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RE: [bafuture] The Coming Energy Crisis or Peak Oil

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  • Charles Jo
    I noticed that my email server gave me problems about this yesterday... ... From: Charles Jo [mailto:cjo@inteliant-tech.com] Sent: Wednesday, February 23, 2005
    Message 1 of 17 , Feb 24, 2005
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      I noticed that my email server gave me problems about this yesterday...
      -----Original Message-----
      From: Charles Jo [mailto:cjo@...]
      Sent: Wednesday, February 23, 2005 9:34 AM
      To: bafuture@yahoogroups.com
      Cc: Wayne Radinsky
      Subject: RE: [bafuture] The Coming Energy Crisis or Peak Oil


      If there are enough (financial, status, etc.) incentives to the
      innovators, then I am certain that we can come up with creative solutions as
      in this example:

      http://science.slashdot.org/science/05/02/22/1932248.shtml?tid=187&tid=126
      &tid=14

      I'm sure there are many others in the works.

      Charles Jo
      charles@...
      www.charlesjo.com



      -----Original Message-----
      From: Wayne Radinsky [mailto:waynerad@...]
      Sent: Tuesday, February 22, 2005 10:43 PM
      To: bafuture@yahoogroups.com
      Subject: Re: [bafuture] The Coming Energy Crisis or Peak Oil


      For a contrary point of view, I saw an interview of the
      author of the book "The Bottomless Well" on TV...

      http://www.amazon.com/exec/obidos/ASIN/0465031161/qid=1109139861/sr=2-1/
      ref=pd_bbs_b_2_1/102-7473617-5459323


      After the last Future Salon, Mark Finnern and I had a
      little debate going -- the question was, if the "Peak Oil"
      theory is true, would a "Peak Oil" crisis slow down or stop
      Moore's Law? Mark said it would. I said no, it would not --
      but it would force chipmakers to make more energy-efficient
      chips. After that the debate turned into a debate about
      "how fast oil prices would go up if peak oil happened" --
      if the price doubled every 2 years, or doubled every year,
      or went up by 4x per year, at what point -- obviously there
      is some point where it would impact Moore's Law, and what
      sort of exponent could we realistically expect to see, etc
      etc

      By the way, I must emphasize here that I am *not* trying to
      promote or advocate one point of view or another. I'm aware
      that when you post a link, people reading always assume you
      agree with whatever viewpoint is expressed on the other end
      of the link. So I have to explicitly point out that I'm not
      trying to argue one side or the other, just posting it
      because I think it's interesting. In fact, I don't have the
      petroleum industry expertise to judge whether the "Peak
      Oil" theory is true or not and have posted everything I
      know about oil exploration on this list already.


      Dimitar Vesselinov wrote:
      >
      >
      > "Fertilizer, DVDs, rubber, cheap flights, plastics and metals. None of
      > these things have anything in common, right? Think again. An
      > ingredient in all of them, in one form or another, is oil.
      >
      > Oil is the precious primer of the world economic engine, making it
      > hum. Oil provides 40% of the world's energy needs, and nearly 90% of
      > all transportation. It's also a building block for many products and
      > goods. Cut supplies of this natural resource and life as we know it
      > could change.
      >
      > But while some experts say the world runs no risk of running out of
      > oil, others disagree. Sounding the alarm is the Association for the
      > Study of Peak Oil and Gas. Its president is Kjell Aleklett, a physics
      > professor at Sweden's Upsalla University.
      >
      > '[During] the next 30 years we will find more than 150, maybe 200, but
      > probably not, but 150 billion barrels of oil is roughly what you're
      > going to find,' Aleklett said. 'And during the same period, we will
      > consume 1,000 [billion barrels of oil]. So that means we are now
      > digging deep into the reserves we have at the moment.'
      >
      > Aleklett is among a group of international experts - ex-oil executives
      > and geologists - who believe there is less oil percolating under the
      > ground than the oil industry acknowledges. They say the world has
      > burned up nearly half of all its oil - an estimated 900 billion
      > barrels of crude.
      >
      > In industry jargon, that halfway point is the 'peak', after which
      > reserves no longer rise but drop. No one denies this will happen
      > eventually. After all, oil is a finite resource. But these oil
      > skeptics - so-called 'peak' oil analysts - say the 'peak' is coming
      > sooner rather than later, maybe even in 2008. They paint a gloomy
      > picture: falling oil supplies plus rising demand will equal shortages
      > - and perhaps a rising risk of war."
      >
      > http://www.atimes.com/atimes/Global_Economy/GA26Dj04.html
      > http://divedi.blogspot.com/2005/02/coming-energy-c
      > risis-or-peak-oil.html
      >
      >
      > bafuture-unsubscribe@yahoogroups.com
      > Yahoo! Groups Links
      >
      >
      >
      >
      >


      bafuture-unsubscribe@yahoogroups.com



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    • Chris Phoenix
      I ve seen arguments on both sides of the peak oil question. But I just saw something new today: a Reuters news article saying that one reason oil prices are
      Message 2 of 17 , Mar 2 5:31 PM
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        I've seen arguments on both sides of the peak oil question. But I just
        saw something new today: a Reuters news article saying that one reason
        oil prices are so high is that traders are worried about demand
        exceeding supply.

        http://www.reuters.com/newsArticle.jhtml?type=reutersEdge&storyID=7788570

        A shallow economic analysis says that demand can't exceed supply, by
        definition. This seems to be the basis for the argument that there's no
        such thing as peak oil.

