402. ON VACATION
After about 5 years of posting on this topic, I've decided to take a vacation due to peak oil burnout. Life is short, and I'd like to do some interesting things besides the day-to-day grind of the peak oil community. Of late, I've found little to stimulate my interest in the peak oil media, and in fact, I find peak oil commentary to be mind-numbingly boring and repetitive. How many Kunstler or Heinberg screeds do you really need to read? They're all the same. Endless rehash of the same leftovers, day after day, like dogfood...
Just to be clear: I'm not taking time off because "the world is falling apart" or any other doomer nonsense. In fact, I find it amazing how little impact "peak everything" has on my daily life. My firm conviction, as always, is that peak oil will occur in extreme slow-motion, and that's why it will be fairly easy to weather and adapt to. It's also why it's a little silly to follow it obsessively on a daily basis.
Anyway, thanks to all my staunch readers for your support. I'll be back, just not as often, so I hope you'll pop in from time to time.
I'll leave this thread open to post ideas, news or suggestions for other sites debunkers might enjoy.
JD
posted by JD @ 6:40 AM
69 comments
69 Comments:
JD,
I am a lurker. What you say is true, life is too short. Whether we can transition for fossils is irrelevant for day-to-day life. Although I am confident we will make the transition safely, there are granules of truth with Kunstler. I do believe there will be more localization, and satellite enterprises. I personally think he is much like Alice Cooper, the SHOCK factor. With diligent thought most can surmise that the world will not end with peak oil, but only to begin.
Salt
JD, your contributions to the PO discussion over the years have always been honourable and founded on facts ... not anecdote and hype.
I will miss your objectiveness and grounded posts and hope that we will hear from ya time-to-time.
Good luck in any new endeavours!
Enjoy your vacation.
Basset Hound
I very much agree with you JD :) There really hasn't been so much interesting stuff lately. But the stuff on this blog has still been nice to read.
Enjoy your holiday :)
JD,
Thanks for personally pulling me back off the ledge. J/K.
Seriously though, I have enjoyed reading your blog through the last year or so. I always appreciated your honest and open discussion and the way in which you presented your side of the story with sources and facts, without all the hype, sensationalism, and hubris.
I, too, have become somewhat bored with the whole peak oil hype. I mean, seriously, how many times can they try to recycle the same tired, incorrect, arguments. Besides, you've earned a vacation by now. Thanks again.
DoctorJJ
Nice onsen shot. Where is that, wakayama?
Easy 4 U to say, srsly, U are going to die!
Really!
Good luck to you JD! I always enjoyed your post, even if they were a bit infrequent at times!
-----------
More good news on the electric vehicle front! South Korea plans on rolling out a 'charge as you go' electric system for electric vehicles, buses and other transportation devices!
The idea is very simple: they build non-contact inductive charging strips into the road around intersections in the city. Each strip is approximately 8 to 35 inches wide and up to several hundred feet long. They believe that by covering just 10% of the roads in a city, you can drive 'indefinitely' on pure electricity.
This is fantastic news as it dramatically cuts back on the size of batteries you need for a city vehicle. This cuts costs and makes the vehicles safer overall! The cost of such a system comes out to $318,000 per km of roadway, or around $500,000 per mile. That's less than half the cost of building an all new light rail system!!
You can find the fascinating read here: http://tech.yahoo.com/news/nm/20090517/tc_nm/us_korea_recharging_road_1
Friend of mine who is the head of R & D at Yazaki--main parts supplier to Toyota, Nissan, Renault--tells me of exactly the same plan for the new highway in Japan. It is a recharging highway, just as you described.
JD, I'll give you a shout when I'm through Kansai this year and likewise do the same and visit in Shizuoka. Our local Onsen isn't quite as ornate as that beauty, but it is rustic and ....completely ..fossil fuel free!!
Thanks for everything--it meant A LOT, and you may have even helped save a marriage. No kidding.
Stuck in Shizuoka
How long will the hiatus last?
Will other contributors continue to make regular posts?
