- The document discusses concerns about future global oil production and rising energy consumption. It notes projections that the world will need to replace an amount of oil equivalent to Saudi Arabia's production every two years to meet demand, yet oil production is declining in most countries.
- Storage levels of natural gas in North America are at high levels, driving prices down. The ratio of oil to natural gas prices is at its lowest level in two decades.
- Issues covered include peak oil production potentially being reached globally by 2015, high decline rates in existing oil fields, and the challenges of increasing non-conventional sources like biofuels to meet future demand.
The document analyzes the historical global price of oil from 1970 to 2000, accounting for inflation and fluctuations in the US dollar's value. It introduces the concept of real global price of oil, which is the true price relative to OPEC countries that set the price. A graph shows that from 1986 to 1995, the real global price varied between $11-19 per barrel. The document also discusses events like the abandonment of the Bretton Woods agreement in 1971 that tied currency to gold, which led countries to exchange dollars for gold and impacted the oil market.
The chances in countriesâ economies after World War II: Petroleum Economics i...AI Publications
Â
This document discusses the history of oil economics in the Kurdistan region of Iraq. It examines how the Kurdistan region's economy depends heavily on oil revenues, covering 90% of the government's budget. The document analyzes annual data from 1995 to 2017 on the relationships between oil price, oil production value, and GDP in the Kurdistan region. It finds that increases in oil price and production value were positively correlated with increases in GDP over this period. Economic growth is important for diversifying the Kurdistan region's economy and making it less vulnerable to shocks in the oil market.
Oil is the major
source of energy from most of the developed as well as developing countries around the world.
Therefore a change in the supply of oil will significantly affect operations in most parts of the
world. There are a number of factors that affect the demand and supply of oil in the world.
- See more at: http://www.customwritingservice.org/blog/factors-affecting-demand-and-supply-of-oil
GROWTH FACTORS AND CHALLENGES FOR OIL MARKET; GROWTH FACTORS FOR OIL MARKET; Demographic Factors, Oil Demand, Motorization in Asian Countries, Upstream Costs Increase, Principal CHALLENGES FOR OIL MARKET, US Shale Oil Production, US shale oil production potential for well drilling, Other constraints, Deepwater Production, Iraqi production growth prospects, GTL â challenge for the oil market after 2020
Oil majors and traders role of opec,ocimf & intertankoKapilLamba6
Â
The document discusses several topics related to the oil and gas industry including:
- Big Oil refers to the world's largest publicly traded oil and gas companies, also known as supermajors, which include BP, Chevron, Eni, ExxonMobil, Royal Dutch Shell, Total, and ConocoPhillips.
- OPEC is an intergovernmental organization made up of 13 oil producing countries that aims to coordinate oil policies and ensure stability in the oil market. Major OPEC members include Saudi Arabia, Iran, Iraq, Kuwait, and Venezuela.
- INTERTANKO is an association representing independent tanker owners worldwide with over 190 members. It works on operational,
Petrocapita Feb 2010 Energy & Macro BriefingPetrocapita
Â
Petrocapita is an energy investment trust and is the second in a family of hard asset funds co-founded by the investment team. We believe that demand for energy will continue to move prices higher over the long-term. Petrocapita was created to allow investors to add professionally managed oil production directly to their portfolios. Petrocapita provides investors 10.25% interest and 10% profit participation.
NFSA Arbitrage Sample Article: Age of Scare-cityDavid Alex
Â
This was one of the feature articles for the NFSA Arbitrage Winter edition 2010. It included a feature Interview with Jeff Rubin, Former Chief Economist for the CIBC & Author of: *Why Your World Is About To Get A Whole Lot Smaller*
The document analyzes the historical global price of oil from 1970 to 2000, accounting for inflation and fluctuations in the US dollar's value. It introduces the concept of real global price of oil, which is the true price relative to OPEC countries that set the price. A graph shows that from 1986 to 1995, the real global price varied between $11-19 per barrel. The document also discusses events like the abandonment of the Bretton Woods agreement in 1971 that tied currency to gold, which led countries to exchange dollars for gold and impacted the oil market.
The chances in countriesâ economies after World War II: Petroleum Economics i...AI Publications
Â
This document discusses the history of oil economics in the Kurdistan region of Iraq. It examines how the Kurdistan region's economy depends heavily on oil revenues, covering 90% of the government's budget. The document analyzes annual data from 1995 to 2017 on the relationships between oil price, oil production value, and GDP in the Kurdistan region. It finds that increases in oil price and production value were positively correlated with increases in GDP over this period. Economic growth is important for diversifying the Kurdistan region's economy and making it less vulnerable to shocks in the oil market.
Oil is the major
source of energy from most of the developed as well as developing countries around the world.
Therefore a change in the supply of oil will significantly affect operations in most parts of the
world. There are a number of factors that affect the demand and supply of oil in the world.
- See more at: http://www.customwritingservice.org/blog/factors-affecting-demand-and-supply-of-oil
GROWTH FACTORS AND CHALLENGES FOR OIL MARKET; GROWTH FACTORS FOR OIL MARKET; Demographic Factors, Oil Demand, Motorization in Asian Countries, Upstream Costs Increase, Principal CHALLENGES FOR OIL MARKET, US Shale Oil Production, US shale oil production potential for well drilling, Other constraints, Deepwater Production, Iraqi production growth prospects, GTL â challenge for the oil market after 2020
Oil majors and traders role of opec,ocimf & intertankoKapilLamba6
Â
The document discusses several topics related to the oil and gas industry including:
- Big Oil refers to the world's largest publicly traded oil and gas companies, also known as supermajors, which include BP, Chevron, Eni, ExxonMobil, Royal Dutch Shell, Total, and ConocoPhillips.
- OPEC is an intergovernmental organization made up of 13 oil producing countries that aims to coordinate oil policies and ensure stability in the oil market. Major OPEC members include Saudi Arabia, Iran, Iraq, Kuwait, and Venezuela.
- INTERTANKO is an association representing independent tanker owners worldwide with over 190 members. It works on operational,
Petrocapita Feb 2010 Energy & Macro BriefingPetrocapita
Â
Petrocapita is an energy investment trust and is the second in a family of hard asset funds co-founded by the investment team. We believe that demand for energy will continue to move prices higher over the long-term. Petrocapita was created to allow investors to add professionally managed oil production directly to their portfolios. Petrocapita provides investors 10.25% interest and 10% profit participation.
NFSA Arbitrage Sample Article: Age of Scare-cityDavid Alex
Â
This was one of the feature articles for the NFSA Arbitrage Winter edition 2010. It included a feature Interview with Jeff Rubin, Former Chief Economist for the CIBC & Author of: *Why Your World Is About To Get A Whole Lot Smaller*
GROWTH FACTORS AND CHALLENGES FOR OIL MARKET; Demographic Factors; Oil Demand; Motorization in Asian Countries; Upstream Costs Increase; US Shale Oil Production; Deepwater Production; Iraqi production growth prospects; GTL â challenge for the oil market after 2020
This is the SPRE presentation from four experts on their 2017 oil price outlooks at the October 2016 full-house Society of Petroleum Resources Economists' meeting in Houston. They included Carl Larry (Frost & Sullivan), Raoul LeBlanc (IHS), Afo Ogunnaike (Wood Mackenzie) and Tony Starkey (S&P Global, Platts). The meeting was opened by JC Rovillain (Enhanced Value Recovery) and the panel discussion was moderated by Javan Meinwald (Marketing Upstream). Check out the YouTube video for the compete presentations and the panel discussion. https://www.youtube.com/channel/UC1sXSv6-jXlbBCQwtcB3kUA
Oil Prices have been extremely volatile during the last decade due to extensive speculative pressures on the commodity. in this episode of Energy Risk Management Series we show one of the methods of countering the same.
The Saturday Economist Oil Market Update 2015John Ashcroft
Â
The document analyzes factors influencing falling oil prices, including increased US shale oil production and OPEC's decision not to cut production. While lower prices benefit net oil importing countries, they hurt oil exporters. The 50% price drop is seen as disproportionate to actual supply/demand changes and may reflect speculative forces. Lower prices have mixed economic impacts, stimulating growth in importers but reducing revenues and potentially destabilizing exporters. The analysis suggests prices will rebound as speculative influences fade and fundamentals reassert themselves.
This document summarizes the challenges facing corporate management in turbulent times. It discusses 5 key forces: 1) the emergence of new regional economic blocks like China and India, 2) environmental impacts on industry from issues like sustainability and global warming, 3) the transition from a petroleum-based economy to renewable energy, 4) the effects of global warming on industry and trade, and 5) the restructuring of the global financial system. The document provides data and examples to illustrate each force and the volatility they create for corporate managers.
Markets for oil, gas, coal, electricity and renewable energy resources...Sidharth Gautam
Â
This document provides a summary of markets for various energy resources including oil, natural gas, coal, electricity, and renewable energy. It discusses the key characteristics of each market, including major producers and consumers, pricing regimes, historical crises that impacted prices, and emerging trends. The markets are complex with interactions between supply, demand, infrastructure for transportation, pricing benchmarks, and government policies. Renewable energy is an increasing focus as technologies progress and costs decline, while fossil fuels still dominate current energy production and trade globally.
