Is it true that today we have more available oil than 25 years ago? And by available i mean, a source of oil that we know of and can be explored.
Yes: http://www.bp.com/sectiongenericarticle.do?categoryId=9017902&contentId=7033474
But that’s probably irrelevant. Demand has grown even faster, which is contributing to the rise in oil prices, and accelerating the eventual depletion of easy-to-access reserves.
the key word being eventual. We could increase our own oil production in the short term while technology catches up. I’ve always felt it was the environmentally responsible thing to do since we can monitor and enforce our own laws. We should experience any environmental repercussions. We’re already pulling oil from the Anwar area but because someone drew a line on a map it’s suddenly too dangerous to extend the operation. do the antelope know where the line is? I’m going with “no” as an answer.
Sorry to soap box but if we accelerated the use of our own resources we would be able to reverse the flow of money overseas (to non-friendly countries) and that money would stay in our economy. Right now we’re paying the Saudi’s to buy our country back from us. The overall increase in GNP would allow the government to expand research into alternative fuels. It’s not like we don’t have a bunch of universities at our disposal waiting for government grants. Here ya go MIT, make me a new automothingy that gets a 100 miles per banana peel. Annnnd…. go.
Where’s the common sense here? If we can build a nuclear device during the steam engine era what is so hard about developing bio-diesel from algae? We have 9 thermal solar power stations in the United States but we can’t invest in bringing the production cost down when we’re sitting on a solar gold mine in the West. “Hello, MIT, need a solar dohickey that costs 8 cents per kilowatt to run. Here’s a pile of money from our own oil production profits. Thanks.”
OK, I’m off my soapbox.
Back on your box, Magiver. You’ll note that chart shows the Middle East with 743 bbl of reserves and the US with 60. In 2005 the US consumed 7.8 bbl. Left to your own resources you have less than 8 years’ worth - and that was 2 years ago.
Why, do you suggest, is oil now coming from the middle east when you have it in the US already? Certainly the US oil companies would prefer to get it locally. The answer is it’s cheaper, even given shipping. So to enforce local sources only would actually cost money, not save it.
Yes thats the point of the “Peak Oil” hypothesis… Oil production has been rising since the advent of the oil-based economy (so 25, 15, or 10 years ago there was more oil being produced than there is now) , but so of course has demand.
According to the “Peak Oil” hypothesis at some point in the near future (or recent past) that will stop, we will reach the “Hubbert peak” and there will come a point where we will never again see the output we are currently seeing today, demand however will carry on increasing. Its only a hypothesis but it should be noted that US oil production behaved exactly that way, and reached a “Hubbert peak” in 1980, decreasing ever since.
http://www.voanews.com/english/2008-04-28-voa36.cfm OPEC spokesman mentions the price is not due to supply nor is it peak oil. You can easily see how eventually supply will matter but it is not now.
If we are talking about oil reserves, which are definied as those volumes of oil which are beleived to be present and can be extracted economically at today’s prices, then yes, for several reasons.
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Better drilling and well completion technology has made more oil accessible. We can drill deeper wells and in more hostile environments (like deep water), in order to produce from reservoirs that just could not be reached in the past. Horizontal drilling and improved fracture stimulation techniques makes it possible to produce from low porosity/permeability rock that would be too expensive to develop using older tech.
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Better exploration technology aids geologists in finding new oil reservoirs and overlooked oil in already known reservoirs. Of particular importance are new logging tools (such as magnetic resonance) and the continuing refinment of 3D & 4D seismic imaging.
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High oil prices create more reserves by making previously uneconomic targets into economic ones.
Almost forgot:
4. The relatively high prices of the last 5 or so years have given companies the cash flow and the confidence in future pricing to invest in the personnel to find and drill for oil and to invest in very expensive exploration and production projects that have a high risk of failure and will not pay off for many years if they are successful.
Hmm, but what he says is
As I’ve said before here, that is not possible, as it is already priced and traded in US dollars then any change in the dollar’s value relative to other countries is irrelevant.
He also says it is not about supply. But I have read that part of the reason we went after Iraq and soon Iran is because they threaten to go off the dollar and use the Euro for exchange rate in oil. That is also what Chavez has threatened. Makes it look like oil power is running things.
I guess it depends what chart you look at. North American reserves are more like 398 bbl. And yes some of the reason is cost of production but some of it is due to reserves that are off limits. As the price rises it becomes more viable to tap into local reserves.
My position is that it would be better to open our reserves and use what we have in the short term while developing a replacement technology. I suspect will be making bio-diesel long before we run out of oil. We certainly have the land available for this.
Gallons of Oil per Acre per Year
Corn . . . . . . . 15
Soybeans . . . .48
Safflower. . . . . 83
Sunflower . . . 102
Rapeseed. . . 127
Oil Palm . . . . 635
Micro Algae . .1850 [based on actual biomass yields]
Micro Algae . .5000-15000 [theoretical laboratory yield]
That doesn’t make any sense. If the dollar is becoming weaker(all else being equal), people will demand more dollars for the same amount of oil. The currency that the price is expressed in is meaningless.
The oil may be traded in dollars but all the other countries involved in the buying selling and getting in on the futures trading, the things that drive the price, all have their own currencies that are appreciating against the dollar. They are all willing to pay more dollars for the oil, becuase they can get more dollars per euro, dhiram or peso, effectivly the oil is not getting more expensive for them. The US refineries etc have to compete with the outside world to get the oil and so have to pay a higher price.
The oil has an intrinsic value which is independent of the actual currency it is denoted with. Lets say euro and dollar is 1:1 and Cecil has a bbl of oil for sale, I am wiling to pay 100 euros a bbl, my life and cost and markets are all in euros so that what I want to pay. You also want the bbl of oil and are willing to pay $101. Next year we need another bbl each, only now the exchange rate is 2:1. I am still willing to pay 100 euros becuase my economic situatiom hasnt changed. So if you want the bbl of oil you now have to pay $201 a bbl, or cecil will sell it to me.
The negotiations may be denominated in dollars, but the only point at which a dollar will used is when I convert my euros to dollars for the purchase.
The oil could be priced in dollars, euros or groats, it is not relavent and only used as a arbritary value measure.
Now the dollar depreciation is certainly not the full story with respect to the rise in crude prices, but it is a factor.
Incidentally one of the drivers behind Iran and venezula moving away from the dollar to euors is partialy driven buy the fact that is is very hard for those countries (particularly iran) to get dollars to do the transaction and to work with the US banking system to get the money from their oil sales. If oil were to switch to being priced in euros nothing much would change for the US dollar, except prehaps some liquidity issues as so many dollars are swapped back and forth in the tradinging process.
ETA , What Rysto said more succintcly than I did.
No it’s not. If you contract to buy a million barrels of crude at $100 USD, that’s what it costs you irrelevant of how many Euros that would be.
IOW it’s not that the price of oil happens to be expressed in USD for your convenience; the price in USD IS the price as used in the international market.
Well sure, but since the value of those USD isn’t fixed relative to the Euro et al, exchange rate variations are absolutely going to have significant impact on the USD price of oil. You can say that changes in the dollar’s value are irrelevant all you like, but that won’t make it so.