You'll be sorely missed :(
But have fun with whatever you do :)
Your blog is by ar the most grounded of the issue. I remember the end of 05 when you took the same hiatus. Thanks for what you do and I look forward to the occasional post.
FYI, I am OCD and this blog has helped me a lot with my last obsession.
Nice place JD!
Oh, and Cliff, (nice name btw) you won't sell many tin foil hats in this blog.
So why won't you copy paste troll on other sites?
Before you take your well deserved break, can you delete that fuckhead Clifford's pathetic troll post?
I agree JD, after a certain amount of time reading through doomer writings (and you've been doing it far longer than me) all just becomes dog food after a while. How many times can you critique Ruppert, Savinar, Kunstler, etc. They have been wrong year after year after year. They are all sensationalists and have their own motives for doing what they do (Ruppert being a paranoid schizophrenic, Kunstler's book sales, Savinar's survival store sales commission, etc).
For those of us that don't sit around and welcome the die off, we are too busy doing something else - working. Making the world turn. Advancing humanity. Doomer's will always be around as a useless little niche of the human race that hates the 'system' (read: the one that sustains them) and, most importantly, themselves.
Take care JD, hope you come back soon. For those of you that want a blog with constant updates on energy resources from a non-doomer perspective, I'd recommend the Ghawar Guzzler:
http://ghawarguzzler.blogspot.com/
I’ll miss your posts JD, but it is understandable why you would need a vacation.
The misinformation coming from the doomer camp does have a certain mindless repetitiveness.
Cliff Clavin’s spammy comment posted above is a classic example.
The rapid post peak production decline scenario was pretty thoroughly discredited back in POD post 327 of January 2008.
http://peakoildebunked.blogspot.com/2008/01/317-strong-argument-for-slow-decline.html
Enjoy the break. I am a lurker who has really appreciated your blog. Thanks for the hard work and the voice of reason.
Andrew, it is easy for me to trace the tone of desperation among McPeaksters. I started publishing the Peak Oil Depletion Scenarios chart in 2004. The first AVG for the practitioners indicated Peak would be 95-mbd in 2020. By May 2009, the 16-model AVG projects a Peak of 94-mbd in 2029.
Above, i've linked my profile to the six year progression of chart trackings. And remember, 2008 marks the 20th consecutive year of McPeakster declarations that "Peak is now".
JD, you can take a well-deserved break.
After all the words on PO have been written, read and analysed, it looks a lot like the Y2K scare. There may be serious consequences if not addressed, but ultimately a very solvable problem.
JD, I'll still check your blog regularly, so don't go away entirely.
By the way, did you hear about the new 42mpg standard that will be in place by 2016? That's nearly double our current standard. I really worry more about water/air quality and global warming now than I do peak oil. In fact, I don't worry about it at all anymore.
Have a nice "vacation" JD, had been wondering why you hadn't started a new thread in a while.
BTW, yes, I still intend to do that natural gas guest post. But I first want to read this one book, which won't arrive until July. I'll let you know - sonehow - when I'm ready.
OF2
Interesting that the Wall Street Journal and the European Energy Commission have both announced a 2008 peak in oil production.
http://europe.theoildrum.com/node/5397#more
http://blogs.wsj.com/environmentalcapital/2009/05/04/peak-oil-global-oil-productions-peaked-analyst-says/
As Japan's 90% imported resources begin to decline will JD change his tune about the lack of a downside to peak oil?
When the BP 2009 Statistical Year in review comes out it will be interesting to see if their data correlates...
Barba and Andrew Ryan, rather than juvenile insults and profanity please try to keep the debate on a civil, adult plane. You may note that Clifford is a Ph.D. and a pound of his salt is likely worth more than a ton of yours.
Hi
You may note that Clifford is a Ph.D. and a pound of his salt is likely worth more than a ton of yours.
Ph.D. of B.S. you mean. It's amazing how a guy in 2009 can still proclaim doom in peak oil and be considered a man with a ton of salt.
Perhaps that's his problem. Too much salt will fry your blood pressure.
