Record Oil Prices and Jobs
Got sent this today...
HOW TO SAVE THE AIRLINES
>
> Dump the male flight attendants.
>
> No one wanted them in the first place.
>
> Replace all the female flight attendants with
>
> good-looking strippers! What the hell --
>
> They don't even serve food anymore,
>
> so what's the loss?
>
> The strippers would at least triple the alcohol
>
> sales and get a 'party atmosphere' going in the cabin.
>
> And, of course, every businessman in this
>
> country would start flying again,
>
> hoping to see naked women.
>
> Because of the tips, female flight attendants
>
> wouldn't need a salary, thus saving even more money.
>
> I suspect tips would be so good that we could charge
>
> the women for working the plane and have them kick
>
> back 20% of the tips, including lap dances and
>
> 'special services.'
>
> Muslims would be afraid to get on the planes for
>
> fear of seeing naked women. Hijackings would
>
> come to a screeching halt, and the airline industry
>
> would see record revenues.
>
> This is definitely a win-win situation if we handle it right --
>
> a golden opportunity to turn a liability into an asset.
>
> Why didn't Bush think of this?
>
> Why do I still have to do everything myself?
>
> Sincerely,
> Bill Clinton
HOW TO SAVE THE AIRLINES
>
> Dump the male flight attendants.
>
> No one wanted them in the first place.
>
> Replace all the female flight attendants with
>
> good-looking strippers! What the hell --
>
> They don't even serve food anymore,
>
> so what's the loss?
>
> The strippers would at least triple the alcohol
>
> sales and get a 'party atmosphere' going in the cabin.
>
> And, of course, every businessman in this
>
> country would start flying again,
>
> hoping to see naked women.
>
> Because of the tips, female flight attendants
>
> wouldn't need a salary, thus saving even more money.
>
> I suspect tips would be so good that we could charge
>
> the women for working the plane and have them kick
>
> back 20% of the tips, including lap dances and
>
> 'special services.'
>
> Muslims would be afraid to get on the planes for
>
> fear of seeing naked women. Hijackings would
>
> come to a screeching halt, and the airline industry
>
> would see record revenues.
>
> This is definitely a win-win situation if we handle it right --
>
> a golden opportunity to turn a liability into an asset.
>
> Why didn't Bush think of this?
>
> Why do I still have to do everything myself?
>
> Sincerely,
> Bill Clinton
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Krusty's right.
Now that the modern citizen has left his village and travelled the world, there is no way aviation will stop.
We'll just end up using the oil from 20 foot high turnips and use half of Queensland to grow them.
Now that the modern citizen has left his village and travelled the world, there is no way aviation will stop.
We'll just end up using the oil from 20 foot high turnips and use half of Queensland to grow them.
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http://www.lifeaftertheoilcrash.net/
After reading this, i am a tad worried - anyone heard of peak oil before?
After reading this, i am a tad worried - anyone heard of peak oil before?
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There is nothing new about this. It has been predicted for some decades. Here is an interesting article from Scientific American March 1998:
http://dieoff.com/page140.pdf
http://dieoff.com/page140.pdf
Grandpa Aerotart
anyone heard of peak oil before?
It has as much factual basis as Catastrophic Global Warming...i.e. NONE.
If you read any credible oil analysis they suggest we might start running short of light sweet crude in about 90 years...after that we have a couple of thousand years worth of heavy oils, tar sands and oil shale...ignoring natural gas and liquified coal.
Even now technology is blurring the distinction between light sweet crude and heavy/oil shale etc to the point that even the most expensive tar sands and oil shale can be profitably extracted at circa US$30.bbl.
From memory Australia has the 3rd largest deposits of oil shale...trillions of barrels of oil equivalent....if we don't let the morons sell it off to the chinese along with our natural gas.
Think about the technology improvements since 1900 and ponder what technology will be doing in 2100, 2200 or 2300BC...still hundreds of years before oil supply even starts to become a real issue.
What will technology bring in the next 100 years?
I have absolutely no fecking idea...but I bet my great, great, great grandchildren won't be driving cars powered by fossil fuels.
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The only thing I would be worried now of, is the Oil Industry. I like Warren Buffet's mantra: "For every bubble, there is a needle in waiting".
There is still plenty of Oil available in the world. It is just harder to extract, and no doubt, the technology to make it possible is there. The days of OPEC holding the world hostage are numbered..and they probably know it.
