 | On being wrong - the falling price of home heating oil in Maine | The Oil Drum | ASPO VII - final thoughts |  |
108 comments on DrumBeat: November 1, 2008
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108 comments on DrumBeat: November 1, 2008
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It has put a crimp in my plans for an infinite increase in the price of our fossil fuel resource base. However, I'm still hanging onto those royalty trusts. They continue to send, perhaps a somewhat smaller, check every month.
Of course, Peak Oil isn't really about prices, it's about production. To the extent this site or its contributors, or (most likely) its readers linked the price rise to Peak Oil, we have brought upon ourselves these questions as the price of crude drops.
The temptation to say I told you so was great, and I said to my Board of Directors that I didn't expect energy prices to go down this Summer. But the lesson to learn here is to steadfastly emphasize the production numbers. They make the point, though not in a way that works in a 8-second sound byte.
The "production" (or more correctly the "locating and extraction") of oil is a costly thing. Unless you're Jed Clampett and happen to own a piece of land from which crude comes a bubbling up in response to a single BB shot, there are big moneys to be paid for exploring, drilling and development. Price does affect production (asymmetrically though --higher prices don't guarantee more oil). We talk about low hanging fruit. What we're really talking about is cheap-to-get-at oil versus expensive-to-get-at oil.
It's a complicated world.
We need to run complicated models in our heads (ELM, etc.).
Global oil production may drop exactly because prices are low (temporarily).
And if that happens, we may very well have seen the peak of global production of conventional oil.