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  • Peak Cheap Oil, Peak Dollar, but no Peak Gold

    Peak Cheap Oil, Peak Dollar, but no Peak Gold

    by Eric Janszen

    Part I: Peak Cheap Oil


    While we’ve been bringing on hundreds of welcomed new members these past few weeks, we’re also aware that we’ve perhaps been boring our regular members silly with all of these interviews and rehashing of old news. Time to lay out iTulip’s summary editorial position on oil and the future of oil prices as the US recession that started Dec. 2007 deepens and the dollar enters its next stage of depreciation. Next we’ll rip into the latest gold bashing article from the mainstream business press. Finally, we offer up an anonymous interview with the president of a top 1% hedge fund that has turned each $1 invested in 2002 into $26 today by investing in junior gold mining companies–not only the gold miners themselves but “picks and shovels” firms, too.

    First, a brief note for our new readers about our methodology. We are not experts in oil or gold. We are, however, experts in rounding up sources who are experts and at doing analyses on the information they give us over long periods of time (we’ve been at this since 1998) to make reasonably accurate forecasts. Some of those experts are among us, but of course the identities of members and many of our sources that wish to remain anonymous are always kept confidential, including the subject of today's interview.

    Peak Cheap Oil

    We don’t believe in Peak Oil, the idea that oil will be used up at an increasing rate until one day it’s all gone. When the US ran out of easily (read: cheaply) accessed, high grade crude we shifted to overseas supplies in the 1970s. As those start to run out, where do we go, the moon? No, price will ration supply: we will experience Peak Cheap Oil. Prices will steadily rise. We may already be there.

    As we first pointed out in Energy and Money in May 2006, “Inflation is not only determined by the supply of goods available relative to the supply of money to buy them, but also the demand for the currency in which goods are priced relative to the supply of that currency. It can be hard to tell which factor is primarily driving prices.” Here's my latest take on oil prices and the dollar since the major price increases began in 2003 and where I think we are headed.

    1. Dollar price of oil rising faster than demand. Global oil dollar prices have been rising far faster than demand for barrels of oil as measured by the OECD since 2004.


    2. Dollar price of most commodities have been rising. The dollar price of nearly every kind of commodity, from foods to metals, has also increased in price at rates that are in most cases a multiple of demand growth.


    3. Dollar price of most commodities has been rising independent of supply/demand characteristics. If you break that chart down into its component parts, you see dozens of commodities going up in dollar price more or less at the same time and extent. Commodity prices are largely driven by supply and demand. The supply and demand characteristics of all commodities cannot be such that they all share the same price timing. Logically, a price factor common to all of them must be influencing the price of all commodities. The most obvious choice is the dollar money supply.

    4. Euro price of oil up only modestly. As evidence of this, note that oil priced in euros has also increased over the same period but only modestly.


    5. Currency depreciation. During the period, the dollar has depreciated by over 30%.


    The US has used currency depreciation since 2003 as its primary economic policy tool. The objectives are to promote exports both to boost economic growth and to reduce the trade deficit.

    The result has been a temporary boost in exports, a delay in the hard landing we would have otherwise experienced in 2007, but no decrease in the merchandise trade deficit. Last point first.
    As you can see, not only did the merchandise trade deficit not improve, it continued to worsen. The reason is that while the aggregate dollar value of exports increased, the dollar value of imports increased even more. Our poll of CEOs and CFOs of companies that export had been telling us all year that revenues and profits were improving, but that nearly all of the sales growth was coming from overseas business with US sales flat; IBM is emblematic. Now, a few production cycles into the inflationary boom they are starting to experience the downside of currency depreciation driven growth: input costs are rising as fast as prices of output; cash flow is squeezed and the purchasing power of profits is declining.

    Now the US enters a major recession with a weak currency, large trade and fiscal imbalances, and huge entitlement liabilities. Demand for oil will decline, but the dollar will decline faster as the government comes to the rescue. The only mystery we will all have trouble solving over the next few years is whether higher oil prices are resulting from a diminishing supply of cheaply extracted oil–Peak Cheap Oil–or from an over-supply of dollars, Peak Dollar. Which brings us to our next topic: has gold gone too far too fast as a dollar depreciation indicator or is it just getting started?

