With reference to Canadian oil supplies "dig" may be more appropriate than "pump".
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.
Not really. Demand is high. Supply is constrained in the short run in terms of the light sweet crude the [also capacity constrained] refiners prefer. Whether the price movement over the last year has anything to do with peak oil will only be apparent if in a year or two significant additional supply has not appeared on the market.
One of the points many peak oil advocates miss is that the most marginal stripper wells get plugged or at least shut in during oil price busts. Other than in some nasty offshore environments there will not be much in the way of abandonments with the price of oil north of $60. This should tell us a lot about what is possible in terms of flat out production and the absolute depletion curves based strictly on reservoir dynamics.
And I don't have my copy. Got donated to the local library during spring cleaning. I'll have to check it out though.
So, tell me, you don't, find anything strange or downright sick about that site? Did you really look at it?
I've been writing all along that at some point, we'll probably see a repeat of 1982. But don't tell that to speculators, doomers or Green extremists because it does not support their agenda.
Actually not true at all. Light truck and SUV prices are starting to rise!
J P Morgan had the right idea. Sell stock. Sometimes for more, sometimes for less.
And there a many, many marginal wells out there. And furthermore, there are even more untapped marginal fields. And in spite of the doomers' claims that "all reserves have been found" anyone who has actually ever done exploration work can tell you that the vastness of the earth (and oceans) are such that we're not even close to knowing what's still out there. Granted, some outstanding fields were found when we moved from wildcatting to technology, and so, it may seem like we've found a great percentage of what may be out there. But let me write this - considering the jumbled geology of the Western US, I think that is overly pessimistic. Heck, you send 10 different people to map the same area of FRANCISCAN terraine in California and you get 10 different maps. And yes, there IS oil mixed in with this terraine. Monterey Formation also has oil. Etc. Until I see Vibroseises in peoples' back yards or in farming area in the smaller valleys, I will not utter the nonsense that we've found everything there is to find.
Yes. It is frustrating to have a Republican governor of Florida (who doesn't have to stand again) and a brand new Republican Senator (with six years before he has to run again), and yet both are united against developing Florida's oil and gas industry which could be a large boon to the state.
That seems to go against basic economics. Basic economics says that supply AND demand determine price.
Well, yes and no.....
Yes, it is a supply and demand balance. What I am saying is that where we are falling short (as regards what we should be doing) is supply. Here is what I mean:
We are actually very efficient now. All the propaganda regarding SUVs aside. We use 50% of the energy we used in 1975 to make the same goods-that's a huge improvement.
Gasoline consumption in and of itself is not the boogyman here.The portion of a barrel of crude that can be cracked into gasoline is relatively fixed. And that portion can't be used for another purpose. i.e. plastics, kerosene etc.. So, say we make a substantial cut in our use of refined gasoline. OK, that does change the supply/demand ratio for gasoline. And that will have an effect on gasoline prices [within limits]. But that's all. Our other needs from oil are not going to change. And there won't be more crude freed up to make plastics or what not.And the cost of crude will set a minimum base for gasoline, regardless of the supply of refined gas.
So, barring an unanticipated leap in technology, we have the most control over supply. We have expended much effort in improving efficiency, but the world's economy will continue to grow. That's what I mean by "you can't conserve your way into growth".
However, there is an almost inexhaustible supply of coal and oil out there. Higher prices make a lot more of it accessible. But, and this is the big thing, do we have the will to get the oil? So far, production has declined since 1975. The states and the feds have excluded more and more oil bearing land since then. Do you realize that the North Slope was opened up on a 51-50 senate vote in 1975(VP tie breaker)?. Where in the hell would we be right now without that production?
I spent the night in gas stations in the early 70's to get gas. What have we done since then to address the problem? Well, we've gotten much more efficient. But we have done almost nothing to improve the supply end of things. But we do have more people, more cars and more goods being produced. New drilling off the Gulf is nonexistant, same off California. Clinton excluded the 2nd largest clean coal deposits in the world (Utah I believe) from development to pay off Indonesian campaign contributions (bribes).
So, not to beat a dead dog, but solving our energy needs via major changes in consumption is a myth, pure and simple. We have much more [potential] control over supply.
