Category Archives: Opinion

Volkswagen Recall Casts Shadow Over France’s Auto Industry

October 16, 2015Electric Cars, Energy and Climate Change, Opinion, PollutionTrevor Larkum

How Will Emissions Scandal Affect The Future Of French Diesel?

ZOE Twins (Image: T. Larkum) — Renault’s electric car, the Zoe, accounted for half of all electric car sales in France in 2015. The car company, which traditionally produced diesel engines, has begun diversifying as the popularity of diesel wanes. (Image: T. Larkum)

Known for such cars as the classic Citroen Deux Chevaux and the luxury vehicles of powerhouse Renault, France has long been one of the largest and most recognizable car manufacturers in Europe — and indeed, in the world. But as its automotive market struggles to recover from lagging sales and more people grow skeptical of the environmental effects of diesel fuel (most French cars have diesel engines), a widening Volkswagen emissions scandal could mark a turning point for French auto manufacturing. A consumer shift to gasoline or alternative fuel would spell fiscal disaster for French car producers, unless they start diversifying engine fuels and looking to alternative energy, analysts said.

“I think it’s going to be negative; it’s very simple,” said macroeconomics analyst Jean Ergas, an adjunct assistant professor at the New York University School of Professional Studies. “This is going to be a big hit for them.”

There may be flowing water on Mars. But is there intelligent life on Earth?

October 16, 2015Energy and Climate Change, Opinion, PollutionTrevor Larkum

While we marvel at Nasa’s discoveries, we destroy our irreplaceable natural resources – so we can buy pre-peeled bananas and smartphones for dogs

‘Think of what would change if we valued terrestrial water as much as we value the possibility of water on Mars.’ (Image: A. Krauze)

Evidence for flowing water on Mars: this opens up the possibility of life, of wonders we cannot begin to imagine. Its discovery is an astonishing achievement. Meanwhile, Martian scientists continue their search for intelligent life on Earth.

We may be captivated by the thought of organisms on another planet, but we seem to have lost interest in our own. The Oxford Junior Dictionary has been excising the waymarks of the living world. Adders, blackberries, bluebells, conkers, holly, magpies, minnows, otters, primroses, thrushes, weasels and wrens are now surplus to requirements.

In the past four decades, the world has lost 50% of its vertebrate wildlife. But across the latter half of this period, there has been a steep decline in media coverage. In 2014, according to a study at Cardiff University, there were as many news stories broadcast by the BBC and ITV about Madeleine McCann (who went missing in 2007) as there were about the entire range of environmental issues.

Think of what would change if we valued terrestrial water as much as we value the possibility of water on Mars. Only 3% of the water on this planet is fresh; and of that, two-thirds is frozen. Yet we lay waste to the accessible portion. Sixty per cent of the water used in farming is needlessly piddled away by careless irrigation. Rivers, lakes and aquifers are sucked dry, while what remains is often so contaminated that it threatens the lives of those who drink it. In the UK, domestic demand is such that the upper reaches of many rivers disappear during the summer. Yet still we install clunky old toilets and showers that gush like waterfalls.

Read more: The Guardian

VW wipeout means the end of fossil fuels looms near

October 16, 2015Energy and Climate Change, Opinion, PollutionTrevor Larkum

Could VW really be responsible for tens of thousands of deaths from pollution?!

VW’s pollution cheating has caused thousands of premature deaths, write Mike Berners-Lee & Chris Goodall, creating costs that could destroy the company’s entire shareholder equity. But this is no ‘Black Swan’ event. It is an early example of the existential threat to the fossil fuel economy.

The derelict Crowood Petrol Station next to the dual carriageway on the Cumbernauld Road as you enter the wee town of Chryston on the edge of Glasgow (Image: byronv2 via Flickr) — The derelict Crowood Petrol Station next to the dual carriageway on the Cumbernauld Road as you enter the wee town of Chryston on the edge of Glasgow (Image: byronv2/Flickr)

No pension fund trustee can legitimately ignore the increasingly obvious likelihood of a rapid destruction of shareholder value as the world speeds up the switch away from coal, oil and even gas.

