Oil Hits $70+ a barrel!

[PCL_128]

Why can't you believe it? You yourself agree in principal when you claim,"...there's enough oil out there to last for 150 years." Based upon your research, we're to assume that peak oil will be reached in 75 years. You see, peak oil is simply an industry term used to describe a point when half the world's oil supply will be exhausted. So, you disagree on the timeframe.

If you're interested in some of the data, here's a good site to start with:

http://www.petroleumequities.com/OilSupplyReport.htm

Yes, there is a point that we reach peak-oil, but what so many people don't understand is that that point keeps moving forward on the time line. Peak oil is based on known oil reserves. Known reserves are reported by the oil companies themselves, and they only include reserves that are retrievable for a certain cost. Most oil companies only report reserves that a retrievable for about $20/bbl or less. If they were to report reserves based on oil that is retrievable for $40/bbl, then the reserves would be quite a bit higher. Also, as technology advances, the cost to drill for oil will constantly decrease which will also create higher reserves as more fields reach the point of being profitable at $20/bbl drilling costs.

The truth is, we have already reached so-called "peak oil" points several times in the last 3 decades. Self-appointed experts have proclaimed many peak oil dates ever since the 70s. We reach each date, and yet we still have more oil reserves than we did when they made their peak oil predictions years earlier. To be honest, 150 years might be conservative. We might have much more available as our technology increases. Getting all worked up about "peak oil" is ridiculous. It's just another kooky conspiracy theory.

 

[2LT]

Peak Oil Defined


RE: "...but what so many people don't understand is that that point keeps moving forward on the time line. Peak oil is based on known oil reserves..."


Reference #2 below. This was published in July of 2000.


Estimating When Oil Production Will Peak



A group of distinguished international petroleum consultants have built new mathematical models of oil discovery, production, and consumption which predict the point of global peak production and ensuing decline. (2)</SPAN>, (3) The models show oil production will peak when half the world's recoverable oil has been produced.


Estimating when peak production will occur therefore requires estimating when half the world's oil supply will be exhausted. This can be done by determining three factors:

1. How much of the oil that has already been discovered remains to be produced.
2. How much additional oil remains to be discovered.
3. How much oil is presently being consumed.



Factor 1 - Remaining Oil from Previous Discoveries:http://ogj.pennnet.com/cd_anchor_home Oil & Gas Journal, the most widely consulted publication on the subject of oil supply and demand, reports that 807 billion barrels were produced by 1998, with almost half of that amount since the supply shocks of the 1970s. Currently, the median estimate of remaining reserves in known fields is 830 billion barrels. (4)

Thus, a total of approximately 1.64 trillion barrels of oil have been discovered, and approximately 0.83 trillion barrels of this total remain to be produced.




Factor 2 - Additional Oil Discoveries: The earth has now been so extensively explored for petroleum that virtually all its prolific producing trends have been identified. Figure 1, which displays the amount of oil discovered per decade, shows discoveries peaked during the 1960s, verifying the advanced state of worldwide exploration.

http://www.petroleumequities.com/Figure1A.jpg

Extrapolating the historical pattern in Figure 1 suggests the ultimate discovery worldwide of about 1.8 trillion barrels, which is in line with the trend of some 25 published estimates over as many years. If so, about 165 billion barrels of oil remain to be found. Adding this amount to the 830 billion barrels of oil still in existing fields gives 995 billion barrels remaining to be produced.




Factor 3 - Oil Consumption Rate: Annual oil consumption worldwide is at present about 25 billion barrels a year. So if oil consumption remains constant with 995 billion barrels still remaining to be produced, the world's oil supplies will last another 40 years.

However, oil consumption is not constant, it is steadily rising. And oil production models show that production cannot remain constant until all oil reserves are exhausted — production rates begin to fall when half the reserves have been produced.

References​

[size=-1]

1. Campbell, C.J.: "Running Out of Gas: This Time the Wolf is Coming," The National Interest, Spring 1998.

2. Campbell, C.J.: "Depletion Patterns Show Change Due for Production of Conventional Oil," Oil & Gas Journal, December 29, 1997.

3. Laherrere, J.H.: "World Oil Supply -- What goes up must come down, but when will it peak?," Oil & Gas Journal, February 1, 1999. 4. "Worldwide Look at Reserves and Production," Oil & Gas Journal, December 28, 1998. [/size]

 

[PCL_128]

What was that post supposed to prove? Yes, I've read all of that along with dozens of other alarmist peak-oil websites, articles, and interviews. The point is still the same: basing peak-oil on known reserves is useless because known reserves are a subjective figure based on whatever criteria the oil companies are using at the time. To get an accurate figure on peak oil, you have to count all known oil in current fields plus estimates on future discoveries. As I've already said, that is not how known reserves are calculated. Known reserves are based more on economic considerations (oil that can be obtained for less than $20/bbl recovery costs) than actual geological considerations.

