Peak Oil, or when supply doesn't meet demand

[Guest]

Re: Peak Oil, or when supply doesn't meet demand

Comments from a (level headed) newbie:

Excellent, level-headed comments from Spartacus, BlackVoid and Harry-Pottery (but I confess I do get a little skittish when Noam Chomsky arguments are introduced). Jim Nickerson implies the same conclusions.

BlackVoid's comment on the obvious and persistent gold-oil inkage is the perfect succinct summary:

Originally Posted by BlackVoid :

Gold price usually follows closely the price of oil. When oil goes up, so does gold. Oil goes down, gold goes down.

It is no wonder that pricing oil in gold results in stable prices. It is like pricing butter with milk.


With all due respect to JK therefore, the gold-oil chart provided - to disprove any linkage between energy and precious metals actually hints at disproving that same argument - as we notice that the price run-up of the two commodities actually comes close to converging in gains after seven or eight years.

Take such a chart out twenty years into oil depletion and you'll acknowledge an incontrovertible linkage. It should be an eminently common-sense conclusion : persistent, long term energy price rises are highly inflationary. Gold is a barometer of inflation.

Suggesting that "Peak Oil nuts" shrilly and foolishly proclaim that "oil is running out" is a flat-out mis-representation. The much maligned and derided "nuts" elaborately and painstakingly point out it's NOT running out - but they are warning that due to very aggressive modern extraction techniques, it's depletion curve will be shockingly abrupt. Clues abound all around us in 2007.

Respectfully,

Lukester

[Mega]

Re: Peak Oil, or when supply doesn't meet demand

Read this Gentilmen:-
http://www.resourceinvestor.com/pebble.asp?relid=33010
Mega

[Finster]

Re: Peak Oil, or when supply doesn't meet demand

Gold price usually follows closely the price of oil. When oil goes up, so does gold. Oil goes down, gold goes down.

A correlation without a cause.

Unless of course you acknowledge the fact that the common denominator in both prices is the same - the unit of measure - the dollar.

Then it makes perfect sense. Dollar depreciate and it takes more of them to buy the same stuff.

Some folks probably think there really is some spooky metaphysical connection between hydrocarbon compounds and element number 79 (and while we're at it, element numbers 28, 29, 30 ... wheat, corn, lettuce, pork, cement, real estate, stocks ...) . But so many seemingly mysterious relationships get really simple once you relinquish the silly fantasy of currency being a fixed standard of value.

Nothing unique about gold here, incidentally. Bet you didn't know that against a broad basket of commodities, oil today - at $67+ per barrel - is actually about 10% cheaper than it was at the end of 1999. Put another way, oil has actually gone up slightly less than the average commodity. The Dow Jones AIG Spot Commodity index has gone from 109.69 to 324.145 in exactly the same span of time that oil has gone from $25.60 to $67.49. (These prices are all measured in dollars, by the way.)

This data is obviously highly inconvenient for those who think that peak oil explains what oil prices have been doing the past few years, but that probably explains why you never hear them talk about it. That and the determination not to let nuisances like facts get in the way of a perfectly good theory...


...

[Tet]

Re: Peak Oil, or when supply doesn't meet demand

This data is obviously highly inconvenient for those who think that peak oil explains what oil prices have been doing the past few years, but that probably explains why you never hear them talk about it. That and the determination not to let nuisances like facts get in the way of a perfectly good theory...

I was just at Palomar Observatory over the weekend and had a nice long tour there, Palomar was the largest telescope, or at least had the largest mirror for a telescope for it's time period, which was originally funded by the Rockefellers in 1928. This is once again a private profit paid for by the public. The Rockefellers funded the telescope and the CCC and all the other FDR bolshevik projects added the roads, the railway, the sewage system, the buildings, the water and the electricity to a remote mountain at the time. The telescope had the world's largest mirror, over 12.5 tons, 200 inches in diameter and gets dedicated in 1947. Now the interesting thing about light spectrum that these very large mirrors collect is you know by the spectrum of the light what the material composition is that makes up the source. Obviously since this is for private bennefit one can only speculate as to what the Rockefellers are looking for in space. It's funny to think that the Pleiades (star cluster) is referred to as the Seven Sisters which is what Standard Oil is known as after the break-up. After the tour it's pretty apparent that the Rockefellers, or should I say Standard Oil wanted to know the origins of hydro-carbons because the Rockefellers certainly knew oil didn't come from dino goo.

