Episode-1306- John Pugliano on the Inflation’s Damage
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John Pugliano of Investable Wealth
John Pugliano is a self taught investor with over 25 years of investment experience. Recently he founded Investable Wealth, LLC to offer independent advice and money management based on his stock trading philosophy and methods. John has served in the military and worked for several large corporations.
He is the father of six. John and his wife Cheryl live happily and debt free in Utah. John spent 20 years in corporate America as an industrial products business development salesman. More importantly for past 25+ years he has taught myself to invest in the stock market and today has a net worth in excess of 1 million dollars.
He is now a licensed financial adviser and owner of an investment advisory firm. Like myself, John has had an extremely low opinion of the financial adviser industry- which is one reason why he has started his own firm.
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An interesting share regarding gas prices…
Back in December of 1998, my husband and I took a trip from Terre Haute, IN to Colorado Springs, CO. We filled his little Acura Integra at 73.9 cents per gallon, and we headed west on I-70. Just east of St. Louis, we actually bought gas for 67.9 cents per gallon!
I remember hearing analysts saying that gas would never be that cheap again, and sure enough, on the return trip, it wasn’t. We never saw gas prices in the 70-cent range in IN after that.
Wouldn’t it be nice to have a time machine? 🙂 I could get a LOT of fuel for my $160/mo gas budget. 🙂
Money: Whence It Came, Where It Went – John Kenneth Galbraith
‘The process by which banks create money is so simple that the mind is repelled.’
Another favorite..
‘The study of money, above all other fields in economics, is the one in which complexity is used to disguise truth or to evade truth, not to reveal it.’
and unrelated.. but pithy..
‘All successful revolutions are the kicking in of a rotten door. The violence of revolutions is the violence of men who charge into a vacuum.’
also unrelated..
‘When people put their ballots into boxes, they are, by that act, inoculated against the feeling that the government is not theirs.
They then accept, in some measure, that its errors are their errors, its aberrations their aberrations, that any revolt will be against them.
It’s a remarkably shrewd and rather conservative arrangement when one thinks of it.’
‘Few can believe that suffering, especially in others, is in vain.
Anything that is disagreeable must surely have beneficial economic effects.’
Loved the show, but was a little confused about one part when Jon was talking about all the choices of bottled water in the stores today. Isn’t that a sign of capitalism? I know we don’t have free markets, but we do have a choice of what company to support with our money even though those choices are decreasing every day. I would rather choose from 25 different bottled water companies knowing that there is a higher probability in that market of someone providing clean water than the market where I only get to pick between Nestle bottled water and Aquafina. Again, great show and I love hearing you and Jon talk. I’m 27 and ready to start learning the investment game. I’m trying to stay in tune with what is going on around me and your podcast helps a ton!
Brooke,
Good question! I totally agree that in a free market we want as many choices as possible. The point I was trying to make is that of over supply and the state of the economy (namely the reason that we’re seeing deflation in some markets). In the case of bottle water, the “product” isn’t differentiated…it’s simply the same stuff that comes out of your tap at home. The only thing that is different is the packaging (and brand name). Remember Econ 101- supply and demand curve…if you have more supply than demand the price will go down. In the case of the bottled water you have 12 companies competing over something that’s very hard to differentiate…there is over supply, the price will fall and many of those companies will lose. That was the point I was also trying to make with commercial real estate- too many fast food and retail stores (that are not making money) like Sears, KMart, JCPenney, Barnes & Noble. The point is that they’re either not profitable or that their sales are declining- not that there are too many of them per se….we do want choice in a free market. It just needs to be profitable, otherwise the market will dictate that those assets are deployed somewhere more productive. That transition can be very painful, especially when companies (or people) are bogged down with debt.
Thanks, John, for that awesome explanation! It will be interesting to see how the market handles these situations. Ever think of starting your own online investment education program (if that is even possible given all the regulations that surround investing)? I would be your first customer 🙂
I think I may have been the one to mention the licensing requirements for Phoenix. Its somewhere around 4,000 dollars to be licensed and bonded (then you have to get insurance). Or you can spend up to 2 years in jail for contracting without a license…. as a landscaper… if you do more than 1000 dollars in time and materials for the whole project. That’s for the entire state of Arizona. Check out the registrar of contractors. http://www.azroc.gov/l_class.html
I kind of want to do a full media campaign against the state. WHY DO YOU HATE POOR PEOPLE!? The barrier to entry for business is way way too high.