History has shown, that once real necessity occurs, a solution is found rather quickly. Undoubtedly, this time will be no different. In the short term, it might hurt a little, but this too, will get resolved. Human creativity combined with free markets are an amazing force, which keeps things in balance over the longterm.
Besides, reports of Oil tankers, full of Oil, waiting for days in habors before being able to off load, suggest, that this is also an infrastructural problem.
US has more coal, than Saudi has Oil. Coal can be processed into synthetic oil. There is no way, that in our life time we will be running out of energy, if ever.
IMHO in a few years nobody will talk about oil prices or the price of energy for that matter.
It is the media, that has to report something - even if it has nothing to report. Doom & Gloom sells. Would anybody listen to: "Everything is just fine, we just need some time to restructure our energy infrastructure."... Nobody would care...or buy a newspaper..or watch the news station, that dramatically competes with another news station.....
Just a few months ago it was "global warming", now it is Oil.. soon it will be "global warming" again...and then some other scandal
While information exchange is good in its essence, too much information can create unnecessary problems....
Just dump the TV for a year and go out play golf or do something you love and you will feel a lot better....that's a promise.
If you want to become a pilot, then for good's sake do everything you can to achive your goal... Just realize, that there are some realities, you may not like about the industry, but that goes for anything.
There is still plenty of Oil available in the world. It is just harder to extract, and no doubt, the technology to make it possible is there. The days of OPEC holding the world hostage are numbered..and they probably know it.
History has shown, that once real necessity occurs, a solution is found rather quickly. Undoubtedly, this time will be no different. In the short term, it might hurt a little, but this too, will get resolved. Human creativity combined with free markets are an amazing force, which keeps things in balance over the longterm.
Besides, reports of Oil tankers, full of Oil, waiting for days in habors before being able to off load, suggest, that this is also an infrastructural problem.
US has more coal, than Saudi has Oil. Coal can be processed into synthetic oil. There is no way, that in our life time we will be running out of energy, if ever.
IMHO in a few years nobody will talk about oil prices or the price of energy for that matter.
It is the media, that has to report something - even if it has nothing to report. Doom & Gloom sells. Would anybody listen to: "Everything is just fine, we just need some time to restructure our energy infrastructure."... Nobody would care...or buy a newspaper..or watch the news station, that dramatically competes with another news station.....
Just a few months ago it was "global warming", now it is Oil.. soon it will be "global warming" again...and then some other scandal
While information exchange is good in its essence, too much information can create unnecessary problems....
Just dump the TV for a year and go out play golf or do something you love and you will feel a lot better....that's a promise.
If you want to become a pilot, then for good's sake do everything you can to achive your goal... Just realize, that there are some realities, you may not like about the industry, but that goes for anything.
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Oil Prices
Great posts, CC. Well presented and thought provoking.
Check out this one too:
http://www.ecofascism.com/article8.html
Check out this one too:
http://www.ecofascism.com/article8.html
Last edited by 400Rulz; 9th Jun 2008 at 06:05.
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Hmmm
Many arguments for and against. Meanwhile the price of oil continues its inexorable push towards $200 bbl. That is a raw fact, regardless of the rose coloured prism through which some choose to view the situation.
Explanations of "speculative inflation" aside, does it really matter? The "underlying price" is irrelevant. You pay what you pay. Do you really say the "underlying price" of an air ticket is $100, so I'll ignore the "taxes and charges" component which increases it to $150. I don't think so. You pay what you pay.
IMHO, anyone who trains to be a pilot in the belief that this industry will provide them with a decent living going forwards is completely MAD. And some of us with low seniority in major airlines should be looking left and right and assessing all of our options.
Pilot shortage over, my friends.
Our great aviation dream is over.
Many arguments for and against. Meanwhile the price of oil continues its inexorable push towards $200 bbl. That is a raw fact, regardless of the rose coloured prism through which some choose to view the situation.
Explanations of "speculative inflation" aside, does it really matter? The "underlying price" is irrelevant. You pay what you pay. Do you really say the "underlying price" of an air ticket is $100, so I'll ignore the "taxes and charges" component which increases it to $150. I don't think so. You pay what you pay.
IMHO, anyone who trains to be a pilot in the belief that this industry will provide them with a decent living going forwards is completely MAD. And some of us with low seniority in major airlines should be looking left and right and assessing all of our options.
Pilot shortage over, my friends.
