The Cost of Civilization

This image represents the dollar cost to the general economy of refining a barrel of crude oil to gasoline. Look closely reader, because that is Death looking back at you.

(You may click images to enlarge) Essentially, this is the Cost of our Civilization, and it is on an exponential curvature; see pink line below:

You can chart geopolitics using this chart; a little volatility during Gulf War One, and subdued prices as Saudi was plundered during the nineties. Volatility returned in 2000 and then you witnessed 9/11 and all the wars which followed: Afghanistan, Iraq, Libya, Syria and now Yemen.

Looking below at the same chart in line form, at the 21 month exponential moving average (red line), the cost in 1988 was around 3 dollars, in the late 90’s 5, and the peak was around 29 dollars in 2013. Please note the volume and volatility during the Great Financial Crisis:

The next financial chart represents the energy cost of refining measured in crude oil. This chart also includes profit margins, waste and investments of companies involved in the refining stage. We may assume profit margins and such were severely compressed since the heart attack, providing us a clearer picture of energy costs since 2009.

The 21 month exponential moving average (red line, blue is 55) since the GFC appears to match what we’d expect from the Hills Group model, whereby the refining phase consumes .35 to .4 barrels of crude oil energy when producing a barrel of gasoline. 

Thus, on a moving average, our financial systems suggest 1.35 to 1.4 barrels of crude oil energy is required to produce one barrel of gasoline. The energy cost of refining is in an ascending channel and monthly stochastics look bullish:

So analyzing the trend, this sector was performing in a stable fashion up to the GFC, where we can assume normal levels of waste, profit and investment; then we see a severe compression starting in 2007 and the bottom is in 2009. The drop was too deep—went as low as 7%—and the refining industry proceeded to suffer a wave of bankruptcies, especially in Europe when the largest refiner filed for bankruptcy. Volatility is becoming increasingly extreme because producers require higher crude prices; refiners require lower crude prices and higher gasoline prices while consumers need lower prices at the pump: All this while refining costs increase. 

This is the image of Civilizational Collapse, it went negative in 2008:



22 thoughts on “The Cost of Civilization

  1. Can you please add further analysis of the charts. The first chart went negative in 2009? and where and when is the refining inefficiency headed?

    Thanking you,

    Brussels

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    1. The Cost of Civilization is on an exponential curve upwards. It went negative October-November 2008, when Lehmans went down?

      Essentially our Civilization tried to collapse that day, which is what the sub zero numbers really represent.

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  2. Good anecdotal story about high end U.S. real estate. People who bought 1.5 million condos at the Ritz in lake Tahoe are now being hit with 6000/month hoa fees. This has dropped actual selling prices down into the 600s, if you want to get out. Hoa fees are non negotiable and never go away, just like property tax.

    Boomers are hiding in RE but good luck!

    Hoa and taxes there might be as high as 10 percent annual carrying cost. That means you go broke on your so called “investment”.

    I’ve been arguing that RE now has to be viewed as a depreciating consumption item, like a vehicle. Looked at that way, you want the lowest priced item you can get away with.

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    1. Bye Bye Rebels… I said it would take 2-3 months. Funny that Jordan won’t open its border to the refugees 🙂

      Been saying it for a while, World War is not the plan, The Reset is.

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    1. That’s a good question; I’ve asked it myself. The benefits of a network approach is that particular guys have a deep understanding of particular instruments, and since this is The Philosophy of Capitalism we have MONETARY guys.

      The short answer: no one knows.

      But the learned say: “before the debt screwed up all the indexes; an ounce would buy you the Dow.”

      So let’s say 20k in todays $s, if you have a kilo that’ll be around 600k in buying power. Now remember, the retards will have no Gold aka buying power, so if they’re desperate they may exchange their land and capital goods quite cheaply.

      I think unproductive “assets”, like housing, may go in the direction of zero.

      Silver is tricky; in the East they don’t care for it. For them, it’s an industrial metal. Outside North America silver is usually taxed.

      North Americans have a taste for it, and I’m assuming silver will perform as money in North America post Reset. I’m informed US big banks have stacked large quantities.

      With the Reset, industrial demand for silver will fall, but as a monetary instrument it will rise.

      My thinking is that Gold breaks out first, as the big boys can and will buy at any fiat price. And silver will stay subdued until the event happens. Silver is troublesome for the big boys as it can’t be smuggled and stored easily, so they’re not stacking silver.

      Given that silver is required by industry, it’ll be suppressed till the very end, and will only perform as money temporarily. Let’s watch how things develop, I’d go for a mix of PMs and I think Silver will go down further this year as industrial demand drops. Perhaps Gold too. I’d advise staggered buys to get the moving average, but if Gold starts trending above $1,300 then I’ll go all in.

