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Drill, almost everyone, Drill!

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Balladeer
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0 posted 04-28-2011 09:51 AM       View Profile for Balladeer   Email Balladeer   Edit/Delete Message      Find Poems   Click to visit Balladeer's Home Page   View IP for Balladeer

WASHINGTON, April 26 | Tue Apr 26, 2011 5:29pm EDT

(Reuters) - President Barack Obama said on Tuesday oil producing countries should increase their output to curb the rise in gasoline prices because "if we're not growing, they're not going to be making money either."

"We're talking to oil producers around the world and letting them know it's in their interest to make sure that high oil prices don't end up hurting the world economy," Obama said in an interview with the CBS affiliate WTKR in Hampton Roads, Virginia.

"So they need to increase supplies. And obviously there's been some disruptions because of Libya but we think that they can make it up and we're pushing them to do so," the president said.

http://www.reuters.com/article/2011/04/26/usa-obama-oil-producers-idUSWEN188820110426

Obama isn’t including the US in his call to increase oil output — quite the opposite. The Environmental Protection Agency just blocked Shell from beginning to drill the estimated 27 billion barrels of oil that the US Geological Survey estimates is under the US portion of the Arctic near Alaska. The west Texas oil industry could be stopped in its tracks because of a  lizard. The Gulf drilling moratorium has helped crippled domestic oil production for years to come along with killing who knows how many jobs. Additionally, the administration wants to end billions in subsidies to domestic oil companies all while the US is set to loan nearly $3 billion to Colombia for refinery upgrades in that country. These are some good places to start before going around panhandling for oil.
http://www.facebook.com/notes/michelle-malkin/obama-finally-says-drill-baby-drill-no-not-you-america/10150164859575677
Sunshine
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1 posted 04-28-2011 10:29 AM       View Profile for Sunshine   Email Sunshine   Edit/Delete Message      Find Poems   Click to visit Sunshine's Home Page   View IP for Sunshine


And this is why our economy will go bankrupt.



Huan Yi
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2 posted 04-28-2011 12:23 PM       View Profile for Huan Yi   Email Huan Yi   Edit/Delete Message      Find Poems  View IP for Huan Yi

.

"Additionally, the administration wants to end billions in subsidies to domestic oil companies"

Is this referring to the tax expenses for
depletion allowance or accelerated depreciation?
I've never heard of the Fed's writing them a check.

.
Huan Yi
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3 posted 04-28-2011 12:49 PM       View Profile for Huan Yi   Email Huan Yi   Edit/Delete Message      Find Poems  View IP for Huan Yi

.


“No CNN person in these different segments asked or said anything about the implicit theory that the world’s petroleum- and commodity-exporting countries were to sit as mute as cigar-store Indians while the value of the dollar was eroded as a matter of policy, to prevent deflation. Inflation will prevent deflation, but is not a lesser evil. A very large number of observers outside the U.S., and a great many economically literate Americans, think that the Treasury and the Federal Reserve have engaged in madly excessive money-supply increases through federal spending, and that traditional inflation from too much money chasing too few goods is inevitable.


In the 27 months of the Obama administration, there have been spectacular rises in the prices of gasoline ($1.83 per gallon to almost $4), oil ($41 per barrel to over $90), gold ($853 per ounce to $1,500), corn ($3.56 per bushel to $6.33), and sugar ($13.37 per pound to $35.39). The real median household income has declined by $300, to under $50,000; the number of food-stamp recipients has increased from 32 million to 43 million; the number of people officially in poverty has increased by 10 percent, to 44 million (more people than the whole populations of Poland or Spain); the ranks of the long-term unemployed have increased from 2.6 million to 6.4 million; and the U.S.’s position in the rankings of economic freedom of the world’s countries has declined from fifth to ninth. I have admitted that my canvass of television news and comment is sketchy, but I have seen almost no reference to any of these problems except the prices of oil, gold, and gas.”


http://www.nationalreview.com/articles/265693/media-don-t-get-economics-conrad-blac  k?page=1

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Huan Yi
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4 posted 04-28-2011 02:01 PM       View Profile for Huan Yi   Email Huan Yi   Edit/Delete Message      Find Poems  View IP for Huan Yi




“If you’re complaining about the price of gas and you’re only getting eight miles a gallon, you know, you might want to think about a trade-in.”


