377. PEAK OIL: WHO CARES?
It's official. Peak oil is a loser. It blew a tire on the curve, and lost the TEOTWAWKI 500 to the ongoing US financial meltdown. Valiant efforts are being made at the peak oil sites to maintain interest and somehow blame the collapse on oil, or at least find some flimsy connection... to no avail. The PO community is looking increasingly like the village idiot who warned everybody about the tornado, just before the big flood hit.
Now that most of Wall Street has been vaporized, peak oil isn't going to be the hot cottage industry it once was. The groupies will now shift to the real rockstars of the global collapse blogosphere -- the finance doomers. Pity the poor peak oil sites... viewers melting away like the Greenland icesheet, page views slumping like WaMu stock...
Amidst the carnage, we can single out one man for some well-deserved kudos. That would be Mike Lynch, who called oil "the mother of all bubbles" on April 21.
THE OIL BUBBLENice job, Mike. I'll take you out for some octopus balls if you're ever in Osaka. Of course, the peak oilers adamantly refuse to admit that oil was a bubble. They stand ready to defend peak oil at all costs, even if nobody else gives a shit anymore. When Jerome a Paris carefully explains why his "Countdown to $200 oil" series is still relevant, even though oil prices fell off a cliff, and the US banking system imploded, the peak oil die-hards will dutifully nod their heads and hit the +1 button.
Of course sane regular Joes like you and me know what's up. We know for a fact oil was a bubble because we looked at the fucking picture.
Indeed, the 2008 oil/commodity bubble was brought to you by the same greedy jerkoffs who brought you this fiasco:
THE DOT COM BUBBLEAnd this monstrous foul-up:
THE US HOUSING BUBBLEby JD
posted by JD @ 3:57 AM
173 comments
173 Comments:
As always, please use the Name/URL option (you don't have to register, just enter a screen-name) or sign your anonymous post at the bottom. The conversation is better without multiple anons.
Thank you,
JD
Oil is on the rise again today. I'm no expert, but this seems to happen briefly everytime the Fed pumps a lot of dollars into the system. Those first in line seem to use the newly minted dollars to speculate. Oil, gold and the market seem to be up. My guess is they all come crashing down at about the same time.
The really hypocritical thing I noticed is that when oil prices were rising dramatically early in the summer, the peak-niks were adamant that the price was ENTIRELY due to supply shortages and overwhelming demand: the market doesn't lie, baby! But now that the prices dropped just as quickly, they are starting to blame the speculators and insisting that "the market doesn't tell the truth about supply and demand anyway."
Riddle me this, doomers: if you claim that the market is accurate every time oil prices rise, but distorted and manipulated every time they fall, what do you think we have a right to call you?
"In the meantime, we should probably address the real underlying problem: the out-of-control casino of greed-crazed vermin we euphemistically call the "financial system"."
The problem, ultimately, is not with the "greed-crazed vermin" of the financial system but with the excess dollars pumped into the system by the Fed. All this extra liquidity is looking for a safe haven. I suppose if the money were invested in alternative technolgies, etc., it might do us some good. Instead it is all funneled into the latest fad. No good seems to ever come from it.
I understand how you could make the case that there was an oil bubble. how can you make the case for a commodity bubble? commodity prices were nowhere near their all-time highs like oil was.
silver is still way less than half of it's all-time inflation adjusted high.
While I am not a "move out to the hills and buy a gun doomer," I do believe that the majority of the price of oil is due to market fundamentals. This holds true for the price on the way up as well as the price on the way back down. Demand destruction kicked in with the high price of oil in a big way. Lags in behavior caused the price to overshoot. The same will happen on the low side. Rinse and repeat.
It is interesting to note that demand destruction, not increased supply, was the primary mover of price. I think it is fair to argue that 5% demand destruction in the US alone can lead to a glut of a commodity that is typically sensitive to 2% over or under supply as a price mover.
This is a bad sign of things to come.
jeffp,
Some of it is fundamentals, yes. But not all of it. It's hard to argue that it's fundamentals when you have such an obvious inflection point in your time series data (housing market crash) and a move of funds to commodities.
Statistically, I'd be shocked if it's simply a lagged fundamentals variable that's driving all of the oil price movement. There's got to be some issues with autocorrelation (high prices driving higher prices). Either way, explaining stochastic systems is never fun, and I tend to believe that most explanations are lacking.
Well, you can pick your graph timeline to support your own conclusions. Oil is still pretty high at above 90 dollars/barrel, you must admit.
And oil has not dropped from 147 due to massive new oil 'production,' but rather due to the collapse of the bubble financial economy.
By the way, I'll take that oil 'bubble' over the real-estate bubble any day.
Gas is still in the high $3/gallon in the US, and home heating oil has not come down very much, which has all of us in the Northeast worried what we'll do come February.
I'm glad that oil has dropped. We should all celebrate, by insulating, upping efficiency, and preparing for the day when the oil production does start falling.
Should we really be happy that we're kicked out of our houses, losing our jobs -- and gas is 'only' $3.75/gallon US?
Great, it's cheaper now, and the even better news is that, without jobs, we don't have to gas up for the long commute! We just hang out in the homeless park our city just opened on an abandoned parking lot!
doomers never quit... at quiting. Impressive their insistence, their tenacity, their restlessness... at giving up. How corageous... their cowardice.
Sorry people, your kind of rethoric does not impress me, despite the fact that you do have a point: I also don't buy this notion that the bubble has finally "popped" and go back to BAU. There's still a lot of demand to destruct, specially in developing countries where oil is being subsidized. That charade won't keep up for long. Only when it ends though, we'll see the oil plumbing like hell to the 50$s range again.
Until then, I'm willing to prophetize oil back to 150.
To the losers who doomerize at gas at 3.5$, boo-hoo. Like I've just said in previous post, I pay 8-9$ per gallon in my country and I'm not living in any hill with a gun, so why won't you instead go whine about your acne to your mommy.
Peak Oil - who cares. You do. You have devoted this site to peak oil. You peruse the real peak oil sites and leave snide comments. You can't get enough of it! Peak oil is not about the price of oil. It is there lurking..and you know it. Keep looking in your rear view mirror sucka
Sorry to go off topic, but I was reading your past article from 2006 on EOR. What happened to that? Was that just a pipe dream? If true why is US oil production continuing to go down?
And no, no one cares about peak oil right now. The financial tsunami has taken over everything, understandably.
~Genesis
I would suggest that EOR deserves a new visit / discussion. As I noted recently, there is ongoing development of THAI, discussed here:
http://nextbigfuture.com/2008/09/petrobanks-capri-thai-processes-for.html
claims that considerable other EOR methods are available (and not just injection pressure methods), discussed by Saleri here:
http://www.worldoil.com/magazine/MAGAZINE_DETAIL.asp?ART_ID=3589&MONTH_YEAR=Jul-2008
other new developments for offshore:
http://newenergyandfuel.com/http:/newenergyandfuel/com/2008/09/10/more-oil-soon/
and still other new developments for old, small wells, discussed here:
http://www.energyinvestmentstrategies.com/2008/09/18/eor-increases-oil-production-near-term/
The impact of these new technologies seems pretty hard to assess -- and it is difficult to determine whether it is merely a "this will get us more now, but at the cost of less later" scenario (as Kingsdale suggests). My hunch is that getting more oil --- even if a bit more expensive - should help dampen decline rates and facilitate the transition to electrification.
http://img295.imageshack.us/img295/4151/rmaxyrz3h300w470c1u5b5dqw2.jpg
http://www.leftbanker.com/uploaded_images/Simpsons-Nelson-Haha-715091.jpg
"Should we really be happy that we're kicked out of our houses, losing our jobs -- and gas is 'only' $3.75/gallon US?
Great, it's cheaper now, and the even better news is that, without jobs, we don't have to gas up for the long commute! We just hang out in the homeless park our city just opened on an abandoned parking lot!"
You make valid points, however the point of the article was never about saying that life is great... just that peak oil wasn't the cause of it. In other words, all those smug doomers who claimed to have predicted peak oil's impacts on the globe can go take a running jump right now. We hit a peak in oil price and consumers proved to the doomers that they are not lemmings and actually adjust their consumption habits.
And here's a video of some californians enjoying their new reduced oil consumption lifestyle.
http://www.youtube.com/watch?v=jmeHiFZUWtE
Nobody ever claimed that people wouldn't "adapt" to reduced availability of oil. But the idea that the adaption would be either pleasant or beneficial was crazy.
So the USA borrowing from the world for 30 odd years to pay for energy to run its economy had nothing to do with the current financial crises.
Can anyone come up with a better reason to deregulate the banks than looking for scapegoats when high energy prices bring it all down.
JD your last two posts are just pathetic.
Anyone can make nitrogen without any fossil inputs. Its called composting dummy. So some in the PO did not understand that. No reason for you to post about it repeatedly. But if you have nothing else...
Oil is almost $100 no bubble has popped.
I understand why. You are grasping at straws. I believe this is why you are taking so long to add new posts. Nothing supports your position.
Show me a peak oil primer that does not mention demand destruction and wild price fluxuations.
The banks all failing and merging is also in all good PO primers. To try to claim this as some kind of victory that prove's a point for you is foolish.
JD will you starve to death talking about our bright future?
Barba, you obvisouly have not been to the USA. The reason your country can afford high oil prices is simple. Infrastructure, you probably have it we don't.
Our people live miles from work and in most cases a car is the only way to get there. Regardless of JD's positive outlook no major infrastructure building is taking place.
Lastly, you guys always call doomers whiners and cowards. Where does this come from? Pointing out problems with the future is whining? I have learned so many skills in the last year or so to prepare to face whats coming head on and i'm a coward?
Seems to me the cowards are the ones with their heads in the sand hoping tech will save them like some silly cargo cult.
If you can't find something real to post JD perhaps you should just stay silent.
JD Walker, You are simply a liar. I don't remember any known voice in the PO community stating price hike's were " ENTIRELY due to supply shortages and overwhelming demand.
Rampant speculation as we near/reach peak has long been a peak oil prediction.
I believe Many argued that speculation was not the only thing raising prices. Many more claimed that peak oil was causing the speculation.
Making false claims to make yourself feel smug is silly.
Did you really think no one would notice?
JD Walker, You are simply a liar. I don't remember any known voice in the PO community stating price hike's were " ENTIRELY due to supply shortages and overwhelming demand.
I saw a few argue that the price was entirely, or almost entirely, due to fundamentals. So no, he's not wrong.
Rampant speculation as we near/reach peak has long been a peak oil prediction.
Great. Just because we're in a period of speculation doesn't mean peak oil, however. Post hoc ergo prompter hoc fallacy, if I'm not mistaken.
I believe Many argued that speculation was not the only thing raising prices. Many more claimed that peak oil was causing the speculation.
Even that's silly. Again, peak oil myopia at its best.
Making false claims to make yourself feel smug is silly.
Did you really think no one would notice?
Smug claims are bad, yes. Logical fallacies and faulty thinking are arguably worse.
Hey shiner, welcome back. I guess I'll take a stab at your points.
So the USA borrowing from the world for 30 odd years to pay for energy to run its economy had nothing to do with the current financial crises.
Well... actually... no. Very little. The current financial crisis is one of illiquidity brought on by a massive rush to invest in something that offered little return in the long-run. Wall Street got hungry for a quick buck, poured tons of capital into loans that never can pay off, and then ended up lending/spending based on a return that would never happen.
And again, as I've pointed out to you at least once: the US's debt as a percent of GDP is not out of line with the rest of the OECD, and is significantly less than many other major powers (including Japan and France.)
Now, as far as I know, none of the Japanese major banks (Sumitomo, Tokyo Mitsubishi, Softbank, etc.) are experiencing meltdown right now. Why? A lot of them learned their lessons from the Japanese real estate bubble.
Can anyone come up with a better reason to deregulate the banks than looking for scapegoats when high energy prices bring it all down.
Are you really saying it was high energy prices?
REALLY?
So this whole subprime mortgage thing was just a fart in the wind?
Plus, who says that deregulation is a "non-doomer thing?" I'm all for increased regulation if it can be implemented properly.
JD your last two posts are just pathetic.
Anyone can make nitrogen without any fossil inputs. Its called composting dummy. So some in the PO did not understand that. No reason for you to post about it repeatedly. But if you have nothing else...
No, this IS important. One of the key points about peak oil DOOOOOOM is that once the oil runs out, we run out of fertilizer, and then we run out of food, and then we all DIIIIEEEE. By showing both supply and demand side changes in fertilizer, JD helps knock down one of the silliest bullet points of LATOC-style hysteria.
Why aren't any doomers even remotely interested in demand-side changes in behavior, I wonder?
Oil is almost $100 no bubble has popped.
ECON 1. ECON 1. THINK ON THE MARGIN.
I don't get why almost ZERO doomers think on the margin. Going from $147 to just under $100 was a 30% marginal shift in price. That's HUGE. Considering that it happened in the course of a few months, it's pretty safe to say one thing:
BUBBLE
Hell, just look at the goddamn graph! The quick rise and drop in price is a good example of a bubble.
I understand why. You are grasping at straws. I believe this is why you are taking so long to add new posts. Nothing supports your position.
Except for... well... a lot of basic economics.
Show me a peak oil primer that does not mention demand destruction and wild price fluxuations.
The banks all failing and merging is also in all good PO primers. To try to claim this as some kind of victory that prove's a point for you is foolish.
This is the problem you, and pretty much all other doomers have: None of you look past your oil fantasyland where everything can be blamed on oil.
Insolvency due to bad lending behavior? Wassat?
Groupthink and hubris leading to poor decision making regarding asset management? Wassat?
NO. IT MUST BE OIL. OIL IS EVERYTHING. OIL OIL OIL OIL. You guys are the same as the global warming causes everything crew. NOTHING is outside of oil's blame.
Britney Spears has another kid? OIL.
Patriots lost? OIL
Dinner sucked? OIL
And so on.