VWs diesel cars emit a much larger amount of nitrogen oxides (NOx) and fine particulates than regulators thought.

Greenpeace estimates that an extra 60,000 to 24,000 tonnes of NOx have been emitted each year from 11m vehicles sold around the world.

NOx and fine particulates have severe impacts on human health and are responsible for many early deaths each year.

We can put a crude financial figure on the impact of the loss of life. Roughly speaking, we think that VW’s actions resulted in costs of between £21 and £90bn for NOx pollution alone.

The larger figure is greater than the stock market value of the entire company. VW would therefore be worthless if called upon to pay the full price for its actions.

Our calculation is based on three separate numbers. All are approximate and can be argued over. But we thought it might be helpful to do the arithmetic nevertheless. These numbers only estimate the social cost of early deaths, not the full burden of ill health, from NOx pollution.

The end of the Oil Age is in sight

October 16, 2015Energy and Climate Change, Oil, OpinionTrevor Larkum

Shell’s departure from the Arctic is a very significant event in the global energy picture, writes Energy Post editor-in-chief Karel Beckman. It is another sign that the End of the Oil Age is in sight.

After Volkswagen, a second major European company had to face acute embarrassment this week. Shell did not commit fraud, but they sure made a billion-dollar blooper in the Arctic. Yes, taking risks is part of what business is about, and sometimes wells turn up dry, but there is a lot more to the story than that.

Clearly the disappointing results of a single exploratory well (“Burger J”) in a single basin can’t have been sufficient reason for Shell to suddenly give up on its Arctic venture altogether. “For the foreseeable future”, as the company put it, i.e. indefinitely. In fact, the company did give two additional reasons: “the high costs associated with the project, and the challenging and unpredictable federal regulatory environment in offshore Alaska”.

But neither of these can have come as a surprise. Critics have been warning for a long time that the costs of Alaskan drilling are prohibitive, and the “regulatory environment” in this part of the world will inevitably be unpredictable.

After diesel scandal Volkswagen must go electric

October 16, 2015Electric Cars, Energy and Climate Change, Opinion, PollutionTrevor Larkum

Perhaps the VW emissions scandal will actually do some good.

Your new clean diesel turns to be less clean than you thought? Switch to an electric car.

Car exhaust pollution (Image: Wikipedia)

In recent days, the loudest thing in the automotive industry is Volkswagen’s scandal over diesel engine emissions.

We at InsideEVs don’t cover conventional cars, but there’s something we’d like to note. After over 100 years of developments, we simply don’t believe that internal combustion engines can be significantly improved upon in terms of fuel economy or emissions.

Proof of that is seen in such things as carmakers using more and more gears (like eight or even nine), while every next gear translates to less gain than the previous one, at some additional cost. Automakers are literally scratching at whatever they can.

In the world of tightening emission standards, evading them is worth billions of dollars and there could be plenty of people sitting tight-lipped about true emissions in various automotive groups.

Getting Older After the Apocalypse

October 9, 2015Energy and Climate Change, Opinion, Peak Oil, Prepping and CollapseTrevor Larkum

Every now and then the Internet serves up something perfectly pitched to what you assumed were your own very individual fears.

On Thursday, for me, that was Romie Stott’s “futurist vision of retirement planning” at The Billfold. Planning for the eventual end of paid work isn’t just difficult because life is expensive and saving money is hard, she points out — it’s also difficult because the world is ending.

Okay, that might be my fears talking. But Ms. Stott does note that climate change over the next several decades will, at the very least, affect certain popular retiree destinations: “If your retirement dream includes a beach house, lake house, Florida, or New Mexico, add four to 11 degrees to the daily forecast; that’s the EPA’s best prediction for 2100 AD.”

