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Page added on July 28, 2018
Interesting times ahead
“May you live in interesting times.” This expression, which seems a blessing, is really laced with stinging irony: interesting times are often fraught with conflict, instability, and danger.
Who can deny that we are living in interesting times? And what could be more interesting than the Helsinki press conference in which President Donald Trump stated before the whole world that he trusted Vladimir Putin more than his own intelligence services? The spy agencies insist that they have definitive proof that the Russian government interfered in the 2016 presidential election. But Putin told Trump that he didn’t, and the American president believed him…at least for a few hours.
The backlash against Trump’s conduct was so intense and widespread that he had no choice but to retract his comments, in typical Trump fashion
The backlash against Trump’s conduct was so intense and widespread that he had no choice but to retract his comments, in typical Trump fashion. According to the President, his error was grammatical, not geopolitical. He meant to say “wouldn’t” not “would” .The next day he invited Putin to Washington for a second meeting.
Meanwhile, two pieces of news were quietly published that will have enormous consequences for Russia, the United States, and the relationship between them.
The first was a prediction by the respected energy analysis company Wood Mackenzie that world oil demand will peak in just 18 years, much earlier than previously expected. The report cites “tectonic changes” in the transport sector—especially the use of more efficient electric and autonomous vehicles— to argue that peak crude oil demand may come as early as 2036. From that point on the world’s appetite for oil will wane. Of course, hydrocarbons will not disappear as an energy source, but their importance will decline more rapidly than experts had anticipated previously.
What does all this have to do with the Helsinki meeting? Well, Russia is a petrostate, a country whose economy is critically dependent on oil and gas exports. Putin has failed to diversify the Russian economy and reduce its dependence on oil and gas. As a result, a drop in the world’s demand for its main export product will reduce the nation’s revenues and thus have a major negative impact on the lives of ordinary Russians. And history shows that dictatorships are not immune to the adverse and unpredictable political consequences of a deteriorating economy.
The second piece of news is an alert from the Institute of International Finance (IIF), a private organization based in Washington D.C. that collects and analyzes information on the health of the world economy. According to the IIF, the world suffers from a serious addiction to indebtedness. Global debt has grown at an alarming rate and has reached levels never before seen. Back in 2003, total global stock of debt amounted to 248 percent of the world economy. Today it is 318 percent.
Are we on the verge of an economic crash like the one that shook the world in 2008? Not necessarily
Debt is not a problem for a person, a company, or a country if they have the income to service it. Or if they can find someone willing to lend them the funds. But if one’s income is not enough to cover the interest due, or if the lenders lose confidence in the borrower’s ability to pay, then they will stop lending. When this starts to happen, the lenders also try to recover what is still owed to them as quickly as possible. This is how financial crises are hatched.
Does this mean that we are on the verge of an economic crash like the one that shook the world in 2008? Not necessarily. The global financial system is stronger today and is relatively better regulated. High indebtedness can be sustained without giving way to a crisis as long as the world’s economy grows and generates the income necessary to service the debt. The concern is that global economic growth, which had been recovering, will be hamstrung by the trade wars unleashed by Donald Trump.
Laurence Fink, the CEO of BlackRock, the largest investment management company in the world, has just warned that the White House’s continued increase in import tariffs, as well as the tit-for-tat reprisals that the affected countries have taken, could hinder economic growth and cause the stock market to fall. Jerome Powell, Chairman of the Federal Reserve, issued the same warning.
The main lesson of the 2008 financial crisis is that the economic diseases of one country infect others very quickly. What happens to the American economy will shake the rest of the world and, of course, Russia, too. Naturally, this will affect the relations between the two countries. Another lesson is that economic crises distract us from our political problems, while political instability distracts us from our economic problems. This is precisely what is happening now.
Alas, it’s safe to say that our times will remain enormously interesting.
