Posted by: seanmalstrom | December 20, 2014

Email: Oil and Gas

Hello there, Sean,

>The  problem  is  that  oil  is  not,  and  never  has been, a scarce
>resource.  The  drop  in  price  should  show  even the most stubborn
>scarce-resource  believer that oil is infinite and in massive supply.
>Oil  does  not  come  from the ground. Oil comes from the Human mind.
>Just  like  all resources are not the bountiful gift of Earth but are
>products of the Human mind. Iron ore is just a rock until Man gave it
>purpose.
Don’t quite share your optimism here. Any hard data to back it up? Of course,
there  always  will  be some oil somewhere, but the real question is
for how much and for how long we could really excavate it? By “for how
much” I mean  EROEI, by “for how long” I mean it’s not a viable energy
resource  to  support world’s current, let alone rising, level of consumption
in long-term scenario (= decades to come).

How about the last 200 years? Oil and Gas is an extremely OLD industry. The reason why it has busts and expansions is because it survives while other industries vanish altogether.

There is no limit on oil. Oil is endless. The reason why is because oil is produced, like everything else is produced, by this thing called ‘technology’. Technology comes from the Human mind. It is the Human mind that is the resource. Oil does not flow from the Earth, it flows from the brilliant minds of the Oil and Gas industry. They are the best paid engineers and scientists in the world for a reason.

Saying that oil comes from the ground is as ridiculous as saying computers come from sand. The material does not create the resource or product. The Human minds create it.

Unless there is a Dark Age or a nuclear war or some other disaster, I do not see how technology would go backwards.

 

>Oil  prices  are down because there is too much oil. Just like today,
>the  idea of expensive natural gas only belongs to the past, the idea
>of  oil  being  expensive  may  only  belong  in  the  past.  Future
>generations  may wonder why people thought oil would remain expensive
>and cannot imagine what the fuss was all about.
Not  quite  my  perspective  as well. Drop in oil prices and crisis of
2008  is  certainly  not a coincedence but merely a sign of collapsing
debt  bubbles.  It  went  down  dramatically  in 2008 and would have
dropped  more  if  not  for  US  money  printing  machine that fixed
nothing, but postponed the process until very recently with the end of
QE3.  So no surpises that the  process  has resumed. With debt bubbles
collapsing I don’t see how demand  could  be on the same level. And if
demand  is  down,  scissors  of  falling  demand  and  ramping  up
production costs annihilate anything above cheap or super-cheap.

Many things went down in 2008, not just oil.

 

//As for the whole shale thing. It always seemed like Ponzi scheme to
me and it indeed proved to be excactly that. “Analysts” and  “experts”
screamed “Buy! Buy! Invest! Invest!” from every frigging gadget  with
a  TV  remote  or Internet connection, competing for “fools capitals”.
The  recent  drop  has  already  started  the  process  of  the  shale
bubble    colapse,  it  just  needs  time  until  it  reaches  every
“investor’s”  mind  (last time in took about half a year, somewhere in
the  end  of  2008  –  early  2009,  before  rig count went down into
oblivion).

You clearly aren’t familiar with the Oil and Gas industry. There is no ‘bubble’ as you think in traditional financial terms. The shale revolution is a technological one such as the invention of off-shore oil rigs. Shale oil will always be around now. The next Civilization game will likely be having ‘shale oil’ as a technological innovation just as it already has offshore rigs as an innovation.

The Energy Corridor is not unlike Silicon Valley in attracting brilliant minds. But what gets me is that no one wants to mention ‘brilliant minds’ in connection with Oil and Gas. Also, oil and gas is mentioned very differently than other resources. Why doesn’t iron or copper get the emotional response that oil does? Oil is just a commodity after all. Perhaps it is because energy market is the bottom of the pyramid of society. We simply need it for everything. The military needs it to run. The food markets need natural gas to fertile its crops and power its tractors.

When the price of oil rises, it is running out. When the price of oil lowers, it is running out. If the price of oil is steady, it is running out. You guys are insane. It’s not running out because it is generated by minds, not by geology. It is like saying geology created the farms and not the farmer or the ocean creates water trade and not the boat merchants.


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