THE PRICE OF OIL vs THE COST OF OIL

.
Even though the price of a barrel of oil is fixed by just a couple of commodity exchanges around the world, the actual cost of oil extraction varies greatly from country to country.

It is much easier to extract oil from land based drilling platforms than it is from offshore rigs.

It is much easier to extract oil when it is close to the surface.

It is much harder to extract oil from tar and shale deposits.

In essence, the harder it is to extract, the more expensive the production costs.

The above is a simplification but other cost factors like local wages, distance from markets also contribute to costs.

I have spent some time researching these costs from various sources and the results are shown below.

Crude prices on the open market currently range from £100 to £120 US dollars per barrel.

The following is a list of average extraction costs by country (in US dollars per barrel).

Saudi Arabia - $1.50
Kuwait - $2.00
Iraq - $5.00

Libya - $5.50

UAE - $7.00
Canada - $8.50
Russia - $12.00
Iran - $12.50
Nigeria - $22.50
Venezuela $25.00
UK - $50.00

With profit margins this big, it is easy to see why western governments and businesses cosy up to non democratic middle eastern regimes.

IT'S OIL IN THE WRONG PLACE - Watch out for thieves !

I've just spent a couple of hours researching where all the oil is, who needs it the most, how much we all use and how long it will last.

I have listed the results in a table.

The table shows the top 10 oil producing countries with the most proven reserves. Please note that these 'proven' reserve figures are usually exaggerated by each country in order to reduce 'the fear' in the commodities markets and to insulate their respective domestic economies.

The table also shows how long each country's reserves would last if the world were dependent entirely on that country.

It also shows the top 10 oil consuming countries and how long they could survive if they had to rely on only their own oil, for instance if the world went all protectionist due to a world war or an extreme economic fear event.

You can click on the table to get a better view.

I think that you will agree that the results are startling.

It really does demonstrate the frailty of western oil guzzling economies. Look how vulnerable Japan, South Korea, Germany, France and Italy are.

Looks like the best places to be (in terms of prosperity and energy security) are Canada and Brazil.

You can also see why Iraq was so important to the Western forces and why the U.S. have built the largest embassy complex in the world.

http://en.wikipedia.org/wiki/U.S._Embassy,_Baghdad

FOOD MADNESS - Counting the calories

Chasing the calorie trail.

It takes 10 fossil fuel calories to produce 1 food calorie on a first world table.

An oil burning machine is used to plough a field.
That ploughing machine and all of the raw materials in that machine were manufactured using oil, gas and coal based energies.

An oil burning machine is used to plant seeds.



That seed drilling machine and all of the raw materials in that machine were manufactured using oil, gas and coal based energies.



The seeds are treated in a factory with germination products derived from oil.
The factory uses oil, coal and gas based energies to run.

The factory uses oil burning machines to bring raw materials to it and oil burning machines to deliver seeds to distribution centres.

These distribution centres consume oil, gas and coal based energies.


They use oil burning machines to transport their seed products to farms.

An oil burning machine is used to apply a high yielding fertiliser.



That fertiliser is derived from oil.


That fertiliser is produced in a factory that uses oil, gas and coal based energy sources.
That factory uses transportation methods and energy sources to distribute its product as the seed company.

The farms often rely on irrigated water systems.
Oil, gas and coal based energies are used to extract water from aquifers and pumped large distances using pumps that consume oil, gas and coal based energy sources.
Pesticides are used throughout the growing period.
These pesticides are derived from oil.
Like the seeds and the fertilisers, these pesticides are made in factories using oil, gas and coal based energies and are transported and distributed using oil burning machines.

The crops are harvested using a multitude of oil burning machines.

The crops are transported to distribution centres using oil burning machines.

The distribution centres use oil, gas and coal based energies.

The goods are packaged in plastics and cardboard.

The plastics are oil derived products.
Cardboard use huge amounts of oil, gas and coal based energies for their extraction, production, transportation and distribution needs.
These packaged products are transported to distribution centres using oil burning machines.
They are then redistributed to supermarkets using oil burning machines.
Millions of people collect their food from supermarkets each day using oil burning machines.














To reiterate then. For each calorie of food on a first world table, another 10 calories of fossil fuel derived energy has been used to put it there.

And finally to put this in perspective.

Each person requires around 2000 food based calories per day to maintain themselves. In power terms this equates to 2.326 KWh; about the same as an electric kettle running for 1 hour or 15 TV sets running for an hour. And given that it takes 10 calories of fossil fuel to produce and transport 1 calorie of food to your table, each person uses the equivalent of 23.26 KWh of fossil fuel energy per day. That is about twice the amount of fossil fuel energy that the average family uses each day for their domestic electricity requirements.

OIL IS THE KEY.

EVERYTHING DEPENDS ON IT AND IT'S RUNNING OUT FAST.

FOOD FOR THOUGHT - The commodity conundrum

Data just released by the World Bank shows that 44 million more people in developing countries have been pushed into extreme poverty in the 8 months since June 2010. They say that food commodity prices have hit 'dangerous' levels.

