The Coming Economic Collapse Will Be Far Worse Than Most Realize

Citizens of the U.S. and the world are heading into a future that few have prepared for.  It will also turn out to be much worse than most realize as it will be unlike anything we have witnessed in the past.

Part of the reason we are in such a bad fix has to do with the compartmentalization and specialization of our modern educational and economic system.  There are many intelligent people in the market doing smart things; however, they often have no clue on what the hell is going on in other industries or professions.

For example, there are many precious metals analysts for whom I have much respect, but who fail to understand the energy industry.  Now, I imagine there are a few analysts in the precious metals Biz who do understand the ramifications of Peak Oil, but it may be more rewarding for them (financially) to keep their traps shut.

And then we have individuals who specialize in “Technical Analysis.”  Many who have read my posts and articles realize that I believe that technical analysis is worthless in a rigged market.  I also believe the big price moves in the gold and silver are more fundamental in nature than technical.

I explained this in detail in several recent articles by comparing the price movement of oil to that of gold and silver.  I have republished two charts below that show how the price of gold and silver moved in parallel with the price of oil in the 1971-1980 time period:

Silver vs Oil Price & Ratio 1971-1980 NEW

Gold vs Oil Price & Ratio 1971-1980

Here we can see that silver and gold moved in tandem with the price of oil.  Many investors still regurgitate the notion that the Hunt Brothers were solely responsible for pushing the price of silver to record highs in 1979.

If that was true, then who was pushing up the price of gold?  Or, how about oil… who was responsible for increasing the price of oil by a factor of 10, from $3.29 in 1973 to $36.83 in 1980?  If I were to ask these questions of someone who blurted out that the Hunt Brothers cornered the silver market… they would get a blank stare back from me, because they have no clue.

My articles get around the Internet.  Someone on another blog made the comment, “comparing the price of silver to oil was silly”.  They said it makes just as much sense to compare the price of silver to the price of potatoes.

Everyone is free to have their own opinion, but the fact is that energy is the key that drives the global economy.  Energy allows silver to be mined, refined, transported, minted, traded and consumed.  I happen to believe the price of energy controls the price of silver, and other commodities as well, for that matter.

Let me see if I can provide another example that may win over the worst skeptics.  If we look at the price movement of copper from 1971-1980, we see an interesting correlation to the price of oil:

Copper vs Oil Price 1971-1980

Well… look at that.  It is perhaps just another coincidence, the price of copper had a similar trend to the price of oil.  As the price of oil shot up in 1979… so did the price of copper.  Hell, the 1979 and 1980 copper-oil price lines are almost identical.

Copper didn’t enjoy the same percentage gains as gold or silver as it isn’t a sought after monetary metal.  However, who was trying to corner the copper market in 1979-80 to push it up to new record highs?  Do you ever hear anyone asking that question?

I bring up this subject so investors realize that the big price moves of gold and silver parallel the price movement of oil and are not due to technical analysis.

The long-term technical analysis chart of silver below is suggesting that cycles and waves may predict the future price of silver.  I say throw-away the damn chart and follow the price of oil… it’s a much better indicator.

Eidetic Research Long Term Silver Chart

Why?  Because, if you were to overlay the price of oil on this chart, you would find a similar trend-line.  That being said, the price of oil is only a basic guideline to gauge the market price of gold and silver.

Due to the Financialization of the market by manufacturing hundreds of trillions of dollars worth of derivatives, fiat currency has been siphoned away from the physical market and into worthless paper garbage.  We have no idea what the prices and costs of goods, services and commodities would be if the majority of fiat currency was invested directly into the physical markets rather than the $trillions in leveraged paper claims.

I would like to touch on one more subject as it pertains to technical analysis before I get into the wonderful subject of economic collapse.

In a recent article, “Silver – The Power of Thought Will Ultimately Prevail” the author Michael Noonan stated the following:

We keep moving away from discussing fundamentals because the fundamentals have not been reliable indicators in the supply/demand equation that normally determines price. Yet, almost every single article focuses on the record sales of numbers of coins offered to the public, charts showing overwhelmingly favorable statistics that favor higher silver prices, cost factors for mine production, decreasing supply relative to increasing demand.

How many times, and in how many ways can the same information be presented over the past year, and yet the price of silver languishes near recent lows? People have an appetite for this kind of information. It serves as a crutch to bolster flagging belief that silver and gold will rally any time soon.

Fundamentals are real. We are not being dismissive of their importance. Instead, we see the perception of their impact as being misplaced, for now. Ultimately, they will prevail, but the greater area of focus of a failed fiat financial system deserves center stage.

