[Duende]

Gandalf the White wrote:
$this->bbcode_second_pass_quote('', 'G')eo-political Peak Oil - 1940? point at which scarcity begins driving international relations

[jlw61]

What an interesting idea. Thanks!

First the superspike... while a hurricane can really cause havoc, they usually only mess things up for a few days or a weak. Yes, there have been some recent exceptions, there always are, but typically a hurricane rips through and things are back up in a few days.

So a hurricane is possible but it would be so much more effective to couple that some other event. Such events could be a new front on the war, people suddenly figure out this PO thing and go ape, a big refinery fire, a terrorist incident, a sudden drop off of oil production due to depletion, Saudi Arabia finally admitting Ghawar has peaked and they won't be able to exceed current production levels, ever. I don't forsee a superspike this year without at least two mid to long term events happening close together.

Second, will a super spike signal the arrival of 'practical peak oil'...

The short answer is 'maybe'.

The long answer is 'maybe'.

Remember there are a lot of people working very hard, trying to become the next Bill Gates by inventing some sort of gasoline replacement. While I do not think much of their short term success and am somewhat suspicious now of their long term success, miracles do happen. With that said, a superspike could simply be some of the above stated factors coming together or it could be the public finally allowing the idea of peak oil to sink in and take a moment from their telly to contemplate the ramifications. If that happens, yeah, that's it.

[americandream]

Lets not forget the Olympic Games in China. That's bound to have an effect on Chinese fuel needs.

[BigTex]

If you look at the direst predictions from the 2003-2005 period, they described a "super spike" scenario (usually political/military events) as taking oil all the way in the $60 range, maybe even briefly into the $70s.

So what a "super spike" looks like depends on where you are standing.

$120 a barrel sure looks like a super spike, given how quickly we've gotten here. Also, the fact that there has been no significant international political or weather event driving it is cause for a lot of concern, I think.

It can always go higher, but $120 feels a little frothy. I think $100 is probably the floor from here on.

I think it will be a while before we break $160.

Famous last words.

[bodigami]

I think the superspike, if it happens, will be €100 ($160 by the time it happens)... but this is just a guess.

[dorlomin]

I was convinced the floor was $90 I am still sure that once everyone burns through there hedging and credit that airlines and consumers will start dropping out of the market and dropping the price. That and people buying smaller cars.

On the otherhand eportland is going to be a kick in the proverbials. There economies are flush with money, or would be if they did not have the dollar chained round there currencies necks.

[cube]

Why don't we just keep things simple and just call it "peak oil".

5 years ago being a PO believer was not a sexy thing to be; 90% of everybody laughed at you. The naysayers said PO was a 100 years away or we'd all be driving electric cars by then. It's nice to be vindicated. IMHO I think the reason why words like "political peak oil" is being tossed around so much these days is because the naysayers were WRONG and they just have trouble admitting it. So they feel compelled to backpeddle by inventing new words. Sheeesh! Why can't people just admit it when they are wrong? I'd have more respect for them.

I won't name any naysayers: you guys all know who you are.

[Ryno]

Consider this: every dollar in crude oil price represents about 2.4 cents. So a superspike of a mere $250 means another $2.88 added to the price of finished products like gasoline, diesel. So that puts the US at around $6.40 a gallon on gasoline. Still lower than almost all of Europe today. We will certainly see some demand destruction at that price, but I think only enough to bring us closer to European numbers. But even at that level, we probably won't reach the Euros on consumption because we simply don't have the mass transit infrastructure, or the close proximity of work, home, family, as is the case in Europe.

Of course it would be myopic to look at the situation purely from an Ameri-centric vantage, so what about the rest of the world? Non subsidized developing nations will be hardest hit. They're already grappling with high food costs, so the little bit of disposable income will not go far and they will flee from their cars in droves. Latin America and most of the far east and eastern Europe will be hit hardest. I can easily see a 3 or 4 million bbl/day drop in consumption from those countries if we hit $250 oil. Then you've got China, India, and the Middle East that subsidize oil. Won't matter to the consumer what oil costs so long as the governments are picking up the tab. But those nations, particularly India and China, will not stand for long, forking out tens or hundreds of billions of dollars in subsidies each year. They'll have to eliminate or at the very least, reduce subsidies.

So, long story short, I think we'll see sufficient global demand destruction at $250 to lower consumption 5 to 10% That gets through year 2 or 3 of the post-peak world. Further out, we'll need higher prices than that to adequately destroy demand to levels of greater than 10%. Confounding factors as we get much past 2 or 3 years out will be: a) global economic health (or lack of) and b) any reasonable, suitable sort of replacement fuel that may be able to usurp current petroleum based transportation fuels.

