The Imminent Crash Of Oil Supply: Be Afraid
countercurrents.org
countercurrents.org
I hate to break it to the authors, but just because something comes directly from the government does not necessarily make it "correct" or even "free from bias".
The only possible concern would be an embargo, in which countries _refused_ to sell to the US at any price. That would be problematic - but it isn't related to Peak Oil and could occur at any time (and, in fact, has in the past) - see http://en.wikipedia.org/wiki/1973_oil_crisis
How I'm using the term strategic here is to indicate that certain resources, those that are most critical to be able to function, such as water and oil, will not always respond to market forces.
So the flatness of suppliers, that it is fungible, is rendered irrelavent once it becomes critical, because that is an aspect of the market to which it no longer strictly applies.
Now, problems could still arise where many countries refuse to sell to us or where China just buys a bunch of oil and starts a huge strategic petroleum reserve that's mainly meant to give us more of a shortage (but that would get expensive quickly, even for China.). But that has nothing to do with whether oil is fungible.
Fungibility means that it makes no difference if Saudi Arabia decides they won't sell to us and instead sells the 100B barrels/day that they would have sold to us (made up number) to China, and because of that, China buys 100B fewer barrels/day from Canada, who sells that 100B to us instead.
If oil becomes very scarce, very quickly, then most countries will see it as a strategic resource. They may sell, to be sure, but not at a volume or a price that will ensure a level of functional viability.
This may not happen, of course, but America isn't stupid: it has spent hundreds of billions ensuring that Iraqi oil will be that source when others fail.
Do you see? It's not just a simple matter of being fungible, because all suppliers are also consumers, and the resource has the potential to be strategic, in which case trumps market forces. If suddenly water became scarce, I may not sell to you at any price because I want to ensure that I have enough for me and my family. It doesn't matter that water is the same everywhere -- if everyone feels that way, you're not going to get some at a price or volume of any certainty. Period.
they don't work when we try them on other countries.
Embargoes really only work when we help those that are embargoing us by setting price controls.
We did that in the 70s and it worked like a charm. Normally, the price we would pay would just go up and third countries would sell us the commodity or cartel members would cheat themselves.
The 70s embargoes wouldn't have worked if the US government hadn't shot itself in the foot. We even had shortages of natural gas and ALL of it was coming from the US!
The market works. The law of supply and demand functions, unless the government decides to break it.
Well that’s what everyone thought up until the 1970’s, when America’s oil fields went into rapid decline. Here’s how it went down:
US> Hello, Saudi Arabia? We would like oil.
SAUDI> No.
US> That's ok! As Jacko says, oil is fungible! Hello, UAE? Oil please.
UAE> No.
US> That's ok! As Jacko says, oil is fungible! Hello, Bahrain, Egypt, Iraq, Kuwait?
> No.
US> Fungible! It's fungible! Hello, Libya, Qatar, Algeria, Syria, Tunisia?
> No.
And suddenly, there was oil panic. Because while oil is fungible, that's an attribute of market dynamics. You have 18 suppliers? Great. Oil is fungible. If one won't sell there are 17 more. But what happens if all 18 won't sell?
Without oil, some countries, like America and its military, can't function. That makes it also strategic.
According your logic, the 1973 crisis wouldn't have happened. Yet it did. And it could again. Oil is fungible until it's strategic. End of sentence.
the emergence of Baghdad as a rival to Riyadh
(I'm not saying that's why, of course. I don't know why. But "it has nothing to do with oil" always struck me as a tad naive, and by "a tad" I mean "maximally".)
-- Alan Greenspan
Natural gas is a very good substitute for most uses of crude oil. Not as good for plastics, but for just about every other purpose it is far better than oil. If oil actually does start to get as scarce as the peak oil proponents suggest I think that the first alternative you are going to see take over is natural gas.
Um, no. No, it doesn't. The gap between decreasing production and increasing demand will widen not nearly slow enough to come up with and implement alternatives on the almost unimaginable scale that will be needed. Furthermore, demand for oil is very, very inelastic. That means that the price will increase very fast, even for a small gap.
