In this week's report:

Oil is now up 100% from the February lows. Remember the predictions of $20/barrel?

Why energy is the "Master Resource".

U.S. gasoline consumption and price?

Is the world going to be short as much as 4 mb/d over the next few years?

Could solar in the desert provide 25% of electric generation?

Audio and video interviews with Jeff Rubin.

    Jeff Rubin will be in Seattle on June 8^th giving a talk at Town Hall

Why do people think anyone really controls the oil price with precision?

Bloomberg (May 28^th) "The outcome, no change in OPEC quotas, was expected, but the surprise was Saudi Arabia being very explicit about a price objective for the first time since the price band mechanism in the early part of this decade," said Lawrence Eagles, global head of commodities research at JPMorgan Chase & Co. in New York." Yea - a price band. We all know how well that worked out in the early part of the decade. They had to keep raising their price band as crude price kept going up.

From the White House announcement on auto emissions and efficiency standards.

White House Press Release (May 18^th) –Question/Answer following release of the announcement:

Question: What is the administration assuming will be the price of gasoline in 2016?

SENIOR ADMINISTRATION OFFICIAL: The models that were used by EPA and DOT assume a price -- a price per gallon from AEO, the Energy Information Agency -- no, AEO. And that, remember they use in model year 2016 $3.50 a gallon, so that was the number used by the agency.

That is correct, $3.50 per gallon 7 years from now. If gasoline price just rise the same percentage in the next 7 years as they have in the last 7 years the price will be over $5 per gallon. If they rise in just nominal dollars the price will be over $4.00/gallon based on last week's U.S. average price. For some strange reason I just don't take much comfort in the government's estimates of future gasoline prices.

In Seattle this week there are a number of stations selling mid-grade and premium above $3/gallon. We could be at $3.50/gallon this summer let alone in 7 years.

Link to this week's Master Resource Report 2009-05-29

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:

More from Jeff Rubin's book "Why Your World is About to Get a Whole Lot Smaller".

    Jeff Rubin will be in Seattle on June 8^th giving a talk at Town Hall

Globalization and Food Production

Cantarell production falls 34% year-over-year!

Like most governments Mexico will probably wait until it is too late.

Reuters (May 19^th) "Mexico, which funds about a third of its budget from crude oil sales, has put off the tough choice of hiking taxes in recent years as sky-high world oil prices masked a steady decline in crude output and a grim prognosis for 2010 production." How do they hike taxes within an economy that may be imploding?

Brazil and China?

Bloomberg (May 20^th) "China Petroleum & Chemical Corp., Asia's biggest refiner, will benefit from guaranteed supplies of crude under a $10-billion loans-for-oil agreement with Brazil as the company's reserves decline." The key word here is "guaranteed"!

Financial Times (May 18^th) "Brazil and China will work towards using their own currencies in trade transactions rather than the US dollar, according to Brazil's central bank and aides to Luiz Inácio Lula da Silva, Brazil's president." They are taking steps to solve a problem they both face; the U.S. Dollar!

Link to this week's Master Resource Report 2009-05-22

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 World will not remain flat for much longer. A review of Jeff Rubin's new book.

Bioelectricity vs Bioethanol?

A nuclear powered drill rig, what will they think of next to extract oil?

Peak Phosphate?

Just one example why you should read Jeff Rubin's new book.

"While electronics and steel may garner all the press attention, food exports from China have managed until recently to stay under the radar. Nevertheless, the recent growth in Chinese food exports has been enormous. Everything from bok choy to apples to breaded chicken fingers is being sent around the world. Food exports to the US have soared from a modest $1 billion to $6 billion in 2008 – a 500 percent increase. This brings a whole new meaning to having Chinese food delivered." (page 217)

I recently met a wheat farmer from Eastern Washington (he now provides organic wheat to our local bakery) that described how wheat is shipped from Washington farms to China, processed into food products and then shipped back. Ultimately to be sold in big box retailers like Wal-Mart in… you guessed it Eastern Washington. As Jeff makes clear in his book this applies to everything from apples to salmon and it will soon end.

We face bigger issues around Peak Oil than just the cost of a summer vacation.

Community Solutions (March-April 2009) Congressman Roscoe Bartlett speaking at a conference on the risks facing Public Health by Peak Oil – "In Bartlett's view, today's federal government efforts to prepare are inappropriately focused on trying to fill any future energy supply gap with substitutes for fossil fuels—although there is in fact no set of substitutes that can make up the difference. "We are still in a phase of irrational exuberance over alternatives," he concluded, "despite the failure of hydrogen only a few years ago, and despite the recent failure of corn ethanol."

