[extropy-chat] Debate on Peak Oil
sjatkins at mac.com
Tue Apr 26 09:24:10 UTC 2005
On Apr 25, 2005, at 7:36 AM, Brian Lee wrote:
>>> And why don't the futures markets reflect this phenomenon? You can
>>> or sell oil right now for December 2010 delivery for less than
>>> If close study of the situation provides strong evidence that the oil
>>> will be worth many times that, speculators stand to make enormous
>>> on the price rise. Yet no one is bidding the price up, and from
>>> what I
>>> have read even Peak Oil believers generally are not putting their
>>> where their mouths are.
>> Because much of the world is still in denial as to the actual
>> situation. Soon denial will no longer be an option. It will not be
>> pretty. It will be worse because its reality was denied for far too
>> long. Humans have a near endless ability to ignore unpleasant news.
>> Look at the tech bubble as a case in point.
>> Rationally we should be building out alternative energy options
>> including nuclear on even the reasoned suspicion of Peak Oil. Alas,
>> rationality is difficult to come by in this species.
>> - samantha
> Isn't it unlikely that the entire world is in denial? Wouldn't some
> enterprising investor (including the Peak Oil proponents) slap a few
> million down in order to get 300% returns in 5 years? It seems that if
> anyone actually believed that oil would be at $200/barrel in 5 years
> that futures prices would be edging up there to reflect a valid
> present cost.
Please describe how you would play it if you believed it and had some
cash. I am quite interested. Prices are edging up with constraints to
ease the correction where we still can. I don't personally think we
will have that luxury for more than another year more, two at the
It is really hard for most people to believe something really nasty is
the case until it is majorly ruining their day. Surely this is not a
controversial statement in this group. Hell, the majority of humanity
denies evolution and all matter of things they would simply prefer not
There is more than a little economic and political pressure to keep the
lid on this. Our financial markets are fragile enough without official
recognition that we are likely soon without adequate relatively cheap
energy. Our financials are much more fragile today than in the 70s.
> While we should develop alternative energy, oil is still the cheapest,
> cleanest form of energy available to us. Until it gets a lot more
> expensive there is little motivation to develop other energy sources.
Not for very long it isn't. Some would argue that without the
hysteria, nuclear is already much cleaner and in a saner environment,
I don't think we can count on smooth ramps in price giving us plenty of
time to substitute something different without incurring any major
energy shortfalls and crises. We must have Plan B actually in
production if we are going to keep the energy on. Not doing this is
irresponsible and dangerous to our future.
> Once oil production actually peaks (as opposed to predicted peaks) we
> will still have many years available to us as oil prices increase to
> develop alternative energy. It should take many, many years to get
> from peak to negligible production so I don't see an impending crisis.
That isn't the way it is likely to work. The rate of production for a
declining well falls of after its peak. You can't get the same amount
at all much less at the same cost per unit time. Also some of our
major fields could drop out of production entirely quite suddenly even
without geo-political crisis. For instance. the Saudi main field,
Gharwar, has been water injected for decades. If the water level
reaches the wellhead the field goes non-productive. This is not that
easy to prevent indefinitely in an aged field. Gharwar accounts for 60%
of Saudi production. Its loss or even clear decline would sent a huge
spike into oil prices and cause a lot of panic. Gharwar produces
mainly light sweet crude which is easiest to process into things like
gasoline. It takes different types of refineries to process different
grades of crude. Too little refinery capacity exists for some of the
other grades that we will increasingly have to use. New refineries
take 4 - 10 years to come online. Again the time to act is before the
crisis is obvious if we are to insure adequate energy and thus
financial, economic and political stability.
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