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Visualizing Peak Oil: Hype, Hope, Boom, Or Bust
While oil prices have slid in their ubiquitous post-QE manner in the last few days, they remain notably elevated amid growing tensions in Iran and central bank largesse spillovers. These short-term fluctuations, however, pale in significance to long-run implications of peak-oil and whether it exists or not. From cost implications to technological innovation and demand destruction and supply constraints, the feedback loops of oil prices over time provide vicious and irtuous cycles for the global economy as we know too well. This brief clip provides all the color we could need on the matter of fossil fuel dilemmas and the diverging opinions of Astenbeck's (ex-Phibro) Andy Hall and Goldman's Michele Della Vigna provide the depth.
DON'T WORRY, DRIVE ON: Fossil Fools & Fracking Lies from MONSTRO on Vimeo.
Andy Hall's Conclusion: In summary, yes there are new oil resources to be developed but it will require high prices for it to happen and even then it is by no means certain that these resources can be developed fast enough to offset declining production from the existing supply base. More likely is that prices will need to rise periodically to curb demand growth emanating from the developing economies. In any event, we feel that longer dated oil prices which remain at a steep discount to spot prices remain a relatively safe investment with very significant upside and limited downside.
What impact high oil prices?
Goldman's Michele Della Vigna: Since the start of this oil price cycle in 2000, peak oil theories have become increasingly popular, due to lack of credible new sources of crude oil. Over the past five years, however, the industry has opened up two new credible sources of future supply: the ultra-deepwater and the “oil shales”. We believe that these new sources of oil will be comparable in scale to the opening up of the North Sea and Mexico in the 1970s and will lead to a meaningful reduction in oil prices, alongside a change in the balance of power of the oil and gas industry. This is why we call it a revolution. However, the technical complexity of these developments and the tightness of the oil services supply chain are likely to delay the impact of these new projects by several years, sustaining a tight oil market.
The 'new' cost-curve...
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My whole point Flak is that in the AGE of the oil/motorcar/petrochem oilgarchy complex was championed by US industrial hegemony; albeit the most inventive entrepreneurs of their age. The Seven Sister Oil oligarchy allowed supply and demand to be dictated by what suited BIG Business America. THe 1928 Achnacarry and Turkish red line agreements laid the groundwork for subsequent carveup of MId-East oil, that the Saud-FDR meeting of 1945 further nailed in concrete. All ME oil play was a resultant of that major Oligarchy play that ensured the oil age worldwide controlled by them.
Red Line Agreement - Wikipedia, the free encyclopedia
EconoSpeak: Has BP Been Too Careless Due To Its Imperial Past?
Oil is above all a politico-oligarchy, big money-big power deal. It is the lifeblood of current civilization and has to be protected like the Holy Grail; by Oil producing Popes and Nation-state consuming kings alike.
To get out of this industrial and civilization conundrum we have to invent a new game. And even if the number of players in current energy game increase, like in current frack gas and smaller sized oil/gas discoveries scenario, the hub of cheap oil stays the same; totally Oligarchy controlled.
So the END justifies the MEANS from their perspective. Simple as that.
What Carter tried was to use the hiatus of 1978-79 peak oil fear to launch a program that would have made US energy independent based on Coal gasification and liquifaction. It was PRICED then at 18$/bbl to break even with oil longer term projections, then at 36$/bbl on spot basis.
The project cost price of those first generation plants of liquids from coal, aka Exxon colorado venture, was more in the range of 11-15 $/bbl; below the 18$ benchmark which got it the government go-ahead.
It is debatable if he, Carter, was entirely wrong, whatever the subsequent supply demand situation. Saud was the arbitrator of world swing production since 1960 GHawar. So Saudi oil could have been used as political ploy by USA/OPEC to maintain oil price worldwide around 18$ level throughout that 1980-2000 period, if US policy had gone down that road bigtime. It would have been win-win for first world and ME producers; as there would have been more balance than the pain today in true PEAK cheap oil.
It would have saved those TX investments of the early 1980s, that BR talked about. But Reaganomics won and Sheikh YAhmani, architect of supply/demand oligarchy cartel balancing model since 1973 was given the pink slip.
While not disagreeing with the premise that everyone was in bed with the other, the production curves suggest that everyone extracted as hard as they could until they couldn;t...Throw in the fact that USSR was bankrupt and needed hard currency to pay the bills and that the only source of hard currency was oil... Anyway you get the ideas...
