High Oil Prices = Peak Oil!... So what do low prices mean?

by **Lolberg** » Sat 28 Mar 2009, 12:30:56

Guys,

When oil was trading at $100+, everyone (including myself) was certain this was due to peak oil related supply constraints.

So you could say many thought -
"$100+ 2008 OIL = PROOF PEAK OIL IS COMING"

So what now? I am not going to say oil is cheap now, but it has come down to the lowest levels in the last few years.

Is this now proof that early peak oil predictions are not true?

If "$100+ 2008 OIL = PROOF PEAK OIL IS COMING" was ok, then isn't it also logical to conclude:
"$40 2009 OIL = PROOF PEAK OIL ISN'T NEAR"?

by **mos6507** » Sat 28 Mar 2009, 13:45:24

pstarr wrote:petroleum demand is mostly inelastic

Oil pares gains on falling demand

US crude stockpiles rose to the highest since July 1993 last week, indicating limited fuel demand in the world’s largest economy.

by **Novus** » Sat 28 Mar 2009, 14:16:50

Low Prices are indicative of industrial civilization collapsing in on itself. The Baltic Dry index which monitors world trade activity has dropped off 90%!! Civilization is floating along on goods and stockpiles that were produced before peak oil. When those stockpiles are used up will see hyper-inflation followed by mass shortages.

by **mlit** » Sat 28 Mar 2009, 14:18:23

Look at what oil prices did during the Asian financial crisis. We are in a far worse situation now yes prices are still fairly high.

by **Ludi** » Sat 28 Mar 2009, 14:35:02

by **pedalling_faster** » Sat 28 Mar 2009, 16:58:02

Lolberg wrote:High Oil Prices = Peak Oil!... So what do low prices mean?

Peak Oil.

One of the aspects of Peak Oil is the prediction of competition for scarce resources.

Part of Cold War history is that the US manipulated oil prices, to hurt countries it didn't like.

Who has oil now, in 2009 ? Venezuela, Iran, Russia.

We won't know the history of this period for a while.

but the IEA estimated for 2009 production are on the books - 9.1% decline, or something like that. we'll know for sure in another 6 or 9 months how 2009 shaped up.

in other words, it's not as linear as, "peak oil = high prices". 8 million other things are going on at the same time.

by **bratticus** » Sat 28 Mar 2009, 17:18:13

Lolberg wrote:If "$100+ 2008 OIL = PROOF PEAK OIL IS COMING" was ok,

How did you determine that high oil prices are proof of peak oil?

The price of oil isn't what Peak Oil is about.

I've long complained that the term "peak oil" is the result of scientists in the oil industry using excessive jargon. The term "peak oil" fails due to being only clear if already known.

They could have saved us so much grief if they had called it "Peak Petroleum Production" instead of "Peak Oil". The missing word "production" makes people think "peak oil" is short for "peak oil prices" when it's not.

Peak Oil is simply short for "peak oil production rates" and therefor only production rate data not prices determines Peak Oil.

The year that all of the world's oil is produced at the fastest rate of all time is the year of Peak Oil. Price has nothing to do with it and never did and never will.

by **Ludi** » Sat 28 Mar 2009, 17:45:11

by **mos6507** » Sat 28 Mar 2009, 18:30:30

pstarr wrote:Here come the bergs.

Sorry, you aren't going to get people to rush outside, throw up their hands, and panic when gas is around $2 a gallon. You be hysterical and end-is-nigh-ish. I'm going to enjoy what little normalcy remains.

by **sameu** » Sat 28 Mar 2009, 19:17:20

High Oil Prices = Peak Oil!... So what do low prices mean?

that high oil prices have put the economy in a recession

by **steam_cannon** » Sat 28 Mar 2009, 19:21:05

Re: High Oil Prices = Peak Oil!... So what do low prices mean?

This can be summarized in two words: Demand Destruction

http://www.energybulletin.net/node/12093
http://en.wikipedia.org/wiki/Demand_destruction

What is demand destruction?
An easy example: Energy costs become to high, factories shutter,
people don't have money for products including gas, gas prices go down.
To summarize further, jobless people can't afford gas and gas becomes cheap.

by **mos6507** » Sat 28 Mar 2009, 22:05:34

sameu wrote:that high oil prices have put the economy in a recession

Why of course! Silly subprime resets. They had NOTHING to do with it. And prices could have just kept on going up forever if not for pesky commuting costs. It's peak oil because, well, we're peakers and we NEED to blame peak oil on the credit crisis otherwise how can we sustain people's interest levels through this lull???

by **shortonsense** » Sat 28 Mar 2009, 22:41:36

pstarr wrote:
Novus wrote:
We are living off the infrastructure (the roads, bridges, pipelines, power dams etc.) built during the days of cheap petroleum.

Every road, bridge, pipeline, power dam, automobile, windmill and solar panel built since 1930 has been built on more expensive oil, 1930 and the discovery of the East Texas field being the all time low point in real dollars. The price was relatively steady, but more expensive, until about the 70's, when the price effectively skyrocketed, and stays high today.

Everything you've ever built, participated in the building of, watched being built or thought about building since the DAY YOU WERE BORN has been under the guillotine of "more expensive" oil.

Lets try and not practice revisionist history in our headlong rush to assign consequences to THIS particular peak oil, considering this particular effect has been going on as long as many of us have been alive.

by **shortonsense** » Sat 28 Mar 2009, 22:50:13

steam_cannon wrote:
To summarize further, jobless people can't afford gas and gas becomes cheap.

Quite true. But then those of us still employed trade in our stodgy gas sippers for zippy zoomy gas hogs which just ooze turbo charged all wheel drive performance, guzzling gas as we go, making up for the unemployed until consumption increases once again, and the price goes back up to reflect it.

Repeat as necessary until gasoline price uncertainty drives the employed into high performance EV's like the Tesla, or regular performance like the Volt.

Such structural changes in consumption lead to lower and lower consumption through time, until suddenly the world is electric and America feels bad for the starving Saudi's and offer them a bailout to subsidize crude sales to the few parts of the world still needing it.

by **shortonsense** » Sat 28 Mar 2009, 23:00:26

pstarr wrote:.

The world did not begin in 2007. This depression has been building since before GW took office. It is a continuation of the dot-com bust of 1999, itself a consequence of the end of the microcomputer revolution.

WHAT!!!! In 1999 I bought a computer which is probably slower than the processor in my wife's PHONE nowadays...how did the microcomputer revolution stop in 1999?

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