Peak Oil is You
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Page added on December 19, 2012
Warnings of oil running out are just baloney
How much would you pay for a barrel of Irish rainwater?
Not much I guess, as it is heavily oversupplied despite being told that water is an increasingly scarce resource worldwide.
This baloney about world ending “facts” applies to the oil market too, and anyone betting on oil prices rising continuously are advised to think twice.
Last week Saudi Arabia, the world’s largest producer of oil, cut production. Was that because they were running out it? Nope. Was it because they had passed peak oil levels and face a future riding camels? Wrong again. No, the reason is because they are concerned oil prices are starting to fall. A vast improvement in fuel efficiency across the world, the collapse in natural gas prices due to huge supplies, and the effect of shale oil finds in western geographies are the reasons why oil is on the back foot.
The US, in this context, is strategically important. It is now forecast that the country could produce enough shale oil for domestic needs by 2017. Imagine, instead of being reliant on undemocratic and highly unstable middle east states, the US could produce its own energy. Throw on top of this a number of mega oil finds off places like Norway and Brazil to understand why the bulls in oil markets are getting nervous.
Oil prices have flattened and weakened over recent months despite Iran, a major producer, being almost shut out of global markets as sanctions bite. With competing energy prices in freefall (natural gas especially) you wonder what could happen next to oil prices.
We should be cheering loudly. Ireland, and Europe, is hugely dependent on imported oil. A collapse in its price would equate to a tax cut for companies and consumers alike. It would lower the cost of running economies and provide a stimulant to consumer spending in recession-mired countries.
Contrast this with those who keep telling us the world is running out of oil and we face massive energy inflation. In their world we all need to install windmills on our heads to survive an apocalyptic future.
There is one small problem with that. Wind energy is expensive to produce because it is capital intensive and turbines are expensive.
In fact, you need oil at about $100 per barrel in order to give wind any viability as an alternative source of energy. This is why the UK shoved price increases down consumers throats last month as it rigged market prices upwards to make wind viable.
Imagine now if oil collapses to, say, fifty bucks. You would think that is not possible until realising certain oil fields in places like Iraq and Saudi are still pulling oil up at a cost of about $10 per barrel.
This $100 oil malarkey is a function of an explicit cartel (OPEC), dangerously unregulated commodity oil trading in global investment banks and the background noise of those who think oil will soon be extinct.
Ireland is the equivalent of Saudi Arabia in the rainfall market. It is gushing, available everywhere and accessible almost for free. It is a commodity that, apparently, will disappear across the world shortly and force enormous food inflation upon consumers, according to the same gang that tell us oil is a precious resource.
If they are right, we should be building huge water refineries, establishing a cartel (OWEC, the Organisation of Water Exporting Countries?) and start talking of peak water.
I’m more inclined to bet that oil prices are heading down in a big way as the actions of consumers and governments shift the demand-supply dynamic enough to allow market forces kick in.
Taking oil prices down sharply and removing dependence on the Middle East is, I suspect, a strategic objective of the US. We should all applaud its efforts and ignore the scare mongering that percolates incessantly from the Malthusians.
8 Comments on "Warnings of oil running out are just baloney"
jeff on Wed, 19th Dec 2012 12:39 pm
This is the kind of cornucopian nonsense that impedes nations from ever adressing peak oil honestly and rationally. You begin with a straw man (that its “running out”), and end with false dichotomy.
Leonardo Margueri took a beating this past summer for his “tight oil” spin. He, and you, mention nothing of existing depletion rates, nor net energy decline.
Beery on Wed, 19th Dec 2012 12:40 pm
Oil, unlike Irish rainwater, is not a renewable resource.
Yet another article full of straw men, falsehoods and other forms of sophistry. Because the one thing the cornucopians daren’t engage in is a rational argument.
Hugh Culliton on Wed, 19th Dec 2012 1:39 pm
A false over-simlification of the ramifications of peak oil. No one ever argued that oil is running out. What is running out is cheap, easy-to-access oil, the stuff with an EROEI of 25:1. Our civilization runs on cheap oil and can’t survive on oil with an EROEI of less than 10:1. Kunstler makes the comparison that, as the human body shuts down from dehydration not when it has no water, but when it looses 10% of it’s water.
econ101 on Wed, 19th Dec 2012 3:18 pm
The truth is clear: oil is virtually unlimited. Continually modifying the “understanding” of peak oil as facts show it to be peak malarkey, is an interesting tactic but not convincing. The low hanging fruit is just now starting to be developed in the USA. EROE! = 25:1 = malarkey of the highest order. It is a meaningless, manipulated, political statistic used to line up the programed bots to herald the coming of expensive alternative energy.
rollin on Wed, 19th Dec 2012 3:50 pm
I guess whoever wrote this consistently runs out gas whenever he drives, because nothing runs out in his world.
Of course peak oil is not about running out, it’s a rate problem. Of course oil cornucopians conveniently ignore facts and understand very little.
It’s nice that self-inflated prophets can say how much rain they get locally and then make the leap that the whole world is the same way.
What is this trash doing on this site anyway?
ian807 on Wed, 19th Dec 2012 4:32 pm
Another happy talk article from a newpaper that doesn’t accept comments, but does appear on Google. Pretty obvious web propaganda.
Of course, we’ll never run out of oil (straw man argument), but we are certainly running out of positive net energy FROM oil. But you need to be able to understand basic physics and basic arithmetic to comprehend this, which appears to be beyond the ken of journalists or economists.
shortonoil on Wed, 19th Dec 2012 5:37 pm
“This baloney about world ending “facts” applies to the oil market too, and anyone betting on oil prices rising continuously are advised to think twice.”
Disingenuous or ignorance; probably a little of both. The commonly held belief is that with plenty of reserves, 4800 Gb, we should never run out of oil. Unfortunately, it doesn’t work that way. The quantity of crude that can be extracted is not determined by the size of the reserve, it is determined by the amount of crude that has already been extracted!
This situation arises because of entropy production in the oil production system. The more oil that is extracted, the more energy it takes to extract it. The point is reached when the energy needed to produce the oil becomes greater than the energy delivery content of the oil. This is a calculable quantity, and our study will present it in extreme detail.
Prices will increase along the same curve that they have been following for last 52 years. They will continue to escalate until oil and its products are no longer affordable. Oil prices have increased over 450% in the last decade, and they will continue to increase because the cost of production is increasing. They will continue to increase, and are now doubling every 7.9 years.
The Hill’s Group
GregT on Wed, 19th Dec 2012 6:44 pm
“If they are right, we should be building huge water refineries, establishing a cartel (OWEC, the Organisation of Water Exporting Countries?) and start talking of peak water.”
Um, sorry, not only is the author clueless about peak oil and it’s ramifications, he/she obviously does not understand the severity of the global emergency concerning water supplies.
http://www.inweh.unu.edu/WaterSecurity/documents/WaterSecurity_FINAL_Aug2012.pdf