    Part II – More Lame Gold Bashing by the Mainstream Business Press

    The front page of the Personal Investing section of today’s Wall Street Journal writer Eleanor Laise warns readers to not jump into the gold market. The article starts off this way.
    How to Survive the New Gold Rush

    Investors Race Into the Hot Commodity, Even as Advisers
    Warn That Gains May Have Peaked; Beware the Tax Hit

    Gold has been riding its reputation as a safe haven to new highs. But it also carries substantial risks for investors.

    With fears of a U.S. recession prompting investors to abandon stocks, the Dow Jones Industrial Average is down 6.6% so far this year. Gold, meanwhile, has been hitting new records. The precious metal has gained 11% this year, to $927.10 an ounce, and has soared 46% since the end of 2006. As the dollar weakens and the economy and markets appear increasingly unstable, some market watchers believe the metal is now headed to $1,000 an ounce.
    Really? $1,000? I went on record in 2001 when gold was dead and trading at $265 saying gold may reach $2,500 an ounce, eventually. Old timers with long track records picking tops and bottoms in the gold price like Jim Sinclair over at JS Mineset are calling for $1,650 this year.

    This gold bashing article is one of hundreds like it that I’ve read since 2001 when we recommended gold as a hedge against irresponsible government spending and monetary mismanagement. These articles all more or less stick to the script that Laise follows with her four bullet points. I shoot them down, below.
    • Gold has lately been hitting record highs, but it comes with substantial risks for small investors.
    Not so. The risks of gold investing are no greater or less than for any other investment. Are we supposed to believe that investing in bonds is “safe” with the Fed raising interest rates in panic mode? Do you like investing in TIPS when the CPI inflation rate they are based on appears to be cooked? How about owning stocks as the US is in the early innings of a debt deflation, the likes of which are still haunting Japan’s economy more than 18 years after their debt deflation started? I summarize the Debt Deflation Bear Market here.



    The US debt deflation will result in a very weak dollar, which is inflationary. It is how the DOW/Gold ratio returns to 1:1, in case you were wondering.

    On to the second fallacious point.
    • Pure-play gold investments can be extremely volatile.
    “Can” be volatile, but please don’t mention that for the past six years gold investments “have not been” volatile and never, ever compare gold to the DJIA since 2001.



    Which was more volatile? Which provided better returns? Gold. When will we read about that in the WSJ? Next.
    • Though it's seen as a hedge against rising prices, gold hasn't always kept up with inflation -- and it can wreak havoc on your tax bill.
    That’s true. Gold is taxed as a “collectible” at a rate of 35% on capital gains–even a gold ETF. But why? Why can’t I take out a $250,000 loan, buy gold and write the interest off against my income taxes every year for 30 years the way I can with a home mortgage? Why can’t my wife and I pocket $500,000 in gold capital gains profits tax free every two years the way we can with our primary residence? Why can’t I take out an interest only ARM with a nutty teaser rate to buy gold? Why not pay 15% on long term capital gains as on a stock? Wonder what might happen to the price of gold if these tax benefits were suddenly put in place. Think maybe the gold price might go up?

    Wonder which asset the government wants US citizens to own? (Hint: Not the one that is a bet that incompetent fiscal and monetary management will result in high inflation.)
    • Broadly diversified funds that hold a wide range of commodities, including gold, may be a better bet for investors, advisers say.
    Gold is a metal so it is in a literal sense a commodity like copper or nickel. But that’s like saying cats are food because they’re animals. Cats have one very special quality that makes them not food: cats are kept by humans as pets. We have conferred upon them a special value as companions and discounted their value as a meal to zero. Similarly, gold is not a commodity because it is the only metal held as a reserve asset by central banks. This fact is conveniently forgotten by most business writers who fail to ask the obvious question: if gold no longer has any value as a backing for currencies, why do central banks still own 20% of all the gold that has ever been mined 37 years after it was ostensibly de-linked from all currencies?

    The reason is that central banks know that the incompetent, spendthrift governments they are loosely shackled to will continue to pursue inane policies and that these, in addition to their own irresponsibility such as interest rate policies under the Greenspan Fed, will eventually cause their fiat currencies to lose substantial value or worse so they’d better have something to fall back on. That was one of the reasons we recommended it in 2001 and we have not seen any compelling evidence to change our minds. As gold increased from $260 then to $924 today, what do you suppose has happened to the value of central bank gold reserves? You can bet the central banks aren’t complaining.

