power to go around. They really have no other practical alternative… though they might try to finesse it by importing electricity from France, which produces over 75% of its power from nukes.

Meanwhile, that hysteria is certainly going to slow down nuclear power in the U.S., but as we said in our conversation after the disaster in Japan, world demographic trends leave no choice but to employ more nuclear power. That makes the current relatively low prices an opportunity.

L: In that context, we should probably mention that there was a flood in the U.S. midwest, and the Fort Calhoun nuclear power plant in Nebraska was flooded. A dike surrounding the plant was even breached, but there appears to be no sign of danger yet. Granted, the plant was shut down for maintenance at the time of the flood, but still, the thing seems to be taking the abuse as designed.

Doug: That’s right, and it bears reiterating that at this point, all of these operating plants are basically 40-year-old technology. Because of the hysteria and resultant government regulations, newer, better, and even safer designs have not been implemented. Almost all the reactors in use today are what are known as “Generation 2.” But there are probably two dozen Gen 3 and 3+ designs that could be deployed; and in a few years there will be Gen 4 units available. Some of these designs are extraordinary – from 10-50 megawatts, self-contained, with almost no moving parts, extremely small, low cost, and capable of being buried for a decade, until they need refueling.

L: So, buy uranium and uranium exploration stocks?

Doug: That’s one way to play it, and we do have a lot of exposure to uranium’s upside in our portfolio. Another, more ground-floor way to play it might be to look into thorium plays. As I understand it, thorium – element 90 on the periodic table – is actually better for power generation than uranium or plutonium. Nuclear scientists originally proposed it for power generation, but governments opted for uranium because it coincided with their weapons programs. As usual, government interference takes us down the wrong path.

L: [Chuckles] As usual. So, there’s an opportunity to invest in nuclear while it’s unpopular, and while it’s unpopular, that’s bullish for hydrocarbons.

Doug: Right. I subscribe to the peak oil theory. By that I do not mean that the world is running out of oil, but that the easy availability of conventional sweet, light crude is in decline. There’s plenty more oil to be found, but it’s a more expensive to process, heavy oil. Or it’s shale oil, or comes from tar sands, or it’s deep under the ocean, which has its own environmental issues and is neither cheap nor easy to produce.

Peak oil is a geological concept. It basically holds that all the low-hanging fruit has been picked. Now, philosophically, it rubs me the wrong way, in that I have total confidence that human ingenuity will find scores of ways to produce new hydrocarbon fuels – and lots of totally new energy sources in addition. Furthermore, the higher oil prices go, the more will be found – and the more it will be economized. So, in a free-market world, oil is a non-problem.

But we don’t currently live in that kind of world. In the meantime – let’s say the next 10-20 years – oil is an issue, for simple geological reasons. And also because, even though consumption has been basically flat in the advanced world for decades, consumption is going to grow radically in “Chindia” and the rest of the developing world. The biggest problem though is likely political, especially because of the increased political risk in the Middle East, where most of the world’s oil reserves are. You’ve got to be bullish on oil.

L: Even with the stuff at $100 a barrel?

Doug: Yes. I believe the odds favor it going to $200, even $250 a barrel before too long. I say that despite the fact I’m much more comfortable buying things when they’re manifestly cheap, and nobody wants them. But at the same time, it’s important to see the trend, and make the trend your friend. And I see no reason to believe this one is anywhere near an end.

L: Okay… But you’re also famous for predicting the coming – now started – Greater Depression. In a major, global economic reversal, wouldn’t energy consumption decrease, and hence prices drop?

Doug: That’s certainly a possibility, but China, India, and the rest of the Third World are marching, increasingly, to the beats of their own drums these days. The Greater Depression will definitely affect them adversely, but the enormous growth that has already gone on there won’t stop – despite the fact China has misallocated gigantic amounts of money in property. There could very well be a real revolution there in the next ten years. People forget that during one of the most turbulent periods in history, 1914-1946 – including, among other disasters, World War I, the Great Depression, and World War II – the world economy expanded by something like 1.8% annually. That trend will continue at one level or another, even if there’s a truly massive upset in the global economy – which I fully expect. The countries of the world will compete in using more oil; China will greatly increase its imports. India even more so. The price will necessarily rise.

So, sure, there could be a dip, especially if there’s a big financial crash, but that would not change the major underlying trend. Long-term energy demand is not dictated by speculators or other financial factors; at heart it’s based on demographic and technological trends, and those are not going to change easily nor soon. Oil in particular supplies very dense and convenient energy. It will be superceded, but not soon.

L: So if oil and gas stocks retreat on bad news, back up the truck for more?

