I don't buy the argument that big oil is denying the peak oil theory because it hurts their profits. Oil as a diminishing resource means that those who can still produce it will make even more money.
If I was a big oil executive I would promote the theory of peak oil to as many people as possible. I'd even purposefully put out trollish comments in the media so that the abiotic believers (like Jerome Corsi) can talk about their conspiracy theories and confuse the sheeple into talking to their governments about digging for the so-called "deep oil" or invest in water-fuelled cars that BIG OIL is supposedly putting down.
But what doesn't make sense is why big oil is denying peak oil. Are they really afraid that an alternative energy source will make their way of life obsolete? What are they afraid of?
If an alternative energy source could truly replace oil and make things go "business as usual", this would have been done a really long time ago. For now, the US is the premier superpower in the world, but it has to import 60% of it's oil from foreign countries. The problem that I have with the US government being in cahoots with "big oil" is this:
IT IS IN THE BEST ECONOMIC INTERESTS OF THE UNITED STATES TO REPLACE OIL AS AN ENERGY SOURCE OR TO MAKE OIL AS INEXPENSIVE AS POSSIBLE
When oil prices plummeted in the 80s and 90s ("The Great Commodities Depression"), the USSR collapsed and the US became unstoppable as an economic and military power.
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Doesn't peak oil help big oil?
Doesn't peak oil help big oil?
by ClassicSpiderman » Thu 14 Jun 2007, 13:37:49
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Re: Doesn't peak oil help big oil?
by MattSavinar » Thu 14 Jun 2007, 14:02:29
Pretend you're an investor. You hear two CEOs give talks, both complete with fancy power point stuff:
CEO A: "We have plenty of this resource and our company is great at finding more!" (insert colorfull graphs)
CEO B: "We're running out and people better prepare to use less." (insert honest graphs)
Which speech will have what effect on the company's respective stock price? I can tell you: CEO A's company will go up, CEO B's company will go down.
CEO A: "We have plenty of this resource and our company is great at finding more!" (insert colorfull graphs)
CEO B: "We're running out and people better prepare to use less." (insert honest graphs)
Which speech will have what effect on the company's respective stock price? I can tell you: CEO A's company will go up, CEO B's company will go down.
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Re: Doesn't peak oil help big oil?
by Twilight » Thu 14 Jun 2007, 15:30:37
You can have it every which way.
You can make a killing as demand rises for a depleting resource.
You can make a killing claiming that there is no end to supply in sight.
They are not mutually exclusive. You can say there is lots of supply if only you could get the investment right (what do you know, lots of people invest!), but at the same time the fundamentals have not changed, the supply/demand situation is whatever it is, so prices still rise and you rake in higher and higher revenues even as you shift declining quantities of lower quality product.
What's more, even as you screw people, they don't want to believe it.
You can make a killing as demand rises for a depleting resource.
You can make a killing claiming that there is no end to supply in sight.
They are not mutually exclusive. You can say there is lots of supply if only you could get the investment right (what do you know, lots of people invest!), but at the same time the fundamentals have not changed, the supply/demand situation is whatever it is, so prices still rise and you rake in higher and higher revenues even as you shift declining quantities of lower quality product.
What's more, even as you screw people, they don't want to believe it.
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Re: Doesn't peak oil help big oil?
by mekrob » Thu 14 Jun 2007, 16:54:54
$this->bbcode_second_pass_quote('', 'A')re they really afraid that an alternative energy source will make their way of life obsolete? What are they afraid of?
If people knew the truth, that it really is running out, then people would probably jump on the bandwagon to get off of it as quickly as possible. They'd dump their SUV's for smaller cars, their small cars for smaller cars or even no cars at all. If you had a dumping of even a couple mpd of oil demand in the world over a short period of time, prices would then plummet and oil companies would lose tens if not hundreds of billions of dollars in profit.
Instead, they sit back and say that they are working on renewables and that oil is going to last for another 40 years (but most people can't actually comprehend what they actually mean). This brings about a sense of complacency. Either "We have plenty of time" or "Let our kids (or the scientists) figure it out". This allows people to stick with their monsterous vehicles for a bit longer, drawing in even more profit.
$this->bbcode_second_pass_quote('', '
')If an alternative energy source could truly replace oil and make things go "business as usual", this would have been done a really long time ago.
Yes, it would have happened had:
1) Energy/Car companies been so ruthless with alternatives such as trams and electric vehicles and renewables.
2) Fossil fuels not gotten billions of dollars worth of taxpayer money while real alternative energy companies haven't gotten jack shit (I say 'real alt. energy companies' because most of the money for 'alternative energy research' is to oil, gas and coal companies). Put them on a level playing field and you'd see a much swifter change over to non-fossil fuels.