Today at Palomar Obvervatory one of the eight large telescopes that they have is dedicated 365 days a year to viewing Saturn's moon Titan. Now one might ask why out of the entire galaxy did they choose such a large portion of the viewing capacity to be dedicated to the study of Titan. Just might have something to do with the fact that Titan is made up of Hydro-carbons, how much hydro-carbon can a planet produce before you hit Peak Oil? I bet the Rockefellers from their now four year study of Titan have a pretty good idea and you can certainly count on Peak being many hundreds if not thousands of years from now.

[Guest]

Re: Peak Oil, or when supply doesn't meet demand

Finster - I regret the discourtesy of not having posted my response to your original thread. I felt, as the thread was quite lengthy already, that a full presentation of the "other side's" views on natural resource depletion would get lost. The reply concerned your arguments regarding the ephemeral significance of resource depletion when inflation is factored in. Please accept my apologies for a missed courtesy.

Please however let's set the record straight: Nobody ever did put forward "the silly fantasy of currency being a fixed standard of value" in which we estimate the rise in price of natural resources. If you believe that was my own argument, you risk underestimating not only my intelligence but that of those others who probably disagree with you on the issue of fiat currency inflation's role. The 1980's are long gone now unfortunately.

I as well as perhaps one or two others who disagree here, am well aware of the large flux of currency purchasing power in which commodities prices are measured - not only now but over the past decade and looking out over the next decade also. You can indeed talk about moves in the 50% - 300% range as currencies debasement accelerates. And yes, emphatically and undeniably, one need only look at the money supply numbers on the back page of the Economist each month to determine that central banks worldwide are engaged in a breakneck campaign of currency inflation. It's everywhere, and it's massive. Unprecedented in it's global scale.

Your arguments (to paraphrase) that "commodities are all just blown around in real value by inflation" seem far too esoteric and partial to the econometric technicians viewpoint to me - given the huge demographic events that are taking this new century by storm.

Try shoe-horning 1/3 of the earth's population (industrialising at an exponential pace) into your theory that all commodities are rising primarily due to the inflationary machinations of a few central banks. 3 billion humans demanding an industrialised lifestyle, and you believe the G8 central banks have the financial weight by virtue of their inflationary prowess - to exert the significant determining factor on resource valuations?

All natural resources are in a huge bull market. Plot those resource bull markets against the industrialisation of the "3rd world" and you'll see the plainest of correlations - parallel. The scarce resources when expressed in decade long supply / demand trends make fiat currency inflation pale as the primary cause.

I don't know if this "inflation explains resource depletion" is your thesis only, or that of the I-Tulip founders also - but if your conclusion is that what's happening in the resource markets is being wrought entirely by central banks and their minions then I must reassess my understanding of the I-Tulip community's appreciation of an issue which a great number of very well respected other observers with 10, 20, 30, 40 and 50 year track records have already understood and closely followed for a half decade. This is a big story! Surely I-Tulip does nto consider the jury adjourned on determination of the fundamentals here?

Few groups of market watchers any longer are debating resource depletion's reality. Why are we even batting it back and forth as being at leat plausible for argument, when Bloomberg devotes an 8 page article to the topic?

I am extremely modest of the scope of my own knowledge in international finance. Frankly, my grasp of international finance sucks. But if "it's all about relative asset values due to an inflating currency" is your thesis, you are not displaying a very inquiring mind. Add 3++ billion people - compressing what the West accomplished in 80 years, into a mere 20 years - and it's all about the emergence of certain "must have" commodities. Water - Energy - Food.

What's to debate?

China and India, not to mention the dozens of other countries being swept up in this growth inflection - are a massive growth event, outstripping the industrialising events of the west in terms of sheer numbers in the past two centuries by a considerable extent. This may soon delegate the "all encompassing" central bank inflation of currencies to a corollary event, as indeed it seems to me that it should.

Meantime, the West has done a pretty good job of stripping the world of half it's natural resources in the preceding two centuries.

