[zeke]

I wanted to post to start a discussion about the supply of oil...the apparent availablity of gasoline in the states despite widely supported accounts that the world as a whole has passed peak oil production.

Now, this isn't a thread about the spiking per-barrel prices, pump prices, and who's making a killing off of oil, but about the apparent steadiness in supply during what is the post-peak time.

I have a friend who works as a buyer/analyst for a chain of stores which sell gasoline and he says, from his data, there isn't even a blip in the supply of oil and gasoline.

"Plenty out there!" is what he says.

I can think of a few things which might explain this, but they're only guesses and my vantage point with respect to hard core data is extremely and admittedly limited.

Any thoughts on this aspect of peak oil?


zeke

[Windmills]

I wanted to post to start a discussion about the supply of oil...the apparent availablity of gasoline in the states despite widely supported accounts that the world as a whole has passed peak oil production.

States. World. Two different places, a wide variety of responses and ramifications of peak oil. There's "plenty out there" for those that can pay. Peak oil effects are not going to play out uniformly across the globe, and scarce resources like oil will also not be distributed uniformly. The category of people that cannot pay will continue to increase. There have always been and always will be those who have feasted in times of famine. They're called rich people. The US is quite rich by world standards, so we can bask in apparent plenty while the poor of other nations suffer the first rounds of peak oil. Regardless, one nation after another will be forced out of the oil age.

[tex123]

I am certainly no expert and I am sure you will get plenty of replies from members who know a great deal more than I do, but from what I understand thus far there is still quite a bit of oil out there just not the cheap, easily accessible oil which we have all become accustomed.

I would be interested in reading senior members' opinions on when we are likely to see a shortage in supply. So far as I can tell gasoline will be available for a long time if you are willing/able to pay for it.

[MadScientist]

There is. Rather than the natural decline of the bell shaped curve, we are riding a plateau. Basically, we are doing everything possible to maintain a flat line rather than the natural decline.
This gives the illusion of "business as usual" for the most part. There is a price however: the longer the false plateau is maintained, the steeper the dropoff will be..
To illustrate this, look at the chart of world oil production. Start on the far right and "push" left. The harder you push, the more oil is available now and the less at the end.
That's why I dont especially like the main page's production chart. It's just not the way things are going. The "cliff" scenario is closer to reality.


Also, as Im sure you realize, "steady supply" is relative to how much money you have. If you are a wealthy American ( and I mean wealthy relative to world population, not your neighbors) your perspective is far different than that of the lower brackets of world income.

[zeke]

hey, thanks for the great answers...

...much as I suspected and theorized myself: there's "plenty" at the moment for those who can pay.


in trying to sound the alert about PO with friends — and mind you, NOT trying to "win" any arguments, either — it's hard to make the case for the reality of PO when gas can still be had at ever-higher prices...

the spiking prices make people grab one or both of the following:

oil companies are gouging us (no news flash there) and speculators are artificially forcing the price up.

I am no finance whiz, either, and I'm having a hard time refuting the speculation angle; to me, it seems the speculators ARE forcing the price up faster than if there were no speculation.

But perhaps that, too is a symptom of the peak oil peak or plateau.


zeke

[ROCKMAN]

zeke,

As others have pointed out there will always be that portion of the world who can't afford oil. Even when oil fell to $10/bbl in 1986 the majority of the world population still couldn't use oil to expand their economies.

But the big question is how will economies that could once succesfully competed in the market place deal with the prospect of being priced out to some degree themselves. IMHO, the primary reason for the run up in oil prices has been not only the decrease in excess global production capacity but the expectation of its significant decline in the near future. Saudi flooded the world market in 1986 so they could reclaim market share they had lost by reducing their production to prop up oil prices. But now Saudi is content with their market share. They've netted almost as much income through June of this year as they did in all of 2007. With all other OPEC members acknowledging they are at PO there is little reason for Saudi to take market share by lower prices when that share will be coming to them soon enough any way.

[Cashmere]

I knew this guy, Zubu, who worked in shipping and receiving at a major boat builder on Easter Island.

He told me how he didn't notice any blips in the supply of lumber for years and years.

Then one year, without warning, prices started going up. He still got as much wood as he wanted, but the price rose continuously.

Then, about 8 or 9 years after the prices started going up, he'd have weeks where he couldn't get any trees at all.

Long story short, they all died.

[TheDude]

The 1973 and 1979 fuel shortages were caused by abrupt events, namely the Arab embargo against nations that supported Israel in the Yom Kippur War, and the downfall of the Shah of Iran, which led to Iranian oil production going to zero. What we are faced with now are very tight supplies, which have lead to high prices; in the process there are shortages outside the OECD. We have a thread on Global Fuel Shortage Reports, Tom Whipple in his Peak Oil Review will list places where shortages are occurring, or you can look up "diesel shortage" or the like on Google News. In a sense the whole world is a supply chain, with rich nations at the start of it.

[burtonridr]

Then, about 8 or 9 years after the prices started going up, he'd have weeks where he couldn't get any trees at all.

Long story short, they all died.

What? The people died?

Is it because the construction of suburbias used up all the available wood?

[ROCKMAN]

And don't forget the STR those rich bastards have hidden away.

