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Tilting at Windmills

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February 20, 2008
By: Kevin Drum

HUNDRED DOLLAR OIL....Via Brad DeLong, Jim Hamilton reviews some recent economic data and suggests that although oil at $100.01 might indeed be a sign of surging inflation, there are other possibilities too:

[Alternatively] you could try a line that to me seems a bit more natural: incoming data aren't confirming the initial notion held by many that a recession began in December. If so, it means that the Fed's easing will come to an end within a few months, and that the demand for oil, copper, and most everything else is going to be stronger than many of us had been anticipating as of a few weeks earlier.

If so, $100/barrel might not be as bad news as you thought.

So: we're not headed for recession, therefore demand for oil will shoot up later this year and prices are rising now in anticipation.

Well, sure. I guess that's possible, if unconvincing. But what struck me in the news reports about oil breaking the $100 barrier was the chatter about OPEC cutting production rates at its next meeting in March. The explanations were the usual ones: inventories are now at reasonable levels and OPEC always cuts production in the spring anyway. So, you know, it's not a big deal.

But this sets off alarm klaxons in my brain. It doesn't really matter whether the reason for increasing demand is economic optimism, soaring growth in China, or anything else. If it's really true that demand is high and likely to get higher — and oil at $100 a barrel certainly suggests this in the strongest possible way — then why would OPEC be talking about production cuts? Even just as saber rattling, what's the point? Are they trying to drive prices even higher? That makes no sense.

So what does make sense? My guess is that they're playing games: announce the possibility of cuts, and then, when production quotas stay level after all, everyone breathes a sigh of relief. And once again we're all distracted from the very real prospect that, quite likely, keeping production level is the best OPEC can do these days. They can't increase production anymore — not for long and not in serious quantities, anyway. Iraq is pretty much the only Middle Eastern country left with any spare pumping capacity, but for obvious reasons it can't take advantage of that at the moment.

The latest oil news is not just a short-term spike. Oil prices have been climbing steadily for six years now, and if OPEC had any real control over their pumping capacity they've had plenty of time to demonstrate it. The fact that they haven't, and are continuing to do everything they can to talk down the possibility, speaks volumes.

Kevin Drum 12:02 PM Permalink | Trackbacks | Comments (43)

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The question is when will it actually sink in that OPEC simply can't increase production? I'm wondering when the area I live in will see $4 a gallon gas.

Posted by: bobbyk on February 20, 2008 at 12:07 PM | PERMALINK

If speculators know there's a ton of excess capacity, will they keep the price up?

If OPEC clearly shows that it could pump a ton more oil, but then didn't do it, wouldn't that hack off a lot of consumers?

So, what, again, is OPEC's incentive to demonstrate the existence of vast excess pumping capacity at this point?

Posted by: ferd on February 20, 2008 at 12:12 PM | PERMALINK

As a child of the 1980s (I was born in 1974, so I don't really remember the 1970s) -- I'm kind of excited the 1970s are back, it was definitely the peak for creativity and activism in the U.S. and have always been sad I missed it: the music, the art, the politics, the drugs. With stagflation and high oil prices -- we are on our way! Thanks George!

Posted by: Christopher on February 20, 2008 at 12:16 PM | PERMALINK

What if there is no excess production capacity? What if the production peak has already occured? No one seems willing to utter the phrase "peak oil," but I'm not seeing anything to disprove it.

There are other immediate reasons for the continued price rise, primarily the fall of the dollar. If you were the Saudi oil minister, what would you do if your oil was valued in dollars and that currency had fallen by 20 plus percent in the past few years. I'd raise my prices to ensure that I was still receiving at least the same value for my product.

Posted by: DevilDog on February 20, 2008 at 12:21 PM | PERMALINK

Kev, my thought too, as I blogged yesterday. If oil prices go up on one refinery explosion allegedly being a stronger upward mover than recession fears are a downward mover, it's a pretty clear sign of Peak Oil.