“But we could save all the oil that they’re talking about getting off drilling, if everybody was just inflating their tires and getting regular tune-ups. You could actually save just as much.”


http://www.nationalreview.com/articles/265809/are-sky-high-gas-prices-good-victor-davis-hanson


People used to joke about Carter taking advice from his daughter . . .


.


Huan Yi
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5 posted 04-28-2011 03:08 PM       View Profile for Huan Yi   Email Huan Yi   Edit/Delete Message      Find Poems  View IP for Huan Yi

.


One of the main so-called subsidies that Mr. Obama wants to eliminate is for the expensing of intangible drilling costs, which has been part of the tax code since its inception. This immediate deduction—rather than amortizing the costs of development over a longer period—provides the capital and cash flow necessary in an industry where the risks are huge and returns are realized over many years, if not decades.

The rest of the items on Mr. Obama's list are tax credits offered to all manufacturers, not just oil and gas. Mr. Boehner's full comments at least revealed the right instincts—namely, proposing to eliminate such carve-outs in return for a lower corporate tax rate as in the Republican budget. The same reform should apply to clean (as well as all other) energy concerns too. . . .

Rising gas prices are stealing the gains of middle-income voters, so this is an important debate to have. Too bad Mr. Obama's Washington can't seem to escape the energy incoherence—phantom speculators, easy villains—of his predecessors.”

http://online.wsj.com/article/SB1000142405274870395690457628744169885520  6.html?mod=WSJ_Opinion_LEADTop


I pretty much found the answer to my question.
But the articles seem to also illustrate Obama’s habitual  response which is to resort to class warfare .


.
Denise
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6 posted 04-28-2011 07:42 PM       View Profile for Denise   Edit/Delete Message      Find Poems  View IP for Denise

That's all community organziers know how to do, John, incite class and race warfare.
Bob K
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7 posted 04-28-2011 08:14 PM       View Profile for Bob K   Email Bob K   Edit/Delete Message      Find Poems  View IP for Bob K



     In this case, I don't believe that the accusation of class warfare is accurate.  The legitimacy of the Republican complaint is not so much about class warfare — look at the disparity in income levels between the very very very very rich in the country and, say, the 50% who aren't.  The Complaint is that the rest of the country is upset about it and seems to be willing to fight back.

     The warfare against the working folks and even the middle class in this country has been going on for decades, but it's been going on pretty much unopposed.

     The material that Huan Yi is complaining about is stuff that I was predicting during the last administration as a result of the policies of that administration.  The tax cuts of that administration have not been repealed, and we are paying service on the debt for the money we borrowed to pay for them.  We are paying money to pay for debts we've run up since the Reagan years, and for the various expensive wars we've waged.  

     Panic and self-righteousness can be expensive luxuries, and it is difficult to distinguish them from policy necessities.  We have not always been very good at this.  Witness Libya, which many of us here agree has been a poor idea, and consider the possibility that some of our previous wars may not have been as necessary as we may have thought at the time.

     In general, I think the country has been better at putting party loyalties ahead of National priorities at least in recent decades.  I would suggest that can be said about both parties, if we're willing to detach from our own party's goals for a bit and have a look at what might be good for the country.

     I like the notion of a country where everybody has a chance to make it to the top.  I also like the notion of a country where we're willing to make sure that nobody goes under the wheels of the bus on the way.  And where we make an effort to treat people decently no matter who they are in the process.

     Nor do I think that anybody here has values that are terrifically different than that, though I'm certainly open to be told otherwise.

     What are the values of Drill, Baby, Drill?

     We've been functioning under forces that push in that direction for over a hundred years now, and it seems like a fair question to ask?

     Do you approve of those values?  Do you disapprove of them?  Is your thinking and feeling mixed about them?

     I'd be interested in hearing from some of the folks who respond to the ethical questions we sometimes deal with as well as the usual folks here, not to say that the folks here don't or wouldn't have interesting ethical things to say.

     But we confine ourselves here, often, to talking about Economic Man, or Political Man, and there are actually parts of this discussion that invite discussion as Ethical Man and Philosophical man as well.

     Of course, if people don't want to broaden out the discussion, then I'll stick with what we have here; and Mike ought to have the say about this:  It's his topic; and he ought to have the right to keep the focus pretty much where he wants it to be.  

