Allen Fuller

Balancing Oil Supply and Demand: Oil Price Looks Like It's Bottoming

Invested in DXO about two months ago. Nearly doubled my money.

Ignore the Hype - Gold as Currency is Dead

Don't ignore gold's value as one bucket in your diversification strategy. Months ago, a lot of people were screaming about how we were headed to hyperinflation. I was skeptical, being convinced more by the arguments of a few that we were headed for deflation instead. So I kept most of my IRA in cash, with a bit in a few stocks and a bit in precious metals. So far that has not been too bad; gold has done better than the stocks but the dollar has done the best of course. However, hyperinflation still has a chance to appear, after the deleveraging process finishes (which is what is destroying the money supply and causing deflation now) and the government realizes the cheapest way out of the national debt is inflation... No one has a crystal ball, so it is best to be diversified, and gold has a part in that.

Peak Oil - Are We There Yet?

On Sep 19 10:19 PM Brian Pursley wrote:

> In response to Allen Fuller,
>
> I say oil is renewable because it is. See Eugene Island and the
> other wells that are refilling.

Oil is renewable if you are willing to wait millions of years.

The "refilling" of certain wells, most likely from reserves deeper in the crust, is an interesting phenomenon. Unfortunately, it is occurring at a rate approximately 100 times slower than our current consumption of oil. So, it's ludicrous to think we can just wait for a few wells to magically refill themselves and then suck it out again.

> Why did the US peak more than 35 years ago? Because that's when
> the radical environmentalists started their political engineering.
> The US peaked by design not by geology. We've only been drilling
> offshore in 2 states.

Your history is wrong. Oil peaked in the U.S. NOT because of radical environmentalists banning drilling etc. No, in fact, in the 1970s there was a DRILLING FRENZY as the oil industry tried to reverse the declines they were seeing. My sources show that drilling in this nation was at its highest around 1980. Yet this was unable to reverse the decline in the lower 48. Only new fields in Alaska allowed us to get a brief bump up in production, though we never achieved the rate of flow we had in 1970.

> How come this peaking pattern is seen in field after field and nation
> after nation around the world? What peaking pattern? Brazil and
> Russia certainly haven't peaked. I suspect it's because drilling
> isn't illegal there. Just a guess.

Russia is now peaking. Their production curve over the last few years shows a slowing in growth, and they are now on track for their first full year of actual declines.

Brazil's discoveries are tantalizing, but in the grand scale of things, only amount to a year or two of consumption. Besides, you have to drill through thousands of feet of rock and salt to get to it. Doesn't sound like the easy oil we have built our economy on. Some estimates indicate Brazil will peak, depending on how fast they produce, in the next decade or even sooner.

In many other nations that used to be great oil producers, we are seeing declines. The U.S., the North Sea (UK and Norway), now Mexico, Indonesia, Egypt, India, Syria, Venezuela (yes!), Yemen, and more. The full list of countries past their peak (by the way, they DON'T all have the environmental restrictions that supposedly, according to you, made the U.S. peak) now includes most of the oil-producing countries in the world. Only the true giant fields in a few nations, mostly in the Middle East, are keeping the world from hitting its peak. And even there, they are relying on old giants, not new discoveries.

> No such thing as so-called "fossil" fuel. In the history of the
> universe fossils have never miraculously or magically evolved into
> complex hydrocarbons: oilismastery.blogspot..../

The abiotic theory of oil production is pretty strongly discredited; look it up. Its proponents do NOT back their theory up with much in the way of verifiable statistics and facts. Even if it were true, again, the rate at which it supposedly gets produced in the crust, according to the theory's own proponents, is not enough to supply our current rate of consumption. So it's a red herring either way.

Peak oil is a historical fact, observable in the past at the level of oil fields, countries and regions; and it is pretty obvious to those who study the DATA and the FACTS that it is about to occur world-wide.

