Subject: Re: [extropy-chat] Debate on Peak Oil

From: Samantha Atkins <[email-masked]>
Date: Mon, 25 Apr 2005 03:05:58 -0700

On Apr 24, 2005, at 9:37 PM, Mike Lorrey wrote:

> Peak Oil exists for certain nations and certain oil companies, based on
> who has the rights to certain oil fields and which fields are being
> allowed to be developed by governments. The world is nowhere near any
> sort of impending oil shortage. We have a minimum of 100 years of oil
> available at todays market prices.

Produce your evidence or withdraw this claim.

>
> The Canadian oil tar sands contain more oil (over 3,000 billion
> barrels), as do Venezuelan tar sands, that the idea that we are running
> out of oil is simply ludicrous.

Except for the unfortunate fact that we have no means to economically 
(today's prices) and environmentally sanely extract and refine such 
oil.

> Technologies for affordably extracting
> oil from these sands is now perfected and is being implemented.

It is far from "perfected".

> In the
> shorter term, China, the Phillipines, Vietnam, and Indonesia are
> sitting on 19 billion barrels under the Spratlys, while the US has an
> equivalent amount sitting under ANWR, plus additional reserves
> elsewhere. The oil and gas fields of Wyoming, I am hearing are seeing a
> boom-time.

US oil production peaked in the 70s (as predicted by Hubbert).  Do you 
think we are dependent on Mideast oil just to amuse ourselves with the 
attendant complications and costs when we actually have everything we 
need right here?  ANWR is not that impressive to the actual oil 
companies.    To put this in perspective, the world sucks down 77 mbd, 
call it 100 mbd in round numbers (we expect to reach this level easily 
with the next 5 - 10 years).  The 19 billion barrels satisfies world 
demand for less than a year.  Not very impressive.  Also we are lucky 
to get as much as 70% of the oil out of the ground.

Drifting  (or even paddling hard) down that river in Egypt will not 
serve our interests.

- samantha

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From: Mike Lorrey <[email-masked]>
Date: Mon, 25 Apr 2005 07:46:36 -0700 (PDT)

--- Brian Lee <[email-masked]> wrote:
> 
> Once oil production actually peaks (as opposed to predicted peaks) we
> will still have many years available to us as oil prices increase to
> develop alternative energy. 

As well as more conservation technologies. Peak Oil production, even if
true, is really immaterial. What matters is the rate of consumption of
oil per dollar (or yuan) of GNP. We are currently on a continuously
decreasing curve of less oil per dollar of GNP, at least here in the US
as well as in China, demonstrating further technological advancement
and transition to information technologies and services industries,
while production industries become further automated.

The only area of the US economy that consumed more oil in 2000 than in
1990 was transportation, which is full of industries bogged down by too
much government regulation, union controls, resistance to automation,
and political influence, as well as consumer sentiment that saw the
greater efficiency of the larger economy as an excuse to buy a bigger
SUV, because they could afford to.

Mike Lorrey
Vice-Chair, 2nd District, Libertarian Party of NH
"Necessity is the plea for every infringement of human freedom.
It is the argument of tyrants; it is the creed of slaves."
                                      -William Pitt (1759-1806) 
Blog: http://intlib.blogspot.com

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From: Brent Neal <[email-masked]>
Date: Mon, 25 Apr 2005 10:44:43 -0400

(4/25/05 2:29) Samantha Atkins <[email-masked]> wrote:

>Huber's argument amounts to belief that somehow there will be more oil 
>available if we want it bad enough because we will come up with some 
>miracle technology to make it so just because we always have and 
>because Americans have a God given right to guzzle oil forever by gum.  
>  There is no credible challenge of the facts as they currently stand.   
>  Only the optimism that if we drag our butts, don't develop 
>alternatives and thus really need the oil that it will be there in 
>plenty and at affordable cost.  I don't understand why anyone would 
>take such an empty argument seriously.

I agree with your assessment of Huber's argument, but not for the reasoning behind it. As Mike has already said, Huber is a pretty bright guy. My opinion is that he is assuming that as oil becomes more expensive, we'll get commensurately better results at innovating out of the problem.  That's a pretty safe bet, considering the human proclivity to pull rabbits out of hats when the chips are down.  But you are correct that if we fail to solve the problem in a timely fashion, things could become sticky. I'm not willing to bet that way (yet).

