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Look, peak oil ain't here and never will be.

You demonstrate that you completely and totally do not know what you're talking about. Peak oil happened in Texas in the early 70s. It's inevitable. It's probably already here. It will mean the end of cheap oil, not the end of oil. Our economy is based, not just on the provision of oil, but the provision of cheap oil. For this, we will have to adjust. Few are willing to admit this, and many are putting their heads in the sand. Most, however, have a better idea of the situation than you do.

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You demonstrate that you completely and totally do not know what you're talking about. Peak oil happened in Texas in the early 70s.
Pennsylvania is a better example.

I said that peak oil is a valid gological hypothesis. It is not a valid economic hypothesis.

Bubbler, I notice that you have changed your reference to "cheap oil". Please explain what this is. How cheap is cheap? Europeans pay about $3/litre for gasoline. Is that cheap or expensive?

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It's a valid economic hypothesis, because once you've peaked, it becomes continually more expensive to draw out the remaining oil. You have to go deeper and deeper and, in the case of the oil sands, use other fossil fuels like natural gas to get the oil.

I would say oil is still pretty cheap, all things considered. No longer cheap is when it becomes prohibitively expensive to drive out of the suburbs and back every day.

And Texas is a perfectly good example:

http://www.energybulletin.net/17009.html

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It's a valid economic hypothesis, because once you've peaked, it becomes continually more expensive to draw out the remaining oil. You have to go deeper and deeper and, in the case of the oil sands, use other fossil fuels like natural gas to get the oil.

Bubbler, your link is to a review with this first sentence in their mission statement:

EnergyBulletin.net is designed to be a clearinghouse for current information regarding the peak in global energy supply.

So, not surprisingly, they take a "peak oil" view of things.

If what you say is true about peak oil at the global level, then I guess Exxon, Saudi Arabia, Kuwait, Venezuela, Russia, BP, Norway would be wise to leave the oil in the ground and be really, really rich in about 10 years when oil prices skyrocket.

[incidentally, Bubbler, do you read posts? I posted that same argument above. You didn't refute it]

I would say oil is still pretty cheap, all things considered. No longer cheap is when it becomes prohibitively expensive to drive out of the suburbs and back every day.
How do you define suburb? How far is far? And what is "prohibitively expensive"? All of these are questions of degree. The price mechanism, excepting panics and bubbles, doesn't fall of cliffs. It's more slippery slope.

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Getting back to the thread's title, the price mechanism works very well for oil exploration, production and distribution and setting incentives for alternatives. There will be no "peak oil" phenomenon.

OTOH, the price mechanism does not work at all for the world's environment. For this reason alone, I agree with Al Gore that we should think seriously about global warming.

People have to pay for the gasoline they buy. People don't have to pay for the emissions they put into the environment. Ergo, gasoline is not a problem; the environment is.

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If what you say is true about peak oil at the global level, then I guess Exxon, Saudi Arabia, Kuwait, Venezuela, Russia, BP, Norway would be wise to leave the oil in the ground and be really, really rich in about 10 years when oil prices skyrocket.

Uh...but if we couldn't buy oil, we would be forced to find an alternative source of energy or (more likely)dramatically change our lifestyle. Then the market would change its present course and oil prices wouldn't skyrocket. So no, they wouldn't be wise to do that. That's why you aren't running an oil company.

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Uh...but if we couldn't buy oil, we would be forced to find an alternative source of energy or (more likely)dramatically change our lifestyle. Then the market would change its present course and oil prices wouldn't skyrocket. So no, they wouldn't be wise to do that. That's why you aren't running an oil company.
Your logic escapes me. Do you mean to say that oil prices are not going to skyrocket? Do you imagine that gasoline will remain at $1.15/litre and then suddenly one day, there won't be any gasoline at the pumps? We'll, like, run out?

We will always be able to buy oil; what is at issue is the price we will have to pay for it.

Bubbler, you seem to view this as an either/or choice for society at large. But that's not the case at all. People now are making decsions to use less gasoline, convert to other sources of energy and so on because of the recent rise in the price of oil. Society doesn't choose to change; it is individuals that, each in their own time, choose to change. The collective result is society slowly changing.

