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Don’t worry. The economy won’t hurt you. It just wants you to have some fun. To prove it, the price of gas continues to fall, now averaging $1.66/gallon according to USA Today. Officially, the last time prices were this low was in 2004, and prices are still dropping after hitting an all-time high this June at $4.11/gallon. The government’s weekly gas and fuel price update shows prices are at their lowest in the Gulf Coast and Rocky Mountain regions. Diesel prices are falling as well, hitting a national average of $2.42/gallon. Help keep downward pressure on fuel prices by finding the lowest local prices (with help from your federal government) here. And if you’ve got a dime you can listen to your V8 tonight. Freaky!
70 Comments on “Gas Prices Party Like It’s 1999...”
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I’m intrigued that people assume this is completely good news.
Good that they can afford to fill their gas tank? Sure.
Good that our economy is in shambles and this is one indicator of possible currency deflation? Extremely bad.
People don’t get it.
The oil price is falling and the auto companies are tanking because the economy is in a death spiral.
Good that our economy is in shambles and this is one indicator of possible currency deflation?
If you believe that high oil prices were part of a massive speculative bubble, as many of us did, then you can see these current prices as part of an inevitable correction that only proves that it is tough to support bubbles when money gets scared. There was no sound reason for oil to cost more than $100 per barrel, that price was never sustainable.
The pendulum may have swung a bit far to the other extreme, and prices may rise somewhat as the panic subsides and markets start to normalize a bit. But overall, this is good news, and it makes it much easier for all of these stimulus measures to be implemented.
In the grand scheme of things, I’ll take lower gas prices over higher gas prices any day of the week, as higher gas prices have a very overt and tangible negative impact on the economy.
However, I am concerned that this will just lull people back to sleep when it comes to exploring alternative renewable energy sources. I would 100% support a large increase in gas taxes to keep people suitably motivated to look for oil alternatives, but we know that’s not going to happen.
Well, Pch101, we generally don’t see anything the same way, so I have to say that when I read last year that global capacity was 10% less than demand, it pretty well described the very rapid run-up in prices satisfactorily for both myself and many others who bothered looking for this information. (It’s called “peak oil” and we apparently hit it in October 2007).
Comparing peak oil to trying to stay alive in a room without exits, which is filling with water means that having the water fill 100% of the room means drowning, while a 3% air space means living.
Demand for oil is down about 3% or so; we literally have a little breathing room.
If/when the economy turns around (whether it be in 2010 or in 2070), then if oil demand again exceeds production, you can look for a massive ramp-up in prices again.
Justin, deflation is very bad (see the Great Depression for proof), but the fact that the Fed and the banksters in charge (along with their puppets in Congress) have overheated the dollar printing presses big-time means that deflation is only a side-show in anticipation of hyperinflation.
For the effects of hyperinflation, study what happened to the Weimar Republic of Germany 1920-1923 and Zimbabwe right now.
Several hundred tons of “not good.”
Maybe we should have paid a little (ok, a LOT) more attention to Ron Paul as a nation. But apparently, just like my 1st born son, we Americans obviously have to learn everything “the hard way.”
By the way, in 1982, gas cost $1.40 per gallon, and I was busy with two part-time minimum-wage jobs and trying to study in college. My wage was $3.35 an hour, up from the $3.10 an hour I got (minimum wage) in 1980. Of course, that 10% “wage increase” over two years was in response to 15% inflation in both 1980 AND 1981. http://www.joesherlock.com/blog-2008-04.html#Whining
Can’t win for losing. Gas goes up, OMG peak oil. Gas goes down, OMG death spiral.
Remember the late 90’s when gas suddenly went down to .77/gallon or so? Was that because the economy was in a death spiral or currency deflation? Or was it because even OPEC can’t figure this stuff out?
One of the large factors in the gas price runup was the shortage of the chemicals used to make summer-blend gasolines. I believe that this actually helped feed the speculative runup in oil prices. Another factor was the flight of capital from CDOs into commodities such as oil and metals. Back in the summer I was predicting that gas would fall back below $3 by the end of the year. Turns out I was wrong, but only in the matter of degree. I also believe that we have a government that will finally implement the right policies to foster both sensible conservation and energy development. Adding to this is a the new-found caution by consumers that will result in less reckless behavior.
Finally, the United States is not the same as Zimbabwe. Not at all. Rhodesia was a farming and natural resouces-based economy that suffered an almost total loss of it’s knowledge base as a result of Mugabe’s kleptocratic policy. Yes, we have real problems. And, yes, we’re in real trouble. But we can feed ourselves (and a good part of the world as well) and with some effort we can produce almost everything else we need as a result of our still substantial industrial and human-capital base.
Well, Pch101, we generally don’t see anything the same way, so I have to say that when I read last year that global capacity was 10% less than demand, it pretty well described the very rapid run-up in prices satisfactorily for both myself and many others who bothered looking for this information. (It’s called “peak oil” and we apparently hit it in October 2007).
Demand for oil is down about 3% or so; we literally have a little breathing room.
Admittedly I’m only an engineer and not that good with numbers, but isn’t 10% greater than 3%? And, wouldn’t demand still exceed production by 7%? If that is truly the case, then why would prices have dropped to less than half of what they were? Sounds to me more like a speculative bubble that finally popped not “peak oil.”
