Fareed Zakaria GPS – CNN 04-17-16

Salient to Investors:

IEA predicts coal consumption in OECD countries will fall 40% by 2040.

Julia Ioffe at Foreign Policy said:

The Saudi regime is in no danger of collapse and is still a strong US ally.

What is happening in Brazil is a sign of healthy cleansing, unlike Russia, where what the Panama papers revealed is far worse that anything Brazil has done. Russian courts will never go after the corrupt, but instead will pursue the corruption fighters.

Ed Luce at The Financial Times said Islamophobia is not weakening democracy but weakening constitutional liberalism.

Brett Stephens at The Wall Street Journal said:

Saudi Arabia could collapse should low oil prices continue, ISIS expanded into Saudi Arabia, the bad war with Yemen, and especially should the current trio of leaders fails.

Brexit would mean Scotland would try to leave Britain and join Europe.

Islamophobia is part of the poison of low growth. Contrast Germany which was able to absorb huge Muslim immigration during the post-war era of 3%-4% growth.

Brazil is the country of the future and always will be.

Gideon Rose at Foreign Affairs said:

Saudi Arabia has internal legitimacy, relatively good finances, strong control over their territory.

Vice President Temer of Brazil is not a particularly strong replacement if President Dilma goes, so no dramatic change or recovery soon.

Brazil’s problems will not destroy the world economy overall.

Julia Rozovsky at Google said their most effective teams all possess psychological safety, i.e. team members can take a risk without fearing being shot down or ridiculed.

Charles Duhigg at The New York Times said:

Researcher Amy Edmondson found that physiological safety has two components: first, the team has to feel like everyone could speak equality and second, the team exhibits social sensitivity, i.e. listening skills.

Saturday Night Live – a team of egomaniacal comedians and writers who for most of their lives hated other people – succeeded because Lorne Michaels forces everyone in team meetings to say something.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1604/17/fzgps.01.html

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Bankruptcies Starting To Pile Up In Coal Industry – OilPrice.com 07-21-15

Salient to Investors:

After decades of strong performance, coal producers are starting to fail faster than anyone expected. Walter Energy is filing for bankruptcy,  Alpha Natural Resources was delisted from the NYSE due to its low share price. Arch Coal implemented a 1-for-10 reverse stock split to avoid delisting.

Coal prices are down 70% from 2011 as the US shifts to natural gas for electric power, amid new regulations to reduce greenhouse gas emissions and protect nearby water streams. The window of exporting coal to energy hungry countries like China is quickly closing due to an international oversupply and China’s less than expected demand. China’s economic growth is slowing, and it is implementing air pollution measures and propping up domestic producers.

SNL Financial estimates the total market cap of the publicly listed coal industry in the US is down more than 80% since April 2011 to under $9.30 billion, of which 40% is Consol Energy.

Read the full article at http://oilprice.com/Energy/Coal/Bankruptcies-Starting-To-Pile-Up-In-Coal-Industry.html

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Investors Head for Exit as Commodities Extend Slump – Bloomberg 09-30-14

Salient to Investors:

  • Investors pulled the most money from US ETPs backed by raw materials since April.
  • US corn and soybean crops are the biggest ever, global stockpiles of nickel are at an all-time high, the US is producing the most oil since 1986, while China is headed for its slowest expansion in two decades.
  • The Bloomberg Commodity Index is set for a fourth straight annual loss, the longest slide since data began in 1991.
  • Societe Generale lowered its price forecasts for more than half of the 43 raw materials it tracks, and recommended shorting gold on rising US interest rates and a rising dollar, target below $1,000 over the medium-term.
  • Citigroup pared its outlook on crude oil, gold, corn and wheat.
  • Goldman Sachs still expects losses in copper and gold.
  • In August, Citigroup forecast the Arabica-coffee crop shortfall may leave a global production deficit lasting into 2016. Citigroup is bullish on palladium, copper, nickel, lead, coking and thermal coal, cocoa and coffee.
  • Deutsche Bank forecast commodities will end 2014 in a positive run with nickel, zinc and lead outperforming.
  • Donald Selkin at National Securities said certain markets are bullish because of supply issues, including cattle, nickel and coffee, while the worst may also be over for the big three – gold, crude oil and grains.
  • Jeffrey Currie at Goldman Sachs expects gold to fall to $1,050 by year-end, copper to fall to $6,200 a metric ton over 12 months due to a major increase in stockpiles.
  • The IEA said global oil demand will weaken because of weaker growth in China and Europe, rising exports from Libya, and booming US output, all outweighing potential output disruptions in Iraq.
  • Economists expect China to grow 7% in 2015, the slowest rate since 1990.
  • Quincy Krosby at Prudential Financial said you need growth in China to support a rally in raw-material prices.

