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The ETP model was wrong - But is there a top for oil prices?

Discuss research and forecasts regarding hydrocarbon depletion.

Re: The ETP model was wrong - But is there a top for oil pri

Unread postby pstarr » Fri 18 May 2018, 18:36:20

Shale is loss leader at $40. A big loser at $50. No profit at $70. Not in the US.
Image
And never at $80/barrel in Great Britain
BP: No UK shale oil production for two decades
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby rockdoc123 » Fri 18 May 2018, 20:10:09

Shale is loss leader at $40. A big loser at $50. No profit at $70. Not in the US.


Thank you for proving my point…..you are completely clueless regarding how oil and gas companies operate.

First of all you come up with a bogus 1-well shale company …why not just post the 10K or year end financials from any number of the pure shale players such as EOG. Quick answer is you are basically an “internet idiot” who has no idea how to get the appropriate information (hint SEC filings) nor how to interpret them :roll:

And secondly lets look at year one EBITDA speaks to all the cash entries, Depreciation is an accounting book exercise and doesn’t speak to how much they made that year. In the case of year one they were actually $2,109,602 to the positive which is pretty damned good given revenues are $5,651,250….effectively they are netting back close to 40%.

And thirdly why this statement is completely fabricated and outside the bounds of reality. In year 2 and 3 its shows decreasing production but yet well op costs stay the same (worst math I have seen in years), G&A stays the same (wouldn’t happen in a company where production is decreasing). So basically this is either some weird outlier or it is completely made up. My suggestion, once again, is go and get actual data from the SEC if you want to make this argument. Every time it has been done before by either Short or one of the other idiots it is pretty easy to show where they did not understand how to read the statement nor what it actually meant in a practical context.

So rather than going on and on about this why don’t you try to explain why the quoted breakeven costs for most shale basins in the US is below $50?

I can understand that someone living in California hillbilly country might have a hard time understanding the real financial definitions but this is pretty pathetic.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Yoshua » Sat 19 May 2018, 04:10:51

I ment of course that the exponential curve reaches a top...breaks down...and then turns into a chaotic pattern.

Those exponential curves can't go on rising forever, at some point they will break down. All of those economic exponential curves will reach a top...break down...and turn into a chaotic pattern. The future will be very interesting and hard to predict.

Humans will be forced to try to master an economy that is behaving in a new and strange way.

How long can this chaotic pattern continue before it crashes? Years or decades? I haven't got a clue.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby kublikhan » Sat 19 May 2018, 07:48:15

pstarr wrote:After conventional light sweet crude (>20 api and <50 api) peaked in 2005, the resulting price of that good stuff exploded, such that it was unaffordable . . . . to entire entire 'economies' of people/societies collapses;
Your premise is incorrect. Thus what follows from your faulty premise is incorrect as well. Light oil production did not peak in 2005. Light oil production was 21,317,000 b/d in 2005. It was 24,957,000 b/d in 2016.
World Oil Review

And light production has continued to increase in 2017:
Growth in global liquid fuels supply since March 2017 has been driven by increases in the production of historically higher-priced light crude oils. This growth has more than offset recent declines in the production of medium and heavy crude oils.
EIA: Changing quality mix affecting crude oil price differentials, refining decisions

pstarr wrote:Further proof of the collapsing EROEI (ETP) is the failed 'economics' of the tight shale industry.
Wall Street Journal, May 18: Oil Is Above $70, but Frackers Still Struggle to Make MoneyThose dumb-@ass oil boosters here never made money when Bakken crude sold for $60. They won't with Permian at $70
As Rockman has pointed out many times, just because you read a website that says oil is $70, that doesn't mean that is the price these frackers sold their oil for. Because of hedging, much of their oil sold for $50-$55. Just as being conservative with their hedges on oil's downslope helped frackers pare their losses when oil prices were in the pits in 2016, being conservative has ended up hurting these frackers when oil went much higher than they projected. Companies who were less conservative and didn't hedge were rewarded with higher profits. Bigger risk, bigger reward. Only that very attitude is what hurt the frackers in the first place so you can't really blame them for being gun shy.

Hedging played a big role in companies’ underwhelming cash generation. Seeking stability after years of wild fluctuations in crude prices, many operators entered into derivatives contracts in late 2017 that effectively ensured they could sell some of their 2018 output for $50 to $55 a barrel. Now that prices have risen to more than $70 a barrel, many are failing to capture the value of the rally. WPX Energy Inc. reported an adjusted net loss of $30 million last quarter, which it said was driven by $69 million in losses on its hedges due to higher oil prices.

