TheEEStory.com

By now, with all this talk of peak mayhem, we would all be looking for a cliff to jump off wouldn't we? That is if we didn't all expect the EESU to liberate us :-)

Aren't we being optimistic? Perhaps just a tad.

I suppose this is why we hold ZNN as a hedge against our oil investments:-)

Better to be a realist.

But aren't there some exciting new things happening? That is if we believe in EEStor and Black Light Power etc. Fortunately I don't need BLP as a hedge against anything:-) Thank goodness for that.

What is there to believe?

Whit limited supply of oil, the production must peak and then decline. There aren't any other possible scenarios I'm aware of.

Robw wrote:

As hardor_nyc states above, we probably are past peak, if you define 'peak' as the easy to extract oil.

I believe the point of this post should be 'will it matter?'

If you're a EESU believer, probably not, as it's introduction will cause an immediate drop in oil demand, and an even greater drop in speculation. This alone will cause the price of oil to plummet rather quickly.

If no EESU, I still believe that something else will come along, the most likely being an advance in battery technology, that will make 'peak oil' no more of a pain for the average person then Y2K was.

I agree RobW, except I don't think it would stay down for very long. Oil suppliers understand all of the above pretty well. Even without an EESU, they see that a global sea change has taken place, and can read the writing on the wall. Oil and gas prices simply can't drop low enough to counteract the effects of the current and planned legislation promoting renewable energy sources and emission-free transportation, nor the incremental advances in electrochemical storage and the inherent cost advantages of existing electric drives that already make the case to corporate bean counters involved in commercial fleet acquisitions and conversions. Private vehicle purchasers will take this cue and follow suit, even when gasoline is at its lowest possible price making electric drive "only" half of the previous total transportation cost rather than one tenth. Oil at over $100/barrel just makes adoption of the electric drive that much more of a no-brainer.

What will the oil producers do, faced with this threat? Simple. They will scale back production just enough to enable them to charge whatever the market will bear for as long as they can, giving them an opportunity to maximize their profits and time to diversify. I believe they'll think they have about 10-20 years of gradually declinining revenue. There just is no other alternative strategy for oil producers if the analysis is simply based on dollars and cents. I believe it will be. It's the nature of the beast. As you say, this will put the squeeze on commodity speculation - there simply won't be enough "head room" left to speculate much when the market is already paying the most it can bear. Speculation will also become increasingly untenable from a political perspective.

How would introduction of a practical EESU magnify this? Well, as mentioned above the dynamics are already at play but I agree that oil prices will drop much harder and much faster than it already would have, as speculation stops dead in its tracks. But they won't stay down long. Expect to see unprecedented cooperation between oil producing states as the shock wears off, the reality sinks in and they start to panic. Some producers such as Canada and other OECD net exporters won't participate actively, but will surely profit passively. Either way it won't matter at that point, since the cartels only need to tightly control a percentage of world production that net importers can't live without. At this point the cartels will probably draw down their estimated window to about 7-13 years of quickly declining profits, driven by accelerated adoption of renewable energy and electrification of transportation afforded by an EESU.

A reinvigorated OPEC, possibly in collusion with Russia and/or former Soviet satellites, perhaps eventually a cartel of cartels, or mega-cartel will probably emerge. This level of cooperation will be absolutely necessary for them to manage world supply firmly enough, and by extension the price. Don't think it can't happen again. The embargo and tight supply fixing of the 1970's wasn't a random event, it was a response to a stimulus. This is their financial and geopolitical life blood. The cartel(s) will probably dance close to but not over the line of military intervention. This shouldn't be too difficult for them since the West will have no stomach for another oil war for a very long time. The US will put heavy sustained pressure on Canada to increase production.

---

You don't have to believe in the EESU or BLP to know that exciting things have been happening over the last couple of years. When I first learned about PO, no major manufacturer had plans for an electric car, Tesla was just a startup without a product (some people were claiming it was a scam) and there were no major producers of automotive Li-on batteries (or even plans for one). Mad Max is only one of many possible futures.

---

Robw wrote:

As hardor_nyc states above, we probably are past peak, if you define 'peak' as the easy to extract oil.

I believe the point of this post should be 'will it matter?'

If you're a EESU believer, probably not, as it's introduction will cause an immediate drop in oil demand, and an even greater drop in speculation. This alone will cause the price of oil to plummet rather quickly.

If no EESU, I still believe that something else will come along, the most likely being an advance in battery technology, that will make 'peak oil' no more of a pain for the average person then Y2K was.

The trouble with the Micawber approach (something will turn up) is that it absolves individuals from doing anything personal to alleviate the problem.

It is probably wiser to assume something will NOT turn up, and to take personal action such as changing one's lifestyle to use significantly less in the way of fossil fuels.

About a year ago I bought a little gadget that you can interpose between plug and socket which measures how much energy is being used and found that our tumbled drier was gobbling large amounts of energy. By putting up a washing line we have cut this right back, although power is still used when the weather is bad. I was appalled to learn that washing lines are banned in many areas of the US by neighbourhood associations. This is an example of a mindset that has to change. Far less showy than buying an electric car that doesn't work very well, but likely to save a lot more energy.

