The Crash Course - Chris Martenson

[Estimated Profit]

http://www.chrismartenson.com/crashcourse

 

I would appreciate feedback from anybody that watches this presentation.

 

As doomsday scenarios go, this one isn't bad. 

 

Thesis: The next 20 years will be radically different than the last 20 years.

 

-Collapse of Fiat Currencies (USD in particular)

-Accelerating debt bubble in the US

-Explosion of money supply (same thing as the debt bubble)

-Explosion of global population (70 million new people per year)

-Scarcity of natural resources

-Destruction of ecosystems

 

I can't say that I disagree with him, but I'd really like to.

 

As the Globe and Mail says: Perspective is everything. If anyone would like to offer theirs to this that would be great.

 

EP

 

 

[returnonmycapital]

As Munger might suggest: You'll make a lot of mistakes by keeping to one extreme or the other.

[leftcoast]

I think this is one of the recommended readings from Jeremy Grantham's last quarterly letter.

 

IMO, the arguments regarding resource depletion over the next few decades are pretty compelling, whether it's Peak Oil or peak something else. Jared Diamond's book "Collapse" gives a historical perspective of the same problem, where exponential population growth eventually hits a hard stop limit. You can argue where that limit is, and how much technology might help delay it, but you can't argue about whether or not it exists. Nothing grows exponentially forever (not even BRK :(). And, as with most phenomena involving any kind of exponential growth, the end-game tends to sneak up on people and manifest itself in a way that seems sudden and dramatic.

[Packer16]

Resource constraint is an interesting topic.  This type of scenario has been around for at least 100s of years (think Malthus).  Historically, whenever someone has had this type of scenario it has never come to pass.  Why?  If nothing is done, the scenario may come to pass but rarely is nothing done.  Typically, the market has used price to signal the allocation of the scarce resource.  With the incentives high, people's ingenuity have usually come up with an alternative.  For example the major find a new oil or natural gas discovery that can  be exploited with new technology (think shale gas).  I think betting against the market and history is dangerous.  In the long term a market based solution will be found but in the short term the pricing mechanism will provide the incentive for the LT solution.

 

 

Packer

[txlaw]

Resource constraint is an interesting topic.  This type of scenario has been around for at least 100s of years (think Malthus).  Historically, whenever someone has had this type of scenario it has never come to pass.  Why?  If nothing is done, the scenario may come to pass but rarely is nothing done.  Typically, the market has used price to signal the allocation of the scarce resource.  With the incentives high, people's ingenuity have usually come up with an alternative.  For example the major find a new oil or natural gas discovery that can  be exploited with new technology (think shale gas).  I think betting against the market and history is dangerous.  In the long term a market based solution will be found but in the short term the pricing mechanism will provide the incentive for the LT solution.

 

 

Packer

 

"BP Makes ‘Giant’ Oil Discovery in Gulf of Mexico," http://www.bloomberg.com/apps/news?pid=20601087&sid=adF31W9._rik

 

Packer may have hit the nail on the head here with his thoughts on resource scarcity, at least with respect to energy commodities. 

 

How many more huge oil fields like Tupi and this one in the Gulf of Mexico are lurking out there waiting to be discovered by companies incentivized by high oil prices?  If we continue to find more fields like these and technology continues to progress at a rapid rate, we may make the transition to renewables fairly smoothly over the next 100 years.  Also, we shouldn't forget that the oil sands and other unconventional energy plays eventually become conventional plays over time.

[oldye]

Resource constraint is an interesting topic.  This type of scenario has been around for at least 100s of years (think Malthus).  Historically, whenever someone has had this type of scenario it has never come to pass.  Why?  If nothing is done, the scenario may come to pass but rarely is nothing done.  Typically, the market has used price to signal the allocation of the scarce resource.  With the incentives high, people's ingenuity have usually come up with an alternative.  For example the major find a new oil or natural gas discovery that can  be exploited with new technology (think shale gas).  I think betting against the market and history is dangerous.  In the long term a market based solution will be found but in the short term the pricing mechanism will provide the incentive for the LT solution.