Our great aviation dream is over.
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sugary dreams
I’m reading and wading through all these posts, reports and opinions and, my head is like a beaten Pinyarda spinning in circles, with kids all around waving their sticks and waiting for the candy to fall. Suddenly, BAM!! Ochre Insider just knocks it right off my shoulders spilling out all my sugary dreams into the mud of hope, lying below.
Grandpa Aerotart
There are a whole bunch of reasons why oil is high at the moment.
Falling US$ (30+% in the last few years)
Various aspects of speculation
'Security' concerns (when has the ME/Nigeria/South America not been a political tinderbox?) - Excess liquidity - Institutional investors trying to recover money lost in the subprime meltdown - etc
Artificially constrained supply.
Nationalisation of various country's (Russia/Indonesia/Nigeria/Venezuela/Brazil/Saudi Arabia etc) oil resources since the 80s...with attendant drops in drilling efficiency in many countries because of a lack of expertise...Indonesia and Venezuela for starters.
The political left/environmental lobby making it impossible for oil companies to build new refineries/drill where they want to increase supply in the last 30 years. No new refineries since 1975 in the US (and many other countries too) and 85% of US continental shelf oil fields and Alaskan oil fields off limits because of the environmental lobby.
Come to that when was the last oil refinery built in Australia?
Consolidation of the US oil industry...read anti competitive, monopolistic practices by the really big US oil companies. They bought out and shut down the 100s of little competitor oil companies that existed in the 20s,30, 40s 50s, 60s, 70s.
Remember when you could buy Amoco petrol, as one example of consolidation reducing competition, in Australia in the 70s?
Lack of funds/desire on the part of oil companies to spend on infrastructure when the price was $12/bbl all through the late 80s and 90s. The modern management practice of manic cost cutting (evident in all businesses in the last decades) is a factor here too. Cost cutting on maintenance, as an example, that BP got stung by last year at Prudo Bay.
The sudden demand for double hulled tankers after the Exxon Valdez spill in Alaska didn't help with infrastructure either...it takes a while to build 1000s of double hulled oil tankers.
Iraq's oil being essentially removed from the world market for an extended period post GW1.
Increased demand
Yes no doubt demand has increased, although now heading south again because of price, especially in India and China but really the world over. Not as much in India and China as the futures traders would have you believe but more than the oil companies could cope with because of the artificially constrained supply side. Read lack of foresight on the part of industry and Govts.
Resource scarcity is not a factor...there is ****LOADS of stuff in the ground. In the ground doesn't help us much though. Having said that there are all sorts of oil projects coming on line in the next little while...Exxon has 20 coming online in the next year alone according to the Exxon CEO.
They are not, btw, looking at $140/bbl and racing out to ramp up oil shale and tar sands hugely either. New projects, from what I have read lately, are price tested at around $70/bbl...if the oil companies are not making a buck or 20 at that price they are not moving a project towards completion.
That is why the 'underlying price' is important.
There are dozens of oil tankers sitting at anchor off refineries chock full of oil that no one wants to buy because of the price..a price largely driven by Futures.
Refineries are running stock holdings down and selling as much refined product as possible at the current high prices and, no doubt, hoping the price retreats, if not crashes, before they are forced to buy the oil in the tankers so they don't get left with huge holdings of expensive oil that just halved in value.
Too the March/April time of year in the US (and it is US demand that drives the Futures Traders/price) is a time of annual reduced demand and refineries reduce production and do some maintenance/change over from primarily heating oil to petrol before demand rises again in the summer so called 'driving season'...although maybe not so much 'driving' this year.
Of course the Futures Traders use falling refinery inventory as an excuse to cry 'PANIC' and bid up the price another $5...just like a gunshot in Nigeria drives it up $3.
OPEC, particularly the Saudis, watch all this and ****loads of other factors besides and see demand falling worldwide at the same time supply is peaking - remember all that oil sat in tankers/new oil coming online?
Far from responding to the political posturing of Bush, Rudd et al to ramp up production they want to restrain it (to avoid another price crash like the 80s when oil went from $100+/bbl [inflation corrected] to $12) but can't because the Futures Traders will scream "Peak Oil-the Saudis are really running out" and the price will go through the roof.
OPEC and the big oil producers like Exxon are sat on the edge of their seats at the moment waiting for the crash they know is coming and that they are almost powerless to stop.