Roger Wiegand: 'Severe Bull Market' Ahead for Gold

I agree with Toeser. No one knows, and no one can convince me 100%, that we will have either deflation or inflation. I read a VERY interesting website called generationaldynamics.c... which has been extremely prescient with this whole credit crunch. They are predicting severe deflation and a second Great Depression. But I'm not 100% convinced. Other websites and analysts I highly respect are predicting hyperinflation, because that is the only lever left to the government. I'm not 100% convinced by their arguments either; it may be out of the government's hand. Right now I'm leaning 60% toward the deflationary position. I hold about 1/2 of my IRA in cash, with about 1/4 of it in precious metals and 1/4 in a handful of stocks I think are very speculative but have a huge upside potential if they succeed (that's my "playing around" money). Whatever happens now, it seems I'm destined to lose some money, but this way at least it shouldn't be all of it.

The Chickens Come Home to Roost, But Have We Really Learned from Our Mistakes?

notsosmart has a point. At least some of your "emergency fund" should be in actual physical goods that you could use. Not just tuna, but other canned goods and food that you can eat if all else is lost. I'm not saying it's the end of the world, but let's say you lose your job and can't get a new one for 6 months. Wouldn't you feel better having a 6-month supply of the basics, than a 6-month supply of money which might get inflated at any time?

Obviously you can't store it up for retirement, but a food storage plan should be part of anyone's hedging against the risk of inflation, job loss, and so on.

The New Normalcy

Bush is to blame for everything, even the cold you caught last year. I'm no fan of Bush but this is just ridiculous.

Actually, it is the Democrats who kept pushing for the mortgage industry to make all these sub-prime loans. I know life is hard for people at the bottom and I sympathize for their situation, but the solution is NOT to give them loans that they cannot repay! It just makes their lives more difficult later on as well as eventually putting the entire system at risk as we have seen.

Peak Oil - Are We There Yet?

Also if peak oil is "garbage" then why did the US peak more than 35 years ago? How come we haven't been able to reverse this trend even with high prices and good technology? How come this peaking pattern is seen in field after field and nation after nation around the world?

Where are the mythical "400 billion barrels" in the Bakken formation? (The USGS came out and said that was a myth; real reserves are estimated at 4.3 billion, nothing to sneeze at but only a few months' worth at our current consumption.)

When are we going to see the "oil" from so-called "oil shale", and at what price? Where are we going to get all the water, and how can we possibly scale up production to the levels required? If you study these so-called solutions, they can only contribute a small part of our consumption over a long range of time.

I'm not a doomer; I believe we will have economic hardship but eventually we will move to true renewable sources like wind, geothermal, and solar. I hold out hope for fusion research as well. But it's time to admit reality regarding fossil fuels.

Peak Oil - Are We There Yet?

To Brian Pursley,

Why do you say oil is renewable? Of course, at a certain cost, a decent chemist should be able to manufacture it from raw elements or basic compounds like water, carbon dioxide, etc. But at that point you need more energy to create it than you would get out of it. Where is your energy going to come from?

All you have to do is look at the fact that DISCOVERIES peaked 40 years ago. You can't pump what you haven't discovered. If peak oil is garbage, then where is all the new oil being discovered? There's a lag time between discoveries and production too, so even if discoveries suddenly and miraculously jumped WAY up, you'd still have a gap before they can contribute to existing production, which is projected to start declining around 2010 or so.

Economists point out that higher prices will cause supply to increase. This is true up to a point; higher prices make previously uneconomic oil suddenly worth extracting. But at some point the price itself will cause so much hurt to the economy that it won't matter that we have "more" oil available at that price.

Everything They Tell You About Solar Is Wrong - Travis Bradford

Nuclear would become much more practical, safe, and cost-effective, and it could last hundreds of years longer if we could perfect breeder reactors. These reprocess the waste into more fuel for further nuclear reactions, so they dramatically reduce the waste that needs to be stored and also stretch the limited supply of uranium much farther. In addition, they can allow the use of thorium, which is more abundant than uranium.

