[Carlhole]

It's official. Peak oil is a loser. It blew a tire on the curve, and lost the TEOTWAWKI 500 to the ongoing US financial meltdown. Valiant efforts are being made at the peak oil sites to maintain interest and somehow blame the collapse on oil, or at least find some flimsy connection... to no avail. The PO community is looking increasingly like the village idiot who warned everybody about the tornado, just before the big flood hit.

Now that most of Wall Street has been vaporized, peak oil isn't going to be the hot cottage industry it once was. The groupies will now shift to the real rockstars of the global collapse blogosphere -- the finance doomers. Pity the poor peak oil sites... viewers melting away like the Greenland icesheet, page views slumping like WaMu stock...
Amidst the carnage, we can single out one man for some well-deserved kudos. That would be Mike Lynch, who called oil "the mother of all bubbles" on April 21.

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Nice job, Mike. I'll take you out for some octopus balls if you're ever in Osaka. Of course, the peak oilers adamantly refuse to admit that oil was a bubble. They stand ready to defend peak oil at all costs, even if nobody else gives a shit anymore. When Jerome a Paris carefully explains why his "Countdown to $200 oil" series is still relevant, even though oil prices fell off a cliff, and the US banking system imploded, the peak oil die-hards will dutifully nod their heads and hit the +1 button.
Of course sane regular Joes like you and me know what's up. We know for a fact oil was a bubble because we looked at the fucking picture.

No one's ever going to believe me, but I swear I've only checked John Denver's blog maybe once or twice in the past 4 years. But I just checked it out again now to see what JD might have written about oil's plunge and the world economic crisis, and found that PeakOilDebunked is pretty damn entertaining!

And JD writes in a faintly Onion-esque way about the foibles of the Doomers which makes me chuckle. His whole blog should be part of THIS site IMO.

Don't get me wrong... I'm very much interested in energy and recognize it as fundamental to everything else. But the whole Doom thing never really grabbed me as likely. I was always more keenly interested in the geopolitical goings-on - US motives in Iraq and Central Asia and all that.

The end of civilization dogma around here strikes me as a total juvenile fantasy trip.
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[RSFB]

Peak Oil: Who Cares?

Those who know that the world will most likely need oil to recover from the recession/depression.

Those who are worried about low investment in renewables and oil exploration / drilling.

Those who are not taking this financial crisis as an excuse to mock peak oil and other related theories and problems.

[seahorse2]

1. World oil production essentially peaked/plateaued at about 85mbpd. Do you think that plateau was geologic limit?

2. World oil production essentially peaked/plateaued in 2005 at about 85mbpd while world GDP was growing (increasing demand for energy). Do you think that plateau in oil production was a cause of the high oil/energy prices or do you think it was just speculation?

3. There are questions on this forum about the effect of lower oil prices on oil production. As you know, existing fields are in decline. Those declines have to be offset by new production, unless of course, world oil demand drops faster than declines in existing fields. Do you think world oil demand will drop faster than declines in existing fields?

4. I personally wonder whether lower oil prices will exacerbate the oil production limits we seemed to be reaching. My own beliefs were that a geologic peak in oil production would not occur until about 2012 - 2014, assuming demand increased at the predicted rates. The problem with dropping demand and dropping oil prices seems to be that necessary investment in new oil production in offshore fields and harder to reach develop places will not occur, and thus, oil production will in fact decline bc existing fields will decline. It seems plausible to me we could get a feedback loop where demand for oil and declines in existing fields "race for the bottom" causing serious economic harm.

5. You assume that the recession or developing depression is not related to energy prices and a plateau in oil production. Assuming this is true, you then draw the conclusion that the "doomer fantasies" have been avoided. How is that? The classic doomer arguments always argued that a drop in world oil production would cause a depression. A depression is a depression is it not? How is a recession or a depression ever a good thing?

[VMarcHart]

The PO community is looking increasingly like the village idiot who warned everybody about the tornado, just before the big flood hit.

That may be a fair comparison. I don't know. But wasn't the flood, like the tornado, caused because of bad weather which was caused excessive use of oil?