Read the full article at  http://www.bloomberg.com/news/2014-09-29/gluts-spur-investor-exit-signaling-prolonged-price-slumps.html

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The 2014 Contrarian Investment Tour, From Rupees to Copper – Bloomberg 12-10-13

Salient to Investors:

Lewis Braham writes:

Contrarian funds can be a hedge of sorts, though a potentially volatile one as out-of-favor sectors tend to be cyclical and prone to booms and busts. Shorting is inherently dangerous as markets have been trending higher.

Brian Singer at William Blair Macro Allocation Fund said currencies help diversify portfolios because they behave very differently from stocks and bonds. Singer recently put 19 percent of the fund in the Indian rupee which he says is undervalued by as much as 70 percent and India’s new central bank governor has already taken actions to stabilize it by raising interest rates. Singer uses financial derivatives to earn a 6 percent yield on the equivalent of a bank deposit. Individual investors can buy currency CDs – a 3-month FDIC-insured rupee CD from Everbank yields 7.25 percent. Singer is short the iShares Russell 1000 Growth ETF and long the iShares Russell 1000 Value ETF  and says people believe the US is the only source of growth and stability in the world but will be surprised in 2014 at how volatile growth stocks can be.

Don Hodges at the Hodges Pure Contrarian Fund is betting on coal, iron and copper mining stocks and said a recovery in the sector will begin when the Chinese work off their commodity inventories and begin buying again.

Jason Hsu at Research Affiliates said emerging market stocks are at a tremendous discount to US stocks. Hsu said the Shiller PE ratio for the S&P 500 is 24 versus its 16.5 average, versus 13.5 for emerging markets. Hsu is buying TIPS – TIPS with maturities of more than 20 years are yielding 1.5 percent over inflation, and is betting on a decline in large US stocks as well as on improved prospects for high-yield and emerging market bonds.

The BlackRock Municipal Target Term Trust trades at an 11.5 percent discount to portfolio value and yields 6.73 percent on a tax-free basis.

Rudolph Riad-Younes at RSQ International Equity Fund does not like gold because it trades closer to 20 percent above its cost of production versus 10 percent to 15 percent historically, and that cost will fall in the next 5 years, further driving down gold prices.

Read the full article at http://www.bloomberg.com/news/2013-12-10/the-2014-contrarian-investment-tour-from-rupees-to-copper.html

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Oil’s Future Draws Blood and Gore in Investment Portfolios – Bloomberg 11-18-13

Salient to Investors:

Bloomberg New Energy Finance says peak fossil fuels demand could happen in 2030 – the point when humans stop increasing their annual burn, either because the environmental danger makes it too costly or because buildings and cars run more efficiently.

Oil and coal companies worth more than $7 trillion may be sinking billions of dollars today into projects that will never make sense to finish.

Nick Robins at HSBC said carbon-asset risk in 2013 went from a conceptual possibility to a sort of near-and-present reality, and the undertow of demand destruction through technological improvement is not currently fully priced in – Teslas and solar panels are eroding the future value of black gold, and investors are ignoring the risk. Robins said that oil investments could turn risky quickly because cars have room for rapid improvement in fuel efficiency and with continued fuel-efficiency standards, demand for oil could get sucker punched. Robins said companies with reserves that are more expensive to extract are at the greatest risk.

Citigroup declared in March the end is nigh for global oil-demand growth.

S&P said policies that cut demand for fuels could lead to outlook revisions and downgrades in smaller oil-and-gas companies as early as 2014, with a similar shock to the majors in 2016.

Goldman Sachs advises oil companies invest only in medium to high-return projects and in buybacks and focus on per share growth.

Coal was the dominant US energy source through WWII and responsible for more than 40 percent of the CO2 emissions that are heating the planet.

US coal demand has fallen near a 20-year low, squeezed by clean-air regulations and displaced by cheaper, less carbon-heavy natural gas. Coal prices have fallen by more than half since a peak in mid-2008, and the Stowe Global Coal Index is trading at a third of its 2008 high.

