The world has a major crude oil problem; expect conflict ahead

Media outlets tend to make it sound as if all our economic problems are temporary problems, related to Russia’s invasion of Ukraine. In fact, world crude oil production has been falling behind needed levels since 2019. This problem, by itself, encourages the world economy to contract in unexpected ways, including in the form of economic lockdowns and aggression between countries. This crude oil shortfall seems likely to become greater in the years ahead, pushing the world economy toward conflict and the elimination of inefficient players.

To me, crude oil production is of particular importance because this form of oil is especially useful. With refining, it can operate tractors used to cultivate crops, and it can operate trucks to bring food to stores to sell. With refining, it can be used to make jet fuel. It can also be refined to make fuel for earth moving equipment used in road building. In recent years, it has become common to publish “all liquids” amounts, which include liquid fuels such as ethanol and natural gas liquids. These fuels have uses when energy density is not important, but they do not operate the heavy machinery needed to maintain today’s economy.

In this post, I provide an overview of the crude oil situation as I see it. In my analysis, I utilize crude oil production data by the US Energy Information Agency (EIA) that has only recently become available for the full year of 2021. In some exhibits, I also make estimates for the first quarter of 2022 based on preliminary information for this period.

[1] World crude oil production grew marginally in 2021.

Figure 1. World crude oil production based on EIA international data through December 31, 2021.

Crude oil production for the year 2021 was a disappointment for those hoping that production would rapidly bounce back to at least the 2019 level. World crude oil production increased by 1.4% in 2021, to 77.0 million barrels per day, after a decrease of -7.5% in 2020. If we look back, we can see that the highest year of crude oil production was in 2018, not 2019. Oil production in 2021 was still 5.9 million barrels per day below the 2018 level.

With respect to the overall increase in crude oil production of 1.4% in 2021, OPEC helped bring this average up with an increase of 3.0% in 2021. Russia also helped, with an increase of 2.5%. The United States helped pull the world crude increase down, with a decrease in production of -1.1% in 2021. In Section [5], more information will be provided with respect to crude production for these groupings.

[2] The growth in world crude oil production shows an amazingly steady relationship to the growth in world population since 1991. The major exception is the decrease in consumption that took place in 2020, with the lockdowns that changed consumption patterns.

Figure 2. World per capita crude oil production based on EIA international data through December 31, 2021, together with UN 2019 population estimates. The UN’s estimated historical amounts were used through 2020; the “low growth” estimate was used for 2021.

Figure 2 indicates that, up through 2018, each person in the world consumed an average of around 4.0 barrels of crude oil. This equates to 168 US gallons or 636 liters of crude per year. Much of this crude is used by businesses and governments to produce the basic goods we expect from our economy, including food and roads.

A big downshift occurred in 2020 with the COVID lockdowns. Many people began working from home; international travel was scaled back. The reduction of these uses of oil helped bring down total world usage. Changes such as these explain the big dip in crude oil production (and consumption) in 2020, which continued into 2021.

Even in 2019, the world economy was starting to scale back. Beginning in early 2018, China banned the importation of many types of materials for recycling, and other countries soon followed suit. As a result, less oil was used for transporting materials across the ocean for recycling. (Subsidies for recycling were helping to pay for this oil.) Loss of recycling and other cutbacks (especially in China and India) led to fewer people in these countries being able to afford automobiles and smartphones. Lower production of these devices contributed to the lower use of crude oil.

On Figure 2, there is a slight year-to-year variation in crude oil per capita. The single highest year over the time period shown is 2005, with 2004 not far behind. This was about the time many people think that conventional oil production “peaked,” reducing the availability of inexpensive-to-produce oil.

[3] Crude oil prices dropped dramatically when economies were shut in, beginning in March 2020. Prices began spiking the summer and fall of 2021, as the world economy attempted to open up. This pattern suggests that the real problem is tight crude oil supply when the economy is not artificially constrained by COVID restrictions.

Figure 3. Average weekly Brent oil price in chart prepared by EIA, through April 8, 2022. Amounts are not adjusted for inflation.

An analysis of price trends suggests that most of the recent spike in crude prices is due to the tightness of the crude oil supply, rather than the Ukraine conflict. The Brent oil price dropped to an average of $14.24 in the week ending April 24, 2020, not long after COVID restrictions were enacted. When the economy started to reopen, in the week ending July 2, 2021, the average price rose to $76.26. By the week ending January 28, 2022, the average price had risen to $90.22.

Russia invaded Ukraine on February 24, 2022. The Brent spot price on February 23, 2022, was $99.29. Brent prices briefly spiked higher, with weekly average prices rising as high as $123.60, for the week ending March 25, 2022. The current Brent oil price is about $107. If we compare the current price to the price the day before the invasion began, the price is only $8 higher. Even compared to the January 28 weekly average of $90.22, the current price is $17 higher.

Saying that the Ukraine invasion is causing the current high price is mostly a convenient excuse, suggesting that the high prices will suddenly disappear if this conflict disappears. The sad truth is that depletion is causing the cost of extraction to rise. Governments of oil exporting countries also need high prices to enable high taxes on exported oil. We are increasingly experiencing a conflict between the prices that the customers can afford and the prices that those doing the extraction require. In my view, most oil exporting countries need a price in excess of $120 per barrel to meet all of their needs, including reinvestment and taxes. Consumers would prefer oil prices under $50 per barrel to keep the price of food and transportation low.

[4] Food prices tend to rise when oil prices are high because products made from crude oil are used in the production and transport of food.

History shows that bad things tend to happen when food prices are very high, including riots by unhappy citizens. This is a major reason that high oil prices tend to lead to conflict.

Figure 4. FAO inflation-adjusted monthly food price index. Source.

[5] Quarterly crude oil data suggests that few opportunities exist to raise crude oil production to the level needed for the world economy to operate at the level it operated at in 2018 or 2019.

Figure 5 shows quarterly world crude oil production broken down into four groupings: OPEC, US, Russia, and “All Other.”

Figure 5. Quarterly crude oil production through first quarter of 2022. Amounts through December 2021 are EIA international estimates. Increase in OPEC first quarter of 2022 production is estimated based on OPEC Monthly Oil Market Report, April 2022. US crude oil production for first quarter of 2022 estimated based on preliminary EIA indications. Russia and All Other production for first quarter of 2022 are estimated based on recent trends.

