[Outcast_Searcher]

I keep seeing current / recent high prices as the implied proof of peak oil in these posts.

Prices are a function of supply AND demand.

I still think the big issue is not current or near term supply but the likely HUGE run-up in relatively near term demand by the roughly 3 billion people in the emerging markets that nearly ALL aspire to have a family car and travel. China and India and the $2500 Nano as the symbol of the cheap family car of choice are the obvious big-hitter culprits cited by the Economist over the past year or so.

I'm constantly amazed by the financial analysts who keep insisting that oil is way overpriced and that it MUST crash in coming months, as there is lots of current supply (ships full of oil sitting in harbors is commonly cited as "proof" of this.).

Well, yeah, if you have the attention span of a GNAT, I guess that makes sense. However, with things like long term oil futures contracts, long term storage costs which can be estimated, and long term supply/demand that can be forecast based on various assumptions, it would seem that the "overpriced" oil market seems to basically disagree with these folks, as many "speculators" remain long and strong on their oil forecast/positions.

In my mind, we may be a LONG way from (geologically caused) peak oil. However, we are NOT a long way from chronically very EXPENSIVE oil (relative to what the global economy can tolerate). The cost may force us to use other things and to conserve a lot. If this results in us hitting a (behaviorally based) oil peak soon, that would seem to be a GOOD thing, at least in the long run.

[smiley]

Yet crude stocks are higher than they have been for a long time. Not all money goes to gold when times are tough.

December 9 1998 -- Crude Oil (Excluding SPR) 334.8 million barrels
December 11 2009 -- Crude Oil (Excluding SPR) 332.4 million barrels

Then you still have to explain why these speculators which are so notably present now were absent during the last crisis.

[davep]

Yet crude stocks are higher than they have been for a long time. Not all money goes to gold when times are tough.

December 9 1998 -- Crude Oil (Excluding SPR) 334.8 million barrels
December 11 2009 -- Crude Oil (Excluding SPR) 332.4 million barrels

Then you still have to explain why these speculators which are so notably present now were absent during the last crisis.

I'm not sure why, but the money in oil derivatives has exploded over the past few years. Maybe they read this site

[sparky]

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Do the maths , Saudi Arabia has more than 2Mb/d spare capacity
Irak is in the process of bringing 3~4 Mb/d within 5 years , easy
Brazilian offshore will be coming on line between 5~ 10 years

There is going to be a glut for the next decade , especially if demand is weak


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[Revi]

I don't think we'll ever see as much come out of the ground as 2008, because the money isn't there. With the economy going full bore all that oil was soaked up and we wanted more.

I think that we'll be on a nice plateau thanks to Iraq, Brasil and Saudi, for a while. I wonder where all that oil is going, however.

I have a feeling it may be headed to China and other growing importers with money.

[sparky]

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an interesting point is the decline of the non Gulf producers ,
North sea , Alaska north slope ,Mexico , Indonesia are all busted now
Russia probably too but they have plenty of acreage to play with

The Gulf is the main game and will remain so even further
that's a lot of eggs in a rather dodgy basket

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[AirlinePilot]

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Do the maths , Saudi Arabia has more than 2Mb/d spare capacity
Irak is in the process of bringing 3~4 Mb/d within 5 years , easy
Brazilian offshore will be coming on line between 5~ 10 years

There is going to be a glut for the next decade , especially if demand is weak


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"easy Brazilian offshore"

Excuse me? I believe you need to do a modicum of research into how "easy" this oil is. Also I believe 5-10 years is a pipe dream for anything more than developmental production from this source.

In case you hadn't noticed,(since it appears you believe there is going to be a glut!) Non Opec oil production is in decline and has been for some while, possibly for years.
Saudi production has to stand the next test, which will bare what their REAL spare capacity is. I'm troubled by their recent huge monetary outlays for offshore/onshore exploration and re-tapping older fields for the scraps. That should send you a clear message about their claimed reserves.

The likely picture is those sources you label above are simply very short term blips on the larger decline curve. The glut we are currently experiencing is due simply to a massive global deleveraging and wont go on forever. We will probably bounce back at some point and new demands will be placed on supply. For instance look at what Mexico imported just a few short years ago. Those 2mbpd above will be used up in a twinkle of your eye once they become net importers sometime in early 2011. Poof..gone...that quickly. I believe your living in a dream world of denial as most currently are.

Wake Up!

[sparky]

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Some of the things you say I agree ,non Gulf production is heading south , big time
the drop in production for non Gulf producers is a fact ,
that's 60% of world production now

a little appreciated element is that oil producing countries internal consumption is increasing too
the critical factor is less extraction than net exports


I never said Brazil is going to be easy ,
I should have put a coma , my fault ; the easy was an adjective to to Iraqi oil ramping up
there is an abundance of tech backup in the region ,
the fields are shallow and onshore the geology well established
safety is an issue but rather minor , Oilmen have worked in troubled spots before
it's a production cost and not the biggest one
I was working in S.A. during the Mecca revolt , business as usual
some friends of mine worked in Iran during the Khomeini revolution ,
they were evacuated AFTER the embassies closed , under small arm fire .

As for the offshore Brazilian fields ( and the African mirror formations )
that's an engineering feat just for the drilling part and the oil is going to be rather expensive
10 years should see some sizable production coming on stream

on the face of it Saudi Arabia cut production by ~ 2 Mb/d in a matter of weeks
time will tell , but those 2Mb/d must be reckoned as available
as for them spending big on their oil industry , they have plenty of money ,spending some of it
on their production make more sense than buying U.S. treasury bills
at least they can expect some real returns


I agree this is a blip , I'm an unshakable Peak Oiler
but I've found skepticism to be an healthy mindset against my own wishful thinking

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