"Peak Oil" vs "Speculation". A balanced look at both theories.

[Speck Tater]

http://www.huffingtonpost.com/henry-blodget/oil-crisis-your-primer-on_b_105690.html

<snip>

In case you haven't been watching CNBC lately, there's a Great Oil Debate going on. On one side is the "Peak Oil" crowd, who believe that the world has now reached its maximum daily oil output and that increasing demand--which is already outpacing supply--will now drive oil prices into the stratosphere.

On the other side are those who blame the problem on "Evil Speculators", and argue that big energy traders are "gaming" the energy markets and adding at least a $30-$40 speculation premium to each barrel (Michigan Rep. Bart Stupak is in this camp).

Who's right? No one knows for certain (and anyone who says they do is fooling themselves). Part of the problem is that no one knows exactly how much oil the world is producing, or what the world's actual daily consumption is. What's more, no one knows what the "intrinsic" value is of a barrel of oil (other than what someone will pay for it--which brings you back to the beginning of the argument again).

<snip>

More at the link.

[lapfog_1]

1. Probably no one mentions the obvious

a rapidly devalued dollar AND peak oil AND a speculative bubble built on the other two.

[tama]

7. Duh

And all three factors could by summed as:

The "God-given" right of Americans (and their globalized copycats) to destroy our planet.

[SergeyDovlatov]

24. Yep. You can't mention the obvious...

Otherwise you cast Iraq was spending in a bad light and that is Un-patriotic and Un-american.

[INdemo]

2. If the oil industry was regulated as it should be and these speculators,

hedge funds,etc were investigated for insider trading,price fixing,etc,etc, we would not be paying these high prices..Under the Bush administration these companies have been allowed to gouge us and get away with it.
http://www.globalresearch.ca/index.php?context=va&aid=8878

[Speck Tater]

5. You're right. We wouldn't be paying $138/barrel.

We'd only be paying $125/barrel.

(You didn't read the article and the links provided in the article, did you?)

[SergeyDovlatov]

25. Without the speculators you would have wild price swings

Successful speculators who make money (as opposed to morons that lose money) serve an important role of stabilizing prices. Buy low, sell high. Thus they buy when there is a glut, and sell when there is a shortage.

Without speculators it would be very hard on oil users and producers since you cannot rely on futures and other tools to reduce the risks of prices going up or down

[Bob Dobbs]

3. Nationalize energy.

Execute energy profiteers.

Problem a long way towards being solved.

[Speck Tater]

4. 91% of oil is already nationalized

That leaves 9% still in private hands.

Do you really think that 9% private oil controls the 91% of nationalized oil?

Do you really think that nationalizing the remaining 9% will do anything?

The biggest problem right now is that nationalized oil companies have NO INCENTIVE to make more exploration and infrastructure investments. Mexico is considering UN-nationalizing their oil company PEMEX because their output is dropping drastically, and they NEED more capital investment.

More nationalization will only make the problem worse, since nationalization is a big part of why the problem exists in the first place: Politicians make lousy business decisions.

[tama]

6. Short term profitism

Is the most dimwitted and asinine policy invented, not even mentionin extreme immorality.

Yes, go on and explore and burn all the oil and other limited resources on Earth as quickly ("efficiently") as possible at the lowest possible cost (subsidise killing the planet!). Who really gives fuck about our children and grandchildren and their children?

Climate change caused by burning all the fossile energy is a gas gas gas! As deep decline in production as possible after the peak production and consequent die off - not even trying a soft landing but going for the hardest really makes sense, don't you think?

But no worry, everything OK, just as long as we keep on making good "business decisions"!!!

[Bob Dobbs]

10. Businessmen make lousy policy decisions.

Multinational energy companies ARE the problem. Were it not for their long term repression of alternative energy solutions we would not be in this mess.

Corporafascists are enemies of The People. Big business is far more destructive to the common good than your demonized politicians.

Aren't you on the wrong web site?

[Terry in Austin]

8. Oh, Bob, you're so impulsive!

Feed 'em to the lions, instead.

Problem remains, but we feel a whole lot better about it!

[Bob Dobbs]

11. Your ongoing defense of corporofascism is tiresome.

One. Trick. Pony.

[Terry in Austin]

23. wow

That's all you've got? C'mon!

And you were showing such promise, noting that the place is run by corporate/fascist elites. Amazing discovery! Welcome to the left side of the spectrum, dude...

Meanwhile, keep asserting your god-given entitlement to Happy Motoring Amerikan Utopia and your weekly trips to Wal-Mart and get all huffy that somebody, somewhere is plotting to keep you out of your tankmobile and needs to be punished.