Figure 5 shows four very different patterns of past growth in crude oil supply. The All Other grouping is generally trending a bit downward in terms of quantity supplied. If world per capita crude oil production is to stay at least level, the total production of the other three groupings (OPEC, US, and Russia) needs to be rising to offset this decline. In fact, it needs to rise enough that overall crude production growth keeps up with population growth.

Russian Crude Oil Production

The data underlying Figure 5 shows that up until the COVID restrictions, Russia’s crude oil production was increasing by 1.4% per year between early 2005 and early 2020. During the same period, world population was increasing by about 1.2%. Thus, Russia’s oil production has been part of what has helped keep world crude production about level, on a per capita basis. Also, Russia seems to have made up most of its temporary decrease in production related to COVID restrictions by the first quarter of 2022.

US Crude Oil Production

Growth in US crude oil production has been more of a “feast or famine” situation. This can be seen both in Figure 5 above and in Figure 6 below.

Figure 6. US crude oil production based on EIA data. First quarter of 2022 amount is estimated based on EIA weekly and monthly indications.

US crude oil production spurted up rapidly in the 2011 to 2014 period, when oil prices were high (Figure 3). When oil prices fell in late 2014, US crude production fell for about two years. US oil production began to rise again in late 2016, as oil prices rose again. By early 2019 (when oil prices were again lower), US crude oil growth began to slow down.

In early 2020, COVID lockdowns brought a 15% drop in crude oil production (considering quarterly production), most of which has not been made up. In fact, growth after the lockdowns has been slow, similar to the level of growth during the “growth slowdown” circled in Figure 6. We hear reports that the sweet spots in shale formations have largely been drilled. This leaves mostly high-cost areas left to drill. Also, investors would like better financial discipline. Ramping up greatly, and then cutting back, is no way to operate a successful company.

Thus, while growth in US crude oil production greatly supported world growth in crude oil production in the 2009 to 2018 period, it is impossible to see this pattern continuing. Getting crude oil production back up to the level of 12 million barrels a day where it was before the COVID restrictions would be extremely difficult. Further production growth, to support the growing needs of an expanding world population, is likely impossible.

OPEC Crude Oil Production

Figure 7 shows EIA crude oil production estimates for the total group of countries that are now members of OPEC. It also shows crude oil production excluding the two countries which have recently been subject to sanctions: Iran and Venezuela.

Figure 7. OPEC crude oil production to December 31, 2021, based on EIA data. Estimates for first quarter of 2022 based on indications from OPEC Monthly Oil Market Report, April 2022.

If Iran and Venezuela are removed, OPEC’s long-term production is surprisingly “flat.” The “peak” period of production is the fourth quarter of 2018. The fourth quarter of 2018 was the time when the OPEC countries were producing as much oil as they could, to get their production quotas as high as possible after the planned cutbacks that took effect at the beginning of 2019.

Strangely, EIA data indicates that production didn’t fall very much for this group of countries (OPEC excluding Iran and Venezuela), starting in early 2019. The 2019 cutback seems mostly to have affected the production of Iran and Venezuela. It was only later, in the first three quarters of 2020, when COVID restrictions were affecting worldwide production, that crude oil production for OPEC excluding Iran and Venezuela fell by 4 million barrels per day. Production for this group then began to rise, leaving a shortfall of about 900,000 barrels a day, relative to where it had been before the 2020 lockdowns.

It seems to me that, at most, production for the group of OPEC countries excluding Iran and Venezuela can be ramped up by 900,000 barrels a day, and even this is “iffy.” Iraq is reported to be having difficulty with its production; it needs more investment, or its production will fall. Nigeria is past peak, and it is also having difficulty with its production. The high reported crude oil reserves are meaningless; the question is, “How much can these countries produce when it is required?” It doesn’t look like production can be ramped up very much. Furthermore, we cannot count on continued long-term growth in production from these countries, such as would be needed to keep pace with rising world population.

Figure 8. Crude oil production indications for Iran and Venezuela, based on EIA data through December 31, 2021. Change in oil production for first quarter of 2021 is estimated based on OPEC Monthly Oil Market Report, April 2022.

Figure 8 suggests that, indeed, Iran might be able to raise its production by perhaps 1.0 million barrels a day when sanctions are lifted.

Venezuela looks like a country whose crude oil production was already declining before sanctions were imposed. The cost of production there was likely far higher than the world oil price. Also, Venezuela has oil debts to China that it needs to repay. At most, we might expect that Venezuela’s production could be raised by 300,000 barrels per day in the absence of sanctions.

Putting the three estimates of amounts that crude oil production can perhaps be raised together, we have:

  • OPEC ex Iran and Venezuela: 900,000 bpd
  • Iran: 1,000,000 bpd
  • Venezuela: 300,000 bpd
  • Total: 2.2 million bpd

The shortfall of crude oil production in 2021, relative to 2018 production, was 5.9 million bpd, as mentioned in Section [1]. The 2.2 million barrels per day possibly available from this analysis gets us nowhere near the 2018 level. Furthermore, we have nowhere to go to obtain the rising crude oil production required to support the rising population with enough crude oil to supply food and industrial goods at today’s consumption level.

[6] Eliminating, or even reducing, Russia’s crude oil production is certain to have an adverse impact on the world economy.

Figure 9 shows the step-down in crude oil production that occurred in early 2020 and indicates that the world’s oil supply is having difficulty getting back up to pre-COVID levels. If Russia’s crude oil production were to be eliminated, it would make for another step-down of comparable magnitude. Major segments of the economy would likely need to be eliminated.

Figure 9. Quarterly crude oil production through first quarter of 2022 divided by world population estimates based on 2019 UN population estimates. Crude oil amounts through December 2021 are EIA estimates. Crude oil production estimates for first quarter 2022 are as described in the caption to Figure 5.

[7] When there isn’t enough crude oil to go around, the naive belief is that oil prices will rise and either more oil will be found, or substitutes will take its place. In fact, the result may be conflict and elimination of segments of the economy.

Our self-organizing economy will tend to adapt in its own way to inadequate crude oil supplies. Eventually, the economy may collapse completely, but before that happens, changes are likely to happen to try to preserve the “better functioning” parts of the economy. In this way, perhaps parts of the world economy can continue to function for a while longer while getting rid of less productive parts of the economy.