It is true that nuclear is subsidized by the public, but as energy costs rise all around, it becomes more cost-effective, especially as newer approaches are perfected as noted above. France successfully generates more than half of its electricity from nuclear, so it is clearly feasible.

That having been said, I much prefer renewable sources of energy such as solar. I am very enthusiastic about solar's potential. I just think that realistically speaking, we will need every source of energy we can get.

Can Royal Dutch Shell's Shale Extraction Technique End 'Peak Oil' Paranoia?

The real reason people are shouting about drilling is crass politics. While we may need it along with every other source of energy and conservation that we can get, the huge relative overemphasis on DRILL HERE DRILL NOW is simply an election-year campaign gimmick to bash Democrats. It's disgusting. And this is coming from a relatively "conservative" guy.

Can Royal Dutch Shell's Shale Extraction Technique End 'Peak Oil' Paranoia?

I applaud the last paragraph for those who have not taken the time to read it.

What really bugs me about many of the "drill here drill now" campaigners is that they seem to pay only lip service to alternatives but get so worked up about finding the last few relatively small and expensive sources of regular oil. I'm not disputing that we may need these to transition... I am not 100% against drilling...

... but while you are shouting DRILL DRILL DRILL, why not also DEMAND ALTERNATIVES TO OIL WITH THE SAME VOLUME PITCH?

Whether now or later, we will be forced to stop using oil. I say, bite the bullet and do it NOW. If the peak in oil comes much later, we'll be ready with a comfortable margin. If it is as soon as many analysts predict, we may just save our economy from a major disaster.

Geologist: In Terms of Supply and Demand, the Oil Peak Is Past

I agree with most of what Chris said. Even if Peak Oil is not happening in the next 5 years (it WILL happen... even the most optimistic analysts see it happening in the next 20-30 years at the MOST), the sooner we get OFF oil, the better we will be.

The free market is starting to move in the right direction, but if peak oil happens by 2010 as seems most likely, then it will be too little too late. As much as I prefer laissez faire policies in general, this is one that is too important to everything-- our economy, our national security, our prosperity, even our survival-- to leave solely in the hands of the whims of the market. The government should have been leading the market in the right direction 20 years ago, with a much more aggressive energy policy that promotes renewables and discourages waste.

We don't have 20 years so the best we can do is get aggressive now. Yet even now people want to deny what is going on.

On talk radio, I hear fairy tales of a "trillion barrels of domestic oil" that we could tap now if only the "radical environmentalists" would get out of the way. This is, to put it mildly, wishful thinking. For example, they claim the Bakken formation may have 400 BILLION barrels of oil. However, the USGS came out and pretty much said that's a myth. Their estimate of technically recoverable oil is 4.3 billion-- nothing to be sneezed at, but nothing that will save us either.

It's time to bite the bullet. It's time for electric cars and improved public transporation. It's time for solar and wind, nuclear, geothermal, and everything else that we can pursue. Postponing what we must eventually do anyways only heightens the risks.

Clean Energy ETFs Face Off

Although I like renewable energy, these P/E ratios are a bit scary... I just hope the underlying companies can start making better profits.

Nobody Cares How the Energy Crisis Gets Solved

Correction, the wild estimates are the P5 figures, not the P95 figures as I incorrectly said in my post at 4:11. In other words, the estimates these political figures are throwing around have less than a 5% chance of being true... even before they start adding non-conventional and unproven sources like oil shale!

Nobody Cares How the Energy Crisis Gets Solved

The full "fact sheet" from the USGS on the Bakken is at pubs.usgs.gov/fs/2008/.... They include the P95, P50 and P5 estimates, but they are labeled F95, F50 and F5 instead, which is commonly done in the industry.

Find out the facts for yourselves, folks... don't believe these figures of "trillions" that are just thrown around for political gain.