Exploring Hydrocarbon Depletion
shortonoil wrote:"As long as the USA produces eight to ten million Barrels per day and consumes twenty million barrels per day the price of oil traded in US dollars will be the benchmark."
It is this type of disingenuous comment that keeps the average person from understanding the petroleum situation. The US processes 18.5 mb/d, imports 6 and exports about 6. Except for refinery gains (about 7%) the US is essentially net neutral on the consumption side. The US imports oil to be able to export finished product.
It is true that much of US production is unsuitable for the production of finished fuels (about 15% of it). Most of that is diluent and feedstock material that goes to Canada, Venezuela and is used by the petro-chemical industry to produce other products. The reason that the US imports oil is because it is very profitable for the refining industry, which is the best in the world. As long as the US can buy crude; which is as long as it can find costumers, which is as long as someone can find US dollars to buy it with. The US will be a petroleum products exporter. It may outlast the internet by several years.
shortonoil wrote:"Between crude and finished products the US imports 8.6 million barrels per day and exports 4.7 mbpd of crude and finished products"
The difference is what comes out of Canada. Like I said the US is essentially crude neutral, and the only reason it imports is to export. As long as it is an exporter of finished products the world will need dollars to buy those products.
The ME Petrodollar recycling process has been greatly over rated!
Trying to change the subject? Can't answer my post?shortonoil wrote:Another major oil exporter coming apart:
http://www.zerohedge.com/news/2017-01-1 ... g-about-it
The price of oil began its decline 2 ½ years ago. Venezuela, Saudi Arabia, Nigeria, and other parts of the ME have seen serious social unrest since then. Norway, Canada, and Russia have been under considerable financial stress since.
"This indirect method of propping up oilcos, however, will continue to work only so long as "investors" still believe that it is worthwhile to invest money in oilcos."
With the teaming masses almost to the point of burning fields, and blowing up pipe lines finding investors for oil projects is likely to become a little difficult! How long can the central banks continue to pore $2.7 trillion per year down a black hole, without completely destroying the remainder of the economy, and themselves?
The coming end of the oil age appears to be on schedule.
Remember dollar preference? Don’t pick up that economics textbook, you won’t find it there! Just because Marshall or Keynes didn’t write about it doesn’t mean it isn’t real. Dollar preference is what it sounds like: given the choice between accepting a dollar as payment or one- or more foreign currencies; between holding the dollar or spending it for shit or between holding the dollar or non-cash assets, people will choose the dollar. At issue is what determines the dollar’s worth. Conventional Lucas/Friedman economics suggests ‘efficiencies’ going forward discount future money: this and time preference ‘discovers’ present monies’ worth. The conventional narrative supports the rate-setting role of central banks and centrality of monetary policy. Debtonomics insists dollars and other currencies are priced by their exchange on demand for petroleum, something that takes place millions of times every day at gas stations around the world. Question for Donald Trump: millions of motorists vs. a handful of central bankers and corrupt politicians, who wins? The worth of the dollar is the fuel price bargain each one represents relative to other currencies, also what future dollars will be worth in a fuel constrained world. In this narrative, dollars are a proxy for fuel as dollars and other currencies were proxies for gold was during the periods of the gold standard. As such the dollar is a hard currency now becoming harder, to be hoarded out of circulation for the value it represents.
Put another way, dollar preference is the convergence between the value of the oil capital and the dollars that are exchanged for it. Fuel by itself is worth more than the real-world enterprises that make use of it regardless of what means are used to ‘adjust’ the price. By this way of reasoning, fuel in the ground in North Dakota is worth more than fuel wasted in a car stuck in traffic on an LA Freeway. Business (wasting) enterprises earn nothing on their own and are essentially worthless. They exist solely to borrow, gaining- and making use of credit is their primary product: other goods and services are intended to justify credit issuance in ever-increasing amounts. Part of this stream becomes the property of well-positioned ‘entrepreneurs’: enormous unearned borrowed profits are what drives the system. When debt = wealth, there is an incentive to take on as much debt as possible, keep what you can for yourself and to shift the retirement- and servicing burdens onto others.
Our economy as nothing more than a vast cost-shifting regime, our ongoing crisis is the shortage of ‘others’ able to bear the burdens of rapidly increased surplus-related costs.
Figure 3: Emerging market currency ETF: carry trades have been unwinding since 2011 as the dollar becomes stronger. A dollar carry is a way to sell the dollar short; investors borrow in the US at low rates then ‘sell’ dollars for higher-yielding assets in another currency. Decline of dollar becomes profits to those holding the overseas assets. When the dollar strengthens as it is doing now, the deal is a bust. Any asset appreciation in an overseas currency is more than offset by foreign exchange losses. What this means is costs are more difficult to shift, that dollar debts held overseas cannot be retired. The export of dollars and the shifting of costs that have been the mainsprings of globalization; that and the petroleum trade. Resource depletion and dollar preference are undoing all three …
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