[Tanada]

$this->bbcode_second_pass_quote('dohboi', 'T')hanks Tanada. Did you see thisarticle about problems with insuring carbon capture and sequestration facilities? A big leak could be quite disastrous.
I like the organic rather than the high-tech approaches to CCS--native grasses, trees...
At 387+ppm we need to both halt further emissions and start sequestering like mad. Almost none of this is happening (deliberately) as far as I can see, and certainly not at the rate the facts call for.
We're still mostly sleep walking into the apocalypse.

[TheDude]

$this->bbcode_second_pass_quote('yesplease', 'I')'m not seeing the permanent demand destruction in oil used for electricity you're referring to.

[yesplease]

$this->bbcode_second_pass_quote('TheDude', '')$this->bbcode_second_pass_quote('yesplease', 'I')'m not seeing the permanent demand destruction in oil used for electricity you're referring to.

[Tanada]

Actually as I can't resist butting in let me mention now that there were news stories circa 2005 that the PRC was using diesel powerplants to power a lot of individual factories simply because they could not build coal fired powerplants fast enough to keep up with the massive growth in electricity demand from their industrial expansion. Since then they have been completing 2 or 3 new powerplants every month. If things are actually slowing down in China at this time I predict that their grid will be able to catch up to demand and pretty soon the factories still running will all be converted over to grid power. Doing that will put a big dent in oil demand inside the PRC, though it now looks like they will store the extra into their SPR, which IMO would be a smart move.

[yeahbut]

$this->bbcode_second_pass_quote('rockdoc123', '')$this->bbcode_second_pass_quote('', 'T')hey aren't driving their SUV's, not towing the RV's and aren't riding their ATV's. Even with gas at $1.75 a gallon the spell is broken. They were yesterday's toys.

[misterno]

Here is what I don't understand. Let's be optimistic and say the depetion rate is %5 instead of %6-9 stated in the original posting. If this has been going on for years then who is coming up with extra oil to the market? Keep in mind that 5% of say 80MM b/d is 4MM b/d and this has been going on for years.

So where does the extra 4MM b/d every year coming from? It is even more than 4MM b/d because oil and gas production has been increasing. So where does the marginal production coming from?

Any ideas?

[seahorse]

Linking a PO thread on a recent Simmons and Hirsch interview. Haven't listened to it yet, but according to those who have, Simmons and Hirsch agree with the gist of this topic which is the IEA nightmare scenario is unfolding due to lack of investment.

PO Topic

[eastbay]

$this->bbcode_second_pass_quote('seahorse', 'L')inking a PO thread on a recent Simmons and Hirsch interview. Haven't listened to it yet, but according to those who have, Simmons and Hirsch agree with the gist of this topic which is the IEA nightmare scenario is unfolding due to lack of investment.

PO Topic

[seahorse]

Eastbay,

Just listened to it myself. What did you think Simmons meant when he said we have until next week to do something?

[eastbay]

$this->bbcode_second_pass_quote('seahorse', 'E')astbay, Just listened to it myself. What did you think Simmons meant when he said we have until next week to do something?

[seahorse]

He just said we have until next week to do something about it. Unfortunately, I have 3 kids running around here today, as well as several of their friends, so its hard for me to concentrate too.

[seahorse]

Simmons brings up another interesting problem, which illustrates just how this credit crisis is leading us to the IEA worse case scenario, and that is the problem of rust, which never sleeps.

The IEA says without investment, decline rates will be about 9% per year. Okay, seems most everyone in the world is mothbolling new projects, rigs are being freed up etc. Profits are down. All this expensive equipment has to be maintained, bc rust never sleeps. Will we have or commit the money to maintain all this idled equipment? Its just an example of how one problem, lack of money, leads to other problems, and they start compounding on each other.

[ki11ercane]

$this->bbcode_second_pass_quote('seahorse', 'S')immons brings up another interesting problem, which illustrates just how this credit crisis is leading us to the IEA worse case scenario, and that is the problem of rust, which never sleeps.

The IEA says without investment, decline rates will be about 9% per year. Okay, seems most everyone in the world is mothbolling new projects, rigs are being freed up etc. Profits are down. All this expensive equipment has to be maintained, bc rust never sleeps. Will we have or commit the money to maintain all this idled equipment? Its just an example of how one problem, lack of money, leads to other problems, and they start compounding on each other.

[eastbay]

$this->bbcode_second_pass_quote('seahorse', 'S')immons brings up another interesting problem, which illustrates just how this credit crisis is leading us to the IEA worse case scenario, and that is the problem of rust, which never sleeps.

The IEA says without investment, decline rates will be about 9% per year. Okay, seems most everyone in the world is mothbolling new projects, rigs are being freed up etc. Profits are down. All this expensive equipment has to be maintained, bc rust never sleeps. Will we have or commit the money to maintain all this idled equipment? Its just an example of how one problem, lack of money, leads to other problems, and they start compounding on each other.

[Tyler_JC]

It's also important to remember that markets have a nasty habit of over-reacting.

The NASDAQ rose from 1,600 to 5,000 over the course of less than 18 months! ('98-'00)

Then when panic set in, the index crashed almost 80% in two years. ('00-'02)

The same happened to oil prices.

We had an orderly increased year over year from 2002 till 2007. Then something broke.



Look specifically at that sharp 2008 spike and drop. It was completely unprecedented.

No oil company executive looked at $147 a barrel as a serious price target but they also assumed that the floor in oil prices would be similar to the price floors of previous years.

Each year it looked like the price floor increased by about 10 dollars. They were budgeting for a worst case scenario of $50-$60 a barrel.

Well, shock and surprise, the markets over-reacted again. Prices have crashed all the way down from $147 to $45 a barrel.

This price level puts pressure on all of the marginal producers and is going to result in a drop off in production.

When the financial crisis passes and the economy begins to grow again, oil supplies will be inadequate to deal with the added demand.

Prices are going to shoot up faster than they did in the 2002-2007 period because the supply cushion just won't be there.

The current troubles in the oil market are just the tip of the iceberg. The nightmare scenario is a permanent increase in the volatility of oil prices.

We went from a flat, fixed price for oil (1968) to an extremely volatile and impossible to predict price for oil (2008).

Welcome to the new reality.

[seahorse]

Agreed Tyler

[Ferretlover]

$this->bbcode_second_pass_quote('seahorse', 'E')astbay, Just listened to it myself. What did you think Simmons meant when he said we have until next week to do something?

[dohboi]

Yes, lovely ferret, that is exactly what he was talking about. But I couldn't quite get why that was going to be the Armagedon trigger.

If Simmons is right this time with his timing, I hope everyone has their preps in place.

I am thinking of giving each member of the family a 50 lb sack of rolled oats and a very warm sleeping bag for Christmas. They all think I'm nuts anyway.

The main point of the talk, as far as I could tell, was that IEA is finally saying something resembling the truth. Instead of just following their economists assumptions that supply would alway meet demand, their geologists finally got off their collective butts and did a field-by-field assessment.

What they found horrified them.

But the people who essentially own IEA wouldn't let them publish the unvarnished truth about the severe rates of decline they see as imminent and inevitable. So they left "bread crumbs" toward the truth for those willing to look for them--things like saying "under extremely optimistic assumptions" before presenting even their grimmest predictions.

But when these geologists speak in person before audiences of people in the industry, they are apparently off the leash and are giving the stark facts to stunned audiences.

Perhaps it is their presentation of said facts to the upcoming OPEC meeting that Simmons think will trigger a severe reaction throughout the major oil-producing regions?