[extropy-chat] Peak Oil news

Samantha Atkins sjatkins at mac.com
Tue Mar 7 10:35:40 UTC 2006

On Mar 6, 2006, at 7:07 PM, Hal Finney wrote:

> Personally, I like to look at the markets to get an idea of the true
> consensus on an issue.  Oil is expensive these days, about $64 a  
> barrel.
> You can buy and sell futures contracts for oil delivery on up to the
> 2012 time frame, and generally those long-term oil contracts are  
> priced
> about the same as today.  Prices climb slightly up until mid 2007 and
> then decline to about today's levels.
> It's not clear how to interpret this, but on its face it doesn't seem
> to point to a particularly drastic Peak Oil scenario.  OTOH if you
> look at options contracts they give you an idea of the range of prices
> the markets expect, and that turns out to be very wide.  If you look
> at prices at the end of 2008, the one-sigma price range is $34-104,
> which corresponds to a 68% chance.  The two-sigma range, corresponding
> to a 95% chance, is $20-180.  So the markets are certainly not ruling
> out oil in the high $100's in the two to three year time frame.   
> Such a
> high price would almost certainly cause a serious recession.  Of  
> course
> the markets aren't ruling out $20-30 oil either, in which case we can
> go back to bathing in the stuff.

The markets, as anyone who plays them knows, are not altogether  
rational.  So I find it unlikely that examining market price  
structures will give good evidence for or against Peak Oil.

- samantha

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