I disagree with Mr. Noonan on his current assessment of the fundamentals.  While I don’t want to get into a TIT for TAT debate with Mr. Noonan on why I disagree, I believe it’s important to understand the difference between the two ideologies.

Mr. Noonan doesn’t focus on the fundamentals because they are, according to his analysis,  “unreliable indicators.”  Instead, he seems to suggest or imply that technical charts offer a better indicator.  Now, I may be guilty of putting words in his mouth as he did not directly say that, but if you read his articles, you will find technical charts rather than fundamental analysis.

I believe that the fundamentals are everything in a rigged market…. even when the paper price doesn’t reflect it.  It is more important to understand the energy fundamentals than it is to focus the on technical charts of silver.  As I explained above, oil has been the major indicator in driving the price of gold and silver (and yes… copper).

Also, when investors understand the fundamentals of the energy-cost structure in the precious metal industry, they will be able to see there is a floor for the price of gold and silver.  I still get investors emailing me stating that silver can go to $5.00 because it’s so cheap to mine.

In addition, technical analysis in a rigged market cannot grasp the serious problems looming in the energy industry.  I just got off the phone with energy analyst Bill Powers of PowerEnergyInvestor.com… and I have to say the information he shared about the U.S. Shale gas industry is alarming.  I will publish an article on this subject next week.

Let’s just say the price of natural gas in the United States is heading much higher.  This will not be because of technical analysis, but rather in response to important fundamental causes, forces and data.

If you are an individual who believes the garbage forecasts put out by the Large Bloated Worthless Banks and Brokerage Houses claiming 20 years of growing natural gas production at low prices of $4.00 Mcf here in the U.S., get ready for a rude awakening.

This is the reason Mr. Noonan’s opinion on the fundamentals are wrong.  While I agree with Mr. Noonan that the “Failed Fiat System” deserves focus, peak oil is the reason the Fiat Monetary System is headed for certain death.

Again… technical analysis is worthless in understanding the ramifications of peak oil and its impact on the United States and the world going forward.

The Coming Economic Collapse Will Be Much Worse Than Most Realize

CityScape Future Not like the Past

From the information and data that I am coming across, the U.S. and World are totally unprepared for severe changes that are drawing near.   These changes and disruptions will be much worse than the typical analysts’ concerns of deflation, hyperinflation or currency collapse.

A few days ago I listened to Coast-to-Coast A.m. with George Noory.  His guest that night was none other than Harry S. Dent Jr.  Harry told George there is going to be a huge stock market crash and the place to put one’s money is not gold or silver… but rather the U.S. Dollar.

Dent believes the dollar will be the safe-haven because we have 20 aircraft carriers roaming the oceans of the world .  Dent credits the strength of the Dollar to the strength of our military.

Dent makes his forecasts based on what he calls the “Demographic Cliff”, which, by the way, is the title of another one of his endless supply of books.  Dent believes understanding the changing demographics of countries is the key to investing.

While Dent has been a successful financial publisher, many of his forecasts have been complete failures.  According to CBS Money Watch article, “Harry Dent and the Chamber of Poor Returns”:

In October 1999, Dent wrote the bestseller “The Roaring 2000s.” The following is from the Library Journal’s review: “Dent’s previous book “The Great Boom Ahead” accurately predicted the stock market boom of the 1990s. In this one, he looks ahead to the new millennium and claims that the Dow may reach as high as 35,000 within the next decade, due in large part to the changing demographics of baby boom investors.”

Dent could not have been more wrong. The next decade saw the S&P lose 1 percent a year, producing a cumulative loss of 9 percent.

Despite this failure, which might have humbled someone else, Dent persisted. In January 2006 he published “The Next Great Bubble Boom: How to Profit from the Greatest Boom in History: 2006-2010.” Again, Dent was wrong. Not long after publication, we experienced the worst bear market since the 1930s. And for the full five-year period the S&P 500 Index returned just 2.3 percent per year, well below the return on safe bonds. This seems like less of a bubble boom, more of a bubble burst.

Dent makes his money on the market realization there will always be a new Group of POOR UNWORTHY SLOBS ripe for the picking.  The market has a short attention span — and memory.

I am surprised that George Noory believes that Dent made several good predictions and it was a good idea to follow his forecasts.  I don’t know what happened to the Coast-to-Coast A.m. show.  Since Art Bell retired years ago…. the show just isn’t the same.

Everything that Art Bell believed about Peak Oil & Climate change seems to be a BIG JOKE to Noory.  He continues to bring back guests who provide evidence suggesting the earth has a creamy nougat center of oil (famous peak oil term coined by James Kunstler), and we are also heading into a New Ice Age — pure bollocks.

