Gas is gonna go through the roof.....

[SpasticGramps]

I'm basically already paying $4/gal. We all know what happens to gas costs during the summer driving season. Don't think I'll see $5/gal before the season's out unless something really crazy happens.

I think we see $5 by the end of the year. Easy. Maybe even by the end of summer. What's happening in the Middle East isn't going to go away IMO. Once the freedom genie is out of the bottle it's hard to put back in.

On top of that prices were already rising before this all went down because of dollar debasing. That isn't ever going to stop. Quantitative Easing will cause food prices to continue to go up and continue to destabilize third world countries first. So, I only see the price going up until it makes everything else go down. If we weren't printing money I'd be more optimistic, but we are stuck in a spiral at the moment with no way out. Lest we forget. Inflation has momentum and I suspect we will start hearing about QE3 a little next month and then confirmation of it in May.

But don't worry. Ben was on capitol hill testifying today. He assured everyone that there is no inflation and that we need to print more because we need more inflation. I don't think the Arab street got that memo.

 

[Mountain]

But don't worry.

LOL..I still remember those old Mad magazines from like 35 years ago...What, Me Worry? Maybe Ben was reading those when growing up?

 

[igrowone]

i had seen that wheat futures have come down some over the last week or so, i think some other ones too
though oil is charging hard, i'm in a bit of a contrarian mood, this may be a peaking mini crisis
supplies are just so high, fear works on the markets for a while, but it wears off eventually

 

[SpasticGramps]

There Are No Good Outcomes ZeroHedge

There Are No Good Outcomes

The political class and their mouthpieces in the corporate controlled mainstream media are desperately trying to spin the oil price surge as a temporary inconvenience that will not derail their phony recovery story. Brent crude closed at $116 per barrel yesterday. West Texas crude closed at $104 per barrel. Unleaded gas has risen by 22% in the last month and 60% since September 1, 2010. I’m sure this slight increase hasn’t impacted Ben Bernanke or Lloyd Blankfein. Their limo drivers just charge it to their unlimited expense accounts. Joe Sixpack, driving his 15 mpg Dodge RAM pickup, is now forking over an extra $1,200 per year in gas expenditures, not to mention more for everything impacted by oil such as food, utilities, and anything transported to their local Wal-Mart by truck (everything). Luckily, the Federal Reserve and crooked politicians only care about their comrades in the top 1% elitist society, for whom oil is an investment, not an expense.

UNLEADED GAS

The “experts” speak as if they know what will happen, even though they never saw the rebellions coming in Tunisia, Egypt or Libya. They assure the masses that Libya doesn’t really have an impact on U.S. oil supply. It’s as if these shills never took Econ 101 in college. World oil demand is 88 million barrels per day. Oil supply is 88 million barrels per day. If 1 million barrels of oil supply are taken off-line, it doesn’t matter that the U.S. doesn’t get their oil from Libya. The Italians need their oil. Do the talking heads understand that oil is fungible? The supplier will ship the oil to the highest bidder. Presto!!! – $116 a barrel oil.

Lies, Obfuscation, Misinformation & Denial

The late Matt Simmons made the strong case In his book Twilight in the Desert that Saudi Arabia has been lying about their reserves for years. Documents released by Wikileaks give support to this contention. Cables from the U.S. Embassy in Riyadh , released by WikiLeaks, urge Washington to take seriously a warning from senior Saudi government oil executive Sadad al-Husseini, a geologist and former head of exploration at the Saudi oil monopoly Aramco, that the kingdom’s crude oil reserves may have been overstated by as much as 300bn barrels – nearly 40%.
The UK Guardian reported:

According to the cables, which date between 2007-09, Husseini said Saudi Arabia might reach an output of 12m barrels a day in 10 years but before then – possibly as early as 2012 – global oil production would have hit its highest point. This crunch point is known as “peak oil”.

Husseini said that at that point Aramco would not be able to stop the rise of global oil prices because the Saudi energy industry had overstated its recoverable reserves to spur foreign investment. He argued that Aramco had badly underestimated the time needed to bring new oil on tap.

One cable said: “According to al-Husseini, the crux of the issue is twofold. First, it is possible that Saudi reserves are not as bountiful as sometimes described, and the timeline for their production not as unrestrained as Aramco and energy optimists would like to portray.”

The US consul then told Washington: “While al-Husseini fundamentally contradicts the Aramco company line, he is no doomsday theorist. His pedigree, experience and outlook demand that his predictions be thoughtfully considered.”