Wow, how disingenuous.
First off, WSJ didn’t “announce” a 2008 peak, but reported that someone believes it was one. That’s quite different from announcing something. Also, where in that article on The Oil Drum does it say that the EEC has announced a 2008 peak?
And Clifford having a PhD doesn’t mean a damned thing. His PhD has nothing to do with petroleum geology or economics. If I had a PhD in English would I be better qualified than an MA in petroleum geology?
I hope the mantle is picked up by Ari or others. Actually, I see nearly daily news on wonderful technical advances, especially in batteries or natural gas, that bode very ill for any Peak Oil doom scenario. In fact, I see a better future ahead, with cleaner air and lower costs.
Perhaps POD just needs to be re-cast a bit to focus on postive developments, rather than debunking myths.
Enjoy your vacation JD. Finding and participating on your site has been the best part of my peak oil discovery experience so far.
I really enjoy the realism and the genuine attempts to do anything else other than break out the ashes, don sack-cloths and weep for the end is nigh.
BTW I have an inferior version of this site I started, if anyone wants to offer any guest posts over at www.dieoffdebunked.blogspot.com
Thanks again JD.
DB
benny cole, that job is well done by the likes of:
http://www.engadget.com/
and
http://nextbigfuture.com/
for example.
But there are others.
DB, nice blog, but if you want me interested, you'll have to write more often.
Anyways, I've bookmarked it in Google Reader, I'll give it a try.
Andrew Ryan: "Before you take your well deserved break, can you delete that fuckhead Clifford's pathetic troll post?"
Epic fail at censorship there AR
uglow,
Technically, it would be "win" at censorship, seeing as he would be successfully censoring Clifford.
But seeing as Cliff's posts are just spam, who cares if it gets deleted?
Barba,
The reason why I didn't write more often is because of the existence of JD's blog, which covered most of what I wanted to cover. Some areas he didn't cover to my satisfaction.
Now that JD is taking some time out, I'd be willing to post one a week if I get enough visitors.
In any case, I'm also open to taking guest posts from anyone who wants to contribute, to increase the posting volume.
DB
Know what you mean. I also started a blog years back when JD was also idle. But work and family got into the way and JD started writing again, so I never got past the first post :), one which I don't even recognize myself in it!!
"Actually, I see nearly daily news on wonderful technical advances, especially in batteries or natural gas, that bode very ill for any Peak Oil doom scenario."
FUCKTARD. TECHNOLOGY IS NOT ENERGY.
M. Oron
M. Oron,
No, but technology can open up new sources of energy as well as allow us to use energy more efficiently.
Clifford,
Where, exactly, does he say that it's "too late to make a transition?"
I read the comment by Bouldig twice and never saw him say that it was "too late." Point out the text, please.
Interesting note from that NAS report:
"Given the probability that world oil production will peak in the 1990s and decline gradually thereafter, it is thus extremely unlikely that the United States will be able to offset its declining domestic production of fluid fuels by increasing its share of world imports. Instead, political and economic pressures on the United States to decrease its share of imports will steadily mount."
Damn! Peak oil should have happened happened already?
Gotta send out that memo to the oil producers!
Cliff, we've all read your spam so many times our eyes have glazed over. You're the penis enlargement ad of the peak oil community.
It's like JD said in the post: peak oilers are boring and repetitive. There's no point in paying attention to you because you just say the same exact thing, over and over.
Wow, so slow economic growth can delay peak oil by a decade or more? What has this recession depression done to the peak.. delayed it another twenty years? YAWN.
And to anyone taking cliff seriously, I will save you the one hundred dollar per minute, or whatever insane amount it was, for a phone consultation and tell you he thinks Mexico is where you can go to survive peak oil. laugh out loud.
If you look at any oil production chart, you will see that if there had not been a production dip then from slow economic growth, the NAS prediction would be right on target for the 1990s. In other words...
... in other words, reality got in the way of models. How surprising.
Mr Cliff, get your tin foil hucksterism shit out of here.