     Thoughts?
Balladeer
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8 posted 04-28-2011 09:29 PM       View Profile for Balladeer   Email Balladeer   Edit/Delete Message      Find Poems   Click to visit Balladeer's Home Page   View IP for Balladeer

Well, there are two camps of thought....one says drill for oil and one says bite the bullet and get weaned off oil, regardless of the repercussions.

It would appear that Obama has managed to alienate both at the same time. If he wanted us to get weaned off oil, he wouldn't be telling the rest of the world to drill more...and even financing it in other , countries. If he does want to continue oil drilling, then he shouldn't be doing everything possible to stop US from producing it while demanding it be done by the other oil-producing countries of the world, causing a monumental lack of jobs and damaging the economy even further.

Either case shows the same thing....once again, he has no idea in the world what he is doing or saying.
Sunshine
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9 posted 04-28-2011 10:25 PM       View Profile for Sunshine   Email Sunshine   Edit/Delete Message      Find Poems   Click to visit Sunshine's Home Page   View IP for Sunshine

We've all been eddicated in the last few decades...there ARE ways around oil...

but to tell "your own people" not to drill? If, indeed, our President knows who "your people are" [i.e., the country that supplements his salary]...

I'm sorry, but to me, this is idiotic. Prior to what year, ["Dallas"?] our country supplied a great many states, countries? with oil. Why did we stop doing so? I never really did understand the word "cartels" only that it equated to "not good business".


Truly, I have no idea on that and I guess I could Google it, but I'd rather hear from the others of my kin. I never did understand why our grasshoppers in California suddenly became still, only to rust.

Balladeer
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10 posted 04-29-2011 08:03 AM       View Profile for Balladeer   Email Balladeer   Edit/Delete Message      Find Poems   Click to visit Balladeer's Home Page   View IP for Balladeer

What are the values of Drill, Baby, Drill?

You'll have to ask Obama, Bob. He's the one saying that to the  rest of the oil-producing world.
Huan Yi
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11 posted 04-29-2011 01:03 PM       View Profile for Huan Yi   Email Huan Yi   Edit/Delete Message      Find Poems  View IP for Huan Yi

.

“Responding to public concern over sharply rising gasoline prices, President Obama announced last week that he was asking Attorney General Eric Holder to launch a criminal investigation of price gouging by oil companies, refiners, and gas stations.

Such posturing is so absurd as to exceed the capacity of satire. The reason gasoline prices are up is that the price of crude oil is up. There is not only a direct correlation between the two, but a causal relationship: The primary cost of producing gasoline is the cost of the oil from which it is refined. It is impossible to make cheap gasoline from expensive oil. To launch a witch hunt against gasoline providers for high price at the pump when oil is selling for $110 per barrel is a truly amazing political stunt...

These graphs show non-OPEC and OPEC oil production, as well as the global price of oil, for the years 1973 through 2011. Note the vast difference in the production patterns: Non-OPEC production rises to meet increased demand. In fact, it nearly doubles — which is what one would expect, since the world economy and world population roughly doubled as well over the same span of time. In contrast, OPEC production figures show no rational trend. Instead, they vary wildly in accord with tactical decisions by the cartel to manipulate supplies and prices. But what is even more stunning is this: In 1973, OPEC oil production was 30 million barrels per day, exactly what it is today. That is, despite the passage of more than a third of a century, during which time the world population doubled in size — and despite the fact that OPEC countries are sitting on top of 80 percent of the world’s commercially accessible oil reserves — OPEC production has not increased at all.  OPEC’s complete stagnation in production since 1973 is remarkable, especially when you consider the fact that in the shorter period from 1945 to 1973, the output of the countries that became OPEC grew more than tenfold. Indeed, to take just the single most important example, the production of Saudi Arabia grew at a rate of 16 percent per year from 1965 to 1974. Then the brakes were slammed on, and from 1974 to today, it has grown at a rate of 0.3 percent.