This document discusses the future sustainability of oil and the consequences if oil is not sustainable. It summarizes that 2008 was a difficult "Annus Horribilis" for the oil industry as prices spiked to $147/barrel before crashing 74% in 3 months. The document argues that oil supply has likely peaked while demand continues to rise, creating a looming crisis. It also notes that the oil industry faces twin crises of an aging infrastructure and impending workforce shortage that high prices alone cannot solve. The future remains uncertain but the next year will be extremely challenging if the issues are not addressed.
This document summarizes an article that examines the impact of crude oil prices on the global economy. It discusses how oil prices are determined by supply and demand factors. Recently, oil prices have been affected by additional factors like increased oil production in the United States. The document outlines objectives to analyze the effects of oil price fluctuations on different economies and sectors. It also reviews previous literature on the relationship between oil prices, inflation, and prices of other commodities like gold. Finally, it lists the top 10 most indebted oil companies globally and their total debt amounts, with Petrobras having the highest debt of $120.6 billion.
150512 | Industrie & Energie | Is Saudi Arabia still ruling the OPEC? | Prese...Flevum
Â
OPEC, led by Saudi Arabia, has flooded the market with oil, causing prices to drop from $115 to $65 per barrel since June 2014. This was likely a strategic move to maintain market share and discourage production from US shale and other sources. However, many OPEC members need higher prices around $100 to balance their budgets without cutting spending. With US tight oil production rising and global demand weaker, it is uncertain whether OPEC can easily control prices going forward.
Financial Algorithms presents the energy trading scenario for the year 2016. In this presentation, after examining various fundamental factors in energy sector, FA forecasts the crude oil price, gasoline & natural gas price levels for the year 2016; in case of mean volatility levels and high volatility levels, both. FA also focuses on how to model price levels and volatility surfaces in low volatility and high volatility scenarios under forward & forward-forward models using various energy contracts and spreads i.e. crack spread. Various greek sensitivities including second order & third order greeks, which can be helpful in projecting the price & volatility levels, are also described. At the end, correlation factors, fundamental & technical both, are discussed. These correlation factors are exogenous in price forecasting, and new emerging trends which can affect the energy trading in a long run also been discussed.
OPEC is an intergovernmental organization comprised of 11 developing countries whose economies are heavily reliant on oil revenues. Within OPEC, Saudi Arabia has often played a dominant role in climate negotiations due to its large oil production and close ties to the oil industry. However, OPEC is a heterogeneous group with differing interests. While OPEC brings negotiating experience and resources to the G77, Saudi Arabia in particular has opposed emissions reductions and disrupted negotiations by linking issues in a way that frustrates other G77 countries. This report analyzes OPEC's role within the G77 in UNFCCC negotiations and its implications for other developing nations.
Carbon Bubble - Making Sense of a "Fossil Market"Timon Henze
Â
The document discusses the concept of a "carbon bubble" where fossil fuel companies' assets are overvalued since they assume all reserves will be burned, contradicting the goal of limiting global warming to 2C. This poses major financial risks. It advocates strategies like divestment campaigns and removing fossil fuel subsidies to exert political and market pressure for climate action. If taken advantage of now, low oil prices and renewable energy advances provide an opportunity to rationalize energy policies and transition to a cheaper, greener system.
The document analyzes recent declines in global oil prices. It provides forecasts from various agencies on expected oil prices in 2014-2015. The decline is attributed to excess supply from the US shale oil boom and OPEC's decision not to cut production. This has weakened OPEC's dominance of the oil market and power over pricing. The shale revolution has made the US more energy independent and reduced its imports. Lower prices could hurt investments in new production and some US shale is uneconomical below $80 per barrel, suggesting prices may stabilize.
The document discusses the history of petroleum politics and the formation of OPEC. It notes that the Achnacarry Agreements established price control in the 1930s in response to an oil boom. OPEC was formed in 1960 by Venezuela, Iran, Iraq, Saudi Arabia and Kuwait to give producing countries more control over oil incomes. Through production quotas and cooperation, OPEC gained the ability to control oil prices in the 1970s. The oil shocks of 1973 and 1979 demonstrated this power and increased prices. However, OPEC lost influence in the 1980s due to new producers and internal conflicts.
An Investigation of Crude Oil and its Implication for Financial Markets Priesnell Warren â
Â
This research paper seeks to unearth the possible repercussions of fluctuations in Crude Oil markets and how they will affect global trade and financial markets. Crude oil or Black Gold is one of the worldâs most precious commodities as its change in price affects the entire economy.
Globalization and its impact on indias petroleum exportsIAEME Publication
Â
This document analyzes the impact of globalization on India's petroleum exports. It provides background on India's petroleum industry and policy pre- and post-globalization. Prior to globalization in the 1980s, India's petroleum exports were minimal, averaging around $30 million annually from 1970-1980 due to a policy of self-sufficiency. After adopting liberalization and privatization in 1991, exports grew substantially, averaging around $5912.75 million annually as production and the private sector expanded under less regulation. The document uses data from 1970-1990 to represent the pre-globalization period and analyzes exports before and after globalization to determine globalization's impact on India's petroleum trade.
Greetings,
Attached FYI ( NewBase Special 29 March 2015 ) , from Hawk Energy Services Dubai . Daily energy news covering the MENA area and related worldwide energy news. In todaysâ issue you will find news about:-
âą Yemen Current Campaign wonât affect Oil flow
âą Saudi SABIC: Trade liberalization driving force for Asiaâs sustainability
âą Ethiopia Expects to Produce Gas by 2017
âą UK:Egdon provides update on Wressle-1 well testing
âą Pakistan gets first gas from LNG terminal
âą U.S. ethanol exports in 2014 reach highest level since 2011
âą Oil prices ease as market downplays supply threat from Yemen
âą Why bombing Yemen (Tiny Oil Producer) Is Roiling the Energy Market
âą Upstream capital expenditure declined 12% year-over-year in 4Q-2014
As this daily news periodical is free for you, we would appreciate your actions to send to all interested parties that you may wish. Also note that if you or your organization wish to include your own article or advert in our circulations, please send it to :-
khdmohd@hotmail.com or khdmohd@hawkenergy.net
Best Regards.
Khaled Al Awadi
Energy Consultant & NewBase Chairman - Senior Chief Editor
MS & BS Mechanical Engineering (HON), USA
Emarat member since 1990
ASME meme since 1995
Hawk Energy since 2010
In this post, I try to discuss the structural changes causing oil price volatility. I also apply 'Game Theory' concepts to analyze the behavior of various stake holders. I conclude by making a prediction on oil prices based on my analysis.
MSC301- The Impact of Change in Oil Price Samiya Yesmin
Â
Course: MSC301- Production-Operations Management
Sr. Lecturer: Md. Tamzidul Islam
This is paper on the impact of change in Oil Price, with regards to Supply Chain Management and production.
TD Securities Calgary Energy Conference 2014Enbridge Inc.
Â
Al Monaco, President and CEO, Enbridge Inc. discussed the strategic imperative of energy market access before an audience of investors, business leaders, and energy industry representatives.
The document discusses the global debt problem and its implications for economic growth and degrowth strategies. It argues that massive debt write-downs are inevitable due to an impending economic collapse brought on by unsustainable debt levels. This collapse will result in the degrowth wanted by proponents of degrowth, but risks restoring pro-growth systems afterwards. Short-term solutions like debt forgiveness or creating non-debt money are proposed to avoid economic and social breakdown in the interim. Long-term, a dual currency system is suggested to separate money for spending and saving.
GROWTH FACTORS AND CHALLENGES FOR OIL MARKET; Demographic Factors; Oil Demand; Motorization in Asian Countries; Upstream Costs Increase; US Shale Oil Production; Deepwater Production; Iraqi production growth prospects; GTL â challenge for the oil market after 2020
This is the SPRE presentation from four experts on their 2017 oil price outlooks at the October 2016 full-house Society of Petroleum Resources Economists' meeting in Houston. They included Carl Larry (Frost & Sullivan), Raoul LeBlanc (IHS), Afo Ogunnaike (Wood Mackenzie) and Tony Starkey (S&P Global, Platts). The meeting was opened by JC Rovillain (Enhanced Value Recovery) and the panel discussion was moderated by Javan Meinwald (Marketing Upstream). Check out the YouTube video for the compete presentations and the panel discussion. https://www.youtube.com/channel/UC1sXSv6-jXlbBCQwtcB3kUA
Oil Prices have been extremely volatile during the last decade due to extensive speculative pressures on the commodity. in this episode of Energy Risk Management Series we show one of the methods of countering the same.
The Saturday Economist Oil Market Update 2015John Ashcroft
Â
The document analyzes factors influencing falling oil prices, including increased US shale oil production and OPEC's decision not to cut production. While lower prices benefit net oil importing countries, they hurt oil exporters. The 50% price drop is seen as disproportionate to actual supply/demand changes and may reflect speculative forces. Lower prices have mixed economic impacts, stimulating growth in importers but reducing revenues and potentially destabilizing exporters. The analysis suggests prices will rebound as speculative influences fade and fundamentals reassert themselves.
This document summarizes the challenges facing corporate management in turbulent times. It discusses 5 key forces: 1) the emergence of new regional economic blocks like China and India, 2) environmental impacts on industry from issues like sustainability and global warming, 3) the transition from a petroleum-based economy to renewable energy, 4) the effects of global warming on industry and trade, and 5) the restructuring of the global financial system. The document provides data and examples to illustrate each force and the volatility they create for corporate managers.
