This attitude of swollen ego through proxy is not limited to the “Right” side of the political spectrum as some might expect. In fact, if the terrifyingly demented presidency of Barack Obama has proven anything so far, it is that elements of the “Left” are just as bloodthirsty as any NeoCon, and just as ready to blindly support the political supremacy of their “side” regardless of any broken promises, abandoned principles, or openly flaunted hypocrisies. No matter how reasonable or irrefutable the arguments against a particular conflict are, there will ALWAYS be a certain percentage of the populace which ignores all logic and barrels forward to cheerlead violent actions which ultimately only benefit a select and elite few.

They do this, though they rarely openly admit it, because of unbalanced and irrational biases which drive their decision making processes. In the case of the wars in the Middle East, the common public argument boils down to one of “self defense”. “They are coming to get us!” At least, that is what we are constantly told. And I’m sure that some Americans out there truly believe this. However, in their heart of hearts, others instead relish the idea of imposing their world views and philosophical systems upon others, even if it means using cluster bombs and predator drones.

Some people simply hate Muslims, for one reason or another. Some people believe that war will bring with it economic gain. Some are so afraid of what they do not comprehend that they only feel secure by attacking it. Some believe that the U.S. citizenry is morally obligated to become entangled with governments like Israel’s, and support them without question as if they are infallible, though they are often just as corrupt as the governments we are directed to despise. And yet others (for religious purposes), actually clamor for Middle Eastern destruction in the desperate hopes that their version of biblical prophecy will be vindicated.

Ultimately, most Americans who support continued destruction in the Middle East, or anywhere else for that matter, do so out a selfish need for private absolution and elevation, not out of a sincere sense of patriotism, and not because nations like Afghanistan, Iraq, Libya, or Iran present a legitimate danger to their safety.

These men and women have invested their very identities into the mechanizations of collective war. They will not be swayed by evidence or honorable arguments. Any criticism of the actions of the collective will immediately be treated as a personal attack on their individual character, causing their minds to shut down completely.

As far as Iran is concerned, I am not here to convince the war-drum pounding zombie hoards infesting the mentally impotent sewage soaked wastelands of my country that their rationalizations for raining laser guided death on the third world is a “reprehensible thing”. Given their impenetrable biases, which I listed above, that would be a complete waste of time.

I could, indeed, point out how in 1953 the U.S. and Britain overthrew the democratically elected leader of Iran, Mohammad Mossaddegh, because he refused to allow global corporate interests to exploit his country’s oil resources. I could outline how the forced CIA installation of the Shah in Iran and the creation of his secret police led to the torture and murder of thousands of innocent people. I could list similar covert activities over the past 100 years or so, in countries all over the world, which have created the now universal disdain the third world has for the U.S. government. I could even show them a PBS special from 1987 which effectively details this history and warns of what is now going on today. The kind of mainstream news coverage that networks currently blacklist honest and daring journalists for:

But what about all the nuclear talk being shoved down our throats lately? Doesn’t this supersede any historical concerns between Iran and the U.S.? What if the terrorists get their hands on “the bomb”?!

On this issue, I could easily interject the fact that countries supposedly hostile to the U.S., like North Korea, have long had nuclear capability, and certainly the means to use infiltrators to deliver that technology, yet, we haven’t sent the Western war machine after them. I would also set the record straight by mentioning that the ONLY country in the world that has used a nuclear weapon against another is the U.S. I could educate these people on the exposure of secret Israeli nuclear weapons programs since the 1970′s, and the fact that Israel even attempted to illegally sell this technology to Apartheid South Africa.

I could try to clear the air by reminding the uninformed that Secretary of Defense Leon Panetta recently admitted that Iran has no nuclear weapons capability. And, that this fact was repeated by an Iranian nuclear scientist, Sharhram Amiri, who defected to the U.S. in 2010 with the help of the CIA in the hopes that he could be used to disseminate propaganda on “secret” nuclear weapons programs in his former homeland. Instead, he only reinforced the assertion that there are no such programs.

With the CIA made to look foolish, they have now decided that Amiri is “peripheral” to the Iranian nuke programs, and is no longer a solid source of information. I could follow by pointing out how decidedly convenient this is…

What about all the similarities between the lies on WMD’s in Iraq and the rhetoric against Iran today? What about the disinformation put forward by the IAEA and its cadre of foreign policy yes-men?

What about the fact that back when Iran was run by our own puppet leader, the Shah, an iron-fisted sociopathic dictator, we were more than happy that the country was developing nuclear power plants:

Sorry, but sharing this information with the warmongering percentage of our American culture is futile. None of this data means a thing to them. For these people, it’s not about facts; it’s about foggy perception, uncontrolled emotion, and false identity. Understanding the situation only complicates their pursuit of the next collectivist high; that frenetic freak frenzy that takes hold of a population and makes them swarm like mad bees, or hungry piranha, poisoning and devouring everything in their path.

