anything compete with natural gas when its prices so low and as nuclear is still game on despite the fukushima disaster well we'll try to answer all of those and while we're on resources we're going to talk industrial metals too plus crime pays but not now well when it comes to robbing a bank low return on investment of hoarding to researchers it turns out i guess this adds to our guest william k. black these is that the best way to rob a bank is to own one let's get to today's capital account. so let's look back a couple of months to remember when oil prices spiked to one hundred ten dollars a barrel for west texas intermediate crude or one hundred twenty five dollars

a barrel for brant crude that was in march and in the mainstream media and from u.s. politicians we heard a lot about those evil oil speculators but when oil prices fall more than twenty percent as they happen in recent weeks the analysis is just plain old supply and demand you don't hear a lot about it noise aside when you look at production since two thousand and six global crude output has pretty much been flat and you can see that more or less in this chart of opec crude oil production since two thousand and five it hasn't changed very much over the years and in fact today opec which is the organization of the petroleum exporting countries and which sees itself as the oil markets prime regulator they met and according to media reports members agreed to maintain their existing oil production agreement but they pointed to a possible emergency meeting should oil prices fall more let's get a sense of where we really are though what plays into oil prices what we're looking

at long term in terms of oil availability peak oil and what energy and resources we can look to in that case we have byron king here he is editor of a gore a financial outstanding investments an energy and scarcity investor he's also a harvard trained geologist a former aide to the u.s. chief of naval operations and why isn't all things energy oil and resources so thanks so much for being on the show it is a pleasure to have you in washington it's a pleasure to be here thank you very much absolutely so let's start with peak oil i know we talked about kind of some of the latest news but i want to back up and get the broad picture so i just want to show our viewers a look at oil production versus consumption so they can get to a view of where we are and i know you'll have believe that we surpassed peak oil a while ago so where do you think broadly were headed ten. years out twenty years out what are we looking at and if you care but first i want to dispel any misconceptions about peak oil peak oil isn't one of those things like oh pico we're

going to run out of oil and we're going to freeze to death in the dark next week or so we've got no no no but the fact is the geologic industrial fact is that crude oil production globally has been steady at about seventy two million barrels a day for about five years since since two thousand and seven or so it is just been flat that means that for every new barrel of crude oil that comes online from a new development say it's offshore other parts of the world whatever there's another barrel that's lost to production due to depletion from the traditional sources whether it's saudi mexico you name it you know you go around the world you get other countries that used to be exporters are now importers and so and so what has made up the difference in terms of total world supply for the last five or six years has been what are called natural gas liquids that is not crude oil that's not that black gooey stuff that comes out of the ground gas liquids or things that condense out of natural gas that comes from the ground when you're when you're doing that that tells you something about the future of your supply we're changing

the fundamentals of supply this will happen over a long period of time years decades but in terms of investing for the long term and whether it's your personal investments or building the energy system for the next fifteen years thirty years forty five years which is what you have to think about if you're you know you know have you ever sponsibility is in high places if you're an oil company i mean there's normal years and then there's oil company years i mean you know there are these sometimes these things take fifteen years to go from a from an idea to actual you know crude into a pipeline so so these are things you have to keep in mind he said you want to back up that's kind of the the landscape that we want to that we want to that we want to deal with today ok and so that's the long term picture that everybody has to keep in mind let's look at the short term picture because short term we've seen oil prices come down twenty percent recently and there are some can. wisdom it seems to be floating around there that there is an oversupply but is this a reflection of a decline in demand and is it a harbinger of some kind of global economic slowdown well the immediate short term

over supply is there's an oversupply of euro's in europe. and those euros in europe are chasing dollars in the united states mean there's been a capital flight from europe to north america to the united states in particular and you couple that with the perceptions of slowdown in china china isn't this great glowing success story that it used to be the dollar has strengthened significantly in the last say three months i mean we're talking a percentage in the range of fifteen to twenty percent in in a certain sort way when you look at it and so right away that accounts for part of the oil price of what it is a price decline i'm sorry it's not that there's too much oil floating around on tankers sure that economies are slowing down you've got issues like refineries closing in europe that you know yeah you know you've got those day to day type issues but there are macro things that are controlling that oil prices they're

