Community Feedback Requested: xPat's PCO Videos

Greetings iTulipers,

When I was recently interviewed about PCO Investing on Jim Puplava's Financial Sense Newshour, I wasn't able to go into nearly as much detail as I would have liked about my views on PCO investing strategies. The reason was that Jim was concerned that the material would be too advanced for his (mostly retail) audience, and wanted to focus much of the discussion on re-stating an explanation of Peak Oil itself.

Jim's hesitation to get too technical on a show intended for retail investors was certainly understandable. But wanting to get the message out in better detail, I set out to make my own two-part video series about PCO investing. The purpose of this thread is to pre-release a very sloppy version of these videos, and solicit feedback on the content from the iTulip community.

UPDATE 2-3-10: The first draft had really awful video quality. The second draft has now been posted and is better, although I still need to add some finishing touches. Please note there are TWO videos at this link. You have to select the video you want to see at the bottom of the player.

The first video explains what Peak Oil is all about, makes the case for why it's real and coming soon to an economy near you, and why you should take it seriously. This is mostly old news to iTulipers, but I'd still love your feedback on how it "plays" if you have time to watch it. The second video should be of much greater interest to iTulipers, and details my crude oil price forecast, then goes into detail on several specific trading strategies for PCO speculators.

When I read the final draft scripts, the material seemed tight, concise, and "engaging". I was quite pleased. But frankly, watching the finished output (particularly video #1), it comes across boring as hell. I can't decide if it's really as bad as I think, or if I'm just sick of it because I've been immersed in thinking about it for two weeks. Candid, honest feedback is welcome. I'm tempted to just cut all the stuff about the role of oil in the economy out of Video #1, and go straight from the "I'm not an RIA" disclaimer to the margarita slide. I'm particularly interested in feedback on whether or not I should do that.

Please let me know if you still can't read the graphics with this version. It looks much better than the first draft on MY screen, but your mileage may vary...

And before anyone freaks out, YES, I did obtain EJ's prior permission before using his PCO Price Cycle graphics in the video.

Thanks in advance for any feedback, and I hope you enjoy the videos. Again, most iTulipers who are already versed in PCO will find Video #2 most interesting.

-xPat

[xPat]

Notes on my Production Woes (in case anyone here can help)

I've learned that the iTulip community is extraordinarily diverse and multi-talented, and the Pythonic Cow was even rumored to have the ability to write interrupt-reentrant operating system kernel code while hanging upside down from a trapeze in another thread... So I'm going to cross my fingers and hope someone here is an expert in online video production and can coach me on how to fix the abysmal graphic quality of these videos. This post is all about my video editing problems, so if you're not interested or able to help, there's no need to read the rest of this (long) post.

I'll just describe what I'm doing, how I got here, and where I'm stuck, and hope someone here can set me straight.

My goal is/was to make these videos playable in either a YouTube-like environment or an embedded player. I want it to be easy for people to e-mail the link to their friends, as with a YouTube link. I want it to look good and have readable graphics, but also be playable by people with limited Internet connections. I've obviously failed so far in these regards.

It started with a friend who is a pro film maker (but definitely not an online video expert) being kind enough to set me up with his professional grade recording equipment, which I used to shoot the footage of me talking to the camera. He strongly advised me to produce 16:9 Widescreen, which I now realize may have been more appropriate for his feature films but perhaps not such a good idea for this online video project. Many of my problems seem to derive from the fact that the powerpoint graphics want to display in 4:3 aspect ratio, with square pixels.

What I didn't realize until well into the editing process was that the source video was recorded in PAL (the standard here in Hong Kong), at 720x576 and 1.422 pixel aspect ratio. I think most of my problems derive from both frame and pixel aspect ratio mismatches, but I can't figure out what to do to fix it now. I'm pretty much stuck with the raw footage I already have - it would be too much work to start from scratch and re-shoot the video.

I am editing with Adobe Premiere Pro v1.5. I am aware that's an old version, but it's all I have and this is a low-budget project so I'm not inclined to go buy new editing software, especially considering the real problem is not the software but me not knowing what I'm doing.

