Anandakos

Understanding Energy: Professional Money Management and Peak Oil

Perceptions,

Well said. And this is another reason to put money on China. We may all be leery of the techno-fascist government of the country, but they are following exactly the correct path for an oil-constrained future.

In ten years they have opened as many kilometers of HSR as exist in Europe. They have stated a national goal that 20% of cars sold in the country will be electrically powered by 2015. Yes they're building coal plants too rapidly, but they're also dumping gigayuan into solar energy production and use.

On Oct 27 08:55 AM perceptions_now wrote:

> Regrettably, I am of the opinion that Oil Production has already
> effectively Peaked in 2005, in that it has subsequently failed to
> keep up with inflation, Demand or Population growth.
>
> There are no new sources of Oil, which will now prove sufficient
> in size to overcome the depletion of the existing, but decaying old
> super fields.
>
> If we were just treading water, with no growth, we would need 1 new
> Saudi Arabia every 3 years!
>
> If Production were to keep up with inflation, Demand & Population
> growth, then another 2 Saudi Arabia's would need to be found &
> put into production every 3 years.
>
> New unconventional sources such as Canadian Tar Sands & Shale
> and the newer deep water fields are simply not sigificant enough
> to offset the depletion rates at the old super fields, such as Ghawar.
>
>
> I suspect the current Production plateau may continue, for a short
> period, but production will fall behind Demand. However, as Demand
> outsrips Supply and Prices rise, those very Price rises will trigger
> the cost ratio to run ahead too much, thus triggering the next Economic
> & Share Market pullback.
>
> The old rules are changing, the return on Money & Energy are
> being irreversibly delevered. The EROEI (Energy Return O Enrgy Invested)
> was 100/1 in the early days of Oil, it is now less than 10/1 and
> falling. New Oil is going to be much more costly to find & Produce
> and the Investment return is not going to be anywhere near what it
> used to be.
>
> When perceptions finally accept that Oil has Peaked, then the rush
> away from Oil, into the search for something that may not be there,
> will also severely dilute the capital needed for Oil Exploration,
> as the EROEI will be decimated!
>
> In fact, even though Demand and Price has been rising, the investment
> in new Exploration has already been falling!
>
> There are no guarantees in life, but the likely outcomes suggest
> that 5-10 years from now, the Global Economic outlook, will be significantly
> different to today and I am not talking of upsides!