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  • Joseph Lado
    Judging by the behavior of oil company executives and oil companies there is still pleanty of oil to be extracted from the ground. I wrote a blog about this in
    Message 1 of 4 , Oct 29, 2006
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      Judging by the behavior of oil company executives and oil companies there is still pleanty of oil to be extracted from the ground. I wrote a blog about this in EVWorld in early September. Peak oil may not be a myth, but at this point oil execs are not worried that their profit margins are going to be affected by it. In fact that the less oil that is around tends to make the remaining stock much more expensive. This means that oil companies can do far less to produce those huge profits they have been producing year after year since George W. Bush came into office. Simply put, peak oil isn't going to do anything for electric vehicles or other alternatives until oil and gasoline prices can't come down again. Given that there was a 83 cent difference average high price in the summer and the average high price now. You just can't believe that supply and demand have that much of an effect on oil prices. Prices of a product are supposed to be reflective of real supply and real
      demand. As far as I know there haven't major changes in demand. So the price of gasoline shouldn't be displaying a 30% drop in demand. There wasn't a 30% drop in demand. What is actually happening is price manipulation for the election (prices are 40 cents lower than last years low) and the cycle that oil companies have come up with to discourage alternatives. Raise prices, allow for speculation in alternatives, drop prices so all those speculators loose their money discouraging them from any future investment in Alternatives. What is needed is Government intervention. See
      http://www.evworld.com/blogs/index.cfm?page=blogentry&authorid=46&blogid=366&archive=1

      In May when people were claiming that the price of oil would never come down from Peak Oil, demand from China and India, and growing demand in the United States, I wrote a piece for the Daily Kos that foretold that prices would come down again. Guess what?
      http://www.dailykos.com/story/2006/5/12/1259/85418

      We need choices away from oil. We need alternatives. But it is doing to be market driven products and people voting with their dollars






      [Non-text portions of this message have been removed]
    • murdoch
      What I agree with is that the global price-mechanism-reaction to peak-global-easy-oil should not be taken-for-granted to be that oil prices will be irrevocably
      Message 2 of 4 , Oct 29, 2006
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        What I agree with is that the global price-mechanism-reaction to
        peak-global-easy-oil should not be taken-for-granted to be that oil
        prices will be irrevocably going up.

        I also agree with the pointing-out of the grey-area of defining
        whether or not oil supply will be seriously encumbered.
        Hard-To-Get-Oil has barely started, much less peaked, Natural Gas
        (from which we make synfuels to replace oil-based fuels) has not
        peaked and Coal (from which we can also make synfuels to replace
        oil-based fuels) I don't think has peaked. Ultimately we will have
        more sources of synfuels, and so on, but the picture is somewhat
        murky.

        I disagree with the statement, in the title of your piece, that Peak
        Oil is a myth. It may be a myth that we know exactly what supply and
        demand are going to do in a Post-Peak environment, but Peak [Easy] Oil
        seems to be happening right on schedule. The recent worldwide drop in
        prices was not in any way a refutation of Peak Oil, in the sense that
        a totally consistent rise is not to be expected, nor has the prices
        fallen that much, nor has it even been shown (that I'm aware) that
        Peak Oil Theory absolutely necessitates a certain type of price
        behaviour.

        The discovery of additional Oil off the Coast of Louisiana, with which
        you start off your EVworld.com piece, is a predictable reaction to
        Peak-Global-Easy-Oil Theories. Sure, gobs more oil will be
        discovered. It's not a big deal. It is taken into account by the
        theory. It does seem worthwhile to ask how the theory reacts to
        trying to parse what is Easy-Oil and what is not, but I do not think
        that a few large discoveries are super-relevant to trying to get at a
        significant overturning of Peak Oil Theory to the point of calling it
        a myth.

        Peak Theory says that production will peak at some point, and gives a
        good predictive idea of when that point will be. It is on record as
        having done that very accurately (in the US), despite a moment a few
        years later when it appeared a new peak would be established (which
        would not at all have invalidated Peak theory but simply caused a
        worthwhile re-examination of its weak points), and appears to be on
        schedule to do that globally (with the same predictable naysaying,
        both times).

