Media Noise Windfall Profit
Recently a good friend sent me an e-mail with a graph from the EIA that was predicting the oilprice-developments and its different aspects into the future. It was interesting to see how the oilprice was taken apart into different aspects and then validated: In Feb 2010 the EIA saw Oil to be at $72, subdivided in: Extraction Costs Average $23, Currency Debasement $8, Lack of Surplus Capacity $4, Inventory Balance $6, Speculator/Hedging Activity $6, Media Noise Windfall Profit $ 25.
Indeed: “Media Noise Windfall Profit” determines more than 1/3 of the oilprice, and when we take this together with Speculator/Hedging Activity, and “Lack of Surplus Capacity (which currently is bogus), we come at the light calculation that almost half (!) of the oilprice is determined by very dubious factors.
What does it mean: Media Noise Windfall Profit? When this determines 1/3 of the oilprice we talk about many billions, if not several trillions of dollar a year, in speculative money that “responds to the media”.
This of course sheds a certain light on the many articles that used to appear in the main-stream press before the current global recession began, that displayed “worry” about “possible supply disruption”, or the effects of “war-theatre” on crucial shipping-lanes that could easily be choked, or “political instability” in certain countries that could “disrupt crucial supply”.
Since the economic crisis, after a short period of relative silence, the “pundits” and “experts” have been jumping on another bandwagon: “Global oil demand will grow again”, “China and the emerging economies will cater for growth in the need the oil” or “Easy Oil is over” and “Peak Oil is Imminent”.
The difficulty here is to distinguish between those people that have done such a great job to alert the world on the finiteness of our resources, and have earned many years of scorn for it in many cases, and those people cultivating a “theatre of fear” to drive up the price.
Without going into a discussion here about the possible imminence, or not, of peak oil, it is clearly now being used to drive up the price by a very substantial part, especially in combination with completely unrealistic “expected future demand”.
The question comes up also: what else is being used in the media to cause “Media Noise Windfall Profit”? What about “possible war”? Geopolitical (dis-)information? Vindication-campaigns against certain countries? Writing about/causing tensions between countries? Terrorism? Pirates?
And then of course the question comes: What or who can still be trusted if the most-read media-outlets, and many much-more-controlled-than-we-may-believe mainstream media are poisonous in what they give from themselves, having a different agenda than what appears to be? Or when the “official” and well known institutions are faking future supply, or “over-projecting” future demand?
Life gets very complicated, and insecure, when there is not even a basis for basic trust anymore.
This has as a consequence that people that are looking for strength, stability and security, often look at what is written or said in the media to come to some clarity. As however most people access the mainstream media for this, the circle is complete and the fountain of “Media Response Windfall Profit” is perpetuated.
We may want to look more carefully at what is written by whom about the “Theatre of Oil” in the future.
And it is exactly this argument, that the information from many media need to be read carefully to validate it correctly, that has been the reason for why we have selected the information for this website from a large multitude of sources: currently 549 and counting (See our “Source-page). This makes it possible to rise above the noise of disinformation, and provide our readers with an as-unbiased-as-possible overview of global developments.
Stay alert,
Alexander
