Best of the Week
Most Popular
1. Next Financial Crisis Is Already Here! John Lewis 99% Profits CRASH - Retail Sector Collapse - Nadeem_Walayat
2.Why Is Apple Giving This Tiny Stock A $900 Million Opportunity? - James Burgess
3.Gold Price Trend Analysis - - Nadeem_Walayatt
4.The Beginning of the End of the Dollar - Richard_Mills
5.Stock Market Trend Forecast Update - - Nadeem_Walayat
6.Hindenburg Omen & Consumer Confidence: More Signs of Stock Market Trouble in 2019 - Troy_Bombardia
7.Precious Metals Sector: It’s 2013 All Over Again - P_Radomski_CFA
8.Central Banks Have Gone Rogue, Putting Us All at Risk - Ellen_Brown
9.Gold Stocks Forced Capitulation - Zeal_LLC
10.The Post Bubble Market Contraction Thesis Receives Validation - Plunger
Last 7 days
Israel’s 50-Year Time Bomb, Pushing Palestinians to the Edge - 19th Oct 18
Bitcoin Trend Analysis 2018 - 19th Oct 18
History's Worst Stock Market Crash and the Greatest Investing Lesson! - 19th Oct 18
More Signs of a Stocks Bull Market Top and Start of a Bear Market in 2019 - 19th Oct 18
Stock Market Detailed Map Of Expected Price Movement Before The Breakout - 18th Oct 18
Determining the Outlook for Gold Mining Stock - 18th Oct 18
Investor Alert: Is the Trump Agenda in Peril? - 18th Oct 18
Stock Market is Making a Sharp Rally After a Sharp Drop. What’s Next? - 18th Oct 18
Global Warming (Assuming You Believe In It) Does Not Affect Gold - 18th Oct 18
Best Waterproof Compact Camera Olympus Tough TG-5 Review - Unboxing - 18th Oct 18
Silver's Time Is Coming - 17th Oct 18
Stock Market Volatility Breeds Contempt - 17th Oct 18
Gold 7-Year Bear Market Phase Is Over - 17th Oct 18
Gold - A Golden Escape - 17th Oct 18
Tec Stocks Sector Set For A Rebound? - 16th Oct 18
Real Estate Transactions are Becoming Seamless with Blockchain-Powered Data Sets - 16th Oct 18
Important Elements of a Viral Landing Page - 16th Oct 18
Stephen Leeb Predicts 3-Digit Silver and 5 Digit Gold?! - 16th Oct 18
BREXIT, Italy’s Deficit, The EU Summit And Fomcs Minutes In Focus - 16th Oct 18
Is this the Start of a Bear Market for Stocks? - 16th Oct 18
Chinese Economic Prospects Amid US Trade Wars - 16th Oct 18
2019’s Hottest Commodity Is About To Explode - 15th Oct 18
Keep A Proper Perspective About Stock Market Recent Move - 15th Oct 18
Is the Stocks Bull Dead? - 15th Oct 18
Stock Market Bottoms are a Process - 15th Oct 18
Fed is Doing More Than Just Raising Rates - 14th Oct 18
Stock Markets Last Cheap Sector - Gold - 14th Oct 18
Next Points for Crude Oil Bears - 13th Oct 18
Stock Market Crash: Time to Buy Stocks? - 12th Oct 18
Sheffield Best Secondary School Clusters for 2018-19 Place Applications - 12th Oct 18
Trump’s Tariffs Echo US Trade Policy That Led to the Great Depression - 12th Oct 18
US Dollar Engulfing Bearish Pattern Warns Of Dollar Weakness - 12th Oct 18
Stock Market Storm Crash, Dow Plunges to Trend Forecast! - 12th Oct 18

Market Oracle FREE Newsletter

Trading Any Market

Gold and United States Imported Oil

Commodities / Crude Oil Sep 13, 2016 - 02:56 AM GMT

By: DeviantInvestor

Commodities

The US has imported crude oil for many decades. The following data (1970 – 2015) comes from the Energy Information Administration of the US government. This data shows reported barrels of crude oil imported into the US.

(Note: This is not a comprehensive analysis of imported energy, nor does it compensate for exports of crude oil, imports or exports of coal, natural gas or other energy sources.)


Imported crude oil has increased erratically since 1970. Imports are down somewhat since 2008 due to the rise of fracking and the ongoing recession.

I plotted the approximate expenditures for imported oil by taking the average price for a barrel of crude oil each year and multiplied that price by imported barrels. Excel calculated an exponential curve that shows the huge increases in expenditures as well as the dramatic recent decline since 2011 due to reduced imports and much lower prices.

Now consider the cost of imported oil measured in ounces of gold priced at the annual average price each year. The cumulative cost of imported oil since 1970, if priced in gold, would have been 8.2 BILLION ounces of gold.

Assume that Fort Knox still contains 147,300,000 ounces of physical gold. Yes, this is a stretch, given that the gold was last audited in the 1950s, but pretend the supposed hoard of gold is still vaulted there. The above graph shows the cost of imported crude oil in “Fort Knox Gold Units,” or the number of times the total Fort Knox Gold would have been sold each year to pay for imported crude oil. Total cost for imported oil 1970 – 2015 has been approximately 55 Fort Knox Gold Units.

OBSERVATIONS:

  • The US and other countries consume more energy each year. Crude oil is a major source of energy.
  • The US runs a trade deficit of about half a $ Trillion each year, much of it is due to the cost of imported crude oil.
  • If the US had paid for imported crude oil in gold, the total cost since 1970 would have been approximately 8.2 BILLION ounces of gold. Clearly this was not possible since the total US official gold hoard is listed as about 260 MILLION ounces of gold, of which 147.3 million supposedly is vaulted in Fort Knox.
  • It is easier to print T-Bonds and IOU’s than to mine and produce gold.

  • The US dollar is currently the reserve currency of the world. This enables the spiral of borrow, spend, delay payment, and live beyond actual production that the US government has encouraged for many decades.
  • If it were not for an aggressive foreign policy and a powerful military, crude oil exporters might not accept T-Bonds (IOUs) and might demand gold or other real goods in payment for the crude oil needed by the US economy. This could become disastrous for the US standard of living. Expect continued US military presence wherever there is oil to be imported.
  • The process by which the US imports goods and exports reserve currency T-Bonds (debt IOUs) will not last forever. When it implodes expect devalued fiat currencies, higher prices for imported energy and commodities prices, and of course, much higher gold and silver prices.
  • It should be clear that higher prices for necessities such as energy, food, and all imports will reduce the standard of living for the majority of Americans. Loss of reserve currency status for the US dollar will be financially catastrophic for many individuals and businesses. Diversions and force may be needed.
  • When you can see the road ahead, preparation is sensible.

Gary Christenson

GE Christenson aka Deviant Investor If you would like to be updated on new blog posts, please subscribe to my RSS Feed or e-mail

© 2016 Copyright Deviant Investor - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Deviant Investor Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules