wank, wank, wank
Nov. 6th, 2007 10:48 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
solarbird(I suppose I should come up with an "economics" tag or something...)
Swiped from here, a table used to make a point other than the one I'm discussing:
Note the interesting differences between transportable energy commodities and everything else. Sure, the CPI is a ... questionable number as now reported, and arguably has been since the mid-90s calculation revisions put together basically to reduce the growth rate of various key governmental debt obligations such as Social Security. But leaving that aside for a moment, that 3, 3, and 4 multipliers vs. 9 and 11 multipliers is substantial, and, I think, revealing. If you take the base commodity increases as inflation indicators (and use those to price real money), then energy still costs three times as much as it did seven or eight years ago.
(Natural gas is transportable, sorta. It's transportable with pipelines, within a continent. From a practical standpoint, it's not transportable over water much yet, as the LNG bottlenecks are massively restrictive, and that's significant enough - particularly when discussing in terms of US dollars - that I think the distinction remains critical.)
If, on the other hand, you take the dollar as an oil-backed currency (as I do), and take it further than I do (as in, only oil-backed, which I think has not been valid for some time) well, that says very nervous things about other commodity prices. As in, they have a lot of catching up to do. Man I hope not. We have enough problems already.
Oil hit $97/barrel today, by the way, so that table is arguably worse than it looks, but hopefully that's more bubble than data. While I think it's still cheaper than it's going to be, for the moment, that's high. Also, the US dollar smashed below the Can93c level, too, down just under 92.5c, and is in general having yet another bad day against the basket and against the Euro and such. But on the other hand, the CDX markets have kind of leveled off! Yay! Oh, except they mostly aren't trading for lack of bids, like last August, so, um, yeah.
As for the stock market, well, as much as I hate to throw any fodder to the gold bugs, from Minyanville's Kevin Depew, here's the S&P 500 normalised against gold:
I wrote him asking whether he'd be willing to run that again, this time against oil, but he didn't do it. I don't have a Bloomberg terminal, so I can't - I don't have all the daily historical data and such, sadly, or I could try to work it out in something lame like Excel. But one thing to remember is that gold's up 3x since 2000. Oil's up nearly ten times as of today. (See table above.) Where's that put the S&P 500 and your bull market? Not higher...
Swiped from here, a table used to make a point other than the one I'm discussing:
Note the interesting differences between transportable energy commodities and everything else. Sure, the CPI is a ... questionable number as now reported, and arguably has been since the mid-90s calculation revisions put together basically to reduce the growth rate of various key governmental debt obligations such as Social Security. But leaving that aside for a moment, that 3, 3, and 4 multipliers vs. 9 and 11 multipliers is substantial, and, I think, revealing. If you take the base commodity increases as inflation indicators (and use those to price real money), then energy still costs three times as much as it did seven or eight years ago.
(Natural gas is transportable, sorta. It's transportable with pipelines, within a continent. From a practical standpoint, it's not transportable over water much yet, as the LNG bottlenecks are massively restrictive, and that's significant enough - particularly when discussing in terms of US dollars - that I think the distinction remains critical.)
If, on the other hand, you take the dollar as an oil-backed currency (as I do), and take it further than I do (as in, only oil-backed, which I think has not been valid for some time) well, that says very nervous things about other commodity prices. As in, they have a lot of catching up to do. Man I hope not. We have enough problems already.
Oil hit $97/barrel today, by the way, so that table is arguably worse than it looks, but hopefully that's more bubble than data. While I think it's still cheaper than it's going to be, for the moment, that's high. Also, the US dollar smashed below the Can93c level, too, down just under 92.5c, and is in general having yet another bad day against the basket and against the Euro and such. But on the other hand, the CDX markets have kind of leveled off! Yay! Oh, except they mostly aren't trading for lack of bids, like last August, so, um, yeah.
