Tuesday, May 4, 2010

SAR #10124

Sell dreams, live in the real world.

Same Old Same Old:  US personal income was up 0.3% in March, as was disposable income.  Spending, however, was up 0.6%. So either personal debt increased, or savings decreased.  Ah, spending more than you make, it's the American way.

Lies, Damned Lies & The Oil Business:  We keep hearing that despite the current inconvenience the US must keep drilling in the Gulf of Mexico because we need the oil in order to keep oil prices down and to free ourselves from dependency on foreign oil.  Crap.  GOM oil production may reach a sustained million bpd.  We use 20 million bpd.  Oil, like gold, is priced on an international market and is fungible.  We could shut down the GOM platforms tomorrow and never miss 'em.  According to the EIA, drilling the entire Continental Shelf would not make a discernible impact on global oil prices.  But it'd probably have an impact on life in and at the edge of the sea.

Profit/Loss:  Every day, 16 US workers are killed by employer negligence.

Ideal Reality:  Goldman's maintains that they were not guilty of anything because they only sold crappy stuff to “sophisticated” investors.  Like that town council in Norway and the school board in Arkansas.  Their investors were so sophisticated they lost a billion dollars on a single set of deals.

Tone Deaf:  Twitch says the little setback in the Gulf should not slow the effort to drill holes in everything.

Party On:  The Fed reiterated its intention to keep the benchmark interest rate near zero for an “extended period”.  They also pretended to discern signs of life in the job market.

A Free and Efficient Market:  “The trust that once made firms like GS and the old JP Morgan special has long since been lost, leaving the marketplace that remains a hideous, barbaric place that is bereft of honor — and a source of infinite risk to the participants.”

Big Sigh:  Researchers have found a way to make plastics from natural gas, breaking our dependence on petrochemicals to provide roadside litter.

The Road Ahead:  A peak in oil production, followed by an increasingly rapid decline in its availability, is undoubtedly in our future, quite possibly our near future.  Industrial society is based on the wide availability of relatively cheap petroleum, efforts to change that dependence should start now, for “once collapse begins we will lose the tools and infrastructure we would need to manage the collapse.”

Animal Spirits:  Fraud and chicanery are the basis for our economy, always have been.  They only get noticed when the wheels come off. “Animal spirits” indeed.

Porn O'Graph:  40 years of backsliding.


Anonymous said...

RE: Big Sigh

Actually sounds like a big deal to me. The more oil we can remove from the manufacturing process the more oil for my car!


Anonymous said...

RE: Porn O'Graph

I guess that is really a graph that shows when the top marginal rates were lowered? I'd like to see the whole series from 1923 mapped against the top tax rate.


jm said...

The 200,000 bpd Gulf of Mexico production figure given is too low by a factor of more than five. According to http://www.theoildrum.com/node/5081 production is about 1.3 million bpd. According to http://www.gomr.mms.gov/PDFs/2007/2007-020.pdf it may rise to 2.1 million bpd. There is also a large component of natural gas production not included in these figures.

Charles Kingsley Michaelson, III said...

jm - Right you are - but even at a million bpd it doesn't do all that much for our dependence. Thanks.


Dink said...

"once collapse begins we will lose the tools and infrastructure we would need to manage the collapse.”

Agreed, the collapse will not be linear.

Anonymous said...

You seem to want it both ways: a million bpd is trivial AND we're doomed by peak oil.

In a peak oil environment, a million bpd doesn't sound trivial to me.

Charles Kingsley Michaelson, III said...

Anony 6.16

A million bpd is 5% of the current US demand, 1.2% of the world's daily production. Would its absence drive up the price of oil, yes. But not dramatically.


jm said...

ckm - Nice to see you edited to correct. The right stands always ready to pounce on anything they can use to discredit the good guys. If I hadn't double-checked the numbers I would have quoted the 200k bpd figure to someone I know who has swallowed the Fox News line hook, line, and sinker, and who I'd dearly like to wean away from them; if I had used that number and he'd discovered the error, he'd have thought me "just one more lying liberal".