[CAMWEST-discuss] Fw: More on oil and finance

Danny Hannan danny_hannan at yahoo.com
Sun Nov 20 05:56:11 UTC 2011


G'day all,
I sent this e-mail to my local state and Federal reps.
The case for more and better public transport and legal priority for cyclists and dedicated cycling lanes on roads.  The situation is only going to deteriorate as the world passes global peak energy production and wrestles with declining energy and fuel availability.
 
G'day Alex and David,
Data presented in the 2011 BP Statistical Review and from the IEA World Energy Outlook 2011 both indicate that earlier projections of shortages of liquid fuels will be realised in 2012 and again in 2015, pushing prices much higher.  For 2012 I expect oil particularly Brent (Europe) and Tapis (Singapore) to range between US$120-150/barrel and possibly as high as US$180/barrel, depending on the impact on oil consumption of the European financial collapse.  Prices above about US$120/barrel are negative for economic growth so a double whammy;  or a perfect economic storm.

Coal continues to increase in consumption globally and demand is still very strong though prices have retreated from recent highs.  As of about 2012 I expect the global exports of coal to start to plateau then decline as countries with reserves use more of their coal and global production also plateaus.  Australia's production and exports are set to double this decade with new rail lines and coal loaders at all three of our major ports.  A reminder that the Australian Energy Resources Assessment 2010 said that at pre-2009 production level Australia's economically viable reserves of coal will be gone in 90 years.  Doubling production will halve the life of the reserves, so all our economically viable coal will be gone by about 2060.

A similar story exists with natural gas but coal-seam and shale gas complicate that picture.

Basically things energy are right on the projected path as described in http://camwest.pps.com.au/renewable-energy/ and I don't think it takes much analysis to realise that  we are rapidly approaching crunch time for our global debt situation.  Global debt plus rapidly rising commodity and particularly energy prices equates to a perfect economic storm.

I put this quote in to emphasise that this is not crystal ball gazing but by analysing the data available and extrapolating opposing trends it is possible to make quite accurate future projections.

"The level of debt in western countries and around the world is high. The USA is the prime example requiring 20% of its GDP to service its debt. Escalating oil and energy prices will cause economic downturns and recessions as is current in 2001. As the price of oil and energy increase through this decade it will cause further economic recession, the burden of debt will increase. As the GDP reduces due to recession, the percentage of GDP required to service that debt will increase. Companies and individuals will start to go bankrupt under the burden of debt. These collapses will have effects on other companies and individuals and will eventually cause a domino collapse leading to a depression. I believe some time 2011–2015 but very possibly much sooner."  (Feb 2001 http://camwest.pps.com.au/projects/why-roads.shtml )

The one thing I missed was the transfer of debt from the corporate sector to sovereign debt, and it is now countries that are going bankrupt and making other countries bankrupt with them, how naive of me.

Dan

danny_hannan at yahoo.com
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