40 Comments on "Interesting times ahead"
Sissyfuss on Sat, 28th Jul 2018 8:33 am
We can all see the patterns that are coalescing before us in terms of overshoot and environmental epiphanies. The repugnance comes when one, either Guy McPherson or Woods McKenzie, assigns an exact date to a prediction. That’s when we call BS but that doesn’t curtail, as some insist, the aforementioned events taking place. But peak oil demand due to technological advances? C’mon, I’d choose McPhersons call of extinction by this September over that one.
Anonymouse1 on Sat, 28th Jul 2018 2:02 pm
In case you hadn’t figured out this farticle is just more pablum-for-retards, this should take care of that for you
“Putin has failed to diversify the Russian economy and reduce its dependence on oil and gas”
‘Putin’ has been working on doing just that, and not without some success or progress. However, I am sure if you asked ‘Putin’ he would (likely) tell you he would like to see more progress made on this important issue.
The neo-liberals and their scribblers, need to stop obsessing so much about what the Russian economy and its leader is doing, and should pay more attention, a LOT more, to what their OWN economies and leaders are up to. Like the Spaniards for example, that wrote this farticle. Spain is hardly an example of fiscal, or political responsibility and virtue itself, being an ex?-dictatorship and a starring member of the PIGS economic basket cases. Remember them? (Still basket cases, even if the media doent talk about that much anymore).
Davy on Sat, 28th Jul 2018 2:12 pm
Wow, Asperger, finally another comment. I will be sure to document it for future reference. It only took you 4 days and multiple grunts in-between.
Boat on Sat, 28th Jul 2018 4:00 pm
Read that Musk of Space X is putting Russia and for that matter other space programs under severe fiscal strain. Why? American tech heavy companies so it much cheaper and efficiently. The space game is moving from countries to companies rather quickly.
GregT on Sat, 28th Jul 2018 4:17 pm
“Wow, Asperger, finally another comment. I will be sure to document it for future reference.”
There is nobody on this forum with the username Asperger Davy, and how’s that documentation thingy working out for you?
Is it helping you with your pretend notion that you are the sole moderator of an unmoderated Internet forum?
MASTERMIND on Sat, 28th Jul 2018 4:18 pm
Boat
How the hell would you know? Space X is a private company that doesn’t release any financial statements..And judging on the way he runs Tesla I woulnd’t hold my breathe..
MASTERMIND on Sat, 28th Jul 2018 4:21 pm
Sissyfuss
Guy Mchpherson just tries to scare people so they go running into his arms..Sorta the same way how Faux news scares stupid and ignorant boomers about illegal immigrants.
GregT on Sat, 28th Jul 2018 4:51 pm
“Guy Mchpherson just tries to scare people so they go running into his arms..”
Guy McPherson gives humanity a good decade longer than you do MM. You are far more of a scaremonger than he is.
MASTERMIND on Sat, 28th Jul 2018 4:58 pm
Greg
Guy’s has no evidence to support his hypothesis..I do on the other hand, and my theories have been tested already see (soviet union)..And Guy made a video last month saying the economy was going to collapse this Sept and he cited three stories from zerohedge as his proof…LOL you can’t make this stuff up..
Guy McPherson is on the edge of extinction..He should be put in a cage and showed off at the circus as a side show freak..
onlooker on Sat, 28th Jul 2018 5:08 pm
MM, you have not looked probably too well into his argument and the concèpt of abrupt climate change/runaway GW. If you had, you would be even more afraud of this then PO. And you would equate it with our possible extinction ie, no adequate habitat to live = no life. While PO only threatens our out of balance ways of living and overpopulation. So,can be seen as a needed cure. Afterall, we survived pretty well for thousands of years without FF
GregT on Sat, 28th Jul 2018 5:09 pm
MM,
Guy McPherson is professor emeritus of natural resources and ecology and evolutionary biology. I’m sure that he has a slightly better understanding of life on Earth than most people do.
GregT on Sat, 28th Jul 2018 5:15 pm
And MM,
Guy would be an ‘expert’ in his field.