As I have mentioned, I am working on my first paid report called The U.S. & World Collapse Report.  There will be information in the report that you will not find in one place anywhere else on the Internet.  I hope to have the new Report Page with free & paid reports out by the first week or two in February.

Dent and many other analysts who focus on “Deflation” will be proved wrong because they fail to incorporate Peak Oil in their forecasts, shown in the chart below:

Peak Global Oil & 1930-1980 periods NEW

When the U.S. and the world were suffering from the Great Depression in the 1930’s, global oil production was still in its infancy.  Global oil production increased from less than 5 mbd (million barrels a day) in the 1930’s to 45 mbd by 1970.

The reason the United States pulled itself out of its horrible depression had more to do with a growing oil supply than the economic activity gained from World War II.

Then we had the terrible 1980-1982 recession in which Fed Chairman Volcker saved the dollar by raising interest rates while putting the Kibosh on the precious metals.  Even though global oil production declined for a short time-period, we still had another 35 years’ worth of growing world oil supplies.

It was the increasing oil supply that enabled the U.S. and world economies to grow out of the severe down-turns.  However, we have been in a global oil production plateau for the past decade (as shown in the small insert graph above, highlighted in yellow).  We are no longer able to increase world oil production as we did in the 1930’s or 1980’s.

Thus, Dent’s Demographic theory of forecasting is worthless in a peak oil environment.  I could not care less whether a truck driver is 21, 41 or 61 years old, if there isn’t an available economic supply of diesel to maintain the transport industry.

The peaking of global oil production is putting severe pressure on the Global Fiat Monetary System.  Business as usual will not continue for long, since cracks are beginning to appear in the energy industry.  I will be discussing this in future articles and in more detail in The U.S. & World Collapse Report. at the SRSrocco Report.

Gold and Silver will become some of the most important stores of wealth and investments in the future.  The U.S. Dollar will not be a safe-haven as Dent and many other analysts believe because a fiat monetary system based on compound interest and fractional reserves need a growing energy supply to survive.

In conclusion, the GREAT U.S. SHALE ENERGY BOOM is heading towards a BUST.  There is no PLAN B and few are prepared for what is coming.  The debate on Technical Analysis vs. Fundamentals will seem silly when U.S. and the world head into the worst economic collapse in history.

As former Assistant Secretary of the U.S. Treasury, Paul Craig Roberts stated recently, when the price of gold and silver revalue much higher, there won’t be any physical metal to buy.  Trying to time the market for the best price may turn out to be a very costly mistake.

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56 Comments on "The Coming Economic Collapse Will Be Far Worse Than Most Realize"

  1. Might as well compare silver to the price of a twinkie

  2. I’m concerned that the price of oil cannot rise to needed levels in the future because of the negative feedback the higher prices will have on the economy.
    Because we are using more and more resources to extract oil these extra invested resources do not benefit society so in a way the more difficult it is to extract the oil the less productive society becomes. This means that products produced in the future will be more expensive leading to a fall in general wages.
    Falling wages will have a fundamental negative feedback effect on the price of oil.

    There is no doubt that substantial global shale oil deposits exists but if the price of oil do not rise a lot higher the shale plays are not economic – and I think the price cannot rise all that much because of the negative feedback it has on society.

    I agree that gold and silver will play a vital role as money in the future – I simply see gold and silver as money – gold is the large notes and silver is the small notes..

    • Ag47,

      Everything you stated in your comment is SPOT-ON. Of the past 11 economic down-turns, 10 of them were related to high energy spikes. Yes, the price of oil cannot rise too high as the citizens of the world will not be able to afford it.

      Price will be another factor in Peak Oil. As I mentioned in the article, my conversation with Bill Powers was quite interesting and alarming. I thought shale gas production in the United States wouldn’t peak until after 2020.

      However, 2014…..THIS YEAR may be the peak. This will have serious ramifications going forward.

      steve

  3. silverpassion | January 24, 2014 at 8:16 am |

    Harry Dent sounded like a desperate nut on C2Cam the other night. And Noory’s no genius by any means, ending the interview simply by saying Dent is ‘right’. Even Art Bell said something idiotic a couple of years ago when he last guest hosted the C2C show…’the economy is recovering..blah blah’. I emailed him after that and told him he was completely out of it. As you stated in your first paragraph: people are smart in their specific fields, but don’t look to them for knowledge about the economy.

  4. Yeah, Harry Dent says gold is about to go up ……. to about $1400 that is and then he advises to sell.

    I kind of see inflation for everything you need to survive (food, energy) and deflation for everything else (your portfolio).