Reasons why global food prices are heading out of control.

Droughts, storms and fires - These have impacted on rising food prices. However, these events happen every year and are not responsible for the current spikes in commodity prices.

Emerging markets - Rapidly developing central Asian countries are seeing phenomenal economic growth activity. Corporations are exploiting their rising disposable incomes and these countries are now sucking in a diversification of 'en vogue' agricultural products. These are being sourced on the world commodity exchanges and driving prices higher.

Bio fuels - Developed countries, particularly those who have signed up for multinational climate change mitigation agreements, are chasing every megawatt from every possible area. Vast tracts of land have been turned over to produce bio crops. This leaves a significant reduction in the available acreage required to produce sugar and cereals in these cash crop producing regions. Lack of supply pushes prices higher.

Commodity speculation - Investment bankers have switched their strategies in light of the financial crisis and the post crisis equity fear expeienced in dealing rooms around the world. Commodities and complex commodity derivatives are now being transacted with the fury once reserved for stocks, shares, options and futures. With all of these new middle men taking their cut, offloading prices have soared.

Globalisation - This has facilitated a tsunami of commodity exchange possibilities. These new 'panaceas' will realise themselves as speculative bubbles followed by spectacular and chaotic collapses.

Currency wars - Because of the financial crisis and the subsequent debt hangover and austerity programs, Governments around the world are doing their damnedest to reduce the value of their fiat currencies in order to inflate away their structural sovereign debts. This only facilitates a race to the bottom. The result of low currency values is higher import prices.

Crude oil price - For a whole raft of reasons previously discussed, crude oil prices will only be heading in one direction and that is not down. Many pesticides, animal feeds and crop fertilisers are derived from oil based products. Most commodities also attract vast fuel miles and transportation costs.


The Tunisian, Egyptian and future middle eastern, central Asian and African stories all have rising food prices as a catalysing process. In the short term a welcome regime change may come. However it is unlikely that regime changes will curtail the longer term future of escalating food prices.

MASTERS & SERVANTS - Say goodbye to hope

Our cabinet ministers and their totally humble beginnings:

David Cameron - Private education at Eton , PPE at Oxford. He is a direct descendent of William IV and cousin of Queen Elizabeth II. He is married to the daughter of the 8th Baronet of Sheffield.

George Osborne - Real name Gideon George Osborne. Private education and studied modern history at Oxford. He is the sole heir to the title and estates of the 17th Baronet of the Irish Ascendancy. Married to the daughter of Lord Howell of Guildford.

Nick Clegg - Private education at Westminster School, Social anthropology at Cambridge. He is a direct descendent of the Imperial Russian Baronecy.

William Hague - Studied PPE at Oxford. President of the Oxford Union.

Ken Clarke - Studied law at Cambridge.

Theresa May - Studied Gegraphy at Oxford.

Liam Fox - Studied medicine at Glasgow.

Vince Cable - Studied natural scieces and economics at Cambridge.

Chris Huhne - Privately educated at Westminster school. Studied French at La Sorbonne and PPE at Oxford.

Andrew Lansley - Privately educated at Brentwood. Studied politics at Exeter.

Michael Gove - Studied English at Oxford.

Philip Hammond - Privately educated at Brentwood. Studied PPE at Oxford.

Andrew Mitchell - Privately educated at Rugby. Studied history at Cambridge.

Owen Paterson - Privately educated at Radley. Married to the daughter of the $th Viscount Ridley.

Michael Moore - Privately educated at Strathallan. Studied politiocs and history at Edinburgh.

Cheryl Gillan - Privately educated at Cheltenham ladies college.

Jeremy Hunt - Privately educated at Charterhouse. Studied PPE at Oxford.

Danny Alexander - Studied PPE at Oxford.

Francis Maude - Privately educated at Abingdon School. Studied law at Cambridge.

Oliver Letwin - Privately educated at Eton. Studied at Cambridge and London Business school.

David Willetts - Privately educated at King Edwards. Studied PPE at Oxford.

George Young - Privately educated at Eton. Studied PPE at Oxford. He is the 6th Baronet.

Dominic Grieve - Privately educated at Westminster School. Studied modern history at Oxford.

These people are clearly able to empathise with thier electorate.

SECOND DARK AGE - Reasons to be fearful Part 3

They're closing in at a phenomenal pace now.

Dogma fueled and ideologically regressive, the class and connections based elite ruling class are back in town and it's only taken 6 months or so to get to where we are now.

It is beginning to look like the last 20 years never happened.

All of those little victories culminating in a more understanding if maybe dumbed-down society now being slashed and burned through an 'oxymoron process' of stealth based shock and awe.

Smoke and mirrors. It hasn't taken long to remove the heat from the bankers and financial centres hangers-on to be forgiven or should that be forgotten.

The new demon is the old demon. Blaming previous administrations for ALL of the WORLDS ills. Spinning a web of confusion as the beast lurches from its slumber towards its sociopathic destiny, our social predestination. And all of this occurring while we sleepwalk into our futures of serfdom and systematic bondage.

We have crossed the rubicon without any knowledge of its identity or existence.