The following is a partial list of ways the economy might adapt:

  • Fighting may take place over the remaining crude oil supplies. This may be the underlying reason for the conflict between NATO and Russia, with respect to Ukraine.
  • COVID lockdowns indirectly reduce demand for crude oil. A person might wonder whether the current COVID lockdowns in China are partly aimed at preventing oil and other commodity prices from rising to absurd levels.
  • Some organizations may disappear from the world economy because of inadequate funding or lack of profitability.
  • Additional supply lines are likely to break, allowing fewer types of goods and services to be made.
  • The world economy may subdivide into multiple pieces, with each piece able to make a much more limited array of goods and services than is provided today. A shift toward the use of other currencies instead of the US dollar may be part of this shift.
  • World population may shrink for multiple reasons, including poor nutrition and epidemics.
  • The poor, the elderly and the disabled may be increasingly cut off from government programs, as total goods and services (including total food supplies) fall too low.
  • Europe could be cut off from Russian fossil fuel exports, leaving relatively more for the rest of the world.

[8] Countries that are major importers of crude oil and crude oil products would seem to be at significant risk of reduced supply if there is not enough crude oil to go around.

Figure 10 shows a rough estimate of the ratio of crude oil produced to crude oil products consumed in 2019, the last full year before the pandemic. On an “All Liquids” basis, the US ratio of crude oil production to consumption would appear higher than shown on Figure 10 because of its unusually high share of natural gas liquids, ethanol, and “refinery gain” in its liquids production. If these types of production are omitted, the US still seems to have a deficit in producing the crude oil it consumes.

Figure 10. Rough estimate of ratio of crude oil produce to the quantity of crude oil products consumed, based on “Crude oil production” and “Oil: Regional consumption – by product group” in BP’s 2021 Statistical Review of World Energy. Russia+ includes Russia plus the other countries in the Commonwealth of Independent States.

Perhaps all that is needed is the general idea. If inadequate crude oil is available, all of the countries at the left of Figure 10 are quite vulnerable because they are very dependent on imports. Russia and the Middle East are prime targets for countries that are desperate for crude oil.

[9] Conclusion: We are likely entering a period of conflict and confusion because of the way the world’s self-organizing economy behaves when there is an inadequate supply of crude oil.

The issue of how important crude oil is to the world economy has been left out of most textbooks for years. Instead, we were taught creative myths covering several topics:

  • Huge amounts of fossil fuels will be available in the future
  • Climate change is our worst problem
  • Wind and solar will save us
  • A fast transition to an all-electric economy is possible
  • Electric cars are the future
  • The economy will grow forever

Now we are running into a serious shortfall of crude oil. We can expect a new set of problems, including far more conflict. Wars are likely. Debt defaults are likely. Political parties will take increasingly divergent positions on how to work around current problems. News media will increasingly tell the narrative that their owners and advertisers want told, with little regard for the real situation.

About all we can do is enjoy each day we have and try not to be disturbed by the increasing conflict around us. It becomes clear that many of us will not live as long or well as we previously expected, regardless of savings or supposed government programs. There is no real way to fix this issue, except perhaps to make religion and the possibility of life after death more of a focus.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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4,255 Responses to The world has a major crude oil problem; expect conflict ahead

  1. > UK agrees mutual security deals with Finland and Sweden

    The UK has agreed mutual security pacts with Sweden and Finland, agreeing to come to their aid should either nation come under attack.

    UK Prime Minister Boris Johnson visited both countries to sign the deals, amid debate about them joining Nato.

    The pacts also state that Finland and Sweden would assist the UK in a crisis.

    Mr Johnson and Swedish PM Magdalena Andersson said co-operation was “even more important” given Russia’s invasion of Ukraine.

    https://www.bbc.co.uk/news/uk-61408700

  2. Michael Le Merchant
    Michael Le Merchant says:

    WATCH: Air traffic controller guides passenger to safe landing at PBIA after pilot has medical emergency

    “I’ve got a serious situation here,” the passenger said from the cockpit. “My pilot’s gone incoherent. I have no idea how to fly the airplane…”
    https://www.wpbf.com/article/florida-pbia-lands-safe-passenger-pilot-private-plane/39957179

    • jarvis9077
      jarvis says:

      That happened to me once in the same aircraft a Cessna 208 caravan.
      Except I had some flying basics like 50 hours of helicopters training.
      The pilot had an episode of schizophrenia and decided he didn’t want to fly!
      I had just taken a 2 hour introduction on how to fly a jet turbine which was useful as I had to use revers thrust on a icy runway.
      I’d love to hear the conversation between the controller and the would be pilot.
      My guess is 1 in a thousand people would have calmness of mind to land that aircraft!

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      I expect that more statistical analysis needs to be done. I know of vaccinated and boosted people with cancer who are doing fine.

      Looking at overall mortality results seems to me to be the big issue. Also, in which areas are there increases? If increases are taking place in cancer outcomes, it would be nice to know whether this is equally true of the vaccinated and unvaccinated, but I doubt researchers are looking at this.

  3. Michael Le Merchant
    Michael Le Merchant says:

    So thoughtful, to prioritize the elderly and immunocompromised.
    https://pbs.twimg.com/media/FSdR5jUVcAAg1k_?format=png&name=small

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      According to Investopedia,

      The Credit Default Swap Index (CDX) is a benchmark index that tracks a basket of U.S. and emerging market single-issuer credit default swaps. Credit default swaps act like insurance policies in the financial world, offering a buyer protection in the case of a borrower’s default.

      The scale on your chart seems to use the letter M, J, S, D for the four quarters of the year. The last time the CDX index spiked was about March 2020. With rising interest rates and reducing buying of securities by Central Banks, it is spiking again.

  4. Michael Le Merchant
    Michael Le Merchant says:

    3-2-1 crack spread

    For three barrels of crude, refiners produce 2 of gasoline and 1 of diesel/jet fuel… the spread is increasing rapidly as the shortage of diesel/jet fuel intensifies.
    https://pbs.twimg.com/media/FSdoUmUXsAE1zmg?format=jpg&name=large

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      I expect that asphalt for roof tiles and road resurfacing will become less available. This can be “cracked” and made into diesel plus some gasoline. Natural gas is required for the process. In fact, inexpensive natural gas is preferred. This may limit the amount of cracking that can be done to the very heavy elements of crude oil.

      Of course, this problem was brought on by refusing Russias’ diesel. We don’t have a good way of making the problem go away, other than buying Russia’s diesel, if it is available.