Granted, the PO community had an emphasis on oil, but the PO community was right on saying things will change for worse, and they did, ie, the financial bubble.

[ROCKMAN]

I can imagine this sort of conversation going on for many years to come. PO is a geological reality. Its validity isn’t based upon oil price at any point in time. If global consumption were to drop 50% and hold there indefinitely PO would still exist. Its impact, on the other hand, would be delayed decades. Two different animals: PO and the price of oil. PO determines the maximum deliverability of oil. Pricing will be controlled by above ground factors. The demand destruction caused by the price spike and the current economic downturn will determine the price of oil. Maximum production rate will always be there below the surface. But the above ground factors, IMO, will always determine oil pricing. But PO will affect some of those above ground factors to a degree. Just as the oil price spike of the late 70’s didn’t prove the validity of PO, the current price of oil doesn’t disprove PO.

The next above ground factor which has a huge potential to effect oil prices is OPEC’s current efforts to finally establish itself as a true cartel. Are we facing a potential increase in oil prices as the world slips deeper into recession? OPEC discipline will determine this scenario. But that won’t be the end of the story: what will be the global political/military response to such a successful move by OPEC. IMHO there are many credible scenarios that be constructed now. But believe anyone can predict which will play out still seems a fool’s game.

[Carlhole]

1. World oil production essentially peaked/plateaued at about 85mbpd. Do you think that plateau was geologic limit?
2. World oil production essentially peaked/plateaued in 2005 at about 85mbpd while world GDP was growing (increasing demand for energy). Do you think that plateau in oil production was a cause of the high oil/energy prices or do you think it was just speculation?

I never have argued against the idea that oil will peak one day (or has peaked already even). I've only ever argued that there is plenty of room to adapt and innovate and compensate for the decline. And I have been anxious for the nation at large to get serious about alternative energy. The Doom crowd doesn't appear to believe that human beings are capable of making adaptations at all.

I had always thought that the main threat caused by the peaking of world oil production was geopolitical strife, resource wars and such - simply because the Pentagon is what it is, because The Carter Doctrine has been formalized over the years, and institutions like those don't change their spots overnight.

Also, the private, historical Anglo-American oil interests are powerful capitalist groups who are admirably represented in Washington by people like Dick Cheney. So, if fields in Mexico, the North Sea, and elsewhere have already peaked, its not surprising that a Dick like Cheney is at the helm guiding US actions in Iraq - the last, rich, cheap oil province left on the planet. This has always been my main interest; its a working hypothesis that will be proven true or untrue in the near future.

As for the other questions, I can only re-post something I wrote in the "Stick To Peak Oil" thread:

Outside of PO.com, I'm seeing more views like this one about this year's dramatic market movements:
Tax Cuts, Lower Oil Prices Will Boost Economy

The financial crisis, economic turmoil, and the stock market sell-off have investors in the doldrums. One bright spot, however, is the recent plunge in oil prices. While this is a welcome development, it is not entirely unexpected. In recent years, easy monetary policy brought us the tech stock bubble, the housing bubble, and the commodities bubble.

High oil prices were largely the result of a weak dollar. They had less to do with strong demand or too little supply. Perhaps it took longer than it should have, but high oil prices finally caused the demand destruction we have been expecting. In reality, this destruction has been going on for months, but it become noticeable only recently. For example, the Department of Transportation just documented a decline of 15 billion fewer miles driven in August 2008 than in August 2007. But it's already late October. No doubt, demand has continued to fall during the last two months as well. Furthermore, as I explained more than a month ago in Forbes magazine, "with global economies slowing, the dollar strengthening and U.S. demand declining, even the threat of hurricanes can't keep oil's price up."

OPEC has long been saying there is plenty of supply. Now it is worried there is too much. Cooler heads at OPEC never wanted to see prices go as high as they did because they feared high prices would cause a global recession—something that is clearly bad for their business. Now they are just as worried that prices will plunge to levels not seen in years. This is why OPEC just announced a 1.5 million barrel per day production cut.