You seem to suggest that those who talk about resource depletion "grossly misunderstand" the role which currency inflation is playing on the price of commodities. I find it hard, given the sheer scale of the industrialisation taking place globally, to regard currency inflations as either the sole, or possibly even the primary factor here on a historical scale.

I have a very high regard for the caliber of your commentary. But from the dumbed down nature of the arguments you attribute to people like me, who repectfully disagree with your conclusions, it would appear you don't wish to hear the more logical (try plain old demographic?) arguments being put forward.

For what it's worth, I think much of your commentary is brilliant, thought provoking and highly worth my study - however on this topic, you may risk arguing yourself into a box by proposing a fnancial rather than physical (resource) causality too exclusively..

Resource depletion will pick up the inflationary baton and carry it forward a further decade, even after central banks have tried to retreat in horror from rampant credit growth credit in their belated fear of the consequences.

The much derided, now antiquated "Club of Rome" will most decidedly have the last word on the inflation story, and it will be driven by population growth, now gearing up for the final exponential leap (is anyone arguing the contrary on this point?), vs. resource depletion. Oil and natural gas are already number one on the critical list.

Thank you for your reply. I appreciate the chance to discuss this with you as you present many (virtually all) other views which greatly broaden my horizons. My forlorn hope is that in this one narrow area, I might broaden yours.

[Finster]

Re: Peak Oil, or when supply doesn't meet demand

Nobody ever did put forward "the silly fantasy of currency being a fixed standard of value" in which we estimate the rise in price of natural resources.

If you are saying that the value of oil has been rising, it’s implicit in your argument. Rising compared to what?

Your arguments (to paraphrase) that "commodities are all just blown around in real value by inflation" seem far too esoteric and partial to the econometric technicians viewpoint to me - given the huge demographic events that are taking this new century by storm.

That’s not what I’m arguing at all. What I am saying is that the price rise that oil has undergone in the past few years is not an increase in value. It is a decrease in value in the measuring stick. The commodities themselves have changed little.

All natural resources are in a huge bull market.

And you know this because you are comparing the value of those natural resources with … currency. Hence you can only conclude that natural resources are rising by assuming that the currency represents a fixed standard of value. Drop that unwarranted assumption, and you have to admit you have no idea what real natural resource values are actually doing.

I don't know if this "inflation explains resource depletion" is your thesis only, or that of the I-Tulip founders also - but if your conclusion is that what's happening in the resource markets is being wrought entirely by central banks and their minions…

You again assume that something is "happening in the resource markets" without considering upon what basis you reach that conclusion. If your argument is purely one of long-term resource depletion then we have no disagreement. But if your argument is that the price rises that have occurred in the past few years are due to that depletion, then we do have a disagreement. We did not just start depleting resources in the past six years. That story has been playing out for many decades. It was playing out in the sixties and seventies, when resource prices (as measured in dollars) were soaring. It was playing out in the eighties and nineties, when resource prices (as measured in dollars) were falling. This tells us that resource depletion is not the real driver behind these major changes in price trends.

Central banks and their minions can do nothing about resource values. But they can and do profoundly affect currency values. And that is what accounts for those changes in resource price trends.

I don’t know how to state this any more clearly. My critique is not of the notion of peak oil, it is of the tendency to only get excited about it when inflation is kicking up. If I am wrong, it is not at all clear why.

...

[Guest]

Re: Peak Oil, or when supply doesn't meet demand

Finster - You take a high handed tone - you must then have a firm handle on the bottom line.

When you see the little skirmishes and small wars break out for "influence" over nations having the oil reserves some time in the next decade you'll presumably still be labeling those conflicts a further "manifestation of global inflation".

I can practically see your feet floating a couple of inches off the ground, levitated upwards by the universal applicability of your argument.

There is of course truth in what you note - but it's only a partial truth, expressed with all the certitude of a savant. When it's all so thoroughly relative for you, with the currency values bobbing around so much - we must inevitably conclude there is little else of note going on in the world to affect sector premiums other than the evaporation of the currencies and generalized relativity theory - And meanwhile we'll all gently cruise up to 9 billion people in the next 35 years without other consequence. LOL !!

