Kezorm

Oil & Gas Exploration SPDR Charts a 'Shooting Star'

I don't know anything about TA, and must admit a certain contempt for it, but here is a question: Wouldn't such accelerations in the uptrend be the natural outcomes of a genuine, historical mismatch between supply and demand? Image an affluent, and extremely large crowd locked in a giant cavern, and the concession stands have a limited number of hotdogs and sandwiches to sell. Wouldn't the price of the sandwiches tend to accelerate in waves, just like your chart, as people begin to realize their predicament?

Another question. Suppose the world is making a transition from undervaluing oil, in times of surplus production to one where it's importance and finite supply are finally recognized. What might the shape of that curve be during the transition? Even if we can drill and generally innovate our way out of the scarcity crisis, the curve during that crisis might look very much like the present curve.

An Energy Policy that Makes Cents (and Sense)

Mike, 134716 here. Need to inject a correction. Here is the link I intended concerning Brazil's offshore prospects.

www.searchanddiscovery...

My apologies for any confusion caused by the incorrect link above.

Great discussions!

Pass the salt!

An Energy Policy that Makes Cents (and Sense)

1.) Proton-beam-induced fission of Thorium - how the world can have lots of electricity for 200,000 years:

en.wikipedia.org/wiki/...

www.inesap.org/bulleti...

einstein.unh.edu/FWHer...

2.) Voluntary driving at 55 mph on Illinois tollways it is unsafe. People come racing up on your arse and swerve away that the last second. The best compromise is to drive in the right lane of the interstate (I-90 for me) until you come upon a semi driving as slowly as you want to go. Then follow a polite distance behind. That way, everyone sees the slower semi and begins to plan to pass that larger, more visible vehicle; they therefore tend not to ride right up onto your bumper before doing so.

FYI, I have seen no evidence that truck drivers are slowing down. The only trucks I have seen driving at their legal, 55 mph limit are fleet trucks belonging to the Frito-Lay company. They go 55 and I happily follow behind them whenever I see them - which is on four occasions in the past two weeks.

I drive an ancient (1990), decrepit Geo Metro 5 spd, 1.0 liter on my 200 mile per day commute across the corn tundra of Illinois. I get 53 mph by driving slower than the legal speed limit whenever it is safe to do so. Why can you not buy a car today that gets this kind of gas mileage? Does anyone really think that they would not sell?

3.) Future automobiles: Yes, the Chevy Volt is nice to see, but it would also be nice to see a cheap, low-tech option similar to the Geo Metro using a small engine, possibly a diesel, with a super-aerodynamic shape. Such a car built today could probably be sold at the same price as a Chevy Aveo and get 75 mpg on the highway. A low price will do wonders to encourage rapid adoption and rapid reductions in overall consumption.

4.) Since nukes will be part of the solution, Canada and the USA should jointly fund the development of nukes designed to drive Fischer-Tropsch plants to convert their coal into liquid fuels, and also to wash and crack tar sands. Nukes are ideal for making the steam required for both of these operations. Nukes therefore make alot more sense than burning precious natural gas in order to produce liquids from the tar sands.

4.) There will be two Hubbert's Peaks. The first one is happening now due to the largely artificial restriction on supplies of crude that would have flowed from Iraq had Iraq not been isolated over the past 20 years. Had Iraqi fields been modernized and developed in parallel to fields belonging to its neighbors, there would be 10 million bpd more oil production capacity today than there is. But were that the case, none of the neighboring nations with peaking or post-peak fields would be raking in the gigabucks than they are raking in now. In fact, no one in the oil biz would be making quite as much money as they are today and no one would be seriously pursuing alternatives either for that matter. Enough said about the first peak.

The second peak is the real one and it might lie 20 years or more in the future AFTER all the deep oil lying in oceanic waters is developed. See these links:

www.geotimes.org/june0...

www.searchanddiscovery...

The past six months of news coming from Brazil confirms what an intelligent observer might gather from the combination of the two links above. Such an observer would then consider what the Brazilian news likely implies for the rest of the GOM, West Africa, the Canadian Scotian shelf, the vast areas around the Falklands. Yes, the oil is deep and it will not be as cheap to extract as Arabian oil has been or as Iraqi oil will be. But it is nonetheless very likely there in massive quantities, and possibly also in very light sweet grades, and in gas condensates that are so coveted by refiners.

On the basis of the probable availability and the probable production from these deepwater sources, I would venture to guess that the real, future Hubbert's Peak will be north of 100 million bpd and possibly as high as 150 million bpd if the CO2 problem proves to not be a problem, or if some kind of massive sequestration (like seeding ocean algae blooms with iron and phosphorus proves practical and beneficial.

www.sciam.com/article....

www.futurepundit.com/a...

www.climateoptions.org.../

news.bbc.co.uk/2/hi/sc...

news.bbc.co.uk/2/hi/sc...

One possible spin-off of fertilizing the ocean is that fisheries might thrive if the creatures at the base of the food chains thrive. OTOH, we could screw up big time and create a climatological disaster like the one foreseen in Greg Benford's book Timescape

Fundamentals Suggest Oil's Headed Much Higher

1.) Natural gas trails petroleum in its rate of worldwide depletion. Given the development of LNG infrastructure, Methane can pick up some of the burden that petroleum has traditionally carried. (Natural gas also emits less CO2 per BTU of output than heavier molecular weight hydrocarbons... so natural gas is truly sort of a "green" fuel.)

2.) Electric cars and 2nd gen hybrids like the Chevy Volt. Since the USA uses a disproportionate amount of oil to fuel transportation, advanced hybrids will gradually shift demand away from oil and towards natural gas, and eventually toward grid based electricity.

3.) Grid based electricity can be sourced from all economical alternatives including wind (already as cheap as coal), solar, and nuclear. Nuclear reactors can be run on mixtures of Uranium and Thorium. While Uranium can last for 25-50 years against accelerating demand, Thorium can last almost forever - longer than it will take to develop more-or-less permanent solutions.

see:
www.cavendishscience.o...
www.divainternational....

4.) Shifting the automotive fuel sources away from petroleum and towards various combinations of natural gas and electricity will preserve the precious liquid fuels for those markets where replacement is far more difficult: trucking, shipping and air travel. These will likely mostly rely on liquid fuels for the next 1/4 century.

So, what solutions seems likely to reward investors?

Look for the best-of-breed companies (like Transocean) that drill for offshore oil and natural gas. And note that natural gas drilling will remain a growth business long after offshore oil nears its peak 20 years or more from now.

Advanced batteries for hybrid automobiles and light trucks. Note that Exxon Mobil has formed a partnership to manufacture membrane materials for Lithium ion batteries. This indicates they have read the writing on the wall and are preparing for the future.

Ceneral Motors. (Yikes!) Yes. GM. I have owned four GM autos and light trucks that have gone over 200K miles. (One went double that and my present S-10 has an engine as tight and efficient at 220K miles as the day I bought it.) I really do not think that anyone builds a better vehicle for a customer who wants to extract from it the maximum useful life. So what does this have to do with the price of oil? The Chevy Volt. It will offer a choice of engines used only to spin a generator, which charges a battery. If GM builds into the Volt the same quality I have enjoyed for a million low-cost miles, they may once again dominate their industry. Instead of the old expression: "What's good for GM is good for America...", the new saying might be "What's good for America... is good for GM."

Alternative fuels, like this one in particular: www.ls9.com/
This company might take ethanol one step further - and produce gasoline directly from plant matter. Use a Google alert to constantly scan for news of IPO's of companies like this that may hit technology jackpots.