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Re: Where are all the Peak Oilists?

Unread postPosted: Tue 30 Jul 2013, 00:40:12
by ralfy
dashster wrote:
Those graphs could be scaled better for looking at peaks, but I don't see 2005 as being the peak in them. And in the second, I also don't see a world peak ex-USA in 2005 as they are explicitly claiming.

That's because when one looks at global production, aggregate information from sources are used, which means the apex will not be sharp. More important, one should look at demand exceeding conventional production: ... onsumption

which partly explains why oil prices are three times higher than what was predicted before 2005.

Re: Where are all the Peak Oilists?

Unread postPosted: Tue 30 Jul 2013, 08:36:02
ralfy – “Many had expected an increase in quotas as members with spare production capacity, led by Saudi Arabia, pushed to avoid a price spike that may dampen long-term demand.” Stepping back a bit and looking longer term: we are already having a price spike and have been for several years. And the KSA has done nothing to alleviate this spike by increasing production which they continue to claim they have the capability to do. In a sense it doesn’t matter if the KSA has excess production capacity or not if they aren’t willing to utilize it to lower prices.

And this is where I wonder if the old construct is falling apart. In blunt terms the KSA doesn’t care if long term demand is dampened per se. They don’t care how much oil they sell per se. What they care about is the bottom line: their oil revenue. Obvious $100/bbl oil has greatly dampened demand compared to when it was selling for less than half that just 6 or 8 years ago. The rise in oil prices has greatly dampened demand but why would the KSA care: during the same time their oil income has risen several hundred %. I’ve made the point that not only may the KSA not be concerned about increases in US oil production but are thankful: it’s helping keep the market stable. And with all-time record high income from their oil sales I would think the KSA would very much like to keep it stable.

Again, a theoretical what if: if higher oil prices reduce global consumption by 10% but the KSA can maintain its current high income thanks to those higher prices what would be their motivation to increase their production? Which really isn’t all that theoretical given that this has been exactly what the KSA has been experiencing the last several years: not increasing production to lower prices and yet making record incomes. As they say, from the KSA perspective: if it ain’t broken don’t fix it.

And I have no doubt that the KSA is looking to China maintaining its growth and appetite for oil to keep their revenue up perhaps even in the face of declining production. It doesn’t matter to the KSA if all the economies can afford their oil…just enough of them in order to maintain revenue. If China can buy 100% of KSA’s production to a price that generates huge revenue for them why would they care if no one else but China buys their production? Granted that would be an extreme situation but on paper it works for both the KSA and China.

Re: Where are all the Peak Oilists?

Unread postPosted: Tue 30 Jul 2013, 15:18:03
by ralfy
The problem with withholding production to keep prices high is that oil production costs goes up: ... 100barrel/

which not only eventually negates revenues made but also makes it more difficult to maintain production if prices go down due to demand destruction.

Ultimately, market stability is attained only with increasing demand for oil and production that easily meets that demand.

Re: Where are all the Peak Oilists?

Unread postPosted: Tue 30 Jul 2013, 16:03:47
ralfy - "The problem with withholding production to keep prices high is that oil production costs go up:" that's not true. But perhaps we're mixing apples and oranges. I couldn’t find what you were referring to in your link. Maybe it’s referring to developing reserves at the margin. IOW the economics involved in additional drilling. But if you’re producing 9 million bopd and want to cut back to 7.5 million bopd you’ll likely shut in your wells that have the higher operational costs. If you had two wells each making 5,000 bopd and one cost you $5/bbl to produce and the other costs you $15/bbl to produce which one would you shut in? Easy answer.

If the KSA cut their production 10% their revenue would go down…at least initially. But if there’s no one there to replace those missing bbls what would happen to oil prices? I doubt they would go down. The fear that the KSA would have would be long term demand destruction brought on by those high prices. OTOH look where we are today: from 2002 to 2005 oil prices increased from $30/bbl to almost $60/bbl. And how did the world respond to those higher prices: consumption increased from 77 million bopd to 84 million bopd. How does that work? Isn’t putting more commodity into the market place going to lower prices? Apparently not if there’s sufficient competition in the market. And for the last 7 years consumption has remained fairly constant and prices have been up 70% to 100%. I thought economist said that once consumption stabilizes so do prices. Apparently not until the last year or two.

