Page one of this report has a must see graph on future fossil fuel (not just oil) production. On page four there are links to a couple good videos on the current petroleum situation.

With all the noise about offshore drilling here are some Inconvenient Facts.

The Oil Drum (June 12^th) ~ "The projections in the OCS access case indicate that access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030." [original source – EIA 2007] Have not heard this brought up in the news surrounding offshore drilling. So will offshore drilling provide the impossible goal of "Energy Independence"?

Link to TheOilDrum.com post http://www.theoildrum.com/node/4174

Link to the IEA report http://www.eia.doe.gov/oiaf/aeo/otheranalysis/ongr.html

Fade to black: Is this the end of oil?

The Independent (June 12^th) ~ "And as prices have kept on breaking records, an ever-growing worry looms in the background, the elephant in the room of the oil price rise: what if they can't produce any more? What if, this time, the oil taps really are running dry?" When you see the graphs on the first page this week it will be very hard to ignore that elephant any longer. That is the problem with being aware of Peak Oil & Gas, you know where the elephant is.

http://www.independent.co.uk/environment/green-living/fade-to-black-is-this-the-end-of-oil-845092.html

"Americans drive 1.4 billion fewer highway miles."

For those who thought there was no downside risk to driving less -Well Guess What?

CNN.com (June 12^th) ~ " Peters expressed concern that the cutbacks have resulted in the collection of fewer taxes on gasoline. Such taxes are funneled to the federal Highway Trust Fund, which gets 18.4 cents per gallon from gasoline and 24.4 cents per gallon from diesel fuel." To quote Bryn Davidson from the Dynamic Cities Project "We may be at Peak Roads." It also may mean the beginnings of peak chuck holes and more crumbling highway infrastructure. Like I queried last week, do your city and state officials get it?

http://www.cnn.com/2008/US/06/18/driving.cutbacks/index.html

I don't want to be an I told you so, but –

"China to Raise Fuel Prices By 17%-18% in Surprise Move."

Wall Street Journal (June 19^th) ~ "BEIJING -- China raised government-set domestic prices for fuel and electricity, responding to increasing shortages at home and growing global criticism that its energy subsidies are fueling global price increases." This will have implications for the global oil market and the Chinese economy. The last major subsidizers to take this action will be the OPEC countries of the Middle East.

http://online.wsj.com/article/SB121388580377088575.html?mod=hpp_us_whats_news (WSJ subscription required)

Link to this week's Master Resource Report 2008-06-20

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.

On June 11^th BP released the BP Statistical Review of World Energy 2008.

Financial Times (June 11^th) Comments by Tony Hayward CEO of BP ~ "Global energy demand growth in 2007 was above average for the fifth year in a row, driven by the fastest period of economic growth since the early 1970s….Yet energy supply has struggled to respond. Production by the Organisation of the Petroleum Exporting Countries fell by 350,000 barrels of oil a day last year." Simply put these conditions plus declining production in OECD countries is why oil is now well over $100/barrel. Over the next few weeks the Master Resource Report and others will be looking carefully at the BP Statistical Review.

Hayward Comments Link - http://www.ft.com/cms/s/0/1384647e-3751-11dd-bc1c-0000779fd2ac.html

BP Statistical Review Link - http://www.bp.com/productlanding.do?categoryId=6929&contentId=7044622

This is a more important reason for alternative energy than the price of gasoline for your car!

Financial Times (June 11^th) ~ "You have to ask yourself: Can we live in the future without things like fertilisers, plastics and certain types of polymers?...We do not currently have alternatives for these products … However, we do have alternatives for energy production." The world can no longer justify using natural gas to generate electricity or produce oil from tar sands. It is far too precious for that. Don't believe me? Consider your life without just one of those products made exclusively from natural gas – fertilizer to grow food!!!

http://www.ft.com/cms/s/0/2517cb0e-3751-11dd-bc1c-0000779fd2ac.html

How vulnerable to the risks of Peak Oil is your city? Cities in Oklahoma recently found out.