[Kingcoal]

There is and always will be plenty of oil for those who can afford it.

[zeke]

We have a thread on Global Fuel Shortage Reports, Tom Whipple in his Peak Oil Review will list places where shortages are occurring, or you can look up "diesel shortage" or the like on Google News. In a sense the whole world is a supply chain, with rich nations at the start of it.

thank you for those links....they're excellent, and I've passed them on to others, "cornies" included.

When I read links like that and others, such as "the oil drum," I'm shocked at the realization of how far off most people are from even entertaining reality as a possibility.


zeke

[shandyman]

Been hearing for months that Iran is storing excess production in tankers offshore. Was told this week that producers in Texas are capping wells because they've run out of storage and the cost of storage keeps rising. The Saudis this week cut premiums on different grades of crude they sell. Seems there is plenty of crude around. Part of the problem is refiners refuse to switch to heavier sour crude, instead driving up prices by demanding lighter, sweet crude produced in revolution torn Nigeria. Wen new refinery capacity come on line and current refiners switch over to cracking heavier crude prices will drop.

[copious.abundance]

I knew this guy, Zubu, who worked in shipping and receiving at a major boat builder on Easter Island.

He told me how he didn't notice any blips in the supply of lumber for years and years.

Then one year, without warning, prices started going up. He still got as much wood as he wanted, but the price rose continuously.

Then, about 8 or 9 years after the prices started going up, he'd have weeks where he couldn't get any trees at all.

Long story short, they all died.

Sorry to hear they died.

But anyway, here's what happened to those lumber prices.

[smallpoxgirl]

What? The people died?

Is it because the construction of suburbias used up all the available wood?

Allegory (n) - The representation of abstract ideas or principles by characters, figures, or events in narrative, dramatic, or pictorial form.

[hermit]

I have a friend who works as a buyer/analyst for a chain of stores which sell gasoline and he says, from his data, there isn't even a blip in the supply of oil and gasoline.

Oil will be available for quite some time... but as it gets scarcer, prices will increase.

Making it less "available" to you and I...

[zeke]

Oil will be available for quite some time... but as it gets scarcer, prices will increase.

Making it less "available" to you and I...

Sure. that's an important aspect of PO to understand. And at some point, the actual supply of the stuff will get tighter, even if you have stacks of dollars, euros or gold. The stuff will simply get more scarce regardless of price. Even Bill Gates' fortune won't make more appear.

and even if bill gates or walmart or other large concerns and government can procure oil, they're nothing without customers or taxpayers.


I can't see it being very pretty if there are isolated entities, if you will, who possess oil, surrounded by the rest of humanity, who don't.


zeke

[Peleg]

hey, thanks for the great answers...

...much as I suspected and theorized myself: there's "plenty" at the moment for those who can pay.


in trying to sound the alert about PO with friends — and mind you, NOT trying to "win" any arguments, either — it's hard to make the case for the reality of PO when gas can still be had at ever-higher prices...

the spiking prices make people grab one or both of the following:

oil companies are gouging us (no news flash there) and speculators are artificially forcing the price up.

I am no finance whiz, either, and I'm having a hard time refuting the speculation angle; to me, it seems the speculators ARE forcing the price up faster than if there were no speculation.

But perhaps that, too is a symptom of the peak oil peak or plateau.


zeke

I think the supply and demand curves which you can get a nie graphic of over at the theoildrum.com are pretty good right now.

http://www.theoildrum.com/tag/world_production

That is the supply graph, you can get the data from the IEA or the EIA and make a nice plot in Excel that shos both supply and demand on one graphic.



Almost everyone understands that when demand outstrips supply you have upward price movements, this is not something you want to try to mess around with unless you need to avoid a catastrophe since capping prices is sure to bring on shortages eventually. So, Look at that graph, notice how after May 07 there is a widening gap between expected demand and expected supply. Price is mostly responding now to that expectation and reality. So if we do see 2010 looking anything like that prediction $200 and $7 are not far fetched at all. I have a suspicion that declines are boing to come on much quicker than people think, and therefore we could see $200 much sooner than 2010. But that is speculation. As for the price of oil, at best you have $30 speculation in that price. So that leaves you with what $100. But look $100 is still almost 50% rise in one year, that is an exponential price pressure all by itself compared to the last ten years. So we go from $10 per barrel in '99 to $100 (excluding the so called speculative bubble) and we have 900% increase in just under ten years, and a wonderfully formed exponential curve. You see this all started back when the real oil supply curve came near to an inflection point so that supply growth (the first derivative of supply) started to decline. Now we are into the phase where supply growth is approaching zero. Once it goes negative and stays (and it will eventually) 'peak oil' will be on the lips of every living human being. That realization could happen as soon as 2010, or as late as 2017 by most good estimates. I'm only in my late 30's. By the time my kids are old enough to want a car, car's could be the last thing a parent buys a kid for their 16th birthday. The issue is that serious, and profound, it is beyond all precedent in human history save perhaps the bottleneck 100,000 years ago (if you believe such things.) Peak Oil is something that every lawmaker should understand very well, all aspects of it and the possible mitigating steps, it should as much a pre-req as how the Senate operates. Peak Oil is THE issue of the 21st century, only climate change will rival it for scale, and only the Return of Christ could be bigger.