I agree with Bunkie, we aren’t headed for some hyper-inflationary “death spiral.” The United States can get away with Hyper-Drive currency printing presses to some extent the same way Japan could in the 90’s: Too many intrinsically valuable assets laying around. Japan could go Weimar tomorrow, but that can’t remove the intrinsic value of a Sony or a Honda. Ditto for the States.
But the printing-press frenzy will drive oil back up again, if anything because there will be too many dollars chasing however much oil is around. So long as oil is a dollar-denominated business, oil will track the dollar as much as the other way around.
The Europeans should “feel” gas being much cheaper than us buying it with Euros if it wasn’t for their crazy tax structures on hydrocarbon consumption. A lot of the rise in the price of oil over the past 20 months was the dollar getting cheaper as much as oil getting pricier.
Deleveraging from the financial ponzi-CDO disaster markets into US Treasuries and therefore strengthening the buck has contributed I would guess as much to the gas-collapse as any real economic driver in the price. Once the deleveraging is over and all the new Monopoly money is blowing around, I would guess the Magic Goo goes for ~$75/bbl by September, and that I think is the “natural” price of oil given supply and demand of both the goo and the dollars to buy it. Price goes higher with an international “incident” in the Persian Gulf. $75/bbl is enough to get prices back up to something you note when you fill up – and shed a tear maybe while filling up your Armada – but not the Petro~Bubble of 2008.
I have to say that when I read last year that global capacity was 10% less than demand
You can say it, but it isn’t accurate. During the price run up, we did not have supply constraints that were permanent or at all unusual, if you compare them to other periods and put them into context.
A lot of what you read on peak oil websites is put together by hacks who know nothing about oil or economics. There was no oil shortage, as we can all clearly see now.
We had real physical shortages for a time during the 1970’s, during a temporary period when OPEC was able to act as an effective cartel. The problem with cartels is that members become tempted to cheat, while consumers figure out how to reduce their consumption. When the two curves finally meet, prices collapse.
We didn’t have a cartel problem during 2005-8, but a different issue, this time one of hedgers in the futures market being supplanted by traders. Traders are indifferent to absolute price, and keep trading until reality sets in.
There were no shortages earlier this year or last year. Many of us took pains to explain that, and as the facts now make clear, we were right. The factors that would be indicative of shortages were not at all apparent.
That doesn’t mean that prices have to stay at this particular low level, but there is no reason to believe that they are going back up to $150, either. If there is going to be a peak oil problem, we’re not going to see it for some years to come.
Not to pat myself on the back, but I called the bubble bursting in April, May, June. In September, I also called the price going below $60.
It was a bubble fueled by hundreds of billions of dollars flowing into the market by Goldman Sachs and other big investment banks, big hedge funds, traders like PH101 said. Once the banks started failing, the big sucking sound started and the money flowed out, and the price crash began.
Peak Oil was a joke, I said it all along. There was never a supply and demand problem, there was a rich guy wanting to get richer problem. The commodities markets were designed for a different time. They need major reform. You shouldn’t be able to buy 100,000 barrels of oil for the coins you have have in your change cup, and at some point there should be some type of requirement to take delivery.
Lumberg, you’re right. I think that the 10% difference between “demand” and “supply” was a) only very temporary (you can only draw so much out of the reserves in hand when demand exceeds supply before you are down to nothing between demand and supply) – and b) that peak was only temporary in the sense that the world was going full tilt; China and India were growing VERY quickly and importing massive amounts of all commodities (did anyone else notice how much concrete, scrap metal, platinum, aluminum, copper, etc. went up?) and c) the point is to realize that we essentially had a room full to the ceiling with water for a very short time – we’d hit the oil peak “peak” – and the rapid ramp-up in prices helped to tip the global economy into the ditch (along with tons of other reasons, many of which we’ve all written about here over time).
The point is, to go back to my analogy, we have some breathing room at the top of the room NEARLY filled with water, now. “Some air” allows life; “NO air” means death for we air breathing mammals, to continue the analogy to it’s logical conclusion.
Now, given that we have some time and air, the trick is to carve an opening in the roof, get out and build another house which won’t fill with water (translation: we need a new source of energy for our world which doesn’t revolve around oil).
But we all knew that, didn’t we?
However; I can concede easily that speculators had something to do with it all, as well – that’s been well proven. I still say that peak oil had something to do with it – given that that a certain Mr. Pickens indicated that oil demand had exceeded production in written statements and on televised interviews at the time when oil prices were spiking up uppity up at a very rapid pace.
given that that a certain Mr. Pickens indicated that oil demand had exceeded production in written statements
First of all, Pickens has been losing his shirt on his natural gas and alternative energy investments, and has been hoping to use the oil crisis to gain political clout that could stop the bleeding from his businesses.
For another, a rapid run up in prices that falls apart is the dictionary definition of a bubble. During a bubble, prices go up a lot, but they don’t stay there. That should sound awfully familiar.
The “death spiral” argument is no more convincing to me now than the “peak oil” argument was in June. Lower energy prices reduce pressure on employment costs and put more spending cash in the consumer’s hands. The threat of deflation can be traced to decades of sloshing liquidity which has to be worked out of the system. Nobody thinks that working it out will be pretty or fun, but my god is it necessary.
