Gyroscopic Investing

Chevron, the second-largest U.S. oil producer, said on Friday its first-quarter profit fell 27 percent due to falling crude oil production and prices.

Like most oil majors, Chevron has suffered from shrinking refining margins and faltering oil and gas production around the globe.

Pointedstick wrote: Wouldn't prices rise if production was down, given the same demand? If both prices and production are falling, wouldn't that point to a collapse in demand?

It probably doesn't help their financials that they were just forced to pay a fine equal to twice last year's net income!

doodle wrote: We've discussed this stuff countless times before, but the recent stock market explosion and houses price rises (in my neighborhood prices are up nearly 30% YOY) has me waiting for the next crash. Mankind has been in a boom for 200 years or so that is way outside of the historical norm. I keep waiting for nature to force reversion to the mean.

clacy wrote:

doodle wrote: We've discussed this stuff countless times before, but the recent stock market explosion and houses price rises (in my neighborhood prices are up nearly 30% YOY) has me waiting for the next crash. Mankind has been in a boom for 200 years or so that is way outside of the historical norm. I keep waiting for nature to force reversion to the mean.

Says who?  What are you basing that on?

Pointedstick wrote:

clacy wrote:

doodle wrote: We've discussed this stuff countless times before, but the recent stock market explosion and houses price rises (in my neighborhood prices are up nearly 30% YOY) has me waiting for the next crash. Mankind has been in a boom for 200 years or so that is way outside of the historical norm. I keep waiting for nature to force reversion to the mean.

Says who?  What are you basing that on?

Can't speak for doodle, but maybe graphs like this?

[img width=500]http://www.marketcalls.in/wp-content/up ... lation.jpg[/img]

moda0306 wrote:

Pointedstick wrote:

clacy wrote: Says who?  What are you basing that on?

Can't speak for doodle, but maybe graphs like this?

[img width=500]http://www.marketcalls.in/wp-content/up ... lation.jpg[/img]

A picture can sometimes be worth 6 billion words.

The problem is, overpopulation will leave real-returns suffering on nominally-fixed assets (bonds) as well... which leaves us (well... a lot of people anyway... most PP'ers are comfortable w/ their gold) wondering how to speculate in the area of commodities.  I think gold is really the main commodity you want, but I think a LOT of people could improve their portfolios by moving to a general equity/bond-ladder/commodity trifecta if it helps them feel more comfortable than having 50% of their portfolio in U.S. treasuries, and another 25% in ONE yellow metal whose price feels like it's based sometimes on a game of greater fools rather than economic fundamentals.

doodle wrote: The first signs of peak oil or just a problem confined to one particular producer?

doodle wrote: I would contend that we are already are in a period of extreme overpopulation that is tightly linked with current abundant energy supplies. I tend to think there must be a causal link there....at least it isn't too much of a stretch to make the argument that the last 200 year population boom is a result of fossil fuels. The two unknowns right now are 1. how much oil is left....and 2. Can we innovate ourselves through declining reserves? I tend to fall on the pessimistic side. After reading a bunch of stuff on theoildrum.com I'm kind of convinced that we are deluding ourselves about how much oil is leftism the ground and that the EROEI equation of extracting what remains doesn't have a big impact.

MachineGhost wrote:

doodle wrote: The first signs of peak oil or just a problem confined to one particular producer?

Zzzzzz.  Peak oil doesn't exist.  Besides the shale oil and gas, there's a gigantic reservoir of oil in the Gulf of Mexico that will make the US the #1 energy producer of the entire world.

doodle wrote: Really? Oh what a relief. I guess that's why Oil production has basically been flat for the last decade despite a 300 percent increase in price. Sure, there will always be oil in the ground, the question is can we economically extract it? And I don't mean in money, I mean in calories invested to calories returned. Sticking a straw in the ground ala Saudi Arabia is a much different scenario than drilling 3 miles down into the gulf.

There are no limits to growth, except government coercion (not coincidentally instigated by wingnuts).

MachineGhost wrote:

doodle wrote: Really? Oh what a relief. I guess that's why Oil production has basically been flat for the last decade despite a 300 percent increase in price. Sure, there will always be oil in the ground, the question is can we economically extract it? And I don't mean in money, I mean in calories invested to calories returned. Sticking a straw in the ground ala Saudi Arabia is a much different scenario than drilling 3 miles down into the gulf.

