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Forget Peak Oil; Worry About Peak Demand - The Market Oracle

Peak Oil - Google - 27 February 2015 - 8:55am

Forget Peak Oil; Worry About Peak Demand
The Market Oracle
Brian Bagnell of Macquarie Capital Markets has two caveats for investors in junior oil and gas companies: Expect extreme volatility, and don't expect oil prices above $70/barrel anytime soon. He tells the The Energy Report that the winners in this ...

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The Market Ticker - BlackBerry Is About To Hose The Competition

The Market Ticker - 27 February 2015 - 8:06am

for enterprise users, at least.

10.3.2, next update coming, appears to have full S/MIME support.

Unconfirmed at this moment, but it appears so.

Sorry Android.....

Categories: Economics

The Market Ticker - Dear Analysts: You're Fools (And So Is LinkedIn)

The Market Ticker - 27 February 2015 - 6:09am

LinkedIn has seen quite a run of late in its stock price.

I killed my profile there a couple of years ago because the company was famous for spamming me, literally on a daily basis, with dozens of so-called "I want to add you to my professional network" invites.

Virtually every single one of these was identical down to the last letter.

In other words, exactly none of these were actually people asking me to be part of their network.

No, they were spam.  They were LinkedIn scanning someone's email address book and, finding my email address in there, sending me said "invitation" unsolicited.


(Click link to read more)

Categories: Economics

The Market Ticker - Net Neutrality Vote In The FCC: You Lose America

The Market Ticker - 27 February 2015 - 4:45am

You get what you deserve America.

You will get it.  Long, hard, and dry.

Reed Hastings' Netflix has largely driven the hysteria about Net Neutrality through one of the most-common means of misleading the public that the government itself is known to use all the time: Create a crisis, then screw you in "solving" it.

Netflix relies on very low-latency, high-speed data delivery over long periods of time to deliver its content to you.  This is an entirely different business model than what has powered the Internet thus far.  It is not an impossible business model, but it is a far more-expensive one to provide than the model used to date.

When you.......

(Click link to read more)

Categories: Economics

China’s Love for Gold: You Ain’t Seen Nothing Yet

The Daily Reckoning - 27 February 2015 - 4:29am

This post China’s Love for Gold: You Ain’t Seen Nothing Yet appeared first on Daily Reckoning.

Welcome to the year 4713. Or, if you prefer, the Year of the Ram.

The Chinese New Year, which [kicked off last week], is the largest and most widespread cultural event in mainland China, bringing with it massive consumer spending and gift-giving. During this week alone, an estimated 3.6 billion people in the China region travel by road, rail and air in the largest annual human migration.

Imagine half a dozen Thanksgivings and Christmases all rolled into one mega-holiday, and you might begin to get a sense of just how significant the Chinese New Year festivities and traditions are.

According to the National Retail Federation, China spent approximately $100 billion on retail and restaurants during the Chinese New Year in 2014. That’s double what Americans shelled out during the four-day Thanksgiving and Black Friday spending period.

As I’ve discussed on numerous occasions, one of the most popular gifts to give and receive during this time is gold—a prime example of the Love Trade.

Can’t Keep Gold Down

Most loyal readers of my Frank Talk blog know that China, along with India, leads the world in gold demand. This Chinese New Year is no exception. Official “Year of the Ram” gold coins sold out days ago, and since the beginning of January, withdrawals from the Shanghai Gold Exchange have grown to over 315 tonnes, exceeding the 300 tonnes of newly-mined gold around the globe during the same period.

China, in other words, is consuming more gold than the world is producing.

What’s not so well-known—but just as amazing—is that China’s supply of the precious metal per capita is actually low compared to neighboring Asian countries such as Taiwan and Singapore.

The World Gold Council (WGC), in fact, calls China “a huge, relatively untapped reservoir of gold demand.”

This might all change as more and more Chinese citizens move up the socioeconomic ladder. Over the next five years, the country’s middle class is projected to swell from 300 million to 500 million—nearly 200 million more people than the entire population of the United States. This should help boost gold bullion and jewelry sales in China, which fell 33 percent from the previous year.

click to enlarge

“I don’t see demand staying down because you have had structural changes,” commented WGC Head of Investment Research Juan Carlos Artigas in an interview with Hard Assets Investor. “One of them, emerging market demand from the likes of India and China, continues to grow, and we expect it to continue to grow as those economies develop further.”

