Guest Post: Peak Denial About Peak Oil

Tyler Durden's picture

Submitted by Jim Quinn of The Burning Platform

Peak Denial About Peak Oil

It is par for the course that with oil hovering between $70 and $80
per barrel Americans have continued to buy SUVs and Trucks at a rapid
pace. Politicians don’t have constituents screaming at them because gas
is $4.00 per gallon, so it is no longer an issue for them. They need to
focus on the November elections. It is no time to discuss a difficult
issue that requires foresight and honesty. It is no time to tell the
American public that oil will be over $200 a barrel within the next 5
years. Anyone who would go on CNBC today and declare that oil will be
over $200 a barrel would be eviscerated by bubble head Bartiromo or
clueless Kudlow. Bartiromo filled up her Escalade this morning for $2.60
a gallon, so there is no looming crisis on the horizon. The myopic view
of the world by politicians, the mainstream media and the American
public in general is breathtaking to behold. Despite the facts slapping
them across the face, Americans believe cheap oil is here to stay. It is
their right to have an endless supply of cheap oil. The American way of
life has been granted by God. We are the chosen people.

A funny thing happened on our way to permanent prosperity and
unlimited cheap oil. The right to prosperity was yanked out from
underneath us by the current Greater Depression. The worldwide economic
downturn has masked the onset of peak cheap oil. Therefore, when it hits
America with its full fury, it will be a complete surprise to the
ignorant masses and the ignorant politicians who run this country. A
Gallup Poll in August asked Americans about our most important problems.
Where is the concern about future energy supplies? It isn’t on the
radar screens of Americans. They are probably more worried about whether
The Situation will hook up with Snookie on the Jersey Shore reality


It is not surprising that the American public, American politicians,
and the American media don’t see the impending crisis. The organizations
that have an interest in looking farther than next week into the future
have all concluded that the downside of peak oil will cause chaos
throughout the world. The US Military, the German Military, and the UK
Department of Energy have all done detailed studies of the situation and
come to the same conclusions. Social chaos, economic confusion, trade
barriers, conflict, food shortages, riots, and war are in our future.

The U.S. was warned in 2005. Its own Department of Energy
commissioned a report by Robert Hirsch to examine peak oil and its
potential consequences to the US. The introduction stated:

“The peaking of world oil production
presents the U.S. and the world with an unprecedented risk management
problem. As peaking is approached, liquid fuel prices and price
volatility will increase dramatically, and, without timely mitigation,
the economic, social, and political costs will be unprecedented. Viable
mitigation options exist on both the supply and demand sides, but to
have substantial impact, they must be initiated more than a decade in
advance of peaking.”

The main conclusions reached by the experts who worked on this report were:

  1. World oil peaking is going to happen, and will likely be abrupt.
    World production of conventional oil will reach a maximum and decline
  2. Oil peaking will adversely affect global economies, particularly the
    U.S. Over the past century the U.S. economy has been shaped by the
    availability of low-cost oil. The economic loss to the United States
    could be measured on a trillion-dollar scale. Aggressive fuel efficiency
    and substitute fuel production could provide substantial mitigation.
  3. The problem is liquid fuels for transportation. The lifetimes of
    transportation equipment are measured in decades. Rapid changeover in
    transportation equipment is inherently impossible. Motor vehicles,
    aircraft, trains, and ships have no ready alternative to liquid fuels.
  4. Mitigation efforts will require substantial time. Waiting until
    production peaks would leave the world with a liquid fuel deficit for 20
    years. Initiating a crash program 10 years before peaking leaves a
    liquid fuels shortfall of a decade. Initiating a crash program 20 years
    before peaking could avoid a world liquid fuels shortfall.
  5. It is a matter of risk management. The peaking of world oil
    production is a classic risk management problem. Mitigation efforts
    earlier than required may be premature, if peaking is long delayed. On
    the other hand, if peaking is soon, failure to initiate mitigation could
    be extremely damaging.
  6. Economic upheaval is not inevitable. Without mitigation, the peaking
    of world oil production will cause major economic upheaval. Given
    enough lead-time, the problems are soluble with existing technologies.
    New technologies will help, but on a longer time scale.

The Hirsch Report clearly laid out the problem. It urged immediate
action on multiple fronts. It is now 5 years later and absolutely
nothing has been done. In the meantime, it has become abundantly clear
that worldwide oil production peaked between 2005 and 2010. The Hirsch
Report concluded we needed to begin preparing 20 years before peak oil
in order to avoid chaos. We are now faced with the worst case scenario.