  5. Michael Le Merchant
    Michael Le Merchant says:

    Gasoline and diesel retail prices are hitting fresh record highs in the US (and several EU countries) this morning.

    In the US, gasoline climbs to $4.404 per gallon (up 48% y-on-y), and diesel rises to $5.553 per gallon (up 78% y-on-y).
    https://twitter.com/JavierBlas/status/1524298122624655361

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      EIA data allows a person to see prices by part of the United States. This link shows such data on a weekly basis.
      https://www.eia.gov/dnav/pet/pet_pri_gnd_a_epd2d_pte_dpgal_w.htm

      I would expect that the highest prices are in the usual problem areas: West coast, Hawaii, Upper East Coast. The farthest places away from Texas and Illinois/Indiana.

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      Diesel and jet fuel are not too far apart. If there is a shortage of diesel, there is also likely a shortage of jet fuel.

      Somehow, a lot of things need to be cut back. Or Europe needs to accept Russia’s diesel, with no objection.

  6. Michael Le Merchant
    Michael Le Merchant says:

    LNG Supply Crisis To Hit Hard This Winter

    Global LNG demand is expected to hit 436 million tons in 2022, outpacing the available supply of just 410 million tonnes.
    https://www.rigzone.com/news/lng_supply_crisis_to_hit_hard_this_winter-11-may-2022-168954-article/

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      I can believe this.

  7. Michael Le Merchant
    Michael Le Merchant says:

    Worst gap between global input/output since 2008
    https://pbs.twimg.com/media/FSd2DIAXEAIqeB8?format=png&name=small

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      Back in 2008, the surging prices could help bring on oil from shale. This time around, we are pretty much out of candidates. Intermittent renewables are close to worthless.

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      Something has to be destroyed when there is not enough energy to go around.

  8. Michael Le Merchant
    Michael Le Merchant says:

    WOW

    For the first time since 2008 – adjustable-rate mortgages make up more than 10% of all new mortgage loans, according to the Mortgage Bankers Association.
    https://www.bnnbloomberg.ca/adjustable-loans-form-largest-share-of-us-mortgages-since-2008-1.1764300

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      Not a big surprise.

  9. Michael Le Merchant
    Michael Le Merchant says:

    Insane!

    Shanghai moves to impose tightest restrictions yet

    Shanghai officials will over the next few days further restrict access to food and hospitals in some parts of the city, the most severe phase of its extended lockdown yet.

    Commercial food deliveries are not allowed and access to hospitals for all but emergencies must first be approved.

    Neighbours of Covid-19 cases and others living close by are also being forced into government quarantine facilities.

    Shanghai is now in its seventh week of city-wide restrictions.
    https://news.yahoo.com/shanghai-moves-impose-tightest-restrictions-060625556.html

  10. Michael Le Merchant
    Michael Le Merchant says:

    I have never seen so much of the commodity complex in backwardation.
    https://pbs.twimg.com/media/FSe2Z3UXsAAldR3?format=jpg&name=medium

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      Traders think that the high prices are temporary. Perhaps they are because high commodity prices and related interest rate hikes will crash the economy.

  11. Hello OFWorlders…having fun spreading the word are we?
    Feed the Beast…

    WFLA/NBC News Channel) — Wall Street investors are capitalizing on the current housing crisis by investing in rental properties in Florida.

    As WESH reports, one of the latest deals involves Cypress Bay, a community of 87 single-family rental homes at the very southern edge of Brevard County in Palm Bay, Florida.

    Two investment funds have purchased the community of homes for $45 million. The funds are the Growth eREIT VII fund and the Fundrise Interval Fund, which were financially backed by New York-based investment bank Goldman Sachs Group Inc.

    Dr. Lawrence Yun, the Chief Economist of the National Associate of Realtors, says the move is relatively new for Wall Street.

    “The degree of large Wall Street money coming in fairly new. I think this is due to the unique circumstance of housing shortage,” Yun said. “Wall Street is able to generate money, private equity, hedge funds and others to say let’s go chase the rising rents and putting money into rental property development.”

    Yada, Yada …as Gail has in the past indicated…the move of wealth to the top and we will own nothing and be happy…or sleeping in a junk rat infested abandoned car in Oakland California

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      If there isn’t enough crude oil, taking vacation trips to Florida seems like it would not be a growing business. Of course, if such trips are a substitute for flying overseas, they might still lead to some fuel savings.

      • Hubbs says:

        Not to vacation, but to live. Wall Street is salivating over this. All the retirees, no longer productive, but funded by pensions, SS, and stock market paper gains enable this. No state income tax. But when the currency facade crumbles and these people become outright burdens to society , they will be left stranded. Contrast this with working productive people and businesses moving to TX. Sure, there will be resource and energy constraints in TX too, but FL will be the Japanese demographic time bomb on steroids.

        • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
          Gail Tverberg says:

          Good point! Older people are better off moving to where their children live. If they can provide “free” daycare for the children while the parents work, the older people can continue to contribute to society.

          • Xabier says:

            I believe Orlov referred to Russian families throwing out the elderly when they could no longer feed them: even a baby-sitter and pot-stirrer has to eat.

            • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
              Gail Tverberg says:

              Good point!

  12. California to decide fate of controversial desalination plant amid brutal drought
    Gabrielle Canon
    Wed, May 11, 2022,
    California officials are poised to decide the fate of a controversial desalination plant planned along its southern coast, in a vote that comes as the American west battles an increasingly perilous dry

    California water use leapt 19% in March, amid one of the driest months on record. After more than a decade of debate, the California coastal commission on Thursday will finally vote on a proposal for a $1.4 bn desalination plant in Huntington Beach, south of Los Angeles.

    As the west grows hotter and drier, the state and others in its neighborhood are seeing water supplies grow scarce. California is now facing its third consecutive year of crippling drought, with shortages spurring strict restrictions. Rising heat also means more water is needed to sustain people, ecosystems and the state’s thirsty agricultural sector.

    Hahaha …more BAU solutions….love it MOREONS as Peewee Edwin likes to post here

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      Desalination plants are an example of the higher cost of fresh water, as diminishing returns set in. If we only had a few wandering shepherds in the US Southwest, we would not worry about desalination plants. It is the whole per-capita issue.

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      I expect that energy will be required to build the plant. Depending on how it operates, it will also be required to operate it (unless it is all solar, and operates when the sun is shining). Energy will also be required to build and maintain the infrastructure to get the water to customers.

