MEXICO:

• “… To update the data on Mexico, its now our #2 source of imported petroleum because Saudi Arabia has fallen from #2 to #4.
• As of November 2009 (the latest data available) the U.S. imported 1.08 mbpd of crude and finished petroleum products from Mexico. Its exports to the U.S. peaked at 1.46 mbpd in 2004, the same year its production peaked. Net exports (production minus consumption) fell to 1.06 mbpd in 2008.
  For the years 2005-2008, Mexico’s exports to the U.S. declined by 0.51 barrels per day. In 2010, supply is expected to fall to 2.5 mpbd — nearly half a million barrels per day less than 2009.”
• “Consequently, Mexico’s oil reserves have decreased by more than 75% in two decades (owing partly to the correction of a previous, ridiculously inflated figure), production has begun to decline and exports are falling fast.”

VENEZUELA:

• “… As of November, the U.S. was importing 0.9 mpbd from Venezuela, making it our #3 source. Its exports to the U.S. peaked at 1.8 mpbd in 1997, the same year as its production peaked. Net exports (production minus consumption) have fallen 38% from the 1997 peak of 3.1 mpbd to 1.0 mpbd in 2008.
  Venezuela’s oil exports to the U.S. have been declining markedly since 2004, after a long period of relative stability, from 2004 through 2009, Venezuelan petroleum exports fell 0.7 mbpd.”
• “Now Chavez is turning east for help in developing his nation’s oil and gas resources. Recent agreements include a $20 billion joint venture with Russia to develop the Junin 6 field in the Orinoco oil belt, … .
  China has agreed to build a refinery and develop the Orinoco heavy oil fields, and Venezuela has guaranteed 560,000 barrels per day to China this year.
  
• “Chavez will put exports to the U.S. on a short path to zero the first chance he gets.”

PH Comment: It looks like oil availability and prices are going to be problems for the U.S. in the not-too-distant future unless we have a war between Israel and Iran: then the not-too-distant future will become NOW.

Until next time; keep your eyes on the horizon as the weather’s changing fast.

Iran Again: A weather report attempts to give an idea of upcoming/incoming weather in order for its viewers/listeners/readers to have some advance notice of the coming weather conditions and events, especially those that could produce dangerous results, and prepare accordingly. Here’s a bit of weather PrudentHome thinks is worth watching for:

• “US raises stakes on Iran by sending in ships and missiles” is the title of this Chris McGreal piece from The Guardian (guardian.co.uk/world/2010/jan31) made available via Drudge Report (drudge report.com) on 2/1/10. Here are some of its key points:

• “Tension between the US and Iran heightened dramatically today with the disclosure that Barak Obama is deploying a missile shield to protect American allies in the Gulf from attack by Iran. The US is dispatching Patriot defensive missiles to four countries — Qatar, United Arab Emirates, Bahrain and Kuwait — and keeping two ships in the Gulf capable of shooting down Iranian missiles. Washington is also helping Saudi Arabia develop a force to protect its oil installations.”

• KEY POINT: “Washington is also concerned at the threat of action by Israel, which is predicting that Iran will be able to build a nuclear missile within a year, a much faster timetable than assessed by the US, and is warning that it will not let Tehran come close to completion if diplomacy fails”

In an economically/financially  fragile world, a major war in the Middle East, with its almost certain effect of reducing oil availability, could/would be devastating to the industrialized nations of the world and their peoples: that includes the USA and us.

Until next time; keep your eyes on the horizon as the weather’s moving fast.

Worse yet to come?

The comments we heard/saw varied from “No way!” to “We already knew that.”

It’s PrudentHomes’ view that the information/”signs” has value because:

A. They have been brought together in one place suitable for a quick copy (and then as a basis for further discussion) and

B. Whether any of the signs are of “… The Final Economic Plunge” or not they could have a profound/negative effect on the Prudent family. Here are three of the signs with some of their commentary:

1. “Price Inflation Of Oil: For a long time, oil has been traded on the world markets exclusively in U.S. dollars. Oil and the dollar are therefore intimately connected. Oil will be the first commodity to reveal any inflation (or hyperinflation) in the dollar breakdown.”