Posted by: SocraticGadfly on February 20, 2008 at 12:24 PM | PERMALINK

So at what point do we have to fall to in order to have a comprehensive energy policy in this country. Or should we just let the wealthy and the oil companies suck as much out of the country as they can until were completely broken down.
Isn't about time?

Posted by: Gandalf on February 20, 2008 at 12:33 PM | PERMALINK

Don't worry, Kev, the conservatives have got round holes and square pegs all figured out.

They'll just pray and make oil fall from the sky!!

Ha!! Stupid libruls!!

Posted by: Swan on February 20, 2008 at 12:35 PM | PERMALINK
But this sets off alarm klaxons in my brain. It doesn't really matter whether the reason for increasing demand is economic optimism, soaring growth in China, or anything else. If it's really true that demand is high and likely to get higher — and oil at $100 a barrel certainly suggests this in the strongest possible way — then why would OPEC be talking about production cuts?

They'd be talking about production cuts if many members were at (or above) their maximum sustainable output and therefore production increases would see those OPEC members losing income (as prices came down and their individual output didn't increase). Its not like you haven't blogged about peak oil: you ought to realize that even short of a global peak, enough producers within OPEC peaking creates political pressure on OPEC to constrain overall production.

Posted by: cmdicely on February 20, 2008 at 12:36 PM | PERMALINK

Here's an odd thought (mostly odd because it fits in the "Dick Cheney actually is a *competent* evil genius" category):
Obviously, the entire Iraq misadventure has been about the oil. But what if the inability to get the country's oil production up off the floor has been a feature, not a bug--that the objective has always in part been to occupy the last remaining undertapped reserves, and to hold off on actually tapping them until OPEC actually does clearly (and publicly) hit their peak oil?

Posted by: The Confidence Man on February 20, 2008 at 12:36 PM | PERMALINK

Here's a potentially crackpot theory:

1. Executives at US oil companies skew heavily Republican.

2. Saudi ministers have closer ties to Republicans than to Democrats.

3. Both US oil execs and Saudis would prefer to see a Republican in the White House in 2009.

4. Thus, a prediction: Oil prices will generally rise between now and mid-summer, allowing the generation of revenues for US oil execs to recycle into the US election campaigns.

5. Oil prices will fall between midsummer and November in order to soothe the mood of the American electorate (i.e., tamp down the desire for change) in the months before the election.

There's not a lot of data to support these predictions, but review the behaviour of oil prices from August 2006 to January 2007 (the election season which brought Democratic control of Congress). Prices fell from August2006 to November 2006 as the Foley scandal broke and the Republican hold on the Congress began to look shaky. Lower prices during this period would assist Republican prospects by soothing the electorate.

After the election, they rose again, but fell from mid-December 2006 to mid-January 2007 as the Democrats prepared to take control of Congress. Some Democrats had made noises about raising taxes on the hugely profitable oil companies, and prices came down sharply as the Democrats were about to assume office.

Lower oil prices in the weeks before the Democrats took control of Congress could have been an effort to dial down calls for new taxes on oil profits.

However, once it became clear that the Democrats were not going to be serious about new taxes on oil companies, oil prices drifted back higher after the Democrats were sworn in.

It may be a crackpot theory, but watch oil prices in the months before the November election and see what happens.

Posted by: fidelio on February 20, 2008 at 12:36 PM | PERMALINK

At least the conservatives got the chance to act obnoxious and defame people and screw everything up over the last few years. What have you liberals done for the country lately?!?

Posted by: Swan on February 20, 2008 at 12:37 PM | PERMALINK

Now if the liberals were running the country, they'd be working on nutso things like making sure we have enough oil, not paying attention to football, Ding-Dongs, Ho-Hos, and figuring out how to reduce the country's gay-supply.