Meanwhile, America remains a strong, dynamic, entrepreneurial society. Businesses that have floated along by managing long-term declines with financial witch-doctory (ahem, Detroit) have to restructure. And I’m convinced that freeing up the human and material resources of say, GM, will open opportunities for new industrial firms. Though the collapse of firms like GM could fuel deflation, lower energy and material costs help start-ups get started. Or fuel consolidation.
In short, economies are like cyclical and stuff. Why be afraid of economic downturn when it presents so many opportunities? This is why we save money, right people? Right? Anyone?
The massive run up and the massive collapse is pretty much negates the idea that the recent oil fluctuations has much if anything to do with supply or demand. The price has been way too wild while supply and demand has stayed fairly stable.
I suspect it was mostly investors trying to get their money out stocks and securities heading towards oil. Buying gold was too John Birchish so they headed to black gold. Oilbugs and the peak oil guys conned each other into thinking the price run up had something to do with reality and they kept conning each other until the oilbugs realized, Wiley Coyote style, that they had run out of solid ground about 60 bucks a barrel ago and started plummeting.
Yes, Edward; you are right in that smart people have been actually saving money. Which entails actually living within your means and using credit sensibly (as in, perhaps only on a mortgage and car loan – not everything under the sun without ever paying anything off while “saving” a few dollars in a savings account). You’re talking real savings. “Guilty as charged” (of being smart enough to listen to my grandparents and parents).
toxicroach, I loved your mental picture reminiscent of the wil-e coyote vs road runner.
Those who are sure speculation had everything to do with this betray an ignorance of the concepts of the supply CURVE and the demand CURVE when they say things like this:
The price has been way too wild while supply and demand has stayed fairly stable.
Terms like “elasticity of supply” and “elasticity of demand”, and the fact that supply and demand are curves, not simple numbers, are important. If you don’t understand them, and how they can make a small shift along the demand curve result in a large increase in prices (or a large decrease in prices); you’re not qualified to comment.
Terms like “elasticity of supply” and “elasticity of demand”, and the fact that supply and demand are curves, not simple numbers, are important.
That’s true. One of the points that peak oilers routinely miss is that elasticity of both change over time, as both suppliers and users respond to price changes. Given the nature of oil, they cannot respond immediately, but given time, they will and do change to meet fundamentals and price changes.
That being said, the average peak oiler is abysmally unfamiliar with trading and futures markets, and how pricing and intrinsic value can and do disconnect. As is the case with every other religion, devotion to the peak oil god encourages some to uphold mythology above truth. Some people enjoy praying for the Apocalypse, and are gravely disappointed when it doesn’t arrive on schedule.
That being said, the average peak oiler is abysmally unfamiliar with trading and futures markets, and how pricing and intrinsic value can and do disconnect. As is the case with every other religion, devotion to the peak oil god encourages some to uphold mythology above truth. Some people enjoy praying for the Apocalypse, and are gravely disappointed when it doesn’t arrive on schedule.
Its kind of funny that the Peak-Oil crowd and the Global Warmer crowd tend to be the same crowd on different weeknights. If they believed Peak Oil, than they should feel some solace that soon the oil will be gone, and global warming will be abated. But no, they talk of the coming Chinese/Indian carbonplosion making the Earth like Venus in fifty years, while thinking the oil runs out in thirty.
Its the same thing you see with the Tin-Foil-hat set, who think we maintain a secret base in the Nevada desert in some sinister deal with interstellar aliens to exploit their warp-drive tech with dilithium crystals and what not, but think us landing on the moon with old-fashioned monster-rockets was faked.
Menno:
Justin, deflation is very bad (see the Great Depression for proof), but the fact that the Fed and the banksters in charge (along with their puppets in Congress) have overheated the dollar printing presses big-time means that deflation is only a side-show in anticipation of hyperinflation.
This is actually an interesting issue. Back in November 2005 the government discontinued publication of the M3 money aggregate. I’m not an economist (and with all respect to economists I thank god every day that I’m not among their ranks) but I think it’s pretty bad when the US says “We’re not going to tell you how much money we’re printing.”
By the way, as much as I think inflation can be bad (Zimbabwe), it’s probably the only way the US is going to improve its debt situation. The alternative – raising taxes and cutting spending – is too much political suicide for either party.
Its kind of funny that the Peak-Oil crowd and the Global Warmer crowd tend to be the same crowd on different weeknights.
That can be true, but these two issues have nothing to do with each other.
I have read the climate change research, and find it indisputable. Fossil fuel usage is a problem, and it needs to be addressed.
That has nothing to do with the oil futures markets and the supply and demand of futures contracts, petroleum and motor fuel. These two topics belong in entirely different boxes.
It isn’t wise for the environmental movement to confuse the two topics, either. Right now, the Peak Oilers are looking awfully foolish, like internet Chicken Littles who just can’t get anything right. Trying to use bad economics to frighten people into good stewardship of the earth is a bad idea.
I have read the climate change research, and find it indisputable. Fossil fuel usage is a problem, and it needs to be addressed.
From what I have seen of climate change research, a great deal of it appears to be politically-driven (both “for” and “against”, either way its a bad sign). And when you look in the actual data collected and protocols/procedures involved in its collection, a great deal of professional slop becomes apparent.
Another problem with the global warming theory is its based on computer-models to predict What Happens Unless… Problem with that is if you take any of the currently “credible” global-climate planetary simulators and wind them back say, 1908, plug the known data-set in from that time along with all the real data collected since, and let the computer run until its “2008” the computer is always wrong compared to what we can actually observe today. Not a good track record there in practice.