So once again if the world is capable of increasing what it pays for oil from $840 BILLION/year to in 2002 to $2.7 TRILLION per year today why would the KSA increase production (if they really could) if they had to lower the price per bbl? I’m an oil produces. I just brought on a 150 bopd well last weekend. I’m very happy to sell all my oil at current prices. I hope the KSA feels the same. LOL.

Re: Where are all the Peak Oilists?

Unread postPosted: Tue 30 Jul 2013, 21:37:10
by sparky
From the OPEC basket price trend and the reports of Saudi decreased production
it seems that the Kingdom is fighting for a price above 100$ a barrel
probably around 104$

.....Successfully so far !

Re: Where are all the Peak Oilists?

Unread postPosted: Wed 31 Jul 2013, 00:06:20
by ralfy
You are right: the article refers to increasing marginal costs, which is another problem. My argument is that higher oil prices leads to inflation, which in turn affects the costs of oil producers and of businesses in general. More credit may be created to maintain demand, but this also increases financial speculation and decreases the value of money.

Stability is ensured through steady, increasing demand met by steady, increasing production. Any surge in demand through increased credit will lead to instability, and worsened as much of the credit is used for financial speculation. And increasing production is ensured only if resources and energy are not affected by physical limitations. Otherwise...

Re: Where are all the Peak Oilists?

Unread postPosted: Wed 31 Jul 2013, 16:34:28
by sparky
Higher prices lead to inflation , yes when there is still some growth
when there is no growth , there is deflation ,customers are broke
when /if growth return , inflation reappear
the stagflation of the 80ies was in a rather healthier economy


Unread postPosted: Wed 03 Apr 2019, 18:17:19
by Pops
Just noticed it's my 15th anniversary at, salute!
Time really flies while waiting on armageddon.
Here's my first post:

Pops wrote:Hello all,

It seems to me that it is pretty obvious that any finite resource will have a mid point of availability. It isn’t a huge leap them to understand that the high point of discovery indicates the eventual high point of production. While economists can wax about “demand destruction” and “replacement technology” the difference is that this “commodity” is fundamental to our ENTIRE way of life, there is no replacement technology to this fantastically “dense” energy source and the few possibilities will take years and huge investments to even get close. Demand destruction in this case relates to the reduction of the world FOOD supply for kripe sakes!

Believe it or not, I didn’t come to “Peak Oil News” to debate (or rant) about the validity of peak oil, there are lots of sources of information and evidence available for those willing to read and decide for themselves. It is a very scary thing to get your head around, but here are our plans FWIW.

We are going the “Lone Farmer” route; relocating away from large populations, learning more agrarian skills, and preparing for the (hopefully) long slide. In the interim (5,10, ? years) I will continue working as a graphic designer, I can work anywhere there is dependable power and a satellite link to communicate with my rep back in town. This has been our plan for years for early/semi retirement, its just earlier than expected. We don’t look at it as a “bunker” so much as a “school” to teach our kids and grandkids (and ourselves) how our parents and grandparents got by without cheap oil.

We are “Ebaying” and yard-saling our late 20th century technology and replacing it with early 20th century technology; out with the electric guitar and in with the acoustic. Our small budget includes alternative power but also lots of “elbow grease” powered solutions.

I don’t believe there will be an oil “crash” soon, but there certainly could be an economic crash as the cost of oil and virtually everything else begins its inevitable rise. That is the wild card; how long do we have to prepare before the cost of preparing is out of reach or the necessities unavailable?


Re: Re:

Unread postPosted: Thu 11 Apr 2019, 18:42:54
by MonteQuest
Pops wrote:Just noticed it's my 15th anniversary at, salute!
Time really flies while waiting on armageddon.

Hey, Pops! How's it been going? Thought I'd drop in for a bit. :)

Monte :)