Posted by: Swan on February 20, 2008 at 12:40 PM | PERMALINK

Its more likely what is called peak oil lite, i.e. world production isn't in rapid decline, but has reached a kind of plataeu. Even if OPEC has some spare capacity, they have become aware they they are using up a finite resource. Slowing the rate of production/depletion increases their current and future revenues. In the past about every $10/barrel increase, they have become nervous -that the price might be too high for the world economy, but have seen that the economy shrugs it off. Now that they see that $90-$100 oil doesn't crash the economy, they want to keep it at least that high. We may be close to the peak, but oil producer revenues will be much much higher on the downward slope than they were on the upward.

Posted by: bigTom on February 20, 2008 at 12:42 PM | PERMALINK

World oil production has been declining since 2005. Declines have occurred before but rarely when oil was bringing record prices.

Posted by: rk on February 20, 2008 at 12:46 PM | PERMALINK

Saudi Arabia is our friend. Ignore the fact that they have never done anything for the United States that was not completely in their self-interest or that they have done many things over the past four decades that show that they are not at all our friends.

Our politicians need to grow some spines when it comes to the corrupt Saud family and OPEC. As long as our politicians kowtow to the Saudis, the Saudis will continue to treat our politicians like the craven fools they are. Bush may be the worst example of this, but he is hardly the first.

Posted by: freelunch on February 20, 2008 at 12:47 PM | PERMALINK

>"and oil at $100 a ... then why would OPEC be talking about production cuts? "

Only takes a moment of pondering.

1)You have an essential commodity with a limited supply.

2) You can probably cut production 20% and drive prices to $200 at the same time.

That's the 'free market' in action. Buy more Exxon-Mobil stock! We'll all be rich! Make the pie higher!

Posted by: Buford on February 20, 2008 at 12:50 PM | PERMALINK

Price spike on a refinery explosion does not necessarily indicate peak oil. It does indicate "peak refinery capacity", meaning that for whatever reason, nobody's interested in building another refinery. There are non-nefarious reasons for this; among them, the oil companies are greeedy, but not stupid, and if they predict peak oil occurring in the near future (not yet, you understand, but while they are still paying down that new refinery) then perhaps there's no point building what will be excess capacity. Or, the oil companies could be looking at climate models, and have decided that it is likely that we will, one way or another, start conserving -- that a carbon tax is in the cards, or much tighter CAFE standards, you name it. And none of this has to be certain, just probable enough to make building another refinery not a good investment.

Or, it could be that they are happier making their money on price spikes, than on selling more oil. Think of it as the oil companies doing their bit to reduce CO2 emissions -- thanks, guys, who'd a thunk you had it in you?

Posted by: dr2chase on February 20, 2008 at 12:52 PM | PERMALINK

Until six months ago the complaint was that the US didn't have enough refinery capacity (mainly blamed on tree-huggers not wanting them in their neighborhoods). Now we see that the combination of lower demand growth and minor capacity increases has changed the supply/demand situation for refined products around. Spreads (profits for refiners) have been badly pinched, if oil prices continue to go up, they will be caught with more capacity than demand as consumption will drop as gas prices grow ever higher. Short oil refiners, go long on oil producers.

Posted by: bigTom on February 20, 2008 at 1:02 PM | PERMALINK

Fidelio... you assume that demand is going to drop this summer and early fall, when it never drops in the summer, barring an economic downturn bigger than what we have.

Please, read up on what Peak Oil actually is about.

CM, good point on individual peakers, both OPEC and non-OPEC. Kev's already written more than once about Cantarell in Mexico, and a bit about the North Sea.

We know projects in Kazakhstan are being schedule and may underdeliver. We know that Chavez's nationalization will take its cut on heavy/sour oil production there.

Posted by: SocraticGadfly on February 20, 2008 at 1:33 PM | PERMALINK

Bush actually said recently that (paraphrasing) "Maybe the Saudis aren't able to increase production" or something to that affect. Is the Chimp introducing the subject of peak oil to Americans?

Posted by: Speed on February 20, 2008 at 2:15 PM | PERMALINK

Bush actually said recently that (paraphrasing) "Maybe the Saudis aren't able to increase production" or something to that affect. Is the Chimp introducing the subject of peak oil to Americans?