CNNMoney (June 12^th) ~ Oklahoma City "…ranked last among 50 U.S. cities in a recent study on areas best able to cope with high oil prices." "High gas prices are also causing an increase in demand for public transport in neighboring Tulsa, Okla. Tulsa ranked second to last in the Common Cause study." "You've got people coming out of the woodwork, screaming for more bus service. We get calls and emails daily…" The people who are now screaming about bus service were screaming about what a waste public transportation was in the past. More on page one of the report this week.

http://money.cnn.com/2008/06/12/news/economy/cities_oil/index.htm?cnn=yes

Transportation and the future.

ASPO-USA (June 9^th) ~ "In transportation, at the risk of a slight over-simplification, our transportation planners and engineers, supported by special interests and too much of the public, see the problem as congestion relief and better mobility for the car." Until the reality that the problem to be faced is constrained liquid fuel supplies and not congestion will there be any solution.

http://www.aspo-usa.com/index.php?option=com_content&task=view&id=391&Itemid=91

Link to this week's Master Resource Report 2008-06-13

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.

"Over the last three years, every one dollar rise in world oil prices has fed directly into a 1% rise in transport costs." What does this mean for world trade? The answer will be a surprise on page two of this week's report.

Brazilian Oil Finds May Cost $240 Billion to Develop.

Bloomberg (June 5^th) ~ "Brazil's oil discoveries, including the Western Hemisphere's largest in three decades, may cost $100 billion more to develop than the industry's most costly field"-- " The total exceeds the $136 billion estimate for Kazakhstan's Kashagan field, led by Eni SpA, and would be enough to fund the U.S. space program for 14 years." This is why the petroleum world of Peak Oil & Gas will not be the same as it has been for the last 150 years. These are not the flat plains of Texas, Oklahoma or even the UK North Sea; the production flow rates will not be the same.

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

The only way intermittent power sources can really help is with huge improvements to the U.S. power grid. Example – Wind Power in Texas.

The Independent (June 3^rd) ~ "Thousands of wind turbines in the US are sitting idle or failing to meet their full generating capacity because of a shortage of power lines able to transmit their electricity to the rest of the grid." Without the necessary infrastructure all the cool new wiz bang technology of alternative energy will not fulfill its potential.

http://www.independent.co.uk/news/business/news/texas-wind-farms-choked-off-from-grid-due-to-insufficient-power-lines-838979.html

Not every country is cutting subsidies.

Bloomberg (June 5^th) ~ "Chile's trucking companies will end a three-day strike over rising fuel costs today… Truckers will return to work at 8 a.m. local time after the government agreed to cut a tax on diesel for them by 80 percent." Next will come shortages and then what will the government do? They just stepped on the Peak Oil treadmill with no plan to get off.

http://www.bloomberg.com/apps/news?pid=20601207&sid=at9FLslSMAtQ&refer=energy

Net Exports and Mexico -- a never ending tale of decline.

Reuters (June 4^th) ~ "Pemex Chief Executive Jesus Reyes Heroles said the state-run company's oil exports were headed for an average of 1.40 million to 1.45 million barrels per day over 2008, around 15 percent below a goal set in Mexico's 2008 budget of 1.683 million bpd." See more on page of report.

http://www.reuters.com/article/marketsNews/idUSN0443990520080605

Link to this week's Master Resource Report 2008-06-06

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.

Items this week:

2008 Peak Oil Conference, Mexico, Nuclear Power, Internet Power Usage, World's 4^th largest energy user and Gasoline Price Temperature Map

House votes to let government sue OPEC.

Associated Press (May 22^nd) ~ "Decrying near-record high gasoline prices, the House voted Tuesday to allow the government to sue OPEC over oil production quotas." This is one of the dumbest ideas I have ever heard come out of our congress. If this is an example of the best they can offer us for energy policy we are all in much deeper trouble than I thought.

http://www.msnbc.msn.com/id/18808477/

Subsidies will have to end – Chinese Oil Giant Sinopec posts further losses

Chinastakes.com (May 27^th) ~ "Sinopec's latest quarterly financial report puts the company's earnings per share at .077yuan, 65.78% down over the same period last year. Without a government granted subsidy of 7.4 billion yuan for the quarter, the company would actually be running in the red." The Chinese government is afraid of the inflation implications of allowing energy prices to rise. However, the longer they play this game the worse the ultimate shock will be. If they appreciated the implications of Peak Oil they would never have played the game this way. At some point they will follow Indonesia, Taiwan and other SE Asian countries in pulling back from energy subsidies. When they do it is going to sting.

http://www.chinastakes.com/story.aspx?id=400

It is not just the airlines that have a problem.