Did Saudi Arabia and the other OPEC countries reach “peak oil” (the maximum rate of petroleum extraction) in 1973? No. Rather, in conjunction with events leading up to and surrounding their 1973 oil embargo, the national governments of the OPEC powers seized control of their oil concessions from the Seven Sisters (the oil multinationals: Exxon, British Petroleum, Shell, etc.), which had developed them. With the new management came a new policy. The Seven Sisters’ policy had been to plan ahead to increase production so as to meet the needs and thereby ensure the continued growth of the world market. As a result of this policy, world oil prices were flat or slightly declining from 1947 through 1972, helping to create one of the greatest periods of economic growth the world has ever seen. In place of this policy, OPEC instituted a new plan, one of restricting production to drive prices up, regardless of the catastrophic effects such actions might impose on the world economy. In the following graph, note the relative stability of oil prices from 1880 through 1972, and the complete instability and wild price fluctuations since OPEC took control of the world oil market in 1973.

The United States uses about 8 billion barrels of oil per year. At the current contrived price of $110 per barrel, we will be charged $880 billion per year for our oil, and the world as a whole will have to pay $3.5 trillion, with 40 percent of the take ending up in the coffers of the OPEC governments.

If there were a free market in oil, its price would be closer to $30 per barrel, and this tribute would be cut by three-quarters. Instead, the price of oil is under the control of a cartel that has placed the industrial world in a state of siege. In exchange for our possessions, they will give us limited supplies of fuel. If we do not wish to be dispossessed, we need to break the siege.”

http://www.nationalreview.com/articles/265930/obama-covers-opec-robert-zubrin?page=2    


What is so tragic is that none of this is a surprise.  The Middle East in OPEC has been assaulting
The West through its practices for decades.  And our response has been to ignore or deny our
our own available resources and let them do it   The only happy Americans are the Alaskan mosquitoes
and the Burying Beetle.

.


Uncas
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12 posted 04-29-2011 01:56 PM       View Profile for Uncas   Email Uncas   Edit/Delete Message      Find Poems  View IP for Uncas


quote:
And our response has been to ignore or deny our
our own available resources and let them do it


You don't have much choice unless you're thinking of nationalising your oil industry, and even then, at current consumption levels, you'd deplete your remaining stock within five years and be right back where you started.

The idea that drilling for oil in the US is a viable solution to rising oil prices is complete twaddle and totally ignores the basic market rules of supply and demand.
Oil is a global commodity owned by the muti-national oil companies and nationalised industries that pump the stuff out of the ground. They sell the oil they extract to the highest bidder at a price dictated by the market, whether that's the US or China they don't really care. If the US allows BP to drill for more oil OPEC would only need to cut production by 1 or 2% to offset the increased oil on the international market and maintain the current price. As the article above points out OPEC are quite willing, and very able, to do so.

.
Huan Yi
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13 posted 04-29-2011 04:22 PM       View Profile for Huan Yi   Email Huan Yi   Edit/Delete Message      Find Poems  View IP for Huan Yi

.


"In contrast, OPEC production figures show no rational trend. Instead, they vary wildly in accord with tactical decisions by the cartel to manipulate supplies and prices."


"the national governments of the OPEC powers seized control of their oil concessions from the Seven Sisters (the oil multinationals: Exxon, British Petroleum, Shell, etc.), which had developed them. With the new management came a new policy."


.
Uncas
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14 posted 04-29-2011 04:32 PM       View Profile for Uncas   Email Uncas   Edit/Delete Message      Find Poems  View IP for Uncas


I presume that means you agree with my assessment.

Balladeer
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15 posted 04-29-2011 06:04 PM       View Profile for Balladeer   Email Balladeer   Edit/Delete Message      Find Poems   Click to visit Balladeer's Home Page   View IP for Balladeer

...and your feelings about Obama demanding that OPEC increase their oil production is what, Uncas? (based on your previous comments)
Uncas
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16 posted 04-29-2011 06:32 PM       View Profile for Uncas   Email Uncas   Edit/Delete Message      Find Poems  View IP for Uncas

quote:
...and your feelings about Obama demanding that OPEC increase their oil production is what, Uncas?


That it's a waste of time.

Unless you back it up by threatening to hit them where it hurts - by lowering demand - remember the name of the game is supply and demand and OPEC holds all the aces when it comes to the supply side of that equation.

A really clever chap would threaten to accelerate the move towards alternative forms of energy and hit the demand side of the equation. As I've pointed out previously that's a threat that OPEC would take seriously:

Sheikh Yamani, former OPEC oil minister, said:

"The Stone Age Didn't End Because We Ran Out of Stones"

He was arguing at the time against increasing oil prices to a level that might force consumer nations to look for better and cheaper alternatives. Faced with that possibility OPEC might increase output to reduce the market price.

