Tuesday, August 25, 2009

Rising oil price - differing reasons - but no peak

Oil prices are rising again - up 65% in the current year. Reasons differ - Opec oil production cuts, data indicating economic recovery, political tension in Nigeria - take your pick. However, two recent newspaper articles written in different continents have rubbished the existence of Hubbert's Peak. This one in New York Times exhorts readers to rally against government attempt to conserve oil:
we can’t let the false threat of disappearing oil lead the government to throw money away on harebrained renewable energy schemes or impose unnecessary and expensive conservation measures on a public already struggling through tough economic times.

The other just blames OPEC. Don't forget to read the comments on this one - highly entertaining and informative.

So should one worry about oil and oil prices or not? Go figure

2 comments:

Unknown said...

Anandbhai,

I agree with the following points mentioned in the comments on the article blaming OPEC:

1. Oil price is being measured in USD. Therefore, one should also look at the performance of the USD in the currency market. USD index is at ~78 - the lowest pt in 2009. Unfortunately, this factor will never register with the Americans.

2. Peak oil is not necessarily a geological phenomenon. It will be the consequence of underinvestment in the upstream oil sector and will likely be caused when the incremental output from new fields/wells lags behind natural depletion of mature fields. What will be interesting to see is what happens to the oil markets when demand once again reaches 87 mmbbl/d.

Cheers,
Sandeep

Sunil Venkatesh said...

Hi Anand,

FP has a compelling article on peak oil.

Regards,

Sunil V

http://www.foreignpolicy.com/articles/2009/09/04/oil_spin?page=0,0

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