        And it's true that if gasoline goes to $4.00 or $10.00 per gallon,
        supply and demand will balance out. The trouble is that oil is not a
        commodity in isolation. "Demand exceeds supply" is an informal way of
        saying "The price at which demand equals supply could be high enough to
        have major ripple effects on other aspects of the global economy."

        At some point, it might be in a nation's best interest to damage the
        economy of another large nation, rather than get into a bidding war for
        oil. Produced oil would get a lot less scarce if, say, the U.S. economy
        went into a major slump.

        China is rapidly getting hungrier for oil. China could damage the U.S.
        economy quickly and severely, simply by reversing its current
        trade-deficit subsidy. Is this a plausible scenario?

        Chris

        Dimitar Vesselinov wrote:

        >
        >
        > "Fertilizer, DVDs, rubber, cheap flights, plastics and metals. None of
        > these things have anything in common, right? Think again. An
        > ingredient in all of them, in one form or another, is oil.
        >
        > Oil is the precious primer of the world economic engine, making it
        > hum. Oil provides 40% of the world's energy needs, and nearly 90% of
        > all transportation. It's also a building block for many products and
        > goods. Cut supplies of this natural resource and life as we know it
        > could change.
        >
        > But while some experts say the world runs no risk of running out of
        > oil, others disagree. Sounding the alarm is the Association for the
        > Study of Peak Oil and Gas. Its president is Kjell Aleklett, a physics
        > professor at Sweden's Upsalla University.
        >
        > '[During] the next 30 years we will find more than 150, maybe 200, but
        > probably not, but 150 billion barrels of oil is roughly what you're
        > going to find,' Aleklett said. 'And during the same period, we will
        > consume 1,000 [billion barrels of oil]. So that means we are now
        > digging deep into the reserves we have at the moment.'
        >
        > Aleklett is among a group of international experts - ex-oil executives
        > and geologists - who believe there is less oil percolating under the
        > ground than the oil industry acknowledges. They say the world has
        > burned up nearly half of all its oil - an estimated 900 billion
        > barrels of crude.
        >
        > In industry jargon, that halfway point is the 'peak', after which
        > reserves no longer rise but drop. No one denies this will happen
        > eventually. After all, oil is a finite resource. But these oil
        > skeptics - so-called 'peak' oil analysts - say the 'peak' is coming
        > sooner rather than later, maybe even in 2008. They paint a gloomy
        > picture: falling oil supplies plus rising demand will equal shortages
        > - and perhaps a rising risk of war."
        >
        > http://www.atimes.com/atimes/Global_Economy/GA26Dj04.html
        > http://divedi.blogspot.com/2005/02/coming-energy-c
        > risis-or-peak-oil.html
        >
        >
        >
        >
        >
        >
        >
        >
        >
        > bafuture-unsubscribe@yahoogroups.com
        > Yahoo! Groups Links
        >
        >
        >
        >
        >
        >
        >
        >

        --
        Chris Phoenix cphoenix@...
        Director of Research
        Center for Responsible Nanotechnology http://CRNano.org
      • markfinnern
        ... U.S. ... Hi Chris, First I thought, no way, they are so dependent on the US consumer they do everything to prop him up. But may be only until their own
        Message 3 of 17 , Mar 2 7:51 PM
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          >
          > China is rapidly getting hungrier for oil. China could damage the
          U.S.
          > economy quickly and severely, simply by reversing its current
          > trade-deficit subsidy. Is this a plausible scenario?
          >
          Hi Chris,

          First I thought, no way, they are so dependent on the US consumer
          they do everything to prop him up.

          But may be only until their own market is developed enough, so that
          sustainable growth can come from within China. Signs would be an
          exponentially growing middle class that can fill the demand gab that
          a US in recession would create.

          Smart move if they can pull it off. Would be quite a rude wake up
          call for us here.

          Best, Mark.
        • Wayne Radinsky
          What is China Doing With its $162 Billion Trade Surplus With the U.S.? February 21, 2005 By Lev Navrozov Why did the United States, and not Germany, Russia, or
          Message 4 of 17 , Mar 2 8:20 PM
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            What is China Doing With its $162 Billion Trade Surplus With the U.S.?

            February 21, 2005
            By Lev Navrozov

            Why did the United States, and not Germany, Russia, or Britain,
            produce "the atom bomb" during WW2? The answer is: the United States
            had enough money for a project of development of it and, having
            received Einstein's letter, warning that Germany may develop "the atom
            bomb" ahead of the United States, Roosevelt finally decided in 1942 to
            finance the project in all earnest, after Germany, at war with the
            United States, had reached in Russia the Volga in the summer of 1942,
            and the defeat of Russia augured ill for the United States.