Wall Street Journal (May 27^th) ~ "Dow Chemical Co. said it will raise prices of all its products by up to 20%, effective June 1, a move the company said is "essential" to its efforts to mitigate the effects of surging energy and related raw-material costs." Energy is The Master Resource that is going to drive costs in every sector of the economy. There is more on DOW in this week's report.

http://online.wsj.com/article/SB121198109401025957.html?mod=wsjcrmain (WSJ subscription required)

"Oil has reached a turning point"

Financial Times (May 27^th) ~ "What is now unfolding is an oil shock. The fact that the world could take $80 in its stride in the context of strong economic growth does not mean that a price that is 60 per cent higher at a time of a credit crunch will be so easily assimilated." Daniel Yergin of CERA makes several very valid points in his Comments in the Financial Times, particularly those related to the cost escalation facing the oil industry. However, as usual he is reluctant to face the realities of geology constraining supply from here on out.

http://www.ft.com/cms/s/0/57b6ff18-2bf2-11dd-9861-000077b07658.html

The Wall Street Journal begins to face Net Exports

Wall Street Journal (May 29^th) ~ "In all, according to the Energy Department figures, net exports by the world's top 15 suppliers, which account for 45% of all production, fell by nearly a million barrels to 38.7 million barrels a day last year. The drop would have been steeper if not for heightened output in less-developed countries such as Angola and Libya, whose economies have yet to become big energy consumers." They are beginning to get a grip on Net Exports, but if prices fall they will probably forget all about it. There is a great graphic of exports with this article.

http://online.wsj.com/article/SB121200725158327151.html?mod=hpp_us_whats_news (WSJ subscription required)

Link to this week's Master Resource Report 2008-05-30

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.

Don't miss the Video on page one of this week's report.

Robert Hirsch on CNBC.

George Bush yesterday told leaders of the oil-rich states of the Middle East that they must face up to a future without their precious hydrocarbons.

The Scotsman (May 19^th) ~ "In a stark warning, he said their supplies were running out and urged them to reform and diversify their economies. The outgoing United States president told the World Economic Forum, meeting in the Egyptian resort of Sharm el-Sheikh, that it was time to "prepare for the economic changes ahead." OK, when is he going to tell the American public that they face the same changes?

http://thescotsman.scotsman.com/latestnews/You39re-running-out-of-oil.4095858.jp

Why $4-a-gallon gas is a bargain.

Slate.com (May 21^th) ~ "Gasoline is also a fairly minor expense when you consider the overall cost of car ownership. In 1975, gasoline made up 33.4% of the total cost of owning and operating a car. By 2006, according to the Bureau of Transportation Statistics, gasoline costs had declined to just 17.1% of the total cost of car ownership." Just consider the total cost of ownership to feed the beast in your garage. All the other expenses such as insurance and maintenance make up about 83% of what it cost to drive your car. Maybe our problem just might be that fuel has been too cheap.

http://articles.moneycentral.msn.com/SavingandDebt/SaveonaCar/Why4DollarAGallonGasIsABargain.aspx?page=1

"A pessimistic supply outlook from the IEA…"

Wall Street Journal (May 22^nd) ~ "The world's premier energy monitor is preparing a sharp downward revision of its oil-supply forecast, a shift that reflects deepening pessimism over whether oil companies can keep abreast of booming demand." It is only a matter of time until this realization begins to spread to coal, natural gas and energy supplies in general. Remember to think beyond the gas tank of your car.

http://online.wsj.com/article/SB121139527250011387.html?mod=hps_us_whats_news

Link to this week's Master Resource Report 2008-05-23

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.

China Increases April Diesel, Gasoline Imports to Ease Shortage.

