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The U.S. No Longer Controls the Price of Oil in a Peak Oil World
OilPrice.com ^ | 03/20/2010 | Gregor MacDonald

Posted on 03/20/2010 12:45:18 PM PDT by bananaman22

Back in the days when US oil demand controlled the price of oil, a massive recession in the United States would have sent oil to 12.00 dollars a barrel. That era, which ended last decade, was defined by ongoing spare capacity in OPEC, low-cost oil in Non-OPEC, and nascent demand for oil in the developing world. That was then, and this is now. And so it’s rather quaint that the energy analysts from that previous era still gather each week on American financial TV, to discuss the inventories at Cushing, Oklahoma. Inventories at Cushing, Oklahoma? The US has been removing discretionary demand for oil for years, starting back in 2004. And current unemployment in California is at 13.2%–another new post-war high. Yet oil is at 82.00 dollars? Get these analysts off TV. Please. We need analysis of diesel demand in Guangdong, and Uttar Pradesh.

With the closing out of the decade we also have the full data set, on global crude oil production. As you can see from the chart below, the twin peaks of oil production in 2005 and 2008 reveal that while the world was able to respond to a moderate price advance coming out of 2002, nearly all of the price action above 40.00 dollars a barrel starting in late 2004 did not produce more supply. Welcome to peak oil: when the world’s remaining supply of oil is more diffuse, of lower grade, harder to extract, and is unable to flow in the aggregate at higher production levels. Full article at: Price of Oil


TOPICS: Business/Economy; Miscellaneous
KEYWORDS: bhoenergy; energy; fifth100days; government; oilprices; peakoil; unitesstates

1 posted on 03/20/2010 12:45:18 PM PDT by bananaman22
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To: bananaman22

Define “peak oil”.


2 posted on 03/20/2010 12:47:50 PM PDT by USFRIENDINVICTORIA
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To: bananaman22
Peak oil?

With the Tupi field just discovered, and the reassessment of the Orinoco field?

That's a joke.

3 posted on 03/20/2010 12:48:11 PM PDT by Regulator (Welcome to Zimbabwe! Now hand over your property....)
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To: bananaman22

I guess oil prices will be going lower then.


4 posted on 03/20/2010 12:50:39 PM PDT by fish hawk
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To: Regulator

The USA has 4 to 5 times the Saudis reserves in oil, coal diesel, shale oil, permafrost hydrate gas, etc. This does not count offshore. The Saudis own Obama, the Dems and environmentalists. The Dems keep making energy rich federal lands into parks for their Saudi bosses.


5 posted on 03/20/2010 12:52:47 PM PDT by Frantzie (TV - sending Americans towards Islamic serfdom - Cancel TV service NOW)
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To: bananaman22
Once again wishful thinking from the ‘Peak Oil’ crowd who still believe that oil is the long decayed matter from the past. Those truly in the know realize that they have no real idea where oil comes from. It is believed to be a natural product from the earths interior. There is no peak oil. Just limited imagination.
6 posted on 03/20/2010 12:53:15 PM PDT by Jim from C-Town (The government is rarely benevolent, often malevolent and never benign!)
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To: bananaman22
I don't think the US has had any chance of controlling the oil price since the 70's.

Were we to start an offshore drilling program, then, yes, we may have a minor effect.

7 posted on 03/20/2010 12:57:49 PM PDT by Paladin2
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To: bananaman22
Obama stated that higher oil prices keep people form driving so much and causing pollution. Colorado oil shale is shut down and drilling on public land is closed. They want to keep the price up to control us. Peak oil is a farce manipulated for profit and control.
8 posted on 03/20/2010 12:58:51 PM PDT by mountainlion (concerned conservative.)
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To: USFRIENDINVICTORIA

Peak Oil = Peak Gullibility = Peak Stupidity


9 posted on 03/20/2010 12:59:54 PM PDT by BRK
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To: BRK

How long ago was peak whale oil? Peak Lumber?


10 posted on 03/20/2010 1:02:20 PM PDT by Paladin2
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To: bananaman22

And yet, our political leadership believes that we have the luxury of not drilling for our own oil, a position that any other country in the world would refuse to do.

See, the Democrats really do believe in American exceptionalism!


11 posted on 03/20/2010 1:06:21 PM PDT by denydenydeny ("I'm sure this goes against everything you've been taught, but right and wrong do exist"-Dr House)
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To: Frantzie

The Saudi’s OWN the US Congress.

If we, the US of A, had a National Energy Policy we would not be in this predicament.