As for the stock market, well, as much as I hate to throw any fodder to the gold bugs, from Minyanville's Kevin Depew, here's the S&P 500 normalised against gold:
I wrote him asking whether he'd be willing to run that again, this time against oil, but he didn't do it. I don't have a Bloomberg terminal, so I can't - I don't have all the daily historical data and such, sadly, or I could try to work it out in something lame like Excel. But one thing to remember is that gold's up 3x since 2000. Oil's up nearly ten times as of today. (See table above.) Where's that put the S&P 500 and your bull market? Not higher...
![[identity profile]](https://www.dreamwidth.org/img/silk/identity/openid.png){kind=small}
no subject
Date: 2007-11-06 09:39 pm (UTC)Except for the fact that the EPA outlawed it. Wonder why that is?
The coming energy crisis is one being manufactured, it is not natural. There is lots of oil in the ground, but we're not being allowed to extract it. No one is building new refineries, even though the need is up, so supply and demand, the price soars.
If people in our government were -serious- about seeing or energy needs met, then they'd be building nuke plants everywhere, drilling for oil domestically, and doing everything they can to get people to use natural gas. They also be helping to open more refineries. The fact that none of this is happening, and in fact that there are laws prohibiting any improval of our energy situation shows that the folks in power aren't looking for any solutions. And before the BDS people kick in, the problem is coming from the Congress.
no subject
Date: 2007-11-07 01:36 am (UTC)There is, however, not such a great supply of producible oil. Recovery factors are characteristically low; and believe this, please, a lot of R&D effort is going into increasing the recovery factors. But some basins, like Nisqually, Cle Elum and Whatcom, will never produce significant oil, because they lack the appropriate type of kerogen to have generated oil in the first instance. Further southwest, towards Mist, Oregon, the kerogen endowment was more amenable, and one does see wet gas and condensate, but the fields are severely structurally compartmentalised, which makes it really hard to maintain effective production. Same goes for southwestern quadrant of Canada's Georgia Basin. Great kerogen, nice level of organic maturation, lousy structural habitat. Charter Oil's wildcat well on Saturna Island essentially ran straight down near-vertical beds in the core of a structure (vide Alan McGugan's classic paper in Bulletin of Canadian Petroleum Geology).
Feeling brave?: spud a well about 1400 metres northwest of Alki Point, Seattle. See what you find. It'll be interesting. I wrote the evaluation documents on that prospect lead, but fully accept that it won't be drilled within my lifetime. Too lawyered-up, that site is.
USGS Western Energy website has a lot of good, accessible, authoritative and free information concerning the basin potentials and total petroleum systems (oil plus gas) of the conterminous States. Worth a gander.
herself, always pseudonymous
(because such comments could impact her livelihood: Big Oil holds big grudges)
no subject
Date: 2007-11-07 05:29 am (UTC)I used to work for PGT (Pacific gas transmission, the major pipeline on the west coast) I know -exactly- how that is.
no subject
Date: 2007-11-07 06:23 am (UTC)we are really bloody careful about the whole pseudonymy thing as long as there is even the remotest chance of drawing a pay-cheque there again.
no subject
Date: 2007-11-07 10:01 am (UTC)From personal experience I can tell you that LNG conversions are quite effective, my car has a dual fuel system, a regular petrol tank and a LNG tank, the car starts on regular petrol, then switches over to LNG as soon as it's warmed up. I drive about 20000 miles a year, need to fill the regular petrol tank roughly 3-4 times a year, the rest of the driving is done on the LNG, from which my Peugeot 307 gets about 23mpg, which is a bit less than I get from petrol, but hey, at almost a third of the price, who's bitching about a 10% loss in mileage.
Is this what you're looking for?
Date: 2007-11-07 11:40 am (UTC)Admittedly, these are the Dec 2007 futures contract prices rather than the actual/spot market prices (since I'm getting this all via my futures broker), but it's not like there'll be a huge difference (well, all right, if SP and CL have sufficiently different backwardation/contango behaviour, then it'll make a difference, but I'm guessing the overall picture won't change that much).
And while XPressTrade's java charting thingie has every bit the fancy coloring of the Bloomberg terminal thingie, evidently none of that makes it into the printable version. Oh well.
Re: Is this what you're looking for?
Date: 2007-11-07 03:43 pm (UTC)