        I also want to point out that the US is in a much different situation
        than every other country. Our leaders have refused to consider taxing
        oil products as much as they do in Europe, even on imports to the US,
        even when it became clear that Oil-Addiction and Gluttony of US
        consumers was putting money in the pockets of declared military
        enemies of the US and declared US allies.

        Taxation might have discouraged the building of demand and might have
        affected the elasticity of present demand. We have long used about
        25% of the world's Oil, when we have only about 5% of the World's
        population. I believe the same numbers, that should give everyone
        pause to think about the depth of hole dug by US citizens over 3
        decades or more, apply roughly to Energy across the board, and not
        just to Oil. I think the Oil percentage of total energy as something
        like 38% at some point, but I'm not sure now.

        So, the comparative Oil Gluttony of the US, ...the dramatically
        different-than-other-nations Oil demand and usage habits of the
        300,000,000 people in that one nation..., may signal that there could
        be a somewhat different economic reaction to Peak-Easy-Oil in that one
        nation, than in other nations. Yes, the numbers may not look that
        different from other nations when compared to GDP, but I think they're
        different enough, whether or not compared to GDP, to give us reason to
        try to examine of there will be a substantial difference in US
        reaction to peak-global-easy-oil and Outside-The-US-reaction to
        peak-global-easy-oil.

        I think perhaps one thing that is called for is an examination of
        Price-elasticity of demand across nations. Is there also such a thing
        as "supply-elasticity" or other types of elasticity measurement? I
        can't recall. Basically, if at some point the US is forced by global
        pricing

        I wonder if we will see peak US Oil Use soon (21 mbpd or so?) or not?
        I also figure we'll start needing to substitute in some synfuels and
        alt fuels numbers, in some of our discussions, to figure out at what
        rate synfuels and alt fuels (as well as forced-conservation) will be
        used as replacements.



        On Sun, 29 Oct 2006 06:17:24 -0800 (PST), you wrote:

        >Judging by the behavior of oil company executives and oil companies there is still pleanty of oil to be extracted from the ground. I wrote a blog about this in EVWorld in early September. Peak oil may not be a myth, but at this point oil execs are not worried that their profit margins are going to be affected by it. In fact that the less oil that is around tends to make the remaining stock much more expensive. This means that oil companies can do far less to produce those huge profits they have been producing year after year since George W. Bush came into office. Simply put, peak oil isn't going to do anything for electric vehicles or other alternatives until oil and gasoline prices can't come down again. Given that there was a 83 cent difference average high price in the summer and the average high price now. You just can't believe that supply and demand have that much of an effect on oil prices. Prices of a product are supposed to be reflective of real supply and real
        > demand. As far as I know there haven't major changes in demand. So the price of gasoline shouldn't be displaying a 30% drop in demand. There wasn't a 30% drop in demand. What is actually happening is price manipulation for the election (prices are 40 cents lower than last years low) and the cycle that oil companies have come up with to discourage alternatives. Raise prices, allow for speculation in alternatives, drop prices so all those speculators loose their money discouraging them from any future investment in Alternatives. What is needed is Government intervention. See
        >http://www.evworld.com/blogs/index.cfm?page=blogentry&authorid=46&blogid=366&archive=1
        >
        >In May when people were claiming that the price of oil would never come down from Peak Oil, demand from China and India, and growing demand in the United States, I wrote a piece for the Daily Kos that foretold that prices would come down again. Guess what?
        >http://www.dailykos.com/story/2006/5/12/1259/85418
        >
        >We need choices away from oil. We need alternatives. But it is doing to be market driven products and people voting with their dollars
        >
        >
        >
        >
        >
        >
        >[Non-text portions of this message have been removed]
        >
        >
        >
        >
        >Yahoo! Groups Links
        >
        >
        >
        >
      • murdoch
        I read the remainder of your Daily Kos piece and I thought you made several more points worth agree with or discussing. You focused on ethanol, and the effect
        Message 3 of 4 , Oct 29, 2006
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          I read the remainder of your Daily Kos piece and I thought you made
          several more points worth agree with or discussing.