giving us this somewhat temporary you know summer respite you might say from those previous high oil prices i think when you when you look ahead when you look out a year two years three years it's stand by because there's a price you're going to go back up and you know we will all live long enough to find out what happens well and i want to get more into that when we're going to see that and what that's going to look like the role of technology and all about but i do want to ask about kind of the short term economic impact of say this global slowdown that you're talking about of some kind of recession that's major and significant in here up or in that includes some of these developing economies that have been driving global growth over the last several years if that happens what will that do to the price of oil short term and other energy prices like natural gas the short term issues will tend to moderate oil per. well price increases i mean you look at it look at a country like south africa for example they are an export ing commodity exporting type of country they're a big important country but what they export

a lot of pretty much raw commodities are somewhat finished because they much of what they do is priced in say u.s. dollars if as their export markets weaken whether it's europe whether it might be a slowdown in china if there's a slowdown in the united states is this all effects of exports in south africa the prices that they get paid for their basic commodities whether it's iron or chrome or or platinum things like that those type of prices go down they get fewer dollars in for their for what they're exporting yet much of what they do is priced in dollars and so the costs go up what happens if you're the mine owner if you're the factory owner in south africa you're lay people off and that's a huge political issue in a place like so that africa with a twenty five or fifty percent depending where you want to talk to unemployment rate you big issue i mean it will affect it it will affect the world so so so these are the everything's connected to everything else you just it keep that in mind it sure is it's really important i do want to ask since we're talking about cost one

ratio that we saw typically of what the cost of oil has been to natural gas historically per b.t.u. which is that that unit of energy has been ten to one and at current levels the ratio is greater than forty to one so is this ratio something that people should be looking at in terms of how much natural gas needs to come up or oil needs to come down well it's a ratio you have to look at be have to look at where it is as well it is forty to one in the u.s. in a place like japan where they import their natural gas through liquefied natural gas i mean the ratio is more like five to one i mean it i mean you're paying twenty dollars per m.c.f. in in japan for liquefied natural gas whereas it is you know it's two dollars you know two dollars and fifty cents or so here you know here in the united states and japan is a huge user of natural gas in particular so. they shut down over nuclear plants last year after the fukushima disaster and they spent the whole year shutting their plants down and who knows who can say whether they will ever restart any of their

plants let alone all of them right and i want to get to the nuclear too but first i want to back up because you're saying that oil prices we're going to see them go higher ok it's going up and over the long term over the long term i want to talk about technologies are there any technologies in the pipeline that could be game changers that could allow more development more excavation more cultivation of oil they could and steady increase production when everybody is expecting this decrease in production while no one one thing i hope i hope the viewers take away today from and it's what i talk about all the time in my newsletter at any investments is that the energy industry the oil industry is a technology industry you know people think of tech as oh you know computers and software and video games and so you know you want tech do all ok i mean that in a minute i mean some of some of the most advanced technology some of those to advanced r. and d. in the world that happens in anything and i'll even throw the space program in there happens in the oil industry and in terms of where they're going and what

they're doing to squeeze and squeeze a little hydrocarbon molecules out across the earth or not there's a lot of hydrocarbon molecules out there they're not all in these nice easy packages like like colonel drake drilled at titusville you know an eight hundred fifty nine or say is not the whole world is not spindle top or something i mean in the in the future it is all about technology it is all about better signal processing better job of physics it's but better oceanic equipment to go offshore it's a better machinery that can but can drill these incredible wells and and find and lift the oil to the world demands and unless we want to completely somehow reinvent the whole world do it quickly and do it seamlessly and not wreck the whole system you know you better figure out that we're going to be living with the oil and the oil industry for many many many decades to come and all that technology you're talking about that ain't cheap ok it is not cheap to go out to. ocean and drill or a bar down to get those oil that might be there i mean it's very expensive so just based on the scarcity of oil and the greater depths that that companies are going