The US Military issued a Joint Operating Environment report earlier
this year. They have no political motivation to sugarcoat or present a
dire picture. This passage is particularly disturbing:

A severe energy crunch is inevitable
without a massive expansion of production and refining capacity. While
it is difficult to predict precisely what economic, political, and
strategic effects such a shortfall might produce, it surely would reduce
the prospects for growth in both the developing and developed worlds.
Such an economic slowdown would exacerbate other unresolved tensions,
push fragile and failing states further down the path toward collapse,
and perhaps have serious economic impact on both China and India. At
best, it would lead to periods of harsh economic adjustment. To what
extent conservation measures, investments in alternative energy
production, and efforts to expand petroleum production from tar sands
and shale would mitigate such a period of adjustment is difficult to
predict. One should not forget that the Great Depression spawned a
number of totalitarian regimes that sought economic prosperity for their
nations by ruthless conquest.

Here is the summary of their analysis:

To generate the energy required worldwide by the 2030s would require us to find an additional 1.4 MBD every year until then.

the next twenty-five years, coal, oil, and natural gas will remain
indispensable to meet energy requirements. The discovery rate for new
petroleum and gas fields over the past two decades (with the possible
exception of Brazil) provides little reason for optimism that future
efforts will find major new fields.

present, investment in oil production is only beginning to pick up,
with the result that production could reach a prolonged plateau. By
2030, the world will require production of 118 MBD, but energy producers
may only be producing 100 MBD unless there are major changes in current
investment and drilling capacity.

2012, surplus oil production capacity could entirely disappear, and as
early as 2015, the shortfall in output could reach nearly 10 MBD.

production and distribution infrastructure must see significant new
investment if energy demand is to be satisfied at a cost compatible with
economic growth and prosperity. Efficient hybrid, electric, and
flex-fuel vehicles will likely dominate light-duty vehicle sales by 2035
and much of the growth in gasoline demand may be met through increases
in biofuels production. Renewed interest in nuclear power and green
energy sources such as solar power, wind, or geothermal may blunt rising
prices for fossil fuels should business interest become actual
investment. However, capital costs in some power-generation and
distribution sectors are also rising, reflecting global demand for
alternative energy sources and hindering their ability to compete
effectively with relatively cheap fossil fuels. Fossil fuels will very
likely remain the predominant energy source going forward.

Just this week, the German magazine Der Spiegel obtained a
confidential study about peak oil that was done by the German military.
According to the German report, there is “some probability that peak oil
will occur around the year 2010 and that the impact on security is
expected to be felt 15 to 30 years later.” The major conclusions of the
study as detailed in Der Spiegel are as follows:

  1. Oil will determine power: The Bundeswehr
    Transformation Center writes that oil will become one decisive factor in
    determining the new landscape of international relations: “The relative
    importance of the oil-producing nations in the international system is
    growing. These nations are using the advantages resulting from this to
    expand the scope of their domestic and foreign policies and establish
    themselves as a new or resurgent regional, or in some cases even global
    leading powers.”
  2. Increasing importance of oil exporters: For
    importers of oil more competition for resources will mean an increase in
    the number of nations competing for favor with oil-producing nations.
    For the latter this opens up a window of opportunity which can be used
    to implement political, economic or ideological aims. As this window of
    time will only be open for a limited period, “this could result in a
    more aggressive assertion of national interests on the part of the
    oil-producing nations.”
  3. Politics in place of the market: The Bundeswehr
    Transformation Center expects that a supply crisis would roll back the
    liberalization of the energy market. “The proportion of oil traded on
    the global, freely accessible oil market will diminish as more oil is
    traded through bi-national contracts,” the study states. In the long
    run, the study goes on, the global oil market, will only be able to
    follow the laws of the free market in a restricted way. “Bilateral,
    conditioned supply agreements and privileged partnerships, such as those
    seen prior to the oil crises of the 1970s, will once again come to the
  4. Market failures: The authors paint a bleak picture
    of the consequences resulting from a shortage of petroleum. As the
    transportation of goods depends on crude oil, international trade could
    be subject to colossal tax hikes. “Shortages in the supply of vital
    goods could arise” as a result, for example in food supplies. Oil is
    used directly or indirectly in the production of 95 percent of all
    industrial goods. Price shocks could therefore be seen in almost any
    industry and throughout all stages of the industrial supply chain. “In the medium term the global economic system and every market-oriented national economy would collapse.”
  5. Relapse into planned economy: Since virtually all
    economic sectors rely heavily on oil, peak oil could lead to a “partial
    or complete failure of markets,” says the study. “A conceivable
    alternative would be government rationing and the allocation of
    important goods or the setting of production schedules and other
    short-term coercive measures to replace market-based mechanisms in times
    of crisis.”
  6. Global chain reaction: “A restructuring of oil
    supplies will not be equally possible in all regions before the onset of
    peak oil,” says the study. “It is likely that a large number of states
    will not be in a position to make the necessary investments in time,” or
    with “sufficient magnitude.” If there were economic crashes in some
    regions of the world, Germany could be affected. Germany would not
    escape the crises of other countries, because it’s so tightly integrated
    into the global economy.
  7. Crisis of political legitimacy: The Bundeswehr
    study also raises fears for the survival of democracy itself. Parts of
    the population could perceive the upheaval triggered by peak oil “as a
    general systemic crisis.” This would create “room for ideological and
    extremist alternatives to existing forms of government.” Fragmentation
    of the affected population is likely and could “in extreme cases lead to
    open conflict.”