With this in mind, the only recourse I could possibly think of to wake them up to their philosophical and moral folly is to expose them to very real and debilitating consequences they will face in their everyday lives in the wake of expanded conflict on the part of the U.S. That is to say, you may hate Iran, you may hate Iranians, you may despise Muslims, you may be driven by a childish need to live vicariously through the exploits of your government, or, you might actually believe the hype that Iran is in league with Al-Qaeda, that they really are after nuclear weapons in a diabolical plot to harm Americans, and you might truly believe that Israel is that “beacon of freedom” in the Middle East and that all its neighbors must be pacified for the sake of democracy. At bottom, whatever your deepest intentions, and whatever you might think, this is irrelevant in the face of the inevitable costs of war. If you support such a war, here is how it will affect you when it breaks loose…

Exploding Oil Prices

The U.S. has had a ban on Iranian oil imports since 1979, however, Iran still supplies about 5% of the global oil market. This might not seem like much, but Iran also has the means and ability to shut down the Straight of Hormuz, which is one of two major petroleum choke points in the world. Around 17 million barrels of oil per day are shipped through the Straight of Hormuz, or about 20% of all oil traded worldwide.

In 2006, during the last major Iran war scare, experts predicted gasoline price increases in excess of $10 a gallon if Iran was invaded.

This would devastate the U.S. economy, which is already hanging by a thin thread. Iran has announced this past weekend it will cease all oil shipments to Britain and France in protest of their support of economic sanctions. This alone is causing oil to spike today. A global energy crisis will financially decimate average citizens who will have their savings sapped by extreme price inflation, not just in gasoline, but in all goods that require the use of gasoline in their production and shipping. If you like this idea, then by all means, support an invasion of Iran.

War Domino Effect

In January of 2010, I wrote an article for Neithercorp Press entitled “Will Globalists Trigger Yet Another World War“. In that article, I warned about the dangers of an invasion of Iran or Syria being used to foment a global conflict, in order to create a crisis large enough to distract the masses away from the international banker created economic collapse.

In 2006, Iran signed a mutual defense pact with its neighbor, Syria, which is also in the middle of its own turmoil and possible NATO intervention. Syria has strong ties to Russia, and even has a revamped Russian naval base off its coast, a fact rarely mentioned by the mainstream media. Both Russia and China have made their opposition clear in the case of any Western intervention in Iran or Syria. An invasion by the U.S. or Israel in these regions could quickly intensify into wider war between major world powers. If you like the idea of a world war which could eventually put you and your family in direct danger, then by all means, support an invasion of Iran.

Dollar Collapse

Make no mistake, the U.S. dollar is already on the verge of collapse, along with the U.S. economy. Bilateral trade agreements between BRIC and ASEAN nations are sprouting up everywhere the past couple months, and these agreements are specifically designed to end the dollar’s status as the world reserve currency. An invasion of Iran will only expedite this process. If global anger over the resulting chaos in oil prices doesn’t set off a dump of the dollar, the eventual debt obligation incurred through the overt costs of war will. Ron Paul has always been right; it doesn’t matter whether you think invasion is a good idea or not. We simply CANNOT afford it. America is bankrupt. Our only source of income is our ability to print money from thin air. Each dollar created to fund new wars brings our currency ever closer to its demise.

This combination of disastrous economic policy and disastrous foreign policy has actually been used before. Great Britain once sat in the position of economic authority that the U.S. sits in today, and the pound sterling was once considered the world reserve because it was required in the global trade of oil, just as the dollar is now. However, British intrigues in the Middle East, and more specifically in Egypt, led them into extreme debt. In the 1940′s and 1950′s, international banks led by America and France threatened to dump British Treasury Bonds in response to their efforts to dominate Middle Eastern oil. Does any of this sound familiar?

This ultimately led to considerable devaluation of the pound. In 1967, the death blow was finally delivered when Prime Minister Harold Wilson artificially reduced the British exchange rate by 14% overnight! Meaning, in the span of a single evening, British citizens lost 14% of their buying power, and every product they went out to buy the next day would cost them 14% more.

It would be practical to mention that the move to destroy the British pound came right in time for the implementation of new programs for the construction of the European Union, and the Euro, the new supranational currency which would later become the standard. The EU and the Euro never could have come about while the Pound Sterling remained a world reserve. Just another amazing coincidence I’m sure, and one that couldn’t possibly have any relation to what is happening to the dollar in 2012, right…?

So, if you like the idea of losing 14% or more of your buying power overnight, and having that financial loss blamed on the tides of war, rather than on the corporate bankers who actually created the mess, then by all means, support an invasion of Iran.

Civil Liberties Destroyed

Do you like being able to walk down the street without having to suffer through constant pat-downs by low wage, brain-dead cretins in blue gloves? Does it make you feel good to know that if you are ever arrested, whether you are guilty or not, you are guaranteed by law to receive a fair trial by your peers in a civilian court with a lawyer by your side? Do you enjoy taking a long drive with the family without facing check points, and predator drones constantly overhead every time you put the top down to feel the wind in your hair? Don’t get too comfortable, folks! These “luxuries” will soon be a thing of the past, especially as the U.S. financial situation deteriorates and war escalates. Think of all the new threats the elites in our government can use to rationalize the usurpation of Constitutional protections when war with Iran, or Syria, or Russia, or China, or all of them at once, breaks out.

The term “terrorist” will take on a whole different dynamic. Great national dangers often facilitate broader definitions of who is and who is not an “enemy of the state”. Crisis gives wings to legislation like the NDAA. In this kind of despotic environment, no one, even those citizens who support the state in nearly all of its enterprises, is safe. Maybe you love the idea of war with Iran, but at the same time, hate the idea of having a TSA goon manhandling your wife or daughter in a train station or on a street corner. Good luck with that. Speaking out could be treated as disruption of national security measures. Off to the gulag with you!