Well that is actually ONLY IF YOU DO THE WORK, this would not apply to consulting and having the client do their own work or hiring labor to do the design. Still BS but not quite as bad as it sounds.
From talking to liberty friends who are general contractors in AZ, the act of making the contract itself makes it so you have to get the license, even if you subcontract for the actual labor.
I’m talking to them about it though, they might be able to bring me in under their license or something like that.
The exact quote and source is: “The process by which banks create money is so simple that the mind is repelled.” — John Kenneth Galbraith, Chapter III, Banks, p.18 from “Money: Whence It Came, Where It Went” (1975)
There is a excellent, yet scary and very patient video that walks you thru the process — “The Goldsmiths Tale” by Paul Grignon. Online at:
http://www.youtube.com/watch?v=T_-xJoLJLq0
You know, we won’t do it so hire them is BULLSHIT! My brother picked oranges in Florida till he worked his way up to welding in the factory; I chopped cotton in Texas till I worked my way up to supervising rail loading. We work our asses off, but business owners WON’T pay us. It is the small, medium, large and otherwise business owners who are in with the government by perpetuating this bullshit bout not wanting to work, but rather more don’t want to pay; Taxes for workers who earn less, more money in my pocket. That’s my money and I’m keeping it, after all isn’t it the reason to be in business – to make money? Right? I know you’ll explode when you see this, but I’ve been watching a lot of things since this whole thing started with the wall street people. Restaurateurs taking half wait staffs tips, building owners picking off the shelf. Yep, your right, your the good guys and that’s the cost of doing business.
Work ethic at this stage of the game has nothing to do with making money. The world is awash in supply of workers, with very little real demand for anything. It seems so long as the environment stays ridiculous anti-workers (increased costs/regulations/needs to pivot on a dime in production) wages will keep being pressured downward. I’d love to own a business, the thought of hiring somebody else is … PFF.. not going to happen. Feel pretty confident most people feel the same. Unfortunately robots continually look better and better. (I think of which will eventually be a massive waste, but thats another story).
I don’t own a kindle or anything like it. I still read books and I know several people who do also.
But there are not enough people like you to keep big brick and mortar book stores in business.
I also remember, “I still own many LPs and will never buy a CD player” being said by many as well, now CDs are rapidly on the way out.
@Jack
You’re right. I just have a huge soft spot for books. Half-Price books on Northwest Hwy, not too far from you, was like my church when I had nothing. I could buy books cheap or just hang out and read. When they moved it across the street and opened a cafe, I could get day old bread and cookies cheap also. And the smell of books in there was just awesome.
John & Jack –
Something I’ve been thinking about is the effects of ‘zero interest’ policies on individual action.
Short version:
– You can only ‘invest’ your surplus
– To create a surplus you must work/create more than you need to meet your immediate needs
– If the return on your surplus is 0% (or with inflation -x%) there is no incentive to create a surplus
therefore..
zero interest rates = shortages & increased prices
As an individual, the only logical solution would be to use your surplus to reduce/eliminate debt, and then to invest in systems of support.
Thoughts?
as an aside..
Its interesting that low interest rate policies are promoted as ‘good for business and employment’.. (low debt cost so companies will ‘expand/invest’) when in reality they seem to promote marginal return activities.
(speculation vs. investment)
I’m not sure I agree with “marginal”. (If i’m reading what you wrote correctly). Speculation isn’t about marginal returns (if thats what you’re saying) its actually more of trying to get big return on perceived increase risk. That’s the nature of zero interest rates. It has driven the prices of all high income assets, where cheap money continually has to go to riskier and riskier assets, increasing speculation.
But where I’ll agree with you, its at the point no where its not even possible to REALLY evaluate the “market” for returns, so finding out its marginal is more of a hindsight, rather than foresight.
I’m kind of mixing apples and oranges..