I want to put out the fires of Hell, and burn down the rewards of Paradise. They block the way to God. I do not want to worship from fear of punishment or for the promise of reward, but simply for the love of God. - Rabia
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Re: Doesn't peak oil help big oil?
by Qolio » Thu 14 Jun 2007, 17:18:03
By denying the peak oil they ensure that demand for oil remains very high until the peak hits us. People will be unprepared, and they will pay almost anything for oil if there are no alternatives.
Denying peak oil -> More demand -> Higher oil prices
Denying peak oil -> More demand -> Higher oil prices
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Re: Doesn't peak oil help big oil?
by Mircea » Fri 15 Jun 2007, 03:07:26
$this->bbcode_second_pass_quote('Qolio', 'B')y denying the peak oil they ensure that demand for oil remains very high until the peak hits us. People will be unprepared, and they will pay almost anything for oil if there are no alternatives.
Denying peak oil -> More demand -> Higher oil prices
Denying peak oil -> More demand -> Higher oil prices
Except it doesn't work that way.
Demand for oil is elastic in the long term.
Whenever the demand of any product or service is elastic, revenues decrease, not increase.
Suppose a typical family buys 50 gallons of gasoline at $4 per gallon, yielding revenues [not profit] of $200. However, when demand is elastic, a typical family would buy 20 gallons of gasoline at $5 per gallon, yielding revenues of only $100.
Have revenues increased or decreased? Decreased and typically profits decrease as well (although there are possible exceptions).
Demand is elastic for all oil-related goods and the elasticity is dependent upon available substitutes and perceived need.
The substitutes for disposable shaving razors are the disposable cartridges, the metal razor refills or an electric razor. So as the price of oil rises, and the cost of the disposable razors rises because of the cost of oil-related materials and the transportation related costs, people stop purchasing them. If the price of the refills rises too high, then people will begin using electric razors or the metal razor refills.
Same with disposable diapers and dispoable baby wipes. Staring at the credit card bills, the cable bill, the internet connection, cell-phone bill, and gasoline bill, etc, if the price of the baby wipes goes up from $24.99 to $32.99, the baby-wipes are history.
As the price of disposable diapers rises, some people will be forced to use both cloth and disposable diapers, and eventually, they won't be able to afford disposables at all.
As demand for oil decreases, the price will not decrease, but it won't rise sharply. You'll have a more gradual price increase.
Of course, what many people on this forum fail to understand is that we're talking about oils, not oil. There are many different types of oils, used for different things and they aren't in high demand. The amount of oil used in dispoable items, like disposable razors and diapers is miniscule compared to that used in transportation, and they type of oil used in disposable items is different than that used for transportation.
Consequently, you'll notice that those oils sell for 50% to 60% less than other types of oils, like those used for transportation, which are in higher demand.
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Re: Doesn't peak oil help big oil?
by Qolio » Fri 15 Jun 2007, 07:24:57
$this->bbcode_second_pass_quote('Mircea', '
')Demand for oil is elastic in the long term.
Whenever the demand of any product or service is elastic, revenues decrease, not increase.
Suppose a typical family buys 50 gallons of gasoline at $4 per gallon, yielding revenues [not profit] of $200. However, when demand is elastic, a typical family would buy 20 gallons of gasoline at $5 per gallon, yielding revenues of only $100.
Have revenues increased or decreased? Decreased and typically profits decrease as well (although there are possible exceptions).
Demand is elastic for all oil-related goods and the elasticity is dependent upon available substitutes and perceived need.
')Demand for oil is elastic in the long term.
Whenever the demand of any product or service is elastic, revenues decrease, not increase.
Suppose a typical family buys 50 gallons of gasoline at $4 per gallon, yielding revenues [not profit] of $200. However, when demand is elastic, a typical family would buy 20 gallons of gasoline at $5 per gallon, yielding revenues of only $100.
Have revenues increased or decreased? Decreased and typically profits decrease as well (although there are possible exceptions).
Demand is elastic for all oil-related goods and the elasticity is dependent upon available substitutes and perceived need.
Oil demand is not very elastic. Demand cannot be elastic without realistic substitutes, and there will never be substitutes for oil that could be mass-produced in the same amounts. Therefore oil demand remains inelastic (elasticity < 1), and oil company revenues can only increase until production drops very low. Also, the bigger the gap between demand and supply gets, the more inelastic the demand will be.
Your example seems quite optimistic too. There is no way a price increase of only $1 would cause a family to cut their gasoline usage by 60%. Most likely it wouldn't have any noticeable effect. At least the family would not cut their total gasoline expenditures if no substitutes are available.
Even if you were right, it wouldn't change anything. It would still be in BO's best interest to encourage demand and try to make it more inelastic. Best way to do this is to always keep claiming that there's plenty of oil left and there's no need to develop alternatives yet.
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