            Germany, Russia, and Britain used all of their resources for the
            conventional life-or-death war and could not spare enough for the
            development of nuclear weapons. Please note that Hitler used to say
            that the advent of nuclear weapons would be as important as the advent
            of firearms in the age of bows and arrows; Stalin was excellently
            informed about nuclear weapons through Pyotr Kapitsa, a Russian pupil
            of Rutherford, the British "father of nuclear physics"; and certainly
            Churchill understood the geostrategic value of nuclear weapons.

            The importance of émigré nuclear scientists in the United States? Yes,
            they were important. But why did they emigrate to the United States in
            the first place? From Einstein's letters we learn that as soon as the
            Nazi government announced in 1933 that Jews cannot hold high posts in
            science, their first impulse was to rush to Britain. Alas, even in
            peacetime, Britain did not have enough money to give them salaries
            commensurate with their salaries in pre-Nazi Germany, where the Jew
            Einstein had held the highest scientific posts way back in 1913 when
            few Americans heard his name — about a decade before he received a
            Nobel Prize.

            Let me give you the opposite example. As I stressed it in many of my
            columns, Eric Drexler, a born and bred America (not a German Jew), is
            the Newton-Einstein of nanotechnology, whose Chapter 11 in his seminal
            study of 1986 is entitled "Engines of Destruction," that is, molecular
            nano weapons. I have been stating that he is the only person who can
            save the West if the Foresight Institute he co-founded is financed to
            convert it into a nano Manhattan Projcct. But his associate told me
            that he "has no salary." Like Einstein, if he had stayed in Germany
            after 1933. But where can Drexler emigrate to have a "decent salary"?
            To China, where he has been worshiped by Chinese nanotechnologists and
            those who are looking forward to the nano annihilation of the United
            States and the democratic West in general unless it surrenders
            unconditionally and becomes a Chinese colony.

            On a Voice of America program in which I participated, an American
            technologist who visited China last year said that Shanghai
            (population 14 million) is more innovative and beautiful than New
            York. An American or British scientist's work in Stalin's Russia or
            hitler's Germany was scandalous. There is nothing scandalous about an
            American, European, Japanese, or Israeli scientist working in
            Shanghai, more innovative and beautiful than New York. All the
            dictators of Chins need is the money for generous salaries and social
            benefits, for excellent apartments or mansions, and second-to-none
            laboratories, with the latest equipment, sold, if necessary, by
            American, European, Japanese, or Israeli corporations.

            The "supreme leaders" of China can arrange the transfer from the West
            to China of corporations producing geostrategically unique goods. Two
            birds are thereby killed with one stone. The "supreme leaders" of
            China thus acquire geostrategically unique corporations, and the West
            loses them. Besides, the "supreme leaders" of China can promise
            through government-controlled Chinese corporations the purchase of the
            geostrategically unique goods the corporations produce.

            In short: money, money, money.

            Isak Baldwin, manager of our not-for-profit Center for the Survival of
            Western Democracies, Inc., has sent me a BBC News web site report of
            February 10, 2005. Hold on to your chairs!

            China's annual surplus in Sino-American trade reached in 2004 an
            astronomical sum: $162 billion, "the largest ever recorded with a
            single country."

            Note that "the supreme leaders" of China do not need the approval of
            any legislature to lump all of the $162 billion into the development
            in 2005 of of molecular nano weapons, predicted by Drexler in Chapter
            11 of his book of 1986, or of other post-nuclear superweapons, or of
            all of them, to see which of them is able to deliver the fatal blow to
            the West by destroying its means of (nuclear) retaliation, thus
            circumventing Mutual Assured Destruction, and making the West
            defenseless.

            In 2003 China's surplus in Sino-American trade was $123 billion. Now
            it is $162 billion. A more than 30 percent increase within one year!
            So what will it be in 2005? Over $200 billion? On trillion dollars in
            five years!

            Late in 2003, the U.S. media announced in triumph: President Bush had
            signed the 21st-century "Nanotechnology Research and Development Act
            which had passed both chambers of Congress and authorized $3.7 billion
            in spending on nanotechnology over the next four years. That is, $925
            million, less than 1 billion a year.

            However, on the development of molecular nano weapons the U.S.
            congress has not allocated a cent. What for? What country will develop
            molecular nano weapons? Certainly not China! It is the biggest
            dictatorship in world history, but the Western political establishment
            has fallen in love with it. Why develop post-nuclear superweapons if
            there is no enemy that will develop them? True, the Chinese press
            itself reported the founding in 1986 of Project 863 to develop
            post-nuclear superweapons in seven fields. But do not believe the
            Chinese press reports. Believe the Western political establishment.

            As for the rogue countries Iran and North Korea, they are Third World
            countries that can barely develop nuclear weapons that Soviet Russia
            began to test in 1949 and China in 1964. Both built powerful nuclear
            missile arsenals, and are now allies. Certainly no post-nuclear
            superweapon could be expected in Hussein's Iraq or can be expected in
            the midst of the Iraqi guerrillas.