But just as OPEC was unable to keep prices from spiking, it is likely to find that it can't prevent prices from falling. Some OPEC nations with weak economies were already exceeding their quotas, trying to sell as much oil as they could at ridiculously high prices. On paper, these nations are entirely in favor of a production cut. However, in practice, they will find it much harder to stick to their promises.

Some economists fear that lower oil prices will cause Americans to return to their profligate ways—putting conservation aside and buying up SUVs and pick-up trucks once again. This won't happen. Every automobile company has invested millions—if not billions—retooling their factories to produce more fuel-efficient vehicles. No one is in favor of going back to old ways.

Lower oil prices and more efficient cars will leave consumers with more cash to spend on other things. This could do as much good as a meaningful tax cut, helping to revive the economy. Combine lower oil prices with a real tax cut and the economy is likely to boom. But if OPEC manages to push oil prices back up to recent highs, the U.S. and the entire world will have an extremely difficult time shaking off this recession.

The rise of China and India had definitely pushed oil up into a higher price plateau from the ultra-cheap levels it had been at in 1998 - probably into the $50 - $60 range.

But absent financial mis-management, supply seems to have been adequate and was not the primary reason for oil skyrocketing up to $147.

This whole thing will be revisited and debated for quite some time as we all watch further economic developments. But I'm seeing more evidence that massive money flows rushing to safety in the oil and commodity markets as the dollar tanked had been the primary reason for the big market move in oil.

Right now, gold is falling - or at least there is no upward pressure on it. If the market at large had the same apocalyptic vision as doom crowd around here, gold would be at $2,500 by now.

It's like I have always said: No one knows the future and it always seems to surprise everyone. Be skeptical of anyone who claims to know exactly how it will unfold.

[Ludi]

And I have been anxious for the nation at large to get serious about alternative energy. The Doom crowd doesn't appear to believe that human beings are capable of making adaptations at all.

As part of the Doom crowd, I'm waiting anxiously to see the nation at large get serious about alternative energy before I believe they are capable of making that particular adaptation.

Still waiting....

Still waiting....

Now that gas prices are much lower I expect to be waiting even longer....

[Leanan]

What is happening is exactly what many peak oilers predicted. "The Second Great Depression," "The Grand Depression," etc. Deffeyes has been warning about this for years.

I am more pessimistic than ever. Without credit, how will alternate energy be developed, or new infrastructure built?

[galacticsurfer]

Like if we had the Depletion Protocol and threw out the total free market spot prices and say had intergovernmental fixed contracts over years plus rationing schemes then everything would appear smooth on the surface. Prices are no indication of geological realities.

In other words if PO was a govt. given and not just ignored as the system is based totally on growth all would be different. They keep trying to grow the system so it busts down regularly in a climbing sawtooth pattern(economy up then oil prices climb then economy crashes and oil price crashes, repeat). Peak energy per capita was in 1970s or 1980 or something and since then it has been downhill. So debt has substituted for real growth(plus East Asian manpower and Chinese coal to make absolute global GDP larger over time) and we have pollyanna creep in all economic indicators to hide the real shrinking economy. Since growth is a fiction based on fake numbers the bubble keeps bursting as real resources don't keep up wtih printing presses(or fractional lending in this case). USA exurbia was a bridge too far for oil prices and Chinese 10% growth for coal and copper and aluminium prices.

When or if a depleton protocol with rationing will be worked into a global system we cannot tell. As long as Mammon is God and growth is highest doctrinal purity then we cannot deal with shortages except through military conflict. This realization breeds, particularly among the male of the species, a juvenile fantasy of herosim and slaughter. Commonsense management of a gradual declin in population does not seem to sink in well with A Type personalities who tend to float up to the top of the heap in our government and corporate structures. It seems therefore that juvenile hormone directed fantasies will be played out when shortages become real in the West, just as currently is the case in Pakistan and elsehwere in terms of electricity and food shortages.

