Debt Rattle Aug 21 2014: Oil, Solar, Dollars And Fairy Tales
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Dorothea Lange Country filling station owned by tobacco farmer, Granville County, NC Jul 1939 I woke up today to a request to comment on an article I
[See the full post at: Debt Rattle Aug 21 2014: Oil, Solar, Dollars And Fairy Tales]Falling costs in batteries, solar cells, oil? Why that’s deflationary. Quick, let’s get some price support legislation passed, along with higher taxes on energy, so the wars can continue to be financed.
If, in fact, oil goes to $150 from here, it will likely be due to a 50% devaluation in the buck. Devaluation which has already taken place, just that it hasn’t trickled all the way down to the pump yet.
Of course, bouts of social engineering for votes and profit might tweak the flow a bit, but in the end, the debt gets devalued.
On fuel economy standards, hell, put ’em all on scooters, and impose gas tax increases, to be allocated to Obamacare, to offset the additional costs incurred by those less balanced falling off of them. But, naturally, .gov will keep the suburbans. Essential personnel, mind you?
Absurdity rules the day when authority displaces market forces in determining outcomes. If leviathan stepped back, and energy was again allocated to it’s most productive uses, with no subsidies or protections, all would reach equilibrium again.
But, no-oooo-o,,, we need the same government that made this mess to “do more.”
It will.
I used to say if Osama had any balls he would attack the Saudi kingdom. Well there are means to be considered also but I think it’s fair to say no such attack on his home was on his radar. IS however is a different story.
Not that I can imagine how it would play out much less start except perhaps with some attacks on high people. I suppose attacks on the ports is possible, if they get planes and people to fly them which doesn’t seem likely. Much less going out into the vast desert with a lot of Shites in the region. Still the point is were the Kingdom to be attacked and its oil output impeded much less really hurt oil could go to the moon. Pick a year, any year, 15, 20, certainly by 25, what Nixon called the Big Enchalda is still that and the week its 40 years of pumping almost every possible barrel ends so will life as we know it.
Oil should rise to cover the costs of drilling for new oil, but a growing economy cannot afford it so it doesn’t. In the geopolitical turmoil of a few weeks back, the increases were more subdued than the Syrian headlines last year. I think prices across the economy will rise before the oil price. Remember, finance is absurd and banks are stupid. Drillers in the Bakken will continue intensive drilling until the financial institutions give the thumbs down.
Most of the attention is on guarding the oil and the oil pipelines. A far less risky way of crippling Saudi production would be to target the giant pumping stations that are pumping water into Ghawar, for example. These giant pumps cannot be readily replaced.
But since IS and the House of Saud are both Sunni, the odds of SA subsidizing IS may be higher than IS destroying Ghawar pumps.
Maxims for our times:
Power without responsibility is exhilarating, while it lasts.
Inefficiency is a necessary pillar of stability.
Situational ethics is no ethics.One thing I’d argue with here is the statement “solar panels must be replaced every 20-25 years, but coal plants last 50 years.” A solar panel will typically be converting at only 80% of its initial efficiency in 20 years (this is how the rated life is set), but it doesn’t magically stop producing energy precisely two decades after its manufacture. Inverters will need fans and electrolytic capacitors replaced, but at least one doesn’t have to go up on the roof to do that. In the meanwhile, the coal plant needs a small army of maintenance personnel and a steady stream of spare parts, to say nothing of mining and transporting the coal.
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