Addison Wiggin – February 24, 2012
- As oil climbs, former Big Oil CEO foresees $7-8 gasoline…
- Rising oil… or a falling dollar? The connection with a national debt that’s grown more than 50% in less than four years
- Dramatic developments in the stem cell space: Patrick Cox on the breakthrough that can transform a cell from almost anywhere in your body into a new healthy heart or lung
- “Sophomoric” and other reactions to our take on the prospect of an Iran war… an entire winery that fell into a pawnbroker’s hands… a CNG-powered Camaro… and more!
Another day, another bump up in the oil price. A barrel of West Texas Intermediate fetches $108.14 this morning.
Oil has moved almost entirely in one direction this month… approaching its highs from last spring.
The national average price for a gallon of regular unleaded this morning is $3.61. The record set in 2008 was $4.11. Last year’s high was $3.98.
It’s getting so expensive, someone in Florida cut a hole in the floorboard of a Chevy minivan… put a makeshift pump and plastic tank inside… and sucked up fuel direct from the underground storage tank at a gas station. The cops showed up and the perps ran off.
“We had this problem pretty widespread a couple years ago,” Hillsborough County Sheriff’s Capt. Andy Ross tells the Tampa Bay Times. “It kind of ebbed. It seems like this is on the uptick again.”
Hmmm… The people at GasBuddy.com figure on a national range between $3.75-4.15 as “summer driving season” approaches, with isolated pockets on the coasts pushing $5.
Already, God help us, it’s becoming a campaign-year football. But in reality, “There’s no quick fix to this, no short-term fix,” said Treasury Secretary Tim Geithner to CNBC this morning — one of the few sensible things to escape his lips during his ignominious tenure.
And without a long-term fix, we’re in for “gas lines, paying $7-8 a gallon,” according to former Shell Oil CEO John Hofmeister.
“There’s not enough oil out there to meet that demand,” he told the North American Prospect Expo in Houston. As evidence, he cites the following …
- U.S. oil consumption: Over 18 million barrels per day. U.S. production: around 7 million
- Chinese consumption: Around 9 million barrels per day, on the way to 15 million by 2015
- Indian consumption: Currently 4 million per day, headed to 7 million by 2015.
“The reason oil prices are so darned high,” says Daily Resource Hunter editor Matt Insley, who attended the conference, “is simple: There’s a global grab for resources. Please don’t forget this simple fact.”
[Ed. Note: Hofmeister did say there’s a chance to short-circuit the rise to $7-8 gasoline… even making it possible to “tell OPEC to take a hike.”
It’ll take the help of Canada and Mexico, he said, but the other key is to raise U.S. oil production back to 10 million barrels a day. Sounds a lot like the American revival Byron King’s been talking about.]
There’s another factor in play, however: “Maybe Oil has become another anti-dollar,” suggests EverBank’s Chuck Butler this morning.
“So the price of oil is rising because the dollar is falling? Something to think about, anyway.”
Indeed, “oil is traded in dollars,” opines The Wall Street Journal’s editorial page this morning, “and its price, therefore, rises when the value of the dollar falls, all else being equal. The Federal Reserve throughout Mr. Obama’s term has pursued the easiest monetary policy in modern times.”
In a sense, the Fed has to: The national debt totals $15,416,323,644,046.76 this morning.
For perspective, the day we released I.O.U.S.A. — Aug. 21, 2008 — the total was $9,618,645,199,394.09.
“My oldest son,” writes Chuck Butler, “actually shows the movie I.O.U.S.A. to his class and quizzes them on it. But think about this for a minute. I.O.U.S.A. was made four years ago. Imagine if my friend, Addison Wiggin, were to make that movie/documentary now?
“Where is the Tea Party?” Chuck goes on. “Have they faded away?”
“I say this because I saw this story in The Washington Post yesterday. ‘The national debt is likely to balloon under tax policies championed by three of the four major Republican candidates for president, according to an independent analysis of tax and spending proposals so far offered by the candidates.’”
One guess whose plan would actually bring the debt down.
When we ventured into the Conservative Political Action Conference a couple weeks ago, one of the people we met said, “There have been four populist movements of late.
“The first was the popular election of Obama, which brought 2 million to the National Mall. Then the came the Tea Party. That was followed by the midterm election which ‘threw the bums out’… then last year came Occupy.”
And now? Hope and change are a distant memory, the Tea Party was co-opted by the Republican establishment, the new crop of congressmembers has proven ineffectual and Occupy vanished as soon as winter arrived.
The only constant has been the growing debt… the mother of all financial bubbles, as we’ve come to call it.
Stocks are inching up this morning, traders exhibiting no excitement at either decent consumer-confidence numbers or Danica Patrick’s overhyped debut in the Daytona 500 this Sunday.
The Dow has pierced 13,000 and the S&P 1,365… for the moment, anyway.
Gold is on a pace to end the week above $1,750 for the first time since early November. At last check, the bid is the nifty number of $1,776.
Silver’s adding on to yesterday’s big gain, currently $35.45.
“This is one of the biggest victories in the battle against disease and aging in my lifetime,” says our biotech maven Patrick Cox. “Scientists have identified the gene that locks down inactive DNA — SP100.”
So what’s it to you? “The SP100 gene,” he explains, “expresses an RNA protein that keep portions of the genome that shouldn’t be activated locked down. This is critical because every cell in your body contains the entire vast genome, containing all of the information necessary to become all of our many thousands of cell types.”
That is, the cells in your skin have all the information they need to become, for instance, heart cells. “It is possible for any cell to become any other cell type — if you know the genetic code and the right gene switches.”