The effect of an EESU - if it appears at all - will, I agree, lead to a drop in oil demand, but the initial effect will be a RISE in coal demand. How beneficial is this?

---

"Low-hanging fruit" is the right analogy.

The reserves of oil shale or oil sands aren't that important. The point is that *cheap* oil is mostly used up. Now, if someone comes up with a cheap way to exploit oil shale, then the situation will change. But, they say there's more gold in a cubic mile of seawater than has ever been mined in all of history. And so what? You can't extract it profitably, so from an economic viewpoint it might as well not exist. The oil in oil shale may be important someday, for lubricants and making plastics and *other* things we use petroleum for, but it's too expensive to use it up fueling vehicles.

It's simple economics. As the price of oil goes up, the more marginal uses of it will cease to be profitable, so those buyers will cease to buy oil. Thus, with rise in price demand goes down.

The transition from using whale oil to petroleum didn't happen overnight. Replacing oil with electricity and other alternative energy sources won't happen overnight, either. But it *will* happen, except for specific applications where the energy/weight ratio is extremely important, such as in aviation fuel.

---

Daniel and Tec,

I agree with much of what you say, but just a couple of points to add:

1. King Abdullah is conscious of the need to leave plenty of oil to his children's children and beyond. So the Saudis will not open the spiggots without strong price justification despite Khurais and Kursaniyah (new fields) now coming on stream.
2. The US Senate has decried the importation of Canadian heavy crude from oil sands and threatened to ban it on "environmental grounds". Stephen Harper has been pleading with the USA to take the fruits of the oil sands.
3. People from many parts of the world are growing tired of the USA demanding first dibs on all natural resources and while "might is right" holds with many, the Iraq invasion has been widely viewed as nothing more nor less (among many OPEC countries) than an extension of the Carter doctrine to secure access to oil. Unfortunately the USA has been comprehensively outmanouvered by China who have been happy to pay USD100 per bbl for long term access to the oil of many countries - including Iraq. As a result less and less of the world's oil is now available for free market bidding. Phenomena such as the Russians ousting Exxon from projects and then exploring in Cuban waters, also exploring and supporting Venezuelan production. China buying more and more under contract from Iran. China loaning USD26bn to Russian oil companies in exchange for long term commitments to sell them 45,000 tonne of oil per day to them. New pipelines criss-crossing central asia and the stans and Russia on their way to China. These factors progressively change a global oil trading landscape that no-one really has control over.
4. Unfortunately the dialogue between the West (consumer)and OPEC countries (suppliers) is along the lines of the customer criticising supplier at every turn for anti-competitive behaviour - with threats of legal action thrown in. This assists the ambitions of both Russia and China.

So despite the fringe geopolitics from places like Iraq and Nigeria, there are many negative forces at work within the marketplace. The supply side issues of lack of reinvestment, field depletion, loss of key people, aging and rusting infrastructure affect the straightforward process of how much can be produced. But the market related issues, changing lanscape of treaties and long term supply agreements linked to aid, will determine who gets the scarce resource.

Those market-side resource allocation issues don't look too hot to me.

So lets hope the EESU really does its job - soon. If it can.

Daniel R Plante wrote:

Robw wrote:

As hardor_nyc states above, we probably are past peak, if you define 'peak' as the easy to extract oil.

I believe the point of this post should be 'will it matter?'

If you're a EESU believer, probably not, as it's introduction will cause an immediate drop in oil demand, and an even greater drop in speculation. This alone will cause the price of oil to plummet rather quickly.

If no EESU, I still believe that something else will come along, the most likely being an advance in battery technology, that will make 'peak oil' no more of a pain for the average person then Y2K was.

I agree RobW, except I don't think it would stay down for very long. Oil suppliers understand all of the above pretty well. Even without an EESU, they see that a global sea change has taken place, and can read the writing on the wall. Oil and gas prices simply can't drop low enough to counteract the effects of the current and planned legislation promoting renewable energy sources and emission-free transportation, nor the incremental advances in electrochemical storage and the inherent cost advantages of existing electric drives that already make the case to corporate bean counters involved in commercial fleet acquisitions and conversions. Private vehicle purchasers will take this cue and follow suit, even when gasoline is at its lowest possible price making electric drive "only" half of the previous total transportation cost rather than one tenth. Oil at over $100/barrel just makes adoption of the electric drive that much more of a no-brainer.

What will the oil producers do, faced with this threat? Simple. They will scale back production just enough to enable them to charge whatever the market will bear for as long as they can, giving them an opportunity to maximize their profits and time to diversify. I believe they'll think they have about 10-20 years of gradually declinining revenue. There just is no other alternative strategy for oil producers if the analysis is simply based on dollars and cents. I believe it will be. It's the nature of the beast. As you say, this will put the squeeze on commodity speculation - there simply won't be enough "head room" left to speculate much when the market is already paying the most it can bear. Speculation will also become increasingly untenable from a political perspective.

