Peak Oil?

HenryTo · Posted: Tue Nov 15, 2005 12:24 pm Post subject: Peak Oil?

Dear all,

I would like to start a discussion/argument on the validity of the Peak Oil theorists on this board. One of my subscribers had asked me to do this - and I believe it will be a very well worthwhile discussion!

I know there has been a lot of literature written about this - including recent books - but one thing that I find lacking is the fact that many of the commentators talk about the industry in VERY BROAD terms. That is, economists who are working with questionable data - questionable because of the lack of transparency in the oil markets, not because it is their fault.

I feel that Matt Simmons had done a great job in his efforts to focus on the Saudi oil machine. He spent an entire book just writing about the Saudi oil industry, and makes a very good argument which discredits the Saudis' claims that they can ramp up to 15 mm barrels a day in a few years. In all likelihood, he argues, Saudi oil output has peaked or is near peaking. We need similar analyses for the Russian oil industry, the North Sea, Iranian, and Venezuelan oil production.

Going forward, this author is bullish on the price of oil in the long-run, as I believe oil demand growth in both China and India will surpass the ability of the world to pump more oil - given current constraints and the lack of new, impressive discoveries.

I would definitely like everyone to chime in.

Best,

Henry

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BlueDaze · Experienced Poster Joined: 22 Nov 2006 Posts: 76

Does the Peak Oil "Myth" Just Fall Down?
- Our Response to CERA

http://www.theoildrum.com/story/2006/11/15/83857/186

BlueDaze · Experienced Poster Joined: 22 Nov 2006 Posts: 76

HenryTo · Posted: Tue Nov 21, 2006 1:35 am Post subject:

Cambridge Energy Research Associates "debunking" the Peak Oil Theory:

http://www.cera.com/aspx/cda/public1/news/pressReleases/pressReleaseDetails.aspx?CID=8444

rffrydr · Posted: Tue Oct 10, 2006 5:45 pm Post subject:

By definition. It was certainly the case for whales at the cusp of industrialism. But price was only a factor for a short while.

As always a question of timing--take; a long enough time and the meaning is forgotton. We didn't leave the Stone Age because we ran out of stones!

There's always a strong, market ignorant, public reaction to oil price moves. It's just funny to hear shouts of 'conspiracy' on a large price DROP!! Starting to sound like a religion, no?

HenryTo · Posted: Tue Oct 10, 2006 5:23 pm Post subject:

Like I mentioned before, the most bullish scenario for oil in the intermediate to longer-run is a further "dip" to $48 to $50 a barrel over the next 12 months - coupled with "a U.S. mid-cycle slowdown." Such a breather in both oil and the economy (not too hot, and not too cold, as they say) will get the potential SUV buyers all happy again (and which may damper VC funding for alternative energy projects). And as China continues to grow and as India continues to build its infrastructure (they will need to double their physical infrastructure spending from $50 billion annually to $100 billion annually in order to sustain a GDP growth of 8% or over), oil will most likely rise to the $80 to $100 level under such a scenario (by the end of this decade).

diesel · Posted: Tue Oct 10, 2006 2:35 pm Post subject:

Peak oil is a reality in that eventually oil production will reach a point of maximum extraction and then begin to decrease whether it is through technological inovation such as electron based vehicles which dont require oil or for depletion related reasons. IMO it will come via the depletion path.

It is important to remember that the world has now not found as much oil as it has consumed for 20 odd years now which indicates that we are running down our worldwide inventory of oil. We currently find about 1/4 the oil that we use every year. In addition most new drilling is now in the deep sea and oil sands/shale i.e. the last frontier so to speak which to me indicates we are moving to an era where the oil we are going to get is going to be harder to find and more expensive to extract. IMO a high oil price is the enabler which will allow extraction of heavy oil.

In addition as Henry has mentioned before there is a huge new customer base for oil i.e. China and India that will be looking to import huge quantities of oil in the future.

Given the above I am structurally long term bullish on oil. The current bear market in oil should be short lived IMO unless we see a worldwide recession.

rffrydr · Posted: Tue Oct 10, 2006 8:58 am Post subject:

"Enthusiasts" are blaming Goldman Sachs for Republican election mandated price decreases: talk is of 'peak plateau' and recrimination againts 'hoarders':

http://www.fromthewilderness.com/members/100406_markets_react.shtml

rffrydr · Posted: Sun Jul 30, 2006 10:07 pm Post subject:

another good debunking with plenty of links for this long-term issue:

http://www.ecoworld.net/blog/2006/07/12/there-is-plenty-of-oil/

rffrydr · Posted: Thu May 04, 2006 10:10 pm Post subject:

Global warming will open up the new (last) frontier of oil exploration! Also, after centuries in the making, a "northwest passage."

Covers the issue pretty thoroughly:

http://economist.com/finance/displayStory.cfm?story_id=6823506

This really took hold, after a period of finally coming to terms with a declining Northsea, with Royal Shell amazing whoops, where did all our reserves go.

HenryTo · Posted: Sun Nov 20, 2005 2:36 pm Post subject: Canadian Tar Sands

Following is an email that I just sent to a subscriber regarding Canadian Tar Sands:
----------------------------------------------------------------------
I came across this today and remembered your email:

http://www.fool.com/news/commentary/2005/commentary05101904.htm

I have not been as optimistic on tar sands simply because of the lack of investments. According to the article Canada currently has a tar sands production capacity of 1mm bpd, and is only projected to grow to "only" 2.7mm bpd by 2015 - definitely not enough of an increase to cover oil consumption growth in the U.S. for the next five years, let alone China's and India's for the next ten years.

Of course, these are only projections - my guess is that this projection will change quite dramatically once we see more price spikes (barring a major world recession) in the next few years. Even then, however, it will take some time for the Canadians to ramp up.

pcoulter · Posted: Sun Nov 20, 2005 10:03 am Post subject:

I think it all depends on whether or not all the OPEC countries actually have the reserves which they are claiming. I'm not sure if Henry discussed this previously, but in the 80's when OPEC established production quotas for its members based on their reserves, many countries' reserves went up by 50 - 100% overnight. We may have already hit peak oil already, but we just don't know it. There are good arguments for and against peak oil and too many unknowns to pick a side. I believe that we'll only be able to identify peak oil in hindsight when the fecal matter finally hits the spinning blade.