If that's supposed to be an introduction, it's really wimping out of giving a proper introduction. His colleagues and the rank and file Republicans don't seem to be picking up the ball and running with it, do they? I guess it may be because Bush and his kind conditioned them too long not to believe that non-renewable energy sources were non-renewable and that environmental problems didn't matter.

In a way- I'm thinking of the Iraq war, for instance- Bush is like a gang leader who knows that his buddies are not tough enough to beat a rival gang. The soldiers are too stupid to give up fighting the other gang themselves, but he won't call the boys off overtly because he doesn't want to look like a wimp. He wants them to figure out on their own it's useless. The savvy gang-leader is the the one who knows what's going on, but maybe all his underlings are all a little stupid and can't figure the stuff out for themselves, so they're still trying to be tough.

Posted by: Swan on February 20, 2008 at 2:25 PM | PERMALINK

Bush just doesn't want to look stupid.

Posted by: Swan on February 20, 2008 at 2:26 PM | PERMALINK

Bush just doesn't want to look stupid.

And that's why he's not acknowledging the writing on the wall about environmental problems and about energy.

Posted by: Swan on February 20, 2008 at 2:27 PM | PERMALINK

Swan said, "Bush just doesn't want to look stupid."

That's a hopeless goal.

Posted by: jeri on February 20, 2008 at 2:36 PM | PERMALINK

There are a lot of inane comments here. OPEC doesn't control the market like it used to. They like you to think they do, but they are merely bluffing. Supply disruptions are now the norm and these will only increase over time because new projects are having to go into more remote areas, like the deep waters off India, etc. The Saudi Ghawar giant field is now in decline, another giant, the Canteral field in Mexico is in terminal decline, the North Sea is tapping out rapidly. The Tar Sands cannot ramp up production rapidly (it's a mining operation) and there are many risks to those operations (huge quantities of gas, water are required). And countries like Venezuala, Nigeria, Russia have much more clout and who can trust these sources. No giant fields have been discovered since the 1960's. Several of these giants are now entering decline. It takes enormous numbers of small fields to make up for the large declines. Replacement of supply is only about 1:3; we're burning 85,000,000 million barrels a day (1000 barrels a second) and replace about 28,000,000 during a period when the earth has become a pin-cushion to the drilling rigs. No, OPEC is no longer much of a factor. It's pretty simple really: a dwindling finite resource, no large fields being found, politically risky sources, and virtually no conservation. This is a formula for ever (and rapidly) increasing prices.

Posted by: Dilbert on February 20, 2008 at 2:39 PM | PERMALINK

Recommended reading:

World Oil Supply May Have Already Peaked
By Lester Brown
People and Planet
Tuesday 05 February 2008

Posted by: SecularAnimist on February 20, 2008 at 2:43 PM | PERMALINK

Well, yes, $100 oil seems expensive to me. Then again, the dollar has been falling relentlessly. Compared to the Euro, for example, the dollar has lost about 25% in value over the past two years. The exchange rate was $1.19 per Euro two years ago and is $1.47 today. I wonder how much the weak dollar has contributed to the runup in oil prices.

Posted by: jeri on February 20, 2008 at 2:48 PM | PERMALINK

Jeri, per U.S. inflation figures, which of course include the recently falling dollar, the peak in June 1980 was $103 and change. So, we're very near the inflation-adjusted all-time high, and it is expensive.

Oh, BTW, all, the refinery in Big Spring could be off line as much as two months.

$100/bbl may seem cheap in the not-so-distant future.

Posted by: SocraticGadfly on February 20, 2008 at 2:58 PM | PERMALINK

There is a piece of this puzzle that doesn't fit. If I understand correctly, we're talking about prices for crude oil, not refined. So if economic theory holds, a refinery explosion and the resultant decrease in refinery capacity should drive DOWN demand for crude oil, with a concomitant DECREASE in price (although one would expect a price increase for refined oil products).

