Declining oil reserves

Off Topic
21

Matt, you need to appear on Coast to Coast AM.

I am sorry if I disagree with you on some points, but you need to use a little more logic, and less socialist propaganda.

The guy who has ten kids obviously needs a condom, but was his choice to have so many kids. Then again with so many kids, they should be able to help support their father.

Now anybody making $200,000 a year should be putting away a large portion of it. In no time whatsoever this person could (should) be a millionaire, and should be able to have enough invested conservatively to produce a proper cushion.

As far as outsourcing, there is no mention of “insourcing” in the numbers, and those numbers are greater then the numbers being outsourced.

All this doom and gloom is not new. Remember my mention of the worries of oil running out before 1900. Right now we are supposed to be living in a Mad Max world, but things are better then ever, regardless of what you hear on the news, or the weird websites out there.

People keep mentioning this terrible economy where there is a 5.7% unemployment, yet forget to mention that America has more people employed then any time in the history of this country. And it is going up. Don’t worry, it will go down again later, and then up, and down, and up. This is just how the economy works.

And as far as technology, it is not just a function of energy. Rather it is a function of necessity. During WWII, with shortages of everything, and a major war going on, technology took a giant leap.

The same thing will happen with oil. What is not feasible now will be more feasible in the future. Nobody can say what it will be, but there will be changes, when needed.

Years ago when a couple of Billionaire brothers foolishly decided to corner the silver market, Kodak was using silver in their development process. When the price of silver skyrocketed they said the hell with this and came up with a way to develop film without silver.

Why didn’t they do it before? Because they didn’t need to.

It might take oil to make cars now, but in the future it might not. It might cost 1.3 units of energy to get a unit of hydrogen, but will it do so in the future? (Also does it matter so much with solar, which is “free” energy?)

I am waiting until people start trying to conserve sunlight, and wind.

As far as commodities, the prices are regulated by the suppliers. An expert on commodities wrote that when a commodity is in abundance, it’s production is slowed, and when it is in limited supply, it suddenly becomes more profitable, so people start producing that commodity.

Here is an example of the advancement of technology. There is a fear of a drop in the price of diamonds, because synthetic diamonds have advanced to the point that a $10,000 diamond can be produced for $5. The experts can only tell a difference only because the synthetic are more perfect then what is possible in nature.

Made in a mountain, or made in a lab. Doesn’t make a difference to me.

One thing though. Doom and gloom sells, so obviously your site will do well, and so should your book. Just don’t expect me to believe it.

In fact I am willing to put my money on the line. Tomorrow look at the price of a barrel of oil. Note it. And exactly ten years from tomorrow look at the price again, and adjust it for ten years of inflation, and see what the difference in price is. If it goes up, I will pay you ten times the difference. If it goes down, you pay me ten times the difference.

22

I have been on Coast to Coast - Feb 25th of this year.

I don’t understand the socialist propaganda charge. I use that anaology to illustrate the fact that so many people (particularly 'liberals) cannot seem to grasp: nothing can replace oil. The alternatives work, but nowhere near as well as oil. Solar can no more replace oil than the minimum wage job can replace the six figure job.

I address all the issues you raise in my book. Email me privately (go to the site) and I wll send you a complimentary PDF version of the book.

I will make you 3 bets:

Gas will hit 3.50 in Ca. this summer.

Next summer, it will be even higher (adjusted for inflation, of course.)

Some form of a draft will be instituted by 12/2005.

If you noticed on my site - the Peak Oil “doom and gloom” crowd has an astonshing rate of accurate predictions. (I know about the Simon-Ehrlich bet - it was based on a faulty premise, which I can explain more in depth if you’d like.)

BTW, you didn’t happen to watch the CSPAN coverage of the Oil conference yesterday?

They more or less backed up everything I have on my site, albeit in more diplomatic sounding language.

Finally, with all due respect - have you read the extensive rightings of Bush’s energy advisor Matt Simmons. he is scared stuffless about Peak Oil?

When a man who is the president of the biggest energy investment firm in the world and who advises the president of the United States says Peak Oil will be absolutely devastating to our way of life - I take him a bit more seriously than you.

Perhaps you should email him your thoughtfull analysis.

Because clearly you know what your talking about and he is a fool. =)

Matt

23

Regarding solar: it is not free to harness. It takes, on average, as much oil to construct the average solar panel set up as it does to construct a new SUV.

