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Peak oil nervousness is caused by vague anecdotal evidence and ignorance of exploration and...

Peak oil nervousness is caused by vague anecdotal evidence and ignorance of exploration and extraction methods, argues energy consultant Michael Lynch: Oil's still abundant - and new supplies should bring the cost per barrel closer to history's $30.
Comments (12)
  • traderyin
    , contributor
    Comments (70) | Send Message
     
    Production cuts are going to bring oil above $30.
    25 Aug 2009, 11:14 AM Reply Like
  • Tom Au, CFA
    , contributor
    Comments (6780) | Send Message
     
    Physical oil is abundant. But much of it is in hard to get-at-places; Siberia, the Arctic, the earth's core. They days of cheap, easily accessible, politically secure, oil, are coming to an end.
    25 Aug 2009, 11:17 AM Reply Like
  • Tony Petroski
    , contributor
    Comments (6373) | Send Message
     
    Graham is right and this will be fun to watch as the "speculators" trying to avoid inflation in the oil markets make their move to a greener future.
    25 Aug 2009, 11:26 AM Reply Like
  • Mr. Big
    , contributor
    Comments (391) | Send Message
     
    Dismissal of peak oil concerns is caused by vague anecdotal evidence and ignorance of supply and extraction capability. Oil may or may not be still abundant....none of us really know.

     

    But what we do know is that oil is becoming harder and harder to extract. And there are minimum oil prices established when the harder-to-get oil becomes a profitable and viable operation.....and I can tell you that minimum price is well above history's $30.
    25 Aug 2009, 11:27 AM Reply Like
  • Tony Petroski
    , contributor
    Comments (6373) | Send Message
     
    By the way, "vague anecdotal evidence and ignorance" have built more than a few fortunes.
    25 Aug 2009, 11:29 AM Reply Like
  • locksmith
    , contributor
    Comments (26) | Send Message
     
    Lynch is going through all his old buzz words again. He misses so many things and is so vague I am surprised NYT publishes it.

     

    A)reserves additions ARE backdated to date of discovery - even with that discoveries peaked in 1960s and have declined every decade -we need to find oil before we produce it
    B)new, better technology allows us to maintain current oil flow rate at cost of higher depletion. Look at Cantarell - stagnant production until 1999 when they introduced nitrogen injection - then horizontal drilling in 2020 -production increased for a few years but is now crashing - (yesterday Mexico announced they are buying oil from Brazil, which means USA is buying oil from Brazil indirectly)

     

    C)Lynch totally ignores the energy and other natural resource input requirements of oil extraction. Dollars are only an abstract marker for real biophysical costs. The energy return on energy invested on oil has gone from 100:1 (1930s) to 30 to 1 (1970s) to 11:1 (2000) and anecdotally is much less now - additionally how much energy and natural resources will it take to rebuild the massive oil/gas infrastructure around the world with 40+ year average life? That isn't even included in those energy profit figures.

     

    D) Nobody I know is blaming politics for declining discoveries, more expensive exploration and production, or increasing depletion rates. Mr Lynch tries to tie the current debate to the oil embargoes from 40 years ago - but tellingly doesn't mention one person today.

     

    E). His final argument about total resources available being enormous mentions "some geologists". Again, he tellingly doesn't mention one name or organization to substantiate his claims.

     

    F) if deflationary bubble pricking continues which I expect, much of the remaining oil will cost more than the market can pay and new investments will stagnate- its all about flow rates in the end.

     

    From a trading perspective, i would be long the oil companies that have ability to grow low cost flow rates and be short the market -net neutral. Oil is and will be for sometime, the lifeblood of civilization - can't make wind turbines with wind, yet.

     

    25 Aug 2009, 11:33 AM Reply Like
  • indefinitelee
    , contributor
    Comments (22) | Send Message
     
    despite producing 11 million barrels per day Saudia Arabia's declared reserves never decline. That's amazing.
    25 Aug 2009, 11:38 AM Reply Like
  • Danny Furman
    , contributor
    Comments (1008) | Send Message
     
    Crack could likely be sold for a "normal profit" at 10% of street prices... Demand drives price, period.
    25 Aug 2009, 11:39 AM Reply Like
  • Jasper M
    , contributor
    Comments (1652) | Send Message
     
    Excellent article. If the NYT had more like this, they wouldn't be staggering towards irrelevancy.
    The coming depression will savage demand, and for some considerable time, to the point where however much oil is available, it will last us plenty long enough for a fairly graceful changeover to alternatives (probably fission, at least at first - .2 Cents/kilowatt-hour is pretty hard to compete with)
    25 Aug 2009, 11:49 AM Reply Like
  • Candor7
    , contributor
    Comments (34) | Send Message
     
    Nobody I know is blaming politics for declining discoveries, more expensive exploration and production, or increasing depletion rates. Mr Lynch tries to tie the current debate to the oil embargoes from 40 years ago - but tellingly doesn't mention one person today.
    >>>>>&g...