Now -- have I sufficiently shown my ignorance about who you are? Good, I thought so.

[diane in sf]

9. Yeah, they're not mutually exclusive--they're related.

[losthills]

12. Supply does not have anything to do with the high prices.

It's the war in Iraq,
Saudi game playing,
Falling value of the dollar (because of the war in Iraq)
Speculation in the oil futures market.
In that order.

Iraq war/Profiteering.

"Peak Oil" does not have anything whatsoever to do with the price of gasoline at the pumps today. The war in Iraq has everything to do with it.

Anyone claiming that "peak oil" or "huricanes" or "China" is causing these record prices is playing you for a sucker.

It doesn't matter if "peak oil" happened 3 years ago, or if it's going to happen 3 years from now-- $4.00 per gallon gasoline is a result of the Iraq War and Saudi petulance. The United States has no leadership right now, and everyone who can is taking advantage of that situation.

[Zachstar]

13. Ok fine if the war ended and the Saudis said sorry we would be paying only 100 USD

Wow we would have another 4 months without a depression WOOT!

[4dsc]

16. SO peak oil is for suckers??

SO I guess you believe peak oil is myth too?? I guess you don't believe peak oil has occurred in over 38 countries around the world??

[kristopher]

18. oil is a global commodity. nt

[losthills]

21. You didn't read my post.

[tom_paine]

14. Is there no room for the idea that BOTH are happening?

:shrug:

That Peak Oil is upon us, but that the Bushies and Saudis still want their cut, meaning they now have to drive the prices to near insane levels to get their cut, and to set us up for the soon to be beginning Phony Even-Year Election Gasoline Price Drop.

[Zachstar]

15. Gas prices will obviously come down for election cycle crap but not by much.

Some sadly think that there is some big conspiricy driving up prices to insane levels. That crap is driving up prices but not NEARLY as much as failed quotas and countries running out of light sweet crude while exploration costs are skyrocketing.

If there is a bubble it will pop back to 100 not 50-75

[kristopher]

17. It isn't a conspiracy.

It's legal market manipulation; pump and dump on a grand scale.
http://www.prospect.org/cs/articles?article=bubble_and_bail

And for those that missed this excellent post on the topic by Racinante:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=115&topic_id=153057&mesg_id=153074

[tom_paine]

20. Well said, sir.

:thumbsup: :thumbsup: :toast:

[tom_paine]

19. First, we must differentiate between consumer gasoline prices and oil bbbl cost.

I am speaking of consumer gas prices, which again, if you examine the graphs, have been known to go up while oil price per bbl. goes down or remains even.

Having said that, and seeing that in 2006 they really pulled out all the stops, the Oil Barons, the Bushies, the Saudis et al. Prices plummeted more steeply and the Bushies still lost.

In any case, we will see. I am saying it's 90% certain, maybe 95%, given that I have watched it happen like clockwork since 2002.

We will soon know. I am guessing prices will go back down to a natl avg. of $3.25 and maybe as low as $2.90. It should start in early September, in accordance with the laws of marketing, as Andy Card let slip once ("never roll out a new product in August").

If I am wrong, I am wrong. But it will be the first time since before 2002 that it won't have happened just in time for the lowest prices to be right at election time.

And, just so you know, the idea that it has to be a conspiracy of cigar smoking guys in a back room is quite a straw man. It's almost wholly out in the open, like The Vast Right-Wing Conspiracy went from being underground ("The Arkansas Project") to being now 5/6ths of cable Tv "News" and 1/2 of newspapers.

It's everyone not being able to fail and notice the fact that all regulatory agencies are being run by Bushie crooks for Bushie crooks, that price-fixing and other illegal activity is now "legal".

They don't have to meet in a smoke-filled room and consprie, they can SEE it happen and act in their own selfish self-interest.

Hell, you or I might do the same if we knew would could do whatever the hell we wanted and be 98-100% certain we'd get away with it. Human Nature.

So scoff if you wish. By December we will know, one way or the other.

[GliderGuider]

22. Speculation is the wave action on the surface of the rising ocean

We do know with reasonable accuracy how much oil is being produced and consumed. What we have no handle on is the net energy being returned overall from the oil being extracted. We also don't really know what proportion of the market price is due to fundamentals versus psychological or speculative pressures. My impression is that 75% to 85% of the current price is legitimate market fundamentals.

It's also worth keeping in mind that some degree of speculation is frictional -- inherent to the system under any circumstances, much like frictional unemployment. when that is factored out, I suspect that there is less than 15% of the current price is due to excess speculation.