Bloomberg (May 15^th) ~ "China, the world's second-largest energy consumer, increased diesel and gasoline imports last month to ease a supply shortfall on the domestic market." This is one of the many reasons that diesel is priced above gasoline. So far this year China has become a black hole into which energy is being sucked at an ever increasing rate. I heard an observation recently that if something grows too fast it is a weed. Maybe that is worth keeping in mind concerning more than just your lawn.

http://www.bloomberg.com/apps/news?pid=20601207&sid=aKZ3Wvg.IUQA&refer=energy

Great news for thermal solar power.

MarketWatch (May 14^th) ~ "BrightSource Energy, Inc., a specialist in harnessing the heat from the sun to create steam for electric power generation, on Wednesday said it closed a $115 million round of financing from a diverse group of blue-chip backers." This is great news for a clean, renewable and domestic energy source that is ready today for deployment. Thermal solar has the ability to provide base load capacity to the grid which critical for successful replacement of fossil fuels power plants. Especially important in the announcement is the support of three major petroleum companies BP, StatoilHydro and Chevron.

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7bEB45C1E7-812E-45F5-916C-DF836A44FEE7%7d&siteid=nbs

So what is the rest of the world supposed to do for rigs?

Bloomberg (May 15^th) ~ "Petroleo Brasileiro SA, Brazil's state-controlled oil company, leased about 80 percent of the world's deepest-drilling offshore rigs…" The article reports that Petrobras is currently negotiating to 17 of the world's 21 rigs capable of working offshore in depths of up to 9,000 feet. So here we are again, infrastructure shortages. There is another example in this week's report concerning offshore wind farms.

http://www.bloomberg.com/apps/news?pid=20601207&sid=a8V5CHwdycrk&refer=energy

The oily truth about foreign policy.

Financial Times (May 13^th) ~ "The only plausible routes to "energy security" lie at home in the US - in the development of new technologies and in a change of lifestyles. Americans may have to drive their cars less. But it will be a brave presidential candidate who says that." So far U.S. energy policy has been focused on supply. Until we change that focus our foreign policy will also remained focused on supply and all the troubles it will bring.

http://www.ft.com/cms/s/0/380e0304-2086-11dd-80b4-000077b07658.html?nclick_check=1

Link to this week's Master Resource Report 2008-05-16

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.

What makes up the cost of diesel and gasoline at the pump?

On page 4 of this week's report the Energy Information Agency gives the answers.

The idea of a gas tax to cut consumption has already been tested.

The idea of a 50 cent per gallon gas tax is examined on page one this week.

Top 3 air carriers boost fuel charge by $20 roundtrip.

AP (May 8) ~ "The increases by American Airlines, United Airlines and Delta Air Lines affect the carriers' fuel surcharges, which now total $130 roundtrip on many flights. That means passengers on some cheap flights could be paying more in fees and taxes than for the airfare itself." It is not impossible that in the future transportation costs will be comprised mostly of the fuel cost with other cost being a minor component. The airlines are also cutting routes. Neither of these actions will be the last.

http://money.cnn.com/news/newsfeeds/articles/djf500/200805081437DOWJONESDJONLINE001020_FORTUNE5.htm

How would you like to buy gas for $2/gallon again?

Best of all you won't have to buy anything or try to run you car on water.

Link to this week's Master Resource Report 2008-05-09

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.

Chevron CEO Expects High Energy Costs For the Long Haul

WSJ: Chevron is a major producer of crude oil, as well. Don't you have any control over the prices?

Mr. O'Reilly: Absolutely not. Our crude-oil production is about 1.5 million barrels a day, out of 88 million barrels a day globally. So we produce 2% of the total global supply. In reality, even though we're a very big company, we're a very, very small producer.

http://online.wsj.com/article/SB120958882073757383.html?mod=wsjcrmain (subscription required)

China oil consumption hits record high in first quarter of 2008

"According to statistics released Tuesday by the China Petroleum and Chemical Industry Association (CPCIA), China's apparent consumption of oil products composed of gasoline, diesel and kerosene rose by 16.5 percent year on year to 52.73 million tonnes in the first three months, and crude oil, rose by eight percent to91.8 million tonnes." That is right refined product imports rose 16.5% from last year.

http://news.xinhuanet.com/english/2008-04/29/content_8075648.htm

Is a windfall profit tax proposal due soon from Washington DC?