Video #1 was produced for NTSC DV 16:9 Widescreen output. I'm pretty sure that was a serious mistake, but I'm not sure what I should have chosen as a target format instead. I get the impression that when publishing video for download on the web, one should not use either PAL or NTSC, but something else. I don't know what to choose, however, so I just picked NTSC.

When the videos came out looking terrible, I started over and re-edited Video #2 for PAL 25fps 16:9 Widescreen. This was in reaction to realizing the raw footage was shot in PAL. But in hindsight, I think I made a mistake trying to set the target format to match the raw footage. I should have been matching it to whatever is most suitable for streaming download, but I don't know what that is.

I'm using Techsmith's Camtasia Studio 7.1 to capture the Powerpoint animations and turn them into video. The first problem I encountered was that when I captured Powerpoint, I got 4:3 aspect ratio that didn't fit my project. I tried lots of different capture settings, and eventually figured out how to tweak the Page Setup feature of Powerpoint to make the PPT slideshow artificially wide, so I could capture something that would fit in my widescreen project.

I eventually realized that Techsmith publishes advice on using Camtasia with Premiere Pro, but it didn't help much. They emphasize producing for a square pixel output format so the grapics don't get distorted. Sounds good, but I didn't know exactly what to select. And my source video is 1.422 PAL pixel aspect ratio. So I ended up taking the 720x576 PAL 1.422 frame, and calculating that a 1024x576 capture frame (square pixel) would "map" to the aspect ratio of the 720x576 @1.422 source video. I still don't know if that was a good idea, but it's what I ended up doing for Video #2, and it came out much better than video #1. But still really sloppy. At this point, I think I should be targeting a square pixel output format that is compatible with the powerpoint capture, and tolerate the conversion of the source video from PAL to square pixels rather than the other way around. But that basically means starting over and re-capturing all the powerpoint and re-editing the whole project. I don't want to do that until someone can tell me what I should be targetting as output.

As should now be obvious, I basically don't know what I'm doing and am just guessing. It's not going well!

When I finally got a semi-optimized capture frame size for the powerpoint, Video #2 actually looked reasonably good when I generated uncompressed .AVI output. At 13Gb (yes, GIGAbytes) per video, the uncompressed .AVIs aren't terribly download-friendly.But with any other output formats I've tried, it displays in compressed aspect ratio, i.e. widescreen compressed to 4:3 and looks funny. And the graphics are outright unreadable.

At this point, I think I have to basically start over, and re-edit the whole thing in a project that targets the right output format, probably meaning square pixels in 4:3 aspect ratio. I don't even know how to crop the 16:9 raw video, but I guess I'll have to figure it out. The main thing I need to know is what output format I should be targeting. MP4? .MOV? .WMV? At what frame dimensions and at what frame rate? When I tried to output these projects to .MOV, they didn't work - everything came out garbled. I chose .WMV for the drafts because it was the only format I could find that produced something half-readable at a (barely) tolerable download footprint.

If anyone can point me in the right direction I'd much appreciate it. I put a fair amount of effort into this project already, and would hate to abandon it now. But I seem to be up against a wall in terms of just not being able to figure out from experimentation what output format will work best. If Premiere Pro v1.5 is just plain not the right software to use, I'd consider buying something else (cheap) to solve the problem, but I don't want to go in that direction unless someone can tell me for sure what's going to work. I've been on the trial and error path for over a week now, and the results unfortunately speak for themselves...

Again, I now have (very large) uncompressed .AVIs of both videos that actually look pretty good - in widescreen, which is how they were produced. If there is some kind of tool that will convert these big .AVIs into something with reasonable download size - without completely annihilating the graphics - that would be MUCH easier than starting over with the editing process from scratch.

I also don't know where/how to host the files most efficiently. Youtube doesn't allow videos >15 minutes in length, so I was going to use Google Video, but that seems to have been closed to new uploads. There are a zillion other video hosting possibilities, but I was unable to figure out which was actually best. Again, my goal is to make it easy for people to share the video by e-mailing a link or embedding a player. The various options all support different media types, and I don't know enough to know which one I should be using so I can't evaluate the hosting sites on that basis.