JD will you starve to death talking about our bright future?
No, and he won't starve to death because of a neo-Malthusian (even though Malthus never predicted a die off) fetish, either. He'll die an old man like most other OECD people.
Barba, you obvisouly have not been to the USA. The reason your country can afford high oil prices is simple. Infrastructure, you probably have it we don't.
I assume you live somewhere that is not the East Coast. I'll let you in on a secret: I don't need a car in NYC.
I also wouldn't need one in Boston or Chicago or DC.
God it sucks to be doomed.
Besides, let me let you in on a hint: THE US IS NOT THE WHOLE WORLD. That, and infrastructure building can and does and has happened very quickly in the past.
Our people live miles from work and in most cases a car is the only way to get there. Regardless of JD's positive outlook no major infrastructure building is taking place.
No, but demographic inversion is.
http://www.tnr.com/politics/story.html?id=264510ca-2170-49cd-bad5-a0be122ac1a9
And who cares if you can increase energy efficiency to meet prices?
Lastly, you guys always call doomers whiners and cowards. Where does this come from? Pointing out problems with the future is whining? I have learned so many skills in the last year or so to prepare to face whats coming head on and i'm a coward?
You're whiners because you don't want to fix problems. You just want to point them out and then retreat into your hidey-hole on the Internet and watch the system crumble.
The problem with doomers is that they aren't solution-minded. They're problem-minded. That's whining.
Seems to me the cowards are the ones with their heads in the sand hoping tech will save them like some silly cargo cult.
If you can't find something real to post JD perhaps you should just stay silent.
Actually, that's a serious misrepresentation of cargo cults and a misuse of the idiom as used in English.
First off, cargo cults didn't think that technology would "save them." They see technological superior peoples as having the technology under their control for the wrong reasons. As for the idiomatic use:
"The term "cargo cult" is invoked as an English language idiom to mean any group of people who imitate the superficial exterior of a process or system without having any understanding of the underlying substance."
Non-doomers are not imitative and don't ignore the underlying fundamentals. Nor do they mistake the necessary condition for a supporting condition. Kind of an odd use of the term, there...
You could say that non-doomers are fetishistic when it comes to technology. But cargo cult doesn't really work.
What's funny is that even if you invoke Feynman's use of the term (pseudoscience), then it's the DOOMER's who are more likely to fall under the "cargo cult" label due to their attachment to a sort of reverse scientific method.
Finally, what JD posts (especially on NUE) is very real and very important. But since doomers don't realize that there's a demand side to things, they just raise a fuss and say OMGSUPPLY and continue on.
"And again, as I've pointed out to you at least once: the US's debt as a percent of GDP is not out of line with the rest of the OECD, and is significantly less than many other major powers (including Japan and France."
And as someone should have pointed out to you, debt as percentage of GDP is a pretty lousy standard when you consider that the US GDP includes military spending that is greater than the rest of the world's military spending combined.
Who cares about peak oil? You do. It's not the biggest problem we face, but it matters, and you care about it.
Thank you for the info. Akrotiri21, good stuff. Although,I can't take anything Saleri says seriously since he still thinks there are around 16 trillion barrels of oil left! I think even the most optimistic person would never say that. The rest of the information was very interesting though, thanks again.
~Genesis
And as someone should have pointed out to you, debt as percentage of GDP is a pretty lousy standard when you consider that the US GDP includes military spending that is greater than the rest of the world's military spending combined.
That makes no sense. He/she's not talking about debt as a percentage of total federal government spending, but debt as a percentage of GDP-- approximately the total production of the nation. Hell, if we were talking in terms of total federal government spending as you seem to think Ari is, the U.S. would look a lot worse because its federal government spending is small as a share of the total economy when compared to other OECD nations.
This post is very worrying to me, as a financial doomer. I do not want a bunch of peak oil crazies joining our ranks and polluting our already meandering and long-winded blogs.
And as someone should have pointed out to you, debt as percentage of GDP is a pretty lousy standard when you consider that the US GDP includes military spending that is greater than the rest of the world's military spending combined.
It's the BEST standard because it provides relative scale. I don't get why people can't get this. Let me give an example I gave before.
Person 1 has $20K in debt, but makes $40K a year.
Person 2 has $30K in debt, but makes $100K a year.
Who's worse off, all else being equal? Person 1, of course. All else being equal, person 1 has more debt relative to his income.
Is all else ever equal? Of course not. However, just listing the dollar value of a debt tells you nothing about the debt-holder's solvency.
Is the US's debt a problem? Yes. In fact, I think most of the OECD holds too much debt. But is the US's debt exceptional relative to most of the rest of the OECD? Not really.
That makes no sense. He/she's not talking about debt as a percentage of total federal government spending, but debt as a percentage of GDP-- approximately the total production of the nation. Hell, if we were talking in terms of total federal government spending as you seem to think Ari is, the U.S. would look a lot worse because its federal government spending is small as a share of the total economy when compared to other OECD nations.
For the record, I'm a guy. Anyway, you seem to get it. And really, when you get down to it, the US is actually spending way too much on its military relative to its security needs. I believe this wholeheartedly. I believe in a leaner, more efficient military. But alas, I am one voter and not someone with much of a voice in affairs.
On the other hand, the US doesn't spend an exceptional amount on its military relative to its GDP:
http://www.nationmaster.com/graph/mil_exp_dol_fig_pergdp-expenditures-dollar-figure-per-gdp
Does this justify spending ~$300b a year? Not really. But it does give relative perspective.
Peak oil is not about PRICES
Peak oil is about PRODUCTION.
Be skeptical..dont be idiotic!
-Jack Bean
Jack Bean,
Production is only HALF of the problem, though. The other half, that doomers seem wont to ignore, is DEMAND.
Jack Bean, you're totally wrong. If Peak Oil was only about "production", The Oil Drum would have zero audience. No, it's about the end of the world, "relocalization", world war 3, Olduvai Gorge, Jevon's paradox, EROEI doom, and how we are so fucking fucked up.
That the world oil production is going to peak is a truism. Only people that believe that the Earth is composed of a creamy nugget core (and perhaps only 7000 years old), are against that reality.
But while "A" is true, we cannot infer that "A therefore B", B being we're going back to rock caves, without either being ignorant at the complex reality of things or just completely insane.
I understand your fear, but it doesn't impress me more than a little brat whining someone stole his candy. Read the NEW TO PEAK OIL? SCARED? START HERE: CONFESSIONS OF AN EX-DOOMER peace linked in the main page, that's a good start to get out of the cage you're stuck in.
"Does this justify spending ~$300b a year? Not really. But it does give relative perspective."
Like the rest of the cornucopian BS on this site, it gives a completely false perspective. The stated budget for 2008 was over 600 billion, and the real spending was easily over 1 trillion if you factor in all the secret projects and clandestine hijinks.
But like you say, who cares? Party on, electric scooters for all.
Genesis,
Should just point out that Saleri is talking about all oil, not just conventional crude.
Cheers
Years ago I took a economy 101 course just to try to figure out economics.
In the 1st hour of class the instructor drew a circle on the board and wrote economy in the middle of it. He then drew several smaller circles and claimed they were in a kind of orbit around the economy.
He then started filling in the little circle with words like markets supply and a few more then he wrote environment in one of the small circles.
I got up walked to the board grabed an erasor and switched the word economy to a small circle and environment to the middle big circle where it belongs. I then told the teacher if he was so dumb he could not plainly see that my way had to be correct he had no right teaching anyone. I then went to administration, dropped the class and got my money back.
Everything on this planet revolves around the environment. The fact that economists would even think it could be different marginalizes them in the peak oil debate.
Economics is gobbeldygook put in place by the bankers to get people to look the other way as they steal.
Ari, thanks for the welcome back.
So the USA living on credit for the last 30 odd years is not responsible for the current financial meltdown? Try living on credit for awhile and see if your financic dont melt away. If it is responsible the next question would have to be why did we become a debtor nation? The answer to that is lack of domestic oil.
So just how long do you think the world will support the USA? forever?
Ari, JD Walters post is a lie. I notice you do not name any known PO adherent who claimed it was all supply and demand. Some misinformed unknown on a blog comments section does not really count.
Can anyone come up with a reason lending rules were relaxed? How come now? Could it be that was the only way to keep our economy afloat in a high cost energy world. I cannot think of a better reason. Maybe greed but people have been greedy forever.
The part about JD starving while saying we have a bright future was a dig thats all. I am a financial and political doomer not a die off doomer.
I would say the doomers are the ones who want to fix the problem. You guys are really pointing people in the direction of buisness as usual. That will not solve the problem. Until people realize we are in serious trouble only band-aids sized solutions will be applied.
As far as the NUE goes it is a non issue. Reposting about it tells me JD knows that he has nothing else in his corner.
Most doomers I know have done much more to fix this problem than most people.
In my garage is enough materials to build a 20 kwh solar and wind power plant. I hope I never need it but I would say that is doing a lot more to solve the future crises than claiming all is peachy on a blog.
How many predictions have to come true at the same time before you guys open your minds/eyes.
Lastly while the USA may have a few cities/states with good mass transit the vast majority of the country does not.
Shiner, the problem you mention has no relation whatsoever with peak oil or energy. It has to do with Reagonomics and Deregulation. Daniel Eran Dilger has a fabulous piece that explains this historically very well, and it's a marvel of a read, albeit if a bit one sided.
Here:
"The Commodity Futures Modernization Act of 2000 (“the Enron loophole”) deregulated the energy industry, giving the elite the ability to profiteer in energy markets isolated from risk or accountability, just like the S&Ls in the 80s. Artful deregulation laws resulted “special purpose entities” being used to create accounting fallacies that made energy companies such as Enron appear to have profits that didn’t really exist, while its accountants hit its debt. Enron’s fraud-based failure wiped out billions in investor wealth and helped contribute to the dotcom recession."
The entire blog is more about Apple, but the writer is very very good. I fully recommend it.
"Ari, JD Walters post is a lie. I notice you do not name any known PO adherent who claimed it was all supply and demand. Some misinformed unknown on a blog comments section does not really count."
TOD in June 30, by Jerome a Paris:
"As you may have heard, oil prices have reached a new high above $140. I can already hear the outcry against speculators and their out-of-control games to enrich themselves at our expense.
(...)
This is just denial
There are A LOT of good reasons why oil prices are going up. Let me show you just a few."
Nate Hagens on July 23 on TOD (the infamous Speculation my a$$ post):
"OK, at least based on this preliminary report, speculators are not the primary culprit behind high oil prices. Clearly SOME % of oils rise is due to speculators(...)
Every year there will be a normal 20+% correction in oil prices and confident authority figures will say that peak oil is a myth."
It was a 40% correction. Oops.
Shiner.
An economy is not really about the pursuit of green paper notes; that's just an abstraction. It is really a system to manage the production, distribution, exchange and consumption of goods and services. It is not inherently good or bad for the environment.
Environment is a nebulous term. Good for the human environment is not necessarily good for other species environments(only humans and wheat plants benefit from wheat fields).
Short term improvements in the human environment may lead to long term degradation(e.g. slashing and burning rainforest to grow food).
You can't have a tolerable environment for humans without an economy(unless you consider hunter-gatherer tribes and small villages tolerable; I don't). You can't have an economy without an environment that will support it. It's silly to try to rank them.
Like the rest of the cornucopian BS on this site, it gives a completely false perspective. The stated budget for 2008 was over 600 billion, and the real spending was easily over 1 trillion if you factor in all the secret projects and clandestine hijinks.
But like you say, who cares? Party on, electric scooters for all.
This is correct (the figures). The US spends closer to $500b as a base budget, and around $651 when you consider emergency discretionary and supplemental spending (figures according to SIPRI.) Mea culpa, there.
However, here's the kicker: the US spends around 4% of its GDP on the military. Now, is this too high? Yes. Is it an incredible amount, relative to its position in the world security equation? Maybe, maybe not. Is it a shockingly high figure, as some say? Probably not.
The thing that bugs me about saying "$600b! $600b!" is that it doesn't say much about the ability of the country to afford that amount of money. It's just a big scary number without a lot of context.
First up I do not have much use for this site but JD is just the sort of ironic prick that I like to listen too upon occasion.
Check out:
http://www.shadowstats.com/
The point is that if the US has 3.3% growth and 11% inflation and an uncalculatable money supply growth- is the economy really growing?
EROEI
To all of you who think there's a bubble in oil/commodities... please, please short the stock of oil companies, the OIL ETF, copper, gold, etc.. Put your money where your mouth is. You guys are so right, you have nothing to fear! Place those bets. We'll talk in 4 months.
I would say the doomers are the ones who want to fix the problem.
Honestly, I believe if this were genuinely true, there would be no need for blogs like this.
The reason I started coming here instead of reading the usual doom/gloom/dieback blogs out there is because, quite frankly, they're just so downright depressing and were really screwing with my head. Now, you may argue that this argument isn't valid since I don't cite any examples or persons who have made me feel like this lately. And yes, I'll admit, I haven't been to a pro PO site for a few years - simply because I felt so damn helpless to all the bad bad bad. I'd been reading them for a few years on and off, and noticed a pattern - I felt bad every time I went through a phase of reading them, and I felt better every time I stopped. The solution is clearly a no brainer, unless of course you're the kind of person who thrives on depression.
For me, the jury is still out on when we will hit PO and what it will mean for the world. If I could offer one piece of advice to the doomers, it would be to tone down the whole "bad bad bad there is no future bad bad bad" and start looking for solutions. Then the rest of your paragraph:
Until people realize we are in serious trouble only band-aids sized solutions will be applied.
might start getting the attention you believe it deserves.
Anon at 1232; getting involved in oil trading is not straightforward. The only viable option for most of us commoners is to own shares in a company that does trade oil, and then pray they get it right. Large deposits (and good credit history) are necessary to actually go in and trade oil.
I note the foul language used by one commentator above. Of course using this kind of language is quite typical of doomer type individuals.
