A New Oil Crisis?

Posted by Geoff Beck on April 07, 2005, 10:13 PM | #

Btw, Campbell makes an interesting and accurate prediction, about 48 or so minutes into the video.

Posted by john rackell on April 07, 2005, 10:46 PM | #

The interviews on GlobalPublicMedia by Campbell, Kenneth Deffeyes, Matt Simmons, Chris Srebowski, Richard Heinberg are all excellent.

Deffeyes is an American original and very droll, well, as you droll as one could expect when contemplating a die-off of the human population. Though he’s not actually one of the direst pessimists.

Simmons is a Republican energy investment banker and not a scaremonger. He just appears to be scared ****less by what he’s seeing. He’s coming out with a book saying Saudi Oil Reserves are bogus and they’ve damaged their oil fields with overpumping. He is worried we may be about to fall off the energy cliff.

I don’t think the managerial elites will be able to cope with this at all.

Time to look into buying that farm.

Incidentally farm land prices in England are sky high partly fueled by all the London bankers and investment types buying up property, specifically farm property. Maybe some people have suspicions and are just hedging their bets ever so slightly.
Naturally these finance types aren’t going to discuss it openly. It’s better to exit a position and establish a new one without causing too much of a ruckus. Very sly of them.

Real scarcity, which peak oil will usher in, will kill Liberalism. Of course it might kill conservatism too: it’s going to cut a pretty wide swath.

Posted by Geoff Beck on April 07, 2005, 11:42 PM | #

John:

I’m reluctant to delve into conspiracy type thinking… yet I’ve often wondered about the constant drone of TV, if part of TV is used inure the public so they can’t understand the complex events the managerialists are undertaking.

Also if some crisis like oil depletion is immanent what better way to pacify the public?

Posted by john rackell on April 08, 2005, 12:38 AM | #

Geoff, I’m not particularly wedded to this conspiracy. I think the bare facts are sufficient, that land is being bid up.

I don’t think the managerial elite can keep the public in the dark, through TV or otherwise. Witness the chaos in England a few years back over a modest increase in fuel prices.

It’s less about being stupidified by TV, people just don’t want to believe it.

Plenty of smart people dismiss the scenario put forth by the geologists in favor of the economist cornucopianist scenario of demand creating its own supply. Not too long ago the Economist had a front cover predicting $10/barrel oil. And you may remember the Attarian thread (Attarian was a conservative bothered by the scarcity hypothesis):

“If the “peak oil” theory is correct, for instance, how come proven oil reserves keep increasing? ...
It’s all utter crap!  I am sorry a bright spark like David has been misled by it”(John Ray)
http://majorityrights.com/index.php/weblog/comments/312/

[BTW Campbell goes into some detail explaining why you have to backdate additional reserves from existing oil fields to the date of first discovery of the field. This gets you an honest trend line of oil discovery. Bottom line is conventional oil discovery peaked in 1965].

Anyway even smart people have this abiding faith that things will just work out.

But on the other side, ‘belief’ in Peak Oil is not the right word. It’s drawing conclusions from the available facts [point one: the big beef of the peak oil guys is the lack of reliable reserve data]. By the time the real facts of depletion are staring people in the face then it will be too late to position oneself. So faith comes in a little: does one make the transition to a different way of life now ahead of everyone else or does one hold on hoping they can weather the economic chaos until or if new technologies arrive. Population was 1 billion in 1900 when the primary source of energy was the sun, it’s 6 now. So 5 billion of us owe our existence to cheap oil, the 5 billion who are going to be without chairs when the music stops.

Needless to say mass immigration is incompatible with the peak oil scenario.

Posted by onetwothree on April 08, 2005, 01:40 AM | #

There is more than enough Uranium for thousands of years of use.

Posted by JRM on April 08, 2005, 01:54 AM | #

Here’s my take:  Oil has been so cheap over the past twenty years that nobody bothered to invest in new production facilities. In order to justify new investment of hundreds of millions of dollars, a project has to make a given rate of return. (Or nobody will buy the bonds used to finance the project). Oil extraction projects exist which can make money when oil is $30 a barrel, but not when oil is $15 dollars a barrel.  So as the price of oil increases, people become more willing to undertake difficult oil extraction projects.  The problem is the turnaround time.  It takes years to build new oil wells, pipelines, export facilities, etc.  Now that oil is at $50, there are lots and lots of oil projects companies want to undertake to produce oil.  But three and five years ago, nobody would have predicted this price surge because three years ago, the expected future price of oil today was much lower.  Thus, not many new oil projects were started.

The immediate future looks very painful because demand is greater than supply and the price will stay up here until the new oil projects kick in and/or people adjust to using less.  Over the long run, the price will likely come down, but that will take a long time.  The scaremongers at Peak Oil will look like they are right.  Just keep in mind that a similar thing happen that last time oil prices shot up:  The Club of Rome circa 1975 predicted all kinds of dire outcomes for the human race.  None of which has come to pass.

In summary:  Commodity prices are cyclical because of long lead times required for investment of new production.  We are at a point in the commodity production cycle where oil prices are rising.

Posted by Andrew L on April 08, 2005, 04:39 AM | #

You woulf find it amazing that Oil is based on world price paraty, intended to stop fuel guzzeling, But now we have Fuel refiners and Oil Companies Guzzeling astronomical profits at the public expence, does it not seem time to end the greed and get back to affordable price parity,and not inflated 600% over the cost of production, You can make money, but that is Criminal.  End the legacy of self serving of some parties that have large stock’s in the Oil share market.The intention of a Capitolist Free market is that,Not the manipulative Regieme we have now.Check out the oil stocks, see how many millionares there are now, You paid for it, and you can feel cheeted, because you are.

Posted by Stuka on April 08, 2005, 08:21 AM | #

Have any of the Peak Oil adherents here adjusted their investment portfolios in light of these predictions? Just wondering.

Posted by Svigor on April 08, 2005, 02:22 PM | #

Oil and Uranium need only carry us the next 10-30 years anyways.  Then nanomaterials will take over and solar power alone will be able to carry many times our current capacity.

Posted by xyz on April 09, 2005, 02:35 AM | #

Stuka, that was absolutely hilarious!