The Master Resource Report

In this week's report: (click this link to access an online copy of the attached PDF)

The IEA's forecast for 2030 oil supply, is it believable? (page 1 )

FedEx and fuel. (page 2 )

Is $80 per barrel oil the critical level? (page 3 )

Brazil's 5 billion barrels of oil. (page 4 )

Wave and Tidal Power - continued progress. (page 4 )

Long distance transportation choices in 1952. (page 5 )

The 50 Worst Cars of All Time.

Time – "On the 50th anniversary of the Ford Edsel, TIME and Dan Neil, Pulitzer Prize-winning automotive critic and syndicated columnist for the Los Angeles Times, look at the greatest lemons of the automotive industry." This is really something. For sure at least some people will find at least one of their favorite cars on the list. But that is the fun of a list like this, to disagree with it. Yes the 1958 Ford Edsel is on the list!!

So how is that jet fuel hedging program working out?

Financial Times (Nov. 17^th) – "Although the price of oil has fallen from a high of $147.27 in July 2008 to about $80 a barrel this month, EasyJet had hedged its fuel prices at higher rates than the average spot price over the year." This was followed on Nov 18^th with this news on Air France. "Air France-KLM, Europe's largest airline, on Wednesday unveiled a net loss of €147m ($219.8m) in its second quarter after suffering a further drop in revenues from its cargo operations and large losses on its fuel hedges."

At best fuel hedging is a short-term bet on price and only provides relief from fuel price escalation for a brief period of time. Hedging is not a solution to the chronic long-term nature of Peak Oil driven fuel increases that the air transport industry must face in the decade ahead. In this week's report the approach that FedEx uses of fuel surcharges instead of using a hedging program are looked at. That approach will also prove largely ineffective over the long-term in protecting the companies in the industry.

So is Peak Oil destine solely to crisis management mode by governments?

Tom Whipple -- "Not many years from now, there will be a huge uproar over who missed the coming of peak oil. There will be Congressional hearings and much finger pointing and protestations that the peaking of world oil production was impossible to predict." Recently much has been made of the U.S. lack of ability to foresee crisis and its tremendous ability to respond and manage them. The Peak Oil scenario ahead will soon put that thesis to the ultimate test. I hope all the pundits are right on that count.

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, through KMS Financial Services, Inc. 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: (click this link to access an online copy of the PDF)

Were the IEA's world oil reserve figures influenced by the U.S.? (page 1 )

So which is it "Peak Supply" or "Peak Demand"? (page 2 )

Mexico tackles budget problems? (page 3 )

Who controls the reserves? (page 3 )

What was the prediction for future oil supplies 60 years ago? (page 4 )

Could Peak Oil play out like the recent Financial Crisis did?

Guardian (Nov. 10^th ) – "Remember the Queen's question – that uncannily accurate and strikingly obvious question she put to economists at the London School of Economics a year ago after the financial crisis: did no one see it coming? Apply that question to peak oil and the answer is that many people did see it coming but they were marginalized, bullied into silence and the evidence was buried in the small print." This was in a follow-up article run by the Guardian after the primary article discussed in this week's report.

EIA data for gasoline and distillate demand don't support views of economic recovery?

EIA (Nov. 12^th) – The EIA (Energy Information Administration: Official Energy Statistics from the U.S. Government) released its weekly petroleum report on Thursday. The report showed that distillate demand was still down and remains below the depressed levels of last year. Gasoline consumption is holding steady just under 9 mb/d which has proven to be a very sticky level of consumption. If gasoline consumption begins to slip further significantly below the 9 mb/d level it will not be a good sign at all. The lack of demand for distillates which are better measures of industrial and commercial demand than gasoline clearly shows that the U.S. economy has not made a major change in direction.

Peak Gold???

Telegraph (Nov. 11^th) -- "Global gold production is in terminal decline despite record prices and Herculean efforts by mining companies to discover fresh sources of ore in remote spots, according to the world's top producer Barrick Gold."

The reason is simple and no different than the situation for oil; "It is increasingly difficult to find ore."

High Speed Rail: A No-Brainer -- The Transformation of Transportation

Chris Nelder has some interesting observations and prescriptions for high speed rail in the U.S. The biggest obvious advantage – it can be done without a dependence on liquid fuels.

