why would a cartel that dictated prices allow this to happen? Why would they eve let the prices go down? Why wouldn't they constantly raise them?
Posted on 05/03/2005 7:20:50 AM PDT by StoneGiant
Oil Reserves Are Increasing
by George Crispin
Eugene Island is an underwater mountain located about 80 miles off the coast of Louisiana in the Gulf of Mexico. In 1973 oil was struck and off-shore platform Eugene 330 erected. The field began production at 15,000 barrels a day, then gradually fell off, as is normal, to 4,000 barrels a day in 1989, Then came the surprise; it reversed itself and increased production to 13,000 barrels a day. Probable reserves have been increased to 400 million barrels from 60 million. The field appears to be filling from below and the crude coming up today is from a geological age different from the original crude, which leads to the speculation that the world has limitless supplies of petroleum.
This really interested some scientists. Thomas Gold, astronomer and professor emeritus of Cornell held for years that oil is actually renewable primordial syrup continually manufactured by the earth under ultra hot conditions and tremendous pressures. This substance migrates upward picking up bacteria that attack it making it appear to have an organic origin, i.e., come from dinosaurs and vegetation. As best I have found so far Russian scientists support his position, at least that petroleum is of primordial origin. There is now plenty of evidence around proving the presence of methane in our universe. It is easy to see it as a part of the formation of the earth. Under the right conditions of temperature and pressure, it converts to more complex hydrocarbons.
Roger Andersen, an oceanographer and executive director of Columbia’s Energy Research Center proposed studying the behavior of this reservoir. The underwater landscape around Eugene Island is weird, cut with faults and fissures that belch gas and oil. The field is operated by PennzEnergy Co. Andersen proposed to study the action of the sea bottom around the mountain and the field at its top and persuaded the U S Dept of Energy to ante up ten million which was matched by a consortium of oil giants including Chevron, Exxon, and Tex Corp. This work began about the time 3-D seismic technology was introduced to oil exploration. Anderson was able to stack 3D images resulting in a 4D image that showed the reservoir in 3 spatial dimensions and enabled researchers to track the movement of oil. Their most stunning find was a deep fault at a bottom corner of the computer scan that showed oil literally gushing in. "We could see the stream," says Andersen. "It wasn’t even debated that it was happening."
Work continued for five years until funds ran out and they were unable to continue. With the world having 40 years of proven reserves in hand it is difficult to interest the major oil producers in much exploration, let alone something done merely for research, and so far from the current accepted theory of a fossil origin for oil.
Similar occurrences have been seen at other Gulf Of Mexico fields, at the Cook Inlet oil field, at oil fields in Uzbekistan, and it is possible this accounts for the longevity of the Saudi Arabian fields where few new finds have been made, yet reserves have doubled while the fields have been exploited mercilessly for 50 years.
Not only can the doom and gloomers not show us running out of the natural resources we recycle, but now there appears to be good odds of a limitless supply of petroleum working its way up to where we can capture it.
A caveat: Gold’s theory is not yet accepted by all scientists, probably all the more reason to trust it.
April 6, 2005
"We" don't have to do anything, just as "we" didn't do anything to transition from whale oil to petroluem. The higher oil prices act as their own incentive for private individuals to come up with alternatives, and they are doing so. They are just not going to tell you about them because they intend on making money off of them.
The economic effects of a domestically produced energy source are twofold - a. cheaper prices from domestic production saves the consumer money, which he or she spends on other goods.
Except, of course, we do not have cheaper prices from domestic production. When we do, that will be great. Whoever comes up with such a source will make a fortune, and there are plenty of people working on it.
Why does a Chinese economic boom translate into higher oil prices? Are Chinese citizens buying more cars? Driving that much more? Is China demanding crude to feed its thriving petrochemical plants? When did THAT industry come into being in China? I'm sorry, but the only way I can buy the Chinese demand explanation is to believe that China is buying up reserves against a day when they want to go to war. And if they were going to do that, I would have thought it made more sense to buy it at $30 a barrel rather than $55.
why did they wait until now to raise prices, why didn't they raise them 10 years ago?
They have been raising prices by fits and starts for the past 30 years. It wasn't all that long ago that I shuddered at $1.20-a-gallon gas. And 10 years ago, gas over $1 a gallon wasn't common. So the answer is, they DIDN'T wait until now to raise prices; they DID raise them 10 years ago. And 5 years ago. And 1 year ago. And last week.
And nobody has offered a believable explanation. Some pretty transparent excuses, sure. But nothing that stands up to scrutiny.
Increased demand.
Are Chinese citizens buying more cars?
Yes.
Driving that much more?
Yes.
Is China demanding crude to feed its thriving petrochemical plants?
Yes
When did THAT industry come into being in China?
Recently.
I'm sorry, but the only way I can buy the Chinese demand explanation is to believe that China is buying up reserves against a day when they want to go to war.
