[Falconoffury]

Is the world being held back from oil shortages due to the release of reserves from places such as Europe and Japan? Are these places only going to release reserves for a while longer while the US fully recovers from the damage from hurricanes Katrina and Rita, or is the problem more global and more systemic at this point in the game? Is damage from the hurricane season becoming more and more a cover story for a simple lack of supply globally?

If the answer to this poll is truly "yes", then consider the implications. It means that the world is living on borrowed time. All that would cause the coming long recession would be reserves either running dry or be no longer sold.

The defining peak oil moment may turn out to be not oil wells no longer being able to meet demand, but oil stockpiles no longer being able to meet demand. We could be looking at a rather harsh and sudden recession if 2-4 million barrels per day is simply withheld globally from stockpiles one day. After that, the economy will have to find a way to survive without growth. The day before the stockpiles are withheld will probably mark the point in human history with the largest amount of fossil fuel consumption, never to be reached again.

[Jack]

You mention the world living on borrowed time - yes, truly. We are like passengers on a great cruise liner that has been mortally wounded by coming too close to an iceberg.

The band still plays...the buffet is well stocked...some dance, while others linger over good food, drink and conversation.

But deep below decks, the engine crew labors feverishly to keep the ship afloat. The captain and officers keep smiles pasted on and avoid frightening the passengers.

A few passengers look nervously about, and count the life boats. There aren't nearly enough.

Throughout the glittering salon, the gaiety becomes a little louder, a little more forced...

Below decks, the water begins to rise.

[Raxozanne]

$this->bbcode_second_pass_quote('Jack', 'Y')ou mention the world living on borrowed time - yes, truly. We are like passengers on a great cruise liner that has been mortally wounded by coming too close to an iceberg.

The band still plays...the buffet is well stocked...some dance, while others linger over good food, drink and conversation.

But deep below decks, the engine crew labors feverishly to keep the ship afloat. The captain and officers keep smiles pasted on and avoid frightening the passengers.

A few passengers look nervously about, and count the life boats. There aren't nearly enough.

Throughout the glittering salon, the gaiety becomes a little louder, a little more forced...

Below decks, the water begins to rise.

[bobcousins]

$this->bbcode_second_pass_quote('Jack', 'Y')ou mention the world living on borrowed time - yes, truly. We are like passengers on a great cruise liner that has been mortally wounded by coming too close to an iceberg.

[NeoPeasant]

$this->bbcode_second_pass_quote('Jack', 'B')ut deep below decks, the engine crew labors feverishly to keep the ship afloat. The captain and officers keep smiles pasted on and avoid frightening the passengers.

[Falconoffury]

I guess most of us can agree that oil production from oilfields is not enough to meet demand at this point in the game. The oil from reserves being released is picking up the slack.

While there is much dispute about the reserves of oil fields, there is no disputing the amount of oil already in stockpiles (unless someone is deliberately lying about their oil stockpiles). The days of economic growth are numbered.

[Tanada]

$this->bbcode_second_pass_quote('Falconoffury', 'I') guess most of us can agree that oil production from oilfields is not enough to meet demand at this point in the game. The oil from reserves being released is picking up the slack.

While there is much dispute about the reserves of oil fields, there is no disputing the amount of oil already in stockpiles (unless someone is deliberately lying about their oil stockpiles). The days of economic growth are numbered.

[Falconoffury]

The original question of this post leads me to my next question.

Let's assume that these stockpiles will one day either become exhausted or just stop being sold on the market. Let's assume that this will hit the market with a sudden reduction of 3 million barrels per day of oil globally. Let's assume that such a case will cause a sudden shock to the economy.

What kind of timeline can we expect for this shock? Are we talking less than 6 months? Less than a year?

[uNkNowN ElEmEnt]

I don't remember the exact details but OPEC nations have a quota based on the amount of their reserves taht determines how much they can sell. Saudi Arabia was caught overstating its reserves so they could sell more.

So just cause its out of the ground doesn't mean they will be honest aobut what their actual reserves are. I will try to find a link for this.

[uNkNowN ElEmEnt]

$this->bbcode_second_pass_quote('', '.')..Simmons’s belief is that Saudi has been overstating its oil reserves for years, its biggest oil fields are in decline and it will struggle to live up to its promise to crank up daily output from around 10 million barrels a day to 12 million by 2009 and later 15 million to meet global demand.

He visited Saudi in 2003 as part of a US energy delegation. By the time he left, six days later, he was convinced that the rosy picture the Saudis had painted of their key strategic resource was deeply flawed but he could not yet prove it.

“On the plane back from Riyadh I said ‘Something doesn’t meet the smell test …’ I have made my career out of uncovering illusions and I thought, wouldn’t it be odd if the biggest energy country in the world proved to be an illusion,” he says.

Chairman of Simmons & Co, the independent energy investment bank he founded in 1974, Simmons is about to publish a book – Twilight In The Desert: The Coming Saudi Oil Shock And The World Economy – in which he outlines the fruits of his painstaking research into the true extent of Saudi oil reserves.

Simmons studied some 200 petroleum engineering reports on the biggest oil fields in Saudi, a nation which boasts 25% of world reserves.

[Falconoffury]

I have read news articles telling that Europe and Japan continue to release oil from stockpiles for sale on the open market.

Saudi Arabia is another story completely. They could have been supplementing their oil sales with some oil from their own stockpiles for months. We would never know. They certainly have the stockpiles to fool us for several months.

[Synergist]

First world strategic reserves are negligible compared to actual proven reserves in the ground. They are kept back and released only in major disasters, of which Katrina-Rita was really the first major test of this system, at least recently.

It can offset prices for weeks, maybe even a couple months, but it will have no real effect on Peak Oil. It's a matter of scale.

But for what it is, I think the SPR and the European counterpart did do its job in the most recent crisis. At least give credit where credit is due, and

[Falconoffury]

and?

The question is not whether it will affect peak oil. The question is how will it affect our economy? Oil prices have been going down, but it is because of these stockpiles being sold off.

Where will oil prices be when these stockpiles stop being sold?

[TommyJefferson]

Not much.

[Rod_Cloutier]

I heard that in 2009, vast amounts of crude oil were being stored in ships at sea. That due to production demands the Saudi's and others had no choice but to pump into tankers because there was no place else to store the oil once demand collapsed.

How much of the oil stored at sea has been burned through? How much is still in storage? What is the capacity utilization of oil freighters at sea?

Those fiqures will be a profound indicator of the lead time still available before oil production hits a ceiling again.

[Serial_Worrier]

Bottom line doomers:

* Gas is still hovering around $3/gallon
* Groceries are fully stocked
* Olive Garden is packed on Tuesday night
* highways packed