[ErikTownsend]

At the end of 2010, I produced two videos about Peak Cheap Oil investing. I'm not selling anything - the videos are informational and my only business interest is in promoting my own name as a subject matter expert.

Since most of the world "doesn't get it", I just produced a third video to debunk the popular notion that "Peak Oil is a thoroughly discredited idea". The high-level executive summary is basically that PCO is real as ever, Shale bought us about 5 years' delay before we see a crisis, but did nothing to avert such a crisis, and I still see a future crisis as a near certainty.

The free video can be viewed at http://eriktownsend.com/Peak-Oil/peak-cheap-oil-investing-video-3.html, and I welcome critical feedback here on the content.

Thanks,
Erik Townsend

[phaster]

Nice video that seems to confirm my own beliefs (perhaps that is because we on this forum are drinking the same kool-aid).

As an investor and student of peakoil, I see the shale revolution of this decade as kinda like the atomic energy revolution of the 1950's (IMHO the phrase too "too cheap to meter" is a reto sound byte, applicable to "fracking")

I'm guessing there is more to the drop in prices of oil than meets the eye. In other words the current Sauda Arabia powers that be are borrowing the willaim casey CIA playbook of the carter/reagan era (in other words the USA screws the USSR, by investing in oil infrastructure in Sauda Arabia there by lowereing the cost below the cost to produce for the USSR, in addition the USA sells weapons systems to Sauda Arabia which creates jobs in the USA and as another bonus the US consumer gets cheap gas to fuel the SUV fad! So bottom line a strategy was developed so that the economy of the USA during this era is the global winner!!)

Before matt simmons died, I heard an interview where he said that before we see the other side of production curve, there would be an oscillating plateau for a while (i.e. convention oil production declines would be filled by technology like increased extraction techniques from convention fields, and extraction from tight geological formations like "fracking" from shale)

As a money manager if you are trying to forecast what is going on, there is something that I think will affect the economy long before the 2030's when it is expected the world will see the other side of the peakoil curve.

Basically this year there is change in accounting rules for pensions which is a wave of debt that is going to be put on the balance sheet for the 1st time which I'm sure will somehow have an effect on oil production/consumption patterns.

I can't shake feeling that the "punch line" figures is going to pop up on a balance sheet, and for "investors" who are looking for fixed income w/ bonds, they will have to reconcile that debt does not seem to be serviceable!!!

http://piggington.com/how_will_unfunded ... omy?page=4

[ErikTownsend]

Hi phaster,

To your comments about "drinking the same kool-aid", agreed, and that's actually my primary motivation for publishing the video. I know no better way to get credible *opposing* arguments thrown in my face than to take a stand, proclaim how I think things will play out, then let everyone in cyberspace who disagrees throw stones. I learn a lot that way. Admittedly, I'm preaching to the proverbial choir by posting the vid on this site, but my hope is that the link will find it's way to the "other side of the argument", and that I'll be attacked relentlessly for my assertions.

As I see it, the only way you can argue with my views is if you dispute either the demand forecast or the projected decline rates. I see room on both points for my assumptions to be challenged. On the demand side, it's easy to imagine demand flat-lining at present levels or even shrinking very slightly rather than growing to 105mmbpd by 2030. But even if demand declined 10% from here, we'd still have a serious problem if the conventional production decline estimates are anywhere close to right.

To me, the really big "gotcha" would be if the prediction of conventional production declining to 43mmbpd by 2030 turns out to be hogwash and we're still cranking out 70mmbpd+ of *conventional* production by 2030. But I've searched far and wide for a credible argument for why that might be true, and can't find one. The only credible arguments I've seen on the supply side are things like "fracking can go global" and "there's plenty of oil in tar sands". Both are true, but the Peak CHEAP Oil argument still stands against them.

Bottom line, I think we're coming up on an epic bottom. It might last a while, but all the dominoes are lining up to create a crisis-level supply problem a few years down the road.

Agreed that someone is pulling the strings here. KSA? USA/CIA as you allude? Heck, I don't know. But this is about more than just a supply-demand imbalance. Someone with an incredible amount of power is *making* this happen. Those insiders close enough to know the real agenda will make a killing in the futures market.

Erik

[radon1]

Crude prices began their decline some time in June-July last year, at the time when it became clear that the Fed was definitely going to end QE and start interest rate hikes. As rockman pointed out elsewhere, this was also the month when the insiders sold lots of their stock.

As far as the pricing of crude is concerned, the key dynamic is not the price of oil itself, but rather the ratio of oil price to real incomes. As long as price to income ratio is not dramatically growing over the long term, - shale/tar sands etc. should remain economical at any extraction cost (assuming no eco issues come into play).