Wall Street Journal (April 30 ) ~ "On Tuesday, grain-processing giant Archer-Daniels-Midland Co. said its fiscal third-quarter profits jumped 42%, including a sevenfold increase in net income in its unit that stores, transports and trades grains such as wheat and corn, as well as soybeans. A sevenfold increase in net income, that makes Exxon look like a bit player. http://online.wsj.com/article/SB120949327146453423.html?mod=wsjcrmain (subscription required)

Iran dumps US dollars in oil deals.

Upstreamonline (May 1) ~ "The dollar has totally been removed from Iran's oil transactions. We have agreed with all of our crude oil customers to do our transactions in non-dollar currencies," the Associated Press quoted Hojjatollah Ghanimifard, a top Oil Ministry official, as saying on state-run television." Is this a desperate move by Iran or are they a trend setter?

http://www.upstreamonline.com/live/article153461.ece

Link to this week's Master Resource Report 2008-05-02

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.

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.

This is what happens when you import 100% of your oil!

Financial Times (March 25) ~ "South Korea's soldiers will be asked to make do with only one bath a week while its air force pilots will have to do more training on computers instead of real fighters as record oil prices force the country to slash fuel usage." This reminds me of the recommendation to share your showers at home from back in the 1970's.

http://www.ft.com/cms/s/0/ed98e766-fa0c-11dc-9b7c-000077b07658.html?nclick_check=1

Is this the upside to Global Warming?

March 27 (Bloomberg) ~ "In Greenland, locals hunt reindeer for food and use dog sleds to traverse the ice sheet. Soon they may be working on offshore rigs and counting their money." Even if global warming cooperates it will be more than a decade before any oil would flow from Greenland. So don't start thinking $2 gasoline just yet.

http://www.bloomberg.com/apps/news?pid=20601207&sid=aeu5ZbUSdOkc&refer=energy

Remember it is not just about oil.

Falls Church News Press (March 27) ~ "Thermal power production across the globe is struggling to cope with high prices and shortages of coal, fuel oil and diesel. Several poorer countries have shut down the bulk of their generation capacity as they are no longer able to pay the fuel bills to keep going." Tom Whipple takes a good look at some of the problems facing the world's electrical needs. For some it appears the fossil fuel age may be nearing an end.

http://www.fcnp.com/national_commentary/the_peak_oil_crisis_load_shedding_20080326.html

Link to this week's Master Resource Report (PDF) 2008-03-28

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.

What exactly are emergency reserves for?

WASHINGTON, March 18 (Reuters) – "Releasing emergency supplies from the U.S. Northeast Heating Oil Reserve would have a short-term effect on lowering record retail heating oil prices, the head of the federal Energy Information Administration said Tuesday." Using "Heating Oil Reserves" to control prices seems the wrong approach. Should they be used to provide emergency supplies when there is an "Emergency" related to supply, not just high prices. http://www.reuters.com/article/bondsNews/idUSN1821841220080318?rpc=401&

Last week it was Northwest Airlines, this week it is United and others.

CHICAGO, March 18 (Reuters) - UAL Corp parent of United Airlines, will shrink its fleet by up to 4 percent this year to combat the skyrocketing cost of jet fuel, the chief executive of the No. 2 U.S. carrier said on Tuesday." There is more on fuel's impact on trucking and airlines in this week's report. Shrinkage and consolidation are two of the options facing the entire transportation sector. The question is will that help.

http://today.reuters.com/news/articleinvesting.aspx?type=companyNews&storyid=159082+18-Mar-2008+RTRS&WTmodLoc=BizArt-L1-CompanyNews-4

"The U.S. Is Poised to Hit a New Oil Gusher."