New Visa Policy Promises Increased Chinese Tourism

The Year of the Ram has also ushered in a new visa policy, one that has the potential to draw many more Chinese tourists to American shores.

For years, Chinese citizens could receive only a one-year, multi-entry visa. Now, leisure and business travelers can obtain a visa that allows them to enter multiple times over a 10-year period. The visa application process has also been relaxed.

In terms of overseas spending, Chinese tourists already sit in first place, just above their American counterparts. According to the United Nations World Tourism Organization, a record $129 billion was spent by Chinese travelers in 2013 alone. The average Chinese visitor spends between $6,000 and $7,200 per trip in the U.S.

This visa policy reform is an obvious boon to travel and leisure companies such as those held in our All American Equity Fund (GBTFX)—Walt Disney and Carnival Corp., for examples, not to mention retailers such as Kohl’s, Coach and The Gap.

Other beneficiaries include Chinese airlines such as Air China, which we own in our China Region Fund (USCOX). Global airline stocks are currently soaring as a result of low oil prices, increased seat capacity and more fuel-efficient aircraft. The new visa policy has the potential to give these stocks an even stronger boost.

On a lighter note, at least a couple of airports in North America are making the most of the Chinese New Year, hosting performances by Chinese musical artists and providing entertainment such as a lion dance through the terminal and calligraphy.

To our friends and shareholders here in the U.S. and abroad, I wish you all a Happy Chinese New Year!

Frank Holmes

P.S. Ever wonder how you can make a lot of money from oil without owning a well? Or whether or not you should buy gold and silver? Or is fracking just a flash in the pan? Get insight, insider scoops and actionable investment tips twice a week with Daily Resource Hunter? Just click here for a FREE subscription!

The post China’s Love for Gold: You Ain’t Seen Nothing Yet appeared first on Daily Reckoning.

Categories: Economics

The Market Ticker - The Stupid Expands

The Market Ticker - 27 February 2015 - 4:01am

You're stupid, you're stupid, you're really pretty dumb.

The University of Minnesota, which has seen protests in recent weeks about campus diversity, announced Wednesday that it will stop sending out alerts with vague descriptions of suspects in serious crimes.

In other words, it won't state the race of suspects.

Of course that is one of the identifying factors that helps someone at a glance know if they're looking at the correct person.

"Suspect is.......

(Click link to read more)

Categories: Economics

The Market Ticker - CPI: The News Isn't The Headline

The Market Ticker - 27 February 2015 - 3:02am

Oh here we go again...

The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.7 percent in January on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index decreased 0.1 percent before seasonal adjustment.

The energy index fell 9.7 percent as the gasoline index fell 18.7 percent in January, the sharpest in a series of seven consecutive declines. The gasoline decrease was overwhelmingly the cause of the decline in the all items index, which would have risen 0.1 percent had the gasoline index been unchanged. The fuel oil index also fell sharply, and the index for natural gas turned down, although the electricity index rose. The food index was unchanged in January, with the food at home index falling for the first time since.......

(Click link to read more)

Categories: Economics

Forget Oil — Get Truckin’ for Some Double-Digit Gains

The Daily Reckoning - 27 February 2015 - 3:02am

This post Forget Oil — Get Truckin’ for Some Double-Digit Gains appeared first on Daily Reckoning.

10-4 good buddy – today, we’re goin’ trucking…

And we’re gunning for some double-digit gains from the cheap oil play I’m about to describe.

A play on cheap oil? OK, you might be skeptical after we had a cheap oil trade blow up in our face last month. But listen…

We thought rock-bottom gas prices would offer us some low-hanging fruit with UPS last month. But that fruit turned rotten when management announced 2014 earnings would miss the mark, which tanked the stock. The reason? Brown hired way too many seasonal workers to handle the Christmas rush. They blew it during the most important time of the year—and we got shafted.

That’s what happens sometimes. It doesn’t matter if the idea is right on the money or completely wrong. We got unlucky—them’s the breaks. But we followed the rules, cutting our losses early. We didn’t lose much. So we moved on.

OK, back to the oil patch.

Oil tried its hand at $55 this month—but quickly folded its cards. Spot price is treading water at $50. And as far as I can tell, it might not budge anytime soon.

