Several reports going around the web claim that oil output rose to its highest point ever last month, and that there is 6 to 8 million barrels per day of spare capacity around the world.
Yea... and I'm still young and handsome (and I would be if it weren't for these g0t damned mirrors).
The price of Oil is holding quite well at near $90 per barrel... but there is plenty of Oil in the market place... and the producers are standing ready to bring the price of Oil down to the $70-$80 target band...
Hoo-boy.... who writes this stuff? And who believes it? Does any investor really believe one word coming out of the mouthpieces of the producing countries?
Not a one of us has any idea of the truth in places like Saudi Arabia, Kuwait, Iran, Venezuela, et al... the only thing WE DO HAVE is the f*&%$(ing price mechanism, and a small ability to extrapolate, infer, and induce. We can't deduce squat.
I will bet $$ to donuts that in a few months the production numbers for November will be adjusted... downward.
Now look.... I will be the FIRST to say that I could be wrong... but if Oil cracks $100 in the next 90 to 180 days, that will give you a good idea of just how accurate or truthful these knuckleheads have been.
This is not something that can be swept under the rug and explained away in the media. $100+ Oil means a great many things... but the most important thing it means to America is that our supply of imported Oil is in steep decline, and at some point the Federal Government is going to be forced... BY TOTAL SUPPLY.... NOT BY PRICE... to do some really, really unpopular-with-the-markets type of policy shift.
Allow me to be specific:
Bill Gross of PIMCO fame thinks that capitalism cannot survive a long term population decline, and I think that concept has merit. Take that concept and apply it to long term energy inputs and I think you come up with the same outcome as declining population (with unlimited energy inputs).
As a stone cold free-market capitalist... I am here to tell you that that is quite disconcerting... because it means that physical rationing of things like heating fuels is a very real possibility... as in, no matter how rich you are the government might not permit you enough fuel to heat and cool a 10,000 square foot mansion or to fly a private jet... and that would be the end of free market capitalism, and the beginning of a whole new phase of Big Brother. (I mean, come on... our government wouldn't use this as a ruse to enact MORE CONTROLS, now would they?)
This is not to say that Shale gas, Coal to Liquids, solar, wind, hydro, switch grass ethanol, et al, won't make that outcome the stuff of fiction... but its worth thinking about.
Its all in the giga-joules, and your first indicator is the price of Oil. Time will tell.
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On another unhappy note.... here is yet again another perfect example of what years of entitlement spending has wrought... a society that firmly believes that something can be had for nothing and a political class unwilling to even try to re-educate the electorate in the simple math or the truth.
Peak Oil is small potatoes next to this.