Some companies are already adjusting their strategies because of higher oil prices. Parsley Energy, which is focused on the Permian Basin, the oil field in Texas and New Mexico that is currently the center of U.S. shale-drilling activity, hedged most of its 2018 production. It plans to change that going forward, and expects to generate more cash relative to spending in coming quarters. Continental Resources Inc., which is primarily active in shale formations in North Dakota and Oklahoma, didn’t hedge its oil production for 2018. It raked in almost $258 million in cash after expenses in the first quarter, best among its peers.
Oil Is Above $70, but Frackers Still Struggle to Make Money
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby shortonoil » Sat 19 May 2018, 08:33:43

The Etp Model isn't wrong; the monetary system is collapsing: you damn fool. Almost every correlation ever used has been broken, and the Emerging Economies FX markets are dying. The monetary system can no longer price the cost of goods and services accurately enough to maintain a functioning economy. Go ask Venezuela, South Africa, Turkey, Indonesia, Mexico, or Argentina how they are doing? This will spread from the poorer peripheral economies to the developed economies. If David Stockman is right, and historically he has been right on the money, it should get to the West within a year! Then we will witness the crash of all times.

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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby tita » Sat 19 May 2018, 08:51:21

I was just looking at the last CC of Centenial Ressources, for some comments of Mark Papa (former CEO of EOG). In short, he expects the oil market to be tight for several years, with shale disappointing from current forecasts, and also further constriction in global supply and demand. He doesn't tell where the oil price will top, but he intend to hedge his production when the price get there.

He also intent to apply his expectations for the growth of his new company, without use of too much debt.

I continue to believe that the overall US supply response in 2018 and later years will be less than currently predicted by the EIA, IEA and OPEC, resulting in more severe supply demand tightening than currently forecasted by these agencies.

CDEV's response is to continue to remain unhedged regarding oil. We will employ some tactical oil basis hedges from time to time, but it's unlikely we will hedge WTI anytime soon. Given our macro view, we see no need to change our industry-leading targeted growth trajectory towards 65,000 barrels of oil a day in 2020.
(..)
As I have stated many times we don't aspire to be the biggest company in the Delaware Basin, we simply want to be the most technically competent pure play and generate some of the highest GAAP ROEs and ROCEs.
(..)
Yes just a overview Scott, as you the IEA and EIA are forecasting total US oil growth this year of the range of 1.3 million to 1.4 million barrels a day. My forecast is about 0.95 and my forecast for 2019 is lower than that. And I think that with that in 2018, 2019 will see a further constriction in global supply and demand even if you exclude the Iranian sanctions situation. So even at the current $70 WTI price level I see a strong possibility of further strengthening in WTI over the next couple of years. So we would intend to remain unhedged. Yes there is certainly a price when we would lay on some WTI hedges, but at this point I wouldn't divulge what that price it would be a fluid situation. But I can tell you that price is not $70.

And as far as the futures curve with the severe backwardation I would say it's laughable that would be my term for it, it's ridiculous. So that's kind of my view on macro and then CDEV's strategy is simply, we would intend to be one of the fastest oil growth entities in the US in what we believe will be a very strong WTI pricing environment over the next multiple years. And the last comment I would make to you is one of the group think items there is out there is short cycle times.

The concept is you have strong oil prices that turns on the shale machine and the shale machine generates a vast amount of oil, which pushes all prices down, i.e., short cycle times and I believe that that group think is 100% wrong, and the concept of short cycle times is incorrect because even if capital gets poured into the shale machine, the shale machine will disappoint in terms of aggregate oil production growth. So I think the industry and the world is going to have to conclude that the short cycle time group think is an incorrect way of looking at global supply and demand over the next multiple years.


Of course, I don't imply he's right. But so far, his 1.5 yo company does well.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Observerbrb » Sat 19 May 2018, 09:37:38

shortonoil wrote:The Etp Model isn't wrong; the monetary system is collapsing: you damn fool. Almost every correlation ever used has been broken, and the Emerging Economies FX markets are dying. The monetary system can no longer price the cost of goods and services accurately enough to maintain a functioning economy. Go ask Venezuela, South Africa, Turkey, Indonesia, Mexico, or Argentina how they are doing? This will spread from the poorer peripheral economies to the developed economies. If David Stockman is right, and historically he has been right on the money, it should get to the West within a year! Then we will witness the crash of all times.

BW


No need for insults. You should have shown up before in order to explain what was going wrong with the model and its price-forecast capability. It seems that the price of oil is going up above the trend line for this year, so the credibility of the model should be affected.