That may sound relatively tame, but she also mentions booming populations of disease-bearing insects, and increasingly catastrophic storms. It’s predictions like this that, for years, have made me think of retirement planning not just in terms of 401(k)s but in terms of learning to build a fire.

Atlantic Ocean Excited To Move Into Beautiful Beachfront Mansion Soon

October 9, 2015Energy and Climate Change, OpinionTrevor Larkum

WEST PALM BEACH, FL—Admitting it has had its eye on the property for quite some time, the Atlantic Ocean confirmed Monday that it was looking forward to moving into a beautiful beachfront mansion in the near future.

“For the longest time it seemed like this place was completely out of reach for me, but I’ve come a long way in the past few years, and now it’s looking more and more like a real possibility,”

said the body of water, which confided that, after having admired the building’s impressive exterior and grounds for so long, it was thrilled at the prospect of finally going inside and exploring all eight bedrooms and 7,500 square feet of living area.

“I’m not quite ready yet, but in a couple years or so, I can definitely see myself in there, making the place completely my own. And the little beachside community that the house is located in is just so cute, too—I can’t wait to go through and visit all the shops and restaurants.”

The ocean noted, however, that it might make a few cosmetic changes to the mansion once it moves in, including gutting the lower floor and taking out a few walls.

Source: The Onion

October 2017, after the crash

October 9, 2015Economy, Energy and Climate Change, OpinionTrevor Larkum

October 2017, after the crash: George Osborne wonders what went wrong

The chancellor might have looked in control in 2015, but the UK was badly exposed as the global economy faltered

October 2017: just hours to go, and still the words wouldn’t come. Other conference speeches had been straightforward. A few easy gags about the Labour leader, some gravelly bits about tough choices and the long-term economic plan and then – whoosh! – a rush of confident promises to zap the deficit and win the global race. The hall’s menagerie of blue-rinses and sixth-formers in suits got the message: George Osborne – a man you can trust with your finances, even if not love with all your heart. But now what was he going to say?

The chancellor glanced down at the A4 leaves, crawling with scribbles from his speechwriter and aides, and sighed. How different things had seemed just two years ago. Tory conference, autumn 2015: an election won, an economy humming, and him credited as the genius behind it all. Lobby hacks said he was the next prime minister. Lefty flacks thought he was parking tanks all over their parched little lawn. Westminster feared him; Beijing respected him. The world had hit Peak Osborne.

Read more: The Guardian

Economy round up

October 9, 2015Economy, Energy and Climate Change, Opinion, Peak OilTrevor Larkum

There are a lot of doom-and-gloom messages going around at the moment – it’s hard to know which to believe. Here’s a smorgasbord of articles that caught my eye, though they’re only a small selection of what’s out there.

Biosphere collapse: the biggest economic bubble ever

Worried about debt, defaults and deficits? Save up your concern for the real problem, writes Glen Barry. The systematic destruction Earth’s natural ecosystems for short-term profit is the ‘bubble’ that underlies economic growth – and if allowed to continue its bursting will leave the Earth in a state of social, economic and ecological collapse.

“The human family will only avert biosphere collapse if we choose to live more simply, share more with others, go back to the land, have fewer kids, protect and restore ecosystems, grow more of our own food, end fossil fuels, and embrace social justice.”

The global environment collapses as in the pursuit of short-term growth, humanity overruns natural ecosystems including the atmosphere that make Earth habitable.

Together we urgently address inequity, climate change, overpopulation and natural ecosystem loss or alone we each face the horrors of economic, social, and ecological collapse.

Newspapers are full of disastrous warnings if economic growth does not return to Greece, or if it drops a couple points in China. Rarely in human history have so many been so fundamentally wrong about a matter of such importance as the desirability, and even the possibility, of perpetual economic growth.

The real threat to human well-being is not that there is too little economic growth. Rather, it is that there is too much, and that we have overshot how much growth can occur without collapsing our shared environment.