A fourth cable, in October 2009, claimed that escalating electricity demand by Saudi Arabia may further constrain Saudi oil exports. “Demand [for electricity] is expected to grow 10% a year over the next decade as a result of population and economic growth. As a result it will need to double its generation capacity to 68,000MW in 2018,” it said.

It also reported major project delays and accidents as “evidence that the Saudi Aramco is having to run harder to stay in place – to replace the decline in existing production.” While fears of premature “peak oil” and Saudi production problems had been expressed before, no US official has come close to saying this in public.

The overstatement of reserves by Saudi Arabia and most of the OPEC countries should be abundantly clear to anyone with a smattering of critical thinking skills. This eliminates just about everyone on CNBC or Fox News. Essentially, the self reported, unaudited declared oil reserves from OPEC members are a fraud. Production quotas for each member of OPEC are dependent upon their oil reserve amount. When this was instituted in the early 1980s, shockingly OPEC countries miraculously added nearly 300 billion barrels to proven reserves in a six year period with NO NEW DISCOVERIES of oil. The chart below shows the unexplained jumps in reserves in red. Do you honestly believe any self reported number from Iran or Venezuela? Dr. Ali Samsam Bakhtiari, a former senior expert of the National Iranian Oil Company, has estimated that Iran, Iraq, Kuwait, Saudi Arabia and the United Arab Emirates have overstated reserves by a combined 320–390 billion barrels and has said, “As for Iran, the usually accepted official 132 billion barrels is almost one hundred billion over any realistic estimate.”

Using some common sense, someone might ask, “How could Saudi Arabia’s oil reserves remain above 260 million for the last 22 years despite pumping over 60 billion barrels during this time frame, and not making any major new discoveries?” Maybe their statisticians did their training at Goldman Sachs or the Federal Reserve. The monster Saudi oil fields are over 40 years old. They will deplete. Oil is finite. They will not refill abiotically like some crackpots contend. Saudi Arabia’s production peaked in 2005 and it has been unable to reach that level since. The spin sheiks in Riyadh and spin doctors in Washington DC cannot spin oil out of sand. Peak oil is about to choke the American way of life.

The denial, accusations and misinformation have already begun. Congressional hearings will be called to blame Big Oil and the dreaded speculators. Americans always need a bogeyman to blame for their mindless decisions and willingness to be led to slaughter by corrupt politicians. Big oil companies do benefit from higher oil prices. Big oil companies spend millions buying off Congressmen. Big oil companies cut corners, ignore safety procedures, and seek profits by any means possible. But, they do not control the oil. Nations control the oil. Many of these nations are led by lying, corrupt, evil despots. That is a fact. Blustering moronic Congressmen going after oil executives and phantom speculators is just a sideshow. It will divert the non-thinking masses from the truth that our leaders haven’t allowed a refinery or nuclear power plant to be built since 1977. These leaders have promoted and subsidized corn based ethanol that requires more energy to produce than it creates and has driven the cost of our food sky high. We are more dependent on foreign oil than any time in our history.

The real speculators are the Americans who clog our highways every morning driving monster SUVs, turbocharged sports cars, gas guzzling minivans, and pickup trucks that make them feel like salt of the earth tough guys despite living in their 6,000 square foot energy sucking McMansions in suburban tracts 30 miles from their jobs, if they have one. The ignorance of the average American car buyer knows no bounds. The recent bounce back in auto sales was led by SUVs and pickups. The green clean cars are nothing but hype and bullshit. GM expects to sell about 10,000 Volts this year, and Nissan expects to sell about 25,000 Leafs in the United States, a piss in the ocean compared with the millions of sport wagons and SUVs purchased by Americans annually. Americans have the attention span of a gnat and are already dazed and confused by the surge in gas prices to $3.50 per gallon.

When oil prices spiked to $147 barrel in 2008, Americans were spending $467 billion per year for fuel. By early 2009, the collapse in energy prices due to the worldwide recession reduced the annual expenditure to $265 billion, freeing up over $200 billion for consumers to spend on other items, pay down debt, or save. Expenditures for fuel had already surged back to $400 billion before the recent spike in oil prices. Next stop $500 billion. That should do wonders for the faux economic recovery that has been touted by Obama and the MSM for the last year. The years of denial, lies, indecision, bad decisions, and inertia have left the country vulnerable and at the mercy of countries in far off lands that despise our way of life.