‘Banks’ use zero interest rate money to make high risk/presumably high return speculations.
Big businesses, in theory, use low interest rate money to finance expansion/modernization.. at least according to the usually stated rationale for trotting out low interest rates during recession/depression.
Reportedly the way big businesses are ACTUALLY using low interest rate money now, is to refinance higher interest rate loans, to amass cash hoards, and to buy back their own stock.
I’m not mentioning ‘small businesses’ because they aren’t getting low interest rate loans.
The ‘marginal return’ comment should actually read ‘marginal return to society’. It is the nature of a market for their to be less and less ‘high return’ activities.
This is due to:
activity x = big $
everyone tries to do x
competition drives down price
activity x = small $
Eventually.. the market has ‘done’ every ‘x’
You see this currently where every ‘hot new market/thing’ has a shorter and shorter period of hotness/high profitability.
also meant by marginal returns:
You can manually plow 10 acres. If you buy a tractor you can plow 100 acres. Return after cost of tractor is 200%. (In the olden days) =)
You plow 100 acres with a tractor. If you buy a new tractor you can plow 105 acres. Return after cost of tractor 0.5%.
Modern business improvements are more of this sort (marginal returns).
Its not manual to mechanized.. its mechanized to slightly improved mechanized.
Its not paper to computer. Its computer to newer computer.
Its not assembly line worker to robot. Its robot to slightly faster robot.
You make an interesting point and it just took me to another level of thinking particularly this statement: “It is the nature of a market for their to be less and less ‘high return’ activities.”
If you think about it, low interest rates would mean, there is such capital accumulated (everybody has worked so much longer than necessary) and saved all of this excess energy and materials, that they can throw it at EVERYTHING. That is probably the BEST POSSIBLE scenario right? You have so much surplus you can reinvest it everywhere. That sounds like… QUITE a pleasant situation. Meaning hey we’ve got enough surplus here… that we can really try things out and see if they work.
But the reality is we’re finding… uh mits not so good. But obviously the origins of the situation are not that there is so much capital, but its everything is being completely and totally misallocated, we have no idea how much surpluses there are, or how much work is even needed. Completely chaotic situation really.
Adding to your marginal return, its the analysis of “amount of debt injected” to the amount of return. I mean people look at and point to the amount of debt being created to GDP over the last 10 years. The same liberal morons keep talking about Keynes (Even though he wouldn’t even agree) that you inject debt you get productive growth. However, not all debt is equal.
@Mike (wrong reply level) –
I see two issues:
The intentional confusion of ‘capital’ with ‘money’.
The promotion of the belief that to create capital (surplus) you must become indebted.
Both are beliefs in ‘scarcity’.. and both benefit the FED (coincidence?).
The issue with the creation of the debt is WHERE the indebtedness is created. Which is with the ‘middle man’ rather than the producer.
Example:
You need 10 tons of steel to build a bridge
So, you go to the bank, get a loan for $1M (10% for 1 year to keep the math simple), and take the dollars (fractionally created) to a producer of steel, where you exchange the dollars for the steel.
For this transaction to ‘balance’ ten percent MORE needs to be produced over the next year (ten percent surplus over that year’s needs). And that surplus goes to.. the bank.
If instead you went to the steel producer and made the same deal with him (10% for 1 year). The surplus would remain with the producer, and he would be able to ‘reinvest’ that surplus.. perhaps into his business.
So, (and not saying this well).. banks/FED by being middle men, via money monopoly, skim all surplus.. and being gamblers (its ‘free’ money after all), are more likely to malinvest it.
Here’s the end results of the Fed’s artificial low interest rates-
* Banks earn a nice profit from keeping money in reserve at the Fed and have zero risk.
* Companies don’t invest in their businesses, instead they borrow cheap money and use it to buy back their stock.
* People are not incentivized to save, instead they waste their money on consumer products or invest in high risk assets like stocks.
* Politicians can keep raising the debt limit and financing their corrupt system.
Did the math regarding how much John’s dad made in “real” terms.
ROUGHLY, of course… back in the day 1 gold ounce was 20 dollars.
Today lets say its 1300.