Doug: Exactly. And it seems to me that in today’s world, in which nothing is cheap, one thing that is relatively cheap and a good value is natural gas. The reason it’s cheap is that previous high prices spurred technological developments, such as horizontal drilling and hydrofracking, that have made huge resources of shale gas economic. This vast increase in supply has made natural gas cheaper – and the time to buy commodities is when they are cheap. You have to be a contrarian, buy what’s unpopular, and sell when it’s the flavor of the day. It’s like my friend Rick Rule says: You’re either a contrarian or a victim. That’s natural gas right now – it’s cheaper, in BTUs per dollar, compared to oil, than it’s been for a very long time.

L: But there’s some risk too, especially with scare stories circulating about fracking causing gas leaks and problems on the surface. A political response could crush whole swathes of gas companies.

Doug: That’s true, and it would be true even if the scare weren’t completely unfounded hysteria, as I suspect it is. It’s mostly the same people who are so hysterically anti-nuclear who are anti new natural gas technologies. These stories about flames coming out of your water faucet have nothing to do with fracking. First, it’s freakishly rare. Second, it can and does happen naturally, for the same reason you see oil (and gas) coming to the surface all over the world, or even marsh gas bubbling up from swamps. Fracking generally occurs thousands of feet under ground; drinking water tables are close to the surface; it theoretically can have an effect, but as a practical matter does not. But I don’t want to get into a discussion of that here. Marin Katusa has covered that ground, from all points of view, as you can see here.

The technophobes of the world are a costly nuisance to everybody. But the good news is that they only drive prices up more, much to the benefit of the companies which are not affected. So, the way to play this is not with any kind of blanket approach, but with well-selected companies that should do well, based on where and how they produce their natural gas.

L: Very good. And this time I don’t have to ask you about investment implications.

Doug: Great. I love being off the hook. We’ll leave it at that, then. Talk to you next week.

L: Sure, Doug, thanks for the insights.

Doug: My pleasure.

12 Comments
  1. Persnickety says:

    This is moderately interesting, but I’m glad I don’t pay for Casey’s newsletter. Although there’s a bit of real information in here, it mostly reminds me of a sort of investing version of the Click n’Clack radio show (NPR).

    Like or Dislike: Thumb up 0 Thumb down 0

    14th July 2011 at 11:23 am

  2. Administrator says:

    Persnickety

    This is his free stuff. The monthly report which has articles by Bud Conrad, David Galland, Don Grove, and Terry Coxon is well worth the subscription.

    Next month’s report will have an article by a fine middle aged writer named Jim Quinn about the coming collapse of China.

    Like or Dislike: Thumb up 1 Thumb down 1

    14th July 2011 at 12:11 pm

  3. Muck About says:

    Never forget that the first and only reason Doug Casey writes or interviews is to sell subscriptions in one of his many newsletters. He has a stable of them and somehow anything you really want to know is in one – but you have to subscribe to get it.

    He a newsletter publisher. Period. Not that he’s not smart. He is. Galland and Coxen are fine writers as well and to hold subscribers you have to put out worthwhile information. I believe Coxen, in fact, started and was Pres/CEO of the Permanent Portfolio Fund Group – which I could recommend to anyone (I DO have a significant position in it myself).

    I look forward to a doomer view of the collapse of China, Admin!

    MA

    Like or Dislike: Thumb up 1 Thumb down 0

    14th July 2011 at 12:36 pm

  4. Yojimbo says:

    Here’s another story that must to told to balance the fracking bullshit.

    A scientist at MIT or Harvard, I forget which, developed this machine able to detect methane leaks (natural gas) from pipes underground throughout boston and measured and graphed the leaks.

    Bottom line: There are enormous amounts of natural gas that are leaking from pipes under all of Boston due to the age of the pipes. And although the gas company fixes them, they are fixed very slowly because the “expense” of fixing them is more than they want to pay.

    What about the cost of fracking to get new gas to replace the lost gas through broken pipes which contributes to polluting of the water supplies, land, rivers, and air?

    More bullshit to prove that our crony capitalist system of turning everything into a “commodity” which has a “market price” does not work. How can one put a price on clean water, land, rivers, and air?

    These assholes who think fracking is a clean technology and has little downside should have to drink the water near these wells and live on the land next to these wells.

    Doug Casey is full of shit on this issue. He obviously hasn’t seen the movie “Gasland” or he wouldn’t be spouting such bullshit.

    http://boston.cbslocal.com/2011/07/12/methane-gas-leaks-common-across-massachusetts/

    http://www.upi.com/Science_News/2011/05/13/Hundreds-of-gas-leaks-found-in-Boston/UPI-72591305333814/

    http://www.naturalgaswatch.org/?p=452

    Well-loved. Like or Dislike: Thumb up 6 Thumb down 0

    14th July 2011 at 12:40 pm

  5. Yojimbo says:

    “The team’s research indicates that unaccounted-for natural gas amounted to 8 billion cubic feet in Massachusetts each year, costing about $40 million and severely damaging the state’s urban and suburban street foliage.”

