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How Much Human Labor Equals One Gallon Of Gasoline?

How Much Human Labor Equals One Gallon Of Gasoline?

Most people are amazed to discover the enormous amount of energy contained in a gallon of gasoline.  However, this isn’t surprising because the public seems to take for granted the ENERGY that drives the entire economy, especially oil.  And, oil is the most crucial energy supply vital for our Just-In-Time-Inventory-Supply-Chain System.  Without oil, the entire global economy would grind to a halt.

In my recent video, The Tremendous Hidden Value In Every Silver Coin, I discussed why the precious metals act as a store of “Energy Equivalent Value.” While many people may disagree with this analysis, our complex economy is nothing more than the trading of energy, in one form (goods) or another (services).

Here’s an example.  Skechers USA, which sells footwear, enjoyed a 7% margin of profit in the first three quarters of 2019.  The company reported $287 million of net income on $3,889 million in revenues.  Thus, the total cost of Skecher’s footwear was 93%.  While the public is purchasing shoes made by Skechers, I can assure you that the overwhelming majority of the cost was associated with the ENERGY consumed in the entire process.  Energy also includes the amount of Human Labor, Materials, Capital Expenditure, etc.  Why?  Because the materials used in Skecher’s shoes were a result of the tremendous amount of energy in all forms and stages in the manufacture of the materials.

So, when someone plops down $75 to purchase a pair of shoes, the overwhelming majority of that price is a result of all the ENERGY consumed in all forms and all stages.  Thus, our ECONOMY is nothing more than the trading of energy… that ends up in one form (goods) or another (services).

How the US Wages War to Prop up the Dollar

map

How the US Wages War to Prop up the Dollar

At Counterpunch, Michael Hudson has penned an important article that outlines the important connections between US foreign policy, oil, and the US dollar.

In short, US foreign policy is geared very much toward controlling oil resources as part of a larger strategy to prop up the US dollar. Hudson writes:

The assassination was intended to escalate America’s presence in Iraq to keep control of the region’s oil reserves, and to back Saudi Arabia’s Wahabi troops (Isis, Al Quaeda in Iraq, Al Nusra and other divisions of what are actually America’s foreign legion) to support U.S. control of Near Eastern oil as a buttress of the U.S. dollar. That remains the key to understanding this policy, and why it is in the process of escalating, not dying down.

The actual context for the neocon’s action was the balance of payments, and the role of oil and energy as a long-term lever of American diplomacy.

Basically, the US’s propensity for driving up massive budget deficits has created a need for immense amounts of deficit spending. This can be handled through selling lots of government debt, or through monetizing the debt. But what if there isn’t enough global demand for US debt? That would mean the US would have to pay more interest on its debt. Or, the US could monetize the debt through the central bank. But that might cause the value of the dollar to crash. So, the US regime realized that it must find ways to prevent the glut of dollars and debt from actually destroying the value of the dollar. Fortunately for the regime, this can be partly managed, it turns out, through foreign policy. Hudson continues:

…click on the above link to read the rest of the article…

Haftar Blocks All Libyan Oil Exports Day Before Berlin Peace Conference

Haftar Blocks All Libyan Oil Exports Day Before Berlin Peace Conference

Given Libyan commander Khalifa Haftar has over the past two years captured the majority of the oil and gas rich country’s energy producing regions, he’s now playing his biggest card yet to leverage international peace talks in his favor amid a final push for his Libyan National Army (LNA) forces to take Tripoli. 

Bloomberg reports Saturday that the Benghazi-based ‘rebel’ general has now “blocked oil exports at ports under his control, slashing output by more than half and posing a potential setback for an international conference on Sunday that aims to broker an end to a civil war in the OPEC nation.”

Image source: AP via Oilandgaspeople.com

The major talks Sunday are due to be held in Berlin, and a who’s who of external backers of each side of the conflict will be in attendance, including Putin, Erdogan, France’s Macron, and UK Prime Minister Boris Johnson, as well as the Italian prime minister and US Secretary of State Mike Pompeo.