So your saying that the price spike and fall is connected to demand?
I’m not an economist, but I stand by my statement that the run up in prices wasn’t influenced too much by demand. I realize you wouldn’t have to see a double of demand to get double prices… but still.
From what I have seen of climate change research, a great deal of it appears to be politically-driven (both “for” and “against”, either way its a bad sign).
It’s quite the opposite. The modest amount research arguing against climate change is not peer reviewed, and it is bought and paid for by oil companies and others that would benefit from it.
Again, I would prefer to see these issues separated. Peak oil is not necessarily proven by climate change, anymore than peak oil is disproven because I’d like to have a V-8. In either case, wishful thinking is not a suitable substitute for good research and fair analysis.
I realize you wouldn’t have to see a double of demand to get double prices
The elasticity comment made previously by the other poster could only be accurate if it was of an an odd shape that we normally don’t see. A small decrease in demand should not produce a 75% reduction in price, in such a short period.
The parabolic shape of the curve is incompatible with standard supply-demand theory. Under normal circumstances, changes are more gradual and proportionate.
When prices go crazy, then assuming that there isn’t a catastrophe like a war or a plague, it’s usually happening because there is a short-term fad that is doomed to end quickly. It makes little economic sense for a 1% increase in consumption to result in a tripling of the price of the good, that disparity is well beyond the mean. Anyone who tells you otherwise hasn’t really studied it from a reputable source.
It’s quite the opposite. The modest amount research arguing against climate change is not peer reviewed, and it is bought and paid for by oil companies and others that would benefit from it.
With global warming (or at least the notion of human input to it) being an ideological bubble all its own these days, very much of the “pro” research is done with considerable political input.
First culprit that comes to mind here is the UN’s research panel on climate-change. It serves no one’s interest at the UN to not be for global interventions on the scale contemplated, or for second-tier countries to take a rhetorical and indirect whack at the USA’s profligate energy consumption. Take a look at UN’s science research of the past that was sold to the world as impending fact, and you see a poor track record there to say the least.
Same deal with the Feds. “Carbon-credits” means “lots-more-money-and-power” to a bureaucrat. It does not serve the government’s interest at any point not to take complete advantage of a crisis – real or imagined – to scoop some more authority and coin. Current events demonstrate that angle vividly.
Also, the general tenor from the Ivory Tower and its financial infrastructure (foundations, Hollywood, the Feds, the Dean, your professor, your peers, the hot chick in Physics101,) frowns on arguments against the scale of human climate impact. It might not be policy, but I bet in fishing for grants or a “worthy” thesis for your degree, or want tenure, you will find much better reception to the extreme of Earth Be Venus by 2050 than the more prosaic and far less popular Same Sh*t Different Day in 2050 thesis.
That being said, the average peak oiler is abysmally unfamiliar with trading and futures markets, and how pricing and intrinsic value can and do disconnect.
What most do not understand is that the futures market does not deal with producing, transporting, or utilizing the actual physical commodity. It’s all paper until the contract comes due and commodity speculators deal exclusively on the paper side, never wanting or intending to take delivery of the actual commodity.
In a sense, the demand for oil contracts far outstripped supply rather than the demand for physical oil.
Of course, the concept of supply and demand curves establishing a true price relies on rational actors with perfect information. And since information is rarely 100% perfect and actors are almost NEVER rational…
@Pch101 –
How can you be so, SO right about the economics of the recent oil bubble and at the same time be so, SO wrong about the theory of anthropogenic global warming?
What most do not understand is that the futures market does not deal with producing, transporting, or utilizing the actual physical commodity. It’s all paper until the contract comes due and commodity speculators deal exclusively on the paper side, never wanting or intending to take delivery of the actual commodity.
What’s really funny about that is that the non-bubble advocates used those points to argue against the existence of the bubble. (No, I don’t quite get that, either…)
Anyone who has done any trading can tell you that prices at which is one is willing to buy and sell can sometimes have little, if anything, to do with fundamentals.
The belief that the price will go up, for whatever reason or for no reason at all, is enough. The only thing that counts is whether someone will do your trade at a higher price than what you paid. The price doesn’t need to be reasonable based upon a supply and demand analysis, it only needs to be achievable, if even but for a moment. The holding period might even be shorter than the time that I needed to type this post.
How can you be so, SO right about the economics of the recent oil bubble and at the same time be so, SO wrong about the theory of anthropogenic global warming?
I think that I could say the same of you!
And all I was going to say is that I paid $1.52 on Saturday at the Kroger near the Airport, before I got the discount for buying $100 worth of groceries.
Let’s not confuse the issues here. “Peak Oil” doesn’t say anything about the price oil is SOLD for.
The theory simply says, that the easiest oil to extract has (most likely) already been obtained. Every extra barrel from existing or new resource will be more expensive to extract.
If the end-sell barrel price is low, then oil that is more expensive to extract will likely not be extracted at the moment. Hence the question marks over whether Canada’s tar sands are economic at this price for example.
In the long term it means oil will get more and more expensive, despite some blips up and down, as demand comes and goes.
I’d guarantee with demand down and the end sell price low that there are uneconomic well-heads shut off right now.
