[joewp]

$this->bbcode_second_pass_quote('DantesPeak', '')$this->bbcode_second_pass_quote('Zardoz', '')$this->bbcode_second_pass_quote('Aaron', '.')..Man I wish I believed in...hell...

[ClassicSpiderman]

$this->bbcode_second_pass_quote('jdmartin', 'I')'d say he'd argue that lack of free market (OPEC, Venezuela, Nationalized oil companies, etc) is the reason that the free market can't work it's magic in the case of oil - that if SA et al opened the door, we'd be back to $15 oil.

[jdmartin]

$this->bbcode_second_pass_quote('ClassicSpiderman', 'S')ounds a lot like the apologists for communism who said that the reason why the US was surpassing the USSR economically was because in order for the communist system to work properly, the entire world had to adopt it.
$82 oil is the magic of the free market at work. If there wasn't so much demand for this product, then OPEC wouldn't have as much power as they do now.

[UncoveringTruths]

$this->bbcode_second_pass_quote('', '(')Fortune Magazine) -- We're hard-wired to tremble when oil prices rocket, and the past few weeks have looked like another example of why. Whenever stocks fell sharply, as they did several times, traders blamed the fast-rising price of oil.

But that chain of logic is misleading. The bigger picture shows that the relation between oil and the economy is changing, and we'll have to rewire our brains to understand what's happening. Watching oil prices rise and fall is no longer enough; the key now is understanding why they're moving.

You know something strange is going on when you step back and examine the stock market's performance not of the past three weeks but of the past five years. As oil prices have surged, they haven't knocked down stocks or hobbled the economy. Instead just the opposite has happened: Oil has tripled, yet stocks have roared ahead to new records, and the U.S. economy has grown smartly over the whole period. That is not how things work, or so we learned after oil spikes triggered recessions in 1973, 1980, 1981, and 1990.

The critical insight into what's happening comes from Daniel Yergin, chairman of Cambridge Energy Research Associates and a longtime authority on world energy. "This is a demand shock, not a supply shock," he says. "What's causing it is the extraordinary economic growth of the past few years."

[pup55]

We had this argument a couple of years back:

The economic statistics today count as GDP such things as people suing one another, "infotainment", insurance, and the NBA, in other words, the economy is producing a lot more things that have no "real value" than it was in 1979. If Paris Hilton has to hire a lawyer to bail her out of jail, it counts as GDP.

If you count only the part of the economy that adds value, such as making things, digging things up from the ground and converting them to something else, growing useful agricultural products, and other useful activities that people actually need to live, the statistics are going to be quite different.

[crossthread]

You *missed* a important link with-in the artical....
********************************************
In 2006, Shell spent $855 million on R&D to Exxon (Charts, Fortune 500)'s $733 million. Both Vinegar and Shell Vice President for Unconventional Production John Barry confirm that oil shale is now the biggest piece of the company's R&D budget, though neither will specify exactly how much has been spent. One source briefed by Shell officials puts the total oil shale R&D investment at north of $200 million.

Shell has long been known for its science. It invented the first semi-submersible offshore drilling rig and pioneered the use of steam flooding to maximize oil well production; it's also the industry leader in natural-gas-to-liquids (GTL) technology. Much of its research originates at its Bellaire Research Center in Houston, where Vinegar has spent most of his career.

The lab's most famous alumnus is the late M. King Hubbert, of Hubbert's Peak fame. Hubbert was the first geologist to understand the mechanics of oilfield depletion and the first to make a reasonably accurate assessment of recoverable oil reserves - initially for the U.S. and later for the world. The founding father of peak-oil theory, Hubbert predicted that U.S. production of conventional oil would peak around 1970 (he was right) and that global oil production would taper off after 2000 (he was wrong, though by how much is the topic of heated debate).

Neither Vinegar nor Barry wants to get drawn into a discussion of peak-oil theory. They simply state that the rapid growth in worldwide oil demand necessitates the development of unconventional oils. (Shell has also invested in biofuels and solar power.)

That said, it's no coincidence the oil company Hubbert once called home is the one now making the biggest bet on unconventional oil - not only oil shale but GTL and Canadian tar sands too. Jim Spehar, a former Colorado community-relations consultant for Shell, remembers company scientists and executives talking at length about peak oil - and about oil shale as a potential "bridge" between conventional oil and renewable energy - when he worked for Shell in the late 1990s.

"They definitely believed that the conventional stuff being pumped out of the ground was a declining resource," Spehar says.

CT
http://money.cnn.com/2007/10/30/magazin ... index2.htm

[crossthread]

You *missed* a important link with-in the artical....
********************************************
whoops sry double post..
but gotaa a new linky...
heh heh

THE TRUTH ABOUT OIL
Pain at the pump has plenty of Americans ticked. Chances are, though, they are angry about the wrong things. Here are five myths many people believe about today's oil pinch--and what the real story is.
http://money.cnn.com/magazines/fortune/ ... /index.htm

Look at reason Myth # 3 this is a "kicker!

MYTH NO. 3:

WE'RE RUNNING OUT OF OIL.

REALITY: This one is true. Sort of. Unlike wind or water, oil is not a renewable resource. So by definition we're using it up, in the same way that we are all dying all the time. The real question is, When will it become impossible (or impossibly expensive) to recover enough to meet demand? Answering that question is not easy. New discoveries and new drilling technologies have transformed the science of exploration, which is why global reserves have doubled since 1980 (to 1.3 trillion barrels) even as consumption has soared.

[emersonbiggins]

$this->bbcode_second_pass_quote('crossthread', 'T')HE TRUTH ABOUT OIL

[Eli]

It is not new math it is bad math.

It is very helpful that inflation numbers followed by the fed have chosen to ignore food and energy because if they hadn't done that this new math would look a lot like the old math.