Thanks in advance to anyone who can help.

xPat

[Jay]

Re: Community Feedback Requested: xPat's PCO Videos

Erik,

I'm just starting it, (and like it so far) but wonder why you mention a few of the more widely known economists who predicted the housing bubble, but leave out EJ! He should be first. His record is as good or better than the names you mention. --- OK, he gets an appropriate mention in the second half, I would still mention him here.

Edit 1)

I might put a slide of a cargo ship in while you talk about bunker fuel, right before the picture of the airplane to make your point clearer. Right now the plane comes up as you talk about shipping issues and it made me do a double take. It would be easy to add a picture of a cargo ship (and maybe a picture of a zillion onshore containers in the Hong Kong port right after the cargo ship.)

Edit 2)

Your comment about Obama outlawing off shore drilling, "Thanks Mr. President," comes across a bit snarky, beneath the rest of the presentation in my eyes. Put the facts out there and let everyone decide. Your presentation and the facts are more powerful without the comment. Leave in the comments on the specifics of his policy actions.

Edit 3)

Might there be a place in the nuclear section to talk briefly about pebble bed technology?

Edit 4)

Might there be a larger role in your presentation to talk about energy conservation? It is by far the largest weapon out there to help with the PCO transition, and lord knows there is a whole lot of low hanging fruit, especially in America, when it comes to conservation (I will leave out my personal theories as to WHY this is.) Conservation efforts in the 70's are what pushed Hubbert's global oil production prediction curve to the right, they will do it again. It might be worth looking at how the curve changed in the 70's, taking that rate of oil usage change from that period and extrapolating it to fit the current best EIA projections that you already use in your presentation. That way you can get an idea of what the least amount of shortage will be out there. It will be less than 5 1/2 Saudi Arabias.


Overall, I thought the quality is better than you made it out to be. I didn't find it boring at all, but I have also read and liked Tragedy & Hope so I may not be the best judge there. I find your thought process measured and it has weight. Your thoughts come across clearly and effectively. Very well done. I look forward to the second video.

Cheers,

Jay

Second video:

Edit 5)

The "solution window" won't start with nuclear, it will start with people riding the bus.

Edit 6)

I love the breakdown of the early half of oil price lability (early crisis window) vs. the later half, the time to be in physical gold.

Edit 7)

For those of you who just want the investment strategies they start at 33 minutes of section 2. I recommend watching the rest of the videos though, it gives you a nice PCO background and you can see if you are comfortable with Erik's philosophies and if his methods strike you as worthy.

Edit 8)

Would you mind posting below a clear graph of the out of the money oil price call ladder for me? Thanks.


Edit 9)

If you decide the ACH sell off is happening, would you mind posting when you decide to start shorting front month futures? And definitely when you decide to cover the short leg! I would suspect we will see an EJ article with a picture of Chinese real estate investor with broken teeth and a cinder block on the ground, connected to an elastic band hanging from the one remaining tooth for the start of the ACH.




Thanks much Erik, I enjoyed the videos and I ordered both books you recommended. I have also enjoyed many of your precious metal posts.

[xPat]

Re: Community Feedback Requested: xPat's PCO Videos

I'm just starting it, (and like it so far) but wonder why you mention a few of the more widely known economists who predicted the housing bubble, but leave out EJ! He should be first. His record is as good or better than the names you mention.

Yikes! Good catch. I do plug EJ and his work several times in Video #2, but you're right that he should have been listed there. My bad. Not sure what I was thinking.

Edit 1)

I might put a slide of a cargo ship in while you talk about bunker fuel, right before the picture of the airplane to make your point clearer. Right now the plane comes up as you talk about shipping issues and it made me do a double take. It would be easy to add a picture of a cargo ship (and maybe a picture of a zillion onshore containers in the Hong Kong port right after the cargo ship.)

