The Crude Oil Tug of War

I think that we can all agree that it takes energy to make stuff. People don’t get very much done when they don’t have enough food to eat. Tractors don’t go very far without fuel. Power plants don’t produce electricity without coal.

And, we’ve run into two problems with energy.

  • More and more people want a share of it
  • We’re having trouble increasing our production of it

Up to now, whenever we needed more energy, we dug a new well or opened a new mine to produce more of it. So, when the Chinese asked for more, we could give it to them. But, that’s not the case, anymore.

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The Crude Oil Tug of War

I pay very close attention to this website:

http://srsroccoreport.com/

The creator of that website, Steve St. Angelo, understands the impact that the cost of energy has on our civilization. And, he also understands the importance of precious metals in a fiat economy.

The Cost Of Energy And Precious Metals

Furthermore, he understands the impact that the cost of energy has on the cost of precious metals. As the cost of energy increases, so will the cost of gold and silver.

We often forget that one of the foundations of the price of precious metals is the cost of getting it out of the ground, and a big component of that cost is energy. It takes a lot of energy to mine silver and gold, so the cost of gold and silver will automatically go up, when the cost of energy goes up.

Of course, that’s the cost. The PRICE of gold and silver depends upon the ability of the global elites to manipulate it.

Steve St. Angelo Interview

That thought was brought home to me when I listened to this interview of Steve St. Angelo, last night:

SRSrocco Interview With Mike Gleason at MoneyMetals.com

https://s3.amazonaws.com/ILB_MS_BUCKET/ILB-141024-Steve-St-Angelo_Interview.mp3

And, I found the interview on SRSroccoReport.com, here:

SRSROCCO INTERVIEW: The Coming Collapse Of The Global Paper Ponzi Scheme
http://srsroccoreport.com/srsrocco-interview-the-coming-collapse-of-the-global-paper-ponzi-scheme/srsrocco-interview-the-coming-collapse-of-the-global-paper-ponzi-scheme/

The Tug Of War

2005 marked a turning point in our civilization. Just as China and other emerging markets were demanding more and more energy, our ability to get more energy started to decline.

It was – and is – a perfect storm.

Now, here’s that tug-of-war that I mentioned in the title:

Oil Consumption by Region
Oil Consumption by Region – 1980 to 2006
(Wikipedia)

Notice that China and the rest of Asia are taking a much larger share of the oil being produced. In fact you’ll probably see it better in this chart:

Percentage of Consumption by Region
Percentage of Consumption by Region – 1980 to 2006
(Wikipedia)

So, Asia is the big winner here.

Who are the losers?

Europe, Eurasia and the US.

Supply Can’t Grow

Normally, that wouldn’t be such a big deal if oil production was substantially increasing. When there is plenty of supply, everyone is fat and happy and willing to share.

But, what if supply isn’t able to grow?

Well, here’s a look at global production and price:

World Crude Oil Production and Price
World Crude Oil Production and Price
(peakoil.com)

Did you notice that when the price of oil goes up, production can only increase by a small amount?

Right.

It doesn’t really matter how much money you offer producers for oil – they still can’t give you more. This means that we are at maximum production, and it’s downhill from here.

And THAT, my friends, is a disaster.

I truly hope that you’ll be ready for this
(That’s a link. There’s not much time left.)

A prudent man foreseeth the evil, and hideth himself: but the simple pass on, and are punished.Proverbs 22:3

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If you find a flaw in my reasoning, have a question, or wish to add your own viewpoint, leave a comment on the website. Your input is truly welcome.

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2 thoughts on “The Crude Oil Tug of War

  1. There are so many fallacies in your writing about oil John that I don’t know where to start.
    Oil is not from fossils, it is generated in the bowels of the earth, and the super deep wells 30,000 + ft deep tap into an inexaustable supply. Oil is being replenished, all the time. The oil that is being used up is the tiny bit that has seeped through the rocks and lodged near the sueface of the crust.

    There is no shortage of oil. There is a glut of the stuff. It is being regenerated in the bowels of the earth

    It costs about $4 per barrel to recover oil in the Middle East

    The price of oil is totally manipulated, as is gold and silver. The same people that control the price of these commodities, control the wold. The price of oil bears no resemblance to the scarcity of oil, if it did oil would be priced at about $10, maybe $20 tops.

    • Hi Douglas Back,

      Unfortunately, no one has been able to prove abiogenic oil formation. Not in a lab. Not in a coherent theory.

      However, let’s – for the sake of argument – assume that you are right. Abiogenic oil is created over the course of thousands of years. We’ve used up the easy-to-get-to part in a little over a hundred years.

      Please understand that the idea of Peak Oil isn’t about running out of oil, it’s about running out of the easy-to-get-to oil. The cheap stuff.

      Furthermore, you are making a claim about a grand conspiracy so powerful that it wouldn’t matter how much oil is really left – it’s all the same.

      So, whatever the truth is, we’re in a massive amount of trouble, no matter what the source of oil is.

      Thank you, Douglas.

      Yours in Christ,

      John Little
      omegashock.com

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