  5. I’ve been skeptical of anything our gov’t tells us . How do we really know that their is really a big oil boom in fracking. I think it’s a deception by our gov’t to drive oil prices down to keep the dollar strong .As it is harder to paper short oil because it actually needs to be consumed in a much higher proportion. Exactly like the star-wars defence shield lie ,spewed to break up the U,S,S.R. Just look at the timing of the fracking “discovery” This gov. has proven itself to be totally ruthless and would try anything. Look=out for freshly minted tungsten at a dealer near you.

    • I meant to say; Oil is harder to paper short than P.M.’s ” because it actually is physically consumed at a much higher proportion than precious metals.” and more delivery of physical oil is needed. which would tend to thwart the fractional schemes of the gov.

  6. There is no peak oil. There is merely price points that must be reached where extracting oil is financial viable. America is in an oil boom because the price of oil has increased to the point where alternative oil extraction methods are now viable.

    • Ken,

      There will be peak oil, gold, silver, copper and etc and etc. It doesn’t matter in what way global oil production peaks… it will peak. Furthermore, Shale Gas production in the United States may indeed peak in 2014. Also, Shale Oil will probably peak 2015-2016.

      After that… there is no PLAN B.

      Lastly, Americans can’t afford a good percentage of the oil that it is consuming currently. The only reason why we have been able to purchase this expensive oil is due to the Fed propping up the financial system by the $trillions in liquidity.

      Global Peak oil is here.

      steve

    • There is peak Oil. Price point ultimately does not matter, if it costs more energy to extract the oil than the energy returned then the activity has no value. To maintain our current standard of living you need cheap and abundant energy. That bus has already left and the queue to get on the next one is getting restive……..

      • Yes, we do need cheap and abundant energy and yes, peak oil is probably real because of extraction costs being so great as to negate any gain. After all you can only charge so much for a gallon of gasoline before you have no buyers. Which bring to mind James Dines, “the original gold bug”, who comments that the world will go NUCLEAR (not WW III), despite Germany’s current status on NEnergy. Invest in U-238. Lookie at China.

    • Fred_Flintstone | January 25, 2014 at 9:19 am |

      Ken is partially correct. There will be a ‘peak’ in production of all resources on this planet (because they are finite). However, if the price of ‘oil’ goes up far enough there will become other extraction methods or methods to produce alternate energies. Same with PMs, if the price goes up high enough, companies will start visiting planets and asteroids to mine. In a ‘market’ economy all of these things will work themselves out……Now, the standard of living of most humans may go down precipitously, but there will be alternatives.

      • Fred_Flintstone,

        The reason for a peak in production in whatever commodity or metal is due to the commercial viability of the system-equation. Furthermore, 10 of the 11 past economic recessions were due to energy price spikes.

        So, the higher energy price kills demand because the masses cannot afford it. While it is true that a higher price may allow further extraction of oil (or whatever) for the wealthy…. this still does not alter the reality of PEAK OVERALL PRODUCTION.

        Lastly… there are other factors and data that I have recently come across that would even make it impossible to extract this more expensive energy or commodities in the future.

        This will be found in my upcoming report, THE U.S. & GLOBAL COLLAPSE REPORT.

        steve

        • In 1979, 1981, 1991, and 2000, the USA economy fell into recession due to the price of oil exceeding $30/bbl. Now, oil is $95/bbl and the economy is growing. What gives?

          Answer: the economy isn’t really growing. It just seems that way since they are under reporting inflation.

      • GET REAL FOLKS! MIning asteroids??? Just remember when the price goes high enough, is anyone going to afford it? Ya still have to pay for it. Economics is really simple.
        You have to give something real (wealth) to get something real (wealth). Anything else, you get at the point of a gun. Fiat currency, high frequency trading, computer algorithms, as well as, high flutin’ Keynesian Economics, with all their graphs and equations, are just ways to steal more wealth from the undereducated. Mining asteroids–reminds me of the Mississippi Bubble. Itinerant “ne’er do wells” marching to the docks in France with picks and shoves over their shoulders going to Mississippi to dig for gold. But like shale oil it is a good story, which will probably be run by the MS Media and gobbled up by Americanus Boobus. The trouble with Reality is it keeps interfering with my life.

  7. Steve–
    That should be “creamy nougat center” not nugget.
    –JHK

    • James,

      LOL… thanks for the correction. I love the research, however I am known to be a BUTCHER at writing.

      steve

    • Ha, true. Let’s twist and connect this strip for a mouthwatering Möbius… the article contains three tasty nugget-nougat ratio charts.