As for energy independence from CTL, it never was a serious idea, a dirty little secret is that based on SASOL number, the US would have to double coal production to replace 10% of oil use...
In those days the greenhouse effet was not understood. Point taken about Sasol reality.
The real nail in CTL route is the CO2 conundrum as shown by this 2007 article :
Fuels for the Future: Romm’s Testimony to Congress | Center for American Progress
But this article is only relevant to those who believe in global warmimg meme.
Here is a more recent technical paper on CTL potential :
http://globalchange.mit.edu/files/document/MITJPSPGC_Rpt197.pdf
I'll give you a little hint... it ain't a meme...
You and I do agree that they will burn whatever they can get their hands on, planet be damned...
I can say it ... Good Bye Oil ... Hello Hell
Hey, that's not such a bad idea... do the three Abrahamics still all believe that hell is 'down'?
http://www.britannica.com/EBchecked/media/100516/A-cross-section-of-Earths-outer-layers-from-the-crust
HELLO indeud.
http://www.youtube.com/watch?v=CFyOw9IgtjY [3/8]
~ 6min mark Peak Oil?
http://www.youtube.com/watch?feature=endscreen&v=yQd-VGYX3-E&NR=1 [cont.]
Robert Newman has a short series about peak oil called "History Of The World Backwards". In it the timelne plays in reverse. By the time the last oil well is sealed humans miraculously rediscover the next best source of free energy - slaves.
:-))
Put sales tax on gas and don't stop until all rednecks are not on bicycles, All SUV should be ban and recycled. All Baby Boomers, by far the most intellectually retarded generation, should drive modern sub-3,000 pound cars.
Bigger and uglier -> http://www1.eere.energy.gov/vehiclesandfuels/images/facts/fotw475.gif
Fuel Taxes don't work, and the direct effect of artificially jacking the fuel cost is REAL & UNAVOIDABLE INFLATION. When the Cable or Phone company shows up in a van loaded with a 1000lbs of parts to provide the basic infrastructure Mr. McIdiot, they give him a 4-figure bill just for showing up, and that gallon of milk which is generally produced regionally and transported by truck instead rail will stop costing $3 because some redneck has to use a big diesel engine to get it to market.
Not all fuel consumption is equal.
Fuel taxes seem to work in Europe well enough. Their fleet is much more fuel efficient than America's and their consumption is only half as much for a similar centralized industrial economy.
There is nothing like $10 gas to get the average SUV owner down to the Honda dealer.
And while is fuel twice as expensive in Europe as the United States, EVERYTHING else is also more expensive in Europe (and the iCrap standard of living is lower) as a direct consequence of the higher fuel cost (and Europe has a far more sophisticated and fuel efficient logistics infrastructure).
If you want to go the insane tax route, the London congestion tax model is far less economically destructive - TAX THE MOTHERFUCKERS WHO WANT TO DRIVE PRIVATE CARS IN PLACES WHERE THERE ARE EXISTING ALTERNATIVE PUBLIC TRANSPORT INFRASTRUCTURES.
All this goes to prove that the ME oil producers, as the meNA and West African regions, all have an historical cost base of average well head cost of USD 10-20/bbl; and thats being conservative.
So these countries stay strategic as they have the biggest export ratios, and recycling their sovereign funds (UAE, KUwait, Qatar) constitutes the Montezuma gold of current first world investment. That is why the west is playing MIC games out there; like an addicted junkie since 1930.
Watch that money line as OIL profits stay the hardest plank to walk on, when the fiat pump debases all other assets around the world.
The OIL/fossil energy lobbies hold the world by their nuts. As far as the west is concerned, the old ANglo Seven Sister oligarchy and surrogates ( Italian, French, Norwegian multinationals), it is now holding less and less the reins of world production, as China and National groups like GAzprom rule the roost. That is the real writing on the wall for First World as this trend will accelerate and hard oil assets will no longer be a western oligarchy game.
Alternative energy scenarios have to be evaluated in this geostrategic context; not just in short term thinking.
We desperately need a new energy paradigm and alternative fuel sources. And it can only come from innovative breakthroughs; although energy conservation/consumption reduction and new modes of living along the line could help considerablly, notably in a nation-state continent that represents 4% of world population and 25% of world energy consumption.
