Beginning of the End? Oil Companies Cut Back on Spending

Gail Tverberg always provides a lot to think about in terms of resource depletion and economic growth. She references Steven Kopits’s presentation which can be found here:

Our Finite World

Steve Kopits recently gave a presentation explaining our current predicament: the cost of oil extraction has been rising rapidly (10.9% per year) but oil prices have been flat. Major oil companies are finding their profits squeezed, and have recently announced plans to sell off part of their assets in order to have funds to pay their dividends. Such an approach is likely to lead to an eventual drop in oil production. I have talked about similar points previously (here and here), but Kopits adds some additional perspectives which he has given me permission to share with my readers. I encourage readers to watch the original hour-long presentation at Columbia University, if they have the time.

Controversy: Does Oil Extraction Depend on “Supply Growth” or “Demand Growth”?

The first section of the presentation is devoted the connection of GDP Growth to Oil Supply Growth vs Oil Demand Growth. I omit…

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Tyler Cowen is flat out wrong about the nature of fiat money

Real-World Economics Review Blog

On his Marginal Revolution blog Tyler Cowen states:

High debt means higher payments to banks and other intermediaries, and so that money need not disappear from the stream of aggregate demand. Investment is AD too, and more generally AD theories based on short-term changes in the distribution of wealth have not generally succeeded in the past (with apologies to Michael Kalecki). It is true that wealth redistribution will induce sectoral reallocations, perhaps significant ones, but then a debt-collapse theory requires a lot of the predictions of sectoral shift theories. At least for the recent crisis that is not obviously going to do the trick, even if sectoral shifts have been underrated by a lot of Keynesian commentators

That’s vaguely right when you’ve borrowed from a pension fund or your dad.

That’s flat-out wrong when you’ve borrowed from an MFI, a ‘Monetary financial Institution’ or a bank with a government license…

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