The real question is can OPEC increase output - the evidence is fairly strong that they couldn't even if they wanted to - that they've already hit peak production.

.
Balladeer
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17 posted 04-29-2011 07:33 PM       View Profile for Balladeer   Email Balladeer   Edit/Delete Message      Find Poems   Click to visit Balladeer's Home Page   View IP for Balladeer

The real question is can OPEC increase output - the evidence is fairly strong that they couldn't even if they wanted to - that they've already hit peak production.

Which brings us  back to the US adding to the output, if drilling were not being stymied by Obama at every turn, since you acknowledge that increasing production reduces market price.
Uncas
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18 posted 04-29-2011 08:08 PM       View Profile for Uncas   Email Uncas   Edit/Delete Message      Find Poems  View IP for Uncas


Mike,

OPEC might not be able to increase production but they can definitely reduce production to match any increase the US could possibly manage and if they've reached peak production that's exactly what they will do. Obama is gambling that they have spare capacity and that the threat to accelerate a reduction in demand will push them to tap it but if they have reached peak production the whole game changes. In that scenario they'll want to maximise the profit on the reserves they have left and to do that they'll adjust output to obtain the maximum price.

How OPEC reacts to his request will be telling. The worst-case scenario is that they reject the request because that's a clear indication that they can't actually increase output. The bad news is that they rejected the last request claiming "There is sufficient oil being produced to meet demand".

.
Balladeer
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19 posted 04-29-2011 08:35 PM       View Profile for Balladeer   Email Balladeer   Edit/Delete Message      Find Poems   Click to visit Balladeer's Home Page   View IP for Balladeer

Did they reject the last request because they were at peak production? I don't feel that being at peak production would be the only reason they would disregard Obama's call.

Nor do I still understand how calling for increased production by the rest of the world and omitting the US makes a lot of sense.

You have tried to explain with patience and I appreciate that but, for me, it just doesn't jive. If I can find any solace, it's in the fact that there are others who feel the same way.
Ron
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20 posted 04-29-2011 11:17 PM       View Profile for Ron   Email Ron   Edit/Delete Message      Find Poems   Click to visit Ron's Home Page   View IP for Ron

quote:
Obama is gambling that they have spare capacity ...

I suspect Obama has a pretty good idea of their capacity. The original size of the major oil fields is a matter of public record, as is the output from those fields over the past fifty or sixty years. The numbers have been crunched by many different organizations and independents and there's not a whole lot of contention.

If you've got time for a long video (about 45 minutes), and the bandwidth to support it, I highly recommend a 2006 Australian documentary appropriately entitled Peak Oil. It's obviously five years out of date, but it's still worth watching.

I think Obama knows his pleas for increased output will fall on deaf ears, just as he knows his probe into price gouging at the pumps will turn up zilch. Unfortunately, no politician can long survive in politics without resorting to . . . politics. And I think that's all this is. "Look, my fellow Americans. I'm doing something."

And before the Republicans jump in feet first to condemn such flagrant politicking from a Democrat, I should probably point out that Obama is stealing all his lines, almost word for word, from Bush's 2006 playbook. Republican or Democrat, they're all just doing what we force them to do to get reelected. Washington is a stage and the politicians are playing their roles we've assigned them.

Our politicians can't tell you the truth because they know we will, indeed, kill the messenger. So, they resort to politics.

The truth is that neither the White House nor Congress can do a damn thing to significantly change the price of oil. You might as well be asking them to lessen the pull of gravity -- which at my age would at least be convenient.

Uncas is right; there is no such thing as American oil. Sucking it out of the ground at the expense of our environment, just so it can be shipped to China or India, simply doesn't make a lot of sense. It's not that simple, of course (more politicking), but drilling new wells will almost certainly do some harm (if not to the environment then to politicians) and will absolutely do NO GOOD AT ALL.

The days of cheap oil are gone. That's the truth your government is afraid to tell you.

Go to your refrigerator and grab a can of Coke. Shake it vigorously. Pop the tab and stand back - 'cause it's not going to take a lot of effort to get that soda to exit the can.

Now go get another can of Coke. Open it and pour out about half the contents. Let it sit for an hour or two, 'til the fizz has largely evaporated. Guess what happens when you shake it now? Not a lot.

