[Rich Toscano]

Contrary to what appears to be popular belief in the media, the “peak oil” concept is not about the amount of reserves, it’s about flow rates. IE, it’s not how much oil is underground, it’s how many barrels can be produced/processed on a daily basis.

The processing required for shale oil as well as tar sands makes them different from the good old days where the Saudis could just turn a valve and increase the flow rate (which they still can do on some fields, but this is just on a small marginal proportion of total supply). They also have much greater environmental impact, to the extent that ramping them up too much would cause other problems.

So shale/tar sands may represent a vast reserve of oil in the ground, but it’s questionable as to whether they can replace the flow lost from declining conventional oil sources.

I am not an “expert” either but this is my understanding from reading/talking to people who are. (For those who wish to know more, try http://gregor.us/ — this is a blog written by Gregor Macdonald, a great energy analyst in addition to being a brilliant macro analyst imho).

Rich

[Rich Toscano]

Contrary to what appears to be popular belief in the media, the “peak oil” concept is not about the amount of reserves, it’s about flow rates. IE, it’s not how much oil is underground, it’s how many barrels can be produced/processed on a daily basis.

The processing required for shale oil as well as tar sands makes them different from the good old days where the Saudis could just turn a valve and increase the flow rate (which they still can do on some fields, but this is just on a small marginal proportion of total supply). They also have much greater environmental impact, to the extent that ramping them up too much would cause other problems.

So shale/tar sands may represent a vast reserve of oil in the ground, but it’s questionable as to whether they can replace the flow lost from declining conventional oil sources.

I am not an “expert” either but this is my understanding from reading/talking to people who are. (For those who wish to know more, try http://gregor.us/ — this is a blog written by Gregor Macdonald, a great energy analyst in addition to being a brilliant macro analyst imho).

Rich

[Rich Toscano]

Contrary to what appears to be popular belief in the media, the “peak oil” concept is not about the amount of reserves, it’s about flow rates. IE, it’s not how much oil is underground, it’s how many barrels can be produced/processed on a daily basis.

The processing required for shale oil as well as tar sands makes them different from the good old days where the Saudis could just turn a valve and increase the flow rate (which they still can do on some fields, but this is just on a small marginal proportion of total supply). They also have much greater environmental impact, to the extent that ramping them up too much would cause other problems.

So shale/tar sands may represent a vast reserve of oil in the ground, but it’s questionable as to whether they can replace the flow lost from declining conventional oil sources.

I am not an “expert” either but this is my understanding from reading/talking to people who are. (For those who wish to know more, try http://gregor.us/ — this is a blog written by Gregor Macdonald, a great energy analyst in addition to being a brilliant macro analyst imho).

Rich

[Rich Toscano]

Contrary to what appears to be popular belief in the media, the “peak oil” concept is not about the amount of reserves, it’s about flow rates. IE, it’s not how much oil is underground, it’s how many barrels can be produced/processed on a daily basis.

The processing required for shale oil as well as tar sands makes them different from the good old days where the Saudis could just turn a valve and increase the flow rate (which they still can do on some fields, but this is just on a small marginal proportion of total supply). They also have much greater environmental impact, to the extent that ramping them up too much would cause other problems.

So shale/tar sands may represent a vast reserve of oil in the ground, but it’s questionable as to whether they can replace the flow lost from declining conventional oil sources.

I am not an “expert” either but this is my understanding from reading/talking to people who are. (For those who wish to know more, try http://gregor.us/ — this is a blog written by Gregor Macdonald, a great energy analyst in addition to being a brilliant macro analyst imho).

Rich

[Rich Toscano]

Sorry to weigh in so late on this. Thanks Ed for the analysis. I have a couple thoughts on the per capita-vs-median income thing.

First, I did some comparisons with per capita and median incomes a while back, and I didn’t come up with the same divergence you did. Unfortunately I can’t remember where I pulled my data but I think it might be a question of different data sources or something.