    Part III: Peak Gold?

    Today I interviewed the president of a hedge fund that invests in gold by investing in junior mining companies. Not only junior mining companies, but also mining equipment companies, so-called “picks and shovels” stocks.

    The fund is in its 6th year and clearly caught the gold wave early and played it well. How well? A dollar invested at inception is $26 today. The fund has been in the top 1% since inception.

    EJ: Why is gold going up?

    HF: Because all currencies are going down. Have been for a while. A few funds are buying gold. That's it.

    EJ: Do you see the US economy going into recession? How will that impact gold?

    HF: Yes. The conclusions are so obvious that most people can’t believe it. The die is cast. It’s Argentina early 1990s and UK 1960s all over again. Things will get worse and worse. We’ll have alternating booms and bust with inflation for a decade. Peak Gold? ($ubscription) interview continued...

    Note: This article may be reprinted in its entirety including the link above.

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    Last edited by FRED; 01-31-08, 02:55 PM.
    Ed.

  • #2
    Re: Peak Cheap Oil, Peak Dollar, but no Peak Gold

    "We don’t believe in Peak Oil, the idea that oil will be used up at an increasing rate until one day it’s all gone."

    Is there some sizable group of people that do believe this? It certainly doesn't describe the beliefs of peak oil believers.
    Last edited by FRED; 01-31-08, 01:12 PM.

    Comment


    • #3
      Re: Peak Cheap Oil, Peak Dollar, but no Peak Gold

      Originally posted by KeithOK View Post
      "We don’t believe in Peak Oil, the idea that oil will be used up at an increasing rate until one day it’s all gone."

      Is there some sizable group of people that do believe this? It certainly doesn't describe the beliefs of peak oil believers.
      Peak Oil Believers do not believe that "oil will be used up at an increasing rate until one day it’s all gone." What they say is that as oil supplies decline, prices will go up and demand will go down -- It is an axiom of economics that supply always equal demand - with price being the intermediary.

      As supplies decline, there are two ways to allocate that limited supply -- by pricing mechanisms (and I believe that this is what EJ is saying) or by government rationing (e.g. gas coupons issued by the government)

      The first method hits the "less well to do" the hardest -- hence the possible "political" need for government purchases and rationing. The likely response to limited supplies -- e.g. of food and energy -- is a combination of both approaches.
      Last edited by FRED; 01-31-08, 01:12 PM.

      Comment


      • #4
        Re: Peak Cheap Oil, Peak Dollar, but no Peak Gold

        Originally posted by KeithOK View Post
        "We don’t believe in Peak Oil, the idea that oil will be used up at an increasing rate until one day it’s all gone."

        Is there some sizable group of people that do believe this? It certainly doesn't describe the beliefs of peak oil believers.
        Search google for "Peak Oil" and these are the first two links returned.

        "Civilization as we know it is coming to an end soon. This is not the wacky proclamation of a doomsday cult, apocalypse bible prophecy sect, or conspiracy theory society. Rather, it is the scientific conclusion of the best paid, most widely-respected geologists, physicists, bankers, and investors in the world. These are rational, professional, conservative individuals who are absolutely terrified by a phenomenon known as global 'Peak Oil.'"

        http://www.lifeaftertheoilcrash.net
        Optimistic estimations of peak production forecast a peak will happen in the 2020s or 2030s and assume major investments in alternatives will occur before a crisis. These models show the price of oil at first escalating and then retreating as other types of fuel and energy sources are used.

        Pessimistic predictions of future oil production operate on the thesis that the peak has already occurred or will occur shortly and, as proactive mitigation may no longer be an option, predict a global depression, perhaps even initiating a chain reaction of the various feedback mechanisms in the global market which might stimulate a collapse of global industrial civilization.

        http://en.wikipedia.org/wiki/Peak_oil

        iTulip position:
        "We have plenty of oil. But we're running out of cheap oil and there are no cheap alternatives."

        Energy and Money, 2006
        The operative word here is "cheap" as in representing a low or declining fixed cost to the economy. The US economic response to higher oil prices has been declining energy intensity, meaning a decline in the amount of energy needed to produce a dollar of GDP. We are optimistic that this trend will continue and accelerate as Peak Cheap Oil drives demand for conservation technologies and less energy intensive forms of production and transportation, and a changing definition of "necessary" transportation.
        Ed.