The article mentions a report by Howard Frumkin with Centers for Disease Control and Prevention that was published in the Jan-Feb 2009 issue of Public Health Reports titled "Energy and Public Health: The Challenge of Peak Petroleum." There is also a second article "Energy and the Public's Health: Making the Connection" also available. These should be required reading for Public Policy, Public Health and Hospital officials. Time is especially short for them to develop and implement policy.

The big question -- Was it Speculation or Was it Supply vs Demand?

ASPO-USA Commentary (May 11^th) "After many years of solid growth, oil production plateaued in October 2004. Regardless of the price level, the oil supply simply stopped responding, and from then on, the world had to make do with broadly flat supplies." This was clear to those who followed the Peak Oil story. To the general public it was as clear as mud. It wasn't the brief move from $100 to $147 that mattered; it was the move from $10 in 1998 to nearly $100 in 2007, a tenfold increase in a decade.

Link to this week's Master Resource Report 2009-05-15

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:

Special Guest Commentary: Was there a link between Mortgages and Energy Prices?

Wind power – policy, politics and the mafia.

Could a distillate glut cause a gasoline supply problem?

Wal-Mart acknowledges the impact of fuel prices on spending.

When the economy rebounds and fuels costs rise again will this story change?

Seattle Times (May 8^th) "With just weeks to go before its first flight, the Dreamliner program has now lost a total 57 orders since the beginning of the year and has taken in only one new order, for eight of the 787s." By the time the mass market air travel demand increases it is very possible the airlines will be confronted by the same fuels cost they thought was left behind last year. Airlines and aircraft manufactures may be running on the same kind of treadmill as petroleum faces, slanted uphill and speeding up.

Great article and a new book (I know it is not about energy but is a must read).

Financial Times (May 3^rd) "In the 1990s, a young team at Wall Street investment bank JP Morgan pioneered a new way of making money – credit derivatives. Within a decade, the market for these exotic securities had exploded to more than $12,000bn – and some people later blamed them for fuelling the global financial fiasco. In the first of two extracts from her book, Fool's Gold, the FT's Gillian Tett reveals how the innovation genie was first let out of the bottle – and eventually devoured the system, to the horror of its creators."

Gillian Tett is a great writer and reporter, now she has put that talent into her new book which I am looking forward to reading. In addition she was named Journalist of the Year at the British Press Awards in March. Her second excerpt will run in this weekend in the Financial Times, don't miss it!

GM sales increased 50% last month!

Bloomberg (May 8^th) "General Motors Corp., the biggest overseas automaker in China, boosted sales in the country 50 percent last month on demand for minivans, which account for 63 percent of its sales." Ok, it was in China where the sale of passenger vehicles rose 37%. Remember, these are not hybrids or electrics, they will demand more and more gasoline and diesel for years to come.

There is hope.

AP (May 6^th) "Ford Motor Co. stripped "truck" from the name of one its Detroit-area plants Wednesday as it announced plans to build its next-generation Focus here, including a battery-electric version Ford expects will run up to 100 miles without using gas or emitting greenhouse gas." If gasoline is $4/gallon when the first of these hits the show room floor the sales could be great. Just remember to be careful with any version 1.0 product.

Link to this week's Master Resource Report 2009-05-08

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 surplus supply of natural gas will soon be taken care of.

9 million barrels per day and holding steady.

Water and Energy have more than one form of linkage.

I am frequently asked for a solution when I speak on "Peak Oil". The solution is simple.

ODAC Commentary (April 24^th) "Shifting transport away from liquid hydrocarbon fuels towards electricity can make a significant contribution to the twin challenges of climate change and energy security." This is a key point; the world faces two challenges that can only be solved from the perspective of energy solutions. Electrification of transportation is the only solution that meets the long-term challenges of both. The sooner the world gets on with electrification and the necessary reduction in per capita energy consumption in the OECD countries the sooner the crisis that looms ahead will begin being mitigated.

http://www.odac-info.org/newsletter/2009/04/24#ad6effe70f30f917640bedf05a7

I did not think I would live long enough to read this.

Financial Times (April 29^th) "Higher taxes to push the price of petrol up by more than 70 per cent are needed to change Americans' car-buying habits and usher in a new generation of fuel-efficient vehicles, according to Bill Ford, chairman of Ford Motor." Honestly based on the flat line of U.S. gasoline consumption it will probably take something closer to $6 per gallon to really drive consumption down and that would also have the nasty effect of driving the economy back down. Don't forget though that to keep gasoline at $2 the requirement is the economy can't recover. Nice choices?

(See page 2 of this week's report for comments on price and consumption)

http://www.ft.com/cms/s/0/d2534a80-3455-11de-9eea-00144feabdc0.html

Link to this week's Master Resource Report 2009-05-01

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.