Non of the above is to minimise the incredible problem that $140/bbl presents our industry and the wider economy...it is a REALLY big deal and we will almost certainly see recession as a result...but recession is NOT the end of the world.
Falling US$ (30+% in the last few years)
Various aspects of speculation
'Security' concerns (when has the ME/Nigeria/South America not been a political tinderbox?) - Excess liquidity - Institutional investors trying to recover money lost in the subprime meltdown - etc
Artificially constrained supply.
Nationalisation of various country's (Russia/Indonesia/Nigeria/Venezuela/Brazil/Saudi Arabia etc) oil resources since the 80s...with attendant drops in drilling efficiency in many countries because of a lack of expertise...Indonesia and Venezuela for starters.
The political left/environmental lobby making it impossible for oil companies to build new refineries/drill where they want to increase supply in the last 30 years. No new refineries since 1975 in the US (and many other countries too) and 85% of US continental shelf oil fields and Alaskan oil fields off limits because of the environmental lobby.
Come to that when was the last oil refinery built in Australia?
Consolidation of the US oil industry...read anti competitive, monopolistic practices by the really big US oil companies. They bought out and shut down the 100s of little competitor oil companies that existed in the 20s,30, 40s 50s, 60s, 70s.
Remember when you could buy Amoco petrol, as one example of consolidation reducing competition, in Australia in the 70s?
Lack of funds/desire on the part of oil companies to spend on infrastructure when the price was $12/bbl all through the late 80s and 90s. The modern management practice of manic cost cutting (evident in all businesses in the last decades) is a factor here too. Cost cutting on maintenance, as an example, that BP got stung by last year at Prudo Bay.
The sudden demand for double hulled tankers after the Exxon Valdez spill in Alaska didn't help with infrastructure either...it takes a while to build 1000s of double hulled oil tankers.
Iraq's oil being essentially removed from the world market for an extended period post GW1.
Increased demand
Yes no doubt demand has increased, although now heading south again because of price, especially in India and China but really the world over. Not as much in India and China as the futures traders would have you believe but more than the oil companies could cope with because of the artificially constrained supply side. Read lack of foresight on the part of industry and Govts.
Resource scarcity is not a factor...there is ****LOADS of stuff in the ground. In the ground doesn't help us much though. Having said that there are all sorts of oil projects coming on line in the next little while...Exxon has 20 coming online in the next year alone according to the Exxon CEO.
They are not, btw, looking at $140/bbl and racing out to ramp up oil shale and tar sands hugely either. New projects, from what I have read lately, are price tested at around $70/bbl...if the oil companies are not making a buck or 20 at that price they are not moving a project towards completion.
That is why the 'underlying price' is important.
There are dozens of oil tankers sitting at anchor off refineries chock full of oil that no one wants to buy because of the price..a price largely driven by Futures.
Refineries are running stock holdings down and selling as much refined product as possible at the current high prices and, no doubt, hoping the price retreats, if not crashes, before they are forced to buy the oil in the tankers so they don't get left with huge holdings of expensive oil that just halved in value.
Too the March/April time of year in the US (and it is US demand that drives the Futures Traders/price) is a time of annual reduced demand and refineries reduce production and do some maintenance/change over from primarily heating oil to petrol before demand rises again in the summer so called 'driving season'...although maybe not so much 'driving' this year.
Of course the Futures Traders use falling refinery inventory as an excuse to cry 'PANIC' and bid up the price another $5...just like a gunshot in Nigeria drives it up $3.
OPEC, particularly the Saudis, watch all this and ****loads of other factors besides and see demand falling worldwide at the same time supply is peaking - remember all that oil sat in tankers/new oil coming online?
Far from responding to the political posturing of Bush, Rudd et al to ramp up production they want to restrain it (to avoid another price crash like the 80s when oil went from $100+/bbl [inflation corrected] to $12) but can't because the Futures Traders will scream "Peak Oil-the Saudis are really running out" and the price will go through the roof.
OPEC and the big oil producers like Exxon are sat on the edge of their seats at the moment waiting for the crash they know is coming and that they are almost powerless to stop.
Non of the above is to minimise the incredible problem that $140/bbl presents our industry and the wider economy...it is a REALLY big deal and we will almost certainly see recession as a result...but recession is NOT the end of the world.
Last edited by Chimbu chuckles; 9th Jun 2008 at 13:25.
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Chimbu,
good post, but like I said above: "For every Bubble, there is a needle in waiting (Warren Buffett)".
