[mkwin]

I have a hypothesis, which I thought I would put out there.

It seemed this last year that the near-term peakers (Simmons, Campbell. Skebowski etc) had been vindicated. The oil price has reached record heights, production had been flat, and some of the mega fields were accelerating their decline.

I have been studying the price of many industrial commodities since 2002-2003. It seems the price of many have taken off due to the explosive demand of Asia and other rapidly industrializing countries.

It occurred to me this apparent peak could simple be a transition to this accelerating demand.

Oil projects take years to commission, to design the projects, bring in the staff, source the finance, and actually build the engineering project.

What if the oil industry around the world was unprepared for this rapid surge in demand and that is the reason we have had a run up in oil prices (as with every other industrial commodity) along with the decline in the dollar.

The industry now seems to be scheduled to deliver a lot more extra capacity to the world oil market over the next few years.



Source: http://en.wikipedia.org/wiki/Oil_megaprojects

So let us start a discussion. Did the events of 2007 vindicate the near-peakers or was it an illusion and the next few years will see a correction in the oil price with peak being put off to at least 2013 or, if capacity continues to be added, indefinitely?

[like_the_dinosaurs]

The last time I checked most of these new projects are running months, even years behind aswell as over budget. Yes the industry is moving heaven and earth to put more crude into the market and look what we have.

The writing is on the wall. Cheap energy is over.

[FreddyH]

$this->bbcode_second_pass_quote('mkwin', ' ')Did the events of 2007 vindicate the near-peakers or was it an illusion and the next few years will see a correction in the oil price with peak being put off to at least 2013 or, if capacity continues to be added, indefinitely?

[mkwin]

$this->bbcode_second_pass_quote('like_the_dinosaurs', 'T')he last time I checked most of these new projects are running months, even years behind aswell as over budget. Yes the industry is moving heaven and earth to put more crude into the market and look what we have.

The writing is on the wall. Cheap energy is over.

[mos6507]

These stats don't tell the whole story. Compare the price of oil when production entered into a plateau to today. For the production numbers to shoot up a little is of little consequence if the price of oil continues to go up, which it will if demand continues to outstrip supply.

[FreddyH]

$this->bbcode_second_pass_quote('mkwin', 'T')here are delays in some projects, yes but are we approaching hubberts peak? That was my question.

[Ludi]

$this->bbcode_second_pass_quote('GASMON', 'W')hy is this oil not flowing

[Gerben]

I do not know. The world is too complex to fit into a simple Hubbert linearization. We might be past. We might be close. We might have several more decades.

I don't think the exact time of the peak is that important. We've already reached a point where oil is only getting more expensive. Where many people can no longer afford to live the way they used to. We're even in an economic crisis partly because states and people overextended their credit in an attempt to maintain business as usual: counting on endless exponential growth. We will never see $ 80 dollar oil again. We'll have to adapt to oil getting more expensive. This will not be easy. The poor are already starting to die.

[Mudpuppy]

"I don't think the exact time of the peak is that important. We've already reached a point where oil is only getting more expensive. Where many people can no longer afford to live the way they used to. We're even in an economic crisis partly because states and people overextended their credit in an attempt to maintain business as usual: counting on endless exponential growth. We will never see $ 80 dollar oil again. We'll have to adapt to oil getting more expensive. This will not be easy. The poor are already starting to die."

Great Post! I do feel people get too hung up on the date issue. Even if the peak is 30 years away, but the increase in production every year is less than the demand growth, than having a late peak is irrelevant. It may have peaked, it may yet peak soon, it may peak way down the road. But that is inconsequential to the real issue of "expensive oil is here and now", and our civilisation is still geared to run on cheap oil and cheap gas. I see in this mornings news that Haiti`s Prime Minister is being ousted due to expensive food prices, and there is more unrest in Egypt over the bread price, and while reading those news articles I carelessly burned and ruined a pot of Basmati rice I had on the stove. Expensive oil is a bottom up issue as it affects the poorest first and then trickles through its effects to the wealthier economies. (There was another train of thought I was thinking of here, but my burned basmati means there may be a food riot in my kitchen if breakfast isn`t done on time, so will leave that for now).

[BigTex]

To me, large scale deepwater exploration, oil sands and oil shale are prima facie evidence that we are at or near the peak.

To me, those activities are sort of like using your dinner roll to sop up that last little bit of gravy after you've eaten most of the food on your plate.

I'm sure there will be price fluctuations up and down going forward, but it's hard to imagine that the future holds a price collapse and oil glut like we saw in the 1980s following the 1970s price shocks.

[mkwin]

$this->bbcode_second_pass_quote('BigTex', 'T')o me, large scale deepwater exploration, oil sands and oil shale are prima facie evidence that we are at or near the peak.

To me, those activities are sort of like using your dinner roll to sop up that last little bit of gravy after you've eaten most of the food on your plate.

[Twilight]

$this->bbcode_second_pass_quote('mkwin', 'D')id the events of 2007 vindicate the near-peakers or was it an illusion and the next few years will see a correction in the oil price with peak being put off to at least 2013 or, if capacity continues to be added, indefinitely?

[evilgenius]

When making your calculations based on price in dollars don't forget to include the possibility that the dollar will recover. If the world economy enters a deflationary spiral the dollar will probably recover against most currencies. If that happens calculations based on price and not barrels per day will become skewed. If that happens the currencies that match up the worst will see an increasing inability to compete so their share of demand will decrease. Correspondingly the best matched currencies, probably the financially connected newly elite, should see an improvement in their ability to compete. I expect China to come out very well and the US fortunes to rise. Europe will get screwed. The new power base would be able to dictate to OPEC in the same manner that the US was able to dictate after the oil crisis of the 70's. They will have that chip as well as the added chip of having suckered the OPEC countries, with their huge dollar wealth, into buying so many crap securities from the Fed that a very real part of their future return is reliant on them cooperating in the new scheme, even if it works against them.

[mkwin]

$this->bbcode_second_pass_quote('Twilight', '')$this->bbcode_second_pass_quote('mkwin', 'D')id the events of 2007 vindicate the near-peakers or was it an illusion and the next few years will see a correction in the oil price with peak being put off to at least 2013 or, if capacity continues to be added, indefinitely?

[Gerben]

$this->bbcode_second_pass_quote('mkwin', 'W')ell the plateau since 2004-2005 appears to be over.

[threadbear]

What if....as the new projects reach completion, Chindia starts to decline economically, isn't able to usher millions more into it's small middle class, and demand drops? The price of oil in euros might drop appreciably, even if oil has peaked.

[funzone36]

Anyone like me knows that we're already at peak. This peak (plateau) will extend until 2010 and then enter terminal decline. Goodbye growth.

[hornofhubris]

The graph clearly shows the dramatic rise in other liquids. Does
this include ethanol? With 25% of US corn crop fermented and
distilled into ethanol to burn in motor vehicles I am unconvinced.
If this is the case let's have the discussion on petroleum using
only petroleum fuels and not add in biofuels or coal to liquids
to hide the fundamental baseline of petroleum only production.

We have had a President and VP go abroad and essentially
beg for more oil production this year, are they less informed
than we are, or privy to poorer data?

We are still very much in a period where temporary manipulations
of unsustainable factors can move the graph line around such
as to prevent a clear enough set of data to interpret.