But that's the whole cruxt of the problem, isn't it? At one end we have a slight decline in standard of living from oil that gets washed out by thousands of other standard of living factors (like technological advancements). And at the other end we have a 'civilization ending' regression to the stone age.

It's not happening. From wikipedia:



How isn't this debatable? Society isn't breaking down now even though oil prices have been between $80-$105 for the past 5 years.

The idea of a "razor thin" spare capacity is kind of silly. That's not a bug of the system - it's a feature. It's why the price fluctuates the way it does.

So I agree with the "Oil Prices will probably keep going up" premise. I just don't see any proof/evidence/arguments from you about:

1. The effect of these higher prices on society.
2. The conclusion that other energy sources won't respond to provide cheaper energy when oil prices get too high.
3. That any of this is going to happen in the next 5-20 years.

You can use the "Report Post" button and say you want it deleted.

Jiggs, do you believe available oil in the world is on the decline in terms of we reached the point where all the wells are drying up?

We have a long time before it matters for anything but cars and batteries are already replacing oil in cars. As prices go up, the costs will encourage research into new sources of energy, a lot of which we already have. The only reason oil hasn't already been replaced is because until 13 years ago, it was dirt cheap and there was no motivation to do something.

Oil supply is obviously serving current demand.

Price is a function of supply and demand, if the price has been north of 100$ and we are all fist pumping on it falling to to ~85 this is not a sign that supply is obviously matching demand.

The chicken little stuff is unjustified. Western governments are already subsidizing and investing in alternatives. We have made enormous progress, and 8 majors have hybrids or pure electrics on the market today. Ironically, the lagging consumption of these vehicles signals how much runway we still have based on where petroleum prices are now.

Think you are right about shale production peaking from the little I have read though, but you imply prices will skyrocket which isn't on my radar. Oil companies use economic models to optimize profits. Those models contain a mix of price and volume - the former of which involves no cost, so will obviously be preferential. That said, like anything a spike in prices will negatively impact demand, so its unlikely we will see significant volatility in production. Moreover, with so much political instability in the ME, I imagine a great deal of volatility is already built into global prices. Much more likely that as shale peaks, prices slowly creep up.

Even in the comfortable scenario (and we both know it will be somewhere in the middle), a radical change in energy (and foreign) policy is obviously needed. I'd say THAT is the whole cruxt of the problem.

As I've displayed numerous times, what you're alluding to there is total liquids, including 4x-more-expensive unconventional oil plays which is ALL that has maintained tepid production growth since 2005. The more telling chart is the one that shows conventional production has flattened off for 9 years running. So, as we go forward, and conventional production begins to decline, more of the crap-grade oil will "need" to make up for it. It is axiomatic that margin costs will rise. If the public can't afford the elevated price (as we've seen time and time again as price bumps up against that $100-110 ceiling), then these companies won't be able to expand drilling.

Production growth is being maintained by debt. These companies, for the most part, are NOT making money on this U.S. shale "bonanza." I'm sorry, they're just not. And now foreign investment is backing out.

Shell shale woes hit Houston-based unit

Shell's Houston-based exploration and production unit for the Americas will take a hit including financial cutbacks and possible job losses in a shake-up the Dutch company announced Thursday, citing disappointing results in U.S. shale plays

Sumitomo to Probe $1.8 Billion in Shale And Coal Losses

Net income is forecast to total 10 billion yen ($91 million) in the year ending March 31, down sharply from the company’s May forecast of 250 billion yen, Sumitomo said in a statement. The bulk of the change comes from a 170 billion yen write down on the value of the shale oil development in the Permian Basin in Texas

Itochu Writes Down Samson Investment as U.S. Shale Bet Sours

The latest impairment of 29 billion yen ($279 million) follows charges of about 33 billion yen reported by the Tokyo-based company last year. Itochu has now written down most of the 78 billion yen, worth $1.04 billion at the time, it paid in 2011 for a 25 percent stake in family-owned Samson.

I could go on and on. The industry does a great job painting a different picture, but their actions, and the actions of foreign investment tell a very different story.

I have to laugh whenever I see you guys suggest this, as if you've forgotten the extent to which QEx, TARP and all the other bailouts have kept the global economy together with duct tape. You're either not watching the same daily international news reports I am, or you just can't see past gated-community America.

China's growth is slowing, the Middle East is on fire, concerns are rampant that Europe is on the brink of recession, Wall St. continues it's pump-and-dump, corporate debt is back to '07 peak levels, as is stock buybacks and margin debt.