This one too, will burst, IMHO probably sooner rather than later. Albeit, a rapid, very temporary spike to higher levels is possible. Most Airlines however, will not feel the pinch on their blance sheets, but it surely will scare the living daylight out of them.
Nevertheless, high oil is generally a tax on the consumer, as it is passed on by the producers...
No doom and gloom, just a hick-up.....
good post, but like I said above: "For every Bubble, there is a needle in waiting (Warren Buffett)".
This one too, will burst, IMHO probably sooner rather than later. Albeit, a rapid, very temporary spike to higher levels is possible. Most Airlines however, will not feel the pinch on their blance sheets, but it surely will scare the living daylight out of them.
Nevertheless, high oil is generally a tax on the consumer, as it is passed on by the producers...
No doom and gloom, just a hick-up.....
Some people are making alot of money out of this at the moment, they have the influence to control the politicians and media, and hype things along with talk of peak oil, demand in China and India, instability in Nigeria etc. If I'd bought oil I would hope the price would go up as well.
Once the bubble bursts there will be some serious losses, but most of the main players will have pulled out and moved onto something else. Those who got in too late will be holding oil they have bought at $130/barrel hoping to sell it at $150+, but finding they can only get $90 for it.
This wild futures and speculators driven ride can't go on for ever. There will be more pain to come, prices could top $150 but eventually it will collapse like the stock market in 1987.
For the moment I will retreat to my bunker in the hills and live off my store of tinned food. All bought for Y2K, after all as the clock ticked over into 2000 all the worlds computers would go crazy and civilisation would breakdown. I'm amazed that my washing machine still works, even these would be affected acording to some experts.
Once the bubble bursts there will be some serious losses, but most of the main players will have pulled out and moved onto something else. Those who got in too late will be holding oil they have bought at $130/barrel hoping to sell it at $150+, but finding they can only get $90 for it.
This wild futures and speculators driven ride can't go on for ever. There will be more pain to come, prices could top $150 but eventually it will collapse like the stock market in 1987.
For the moment I will retreat to my bunker in the hills and live off my store of tinned food. All bought for Y2K, after all as the clock ticked over into 2000 all the worlds computers would go crazy and civilisation would breakdown. I'm amazed that my washing machine still works, even these would be affected acording to some experts.
Grandpa Aerotart
live off my store of tinned food. All bought for Y2K,
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Once the bubble bursts there will be some serious losses, but most of the main players will have pulled out and moved onto something else. Those who got in too late will be holding oil they have bought at $130/barrel hoping to sell it at $150+, but finding they can only get $90 for it.
This wild futures and speculators driven ride can't go on for ever. There will be more pain to come, prices could top $150 but eventually it will collapse like the stock market in 1987.
This wild futures and speculators driven ride can't go on for ever. There will be more pain to come, prices could top $150 but eventually it will collapse like the stock market in 1987.
It might sound harsh, but I can't wait to see the bastards get burned.....to a crisp.
There is a saying in the stock market, "Don't panic, but if you are going to panic do it before everyone else." Rather than Peak Oil, think peak oil price. Which trader is going to blink first as he realises he's just paid too much and tries to cut his losses. All of a sudden more and more oil comes onto the market as others follow him in a stampeed to get out and the price plummets.
Asian countries such as Malaysia and Indonesia,are reducing subsidies leading to reduced demand. Airlines particularly in America are grounding older inefficient aircraft. American drivers are finding that they can get by without a V8 5litre turbo charged SUV doing 15mpg. President Bush is on his way out, will his replacement be so friendly with Big Oil ?
The question is when and at what price all this happens.
Asian countries such as Malaysia and Indonesia,are reducing subsidies leading to reduced demand. Airlines particularly in America are grounding older inefficient aircraft. American drivers are finding that they can get by without a V8 5litre turbo charged SUV doing 15mpg. President Bush is on his way out, will his replacement be so friendly with Big Oil ?
The question is when and at what price all this happens.
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CC, I realise you don’t want to startle the horses but please try to use reputable sources to support your arguments about “****loads of the stuff in the ground and trillions of barrels of oil available from tar sands and oil shales here in Australia” if we could only bolt the door and keep it all for ourselves. It simply doesn’t work that way otherwise why not close down the whole of the NW Shelf and keep all that LNG and tell the Chinese and Japanese to go jump? It’s a world market and the almighty dollar always wins the day. Then there’s that mountain of the shale and tar sands you say Canada is sitting on and the huge reserves in the Arctic if only those f%#king Greenies would get out of the way and let us get at it. Who knows what is there but it is not going to be available in great enough quantities for decades and put simply can all the unfound and unproven resources be exploited quickly enough to more than offset the peaking and decline of the known and proven reserves?