The “greater good” somehow always entails the dissolution of civil liberties for the common man. Invariably, the establishment in power favors no one, save a highly connected few. Being pro-establishment does not necessarily protect you from a government given free reign to do whatever it pleases in wartime. In the end, everyone is fair game.

If this is the kind of America you want to live in, by all means, support an invasion of Iran.

If You Can’t See The Big Picture, You Can’t See A Thing…

The relentless drive for war in the Middle East is not about “spreading democracy”. It is not about terrorism. It is not about oil (at least for the most part). It is not about Israel (at least, not the Israeli people). It is not even about corporate profiteering by the Military Industrial Complex. War in the Middle East is about changing the way our country and our world operates, culturally, socially, financially, and politically. War opens doors to social re-engineering that could never be accomplished otherwise. War creates fear, panic, rage, and allows dystopian fallacies to reign supreme. War, unjust and dishonorable war, makes countries weak, and ripe for violent change.

Iran is not a threat to our way of life, and never has been. But, war in Iran could easily upset the core of our entire country, and leave us wayward strangers in the land we were born.

While much of the rhetoric of preemptive invasion that America has been awash in these past few months is carefully crafted and disseminated by government entities whose intentions are far from honest, its effectiveness is mute without the helping hand of a thoughtless subsection of the public. Every decade or so, a new generation of idiot spawn comes of age to be willingly sacrificed on the chopping block of globalist conquest. This new decade brings with it the promise of not just more of the same, but perhaps the most costly tithe to the gods of war ever made in our country’s history. This is not our fight. This is a fight we are being conned into undertaking for the profit of others, and thus, it is a fight we cannot win. Perhaps when the blind mobs of this nation feel the abrupt sting of their foolishness in their narrow day-to-day existence, they will finally understand…

Regards,

Brandon Smith
Alt-Market.com

Brandon is the founder and chief strategist behind the Alternative Market Project. His goal is to create a barter networking hub and educational gathering place for every American across the country who wishes to decouple from our current collapsing financial system and build something better. Getting people out of their homes and meeting face to face to organize meaningful relationships, and eventually, entire free market communities designed to shield cities and states from economic and political danger; this is the mission of the Alternative Market Project.

Consequences to Expect if the U.S. Invades Iran was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

I’ve given it a lot of thought, drawing on my decades of market-watching experience. In the end, I came up with three predictions for 2012, one of which I will talk about in today’s article.

[ Michael also tied these predictions to three new trade recommendations, currently only available to Agora Financial Reserve members, but which we are working on making available to Whiskey Shooters for an unbelievable discount. More on this later in the week. Keep an eye out of it. -- Ed.]

But be warned: While I believe these events have a very high probability of occurring next year, the mainstream media will likely disagree. Expect them to say I’m being absurd, or at the very least ascribe to them a very low probability of happening.

Let them whine — they were wrong in 2011, and they will be wrong in 2012. So these predictions will catch most investors off guard [...which means you have an opportunity to buy into the matching recommendations for a relatively low price. -- Ed.]

And remember, I’m not a “doom and gloom” guy. In fact, I actually hope all of my predictions do not come to fruition, as they will prove yet more detrimental to this already-anemic economy and country.

But I can’t ignore what I see…and it is my charge to find a way for you to prosper amid the coming chaos. Even if what I see isn’t 100% on the money, the plays I’ve selected should still do all right.

So sit down, strap in and prepare to be surprised, starting with my first recommendation.

It’s pretty clear that we’re going to see some sort of military action against Iran’s nuclear infrastructure, either by Israel, the United States or even NATO. Recent words from Israeli policymakers, U.S. military action and even signals from the markets made that abundantly clear.

In a pre-Thanksgiving interview on CNN, former prime minister and current defense minister of Israel Ehud Barak spelled out his country’s position:

“People understand now that Iran is determined to reach nuclear weapons. No other possible or conceivable explanation for what they have been actually doing. And that should be stopped. And under nuclear Iran, the whole region will turn nuclear — Saudi Arabia, Turkey, Egypt will have to turn nuclear. The countdown toward nuclear materials in the hands of terrorists will start, even if you take out the generation. But more than this, they will use the nuclear umbrella to kind of intimidate neighbors all around the Gulf, to sponsor terror. Try to think what happens if at a certain moment you wake up after Iran turns nuclear, three years down the stream, and you end up with a Bahrain overwhelmed by Iran — who will come to rescue? Who would have come to rescue Kuwait when it was taken by Saddam Hussein 20 years ago, if Saddam could have said credibly enough that he had three or four crude nuclear devices?”

The defense minister continued:

“It’s true that it wouldn’t take three years…probably three-quarters, before no one can do anything practically about it because the Iranians are gradually, deliberately entering into what I call a zone of immunity, by widening the redundancy of their plan, making it spread over many more sides.”

He then reiterated the time frame in which Israel has to take military action: “I cannot tell you for sure, nor can I predict whether it’s two-quarters or three-quarters. But it’s not two or three years.”

In case you couldn’t read between the lines, Mr. Barak has given us a time frame for a pre-emptive attack — sometime within the next nine months!

And that’s overt military action. The covert options may have already begun… with the United States providing a hand.