2. “Grocery Store Peculiarities: Wholesale prices of goods have recently been increasing far beyond what mainstream economists had predicted, hinting at the first steps towards inflation… Eventually, stores and manufacturers can no longer absorb the inflation, and either raise their prices, or diminish their volume. Keep careful note of your local grocery stores.”

3. “Terror Attack / New War: The world is on the brink as it is. If a terrorist attack (false flag attack), or a new war arises, it is time to collect your gear, your family, your friends, and make for the hills (if that’s where you plan to go). Any new and extended threat of conflict in 2010 will be used as an excuse to institute martial law and subjugation of civil liberties, not to mention trigger a financial meltdown…”

PrudentHome Comment: We have mentioned several times in this new year that NOW is a great time to raise you and your families’ awareness level as to events, situations and conditions. The foregoing three “signs” are examples of what we meant/mean. Please read the article and consider any of the “signs” mentioned as a trigger, at least, for immediate action to pull together any loose ends in your program of family preparedness.

Until next time; keep your eyes on the horizon as the weathers changing fast.

“… There’s been a pretty significant development in regards to peak Oil that’s worth drawing particular attention to. From yesterday’s UK Guardian, …The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims [the agency] has been deliberately underplaying a looming shortage for fear of triggering panic buying.

The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while      overplaying the chances of finding new reserves.”

A bit later in the article:

“Many inside the organization believe that maintaining oil supplies at even 90m To 95m barrels a day would be impossible but there are fears that panic could spread on the financial markets if the figures were brought down further.

A second senior IEA source, who has now left but was also unwilling to give his name, said a key rule at the organization was that it was ‘imperative not to anger the Americans” but the fact was that there was not as much oil in the world as had been admitted. “We have [already] entered the ‘peak oil’ zone. I think that the situation is really bad,” he added.

PH Comment: It seems that all governments want important information skewed to meet their particular ends and it’s with this in mind that we continue to recommend having a number of reliable sources for your information.

Life After The Oil Crash has proven itself in this regard to PrudentHome.

Conversations With ‘Pop’ Smith: Question – ‘Pop’, in our last conversation you said that you thought that we were in the “Long Recovery” and that you were preparing for sustained hard times. Are you prepared?

‘Pop’ Smith’: No, I’m not prepared but I am continuing to prepare given our time and resources. To give you an idea of what we’re doing this winter;

1. We’re expanding and preparing our garden area to more than twice the small size we had this past spring
2. We’ve just finished an inventory of the over-the-counter drugs in our family medical kit and separated those that need to be replaced (old or expired) ASAP.
3. We’re changing out our oldest stored water for fresh and expanding our reserves by about 20%.

This past week we set up a jar for pocket change to help finance an expected and expanded seed purchase for our 2010 spring garden as soon as the catalogs begin to arrive. We plan on wiping down our garden tool handles (wood) and walking sticks with linseed oil for preservation and protection. And finally, we’ve changed out some of our more recently stored honey into mason jars from less reliable containers.

Our goal is to accomplish some three small jobs each week and three larger jobs each quarter at a minimum.

Thanks, Pop.

• “With the prospect of Israel bombing Iran’s nuclear facilities looming (just listen to Benjamin Netanyahu’s impassioned speech before the UN last Friday/PH), Tehran has renewed its threat to shut down the strategic Straight of Hormuz, through which up to 40 percent of the world’s oil passes …”
• “While the threat from Iranian authorities isn’t new, the fact that it could be blocked, even temporarily, comes at a bad time for the world economy in which a spike in energy prices, even for a short time, could have a detrimental impact.”