The nice part about $4.11 a gallon gas was it kept the stinky old poor people off the road and the SUV’s in the slow lane doing 55. Now Suburbans are flying down the roads like a bat out of hell and I am noticing a lot more ten dollar cars driving around lately.
The theory simply says, that the easiest oil to extract has (most likely) already been obtained. Every extra barrel from existing or new resource will be more expensive to extract.
When hasn’t that been the case? The easy to extract oil, the oil that literally bubbled to the surface was extracted long ago.
It goes both ways with scientists being bought off. The lure of goverment subsidies and other grants/funds is more than enough to sway certain scientists into blowing climate change out of proportion, or even outright lie about it. If you believe every scientist that claims climate change is man’s fault is doing so out of just the goodness of his heart you’re a fool.
The theory simply says, that the easiest oil to extract has (most likely) already been obtained.
The theory as popularly circulated on the internet is that oil is not being discovered quickly enough to match the increasing rate of consumption. The high prices of the last three years were heralded as proof that these greedy consumption chickens had finally come home to roost.
Those in the know have little disagreement with the notion that exploration costs are going up and that a lot of the cheap-and-easy oil has already been taken. Those who disagree with the peak oil argument would address this by claiming that new technology can be expected to evolve that will make it possible to locate other sources of new oil and extract it in a cost effective manner.
@ Pch101
The theory as popularly circulated on the internet is that oil is not being discovered quickly enough to match the increasing rate of consumption. The high prices of the last three years were heralded as proof that these greedy consumption chickens had finally come home to roost.
I was trying to remark that the “Peak Oilers” are not wrong just because the price of oil has come off it’s highs.
The impression that they are, as you suggest, might be more because the MSM and internet are unable to get their head around what Peak Oil is about.
The impression that they are, as you suggest, might be more because the MSM and internet are unable to get their head around what Peak Oil is about.
No, the impression comes from the fact that the Peak Oil crowd was pointing to increasing oil prices, and jumping up and down excitedly because these rising prices were supposedly proof for their theory.
Now that prices have come down, they are making excuses for what was obviously a ridiculous, foolish position to take. They will need a new story, because they can’t possibly apologize or acknowledge their mistakes.
i agree with what many of you are saying with how the high prices are making people open there minds to more efficient ways of energy.
but at this time in our economy i think the lower prices we are starting to see will help us. I think the high prices turn people away from buying new cars, taking trips, and just going out and spending in general… paired with the increase in utilities etc. the high fuel prices is overall a hurt on our failing economy.
GasPriceNinja.com
@ Pch101
No, the impression comes from the fact that the Peak Oil crowd was pointing to increasing oil prices, and jumping up and down excitedly because these rising prices were supposedly proof for their theory.
I’m not sure who these people are, they’re certainly not the oil geologists, oil execs and/or refinery owners that I’ve met at energy conferences over the years.
They know very well Peak Oil does not ascribe a particular price to oil or not that Peak Oil means “running out”. It’s a common misconception with the public and distortion from the media/politicians.
The current low price of oil is still perfectly compatible with the theories of Peak Oil.
The current low price of oil is still perfectly compatible with the theories of Peak Oil.
There isn’t one monolithic position of Peak Oil, particularly in the popular realm.
The conservative theorists argue that oil production will peak at some point and that future extraction costs will be too high to access some of the remaining sources. This position may have some merit, and I personally believe that we should prepare for this possibility, even if the theory could ultimately be proven false.
Those who argued that the prices of a few months ago were the result of supply shortages related to Peak Oil were clearly wrong. This was not a small crowd of pundits, and they were able to capture the imagination of many an internet pessimist. They are a vocal wing of the Peak Oil crowd, and they’ve earned the criticism.
CarnotCycle:
Also, the general tenor from the Ivory Tower and its financial infrastructure (foundations, Hollywood, the Feds, the Dean, your professor, your peers, the hot chick in Physics101,) frowns on arguments against the scale of human climate impact. It might not be policy, but I bet in fishing for grants or a “worthy” thesis for your degree, or want tenure, you will find much better reception to the extreme of Earth Be Venus by 2050 than the more prosaic and far less popular Same Sh*t Different Day in 2050 thesis.
Two replies to the same person. Hmm…
Anyway, how is the above evidence for anything? As in my last post, you seem to confuse political thoughts and ideas for sound technical principles.
To find real data on climatology, you need to consult climatology research. Even a VERY cursory examination would find an overwhelming disparity of evidence in one direction.
To put it in familiar political terms, this is almost as settled of an issue as Evolution vs Creationism.
—
On the other hand, there seems to be more ambiguity about the specifics of Peak Oil, I suspect because research is occluded by even stronger financial interests. For example, the larger oil producing nations do not release numbers and I doubt will allow researchers into their records.
From historical data, Peak Oil as a general phenomenon seems real enough, but only certain insiders will know when it comes to pass for our largest reserves.
@ agenthex
…there seems to be more ambiguity about Peak Oil…
Peak Oil as a general phenomenon seems real enough, but only certain insiders will know when it comes to pass
(Sigh), OK, one more go for me and I’m done.
Peak Oil is a very simple idea widely accepted within the energy/resource industries, certainly since around the mid-1990s, perhaps earlier, including within the oil majors.
There are some dissenters, it is true, but these industry insiders are usually complaining about the constant linkage of Peak Oil to the current oil price, not the concept itself.