The Drone Wars

You’ve probably heard about the RQ-170 unmanned American spy plane that Iran claims to have shot down. After weeks of denial, the United States has admitted it was hunting suspected Iranian nuclear sites.

Now Iran has claimed it was able to take control of the drone during its flight, forcing it to land exactly where Iran wanted it.

Spy flights are one thing. Actual hostility would be something completely different. But the fact is that might have already started too.

Israeli newspapers declared that Israel’s war with Iran already had begun, in the form of covert action in cooperation with other groups. The Miami Herald has information backing this up.

It reports that there have been a series of “mishaps” at Iranian nuclear facilities and weapons sites. They may be part of a covert organized attack on Iran’s nuclear weapons program, according to the paper.

A recent occurrence outside Iran’s third-largest city, Isfahan, is thought to be the most-recent strike, though details on the intended target are still unclear. Intelligence officials across the Middle East say there is strong evidence that an explosion at a sprawling military base and nuclear facility outside Isfahan had done some “significant structural damage.”

But it’s not just the promises from Israel, scattered newspaper reports or signs of U.S. surveillance that indicate an attack on Iran is imminent. It’s the market indicators as well.
Consider oil prices. Logic dictates that if the global economy were slowing, the demand for oil would drop, along with its price. In fact, that’s what has been happening with most industrial commodities. But oil remains a glaring exception.

Take a look at the following charts:

The first shows the year-over-year change in oil and copper prices, and the second shows the change in both those commodities over the last 30 days.

We can see that oil prices are up 12% over the last 52 weeks and have surged 13% in the last month. But copper prices are down nearly 10% YOY and have dropped about the same amount in just the last month. As I alluded to in the last issue, falling copper prices are a signal that a global recession is just around the corner. However, oil prices are telling us that something other than just a global economic funk is in the cards.

I believe oil prices have begun to factor in the removal of the world’s third-largest exporter of oil from the market. But I think the markets are actually being too optimistic. There is much more at stake here than the 2.2 million barrels of oil that Iran exports each day.

If you know Middle Eastern geography, you know Iran sits alongside the Strait of Hormuz, a narrow body of water that connects the Persian Gulf to the Arabian Sea and, ultimately, the Indian Ocean.

Oil tankers from Bahrain, Iraq, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates all travel through the strait. In fact, 33% of the world’s tanker traffic and a mind-blowing 17% of the world’s oil pass through the strait.

So with just a little effort, Iran could effectively block nearly one-fifth of the world’s oil supply. And the country knows it.

This is not speculation. This is 100% fact. As Fox News reported, Parviz Sarvari, a member of the Iranian parliament’s National Security Committee, recently warned, “Soon we will hold a military maneuver on how to close the Strait of Hormuz… If the world wants to make the region insecure, we will make the world insecure.”

Wall Street cannot ignore that threat much longer. The increasing likelihood of an overt attack on Iran will not make the situation any better. Remember that when Saddam Hussein invaded Kuwait in 1990, oil prices doubled. And that was just a fraction of the world’s oil at stake, compared with what closing down the Strait of Hormuz could mean.

But even if the world manages to avoid a confrontation with Iran, there are other reasons to have exposure to rising oil prices in your portfolio next year.

For one thing, there’s still the ever-present proclivity of global central bankers to print unlimited amounts of money. After all, oil has traditionally been a fairly good hedge against inflation. Remember back in the late ’70s when gold and oil prices soared together when the Fed under Arthur Burns sent inflation to 15%.

But couple Fed chief Ben Bernanke’s love affair with counterfeiting, er, creating new cash with the credible threat of oil shortages, and you can clearly see why owning oil-producing stocks may be a great asset in 2012.

Regards,

Michael Pento

Iran’s Desperate Gamble to Push Oil Up to $200 was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

There was no denying the spectacular weather for us long-suffering northeasterners. A week ago, it was like living in a banana daiquiri around here. Now, it was sixty-two degrees in East Haddam, CT, along a very beautiful stretch of the Connecticut River somehow miraculously unmarred by the usual mutilations of industry or recreation. On a few hillsides facing south, daffodils were already up with blossom heads ready to pop. The mind could go two ways: into the past, when wooden sailing craft were built in yards along the river; or into the future, when it would be easy to imagine wooden sailing craft being built there again, only twenty miles or so from the great sheltered mini-sea of Long Island Sound.

Whatever else one thinks of how we live these days, it’s hard to not see it as temporary, historically anomalous, a peculiar blip in human experience. I’ve spent my whole life riding around in cars, never questioning whether the makings of tomorrow’s supper would be there waiting on the supermarket shelves, never doubting when I entered a room that the lights would go on at the flick of a switch, never worrying about my personal safety. And now hardly a moment goes by when I don’t feel tremors of massive change in these things, as though all life’s comforts and structural certainties rested on a groaning fault line.

It had been one of those eventless weeks when the world pretended to be a settled place. The collapse of Greece seemed like little more than a passing case of geo-financial heartburn. The 36,000-odd newly-unemployed were spun magically into a feel-good story for public consumption, and the stock markets ratified it by levitating over a hundred points. The news media was preoccupied with the Great Question of whether the first woman film director would win a prize, thus settling all accounts in the age-old gender war, and the health care reform bill lumbered around the congressional offices like a zombie in search of a silver bullet that might send it back to the comforts of the tomb.