        Comment


        • #5
          Re: Peak Cheap Oil, Peak Dollar, but no Peak Gold

          EJ, it wasn't too many months ago that you wrote an article on iTulip saying that gold could not skyrocket because it had no government support. That it would go up at the rate of inlfation. I made a comment in that thread that I'd like to refer to but can't find that article now. Can FRED or someone point me to the link. I have not been able to find it by searching.

          Thanks
          Charles

          Comment


          • #6
            Re: Peak Cheap Oil, Peak Dollar, but no Peak Gold

            Originally posted by Charles Mackay View Post
            EJ, it wasn't too many months ago that you wrote an article on iTulip saying that gold could not skyrocket because it had no government support. That it would go up at the rate of inlfation. I made a comment in that thread that I'd like to refer to but can't find that article now. Can FRED or someone point me to the link. I have not been able to find it by searching.

            Thanks
            Charles
            It's in EJ's keynote presentation to the 2007 Hard Assets Conference.

            Does not say gold can't skyrocket but that it cannot meet the iTulip definition of an asset hyperinflation, which requires government support. Gold will rise in spite of government not because of it as in the case of the housing bubble.
            Ed.

            Comment


            • #7
              Re: Peak Cheap Oil, Peak Dollar, but no Peak Gold

              Originally posted by FRED View Post
              iTulip position:
              "We have plenty of oil. But we're running out of cheap oil and there are no cheap alternatives."
              example,

              http://www.suncor.com/links_popup.aspx?ID=3250
              Calgary, Alberta (January 30, 2008) – Suncor Energy announced today that its Board of Directors has given final approval to a $20.6 billion investment that is expected to boost crude oil production at the company’s oil sands operation, located north of Fort McMurray, by 200,000 barrels per day (bpd).

              Comment


              • #8
                Re: Peak Cheap Oil, Peak Dollar, but no Peak Gold

                That’s true. Gold is taxed as a “collectible” at a rate of 35% on capital gains–even a gold ETF. But why? Why can’t I take out a $250,000 loan, buy gold and write the interest off against my income taxes every year for 30 years the way I can with a home mortgage? Why can’t my wife and I pocket $500,000 in gold capital gains profits tax free every two years the way we can with our primary residence? Why can’t I take out an interest only ARM with a nutty teaser rate to buy gold? Why not pay 15% on long term capital gains as on a stock? Wonder what might happen to the price of gold if these tax benefits were suddenly put in place. Think maybe the gold price might go up?




                Wonder which asset the government wants US citizens to own? (Hint: Not the one that is a bet that incompetent fiscal and monetary management will result in high inflation.)
                • Broadly diversified funds that hold a wide range of commodities, including gold, may be a better bet for investors, advisers say.
                Gold is a metal so it is in a literal sense a commodity like copper or nickel. But that’s like saying cats are food because they’re animals. Cats have one very special quality that makes them not food: cats are kept by humans as pets. We have conferred upon them a special value as companions and discounted their value as a meal to zero. Similarly, gold is not a commodity because it is the only metal held as a reserve asset by central banks. This fact is conveniently forgotten by most business writers who fail to ask the obvious question: if gold no longer has any value as a backing for currencies, why do central banks still own 20% of all the gold that has ever been mined 37 years after it was ostensibly de-linked from all currencies?

                The reason is that central banks know that the incompetent, spendthrift governments they are loosely shackled to will continue to pursue inane policies and that these, in addition to their own irresponsibility such as interest rate policies under the Greenspan Fed, will eventually cause their fiat currencies to lose substantial value or worse so they’d better have something to fall back on. That was one of the reasons we recommended it in 2001 and we have not seen any compelling evidence to change our minds. As gold increased from $260 then to $924 today, what do you suppose has happened to the value of central bank gold reserves? You can bet the central banks aren’t complaining.


                Great Points!
                I know of no one (except evidently the IRS) who considers recently minted gold bullion coins (e.g., eagles, maples, kruggerands, etc.) to be collectibles. Taxing L.T. capital gains at ordinary income rates is just another way to discourage folks from holding it.