[forbin]

a biased report from the group that wants tax cuts

I heard again today on the news, tax cut will get us all saved

big government is the problem

no sorry , its not , tax cuts are the problem , that lot have had their way in the past decade or more . tax cuts go us into this mess and peak oil will not be solved by tax cuts ( ok we'll get a little more oil if taxes are cut on exploration , if there's much to find)

but NOT more tax cust for the rich !

oh don't cry for poor old peak oil , these people are the same shamsters that come out of the woodwork every time theoil price dips

I seriosly doubt that can spell geology

so no panic peak oil has happend for texas , north sea and cantarell

Forbin.

[ROCKMAN]

So no PO at Cantarell, eh Forbin? Congratulations: you definitely etched your credibility in granite now.

[mos6507]

As part of the Doom crowd, I'm waiting anxiously to see the nation at large get serious about alternative energy before I believe they are capable of making that particular adaptation.

Still waiting....

Still waiting....

Now that gas prices are much lower I expect to be waiting even longer....

I'm waiting to see if Obama stops talking about alternative energy after he gets sworn in if gas prices keep going down. I am going to be a very harsh critic of Obama if he drops the ball on his rhetoric. I know people here are almost universally cynical when it comes to politics but I'm willing to give the guy the benefit of the doubt.

[galacticsurfer]

US and Western 70s stagflation was due to West Texas PO ca. 1970. This total economic meltdown is result of Global PO.

[mos6507]

US and Western 70s stagflation was due to West Texas PO ca. 1970. This total economic meltdown is result of Global PO.

Correction, PARTLY due to peak oil.

[Carlhole]

What is happening is exactly what many peak oilers predicted. "The Second Great Depression," "The Grand Depression," etc. Deffeyes has been warning about this for years.

I am more pessimistic than ever. Without credit, how will alternate energy be developed, or new infrastructure built?

Speaking of the Devil...

Was It Deliberate?

Oct.24, 2008 - Warning: I am not convinced that the following event actually happened, but it is an important possibility to explore.

The current financial crisis is clearly not simply the bursting of the housing bubble. The underlying cause was world oil production. The housing crisis is a symptom, not the disease.

The current disaster is enormously larger than the 2001 attack on the World Trade Center. It isn't just dollars. People are avoiding essential health care expenses; the US suicide rate is up. The destruction of the World Trade Center was deliberately planned, and the damage was huge compared to the cost of the attack.

Another possible example was the collapse of the USSR. On page 11 of Beyond Oil, I quote Stephen Kutin's hypothesis that the Soviet Union crashed after Saudi Aramco flooded the world with cheap oil. Here's the question: Did an economist in a windowless basement office in Langley, Virginia figure out that two million barrels per day of additional Saudi oil would destroy the profitability of the Soviet oil exports? Suppose that the economist passed the word upstairs and the idea was proposed to the Saudis as an old-fashioned price war. At that time, the Soviet Union and Saudi Arabia were the two largest producers of oil.

In a fascinating piece in the October 16, 2008 Denver Post, W. Jackson Davis points out that peak oil probably triggered the present crisis, but he says that economists were blindsided as if "a 'secret signal' sent out in 2007 slammed the economy with soaring energy and food costs, and the free-fall of housing prices." Could it have been an actual signal message?...

So there's Ken Deffeyes bucking up the Doomerosity. But I still think the financial debacle had most of its origins in lax monetary policy which led to a big-time housing bubble. Housing prices could NOT have kept escalating ad infinitum even in times of cheap gas; they HAD to bust down some time. All those mortgages had been collateralized into securities. We would have seen the same effect on the banks.

But I'm glad to see heavyweight Deffeyes himself commenting on whether or not the crude price run-up was a cause or an effect. I'm sure we haven't seen the end of this particular argument.

[ROCKMAN]

mos,

I hope your optimism is rewarded. I've long since given up much hope for the White House (regardless of which party wins) to have any real effect on our daily lives (other than commiting us to war, of course). I'm not even sure the Congress can collectively produce significant change in our long term planning. The two-party system has effectively eliminated much ability to generate a systemic correction. I can only see them jointly continue to manipulate the public with the blame game rather than admit culpability and address the critical issues honestly.

