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hardnox604008
Veteran Advisor

Re: The US response to the crisis in the middle east.

The monthly high of world oil production set in 2005 still stands.

 

Demand is doing what it ought to do on a steep price rise- falling.

 

And there are some nice hits out there- natural gas fracking, tight rock like the Bakken, deep offshore.US production is actually up YOY.

 

But 4 of the 5 "king" fields in the world are undisputably in decline. The great monster, Ghwar in SA may be ner a steep decline if the late Matthew Simmons was correct.

 

The thing about peak oil seems to be the the nature of how it will unfold is becoming clearer as we get there. The long plateau scenario seems to be taking place- which many had predicted. The problem with that is that it likely means a sharp drop at the end of the plateau, wherever it is.

 

fwiw, h

tomtoolbag
Veteran Advisor

Re: The US response to the crisis in the middle east.

  I'm trying to find the info that I read about it at a scientific blog/compilation site, but they switched or up graded and their archives are limited.http://oilismastery.blogspot.com/search/label/Peak%20Oil%20Myth

 

  I have a hard time believing the Hubbert curve basically because it hasn't been attempted to refute it, it seems as though it's taken as a given. Also, when I factor in the emotional/manipulation aspect of it and the self-serving issues from the oil companies' position, along with an alternative theory(abiotic), it leads me to believe that it has some hype factored into the equation. On the other hand though, various signals such as oil company sales to other oil companies and the lack of upgrade/improvements leads me to believe otherwise.

 

  To me it's almost like: free beer....................tomorrow.

hardnox604008
Veteran Advisor

Re: The US response to the crisis in the middle east.

The Hubbert Curve is basically just a composite of how individual oil field output behaves. And of course technology has an impact on that curve- enhanced extraction tends to push the tail out farther after the peak.

 

BTW, the on shore continental US fits that curve about perfectly.

 

But the overwhelming evidence for oil depletion is the continental on shore US which is indiputably the best explored patch on earth. It is basically sucked dry.

 

For me, the "drill baby, drill" episode (and attendant ridicule of the tire pressure response) was one of the four or five key events that turned me permanently away from the Republican Party.

 

Sure, there is some oil out there, by some measures "lots of oil."  And sure there are oil companies that badly want to get at it and sure they're going to make political waves to try to. But it just isn't anything of a magnitude to change the game.

 

Pardon me while I shift gears. In retrospect the run to $150 oil, the curious ethanol legislation and the Cheney oil summit all make sense.

 

Matt Simmons was one of the prime actors in the Cheney oil summit and he was very public (virtually the only one) about the fact that they were very receptive to his peak oil message.  If you beleived that message in 2001 then you simply had to run oil prices a lot higher to stimulate the next generation of more expensive exploration and projects; you needed to get at the last great conventional oil province (Iraq) and things like ethanol make a little bit of sense.  From that perspective the administration was simply being quite forward looking in preserving the interests of the US economic empire.

 

Of course the devil is in the details and, among other things, I'm quite sure they hugely underestimated the cost of colonizing Iraq.

 

Anothre gear shift- the Hirsch report is considered to be one of the better studies on mitigating the impact of peak oil. Here's a html version- maybe you can find the PP and download it but I couldn't.

http://webcache.googleusercontent.com/search?q=cache:TpTN7eFJ5BoJ:www.physics.ucsd.edu/~tmurphy/phys...

 

His conclusions are that it takes 20 years lead time to avoid huge economic disruption at the point where the the hard production declines start- with 10 there is moderate difficulty and with 0 there is catastrophe.

 

I'm not sure we've done much of anything to really mitigate that future event- all we've done is either a) push to a peak earlier with increased production of 2) extended the post-peak plateau longer. In either case, there doesn't seem to be a lot of serious policy in place to actually prepare for the time when the declines start to really bite.

 

In retrospect the Cheney strategy is completely wrongheaded- getting more oil in the short run isn't the answer unless there is a very serious commitment to structure the economy in preparation for the peak.

 

fwiw, h

 

tomtoolbag
Veteran Advisor

Re: The US response to the crisis in the middle east.

  I can see the logic and agree with it in regards to the implementation of Ethanol, but the sticking point is the mandates. The mandates at a given percentage just requires more oil(gas) consumption unless the percentages go up, and also the overall total of gas consumption and blending with Ethanol is limited due to older vehicles and their inability to burn it without consequences. Saying that it lessens our dependency on oil is a wash, because it requires more to comply with the mandates(at current percentages).

 

  There are a couple of other reasons that come to me and that is the petro-dollar status and how it relates to our economic standing. Also, there is the idea that coincides with what you referred to, in that they(the oil companies) are extracting every last drop to maximize profits with existing technologies.

 

  I have also wondered if the commodity markets are affected by the reserve currency status that we have throughout the world. Any thoughts on those things?

bruce MN
Veteran Advisor

Box of rocks

nt

 

hardnox604008
Veteran Advisor

Re: The US response to the crisis in the middle east.

Hi Tom,

 

My friend who I discuss these things with and I ruminated at great length on the petrodollar issue and whether what you had was, essentially, a tax on the US consumer that went to the Gulf arabs who then recycled it back into US treasuries. Maybe something there but I was never really able to connect all the dots or see a pattern.

 

I've also thought a lot about the reserve currency status issue.

 

This isn't an answer but it is an observation:  the reserve status presently is a two edged sword. On the one hand we desperately don't want to give it up, but on the other hand I think that it stands against every effort to depreciate the dollar which we'd really like to have happen.

 

The world is currently awash in debt and a huge amount of that debt is denominated in dollars. It is counterintuitive but when credit gets tight the dollar rises agaist other currencies- and against commodites and other risk assets- becasue everyone is synthetically short the buck and has to scramble to get dollars to cover.

 

No answers, just some observations and more questions. Best, h

GreaTOne_65
Senior Contributor

Re: Unfortunately....

You really are a pompous a&&, Craig! The President hasn't had anything to do with whats going on over there. Besides that, anything that's done now will take 10 years to make to the pipe line. So you only make a fool of yourself, of that, I wouldn't be to proud.Smiley Sad

kraft-t
Senior Advisor

Re: The US response to the crisis in the middle east.

I heard a woman on washington journal this morning as a nasa expert why we don't unleash that technological group of wizards to the design of 100 mile per gallon vehicles. Perhaps that is a lofty goal but wouldn't it be worth spending spce research dollars on something more realistic for consumer needs in the American market?

 

It seems like that approach would probably produce some that benefits the public more.

 

gough whitlam
Advisor

Re: Unfortunately....

Craig - when the US economy was boiling along before the GFC hit, no body ever believed it would end.  Now someone must pay. It is that simple.