            You see? Those countries that are able to produce post-nuclear
            superweapons are too good to do so, and those that are roguish enough
            to develop them, are too technologically underdeveloped and too poor
            to finance seven Manhattan projects to develop post-nuclear
            superweapons in seven fields.

            So the key target, to ensure security, is to defeat those roguish
            Sunni guerrillas in Iraq, then to conquer the roguish Shia Iran, and
            convince the rogue North Korea (with the help of our dear good
            peaceful friend China) to stop producing those roguish nuclear
            weapons. As for the West, it reminds me of a lady from Niger who fell
            in love with a tiger and decided to ride him.

            A lady from Niger
            Loved and rode a tiger.
            She ended up inside him,
            And with a smile on his lips.

            --------------------------------------------------------------------------------

            Lev Navrozov emigrated from the Soviet Union in 1972 He settled in New
            York City where he quickly learned that there was no market for his
            eloquent and powerful English language attacks on the Soviet Union. To
            this day, he writes without fear or favor or the conventions of polite
            society. He chaired the "Alternative to the New York Times Committee"
            in 1980, challenged the editors of the New York Times to a debate
            (which they declined) and became a columnist for the New York City
            Tribune. His columns are today read in both English and Russian.
          • Peter C. McCluskey
            ... News articles about short-term price fluctuations rarely say much about the longer term outlook. I suggest comparing near-term futures contracts with
            Message 5 of 17 , Mar 4 9:34 AM
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              cphoenix@... (Chris Phoenix) writes:
              >
              >I've seen arguments on both sides of the peak oil question. But I just
              >saw something new today: a Reuters news article saying that one reason
              >oil prices are so high is that traders are worried about demand
              >exceeding supply.

              News articles about short-term price fluctuations rarely say much about
              the longer term outlook.
              I suggest comparing near-term futures contracts with contracts for later
              delivery. Here's some crude oil futures prices:
              Apr 2005 $53.48
              Dec 2005 $51.87
              Dec 2007 $45.29
              Dec 2009 $43.24
              Dec 2011 $42.58
              They seem to be saying that if the peak oil theory is right, other energy
              sources will make up for it.
              --
              ------------------------------------------------------------------------------
              Peter McCluskey | Everyone complains about the laws of physics, but no
              www.bayesianinvestor.com| one does anything about them. - from Schild's Ladder
            • Chris Phoenix
              Peter, you get (+5 insightful) for that. It does seem to blow away my argument. A few questions: How do futures traders deal with possible changes in the
              Message 6 of 17 , Mar 4 1:58 PM
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                Peter, you get (+5 insightful) for that. It does seem to blow away my
                argument.

                A few questions:

                How do futures traders deal with possible changes in the value of the
                dollar? If I expect to pay $42.58 for a barrel in 2011, what is that in
                today's dollars?

                What have the Dec 2011 futures done over the past two years? (Where
                does one find these numbers?)

                Is there any way to tell whether the traders are expecting a slowdown or
                collapse in one or more major economies? In other words, are they
                expecting more supply, or less demand?

                Thanks,
                Chris

                Peter C. McCluskey wrote:
                > cphoenix@... (Chris Phoenix) writes:
                >
                >>I've seen arguments on both sides of the peak oil question. But I just
                >>saw something new today: a Reuters news article saying that one reason
                >>oil prices are so high is that traders are worried about demand
                >>exceeding supply.
                >
                >
                > News articles about short-term price fluctuations rarely say much about
                > the longer term outlook.
                > I suggest comparing near-term futures contracts with contracts for later
                > delivery. Here's some crude oil futures prices:
                > Apr 2005 $53.48
                > Dec 2005 $51.87
                > Dec 2007 $45.29
                > Dec 2009 $43.24
                > Dec 2011 $42.58
                > They seem to be saying that if the peak oil theory is right, other energy
                > sources will make up for it.

                --
                Chris Phoenix cphoenix@...
                Director of Research
                Center for Responsible Nanotechnology http://CRNano.org
              • Peter C.McCluskey
                ... The futures prices say something about what the dollar will be worth in 2011. If you use expected CPI changes (taken from CPI-linked bonds) to convert 2011
                Message 7 of 17 , Mar 4 4:48 PM
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                  cphoenix@... (Chris Phoenix) writes:
                  >Peter, you get (+5 insightful) for that. It does seem to blow away my
                  >argument.
                  >
                  >A few questions:
                  >
                  >How do futures traders deal with possible changes in the value of the
                  >dollar? If I expect to pay $42.58 for a barrel in 2011, what is that in
                  >today's dollars?

                  The futures prices say something about what the dollar will be worth in
                  2011.
                  If you use expected CPI changes (taken from CPI-linked bonds) to convert
                  2011 dollars to today's dollar's, I'd guess that would become something
                  in the mid 30s. I haven't checked that carefully, but the CPI-measured
                  inflation is probably expected to be around 2.5 to 3%. And there's some
                  doubt as to how well the CPI measures inflation.

                  >What have the Dec 2011 futures done over the past two years? (Where
                  >does one find these numbers?)

