The Master Resource Report

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

What does energy consumption say about the recession? (page 1 )

Jet fuel prices and the airlines. (page 2 )

Mexico's credit rating. (page 3 )

Moore's Law does not apply to oil. (page 4 )

Two very good video interviews by ASPO-USA on petroleum supplies. (page 5 )

EIA gasoline supply data.

On Wednesday the EIA released its weekly petroleum report which includes data on gasoline and distillate supplied to the market. Gasoline continues to remain flat at 8.9 million barrels per day, holding steady around the apparent demand floor of the last five years of 9 million barrels per day. Distillate is also flat over the last few weeks but importantly is down from the depressed levels of a year ago.

There is more in this week's report on the trends over this decade in industrial and commercial consumption of petroleum products. While gasoline consumption appears to have hit a floor that goes back to 2004, distillate, jet fuel and natural gas which have high industrial use components in their demand are all down from 2004 levels.

Did you know that corn production requires propane?

A good example of the dependence of agricultural production on fossil fuels is being demonstrated by events involving propane during the current corn harvest. Again Peak Oil will impact far more than the price you pay at the gasoline pump.

"Gov. Jim Doyle [Wisconsin]has declared a state of emergency to help alleviate a shortage of propane. Doug Caruso of the Wisconsin Farmers Union says the demand for the fuel is higher than normal because it's needed to help dry a high-moisture corn crop."

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)

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.