There are no good outcomes, only bad, really bad, and catastrophic. Take your pick. Could gas prices drop below $3.00 per gallon if the world sinks back into recession? Yes. But it would only be momentary. The easy to access supply is dwindling. The medium and long term direction of gas at the pump is up. There is nothing that can be done in the next five years to prevent significantly higher oil prices. A full court press of realistic ideas like converting our truck fleets to natural gas, a major effort to build nuclear power plants, more drilling, greater use of wind, geothermal, and solar would take at least a decade to have an impact. There is no consensus or resolve to undertake such an effort. Therefore, Americans will suffer the consequences. Be a good American and take advantage of GM’s no interest for 7 years deal on their biggest baddest SUVs and buy two. What could go wrong?

I don't agree with everything he says, but do with the jist of it.

 

[Scout]

The ME uprising will probably make a great scapegoat for the xtian/2ionist banksta cartel looting in the near future completely wiping away any memory of their evils for the idiot lemmings on their death march to the edge of the cliff. If oil continues to go parabolic and casaulity plays out, I can see this ploy working to their near-term benefit. They always need something to blame and most Americans feel as they are blameless. It won't be too long before they stage alien invasions claiming the aliens will not return Justin Bieber except for 1trillion dollars, therefore we will always need to print more dollars....

 

[SpasticGramps]

This is a great video. I just heard the best idea from the former Vice Chair of the Federal Reserve BANK of the US to help solve the oil problem. We need to cut interest rates. Yes, cut the 0-0.25% interest rate. These are the ideas from a diseased mind of a central planner.

Larry Meyer's Solution To Surging Oil Prices: "The Fed Should Cut Rates"

For those who need a good laugh this Saturday evening, we turn our attention to the man who singlehandely made frontrunning the Fed a (somehow legal) artform: Macroeconomic Advisors' Larry Meyer. This so-called pundit, who recently was caught in a debate with David Einhorn (if one may call the complete and utter mauling of someone for his absolute lack of comprehension of anything finance related, a debate), exposing him for the hollow chatterbox he is, and who only receives consultancy fees due to his close relationship with the Fed, which allows him to leak privileged Fed information to the likes of Bill Gross, Larry Fink and others who deem his services relevant, was on CNBC telling the heptabox panel that an oil shock is disinflationary, and that the way to deal with surging oil prices is to CUT interest rates. That's right: cut rates, which at last check were at 0-0.25% (6 minutes into the clip below). While we feel embarrassed for anyone who shares the same perspective as Meyer, who confirms that monetary groupthink is the deadliest form of contagion possible, what stuns us is how anyone could possibly pay to get this person's input on anything aside from what the Fed will do at any point in the future (an arrangement which should be made illegal as of yesterday). Which in itself begs the question: are the Feds finally bugging Macroeconomic Advisors' phone conversations with their clients? After all Gerson Lehrman et al are getting crushed as no hedge fund wants to get their inside information from the "expert networks" any more. Why should Larry Meyer's firm fare any different? Please somebody at the SEC or the DA office: explain that one to us...

Can't wait to see Larry's prediction of no QE3 pans out. Hilarious. Thank god for the FED. Wouldn't know where we would be without their great leadership. Probably bankrupt and printing money or something.

 

[SpasticGramps]

Looks like the FED is going to blame oil prices on the need for QE3.

Fed must be flexible given oil prices, Lockhart says Dallas Fed chief says prices could go even higher MarketWatch

WASHINGTON (MarketWatch) — The Federal Reserve may want to consider a third round of bond purchases if an oil shock materializes, a central bank official said Monday.

Dennis Lockhart, the president of the Atlanta Fed, said that while his first instinct is to be “very cautious” about making another round of bond purchases once the Fed’s $600 billion bond-buy program expires in June, he said he would consider them depending on oil prices.

Given the new risks from the Middle East turmoil, “I prefer a posture of flexibility as regards to policy options,” he said in a speech at the National Association for Business Economics.

Lockhart doesn’t actually have a vote on the matter until next year, though he does participate in Federal Open Market Committee meetings.

Noting that economic studies show a high correlation between oil shocks and the onset of recessions, Lockhart said it was possible that prices may rise to a level that would endanger the economic recovery and force the Fed to ease further with another round of asset purchases. Read MarketWatch First Take ‘Fed should ease in oil shock.’

Former IMF chief economist Michael Mussa said the Fed should “sit tight” and not feel the need to respond to the oil prices rise.

“There is a limited amount monetary policy can do,” Mussa said in an interview.

Wow. I'm shocked. Totally shocked. /sarcasim

They need to have some excuse to print more money. I wonder what it will be for QE4 and 5. I personally don't think we are going to make it to 4 myself. I've been wrong before though.

 

[Scout]

It seems we will have a similar episode to the Weimar hyperinflation with similar social outcomes like Germany had but much worse this time around since the dollar is the reserve currency. Will the real culprits of all the horror to come escape into the night once again?

