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Independent researcher Steve St. Angelo started to invest in precious metals in 2002.  Later on in 2008, he began researching areas of the gold and silver market that, curiously, the majority of the precious metal analyst community have left unexplored. These areas include how energy and the falling EROI – Energy Returned On Invested – stand to impact the mining industry, precious metals, paper assets, and the overall economy. His website with frequent postings is: https://srsroccoreport.com.

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Just Out! Previously Unpublished!
Number 5 in the Jeff Greenaway Series

Something Strange is going on at Camp Timahoe
in Lost Indian, Vermont, summer of 1962
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New Paintings by JHK 2016 — 2017


Great Summer Reading… JHK’s Hippie Novel!

“Simply the best novel about the 1960s.”

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Now in Paperback !
Only Seven Bucks!

JHK’s Three-Act Play
A log mansion in the Adirondack Mountains…
A big family on the run…
A nation in peril…


Other Books by JHK
The World Made By Hand Series:

Book 1:
World Made by Hand
Book 2:
The Witch of Hebron
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Book 3:
A History of the Future
Book 4:
Harrows of Spring
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Geography of Nowhere The Long Emergency
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About James Howard Kunstler

View all posts by James Howard Kunstler
James Howard Kunstler is the author of many books including (non-fiction) The Geography of Nowhere, The City in Mind: Notes on the Urban Condition, Home from Nowhere, The Long Emergency, and Too Much Magic: Wishful Thinking, Technology and the Fate of the Nation. His novels include World Made By Hand, The Witch of Hebron, Maggie Darling — A Modern Romance, The Halloween Ball, an Embarrassment of Riches, and many others. He has published three novellas with Water Street Press: Manhattan Gothic, A Christmas Orphan, and The Flight of Mehetabel.

15 Responses to “KunstlerCast 306 — Gold, Silver, and Oil with Steve St. Angelo” Subscribe

  1. Martymcfly August 14, 2018 at 7:06 pm #

    I don’t know any more about oil than the average citizen. But I do know that almost since it was discovered, someone’s been predicting the end of it. They were wrong 100 years ago, they were wrong 50 years ago, they were wrong a decade ago and I’m pretty sure they’re wrong now too.

    I do know a little about ETFs and derivatives. They are not the same. To suggest that the commonly held ETFs are similar to the derivitives that caused all the problems a few years ago is misleading, at best.

    • DurangoKid August 15, 2018 at 12:43 am #

      100 years ago no one knew about Saudi Arabia or Venezuela or many of the super giant oil fields. The technological reach of oil exploration was still primitive by today’s standards. Saying we’re running out of oil in 1910 was the equivalent of there’s only open ocean between Europe and the east coast of Asia. Now the situation is quite different. The vast majority of the Earth’s surface has been explored and cataloged. What remains to be discovered is relatively insignificant compared to what is already known. A billion or two barrels of oil won’t come out of the ground in the blink of an eye. It will take a couple of decades to get it all. 300,000 bbl/day is little compared to the 92 +/- million bbl/day the world burns.

      Not all oil is the same. Conventional oil is the old timey stick a pipe in the ground for $500,000 and suck for 20 years. The rock is porous and the oil is light and sweet. The energy return on energy invested, EROEI, is 50 to 100 to 1. That’s the oil that M. King Hubbert predicted in 1956 would peak in 1970 in the US. He was right.

      Off shore oil is similar to conventional except that it requires billions of dollars worth of equipment to drill a cluster of wells. Typically the well must pass through hundreds or thousands of feet of water before getting to the surface. Next comes thousands of feet of drilling to get to the deposit. Some wells go as deep as 13,000′ or more. This oil is expensive compared to conventional. The North Sea deposits are now way past their peak. New off shore deposits are announced from time to time. It’s not uncommon to have their original estimates for recoverable oil reduced by half or three quarters.

      Another form of oil is tight oil. This is oil still sitting in its source rock. These source rocks are where the organic matter was originally deposited millions of years ago and they never moved. In conventional deposits the oil filters up out of the source rock and into a reservoir of porous rock capped by an impermeable layer. The only way to get at tight oil is to drill horizontally and then fracture it to release the oil. The reason we’re hearing about it now is that years ago it wasn’t considered worth going after. Compared to conventional deposits, there wasn’t that much of it anyway. Instead of a half a million dollars per well the cost is in the millions per well. The production profiles are peak quickly and then plummet. In a few years a well must be refracked or abandoned. The great number of drilling rigs don’t reflect productivity as much as running to stay still.