The Berlin conference comes after a failed deal to establish a ceasefire in Moscow earlier in the week, when Haftar left the city after the head of the UN-backed Government of National Accord (GNA) in Tripoli, Fayez al-Sarraj, actually signed the agreement. Haftar also reportedly secretly scuttled to different Mediterranean capitals, including Athens, in a bid to gain recognition as legitimate leader on the ground.

Haftar’s drastic move to block oil exports is likely aimed at torpedoing the Berlin meeting before it even starts, given he’s proven intransigent in the face of international pressure for him to halt the ongoing Tripoli offensive — even during the talks hosted by one of his key political backers Vladimir Putin. 

Libya’s National Oil Corp. (NOC) has now declared Force Majeure, per Bloomberg:

…click on the above link to read the rest of the article…

Permafrost will limit natural gas, oil, and coal extraction

Permafrost will limit natural gas, oil, and coal extraction

Preface. For many people, it’s comforting to know that about 25% of remaining oil and gas reserves (we have the know-how and economics to get it) and resources (beyond our technical and monetary capability) are in the arctic. They assume we’ll get this oil and gas when we need to, and delay oil shortages for a decade or more.

But  they haven’t considered the difficulties of trying to drill for oil and gas or mine coal in permafrost.  It buckles roads, airports, buildings, pipelines, and any other structures placed on top.

A Greenpeace report published in 2009 said thawing soil in Russia’s permafrost zones caused buildings, bridges and pipelines to deform and collapse, costing up to 1.3 billion euros (nearly $1.5 billion) a year in repairs in western Siberia.

Although there are ways to build roads that can withstand melting and freezing permafrost for a while, it is terribly expensive, and it is why we haven’t developed much oil or natural gas in Alaska besides Prudhoe Bay, as far north as you can get, with fewer permafrost issues.

The cost and energy of production in permafrost may mean that reserves are much less than estimated.  Especially if they are developed when oil production begins to decline, since the price and declining availability of oil will mean there’s less energy to build roads, towns, platforms for drilling rigs and oil pipelines. And for agriculture, transportation supply chains, and all the other myriad ways oil and gas keep us alive.

As it is, climate change continues to exceed past engineering standards, and every year Alaska and Canada spend millions of dollars trying to fix roads, bridges, and other infrastructure.

…click on the above link to read the rest of the article…

Living On Borrowed Time

Living On Borrowed Time

How soon until the consequences of our excesses catch up with us?

The laws of physics are governed by cause and effect. But there can exist a time lag between the two.

For instance:

Note how the speed of both the bullet and the retracting latex far exceed that of the shockwave or gravity on the water contained inside each balloon.

There’s an observable time lag during which the globe of previously-contained water momentarily hangs there in space.

Then, a beat later, it’s obliterated.

Living On Borrowed Time

I’m unusually focused on time these days as we’re updating Peak Prosperity’s crown jewel, The Crash Coursevideo series.

Originally created in 2008 and updated in 2014, it lays out the macro forces driving the economy and our way of living, explaining why most of them are unsustainable and headed for trouble. That then opens the door to an avalanche of critical questioning about what the future will bring.

Updating the parade of charts and data has been eye-opening for me. When I last did this (early 2014), the S&P had just returned to the same price level that served as the apex for both the 2001 and 2008 market bubbles.

I remember how concerned I was then. How could we have returned to such reckless exuberance so quickly after the pain caused by the Dot-com bust and the Great Financial Crisis? Did we learn nothing from our previous (and recent!) excess?

Clearly not only did we not learn; we didn’t give a crap. With a “hold my beer, you ain’t seen nothin’ yet” bravado, we proceeded to DOUBLE the S&P above the previous bubble highs.