Markets for oil, gas, coal, electricity and renewable energy resources...Sidharth Gautam
Â
This document provides a summary of markets for various energy resources including oil, natural gas, coal, electricity, and renewable energy. It discusses the key characteristics of each market, including major producers and consumers, pricing regimes, historical crises that impacted prices, and emerging trends. The markets are complex with interactions between supply, demand, infrastructure for transportation, pricing benchmarks, and government policies. Renewable energy is an increasing focus as technologies progress and costs decline, while fossil fuels still dominate current energy production and trade globally.
This document discusses the future sustainability of oil and the consequences if oil is not sustainable. It summarizes that 2008 was a difficult "Annus Horribilis" for the oil industry as prices spiked to $147/barrel before crashing 74% in 3 months. The document argues that oil supply has likely peaked while demand continues to rise, creating a looming crisis. It also notes that the oil industry faces twin crises of an aging infrastructure and impending workforce shortage that high prices alone cannot solve. The future remains uncertain but the next year will be extremely challenging if the issues are not addressed.
This document summarizes an article that examines the impact of crude oil prices on the global economy. It discusses how oil prices are determined by supply and demand factors. Recently, oil prices have been affected by additional factors like increased oil production in the United States. The document outlines objectives to analyze the effects of oil price fluctuations on different economies and sectors. It also reviews previous literature on the relationship between oil prices, inflation, and prices of other commodities like gold. Finally, it lists the top 10 most indebted oil companies globally and their total debt amounts, with Petrobras having the highest debt of $120.6 billion.
150512 | Industrie & Energie | Is Saudi Arabia still ruling the OPEC? | Prese...Flevum
Â
OPEC, led by Saudi Arabia, has flooded the market with oil, causing prices to drop from $115 to $65 per barrel since June 2014. This was likely a strategic move to maintain market share and discourage production from US shale and other sources. However, many OPEC members need higher prices around $100 to balance their budgets without cutting spending. With US tight oil production rising and global demand weaker, it is uncertain whether OPEC can easily control prices going forward.
Financial Algorithms presents the energy trading scenario for the year 2016. In this presentation, after examining various fundamental factors in energy sector, FA forecasts the crude oil price, gasoline & natural gas price levels for the year 2016; in case of mean volatility levels and high volatility levels, both. FA also focuses on how to model price levels and volatility surfaces in low volatility and high volatility scenarios under forward & forward-forward models using various energy contracts and spreads i.e. crack spread. Various greek sensitivities including second order & third order greeks, which can be helpful in projecting the price & volatility levels, are also described. At the end, correlation factors, fundamental & technical both, are discussed. These correlation factors are exogenous in price forecasting, and new emerging trends which can affect the energy trading in a long run also been discussed.
OPEC is an intergovernmental organization comprised of 11 developing countries whose economies are heavily reliant on oil revenues. Within OPEC, Saudi Arabia has often played a dominant role in climate negotiations due to its large oil production and close ties to the oil industry. However, OPEC is a heterogeneous group with differing interests. While OPEC brings negotiating experience and resources to the G77, Saudi Arabia in particular has opposed emissions reductions and disrupted negotiations by linking issues in a way that frustrates other G77 countries. This report analyzes OPEC's role within the G77 in UNFCCC negotiations and its implications for other developing nations.
Carbon Bubble - Making Sense of a "Fossil Market"Timon Henze
Â
The document discusses the concept of a "carbon bubble" where fossil fuel companies' assets are overvalued since they assume all reserves will be burned, contradicting the goal of limiting global warming to 2C. This poses major financial risks. It advocates strategies like divestment campaigns and removing fossil fuel subsidies to exert political and market pressure for climate action. If taken advantage of now, low oil prices and renewable energy advances provide an opportunity to rationalize energy policies and transition to a cheaper, greener system.
The document analyzes recent declines in global oil prices. It provides forecasts from various agencies on expected oil prices in 2014-2015. The decline is attributed to excess supply from the US shale oil boom and OPEC's decision not to cut production. This has weakened OPEC's dominance of the oil market and power over pricing. The shale revolution has made the US more energy independent and reduced its imports. Lower prices could hurt investments in new production and some US shale is uneconomical below $80 per barrel, suggesting prices may stabilize.
The document discusses the history of petroleum politics and the formation of OPEC. It notes that the Achnacarry Agreements established price control in the 1930s in response to an oil boom. OPEC was formed in 1960 by Venezuela, Iran, Iraq, Saudi Arabia and Kuwait to give producing countries more control over oil incomes. Through production quotas and cooperation, OPEC gained the ability to control oil prices in the 1970s. The oil shocks of 1973 and 1979 demonstrated this power and increased prices. However, OPEC lost influence in the 1980s due to new producers and internal conflicts.
An Investigation of Crude Oil and its Implication for Financial Markets Priesnell Warren â
Â
This research paper seeks to unearth the possible repercussions of fluctuations in Crude Oil markets and how they will affect global trade and financial markets. Crude oil or Black Gold is one of the worldâs most precious commodities as its change in price affects the entire economy.
Globalization and its impact on indias petroleum exportsIAEME Publication
Â
This document analyzes the impact of globalization on India's petroleum exports. It provides background on India's petroleum industry and policy pre- and post-globalization. Prior to globalization in the 1980s, India's petroleum exports were minimal, averaging around $30 million annually from 1970-1980 due to a policy of self-sufficiency. After adopting liberalization and privatization in 1991, exports grew substantially, averaging around $5912.75 million annually as production and the private sector expanded under less regulation. The document uses data from 1970-1990 to represent the pre-globalization period and analyzes exports before and after globalization to determine globalization's impact on India's petroleum trade.
Greetings,
Attached FYI ( NewBase Special 29 March 2015 ) , from Hawk Energy Services Dubai . Daily energy news covering the MENA area and related worldwide energy news. In todaysâ issue you will find news about:-
âą Yemen Current Campaign wonât affect Oil flow
âą Saudi SABIC: Trade liberalization driving force for Asiaâs sustainability
âą Ethiopia Expects to Produce Gas by 2017
âą UK:Egdon provides update on Wressle-1 well testing
âą Pakistan gets first gas from LNG terminal
âą U.S. ethanol exports in 2014 reach highest level since 2011
âą Oil prices ease as market downplays supply threat from Yemen
âą Why bombing Yemen (Tiny Oil Producer) Is Roiling the Energy Market
âą Upstream capital expenditure declined 12% year-over-year in 4Q-2014
As this daily news periodical is free for you, we would appreciate your actions to send to all interested parties that you may wish. Also note that if you or your organization wish to include your own article or advert in our circulations, please send it to :-
khdmohd@hotmail.com or khdmohd@hawkenergy.net
Best Regards.
Khaled Al Awadi
Energy Consultant & NewBase Chairman - Senior Chief Editor
MS & BS Mechanical Engineering (HON), USA
Emarat member since 1990
ASME meme since 1995
Hawk Energy since 2010
In this post, I try to discuss the structural changes causing oil price volatility. I also apply 'Game Theory' concepts to analyze the behavior of various stake holders. I conclude by making a prediction on oil prices based on my analysis.
MSC301- The Impact of Change in Oil Price Samiya Yesmin
Â
Course: MSC301- Production-Operations Management
Sr. Lecturer: Md. Tamzidul Islam
This is paper on the impact of change in Oil Price, with regards to Supply Chain Management and production.
TD Securities Calgary Energy Conference 2014Enbridge Inc.
Â
Al Monaco, President and CEO, Enbridge Inc. discussed the strategic imperative of energy market access before an audience of investors, business leaders, and energy industry representatives.
The document discusses the global debt problem and its implications for economic growth and degrowth strategies. It argues that massive debt write-downs are inevitable due to an impending economic collapse brought on by unsustainable debt levels. This collapse will result in the degrowth wanted by proponents of degrowth, but risks restoring pro-growth systems afterwards. Short-term solutions like debt forgiveness or creating non-debt money are proposed to avoid economic and social breakdown in the interim. Long-term, a dual currency system is suggested to separate money for spending and saving.
The document summarizes key points about peak oil and its implications. It discusses how the world's oil production will likely peak in the near future as existing oil fields decline, and global oil demand is expected to outpace declining production. This will lead to higher oil prices and economic difficulties as less oil becomes available to fuel continued growth. Planning and development will need to adapt to a future with less available energy by promoting conservation, local production, and reduced reliance on long distance transportation of goods and people.
This report discusses the recent decline in oil prices and the battle between OPEC and the United States for control of the oil market. Oil prices fell from over $110 per barrel in 2014 to under $50 per barrel in early 2015 due to increased production from the U.S. and other non-OPEC countries. While lower prices benefited consumers and some economies, they hurt oil-producing countries. The U.S. has significantly increased oil production in recent years through fracking and other methods. As a result, OPEC is losing its dominance over the oil market and control over prices. The oversupply of oil from both OPEC and non-OPEC producers means prices are expected to remain low
Agcapita February 2012 Briefing - Spare a Moment for the Real EconomyVeripath Partners
Â
âAccording to the Mercer Pension Health Index, the decline in longterm interest rates over the past six months has brought the funded status of Canadian pension funds near the all-time low reached in 2008 (Chart 20). This index declined from 71 per cent in the second quarter of 2011 to 64 per cent at the end of October, indicating that a representative pension plan faces a higher risk of being unable to fully meet its financial obligations.â
Mercer Capital's Value Focus: Energy Industry | 3Q 2015 | Segment: Explorati...Mercer Capital
Â
Mercer Capital's Energy Industry newsletter provides perspective on valuation issues. Each newsletter also typically includes a macroeconomic trends, industry trends, and guideline public company metrics.