          You focused on ethanol, and the effect on ethanol economics when Big
          Oil flexes its muscles and makes it hard to compete in fuel for
          vehicles. I wanted to point out boidiesel as well. I know a woman
          whose store makes a living partly by selling biodiesel, and when Oil
          Petro-Diesel at the pump was at much higher prices, she was starting
          to do ok with her biodiesel sales. Now that Petro-Diesel at the pump
          is lower, her biodiesel sales are rough, and her margins are very bad.

          More broadly, in response to your piece, I have always been a skeptic
          that the Oil Companies manipulate things as much as some of my friends
          and colleagues believe, but have always been open to the idea that I
          may be wrong in this skepticism.

          In this case, no matter what happens in short run (over the next few
          months, leading into the home heating oil season and then Memorial Day
          Driving season, and so on), I think one of several questions we face
          are whether a tightening of global supply will force a change in the
          manipulative policies. So, even if I am wrong to be skeptical about
          some of the claimed global oil price and supply manipulation, I think
          the day is approaching when some of the equation will change. The
          claimed manipulation wouldn't disappear in an environment of
          permanently increased supply constraints. I think it would have to
          make some interesting adjustment though.

          As supply changes, I think we should talk about our assumptions as to
          what will happen to demand and price. Although part of your thesis
          seems to be that supply is not as much at stake as the
          peak-oil-theorists claim, and so we may disagree, we may have some
          good discussion I think as to what would happen in a supply
          partly-constrained environment. Is it valid to assume Oil at a
          Bazillion dollars per barrel (a la the world of the Road Warrior)? I
          don't think it will play out that simplistically.


          On Sun, 29 Oct 2006 06:17:24 -0800 (PST), you wrote:

          >Judging by the behavior of oil company executives and oil companies there is still pleanty of oil to be extracted from the ground. I wrote a blog about this in EVWorld in early September. Peak oil may not be a myth, but at this point oil execs are not worried that their profit margins are going to be affected by it. In fact that the less oil that is around tends to make the remaining stock much more expensive. This means that oil companies can do far less to produce those huge profits they have been producing year after year since George W. Bush came into office. Simply put, peak oil isn't going to do anything for electric vehicles or other alternatives until oil and gasoline prices can't come down again. Given that there was a 83 cent difference average high price in the summer and the average high price now. You just can't believe that supply and demand have that much of an effect on oil prices. Prices of a product are supposed to be reflective of real supply and real
          > demand. As far as I know there haven't major changes in demand. So the price of gasoline shouldn't be displaying a 30% drop in demand. There wasn't a 30% drop in demand. What is actually happening is price manipulation for the election (prices are 40 cents lower than last years low) and the cycle that oil companies have come up with to discourage alternatives. Raise prices, allow for speculation in alternatives, drop prices so all those speculators loose their money discouraging them from any future investment in Alternatives. What is needed is Government intervention. See
          >http://www.evworld.com/blogs/index.cfm?page=blogentry&authorid=46&blogid=366&archive=1
          >
          >In May when people were claiming that the price of oil would never come down from Peak Oil, demand from China and India, and growing demand in the United States, I wrote a piece for the Daily Kos that foretold that prices would come down again. Guess what?
          >http://www.dailykos.com/story/2006/5/12/1259/85418
          >
          >We need choices away from oil. We need alternatives. But it is doing to be market driven products and people voting with their dollars
          >
          >
          >
          >
          >
          >
          >[Non-text portions of this message have been removed]
          >
          >
          >
          >
          >Yahoo! Groups Links
          >
          >
          >
          >
        • joelado
          Dear Murdoch, Titling things on Daily Kos is always a tricky proposition since you get readers based on how catchy your title is. If I had named the piece
          Message 4 of 4 , Oct 30, 2006
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            Dear Murdoch,
            Titling things on Daily Kos is always a tricky proposition since you
            get readers based on how catchy your title is. If I had named the
            piece "Peak Oil is real but there are some things that you should
            think about the idea before you believe it to be something to be
            concerned about at this time." Well, you can imagine how many people
            would have read that. The factor that I am most focused on is not peak
            oil. It will come and it will have a strong affect on our economy. No
            dought in my mind about that. What I am most interested in learning is
            the economic stages that it will go through. You very thoughtfully
            characterized Peak-oil as easy Peak-oil, which I agree with. The
            example of the new findings of oil in the Gulf of Mexico was one of
            those examples. It is not easy oil to extract. I think it is 20,000
            feet below he ground in deep, deep water. We might be talking about
            Peak-Oil but oil men and now unfortunately woman think in these term.
            What will the average barrel of oil cost and will we after all our
            expenses be able to make if we need to go to this hard to extract oil
            to get it.

