[bencole]

$this->bbcode_second_pass_quote('Lolberg', '
')High Oil Prices = Peak Oil!... So what do low prices mean?

[mos6507]

$this->bbcode_second_pass_quote('pstarr', '
')We have just completed two decades of debt-fueled growth that would have made complete sense on a world of infinite resources. Unfortunately the supply of planet, to turn into stuff, is finite.

[Novus]

$this->bbcode_second_pass_quote('shortonsense', '')$this->bbcode_second_pass_quote('pstarr', '.')

The world did not begin in 2007. This depression has been building since before GW took office. It is a continuation of the dot-com bust of 1999, itself a consequence of the end of the microcomputer revolution.

[shortonsense]

$this->bbcode_second_pass_quote('Novus', '')$this->bbcode_second_pass_quote('shortonsense', '
')
WHAT!!!! In 1999 I bought a computer which is probably slower than the processor in my wife's PHONE nowadays...how did the microcomputer revolution stop in 1999?

[Novus]

$this->bbcode_second_pass_quote('shortonsense', '')$this->bbcode_second_pass_quote('Novus', '')$this->bbcode_second_pass_quote('shortonsense', '
')
WHAT!!!! In 1999 I bought a computer which is probably slower than the processor in my wife's PHONE nowadays...how did the microcomputer revolution stop in 1999?

[Snowrunner]

$this->bbcode_second_pass_quote('shortonsense', '')$this->bbcode_second_pass_quote('Novus', '')$this->bbcode_second_pass_quote('shortonsense', '
')
WHAT!!!! In 1999 I bought a computer which is probably slower than the processor in my wife's PHONE nowadays...how did the microcomputer revolution stop in 1999?

[bratticus]

$this->bbcode_second_pass_quote('pstarr', 'T')he world did not begin in 2007. This depression has been building since before GW took office. It is a continuation of the dot-com bust of 1999, itself a consequence of the end of the microcomputer revolution.

[shortonsense]

$this->bbcode_second_pass_quote('Novus', '')$this->bbcode_second_pass_quote('shortonsense', '
')
Why? We could manufacture it here easy, it would probably just cost more. Its not like we don't know HOW.

[mos6507]

$this->bbcode_second_pass_quote('bratticus', '
')Peak Oil hit the US in 1971. After that the transition has been from a solid economy based on industrial expansion to ever-increasingly phony economy based on, what now? Debt-based equity, credit derivatives and Ponzi schemes?

[sameu]

$this->bbcode_second_pass_quote('mos6507', '')$this->bbcode_second_pass_quote('bratticus', '
')Peak Oil hit the US in 1971. After that the transition has been from a solid economy based on industrial expansion to ever-increasingly phony economy based on, what now? Debt-based equity, credit derivatives and Ponzi schemes?

[AirlinePilot]

$this->bbcode_second_pass_quote('mos6507', ' ') I'm going to enjoy what little normalcy remains.

[AgentR]

PO != High prices.
PO != Low prices.

PO = Volatile Prices.

Who here would be comfortable betting their own future and that of thousands of employees on your ability to guess what the price of oil will be next year.

I can make business plans for $125 oil. I can make business plans for $30. It gets much more difficult when I can honestly say oil could be $150 or $40 next July.

[shortonsense]

$this->bbcode_second_pass_quote('AgentR', ' ')

I can make business plans for $125 oil. I can make business plans for $30. It gets much more difficult when I can honestly say oil could be $150 or $40 next July.

[ralfy]

According to this article,

http://money.cnn.com/2008/10/10/news/ec ... /index.htm

the price of oil has to fall to US$45 per barrel in order to maintain a middle class lifestyle that consumes around a thousand barrels a year, but even at that number it's possible that consumption levels are much lower, so it doesn't matter if the price is low because income and availability of credit may also be low. In a way, we are experiencing the effects of peak oil, i.e., lower levels of industrialization and consumption.

The same article states that the price has to be around $55 or $70 to cover production costs, but Simmons argues that it has to be higher. Given that, if prices remain low, production will certainly be decreased, which is also similar to some of the effects of peak oil. It's also possible that with lack of demand and credit oil production will not recover.

[sihmei]

One shouldn't look at peak-oil in terms of money and price. Money is meaningless - the world contrary to popular belief does not run on money, it never has and never will. It runs on energy. Money is merely a product of energy - if there's no energy, there is no money.

The damage from peak oil will not from how many bits of paper are handed over or how many zeroes and ones being moved about on a spreadsheet - it will be from oil simply not being available to do the work we need it to do. The damage will not be due to the cost of oil but it's absence.

As oil energy shortages start causing our civilisation's incredibly complicated and fragile systems to break down, the demand destruction could be so great the oil price may stay very low - for example it could stay below $20 for years or even decades. If the systems get broken so much we could not generate sufficient demand to raise the price even if we want to. Our physical ability to consume oil is dependent on the incredibly fragile systems that criss-cross the world - when those systems go, the ability to consume oil will go, even if the supply is there.

So oil could be incredibly cheap even while peak oil sends our civilisation spiraling into the abyss.

Money and price, like the rest of economics, is hocus-pocus magical pseudoscience with only the faintest relation to reality.

[mos6507]

Thankfully, there is no shortage of oil right now. There is a shortage of credit, however. Or should I say, too much outstanding debt.

[AgentR]

$this->bbcode_second_pass_quote('shortonsense', 'A') business might lock in a long term contract for its energy supplies, much the way airlines hedge against price changes for their fuel.

[shortonsense]

$this->bbcode_second_pass_quote('sihmei', 'O')ne shouldn't look at peak-oil in terms of money and price. Money is meaningless - the world contrary to popular belief does not run on money, it never has and never will. It runs on energy. Money is merely a product of energy - if there's no energy, there is no money.

[RacerJace]

A few things to consider regarding peak oil and prices...

1. As mentioned by others on this thread, peak oil is primarily referring to a production peak. It is both a geological limit and a net energy limit (EROI).
2. Market prices affect economic activity. If the price of oil is too high demand drops and marginal businesses disappear when their costs rise too high. Demand ultimately falls to a new lower equilibrium.
3. There is a lag in the supply chain (well to ship to refinery to distribution of fuel and other FF products to the consumer). So as demand drops there will be a short term glut driving prices down until eventually the supply is reduced to match the new level of demand.
3. If credit dries up (i.e. banking systems collapse, derivatives evaporate and futures markets unravel) the "virtual demand" also dries up further driving down the spot price.
4. Deliveries of oil also become constrained by a lack of credit as shipping companies have difficulty getting a line of credit to conduct business. Shipping is held up and time on the water increases which is an additional cost holding up the productive output otherwise generated by burning the oil in the tanker (i.e. idle inventories cost money)

But none of these things change point 1. The amount of oil left in the ground, the rate at which it can be produced and the amount of effort/energy required to bring it to market are at a plateau (roughly the 50% mark). From here on until the next geophysical/biologic event occurs (like the one that lead to the accumulation of oil million years ago) there will be a negative production rate for oil and as a consequence a perpetual ratcheting down of the global economies and global population (after an initial lag period).

Hope this answers your question...

[shortonsense]

$this->bbcode_second_pass_quote('RacerJace', 'A') few things to consider regarding peak oil and prices...

1. As mentioned by others on this thread, peak oil is primarily referring to a production peak. It is both a geological limit and a net energy limit (EROI).