The doombats keep on piling up.
"yeah, you moron, let's see who will be laughing some years now, shall we? Why don't you put your money where your mouth is? You're so naive, there's this ton of inflation you know and there's so much you don't know shit 'cause you're so screwed and lied to, 'cause you're so gullible, I'm not you see, for I've seen the light so I, like, I'll be saved by this 'cause you know, I'm like the rebelds from the matrix, ya' know, with knowledge you can't handle, I know youar'all slaves to this system and simply don't even want to know, 'cause..."
Fucking grow up little brats, stop complaining that life's hard and GET TO FUCKING WORK!
"Yes. Is it an incredible amount, relative to its position in the world security equation? Maybe, maybe not. Is it a shockingly high figure, as some say? Probably not."
Maybe? Probably? More equivocal BS from the pee-wee neocon platoon.
US military spending, by anyone's metric,is more than the rest of the world combined, and all that military spending is a much bigger part of your holy GDP statistic. Factor in the interest, economic losses due to wounded soldiers, exotic black box projects and the number is way past 1 trillion.
The unspeakably sad fact is that most of that staggering sum of BORROWED money is spent for the sole purpose of policing the world's largest known reserves of oil.
That's right, the world's largest military, spending more money than all the rest of the world combined, sucking more oil than several small countries, the US military spends all this money to protect OIL.
That's why you care about PO, and why it is so pathetic to see you and JD huffing and puffing to prove that no one cares about it.
Did you see what CNN put up today? "$500 oil is coming" or something.
http://money.cnn.com/2008/09/15/news/economy/500dollaroil_okeefe.fortune/index.htm?postversion=2008092210
At first I was shocked that CNN would put that... then I realized they were interviewing Matt Simmons and I laughed it off.
stats79: I have wondwered about that too, the flooding of Fed dollars, especially into overseas banks, and the subsequent run-up of speculative crude prices. I sense that the dollars allowed speculators to rescue some positions.
How long can it last? I even wonder if financial houses had so much tied up in oil, they were going to collapse because of that, and the Fed is allowing a temporary stablizing of oil prices, to save the world banking system. Remember, our financial institutions are leveraged 30 to one, and oil lost 33 percent of trading value in a couple months.
I suspect this is a temporary reprieve for oil. It will start unraveling again.
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2187rank.html
That is a breakdown of who holds US dollars.
There is no way anyone can say this is not the heart of our economic problems.
Economic gobbalygook about sub prime loans and such will not change this.
Before 1970 the USA was at the top of this list. Peak oil in the USA caused this reversal.
The rest of the world is tired of paying our way.
JD walkers use of the full caps "ENTIRELY" makes him a liar. No one has disputed that.
Soylent, I most certainly can rank the environment above the economy. The environment can exist just fine without an economy in fact it thrives.
Economy on the other hand cannot exist without the environment. I am not the one ranking them. economists are and they rank the economy above the environment. It ruins any usefullness they may have had.
Barba, I understand about the deregulation and put much blame upon it. I also believe energy and growth were the reasons for deregulation.
If the banks were not allowed to break the rules and artificially inflate bottom lines It would all come crashing down and the USA would have to accept a more austere lifestyle.
The current US economic problems are due to domestic peak oil and decline.
As long as imported oil was cheap we could pretend it was all ok.
Richard, putting your head in the sand because you don't like the message is not a way to solve problems.
I don't read latoc (to out there)or the oil drum (To Australiacentric)
I read http://www.energybulletin.net/
It pretty much links to world media energy stories and some sites where people write about preparing to be as self sufficient as you can be.
http://thearchdruidreport.blogspot.com/ John Michael Greer is a really smart guy who talks about depletion solutions reasonably.
There are many sites that misinform about the peak oil problem. In both directions.
http://www.reuters.com/article/gc06/idUSN0941774420071010?pageNumber=2&virtualBrandChannel=0
Check this out...in October of 2007, all of the banks issued Collaterized Commodity Obligations (CCO), a derivative product similar to the Commodity Debt Obligations we saw not too long ago.
I wonder when this ponsi scheme will blow up. I'm so excited to bailout Boone Pickens when these thing collapse into a ball of fire.
-Ryan
Anon,
Thanks for the response, and I'll just take your points one by one best I can.
Maybe? Probably? More equivocal BS from the pee-wee neocon platoon.
This is an odd ad hominem since one of my first papers in graduate school was an argument that the neocons were the biggest mistake to happen to American foreign policy since post-WWI hyper isolationism. I am by no means a neo-con, and have never found their arguments persuasive.
I also did a small piece in my program about how Fukuyama was completely wrong in his assertions about the so-called "end of history."
So yeah, the neo-con label doesn't stick. I'm more of a structural realist, in the same line as Kenneth Waltz.
As for equivocation, I tend to prefer to speak in less certain terms because the certainty you seem to express is the same kind of absolute-think that got us into the current neo-con spawned mess.
I'll stick to nuance and withholding judgment when necessary, thank you very much.
US military spending, by anyone's metric,is more than the rest of the world combined, and all that military spending is a much bigger part of your holy GDP statistic. Factor in the interest, economic losses due to wounded soldiers, exotic black box projects and the number is way past 1 trillion.
I don't use GDP as some sort of sacrosanct figure. I use GDP because it offers perspective on the spending. A good way to demonstrate this is to compare North Korean and British military spending in absolute and relative terms:
Absolute terms
North Korea $5b
UK: $31b
Relative terms
North Korea: ~22% of GDP
UK: ~2.5% of GDP
The UK spends much, much more on its military than North Korea does (almost six times more,) yet nobody in their right mind could argue that the UK's spending is more damaging to the UK's finances than North Korea's is to its finances.
That's the point: you need to look at ability to spend alongside the amount spent.
The unspeakably sad fact is that most of that staggering sum of BORROWED money is spent for the sole purpose of policing the world's largest known reserves of oil.
That's right, the world's largest military, spending more money than all the rest of the world combined, sucking more oil than several small countries, the US military spends all this money to protect OIL.
All? So the 7th fleet is in Asia for oil? I find that hard to believe.
This is the problem you have anon: you speak in superlatives, but lack the superlative data to back up your assertions. I don't necessarily disagree that US military interest in the ME is expensive and ineffective, but you exaggerate when a fair view alone would suffice.
That's why you care about PO, and why it is so pathetic to see you and JD huffing and puffing to prove that no one cares about it.
Actually, my interest in PO is largely based on geopolitics in regard to developing and BRIC countries. I'm not terribly concerned with the doomsday theories, because they bore me. I prefer to more subtle and ultimately interesting issues of development economics and developing nation foreign policies.
That is a breakdown of who holds US dollars.
There is no way anyone can say this is not the heart of our economic problems.
Perhaps not if that person doesn't understand how the current account functions, but to those who do, it's easy to say that it's not. The truth is that the debt the US holds is entirely serviceable.
What I don't understand is why you think that the US's debt, which is in line with the rest of the OECD, is somehow unique in its effects on the economy, while Japan and Italy are not affected? Your American-centrism is odd.
Economic gobbalygook about sub prime loans and such will not change this.
Do tell why not. Don't just state it and then leave it.
Before 1970 the USA was at the top of this list. Peak oil in the USA caused this reversal.
The rest of the world is tired of paying our way.
Source? Data?
JD walkers use of the full caps "ENTIRELY" makes him a liar. No one has disputed that.
Heal thyself, physician.
Soylent, I most certainly can rank the environment above the economy. The environment can exist just fine without an economy in fact it thrives.
Economy on the other hand cannot exist without the environment. I am not the one ranking them. economists are and they rank the economy above the environment. It ruins any usefullness they may have had.
First off, you're guilty of a hasty generalization (another logical fallacy, and one you seem fond of). Not all economists think that way-- not even close. In fact, some top-tier economists, including Sachs, put the environment at the very heart of the economy.
As for your assertion that the environment can exist without an economy, who cares? The environment can exist without humans. "The environment" as you use it is just a Rousseauian abstraction. If the Earth were exploded tomorrow by an errant comet, the universe wouldn't care.
But I sure as hell would.
Barba, I understand about the deregulation and put much blame upon it. I also believe energy and growth were the reasons for deregulation.
Source?
If the banks were not allowed to break the rules and artificially inflate bottom lines It would all come crashing down and the USA would have to accept a more austere lifestyle.
What is "it?" As for austere lifestyles, you are correct. Consumption smoothing is coming.
The current US economic problems are due to domestic peak oil and decline.
JUST due to oil? That's it?
So that HUGE deficit with China, Germany, Switzerland, Sweden, etc. is not really important because it was spent on something besides oil?
The vast majority of the current account deficit is not spent on oil, shiner.
As long as imported oil was cheap we could pretend it was all ok.
Richard, putting your head in the sand because you don't like the message is not a way to solve problems.
He's not saying that. He's saying that moping and crying "DOOOOOOOM" all the time is counterproductive. People aren't like most doomers: they don't get a hard-on from doomtalk.
Shiner, your problem is that you walked into a third-tier economics class (no doubt at an extension or community college), didn't like some point in the beginning, then decided that all economics was the same.
Hasty generalizations and stereotypes are bad, mmkay?
I am not as quick to write off Simmons as many of you do. But, one thing that I do find interesting about what he says if that he finds it ironic that he is the voice of peak oil out there when it should be the oil companies.
Hmm, maybe it's because the oil companies KNOW MORE THAN YOU DO MR. SIMMONS!!! Has he ever thought about that?
For example, I could be the "voice of reason" for my favorite college football team and which high schoolers they should recruit to come play for them each year. But when it comes down to it, the coaches of my favorite team who are recruiting the players, watching video of the players, know a heck of a lot more than I do about these guys.
The same is with Simmons. I know the guy is smart and I also know that he has done a lot of research on energy, and knows a lot about it. He may very well be right about the price and supply of oil. But, he may also be dead wrong.
What do most of you here think about Simmons and his predictions? I mean who is to say the large field in Saudi Arabia isn't going to start declining at a rapid rate? Also, is Simmons one who would be considered a "doomer"?
frankie,
I only write off Simmons because he has been singing the same tune over and over and over and over again, and his figures get more and more out of line with reality as time goes on.
This summer we were supposed to be scared of $300/barrel oil. Now it's $500? Where did the $200 premium come from? These sorts of wild swings in his numbers suggest that his models, if he actually has any, are not that accurate.
I don't write him off for any reason other than he has yet to be right about what he harps on the most. Maybe he's right about supply, but someone who doesn't understand fuzzy logic sounds like someone who's unequipped to deal with supply issues.
Oil up $22.95 today!! I wanted to believe you guys, I really did, but this is just too much. I think the doomers are right. Between this and the economic problems, we are toast.
~Genesis
Genesis,
Ask yourself WHY oil is up today. Could it be that large investors are moving their money back to the safe havens (commodities)?
Stop looking at the market and oil as completely separate (in terms of the price mechanism), and try to see how fund movements from one to the other matter.
Market downturns leave a lot of free capital. Free capital has a habit of migrating. Since real estate isn't a safe haven right now, the only thing left is commodities.
Am I concerned? Yes. Is this the end of the world and everything in the universe? Probably not.
Yea, the $25 spike today - back up to $130 dollars/barrel - will be a bit hard to fit into JD's frame. But I'm dying to see him try.
Genesis,
Here's something that might interest you in regards to the current price jump:
"Natural gas futures gained in New York, following crude oil, on speculation a $700 billion U.S. government bailout of the financial industry will prop up the economy and spur demand.
Oil rose above $109 a barrel after lawmakers pledged fast consideration of the plan to buy devalued mortgage securities. Gas is sometimes included in buy programs when speculators see value in owning petroleum-based futures. Gasoline and heating-oil futures also advanced today.
``If it wasn't for the strength in the crude market'' gas would be lower, said Gene McGillian, an analyst at TFS Energy LLC in Stamford, Connecticut. ``If oil prices continue to climb they will be a magnet for the gas market. We saw that happen this spring.'' "
Source: http://bloomberg.com/apps/news?pid=20602099&sid=a8PeVNX8tjfU&refer=energy
hal,
It's easy, actually.
The price jump clearly has nothing to do with supply or demand fundamentals. A $20+ jump in one day is by no means the result of a change in supply or demand.
The most likely cause (Occam's Razor, anyone?) is capital shifting thanks to the bailout.
"Ask yourself WHY oil is up today."
OK.
Could oil be up because the US is getting ready to dump an additional trillion or so into an already inflationary economy, and all those damn Chinese holding dollars want to buy something real before their dollars are completely worthless?
Or is oil up because a lot of internet PO doomers don't realize the peak oil is "officially" over and their whining drove the price of oil up?
In the last 3 hours crude oil jumped by ~$19/bbl on nymex.
It lost $10/bbl and regained it again in just 30 minutes.
That's an amazing amount of volatility.
http://finance.yahoo.com/echarts?s=CLV08.NYM#symbol=CLV08.NYM;range=1d
OK.
Could oil be up because the US is getting ready to dump an additional trillion or so into an already inflationary economy, and all those damn Chinese holding dollars want to buy something real before their dollars are completely worthless?
So you're blaming sovereign wealth funds. Fine. That's essentially what I said (capital moving to safe havens.) But since we have no evidence for your explanation (mine is simply supported by historical precedent), we should be inclined to go with the simpler explanation (Occam's Razor.)
Again: capital movement.
It still doesn't mean much in terms of PO, really.
The Chinese didn't dump their investments in Japan during the 90s and early 2000s despite Japan running a decade-long Keynesian attempt at deficit spending. So why dump American investments so suddenly?
I mean, China is still one of the largest institutional investors in Japan despite Japan's 180% debt-to-GDP ratio. Clearly, China is not afraid of debt burdens in and of themselves.
Or is oil up because a lot of internet PO doomers don't realize the peak oil is "officially" over and their whining drove the price of oil up?
Who said that it's "officially" over?