So now we have a second chance at double-digit gains trading the cheap oil theme. And don’t worry, we’re not touching UPS…

Listen, oil isn’t magically jumping to $100 anytime soon. As I said, it could fluctuate around $50 for the foreseeable future. That’s great news for businesses using a lot of fuel. Operating costs are way down, which means higher profits. And higher stock prices. Check out the Dow Jones Transportation Average right now…

It’s up a muscular 18% since the October bottom. Compare that to the Industrials, which are up less than 12%.

Breaking it down further…

Airline stocks look good these days, but most lost altitude after spikes in December and January. Railroads got derailed because many make money transporting oil, and the market’s giving the back of the hand to oil right now. But there is one group in the transports where we see a perfect trade shaping up: trucking.

So get truckin’ today. Over and out.


Greg Guenthner

for The Daily Reckoning

P.S. So get truckin’ today. Over and out. If you want to cash in on the biggest profits this market has to offer, sign up for my Rude Awakening e-letter, for FREE, right here. Stop missing out. Click here now to sign up for FREE.

The post Forget Oil — Get Truckin’ for Some Double-Digit Gains appeared first on Daily Reckoning.

Categories: Economics

Peak Oil Notes - Feb 26

Energy Bulletin - 27 February 2015 - 12:40am

A mid-week update. Oil prices fell on Monday and Tuesday this week on expectations that US crude stocks will continue to grow.

Categories: Peak oil news

Women Over 65 Own Nearly a Third of Iowa’s Farmland—Can They Prevent the Next Dust Bowl?

Energy Bulletin - 27 February 2015 - 12:39am

“Being invisible does two things: You think you don’t have any responsibilities [and] you’re just left out.”

Categories: Peak oil news

Slow Money 2014 Highlights

Energy Bulletin - 27 February 2015 - 12:38am

SLOW MONEY 2014 was our largest event to date, with over 850 attendees from 46 states, Canada and France, and 6,000 watching via live stream.

Categories: Peak oil news

The Market Ticker - And Then There Were Three

The Market Ticker - 27 February 2015 - 12:15am

Wow, I'm impressed.  Three whole recruits.

Three New York City residents -- two with Uzbekistan citizenship, and one a citizen of Kazakhstan -- plotted to travel to Syria to join ISIS militants and 'wage jihad,' the Justice Department announced on Wednesday.

Oh, and how were those fine NYC Residents here in the country, may I ask?  Did they have green cards?  If so, how did they get them?  If not, why and how were they here?

Oh, nobody wants to talk about that, right?  Why the hell not?


Oh, and if you want "hot" sauce on that jihadi crap, one of them apparently offered to murder the President, provided ISIS ordered.......

(Click link to read more)

Categories: Economics

5 Reasons Cargo Bikes Are the Perfect Mode of Transportation

Energy Bulletin - 26 February 2015 - 10:31pm

With Americans driving less and more cities encouraging people to bike, the humble cargo bike has quietly gained traction in the U.S.

Categories: Peak oil news

If We're Serious about Saving Bees and Butterflies, Here's What We Should Do

Energy Bulletin - 26 February 2015 - 10:12pm

If pollinator health is made a priority, to be successful much current policy and practice must change.

Categories: Peak oil news

Is the US Overplaying Its Energy Hand?

Energy Bulletin - 26 February 2015 - 9:49pm

The evidence suggests the United States is playing energy poker with a pair of jacks in its hand, but betting as if it had four aces.

Categories: Peak oil news

The Externality Trap, or, How Progress Commits Suicide

Energy Bulletin - 26 February 2015 - 9:43pm

Economic life in the industrial world these days can be described, without too much inaccuracy, as an arrangement set up to allow a privileged minority to externalize nearly all their costs onto the rest of society while pocketing as much as possible the benefits themselves.