All in all, it was the sort of quiescent string of days that makes someone like me nervous. I can’t help imagining what it was like in the spring of 1860, for instance, when so many terrible questions of polity hung over the country, and hundreds of thousands of young men still walked behind their plows or stood at their counting desks or turned their wrenches in the exciting new industries — not knowing that destiny was busy preparing a ditch somewhere to receive their shattered corpses in places as-yet-unknown called Spotsylvania, Shiloh, and Cold Harbor. Or else my mind projects to the spring of 1939, when men dressed in neckties and hats sat in a ballpark watching Joe DiMaggio and Charlie Keller play “pepper” in the pregame sunshine, and nobody much thought about the coming beaches of Normandy and the canebrakes of the Solomon Islands.

Everything we know about it seems to indicate that human beings happily go along with the program — whatever the program is — until all of a sudden they can’t, and then they don’t.  It’s like the quote oft-repeated these days (because it’s so apt for these times) by surly old Ernest Hemingway about how the man in a story went broke: slowly, and then all at once. In the background of last week’s reassuring torpor, one ominous little signal flashed perhaps dimly in all that sunshine: the price of oil broke above $81-a-barrel. Of course in that range it becomes impossible for the staggering monster of our so-called “consumer” economy to enter the much-wished-for nirvana of “recovery” — where the orgies of spending on houses and cars and electronic entertainment machines will resume like the force of nature it is presumed to be. Over $80-a-barrel and we’re in the zone where what’s left of this economy cracks and crumbles a little bit more each day, lurching forward to that moment when something life-changing occurs all at once.

I gave a talk down in Connecticut to a roomful of people who are still pretty much preoccupied with such questions as how to fight the landing of the next WalMart UFO, or how best to entice tourists to purchase objets-d’art, or serve up weekend entertainments along with fine dining and accommodations. Meanwhile, I’m thinking: how many of you might be grubbing around the woods six months from now for enough acorns and mushrooms to make something resembling soup…? It’s an extreme fantasy, I know, but it dogs me. Elsewhere in this big nation, I imagine a laid-off engineer — a genial, capable fellow, once valued by his former employer —  tinkering in his Ohio basement with a device designed to blow up the headquarters of the health insurance company that has just denied his wife treatment for cancer of some organ or other. Or my mind ventures into the rank “function room” of a Holiday Inn outside Indianapolis, where Tea Party recruits meet over chicken nuggets to discuss the New World Order, and the Bilderberg conspiracy, and the suspicious numbers of Jews in the bonus-padded upper echelons of the Wall Street banks, and what might be done about that.

On the trip back to upstate New York, my eyes couldn’t fix on anything in the landscape that seemed even remotely permanent. Even the massiveness of all that steel and concrete deployed in everything from the glass towers to the highway toll booths seemed insubstantial.  I could easily envisage the Mass Pike empty of cars with mulleins and sumacs popping through fissures in the pavement, and sheets of aluminum on the vacant Big Box stores flapping rhythmically in the wind, and something entirely new going on in the hills and valleys along the way, where people labored to bring forth new life.

Regards,
James Howard Kunstler
Whiskey & Gunpowder

March 9, 2010

Oil Prices Will Eventually Change Everything Drastically was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

Everything is about to get more expensive. From gasoline to anti-freeze, life jackets to golf balls, and eye glasses to fertilizer. There are very few things in the modern world that aren’t made from oil, made by machines dependant on oil, or shipped by vehicles powered by oil.

The implications, at first glance, appear to be the opposite of good news. In fact, it’s enough to strike panic in the hearts and wallets of the average consumer.

And that’s exactly why the International Energy Agency just released its annual World Energy Outlook, clearly rejecting the possibility that crude output is now in terminal decline. Their attitude seems to be, what you don’t know won’t hurt you. For now that is.

The truth however, is beginning to surface, and from an investor’s perspective, the truth can mean money in the bank. Right now, the IEA’s claim that oil production will be ramped up from its current level of 85 million barrels per day to 105 million barrel per day by 2030 is receiving harsh criticism.

The Guardian reports, “The world is much closer to running out of oil than official estimates admit.”

This comes from a whistleblower inside the International Energy Agency who states the fear of triggering panic buying has caused them to intentionally underplay the inevitable shortage.

Kjell Aleklett, professor of physics at the Uppsala University in Sweden, and co-author of a new report ‘The Peak of the Oil Age’, states “oil production is more likely to be 75m barrels a day by 2030 than the ‘unrealistic’ 105m used by the IEA.”

According to Professor Aleklett’s research, they are making a dangerous and unjustified assumption. One that is dependent upon the oil industry’s ability to ramp up production to levels never before achieved.

Are you beginning to see the opportunity here?

Whistleblowers and scientists are not the only ones disputing the IEA’s report. The folks who pump oil aren’t buying its rosy scenario either.

·   Total SA, the French oil giant, that is making its move into the Alberta oil sands, doesn’t accept the IEA’s optimistic claims. The company runs on the belief that oil production won’t surpass 95 million barrels.

·   Former chief executive officer of Canada’s Talisman Energy, Jim Buckee, agrees the IEA prediction is nonsense.

·   Sadad al Husseini, energy consultant and the former exploration and production chief of the world’s largest oil company, Saudi Aramco, recently said, “Oil supplies have reached a capacity plateau and will not meet a growth in demand over the next decade.”

