21:40 “Europe isn’t as bad energy-wise as it was projected to be six months ago.” I keep hearing analysts say this and it’s such silly logic. Just think about it for a moment. What they’re essentially saying is that Europe barely just had enough gas to get through the winter (and that still has enough gas to get through the winter). The question is never then asked, well, assuming Europe gets through this energy crisis, what did Europe have to do to get through the winger? Consume less gas. How much less? Enough to severely slow down economic growth. So we had he lockdowns which lowered consumption, and now rationing of energy. So to barely through the European economy had to be sacrificed? Is that really what anyone would call a success? Secondly, the largest wild card they are not considering is that Putin and OPEC could play with the oil supply. They’ve been so focused on gas supply they forget that poo, being such a tightly traded market, can easily hit $200 per barrel if not that much supply comes off the market. So what happens if Putin takes oil off the market? It sends oil higher. But won’t wont bankrupt Putin as he would have less oil to sell? No. Because oil price went up and there will always be balance demand for it. And let’s not get started on how long it will take take Europe to make up for the Russian gas AT AN AFFORDABLE price, if ever. This energy story is far from over. 22:21 WE WONT EVER be weaned off fossil fuels. It’s a matter of physics and solar and wind doesn’t have the energy density (among other things) to ever come close to replacing fossil fuel. Nuclear is the closest thing and the proper tech for the newer forms is still a ways off. Too far to replace in time to help increase economic growth. And even then it would mainly help replace the grid energy system (and that too would take decades in of itself), but even with that there are issues with lack of fungibility that only fossil fuels have. 26.42 Correct, time is what is required. However, the notion that if there is incentive at a high enough price there will be investment is also wrong. It is only right to the degree that the global economy can afford those higher prices. The world peaked in cheap oil long ago. What is left is low quality more expansive oil. There is a lot of oil that could be produced at $300 or more per barrel. Now tell me if the global economy can afford $300 oil and I’ll sell you a bridge I do not own. There is a window where oil price has to be affordable to the consumer to consume and produce and also profitable or high enough in price to profit from. If it goes to high in price, sure producers can profit, but economy slows down as people consume less. But if oil goes too low in price, it’s not profitable enough for many companies to produce. The age of cheap oil allowed for these things and how that has come to an end. Also, the energy return on energy invested or EROEI is lower than it was when we had cheap abundant oil. This is a big problem that lies in the realm of physics/entropy and now amount of money can fix that. 37.14 The alternative will be to ‘decivilize’ because there are two trends at play as driving factors working against us having cheap oil to civilize: 1) current oil deals have a yearly depletion rate. So just to keep producing to keep the worlds current standard of living we have to find more Saudi Arabia’s at affordable prices. That’s higher EROEI oil. That won’t be happening because large oil plays of cheap high EROEI oil like Saudi Arabia are finite. 2) In conjunction to depleting higher EROEI oil fields, the future oil plays will be more expensive lower EROEI oil. The reason why the oil price has to go up to produce is because it takes more energy to produce energy from it. We must dig or drill much deeper, in colder environments, both of which require more energy. And then after using more energy to get to it, we have less energy as the end product. Lower EROEI oil. So prices can only go up because it’s a proxy for the energy quality of the oil which is lower. This is what is gutting civilization. But remember, the global economy can only afford oil at a price so that will cause slower growth in of itself, and less growth in of itself guts civilization. But the oil price can only go up so high for as long as there is enough EROEI to sustain civilization itself. In other words we will try to pay any price to prevent decivilization but no price will be high enough to stop that because it’s a matter of physics and not money!
I guess like me you're a Physicist ( or maybe a scientist/engineer). Trouble is many people in banks and finance think economics is a science and it is NOT! :)
“Peak cheap oil” is just a revised version of “peak oil,” and it is just as much a myth as it was in the 1930s. The only reason we are on the verge of $200 oil is a global conspiracy of fools whose intent is to enforce an entirely gratuitous “energy transition” from abundant, reliable and cheap fossil fuels + nuclear to abundant but unscalable or unreliable alternatives. Reverse the forced energy transition and you reverse the looming shortage of cheap and reliable energy. It is very simple and reasonable, but when people such as the one on this panel are unwilling to mouth the words, what chance is there?
Highly intelligent reply. Usually I’m the one writing diatribes in the comments. 😂. Pleasure whenever I see someone already went there. The “green energy transition” is a nonsense scam on several levels. It’s about controlling the third world’s resources and the first world’s populations while dealing a body blow to countries like Russia. That’s the game, whatever they claim…
@@martynfenton4862 it could be much more scientific if we stopped constantly manipulating the free market. but at it’s core, it’s necessarily subjective. people value things differently because they have different needs/wants/preferences. we could make much more scientific strides by recognizing that and working to facilitate the expression of the intelligence of the market. instead, we destroyed the free market in interest rates, we manipulate various commodities for the benefit of a few (including precious metals for the benefit of fiat currencies), we tolerate government-sanctioned cartels in several key industries, we prop up bad companies and insane bureaucrats with easy credit, we bail out failed institution after failed institution, etc.
Very good points by Mike Kao
Mike is the man
"The DOLLAR is our currency, but it's your problem." - John Connally
Great discussion.
Great talk!
21:40 “Europe isn’t as bad energy-wise as it was projected to be six months ago.”
I keep hearing analysts say this and it’s such silly logic. Just think about it for a moment. What they’re essentially saying is that Europe barely just had enough gas to get through the winter (and that still has enough gas to get through the winter).