GregT on Sat, 28th Jul 2018 5:17 pm
You MM, on the other hand, are not.
MASTERMIND on Sat, 28th Jul 2018 5:17 pm
Inequality and energy: Revisiting the relationship between disparity of income distribution and energy use from a complex systems perspective (Khan 2018)
https://www.scribd.com/document/384908376/Inequality-and-energy-Revisiting-the-relationship-between-disparity-of-income-distribution-and-energy-use-from-a-complex-systems-perspective-Khan-20
https://www.sciencedirect.com/science/article/pii/S2214629618303074
MASTERMIND on Sat, 28th Jul 2018 5:20 pm
Greg
He is a disgraced expert who got fired for sexually harnessing his students..If you want to believe the sky is going to fall because zerohedge told you go right ahead..
GregT on Sat, 28th Jul 2018 5:39 pm
“He is a disgraced expert who got fired for sexually harnessing his students”
OK MM, then why does Guy still have a webpage at Arizona State University?
https://www.environment.arizona.edu/guy-mcpherson
onlooker on Sat, 28th Jul 2018 5:42 pm
And what does sexual harassment have to do with his qualifications?
GregT on Sat, 28th Jul 2018 5:44 pm
“If you want to believe the sky is going to fall because zerohedge told you go right ahead..”
I have made my views on Zerohedge perfectly clear MM, and you would be the only one here who is constantly preaching that the ‘sky is falling’ due to economic collapse.
I am far more inclined to believe the Earth sciences in regards to collapse, than an underemployed chemist, who has told everyone that he is planning on committing suicide.
Your ‘credentials’ are not in the least bit impressive MM.
MASTERMIND on Sat, 28th Jul 2018 5:50 pm
As Oil Industry Recovers From a Glut, a Supply Crunch Might Be Looming
Dearth of investments in oil projects mean a spike in prices above $100 could be on the horizon
Crude across the globe is being used up faster than it is being replaced, raising the prospect of even higher oil prices in the coming years.
The world isn’t running out of oil. Rather, energy companies and petro-states—burned by 2014’s price collapse—are spending less on new projects, even though oil prices have more than doubled since 2016. That has sparked concerns among some industry watchers of a massive price spike that could hurt businesses and consumers.
The oil industry needs to replace 33 billion barrels of crude every year to satisfy anticipated demand growth, particularly as developing countries like China and India are consuming more oil. This year, new investments are set to account for an increase of just 20 billion barrels, according to data from Rystad Energy.
The industry’s average decline rate—the speed at which output falls without field maintenance or new drilling—was 6.3% in 2016 and 5.7% last year, the Norway-based consultancy said. In the four years before the crash, that decline rate was 3.9%.
Any shortfall in supply could push prices higher, similar to when oil hit nearly $150 a barrel in 2008, some industry participants say.
“The years of underinvestment are setting the scene for a supply crunch,” said Virendra Chauhan, an oil industry analyst at consultancy Energy Aspects. He believes a production deficit could come as soon as the end of next year, potentially pushing oil above $100 a barrel.
Once, market participants worried that supply would peak. Now, they talk of vast oil reserves underground.
The Gulf of Mexico, for instance, holds roughly 4 billion barrels of proven reserves, according to 2016 data from the U.S. Energy Information Administration. But new projects generally require billions of dollars of investment and years of development. BP PLC’s $9 billion Mad Dog 2 development in the Gulf of Mexico isn’t expected to start production until 2021, despite getting the green light in 2016. Such deep-water projects take an average of 3½ years and roughly $5 billion to go from approval to production, according to consultancy Wood Mackenzie.
The industry has a record of boom-bust spending that can lead to big price swings.
Right now, companies are cautious after a period of profligate spending before the 2014 crash led to years of painful restructuring. Even as oil markets recover, Big Oil remains under pressure from investors to show it can maintain financial discipline and deliver on promises to improve returns. While production is still growing at many companies, they have been cautious about commissioning new projects.
