muses of the moment

February 4, 2014

Oil prices

Filed under: Economic Crisis, Peak Energy — totallygroovygirlfriday @ 1:34 am

Click here for a good article on the economic impact of the Keystone pipeline. gg found Washington’s point interesting. gg will need to look at the numbers a little more closely to confirm.

But the real story here is not Keystone. One of the main reasons that the industry has focused so much on refined oil products to make money is because crude oil is now a process. The oil that we can get out of the ground (globally as well)moving forward, even with new technology, is very crude, that requires more and more expensive refining processes to make it usable for anything, especially gasoline. Expensive wells and expensive processing requires debt. We are in a global debt collapse. Anything connected with debt will become more expensive. And since the US has set up an infrastructure so dependent on cheap oil, prices must continue to go up long-term. And if we are smart, we will start using oil to set up a more diverse infrastructure, but even that will be expensive.

This is the reason gas prices will continue to go up regardless of the petro-dollar. But changing the petro-dollar will certainly have an impact. It is these things that make gg continue to write about peak oil. Peak oil is not about no oil: it is about the grade of crude available and the expensive processes to get it out of the ground and form it into something useable.

As I stated a few days ago, the US GDP driver is exports, dominated by oil-energy exports. Chances that the government will do anything necessary to continue to keep exports up is very high.



  1. Something to keep in mind is that the price of oil, for the moment, is denominated in dollars. As the acceptance of the dollar fades as the world’s reserve currency, so must the price of oil must increase in dollars. It’s hard to factor out the dollar’s distortions, so most people don’t try.

    The price of oil in terms of grams of gold has never been lower. But, gold is manipulated down just as the dollar is propped up. When the manipulation of the markets fail, as it must eventually, then the price of oil in terms of gold must rise. But, that is not because oil has become more scarce.

    Peak oil is a socialist concept. It is promoted by resource scarcity advocates such as the Club of Rome’s “Limits to Growth.” Peak oil’s definition is quite slippery. Is it about the oil available for use or is it about the number of new oil field’s which are found? Resource scarcity advocates do not believe in the market’s ability to resolve problems.

    Peak Oil does not incorporate improvements in technology, so the Shale Oil and Gas revolution caught it’s advocates by surprise.

    Then there is governmental interference. Vast segments of the world are prohibited from exploration. There is no way of finding out how mush oil is available when exploration is prevented.

    A far better way of determining scarcity is Oil Reserves and Resources. Oil Reserves are the amount of oil we can pump at today’s prices, which stands at 52.9 years of current consumption.

    Oil Resources is the oil we know about, which requires a higher price or improvements in technology.

    Comment by LG Wheeler — February 6, 2014 @ 4:03 pm

  2. GG,

    I wouldn’t mind if you could help us all kind of get a read to where Martin Armstrong says the economy is going. On his blog today he talked about gold. I literally read the blog twice and still can’t figure out if gold is ready to bust upwards or if it’s going down. If Ukrainians are buying US Dollars then would one would expect that others are probably going to start moving their money in to safer environments as well. To me that u ltimately means in to US equity markets. If so, then US companies should begin to see their stock prices rising. I am wrong? I am right, but too early in thinking that it will begin now/soon?

    Comment by MikePhila — February 7, 2014 @ 2:44 pm

  3. Mike,

    I reread the post twice too. I do not know, it was very confusing. And the gold chart shows it is in the middle of the trend channel, so that doesn’t help at all. I am taking a wait and see approach on metals. Hopefully, Martin will clarify.

    As far as equity markets go, Martin has certainly been correct about global capital flight into US equities. But the capital is some of the global created money. That created money can go down the global debt drain very quickly in the next debt crisis. The problem is we have no idea what will trigger that next leg of the debt crisis.


    Comment by totallygroovygirlfriday — February 8, 2014 @ 11:53 am

  4. Good point.


    Comment by totallygroovygirlfriday — February 8, 2014 @ 11:54 am

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