This document discusses several issues facing the global community, including climate change, population growth, demands for food and energy, and water scarcity. It notes that projections simply extrapolate past trends, while forecasts try to account for changing circumstances. The future likely holds reduced standards of living in western nations if changes are not made. Climate change will impact weather patterns and water availability globally and in the UK. Growing demands for food and energy are stressing limited resources.
The document summarizes the global economic outlook following the 2008 financial crisis. It discusses different theories on the shape and strength of economic recoveries after financial crises. It then analyzes the economic situations and outlooks of various regions and countries around the world, including challenges faced by developed economies in Europe and growth prospects for emerging economies such as China, India, and countries in the Middle East.
The document discusses the history and future of fossil fuels. It describes the "Golden Age" of oil from 1859 to 1960 when discoveries grew rapidly. The Hubbert peak theory from 1956 correctly predicted that US oil production would peak around 1970. While new sources have been found, overall production is still expected to decline as conventional sources diminish. The end of cheap and abundant oil poses major economic challenges but also opportunities to transition to more sustainable energy sources.
NNFCC market review feedstocks issue seven october 2012NNFCC
Â
Welcome to the October 2012 issue of our market review for biomass feedstocks. As the UKâs crop harvest draws to a close, it is not only remarkable for being two weeks later than normal and for producing the lowest yields seen since the 1980s but it could also play its part in causing a major shift in EU biofuel policy.
Transition Town Model: UK Industry Task Force Report on Peak Oilmcgarciavallejo
Â
This report by the UK Industry Taskforce on Peak Oil & Energy Security provides two expert opinions on the risk of peak oil production. Both opinions agree that the era of "easy oil" is over and that global oil production will soon fail to meet growing demand. The taskforce considers a "descent" scenario, where global production steadily falls, to be highly probable. It fears a possible "collapse" scenario. The report expresses concern about infrastructure problems in the oil industry and calls for a mandate to mobilize low-carbon energy alternatives, to avoid over-reliance on high-carbon options like coal-to-liquids in response to peak oil risks. It argues that energy policy priorities may need reversal to adequately address the threat
What the drop in oil prices means for the economy and office marketsJLL
Â
Lower oil prices will negatively impact energy companies through reduced profit margins and capital spending cuts, leading to potential job losses. However, lower gas prices provide an economic stimulus for consumers and other industries through substantial savings. While energy-focused office markets may see weaker demand from energy companies scaling back, the broader economic benefits of low oil prices and diversifying economies will help offset negative impacts on office fundamentals. The long-term impact on office markets depends on the level of mergers and acquisitions in the energy sector and whether prices remain low, increasing vacant space through consolidation.
The document provides an analysis of the causes of the current global oil crisis from an Islamic perspective in 3 sentences:
The high price of oil is primarily due to the depreciation of the US dollar which oil is priced in, as well as increased global demand and speculation in oil markets. Muslim rulers have also failed to properly utilize and distribute oil wealth or invest in infrastructure, and the absence of an Islamic caliphate system has led to instability, poverty, and injustice in the Muslim world. Only by returning to the Islamic way of life and establishing a caliphate can the Muslim world hope to fairly manage its oil resources and achieve economic progress.
The document provides an analysis of the causes of the current global oil crisis from an Islamic perspective in 3 sentences:
The high price of oil is primarily due to the depreciation of the US dollar which oil is priced in, as well as increased global demand and speculation in commodity markets. Muslim rulers have failed to properly utilize and distribute oil wealth or invest in infrastructure, and the absence of an Islamic economic system has led to instability, poverty, and injustice. Only by reestablishing the Khilafah can the Muslim world achieve unity, prosperity, and a just system for managing resources like oil according to Islamic principles.
EY Price Point: global oil and gas market outlook (Q4, October 2020)EY
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Oil and gas prices have recovered steadily from their lows and are relatively stable, but that stability is supported by the combination of purposeful withholding of production by oil-producing countries and economic stress on upstream independents. Oil prices closed the quarter roughly where they started it, while refining spreads were down slightly. LNG spreads were substantially higher at the end of Q3 than they were at the beginning of the quarter but are still roughly half of what is generally thought of as sustainable.
Going forward, the market will be looking closely at how the economy and demand respond to new developments with respect to a potential COVID-19 vaccine and the US election.
Between 2014-2015, crude oil prices fell more than 50% due to excess supply and uncertain demand. The US has increased shale oil production, reducing imports and maintaining high stock levels. China's economic slowdown has weakened oil demand. Saudi Arabia wants to maintain market share by keeping production high to weaken shale producers' profitability. Low prices are expected to continue into 2018 as supply remains high and demand growth slows. Energy companies must optimize operations to improve efficiency in this challenging market.
The document provides an overview of crude oil markets including key facts, figures and country profiles. It discusses the top oil producing and consuming countries. Saudi Arabia has the largest proven reserves while the US is the top consumer. China and India are major growing consumers increasing imports to meet demand. Geopolitical and economic factors influence prices along with inventories and production from OPEC.
Similar to Investing in Agriculture - September Agcapita (20)
Veripath has over 90,000 (2021) acres across its Canadian row-crop portfolios and its principals have been investing in the Canadian farmland space since 2007, including creating the first RRSP eligible Canadian farmland fund. Minimum and zero tillage methodologies have very high penetration in Canadian prairies (AB, SK and MB). These tillage techniques are accepted to increase carbon/biomass in the soil and are a key component of conservation/regenerative agriculture practices. Veripath portfolios have minimum and zero tillage usages levels that on average are materially higher
than baseline provincial levels
Canadian Farmland - Saskatchewan Provincial Fact SheetVeripath Partners
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Saskatchewan farmland ownership regulations allow Canadian citizens and permanent residents, as well as fully Canadian-owned corporations and organizations, to own farmland without restrictions. Non-residents and foreign entities can own up to 10 acres, while partially foreign-owned entities controlled by Saskatchewan residents can own up to 320 acres. Saskatchewan accounts for 38% of Canadian farmland and major crops include wheat, canola, oats, lentils, and barley. The province has over 68 million acres of arable land and produces over 1.78 million metric tonnes of total crops annually.
Quebec has ownership regulations for farmland that deem corporations and other legal persons as residents based on majority ownership and control by Quebec residents. Non-residents can apply to purchase farmland if the land is unsuitable for cultivation or livestock, or if the non-resident intends to settle in Quebec within 4 years and become a citizen or permanent resident. The province limits non-resident purchases to 1,000 hectares per year. The fact sheet also provides key metrics on Quebec farmland, including 8 million acres of arable land representing 5% of Canadian farmland. Major crops include corn, soybeans, barley, oats and wheat.
- Agricultural land use in Ontario is governed by the 2005 Provincial Policy Statement which does not restrict foreign or institutional ownership of farmland.
- Key metrics about Ontario farmland include 13 million acres of arable land, which makes up 8% of Canadian farmland. The average farm size is 57 acres.
- Major crops grown in Ontario include corn at 16% of production, wheat at 16%, and soybeans at 25%.
Legislation in Manitoba allows foreign ownership of up to 40 acres of farmland unless granted an exemption. Only Canadian citizens, permanent residents, and Canadian-controlled corporations and entities can purchase unlimited amounts of farmland. Manitoba has 19 million acres of arable land, representing 11% of Canadian farmland. The major crops grown are wheat, canola, barley, oats, corn, and soybeans.
British Columbia farmland statistics:
- There are 7 million acres of arable land in BC, comprising 4% of total Canadian farmland.
- Major crops grown in BC include wheat (25%), barley (25%), soybeans (24%), and canola (23%).
- The average farm size in BC is 240 acres. Farmland in BC is regulated by the Agricultural Land Commission but there are no restrictions on institutional or foreign ownership of farmland.
Alberta has no restrictions on institutional or foreign ownership of farmland. It has 52 million acres of arable land, comprising 31% of Canadian farmland. Major crops include wheat (48%), canola (23%), and barley (23%). The average farm size is 23 acres.
Alberta accounts for 31% of Canadian farmland and produces over 1.2 million metric tonnes of crops annually. The major crops grown in Alberta are wheat, canola, and barley. The average farm size in Alberta is approximately 23 acres. Canadian citizens and companies are not restricted by foreign ownership regulations when purchasing Alberta farmland.
"Show me the incentive and I'll show you the outcome" â Veripath Farmland Funds Q4 Investor Letter: Investing in a World of Financial Repression, Negative Real Rates, Valuation âChallengesâ and Inflationary Forces.
Do G7 governments have an incentive to attempt to keep inflation higher for longer and real rates lower for longer? Negative real rates across a broad spectrum of credit assets are a graphic sign that we inhabit a world of financial repression orchestrated by central banks at the formal/informal behest of sovereign borrowers. In a normally functioning market, lenders do not provide capital to borrowers for negative yields â i.e., they do not pay for the privilege of lending. It goes without saying we are not in a normally functioning market.
Veripath Research "As people in the emerging economies of India and China make the transition to western standards of
living there is an often-overlooked issue â their water
consumption is rising dramatically.