The industrial growth economy is ravaging natural ecosystems. Stocks of natural capital – including water, soil, old-growth forests, wild fish – are being pillaged to artificially inflate short-term economic growth numbers.

Modern industrial capitalism’s narrow focus upon GDP growth as a measure of a society’s well-being utterly fails to account for the very real and detrimental costs of liquidating Earth’s natural life-support systems.

Infinite growth on a finite planet is a recipe for disaster. Nothing grows forever and trying inevitably rips apart any system seeking to do so.

Continued ravaging of Earth’s natural ecosystems for short-term growth is the biggest economic bubble ever. Such a short-term, myopic focus upon economic growth can only end in social and ecological collapse.

Deflationary Collapse Ahead?

Both the stock market and oil prices have been plunging. Is this “just another cycle,” or is it something much worse? I think it is something much worse.

Back in January, I wrote a post called Oil and the Economy: Where are We Headed in 2015-16? In it, I said that persistent very low prices could be a sign that we are reaching limits of a finite world. In fact, the scenario that is playing out matches up with what I expected to happen in my January post. In that post, I said

Needless to say, stagnating wages together with rapidly rising costs of oil production leads to a mismatch between:

The amount consumers can afford for oil
The cost of oil, if oil price matches the cost of production

This mismatch between rising costs of oil production and stagnating wages is what has been happening. The unaffordability problem can be hidden by a rising amount of debt for a while (since adding cheap debt helps make unaffordable big items seem affordable), but this scheme cannot go on forever.

You Call This Progress?

One of the prevailing narratives of our time is that we are innovating our way into the future at break-neck speed. It’s just dizzying how quickly the world around us is changing. Technology is this juggernaut that gets ever bigger, ever faster, and all we need to do is hold on for the wild ride into the infinitely cool. Problems get solved faster than we can blink.

But I’m going to claim that this is an old, outdated narrative. I think we have a tendency to latch onto a story of humanity that we find appealing or flattering, and stick with it long past its expiration date. Many readers at this point, in fact, may think that it’s sheer lunacy for me to challenge such an obvious truth about the world we live in. Perhaps this will encourage said souls to read on—eager to witness a spectacular failure as I attempt to pull off this seemingly impossible stunt.

The (slightly overstated) claim is that no major new inventions have come to bear in my 45-year lifespan. The 45 years prior, however, were chock-full of monumental breakthroughs.

How our energy problem leads to a debt collapse problem

Usually, we don’t stop to think about how the whole economy works together. A major reason is that we have been lacking data to see long-term relationships. In this post, I show some longer-term time series relating to energy growth, GDP growth, and debt growth–going back to 1820 in some cases–that help us understand our situation better.

When examining these long-term time series, I come to the conclusion that what we are doing now is building debt to unsustainably high levels, thanks to today’s high cost of producing energy products. I doubt that this can be turned around. To do so would require immediate production of huge quantities of incredibly cheap energy products–that is oil at less than $20 per barrel in 2014$, and other energy products with comparably low cost structures.

Our goal would need to be to get back to the energy cost levels that we had prior to the run-up in costs in the 1970s. Growth in energy use would probably need to rise back to pre-1975 levels as well. Of course, such a low-price, high-growth scenario isn’t really sustainable in a finite world either. It would have adverse follow-on effects, too, including climate change.

How the banks ignored the lessons of the crash

Ask people where they were on 9/11, and most have a memory to share. Ask where they were when Lehman Brothers collapsed, and many will struggle even to remember the correct year. The 158-year-old Wall Street bank filed for bankruptcy on 15 September 2008. As the news broke, insiders experienced an atmosphere of unprecedented panic. One former investment banker recalled: “I thought: so this is what the threat of war must feel like. I remember looking out of the window and seeing the buses drive by. People everywhere going through a normal working day – or so they thought. I realised: they have no idea. I called my father from the office to tell him to transfer all his savings to a safer bank. Going home that day, I was genuinely terrified.”