Apart from the relatively benign weather, Mexico would appear to be a relatively poor choice as a safe haven in the event of a post peak oil collapse.
http://www.stratfor.com/weekly/mexico_road_failed_state
http://online.wsj.com/article/SB123206674721488169.html
Heavily armed gangs are not likely to leave gringo survivalists in peace on their doomsteads for very long.
Next thing we know Cliff will be recommending Columbia or Iraq as safe havens.
JD,
Thank you for taking out the trash. I was going to be sad if the last post you made, (for a while at least), was littered with the worthless drivel that Cliff Claven had been spewing.
DoctorJJ
Clifford,
You're still trolling!? I steamrolled your ass a while back with your July '08 peak hypothesis, then I got around your censorship by sending my post to your readers. Ha! Ha! You ran the ball into the wrong endzone, homie. And kids, don't let his Ph.D. fool you - he hasn't discovered electricity is used to run freight trains!
JD,
It's regretful to learn of your semi-retirement, but you deserve it. Nobody should have to endure five years of staring at satellite photos and reading regurgitated Kunstler. While some of us will pick up the slack, nobody will compare to you: you're the Michael Jordan of debunkers. Hopefully you'll pull a Jordan in semi-retirement and help the winning team pull in another three championships.
Hey JD,
Yet another lurker. I think you've done a great job not only debunking the doomer myth, but providing some insight into what our energy future may look like. You've talked me off te ledge of anxiety that I was on a year ago, and I'm now actually excited about what the energy future may hold.
Enjoy a well earned vacation, sir!
JD,
Mate, sometimes I'm somewhat of a doomer myself but in the back of my mind, your angles always make sense and I enjoy this blog.
I hope you enjoy your break but seriously, come back to us buddy and keep up the posts. You're needed more than you know.
Michael Pinilla
I hope you'll pop in on occasion to post some new-tech news...that's actually what's kept me coming back.
Heh mutant m.oron?
You said "FUCKTARD. TECHNOLOGY IS NOT ENERGY."
Is it not?
Do you think that oil wells, oil rigs etc are NOT technology.
Do you also think that matches or, hell, even flint tools are not technology?
Clue: Our ability to utilize energy REQUIRES technology.
Smarter technology allows more efficient extraction of useable energy from ANY energy flow whether it's oil or sunlight.
Hope that helps.
DB
Best Buy is selling (and heavily advertising) some electric scooters that are sub $900. I can see them moving quite a lot of these if gas keeps creeping up. Yeah that just screams end of the world. Not.
Bleh, anyone else feel like a bonehead? Like probably most people here, I had a brief (2 week in my case) Peak Oil Doom scare before snapping out of it, now I just feel stupid. Peak Oil is not going to be any more traumatic to the economy than Peak Horse and Buggy. Certainly not the end of the world or anything close. The economy goes through ups and downs anyway and I doubt the (very gradual) transition away from oil will even be particularly noticed.
Hmm...
http://cars.uk.msn.com/News/car_news_article.aspx?cp-documentid=147793033&ocid=today
"The economy goes through ups and downs anyway and I doubt the (very gradual) transition away from oil will even be particularly noticed."
Yes, I'm sure no one will notice the absence of 2/3 of the US automotive industry. Peak oil, what a farce.
HDT
The picture is beautiful! Where is it?
HDT,
The US auto industry was too large with or without the cost of oil. Overcapacity has been a problem for years, and was one of the key issues facing the Big Three, along with large legacy costs. GM, which was downsizing and restructuring even before the oil price spike, was far too large for its own good.
In fact, as The Economist points out, there is worldwide capacity to build 90 million cars a year, but only a latent demand of about 60 million. The US was simply a microcosm of this, and it just happened to have three of the largest automakers.
Even assuming that oil prices had stayed at their pre-2001 levels, it's unlikely that GM would not have had to do something incredibly painful. Keep in mind that GM had legacy costs of (literally) thousands of dollars per vehicle. Even today, with the improved balance sheet, GM has to shoulder hundreds of dollars in health care costs per vehicle. This is more than any other auto maker, and is an unfortunate consequence of the GM of the GM heydey's ability to mask these costs through scale.