If John’s dad made 5000 dollars in a year that would buy 250 ounces a gold, per year.
250 ounces of gold x 1300 == 325,000.
Did John’s dad live well? Uhm yeah.
Just did a google search- average income in 1960’s was $4,743. As I mentioned, I think my dad made around $5,000. He was a high school grad, blue collar crane operator, worked his way up to a boss at a small company that today would be considered a recycler.
As you mentioned, his REAL income in terms of GOLD would be substantial today…and he did live well. In his mid 20’s he had- nice 3 bedroom house in suburbs (paid for); 1954 Cadillac (paid for), other top of the line “tech” of his day- real-to-real recorder, etc. [interesting fact, his Cadillac was loaded with all the modern conveniences- power steering, brakes, etc etc, pretty much everything a car has today but no air conditioning and cruise control, oh and no seat beats either]
Today you don’t find too many high school grads living like that, especially when they’re 25.
Yeah… it’s pretty rough incomewise today. I’m a college graduate in a real field (computer programming) and I just now have my loans paid off and a decent paid for car…. getting a house will be a huge challenge to not have to pay it off over 30 years…
I like this talk about Amazon…. its funny because of how much I use it (and everyone else uses it), yet I’m predicting they’ll be significantly less than they are today (or gone) in about 5 years. Amazon’s growth and profits have been dropping like a rock for years. Very very scary downward. They’re margins are complete garbage for a company that is “king” of sales right now.
I personally think mail order taking over community stores, in the end, will be proven to be a complete and total misallocation of funds. Just as much as offloading all of the US’s television onto the Internet. (That’s falling apart as well).
A thought question. What happens when the local box stores fully collapse and this whole “go to the store to view and then buy online elsewhere” becomes not doable? Thats one thing i’ve been thinking about being that Mish Shedlocks writes often about this window shopping thing. John mentioned in passing about commerical real estate being a possible trigger, and its something I’ve forgotten about. Zerohedge wrote about this years ago talking about real estate loans coming due in the upcoming year (now years). Totally forgot about that. Where I used to live there was commerical real estate EVERYWHERE for sale. Those companies that own those buildings can only hold on so long with zero income, debt being payed out, and paying the highest tax rates on property.
Isn’t that just the correction phase? The market is reallocating resources. We had that throughout history, tractors replacing farm labor and people shifting to the city destroying small towns, then the automobile with highways and people moving to the suburbs closing down city stores. Sure it sucks for a lot of people and some really profit. Why wouldn’t the stores come back if Amazon failed, or a new Amazon emerged? I buy from all sorts of online stores. In fact, using Amazon for me sucks because they are in my state and I pay tax on the purchases. True if there’s a fuel shortage or internet sales tax, things would really change.
You also have to realize Amazon has its fingers in a lot of pies. It is huge in cloud services for business, streaming movies and music, 3rd party commission sales, etc… Our company uses them for hosting some of our products and development environments.
Local stores have to reinvent themselves to meet the local needs. I find myself using them more and using big box guys less since working on our homestead. The internet is replacing my Target, Best Buy, Borders and Walmart business. I really don’t want to drop ship a bale of 120 lb alfalfa, and if I need to fix a fence, I might not want to wait a few days or pay $20 for next day for an $5 T Post.
I would also say taxes are really the problem. I can get a 50lb bag of food shipped cheaper from CA mainly because I’m not hit with an 8.2% tax. The feed is the same price as I can find in my local feeds stores, its the tax that makes the difference. To me not carrying the bag is a bonus, but I can see where you’d pay for that. Also, as you mentioned the stores are paying taxes for the property.
The other thing that might knock stores down is 3d printing. There is a great set of books, “Dameon” and “Freedom” that put this concept into motion, along with virtual currencies. I think that is more the future. 20 years, from now, if I need a wrench okay, Ill just print it out.
I know there is a lot of I’s in this and don’t want to commit the part to the whole fallacy. Just offering another perspective.
Your point is correct that technologies like Amazon are just reallocating resources to more productive parts of the economy. That’s the free market working. The consequences of that may be a collapse in retail real estate, etc, which could have a detrimental effect on the overall market. I don’t make a value judgement, I just try to profit from the inevitable market fluctuations.