Michael Parker and Purdy Ho at Bernstein Research said in June in “The Beginning of the End of Coal” that demand for coal will fall beginning in 2016, Chinese auto fuel-efficiency standards are already tougher than the US, and a newly vocal middle class is pushing back against suffocating smog. Parker and Ho said all industrialized societies eventually decide that environmental damage caused by uncontrolled industry is no longer tolerable, and predicted coal demand in China is about to fall, and the global thermal coal market will never recover – China’s services sector is one-sixth as energy intensive as the industrial sector and accounted for 45 percent of the economy in 2012, versus 39 percent in 2011.

Climate scientists say that global temperatures cannot rise more than 2 degrees without causing irreparable damage – the IEA said two-thirds of proven fossil-fuel resources must remain buried to meet that goal. Carbon Tracker said the top 100 coal and top 100 oil-and-gas companies had a combined value in 2011 of $7.42 trillion, much of which ws based on reserves that can never be used.

Hal Quinn at the National Mining Assn said that even in the US, coal use will continue unabated through 2020 as larger, more efficient plants supplant older ones.

Global population will rise 30 percent by 2050. The US Energy Information Administration’s low oil price analysis sees crude oil around $75 a barrel for the foreseeable future.

Craig Mackenzie at Scottish Widows said investors have grown numb with the idea that energy demand will continue to grow for the next 4 decades, but some are beginning to call the consensus view for future demand into doubt – things have changed a lot in the last year. Mackenzie said the biggest uncertainty in projections is how soon China’s economy will shift to a service economy, and most investors mistakenly think this is still decades off. Scottish Widows sold its stocks and bonds in coal on purely financial reasons.

Read the full article at http://www.bloomberg.com/news/2013-11-18/oil-s-future-draws-blood-and-gore-in-investment-portfolios.html

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Our Chat With Jeremy Grantham – The Wall Street Journal 09-20-13

Salient to Investors:

Jeremy Grantham at GMO said:

Commodity prices fell for a hundred years by an average of 70 percent, and then from 2002 basically everything tripled and regained the whole decline in 6 years – tobacco was the only commodity that fell. The game changed because of the ridiculous growth rates in China whose 1.3 billion people use 45 percent of the coal used in the world, 50 percent of all the cement and 40 percent of all the copper.

The most important, valuable and critical commodity is phosphate or phosphorous, which is necessary for all living things. Yet we are mining and depleting it. 85 percent of the low-cost, high-quality phosphorous is in Morocco and belongs to the King of Morocco, and the rest of the world has 50 years of reserve if we don’t grow too fast.

I would own stock in the ground, great resources, reserves of phosphorous, potash, oil, copper, tin, zinc, but aluminum and iron ore less so because there is so much. I would not own coal or tar sands because it is hugely expensive to build coal utilities, and plants for tar sands are massive. So before they get their money back, the price of solar and wind will have come down so much.

The pressures on food are worse than anything else, so invest wisely in very good farmland, though it has had a big run and you can never afford to ignore value. Look for farmland in distinctly stable countries like Australia, New Zealand, Uruguay, Brazil, Canada, and the US. Forestry is a little overpriced but we are in a world where everything is overpriced because of incredibly low interest rates that push people into investing.

A career politician has a very short horizon and is not interested in problems that go out five or 10 years, as are corporations because a dollar in 10 years has a much lower value than a dollar today. The oil industry is making a bundle so does not want to change to a system that recognizes climate change and the need to have a tax on carbon.

With politicians so dependent on campaign contributions from the vested interests, the financial world, but more particularly the energy world, it is a miracle anything gets done.

The central idea in the stock market is patience and value and mean reversion and in society, it is resources and climate damage.

The market can go a lot higher with the Fed pushing it – to yet another real bubble, like the one in 2000 with Greenspan, the housing bubble and financial bubble with Bernanke and Greenspan.

America and Australia are the two very, very optimistic-biased societies. Mention housing bubble to Australians, they hate you for years! Optimism is very useful in enterprise, in start-ups because when the smoke clears, you end up with the Amazons and the Googles – we just throw more darts at the dartboard. But the downside is only 10 percent survive, but they all think they’re going to win.