How would introduction of a practical EESU magnify this? Well, as mentioned above the dynamics are already at play but I agree that oil prices will drop much harder and much faster than it already would have, as speculation stops dead in its tracks. But they won't stay down long. Expect to see unprecedented cooperation between oil producing states as the shock wears off, the reality sinks in and they start to panic. Some producers such as Canada and other OECD net exporters won't participate actively, but will surely profit passively. Either way it won't matter at that point, since the cartels only need to tightly control a percentage of world production that net importers can't live without. At this point the cartels will probably draw down their estimated window to about 7-13 years of quickly declining profits, driven by accelerated adoption of renewable energy and electrification of transportation afforded by an EESU.

A reinvigorated OPEC, possibly in collusion with Russia and/or former Soviet satellites, perhaps eventually a cartel of cartels, or mega-cartel will probably emerge. This level of cooperation will be absolutely necessary for them to manage world supply firmly enough, and by extension the price. Don't think it can't happen again. The embargo and tight supply fixing of the 1970's wasn't a random event, it was a response to a stimulus. This is their financial and geopolitical life blood. The cartel(s) will probably dance close to but not over the line of military intervention. This shouldn't be too difficult for them since the West will have no stomach for another oil war for a very long time. The US will put heavy sustained pressure on Canada to increase production.

Daniel

Excellent response...I can't totally disagree with anything you say here. I realize there are many possibilities, and this is definitely one of them.

My own opinion is with a successful EESU introduction (or something similar) will cause an immediate and sharp drop in oil prices, short-term.

Mid-term, anything is possible...however I believe that oil prices will rebound, but nothing like $147 a barrel like we say last year.

It is possible that OPEC nations could rally together and come out stronger, but I believe that won't happen, rather a price war will emerge among them to capture those last few years of declining profits, before the inevitable end.

---

Robw wrote:

Daniel R Plante wrote:

Robw wrote:

As hardor_nyc states above, we probably are past peak, if you define 'peak' as the easy to extract oil.

I believe the point of this post should be 'will it matter?'

If you're a EESU believer, probably not, as it's introduction will cause an immediate drop in oil demand, and an even greater drop in speculation. This alone will cause the price of oil to plummet rather quickly.

If no EESU, I still believe that something else will come along, the most likely being an advance in battery technology, that will make 'peak oil' no more of a pain for the average person then Y2K was.

I agree RobW, except I don't think it would stay down for very long. Oil suppliers understand all of the above pretty well. Even without an EESU, they see that a global sea change has taken place, and can read the writing on the wall. Oil and gas prices simply can't drop low enough to counteract the effects of the current and planned legislation promoting renewable energy sources and emission-free transportation, nor the incremental advances in electrochemical storage and the inherent cost advantages of existing electric drives that already make the case to corporate bean counters involved in commercial fleet acquisitions and conversions. Private vehicle purchasers will take this cue and follow suit, even when gasoline is at its lowest possible price making electric drive "only" half of the previous total transportation cost rather than one tenth. Oil at over $100/barrel just makes adoption of the electric drive that much more of a no-brainer.

What will the oil producers do, faced with this threat? Simple. They will scale back production just enough to enable them to charge whatever the market will bear for as long as they can, giving them an opportunity to maximize their profits and time to diversify. I believe they'll think they have about 10-20 years of gradually declinining revenue. There just is no other alternative strategy for oil producers if the analysis is simply based on dollars and cents. I believe it will be. It's the nature of the beast. As you say, this will put the squeeze on commodity speculation - there simply won't be enough "head room" left to speculate much when the market is already paying the most it can bear. Speculation will also become increasingly untenable from a political perspective.

How would introduction of a practical EESU magnify this? Well, as mentioned above the dynamics are already at play but I agree that oil prices will drop much harder and much faster than it already would have, as speculation stops dead in its tracks. But they won't stay down long. Expect to see unprecedented cooperation between oil producing states as the shock wears off, the reality sinks in and they start to panic. Some producers such as Canada and other OECD net exporters won't participate actively, but will surely profit passively. Either way it won't matter at that point, since the cartels only need to tightly control a percentage of world production that net importers can't live without. At this point the cartels will probably draw down their estimated window to about 7-13 years of quickly declining profits, driven by accelerated adoption of renewable energy and electrification of transportation afforded by an EESU.

A reinvigorated OPEC, possibly in collusion with Russia and/or former Soviet satellites, perhaps eventually a cartel of cartels, or mega-cartel will probably emerge. This level of cooperation will be absolutely necessary for them to manage world supply firmly enough, and by extension the price. Don't think it can't happen again. The embargo and tight supply fixing of the 1970's wasn't a random event, it was a response to a stimulus. This is their financial and geopolitical life blood. The cartel(s) will probably dance close to but not over the line of military intervention. This shouldn't be too difficult for them since the West will have no stomach for another oil war for a very long time. The US will put heavy sustained pressure on Canada to increase production.

Daniel

Excellent response...I can't totally disagree with anything you say here. I realize there are many possibilities, and this is definitely one of them.

