Awash in a Sea of Oil

I just tried to come up with a list of benefits that will redound to the U S of A because of this but the list is too long to make a coherent post. (As if my posts are usually coherent.)


Ladies and Gents, it is official that the United States is awash in a sea of oil. In fact, we have more recoverable oil than even Saudi Arabia. Forget the snark about "Hydrocarbon Deniers" and read the article at the link. You may find it eye opening.

Repetitively Repeating ... but Worth It

“To preserve our independence, we must not let our rulers load us with perpetual debt. We must make our selection between economy and liberty or profusion and servitude.

If we run into such debts as that, we must be taxed in our meat and in our drink, in our necessaries and our comforts, in our labors and our amusements, for our callings and our creeds, as the people of England are.

Our people, like them, must come to labor sixteen hours in the twenty-four, give the earnings of fifteen of these to the government for their debts and daily expenses; and the sixteenth being insufficient to afford us bread, we must live, as they now do, on oatmeal and potatoes, have no time to think, no means of calling the mismanagers to account; but be glad to obtain subsistence by hiring ourselves to rivet their chains on the necks of our fellow-sufferers.

Our land-holders, too, like theirs, retaining, indeed, the title and stewardship of estates called theirs, but held really in trust for the treasury, must wander, like theirs, in foreign countries, and be contented with penury, obscurity, exile, and the glory of the nation.

This example reads to us the salutary lesson that private fortunes are destroyed by public, as well as by private extravagance. And this is the tendency of all human governments.

A departure from principle in one instance, becomes a precedent for a second, that second for a third, and so on, till the bulk of society is reduced to be mere automatons of misery, to have no sensibilities left but for sinning and suffering.

Then begins, indeed, the bellum omnium in omnia, which some philosophers, observing to be so general in the world, have mistaken it for the natural, instead of the abusive state of man.

And the forehorse of this frightful team is public debt. Taxation follows that, and in its train wretchedness and oppression.”

– Thomas Jefferson

Greed is Good: Or at least Greed is Greed

Someone using the nom de plume The Ugly Truth at the financial website Seeking Alpha has published an interesting article on Apple's stock price performance and whether or not Apple's stock is, in fact, in a bubble.


Which brings me to the psychological point about financial bubbles. The Ugly Truth republishes a chart I've seen before, which is a great representation of the way people react to perceived, easily available money: Greed!


When your barber is talking about trading options on Apple stock, it's time to get out of Apple. When your neighbors are creating trading pools to form investment clubs, it's time to get out of the market. When the guy pitching internet web development to your boss (in 1999) says "this time it's different", then do not walk but run away.

Party Like It's 1999!

Housing prices have now returned to the inflation-adjusted levels of 1999. This chart from the American Enterprise Institute is particularly interesting regarding just how high prices got in the housing bubble. I'm curious, though, and I'd like to find information going further back in the past. The chart clearly shows that housing prices were even lower prior to 1999. Hmm ... just what is the historic average? I'll have to take a look.

Six Energy Myths

There's a very interesting article at the always interesting site, Pragmatic Capital, run by Cullen Roche. It talks about some energy myths that are part of the conventional wisdom. Follow this link for more detail. Here are the highlights.

• US crude oil comes from the Middle East/Persian Gulf.

It doesn't; at least not most of it. As I commented on before, Canada is our largest foreign supplier of oil with Mexico at number two.

• The US domestic energy production continues to dwindle.

It was but it's not dwindling now. Production is ramping up and quickly with the oil shale finds in the Bakken (North Dakota) and Marsellus (Ohio, Pennsylvania, New York) fields. I've seen predictions that we'll be the largest producer of oil in the world before 2020.

• If the US produced more of its energy requirements, the price at the pump would be lower.

This is wrong on its face. As a commodity traded in a world-wide market, the price of oil is based on world markets. The recent tussle over the Keystone pipeline is a good example of this irony. Proponents of Keystone often claim that we'll get cheaper oil if we ship it from a direct neighbor like Canada. Perhaps, but shortening the supply line won't make a difference you'll feel at the pump. What will make the difference is encouraging Canada to pump and sell all they can get their hands on. 

• US energy needs are constantly growing.

Also not true: at least not as a percentage of GDP. The linked article has more detail.

• The US is not an energy exporter because it has no excess energy to export.

True at the macro level, but misleading. Starting this year we are a net exporter of refined products like gasoline and jet fuel. We make it more cost efficiently than others so they buy it from us.

• World’s oil production has already peaked and as the reserves dwindle, more wars will be fought over the scarce energy resources.

Absolutely not true but I'll leave it to the article's author to explain it.

 Enjoy the read. And, by the way, Happy New Year 2012!

Orwell and Havel

I am a huge fan of George Orwell. My favorite book of his is Homage to Catalonia which is his memoir of his participation in the Spanish Civil War. It seems that the recently departed Vaclav Havel (leader of and the best thing to come out of the post-Communist Czechoslovakia) is also a big fan of George. Orwell wrote of the potentiality of totalitarianism. Havel lived in it. Today, I picked up this quote from Havel, which could have come straight from Orwell.

The post-totalitarian system touches people at every step, but it does so with its ideological gloves on. This is why life in the system is so thoroughly permeated with hypocrisy and lies: government by bureaucracy is called popular government; the working class is enslaved in the name of the working class; the complete degradation of the individual is presented as his ultimate liberation; depriving people of information is called making it available; the use of power to manipulate is called the public control of power, and the arbitrary abuse of power is called observing the legal code; the repression of culture is called its development; the expansion of imperial influence is presented as support for the oppressed; the lack of free expression becomes the highest form of freedom; farcical elections become the highest form of democracy; banning independent thought becomes the most scientific of world views; military occupation becomes fraternal assistance. Because the regime is captive to its own lies, it must falsify everything. It falsifies the past. It falsifies the present, and it falsifies the future. It falsifies statistics. It pretends not to possess an omnipotent and unprincipled police apparatus. It pretends to respect human rights. It pretends to persecute no one. It pretends to fear nothing. It pretends to pretend nothing.

 Ladies and gents: This is as good an example of clear thinking as you'll ever see.

A Maze of Keystones

The Keystone pipeline project is under considerable and strenuous debate in the United States today. You can find much more interesting commentary on it than you'll get from me. But here is a very interesting graphic.

In a recent CNBC appearance, the famous (or infamous) oil man T. Boone Pickens made the comment that there are five pipelines running through his own ranch in Texas. Pipelines are a long-running fact of life. One more won't hurt.