            Let me talk about tar sands of Canada. There is a vast field of tar
            sands in Canada. Enough oil to push back the end of oil for decades.
            Tar sands are a good microcosim of an alternative fuel because when
            oil is selling for less than $30 dollars a barrel tar sands are not
            worth the effort for oil companies. When oil makes it into the $30
            range oil companies start up their investment in the very expensive
            process to extract the oil from tar sands. When oil hit $60 a barrel,
            several major oil companies put in money and expanded their operations
            in the tar sands and invested in new equipment to make this a
            reality. Through out the history of the tar sands field it has been a
            start and stop operation. When oil per barrel prices go over $30 they
            begin. When the price of oil drops below $30 they stop. If oil should
            remain above $30 dollars a barrel you will be able to see tar sands
            oil entering the market place within a 5 year period or less beyond
            that point. Unfortunately for oil Ethanol also becomes doable in the
            long run when oil is $30 a barrel.

            Ethanol in the United States has always been a hotly debated topic.
            Brazil on the other hand went forward with a program to reduce their
            dependency on oil because they really had no other choice. Today,
            Ethanol is unsubsidiesed in Brazil and at times competes very well
            with the price of gasoline. It does so because most of the vehicles on
            the road in Brazil are flexible fuel vehicles (FFV). Seven out of 10
            new cars sold in Brazil are FFVs and the ratio is growing. Because
            consumers have a choice, when oil/gasoline prices go up people switch
            to using more ethanol, preventing gasoline prices to gyrate out of
            control since an increase in prices sends people running towards
            alternatives and stopping demand until the price of gasoline becomes
            competitive with Ethanol. Durring the last oil crunch Brazil had no
            where near the percentage changes in gasoline that the United States
            experienced. Why? Because Ethanol acted as a moderating factor.
            Brazilians can produce a gallon of Ethanol for a whole sale price of
            55 cents a gallon. In Brazil there is a ready market for Acool, what
            Ethanol is called there. In the United States the distribution is
            almost entirely as a blended fuel, the 10% Ethanol you see almost
            everywhere. The US imposes a 50 cent import tax on every gallon of
            Ethanol that enters the United States, making Brazilian Ethanol
            uncompetitive with US based Ethanol production. Effectively blocked
            from being a moderating factor on the price of oil in the US.

            There are other factors to look at, but what we are really affected by
            in our lives the most are economic factors. The current reality of oil
            in the United States economy is that it has a strangle hold on our
            motive fuel market. Oil company supplier controled markets dictate to
            us what price we pay at the pump and not our dollars dictating to
            motive fuel suppliers what we will pay at the pump. Other factors that
            indicate that oil companies are price givers and not takers is that
            for all the talk about foreign oil and foreign countries getting rich
            off of the price of oil, the oil companies have made profits never
            before seen in history, and I am talking about a percentage basis
            here. If the oil companies had to purchase oil at $75 dollars a
            barrel, then transport it to the refineries, refine it, then ship it
            out to the gasoline stations, etc. etc. etc. on top of that price they
            would have been taking a hit on their bottom line. Instead they are
            making the largest profits in their company's histories. They aren't
            paying that price, we are. That price has nothing to do with supply
            and demand since many oil companies own the entire supply chain. When
            you own the entire supply chain life is very different economically
            then if you are just a bit player. If Wall Mart is a Channel captain
            in its supply chain, than the oil companies are oil five star Generals.

            I could go on and on about this, but economics is the key to
            understanding what will happen with alternatives in the future.
            Currently oil companies are in the drivers seat. However, if
            predictions of peak oil are true, there may be a possibility for
            alternative fuels in the near future. I personally hope that electric
            vehicles and home based distributed power generation such as roof
            mounted solar panels, pole mounted windturbines, home based
            geothermal, and ambient tempurature conversion systems lead to a super
            clean, quiet and less dangerous world of energy production and
            consumption. These technologies represent the economic game changers.
            They will most effectively be the things that break us from our
            dependency on oil, fosil fuels and nuclear.

