Trump's Economic Plan

[StCapps]

Gotta get that oil price back up, and attacking Iran is the quickest way to do it, big fight in the Gulf, war zone in the Straight of Hormuz, attacking the Iranian infrastructure, oh yes indeed, bring it ons, Neocons, cha-ching.

The only questions are can they come up with a a reason to fight the war that will sell to general public and if so what will that pretext will be? Nuclear Deal violations or some shit?

Oh hell, they'll just pull the "WMD!" lever again, if it ain't broke don't fix it, works every time, and you watch, them Iranians will play right into it, they already launching ballistic missiles in violation of the agreement, that regime in Tehran actually needs the GOP as an enemy as much as the GOP needs them.

Figured that might be the play. This time it's even easier to sell "WMD!" to the public due to Iran's nuclear policy decisions lulz.

[Smitty-48]

The Iranians are looking for this fight, they've been cruisin' for a bruisin' for awhile now, and the way I figure it, it's because they fear being brought down from within, kumbaya ain't no good for the Mullah's in Tehran, if Iran is not being attacked by the Zionist American Infidels, the whole raison d'etre for the revolution goes away, they need a war, war, is what is keeping them in power, and with Iran, America is not going to invade with massive numbers of troops, it will be an Air-Sea war, lots of bombing, but no regime change, which is actually win-win, from the point of view of the Revolutionary Guard, as that is the very thing which consolidates their power over the country.

Government Oil the People needs an Iranian Menace, and the Iranian Menace needs to be menaced to maintain its grip on power; it's a symbiotic relationship.

[adwinistrator]

Since this thread is more relevant than the one I originally posted this in, I'll toss it here as well as some of this conversation involves the price of oil, and it's relations to the US and global economies. This post covers the factors that drove the price of oil down in 2014, drove the price of oil up in 2016, and how the oil marketplace has shifted in the last 5 years.

_______________________________________________________________________________________


For anyone interested in understanding the causes of the 2014-2016 oil price drop, the current recovery, and the long term forecast, I'll write out a simplified but thorough explanation.

The price of oil dropped from over $100/barrel in 2014 to $50/barrel today, with a low of $26/barrel last February.

The main causes of these changes were:

• Decreased demand
• Oversupply
• Strong US dollar exchange

Decreased demand was contributed to weakened economies in Europe, China, and many developing countries. US imports dropped substantially due to increased production via shale drilling (fracking) to the point that US net oil production surpassed net imports.

Oversupply was caused by a few factors. The global oil market is much more diversified, and no single producer or group can reduce supply to raise prices, without losing market share. This is mainly due to the increase in US oil production. Before the price drop, high prices made US shale oil profitable. Between 2009 and 2014, global crude oil supply increased by almost 5 million barrels per day, 3.3 million barrels of which came from the US. OPEC decided not to cut production in 2014 as prices began to drop, adding additional downward pressure to the price of oil. The Iran deal allowed Iranian oil exports on the market, adding further downward pressure.

While supply and demand were already set to reduce oil prices, a strong US dollar increased this downward pressure. The Euro was remaining weak against the US dollar, and China devalued their currency amidst their decreased economic growth. In this case, the US dollar helped push prices down, but at some point the low oil price contributed to an even stronger US dollar.

The strength of the US dollar vs other major currencies is integral to the oil market, which is traded in US dollars. A very simplified way to think about "US dollar strength" is that it has 3 main factors: US economy (exports vs. imports, monetary policy, etc.) vs. global economy (other major currencies doing better or worse) vs. Oil/Gold prices (supply/demand). There's a lot of academic debate, but basically, a strong US dollar can push oil prices down, and dropping oil prices can push up US dollar strength.

The oil prices hit their low early last year ($26/barrel in Feb 2016), and have been steadily increasing to today (~$50/barrel).

This is due to:

• OPEC agreeing to major production cuts in Nov 2016 (-1.8M barrels/day until May 2017).
• Higher demand caused by stronger global economic growth, higher vehicle sales and colder than expected weather in Q4 2016.
• Decreased US shale oil production caused by low oil prices.

Does this mean that prices are going back to $100/barrel? Not likely.

Bringing the price of oil from $26/barrel to $52/barrel was enough to increase active US oil rigs from 439 to 591. You can expect to see OPEC production cuts also ease along the same proportion.

