The Cost of Oil And Hubbert's Peak

The Record, Bergen County, NJ ^ | Tuesday, August 16, 2005 | William Tucker

[rockthecasbah]

World oil prices pushed up to $67 a barrel last week. Is it just a seasonal phenomenon, a reflection of summer driving patterns, a sign of Saudi intransigence, a conspiracy by the oil companies? Perhaps. But far more likely, it has something to do with Hubbert's Peak.

In 1956, Shell Oil geologist M. King Hubbert made a startling prediction. Judging from the rate new oil was being discovered, he calculated that American oil production would reach its peak in 1969.

The prediction received little attention. After all, people had been predicting that oil would eventually run out since Colonel Drake drilled the first well at Titusville in 1859. These pessimistic forecasts had always proved wrong.

But Hubbert had some logic on his side. A veteran prospector, King had noticed that - largely because of requirements by the Securities Exchange Commission - oil companies did not immediately add new discoveries to their official "reserves" as soon as they were found but parceled them out year by year. This created the illusion that new oil was continuously being found.

[Outland]

"You are thinking of methanol. Ethanol won't affect the gaskets at all. If they can handle gas, booze is no problem. Methanol will "dry" out gaskets fairly fast."

That's not always true and I wasn't thinking of methanol even though methanol and ethanol are both alcohol compounds.

From a 2003 Ford Taurus owner's manual:

Ethanol is more chemically active than gasoline. It corrodes some metals and causes some plastic and rubber components to swell, break down or become brittle and crack, especially when mixed with gasoline. Special materials and procedures have been developed for flexible fuel vehicles and the dispensers used by ethanol fuel providers. Flexible fuel components and standard unleaded gasoline fuel components are not interchangeable. If your vehicle is not serviced in accordance with flexible fuel vehicles procedures, damage may occur and your warranty may be invalidated.

Also of note that the air/fuel ratio for ethanol is diifferent for gasoline. This necessitates fuel injectors that can deliver more fuel and a computer programmed to know the correct ratios. Ignition timing is also different as you have pointed out.

One of the reasons that ethanol can be corrosive is that like most forms of alcohol, ethanol readily absorbs water, including water vapor if exposed to the air.

[AFPhys]

Oil futures traders are betting that the price will go up as a result of supply disruption: pure and simple. Some (probably many) of them will lose a great deal of money when it does not go up.

You are free to do the same kind of betting if you wish to. Or you can play the lotteries and give the states 50% off the top, or go to Vegas and give the casinos 20% or so off the top.

[AFPhys]

http://www.freerepublic.com/focus/f-news/1466304/posts
Police deployed at South China gas stations(Price controls=fuel shortage)

This article demonstrates what I have been stating in many threads about the price of oil: that this rise in oil prices is going to hurt the "newly emerging economies" like China and India FAR MORE than it will hurt the US - we're far more prepared for higher oil pricing than they are, and it will be THEIR demand that falls sooner or later. They just don't have the backup systems and resources we have developed over the years...

Pretty soon the futures traders are going to figure this out...

[RightWhale]

The problem in China is fairly small today; distribution is always a problem for centrally controlled economies. But shortages, when they finally develop in a serious and permanent fashion will definitely hurt the weaker economies first and most. America and Europe could get by on a lot less oil, it would slow us down, but we would survive. China would have to park their new SUVs, but would still have to make payments anyway while they ride their bicycles to work to darkened factories. China could even have food shortages.

[Brilliant]

Yep. The main reason they need oil is to run their productive capacity. They make a lot of things out of plastic. Plastic is made out of oil. They use fuel to run industial machinery. That takes oil. They have autos, of course, but not nearly as many as we do. Our primary use of oil is to provide transportation for workers and consumers, and to move goods. If we cut back, then that's what we're cutting back on. Whether the Chinese cut back or not, they are going to be generating a lot less income because the cost of oil has gone up.

[Pessimist]

I agree, nukes would be great - for this and other uses.

But re the "It takes more energy than it produces" argument: The figures I've seen are that it produces 1.35 times as much energy as is used to produce it.

There was some study a while back which DID claim it takes more energy than it makes, but that's since been debunked. Turns out the guy was using 25 yr old data for how much energy it took to produce a bushel of corn. Farmers have gotten a lot better over the years.

[quantfive]

"There was some study a while back which DID claim it takes more energy than it makes, but that's since been debunked. Turns out the guy was using 25 yr old data for how much energy it took to produce a bushel of corn. Farmers have gotten a lot better over the years."

I own an ad agency and we have a market research division. It's very easy to skew the data sample collection process and subsequent "analysis". Even if this ratio were true, this research about 1.35 times/energy/corn oil replacement is not based on using a nuclear plant to fuel the conversion process.

[GOP_1900AD]

RE: Pretty soon the futures traders are going to figure this out...

But of course, they will be "fueling" hysteria to the best of their capabilities, going after just... one .... more .... dead cat bounce, until the bottom completely falls out of this frothy, overhyped market! LOL ....