Peak Oil says NOTHING about the pricing of fuel for your car today.
The media via various pundits should not have linked Peak Oil with this year’s high prices, nor should people suggest Peak Oil is “broken” because the price has become much lower.
Please read;
Wackypedia Peak Oil
I was referring to it as a researchable geological phenomenon. Maybe you can try offering links that are actually helpful in that context.
You can also try glancing through your own links:
“Leonardo Maugeri, CEO of ENI dismissed the peak oil thesis in an peer reviewed article in Science (journal) as “the current model of oil doomsters” based on several flawed assumptions. According to him, neither the geological structure of earth is as thoroughly explored as necessary nor necessary global production, discovery trend and geological data are available globally. Maugeri refers to predictions based on the Hubbert Model which subsequently had to be revised in the last 20 years. He concludes the worst effect of the Peak Oil thesis and its predecessors as regurlarly recurring oil panicking which lead e.g. western political circles toward oil imperialism. According Maugeri, catastrophic views fail to take into account a complex reality allowing reliance on abundant oil supplies for years to come[119]”
@ agenthex
I was referring to it as a researchable geological phenomenon.
Sorry – you lost me there.
You can also try glancing through your own links.
Hence why I mention some of the dissenters.
I believe Leonardo Maugeri has since clarified his remarks as relating to the hysteria about oil price particularly and the actions of governments. He is also well known as a strong advocate of removing all taxes by government on oil use.
Even previously opposed BP have since stated that they accept that Peak Oil is a reality.
All I’ve said in essence is that published scientific research into the validity of the hypothesis (both at level of individual reserve and comprehensive cumulative for all) seems sparse considering the commercial interest and enormous implications.
In any case, the risk of catastrophe is overblown as we’ve already experience $150/brl and that’s the starting price point for viability for other sources (like non-liquid or renewables).
Peak Oil says NOTHING about the pricing of fuel for your car today.
You keep saying that, and that isn’t true.
All of those who believe in peak oil would claim that at some point, the quantities of oil that we will be able to locate and that can be extracted at an economically viable price will be exceeded by demand for oil.
They don’t all agree on when this will happen. Some would say that this is going to happen, others would say that it has already happened.
It goes to follow that if you believe that supplies are growing at a pace more slowly than demand, or for that matter, if supplies are shrinking in comparison to demand, that the price of oil will go up.
This is where the fun starts. There were absolutely some peak oil folks running around just a few months ago telling us that (a) the peak had already occurred and that (b) the increasing prices were the direct result of this peak having been passed. This argument was integral to many who were arguing that it was long-term supply-and-demand fundamentals, and not a speculative bubble, that drove the price increases of the last few years.
This is recent history, so it’s quite easy to find numerous examples of these claims being made under the banner of peak oil. There’s no point in denying it, as versions of these debates even occurred on this forum.
This is recent history, so it’s quite easy to find numerous examples of these claims being made under the banner of peak oil.
Just because some populists misunderstood it portends doesn’t mean we have to.
Just because some populists misunderstood it portends doesn’t mean we have to.
You mean like Paul Krugman, who won a Nobel Prize in economics, and who linked climbing oil prices in April 2008 to peak oil theory? (“This is what peak oil is supposed to look like.”)
http://krugman.blogs.nytimes.com/2008/04/15/oil-numbers/
Do you mean Matt Simmons, one of the best known pundits on peak oil theory who argues that oil peaked in May 2005?
In February 2008, when oil was about $100 per barrel, Simmons said “Demand on the other hand shows absolutely no sign of slowing down because we are now at $100 a barrel, which I still think is a preposterously cheap price.”
http://www.arabianbusiness.com/512436-oil-could-reach-us300-claims-expert
Come on, guys, don’t try to rewrite history. The storage capacity of the internet allows it to bite people in the ass, the documentation of peak oil being linked to $100+ oil prices by peak oil proponents is there for everyone to see.
These are just two examples of well-known credible people who told you that there was no bubble and that the factors that made oil expensive then were not going to end. They got it wrong. Just admit it, and try to learn from this for next time.
You should look for facts where experts have their expertise instead of some shill offshoot interpretation.
For example, Colin Campbell is an oilman who has written quite a bit on the subject, and the technical side of his analysis seems fine. The side effects of a peak is open to interpretation and is filled with motley fools looking for attention. Colin says “But it isn’t this peak has real great significance, it is the perception and the vision of the long decline that comes into sight on the other side of the peak. That’s really what matters”.
It’s pretty clear he understands this dichotomy between reality and perception. I also remember an interview a while back where he (and couple others; can’t remember) discuss that many alternative sources will become feasible towards $150/brl, and I’ve already noted above that this level has empirically shown to be a non-issue anyway.
Finally, Paul Krugman is absolutely a populist. He positively relishes in taking opinions on niches he knows not, and it certainly isn’t the first time it’s made him look silly. Note his nobel is for new trade theory, not related to energy.
In any case, we’re talking about different aspects of “Peak Oil”. I’m not particular interesting in the minutia of speculative pricing, and you can see for good reason.
Paul Krugman may be a populist, but he is also a Nobel Prize winning economist who attributed the oil price spiral to supply constraints caused by peak oil.
Matt Simmons has a long history in the oil business, and published a widely read book on the subject of peak oil. He is one of the most vocal proponents of the topic.
