In this week's report:

Do CFLs, CO₂ and mercury mix?

U.S. gasoline consumption trends and price.

Guess who is a painter?

The Peak Oil Crisis: A Turning Point?

(Falls Church News-Press) – "If there is anything we have learned in the last 18 months, it is that oil prices are highly sensitive to over and under supply. The conventional wisdom holds that last summer's $4 - 5 gasoline was mostly the doing of speculation by highly leveraged hedge funds and will not recur in the immediate future. However, most of those following the details of oil prices in recent years believe there was some amount of under supply last summer caused by the pre-Olympics Chinese oil demand spike." If you have not read Tom Whipple's insightful and to the point articles before this would be a good one to start with. He takes a very good look at where global supply may be headed in the months ahead given the apparent success in Opec members actually cutting supply. This will be a very unwelcome surprise to experts predicting $20/barrel oil.

http://www.fcnp.com/index.php?option=com_content&view=article&id=4173:the-peak-oil-crisis-a-turning-point&catid=17:national-commentary&Itemid=79

Opec is making believers out of skeptics on output cuts.

(Upstreamonline) – "Opec member United Arab Emirates announced it was cutting back supplies to Asia for April, adding to expectations the producer group will throttle back production further when it meets in March." This news plus indications that Opec members have achieved production cuts close to 4.3 mb/d may have started to sink in. If Opec sees results from these production cut backs it will reinforce their willingness to stick to them, at least in the short run.

http://www.upstreamonline.com/live/article172909.ece

2012 is an important year.

Readers of The Master Resource Report know that 2012 could be the year that Mexico confronts the net export problem head on. But it may also be the year that Las Vegas confronts the export of water from Lake Mead. (Bloomberg) –"Since 1999, Lake Mead has dropped about 1 percent a year. By 2012, the lake's surface could fall below the existing pipe that delivers 40 percent of the city's water." The article discusses the bleak scenario facing much of the U.S. Southwest water supply. As mentioned many times here the solutions to the water problems all depend on cheap abundant energy to succeed. Cheap and abundant are two conditions that Peak Oil is not going to provide.

http://www.bloomberg.com/apps/news?pid=20601109&sid=a_b86mnWn9.w&refer=home

Link to this week's Master Resource Report 2009-02-27

Disclaimer

This publication is dedicated to the education of readers and is an information service only. While the editor is licensed to offer investments and investment advice, the information provided herein is not to be construed as an offer to buy or sell securities of any kind, is the opinion of the author and not endorsed by KMS Financial Services, Inc. It is possible at this or some subsequent date, the editor and/or affiliated parties may own, buy or sell securities discussed in this newsletter, or based upon information provided in the newsletter, or contrary to information provided in this newsletter. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. We make every effort to provide timely information, but cannot guarantee specific delivery times due to factors beyond our control.

In this week's report:

The U.S. has stepped of the natural gas drilling treadmill.

Energy and water.

Renewable energy and infrastructure.

Yesterday the market discovered something this report has been covering for months!!!

U.S. gasoline consumption is not falling year-over-year. Just imagine what U.S. gasoline consumption would be if the country was not in the worst recession in 80 years?

The future is being determined today.

(Bloomberg) – "Well shut-ins are "expected to grow markedly from March onward" as the cost of producing, transporting and paying taxes on the oil surpasses the price received for it…" This problem crosses both oil and gas. Are we moving towards the IEA's nightmare scenario?

http://www.bloomberg.com/apps/news?pid=20601072&sid=aaWUswQKCr1A&refer=energy

(Upstreamonline) – Repsol's chief executive Antonio Brufau said, "All in all, the reduction of investment, the credit squeeze and the current strong risk aversion caused by the global financial crisis and low prices, could have long-lasting effects on the supply side well above the effect on consumption, that is, a temporary shrinkage in energy demand…" There is little question that it will have a long-lasting effect. From the Peak Oil perspective will become permanent when coupled with the escalating depletion rate in existing fields outlined in the IEA's WEO 2008.

http://www.upstreamonline.com/live/article172360.ece

Back in January Kevin wrote about the Panic of 1907, now look at what he found.

"…last week called the auto industry's slump a "depression" and warned that Washington had better take quick action to help the unemployed." This week he found a Time Magazine article from Dec. 9, 1974. We highly recommend taking the time to read it. The world did not end in 1974 but at the time it sure seemed like it would.