Kiplinger, March 17 - "A new black gold rush is under way, this time in North Dakota. The potential payoff is huge -- up to 100 billion barrels of oil. That's twice the size of Alaska's reserves and potentially enough to meet all U.S. oil needs for two decades." Come back to this after reading what Chris Skrebowski has to say about reserves versus flow rates in today's report. Could they really produce over 20 million barrels per day for 20 years? That is more than twice the daily production of Saudi Arabia and twice the all time production rate for the US. It also assumes no growth in US demand over those 20 years.

http://www.kiplinger.com/businessresource/forecast/archive/The_U.S._Poised_to_hit_New_Oil_Gusher_080317.html

Link to this week's Master Resource Report (PDF) 2008-03-21

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.

There is more than one way to be addicted to oil.

Financial Times 2008-03-10 ~ "Many oil-producing countries cannot afford to let the price of oil drop as the revenue they require to assure macroeconomic stability at home continues to increase, a new report by PFC Energy, a leading oil consultancy, reveals, writes Sheila McNulty in Houston." This short piece in the Financial Times makes it clear that the US is not alone in its addiction to oil. Our suppliers are just as hooked. One other point, I think that if you only subscribe to one newspaper it should be the Financial Times. http://www.ft.com/cms/s/0/605387a4-ee44-11dc-a5c1-0000779fd2ac.html

Northwest Airlines to Risk Manage Fuel Cost With SuperDerivatives

"Rising fuel costs continue to be one of the biggest challenges to Northwest Airlines and the airlines industry as a whole. We searched for a derivatives platform that would enable us to evaluate various hedging strategies and option valuation for FASB 133 accounting," said David Zanussi, Managing Director of Fuel Management, Northwest Airlines." I sure hope this goes better for them than the derivatives worked out in the subprime mortgage market. Somehow I don't think it will. More on airline fuel costs in this week's report on page 2.

http://www.businesswire.com/portal/site/google/?ndmViewId=news_view&newsId=20080311005871&newsLang=en

Shell Oil "A National Dialogue on Energy Security:"

Just because they are a big international oil company doesn't mean what they have to say isn't worth listening to. If you take the time to read this report from Shell do it within the context of a much broader view of energy than just petroleum. Remember they do have an agenda. (20 page PDF)

"The Myth: We're running out of oil. The Reality: Oil resources are out there, should we choose to develop them." True, but remember the flow rate will not be the same!

"The Myth: Alternative fuels are a "magic bullet." The Reality: We believe in alternative fuels – but not in magic." The scale of our petroleum use is huge; petroleum will be with us for decades to come.

http://www-static.shell.com/static/us-en/downloads/energy_security/pdf/shell_final_report.pdf

Link to this week's Master Resource Report (PDF) 2008-03-14

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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.

The hunt for a scapegoat continues.

Financial Times 2008-03-05 ~ "No question the high price of gasoline has hurt economic growth here," Mr Bush said in his most outspoken criticism of the oil cartel. The US president warned that for Opec it was a "mistake to have its biggest customer's economy slow down . . . as a result of high energy prices". The fundamental underlying premise is that there is plenty of production capacity and they are just holding out on us. If that premise is wrong and we have not taken steps to deal with it we are all in real trouble.

http://www.ft.com/cms/s/0/d0ece0be-ea57-11dc-b3c9-0000779fd2ac.html

The doubling of the price of coal worldwide will have more of a direct impact on economies outside the US than oil has. Remember China derives 80% of primary energy from coal.

The Guardian 2008-03-05 ~ "Coal, for so long the Cinderella of fossil fuels, is suddenly not just in demand but in desperately short supply. The world's biggest producers and exporters are struggling, and the price of imports to Europe has doubled to almost $140 (£70.5) per tonne over the past year" While everyone has been focused on oil he big problems may come from coal and natural gas. It is not just about oil it is about the Master Resource "Energy".

http://www.guardian.co.uk/environment/2008/mar/05/fossilfuels.energy

"NAFTA's legacy: the worst agreement we ever signed."

globeandmail.com 2008-03-05 ~ "Canada now exports 63 per cent of the oil it produces and 56 per cent of its natural gas to the U.S. And because of NAFTA's proportionality clause, Canada is legally obliged to continue exporting the same proportion of our oil and gas forever even if we face a shortage." Take a minute to read this article and consider your opinion if you were Canadian. The NAFTA treat is probably doomed in its current form, when maybe the only question.

http://www.theglobeandmail.com/servlet/story/RTGAM.20080305.wcomment0306/BNStory/Front/home

Link to this week's Master Resource Report (PDF) 2008-03-07

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.

