Tuesday Night 3-17-15 Charlie & Dinar Speculator Member Chat:
All About The Oil & ISIS - PART 1
Charlie Hi Everybody! I'm preparing my notes. Give me a minute
ksdunlap ok Charlie
b1955 Take your time I'm preparing my mind
ksdunlap i don't have one to prepare so i'll just stay quiet :S
Charlie I want to go back to oil. Oil is the number one reason for Iraq and the dinar to be relevant. There are two completely different sides to oil as I have mentioned
Charlie There is the obvious, energy side
Charlie Then there is the not so obvious, financialized side
Charlie I want to focus on the energy side
Charlie With this I think you will see why Iraq will be a bigger and bigger role in our world in the months and years to come
Charlie Energy is the lifeblood of any economy.
tudor without energy, no factories etc
Charlie The supply of that energy deserves our very highest attention.
Charlie 95% of everything that moves from point A to point B across the globe does so based on petroleum derived liquid fuels. This makes petroleum quite special and unique.
Charlie When an oil field is tapped we find that the amount of oil that comes out if it follows a very prescribed pattern over time that ends up resembling a bell curve
Charlie The left side of the bell is the cheaper and easier side.
Charlie The right side is the expensive side.
Charlie We start pumping out oil out of well with less energy needed to extract it.
Charlie At the moment of the peak roughly half the oil that was there in the first place still remains.
Charlie But something interesting happens at the half-way mark. Where oil gushed out under pressure at first, the back half usually has to get laboriously pumped out of the ground at higher cost.
tudor ahhhh makes sense
Charlie Cheap oil takes less energy and cost to extract.
Charlie Cheap has nothing to do with the quality
Charlie Just the cost
Charlie When we talk of Iraq, we are talking anywhere from 30 to 100 barrels of oil for every barrel of energy used to extract.
tudor thats the cheap factor
Charlie Forget all about how much money energy costs because it is actually irrelevant, especially when money is printed out of thin air. Instead we are going to focus on how much energy it takes to get energy because as I am going to show you that is what really matters.
Charlie Oil is about to go below 40 per barrell
Charlie It was over 100 last year
Charlie Cost is a factor, but more importantly, when you compare oil sources, such as shale, you will see that the NET ENERGY is more important.
Charlie If it costs you 1 barrel to get 100, that is a net of 100
Charlie Crude oil in places like Saudi Arabia and Iraq is as cheap as it gets.
Charlie Shale does not compare.
Charlie Over time these oil fields dropped in the net energy, but Iraq has much untapped cheap oil.
Charlie Saudis still pump out at 10 or 20 to 1
Charlie Iraq has more untapped cheap oil making it the prize of the Middle East
Charlie Shale at the very best returns at a 2 or 3 to 1 rate
Charlie We hear about an oil glut, over production as the reason for the price of oil going down.
Charlie Truly, the global economy is slowing down much faster than anyone predicted
Jade and Iraq does want to borrow from IMF to make up for the price drop
Charlie They should avoid at all cost.
Charlie You hear of global economic growth, but you really can't measure growth with all the money printing that is going on.
Charlie When I hear of movies breaking box office records, what I really see is the price of movie tickets going up.
48hotrod Getting here late - but very interesting chat - Thanks Charlie - you have really kept me busy reading in the forum -- I had not heard of the Black Swan before and was kinda surprised -- - sorry to interrupt -
Charlie Compare what a movie made in the 70's vs today and you can't compare in dollars - and don't even try adjusted for inflation because the inflation numbers are cooked.
Charlie Hi hotrod!
tudor we dont go to the movies, cant afford to
Charlie So when I try to look at economic growth. Real growth. I look at industrial numbers
48hotrod I sure hope this chat will be in the forum Please Please - I want to read it ALL
Charlie Look at the Blatic Dry Index first http://www.bloomberg.com/quote/BDIY:IND
tudor charlie posts them all, no worries
Charlie Look at the 1Y chart
tudor it really fluctuates and is way down
Charlie Yes, way down
Charlie In one year from 1621 to 568
tudor like my checkbook lol
Charlie What is the Baltic Dry Index you ask?
Charlie the index provides "an assessment of the price of moving the major raw materials by sea"
Charlie Most directly, the index measures the demand for shipping capacity versus the supply of dry bulk carriers. The demand for shipping varies with the amount of cargo that is being traded or moved in various markets (supply and demand).
b1955 Just about to ask
Charlie Because dry bulk primarily consists of materials that function as raw material inputs to the production of intermediate or finished goods, such as concrete, electricity, steel, and food; the index is also seen as an efficient economic indicator of future economic growth and production.
The BDI is termed a leading economic indicator because it predicts future economic activity.
Charlie This is what is driving oil prices down,
Charlie Global economic slow down
Charlie As the shale industry begins to collapse because of the the high cost to extract, we begin to see the market somewhat shrink.
tudor and more jobs lost
Charlie And the derivative market implode.
tudor not good
Charlie What does this mean for Iraq?
Charlie Iraq has a lot of production growth ahead, but the slowing global economy is a cause for concern. What wild cards are hidden in Iraq's favor?
tudor low production, extraction costs
Charlie Yes, but what will give them an opportunity to grow and move up the chart of oil producers?
tudor internationally recognize dinar
Jade getting rid of isis for one thing
tudor with a value
Charlie Yes, Isis has to be dealt with. There is another way you go up.
Charlie Here is the list of top oil producers
Charlie Iraq has steadily grown since liberated from Saddam.
Jade up there with some big boys
Charlie And growing
Charlie Unveiling production of 4 million barrels of crude per day in December, Adel Abdel Mehdi told reporters that the total was " a historical figure, and the first time Iraq has achieved this."
Charlie Iraq has not pumped as much crude oil since 1979, when the previous record was set with 3.56 million b/d . The December total would make Iraq OPEC's second largest producer, behind Saudi Arabia at around 7 million b/d and ahead of Iran, the United Arab Emirates and Kuwait which each produce 2.7 b/d.
tudor oh my
Charlie So we see the muscles are being flexed.
Charlie Now this is where it gets interesting.
Charlie So we see that Iraq will be challenged by two things: Isis and global demand drop
Charlie But the sign I am seeing is that Iraq is a cheap oil producer, and I believe the cheapest.
Charlie The straws tapping into their oil fields are on the left side of the bell curve and this is primarily due to the years of low production because of sanctions on Iraq
Jade Any chance they will pump and store it? I promise to buy a gas guzzling car!
Charlie Iraq is ahead of the game, because they were slowed down in both pumping and exploration.
Charlie Saudis are pulling lots of water out of their wells.
Jade On the right side of the bell?
tudor Jade, charlie esplained that at the beginning, look in history hon
tudor be back in a few minutes
Charlie The left side of the bell is the upward part and less expensive
Charlie Saudi http://blogs.platts.com/2014/05/19/saudi-aramco/
Comments may be made at the end of Part 2 thank You