 

[SouthTex]

I see the light... Use more oil. Hey there is plenty out there why worry now when we can put it off for ten years. I just think we might want to consider tightening our belts and using less. Hey for those of you who need a patriotic reason to get motivated think about it as a way to cut off the money to people who bomb things. Those guys from Saudi problobly used a little oil money to learn to fly.

 

[Tim47SIP]

Wow!

Interesting that we get an administration run by ex oil executives and now we have 70/barrel oil with the oil companies making unprecedented profits.

What is more interesting is that there are people like you out there that really believe this stuff. MMoore would be proud of you. Keep the conspiracy theories going, they are quite comical.

 

[Immelman]

What is more interesting is that there are people like you out there that really believe this stuff. MMoore would be proud of you. Keep the conspiracy theories going, they are quite comical.

Hmm, so you're suggesting that government officials would NEVER be leveraged by private energy firms to allow prices to go through the roof? Never.. are you sure? Absolutely certain?

What about Enron?
What about shutting down power plants 5 yrs ago to artificially reduce power supply to jack up the rates?
What about coercing state gov't officials to enter into long-term contracts at these prices to get out of the high-cost spot market?

This isn't conspiracy, its recent history!

The only difference is that in the power industry, there does exist some regulation as to what the consumer directly pays; the state is now picking up the tab (in California anyways); the same cannot be said at the pump where we immediately feel it.

Lack of refinery capacity = excuse to gouge the prices.

That said, I am seriously considering a career switch to alternative energy engineering. I see a lot of $$ to be made in that field over the next 10+ yrs... I should start brushing up on my physics

 

[G4G5]

Fill up your cars!

Unleaded Gas is up, the NY Merc just halted unleaded gas futures after a .25c rise before noon! Up over 14% today. Was $2.06 now it's $2.35 per gal and climbing.

 

[Dangerkitty]

Forbes predicts bubble will burst

Oil bubble to burst: Forbes
From: Agence France-Presse
August 30, 2005

RECORD oil prices this week were evidence of a speculative market bubble that was set to burst in the next 12 months and make the hi-tech crash of 2000 "look like a picnic", US business publisher Steve Forbes said today.

The price of light sweet crude topped $US70 a barrel yesterday as Hurricane Katrina headed for the US Gulf Coast, which accounts for about a quarter of US oil output.
Mr Forbes, editor-in-chief of the influential Forbes business magazine, said inflation and increased demand from China and India only accounted for a small part of the price raise from $US25 to $US30 a barrel three years ago.

"The rest of it is sheer bubble speculation," Mr Forbes said in Sydney at the launch of a business conference.

"I'll be blunt, there's hardly a hedge fund in North America that hasn't speculated on oil futures.

"So I'll make a bold prediction ... in 12 months, you're going to see oil down to 35-40 US dollars a barrel.

"It's a huge bubble, I don't know what's going to pop it but eventually it will pop – you cannot go against supply and demand, you cannot go against the fundamentals forever."

Mr Forbes said the higher the oil price rose, the harder it would eventually crash.

"I don't think it's going to go to $US100 but if it does, the crash is going to be even more spectacular," he said.

"It will make the hi-tech bubble look like a picnic – this thing is not going to last."

Mr Forbes urged the US Government to stop adding to its Strategic Petroleum Reserve (SPR), a 700-million-barrel reserve that is meant to be used in emergencies.

"The speculators know now that no matter what happens to the price of oil, Uncle Sam is there buying almost every day," he said.

"Stop the buying and in fact throw some of that oil on the open market, boy that would throw it in turmoil and send the price down."

The US Government has said it could release some of the SPR to overcome any shortages caused by Katrina.

 

[xrated]

This is America if there was money to be made people would do it. The reason refineries haven't been built is because at a $.99 a gallon there wasn't a great margin... Now that will start to change. I know those crazy enviro pukes who have been saying for years we might want to consider using less fossel fuels... Yep they were waaaaaay Off!

Blah blah blah......ya, the Oil companies are making RECORD profits but no refinery building in sight. So what does Bush do? Well, the Oil industry isn't making enough money to build refineries so I got a great idea....give um a tax break! If he ain't in their back pocket, I don't know who is.

Screw giving them more money, I read an article that said the permit process in building a refinery alone takes five years. That's what has to change. By then, it will be WAY to late.

 

[BoilerUP]

DangerKitty hit the nail on the head with his most recent post. One would be foolish to not believe in Peak Oil, but you'd also be foolish to think the sky is falling in the next decade because of it.

The reason oil hit $70/barrel is pure, unadulterated, American-style speculative GREED. Hedge funds and the futures market are putting the hurt on your wallet today, with lack of refining capibility a near to medium-term problem and supply a long-term issue to deal with.

And no, I'm not a stock broker or a petroleum enginner, but I did stay at a Holiday Inn Express last night...