Ari, It doesn't matter to me what the reasons are that oil jumped. Obviously it wasn't demand related. But as the dollar continues to tank & oil rises, we are going to be priced out. When our useless dollars can't buy oil, we are done. It doesn't matter how much oil is left.
~Genesis
Genesis,
The reason why SHOULD matter to you, because it tells you what it means in the long run.
The thing that a lot of people don't seem to understand is that these prices affect other markets as well. It's not like the Europeans and Asians are all just trucking along without even blinking an eye.
If I may make a suggestion, pick up a macroecon book and study exchange rates and how they affect purchasing power.
Weak currency may be bad for importers, but it's good for exporters. You can't make ceteris paribus arguments so flippantly and expect people to not cock an eyebrow.
A $25 dollar jump in the price of oil has absolutely NOTHING to do with Supply and Demand. I'm not sure why it happens but I know its not supply and demand. Anyone who thinks contrary is a moron.
"Who said that it's "officially" over?"
Your guru, JD, in this very post:"It's official. Peak oil is a loser."
Pay attention; the hyperbole you use today will come back to haunt you. Now continue shilling for BushCo.
Your guru, JD, in this very post:"It's official. Peak oil is a loser."
Anon,
That was a tongue-in-cheek statement in regards to the "TEOTWAWKI" sentiment. He never said that peak oil "is over."
JD was clearly being facetious.
Pay attention; the hyperbole you use today will come back to haunt you. Now continue shilling for BushCo.
You mean like $300, or even $500/barrel oil?
Anyway, this ad hom is kind of silly. How am I "shilling for BushCo?" By not agreeing with a sentiment of yours? Why don't you stop throwing platitudes around and actually offer something of substance-- I'm serious.
Hal H.
This one-day spike is amazing. But it does strongly suggest it is speculators, not fundamentals that control the trading price of oil.
My suspicion is that banks propped up the NYMEX price on the last official trading day of the month to reverse serious losses by hedges, who are leveraged 30-to-1 and more. Long-Term Capital Management would look like a picnic next to the hedge fund losses that would spin out of $75 a barrel oil.
So they got it spiked back up this month. Next month? And the one after that? Even as global demand is waning? Time will tell.
Benny,
I don't bother reading TOD or the other sites much, but I have to wonder if they're all excited about this development.
I mean, we're THIIIIIIS close to everyone dying. YIPPEE!!!
Well, oil just hit the $130 which it was at when Lynch called the 'oil bubble'. Ain't it ironic?
I don't buy JD's conjecture that the financial crisis is somehow independant of the oil bull market. The two are related. And the oil bull is certainly related to the peak oil phenomenon. I'm not removing my bookmarks to TOD and POCOM just yet...
"Soylent, I most certainly can rank the environment above the economy. The environment can exist just fine without an economy in fact it thrives."
There's no such thing as an environment that can be thriving independently of the qualifier of whom it is thriving for. Over 99% of all species that ever lived have gone extinct without our help; surely they wouldn't agree that the environment is thriving?
An economy is a vital part of making the environment bearable for humans; without it humans would have been unable to progress beyond small villages and tribes at constant battle with each other, with starvation and with the elements.
If you don't value the continued existance of human civilisation than some romantic fantasy about the environment you're a genocidal madman.
jev,
Well, oil just hit the $130 which it was at when Lynch called the 'oil bubble'. Ain't it ironic?
Actually, it's more coincidental than anything. But just because it's back up again doesn't make it any less detached from fundamentals.
I don't buy JD's conjecture that the financial crisis is somehow independant of the oil bull market. The two are related. And the oil bull is certainly related to the peak oil phenomenon. I'm not removing my bookmarks to TOD and POCOM just yet...
I don't see where JD has conjectured that the financial crisis is completely independent of the oil bull market. However, I do think you, and many other peak oil-concerned people, mix up cause and effect. It's not most logical that oil prices caused the financial crisis. It's most logical that the financial crisis caused oil prices. It makes sense if you think like an investor:
"OH CRAP MY RISKY INVESTMENTS ARE CRASHING, I NEED SOMETHING SAFE. TIME TO MOVE TO COMMODITIES AND WAIT FOR A BETTER MARKET."
Now, is it true that there is also a degree of the extraction premium in prices? Yes, absolutely. But is it enough to justify the price jump in a day? That seems doubtful.
There's no such thing as an environment that can be thriving independently of the qualifier of whom it is thriving for. Over 99% of all species that ever lived have gone extinct without our help; surely they wouldn't agree that the environment is thriving?
An economy is a vital part of making the environment bearable for humans; without it humans would have been unable to progress beyond small villages and tribes at constant battle with each other, with starvation and with the elements.
If you don't value the continued existance of human civilisation than some romantic fantasy about the environment you're a genocidal madman.
EXACTLY. Who the heck cares about the environment outside of its role for human well-being? People need to stop separating "the environment" from human reality.
Does that mean I want to treat the Earth like something to be thrown away? No way! I'm one of the greenest people I know (for financial as well as personal reasons.) I eat very little meat, I use only CFLs, I've got my daily energy use down to ~3kWhs/day, I drive less than 2K miles a year, and I recycle everything.
However, I don't imagine that this is for Earth Mother Gaia's sake, and to save California Condors from extinction. It's because I want the human species to thrive and do well.
Ari-
I stopped rading TOD most days as well. It is not a forum -- you will get banned if you post such things as "if U.S. drivers cut mileage by 10 percent, and drive cars that get 10 percent more mpg, then gas use falls by 20 percent --enough to create huge gluts of gasoline."
It is most likely a front for oil speculators.
My guess is most doomers are unhappy with their lives, and want company. Nothing makes them angrier than some optimism.
The price of oil spiking back up over the past couple of days only proves one thing. That floods of money into a market can cause wild price swings that have absolutely nothing to do with the underlying fundamentals. Did supply change drastically since last week? No! Did demand change? No! Did the long term outlook for oil supply and demand change? No! Did peak oil suddenly hit? NO!!! What did happen? The Fed decided to dump a bunch of cash into the market, which did two things. First, it freed up a lot of other cash for investors that then need to invest it somewhere and secondly, it seriously and suddenly devalued the dollar. Both of those factors send floods of investment money into commodities, especially oil. If anything was proven, it was that speculators and investors CAN have a profound effect on a market, and therefore disproves a lot of the doomers and oil patch a-holes who have been saying that the deluge of money into the markets wasn't having an effect.
DoctorJJ
Yea, the $25 spike today - back up to $130 dollars/barrel - will be a bit hard to fit into JD's frame. But I'm dying to see him try.
Hi hal,
The Oct. contract expired. The current NYMEX price for the front month (Nov.) is $108.63.
The spike in the Oct. contract has all the hallmarks of a classic "squeeze" -- a manipulative technique related to the market corner. The CFTC is looking into it.
My framework is that the gyrations in the oil market are being caused by the same fast-buck vermin who brought you the subprime crisis and the collapse of Wall Street. A market squeeze fits into the framework just fine.
The solution to the oil futures shenanigans is the same as the solution to the financial crisis: stiff government surveillance and regulation.
Richard, putting your head in the sand because you don't like the message is not a way to solve problems.
Shiner: Nor is categorically stating there is no solution to it and refusing to be negotiated with.
Let's see.. For the 'ordinary person' out there (who is not an expert on economics nor anything to do with energy) they have two options. Either they hang out at PO doom sites, get depressed and their life sucks... or they ignore it all and their life is ok. Either way, they can't make a rats arse of difference to anything can they?
Now, like I say, if the doomers offered some solutions rather than just trying to scare people, they might get some headway.
It reminds me of the South Park episode with the Gnomes stealing underpants. The agenda of a doomer seems somewhat like this:
1) Scare the masses over PO
2) ??
3) PO problems solved
I'm not arguing as I still don't have an opinion about PO. All I'm trying to do is paint things from the perspective of an average citizen with minimal knowledge of the subjects being discussed. If you want ordinary citizens to listen to your doom for long periods of time, maybe a new approach is called for?
I don't buy JD's conjecture that the financial crisis is somehow independant of the oil bull market.
jev,
You're misunderstanding me. My position is that the financial crisis and the oil bull market (not all, but much of it) were both created by the same people: profiteers, speculators, financial interests. The wall paper looks different, but when you peel it back, its the same seething mass of cockroaches underneath.
Richard,
Thank you for your excellent and true comments.
The problem with doomerism is that doomers, by definition, believe we are screwed and solutions won't really work. That's why they don't really talk about solutions, and in fact, spend most of their energy pissing on solutions and figuring out reasons why they won't work. Many doomers don't want solutions to work because they detest modern culture, and revel in the idea of its demise (e.g. Kunstler, Heinberg, Derrick Jensen, Daniel Quinn, Jan Lundberg etc.) Some just have a dark or neurotic personality.
The bottom line is that a "doomer proposing solutions" is an contradiction in terms. They have no solutions. However, this puts them at odds with the vast majority of people, who like modern life and want a solution, not doom. The doomers have the edge in the dark corners of the blogosphere, but they don't do very well when you shine the light on them. The public hates doomers, and no statesman or leader would ever talk like a doomer. That is their great weakness. So doomers like Shiner like to pretend that they are somehow interested in or involved in positive solutions, but its mostly just a pose, to cover up how poorly they come off in front of a audience of normal ordinary people.
Ari -
You are right, it should matter. This huge volatility in the market is really messing with my emotions. I was not expecting $25 swings in a single day, at all! It will be interesting to see how this all plays out in the next year.
~Genesis
Well, I read about half the posts in this comment section.
Doomers, you sound under-educated and overly simplistic in your thinking, not to mention close-minded and absolutely married to your pet doom scenario.
Ari and the others who are on JD's side sound articulate and educated. They sound like they are careful thinkers who evaluate all possible data with an even hand and a broad scope.
In short: Doomers sound like dogmatic religious freaks. Non-doomers sound like smart thinkers. I know who I trust more.
Is oil production and supply a big problem? Yes, of course. Is it going to lead to a catastrophic collapse of society? Probably not. Something probably will, but I doubt it will be oil.
A virus is much more likely. Can we start a virus-doomers blog? That would be more interesting than all the same old OMG OIL DID IT b.s. over and over again.
Oh, by the way. My husband is a doomer. We can talk about anything around the dinner table. Anything. Religion, politics, unusual sex practices: You name it. Nothing will have us fighting faster than talking about PO, though.
I figure if our friends who are a Jew and a Catholic have a successful marriage than a doomer and a realist can have a successful marriage, too.
Besides, I can tell this is just a phase that he'll grow out of. He also insisted vehemently that a private individual would NEVER, NEVER EVER go into space. Two days before the Ansari X Prize was announced. He's now a big fan of private space ventures.
I'm sure there have been doomers since the very beginning of scientific invention. Some poor sod probably said "You know what, we can't get across this huge mass of water. We're all going to die. Lets just horde all the food and clean water we have and try to survive as long as we can." Meanwhile, the creative optimists learned how to harness the power of wind, coal, and eventually electricity. Its ironic that at this very moment, we're at that point again. We CAN overcome, and we will. Reminds me of the opening to one of my favorite shows, Enterprise, from a few years ago and its opening montage. One just needs Faith of the Heart, as corny as that sounds.
America was here 100 years ago, and it'll be here 100 years from now, stronger, more advanced, and a lot cleaner in terms of energy.
-Jeffrey
I did waddle over to TOD to have a quick glance. They were as of yesterday evening here in Wales surprisingly sanguine on the subject of the skyrocket in oil, with a few even suggesting a degree of manipulation. I am sure they will be sent for re-eductation.
JD: Glad you enjoyed my comments. I feel quite honoured to have gotten people's attention and even earned a mention in comments!
The doomers have the edge in the dark corners of the blogosphere, but they don't do very well when you shine the light on them.
Doomers are just another example of what society has a lot of. People who like to pick holes in everything anyone does. BANANAs (build absolutely nothing anything anywhere anybody) if you will. In a way, they remind me of snipers - they sit up on their exclusive high ground firing shots down on the minions below them who they truly believe they are infinitely superior to. They like to think of themselves like Morpheus in the Matrix - they know the facade that all of us have been blindly slaving to maintain. They're usually very smart people, but I've noticed such people do have a tendency to get somewhat elitist and let this go to their heads. Shiner's example of how he treated his economics teacher when he believed he knew more is a good example of this. Doomers express their perceived elitism by firing shots at practically every facet of life they don't agree with, and they do it in a way that is convincing and empowering. This is what seduces 'normal' people into buying their PO hype.
I always like to present the argument 'hey buddy, I'm just telling it how the masses see you guys'. Having laid the groundwork to prove their elitism over the past few years, they can't argue with this. They can't try to all of a sudden decide they are just an ordinary person and not super intelligent. To do so would negate a large majority of their posts over the past few years.
Hm, this blog is more and more a talking point about how awwwful doomers are. What doomers? Who cares?
I suggest some of the people actualy here read some TOD articles + comments. Then they will see that criticism and debate is quite serious and comprehensive. The comments above about TOD banning you for taking part in the debate are pure lies. Just for your info!
Have a look at the price development of equities, gold and oil over the last 10 years. You'll see oil leading the charge. inflation never came in to it before the last few years. The oil price is not an 'effect'. It's a cause. It's THE cause.
MarketWatch today:
"Clearly the money out there needs a place to go, and oil is now a major safe haven," said Michael Lynch, president of Strategic Energy & Economic Research (SEER).
When the man who "called the oil bubble" starts calling oil a "safehaven" for money you've got to wonder...
Have a look at the price development of equities, gold and oil over the last 10 years. You'll see oil leading the charge. inflation never came in to it before the last few years. The oil price is not an 'effect'. It's a cause. It's THE cause.
Oil? Causing the rise in prices of other commodities?
So the decade and a half of sustained super fast growth in China and India, and to a lesser extent the BRIC countries don't better explain commodity prices than... oil?
Huh.
When the man who "called the oil bubble" starts calling oil a "safehaven" for money you've got to wonder...