Here at PeakProsperity.com, my co-founder Chris Martenson and I have spilled a lot of ink in the ensuing years, warning how QE (aka central bank money printing), stock buybacks, and record low interest rates have pushed the degree of systemic unsustainability to Bizzaro-world levels. For our most recent analysis, click herehere and here.

…click on the above link to read the rest of the article…

Shale’s Debt-Fueled Drilling Boom Is Coming To An End

Shale’s Debt-Fueled Drilling Boom Is Coming To An End

Marcellus shale

The financial struggles of the U.S. shale industry are becoming increasingly hard to ignore, but drillers in Appalachia are in particularly bad shape.

The Permian has recently seen job losses, and for the first time since 2016, the hottest shale basin in the world has seen job growth lag the broader Texas economy. The industry is cutting back amid heightened financial scrutiny from investors, as debt-fueled drilling has become increasingly hard to justify.

But E&P companies focused almost exclusively on gas, such as those in the Marcellus and Utica shales, are in even worse shape. An IEEFA analysis found that seven of the largest producers in Appalachia burned through about a half billion dollars in the third quarter.

Gas production continues to rise, but profits remain elusive. “Despite booming gas output, Appalachian oil and gas companies consistently failed to produce positive cash flow over the past five quarters,” the authors of the IEEFA report said.

Of the seven companies analyzed, five had negative cash flow, including Antero Resources, Chesapeake Energy, EQT, Range Resources, and Southwestern Energy. Only Cabot Oil & Gas and Gulfport Energy had positive cash flow in the third quarter.

The sector was weighed down but a sharp drop in natural gas prices, with Henry Hub off by 18 percent compared to a year earlier. But the losses are highly problematic. After all, we are more than a decade into the shale revolution and the industry is still not really able to post positive cash flow. Worse, these are not the laggards; these are the largest producers in the region.

…click on the above link to read the rest of the article…

Art Berman: Houston, We Have A Problem

Art Berman: Houston, We Have A Problem

The surplus energy that powers the world is declining

Every week in our Off The Cuff Series, we interview expert minds on the premium side of PeakProsperity.com. These discussions are unscripted and informal, where my partner Chris Martenson and his guest react to recent macro developments and predict the likeliest repercussions.

Every once in while, when we have an exceptionally timely conversation, we’ll make it available to the public. And we’re doing that this week.

Chris caught petroleum geologist Art Berman right before he went on stage to deliver a presentation on the limitations of shale oil (his excellent slides can be found here). The world is finally starting to realize that the profit-making potential of this space was drastically over-hyped.

But more important, warns Art, is that the souring sentiment on shale oil is a reflection on the bigger challenge ahead of us: How we will power the world in a future of declining net energy?

When we reflect upon the material progress of humankind over the hundred and fifty years, it seems very clear to me that much, if not most, of it happened because humankind moved basically from wood to coal to oil/natural gas. To increasingly more dense sources of energy.

And the result is that we get a whole lot more work out of whatever energy we expend. Less and less of that is done by manual labor.

Everything works to live. Look at the African savanna: it’s all about energy. The animals spend all day long getting food one way or another.  That’s the way life on earth works.

But not so much for us, because we’re fortunate — we humans have all this fossil energy at our disposal. You and I can sit and chat on Skype here without having to do very much.

…click on the above link to read the rest of the article…

The Top 5 Ways We Use Oil & Gas

The Top 5 Ways We Use Oil & Gas

Petchem

If climate change and the use of fossil fuels is starting to worry you, consider this: The lion’s share of the petroleum in the United States is being used just to get around–to get people and things from point A to point B. 

Industrial, residential, commercial and electrical power usage of petroleum pales in comparison.   

Fossil fuels–which include crude oil and other liquids–are refined into petroleum products for a multitude of uses, and last year, the United States consumed over 20 million barrels per day. 

A whopping 69 percent of that was consumed by transportation. Industry, which the masses like to villainize most in terms of fossil fuel consumption and greenhouse gas emissions, used only 25 percent. Residential usage accounted for only 3 percent of our petroleum consumption, and commercial, only 2 percent. 

