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  1. Hi CAF: I was interested to read on the Thrivemovement.com website… Foster and Kimberly Gamble’s latest blog post with video about “Plan A, Plan B, Plan C, Plan D, Plan E” and how they see basically 5 different ways that the global financial situation will evolve. It’s worth a read and a listen.

    1. Megan:

      Someone sent me the scenarios and I took a quick look. It is on my list to do a review of what Foster and Kimberly are saying by the time I publish the Wrap Up. So still on the list. I think the scenarios are missing a great deal and, again, I think the Dragon Elder story has less than a 1% chance of being true. I am getting an overwhelming number of requests to unpack predictions or theories that I believe are low probability. It is a much better use of Solari Report resources in helping people to instead focus on what we do know and to frame the unknown in a way that is useful.

      Make sure you read my commentary on the US dollar Index. Some of many scenarios I am preparing for is a US dollar Index rising through 100 – even up to as high as 110-120 and a gold price that could drop though 1100 and bottom as low as 700. And given the possibilities of new technology, lots of unusual twists and turns along the road.

      Catherine

  2. Thank you for a refreshing, and frankly optimistic ‘behind the curtain’ view of world events. You bring a four dimensional focus to man’s place in the universe not found in our current two dimensional media information system. Kudos from a 70 year old grandfather of 11. Ever onward….

  3. http://www.eia.gov/tools/faqs/faq.cfm?id=367&t=6

    “How much does it cost to produce crude oil and natural gas?

    A measure of the total cost to produce crude oil and natural gas is the upstream costs. The upstream cost includes lifting and finding costs. Lifting costs are the costs to operate and maintain oil and gas wells and related equipment and facilities to bring oil and gas to the surface. Finding costs are the costs of exploring for and developing reserves of oil and gas and the costs to purchase properties or acquire leases that might contain oil and gas reserves.

    EIA collects data related to these costs from the largest (major), U.S. oil and gas producers in its Financial Reporting System (FRS). The data are generally representative of the average cost for the FRS companies to find and produce their own particular mix of crude oil and natural gas in their production locations in the U.S. and in other countries and regions of the world. The table below is adapted from the most recent report of the Performance Profiles of Major Energy Producers, 2009.

    Costs for Producing Crude Oil and Natural Gas, 2007–2009
    2009 Dollars per Barrel of Oil Equivalent1

    Lifting Costs Finding Costs Total Upstream Costs
    United States – Average $12.18 $21.58 $33.76
    On-shore $12.73 $18.65 $31.38
    Off-shore $10.09 $41.51 $51.60

    All Other Countries – Average $9.95 $15.13 $25.08
    Canada $12.69 $12.07 $24.76
    Africa $10.31 $35.01 $45.32
    Middle East $9.89 $6.99 $16.88
    Central & South America $6.21 $20.43 $26.64
    15,618 cubic feet of natural gas equivalent to one barrel.

    Source: Tables 10, 11 and 12, Performance Profiles of Major Energy Producers, 2009.

    Last reviewed: January 15, 2014”

    Catherine,

    Based upon the averages listed above, I have to disagree with Jim Norman’s analysis of the costs related to oil production. In your interview with him, he suggested a cost to the producer at less than $5 (I believe he said more like $1 but I am giving him some leeway). I have absolutely NO idea where he came up with this estimate, but here in the south and southwest oil fields, traditional onshore production, not fracking, the cost is far greater. The idea that oil will be produced at $60 per barrel will clearly drive many small wildcatters and small oil companies to cease drilling. For those with debt, and that is about every operator, this will mean assured bankruptcy. The combination of drilling dry holes (typical), the increasing liability costs, permit fees, transportation costs (which includes building new pipelines… again, liability, permit, cost of surface leasing, etc.) makes $60 a barrel a stimulus to decrease oil production here in the US. In fact, in terms of onshore drilling, many companies are now looking to ultra deep drilling which creates a risk in the multimillions per exploration.

