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mises
Joined: 05 Nov 2007
Location: retired
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 Posted: Thu Nov 13, 2008 8:41 pm Post subject: |
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We have to be careful here in assigning blame for the recent price drop to supply fundamentals. This was not the case. The price spike this year was due to leveraged financial speculation (the long commodities and short dollar trade). It was all commodities that spiked. Clearly, we aren't at peak pork bellies.
Many major fields are in decline, most obviously in Mexico and Russia. In addition Saudi will not allow for third party surveys of their supply, and when Kuwait finally allowed for this their reserved were written down by 50%. However, with technological advancements we are able to return to fields that were considered drained and pull more oil out. And many fields are being purposefully under exploited.
It is a tough issue. I don't like the "peak oilers" attitude, which is similar to 9/11 truthers in emotive nonsense, but I follow the debate closely and feel obliged to say that they aren't totally full of shit in their concerns. |
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amandaz
Joined: 05 Jun 2008
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| Posted: Sat Nov 15, 2008 11:53 pm Post subject: |
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Peak oil simply means that there is not an unlimited supply of the resource and one day we will run out. We hit the peak a while ago, and now supplies are on a downward trend.
That being said, if people don't have money, they can't buy oil. So the price will drop and it might last a while longer, but it will still run out. Humans actually haven't been dependent on oil for that long, so hopefully people will wake up and learn to live a little closer to the earth before it does run out. Grow a garden and think about what you consume! |
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Bigfeet
Joined: 29 May 2008
Location: Grrrrr.....
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| Posted: Sun Nov 16, 2008 2:28 am Post subject: |
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| That's the thing about peak oil, we won't know when we've hit it until years down the line. If oil is around $100 for years and supply still hasn't increased then we can say that we've passed it. Right now it can simply be short-term supply/demand/speculation dynamics. |
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seoulteacher
Joined: 18 Nov 2005
Location: Seoul
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| Posted: Mon Nov 17, 2008 3:40 am Post subject: |
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| mises wrote: |
We have to be careful here in assigning blame for the recent price drop to supply fundamentals. This was not the case. The price spike this year was due to leveraged financial speculation (the long commodities and short dollar trade). It was all commodities that spiked. Clearly, we aren't at peak pork bellies.
Many major fields are in decline, most obviously in Mexico and Russia. In addition Saudi will not allow for third party surveys of their supply, and when Kuwait finally allowed for this their reserved were written down by 50%. However, with technological advancements we are able to return to fields that were considered drained and pull more oil out. And many fields are being purposefully under exploited.
It is a tough issue. I don't like the "peak oilers" attitude, which is similar to 9/11 truthers in emotive nonsense, but I follow the debate closely and feel obliged to say that they aren't totally full of shit in their concerns. |
Mises, you raise a good point: national oil producers do not allow independent, 3rd party audits of their reserves: so we have been left with no other option than to accept their reserve figures. I say 'do not allow' (ie. implying without exception, which I do believe to be the case), and yet you said Kuwait did. Its now too late at night for me to do a google search, but that's news to me (and I'm not doubting your integrity, and I realize that you are somewhat sympathetic to the peak oil concept - but I figure I'd have remembered any such development).
OPEC production quotas allocated to individual cartel members were based on members' % of total reserves. So there was great incentive then for individual member states to re-calculate - and increase - reserves. Which is what happened, almost overnight. And, again, it was done without independent, 3rd party audits. So individual oil producer countries generally could be much closer to a peak oil situation than they're letting on - and we would have no way of knowing.
And want to be sobered up? Our still-underway 'debt crisis' (which could yet lead us into prolonged depression, never mind recession), and which has become a much bigger crisis than merely one of debt, hit us pretty unexpectedly, didn't it? Oh, yes, there were quite a few who were warning, and for a few years now, that economic fundamentals had gotten out of line. But think of the large drops on stock markets worldwide: did those equity holders who've suffered major losses act prudently - in ways that we've now come to see would have been prudent - ahead of time? Or did they continue to believe that the good times would never end? No, we proceeded despite simple common sense warning signs - as might be said in hindsight about our assumptions about oil reserves, if ever a peak oil crisis hits (and I hesitate to say that its an implausible theory). |
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