You're missing the big picture. The scenario today is not the same at all.Diesel_dyk wrote:
I have to disagree with Berster7 on a couple of pointsBertster7 wrote:
Almost all the OPEC countries, particularly Saudi Arabia, are extremely efficient at their extraction. They just like to hold oil back to inflate the price. That's the biggest problem I have with the OPEC cartel. It is places like Russia that could benefit from more foreign investment.Turquoise wrote:
Given the scenarios you put forth here, would it not be reasonable to assume that the pressures many economies will face from the peak oil situation will lead to a strong desire to take the Middle East's oil through force?
I guess what I'm trying to say is... If peak oil really hits in 2010, I'd rather not have the Saudis hold onto a large portion of the world's oil as they please. If they continue to be inefficient in their extraction methods, they will only drive up the price of oil further -- which could lead to a lot of suffering worldwide.
Why not just amass a coalition of major military powers to take the oil? For example, if the U.S., China, and the EU all agreed to conquer OPEC, would there really be any force that could stop us?
Granted, I realize what you mentioned is far more likely to happen, since it's extremely rare for the U.S., China, and the EU to all agree on anything.
None of this matters that much, because in 50 years (or it could be as few as 5-10 years) oil will be too expensive for use to fuel cars and alternative fuels will be needed. Oil has increased in price dramatically recently, I can't see how any further increase can be avoided. Any measures to seize oil militarily would simply delay the inevitable and would, in my opinion, be unspeakably foolish.
In 1998 oil was less than $20/barrel. It is now $130/barrel. It has increased in price by 6.5x in a decade. If prices continue to rise at that rate, which they are likely to do, in 2018 oil will be almost $1000/barrel. It is clear that a commodity that has increased in price to that extent will not be viable for average consumers.
People need to get used to the idea that driving cars running off petrol or diesel will simply not be possible, unless you are exceedingly rich, within a shockingly short timeframe.
First, when the 1973 oil crisis occurred there were predictions that the price of oil would continue to increase exponentially. This did not occur. It only took a 5% decrease in demand to cause the price of oil to decrease to around $10 per barrel. This occurred because the decrease in demand affected the revenue streams of oil producing countries who were dissatisfied with their oil allotment under OPEC. When these dissatisfied countries broke from OPEC and began over producing the result was a plummeting in the price of oil. I would not predict that the price of oil will continue to increase at an exponential rate. this is assuming that the price of oil is not subject to massive market manipulation which I actually do think is occurring.
Second, if China is a major competitor to the US for resources, then why did US officials lobby Canada 3 or 4 years ago on behalf of China for Canada to permit Chinese investment in the tar sands project in Canada. This makes no sense if China is a competitor. Why should the US officials want China to be involved in the supply of oil from the US's safest oil supplier. As you probably know most oil from Canada is pumped by pipeline to the US, not taken by tanker to China. Any ownership of Canadian oil by China would be in the form of oil contracts that would be sold to US oil companies - not taken to China. So why have China involved at all in this process if they are only going to act a middle man between Canadian suppliers and US oil Companies.... Which leads to my point that the oil contracts are being funneled through China for the purpose of market manipulation.
As I understand the deal between the US and Canadian officials, the US horse traded the softwood lumber trade dispute with Canada in return for Canada opening up the tar sands to the Chinese. I fail to see any benefit to the US except for benefit to Cheney.
That all being said, I do see one way in which this could all be in the national security interest of the US, Europe, China and Japan.
If the middle east and Russia becomes comfortable with the idea of $150, $200 or more from oil, these countries will begin to borrow heavily from the IMF and the world bank for mega projects based on the ability to pay back the loans using high oil revenues. While the Suadi's might not fall into this trap I think Venezuela, Mexico, Russia and others are vulnerable.
This would
1. create incentive in domestic markets for increased investment in alternative fuels and decrease dependency on these oil producing regions
2. create an economic club in the form of debt owed to the IMF and world bank where an impending collapse in the oil market would crash these economies. The inability to pay back loans would lead to demands by the world bank and the IMF for these countries to open up their oil markets and oil reserves. It would result in smashing OPEC and opening these markets to foreign investment by big oil without the need for an imperialist conventional war as you state Turquoise - but the result would be the same with having to put boots on the ground. If this is all true then the price at the pump we pay now would be worth it as it would be al ot cheaper that a full out war with the middle east nor a war with Russia which we can't have with anyway. and in the long term we would have a more stable supply and price for oil.
just food for thought -if we had smart leadership with long term goals in mind
The situation in the 70s was very different. Emergent markets in the developing world were far less of a factor, also global production was not approaching its peak, although US production had just passed its peak and begun to decline. There simply isn't enough easily extractable oil to just ramp up production levels for any sort of sustainable period. Short term the price could be stabilised, but that will only hasten the inevitable, which is easily accessible, easily refinable crude running out, which will vastly increase production costs, slow production and put prices through the roof.
The difference today is that there isn't enough oil left. I'm not saying we're imminently going to run out, but the sources are going to become rarer and more difficult to extract from. There is plenty of heavy crude left, but that's crap and refining would be expensive. You can't expect increasing production of a limited resource that is virtually at peak production point already, so soon production WILL go into terminal decline, to be a solution. This is something that will effect us in our lifetimes.
Supply WILL fall dramatically (within 20 years absolute maximum). Demand will continue to rise. Prices will go up and up and up.
China is not a competitor for resources with the US. Much of the oil use in China goes towards manufacturing cheap products for the West.
There is nothing that can be done to prevent oil prices from rising immensely. There simply isn't enough oil to maintain current production rates for any length of time. We are going to have to learn to live without oil, or at least without using loads of oil.
Last edited by Bertster7 (2008-05-25 15:01:06)