[DemonD]

Re: Peak Oil, or when supply doesn't meet demand

Luke, I hate to be the one to tell you, but what Finster is saying is correct on many levels. Think about it. A barrel of oil today is 69 dollars, where last week it was 64. Why is that? Are supply and demand that far out of whack?

No.

The reason skirmishes and things cause oil to go up is that the speculators play the futures on that news. It is no different than having a bit of frost in Florida one morning, and the price of oranges skyrockets the next day. The supply of oranges on that day do not change, but speculators take that news and go bullish on oranges, driving the prices up. Then of course when the weather gets better, they short oranges and make money both ways. Who are the speculators? A lot of that would be investment banks that are directly or indirectly tied to central banking operations. Remember, reserve requirements in this day and age are practically nil, so if you are an investment bank and want to take out hundreds of millions in loans to buy barrels of oil, you can do that. Remember amaranth? They made a bet on natural gas just like that that went the wrong way. (No one said there wasn't some risk invovled.)

But anyway, it's the currency and money policies that determine short-term fluctuations like that.

And yes, while Finster's tone of writing may be a bit patronizing, he is right on the money on this one; he isn't disagreeing with part of your premise, just making the point that you have to look at oil in context, and to disregard currency inflation would be to disregard a very large component of why oil (and other commodities) have risen so damn much in the past 7 years.

Also, I would argue these skirmishes and whatnot are really more for the benefit of oilmen in ivory towers. Last I checked brazil was a net exporter of oil since they went to E85 ethanol from sugar cane. Energy solutions are out there, it's just that Bushie and his pals don't get to be super gazillionaires able to buy 100,000 acres of land in paraguay by developing alternative fuels. Their riches come from oil and wars.

[Guest]

Re: Peak Oil, or when supply doesn't meet demand

Hi DemonD -

Thanks for your friendly heads-up. Please note I've mentioned the futures markets already as one significant factor, and also noted that it's relied on heavily on I-Tulip as an "explanation" - or a "primary" cause of severe tightness in the energy markets.

No question, speculative money, cheap credit, big liquidity, are a very big factor. But what I note with considerable curiosity is that these are the ONLY reasons acknowledged by those commentators here sharing your views (many apparently)..

This is, if you like, the stated "I-Tulip point of view" on what's happening in the commodity markets. Maybe Finster's rather absolutist pronunciations on this topic have boxed I-Tulip in on their consensus view? Generally it's a good idea to have a flexible, more porous viewpoint, as "all encompassing theories" risk becoming brittle as extraneous factors intrude?

Maybe no-one else here is prepared to speak up if they see a large, fundamental flaw in your almost institutionalized point of view. I do, because I've looked around and noticed it does not require a lot of scrutiny to clearly see the crackling, rising tension - worldwide - and the ominous tightness in global spare capacity in the energy markets. Don't look at US spare inventory, look at the global one, for a clear picture.

I keep half expecting the I-Tulip editors to step in and acknowledge forthrightly that there is a clear, internationally acknowledged, and growing tightness in world energy markets, and then acknowledge this considerably stretches arguments to attribute this primarily to speculation in futures and to inflation.

But as is becoming abundantly clear, they must be take your sanguine view on this point. It's frankly a bit astonishing to me, as it flies blindly in the face of all the jockeying that's occurring for example, among those nations trying to secure oil and gas pipeline routes geo-politically. What are they so concerned about - do you think they are merely trying to secure inflation hedges?

I don't have an opinion on "peak water" (although everything I read suggests this is a huge topic itself - with a big finger pointing at - depletion!). I don't have clear views on "peak minerals", "peak vegetables", etc ... You are almost certainly right, a very large component is the commodities up-cycle, which is tied inextricably to inflationary mega-trends worldwide, behind which we spot the familiar old bogey, zero reserve requirements, as the primary culprit. It's real important to not get dazzled by this powerful factor such that we believe it's the only one however.

To me it's an eye opener, insofar as this limited attribution (speculation, inflation) of what's occurring in the early days of the 21st Century in the world's increasingly nervous jostling for energy, is espoused by a website and community that's distinguished by brilliance in every other respect.

