Is Peak Oil reality? What do you think?

[Uncle Miltie]

Price: The ultimate regulator of demand.

[jimknopf]

You are right. But the hypothesis that a "peak" in production could be reached soon is a physical aspect, not an economic question.

[hobbes1]

OK. How about starting with the fact that the current figures and projections only include the Oil that can be Recovered, at Current Prices. As Prices go up, the feasability of Exploring for new sources, and recovering some existing sources not counted due to lack of viablity, will become producing sources.


That is a large what if, unaddressed by the Peak Oil hysteria/fallacy.

[hobbes1]

Incorrect, it is a decidedly economic question. Even the capacity to refine, is currently an economic rather than a physical question, and as per your request, just saying it isn't is not sufficient.

Explanation is merited.

[Petronski]

The DUmmies were soiling themselves over this issue the other day. Anything they take THAT seriously is probably bunk.


Look closely at who is pushing 'Peak Oil' and ask yourself "What are they selling?"

[Uncle Miltie]

For fossil fuel wonks, I'm sure your discussion is pertinent. However, for us great unwashed, we need only care about the marginal cost of the next unit of energy produced.

For example, wind energy is only slighly uneconomic today. Here in North Dakota, we could economically put up a few hundred thousand windmills if other energy prices consistently rise, say 25%.

Plus, I have a friend who went to the Colorado School of Mines who claimed that one county in Wyoming had more energy in coal than all the oil in Saudi. That's a lot of BTUs. Sulfuric, sure, but I suspect scrubbing technology is only a matter of expense.

Which brings me back to my point: non-wonks need only care about the marginal cost of energy. Certainly, costs will rise, but in a moderate fashion, one which our modern flexible capitalist economy will quickly accomodate.

Have another cup of coffee, and a great and profitable day!

[bondjamesbond]

Assuming in a very simplified calculation that the demand stays constant...

Bad assumptions lead to bad results.

If production were to fall, demand will also fall. Oil will be priced in such a way that supply balances demand. If there is a shortage, prices will be bid up to such a level that the demand decreases and the shortage is eliminated.

This is all Econ 101. Nothing complicated here.

Now it is true that oil consumption is fairly inelastic in the short term. But over a number of years, people's consumption habits will adapt to the new price levels, as they start driving less or more fuel efficiently and consume less energy in general.

The actual result of Peak Oil will be a regime of structurally increasing prices and general inflation. But Peak Oil does not mean that we will run out of oil. As oil becomes more expensive, it will become less dominant as an energy source.

Think of whale oil. Whale oil used to be used in lamps all up and down the Eastern Seabord of the United States. Nowadays, it is practically non-existant. Cheaper and more reliable substitutes became available and the cost of whale oil became too high, reletively speaking. One could still produce whale oil today, but why would anyone want to?

A hundred years from now, oil will be an anachronism, mainly of interest to historical buffs and people with obsolete equipment.

[jimknopf]

I agree that the economic viability of production depends on the price.

So you are right, the exact point of peak oil (if it exists) depends on the price, too.

But what I mean is if there simply IS no more oil, than the price is not important.

I don't think that the eia figures are based only on current prices. There is no disclaimer saying so.

The Canadian tar sand is included, and as of Jan. 2003 (with a lower oil price than today) it was perhaps not a good idea to explore it. Nevertheless it appears in the statistics.

[bereanway]

Hubbert's peak was very precise in predicting the time at which US domestic production would peak. It appears we are now approaching that point with respect to worldwide production. We won't run out of oil, but demand is beginning to outstrip the rate at which we can bring it to the surface. At 10.5 mil barrels/day the Saudis are approaching peak production levels. There's not a whole lot of swing left in that swing producer. Worldwide consumption is at 81 mil/day and growing rapidly. Permanently higher prices would appear to be on the horizon even if the radicals don't win out in the ME.

[No Blue States]

Interesting subject.

Just listening in mostly, having no expertise on the subject.

But oil is a finite resource and there is a last barrel.

I will be glad when solar or wind power is affordable.

[LOC1]

According to the published analysis based on Hubert's theory, what happens at the "peak" is that oil production can no longer increase, and instead begins to decline. We don't run out of oil. What happens is the price of oil increases to the point that conservation, and alternative sources of energy, reduce the demand for petroleum products to the level of existing supply.

That is why the study was called "The End of Cheap OIL."

You can find the original article published in Scientific American during March, 1998 here:

http://www.hubbertpeak.com/sciam983.htm

One might argue that in the time period since the article was written, oil supply, world oil demand, and oil prices have all tended to follow the pattern one might expect if the "peak" were real. However, we will not know for certain until several years after the "peak" occurs, if and when it does.

In any event, this is an economic scenario, which should at least be tested in any long range planning. Such planning would directionally encourage such things as tar sands development, increased use of hybrids car engines, distributed electrical generation, methane hydrate exploration, etc. All of these activities are being pursued as though someone thought the higher oil prices implicit in the "peak" theory had some validity.

[jimknopf]

Assumptions... There are good reasons to assume that China will increase the demand.

Qou are quite optimistic that the transformation process happens without frictions. But you seem to agree that in 100 years there won't be any more oil...

[jimknopf]

Thanks for your link!

[hobbes1]

So you are right, the exact point of peak oil (if it exists) depends on the price, too.

Not exactly. A Rising price, could in fact put a peak on the Demand for Oil, rather than the ability to produce it, driving demand below production levels. (Theoretically, and in all likelyhood what would be more likely to happen.(See the poster above Hybrid Cars etc...).

[BipolarBob]

Plus, I have a friend who went to the Colorado School of Mines who claimed that one county in Wyoming had more energy in coal than all the oil in Saudi. That's a lot of BTUs. Sulfuric, sure, but I suspect scrubbing technology is only a matter of expense.
Actually PRB coal(Powder River Basin) is low sulphur. Scrubbers are nevertheless required because of CAA.But yes they have several lifetimes of coal reserves known.

[hobbes1]

You are making a jump from NO MORE OIL NEEDED, to No More Oil, they are in fact opposites.

[dighton]

If you are sure peak oil is a phony scare tactics, please tell us WHY. A bunch of "No, it's not real" posts with no substance behind it will NOT be considered. ... Please calm our fears.

If this question conforms to your rules, who is "us" and "our"?

[Eurotwit]

The stone age didn't end because they ran out of stones :-)

[Jalapeno]

bump for an interesting lurk.