Oil bulls came out of hiding recently, but this analyst is waiving a caution flag.
The countdown has started as the demise of the great U.S. shale gas industry has begun. This will have a disastrous impact on the U.S. economy as shale gas production declines in a big way:
Today, we don’t have cheap oil to pull us out of the huge mess we are facing as the Global Financial System is loaded with Debt, Derivatives and Fraud as far as they eye can see.
When the highly leveraged Global Financial System finally crashes, it will pull down the energy industry with it. Thus, a great deal of the supposed forecasted growth of oil and gas will no longer be commercially viable.
This will also destroy a great deal of the PAPER CLAIMS such as futures, options, derivatives and etc, leaving a mad dash for physical assets. Some think we will see Deflation… we may. However, I believe it will be DEFLATION in the value of paper claims with a huge RISE in the value of the physical asset.
It will be the disintegration of the 100 paper claims on gold and silver that will implode to zero, while the actual physical bullion will hit levels thought unimaginable.
When this occurs… remember my favorite line:
GOD HATH A SENSE OF HUMOR.
The U.S. and Global financial system is being kept alive by a highly leveraged paper system. The Fed’s recent announcement of a $10 billion taper has had the anticipated impact on the precious metals and bond market.
Even though I thought the Fed would never taper, the end result will be the same. As I have mentioned several times, Energy drives the markets… not Finance.
The so-called U.S. Shale Revolution is the only thing that is holding off the collapse of the global markets as it has brought on more oil supply (only temporarily), desperately needed by the world.
Unfortunately, it looks like the “Illusion of Sustainability” in shale oil production took a BIG HIT, as the forecasted decline rate at the Eagle Ford Shale Field increased double-digits in just one month.
By SD Contributor SRSrocco:
What is taking place in North Dakota is the same thing that took place during the 1848-50’s California Gold Rush. And that is a Big Migration of people with very little in the form of housing and services.
ALL BOOMS behave the same way. After the BOOM, comes the BUST. The N.D. Bakken Boom won’t be any different.