If Peak Oil were real, the price of Oil wouldn't be tracking with Inflation. It would have broken free of that Inflation adjusted price and would have risen a long time ago. The Supply/Demand curve would have kicked it in the nuts rather than letting the price go down in real Inflation adjusted terms.
Tylers, why do you post this shit if you understand Economics on the level that it's apparent that you do, most of the time that is....
Another superb demonstration of your analytic abilites or lack thereof...
Hint: from their respective bottoms, oil has kicked golds ass....
Show me. Gold's up about 50X from $35/oz in 1970.
Oil is up ~55 from then ($2 a barrel)...
CL was less than $90 today. How is that ~55? Did you ever get any training in arithmetic?
How do you figure that's "kicking ass"?
Yep - this is an economic and political question - if you want to know if there's more oil, ask Bernanke and Obama .. would they lie to you?
http://www.americanthinker.com/2012/03/what_if_oil_and_natural_gas_are_renewable_resources.html
What if oil and gas are renewable (Where did all the Gas come from) (Why are we so suprised)
great article from the American thinker
and great book by Thomas Gold
Scientist Thomas Gold presents the decades-old theory of "abiotic" oil-creation, which supports these facts, in his book, The Deep Hot Biosphere. In it he explains that the idea of the "biotic" creation of "fossil fuels" -- that decaying organic matter is compressed into oil -- is incorrect. In fact, the earth is constantly producing new oil very deep below its surface, and in some cases the oil flows up to replenish existing oil fields thought to be exhausted. In simple terms, the microscopic organisms mentioned above interact with the hydrocarbons, altering them and leaving their footprint, thus disproving the notion that oil is a "fossil fuel."
Read more: http://www.americanthinker.com/2012/03/what_if_oil_and_natural_gas_are_renewable_resources.html#ixzz27TwzJnwS
I'm not surprised. The same warmongering Zionist neo-conz at AmThinker take Ann Barnhardt seriously. "Abiotic oil" is also frequently invoked on Coast-to-Coast Late Nite radio, along with witches, werewolves, and Bigfoot. Sez all.
Thanks for the great link Boo! I always thought there was something fishy about 'fossil fuel'. I found this one a little while back. I like the way Colonel Prouty explains the oil industry equivalent of the creation of the Fed.
http://www.youtube.com/watch?v=stnMHgEUrnc
One of the few Peak Oil video clips worth watching: http://www.youtube.com/watch?feature=player_detailpage&v=4Z9WVZddH9w#t=8...
Cheap (easy to drill, easy to transport) oil is history. It only gets more expensive from here on out. Meanwhile, demand is increasing and production is slowly decreasing. Get it?
This guy must really like to listen to himself.
Peak oil. Just another ploy to keep the masses afraid, the quasi-intellectuals occupied and the speculators very, very rich. In my humble opinion global warming and peak oil are from the same book of bullshit with the same bullshit cult followers. Once no one can squeeze a dollar out of this idea, it'll go away like so many other untruths.
Yep - totally agree, there is an infinite supply of oil - because the world is infinitely big. When you look over the earth, it goes so far -you can't even see that far - so its infinite, and that's the same for oil.
These people who come up with numbers and facts - they just don't understand what infinite means.
Pretty soon oil will be so high the world will never run out.
Just think what this is going to do with the production costs for all precious metals.
Listen up folks,
There's plenty of erl in the good ol' USofA. It's just that that stinkin' commie, muslim, not my God (excuse me) worshippin' socialist nazi is keeping us from it. He hates 'Merica cause he's an Indonesian, muslim, Kenyan, 'Murica hater, that's why. Why Sarah Palin was right with the drill me, drill me, drill me and drill me some more. Frack my frickin aquafir you dirty dirty boy. We should be drillin off the coast of every millionaires beachfront home. You know how much they hate those windmills makin' eyesores in front of the 10 million dollar compound they "they built", not their daddy. When they see those glorious drilling platforms a stones throw off of Cape Cod, the Hamptons and Miami beach, their chests will swell with pride as the lovely crude flows home to the good ol' US of A . Why then we can "pull out" as you will from all those dirty rotten MENA nations that have been givin' us so much crap these days. 'Cept for that special land that has us wrapped around their little finger like a ring to be kissed, cause we is special in every sense of the word and eveybody else can kiss my special Texas ass.
The problem isn't just high prices but much low energy returns.