Into The Crash Series (causes),

[numbersix]

Its strange how the same people who believe house prices only ever go up are waiting for oil prices to come down!!!!

Why dont these people also think that oil can only go up in price.....

All this info about peak oil is very interesting and from my own point of view I now cycle to work three or four days out of five to try and avoid wasting petrol which is becoming like liquid gold these days.

We may see cars being stolen for a tank full of petrol and not the car itself ... just as in Mad Max....

On a different note during a recent holiday in Wales I came across diesel priced at 99.8 p per litre. Has anyone seen it higher anywhere else ???

[bottletop]

Why not just buy oil then, Jackass ?

<{POST_SNAPBACK}>

@ Alright Jack: When I want an opinion equal to yours I'll ask my dog...alright?

Edited August 30, 2005 by bottletop

[RichardW]

Oil exceeded $70 today, but the important bit in the piece of news below is that supply can no longer keep up with demand.  $70 will seem very very cheap in a couple of years time.

We were discussing a paper by Anderew Oswald, an Econmist at Warick, which led me to follow some link to this interesting chart on his web site.

http://www2.warwick.ac.uk/fac/soc/economic...ilunemq2004.pdf

Quite a strong correlation between the Oil Price and Unemployment. Draw your own conclusions...

Richard.

[malco]

I see The Economist is still clinging to "the market" to wave the magic wand:

"Even so, with demand growing strongly and supply unusually tight as a result of years of inadequate spending on exploration, development and refining capacity, any serious supply disruption would push prices yet higher. The basic fact is that the equilibrium price of oil has risen: analysts at Goldman Sachs expect oil to fetch an average of $68 a barrel next year and $60 for the next five years. In the long run, such high prices will encourage exploration and bring forth increased supply that will eventually dampen prices, but this will take time."

(from: http://www.economist.com/displaystory.cfm?story_id=4321834)

So relax, kiddies, big mama market will come to the rescue.

Economists make me sick. The only justification for the subject is to gratify the vanities of smug little babes who are never surprised and never wrong.

I wonder how they'll explain Peak Oil away when it actually happens...

[cgnao]

Panic buying in response to disruption and physical market price spikes exceeding future prices.  Another very worrying sign that dwindling supplies can no longer match soaring demand.

<{POST_SNAPBACK}>

More of the same:

New York Gasoline Soars to a Record: World's Biggest Mover

Aug. 31 (Bloomberg) -- Gasoline futures rose as much as 13 percent, the biggest fluctuation of any commodity today, after Hurricane Katrina shut oil refineries near the Gulf of Mexico, raising prospects for $3 a gallon at the pump across the U.S.

Some refiners and wholesalers are restricting the amount of fuel retailers can buy. U.S. Energy Secretary Samuel Bodman said that the government approved one release of oil from the Strategic Petroleum Reserve and is reviewing other applications. Tapping the reserve will do little to boost gasoline production.

``Release of the SPR isn't going to get the refineries back on line or get the electricity running,'' said Peter Beutel, an energy consultant and president of Cameron Hanover Inc. in New Canaan, Connecticut. ``Releasing the SPR is the best we can do, which is a sad commentary on our preparedness for this kind of disaster.''

Gasoline for September delivery rose 18.55 cents, or 7.5 percent, to $2.66 a gallon as of 11:41 a.m. on the New York Mercantile Exchange. The price reached a record $2.80 a gallon in earlier trading. Prices soared 20 percent yesterday, the biggest single-day increase since the contract began trading in 1984.

Regular-grade gasoline, averaged nationwide, rose 1.5 cents to a record $2.619 a gallon yesterday, according to data released today by the AAA, the nation's largest motoring organization. Pump prices are 41 percent higher than a year ago.

``A retail price rise of 65 cents in the north and $1.10 a gallon in the south is'' likely by the weekend, Beutel said.

Crude oil for October delivery fell 66 cents, or 1 percent, to $69.15 a barrel. Futures touched $70.85 yesterday, the highest since trading began in 1983. Oil is 64 percent higher than a year ago.

Edited August 31, 2005 by cgnao

[cgnao]

Watchdog warns of global energy crisis

IEA chief says heightened buying of E.U. gasoline could lead to a global energy shortage.

September 3, 2005: 12:29 PM EDT

BERLIN (Reuters) - The head of the West's energy watchdog said in an interview on Saturday that Hurricane Katrina could spark a worldwide energy crisis if damage to U.S. refineries led to a big increase in U.S. purchases of European gasoline.

"If the crisis affects oil products then it's a worldwide crisis. No one should think this will be limited to the United States," Claude Mandil, head of the Paris-based International Energy Agency (IEA) told German daily Die Welt.

"They are already buying gasoline in Europe. If the refineries are damaged, that will only increase. Then this will become a worldwide crisis very quickly."

Mandil told the paper that high oil prices represented a risk for global economic growth and urged consumers to alter their behavior to save more energy and limit the fallout.