Categories: Peak oil news

The Externality Trap, or, How Progress Commits Suicide

The Archdruid Report - 26 February 2015 - 3:14pm
I've commented more than once in these essays about the cooperative dimension of writing:  the way that even the most solitary of writers inevitably takes part in what Mortimer Adler used to call the Great Conversation, the flow of ideas and insights across the centuries that’s responsible for most of what we call culture. Sometimes that conversation takes place second- or third-hand—for example, when ideas from two old books collide in an author’s mind and give rise to a third book, which will eventually carry the fusion to someone else further down the stream of time—but sometimes it’s far more direct.
Last week’s post here brought an example of the latter kind. My attempt to cut through the ambiguities surrounding that slippery word “progress” sparked a lively discussion on the comments page of my blog about just exactly what counted as progress, what factors made one change “progressive” while another was denied that label. In the midst of it all, one of my readers—tip of the archdruidical hat to Jonathan—proposed an unexpected definition:  what makes a change qualify as progress, he suggested, is that it increases the externalization of costs. 
I’ve been thinking about that definition since Jonathan proposed it, and it seems to me that it points up a crucial and mostly unrecognized dimension of the crisis of our time. To make sense of it, though, it’s going to be necessary to delve briefly into economic jargon.
Economists use the term “externalities” to refer to the costs of an economic activity that aren’t paid by either party in an exchange, but are pushed off onto somebody else. You won’t hear a lot of talk about externalities these days; it many circles, it’s considered impolite to mention them, but they’re a pervasive presence in contemporary life, and play a very large role in some of the most intractable problems of our age. Some of those problems were discussed by Garret Hardin in his famous essay on the tragedy of the commons, and more recently by Elinor Ostrom in her studies of how that tragedy can be avoided; still, I’m not sure how often it’s recognized that the phenomena they discussed applies not just to commons systems, but to societies as a whole—especially to societies like ours.
An example may be useful here. Let’s imagine a blivet factory, which turns out three-prong, two-slot blivets in pallet loads for customers. The blivet-making process, like manufacturing of every other kind, produces waste as well as blivets, and we’ll assume for the sake of the example that blivet waste is moderately toxic and causes health problems in people who ingest it. The blivet factory produces one barrel of blivet waste for every pallet load of blivets it ships. The cheapest option for dealing with the waste, and thus the option that economists favor, is to dump it into the river that flows past the factory.
Notice what happens as a result of this choice. The blivet manufacturer has maximized his own benefit from the manufacturing process, by avoiding the expense of finding some other way to deal with all those barrels of blivet waste. His customers also benefit, because blivets cost less than they would if the cost of waste disposal was factored into the price. On the other hand, the costs of dealing with the blivet waste don’t vanish like so much twinkle dust; they are imposed on the people downstream who get their drinking water from the river, or from aquifers that receive water from the river, and who suffer from health problems because there’s blivet waste in their water. The blivet manufacturer is externalizing the cost of waste disposal; his increased profits are being paid for at a remove by the increased health care costs of everyone downstream.
That’s how externalities work. Back in the days when people actually talked about the downsides of economic growth, there was a lot of discussion of how to handle externalities, and not just on the leftward end of the spectrum.  I recall a thoughtful book titled TANSTAAFL—that’s an acronym, for those who don’t know their Heinlein, for “There Ain’t No Such Thing As A Free Lunch”—which argued, on solid libertarian-conservative grounds, that the environment could best be preserved by making sure that everyone paid full sticker price for the externalities they generated. Today’s crop of pseudoconservatives, of course, turned their back on all this a long time ago, and insist at the top of their lungs on their allegedly God-given right to externalize as many costs as they possibly can.  This is all the more ironic in that most pseudoconservatives claim to worship a God who said some very specific things about “what ye do to the least of these,” but that’s a subject for a different post.
Economic life in the industrial world these days can be described, without too much inaccuracy, as an arrangement set up to allow a privileged minority to externalize nearly all their costs onto the rest of society while pocketing as much as possible the benefits themselves. That’s come in for a certain amount of discussion in recent years, but I’m not sure how many of the people who’ve participated in those discussions have given any thought to the role that technological progress plays in facilitating the internalization of benefits and the externalization of costs that drive today’s increasingly inegalitarian societies. Here again, an example will be helpful.
Before the invention of blivet-making machinery, let’s say, blivets were made by old-fashioned blivet makers, who hammered them out on iron blivet anvils in shops that were to be found in every town and village. Like other handicrafts, blivet-making was a living rather than a ticket to wealth; blivet makers invested their own time and muscular effort in their craft, and turned out enough in the way of blivets to meet the demand. Notice also the effect on the production of blivet waste. Since blivets were being made one at a time rather than in pallet loads, the total amount of waste was smaller; the conditions of handicraft production also meant that blivet makers and their families were more likely to be exposed to the blivet waste than anyone else, and so had an incentive to invest the extra effort and expense to dispose of it properly. Since blivet makers were ordinary craftspeople rather than millionaires, furthermore, they weren’t as likely to be able to buy exemption from local health laws.