43mbpd shortfall(about half of current usage) in 20 years is not that slow.
Predictable, well, these predictions could be off and possible we make another big discovery.
Personally, I am not pessimistic, we will make alternatives as prices rise, but it will be rather painful.
Obviously at some point the production levels will gradually decline, but people will either boost efficiency or substitute away from oil.
I'm also contesting that we need to be afraid. So long as the change happens gradually there are lots of things we can do to use energy more efficiently or generate more of it.
We'll never truly run out of oil as long as there is a free market. It will just keep getting more expensive.
The runup in oil prices that finally turned around in 2008 had nothing to do with long term supply but was caused too much easy credit overheating the economy.
Having said that, I do agree that oil will simply get more expensive, and that we won't simply run out of it.
the real estate bubble and its collapse were certainly caused by a perfect storm of market distortions, many of which are still with us.
but prices for many things, including oil, are set freely and that is the element of the market relevant to the existence of the supply of oil
That is a completely absurd statement. Oil is a finite resource that cannot be reused (at least when it is used for its main purpose). By definition it /must/ run out someday. We can hope to keep pushing that date back, but not forever.
Believe me, if gasoline costs you $50 a gallon, you'll be walking everywhere by choice. You'll pay $10 for a bus ride and love it.
R&D will be in overdrive.
This is not the first time human beings have encountered a scarce resource.
True, the peak is predicted to have been a few years before now, but I believe production IS falling today?
Obviously there is a finite supply of oil, and it will start to run low sooner or later. But I would question any forecaster's ability to make pinpoint accurate judgements on this, given that so many have tried over the last 40 years, and so many have gotten it wrong.
In general, I think that it is very dangerous to pivot thinking around a particular data point or graph. It ascribes a lot of importance to a set of data, that, in summary view looks very concrete and real, but might be made up of a lot of layers of uncertainty and plain old guesswork. I'm not suggesting that this graph is necessarily wrong, but you'd have to be pretty idealistic to believe any simplified piece of information about something has chaotic and complicated as all of the conventional and unconvential oil still in the ground, and able to be extracted, with timeframes and technologies thrown in. There's not even any uncertainty bars in the information.
A nice side effect: they're usually written by ignorant people for ignorant people and aren't worth reading.
1. Oil companies have a variety of categories for reporting reserves. 15+ years ago companies used to regularly report liberal reserve numbers for the sake of stock price boosting. Since then the regulators have pushed companies to be conservative in their "findings". The historical shift makes it look worse than it is -which doesn't look bad to me (33 years of known resources is so much frikin oil).... There are so many companies sitting on thousands of drill opportunities and they simply don't have the upfront capital or even people to work on them.
2. Even if CONVENTIONAL Oil is harder to find there's plenty of Natural Gas and Non-Conventional resources to move towards without it being a big deal. This is how the market works - when the price of oil is too high due to supply constraints then technology/infrastructure will shift. This seems fairly normal to me - certainly not a panic situation. And quite frankly it's great for our economy to make these shifts - more jobs, new jobs.
3. > "Although there are large deposits of "unconventional" oil such as the Canadian tar sands, most are making only slow progress at development and consume as much or more energy in their production as they can generate."
What a load of Malarky. There's absolutely no truth to this what so ever. Canadian Oil Sands are the most poorly understood commodity on the market. It doesn't consume more energy to produce - there's no substance in the article for me to even bother counter stating (and all the environmental concerns, relatively speaking, are just completely unfounded).
I think it is very hard to make a convincing case that fear causes us to do less. It might lead to that reaction in some people, I’m not sure whether that is true of everyone.
The kind of fear that stops you in your tracks seems rather like a overreaction – a misfiring – of your fear circuitry. You should, after all, run when you see the tiger, not stop. My guess would be that fear leads to inaction only in a minority of people.
That’s only a guess, but I’m not exactly sure why having no emotional reaction or being happy upon hearing those news (and assuming there’s some truth to them) is better.
<sarcasm>This is just total news to me. </sarcasm>
Oh, yes... and forget about that vacation across Europe. Cheap air travel is going to be an early casualty in this ride. :>