Is it Peak Oil? Moment of truth is here...

[JackRiddler]

I'm among those convinced peak oil will happen and that it's a function of physical reality, but are we there yet? Saudi Arabia has announced in a big way and confident way that they can and want to bring the price down by increasing output. A few peak oil theorists like Matthew Simmons say S.A. has peaked and cannot actually do that. We will find out in the next few weeks. If S.A. has the reserves and the capacity, and is serious about its pronouncements and wants to maintain credibility, then they will deliver and the price will drop back to the $100 level for now. If not, expect the speculation to drive it up to $200 by the end of the year, demand growth or not.

(Meanwhile... Iran. Why? Madness.)

[Speck Tater]

1. They way I heard it, SA CAN increase output...

... but to do so will deplete their fields even faster, bringing the inevitable drop-off even sooner.

[Fovea]

2. Worse than depletion

is the damage caused to the oil bearing structures by forced production.

The Saudis have damaged their biggest field already this way.
I cannot imagine what would motivate them to do it again.

[Warren Stupidity]

3. There are complications.

First the Saud crime family has made similar announcements over the last few years, but oddly enough they have not actually increased output in any meaningful way. Second, the Sauds are not idiots. The dollar is in the shitter and the family is not going to increase supply to the point where, in real terms, oil prices actually go down. Expect some major conditionalizing to come out of this 'summit'.

I think we are in the period where every increase in demand from population growth and economic expansion results in supply constraints that in turn result in price increases. We have also reached the point where price increases dampen economic growth (but not population growth yet) so there will be price fluctuation rather than run away price inflation. Peak oil: most likely yes we are in the early stages. Blaming speculators is convenient, but the speculation is somewhat reality based, they are speculating about what is in store for the future and the bets are on a long term upward trend.

[JackRiddler]

5. Oh yeah...

Blaming speculators is convenient, but the speculation is somewhat reality based, they are speculating about what is in store for the future and the bets are on a long term upward trend.

Hope it's clear that's what I meant as well. Thanks.

[yella_dawg]

4. I've lost count of the times Saudi Arabia has pledged to boost output lately.

They have yet to do so. Any significant, long-term boost would require infrastructure changes, and why pay for that when the reserves are dwindling?

Smoke and mirrors.

[ProdigalJunkMail]

6. even if the Saudis pump more oil

they are limiting the raised output to an additional 700,000bbl/day And that may sound like a lot...but it is only 1/30th the USA daily consumption...and there doesn't seem to be a supply problem at the moment...no shortages that I have heard of.

sP

[Terry in Austin]

7. Yes. A little past peak, actually.

The EIA numbers for world production tell the story. Production has been essentially flat since 2004. In fact, the actual black stuff has been declining -- the totals are being fluffed up with an assortment of "stunt liquids" like condensates, ethanol, tar-sands syncrude, etc.

The first symptom of peak oil -- demand outrunning supply -- is already very much with us. Witness the high prices (sorry, bigoil/speculator conspiracy fans, but reality intrudes).

As many peak oil observers have observed, we won't know for sure until we're seeing it in the rearview mirror -- but in this particular mirror, objects may be further away than they appear.

I agree with you that we're at the moment of truth, although it seems more generally that we're having a moment of denial instead. I'd have to say that Saudi Arabia is totally blowing smoke, and any return to hundred-dollar oil is pure wishful thinking. Even with all the spigots wide open, there just isn't enough of it to go around.

We need to get off of this stuff, fast.

(And Iran? Sheesh. Just one more reason to get clean and sober.)

[ladjf]

8. No. We are at "peak price rigging".

[JackRiddler]

9. Well, that's the question!