Dunno what you've been smoking but do you notice the parabolic curve on the right edge of the chart?  Yes?  That happened while all the wingnuts Malthusians were crying over their spilt milk.  Never let it be said that if you bite a wingnut on their ass, they will realize what happened!

doodle wrote: I'm not judging this scenario as good or bad, I'm just drawing attention and discussing its plausibility. So don't be a twit and start categorizing ideas and observations as some sort of "left wing" propaganda. I'm an apolitical pessimist. I couldn't give two shits what any particular political party says, I look at the world and interpret it through my own particular experiences and dispositions.

The rest of the world doesn't matter.  They're decades behind on implementing shale and deepwater technology, lack the transportation infrastructure anyway, and almost all the oil producers are state controlled, i.e. corrupt and inefficient.  So they will sorely lag the US in production increases (if at all).  You have to realize that we are very unique as a country in allowing private property ownership of resources...  in almost every other country resources are controlled and monopolized by the state so there is not that entrepreneur financial and exploration free market.  The good ol' USA is the worst of all countries...  except for all the others!

This video illustrates the discussion that should be going on about climate change. Please watch the video first so you know what I am talking about.

http://www.youtube.com/watch?v=zORv8wwi ... ata_player

The rows are the scientific discussion, if you do not understand science, leave that discussion to the scientists.

The columns are the political discussion. Since we, the people, choose politics (okay, okay, I know, but bear with me), this is the discussion that we, the people, should be having.

Whether to act or not to act. The scientists can give us their best odds. This may influence the decision if and only if you can put a price on disaster. For instance, you can put a price on the 3000 people that died due to hurricane Katrina. That is, you can pretend it’s cold-hearted to so, but when you are given unknown odds and weighing known disasters against known costs, this is the calculation you will be doing.

Similar game theoretical constructs were used to determine whether nuclear wars (conventional wars too) were worth fighting. It turns out that mutually assured destruction games are not worth playing (this is why it is in the best interest of any country that wants to be a geopolitical player or does not want to be geopolitically played to acquire nuclear weapons and also in the best interest if any country that is a geopolitical player to ensure that other countries don’t get them if they don’t have them already, simple math, really, no high-falluting ideals).

In this situation, the game we play is called the “commons dilemma”? or the commons game. It is also known as the tragedy of the commons because that is the typical outcome. The conflict in the commons game is between short term self-interest and long term group interest.

One solution to this sociological problem has been privatization. In this case the self-interested person never impacts the group, only himself, that is, he can not transfer the cost of his bad decisions onto the group, nor can he profit from the group.

Naturally, this is difficult when the commons is the entire planet and the commons expand our generation as well as our children and their children and so on (and who is representing the polar bears?). We can not privatize the air. Unfortunately, CO2 emissions do not stay over the country they were emitted but spread to the whole planet. Therefore, one country can easily profit from others, kinda like letting your dog take a crap in your neighbors yard as well so you do not have to clean up nearly as much. The present can easily profit from the people future as they have not been born yet. I don’t think I need to do a doggy example for this one.

If we are to consider this we must have fairly developed morals. We must be able to empathize with people that do not have our advantages e.g. people that live 10 feet above sea level, people living close to encroaching deserts, or people that can not afford to buy food which they must because they can no longer grow it where they live. And we must emphasize with people who are lowering the ground water table to maintain their golf courses and pumping up oil to support their way of life; they are people too. Not only must we consider all these interests. We must also consider the interests of future people. Our children—their children too—who are being born now, who will see all this unfold according to the choice we make now (not making a choice is also a choice).

We can however also say, well, we don’t care about universal principles and human rights. After all, we have weapons, and we can decide unilaterally. We spend so much on our military that nobody can touch us, least of all the polar bears, and definitely not our unborn children. Hence, since we can not suffer any consequences, we can do what we want. We even have a recent history of doing so (very many wars in the 20th century were fought over oil). We will do this to protect our (national) interests because our interests are more important than your interests, at least to us. We also know the consequence of this (although some are in denial and naively call the predictable response evil). People fighting back with whatever means they have. We call this terrorism. Eco-terrorism can involve releasing sulfur aerosols in the stratosphere with thousands of balloons. Most countries can do this; a sufficiently funded private organization could even do this. This will white out the sky—you will not see the sun again, but at least it will be a bit colder which could benefit some countries and hurt others. (Many wars in the 21st and 22nd century will be fought over climate.)