The invention of the mechanical blivet press changed that picture completely.  Since one blivet press could do as much work as fifty blivet makers, the income that would have gone to those fifty blivet makers and their families went instead to one factory owner and his stockholders, with as small a share as possible set aside for the wage laborers who operate the blivet press. The factory owner and stockholders had no incentive to pay for the proper disposal of the blivet waste, either—quite the contrary, since having to meet the disposal costs cut into their profit, buying off local governments was much cheaper, and if the harmful effects of blivet waste were known, you can bet that the owner and shareholders all lived well upstream from the factory. 
Notice also that a blivet manufacturer who paid a living wage to his workers and covered the costs of proper waste disposal would have to charge a higher price for blivets than one who did neither, and thus would be driven out of business by his more ruthless competitor. Externalities aren’t simply made possible by technological progress, in other words; they’re the inevitable result of technological progress in a market economy, because externalizing the costs of production is in most cases the most effective way to outcompete rival firms, and the firm that succeeds in externalizing the largest share of its costs is the most likely to prosper and survive.
Each further step in the progress of blivet manufacturing, in turn, tightened the same screw another turn. Today, to finish up the metaphor, the entire global supply of blivets is made in a dozen factories in  distant Slobbovia, where sweatshop labor under ghastly working conditions and the utter absence of environmental regulations make the business of blivet fabrication more profitable than anywhere else. The blivets are as shoddily made as possible; the entire blivet supply chain from the open-pit mines worked by slave labor that provide the raw materials to the big box stores with part-time, poorly paid staff selling blivetronic technology to the masses is a human and environmental disaster.  Every possible cost has been externalized, so that the two multinational corporations that dominate the global blivet industry can maintain their profit margins and pay absurdly high salaries to their CEOs.
That in itself is bad enough, but let’s broaden the focus to include the whole systems in which blivet fabrication takes place: the economy as a whole, society as a whole, and the biosphere as a whole. The impact of technology on blivet fabrication in a market economy has predictable and well understood consequences for each of these whole systems, which can be summed up precisely in the language we’ve already used. In order to maximize its own profitability and return on shareholder investment, the blivet industry externalizes costs in every available direction. Since nobody else wants to bear those costs, either, most of them end up being passed onto the whole systems just named, because the economy, society, and the biosphere have no voice in today’s economic decisions.
Like the costs of dealing with blivet waste, though, the other externalized costs of blivet manufacture don’t go away just because they’re externalized. As externalities increase, they tend to degrade the whole systems onto which they’re dumped—the economy, society, and the biosphere. This is where the trap closes tight, because blivet manufacturing exists within those whole systems, and can’t be carried out unless all three systems are sufficiently intact to function in their usual way. As those systems degrade, their ability to function degrades also, and eventually one or more of them breaks down—the economy plunges into a depression, the society disintegrates into anarchy or totalitarianism, the biosphere shifts abruptly into a new mode that lacks adequate rainfall for crops—and the manufacture of blivets stops because the whole system that once supported it has stopped doing so.
Notice how this works out from the perspective of someone who’s benefiting from the externalization of costs by the blivet industry—the executives and stockholders in a blivet corporation, let’s say. As far as they’re concerned, until very late in the process, everything is fine and dandy: each new round of technological improvements in blivet fabrication increases their profits, and if each such step in the onward march of progress also means that working class jobs are eliminated or offshored, democratic institutions implode, toxic waste builds up in the food chain, or what have you, hey, that’s not their problem—and after all, that’s just the normal creative destruction of capitalism, right?
That sort of insouciance is easy for at least three reasons. First, the impacts of externalities on whole systems can pop up a very long way from the blivet factories.  Second, in a market economy, everyone else is externalizing their costs as enthusiastically as the blivet industry, and so it’s easy for blivet manufacturers (and everyone else) to insist that whatever’s going wrong is not their fault.  Third, and most crucially, whole systems as stable and enduring as economies, societies, and biospheres can absorb a lot of damage before they tip over into instability. The process of externalization of costs can thus run for a very long time, and become entrenched as a basic economic habit, long before it becomes clear to anyone that continuing along the same route is a recipe for disaster.
Even when externalized costs have begun to take a visible toll on the economy, society, and the biosphere, furthermore, any attempt to reverse course faces nearly insurmountable obstacles. Those who profit from the existing order of things can be counted on to fight tooth and nail for the right to keep externalizing their costs: after all, they have to pay the full price for any reduction in their ability to externalize costs, while the benefits created by not imposing those costs on whole systems are shared among all participants in the economy, society, and the biosphere respectively. Nor is it necessarily easy to trace back the causes of any given whole-system disruption to specific externalities benefiting specific people or industries. It’s rather like loading hanging weights onto a chain; sooner or later, as the amount of weight hung on the chain goes up, the chain is going to break, but the link that breaks may be far from the last weight that pushed things over the edge, and every other weight on  the chain made its own contribution to the end result