to have to go to to get it are we going to see oil prices increase just simply because the cost of production is increased oh yeah because your marginal barrel of oil right now and we you can say that today west texas oil was you know eighty two dollars a barrel and you know brant was you know one hundred two what are the marginal cost of a barrel of oil that that barrel that comes out of those advanced deepwater plays or oil might be sixty dollars seventy dollars eighty dollar oil and when you look at the oil turn of the oil sands in canada when you look at other things i mean so you've got a price floor that's being set by those marginal barrels of oil at the same time when you talk about opec we begin with talking about opec opec's problem is that most of those countries in opec cannot afford to sell their oil for less than a boat let's i'll give you a number eighty to ninety ninety five dollars a barrel if they don't get ninety five dollars a barrel for the oil that they're exporting their countries run national deficits

they're there they're in there they're in the red yeah it's an interesting point i want you to hold that thought i will show our viewers a chart of that when we get back so i want to talk a little about the politics behind those oil prices are going to when we get back and also nuclear and not more natural gas and all these other alternatives so this is byron king a glorified actual oil and energy expert and we'll be back in a few minutes with him also still ahead we talk a lot about gold and silver on this show but what about industrial metals like copper well we'll have more inspiring pain on it after the break but first your closing market numbers. thank. you.

it's. just. well. it's technology innovations all the developments around russia we've got the future are covered. welcome back moving on from the supply and demand dynamics for oil which we've been talking about let's look at the politics of oil first i want to bring up a chart that that shows really what our guest was referring to he was talking about

that major oil producers you know they can't let oil prices fall that much because they need strong oil prices to pay their bills and you can see right there what they need those prices to be at the same time there are some benefits both political and economic to lower oil prices slowing development of shale and oil scuse me shale oil and tar sands being one also i guess you're less likely to see demand disruption so the question though is how are these political aspects going to play out in the short run long run so i want to bring byron came back in here and ask what these political implications are going to mean for the oil dynamic just kind of rothley well the chart to to show that graph that you showed me it indicated that a lot of countries have fairly low production costs on the left side of the truck the brown on the bow. on the bottom there you can see where it might cost the country you know ten twelve fifteen dollars a barrel to lift it out of the ground in terms of running their whole oil industry and you know you divide that into how many barrels they produce but then in turn

that then all the difference all that white area but up to that yellow part on top that's the money that they need to run the country that's that's what that's what that's what pays the bills it's what buys the food in port fourchon that's what you know i mean if you're going to cynical that's what pays for the for the big fancy jets that fly the princes around so they can go gambling all that you know i mean you know what we will get all judgment about is right they need the money if they don't get that price for the oil they could have bread riots literally riots in the streets one country that crossed over the deficit about a year and a half ago is a country may have heard it's called egypt they used to be in that oil export or now they're not without that extra kick from the oil money the export when it was coming in to egypt their national accounts fell apart and the national government fell apart and egypt is has been in turmoil ever since i mean that's one example of what the world could see if some of these countries see oil prices too low for too

long that's interesting and just to briefly follow up how much leverage just saudi arabia have how much leverage do you think it will use in order to keep oil prices a little low because i know it's been pretty agreeable with the united states and exercising that that that the saudis the saudis pride themselves on being a the world's reserve capacity for oil they say they have about two to three million barrels a day that you know they can turn valves and they can you know fill the pipelines and fill fill an extra couple of tankers and you know that they could do that in a pinch and they have done it at various times that for example during the gulf war in one nine hundred ninety one or or you know if there were a hurricane in the gulf of mexico if something bad happened somewhere to large amounts of production in the world you know the saudis you know tend to do that right now the saudis are running over about ten million barrels a day of oil output which which is really. you know but good for them it's one of the things that's contributing to you know lower lower oil prices across the world although it makes all the other opec people mad you know opec is this cartel it's