Even the International Energy Agency, which has always painted a rosy
picture of the future, has even been warning about future shortages due
to lack of investment and planning.

Americans think that the discovery of oil on our soil in 1859 has
entitled us to an endless supply. It is not so. We account for 4.3% of
the world’s population but consume 26% of the world’s oil. As China,
India and the rest of the developing world become economic powerhouses,
they will consume more and more of the dwindling supply of easily
accessible oil. As the consumption curve continues upwards, the
production curve will be flat. The result will be huge spikes in prices.
It will not be a straight line, but prices will become progressively
higher. As the studies referenced above have concluded, the result will
be economic pain, social chaos, supply wars, food shortages, and a
drastic reduction in lifestyles of Americans. They won’t see it coming,
just like they didn’t see the housing collapse coming or the financial
system collapse coming. They’ll just keep filling up those Escalades
until the pump runs dry.


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EscapeKey's picture

Oh we applaud you as well for taking time out of your busy schedule to parade your ignorance about. Believe me, we've had quite a few laughs as well.

SheepDog-One's picture

And VK, I dont see those yelling we're in dire straights reducing their lifestyles at all! Still 3 people on a private 777 flying all over the place coast to coast to meet for coffee, personal jets for all execs and politicians, but YOU need a bicycle...hey go for it man!

Maos Dog's picture

I remember a lecture given to us in school about peak oil, and how it was here and soon going to cause worldwide chaos etc etc etc, in effin 1974!!!!! I call bull**it!

The entire oil situation is 100% a political problem, and not a resource problem.

I don't care anyway, I tear up the roads in my 54mpg Harley

SheepDog-One's picture

Right! Peak oil was a dire emergency in 1970! Wildly hyped back then. Its a control problem, they want set prices, massive controls, and massive new taxes and the sheeple lap it up like manna! Oooo we're scared please tax us and control us more! America is just a Stockholm Syndrome basket case, and Im cheering for its quick demise.

Calmyourself's picture

Ok you win, peak oil is here, we are running out and anarchy is on the way.. That being said where is the push to build 80-200 standardized nuke plants in this country?  Until you (Gore, etal) start acting liking a crisis is imminent and push nuclear I will stay calm. 


People, the fingers are staying in the dam for a long time get used to that, deflation is here for a good long while and default and the other boogie men are still way under the bed....

ZackAttack's picture

But, frankly, if the survivors are codgers like Kunstler, I'd just as soon be fucking dead.

william the bastard's picture

Abiogenic Oil. It's a gas!

Who knew there were that many dinosaurs?

SheepDog-One's picture

Actually oil doesnt come from 'dinosaurs' at all, but vegetation from swamp bogs, decaying plant matter that is obviously ongoing at all times. Anyway, yes its obvious that oil IS regenerating!

curbyourrisk's picture

You did not really expect a Peak believer to know that...did you?  They are all about opion....not PROVEN FACTS.  They love theory.....just like the whole global warming army... and Algore nuts.