Read the full article at http://online.wsj.com/news/articles/SB10001424127887323665504579032934293143524

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Buffett Says Coal’s Slide to Be Permanent, Yet Gradual – Bloomberg 07-25-13

Salient to Investors:

Warren Buffett said coal use in the US will continue to fall gradually as electric utilities switch to cleaner alternatives over many years, and when natural gas prices get low enough. Buffett said coal plants produce 38 percent of all US electricity. Coal accounted for 49 percent in 2007.

Read the full article at  http://www.bloomberg.com/news/2013-07-25/buffett-says-coal-s-slide-to-be-permanent-yet-gradual.html

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The Race of Our Lives – GMO Quarterly Letter 04-26-13

Salient to Investors:

Jeremy Grantham writes:

  • The world, in its reckless use of resources and natural systems, shows many of the indicators of potential failure that brought down many prior civilizations. However, we have two saving graces that may save us – declining fertility rates and progress in alternative energy.
  • People, especially investors, prefer good news and wishful thinking to bad news. Good news is an easier sell, especially in investing.
  • There is near complete control of government by the powerful beneficiaries of the current system.
  • Malthus observed that population had always kept up with food supply, meaning even successful societies were only a few bad growing seasons away from starvation.  Malthus predicted this would always be the case but was wrong on two counts since. Coal and oil, and declining fertility.
  • Our hydrocarbon interlude will end either when economic resources are exhausted or when we have ruined our climate and environment.
  • Nobody before 1960 ever dreamed we would voluntarily decide to have fewer children even as we became richer.  The  remarkable decline in fertility is our last best hope for our civilization and the well-being of all life and I believe we succeed on this front.
  • Our second great hope is renewable energy – solar, wind, etc, plus electric grid efficiencies and improved energy storage.
  • By 2025 to 2030, both solar and wind power will be cheaper than coal, a hopeless choice for electricity generation in 20 years, especially when fully costed for externalities like pollution and climate damage.
  • Personal average wealth and income has been rising only 1% to 3% a year for the last 30 years. Solving our long-term energy problems may not only be the most critical economic problem, but one of two most critical inputs into our future viability as a civilization.
  • Once the capital is found and the project is built, a wind or solar farm delivers far cheaper energy than a coal-fired utility plant, at around one-third of the marginal cost of coal.
  • California gets almost twice the amount of sunshine as London.
  • Energy storage is now being worked on by scores, if not hundreds, of research teams. Caution, a lack of expected progress in energy storage could materially slow down the rate at which alternative energy is adopted.
  • Expect China to set a brilliant example on alternative energy. They could smooth out their potentially dangerous transition from 50% capital spending to a more reasonable 35% over the next 20 years or so by managing a giant program of alternative energy. This would potentially give them global dominance in the most important industries of the future, relieve them of their greatest single worry, energy security, and lower the chronic air pollution of their major cities. Such a program would leave them as the low-cost energy player in global trade, which when added to their lower labor costs, rising educational standards, rapidly improving infrastructure, and capital deepening, should put the fear of God into US capitalists.
  • Our population is likely to start declining in a few decades, slowly but surely, and the fertility rate of 1.8% or less would allow global population to fall back more or less gracefully by 2200 to a probably sustainable level of 4 billion.
  • Natural gas in 5 years will rise to  $6 to $7 mcf.

Read the full article at  http://www.gmo.com/websitecontent/GMO_QtlyLetter_1Q2013.pdf

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Jeremy Grantham – Charlie Rose 03-11-13

Salient to Investors:

Jeremy Grantham at Grantham Mayo Van Otterloo says:

The US is muddling through reasonably well in the short-term, but long-term we are in a slowdown unappreciated by most economists – because they are not interested in the long-term.

US growth won’t ever return to previous levels because it is determined by population growth plus productivity. US population growth – a huge component of GDP growth – often hit 1.5% but has now fallen to 0.2%-0.3%. Workers work a little less each year. Women, who hardly worked in 1950s, entering the workforce was a big boost to GDP but their acceleration peaked in 2000 and is now over. We should not expect more than 0.2%  increase in hours offered to the workforce.

Bernanke’s erroneous belief that we can return to 3 percent growth implies productivity will increase by 1% and offset the decline in workplace hours growth, but productivity will continue to decelerate modestly going forward. In the 40 years following WWII, productivity was 1.7%-1.9%, and in the last 30 years was 1.3%. So even assuming we can hold 1.3%, which is optimistic, then adding in 0.2% population growth gets you to 1.5% versus Bernanke’s 3% and the IMF and World Bank’s 2.5%.