A veteran at a small credit rating agency who spent his whole career in the City of London told me with genuine emotion: “It was terrifying. Absolutely terrifying. We came so close to a global meltdown.” He had been on holiday in the week Lehman went bust. “I remember opening up the paper every day and going: ‘Oh my God.’ I was on my BlackBerry following events. Confusion, embarrassment, incredulity … I went through the whole gamut of human emotions. At some point my wife threatened to throw my BlackBerry in the lake if I didn’t stop reading on my phone. I couldn’t stop.”

Other financial workers in the City, who were at their desks after Lehman defaulted, described colleagues sitting frozen before their screens, paralysed – unable to act even when there was easy money to be made. Things were looking so bad, they said, that some got on the phone to their families: “Get as much money from the ATM as you can.” “Rush to the supermarket to hoard food.” “Buy gold.” “Get everything ready to evacuate the kids to the country.” As they recalled those days, there was often a note of shame in their voices, as if they felt humiliated by the memory of their vulnerability. Even some of the most macho traders became visibly uncomfortable. One said to me in a grim voice:

“That was scary, mate. I mean, not film scary. Really scary.”

Read more: The Guardian

IMF warns of stagnation threat to G7 economies

Fund’s latest World Economic Outlook cuts global growth forecasts saying emerging markets slowdown may entrench low inflation and promote stagnation in the west

The International Monetary Fund is warning that the weak recovery in the west risks turning into near stagnation after cutting its global economic growth forecast for the fourth successive year.

In its half-yearly update on the health of the world economy, the Washington-based fund predicted expansion of 3.1% in 2015, 0.2 points lower than it was expecting three months ago and the weakest performance since the trough of the downturn in 2009.

“Six years after the world economy emerged from its broadest and deepest postwar recession, a return to robust and synchronised global expansion remains elusive,”

said Maurice Obstfeld, the IMF’s economic counsellor.

Read more: The Guardian

The Stock Markets Of The 10 Largest Global Economies Are All Crashing

You would think that the simultaneous crashing of all of the largest stock markets around the world would be very big news. But so far the mainstream media in the United States is treating it like it isn’t really a big deal. Over the last sixty days, we have witnessed the most significant global stock market decline since the fall of 2008, and yet most people still seem to think that this is just a temporary “bump in the road” and that the bull market will soon resume. Hopefully they are right. When the Dow Jones Industrial Average plummeted 777 points on September 29th, 2008 everyone freaked out and rightly so. But a stock market crash doesn’t have to be limited to a single day. Since the peak of the market earlier this year, the Dow is down almost three times as much as that 777 point crash back in 2008. Over the last sixty days, we have seen the 8th largest single day stock market crash in U.S. history on a point basis and the 10th largest single day stock market crash in U.S. history on a point basis. You would think that this would be enough to wake people up, but most Americans still don’t seem very alarmed. And of course what has happened to U.S. stocks so far is quite mild compared to what has been going on in the rest of the world.

HSBC fears world recession with no lifeboats left

The world authorities have run out of ammunition as rates remain stuck at zero. They have no margin for error as economy falters.

The world economy is disturbingly close to stall speed. The United Nations has cut its global growth forecast for this year to 2.8pc, the latest of the multinational bodies to retreat.

We are not yet in the danger zone but this pace is only slightly above the 2.5pc rate that used to be regarded as a recession for the international system as a whole.

It leaves a thin safety buffer against any economic shock – most potently if China abandons its crawling dollar peg and resorts to ‘beggar-thy-neighbour’ policies, transmitting a further deflationary shock across the global economy.