Oil and Availability: From The Oil Drum, at theoildrum.com, on 9/28/09 we have an “Interview with Sadad al Husseini (a geologist, reservoir engineer – production engineer who began work with Aramco in 1970 working in exploration, production and project management and who is now a consultant) – “The Facts Are There”. Here are some of Mr. Husseini’s observations on oil availability in the near and longer term:

“Sadad: I’ve been tracking the number of projects, globally, for a long time in the Middle East and elsewhere — Russia, Brazil, west coast of Africa and others. A lot of this information is in the public domain, so there is no mystery there. The International Energy Agency recently reported on the same numbers. The bottom line is that there are not enough projects. There is not enough new capacity coming on line, within say the next five or six years, to make up for global declines. …”

Even at these modest decline rates, we are basically going to see a shortage of capacity within two to three years. We’re being lulled by the current excess capacity, which has more to do with lower demand than anything to do with supply. So we do have a problem in the near term. In the longer term it’s even worse because in the longer term the lead time to discover, develop and put on line production runs into 10 years. And there isn’t enough being done in the long term as well. So it’s both a short and a long-term problem.“

PH Comment: With all of the foregoing, and knowing that food production is very much related to oil production (quantity produced, processed, transported/distributed, stored, and cost), perhaps it’s time to remind ourselves of those two nagging questions: “Got food storage?” and “Got garden?”

Until next time; keep your eyes on the horizon as the weathers changing fast.

• “Goldman Sachs is once again warning the world of a coming spike in oil prices that will remind everyone of 2008.”
• “The spike from 2008 will return because there’s been ‘decades’ of poor investment decisions by oil producers.“
• “Says Goldman via Alphaville, ‘As the commodity markets rebound with the broader global economy we expect a redux of 2008 when severe supply constraints forced the rationing of demand through sharply higher prices to keep the markets balanced.’”

Banks: News Max (money news.newsmax.com) posted this Julie Crenshaw piece on 8/17/09: “Warren: Banks Are Sitting on Bad Assets”. Here are some highlights:

• “Elizabeth Warren, head of the Congressional Oversight Committee, says most of the toxic assets former treasury Secretary Henry Paulsen convinced Congress to give him $700 billion to buy are still on the books.”
• “That’s because selling those assets at actual values would mean banks would have to recognize their losses, which would put some banks out of business.”
• “The final piece of bad bank news: Warren says default rates on the commercial mortgages that are coming due 2010-2012 may be as high as 60 percent.”

The Economists: “Taleb: Bernanke, Summers and Geithner Are Idiots; Economists Have Been No Better in Their Predictions than Cab Drivers” is the title from Washington’s Blog (georgewashington2.blogspot.com) on 8/17/09. The post is from an open letter to British Conservative leader David Cameron by the noted economic writer, author, analyst and commentator Nassim Nicholas Taleb. Here’s some of that letter:

• “I despair of the Obama administration’s ability to fix this financial crisis and prevent future ones. I am appalled by the dangers it has been creating and it’s takeover by the same economic  establishment responsible for this crisis.”
• “Be careful, too,  of the so-called science of economics. Economists have been no better in their predictions than cab drivers. We have an ‘expert’ problem, in which the expert provides you with misplaced confidence, but no information. Because we think, correctly, that the dermatologist, the baker, the chemist are true experts (they know about their respective subjects than the rest of us), we swallow the canard that the economists at the World Bank, the Bank of England, and the US Federal Reserve are also experts, without checking their record. This reliance on faux experts is, for the most part, what got us here.”
• “We replaced the heuristics  of our elders with arrogant (and incompetent) beliefs, breaking, in the name of science, the chain of knowledge. Old, conservative bankers and traders have been replaced by keen young mathematical analysts, yet anyone who listened to a grandmother who survived the depression would have been warned against debt and been better prepared than Ben Bernanke and Alan Greenspan, respectively chairman of America’s Federal Reserve.”

We plan on continuing our discussion of “What to Garden In Hard Times” at next time.