My own opinion is with a successful EESU introduction (or something similar) will cause an immediate and sharp drop in oil prices, short-term.

Mid-term, anything is possible...however I believe that oil prices will rebound, but nothing like $147 a barrel like we say last year.

It is possible that OPEC nations could rally together and come out stronger, but I believe that won't happen, rather a price war will emerge among them to capture those last few years of declining profits, before the inevitable end.

I believe you guys have hit it right on the button, except I would like to add that when the USA does not have any money to spend on any foreign goods, then the price of crude oil can not sustain any higher price than, in my humble opinion, more than $100.00 a barrel. If the price goes over this amount, the USA will go back into a recession and the price will drop substantially again like last time.

---

Tec wrote:

Robw wrote:

As hardor_nyc states above, we probably are past peak, if you define 'peak' as the easy to extract oil.

I believe the point of this post should be 'will it matter?'

If you're a EESU believer, probably not, as it's introduction will cause an immediate drop in oil demand, and an even greater drop in speculation. This alone will cause the price of oil to plummet rather quickly.

If no EESU, I still believe that something else will come along, the most likely being an advance in battery technology, that will make 'peak oil' no more of a pain for the average person then Y2K was.

The trouble with the Micawber approach (something will turn up) is that it absolves individuals from doing anything personal to alleviate the problem.

It is probably wiser to assume something will NOT turn up, and to take personal action such as changing one's lifestyle to use significantly less in the way of fossil fuels.

About a year ago I bought a little gadget that you can interpose between plug and socket which measures how much energy is being used and found that our tumbled drier was gobbling large amounts of energy. By putting up a washing line we have cut this right back, although power is still used when the weather is bad. I was appalled to learn that washing lines are banned in many areas of the US by neighbourhood associations. This is an example of a mindset that has to change. Far less showy than buying an electric car that doesn't work very well, but likely to save a lot more energy.

The effect of an EESU - if it appears at all - will, I agree, lead to a drop in oil demand, but the initial effect will be a RISE in coal demand. How beneficial is this?

Tec

I agree, no one individual or nation should wait for a technological advance to occur, and just say 'screw it, technology will save us', I'm not advocating that.

There is no harm done with doing everything possible to curb fossil fuel use.

If you've seen any of my posts on this forum I'm a big Gen 4 nuclear proponent...the technology exists to replace all coal fired plants with LFTR's or IFR's at a reasonable cost and the fuel supply could last millions of years using these reactors.

I don't think we should abandon pursuing this technology 'just in case' nuclear fusion comes along, making them obsolete.

---

Fair enough robw. I'm neither pro nor anti nuclear.

I'd be more enthusiastic if there were no radiactive waste. This is undesirable stuff at the best of times, and can really ruin your day if it falls into the wrong hands. Also I've heard different stories about how long the supply of fissile material on the planet actually will last, and I am not sure what the truth is.

I'm all for exporing all avenues, but if you ask me a change in mindset would be an excellent thing. Most of the pressure to consume is sold on the basis that more = better, and I think this has to change. Long term, a change in attitude to what we consume could prove much more important than even 'solving the energy crisis'.

Not long ago, I read a book called "The Spirit Level" by Richard Wilkinson and Kate Pickett. Basically it consists of a series of graphs comparing various social phenomena such as drug addiction, teenage pregnancies, percentage of people who consider themselves happy, average life expectancy etc. etc. against the degree of income inequality in the countries.

It turns out that the US produces excellent statistics on many of these and it allows comparisons to be made between different states in that country on the basis of their levels of income inequality, as well as global comparisons where statistics are produced.

It turns out that although rich always do better than poor in ALL countries, it is better for both - wealthy or poor - to live in a more equal society. There are some surprising statistics. For instance a child born in Greece - a relatively egalitarian society - has a better chance of surviving the first year of life, and a better chance of living longer than a child born in the US, which is of course much richer.

If this is to be believed, and the evidence is well researched, documented, and very convincing, we could all do better - for OURSELVES - if we considered paying more attention to reducing the gap between rich and poor, and paying less attention to getting rich ourselves.

Hardly a new message I suppose. But most interesting to see clear statistical evidence that it actually sems to work. It fits well with consuming less overall!

---

Robw wrote:

If you're a EESU believer, probably not, as it's introduction will cause an immediate drop in oil demand, and an even greater drop in speculation. This alone will cause the price of oil to plummet rather quickly.

Why ? It is not like demand 2 months from now is going to dry up just because of some ultracap ....

update : corrected the author of quoted part.

Last edited Tue, 04 Aug 2009, 2:39pm by evnow

---

I love this forum and I have been lurking here for many months before I started posting. I am myself an ex mining electical engineer so I can follow most of the technical stuff, most of the scientific stuff, although I get the general idea, is way over my head. What surprises me is that even the most technical and inteligent here don't seem to get it, that it is going to take years even if Eestor starts rapid ramp up of production next year, before it even makes a dent in the energy storage market. somebody a couple of posts back airily stated that it could bring down the price of oil. my answer too that is simple, bullshit.