you know it's good it's good it's bad i mean on the one hand it's a cartel they agree to hold prices and hold production to keep prices at a certain level on the other hand you know any one person who has the capability to you know to swing one way or the other to you know screw up all your economics and right now saudi i would say is kind of screwing up the economics for everybody else but you know keeping those prices little bit low right another point you made though let's follow up on that it has to do with if i'm saudi and my future my next hundred years has to do with exporting my oil because you know it's not as if they make mercedes benz in saudi arabia or it's not of their big food exports are ending like that you know saudi exports oil and and that's their gig if i'm the saudis i want to be careful about letting too many other energy projects around the world get economic and gain traction and so and so i want to keep that oil price low enough that that i'm trying to keep those other guys on the margins but i want to keep my market share looking into the future over many many decades so with that

political aspect in mind let's talk about some of these alternatives because natural gas is one it's a very cheap in the united states also very plentiful what's your view on natural gas as an energy source i think natural gas is a wonderful energy source here in the united states me quite frankly we we as a nation could not move quick enough to begin a program to convert automobiles and trucks and such to natural gas power i i see that happening slower than a lot of people would probably like and slower than the than the real you know promoters would you know want you to believe but but i do see that happening over time i see natural gas as a key factor in a lot of the rest of the world too because the only reason the united states is swimming in surplus natural gas right now is because you know we basically because a lot of the technology happened in a lot. development happened under the nose of the politicians and before the politicians knew what was happening you had gas wells you know just flooding the pipelines with what i was gas from and the pope says woke up and said well what we

did it we didn't know this was happening oh now hey let's regulate the heck out of it now you know but but although there are some problems rocking i mean we've been everywhere you know where we want to water that light on fire thout when we go there i mean it's a it's not nearly as good as the oil companies tell you it's not nearly as bad as the critics want to want to claim and you know we could we could let our they have that for now say that there's more interesting stuff to get into which is the rest of the world has lots of shale as well i mean that over the next you know ten and twenty years we will see this kind of development happen in other parts of the world as well that's interesting i want to stick with alternatives i want to talk about nuclear because after fukushima in japan you mentioned japan pulled back also we saw countries like germany close eight of their plants and have a plan for more large scale shutdown of them by two thousand and twenty two but is this a trend that's going to continue or is nuclear just simply too viable of an option to to not i think nuclear is truly important not to carry it through you know the germans i mean you know they. they want to shut down their nuclear systems ok fine

but they're importing electricity from france which comes from nuclear and so it's only center where you know that you know the japanese mean they've shut down their nuclear plants at the same time they are just their utility companies are hemorrhaging red ink over importing oil to run their. run their oil fired generators and in japan it's in parts of japan who literally have thirty percent less electricity now than they did you know a year and a half ago i mean i mean it is a very tough aspect to the japanese economy it's one of those things that will keep the japanese economy you know japanese for the next who knows for the next twenty years if they don't if they don't figure this out but it but in terms of the rest of the world where nuclear technology is going and in fact in terms of you know the improve safety the types of passive cooling see. that are coming out the new reactor designs entirely new designs for uranium fuel rods that include beryllium that make them almost no proof i mean it's we don't get all you know being you know

deep into the technology and that of the fascinating technology of mixing brilliant and uranium that will create fuel rods that literally would never melt down so we're going to a good place a nuclear speaking of that that brings me to bear elements which we never get to talk about on this show because it's difficult to find people that are experts in industrial metals and rare earth so i don't have a whole lot of time i just was wondering quickly your take on copper and rare earth elements well i think that the world is still electrifying in the developed world much of the grid needs to be rebuilt certainly for if as more and more people do the windmill solar and other things you know where the the generation's way out there and the load is way down there it's going to need lots of copper i mean not not all those big transmission ours are made a copper they're made out of other things too but but in terms of wiring the developed world rewiring the developed world lots of copper and then in the developing world. you know i mean there are people out there who may have one or