This insinuation smells like a logical fallacy. And whattaya know, it is.
Just because Lynch called a bubble before doesn't mean that oil hasn't become a safe haven for investors looking to keep their capital safe in the short- and medium-term.
Just because Lynch called a bubble before doesn't mean that oil hasn't become a safe haven for investors looking to keep their capital safe in the short- and medium-term.
The guy used to talk about oil getting down below $60 any time now. How can he say that and call oil at 100+ bucks a "safe haven".
You're clutching at straws Ari...
Have people really been banned from TOD for having optimistic viewpoints?
Yes, I was banned. Others have been too. It is not a forum. It is likely frontrunning for oil speculators. Several "editors" post anonymously. They do not answer e-mails inquiring about their sources of funding, or if editors receive money, directly or indirectly, from oil interests.
Unlike a news organiztion, they do not have codified conflict of interest guidelines.
Jev,
Market conditions change, and what he said a few months ago certainly does not hold true today. How is this clutching at straws? Stochasticity in the system means you have to be flexible. It would be one thing if markets were deterministic, but they are not.
The bailout changed everything-- any investment advice/analysis today is different from the pre-bailout period. That's how it goes in markets.
Oil is, like all other commodities, seen as a "safe haven" in times of market volatility. Investors are jittery right now, and they want a place to try to reduce risk. "Safe haven" doesn't mean "risk free." There is no such thing. But it's the closest thing that investors can dump large amounts of money into right now and hope for a halfway decent return. How is this an odd thing to say?
By the way, tell me: how is the run up of commodity prices caused primarily by oil and not by a run up in demand by Chindia and the BRIC countries?
Ari, if you want to debate the issues, get an account at pocom and Ill see you there.
This thread is (among other things) about Lynch, and I say he has been terrible at predicting oil prices. He cannot be trusted because he contradicts himself constantly (much worse than Simmons).
Ari, if you want to debate the issues, get an account at pocom and Ill see you there.
This thread is (among other things) about Lynch, and I say he has been terrible at predicting oil prices. He cannot be trusted because he contradicts himself constantly (much worse than Simmons).
What is Pocom?
The point is that even if Lynch is wrong about prices, he can be right about the bubble. I don't really care that much about what he has to say about prices (I never even knew he had made a prediction about $60/barrel), but I do know that he's barking up the right tree in this case.
Ignoring what he says simply because he's made bad predictions doesn't make him wrong about something else-- that's just ad hominem fallacious thinking.
I don't care to register elsewhere, to be honest. Not because I'm afraid of debate (I'm clearly not), but because the only reason I post on this page is that I already have a blogger account. So tell me: how does increased demand in commodities not have anything to do with China, India, and the BRIC countries?
If you're going to make strong proclamations, then back them up. I'm serious.
The comments above about TOD banning you for taking part in the debate are pure lies. Just for your info!
I've yet to be banned from TOD, but from my own experience, I wasn't far off from that point. They now have this system of "points" which were only to be temporary. Their purpose, according to Prof. Goose, was to distinguish the informational comments from garbage. The result was inevitable: every comment that tried to argue against the point of the particular thread got shed loads of minus points, while rants on how people were fucked up and doomed and how our lifestyles are just so wrong, got +40 points, independently of the "quality of information" contained. I informed several times Prof. Goose that this scheme was not working towards his designated goal. He didn't respond. Clearly, his goal was to create an automatic censor machine for anyone who didn't share their philosophical agenda.
This is not oppenness. This is a way to subliminally opress dissent and foment consent. "Groupthink", anyone?
Curiously, everytime I visit TOD, I skim through the comments in search for the negative marked ones. Those are the only interesting ones.
Barbra,
The few times I've been to TOD since I swore it off I noticed the same trend, to be honest. The +'s are usually doomthinkers, the -'s are usually the iconoclasts.
Ari, that was precisely my point. I stopped commenting there because I noticed that I was also becoming quite reactionary and angry towards that oppressing environment. My nick there is my own name, LuisDias.
Barbra,
I've seen you before. Hah. You're always getting in trouble for being a contrarian.
Freddy Hutter=Prime Example.
Why would he lie about being banned from all of those sites?
To me, Freddy Hutter presents more points of view than any site around and let's you decide for yourself what to think about PO.
Here’s a classic doomer hit job on Uranium extraction from seawater from Ugo Bardi on the oil drum:
“Current strength is sometimes measured in "Sverdrups", a unit that corresponds to one million tons of water per second, or 3E+13 tons of water per year. So, one Sverdrup is almost exactly the flow of seawater that carries enough uranium for the present needs of nuclear plants. Some currents are reported to be much stronger than one Sverdrup. For instance, perhaps the strongest current in the world is the Antarctic Circumpolar Current (ACC) which carries about 135 Sverdrups. There is plenty of uranium being transported there. But the average depth of the Southern (Antarctic) Ocean is around 3000-4000 meters and the area is highly hostile to human activities. Anchoring there millions of tons of adsorbing membranes, together with all the processing facilities, is simply unthinkable.
Perhaps we could consider the Strait of Gibraltar as a more friendly environment where to find strong currents. Damming the strait in order to produce energy had already been proposed by Herman Sorgel in the 1920s with his concept of the "Atlantropa" dam. The dam was supposed to provide about 50 GW of hydroelectric power, a little more than 10% of the power presently provided by the nuclear industry today. The dam was never built; of course: it would have been a disaster for the Mediterranean sea.
Today, we seem to be a little more careful with these megaprojects, but still the Strait's current is very strong and we could appropriate a fraction of it for uranium extraction. The flow of seawater through the strait is about one Sverdrup , enough to satisfy our current uranium needs. Let's say that we could intercept 10% of it (and even that could have huge negative effects on the Mediterranean environment). In this case we'd need the equivalent of 10 Straits of Gibraltar just for satisfying the current needs of the nuclear fission industry and some 60 equivalent straits for raising production to match the present world's demand. Do we have the equivalent of 60 Straits of Gibraltar in the world? We can't say for sure that we don't; but of one thing we may be sure: the task would be colossal, devastating for the environment, and expensive beyond imagination.”
http://europe.theoildrum.com/node/4558
And yet a 2 minute Wikipedia search on ocean currents turned up the following:
“Recent studies suggest that the water transport in the Gulf Stream steadily increases from 30 Sv in the Florida Current to a maximum of 150 Sv at 55°W longitude. http://en.wikipedia.org/wiki/Sverdrup”
So you don’t have to go the Southern Ocean to find a sufficiently strong current. There’s one conveniently located just of the coast of Florida and the Carolinas.
Then there’s the Kuroshio current off Japan (http://en.wikipedia.org/wiki/Kuroshio_Current), in which the field experiment extracting uranium from sea water was conducted:
“The total amount of uranium in seawater is 4.5 billion tons though the concentration is very low, 3.3 ppb (3.3mg-U in one ton of seawater). This total amount is 1000 times of all the underground uranium. Moreover, the annual amount of the uranium carried by the Black Current, flowing near Japan, is estimated at 5.2 million tons. When 0.2% of this uranium is collected, it would be enough for all the nuclear power generation in Japan.”
http://jolisfukyu.tokai-sc.jaea.go.jp/fukyu/mirai-en/2006/4_5.html
And yet Ugo Bardi says large scale extraction of Uranium from seawater “would be colossal, devastating for the environment, and expensive beyond imagination”.
ROTF LMAO
yogi,
Check out this post at Depleted Cranium:
http://depletedcranium.com/?p=561
Basically, we have enough fissile and potentially fertile fuel above ground already to keep things going for a fair bit of time, and the ability to mine the stuff at a net gain is clearly there.
:-(
So how do you guys see this financial mess ending? I obviously can't get an unbiased at other sites because they are all, it's the end oHHNOEZ111!!!11!!
~Genesis
Genesis,
I see a year or two of stalled growth, like the UCLA Anderson Forecast:
http://www.bizjournals.com/sanjose/stories/2008/09/22/daily52.html
In that period, I see a lot tighter regulation put in place (finally).
I also think that we're seeing the end of the 20th century era of Wall Street (Goldman, Bear Sterns, Lehman, Morgan Stanley, etc.) and a new era of players in some fashion:
http://www.iht.com/articles/2008/09/23/business/streets.php
I suspect (and this is really just a semi-educated prognostication) that with the Asian and European banks buying up US banking assets, that we may also see a more level banking playing field than before. I don't know how I feel about that, but with Mitsubishi and Barclay's gobbling up what they can, it's hard to not see a stronger Tokyo and London in finance... and they weren't weak to begin with!
However, a lot of the big players see opportunity:
http://www.fool.com/investing/value/2008/09/18/opportunities-that-others-dont-see.aspx
and I can't say I disagree with them. I wonder-- and this is just me thinking "out loud"-- if Wall St. is truly past its era of highly leveraged bets and risk taking glory days. I have an itch in the back of my brain that we may be in for a decade of what the Japanese experienced, but I obviously have no ability to say that with any certainty.
One thing's for sure, though: we aren't going to see Gordon Gekko's Wall Street anytime soon!
Looks like Nomura's buying American banking assets as well:
http://www.nytimes.com/2008/09/24/business/worldbusiness/24lehman.html?ref=business
I wonder if Japan's i-banking and financial industries are going to make a phoenix-esque comeback? Time will tell.
I wish Stuck in Shizuoka still posted, because I'm sure he and JD might have some thoughts on a resurgent Tokyo.
Ari, thanks for the link. There’s also a more detailed discussion of Uranium supply issues on the World Nuclear Association’s website:
http://www.world-nuclear.org/info/inf75.html
Thanks again Ari for your reply. It is very hard to not get wrapped up in the doom right now. Interesting times indeed.
~Genesis
Genesis,
The way I look at it is this:
Japan has spent almost 2 decades now with on-and-off economic growth/stall/decline. I don't know too many Japanese people who are starving, without heat, running water, etc.
I lived in rural Japan for a while, and let me tell you: I didn't use transit. We got around, nonetheless. Gas cost twice as much, and yet I managed. Food cost a lot, and yet I managed. Not the end of the world.
It's easy to get worried, and yes, I'm concerned (mostly about my ability to make sound investments), but so what? We'll all have roofs over our heads and food on our plates. The Prius and Insight and Volt and all the electrics will reduce gas demand a good deal, and the financial system will recover eventually.
Maybe not the New Gilded Era redux, but something that will probably be even better and more intelligent. Keep your chin up, brother-- only optimists can lead through dark times.
LOL - but remember, the whole "debt based monetary system" is all part of the PO doomer gestalt. Just go back and read some of Monte's past ravings on the subject. This will simply be taken as yet another confirmation that we've reached the limits to growth.
hi ari,
still here lurking. a little doomerish of late to be honest but trying to be positive with developments in natural gas infrastructure, big gains in batteries, and what seems to be massive investments in bio-mass gassification and bio-fuels in general.
Tokyo? mmmm...I am not nearly as positive about Japan as JD but I think that there could be hope here IF the decline curves are not as dire as predicted. Is there a middle ground between CERA and Campbell/Simmons? I sincerely hope so.
At least Simmons/Pickens are getting more than just sound bites in the MSM AND have money and politicians behind them. Perhaps, despite being alarmists, their voices (and deep pockets) have a much needed purpose. Check out the CNN Money report on Simmons. Alarmist perhaps, but i think that's just part of his technique to get the ball rolling, otherwise its just complacency and BAU until desperation sets in (that and a police state).
Ok, enough rambling, daughter calling and I will post something more coherent once I get through this latest doomer stage.
Stuck in Shizuoka
Stuck,
How about all the developments in nuclear and the big shifts toward urban living and energy efficient vehicles?
Personally, I think watching things change so quickly demonstrates just how much of an opportunity this time is.
Also, I'd like to note that there IS a middle ground: Hutter. Some may call him crazy, but nothing he does is really that insane. He's certainly not forecasting anything nutters.
Yes, with the exception of Germany, (and perhaps a few others), nuclear is gaining credibility (or regaining it perhaps, given the ridiculous negative press fed by the MSM to the public after a few minor accidents) and it obviously looks to be something that can shore up current electrical shortages and future needs, especially in Japan and China, places where NIMBYists don't really have any political clout. I'm in agreement there with you. Of course the technology to use thorium and to make small, nearly portable reactors has grounds for optimism as well. I have no doubt that there will be a CANDU plant near the Alberta tar sands in two years. Especially if the tar sands have any open of meeting US crude needs in a few years when the declines in conventional become all too apparant, even to someone as myopic as McCain
("drill drill drill" really got me down---if there is to be any drilling it is only the need for some common sense into the man's head).
But, here on the cusp of what SHOULD be an energy revolution, and one that could bring millions of REAL jobs into America, there is a credit crisis that looks to grind the capitalist/entrepeureal system into the ground. When algae seems poised to lure billions of $ of investment---the kind of money needed to scale it up--and Brazilian ethanol is getting even more investment to make allow blending of gasolines/ethanol around the world, and there is some serious attempts to ramp up production of cars with genuinely good fuel economy...we have a credit crisis that threatens to effectively ZAP the venture capital needed for such projects (and the resulting mitigation of PO).
Of course, as we all know, this energy crisis is, for the most part, a liquid-fuel crisis. And that is what needs most to be tackled with all the venture capital and research that America COULD provide. But without the backing of major banks and major players like Buffet/Gates (who just threw $200 mil into a cellulosic ethanol plant), this may just well dry up in front of our faces.
Of course, scooter sales are skyrocketing, cars with MUCH better fuel economy are being ramped up (why they don't allow Japanese "kei" cars to be built in America is beyond me though--they cost about $12,000 and get 50 mpg or more and still use just regular ole gasoline), and, as you point out, there is some reurbanization going on, with concomittant growth in transit and bicycle lanes, etc. I have seen it with my own eyes and must admit, it seems a sea change is afoot.