Until then: keep your eyes on the horizon as the weathers changing fast.

‘Investments’ Part 2: ”Betting the Farm”, a Fortune Magazine article by Brian O’Keefe, accessed via money.cnn.com on 6/10/09, is sub-lined “As world population expands, the demand for arable land should soar. At least that’s what George Soros, Lord Rothschild, and other investors believe.”

At PrudentHome we’re not so much interested in the investment nuances of farmland as a commodity as we are in why some of the world’s foremost investors are interested in it and how those reasons might impact the average family/prudent home. Here are some of the ‘why’s” in the article:

• “In the spring of 2008 spiking grain prices caused food shortages and rioting in dozens of countries before falling some 50% by December. … That crash has obscured a broader trend. Even after the correction, grain prices remain above their 20-year average, and food stocks around the world are still near 40-year lows. For many investors, last year’s shortages are a preview of what could lie ahead.”
• “The fundamentals … . The simplest metric to consider is the amount of farmland per person worldwide. IN 1960 THERE WERE 1.1 ACRES OF ARABLE FARMLAND PER CAPITA GLOBALLY, ACCORDING TO DATA FROM THE UNITED NATIONS. BY 2000, THAT HAD FALLEN TO 0.6 ACRE (caps from PH) …. And over the next 40 years the population of the world is projected to grow from 6 billion to 9 billion.”
• “… says Joachim von Braun, director general at the International Food Policy Research Institute, “With limited land and water resources, this will automatically lead to increased valuations of productive land. And it goes hand in hand with water. Water scarcity will probably increase even more than land.”
• “The biggest investors in farmland over the next decade will probably be sovereign wealth funds and governments of crop-starved  countries eager to secure food supplies (PH note: they’re already doing it with essential raw materials such as oil and copper) for their rapidly growing populations. In 2008, China announced a $5 billion plan to develop agricultural assets in Africa. That’s just a start. Given that it has 20% of the worlds population but only 7% of it’s arable land and 7% of it’s freshwater resources.”

Regarding the views of one of the investors the article highlights: “There’s another thing she finds comforting about what she’s doing, “I’ve always personally liked the idea” she says, “that even if the bottom dropped out of this whole credit bubble and the world blew up, that the farmland, while it might not make a return for two or three or four years, was going to be there down the road. Because in the end, people have to eat.”

Last week, we mentioned in Part 1 of our “Investments In Farmland?” post, that we’d present some ideas regarding how the “why’ of farmland investments would affect the individual family. And here’s how: limits on the availability of farmland in the future will ensure the rise in cost of food and may very well bring into question its availability altogether.

There are additional factors regarding probable food cost increases and availability. These factors revolve around key “inputs” (positive & negative, direct & indirect) to farming/food production beyond the land itself and include: water (already mentioned), oil (90% of the worlds agriculture is fossil fuel dependent), phosphate (comprises about 12% of commercial fertilizer), weather/climate, the economy (national & international), pests (Ug99-wheat rust), population (numbers), and population – diet (what that population eats, i.e., it takes about seven pounds of grain to produce one pound of beef/USDA).

How can the individual family hope to confront these challenges from rising food costs and questionable availability? Here’s how: through the in-home storage of food (and life essentials), food processing (e.g., cooking, canning & drying equipment) and production necessities (e.g., tools, open-pollinated seeds, natural fertilizers & insecticides.)  Also add the knowledge and skills necessary to effect the foregoing. The family will have to know how to do more and more for itself in order to thrive: self-sufficiency must be the goal.

Until next time, keep your eyes on the horizon as the weathers changing fast.

The Price Moves #1: “Oil price leaps to year’s high” says the post on the guardian.co.uk site this 6/11/09.  Terry Macalister’s piece speaks to several possible price point futures and raises some serious questions concerning declines in oil reserves.

