thomas malloy wrote:
Taylor J. Smith wrote:
Hi Stephen,
Nice simulation; but human greed and stupidity, which are impossible
to over-estimate, are not
Personal reflections:
I hope they're right. Not sure that I do.
Does your calculation factor in an increase in the supply of oil which
will result from the increase in price?
The whole point of the exercise is that we seem to have reached the
world peak in oil production, and supply cannot be increased, due to
lack of resources. So the question I was trying to answer was, if demand
continues to increase but supply is forced to remain static or drop,
what will be the effect on price? (Sure it'll go up, but how much?)
Peak oil has been predicted for a good many years, and reading the news,
I'm hearing about old fields in Russia, Saudi Arabia, and the Americas
passing their peaks and declining and no new fields seem set to come on
stream. It sure looks like it could be the peak of production.
Saudi Arabia has two large fields left but they're hard to use -- they
have major pressure problems and will need water injection from day 1.
They hope to start producing from the Khurais field in 2009, if I recall
correctly, but it's going to take a research project to extract the oil,
and whether or not it works as planned it's not going to help with
prices this year. Aramco is supposedly the world expert in extracting
all possible oil from a field, rumors of Arab oil field mismanagement
notwithstanding, but it's a big enough challenge that even they may have
trouble extracting the oil -- and their last remaining large field,
whose name slips my mind, is apparently even tougher to work with than
Khurais.
Brazil has made a large find recently but it's not really confirmed and
could be smaller than it appears (admittedly fields usually turn out
/larger/ than thought, tho), and it's under more than a mile of ocean
water which won't make it any easier to bring on-stream quickly, so it's
not going to be producing anything this year, either. But let's put it
in perspective: If it's 40 billion barrels, as has been reported in the
news, that's slightly more than a 1-year supply for the world. The
world uses about 84 million barrels per day, or about 30 billion barrels
per year. So, Brazil's find just extended the "oil era" by 16 months.
And finds of that magnitude are reported far less frequently than one
every 16 months!
Straws in the wind, that's all; but it's sure looking like stormy
weather coming.