You can deny, deny, deny (and judging from your replies, that’s exactly what you intend to do), but they are in the peak oil camp. Just because they got this wrong doesn’t mean that they don’t share that belief system.
I myself pointed out that there are some peak oilers who approach it differently and see the peak coming in the future. That’s fine, but that doesn’t mean that there aren’t also others who hold the more aggressive view, such as Simmons.
What am I denying? The existence of reactionaries for any scientific exponent that makes it into the mainstream as I’ve laid out so explicitly?
How many people out there misunderstand darwinism or climate change? Do you attribute that to a failure of evolution or climate science?
If you want to confuse these marketeers for empiricists, at least make it clear that’s the intent.
What am I denying?
You’ve decided that peak oilers such as Friedman and Simmons, both credible people in the field, aren’t “real” peak oilers, just because you say so.
They are vocal proponents of peak oil theory. They are credentialed and more than qualified to represent their camp. Other peak oilers were certainly not eager to distance themselves from these pundits when oil prices were climbing, it’s only now in the wake of embarrassing results that the cover up is being attempted.
If you want to argue that some peak oilers would say that peak oil is in the future tense, no need to bother, I already pointed that out several posts ago.
The facts are what they are. These particular proponents, as well as many others like them, were wrong. You’re attempting to pretend that they don’t count, but they do. They may not be your preferred breed of dog, but they are still dogs.
I would again note that neither of them presented any substantive causality between the science and the market. If “credentials” are adequate evidence for you (ironically like all the other chicken littles), then so be it, they are not for me.
I would again note that neither of them presented any substantive causality between the science and the market.
It’s nice that peak oilers playing defense are only making this point after the fact. The peak oil camp wasn’t so quick to disavow these pundits when prices were going up.
The whole discussion is drifting into an Orwellian quagmire. Because you aren’t fond of the history, you’ve decided to rewrite it.
All you’re doing is conflate science with punditry because it’s easier to pick on the one with all the ignoramuses.
Matt Simmons is a business exec. Krugman is not in energy. Would you like to raise some example from the other camp or continue to make fun of peak oil (climate change) because of something Simmons (Al Gore) said?
Since you like Colin Campbell so much, perhaps I should remind you that in July 2008, he wrote this article entitled “The oil price will stay high. Here’s why.”
http://blogs.independent.co.uk/openhouse/2008/07/the-oil-price-w.html
Matt Simmons is a business exec.
Since you don’t like Matt Simmons so much, perhaps you didn’t know that Simmons is an adviser to the Oil Depletion Analysis Centre, of which Colin Campbell is a patron. Campbell and his cohorts apparently think quite a bit of Simmons, being that Simmons is officially on board to provide Campbell and his partners with advice.
http://www.odac-info.org/about-odac
Let me guess — another excuse is forthcoming.
Your first link doesn’t even say what you pretend it does. Look at the quote from Colin I posted.
Also, I see you’ve taken to guilt by association to make your point. I’ll one-up your accusation. I’ll assume at least one of your coworkers is not a great logician, and provide that as proof you make terrible arguments.
Your first link doesn’t even say what you pretend it does.
The first link argues that peak oil explains the high prices of July 2008. The title, in case you missed it, is “The oil price will stay high. Here’s why.”
guilt by association
That’s a bit like arguing that Dick Cheney doesn’t represent the Bush administration.
Simmons, whom you don’t like, is an adviser to Campbell. If Campbell dislikes Simmons as much as you do, why does Simmons serve as his organization’s adviser?
Meanwhile, Campbell associated this summer’s prices with peak oil, as you will note in his article entitled “The oil price will stay high. Here’s why.”
If Campbell didn’t believe that the oil prices in July were the result of peak oil, then it doesn’t make much sense that he would publish an article in July that used peak oil theory to explain the high prices.
I’m really quite sorry that the facts contradict your representations. But they obviously do, and the internet has been kind enough to preserve these mistakes for posterity’s sake.
If you actually took the slight effort to read the quote and understand the context, you’ll note that he says the perception of peak oil is more significant than the reality, which was absolutely accurate in this case.
Regardless, markets and economics is a little out of the scope of his expertise, so I’m not sure why you care so much of his opinion on it.
You’ll also note Campbell is a “patron” at ODAC, and Simmons is an “advisor”. I’m sorry you’re not able to find a less tentative link between the two.
Again, you may find it rewarding to dwell on people who are out of their depth, but I’d prefer to concentrate on the less obvious.
you’ll note that he says the perception of peak oil is more significant than the reality
Actually, in his article written in July 2008 entitled “The oil price will stay high. Here’s why,” Chapman explains the high oil price as being the result of peak oil. He even went out of his way to argue that the price increases of 2008 were different from prior periods, because they were caused by the supply peak instead of short-term political factors: http://blogs.independent.co.uk/openhouse/2008/07/the-oil-price-w.html
Meanwhile, Campbell sure seems to have a respect for Simmons that you don’t. Here’s an excerpt from an interview with Simmons describing how they got acquainted:
I recall reading some excerpt about this Scientific American article about the end of cheap oil, and someone alerted me that there was this guy named Colin Campbell that had written a book about depletion. So, I ordered the book, and as I was skimming through it, I saw an appendix at the back. I thought, now, I’m going to figure out, they must say some wonderful things, and I saw my name quoted ten times.