                  The 2011 futures have only been trading a few months. The Dec 2009
                  futures started trading in Nov 2002 at $22.66 and have been heading
                  up fairly steadily since then. So it's certainly possible that traders
                  have a persistent pattern of being wrong about peak oil.
                  You can buy CDs of historical futures prices at prophetfinance.com or
                  pinnacledata.com. I'm unsure whether there are any cheaper sources of
                  historical data.

                  >Is there any way to tell whether the traders are expecting a slowdown or
                  >collapse in one or more major economies? In other words, are they
                  >expecting more supply, or less demand?

                  Traders generally assume (at least for futures to be settled several years
                  from now) that growth will continue at roughly its historical average.
                  Interest rate futures are probably the best approximation to an objective
                  growth forecast, and they are showing that short-term rates in the U.S.
                  will continue to rise. It's rare enough for them to predict a recession
                  that that probably doesn't mean a lot. And I don't know whether there are
                  any market prices which provide estimates of world or Chinese growth.
                  So the best guess is that traders expect growth in supply and demand
                  for energy, but it's hard to confirm that guess.
                  --
                  ------------------------------------------------------------------------------
                  Peter McCluskey | Everyone complains about the laws of physics, but no
                  www.bayesianinvestor.com| one does anything about them. - from Schild's Ladder
                • Chris Phoenix
                  ... Well, I ll put my argument back on the table, then. If the price has gone steadily upward from $22.66 in Nov 2002 to $43.24 in March 2005, then by Dec
                  Message 8 of 17 , Mar 6 10:21 AM
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                    Peter C.McCluskey wrote:
                    > The 2011 futures have only been trading a few months. The Dec 2009
                    > futures started trading in Nov 2002 at $22.66 and have been heading
                    > up fairly steadily since then. So it's certainly possible that traders
                    > have a persistent pattern of being wrong about peak oil.

                    Well, I'll put my argument back on the table, then. If the price has
                    gone steadily upward from $22.66 in Nov 2002 to $43.24 in March 2005,
                    then by Dec 2009, if a linear trend holds ($8.82 per year), it'll be
                    $64.56.

                    The question is, why do the traders today think oil in 2009 will be so
                    much more expensive, relative to what they thought in 2002? Is it just
                    that their assessment of Middle East politics has gone steadily
                    downhill? Or is it that a new idea (peak oil) is spreading through the
                    trading community?

                    Hm... I guess the real question is, how common is it for oil futures
                    several years out to double in price?

                    Chris

                    --
                    Chris Phoenix cphoenix@...
                    Director of Research
                    Center for Responsible Nanotechnology http://CRNano.org
                  • J. Andrew Rogers
                    ... I do not think this has anything to do with peak oil. Most long-term futures traders are going to be reasonably savvy about the production numbers and
                    Message 9 of 17 , Mar 6 2:10 PM
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                      On Mar 6, 2005, at 10:21 AM, Chris Phoenix wrote:
                      > The question is, why do the traders today think oil in 2009 will be so
                      > much more expensive, relative to what they thought in 2002? Is it just
                      > that their assessment of Middle East politics has gone steadily
                      > downhill? Or is it that a new idea (peak oil) is spreading through the
                      > trading community?


                      I do not think this has anything to do with peak oil. Most long-term
                      futures traders are going to be reasonably savvy about the production
                      numbers and supply, and over the time window these futures are in,
                      would have been aware of any so-called "peak oil" impact. What has
                      probably happened is that producers have discovered that the price the
                      market will bear is higher than previously thought, which has re-priced
                      the market in general. The Middle East situation provided a means to
                      experiment with higher market prices. One could argue that the prices
                      are due more to a constriction on the number of suppliers than the
                      supply itself.

                      Oil, like gold, is often treated more like a currency than a commodity
                      and the price has little to do with the cost of production or potential
                      supply. You see this with many primary minerals that are not
                      geographically ubiquitous and controlled by a few interests. The cost
                      of producing gold is rapidly approaching $100 from its current $175,
                      but the futures contracts are a steady $450. By comparison, silver is
                      priced like a true commodity, just barely over the cost of production.
                      During much of the 1990s the price of gold was extremely soft, only
                      marginally above the cost of production, because several governments
                      started dumping gold reserves onto the open market in open competition
                      with the gold producers, more interested in moving gold than supporting
                      a price. The mining companies responded by suspending most mining
                      operations during this time (the ore isn't going anywhere) until the
                      reserve dumping stopped and they could control the price again.

                      Part of the reason this is the case is that both gold and oil are
                      primary minerals, and therefore output from mining operations of these
                      minerals can be adjusted very cheaply to suit supply objectives and
                      pricing. If changing the level of production was expensive, it would
                      be far less profitable to manipulate supply. The question is how high
                      the price can go before some member of the de facto cartel defects.
                      Many other non-ubiquitous minerals, like silver, are produced almost
                      entirely as incidental output of primary mineral extraction (e.g. gold
                      and copper in the case of silver) and therefore there is no easy way to
                      directly manipulate supply in support of some market price because
                      everyone needs to get rid of whatever they happen to produce.

