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Peak Oil Is Here!


LonJowett

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Unlike global warming, peak oil is inevitable but also manageable. The end of cheap oil will require total reorganization of our economy and our urban infrastructure. Unfortunately we aren't doing much of anything to deal with this, despite indications, like in this week's Moneyweek, that oil production has already peaked. The next 20 years sound really frightening: “In the end, it will be the 'total shift' to oil supply dictating demand. Rising prices will clear the market, and the prices will rise precipitously."

http://www.moneyweek.com/file/16933/prepar...rgy-expert.html

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We have discussed peak oil in another thread but if you want to debate it here again, fine.

I said that peak oil is a valid gological hypothesis. It is not a valid economic hypothesis.
Link

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From your link above, I found this interesting quote:

Bakhtiari urges using market incentives to reward people for reducing, reusing, or recycling. It is far better to make use of positive subsidies, instead of negative reinforcement. The implications of Peak Oil are negative enough even without the prospect of negative reinforcement.
Well, gee whiz, that is exactly what the world oil market will do. Hence, there is no reason to "fear" so-called "peak oil".

I have never heard of Bakhtiar before but I get suspicious when an Iranian starts to give doom-and-gloom interviews to western audiences.

Also, the author of the article seems to be a geologist but a bad journalist. He forgot to mention one of the key features of rising oil prices: how it affects land values.

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Bakhtiari urges using market incentives to reward people for reducing, reusing, or recycling. It is far better to make use of positive subsidies, instead of negative reinforcement. The implications of Peak Oil are negative enough even without the prospect of negative reinforcement.

Well, gee whiz, that is exactly what the world oil market will do. Hence, there is no reason to "fear" so-called "peak oil".

I don't agree with you at all.

Peak oil will result in a dysfunctional society in COLD countries like Canada where enormous amounts of energy are required to see us through the winter months.

Reducing, recycling means nothing compared to the energy Canadians require and PRACTICAL alternative sources of energy are simply not available.

You must remember when 'how much is to much' for a litre of oil or gas, leaves Canadians in an uncompromising position compared to what Americans who can afford to pay a lot more for their oil and gas who don't have to worry about a cold Canadian climate.

Market conditions will cater to Americans who can pay more, Not Canadians.

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You must remember when 'how much is to much' for a litre of oil or gas, leaves Canadians in an uncompromising position compared to what Americans who can afford to pay a lot more for their oil and gas who don't have to worry about a cold Canadian climate.

Market conditions will cater to Americans who can pay more, Not Canadians.

Huh?

Albertans and Canadians are sitting on the black gold everybody in the future is going to be paying a gazillion bucks to get. Sounds like Albertans and Canadians have a great future.

Indeed, the next Albertan premier would be wise to let it sit in the ground for a decade or two. Then break open the stash and make every Albertan a Rockefeller. If you believe the peak oil theory, that's the obvious strategy.

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From your link above, I found this interesting quote:
Bakhtiari urges using market incentives to reward people for reducing, reusing, or recycling. It is far better to make use of positive subsidies, instead of negative reinforcement. The implications of Peak Oil are negative enough even without the prospect of negative reinforcement.
Well, gee whiz, that is exactly what the world oil market will do. Hence, there is no reason to "fear" so-called "peak oil".

I don't get what you mean.

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I don't get what you mean.
As oil prices rise, people will change their behaviour. The definition of "market incentive" is "price".
The high price of gasoline is fueling a major defection by consumers from full-size sport utility vehicles, a new analysis shows.

Sales of full-size SUVs fell 21 percent last month and 31 percent in January according to a study released Monday by Power Information Network, a unit of market researcher J.D. Power and Associates.

Detroit News
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You have a naively optimistic concept that the market will always behave in a logical and agreeable manner. But with this situation, supply will dictate the price, and the demand will far outstrip supply within a few short years. In that case, all bets are off as to where the price goes.

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You have a naively optimistic concept that the market will always behave in a logical and agreeable manner. But with this situation, supply will dictate the price, and the demand will far outstrip supply within a few short years. In that case, all bets are off as to where the price goes.
If that's what you really believe, then buy some futures contracts and get rich. If demand "far outstrips" supply, then I guess the price will rise.

If the world oil market behaves "illogically" (ie. a speculative bubble), I can only see the oil price being possibly higher than what it would be if the bubble didn't exist. Even collusion would result in a higher price.

But heck, what do I know. There are thousands (if not millions) of smarter people around the world trading real money on the energy markets. If there was a way to make a buck, they'd have figured it out by now.

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Bubbler, we face numerous environmental problems today because markets work so well. It is not markets that I fear or mistrust. It is their absence. Bob Rae and Bill Clinton understand this. Other Leftists are too suspicious of markets. They would be wise to appreciate markets and what they do and then start to think about what happens when markets don't exist.