  8. Revalations:
    5 And when he had opened the third seal, I heard the third beast say, Come and see. And I beheld, and lo a black horse; and he that sat on him had a pair of balances in his hand.
    6 And I heard a voice in the midst of the four beasts say, A measure of wheat for a penny, and three measures of barley for a penny; and see thou hurt not the oil and the wine.

    After these verses, there was famine. Why? Because once the OIL is threatened or hurt in our economies, there is no business. Food cannot be delivered, we cannot get to work, and electricity will be limited or gone. Right now we have so called peace talks with Iran and Syria which are going no where. There will be a war soon to keep us distracted. Syria is the last of the Mohichans as far as places with ancient bible names. When they fall, watch out below because it will be WW3. As for the wine part, lets just say when reality sets in, many will need liquor to get through their every day problems. It will be as a way for them to forget their lost and sorrows.

    Verse 5 shows there are balances in the hand of the Angel, now this is used to measure food and also it is symbolic of honest money measurements. Notice the pricing on the wheat and barley. Things will get expensive and many because they cannot afford the pricing will suffer. Get honest money, Gold & Silver. It is written that money should be of just weights and measures. The dollar is not honest money for its value is determined by interest rates and other manipulations.

    When the oil is hurt(and by the way oil/gold is the money of those who are wealthy), everything else will be. All economies are driven by oil whether people want to hear it or not. The world reserve currency is backed by oil.

    Steve is correct with his analysis because there would be no economy without oil. At least not the one we live in today. Let them talk Steve, that’s how you know that you are correct. Thanks for the information you give always.

  9. Well done.

  10. Hey give Harry Dent some credit. 2006 -2010 the economy went boom big time!

  11. bigblockpower | January 24, 2014 at 4:16 pm |

    Steve,

    Long time no hear. Awesome article, again! Can’t wait for the upcoming reports. Hope to hear from you.

    • bigblockpower,

      Thanks for the Kudos and your reply. I believe the data in my upcoming reports may be quite alarming to those who haven’t been reading my work…. and quite surprising for those who have.

      steve

  12. Steve:
    Always enjoy your work.

    Since you admit to being the ‘butcher of writing’
    “I could care less on whether on not a truck driver is 21, 41 or 61 years old”
    should be
    “I could NOT care less ….”

    • bucktooth,

      LOL…. thanks. I guess I need to get an editor. I will have someone copy edit my reports, but I am a one man show here on the site. I really love the research and making the graphs. Actually, I create the graphs & charts first, then the writing comes second.

      thanks again,

      steve

  13. I suspect that most people do not really give an in-depth look at energy.

    Energy is the ultimate currency of the universe. All the energy that exists in this universe was created at the moment of ‘creation’.

    Historically speaking, the population of man was quite low for most of history as the only power that existed for our species was ‘manpower’.

    Later came ‘horsepower’ which was fairly radical in changing the previous human condition.

    And now we have fossil power. But it has been around long enough to lull a few generations into thinking about things other than this most fundamental influence of all civilizations and of our universe.

    ‘Any’ changes in the energy supply is going to be a species wide cause of change. And here we stand in this interesting times.

    I can understand the lies and obfuscations regarding energy supplies. Everything (globally at this point) would be affected by a true accounting of the state of energy. I see this (energy) to be the most obvious ‘tipping point’ for a major revision of mankind’s current global market. More so than the financial markets or even water.

    • Saylor,

      What you stated in your comment is totally correct. However, the problem as I have mentioned is due to the “Specialization” & “compartmentalization” of our world. I know very smart people who still think there is plenty of oil to extract — even though its harder to do so.

      They fail to understand the EROI FACTOR (EROI – Energy Returned on Invested). I will be providing some very factual EROI data in my upcoming REPORTS. People lie… but the EROI does not.

      It doesn’t matter if there is more oil. If the remaining oil has an EROI ratio that is so low too allow a modern society such as ours to continue… it will remain in the ground

      steve

  14. Oil is one energy input into mining Gold and Silver. Electricity is another very large energy input into mining.

    Mines in remote areas have no access to natural gas but do have access to electricity. The cost of electricity mirrors natural gas in the US more and more. In other countries (China for example) it is coal and the capital investments to change natural gas or coal into electricity.

    I have never read you address the energy input from electricity into production of precious metals.

    Just food for thought.

    • Scummy,

      You bring up an excellent point. This is the energy break-down for mining:

      OIL = Runs the Earth Moving Machines that extract and transport the ore.