As the GM restructuring documentation demonstrates, GM's breakeven in the past decade was for US sales of over 10m vehicles per year. GM, to be profitable, needed to go down to about 9m a year. That was regardless of oil prices.
Oh, and 2/3? Hardly. But why bother with actual figures when you can simply make stuff up and be DRAMATIC?
You are so right, Ari! It's now clear to me that the (very gradual) transition away from oil will even be particularly noticed. What was I thinking? The health of the automobile industry is completely isolated from oil supply and demand. What would we do without all the drama-free commentary here on POD?
HDT
"What would we do without all the drama-free commentary here on POD?"
Probably be thinking of realistic ways to deal with the future problems humans face instead of masturbating over technological panaceas (biofuels? hmmmmmmm....)
HDT,
I noticed that you didn't bother actually rebutting any of my points. I wonder why?
I never said that oil prices didn't hurt GM. They obviously did. But you focused on one small part of the overall picture to the detriment of actually understanding what happened. GM and Chrysler's demise were not one-off events. They were events that occurred over the course of decades. By boiling the GM and Chrysler situation down to "oil" is to ignore the full gravity of what happened to the American automotive industry.
You also exaggerated your claims, but that's not unusual with commentary about Detroit.
In any case, tell me this: why have Toyota, Honda, Ford, et. al, managed to weather this storm but GM and Chrysler have not? If the key factor was oil, then why have they all survived, and in the case of some companies, actually managed to still remain profitable in EBIT terms?
jgloz,
I actually have said that I don't think that biofuels will be the best solution. But I do think that despite the anti-technological bent you've apparently taken, technology will matter. It may not, however, be "new" technologies, but rather older technologies (transit systems) that end up making the biggest difference. But to discount new technologies is silly as well. The new technologies being used by NG producers are allowing us access to sources of gas that were locked away a decade ago. Can we really discount the role of technology in letting us access deep sea oil?
Technology matters. A lot.
But just like how technology may not be the sole solution, it won't be excluded from the solution.
You say "masturbating over technological panaceas," but ultimately it will be technology that solves the problems. Whether it be grid-based transportation or a move toward "local" industry, it will still be technology that drives the future human experience.
jgloz, he does talk a lot about realistic solutions to the world's energy problems, namely electric vehicles and conservation. And if you read some of the articles he psts, he tends to pooh-pooh biofuels as being inferior to electricity.
We'd love to see you back soon, JD. If not you, then one of your more prominent commentators such as Ari. Technology is just way too fascinating and is developing at way too fast a pace to not comment on it.
"...why have Toyota, Honda, Ford, et. al, managed to weather this storm but GM and Chrysler have not?"
Because they are marginally smarter than GM and Chrysler. And the storm's not over by a long shot. The others will either innovate and change - if the economy permits - or shrink and die.
If oil was still $20/bbl like it was when Bush took office, GM would still be making Hummers and we wouldn't be having this discussion. But even in the biggest recession in 75 years, with consumption dropping, oil prices are rising inevitably. Deny it all you want, and wave your technology wand around - oil prices are going right back up to where they were before.
HDT
HDT,
If you are so sure of this, why aren't you trading oil futures?
I don't mean to only be snide, but with all the "experts" running around and saying where the price is going, what makes you so sure that you're the one certain voice who knows what will happen?
There exists, today, well over 4 million barrels spare capacity. Demand is still down a considerable amount, year-on-year. Yet you think that prices going up is "inevitable?"
Yes, price will likely go up again, but the question is always: when? What's the time frame?
You claim that the other companies are "marginally smarter" than GM and Chrysler? Man, you seem to think that maintaining your business in the midst of one of the worst recessions in the past two centuries is just "marginally smarter?" What would be your definition of actually smart, then?
