Comments on: Debunking Peak Demand http://www.aspousa.org/index.php/2010/04/debunking-peak-demand/ Truth in Energy Thu, 09 Feb 2012 00:16:16 +0000 http://wordpress.org/?v=2.6.2 By: spicetrader http://www.aspousa.org/index.php/2010/04/debunking-peak-demand/#comment-4096 spicetrader Sat, 19 Jun 2010 16:55:38 +0000 http://www.aspousa.org/?p=3488#comment-4096 Scott Benson's assertion of a 70-year cycle would put the dotcom crash as the successor to the Great Crash of 1929. The 70-year Kondratieff cycle was cited also by some commentators at the time of the Crash of 1987. It's interesting to see the Oil Crash of 2009 attributed to the same supernatural cause. Scott Benson’s assertion of a 70-year cycle would put the dotcom crash as the successor to the Great Crash of 1929. The 70-year Kondratieff cycle was cited also by some commentators at the time of the Crash of 1987. It’s interesting to see the Oil Crash of 2009 attributed to the same supernatural cause.

]]> By: Debunking Peak Demand | Peak Oil News http://www.aspousa.org/index.php/2010/04/debunking-peak-demand/#comment-4042 Debunking Peak Demand | Peak Oil News Sat, 24 Apr 2010 15:02:08 +0000 http://www.aspousa.org/?p=3488#comment-4042 [...] ASPO-USA [...] [...] ASPO-USA [...]

]]> By: Cinquero http://www.aspousa.org/index.php/2010/04/debunking-peak-demand/#comment-4039 Cinquero Fri, 23 Apr 2010 18:04:48 +0000 http://www.aspousa.org/?p=3488#comment-4039 Sorry guys, I don't like such theoretical discussions without integrating some reality checks. First of all, the debate about peak demand or peak production is an ideological one. In practice, there are some uses for oil below some price and less economically feasible uses for oil above some price. Looking at price and demand independently or even constructing artificial concepts based on a separations of the two concepts is useless. Let us do a reality check: the Anglo-Saxon world increasaed oil consumption and we (the Germans together with some Asians) robbed them their industries. So while modern industrialization tends to reduce oil consumption, mind-less consumer nations tend to waste oil when having cheap money at hand. In other words: the Federal Reserve together with simple-minded US politicians "said" to the US consumer: buy everything you can. Don't care about tomorrow. Be dumb. Nothing matters. The conclusion of this is: the oil usage increase in the US and in the UK was a result of dumb politics and cheap credit and not of a growing productive base (although credit growth looked like economic growth like it massively did in Q4 of 2009). Will that continue? For now? It pretty much looks like because US and UK and Canadian officials don't seem to be aware of the effect of cheap (dumb) money. My best guess is that this will change if oil prices remain high or when we will experience the next credit-driven oil price peak. Some US senators are already getting some clues that the low Fed rates may have been contributing to the financial crisis. Sorry guys, I don’t like such theoretical discussions without integrating some reality checks.

First of all, the debate about peak demand or peak production is an ideological one. In practice, there are some uses for oil below some price and less economically feasible uses for oil above some price. Looking at price and demand independently or even constructing artificial concepts based on a separations of the two concepts is useless.

Let us do a reality check:

the Anglo-Saxon world increasaed oil consumption and we (the Germans together with some Asians) robbed them their industries. So while modern industrialization tends to reduce oil consumption, mind-less consumer nations tend to waste oil when having cheap money at hand. In other words: the Federal Reserve together with simple-minded US politicians “said” to the US consumer: buy everything you can. Don’t care about tomorrow. Be dumb. Nothing matters.

The conclusion of this is:

the oil usage increase in the US and in the UK was a result of dumb politics and cheap credit and not of a growing productive base (although credit growth looked like economic growth like it massively did in Q4 of 2009).

Will that continue? For now? It pretty much looks like because US and UK and Canadian officials don’t seem to be aware of the effect of cheap (dumb) money. My best guess is that this will change if oil prices remain high or when we will experience the next credit-driven oil price peak. Some US senators are already getting some clues that the low Fed rates may have been contributing to the financial crisis.

