Warning: Oil supplies are running out fast

As of now oil is trading above $71 per barrel. Yikes!

In the Independent of the UK day there was an article entitled, "Warning: Oil supplies are running out fast." In the article it says that Dr. Birol thinks, "that the public and many governments appeared to be oblivious to the fact that the oil on which modern civilisation depends is running out far faster than previously predicted and that global production is likely to peak in about 10 years – at least a decade earlier than most governments had estimated."

This article also reports that, "The IEA estimates that the decline in oil production in existing fields is now running at 6.7 per cent a year compared to the 3.7 per cent decline it had estimated in 2007, which it now acknowledges to be wrong."

The Wall Street Journal also reported on this today. Read it here.

This is potentially a huge problem in the future and needs to be addressed now. This is a potential tragedy of the commons in the making.

What is a tragedy of the commons? Read here to find out.

To learn more about peak oil go here.

Chinese Economic News

1) In an interesting article in Forbes today. Gordon Chang is skeptical about an economic recovery in China. If Gordon Chang is right this is not good news for the global economy.

According to Chang,

"So, as big as all of Beijing's spending programs are--they could end up being about 18% of GDP and the largest in the world on a percentage basis--they are not enough to stop the country's accelerating decline for more than a few quarters. China was once in a supercycle upward. Now it has turned a corner and is in a supercycle in the other direction. At some point, this will become evident, even to the World Bank. "

Yikes but I'm sure Jim Rogers would disagree with this analysis. It will be interesting to see who ends up being right.

2) China is buying record amounts of iron ore. Read about it here.

3) The US dollar falls as China calls for a global currency. Read about it here.

4) China is trying to hedge against its dollar holdings. Very smart move I say because there are budgets deficits in the United States as far as the eye can see. One way they are hedging is by buying gold.