Monday, July 31, 2006

'David C' posted this under the title 'Peak Oil and Lack of Market Response' on the Four Corners Open Letters forum.


The curious thing about the situation in oil is not that its price is rising seriously, but the lack of market response. It would appear that there are a number of technologies that exist to take over from oil, and have the added advantage of not creating the sort of environmental damage that oil does. Is it because this price increase has been both sudden and seen as an abberation, rather than a permanent state? If so, your report may have done the world a favour.


I've posted a reply...as Ned


Peak oil has been coming since 1981, when discovery (gross increase in reserve size) was outstripped by usage (decrease in reserve size), giving a net decrease in reserve size.

In the last few year, usage has outstripped the ability to extract from the total reserves due to China & India mainly.

While the 'ability to extract' may increase, short term. The net change in total reserves is a long term trend.

The markets response will be a long term trend too!

The market is starting to respond. Look at the price of sugar (a commodities that is more an energy commodity than the food commodity it use to be) and look at the dollars being paid to farmers for site turbine masts on their land.

When the main source of energy was from mining, farming was a food and fibre game. In future, farming will be a food, fibre & energy game.


I should add that this assumes that Coal, a fossil fuel where the peak is way farther into the future and where the decline would be slower, will not indirectly replace oil, for carbon emission reason.

In effect we would move away to the cheap fuel of the last 250 years(coal), and particularlly the last 100 years(oil). This changes the whole value equation between labour(time) and products (matter & the energy used to transform it).

Interesting times indeed!

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