What about electricity? American electricity generation used only 1 percent of those petroleum products. 

Source: EIA

So, for anyone looking to pinpoint where we need to start cheerleading for renewables or fossil-fuels shaming, here are the top 5 uses of petroleum products to help redirect the debate: 

#5 Oceans of Plastic: Still Gas, 0.703M BPD

While primarily referring to methane and ethane, “still gas” is any form or mixture of gases produced in refineries by distillation, cracking, reforming, and other processes. That means it also includes ethylene, normal butane, butylenes, propane, propylene, and others. 

It’s used most as refinery fuel or petrochemical feedstock. 

The conversion factor is 6 million Btus per fuel oil equivalent barrel.

U.S. refineries burned nearly 240 million barrels of still gas in 2018. 

But petrochemicals are one of the largest drivers of global oil demand, so it’s a circular competition here for still gas. 

 …click on the above link to read the rest of the article…

Saudi Bases and the Bin Ladens: A Love Story

Saudi Bases and the Bin Ladens: A Love Story

What is Trump really up to? It’s almost unknowable. At the same time that the president was pulling (some) troops out of Northeast Syria, giving an antiwar speech, and then sending other troops back into Syria to “secure the oil,” he also quietly sent another 1800 service members into Saudi Arabia. What little Trump did say about it consisted of a peculiar defense of his actions. Faced with the obvious question from a reporter: “Mr. President, why are you sending more troops to Saudi Arabia when you just said it’s a mistake to be in the Middle East?” Trump argued that there was no contradiction in his policy because, well, the Saudis “buy hundreds of billions of dollars’ worth of merchandise from us,” and have “agreed to pay us for everything we’re doing to help them.” It seems the U.S. military is going full mercenary in the Gulf.

While I’ve noted that Trump’s recent antiwar remarks were profound – though largely unfulfilled – these words will amount to nothing if followed by a military buildup in Saudi Arabia that leads to a new, far more bloody and destabilizing, war with Iran. Nothing would please the “three Bs” – Israeli Prime Minister Bibi Netanyahu, Saudi Crown Prince Mohammed Bin Salman, and former National Security Adviser John Bolton – more than a US military strike on the Islamic Republic, cost and consequences be damned.

It’s just that an Iran war isn’t the only risk associated with basing majority-Christian, foreign American troops in the land of Islam’s two holiest cities. And a brief historical review of US presence in Saudi Arabia demonstrates quite clearly the potential transnational terrorist “blowback” of Washington’s basing decisions. In fact, Trump’s latest deployment constitutes at least the third time the US military has been stationed on the Arabian peninsula.

 …click on the above link to read the rest of the article…

US Needs To Occupy Syria Because Of Kurds Or Iran Or Chemical Weapons Or Oil Or Whatever

US Needs To Occupy Syria Because Of Kurds Or Iran Or Chemical Weapons Or Oil Or Whatever

President Trump reiterated to the press today that the United States is maintaining its military presence in Syria not to patrol the nation’s border with Turkey, but to control its oil fields.

“We’ve kept the oil,” Trump said. “We’ve stayed back and kept the oil. Other people can patrol the border of Syria, frankly, and Turkey, let them – they’ve been fighting for a thousand years, let them do the border, we don’t want to do that. We want to bring our soldiers home. But we did leave soldiers because we’re keeping the oil. I like oil. We’re keeping the oil.”

This open “kick their ass and take their gas” policy is nothing new for America’s reality TV president; he’s been saying it for years. It was recently addressed head-on by Syrian president Bashar al-Assad, who said during an interview that it’s nice to have a US president who is honest about America’s true motives in the Middle East for once.

“As for Trump, you might ask me a question and I give you an answer that might sound strange,” Assad said. “I say that he is the best American President, not because his policies are good, but because he is the most transparent president.  All American presidents perpetrate all kinds of political atrocities and all crimes and yet still win the Nobel Prize and project themselves as defenders of human rights and noble and unique American values, or Western values in general.  The reality is that they are a group of criminals who represent the interests of American lobbies, i.e. the large oil and arms companies, and others.

