Art Berman: Think Oil Is Getting Expensive? You Ain't Seen Nothing Yet. Adam Taggart
A global supply crunch approaches...
After issuing clear warnings on this program that sub-$50 oil prices were going to be short-lived, oil expert and geological consultant Art Berman returns to the podcast this week to explain why today's $70 oil prices will go higher -- likely much higher -- and start materially contricting world economic growth.
Art explains how the current glut of oil created by the US shale boom -- along with high crude output by both OPEC and non-OPEC producers -- is a temporary anomaly. Fundamentally, we are not finding nearly as much oil as we need to continue the trajectory of the global demand curve. And at the same time, we're extracting our reserves at a faster rate than ever. That's a mathematical recipe for a coming supply crunch -- it's not a matter of if, but when:
The price of oil has gone up 30%+ percent just here in the last year alone. There are some very good reasons for that.
In the United States, we've been drawing down our reserves, our inventory and the amount of oil we have in storage, consistently since February of 2017. We're going into the 15th month of drawing from storage each week because we're not producing enough to meet the need.
To those paying attention: the United States is right now producing more oil than it ever has in its history. We are a million barrels a day higher than the peak in 1970 -- the one that King Hubbert got in trouble for warning about. We're higher by 50,000 or so barrels per month of production. Yet, here we are, still sucking oil out of storage. What does that tell you? There is only one way to interpret that: We are using more than we are producing.
Countries like the United States and western Europe; our demand is pretty much stable. We are not a big growing economy anymore. But the emerging markets – Asia, Latin America, and Africa – they are going full bore. That is where something like 80% of world demand growth is coming from.
Never ever lose sight of the fact that the United States imports a ton of oil. I mean we are importing, on average, 7 million barrels of crude oil a day. I mean that is more than many continents use a day. Why are we importing all that when we are also producing 11 million barrels a day?
We are nowhere near energy self-sufficiency, nor do I think we will ever get there.
We're in deep trouble.
Click the play button below to listen to Chris' interview with Art Berman (60m:06s).
Adam is the President and Co-Founder of Peak Prosperity. He wears many hats, but his basic job is to handle the business side of things so that his fellow co-founder, Chris Martenson, is free to think and write.
Adam is an experienced Silicon Valley internet executive and Stanford MBA. Prior to partnering with Chris (Adam was General Manager of our earlier site, ChrisMartenson.com), he was a Vice President at Yahoo!, a company he served for nine years. Before that, he did the 'startup thing' (mySimon.com, sold to CNET in 2001). As a fresh-faced graduate from Brown University in the early 1990s, Adam got a first-hand look at all that was broken with Wall Street as an investment banking analyst for Merrill Lynch.