A society that’s approaching collapse because too many externalized costs have been loaded onto on the whole systems that support it thus shows certain highly distinctive symptoms. Things are going wrong with the economy, society, and the biosphere, but nobody seems to be able to figure out why; the measurements economists use to determine prosperity show contradictory results, with those that measure the profitability of individual corporations and industries giving much better readings those that measure the performance of whole systems; the rich are convinced that everything is fine, while outside the narrowing circles of wealth and privilege, people talk in low voices about the rising spiral of problems that beset them from every side. If this doesn’t sound familiar to you, dear reader, you probably need to get out more.
At this point it may be helpful to sum up the argument I’ve developed here:
a) Every increase in technological complexity tends also to increase the opportunities for externalizing the costs of economic activity;
b) Market forces make the externalization of costs mandatory rather than optional, since economic actors that fail to externalize costs will tend to be outcompeted by those that do;
c) In a market economy, as all economic actors attempt to externalize as many costs as possible, externalized costs will tend to be passed on preferentially and progressively to whole systems such as the economy, society, and the biosphere, which provide necessary support for economic activity but have no voice in economic decisions;
d) Given unlimited increases in technological complexity, there is no necessary limit to the loading of externalized costs onto whole systems short of systemic collapse;
e) Unlimited increases in technological complexity in a market economy thus necessarily lead to the progressive degradation of the whole systems that support economic activity;
f) Technological progress in a market economy  is therefore self-terminating, and ends in collapse.
Now of course there are plenty of arguments that could be deployed against this modest proposal. For example, it could be argued that progress doesn’t have to generate a rising tide of externalities. The difficulty with this argument is that externalization of costs isn’t an accidental side effect of technology but an essential aspect—it’s not a bug, it’s a feature. Every technology is a means of externalizing some cost that would otherwise be borne by a human body. Even something as simple as a hammer takes the wear and tear that would otherwise affect the heel of your hand, let’s say, and transfers it to something else: directly, to the hammer; indirectly, to the biosphere, by way of the trees that had to be cut down to make the charcoal to smelt the iron, the plants that were shoveled aside to get the ore, and so on.
For reasons that are ultimately thermodynamic in nature, the more complex a technology becomes, the more costs it generates. In order to outcompete a simpler technology, each more complex technology has to externalize a significant proportion of its additional costs, in order to compete against the simpler technology. In the case of such contemporary hypercomplex technosystems as the internet, the process of externalizing costs has gone so far, through so many tangled interrelationships, that it’s remarkably difficult to figure out exactly who’s paying for how much of the gargantuan inputs needed to keep the thing running. This lack of transparency feeds the illusion that large systems are cheaper than small ones, by making externalities of scale look like economies of scale.
It might be argued instead that a sufficiently stringent regulatory environment, forcing economic actors to absorb all the costs of their activities instead of externalizing them onto others, would be able to stop the degradation of whole systems while still allowing technological progress to continue. The difficulty here is that increased externalization of costs is what makes progress profitable. As just noted, all other things being equal, a complex technology will on average be more expensive in real terms than a simpler technology, for the simple fact that each additional increment of complexity has to be paid for by an investment of energy and other forms of real capital.
Strip complex technologies of the subsidies that transfer some of their costs to the government, the perverse regulations that transfer some of their costs to the rest of the economy, the bad habits of environmental abuse and neglect that transfer some of their costs to the biosphere, and so on, and pretty soon you’re looking at hard economic limits to technological complexity, as people forced to pay the full sticker price for complex technologies maximize their benefits by choosing simpler, more affordable options instead. A regulatory environment sufficiently strict to keep technology from accelerating to collapse would thus bring technological progress to a halt by making it unprofitable.
Notice, however, the flipside of the same argument: a society that chose to stop progressing technologically could maintain itself indefinitely, so long as its technologies weren’t dependent on nonrenewable resources or the like. The costs imposed by a stable technology on the economy, society, and the biosphere would be more or less stable, rather than increasing over time, and it would therefore be much easier to figure out how to balance out the negative effects of those externalities and maintain the whole system in a steady state.  Societies that treated technological progress as an option rather than a requirement, and recognized the downsides to increasing complexity, could also choose to reduce complexity in one area in order to increase it in another, and so on—or they could just raise a monument to the age of progress, and go do something else instead.
The logic suggested here requires a comprehensive rethinking of most of the contemporary world’s notions about technology, progress, and the good society. We’ll begin that discussion in future posts—after, that is, we discuss a second dimension of progress that came out of last week’s discussion.
Categories: Peak oil news