            --- In future-fuels-and-vehicles@yahoogroups.com, murdoch
            <murdoch@...> wrote:
            >
            > I read the remainder of your Daily Kos piece and I thought you made
            > several more points worth agree with or discussing.
            >
            > You focused on ethanol, and the effect on ethanol economics when Big
            > Oil flexes its muscles and makes it hard to compete in fuel for
            > vehicles. I wanted to point out boidiesel as well. I know a woman
            > whose store makes a living partly by selling biodiesel, and when Oil
            > Petro-Diesel at the pump was at much higher prices, she was starting
            > to do ok with her biodiesel sales. Now that Petro-Diesel at the pump
            > is lower, her biodiesel sales are rough, and her margins are very bad.
            >
            > More broadly, in response to your piece, I have always been a skeptic
            > that the Oil Companies manipulate things as much as some of my friends
            > and colleagues believe, but have always been open to the idea that I
            > may be wrong in this skepticism.
            >
            > In this case, no matter what happens in short run (over the next few
            > months, leading into the home heating oil season and then Memorial Day
            > Driving season, and so on), I think one of several questions we face
            > are whether a tightening of global supply will force a change in the
            > manipulative policies. So, even if I am wrong to be skeptical about
            > some of the claimed global oil price and supply manipulation, I think
            > the day is approaching when some of the equation will change. The
            > claimed manipulation wouldn't disappear in an environment of
            > permanently increased supply constraints. I think it would have to
            > make some interesting adjustment though.
            >
            > As supply changes, I think we should talk about our assumptions as to
            > what will happen to demand and price. Although part of your thesis
            > seems to be that supply is not as much at stake as the
            > peak-oil-theorists claim, and so we may disagree, we may have some
            > good discussion I think as to what would happen in a supply
            > partly-constrained environment. Is it valid to assume Oil at a
            > Bazillion dollars per barrel (a la the world of the Road Warrior)? I
            > don't think it will play out that simplistically.
            >
            >
            > On Sun, 29 Oct 2006 06:17:24 -0800 (PST), you wrote:
            >
            > >Judging by the behavior of oil company executives and oil companies
            there is still pleanty of oil to be extracted from the ground. I wrote
            a blog about this in EVWorld in early September. Peak oil may not be a
            myth, but at this point oil execs are not worried that their profit
            margins are going to be affected by it. In fact that the less oil that
            is around tends to make the remaining stock much more expensive. This
            means that oil companies can do far less to produce those huge profits
            they have been producing year after year since George W. Bush came
            into office. Simply put, peak oil isn't going to do anything for
            electric vehicles or other alternatives until oil and gasoline prices
            can't come down again. Given that there was a 83 cent difference
            average high price in the summer and the average high price now. You
            just can't believe that supply and demand have that much of an effect
            on oil prices. Prices of a product are supposed to be reflective of
            real supply and real
            > > demand. As far as I know there haven't major changes in demand. So
            the price of gasoline shouldn't be displaying a 30% drop in demand.
            There wasn't a 30% drop in demand. What is actually happening is price
            manipulation for the election (prices are 40 cents lower than last
            years low) and the cycle that oil companies have come up with to
            discourage alternatives. Raise prices, allow for speculation in
            alternatives, drop prices so all those speculators loose their money
            discouraging them from any future investment in Alternatives. What is
            needed is Government intervention. See
            >
            >http://www.evworld.com/blogs/index.cfm?page=blogentry&authorid=46&blogid=366&archive=1
            > >
            > >In May when people were claiming that the price of oil would never
            come down from Peak Oil, demand from China and India, and growing
            demand in the United States, I wrote a piece for the Daily Kos that
            foretold that prices would come down again. Guess what?
            > >http://www.dailykos.com/story/2006/5/12/1259/85418
            > >
            > >We need choices away from oil. We need alternatives. But it is
            doing to be market driven products and people voting with their dollars
            > >
            > >
            > >
            > >
            > >
            > >
            > >[Non-text portions of this message have been removed]
            > >
            > >
            > >
            > >
            > >Yahoo! Groups Links
            > >
            > >
            > >
            > >
            >
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