                      In other words, I expect that the futures contract prices are the
                      result of futures traders being pragmatic about the fact that the price
                      structure is artificial and that the producers have found a new price
                      level they can support without significant defections. Given this,
                      there would be no reason to expect prices to return to previous lower
                      levels short of a very significant defection that does not seem likely
                      to occur.

                      Or at least, that is my take.

                      j. andrew rogers
                    • Peter C. McCluskey
                      ... Prices of other natural resources, particularly steel and copper, have increased sharply at roughly the same time. Theories based on surprising Asian
                      Message 10 of 17 , Mar 9 12:34 PM
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                        cphoenix@... (Chris Phoenix) writes:
                        >The question is, why do the traders today think oil in 2009 will be so
                        >much more expensive, relative to what they thought in 2002? Is it just
                        >that their assessment of Middle East politics has gone steadily
                        >downhill? Or is it that a new idea (peak oil) is spreading through the
                        >trading community?

                        Prices of other natural resources, particularly steel and copper, have
                        increased sharply at roughly the same time. Theories based on surprising
                        Asian demand and on a weak dollar would predict this, peak oil and mideast
                        politics do not.
                        Crude oil futures prices for delivery in 2005 have risen more than prices
                        for 2009+ delivery, which is what theories based on Asian demand tend to
                        predict, and the reverse of what peak oil predicts.
                        Of course, there's no reason to think these theories are mutually exclusive.

                        >Hm... I guess the real question is, how common is it for oil futures
                        >several years out to double in price?

                        Not very common, but oil futures have only traded on an organized exchange
                        since 1983, and only started trading contracts several years out in the mid
                        1990s, so we don't have much info to go on. And determining that it is
                        unusual doesn't do much to distinguish between the theories I've mentioned.
                        An economy the size of China growing at something like 10% per year isn't
                        exactly normal. The conflict between the U.S. and Al Qaeda isn't very
                        similar to previous global conflicts.
                        --
                        ------------------------------------------------------------------------------
                        Peter McCluskey | Everyone complains about the laws of physics, but no
                        www.bayesianinvestor.com| one does anything about them. - from Schild's Ladder
                      • Joschka Fisher
                        from the oil rig of joschka fischer: Here are some very good reasons why trders think oil in 2009 2ill be so much more expensive relative to what it was in
                        Message 11 of 17 , Mar 10 10:01 AM
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                          from the "oil rig" of joschka fischer:

                          Here are some very good reasons why trders think oil
                          in 2009 2ill be so much more expensive relative to
                          what it was in 2002.

                          http://www.energybulletin.net/4466.html



                          --- "Peter C. McCluskey" <pcm@...> a écrit :
                          >
                          > cphoenix@... (Chris Phoenix) writes:
                          > >The question is, why do the traders today think oil
                          > in 2009 will be so
                          > >much more expensive, relative to what they thought
                          > in 2002? Is it just
                          > >that their assessment of Middle East politics has
                          > gone steadily
                          > >downhill? Or is it that a new idea (peak oil) is
                          > spreading through the
                          > >trading community?
                          >
                          > Prices of other natural resources, particularly
                          > steel and copper, have
                          > increased sharply at roughly the same time. Theories
                          > based on surprising
                          > Asian demand and on a weak dollar would predict
                          > this, peak oil and mideast
                          > politics do not.
                          > Crude oil futures prices for delivery in 2005 have
                          > risen more than prices
                          > for 2009+ delivery, which is what theories based on
                          > Asian demand tend to
                          > predict, and the reverse of what peak oil predicts.
                          > Of course, there's no reason to think these
                          > theories are mutually exclusive.
                          >
                          > >Hm... I guess the real question is, how common is
                          > it for oil futures
                          > >several years out to double in price?
                          >
                          > Not very common, but oil futures have only traded
                          > on an organized exchange
                          > since 1983, and only started trading contracts
                          > several years out in the mid
                          > 1990s, so we don't have much info to go on. And
                          > determining that it is
                          > unusual doesn't do much to distinguish between the
                          > theories I've mentioned.
                          > An economy the size of China growing at something
                          > like 10% per year isn't
                          > exactly normal. The conflict between the U.S. and Al
                          > Qaeda isn't very
                          > similar to previous global conflicts.
                          > --
                          >
                          ------------------------------------------------------------------------------
                          > Peter McCluskey | Everyone complains about
                          > the laws of physics, but no
                          > www.bayesianinvestor.com| one does anything about
                          > them. - from Schild's Ladder
                          >
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                        • Kevin D. Keck
                          Or maybe it s all just a ruse: http://www.davesweb.cnchost.com/nwsltr52.html I particularly like the footnote: * There is a close parallel here with the
                          Message 12 of 17 , Mar 10 11:10 PM
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                            Or maybe it's all just a ruse:

                            http://www.davesweb.cnchost.com/nwsltr52.html

                            I particularly like the footnote:

                            * There is a close parallel here with the diamond industry. It
                            is a relatively open secret that the diamond market is an
                            artificial one, created by an illusion of scarcity actively
                            cultivated by DeBeers, which has monopolized the diamond
                            industry for generations. As Ernest Oppenheimer of DeBeers said,
                            nearly a century ago, "Common sense tells us that the only way
                            to increase the value of diamonds is to make them scarce -- that
                            is, reduce production." And that is exactly what the company has
                            done for decades now.