"But even in the biggest recession in 75 years, with consumption dropping, oil prices are rising inevitably. Deny it all you want, and wave your technology wand around - oil prices are going right back up to where they were before."
Deny what? Prices are rising, but it has NOTHING to do with supply and demand. Demand is where it was over a decade ago and supply is higher than it's been in 20 years. The run up in prices this time is from people speculating in the market. Not necessarily "speculators" or hedge funds, but commodities, in particular oil, are being "assetetized". Retirement funds, investors big and small, including your average Joe the Plumber, are all dumping money into oil futures because they think the price is going to keep going up and because they are sheltering themselves from the imminent inflation that is coming as a result of Barry's government spending spree.
Again, the current price of oil and it's recent meteoric rise has ABSOLUTELY NOTHING to do with supply and demand or peak oil.
DoctorJJ
"If oil was still $20/bbl like it was when Bush took office, GM would still be making Hummers and we wouldn't be having this discussion."
SUVs were their highest margin and most profitable product and they still are even through this downturn.
If they had concentrated on making SUVs instead of making vehicles they are too incompetent to make GM and Chrysler might have avoided chapter 11 for long enough to develop a new niché. (of course, they wouldn't have been legally allowed to do that, see CAFE standards).
You only have to watch the dollar to see what oil is going to do. When the dollar was making some impression gains on Monday oil was down, what almost two dollars?? The dollar is losing again and surprise surprise, oil is rising once again.
Peak oil is the end of cheap oil, not the end of oil by a long shot. Jeromie on LATOC has posted a lot about the breakthroughs being made on heavy oil and once considered unrecoverable oil. No one has disputed any of it, because it is in fact the direction we will be going. That along with electric and conservation and a touch of NG.
Of course, we do still have the massive overpopulation problem that no one in power is addressing. The best solution seems to be bringing people out of poverty, which has been demonstrated in most developed countries.
"If you are so sure of this, why aren't you trading oil futures?"
Who says I'm not?
"...what makes you so sure that you're the one certain voice who knows what will happen?"
I'm not "one certain voice," I'm only one voice in a large and growing chorus of others who are saying essentially the same thing. The handwriting is on the wall for all to read. The markets aren't always rational, and it's obvious now that the markets can be gamed, but it is all we have for now, and to say that the price of oil, or any other commodity has nothing to do with supply and demand is willful, ideologically driven ignorance.
"Yes, price will likely go up again, but the question is always: when? What's the time frame?"
Wouldn't we all like to know the answer to that? The answer to that question is the kind of thing financial advisor types charge you for. Plus, with Obama, congress Wall Street and OPEC all working at cross purposes to rework the system, the answer is fluid and complicated. Suffice to say that since oil is in demand and finite (as even you knee-jerk optimists admit)the price will trend ever higher, with the occasional dips. It's really as simple as that.
"Deny what? Prices are rising, but it has NOTHING to do with supply and demand. Demand is where it was over a decade ago and supply is higher than it's been in 20 years. The run up in prices this time is from people speculating in the market."
Speculation in the markets? And I suppose you think that's bad? Haven't people always speculated in the market? Don't markets and speculation hinge on the perception of supply and demand?
If you sincerely believe that the price of oil today has nothing to do with supply and demand, then you are simply deluded. If it were not for speculation, there would be no reason for the modern marketplace to exist.
HDT
Oopsy, not enough uranium to go around?
"TORONTO (Reuters) - A global shift toward nuclear power is prompting countries to rush to lock in long-term access to tight supplies of uranium, and China and India look to be the next players to get in on the action."
But it's all good anyway. We'll just use the non-existent thorium reactors y'all are so hot on.
Alberto
Alberto,
You need to separate "short-term" and "long-term." Uranium is tight right now because mining for it has been extremely weak. So weak, in fact, that one of the largest sources of fissile material is the stuff from warheads.
Uranium reserves are not scarce. Mining of reserves, however, is.
That is not an intractable problem, however.
HDT,
You, like New Guy, deal only in binaries and truisms. It's tiring.
