Gas Is Going To $5 A Gallon, Consumer Spending Is Dead, And House Prices Will Fa

[MNeagle]

Gas Is Going To $5 A Gallon, Consumer Spending Is Dead, And House Prices Will Fall Another 20%


Read more: http://www.businessinsider.com/#ixzz11G2T1Elq

John Mauldin, Thoughts From The Frontline


This week I am at a conference in Houston. I must confess that I don't attend many of the sessions at most conferences where I speak. But today, the guys at Streettalk Advisors have such a great lineup that I am there for every session. But it's Friday and I need to write. The solution? This week you get a "best of" letter. The best ideas I've heard and the best charts I've seen at this conference. Then we close with two short but very thoughtful essays from Charles Gave and Arthur Kroeber of GaveKal on "The Morality of Chinese Growth." Lots of charts and something to make you think. Should be a good letter.

Oil at $125 a Barrel, Gasoline at $5


John Hofmeister is the former president of Shell Oil and now CEO of the public-policy group Citizens for Affordable Energy. He paints a very stark (even bleak, as he gets further into the speech) picture of the future of energy production in the US unless we change our current policies. First, because of the aftereffects of the moratorium. It is his belief that the drilling moratorium will effectively still be in place until at least the middle of 2012. There won't even be new rules until the end of 2011, and then the lawsuits start.

Gulf oil production will be down by up to 1 million barrels a day. Imported oil is now 67% of oil usage but will go to 75% by 2012. He thinks crude oil will be up to $125 and gasoline between $4-$5 at the pump. And it will only get worse.

He describes the problem with the electricity from coal production. The average coal plant is 38 years old, with a planned-for life of 50 years. Our energy production capability is rapidly aging, and we are not updating it fast enough.

He argues that the fight between the right and the left has given us 37 years without a realistic energy policy, as policy gets driven by two-year political cycles but good energy planning takes decades. There are 13 government agencies that regulate the energy industry, with conflicting mandates that change very two years. There are 22 congressional committees that have some level of involvement and oversight of the energy industry.

The following table is from data provided by Triple Double Advisors LLC, an energy specialty investment firm in Houston, Texas. John White was sitting next to me and showed me this table, pointing out the poor performance in terms of investor returns from renewable energy sources and the larger returns from Master Limited Partnerships where investors are seeking yield. It seems the market is voting that it doesn't have much confidence in the renewable energy world. Hofmeister suggests that government subsidies for renewable energy will go away under the pressure to get the fiscal deficit under control. Maybe the market senses that. He says we need to create a 50-year plan for our energy policy that transcends the political cycle. (I am going to get this speech transcribed and will post it so you can read it. This guy talks sense.)




Read more: http://www.businessinsider.com/mauldin-2010-10#ixzz11G3FW1Ot

[Cebu_4_2]

Oil is going to 10.00 gas will be 25¢ cause no one will need to buy it. No home, no car, no job.

[Ponce]

About 87% of everything that we use comes with the aid of oil which will make everything go up, up, up and away........as long as silver goes up at par with oil then those holdin PM will be paying the same as in the past, not $5-10 a gallon but $2.00 gallon........the same for food.

[old steel]

Here it is the fall gas/oil prices should be dropping and instead they are rising.

Am i missing something or is everything normal?

[MNeagle]

Gas rose $.14 overnight here this week!! Nothing I saw/read explained it either.

[madfranks]

About 87% of everything that we use comes with the aid of oil which will make everything go up, up, up and away........as long as silver goes up at par with oil then those holdin PM will be paying the same as in the past, not $5-10 a gallon but $2.00 gallon........the same for food.


As long as you've saved enough silver to live the rest of your life on. For the rest of us who still need an income, this is very bad news.

[zap]

They could make lots of that stuff with Hemp If they'd let em.

[Dogman]

About 87% of everything that we use comes with the aid of oil which will make everything go up, up, up and away........as long as silver goes up at par with oil then those holdin PM will be paying the same as in the past, not $5-10 a gallon but $2.00 gallon........the same for food.


As long as you've saved enough silver to live the rest of your life on. For the rest of us who still need an income, this is very bad news.


Yea
The last time gas prices were super high, everything went up in price and I also suspect that it helped push our economy over the edge. Last time Nobody drove much unless going to work and even today the traffic is not as heavy as before the last time gas was sky high.If the price does go to five dollars a gallon,Just stick a fork in this nation because we are done for. Because I think it would be the straw that will finally break our backs.

IMHO

[Fortyone]

Here it is the fall gas/oil prices should be dropping and instead they are rising.

Am i missing something or is everything normal?




I live in the Midwest,petrofuels ,always rise in the fall.Demand for LP,Fuel oil,K1,and Diesel

[Gknowmx]

Oil is going to 10.00 gas will be 25¢ cause no one will need to buy it. No home, no car, no job.


Really? Cause there are about a couple billion folks in the growing economies in India and China that WILL buy that oil and gas. Most Americans' homes, gas tanks, and jobs will be empty as long as their brian is full of the same old USA-centric world understanding. YMMV.

[Ponce]

Last time that silver was at $18.00 (about five years ago? posted at GIM) and gas was at $2.85 I traded 150 oz of silver at $18.50 for gas at $2.75, the guy thought that he was smart........but then gas went up to $4.15 and his wife almost killed him........I had gas for about two and half yeas............I could do it again, but why?.......where gas goes up in the air silver goes up in price, besides, I do have the cash for the gas................ better silver in hand than gas flying hahahahahaahahah.

You know madfranks? what really pisses me off is the why those with a college degrees don't see what I see as I see it, I have known for over ten years what was going to happen, and is happening, and I got ready for it......I have read many that have said "I knew that it was going to happen".........but

"To know about something and do nothing is like knowing nothing"... Ponce

[Neuro]

Oil is going to 10.00 gas will be 25¢ cause no one will need to buy it. No home, no car, no job.


Really? Cause there are about a couple billion folks in the growing economies in India and China that WILL buy that oil and gas. Most Americans' homes, gas tanks, and jobs will be empty as long as their brian is full of the same old USA-centric world understanding. YMMV.
Yes you are correct. There are more cars sold annualy in China than in the US, granted those cars use less fuel, but together with India and a few other Asian countries fuel demand will continue to grow with it's growing middle class. One of their highest priorities when getting more money is to get a car.