Sorry CC the liquid oil that’s still available is held in reserves that are shrinking, getting harder and more costly to pump out and the stuff we have yet to find is by definition getting harder to find otherwise we would have found it already and 80% of the oil we use today is being extracted from fields found and developed prior to 1973.
“What about the massive reserves of tar sands and oil shale?” I hear you say. While it was used by the Nazis in WW2, it was a necessity in the absence of alternative supplies of oil and when price did not matter and still used in South Africa as a legacy of their need to overcome sanctions during the apartheid years. Granted the costs to convert tar sands to oil today are more favourable but it still takes energy equivalent of two barrels to produce one of oil and with unacceptable environmental impacts.
All other factors, from the machinations of hedge funds to the lack of twin-hulled tankers compound and complicate the current situation and the price may rise and fall but to $40 a barrel me thinks not. The fact that the Australian dollar is currently at record levels and almost parity with the US dollar protects us from oil prices being up to 50% higher than they are currently. The most likely direction of the Aussie dollar in the longer term is going to be downwards greatly exacerbating the situation for the price of fuel in Australia.
It is as if no one wants to know that the stuff is beginning to run out at the same time as our appetite for it is increasing exponentially. There used to be 5 million bicycles in Beijing but now there are probably more like 5 million motor vehicles increasing at a rate of 1000 per day. India aspires to have a middle class of 300 million living at a similar standard as we do presently by 2025. It is not just their desire to drive a car but the increased use of oil to support every aspect of their economy, everything from plastics, pharmaceuticals to fertilisers and the inputs to grow and transport the food they will eat.
There have been warnings for the past 50 years about the point where oil available for future use was getting to a point where it was less than what had been consumed so no one should now be surprised. In the past ten years these warning have become subject to public debate and yet they have still been ignored by both the public and governments as the consequences were simply too dire to contemplate. Hell, both sides of politics have just spent two weeks debating the merits or otherwise of a 2 -5.5 cent a litre reduction in excise on the stuff. It was akin a discussion on the flight deck with bells ringing, lights flashing and the first decision made was whether to offer the passengers a discount on their airfares on account they were not going to make it.
I think it is obvious that absolutely nothing would be done until we first had a liquid fuels crisis, which is probably what we are having today. The International Energy Agency is predicting a "supply crunch" within five years, while other experts, such as Texas oilman T. Boone Pickens, believe we are already one year beyond the peak and have now begun a downward production slide. The German Energy Watch group has just published a report asserting we are past the peak and predicting a 50 per cent decline in oil production by 2030 and an ex-vice president of the National Iranian Oil Company, Ali Samsam Bakhtiari, predicted a 30 per cent decline in production within the 13 years to 2020. A survey by researchers at Case Western Reserve University collating the opinions of 155 oil industry experts rated peak oil occurring before 2010 as "highly likely".
A search in Google for ‘Peak Oil’ produced 4.6 million hits while a search for ‘Peak Oil myth or lie’ revealed 136,000 hits of which many I looked up at random were actually arguments in the support of Peak Oil.
In conclusion I do not subscribe to the idea that it is the end of life as we know it but it will take some serious changes in the way our economies work and the way we live. Treat it as a challenge that we can meet.
Sorry CC the liquid oil that’s still available is held in reserves that are shrinking, getting harder and more costly to pump out and the stuff we have yet to find is by definition getting harder to find otherwise we would have found it already and 80% of the oil we use today is being extracted from fields found and developed prior to 1973.
“What about the massive reserves of tar sands and oil shale?” I hear you say. While it was used by the Nazis in WW2, it was a necessity in the absence of alternative supplies of oil and when price did not matter and still used in South Africa as a legacy of their need to overcome sanctions during the apartheid years. Granted the costs to convert tar sands to oil today are more favourable but it still takes energy equivalent of two barrels to produce one of oil and with unacceptable environmental impacts.