Let me try and explain what I mean We all know that the Photo Voltaic panel industry is growing at a rate of about 40%/year there isn't a week goes by without reading or hearing about some firm opening a plant to produce 100 megawatts of panels a year that will employ I don't know how many people. I don't know how many billions Energy secretary Chu has just invested in research and to help start ups.Its a large a growing industry worth Billions around the world It sounds all nice and reassuring. Now lets get down too the nitty gritty. Do any of you know how much electricity comes from Photo Voltaic panels?. The answer is 0.1% That will say that for every 1,000 watts of electricity produced in America Photo Voltaic produces 1 watt. Now if the Government was to invest 100s of Millions of dollar to double the industries production every year it would take 4 years to even reach 1% of America's electricity production. Esstor is in exactly the same position

Tec wrote:

Fair enough robw. I'm neither pro nor anti nuclear.

I'd be more enthusiastic if there were no radiactive waste. This is undesirable stuff at the best of times, and can really ruin your day if it falls into the wrong hands. Also I've heard different stories about how long the supply of fissile material on the planet actually will last, and I am not sure what the truth is.

Tec

If you'd like to get 'up to speed' on 4th gen nuclear, there's a lot of good stuff out there.

The IFR (Integral Fast Reactor) is a 4th gen Advanced Liquid-Metal Reactor. It was developed at Argonne National Labs in the mid 90's (killed for political reasons) that solves most of current nuclears shortcomings.

It can burn uranium at 99% efficiency, produces less than 1% of the nuclear waste of current gen 2 reactors, is passively safe, much more proliferation resistent, and could supply the world's energy needs for hundreds of years off the nuclear waste and depleted uranium of current nuclear plants. We would not need any new uranium for a long time.

http://skirsch.com/politics/globalwarming/ifr.htm

The LFTR (Liquid Flouride Thorium Reactor) is a Molten Salt Reactor that has all the advantages of the IFR, but runs off thorium, which is even more abundant then uranium. It could also be mass produced, which would cut down on costs tremendously.

http://rethinkingnuclearpower.googlepages.com/a...

Last edited Tue, 04 Aug 2009, 11:54am by Robw

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Yorkshire Miner wrote:

What surprises me is that even the most technical and inteligent here don't seem to get it, that it is going to take years even if Eestor starts rapid ramp up of production next year, before it even makes a dent in the energy storage market. somebody a couple of posts back airily stated that it could bring down the price of oil. my answer too that is simple, bullshit.

If the EESU is publicly demonstrated, and works as claimed or anywhere close enuff to make EVs practical, it *will* cause the price of oil to drop, immediately. Not because demand will drop, but because part of what keeps the price of oil artificially inflated is oil futures, which are based on what speculators think the *future* price of oil will be. And with EESUs being sold on the market, the demand for oil will eventually drop somewhat below what it would be if the EESU never exists. Therefore, the speculators will see oil futures as having less value.

Yorkshire Miner wrote:

Now lets get down too the nitty gritty. Do any of you know how much electricity comes from Photo Voltaic panels?. The answer is 0.1%

That's because solar power is currently too expensive to make widespread adoption attractive. That situation is in the process of changing; give it a few years.

---

Yorkshire Miner wrote:

What surprises me is that even the most technical and inteligent here don't seem to get it, that it is going to take years even if Eestor starts rapid ramp up of production next year, before it even makes a dent in the energy storage market. somebody a couple of posts back airily stated that it could bring down the price of oil. my answer too that is simple, bullshit.

I think your way off here....just the perception that an EESU works and is on the way will send oil markets spiraling downward, at least short term, even before the first EESU is on the streets.

Look what happened last year...$147 a barrel to $35 in a matter of months...just because of a global recession, which amounted to a 2-3% reduction in demand.

What do you think will happen if an EESU arrives and works as advertised?...'watch out below'!

---

Robw wrote:

Yorkshire Miner wrote:

What surprises me is that even the most technical and inteligent here don't seem to get it, that it is going to take years even if Eestor starts rapid ramp up of production next year, before it even makes a dent in the energy storage market. somebody a couple of posts back airily stated that it could bring down the price of oil. my answer too that is simple, bullshit.

I think your way off here....just the perception that an EESU works and is on the way will send oil markets spiraling downward, at least short term, even before the first EESU is on the streets.

Look what happened last year...$147 a barrel to $35 in a matter of months...just because of a global recession, which amounted to a 2-3% reduction in demand.

What do you think will happen if an EESU arrives and works as advertised?...'watch out below'!

Greenpeace would back you up there Rob.

http://www.guardian.co.uk/business/2009/jul/27/...

If EEStor is for real and economic, and if they ramp up in the way we imagine they will (by licence), then capacity will increase rapidly and with brutal effect on the demand for oil.

Who knows, with a bit of luck there might still be a lot of it left by the time we stop wanting it completely.

---

evnow wrote:

armstrong wrote:

If you're a EESU believer, probably not, as it's introduction will cause an immediate drop in oil demand, and an even greater drop in speculation. This alone will cause the price of oil to plummet rather quickly.

