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287 comments on DrumBeat: May 8, 2008

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DaveMart on May 8, 2008 - 10:01am Permalink | Subthread | Parent | Comments top

I thought it important to strike whilst the iron was hot, and so posted to the blog, even though I would have preferred that those better qualified had got in - I hope I have presented the case with reasonable competence!
Here is what I said:

OIL IS NOT GOING TO GET CHEAP AGAIN, AND OIL SUPPLIES ARE ABOUT AS HIGH AS THEY WILL GET
This rise is not due primarily to speculation or political factors or even drilling restrictions, but new fields are getting more and more difficult to find, are smaller and cost more to develop.

The statements of massive reserves that can be produced in most oil producing countries is nonsense - the state run bodies in places like Saudi Arabia had every incentive to overstate reserves, as quotas were based on them.
Although they have pumped billions of barrels, remaining reserves remain exactly the same as they were according to their (unaudited) figures!
What a coincidence!
Give or take, production is about as high as it will get:
http://www.energybulletin.net/17009.html
Demand is going up all the time, with major new consumers like China and India wanting ever more oil.
Demand always balances supply.
Result? Ever rising prices.
PRICE RISES WILL BE GEOMETRIC
When supply is static, the only way to balance things out is by demand destruction.
The poorest people in the world have already been forced out.
Driving out the next tier up will be tougher - it is people like those in America who need to drive a long way to work, and are relatively poorer than some others.
But supply and demand will balance, so if $200/barrel oil does not do it, then it will go to $400/barrel:
http://anz.theoildrum.com/node/3947#more

It gets worse, as in fact as in the North sea or Mexico when supplies have peaked, they drop rapidly - Russia is on the verge of this, as they have recently half-admitted.
Oil exporters also tend to keep it cheap in their own land, leading to rocketing demand - Saudi Arabian demand is going through the roof.

So if $800/barrel oil is what it takes to knock out the next level of demand, that is what will happen, to put the middle classes on the bus.

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Kohesion on May 8, 2008 - 10:15am Permalink | Subthread | Parent | Comments top

Here is what I posted:

Hello,

I’ve been researching energy since 2004 when it seemed to me that fuel prices were becoming oddly volatile.

What I have discovered since then has been quite shocking and really changed my perspective. We truely live in a finite world.

I beg everyone who is reading this to do the research yourself. Take a saturday afternoon, read SAICs Hirsch report, read IEAs energy forecast from last year, read what the US GAO has to say about the peaking of world oil.

All the information is out there but you are going to have to go get it yourself.

It takes a good amount of courage to read some of the projections as most of them are not so rosy; so be courageous but please don’t forgo checking the facts for yourself.

If you are fairly technical, start spending some time at http://www.theoildrum.com. There is alot of good information there.

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PaulusP on May 8, 2008 - 10:25am Permalink | Subthread | Parent | Comments top

Both your replies don't show. At least not now

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DaveMart on May 8, 2008 - 10:27am Permalink | Subthread | Parent | Comments top

'Awaiting moderation'

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PaulusP on May 8, 2008 - 10:53am Permalink | Subthread | Parent | Comments top

I posted this: "Oil is a finite resource. Despite large reserves, more important is how fast you can get it pumped out of the ground. Presently we burn 1000 barrels, or 159,000 liters. Per second, that is. Totalling approximately 85 million barrels of oil each day, or 30 billion barrels of oil a year. People should see the recent Brasilian find of possibly 33 billion barrels in this perspective.

Sometime, something, somewhere has got to give. That thing is called Peak Oil. This occured in the US around 1970. Worldwide Peak Oil is probably around now."

I wonder how long w'll be waiting for moderation. The more of us posting there, the harder pressed they will be to post these. I can already smell the panic on their end ;-)

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DaveMart on May 8, 2008 - 11:04am Permalink | Subthread | Parent | Comments top

They say they may not post all comments.
Part of the reason I posted was that I saw the guy on the TV, and he said that he personally would try to read all comments.
He is solid that oil is likely to hit $200, but I am not sure that he is peak aware, so thought it worthwhile to try to communicate.
You point of flow rate you make is the other one I was desperate to squeeze in, but if the post is too ling they won't read it, so i left it out - great that you have covered it.
Hopefully West Texas and others will chime in - I referenced him - hope he doesn't mind

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aeldric on May 8, 2008 - 9:00pm Permalink | Subthread | Parent | Comments top

Visible now.

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Cslater8 on May 8, 2008 - 5:12pm Permalink | Subthread | Parent | Comments top

Your right about the poor having been knocked out first. If you remember, price of gasoline at the pumps dropped for a short period of time about a year, year and a half ago due increased supply caused by the demand destruction of those countries. And yes, the next tier will be the tier not able to pay the higher prices. Maybe that's the US - who knows? But yes there is some price point for each economic tier that causes demand destruction, and what that price will be for each tier is yet to be determined.

I think what we saw first was demand destruction of the poorest countries, and secondly huge increases in food prices worldwide. The 3rd effect of higher fuel prices is yet to be determined. Either it will be more demand destruction at a higher tier or possibly mass famine in Africa and other 3rd world countries when the price of food goes too high.

In any case we are in the beginning stages of Kunstler's Long Emergency. Stock up on canned food and save your fruit and vegetable seeds for the day you start your own personal food garden. Speaking of which our local Walmart is selling its cheapest food at an alarming rate. Our last visit was an eye opener as most of the food shelves were empty. If nothing else it shows people are getting more desperate to put food on the table. Must be hard with a big family.

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