I think I saw someone mention this earlier, but the danger in dumping a ton of money into development of alternatives can artifically skew development towards technologies that are cost-effective to develop, but not to operate. However, Mike's argument that we shouldn't be developing solar cells because they are 10 times more expensive than fossil fuels or nuclear power (assuming that solar is ~$0.70 per kwh and fossil fuels are ~$0.07.  Pure handwaving.)  does not hold because there is no guarantee that in the future, fossil fuel electricity will remain that cheap and there is no reason to believe that solar cannot be cheaper (for example, the PbS nanocrystal in PPV solar cells that are about 30% efficient over a much broader spectrum than silicon.)  

The net present value of a technology is very difficult to compute: it can be manipulated by both gainsayers and naysayers with equal effectiveness. The only effective way to make rational choices about this is to look at the science, not the economics.

Brent
-- 
Brent Neal
Geek of all Trades
http://brentn.freeshell.org

"Specialization is for insects" -- Robert A. Heinlein

---

From: Mike Lorrey <[email-masked]>
Date: Tue, 26 Apr 2005 16:54:10 -0700 (PDT)

--- Hal Finney <[email-masked]> wrote:
> Dustin Wish writes:
> > I had read an article about new exploration in the Gulf of Mexico
> using new
> > technology, which they said shows a HUGE oil reserve almost twice
> the amount
> > of oil as has been used up till today. That would be a turn around
> from the
> > cheap oil economic times we have lived in.
> 
> On the other hand, this news from a Peak Oil site is discouraging for
> Gulf of Mexico oil development:
> http://www.energybulletin.net/5438.html
> 
> "According to a new study published on Sunday by state oil monopoly
> Petroleos Mexicanos, the potential for oil exploration in the Gulf of
> Mexico has been greatly overestimated.
> 
> "Petroleos Mexicanos, or Pemex, revealed that terrain in waters
> deeper
> than 3,000 meters in the Gulf of Mexico an area known as the Abyssal
> Plain were 'not suitable for oil exploration.' The statement
> represents
> a serious setback for future drilling in the area, and, according to
> petroleum analysts, jeopardizes any possible collaborations with
> foreign
> investors.
> ...
> "Pemex had initially earmarked a possible 54 billion barrels of oil
> that could be drilled from the area. With that figure now cut in
> half, Pérez Cruz says, exploration becomes economically unviable"
> 
> This is why I say that Peak Oil sites provide biased news.  They
> search
> the press for all the bad things, but won't reprint good news (that
> is, news which goes against their theories). 

Especially when you consider that Pemex is the only oil company in the
world that has never turned a profit. When you have a company
management that could teach the saudis a thing or two about graft and
nepotism, it isn't hard to wonder why they are now trying to downplay expectations.

Mike Lorrey

---

From: Mike Lorrey <[email-masked]>
Date: Tue, 26 Apr 2005 16:58:07 -0700 (PDT)

--- Alfio Puglisi <[email-masked]> wrote:
> On Tue, 26 Apr 2005, Hal Finney wrote:
> 
> >day to day basis.  Of course an unbiased site would be best, but
> I've
> >given up hope in that regard!
> 
> Have you given a look at the Wikipedia article on the matter?
> 
> http://en.wikipedia.org/wiki/Peak_oil

Mwahahahahaaa.... how entertaining:
"Based on available production data, proponents have predicted the peak
years to be 1989, 1995, 1995-2000, or, according to one influential
group, 2007 for oil and somewhat later for natural gas."

Geeze, if you replaced the words "peak years" with "return of Jesus
Christ" you'd have a nice joke about cheated chiliasts.... I'm sorry,
couldn't help it. Who is it now that needs to wear tinfoil hats and
start digging their bunkers? HAW!

Mike Lorrey

---

From: Mike Lorrey <[email-masked]>
Date: Tue, 26 Apr 2005 20:54:06 -0700 (PDT)

--- Matus <[email-masked]> wrote:
> > -----Original Message-----
> > From: [email-masked] [mailto:extropy-chat-
> > [email-masked]] On Behalf Of Samantha Atkins
> > 
> > I find the case for Peak Oil and quite soon compelling.  But
> whether we are nearing the Peak rapidly or not is in a way
> irrelevant.   If most
> 
> Has any resource, ever, reached a peak and then declined while demand
> continued to be at least consistent?  Ever?  Why all of the sudden
> are we suggesting it will happen with Oil?