The question I never see asked is, just how much of this "biodiesel" oil is available? IOW, suppose we get a million vehicles running exclusively on it, is the supply there realistically? Will there be long lines at MacDonalds instead of the Mobil station? Just kidding on that.
Seriously, providing veggie oil in these kinds of quantities is a completely different animal than a few thousand cars hitting restaurants for their leftovers.
I don't see how you can say that the problem is in one but not the other. If we did not have the higher demand, we would not need the higher supply.
And the unfortunate thing is that we don't control the supply. Saudi Arabia, Iran, and Venezuela do. So if the problem is entirely the supply, and not the demand, then we don't have much hope.
And the unfortunate thing is that we don't control the supply. Saudi Arabia, Iran, and Venezuela do. So if the problem is entirely the supply, and not the demand, then we don't have much hope.
I said the solution (as opposed to the problem) is increasing supply, not lowering demand.
No, we don't have a lot of hope in the short term. A significant economic contraction - recession - is the immediate salve. Not very palatable is that?
But we do have a lot of hope in the long term. There is plenty of oil, IF we can get our government(s) to allow industry to get it. Big if, based on the last 30 years.
Did I write that erudite piece to fall upon deaf ears? Seriously, read it again. I addressed your point RE supply/demand.
With reference to Canadian oil supplies "dig" may be more appropriate than "pump".
from: http://www.forbes.com/associatedpress/feeds/ap/2005/08/18/ap2184739.html
But the American Petroleum Institute reported Wednesday that U.S. oil demand fell 3 percent in July compared to the same month last year, while gasoline deliveries fell 0.8 percent, an indication of slowing demand."
--->
Today, some traders are calling the week's earlier moves an "overreaction". This quote seems to belie that attitude. There will be an adjustment of peoples' consumption patterns, as the above quote demonstrates.
"The question I never see asked is, just how much of this "biodiesel" oil is available? IOW, suppose we get a million vehicles running exclusively on it, is the supply there realistically? Will there be long lines at MacDonalds instead of the Mobil station? Just kidding on that.
Seriously, providing veggie oil in these kinds of quantities is a completely different animal than a few thousand cars hitting restaurants for their leftovers."
I am not an expert on providing you an exact number but vegetable oil is just that, it is compressed organic matter. The earth has plenty of land to grow 1000X the amount of vegetables we are growing now so it's seems unlimited. However, from my understanding, the real issue is having a good supply of other energy to convert corn/sugar to ethenol and processing the organic matter into veggie oil. The easy answer is nuclear energy.
The radical environmental protection movement that began in the late 60's and into the 70's really squashed our ability to pursue nuclear power to it's full potential. But even some of the hold-overs from that era are starting to realize that this is a better option for the environment then burning fossil fuel for the next 50 years. Also, the technology is much safer then it was 30 years ago.
"Brent down $3.25 since Monday. Sep -$2.55 since Monday.
The next week could be really interesting in oil futures."
it is coming down a bit which is good news. I think it will settle down to about $58 a barrel for the long haul meaning $2.25 price per gallon of gas. The days of huge spike and huge declines is over because of India and China demand. In other words market economics 101, more buyers on the market. The $2.25 price did not seem to slow the economy much but the $2.60 price is going to take a toll. I am in the Northeast and I paid $2.11 a gallon for heating oil. I bought it in early August 2 days before this recent price spike. We in the Northeast get a double whammy of gas and heating oil prices. I thank God I can afford it and when I can't go out to eat as much or go on vacation, I still remember I have a decent home, enough food and am warm.
Correct. There is no "skyrocketing demand", buried in most of these weekly articles is the fact that supplies are outstripping demand, year over year. Today, the stories about the huge drop in oil prices yesterday are mentioning that oil supplies grew by 11% compared to year ago totals, but demand FELL by 3%.
Source: http://biz.yahoo.com/ap/050818/oil_prices.html?.v=17
Flex-fuel technology was created by Ford Motor Company in the mid-1980s. Flexible fueled vehicles (also called variable fuel vehicles) have been produced by Ford (Ranger, Crown Victoria and Taurus), GM (Chevy S-10 and GMC Sonoma), and Daimler-Chrysler (Plymouth Voyager and Dodge Caravan).The main problem is that the U.S. won't ever sell 100% ethanol since it is essentially "white lightening". This is precisely why E85 has 15% gasoline added.
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