[Aaron]

Often overlooked in the grand scheme of things, is the dependency of oil producers on their own products.

We tend to look at the downstream effect of higher oil prices on the various markets which are dependent on the products refined from oil. If this logic is correct, that as oil's price soars higher the price of these products which depend on oil also rise, then the same logic must hold true for oil production itself.

This feedback loop means that as oil becomes more expensive it becomes even more expensive to locate, extract & produce that oil. Which in turn, causes even higher oil prices, which again raises the cost of oil production.

You get the idea...

This compounding effect becomes more & more pronounced the higher the relative price of oil climbs, creating a cascading effect which will eventually lead to price "super-spikes" where large jumps in price may happen very quickly compared to traditional inflation.

Because markets can't adjust quickly to these super-spikes, the potential for collapse of markets becomes a realistic fear as oil continues it's meteoric climb skyward.

Your dog wants blissful ignorance.

[MD]

Those that wave off ERoEI as not particularly important should pay close attention.

[cube]

$this->bbcode_second_pass_quote('Aaron', '.')...
This feedback loop means that as oil becomes more expensive it becomes even more expensive to locate, extract & produce that oil. Which in turn, causes even higher oil prices, which again raises the cost of oil production.

You get the idea...
....

[Rage]

I believe this is precisely why there has been little reinvestment into additonal infrastructure and facilities. I forget the exact statistics but the last refinery was built in the states when? How old are the tanker fleets?

This is also why the oil majors can create such massive profits - the infrastructure investments have long ago paid for themselves. The fields that are still under corporate control just pump out money. Why reinvest when you're posting earnings in excess of 10 billion dollars.

[pup55]

Here is a graph for you,data from:

MEPS

It's the price per ton of rebar over the period between December of 06 and February '08

This is not the high-tech steel it takes to build refineries, mind you, it is the cheap steel that you have to have in order to build anything.

Looks like you're right.

[threadbear]

$this->bbcode_second_pass_quote('Rage', 'I') believe this is precisely why there has been little reinvestment into additonal infrastructure and facilities. I forget the exact statistics but the last refinery was built in the states when? How old are the tanker fleets?

This is also why the oil majors can create such massive profits - the infrastructure investments have long ago paid for themselves. The fields that are still under corporate control just pump out money. Why reinvest when you're posting earnings in excess of 10 billion dollars.

[pup55]

$this->bbcode_second_pass_quote('', ' ')The refinery and petrochemical project at Paradip in Orissa was initially estimated in 2006 to cost 256.5 billion rupees (about $6.2 billion at the time), but similar projects worldwide have been scrapped due to surging contractor and material costs.

Bankapur said in an interview he was confident that the board would give it the green light to move ahead with the refinery, which is planned to be one of the world's most advanced.

He said that costs have risen, but declined to say by how much.

"We are working on the cost estimates. Steel prices have gone up by around 30 percent. In the next seven to ten days we will hopefully get a board approval," he said.

[joeltrout]

$this->bbcode_second_pass_quote('Rage', '
')
This is also why the oil majors can create such massive profits - the infrastructure investments have long ago paid for themselves. The fields that are still under corporate control just pump out money. Why reinvest when you're posting earnings in excess of 10 billion dollars.

[Duende]

This phenomenon which you're describing Aaron is called "The Law of Receding Horizons." I was just thinking the same thing earlier, and it actually came up in another thread... so maybe we're all on the same page about this.

Some challenge its significance. But, my feeling is that time will show that alternatives will never ramp up significantly. They will become dogs chasing their own tail.

Check out an article on the subject of The Law of Receding Horizons. Interesting stuff.

[threadbear]

$this->bbcode_second_pass_quote('joeltrout', '')$this->bbcode_second_pass_quote('Rage', '
')
This is also why the oil majors can create such massive profits - the infrastructure investments have long ago paid for themselves. The fields that are still under corporate control just pump out money. Why reinvest when you're posting earnings in excess of 10 billion dollars.

[joeltrout]

$this->bbcode_second_pass_quote('threadbear', '
')
The only major threat to majors is that their monumental greed, together with OPEC's shoring up of American banks, will lead to their own demise. I imagine them proceeding lemming like, over a cliff, to the sounds of ringing cash registers.

[Rage]

That is, 10 billions dollars in the first quater alone.

$this->bbcode_second_pass_quote('', 'T')his seems to be a very narrow minded short-term view. Of course those projects pay off when oil prices are high but remember all those decades when it was tough to make a major poject economic.

[joeltrout]

$this->bbcode_second_pass_quote('Rage', '
')
It is narrow minded and very short term but that is, after all, what has gotten our society into this mess in the first place.

[yesplease]

$this->bbcode_second_pass_quote('Aaron', 'I')f this logic is correct, that as oil's price soars higher the price of these products which depend on oil also rise, then the same logic must hold true for oil production itself.

[threadbear]

$this->bbcode_second_pass_quote('joeltrout', '')$this->bbcode_second_pass_quote('Rage', '
')
It is narrow minded and very short term but that is, after all, what has gotten our society into this mess in the first place.

[cube]

$this->bbcode_second_pass_quote('threadbear', '.')..
Is this Big Oil Apologists.com? Sheesh. "it's not oil company's fault" If you work for smaller oil companies, you are as much or more at the mercy of the distorting market and political force of the majors.

[threadbear]

$this->bbcode_second_pass_quote('cube', '')$this->bbcode_second_pass_quote('threadbear', '.')..
Is this Big Oil Apologists.com? Sheesh. "it's not oil company's fault" If you work for smaller oil companies, you are as much or more at the mercy of the distorting market and political force of the majors.

[cube]

$this->bbcode_second_pass_quote('threadbear', '.')..
A little subtlety please. We all know it's finite, that the low hanging fruit has been picked. Does that excuse the rapacious greed that has made the problems far worse? Does it?

[Aaron]

$this->bbcode_second_pass_quote('', 'F')ortunately, oil production tends not to depend on oil prices directly since there isn't much oil used in it.

[yesplease]

$this->bbcode_second_pass_quote('Aaron', '')$this->bbcode_second_pass_quote('', 'F')ortunately, oil production tends not to depend on oil prices directly since there isn't much oil used in it.