What percentage of the US trade deficit is oil and gas?

The answer is the first item in today's report.

The International Monetary Fund warned oil ministers on Monday that their expansion in capacity was failing to keep up with surging demand, leading to instability in the market.

Financial Times (April 21) ~ "Mr Lipsky said the spare capacity held by Opec, the oil producers' cartel, was about half of its 1996-2007 average, or one quarter of its 2002 level, and was expected to remain limited for some time." So is it "Can't" or is it "Won't"? It is my belief that can't is the most likely reason.

http://www.ft.com/cms/s/0/ced48ca0-0fcd-11dd-8871-0000779fd2ac,dwp_uuid=f2b40164-cfea-11dc-9309-0000779fd2ac.html

Lighting one 60-watt incandescent bulb (12 hrs./day) may use 3,000 to 6,000 gallons of water a year.

ScienceDaily (April 22) ~ "According to the study, the most water-efficient energy sources are natural gas and synthetic fuels produced by coal gasification. The least water-efficient energy sources are fuel ethanol and biodiesel." The study from Virginia Tech reported that for electric "… power generation, Younos and Hill have found that geothermal and hydroelectric energy types use the least amount of water, while nuclear plants use the most."

http://www.sciencedaily.com/releases/2008/04/080417173953.htm

Link to this week's Master Resource Report 2008-04-25

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.

Supply-side squeeze explains spike in oil.

Financial Times (April 15) ~ "But that is to focus too much on demand. What is arguably driving the market to record highs is supply." Javier nails it in this very important article this week. In our growth oriented economy everyone has been focused on the demand side of energy. When that emphasis on demand growth shifts to the supply side and a scarcity premium is applied to energy the economies of the world change. The new view requires an understanding of how demand will continually need to adjust to constrained supply.

http://www.ft.com/cms/s/0/967448f4-0b1e-11dd-8ccf-0000779fd2ac.html

Surge in Natural-Gas Price Stoked by New Global Trade

Wall Street Journal (April 18) ~ "Prices in the U.S. have risen 93% since late August as power-hungry nations like South Korea and Japan compete in a global natural-gas market that scarcely existed a half-decade ago. Still, U.S. prices are as low as half the level of some overseas markets, suggesting they have much further to rise." The world's Liquid Natural Gas (LNG) market is following the same evolution as the coal market did. Cheap natural gas will not bail us out this time like it did in late 1970's and 1980's. (subscription required)

http://online.wsj.com/article/SB120847521878424735.html?mod=hpp_us_whats_news

James Howard Kunstler: World Made by Hand

Jim will be at the University Book Store in Seattle on Tuesday, April 22 at 7:00 PM to talk about his new book "World Made by Hand". For those who may not know Jim is the author of "The Long Emergency" which examines the demise of suburbia. His new book is a fiction about a post peak oil world. I am sure that Jim will be as entertaining as usual when he gives his talk. For those outside of Seattle here is the link to Jim's book tour schedule.

http://www.groveatlantic.com/grove/bin/wc.dll?groveproc~genauth~3663~0~info~tour

Link to this week's Master Resource Report 2008-04-18

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.

Senate bill would reduce coal produced Green House Gas Emissions (GHG) 20% below 2005 levels by 2020.

Platts (April 9) ~ "Crafted by senators Joe Lieberman, Independent-Connecticut, and John Warner, Republican-Virginia, the bill sets annual greenhouse gas emissions caps at 4% below 2005 levels in 2012, 15%-20% below 2005 levels in 2020 and 70% below 1990 levels in 2050 for the electric power, industrial and transportation sectors." It is clear from this purposed bill that neither senator Lieberman nor Warner bothered to check out the science or technology on this one. When you read this week's report it will be clear there is trouble ahead.

http://www.platts.com/Coal/News/8646189.xml?sub=Coal&p=Coal/News&?undefined&undefined

Fears grow over rice supplies as prices hit record.