The Globe and Mail recently joined the debate stating, “New [oil] fields, generally smaller, are less productive than old ones – note the virtual freefall in production rates from the North Sea fields, which reached peak output in 2000. Another reason [for the decline] is development pace, or lack thereof. The yet-to-be-developed reserves in the WEO report cover 1,874 fields of various sizes that would have to come into production in the next 20 years.”

That works out to almost eight new fields being brought to production each month. A realistic target? Only time will tell. Even if the oil exists, the next question becomes one of money, and where it will come from in order to keep this pace of development on target.

When you add in professor Aleklett’s conclusion that production will shrink to 75 million barrels per day by 2030 — almost one-third less than the IEA’s figure and 10 million barrels less than current production, it’s easy to see why investors need to take notice.

Shrinking supply and ever-growing global demand are creating the perfect storm for oil prices.

The current price of crude could be the bargain of the century. Understand this and every increase at the pump will give you reason to smile.

Regards,
Marin Katusa
Senior Energy Strategist, Casey’s Energy Report

January 19, 2010

Cheap Oil is Gone, and That’s Good News was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

What they’re missing is real simple: peak oil means no more ability to service debt at all levels, personal, corporate, and government. End of story. All the other exertions being performed in opposition to this basic fact-of-life amount to a spastic soft-shoe performed before a smokescreen concealing a world of hurt. If the “quantitative easing” (money creation) and fiscal legerdemain (TARPs, TARFs, et cetera) happen to jack up the “velocity” of the new funny-money, and the world resumes its previous level of oil use, the price of oil would rise again — this time astronomically because the previous crash of oil prices crushed the development of new oil projects to offset depletion — and the global economy will crash again. Only the next phase of the disease is liable to move beyond the financial and into the social and political realms. Disorder of various kinds will rule — toppled governments, civil unrest, international tension and conflict.

The US is doing everything possible to avoid these awful realities, but probably the worst self-deception is the idea that everything would be okay if we could just “re-start lending.” That’s just not going to happen. There is no more capacity to service the debt we’ve already piled on. Americans borrowed too much, and the bankers who made obscene fortunes in fees and bonuses in fraudulent lending managed to leverage this unpayable debt into the greatest collective swindle the world has ever known. The swindle has sent poison into every cell of the macro socio-economic organism, and further swindles are unlikely to revive it.

The rally in stocks, the financials in particular, could go on for another month or two. In the meantime, banks are striving desperately to avoid calling in more bad loans — especially in commercial real estate, malls, strip malls, Big Box power centers — because they don’t want any more losses on their balance sheets. That can only go on for so long, too. Sooner or later the daisy chain of credibility in the fundamental transactions of business lose legitimacy and something’s got to give.

My guess is it will first take the form, sometime after Memorial Day (but maybe sooner) of wholesale liquidations of everything under the North American sun: companies, households, chattels, US Treasury paper of all kinds, and, of course, the S & P 500. We’ll soon find out whether an organism the size of the United States can run an economy based on one family selling the contents of its garage to the family next door. My guess is that this type of economy won’t support the standards of living previously enjoyed in places like Dallas and Minneapolis.

The socio-political fallout from the inherent anger and disappointment in all this is liable to be severe. The public is already warming up for it, with cheerleaders such as Glen Beck on Fox TV News calling for the formation of militias, and gun sales moving out-of-sight. One mistake that the banking elite and their lawyer paladins made the past decade was their show of conspicuous acquisition — of houses especially — in easy-to-get-to places where anyone can see them, for instance an angry mob in Fairfield County, Connecticut, or Easthampton, New York. Unlike the beleaguered elites of South Africa (where I visited recently), who live behind layers of fortification, the executives of Citibank, Goldman Sachs, J.P. Morgan, and a long list of hedge funds, will be found cringing in their wine-lockers behind a measly layer of privet hedge when the tattooed minions of Glen Beck come a’calling.

This could perhaps be avoided if someone in authority like US Attorney General Eric Holder took an aggressive interest in the multiple swindles of the decade past, and commenced some prosecutions. But the window of opportunity for this sort of meliorating action may close sooner than the government and the mainstream media believe. Social phase-change, as in the formations of mobs, is nothing to screw around with. Once the first window is broken, all bets are off for social stability. My guess is that the various bail-out gifts to the bankers are long past having gone too far in the eyes of this increasingly flammable public.

We have no previous experience with this type of social unrest. The violence of the Vietnam era will look very limited and reasonable in comparison — in the sense that it was an uprising on the grounds of principle, not survival. And the Civil War was a wholly regimented affair between two rival factions. This time, people with little interest in principle beyond some dim idea of economic fairness, will be hoisting the flaming brands out of sheer grievance and malice. By the time Lloyd Blankfein sees the torches flickering through his privet, it will be too late to defend the honor of his cappuccino machine.

As I’ve averred more than a few times in this space before, the standard of living in America has got to come way down. We mortgaged our future and the future has now begun. Tough noogies for us. But the broad public won’t accept the reality of this as long as the grandees of finance and their myrmidons appear to still enjoy the high life. They’ve got to be brought down hard, perhaps even disgraced and humiliated in the courts, and certainly parted from some of their fortunes — if only in lawyer’s fees. Mr. Obama pretty much served notice to this effect last week, telling a delegation of bankers in the White House that he was the only thing standing between them and “the pitchforks.” It’s possible he understands the situation.