I just hope that
a) McCain and Palin don't get in (do you know she got her first passport in 2007? Watch 73 year old McCain get a heart attack in office and this bubblehead ingrate hockey Mom become President...scaaaary).
2) Iraq production ramps up in a big way
3) The bail out is somewhat succesful AND, simultaneously, clean tech and energy become the new bubble...and it lasts.
4) China and India slow waaay down AND switch to an electrical transportation infrastructure as they see the error of their ways
5) the major car companies bring a few million Japanese "kei" cars into American cities and promote their gas miser ways and frugral prices. Hey, if the Beetle could sell 20 million, no reason a Daihatsu couldn't.
6) The 2nd and 3rd generation biofuel business skyrockets and the American Southwest become the hub of growth and distribution of the product
7) The Picken Plan is implemented and actually works. We have LPG powered taxis here in Japan and, you know what, it isn't that big a deal. The conversion is easy. The US NG infrastructure...well...needs to be built. Could work though--it certainly does in Argentina
Ok, too much spaced used. There is my positive wish list. Sorry if its too long JD.
Stuck in Shizuoka
I think the good thing the Hutter website does, is he takes a spreadsheet and plugs numbers in and shows us what the end result actually is. Which is often not as scary some like to make out.
Some of my co-workers are in China at the minute. The reports I'm getting suggest that place is on its way to an almighty environmental shock. Remember, for all the talk by traders and analysts of 'surging demand, stagnant supply', India has massive social and ethnic problems, not to mention the very real threat of a nasty conflict with Pakistan. Even the glorious one-party China has simmering tensions under the surface.
Errr JD....
So peak oil has now been consigned to history and you are rubbing your hands together with glee at the fall off in visits to PO sites. But doesn't that mean that interest in a blog named Peak Oil Debunked is very quickly going to tail off aswell? How long do you think your faithful supporters are going to keep supporting your blog if peak oil is now in the past? I think you'll find they will soon find more interesting things to do.
By the way, I noted that the oil price graph you published has carefully omitted the 20% increase in oil prices in the last few days before you published. I don't think we've heard the last of peak oil by a long way.
Stuck,
A couple things (I'm at work, so I have to keep it brief):
-- First off, capital from the big players doesn't seem to have dried up completely... just moved. Barclay's, Nomura, Mitsubishi UFJ, BofA, etc. all have plenty of capital. What we have to see, however, is if they're interested in lending it.
If not, there are plenty of angel financiers out there (especially in CA) who are in love with this kind of stuff.
-- The Volt, Prius, Civic Hybrid, electric Smart, etc. more than make up for the lack of Kei in the US (I read it was due to safety laws, BTW.) That, and increasing interest in urban living is helping reduce commutes. I see a bright turn around a dark bend.
At any rate, I don't rule out a recession these days at all, but I don't know that it's going to be TEOTWAWKI + TSHTF. Maybe just "Japan 90s" or "US 80s" all over again.
Good news for those worried about investments in alternative and renewable energy during the current credit crunch:
http://greenwombat.blogs.fortune.cnn.com/2008/09/25/a-green-credit-crunch/
This suggests that, where some sectors of the economy (like housing or finance) may be faltering, other sectors will continue to develop. We're not looking at a collapse of wealth, just its redistribution.
JD,
That falls pretty much in line with what I was thinking.
Capital isn't vanishing, just changing hands and being directed in new directions.
The post is just stating the obvious about the cyclical nature of this business and everybody is all excited?
I have to agree with some comments though, an especially good point by walters here was that a lot of people (myself included) were arguing that the recent price rise was largely due to fundamentals. Well, it appears that the outlook for fundamentals is enough as the weak outlook for demand seems to be the top thing to blame right now.
I really would never have expected oil to go below $100 since I thought a lot of people would be seeking refuge from the financial crisis in commodities and that should rather balance the scales.
Strangely it appears that with this financial crisis everything is going down. Even my commodities basket *sniff*
Where's the money going?
In my opinion the basic long-term outlooks regarding oil supply/demand still don't look very good and I'd be surprised if oil stays at this level for a long time.
If i'm wrong then the markets either don't care about the long term, behave weird in general - or my view about supply/demand is seriously wrong.
Oh yeah, and about ari's comment about doomers being elitists : in my opinion quite a lot of people arguing on the internet are elitists. I can't deny I don't have a hint of that as well, and neither can you - ari - if you're completely honest to yourself. A lot of people arguing against the severity of peak oil are seriously elitist people.
babun,
I never said such a thing. Please read my, and other people's words, more carefully. I have had many things put in my mouth by doomers, and it's quite frustrating.
I never said such a thing. Please read my, and other people's words, more carefully. I have had many things put in my mouth by doomers, and it's quite frustrating.
Oh crap - sorry, it was richard :)
Steve W said... But doesn't that mean that interest in a blog named Peak Oil Debunked is very quickly going to tail off aswell?
I really don't think JD cares. He isn't on a power trip with this blog, he is just trying to educate the public. If the public becomes more educated the whole PO stuff dies down, then I think JD will believe he has accomplished something and will not care if the number of readers decreases. Just my .02, I may be wrong though so I don't wanna be putting words in JDs mouth.
babun,
It's good to see you admit your ways were wrong, but you fail to see that just because oil plummeted, it doesn't mean that speculation disappeared, leaving only supply-demand considerations on the table for now. If anything, the recent market squeeze denounced by JD which made oil back to 120$ recently should put caution on saying things like that.
Also, just because oil does not behave as you would like it to, it doesn't follow that they are the irrational ones here, perhaps it was you who was wrong all along, though mind you that I'm not exactly advocating their sheer rationality!
The comment about doomers being elitists was richard's. It's a generalization, thus not entirely true a priori, but I see it as a valid criticism against the notion that the outcome of things is known for sure. While not only doomers have this "sureness" of things to come, all of them are pretty sure that we're simply fucked up. The problem with this is that this isn't just a conclusion taken from cold facts, the problem is that those "cold" facts are always interpreted, joined, combined, etc. with the doomerish point of view, inevitably polluting the reached conclusions.
This is a natural human condition. But doomers simply multiply that effect by 1000. It's like, "hey, gas just went down 1%", "OMG, Simmons was right! It's TEOTWAWKI!!"; "hey, gas just went up 1%", "Just ONE lousy percent? OMG, we're so fucked up. Where's the rope?!?"
It's nauseating.
It's good to see you admit your ways were wrong, but you fail to see that just because oil plummeted, it doesn't mean that speculation disappeared, leaving only supply-demand considerations on the table for now. If anything, the recent market squeeze denounced by JD which made oil back to 120$ recently should put caution on saying things like that.
Well, I find it hard to believe that speculators would manage to press the price down from its current level. I never argued speculation would have disappeared, but it is true that i see it as a kind of an add-on which is largely gone at the moment. That means that the only pressure I'd potentially see it applying would be upwards pressure.
Also, just because oil does not behave as you would like it to, it doesn't follow that they are the irrational ones here,
If oil prices were anything close to rational they would be somewhat predictable. But that is not the case. So all anyone can do about the price is speculate in my opinion. Past performance is no guarantee of future results, as they say.
As far as I know oil futures markets work in a way quite different from what was originally intended - so it's not just about "how I would like them to behave".
If oil prices were anything close to rational they would be somewhat predictable. But that is not the case. So all anyone can do about the price is speculate in my opinion. Past performance is no guarantee of future results, as they say.
Do you mean rational in a common parlance sense, or in the economic sense? Rational, efficient markets should NOT be predictable if you agree with efficient markets hypothesis. They are necessarily stochastic, and should not be predictable.
Sorry to make this the Ari show, but...
One thing that we see very clearly in the oil markets is that they are NOT efficient-- there are clear signs of forms of manipulation-- I even remember seeing an argument that there is serial correlation present. If oil markets were efficient, prediction would be impossible because the data would be a random walk. It clearly does not exhibit this kind of behavior.
Oil is an interesting commodity because so much of it is sold by states without an interest in fundamentals. I'd like to see more work done comparing oil and other commodities' responses to various shocks to see which ones exhibit more efficiency. I'm willing to bet that uranium is actually remarkably efficient because it has so few governing bodies.
Do you mean rational in a common parlance sense, or in the economic sense? Rational, efficient markets should NOT be predictable if you agree with efficient markets hypothesis. They are necessarily stochastic, and should not be predictable.
Both economic and rational? I don't know a lot about economic stuff, but i thought investment analysts were not supposed to be synonymous to gamblers in general?
Wait, merely gamblers was not a good point of reference there (they can be rational betters) - make it gamblers betting on something completely random. Like rolling a dice.
Even dices have gaussian predictable curves... ;p
I'm in a hurry, so I'll leave Ari to feedback you.
babun,
If you assume that markets are efficient (that available information is always reflected in the price of a security/good), then you cannot "beat" the market. However, oil prices are not necessarily reflective of free and fair markets, and therefore you can make some predictions if you have the right information.
I recommend you read this link on efficient market hypothesis:
http://en.wikipedia.org/wiki/Efficient_market_hypothesis
It's Wiki, so it's full of mistakes, but you'll get the general idea.
Ari - Thank you for taking the time to explain all points. I really enjoy your posts.
Since I stopped going to LATOC & theoildrum my mood has also improved 100% lol.
~Genesis
Genesis,
I found that the month or so I spent on LATOC and TOD made me miserable and generally quite despondent. And why not? It's a misery machine! I started getting fishy when I realized that they were also peddlers of a lot of wares... but that's just me being a bit conspiratorial.
I think one of the best, most balanced discussions of the "worst-case scenario" was written by Fabius Maximus: http://fabiusmaximus.wordpress.com/2008/05/08/doomster/
Though he has recently begun to wax a bit more pessimistic, I think it's because of his interest in US supremacy, rather than a concern for the end of the US and the world system altogether.
Good reading, though, and definitely a good addition to the "the world ain't ending" literature.
Also:
http://depletedcranium.com/?p=749
Dr. Buzz0 is a different perspective, but also fun to read from.
I still briefly skim through the Drumbeat on the Oil Drum site, because it's a great source for many different news stories on energy, the economy, etc. But you have to be careful: many of the stories linked to come from local, podunk editorial columns written by some journalism student who's just read Kunstler for the first time, or from obscure, marginal peak oil websites that spin any contemporary story as confirmation that it's TEOTWAWKI. Even some of the investment blogs Leonan links to are quite iffy and excitable. I only read the stories that come from credible news outlets like AP/Reuters, CNN, NY Times, Bloomberg, etc. and editorials from the Wall Street Journal, etc.
Also the stories tend to be overwhelmingly about problems. There should be a similar Drumbeat which emphasizes the alt energy breakthroughs, local environmental success stories, etc. Because they're definitely out there.
jd w,
I used to skim the Drumbeat and a few other "bloggy news filters" for stuff, but then I just decided to occasionally browse tech blogs for tech, autobloggreen for autos, etc. It was too much to read about how oil is killing us all on TOD, how the environment is killing us all on Treehugger/Grist, etc etc.
I think the problem with the Internet in general is that it allows for too much "hyper-filtration" of information, to the point that you no longer get even a semblance of balance. Instead, you get POVs expressed through chockoblock information streams that are designed with a philosophical bent in mind.
Now, is that always bad? Nope. Points of view are what make life interesting. But TOD and a lot of the other PO sites don't admit to their POVs. They claim to aim for unbiased coverage of events-- that is clearly not true.
To me, TOD is the "No Spin Zone" of energy sites. In other words: Chock full of spin, but none of its viewers ever seem to realize it due to a strong reality distortion field.
Now, I've been called sanguine by others even here. Well, that and other less savory things (including "neocon???"). But I'm sure as hell not silly enough to not admit that JD has a POV and biases. He does. I just happen to think that his evidence, along with the evidence presented by others, better support their POVs, despite their flaws. That, and JD doesn't say that TOMORROW will be peak oil.
Or the day after that.
Or maybe the next day.
Sometime maybe?
Since I stopped going to LATOC & theoildrum my mood has also improved 100% lol.
That is how I feel as well but then I always say to myself, what if they are right. What if shit is going to go to hell soon and by being in denial and not checking out these sites, I am failing to prepare? Overall, I have stopped going to those sites but I still worry....just what if.
Anon,
Assuming that they are right, and the end of the world as we know it is just around the corner, with mass starvation, cannibalism, die-off and all the rest...
You think that reading their websites is preparation for something like that??? You think all the people who comment on the Oil Drum and LATOC are all battle-hardened survivalists, ready at a moment's notice to drop everything and live like Robinson Crusoe?
Give me a break. Most of them are just Internet addicts with too much time on their hands. Just reading an amateur website won't prepare you for Armageddon. In fact, I think it's safe to say that nothing really can prepare you for that, because you have no idea how it's going to affect you personally, in your own situation. Sure, it's useful to know a few survival skills (I'm reading a great disaster prep book called "Just in Case" right now). But if/when the shit hits the fan, everyone's going to have to scramble to adjust, and furthermore there's absolutely no guarantee of your personal safety, even with all these skills.
To take just one example: there's a lot of talk about retreating to the countryside on a few acres of land, grow vegetables and raise animals, be self-sufficient and yada yada yada. Do you really think that in a time of mass starvation or plague that the countryside is just going to be left alone? That somehow people will just ignore the possibility of raiding farms and homesteads?
Against the prospect of societal breakdown, the best preparation is to stay healthy, out of debt, and with strong communal ties. And when that prospect is unlikely at best the thing to do is just keep a weather eye on the horizon, keep going forward in a career that inspires and fulfills you, by all means get some survival training, and hope for the best.
Slavishly following the Oil Drum is certainly not going to prepare you for anything except more time slavishly following the Oil Drum.
jd walters brings up an excellent point, and I'd like to use some history to further it.
A good example in the 20th century of a society in the midst of turmoil is China during the Cultural Revolution. Now, while everyone suffered, it's probably safe to say that city dwellers suffered a smidge less.
Now, I don't claim that China's Cultural Revolution period is a perfect analog for... anything, really, but I do think it shows that you're not always better off in the countryside with your little country farm and some horses or something.