I never said that price is ONLY due to speculation. However, to say the opposite, that it is ONLY due to supply and demand, is also a bit silly. Futures are based on PREDICTIONS, which as we all know can be incorrect. To say that a futures contract is based ONLY on supply and demand is silly based only on the nature of what a futures contract is!
Speculation in the tech bubble, for example, was based on the perception that there would be ever growing prices, demand, and market growth. We all know how that panned out. Bubbles are, by nature, based on predictions. They are bubbles BECAUSE they are separated from the fundamentals. No market is truly efficient, but the fact also remains that some markets are more or less efficient than others.
The fact is that separating price premiums is not an easy thing to do, and no matter who says they know the exact breakdown, I'm skeptical. Also, what is in demand and isn't finite? Finiteness is a given.
Truisms: the core of all peak oil debates!
As for your other comments, "growing choruses" have been wrong. In this case, what is this so-called chorus even saying, anyway? That oil is finite? No shit? The question has been and always will be, "How do markets respond to prices?"
Long term contracts for uranium supply are standard practice in the nuclear power industry,
And the average abundance of uranium in the earth’s crust is about the same as that of tin.
http://nuclearinfo.net/Nuclearpower/UraniuamDistribution
The use of thorium in currently available light water reactor technology was experimentally demonstrated in the late 1970s,
http://www.atomicinsights.com/oct95/LWBR_oct95.html
And at least one company has proposed a commercial fuel assembly design based on that work,
http://www.thoriumpower.com/default2.asp?nav=technology_solutions&subnav=fuel
However, I suspect uranium prices will have to go much higher than the current $40-50/lb for it to have a significant economic advantage over conventional uranium fuel.
"You, like New Guy, deal only in binaries and truisms. It's tiring.
I never said that price is ONLY due to speculation."
Nor did I. The binaries are your creation.
"However, to say the opposite, that it is ONLY due to supply and demand, is also a bit silly."
Yes, to say the opposite would be a silly binary. Which is why I didn't say it. JJ issued the big binary: "Prices are rising, but it has NOTHING to do with supply and demand."
And that is simply false. The price ALWAYS has SOMETHING to do with supply and demand, otherwise the market would not function. There will always be speculation and market distortions coming from a variety of forces. But on any given day, the market still assimilates all the data, the sentiments and the speculation and sets the price of the commodity based purely on the common perception of value.
"Futures are based on PREDICTIONS, which as we all know can be incorrect. To say that a futures contract is based ONLY on supply and demand is silly based only on the nature of what a futures contract is!"
Of course it's silly - it's a binary strawman that you've created. If the US were awash in oil the way it was in 50 years ago - lots of supply - oil never would have approached the prices we've seen over the last 18 months.
Again, to say that supply and demand has NOTHING to do with the price of oil is just willful ignorance.
HDT
I'm pretty sure I said prices are rising which has nothing to do with supply and demand, not that the price has nothing to do with supply and demand. Big difference. I still stand by that statement. The current price of oil on the commodities markets has little to do with supply and demand currently or in the foreseeable future. Right now there is a flood of money into these markets.
If it was any other good, maybe you would understand. Take water for example. It's finite. It is definitely a valuable commodity. You need it to live. Yet, if you had ample supply and every bucket you could find was overflowing with it and there was no indication that supply would exceed demand for years, yet the price kept going up, you would automatically know that the price rising had "nothing" to do with the underlying fundamentals.
It's like when it comes to oil, people are so brainwashed that they don't understand basic economic principles.
DoctorJJ
"If it was any other good, maybe you would understand. Take water for example. It's finite. It is definitely a valuable commodity."
Next time it rains oil, go outside and fill a few barrels. What's that you say, it doesn't fall from the sky?
"Yet, if you had ample supply and every bucket you could find was overflowing with it and there was no indication that supply would exceed demand for years, yet the price kept going up, you would automatically know that the price rising had "nothing" to do with the underlying fundamentals."