Even that 1.5% assumes that an increase in resource cost is a boost to GDP – if you drill a more expensive well then GDP goes up but that cost of resources is a cost of doing business for the rest of the economy. The more people it takes to get one barrel of oil is counted as a contribution to GDP and make the economy look stronger when in actually it is weaker. If you take out the resource component in the last 10 years, the economy grew 0.4%- 0.5%  less than is measured by GDP, thus bringing our 1.5% down to 1%.

The cost of resources declined – the typical commodity dropped by 70 percent – for the 100 years prior to 2000, so GDP was understated by 0.25%.  From 2002-2008 we gave the whole decline back as resources went up more steeply than in WWII – no one talked about it despite overnight running out of cheap resources because of steady population growth and the enormous surge in Chinese demand for resources – growing 10% per year.

China uses 53% of all cement, 47% of all coal, 46% of all iron ore. If China slows to 7% it means 10 years from now we need to find another 47% of coal just for China.

China shifting to a domestic demand economy would be a good engine for economic growth in the US and Europe and Latin America in the short-term, but long-term the problem is that growth is incredibly energy intensive and burning coal and oil has enormous environmental consequences as well as pushes up the price of oil in the short-term. Oil was $25 in 2000 and is $100 today and makes up half the cost structure of producing the other resources – e.g. mining copper combined with lower quality ore means the price of oil is going up . Resource prices are rising faster than global GDP growth.

The carbon math shows global temperatures have increased 0.8 degree centigrade – spring comes 2 weeks earlier. Scientists say 2 degrees is the critical boundary – above that brings dire consequences which will worsen for a long time.  A rise of below 2 degrees means we might limp through. The carbon in our proven reserves is five times that needed to raise global temperatures 2 degrees and guarantee starvation and floods for our grandchildren. We will pump all the easy oil and gas. Pumping tar sands and digging coal is extremely costly and ruinous to the environment – we are racing toward getting rid of the earth’s bio diversity. We have done enough to frighten the Scientists but not the average man in the street. In a real crisis, we will belatedly do something.

Since most of the stock value in oil companies is in their reserves, they have to pump and promote oil.

Oil was $16 a barrel for 100 years until OPEC in 1934, then moved to $35 where it traded for 30 years before moving to $80-85 in the last few years. We are never going back to $35 because the price is cost driven – Shell will tell you it costs $80-85 to find and drill for a barrel of good oil.

There is no substitute for water, soil, potassium and phosphorus. Phosphorus has no substitute and no living thing grows without it, yet we will run out of non-Moroccan reserves in 50 years. Water desperately tries to recycle, but phosphorus stays underground and requires a lot of energy to extract it.

Malthus described the past very accurately. Coal arrived at the time of his treatise and with oil and gas bought us a 250-year timeout with virtually infinite energy – 1 gallon of oil is equivalent to 200 man hours of labor. Science has helped us in this 250 year window but not before that? Coal and oil have given us superman power. Before coal came along, every civilization from Rome to the Mayans collapsed due to their arrogant self-belief and overreach once the weather turned against them.

Every wave of technology has been hugely energy intensive – coal and steam for railroads, oil for cars, energy for refrigerators and air conditioning, and to power iPhones and iPads.

There are 2 gifts that we have that none of the prior civilizations had that might get us off the hook. The first is our dramatically declining fertility rate which has fallen contrary to all predictions – 1.8 children per couple in developed countries. Even Iran has gone from 7 per woman in 1960 to 1.5-1.6 today. The global population has to drop to a level that can be sustained by our reserves of carbon fuel. Science will give us an out if we can maintain  the population decline from 10 billion today to 4 billion in 200 years – very doable – and ensure complete self-sufficiency.

The second gift is alternative energy sources like solar and wind power, and a storage grid system that is happening faster that people realize, all suppressing demand for finite resources.

The rich half of world, including China, is pricing out the poor half. The rich half consumes wheat while the Moroccans, Libyans and Tunisians who live on wheat cannot afford it.

Was able to spot the prior bubbles by focusing on the numbers. Every asset bubble in the financial world has burst. There is enormous pressure in the investment business to deliver good news – stockbrokers, investment houses thrive on it. To talk about gross overpricing and downside risk in asset bubbles is an invitation to get fired because people just don’t want to hear it. Doing so cost my firm half its book of business in the great tech bubble. Being bullish sells but you won’t easily hear honest advice when it is bearish.