“We will have to go to higher investment levels than we’re seeing at the moment,” Royal Dutch Shell PLC Chief Executive Ben van Beurden said Thursday. “My hope is still that we can avoid a real supply crunch.”
Oil-industry investments fell 25% in 2015 and 2016, according to the International Energy Agency. Capital expenditure was flat in 2017 and early data suggests a modest rise in 2018, despite prices rising around 30%.
“When you halve your capital expenditure, it’s hard for this not to have an effect,” said Martijn Rats, global oil strategist at Morgan Stanley. The bank predicts that supply shortages, among other factors, will push Brent—the global oil benchmark—to $90 a barrel at the start of 2020. Its bull case projects $105 a barrel.
A host of other factors are dampening new production. Among the world’s biggest oil-producing nations are Venezuela, Iran, Libya and Nigeria, which have struggled to maintain output because of a range of economic, political and technical factors.
Concerns over a possible transition away from fossil fuels are also hanging over executives. BP and Shell are moving toward producing more natural gas than oil, anticipating a surge in demand for the lower-carbon fuel. Adding to the industry’s supply issues, transport problems in Canada and the U.S. have led to bottlenecks.
Veteran oil investor Pierre Andurand is betting on a multiyear bull run in oil. Mr. Andurand said Brent could hit highs of $100 a barrel this year and top $150 by the early 2020s. Others forecast more modest price gains but still believe a supply deficit will raise prices.
To be sure, strong demand for crude could falter if the global economy slows. On the supply side, some large new projects have been commissioned, potentially signaling appetite for more investment, and companies are driving down project costs allowing them to do more for less. Likewise, soaring production from U.S. shale fields has offset underinvestment and declines elsewhere. But the shale industry’s growth is expected to peak in the early to mid-2020s, according to industry experts.
To avoid a longer-term price spike, companies need to start investing now, and not just in shale, analysts say.
Without those fresh investments, decline rates globally are expected to continue to worsen as companies finish working through projects financed before the crash.
In parts of Brazil and Norway, decline rates are already above 10-15%, Energy Aspects’ Mr. Chauhan said. Output from Venezuela’s aging fields fell by more than 700,000 barrels a day over the past year, according to the IEA. In June, Angola’s output hit a 12-year low, while Mexico’s production is down nearly 300,000 barrels a day since the middle of 2016, despite efforts to open up the industry and reverse declines, the IEA said.
“Nobody is really stepping in,” said Doug King, chief investment officer of the $140 million Merchant Commodity hedge fund. “People still got burned by the downturn.”
Write to Sarah Kent at sarah.kent@wsj.com and Georgi Kantchev at georgi.kantchev@wsj.com
https://www.wsj.com/articles/as-oil-industry-recovers-from-a-glut-a-supply-crunch-might-be-looming-1532775605
GregT on Sat, 28th Jul 2018 5:58 pm
MM,
The sooner the oil age ends, the better the outlook for the long term survivabilty of mankind, and most other life on this planet.
Humanity will survive just fine without ‘the economy’, but humanity will not survive without a healthy natural environment.
You are a very confused young ‘man’ MM.
GregT on Sat, 28th Jul 2018 6:26 pm
MM,
We are all going to die. Nobody gets out of this life alive.
If you were diagnosed with a terminal illness, and given a couple of years left to live, would you spend those years whining about how horrible your life is on an Internet forum, or would you live your final years to their fullest?
Get up off of that couch, and do something positive for the remainder of your life. However long, or short, that might be.
MASTERMIND on Sat, 28th Jul 2018 6:48 pm
Greg
You are deluding yourself into trying to find a silver lining..when the oil age ends billions of people are going to die a horrific death and it will likely lead to our extinction..That is not something to be anticipated..
GregT on Sat, 28th Jul 2018 6:55 pm
MM,
I first became aware of the limits to growth back in the 70s, long before you were even born.
Enjoy what little time you have in this life, because no matter what you do, it is not going to last forever.
