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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Elroy Jetson who wrote (41789)9/19/2005 9:24:12 AM
From: Wyätt Gwyön  Read Replies (1) of 110194
 
You could say we have been running out of crude oil since we first started using it in the 1800s.

well, as you know the issue with peak oil is not what's left in the ground, but the rate at which you can get it out of the ground. the analysis Hubbert applied to the Lower 48 in the mid 1950s was based on the fact that US discoveries had already peaked, and production should peak several decades thereafter. certainly the high oil prices throughout the 1970s did not reverse the production peak seen in the Lower 48 in 1971, despite the increasing economic attractiveness of production.

similarly, global discoveries peaked in the 1960s, so a lag to production puts us on the verge of a production peak right about now. while it is obvious that high prices will destroy demand at some point (everybody thought we'd passed that point at $40, but apparently not), if the global peak is indeed in then high prices will not simultaneously increase supply above and beyond the peak. this makes for a chaotic environment where you can expect a land grab for the choice oil assets in the world. the main place where there are choice undeveloped assets is Iraq, so it would not be surprising if a hegemonic superpower were to attempt to overthrow the government there and take over the oil assets, even as oil prices more than double in the process. wait, that's already happening -g-.
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