Why ? It is not like demand 2 months from now is going to dry up just because of some ultracap ....

I did not write that quote, Robw did.

---

Welcome Yorkshire miner!

Thermal solar plants can reuse the turbines of gas/coal fired plants. I agree that none of this happens overnight but if we (Americans) had to switch in a hurry because of economics or geopolitical embargoes etc. then the transition would happen rather quickly.
Americans are just people to be sure but we do have a history of hyper-productivity/ingenuity when cornered with a big enough problem.
Currently we are not really cornered or are sold the belief that we can just "drill baby drill" out of temporal oil shortages. These cultural/political roadbumps are predictable but there is really strenght and force behind change and opportunity that will likely surprise all of us.
Throw in some innovation, like an EESU, household energy harvesting, smart grid tech, super LEDs, slick EVs etc. and we will all be doing our best to keep up.

Again, welcome to the party!

---

armstrong wrote:

Robw wrote:

Daniel R Plante wrote:

Robw wrote:

As hardor_nyc states above, we probably are past peak, if you define 'peak' as the easy to extract oil.

I believe the point of this post should be 'will it matter?'

If you're a EESU believer, probably not, as it's introduction will cause an immediate drop in oil demand, and an even greater drop in speculation. This alone will cause the price of oil to plummet rather quickly.

If no EESU, I still believe that something else will come along, the most likely being an advance in battery technology, that will make 'peak oil' no more of a pain for the average person then Y2K was.

I agree RobW, except I don't think it would stay down for very long. Oil suppliers understand all of the above pretty well. Even without an EESU, they see that a global sea change has taken place, and can read the writing on the wall. Oil and gas prices simply can't drop low enough to counteract the effects of the current and planned legislation promoting renewable energy sources and emission-free transportation, nor the incremental advances in electrochemical storage and the inherent cost advantages of existing electric drives that already make the case to corporate bean counters involved in commercial fleet acquisitions and conversions. Private vehicle purchasers will take this cue and follow suit, even when gasoline is at its lowest possible price making electric drive "only" half of the previous total transportation cost rather than one tenth. Oil at over $100/barrel just makes adoption of the electric drive that much more of a no-brainer.

What will the oil producers do, faced with this threat? Simple. They will scale back production just enough to enable them to charge whatever the market will bear for as long as they can, giving them an opportunity to maximize their profits and time to diversify. I believe they'll think they have about 10-20 years of gradually declinining revenue. There just is no other alternative strategy for oil producers if the analysis is simply based on dollars and cents. I believe it will be. It's the nature of the beast. As you say, this will put the squeeze on commodity speculation - there simply won't be enough "head room" left to speculate much when the market is already paying the most it can bear. Speculation will also become increasingly untenable from a political perspective.

How would introduction of a practical EESU magnify this? Well, as mentioned above the dynamics are already at play but I agree that oil prices will drop much harder and much faster than it already would have, as speculation stops dead in its tracks. But they won't stay down long. Expect to see unprecedented cooperation between oil producing states as the shock wears off, the reality sinks in and they start to panic. Some producers such as Canada and other OECD net exporters won't participate actively, but will surely profit passively. Either way it won't matter at that point, since the cartels only need to tightly control a percentage of world production that net importers can't live without. At this point the cartels will probably draw down their estimated window to about 7-13 years of quickly declining profits, driven by accelerated adoption of renewable energy and electrification of transportation afforded by an EESU.

A reinvigorated OPEC, possibly in collusion with Russia and/or former Soviet satellites, perhaps eventually a cartel of cartels, or mega-cartel will probably emerge. This level of cooperation will be absolutely necessary for them to manage world supply firmly enough, and by extension the price. Don't think it can't happen again. The embargo and tight supply fixing of the 1970's wasn't a random event, it was a response to a stimulus. This is their financial and geopolitical life blood. The cartel(s) will probably dance close to but not over the line of military intervention. This shouldn't be too difficult for them since the West will have no stomach for another oil war for a very long time. The US will put heavy sustained pressure on Canada to increase production.

Daniel

Excellent response...I can't totally disagree with anything you say here. I realize there are many possibilities, and this is definitely one of them.

My own opinion is with a successful EESU introduction (or something similar) will cause an immediate and sharp drop in oil prices, short-term.

Mid-term, anything is possible...however I believe that oil prices will rebound, but nothing like $147 a barrel like we say last year.

It is possible that OPEC nations could rally together and come out stronger, but I believe that won't happen, rather a price war will emerge among them to capture those last few years of declining profits, before the inevitable end.

I believe you guys have hit it right on the button, except I would like to add that when the USA does not have any money to spend on any foreign goods, then the price of crude oil can not sustain any higher price than, in my humble opinion, more than $100.00 a barrel. If the price goes over this amount, the USA will go back into a recession and the price will drop substantially again like last time.

Yeah, I think they'll try to keep it between $70 - $100 per barrel.

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AD2 wrote:

Robw wrote:

Yorkshire Miner wrote:

What surprises me is that even the most technical and inteligent here don't seem to get it, that it is going to take years even if Eestor starts rapid ramp up of production next year, before it even makes a dent in the energy storage market. somebody a couple of posts back airily stated that it could bring down the price of oil. my answer too that is simple, bullshit.

