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Midnight Oil
For a useful way to think about energy exports and prices, Dallas based geologist Jeffrey Brown points to the current situation with global rice supplies. Brown among others worked on the Export Land Model (ELM), a model that reflects the decline in oil exports as a result of Peak Oil.
As long as there are abundant local supplies of rice, countries are happy, eager in fact, to export excess production in order to generate foreign exchange. But as soon as local consumption exceeds locally available production, then all hell breaks loose and the next thing you know countries are banning exports,…
25Jun2008 | Whiskey and Gunpowder | Comments Off | ContinuedThe Anti-Dollar
Oil has become the “anti-dollar†of modern times. Oil is now serving as the source of global monetary discipline that gold used to perform.
Oil is the energy life-blood of all modern economies. So when a nation debauches its currency, the oil markets react instantly. And oil will not accept monetary malpractice, certainly not by the U.S. Federal Reserve. If traders perceive that the dollar is declining, this perception lights the fuse for oil prices to rise.
There is an old saying that “You can’t fight the Fed.†But oil is fighting the Fed. In fact, oil is scoring a knockout, like…
21Jun2008 | Whiskey and Gunpowder | Comments Off | Continued
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