Oil prices could top $300 per barrel within the next five years, according to one industry expert. -- Matt Simmons

"Demand on the other hand shows absolutely no sign of slowing down because we are now at $100 a barrel, which I still think is a preposterously cheap price. It works out at just $0.15 a cup. A cup of gas will get a car with six passengers in, with the air conditioning on and go two miles. It's a bargain" Matt is a braver man than I predicting price. The truly scary part is that we have a better chance of seeing $300/barrel than every seeing $30 again. There is more on oil prices in this week's report.

http://www.arabianbusiness.com/512436-oil-could-reach-us300-claims-expert?ln=en

Study says clean energy investment near $150 billion in 2007.

(Reuters) - Global investment in clean energy technologies soared 60 percent last year to $148.4 billion (74.4 billion pounds), London-based researchers New Energy Finance said on Thursday." It is worth noting that the report indicated biofuel investing actually fell in 2007. "Within the clean energy sector solar power has seen by far the strongest investment growth over the past four years, the report said, at 254 percent per year since 2004."

http://uk.reuters.com/article/UK_SMALLCAPSRPT/idUKL2892386220080228?sp=true

Mexico's Cantarell oil output slides further.

"(Reuters) - Crude oil output from Mexico's huge but aging Cantarell offshore field fell again to 1.243 million barrels per day in January, the lowest average monthly output level in several years, the energy ministry reported on Tuesday." To make matters even worse with the highest oil prices in history Mexico's national oil company Pemex managed to lose $1.48 billion (yes billion) in 2007. Is anyone in Mexico City or Washington DC nervous yet?

http://uk.reuters.com/article/oilRpt/idUKN2638112220080226

The answer to my question about Mexico City at least came this morning. According to Upstreamonline "Mexico's key opposition party, the Institutional Revolutionary Party (PRI), is unlikely to back any oil sector reform proposal that would let private companies form profit-sharing alliances with the state-run Pemex." The crisis isn't bad enough yet to panic so why try to deal with it. Again we see no understanding of the implications of Peak Oil.

Link to this week's Master Resource Report (PDF) 2008-02-29

Find the answer to this question in this week's report.

How much coal is required to run a 100-watt light bulb 24 hours a day for a year?

How much CO₂  is produced?

Oil at $100 May Look `Cheap' Within Five Years

"(Bloomberg) -- Crude oil prices of $100 may look "cheap" within five years if OPEC production fails to keep pace with global demand growth, according to Alfa Bank. "We may hit peak oil in the course of the next three, four or five years, in which case $100 oil will look somewhat quaint,'' Alfa Bank's Moscow-based Head of Research Ronald Smith said in an interview with Bloomberg television." I think his five year time frame may be too long. I do like his use of the word quaint.

http://www.bloomberg.com/apps/news?pid=20601207&sid=aoz6VDOFWe60&refer=energy

Jakarta to seize gas field in Exxon dispute.

"(Financial Times) -- Indonesia on Tuesday said it would seize Asia's largest undeveloped gas block from ExxonMobil and ask Pertamina, the state-owned energy group, to prepare a feasibility study to take over the field." The fact that "Resource Nationalism" is spreading is not news anymore. The next phase, "Resource Withholding" has not yet sunk into the investment or commodity markets. One the resource is controlled solely by national company the move to "Resource Withholding" is an easy step. Also remember is will involve far more than energy resources.

http://www.ft.com/cms/s/0/79091b66-df3e-11dc-91d4-0000779fd2ac.html

The Peak Oil Crisis: Connecting the dots.