What clued me in to the one-sided nature of the prevailing view amongst many in this community was that there was / has been little or no analysis of what could be other causes for the general tightening of global spare capacity in the energy markets.

I don't need to reiterate the opinions of those few analysts (petroleum geologists or related, for the most part) in my previous posts, who debunk CERA's conclusions, and who flatly disagree with the popular view (you share), that the only issue of note in the energy markets is speculation and currency debasement.

Will you remember my posts on this topic when you see the world sliding into further skirmishes over strategic control of energy? What will you think when you see the EU increasingly distressed by Putin's attempts to use energy scarcity as a political tool of coercion?

China outflanks the US at every turn because they are ready and willing to buy the friendship of every last tinpot dictatorship that will sell then a scrap of oil. The US is certainly not much better. What's all their anxiety about for sourcing oil? You don't see it, huh?

By the way, just in case you were wondering if I'm some flaming liberal to espouse resource depletion views and that I harbor a heart-on-my-sleeve indignation about "no blood for oil" - I do not see it that way.

I always had doubts about the theory the US went into Iraq "for the oil" which to my mind is a tenuous theory as we've spent enough there in a bloody misadventure to buy the oil on the global spot markets probably for a dozen years.

I'm noting also, paradoxically, that people like Tet have very strong views about the US Govt's (and other Govt's) urge to rank exploitation, and he may indeed be right. Hell, he probably is right. However, doesnt that view then beg the question - why are so many countries getting concerned about where they will get their next decade's oil?

I think it's fascinating - I-Tulip, one of the most probing, prescient communities today on bubbles, is missing this entire story.

Regards, etc ...

[Finster]

Re: Peak Oil, or when supply doesn't meet demand

Maybe Finster's rather absolutist pronunciations on this topic have boxed I-Tulip in on their consensus view? Generally it's a good idea to have a flexible, more porous viewpoint, as "all encompassing theories" risk becoming brittle as extraneous factors intrude?

Why? If having a "flexible" view means occupying a fuzzy limbo between part right and part wrong, then why should it be a "good idea"? I'll stick with being 100% right, thank you. The simple fact is that although you have criticized my posts at great length, you have yet to rebut the substance of the points made. My arguments have a "high handed" tone, my feet aren't on terra firma, my view is insufficiently "flexible" ... fine, but where exactly am I wrong?

Is it untrue that the dollar is not a fixed standard of value? Is it untrue that that the price of oil has actually fallen so far this century in comparison with the average commodity per the DJ AIG commodity index? Is it untrue that the price of oil has moved very little in decades when denominated - not in dollars or other paper currencies but - in a form of money which cannot be inflated by governments or their central banks? Is it untrue that the great commodity price inflation of the 1970s was reversed with decisive Fed policy action with interest rates nearing 20%, or that the current one took wing amid 1% monetary ease so aggressive it was referred to as "emergency" accommodation?

While you note repeatedly that resources have been in depletion, I have never claimed that they are not. So how am I wrong there? If there is anything of substance underneath the smoke, it has yet to be revealed.

It’s highly doubtful any mere "pronunciations" of mine have boxed iTulip denizens into any particular point of view. We are an independent thinking, contrarian lot (after all, on the front page it says "The Contrary Market View"). Folks here tend to be persuaded not by trendy ideology or an authority figure’s say-so, but by fact and logic. Historical data. Hard numbers. Solid reasoning. This is where the thesis you criticize comes from, and that is where you would need to find error to colorably rebut it. Identify for us the faulty data, zero in on the sloppy reasoning, and then at least we can say there is a debate.

[Tet]

Re: Peak Oil, or when supply doesn't meet demand

Hi DemonD -

I'm noting also, paradoxically, that people like Tet have very strong views about the US Govt's (and other Govt's) urge to rank exploitation, and he may indeed be right. Hell, he probably is right. However, doesnt that view then beg the question - why are so many countries getting concerned about where they will get their next decade's oil?

I think it's fascinating - I-Tulip, one of the most probing, prescient communities today on bubbles, is missing this entire story.

Regards, etc ...

