preview.tinyurl.com/5mujcl -> seekingalpha.com/article/100670-was-peak-oil-a-multi-billion-dollar-hoax
back to cake * Font Size: * Print * Email Crude oil prices started their astonishing price rise in January of 2007 right on cue for a normal seasonal rise into the summer. By August, prices were accelerating and continued higher going into the end of 2007. The usual seasonal year-end decline was hardly noticeable. As 2008 began, crude prices seemed to be a one-direction trade as prices accelerated even faster. OPEC and the Saudis claimed there was plenty of supply on the market but prices were being bid up regardless. Many analysts revived earlier predictions about peak oil and the impending decline in production as the justification for higher prices in anticipation of supply shortages in the future.
Volatility Trading Digest(TM) Volume 8, Issue 25, Saudi Oil Summit, dated June 23, 2008 we wrote: A number of recent events suggest that there may be a coordinated effort underway to lower crude oil prices and the Saudi Summit may mark the beginning of more coordinated actions designed to curb prices. After the meeting, we were surprised by the lack of coverage by the financial press. There were hardly any mentions of the event and no details were provided about any agreements that were made.
No doubt there are many factors contributing to the subsequent decline including the claim made by OPEC and the Saudis of excessive speculation in the futures market. If excessive speculation played a part in the price rise we would expect to see declining open interest in the futures market as long positions are liquidated. In November of last year, open interest was 16 million contracts, by the middle of May when crude prices were still rising it had declined to 15 million. At the price peak on July 11, 2008 the reading was 14 million and by this week they have declined to 11 million. So in the last 11 months open interest has declined about 31% with half of the decline in open interest occurring in the last 3 months since the peak in prices. We are seeing long liquidation in the futures market and with hedge funds under redemption pressure we think there could be more to come. We are not claiming the entire price increase that began on January 15, 2007 at 57 and accelerated in August of '07 from 67 was futures related. Nevertheless it must now be obvious to most everybody that it accounted for a substantial portion just as OPEC and the Saudis claimed throughout the entire episode. As a result I do not believe the world has to worry about peak oil' for a very long time. Apparently nobody was listening to the Saudis, as everybody was focused on making the case for peak oil production as a justification for higher prices. While we do not have the analytical resources of the Wall Street investment bank that first produced the $150 per barrel price forecast and then the $200 per barrel forecast, we do think OPEC has regained credibility for knowing something about their market. Perhaps in the future we should be paying more attention to OPEC and less to Wall Street analysts. If so, then here is the current OPEC outlook: Even if governments are successful in calming equity markets and unfreezing credit markets in the near future, the fallout on the real economy from financial market headwinds is expected to be considerable. The rapid crude oil price rise was like an alarm bell ringing and it was heard. In a democracy is seems we are only capable of focusing on the crisis of the moment. There is no doubt the credit market crisis needs attention, but hopefully the US will not allow this opportunity for greater energy independence to be lost even if crude oil prices continue to decline in the near term.
This is first time I have read it and many have just listened to Goldman and Matt Simmons. Looks like Saudi Aramco CEO knows a thing or two about the oil markets too, and he says too soon to worry about PEAK OIL.
My Website Oct 20 08:12 AM As I try to explain in my article the current financial crisis is directly linked to Peak Oil. The current events that nobody saw coming, were already announced in as early as 2006 by Dr. Colin Campbell, a geologist, former Vice-President of Fina Oil Company and founder of the ASPO (Association for the Study of Peak Oil). On a video interview available on YouTube, he declared: "Expansion becomes impossible without abundant cheap energy. That speaks of a financial crisis, unseen, probably equalling the Great Depression of 1930; " So "Peakists" are not surprised at all by current events, and it does not contradict their explanations. In addition, I would instinctively not trust corrupt and autocratic regimes of the OPEC (such as Saudi-Arabia) as you do. This quote from Sadad al-Huseini, the former Head of Exploration and Production at Saudi Aramco tells a lot about the situation and the flawed official message from the KSA: "The evidence is that in spite of the increases - very large increases - in oil prices over the last four years, we haven't been able to match that with increasing capacity.
Chalabi, the former OPEC Secretary-General, gives additional information about how the cartel really works: "OPEC countries do not care about what might happen 20 years from now. Because, these are politicians, they want more money, to spend rationally or not.
So yes Peak Oil may have already happened, we will have to wait a few more years to be sure. Campbell, he added on this issue, "a debate rages as to the date and height of peak, which I think rather misses the point when what matters - and matters greatly - is the vision of the long decline that comes into sight on the other side of it".
What happens when you have one unit supply more than demand? Commodity prices of inelastic markets have exaggerated highs and lows. As long as the Saudi's had excess production that they could turn off and on at the wellhead, crude oil behaved like an elastic market. Now there's a limit to the upside, so the market has become an semi-inelastic market. Get prepared for more erratic price moves in the future.
Peak oil is here for most large field in the world if not all. The Saudis have been less than honest about their fields. The large fields we do know about are over the hump, Mexico is projected to be a net importer within two years.
My Website Oct 20 10:17 AM Provocative article and good discussion. In addition to the cost of production going up to extract oil from more and more challenging places, the "political", "social" and "environmental&qu...
Those are playing the game of gunning risk with other people's money, and they really don't care a lick what story is used to get the herd in behind them. It is so obvious that chasing headline bubbles is always a recipe for loss and disaster, but people still do it, over and over and over.
An Illusion we are now espousing never existed because the world as a whole is experiencing a massive slowdown. While other parts are in recessions or about to enter into recessionary modes. So if thats what it takes to push Peak Oil off the table, then you can have it. I prefer a growing economy with increased employment vs low oil. The Oil Sector is in the process of shutting down more expensive projects like Haynesville and other deep Sea projects where the seabed is 7,000 feet deep to preserve cash for mundane things like ongoing operational expenses: salaries, maintenance, you know keeping alive. I'm not talking about the big boys, I'm talking about the independents. Just Like small companies are the lifeblood for employment in the US, which Obama wants to bleed, so the small oil companies provide the vast majority of incremental discoveries for which they need infusions of capital( which they aren't going to get at these price levels). Definitely, No Peak Oil as long as the world stops growing or contracts.
For example, the recent price run-ups have created enough new exploration activity that in the most recent EIA report, the US added more petroleum reserves in 2007 than it produced. For natural gas, proven US gas reserves are at an all time high based on EIA reporting for the last 31 years. This is the direct result of new technology and a new geologic paradigm. How this technology change will play o...
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