Richard Heinberg’s Museletter: Various Musings

This month’s issue is a compilation of several recent short writings. The last of these, a set of frequently asked questions about Peak Oil, is a work in progress that will appear in expanded form at www.postcarbon.org.

… As oil crosses $100 on its way south, not even a hurricane in the Gulf of Mexico and a statement from OPEC that the cartel will cut production by over 500,000 barrels per day seems capable of halting the bloodletting. In response, the Financial Post features an article (Sept. 11) titled (“Peak Oil peak,”) quoting this writer out of context; compare this with my commentary, which was the source of the quote: Hurricane destroys oil infrastructure; oil price falls). Wasn’t the price of oil supposed to rise endlessly? Wasn’t the world supposed to end by now? What happened? What does it all mean?

First, why did the price of oil rise this summer to nearly $150? On this there is little agreement among the mavens. A new report by hedge fund managers Michael Masters and Adam White (released Sept. 10 by Sens. Byron Dorgan, D-N.D., and Maria Cantwell, D-Wash.) chalks it all up to speculation (Oil speculation blamed for rise in energy prices). Pension funds, college endowments, and other institutional investors bought heavily into commodity index funds earlier this year, and that sent the price of crude to the moon. Recently the same investors have taken their money out of oil futures, and this accounts for petroleum plunging back to earth. Move along, folks, nothing to see here.

But this directly contradicts the findings of an earlier study by the Commodity Futures Trading Commission (CFTC Report on High Oil Prices). That 100-page report concluded that the price run-up was all about supply and demand.

Confused yet?

Post Carbon Institute