     

    Man, Locksmith, have you ever got that right! No sooner does an Oil exploration company file for exploration rights on offshore or public property, when all of a sudden, its placed in some form of "conservancy." We are plagued by an eco movement which has a religious fervor. Historically the movement is similar to the prohibition movement of the early 20 th Century. The government moves according to their lights, and HAS to get out of this loop before we fall back to horses and carriages. LOL. What a bunch of Duds!

     

    And as you point out, no one wants to really point fingers at these eco idjits in reviewing the industry. Political correctness ( national socialist at this point) circumscribes capital investment. Duds ALL!

     

    And I have enough faith in these consumate duds and their government counterparts to bet that oil will stay above 50 dollars for the next 3 years at least. Thirty dollar oil? Dreamers.
    25 Aug 2009, 12:17 PM Reply Like
  • Candor7
    , contributor
    Comments (34) | Send Message
     
    Nobody I know is blaming politics for declining discoveries, more expensive exploration and production, or increasing depletion rates. Mr Lynch tries to tie the current debate to the oil embargoes from 40 years ago - but tellingly doesn't mention one person today.
    >>>>>

     

    Man, Locksmith, have you ever got that right! No sooner does an Oil exploration company file for exploration rights on offshore or public property, when all of a sudden, its placed in some form of "conservancy." We are plagued by an eco movement which has a religious fervor. Historically the movement is similar to the prohibition movement of the early 20 th Century. The government moves according to their lights, and HAS to get out of this loop before we fall back to horses and carriages. LOL. What a bunch of Duds!

     

    And as you point out, no one wants to really point fingers at these eco idjits in reviewing the industry. Political correctness ( national socialist at this point) circumscribes capital investment. Duds ALL!

     

    And I have enough faith in these consumate duds and their government counterparts to bet that oil will stay above 50 dollars for the next 3 years at least. Thirty dollar oil? Dreamers. Aug 25 12:17 PM |Report abuse| Link | Reply 00

     

    On Aug 25 11:33 AM locksmith wrote:

     

    > Lynch is going through all his old buzz words again. He misses so
    > many things and is so vague I am surprised NYT publishes it.
    >
    > A)reserves additions ARE backdated to date of discovery - even with
    > that discoveries peaked in 1960s and have declined every decade -we
    > need to find oil before we produce it
    > B)new, better technology allows us to maintain current oil flow rate
    > at cost of higher depletion. Look at Cantarell - stagnant production
    > until 1999 when they introduced nitrogen injection - then horizontal
    > drilling in 2020 -production increased for a few years but is now
    > crashing - (yesterday Mexico announced they are buying oil from Brazil,
    > which means USA is buying oil from Brazil indirectly)
    >
    > C)Lynch totally ignores the energy and other natural resource input
    > requirements of oil extraction. Dollars are only an abstract marker
    > for real biophysical costs. The energy return on energy invested
    > on oil has gone from 100:1 (1930s) to 30 to 1 (1970s) to 11:1 (2000)
    > and anecdotally is much less now - additionally how much energy and
    > natural resources will it take to rebuild the massive oil/gas infrastructure
    > around the world with 40+ year average life? That isn't even included
    > in those energy profit figures.
    >
    > D) Nobody I know is blaming politics for declining discoveries, more
    > expensive exploration and production, or increasing depletion rates.
    > Mr Lynch tries to tie the current debate to the oil embargoes from
    > 40 years ago - but tellingly doesn't mention one person today.<br/>
    >
    > E). His final argument about total resources available being enormous
    > mentions "some geologists". Again, he tellingly doesn't mention one
    > name or organization to substantiate his claims.
    >
    > F) if deflationary bubble pricking continues which I expect, much
    > of the remaining oil will cost more than the market can pay and new
    > investments will stagnate- its all about flow rates in the end.
    >
    >
    > From a trading perspective, i would be long the oil companies that
    > have ability to grow low cost flow rates and be short the market
    > -net neutral. Oil is and will be for sometime, the lifeblood of civilization
    > - can't make wind turbines with wind, yet.
    >
    >
    25 Aug 2009, 12:41 PM Reply Like
  • Jake Huneycutt
    , contributor
    Comments (1378) | Send Message
     
    It seems like the arguments rebutting "peak oil" theories by the author are based on "vague anecdotal evidence and ignorance." For that matter, calling it "vague anecdotal evidence" may be a stretch, because the author doesn't really make much of a positive case as to why oil will fall to $30/barrel. He simply casually dismisses the arguments of others with little evidence to back him up.

     

    It's probably worth noting that in the worst demand-destruction event of most of our lifetimes, oil never fell to $30/barrel. That doesn't give me a lot of confidence in the author's conclusion.

     

    I think oil will probably start to hover in the $60 - $80/barrel range for the next decade.
    25 Aug 2009, 02:15 PM Reply Like
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