 

 

Packer

 

"BP Makes ‘Giant’ Oil Discovery in Gulf of Mexico," http://www.bloomberg.com/apps/news?pid=20601087&sid=adF31W9._rik

 

Packer may have hit the nail on the head here with his thoughts on resource scarcity, at least with respect to energy commodities. 

 

How many more huge oil fields like Tupi and this one in the Gulf of Mexico are lurking out there waiting to be discovered by companies incentivized by high oil prices?  If we continue to find more fields like these and technology continues to progress at a rapid rate, we may make the transition to renewables fairly smoothly over the next 100 years.  Also, we shouldn't forget that the oil sands and other unconventional energy plays eventually become conventional plays over time.

 

The price of a KW of energy is dropping like a stone, they should have 1$/kw by 2012, there has to be a energy parity price point where the use of solar simply explodes and drives down the marginal cost of power close to 0! 

[Guest kawikaho]

Solar is not going to make that happen. 

[Parsad]

If you watch old episodes of "All In The Family", Rob Reiner's character (Michael) is constantly nagging his father-in-law about the Vietnam War, population explosion and the environment.  I remember watching one episode in which he said the world would be out of food by the year 2000.  Pphhhhttt!  

 

I was an environmental sciences major in University, and I could not disagree more with some of the rhetoric being spewed by the so-called environmentalists these days.  They espouse clean energy, yet they don't focus on decreased consumption...buy a hybrid SUV, instead of driving a gasoline-powered Honda Civic.  Doesn't matter if more hydrocarbons are required to create fuel cells than consumed by the smaller gasoline vehicle.  Why don't governments just increase taxes on automobiles (hybrid or gasoline) and decrease fares for public transit?  That would do far more for the environment.

 

I remember Al Gore's movie and crusade that became a focal point for environmentalists and celebrities a few years ago.  Yet Al Gore's home consumed 30 times more electricity than neighbouring homes.  His decision was to continue to consume the same amount of electricity, but he powered it with newly installed solar panels and the purchase of carbon credits!  Carbon credits!  The biggest whack of horseshi* that anyone could have come up with.  Let's not be responsible for our actions, but just buy our way out of it...or at least try and offset our pollution!  

 

In general, I'm very optimistic about technology & science improving lives world-wide, and that it will assist us as we do slowly deplete some resources.  Cheers!

[Guest Broxburnboy]

Resource constraint is an interesting topic.  This type of scenario has been around for at least 100s of years (think Malthus).  Historically, whenever someone has had this type of scenario it has never come to pass.  Why?  If nothing is done, the scenario may come to pass but rarely is nothing done.  Typically, the market has used price to signal the allocation of the scarce resource.  With the incentives high, people's ingenuity have usually come up with an alternative.  For example the major find a new oil or natural gas discovery that can  be exploited with new technology (think shale gas).  I think betting against the market and history is dangerous.  In the long term a market based solution will be found but in the short term the pricing mechanism will provide the incentive for the LT solution.

 

 

Packer

 

There may indeed be more oil out here, but the point is the CHEAP oil is gone, new discoveries will have higher production and transportation costs attached. The same is true in North American natural gas.. much has been made of the potential of the recent shale gas discoveries, but production costs will be at least 6.00 bucks per.

This discovery for BP is great, but it is very deep and deep well production carries its own cost escalators. Reading further ...production won't commence for another 6 years at least, meanwhile demand is projected to begin rising again.

 

 

[Guest kawikaho]

I took an econ class back in 93, and we had to read this book that espoused all these nuts scenarios that sounded like all the current doomsday prophecies.  I should go find it sometime, if I can.  I don't put much faith into these extremist points of view. 

 

Al Gore is the biggest freaking hypocrite.  And so are all those celebrity wanna be environmentalist types.  They buy a Prius to make themselves feel good, but fly a jumbo jet for a hobby.  It's ludicrous.  I think the world would be better off without these assholes. 