Really, in the end, if it goes all armageddon, then it's best to just cross your fingers and hope for the best. That's all history has taught us.
That is very true. I never really thought about it that way. I guess it doesn't really matter what preparation we make because we don't know how bad it will really be or get. Because, if people are hungry, they are going to head to the closest farm where there is food.
The way I look at it, there is not a whole lot we can do in the long run. We just have to live our life to the fullest everyday and hope for the best.
anon (Genesis?),
Pretty much. Live in defiance of the .01% terrible scenarios, not for them.
That's what JD and all the other optimists should teach you and all of us.
JUST FUCKING LIVE. It's all that there is to this stupid lot anyway, so might as well enjoy it.
Here's a sensible perspective on the current crisis, for people who like putting the words 'great' and 'depression' together too much:
http://news.bbc.co.uk/2/hi/business/7631281.stm
pocom is peakoil.com.
Discussing a variety of issues in a single thread like this one is not efficient. That is why I prefer message boards or usenet.
Ari: So tell me: how does increased demand in commodities not have anything to do with China, India, and the BRIC countries?
Two reasons.
1. The increased demand from those blocs was predicted well in advance. The IEA demand figures have been spot on throughout this entire period. IEA has always been good at predicting oil demand. Oil companies have based their investment strategies on IEA demand predictions.
2. The economic growth of those blocs has also been correctly predicted. They have been booming for years, or even decades in the case of China. (25 years of 9% average growth!) Implying that the current or recent economic growth of those countries is somehow a 'surprise' forcing up commodity prices is ridiculous. Their economic growth has been consistently high for many years.
So if demand development of commodities, including oil, has been well understood and correctly predicted for many years, then if supply does not keep up, it must be a supply side issue. Blaming economic growth (assuming it to be somehow 'anomalous') as the reason for the current lengthy commodities bull market is simply an incredibly weak argument.
Jev,
1. The increased demand from those blocs was predicted well in advance. The IEA demand figures have been spot on throughout this entire period. IEA has always been good at predicting oil demand. Oil companies have based their investment strategies on IEA demand predictions.
A few things come to mind. First off, just because oil companies base investment strategies on IEA demand projections doesn't mean that they accomplish what they set out to do. You also forget that you have swing producers like the Saudis who have no interest in increasing supply at risk of reducing long-term returns on their fields.
However, before you say "aha!" in regards to my Saudi comment, note that I'm saying that production CAN increase, but that for a country that's interested in reducing its "Dutch sickness" like Saudi, it makes no sense to produce beyond what yields the highest discounted net present value in the short-, medium-, and long-run.
2. The economic growth of those blocs has also been correctly predicted. They have been booming for years, or even decades in the case of China. (25 years of 9% average growth!) Implying that the current or recent economic growth of those countries is somehow a 'surprise' forcing up commodity prices is ridiculous. Their economic growth has been consistently high for many years.
Predictions are one thing, actual effects on commodity markets are another thing. Markets are not totally efficient, and just because projections are made doesn't mean that _____ mining company will run to produce a whole lot more if the investment won't yield a net positive NPV return within a specified window.
As I'll explain below, even IF said company strives to keep up with demand, the cost functions can raise prices regardless of ability to meet market demand.
So if demand development of commodities, including oil, has been well understood and correctly predicted for many years, then if supply does not keep up, it must be a supply side issue. Blaming economic growth (assuming it to be somehow 'anomalous') as the reason for the current lengthy commodities bull market is simply an incredibly weak argument.
Demand growth being forecasted and understood doesn't mean that prices don't go up. Why would you even assume that? Prices can go up even as supply goes up if the variable cost of production increases. Remember that the supply curve also reflects fixed and variable costs. You can't arrive at a good conclusion in your pricing argument if you don't factor in the LRAC (long run average cost) (which is usually U-shaped due to diseconomies of scale after a certain point.)
And there you go: supply can increase while the LRAC INCREASES due to diseconomies of scale, and you can still meet market demand while price goes up.
Now, show me that commodities aren't being affected by diseconomies of scale due to such high demand (regardless of forecasts and actual ability of markets to respond to those).
For people suffering from romantic delusions of the simple life and peak oil as a means to reach it I strongly recommend watching Frontier House, a mini series about 3 families living an 18th century home steader life in Montana for a summer season.
(sorry, got confused, the 1800's is the 19th century).
Interesting point raised by Ari vis that a truly efficient market should represent a 'random walk'. These words really caught my attention as I'd never thought of it that way before. I can think of a few mathematical ways in which oil price data could be compared with other commodity prices to teeze out any underlying systematic periodicity, versus daily random fluctuations. I've got an idea how to do this based on my own work on X-ray diffraction and number sequences - shame im rather busy at work at the minute.
Has anyone noticed how the doomers have stopped writing comments on this thread?
Richard,
Yeah, it had crossed my mind. They're probably all at their sites discussing the gas shortages in the American southeast as a sign of end times yet to come.
So I got curious about the so-called link between oil and the rest of the commodities' prices. Being a fan of testing hypotheses, I plugged some numbers (World Bank data on commodities) into a very very simple regression (OLS), and found no significant relationship between energy and most other commodities (at the 95% level.)
Now, as any decent statistician will tell you, that doesn't necessarily mean anything. But it should raise an eyebrow or two, especially considering how "simple" the relationship is supposed to be.
Something else also occurred to me. We're constantly being told that oil is the "x-variable" to GDP growth. What if it's instead covariate, and oil is actually dependent on GDP as well? In other words, what if there is endogeneity, and y explains x as well? I rarely see this explored, yet it makes a lot of sense to me, personally.
Just a couple of interesting thoughts.
- Robert L. Hirsch, Senior Energy Advisor, MISI
- Matthew R. Simmons, Chairman, Simmons & Company International
- Chris Skrebowski, Editor, UK Petroleum Review
ASOP CONFERENCE
PEAK OIL DOOMER said...
- Robert L. Hirsch, Senior Energy Advisor, MISI
- Matthew R. Simmons, Chairman, Simmons & Company International
- Chris Skrebowski, Editor, UK Petroleum Review
And those names are supposed to mean what to me?
Guys, if you want to ROFL, check out TOD today. There is an article and it uses the phrase PEAK DIRT. PEAK DIRT. Let me say that one more time, PEAK DIRT.
LOLOLOLOLOLOLOL, what a freakin joke.
anon,
I'm guessing it's supposed to be about topsoil? The thing about topsoil, though, is that it's technically a renewable resource with proper stewardship. I wouldn't lose sleep in the US and EU and Japan over whether you'll starve due to topsoil erosion.
Topsoil erosion? Well, I have read a little about it but, as Ari said, stewardship is the key word here and, as the local 'green' revolution is taking place (markets closer to urban centres, intensive organic gardens, farmers' markets, soil rejuvenation, higher prices to both savour and protect local food) I think that this one is probably just part of the overall energy tranformation of the OECD. Yes, I wouldn't lose sleep about this one in OECD numbers.
Ari, whilst you are being so quick at responding here, and debating much of the current doomer prognostications, here's one for you:
I am slowly moving toward a state of 'peak oil' agnosticism. This is because I have seen firsthand many of the solutions (or attempts at mitigation) being implemented and I think that a move towards alternative forms of transportation COULD work, given enough time, and capital/investment and general raising of awareness. There does seem to be a sea-change in thinking. Perhaps the current shortages in the American South will even have a hand in this.
However, what keeps me from being an optimist, is that the American financial house of cards is losing the flimsy apparatus that props it up: namely, capital and credit.
Should we see a very deep recession--which I think we likely will now--spill over into the global economy, will there be the capital and investment, along with the political will and leadership to put the money into the 3rd gen. biofuels, local transit, clean tech, NG vehicles, and strong conservation that is needed to make this transformation from oil/gas--to gas/battery--to battery/electricity? Where will the bridge come from if the taxpayers themselves are:
1) no longer able to add to the coffers of the state
2) unable to invest in the market place
3) unable to afford to purchase the PEV/EV and/or change to NG powered vehicles
And, with these problems, are we not going to see a shortage of capital and investment in clean tech/energy as the banks/corporations themselves see a loss of capital?
Perhaps Obama will do the hereto unthinkable and fess up to the public ala Jimmy Carter, and actually address the issue of oil depletion?
Much more to say but I am quite curious on your response, especially after your interesting idea about the role of oil in GDP..
Regards,
Stuck
Stuck,
Credit is not "vanishing." That's a misnomer. It's being moved around. Is availability of credit a problem? Yes. Is it just drying up, never to be found again? I don't think so.
Remember that most of the "cutting-edge" stuff is financed by angel financiers anyway, and has less reliance on the big players that were. What does it matter to Silicon Valley people if Merrill is gone when most of their benefactors are loaning out of their own pockets?
Perhaps Obama will do the hereto unthinkable and fess up to the public ala Jimmy Carter, and actually address the issue of oil depletion?
I see this bandied about a lot, but... WHAT oil depletion? I mean, outside of the consistently wrong predictions of the so-called "lunatic fringe," most scenarios are far from frightening. How many times do Simmons et al. have to be wrong before people start listening to more scientifically accurate agencies who actually perform significant analysis?
Stuck, also remember that the shortages in the Southeast have NOTHING to do with crude availability, but rather with the availability of refinery capacity. Even if the world were pumping twice as much crude today, it wouldn't have mattered in that region because the refineries couldn't make it into anything useful.
This credit crisis is bad, yes, but mosey on over to the FDIC and compare it to the 1980s crisis.
Also, remember that crude supply shortages, at least in the near- and medium-term, are very unlikely. What's more likely is a continued run-up of prices. However, this following quote puts that into some interesting perspective:
From 1974 to 1985, the United States spent more than 10 percent of its GDP buying energy. In GDP terms, the peak year for U.S. energy costs was 1981, when Americans spent roughly 13.7 percent of GDP. In 1973-1975 and 1979-1981, the share of GDP devoted to energy increased despite decreases in per capita and total energy use. Since then, even from 2003-2006, per capita energy consumption in the United States has remained relatively steady, between 340 and 350 million BTU per person.
Beginning in 1986 and lasting through the end of the decade, energy expenditures as a percentage of GDP started to decrease to around 8.0 percent. During the 1990s that ratio fell even further, reaching 6 percent in 1999. The fast-growing information economy had relatively low energy consumption, which helped to reduce consumption as a percentage of GDP.
Energy spending as a percent of GDP didn’t begin rising significantly until real energy prices began rising in 2003. But there are several key differences between our current situation and that of the 1970s.
First, U.S. energy consumption has been fluctuating around 98-100 quadrillion BTU—hardly increasing at the pace it was in the 1970s, where consumption increased by 13.0 quadrillion BTU over a decade. Consumption in 2006 was only 5.7 quadrillion BTU greater than it was in 1996. And we have actually been decreasing our per capita energy consumption since 2004, whereas per capita energy consumption was increasing during the 1970s.
The same is true of all the other OECD countries, if I'm not mistaken. JD's earlier posts demonstrated this pretty well, I'd say.
So what will happen to oil consumption if GDP growth slows, stops, or reverses? It will of course go down. However, I find it VERY hard to believe that Volts and Priuses and that new Chrysler electric and the Smart electric and whatever else will simply vanish. Cars get sold even during recessions-- fewer perhaps, but still a good deal many. Simply doubling American gas mileage takes almost 30% of oil consumption out of the picture.
And that's not hard to imagine happening during a recession as Americans scramble for smaller, cheaper, and more fuel efficient autos.
Will capital be reduced? Yes. But those who seek it will find it in Japan, the UK, and amongst angel financiers and boutique investment firms throughout the US (who didn't get as involved in the toxic housing debt as the big players did.)
As of right now, I think like 20 banks failed since 2008 started. To put that into perspective, over 1600 failed from 1980 to 1992. Many large ones, at that. Yet, American gas mileage increased-- even without the incredibly more efficient technologies of today.
Think about that: in the 1980s, amidst what was an AWFUL economic period, fuel efficiency increased A LOT. It can happen, and I have no doubt that it will happen today.
Also of note is the fact that Japanese oil consumption has dropped year-on-year since the bubble burst in the 1990s, despite the fact that the Japanese economy has gone through fits and starts.
Japan also has debt up the wazoo, but hey... good transit, right?
My point is that a recession doesn't have to mean that you stop reducing your oil use. Japan is a prime example of this, I believe. Perhaps the US is set to start becoming a "post-car society" as well? I don't know. Either way, I don't think capital will end it. Remember, also, that companies can invest using equity, though it's more expensive to do so. I bet you (seriously), that Japanese banks just start filling the roles that Wall St. banks did, along with the new giants (JPMorgan-WaMu? HUGE!) and the still VERY solvent angel financiers all around the country.
The real problem isn't whether credit will be available, but whether the lenders will be interested in lending to American companies in the near-term. Equity is awfully expensive when you already have low price-to-earnings like the automakers do right now.
But still, Sumitomo, Mitsubishi UFJ, Mitsui... they're the new Merrill, Lehman, etc. Just don't expect them to be the freewheeling risk takers that the American i-banks were. They're not.
Hey Ari,
interesting responses. Am at work now but WILL come back later. Many things come to mind. Agreed on some, beg to differ on others. yes, transit is great here. Hope that continues and a resilient China will allow greater decoupling between japan and US. japan just posted its first ever trade deficit though...not good for a manufacturing economy.
Just quick though--even the normally optimistic IEA calls for a severe supply crunch from 2012 with a worsening outlook from 2015. Of course, lots could happen between now and then. Let's hope.
More later and thanks,
Stuck
ps.
Yes, the shortages in the South are temporary because of refineries being shutdown and platforms offline prior to Ike and Gustav landing. However, I do wonder if they can serve as a good example to the public of what COULD happen on a more permanent basis should we keep consuming our 85 million bbl a day without MUCH more investment and without conservation/mitigation measures.