Regards,
James Howard Kunstler

April 7, 2009

Strange Days of Debt, Peak Oil and Stock Rallies was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

By artificially raising the price of gasoline, the net-zero gas tax uses highly effective market forces to channel usage and investment away from oil and toward alternative sources of energy.  This market-based approach demonstrated its effectiveness in response to the surge in oil prices last year:  gasoline consumption subsided and gasoline prices plummeted.  During the surge, it was the Saudiís pocketing the dough.  Net-zero puts the dough back into U.S. taxpayersí pockets.

The most compelling reason for a net-zero gas tax was neglected by Lugar and Krauthammer, though.  The fact is that, on a household-by-household basis, net-zero is actually ìnet-positiveî, and progressive.  This is because there is a strong positive correlation between household income and household gasoline consumption .  Thus the net-zero tax gives a net positive financial benefit to a significant majority of households, because households with the greatest income tend to be extravagant while households with the least income tend to be frugal.  The result is a financial windfall for a substantial majority of taxpayers, especially those with the greatest need.  This will then also serve as an added economic stimulus, with immediate and continuing benefit to the economy.

There is urgency in implementing this net-positive gas tax idea, however, because of accelerating declines in global oil production .  Oil prices (and political tensions) will escalate in response to the inexorable increases in the global demand for oil, most notably in China and the developing world.  Thus if a net-positive gas tax is to be imposed it must be done now, before natural free-market forces drive the price beyond our ability to bear an additional tax.  This in fact already happened, last year.  Fortunately, the current recession has given us a reprieve, one final window of opportunity it seems.  But we must act immediately to hold down the price of oil, or else prepare to open our wallets to OPEC.

Dr. George Doddington

A Net-Positive Gas Tax was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

It was really quite something to be in a fully equipped broadcast studio, surrounded by live feeds from major networks and many other forms of information. I could see the entire storm system develop in living color, both from radar pictures, satellite imagery and on-the-ground video.

And there I was, sitting at a desk in front of a battery of cameras, addressing the unfolding drama of a massive storm bearing down on the spot that produces 25 percent of U.S. oil output. It was like being Howard Cosell on energy, instead of sports. Aside from getting up at 3:45 a.m. to get to the studio on time, it was great.

Big Storm, Perfect Strike, Pins Still Standing!

Make no mistake. Hurricane Gustav was a big storm. Heck, Gustav was 400 miles wide, so it covered a lot of area. And Gustav bowled a perfect strike, moving northwest across the Gulf, right down the center of oil-patch alley below Louisiana.

But despite the evident power of this meteorological bowling ball, Gustav didn’t knock down any pins! As I write this, the Gulf of Mexico oil infrastructure seems to be intact. Gustav passed over, under and through literally thousands of offshore structures. And none of them appear to have been damaged, or at least not very badly.

Gustav weakened a bit as it approached the shore. So it seemed like the storm was bleeding down during the final approach. But the key “energy” point is that the oil industry has spent the past three years beefing up its infrastructure against wind and waves. And so we saw a strong storm pass right through, with almost no damage. Wow.

Onshore, the media were looking for the “human interest” angle. The “big story” was whether or not we would see a repeat of the 2005 hurricane debacle, with massive flooding in New Orleans and the associated human misery.

Well, the levees in New Orleans held up. Of course, there was flooding due to Gustav. Power lines went down. The high winds caused lots of damage. That was my next “energy” point. If the offshore oil and gas facilities made it through the hurricane, what was going to happen to the electric power?

Without electric power, the pumps can’t work. The refineries are down. The pipelines can’t move product. But again, it seems that damage was not as bad as it could have been. So the pumps and pipelines are still up and running. And it means that refiners like won’t have to rebuild parts of their refinery complex.

Remember Katrina in 2005? We all knew Katrina. And Gustav was no Katrina.

Oil Went Up Then Oil Went Down

Leading into Gustav, there was a special electronic trading session on Sunday, Aug. 31. Oil prices traded up around $118 per barrel. By Monday morning, Sep. 1 — and as Gustav was making landfall south of New Orleans — oil traded down toward $105 per barrel on European exchanges.

Sure, the markets were happy that Gustav didn’t knock out any significant oil infrastructure. But it was not just oil that was down. Gold tumbled. Other commodities and resource plays were down. And through it all, the U.S. dollar was up. In fact, the dollar was setting records against the likes of the British pound.

There was something going on out there besides Gustav sparing the oil patch of the Gulf of Mexico. What was it? Well, the dollar is strengthening. This was another of my topics on the Fox Business broadcasts. The producers wanted me to discuss the “oil story.” But I worked at steering the discussion to the “rising dollar” story. And Fox was good about airing the discussion.

By the Tuesday morning broadcast, Fox Business led with a story — and my commentary — not about the hurricane but about how the dollar has been strengthening for about eight weeks. That’s the REAL story.

I discussed how back in mid-summer, oil approached $145 per barrel. People were asking whether or not oil was in a bubble. Well perhaps it was the “froth on the beer,” but not a bubble.

And oil was rising as the dollar was falling. In fact, oil has been rising for well over a year, as the dollar has tumbled. For the currency traders, life was easy. Bet against the buck, and the Euro would rise. You saw this in gold and other precious metals as well.

