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Oil Price

“How many years of falling supplies until we accept that oil peaked?”

mattsimmons_howmanyyearsdecline That is the question American investment banker Matthew Simmons asked at the  ASPO October 2009 conference in Denver, Colorado.   This is the first post with the best slides from various presenters. Matthew wrote the book “Twilight in the desert, the coming Saudi oil shock and the world economy”.     

Well, we see where the financial system and the world economy are.  In the 1st half of 2008, just when the world needed every barrel of oil,  Saudi Arabia was unable to produce more than in 2005.  Matthew’s slide gives annual global crude oil production from all countries.  In an earlier presentation he pointed out that no one can predict the peak with any accuracy and that the only thing we can do is watch it in the rear view mirror. And this is exactly what this site is doing, on a monthly basis.  Download Matthew’s slide show here: 


How do peak oil and the financial crisis evolve together? Gail the Actuary  writes in the oildrum: “The crash is likely to be more closely tied to a decline in credit, international finance, and international trade than to geological decline. Peak oil is very closely tied to peak credit, and it is the lack of credit that start interfering with our current system.

The issue is that we live in a highly networked system. Once one part of that system starts to unwind (because of lack of credit, or lack of investment due to lack of credit), then other parts stop working as well. We are likely to find it more and more difficult to obtain imports of all types, including replacement parts for cars, electrical transmission, and oil production. Demand may drop way back as well–but because of a lack of credit.”

Her slideshow is here:

next_oil_price_shock Dave Cohen presented this graph from his article “The price is not right”  

He does not see scarcity determine the price of oil for a long time and writes: “The first price spike (and decline)  was mostly caused by a global economic financial crisis which has been 20-odd years in the making. Very high oil prices were likely the straw that finally broke the camel’s back. Subsequent spikes may be predominantly caused by the oil price itself and other assorted disasters like the inevitable crash of the dollar.

The issue discussed in this essay is whether the price does or does not tell us about Our Oil Future. It does not. We know the $45 oil price is not right as we look down the road to a time when the global economy rises like a Phoenix from the ashes. Because of the nature of oil pricing, I find it likely that we revisit the 2008 nightmare over and over again in future years”

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