I gasped when I read this because there IS a photo of a huge container ship displayed immediately before the Delta jetliner. I just checked and the source .WMV that I uploaded DOES show it, but for some reason the version on Archive.org does not! Apparently this is another symptom of my inept video editing "skills" in action. Anyway, for now, just imagine a big container ship that says "China Shipping Line" on the side of it. It's in my version - honest! :-)

Edit 2)

Your comment about Obama outlawing off shore drilling, "Thanks Mr. President," comes across a bit snarky, beneath the rest of the presentation in my eyes. Put the facts out there and let everyone decide. Your presentation and the facts are more powerful without the comment. Leave in the comments on the specifics of his policy actions.

Good feedback. I guess snarky is how I feel about it, but you're right that it's the only place in the video where I get outright sarcastic. I'll think about it and consider editing it out of the final version.

Edit 3)

Might there be a place in the nuclear section to talk briefly about pebble bed technology?

Good idea, but at this point it's too late to add new commentary. I suppose I could record it and put it behind still pictures or something. But too much work to get my friend to bring all the pro video gear back just for that. Agreed I should have commented on it, though.

Edit 4)

Might there be a larger role in your presentation to talk about energy conservation? It is by far the largest weapon out there to help with the PCO transition, and lord knows there is a whole lot of low hanging fruit, especially in America, when it comes to conservation (I will leave out my personal theories as to WHY this is.) Conservation efforts in the 70's are what pushed Hubbert's global oil production prediction curve to the right, they will do it again.

I see your point, but I already feel this video series ABOUT INVESTING is way too heavy on the story of PO, and dilutes the investing story. Plenty of other people have done excellent primers on PO that focus on conservation.

I'm not disagreeing about the importance of conservation. But I set out to make a half-hour video about PCO investing and wound up with almost two hours split into two videos. Its already too long.

Overall, I thought the quality is better than you made it out to be. I didn't find it boring at all, but I have also read and liked Tragedy & Hope so I may not be the best judge there. I find your thought process measured and it has weight. Your thoughts come across clearly and effectively. Very well done. I look forward to the second.

Thanks. In case it wasn't clear, both first and second videos were posted in the Archive.org link. At the bottom of the player, there is a place to click on Video 1 or Video 2. The second one is all about investing in PCO, and is IMHO the better of the two.

I'll be curious to hear what others think about the length of the first video. I really liked it as-is when I wrote the script, but after watching it (during editing) a zillion times, I get sick of hearing myself preach about the importance of oil in the economy (the business with looking at two pictures and asking yourself "why?" seems corny and preaching in hindsight). That's where I'm tempted to cut a bunch out and jump right into the explanation of hubbert's peak.

As to quality being "better than I made it out to be", I may have miscommunicated. I'm actually quite pleased with the CONTENT quality, particularly of the second video. It's the PRODUCTION quality (graphics not readable due to me not being expert at online video production, massive container ships disappearing mysteriously, etc.) that I'm frustrated with.

Thanks for your feedback, Jay!

xPat

[Jay]

Re: Community Feedback Requested: xPat's PCO Videos

We may end up posting over each other, so I will wait until you are done to comment further. Please quickly re-read my original post as I slipped a few extra things in there for you. Thanks again!

Also, don't over look my conservation comment. It is actually my most important message. I put another few sentences in there after you read it. Conservation has BIG implications for your time line (which is everything). It WILL shift the curve to the right. Take the ramifications from the 70's and the OPEC crisis, place them on the current EIA predictions and your complete model will be much better, as you will have a better feel for the mitigating effects of high prices.

[xPat]

Re: Community Feedback Requested: xPat's PCO Videos

Thanks for the comments, Jay. PM me your e-mail and I'll send you the graph you want. (Whenever I try to post graphics in iTulip posts, they come out postage-stamp sized...)

I hope to have a new version of the videos available for everyone soon, with all the graphics clearly readable.

Erik aka xPat

[FRED]

Re: Community Feedback Requested: xPat's PCO Videos

Thanks for the comments, Jay. PM me your e-mail and I'll send you the graph you want. (Whenever I try to post graphics in iTulip posts, they come out postage-stamp sized...)

I hope to have a new version of the videos available for everyone soon, with all the graphics clearly readable.

