Remember all the dire "peak oil" predictions?

[REWahoo]

I found a few threads back in 2005 - 2008 where many posters were convinced we were at or near the point of "peak oil" and prices had nowhere to go but up as supplies dwindled.

http://www.early-retirement.org/forums/f30/peak-oil-17363.html
http://www.early-retirement.org/for...k-15-gallon-gas-and-our-retirement-35818.html
http://www.early-retirement.org/forums/f28/oil-peaked-32941.html

My how times have changed:

'Peak oil' doomsayers proved wrong

Five years ago, some oil market speculators became convinced that the world was nearing the limits of oil production. Sometime soon -- the 2010s? the 2020s? -- oil production would begin a long steady decline.

Think again. World oil production continues to rise.

In 1972, the year of the famous "Limits to Growth" report by the Club of Rome, the world produced about 55 million barrels of oil per day. In 2011, the world produced almost 80 million barrels. If today's prices hold, many experts expect production of 90 million barrels by decade's end.

Some nice notes in the article about how a byproduct of technical improvements in oil drilling have uncovered vast deposits of natural gas in the US, a much cleaner fuel for electrical generation compared to coal.

 

[bob boag]

The problem with all this profligate oil consumption due to the shortage that didn't happen is that global warming will doom us all.

 

[REWahoo]

The problem with all this profligate oil consumption due to the shortage that didn't happen is that global warming will doom us all.

I knew someone would find a dark exterior on this silver-lined cloud!

 

[ERD50]

The problem with all this profligate oil consumption due to the shortage that didn't happen is that global warming will doom us all.

But as was pointed out - along with this oil comes added Natural Gas reserves, considered less of a GW threat than coal. Lower carbon output, certainly cleaner in all other ways also (particulates, sulfur, mercury, etc).


-ERD50

 

[travelover]

Just like Y2K - a total scam job.

 

[rbmrtn]

The thing that was unknown was the increase in production from fracking. Some reports are saying North America will be energy independent by next decade. Which, in turn, I think will have a major impact on keeping inflation under control.

 

[Andre1969]

The problem with all this profligate oil consumption due to the shortage that didn't happen is that global warming will doom us all.

Cool, at least my heating bill will go down then!

 

[youbet]

Yes! It's good news to know that mankind will have whatever quantity of carbon based energy it desires for eternity........

I was concerned we'd have shortages someday, probably not in my lifetime, that would lead to unfavorable economic conditions for my grandkids. It's comforting to know the supply is without end.

 

[haha]

I found a few threads back in 2005 - 2008 where many posters were convinced we were at or near the point of "peak oil" and prices had nowhere to go but up as supplies dwindled.

http://www.early-retirement.org/forums/f30/peak-oil-17363.html
http://www.early-retirement.org/for...k-15-gallon-gas-and-our-retirement-35818.html
http://www.early-retirement.org/forums/f28/oil-peaked-32941.html

My how times have changed:

'Peak oil' doomsayers proved wrong

Some nice notes in the article about how a byproduct of technical improvements in oil drilling have uncovered vast deposits of natural gas in the US, a much cleaner fuel for electrical generation compared to coal.

IMO, part of this really still does not add up. We are in the worse recovery since the 30s, yet the price of gasoline is at its long term high, and although WTI is well off from its high in 2007, it is still quite high relative to its long term average or trendline. Why is this if we are drowning in oil?


Brent is higher yet, but North American oil is still to some extent landlocked so our production is affecting Brent prices more through our demand being somehwat lower than our supply reaching international markets. As far as I know know, there are controls on the export of US crude , but refined products such as diesel can be, and are being exported in good quantity. I've read that there are also some workarounds wrt the export restrictions.


NG is a different, and there had been no talk about peak natural gas. Even though no one that I know of predicted the large technological advances in horizontal laterals from one pad, or in formation fracturing, plenty of geologists remain unconvinced that gas can continue to be profitably extracted at current flow rates and prices.

