Cafe Hayek - Latest Comments in Running out of oil?

Re: Running out of oil?

True_Liberal — Tue, 04 Apr 2006 18:36:20 -0000

It's time to revisit the Paul Erlich - Julian Simon wager:

http://www.overpopulation.c...

Re: Running out of oil?

Patrick R. Sullivan — Tue, 04 Apr 2006 11:26:57 -0000

Unfortunately for Venezuela, they drove almost all their petroleum experts out of the country:

http://flyunderthebridge.bl...

Re: Running out of oil?

bbartlog — Tue, 04 Apr 2006 10:46:18 -0000

Roy -

your math is off; based on your numbers we would get 2000 to 12000 days, not 1000 to 6000. But in any case you are attacking something of a straw man; we can assume that Chavez' claim was based more or less on Venezuela's current rate of oil production, not on Venezuela trying to satisfy all global oil consumption. If we accept the figure of 312 billion barrels for Venezuela's reserves, and divide by their current production of 3.3 million barrels per day, we arrive at a figure of 259 years. This figure we can in turn adjust downward to account for continuing increases in production and the reduced efficiency of heavy crude oil; but in any case we can see that the 200 year figure is not mere hyperbole.

Re: Running out of oil?

Roy Stogner — Tue, 04 Apr 2006 07:49:14 -0000

Google's top links tell me that the world uses around 75 million barrels of oil a day and growing, and that Venezuela has 200 to 1200 billion barrels of heavy crude oil potentially available to be turned into 2/3 that volume of crude oil. Assuming we get 3/4 efficiency instead to be optimistic and make the math easier, that gives us between 1000 and 6000 days of Venezuelan oil. I don't want to sound ungrateful, and pushing peak oil back a decade would be fantastic, but this isn't some new unlimited source (or even 200 years worth) of energy, it's another PR opportunity for Hugo "I can use Bush's faults to distract from my own!" Chavez.

Re: Running out of oil?

Aaron Krowne — Tue, 04 Apr 2006 05:36:24 -0000

I dont think Venezeula is really itching to give us a good deal on oil...

Re: Running out of oil?

William — Mon, 03 Apr 2006 18:05:44 -0000

I think the best part of this is it shows a little competition may emerge to combat OPEC's collusive behavior. I'm not sure $50 per barrel is a wise deal to make, though, since I think the price could fall below that once again.

Re: Running out of oil?

Swimmy — Mon, 03 Apr 2006 16:20:15 -0000

I would say that the peak is a little closer than some imagine, if we're gonna go through price fixing nonsense again.

Re: Running out of oil?

Half Sigma — Mon, 03 Apr 2006 11:24:59 -0000

Peak oil only refers to conventional oil. Extracting uncoventional oil like oil sands is more like mining than it is like conventional oil drilling.

Re: Running out of oil?

happyjuggler0 — Mon, 03 Apr 2006 11:11:40 -0000

Oil companies explored for oil in all kinds of countries, found som, and then later had all their findings stolen via nationalization. Why anyone thinks they will not simply steal again when the prices paid seem too small at a later date?

Re: Running out of oil?

John Dewey — Mon, 03 Apr 2006 10:49:28 -0000

That's a good point, Robert. If we trusted Castro and Marcos and didn't get burned, perhaps we should be more trusting of Chavez.

One point about those military bases, though. I think we always had U.S. military presence there to guarantee the contracts. Also, it was probably in the economic interest of the Philipines and Panama to honor their respective agreements. That's a little different scenario than a nation selling its most important asset for less than market value, isn't it?

In any case, you are probably correct that the high offer price is what kills any deal right now.

Re: Running out of oil?

Robert Cote — Mon, 03 Apr 2006 10:17:34 -0000

Ask Cuba or Panama or the Phillpines about long term deals. Guantanamo, Canal, the AFB buried under Pinatubo. We could certainly live up and expect the same from them. $50 oil sounds expensive to me and that's why there's hesitation. Oil companies use internal $25/bbl pricing when evaluating investment in new capital goods or research, exploration, etc.

Of course we could do a real dirty deal and agree to $50 and then inflate our money.

Re: Running out of oil?

John Dewey — Mon, 03 Apr 2006 09:28:12 -0000

Jasperpants,

Are Latin American governments stable enough for us to count on?

The problem such long term deals is that they are not guaranteed. I cannot imagine Saddam Hussein honoring a $1 a barrel deal after the market price rose to $20 and then $30 and $40.

Native Americans were offerred many deals by the U.S. government over the years. Did those deals from even a stable government hold up?

Re: Running out of oil?

johngaltline — Mon, 03 Apr 2006 08:48:43 -0000

Thanks. I loved the pistachio link.

Re: Running out of oil?

JasperPants — Mon, 03 Apr 2006 08:42:17 -0000

The US should look at taking the deal.

I just finished "Twilight in the Desert" by Mattew Simmons where he tells a story about Iraq once offered the US a locked-in price of oil at $1.00 a barrel. (I think this was in the 30's or 40's, I can't be sure.)

At the time, everyone laughed because oil was trading at less than that amount.

Perhaps its worth looking at to cool off relations a bit?

JasperPants