MASTERMIND on Sat, 28th Jul 2018 6:58 pm
Greg
I am just glad my government created homeland,NSA,FEMA,ICE, so when shit hits the fan I will be protected…/s
Makati1 on Sat, 28th Jul 2018 7:02 pm
Five out of ten articles today, are not about Peak Oil. At least, not directly. Interesting! Maybe the site owner realizes that the discussion of how many barrels are left and what the price might be tomorrow, are not enough to generate much discussion? After all they are just guesses, not based on facts, and of interest only to those who live a very narrow oily life.
Whereas, articles about the Us collapse, the ecological collapse, and the impending extinction of humans, will generate more discussion and keep the delusionalists “debating” (I use that term loosely) with the realists. Many of the articles I see posted here, I first saw on Zero Hedge the day before. Interesting!
Oh yes! We do live in very interesting times. Probably the end of times. Surly the end of the Us’ American Dream.
MASTERMIND on Sat, 28th Jul 2018 7:02 pm
INSIDE THE U.S. MILITARY’S SECRET DOOMSDAY DEFENSE
https://www.wired.com/story/us-doomsday-defense-photos/
If I were the US elites I would have my finger on the nuclear button, ready to hit Russia..No bluffs..They know the world is coming to an end soon…Live free or die!
Makati1 on Sat, 28th Jul 2018 7:14 pm
BTW: The above article came straight from the Us propaganda mill and is so full of bullshit that it is laughable. But the brainwashed American serfs will suck it up like mother’s milk. Gullible Americans! LMAO
GregT on Sat, 28th Jul 2018 7:16 pm
“I am just glad my government created….”
So now you believe that your tax farmers belong to you?
Priceless.
Makati1 on Sat, 28th Jul 2018 7:18 pm
MM, perhaps the Us’ ‘elite ‘ are smarter than you are? They know that any attempt to destroy Russia will be suicide for themselves. Just because you want to take the easy way out does not mean that they do. You are one of those brainwashed Americans who think Russia and China are your enemies. Keep sucking up that propaganda. 3AM flash in your future?
MASTERMIND on Sat, 28th Jul 2018 7:26 pm
Madkat
At my local wal mart early this year..some high school kids got on the store intercom and played a recording from their phones.That said ‘North Korea has just fired several nuclear missiles at America and one is headed for my city..” And it said that one had already hit Chicago..And everyone in the store took off running for the exits thinking a missile was coming..And it was around 10pm at night..And the local police were fucking furious..and then never caught the little shits who did it..It was the best prank ever..lol
MASTERMIND on Sat, 28th Jul 2018 7:30 pm
Greg
If you don’t want to pay taxes go live in a country like Somalia where they have very little government..Its a tin foil hat libertarian’s dream..
GregT on Sat, 28th Jul 2018 7:40 pm
MM,
Thanks dude, but I prefer to live in a democracy. I don’t constantly whine because my ‘side’ didn’t win, I have no delusions that the government is ‘mine’, and I understand very well that my tax dollars are not being spent on what they were supposed to be spent on.
Cloggie on Sun, 29th Jul 2018 8:03 am
Like the Spaniards for example, that wrote this farticle. Spain is hardly an example of fiscal, or political responsibility and virtue itself, being an ex?-dictatorship and a starring member of the PIGS economic basket cases. Remember them? (Still basket cases, even if the media doent talk about that much anymore).
Actually the media have stopped talking about Spain and Portugal, because Iberia is doing fine:
https://www.nytimes.com/2017/07/28/business/spain-europe-economy-recovery-unemployment.html
https://www.cnbc.com/2017/08/02/how-portugal-came-back-from-the-brink.html
Cloggie on Sun, 29th Jul 2018 8:26 am
“Like the Spaniards for example, that wrote this farticle.“
Spaniard?
Moises Naim?
With such a name all alarm bells should begin to ring.
https://en.m.wikipedia.org/wiki/Moisés_Na%C3%ADm
He is from, cough, Venezuela.