Veripath Farmland Partners Research - portfolio optimization using farmland a...Veripath Partners
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A review of the Canadian farmland market over the last 30 years reveals: a farmland holding would have improved the financial performance of typical investor portfolios; realized volatility that was lower than stocks; realized returns that were greater than bonds; a low correlation to traditional financial asset returns; and most importantly domestic institutional and retail investors are clearly under-invested relative to efficient frontier analysis.
Are fiscal/monetary conditions affecting the macro thesis for Canadian farmland investments? Do publicly traded equity investments hedge all inflation regimes? Canada's debt to GDP - looming threat or irrelevancy?
- The document discusses Canadian farmland as an investment during periods of low or negative real interest rates (when inflation is higher than nominal interest rates). It finds that farmland appreciates significantly more during such periods, averaging 11.3% annual returns, compared to periods of higher real rates where returns are barely positive.
- Canadian farmland demonstrated resilience during the 2020 COVID-19 economic disruption, with appreciation of 3.6-8% across provinces.
- Soft commodity prices have increased noticeably in recent quarters, benefiting Canadian farmland and food producers.
This newsletter discusses recent economic and monetary policies that have led to rising government debt and money printing. It summarizes the history of past currency failures in France and Germany when governments excessively issued paper currencies. The author argues that current policies of unlimited deficit spending and money printing will not lead to lasting prosperity and will end in economic problems. The newsletter recommends investing in assets that benefit from emerging market growth, reduce counterparty risk, hedge inflation, and have inelastic demand to improve portfolio returns in this environment.
Equicapita Announces Acquisition of Majority of CCMETVeripath Partners
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Equicapita Income Trust and Equicapita Income LP (collectively âEquicapitaâ or the
âFundâ) are pleased to announce the completion of the acquisition of a 70% equity ownership of CCMET
Group of Companies, a leading provider of integrated, full service materials engineering and testing
services throughout Western Canada, by an affiliate of the Fund.
Equicapita Reaches $100M in Subscribed Trust Capital Veripath Partners
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Equicapita Income Trust announces it has completed the raise of $100M in subscribed preferred trust capital.
Stephen Johnston, a partner at Equicapita reports, "Equicapita is pleased to have passed the $100M mark in subscribed capital. Equicapita is part of a group of innovative Calgary based alternative funds seeking alternative investments. As managers we seek to deliver superior investment returns with lower volatility than public markets through private equity investing that combines strong underlying asset fundamentals and a disciplined value style. In practice we look for investments with: established macro drivers (typically in the form of a favourable supply/demand situation) and: a margin of safety (in the form of discounted asset prices, ability to acquire cash flow cheaply). To date, we have successfully deployed capital in multiple investment strategies via a group of funds â in farmland, SME PE, energy and non-bank lending â and currently have approximately $300M in unlevered AUM.
Agcapita is pleased to announce that Agcapita Fund IV has launched. Agcapita Fund V is a $20 million offering and is the only RRSP eligible farmland investment vehicle in Canada. If you would like to receive information about Agcapita Fund V please feel free to contact us at Fund5@agcapita.com or register online at the Agcapita website.
Stephen Johnston, co-founder of Agcapita, commented "Agcapita believes that prices of Canada farmland, in particular Saskatchewan farmland, are discounted to world averages for a tonne of productive capacity. Part of our investment premise is that this gap will close and with the attention that Canadian farmland is receiving from investors it can obviously happen quite quickly. It is this "margin of safety" return driver that attracted us to Canada and Saskatchewan in the first place.â
Investigating the Long Run Relationship Between Crude Oil and Food Commodity ...Veripath Partners
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"Crude oil price is believed to be one of the factors that affect food commodity prices. It is an
agricultural production input, therefore the prices of fertilizer, fuel and transportation are affected by the crude oil prices directly, and subsequently they influence the production of grain commodities. There is another dimension to how oil prices can affect food commodity prices, and it is from the derived demand for biofuels. With rising oil prices, demand for biofuels increase and the production
of these fuel is highly dependent on the availability of agricultural feed stocks. So it is primarily because of the above two dynamics that I want to investigate if there is a long term relationship between crude oil prices and food commodity prices. This is an important issue in present times because of the rising prices and volatility in the oil and food commodity markets. I will try to examine if there exist a cointegrating relationship between crude oil price and food commodity price for the period between 1980 to 2011. The food commodities selected are maize, rice, soybean and wheat. Time Series econometric techniques were applied to find our results. The Engle-Granger Co-integration test revealed that there is long run relationship between crude oil prices and maize, soybean, wheat. But, rice prices were not found to be cointegrated. I also carried out the traditional Granger Causality test to check whether causality exist between the two prices. We find that there is unidirectional causality, with only crude oil prices âGranger causingâ each of the four food commodity prices. The reverse was not true, as crude oil prices were not found to be influenced by price of food commodities. So from our results we can confirm the significance of oil prices and the impact it has on the food commodity prices."
VBA Journal: Farmland, Reaping the Reward of IlliquidityVeripath Partners
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Farmland is an asset class that provides a legal claim on land, and the agricultural produce that is grown on that land, in perpetuity. The returns from farmland are like those of a perpetual bond, with the proviso that operational farming returns show high volatility, being largely driven in the short term by climatic conditions and commodity prices. Bonds are typically priced at between 20 and 50 times returns, which is consistent with farmland price multiples. In contrast, equities in a moderate growth sector generally trade at a price to earnings ratio of approximately 10, making farmland look less attractive if perceived as a stock. Like other real assets farmland is protected against inflation, as is farm production. Farmland is thus similar to an inflation-protected perpetual bond with a variable yield, where both principal
and coupons are protected against currency depreciation.
Agcapita Update â Canadian Growing Season Lengthens 2 Weeks Over Last 50 Year...Veripath Partners
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According to a recent Bloomberg article: "Corn is the most common grain in the U.S., with its production historically concentrated in a Midwestern region stretching from the Ohio River valley to Nebraska and trailing off in northern Minnesota. It had been ungrowable in the fertile farmland of Canadaâs breadbasket. That is changing as a warming climate, along with the development of faster-maturing seed varieties, turns the table on food cultivation. The Corn Belt is being pushed north of what was imaginable a generation ago. Growing seasons on the Canadian prairie have lengthened about two weeks in the past half-century.
5 Tips for Creating Standard Financial ReportsEasyReports
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Well-crafted financial reports serve as vital tools for decision-making and transparency within an organization. By following the undermentioned tips, you can create standardized financial reports that effectively communicate your company's financial health and performance to stakeholders.
1. Elemental Economics - Introduction to mining.pdfNeal Brewster
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After this first you should: Understand the nature of mining; have an awareness of the industryâs boundaries, corporate structure and size; appreciation the complex motivations and objectives of the industriesâ various participants; know how mineral reserves are defined and estimated, and how they evolve over time.
The Rise of Generative AI in Finance: Reshaping the Industry with Synthetic DataChampak Jhagmag
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In this presentation, we will explore the rise of generative AI in finance and its potential to reshape the industry. We will discuss how generative AI can be used to develop new products, combat fraud, and revolutionize risk management. Finally, we will address some of the ethical considerations and challenges associated with this powerful technology.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
2. Elemental Economics - Mineral demand.pdfNeal Brewster
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After this second you should be able to: Explain the main determinants of demand for any mineral product, and their relative importance; recognise and explain how demand for any product is likely to change with economic activity; recognise and explain the roles of technology and relative prices in influencing demand; be able to explain the differences between the rates of growth of demand for different products.
Lecture slide titled Fraud Risk Mitigation, Webinar Lecture Delivered at the Society for West African Internal Audit Practitioners (SWAIAP) on Wednesday, November 8, 2023.
Independent Study - College of Wooster Research (2023-2024) FDI, Culture, Glo...AntoniaOwensDetwiler
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"Does Foreign Direct Investment Negatively Affect Preservation of Culture in the Global South? Case Studies in Thailand and Cambodia."
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
My study abroad in Bali, Indonesia, inspired this research topic as I noticed how globalization is changing the culture of its people. I learned their language and way of life which helped me understand the beauty and importance of cultural preservation. I believe we could all benefit from learning new perspectives as they could help us ideate solutions to contemporary issues and empathize with others.