Second, if you look at the price to rent ratio, it tracks pretty well with the price to per capita income ratio. That is a sign to me that per capita income is doing a good job of tracking “spending power” on houses, because it is more or less in line with what people are spending on rents.

Rich

[Rich Toscano]

Sorry to weigh in so late on this. Thanks Ed for the analysis. I have a couple thoughts on the per capita-vs-median income thing.

First, I did some comparisons with per capita and median incomes a while back, and I didn’t come up with the same divergence you did. Unfortunately I can’t remember where I pulled my data but I think it might be a question of different data sources or something.

Second, if you look at the price to rent ratio, it tracks pretty well with the price to per capita income ratio. That is a sign to me that per capita income is doing a good job of tracking “spending power” on houses, because it is more or less in line with what people are spending on rents.

Rich

[Rich Toscano]

Sorry to weigh in so late on this. Thanks Ed for the analysis. I have a couple thoughts on the per capita-vs-median income thing.

First, I did some comparisons with per capita and median incomes a while back, and I didn’t come up with the same divergence you did. Unfortunately I can’t remember where I pulled my data but I think it might be a question of different data sources or something.

Second, if you look at the price to rent ratio, it tracks pretty well with the price to per capita income ratio. That is a sign to me that per capita income is doing a good job of tracking “spending power” on houses, because it is more or less in line with what people are spending on rents.

Rich

[Rich Toscano]

Sorry to weigh in so late on this. Thanks Ed for the analysis. I have a couple thoughts on the per capita-vs-median income thing.

First, I did some comparisons with per capita and median incomes a while back, and I didn’t come up with the same divergence you did. Unfortunately I can’t remember where I pulled my data but I think it might be a question of different data sources or something.

Second, if you look at the price to rent ratio, it tracks pretty well with the price to per capita income ratio. That is a sign to me that per capita income is doing a good job of tracking “spending power” on houses, because it is more or less in line with what people are spending on rents.

Rich

[Rich Toscano]

Sorry to weigh in so late on this. Thanks Ed for the analysis. I have a couple thoughts on the per capita-vs-median income thing.

First, I did some comparisons with per capita and median incomes a while back, and I didn’t come up with the same divergence you did. Unfortunately I can’t remember where I pulled my data but I think it might be a question of different data sources or something.

Second, if you look at the price to rent ratio, it tracks pretty well with the price to per capita income ratio. That is a sign to me that per capita income is doing a good job of tracking “spending power” on houses, because it is more or less in line with what people are spending on rents.

Rich

[Rich Toscano]

Ha! Hilarious FSD… nicely done.

rich

[Rich Toscano]

Ha! Hilarious FSD… nicely done.

rich

[Rich Toscano]

Ha! Hilarious FSD… nicely done.

rich

[Rich Toscano]

Ha! Hilarious FSD… nicely done.

rich

[Rich Toscano]

Ha! Hilarious FSD… nicely done.

rich

[Rich Toscano]

I think there is no chance that the govt sits back and “lets it burn,” to use Pemeliza’s term.

Yes, there has been some recent talk by the administration, but it’s all about increasing bank regulation, not decreasing stimulus. There will be more stimulus and it will be aimed more at main street to address the (entirely true) perception that the govt bailed out wall street at the expense of main street. So now main street will get theirs.

Mind you this is all happening as economic growth is rebounding, markets are improving, housing prices are rising. Another dip down and any tough talk would be replaced by more huge and desperate stimulus attempts.

I would also remind everyone of the GSE’s new unlimited credit line, which could be used to write down loans or to lower lending standards again. Anyone who is banking on a future flood of foreclosures as a sure thing is making a big speculation imho.

To me, the evidence is overwhelming that the stimulus, bailouts, and easy money will continue for as long as the mkts allow it. Maybe I’m just more cynical than others, but to think that the govt is suddenly going to step back and let this play out flies in the face of all evidence, imho.

rich

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