Ha

 

[rbmrtn]

IMO, part of this really still does not add up. We are in the worse recovery since the 30s, yet the price of gasoline is at its long term high, and although WTI is well off from its high in 2007, it is still quite high relative to its long term average or trendline. Why is this if we are drowning in oil?


Ha

Need refineries to make gasoline. We haven't built a new one in 30+ years. The old one are wearing out requiring more maintenance and downtime.

 

[Alan]

The old ones are wearing out requiring more maintenance and downtime.

I know just how they feel.

 

[rbmrtn]

I know just how they feel.

Yea, don't we all!

 

[IBWino]

Need refineries to make gasoline. We haven't built a new one in 30+ years. The old one are wearing out requiring more maintenance and downtime.

+1

This is certainly one of the main contributors to the high gasoline prices in California, where it's been nearly impossible to expand existing refineries, let alone build new ones.

 

[ronocnikral]

IMO, part of this really still does not add up. We are in the worse recovery since the 30s, yet the price of gasoline is at its long term high, and although WTI is well off from its high in 2007, it is still quite high relative to its long term average or trendline. Why is this if we are drowning in oil?


Brent is higher yet, but North American oil is still to some extent landlocked so our production is affecting Brent prices more through our demand being somehwat lower than our supply reaching international markets. As far as I know know, there are controls on the export of US crude , but refined products such as diesel can be, and are being exported in good quantity. I've read that there are also some workarounds wrt the export restrictions.


NG is a different, and there had been no talk about peak natural gas. Even though no one that I know of predicted the large technological advances in horizontal laterals from one pad, or in formation fracturing, plenty of geologists remain unconvinced that gas can continue to be profitably extracted at current flow rates and prices.

Ha

Perhaps this is what you were saying...but Brent is more of a representation of worldwide demand. It is the price the US and all other countries purchase crude. WTI is what suppliers are paid in the US. For example, in the Bakken, the crude produced is paid anywhere from +$2 to -$20 of WTI. My question was, if it costs $15/bbl to get the oil from North Dakota to Houston, how does someone pay you +$2 WTI and make money? The answer is, we're really being paid -$20 Brent. So, my reply to the question of why the downturn and still the high prices is, world wide demand is up.

You can play with the interactive graph at EIA for both gasoline and crude prices shown both in Real and nominal $'s.

Short-Term Energy Outlook - U.S. Energy Information Administration (EIA)

To answer the question about peak oil, since the 1st oil well was drilled in the US in 1859, peak oil has been talked about. I took a bet that we weren't near peak oil as I majored in a narrowly focused degree, mainly because it sounded interesting to me. There were about 18 others at my college who took the same bet, about half of which were from foreign countries. Today there are about 150/yr who "bet" on oil. It's rewarded me well.

I may have shared this here before...

I’ll drink every gallon produced west of the Mississippi!

-John Archbold, at one time, President of Standard Oil

 

[REWahoo]

I’ll drink every gallon produced west of the Mississippi!

-John Archbold, at one time, President of Standard Oil

How did he die?

 

[ronocnikral]

How did he die?

Apparently from an appendicitis in 1916.

 

[jimnjana]

Peak oil is not discredited. The concept is still correct but the timeline has changed. The price of finding and producing crude will keep oil prices high and generally rising.

 

[Stanley]

The economic crash of 2008 and the weak recovery have kept the demand for oil lower that it would otherwise be. New natural gas discoveries have helped balance energy use with supply, but, the new supplies are much more expensive to extract than in the old days. New oil is also more expensive to extract. As long as we are willing to pay the price we can have all the oil and natural gas we want.

IMHO, prices will trend up because of these new realities.

On a practical level if I were purchasing a new car today, I would figure gasoline will average at least $4 a gallon over the next five years, and at least $5 a gallon over the next ten years. This assumes no significant increase in gasoline taxes - probably a foolish assumption.

