Timothy Stolz

OPEC's Cuts Can't Fight Global Recession Headwinds

Let us suppose that the accepted rule of supply and demand exists. That supply being more than the demand, as measured in a given quantity by the Center for Global Energy Studies and/or the US equivalent, the IEA. That demand is now measured to be contracting in 2008, for the first time in 15 years.
Now OPEC comes into the equation with a "stated" and who knows if "real" factor decreasing the supply by 1.5 mbd, that likely will only offset the equation by a portion of the decreasing demand.
At some point in time the OPEC decrease and the steady augmentation of the demand destruction component towards neutral or zero, should occur.
As measured in the beginning of OPEC's involvment in our equation, they really had no impact on the price of oil, cheating or not cheating. As the reduced demand component moves closer to neutral, in theory, OPEC begins to have an influence on the price of oil. In other words, "until the slack is drawn up in the rope, you can't make a noose." That slack is the reduced demand component of the oil price equation too large for OPEC to alter by their recent stated reduction. Maybe later when the demand catches back up with the supply they will have more of an ability to control prices.

What Happened to Peak Oil?

It is likely a generation will pass, at least in the US, before a significant amount of renewable energy is available to be harnessed, to offset enough of our oil based consumption to avert "peak oil."
There are just too many people who, as one presidential candidate uses the phrase, "just don't get it" that by virtue of their personal oil consumption habits stand in the way of any near term measurable success. I define "near term" as 20-30 years for the purposes of this discussion.
On the other hand, it seems that an entire generation of young people who are at the age to become politically active "do get it" and are enlightened enough about the potential environmental and economic concerns, to promote the changes necessary to deal with this demon we have named "peak oil."
For those of us caught in the middle of this conflict, our work is to encourage and to offer support and guidance to that younger generation's effort where are abilities and finances provide us an opportunity to do so.
Once we "know what we know" that knowledge brings with it a moral imperative to act.
We need to help the issues of the day move forward and address the present as well as potential future deterioration of our economy and the environment.