Toxicosis's picture

Hey curb, where exactly is your data?  Can you justify your assessment by PROVEN FACTS or are you just blowing that out of your ass.  Anyway Curb, what background in science do you have to toss around statements devoid of any support, validity, or substantiation to give credibility to your observations.  Is science just convenient when it works for you, fits into your whimsical paradigm or only when you choose to accept aspects of it.  Get a life Curb, and at the least get an education, cause your assessments are about as valuable as shit in the wind.

Millennial's picture

Shit in the wind is pretty valuable. I got some shit in my wind. Now I feel like there is a wet spot between my hairy ass cheeks. 

trav7777's picture

Lol...maybe they can show me ONE oil well in the history of the world that hasn't peaked.

Proven facts?  Fuck, this shit has been out there getting measured by professional oilmen and geologists for fucking 100 years.

WAKE UP MORONS, the USA peaked in 1970.  40 years ago...get with the fucking program already.  How motherfucking out of date can you be to talk about not having CYR's "PROVEN FACTS" when the effin facts are 40 years fucking old?

GFD, there's a wiki page showing major nations' peak production dates; anyone can look at it and check the references.  JFC

curbyourrisk's picture

So says.....whats his name!

trav7777's picture

Gotta ask this:  are you people fucking stupid?

Do you want PRODUCTION CHARTS which SHOW a C&C peak in 2005?  Or do you want to stay stupid?

The origin of oil is IRRELEVANT.  I don't care if it comes from the three of your ASSES.  If you consume it at above the rate it replenishes, you have a fucking problem, moron.  Even idiots as clueless as YOU can figure this shit out, right?

So you DENY peak.  You therefore claim that oil production can GROW FOREVER.  Only a raving MORON would believe something so utterly absurd.

The problem with you retards is that you don't even understand what Peak IS despite the best efforts of dozens of people with far more cognitive ability than you trying to explain it to you in details that those pathetic things you call brains can grasp!

Let me try one more time:  we consume oil in this world at a RATE.  We do not CARE how much oil is in the ground.  We care solely about the RATE at which we expect to use it.

Peak oil is the point at which the RATE we can extract oil from the ground peaks.  After that point, we can only produce it at decreasing RATES compared to previous years.  As our economies are all built on growth, we NEED to have an INCREASING RATE of oil production because energy is a net input to EVERYTHING.  If we wanna have more people doing more things (growth), we must have energy at an increasing RATE.

Peak Oil has NOTHING WHATSOEVER to do with reserves, only to do with the RATE at which those reserves can be produced.

Now, this may fucking shock you, but ALL OIL FIELDS have PEAKs.  Every single fucking one in the history of oil.  100%.  All.  Todo.  Got it?  Now, this may be a leap for you guys to get your heads around, but if you see that individual wells have peaks and entire fields have peaks (they do) and collections of fields called COUNTRIES have peaks (they have, approximately 60 of the top collections of fields we refer to as "countries" have met a measurable and DEMONSTRABLE peak in their oil production), then is it so hard for you cretins to grasp that collections of countries that we call the fucking EARTH might also have a peak???  Is that REALLY so fucking hard?

Or are we to assume that wells peak, fields peak, collections of fields called countries peak, but the collection of countries called the earth, well...naw, it will continue geometric growth in production FOREVER? 

VK's picture

+ Gazillion, Fucking Epic Trav! Peak Bitchez!!

curbyourrisk's picture

Production charts. based on data provided by whoooo......

Remember...statistics are just as good as the data sets they come from.  Ask ALGORE how his hockey stick theory went.....  Up in smoke.

You guys only provide one side to the story...your side......Would love to know if you are long oil or short oil......



EscapeKey's picture

Oh right, so your no stats tumps trav's sources?

You're a fucking retard.


John Bigboote's picture

Wow, what a pussy response. You've been obliterated. Quit posting before it gets even uglier for you.

Billy Bob's picture

This whole thread is making me sick!... I have been a member of this site since the Spring of 2009  and I am sad that it has become the dumping ground of the stupid, witless, and ignorant.  For a period last year, the folks who attended here and contibuted here were informed, connected to reality, and generally questing  for better information and more knowledge.  It has become a place ( as have many other high profile site) where the uninformed, stupid and ignorant go to spew their inanity.

