Byron King of the Outstanding Investments
newsletter reports on some bigshot Energy Watch
Group report that is 234 pages long, and how it
"reviews the history of world oil production over
the past century and forecasts future output using
the most sophisticated statistical techniques
available", which are, as we all know (now that
Black Swan statistics has shown the inevitable
catastrophic failure of the bell curve) not worth
squat, but the bell curve is the only thing we
have.
The forecast is "the onset of severe
shortfalls in oil output to meet
forecast demand", and
already, EWG reports, "Oil production will fall 7%
this year alone." Seven percent! My god! This is
terrible news!
Probably because I had too
much beer at lunch, it took me a couple of minutes
to focus my mind, but I finally dredged up out of
the Mogambo Murky Memory Of Metrics (MMMOM) the
old supply/demand dynamic. When I plugged a
falling supply of oil and an apparently rising
demand for oil into that magical machinery, the
answer was that prices will be higher! Much
higher!
Naturally, I immediately turned my
mind to a question of how many shares of oil
companies I have, and I realized I don't have
enough, because my sense of greed is causing me to
want to go outside and bum cigarettes and loose
change from passersby so that I can buy some of
the aforementioned shares of oil companies.
And then I heard Mr King say, "According
to the group's research, global oil reserves lie
near the 1.2 gigabarrel range - a mere 42-year
supply at current consumption levels."
Ow!
I actually got a little twinge from my Honking Big
Mogambo Greed Gland (HBMGG) contracting in a
painful spasm, as this is too, too sweet! Only
enough oil to last another 42 years at current
rates of consumption? Wow! I can't even imagine
how much oil will cost in year 41! Or year 40! Or
39! Whee!
So how deliciously sweet is the
profit potential here? I dunno, and I suddenly
wish that I had some facility with math, so that I
could titillate myself with wild dreams of
unbelievable capital gains, enough to make Warren
Buffet fume with envy, and then when he calls me
and wants me to help him out, I can turn the
tables on him by having my snotty secretary tell
him what his snotty secretary said to me when I
called him up to ask for a lousy couple of bucks!
Like he is going to miss 20 bucks!
But
being math-impaired, I completely miss out on that
particular part of life, and I am diminished, but
let me try and "even the playing field" for a
tragic victim of math-impairment, like maybe
getting a Handicapped Parking Permit so that I can
park right up front, nice and handy, wherever I
go, and everybody gets all huffy ("Get out and
don't come back!").
Even so, you can look
deep, deep into my Bloodshot Mogambo Eyes (BME) to
see the utter, utter conviction I have that
consumption levels of oil will NOT be constant
during those 42 years, but will attempt to
increase because everybody wants it, and the only
reason that consumption of oil would not increase
in the face of that burgeoning demand is because
the price was too high!
Therefore, since I
also believe that Peak Oil is a fact of life and
that we have now passed the point where we are
using more oil than we are finding, this means
that demand will grow exponentially while, at the
same time, supply falls exponentially. Suddenly,
my heart is racing and I am crazy out of my head
with visions of the raw, gluttonous greed that
this portends!
All of this is, I hope you
notice, totally consistent with my original
hypothesis that oil prices will be rising higher
and higher with every tick of the clock, higher
and higher, month after month and year after year,
until sometime after you get old and die, and then
it won't matter anymore, anyway.
This, of
course, makes me think again that I do not own
enough shares of companies in the oil business or
in the immortality business, and the reason that I
don't have more of either is that I don't have the
money, and I don't have the money because things
cost so much and my boss won't give me a raise
because she hates my guts, and she wants to see me
quit or come crawling to her, begging, which I
won't do because it has never worked in the past,
and now the only reason that she doesn't fire me
is because she knows I will make her pay, sooner
or later, and pay big time, in some kind of sick,
Twisted Mogambo Revenge (TMR) and she is too close
to retirement for that crap.
I can see by
Mr King's face that he is horrified at this rare
glimpse of Vengeful Mogambo Extremism (VME).
Quickly getting back to the subject, he quotes
Hans-Josef Fell, EWG's founder, as saying, "The
world soon will not be able to produce all the oil
it needs, as demand is rising while supply is
falling." Naturally I shout out, "I already said
that! He's copying me, the little plagiarizing
bastard!"
Obviously shaken at my stupid,
gratuitous, vicious attack, Mr Fell says, in a
burst of understatement, "This is a huge problem
for the world economy."
Mr King summarizes
the report as going on "to predict extreme
shortages of fossil fuels will lead to wars and
social breakdown".
I say, "We're freaking
doomed!"
And when I look at it, we're all
saying the same thing. So "we're freaking doomed"
is as good as any way of saying it.
Richard Daughty is general
partner and COO for Smith Consultant Group,
serving the financial and medical communities, and
the editor of The Mogambo Guru economic newsletter
- an avocational exercise to heap disrespect on
those who desperately deserve
it.
Republished with permission from The Daily Reckoning.
Copyright 2007, The Daily Reckoning.
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