[TheDude]

Thanks for the article, Carl.

I'm concerned about the geopolitical fallout when the supply begins to drop year after year as well. Read Yergin's account of the jockeying that went down in '73 and '79, it was quite a mess even with short term supply shocks. Now imagine that going on year after year.

[Carlhole]

Was It Deliberate?

In a fascinating piece in the October 16, 2008 Denver Post, W. Jackson Davis points out that peak oil probably triggered the present crisis, but he says that economists were blindsided as if "a 'secret signal' sent out in 2007 slammed the economy with soaring energy and food costs, and the free-fall of housing prices." Could it have been an actual signal message?...

Kinda weird seeing ol' Ken turn conspiracy theorist. But I think he's shooting way wide of the mark on this one. This was NOT some sort of international conspiracy to destroy the US economy!

It has been in everyone's interest for the past 18 years to do business, develop, be secure and grow rich. No group of countries out there would have wanted to sabotage the American economy! To quote JD, "That would be like making war on your liver".

These are some of the main reasons for the current crisis:

(1) Artificially loose money and low interest rate policies of the Federal Reserve - especially after 2001.

(2) Loose qualifications for mortgages

(3) Washington's record deficit spending

(4) The phenomenally rapid rise of China and its mammoth financial and trading relationship with the US

(5) Patterns of poorly calculated, unrestrained leveraging and the explosion of derivatives in financial markets

All of these things created a superheated global economy that was not sustainable because it was being funded with debt. This is what eventually led to the current calamity. Several years ago, the market became aware that these unhealthy trends would reach a critical stage before long and the market started selling the dollar. Hedge funds and other large investors started stashing funds in oil and other commodities at the same time as a safe haven.

Peak Oil is a different concept than Maximum Flow Rate. Oil flow rates these days have a ceiling - a ceiling which cannot be raised quickly without a lot of investment and preparation. So, while massive flows of capital drove the oil market higher, the superheated global economy hit its head on a flow rate ceiling and this drove oil prices up even further - way beyond where they should have been had there been no global economy on steroids and no financial mis-management.

So, you can say that the limits of oil flow played a part in the record price rise and in the current economic crisis. But the origins of the crisis lay in the the enumerated items above.

[SuperTico]

As part of the Doom crowd, I'm waiting anxiously to see the nation at large get serious about alternative energy before I believe they are capable of making that particular adaptation. Still waiting.... Still waiting.... Now that gas prices are much lower I expect to be waiting even longer....

I'm waiting to see if Obama stops talking about alternative energy after he gets sworn in if gas prices keep going down. I am going to be a very harsh critic of Obama if he drops the ball on his rhetoric. I know people here are almost universally cynical when it comes to politics but I'm willing to give the guy the benefit of the doubt.

Obama is a farce. He's a tool of the illuminati. He, like McBush and the rest of these scumbags, bow to their masters "yessa massa"(in Barracks case) Michelle is a member of the CFR/CIA= agents of the worlds richest dirtbags.
I'm a millionaire who dumped two VERY succesful farms and everything else I owned ( I torched my high school year books, family photos, shooting trophies... name it) I came here with a bulldog, a few guns and a few books plus my SURVIVAL gear. 4 military duffel bags full of stuff ( 500 lbs).

Am I a whacko ? I hope so ! But like everything else in my life I have yet to be wrong; thus far. I honestly hope this time I am.
BUT IF I'M RIGHT I'll be fine. Gotta go feed my wabbitz and Tilapia.
Later........

[aswerfawf]

i think the explaination for some doomers is that they secretly want this culture, this society, this civilization to be destroyed. peak oil, like the other crisis cults of the past (i'm talking about christianity and zorastrianism) have capitalized on this intense desire to destroy societies which hold us captive. unfortunately, they also have the tendency to replace concrete action with faith and put all their energy into preparing for the fire of god. however, hoping for the collapse won't hasten it any more than building a root celler will.