All other factors, from the machinations of hedge funds to the lack of twin-hulled tankers compound and complicate the current situation and the price may rise and fall but to $40 a barrel me thinks not. The fact that the Australian dollar is currently at record levels and almost parity with the US dollar protects us from oil prices being up to 50% higher than they are currently. The most likely direction of the Aussie dollar in the longer term is going to be downwards greatly exacerbating the situation for the price of fuel in Australia.
It is as if no one wants to know that the stuff is beginning to run out at the same time as our appetite for it is increasing exponentially. There used to be 5 million bicycles in Beijing but now there are probably more like 5 million motor vehicles increasing at a rate of 1000 per day. India aspires to have a middle class of 300 million living at a similar standard as we do presently by 2025. It is not just their desire to drive a car but the increased use of oil to support every aspect of their economy, everything from plastics, pharmaceuticals to fertilisers and the inputs to grow and transport the food they will eat.
There have been warnings for the past 50 years about the point where oil available for future use was getting to a point where it was less than what had been consumed so no one should now be surprised. In the past ten years these warning have become subject to public debate and yet they have still been ignored by both the public and governments as the consequences were simply too dire to contemplate. Hell, both sides of politics have just spent two weeks debating the merits or otherwise of a 2 -5.5 cent a litre reduction in excise on the stuff. It was akin a discussion on the flight deck with bells ringing, lights flashing and the first decision made was whether to offer the passengers a discount on their airfares on account they were not going to make it.
I think it is obvious that absolutely nothing would be done until we first had a liquid fuels crisis, which is probably what we are having today. The International Energy Agency is predicting a "supply crunch" within five years, while other experts, such as Texas oilman T. Boone Pickens, believe we are already one year beyond the peak and have now begun a downward production slide. The German Energy Watch group has just published a report asserting we are past the peak and predicting a 50 per cent decline in oil production by 2030 and an ex-vice president of the National Iranian Oil Company, Ali Samsam Bakhtiari, predicted a 30 per cent decline in production within the 13 years to 2020. A survey by researchers at Case Western Reserve University collating the opinions of 155 oil industry experts rated peak oil occurring before 2010 as "highly likely".
A search in Google for ‘Peak Oil’ produced 4.6 million hits while a search for ‘Peak Oil myth or lie’ revealed 136,000 hits of which many I looked up at random were actually arguments in the support of Peak Oil.
In conclusion I do not subscribe to the idea that it is the end of life as we know it but it will take some serious changes in the way our economies work and the way we live. Treat it as a challenge that we can meet.
We have been used to relatively cheap oil in the past which has meant little incentive to conserve it or find alternatives. Now that it's hit record price levels suddenly the benefits of using it efficiently and developing alternatives become apparent.
If the price settles at a relatively high but not exorbitant level rather than crashing back to $40/barrel, the benefits of conservation, finding alternative energy sources and exploiting the harder to reach reserves will still be there.
We may be better off with $80/barrel oil than $40 in the long term.
The American greenies may have to give a bit of ground and allow drilling in previously off limit areas. If it's them or $6/gal petrol, ways will be found to get around them.
India may want a 300 million strong middle class, whether it actually gets it is a different matter. However there will be no stopping the Chinese, their consumption will grow and grow.
The South Africans successfully made fuel from coal, out of necessity not because it was cheaper. Google "SASOL" for the story. All with 1970s/80s technology, think how much better it could be done today.
Those who can adapt to a new environment survive, those who can't or won't , perish. Imagine what Concorde would cost to run at todays fuel prices and how much a LHR - JFK ticket would cost vs a modern fuel effecient twin such as the B777 or A330.
If the price settles at a relatively high but not exorbitant level rather than crashing back to $40/barrel, the benefits of conservation, finding alternative energy sources and exploiting the harder to reach reserves will still be there.
We may be better off with $80/barrel oil than $40 in the long term.
The American greenies may have to give a bit of ground and allow drilling in previously off limit areas. If it's them or $6/gal petrol, ways will be found to get around them.
India may want a 300 million strong middle class, whether it actually gets it is a different matter. However there will be no stopping the Chinese, their consumption will grow and grow.
The South Africans successfully made fuel from coal, out of necessity not because it was cheaper. Google "SASOL" for the story. All with 1970s/80s technology, think how much better it could be done today.
Those who can adapt to a new environment survive, those who can't or won't , perish. Imagine what Concorde would cost to run at todays fuel prices and how much a LHR - JFK ticket would cost vs a modern fuel effecient twin such as the B777 or A330.