      ELECTRICITY = Runs the Equipment that crushes, processes and refines the ore into metal

      Most companies that sell electricity to these mines use Coal, Natural Gas & Hydro to generate the power. Only those very remote mining companies consume mostly Diesel or Fuel Oil to generate electricity when they are unable to access the Electric Grid. Some are now using natural gas.

      While there are several energy types, I believe Oil is the most vital going forward. That is why I tend to focus on oil rather than natural gas or coal. I will explain this in more detail in future reports.

      However… when the world peaks in oil production… its game over.

      steve

  15. Thanks Steve, well said. The charts tell the story. It’s the energy required to find rare earths, extract, concentrate then further purify that dictate the replacement value; the embedded energy in distilled earth, so-to-write. It is the energy expended that dictate the greater portion of cost to commodities.

    “…the big price moves in the gold and silver are more fundamental in nature than technical.” “the big price moves of gold and silver have been related to the action of the price of oil…”

    so true, and coupled with –

    “We have no idea of what the prices and costs of goods, services and commodities would be if the majority of fiat currency was invested directly into the physical markets rather than the $trillions in leveraged paper claims.”

    In the sixties, coke bottles fetched a nickle for the glass. I think the inflation adjusted 1960’s nickle in 2014 fiat dollars would suggest something went awry. “We have no idea of what the prices and costs of [glass] would be if the majority of fiat currency was invested directly into the physical markets rather than the $trillions in leveraged paper claims.” And we have no idea what the true price and cost of [glass] will be post cheap oil. As you point out so well, it the energy.

    “The future will not be like the past”

    The future will certainly not be like the recent past. Maybe to some degree, the more distant past is the future, in large echos. JHK paints a picture of a world made by hand, and I suspect that’s a damned accurate forecast. But I think there will also be pockets of technology and concentrated energy use. No telling what that may look like. At any rate change is in the air.

    • dale,

      I agree with you. I have had several email exchanges with James Kunstler and actually had a planned interview with him last month for his site. There was a reason that I elected to postpone it. This will be discussed in my U.S. & WORLD GLOBAL COLLAPSE REPORT.

      Anyhow, Kunstler is correct. The majority of yuppies will be working in agriculture rather than their current occupation of typing on a keyboard making 6 figures.

      However, I also do agree that there will still be technology… but at a much lower level.

      steve

  16. Gold and Oil both define the relative value of the US$. Gold’s affect is more psychological and is mostly contained to financial markets. The price of gold has no effect on the cost of living. Oil is quite literally the opposite. The price of oil has a direct effect on the price of almost everything. People tend to forget that the ’08 housing market crash main catalyst was the tremendous run up of the price of oil from the 50’s in Jan ’07 to the 140’s in July of ’08. There is no commodity that has more effect on the world economy than the price of oil, nothing even close. Energy is what drives the world economy. I was listening to an interview with Peter Schiff while writing this and he just said Oil companies are barely making money at the current price point and oil must go up.

    Here is a PDF showing energy generation sources in the US. http://www.eia.gov/totalenergy/data/monthly/pdf/sec1_5.pdf This is by Btu. Natural Gas now makes up 33% of total production, Oil is 19% and Coal is 25%. NatGas is now just as important as oil for energy production in the world. Guess who is the largest producer of oil and 2nd in gas in the world… Russia. The Ukraine unrest is a proxy fight between Russia and the West. China is the world leader in energy generation, and it is almost all coal. Hence the horrible pollution. China cannot continue using coal at the levels they are. What do they move to?
    World Energy Production by Type;
    http://www.energyrealities.org/chapter/our-resources/item/energy-production-by-fuel-type/erpCCB0E4D7583110F96
    http://yearbook.enerdata.net/crude-oil-production.html#energy-primary-production.html

    I believe in the reality of peak oil. But when? The higher the price and better the technology the more oil is ‘found’. It has always seemed to me that it is in the best interest of nations and oil companies to under report reserves and new oil field size. Lot easier to keep the price of oil up with the threat of running out. The fact is 2012 was the highest year of crude oil production in history. Could not find 2013 numbers. And I do believe shale has no legs, wells have very short productive lives, not to mention the negative environmental effects.

    Even if peak is close and the downslope is steep, it appears worldwide debt is going to trump oil before that happens.

    • TORNasunder,

      You bring up many great points.. and I don’t have the time to address them all. While it is true that the U.S. produces less BTU’s of Oil than of coal & natural gas, it CONSUMES more BTU’s of Oil than anything else. Here are the figures from NOV 2013 EIA data:

      2012 U.S. Oil Consumption = 34.6 Quad BTU (45% of total)
      2012 U.S. Natural Gas Consumption = 26.0 Quad BTU (33% of total)
      2012 U.S. Coal consumption = 17.4 Quad BTU (22% of total)

      So, here we can see that the U.S. is consuming a great deal more Oil BTU’s than both natural gas and coal. The big problem for the U.S. is that it cannot run its domestic economy on the oil that it produces… it can with the natural gas and oil.