Solution Manual For Financial Accounting, 8th Canadian Edition 2024, by Libby...Donc Test
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Solution Manual For Financial Accounting, 8th Canadian Edition 2024, by Libby, Hodge, Verified Chapters 1 - 13, Complete Newest Version Solution Manual For Financial Accounting, 8th Canadian Edition by Libby, Hodge, Verified Chapters 1 - 13, Complete Newest Version Solution Manual For Financial Accounting 8th Canadian Edition Pdf Chapters Download Stuvia Solution Manual For Financial Accounting 8th Canadian Edition Ebook Download Stuvia Solution Manual For Financial Accounting 8th Canadian Edition Pdf Solution Manual For Financial Accounting 8th Canadian Edition Pdf Download Stuvia Financial Accounting 8th Canadian Edition Pdf Chapters Download Stuvia Financial Accounting 8th Canadian Edition Ebook Download Stuvia Financial Accounting 8th Canadian Edition Pdf Financial Accounting 8th Canadian Edition Pdf Download Stuvia
2. Summary
Milton Friedman famously postulated âinflation is always and
everywhere a monetary phenomenonâ. To believe in deflation is to
believe that the money supply will actually contract rather than the
rate of growth merely slowing from historically high levels which is
all that is happening currently. Rather than contract, I believe that
there are two factors that will significantly increase the money supply
in the medium term:
â Excess Bank Reserves: The global banking system has been
flooded with cash that is currently accumulating on central bank
balance sheets as âexcess reservesâ. Banks will obviously begin
to lend again and through the multiplying effect of fractional
reserve banking will significantly increase the money supply. If
they do not do so voluntarily we expect them to come under
government pressure to do so. I do not believe that the political
will exists to extract these funds from the banking system. For
example, the Swedish Central Bank recently cut nominal CONTENTS
rates on excess reserves on deposit to NEGATIVE 0.25% 3 Energy Consumption Overview
in order to force banks to lend. 3 Global Oil Production - WEO
â Fiscal Deficits: Massive Keynesian style spending/deficits 4 Global Oil Production - EIA
planned â current projections by the World Bank are that 5 World Oil Peak When?
government deficits will accelerate to 9% of global GDP in 2009. 5 Alberta Natural Gas
Government is stepping in as borrower and spender of last 6 Energy Consumption Quick Facts
resort. 7 Rig Counts
7 Saskatchewan Oil Quick Facts
Prior to 1971 when the US and the world went off the last remnant 9 Food, Feed and Fuel Revisited
of the gold standard you could argue that there was at least some 10 Short History of Agriculture
restraint on printing money. We have now arrived at a point in 11 US Fiscal Deficit
financial history where there appears to be no immediate restraint 12 Global Interest Rates
on money printing compounded by the fact that there is no stable 13 Canadian Dollar
(non-inflating) fiat currency with sufficient market size to act as a safe 13 Global Money Printing Update
haven/competition and widespread belief amongst governments
and central banks that inflation will actually be a good thing for the
economy. The track record of the central banking community with
respect to inflation/eroding the purchasing power of fiat currency
is virtually perfect. The economist, Ludwig Von Mises once
quipped âGovernment is the only institution that can take a valuable
commodity like paper, and make it worthless by applying ink.â
1
3. Summary (continued)
Its important to remember that inflation is not incidental to what the governments and central banks of the
world have been doing during the crisis. Theyâre not saying, âLetâs bail out the banking system even if that
is inflationary.â The banking system has been flooded with excess reserves with the expectation that these
will be lent and the money supply increased. I would argue that the banking system is incentivized to create
leverage and lending and so I canât see that all this money sits on the sidelines indefinitely.
On top of the excess reserves parked in the system, the governments of the world are now effectively dictating
that if the private sector will not or cannot borrow the reserves they have pushed into the banking system then
they will borrow them. Hence we have fiscal deficits rapidly increasing across the globe.
Canada is not immune from this type of inflationary activity. Timothy Lane, one of the deputy governors of the
Bank of Canada has been floating the idea that the Bank of Canada should use quantitative easing to devalue
the Canadian dollar. Mr. Lane said that a âpersistently strongâ Canadian dollar will reduce growth. However,
quantitative easing would merely lower the purchasing power of Canadians through inflation as it devalued the
Canadian dollar â whereâs the benefit?
Does the Bank of Canada really believe you can devalue your way to prosperity? Ask any inflation stricken
country about this theory. I believe that current Keynesian policies will achieve nothing more than corrosive
inflation. What western economies need is more capital. Printing money does not create capital. Worse yet,
low interest rates artificially stimulate speculation and consumption rather than savings. Ultimately, the inflation
that money printing creates reduces the pool of available capital causing long lasting harm.
There are lots of complicated and opaque terms for what is being done - quantitative easing, liquidity, stimulus,
bail-outs etc - but strip away the jargon and its simply printing money, borrowing money and spending money.
If Milton Friedman, Ludwig Von Mises and history are any guide it should be inflationary.
On a different note we have added an energy section to the briefing for three key reasons:
â Energy and agriculture are increasingly intertwined with the expanding production of biofuels and large
energy inputs required to maintain the yields in modern agriculture.
â Western Canadian oil production assets were being sold for over $70,000 per flowing barrel in late 2007,
early 2008. Purchase prices have now fallen to around $20,000 per flowing barrel and less due to the
credit crisis. At current oil prices, direct production purchases can generate extremely attractive cash
flows for discriminating investors.
â The energy sector is part of the western Canadian secular bull market for commodities that is one of
Agcapitaâs central investment beliefs.
Kind Regards
Stephen Johnston - Partner
2
4. Energy Update
ENERGY CONSUMPTION OVERVIEW
In inflation adjusted terms, oil is materially below its attractive window of opportunity to purchase oil and
1981 peak. The current oil markets, however, are gas assets for competitive prices.
dramatically different from their 1980s counterparts.
In 1981: GLOBAL OIL PRODUCTION - WEO
â Global consumption was approximately 69 million
bopd In 2008 World Energy Outlook (âWEOâ) analyzed
â OPEC had approximately 10 million of spare approximately 800 fields accounting for Ÿ of global
production capacity reserves and more than 2/3 of global oil production.
â Global production was increasing approximately They came to the conclusion that decline rates are far
1% per annum higher than previously thought, between 6.7% and
â China consumed less than 2 million bopd or less 8.6% a year. As result, they estimate that to maintain
than 1 barrel/person/year the current levels of oil production by 2030 the world
â The US consumed 24 barrels/year/person would need to develop and produce 45 million barrels
per day or approximately four new Saudi-Arabias.
In 2008: Simultaneously, they analyzed the large-scale projects
â Global consumption is approximately 84 million
bopd
â OPEC is estimated to have less than 3 million of
spare production capacity CHART 1: WORLD CRUDE OIL & LEASE
â Global production outside of OPEC is declining by CONDENSATE PRODUCTION,
over 5% per annum INCLUDING CANADA OIL SANDS
â Data points to global peak oil underway MBD
â China is the second largest consumer of oil in 76
Forecast
the world â 8 million bopd but still only 2 barrels/ IEA WEO 2008
person/year 72
Decline rate = 3.4% pa
Peak 1 Peak 2 Peak 3
â The US consumes 24 barrels/year/person May 05 Dec 05 Jul 08
74.82
Dec 2010 to Dec 2012
74.24 74.16
68
May 09
Alberta and Saskatchewan have non-conventional oil 70.8
reserves that rival Saudi Arabia â and conventional 64
reserves of oil and gas that make them world-class
producers. Oil production in Alberta was being sold 60
for as much as $130,000 per flowing barrel in late
56
2007, early 2008. Purchase prices have now fallen to 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
under $20,000 per flowing barrel. Junior producers
are in extreme distress due to an inability to access Source: EIA, en.wikipedia.org/wiki/Oil_Megaprojects, Tony
either the debt or equity markets. This presents an Eriksen âaceâ theoildrum.com
3
5. Energy Update (continued)
that are planned globally (about 230) out to 2015. 118 million barrels per day - 10.5 million barrels of
It takes five to ten years to produce oil from a new unconventional liquids filled the shortfall. In 2009
field. When the WEO added all the projects together the numbers deteriorated materially. Projected
(assuming all of them are able to locate financing conventional production dropped from 107.5 million
in the current credit crunch) they will bring about barrels per day of oil in 2030 in 2007, to 102.9 million
25 million barrels per day. However, because of barrels per day in 2008, to 93.1 million barrels per
the decline rates, the world will still be short of âat day in 2009. Thatâs a 13.4% reduction in conventional
leastâ 12.5 million barrels per day before 2015. A production in two years.
recent report from the US Joint Forces Command
supports the WEO calculations: âBy 2012, surplus The 2009 EIA report assumed 13.5 million barrels
oil production capacity could entirely disappear, and per day of unconventional liquids by 2030 to fill the
as early as 2015, the shortfall in output could reach supply shortfall, including 5.9 million barrels per day
nearly 10 million barrels per day.â in biofuels. To reach 5.9 million barrels per day of
biofuels by 2030 would necessitate a huge diversion
In 2009, Merrill Lynch also conducted a similar of cropland from food to energy with the strong
analysis and concluded that, âthe world now needed possibility of increasing food prices and shortages.
to replace an amount of oil output equivalent to
Saudi Arabiaâs production every two yearsâ. Yet The EIA reference case calls for USD$130/barrel oil
oil production is already in an irreversible decline in 2030. Assuming inflation rates of 5% over the
in at least 54 of the 65 most important producing projection period then this is only USD$ 46/barrel
countries and we currently consume between in real terms â i.e. the unlikely conclusion that real
4-5 barrels of oil for a single one discovered; an prices in 2030 will be lower than exist currently. Both
unsustainable situation. inflation and demand growth could be much greater
and according to other research the cost of oil could
GLOBAL OIL PRODUCTION - EIA pass the USD$300/barrel mark if there is even a 15%
shortfall in the supply. At a recent meeting of the All
The Energy Information Administration (âEIAâ) Party Parliamentary Group on Peak Oil, Toronto-
publishes an annual International Energy Outlook. based transport consultant Richard Gilbert revealed
Up until 2008, they were predicting growth in world that while oil consumption is expected to increase by
oil supplies for the next two decades. The EIA makes about a third by 2025 to more than 40 billion barrels
its projections based on what its analysts call the a year, production will have fallen to less than 25
âreference caseâ that is tied to an estimate of average billion barrels a year. Gilbert quoted two different
economic growth. sets of research, highlighting the impact of a shortfall
in crude supply: one states that a 15% shortfall in
In 2007 the EIA was predicting that world production supply will lead to a 550% hike in the cost of a barrel
of conventional liquids would be 107.5 million of crude (and thatâs based on the 2002 price of
barrels per day in 2030 (up from 81.9 in 2005) USD$50/barrel) and the other concludes that a 4%
coinciding with its prediction for world demand of shortfall will result in a 177% increase.