My guess is that either (as is common) investors, even the most well informed, are just plain stupid; or the refinery explosion had nothing to do with the latest price hike, and this is just a typical case of the media pulling an explanation out of their asses.

In response to jeri, (above) the weakening dollar has had a lot to do with the surge in crude oil prices over the mid and long term. I haven't been actively tracking the dollar to other currencies lately, but I doubt that this most recent spike is primarily due to the falling dollar. Many analysts predict that the days of pricing oil in U.S. dollars are nearly over.

Posted by: Dave Brown on February 20, 2008 at 3:08 PM | PERMALINK

Have these guys forgotten the term 'stagflation'?

Time to bring it out again and polish it up. We're going to need it a lot over the next few years because the chickens are coming home to roost.

Posted by: NeilS on February 20, 2008 at 3:23 PM | PERMALINK

Peak Oil Plateau

Stability in demand & supply over "some time".

Could stabilize the system for some short period before someone loses control of their greed and macho leading to some upset of the stability

etc

5-7 years of POPlateau would be sweet indeedy

Read The Oil Drum for a real education on below ground probabilities and above ground factors

It will be interesting anyway it goes.

"The only barrier to a successfully sustainable planet is ignorance." - R. Buckminster Fuller

Posted by: daCascadian on February 20, 2008 at 3:39 PM | PERMALINK

Dave Brown,
Thanks, that makes sense to me. I know that if I were living in the Middle East and selling something priced in dollars, I would consider a higher dollar price as staying even, not as a price hike. And given the long slide in the dollar (which pretty much continues even now), I would think a lot about changing currency used for pricing. Just for peace of mind.

SocraticGadfly,
I fear you are right about future pricing.

Posted by: jeri on February 20, 2008 at 4:19 PM | PERMALINK

OK, everyone repeat after me: supply + demand.

Supply and demand is, in short, the only aspect of economics which has any relevance in the real world. I strongly suspect that the field exists as a career solely to provide work for those who would be otherwise unemployable, such as Milton Friedman.

Supply + demand, though, can be seen in effect nearly everywhere. Why is oil at $100/barrel + rising? Let's see...

Supply: it isn't increasing, and may well be decreasing (peak oil).

Demand: at an all time high, + rising. China's + India's economies will surely demand more oil as their economies grow, and our gluttonous tastes seem to hardly be affected by $3/gal. gasoline.

So, combine increasing demand w/decreasing supply, and what do you get? Even a Chicago School economist will tell you that prices will increase.

No matter who we elect as President, oil prices are likely to continue to rise for the foreseeable future. Yes, prices may stabilize or even decline somewhat if a new President seems less likely to start lobbing nuclear- or, should I say, nuke-you-ler- warheads at Tehran. But nothing can change the fact that the supply of oil is vanishing. At our current pace of use, it may not last the 21st century. And, unless we feel like putting our economies on hold for a few hundred million more years, until natural processes convert the dead animals of today into more oil, we won't be getting any more black gold.

The only real solution is to move entirely away from fossil fuels as the backbone of our economy. This may be the single most wrenching technological challenge since the Industrial Revolution: weaning ourselves off oil, and onto more sustainable energy sources. And, by 'sustainable energy sources,' I mean those which replace themselves, like wind, solar, hydro, and geothermal.

It's fairly simple, really.

-Z

Posted by: Zorro on February 20, 2008 at 4:37 PM | PERMALINK

Even if we price oil in Euros it has been rising rapidly of late. It has all the makings of a supply/demand imbalance. But we wouldn't want the public to figure out peak oil. We have SUVs to sell!

Posted by: bigTom on February 20, 2008 at 4:41 PM | PERMALINK

I think it is a pernicious misconception that the real price of oil is rising beyond $100/bbl due to lack of supply. If Ray Learsy's book "Over a Barrel" is true, and it made tremendous sense to me, oil supply shortages have been loudly proclaimed by oil producing states and big oil companies for over 100 years. It's no secret why OPEC and Big Oil want people to think the world's oil supply is rapidly declining--it makes it much easier to argue that they have no choice but to charge obscenely high prices for their product. In the last two years, ExxonMobil has generated the highest recorded profits in the history of capitalism--$40 billion plus last year, and it's looking like much more this year. Also keep in mind that the oil industry geologist, Hubbel, who first came up with the so called "peak oil" limit in the 1950s turned out to be grossly wrong--we were supposed to have passed the peak more than a decade ago.