      The huge increase in U.S. Debt over the past several decades correspondes to its Oil production deficit. Basically, American cannot afford a percentage of the oil they are consuming.

      The U.S. has been able to LIVE OFF THE PHAT of the rest of the world because it EXPORTS its INFLATION.

      Lastly, the huge Debt Bubble will collapse not because it has become so Large, but because the world will no longer take U.S. Debt Money for Real things. The peaking of oil is a major factor in the collapse of Global Debt.

      steve

      • Well I was bit all over the place with my post, so no problem. I never considered the USG’s debt to be a result(or at least partly due) of imported oil, have to ponder on that one. I completely agree that the US exports it’s inflation, what is really shocking about that statement is what the actual inflation rate in the US is… 5-8%+? When we can’t export the debt then hyperinflation is guaranteed. I think we may be splitting hairs on why the US$ will collapse but I’m still not convinced it has to do with oil. There is a tremendous amount of financial fraud happening today that has nothing to do with oil, just naked greed. But I’ll keep reading your articles and reading the well informed commentary here, as regardless oil is a key piece of the global financial system.

        • So true, so simple, yet so few understand the significance

          • oops–that was supposed to go to another comment.

            TORNasunder, agreed that there are a lot of things going on not overtly related to oil. It’s a pretty amazing convergence of events. Population, resource limits, corruption and sociopathy, technology accelerating at a dizzying pace, debt overload.

            But energy is key. All things are driven by energy, and if it gets dramatically more expensive, it will change everything.

            The oligarchs seem to be going for a broke, I imagine because they know the game is about to change.

  17. Interesting article. Yes, it’s impossible to predict manipulated markets, unless you’re the manipulator, which is why I stopped taking Puplava to heart. Though in his defense, he has to earn his living in the “what’s happening now” market. That and all the Eric King’s and Eric Sprott’s and PCR’s of the sky is falling world have to answer “I never thought it would go on as long as it has and I don’t know when it will end” when they’re asked why their predictions of the economic crashing of the world that they thought in (pick a year) hasn’t yet happened. For the record, I too predicted and prepared for a collapse in 2008 – sold house in 2006 and loaded the boat in PM’s – that wouldn’t be easily recoverable from – well not exactly because of the run in PM’s from ’08-’11, but that didn’t pan out with the post ’11 smackdown in all things PM, and now friends and family don’t listen to me…

    Let’s face it, the money masters of the world control this matrix and we plebs don’t know what they’re thinking and planning. That being said, I don’t want to give them Godlike powers as, I think anyway, they’re mostly sociopaths who think like pirates. And that’s what makes it scary: there’s no one really in control and when it breaks, it breaks very badly.

    On the positive, I work with a lot of smart people and I think there is a non-petroleum, non-(bad)nuclear energy transition on the shelf, only it’s being suppressed by the above money masters. Whether this transition can be implemented in a crashing world will be dicey as the infrastructure needed will be sorely tested in a compromised economic environment.

    And since you have discovered a tracking key through your oil price vs. other commodity price movements, please send me info on how to subscribe to your work.

    • JQ,

      You are correct about Puplava and his readers-investors continuing to make fiat currency on the latest FED GENERATED BUBBLE TREND. However, like Bernie Madoff… this TREND will blowup sooner than later. As Ex-Assistant Secretary to the Treasury, Paul Craig Roberts correctly states….. When gold and silver finally revalues, there won’t be any real physical metal available to purchase.

      While Jim Puplava et al, are adding DIGITS to their accounts, I wonder how successful they are going to be when the Global Currency Reset hits over some weekend. How much will those DIGITS matter at this point in time?

      This is the important factor to consider.

      IMPORTANT NOTE: Even though I still have the MEMBERSHIP intro area on my site, I have decided not to have a monthly subscription service. Instead, I will be offering PAID REPORTS next month.

      Thanks for the interest JQ,

      steve

      • Please don’t take it that I judge Puplava harshly. I don’t. He’s just dealing with the hand he’s being dealt and passing his advice on… Don’t forget he brought Matt Simmons into his little world of the internet as well as giving Eric King his launching pad. One doesn’t make it from a working class Phoenix household to living the life in San Diego w/o being: a) smart and b) knowing which way the wind blows.

