Posted on 08/17/2005 11:10:59 AM PDT by 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.
There are "original oil in place" reserves. They become reserves when you find them.
There are "economically recoverable" reserves. They become reserves when the prices and technology arrive.
Alberta has more total hydrocarbon reserves than Saudi Arabia. Oil shale and tar sand.
Speculation does have some impact, but speculation alone simply could not cause all of the price increase we've had in the last three and a half years. It's mostly being driven by increased demand (especially in booming China), plain and simple, in the same way that the huge spike in the late '70 and early '80s was driven by the artificial supply cuts created by OPEC.
What do you base you bet on? Is supply going to increase or is demand goign to decrease?
Inland America was once an open sea. Oil seems to occur at the edges of seas and oceans. That's one speculation, that sealife fell to the bottom and was compressed by sediment where it gradually turned to bitumen and oil and then emerged along the shoreline. That would account for oil deposits from Indiana to Texas/Louisiana and the tar sands from Colorado to Alberta.
Some ethanol makes sense, even though it is a loser to plant, grow, and refine ethanol. It does act as an antiknock compound in small quantities. Much better on the ground water than MTBE.
"t takes more energy to plant, fertilize, harvest, and refine the corn into ethanol than you get from burning the ethanol in your car."
I've heard similar statements, but I've never seen any categorical data on that analysis. Know where I could find any?
63.25 -2.83
5% move in one day?
They burned some wood to cook up that product.
Great! Quantify it!
How much American drilled oil is being delivered in that market?
From www.iowacorn.org/ethanol/ethanol
Q: Will we deplete human and animal food supplies by using corn and other grains for fuel production?
A: No, actually the production of ethanol from corn uses only the starch of the corn kernel. All of the valuable protein, minerals and nutrients remain. One bushel of corn produces about 2.7 gallons of ethanol AND 11.4 pounds of gluten feed (20% protein) AND 3 pounds of gluten meal (60% protein) AND 1.6 pounds of corn oil.
So, you get all that other stuff PLUS 2.7 gallons of ethanol / bushel. I don't know what corn prices are right now, but they're probably somewhere in the $4 something / bushel range.
Granted, when gas was <$2.00 / gal, it wasn't feasible. It may not even be now. But at some price point it will be.
Yes. It's different than, say, the service industry and certain commodities, but the same as the utilities market. The public WILL cut way back on restaraunts and travel while shopping for cheaper sources of food and necessary paper products before cutting back much at all on gas or utilities.
"Alberta has more total hydrocarbon reserves than Saudi Arabia. Oil shale and tar sand."
I agree but the tar sands will be capacity limited for some time. An interesting company to follow in this regard is OPTI Canada Inc. They have raised significant capital to put to work in the tar sand play. It's worth watching.
"July sales of SUVs were very strong"
That probably had more to do with price cutting by automakers. At some point, there will be demand destruction due to high oil prices. We just haven't seen it yet. What will it take? $60, $70 or $100 per bbl?
Here is a fairly massive resource:
http://quasar.physik.unibas.ch/~fisker/401/oil/hubbheir.html#http://www.postcarbon.org/DOCS/2002/11/General-Knowledge-in-the-Post-Carbon-Age.delivered-edited.lecture-only.sans-Q&A.2002-11-10.pdf
A collection of scientific writings, supporting Hubbert
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