Reviews and Views

Export Land Model

        This may be a good time to become familiar with the name of Jeffery Brown.  He is a Texas oilman, an independent petroleum geologist and manages a joint-venture exploration program.  Based in Dallas, he has created a forecast model that leads him to believe that we are headed toward a dramatic reduction in energy (oil) and sooner than you think.  Let me attempt to recap how the model works. 

1.  Assume an exporter country reaches its peak in oil production.  By the way, this reaching “peak” is occurring world-wide from most of the reserve info (an exception would be Saudi Arabia who doesn’t report). 
2. Assume domestic users within that exporter country consume 50% of all the oil produced in their country.  For some exporters that consumption is greater than 50%.
3. Assume a 5% annual NET decline rate in oil field production.  This is depletion which is reasonable 5% currently.
4. Assume a 2.5% annual increase in domestic consumption as their standard of living improves (i.e. more cars, larger homes, more electricity, more comforts, medical improvements, better housing, manufacturing, food production and longer lives).
5. The result is that this particular exporting country will reach ZERO exports in only 9 years (nine very short years).

         Today, this model can be seen playing out in Indonesia and the United Kingdom.  Jeffery Brown goes on to make the case that…

• NET exports from the current top 5 exporters could drop to ZERO by 2031 (within 21 years).  Those 5 top exporters are Saudi Arabia, Russia, Norway, Iran, and the United Arab Emirates (UAE).
• We know Russia is now declining, Saudi Arabia has not exceeded their 2005 peak and UAE is unclear.
• New investment in the oil industry is insufficient to keep this decline from probably accelerating.
• A depression is currently unfolding in the energy industry.
• Net oil exports will continue to decline – soon a bidding war among importers will increase oil prices.  Brown thinks it could be as early as late 2009, but others point to the 2011-2012.
• People need to change their minds about continued economic growth.
• There needs to be a new low-energy society – where we walk or bicycle more – where we depend on each other in smaller communities.

To do so changes everything as we know it.  It could become very expensive and difficult to the Atlanta metro area for commuters.  See the entire article at http://www.theoildrum.com/node/2767, dated July 13, 2007.

August 23, 2009 Posted by Bill Wyler | Economy | Leave a comment

Debit Cards

Over half (58.2%) of all card transactions are now paid with debit cards.  According to the Nilson Report, credit cards account for 41.8%.  Of all card dollars spent, over 38% come from debit cards.  This is a significant rise of 26% from 2002.

Remember that debit cards and credit cards protections vary somewhat.  If you experience card fraud…

• Credit cards face a $50 maximum liability, regardless of when the card is reported lost or stolen.
• Debit cards face a $50 maximum liability, if reported within 48 hours.  However, if the lost debit card is reported 2 to 60 days after wards, you the card holder can be held accountable up to $500 for any fraudulent charges.  After 60 days, you can face unlimited losses.

See the complete article, “Debit Cards Overtake Credit Cards”, dated August 6, 2009 at http://www.wsj.com (the Wall Street Journal).

August 9, 2009 Posted by Bill Wyler | Economy | Leave a comment

Sea of Troubles

When consumers cut back on purchases, the eventual effect moves down stream over time.  Currently there is a “vast, swelling armada” lying idle.  Nearly 750 vessels are laid up in safe harbors in Asia.  These are all types of shipping – container ships, bulk carriers, tankers, car carrier, and others.  Another 280 ships are being sheltered in European waters.  It is estimated that “nearly 10% of the world’s merchant ships are anchored “because of a collapse in global trade.”

To make matters worse, “there is a huge supply of new ships on order and due off the slipways over the next four years” (2010 – 2013).  President of European Community Shipowners’ Associations estimate than “in June (2009) that shipping capacity would exceed the needs of the market by between 50% to 70% in the near future.”  Box trade (standard containers) is in the midst of its first decline.  It is estimated that “some 15% of capacity will be idle by October (2009).”  For example, “container rates have tumbled:  before last summer it cost $1,400 to move a container from China to Europe; today the rate is barely $400.”  When recovery does come to the global economy, a rapid expansion of container trade may not resume due to over capacity.

This recap comes from an article at The Economist (www.economist.com), “Sea of Troubles”, dated July 30, 2009.

August 8, 2009 Posted by Bill Wyler | Economy | Leave a comment

Residential Real Estate

In July 2005, homes in the U.S. sold for a median price of $227,800.  Most recent data from the National Association of Realtors reveals that homes sold for around $170,200 median price.  This is a 25% decline.

The inventory of homes in November 2006 reflected 7.2 months of supply.  Recently that inventory has risen to 10.2 months or over a 40% increase.

Farmland is being affected by the current economy.  For the first time in 21 years, the value of U.S. farm real estate fell.  The national average price of farm real estate (includes land and buildings) declined 3.2% in 2009 from last year.

Source:  August 6, 2009, Casey’s Daily Dispatch.

August 8, 2009 Posted by Bill Wyler | Economy | Leave a comment

Obama Administration’s Health Care Plan

For a copy of a summary of the Obama Administration’s Health Care Plan go to the following website

Click to access healthcare_overview_obama_072909.pdf

The highlights are provided by Liberty Counsel, a nationwide public interest religious civil liberties law firm.  There is something in it to scare just about anyone.

August 3, 2009 Posted by Bill Wyler | Economy | Leave a comment