The Market Ticker - Oh, So Now It's State Department People Too?

The Market Ticker - 26 February 2015 - 10:15am


Fairfax County Police officials say Daniel Rosen was arrested by a county detective about noon at his Washington, D.C. home after he allegedly sought to arrange sex with a minor. The detective, a female officer working in the county's Child Exploitation Unit, had been posing as the minor in online exchanges with Rosen, police said. 

Rosen, who is the director of counterterrorism programs and policy at the State Department, was arrested and transported to a D.C. jail and charged with one count of Use of a Communications Device to Solicit a Juvenile.

So let me see.....

We have people with high-level classified access in our government, folks who we claim are counter-terrorism people keeping.......

(Click link to read more)

Categories: Economics

Three Stocks to Profit From Surging U.S. Oil Inventories

The Daily Reckoning - 26 February 2015 - 7:00am

This post Three Stocks to Profit From Surging U.S. Oil Inventories appeared first on Daily Reckoning.

“Jody, where can a person invest his money and be guaranteed to make 50% in the next six months?”

No. The question above isn’t from our reader mailbag. Instead, this is the recurring dialogue between me and my cousin Brad at family gatherings.

Below, I’ll share my typical response. I’ll also share three tickers that provide a decent shot at a 50% gain without taking on much risk.

The question above is one I mentally prepare myself for each time my family gets together. Here’s my response and the ensuing back-and-forth…

Me: “There is no place that you can invest your money and be guaranteed to make 50% in the next six months. I don’t believe that I or anyone has the ability to predict even which way the entire market will move over a short of time period. Even Warren Buffett says that he has no clue how the market will move over a calendar year.”

Cousin Brad: “Yes, yes, that is what you always say. But seriously, where can a person make 50% in the next six months?”

Me: “It isn’t guaranteed, but I hear the lottery is a source of the windfall profits that you seek.”

This particular family member knows about my obsession with investing. I’m not joking about this. We seriously have a conversation along these lines at every holiday and birthday gathering.

I think he believes that I am holding out on him. That I’m keeping the really good ideas for myself. Or perhaps he thinks it is rather pathetic that someone who spends as much time on investing as I do can’t make 50% every six months.

Of course, I’m not holding out on him, and I believe that even aiming to make those kinds of returns in a short period of time can cause an investor to take unnecessary risks.

That being said, I do believe I’m aware of a group of companies that are very well positioned for the next six months. I believe these companies should generate unusually strong cash flows in the next couple of quarters, which should also result in good stock price performance.

For decades there was virtually no difference in the daily price of West Texas Intermediate or Brent crude oil. Historically WTI actually traded at a slight premium to Brent because it is a higher-quality crude.

Source of chart data: Energy Information Administration website

The chart above tracks the differential between WTI and Brent from 1990 through the end of 2010. As you can see, the differential stayed very close to $0 over this time, which means there was little difference between the two prices.

With the United States historically importing far more oil than it produced, the price for American oil was set by the global market.

Then, in 2011 fast-growing North Dakota oil production overwhelmed the pipeline capacity available to move that oil from the wellhead to refineries or other end-users. That meant that too much oil was getting stuck in one location, Cushing, Oklahoma, which is where WTI is priced.

Bloated Cushing inventories put major pressure on WTI pricing. Oil produced here in North America that was shipped to Cushing received a lower price than similar quality oil produced globally.

Differentials blew out massively from any historical precedent, with WTI trading for an incredible $30 less than Brent at one point in late 2011.

Since then, those differentials have gradually shrunk. The rail industry moved quickly to add capacity to ship hundreds of thousands of barrels to end destinations, and the reversal of the Seaway pipeline was added to get oil from Cushing to the Gulf Coast. It took a while, but the industry adapted.

For most of 2014, WTI traded reasonably close to Brent.

