# Peak Oil Question
**URL:** https://boards.straightdope.com/t/peak-oil-question/664699
**Category:** Factual Questions
**Created:** [July 27, 2013, 10:13pm UTC](https://boards.straightdope.com/t/peak-oil-question/664699 "2013-07-27T22:13:26Z")
**Posts on this page:** 9
**Page:** 6
### Author:  [@LonghornDave](https://boards.straightdope.com/u/LonghornDave)
#### Post date: [August 1, 2013, 9:34pm UTC](https://boards.straightdope.com/t/peak-oil-question/664699/101 "2013-08-01T21:34:26Z")
> [@deltasigma](#):
>
> I gave you a cite - the steady down trend in nat gas since fracking which clearly contrast the steady up trend prior to that. How about you give some cites buddy?
The downtrend in natural gas prices relates to the increase in natural gas production. I think the basic story with natural gas prices is that it was extremely low for most of its history, rose quite a bit in the 2000s as production could not keep up with the increase in demand then plummeted as production significantly surpassed demand.
Generally speaking, producers became so good at finding gas that they flooded the market with supply when demand wasn’t there. They did so to their own detriment resulting in numerous bankruptcies or just massive asset impairments.
Also, we have to remember that natural gas is somewhat unique since the U.S. is essentially an island where we can’t easily import or export the product.
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### Author:  [@LonghornDave](https://boards.straightdope.com/u/LonghornDave)
#### Post date: [August 1, 2013, 9:44pm UTC](https://boards.straightdope.com/t/peak-oil-question/664699/102 "2013-08-01T21:44:13Z")
> [@Really\_Not\_All\_That\_Bright](#):
>
> That can’t possibly be a word. Can it?
As already discussed, backwardation and contango are terms describing the shape of the futures curve. A backwardated market can be a bullish sign as it basically means that demand is very strong right now (or there’s a supply disruption or something). You have people buying it now at a higher price even though they can buy it in the future for cheaper.
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### Author:  [@LonghornDave](https://boards.straightdope.com/u/LonghornDave)
#### Post date: [August 1, 2013, 9:49pm UTC](https://boards.straightdope.com/t/peak-oil-question/664699/103 "2013-08-01T21:49:21Z")
> [@md2000](#):
>
> The existing older fields - Saudis, Texas, Libya, Iran, Indonesia - these are producing pretty close to free, since the wells are long ago drilled and only the extraction and piping infrasructure needs to be maintained.
I see people saying this sort of thing a lot and I don’t really understand how anyone can possibly believe this is true.
Older fields generally have higher operating costs, not lower. The reason for this is simple: production is declining and a large portion of the field operating costs are fixed. Therefore, on a cost per barrel basis, lifting costs rise over time. This is true for any field anywhere, conventional or unconventional.
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### Author:  [@LonghornDave](https://boards.straightdope.com/u/LonghornDave)
#### Post date: [August 1, 2013, 9:58pm UTC](https://boards.straightdope.com/t/peak-oil-question/664699/104 "2013-08-01T21:58:30Z")
> [@md2000](#):
>
> For example, one side says that Iran’s nuclear research is not about their hard-on for a bomb, it’s a side effect of the recognition that the oil is running out there, and they need to find other ways to generate electricity to help build toward a first world lifestyle. Big booms are just a beneficial side effect.
A more rational take (if you wanted to say that the nuclear is not for weaponry purposes) would be that they are worried about their consumption increasing. Outside of China and India, the Middle East is the fastest growing oil consumer.
> [@md2000](#):
>
> During the first Gulf War the Saudis would raise production, as they did often if prices got too high, to stick it to neighbours who really needed the cash. They used to be able to ramp up to 10 billion barrels a day or more, now they are lucky to do 6.
Obviously you mean million and not billion, but you’re overall point is incorrect. Saudi Arabian oil production has increased and is more like 10 million barrels per day now (more depending on if you want to include things like NGLs as oil production).
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### Author:  [@LonghornDave](https://boards.straightdope.com/u/LonghornDave)
#### Post date: [August 1, 2013, 10:11pm UTC](https://boards.straightdope.com/t/peak-oil-question/664699/105 "2013-08-01T22:11:50Z")
> [@deltasigma](#):
>
> And yet as I pointed out here, the futures market has the price declining for the next 7 years. (BTW, I only looked at your article so far as to see it was Jan 2011).
Forgot to mention that NYMEX futures aren’t a very good thing to use as a predictor of oil prices.
For one thing, we’re probably generally more concerned with the global price of crude. NYMEX, by far the most active, efficient, and transparent futures market, is based upon the price of West Texas Intermediate oil sold in Cushing, Oklahoma. With the major increase in U.S. oil production, this price has experienced large differentials from global prices. Essentially, there was an increase in supply going into Cushing with no way of getting it all out.
Second, it is really giving the futures market too much credit to act like it is a good forecasting tool. The market exists for the benefit of hedgers and speculators; that is it’s purpose.
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### Author:  [@deltasigma](https://boards.straightdope.com/u/deltasigma)
#### Post date: [August 4, 2013, 8:41pm UTC](https://boards.straightdope.com/t/peak-oil-question/664699/106 "2013-08-04T20:41:18Z")
[PRINCE ALWALEED: Fracking Is Going To Crush The Saudi Economy If Nothing Is Done](http://www.businessinsider.com/saudi-prince-alwaleed-warns-on-fracking-2013-7?nr_email_referer=1&utm_source=Triggermail&utm_medium=email&utm_content=emailshare)
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### Author:  [@Francis\_Vaughan](https://boards.straightdope.com/u/Francis_Vaughan)
#### Post date: [August 5, 2013, 4:51am UTC](https://boards.straightdope.com/t/peak-oil-question/664699/107 "2013-08-05T04:51:06Z")
[Remembering the founder of fracking.](http://www.forbes.com/sites/lorensteffy/2013/07/29/remembering-george-mitchell-and-his-paradox/)
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### Author:  [@Domesticated\_Primate](https://boards.straightdope.com/u/Domesticated_Primate)
#### Post date: [August 13, 2013, 10:23pm UTC](https://boards.straightdope.com/t/peak-oil-question/664699/108 "2013-08-13T22:23:38Z")
> [@md2000](#):
>
> (snipping most of post)
>
> My POV is - we’ve bought ourselves some time with fracking, let’s spend that time
> wisely.
What about the side effects of fracking? Pollution (esp of water), enormous use of water, earthquakes?
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### Author:  [@md2000](https://boards.straightdope.com/u/md2000)
#### Post date: [August 14, 2013, 6:03am UTC](https://boards.straightdope.com/t/peak-oil-question/664699/109 "2013-08-14T06:03:41Z")
> [@Domesticated\_Primate](#):
>
> What about the side effects of fracking? Pollution (esp of water), enormous use of water, earthquakes?
And the Exxon Valdez, the leak in the Gulf of Mexico, and the Fires of Kuwait? Not to mention the pollution in China… (We stepped off the airplane in Xi’an a few years ago, saw the haze, and naively asked “Is there a forest fire nearby?” It turns out this was normal. )
Do you ever wonder what will happen to our economies if we ever reach the level of, say, $20/gallon for gas? New York at least has the electric subways, and is surrounded by commuter rail. What will happen to the more car-focussed metropolises? Will they become Detroits, or will we have time and will to build an energy efficient commuter infrastructure?
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