I think your way off here....just the perception that an EESU works and is on the way will send oil markets spiraling downward, at least short term, even before the first EESU is on the streets.

Look what happened last year...$147 a barrel to $35 in a matter of months...just because of a global recession, which amounted to a 2-3% reduction in demand.

What do you think will happen if an EESU arrives and works as advertised?...'watch out below'!

Greenpeace would back you up there Rob.

http://www.guardian.co.uk/business/2009/jul/27/...

If EEStor is for real and economic, and if they ramp up in the way we imagine they will (by licence), then capacity will increase rapidly and with brutal effect on the demand for oil.

Who knows, with a bit of luck there might still be a lot of it left by the time we stop wanting it completely.

Thanks AD2, we usually agree on almost everything, as long as its not nuclear...=)

Look, we all know long term (25+ years) oil companies, the way we know them, are doomed.

I believe short term, with the intro of the EESU, oil prices will drop radically, even if demand doesn't. Just on the news that something viable is on the way that can easily replace oil, at least transportation wise, will send prices tumbling.

Its the mid-term (5-15 years or so) where things could get dicey.

As Daniel Plante pointed out in his post, if the OPEC countries get there act together and conglomerate into a Super-OPEC, they could control oil prices and keep them artifically high for some time to come, until demand drops so low that it is not practical to do so.

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What effects oil prices is supply and demand and prices adjust to the varing volume of supply and demand. You get low oil prices if supply exceeds demand. With peak oil demand exceeds supply then oil prices stay high, and when supply permanently starts to decline as it will do when we drop of the plateau of approximately 80 billions tons a year which we have been bobbing along at from about 2005, then supply will permanently exceed demand and oil prices will stay permanently high. It is as simple as that. The only thing that will make a difference too oil prices in the future is if we find a cheap alternative fuel, as Eestor is a storage device and not an alternative fuel I don't see how it can affect oil prices. A viable demonstration in a couple of months will certainly get the worlds attention and millions will realize its potential. But the following day the markets will be worried about how can I fill all the petrol tanks of all those millions of klunkers that run on petrol and if the supply can meet the demand with all the major oil fields in decline the North Sea oil field here in Britain is declining at over 7% /year and Cantrell in Mexico where America imports a hell of a lot of oil from at over 14% /year. Nearly all the major world oil fields are now in permanent decline. That is what will be concentrating the minds of the markets in deciding the price of oil not the potential of an energy storage device which will take years to come into full production.

Yorkshire

Did you read my post above? Do you remember how oil plummeted from $147 to $35 per barrel in 6 months?

Why did this happen? Think about it...in the minds of speculators they knew that oil demand would be down because of the global recession...which turned out to be a 2-3% drop in global demand.

Now, what do you think will happen with the announcement of a succussful EESU? Ian and Dick driving around in a cityZENN, announcing that the age of oil is over?

Do you think the next day will be 'business as usual' in the oil markets? And this is well before the first EESU hits the market.

I wouldn't be surprised if oil dropped $20 per barrel that first day. Now, of course it will stabilize eventually, but in the short term I wouldn't be a bit surprised to see oil hit $20 per barrel real quick.

I course, this is all based on an EESU being built to the specs we've been hearing about.

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EEventually wrote:

Rumour has it that it is being stockpiled all over the place by investment vehicles. Imagine if you had 1m barrels in storage that were bought at $45 each. Nice profit there for doing very little.

You are referring to an oilttrading condition called "contango."

google it

Thanks, I know. Was being slightly ironic ;)

energy investor wrote:

Unfortunately there are people who know the position through many thousands of hours of research (with their views represented by ASPO) and then there are people who know very little but are happy - as Trick is - to air their views. We can do little about that.

Are these the same people that are currently heading for the hills with an axe in one hand and neighborly good intentions in the other?

Or are they the people who drive around in <20 mpg SUV's whilst getting their kicks posting oil FUD on random forums?

The most recent announement I can find on upstream capacity (here) is that RDS are on track to increase by 1 million BOE/d, despite the current recession causing oversupply.

So if PO is a reality, why are oil producers - who employ thousands of people to research every single aspect of the energy market - actually increasing capacity?

Robw wrote:

Yorkshire

Did you read my post above? Do you remember how oil plummeted from $147 to $35 per barrel in 6 months?

Why did this happen? Think about it...in the minds of speculators they knew that oil demand would be down because of the global recession...which turned out to be a 2-3% drop in global demand.

Now, what do you think will happen with the announcement of a succussful EESU? Ian and Dick driving around in a cityZENN, announcing that the age of oil is over?

Do you think the next day will be 'business as usual' in the oil markets? And this is well before the first EESU hits the market.

I wouldn't be surprised if oil dropped $20 per barrel that first day. Now, of course it will stabilize eventually, but in the short term I wouldn't be a bit surprised to see oil hit $20 per barrel real quick.

