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mises
Joined: 05 Nov 2007
Location: retired
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 Posted: Mon Nov 09, 2009 8:48 pm Post subject: Key oil figures were distorted |
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http://www.guardian.co.uk/environment/2009/nov/09/peak-oil-international-energy-agency
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The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims it has been deliberately underplaying a looming shortage for fear of triggering panic buying.
The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves.
The allegations raise serious questions about the accuracy of the organisation's latest World Energy Outlook on oil demand and supply to be published tomorrow � which is used by the British and many other governments to help guide their wider energy and climate change policies.
In particular they question the prediction in the last World Economic Outlook, believed to be repeated again this year, that oil production can be raised from its current level of 83m barrels a day to 105m barrels. External critics have frequently argued that this cannot be substantiated by firm evidence and say the world has already passed its peak in oil production.
Now the "peak oil" theory is gaining support at the heart of the global energy establishment.
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"Many inside the organisation believe that maintaining oil supplies at even 90m to 95m barrels a day would be impossible but there are fears that panic could spread on the financial markets if the figures were brought down further. And the Americans fear the end of oil supremacy because it would threaten their power over access to oil resources," he added.
A second senior IEA source, who has now left but was also unwilling to give his name, said a key rule at the organisation was that it was "imperative not to anger the Americans" but the fact was that there was not as much oil in the world as had been admitted. "We have [already] entered the 'peak oil' zone. I think that the situation is really bad," he added.
Matt Simmons, a respected oil industry expert, has long questioned the decline rates and oil statistics provided by Saudi Arabia on its own fields. He has raised questions about whether peak oil is much closer than many have accepted.
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And this without an independent audit of Saudi.. |
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Pluto
Joined: 19 Dec 2006
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| Posted: Mon Nov 09, 2009 9:19 pm Post subject: |
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Not one to wade too far into 'conspiracy theories' but trying to figure out why the Dollar has lasted so long without a hard currency backing.
Think about this for a second or two:
Gold <----> Dollar <-----> Oil
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| What has characterized our international system since 1971, or "Bretton Woods II" as it is sometimes called, is this: 1) the gold futures clearing system, and related paper markets and 2) the ability to swap oil for gold via these markets using exclusively US Dollars. This has given implicit support to the U.S. dollar far beyond what could be reasonably imagined considering the U.S. fiscal situation -- in the sense that the dollar is supported as long as 1) oil is for sale in dollars and 2) gold is for sale in dollars. This does not always have to be the case, and this is the core of the issue. If gold goes into permanent backwardation it will no longer be for sale in dollars on COMEX. Period. This will implicitly cut off oil flows to a trickle until payment is re-linked to gold via the IMF SDR or another mechanism. |
http://www.zerohedge.com/article/gold-and-systemic-crisis
The Dollar is no longer directly linked to Gold, per se. However, gold and oil are priced only in Dollars. Delink one, and the whole ponzi scheme/house of cards will come tumbling down. Still not sure what I think of the whole hypothisis, but I do think it would be an interesting one to follow. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Mon Nov 09, 2009 9:30 pm Post subject: |
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A few years ago I thought of the "oil skeptics" (I made that term up now) as conspiratorial. But in the last year or so I've been around the energy industry quite a bit and the idea that the amount of easily (or even moderately difficult) extracted oil is dramatically overstated is almost universally held.
I think I posted it in the depression thread, but this interview on the subject is excellent:
http://twobeerswithsteve.libsyn.com/index.php?post_id=540822
In regards to the oil being the backing of the dollar, I agree. It is a roundabout arrangement, but oil trading in dollars seems to set a floor under the dollar which removes the risk of a dramatic run.
Also, I read recently that the median lifespan of a fiat currency is 30 years. The dollar was unhinged from gold in the early seventies. |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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| Posted: Tue Nov 10, 2009 8:11 am Post subject: |
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This problem is the result of the socialist energy and transportation industries causing a massive malinvestment in the wrong infrastructure that has caused the total reliance on the automobile - the wrong form of transportation, and one that the free market never would have chosen.
We can escape this problem and deal with pollution and global warming or climate change by privatizing the roads, highways, air and water and allowing the free market to make the adjustments and rebuild the infrastruction using rational location choices and non-polluting means of energy production and transportation. We can shorten the daily travel requirements of Americans drastically and eliminate the need for all imported oil with the accompanying reduction in energy use, energy production, environmental heating, pollution and climate effects.