There was a series recently, I think 4 articles, in the New York Times on Stupid People.  It was quite interesting.  The take away for me is that stupid people do not know they are stupid. They are unable to perceive their own stupidity, and they are unable to recognize that other people may have better information, better analytical skills, or better solutions.  They are what one of my friends call "double dumb".  They don't know, yet they don't know that they don't know.

The problem in these exchanges, on topics that require informed comment, insightful estimations and carefully considered obsetvations, is that the informed and knowledgeable are sucked into an unending round of challenge and then response.  Nothing wrong with challenge and response... but why continue to offer good energy and consideration to those who are incapable of receiving it?  The Carpenter is reported to have said something about "casting pearls in front of swine". 

Let's please allow these exchanges to expire.. it does nothing for the informed to respond to the uninformed who can not hear...... They are only here because we respond.,. when we quite responding, they will go somewhere else.


Billy Bob

trav7777's picture

Downing Effect and Dunning-Kruger...actually, researched psychological phenomena.

I keep trying, though, but I've gotten more abusive as the years have gone by.  I've been doing this peak thing since like 2003 or something, maybe even before that.  I used to be patient, polite, try hard.  Friend of mine had a 1400+ SAT back when that meant something, couldn't get this shit.  I tried over and over, because I am stubborn and I refuse to admit defeat.  No Kobayashi Maru for me.  Eventually, I succeeded.

His position was classic Downing; he assumed that if it were real, he'd have known about it.

Most people, when they are forced to accept the truth of peak, retreat to the Jiminy Cricket Defense of hopium OD.  "They" will just "come up with something."

And, maybe they will...I have long said that fusion power is our way outta this, but that sadly always seems a decade off.  But the stupid are very clearly outbreeding everyone else, and this modern idiot is so brash and cocksure; it so totally amazes me how self-important and grandiose literally mediocre people are.  It's really quite astonishing at times.

People who cannot write with a modicum of clarity, have a paucity of vocabulary range, lack even basic grammar and language structure, nevermind their ubiquitous incoherence...these people expect to be taken SERIOUSLY in their opinions, for god's sake.

I marvel at it, and wonder just exactly wtf is going on in their heads; do idiots like CYR actually believe that they can match wits with me?  That their level of knowledge on this topic is at parity with mine?  It appears patently obvious to me and several others here who is knowledgeable on this topic merely by what they write; it seems to be self-evident, but I guess I must conclude that it isn't.  This is a very confounding phenomenon, probably warranting further investigation into how to surmount it.

I really believe that, ceteris paribus, it would be more advantageous if stupid people were told early on that they were stupid as opposed to being subjected to the abuse of ersatz self-esteem-oriented "education," which serves only to compel their belief in the fabrication that they are intelligent.  Instead, we irrationally dump metric assloads of resources into futile and vainglorious attempts to put everybody on the righthand side of the bellcurve.  It's not just asinine, it's really rather self-destructive.  The average will not invent the transistor or microprocessor or anything else for that matter because such an endeavor is outside of the purview of the average!  As a society, we'd be better served by placing at the disposal of the intelligent our resources so that they could provide society with all of the whizbang cool consumer merchandise that the cretins ooh and ahh over.  Along with technical quantum leaps.  Instead, there is mass agonization over poor ghetto kids with IQs of 80, so we need to cut manned space flight and other science research because dem kids gots ta has sheeit n' gibs me dat.

Why not just give one child's scholarship money to the other child who's a heroin addict?  Seems to make about as much sense.

SheepDog-One's picture

Over $100 billion spent on the last G-20 meeting, for SECURITY, each of them flew multiple luxury jets there, and yet the sheeple believe THEIR story that you MUST now have massive controls put on you, new huge taxes, and a permission slip for what you drive? Its all hillarious to me, seeing the total implosion of humanity. And they LIKE it!

traderjoe's picture

I'm not so sure about the idea of peak oil. I get some arguments on both sides. Certainly a lot of natural gas available in the US. Of course, not without some environmental impacts. 

I can be sure of one thing - there's no way the entire BRIC countries can reach the same standards of living with the same carbon usage - and that will create problems. 

Did read an interesting article last week on Peak Helium though. 10 years or so to total depletion (or something like that). No way to reproduce more. 

SheepDog-One's picture

Oh man that more helium balloons to inhale then talk funny at parties? We're screwed.

trav7777's picture

Ok, TJ...lemme help you out.