Best estimates are that most of the major oil fields discovered in the first half of the Twentieth Century have been about half-way depleted. That's actually the good news. The bad news is that getting the second half out of the ground - just as with the Coke can - is a lot more difficult than getting the first half out was. And difficult equals expensive.

The other painful truth is that all those major oil fields discovered 50 to 80 years ago have already been discovered. There isn't anyone who believes we'll suddenly stumble into another significant source of oil. What's there is there. Did you know that one fourth of all the known oil reserves in the world lie beneath just one country? Never mind the rest of OPEC, Saudi Arabia alone controls the supply. If there was just one barrel of oil in the whole world, the amount that American soil could contribute to that barrel would be measured in ounces.

The supply of oil, much like the pull of gravity, is not within the purview of our government. Even OPEC, I think, has a lot less control over supply than most want to believe (although as Uncas said, they CAN lower the supply, though not without experiencing their own pain). We can't significantly increase supply and, in my humble opinion, I don't think we can significantly lower demand either. Not with China and India chomping at the bits.

The price of fossil fuels is going to continue to rise. At worse, we can learn to deal with it. At best, we can accept it and stop making our politicians lie to us.

serenity blaze
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21 posted 04-29-2011 11:27 PM       View Profile for serenity blaze   Email serenity blaze   Edit/Delete Message      Find Poems  View IP for serenity blaze

Wow.

Ron and I share a mutual distaste for gravity.

*laughing*

(I once asked a physician if arthritis would be less painful in a zero-gravity situation.)

Um. He said he didn't know, but I'm to let him know if I stumble across any research.

He also told me that the perception of no gravity via Rx meds wouldn't count, 'cause even if you're blasted out of your mind, your feet would still touch the floor.

Presumably.

Uncas
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22 posted 04-30-2011 06:56 AM       View Profile for Uncas   Email Uncas   Edit/Delete Message      Find Poems  View IP for Uncas


Ron,

I agree with almost everything in your post apart from a couple of minor niggles; they don't affect the overall conclusions but do have an impact on how the effects of peak oil will play out.

The first niggle is whether anyone can really know when peak oil will occur, sure the data is available, I've crunched a lot of the numbers myself, the problem is that the numbers available are dubious. Take the figures for reserves, if you look closely at the numbers for OPEC members you'll see a massive hike in the reported reserves that suspiciously coincides with the OPEC agreement to set output levels for each member based on the amount of oil they had. You could ignore the inflated figures and try to extrapolate from the pre-agreement figures but the problem there is any new discoveries or adjustments to pre-agreement figures since then are equally dubious.
In light of that I think it's fair to say that Obama isn't sure whether OPEC will hit peak oil next year, in five years or that they actually hit that watermark in 2010 (which is where I'd put my money if I were a betting man).

That's why Obama requesting a hike in production is so important and far more than a political rhetoric - the reaction by OPEC is a clear indicator of whether they are actually capable of increasing production. They've clearly stated that they are, they are on record as saying that they will if it stops the oil consumers from seeking viable alternatives, if they don't it's almost certain that the reason is they can't. My guess is that one of the OPEC nations will announce that they're increasing production (they've done that before - it's normally Saudi Arabia) the price will take a short term dip but the increased production will never materialise.

The next niggle is whether OPEC will cut production and whether that will cause them any pain, the answer, ironically,  is dependent on whether they have the capacity to increase production and the availability of recoverable supplies outside OPEC's control.

If they can increase production, and the untapped capacity outside the OPEC regions is sufficient to impact he price they'd be stupid to reduce output - the long term outcome would be lower income on their oil. In that scenario, the pain would be obvious.
If however they can't increase production but an increase in oil from outside the OPEC regions starts to impact the price it makes perfect sense to lower output it maintain the price. After all, it's a lot less pain to sell one barrel of oil for $100 than it is to be forced to sell ten barrels for the same money, especially if you've got a limited number of barrels left.


Thanks for the link btw, peak oil is something I've been interested in for a few years and the documentary was worth watching to see Hirsh articulate in person what his report to the US Department of Energy laid out in 2005. It's worth a read if you get the time.
http://www.netl.doe.gov/publications/others/pdf/oil_peaking_netl.pdf

.
 
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