 …click on the above link to read the rest of the article…

First Images Of US Troops Occupying Syria’s Oil Fields Stir Outrage

First Images Of US Troops Occupying Syria’s Oil Fields Stir Outrage

The reality of American foreign policy all in one stunning image: regional Iraqi Kurdistan24 television has broadcast the first footage of the United States Army seizing and ‘protecting’ a Syrian oil field in the country’s northeast

Specifically the images are of a US armed convoy at Rumelan oil field, and are the first to show Trump’s ordered “secure the oil” policy in action. A Salon op-ed aptly quips in reaction: It’s about the oil, stupid: Trump wants to end the forever wars, except the one about oil and money.”


US forces began patrols at oilfields on Mount Qarachokh near Derik in northeastern #Syria on Friday. #TwitterKurds


Middle East war correspondent Jenan Moussa, who has covered the Iraq war and other US occupations in the region, voiced the growing outrage over the US resource theft underway in Syria:

Since discovery of oil in the MidEast, many in the region said: the U.S. is only here to steal our oil. U.S. denied it, and claimed it’s about democracy, human rights, women etc.

Not sure if Americans realize but these pictures of U.S. troops in northeast Syria are HUGELY damaging to U.S. image.


Since discovery of oil in MidEast, many in region said: U.S. only here to steal our oil.

U.S. denied, claimed it’s about democracy, human rights, women etc.

Not sure if Americans realize but these pictures of U.S. troops in northeast Syria are HUGELY damaging to U.S. image.


One Syrian commentator said sarcastically on social media: 

The Few. The Proud. The Marines. stealing Syria’s oil. 

And further pointed out that, “Trump just showed you the naked truth about US foreign policy in the Middle East.”

 …click on the above link to read the rest of the article…

Assad Calls Trump “Best US President” Ever For “Transparency” Of Real US Motives

Assad Calls Trump “Best US President” Ever For “Transparency” Of Real US Motives

Arguably some of the most significant events since the eight-year long war’s start have played out in Syria with rapid pace over just the last month alone, including Turkey’s military incursion in the north, the US pullback from the border and into Syria’s oil fields, the Kurdish-led SDF’s deal making with Damascus, and the death of ISIS leader Abu Bakr al-Baghdadi. All of this is why a televised interview with President Bashar Assad was highly anticipated at the end of this week. 

Assad’s commentary on the latest White House policy to “secure the oil” in Syria, for which US troops have already been redeployed to some of the largest oil fields in the Deir Ezzor region, was the biggest pressing question. The Syrian president’s response was unexpected and is now driving headlines, given what he said directly about Trump, calling him the “best American president” ever – because he’s the “most transparent.”

“When it comes to Trump you may ask me a question and I’ll give you an answer which might seem strange. I tell you he’s the best American president,” Assad said, according to a translation provided by NBC.

“Why? Not because his policies are good, but because he is the most transparent president,” Assad continued.

“All American presidents commit crimes and end up taking the Nobel Prize and appear as a defender of human rights and the ‘unique’ and ‘brilliant’ American or Western principles. But all they are is a group of criminals who only represent the interests of the American lobbies of large corporations in weapons, oil and others,” he added.

 …click on the above link to read the rest of the article…

The Climate Crisis Is Real: Here’s the Expert Advice on What We Need to Do

The Climate Crisis Is Real: Here’s the Expert Advice on What We Need to Do

A global primer on next steps, from keeping oil in the ground to changing our diets to shifting to a green economy.

GretaThunbergMarch.jpg
Greta Thunberg helped launch a movement. But dealing with the climate crisis is up to us. Photo by campact Creative Commons licensed.

“The world is waking up,” Thunberg told world leaders at the recent UN Climate Action Summit. “And change is coming whether you like it or not.”