The Crash of 2015: Going Global

Just in the past week, the headlines have been coming like triphammer blows: in Bloomberg News, “Something has gone wrong with the global consumer,” (according to JP Morgan); in International Business Times, “G7 Finance Ministers to address faltering global growth;” in London’s Telegraph, “HSBC fears world recession with no lifeboats left;” in OilPrice.com, “Clock running out for struggling oil companies;” and even in the mainstream vanilla Washington Post, a column by Robert Samuelson predicts “China’s coming crash,” then puts a question mark at the end to make sure we don’t worry too much.

When you add these concerns to longer standing ones about wild gyrations in the world’s stock and bond markets; the advent of peak oil in pretty much every oil-exporting country in the world; the onset of the effects of global climate change in California, the Middle East, North Africa, Brazil and elsewhere; it becomes apparent that optimism ought to be listed as a disorder requiring medical intervention.

Global Financial Meltdown Coming? Clear Signs That The Great Derivatives Crisis Has Now Begun

Warren Buffett once referred to derivatives as “financial weapons of mass destruction“, and it was inevitable that they would begin to wreak havoc on our financial system at some point. While things may seem somewhat calm on Wall Street at the moment, the truth is that a great deal of trouble is bubbling just under the surface. As you will see below, something happened in mid-September that required an unprecedented 405 billion dollar surge of Treasury collateral into the repo market. I know – that sounds very complicated, so I will try to break it down more simply for you. It appears that some very large institutions have started to get into a significant amount of trouble because of all the reckless betting that they have been doing. This is something that I have warned would happen over and over again. In fact, I have written about it so much that my regular readers are probably sick of hearing about it. But this is what is going to cause the meltdown of our financial system.

Many out there get upset when I compare derivatives trading to gambling, and perhaps it would be more accurate to describe most derivatives as a form of insurance. The big financial institutions assure us that they have passed off most of the risk on these contracts to others and so there is no reason to worry according to them.

Well, personally I don’t buy their explanations, and a lot of others don’t either. On a very basic, primitive level, derivatives trading is gambling. This is a point that Jeff Nielson made very eloquently in a piece that he recently published…

No one “understands” derivatives. How many times have readers heard that thought expressed (please round-off to the nearest thousand)? Why does no one understand derivatives? For many; the answer to that question is that they have simply been thinking too hard. For others; the answer is that they don’t “think” at all.

Derivatives are bets. This is not a metaphor, or analogy, or generalization. Derivatives are bets. Period. That’s all they ever were. That’s all they ever can be.

Peak oil round up

October 8, 2015Energy and Climate Change, Opinion, Peak OilTrevor Larkum

There’s a lot of discussion in the ‘blogosphere’ of whether we’re starting to see the effects of peak oil in our economic woes – here are some highlights (and don’t forget my blog post).

2015 Could Be The Year Of Peak Oil

…
I am now more convinced than ever that 2015 will see the peak in world crude oil production. I have very closely studied the charts of every producing nation and my prognosis is based on that study. I see many nations in steep decline and most every other nation peaking now, or in the last couple of years, or very near their peak today. These include the world’s three largest producers, Russia, Saudi Arabia and the USA.

China Peak Oil: 2015 Is the Year

Domestic production looks set to peak, with some profound implications for the world market.

Intense focus on the North American shale boom, Saudi Arabia, and ISIS obscures an important emerging energy trend: China’s oil production is peaking. This has profound implications for the world oil market, because China is not just a massive importer of crude; it is also among the world’s five largest oil producers, trailing only the U.S., Russia, and Saudi Arabia, and virtually neck-in-neck with Canada.

China’s oil industry has delivered impressive oil and gas production growth over the past decade. Yet a range of data and historical analogies increasingly suggest that, at global oil prices between $50-to-$100 per barrel, China’s oil supply capability is plateauing and may peak as soon as this year. Lower or higher prices would accelerate or extend this timing.

US Oil Production Nears Previous Peak

The EIA’s Monthly Energy Review came out a couple of days ago. The data is in thousand barrels per day and the last data point is July 2015.