The question is never then asked, well, assuming Europe gets through this energy crisis, what did Europe have to do to get through the winger? Consume less gas. How much less? Enough to severely slow down economic growth.
So we had he lockdowns which lowered consumption, and now rationing of energy. So to barely through the European economy had to be sacrificed? Is that really what anyone would call a success?
Secondly, the largest wild card they are not considering is that Putin and OPEC could play with the oil supply. They’ve been so focused on gas supply they forget that poo, being such a tightly traded market, can easily hit $200 per barrel if not that much supply comes off the market. So what happens if Putin takes oil off the market? It sends oil higher. But won’t wont bankrupt Putin as he would have less oil to sell? No. Because oil price went up and there will always be balance demand for it. And let’s not get started on how long it will take take Europe to make up for the Russian gas AT AN AFFORDABLE price, if ever.
This energy story is far from over.
22:21 WE WONT EVER be weaned off fossil fuels. It’s a matter of physics and solar and wind doesn’t have the energy density (among other things) to ever come close to replacing fossil fuel. Nuclear is the closest thing and the proper tech for the newer forms is still a ways off. Too far to replace in time to help increase economic growth. And even then it would mainly help replace the grid energy system (and that too would take decades in of itself), but even with that there are issues with lack of fungibility that only fossil fuels have.
26.42 Correct, time is what is required. However, the notion that if there is incentive at a high enough price there will be investment is also wrong. It is only right to the degree that the global economy can afford those higher prices. The world peaked in cheap oil long ago. What is left is low quality more expansive oil. There is a lot of oil that could be produced at $300 or more per barrel. Now tell me if the global economy can afford $300 oil and I’ll sell you a bridge I do not own. There is a window where oil price has to be affordable to the consumer to consume and produce and also profitable or high enough in price to profit from. If it goes to high in price, sure producers can profit, but economy slows down as people consume less. But if oil goes too low in price, it’s not profitable enough for many companies to produce. The age of cheap oil allowed for these things and how that has come to an end.
Also, the energy return on energy invested or EROEI is lower than it was when we had cheap abundant oil. This is a big problem that lies in the realm of physics/entropy and now amount of money can fix that.
37.14 The alternative will be to ‘decivilize’ because there are two trends at play as driving factors working against us having cheap oil to civilize: 1) current oil deals have a yearly depletion rate. So just to keep producing to keep the worlds current standard of living we have to find more Saudi Arabia’s at affordable prices. That’s higher EROEI oil. That won’t be happening because large oil plays of cheap high EROEI oil like Saudi Arabia are finite. 2) In conjunction to depleting higher EROEI oil fields, the future oil plays will be more expensive lower EROEI oil.
The reason why the oil price has to go up to produce is because it takes more energy to produce energy from it. We must dig or drill much deeper, in colder environments, both of which require more energy. And then after using more energy to get to it, we have less energy as the end product. Lower EROEI oil.
So prices can only go up because it’s a proxy for the energy quality of the oil which is lower. This is what is gutting civilization. But remember, the global economy can only afford oil at a price so that will cause slower growth in of itself, and less growth in of itself guts civilization. But the oil price can only go up so high for as long as there is enough EROEI to sustain civilization itself.
In other words we will try to pay any price to prevent decivilization but no price will be high enough to stop that because it’s a matter of physics and not money!
I guess like me you're a Physicist ( or maybe a scientist/engineer). Trouble is many people in banks and finance think economics is a science and it is NOT! :)
“Peak cheap oil” is just a revised version of “peak oil,” and it is just as much a myth as it was in the 1930s. The only reason we are on the verge of $200 oil is a global conspiracy of fools whose intent is to enforce an entirely gratuitous “energy transition” from abundant, reliable and cheap fossil fuels + nuclear to abundant but unscalable or unreliable alternatives. Reverse the forced energy transition and you reverse the looming shortage of cheap and reliable energy. It is very simple and reasonable, but when people such as the one on this panel are unwilling to mouth the words, what chance is there?
Highly intelligent reply. Usually I’m the one writing diatribes in the comments. 😂. Pleasure whenever I see someone already went there. The “green energy transition” is a nonsense scam on several levels. It’s about controlling the third world’s resources and the first world’s populations while dealing a body blow to countries like Russia. That’s the game, whatever they claim…
@@martynfenton4862 it could be much more scientific if we stopped constantly manipulating the free market. but at it’s core, it’s necessarily subjective. people value things differently because they have different needs/wants/preferences. we could make much more scientific strides by recognizing that and working to facilitate the expression of the intelligence of the market. instead, we destroyed the free market in interest rates, we manipulate various commodities for the benefit of a few (including precious metals for the benefit of fiat currencies), we tolerate government-sanctioned cartels in several key industries, we prop up bad companies and insane bureaucrats with easy credit, we bail out failed institution after failed institution, etc.
How is this free?
Seems like mike lost a lot weight. Look good man
Well he has been long bonds for a bit.
is there a way to invest in EM or Europe that is more accretive to them than us? I hate to suggest esg. But damn
So glad I can invest in dirt and grease. Tech bored the shit out of me. I can tell green really wanted to segue into digital asset land hahaha
Charlie…. “Right, like, ya know”
In simple terms it’s the triffin dilemma in real time we live in now .
Just posted a video about why bitcoin is the best hedge against inflation
LMAO