The stock market P/E in 1929 of 21 times earnings was exceeded in late 1997 by a market that eventually reached 35 times in March 2000. In the tech bubble most of my investment committee thought we were in a golden new era of tech and that the internet would drive away the dark clouds of ignorance.

Markets can be from time to time become crazily inefficient  because economic theory doesn’t work with humans: like incredibly well-informed buyers know as much as sellers which is complete nonsense. Bernanke has inherited complete academic view that markets are efficient – he did not see the housing bubble in 2007, unlike all of the couple of dozen of newsletter writers,  economists, stock advisors we listen to.

Japan real estate was the biggest bubble in history – land under the Emperor’s palace was worth more than all of California. Right behind was the Japanese stock market bubble which went to 65 times earnings versus the previous record of 25 times.

The statistical definition of a bubble occurs every 44 years in a random world but occurs every 30 years in the real world. Black swans are not as common.

Citigroup was insolvent and should have been allowed to fail in order to show that we would not bail out ludicrous bets.

Investors can make good money in cheap stocks in the long-term. However, while valuations for the great franchise companies like Coca-Cola are a little expensive, the rest of the market is very expensive and assumes profit margins will return to normal. Overseas emerging markets offer better returns.

Currently slightly underweight global equities and heavily underweight US equities excluding the 25% of the market which are great franchise companies.

Bernanke is whipping an economy that can only grow at 1% thinking it can grow at 3%, and does not have the tools to generate employment, which should not even be in their mandate. Creating jobs requires fiscal policy. 74 year-olds should still be working because they are not the 70-year olds of 100 year ago. The unemployed should do useful projects that bring societal benefit, like  installing insulation in cold areas, redoing the grid system.

Debt is vastly exaggerated and we have been conned by the financial world that it is everything. Debt is in the accounting, paper world and distracts us from the real world, which is the quantity and quality of your people , capital spending being inventive, training, education relative to South Koreans. In 1982, total debt was 1.25 times GDP and then it shot up at a a 45 degree angle over the next 30 years to 3.5 times GDP, yet the growth of economy has slowed proving debt doesn’t create long term growth despite Bernanke thinking it does.

Housing explains why this recovery slow – there is nothing more dangerous than messing with housing. Just going back to trend would have tripled oil, triple food, triple copper so don’t need debt.

By keeping interest rates low, the Fed is hurting retirees and transferring money from the poor to the rich, to the banking system, hedge funds, speculators, corporations, who are spending less than at any time in history. It is better to stimulate the economy through government spending than to play games with the monetary system and interest rates and transferring money to people who don’t spend it.

View the full video at http://www.charlierose.com/view/interview/12812

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U.S. to Be World’s Top Oil Producer in 5 Years, Report Says = New York Times 11-12-12

Salient to Investors:

The IEA said:

  • The US will overtake Saudi Arabia as the world’s leading oil producer by about 2017 and will become a net oil exporter by 2030, and become all but self-sufficient in meeting its energy needs in about two decades.
  • Global energy demand will grow between 35 and 46 percent from 2010 to 2035, mostly from China, India and the Middle East.
  • The US will overtake Russia as the leading producer of natural gas in 2015.
  • Electricity prices will become 50 percent cheaper in the US than in Europe.
  • The use of coal, the dirtiest fuel, continues to rise elsewhere, and no more than one-third of the proved reserves of fossil fuels should be used by 2050 to limit global warming to 2 degrees Celsius.

Fatih Birol at IEA said the foundations of the global energy systems are shifting, with Middle Eastern oil rerouted to China. American-mined coal heading to Europe and China. Birol said the prediction of self-sufficiency was 55 percent dependent on more oil production and 45 percent on improving energy efficiency in the US.

Michael A. Levi at the Council on Foreign Relations cautioned that being self-sufficient did not mean insulation from seesawing energy prices, set by global markets. Levi said the IEA report assumes improved gas mileage in cars and energy efficiency in homes and appliances, and confirms that we will blow past every safe target for emissions.

Read the full article at http://www.nytimes.com/2012/11/13/business/energy-environment/report-sees-us-as-top-oil-producer-in-5-years.html?nl=todaysheadlines&emc=edit_th_20121113&_r=0