As far as the peak oil argument, it's not even worth arguing, it's been beat to death and very few are interested/willing to engage in a politically unbiased, fact based discussion on the subject, not to mention it's damn near impossible to determine what statistics are in fact true due to the lack of accuracy and transparency from all major producing nations, not just Saudi Arabia. At the end of the day the problem of high energy prices and strong demand will solve itself. Either crude will trade >100 (or some other "high" price) for an extended period of time which will provide the needed incentive for a mass effort to do all of the following: - Decrease demand (not just the usual argument of reducing vehicle fuel consumption; ever noticed how many lights and computers are left on all night in the office buildings in Manhattan or any other large city?), - Innovation in alternative fuels that actually consider whether a profit can be realized such that people are actually pursuing potentially profitable ideas, as opposed to losses that lead to mothballed plants (that is unless we want to "finance" unprofitable ventures for the sake of producing alternative fuels) - Improve CAFE standards - Wide scale development of public transit systems (at some point, at least in urban/suburban areas where public transit makes sense, many consumers would be glad pay for train and bus tickets to finance the infrastructure as opposed to $5 gasoline or diesel) - More efficient drilling, production and refining processes, etc. OR a significant global recession will reduce demand to a point that drive prices significantly lower and we'll have to wait for the next energy bull market to arrive before the cycle begins again. While we're at it we should consider removing the subsidies/tax credits for alternative energies as they do little more than promote an inefficient allocation of capital to businesses/industries that wouldn't exist in their current state in a "free market" and would instead be allocated to more innovative/energy efficient ideas. As someone that trades refined products and biofuels, it's accurate to say that many US biodiesel producers are only able to turn a "profit" due to the splash and dash trade. Not to mention ethanol, one of the largest economic/energy scams of our lifetime. In the meantime, the majority will continue to live life as usual and continue to bitch about higher prices but do little to attempt to reduce their own consumption.
Lies and lies. And the sad part is that is actually really easy to prove. We know why OPEC members lie, because that's how they get their quota. For decades of usage and no new discoveries, nevertheless their reserves remained the same or even increased! I already said why they say there is huge extra capacity left. It is a long term lie. If users realized that they are going flat or down, they would start to look for alternatives IMMEDIATELLY! Sure they could have a pricespike for a short time, but that would also kill demand soon, and would be temporary. In the long run their lies work better. They don't want to kill their golden chicken... (thought the chicken will die anyway)
If a price spike would kill demand "soon," that means that alternatives for oil consumption are relatively plentiful and easy to develop, and peak oil poses no lasting threat to us. So why worry? A brief price spike, a flurry of developing alternatives, then cheap energy as far as the eye can see. Do you see my point here? The Saudis are acting in a way that is not consistent with the alarmist / Peak Oil / theoildrum.com view of the oil market. There's no way you can make it consistent. If there is actually a deep crisis coming that can only be averted through decades of foresight, if at all, then the Saudis are knowingly selling their oil for less than it is worth. Martin
Sorry, but I am not following.... How the hell did you get to that conclusion? It absolutelly doesn't follow. The plentifulness (or lack of it) of alternatives or the how easy it is to develope them has nothing to do with a quick pricespike. True, if the price stays high for a longer time, than certain alternatives become more economic and feasable. And that can be a very good reason for the Saudis not to strecth the current oil price too high. If they had brain, they would do the studies and they would try to keep the price just below the cost of the next alternative. Also there isn't a flurry of alternatives.... The Saudis are acting in a way that is not consistent with the alarmist / Peak Oil / theoildrum.com view of the oil market. I don't see it. They are acting the way I would act if I were them. Secrecy, obfuscation, and denying the fragile state of reserves....
Boone Pickens saying that we are peaking at 85 mbpd, and I tend to agree with him. We will NEVER see over 90 mbpd... http://www.theoildrum.com/node/3102#more As an interesting fact, the oilprice measured in GOLD during the years, instead of dollars: http://img168.imageshack.us/my.php?image=guess1ip0.png It just shows if we pick a different standard than dollar, oilprices were pretty much the same in the last 3 decades.