My personal opinion on 3D printing- it’s over hyped. It will, and has already drastically effected rapid prototyping, etc but I’m very skeptical that it will become as ubiquitous to the consumer as the PC.
“Amazon are just reallocating resources to more productive parts of the economy”
I disagree. Adam’s argument for using internet shopping was related to taxes and price point. In otherwords, he’d be more inclined to do local shopping if the taxes weren’t 8+%. So really online shopping is more of a work around in this case, rather than a “technology that is better allocating funds”. I’m effectively saying that because there is such gross misallocation, and government interference that Amazon is even in existence (to include sprinkling a heavy bit of cheap energy). The nature of gross misallocation also completely removes visibility into the markets what-so-ever. As Jim Grant says all the time “We live in a house of mirrors”.
The point I was making about Amazon was that if you look at their trajectory its probably one of the worst companies out there. In fact, they’re up there with all the other Dot Com 2.0 bubbles. There is historical evidence that has shown that bringing products to individuals is a foolhardy business idea and the death of a business. I personally think we’re going to find that out sooner rather than later. Guess who also can’t get their shit together? UPS, USPS, and if I’m not mistaken FEDEX isn’t doing all that great either. How is this possible if online shopping is the way? There is literally no secret to how online shopping is possible on such a large scale. Cheap energy.
We can talk all day about how expensive gas is today (which was done on the podcast) but if you compare the price of silver today (even with it having been beaten down for the last few years) you’ll find a completely different story. I was in the process of calculating all this up, but realized I have other things to do hahah, but I assure you, not in the 1950s, nor in the 1990s was Oil ever cheaper to silver than it is today. The key is to look at junk silver, face values, etc.
Considering that this is the case, and these companies (that can only exist with unbelievably cheap energy) how are they going to fare when its not so cheap? I’ll contend the whole experiment of online shipping for the masses might be one of the biggest missallocations.
@Adam
“We had that throughout history, tractors replacing farm labor and people shifting to the city destroying small towns, then the automobile with highways and people moving to the suburbs closing down city stores.”
To be honest this is such a short span of history that there isn’t much you can make out of this. The change in technology from the late 1800s, till right now is out of scope with technological changes from the beginning of man till the 1800s. In otherwords, just over 100 years of completely erratic changes hardly constitutes a standing ground with history. The only thing that can be matched with this technological trend is the use of energy. (Cheap energy), which we’ve all seen is an almost vertical exponential curve. At least in my opinion nearly everything is pointing to red lights on that front.
“Local stores have to reinvent themselves to meet the local needs.”
Going to disagree with that one, at least sorta. Maybe in the short term, long term no. Shops have been around for centuries, internet point and click purchasing has been around for about a decade+. In general it seems to me that the entire 20th and 21st century way of living, producing, and consuming will have been the greatest failed experiment in history. Every single technology created during that time, with cheap energy and resources, has zero historical basis or longevity. The car for example is something we so take for granted. In the grand scheme of things it is a youngster.
“Why wouldn’t the stores come back if Amazon failed”
Of course they’ll be back (different ones). Wouldn’t that then indicate a waste of resources (other than just trying it out).
Good discussion going on here.
Let me say I don’t even consider sales tax on amazon. I did but long ago most of the products there lost that loop hole one way or another I now and most you you now pay sales tax on amazon.
I buy because I have prime, I can get any item for about the same or less at a store, I don’t leave the house, I don’t pay shipping and I have it in two days or less. Done the end and if I had to pay 5% more on average I would for that convenience alone. I just because of John figured out we can have two huge sacks of dog food delivered monthly on auto order for not a penny more than we pay in stores trying to time sales. I won’t have that big fing bag taking up cart space any more. Done, over, out, the end!
Amazon is reeking havoc on retail not due to taxes, but because they have a better model. I mean other than women who like to shop for make up and clothes and shit, who really wants to “go shopping”. Not many.
Oh and at the store I get either a clerk that knows less than me or a knowledgeable one that says his shit is best because he is paid to. Amazon gives me real feedback from fellow customers. Retail is dying and it should, it is a waste of space, resources, etc.
