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Big Collapse Coming, $10 Oil


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$10 oil on the way? The world's speculators must be positively tumescent at the thought. Can't see it happening. Commodities are on the march and oil will join the ranks before long.

Seems far fetched, I agree, but as Moloney points out, the base money supply has skyrocketed, while the money being created just began to plummet.

Well, now the developing world is helping to take up the slack, but I think that protectionist action is on the cards for the US. They just can't afford to tow China any more. If China crashes, then $10 oil is a very real prospect.

Edited by Toto deVeer
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Has this guy never heard of peak oil.

This version of deflation seems to involve hyperinflation. Can I say I am confused?

He seems to be quite nervous. Maybe Putin is in the audience? It takes chutzpah to speak like this at a bankers conference.

Personally, I believe that a lot of the liquidity being provided to the banks is being churned through commodities for a quick profit by the PDs, creating a froth in commodities. Oil was the first to succumb to this phenomenon. JP Morgan, in 2009, was hoarding tankers in the Med full of oil and just parking them.

If deflation sets in, the $50 in purchasing terms in 5 years might be equivalent to $75 today.

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He seems to be quite nervous. Maybe Putin is in the audience? It takes chutzpah to speak like this at a bankers conference.

Personally, I believe that a lot of the liquidity being provided to the banks is being churned through commodities for a quick profit by the PDs, creating a froth in commodities. Oil was the first to succumb to this phenomenon. JP Morgan, in 2009, was hoarding tankers in the Med full of oil and just parking them.

If deflation sets in, the $50 in purchasing terms in 5 years might be equivalent to $75 today.

$10 a barrel - that wouldn't even cover production costs. Cheaper for the producer to just shut in production and wait.

$10 and all the heavy. sour, tar sand operations world wide will stop the same day

Me thinks the floor for oil is probably now in the region of $35.

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Slight problem, he's drawing all his graphs against the US dollar. Against CHF, NOK or Gold they would look rather different and the head and shoulders would probably go away. :huh:

i thought head and shoulders was supposed to take things away?

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$10 a barrel - that wouldn't even cover production costs. Cheaper for the producer to just shut in production and wait.

$10 and all the heavy. sour, tar sand operations world wide will stop the same day

Me thinks the floor for oil is probably now in the region of $35.

Exactly - if demand falls by that much, they'll just leave it in the ground.

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The Russians are proposing to open up Arctic Oilfields that have become economic because the seas around the Arctic are becoming navigable, probably because we have burnt so much fossil fuel.

We're jammy gits, aren't we? We burn all the world's oil, so the world give us more oil!

And when the oil's gone we'll start on the Methane Hydrates - there's more of them than there ever was of oil. And they burn cleaner. :P

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$10 a barrel - that wouldn't even cover production costs. Cheaper for the producer to just shut in production and wait.

$10 and all the heavy. sour, tar sand operations world wide will stop the same day

Me thinks the floor for oil is probably now in the region of $35.

I don't want to get into the cost of oil production, that's another matter, but I agree that if it does get down to $10, it won't stay very long. What really matters to the producers is an average annual price, no? They won't stop producing unless the price stays low for some time.

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LOL at stupid predictions. It would be awesome if it happened... which is why it won't. Drive your car for nothing. Buy a house for nothing etc.

you think your salary would still be the same if it went to 10 Dollars, in fact you think youd even have a job? Thats the funny part, considering these isolated prices / incidents in the future whilst extrapolating forward all other conditions being the same as today

Edited by Tamara De Lempicka
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This version of deflation seems to involve hyperinflation. Can I say I am confused?

I believe the idea is deflation first while the good debts are paid down, then hyperinflation later when all that is left is a bumload of fiat paper and a huge pile of unpayable debts (i.e. the folks who owe the debts aren't the ones with the paper needed to pay it back). To me that seems plausible, it is a pretty reasonable-sounding description of a broken monetary system.

Japan has gone through pretty much the first half of this process, twenty years of private sector deleveraging as individuals and companies saved or paid down debts coupled with twenty years of massive public sector leveraging as the Japanese government created the most worthless debt imaginable: a huge pile of paper backed by nothing more than a promise that the next generation would pay. Now the Japanese saving rate is plumbing 2%, down from 25%: the private sector can hardly deleverage/save any more. The Japanese government meanwhile owes 200% of GDP. There is plenty of fiat paper, it is sat in the bank accounts and mattresses of elderly wealthy Japanese. Meanwhile the debts are all owed by the Japanese young in the form of government debt. "The folks who owe the debts aren't the ones with the paper needed to pay it back?" That is Japan to a T. So what happens now? Let me know if you figure it out!

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LOL at stupid predictions. It would be awesome if it happened... which is why it won't. Drive your car for nothing. Buy a house for nothing etc.

Deflation will benefit only those who are not stuck servicing massive debts. $10 a barrel oil is not much good to you if your mortgage is now costing you 75% of your income.

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We're jammy gits, aren't we? We burn all the world's oil, so the world give us more oil!

And when the oil's gone we'll start on the Methane Hydrates - there's more of them than there ever was of oil. And they burn cleaner. :P

Indeed... at the rate we are going they'll extract themselves..

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Have you a linky?

Sounds interesting to a disinterested mind.

Methane hydrates are a solid product of a reaction between methane and water that happens at high pressures and low temperatures (i.e. a lot of the sea bed). If you remember the first attempt to put a dome over the Deepwater Horizion leak, it failed because methane hydrates formed and blocked the whole thing up.

They can also be present in permafrost areas.

There is significant debate, however, as to how much there is. Trace amounts are present practically everywhere where formation conditions are present; the problem is finding amounts that would be commercial to actually produce. You may have to liberate and capture the methane from square kilometers of ocean floor at a time, or heat vast areas of permafrost, in order to get commercial quantities out. Compared to your average natural gas field, where the big problem is stopping the stuff coming out, or even shale gas, it's a massive technical challenge even if there is enough to make it worth while.

I'd also point out that as the permafrost warms and the arctic ocean loses ice cover, there is a possibility that it will be released naturally. How much and how quickly is in the 'very unknown' category, but luckily we are running an experiment.

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I don't want to get into the cost of oil production, that's another matter, but I agree that if it does get down to $10, it won't stay very long. What really matters to the producers is an average annual price, no? They won't stop producing unless the price stays low for some time.

There are some advantages to shutting down production.

....but stopping production for a while is something that will give a boost in production, generally, when the well is restarted. Aramco is a great believer in this and will rest their wells when they can to improve ultimate yield numbers.

From Heading_out over at www.oildrum.com

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Has this guy never heard of peak oil.

This version of deflation seems to involve hyperinflation. Can I say I am confused?

Deflation of debt fuelled assets will encourage more printing and pretending by govts (QE 2), which in turn sets the scene for hyper=inflation. Both are happening. $10 oil sounds too low and unlikely, but a major market crash on the second leg down does not.

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  • 433 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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