[alokin]

maybe there won't be a lot of summer driving season this year at least in the US?
A superspike won't be that bad as it makes people wake up, and maybe change habbits organize their lives in a different way etc.

[perdition79]

$this->bbcode_second_pass_quote('alokin', 'm')aybe there won't be a lot of summer driving season this year at least in the US?
A superspike won't be that bad as it makes people wake up, and maybe change habbits organize their lives in a different way etc.

[TreebeardsUncle]

Actually, don't think we will be seeing superspikes.

There are 4 variations superimposed onto the oil price behavior.

1 is the business cycle in which recessions occure every 9 years or so these days.

2 is the annual variation with the oil stocks climbing in late winter through early summer, becoming very volatile in July, and then declining into the fall.

3 is the investment cycle which runs around 20 years. The late 80's through the early 00's were a period of very low investment.

4 is the ramp up (not a spike!) due to the effects of peak oil. When world production peaks we will see a sharp increase in the slope of the price increase in oil. That will be an inflection point.

People frequently have difficulty in noting upward trend-lines when they are superimposed on oscillatory behavior (See global warming.)

Geoff
Pulling Rank
MS Physics, UC Davis, 1996
MS Electrical Engineering, UC Davis, 2001
279 Units as a Graduate Student there

Have been investing in oil stocks, particularly deep-water drillers for the past 3 years now.

[yesplease]

$this->bbcode_second_pass_quote('BigTex', '$')120 a barrel sure looks like a super spike, given how quickly we've gotten here. Also, the fact that there has been no significant international political or weather event driving it is cause for a lot of concern, I think.

[MD]

$this->bbcode_second_pass_quote('yesplease', ' ')The rest of the world has seen an increase, but not nearly as much as we have seen, thanks to the fiscal policies of our government.

[yesplease]

$this->bbcode_second_pass_quote('MD', '')$this->bbcode_second_pass_quote('yesplease', ' ')The rest of the world has seen an increase, but not nearly as much as we have seen, thanks to the fiscal policies of our government.

[alokin]

The oil is pegged to the dollar. Isn't it that a super spike in the crude price would sweep lots of money into the US and keeping the economy afloat? There would be a reduction as gasoline prices would eat up a part of this national income.
Isn't it like this: most of the bush administration have their hands deeps in the oil business and gain if the oil price increases?

[Gandalf_the_White]

$this->bbcode_second_pass_quote('alokin', 'T')he oil is pegged to the dollar. Isn't it that a super spike in the crude price would sweep lots of money into the US and keeping the economy afloat? There would be a reduction as gasoline prices would eat up a part of this national income.
Isn't it like this: most of the bush administration have their hands deeps in the oil business and gain if the oil price increases?

[solarpoweredlasers]

$this->bbcode_second_pass_quote('solarpoweredlasers', '
')My next purchases besides accumulating more of the above will probably be EMR (oil) at 11c although i'll have to hold for at least 6 months to see any decent return

[diemos]

80e6 barrels/day x 120 dollar x 365 days = 3.5T$/year to pay for world oil production.

The CIA factbook lists world GDP as 54T$/year so 6.5% of world GDP goes to pay for oil.

At $1800/barrel the entire world economic output would be handed over to the owners of oil in exchange for their black gold so that's the theoretical maximum that the price of oil could reach. (in constant dollars ignoring inflation/deflation).

I'm going to assume that the world polity will not tolerate more than about 20% of world GDP being handed over to the current owners of the oil before that oil is redistributed by force so I'll guess that oil won't go above $360 in constant dollars without a world war.

[Micki]

$this->bbcode_second_pass_quote('', 'A')t $1800/barrel the entire world economic output would be handed over to the owners of oil in exchange for their black gold

[thylacine]

I'm not sure how valid or not the 20% GDP is as a trigger for war, but it's certainly an interesting way of looking at the issue.

I found this site: Mr Dowlings interactive table of the nations of the world , cut and pasted the data into excel and had a look at what sort of pain various countries are in.

At $125 per barrel: Singapore (29%); Cuba (24%); Jordan (18%).

At $200 (possible spike this year?): Syria (24%); Belarus (26%)

The ones to keep an eye on are the non-oil-producing nations, shelling out large chunks of GDP and that sit adjacent to oil producers. Countries like Egypt, Syria, Jordan, Israel, Lebanon?