The flip side is million of jobs are going to be lost due to this. Amazon and people who will do similar models will use 1 employee vs. 5-6 of a retail outlet, pay the employee twice as much but yet get a solid 300% increase in wage to benefit ratio. And the rich get richer.
Does anyone see why I keep saying build local economies, create businesses, do permaculture. The zombie apocalypse is underway right now, no one sees it. Anyone smug when I say 50% of teachers will be jobless in 10ish years better really look at their own profession.
@The New Mike –
Here is another more interesting way that CAPITAL is destroyed/misallocated.. pensions.
Let’s say you’re a lifeguard in Newport Beach CA. The lowest paid ‘officer’ made $98k in 2010. And can retire at age fifty, after working for 30 years @ 90% of their base pay.
Male life expectancy is 74 in the US (not sure if spouse keeps the pension).. so if we do the math w/ out inflation adjustments its like this:
30 years of lifeguarding costs society:
($98k x 30 years) + ($88k x 24 years retired) = $5,052,000
Or to look at it another way, the LOWEST PAID lifeguard costs society (annually):
$98k salary
$70k DEBT (pension obligation.. promise of FUTURE CONSUMPTION of resources)
So, the lowest paid lifeguard, is allocated $168k in resources per year. Do they produce $168k in VALUE to society?
source article:
http://www.foxnews.com/us/2011/05/20/lifeguard-pay-200g-riles-california-beach-city/
(yes.. I realize its fox news) 😉
Well I’d say “value to society” is a pointlessly vague term, and its why Government spending is always… and I mean always in the moral gray area. Individuals value things, therefore it would have to be 168k to individual/s whom pay/hire the said person. If you were to privatize a beach the owner of the beach would have to pay this person, and individual fares for using the beach would have to balance this out. People would then need to decide if the… 5-20 dollars a person would be worth it (just throwing out a number) for the beach and all its amenities.
Any situation where you have people paying for things (usually against their will) for things they don’t use, you’re pretty much guaranteed to be wasting money. (Or that might actually be a true definition of wasting money).
“Billing you for my services”. Damn right. That’s such a good point. It also changes the way you think about the environment you work in. Its all choice. You’ve chosen that you’re willing to work in said environment and bill that company for that amount. If you’re not willing to do that, don’t take the job.
But in “fairness” particularly in larger companies its agitated by the fact that they expect you to act dependent and as just an employee that does what they’re told. That’s usually how the system is setup, but individuals, managers/supervisors, generally appreciate the person more who doesn’t just “show up and collect a check”.
I made a weird observation this weekend on Jack’s “can’t afford ground beef observation.” We stopped buying our beef in a store a long time ago and now only buy half a steer that is grass fed no antibiotics, etc… Over the last 10 years the price has been about $2 – 3.25 a lb plus butchering and kill fees. The variance is normally if I want Angus or Hereford. I was looking again and the prices were still the same. I notice the pork is still about 2-3 a lb as well. To me it seems the factory system is inflating up to what the local rancher / farmer was selling for. Which this make sense since the industrial system has a lot of inputs like lots more fuel, corn, medicine, transportation, etc…
Great show!
At one point John was talking about energy security and how it’ll not be a problem for a long time, primarily because of fracking and other natural gas sources.
I would disagree when the focus turns onto liquid energy ie oil which is still required to a large degree in the US and elsewhere. Sure you’ve got gas coming out of your ears at the moment but the extraction rate is phenomenal which just means that you’ll hit the peak for those fields earlier than otherwise.
The global lack of liquid energy (oil) with a high enough Energy Returned On Energy Invested will cripple multiple economies within 1-5 years.
There was a conference hosted by the US military last year that discussed this which is where the lower end of that figure comes from. http://www.theguardian.com/environment/earth-insight/2014/jan/17/peak-oil-oilandgascompanies
Since a) a global house of cards has been constructed and b) it’s all based on oil the Energy part of the Energy, Ecology, Economy tripple whammy heading our way shouldn’t be underestimated. IMO.