Poor countries were bound to suffer most from a recent surge in energy prices, which has been aggravated by Katrina and the shortages it has caused, he said.

On Friday, the IEA launched a rescue plan to ease those shortages, saying its 26 members would release two million barrels per day of oil over a 30-day period.

U.S. gasoline prices have spiked by nearly a fifth over the past week, pushing up fuel prices around the world.

Edited September 8, 2005 by cgnao

[malco]

What disturbs me about this is that the profligate waste of oil in support of spoiled lifestyles in the mature economies - especially in North America - is denying oil to poor nations and developing nations. They lack our buying power, bluntly put, so we leave them empty handed at the great auction that is the global market for oil. Supply and demand the economists will say, and so it is.

It has been noted on specialist sites that in countries like Eritea, Indonesia, the Philippines and elsewhere the oil price is already wiping out even basic levels of mobility and causing political strife. We could see a host of dangerous, reactionary governments appearing all over the world simply because in the mature nations the political class hadn't the guts to lay it on the line what persistent excessive transport consumption would do.

The implications for the price of food is also very worrying. I wonder how long it will be before the Great and Good are appealing to us to save the starving millions, yet without having the guts to say to our faces that it is our refusal to change lifestyle that caused the starvation.

I doubt that Peak Oil will be the neat bell curve of the theory. Instead, it will be a series of crises caused by hurricanes, or political storms, or shipping disasters, or whatever stressing the supply, followed by relief as new fields are brought on line or a spike in prices hammers demand in the poorer nations. This sequence of dramas will mask the fundamental that new oil is not coming on line fast enough to replace depletion of existing fields and meet rising demand. These crises will get more and more common and more and more serious, but I doubt that the basic concept of Peak Oil will become widely known. Even when decline sets in, the public will probably blame the bankers or the oil companies, or the Chinese .

[Blue Peter]

I doubt that Peak Oil will be the neat bell curve of the theory. Instead, it will be a series of crises caused by hurricanes, or political storms, or shipping disasters, or whatever stressing the supply, followed by relief as new fields are brought on line or a spike in prices hammers demand in the poorer nations. This sequence of dramas will mask the fundamental that new oil is not coming on line fast enough to replace depletion of existing fields and meet rising demand. These crises will get more and more common and more and more serious, but I doubt that the basic concept of Peak Oil will become widely known. Even when decline sets in, the public will probably blame the bankers or the oil companies, or the Chinese .

<{POST_SNAPBACK}>

I'm sure that you're right, it won't be a neat bell curve, but something with lots of wobbles. However, the assumption is that if you don't look at the detail, it's roughly a bell curve.

However, the bell curve theory has been developed for smaller entities than the world (single wells, fields, or countries, most spectacularly, the USA), when there has always been somewhere else on the upside of the curve to pump out even more of the black stuff. When the whole world peaks, there's nowhere else (of an equivalent size) able to take the strain, so, empirically, we're in a new situation. The bell curve theory (hypothesis or whatever) may not stand up to such a test.

Peter.

[Smurf1976]

I've been thinking that we'll see production resemble a bell curve with quite a bit of ripple on it due to disasters etc.

But the price will IMO swing about wildly as the global economy goes into recession (causing prices to drop) but then bumps into the ever declining oil supply ceiling whenever a "recovery" starts to take place thus plunging the economy back into recession.

I'm very doubtful that the masses will ever truly understand peak oil and even less convinced that they will understand peak gas. How would any politician explain the massive waste of gas, as the most readily available substitute for oil, by using it to generate baseload electricity?

[bottletop]

As far as poorer countries lacking access to oil goes, it can only fall on the oil producing nations to subsidise the price of oil to poorer nations and charge rich western nations more for their supply. Expecting the west to do anything to lighten the load on poorer nations as we head towards peak oil is a non starter.

Perhaps Iran's upcoming oil bourse will be a step in the right direction towards eventual rationing/tiered pricing of oil.

Certainly things will look better for europe and worse for america if the trading is denominated and settled in euros. An america can do nothing about iran militarily as Iran has supposedly got a large number of russian supersonic anti-ship missiles against which US ships have no defense and with which they could easily shut the straits of hormuz.

Edited September 9, 2005 by bottletop

[cgnao]

http://news.ft.com/cms/s/49cbc224-250d-11d...000e2511c8.html

Crude surges after drop in inventories

By Chris Flood

Published: September 14 2005 12:29 | Last updated: September 14 2005 20:36

Oil prices up image

Crude oil prices rallied after a larger than expected fall in US oil inventories was reported by the Energy Information Administration in the second week after Hurricane Katrina ravaged the Gulf Coast.

ADVERTISEMENT

The EIA said crude oil inventories fell 6.6m barrels in the week ended September 9, against the consensus forecast of a decline of 1.4m barrels.

