Conventional Energy Bubble, Why Not?

[western]

A few things puzzle me. I have trawled the postings relating to peak oil and have seen some very insightful and logical arguments. My understanding of a bubble is an over exuberant rush to the market by the masses in the hope of riding the next big one.

When people start to realise that oil and gas and other conventional energies are going to enter or have already entered an irreversible decline, why will this not be the trigger of a new bubble. A simple event like a sharp spike in prices due to some supply issue or global event, will surely get people thinking. I'm pretty sure most people are not going to ponder the merits of arguments and graphs about supply and demand put forward by this site, if they did then there wouldn't have been a housing bubble.

An alternative energy bubble, the way I see it will take quite a while to capture the imaginations of most people while the concept of the words Oil, Gas and Running out wont take long to compute. Am I way off the mark here?

[medved]

Re: Conventional Energy Bubble, Why Not?

A few things puzzle me. I have trawled the postings relating to peak oil and have seen some very insightful and logical arguments. My understanding of a bubble is an over exuberant rush to the market by the masses in the hope of riding the next big one.

When people start to realise that oil and gas and other conventional energies are going to enter or have already entered an irreversible decline, why will this not be the trigger of a new bubble. A simple event like a sharp spike in prices due to some supply issue or global event, will surely get people thinking. I'm pretty sure most people are not going to ponder the merits of arguments and graphs about supply and demand put forward by this site, if they did then there wouldn't have been a housing bubble.

An alternative energy bubble, the way I see it will take quite a while to capture the imaginations of most people while the concept of the words Oil, Gas and Running out wont take long to compute. Am I way off the mark here?

Yes. Conventional Energy Bubble is "bad for America", it will be immediately killed by the government.

Housing, dotcoms, alternative energy or whatever dogooder fantasies we already went through were all "good for America", so there were no regulations intended to kill them.

[western]

Re: Conventional Energy Bubble, Why Not?

Yes. Conventional Energy Bubble is "bad for America", it will be immediately killed by the government.

Housing, dotcoms, alternative energy or whatever dogooder fantasies we already went through were all "good for America", so there were no regulations intended to kill them.

But what if people rushed to invest in oil gas or coal companies, exploration companies, oil and gas infrastructure and equipment, foreign companies like Canadian energy trusts and other associated industries. A rush to invest in these companies will be difficult to regulate against and do not affect the price of the commodity, this will still follow the supply and demand rules and the enron loophole sort of rules.

[phirang]

Re: Conventional Energy Bubble, Why Not?

It is instructive to attempt to simulate the production of power in various countries across a variety of economic strata (dirt po', eh, and hella loaded).

Only when you bother with an excel sheet and some native data do you realize how bad the energy crisis is. The demand, unfortunately, will prove pretty damn elastic, as the substitutes suck and forgoing the consumption would reduce the actor to Liberian-level economic status.

The irony you wil find is that the poorest countries almsot always have the highest levelized cost of energy!!!

* gets off soapbox

[medved]

Re: Conventional Energy Bubble, Why Not?

But what if people rushed to invest in oil gas or coal companies, exploration companies, oil and gas infrastructure and equipment, foreign companies like Canadian energy trusts and other associated industries. A rush to invest in these companies will be difficult to regulate against and do not affect the price of the commodity, this will still follow the supply and demand rules and the enron loophole sort of rules.

1. Oil, coal and gas companies are "bad guys". They will be taxed and beaten to death, and then nationalized. Example: http://ap.google.com/article/ALeqM5h...tri0QD8VP9J400 (no matter, oil companies only have about 11% profit margin and SW companies around 25%). Besides, I think, the gov't makes more money on gasoline, than the oil companies do.

2. Witness predatory taxation of the Canadian income trusts by the "konservative" government. If they still make enough money to pass some income to their shareholders, they will be taxed more.

3. Oil related equipment companies may escape these problems to a degree, but this sector is too specific and small for a market bubble, and if it grows too big, it will also be overtaxed/nationalized.

[phirang]

Re: Conventional Energy Bubble, Why Not?

I could definitely see a populist effort to nationalize exxon... would be pretty popular, actually!

gazprom 2.0

[tombat1913]

Re: Conventional Energy Bubble, Why Not?

An alternative energy bubble, the way I see it will take quite a while to capture the imaginations of most people while the concept of the words Oil, Gas and Running out wont take long to compute. Am I way off the mark here?

I think it would take time to capture the imaginations of investors unless legislation and incentives are pushed through to encourage it. Most of the science and technology is already in place, so if for instance the wait time to get approval to build a new nuclear plant drops below the current 10 years, and the actual rate of approval goes up as well, then a new market will be created which was almost non existant before. Then if they further encourage growth by giving carbon credits or some other incentive to non carbon emitting power plants it will give even further encouragement for power companies to start building.

Natural Gas plants such as the one I'm "working" in as I write this are only running a few months out of the year because the cost of gas is so high. Some of the power companies are just selling their natural gas futures off instead of running their natural gas plants because it's generally more profitable, unless demand is high enough.