Only the free market can cure these energy, transportation, and pollution problems that the socialists have created. |
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RufusW
Joined: 14 Jun 2008
Location: Busan
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| Posted: Tue Nov 10, 2009 8:38 am Post subject: |
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| ontheway wrote: |
| Only the free market can cure these energy, transportation, and pollution problems that the socialists have created. |
You're like a broken record... only brokener.
You fail to understand monopolies of scale... you also fail to understand the 'tragedy of the commons' (pollution)... Google them. |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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| Posted: Tue Nov 10, 2009 8:48 am Post subject: |
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| RufusW wrote: |
| ontheway wrote: |
| Only the free market can cure these energy, transportation, and pollution problems that the socialists have created. |
You're like a broken record... only brokener.
You fail to understand monopolies of scale... you also fail to understand the 'tragedy of the commons' (pollution)... Google them. |
No need to google these simple concepts that you don't even know the names of:
It's called "economies of scale" not monopolies and it is one of the things I have been referring to. The socialists have caused massive market distortions to cause the wrong infrasctructure to be built, and additionally to create the wrong size of everything from businesses, to incomes for high level managers, to cities. We can never get things at the right "scale" under socialism. Even the Soviets proved this.
As to the "tragedy of the commons" this is exactly what comes from socialism. It cannot happen in a free market because the free market eliminates the commons.
The "commons" is socialism and it always fails. |
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RufusW
Joined: 14 Jun 2008
Location: Busan
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| Posted: Tue Nov 10, 2009 9:01 am Post subject: |
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You're right, 'economies of scale', but they eventually equal monopolies. Therefore regulation is required. The rest of the Western world is deciding on how much regulation - the Republicans (and you) are arguing for no regulation.
Commons = air/water pollution. Do you buy/sell clean water or air? No, becuase poor people wouldn't be able to afford it. The socialism you argue against is actually a mechanism to make sure the poorest people on earth can survive.
The Soviet Union was Communist. All the countries within the EU are socialist, America has many tenants of socialism. |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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| Posted: Tue Nov 10, 2009 9:05 am Post subject: |
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| RufusW wrote: |
| You're right, 'economies of scale', but they eventually equal monopolies. |
Your comment is such a non sequitur that it is obvious that you're never actually studied economics, despite any claim you might make to having been enrolled in a class with that word in its name. |
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RufusW
Joined: 14 Jun 2008
Location: Busan
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| Posted: Tue Nov 10, 2009 9:09 am Post subject: |
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| I studied Politics with Economics at the University of Bath. You? |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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| Posted: Tue Nov 10, 2009 9:12 am Post subject: |
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| RufusW wrote: |
| I studied Politics with Economics at the University of Bath. You? |
Then you should be aware that economies of scale prevent monopolies and that no monopoly has ever existed in history without being created directly by the government or by the government using its power to assist one entity by eliminating the competition through governmental action. |
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RufusW
Joined: 14 Jun 2008
Location: Busan
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| Posted: Tue Nov 10, 2009 9:16 am Post subject: |
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| ontheway wrote: |
| Then you should be aware that economies of scale prevent monopolies and that no monopoly has ever existed in history without being created directly by the government or by the government using its power to assist one entity by eliminating the competition through governmental action. |
You didn't answer the question, where did you get your economics degree?
Anyway, no, there are natural monopolies (resulting from scale). Once a company has a certain marketshare they're destined to be a monopoly or part of a monopsony.
Economies of scale are the exact reason for monopolies. Sorry, I can tell you don't know what the hell you're talking about. Reciting information from right-wing/libertarian blogs doesn't count as knowledge. |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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| Posted: Tue Nov 10, 2009 9:29 am Post subject: |
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| RufusW wrote: |
| ontheway wrote: |
| Then you should be aware that economies of scale prevent monopolies and that no monopoly has ever existed in history without being created directly by the government or by the government using its power to assist one entity by eliminating the competition through governmental action. |
You didn't answer the question, where did you get your economics degree?
Anyway, no, there are natural monopolies (resulting from scale). Once a company has a certain marketshare they're destined to be a monopoly or part of a monopsony.
Economies of scale are the exact reason for monopolies. Sorry, I can tell you don't know what the hell you're talking about. Reciting information from right-wing/libertarian blogs doesn't count as knowledge. |
Wow. You really missed out on an education.
There is no such thing as a natural monopoly. Economic studies comparing cities that allow competition in utilities vs monopoly cities proved his years ago - published in Reason mag among others, so you might find it without going to econ journals.
And, if you had studied economic history you would have discovered the very idea for the now disproven fallacy called "natural monopoly" was two public relations men - not economists - working for their employers' interests in convincing congress and state legislatures to legislatively eliminate their competition. This was over 100 years ago, so a bit before your time and before your teachers' so without actually studying economics it's understandable why teachers who were ignorant passed on no knowledge.
