Wall Street Succumbs to Peak Oil

Yergin and CERA

Yergin and CERA is financed by the oil industry. Moreover, their numbers are not openly available to the public. The "peak oil theorists" publish their numbers, methodology and findings openly on the web. You have to trust Yergin, not so with the peak oilers.

The biggest flaw in the system is the lack of transparency by the largest producers of oil., i.e. Saudi Arabia. The United States future rests on numbers that the KSA provides without any auditing whatsoever. We only have their word. Doesn't seem smart to me.

vorpal of MA @ May 23, 2008 15:45:27 PM

Peak Oil

If by 'peak oil' you mean there aren't any new and cheap, easily extracted fields such as Saudi Arabia out there, I'd agree. But if you mean, we are running out of oil deposits of any type, that seems unlikely based on the unexploited fields we already have that are well known.

For example, U.S. shale oil deposits are enormous. Canadian tar sands deposits are enormous. Off shore deep water deposits are huge and largely untapped. All of these exist and could be tapped, but they are expensive. If we tapped them, as a group they would probably come close to doubling world reserves. They are generally not included in known reserves, but should be.

Recent examples -- Brazil just found a very large offshore field. We tapped a big new one in the Gulf of Mexico. Iraq just made a new discovery.

In short, I don't think you can talk about peak oil except in terms of a price point. That is, we have peaked in production of oil that can profitably be tapped at $30/barrel or $50/barrel. Yes, that is almost certainly true. But, have we peaked in production of oil that can be profitably extracted at $100/barrel, I doubt it.

www.fundmasteryblog.com

Kurt Brouwer of CA @ May 23, 2008 15:40:45 PM

Peak Oil

Dissapointing that we are still debating Peak Oil when for most of us we have moved way beyond the 'theory' of "Peak Oil". Read Mathew Simmons since he is a Republican and was on Dick Chaneys Energy Task force. We are like Willy Cyote when he runs out over a cliff and does not fall untill he looks down.

If you haven't done any preparations for a difficult time, the window of opertunity for the majority of us serfs is closing quike if it has not already. Wake up folks. There is little time left. Power down and learn other methods of energy usage. Your going to be forced to do this anyway and soon. You might as well practice low energy methods as an adaptive stategy. Most people do not think they will be as affected as their neighbors. They are wrong. Rationing of fuel could only be a year away. Thats when the paradigm will change. Adapt of suffer. That is the choice. E

Eugene Duran of NM @ May 23, 2008 15:38:50 PM

Socially Responsible Investing

Yup...I agree. I was thinking of investing in New Alternatives Mutual Funds (NALFX), global companies, mostly wind-generated energy (Gamesa - Spain, and Vestas-Denmark) mentioned in June 2008 Consumer Reports Money Adviser newsletter with a high 5year annualized return, as a good place to open a Roth IRA. Your article would be guilting me out, except that I've decided charity begins at home. I am so tired of being scammed by home-grown annuities salesmen posing as "financial planners" and biz-opp and other salesmen trying to get to the little retirement savings I have left--all home-grown...plus the antics of the currrent administration of 'good ol' boys' exploiting the religious right with their fear tactics to push their agenda with destructive consequences. If I'm going to be greedy, I'd like my few remaining , rapidly weakening dollars to go wherever they are going to do at least some small good. Three years from full retirement, I just opened my first Roth IRA this month and placed my first trade on my birthday. Ironically, the best gainer in my Sharebuilder account is for a wastewater treatment company whose patented, best of the bunch, state of the art technology was the recent winner in the bid to help rebuild the sanitation infrastructure in Baghdad. So I'm profiting doing damage control--at least it is constructive and green (micro-organisms cost-effectively eat the sludge in a no-odor process.) How can we not think globally these days---where does our extended community end? especially in this Information Age of the 21st Century? By the way, there is a bike hospital along the same lines as Velocipede just a few blocks from my home in Sacramento--great cause staffed by volunteers with great spirit and hearts as big as the world. Thanks for keeping us aware of the difference our small contributions can make--such ever-expanding consciousness of the effects of our individual and collective choices can change the world. Ghandi did it --why not "you and me and we"? Let's applaud the engineers without borders and the low-administrative cost charities like Vitamin Angels, our organic farmers that feed us and keep us and the soil healthy in a perfectly vibrant synergy. Thanks for inspiring us to work for more harmony.

B. K. E. of CA @ May 23, 2008 15:26:42 PM

Energy Policy

The absolute last thing we need is an energy policy. The notion that the government knows better than the marketplace which energy sources we should be using is absurd. Let prices determine how we obtain our energy. If the price of oil continues to go up then people will adjust their behavior and we will adopt new sources without any interference from the government. Already billions are being poured in by the private sector for solar and other renewable energy types. Government interference is guaranteed to only produce more ethanol-style boondoggles.

Indeed, to the extent we have government interference/policy already it seems to consist of preventing new oil exploration, building refineries and giving payoffs to corn farmers. No more of that please.

The thing we need to keep in mind here is that there is currently no free market in energy. 11 of the top 15 biggest oil companies are government owned. If the free market were allowed to work we would be drilling for oil all over the place and boosting production, as well as making more efficient use of existing oilfields.

Colin of DC @ May 23, 2008 12:32:06 PM

The Transition

The US is already pouring mass resources in a race to secure what is left of a declining global oil supply. These are the same resources we have available to develop new technologies and a self-reliant infastructure within our own borders. Once that is gone, all that's left is chaos.

Dale Hays of AZ @ May 23, 2008 10:30:40 AM

And "globalization"

They use the euphemism "globalization" when they want to justify exporting of jobs to the Third World. Well it is responsible for our present price increase more than peak oil. At this point we have just plateaued in oil production. That wouldn't have caused this spike except that we have sent so many jobs to China and India that they are now becoming large buyers of oil. So a stall in production still gets a big jump in price. Imagine what is gonna happen when production starts to decline 5% or more each year.

Robert Smith of CA @ May 23, 2008 01:36:51 AM

Spike in oil prices

Production and demand cannot keep pace with growth, therefore speculation cannot remain stable. Energy policy cannot keep pace with the markets, to the consternation of the political class, who cannot control production or rising prices. Consumers, ill-prepared and misinformed about rising prices, will seek relief through "price controls" that are politically driven but destined to fail. Consumer confidence in both policy and markets will wane.

Only when oil can reach a price that dampens demand will there be any stabilization in the markets. This will be accompanied by serious recession, as nations scramble for "cheaper oil" just to keep basic services and necessary production of industrial goods. Agriculture will suffer world-wide. Internal security will be of great concern as lay-offs and unemployment lead to mass migration and a significant rise in crime.

Kim Kohl of TX @ May 23, 2008 00:19:43 AM