Thursday 27 November 2008

Finance crash 2009, Energy after 2011, Food after 2015, Ecological after that?

We just love the good news. So, turn away, browse elsewhere.

Here goes - a series of meltdowns

Marc Faber (investor):

"In the January of 2009 the world economy will be imploding. You gotta get out. I repeat: imploding."

Jeroen van der Veer (CEO, Shell)

"[We] had better make speed, or else the lights would go out. A sense of urgency is needed.
The energy challenge will be a problem for at least 50 years

Second, oil and gas alone will not be able to provide this fuel.

And third, CO2 levels will go up in concentration higher than the levels recommended by the scientists."

Oh yes, he forgot to mention the agricultural crash due to lack of fertile topsoil, competition from biofuels, lack of fossil fertilizers and the fact that we have been eating major grains from the stockpile for few years already (read: eating more than producing).

Bring it on, we say. Bring it on.

Only by wiping the slate clean can one really even imagine starting anew.

Thursday 6 November 2008

IEA predicts oil price to rebound to $100 - $200

Well that didn't take long. FT reports again:

“While market imbalances could temporarily cause prices to fall back, it is becoming increasingly apparent that the era of cheap oil is over [.] Current global trends in energy supply and consumption are patently unsustainable [.]

Oil prices will rebound to more than $100 a barrel as soon as the world economy recovers, and will exceed $200 by 2030."
So much for going back to the good old days. The funny bit is of course the $200 by 2030. Sure, but we are going to be seeing that a lot sooner than that. I could have made an equally useless prediction: $300 oil by 2100. How's that. Base inflation alone will drive oil to $200 by 2030, not to mention all the shortages in availability. $200 might well be reality by 2011-2015, depending on how recession lasts.

This is our last wake up call. The final recession before the big one to do any meaningful infrastructure work, if any.

Now the markets know. The message has been hammered in. If anybody still believes oil futures prices on their own are a solid indicator of peak oil or lack of peaking, they are sorely mistaken.

We a bit of bad luck we might even get a price rise before we get out of this recession. Stagflation after stagdeflation, anyone?

Sunday 2 November 2008

Anarchy in the UK

UK is in dire straits.

North Sea oil production is falling, causing a growing double deficit, both in falling exports and increasing energy imports. In addition, natural gas production is coming off a cliff. Almost all of UK's heroic climate change mitigation has been achieved by a switch from coal to natural gas. Oh well, they can always go back to coal.

Now Peak Oil Group (UK) has assessed that peaking of UK's own production and that of the world at whole is a much greater threat than terrorism. No surprise there, considering that terrorism still kills less people in UK than cars do.

"When they fail to meet demand, many countries will experience this as an energy crisis. Some will experience it as an energy famine, as producers start to withhold exports."
- Jeremy Leggett, chairman, Peak Oil Group (UK)
Add to this the fact that UK banks are extremely over-leveraged through debt which is now crumbling worldwide. The residential housing bubble is among the biggest in the whole of OECD and clearly worse than in the faltering US. As a final icing on the cake, the country produces very little, it's financial center role is now in serious doubt and it has a consumer base that is up to it's neck in debt - unable to consume anymore. Oh yes, let's not forget the recent turn into isolationism and immigration hostility.

Ingredients for a really disastrous recipe are all here. The fall of the UK in the coming two decades could be something not seen since the heydays of the 60s and the ensuing fall of the 70s.

Milton! I think thy spirit hath passed away
From these white cliffs and high-embattled towers;
This gorgeous fiery-coloured world of ours
Seems fallen into ashes dull and grey,
And the age changed unto a mimic play
Wherein we waste our else too-crowded hours:
For all our pomp and pageantry and powers
We are but fit to delve the common clay,
Seeing this little isle on which we stand,
This England, this sea-lion of the sea,
By ignorant demagogues is held in fee,
Who love her not: Dear God! is this the land
Which bare a triple empire in her hand
When Cromwell spake the word Democracy!