      California is very energy deficient. I am not sure how this all happens.

  13. KATHLEEN RONAYNE
    Tue, May 10, 2022, 8:45 PM
    SACRAMENTO, Calif. (AP) — New homes built in California starting in 2026 need to be powered by all-electric furnaces, stoves and other appliances if California is to meet its ambitious climate change goals over the next two decades, according to a state pollution-reduction plan released Tuesday.

    The roadmap by the California Air Resources Board sets the state on a path to achieve “carbon neutrality” by 2045, meaning as much carbon is removed from the air as is emitted. The state’s timeline is among the most ambitious in the nation; Hawaii has a similar goal and some other states have a 2050 deadline.

    California could reach its goals through a drastic transition away from fossil fuels that power cars, trucks, planes, ships, homes, businesses and other sectors of the economy. The board staff recommends the state cut the use of oil and gas by 91% by 2045 and use technology to capture and store carbon emissions from remaining sources.

    The plan was put together by air board staff and it is not final; a public comment process will begin and the political appointees who make up the air board will ultimately decide whether to make any changes. The Legislature or other regulatory bodies would have to agree to put the various policies in place. The California Energy Commission, for example, sets building codes.

    Still, state officials said the document represents an important step for California and the rest of the nation. California is the nation’s most populous state and has the world’s fifth largest economy compared to other nations. That economic power means the state’s policy choices can drive major business changes, and other states often follow California’s lead on climate policy.

    Ah, was hoping for solar ovens and solar water heaters…WTF? All Electric is still BAU Baby! Haha

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      Where will the electricity come from???

      It is always good to have a narrative about how the system can be saved, even if it is truly nonsense.

      • “After Pain at the Pump Comes the Electric Shock…

        “Governor Ron DeSantis of Florida recently threw a curveball when he vetoed utility-friendly solar power legislation. Whatever his political calculations, his stated rationale of protecting inflation-addled voters from rising utility bills will resonate…

        “On all fronts, the 2010s were halcyon years. The shale boom suppressed the price of natural gas and, by extension, of producing electricity… Now it’s safe to say that shale dividend has run its course.”

        https://www.washingtonpost.com/business/energy/after-pain-at-thepump-comes-the-electric-shock/2022/05/11/b5cd7f7a-d122-11ec-886b-df76183d233f_story.html

        • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
          Gail Tverberg says:

          Solar power really isn’t worth much to the electric grid. But credits for solar power can’t be adjusted to reflect this obvious problem, because voters would object. It would go against the “green energy will save us” narrative.

  14. Oakland Is Littered With Abandoned Stolen Cars
    Steven Symes

    To get all the stolen cars towed faster, the city is shifting the responsibility of having abandoned vehicles towed to Oakland Department of Transportation. However, there are some cars which look abandoned but are in fact habitats for the homeless, meaning the city will not remove those vehicles. That’s right, in the city of Oakland, California you can live in your car and park it in a legal spot indefinitely. Just remember, if you do that someone might steal your home, because car theft is really hot there.

    We already know about the huge problem with abandoned stolen cars littering the landscape in Detroit and some other cities, but we just ran across the crazy story about how bad it is in Oakland, California. According to the local report, some residents say over half the cars parked on their street have been stolen and dumped. Some are missing parts, windows, etc. and the city isn’t doing much to clean them up.

    Escape from New York moved to Oakland California

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      Years ago, I remember seeing the problem of abandoned cars in New York City. Now it has moved elsewhere, I see.

      When I was a juror in a murder trial years ago, I was introduced to the idea of poor people living in their cars, by the testimony of someone who gave his residence as the “car parked in front of XXXXXXXXXXXX.” I also heard from police officers about people who would commit some minor crime in the fall of the year, with the intended purposed of being put in jail for at least a few months. Jail would provide food and an indoor living place during the cold winter months. The trial involved a very educated and well-spoken alcoholic killing another alcoholic, while they were both drunk. They lived on the fringe of the economy.

  15. SACRAMENTO, Calif. (AP) — California’s water use jumped dramatically in March, state officials said Tuesday, as one of the driest stretches on record prompted a wave of homeowners to start watering their lawns earlier than usual in defiance of Gov. Gavin Newsom’s pleas for conservation amid a severe drought.

    Newsom last summer asked residents to voluntarily cut water use by 15% compared to 2020 as climate change intensified a drought that threatened to drain the state’s reservoirs to dangerously low levels. Water conservation increased gradually through December, aided by some intense fall and early winter storms that reduced water demand.

    But the first three months of 2022 have been the driest on record. Californians averaged 77 gallons (291.48 liters) per person per day in March, an 18.9% increase from March 2020. It’s the most water Californians have used in March since the middle of the previous drought in 2015. Statewide, water consumption is up just 3.7% since July compared to 2020, woefully short of Newsom’s 15% goal

    Newsom responded on Tuesday by pledging to spend $100 million on a statewide advertising campaign to encourage water conservation. The campaign will include traditional radio and television spots while also paying people with large followings on social media to urge others to save water. He also promised to spend an $211 million to conserve more water in state government buildings by replacing plumbing fixtures and irrigation controls.

    “Conservation actions are most impactful when they account for the diversity of conditions and supply needs around the state,” Newsom’s office said in a statement. “We are hopeful these actions will significantly contribute to the state’s overall water reduction goals as outdoor watering is one of the biggest single users of water.”

    Urban water use accounts for a relatively small percentage of California’s overall water use when compared to agriculture. But the state’s farmers have been suffering, too, as state and federal officials have reduced water allocations to zero in some places.

    The new normal….

    • danakayel
      Dana says:

      It rains so much here in the middle of MO that my hubby is happy that the rains slow down in July and August, as it gives him a respite from mowing the exuberantly growing grass. I heard a funny story once about a family of cattle ranchers who sold their spread in Arizona and bought a ranch near Springfield MO. The fellow came to check out the locale before buying, and one of his questions to the realtor was – ” Who waters all the grass on the highway medians?”

  16. Sam says:

    Stock market is up because the ministry is saying inflation has peaked… all down hill from here

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      Debt bubble is collapsing, allowing prices to fall.

      But today, WTI oil price is $105. (Oops! Wrong number earlier)

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      I see that US markets are again down, led by NASDAQ at -1.25%.

