Peak Oil

[Derec]

Hybrids are still the "one man-four tires" transportation model.

Most hybrids and electrics seat 4 or more, unless you go with something like the McLaren P1 or Porsche 918 Spyder.

And they have tried 3 tires but it wasn't very brilliant.

That is not a change in direction. A sharper knife is still a knife.

Well if I want to cut something a sharper knife is definitely preferable to a spoon.

I know what you mean though. I am in favor of more public transit in US cities (most tend to be woefully underserved), especially using rail. But such investments are expensive and too often fail due to local politics.

 

[Bronzeage]

Most hybrids and electrics seat 4 or more, unless you go with something like the McLaren P1 or Porsche 918 Spyder.

And they have tried 3 tires but it wasn't very brilliant.

That is not a change in direction. A sharper knife is still a knife.

Well if I want to cut something a sharper knife is definitely preferable to a spoon.

I know what you mean though. I am in favor of more public transit in US cities (most tend to be woefully underserved), especially using rail. But such investments are expensive and too often fail due to local politics.

Mass transit fails because we have over 70 years of infrastructure which is designed to be used by cars. This is similar to trying to sell electric light bulbs in a city lit by gas lamps. For the past 30 years, our only solution to the problem has been to build better cars. Every car requires a road and two parking spaces. One space where it came from and another where it's going. It's as if we came up with a gas lamp which leaked less gas and produced less soot and said we didn't need electric lights.

 

[Jimmy Higgins]

Most hybrids and electrics seat 4 or more, unless you go with something like the McLaren P1 or Porsche 918 Spyder.

And they have tried 3 tires but it wasn't very brilliant.

Well if I want to cut something a sharper knife is definitely preferable to a spoon.

I know what you mean though. I am in favor of more public transit in US cities (most tend to be woefully underserved), especially using rail. But such investments are expensive and too often fail due to local politics.

Mass transit fails because we have over 70 years of infrastructure which is designed to be used by cars. This is similar to trying to sell electric light bulbs in a city lit by gas lamps. For the past 30 years, our only solution to the problem has been to build better cars. Every car requires a road and two parking spaces. One space where it came from and another where it's going. It's as if we came up with a gas lamp which leaked less gas and produced less soot and said we didn't need electric lights.

Is this a good place to mention that parking areas are often impermeable and in areas with combined storm/sewer lines, tends to help with the sending of poop into the river whenever a high intensity rainfall occurs?

 

[Bronzeage]

Mass transit fails because we have over 70 years of infrastructure which is designed to be used by cars. This is similar to trying to sell electric light bulbs in a city lit by gas lamps. For the past 30 years, our only solution to the problem has been to build better cars. Every car requires a road and two parking spaces. One space where it came from and another where it's going. It's as if we came up with a gas lamp which leaked less gas and produced less soot and said we didn't need electric lights.

Is this a good place to mention that parking areas are often impermeable and in areas with combined storm/sewer lines, tends to help with the sending of poop into the river whenever a high intensity rainfall occurs?

It's never a bad time to mention something that lowers the quality of life for everyone.

OMFT transportation is so integrated into our lives, it's treated as a force of nature, with little difference between traffic and a thunderstorm. I was in a discussion about locating new businesses in our downtown area. He said it was a bad idea because of "inadequate parking."

I said inadequate parking is a code phrase that means "our city government's poor planning has saddled us with an infrastructure which stifles economic growth."

 

[arkirk]

Oil is a finite resource. New technology does extend economical production beyond previous estimates, but as a finite resource, at some point demand must exceed supply. The only question is when.

To be fair, peak oil refers to the concept that society when suffer unsolvable catastrophic effects when a tipping point of demand exceeding supply is reached. Its not simply that oil will run out one day.

Most of the known reserves of oil must stay in the ground if we are to limit the temperature rise to 2 deg. C. And there's going to a lot of hell to pay with even a 2 deg. rise.

 

[semiopen]

Have to admit I didn't see the price decline coming.

Obviously there is a trade off between cheaper energy and environmental damage as arkirk points out.

Peak Oil was more of a conservative, libertarian concept. For example, Agora Finance has been talking about it for decades. I didn't read the OP that carefully so I'm not sure if that point was brought out.

I tend to view the decline as real, but having no idea that this was going to happen, I'm not expecting people to take me seriously.

Also, I think this makes the Keystone pipeline untenable economically but of course it's the principle of the thing now.

 

[Bronzeage]

Have to admit I didn't see the price decline coming.

Obviously there is a trade off between cheaper energy and environmental damage as arkirk points out.