                            There are reportedly nearly one billion diamonds produced every
                            year, and that is only a fraction of what could be produced.
                            Diamonds are not, conventional wisdom to the contrary, a scarce
                            resource, and they are therefore not intrinsically valuable.
                            Without the market manipulation, experts estimate that the true
                            value of diamonds would be roughly $30 per carat.

                            Interestingly enough, Soviet researchers have noted that
                            diamonds are the result of the same processes that create
                            petroleum: "Statistical thermodynamic analysis has established
                            clearly that hydrocarbon molecules which comprise petroleum
                            require very high pressures for their spontaneous formation,
                            comparable to the pressures required for the same of diamond. In
                            that sense, hydrocarbon molecules are the high-pressure
                            polymorphs of the reduced carbon system as is diamond of
                            elemental carbon." (Emmanuil B. Chekaliuk, 1968)

                            So what we appear to have here are two resources, both of which
                            are created in abundance by natural geothermal processes, and
                            both of which are marketed as scarce and valuable commodities,
                            creating two industries awash in obscene profits.



                            If you're more intrigued than incredulous, see also the comment
                            posted on Rense's page for this article:

                            http://rense.com/general63/staline.htm
                          • Joschka Fisher
                            From the Hey I gotta question and Speculation desk of Joschka Fischer: Well, I always thought of Diamonds as Giffen goods. That s normally a theortical good
                            Message 13 of 17 , Mar 11 9:22 AM
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                              From the "Hey I gotta question and Speculation" desk
                              of Joschka Fischer:


                              Well, I always thought of Diamonds as Giffen goods.
                              That's normally a theortical good that you buy more of
                              when the price goes up and less of when the price goes
                              down.
                              Giffen Goods and Price Theory
                              http://gymnasiax.com/texts/friedman/pricethy03.html

                              As for rarity...I always thought diamonds were rare
                              not based on the amount of diamonds but on "the rarity
                              of their cut process".

                              Diamonds can be man-made ( GE has the patent 1955 and
                              improved on it in 1970's) The 1955 process was not
                              Gem grade. I don't know about the 1970 process,
                              however. They were inadvertently working on a
                              focusing lens for Xrays when they stumbled on the
                              improved process.

                              Also if you've been in the vicinity of any metorite
                              slamming into the earth you'll find some diamond
                              debris. Of which ( I'm still looking this up ) but
                              according to an old Ian Flemming novel, the rarest of
                              diamonds can be formed.

                              I cite this excerpt ( below) from this
                              link:http://www.umich.edu/~gs265/meteor.htm
                              The Arizona crater was also at the center of a unique
                              debate concerning diamonds. In 1955 experiments were
                              completed by F. P. Bundy and others that indicated
                              extreme pressures and temperatures were needed to form
                              a diamond. The speculation that followed was that tiny
                              diamonds, found in iron associated with the Arizona
                              Crater, likely formed as a result of a high pressure
                              and temperature impact (Mark, 1987). Opponents argued
                              that needed heat and pressure could not have been
                              achieved in such an impact, and that the diamonds were
                              probably formed in space, during the formation of the
                              meteorite itself (Mark, 1987). Today diamond formation
                              is characteristic of most meteorite impacts, and along
                              with other high temperature, high pressure minerals
                              has been accepted as evidence for a meteorite impact.
                              Nearer the impact itself, pressures and temperatures
                              become high enough to melt pre-existing rock.


                              Peak Oil:
                              Well everyone certainly has cut back on oil
                              exploration and this article though Canadian-centric
                              focuses on why.