The model can be mistaken for multiple reasons - but can you actually model why this has occurred and what is expected to happen afterwards?

I agree with you on the Emerging Market economies, it does not sound good at all. I think we are going to witness an avalanche in the coming months, but how or in which way could it spread to the rest of the world?
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby onlooker » Sat 19 May 2018, 10:09:26

Yes, I believe in the conclusions the Hills Group has arrived at. I also had faith the ETP would stand the test of time. Unfortunately, that is not transpiring. So, I am curious as to the specific reasons Short that you and your colleagues cite for the breakdown of the MAP trendline?
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby kublikhan » Sat 19 May 2018, 10:15:25

Hey short, how about you pay up on that bet you lost?

shortonoil wrote:
kublikhan wrote:
shortonoil wrote:"If you expect a demand dearth in 2017 that will push prices lower, it is a prediction."

There is a difference between a prediction, and a projection. A prediction comes from a generally held opinion. A projection is derived from calculations done on an established data base. This is a projection; the price will be lower in 2017 than it was in 2016. There is sixty years of data to back up that conclusion.

If anyone is brave enough I'll give 5 to 1 odds in favor of the projection. That still leaves a very good spread on my side. $250 limit. We can handle the wager through PayPal.
I'll take that wager. I'll even go up to your limit of $250. So the bet is:
If average 2016 price of oil is lower than average 2017, I win and you pay me $1250 via paypal.
If average 2016 price of oil is higher than average 2017, you win and I pay you $250 via paypal.
Is this correct?
Yearly average WTI as reported by the EIA to be specific. Agreed and you are on!
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Outcast_Searcher » Sat 19 May 2018, 10:32:54

shortonoil wrote:The Etp Model isn't wrong; the monetary system is collapsing: you damn fool. Almost every correlation ever used has been broken, and the Emerging Economies FX markets are dying. The monetary system can no longer price the cost of goods and services accurately enough to maintain a functioning economy. Go ask Venezuela, South Africa, Turkey, Indonesia, Mexico, or Argentina how they are doing? This will spread from the poorer peripheral economies to the developed economies. If David Stockman is right, and historically he has been right on the money, it should get to the West within a year! Then we will witness the crash of all times.

BW

He's back.

So now, despite the global economy showing better growth than in over a decade, things are STILL in massive collapse, eh? And let's blame the emerging economies.

Well, why? Is it the stronger dollar recently? You know, the one you were claiming is worthless and is "toilet paper" in your previous defense of the ETP MAP (which was failing then, as well?) If the DXY is such a disaster, why is it up in recent months? In the past 5 years? And within 10% of being flat the past 10, 20, 30, and 40 years? I'd call that remarkably stable, over time (even though quite volatile in the SHORT term.) I'll call useless cherry picking on ALL your weak US dollar claims.

http://www.macrotrends.net/1329/us-doll ... ical-chart

You just spewing "we will witness the crash of all times" when your previous forecasts are going MASSIVELY wrong isn't any more credible than zerohedge constantly claiming doom is on our doorstep for a good decade now -- and being consistently wrong. Throwing out random FUD on things like the US$, developing economies, or the phase of the moon don't change that.

So why should we take you any more seriously than any of the other silly fast crash doomer porn flying around the internet? Because you don't pay your debts?
Last edited by Outcast_Searcher on Sat 19 May 2018, 10:38:51, edited 1 time in total.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby pstarr » Sat 19 May 2018, 10:33:25

Observerbrb wrote:I agree with you on the Emerging Market economies, it does not sound good at all. I think we are going to witness an avalanche in the coming months, but how or in which way could it spread to the rest of the world?

You are asking the wrong question. The 'contagion' will not 'spread' to the rest of the world. Just as the mortgage crisis and housing collapse in the United States did not 'spread' from the United States and 'cause' the worldwide Greatest Recession. That was a convenient lie, an easy sell to a clueless shopping people. So to debt and decline in the poor stressed 3rd world countries has little or nothing to do with our own dilemma. We will collapse all on our own.

The difference between us an so-called "Emerging Markets" is the stored energy/value in our centuries-old infrastructure. We still have enough energy-efficient functionality in our highways, water/electrical/energy delivery systems, public health and education to hold society together. Though we continue to let it deteriorate and rust away.

The thermodynamic fundamentals which underlie all economies is not a 'diseases' that can spread. It is the bedrock of all human life.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby pstarr » Sat 19 May 2018, 10:42:23

kublikhan wrote:Hey short, how about you pay up on that bet you lost?

shortonoil wrote:
kublikhan wrote:
shortonoil wrote:"If you expect a demand dearth in 2017 that will push prices lower, it is a prediction."

