Peak Oil? Is it upon us?

[digitalcraft]

Originally Posted by bmwpower

Funny you should ask, did a project on peak oil theory. The peak oil theory worked well for America because it is one large, but stable economy by global standards, attempts to predict world's peak oil have been futile because as oil prices rise it becomes more financially viable to drill in areas previously deemed too expensive. This is the case of Alberta, previously separating the oil from oil sands was too expensive to justify the investment in capital, but with rising price of oil companies have now begun to extract oil, thus using the second largest reserve of oil in the world, which previously had been untouched, and as oil prices rise, more oil becomes available for the same reason, so I think its unlikely to peak in the near future...

This is both fortunately and unfortunatley true. Another option that used to be too expensive is synthetic fuel. We're actually able to make synthetic fuel, it just used to be that it was more expensive than just drilling for it, but I think even right now its actually less expensive.

Unfortunate because it also causes lots of pollution. Just plain running out of oil so people would go with cleaner alternatives would be a good thing in the long run, even if it would be a painful transition.

[NSXType-R]

Hard to say really. Haven't read the thread yet, but isn't there a way to get oil from a solid? They boil the rock under immense pressure to get the crude oil out. Forgot what the rock was called.

[Fleet 500]

Originally Posted by NSXType-R

Hard to say really. Haven't read the thread yet, but isn't there a way to get oil from a solid? They boil the rock under immense pressure to get the crude oil out. Forgot what the rock was called.

I think you're talking about shale.

[NSXType-R]

Originally Posted by Fleet 500

I think you're talking about shale.

Yup, that's the one.

[NSXType-R]

Originally Posted by bmwpower

Funny you should ask, did a project on peak oil theory. The peak oil theory worked well for America because it is one large, but stable economy by global standards, attempts to predict world's peak oil have been futile because as oil prices rise it becomes more financially viable to drill in areas previously deemed too expensive. This is the case of Alberta, previously separating the oil from oil sands was too expensive to justify the investment in capital, but with rising price of oil companies have now begun to extract oil, thus using the second largest reserve of oil in the world, which previously had been untouched, and as oil prices rise, more oil becomes available for the same reason, so I think its unlikely to peak in the near future...

Originally Posted by MRR

The fact is the world consumes 30 billion barrels of oil a year. The Canadian oil sands have around 180 billion barrels in the best case scenario. There is oil shale as well but it costs such an exorbitant amount of money to produce and it emits much more CO2 in the process of converting it to usable oil. In the past it would mean the US in particular would consume less, demand would decrease, and prices would stabilize but unfortunately huge increases in demand from India and China will more than offset any decrease in US consumption. The fact of the matter is I believe we will see the price of a barrel of crude doubling if not tripling in the next few years. I sincerely hope I am wrong but people have to stop putting their heads in the sand and believing that cheap oil is coming back. In 1998 a barrel of crude somewhere between $10-15 (can't remember exactly) and is now pushing close to $130.

Well Canada's not the only country producing oil. See above post.

Originally Posted by Cyco

CitiGroup obvious thinks the peak is some way away, or demand will lessen greatly as their price forecast is for $40/barrel.

This does contrast with Goldman Sachs' forecast of $200 a barrel though.

Considering that oil went above $100 a barrel when they said it might not have within a period of about half a year, $200 per barrel doesn't sound too difficult to attain.

[MRR]

Originally Posted by digitalcraft

Just plain running out of oil so people would go with cleaner alternatives would be a good thing in the long run, even if it would be a painful transition.

Painful being the key work. The question is not whether we can find alternatives (we most certainly can) but can we substitute them fast enough to make up for the yearly loss of oil production that we probably will see in the future and avoid a precipitous drop in the standard of living for the industrialized world? Maybe is the best I can get at now but worst case scenario involving energy shortages, blackouts, cars could only be used for rare and expensive transportation, air travel collapses for middle class, food impossible to transport so many in 3rd world starve, etc. This is kind of a doomsday scenario but governments and people need to act quickly to prevent the worst from happening.

[Matra et Alpine]

http://services.google.com/earth/kmz...sumption_n.kmz

Not attesting to it's accuracy, but it does get the message over VERY clearly the disparity in consumption

[NSXType-R]

Originally Posted by MRR

Painful being the key work. The question is not whether we can find alternatives (we most certainly can) but can we substitute them fast enough to make up for the yearly loss of oil production that we probably will see in the future and avoid a precipitous drop in the standard of living for the industrialized world? Maybe is the best I can get at now but worst case scenario involving energy shortages, blackouts, cars could only be used for rare and expensive transportation, air travel collapses for middle class, food impossible to transport so many in 3rd world starve, etc. This is kind of a doomsday scenario but governments and people need to act quickly to prevent the worst from happening.

Well the situation that you're proposing is somewhat like what's happening in Juneau, Alaska. Avalanches have damaged power lines and now they must cut back drastically on electricity or else pay 400% more than what they used to pay for electricity. I'm pretty sure the world could use a lesson like what happened in Juneau. If it affects you greatly enough, you'll change, hopefully for the better.

But then again, there are the oil executives. That's another problem on its own. Why do they prefer milking all the money out of us?

Oil execs defend huge profits before Senate - Oil & energy - MSNBC.com

Check this article. It made me shake my head in disbelief.

Times could not be worse for us.

[MRR]

Originally Posted by NSXType-R

Well the situation that you're proposing is somewhat like what's happening in Juneau, Alaska. Avalanches have damaged power lines and now they must cut back drastically on electricity or else pay 400% more than what they used to pay for electricity. I'm pretty sure the world could use a lesson like what happened in Juneau. If it affects you greatly enough, you'll change, hopefully for the better.

