Saturday, October 15, 2016

Kirkuk has plenty of "easy-to-extract" oil, hence, #waronislam

Why energy prices are ultimately headed lower; what the IMF missed | Our Finite World: "It takes energy to make goods and services.
It takes an increasing amount of energy consumption to create a growing amount of goods and services–in other words, growing GDP.
This energy must be inexpensive, if it is to operate in the historical way: the economy produces good productivity growth; this productivity growth translates to wage growth; and debt levels can stay within reasonable bounds as growth occurs.
We can’t keep producing cheap energy because what “runs out” is cheap-to-extract energy. We extract this cheap-to-extract energy first, forcing us to move on to expensive-to-extract energy.
Eventually, we run into the problem of energy prices falling below the cost of production because of affordability issues. The wages of non-elite workers don’t keep up with the rising cost of extraction.
Governments can try to cover up the problem with more debt at ever-lower interest rates, but eventually this doesn’t work either.
Instead of producing higher commodity prices, the system tends to produce asset bubbles.
Eventually, the system must collapse due to growing inefficiencies of the system. The result is likely to look much like a “Minsky Moment,” with a collapse in asset prices.
The collapse in assets prices will lead to debt defaults, bank failures, and a lack of new loans. With fewer new loans, there will be a further decrease in demand. As a result, energy and other commodity prices can be expected to fall to new lows."

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