                              --- "Kevin D. Keck" <keck200407@...> a
                              écrit :
                              >
                              > Or maybe it's all just a ruse:
                              >
                              > http://www.davesweb.cnchost.com/nwsltr52.html
                              >
                              > I particularly like the footnote:
                              >
                              > * There is a close parallel here with the diamond
                              > industry. It
                              > is a relatively open secret that the diamond market
                              > is an
                              > artificial one, created by an illusion of scarcity
                              > actively
                              > cultivated by DeBeers, which has monopolized the
                              > diamond
                              > industry for generations. As Ernest Oppenheimer of
                              > DeBeers said,
                              > nearly a century ago, "Common sense tells us that
                              > the only way
                              > to increase the value of diamonds is to make them
                              > scarce -- that
                              > is, reduce production." And that is exactly what the
                              > company has
                              > done for decades now.
                              >
                              > There are reportedly nearly one billion diamonds
                              > produced every
                              > year, and that is only a fraction of what could be
                              > produced.
                              > Diamonds are not, conventional wisdom to the
                              > contrary, a scarce
                              > resource, and they are therefore not intrinsically
                              > valuable.
                              > Without the market manipulation, experts estimate
                              > that the true
                              > value of diamonds would be roughly $30 per carat.
                              >
                              > Interestingly enough, Soviet researchers have noted
                              > that
                              > diamonds are the result of the same processes that
                              > create
                              > petroleum: "Statistical thermodynamic analysis has
                              > established
                              > clearly that hydrocarbon molecules which comprise
                              > petroleum
                              > require very high pressures for their spontaneous
                              > formation,
                              > comparable to the pressures required for the same of
                              > diamond. In
                              > that sense, hydrocarbon molecules are the
                              > high-pressure
                              > polymorphs of the reduced carbon system as is
                              > diamond of
                              > elemental carbon." (Emmanuil B. Chekaliuk, 1968)
                              >
                              > So what we appear to have here are two resources,
                              > both of which
                              > are created in abundance by natural geothermal
                              > processes, and
                              > both of which are marketed as scarce and valuable
                              > commodities,
                              > creating two industries awash in obscene profits.
                              >
                              >
                              >
                              > If you're more intrigued than incredulous, see also
                              > the comment
                              > posted on Rense's page for this article:
                              >
                              > http://rense.com/general63/staline.htm
                              >
                              >
                              >
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                            • Chris Phoenix
                              Last I heard, the deep-geothermal oil hypothesis was on the ropes and had not been productive in test drills. I suspect that billion-diamonds figure includes
                              Message 14 of 17 , Mar 11 10:47 AM
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                                Last I heard, the deep-geothermal oil hypothesis was on the ropes and
                                had not been productive in test drills.

                                I suspect that billion-diamonds figure includes industrial diamonds.

                                Chris

                                Kevin D. Keck wrote:

                                > Or maybe it's all just a ruse:
                                >
                                > http://www.davesweb.cnchost.com/nwsltr52.html
                                >
                                > I particularly like the footnote:
                                >
                                > * There is a close parallel here with the diamond industry. It
                                > is a relatively open secret that the diamond market is an
                                > artificial one, created by an illusion of scarcity actively
                                > cultivated by DeBeers, which has monopolized the diamond
                                > industry for generations. As Ernest Oppenheimer of DeBeers said,
                                > nearly a century ago, "Common sense tells us that the only way
                                > to increase the value of diamonds is to make them scarce -- that
                                > is, reduce production." And that is exactly what the company has
                                > done for decades now.
                                >
                                > There are reportedly nearly one billion diamonds produced every
                                > year, and that is only a fraction of what could be produced.
                                > Diamonds are not, conventional wisdom to the contrary, a scarce
                                > resource, and they are therefore not intrinsically valuable.
                                > Without the market manipulation, experts estimate that the true
                                > value of diamonds would be roughly $30 per carat.
                                >
                                > Interestingly enough, Soviet researchers have noted that
                                > diamonds are the result of the same processes that create
                                > petroleum: "Statistical thermodynamic analysis has established
                                > clearly that hydrocarbon molecules which comprise petroleum
                                > require very high pressures for their spontaneous formation,
                                > comparable to the pressures required for the same of diamond. In
                                > that sense, hydrocarbon molecules are the high-pressure
                                > polymorphs of the reduced carbon system as is diamond of
                                > elemental carbon." (Emmanuil B. Chekaliuk, 1968)
                                >
                                > So what we appear to have here are two resources, both of which
                                > are created in abundance by natural geothermal processes, and
                                > both of which are marketed as scarce and valuable commodities,
                                > creating two industries awash in obscene profits.
                                >
                                >
                                >
                                > If you're more intrigued than incredulous, see also the comment
                                > posted on Rense's page for this article:
                                >
                                > http://rense.com/general63/staline.htm
                                >
                                >
                                >
                                >
                                > bafuture-unsubscribe@yahoogroups.com
                                > Yahoo! Groups Links
                                >
                                >
                                >
                                >
                                >
                                >
                                >
                                >

                                --
                                Chris Phoenix cphoenix@...
                                Director of Research
                                Center for Responsible Nanotechnology http://CRNano.org
                              • Kevin D. Keck
                                ... [...] ... Actually, newer, much better processes were covered in a Wired cover story ~18 mos. ago: http://www.wired.com/wired/archive/11.09/diamond.html At
                                Message 15 of 17 , Mar 12 12:27 AM
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                                  --- Joschka Fisher <grabarkowic@...> wrote:
                                  [...]
                                  > Diamonds can be man-made ( GE has the patent 1955 and
                                  > improved on it in 1970's) The 1955 process was not
                                  > Gem grade. I don't know about the 1970 process,
                                  > however. They were inadvertently working on a
                                  > focusing lens for Xrays when they stumbled on the
                                  > improved process.

                                  Actually, newer, much better processes were covered in a
                                  Wired cover story ~18 mos. ago:

                                  http://www.wired.com/wired/archive/11.09/diamond.html

                                  At the moment they can only make yellow or brownish
                                  gem-quality diamonds, and not the white diamonds which
                                  are the bulk of De Beers' business. But it's probably just a
                                  matter of a few years now until they'll be able to manufacture
                                  large, nearly flawless white ones too. And rubies as well.
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