But then again, there are the oil executives. That's another problem on its own. Why do they prefer milking all the money out of us?

Oil execs defend huge profits before Senate - Oil & energy - MSNBC.com

Check this article. It made me shake my head in disbelief.

Times could not be worse for us.

Yes but companies like those only control around 20% of supply. Even though their total profit is increasing their marginal profit is decreasing. The fact of the matter is current levels of supply don't meet up with world demand anymore and market speculation may be a symptom not the cause of the problem (if you know something will be in short supply later you pour money into it - its common sense).

[NSXType-R]

Originally Posted by MRR

Yes but companies like those only control around 20% of supply. Even though their total profit is increasing their marginal profit is decreasing. The fact of the matter is current levels of supply don't meet up with world demand anymore and market speculation may be a symptom not the cause of the problem (if you know something will be in short supply later you pour money into it - its common sense).

Okay, but what about speculation? How does that factor in?

If people pour money into oil, saying that there won't be any left, everyone's gonna panick and throw more money in and buy more, decreasing supplies to everyone else. Or that's the way I think it works.

[MRR]

Originally Posted by NSXType-R

Okay, but what about speculation? How does that factor in?

If people pour money into oil, saying that there won't be any left, everyone's gonna panick and throw more money in and buy more, decreasing supplies to everyone else. Or that's the way I think it works.

But it isn't just idiotic panic. Investors are seeing real supply shortages so they are locking in futures contracts to get the commodity later at todays prices. Saudi Arabia has lied about their reserves and has to pump an enormous amount of saline water into their oil fields to keep the daily production up and they have completely re-drilled Ghawar, their largest field, with horizontal drilling methods. This all fine but it means when it is closed to being depleted there will be a sharp drop in daily production (you use it to the last drop but when its gone you know it very fast).

[my porsche]

I had this long reply typed out and when I hit submit, the UCP server shat itself, so here is just what I can remember of it, it was a few hours ago.

Originally Posted by NSXType-R

Oil execs defend huge profits before Senate - Oil & energy - MSNBC.com

Check this article. It made me shake my head in disbelief.

Why? That's not even that high for a CEO in this country. Rex Tillerson (Exxon) is ranked 134 among CEOs according to salary. Why don't we have another senatorial hearing for the 133 guys ahead of him as to why their pricing of their goods and services have accommodated huge profits? Face it, in a free market, the guys at the top of a business that is in high demand will be raking in the money. Would you honestly expect anyone, regardless of profession to refuse a pay raise because their business has been successful? No. Why would it be any different for them simply because their chosen profession is oil? Plus, they've been making almost this much for a long, long time.

I say, why is the price of gasoline so low? Yeah, LOW. The price of a barrel of crude oil has more than doubled since this time last year, but the price of a gallon of gas has only gone up ~30%, what explains the disparity in pricing? I think the media frenzy is both blowing out of proportion and intensifying this entire ordeal, let's use some rough numbers here. Based on 15,000 miles a year, 17mpg, the average person uses 885 gallons of gas a year, at the $3 a gallon of last year, the average American spent $2,650 a year on gas, at $4 per gallon, $3,500. Is the extra $850 really affecting them that much? No.

I saw an article in the paper about how "higher gas prices are making some fans, even the most die hard, are reconsidering whether their money is better spent elsewhere". Their numbers boiled down to an extra $7 per outing caused by higher gas prices, which was the huge "strain" in their $180 baseball game outing. People need to just be sensible and think things through before they just freak out and start acting like doomsday is around the corner.

Do we need to find alternative fuel sources? Yes. Is the sky falling and Armageddon eminent? No.

[Rockefella]

Originally Posted by my porsche

I say, why is the price of gasoline so low? Yeah, LOW. The price of a barrel of crude oil has more than doubled since this time last year, but the price of a gallon of gas has only gone up ~30%, what explains the disparity in pricing? I think the media frenzy is both blowing out of proportion and intensifying this entire ordeal, let's use some rough numbers here. Based on 15,000 miles a year, 17mpg, the average person uses 885 gallons of gas a year, at the $3 a gallon of last year, the average American spent $2,650 a year on gas, at $4 per gallon, $3,500. Is the extra $850 really affecting them that much? No.

One thing to remember is that increases in gas prices are not solely at the pumps. Think about transportation of goods and manufacturing of raw materials.

[MRR]

Originally Posted by my porsche

People need to just be sensible and think things through before they just freak out and start acting like doomsday is around the corner.

Do we need to find alternative fuel sources? Yes. Is the sky falling and Armageddon eminent? No.

I agree in the sense that gasoline is still relatively cheap (sorry we only pay around $4-5 a gallon depending on where you are in the US while Europe pays $8-9 a gallon). However the rapid spike in price is indicative of a supply shortfall. Already the IEA has cut back their optimistic estimates in oil production expansion (I think they are still too optimistic) and the fact is we are running out of oil very fast.

The government should be doing everything it can to find a way to produce gasoline and diesel substitutes (fuel cells, etc won't be viable for many years if not decades unfortunately). Algae oil, coal to oil, etc basically everything beside ethanol from corn would be helpful right now. How about taking those billions in tax breaks for oil companies and useless subsidies to wealthy farmers in the Farm Bill from last week and put it towards finding petroleum fuel substitutes? We should have learned our lesson in the 1970s but we had better hurry up before production starts declining and we get into deep shit.

[MRR]

Originally Posted by Rockefella

One thing to remember is that increases in gas prices are not solely at the pumps. Think about transportation of goods and manufacturing of raw materials.

High oil prices = high inflation because since we went off the gold standard oil is inflation in some respects (not entirely) since oil is traded in dollars for the most part.