Peak Oil and investing in oil companies and or other companies

[Phone Booth]

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you are right. based on what you say, peak oil is indisputable.

but you've missed a major factor that makes it unlikely, and one factor that has made peak oil a joke since inception. at every point in time since the origination of peak oil, there has been the theory that the amount of reserves in the ground and rate of refinement, extraction etc. will never meet demand by year X and by year Y where Y>X, there will be no oil left.

but year Y keeps getting pushed back? why?

because innovation and demand elasticities aren't proporly corrected for.

the human ability to respond to a falling commodity supply aren't easy to deal with and haven't (to my knowledge) been studied to the point of decent estimation.

every time period peak oil says "given current trends" or "given current levels of projected dmeand growth and estimated supply growth" etc. they don't take into accound basically random innovation in the future between now and time Y.

at time X, oil pirce will increase since demand won't be met. but as price rises, the incentive to innovate and alternate usage increases. other technologies become attractive. it isn't that we CANT run out of oil...it's simply that we wont, EVER run out of oil.

the reason is because as the last drop of oil comes closer and closer to reality, the price would increase higher and higher such that fewer and fewer people could and would want to buy it at that price.

those that do, have to pay that high price. but they will, as the price gets higher, be incented ever more strongly to substitute or innovate.

it is what has always happened and what will likely continue to happen.

this is why peak oil has kept pushing back Y and why, in fact, Y will never arrive.

even with a massive shock somewhere, people will drive less, consume less oil as price becomes ever higher. govt may even be forced to step in if the shock is severe enough (1973).

this explanation i've provided isn't my own, i learned about it reading and getting trained. but it makes the most sense.

the main problem/issue is the degree to which we depend on oil for plastics, and really everything in our lives.

we will have a massive demand shock for alternatives as well if the supply shock for oil happens (i.e. all oil refineries or pumps blow up simultaneously or something).

their prices will rise but not by as much as the real deal: oil.

so there you have it.

why peak oil will almost certainly never come about and almost certainly never be correct (just as it has been incorrect and its predictions proved patently wrong time and time again)

Barron

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I think you're mixing two theories - peak oilers don't, in general, talk about running out of oil - it's strictly a theory about extraction capacity and I think there's a good reason to believe that we're near the global peak.

As for the reduction in quantity demanded due to increase in price - that's not really the realm of peak oil theory, but rather something for economists to ponder. It's very difficult to imagine at this point what could replace petroleum on a large scale and the infrastructure we have pretty much ensures that demand for energy is rather inelastic.

[DcifrThs]

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you are right. based on what you say, peak oil is indisputable.

but you've missed a major factor that makes it unlikely, and one factor that has made peak oil a joke since inception. at every point in time since the origination of peak oil, there has been the theory that the amount of reserves in the ground and rate of refinement, extraction etc. will never meet demand by year X and by year Y where Y>X, there will be no oil left.

but year Y keeps getting pushed back? why?

because innovation and demand elasticities aren't proporly corrected for.

the human ability to respond to a falling commodity supply aren't easy to deal with and haven't (to my knowledge) been studied to the point of decent estimation.

every time period peak oil says "given current trends" or "given current levels of projected dmeand growth and estimated supply growth" etc. they don't take into accound basically random innovation in the future between now and time Y.

at time X, oil pirce will increase since demand won't be met. but as price rises, the incentive to innovate and alternate usage increases. other technologies become attractive. it isn't that we CANT run out of oil...it's simply that we wont, EVER run out of oil.

the reason is because as the last drop of oil comes closer and closer to reality, the price would increase higher and higher such that fewer and fewer people could and would want to buy it at that price.

those that do, have to pay that high price. but they will, as the price gets higher, be incented ever more strongly to substitute or innovate.

it is what has always happened and what will likely continue to happen.

this is why peak oil has kept pushing back Y and why, in fact, Y will never arrive.

even with a massive shock somewhere, people will drive less, consume less oil as price becomes ever higher. govt may even be forced to step in if the shock is severe enough (1973).

this explanation i've provided isn't my own, i learned about it reading and getting trained. but it makes the most sense.

the main problem/issue is the degree to which we depend on oil for plastics, and really everything in our lives.

we will have a massive demand shock for alternatives as well if the supply shock for oil happens (i.e. all oil refineries or pumps blow up simultaneously or something).

their prices will rise but not by as much as the real deal: oil.

so there you have it.

why peak oil will almost certainly never come about and almost certainly never be correct (just as it has been incorrect and its predictions proved patently wrong time and time again)

Barron

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I think you're mixing two theories - peak oilers don't, in general, talk about running out of oil - it's strictly a theory about extraction capacity and I think there's a good reason to believe that we're near the global peak.[/quote

yea sorry...the PO guys i've talked with basically said we'd run out of oil so that was the point i was meaning to dispute.

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As for the reduction in quantity demanded due to increase in price - that's not really the realm of peak oil theory, but rather something for economists to ponder. It's very difficult to imagine at this point what could replace petroleum on a large scale and the infrastructure we have pretty much ensures that demand for energy is rather inelastic.