“He is a Distinguished Fellow at the Carnegie Endowment for International Peace. “
“Naim served as the editor in chief of Foreign Policy magazine for 14 years (1996-2010)”
Aha, a globalist.
“He is the former Minister of Trade and Industry for Venezuela and Executive Director of the World Bank”
Foreign policy wonk.
“Among other publications, Naím’s work has appeared in: The New York Times, The Washington Post, Newsweek, Time, Le Monde, Berliner Zeitung and many more, making him one of today’s most widely read columnists on international economics and geopolitics.”
It is getting warm now.
“George Soros said this “extraordinary new book will be of great interest to all those in leadership positions – business executives, politicians, military officers, social activists and even religious leaders.”
Uhoh, gets a pat on the back from Soros, no less.
“Naím is a member of the board of directors of the Open Society Foundations. He is also a member of the Council on Foreign Relations, the Atlantic Council, the Inter-American Dialogue[14] and the World Economic Forum.”
“On January 2, 2015, The End of Power was selected by Facebook CEO Mark Zuckerberg as the inaugural book for the Mark Zuckerberg book club,”
More tribal pats on the back.
For those too stupid to figure out from what angle the wind is blowing (he calls Russia a “dictorarship”):
https://en.m.wikipedia.org/wiki/List_of_Latin_American_Jews
Cloggie on Sun, 29th Jul 2018 8:32 am
“As Oil Industry Recovers From a Glut, a Supply Crunch Might Be Looming”
Millimind has yet to grasp the difference between peak oil and a supply crunch due to underinvestment due to low prices.
MASTERMIND on Sun, 29th Jul 2018 9:48 am
Clogg
It doesn’t matter how much you invest when all the major oil fields have already been discovered..Even when the oil price was well above 100 dollars and oil companies had plenty of money they couldn’t invest enough to discover enough to cover annual consumption..
IEA Chief warns of world oil shortages by 2020 as discoveries fall to record lows
International Energy Agency says U.S. shale won’t fill the void which could lead to petroleum shortages
LONDON—Global oil discoveries fell to a record low in 2016, the International Energy Agency says, raising fresh concerns about the potential for a petroleum-supply shortage as soon as 2020.
Don’t expect output from U.S. shale producers to fill the void, the IEA said. American shale production is expected to grow by 2.3 million barrels a day or more over the next five years, but that isn’t enough to make up for declining output elsewhere.
The IEA also doesn’t expect global oil demand to stop growing any time soon, potentially turning the current glut of oil into a dearth.
The Organization of the Petroleum Exporting Countries has also sounded the alarm over the potential for a looming supply gap in the long term. Saudi energy minister Khalid al-Falih told a London energy conference last year that “there will be a period of shortage of supply.”
Shale “is not enough by itself,” the IEA’s Mr. Birol said.
https://www.wsj.com/articles/iea-says-global-oil-discoveries-at-record-low-in-2016-1493244000
Reply
MASTERMIND on Sun, 29th Jul 2018 9:52 am
Greg
Don’t worry you won’t have to pay taxes very much longer..But be-careful what you wish for.
GregT on Sun, 29th Jul 2018 12:12 pm
MM,
Where did I say that I ‘wish’ not to pay taxes?
I have no problem with being a contributing member of society. What I do have a problem with is bloated bureaucracies, misallocation and mismanagement of public funds, and exponentially growing mountains of debt.
MASTERMIND on Sun, 29th Jul 2018 12:39 pm
Greg
That is what happens when you let population growth go unchecked..I wish we had a strong leftist dictator in power like Lenin..Democracy is a stupid idea..All it does is lead to gridlock and divides people..
Duncan Idaho on Sun, 29th Jul 2018 2:06 pm
The last “elephant” discovered:
Kazakh in Kazakhstan was the last “elephant” discovered.
That was 18 years ago.
Natures way of telling you something is wrong?