      Timeline: in six months we’ll officially be in a worldwide Real Estate bear market, aka Global Depression.

      My friends and I will add commentaries and analysis here; instead of expanding volume 3, so I’ll let you know how things are progressing.

      Take Care,

      Putrid

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  3. Are you the Putrid? I just finished your work, the Reset. I thought it was compelling. I had very similar views in 2008 after the Sub Prime meltdown and shared them with some of my more intelligent friends in finance. Although not an expert on peak oil, I was of the opinion that derivatives would inevitably collapse the system. It turns out there are quite a few of us silently preparing, and many do in fact frequent ZH. In all honesty, we are surprised they have been able to keep this charade afloat this long. Many still believe the West will slowly sputter and die gradually over decades leaving a supremacy vacuum for China to fill, however I fear it will not be the case and war will be used to scapegoat the financial mafia out of responsibility. The greatest tragedy will not be the horrors that will unfold before our eyes, but the possibility that the masses, deluded and confused by a propaganda system that would make Goebbels weep with envy, will not understand what truly happened, and to which groups and interests the blame, and public fury, should be directed.

    I often believed that the solution would be simply to arrest all Fed board members, strip the Fed’s ability to create money, and restore this sole power to the Treasury. All of the nation’s debt to the Fed should be written off as illegitimate and a commodities backed dollar would replace FRNs. Imagine how unlikely this was to be! A seemingly insurmountable task, even if we had brilliant patriot in office capable of understanding the game and playing at that high of a level. Cryptocurrencies could make that unnecessary. It is a little to early to call this game, but the next level of consciousness and the human spirit is about to unfold.

    Call it the Fourth Turning, the Great Awakening, the Aquarian Age, the next octave of the human experience, whatever blows your hair back. The internet was the major leap in this generation that freed information and made everything else possible. YouTube and others are now allowing us to create our own media, free from the manipulation of the social engineers in Hollywood. This decentralization is spreading in every facet of human culture right now. Cryptocurrencies could potentially play a role in freeing our wealth from the theft of the central planners. We will simply not need this ruling elite anymore. I am not sure what will happen, I can only vaguely estimate probabilities, but does the possibility not delight your imagination?

    As dark as the situation may be, I have great confidence that the light of consciousness will never be extinguished and the indomitable will of the human spirit will emerge and triumph. Humans have the unfortunate tragedy of needing very severe circumstances to muster the courage and will to change, but when they do, the results can be astounding.

    I suspect the reset will be unlike anything ever see by human eyes. Terrifying, horrific, and yet exciting and full of possibility. Many will die. Many will want to die. Illusions will be shattered, egos dissolved. Like Jefferson said, “We are not to expect to be translated from despotism to liberty in a featherbed.” Despite these challenges there are many of us that are ready to assist our brothers and our country.

    When the moment happens, I will look for you, along with many other ZH members where you all will likely be: the front.

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  4. Try to fathom the lack of choices for those at the Top. Look at the above chart: extinction level decision points. What would you do?

    Imagine making a decision that could effect 7 billion people…Read Volume 1 and 2 before you choose a violent reaction; I plan on protecting myself, and avoiding violence.

    If there’s political violence around you, it’ll last ten years.

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    1. The Propagandists are out in full force now in the USA calling for a Civil War continuously this year! Have you seen usatoday?
      https://www.usatoday.com/story/opinion/2018/06/25/sanders-nielsen-incidents-suggest-new-us-civil-war-underway-column/729141002/
      https://www.usatoday.com/story/news/politics/onpolitics/2018/06/27/civil-war-likely-voters-say-rasmussen-poll/740731002/

      Looks like more positioning for the events to come here as more and more “lines” are being drawn in the ground here. It is a shame that so many who call themselves critical thinkers, alternative news, etc. are buying into this narrative that is so contrived but I must say not too many see the full picture of what it all encompasses. Your analysis of the USA going full fascism and people killing each other is exactly spot on. The cities here are going to be some sort of Stalingrad, mad max, etc. type of scenario because the National Guard will not be able to keep the peace unless they resort to straight out killing people. We have almost 50 million on food stamps!! It will not be until that point that these people will realize they are ultimately f’d. Not long now before the USA is going to fold up like a cheap suit on the world stage and resort to killing each other once the “Reset” occurs. The only people who will survive in the USA will probably be the “Preppers”, Amish, Mennonite, survivalist types, and country farmers who are constantly mocked here but these are some of the most level-headed people here and live far away from urban areas. This is going to be epic.

      Thank you for the continued analysis, several of us are watching this very closely to best prepare.

