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DanS
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Kickball Capital of the World
Jan 1970
time: 00:34
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Sure. I can point to the fact that a peak on a global scale has never been reached before this (i.e., no empirical evidence of a global peak is available). Also, as pchang makes clear, there are vast uncounted reserves available at higher price points.
Last edited by DanS on 18-03-2005 at 21:39
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DanS
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Kickball Capital of the World
Jan 1970
time: 00:34
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quote:
We know that oil is a finite resource and that's enough to know that at some point demand will outstrip supply and the price will go up as scarcity increases. |
How do we know that demand will outstrip supply? You don't know that.
Supply is impacted by price and indeed the relevant energy supply market includes sources other than oil at various price points. For instance, you can economically make gasoline out of coal at a price point not much higher than $55 a barrel. I have no doubt that we would eventually run out of oil absent market forces, but you can't just ignore the market forces to gin up fear of a crisis.
quote:
But no-one has come up with anything that is as cheap as oil or is likely to be as cheap as oil. |
No one has come up with anything as cheap and convenient as oil so far. That's why we use it, obviously. But the world would go on just fine with a source of energy other than oil at a higher price point. The economy is growing rather well at a $55 price/barrel oil price point, after all.
Last edited by DanS on 18-03-2005 at 22:40
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Agathon
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Leafs 4TW!! - CPA
Dec 2002
time: 00:34
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quote:
How do we know that demand will outstrip supply? You don't know that. |
Because it's a finite resource that is the cheapest alternative that we know of right now.
Assuming that it won't is either assuming that it's (a) not finite, which is absurd; or (b) assuming that it will become possible to produce some other energy source at the same or cheaper price.
The problem is that no-one has any idea whether (b) is true or not, so it is just silly to say that the market will fix it, since it may well be physically unfixable.
quote:
Supply is impacted by price and indeed the relevant energy supply market includes sources other than oil at various price points. For instance, you can economically make gasoline out of coal at a price point not much higher than $55 a barrel. I have no doubt that we would eventually run out of oil absent market forces, but you can't just ignore the market forces to gin up fear of a crisis. |
I'm not ignoring them at all. I'm just pointing out that markets are powerless to do the physically impossible.
quote:
No one has come up with anything as cheap and convenient as oil so far. That's why we use it, obviously. But the world would go on just fine with a source of energy other than oil at a higher price point. The economy is growing rather well at a $55 price/barrel oil price point, after all. |
That's just a leap of faith. We have no idea of what the eventual price point will be and whether it will be low enough to maintain things as they are. Similarly, moving to coal just postpones the problem. Assuming the market will fix every problem assumes that every problem is fixable.
We simply don't know what will happen. So, as in all such cases, we should proceed with caution.
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Flubber
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With a view of the Rockies
Aug 2000
time: 22:34
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quote:
Originally posted by DanS
Nobody knows. |
Thats probably the most accurate statement about oil reserves that can be made. Heck I am sitting in the office of an oil company right now and I can tell you that after running 2 D seismic and then 3D, the geophsicists have little idea if there is anything in a given spot. Wven after a first well, you have little idea of the size of a find.
Take big projects off the east coast of Canada . . . Even after a dozen wells into the Hibernia pool they are still revising the amount of recoverable oil. It used to be less than 700 million barrels and now its over 900 million. meanwhile Sable seriously downgraded its natural gas reserves.
These are fields that have been drilled a fair bit and experts still don't know. In areas that have not been drilled or are sparsely drilled, we frankly have no idea. Take the Orphan Basin in offshore Newfoundland-- Companies have committed to 600 million dollars of exploration work there but they could find nothing and they could find a few billion barrell fields.
Its uncertain and that the only certainty.
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Flubber
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With a view of the Rockies
Aug 2000
time: 22:34
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quote:
Originally posted by DanS
You're losing the context of the price. Inherent in the price of oil is a perception about how plentiful oil is. There is no fixed price for oil. There's no inherent quality of oil that makes it the cheapest alternative. We could wake up tomorrow and find out that oil is no longer the cheapest alternative. It wouldn't take any technology breakthroughs or anything. |
While I agree with your point partially, a consumer won't just "wake up tomorrow" to a a new alternative. Its an evolution. As oil prices increase, energy producers around the world are looking to alternatives that become more feasible again. Think hydro, wind, nuclear even coal-- all of these have a whole different economic dynamic if you assume 50 dollar oil compared to 30 dollar oil.
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DanS
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Kickball Capital of the World
Jan 1970
time: 00:34
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Yes, it's an evolution, but the price tipping against oil could happen at any time. You would still use oil under this reality, just that you would prefer to use other things and would increasingly tend to use other things.
There's this bizarre notion that we will just pump the oil dry and then we'll all be fvcked without any good alternatives. Bkeela's getting himself off on this scenario. Sitting here right now, I can guarantee that this will not happen, because there already are alternatives available that could be utilized on a mass scale.
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Think hydro, wind, nuclear even coal-- all of these have a whole different economic dynamic if you assume 50 dollar oil compared to 30 dollar oil. |
Yup Yup
Last edited by DanS on 18-03-2005 at 23:36
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DanS
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Kickball Capital of the World
Jan 1970
time: 00:34
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quote:
So "vast" could be "miniscule"? |
No, it couldn't be miniscule. Even a reasonable lower limit would be "vast".
Let's put it this way. This whole oil age began with oil being gathered from the surface Clinton sands in Pennsylvania. Basically, it boiled up from the ground. In the meantime, we have explored a modest amount around the world and to relatively shallow depths on land and some coastal areas and have found it to be a plentiful commodity so far.
Last edited by DanS on 18-03-2005 at 23:47
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Flubber
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With a view of the Rockies
Aug 2000
time: 22:34
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quote:
Originally posted by DanS
.
There's this bizarre notion that we will just pump the oil dry and then we'll all be fvcked without any good alternatives. Bkeela's getting himself off on this scenario. Sitting here right now, I can guarantee that this will not happen, because there already are alternatives available that could be utilized on a mass scale.
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Agreed. It is silly to the extreme to think oil will get pumped dry anytime soon. The reality is that there will always be some oil that is so expensive to get that other alternatives will beat it by such a wide margin , its unreasonable.If oil gets increasingly scarce. its price will go up and up making alternatives more attractive. In north America there are huge untapped hydro electric possibilities in places like Labrador
I know places in northern Canada where the companies drill hoping NOT to find oil. The search is for natural gas and with other gas finds , a gas pipe will be economic but oil is nowhere near there yet.
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Flubber
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With a view of the Rockies
Aug 2000
time: 22:34
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quote:
Originally posted by DanS
In the meantime, we have explored a modest amount around the world and to relatively shallow depths on land and some coastal areas and have found it to be a plentiful commodity so far. |
yup
So even though we don't KNOW what else is out there, reasonable assumptions indicate that there is still a lot to get.
The latest info I saw in an industry journal predicted that we had oil ( counting only the stuff that is "proven") that would last until something like 2040. The article used a lot of qualifications but their point was if exploration stopped tomorrow, we would be good for 35 years.
Oil companies continue massive exploration efforts because there is more out there. heck new concepts abound. They are producing methane from coalbeds and producing from formations ( called "tight sands") where it wasn't economic to do so even a few years ago
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18-03-2005 21:09
Just like growth rates won't continue, simply because people would die enmasse at a certain point when they are no longer able to sustain themselves.
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