No cheap oil means no solar panels. (or at least none that anybody other than the super rich can afford)

Matt

24

As far as a Mad Max world - Fallujah sure looks Mad Maxish, wouldn’t you say?

Sorry to say, but many t-mag readers, who tend to be young - will get to see this up close as the draft is reinsituted.

Matt

25

Ah Mage, again good stuff. And I love the homage bet to Julian Simon.

BTW, why do none of the doom-and-gloomers ever bother trying to explain what “aberration” caused Simon to win that bet?

26

Answer to the previous question: Because there was no aberration and commodities became cheaper because of demand and innovations responding to it.

27

Matt, say a solar panel station costs an initial 100 units of whatever to build. You are right that when you flip the switch on it will not give you back 100 units in the same time frame that you expended it in making the system. However, with some planning you can actually run the solar panel system for a much longer time than it took you to build it. Say it takes one month to build, it might take you 6 months to get that 100 units of energy back but then every 6 months after that you actually get a free 100 units from the sun with no more cost put into the system. This isn’t rocket science.

You also fail to mention fusion and coldfusion as energy sources.

28

Fusion and cold fusion?

You can’t believe that these are anything but a pipe dream, can you? Break throughs in technology may or may not happen. Still it is a big risk relying solely on them.

With current technology and current supply and demand (even taking into account a higher price increasing supply and reducing demand) the energy market looks troubling for the future.

Flip on over to the commodities prices in your newspapers. Oil and base metals mostly have an inversions (i.e. higher prices now lower prices in the future) in their delivery months. This is not normal as usually the far away months are more expensive since the seller has to pay for the storage of the commodities and demands a premium over the current month.

An inverted market shows there is a real shortage and people are paying extra (i.e. storage cost premium and then some) to get a hold on the commodities now because they are afraid that they might not be able to get them in the future (or at least at any ware near current prices).

Wars of the future may be masked in ideology but they will be what they have always been about, BOOTY (i.e. land and resources).

The more pressing the shortage of resources the more likelihood of war.

Matt some of the things on your website I agreed on, some I though you were over playing, some I disagreed on and some I did not have a clue what you were on about. Never the less I agree that the shooting the messenger (or the bearer of bad news) response is a little irrational.

29

There are some other rumors in the spook world that China implemented 9/11 to destroy our economy. Who knows. Only the guys in area 51 that rebuilt some anti-gravity ships know the answer :stuck_out_tongue:

Nathan

30

Thanks for the link about Julian Simon and the famous bet.

I think it is very important that the bet took place in 1980. Paul Volker had just started to agressively fight inflation at the federal reserve. He did this by drastically cutting the money supply. In effect money became scarce and hence the value of money rose in relation to the value of commodities.

I take that bet today with anyone since Alan Greenpan is at the helm of the federal reserve. Under Alan Greenpan the money supply has exploded. The money supply looks likely to continue to increase into the future under Greenpan or his sucessors.

31

How is fusion a pipe dream, there are hundereds of nuclear power plants in existance today.

Cold fusion may seem like a pipe dream, but so did humans being able to fly so I guess we’ll see.

32

Hold on Matt –

You’ve got to cut me a small break with your attempt to use Fallujah as a proxy for a “Mad Max” world.

Let’s step back from the media view of Iraq (All Fallujah, All the Time!) and think about this for a second.

Iraq is approximately the size of California. Fallujah is one city of approximately 500,000 residents – a city with a history of unrest and insurgency that Saddam kept in check via bribes to the locals. It is also serving as a point of attraction to the foreigners who are coming to Iraq to jihad against the “Evil” U.S.

Why not show the rest of the country, recovering peacefully? That’s a boring story. It’s a much better lead in on T.V. to show one bridge blown up than 10 bridges built.

Given Fallujah’s size and isolation, I hardly think it proves your point.

33

Also, there is a much easier solution to our energy problem that does not involve instituting a draft – or even use of new technology. It involves drilling in Alaska and off-shore for oil, and building more nuclear power plants. Hardly pipe dreams those, eh?

34

Fission may be an alternative, but fussion?

35

Regarding solar:

The Energy Payback time for an average solar set up is 12-24 years.

For oil, it is 6 weeks.