Just for educating the ignorants: 1) Crude oil - Latest available figures from the Energy Information Administration (EIA) show that crude oil production including lease condensates increased by 455,000 b/d from June to July. Total production in July was estimated at 73.28 million b/d, which is 1.01 million b/d lower than the all time high crude oil production of 74.30 million b/d reached in May 2005. 2) Total liquids - In September world production of total liquids increased by 450,000 barrels per day from August according to the latest figures of the International Energy Agency (IEA). Resulting in total world liquids production of 85.10 million b/d, which is 1.03 million b/d lower than the all time maximum liquids production of 86.13 million b/d reached in July 2006. 3) Status of the production plateau - Both the International Energy Agency (IEA) and Energy Information Administration (EIA) figures show that global liquids production has been on a plateau since 2005. The IEA figures result in an average global production in 2007 up to September of 85.03 million b/d, almost to the same as the average 2006 production of 85.00 million b/d and higher than the average 2005 production of 84.10 million b/d. The EIA puts the average global 2007 production up to July at 84.40 million b/d, slightly lower than the average 2006 production of 84.60 million b/d and the average 2005 production of 84.63 million b/d.
I agree. So, what do you think that cost is? Let's say world oil production has peaked today and the Saudis are essentially pumping flat out. With no excess global supply, future oil prices then will be dictated by the cost of the marginal barrel of crude oil alternative. How much do you think that marginal barrel will cost, let's say, a decade from now? If that price is less than $88 in 2007 dollars, then you're right, the Saudis are smart to lie about their reserve situation. But that also means that the Peak Oil theorists / theoildrum.com geeks / oil longs like you and me are all wrong and oil doesn't necessarily need to be any more expensive than it is today -- a price that is not significantly disrupting world economic growth. If that price is greater than $88 in 2007 dollars, then the oil longs are right, but you are wrong about the Saudis, they would be better off driving oil prices up because no matter what they say oil is going to be more expensive in the future. So I am still concerned that the Saudis are doing something that seems to be contrary to their financial interests. Martin
Sparohok, this is very sensible, but perhaps too sensible. Is the Saudi state in totum necessarily a rational actor? There are probably numerous cliques and factions within Saudia Arabia, all with differing views on what is going to happen to oil production. Some are no doubt well informed, others perhaps just trot out the party line. If there is enough tension between the various factions then compromise could force Saudi state policy off the plane of what we might see as rational. Let's make an analogy with the US. Rightly or wrongly, many people both in the US and without believe that the policies of the current administration over the past few years have been far from rational and well thought-out. Many people (again, rightly or wrongly) believe that these policies have actually damaged US interests both at home (Patriot Act) and abroad. These beliefs, held by a significant fraction of the US population, have not prevented the administration from implementing these highly controversial policies. If a modern democratic state can be riddled with this kind of conflict and if such a state can take actions that many believe work against that state's own best interests, why should we expect more from a semi-tribal society like Saudi Arabia? Suss
I don't know what the exact cost is, that is a detailed study. Certain old oilfileds also can be reopened at a certain price, but the producers want to be sure that the price is going to stay that high and not just a temporary spike. If you noticed, so far I haven't speculated about PRICE, because it is really marginal to the main problem. And the Saudis don't dictate the price anymore, the market does, including Chinese demand, weather in the mexican Gulf, war in the Gulf, etc. There are several scenarios that could cause a sudden and big price DROP: -- SARS or birdpox whipes out 100 million Chinese thus lowering their demand -- big recession in the US, transportation cutbacks -- a few countries deciding to go on and use MORE nuclear power -- dollar suddenly gains strength etc.etc. I am only oil long in a sense that in the long run it can only go up. That doesn't mean it won't fluctuate or even drop temporarily... Also as mentioned earlier, oilprice depends on the dollar's strength. If the dollar keeps weakening oilprice will automatically go up. The Saudis and every big oilcompany is basicly playing for TIME, they want the cat out of the bag as late as it can be. Eventually it will be obvious that we passed peakoil, but we can only know for sure a few years later. Again, if humankind gets lucky we can get a 5-10-15 years plateau of stalled production instead of a sudden (and obvious signal) drop in production.... P.S.: Theoildrum.com is probably the most intelligent and professional awareness site I ever seen, so don't call them geeks. There are quite a few experts on it.
Point well taken! They aren't necessarily rational, but since they have information about oil supply that nobody else in the world has, it's still worth paying attention to what they are saying. Pekelo is claiming that Saudi statements fit right in with his view on peak oil, which I don't think is the case. That's really the main thing I'm trying to argue here. Also, it seems to me that greed is a very powerful force of human nature. If the Saudis were being irrationally greedy that would make total sense. But here it seems like they are being irrationally non-greedy, selling their oil for less than it should be worth. Martin