U.S. crude stockpiles swelled in January to nearly 200 million barrels above their five-year average, according to the OPEC report.
"This vast increase in inventories is a result of a strong supply response from the U.S. shale producers, who were not involved in the OPEC agreement and who have instead been using the resultant price rally to increase output," said Fiona Cincotta, an analyst at City Index.

Sources:

1. MarketWatch. 5 year U.S. Dollar Index (DXY).
2. Ivana Kottasova. "Oil prices have doubled in a year. Here's why" (2/13/17). CNN Money.
3. Ivana Kottasova. "The global oil surplus will disappear in 2017" (12/13/16). CNN Money.
4. Investopedia. "4 Reasons Why the Price of Crude Oil Dropped" (10/22/15).
5. Mike Scott. "What’s Driving the Plunge in Oil Prices" (12/22/15). Fortune: Finance.
6. Knowledge@Wharton. "Beyond the Gas Pump: A New World Order for Oil" (1/22/15). The Wharton School, University of Pennsylvania.
7. Knowledge@Wharton. "What a Robust Dollar Means for U.S. Business - and the Global Economy" (4/15/15). The Wharton School, University of Pennsylvania.
8. Frank Holmes, U.S. Global Investors. "Here's What A Strong Dollar Does To Oil And Gold Prices" (10/22/15). Business Insider
9. Martin Feldstein. "The Dollar and the Price of Oil" (2008). Project Syndicate, Harvard University Department of Economics.

[Smitty-48]

Yeah, well, this is why Government Oil the People needs a big war with Iran, to incite massive disruptions across the Persian Gulf while crippling Iranian production capacity, because them shale Wildcatters ain't gonna be making much profit at $52/barrel, and nobody gets into the oil business just to break even.

Best way to cut OPEC production, is to shoot the place up and cause all heck to break loose in the Straights of Hormuz; watch this space.

Optimally, you get the Arabs and Iranians trading ballistic missiles on each others oil fields, while they trade cruise missiles on each others tankers, with a big ol' minefield at that chokepoint in Hormuz; cha-ching.

Best hit some of them African OPEC countries too while you're at it, I hear Africa is full of "terrorists", warm up the GBU's.

[ssu]

Get the fuck out of here with your garbage argument.

Learn math, will you?

Oil, math and DSL do not mix. DSL is good at math, but if it's math having to do with oil he'll just pretend he can't do the math because oil is the devil. Peak oil still freaks him out, I shit you not. When it comes to oil, StA is straight up Malthusian in outlook.

Well, I'm a believer in Peak Oil, I'm not just a believer in the "Mad Max"-scenario. What the really funny thing is that Peak Oil has already happened, and we already see it "in action". Oooh, the horror!

We have already seen that:

a) high oil prices act as an handbrake to the economy. That handbrake effect happens when price of oil goes to the range of 75$ to +100$

b) high oil prices make food more costly and produce food riots and effects the poorest countries the most. End result: political instability.

Yet:

a) high oil prices make alternative energy resources more competitive and incites more technological R & D.

b) high oil prices make more costly ways of producing oil (like shale & tar sands, as Smitty points out) economically profitable


The "apocalyptic" scenario of Peak Oil would have happened... if there wouldn't have been a fracking & horizontal drilling revolution. Comparing light sweet crude and a some shale rock or tar sands and one can see that it's a totally different resource. Another reason is simple laws of supply and demand (as adwinistrator points out). Hence technological advancement plays a huge role making "Peak Oil" rather a nuisance to the economy than an dramatic sinister event that will break up our societies.

Yeah, well, this is why Government Oil the People needs a big war with Iran, to incite massive disruptions across the Persian Gulf while crippling Iranian production capacity, because them shale Wildcatters ain't gonna be making much profit at $52/barrel, and nobody gets into the oil business just to break even.

Best way to cut OPEC production, is to shoot the place up and cause all heck to break loose in the Straights of Hormuz; watch this space.

Optimally, you get the Arabs and Iranians trading ballistic missiles on each others oil fields, while they trade cruise missiles on each others tankers, with a big ol' minefield at that chokepoint in Hormuz; cha-ching.

Best hit some of them African OPEC countries too while you're at it, I hear Africa is full of "terrorists", warm up the GBU's.