Erik aka xPat

To post full sized pics, upload them to a pic hosting service such as http://www.imagehosting.com then post the resulting URL here within [ i m g ] [ / i m g ] codes, without the spaces between the characters.

[jk]

Re: Community Feedback Requested: xPat's PCO Videos

Hi erik,

I just got around to watching your videos. On the whole, I think they’re excellent.

Some comments follow, both large and small:

1. I understand why you say it, but I laughed when you said to consult a “Licensed investor professional.” In general, a conventional and clueless group, almost guaranteed to give bad advice.

2. if you’re going to credit people like schiff, then – yes- add ej, but also add bill fleckenstein, who was quite early in identifying both the dot com and the housing bubbles, and who offers a very cheap subscription service.

3. maybe it’s just me, but I found the Margarita distracting and unhelpful. How many people are drinking from this glass? Or am I supposed to fit all those straws in my own mouth? in that case, can I generate enough suction, myself? And isn’t the ice melting, producing more fluid, but otoh diluting the drink? I just don’t think it helps.

4. the 70’s “shortages” were a product of the embargo- not peak u.s. production, since we could import otherwise. We were not just reliant on local production. And the “shortages” were just psychological anyway, resulting in stores being transferred from central repositories to the more-full-than-usual gas tanks of millions of motorists.

5. when you talk of actual production numbers, show a graph of production, showing the undulating peak since ’05.

6. don’t show a pco bell curve- a rise in oil prices is not dependent on production going down, just on the cost of production going up while demand continues to grow.

7. you talk about whether to project demand at more or less than 105, but demand will go down as price goes up.

8. Biomass ethanol not corn, and re: eroei- form matters- it’s worth converting a higher quantity of poorly accessible energy to a lower quantity of highly useful, portable energy.

9. isn’t a fair amount of electicity, especially variable generation, based on natural gas generators?

10. to echo jay’s point, you need to mention conservation , not just “efficiency.” Although conservation can be considered a form of efficiency, I don’t think the connotations are the same.

11. when you said you can’t replace energy itself, I thought that the net can do just that, at least for certain purposes. This relates to what you call “the solution,” so I’ll leave that for below.

12. Accelerators of pco - opec consumption, both in the form of highly subsidized conventional consumption in e.g. vehicles in opec countries, and in the form of in-sourcing post-pump processing, refining, petrochemical production, etc. This is also to be distinguished from the decision to keep it in the ground, awaiting higher prices.

13. bring in qe where it belongs, in part ii. It doesn’t really relate to the pco thesis, which is separate from the inflation thesis. Elsewhere you are careful to distinguish real and nominal prices. Q.e. doesn’t belong in part i.

14. again, re pco: even if volumes produced are steady, the cost of recovery grows with increasing reliance on non-conventional sources. Also, the price rises as demand grows, even if production is steady.
===

part ii

1.why is the market mispricing? Need to understand that to feel comfortable. You discuss several factors, but I think the biggest is that the market can be very shortsighted, and nothing matters until it matters. The housing bubble was clearly clear to me, but it didn’t matter to the market. The first cracks were those 2 bear stearns hedge funds which blew up. Then, suddenly, it mattered. as you say, it's all about the psychologically driven point of recognition.

2. you speak of “THE solution”, but it might be worth saying that there won’t be A solution, there will be many contributing partial solutions, and even so, there might not be enough of them.

3. you say that, really, one would think recognition of pco should have started already. what do you call $90/bbl oil? I remember, not all THAT long ago, when conventional analysts said $30 oil could never be sustained.

4. there can be an 0scillation of oil price and economic activity - ej’s cycle, gregors graph [which I’ve posted a couple of times in other threads]. You show wiggles in your crisis-era graph, but it might be worthwhile to be explicit that they would correlate with wiggles in economic activity.

5. What is the aha moment? You say, when market participants recognize that conventional production has peaked. how will we see that, except by price action itself?