On ANY energy-related topic on ZH, just scan down and find my posts.  I mentioned the 2002 Helium peak in many previous posts.

Helium naturally replenishes because it comes from U238 alpha decay.  HOWEVER, the RATE at which it can be extracted from the earth will reach a peak point and then decline.

Helium is an absolutely CRITICAL element, necessary for the very bleeding edge of technology, irrespective of what this sheepdog idiot says below me.  He is used in cryogenics, MRI and high tech imaging; yet we waste it on kids' balloons.  This is the tragedy of our society filled with fucking consumptive viruslike cretins.

The deer on the island don't mean to consume themselves into self-destruction; they are just too stupid to know not to.  Humanity is cursed similarly.

tmosley's picture

You do know that if He stocks decline, they will stop using them for balloons, right?

You should also know that if that He wasn't used for balloons, it would be lost into the atmosphere and no one would have gotten to enjoy it, right?

You keep saying people are stupid.  You are a person, too.  I guess you have low self esteem.  In the real world, people overcome obstacles as they come before them, not a hundred years before they get to them.  All you need to maintain access to that which is vital is sound money so that those applications that are most vital to the economy (and can therefore command the greatest access to those resources) have the priority.  This means no debasement or taxation, both of which are means by which governments gain access to goods and services that are more valuable than any service provided by said government.

trav7777's picture

No...usage for balloons will compete with real usages and price will rise.

In fact even peak deniers such as Douchinger (who dives) have noticed the He price trend and supply tightness.

Sound money is fucking irrelevant.  You can put all the sound fucking money, the entire WORLD'S WORTH of gold in front of a depleted oil well and COMMAND IT to deliver you more oil and it will not.

I got no freakin idea where you got the notion that money was somehow the end all and be all of life.  You can't eat gold nor run your car off of it.

Treeplanter's picture

I drove cab in Vancouver.  All cabs are run on natural gas.  Cheaper, cleaner, no loss in power.  We already have an alternative to oil.  Instead we blow all this money on scams that don't work too hot or cost a fortune.  We need oil for making stuff.  At some point we gotta stop burning it up.  Maybe we need $200 oil to move us to running our vehicles on natural gas.  In the meantime, the only politician who is talking about oil is Sarah Palin. And she's the one who removed the logjams stopping a gas pipeline from Alaska.  Dumb Palin, dumb like an Arctic Fox.'s picture

i had a friend back in the 80's that just converted his truck to natural gas. he was a motor head and did it himself. he said win/win. just hard to find gas stations with natural gas. guess, what they did the same thing with diesel. it's the gas station companies that are the obstruction, maybe.

brian0918's picture

What is the problem, exactly? It's not as if all oil sources are equally accessible, and we are suddenly going to wake up one day and realize "ZOMG WE HAVE NO OIL LEFT!!111".

No. We are currently utilizing the most accessible, cheapest oil sources. As those dry up, we'll start accessing the more difficult, more expensive sources of oil, and that will raise the price of oil overall. Over time the price will continue to increase, and that will naturally wean people off oil, as alternative energies become more competitive and profitable. We will all probably be using alternative resources well before the oil resources are completely exhausted.

So, what's the problem? The only way I could see this natural market process circumvented is if government gets involved, and holds the price of oil lower than it naturally would be.

This article in Forbes gives some more insight:

hedgeless_horseman's picture

We will all probably be using alternative resources well before the oil resources are completely exhausted.

How is that energy-from-static generator and invisibility ray shield going, Galt? 

Unless some more, and different, UFO's crash with new technology, it looks like we better work on improving what we have now.

brian0918's picture

Is your comment even a response to anything I said? Who said anything about needing some futuristic technology?

As oil resources become more expensive to process, and oil approaches $500 a barrel, solar power will look much more appealing, and attract more R&D and customers, making it more efficient and cheaper.

hedgeless_horseman's picture

My comment is based on your comment and how it relates to one of the main premises of your avatar's most popular book, free energy, which you clearly haven't read.  That is sad. 

Better either find a new avatar, or read the book.

Citxmech's picture

The problem is the way the commodities markets work.  When supply is met by demand, prices are stable.  When there is "one bushel" more supply than demand, the price structure is broken, and prices drop at a far greater percentage than the oversupply [See The Devil's Bushel].  The corrolary to this is when supply drops below demand.  Now, the opposite happens and the price gets bid to the moon.  Of course the world cannot function like it has on $150/bbl oil, so demand crashes and prices plummet in a vicious cycle [bumpy plateau]. 