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Perhaps the use of oil is misleading. Energy is a far more accurate word for the entire discussion I think. The reason OIL is so imprtant to us is that we are using it as fuel for our transportation methods. If you want to conserve oil consumption all you need to do is go for the biggest bang for you buck and utilize a more effecient system of transport for goods and people. Efficient meaning cost effective. There is only one viable alternative is you go with that theory and that is to electrify the railroad network and increase its capacity and diversity.

Go further and faster with the development of; wind, solar, tidal and even nuclear power production. Start thinking about another problem we will be confronted with in the near future and that is water consumption. The tree huggers need to take a back seat and we need to start talking about water in Canada. Sitting as we are on 7% of the worlds fresh water supply we have a hole card that can be used as a wild card to everybody's advantage. Water can irrigate as well as create power. Given that is drains into the worlds oceans we need to rethink this resource as it leaves our territory un-used and without public benefit by natural causes. There is a lot of available kilowats draining into the oceans that we simply haven't had the brains to tap into.

The reason oil is an issue is because of its relative expense and current state of use. Alter its use and its development will change as well. It is a hydrocarbon that cannot be recycled from its liquid form when used as an energy source, but in a solid form it is nearly impervious to decay and can be recycled numerous times into virtually anything we want. Burning it up doesn't make much sense in the greater scheme of things now does it?

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We will always be able to buy oil; what is at issue is the price we will have to pay for it.

Exactly. Though you still completely misunderstand the issue of peak oil. No, we won't run out. Yes, there will still be oil 300 years from now. No, it won't skyrocket in price overnight, but just since Bush has become president, it's gone up about 700% so it will go up fast. The point is, it gets more and more expensive to get it out of the ground, because it's deeper and harder to get. Therefore, there are no more fountains of bubbling crude found by shooting at some rabbits. It quickly becomes a very precious commodity, and wasting it driving Hummers 100K every day is no longer an option.

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Bubbler, your link is to a review with this first sentence in their mission statement:
EnergyBulletin.net is designed to be a clearinghouse for current information regarding the peak in global energy supply.

So, not surprisingly, they take a "peak oil" view of things.

What is a peak oil view of things? Perhaps it's a view of things from someone who actually understands what peak oil is, and doesn't think it means we've run out of oil.

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We will always be able to buy oil; what is at issue is the price we will have to pay for it.
Exactly. Though you still completely misunderstand the issue of peak oil. No, we won't run out. Yes, there will still be oil 300 years from now. No, it won't skyrocket in price overnight, but just since Bush has become president, it's gone up about 700% so it will go up fast. The point is, it gets more and more expensive to get it out of the ground, because it's deeper and harder to get. Therefore, there are no more fountains of bubbling crude found by shooting at some rabbits. It quickly becomes a very precious commodity, and wasting it driving Hummers 100K every day is no longer an option.

Well, Bubbler. It appears you and I agree. We will not run out of oil, but oil will just become more expensive. The next question is: how expensive?

You state that since 2000, the price has gone up 700%. That statistic is extremely misleading. Oil prices may have risen recently but they are still below what they were in 1980. Here's a graph of world oil prices in real, inflation-corrected dollars since 1947. (I couldn't find a graph going back further but that's even more interesting since prices were generally declining to 1930.)

In the immediate future, it is quite possible that the price of oil will rise to $100/barrel. That would put gasoline prices in Canada around $1.50/litre. At that price, I think you and I would both agree that we would see fewer SUVs on the road, and house prices in distant suburbs would fall somewhat. People would adjust - we've done it before. But the adjustment isn't only on the demand side. This article suggests that it is profitable to turn coal into diesel fuel at $35/barrel. IOW, the price mechanism performs its role as expected.

The "peak oil hypothesis" is one in a long line of "end of the world/we'll run out" theories. These theories are wrong because they ignore how the price mechanism operates. Not surprisingly, many of these theories are developed by engineers and geologists, or by people with a political agenda of some sort.

