More maths on oil
Econbrowser publishes oil price estimates in more detail
Bottom line: Demand is going to rise one hell of a lot. Supply for that demand just is not there.
This paper does not review supply from coal to liquids or gas to liquids. The only way to meet demand is to generate liquids from coal by underground gasification followed by gas to liquids conversion. This will require many, many quite gigantic projects, but at present we have only a small number of small exploratory projects, most them scheduled to start producing around 2015 or so. So the price of oil will have to rise to quite astonishing levels, at least for a couple of decades. We have only seen the beginning.
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Iredeu
May 27th, 2008 at 8:21 pm
Exactly !!
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Constant
May 28th, 2008 at 3:45 am
Anything sufficiently predictable about the future should already be taken into account in current prices.
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Constant
May 28th, 2008 at 3:46 am
Anything sufficiently predictable about the future should already be taken into account in current prices in some fashion. Is it? I haven’t been watching so I don’t know the answer.
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jamesd
May 28th, 2008 at 8:32 am
Predictions have been consistently and badly wrong.
Private oil companies and speculators have modeled government oil companies, socialist oil, as if socialists were rational actors driven by economic self interest - which I could have told them was a very bad model. Socialist oil is 93% of oil production.
One problem is that the oil rigs are for the most part stolen, and are therefore neglected and deteriorating, even though it would profit the thieves to upgrade them and apply the most modern technology.
Another problem is that high oil prices not only motivate people to extract oil from nature, but to steal oil from people - high oil prices result in increased activity by tyrants, demagogues, terrorists, and bandits, which tends to reduce oil production. Thus production is apt to diminish as a result of higher prices.