I course, this is all based on an EESU being built to the specs we've been hearing about.

Dear Robw,

yes I did read your post, and yes I do remember when oil plummeted from $147 to $35 a barrel but now all that funny money has been purged from the system with all the financial de-leveraging, but have you noticed that it has creep up to around $71 dollars today and that is without a growing real economy. In the past with a growing supply when the world economy bottomed out oil prices dropped. Have you noticed it has not happened now it has gone in the opposite direction. That should tell you that there is a supply constraint. If you don't believe me may I suggest you read this article

http://www.independent.co.uk/news/science/warni...

Dr Fatih Birol, by the way is the chief economist at the International Energy Agency (IEA) and has been the main cheer leader of the oil lobby for years and if he says it is bad, brother it is bad.

Now personally I don't give a dam if Dick Weir and Ian Clifford drive a cityZenn while wearing a Micky Mouse suits it will have no effect on the oil market tomorrow, the same way that the Wright brothers public demonstations of controlled flight at Le Mans in France and to the American Army in Washington in 1908 had no effect on the transport market the following day. We had to wait another 40 years before we saw any effect although the potential was there from the beginning. The same will be for Eestore, although its potential will most likely be realized a lot sooner but it is still going to be at least 20 years into the future, The oil market is in the here and now not in some nebulous future and the fundamentals of that are determined by Supply and demand and if supply cannot be increased because of peak oil then prices rise, the logic is not too difficult. I think it is explained in Econ. 101.

I certainly like your optimism concerning oil falling quickly down to $20 a barrel, if it did I would be very worried because it would tell me that the world economy had collapsed and nobody could afford to pay $70 a barrel

deep regards

yorkshire Miner

i believe Oil will eventally go to $0.00 after the ESU takes over along with solar wind and other alternatives to come.

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Hi Guys,

I agree with Yorkshire Miner. I didn't always have that view and bought into ZMC because I saw it as a hedge on my oil investments. I expected the EEStor would be the only new development that could thump my oil investments. I still think it will have a huge impact over the medium to long haul - but certainly not a near term impact. I won't go into the cause of the crash - other than to say I predicted it one year out and watched it like watching a slow motion train wreck. It ain't over yet.

However, while the crash was about USA and Europe and their "crock of shit" regulatory and banking systems that gave rise to systemic de-leveraging, the recovery will be about Asia, the BRICs and OPEC. The launch of the Nano in India and the fact that China is now the number one world car sales country means the ICE industry has a head of steam that in turn means oil prices are more likely to be driven by the emergence of the world economy from recession (when it actually happens) than by sentiment over renewables/ EVs.

Remember too that oil is not just about cars and my estimate of the impact of field depletion to new capacity brought in suggests that we will have a year on year drop of about 4% in output (until there is another major find). Of course there is the swing facility in Saudi Arabia - but that won't cope with an upswing in demand and remember King Abdullah is sufficiently mindful of his "intergenerational equity" obligations never to LET the price drop below about USD60/bbl.

In the past the phrase "what Lola wants, Lola gets" applied to the USA and EU. But this will be a different world.

So I have recently come to the conclusion that my ZMC hedge is no longer a hedge but a free-standing investment - for the foresseable future at least.

And - by the way, I do have reasonable estimates of how much of the oil price is driven by the speculators and it is less than you think.

So if PO is a reality, why are oil producers - who employ thousands of people to research every single aspect of the energy market - actually increasing capacity?

Dear Trick,

the answer is quiet simple, Peak oil is about the whole market not the individual players that make up the market. Firm A can increase production by 1 Billion barrels a year but it will not affect the supple in a positive way if all the other firms production falls by 2 billion barrels a year total supply goes down.

The theory of peak oil was worked out by an American geologist called Marion King Hubbert in I think 1956, he used it to predict that American oil production would peak in 1970, he was right on the button and all the frantic drilling in the following years made no difference Americas oil production even when they found the massive oil field in Alaska and production began to rise never succeeded the total output from 1970. May I humble suggest that you read up on Peak Oil and factor it into your thinking, it is going to be very important in understanding what happens in the future. This is a good place to start.

http://rpc.blogrolling.com/redirect.php?r=fb415...

Deep regards

yorkshire Miner

Finally, I view the way we are encouraged to pretend that EVs will make everything all right with deep dislike. It won't make any difference to the consumption of fossil fuels, whether they are oil or coal. What is needed is a less profligate mindset, at least until some form of truly plentiful primary energy is discovered.

Isn't going to happen short of restructuring the US into a totalitarian state. No, you will never convince Americans to take the bus or bike.

When, as I believe, EESTOR pans out, the issue will be electricity generation and ramping up the recharging infrastructure. Since EESTOR's strategy includes conversion kits, the country won't have to wait a decade to junk ICE vehicles.

At that point, if the peak oil problem is genuine, and solar/wind is not ready to compete, any objectors to massive nuclear power buildup will be tarred and feathered by angry mobs.

Yorkshire and Energy Investor

Well, I guess we'll just have to agree to disagree...

Lets hope that the EESU comes true and see who is right...=)

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