Tuesday, August 16, 2005
How Serious is Peak Oil?
Oh Lord! My search engine says this article is coming from Beverly Hills! Beverly Hills....meet peak oil!
"In the past, oil was considered to be an unlimited natural resource. It was sold freely, like gravel or crushed stone. Until now, the real price of oil has generally been related to the cost of extraction. Speculation and politics have caused the wide shifts in the price of oil that we have seen in the past, and will continue to do so in the coming years. But, in the near future, oil will also be sold less casually. Its price will be only partially related to demand, and partially because it will be held back in reserve, as a valuable, but dwindling resource. It will be sold with a view toward the conservation of capital, if you will.....
....As you can see, the problem is not a shortage of oil, but it is the price of oil. International politics and speculation would have prices rising in any case, but the war and turmoil in the Middle East is causing most of the excessive price speculation that we see today. Certainly developing countries like India and China are having some considerable affect on the price as well. It is highly unlikely that we will see oil under $50 again, for any prolonged period of time. On the other hand, prices over $100 will cause investors to initiate adventures into other sources of oil and other sources of energy. Even at $75 or $80, some other forms of energy will begin to replace oil in certain areas, from wind farms and bicycles to solar cells and hybrid automobiles. Most of these new energy sources are of questionable value except on a very small scale. However, new energy sources of any kind require investment and lead time. Meanwhile prices can become disruptive."