[extropy-chat] Should You be Freaking About Oil Peaking?

Mike Lorrey mlorrey at yahoo.com
Tue May 24 04:34:53 UTC 2005

--- Hal Finney <hal at finney.org> wrote:
> Of course, "today's high prices" are actually down quite a bit in the
> past few weeks.  Oil hit $58/bbl and is now at $48.  There seems to
> be a general sentiment that $40 will be the new floor, but there are
> no guarantees about that.  A year ago it was at $25 and nobody would
> have predicted a doubling.  These new players in the Canadian oil
> fields are hoping and praying that the price holds up.

If oil floors out at $40, there is no peak oil... $25.00/bbl, which I
predicted would be the price a month after the start of the Iraq war
(as it happened) was followed with a 40% int'l market devaluation of
the dollar as many national governments delinked their currencies from
the dollar, shifting to the euro, so $25 then is $35.00 now on
international markets.

This means that at a $40.00 price floor, oil prices have risen in
reality $5.00 in two years. This is in reality 5-6% annual inflation in
energy prices. Significantly above average, but nothing to write home
about. With current $48 prices, that means a real rise in oil prices of
$8.00 (you need to devaluate the actual price rise by 40% as well to
get a good comparison to then-year dollars.)

Assuming China, Korea, and Japan don't individually or together dump
the dollar en masse (Korea has already made motions and China is
already selling off dollars in a 'basket diversification' move), we
shouldn't see prices rise higher than that. Of course, I wouldn't put
it past them. The faster they (China) price us out of the middle
eastern oil market, and leave us working on our domestic supplies, the
sooner they get an advantage in the eventual face-off over Taiwan.

Mike Lorrey
Vice-Chair, 2nd District, Libertarian Party of NH
"Necessity is the plea for every infringement of human freedom.
It is the argument of tyrants; it is the creed of slaves."
                                      -William Pitt (1759-1806) 
Blog: http://intlib.blogspot.com

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