Peak Oil - What are your thoughts?

[JPreston]

I don't really see what the controversy is; there is only a finite amount of oil in the world, and industrialisation of China and India is leading to a massive and imminent hike in demand.

Maybe they were worried about peak oil waaaaaaay back in the 1970's - an astonishing 30 years ago so they must have been wrong - but they weren't paying $70/barrel with no end in sight, like we are now. It's apparently already cheaper to invade and occupy a foreign country than it is to buy oil on the open market, so we can look forward to all manner of shenanigans over the next 50 years.

[DaBeeeenster]

No it isn't. Firstly, the rigs out there are merily drilling away, and getting a return, production isn't decreasing. The fields aren't divided neatly into cheap fields and expensive fields, only fields which show a reasonable return and so are worth investing money in for a quick return at the current price point, and those which aren't economical at the moment. As prices go up, the return on investment makes more fields attractive. It's possible none of the fields in the North Sea are economical to invest and expand into at the moment, and so production isn't increasing. Production will only decrease when the cost of running the existing rig is higher then the return.

This is fairly basic economics...

Yes, this is all very well and good, but unfortunately all the easy-access oil is being extracted as fast as it possibly can, and the simple transition that you describe does not exist.

A few years ago, oil was $20 a barrel. Now it's ~ $70, and the rate of production has not changed a great deal. This would indicate that there are not a significant number of fields out there that can produce oil economically at $70. THAT's the problem.

[Nat101]

Its a load of Rubbish. We DO need to reduce our dependance on oil, but its for political reasons, not environmental ones as much.
Alarming headlines do not a truthfull story make.
P.S. are you going to answer my questions in teh other thread

In so much as that worsening environmental problems could potentially contribute to increased political strife, I'd agree. Please be clear when it comes to the issue of scaremongering; some climatologists are presenting alarming extrapolations. It is not merely a case out-of-hand distortion by the media.

[TeePee]

There is no transition. The rate of production worldwide IS increasing, although not as fast as it has historically, mainly for political reasons. It's not a transition, it's fluid macroeconomics. Why drill expensive oil from the North Sea when it's cheaper to go elsewhere.

[DaBeeeenster]

There is no transition. The rate of production worldwide IS increasing, although not as fast as it has historically, mainly for political reasons. It's not a transition, it's fluid macroeconomics. Why drill expensive oil from the North Sea when it's cheaper to go elsewhere.

So you dont think that soon demand will outstrip supply?

[TeePee]

If demand outstrips supply, people will be queueing on forecourts for fuel, as happened a couple of years ago, every day.

Not going to happen.

Demand and supply will both change, and prices will go up, long term, but demand will never outstrip supply as a trend.

[DaBeeeenster]

If demand outstrips supply, people will be queueing on forecourts for fuel, as happened a couple of years ago, every day.

Not going to happen.

Demand and supply will both change, and prices will go up, long term, but demand will never outstrip supply as a trend.

So wait a minute, let me get this right. You are saying that a demand will never outstrip supply even tho oil is a finite resource, and demand is constantly increasing?

If demand is not outstripping supply, why is oil 70 bucks a barrel?

[TeePee]

Because as the price goes up, demand decreases.

[DaBeeeenster]

Because as the price goes up, demand decreases.

But I thought you said demand would never outstrip supply? Surely if the price is going up, it is?

[TeePee]

No.

If demand were outstripping supply, people would be queing on the forecourts. If you want fuel, you can buy it, theres no shortage. But you have to pay the price.

[DaBeeeenster]

No.

If demand were outstripping supply, people would be queing on the forecourts. If you want fuel, you can buy it, theres no shortage. But you have to pay the price.

I think you are mistaking price elasticity with the market price. If demand was not out-stripping supply, the price of oil would not have quadrupled in the last 5 years...

[TeePee]

The price is going up because the cost of producing oil is increasing.

But if this is what you see as 'demand outstripping supply' and you want to blame a shortage in supply for the price increase (even though production is increasing) then you at least agree that this peak oil garbage isn't going to be a problem. Price goes up and demand goes down, as people start driving less and switching to invalid cars.. No problem. What peak oil thought was the end of the world was just the whine of a million milk floats.

[DaBeeeenster]

The price is going up because the cost of producing oil is increasing.

But if this is what you see as 'demand outstripping supply' and you want to blame a shortage in supply for the price increase (even though production is increasing) then you at least agree that this peak oil garbage isn't going to be a problem. Price goes up and demand goes down, as people start driving less and switching to invalid cars.. No problem. What peak oil thought was the end of the world was just the whine of a million milk floats.

Peak Oil does not proscribe anything related to the "state of the world" with regards to decreasing oil extraction rates. It merely predicts the oil extraction rate over time.

Your post above actually argues in favour of Peak Oil. It states that as oil becomes more and more expensive to extract, the rate of extraction will decrease, which is precisly what is happening.

Regarding the state of the world, post peak, you need to think long and hard about the potential ramifications of a world with a dwindling supply of oil. When you are eating pretty much all food these days, you are effectively eating oil (think pesticides, herbicides, transportation, the industrialisation of agriculture, packaging). Think about the impact high oil prices will have on almost all consumer products, air travel, the current petro-transport infrastructure that will become increasingly expensive to the point of die-off.

[TeePee]

I never said the rate of extraction will decrease. It hasn't and won't. The cost of extraction will, and has. This is what puts the price up, and as the price goes up investment in alternative technologies becomes more economical. I don't need to think about the impact, you can see it now. Why do you think so many car companies are producing hybrids?

Of course, the spiking price over the last 5 years is not a trend.

[DaBeeeenster]

I never said the rate of extraction will decrease. It hasn't and won't. The cost of extraction will, and has. This is what puts the price up, and as the price goes up investment in alternative technologies becomes more economical. I don't need to think about the impact, you can see it now. Why do you think so many car companies are producing hybrids?

Of course, the spiking price over the last 5 years is not a trend.

I'm not quite sure if you are trolling or not; you seem to be arguing that Peak Oil is a reality...?

[TeePee]

My argument is that the only limit on available oil is an economic one. Costs of extraction go up slowly over a long period, and when other tech becomes economically viable due to higher pricing, we switch. No crisis and no shortage.

High pricing at the moment is artificial. The effects of Katrina wiping out rigs in the Gulf of Mexico has been OPEC sensing an opportunity to tax the US. Watch what happens over the next few months...