Thought-Provoking Essay

Read THIS.

A few excerpts ...

The announcement in December by the Kuwaiti government that production had peaked and is now declining at the world’s second largest field, Burgan, passed without comment or even a blip in the price slide.

The fact that Iran on current trends is set to become an oil importer in six or seven years causes not the least anxiety. The world’s oil replacement ratio, that is to say the percentage of consumption that is replaced each year with new discovery, has fallen to 30% and keeps falling.

The truth of the matter is that the world is in the midst of an energy crisis, but neither the NYMEX nor the IPE seem to have noticed.

Instead, the market is worried, worried, worried about an American recession. We have news for the market. The recession arrived seven years ago and is gathering strength. GDP in real terms is contracting if one deflates it using an inflation index calculated the way it used to be calculated instead of the hedonic, chain-weighted nonsense that the government churns out to ensure that GDP stays positive. If Uncle Sam was still calculating the rate of inflation the way he did in 1970 when US oil production peaked, it would be over 10% per annum instead of the fictional 2.6% that the government claims today.

XX My one crit to this essay is the author is too focused on the US. True, we lead the global economy by the hand, but the global economy is growing more able to stand on its own every year. Nonetheless, whether you agree with him or not, it's a gripping read.

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