mpkirby

Peak Oil and Climate Change: Re-Tooling Transportation

For those that don't believe peak oil is upon us, and for those that do. State the conditions under which you would change your position. For example, would the increase in oil production over 90 mbpd be enough to convince you? For those skeptics, would it be price? Or overall production numbers?

And is there a difference between political peak oil and geological peak oil? What does it matter if I can't get it out of the ground?

So instead of declaring that the world is over (peak oilers), and that it's a gigantic hoax (plenti-oilers?)

Let's at least contemplate that (1) conditions could exist that would limit further production of oil (geological, political, whatever).

and (2) Should the conditions work out that further increases in oil production come, and we aren't at peak oil, does this mean that the principles of peak oil aren't good principles anyway?

Consider steps taken to prevent peak oil an insurance policy. We should spend a small percentage of our income to purchase insurance in the event that peak oil turn out to be true.

So what would that insurance look like?

Mike

Is 'Peak Oil' Already Affecting the Stock Market?

"With battery technology and nuclear power, we could remove ourselves from oil dependency very quickly. "

When the amount of energy being discussed is measured in "qudrillions of BTU's", nothing happens very quickly.

We currently need about 6 quads for transportation. It's about 28% of our total energy use. WE currently generate about 8.4 quads of electricity.

Don't delude yourself into believing that anything happens quickly with this infrastructure.

WE need:
- More technology development for electric transportation (5 to 15 years)
- More conventional electric generation (5 to 20 years)
- More alternative energy generation (2 to 20 years)
- Better urban planning to avoid sprawl that requires large numbers of miles driven (20 to 100 years).

What this means is that your children will likely not have the same lifestyle that you have. Your grand children (if you are lucky will be back to parity with what we enjoy today. Your great-grandchildren may (if something else doesn't peak) actually start to grow again.

Mike

The Great Oil Deception: Part Two

Let's assume for a moment that the thesis is correct. That the cost of finding oil is in fact a short-term cyclical phenomena.

If we divide the oil in the world into two camps. Oil discovered before 1990, and oil discovered after, the decline in production from established fields isn't being made up from the discovery of new fields AT ANY COST.

In other words, in the past it took 1 single rig X weeks to find significant oil in off-shore drilling.

Now it takes multiple rigs much longer.

Perhaps we just need more rigs. But I suspect the horizon is receding into the distance. And we can't build rigs fast enough to offset decline.

There can still be made an arguement for above-ground reasons driving the problem.

Off-limits drilling in the U.S., combined with nationalized oil companies that under-invest in established fields.

But even if that were resolved today, the resultant increase in production would only stave off the issue for a few decades at most.

Think of it as an insurance policy. We need to invest in reducing our use of oil "just in case" there turns out to be a long-term decline in production. If we are wrong. Oh well. I'll go buy another SUV.

Mike

Is Oil a Bubble? Part 3

Many of the comments here describe the issue in terms of win/loss. It isn't a sporting event.

It isn't "Greens' versus "Hummer-driving, anorexic soccer mom's"

The reason we have no reasonable energy policy is because no one is able to be reasonable.

We need:

- More drilling
- More conservation
- More nuclear
- Higher CAFE standards
- Tax structures that encourage investment and conservation.

We don't need:
- Whining conservatives bemoaning the environment for preventing them from driving their SUV's to Starbucks to get a latte.
- Whining liberals complaining that Oil kills otters, Nuclear radiates all, coal dirties snow, wind kills birds, solar ruins their "view of the valley".

Get over your pathetic selves, and sit down and negotiate!

Mike

Oil Will Peak at $150-200 - Barron's Interview

I don't believe the comparison to the 1980's is necessarily valid. In the 1980's there was significant excess capacity driven by investment that occurred during the high prices of the oil shock.

Although there is tremendous investment underway now, much of the early news is that there isn't going to be a lot of new flow (key word there is flow).

Declining fields are consuming most of the new production, and new production is not "easy" oil.

So while the conditions around investment and consumption are similar to the 1980's, the flow rate on existing and new fields are not. Consequently unless demand drops more than 4% per year, I don't see a let-up in price pressure.

Mike

Peak Oil, Crude Price and Equity Correlation

He's saying that unless oil gets down to 50 dollars, people still can't afford it, and there will continue to be a move towards conservation, and a drag on the economy. At 25-50, it's a stimulus.

He's also saying that crude oil inventories are going down at the same time as refined product inventories, so that's real bad.

Mike

Is Oil a Bubble? Part Two

I think the "blame the speculators" crowd is missing the point.

While the "future" price of oil might be high due to speculation, ultimately when the speculators roll the contracts forward, they sell their soon to expire contracts to someone that actually wants to get the oil.

If it is a speculative bubble, that oil ends up being purchased at a loss to the speculator. Or a speculator actually takes delivery of the oil and stores it, pushing up oil inventories.

Inventories are not up, and there isn't a significant loss being taken by speculators.

Therefore, we can assume the demand is real at this price.

Mike

IEA Warns of Potential Supply Shortage

Followed by a recovery, and then another spike.

Is Oil a Bubble? Part One

For those of you promoting "peak oil" as justification for sustained high prices, don't forget that while the oil market is inelastic (explaining the sustained price right now), it isn't totally rigid.

Peak oil is about production curves, not price. It is totally reasonable to go through peak oil with very high prices, followed by crashes, followed by a resumption of high prices.

Peak oil says nothing about price. It only speaks to production.

Mike

Searching Oil Inventories for a Bubble

If there was a truly fundamental disconnect between speculators and real consumers for the price of oil, I'd expect at least some of them to acquire the oil they need on the spot market. Why buy expensive long-term contracts when you can get cheap spot-price oil now.

Since the spot price isn't heavily discounted relative to futures, I suspect the smart money (that is the money that actually wants to purchase the product) believes the price is relatively fair.

Regarding oil shale. the old $80 figure was based on energy costs during $30 dollar oil being used to extract $80 dollar or higher shale oil.

Now that energy prices are $130, the break-even point isn't $80, it's considerably higher.

Further it is a very water intensive process.

And finally, the kind of oil it produces is difficult to process. There aren't a lot of refineries that can process that kind of oil. If we produce it in large numbers it isn't clear that we could do much with it.

Mike

Putting Apple Headphones Through The Wash: Another Great Customer Experience

In addition, if you go to the gym, and take a shower, after drying your hair, don't put your earbuds back in your ears until you dry them out.

The same thing will happen.