There is a difference between a prediction, and a projection. A prediction comes from a generally held opinion. A projection is derived from calculations done on an established data base. This is a projection; the price will be lower in 2017 than it was in 2016. There is sixty years of data to back up that conclusion.

If anyone is brave enough I'll give 5 to 1 odds in favor of the projection. That still leaves a very good spread on my side. $250 limit. We can handle the wager through PayPal.
I'll take that wager. I'll even go up to your limit of $250. So the bet is:
If average 2016 price of oil is lower than average 2017, I win and you pay me $1250 via paypal.
If average 2016 price of oil is higher than average 2017, you win and I pay you $250 via paypal.
Is this correct?
Yearly average WTI as reported by the EIA to be specific. Agreed and you are on!

We have the rest of the years for the world's various economies to crash and drive the price of crude oil into the basement. It has been said here a hundreds times . . . it is the running average price counts to the analysis.

You are now and forever on my ignore
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Outcast_Searcher » Sat 19 May 2018, 10:51:12

pstarr wrote:The thermodynamic fundamentals which underlie all economies is not a 'diseases' that can spread. It is the bedrock of all human life.

When major oil companies are consistently concerned about thermodynamics in their financial reports -- when they're explaining big losses or persistent losses due to "thermodynamic" factors they can't overcome, be sure and get back to us. In the mean time, despite all the false claims about fracking being an economic disaster, higher oil prices are improving financial results of the majors, just as they always have. Funny how reality intrudes on random economic conjecture.

Meanwhile, in the real world, humanity is learning to harness more and more energy from the sun which used to go to waste. So more usable energy, without so many bad side effects, from things like wind and solar and geothermal. And as battery tech improves, it will be more and more viable economically to store it and greatly reduce the "intermittency" problem.

So where does THAT fit into your "thermodynamic" discussion, since you like to play ETP disciple?

More important for the short term (which shorty is back to forecasting doom in, changing tactics on which FUD levers to pull, like a weather vane follows the wind), if emerging or even frontier economies have problems and more people need to ride bikes instead of use oil products -- how does that equate to RAPID first world collapse?

Shorty isn't talking about collapse in decades. He's just moved the date back a bit, since his MAP is a joke.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby kublikhan » Sat 19 May 2018, 10:53:24

pstarr wrote:We have the rest of the years for the world's various economies to crash and drive the price of crude oil into the basement. It has been said here a hundreds times . . . it is the running average price counts to the analysis.

You are now and forever on my ignore
Typical pstarr. When someone calls you out on the BS you are spewing, you run and hide on ignore. Since you never really put anyone on ignore I will explain to you what our bet was. I think this is the 5th time now?

The bet:
Will oil prices be higher in 2016, or 2017?
Shortonoil bet oil prices will be higher in 2016.
Kub bet oil prices will be higher in 2017.

Shortonoil offered 5:1 odds with a maximum bet of $250. I bet the full $250 amount. At 5:1 odds that gives me a payout of $1250 if I win. And since the average WTI price in 2017 was higher than in 2016, I win. There are no "years" left on the bet. It was a bet only on oil prices in 2016 vs 2017. All clear now pstarr? Here is the link to the bet:

THE BET
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Outcast_Searcher » Sat 19 May 2018, 11:12:36

shortonoil wrote:This will spread from the poorer peripheral economies to the developed economies. If David Stockman is right, and historically he has been right on the money, it should get to the West within a year! Then we will witness the crash of all times.
BW

You REALLY should check a bit on the NONSENSE you spew, before you spew it. I'd recommend you try this thing called "Google search".

It took me about 5 seconds to get hits to show your claim about Stockman being historically "right on the money" to be your usual COMPLETE nonsense.

Examples:

https://www.cnbc.com/2016/11/22/david-s ... -call.html

"I see a recession coming down the pike in 2017. The stock market is going to go down and it's going to stay down long and hard because, for the first time in 25 years, there's nothing to bail it out."

Wrong. No recession in 2017. A very strong stock market through 2017 in the US and globally, reflecting good economies and good corporate profit growth and outlook.

https://www.forbes.com/sites/johntamny/ ... 43997e24bd

First up, Stockman predicts that “this latest Wall Street bubble, inflated by an egregious flood of phony money from the Federal Reserve rather than real economic gains, will explode, too.”