Now then, let me turn to global warming. In this case, there is no price mechanism at all. There is no incentive for anyone to do anything except to emit more greenhouse gases into the air. As long as our emissions are small relative to the space available then we face no serious problem but as your "peak oil theory" implies, that won't last forever.

Bubbler, I would agree with your "peak oil hypothesis" if you applied it to the environment since, unlike oil, the environment lacks any price incentive mechanism.

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The "peak oil hypothesis" is one in a long line of "end of the world/we'll run out" theories.

You still don't get it. It's more like one of those "inevitable, probably sooner than later" theories.

And your faith in the market to maintain order is likely mistaken. The market will sell all it can produce at the highest rate it can. Today, that's around $75 a barrel. If it's producing less than the world demands, it will simply sell for more--much more, if it can.

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You still don't get it. It's more like one of those "inevitable, probably sooner than later" theories.

And your faith in the market to maintain order is likely mistaken. The market will sell all it can produce at the highest rate it can. Today, that's around $75 a barrel. If it's producing less than the world demands, it will simply sell for more--much more, if it can.

I don't get it?

Why would anybody sell something today for a low price if they believed that tomorrow or next year it would fetch a higher price?

Look Bubbler, did you quit school at 16 and get a minimum wage job immediately? Or did you forego the low wage, stay in school, so that you could earn a higher wage in the future?

----

But why are you belabouring this point? I thought we agreed that the world will never run out of oil and the price of oil is not going to skyrocket all of a sudden.

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Why would anybody sell something today for a low price if they believed that tomorrow or next year it would fetch a higher price?

People only sell things for as high a price as they can get. Today that's $75 a barrel; if demand increases and supply reduces, that will change. It could change quickly; I hope it changes gradually: but either way, that change is inevitable.

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People only sell things for as high a price as they can get.
What? Do you mean that people don't think about the future?

Then why do they have children, plan for retirement, consider the resale value of a house? Why are we even having this discussion?

People sell things for many reasons but in general, they will sell something now if they think the price will go down. They will wait if they think the price will go up.

Incidentally, the price of a light sweet crude futures contract on NYMEX for delivery in December 2012 is $68.57. This fact alone should lay to rest any idea of "peak oil". The people who trade in oil futures have alot more interest in understanding oil pricing than the people who create peak oil Internet web sites.

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Even the most conservative oil producers say that production is limited and will reach a "peak" in the next 25 years, and that's based on overestimated Saudi numbers.

They sell the oil now because they have to perpetuate the demand. If they stopped selling it, people would be forced to find alternative sources.

People once said it was insane to speak of peak oil produciton in Texas in the early 1970s. Then what happened? Oil production peaked in Texas in the early 1970s.

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Bubbler, no one can accuse you of lack of determination.

I'll take that last part first:

People once said it was insane to speak of peak oil produciton in Texas in the early 1970s. Then what happened? Oil production peaked in Texas in the early 1970s.
I never said that one oil well will not run out of oil, or one oil field won't run out of oil. A graph of depletion may show a production rise and then fall. In fact however, oil wells and oil fields never really stop producing. Extraction is an economic question and some wells can produce more oil if the price is high enough.

[bubbler, you seem obsessed about the Texas example as if that is a metaphor for the world. In fact, Texas is a bad example of the "peak oil theory" and certainly no metaphor of anything.]

They sell the oil now because they have to perpetuate the demand. If they stopped selling it, people would be forced to find alternative sources.
WTF? Do you mean oil producers (they) force us to consume gasoline (to perpetuate the demand)? And how would they stop selling it?

Bubbler, it is impossible to talk about oil without talking about the price of oil. Producers cannot "perpetuate demand" nor "stop selling". At most, producers can possibly influence the oil price. OPEC does that - to a degree - by raising the oil price. A higher oil price discourages consumers and encourages alternatives to oil.