Here are some highlights:

• “The price of oil burst through the $71 a barrel mark today amid revelations that proven reserves had fallen for the first time in 10 years and predictions that the price could eventually hit $250.”
• “Kuwait’s oil minister, Sheikh Ahmad al-Abdullah al- Sabah, put some of the rise down to signs of recovery in Asia but warned that overall demand was still weaker than last year. OPEC would not raise supply at current oil prices but did not rule it out “if it reached $100”, he said.
• “… BP’s Statistical Review of World Energy, which showed that the world’s proven reserves had fallen by 3bn barrels to 1.258tn by 2008 from a revised 1.261tnin 2007.”
• “The drop is partly attributed to a drop in exploration drilling due to the precipitous fall in oil prices last year BUT ALSO TO THE END OF “EASY” OIL (caps/PH).”
• “The latest surge (in price) has also raised fears that higher energy costs could snuff out the nascent economic recovery.”

The Price Moves #2: The Los Angeles Times …Business (latimesblogs.latimes.com/money) article of 6/11/09 brings several different perspectives to the table regarding these aspects of oil: prices, uses and reserves as well as the future of all three. Some of  “Oil, The rise and fall … and rise “  key points:

• “The world consumes 30 billion barrels of oil a year. Without it, our food doesn’t make it to the supermarket and our flights to Hawaii are grounded.”
• “An $85-a -barrel year end forecast  from Goldman Sachs …”
• “Prices have more than doubled since crude visited the low-$30’s in February. The falling dollar has helped, as some investors have turned to raw materials as a hedge against the greenback’s slide.”
• “ … the action (oil demand) is in the developing world. Masses continue to leave the land for the cities, where they become bona fide fossil fuel consumers.”
• “Where the crude will come from to satisfy these new wants is a puzzle. Most of the cheap and easy sources have been mined.For much of this decade, when demand already was pushing the supply envelope, drillers ventured into fields and waters that required high expense and high technology to yield their riches. Now, many of those projects have shut down.”
• “But this much seems clear: the move from $33 to $68 a barrel -during a time of surplus – offers just a whiff of what will happen when supply tightens again. If the recession passes and scarcity sets in, the return of energy angst will make for giddy prices in the oil market.”

‘As Reserves Decline’: “World Oil Reserves Fell for The First Time in 10 Years BP Says” is the Rachel Grahan and Alexander Kwiatkowski article posted on Bloomberg.com this 6/11/09. Here is perhaps the article’s most important point:

“None of the biggest international oil companies have replaced output through new discoveries or extending fields IN THE PAST SIX YEARS (caps/PH), Sanford C. Bernstein & Co. said in an April 2 report. Companies such as Royal Dutch Shell Plc, Europe’s largest oil company by market capitalization, are looking at acquisition to boost reserves, Bernstein said.”

PrudentHome.com Comment: In practical terms, with 90% of the world’s food produced via high fossil fuel inputs, oil = food.

Oil also effects and affects civilization as we have come to know it, especially in the Western World. It is not just a lubricant but THE lubricant of and for the modern world’s standard of living.

With this in mind, perhaps it would be a good idea to keep an eye on its availability and search for substitutes as soon as possible at the international, national and personal levels. Just a thought.

Until next time, keep your eyes on the horizon as the weathers changing fast.

PrudentHome ended its post that day promising to begin a discussion of a “plan B” rationale this week along with the beginnings of some specifics. That was before we read JOE 2008 (in the civilian version).

JOE 2008, Joint Operating Environment 2008 report on worldwide security threats prepared by the U.S. Joint Forces Command in Norfolk, VA (accessed thru worldnetdaily.com via the article by Jerome Corsi on 1/15/09 entitled “U.S. warns drug war threatens Mexico ‘collapse’ “). JOE 2008 gives some additional substance and underpinnings to the Harun I. letter. Here are some of the points discussed in the report that we thought you might want to know:

DEMOGRAPHICS:

• The world will add 60 million people per year yielding a world population of 8 billion by the year 2030.
• 95% of this increase will be in developing countries.
• The performance of the global economy will be key in either dampening or inflaming ethnically or religiously based violent movements.
• The U.S. will add 50 million in population by 2025.