All that Iranian oil hitting the global market now is keeping the oil price low. Yep, have to do something about it!

[adwinistrator]

Well, I'm a believer in Peak Oil, I'm not just a believer in the "Mad Max"-scenario. What the really funny thing is that Peak Oil has already happened, and we already see it "in action". Oooh, the horror!

...

The "apocalyptic" scenario of Peak Oil would have happened... if there wouldn't have been a fracking & horizontal drilling revolution. Comparing light sweet crude and a some shale rock or tar sands and one can see that it's a totally different resource. Another reason is simple laws of supply and demand (as adwinistrator points out). Hence technological advancement plays a huge role making "Peak Oil" rather a nuisance to the economy than an dramatic sinister event that will break up our societies.

I'll just add that obviously "peak oil" is real, since at some point you begin encountering diminishing returns.

I think shale oil has helped put off the peak oil crisis by decades. I don't think it actually changes the nature of how severe the crisis will be when it occurs, especially since there will probably be another billion or two people on earth by that point.

[ssu]

I think shale oil has helped put off the peak oil crisis by decades. I don't think it actually changes the nature of how severe the crisis will be when it occurs, especially since there will probably be another billion or two people on earth by that point.

The transition from oil will take long: it will be measured in decades at least. And as technology improves, costs come down. In fact I think the LOW prices of oil will be in the long run beneficial to shale oil and other unconventional methods. This is because the companies have truly a reason to cut costs as otherwise they are out of business. Hence if the Saudi's can think they can counter US domestic shale oil with lower prices, it's going to hurt them in the long run. But if you have subsidies, no reason to improve things. Basically subsidies are counted as fixed income with no need to think about a reality without them (that's why domestic industries protected By tariffs usually never improve themselves to be able to compete on the global market).


We can also quite well estimate how many people there are going to be in 2050, perhaps 8 to 11 billion. Because if there one type of forcasts that have been correct in the long run, it's population growth (as those in 2040's starting families are already born). And no.1 reason for population growth to get lower has allways been the increase in the prosperity of the people. Now likely that prosperity will continue to increase on a global level as it has done now. You are talking about doubling the population of today... but then it might stay the same for a long time.

[Penner]

Well, I'm a believer in Peak Oil, I'm not just a believer in the "Mad Max"-scenario. What the really funny thing is that Peak Oil has already happened, and we already see it "in action". Oooh, the horror!

...

The "apocalyptic" scenario of Peak Oil would have happened... if there wouldn't have been a fracking & horizontal drilling revolution. Comparing light sweet crude and a some shale rock or tar sands and one can see that it's a totally different resource. Another reason is simple laws of supply and demand (as adwinistrator points out). Hence technological advancement plays a huge role making "Peak Oil" rather a nuisance to the economy than an dramatic sinister event that will break up our societies.

I'll just add that obviously "peak oil" is real, since at some point you begin encountering diminishing returns.

I think shale oil has helped put off the peak oil crisis by decades. I don't think it actually changes the nature of how severe the crisis will be when it occurs, especially since there will probably be another billion or two people on earth by that point.

But isn't the definition of Peak Oil is when the most conventional and easiest/cheapest methods of obtaining oil have been exhausted, and folks, we have most likely passed it by- probably within the last decade or so when the last time oil spiked to something like $150 a barrel. I mean look where we are getting our oil- Tar Sands- unconventional method (and sure technology has now made it more conventional) but we have already reached the tipping point.

[Speaker to Animals]

Well, I'm a believer in Peak Oil, I'm not just a believer in the "Mad Max"-scenario. What the really funny thing is that Peak Oil has already happened, and we already see it "in action". Oooh, the horror!

...

The "apocalyptic" scenario of Peak Oil would have happened... if there wouldn't have been a fracking & horizontal drilling revolution. Comparing light sweet crude and a some shale rock or tar sands and one can see that it's a totally different resource. Another reason is simple laws of supply and demand (as adwinistrator points out). Hence technological advancement plays a huge role making "Peak Oil" rather a nuisance to the economy than an dramatic sinister event that will break up our societies.

I'll just add that obviously "peak oil" is real, since at some point you begin encountering diminishing returns.

I think shale oil has helped put off the peak oil crisis by decades. I don't think it actually changes the nature of how severe the crisis will be when it occurs, especially since there will probably be another billion or two people on earth by that point.