Learsy also points out that back in the 1970s, the last time OPEC was able to ratchet up the price of oil from a couple of bucks/bbl to about $30/bbl, a strong global committment to convservation and alternative energy source R&D scared OPEC within a few years into dropping the price back down to about $10/bbl where it stayed for about 20 years. Even in 2002, before the Iraq war, the price of a bbl of oil was in the low $20s.

The big problem is that the large OPEC nations, principally Saudi Arabia, will not reveal what they really have in proven reserves. And so we are left to guess as to how truthful their talk about a "shortage" really is. For my money, there is no oil shortage, there is only a truthful information shortage. What is needed is a US administration not affiliated with Big Oil that will subsidize the R&D needed to find alternative energy. This effort must be continued in the face of OPEC's predictable lowering of the oil price which it will do when it believes we are serious about actually ending our oil addiction. OPEC does not want to slay its golden goose.

Posted by: Bob C on February 20, 2008 at 5:21 PM | PERMALINK

Zorro wrote: "The only real solution is to move entirely away from fossil fuels as the backbone of our economy. This may be the single most wrenching technological challenge since the Industrial Revolution: weaning ourselves off oil, and onto more sustainable energy sources."

It isn't really that "wrenching" of a technological challenge. According to an article in the January 2008 issue of Scientific American magazine, entitled "A Solar Grand Plan":

The U.S. needs a bold plan to free itself from fossil fuels. Our analysis convinces us that a massive switch to solar power is the logical answer.

Solar energy’s potential is off the chart. The energy in sunlight striking the earth for 40 minutes is equivalent to global energy consumption for a year. The U.S. is lucky to be endowed with a vast resource; at least 250,000 square miles of land in the Southwest alone are suitable for constructing solar power plants, and that land receives more than 4,500 quadrillion British thermal units (Btu) of solar radiation a year. Converting only 2.5 percent of that radiation into electricity would match the nation’s total energy consumption in 2006.

To convert the country to solar power, huge tracts of land would have to be covered with photovoltaic panels and solar heating troughs. A direct-current (DC) transmission backbone would also have to be erected to send that energy efficiently across the nation.

The technology is ready. On the following pages we present a grand plan that could provide 69 percent of the U.S.’s electricity and 35 percent of its total energy (which includes transportation) with solar power by 2050. We project that this energy could be sold to consumers at rates equivalent to today’s rates for conventional power sources, about five cents per kilowatt-hour (kWh). If wind, biomass and geothermal sources were also developed, renewable energy could provide 100 percent of the nation’s electricity and 90 percent of its energy by 2100.

The federal government would have to invest more than $400 billion over the next 40 years to complete the 2050 plan. That investment is substantial, but the payoff is greater. Solar plants consume little or no fuel, saving billions of dollars year after year. The infrastructure would displace 300 large coal-fired power plants and 300 more large natural gas plants and all the fuels they consume. The plan would effectively eliminate all imported oil, fundamentally cutting U.S. trade deficits and easing political tension in the Middle East and elsewhere. Because solar technologies are almost pollution-free, the plan would also reduce greenhouse gas emissions from power plants by 1.7 billion tons a year, and another 1.9 billion tons from gasoline vehicles would be displaced by plug-in hybrids refueled by the solar power grid. In 2050 U.S. carbon dioxide emissions would be 62 percent below 2005 levels, putting a major brake on global warming.

This plan relies on technology that already exists. The suggested investment of $400 billion over 40 years, ie. $10 billion per year, is quite modest compared to existing subsidies for coal, oil and nuclear power, and miniscule compared to the half a TRILLION dollars per year that the USA spends on the military (much of which goes to protect and/or control overseas oil supplies).