  17. Wow, the EU is threatening to go nuclear if the UK reneges on the NI Protocol of the Brexit, and to scrap the entire deal. This is a very dangerous game of ‘chicken’.

    > EU Ready to Suspend UK Trade Deal If Johnson Revokes NI Protocol

    The European Union would likely move quickly to launch infringement procedures against the UK and suspend their trade agreement if Boris Johnson’s government puts forward legislation to revoke its commitments over trade with Northern Ireland, according to a person familiar with the matter.

    The European Commission, the EU’s executive arm in Brussels, would be responsible for recommending a course of action while the final decision on the details and timing of any measures would need the backing of member states.

    As well as freezing the privileged access that UK companies have to the EU single market, the commission would also halt talks over the status of Gibraltar, the person said, asking not to be identified commenting on private discussions.

    Any decision would require the backing of the bloc’s 27 EU governments and would lead to a cooling off period before tariffs, quotas and other barriers to trade between Britain and the EU kicked in. The EU could terminate the whole deal or target specific industries.

    https://www.bloomberg.com/news/articles/2022-05-11/eu-ready-to-suspend-uk-trade-deal-if-johnson-revokes-ni-protocol

  18. Ironically, the Tory row with the EU over NI is doing massive damage to the UK in regard to NI.

    The Tories and DUP are a ‘tag team’, where DUP refuses to allow the NI parliament to function with NIP, and the Tories then tell the EU that, ‘we need to get rid of NIP because it disrupts the NI parliament’.

    The result is the electoral disarray of unionism in NI, and the mobilisation of pro-Irish unity sentiment. That is only liable to increase if the Tories now go nuclear on the NIP and the Brexit deal.

    If NIP/ Brexit deal is vapourised, then the result will presumably be a land border on the island of Ireland, and the impoverishment of NI along with the rest of the UK. A border poll cannot then be far off.

    > ‘We will not be held to ransom’ over protocol, says O’Neill

    Donaldson says DUP will not go back into Executive unless protocol is replaced

    The North’s first minister in waiting, Michelle O’Neill, has said there can be “no excuses” to prevent an Executive being formed in Northern Ireland.

    Addressing reporters at Stormont on Monday afternoon, Ms O’Neill said there was “no reason for delay” and said that “as democrats the DUP, but also the British government, must accept and respect the democratic outcome of this election.

    “Brinkmanship will not be tolerated for the north of Ireland to become collateral damage in a game of chicken with the European Commission. ”

    The responsibility for finding solutions to the protocol and ensuring its smooth implementation “lie with Boris Johnson and the EU,” she said. “Make no mistake, we will not be held to ransom.”

    Speaking alongside her party colleague, the Sinn Féin leader Mary Lou McDonald said the “job now is to get to work” and called for the “immediate formation of an Executive, Michelle O’Neill ratified as first minister and an appointment of a deputy first minister.”

    She warned “any tactics of delay from the DUP, any grandstanding by them, any gamesmanship from the British Government who may wish to use the north of Ireland as a bargaining chip in terms of their wider engagement with the European Union over the protocol, would be clearly intolerable and must not happen.”

    The DUP, which was returned as the second largest party, resigned from the position of first minister in February as part of its protest over the Northern Ireland protocol, which it opposes.

    The DUP leader Jeffrey Donaldson has said his party will not go back into the Executive unless the protocol is replaced.

    https://www.irishtimes.com/news/ireland/irish-news/we-will-not-be-held-to-ransom-over-protocol-says-o-neill-1.4873743

  19. UK Tories are preparing domestic legislation to ‘allow’ them to renege on the NI Protocol of the Brexit deal, and the EU is threatening to scrap the entire Brexit deal if the Tories do that. UK and EU would then trade only under WTO, which would entail hefty and often prohibitive tariffs. If you thought that the Tories could not mess up any worse the UK relationship with the EU, then keep an eye on this.

    > Germany’s Scholz warns against unilateral breach of N.Ireland protocol

    BERLIN (Reuters) – German Chancellor Olaf Scholz on Tuesday warned against breaking the Northern Ireland protocol agreement unilaterally, after a report saying Britain is set to ditch large parts of the protocol.

    “We have found a good way for Northern Ireland and no one should unilaterally override the arrangement which we have agreed together,” Scholz told journalists at a joint news conference with Belgian Prime Minister Alexander De Croo.

    De Croo said not abiding by the protocol would create a big problem in the European Union’s internal market.

    “Our message is quite clear: Don’t touch this … If that agreement would be revoked, then I would think that the whole system will be revoked. I would not see any other solution,” De Croo said.

    British Foreign Secretary Liz Truss is set to ditch large parts of the Northern Ireland protocol after giving up on talks with the European Union on a Brexit deal, The Times reported.

    https://uk.news.yahoo.com/germanys-scholz-warns-against-unilateral-131116054.html

    • > ‘No other solution!’ EU leader threatens to ‘revoke’ Brexit as bloc hits back at UK plans

      BREXIT should be “revoked” entirely if the UK Government goes ahead with its plans to scrap the Northern Ireland Protocol, the Belgian Prime Minister has threatened.

      Speaking at a joint news conference with German Chancellor Olaf Scholz on Tuesday, May 10, Alexander De Croo warned scrapping the Brexit Protocol would result in the “whole system to be revoked”.

      He said: “Our message is quite clear: Don’t touch this … if that agreement would be revoked, then I would think that the whole system will be revoked.

      “I would not see any other solution.”

      Echoing his words, Chancellor Scholz also said: “We have found a good way for Northern Ireland and no one should unilaterally override the arrangement which we have agreed together.”

      Foreign Secretary Liz Truss is set to ditch large parts of the Northern Ireland protocol after giving up on talks with the European Union on a Brexit deal, The Times reported.

      https://www.express.co.uk/news/politics/1608476/eu-brexit-threat-chief-threatens-revoke-uk-vote-leave

      • “Michael Gove has said he is “super cool” with the idea of legislation to tear up the Northern Ireland Protocol unilaterally – despite the risk it could spark a trade war with the EU.” 😎

        “…Mr Gove also claimed Boris Johnson was an “expert negotiator” and suggested the threat to ditch the protocol could be part of UK negotiating tactics.”

        https://www.independent.co.uk/news/uk/politics/brexit-protocol-boris-johnson-gove-truss-b2076330.html

        • The Tories look set to do a ‘Cambodia’ and to make a right mess. See below, there is no way that the EU is going to agree to what amounts to a renegation of the entire NIP. No crystal balls, but looks like this is coming to a head.

