Saturday, July 26, 2008

Top List- Economic Collapse

Welcome back campers! :-)

How is your summer going! The oil biz has been really busy.

For today's entertainment, we will explore my Top List of reasons the collapse is already here.

1) Trucking is Sucking. The US economy is 2/3rds dependent upon consumer spending. Consumer spending is totally dependent upon the trucking business to get goodies to the store to buy. Trucking in the USA is completely collapsing. Independent truckers are walking away from their leases and just leaving the keys to their trucks at the truck stop and getting a ride back home with Billy Bob. This is already having a huge impact upon the US economy. It is really bad. Way worse than you think. As soon as the big companies (Yellow, England, Knight, Swift, Stevens, J.B. Hunt, Central, etc.) have to park their over!!!

2) The US Government is using Fantasy Accounting tactics to hide the true economy. Many accredited economists have explained that the US does not follow sound accounting practices and that the so-called "shadow statistics" show that a) the economy has been in a recession for 3 quarters; b) inflation is actually about 8-9%; c) Medicare, Medicaid and Social Security are treated as "off balance sheet" items. This is ridiculously insane and not even close to sound economic policy. Send Greenspan a Christmas card

3) The Saudi Ghawar oilfield is toast! Saudi is trying desperately to raise daily oil production from Khursumaniya but Ghawar is spitting up a high water cut and making it impossible to keep the production so high. Injecting 7 Million barrels of seawater a day to keep reservoir pressures up only seems like a good thing, it will soon cause a catastrophic collapse in Ghawar production.

4) The US fleet of cars and light trucks cannot be changed fast enough to make a significant difference in the amount of fuel consumed for transportation. 

I have been waiting to find an authoritative source to help people to understand that buying a Prius and having automakers start producing PHEVs (Plug-in Hybrid Electric Vehicles) will NO WAY SOLVE THE TRANSPORTATION FUELS PROBLEM!!!!

Check out this newsbit from a Silicon Valley industry event this last week......

Dr. Andy Frank, a professor of mechanical and aeronautical engineering at UC Davis who is credited as being the "father of the Plug-In Hybrid, broke the numbers down in his keynote address....

"We have 200 million cars on the road today (it actually is 230 million cars and light trucks-jbs), but we only make 15 million new cars each year. So at best, if the country's entire auto manufacturing capacity were to build nothing but PHEVs, in 10 years we could only replace about 5% of the fleet." (those are actually old numbers now that car sales are down 30% according to my friends in the SoCal Car Biz, the new rate of replacement is way lower than 5% in 10 years-jbs)

THIS IS REALLY BAD. BASICALLY IT MEANS THAT WE BLEW IT!!! We needed to start making these changes 30 years ago after the 1971 Peak in US oil production.

Sometimes my fellow americans get pissed when I explain to them that the US is far more corrupt than Russia. They seem to misunderstand this as a non-patriotic statement. It is not. I am a great patriot and I have spent my whole life helping my country by being a model citizen and global ambassador when I travel. Russia is corrupt in a different in-your-face kind of way that your average american will never understand, especially because they have never been to Russia like I have. The Russian "thieves world" culture is different but strangely similar to the system of 35,000 corporate lobbyists that run the US of A.

The transportation "fleet failure"  is not some catastrophic event off in the future. IT IS HERE! Obviously the entire USA is built wrong. Muscle cars and SUVs and 18 wheelers that get 5 mpg are killing the USA!

5) The US has no energy plan!!! (if you want to read about the only real plan that the USA has you need to read the position papers at the PNAC (Project for the New American Century)

Remember that for most of the history of the USA, we didn't even have a Department of Energy in the government. That just goes to show how out of touch with reality the people running the country were. The big illusion was that money was everything. Business. The economy. They never understood the simple fact that money is an abstract that is derived from the concrete reality that energy feeds commerce and allows an economy to be built.

6) The US corporate propaganda machine has blinded people and will continue to blind people to prevent our collaboration on any real effective solutions (for example, just yesterday, the USGS announced that there are "billions of barrels of oil" in the arctic. As if that would somehow solve our dysfunctional energy system. Remember the USGS were the same people who told us there was no Peak in US oil production in 1971 and now created this huge bullshit about the Bakken Formation holding 500 Billion barrels of oil when maybe 3 billion will be recovered)

Matt Simmons has already made it clear that the US needs a "Manhattan Project" for energy. Good luck with that. There is none of the "political will" that Al Gore dreams about to bring any real leadership into play.