two light bulbs in their house and you know and they are going places that will take copper in terms of the rare the rarer so you know the lamp the knives and all those things i cover that in my newsletters but i i think there are fabulous developments going on around the world the chinese monopoly of ninety seven percent a world where earth is breaking down again it's one of these things won't happen we want to wake up one morning and say oh hey you know we broke the monopoly done work that way but but in terms of what's happening the developments out there you know people people should feel pretty good that there are really really dedicated smart people out there making new developments on most of the continents mean north america is full of them there are some in south america africa europe central asia a former soviet union and the soviet union the soviet union now russia. has a phenomenal phenomenal. intellectual capability in terms of this type of work i've actually visited a major laboratory shop in moscow that those exactly this kind of work very interesting and we are going to leave it there because we're out of time but we

covered so much and it's stuff that our viewers does don't always get to hear about so i really appreciate you pleasure being here to let us all know about your insight that was byron king agoraphobe actuals oil and energy expert. all right let's wrap up with a quick loose change with dimitri and shannon so at the beginning of the show i talked a little bit about bank robbery have you ever thought of how easy life would be if you just robbed a bank like these guys. let's do this sit three guys you guys on the road every guy get to share price years twenty six you don't get the day job you think you can sit it out and still take

a slice you know what they call the joker. well the joke may be on you a new paper written by economist says that the return on average bank robbery is frankly rubbish the authors conclude that it. is about twenty five grand per person per raid so this just seems to add to what william k. black writes which is the best way to rob a bank instead. that believe it or not you know audiences know this but i used to work i don't know that rob banks although i used to be a bank auditor so i used to actually a lot of banks including and and one of the things that surprised me when i went there was like you know how you can rob a bank is that so hard but you know it never dawned on me then that the way to rob a bank would be to go and actually work at a bank and work on the investment side especially investment banking trading floor you know lloyd blankfein these number one bank robber him or jamie diamond these guys are the ones of the cartel market and they've become untouchable we just saw jamie diamond get practically lavish praise for lavish praise for losing two

billion dollars on the hill with presidential car fling great executive coach who. was like i have executive quickly c.n.n. does this work your plans to rob a bank if it's for whatever reason you want to leave your job if i was a banker. because i wouldn't be going to jail anyway that's true because they never get criminal charges or if you were a banker yeah that's right no it's only the peasants who are under the sea and then there was a thing on c.n.n. some guy was on the hood of a car trying to open up a door but it's too complicated if you're a peasant you have to be a bank executive you want to rob a bank ok sorry don't try your record you're going to go live in prison to get free food but that's it you get a free pass if you're a banker though so with that we're going to leave you with that thought thank you so much for watching and be sure to tune in tomorrow and in the meantime you can always follow me on twitter at lauren lyster and give us feedback on the show or catch any you missed it you tube dot com slash capital account plus you can watch

us in h.d. on hulu and hulu alone that's hulu dot com slash capital dash count and from everyone here at capital account thanks so much for watching and have a great night.

press protests on the eve of egypt should presidential runoff as the country's highest court dissolve the parliament and allow the mubarak's axe prime minister to continue his controversial election challenge. for us that's a deadly drone attacks on pakistani territory leading to calls for an investigation into their the galaxy of them it claims innocent civilians are being killed in strikes officially targeting terrorists. and syria's government says there may be more suicide bomb attacks in the country's capital but warning follows the arrest of a man with ties to al-qaeda linked group next we had back to washington this time for the along with the syrian turmoil taking center stage in today's program.

well going to be alone or shall we look at the real headlines with none of the mercy or can live out of washington d.c. now tonight we're going to talk expanding a shadow wars and a back and forth between russia and the u.s. over syria retired lieutenant colonel tony shaffer joins stephen soon as on our panel then just a few billionaires were all the entire world carlos slim sheldon adelson just to name a few names if they want something they throw money at it but how does it affect me and you are not all that i'm working tonight including a dose of happy hour but first take a look with mainstream media decided to miss. so i'm surprisingly the economy is still topic number one and as usual the brains.