4
6. Energy Update (continued)
WORLD OIL PEAK WHEN?
The global recession has temporarily hidden a World oil discovery peaked in mid 1960s. Since the
developing problem in the energy sector. As more oil production in the lower 48 states of US peaked
and more countries are reaching their national peak about 40 years after the peaking of discovery, there
oil outputs, the obvious question is when will world oil are reasons to believe according to Hubbertâs theory
production peak. The concept that oil production will the same thing could happen to world oil production.
peak is not in dispute â rather the timing of this event.
Predictions vary from it already having taken place to ALBERTA NATURAL GAS
2030 and beyond. Peak oil was first studied by M.
King Hubbert. In 1956, he successfully predicted the The Alberta economy is heavily exposed to natural
1971 US oil production peak by using a model based gas prices rather than oil prices. While oil prices
on cumulative oil discoveries, predicting it appears have been relatively strong, natural gas prices in
correctly, that oil production follows oil discoveries Canada are at lows not seen since 2002. According
in the same bell shaped curve. To put current to First Energy âThe market is trying to rationalize all
discoveries in perspective to current consumption - of the gas that is piling up and there are fewer and
oil is now being consumed four to five times faster fewer places to put it. We expect that a $1 handle on
than it is being discovered. prices will start becoming more common in the next
few weeks,â said First Energy analyst Martin King.
Inventory levels continue to build in Western Canada,
at 492.46 billion cubic feet as of Aug. 23 2009. This
CHART 2: WORLD OIL DISCOVERY OVER exceeds the 489 billion cubic feet of existing storage
10-YEAR PERIODS capacity that according to King indicate that some
500
450
400 CHART 3: US NATURAL GAS
STORAGE TREND
Billions of Barrels
350
300
250 3,600
3,200
200
2,800
Billion Cubic Feet
150 2,400
100 2,000
50 1,600
1,200
0 800
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030
400
Discovery Extrapolation 0
May-08
May-09
Aug-07
Nov-07
Aug-08
Nov-08
Aug-09
Feb-08
Feb-09
Source: ASPO March 2008
5
7. Energy Update (continued)
dormant storage sites have been reactivated. âAt Average prices at the AECO natural gas hub in
this stage, we still believe that shut-ins on the scale Alberta dipped below CAD$2 recently. Natural gas
of 0.5 billion to 0.8 billion cubic feet per day may be prices have been on a downward spiral since the
needed for a short period of time for some kind of middle of 2008, driven by increased North American
balance to be achieved in this market. If this does supply. The effect of this divergence between strong
not occur, then protracted extreme price weakness is oil prices and weak natural gas prices can be seen
likely in store for the middle to late part of September graphically in Chart 4 of the ratio between the two.
to prices below $1 per gigajoule.â Storage levels are The oil/natural gas ratio is now trading at levels not
also high in the US as can be seen in Chart 3 seen in two decades.
ENERGY CONSUMPTION QUICK FACTS
â Internet: Contrary to popular belief, the internet
CHART 4: WTI CRUDE VERSUS NATURAL consumes large amounts of energy. Author John
GAS RATIO (AUGUST 2009) Michael Greer explains: âThe hardware of the
(CLV9/NGV9) 8/1/2009
internet, with its worldwide connections, its vast
24.14 server farms, and its billions of interlinked home
23.00 and business computers, probably counts as
22.00 the largest infrastructure project ever created
21.00
20.00 and deployed in a two decade period in history.
19.00 The sheer amount of energy thatâs been invested
18.00 to create and sustain the internet beggars the
17.00
16.00 imagination.â Recent estimates indicate the
15.00 infrastructure necessary to support the internet
14.00 consumes 10% of all the electricity produced in
13.00
12.00 the United States and 5% globally.
11.00 â Automobiles: The construction of an average car
10.00 consumes the energy equivalent of approximately
9.00
20 barrels (840 gallons) of oil. Ultimately, the
2004 2005 2006 2007 2008 2009 Monthly construction of a car will consume an amount
Note: The shaded area indicates the range between of fossil fuels equivalent to twice the carâs
the historical minimum and maximum values for the final weight. Itâs also worth noting that the
weekly series from 2004 through 2008. Source: construction of an average car consumes almost
Form EIA-912, âWeekly Underground Natural Gas 120,000 gallons of fresh water.
Storage Report.â
6
8. Energy Update (continued)
â Households: Home appliances are the worldâs SASKATCHEWAN OIL QUICK FACTS
fastest-growing energy consumers after
automobiles, accounting for 30 percent of â Saskatchewanâs first commercial crude oil
industrial countriesâ electricity consumption. discovery was made in 1944.
Ninety percent of the energy consumed by an â Most of the major pools were discovered as a
incandescent light bulb is given off as heat, while result of an intensive exploration effort in the mid-
only 10 percent is converted to light. 1950s and early 1960s.
â Saskatchewan is now the second largest oil
producer in Canada after Alberta producing
RIG COUNTS approximately 17 percent of total Canadian oil
Baker Hughes has issued the rotary rig counts as a production.
service to the petroleum industry since 1944, when
Hughes Tool Company began weekly counts of US
and Canadian drilling activity. Recent counts show a CHART 6
massive drop-off in activity in the oil and gas sector,
particularly in North America. When the economy
and demand starts to grow again this period of
limited investment into production and development
may create upward pressure on prices.
ALBERTA SASKATCHEWAN MANITOBA
CHART 5: RIG COUNTS
Change
Last Count
Area Count from Last
Date
Year
U.S. August 999 -1032
NORTH
DAKOTA
Canada August 184 -252 MONTANA
International July 974 -118 SOUTH
DAKOTA
Source: Baker Hughes
WYOMING
7
9. Energy Update (continued)
â Crude oil production in 2007 was 24.8 million
cubic meters (156.1 million barrels). CHART 7: BAKKEN OIL PRODUCTION
â Cumulative oil production from Saskatchewan Well Oil Production
to December 31, 2007 was 745.0 million cubic Count Per Well OIl Production
meters (4.7 billion barrels). 700 70
â Remaining recoverable reserves at December 31,
600 60
2006 were estimated to be approximately 187.5 Oil Production per Well
million cubic meters (1.2 billion barrels). 500 50
â Saskatchewan has an estimated 3.4 billion cubic
meters (21.3 billion barrels) of heavy oil-in- place 400 40
in the west-central region of the province.
300 30
â Saskatchewan set a record for land sale revenues
of $1.12 billion in 2008, of which $916.5 million 200 20
was spent in the southeast in the Bakken play. Well Count
100 10
â The Bakken formation â a light oil-bearing Oil Production
formation extending throughout the Williston 0 0
Basin â is estimated to contain anywhere from 2003 2004 2005 2006 2007 2008
100 billion to 400 billion barrels of oil in place, Source: Government of Saskatchewan
one quarter of which is estimated to be located in
Saskatchewan.
â Production from Saskatchewanâs portion of the
Bakken has jumped from 950 barrels of oil per
day (bopd) in October 2004 to 54,000 bopd in
October 2008. As of December 2008, Bakken
production exceeded 57,000 bopd.
â Saskatchewanâs oil production has steadily
increased in the last eight years, after doubling
between 1990 and 2000. By contrast, Albertaâs
conventional (non-oilsands) production has
steadily declined from 350 million barrels in 1995
to 191.6 million barrels in 2007.
8
10. Agriculture Update
FOOD, FEED AND FUEL REVISITED
As the worldâs population grows, competition for water and energy. But Beddington also points to
food, water and energy will increase. Food and other drivers.
farmland prices will rise as a result. â Urbanization: Not only is the worldâs population
predicted to grow (until the middle of the century,
According to John Beddington, the UK governmentâs at least) but more people are moving to cities. The
chief scientific adviser, by 2030 âa whole series of growth of cities will accelerate the depletion of
events come togetherâ to create the pre-conditions water resources as cities are more water intensive
for a crisis: per capita.
â Income Growth: As people become wealthier
â The worldâs population will increase by 33% their diets are change. The largest increase
â Demand for food will increase by 50% in meat consumption comes at income move
â Demand for water will increase by 30% up to USD$ 5,000 per year â a change that
â Demand for energy will increase by 50% approximately 80% of the worlds population has
yet to make.
Some of the problems reinforce each other, for â Biofuels: The more land is devoted to growing
example, agriculture consumes large amounts of biofuels the less can be used for growing food.
CHART 8: POPULATION GROWTH, 1950-2050 CHART 9: PROJECTED GROWTH IN FOOD
PRODUCTION , 1960-2050
Europe Africa Asia Latin America Northern America Oceania
Billion Million tonnes Total cereals Total meats
3500
10 Projected beyond 2008 Projected data
3000
8
2500
6
2000
4 1500
2 1000
0 500
50 55 60 65 70 75 80 85 90 95 00 05 10 15 20 25 30 35 40 45 50
19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 0
1662 1970 1980 1990 2000 2015 2030 2050
Source: UN
Source: FAO
9
11. Agriculture Update (continued)
SHORT HISTORY OF AGRICULTURE
CHART 10: GLOBAL ENERGY DEMAND
The history of modern agriculture comprises three 1980 â 2030
distinct periods: Developed nations (OECD) Developing nations (non-OECD) World*
â The Expansion Period (1600 to 1920): Increases Million tonnes of oil equivalent
in food production during these three centuries 20
Projected from 2007
came simply from putting more land into
15
production; technological change played only a
minor role.