As to my personal info, I do not post it as it makes it possible to google me. |
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RufusW
Joined: 14 Jun 2008
Location: Busan
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| Posted: Tue Nov 10, 2009 9:36 am Post subject: |
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| ontheway wrote: |
| Wow. You really missed out on an education. |
No. As I said, I went to one of the best Universities in the world, you've got a distorted view of education.
| ontheway wrote: |
| There is no such thing as a natural monopoly.... published in Reason mag among others, so you might find it without going to econ journals. |
Geee.. I'd hate to find that information in 'econ journals'...ooo...
...source?
| ontheway wrote: |
| And, if you had studied economic history you would have discovered the very idea for the now disproven fallacy called "natural monopoly" was two public relations men... working for their employers' interests in convincing congress and state legislatures to legislatively eliminate their competition. This was over 100 years ago, so a bit before your time [wat>?] and before your teachers' so without actually studying economics it's understandable why teachers who were ignorant passed on no knowledge. |
Source? or we can all happily ignore you.
Exactly who do you think I'm going to believe, my economics lecturer or you...? source man!
| ontheway wrote: |
| As to my personal info, I do not post it as it makes it possible to google me. |
Paraaaaaanoia!!
Anyway... natural monopoly, what about defence of the country... that's one right? Or what about global warming.. that's a failure of the commons... oh no, wait a sec.. you don't believe in global pollution. |
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gakduki
Joined: 16 Jul 2009
Location: Passed out on line 2 going in circles
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| Posted: Tue Nov 10, 2009 5:33 pm Post subject: |
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| If you studied high level econhomics and finance you would realize there are many natural monopolies. Things such as geography naturally create monopolies. There are many regional monopolies for both supply and demand. I could provide examples, however it is unnecessairy. One of the biggest flaws of Capitalism is that if left unchecked and unregulated, it leads to vast inequalities. Just look at the robber barrons of the mid-industrial era. |
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Pluto
Joined: 19 Dec 2006
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| Posted: Tue Nov 10, 2009 6:36 pm Post subject: |
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Rufas, you say you went to one of the UK's best universities, but are you sure you know what you are talking about w/r/t economies of scale?
| on page 237 Pindyck & Rubenfeld wrote: |
As out put increases, the firm's average cost of producing that output is likely to decline. This can happen for the following reasons:
1. The firm operates on a larger scale, workers can specialize in the activities which they are most productive.
2. Scale can provide flexibility. By varying the combination of inputs utilized to produce the firm's output, managers can organize the production process more effectively.
3. The firm may be able to acquire some production inputs at lower cost because it is buying them in larger quantities and can therefore negotiate better prices. The mix of inputs might change with the scale of the firm's operation if managers take advantage of lower-cost inputs.
At some point, however, it is likely that the average cost of production will begin to increase with output. There are three reasons for this shift:
1. At least in the short run, factory space and machinery may make it more difficult for workers to their job.
2. Managing a larger firm may become more complex and inefficient as the number of tasks increase.
3. the advantages of buying in bulk may have disappeared once certain quantities are reached. At some point,available supplies of key inputs may be limited, pushing their costs up. |
http://wps.prenhall.com/bp_pindyck_6/19/4991/1277774.cw/index.html
This comes from a fairly standard textbook.
Economies of scale exist due to the firm's learning curve, the firm's access to resources and its ability to buy in bulk thereby lowering variable costs.
There is a point, often call the point of diminishing returns, where it becomes more expensive to run the firm. Once a firm becomes to big and too bureaucratic, it becomes too inefficient to run.
Where you get this idea that economies of scale create natural monopolies is anyone's guess. When a firm becomes too big, it can easily be undercut by smaller and leaner competitors. The are only 2 ways that you can put them out of business. One is to point a gun at them and tell to walk away or hire a team of lobbyists in order to advance legislation in your favor.
People often cite railroads and utilities as examples. Much like the robber barrons. Problem in the 19th century was that investors didn't want to put up money for a transcontinental railroad, but politicians did. So the US government granted a couple of firms monopoly privileges to build these railroads. The government actively squashed competition. The robber barons were actually corporatists.
There are those of us with Masters level degrees that reject the idea of natural monopolies. Why do you think we keep bringing up mobile phones? Do you honestly believe that the mobile phone you've got in your hand would be there if the US government was still actively protecting AT&T?
http://www.movieweb.com/video/HUOVvPTWha0QSW
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