 | Dr James Hansen: Can We Still Avoid Dangerous Human-Made Climate Change? | The Oil Drum: Europe | The architecture of UK offshore oil production in relation to future production models |  |
173 comments on How to Address Contrarian Arguments - part I
Comments can no longer be added to this story.
User login
Personnel
Editors
Contributors
Peak Oil Primers
Archives
- December 2008
- November 2008
- October 2008
- September 2008
- August 2008
- July 2008
- June 2008
- May 2008
- April 2008
- March 2008
- February 2008
- January 2008
- December 2007
- November 2007
- October 2007
- September 2007
- August 2007
- July 2007
- June 2007
- May 2007
- April 2007
- March 2007
- February 2007
- January 2007
- December 2006
- November 2006
- October 2006
- September 2006
- August 2006
- July 2006
- June 2006
- May 2006
- April 2006
- March 2006
Vital Trivia
License
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.
GAIA Host Collective
The oil traders, who have a big influence on the day-to-day price, seem to react to the "inventories". But I think those inventories are vastly over-rated. They are only a few days, perhaps 2 weeks, of supply. And they're not a lot higher than they were - the "increase" is what, less than one day's supply? Drawdown form tank farms in KSA and Europe can easily explain the commercial "inventories" in the USA. Meanwhile the SPR is lower than it was (pre-Katrina).
Also, like WT says, the bidding war for oil happens in spurts. So the "demand destruction" in poorer countries brings a temporary bit of "relief" to the richer countries, until the next round of bidding. It's a "musical chairs" game and the chairs are slowly disappearing even if some fat asses are still sitting.
Anyway, I am not saying that the price signal is perfect. Not at all -- that is why Peak Oil is so difficult to tackle. The Market is mostly blind, until near the end. The current visibility of some price signal is thus a sign, although uncertain, of imminent peak.
Finally, I don't think that "peak" is the important point in time. Supply can fall behind demand even before the peak. You would expect it to, since the supply curve flattens out as you near the peak, and the demand curve is still rising, even faster (e.g. China). With the globalized economy dependent on "growth" that's catastrophic. Moreover, worldwide per capita oil peaked in 1979, thus any "growth" since has been due to increasing inequity.
The supply of oil exactly equals the demand for oil, plus or minus any change in inventory.
And most oil changes hands at the market price.
When you say 'supply can fall behind demand even before the peak' that is actually logically impossible (except for changes in inventories).
I'm not aware of evidence that total world oil consumption has fallen, so if there is 'demand destruction' it's not evident in the aggregate. That (the quantity of oil demanded) would be a higher quality statistic than total oil produced.
The fall in oil per capita isn't particularly concerning. Merely a sign that the world has gotten better at generating GDP, per barrel of oil consumed. (It also uses less copper per unit of GDP than it did in 1979).
If we look at some other measures like life span and average life expectancy, or number of mobile phones in the world (1979: people connected to a phone system of any kind), proportion of people who are starving, etc. then the world is a richer place than 1979 (with the striking exception of sub-Saharan Africa, where AIDS has taken a horrific toll).
Where there is room for concern is in total pollution and in other measures of ecosystem degradation. The capacity of the Earth to handle our polluting output is finite (albeit elastic).