ROCKMAN wrote:ralfie - I agree with much of what you say. But: "And then there's one effect of peak oil, which is increasing cost to increase production, leading to diminishing returns, i.e., increasing debt needed for lower increases in production." Not sure what you mean by "effects of peak oil". We are obviously much closer to PO today then in then the late 1970's. But, adjusted for inflation, my cost to develop new oil reserves is much lower today. But this is a very complicated issue. Folks are easily confused. For instance the "easy oil" was found long ago and no longer exists. Such statements are typically made by folks who have never explored for oil. It was never easy. In reality the success rate is much higher today then in those "easy oil" days. Which is due to greatly improved exploration technology. What has changed is the size of fields left to discover: they are much smaller today. That fully explains why the volume of new reserves discovered has declined dramaticly...not because it is neither more difficult nor expensive. In truth many of the fields discovered today would have been impossible to find in the 1950's/60's.
Even the hot trends today (Bakken/Eagle Ford, etc) were known to contain oil long ago. But very little could be commercially developed with technology at that time. Ironically it is because of higher oil prices resulting from aspects of PO that technology was created that allowed unconventional plays to bloom which has delayed to inevitable day global PO is reached.
Peak oil refers to a peak in oil production. The effects of peak oil, which include economic crises, take place before the peak takes place.
That is because the oil is used by a global capitalist system coupled with competition, which means it requires not only continuous growth but growth at an increasing rate. That is turn is needed because of financial speculation (e.g., a credit market with a notional value of $1.2 quadrillion and many times larger than the global economy itself) coupled with overproduction (i.e., businesses need to sell more than their competition), especially when it comes to maximization of profit and a consumer market consisting of a growing global middle class, and for which demand will require, in terms of energy and material resources, more than one earth.
Unfortunately, diminishing returns does not make that possible. The phenomenon, which refers to decreasing amounts of new production in exchange for increasing amounts of energy and debt needed to ensure them, is the reason why fields left to discover are much smaller, and why debt has been soaring to increase oil production. A global capitalist system as described above will eventually experience one financial shock after another coupled with high prices not just for oil but for various goods and services dependent on it, including food.
In general, the belief is that technology will solve this problem, just as the use of oil led to the formation of that same global capitalist system. But the same solution actually creates more problems, as increased production thanks to technology is achieved only with the premise of increased consumption, which leads to more profits (hence, profit maximization). But as explained earlier, the system on which that oil is used needs higher energy returns, which means cheaper oil.
This explains why, as pointed out by the
Times article, increasing amounts of debt (i.e., easy money) was needed for fracking. But as implicit in my previous posts, there is a price to pay for easy money, which in this case should be "easy oil" or larger, easily accessible fields.