In complete agreement though that a quick switch to very small, fuel efficient cars/scooters/bikes/transit will cut 30% or even more. The public remains ignorant but the wallet speaks to them like a 2 x 4 applied to the head. For that, I hope we stay at $100-$140 a bl for a verrry loooong time. Over that and it may sink economies even more.
Another thing I don't understand about the DOOM crowd, why does it have to be either BAU or Mad Max?? Is there no in between with them? Peak oil is not peak energy last time I checked. They also assume NO tech will be used if it can't be scaled up to fill every Americans car. Does anyone else see a flaw with that? It's like they want to run around shooting people with their 10K of rounds & looting food. /end rant.
~Genesis
Stuck,
Be careful when it comes to what the IEA says. Read what Birol said:
"What we are saying is we could have a supply crunch to 2015 if we do not see enough investments coming to the markets, if we do not see production growing at a level to compensate the declines and meet the demand, and if the oil demand growth is not dampened in the OECD countries, China and India."
It's not a below-ground problem, then, but an above-ground problem. Certainly not the end of the world, if you ask me. Will it suck? Yes. Will it be Mad Max? Doubt it.
Its not just the doom crowd who thinks it can't be somewhere in the middle. On this thread JD walters said
"To take just one example: there's a lot of talk about retreating to the countryside on a few acres of land, grow vegetables and raise animals, be self-sufficient and yada yada yada. Do you really think that in a time of mass starvation or plague that the countryside is just going to be left alone? That somehow people will just ignore the possibility of raiding farms and homesteads?"
JD Walters. Yes I do think the countryside will be left alone. A combination of police and food trucks from the Gov't will keep people in line.
When the trucks don't show there will probably be uncontrollable riots around the distribution sites. Still I don't see coherent masses of people roaming miles and miles looting.
Just becaus some PO site claims it will be anarchy does not make it so. In fact history shows starving society usually just sit down and die.
It will take years before police go away even if all imports into the USA stop tommorrow.
Also am I the only one who is tired of right wing radio corrupting our language? Being called elite used to be good!
Of course Obama is one of the elite, every US Senator is. Being elite means at the top of your game. Whatever that game may be.
It would be really hard to tell what an elitest doomer would be. Is it the guy with the best hidout?
Or could it be the one with the most helpfull posts? Kinda silly when ya think about it huh?
If you guys think being elite is thinking you are better than everyone else think again. We have many words for that already.
Being elite is when you are better than most everyone else at something.
I'm sick of the corporate elite using their media to redefine words that describe them.
Fascist is another word thats meaning has been butchered by the corporate elite. For the same reason as above.
Lastly maybe us "doomers" aren't posting because its gotten silly here.
It looks like the financial crash may be coming. Reuters had a story claiming the Chinese regulators told the banks not to buy any more t-bills.
shiner,
The problem with doomers is that they think in binary. "Yes" or "No." There is no in between. It can't be a severe recession. It has to be TEOTWAKI. It can't be a crunch, it has to be a crash. Economists have nothing of value to say because they're wrong about ____.
There's a little thing called a spectrum.
It's funny to me how often I see "pseudo-economics" thrown around by doomers, but the second a real economist says something, they're told to STFU and GTFO.
By the way, I find it funny that the doomers (like you, shiner) talked up a storm about the story about Chinese banks being told not to lend, yet I don't see much discussion of this:
http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSSHA17536520080925
China's banking regulator sought to reassure jittery financial markets on Thursday, denying a report it had told local banks to stop lending to U.S. banks and stressing that foreign bank operations in China were healthy.
"The CBRC has never, through any channel, issued a statement or told domestic commercial banks not to lend to or borrow from U.S. financial institutions," the China Banking Regulatory Commission said in a statement on its website.
CBRC Vice Chairman Wang Zhaoxing told Reuters that a report in the South China Morning Post, which said the agency had told Chinese banks to stop lending to U.S. banks in the interbank market, was not correct.
"If they are not willing to lend, this is the normal practice of risk control," said Wang, speaking on the sidelines of a major banking conference.
The CBRC later said the SCMP report was irresponsible.
Dealers at some Chinese and foreign institutions, who declined to be identified because of the sensitivity of the issue, said U.S. and some other foreign banks were finding it harder to borrow from the market.
Some Chinese banks have temporarily stopped offering new lending to U.S. banks, in yuan and other currencies, because of uncertainty about risk, three traders said. Similar caution in lending has been seen in markets around the world.
That's very different from what you said.
Sorry for making this The Ari Show again, but I'd like to note something:
It took me all of 5 minutes to verify the China lending story. FIVE MINUTES to find out that it wasn't The Truth (TM).
Why is this so hard?
ari,
That sounds like one of the older quotes from Birol. His statements have gotten gloomier as time has passed. Have you read the e.g read the transcript of the interview by Astrid Schneider?
http://www.politicsandcurrentaffairs.co.uk/Forum/peak-oil-economics-environment/48387-fatih-birol-interview-leave.html
And I don't really understand how the fact that it's all about "above ground factors" is going to make it all right. That's just a silly cliché to make it sound all right I think. While there probably are some above ground factors that could be remedied, others are very much less likely to be so, and even the ones that could be remedied need some serious effort, money and time.
Since Birol has been pretty much the only one with the gloomier views in the IEA though - I'm eagerly waiting to get my hands on that WEO which is to be published in November to see what the IEA's official stance is at the moment.
Seems to me that predicting oil production is about as hard as predicting oil prices. That means I think we could be alright for the forseeable future. Or we could be caught by surprise as we did with the recent price rise (at least I think we did). I'm not the gloomiest doomer anymore (I used to be very much so) but I'm still leaned towards a negative point of view of the current situation. At the very least I think we should be prepared for a very long depression. That is not to say I couldn't imagine business as usual, at least for a few decades to come - this is just what I think at the moment.
Babun,
And I don't really understand how the fact that it's all about "above ground factors" is going to make it all right. That's just a silly cliché to make it sound all right I think. While there probably are some above ground factors that could be remedied, others are very much less likely to be so, and even the ones that could be remedied need some serious effort, money and time.
They're not supposed to make us feel better, in my mind. Not by a long shot. They're just supposed to demonstrate that this isn't some pre-determined path that the doomsters have mapped 100%. All too often, the doomsters like to make it sound like it's OUT OF OUR HANDS, DON'T TRY, GIVE UP, JUST GO DIE NOW. It's not. Is it a challenge? Yes. But since when has any of this NOT been?
My point is that the determinism is not based on demonstrated facts or trends, but just some sort of "reverse scientific" method, whereby the person comes up with the path and then fills in the facts with whatever supports his/her beliefs.
Seems to me that predicting oil production is about as hard as predicting oil prices.
Yes, you're right. But at the same time, some have done a decent job (at least better than Simmons and others!). Will it always be a bit of guesswork? Yes. Anyone who understands probabilism knows that it's not exactly easy.
I'm not the gloomiest doomer anymore (I used to be very much so) but I'm still leaned towards a negative point of view of the current situation. At the very least I think we should be prepared for a very long depression. That is not to say I couldn't imagine business as usual, at least for a few decades to come - this is just what I think at the moment.
I don't think that a severe recession or depression is entirely impossible, either. But TEOTWAKI? That seems far-fetched, and a bit of the "crunchy rapture" pipe dream of "HAHA WE TOLD YOU SO!"
In fact history shows starving society usually just sit down and die.
You're missing a very significant point - social change. Last time we had a major famine, crime wasn't the monster it is today. Do you really think it's fair to expect that today's society will do exactly what society did centuries ago?
This is the society where we have looting at pretty much every major disaster; streets aren't safe at night; serial killings are becoming more frequent. Can you seriously see this society just putting away their angst, lying down and dying rather than stealing from someone else's crop?
Not trying to paint a 'doomer' picture or anything. Just making it clear that JD has a point.
Richard,
I'm not sure on the numbers but I would bet that crime was more of a problem 80 years ago then it is now, believe it or not.
Seems to me that predicting oil production is about as hard as predicting oil prices.
Since oil price depends upon oil production plus a lot of many other different things, and given all the statistical caveats involved, I'd argue that oil production is quite more predictable than oil price.
And empirically, this has been so. Mathew Simmons was talking about oil at 500$ three years ago (an error of 1000%?). Equal erroneous mistakes were made by Yergin. I don't think people make such lousy errors in oil production numbers.
On crime:
Crime in the US is down, significantly, since the 1980s-1990s.
http://www.ojp.usdoj.gov/bjs/glance.htm#Crime
I don't know about serial murder or any "niche crimes," though.
barbra,
Isn't Yergin pretty much on the mark when it comes to production? Price is where he falters. Simmons calls for both production drops AND price hikes, so he misses both marks.
ari, I didn't check Yergin's production numbers, but you are only underscoring my point.
There was a report earlier that our good friend Boone Pickens is having his worst year ever. Have lost the link but should be somewhere in their energy section.
I don't know whether to trust the IEA. Fatih Birol's posturing in various newspapers seem to contradict the more level headed assesments of other within the organisation.
http://www.bloomberg.com/apps/news?pid=20601012&sid=a1G9CRYKkylo&refer=commodities
Meh, I was going to sit this one out. I'm just an interested party, no influence or dealings with oil other than buying gasoline and motor oil, and beyond a 401(k) I do not invest. I, like several other people, have been reading more, though.
Ari, don't worry about it being the Ari Show. You're just refuting with info which should be obvious.
Also, it amazes me how little attention Matt Simmons gets over what his chosen profession is. Investment banking in the energy sector. It's more likely than not that it's in his interest for oil to skyrocket. Why is this hard for people to "get?" OF COURSE he's going to call for insanely high oil! It's been working for months! Panic is skyrocketing! For some bizarre reason, people see oil as an inflation hedge.
Since oil price depends upon oil production plus a lot of many other different things, and given all the statistical caveats involved, I'd argue that oil production is quite more predictable than oil price.
And empirically, this has been so. Mathew Simmons was talking about oil at 500$ three years ago (an error of 1000%?). Equal erroneous mistakes were made by Yergin. I don't think people make such lousy errors in oil production numbers.
Why yes, i wasn't actually implying a uniform comparison but I meant more like predicting trends in general.
babun,
Probabilistic studies aren't necessarily meant to give us EXACT figures, which is the big mistake that a lot of oil pundits make. They're merely range estimates.
Year-on-year data is interesting because it gives a trend, but outside of extrapolating based on reserve growth data (and applying Bayesian methods), it's clearly not an exact science.
For one, you have to extrapolate: economic growth (very hard, very much stochastic), substitution (and its effects on demand), geological factors (which are not known with as much certainty as many seem to believe), and many other factors.
Price is even worse!
But hey, pundits will spin until they get dizzy, and all we get out of it is a bunch of half-truths and half-baked cries of wolf.
The argument of the post is febrile in the extreme. So far as I can tell, you are saying that peak oil is not real because the prices fell after they rose? Is oil infinite? Are you an 'abiotic man?'
A price rise could have been started by lower supplies (we have only a four or five day reserve of gas in US right now, btw), then ridden up by speculators. In a complex, hence actual, world, such events have multiple causes.
But I like your imaginary world where oil will never run out or be hard to find. A world where they are drilling four miles under the ocean for 1/10th the Saudi Reserves at monstrous expense because there is just so much oil that it's a good idea to risk bankruptcy on such hopes.
Stellar logic.
Kelly,
Did you actually read the post? He didn't argue that oil is infinite. Notice the disclaimer at the top of the main page:
Debunking peak oil hype with facts and figures, and exposing the agendas behind peak oil.
DISCLAIMER FOR IDIOTS: This site officially accepts that oil is finite, and will peak someday.
Nowhere in that post did JD argue that oil is not finite.
still amazed people don't take just a minute to read the disclaimer and a few minutes to at least skim through topics JD has posted before writing their version of Kelly's comment.
It's one thing to be a doomer and debate the effects of Peak Oil (some of them are simply passing through stages and really don't deserve an online drubbing) or an "armchair" cornucopian (see last comment in parentheses) but it is entirely another matter to rip this blog apart without taking 5 minutes to at least read through it.
I do wonder though---are the fears about the impending decline rates due to Peak Oil simply just swept under the rug by the media etc, in light of the financial crisis? Frankly, I can't see how the financial crisis itself takes away any of the ramifications of the decline rates in conventional crude other than demand being lowered due to unemployment/personal financial problems, etc.
A deep recession in the global economy could easily push the date of peak back a few years of course, as we have seen how a recession/high gas prices had an effect on North American gasoline consumption in the past.
Given this, it does make me wonder how a brief reprieve from the current demand for 85 mil bl/d may allow for a little more window in time to promote methanol/butanol/CNG powered engines along with advances in mass transit and reurbanization?
Bike sales are soaring and Honda is just about to produce a serious of hybrid motorcycles and, along with Yamaha, some very exciting electric scooters (no doubt of MUCH better quality than cheap Chinese scooters/bikes).
Could we see these developments get more and more credence as serious mitigation DUE TO a recession/high gas prices occurring together?
I should add that, while Japanese domestic and overseas auto/truck sales plummet, their sales of minicars (600cc beauties--generally about 50 mpg and 12,000 dollars US) are holding their own. The minicar keeps improving year after year but, of course, the US will not allow their importation.
stuck in Shizuoka
Wow. Just wow.
How can this not repudiate the crux of peak doom logic? I thought it was predicated on the fact that users would frantically drive their SUV's right over the peak, shotguns in hand, no demand destruction in sight.
Of course demand is collapsing in spades along with a barrel which could easily (if shockingly) see $20 again. Where is Hirsch's $500 a barrel? Not anytime soon.
If you look at the US' usage after the shocks of the 70s, oil usage was sliced dramatically and long lastingly without even that much of a drop in availability. This shock (which is due to stupid Fed policies and the existence of Freddie and Fannie) is going to drop usage even more dramatically for many years to come, all while there is plentiful oil.
Post a Comment
<< Home