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Dear August1991,

Bubbler, we face numerous environmental problems today because markets work so well. It is not markets that I fear or mistrust. It is their absence.
There will never be an 'absence', so long as there is demand. It is the manipulation of demand that I fear. I also fear anarchy, which 'Mammon' would be foolish not to exploit.
Other Leftists are too suspicious of markets. They would be wise to appreciate markets and what they do and then start to think about what happens when markets don't exist.
I temper my suspicions with a realization of what markets (or the monster of 'truly free enterprise') would do if given an absolutely free hand.
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Ever hear of the Crash of 1929?
It was a speculative bubble in a stock market and hence stock prices rose above what they otherwise should have been.

If this happened in the world oil market, then oil prices would be higher than what they otherwise would be and there would be even less reason to believe in a peak oil scenario.

The peak oil scenario is predicated on too low oil prices until the cataclysm is upon us. Simple greed on the part of the many oil reserve owners makes that scenario unlikely (impossible).

Dear August1991,
Bubbler, we face numerous environmental problems today because markets work so well. It is not markets that I fear or mistrust. It is their absence.
There will never be an 'absence', so long as there is demand. It is the manipulation of demand that I fear. I also fear anarchy, which 'Mammon' would be foolish not to exploit.
Thelonious, you're ignorantly wrong.

There is a legitimate demand for the service called "environmental protection" and there's even a willingness to supply it. Unfortunately, there's no market where anyone can buy "environmental protection" from its producers. A few hundred years ago, this was not a major problem but since the world oil market works so well now, the lack of an environmental protection market has become critical.

To worry about peak oil is like a woman worrying about prostate cancer. To worry about peak oil when we face environmental problems is like a woman worrying about prostate cancer while lying on the beach in a bikini.

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There is a legitimate demand for the service called "environmental protection" and there's even a willingness to supply it. Unfortunately, there's no market where anyone can buy "environmental protection" from its producers.
We should narrowly focus a discussion upon such markets. They have been touched upon previously in different threads. There is too much tangential chaff that gets mixed back into the discussions of the environment.

Anybody want to revive an old thread or create a new one?

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The peak oil scenario is predicated on too low oil prices until the cataclysm is upon us. Simple greed on the part of the many oil reserve owners makes that scenario unlikely (impossible).

No, your scenario is wrong because you base your argument on the assumption that the cost of producing a barrel of oil today is roughly the cost of what it costs tomorrow. But after the peak, it gets progressively more expensive to produce a barrel of sweet crude because they have to drill deeper to get less.

And as to your simplistic question of "why don't they just leave it in the ground now?" ignores the fact that our economy is wholly dependent on the provision of oil. Take it away and there is collapse. Nobody makes money from economic collapse, so the tendency is to enjoy the good times while we have them and hope for the best.

We can prepare to make this inevitable shock less severe. Our kids would thank us.

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No, your scenario is wrong because you base your argument on the assumption that the cost of producing a barrel of oil today is roughly the cost of what it costs tomorrow. But after the peak, it gets progressively more expensive to produce a barrel of sweet crude because they have to drill deeper to get less.

And as to your simplistic question of "why don't they just leave it in the ground now?" ignores the fact that our economy is wholly dependent on the provision of oil. Take it away and there is collapse. Nobody makes money from economic collapse, so the tendency is to enjoy the good times while we have them and hope for the best.

We can prepare to make this inevitable shock less severe. Our kids would thank us.

LonJowett, I strongly advise you to take an introductory course in economics at any university or community college near where you live.

As to the usefulness of gas after the impending collapse of civilization, I'm sure a couple of those little blue Coleman propane cannisters will come in handy. I suggest you stockpile a few. They store well. You'll be the cool guy on the corner.

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Done and done. Oil isn't running out while we are alive. Or ever.

Peak oil has nothing to do with running out of oil. Nothing! It has to do with a peak in production. It means the end of cheap oil, a phenomenon even a person who hasn't taken intro to Economics can see is already beginning to happen. As lonjowett said, after the peak, the oil is deeper and more difficult and expensive to get. I'm not sure what people's motives are in repeatedly trying to portray it as the end of oil.

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I'm not sure what people's motives are in repeatedly trying to portray it as the end of oil.

How about taking the emphasis off of 'lack of oil' to cover the expected huge increase due to 'supply and demand'.

Hey, investors have to make a living you know.

But no matter how you look at it we are in trouble.

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Albertans and Canadians are sitting on the black gold everybody in the future is going to be paying a gazillion bucks to get. Sounds like Albertans and Canadians have a great future.

Indeed, the next Albertan premier would be wise to let in sit in the ground for a decade or two. Then break open the stash and make every Albertan a Rockefeller. If you believe the peak oil theory, that's the obvious strategy.

I'm a gonna drop this in the "Iraq: not about oil" thread. :D

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Done and done. Oil isn't running out while we are alive. Or ever.

Geofrey wasnt paying attention when they covered peak oil in intro Geology if he thinks it means we are running out of oil.

