[FaceDown]

There are certainly some confused and/or incorrect statements in that article. However, the headline may very well be correct regardless of the reasoning.

One of the things that anybody over 30 years old in the oil and gas business can tell you is that all booms bust. And when they bust they bust big time. Sometimes it is a supply issue (1970s) and at other times it is a global economic health issue (late 1990s).

Peak oil is knocking on the door, but financial chaos from regular human greed (banks, governments, etc) has already sneaked in through the window and is rifling through our stuff at this very moment.

[Revi]

According to the oil drum we have about 4200 gallons left per person on the planet. That means that if we all drove cars that get 20 mpg we have enough left to drive 84,000 miles.

Most of the world doesn't drive cars, but that's the amount left if they did.

[shortonoil]

Revi said:

$this->bbcode_second_pass_quote('', 'A')ccording to the oil drum we have about 4200 gallons left per person on the planet. That means that if we all drove cars that get 20 mpg we have enough left to drive 84,000 miles.

Most of the world doesn't drive cars, but that's the amount left if they did.

[burtonridr]

$this->bbcode_second_pass_quote('article', 'B')ut sooner or later the world won't keep paying those prices: Eventually, the price must fall back to the cost of that last barrel to clear the market.

[Ludi]

$this->bbcode_second_pass_quote('', ' ')We just know that it will appear.

[burtonridr]

I dont know, he could be right, it may drop a little, it may rise substantially...

It all depends on how many people get choked to death by the price and how much of the demand dies off. It will find an equilibrium.... But who know where that will be.

But I dont think it will drop because new oil will not come online quick enough to shore up the equilibrium it has currently leveled off at.

[jdmartin]

I've come to the conclusion that most economists are other-school dropouts. They're simply jackasses. Equating a finite product buried beneath the ground with the infinite supply of make-believe financial instruments or housing is just stupid.

[Heineken]

And here I was thinking CNN was our friend. Interviewing Revi and all that.

Probably the left hand doesn't know what the right hand is doing. Or maybe there's an internal battle at CNN---the old fantasies versus the cold new realities.

[Twilight]

$this->bbcode_second_pass_quote('Shawn Tully (Fortune)', 'A')nd so it will be with oil. We don't know where the new abundance will come from, from shale, or tar sands or coal or an OPEC desperate to regain market share. We just know that it will appear. With prices like these, it always does.

[Heineken]

$this->bbcode_second_pass_quote('NoWorries', 'S')hawn Tully (Fortune magazine):

"An earlier bubble is also instructive. In the early 1980s silver prices jumped from $10 to $50 on the theory that the world was facing a permanent shortage of silver. Suddenly ads appeared asking homeowners to bring their tea sets and jewelry to Holiday Inns for a big price. Silver supplies poured from seemingly nowhere, out of America's cupboards, of all places.

And so it will be with oil. We don't know where the new abundance will come from, from shale, or tar sands or coal or an OPEC desperate to regain market share. We just know that it will appear. With prices like these, it always does. ..."

Although I am not a pessimist, and not entirely convinced Peak Oil is here just yet (I think current valuations are mostly due to weak US dollar, and monetary policy) I must say this item left me even more skeptical about his unbridled optimism. Does Tully think oil will suddenly come gushing forth from people's kitchen cupboards?

Also, I fail to see the analogy with the housing or tech markets. Unlike housing or technology, there is a finite supply of oil. There is not a finite supply of housing or new technology.

As for his final lines ("we just know it will appear") that strikes me as blind faith.

[NoWorries]

$this->bbcode_second_pass_quote('burtonridr', 'I') dont know, he could be right, it may drop a little, it may rise substantially...

It all depends on how many people get choked to death by the price and how much of the demand dies off. It will find an equilibrium.... But who know where that will be.

But I dont think it will drop because new oil will not come online quick enough to shore up the equilibrium it has currently leveled off at.

[BigTex]

That figure for the number of gallons of gas left per person is like a deluxe double dip of doom served in a poop-flavored cone.

[Revi]

According to the oil drum we have about 4200 gallons left per person on the planet. That means that if we all drove cars that get 20 mpg we have enough left to drive 84,000 miles.

Most of the world doesn't drive cars, but that's the amount left if they did.

[TheDude]

$this->bbcode_second_pass_quote('Twilight', '')$this->bbcode_second_pass_quote('Shawn Tully (Fortune)', 'A')nd so it will be with oil. We don't know where the new abundance will come from, from shale, or tar sands or coal or an OPEC desperate to regain market share. We just know that it will appear. With prices like these, it always does.

[burtonridr]

$this->bbcode_second_pass_quote('NoWorries', '
')
No, with respect, he definitely is not right about oil just "appearing" out of nowhere. That is a bizarre and absurd sort of thesis that would earn an "F" on any undergraduate essay....

$this->bbcode_second_pass_quote('Mechler', 'I') think this sums up the gist of the article...and why the author is dead wrong.

$this->bbcode_second_pass_quote('', 'B')ut if you stick to basic economics, it's clear that the only question is when - not if - prices will succumb.

[DantesPeak]

$this->bbcode_second_pass_quote('OilFinder2', '')$this->bbcode_second_pass_quote('Mechler', 'I') think this sums up the gist of the article...and why the author is dead wrong.

$this->bbcode_second_pass_quote('', 'B')ut if you stick to basic economics, it's clear that the only question is when - not if - prices will succumb.

[copious.abundance]

$this->bbcode_second_pass_quote('DantesPeak', 'W')hat you and many others have said, simply put, is that if the price of oil rises, then is must fall later. Then it would also be logical to say if the price of oil falls, the price will rise later as demand is increased.

Ok, I agree with the cycle theory. Yes we are going to have up and down cycles. That doesn't explain why there will be a bust. Why is there any more chance of a bust than rapidly soaring prices?

[cube]

It looks like OilFinder2 just got:


DantesPeak does a good job explaining things.

[copious.abundance]

$this->bbcode_second_pass_quote('cube', 'I')t looks like OilFinder2 just got:


DantesPeak does a good job explaining things.