21 May 2008
Peak Oil Dogma
Posted by Joy Bischoff under: World Economy .
Shortage fears push oil futures near $140
By Carola Hoyos and Javier Blas in London
Fears of a shortage within five years propelled long-term oil futures prices to almost $140 a barrel on Tuesday, further stoking inflationary pressures in the global economy.
Investors rushed to buy oil futures contracts as far forward as December 2016, pushing their prices as high as $139.50 a barrel, up more than $9.50 on the day. The spot price hit a record $129.60 a barrel.
Veteran traders said they had never seen such a jump and said investors were increasingly betting that oil production would soon peak because of geopolitical and geological constraints.
Neil McMahon, of Sanford Bernstein, said: “Peak oil views – regardless of whether right or wrong – are seeping into the market and supporting high prices.”
I do not believe in the theory of peak oil. I have listened to a number of experts discuss this on both sides of the issue. ‘Fossil Fuels’ is a misnomer. I agree with those who believe oil is a natural by-product of the earth and did not come principly from remains of fossils. Finding oil in shale rock is one of a great deal of indicators that the old theory is wrong.
It is my opinion that the peak oil scare is being used to further the agenda of extremist environmentalists. The timing of the hype is calculated to push the price of oil higher and force changes that are in keeping with the desires of the environmentalists.
There is a great deal of information on both sides of the issue for anyone interested to google. Here is one statement on peak oil:
THE OIL RESERVE FALLACY
Proven reserves are not a measure of future supply
“We are looking at more than four and a half trillion barrels of potentially recoverable oil. That number translates into 140 years of oil at current rates of consumption, or to put it anther way, the world has only consumed about 18 percent of its conventional oil potential.
“That fact alone should discredit the argument that peak oil is imminent and put our minds at ease concerning future petrol supplies.”
“The Impact of Upstream Technological Advances on Future Oil Supply” - Mr. Abdallah S. Jum’ah, President & Chief Executive Officer, Saudi Aramco, address to OPEC, Vienna, Austria, Sept. 13, 2006.
http://www.radford.edu/~wkovarik/oil/index.html
7 Comments so far...
Cameron Says:
21 May 2008 at 12:55 pm.
Oil prices were being discussed in news and comments but I decided to post here since it is the blog topic. I have never looked into peak oil so I can’t talk about that. I’ll I know is that the oil companies making a very stupid argument in this article that makes me totally disrespect them.
Big Oil defends profits before Senate panel
May 21 01:24 PM US/Eastern
By H. JOSEF HEBERT
Associated Press Writer
WASHINGTON (AP) - Top executives of the five largest oil companies tried to shift anger over high prices to a debate over supplies Wednesday, leading a senator to accuse them of acting like “hapless victims” while racking up record profits.
Patrick Leahy, D-Vt., told the executives there’s “a disconnect” between normal supply and demand and the skyrocketing price of oil—surpassing $130 a barrel even as the oil leaders testified—that the industry has yet to explain.
J. Stephen Simon, executive vice president of Exxon Mobil Corp., said profits have been huge “in absolute terms” but must be viewed in the context of the massive scale of the industry.” He also said high earnings are needed “in the current up cycle” to pay for investments in the long term when profits will be down.
“‘Current up cycle,’ that’s a nice term,” replied Leahy with sarcasm, “when people can’t afford to go to work” because gasoline is costing close to $4 a gallon.
He asked Simon what his total compensation was at Exxon, a company that made $40 billion last year. Simon replied it was $12.5 million annually.
http://www.breitbart.com/article.php?id=D90Q5MT80&show_article=1
T. Fan Says:
21 May 2008 at 1:05 pm.
I don’t believe in peak oil either. There weren’t that many dinosaurs. We have found so many huge oil fields that we are just letting sit there that this argument is stupid. Are we suppose to go to all kinds of alternatives and get off oil altogether? Okay, then why are we letting our oil just sit there? That is the dumbest argument but it matches the intellect of our current crop of politicians.