Financial Times (April 5) ~ "The price jump came as leading exporting countries including Vietnam, India, China and Egypt, banned foreign sales. Hanoi extended its ban for two months until June." I encourage you to read this article and reflect on how it would read if it were energy instead of rice. What if the countries listed here were Mexico, Canada or Saudi Arabia instead of the rice exporter. Consider how the governments and individuals have each responded to the crisis. There is a lesson here of what may loom ahead for energy. *** Net Exports ***

http://www.ft.com/cms/s/0/d135576c-02a9-11dd-9388-000077b07658.html

The future of oil prices – IEA.

Bloomberg (April 7) ~ "World oil prices are likely to remain high ``for many years to come'' as demand increases and national oil companies lack an incentive to increase production, the chief economist of the International Energy Agency said." Of course most people want to know how high is "high" and how long is "many years". From a Peak Oil perspective "high" means a permanently rising price with plateaus and "many years" means for the decades to come. Sorry.

http://www.bloomberg.com/apps/news?pid=20601207&sid=aY4mcIZc1ozo&refer=energy

ExxonMobil says global LNG demand set to triple.

Upstreamonline (April 8) ~ "Demand for liquefied natural gas in the US and Europe will surpass Asian consumption by as early as 2015, while global LNG demand is set to triple between now and 2030, US giant ExxonMobil said today." This makes plenty of sense from ExxonMobil's point of view given that 50% of reserves are now in gas. However, from a net export perspective the key question is how much gas will actually make it to the global LNG market.

http://www.upstreamonline.com/live/article151937.ece

Link to this week's Master Resource Report 2008-04-11

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.

Opec's disappearing excess capacity is the root cause of oil above $100 a barrel.

Financial Times (April 2) ~ "In fact it is total stocks, which include inventories in the industrial countries and excess capacity in the oil producing countries, which are the main determinant of oil prices." My perspective is that a lack of excess capacity is a contributor to the lack of net export capacity. Increasing domestic demand for whatever reason coupled with a peaking of production mandates a decline in "net exports". For the importing countries what causes the decline in "net export" capacity is not as important as the fact it is occurring. I encourage you to read this commentary in the Financial Times but do so with an eye for the real problem - a lack of "net export" capacity for whatever reason.

http://www.ft.com/cms/s/0/4ba38d8c-0059-11dd-825a-000077b07658.html

Scientists have produced further compelling evidence showing that modern-day climate change is not caused by changes in the Sun's activity.

BBC (April 3) ~ "We tried to corroborate Svensmark's hypothesis, but we could not; as far as we can see, he has no reason to challenge the IPCC - the IPCC has got it right." The solutions to the climate change problem are imbedded in the solutions to Peak Oil & Gas. The reverse is not true; solving the climate change problem does not in itself solve our energy problem. Therefore only an integrated approach to Peak Oil & Gas and climate Change can resolve these two critical problem the world faces. Finally the consequences of Peak Oil & Gas will strike society before Climate Change; most likely overwhelming Climate Change on the world agenda.

http://news.bbc.co.uk/2/hi/science/nature/7327393.stm

Maple-syrup price soars; will flapjack lovers waffle?

Seattle Times (April 3) ~ "Patti Fuller, owner of Fuller's Sugarhouse in Franklin, N.H., said she reluctantly raised the price of a gallon of her syrup from $42 last year to $50 this year. She cited the increased cost of oil to power the machinery that boils the sap into syrup. The cost of plastic tubing and jugs also increased, she said, because they are also petroleum products." Here is one food product price increase you cannot blame on biofuels. It does demonstrate why energy and in particular petroleum is the Master Resource.

http://seattletimes.nwsource.com/html/foodwine/2004324196_syrup03.html

Link to this week's Master Resource Report (PDF) 2008-04-04

Questions or comments? E-mail me at jim.hansen@kmsfinancial.com or call 206-363-7868 toll free 888-216-4800

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.