]]> By: Bill Simpson in Slidell http://www.aspousa.org/index.php/2010/04/debunking-peak-demand/#comment-4031 Bill Simpson in Slidell Tue, 20 Apr 2010 14:56:50 +0000 http://www.aspousa.org/?p=3488#comment-4031 Peak oil demand? That is a funny concept. If only it even might be true. Oil would need to be far more expensive than it is today, for peak oil demand to be near. And if oil gets that expensive anytime soon, the economy will collapse from demand destruction for everything else. Ten percent unemployment will seem like the good old days, if oil gets that expensive before electric or natural gas powered vehicles become a significant part of the vehicle fleet. There are over 6,000,000,000 people on this planet. That number is expected to increase to roughly 9,000,000,000 by 2050. How many of us own automobiles? I have no idea, but you can bet all your money that a whole lot more people want to own one, than actually own one today. Automobiles have given us the most freedom of movement in human history. The vast majority of people who can afford to own a car, will own a car. Living in the rich USA, where even people living in near-poverty own cars, can give us a distorted view of the rest of world. Outside of the developed countries, only a small part of the population can afford to own a car. In China, less than 2% of the 1,300,000,000 people own cars. The 1,000,000,000 Indians like cars too. That is why we see new auto plants being opened on a regular basis in China, and elsewhere. Those plants produce a lot of cars. Nearly all of those additional vehicles are powered by oil. We haven't seen the tip of the iceberg in car ownership on this planet. Most people still live in underdeveloped countries, but many of these countries are now developing fast, as world trade continues the rapid growth that Chinese industrialization, and the invention of the shipping container, helped initiate. They aren't widening the Panama Canal for nothing. The fully developed world of North America, Europe, Japan, Australia, New Zealand, S. Korea, and a few other scattered countries, could never reduce their oil consumption enough to keep world oil consumption from increasing, without going into a permanent state of economic contraction. There are just too many other people out there that want a car, and will soon be rich enough to buy one. I wonder how much fuel all those new jets that Airbus and Boeing will sell to China, and the rest of Asia, will burn? Those planes don't sit on the ground for long. Think how much fuel one jetliner consumes in its' lifetime. I bet that is one scary number. Peak oil demand? That is a funny concept. If only it even might be true. Oil would need to be far more expensive than it is today, for peak oil demand to be near. And if oil gets that expensive anytime soon, the economy will collapse from demand destruction for everything else. Ten percent unemployment will seem like the good old days, if oil gets that expensive before electric or natural gas powered vehicles become a significant part of the vehicle fleet.
There are over 6,000,000,000 people on this planet. That number is expected to increase to roughly 9,000,000,000 by 2050. How many of us own automobiles? I have no idea, but you can bet all your money that a whole lot more people want to own one, than actually own one today. Automobiles have given us the most freedom of movement in human history. The vast majority of people who can afford to own a car, will own a car. Living in the rich USA, where even people living in near-poverty own cars, can give us a distorted view of the rest of world. Outside of the developed countries, only a small part of the population can afford to own a car. In China, less than 2% of the 1,300,000,000 people own cars. The 1,000,000,000 Indians like cars too.
That is why we see new auto plants being opened on a regular basis in China, and elsewhere. Those plants produce a lot of cars. Nearly all of those additional vehicles are powered by oil. We haven’t seen the tip of the iceberg in car ownership on this planet. Most people still live in underdeveloped countries, but many of these countries are now developing fast, as world trade continues the rapid growth that Chinese industrialization, and the invention of the shipping container, helped initiate. They aren’t widening the Panama Canal for nothing.
The fully developed world of North America, Europe, Japan, Australia, New Zealand, S. Korea, and a few other scattered countries, could never reduce their oil consumption enough to keep world oil consumption from increasing, without going into a permanent state of economic contraction. There are just too many other people out there that want a car, and will soon be rich enough to buy one.
I wonder how much fuel all those new jets that Airbus and Boeing will sell to China, and the rest of Asia, will burn? Those planes don’t sit on the ground for long. Think how much fuel one jetliner consumes in its’ lifetime. I bet that is one scary number.

]]> By: Scott Benson http://www.aspousa.org/index.php/2010/04/debunking-peak-demand/#comment-4028 Scott Benson Mon, 19 Apr 2010 23:57:24 +0000 http://www.aspousa.org/?p=3488#comment-4028 There was no talk about speculation before the 2008 blowup either, although it was very clear that investors (speculators) caused the price of oil to zip up to $147/barrel in the summer of 2008. How do we know? Because the price came crashing down just as fast, as investors (speculators) unwound their investments to cover other losses. Speculation (and the dollar) had everything to do with oil prices. And this time is no different. It's an asset bubble, just like we've had every 70 years or so for the last 500 years. Take the ultra-low interest rates we have worldwide, and add a few over-excited investment professionals who are about my age (42), and you can see how lots of borrowed money has flooded the stock and commodity markets yet again, raising prices. There is no shortage of oil anywhere, especially in the U.S. The mature economies may indeed have oil-peaked in terms of demand, but the idea that emerging economies (China) are going to have the cash on hand to buy up more expensive oil, I seriously doubt it. Oil is a self-price-limiting commodity. Higher prices mean less demand means lower prices. Peak demand is nonsense, but peak affordability isn't. There was no talk about speculation before the 2008 blowup either, although it was very clear that investors (speculators) caused the price of oil to zip up to $147/barrel in the summer of 2008. How do we know? Because the price came crashing down just as fast, as investors (speculators) unwound their investments to cover other losses. Speculation (and the dollar) had everything to do with oil prices. And this time is no different. It’s an asset bubble, just like we’ve had every 70 years or so for the last 500 years. Take the ultra-low interest rates we have worldwide, and add a few over-excited investment professionals who are about my age (42), and you can see how lots of borrowed money has flooded the stock and commodity markets yet again, raising prices. There is no shortage of oil anywhere, especially in the U.S. The mature economies may indeed have oil-peaked in terms of demand, but the idea that emerging economies (China) are going to have the cash on hand to buy up more expensive oil, I seriously doubt it. Oil is a self-price-limiting commodity. Higher prices mean less demand means lower prices. Peak demand is nonsense, but peak affordability isn’t.

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