Letters to the Editor
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A conspicuous absence indeed
I noticed it immediately myself when I read that article.
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always wondered about that logic
shale oil, tar sands, etc. are too expensive to get, but when the price of oil goes up there'll be enough economic incentive that there'll be plenty of oil; yeah, but doesn't that mean plenty of oil at $100+ a barrel?
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Learn from Stagflation
Jad Mouawad's change in thought echoes those of economists in the 1970s who thought a stagnant economy and inflation could not co-exist. Eventually the truth of reality is perceived.
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Strip Mine
You can stip-mine the West, North Dakota and north of Edmonton, and even Venezuela, or drill miles down off Brazil in the ocean, and it still will not bring the price down, as it is expensive to do this. Not to mention devastating to land, animal and water use.
Peak oil is already here, according to Richard Heinberg's "The Party's Over." And part of the theory of peak oil is that the 'easy' stuff is gotten. So the back half of the bell curve is not the same as the front half. It is not like draining a glass with a straw, and when you get to 'half' you are at 'peak.' It is more like digging a hole, and the first 6 feet are soft dirt, and the last 6 feet are rock. Literally.
Almost every major oil field in the world is past peak except a few. The Saudi's et al. lie about what is under their sand, as their 'reserves' haven't gone down in years. They will not allow independent observers to look at the figures.
Most of the people yelling about the high price of gas do not understand what is going on ... yet. But they will, and when that happens, look out.
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Retired petroleum geologists
I particularly love going to talks by retirees in my field. The good ones have a career's worth of stifled political observations. Now that they're secure, they'll say the stuff that is too contentious for people who still want jobs.
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so then I am puzzled why seemingly obscure political events lever the price so much
If it's just peak oil peak oil peak oil then why is it political, and more often financial speculative events drive the price in seemingly random directions. You can't have it both ways.
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The Benefit of Foresight
This was all so predictable. With China, India, Indonesia and several other south east Asian nations rapidly industrialising (not to mention other large populations like Brazil) demand was set to go through the roof. The U.S. economy funded growth with debt seriously undermining the dollar, the war antagonised oil producers not just among Arab nations but throughout the third world - and we all kept the appliances turned on, drove the gas guzzlers and kept consuming. I was commenting on today's news back in 2003 (follow my link).
Did people really believe those preachers who said God would provide infinite oil supplies?
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Underlying
Oil prices on a day or month to month basis are not determined directly by peak oil. Speculation, falling dollar, threats to the oil supply system, usage, all play a role. As well as the search for super-profits by the oil companies.
Peak oil is just the underlying tendency, like global climate change is underlying the day to day, month to month, even year to year weather.
They both share a similarity, in that this planet is not an unlimited or controllable resource.
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Wait For The Election
Prediction: In the weeks leading to the upcoming election watch how gas prices start to drop.
This happened during the last election and a few folks were awake enough to notice.
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@Electro
But it really IS both ways. It's peak oil, or more precisely higher world demand than supply brought on by peak oil making the market prone to volitility brought on by fairly small changes in market conditions.
When there's plenty of something for everybody the price is set mainly by the cost of production and by what people can get out of it. When a thing gets scarce, then the price is set by whoever can affrod to pay the most while others do without, or at least with less.
And it doesn't take much with a rescource like oil that everybody thinks they need. A change in either output or demand of just a few percent means the difference between a glut and an inflationary scarcity.
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so it's nonrational pricing and so called peak oil is therefore meaningless
We're agreed, thanks.
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Reality Sets In
The days of cheap and plentiful gas are over. When there are approximately 5 billion people increasing their consumption of a resource each year, it goes without saying that the resource will become more expensive. Demand goes up, price goes up. Of course, if we could wave a magic wand and suddenly come up with billions of barrels of easily accessed oil reserves this might not occur. That hasn't happened and it won't.
Instead, Bush et. al. have sat on their hands while consumption soared and did nothing to curb usage. I believe the US still outstrips both India and China in consumption. Now, McCain and Clinton have latched onto one of the worst ideas to come along in a while. Make gasoline artificially less expensive by eliminating the federal taxes on it, despite the fact that these taxes go directly to transportation systems and needed jobs. No, far better to stick a very small bandaid on the problem and watch as the price of gasoline jumps as more Americans delude themselves into believing that consumption (demand) doesn't drive the price. It does folks.
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Inflation
So the price of oil has nothing to do with the falling value of the dollar? It hasn't risen in Euros in the past few months.
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So What is in incentive to pump more oil...? Entirely Rational Economic Decisions
It is ENTIRELY rational thinking....to sit and wait on developing more production capability as demand grows and world consumption continues to increase - also there is a lag effect in bringing on increased production...years, even decades for an entirely new form of extraction technology (tar sands, oil shale..etc.). These people are not being irrational, they have economists tracking the world production output growth and the world oil consumption growth....The author of that article even mentioned the possibility of $200 dollar per barrel oil and the corresponding valuation of US gasoline at $7 per gallon. Why - as an oil producer, would I increase pumping when I am sitting on a fixed capital asset (my oil field) with finite reserves in the world and the value of that asset increases by millions for each dollar increase in the price of a barrel of oil. - and regardless of price, there is always a buyer for that oil. THis is simple economic game theory and even if I worry about other producers suddenly shipping more oil and taking more of the economic supply, I realize from world oil consumption trends that I will continue to get increased prices in the future.
Remember, it's not about Peak oil....but Peak Oil Extraction Rates...you can only pump so fast...and so this is the economics of derivatives - production rates and consumption rates ( that a calculus time-based derivative...not the financial instrument) - and not the economics of quantity that is setting the current price.
Now the economic inflationary impact, in the year 2015, of $7 dollar a gallon gas would be a matter to write about - it would effectively change the housing value and deflate outlying suburbs in value and decimate all minimum wage jobs in retail and service industries when you reach the tipping point of wages that cannot cover minimum transportation costs to work at that minimum wage job. Not to mention the Auto industry.....And remember, the rise from $60 a bbl to $120 a bbl was over a relatively short time frame - another raise to $180 would trigger these permanent changes.....the implications of energy costs this high are staggering.