A lot of people have been asking me about the apparently low price of oil these days. Some have argued that we are not near peak oil after all, and that the huge price spike seen this year was not something to worry about. In June the price of oil spiked to $147/barrel and it didn't show any signs of letting up. Now, the price of oil is in the 50's, as it was in early 2005. So, we're off the hook right? I don't think so. Peak oil has everything to do with supply, not demand. It's about reaching a point where all the "good stuff" is gone and oil, thus becomes more expensive to extract and refine.
The recent drop in oil prices is due solely to demand destruction, or the fact that we are in a global recession. Let's face it. Germany even declared official recession today. So, bidders on oil futures tend to back off investing in oil when they expect demand to fall. Thus, as demand falls, so too does the price of oil. Oil futures have dropped so much, in fact, that OPEC (the Organization of Petroleum Exporting Countries - whom are mostly comprised of Middle Eastern countries) has voted to decrease production, to help bring the price back up, to cover their interests. So far, it hasn't worked.
In any case, gas is cheaper now, and maybe it's a good time to fill up your oil heating furnace for the winter. Personally, I think we are at a crossroads of oil price stability/volatility, where extraneous economic conditions and geopolitical pressure, in addition to general supply and demand issues are thrusting us into a future of inestimable prices. So, what about peak oil? First of all, I maintain that we have passed global, all-time peak oil production. Although, I could be proven wrong. The local maximum in oil production rate occurred in May 2005 and it hasn't gone back that way since. Could that be the all-time peak? I think so. In principal, we could pump more than that again, but it doesn't seem likely. Economic conditions are giving OPEC a break (production-wise) in that they can safely decrease production, to affect the price of oil and bolster their profits somewhat.
So, the pressure is off OPEC to pump more, more, more, to bring the price down. Occidental economic conditions have taken care of this for them. But, ultimately, it's all relative. If global currencies are devalued, how much reprieve can depressed oil futures give us anyway? Time to go back to nature. Time to power down.
Having said all this, Spain is in recession as much as the rest of Europe, but there is still no sign of a slowdown. There are just as many cars on the roads, just as many plastic made-in-China products on the shelves but there are more people out of work and the price of food has not gone back down. I think it will take real, at-the-pump shortages and "out of gas" signs before people start to modify their behavior.
Peace,
Grant
The recent drop in oil prices is due solely to demand destruction, or the fact that we are in a global recession. Let's face it. Germany even declared official recession today. So, bidders on oil futures tend to back off investing in oil when they expect demand to fall. Thus, as demand falls, so too does the price of oil. Oil futures have dropped so much, in fact, that OPEC (the Organization of Petroleum Exporting Countries - whom are mostly comprised of Middle Eastern countries) has voted to decrease production, to help bring the price back up, to cover their interests. So far, it hasn't worked.
In any case, gas is cheaper now, and maybe it's a good time to fill up your oil heating furnace for the winter. Personally, I think we are at a crossroads of oil price stability/volatility, where extraneous economic conditions and geopolitical pressure, in addition to general supply and demand issues are thrusting us into a future of inestimable prices. So, what about peak oil? First of all, I maintain that we have passed global, all-time peak oil production. Although, I could be proven wrong. The local maximum in oil production rate occurred in May 2005 and it hasn't gone back that way since. Could that be the all-time peak? I think so. In principal, we could pump more than that again, but it doesn't seem likely. Economic conditions are giving OPEC a break (production-wise) in that they can safely decrease production, to affect the price of oil and bolster their profits somewhat.
So, the pressure is off OPEC to pump more, more, more, to bring the price down. Occidental economic conditions have taken care of this for them. But, ultimately, it's all relative. If global currencies are devalued, how much reprieve can depressed oil futures give us anyway? Time to go back to nature. Time to power down.
Having said all this, Spain is in recession as much as the rest of Europe, but there is still no sign of a slowdown. There are just as many cars on the roads, just as many plastic made-in-China products on the shelves but there are more people out of work and the price of food has not gone back down. I think it will take real, at-the-pump shortages and "out of gas" signs before people start to modify their behavior.
Peace,
Grant
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