Dhlazare wrote:
> But the big picture has changed. In the last 20 years we've seen intensified
> exploration throughout the world, particularly in the former soviet bloc. As
> drilling techniques improve, the amount of oil within reach expands. Hence
> the paradox: even tho consumption continues to spiral upwards, production
> accelerates even faster. The result: a continued long-term downward trend in
> energy prices.
There is no long-term downward trend. Prices zoomed up in 96/97 then collapsed later last year for three reasons: the Asia meltdown, an 'exceptionally' warm winter, and more Iraqi oil. There has been no surge of exploration either, and no major discoveries since the early 1970s. The Saudis are investing $100-150bn in uprating their production by up to 10m bbls/day to come om stream in the next 5 years; the cost of this oil, in traditionally the cheapest region, will be around $16 bbl. Non-OPEC oil will decline precipitously when the current N SEa phase dies down in 3 years time. As for the Soviet Union, there has been non prospecting spree, quite the contrary. FSU oil production is still less than half what it was in 1985, and will NEVER recover, even when Caspian oil comes on stream (and that is not the bonanza the WSJ in particular, with its absurd estimate of 197bn recoverable bbls, claimed).
US expro in particular has collapsed. Your premises are wrong and your idea of the facts, out by a mile.
> Rather than running out of oil, the problem of a global
> capitalist economy characterized by chronic over-production is one of too much
> -- too much oil (and therefore weak prices), too many cars, too much CO2, and
> too much global warming.
The market checks prices like a carburettor checks the flow of gasoline: neither checks how much is left in the tank. People (like WSJ, API and even the DOE EIA) counter the known facts of global EUR and depletion rates, with lots of kooky little stories like what is happening in Texas high ground and the ole' Mississip. You need to ask why they cover the trail with all these red herrings.
> Imagine if such hyper-intensive
> techniques were applied globally. Production would zoom, while prices would
> crash through the floor.
Expro has got better and more cost-effective because of 3d seismic, but like I say, all that is happenign is that the reserve are being pumped out faster. This, actually, is what happened in the USSR, where the Hubbert curve, undeflected by such phenomena as Texas prorationing, OPEC cartels etc, went up expontentialy and then went down even quicker. In other words: oil production will not fall gently; as a result of the present 'glut', it is more likely to collapse.
Every price hike in the past 30 years has been preceded by a glut, low prices, depressed market, and a rush by Detroit to bang out more and bigger gas guzzler. So don't kid yourself.
> None of this is to deny that an environmental crisis exists. It does -- it's
> just a different kind of crisis predicted by the dreaded Paul Erlich and his
> various epigones. While energy prices are falling, the cost, measured
> socially and environmentally, continues to rise. The more oil we consume, the
> more society is impoverished.
I agree except that I don't dread Ehrlich; like a lot of right-wingers with tunnel vision, he sees a long way in the direction he's looking.
> As for "politico-economic perturbations that
> are of course unjustifiable," what I was referring to were factors acting on
> the energy market (narrowly construed) from without. Capitalism was in the
> throes in the '70s of an inflationary panic.
> The world, if you recall, was
> running out of everything -- energy, cocoa, coffee, and a host of other raw
> materials. What was in fact happening was that there was an oversupply of
> dollars, negative real interest rates, and consequently a flight to
> commodities. For OPEC, it was more profitable for a time to keep its oil in
> the ground than to sell it for devalued American currency. The ideology of
> shortage, which people like Erlich were so busily promoting, was very much a
> product of the time.
Look, this is a very interesting and complec question -- the collapse of Bretton Wods, US dollar seignorage and how the US itself colluded with OPEC to mop up the eurodollar overhang. But the bottom line about inflation is that it happens when social classes and regional and politcal interest groups and elites are temporraily powerful and the hegemonic power is temporarily weak, as the US was after Vietnam. Inflation in Europe was driven by working class militancy and exceptional wage pressure to compensate for consumer (oil-shock driven) price inflation. Similarly, Latin America in particular was onm the crest of a wave. All these different interest groups got screwed by sado-monetarism, and the inflationary heat was take away: but all this only proves that there had been a battle over scarce resources, chief among them, oil. There is no more convincing evidence about energy scarcity than the story you yourself tell: unless it is the fact that even tho oil is so 'cheap' today, 75% of humankind have to make do with wood and dung as energy resources. That's how THEY'VE been screwed.
> In short, the world ain't gonna run out of oil for some time to come.
In shorter, this is not so.
> Indeed,
> assuming democracy triumphs
Pardon me?
> and the world responds rationally
Eh?
> to global
> warming and similar problems, we can expect to see the "greening" of the tax
> system, a general trend away from fossil fuels, and a further reduction in
> petro prices.
>
Dream on, Dan. No tax greening in your lifetime. Not in the US, not before the next oil shock anyhow (which will be in your lifetime, I guess).
Regards Mark