Hell, how many European banks are going to fail the EU's stress test this week? 12? 18? 36? Reports vary.

Are you quite sure you're being honest about the health of the global economy?

I'm not sure what you're ultimately claiming here. That spare capacity isn't important? That world events don't disrupt production (Egypt, Libya)? That it's just not "razor thin" at all?

1. Detoit sez hai
2. I asked the thread to allude to what that energy source will be, exactly. Still waiting.
3. I guess you're just not very familiar with my work here.

Former BP geologist: peak oil is here and it will 'break economies'
Industry expert warns of grim future of 'recession' driven 'resource wars' at University College London lecture

"... a sustained decline in global conventional production appears probable before 2030 and there is significant risk of this beginning before 2020... on current evidence the inclusion of tight oil [shale oil] resources appears unlikely to significantly affect this conclusion, partly because the resource base appears relatively modest."

..."If we can afford to pay $150 per barrel, we could certainly produce more given a few years of lead time for new developments, but it would break economies again."

Which do you believe could be faster:

- the panic that spreads when fortune 500 companies and multinationals realize they have bad debt on their hands the next time there's an oil price spike and a massive asset correction? OR...

- the lead time required for the global transition from the edifice utterly built on cheap petroleum to "something else" ... a "something" that no one can actually allude to quite yet with any certainty of scale and viability? ...

Market forces can be quite persuasive. You know, given abdundant time and investment.

In any event, you're being a little naive if you think "electrics" can move freight, fertilize crops, kill pests, lube computer chips, build/repair infrastructure or pave roads.

Yes, degrowth is inevitable. The affects of that transition will not be pleasant for complex societies, but certainly doable for those not stuck in the denial and anger stages of grief.

getting back to my assertion that the oil majors are downsizing (dumping CAPEX), I point some of you to this thread, focused on this presentation given by Stephen Kopitz at Columbia U. earier this year.

Can you elaborate on this a bit? Especially the bolded.

Peak oil was not a proximate cause of the financial problems in Detroit.

Jiggs,

you were never right. You cannot be objective. You are deluding yourself and smart people are telling you that. I am certain you have lost money on this peak oil theory of yours. Stop it.

show your work, or GTFO

http://www.amazon.com/The-Catabolic-.../dp/B00FA2HFJW

As soon as you answer my question in the post you truncated.

Do you think transition to a replacement energy source you can't actually name will be faster than the affects of peak oil (already beginning to unfold around us)?

because despite over a decade of warning, nothing seems ready to be scaled up nor commercially viable.

I had a clarification question that you refuse to answer, so I guess we're done? Seems silly to me but whatever floats your boat bro.

There are already alternatives to oil, but oil is so cheap that we don't use them. As the price of oil goes up we will use them more and more. If oil is going to skyrocket in price, why don't energy companies just buy up huge oilfields and sit on them and wait until this happens?

If you believe $80-110 oil is "cheap," and alternatives are only waiting for oil price to be even more than that, then you don't appear to have a working understanding of what a consumer-driven society can afford so as to maintain growth rates capitalism utterly depends upon.

"We can pretend we've found a eleventy trillion barrels behind the moon. But that says nothing about the logistics of getting it to market, nor the capacity for the average consumer to afford it."

In other words: Yay! There are "alternatives," ... but at what price?

I don't think you have a working knowledge of economics let alone consumer-driven society. Like do you think the average consumer is spending money on barrel of oils? lol

I mean cheap relative to other sources of energy. In the future as it starts to run out and as renewables keep going down in price then oil will eventually be replaced by renewables.

The prices of alternatives are more than oil, that is why oil is being used now.

So basically, you're saying people might have to start using public transportation? I have to admit that that's pretty depressing.

and oil being expensive increases the speed at which alternatives are developed. It could be that Jiggs is largely right but it's also a good thing viewed from a more distant perspective.

I'm still finding it very hard to get any idea how bad it is from a short term perspective if indeed it is bad at all. Though, presumably we all agree the economy would be doing better now if oil was more like $30 a barrel because it was more plentiful.

Cmon, is it because its Jiggs you think you can be so lazy, its obviously clear he meant that the price of oil is reflected in prices consumers have to pay for consumer goods, not barrels of oil itself. Or do you actually think he thinks consumers are going down the shops to buy oil? Cmon.

Oil is pretty much an input cost into nearly everything.