But how long that awakening takes could be decisive for warming this century. A report published ahead of the summit declared that the impacts of climate change are accelerating — global emissions of carbon dioxide grew by 20 per cent between 2015 and 2019, while the average rate of sea level rise has increased to five millimetres per year over roughly the same period.

One author warned that limiting global temperature rise to two degrees Celsius would require tripling current commitments to reduce emissions. To hold temperatures to 1.5 degrees Celsius above pre-industrial levels, global ambition would need to increase by a factor of five.

The debate over whether climate change is happening is over, and the conversation about what should be done is beginning in earnest. We’ve asked experts from around the globe to describe how the world should respond to the threat of climate breakdown. We share their insights here.

The state of the Earth

Nowhere are the effects of climate change more visible than in the Arctic, a region that’s estimated to be warming at least twice as fast as the global average. Arctic sea ice reached its second-lowest extent on record in September 2019.

A new report by the Intergovernmental Panel on Climate Change has revealed the changes that are under way in the oceans and the ice-covered regions of the world, and the message is stark.

 …click on the above link to read the rest of the article…

Trump Wants Deal With Exxon or Other Company to Take Syrian Oil

Trump Wants Deal With Exxon or Other Company to Take Syrian Oil

‘We should be able to take some’

Having sent growing numbers of troops into eastern Syria explicitly to control the oil, President Trump now says he is seeking a deal with Exxon Mobil or “one of our great companies” to go into occupied Syria and take the oil.

Trump has long suggested that in his view, the US should be able to just take oil from countries it is involved in militarily, as a way to recover some of the costs of his various wars. Trump said on Sunday that the oil is valuable and “we should be able to take some also.”

That Trump is sold on this idea is one thing, but convincing a US Oil and Gas Major to go along with the operation is another thing. The legal basis, particularly internationally, of taking Syrian oil without Syrian permission, and keeping US military forces there to keep Syria from stopping them, is going to be complicated, to say the least. 

Trump’s conviction that legally it’s probably fine, after all, doesn’t mean the US company, whichever it turns out to be, wouldn’t get sued in the US or internationally for looting Syria’s oil.

These huge multinational companies are notoriously risk-averse about conflict, and would likely be so about joining the president in an oil-taking scheme of this sort. That means while Trump continues to war to keep the oil, he’s going to face a big job selling the idea to any company. 

It’s Official: Trump Says US Keeping Syria’s Oil, Secured By “Small Number” Of Troops

It’s Official: Trump Says US Keeping Syria’s Oil, Secured By “Small Number” Of Troops

“Now we’re getting out… let someone else fight over this long bloodstained sand,” President Trump said during a major, unannounced speech from the White House declaring America’s “big success” in Syria. 

As we predicted, he confirmed the US is “getting out” but it’s not quite the reality, because he also confirmed a “small number” of American troops will stay in Syria to protect oil in the region

“We have secured the oil and, therefore, a small number of U.S. Troops will remain in the area where they have the oil,” Trump said. “And we’re going to be protecting it, and we’ll be deciding what we’re going to do with it in the future.”

But of course, this oil belongs to the Syrian state and its people, as even former top White House Syria and Iraq envoy Brett McGurk, stated bluntly this week: “Oil, like it or not, is owned by the Syrian state.”

Trump also acknowledged during the Wednesday televised address, in a rare reference to past White House policy, that Obama embarked on a failed “regime change” bid in Syria, which morphed into a nightmarish war taking 500,000 lives. 

Currently, even amid a US troop pullback in the north, American special forces and Kurdish-led SDF forces remain in control of the key oil and gas infrastructure in the Deir Ezzor region, east of the Euphrates. The major oil and gas fields in the eastern region such as al-Omar, Conoco field, and Rumeilan oil field, remain Syria’s only significant domestic energy access.

 …click on the above link to read the rest of the article…

Olduvai IV: Courage
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Olduvai II: Exodus
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