However, analysts said the fall in crude inventories was likely to prove a temporary blip as the release of reserves by IEA members will shortly push up stock levels once more.

Nymex October West Texas Intermediate traded $1.98 higher at $65.09, while IPE Brent for October delivery rose $1.76 to $63.37.

The statement in bold is very very very worrying. Stocks replenished by strategic stockpiles, not production. So what happens when the strategic stockpiles are depleted? By the way the US strategic stockpile is rumoured to be about 700 million barrels i.e. less than 10 days worth of worldwide daily demand.

[EmpiricalBear]

The statement in bold is very very very worrying. Stocks replenished by strategic stockpiles, not production.

bearish as I am, I think that this is a bit hysterical.

1) The whole point of having strategic reserves is to be able to release them during temporary disasters etc. ie: The problems caused by Katrina which are a temporary problem due to damage to refining and extraction. Its there for a rainy day, the rainy day has arrived.

2) The US strategic reserves may only be able to sustain worldwide consumption for 10 days, er... but that is not what its for. Its to provide a buffer for US consumption, not worldwide consumption.

[BoredTrainBuilder]

As far as poorer countries lacking access to oil goes, it can only fall on the oil producing nations to subsidise the price of oil to poorer nations and charge rich western nations more for their supply. Expecting the west to do anything to lighten the load on poorer nations as we head towards peak oil is a non starter.

Perhaps Iran's upcoming oil bourse will be a step in the right direction towards eventual rationing/tiered pricing of oil.

<{POST_SNAPBACK}>

Why on earth should anyone subsidise oil for anybody? You can't be seriously suggesting that rationing could work on any sustainable basis let alone a world-wide one?

In practice of course the simplest and most effective means of rationing will in fact apply: the market will set the price and those that want oil the most will get it by paying the most.

Subsidising this substance at any level is stupid: it will just bring forward the day of reckoning by increasing consumption.

[BoredTrainBuilder]

I see The Economist is still clinging to "the market" to wave the magic wand:

. . .

So relax, kiddies, big mama market will come to the rescue.

Economists make me sick. The only justification for the subject is to gratify the vanities of smug little babes who are never surprised and never wrong.

I wonder how they'll explain Peak Oil away when it actually happens...

<{POST_SNAPBACK}>

If by 'Economists' you mean the people who write The Economist, they have been clear for some years that oil is a finite resource and that future production will be increasingly expensive. But surely there is no question that in the medium term the mechanism they suggest will indeed bring supply and demand back into balance and lower the price, albeit at a higher price than before?

Why does this statement of the obvious make you sick?

[cgnao]

The Peak is nigh

http://uk.news.yahoo.com/21092005/325/opec...mbing-deal.html

With OPEC quotas no longer in place, it will shortly be evident that there is no more spare capacity.

Oil companies have not invested in more refining capacity because they know crude production will inexorably decline.

[malco]

The Peak is nigh

http://uk.news.yahoo.com/21092005/325/opec...mbing-deal.html

With OPEC quotas no longer in place, it will shortly be evident that there is no more spare capacity.

Oil companies have not invested in more refining capacity because they know crude production will inexorably decline.

<{POST_SNAPBACK}>

There is a flaw in the view that the problem is in refining capacity. A bottleneck in refining would cause downstream products to price surge but I fail to see why crude prices would go up. If anything crude might go down as there would be excess capacity building up behind the refinery bottleneck. So the high oil price must in fact be due to basic supply shortage at source: the well-head.

Have I got that right? If not, please explain how it all works out.

My reference to economists as "bloody babies" was unnecessarily derisive, but was intended to convey their complacent disregard of the reality that depletion means global production goes into decline AND THERE IS NOTHING YOU CAN DO ABOUT IT.

If you find yourself on the sinking Titanic then you must take to the lifeboats. If there are not enough lifeboats then some are going to freeze to death and no blurbing by economists about "human ingenuity is infinite" will magically conjure some "equivalent resource" to replace lifeboats, no matter how intense the demand, because there is no alternative. Given time, the ingenious could rip up the decks and make new lifeboats, but the point is, once peak oil hits, time is the one thing we won't have. It will be too late to avert at least some very hard decisions about who will have and who will have not. The decisions will be made by "the market", not by humans. The Market doesn't care what distress this causes. That's what the economists don't tell you.

There are alternatives to conventional oil, but there are no alternatives to cheap oil. The alternatives are energy intensive and so even to the extent that they replace in volume the depletion of conventional oil, they do not replace the low entropy of easy, cheap oil. This issue of energy quality is the key to appreciating the meaning of peak oil. As depletion progresses, it seems pretty doubtful that production of non-conventionals could be increased enough, because of the requirement to put energy into the process.

There is nothing we can do about it now. The reactions of Gordon Brown and the media to the crisis have convinced me that our societies are not going to be smart enough to understand what is happening to them.

Edited September 21, 2005 by malco