Even the most conservative oil producers say that production is limited and will reach a "peak" in the next 25 years, and that's based on overestimated Saudi numbers.
Who are these "conservative oil producers"? Any daily newspaper contains various crazy predictions. So what? Since Thomas Malthus, people have predicted that we will run out of natural resources. Dennis Meadows in the 1970s is another example. These predictions are wrong because they invariably ignore how the price mechanism works. The "peak oil hypothesis" falls into exactly the same category.

Your suggestion that Saudi Arabia "overestimates" oil reserves is interesting. There is no doubt that published statistics about "oil reserves" are highly political. Some people want it known that they are very rich and others want to keep their wealth secret. In the case of corporations such as Exxon, they are are forced to be conservative in claiming reserves since reserves determine the value of the company.

IMV, the "peak oil theory" is an interesting feature of the Internet, like 9-11 Conspiracy Theorists and Paris Hilton videos. If the Internet had existed when Watergate occurred, God knows what would have happened.

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People only sell things for as high a price as they can get.
What? Do you mean that people don't think about the future?

Then why do they have children, plan for retirement, consider the resale value of a house? Why are we even having this discussion?

People sell things for many reasons but in general, they will sell something now if they think the price will go down. They will wait if they think the price will go up.

Incidentally, the price of a light sweet crude futures contract on NYMEX for delivery in December 2012 is $68.57. This fact alone should lay to rest any idea of "peak oil". The people who trade in oil futures have alot more interest in understanding oil pricing than the people who create peak oil Internet web sites.

Ok. Is the ozone hole also a conspiracy by 'libruls'? I'm curious.

Your lack of understanding on the peak oil question is illustrated when you ask ' Would'nt those companies do best to just leave the oil in the ground, wait 10 years, and sell it at 400% profit?'

You see, with an oil well, you can't 'turn it off'. Most of the major fields that are relied on today have been in production for 20 years of more. When you stop production on a given well, you may find some of the oil has become unrecoverable - trapped in pockets inside the rock. Also, there is a question of capacity - Saudi has been paying huge amounts to Western engineers to come build them new capactiy, but they still don't have enough to simply siphon off a couple years production and dump it in vats.

Also, while they are saving oil how do you propose they make money?

Anyways, I suppose to you this is 'tin-foil hat' land. It's not, and I will cheerily remind you of that someday when we have ample ancedotal evidence around us to post-mortem prove the thesis.

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Ok. Is the ozone hole also a conspiracy by 'libruls'? I'm curious.
If you read back through this thread, you'll see that I make a sharp distinction between "peak oil" (or catastrophically running of a natural resource) and environmental destruction such as global warming and the ozone layer.

These are entirely different situations. Oil extraction is subject to the market price mechanism and hence it doesn't pose a problem. Global warming (and the ozone layer) are not subject to market prices and hence, they pose potentially severe problems. In the case of the ozone layer, CFCs were simply banned.

Your lack of understanding on the peak oil question is illustrated when you ask ' Would'nt those companies do best to just leave the oil in the ground, wait 10 years, and sell it at 400% profit?'

You see, with an oil well, you can't 'turn it off'. Most of the major fields that are relied on today have been in production for 20 years of more. When you stop production on a given well, you may find some of the oil has become unrecoverable - trapped in pockets inside the rock.

You simplify a complex question. But I think it's fair to say that if the oil has been sitting in the ground for several million years, it can sit there for a few years more without great loss. In fact, alot of oil stays in the ground because it's not recoverable at current market prices. That's the idea behind converting coal to diesel.

But my argument isn't about the size of proven reserves. I dispute the "peak oil idea" because it is based on a misunderstanding of how markets work. This is sad because we face potentially severe environmental problems precisely because of an absence of markets.

Unddrstanding how and why markets work is at the heart of so much confusion in public policy questions.

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  • 3 weeks later...

I finally saw the movie this weekend. It was quite good for a limited budget film. Coincidently, the Globe and Mail ran the story on my former professor Dr. Tim Ball and his campaign against the idea that the world is warming. His thoughts are that the world is cooling. He hasn't had a peer reviewed paper in 14 years but he is being funded by the oil and gas industry and prominent conservative types at the University of Calgary to dismiss the science of global warming.