Peak Oil was more of a conservative, libertarian concept. For example, Agora Finance has been talking about it for decades. I didn't read the OP that carefully so I'm not sure if that point was brought out.

I tend to view the decline as real, but having no idea that this was going to happen, I'm not expecting people to take me seriously.

Also, I think this makes the Keystone pipeline untenable economically but of course it's the principle of the thing now.

Petroleum is so tightly woven into the world economy, a very small shift at any level will send ripples up and down. When consumer demand drops, for whatever reason, plastic manufacturers have to reduce production. They use less feed stocks and fuel. The transportation system which carries little plastic ducks all over the world then cuts back. Ports and warehouses reduce their fuel and electrical consumption. All the way down the line, a drop in production, means less energy useage.
Refineries cannot simply reduce production to match that days demand. In order to operate at peak efficiency, all systems must run at full capacity. The last thing they want to do is produce gasoline at a higher cost/gallon when prices are falling. This means large stocks of processed petroleum have no where to go.

It takes six months to a year for refining capacity to catch up with demand. It doesn't matter whether demand is increasing, or decreasing.

The real choke point in this is crude oil production. That is one cost which never drops because that money was spent years ago. It's a sunk cost that can only be recovered by pumping oil out of the ground and selling it. When crude oil was selling for $150/bbl, there were a lot of places where drilling and pumping looked like a good idea. Who cared if the cost was $100/bbl? Now those oil fields are trying to payback $100/bbl costs, with $50/bbl oil.

 

[Derec]

Peak Oil was more of a conservative, libertarian concept. For example, Agora Finance has been talking about it for decades. I didn't read the OP that carefully so I'm not sure if that point was brought out.

No, I wasn't talking about any of that. Not sure about the libertarian angle though, are people like Colin Campbell or Ken Deffeyes libertarians?

I tend to view the decline as real, but having no idea that this was going to happen, I'm not expecting people to take me seriously.

Obviously oil is a finite resource and the world produces about 30 Gbbl each year which depletes reserves, especially easier to produce reserves that get "picked" first like low-hanging fruit. However, contrary to the Peak Oil hysteria more recent history has shown that the world economy and societies can sustain an oil price of around 100 USD/bbl. That price makes investment in oil production more lucrative opening more supplies and it also dampens demand. The thing is, price is is function of supply and demand but both supply and demand are a function of price (among other things obviously). The result is a negative feedback loop that resists price changes in either direction to a certain extent. Take Matthew Simmons. He did some great work for example analyzing oil industry in Saudi Arabia in his 2005 book Twilight in the Desert but his prediction of $200 oil never materialized for this very reason. Same goes for predictions that we will see oil price in the $20s during this current slump.

Also, I think this makes the Keystone pipeline untenable economically but of course it's the principle of the thing now.

Quite the contrary. With lower oil price it is now more imperative than ever to have an efficient way to get that relatively expensive oil to the refineries. Pipelines are not just safer than rail transport but also more efficient and thus cheaper, reducing the total cost of Canadian oil sands.
Furthermore, what makes you think these oil prices are here to stay in the long run? Oil prices are going to rebound as sure as death and taxes and will probably reach $100 again by mid-2016 if not sooner. Which also means that if Obama and (bought and paid for by Tom Steyer) Democrats are successful in deep sixing Keystone XL they will be blamed come the next elections.
By the way, as consumers buying a new gas guzzler because gas prices are ~$2/gal is about the most stupid thing somebody can do right now. Buy a fuel efficient vehicle instead since there will be a rude awakening and you may even get a discount because too many people are looking at gas guzzlers right now.

 

[semiopen]

Derec, Agora Financial is so libertarian they supported Obama against McCain in 2008. They are gold bugs who consider investing in GLD too dangerous because the paranoids have secretly stolen the underlying assets. I remember the cocktail party at their annual conference a few years ago where a lady advised me to get nervous when the government came up with colored money.

Oil futures are $46 today. You may be right that they will not go into the 20s but I'm sure you would have said the same thing about them going below $100 or so not too long ago.

I must be a genius in your book because I leased a plug in Prius at a decent price a year and a half ago and average over 100m/gallon. I'm guessing I'll continue to be punished until the lease expires next year.

 

[Bronzeage]

Derec, Agora Financial is so libertarian they supported Obama against McCain in 2008. They are gold bugs who consider investing in GLD too dangerous because the paranoids have secretly stolen the underlying assets. I remember the cocktail party at their annual conference a few years ago where a lady advised me to get nervous when the government came up with colored money.