ENERGY: To meet even conservative population & economic growth rates, energy needs to grow 1.3% per year thereby increasing by 50% by 2030. This means in practical terms, adding a Saudi Arabia to world oil production every seven years.

By 2012, surplus oil production capacity could entirely disappear and as early as 2015, the shortfall in output could reach 10 million bbls/day.

PH Note: Remember that world food production is 90% fossil fueled based.

FOOD: Two major factors drive food requirements: 1. Growing global population and 2. Prosperity that expands dietary preferences (increased use of animal protein). These two requirements could produce a situation wherein there is adequate global food supply but localized food shortages.

WATER: Agriculture will likely remain the greatest source of water use demand. Within 25 years, water scarcity could effect three billion people.

The foregoing outline of some of the key portions of the JOE 2008 report should give all of us pause and should help provide the incentive to begin thinking about how our individual families will cope with these key changes. We definitely need a “plan B”.

Until next week then, keep your eyes on the horizon.

The second article, “ PEMEX Expects Oil Depletion in Seven Years “ by Carlin Lee, was presented on 8/06/08. It noted that the U.S.’s third largest oil importer, Mexico, had informed the U.S. that “ Supplies of it’s economically exploitable resource was running out. “ A time line presented a depletion target date of about seven years.

MICRO ECONOMICS: msnbc.com on 8/26/08 in an article entitled “ Pinching pennies like your grandparents “ by Allison Linn, noted that a web site ( HillbillyHousewife.com) was presenting traditional recipes and money-saving food preparation tips in response to the economic hard times that many were currently experiencing around the country. The site recently saw traffic increase to about 300,000 unique hits per month by presenting … “ the type of serious. cost-saving home economics common a generation or two ago. “ in the face of skyrocketing increases in the cost of food staples.

The article went on to say that “ Many expect grocery prices to rise as global-demand increases and farmers and ranchers pass on higher costs for everything from chicken feed to fertilizer. “

FOOD: “ Food, Fuel and Water Crisis Converging “ headlines a brief article by Thalif Deen, IPS at energy bulletin.net (8/26/08). The 8/22/08 article speaks to a “tipping point “ reached “ because the scarcity of water poses a threat to the food supply just when the agricultural sector is stepping up production in response to riots over food prices, growing hunger, and rising malnutrition. “ in quoting Lars Thunell, the Executive VP of IFC ( a member of World Bank group).

Energybulletin.net, continuing on 8/26/08, posts another article referring to global fertilizer cost increases entitled “ Tackling the global fertilizer crisis” . This article, by Salah Uddin Shoaib Choudhury (American Chronicle) points out that the “ Worldwide fertilizer crisis is getting worse with no sign of dramatic resolution…or downward trend of the price of fertilizer.”

LIMITED-SPACE GARDENING INFO: Our great interest in limited-space gardening here at ’PrudentHome’ derives from the kind of information presented above and the observation that most of us in our country don’t have the benefit of a large plot of land to garden on. For a great many families, the need to have a productive garden far outstrips our resources ( not only in land but in skills, finances and time). The following information will hopefully help to bridge the gap.

We’re recommending here an excellent book on container gardening entitled “ The Bountiful Container “ by R.M. Nichols McGee & M. Stuckey, 2002, 431pp. @ our last listing for $ 16.95

The book covers “ vegetables, herbs, fruit and edible flowers, with information on what kinds of containers to use, soil mixes, plant combinations and recipes.” It should be noted that almost ANYTHING that can be grown in a traditional garden can be grown in a container garden

We want to note here also a very inexpensive packet of information on “ Limited Water Growing “. This 6 page packet contains information on water saving techniques in gardening for about $1.

Next week we’ll continue with our “ Weather Report” and some further suggestions on small-space gardening .

Until then, keep your eyes on the horizon.