But recently, those differentials have started blowing out again.  At the close of trading last week, the differential between WTI and Brent was nearly $10, with Brent sitting near $62 and WTI near $52.

The reason for the surge in the differential this time is again soaring North American oil inventories. This time, though, it isn’t a case of not being able to get the oil out of Cushing. It is a case of arbitrageurs around the world shipping their oil to North America (both Cushing and the Gulf Coast) for storage.

Over the past six months, there has been more oil produced globally than consumed. That extra oil needs a home, and the most obvious place for it is onshore in the United States, which is really the only place with sufficient available storage. Land storage costs are only 30 cents per barrel per month, which is much lower than the dollar per month it costs to store oil offshore on a tanker.

As long as daily global oil production exceeds consumption, these inventories are going to increase. That is going to keep WTI at a price lower than Brent.

Buy low and sell high. Yep, that is a simple recipe for making money.

For North American refiners, that is what their near-term prospects look like.

These companies have input oil costs based off of WTI, but sell refined oil-based products (gasoline, jet fuel, kerosene, etc.) priced off of Brent.

With WTI/Brent differentials widening and expected to stay under pressure for the next six months, North American refiners could very well post some better-than-expected cash flows.

I would view this as a fairly short-term opportunity — which is great news for my cousin, or anyone looking for short-term gains.

The best way to play this short-term opportunity is with a handful of well-positioned refiners.

I would suggest owning the refiners that have the most exposure to these widening differentials (WTI/Brent and LLS/Brent). LLS is Light Louisiana Sweet, which is priced at the Gulf Coast, where inventories will also be growing.

That makes Marathon Petroleum (MPC), Phillips 66 (PSX) and Valero Energy (VLO) the best companies to take a closer look at. These companies have the most exposure to Gulf Coast and Cushing input pricing.

Remember, this is a short-term play. I expect to see American oil production level off by the middle of this year and perhaps even start to decline. Inventories will also start to come down as we hit driving season.

But if you’re looking to play a little-known opportunity in American oil, now’s your chance.


Jody Chudley
for The Daily Reckoning

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The post Three Stocks to Profit From Surging U.S. Oil Inventories appeared first on Daily Reckoning.

Categories: Economics

Ukraine Hyperinflates

The Daily Reckoning - 26 February 2015 - 4:38am

This post Ukraine Hyperinflates appeared first on Daily Reckoning.

Since the New Year, Ukraine’s currency – the hryvnia – has collapsed, losing 51 percent of its value against the U.S. dollar. To put this rout into perspective, consider that the Russian ruble has only lost 8 percent against the greenback during the same period.

Like night follows day, the hryvnia’s meltdown has resulted in a surge of inflation. The last official Ukrainian year-over-year inflation rate is 28.5 percent. This rate was reported for January and is out of date. That said, the official inflation rate has consistently and massively understated Ukraine’s brutal inflation. At present, Ukraine’s implied annual inflation rate is 272 percent. This is the world’s highest inflation rate, well above Venezuela’s 127 percent rate (see the accompanying chart).

When inflation rates are elevated, standard economic theory and reliable empirical techniques allow us to produce accurate inflation estimates. With free market exchange-rate data (usually black-market data), the inflation rate can be calculated. Indeed, the principle of purchasing power parity (PPP), which links changes in exchange rates and changes in prices, allows for a reliable inflation estimate.

To calculate the inflation rate in Ukraine, all that is required is a rather straightforward application of a standard, time-tested economic theory (read: PPP). At present, the black-market UAH/USD exchange rate sits at 33.78.

Using this figure and black-market exchange rate data that the Johns Hopkins-Cato Institute for Troubled Currencies Project has collected over the past year, I estimate Ukraine’s current annual inflation rate to be 272 percent – and its monthly inflation rate to be 64.5 percent. This rate exceeds the 50 percent per month threshold required to qualify for hyperinflation.

So, if Ukraine sustains its current monthly rate of inflation for several more months, it will enter the record books as the world’s 57th hyperinflation episode.


Steve Hanke
for The Daily Reckoning

This post was originally featured, right here.

[Editor’s Note: Our Jim Rickards has launched a brand new monthly investment letter called Strategic Intelligence. The latest issue printed last Friday. Please click here to see why it’s the resource every investor should have if they’re concerned about the future of the dollar.]

The post Ukraine Hyperinflates appeared first on Daily Reckoning.

Categories: Economics
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