US consumption of total liquids, or as the EIA calls it, petroleum products supplied, reached 20,000,000 barrels per day for the first time since February of 2008.

Something I never noticed before, consumption started to drop in January 2008, seven months before the price, along with world production, started to drop in August 2008. This had to be a price driven decline. Could the current June and July increase in consumption be price driven also?

Crashing Oil Prices Aren’t Due to an Oil Glut But to Demand Destruction

As I began to mention at the end of the first part of this three-parter, I’ve only just recently come to the conclusion that oil prices aren’t going to have a tendency to rise due to the tightening of supply imposed by peak oil, but to depreciate. This of course flies in the face of the common logic of supply and demand, but when factoring in the method by which the majority of our money is created, a deflationary effect can be seen to come into play. This has taken me an absurdly long time to clue into, for although I’d steadfastly amassed a bunch of pieces (various information), I hadn’t realized they were actually all part of the same puzzle.

With peak oil and fractional-reserve banking being the first two pieces of this puzzle, the third piece that I needed to factor in (which oddly enough I’d already written about) is the fact that money is a proxy for energy.

Will declines in U.S. and Canadian oil production lead to a global decline?

At the beginning of this year I noted that all of the growth in world oil production* since 2005 has come from two countries: the United States and Canada. And, I suggested that since the growth in production in those two countries came from high-cost deposits–tight oil in the United States and tar sands in Canada–that the precipitous drop in oil prices would lead to declines in production in both countries.

I concluded that unless another area of the world suddenly started growing its oil production significantly that those declines would probably result in a worldwide decline in oil production.

Well, declines in the both the United States and Canada have arrived. It will be several months before we can know with any certainty whether those declines will translate into a persistent global decline.

Support For OPEC Production Cut Is Increasing

…
Now the shale producers won’t willingly reduce output, as shale production is made up of many different companies, and not a national company like most global oil producers; but due to the economics of the current oil price environment, many shale oil producers will face bankruptcy next year, and as a result, will go out of business.

The reason being is that in 2016, most oil hedges will expire. These hedges have allowed shale oil companies to stay afloat and achieve cash flow neutrality, despite the decline in oil prices. These hedges have also helped shale oil companies gain access to credit, so they can raise the capital needed to put their wells into production. When these hedges expire, companies will not generate the cash flow needed to meet their covenants, which will in turn bankrupt them, and production from U.S. shale oil wells, will start declining rapidly. This will also dry up the credit markets and prevent any type of quick rebound in shale oil production.

This is why the IEA even estimates that U.S. oil output will start collapsing next year.

US Shale Oil too Expensive, Peaks 1H 2015

According to EIA data, monthly US crude oil production peaked in April 2015 at 9.6 mb/d.

This is When Bonds Go Kaboom!

…
In the energy sector, the bond devastation is even worse.

California Resources – Occidental Petroleum’s spinoff of its oil-and-gas assets in California, a masterpiece of Wall Street engineering – has done nothing but burn investors in its 10 months as an independent company. When I last wrote about it ten days ago, its $2.25 billion of 6% notes due 2024, issued at par to QE-drunk investors in September last year, had plunged to 66 cents on the dollar. Now they’re at 59.5 cents on the dollar.

Chesapeake Energy, the second largest natural gas driller in the US, is also facing the music. Two of its brethren, Quicksilver Resources and Samson Resources, have already filed for bankruptcy. When I last wrote about Chesapeake a month ago, its $1.1 billion of 5.75% notes due 2023 – that in June 2014 had been at 112 cents on the dollar – had plummeted to 70. Now they’re at 67.

Collapse is Inevitable

There has been considerable discussion lately as to whether or not total collapse of the world’t economies will happen in the relatively near future. I think that is the wrong question. Let me explain.

Ecological collapse of the world’s ecosystem is a lead pipe cinch. It is already well underway and instead of slowing down, it is gaining momentum fast.