[extropy-chat] Re: peak oil debate framed from a game theory standpoint ?

[Mike Lorrey]

--- Hal Finney <hal at finney.org> wrote:> 
> As oil reaches each new price level, Peak Oilers take it as
> vindication and confirmation of their views.  There was a time when
> $50 oil was unimaginable. Then $60 oil was unimaginable, then $70.
> Today $80 or $90 oil is unimaginable. What will we be saying by the
> end of this year?

What do they say about the fact that once you take into account price
shifts solely due to changes in the value of the dollar caused by
banking policy, oil prices of $56/bbl today are essentially no
different from $40/bbl prices two years ago. Todays spot price of $69
is equal to $49/bbl prices two years ago, when prices were $30/bbl. So
it appears that half of the present high prices vs. two years ago is
solely due to fluctuations in the dollar markets due to banking policy.
The other half can be attributed to multiple things: middle east
instability, the current Katrina crisis, as well as growth in Chinese
demand.

It all depends on what currency you value the oil by. How has the price
of oil in Euros changed over the last several years? Not nearly as
much. While the Chinese Yuan price for oil has followed the dollar up
until last month, it is currently dropping.

Looking at oil and gasoline futures on Bloomberg today, prices are all
headed down by significant percentages, primarily due to this:
http://www.bloomberg.com/apps/news?pid=10001099&sid=arESneY6CKik&refer=energy

The US has 700 million barrels in its Strategic Oil Reserve and can tap
it at 4.4 million barrels per day (giving a 154 day supply at the
maximum rate). It is currently going to sell about a million barrels a
day of it as part of the IEA action described above. Given this action,
prices should be back below $60/bbl within a month or two.

I should also note that President Bush ordered the Reserve filled to
capacity shortly after 9/11, when oil prices shot up from the mid $25
range to the $35-38 range on the spot markets. Depending on what prices
it obtained these reserves at, the gov't could realize a significant
windfall on these sales. Assuming they sell a million a day for two
months, they should see profits of about $1.5 billion, which should
help offset some of the $10.5 billion being authorized by Congress for
the Katrina recovery efforts.

As this oil is oil that has already been purchased from the originating
nations and put into old salt mines, or domestic wells that have been
mothballed for the reserve, this effort should also bring world oil
prices down by creating a bit of a glut, especially considering the
short term lack of refinery facitilies in operation here in the US.

Mike Lorrey
Vice-Chair, 2nd District, Libertarian Party of NH
Founder, Constitution Park Foundation:
http://constitutionpark.blogspot.com
Personal/political blog: http://intlib.blogspot.com

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