6. you talk of an increase in the cost of everything. But it won’t necessarilybe everything, but of essentials. There will be a decrease in discretionary consumption which might lead to price declines in those items. Also, e.g. exurban real estate, dependent on cheap oil to make commuting economically viable. Otoh a rise in prices in real estate served by public transit. I’ve been told by friends that areas close to – within walking distance of - commuter rail stations outside Chicago are experiencing rises in real estate prices, even as other areas decline.

7. Panic to control oil resources will represent a real danger point.

8. even in a deflatonary depression, the price floor could be higher if consumption levels require unconventional oil.

9. Energy ceiling- reference gregor’s model.

10. Retail investor can price average in, otherwise could miss the boat. [oops, you say that later.]

11. Oil and gas companies- do they own reserves? Even if so, they may be exposed to e.g. nationalization depending on the location of those reserves. i like canadian producers, myself. i already own cve and su, and a bunch of other, conventional, producers. and the dividends cushion the volatility.

12. Service company etf’s might be a retail vehicle.

13. re: Price targets- I like your emphasis on real, not nominal, prices. But didn’t we already find out that 150 [in 2008 dollars] was too high? Can we exceed that price, except on a spike basis?

[xPat]

Re: Community Feedback Requested: xPat's PCO Videos

Hi erik,

I just got around to watching your videos. On the whole, I think they’re excellent.

Some comments follow, both large and small:

Thanks for the compliment, jk. Unfortunately I'm not making much progress on the technical (video quality) front, so I'm not sure when I'll have a final version ready to release.

I very much appreciate your numerous and very intelligent comments. I'll respond to some of them - for the ones I don't address directly, please assume my reaction was "That's an excellent point - thanks for sharing it". Comments I had a particular reaction to are below...

4. the 70’s “shortages” were a product of the embargo- not peak u.s. production, since we could import otherwise. We were not just reliant on local production. And the “shortages” were just psychological anyway, resulting in stores being transferred from central repositories to the more-full-than-usual gas tanks of millions of motorists.

I think that's debatable. In my opinion, the embargoes came about when the arabs perceived U.S. vulnerability. That vulnerability came from the fact that the U.S. could no longer grow without imports. Or at least I believe that to be the case.

Again, it's all about PERCEPTION, and your comments about the "shortages being just psychological" echo that. If/when we get to the point that the general population "gets it" and understands that peak production has come and gone, that should create a panic much greater than the '70s, and "psychologically induced" shortages worse than the 70s.

5. when you talk of actual production numbers, show a graph of production, showing the undulating peak since ’05.

I do plan to. This first draft included powerpoint overlays from my own slides. I plan to add a bunch more graphs and photos (to lessen the amount of time you get stuck looking at me reading the teleprompter), and a really good production graph is on my wishlist of items to add to the video. Because all my video production woes center on the graphics, I'm going to have to start over and re-edit all the graphics anyway. For that reason I gave up and stopped trying to add more graphics until I can figure out what I'm doing wrong in terms of the downloadable video file settings.

If you or anyone else have suggestions for what other graphics I should add, please speak up! It's too late to change the narration, but I can go out and find new graphics to lay on top of the existing voice track.

7. you talk about whether to project demand at more or less than 105, but demand will go down as price goes up.

That's an excellent point, and in hindsight I wish I had put some commentary in about it. One problem is that I don't have any really solid sources (credible research done by others) to cite in this area.

We all know that the "real demand forecast" was the 120mm bpd+ figure IEA was using before they started being influenced by political pressure. But that was based on an assumption that prices would stay about the same, which they won't.

So how do you estimate what demand will be, when it is dependent on price, which will be seriously affected by demand? It seems to me that price volatility is the strongest conclusion you can draw from this inter-dependency. I also think demand will strongly be influenced by those psychological factors. If everyone who has access to a tank gets the idea they should fill it now while they still can at these prices, that by itself would create a huge demand and price spike, which would at first be self-accelerating.

9. isn’t a fair amount of electicity, especially variable generation, based on natural gas generators?

Yes, and I really screwed up by not mentioning that a lot of the newly discovered shale gas will likely go toward electricity generation. Something I have not seen any good analysis on (but would love to find some) is the question of efficiency tradeoffs in powering vehicles with NG directly (CNG fueled vehicles) vs indirectly (Electric vehicles supplied by NG-fired electrical production).