Every year we produce and use more oil than the previous year - thats not necessarily going to stop soon but that oil is going to get more expensive to produce. Just look at the what it would cost to produce a tar sands barrel. If natural gas prices jump, that estimated cost also goes up too.

In terms of investment, that doesnt even mean the oil companies are going to get higher profits. Their profits may stay at roughly the same exhorbitant rate - or even go down. It's the production cost that will drive the price so high.

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Every year we produce and use more oil than the previous year - thats not necessarily going to stop soon but that oil is going to get more expensive to produce. Just look at the what it would cost to produce a tar sands barrel. If natural gas prices jump, that estimated cost also goes up too.

In terms of investment, that doesnt even mean the oil companies are going to get higher profits. Their profits may stay at roughly the same exhorbitant rate - or even go down. It's the production cost that will drive the price so high.

The price of oil is not going to rise faster than some alternative investment. If anybody thought it would, then it would be wiser to leave it in the ground and let its price rise.

Would you sell something now for $100 if you knew that next year, you could sell it for $300? Please don't tell me that the oil company managers are short-sighted or stupid. And this has nothing to do with changing production costs, or seeking more difficult oil.

The idea of peak oil makes perfect sense in a world without the price mechanism. But once you add in the economics, the peak oil theory collapses and makes no sense.

Incidentally, the way we use energy has radically changed since 1980 as a result of the first oil price spikes. It took over a decade to make these changes. There have also been changes on the supply side.

IME, proponents of peak oil are either outlandish stock promoters trying to push some energy company or else the looney left insistent on predicting the imminent collapse of capitalism. The latter often has a calvinist edge since the collapse is presented as retribution for our sinful, profligate ways.

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Every year we produce and use more oil than the previous year - thats not necessarily going to stop soon but that oil is going to get more expensive to produce. Just look at the what it would cost to produce a tar sands barrel. If natural gas prices jump, that estimated cost also goes up too.

Tar sand oil will sound cheap compared to the energy requirements to process shale oil.

To bad August doesn't understand that many industries, clothing, computers, thousands of plastic manufactured articles all require oil and that's why we can't leave it in the ground till next year because if we did the economy would collapse.

Natural gas prices have no where to go but up.

There's a shortage predicted in the U.S.

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Would you sell something now for $100 if you knew that next year, you could sell it for $300?

You can repeat the same argument, and I can repeat that the economy depends on oil, that when demand exceeds supply industry shuts down, alternative energy sources are found, and the economy suffers--all bad for oil industry profits now and in the long term. You will likely ignore these points and repeat the same facile argument in your next post.

Besides, lots of people are buying up oil fields based on speculation and keeping them as reserves. I think China is really into that these days and has the rights to a lot of Alberta.

IME, proponents of peak oil are either outlandish stock promoters trying to push some energy company or else the looney left insistent on predicting the imminent collapse of capitalism. The latter often has a calvinist edge since the collapse is presented as retribution for our sinful, profligate ways.

I realized it's popular in these times to polarize every debate into the looney left versus the wacko right, but I think this issue crosses ideologies. We all depend on oil, and whether or not we've been "sinful" is irrelevant: our middle class was constructed on the premise of cheap oil and plans should be encouraged to ease the transition out of that era.

Your argument is pretty much based on the premise that oil is an infinite resource, that supply will continue to grow exponentially, and that the market will save us despite all geologic evidence to the contrary. And I'm the looney one?

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I realized it's popular in these times to polarize every debate into the looney left versus the wacko right, but I think this issue crosses ideologies. We all depend on oil, and whether or not we've been "sinful" is irrelevant: our middle class was constructed on the premise of cheap oil and plans should be encouraged to ease the transition out of that era.

Your argument is pretty much based on the premise that oil is an infinite resource, that supply will continue to grow exponentially, and that the market will save us despite all geologic evidence to the contrary. And I'm the looney one?

My argument is not based on the premise that oil is an infinite resourse. Fish and forests are renewable resources. Oil is a non-renewable resource.

Oil was never cheap and the idea of "cheap" is purely relative. Cheap to you is expensive to me. The price of something, a mere number, mathematics in essence, is a remarkable human invention. It specifies clearly the terms of a trade.

The basic pricing mathematics (economics) of both renewable and non-renewable resources were explored and understood in the 1920s. (Here's one easy link.) The peak oil hypothesis is a throw back - it's like a flat earth theory after Newton.

IMV, we face potentially severe problems in the way we collectively deal with the environment around us. Peak oil just ain't one of those problems. We invented the price mechanism to cope with such collective problems as "peak oil" and it is working perfectly well in this case. Unfortunately, the price mechanism cannot be easily applied to other pressing collective problems - for example, global warming and pollution in general - and in these cases, we have to seek other solutions.

As I stated in another post, worrying about peak oil is like a woman worrying about prostate cancer. Given the problem of global warming, it's like a woman on the beach worrying about prostate cancer.

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