                It makes more problematic Ron Paul's initial strategy for returning to gold based money: https://www.mises.org/story/2826
                ....
                "The First Step: Gold Coinage



                The heart of Mises's proposal to restore gold to our monetary system is a gold coinage. He wrote,
                Gold must be in the cash holdings of everyone. Everybody must see gold coins changing hands, must be used to having gold coins in his pockets, to receiving gold coins when he cashes his paycheck, and to spending gold coins when he buys in a store.[7]
                In this one detail — the critical importance of the gold coinage — I believe lies the key to establishing a new gold standard.
                We should make no mistake about it: the more progress we make toward reestablishing the gold standard, the more aggressive our opposition will become. Some vested interests, as you know, have a lot to lose if we succeed in getting the monetary system reconstructed on a gold basis. The first political step is, therefore, to get the coinage into circulation.
                One objective might be to aim for every American to become a gold owner. We must encourage a broader base of political support for gold ownership and the availability of gold for personal economic objectives. Certainly a broader base of gold ownership in the country would help to reduce the threats of discriminatory taxation or regulation of gold ownership and gold coin transactions, which are seriously favored in Congress today."
                .....



                By the way, deos anyone know more of this agreement between the Central Banks referenced in the GLD prospectus (see below)?
                http://www.streettracksgoldshares.co...reetTRACKS.pdf.

                "Substantial sales of gold by the official sector could adversely affect an investment in the Shares.
                The official sector consists of central banks, other governmental agencies and multi-lateral institutions that buy,
                sell and hold gold as part of their reserve assets. The official sector holds a significant amount of gold, most of
                which is static, meaning that it is held in vaults and is not bought, sold, leased or swapped or otherwise
                mobilized in the open market. A number of central banks have sold portions of their gold over the past 10 years,
                with the result that the official sector, taken as a whole, has been a net supplier to the open market. Since 1999,
                most sales have been made in a coordinated manner under the terms of the Central Bank Gold Agreement,
                under which 15 of the world’s major central banks (including the European Central Bank) agreed to limit the
                level of their gold sales and lending to the market. It is possible that the agreement may not be renewed when it
                expires in September 2009. In the event that future economic, political or social conditions or pressures require
                members of the official sector to liquidate their gold assets all at once or in an uncoordinated manner, the
                demand for gold might not be sufficient to accommodate the sudden increase in the supply of gold to the
                market. Consequently, the price of gold could decline significantly, which would adversely affect an investment
                in the Shares."


                I realize that this is a broad disclaimer to fully apprise the investor of every possible risk they can think of, but what (if anything) could motivate central banks to dump gold?

                Comment


                • #9
                  Re: Peak Cheap Oil, Peak Dollar, but no Peak Gold

                  Originally posted by FRED View Post
                  It's in EJ's keynote presentation to the 2007 Hard Assets Conference.

                  Does not say gold can't skyrocket but that it cannot meet the iTulip definition of an asset hyperinflation, which requires government support. Gold will rise in spite of government not because of it as in the case of the housing bubble.
                  Presumably there's no intentional government support. If you allow for government "support" by mismanagement, malfeasance, credit overexpansion, and wrecking the currency ...
                  Finster
                  ...

                  Comment


                  • #10
                    Re: Peak Cheap Oil, Peak Dollar, but no Peak Gold

                    Originally posted by Finster View Post
                    Presumably there's no intentional government support. If you allow for government "support" by mismanagement, malfeasance, credit overexpansion, and wrecking the currency ...
                    That's not "support." That's your government hard at work! We're working hard! To wreck your economy!
                    Ed.

                    Comment


                    • #11
                      Re: Peak Cheap Oil, Peak Dollar, but no Peak Gold

                      What is the name of the Hedge fund whose president you interviewed? How can I contact them?

                      Comment


                      • #12
                        Re: Peak Cheap Oil, Peak Dollar, but no Peak Gold

                        I'm sorry but your analysis of PEAK OIL is quite wrong. If I may respond to EJ's
                        "Why I don't believe in Peak Oil in One Chart",

                        Here is why I DO BELIEVE in PEAK OIL, in ONE CHART of course.
                        Courtesy of James Dines & Co. From the Atlantic Magazine
                        Attached Files

                        Comment


                        • #13
                          Re: Peak Cheap Oil, Peak Dollar, but no Peak Gold

                          While I'm not a big fan of the first two google links research methodology, I'll be happy to respond. The examples you give never say "oil will be used up at an increasing rate until one day it’s all gone."