If we had "ample supply" here in the US, we wouldn't be importing 2/3 of our oil and policing the Persian Gulf. If we had ample supply, oil prices wouldn't rise every time Iran gets dicey or a pipeline is destroyed in Nigeria. If we had ample supply, oil would still be $20 a we wouldn't be having this discussion.
"It's like when it comes to oil, people are so brainwashed that they don't understand basic economic principles."
I've noticed that.
HDT
HDT,
Are you actually implying that prices of goods always reflect supply and demand? Because there are plenty of examples where that is not the case.
Also, whether or not the US imports oil is a non sequitur to your argument about supply and price. The biggest question with price is what the average worldwide supply and demand curves look like, because oil is an internationally mostly freely traded commodity. The price in New York is the price in Tokyo is the price in Mumbai, etc.
Finally, even WITH ample supply, we can have prices go up because of Iran or Nigeria because futures are in no small part priced based on perceptions. We have plenty of supply today relative to demand, and even with a pipeline in Nigeria shutting down, spare OPEC capacity could cover the supply loss. So why can it still affect prices? Mostly because fear of a shock is priced in as a premium, not necessarily because supply cannot meet demand.
"Also, whether or not the US imports oil is a non sequitur to your argument about supply and price. The biggest question with price is what the average worldwide supply and demand curves look like, because oil is an internationally mostly freely traded commodity."
"Mostly freely traded," another one of Ari's trademark equivocations. Not that long ago, the United States was the undisputed world power and a net oil exporter of oil. Now our daily lives depend on vast amounts of imported oil to keep the wheels of a shaky economy turning. If that supply of imported oil is threatened, the price of oil goes up and the Dow goes down. If the supply is interrupted, prices go way up, as we saw in the Katrina aftermath.
The costs of importing oil are an essential part of the supply/demand equation. You're using Bush era accounting tricks to keep the real costs of your oil consumption off the balance sheet.
HDT
And that is simply false. The price ALWAYS has SOMETHING to do with supply and demand, otherwise the market would not function. There will always be speculation and market distortions coming from a variety of forces. But on any given day, the market still assimilates all the data, the sentiments and the speculation and sets the price of the commodity based purely on the common perception of value.
This is clearly false, and is based on the idea that markets are efficient... and that they are not.
Actually, I don't know what you're trying to argue here. That markets are both efficient and yet distorted? That's an interesting theory, but I think this current recession has demonstrated that efficient markets hypothesis is pretty much crap. To argue, therefore, that markets assimilate all information is a bit of a stretch.
Nonetheless, whether or not "the market" sets the value doesn't tell us what the actual value is. How is this not clear by now? We've seen this in a number of cases. Just because it's oil doesn't make it any different.
Of course it's silly - it's a binary strawman that you've created. If the US were awash in oil the way it was in 50 years ago - lots of supply - oil never would have approached the prices we've seen over the last 18 months.
Once again, how is it not clear that:
OIL
IS
AN
INTERNATIONALLY
TRADED
COMMODITY?
Even if the US were "awash with oil" (BTW, it still is the third or fourth largest producer), what matters is world demand and world supply.
The U.S. should to be very careful not to upset Canada, eh? ;)
http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/company_level_imports/current/import.html
Crude Oil Imports (Top 15 Countries)
(Thousand Barrels per Day)
Country Mar-09 Feb-09 YTD 2009 Mar-08 YTD 2008
CANADA 1,845 1,913 1,901 1,795 1,886
MEXICO 1,092 1,219 1,203 1,232 1,220
VENEZUELA 949 960 1,029 858 980
SAUDI ARABIA 944 1,099 1,128 1,535 1,541
NIGERIA 860 457 607 1,154 1,102
ANGOLA 644 671 612 384 433
IRAQ 587 554 570 773 697
BRAZIL 334 365 365 188 175
COLOMBIA 254 225 235 135 174
RUSSIA 219 139 173 108 68
ALGERIA 215 142 242 247 269
ECUADOR 210 243 241 231 217
KUWAIT 181 251 218 199 232
GABON 108 89 106 63 54
NORWAY 103 33 61 23 14
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