7) The Sub-Prime Meltdown has crippled the US and world economy just at the time we need $ to invest in sustainable energy

 (one algae biofuels company I am working with has developed a solution to sequester carbon dioxide from smokestack emissions at powerplants and feed the CO2 to algae and create algae oil that can be transesterified into algae biodiesel and the leftover algae residue can be dried, gassified and converted to syngas to be burned to create electricity and more CO2 to feed more algae. Want to know the joke? It makes more economic sense to ship the algae biodiesel to Europe and sell it there than it does to sell it here in the USA!!! If our government does not wise up, the biofuels we need will just get shipped somewhere else.)

8) Global Peak Oil Production has not yet affected oil markets (and therefore, all other markets that use petroleum(fertilizer, pesticides, plastics, petrochemicals, medicines, etc. etc.)) As soon as the news gets out that the world's oil supply has Peaked in production, oil will rise to what it is really worth- my latest calculations show $987.00 per barrel!!!

9) The USA has permanently lost it's prominence and the US Dollar is lost now too. (this means if you are a US citizen you need to get a lifeboat outside the US and some minimum "nestegg" in a foreign currency. These are the type of international strategies I develop for my clients)

10) An attack against Iran seems imminent. Any attack against Iran, whether by the USA or Israel or some bullshit "coalition" will cause an immediate, in 3 days, collapse in the global economy. Iran has many, many Chinese made Silkworm missiles in emplacements around the margin of the Strait of Hormuz that they have promised to fire at oil tanker traffic in the Persian Gulf. 17 Million barrels per day, one FIFTH of the world's oil passes through the Strait of Hormuz each day. The US SPR (Strategic Petroleum Reserve) is only ESTIMATED to be able to supply 30 days of oil if the Strait is closed. Just one tanker hit will cause all the insurance companies to pull their coverage or increase their fees. A mere military escort by US or Canadian or British warships will not be enough to continue a significant supply of oil through the strait. We need to help Iran and make them our friends. They already are. We have over 900,000 Iranians that live just in California and I know many Iranians very well and they are certainly not the religious monsters many ignorant redneck americans seem to think they are.

Iran needs our help. We should give them as much nuclear ELECTRICAL POWER capacity as they can handle. It is totally achievable to put international monitoring in place to prevent Iran from further enriching nuclear materials to weapons grade. Unfortunately the USA is an nation living under almost absolute propaganda manipulation and the average American is scientifically illiterate and can't understand nuclear physics and the issues involved. I don't know how many times I have suffered through an ignorant american making jokes about President Carter without even realizing that he had a degree in Nuclear Physics and they don't. Sad.

11) Recent statements about the SPR proves that all US politicians are functionally illiterate and do not understand the SPR or the oil business. They are leading the USA into the abyss. It does not matte which political party you are talking about. They all failed to understand the SPR and how it should be used. Have you heard even one talking head explain that the USA has a signed obligation to provide OUR OIL to other nations in case of THEIR emergencies? Yes, it's true. We have an obligation through the IEA. How come no politicians are explaining that the SPR is supposed to be saved for an emergency, even our friends' emergency???

So, there you have it. The collapse is already here. We have been in a slow motion wreck since at least 1971 when the US oil production peaked. That is the price of corruption. The lobbyists were just too successful and none of the politicians care enough to stand up and do the right thing because they are constantly worrying about getting re-elected.

What to look for? Well, when you turn on the TV and Bobby the Talking Head tells you the big trucking companies just shut down, watch out. There isn't gonna be some "Bear-Stearns-Bailout" for the trucking biz. There just won't be much to choose from at the store or market. My friends in Russia have told me some rather vivid stories of waiting in line for bread or meat.  Get ready America! (The remaining malls will crash and burn too.)

And, run for the hills when Susie NewsAnchor tells you that Saudi finally admitted that the Ghawar field is toast. That will mean that we have hit Global Peak Oil!!!

Solution you ask? Get your ass to the top of your own pyramid ASAP (start a medical clinic and a sustainable farm).

What's that smell? Rome is burning!