Then in mid-July, it all changed. Overnight. There was no big announcement from the Federal Reserve or the European central bank. Nobody said “We’re Tanking the Euro.”  But it’s pretty clear that they decided that enough was enough. The falling dollar and rising Euro was killing exports from European countries. It was putting Germany and France into recession.

So the central banks of the world started buying dollars. The U.S. buck strengthened. Oil fell from $145 into the $115 range. And even the Russian invasion of Georgia, or Hurricane Gustav, could not cause oil to rise. Stay tuned as this drama unfolds.

And while you are tuned-in, don’t give up on the long-term prospects for energy, precious metals and resources. The dollar is rising? This too shall pass.

Really, is the U.S. economy strong and getting stronger? No. Is the U.S. tax code becoming friendlier to investment and long term capital creation? No, again. Are the demographics of the U.S. labor force changing towards a long period of increasing productivity? Nope. Has the U.S. solved its problems in banking, finance, housing, energy, trade deficit, government spending? No, no, a thousand times no.

So it’s frustrating to watch as falling oil prices, falling gold prices, falling other things take down many companies. But have faith over the long haul.

Over the long haul, go with companies that own real stuff. Like oil reserves, or mine reserves, or critical technology in advanced resource industries. Go with the hard-stuff. Avoid the fluff. Or come the next financial hurricane, you might get blown away.

Until we meet again,
Byron W. King
September 12, 2008

The Dollar and Oil Prices was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

So we’ve seen quite a tumble, led by declining oil. But then again, oil had quite a run-up. I’ve said before that oil was climbing too far, too fast. And over the past few weeks, oil tested the $150 mark. But like Gen. Pickett at Gettysburg, this charge to $150 failed.

What seems pretty clear is that at $140, a lot of things in this world just don’t work anymore. Airlines are, obviously, one business not built around highly priced oil. Worldwide, 24 airlines have gone bankrupt so far this year.

But there are other parts of the transport system, the food system and the economy that are cratering with the oil run-up.

Sure, a lot of things don’t work well even with oil at $130, $120 or $110. But that’s not the point. It seems that above $140, the developing world just stops developing. We saw pain at $100 and above. We were beginning to see true demand destruction above $140. So oil pulled back, and perhaps for a while.

I should add that the recent rally in financials pulled a lot of money out of oil.

Last week, the U.S. monetary authorities made a fateful decision. Rather than let Fannie Mae and Freddie Mac fail, or take these two horribly mismanaged firms over via receivership, the U.S. Fed and Treasury Department, essentially, nationalized the bad risks and socialized the losses. This is going to come back to haunt and hurt us, like a guy with a chain saw on Halloween night.

Efficient Capital Markets? No Way!

And despite the oil pullback, crude petroleum is still double the price of what it was just two years ago. So we are living with a 100% increase in the nominal oil price.

The oil run-up was not all just insatiable demand meeting flat supply. I’ve discussed this in other articles. The U.S. dollar has been mismanaged for decades, and thus we live in chronically inflationary times. And couple this with the horrid shenanigans of Wall Street and the overall U.S. banking system in this modern era. Ugh!

Remember how some people used to dismiss the fact that the U.S. was deindustrializing? Remember how some people used to praise the so-called “service economy”? They would say things like, “The U.S. capital markets are the most efficient in the world.”

To which we now reply, “Oh, really?”

How could the U.S. banking and finance system ever have gotten so bad? Don’t we have regulators who are supposed to look over the shoulders of the bankers? Don’t they teach people how to be careful in business schools? Heck, here at Whiskey & Gunpowder, we’ve been writing about the looming implosion for several years. It’s not like it was some state secret.

So now we are at the moment of decision. How many billions of dollars does the U.S. banking system have to lose? OK, how many tens of billions? Hundreds of billions? When you add in the toxic derivative instruments, it adds up to trillions of dollars. And it looks like the nation is on the hook for a lot of it.

Where can things go from here, what with all that worthless paper floating around?

I understand that the Fed does not want to raise interest rates. That would just plain hit the economy in the gut with the left fist. The politicians would scream. But when the Fed wimps out, the dollar declines in value. And the cost for foreign imports, such as oil, rises. That hits the economy in the gut with the right fist. One way or the other — a left or a right to the gut — our U.S. economy is getting beat up. I’d prefer it if we just took our own national medicine and stabilized the dollar.

If the dollar stabilizes, oil should level off. And we could see the market begin to recover. So watch the dollar for your signal.

Meanwhile, the gold and precious metals stocks benefited from the declining dollar. Toward the end of June, most gold stocks all had good run-ups as the dollar fell.

You can’t really time these kinds of moves over the short term. But over the long term, the U.S. dollar has been declining in value. And precious metals have been climbing. My colleague Ed Bugos, a true gold bug, foresees gold at $1,200 per ounce by early 2009. Another precious metals trader of my acquaintance is forecasting silver at $26 per ounce. If that happens, the mining stocks will soar.

Until we meet again…
Bryon W. King
July 30, 2008

P.S.: Many precious metal experts believe that gold will be climbing in the long term. With our weak economy and even weaker dollar, we would expect a strong push in the near future. If gold does reach these high levels once again, many investors simply won’t be able to afford to get back in. But there is a way that you can still play the gold market for just a penny per ounce.

Oil Price Retreats was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.