                          More importantly, if you want to do internet research to find out what peak oil believers believe, go to one of their sites. For example, from the peak oil overview at www.theoildrum.com :
                          "What is peak oil?
                          "Peak oil" is the term used to describe the situation when the amount of oil that can be extracted from the earth in a given year begins to decline, because geological limitations are reached. Extracting oil becomes more and more difficult, so that costs escalate and the amount of oil produced begins to decline. The term peak oil generally relates to worldwide production, but a similar phenomenon exists for individual countries and other smaller areas."

                          This is not a cherry-picked quote. I've been reading about peak oil for several years, and have never seen any of the leading peak oil voices describe peak oil in the way you have. Since it is a common misconception, I'm sure you can find the "running out of oil" view by some journalist or in blog comments, but not by anyone with any influence in the peak oil community. I have seen it described as a misconception to be avoided, as in this excerpt from a British article on preparing for peak oil [http://www.odac-info.org//welcome/documents/PFPO_Final.pdf]: "What is Peak Oil? People usually ask when the world’s oil is going to ‘run out’, but this is the wrong way to frame the question. Peak oil refers to the year in which global oil production will reach its maximum level, never to be exceeded, and then fall into sustained decline. This is expected to happen ‘at the midpoint of depletion’ - when only half the oil that will ever be produced has been consumed, and the other half is still underground."
                          The "oil suddenly running out" view of peak oil is not only a misstatement of the peak oil view, it is totally inconsistent with the methodology used by peak oil theorists to forecast peak oil: Oil depletion curve estimates for various countries, sources or fields, with peaks at different years, are combined to get an overall forecast. While different researchers come up with different curves, they all show the oil depletion continually for decades (the British article cited above gives a 3% estimate for annual fall in oil production after the peak). An example of one of these estimates, showing peak oil about a decade away but oil production still above 1970s level in 2050, can be found at: http://www4.tsl.uu.se/isv/UHDSG/.

                          The iTulip view that "we're running out of cheap oil and there are no cheap alternatives" does not stand in opposition to peak oil theory, it's central to it. One of the leading peak oil theorists, Dr. Colin J. Campbell, co-authored a peak oil paper in Scientific American in March 1998 entitled "The End of Cheap Oil" [http://dieoff.com/page140.pdf], and I've seen peak oil theory characterized in those same terms numerous times.

                          I'm not sure why you're fighting peak oil believers when, for the most part, they are saying the same thing you are (though a few in the community may be unrealistically optimistic about cheap energy alternatives).

                          I challenge any of your readers to go to some of the sites like theoildrum.com or peakoil.com, check out some of the links, scan a few articles by peak oil theory advocates like Matthew Simmons, Dr. Campbell or James Kunstler. Then they can judge for themselves whether peak oil theory more closely resembles the iTulip view of "the end of cheap oil", or the "running out of oil" view you ascribe to peak oil believers.

                          Comment


                          • #14
                            Re: Peak Cheap Oil, Peak Dollar, but no Peak Gold

                            KeithOK -

                            Your observation is entirely correct, and in fact iTulip have been apprised of this before, but the observation elicits a "no comment".

                            The differences between iTulip's "Peak Cheap Oil" [TM] and the rest of the world's plain old "Peak Oil" are 98% semantic. The reason this semantic difference has been constructed and is required to exist is to dissociate iTulip's interpretation of this event from the Peak Oil community, many of whose members elicit a certain "socio-political distaste" around here. I agree, it's a bit silly. There is an old expression: "Call a Spade a Spade", which I think is applicable here.

                            Good job pointing this issue out, as it was crying out for clarification. Whether iTulip acknowledge the distinction is semantic or not, it remains so infinitesimally subtle as to remain indeed purely a semantic difference. They are now officially in bed with the peak oil community, unless and until they refute Peak Oil. How distressing is that?

                            Comment


                            • #15
                              Re: Peak Cheap Oil, Peak Dollar, but no Peak Gold

                              Its because it is apparently too simple for you to understand:

                              Peak oil means oil will NEVER be produced at the rates it is today.

                              Peak cheap oil means the rate of oil production is not the issue, it is the area under the cost * production curve.

                              Peak cheap oil means it is very possible that oil production could go up in the future, but the price would still be higher.

                              Peak oil means a permanently increasing price as all the Mad Max'ers circle around the last refinery.

                              Comment

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