The article also ends with the usual economics 101 argument that we will see prices come down as alternatives and more oil come on the market. This is the mistake every modern economist makes they assume that every thing will respond to economic stimulus.

Basically because we need more we will find more oil, the geology professor down the hall would say different however. The other assumption they make is that for every product there is an equivalent substitute. Again this is not true you there is nothing on earth like the concentrated energy that is contained in oil.

[Lifer]

But look at kiwi fruit or funny t-shirts. I don't see any shortage of these items, and after all, what's really the difference between kiwis and sweet crude?

[joewp]

$this->bbcode_second_pass_quote('Eli', 'T')his is the mistake every modern economist makes they assume that every thing will respond to economic stimulus.

[sicophiliac]

Well if we are on the downward slope past the peak in oil production wont that be a supply shock in itself? Oil is still vital to our economy and even though energy efficiency has improved greatly and electrical grid reliance on oil has decreased its still a matter of time before the high price of oil hits us. 40 or 50 bucks a barrel certainly did not do it but maybe 100 bucks a barrel will. We must remember that these 80-95 dollar oil prices haven't hit the economy yet.. it will take a few months to hit the gas pumps and probably an earnings quarter or two before businesses see these higher costs and see consumer spending affected and decide to slash jobs and or raise prices. I guess we could compare it to taking shots of vodka or whiskey.. a few drinks and your fine... then you hammer down 5 more shots in 5 minutes and for awhile your still able to walk and talk normally until it hits your blood stream and your passed out on the floor.

[FloridaGirl]

$this->bbcode_second_pass_quote('', 'Y')ou know something strange is going on when you step back and examine the stock market's performance not of the past three weeks but of the past five years. As oil prices have surged, they haven't knocked down stocks or hobbled the economy. Instead just the opposite has happened: Oil has tripled, yet stocks have roared ahead to new records, and the U.S. economy has grown smartly over the whole period. That is not how things work, or so we learned after oil spikes triggered recessions in 1973, 1980, 1981, and 1990.

[darren]

$this->bbcode_second_pass_quote('pup55', 'T')he economic statistics today count as GDP such things as people suing one another, "infotainment", insurance, and the NBA, in other words, the economy is producing a lot more things that have no "real value" than it was in 1979. If Paris Hilton has to hire a lawyer to bail her out of jail, it counts as GDP.

If you count only the part of the economy that adds value, such as making things, digging things up from the ground and converting them to something else, growing useful agricultural products, and other useful activities that people actually need to live, the statistics are going to be quite different.

[shortonoil]

sicophiliac said:
$this->bbcode_second_pass_quote('', '
')40 or 50 bucks a barrel certainly did not do it but maybe 100 bucks a barrel will. We must remember that these 80-95 dollar oil prices haven't hit the economy yet..

[DantesPeak]

$this->bbcode_second_pass_quote('shortonoil', '[')b]sicophiliac said:
$this->bbcode_second_pass_quote('', '
')40 or 50 bucks a barrel certainly did not do it but maybe 100 bucks a barrel will. We must remember that these 80-95 dollar oil prices haven't hit the economy yet..

[Twilight]

Yes, drawing on credit lines sounds about right.

Oil rising from $30 to $95 since 2003 along with significant cost increases in other commodities, hasn't killed major importers' economies only because their consumers took on unsecured debt and/or remortgaged their houses to increase their living standards fast enough to outrun inflation. In some cases (specifically the US), they also took a massive pay cut in the form of a declining currency serving to erode purchasing power, and still kept ahead. The remarkable uniformity of the housing bubble across numerous such nations says to me this is a real effect and not coincidence.

The "something for nothing" culture we see on a collision course with reality is absolutely connected to historic availability of cheap surplus energy.

This year, Mr Dodge RAM Weekend Sailor has seen his grocery bill increase 15%, his purchasing power on imported goods fall 10%, his pay rise 3% in line with official inflation figures, yet his standard of living has held steady in spite of his having no savings to draw on. Sure, consumer electronics become 20% cheaper year-on-year, but that's not a monthly household expense.

So where did all this free money come from? Why, from a future which, with a recession on the horizon, does not now appear to exist. And the money wasn't free.

That's how the world bought itself out of higher energy price:, government debt, personal debt, sometimes hiding it. It's a bit early for anyone to declare conventional wisdom overturned. How much longer are these windows staying open? A year? Two?

[yull]

Good post Twilight. The whole state of the world economy now is a joke, much of it built on wealth that doesn't even exist. I do feel like we're the titanic, we've hit the iceberg (peak oil) and are now beginning to take on water.

How long can this doomed ship stay up? Oil production doesn't look to be heading up next year, so the strain and the amount of water gushing in is going to increase. Prices will go up further and shortages will probably increase globally, and it just gets worse from then on.

Oil prices this high MUST be doing damage - price spikes have always caused recessions in the past, it's like the world is in a state of denial and is just sticking their heads in the sand, just covering things up to maintain an illusion of business as usual for as long as possible. The damage will just accumulate over time, before hitting us all at once, probably just around the same time we head off the plateau and down the slope at the other end.

Worrying, worrying times.

[MrBean]

$this->bbcode_second_pass_quote('darren', '')$this->bbcode_second_pass_quote('pup55', 'T')he economic statistics today count as GDP such things as people suing one another, "infotainment", insurance, and the NBA, in other words, the economy is producing a lot more things that have no "real value" than it was in 1979. If Paris Hilton has to hire a lawyer to bail her out of jail, it counts as GDP.

If you count only the part of the economy that adds value, such as making things, digging things up from the ground and converting them to something else, growing useful agricultural products, and other useful activities that people actually need to live, the statistics are going to be quite different.