 

[Masquernom]

Don't believe everything you read in the media. Check the web site "The Oil Drum". You'll find that the shale oil wells production drops off very fast after the first year or two. The US is still importing a lot of crude oil. And will continue to import oil for the forseeable future. Almost as big a deal as the shale oil finds, is the fact that gasoline consumption in the US has been dropping the last few years. Only slightly because of improved auto efficiency. Mostly because US citizens are driving fewer miles each year.

So, the US is producing more domestic oil, and the US is consuming less gasoline. But February gasoline prices in the US this year are the highest on record....

Sounds like we're swimming in the stuff alright.

 

[Dawg52]

The economic crash of 2008 and the weak recovery have kept the demand for oil lower that it would otherwise be. New natural gas discoveries have helped balance energy use with supply, but, the new supplies are much more expensive to extract than in the old days. New oil is also more expensive to extract. As long as we are willing to pay the price we can have all the oil and natural gas we want.

IMHO, prices will trend up because of these new realities.

On a practical level if I were purchasing a new car today, I would figure gasoline will average at least $4 a gallon over the next five years, and at least $5 a gallon over the next ten years. This assumes no significant increase in gasoline taxes - probably a foolish assumption.

As long as my oil stocks continue to do well, I can digest higher prices at the pump. I guess we will see how it all shakes out in the future.

 

[Mulligan]

IMO, part of this really still does not add up. We are in the worse recovery since the 30s, yet the price of gasoline is at its long term high, and although WTI is well off from its high in 2007, it is still quite high relative to its long term average or trendline. Why is this if we are drowning in oil?

Brent is higher yet, but North American oil is still to some extent landlocked so our production is affecting Brent prices more through our demand being somehwat lower than our supply reaching international markets. As far as I know know, there are controls on the export of US crude , but refined products such as diesel can be, and are being exported in good quantity. I've read that there are also some workarounds wrt the export restrictions.

NG is a different, and there had been no talk about peak natural gas. Even though no one that I know of predicted the large technological advances in horizontal laterals from one pad, or in formation fracturing, plenty of geologists remain unconvinced that gas can continue to be profitably extracted at current flow rates and prices.

Ha

Hopefully in the near future if natural gas can continue to be converted more efficiently into vehicle use, this will put a nice lid on gas prices.
The link below details many of the recent developments in getting natural gas cars refueled at a faster rate, and build out of the distribution system.
I always wondered what the hold back was besides distribution stations. One project is developing a compressor system at home that removes the water from natural gas and can get the car refueled in under an hour at home as opposed about 8 hours now. A typical driver spends $2k in gas a year, and that could be brought under $1k a year using natural gas.

http://news.discovery.com/tech/alte...e-natural-gas-cars-finally-arrived-130304.htm

 

[GrayHare]

Oil is virtually its own currency, "black gold", so it's not surprising to see its price rise when more dollars are printed.

 

[ERD50]

IMO, part of this really still does not add up. We are in the worse recovery since the 30s, yet the price of gasoline is at its long term high, and although WTI is well off from its high in 2007, it is still quite high relative to its long term average or trendline. Why is this if we are drowning in oil?
...

Ha

I don't know if it applies in this case, but isn't the cost of production a factor? IOW, there might be lots of oil somewhere, enough to 'drown in', but expensive to get to and it will never be sold for less than the cost of production.

I guess it comes down to what they mean by having lots of oil. Is that a reference to current oil production, or oil 'reserves' (which might have a high cost of production)?

-ERD50

 

[clifp]

Oil is virtually its own currency, "black gold", so it's not surprising to see its price rise when more dollars are printed.

This is pretty much my simple minded understanding also. The supply of money (broadest definition) of dollars increased very rapidly, the supply of oil increased modestly and demand was roughly flat over the last few years. Hence the price of oil rose.

I can't seem to find a good chart but I think the barrels of oil per ounce of gold has remained relatively stable over the last decade or so.

 

[HFWR]

I know just how they feel.

But my gas output is at an all-time high...