As long as their is so much confusion and ignorance on these topics, it could probably go on for quite some time. The suspense gets to me at times which is when I re-connect with the herb....

 

[SpasticGramps]

Will the real culprits of all the horror to come escape into the night once again? I'm pretty fond of b9k9's musings on ZH....

As much as I want to say no, they probably will. The currency crisis and subsequent hyperinflation will be blamed on some external factor distraction. The Middle East uprising is looking like a promising scapegoat. Nevermind that it was us who through finally making impossible for the Middle East proles to eat caused them to rise up. And what's our solution. Debase the reserve currency more and further drive up inflation. Starve them some more. BRILLIANT!

Here is the long and short of it. If the Middle East proles don't get to eat then the US proles don't get any oil. Looks like Obummer may be looking at invading though with NATO's backing of course. Noble Peace Prize faux pas? Definitely need some war thrown into the mix to really destabilize things. All I know is I'm short equities and the US Dollar, long silver, oil, and WWIII.

 

[SpasticGramps]

Charles Biderman is the man. Rigged markets never end well.

Charles Biderman On How The Fed Continues To Rig The Market And Why There Will Be A QE 3...And 4

The last time Charles Biderman appeared on CNBC, he was carted onstage (and promptly off) in the late hours before Christmas Eve, when it was virtually assured nobody would hear the self-evident truths out of his mouth such as this one: "individuals have been selling, companies are net selling, insider selling and new offerings are swamping any buyback and any cash M&A activity since QE 2 was announced. Pension funds and hedge funds don't really have that much cash to invest. So what nobody's asking is what happens when QE 2 stops: if the only buyer is the Fed, and the Fed stops buying, I don't know what is going to happen...When I was on your show a year ago I was saying the same thing: we can't figure out who is doing the buying it has to be the government, and people said I was nuts. Now the government is admitting it is rigging the market." Now that the great muni scare forced retail to take proceeds from muni liquidations and invest in stocks just as the market topped out, CNBC brought Biderman on again, hoping to get something, anything, bullish out of the flow of funds expert. Wrong. "In December of 2009 received a lot of ridicule for saying that the Fed is rigging the market which as everybody is well aware." As for the "sustainable economic recovery" i.e., what happens to Quantitative Easing: "They probably will end for a while, we think there is going to be a QE3 and 4, or until the market says: "No Mas - we are not going to believe this game the Fed is playing... The Fed is printing over $100 billion a month to buy other assets and pay bills, and economic growth is picking up at a $200 billion annual rate. This is very inefficient method of boosting the economy, and then how do we repay these trillions that have been created out of thing air in the future." At which point the producer "screams get him off my show."

Oddly enough, this form of market manipulation by the Fed is precisely what Zero Hedge has been claiming since day one, prompting our legacy media followers to brand us on occasion as "conspiratorial." Ironically, it is precisely this kind of "conspiracy theorism" that is ultimately proven to be nothing but fact in this bizarro banana republic, now that the wheel of the Ponzi system are finally coming undone (see the recent deranged ramblings of one Bill Gross for more). Yet it hasn't stopped once upon a time blogger, CNBC regular and now Bloomberg columnist, Paul Kedrosky to declare from atop his status quo-worshipping altar that Zero Hedge is "too conspiratorial and too much of an intellectual monoculture." That's ok Paul, we realize that mainstream bashing of Zero Hedge in public, while fervently copying, pasting and/or paraphrasing from it, is all the rage for our less than sophisticated, but admittedly very, very polycultured, imitators. And yes, just like Biderman, we are happy to be called "conspiratorial" if that is the MSM's codeword for being proven right within 3 to 6 months... and actually having an original thought.

 

[Blueshark]

As much as I want to say no, they probably will. The currency crisis and subsequent hyperinflation will be blamed on some external factor distraction. The Middle East uprising is looking like a promising scapegoat. Nevermind that it was us who through finally making impossible for the Middle East proles to eat caused them to rise up. And what's our solution. Debase the reserve currency more and further drive up inflation. Starve them some more. BRILLIANT!

Here is the long and short of it. If the Middle East proles don't get to eat then the US proles don't get any oil. Looks like Obummer may be looking at invading though with NATO's backing of course. Noble Peace Prize faux pas? Definitely need some war thrown into the mix to really destabilize things. All I know is I'm short equities and the US Dollar, long silver, oil, and WWIII.

And the scary part of it is that I can see that very thing happening. God help the planet...