          • Xabier says:

            Trivial provincial politics and hairless-ape gesturing.

            Frankly, my dears, nothing less than genocide and nuclear war can get my attention these days…….

            • Perhaps the human need for concerns of ‘mega’ proportions is where God comes into it. People feel that the ‘petty’ day to day is ‘beneath’ them. Arguably it is a massive ‘will to power’ that wants to concern itself only with the ‘grand’, even the ‘total’. Perhaps we all, or some of us, have an inner ‘Caesar’ that wants to conquer all and that gets frustrated with more limited, ‘petty’ concerns (and we tend not to admit that). Religion can give the will to Total Control, Total Power, an outlet. In some sense humans become ‘one’ with the All Powerful, in ‘adoration’, which is the only sort of God that can satisfy our needs. God then is a reflection of our total ‘will to power’. Likely religion can be other things besides. In any case, we all need to manage our psychological tendencies for our own health – or perhaps dissatisfaction is fine, it is just a facet of human existence. Whatever.

    • The Tories are set to go nuclear on the Brexit deal as early as next week.

      > UK prepares trade war against EU: everything ready to break Irish protocol

      A new war is brewing between London and Brussels. The drums are already beating and the first pawns could move as soon as next week. Downing Street is preparing a bill to unilaterally scrap key parts of the Ireland Protocol – a crucial piece of the Brexit deal – by suspending the checks on goods that now need to be carried out between Britain and Northern Ireland. Not that it caught anyone by surprise. In Westminster, it was said from the beginning that Boris Johnson never had any intention of complying with what was agreed with the EU. The fact that more than two years have elapsed since the divorce and the contentious controls have never been completely implemented is proof of this.

      …. According to The Times, the head of British diplomacy, Liz Truss, has asked officials to prepare the draft of a bill that could end up triggering a trade war with the bloc, at a time when the high cost of living is seriously affecting citizens: more than 2 million adults in the UK can no longer afford to eat every day.

      Initially, the bill was intended to give ministers the power, in principle, to override the Irish Protocol. But now it goes further than expected because, as well as suspending controls, it would also remove the powers of the Court of Justice of the European Union (CJEU) and all requirements for Northern Ireland companies to follow EU regulations, as they are now bound by Brexit. The bill could be introduced in the House of Commons – where the Conservatives have a large majority – as soon as next Tuesday. Officials have already warned Truss that the strategy could lead the EU to suspend all cooperation with the UK, except in Ukraine, and take legal action against the Executive.

      …. But Truss has been moving her cards for some time to position herself as the future leader of the Conservative Party and believes that this will help her gain more support in the far right-wing of the party.

      https://www.revyuh.com/top-news/featured/uk-prepares-trade-war-against-eu-everything-ready-to-break-irish-protocol/

      • Kim says:

        Meanwhile, in Papua New Guinea…

      • Jan says:

        A war against Brussels will get interesting in the moment another Ex-EU state forms an alternative Union with GB. That might be Greece or Spain or Italy or France who are all victims of the German salary dumping.

        The German chancellor and the president of highcourt are suspects in the billion Euros stealing of Warburg also known as Cum-Ex case. The German minister of foreign affairs is a silly WEF-girl. The minister of health has a doubtable reputation from the Lipobay case and is clearly a pharma lobbyist, if not mentally deranged. The minister of economy said openly that the sanctions against Russia will have consequences but it will be worth to suffer them. The Germans are still electing their government with big joy and hopes but it neednt stay that way.

        There are tendencies to see the government involved in corruption, propaganda, lack of human rights, and lack of good jurisdiction. If an economic desaster is added the populace might protest against parliament.

        The WEF has placed its people everywhere but they are not able to bring goid solutions for the people. All is propaganda based. When will people realize? Do elections still have effects?

        As a consequence the then failed state will have to maintain their power with pure force. I doubt that this is a situation in which Germany could lead a more and more authoritarian and less and less legitimate EU. A strong UK leadership might be then seen as an alternative. On the other hand the UK is dependend on the import of fossile fuels too. If that plays the cards the joker is with Russia.

        • I suspect we will see a backing down by the UK government and more talks re the Northern Ireland protocol. The EU is going to be weathering a lot of internal discord this year under the weight of financial problems and inadequate energy supplies, and both it and the UK could well do without the additional pain of a trade war.

          Although recent evidence suggests cooler heads are no longer prevailing, so I don’t say that with much confidence. 😆

          “Italy is the most salient casualty of the global bond sell-off this year, the country most threatened as the big central banks step up the pace of monetary tightening.

          “This tightening has a particular character in the eurozone’s half-completed currency union, where states no longer have their own sovereign lender-of-last resort, and no longer borrow in a currency that they can print.

          “This makes the end of quantitative easing more treacherous in Europe than anywhere else, especially for Italy with a public debt of 151pc of GDP. This is up from 134pc before the pandemic, and up from 120pc in 2011 when it blew up last time. This level is uncharted territory for a major sub-sovereign borrower.”

          https://www.telegraph.co.uk/business/2022/05/08/bond-tremors-hit-italy-eurozone-risk-returns-vengeance/

          • “Lagarde sends strong signals for ECB’s rate hike as soon as July…

            “The Frankfurt-based institution should end its bond-buying stimulus program “early in the third quarter,” Lagarde said in a speech in Ljubljana, followed by a rate hike that could come “only a few weeks” later.”

            https://www.dailysabah.com/business/finance/lagarde-sends-strong-signals-for-ecbs-rate-hike-as-soon-as-july

            • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
              Gail Tverberg says:

              Good way to crash the economy.

          • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
            Gail Tverberg says:

            I wonder if the EU will stay together. It was a product of abundant, cheap energy supplies.

            • i’ve always pressed that point

              and it’s important to remember that the USA was created out of the disparate nations of Europe

              the immigrants into the USA had undreamed of wealth and prosperity compared to what they had back in Europe

              but they brought with them the ‘european’ mindset—which has been subdued as long as there was ‘plenty’.

              look what happening to america now there isn’t ‘plenty’

              cracks are appearing on religious, political, resource, geographical boundaries.

              which is exactly what drove europe to war time after time

            • Xabier says:

              The product also of supra-national ideology and sheer war-weariness.

              The catastrophe of the 1940’s exhausted the appetite for war in Europe, and profound social changes made automatic obedience unlikely.