"Calling the U.S. "a developing country in terms of rail," a Siemens representative told the New York Times last week that his company was a candidate for a proposed high speed link between San Francisco and Los Angeles, along with Bombardier and Japanese bullet train manufacturer Hitachi." So where are the U.S. companies on that list?

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, through KMS Financial Services, Inc. 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.

Special News:

This is a follow-up to the article in today's Master Resource Report and the news this week on events at World Oil concerning Art Berman and shale gas. Read this posting on Art's blog concerning his leaving and the firing of his editor over his work on shale gas. Petroleum Truth Report

In this week's report: (click this link to access an online copy of the PDF)

Railroads & Peak Oil. (page 1 )

The shale gas question heats up? (page 1 )

Why wasn't this in the paper? (page 3 )

4-5 trillion barrels of oil, really? (page 3 )

Spain hit 45% of electric power from wind. (page 4 )

Ok, Warren Buffett bought a freight railroad. What about passenger rail?

James Kunstler has some thoughts on passenger rail that he wrote in a forward to a new book "Waiting on a Train: The Embattled Future of Passenger Rail Service" by James McCommons. "Rebuilding the nation's passenger railroad has got to be put at the top of our priority list. We had a system not so long ago that was the envy of the world; now we have service that the Bulgarians would be ashamed of."

Fans of James Kunstler will be happy to hear that his new book is almost out. It is a follow-on to "World Made by Hand". I will try to give it a review when I get a copy.

Mexico?

Bloomberg (Nov. 3^rd) – "Mexico's Congress on Nov. 1 passed a watered-down version of President Felipe Calderon's 2010 budget that Fox [former President Vicente Fox] says is not enough to reverse a "desperate" budget situation brought on by falling oil revenue, which funds 38 percent of spending." Mexico is in a very bad way caught between falling production and lower oil prices.

CNN Money on six electric car companies and their plans for success.

"Each of these carmakers is gearing up to be the next big thing in electric automobiles. Here is how they're charting success." They range from the $30,000 Wheego & Aptera to the $88,000 Fisker. How many will be standing in 3 or 4 years? My guess is not many. Scale will prove to be the issue for most.

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, through KMS Financial Services, Inc. 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: (click this link to access an online copy of the attached PDF)

Jet fuel and distillate fuel demand trends. (page 1 )

Is $80 oil a problem for the economy? (page 3 )

Ten years of US gasoline and distillate fuel consumption. (page 4 )

Chinese investing in wind power in Texas???

Dallas Morning News (Oct. 29^th) – "A Chinese-American joint venture has agreed to build the next massive wind farm on the plains of West Texas." Texas would never let China own their oil wells, but the wind, no problem? I wonder why they couldn't get T. Boone in on this one.

Will the Saudi's intervene to keep oil prices down?

Khaleej Times [Reuters] (Oct. 29^th) – "Saudi Arabia might seek to brake any new oil price spike, mainly to protect a fragile global economy and prolong its own role as the world's top oil producer — and if that hurts regional rival Iran, it will shed no tears." The Saudi Arabian government does not want the world economy to slip backwards into recession when it may just be moving out of one. The spector of demand falling and prices slipping back to the $30/barrel levels of last December will keep their minds focused.

The question is how long can they provide that supply when global demand returns to the levels of 2007-08?

Jeff Rubin clearly thinks not for long and said so on James Cramer's show Thursday. He thinks oil will scale triple digit levels within 12 months and put an end to the recovery. If you watch this video it is like all "Mad Money" clips, only with adult supervision and definitely no children should be present. (Cramer thinks we have 200 years worth of natural gas, enough said) Note: I only knew about this interview thanks to a friend, I am proud to say I normally avoid Mr. Cramer.

North Dakota passes Louisiana in oil production.

Associated Press (Oct. 28^th) – "The agency's Energy Information Administration said North Dakota produced 6.38 million barrels of crude in May, edging Louisiana, which had 6.34 million barrels for the month. Oklahoma was ranked fifth, at 5.7 million barrels for that month, according to the most recent figures." Don't get too excited though, North Dakota's total monthly production would only meet about one-third of a single day's demand for oil in the U.S. In addition number five ranked Oklahoma is now producing less oil than in 1913 (page 2). Never forget SCALE when reading oil production statistics.

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, through KMS Financial Services, Inc. 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.