 

[igrowone]

it's easy to get caught up in the ups and downs of our current times
a crisis that affects us seems to be the worse thing possible, but a little perspective never hurts
a strange quote i heard today of Ronald Reagan's(not that i'm much of an admirerer)
he said that he wasn't too concerned about deficits, they tended to correct themselves
so we'll print money as long as we can get away with it, then we'll stop, because we can't get away with it anymore

 

[whodare]

it's easy to get caught up in the ups and downs of our current times
a crisis that affects us seems to be the worse thing possible, but a little perspective never hurts
a strange quote i heard today of Ronald Reagan's(not that i'm much of an admirerer)
he said that he wasn't too concerned about deficits, they tended to correct themselves
so we'll print money as long as we can get away with it, then we'll stop, because we can't get away with it anymore

im a glass half full kinda guy too but im not worried about us printing too much money and having a massive debt im worried about the consequences of it because the us dollar is ,was, or wont be soon, the worlds reference point for national wealth...

things like hyper inflation, civil unrest, high levels of poverty, destruction of middle class, world war, things of that nature...

take care

 

[igrowone]

im a glass half full kinda guy too but im not worried about us printing too much money and having a massive debt im worried about the consequences of it because the us dollar is ,was, or wont be soon, the worlds reference point for national wealth...

things like hyper inflation, civil unrest, high levels of poverty, destruction of middle class, world war, things of that nature...

take care

i heartily agree the dollar will be become a somewhat lesser currency, hopefully it's an orderly process
maybe the upside is the world will grow in some new and better(?) way - in an optimistic mood tonight

 

[SpasticGramps]

History tells us that correction we are about to go through will be a net plus for humanity, but the path to get there will be treacherous for many. Especially those who still believe the status-quo is going to continue forever.

What is happening is we are quickly transitioning from a global order with one hegemonic super-state. This is a uni-polar global configuration. History tells us that when there is a hegemonic power the world, believe it or not, is relatively stable as the super-power tends to control the agenda. Sometimes there is another superpower challenging the hegemon such that the configuration is bi-polar. Such was the case with the USSR in the Cold War. It's debatable whether or not this was a true bi-polar configuration as the USSR wasn't near the superpower the US was. Global wars in a bi-polar configuration are usually regional skirmishes for fear of MAD (mutually assured destruction) between the two superpowers.

With the United States quickly losing it's reserve currency status and quickly losing it's hegemonic influence in the world it is becoming multi-polar. We haven't seen this configuration since pre-WWI. Some argue pre-WWII, but I strongly disagree. This configuration is often the most volatile one. Great wars generally arise here as nations compete for hegemonic status and influence.

When can have all the UN Kumbaya we want, but in the end nation-states exist in a state of anarchy and act for their own interest. This is never more apparent than when the times get tough.

Will these trying times be good for humanity. Yes, in fact they are necessary for humanity to grow. Will the world be the same. Not IMO. There will be a New World Order. However you want to define that is up to individual perception.

 

[SpasticGramps]

FYI, a large spike in oil has preceded the last 5 out of 6 recessions.

 

[HempKat]

And the scary part of it is that I can see that very thing happening. God help the planet...

Definately, I mean if there is to be a battle of Armageddon to fullfill the Christian prophecy of the end of the world. Then we need to get a major conflict going on in that part of the world ASAP! Especially if it's supposed to be in 2012 as many believe.

 

[whodare]

Definately, I mean if there is to be a battle of Armageddon to fullfill the Christian prophecy of the end of the world. Then we need to get a major conflict going on in that part of the world ASAP! Especially if it's supposed to be in 2012 as many believe.

lol its not the christian prophecy you have to worry about but the radicalist islamist who truly believes in the mahdi... look it up...

 

[HempKat]

There will be a New World Order. However you want to define that is up to individual perception.

Isn't that going to happen, is in the process of happening anyway with the emergence of China and India as the new market of consumers that drive the world markets? I mean regardless of Berneke, The FED and printing of money?

I mean even if everything was all relatively pre 9/11 stable here and everyone was working and spending like normal, the government was in the black like it was pre 9/11 or at least substantially less in the red. The stock market was roughly at it's highest, etc. Things would still be heading this direction because of a much larger pool of consumers that has now been activated by companies shipping jobs and manufacturing overseas. Soon that market's influence will become greater and the best deals will go there. Just like Europe pays more for fuel because we are such a bigger market with a greater demand, soon we'll be the ones paying more because China and India is a much bigger market then us and people there can afford things now.

 

[HempKat]

lol its not the christian prophecy you have to worry about but the radicalist islamist who truly believes in the mahdi... look it up...

Frankly any extremist scares me be he Christian, Muslim, Jew, it doesn't matter.