  20. Jan says:

    It is obvious that Europe will face supply cuts. Spain believes to be more independent as they get their oil from Libya but who knows what happens if Germany and especially Austria are really cut off.

    Here people prepare in two ways: On the one hand the official state institutions that have reduced their duties onto forcing citizens into doubtable gene experiemtns run slogans like: “Freezing for Ukraine” and “Preparing for blackout”. On the other hand people start to grow herbs and plants on their balconies and learn how to cook and preserve. Most people though are dependend on electricity and gas for food preparation. The supermarkets say there is no way to sell food without checkstand service!

    In times of possible shortages I suspect they will cut down private transport. The institutions are already looking for bus drivers and train conductors. It is very likely that the economy will break down completely. That means people will be dependend on public money and public food. On the countryside people will come to deals with the farmers so a lot of food will never reach the markets. People dont trust the governments as the British did during WW2. In Austria the current government staff has never been elected, they are only approved by parliament and the ministers are exchanged after short periods. In Germany the minister of health is openly depicted as “insane”. He seems to lack a perception of reality. It is likely that the governments will try to use military force to make people comply. They are restocking military equipment alledgedly for Ukraine. But force will have limits.

    There is a discussion if in case of gas shortages the private households or the industry should shut down. In the moment private transport ends there will be no way for a lot of people to arrive to work.

    People will soon realize that growing herbs is not enough and that subsistence farming will not be successful within weeks. The weaker people will simply “leave” – think of people being dependend on extra oxigen or continous medical treatment or just the daily meal delivery. Hygiene will decline with the break of cooling, which might affect also the young.

    I guess people will try to rush onto the countryside. That will also be necessary to replace fuel driven machinery. On the other hand there is currently no work and in fact people are not welcome there.

    A problem will be the product range of available fuels. Many people buy cheap gas stoves driven by cartridges. This “canned” gas is not very sustainable. Refilled bottles require transport. Some have diesel heating and diesel is needed for busses, logistics and farm machinery. Diesel can also be used for electric converters. Some have kerosene lamps. Alcohol is already short because it is needed for desinfection. Lights and charging smartphones will be a challenge. As a consequence digital services will soon be out. Local institutions should prepare to build up local stations but they are only interested in boosting up sales for Pfizer.

    The European Union tries to establish an own army to be able to hold people down in the national states without parliamentarian approval. The WHO is trying to establish respectable contracts. It means people will start to form “neighbourhood watch groups” to have protection against the central forces. As the states refuse their duties and deny any service other than mandatory vaccinations and shovelling public money to the rich, people will refuse to pay taxes – even if they can. There are already respective discussions think of the mandatory pay for TV services. The central forces will have no other way than using the military. I think this strategy is limited.

    Until 1866 Austria was the largest and the most powerful European state. The country fell into pieces after WW1. One of several reasons was that the central power could not provide acceptable food logistics. Food production was high enough but they could not distribute it. People had to care for themselves and were no longer dependend from the Imperial institutions. So they build up their own Republican institutions.

    Expectations into the future are currently very low in Europe.

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      Thanks for your thoughts. Europe’s outlook is not very good, in my opinion, either. Too many people; not enough inexpensive energy supplies.

    • Xabier says:

      Thanks, most interesting.

      Most likely that a European army is intended for internal repression, together with para-military security contractors.

      ‘Freeze for Ukraine!’ as a slogan doesn’t inspire quite like ‘We will fight them on the beaches’….

      The first step in remaining sane is reconciling oneself to things getting very much worse.

  21. hillcountry – retired electronics manufacturing engineer
    hillcountry says:

    Rick Ackerman:

    While investors may not understand the implications of a short-squeeze on the dollar, the stock market has reacted intuitively with disturbing signs that a bear market has begun. But the 10% decline in shares so far is not even a warm-up for what’s coming. Wait till the financial whales realize that their all-in bet on inflation is dead wrong. It could take them a while, so there is still time for wary investors to batten the hatches. If you Google ‘dollar short squeeze’, you’ll find that virtually all commentary on the subject pertains to a squeeze driven mainly by professional traders. This is a far cry from the short squeeze I’ve been writing about all these years. That squeeze — the one that is actually coming — will be global and affect everyone, not just the trading desks of big banks. Inflation fears are about to slam into the far bigger, deflationary reality of a strengthening dollar. The benighted hacks who invent the news ought to ask their supposed experts how much more inflation the U.S. is likely to have with the dollar rising sharply. Prefer straight talk to boring mainstream blather? Click here for my recent interview with Howe Street‘s Jim Goddard.

    https://www.rickackerman.com/2022/05/173519/

  22. This may have been posted already and I missed it.

    Many countries of the world (including the USA, Canada, Australia, the EU, UK) are about hand over all legal decisions dealing with health (or parts of health policy, I am not sure of the details) to the WHO (UN World Health Organisation). According to this interview with Michele Bachmann, I don’t know her, the vote in the USA to do so is within two weeks time. And we all know who effectively runs / owns the WHO (one B. Gates).

    Seems to me that the WHO has been in charge of all decisions relating to CV19 etc for the last 2-2.5 years, and this is just formalising an already-existing mode of reality. No need in future for politicians to pretend they are making independent decisions / thinking for themselves.

    Not sure what can stop this going ahead, and I would not be surprised if later this year it is mandated that every single person must be vaxxed – seems to be what Canada is preparing for. Or as Michele mentions, lockdowns a-la-Shanghai are mandated wherever takes the WHO’s fancy. And all our political leaders will say is – but the WHO says this is what is best and we must follow the experts’ guidance, just like over the last two years.

    https://www.bitchute.com/video/GNeOmd77dfCL/
    IT’S HAPPENING: WE ARE ABOUT TO TURN US SOVEREIGNTY OVER TO WHO, CCP, UN

  23. Fast Eddy says:

    Chinese media unveils details of US-inspired military logistics system

    The country has five support centres for the theatre commands with a central hub in Wuhan

    https://www.scmp.com/news/china/military/article/3177222/chinese-media-unveils-details-us-inspired-military-logistics?module=lead_hero_story&pgtype=homepage

    The system is designed to be more like a civilian courier service.

    Hmmm…. prepping the hordes for Devil Covid… look here — when you lockdown in Fear — we’ve set up this courier service… to ensure you don’t starve…. the food will come – then it won’t

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