Wrong. That article was dated April 2013. No explosion, but plenty of real economic gains.

https://www.pbs.org/newshour/economy/pa ... david-stoc

Paul Krugman: I think Stockman is an interesting sort of amalgam. Most of what he says is what I would think of as sort of standard “gold bug-ism.” He’s pretty much standard, you know, like the commenters on gold-bug blogs. It’s all “inflation” and “too much printing of money” and “excess” and “we’ve been doomed ever since [Franklin Roosevelt] took us off the Gold Standard.” Mixed in with a certain amount of “we need to crack down on the bankers,” and so there’s a little bit of liberal-sounding stuff in there.


I was going to comment on how I can see his appeal for the doomer community. I found a variety of hits showing how he's usually WAY wrong on his calls, like the one above. Of course, a Cassandra historically is way wrong almost all the time, just by looking at history.

So the only thing good about Stockman's track record is what you WISH for in your mind. That's not reality. You do know the difference, right?
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Yoshua » Sat 19 May 2018, 14:31:40

"Argentina strikes deal with oil companies to freeze fuel prices

BUENOS AIRES, May 8 (Reuters) - Argentina'sEnergy Ministry said on Tuesday it had reached a price stability agreement with YPF, Pan American Energy and Shell to freeze gas prices for the rest of May and June.
The measure will help control consumer prices "in favor of general economic interest," the ministry said in a statement. It said the companies would be compensated for any costs related to price variations over the six months starting July 1.

The announcement follows a tumultuous few weeks for Argentine financial markets that led the central bank to hike the benchmark interest rate to 40 percent on Friday and the government to say it was seeking financing from the international monetary fund on Monday.

Argentina is battling one of the world's highest inflation rates and is not expected to make the central bank's target of 15 percent this year."

The government is close to defaulting on its massive dollar denominated debt, inflation is high and the peso in free fall, but it will still find the money to subside fuel to keep the economy alive.

Argentina's peso lost another 5% of its value only this week.

Oil prices are up 75% since last summer, but soybean prices have been flat since 2015. Argentina is the largest soybean producer in the world.

In fact farmers all over the world are getting hurt by rising fuel prices and stagnant food prices.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Outcast_Searcher » Sat 19 May 2018, 14:47:39

Yoshua wrote:"Argentina strikes deal with oil companies to freeze fuel prices

BUENOS AIRES, May 8 (Reuters) - Argentina'sEnergy Ministry said on Tuesday it had reached a price stability agreement with YPF, Pan American Energy and Shell to freeze gas prices for the rest of May and June.
The measure will help control consumer prices "in favor of general economic interest," the ministry said in a statement. It said the companies would be compensated for any costs related to price variations over the six months starting July 1.

LOL, good old Yoshua.

As if a 6 week freeze will change anything of substance in Argentina, even if they ONLY deal with the two companies mentioned, re oil.

And there is no free lunch. If Argentina is going to compensate the companies for price rises the 2nd half of 2108, someone (taxpayers) has to pay for that.

If this post is supposed to make some kind of case for a top in global oil prices, you have far more work to do. Hint: Argentina isn't the world.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Yoshua » Sat 19 May 2018, 15:16:16

Argentina is just the tip of the iceberg...the canary in the coal mine...the weakest economy among others. IMF will of course come to rescue. More debt is the only solution.

If these high fuel prices stay high and more nations starts to fall apart, if it turns into a massive crisis around the world...then will IMF be able to rescue them all?

Another question in my mind is: Why aren't food prices rising? Supply and demand? Will someone be the first one and say that we have a food glut...while millions of people are starving.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby onlooker » Sat 19 May 2018, 15:37:45

Yoshua wrote:Argentina is just the tip of the iceberg...the canary in the coal mine...the weakest economy among others. IMF will of course come to rescue. More debt is the only solution.

If these high fuel prices stay high and more nations starts to fall apart, if it turns into a massive crisis around the world...then will IMF be able to rescue them all?

Another question in my mind is: Why aren't food prices rising? Supply and demand? Will someone be the first one and say that we have a food glut...while millions of people are starving.

Yes, it spreads from the periphery ie. weakest to the core ie. strongest. Perfectly, logical. :twisted:
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby pstarr » Sat 19 May 2018, 15:49:03

Yoshua wrote:Another question in my mind is: Why aren't food prices rising? Supply and demand? Will someone be the first one and say that we have a food glut...while millions of people are starving.

Food prices will rise . . . later.

Current crops and harvests were planted, cultivated, fertilized, harvested etc when diesel and fertilizer were cheap. Next time could be months?

I also read another recent post earlier today, where someone ?? said food prices were already going up in Argentina and elsewhere. We will see?
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