more nattering about oil and money

[solarbird]

Oil won't run out any time soon. True. This is being reported as a refutation of any ideas about the peak production of crude oil. However, if you look a little more closely at their numbers, you find a few key things:

1. Their numbers indicate that conventional crude production is apparently going to drop substantially - down to 80.6mbl/day, in a period of continually-rising demand.
2. Non-conventional petrochemical sources (read: mostly not actually crude oil) that can be converted to oil and oil-similar replacements will be used to make up all of the losses and add to gains. These are more expensive. However, they still think price will drop significantly, to $35/barrel or less, within a few years. I would love to see some of their numbers on this.
3. They assert directly that proven reserve statements are too conservative and should be taken as substantially larger. In particular, OPEC output growth will make up the overwhelming majority of the increase in oil supply.

I wish the details of their analysis that lead to their summary testimony before Congress today was available on their web site. I would like very much to know some of those details, particularly since there seems to be almost an all out suggestion offensive that oil will get much cheaper soon.

(Mind you, give a big enough recession, and it damned well will! But I don't think that's the way anybody wants to go about achieving that.)

In other news, crude inventories actually climbed a bit, against expectations; about the amount you'd expect if EU ships were still getting here with crude and processed inventories. That's good; we should get through the winter this way without any steep climbs. (I still don't have the kind of timetable I'd like on those EU shipments getting through the system; I wish I did. If we see the beginning of a series of sustained inventory drops, I think that'll be the clue.)

Also, this is interesting, if they go through with it. Venezuela and Russia are also reportedly interested, but aren't taking substantive steps that I know about - tho' Russia is apparently about to go on a Eurobond buying spree.

In mostly-unrelated news, Bloomberg is calling the real estate bubble over, as of yesterday. So are about a zillion other publications. I have no idea whether they're right; I'd have thought the bottom should have dropped out already.

And here's today's leaf:

November Revolution

Comments

[sir-quirky-k.livejournal.com]

I'm not sure how significant the US house-price boom has been, but the UK one has reached ridiculous proportions. An average two-bedroom house in the worst part of my home town - a coastal town three hours from London by train, notable for tourism but with more than its fair share of petty youth crime - is the equivalent of over $200,000. I'm not kidding.

Don't even get me started on the housing market in London.

[backrubbear.livejournal.com]

I'm not terribly well read on the oil stuff, I get most of my info anecdotally.

It's sounding like the current price of oil is high enough that it's pushing technologies meant to exploit oil sands over an edge. I believe the argument is that once those technologies start getting used heavily, the cost of production will go down due to improved harvesting techniques.

If that's true, it'll be interesting to have oil production significantly in our back yard again. I suspect Alberta wont ever be the same.

As for the bubble, I'm rather glad I sold my house when I did.

[sistawendy.livejournal.com]

You know, I've read (in The Economist?) that some oilmen the Saudis' reserve estimates are about twice as high as they should be.

[llachglin.livejournal.com]

$200,000 is pretty close to the median national home price in the US as of this year (last year it was $185k). In Seattle, it's nearly impossible to find a home for that price. We have a modest 3-bedroom house roughly 20 miles outside the city that has a tax valuation above $250K, and those usually lag behind market price during a boom.

Then consider that Seattle is a second-tier housing market, and that things are much more expensive in New York and California.

In short, it sounds pretty similar, though from what I read it sounds like the UK housing cycle is leading the US cycle generally, and likely to cool off just before we do.

[solarbird]

Indeed. Many OPEC proven reserve figures shot up overnight - in many cases, as with Saudi Arabia's, doubling - when OPEC shifted to a policy of basing production quota on proven reserve figures. Many of those figures have also never declined, even while billions of barrels have been extracted.

[llachglin.livejournal.com]

The problem with the oil sands is that extraction is difficult and expensive, so that even given the potentially huge amount of oil there, the amount that will ever be extracted at once will hardly make a dent compared to rising demand. The estimates I've seen are that it could provide as much as 5% of expected demand for the foreseeable future. That's a lot of oil, but it doesn't come close to solving the underlying problem.

It's also expensive, as Solarbird points out, and environmentally destructive. It requires massive quantities of water, and the energy for extraction will probably require nearby coal plants.

It's not a long-term solution.

[backrubbear.livejournal.com]

is that extraction is difficult and expensive

The bits I had read was that they'd made some advances to lower the cost. It is (supposedly) still expensive compared extracting oil from Saudi Arabia, but given current prices, it's supposed to be more viable.

I'll leave it that I haven't done specific research on this nor do I keep this in my references. Likely sources for my comments would be IEEE Spectrum or Wired.