Nothing going on today that hasn't been going on for at least a hundred and fifty years. 150-years ago it was cotton, King Cotton was what everyone needed in order to have an industrial society in the 1860's. Lot's of places were getting ready to start exporting cotton to complete with King Cotton, Egypt and the Crimean. London controlled the cotton trade and didn't like the threat of competition, cotton traded almost exclusively in Sterling through London, you gave England your cotton and England gave you the world's reserve currency of the time period. Wars were financed and fought over King Cotton, theWar Between the States and the Crimean War were both prime examples. Other world currencies including the d0llar were becoming a threat to England at the time, before the War the US had over 10,000 different currencies and thanks to the war and the National Banking Act of 1862, at the end of the War there was only one. The Bank of England had officially recaptured her colonies in the US.

England always manipulated the supply of cotton, always changed the price of cotton which in effect made the pound sterling stronger or weaker which was whatever was in England's best interest at the time, that's what Empires do, export massive amounts of inflation by devaluing the world's reserve currency. Peak Cotton or Peak Oil same bullshit the queen and the Bank of England have been pulling for hundreds of years, looks like maybe the rest of the world has figured out how to fight back this time. It would appear wars are being fought to keep the oil in the ground to make oil more expensive, just like wars were fought to make cotton scarce 150-years ago driving up the price of cotton and wiping out the value of the pound sterling, thus exporting massive amounts of inflation to the rest of the world.

Just when it looks like the d0llar will fall off a cliff and just when all the bets have been placed against the d0llar, a major discovery will be announced or any of the millions of barrels that have been taken off the market will be allowed back on the market. Iraq, Nigeria, Norway, Mexico, Gulf Coast, OPEC, Russia, plenty of places to choose from. Oil pipeline from Russia to China I hear is running ahead of schedule. This is all part of the Great Game, which the Anglo Empire has been running since the early 1800's.

[Moe_Gamble]

Re: Peak Oil, or when supply doesn't meet demand

Lukester, IMO the reality of peak oil is not reflected in the price yet, mainly because the "all liquids" measure hasn't really peaked yet, and because the investing class doesn't understand the reality yet. (Which would be why oil hasn't taken off in price relative to other commodities, as Finster correctly points out.)

According to the EIA, "all liquids" production was 84.6 mbpd in 2006. Production in 2006 was about equal to 2005. The EIA's most recent production prediction for 2007 is greatly lowered from earlier predictions to about .2 mbpd more than 2006 (although the average for 2007 to date is only 84.26 mbpd--they are relying on projects coming onstream late in the year to get their number, and I doubt we'll see it).

Although there are a number of production projects coming online over the next few years, including the Russian projects Tet has mentioned in several posts, I also doubt we will see any increase in overall production in these years. One reason I doubt it is because we haven't seen the predicted overall increase from the new projects that came online in 2005 and 2006 (http://www.odac-info.org/assessments...ts_2006Apr.pdf). The reason we didn't see the predicted overall increase was mainly because decline rates in mature fields went up faster than optimists had predicted. Those decline rates will be getting worse.

Clearly there will be substitutions for oil, and we are already seeing demand destruction in poor countries (though not in richer ones: http://www.chinadaily.com.cn/bizchin...ent_897795.htm). But surely it's obvious that oil is different from any other commodity. It's true that other commidities have had an influence on environmental carrying capacity and growth. For example, human cultivation of certain food crops definitely ennabled increased population and more complex social organization. And certainly a number of tools and inventions have ennabled humans to expand their territory and population. (http://en.wikipedia.org/wiki/Guns,_Germs,_and_Steel) But human beings mined things like copper and cultivated things like cotton (and cornered the market on them) for thousands of years without it leading to the kind of population growth we've seen since the beginning of serious oil use.

So I'm with you, Lukester, it's real, it's now and it's a great bet through probably 2008-2009, maybe into 2010, depending on exactly how it plays out. Personally, I think it will be wise to get out around the time the reality hits the mass consciousness and everyone gets surly about it. As Tet might put it, I think we can expect some sort of Bolshevik energy plan about then. (By the way, Tet, Gazprom is making a move to stop the planned natural gas pipeline from Russia to China: http://newsvote.bbc.co.uk/2/hi/business/6769797.stm)

[Tet]

Re: Peak Oil, or when supply doesn't meet demand

As Tet might put it, I think we can expect some sort of Bolshevik energy plan about then. (By the way, Tet, Gazprom is making a move to stop the planned natural gas pipeline from Russia to China: http://newsvote.bbc.co.uk/2/hi/business/6769797.stm)

I have said for some time that we will know how real Peak Oil is once China looks for natural gas from China starts to look for natural gas from China has never negotiated for Russian natural gas, the easiest fix for power and electricity and China has never asked for natural gas from . I would think even Peak Oil hypsters would think this is odd but that would require some thought.