This is the discussion we should be having. If you know the science, you can have the scientific part of the discussion as well. If you don’t know the science, please don’t hide your having to make this moral choice behind scientific uncertainty.

You will be judged on your moral choices.

Yes, it sucks being alive now and having to make this choice. It probably sucked having to make the choice in Nazi-Germany in 1935 as well, but we each do what we must do. Everybody alive today is responsible.

I admit you're an easy target, but I do like to use facts to justify my stance rather than fear mongering, induction or emotionalism or whatever the inverse wingnuts do.

doodle wrote: So my charts and graphs are fear mongering and emotionalism? Please explain

doodle wrote: The fact is, MG, that the facts are unclear. No one really, knows (except for you of course)...we are working with uncertain and incomplete information and making conjectures based of of that. I'm merely drawing attention to the way that humans today are looking at 200 years of growth and extrapolating from this that this is normal. Humans are living in exceptionally strange times and have grown to immense populations based on cheap and easy energy. The question is whether this will continue indefinitely and if it doesn't how fast will the decline be? Seneca, who I admire almost as much as I do you said "increases are of sluggish growth, but the way to ruin is rapid." Maybe that is worth considering......or would that be too leftwing?

MachineGhost wrote:

doodle wrote: The fact is, MG, that the facts are unclear. No one really, knows (except for you of course)...we are working with uncertain and incomplete information and making conjectures based of of that. I'm merely drawing attention to the way that humans today are looking at 200 years of growth and extrapolating from this that this is normal. Humans are living in exceptionally strange times and have grown to immense populations based on cheap and easy energy. The question is whether this will continue indefinitely and if it doesn't how fast will the decline be? Seneca, who I admire almost as much as I do you said "increases are of sluggish growth, but the way to ruin is rapid." Maybe that is worth considering......or would that be too leftwing?

I think centuries of evidence show the facts are clear: humans innovate, always have, always will.  Crisis is opportunity.  The pessimist in you just doesn't want to acknowledge that a vacuous vacuum called the "free market" is what keeps human civilization marching fowrad.  It's much more psychologically comforting to have blind fatih in command and control and ti impose restrictions and coercion onto other human beings to collectively feel like you're "doing something".

Definitely not too leftwing, its statism now.

doodle wrote: I'm not arguing for command and control by the way, but if anyone has blind faith it would be you in the "free market" .....to go back to many earlier discussions we have made on this topic, nothing in this world is "free" ....every choice you make affects me whether I like it or not. So don't pretend like your "free market" isnt really coercive and overbearing to me as an individual.

MachineGhost wrote:

doodle wrote: I'm not arguing for command and control by the way, but if anyone has blind faith it would be you in the "free market" .....to go back to many earlier discussions we have made on this topic, nothing in this world is "free" ....every choice you make affects me whether I like it or not. So don't pretend like your "free market" isnt really coercive and overbearing to me as an individual.

What's more coercive to you, the drought water restrictions passed by the legislature of the state of CA (or mayor of SF or whatever) or the deepwater rigs drilling for oil in the Gulf of Mexico to bring you cheap oil? 

I don't have blind faith in the "free market" but I do have a lot more blind faith in liberty to solve problems than bungeling coercive bureaucrats.

MachineGhost wrote:

doodle wrote: I'm not arguing for command and control by the way, but if anyone has blind faith it would be you in the "free market" .....to go back to many earlier discussions we have made on this topic, nothing in this world is "free" ....every choice you make affects me whether I like it or not. So don't pretend like your "free market" isnt really coercive and overbearing to me as an individual.

What's more coercive to you, the drought water restrictions passed by the legislature of the state of CA (or mayor of SF or whatever) or the deepwater rigs drilling for oil in the Gulf of Mexico to bring you cheap oil? 

I don't have blind faith in the "free market" but I do have a lot more blind faith in liberty to solve problems than bungeling coercive bureaucrats.