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    2. I have fathomed a choice for them, take a cyanide pill…. Here’s a tick tac assholes. The suppression of humanity to maintain their paradigm will be balanced by a higher power.

      Their whole paradigm is based on the premise that humanity needs a boot on the neck to create/produce, such as the tether of money to the root charkas (no spiritual growth) that feeds the selfish tendencies spiraling the duality of Heaven and Earth out of balance. I notice that you yourself, Putrid, are heavily tethered to the sensory experiences of this lower soul… a victim of conditioning, understandable. Also note the doctrine of original sin as a supporting document for their model.

      You can’t get an ought from an is (visa versa) with out a paradoxical conclusion, hence the paradoxical nature of capitalism and their current disharmony of Heaven and Earth. Since they can not escape their own conditioned consciousness, their solutions will only accelerate their entropy, not ours. The consciousness of the individual is the link between macro and micro.

      I believe this is their apocalypse not ours, a purge of the populous will be healthy, as some need a reset of the soul… bottom line the families reign is over, the dawn of a man’s golden age is near.

      BTW I love your work, it stimulates the mind. I believe your conclusion will get an update. Relative premises with an absolute conclusion will create a paradox.

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      1. I care not who wins; The Families, the imperialists, the plebs, the Chinese, the Russians…

        To me, you’re all scum.

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  5. What if none of this ever happens? We are now 10 years after the GFC with no end in sight to the present system. What if it just quietly dies down over the next century?

    -collapsed birth rates, reduced workers entering the system, reduced demand, combined with global poverty, means no more middle class ascension; likely retreat into escapism, drugs, religion, etc. to cope with this realization
    -energy conservation/substitution, remaining oil/coal/gas reserves slowly depleted to preserve legacy infrastructure in key areas (industrial agriculture, transport in and between metro areas) while peripheral towns/cities allowed to die
    -political structures supported by all available police state measures which will monopolize effective armor and weapons, no real political change in any direction
    -financialization allows assets to hover at distorted levels, when a free market would have allowed prices to collapse, which would in fact be bad because it would stimulate demand; so in effect, stocks/real estate bought up and levitate away from any new participants entering except big money
    -immigration into the core corporate systems, U.S. and Europe, continues to divide up the populace, preventing any popular uprising but instead the people directing their ire and violence at outside groups; meanwhile China happy to continue on the course of development while allowing Western middle classes to shrink away
    -meanwhile the physical system itself localizes, long distance trade and travel grind to a halt, people’s horizons shrink as they grow old in poverty and can’t escape; of course, during this process, the corporate propaganda machine, long ago perfected, will convince people that everything is fine, they are 20 years old, keep on working, keep on accumulating debt, keep on watching movies, etc.

    I just don’t see anything on the horizon to break this, no matter what the analysis is. You can’t revolt, you can’t escape, in a built up world of 7.5 billion people. There’s nowhere to run, nowhere to build any alternative systems. The most you can do is adjust in place.

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    1. All the currencies are dying.

      How long before mass panic? Man I hope we get to 2020, but I’m not confident of that. I’m thinking 2019 will be brutal.

      On a personal level, best course is to save what you can and live small, and get a job, any job. Just stay busy and adjust around that job. Pretend you’re poor.

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  6. Conventional oil peaked in 2008ish so central bank conventional monetary policies no longer functioned. Unconventional policies were enacted which gave rise to unconventional oil. I’m sure that wasn’t a coincidence.

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      1. [quoting Boris Pasternak] “For a moment she rediscovered the purpose of her life. She was here on earth to grasp the meaning of its wild enchantment, and to call each thing by its right name. By its right name.”

        I saw this quote in the movie, Into the Wild, and thought about Putrid’s quest to define reality…or to call ‘each thing by its right name. By its right name.’ – No bullshit, let us be honest about the reality in which we find ourselves, including the reality of who I am…

        Thanks Putrid.

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    1. +1000

      Agreed..especially the Bullshit Machine.

      Hard to stomach the fact of your own sociopathy, but the alternative (self-delusion being the key to happiness and all) only works for so long..

      If I want to be honest about the reality of who I am and the reality in which I find myself, I have to let go of all my bullshit..not pleasant, but (from my perspective) necessary.

      AA for sociopaths..indeed!

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      1. You’re welcome Joe,

        Now that you know yourself, I hope you can moderate your behaviour. Just try to be nice to your family and don’t manipulate them: it’s all vanity, and they’ll end up hating you …

        Eventually, they’ll become aware of it.

        I was hoping more normies would be attracted to my output; but like in life; I appear to attract those persons on the spectrum.

        The first subject I studied, as a child, was psychology. Not because I had psychological problems, but because my father worked in that field. Also religion; but I’m more interested in God these days.

        Take Care,

        Putrid

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