When I finally met Colin Campbell, he said, “My compliments to you. You were actually speaking out on this more frequently than anybody else!”
http://globalpublicmedia.com/transcripts/212
Campbell dislikes Simmons so much that Simmons is chairman of the advisory board for ASPO-USA, while Campbell sits as a member of that board. In case you didn’t realize it, the parent organization ASPO was founded by, you guessed it, Colin Campbell. http://www.aspo-usa.org/index.php/about/advisory-board/
Clearly, the two have nothing in common, even though they run in the same circles, quote each other in their books and articles, and make similar predictions to each other.
Again if you actual read what Campbell says he believes instead of that one vague article (which again, is consistent with the perception of the end of cheap oil he’s mentioned). Look at how he even mention “this century”, which is consistent with what he’s said in the past about the reality of oil. I’ve already mention this dichotomy.
This guy’s on record quite often (like the books he’s written) talking about how the actual decline in production is gradual, so maybe you can try educating yourself instead of dwelling on one blog post.
—
On the Simmons connection, it’s quite natural they walk in similar circles given their topic of interest . Again, maybe you can find something more substantive than guilt by association, like Campbell saying he agrees with Simmons’ hyperbolic statements (that term seem familiar?) on future market prices, which would actually give some substance to your argument.
one vague article
Campbell wrote the article. He called it “The oil price will stay high. Here’s why.”
Notice the word “stay.” It obviously didn’t stay.
I am frankly embarrassed for the peak oilers. There are some aspects of peak oil theory that are reasonable, particularly in respect to the potential for future depletion.
But the enthusiasm with which they jumped on the oil bubble bandwagon is an obvious humiliation that is tough to live down, as is evident in the sad efforts above to pretend that they didn’t make these statements, even though I have provided links that clearly prove it. They have to resort to lying, because the truth is too unpleasant. Unfortunately, they talked so much that they can’t hide all of it.
I’m still waiting on any substantive evidence for your arguments. Frankly it’s quite ironic you happen to be satisfied with the same level of detective drivel that the peak oil pundits are.
It’s a post on a blog! And he used the word “high”! The man has a large body of work on the specifics of the industry and I’d repeat my recommendation to educate yourself on the climate rather than dwell on the daily weather.
you happen to be satisfied with the same level of detective drivel that the peak oil pundits are.
I’m simply quoting their claims that the price increases of 2008 were permanent. These are claims that you said that they didn’t make, but they obviously did.
If you don’t care for what they said, then argue with them. I’m just serving as the messenger. Obviously, the message is quite painful, but reality bites.
If there hadn’t been an economic collapse, it’s not inconceivable that prices would’ve settled around ~100 for while. I serious doubt in that case you would’ve admitted to your oh so egregious error and happily faced the opportunistic dogpile you’re dishing out.
I’m not trying to convince anyone of short term futures of speculative priced commodities; these markets are inherently unpredictable without strict regulation. I wouldn’t have anything invested in it, like many other financial instruments that are a gamble.
If there hadn’t been an economic collapse, it’s not inconceivable that prices would’ve settled around ~100 for while.
While Colin Campbell was writing newspaper articles using peak oil to explain why July’s oil prices were going to remain at those levels, I was unequivocally calling it a bubble, including on this website.
Perhaps the solution is for Campbell to stop making economic predictions. He has been predicting a depression caused by oil for several years, so he isn’t a stranger to mixing his version of geology with economics. That may be embarrassing, but it is what it is.
If we’re just going to use this thread for gloating, I guess I can pretend I “called it” on the econ collapse because I saw too much downside and took all my money out and had no exposure. I can pile all over all the people around me who lost substantively, including you to some extent I suspect, but what’s the point of gloating over other’s spilled milk?
Luck does favor the prepared, but we both know predicting the weather is a risky business.
On “peak oil”, as I’ve said, unless someone develops a working causal model between supply level and energy demand elasticity, I wouldn’t even bother with whatever their expectations are. The only info of value in these short term markets is insider info and that doesn’t come easy.
I guess I can pretend I “called it”
You may need to pretend, but I don’t. If you search through this site, you will find numerous comments made by myself and others that argued that the 2008 price increase was a bubble that would pop. I made those comments at the same time that your preferred pundit, Colin Campbell, was taking the opposite position in articles such as the one linked above.
Campbell got it wrong, his associate and research source Simmons got it wrong, and the rest of that crowd got it wrong. I know that it kills you to admit it, but they got it wrong and you don’t do yourself any favors by denying it.
Yeah, no shit sherlock they got it wrong on market pricing. Some just more egregious than others.
I mean, the whole damn economy was on a bubble, so I give you no credit unless you predicted <50 and just made yourself a fortune shorting. And even then, that’s partly due to luck.
Even with bubbles no one can really predict the specifics of rise and fall (considering it’s not even consistent when there’s regional pricing), and anyone doing it (on either side) is a fool and bound to be wrong.
they got it wrong on market pricing
At least you finally admitted it. It only took you two or three days to come around.
And how many days is it going to take for you to realize that I’ve said from the beginning that it’s pointless to argue about the weather, and make a meaningful point about that instead?
Look at my first post to you:
For example, Colin Campbell is an oilman who has written quite a bit on the subject, and the technical side of his analysis seems fine. The side effects of a peak is open to interpretation and is filled with motley fools looking for attention.