"(Falls Church News-Press) Earlier this week oil closed above $100 a barrel for the first time. To make matters worse, wholesale gasoline and heating oil jumped 11 cents a gallon in a single day to their all-time highs." If you have not read Tom Whipple's work for the Falls Church News-Press or ASPO-USA take the time to check this out,

http://www.fcnp.com/index.php?option=com_content&task=view&id=2583&Itemid=35

Link to this week's Master Resource Report (PDF) 2008-02-22

Vietnam to Slash 2008 Coal Exports, May Phase Out Shipments

"(Bloomberg) -- Vietnam, China's largest coal supplier, plans to reduce exports 32 percent this year and gradually eliminate the sales to meet rising domestic demand, a government official said." In the April 6, 2007 issue of this report I indicated that Vietnam would be reducing its exports of coal. Now that there is a developing crisis in the Pacific Basin coal supply it is coming to pass. This brings together two key concepts I cover nearly every week; net exports and resource withholding. Stay tuned it is going to get interesting.

Link to source: http://www.bloomberg.com/apps/news?pid=20601087&sid=agcDPPksNI6U&refer=home

14% annual decline rate for Mexico's largest field.

"According to Sener, the 2007-16 Crude Oil Market Outlook prepared by the Energy Information System of the Energy Secretariat, in any scenario—high or low—Cantarell's production will average 917,000-921,000 b/d during 2006-16, with an average annual decline of 14.1%."

Link to source: http://www.ogj.com/display_article/319499/7/ONART/none/DriPr/1/Mexico-oil-production-decline-to-increase-in-2010/site_license.cfm?sl=petrobras

This is why I think ASPO will win the $100,000 bet with CERA, assuming CERA accepts the challenge.

From the OilDrum.com "Our own government data, in an EIA release earlier this week, announced downward revisions in Crude + Condensate oil production for November 2007, confirming (for now) that May 2005 is still the standing peak for oil production. World production through the first 11 months of 2007 averaged 73,223,000 bpd which is 594,000 bpd below the average for 2005. November 2007 production is still 582,000 bp/d below the record month of May 2005."

Link to Source: http://www.theoildrum.com/node/3627#more

Link to this week's Master Resource Report (PDF) 2008-02-15

Wager Challenges CERA Oil Supply Prediction

Group bets $100,000 against CERA supply forecast

"CERA's claims of 'plentiful energy resources' are misguided, overly optimistic and out of touch with recent warnings from oil industry CEOs," Udall said. "CERA projections have been wrong so often that policy makers should think twice about embracing their data," added Bob Kanner, CEO of Cleveland-based PubCo Corporation, who has wide-ranging investments in the oil and gas industry. "I'm participating in this bet to illustrate the need for greater truth and clarity in the prediction of oil and gas supplies. We're not just betting our money, we're betting our nation's future."

Full text of wager is on page 5 of the attached Master Resource Report.

http://www.aspo-usa.com/index.php?option=com_content&task=view&id=312&Itemid=91

Biofuels Hold Potential for Greater Levels of CO₂ – Highly recommend reading!

"Together the two studies offer sweeping conclusions: It does not matter if it is rain forest or scrubland that is cleared, the greenhouse gas contribution is significant. More important, they discovered that, taken globally, the production of almost all biofuels resulted, directly or indirectly, intentionally or not, in new lands being cleared, either for food or fuel."

If you don't have time to read the article there is a six minute audio worth listening to.

http://www.nytimes.com/2008/02/08/science/earth/08wbiofuels.html?_r=1&ref=business&oref=slogin

Central Asia is going to heat up in the future.

"ASTANA, Kazakhstan (Dow Jones)--The Kazakh state could seize oil fields and mineral deposits from private investors, Prime Minister Karim Masimov said Thursday"

Scale will not allow this to happen! (This week's report tells why)

"The U.S. Senate is trying to jumpstart action on that front. In October, Sen. Norm Coleman and several co-sponsors introduced the Carbon Dioxide Pipeline Study Act "a prod to get five federal agencies to clear away technical and regulatory hurdles to the construction of a huge national pipeline."

http://blogs.wsj.com/environmentalcapital/2008/02/05/reality-check-please-clean-coals-pipeline-problem/

Text of Bill http://www.govtrack.us/congress/billtext.xpd?bill=s110-2144

Link to this week's Master Resource Report (PDF) 2008-02-08