RR,

Right on with the right on! I think you are spot on. We are going to see, starting about 2009 an up tick in production, modest, that will continue for a bit and the energy equation will be rearranged (tar sands, coal, etc.). All these blocks will be rearranged.

The wild cards will be war and GHGs and what we do about them. Will the MSM talk about the latter only on Earth Day?  

I think the leadership in Iran will continue to say provocative things every time the price starts to dip, because they are making a lot of money because of the fear they are generating.

There are reports that Iran has agreed to have uranium enrichment performed for it on Russian territory. If it is correct that there is a $10 -$15 fear premium in the price then this development may take us back to $60 a bbl but it may not correct the short term problems of petrol availability. Imagine the screams in that case: oil goes down yet a gallon of gas stays high.


The provocative Iranian comments are targeted at building support with Shia youth throughout the middle east. These would be Iranian foot soldiers if a conflict occurred. This strategy is working and is creating concern for internal unrest in other countries with Shia minorities.


I don't think that the OPEC nations will look kindly on a price drop. At some point they have to ask: why are we selling our single non-renewable asset at a price that helps the west when we could sell the same asset at a price that better benefits us? Two facts support this view. The first is that there was no apparent negative impact on the consuming economies from the recent high prices. The second is that the high prices have resulted in a flood of money and there is a lack of secure investment outlets for this money given the questions raised over stability of the US dollar.


If the price does correct, I would expect an OPEC decision to curtail production.

I will take a shot at defining my idea that this is peak.

The amount of oil (in the sense of liquid fossil fuels in today's infrastructure) in terms of energy provided/availability for non-oil producers will essentially be in decline from this point, and will never increase, regardless of the effort thrown into it. In fact, this effort will mark one of the major drivers of the downward trend - more energy used for less energy returned is a pithy way to look at my personal understanding of peak.

Notice, this does not include facts in the rigorous sense of projects coming on-line, depletion rates, or future developments (would humanity be stupid enough to keep using fossil fuels after clear evidence of climate change - are we smarter than yeast?).

It does include various disparate elements in a wide view - increasing geostrategic positioning, leading to a decrease in oil available for other uses, for example, or a focus on increased infrastructure being built to keep up with inevitable production declines. Or a mad scramble to keep oil flowing, regardless of the costs (look at the various jet fuel shortages in the U.S. and England to see how a shortage rapidly leads to inefficiencies like trucking jet fuel instead of using a pipeline). Or more ominously, end games involving destruction of oil facilities (see Nigeria, or Iraq).

This displacement means less oil available for what today is considered normal.

We are at peak, regardless of whether production moves up a touch, bumps along, or has started to inevitably slide down. Also regardless of how much fuel costs.

And no, I don't have anything backing it up but an opinion that from roughly this point, we go down the slope. We will never have as much energy available from oil as now, broadly enough defined ('now' is a few months, not a few years). Everything from this point will be a game of musical chairs, and though how long the music plays between chairs being taken away is open, all the players seem to have understood the basic rules.

Of course, if you read something from company sources about abiotic oil, or secret Nazi plans discovered in an attic, or that overlooked Soviet secret field with 68GB URR, then I guess my opinion was wrong.

And if we as a species are dumb enough to use climate change to take advantage of finally exploiting the fossil fuels around both Poles, then we deserve what happens to us.

I think the sense of infinite possibilities is most likely to be at peak, as there is nothing blocking our view in any direction.

You may certainly be correct. I'm not declaring one way or another but think peak is possible now primarily because of the ongoing political and climatic factors truncating the peak.

I am certain, however, that however good your chief economist is, s/he does not know the facts in terms of decline rates & timing to expect with the world's greatest fields - why?- because no one does. For this reason, no matter how good their work, they don't have a read on 50% of the equation and it's pretty dangerous being certain right now.

There's an altruistic reason for some highly placed people to create a panic about peak oil now: in order to create political pressure to start the switch to alternatives now.  

Suppose that a man predicts that tommorrow his mother-in-law will die. Every day he makes the same prediction. Because he has repeatedly been wrong some people, let's say investment brokers, come to the conclusion that his mother-in-law will live at least another 50 years and loan her a million bucks to be paid back through future social security checks. They say technological improvements will keep her alive perhaps by using abiotic snake oil or cold fusion cream. They cite the story of the 124 year old French woman as proof she won't die soon. The next day she dies and the brokers who risked somebody else's money cry foul. Nobody told them she was a chain smoking, drunken, high stakes poker player. Except her son-in-law who was always wrong.

This was my thought as well.  And it hasn't been a couple of months.  The switch with IPE and Brent leading WTI is recent.  I have wondered about this.  It seems resonable that Europe would want to buy from the European markets and the US would want to take advantage of the WTI oil first because of shipping costs.  Is the US buying more agressively from IPE?  It is interesting because Nymex up until yesterday matched WTI as it usually does, but now it matches the IPE price.  Nymex is the typically reported price.  How is this (Nymex)price determined?  What do you make of these shifts we're seeing?