Why Peak Oil Will Never Lead To $500/bbl Crude Oil

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  • Mon, May 03, 2010 - 01:18am

    #11
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    Re: Why Peak Oil Will Never Lead To $500/bbl Crude Oil

Erik

Completely agree with your assessment. Keep the good hits coming.

 

 

  • Mon, May 03, 2010 - 01:18am

    #12
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    Re: Why Peak Oil Will Never Lead To $500/bbl Crude Oil

Erik

Completely agree with your assessment. Keep the good hits coming.

 

 

  • Mon, May 03, 2010 - 02:19am

    #14
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    Re: Why Peak Oil Will Never Lead To $500/bbl Crude Oil

Erik — Very well written article.  As was your article on the gold/silver manipulation story.  As I have written elsewhere there is a major risk that the Obama Administration, to cover up its incompetence and corruption, will seek to nationalize or otherwise control the oil industry.

  • Mon, May 03, 2010 - 02:21am

    #13
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    Re: Why Peak Oil Will Never Lead To $500/bbl Crude Oil

Very nice article Eric.  I remember the gas lines in the 70s after price controls.  Oil demand did not go down, but the common man just could not purchase gas at the government price — you needed connections or pay extra under the table.

Nate hit the nail on the head.  Peak Oil = Peak Population.  This does not bode well for developing countries without strong militaries.

DTM:  I think it will be a very long time, before drilling resumes in the Gulf. While it is spewing 5000 barrels a day with the pipe partially crimped by the robotic subs: BP has estimated that if they lose the wellhead, based on the diameter of the well and the pressure of the oil, it could theoretically leak a maximum of 158,000 barrels a day(it is just fricken mindboggling).  BP will be in bankruptcy protection soon, unless it is nationalized as too big to fail like our banks, car companies, and AIG. (which leads to some excellent conspiracy theories).  This disaster is so big it could trip the double dip recession all by itself and certainly will take the blame when the economy nosedives this summer — like the economy wouldn’t have nosedived anyway.

  • Mon, May 03, 2010 - 05:06am

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    Re: Why Peak Oil Will Never Lead To $500/bbl Crude Oil

Erik,

Extremely well written article – on par with a Martenson Report (which I value immensely)!

Chris,

I hope that you’ll consider putting up a link on your blog to this report by Erik.  I’d hate to see this report buried in the past forums which tends to happen once the new forums push the old ones off the homepage.  You don’t have to take my word for it – you can see the positive comments above.  You might want to add your own comments/conclusions about the importance of resiliency in light of price shocks or shortages any time in the next couple years.

Cheers,

James

  • Mon, May 03, 2010 - 05:59am

    #16
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    Re: Why Peak Oil Will Never Lead To $500/bbl Crude Oil

I very much appreciate this great article Eric. I do however have three criticisms. At this point I personally wouldn’t make any pricing predictions. You seemed to have overlooked two highly important and emotional issues that are at the very core of peak oil. The global industrialized food system and monetary systems.

When (not if) our industrialized food systems begin to fail I suspect people will be willing to pay more and more to try and keep the system running on fossil fuel based fertilizers, pesticides, and machinery.

What would $500/bbl really mean in a hyper-inflationary environment (if that comes)? Perhaps at this point we should start pricing oil in gold or silver 😉

For what it’s worth IMHO I’m not that crazy about the intent of the article as it seems heavily influenced by greed which is apparent by a large focus on investment. Perhaps I’m biased as I don’t have much money and would rather focus on steering readers towards finding solutions or ways to physically survive the tough times ahead. But then again I would imagine it would be hard for people to set their minds on finding solutions when they are too busy worrying about their investments.

Thanks for the good read.
Cheers
r.

  • Mon, May 03, 2010 - 06:27am

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    Re: Why Peak Oil Will Never Lead To $500/bbl Crude Oil

Thanks, everyone for all the kind words. I wrote the gold debunking article out of pure frustration with the fact that nobody was telling the truth and that there was so much BS in the system that I thought was dangerously misleading. But it was kind of fun and I realized that writing helps me organize my own thoughts better. I do plan to write more articles, and will post them here assuming the interest continues (?)

[quote=James Wandler]

Chris,

I hope that you’ll consider putting up a link on your blog to this report by Erik.  I’d hate to see this report buried in the past forums which tends to happen once the new forums push the old ones off the homepage.  You don’t have to take my word for it – you can see the positive comments above.  You might want to add your own comments/conclusions about the importance of resiliency in light of price shocks or shortages any time in the next couple years.

Cheers,

James

[/quote]

James, I’m very flattered! Chris is always welcome to use my writings any way he thinks will help the site, whether that be quoting excerpts, promoting articles to the main blog as guest articles, or just leaving them here in the forums. I have no commerical interest in this writing; I do it to help organize my own thoughts. Whether the stuff gets published at all or where really doesn’t matter to me, but if it can help Chris and the site in any way, I’m all for it.

I also submitted this one to FinancialSense and TheOilDrum. It’ll be interesting to see who picks it up and how it does.

Thanks again for the kind words, everyone

Erik

 

  • Mon, May 03, 2010 - 06:47am

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    Re: Why Peak Oil Will Never Lead To $500/bbl Crude Oil

I really appreciate the article and the consolidation of information relating to peak oil and its effects, but I also agree with a few other posters who mentioned the cautious approach to pricing oil in the near future and methods of exploiting that information. I think this article is just as good as a summary of the peak oil problem and some likely consequences, rather than a guide to investment in paper claims on oil. I guess there is no harm in putting out opinions on how to capitalize on the upcoming supply shocks, and I think the article is correct in pointing out that oil companies could do much worse than expected, but personally I would rather sit this one out and focus on some more concrete changes that I need to make. Maybe its because I hate taking losses more than missing gains at this point (as CM likes to say), and also I’m just tired of trying to participate in this parasitic paradigm we call a global economy.

 

  • Mon, May 03, 2010 - 07:06am

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    Re: Why Peak Oil Will Never Lead To $500/bbl Crude Oil

Great analysis Eric,  now I need an article on how to trade ETF’s !  

  • Mon, May 03, 2010 - 07:24am

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    Re: Why Peak Oil Will Never Lead To $500/bbl Crude Oil

Great analysis Eric,  now I need an article on how to trade ETF’s !  

Please don’t even consider investing in either futures or futures-based ETF’s unless you fully understand the implications of contango and backwardation. The oil market is currently in contango which means the price is higher in the future than now. This means that to be profitable any futures-based investment first has to overcome this price differential. For ETF’s this differential has to be made up every time contracts are rolled forwards.

If you want to see the effect this can have I would suggest looking at an oil ETF (e.g. CRUD) and comparing the price action over the last year (during which time the contango has persisted) with that of the underlying commodity.

Seriously, take care with this.

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