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Peak oil depends on oil price, the world is awash in oil at $110. Even up to 2005 oil's peak price was $60. Peak oil also depends on consumption, with cars lik

by fleitz 13y ago

Peak oil depends on oil price, the world is awash in oil at $110. Even up to 2005 oil's peak price was $60. Peak oil also depends on consumption, with cars like Tesla coming out we'll see a sharp decline in consumption over the next 20 to 30 years, at $300/bl a Tesla starts to make a lot of sense. The world will never run out of oil, its price will simply continue to increase until other alternatives become economically viable, as those alternatives become viable economies of scale and capital investment will make alternatives that much better.

jofer 13y ago
The world is "awash" in oil at $110, but that oil simply can't be produced fast enough to meet demand. That's the fundamental problem.
- liber8 13y ago
  This is provably false. If oil couldn't be produced fast enough to meet demand, the price of oil would not be $110 a barrel, it would be $110+x per barrel, where x is the maximum number of dollars people are willing to pay to use the available supply of oil. This thinking generally leads people to miss OP's point, which is that the world will never run out of oil. Price will always fluctuate to meet demand (so long as we let the market set the price).
- fleitz 13y ago
  The oil business does not get disrupted by 3 kids in an apartment with $20K. If you want to open an oil field or a refinery you need billions of dollars and a financial projection that says the oil will stay at $X dollars for at least Y years. Since most people aren't convinced that oil will stay at $110 dollars for the foreseeable future they'd rather not risk billions of dollars. If you can accurately predict oil prices stop reading hacker news and open a commodities account.
  - jofer 13y ago
    You misunderstood what I'm saying. It has nothing to do with economics or disruption. It has _absolutely everything_ to do with geology. The hydrocarbons that become economic at higher oil prices fundamentally cannot be produced as quickly as conventional reserves. It's a matter of permeability. Not a matter of economics. Also, I'd wager I'm far more aware than you think of the investments required to explore, develop, and produce a prospect. (I know nothing about refining, though.)
UweSchmidt 13y ago
There could however be a state where things just are not as convenient as they are now. There is no law of nature that says things have to stay as fun as they are now after we have depleted this unique resource that nature had to digest dinosaur bones for a few millions of years for. Tesla's looking good though, so there's hope.
- fleitz 13y ago
  There's also the self-driving car which drastically reduces the number of cars required to replace the existing fleet.
  - UweSchmidt 13y ago
    How is that?
    - nitroscott 13y ago
      Imagine running trucks 24 hours a day. With no sleep constraints, you can move almost twice as much stuff with the same # of cars. Increase utilization and speed which would have great impacts on efficiency.
      - glenra 13y ago
        Those hypothetical cars and trucks would wear out twice as fast and consequently need to be replaced twice as often as before.
rybosome 13y ago
This makes sense economically, but that doesn't address the difficulties we will face as oil becomes too expensive for common, important uses. Our fleet of oil-consuming vehicles won't magically convert themselves. The oil-backed electrical grid will take a hit. Food will become incredibly expensive (or more scarce) since the vast majority will come from far away, and have been transported via oil.
- gshubert17 13y ago
  Not just that. Most corn production heavily depends on oil-based inputs, such as fertilizer, fuel for machinery, and natural gas for drying and storage. Corn from the same county will become much more expensive, even without transportation costs.
  - fleitz 13y ago
    Fertilizer does not come from oil. This is a myth. Natural gas is not an oil-based input. http://en.wikipedia.org/wiki/Fertilizer#Inorganic_commercial_fertilizer http://en.wikipedia.org/wiki/Fertilizer#Inorganic_commercial...
    - gshubert17 13y ago
      Right. Hydrocarbons, then. Natural gas and petroleum have similar geologic and economic characteristics.
      - fleitz 13y ago
        I hate to break it to you but pretty much everything is a hydrocarbon. Natural gas and petroleum are about as similar as the hydrocarbons of corn and cherries.
        gshubert17 13y ago
        Does natural gas exploration and exploitation have peak phenomena similar to petroleum? And does coal have its own reserves and peak phenomena? Coal, petroleum, and natural gas are three large categories of energy hydrocarbons. If gas is cheap relative to oil or coal, then at the margin, some users will shift to gas. Prices of energy hydrocarbons will be correlated, over the long term. Then, as coal, oil, and gas are all depleted (with their own separate peaks, perhaps), their prices will increase. Foods like corn which have many dependencies on low-priced energy (farm equipment, fertilizer, drying, and transport), will come under increasing upward price pressure. Corn is used in perhaps a quarter of food SKUs in American grocery stores, so won't a lot of food prices go up as energy prices go up, as a consequence of peak oil (or coal or gas)?

