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Friday, February 24, 2012

How much OIL? New Doomsday Clock?

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A New Clock?

How much OIL?

Comparing this to Cold War DOOMSDAY CLOCK

Comments Published NY Times, DOT Earth
September 22, 2011 

Without doubt oil remains as the most critical element to the operation of our modern industrial society. Its exhaustion would bring its machinery to a complete halt. Even the banking system and money could cease to exist as energy is required to maintain the grid that electronically transports money world-wide. No grid, no banks, no money.

Words and environmental issues aside trying to nail down "the number" of years remaining in oil reserves is more than elusive. Given the profound implications of such a number, it is one that policymakers, economists and many others should have right at their finger tips. Indeed it is comparable in many ways to the doomsday clock experts referred to during the "Cold War" 

So what is a possible number? Well, taking a ballpark stab at it, using the reserve and production numbers provided in BP's World Oil Report it is roughly less than 15* years. Yikes!...15 YEARS? That just cannot be as I own thirty years bonds and my retirement plans are set for forty years. Try doing the numbers yourself, by Googling their report and doing some simple division. Maybe you can find a way to stretch out the numbers to at least match the maturity of the 30 year bonds. If not, then a prudent exchange to bonds with 10 or 15 year maturities makes complete sense.

The point being; whether it’s 15, 30 or 40 years, this is perhaps the most critical number we need to know and plan with. Short of massive war or natural disasters, this number gives us a sense of when the well runs dry for the modern industrial machine. A possible timeline to when the whole system could simply just come grinding to an abrupt halt.

Bringing back memories of the foreshadowing in Cat Steven’s 70's song, "Where Do the Children Play?

*For sake of discussion we have discounted OPEC reserves as that have moved significantly upwards over the past decade.The underlying intent for increasing reserve estimates is to increase production quotas and thus revenues. The information risks and quality are thus highly suspect. So much so, that estimates of life expectancy range by decades.The concern is not really when reserves are exhausted, but rather, when dramatic cutbacks in production will occurr- the economic impacts of 25%-50% production declines may be just as dramatic as complete exhaustion. There is a high chance that this could occur in the fifteen years noted, so determining the real life expectancy numbers should be one the most important and transparent initiatives on our global agenda.

First Financial Insights Inc.
September 22, 2011
Toronto, ON


The MOST IMPORTANT Radio Interview Ever

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 Where do the children play?