It seems to me that all this shale gas has to find its way to supporting transportation one way or another - the oil is going to keep getting more expensive, and the cost/btu divergence between distillates and NG is already extreme. Either way you go, there is a big infrastructure cost. You either have to build a bunch of new NG-fired electrical plants and upgrade the distribution grid, or you need a whole new infrastructure of NG fueling stations. Knowing which way this will go would be valuable information to investors, and honestly I don't have a very good handle on it yet.

1.why is the market mispricing? Need to understand that to feel comfortable. You discuss several factors, but I think the biggest is that the market can be very shortsighted, and nothing matters until it matters. The housing bubble was clearly clear to me, but it didn’t matter to the market. The first cracks were those 2 bear stearns hedge funds which blew up. Then, suddenly, it mattered. as you say, it's all about the psychologically driven point of recognition.

I think the shortsighted/nothing matters till it matters comments hit the nail on the head. IMHO, the fact that people who speculated on the upside in '08 got creamed plays a big part in this. Peak Oil is literally ridiculed by many people on wall street, because in their eyes the sell-off from $147 to $32 "disproved" the theory. That's just how these people think.

The reason I say the market is mis-pricing oil is because of the term structure being in backwardation. Regardless of whether present levels are high, low, or just right, the notion that oil will be more plentiful five years from now than it is today is just nuts.

Your analogy about housing being clear to you (and me, and a whole bunch of other people) captures the point exactly. A whole lot of people know about PCO, but the market isn't pricing it in. When the market realizes we were right, it will go down about the way the realization that EJ/Schiff/Martenson/Fleck/Others were right about housing went down: Panic and irrational herd behavior.

3. you say that, really, one would think recognition of pco should have started already. what do you call $90/bbl oil? I remember, not all THAT long ago, when conventional analysts said $30 oil could never be sustained.

I definitely don't call it PCO recognition. I think $90 oil is a reality in part because of PCO-related factors, but in terms of market recognition, the fact that crude futures are in backwardation is clear evidence that the market doesn't (collectively) understand the problem. They think that $90 oil is a temporary, passing thing and that prices will "come back down to normal" within a year. That's what the term structure of the futures market is telling us.

4. there can be an 0scillation of oil price and economic activity - ej’s cycle, gregors graph [which I’ve posted a couple of times in other threads]. You show wiggles in your crisis-era graph, but it might be worthwhile to be explicit that they would correlate with wiggles in economic activity.

Excellent point. If I end up with a total re-do (meaning re-writing the script and re-recording the narration), I'll add this.

5. What is the aha moment? You say, when market participants recognize that conventional production has peaked. how will we see that, except by price action itself?

When we see a return to steep contango in the term structure of crude futures.

13. re: Price targets- I like your emphasis on real, not nominal, prices. But didn’t we already find out that 150 [in 2008 dollars] was too high? Can we exceed that price, except on a spike basis?

EXCELLENT point, but IMHO the jury is still out. My best GUESS is that we have begun the next parabolic run-up to the next blow-off top, and that the blow-off top in oil prices will also mark the turn of the general economy back into the secular bear trend. But that's a whole lot of supposition and assumption on my part.

I have to admit, when I watched the video myself and heard myself saying $250 is my working limit for how much the economy can tolerate, I wished I had said it differently. What I meant was that's the absolute highest figure I think is fathomable, but I also think the real number could be half that - and that we'll never top $150. But I just don't know.

If the Egyptian contagion continues, I think we'll probably see $115 in the next few months. To my thinking, that's the place to double up on the hedges, and to start to brace for the next move down. Whether the next top is $115 or $215 is still a crap shoot in my mind, though. If I had to guess, I'd say $125 - $130, but that's based on nothing but gut feel.

Thanks again for all the excellent comments, jk!

Erik/xPat

[xPat]

Production update

I just discovered some awesome freeware called Format Factory that lets me convert the (good graphic resolution) .AVIs to player-compatible formats.