What we have is a National Energy Policy of refusing to admit there is a problem and blinders to our own national resources.


12 posted on 03/20/2010 1:09:40 PM PDT by K-oneTexas (I'm not a judge and there ain't enough of me to be a jury. (Zell Miller, A National Party No More))
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To: USFRIENDINVICTORIA

I’ll define it for ya so this article will make sense...

Forget the environmentalist’s definition of peak oil.

Peak oil is when we reach a point where oil exploration and production is no longer flexible enough to adjust perfectly with oil demand.

In otherwords, pure capitalism is no longer in play in the oil industry. there is a rigidity imposed on the markets that resists flexibility in supply. Lots of things contribute. Let me attempt to list the culprits:

1. environmentalists’ restrictions on energy development
2. taxes
3. regulation
4. oil cartels (ie OPEC)
5. cap and trade
6. subsidized renewable energy
7. tyrannical totalitarian mismanagement of third world oil resources
8. Energy producer nations and energy consumer nations are increasingly mutually exclusive groups.
9. corruption
10. loss of confidence in the US $dollar


13 posted on 03/20/2010 1:15:42 PM PDT by mamelukesabre (Si Vis Pacem Para Bellum (If you want peace prepare for war))
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To: BRK

Peak oil=crashed dollar


14 posted on 03/20/2010 1:19:06 PM PDT by JPJones (There are no conservative Democrats. Just ones scared of re-election.)
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To: Frantzie
Good points.

Obambi continues to serve Islam.

15 posted on 03/20/2010 1:19:39 PM PDT by Regulator (Welcome to Zimbabwe! Now hand over your property....)
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To: mountainlion

I dissagree.

I think “peak oil” is an excuse to enable government to continue inaction and to avoid blame.

However, I won’t completely rule out your idea either.


16 posted on 03/20/2010 1:22:55 PM PDT by mamelukesabre (Si Vis Pacem Para Bellum (If you want peace prepare for war))
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To: bananaman22

“Welcome to Free Republic.”

(last Wednesday)


17 posted on 03/20/2010 1:24:20 PM PDT by Former War Criminal (My senior Senator (who served in Vietnam) said so.)
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To: bananaman22

Peek oil is like peek healthcare. Artificial shortages designed to control sheeple.


18 posted on 03/20/2010 1:25:43 PM PDT by MileHi ( "It's coming down to patriots vs the politicians." - ovrtaxt)
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To: mamelukesabre
I think “peak oil” is an excuse to enable government to continue inaction and to avoid blame.

I don't see it as inaction. They have banned offshore drilling. They shut down oil shale development and drilling on government land. They stop new technology and they stop new refineries. Their action is to stop oil so the big international crooks like soros can make billions.

19 posted on 03/20/2010 1:27:44 PM PDT by mountainlion (concerned conservative.)
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To: mamelukesabre
Peak oil is when we reach a point where oil exploration and production is no longer flexible enough to adjust perfectly with oil demand.

Include refining in production (and I think you do) and you've got it. There may be plenty of oil and oil equivalents in the ground, but if you can't meet a year's demand for barrels per year, you will get much, much higher prices.

The peak oil argument stupidly stated is that "the sky is falling, we've used up all of the oil." Understandably, many posters disagree with that, as do I. The peak oil argument intelligently stated--as by you--is that we may not be able to deliver oil products at the rate the economy demands within the accustomed price range. This causes increased prices, which both reduces demand, and after a time of investment, eventually increases supply. So, the "peak oil" claim of much higher prices makes sense to me.

20 posted on 03/20/2010 1:32:46 PM PDT by Pearls Before Swine
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To: Frantzie
Peak oil is not in reality a geophysical condition; it is geopolitical.

Whenever government regulation or subsidy interferes with the free market there will be "peak" something because supply/demand has been tampered with.

At this point we could be sitting on top of 100 times the Saudi supply of light, sweet crude and it wouldn't increase the world supply at all. There is no political will to pump it.

It's time to drill some politicians, then we can drill some oil.

21 posted on 03/20/2010 1:46:33 PM PDT by seowulf (Petraeus, cross the Rubicon.)
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To: bananaman22

#1 - Peak Oil = fraud
#2 - the only reason the US doesn’t control oil prices is because we are currently under the control of anti-Americans who are occupying our nation’s capital.

I guarantee, if the US shut off imports of oil, and immediately opened up all of our own oil fields, both on land, and under the seas - we would OWN the oil markets.