I can't link directly to the article because it is protected content on the Globe and Mail site but here were some of the letters written to the Globe in response.

http://www.desmogblog.com/friends-of-science

oh, one last edit. I think I read that the movie has grossed $22 million as of this weekend. Not bad for a Powerpoint movie.

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I never said that one oil well will not run out of oil, or one oil field won't run out of oil. A graph of depletion may show a production rise and then fall. In fact however, oil wells and oil fields never really stop producing. Extraction is an economic question and some wells can produce more oil if the price is high enough.

I completely agree.

[bubbler, you seem obsessed about the Texas example as if that is a metaphor for the world. In fact, Texas is a bad example of the "peak oil theory" and certainly no metaphor of anything.]

Why? Just because you say it doesn't make it so.

Do you mean oil producers (they) force us to consume gasoline (to perpetuate the demand)?

No, we willingly go along and buy. But if they stopped selling to us, we would be forced to suffer miserably or find something else.

And how would they stop selling it?

I don't think they could. They would have to have capacity for almost limitless reserves. I think you (or someone debating me) brought up the scenario that if the price was going to rise in the future, why don't they stop selling it now. I don't think that's possible either.

Bubbler, it is impossible to talk about oil without talking about the price of oil. Producers cannot "perpetuate demand" nor "stop selling". At most, producers can possibly influence the oil price. OPEC does that - to a degree - by raising the oil price. A higher oil price discourages consumers and encourages alternatives to oil.

That's true. It also makes fertilizing our food and heating our homes and driving 40 miles out of suburbia every day unaffordable.

IMV, the "peak oil theory" is an interesting feature of the Internet, like 9-11 Conspiracy Theorists and Paris Hilton videos. If the Internet had existed when Watergate occurred, God knows what would have happened.

Other than, unlike bird flu or Y2K or local terrorism, it will certainly happen and probably soon. We can hope that our technologies will save us, but we shouldn't deny reality completely.

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Here's some additional incovenient truth.

Public records reveal that as Gore lectures Americans on excessive consumption, he and his wife Tipper live in two properties: a 10,000-square-foot, 20-room, eight-bathroom home in Nashville, and a 4,000-square-foot home in Arlington, Va. (He also has a third home in Carthage, Tenn.) For someone rallying the planet to pursue a path of extreme personal sacrifice, Gore requires little from himself.

...

Then there is the troubling matter of his energy use. In the Washington, D.C., area, utility companies offer wind energy as an alternative to traditional energy. In Nashville, similar programs exist. Utility customers must simply pay a few extra pennies per kilowatt hour, and they can continue living their carbon-neutral lifestyles knowing that they are supporting wind energy. Plenty of businesses and institutions have signed up. Even the Bush administration is using green energy for some federal office buildings, as are thousands of area residents.

But according to public records, there is no evidence that Gore has signed up to use green energy in either of his large residences. When contacted Wednesday, Gore's office confirmed as much but said the Gores were looking into making the switch at both homes

...

As executor of his family's trust, over the years Gore has controlled hundreds of thousands of dollars in Oxy stock. Oxy has been mired in controversy over oil drilling in ecologically sensitive areas.

...

Gore receives $20,000 a year in royalties from Pasminco Zinc, which operates a zinc concession on his property. Tennessee has cited the company for adding large quantities of barium, iron and zinc to the nearby Caney Fork River.

USAToday

It's just another case of limousine liberals telling the rest of us how we should live our lives. :angry:

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It's just another case of limousine liberals telling the rest of us how we should live our lives. :angry:

You're right. He should be taken to task for not living what he is saying.

I take it then that you agree we should all be doing something on global warming.

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It's just another case of limousine liberals telling the rest of us how we should live our lives. :angry:

You're right. He should be taken to task for not living what he is saying.

I take it then that you agree we should all be doing something on global warming.

How can any of us "live" by what he's saying? The point is our society is structured so that it is nearly impossible to function without burning fossil fuels and living unsustainably. You aren't a hypocrite for pointing that out, but you are if you claim to have people's best interests at heart and continue to ignore reality.

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