Now that scientists have pinned down SP100, they’ve made a huge leap toward being able to turn the right switches on and off — giving them the ability to take cells from your skin and build a new healthy heart.
“This discovery,” Patrick says, “will accelerate regenerative medicine and enable untold numbers of therapies.” And, no doubt, deliver considerable profit for early investors.
Patrick is all over the iPS stem cell sector. He’s identified three companies leading the way in a $64 billion market. New readers of Breakthrough Technology Alert learn about all of them as soon as they sign up. Access here.
“Your analysis of Iran is sophomoric,” begins the first of several letters reacting to yesterday’s issue.
“Iran may not plan to actually eliminate Israel, but if you lived in Israel and there was a nation that threatened to do so, and if you thought you had the opportunity to prevent them from attaining that capability, you might wish to do so, rather than having to live every day with that threat hanging over you.”
“In addition, apparently you are not familiar with the Hojjatieh sect in Iran.”
“It would not hurt if you actually were familiar with topics on which you commented. That might take a bit more work, but the results would be improved.”
“If,” writes another, “a man came up to you and said, ‘I am going to get a gun and blow your brains out,’ would you take him seriously? Would you just stand there waiting for him to come back and do what he said or would you take action to prevent your death?”
“That is the situation that Israel is in. Do they wait to be incinerated or do they take steps to prevent it? What would you do?”
“I have written to you quite critical of some of your political perspectives,” writes a third. “I now want to compliment you about your discussion of Iran’s putative efforts for a bomb and your very perceptive comments about the efforts of Israel and AIPAC to direct our responses.”
“What better way for them to distract from the Israelis’ refusal to stop settlements and to reach a genuine two-state settlement. Thanks for being clear thinking.”
“Back from a business trip in three Arab countries,” writes European reader, “I am, as everybody, very much worried about the persisting explosive situation in the Middle East.”
“Everybody there expects the bombing of Iran from Israel, with the logistic support of America. So writes every paper. Everybody worries, particularly the new political class, that the war will make the masses of the whole Arab and Islamic world explode.”
“The question I hear more frequently is: ‘How is possible that America doesn’t understand that they all (Arab and Islamic) feel very much involved and partisan with the Palestinians, and the solution is in Palestine?’”
“No one understands how a world power like the USA is completely subordinate to an internal minority and to the leadership of a country that looks after only its own interests.”
“Because of that, America lost the sympathy and much of the business of the Arab world, the Islamic world, African countries and more. China is very thankful. Europe looks astonished in the way Israel maneuvers your political establishment.”
The 5: Yikes. All we do is point out a few things about the futility of war and empire and suddenly we find ourselves square in the middle of a debate about Israel’s relations with its neighbors. We should have known better.
“A pawnbroker friend in California,” writes a reader noting our item yesterday about fine wine as collateral, “made a loan three years ago to the owner of a small winery which was put up as the collateral for the loan.”
“When the loan could not be repaid, my friend became the owner and now has his own label. And he’s making money at it, which, obviously, is more than the original owner could manage.”
“I live in central Texas and yes, we have an oil boom going on,” writes a reader who’s taken note of Byron King’s Re-made in America report. “As I speak, there are more businesses cropping up and people doing better financially, considering we were all on unemployment up till last year.”
“I know this does not help many readers other than that there is a significant truth as to what Byron says and predicts with natural gas and oil markets.”
“At this very moment,” he adds, “I am gearing up to convert both my vehicles to natural gas. Why? It’s CHEAP and environmentally friendly. I have never been an extreme environmentalist, but believe it should be an important practice for all to adhere to. My point is when things get in dire straits, take drastic measures and adapt.”
“I drive 80 miles a day to work, gas is $3.50 and rising at the pump for regular unleaded. All in all, I can fill my tanks with CNG for about 80 cents a gallon and get the same mileage. We are CNG advocates, and when gas prices fall again, I will stay with CNG.”
“I love reading The 5 and all the stories and rhetoric.”
The 5: “One of the coolest things I saw during my recent trip to Houston,” writes the aforementioned Matt Insley, “wasn’t out in the energy patch — it was on the conference center floor.”
“Chesapeake Energy, a huge land leaser and natural gas driller, had this little baby on display”:
“Besides being damn cool,” says Matt, “this car shows the industry’s desire to find a place for all of this cheap gas. One of the most useful places that I’m seeing is right inside the engine of your car. Heck, who wouldn’t want to peel wheels (in a sports car, no less) at half the price of gasoline!”
Who, indeed? Who can predict what sort of ingenious ways will be developed to use the ever-growing reserves of U.S. shale gas and oil?
One thing’s for sure… By the time inventors and entrepreneurs figure it out, the easy money will have already been made. You don’t want to miss out.
Have a good weekend,
Addison Wiggin
The 5 Min. Forecast
P.S. “The Little Book of the Shrinking Dollar does an admirable job of highlighting the dangers of the Federal Reserve’s monetary policy,” writes Rep. Ron Paul — one of several testimonials for the new book that frankly make us blush.
“Not only,” adds Gloom, Boom & Doom Report editor Marc Faber, “does Addison convincingly and disturbingly argue that ‘every paper currency in the history of civilization has eventually lost its entire value,’ but he also offers ways to protect our wealth.”
“This latest effort,” adds resource investing guru Rick Rule, “is a must-read for investors and speculators whose wealth is denominated in U.S. dollars. While the topic is certainly not pleasant, this book is easy to read, and insightful.”
The manuscript is in the hands of our editors at Wiley. Release is set for sometime in April, but you can pre-order your copy right now and snag a 20% discount at Laissez-Faire Books.