22 posted on 03/20/2010 1:46:57 PM PDT by TheBattman (They exchanged the truth about God for a lie and worshiped and served the creature...)
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To: seowulf

The energy the USA has is the only thing that will help us reboot the economy, create wealth and pay down the debt. Energy creates wealth.


23 posted on 03/20/2010 1:50:58 PM PDT by Frantzie (TV - sending Americans towards Islamic serfdom - Cancel TV service NOW)
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To: seowulf

People do not realize that the earth is making oil all the time. The core of the earth, I would assume, is like a nuclear reactor like the sun. The heat and pressure create oil or hydrocarbons. Oil is being “created” every minute of every day.


24 posted on 03/20/2010 1:53:50 PM PDT by Frantzie (TV - sending Americans towards Islamic serfdom - Cancel TV service NOW)
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To: Frantzie
People do not realize that the earth is making oil all the time.

That is a theory put out by a Russian geologist 30 some years ago that has been gaining popularity especially over the last decade. That theory could explain some of the very deep oil deposits that have been found recently; deposits that would very unlikely have come from organic detritus. Isotope studies have also suggested that it is not of organic origin.

Although I wouldn't say it is proven, I think the earth's oil supply is probably a combination of organic and geophysical processes and though the supply is probably not unlimited, we are no where near the end of commercially extractable oil supply.

All we are lacking is will.

25 posted on 03/20/2010 2:02:52 PM PDT by seowulf (Petraeus, cross the Rubicon.)
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To: Frantzie
Energy creates wealth.

Wealth is just stored energy.

26 posted on 03/20/2010 2:04:23 PM PDT by seowulf (Petraeus, cross the Rubicon.)
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To: Regulator

There is NO PEAK OIL! DRILL HERE, DRILL NOW!

Atlease ONE TRILLION barrels (+++) of recoverable oil sits in the Green River Formation! Obama, Salazar and the pricks at the EPA won’t let us go get it!

http://energy.cr.usgs.gov/other/oil_shale/green_river.html
Overview of estimated in-place resources for the Green River Formation in Utah, Colorado. In-place shale oil resources in the Piceance Creek Basin in billions of barrels per township. Total is 1.007 trillion barrels. Click for a larger image.

Other estimates:

http://knol.google.com/k/oil-shale#
“...The U.S. Department of Energy’s Office of Petroleum Reserves estimates that the Green River Formation contains 1.8 trillion barrels of shale oil in deposits yielding greater than fifteen gallons per ton, with over eighty percent of the formation’s recoverable resources located in Colorado’s Piceance Basin. (Oil shale formations yielding less than 15 gallons of oil per ton of rock are not considered economically viable for extraction.)[2]

And, I’ve said nothing about US coal and natural gas reserves!


27 posted on 03/20/2010 2:17:34 PM PDT by WellyP
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To: bananaman22

I think the guy is just talking about peak production point on his chart. Production went up, peaked, and has declined for various reasons - none having anything to do with known or proven reserves. The companies just are not pumping as much, is all. IMHO.


28 posted on 03/20/2010 2:25:48 PM PDT by PIF
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To: USFRIENDINVICTORIA
"Define “peak oil”."

You have asked a legitimate question. And since most of the responses on this thread are wrong, I thought I might offer something else. I also invite you to do your own research. Use your favorite search engine and try something like "Hubbert Peak Oil."

But in a nutshell, "Hubbert's peak" or "peak oil" is simply a term to describe the observation that in any hydrocarbon producing region, the production curve from first discovery to final depletion has a "bell curve" shape.

That is to say that production in any basin starts from zero (prior to the first discovery), rises to some peak value and then falls to zero (over time, could have a long tail) as the fields deplete. Note that the only assumption in the above is that the recoverable pool of oil in the basin is finite.

In the original formulation, Hubbert, a Shell geologist made quantitative estimates of the time between first discovery, peak production and the ultimate final decline. But the basic premise of the theory is as obvious as the conclusions reached from "Laffer's Curve" about the effect of tax rates on government revenues.

The theory is obviously true for any given basin. It is therefore also true for all the basins in any region in aggregate (again the only assumption is that the resource is finite).

Hubbert was originally making predictions about production the United States. As it turned out his quantitative prediction for the US was pretty good.

Note that whether the world in total is at Peak Oil today is a question separate from the validity of Hubbert's theory.

Oh, and by the way, the fellow posting about oil being generated continuously in the center of the earth is a crank. But, to be fair, he is the only one with a logical argument against Hubbert's theory. He just happens to be wrong.

29 posted on 03/20/2010 2:48:06 PM PDT by trek
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