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Remember all the dire "peak oil" predictions?
Old 03-04-2013, 12:01 PM   #1
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Remember all the dire "peak oil" predictions?

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.

Peak Oil
Charles Maxwell, Hubbert's Peak, $15 gallon gas and our retirement.
oil peaked?

My how times have changed:

'Peak oil' doomsayers proved wrong


Quote:
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.
Quote:
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.
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Old 03-04-2013, 12:11 PM   #2
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The problem with all this profligate oil consumption due to the shortage that didn't happen is that global warming will doom us all.
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Old 03-04-2013, 12:12 PM   #3
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Originally Posted by bob boag View Post
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!
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Old 03-04-2013, 12:22 PM   #4
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Originally Posted by bob boag View Post
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).


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Old 03-04-2013, 12:23 PM   #5
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Just like Y2K - a total scam job.
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Old 03-04-2013, 12:38 PM   #6
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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.
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Old 03-04-2013, 12:42 PM   #7
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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!
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Old 03-04-2013, 12:44 PM   #8
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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.
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Old 03-04-2013, 12:45 PM   #9
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Quote:
Originally Posted by REWahoo View Post
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.

Peak Oil
Charles Maxwell, Hubbert's Peak, $15 gallon gas and our retirement.
oil peaked?

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
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Old 03-04-2013, 01:04 PM   #10
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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.
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Old 03-04-2013, 01:13 PM   #11
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The old ones are wearing out requiring more maintenance and downtime.
I know just how they feel.
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Old 03-04-2013, 01:16 PM   #12
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I know just how they feel.
Yea, don't we all!
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Old 03-04-2013, 01:24 PM   #13
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Originally Posted by rbmrtn View Post
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.
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Old 03-04-2013, 01:48 PM   #14
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Originally Posted by haha View Post
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...

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Iíll drink every gallon produced west of the Mississippi!

-John Archbold, at one time, President of Standard Oil
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Old 03-04-2013, 01:50 PM   #15
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Iíll drink every gallon produced west of the Mississippi!

-John Archbold, at one time, President of Standard Oil
How did he die?
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Old 03-04-2013, 01:53 PM   #16
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How did he die?
Apparently from an appendicitis in 1916.
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Old 03-04-2013, 02:11 PM   #17
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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.
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Old 03-04-2013, 02:19 PM   #18
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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.
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Old 03-04-2013, 03:00 PM   #19
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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.
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Old 03-04-2013, 03:12 PM   #20
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Originally Posted by Stanley View Post
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.
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