perceptions_now

Understanding Energy: Professional Money Management and Peak Oil

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!


On Oct 27 06:46 AM User 353732 wrote:

> 1. The easiest prediction to make about oil is a statement regarding
> what will happen in 5 years. No one can possibly know...... and no
> will remember even a year from now who said what and when in the
> Fall of 2009. It would be far more credible and impressive if we
> could have actionable predictions about oil production, storage and
> prices for 2010.
>
> 2. Oil will "peak" when demand for oil is put in a cage by the combination
> of major increases in global natural gas supply and nuclear energy.
>
>
> 3. The planetary endowment of natural resources, especially hydrocarbon
> resources, is unknown and unknowable. Geo-strategic developments
> that impede or facilitate resource developments cannot be forecast
> with any consistency(otherwise there would not be constant "surprises")
> and transforming technological and business process innovation cannot,
> by definition, be anticipated. Resource base, geo-politics, technology,
> risk capital all combine to shape and determine oil, or natural gas
> or coal or uranium or thorium supply. Anyone who can correctly and
> consistently forecast all these variables and their interaction 5
> to 10 years from now, should have no difficulty at all in providing
> investors with very specific trajectories for oil, natural gas, electricity
> etc price, supply and demand in the US and worldwide over the next
> 2 to 3 quarters. Yet no one does, because no one can.