I think demand has outpaced supply, but not peak yet

Ayoob · Expert Joined: Jul 15, 2004 Posts: 1056

I think it's just a case of demand rising faster than the ability to pump is rising. We haven't actually dropped in production yet, so that's not the reason the prices have just skyrocketed. It's just a bidding war to see who's going to get the oil that comes out of the ground. Poorest get butted out of the way first. But, production is still rising. That hasn't actually stopped yet. Nat Gas has peaked in NA, and the price tripled.

When oil Peak comes, I'd think prices would triple overnight. There would be no way to contain the panic that would come. Rationing? I don't think so.

Thankfully, I got a new job selling security equipment and I don't have to drive all over creation anymore. If it came down to it I could ride my bike (2 hours) to work and back through the worst neighborhoods in LA, but it could be done. Not sure I'd want to do that, but I could.

Specop_007 · Expert Joined: Aug 12, 2004 Posts: 6235

Even if Europe and North America dont increase there usage by 1 drop, we're still going to see a horrendous shortage soon. China is gearing up, and fast. Hell, compare wire (As in copper wire for houses) prices to that they were previously.
If China keeps gearing up hard like they are, prices on ALOT of things are going to go up, and possibly dramatically.

buster · Heavy Crude Joined: Aug 12, 2004 Posts: 144

What we do have seems to be near-equilibrium between production capacity and demand, such that interruptions in supply from any one of the top 4 or 5 sources leaves us without much surplus capacity to handle the shortfall.

It takes years to put new sources online, and meanwhile existing sources diminish in capacity year-by-year. We may continue to see the industry playing "catchup" to demand for the rest of the run-up to actual peak.

If we face, say, 10 or 15 years of shortfalls caused by production capacity chasing demand, this could actually be a very good thing -- extending the life of existing reserves, forcing limits on use, and paving the way for a "soft landing" rather than the "dieoff" predicted by some.

This is especially so now that there is some serious investment going into renewables research. Presently, holes can be poked into every plan for replacing oil, but I doubt that situation will hold true forever.

I have little faith in the belief that the "free market" is always the best way to address public problems, but I have to grant that "smart money" has realized that oil needs a replacement. The renewables research that the green movement has demanded for a half-century is at last happening, thanks to good old greed.

Part of me resents that, and wishes for peak to come anyway, just to teach those damned capitalists a lesson...but my saner part remains hopeful.
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