Edge of Chaos

I started 2015 with a morning run, as I do most days. But before I got to my runners, I attempted to get out of bed but felt the day after side effects of one or two glasses too many (OK, who am I kidding, 4 or 5 too many, but it was New Year’s Eve—so completely justifiable) of my favorite Rioja. So, as I’ve done many times in my life, I lay back down in bed, grabbed my iPhone, and went over my newsfeed. I quickly came across a news release stating that Jordan and Israel were having problems with their long-term natural gas deal. This brought my cloudy memory back to 2010 when Doug Casey and I were early to the Israel natural gas discovery; I wrote a full feature on our site visit to the offshore natural gas deposits in Israel in 2011. Looking back, I titled the research report Edge of Chaos—and correctly stated why we would stay away from explorers and producers (E&P) with direct exposure to the Israeli offshore natural gas deposits at the time.

During my jog, I started running through my memories of the site visit; a specific meeting Doug and I had with a government official in Tel Aviv stood out. This particular government official had never worked in the private sector a day in his life, and although he was clearly intelligent, he and I completely disagreed on the government’s plan at the time regarding development of the offshore gas fields.

After my run, I pulled up that research report, and I decided it was worth taking a look back at the importance of site visits and resource speculation. For Casey Energy Report subscribers, the full report is available for you to read.

Looking back at words you write many years ago at times will make you blush, but this time I couldn’t help but laugh at how I started the report:

As my plane approached its landing in Tel Aviv, I looked out the window and couldn’t help but reflect on the old joke that Israelis like to tell on themselves: “We followed Moses for 40 years, and he brought us to the only place in the Middle East with no oil.” Is it true, I wondered… or will new technology unlock a massive resource of oil and gas to relieve Israel’s dependence on oil and gas from nations that would like them out of the neighborhood?

I completely forgot about how accommodating the passport official was, not bothering to actually stamp my passport:

As many of you know, Israel is very different from the rest of the Middle East. Neither side forgets that. For instance, I travel a lot, and trying to enter an Arab country with an Israeli stamp blazoned on my passport isn’t a good idea. After the passport control officer asked me why I’ve traveled to so many Arab countries, I half-jokingly suggested he leave my passport unstamped. He looked at me and said, ‘Sure, no problem.’”

Interestingly enough, never before or since have I ever had the experience I had leaving a country as I did Israel. I wrote in:

In this edition of Casey Energy Report, we cover the entire Israeli oil and gas sector. To our knowledge, it’s the first comprehensive analysis of all the companies producing and exploring for oil and gas in Israel.

We think you’ll come to the same conclusion we did: that Moses knew something the modern world is just figuring out now—that is, Israel has a lot of natural gas. However, even with this massive potential, Israel operates on the edge of chaos, that tricky margin between highly ordered and highly unpredictable. It’s a reality that the country’s long history of conflicts with its neighbors makes impossible to escape.

I was reminded of that right up to the last moment of my trip. In leaving Israel, I was held up by its famously elaborate and thorough security protocol for three hours. Of all things, it was my Kindle that did it. The security personnel finally let me go, but they kept my Kindle.

I just got it back in the mail. It’s fine, except it’s open to a different book than I was reading. Perhaps after even two thousand years, the Romans are still a sore subject in Israel.

The book I was reading on my Kindle at the time, on the recommendation of my friend and colleague Dominick Graziano, was a biography of Julius Caesar. When I got my Kindle back, it was on the last page of a free version of The Richest Man in Babylon.

The event I wrote about has reminded me that even as we enter 2015, we are now closer to the edge of chaos than ever before. Emerging markets globally look to suffer further pain in early 2015; the global economy looks to be getting worse rather than better; Japan is on the brink of some serious economic issues; and South Korea isn’t too far behind it.

The Colder War is now more relevant than ever, even though most in the Western world have already dismissed Putin and Russia because of the ruble’s depreciation and the oil’s collapse.

Rule #1 in the art of war is to respect your opponent—and I won’t hesitate to say that the US will be surprised by Putin’s actions in 2015.

China and Russia will announce further agreements in 2015 and will sign more long-term energy and resource developments for a secure supply of natural gas, oil, and uranium from Russia to China—with love, of course (From Russia with Love being one of my favorite James Bond films… but I digress, along with the fact that the 1960 Miss Universe first runner-up, Daniela Bianchi, was Bond’s Russian “adventure” in the movie—she helped make it a must-see Bond movie).

In this month’s January Casey Energy Report (CER) forecast issue, I go over what I expect to see for oil, natural gas, and uranium in 2015. It’s an important read, as I completely disagree with certain members of The Casey Report. Smart guys over there, but I have a different take on what I see in the oil patch. We also disagree on natural gas. Most important, in the CER issue, I state how Doug Casey and I are personally playing the downturn in oil prices, and where we’re putting our own money. You won’t want to miss this month’s Casey Energy Report.

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