I still don't know what the best format to use is - but it seems that the .WMV output is reasonable graphic quality.

I hope to have new versions of the videos up within 24 hrs that both display correctly (widescreen) and have legible graphics. Stay tuned...

xPat

[Fiat Currency]

Re: Production update

.... I still don't know what the best format to use is - but it seems that the .WMV output is reasonable graphic quality.

Personally I prefer good old MPEG-2.

QuickTime, Windows Media, PCs, DVDs, PS3 etc. all eat MPEG-2 and there are almost infinite CODECs (especially for sound) whether you want to work in PCM, MP3, DD5.1, DTS etc.

MPEG-4 will be the one in the end (H.264 for video) once they're done messing with it (Part 14 already?) ... but since it will container MPEG-2 you'll have zero backward compatibility issues.

[zoog]

Re: Notes on my Production Woes (in case anyone here can help)

What I would probably do is start a new Premiere project at 768 x 576 x 1.0 (4:3), export the powerpoint at that resolution, and accept either horizontal letterboxing or side cropping for the recorded video (which is 720 x 576 x 1.422). Unless I'm mistaken, the recorded video should go into the project "unsquished" and therefore automatically cropped on either side. As it appears that you are off to one side in the video footage, you will probably want to open Effect Controls > Motion and adjust the horizontal Position to shift the video to the right so that your shoulder is not cut out of frame. Alternatively, you can use Effect Controls > Motion > Scale to scale down the recorded video to approximately 75% so that it all fits, with horizontal (top and bottom) letterboxing.

Then you can export the video at some smaller size for the web, say 384 x 288 or 320 x 240, both are 4:3 ratios. You may have to experiment with different bitrate quality settings and different codecs (wmv, h.264, etc) to get readable results. As Flash videos these days are often really h.264 videos, you may want to pursue that route, though my experiments suggest it does not work as well as wmv for text and simple graphics. Ironic since basic Flash itself uses vector based fonts and graphic elements which are therefore very crisp and easily scalable.

[Jay]

Re: Community Feedback Requested: xPat's PCO Videos

Yes, and I really screwed up by not mentioning that a lot of the newly discovered shale gas will likely go toward electricity generation. Something I have not seen any good analysis on (but would love to find some) is the question of efficiency tradeoffs in powering vehicles with NG directly (CNG fueled vehicles) vs indirectly (Electric vehicles supplied by NG-fired electrical production).

Erik/xPat

I would guess direct power as the losses in electrical production are so great, but then again most of American energy policy makes little sense so who knows:

[xPat]

Re: Notes on my Production Woes (in case anyone here can help)

Zoog & Fiat,

Thanks for the tech advice. Much appreciated.

As it turns out, I had found a way to translate my high-res AVIs to .WMV that looked pretty good. I re-produced the first video, adding the global oil production chart jk suggested and removing the "Sorry these graphics suck" disclaimer at the beginning.

Then I went to do the same on the 2nd video, and my system crashed while saving the Premiere Pro project file, and I lost the 2nd video completely! I guess the good news is that since I'm now forced to start from scratch, I can follow zoog's advice and re-master the 2nd video at 768x576.

I hadn't anticipated how much work this video editing stuff would be. I think I now have more time invested in screwing with Premiere Pro than writing the script and taping the raw footage!

xPat

[xPat]

Re: Community Feedback Requested: xPat's PCO Videos

Clearly direct would be more efficient in terms of energy loss, but the question I don't even begin know how to answer is, "Which would be more practical - development of a CNG distribution system for vehicles, or upgrade of electrical power generation and distribution grid to deliver the same energy through electrical transmission?"

Seems to me that one of the biggest issues will be safety of CNG. Not just the crashworthiness question (just imagine the Ford Pinto debacle repeated with CNG), but also the issues of delivery to filling stations, leaks at filling stations, retraining fire rescue personnel for CNG challenges, etc.

I would think that electrical would be the safe/easy way to go. The question in my mind is how MUCH less efficient is it in terms of percent energy contained in the NG making it to the drive wheels vs. the indirect electrical path.

xPat