    This number may be high or low. It is just an estimate. But it is a shitload of natural gas lost through leakage that then must be fracked to put back into the supply line.

    Well-loved. Like or Dislike: Thumb up 5 Thumb down 0

    14th July 2011 at 12:43 pm

  6. Yojimbo says:

    I grew up next to the convergence of the Susquahanna and Chemung Rivers in Pennsylvania. Now it is an Endangered River due to the fracking of natural gas.

    DCES

    http://www.sustainablebusiness.com/index.cfm/go/news.display/id/22418

    http://www.buffalonews.com/editorial-page/from-our-readers/another-voice/article450231.ece

    Like or Dislike: Thumb up 1 Thumb down 0

    14th July 2011 at 12:49 pm

  7. Yojimbo says:

    Sorry, it’s Susquehanna, not Susquahanna.

    Like or Dislike: Thumb up 0 Thumb down 0

    14th July 2011 at 12:50 pm

  8. scott says:

    I’m ok with fracking. The oil and gas industry ( and their insurers) have 20 billion reasons to want to make sure their wells are engineered properly unless they want to end up like BP and Tony Hayward. Gas leaks in distribution lines are a problem but those are seldom owned by oil and gas E&P outfits. Just as likely to be a municipal utility whose ‘owners’, the city council, use them as cash cows far more ruthlessly than the E&P boys could ever hope to get away with. I know, I worked for one and, as municipal utility, they are exempt from most regulation or even tort claims.

    Nuclear I have come to have a problem with owing to the geological timescale of its by products and the absolutely catastrophic and insidious potential of a mishap. We need to remember that up till very recently virtually ALL nuclear power plants were operated in and by major nations and of the 3
    major accidents even those nations were hard pressed to cope with the consequences. In fact, the USSR was not able to cope with the long term clean up costs and so, the international community is left with a large part of the bill! When we look at what Fukushima is likely to cost Japan and the fact than even mighty Japan with its world class engineering and technology is still scrambling to find a way to ‘fix’ the problem the issue of nuclear ‘proliferation’ should be manifest.

    That Japanese, European and American nuclear power plant designs are being offered for sale to third world countries is as risky as selling nuclear bombs if you think about, perhaps more so. The ‘so-called’ nuclear powers have never had a bomb go off accidentally in large part because they were under military control and not operated for profit or to keep the lights on where failing to do
    so could be a ‘political’ problem. The US government would never allow Sandia to sell a nuclear arsenal to Mexico or Indonesia for obvious reasons and these are major nations in their own right yet Mexico operates nuclear power plants ( don’t know about Indonesia but its only a matter of time).
    Now consider if the Boxing day tsunami off Banda Aceh had ‘Fukushimaed’ an Indonesian NPP or if Mexico had a large earthquake, volcanic or tsunami event that did the same to their NPP. Think they’d have the engineering and financial resources to even begin to cope? As radiation plumes do not respect national borders the US could face a far more serious nuclear ‘threat’ from a Mexican NPP than a North Korean ICMB yet no one has even addressed this very real problem.

    Like or Dislike: Thumb up 0 Thumb down 4

    14th July 2011 at 2:19 pm

  9. Scooter says:

    https://secure.wikimedia.org/wikipedia/en/wiki/Malachi_Ritscher

    Read about this guy…the media ignored his immolation (in the median of one of the busiest expressways in the country at peak rush hour) as well. Read his “Mission Statement”. He is the proverbial tree that fell in the forest(like Tom Ball) and no one from the MSM was there to report if it made a sound.

    Like or Dislike: Thumb up 1 Thumb down 0

    14th July 2011 at 3:32 pm

  10. Thinker says:

    When Tom Ball immolated himself, I found a long list of political self-immolations on Wikipedia. It’s surprising how few of these ever made the news.

    https://secure.wikimedia.org/wikipedia/en/wiki/List_of_political_self-immolations

    Like or Dislike: Thumb up 4 Thumb down 0

    14th July 2011 at 4:03 pm

  11. howard in nyc says:

    the dude who did it outside bob mcnamara’s pentagon window (1965?) was the last one to get much airplay.

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    14th July 2011 at 11:32 pm

  12. howard in nyc says:

    shit, you had the link to wiki right there, and i didn’t bother to look it up. norman morrison. november, 1965.

    Like or Dislike: Thumb up 0 Thumb down 0

    14th July 2011 at 11:35 pm

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