Oil futures are $46 today. You may be right that they will not go into the 20s but I'm sure you would have said the same thing about them going below $100 or so not too long ago.

I must be a genius in your book because I leased a plug in Prius at a decent price a year and a half ago and average over 100m/gallon. I'm guessing I'll continue to be punished until the lease expires next year.

It was Martin Luther King jr who said, "This will all be over when they realize colored spends like anyone else's."

 

[semiopen]

Derec, Agora Financial is so libertarian they supported Obama against McCain in 2008. They are gold bugs who consider investing in GLD too dangerous because the paranoids have secretly stolen the underlying assets. I remember the cocktail party at their annual conference a few years ago where a lady advised me to get nervous when the government came up with colored money.

It was Martin Luther King jr who said, "This will all be over when they realize colored spends like anyone else's."

I thought that "colored money" might be ambiguous when I wrote it. Of course she was referring to The New Colors of U.S. Money. To be fair to the lady, she brought this up in a semi-joking manner.

 

[Derec]

Derec, Agora Financial is so libertarian they supported Obama against McCain in 2008.

So not libertarian at all.

They are gold bugs who consider investing in GLD too dangerous because the paranoids have secretly stolen the underlying assets. I remember the cocktail party at their annual conference a few years ago where a lady advised me to get nervous when the government came up with colored money.

Sounds more like nuts than libertarians.

Oil futures are $46 today. You may be right that they will not go into the 20s but I'm sure you would have said the same thing about them going below $100 or so not too long ago.

As I said, there is a negative feedback loop. Lower price means more demand. Lower price also means reduction in drilling new wells reducing future supply as existing wells decline. Furthermore, it is just a question of time before OPEC cries uncle and reduces their production targets.

I must be a genius in your book because I leased a plug in Prius at a decent price a year and a half ago and average over 100m/gallon. I'm guessing I'll continue to be punished until the lease expires next year.

Leasing is very different than buying. Also my point was about buying a fuel efficient vehicle when prices are down and demand for such vehicles is reduced resulting in rebates. SUVs and trucks have already increased in sales. Those people are in for a rude awakening for sure.

 

[Bronzeage]

It was Martin Luther King jr who said, "This will all be over when they realize colored spends like anyone else's."

I thought that "colored money" might be ambiguous when I wrote it. Of course she was referring to The New Colors of U.S. Money. To be fair to the lady, she brought this up in a semi-joking manner.

That's okay. I made up the MLK quote.

The United States is fortunate in that our founding fathers saw fit to steal a large enough piece of land between two oceans, which contained enough natural resources to last until we were able to understand how to conserve them. The history of mankind is filled with examples of people who outgrow their resources before figuring this out.

 

[semiopen]

Derec, in our history together, do you think I would give you such an easy opening... my comment about them supporting Obama was to show how far to the right they are. McCain, if you recall, wanted to stay in Iraq.

They recommended Tesla when it was in the 20s... not that nuts... i even held a few thousand shares for a few days... wish I was nuts enough to hang on.

 

[lpetrich]

Skepticblog » News from the oil patch by paleontologist Donald Prothero.

Last week, I attended the annual meeting of the American Association of Petroleum Geologists (AAPG), held in Long Beach, California, from April 21-25. 2012. Although I have done lots of consulting with oil companies over the years, have taught the basics of oil geology all my career, and have many former students working in oil companies, I’m still primarily an academic geologist.

The AAPG conference was lavish and expensive, much more than academic ones -- oil companies have money that they are willing to burn on such things.

There weren't nearly as many talks at the AAPG conference as at many academic conferences, because most would-be presenters are oil-company employees, paid to do tasks other than compose papers for their colleagues to read.

But the biggest take-home message is something oil geologists have known for years: oil is never going to be as cheap or easy to obtain again, and the global price of oil will get higher and higher as it becomes more and more scarce, especially with the huge increase in demand from developing countries like China and India. I heard this message over and over again, from the gossip on the exhibit hall floor with friends, to the plenary addresses by the top people in the oil business.

Discovery of US oil fields peaked around 1930, and production peaked around 1970.

World discovery rate peaked in 1965, and has been steeply declining ever since, even though more and more exploration is conducted in the farthest reaches of the globe in the past 47 years. The “peak oil” effect has probably already occurred, and we are likely on the slow downward decline in discoveries of cheap, easy-to-pump oil.

However, we are still too close to the date to pin it down with any confidence. A date likely somewhere in 2005 - 2010.

