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46 comments on What are Chevron and Shell trying to tell us

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Halfin on November 7, 2005 - 8:09pm Permalink | Subthread | Parent | Comments top
Lou -

I couldn't agree more. I'm constantly amazed by how many people ask, with no apparent irony whatsoever, whether oil companies (as well as other big corporations) or national leaders/politicians know about PO.

How the heck could they NOT know???

How can you reconcile this supposed insider knowledge with the fact that oil futures prices remain low? Wouldn't you expect insiders to want to make enormous profits between now and 2010 by using their inside knowledge to load up on oil futures?

As an economist you are aware that one of the benefits of futures markets is that they take private information and make it public. There are any number of ways for these insiders to profit from their knowledge, but these actions will collectively drive up prices and thereby expose the reality of future shortages for everyone to see.

I don't see how an economically literate person can believe that there is widespread insider knowledge of a hard Peak Oil scenario in the next five years, given the price information presently available from futures markets. There is just no way we could have such low prices, if that many people knew this supposed truth.

How do you explain it?

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ericy on November 7, 2005 - 10:27pm Permalink | Subthread | Parent | Comments top
Yes, in theory you could go and start buying futures in the hopes of making a fortune. The problem is that if there is a major economic downturn, then demand could fall along with prices, and you could lose your shirt.
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LevinK on November 8, 2005 - 1:16am Permalink | Subthread | Parent | Comments top
Everyone knows the geological truth but noone knows how the market will react. Oil is not an ordinary commodity and everyone knows that.
I suggest that there is a great chance of market failure so huge that all futures are rendered void and some kind of rationing is imposed. There are many scenarious including severe recession and a price drop afterwards.
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mikeB on November 8, 2005 - 7:18am Permalink | Subthread | Parent | Comments top
You're assuming "markets" will respond according to "rational," economic "theory" and not according to human depravity, selfishness and fear.
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Donal on November 8, 2005 - 11:42am Permalink | Subthread | Parent | Comments top
I suspect that many insiders "know about PO" and understand that oil depletion is inevitable. But what do they or we really know? Though I see it coming, I don't know how this depletion is going to play out. When will oil peak? Will we have a steep decline or less painful plateaus? Will there be unrest, disorder, (more) rioting, (more) war or (more) economic collapse? Will there be a meaningful shift to alternative energies?

I'd expect that there is a wide range of beliefs and probably some skepticism among futures traders, and from what I've read, many of them aren't as inside as they think.

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