    I know you are for sustainable energy resources and I believe they will eventually become efficient enough to replace conventional hydrocarbon resources, but for the bulk of the world, that time has not come. We need to be able to recover enough conventional resources to take us into the future. If the geopolitics of oil values continues to focus on punishing the Russians, it will destroy the rest of the world economy with it.

    That is my opinion, for what it is worth.

    Jane

    1. Jane:

      I will have to relisten. I though the reference to $5 was a year or so before the book was written, not currently.

    2. From CAF: I asked Jim Norman to commment

      Catherine:

      Thanks for forwarding these comments. I think what I said in the interview was that the FINDING cost of oil for majors like ExxonMobil is on the order of $1 per barrel of oil equivalent. In fact, it was considerably less than that until just recently for XOM. Here is an excerpt from a 2005 8-K which confirms that:

      http://www.wikinvest.com/stock/Exxon_Mobil_(XOM)/Finding_Costs.

      Now that is just the cost of finding oil and gas (that is expected to become proved reserves). The further cost to develop those BOE goes into “Finding and Development” costs or F&D. Those costs for the majors have been rising steadily with oil prices (in part, no doubt, because their inherent profitability allows them to be less stingy with their exploration and production dollars). The charts on pp. 9-10 of this analysis show that pretty well:

      http://cdn2.hubspot.net/hub/312313/file-437446448-pdf/Whitepapers/Top_7_Ways_to_Measure_FD_Costs.pdf

      Even using the most expensive way to measure F&D, however, the costs for the majors has been running at only about a fourth to a third of the market price for crude. And Exxon until recently has been one of the lowest-cost of the majors upstream. Granted, the costs for finding and developing oil are more than for gas, generally speaking. But in the interview I was talking in therms of BOE — barrels of oil equivalents, which is the only way the numbers are disclosed by companies, if at all any more. As I said, the all-in F&D costs for the majors has been running somewhere in the high teens (see the lime green line on p.9). That’s where it was when The Oil Card was written in 2007-8. I’d expect it has risen since then mainly because companies could afford to be less frugal, but it is still less than half the market price for oil. My point was that oil prices could still fall massively before they would reach the majors’ F&F costs. And even if that were to happen, once oil and gas wells are on production, they tend to remain so. Oil and gas production volumes might not fall much at all even if prices fall into the $40/bbl range. Indeed, there will be tremendous pressure on the Russians and others with surplus capacity to pump even more volumes to maximize whatever revenues they can get.

      I have no idea what kind of methodology the EIA uses, but would have to say it is at some variance with what the companies report to the SEC. These three years are also problematic. There was a massive price drop in 2008 that forced a number of companies to write down high-cost properties, greatly reducing net reserve additions and skewing per-barrel reserve addition costs markedly upward.

      As to the main point of the writer, however, I could not agree more. A further sharp drop in the oil price will be devastating to the US independent oil sector, especially companies that have used a lot of debt financing (and who hasn’t?). Recall the 1980s, when the US economic war against the Soviets utterly decimated the US independent oil sector. It was a price worth paying, Washington evidently felt, even when it infected the S&L business and brought that tumbling to its knees. The independents almost always have higher costs per BOE than the majors, because they are going after smaller quantities in picked-over US venues. The majors hold down their costs by going for mega-projects with billion-barrel reserves in low-cost foreign offshore fields. They’ll survive if prices fall. The little guys will get crushed again.

      JN

      1. Interesting that the “cost of finding” is so low. I am aware that many of the smaller mineral companies, especially those that have been operational for at least 50 years, have seismic studies that they procured on their mineral interests. These companies then lease these interests to drillers. Those numbers are NOT going to carry over to the “big boys” in terms of “finding” as this data is used as an enticement to the larger oil companies to lease and drill. I would be very interested to see who actually pays for the offshore studies where the most current “low hanging fruit” still resides… U.S. Geological? Believing the data put out by these multinational companies is akin to believing U.S. unemployment figures.