There are no polls that show just how many qualified experts (geologists and geological engineers within and close to the oil industry) accept the concept of peak oil and the end of cheap abundant oil, but a lot of oil experts are on the record as supporting it, including a number of oil geologists and executives. My many friends in the oil business almost all tell me that “peak oil” is widely accepted among their colleagues, and they have long been forced to work with extraordinarily difficult exploration problems because there are no easy oil fields any more.

DP then mentioned other users of oil: plastics, fertilizers, and pesticides. He also slammed biofuels as a cure worse than the disease in some ways. He concluded by noting Germany's increasing use of wind and solar energy, starting in the 1990's. Such efforts have been bearing fruit, as one can tell from stories in Cleantech News — Solar, Wind, EV News (#1 Source) | CleanTechnica and other places. However, wind and solar energy are mostly for electricity generation, and the fossil fuels for that are mostly coal and natural gas. Also, electric cars aren't very big competition for gasoline ones. Cellulose digestion could make biofuel production more efficient, but its commercialization is only beginning. So there isn't any good substitute for oil, at least not just yet.

 

[Derec]

Derec, in our history together, do you think I would give you such an easy opening... my comment about them supporting Obama was to show how far to the right they are. McCain, if you recall, wanted to stay in Iraq.

I know what you mean but I still disagree that them supporting Obama showed how "right wing" they are.

They recommended Tesla when it was in the 20s... not that nuts... i even held a few thousand shares for a few days... wish I was nuts enough to hang on.

Even a blind squirrel finds a nut occasionally.
Btw, oil price has recovered a bit and is now at ~$48/bbl.

 

[semiopen]

Supporting Obama tricked me into thinking that they were sane... then after I subscribed I got tea partied, buy golded, buy energied, Obamad, and Bernankied relentlessly. So yes, they are nuts but technically sane.

Thanks for the oil quote but had one bought this positive development your would be losing over 4% for the day as futures are now 46.60 or so.

On general principles, I have my doubts about buying oil now. I wonder if this is similar to Ruy's three tranche gold investment strategy... I could be wrong but I wouldn't mess with this at the moment.

 

[bleubird]

As Bronze stated,everything has been built for cars.Oil made all we have possible.no one 80 years ago could see the mess that oil would cause.We can see it now,but it maybe too late.Some cities have made the effort,like Portland,OR.You can not get people out of their cars if there is no alternative.

insane:"doing the same thing over,and expecting a different outcome"

 

[semiopen]

As I've admitted, I don't follow oil very closely.

For the WTIC (West Texas Light Crude) spot price, it hit $10.65 in 1999. After getting up to $79.43 in 2006 it made what looked like a solid bottom of $50.55 in early 2007. Then, after hitting an all time high of $147.27 it crashed to $35.13 in early 2009.

The current crash has taken out resistance at $50.55 like it wasn't even there. IMHO there is at least a 50% chance that the low at $35.13 will be taken out which would make the next target @25.08 which was formed in 2003.

We're not talking about shit that was happening in the Civil War here, this is all after the invention of the GPS, cell phones, and air conditioning.

Anyway, people should realize that buying oil here is risky.

 

[Derec]

For the WTIC (West Texas Light Crude) spot price, it hit $10.65 in 1999.

Which is $15 in 2014 dollars - still very low but there is ~40% difference when comparing prices even a decade and a half ago.

After getting up to $79.43 in 2006 it made what looked like a solid bottom of $50.55 in early 2007. Then, after hitting an all time high of $147.27 it crashed to $35.13 in early 2009. The current crash has taken out resistance at $50.55 like it wasn't even there.

I am baffled by this thinking of "resistances". Just because oil bottomed out at a certain (not even inflation adjusted) price 8 years ago why should the market "remember" that today - unless the market is dominated by people believing in it of course.

IMHO there is at least a 50% chance that the low at $35.13 will be taken out which would make the next target @25.08 which was formed in 2003.

The reason oil bottomed out so low in 2009 is because the spike in 2008 triggered the financial crisis and led to demand destruction. We did not have a $147 spike so I do not see why $35 dip should be repeated. The dynamics are very different than they were then. As to $25 - not going to happen unless demand drops precipitously in the next few years. Most oil costs much more than that to produce and I estimate even Saudi costs are above $20 these days.
World produced a bit more than a trillion bbl of oil since oil industry began in the late 19th century. Since 2003 a bit less than 300 billion bbl have been produced, which means there is so much less in the ground than was the case when that low price of $25/bbl was set. Just to put in in perspective.

Anyway, people should realize that buying oil here is risky.

Speculating on commodities is risky. And I do not have the spare cash to do it myself anyway.