      At the bottom of the barrel, so to speak, are non-fluid hydrocarbons like the Athabaska. There is no primary recovery possible with this gunk, or bitumen if you prefer. The Orinoco is a huge deposit of extremely heavy high sulfur crude. There’s a lot of it there, but the rates of production would be low and expensive and the sulfur content is a big problem in itself. That’s why it has remained below ground for decades after its discovery.

      Some oil provinces are in a state of secondary recovery. Ghawar and Kern county California are examples. To get the oil out another substance is pumped into the reservoir to force the oil up. For Ghawar it’s sea water. In Kern county is steam. When the fraction of oil recovered drops below 20 – 25%, the field is pretty much done. The water cut in Ghawar is over 50% and rumored to be 75% in some areas. The Saudis aren’t exactly honest when it comes to reserve estimates, either. A lot of OPEC oil reserves are suspected of being guesses or outright lies. For a short time several decades ago California was the world leader in oil production. Any more, not so much. Over 75% of oil producing countries are past their peak of production.

      The model of conventional oil production peaking 40 years or so after the peak of discovery seems to be holding. Global discovery peaked in 1962 and production peaked in 2005 or so. Unconventional oil has filled in the gap in demand. Some have called tight oil the retirement party for the oil age.

      Oil is the transport fuel of choice. Yes, there are electric cars to be had, but they’re a vanishingly small fraction of the fleet. Currently, electric vehicles have not made any inroads into the fleet of diesel powered trucks and earth moving equipment. At some point in the product cycle everything moves by truck. Without trucks nothing moves. Without ships burning bunker fuel nothing moves across the oceans. Trains can be electrified with overhead wires or a third rail, but have you ever wondered why diesel-electric trains carry their electric power plant with them?

      The take-away for Peak Oil is not that oil suddenly runs out. What matters is the rate of production, not the quantity of oil remaining. The supply of oil has stopped growing and with it the economy. The economy is based on transforming resources into commodities and then shipping them from the producers to the consumers. Nothing is moved or transformed without energy. Debt assumes repayment. It also assumes the future pool of money, energy, and resources will be big enough to service the debt. Peak Oil puts all of that in jeopardy.

      That’s my primer on Peak Oil. What’s true for oil now will be true for coal and natural gas before the middle of the 21st century. No amount of financial shenanigans can change that.

  2. Martymcfly August 15, 2018 at 6:42 am #

    No doubt oil was easier to get in the beginning; it’s only natural that you take the easy oil first. But all indications are we have plenty of harder oil to last as long as we will need it to. Obviously at some point it will no longer be worthwhile to extract the oil, but that point appears to be pretty far off still. By that time we will have much better alternatives. We will probably stop extracting oil because the demand has dropped more than because it is too expensive to drill.

    I have no problem with a retirement party for the oil age. It’s been great, but let’s get on to something better. It will probably be a pretty long retirement party, though.

    • Rodster August 15, 2018 at 5:02 pm #

      And you missed the entire point the previous poster DurangoKid was trying to make. In order to create alternative energy, you need energy and that energy comes from fossil fuels. Without fossil fuels alternative energy is a fantasy or fairy tail. In fact fossil fuels has made possible everything we wear and eat.

      We got to where we are today because of fossil fuels and everything we produced along the way. Alternative energy won’t save the day because it requires fossil fuels.

      • Martymcfly August 15, 2018 at 9:47 pm #

        Actually, DurangoKid’s post was exclusively about fossil fuels; he didn’t even mention alternative energy,

        Now I am well aware that we use fossil fuels to create alternative energy systems. And for the near term, we will continue to use fossil fuels to create alternative energy systems. Luckily, we have enough fossil fuels to do that.

        Of course, as more non-fossil fuel energy comes along, we will use more and more of that to make additional alternative energy systems. Then the alternative energy won’t rquire fossil fuels.

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  5. Caine August 26, 2018 at 5:03 pm #

    You talk here about the fiscal trouble shale is in. The gov’t has bailed out businesses of all sorts they claim to be important. Why wouldn’t they, even secretly, bail out shale? How do we know they aren’t as we speak? Shale could certainly be considered a matter of national security.

    By speaking about the capital part of the industry, we might just be guilty of the same misconceptions Peter Schiff is guilty of.

    • Caine August 26, 2018 at 5:07 pm #

      As long as the EROEI works out, why give a crap about the paper side of this? It’s about energy.

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  7. anatoliaa September 10, 2018 at 10:01 pm #

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