Peak Oil / Hubert’s Peak Theory

Living around Boulder you can't throw a stone without hitting someone that will engage you in a lively conversation about Global Warming. I count myself as a believer in all the data but fall a little short of being able to connect all the dots to global disaster. I believe the earth is a very complex climate that is not easily modeled. Don't get me wrong, ultimately the results may be far worst then being predicted, or maybe a good deal less. In either case I'm suspicious of the populations' ability to change anything that may or may not happen in a meaningful way even if we all wanted to, which we don't.

More interesting to me is Peak Oil Theory. There is a lot of good reading floating around on this not that new prediction that soon (if not already) the world production of oil will start to decline. Compounding the problem is the absolutely known fact that the world is using increasingly more oil, specifically in high growth economies like China. Obviously in today's gasoline climate you can start to see what happens when fuel is less and less available. I personally find this prophecy is much easier to connect the dots to an immediate global disaster then Global Warming. But, to each his own prediction of doom I suppose.

A friend of mine sent me a link to a just released asset management report.. It's very interesting reading and only a couple pages, check it out.

Comments

[Tom]

Chicken Little lives!

"Peak Oil Theory" has been around for decades, and every time there is a change in oil prices, some dickhead shouts, "we're running out of oil! we're running out of oil!"

This "theory" completely ignores the significantly weightier THEORY of economics, which says that as the price rises, more supply will be made available.

By the way, gas today is only marginally more expensive - in real $ - than it was 20 years ago.

[Zachary]

I think the market is speaking pretty plainly on the subject of Peak Oil. It's here. Gas is expensive and getting more so. Supply is not increasing with the uptick in demand, because the oil is running low, and the last dregs are harder and more expensive to extract. The market is starting to see opportunities for profit in alternative fuels.

Eric Janszen predicts in the Harpers article "The Next Bubble" that the next boom bust cycle (after the dot-com and housing busts) will be alternative energy. He believes that it will be the next hot thing to receive massive investment. This is probably good, because we really need alternatives to oil, not to mention something to heal our economy after the housing crash. But the downside is that it will become hyperinflated, as did tech stocks and house prices, and will itself subsequently crash.

http://www.harpers.org/archive/2008/02/0081908

[Randy Cox]

I'm the CTO for WebPartner. One of the things I do is run a WebPartner "channel" tracking Peak Oil as a topic. I have "WatchPoints" that follow the conversation on the web from proponents of Peak Oil theory to those who attempt to debunk it. It's something I've been interested in for a long time as a graduate of the Colorado School of Mines in '84 in Chemical Engineering and Petroleum Refining. I thought you might be interested in the link.

http://www.webpartner.com/iup/channelroom.php?chid=8y572hijr7YBjJmS

[Mike]

There is a great article on Hubbert's perspective and Peak Oil Theory in Scientific American, entitled "The End of Oil" (2001).

[Tom]

"...there is little evidence to support the doctrine of "peak oil" in its extreme form. The Middle East still seems to contain a sea of the stuff..."

Economist Magazine, May 31, 2008, page 13.

One needs to understand the difference between short term and long term supply elasticity, and then mix in the relatively short-term of demand elasticity, to comprehend much about how oil price moves.