  18. In order to survive, the worldwide communities need an alternative energy source to replace Oil. The only viable source is Thorium (LFTR) Reactors. Until they are designed and developed for local networks, we will all be up the creek with an empty gas tank.

    • Nick,

      While Thorium LFTR Reactors could offer a better alternative than that ABORTION called URANIUM powered Nuke plants, it takes Oil to mine, refine, transport and produce the materials to make those LFTR reactors.

      I believe we have run out the clock on Modern Civilization. And… I think we may have much BIGGER PROBLEMS to be concerned about other than Economic Collapse.

      steve

      • lastmanstanding | January 26, 2014 at 10:07 am |

        Not only has the clock run out, but all of this energy was used on things that where developed for human control.

        Not human survival on this beautiful earth.

  19. j. kruszewski | January 27, 2014 at 8:57 am |

    The price of oil in this article is a repeating theme. As we were being lied into Iraq War, Grover Norquist and the Project for a New American Century were giddy about the fact that with the fall of Saddam they could force down the price of oil and screw OPEC. Dick Cheney told Norquist to Shut the F@#k up, sit the F@#k down. And this is a quote from Norquist “Cheney told me we’re in the ‘Oil Profits’ business not ‘Oil Producing’ business”. That tells me Oil price is manipulated higher and the reasons we have all this social upheavels in the Middle East is by design to keep oil priced high. The bottom line is high oil anyway, but I was wondering if the author took this into account and if not does it matter?

  20. In order for the ‘peak oil’ argument to have validity, means by default that every square mile of the planet has been mapped and geologically screened for deposits – land or sea, navigable or not, inhospitable or not, legislatively impaired, or not, and found to be either lacking or finite both. If this has been done, please advise or cite the documentation – I’d like to review it. If, on the other hand, ‘peak oil’ is an extrapolation of current limitations as described above, then the dynamic itself is one that is subject to change, and Not a proven fact, hard science, or ‘settled’ matter.

  21. I once read that the average driver can effectively double their fuel economy by adding a passenger. Most of the cars that I pass on the road have only one person in them, which is true for me as well
    Also, in the aftermath of Fucushima (Sp?), we should demand a global initiative to develop renewable energy sources such as wind, solar, tidal and geothermal. Not only would energy prices come down but global employment would explode. The R&D behind such an endeavor would create unimaginable breakthroughs in many technologies and give the peoples of the world a chance to unite behind a common cause for the common good..

  22. Dent is full of it. He says the the dollar is strong because we have 20 aircraft carriers sailing around the world. The truth is exactly the opposite. That is why the USA is broke. An empire seeking world conquest is the main cause of most empires crashing. The fools that mis-control the economy are crazy the way they spend money they don;t have and it can;t last . The result are in, it has never worked before, the government department of murder will fare no better this time,

  23. 20 aircraft carriers? Are we hiding 8 of them somewhere? Last I checked we had 12 with 10 in service at any given time.
    Major JC

  24. It is highly unlikely peak oil will play out in a nice orderly and linear decline. Once it becomes evident that global oil production is declining, hoarding, oil wars and physical use of force could mean that a large number of the poorer countries in the global economy (third world) will become completely cut off from any oil supply in a very short space of time. Think billions of starving people stampeding around killing and eating every animal, bird, fish and whale that exists to ward off the inevitable starvation. The anthropocene may finally end with a very empty and silent world. I hope and pray I’m wrong…….

  25. People may be interested to know that Australia has a boatload of hardly tapped oil. TPTB want to keep a lid on it for now, but they suspect that there is at least 400 BILLION barrels of oil there. They have definitely identified about 180 billion barrels, and discovery drilling continues. Do Google searches for the “Officer Basin Oil” and “LINC ENERGY” for starters on your research. For comparison, Saudi Arabia had only 260 billion barrels, and they still have a big chunk of it, if you can believe their figures.
    And please don’t fret about running out of energy. TPTB, after murdering Stanley Meyer, have his hydrogen-on-demand technology squirreled away for a rainy day. Stanley devised a prototype dune buggy that could travel coast to coast on 22 gallons of water. But that will remain hidden until after the ARCHONS have sold us their last pint of black gold.
    And they have various over unity devices shelved away that work off high tech quantum physics technology such as the MEG, which stands for Motionless Electromagnetic Generator. The device is about the size of a toaster oven and it can power your whole house with extra juice you can sell back to the grid. That device was all patented and ready to go and was supposed to be put into mass production in 2003, but it wasn’t because they would have rather invade Iraq and kill a bunch of innocent civilians. That’s a big way they get their jollies, coming all over themselves, you know. And you wouldn’t want to deprive them of that now would you ?

  26. Peak oil. What happened?

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