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right, but keep in mind, it was difficult to imagine in 1973 that we'd be where we were in 1990, or where we are today.

and when i said oil is ahuge part of everything we do, thats what i mean that it will be difficult to get away from.

but difficult isn't impossible. at someprice, the difficult becomes the necessary and at that point, innovation and reduction of use occur (in the reverse order)

Barron

[The once and future king]

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this is why peak oil has kept pushing back Y.

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As far as I know, this hasnt happened once. As far as I know peak oil only ever been brought forward as no one predicted the massive consumption now required by India and China which is crushing any innovations in fuel technology with simple brute force demand for energy.

As for innovation, the idea that something has merely to be demanded for it to be existent is obviously fantasy. We can all see peak oil in the near horizon, but so far we are not close to an alternative to the petro chemical engine. Ethanol is a joke, you would have to agrigate a land mass the size of Europe to meet North American demand for ethanol if it were the main fuel type.

There is demand for countless things that are not existent, such as a cure for aging etc, an opportunity can exist in isolation from that which satisfies it. A problem does not imply a solution. To think that the market can resolve all opportunities is an ideological arguement not a rational one.

[tolbiny]

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We can all see peak oil in the near horizon, but so far we are not close to an alternative to the petro chemical engine

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Huge amounts of the petro chemical engine are simply luxuries. There is more than enough productive farmland to feed everyone in the US many times over, right now (thanks to various subsidies) huge amounts off food grown is shipped to feed other food. I don't remember the exact numbers but if my memory serves the us can cut its consumption by 5-10% just by eating more vegetables/grain instead of beef, and by another 5-10% just by no longer buying the bottom 25% of the car market (when it comes to fuel efficiency).

[emon87]

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lol there is soo much oil left in your own country OP, peak oil is a ways off.


and lol at the people taking fishhead seriously.

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India and China have 1/3 of the world's population and they are using a lot more oil. 15 years or 20 years from now when they are using WAY more oil than today what will happen ? Yes we have an insane amount of oil in northern Alberta but the whole world is buying and using it. It's going to go way faster than most expect it.

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don't you think that most of the researchers would have taken china and india into account?



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My friends uncle is a billionaire and owns Fathom Energy which is deep in the tar sands of Alberta and is headquarterd in Calgary. I'm sure he knows more than the 'experts'. India and China are using more and more oil and are desperate for oil.

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Maybe you should rely on the insider advice you have and not the random advice of an internet poker board then?

[The once and future king]

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We can all see peak oil in the near horizon, but so far we are not close to an alternative to the petro chemical engine

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Huge amounts of the petro chemical engine are simply luxuries. There is more than enough productive farmland to feed everyone in the US many times over, right now (thanks to various subsidies) huge amounts off food grown is shipped to feed other food. I don't remember the exact numbers but if my memory serves the us can cut its consumption by 5-10% just by eating more vegetables/grain instead of beef, and by another 5-10% just by no longer buying the bottom 25% of the car market (when it comes to fuel efficiency).

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So you are saying we can make those ajustments without huge changes to our economy and social consumption culture?

If you are saying that we will have to change x or y that is not an arguement against Peak Oil it is an arguement about how we will cope with peak oil.

Bottom line is that fuel oil is a primary input cost to nearly everything, and we also need it then move production from A to B. What we eat and how many cars we buy cant change the fact that everything will/is be more expensive not only to make but to transport.

[DcifrThs]

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We can all see peak oil in the near horizon, but so far we are not close to an alternative to the petro chemical engine

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Huge amounts of the petro chemical engine are simply luxuries. There is more than enough productive farmland to feed everyone in the US many times over, right now (thanks to various subsidies) huge amounts off food grown is shipped to feed other food. I don't remember the exact numbers but if my memory serves the us can cut its consumption by 5-10% just by eating more vegetables/grain instead of beef, and by another 5-10% just by no longer buying the bottom 25% of the car market (when it comes to fuel efficiency).

[/ QUOTE ]

So you are saying we can make those ajustments without huge changes to our economy and social consumption culture?

If you are saying that we will have to change x or y that is not an arguement against Peak Oil it is an arguement about how we will cope with peak oil.

Bottom line is that fuel oil is a primary input cost to nearly everything, and we also need it then move production from A to B. What we eat and how many cars we buy cant change the fact that everything will/is be more expensive not only to make but to transport.

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yea, i obviously have confused peak oil (which i now have read superficially...i.e. wikipedia) with theories asserted by people who called themselves believers in peak oil (one of these was at a poker table in foxwoods and was hilarious).

first off, even though i was confused about the Y (end of oil point) asserted by those people rather than peak oil, here is what actually ahppened to peak oil predictions:

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The only reliable way to identify the timing of peak oil will be in retrospect. M. King Hubbert, who devised the peak theory, predicted in 1974 that peak oil would occur in 1995 at 12-GB/yr "if current trends continue".[2] However, in the late 1970s and early 1980s, global oil consumption actually dropped (due to the shift to energy efficient cars,[3] the shift to electricity and natural gas for heating,[4] etc.), then rebounded to a lower level of growth in the mid 1980s (see chart on right). The shift to reduced consumption in these areas meant that the projection assumptions were not realized and, hence, oil production did not peak in 1995, and has climbed to more than double the rate initially projected.