But isn't the definition of Peak Oil is when the most conventional and easiest/cheapest methods of obtaining oil have been exhausted, and folks, we have most likely passed it by- probably within the last decade or so when the last time oil spiked to something like $150 a barrel. I mean look where we are getting our oil- Tar Sands- unconventional method (and sure technology has now made it more conventional) but we have already reached the tipping point.

No. Peak oil occurs when demand exceeds potential supply. You can reach peak oil either through depletion or just rapidly increasing demand. We are doing both.

One of the weird things about peak oil is that it will seem like oil is plentiful right before it hits. We will be drilling and processing more oil in a single year than we did in multiple previous years. Everything will seem great. Then the news hits that supply isn't in any way catching up with demand. Futures markets will go crazy, and oil will increase by thousands of percent in a few days or weeks.

If you want to plan for peak oil, buy some decent oil stocks and stockpile gold and silver whenever their spot prices drop. Once peak oil hits, sell the oil and buy tangible assets. Get out of stocks and bonds altogether.

The problem is that nobody can really predict when this will happen, so doing that might not be terribly profitable unless you guess right within about five to ten years of the event. I sort of suspect it will happen in the 2030s or 2040s, but it's just a guess based on my feeling that terrible shit always happens at once, and that's about the same time as the demographic winter and probably climate change problems.


One thing you might pay attention to is how much gold the Saudi royal family and the other wealthy (noble) families in Saudi Arabia buy. If you see a consistent up-tick in their acquisition of gold, silver, and other tangible assets, then maybe it's about to happen..

[adwinistrator]

I'll just add that obviously "peak oil" is real, since at some point you begin encountering diminishing returns.

I think shale oil has helped put off the peak oil crisis by decades. I don't think it actually changes the nature of how severe the crisis will be when it occurs, especially since there will probably be another billion or two people on earth by that point.

But isn't the definition of Peak Oil is when the most conventional and easiest/cheapest methods of obtaining oil have been exhausted, and folks, we have most likely passed it by- probably within the last decade or so when the last time oil spiked to something like $150 a barrel. I mean look where we are getting our oil- Tar Sands- unconventional method (and sure technology has now made it more conventional) but we have already reached the tipping point.

No. Peak oil occurs when demand exceeds potential supply. You can reach peak oil either through depletion or just rapidly increasing demand. We are doing both.

One of the weird things about peak oil is that it will seem like oil is plentiful right before it hits. We will be drilling and processing more oil in a single year than we did in multiple previous years. Everything will seem great. Then the news hits that supply isn't in any way catching up with demand. Futures markets will go crazy, and oil will increase by thousands of percent in a few days or weeks.

If you want to plan for peak oil, buy some decent oil stocks and stockpile gold and silver whenever their spot prices drop. Once peak oil hits, sell the oil and buy tangible assets. Get out of stocks and bonds altogether.

The problem is that nobody can really predict when this will happen, so doing that might not be terribly profitable unless you guess right within about five to ten years of the event. I sort of suspect it will happen in the 2030s or 2040s, but it's just a guess based on my feeling that terrible shit always happens at once, and that's about the same time as the demographic winter and probably climate change problems.


One thing you might pay attention to is how much gold the Saudi royal family and the other wealthy (noble) families in Saudi Arabia buy. If you see a consistent up-tick in their acquisition of gold, silver, and other tangible assets, then maybe it's about to happen..

Good explanation. I'd just add another way to think of peak oil.

It's not just about "running out" of oil, because that will never technically happen.

It happens in a few stages:

At some point, we'll exhaust all the oil that is "easy" to access, and we'll have to go after the more difficult, dangerous, and costly oil to keep up with demand.

Oil will get prohibitively expensive, lowering demand.

At some point, it is no longer economically viable to product that oil. This happens at the local deposit/extraction level, not a big deal, they stop extraction and go after cheaper methods.

Peak oil is when this happens at a global level, and passes a tipping point.

You can see where gov't subsidies would be used to try and keep it going for a bit, or even a gov't extraction program operating at a loss. But even that can only continue for so long...

While many nations will be able to transfer to alternative energy sources, what about those that can't? Billions of humans in 3rd world nations will be in a slow moving logistical collapse, and will likely die of starvation...