[txlaw]

Resource constraint is an interesting topic.  This type of scenario has been around for at least 100s of years (think Malthus).  Historically, whenever someone has had this type of scenario it has never come to pass.  Why?  If nothing is done, the scenario may come to pass but rarely is nothing done.  Typically, the market has used price to signal the allocation of the scarce resource.  With the incentives high, people's ingenuity have usually come up with an alternative.  For example the major find a new oil or natural gas discovery that can  be exploited with new technology (think shale gas).  I think betting against the market and history is dangerous.  In the long term a market based solution will be found but in the short term the pricing mechanism will provide the incentive for the LT solution.

 

 

Packer

 

There may indeed be more oil out here, but the point is the CHEAP oil is gone, new discoveries will have higher production and transportation costs attached. The same is true in North American natural gas.. much has been made of the potential of the recent shale gas discoveries, but production costs will be at least 6.00 bucks per.

This discovery for BP is great, but it is very deep and deep well production carries its own cost escalators. Reading further ...production won't commence for another 6 years at least, meanwhile demand is projected to begin rising again.

 

 

 

It's true that cheap oil is gone, but there is a big difference between expensive oil, which I think is likely, and supply/demand imbalance such that there is not enough oil to supply everyone who needs it on an annual basis.  New discoveries and alternative plays such as the Canadian oil sands will hopefully make sure that there is enough annual oil production to cover increased annual demand, albeit at higher oil prices (perhaps much higher). 

 

Additionally, if we are successful in shifting much of our transportation system from the liquid fuels based model to an off the electricity grid model, then demand for liquid fuels won't go up at the crazy rates projected by peak oil people.  Instead, electricity demand will go up quite a bit, which will mean more demand for energy sources such as cheap and plentiful coal, nat gas, renewables, nuclear, etc.  There will also be increased demand for more and more efficient electricity storage solutions (i.e., battery technology).

 

As for the nat gas productions costs, no one is sure what the exact numbers will be, but Chesapeake in its investor presentation makes the point that shale gas producers will have much lower F&D costs than conventional producers and that these will actually decrease "as efficiencies increase and shale gas resevoir knowledge improves."  CHK estimates that shale producers will have F&D costs of less than $2 for several decades going forward.  In other words, the economics of North American nat gas is not the same as oil.

[smw397]

With more demand for renewables comes demand for energy storage as well.  Batteries, flywheels, ultracapacitors, even hydrogen, which is more correctly viewed as an energy medium than a source.   

[20ppy]

Again, I think it boils down to math.

 

Watch this and you can reach your own conclusion.

 

 

I think the point of no return will have to be reached to force some new behaviors, otherwise, people will keep saying that it won't happend.

[ragnarisapirate]

Resource constraint is an interesting topic.  This type of scenario has been around for at least 100s of years (think Malthus).  Historically, whenever someone has had this type of scenario it has never come to pass.  Why?  If nothing is done, the scenario may come to pass but rarely is nothing done.  Typically, the market has used price to signal the allocation of the scarce resource.  With the incentives high, people's ingenuity have usually come up with an alternative.  For example the major find a new oil or natural gas discovery that can  be exploited with new technology (think shale gas).  I think betting against the market and history is dangerous.  In the long term a market based solution will be found but in the short term the pricing mechanism will provide the incentive for the LT solution.

 

 

Packer

 

This is a great point; one of my favorite examples of expense making innovation happen, is the aluminum cap on the top of the Washington Monument. It was erected when aluminum was one of the most expensive metals in the world... so, it would have been dumb to not put it on the top of the monument to our first president that also lead us through the revolution... right?

 

Then, a mere 2 years later, some guys figured out how to make the stuff cheaply via the Hall-Heroult process. Later some smart folks thought it a good idea to put beer and Coca-Cola in cans made of the stuff, due to it's cheap price. Had prices been low all along, it probably wouldn't of happened; at least, not for a much longer time.