Again, the renewables simply cannot compete with fossil fuels in terms of net energy delivery. It’s not even close. Not to mention that you can’t use solar, wind, etc. . .to power heavy industry, airplanes, boats, etc. . .

Regarding Fallujah: the rest of the contry is recovering peacefully? You’ve got to be kidding. We’ve got 700 plus dead soldiers (with the numbers rising steadily) and a number of wounded as high as 10,000. I think the soldiers might beg to differ with your analysis. Also, you can’t possibly believe were going to pacify Fallujah and then it will all be okay. There are going to be many other Fallujah’s. Our leaders are telling us we will be engaged in the war on terror the rest of our lives. A lifelong war? Again - sounds kinda Mad Maxish to me.

A point about technology: you guys ever watch those documentaries on the History channel about the technologyh of the third reich? Pretty amazing stuff they had - jet fighters, protoype for a stealth bomber etc. . Technologcially, they were amazing - but you know why they lost? They ran out of fuel. Six months after invading Russia, they had to have many of their infantry units use bicycles and horses, as there was no fuel.

Without fuel, it doesn’t matter how innovative or technologically advanced you are. You can’t make adaptations without energy. Energy is not just any commodity! (Note - thank god the nazis did run out of fuel. I simply use this to illustrate a point: no energy = no ability to use your innovative abilities to adapt.

Think of any instance of adaptation: it could be the US building the nuclear bomb, the silver issue discussed above, whatever instance you choose, they all share one fundamental fact: the adaptation that took place was based on an abundance of cheap energy. No cheap energy, no major invention or discovries possible.

I will address the other issues later.

You should listen to the audio and video interviews with Matt Simmons on globalpublicmedia.com He addresses all of your points in a fashion far more thorogouh and articulate than I could.

YOu guys really need to start taking this stuff seriously.

Matt

36

Regarding offshore and Alaksa:

Prudhoe Bay in Alaska is already in decline. ANWR has only enough oil to power the US for 6 months.

Offshore is a solution, but an extremely expensive one. For instance, an offshore rig costs upwards of 100 million dollars to build. An on shore set up costs about 100,000. Source: Jim Puplava, FinancialSense.com.

That is the problem: there’s lots of oil, but what’s left is much, much more expenseive than what we are accustomed to.

It’s true, as conventional oil becomes more expensive, these alternative sources of oil (oil sands, polar, deep water, etc… . ) will become profitable.

But profitablily for the energy companies does not mean affordibility for the average person. Even if you are rich, you will be affected as prices for pretty much everything go up.

Matt

37

There is still going to be supply and demand issues, The oil companies will not make any money if the cost is too high for anybody to buy it. They will always have to sell it at a price that is feasable to most people.

I disagree with your notions of how long renewable energy takes to pay back the equipment. I live very near a 15 unit wind farm that cost 300k a unit, the expected energy production is supposed to be 1.2 million a year. This estimate that the units will pay for themselves in approx 4 years. and after that they will contribute approx 1.2 million a year in energy. If it wasn’t feasable then why would anyone be doing it right now?

38

Wind is better than solar, no doubt - but it still doesn’t compare to oil!

An energy payback time of 6 months versus 4 years - that is a huge difference.

Agains, I go back to the example of the McDonald’s job compared to the IT job.

The McDonald’s job is “feasible” - it will deliver net income, but at nowhere near the rate of the IT job.

If you’ve got a family to feed, you can do it on an IT salary, but not on a Mcdonald’s salary.

Likewise, if we had a small economy and a much smaller population accustomed to a much lower standard of living, wind would be fine. But we have a huge economy, and lots of people accustomed to a very high standard of living. Wind cannot get the job done like oil. (But it is certainly better than nothing)

Wind power is great stuff, but it will never, never account for more than 2 percent of the US energy supply - even with ridicuosly high investment and growth numbers.

Do the math.

Matt

39

Vegita: regarding your supply and demand issues:

Let’s say it costs a company 50 bucks (in the future) to discover, refine, extract a barrel of oil.

If people can’t pay more than 50 bucks, there going to have to sell it at a loss. Which means they will go out of business.

Are you getting this?

40

Vegita,

Another point: you are confusing cost with value.

Each wind unit cost 300,000. But they only cost that much because oil used to construct and transport them was so cheap.

Essentially your wind farm has been subsidized by cheap oil. As oil goes up, the wind farm’s payback time will go up as well.