"… middle-class people are coming into my shop in droves — at least triple the number of last year. We've had an influx of wealthier people who have been cleaning out safe-deposit boxes and selling the diamonds and jewelry."
http://www.time.com/time/printout/0,8816,908956,00.html

Link to this week's Master Resource Report 2009-02-20

Disclaimer

This publication is dedicated to the education of readers and is an information service only. While the editor is licensed to offer investments and investment advice, the information provided herein is not to be construed as an offer to buy or sell securities of any kind, is the opinion of the author and not endorsed by KMS Financial Services, Inc. It is possible at this or some subsequent date, the editor and/or affiliated parties may own, buy or sell securities discussed in this newsletter, or based upon information provided in the newsletter, or contrary to information provided in this newsletter. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. We make every effort to provide timely information, but cannot guarantee specific delivery times due to factors beyond our control.

In this week's report:

Where has the decline in U.S. consumption occurred?

Chevron hits oil, over 5 miles down.

How long would it take to watch 20 million barrels of water cascade over Niagara Falls?

Do you know where Cushing is?

Financial Times (Feb. 11, 2009) "The International Energy Agency warned that "deterioration in the fragile WTI pricing mechanism would only serve to reinforce the view that the crude has become an irrevocably broken benchmark". This landlocked delivery point for WTI is one more example of a risk facing long-term Peak Oil investors if they pay too much attention to short-term energy prices. Link to Google Map

http://www.ft.com/cms/s/0/6cc84c30-f867-11dd-aae8-000077b07658.html

Predictions from the past…. (I know this is not really energy related.)

"Government-guaranteed home mortgages, especially when a negligible down payment or no down payment whatever is required, inevitably mean more bad loans than otherwise. They force the general taxpayer to subsidize the bad risks and to defray the losses. They encourage people to "buy" houses that they cannot really afford. They tend eventually to bring about an oversupply of houses as compared with other things. They temporarily over stimulate building, raise the cost of building for everybody (including the buyers of the homes with the guaranteed mortgages), and may mislead the building industry into an eventually costly overexpansion. In brief, in the long run they do not increase overall national production but encourage malinvestment." [emphasis is mine]

~From Chapter VI "Credit Diverts Production" in Henry Hazlitt's "Economics in One Lesson," first published in 1946, quote from 1978 edition.

Link to this week's Master Resource Report 2009-02-13

Disclaimer

This publication is dedicated to the education of readers and is an information service only. While the editor is licensed to offer investments and investment advice, the information provided herein is not to be construed as an offer to buy or sell securities of any kind, is the opinion of the author and not endorsed by KMS Financial Services, Inc. It is possible at this or some subsequent date, the editor and/or affiliated parties may own, buy or sell securities discussed in this newsletter, or based upon information provided in the newsletter, or contrary to information provided in this newsletter. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. We make every effort to provide timely information, but cannot guarantee specific delivery times due to factors beyond our control.

In this week's report:

Can the Western Hemisphere survive solely on its own production?

So where does the world stand on lithium?

More on tidal power.

Year-over-year U.S. gasoline consumption now down 2.4%.

This week's EIA report on U.S. gasoline consumption had some interesting data. The EIA reported a 2.4% drop in the four-week average consumption from a year ago to 8.7 mb/d (365.4 million gallons). A minor surprise though was the increase in the much more volatile one week data showing a year-over-year move up of 1%. Don't forget that by this time in 2008 U.S. gasoline consumption was weakening year-over-year with 2007.

http://tonto.eia.doe.gov/oog/info/twip/twip_gasoline.html

Mexico isn't the only place in Latin America that is in trouble.

According to Bloomberg in 2003 PDVSA (Venezuela's national oil company) forecast 2008 production level of 4.4 mb/d, they actually managed only 3.27 mb/d. Hey they only missed by 26%.

http://www.bloomberg.com/apps/news?pid=20601109&sid=arRinmnrGtyE&refer=home#

In addition take a look at what Tom Whipple has to say on the mess that is Venezuela on the ASPO-USA web page.

http://www.aspousa.org/index.php/2009/02/venezuela/

While at the ASPO-USA web page check-out the other Commentaries.

http://www.aspo-usa.org/index.php/category/commentary/     

Link to this week's Master Resource Report 2009-02-06

Disclaimer

This publication is dedicated to the education of readers and is an information service only. While the editor is licensed to offer investments and investment advice, the information provided herein is not to be construed as an offer to buy or sell securities of any kind, is the opinion of the author and not endorsed by KMS Financial Services, Inc. It is possible at this or some subsequent date, the editor and/or affiliated parties may own, buy or sell securities discussed in this newsletter, or based upon information provided in the newsletter, or contrary to information provided in this newsletter. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. We make every effort to provide timely information, but cannot guarantee specific delivery times due to factors beyond our control.