What I find very compelling is that wikipedians have exposed that the
wikipedia article on abiogenic petroleum theory has been hacked with
unjustified critical alterations by an anonymous user at Halliburton,
alterations that try to cast doubt on abiogenic petroleum origins.

http://en.wikipedia.org/wiki/Talk:Abiogenic_petroleum_origin
(See "Possible conflict of interest")

Why would Halliburton seek to do this? Perhaps because the theory and
its supporting evidence (as well as the fact that abiogenic oil is the
standard accepted theory in Russian geology circles) cast serious doubt
on the "Peak Oil" proponents?

I also see major hype about "Peak Oil" coming from sources like
Halliburton, yet both Saudi Arabia and Iran's oil ministers both assert
that the problem with gasoline prices and the panic-driven spot
markets, is that there is a very serious shortage of refining capacity,
NOT production capacity. I talk to folks in the Iranian oil industry
who can't give their oil away at $30/bbl.

Mike Lorrey

---

From: Mike Lorrey <[email-masked]>
Date: Thu, 28 Apr 2005 06:31:03 -0700 (PDT)

--- Matus <[email-masked]> wrote:
> 
> I say again, has any resource, ever, reached a peak and then declined
> in
> supply while demand continued?  Absent, of course, government
> regulation.  A lot of things *can* happen *in principle*.  I still
> haven't seen one example?  Did we run out of steel?  Did we run out
> of tungsten?  Did we run out of coal?  Have we run out of wood? 
> Uranium? Anything?  Ever?

Specifically, large beams used in post and beam construction in the
medeival and renaissance periods gave way in Europe, as old growth
forests either disappeared or became dedicated solely to construction
of naval vessels, to construction with smaller beams and the start of
the Georgian style, with many small pieces of wood forming complex
trussworks, into the Baroque period and beyond.
> 
> > 
> > >
> > > This discussion ignores the fact that one can manufacture
> gasoline
> out
> > > of a few dollars of electricity right from the carbon dioxide in
> the
> > > air
> > > and hydrogen in the water.
> > 
> > Hahahaha.  Show me how that is economical.
> > 
> 
> I showed you that it is obvious that it *will* be.
> 
> It sure is a funny thing when extropians start suggesting that
> nothing
> new will come out of 6 billion human minds.
> 
> Matus
> 
> 

Mike Lorrey

---

From: [email-masked] ("Hal Finney")
Date: Thu, 28 Apr 2005 08:28:23 -0700 (PDT)

Samantha Atkins writes:
> On Apr 25, 2005, at 7:36 AM, Brian Lee wrote:
> > Isn't it unlikely that the entire world is in denial? Wouldn't some 
> > enterprising investor (including the Peak Oil proponents) slap a few 
> > million down in order to get 300% returns in 5 years? It seems that if 
> > anyone actually believed that oil would be at $200/barrel in 5 years 
> > that futures prices would be edging up there to reflect a valid 
> > present cost.
>
> Please describe how you would play it if you believed it and had some 
> cash.  I am quite interested.  Prices are edging up with constraints to 
> ease the correction where we still can.  I don't personally think we 
> will have that luxury for more than another year more, two at the 
> outside.

The straightforward way to benefit from a rise in oil prices is to
own oil.  The commodities markets are risky but there are ways to do it
which reduce the risk.  There are many web sites available to describe
futures and options which would let you directly invest in oil (perhaps
more accurately, bet on a rise in oil).

You could also buy stock in oil companies, concentrating on ones that
have large proven reserves.  Some people point to the consolidation in
this industry as evidence that insiders (oil company executives) think
that the market is undervaluing the industry.

Investing in alternatives to conventional oil is a possibility as well.
Canadian companies with their tar sands, or more exotic alternatives like
solar and wind, may become bigger players as conventional oil runs short.

One problem is that even if the Peak Oil scenario is broadly correct,
things may not play out exactly according to the script.  Suppose that oil
prices continue to climb over the next few years, and this depresses the
world economy enough that we fall into a stubborn recession.  This could
reduce demand so that the price stops rising, or even falls.  Oil usage
drops quite a bit during a recession, as during the 80s.  There was even
a small decrease in consumption from 2000 to 2001 to 2002.

The Peak Oil proponents could be right but oil prices could still fall,
and then investments made on the opposite assumption would not pay off.
There are no certainties!

Hal