10
â The Mechanization Period (1920 to 1970): In
this half-century, technological advances issuing 5
from cheap, abundant fossil-fuel energy resulted 2005: Developing nations
in a dramatic increase in productivity (output 0
overtake developed nations
per worker hour). Meanwhile, farm machinery, 1980 1990 2000 2010 2020 2030
pesticides, herbicides, irrigation, new hybrid
Source: IEA
crops, and synthetic fertilizers allowed for the
doubling and tripling of crop production. Also
during this time, U.S. Department of Agriculture
policy began favoring larger farms (the average
U.S. farm size grew from 100 acres in 1930 to
almost 500 acres by 1990), and production for
export.
â The Energy Period (1970-present): In recent
decades, yield improvements have been primarily
obtained with the application of increasing
amounts of energy. At the same time the
incremental productivity of this approach has
been dropping â i.e. an ever-growing amount of
energy is being expended to produce each extra
bushel of yield from the overall system. In short,
strategies that had recently produced dramatic
increases in productivity became subject to the
law of diminishing returns.
10
12. Global Macro Update
US FISCAL DEFICIT
The U.S. federal budget deficit will run to $1.6 trillion our national debt is now $340 billion. This is about
this year, the Congressional Budget Office said at 3.04% rate of interest. In ten years the Obama
yesterday, equal to 11.2% of GDP. Thatâs the biggest administration admits that they will add $9 trillion to
deficit since World War II. This is a pattern that is the national debt. That would take it to $20 trillion.
being repeated throughout the developed world â Letâs say that by some miracle the interest on the
e.g. Britain will run a 11.6% deficit, and Japan a national debt in 10 years will still be 3.09%. That
10.3% deficit. would mean that the interest on the national debt
would be $618 billion a year or over one billion a day.
US government spending has climbed by US$700 No nation can hold up in the face of those kinds of
billion, a 24 percent jump, for the biggest annual expenses. Either the dollar would collapse or interest
increase in more than half a decade. It is expected rates would go through the roof.â
to aggregate to US$ 9 trillion in the next 10 years â a
doubling of debt levels as can be seen in Chart 12. As the current and cumulative US fiscal deficit grows
the influence of the USâ creditors increases - the
Richard Russell recently wrote, âThe US national majority of these creditors are foreign, most notably
debt is now over $11 trillion dollars. The interest on China.
CHART 11: TOTAL CREDIT MARKET DEBT AS CHART 12: US NATIONAL DEBT AS
PERCENT OF US GDP PERCENT OF GDP
370
350 3/31/2009 Debt = $52.904 Trillion = 375.5%
340 3/31/2009 GDP = $14.090 Trillion 100%
330
320
310 82%
300
290
280
270 80%
260
250
240
230
220
210
200 60%
190
180
170
160
41%
150
140
130 40% 2008 2019
1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Source: Ned Davis Research Source: CBO
11
13. Global Macro Update (continued)
If and when purchasers of US sovereign debt GLOBAL INTEREST RATES
become concerned about US debt levels they may
pare back or even exit the market altogether raising The major central banks of the world are continuing
interest rates. According to tax policy expert and to pursue the strategy of monetary easing via
Syracuse University professor Len Burman wrote in historically low interest rates and quantitative easing.
a recent op-ed titled âCatastrophic Budget Failureâ.
âTaxes would rise to levels that would make a Thereâs no sign yet that the US Fed will deviate
Scandinavian revolt. And the government would not from the strategy it has been pursuing for almost a
be able to provide anything but the most basic public year by making money virtually costless in nominal
services. We would no longer be a great power (or terms. Paul McCulley, who helps oversee the worldâs
even a mediocre one), and the social safety net would biggest bond funds as a partner at Pacific Investment
evaporate.â Management Co., expects the Fed will keep its target
interest rate unchanged at zero to 0.25 percent into
2011.
CHART 13: CHINA â AMERICAâS BANKER
CHART 14: GLOBAL INTEREST RATES
Quarterly figures, $bn Holdings of US assets, $bn
250 800
Increase in foreign- 200
Interest Rate (August
exchange reserves*
Treasury bonds Central Bank
150 600
2009)
100 Bank of Canada 0.25%
50 400
+0 Government Bank of England 0.5%
-50 agency bonds
200 Bank of Japan 0.1%
âHot-moneyâ flows Corporate bonds
Equities+
100 European Central Bank 1%
150 0
2004 05 06 07 08 09 2007 08 09 Federal Reserve 0.25%
Swiss National Bank 0.25%
* Includes PBOCâs other foreign assets, CIC, and foreign assets
of state banks; adjusted for currency gains/losses The Reserve Bank of Australia 3%
+Not marked to market
Source: Brad Setser & Arpana Pandey, Council on Foreign
Relations
12
14. Global Macro Update (continued)
CANADIAN DOLLAR
Timothy Lane, one of the deputy governors of the low interest rates (as can be seen in part from Chart
Bank of Canada (âBOCâ) has been floating the idea 14) and direct money printing in the form of the
that the Bank of Canada should use quantitative suitably obscure title of quantitative easing (âQEâ).
easing to devalue the Canadian dollar. Mr. Lane said
that a âpersistently strongâ Canadian dollar would The money injected into the financial system is whatâs
reduce growth. He attributed the Canadian dollarâs known in the central banking community as âhigh-
increase to the recovery of commodities prices and powered liquidityâ as its effect is multiplied greatly
the weakening of the U.S. dollar - neither of which by the fractional reserve banking system. These
the BOC has any direct control over. Quantitative funds are designed to re-inflate the asset markets
easing, a direct money-printing strategy would lower â particularly it is hoped the stock and real-estate
the purchasing power of Canadians through inflation markets. Sample QE programs:
as it devalued the Canadian dollar. Does the BOC
really believe you can devalue your way to prosperity? â Federal Reserve: The Fed is printing US$1.75-
Ask any inflation stricken country about this theory. trillion in order to buy Treasury and mortgage
Keynesian deficit and money printing economic backed bonds.
policies are now being pursued globally on a scale â Japan: The Bank of Japan is printing „1.8-trillion
without precedent. We believe that this will achieve each month into the banking system - monetizing
nothing more than inflation. What western economies 50% of Tokyoâs budget deficit this year.
need is more capital. Printing money does not create â UK: The Bank of England is printing ÂŁ175-billion
capital. Worse yet low interest rates and cheap pounds to purchase distressed assets from banks
capital artificially stimulate speculation rather than â monetizing 66% of the UKâs budget deficit this
saving and the inflation that money printing creates year
ultimately reduces the pool of available capital â EU: The European Central Bank is printing
causing long lasting harm. âŹ442-billion (US$613-billion) which it will inject
into one-year money-market funds.
GLOBAL MONEY PRINTING UPDATE
Our prediction is that this re-inflation effort will initially
The global cost of bailing out the financial sector to only serve to increase the nominal price of speculative
date amounts to around US$12-trillion. To put that assets â those that are directly accessible by the
in perspective it represents approximately one fifth investment and commercial banking community while
of the worldâs total annual economic output. On having little effect on the real economy. Eventually
top of this overt subsidy to the financial sector, the it will spread through the real economy creating
G-20 governments are now committed to additional significant consumer price inflation.
stimulus in the form of deficit spending, historically
13
15. Global Macro Update (continued)
While this inflationary program to save the banking deliberately creating inflation but trying to keep the
sector has been underway in the developed world, USâs increasingly restive foreign creditors happy at
China has been selling US dollar to increase its the same time. Ultimately, I believe this will prove to
inventories of oil, metals, and other industrial staples be a very difficult task.
and making direct investments in natural resource
assets from Canada to Australia to secure supply. In summary, I would argue that the large increase
For example year on year Chinaâs imports of: in the money supply that has taken place and
that is planned will only serve to devalue the G-20
â copper were up 160%; and currencies and will not save the real economy â
â aluminum were up 1,600%. perhaps the devaluation will not be obvious relative
the various currencies as they all are debased at the
As we wrote in the August briefing, in the first eight same rate but should become increasingly obvious
months of 2009, Chinaâs vehicle sales have for the versus hard assets.
first time exceeded the US â increasing 29% to
8.33-million, while US vehicle sales decreased 28%
to 7.1-million. Increased Chinese demand for iron-
ore, steel, and rubber reflect this trend.
I would argue that gold and crude oil prices clearly
reflect the G-20âs inflationary monetary policies â in
particular manifested by an increasingly weaker US-
dollar. The consensus seems to be building that
the G-20 central bankers will not be increasing real
interest rates or reversing their QE in the near-term.
The Fed is explicitly signaling that it intends to leave
monetary policy extremely accommodative for an
extended period while at the same time paying lip
service to inflation fighting and the much discussed
âexitâ. What are we supposed to make of Fed
Chairman Ben Bernanke comments in July that âThe
Fed believes that a highly accommodative stance of
monetary policy will be appropriate for an extended
period,â while at the same time declaring âWe will
not allow the broad measures of money circulating in
the economy to accelerate at a rapid rate that would
eventually cause inflation.â This seems somewhat
contradictory to me and indicative of a man who is
14
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