What will the resistance look like this time around? Will it even come?

More fearful than 1984, we look backward and see our futures writ large with capital Cs.

Like an intern in a national stargazey pie, we stare expresionless at death and decay in equal measure, caught at the margins of a Venn diagram, squeezed by the perpetual machine, into the void, into the vast expanse that is the 2nd dark age.

FOOD DEMAND = FOOD PRICES = FOOD RIOTS = CHAOS

Food prices and other commodity values have been rising considerably during the last few years and particularly since the 2008 global financial crisis.


There are several structural reasons for this which have been discussed in earlier blogs.

While in the West, we find these inflationary food prices annoying or worrying or stressful (depending on which social level you exist), it is becoming a far more desperate story for others around the world.

Here in the UK, an individuals food budget is not too significant, and we can always cut down on other things, shop around, find offers and bargains etc.

When food begins to take significant proportions of a family's budget, people begin to attach a political dimension to their concerns and this may result in protests, riots and even regime change.

Here is a list of 25 countries that like Egypt and Tunisia are finding that their food budget is getting out of control. The list shows the percentage of household income that is spent on food:

Venezuela 32.6 %
Lebanon 34.1 %
Latvia 34.3 %
Tunisia 36.0 %
Libya 37.2 %
Dominican Republic 38.3 %
Sri Lanka 39.6 %
China 39.8 %

Romania 45.4 %
Philippines 45.6 %
Kenya 45.8 %
Angola 46.1 %
Pakistan 47.6 %
Egypt 48.1 %
India 49.5 %
Bulgaria 49.5 %
Vietnam 50.7 %
Sudan 52.9 %
Algeria 53.0 %
Bangladesh 53.8%
Azerbaijan 60.2 %
Ukraine 61.0 %
Morocco 63.0 %
Nigeria 73.0 %

It's not just armies that march on their stomachs.

UK TODAY - Where is the good news?

Unemployment rising :
means less tax revenue to the exchequer.
means rising social security benefit bill for the exchequer.
means larger budget deficit.
means social decay / disorder.

Inflation rising:
means reduced economic activity.
means risks to businesses.
means unemployment.

means less tax revenue to the exchequer.

means rising social security benefit bill for the exchequer.

means larger budget deficit.

means social decay / disorder.

Taxes rising:
VAT at its highest ever level at 20%. It never comes down.
National insurance rising in April.
means reduced economic activity.

means risks to businesses.

means unemployment.

means less tax revenue to the exchequer.

means rising social security benefit bill for the exchequer.

means larger budget deficit.

means social decay / disorder.

Public Services being cut:
means less services.
means unemployment.

means less tax revenue to the exchequer.

means rising social security benefit bill for the exchequer.

means larger budget deficit.

means social decay / disorder.

.

Rising education costs:

means high debt for young adults.

means less graduates.

means less skilled workforce.

means lower wages.

means less tax revenue to the exchequer.

means rising social security benefit bill for the exchequer.

means larger budget deficit.

means social decay / disorder.

Vicious Circle = Vicious Government

99ers SET TO TAKE OFF !

In the United States, unemployment benefits are only paid for a maximum of 99 weeks or just less than 2 years.

After that period, that's it. You're on your own.

After the banking crisis of Autumn 2008, unemployment began to soar. Every week the number of unemployed rose. These job losses continued for 55 weeks at a weekly increase of between 50,000 and 200,000 per week.

The worst period was from November 2008 to October 2009. But even since October 2009, the number of new jobs created has never exceeded 50,000 per week.

The net effect of all of the above statistics is that from December 2010 there are likely to be around 50,000 people losing their benefits every week. This figure will get significantly worse up tom around April 2011 when around 200,000 people will lose their benefits every single week.

It remains to be seen what such large numbers of disenfranchised people will do about this over the coming months.

Keep 'em peeled!

Educating Slaves !

The British higher education system has been changed drastically over the last 20 years.

When I was a student, I got a full mandatory grant, a discretionary hardship grant, a book grant and heavily subsidised canteen facilities.

After a very comfortable time at college, I left higher education with a useful qualification that enabled me to be flexible in my career choice, not be tied to a corporations dictatorial mandate and I had no fear of debt.

The last 20 years has seen all the benefits that I received, systematically dismantled. These educational rights have been replaced with a system whereby students are leaving education with massive debts.

The jobs that most of these graduates will end up doing, would have been done by similar people with a couple of 'A' levels 20 years ago.

All that has happened is that the jobs market has been fixed in order that a large percentage of the new working population are being systematically enslaved by debt at the start of their careers; at the start of their adult lives; before they can even think about housing, families etc

During the next phase of this program, employers will bring down graduate wages to a median figure of less than £21,000. The feed in interest repayment taper will become a ceiling for employers to exploit.

Fancy a workforce that's too scared to answer back or question management?
Fancy a workforce enslaved by the fear of their own debts?
Then look no further. Employ a graduate today. Or even better employ a cheaper slave in 3 years time.

It's time to wake up !

It's time to take back control !

It's time to change your destiny !