If we managed our contraction, we could wean ourselves off of the oil teat - but no one want's to take the hit.  Instead we're embarking on WWIII as we speak:  The war for the last of the easy resources [see Resource Wars].  It is going on right now - most of us just don't know it yet.     

Waterfallsparkles's picture

Anyone think Gas prices are down because the Government now owns GM?

Jason T's picture

I believe July 2008 was the peak.  I wrote about it in April 2009 and warned clients.

Bluntly Put's picture

Always talking about peak resources. What about those issues no one wants to discuss like peak entropy? What happens when the entropy reservoir reaches capacity eh? What about peak planning? What happens when idiocracy rules the day? (already is). There is unlimited electrical energy flowing from the upper ionosphere it forms hurricanes, thunderstorms, etc. Here's another what about peak ignorance? What happens if the masses suddenly get smart and realize the unlimited electrical potential given to us freely from the sun?

ZackAttack's picture

Entropy sure isn't what it used to be.

Millennial's picture

I just farted out my nacho bell grande. I agree.

RicktheDick's picture

Anyone interested in learning more about peak oil, should read "The Long Emergency."

tom's picture

Wrong all over.

Your chart has consumption exceeding production by 1-3k bpd for most of the last decade. How do you think that happened? An enormous secret stockpile somewhere that we drained down? Or is your data just wrong? Ooh this is a tough one. I'll give you three guesses.

Your chart is at least right that production and consumption both dropped sharply in 2008-2009. Ever heard of Opec? Production quotas? In which Arab oil producers agree to produce less than capacity? (And Iran and Venezuela agree to pretend to.)

Your chart is also right that production and consumption have rebounded, but by less, in 2009-2010. Compliance with Opec quotas has been deteriorating as demand has been rebounding. If this trend continues, we'll start rubbing up against Opec capacity in another year or two. But the Saudis have almost 2mbpd of delayed fields that they were scheduled to bring on line in 2008-2009. I suppose you take on faith Matt Simmons' claims that these fields are worthless, even though his book has been debunked a hundred times over.

And where do you get your figures for demand from 2011 on? Timothy Geithner? My expectations are for stagnation in 2011 developing into a severe crisis by 2012-2013. If I'm completely wrong and somehow the US is saved from fiscal crisis (by aliens? discovery of a perpetual motion machine?), then maybe oil capacity will be under real pressure from demand by earliest 2014.

papaswamp's picture

Completely unrelated...anyone been watching Silver? It is going nuts today.

Millennial's picture

I just ate some multi-vitamins. I'm healthy now.

knukles's picture

May you all Forever be in Tormented in Stasis whilst crossing the Flaming River of Blood in the Seventh Circle of Hell for your Callous disregard of the Bearers of all Reasonable Spiritual and Alkhemical Truths of Mankind.

Nobody gets out alive who fucks with Snooki and JerseyShore.  If Peak Oil don't matter to Snooki, it ain't.   
Remember, we're America and History Don't Apply to Us.

Millennial's picture

You should've read my post dude. I think u stole it and compressed it.

I found some ants on the dishes in my computer room. I like to think they are helping me clean.

economicmorphine's picture

I believe in Peak Oil, because we're talking about "economic recovery" not hydrocarbon in the ground.  Also, King Hubbert actually did a little work in arriving at his thesis, unlike the typical message board dolt who talks about endless supplies of oil and gubment plots. 

Quinn’s main point is correct.  Oil usage patterns are completely unsustainable, especially in the US.  I understand the desire of most people to maintain the status quo, but I don’t understand the “bury hour head in the sand” mentality.    The same is true of water, BTW, but don’t tell people that they can’t grow bluegrass in the desert.  They will insist that it is their God-given right until they turn on the faucet and get gravel, at which point they will demand that their incompetent government rescue them from themselves.

That said, in my area of rural Texas many fortunes have been made on the back of a barrel, and it seems that people here understand very clearly what is happening.  When you see wealthy independent producers driving Priuses to town in Texas, it sort of gets your attention.

nit.noi.baht's picture

Man, this writer rips Maria.

I think she is hot. And recalling how excited she got mentioning that Ebay up $50 during must have really gotten her blood boiling.

Rip Kudlow, but, Maria. Dude...