        It looks to me as if Dr. Farrell has put his finger on this geopolitical disaster as what started out as a financial play against the Russians has been coupe’d by the Saudi’s (Sunni’s) who are playing payback to the US (shale oil production) by pushing the oil prices even lower. The U.S. has meddled enough in the Middle East to finalize the murder of the petrodollar. For the little guy, like me, this is a total nightmare. For the U.S., it could be far worse. The slow burn could well turn into a raging inferno.

        We will see.

  4. Hi Catherine,

    Have you read anything about the health impact of phone/tablet screens at night, e.g. https://gigaom.com/2014/09/01/what-is-the-blue-light-from-our-screens-really-doing-to-our-eyes/? There is some software for automatic color temperature adjustment, based on the time of day: https://justgetflux.com/

    For those who read a lot of documents, a positive product trend is large-screen e-readers, because eink is reflective, i.e. it does not shine light in your eyes like a tablet or desktop display. In addition, eink does not refresh, so there is no screen frequency (that could be modulated..)

    Options are the pricy Sony 13.3″ model for reading/writing PDFs, targeted at business for $1000 or the Russian Pocketbook CAD reader for $600 which will be available in 2015, after Sony’s exclusivity period on the 13.3″ Mobius e-ink screen has expired. Sony battery life is 3 weeks, supports handwritten notes.

    http://store.sony.com/digital-paper-system-zid27-DPTS1/cat-27-catid-collections-standalone-installation-telesales-only
    http://the-digital-reader.com/2014/06/17/574-pocketbook-cad-reader-delayed-next-year-will-mobius-screen/
    Video comparison of Sony with Surface Pro: http://www.youtube.com/watch?v=RtMnEYJ1Hh8

    Rich

  7. Catherine,
    Why does it take so long for the audio of your weekly comments and interview to be available for download?
    I try to download it Friday morning and I can’t because audio encoding in not complete.

    Allan Johnson

    1. Alan:

      We post the file on Thursday nite and upgrade it on Friday.

      This week the fault is entirely mine. I was traveling through the Southwest was late into the hotel.

      I will check with our producer regarding the encoding to ensure that does not happen again.

      My apologies.

    2. Alan:

      Did you download from the blog post? It was posted there on Thursday nite. We do not post the file in the archives until we have the revised, higher quality version on Friday, I have asked our producer to contact you so we can make sure this does not happen again.

      Catherine

  9. Catherine,

    I am a long time subscriber and fan of yours. I stumbled over a new book which I purchased for my Kindle and have been listening to as I am banging around my Barn preparing for the EARLY Winter Wx headed our way. (Finance Monsters: How Massive Unregulated Betting by a Small Group of Financiers Propelled the Mortgage Market Collapse Into a Global Financial Crisis by Howard B. Hill)

    Please, Please, Please schedule an interview with this author BUT only after you have read his book!

    Like you Princess, he has the DEEP BACKGROUND Knowledge about the FRAUD AND KRAP STORM we are living through.

    Stay in, “THE LIGHT,”

    CC

    1. Charles:

      Make sure you listen to the Secret Space Program video presentations.

      They were not betting. They were successfully engineering a financial coup. It worked.

      Will check it out. Thanks for the recommendation~!

      Catherine

  10. Catherine, have you seen anything about the new film Interstellar? It looks fascinating in light of the secret space program / hidden agendas you and Dr. Farrell often talk about. Wondering if you could review it in one of your weekly reports – I’d love to have your thoughts.

    Kathy Churay

    1. Yes, great suggestion! I have not seen it yet, but plan to. Nolan is one of Hollywood’s most profitable movie makers so they are certainly promoting it.

  11. Hi Catherine,
    Have you seen Foster and Kimberly’s most recent (Nov. 1) blog post, “Is the value of your money about to change?” …
    They are talking about the White Dragon Society and all the progress being made with the White Hats’ negotiations. Hearing them talk about it makes it pretty darned real. It is “The Huge Subject,” I think (the hippo in the room?).

    1. Megan:

      I am preparing a discussion for this week’s Money & Markets on a number of recent pieces, including the one by Foster. Foster is a great friend and ally and I agree with him on many issues. On this one, I would give the chances of the scenario he describes as being true as less than 1%.

      Catherine

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