Well, they are also buying excess reserves as well.
And if they were going to do that, I would have thought it made more sense to buy it at $30 a barrel rather than $55.
The price of oil is the price of oil. If there was no economic boom, then oil wouldn't be so high, but then China wouldn't have the dough to buy oil at these prices.
They have been raising prices by fits and starts for the past 30 years. It wasn't all that long ago that I shuddered at $1.20-a-gallon gas. And 10 years ago, gas over $1 a gallon wasn't common. So the answer is, they DIDN'T wait until now to raise prices; they DID raise them 10 years ago. And 5 years ago. And 1 year ago. And last week.
That's just not true. Adjsuted for inflation, gas prices have been going up and down for the last 30 years. If they had total control over prices, you would have seen a constant increase over the last 30 years, which is not the case.
And nobody has offered a believable explanation.
It's called supply and demand.
why would a cartel that dictated prices allow this to happen? Why would they eve let the prices go down? Why wouldn't they constantly raise them?
First of all, "adjusted for inflation" is deceptive, since rising gasoline costs are a major contributor to inflation. Secondly, while gas prices haven't gone up STEADILY for the last 30 years, they have gone nowhere but up. Nowhere on earth are you paying LESS for gasoline today than you were 30 years ago. Or 10 years ago. Or 5. Gasoline tends to increase in price dramatically rather than in small increments, but it has risen inexorably for the last 30 years.
It's called supply and demand.
The Chinese are not driving so many more cars that it would account for this dramatic an increase in crude demand. And no petrochemical industry arises overnight. In fact, the oil companies assure us that constructing a refinery takes centuries and costs billions and billions of dollars. So an emerging Chinese petro industry doesn't ring true either.
I'm not entirely ignorant of the laws of supply and demand. I just don't see that as a satisfactory explanation of this phenomenon. On the other hand, monopoly serves to adequately explain almost all of what we're seeing in the oil industry today.
A look at any graph shows that it has not risen "inexorably for the last 30 years. Leaving that aside, however, if the price is jsut dictated by a cartel, why is it ever allowed to go down at all? Is this cartel stupid?
The demand for oil by China is a relatively easy stat to look up, I advise you to do so. Chinese oil demand is growing rapidly. It's just a fact and I am not going to bother to discuss it anymore.
No one worth their paycheck will ever assert that we know all there is to know about recoverable petroleum resources, but one field's serendipitous recharge does not make for an endless supply.
that is because rather than look up the easy to find stats on Chinese demand, you would prefer to go with the conspiracy theory. The reality is that I did and/or used to work for a large "oil company" and I can tell you as a fact that we sold our products on the open market in a very competitive environement. Yes, OPEC can tinker with stuff here and there, but to call it a monopoly is just plain wrong.
From the article: Their most stunning find was a deep fault at a bottom corner of the computer scan that showed oil literally gushing in. "We could see the stream," says Andersen. "It wasn’t even debated that it was happening."
Pretty good evidence that this is happening.
When the environmental regulations and formulation requirements are bound to change two or three times from when you break ground to project completion, requiring expensive retrofits before you even go into production, who in their right mind would make the investment?
Sad to say, but it only takes an administration change for the wind to blow the other way.
PennzEnergy merged with Devon a number of years ago.
Out of the thousands of oil wells, one has oil gushing in from an unknown source. It is quite possible that there is simply a strange geological formation there, and not that the oil is gushing up from the center of the earth.
Right.
Wouldn't it be interesting if the Eugene Island oil was coming from a leak in the Strategic Petroleum Reserves in other parts of Louisiana? It's a long ways away, but stranger things have happened...
I will check the stats. I admit I've never really looked them up. But my gut tells me that the demand from China alone could not possibly account for the difference we're seeing at the pump.
Agree.
That's what is currently killing the all-electric car. The rapidity of BTU energy transfer from gas pump to gas tank is a hard mark to beat. Consequently, the hybrid car is the more logical approach to cutting down on (and, hopefully, someday eliminating) our dependence on foreign oil. The question is how much corn do we have to plant to make it a completely renewable resource? ;-)
Similarily, the oil and gas drilling industry has - in the face of a heck of a lot of pressure, it must be admitted - finally developed much more environmentally sound and less environmentally demanding production technologies. This new technology is what makes the case for drilling in the environmentally-sensitive ANWR plausible. If we were using the production methods of the 1940s-60s, it would be impossible to sell.
Spilled oil is money lost.
The ability to drill multiple wellbores from one location translates into money saved. (on location construction, infrastructure, etc.)
Horizontal well drilling technology, only well developed since the 1980s, and far, far more reliable in the last 10 years has made this possible, as well as made possible economic recovery of reserves not previously producible.
Environmental pressures have not been to 'clean up' drilling for oil, or the production thereof, but to prevent drilling and production altogether.
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