And my junior high school text book said we had only 35 years left of oil in TOTAL that was in 1983. The book was over 5 years old at that time. So um, yea.
Is it possible that a high school text book didn’t present all the facts entirely correctly?
They were actually not far off the date for peak oil but my point is actually that no-one (these days) is saying that oil is running out, it’s just getting too expensive to get at. We’ve got all the easy, high quality stuff (EROEI = 100) and now it’s just low-grade, hard-to-get-at stuff left (EROEI = ~10-15) or solar that’s supposed to power civilisation (EROEI = 3). Countries without their own production are starting to sweat it. Well actually most aren’t because it’s political suicide to do so in the open but they should be.
They were not predicting peak, but NO MORE OIL.
As to this, “Is it possible that a high school text book didn’t present all the facts entirely correctly?”
You bet your ass! Just as such books and peak oilers continue to do today. The truth is perception bias makes people see what they want to see. I have examined the actual facts without emotional attachment here.
Let me put it this way, there is a problem in that oil field production will peak, but, the timeline is longer than most who believe it want to accept. It is so long that you have a LOT BIGGER PROBLEMS to worry about right now.
I wanted to say “let’s agree to disagree” but I can’t let it go. Last one from me and then you can go about being awesome.
(no sarcasm whatsoever there, you do awesome work and I’m proud to be in the MSB)
Which facts have you analysed? The true numbers of reserves not released by the oil companies, just discussed in dark rooms behind closed doors? Even big oil are starting to look shifty and say “er well maybe we have been exaggerating a little bit…”
The facts are that big oil’s costs are sky-rocketing, company growth is down, production is barely being maintained, the projects are technically harder and more risky at the same time as demand is rising in consumer AND producer countries. The military (among others) knows this and are investing heavily in nuclear and renewables.
Ping pong hey? Look it is clear that you want for some reason to believe the end is near, fine, if that makes you feel better justified in your prepping or what ever.
Tell you what though you better worry more about the economy, the coming shifts, etc. than peak oil. Sadly this society will burn down the last oak tree before anyone shuts off one xbox. Oh and don’t tell me all the things that oil does other than produce energy. If other source of energy are used for that, your great, great, great grandchildren will still have oil to make a tire or plastic cup, if they have any need for them that is.
Again do you even know how much oil is off our west coast that have never been tapped? I am talking inside 12 miles of shore. CA could produce more oil and gas then Texas within 5 years if they wanted to.
The only thing I’m going to add to this, is looking at big oil they’re staying away from fracking like its shit on a stick.
The only company that has gone big in this is Shell, of which recently the former CEO stated something along the lines that it was the biggest mistake in the companies history, or his personal history or something like that. The wife just updated me to the fact that they’re starting to pull out capital and resources towards that endeavor.
Its worth taking note that the big boys are pulling out or not going near it. (Way way… WAY too capital intensive, and high liabilities).
@Mike, well see, here is the thing, tons of those little exploratory and extraction companies are actually owned by big producers. You also have to look at where the gas is coming from, smaller more nimble companies are needed, tons of it is being taken from under suburban homes. As to risks the only real one is a gas market crash. The geophones these guys use now are slick as shit and they know where to and where not to drill. We are seeing zero dry holes.
I am not saying fracking is good, I am saying it works, they are doing it and it isn’t going to go away any time soon. Doesn’t matter if any of us like it or not, it is what it is.
Also for the peakers, if we did get into a real shortage how long before the enviro weanines in CA and OR got a clue and opened up off shore drilling or the President declares a national emergency and just orders it? There is more oil off the cost of CA an OR than ever existed in Saudi Arabia, as in ever.
Again I am not saying peak oil, peak gas, etc. are not real, I am saying those sounding the alarm have drastically shortened the bell curve timeline. The reason is simple, they don’t think people will listen if they are more realistic.
This guy is mega switched on. John – Do you do any podcasts on a regular basis? Or just articles on your website. Would love to hear your thoughts more often.
Thanks Andrew. For now just blog articles on the website. (people can subscribe for free email updates) I’ve received a lot of requests for a podcast but I don’t want to start anything unless I can deliver quality reliable content on a regular basis.