Methane is pretty well oil too. << so, our gold, i am guessing, is actually natural gas > Fungibility is the foundation of energy - there is overlap in multitudes of ways. Oil could fade from its pedestal and as Sheik Yamani said, now decades ago, the oil age won't end for lack of oil just as the stone age didn't end because of a shortage of stones. Until then, oil is the centre piece of energy supplies with other ideas getting greater or lesser pieces of the action depending on ebbs and flows of billions of activities. Fracking for example is now rapidly gaining ground. That puts pressure on oil, so oil prices anywhere near the vicinity of fracking go down and oil prices further away go down too, as the ripples spread around the world like the Japanese tsunami which I watched wash up beside us in Tauranga harbour.
All the hysteria about Peak Oil and Global Warming and general environmental assertions for many decades have persuaded most people that it's a woeful world as far as energy supplies are concerned. They think that even if we have oil now, it's running out and going exponentially parabolic in price to asymptotically hyberbolic levels. In fact, the cosmos and Gaia, are made of energy and the amount that can be tamed and delivered at current prices is pretty much unlimited. Coal, gas, tars/bitumens, oil, noocular, chlorophyll and photovoltaic - there is pretty much an infinite supply at prices about where we are now.
If too many moai diggers or gold excavators use methane instead of oil, oil prices will be lowered to compete. If China builds swarms of atomic reactors, coal mines will be closed with miners redeployed as Apple assembly line workers or assembly worker service people.
Iraq is ramping up oil production as Iran's is put under pressure. Apparently Iraq will become the world's biggest exporter.
Oil, gas, coal, bitumen, tar, fission, fusion, insulation, electronic control systems, computer power, Google autocars all want market share as do any number of other ideas. To the extent that others succeed, oil fails and prices fall. If you see oil in surplus, aka price falls, it might be pay to flip faster, even if you use gas.
As you have always said, producing gold from oil is totally different and unrelated to the panic of money mania.
Bailing out of both will be important.
Meanwhile, fiscal cliffs loom and QEs proliferate.
Mqurice |