Colin Campbell of the Association for the Study of Peak Oil and Gas (ASPO) has suggested that the global production of conventional oil peaked in the spring of 2004 albeit at a rate of 23-GB/yr, not Hubbert's 13-GB/yr. During 2004, approximately 24 billion barrels of conventional oil was produced out of the total of 30 billion barrels of oil; the remaining 6 billion barrels coming from heavy oil and tar sands, deep water oil fields, and natural gas liquids (see adjacent ASPO graph). In 2005, the ASPO revised its prediction for the peak in world oil production, again, from both conventional and non conventional sources, to the year 2010.[5] These consistent upward (into the future) revisions are expected in models which don't take into account continually increasing reserve estimates in older accumulations.[6]


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so it's already been pushed back twice.

anyways, the part that i have heard argued time and again against (not necessarily part of peak oil) is that we'll run out of oil, or that we'll never (or not suitably) be able to cope with declining oil supply.

as was mentioned, a lot of what we do is luxurious. how much gas would be saved if everybody owned hybrid cars? so why don't we?

demand elasticity curves have varying convexity dependent upon price level and price change. as price gets higher and higher, or price changes get bigger and bigger, (oil production declines while demand levels or increases), elasticity also increases beyond the current "inelastic" curves we see.

this is only part of it.

we currently don't have such a massive incentive to pour R&D dollars into alternatives or making oil go an extra mile so to speak since we are in a state of "comfort" with where we are despite all the warnings.

when the issue begins to be felt (i.e. on the bottom line or projections), incentives will increase and consumer action will move towards alternatives (and other projects will become viable).

i don't really see how else this would play out.

Barron

[DcifrThs]

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this is why peak oil has kept pushing back Y.

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As far as I know, this hasnt happened once. As far as I know peak oil only ever been brought forward as no one predicted the massive consumption now required by India and China which is crushing any innovations in fuel technology with simple brute force demand for energy.

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you clearly know wrong as i cited above. it happens to me all the time. learning is all about being wrong [img]/images/graemlins/smile.gif[/img]

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As for innovation, the idea that something has merely to be demanded for it to be existent is obviously fantasy. We can all see peak oil in the near horizon, but so far we are not close to an alternative to the petro chemical engine. Ethanol is a joke, you would have to agrigate a land mass the size of Europe to meet North American demand for ethanol if it were the main fuel type.

There is demand for countless things that are not existent, such as a cure for aging etc, an opportunity can exist in isolation from that which satisfies it. A problem does not imply a solution. To think that the market can resolve all opportunities is an ideological arguement not a rational one.

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what are you talking about? i was talkingn about incentives and real innovation. not a cure for aging or the fountain of youth. these things have already happened albeit on a smaller scale (due to smaller incentives).

your two paragraphs above are troubling in their glibness. i'm not saying "just because we'll demand an alternative, one will magically appear." i'm saying that as incentives to reduce oil consumption (or increase efficiency), incentives to diversify will also increase as they've already done historically. i'd thinkt hose incentives will increase slowly until peak oil is literally on the horizon and then they will increase far faster than rate of approach of peak oil (and even faster afterwards).

Barron

[disjunction]

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so it's already been pushed back twice.

Barron

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I have no position on peak oil, but the point I always hear them make is that they had this same debate 40 years ago. There were those saying the U.S. would hit its peak production and be reliant on foreign countries. The other side said that this was ridiculous and new fields were being discovered every day in the U.S.

That's my understanding anyway. I am too young to remember. [img]/images/graemlins/grin.gif[/img]

[kimchi]

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We can all see peak oil in the near horizon, but so far we are not close to an alternative to the petro chemical engine

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Huge amounts of the petro chemical engine are simply luxuries. There is more than enough productive farmland to feed everyone in the US many times over, right now (thanks to various subsidies) huge amounts off food grown is shipped to feed other food. I don't remember the exact numbers but if my memory serves the us can cut its consumption by 5-10% just by eating more vegetables/grain instead of beef, and by another 5-10% just by no longer buying the bottom 25% of the car market (when it comes to fuel efficiency).

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Oil consumption can be shaved, sometimes quite considerably, here and there. The thing is, EVERYTHING we do in modern society is linked and dependent on oil at some stage. We have become so used to cheap energy (it's even cheap at today's levels). We can substitue meat with vegetables, but we'll still need oil to plant, fertilise (it's used in all fertilisers) harvest, package, process, ship, refridgerate the produce.

Unless we return to a hunter-gatherer society (predicted as a forced possibility by some doomsters, and also incidently, a much more energy effecient sustainance strategy than agriculture) the current human population can't be sustained without access to cheap energy. Problem is, the world isn't big enough to support 6 billion hunter-gatherers.