Matt Says:
21 May 2008 at 1:43 pm.
Awhile back a couple of people who post here sometimes accused Joy of being wrong to suggest things would probably get tougher. How much evidence do you need people?
Stocks tumble on $133 oil, Fed meeting minutes
NEW YORK (AP) - Wall Street extended its sharp decline Wednesday, driving the Dow Jones industrials down more than 190 points as investors smarted from record-high oil prices and a bleak economic assessment from the Federal Reserve.
Stocks fell in early trading in response to the surging price of oil, which shot up more than $4 and breached $133 a barrel for the first time on the futures market Wednesday.
The stock market then slumped further after minutes from last month’s Fed meeting revealed that policymakers expected sharply lower economic growth and higher unemployment later this year—and that inflation worries are likely to keep the central bank from cutting rates again.
http://www.breitbart.com/article.php?id=D90Q6OI00&show_article=1
Cameron Says:
21 May 2008 at 4:49 pm.
This is getting shocking.
Stocks tumble on $134 oil, Fed meeting minutes
NEW YORK (AP) - Wall Street pitched lower for the second straight session Wednesday as record-high oil prices and a bleak economic assessment from the Federal Reserve deepened investors’ worry that Americans may face several more months of rising costs and a shaky employment picture. The Dow Jones industrial average fell 227 points, logging its widest two-day loss since late February.
Early in the day, stocks began falling on the surging price of oil, which shot up more than $4 and breached $134 a barrel for the first time on the futures market Wednesday.
The stock market slumped further after minutes from last month’s Fed meeting revealed that while policymakers expected sharply lower economic growth and higher unemployment later this year, inflationary risks are likely to keep the central bank from cutting rates again. Lower interest rates spur economic growth, but they also tend to accelerate inflation.
http://www.breitbart.com/article.php?id=D90Q8H5G0&show_article=1
Cameron Says:
21 May 2008 at 4:52 pm.
‘Squawk Box’ Guest Warns of $12-15-a-Gallon Gas
Robert Hirsch, an energy advisor, says CNBC morning show prediction was a citation of the ‘Dean of Oil Analysts.’
It may be the mother of all doom and gloom gas price predictions: $12 for a gallon of gas is “inevitable.”
Robert Hirsch, Management Information Services Senior Energy Advisor, gave a dire warning about the potential future of gas prices on CNBC’s May 20 “Squawk Box”. He told host Becky Quick there was no single thing that would solve the problem, due to the enormity of the problem.
“[T]he prices that we’re paying at the pump today are, I think, going to be ‘the good old days,’ because others who watch this very closely forecast that we’re going to be hitting $12 and $15 per gallon,” Hirsch said. “And then, after that, when oil – world oil production goes into decline, we’re going to talk about rationing. In other words, not only are we going to be paying high prices and have considerable economic problems, but in addition to that, we’re not going to be able to get the fuel when we want it.”
Hirsch told the Business & Media Institute the $12-$15 a gallon wasn’t his prediction, but that he was citing Charles T. Maxwell, described as the “Dean of Oil Analysts” and the senior energy analyst at Weeden & Co. Still, Hirsch admitted the high price was inevitable in his view.
http://www.businessandmedia.org/articles/2008/20080521145247.aspx
Saddened Says:
21 May 2008 at 5:40 pm.
Kind of takes your breath away doesn’t it? How are we going to get by when this all filters into food and everything else? Reminds me of Obama saying the world wouldn’t let us continue our way of living. Why? Does our doing well make others do bad? No, it is just the opposite.
Mac Says:
21 May 2008 at 8:42 pm.
I saw the news with the senate talking to the oil companies but nobody seems to be seriously coming up with a solution that will help within the next little while. Something has to be done. This is completely crazy. People say us Americans are so spoiled because gas is higher in some other countries but our economy and society was built this way. It isn’t our fault.
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