by fleitz 13y ago

jofer 13y ago

The world is "awash" in oil at $110, but that oil simply can't be produced fast enough to meet demand. That's the fundamental problem.

liber8 13y ago
This is provably false. If oil couldn't be produced fast enough to meet demand, the price of oil would not be $110 a barrel, it would be $110+x per barrel, where x is the maximum number of dollars people are willing to pay to use the available supply of oil. This thinking generally leads people to miss OP's point, which is that the world will never run out of oil. Price will always fluctuate to meet demand (so long as we let the market set the price).
fleitz 13y ago
The oil business does not get disrupted by 3 kids in an apartment with $20K. If you want to open an oil field or a refinery you need billions of dollars and a financial projection that says the oil will stay at $X dollars for at least Y years. Since most people aren't convinced that oil will stay at $110 dollars for the foreseeable future they'd rather not risk billions of dollars. If you can accurately predict oil prices stop reading hacker news and open a commodities account.
- jofer 13y ago
  You misunderstood what I'm saying. It has nothing to do with economics or disruption. It has _absolutely everything_ to do with geology. The hydrocarbons that become economic at higher oil prices fundamentally cannot be produced as quickly as conventional reserves. It's a matter of permeability. Not a matter of economics. Also, I'd wager I'm far more aware than you think of the investments required to explore, develop, and produce a prospect. (I know nothing about refining, though.)

UweSchmidt 13y ago

There could however be a state where things just are not as convenient as they are now. There is no law of nature that says things have to stay as fun as they are now after we have depleted this unique resource that nature had to digest dinosaur bones for a few millions of years for. Tesla's looking good though, so there's hope.

fleitz 13y ago
There's also the self-driving car which drastically reduces the number of cars required to replace the existing fleet.
- UweSchmidt 13y ago
  How is that?
  - nitroscott 13y ago
    Imagine running trucks 24 hours a day. With no sleep constraints, you can move almost twice as much stuff with the same # of cars. Increase utilization and speed which would have great impacts on efficiency.
    - glenra 13y ago
      Those hypothetical cars and trucks would wear out twice as fast and consequently need to be replaced twice as often as before.

rybosome 13y ago

This makes sense economically, but that doesn't address the difficulties we will face as oil becomes too expensive for common, important uses. Our fleet of oil-consuming vehicles won't magically convert themselves. The oil-backed electrical grid will take a hit. Food will become incredibly expensive (or more scarce) since the vast majority will come from far away, and have been transported via oil.

gshubert17 13y ago
Not just that. Most corn production heavily depends on oil-based inputs, such as fertilizer, fuel for machinery, and natural gas for drying and storage. Corn from the same county will become much more expensive, even without transportation costs.
- fleitz 13y ago
  Fertilizer does not come from oil. This is a myth. Natural gas is not an oil-based input. http://en.wikipedia.org/wiki/Fertilizer#Inorganic_commercial_fertilizer http://en.wikipedia.org/wiki/Fertilizer#Inorganic_commercial...
  - gshubert17 13y ago
    Right. Hydrocarbons, then. Natural gas and petroleum have similar geologic and economic characteristics.
    - fleitz 13y ago
      I hate to break it to you but pretty much everything is a hydrocarbon. Natural gas and petroleum are about as similar as the hydrocarbons of corn and cherries.
      - gshubert17 13y ago
        Does natural gas exploration and exploitation have peak phenomena similar to petroleum? And does coal have its own reserves and peak phenomena? Coal, petroleum, and natural gas are three large categories of energy hydrocarbons. If gas is cheap relative to oil or coal, then at the margin, some users will shift to gas. Prices of energy hydrocarbons will be correlated, over the long term. Then, as coal, oil, and gas are all depleted (with their own separate peaks, perhaps), their prices will increase. Foods like corn which have many dependencies on low-priced energy (farm equipment, fertilizer, drying, and transport), will come under increasing upward price pressure. Corn is used in perhaps a quarter of food SKUs in American grocery stores, so won't a lot of food prices go up as energy prices go up, as a consequence of peak oil (or coal or gas)?