China's needs for oil grow less by the day, but those preaching the evangelic Peaksterism of Oil never once look at the supply side of the ledger. In December China turned on the equivalent of 17 nuclear power plants when Three Gorges project went live. 17 nuclear power plants produce a shitload of power, yet no mention of this capacity can be found from the doom and gloom boyz preaching Peakster Oil. I would imagine that black outs and brown outs are already a thing of the past in China this summer. In December China just started construction of a hydro-electric power plant that will be even larger than Three Gorges.

Next year China will have two to three actual nuclear power plants go live and three to four nuclear power plants go into production each year for the next 13-years. Next year wind power and solar power will start producing a significant portion of China's electricity needs. China is actually considering exporting electricity to India. With China's own domestic oil discoveries I would think in the next two to three years China's domestic oil production will be 10-11 million barrels per day. If things were so bad in China and China was so desperate for power you'd think China wouldn't be closing so many of their coal fired power plants which they are currently doing. Blow-off top is how I'd be playing oil, but that would require some understanding of charts as well.

A united Asia that includes Russia kicks the shit out of the Anglo Empire, get used to it the world will be a better place for it, even for the Anglos.

[Finster]

Re: Peak Oil, or when supply doesn't meet demand

[COLOR=black]Nothing going on today that hasn't been going on for at least a hundred and fifty years ...

...I have said for some time that we will know how real Peak Oil is once China looks for natural gas from

Indeed, Tet. And those evangelic peaksters are missing another major supply issue - and that is of dollars. Our own Bart has been tracking the production of dollars for quite a spell now, and shows us that since 1994 the supply has about tripled.

Some quick math. Then it took about twenty dollars to buy a barrel of oil; before this tripling took place. If the supply of oil were utterly constant - that is, if there were absolutely no depletion whatsoever occurring - the dollars/oil ratio triples. In other words, just based on these few data points, oil ought to be selling at $60 a barrel, right now - even if there were no depletion!

Keep the supply of oil constant, triple the supply of dollars, and presto, you have three times as many dollars in the world per barrel of oil that you did before. Exactly what should we expect the price to do?

As I've stated practically ad nauseum, none of this means that there isn't something to the peak oil hype. Of course we are talking about a depleting resource. But those who are hyperventilating about it just now because oil prices have been soaring are but its fair weather friends. The reason the price has been soaring has far, far, less to do with the supply of oil than it does the supply of the dollars.

If this seems a little too abstract or subtle for any reader, I would invite him to simply remind himself, every time he hears an oil price quoted, what units are being used. Is that price being quoted in dollars per barrel?

If so, then in evaluating peak oilster's discussions of oil prices doesn't he find it strange to encounter copious discussion of the oil supply whilst consideration of dollar supply figures are completely omitted from the calculus?

Is not half of the analysis missing?

[bill]

Re: Peak Oil, or when supply doesn't meet demand

The petro dollar has been busy building oil infrastructure as well. Now why would the oil companies invest such a great deal of capital if we are headed for a oil decline? A question for the expert.
A few refineries expansion stories:


http://oilandgasnewsworldwide.com/bk...&Article=20317

http://www.atimes.com/atimes/South_Asia/IB23Df02.html

http://english.people.com.cn/200703/...08_355414.html

http://www.marketwatch.com/news/stor...F099FDAF6C9%7D

http://quote.bloomberg.com/apps/news...d=a.1o1AEQzsqM

http://www.reuters.com/article/envir...3?feedType=RSS


Peak oil site says:
http://www.peakoil.com/fortopic30022-0-asc-0.html

Oil industry scales back refinery plans because of ethanol


As stated above in the few articles I posted it would seem oil refinery expansion is booming.