A thriving, sustainable economy powered by optimally-efficient use of clean, renewable electricity, augmented by sustainable biofuels, geothermal, etc., is readily achievable.

The obstacles are not technological or economic -- the obstacles are the political and institutional power of entrenched, ultra-wealthy interests who reap trillions of dollars in profit from fossil fuels, and want to keep those profits flowing until the last drop of oil and the last crumb of coal on Earth has been burned.

That's why the 2005 Energy Bill lavished billions of dollars in subsidies, tax cuts and loan guarantees on the coal, oil and nuclear industries, while support for renewable energy is being cut, renewable energy tax credits are being allowed to expire, etc.

Posted by: SecularAnimist on February 20, 2008 at 5:29 PM | PERMALINK

Eh. I remember when I was ticked off by $1.50 gas. Like what, 4-5 years ago?

Sigh. At least we know what it means to have an oilman in the White House. All bad. But then, we knew that already...didn't we.


Posted by: James on February 20, 2008 at 6:01 PM | PERMALINK

While I agree that we have the ability to replace fossil fuels as our primary means of power generation, I would remind you of one more helpful little chestnut: when in doubt, bet on inertia.

In other words, even if there's every reason to change from doing Thing A to Thing B, people tend to stick w/Thing A until they have no choice in the matter. Logical? Of course not. But we *are* discussing humans, are we not? And, in my experience, humans are a reliably illogical bunch.

-Z

Posted by: Zorro on February 20, 2008 at 7:30 PM | PERMALINK

"Oil prices have been climbing steadily for six years now"

Proving that the Bush presidency has been a real success!!!

For his base.

Posted by: Joey Giraud on February 20, 2008 at 8:16 PM | PERMALINK

"Saudis will continue to treat our politicians like the craven fools they are. Bush may be the worst example of this"

Before calling George W. Bush a fool I would recommend you investigate the increased value of the Bush family holdings managed by James Baker and The Carlyle Group, boosted by recent Saudi investments.

Except you can't. They're not public. The only info available comes from not-credible conspiracy kooks and tin-foil-hat wearing crazies who would never be trusted by Washington pundits.

Never mind.

Posted by: Joey Giraud on February 20, 2008 at 8:34 PM | PERMALINK

I am glad to see that a few commenters on this blog pointed their finger where Kevin wouldn't: Peak Oil. For the most part, however, they seem rather blase about it.

Peak Oil, if it really is here, means nothing less than the rapid deterioration and likely collapse of our civilization...and soon. If you don't believe me, do an Google search and see what is most likely in store for us. Even if Obama turns out to be another FDR, he won't be able to save us.

Posted by: bdrube on February 20, 2008 at 8:54 PM | PERMALINK
Also keep in mind that the oil industry geologist, Hubbel, who first came up with the so called "peak oil" limit in the 1950s turned out to be grossly wrong--we were supposed to have passed the peak more than a decade ago.
Bob C

Bob C, your commentary is crap. For one thing, the guy you're insulting is Dr. M. King Hubbert, not 'Hubbel'. He predicted that the lower 48 states would peak out oil production in about 1972 (he made the prediction 10 years earlier), and guess what - he was spot on. He said nothing about the world other than it too would peak out in terms of production well before running out of oil. The rest of your commentary is of the same ilk.

Posted by: Dilbert on February 20, 2008 at 10:05 PM | PERMALINK

bdrube: Peak Oil, if it really is here, means nothing less than the rapid deterioration and likely collapse of our civilization...and soon.

While I agree entirely that the eventual end of oil will be a huge technological, economic, + political challenge for human society, I can't agree about it being the 'collapse of our civilization.' And that's even w/o resorting to Ghandi's quote about Western Civilization being a good idea.

There will be major adjustment problems as the world's societies switch to other sources of power, + many rhetorical pairs of wooden shoes will be thrown into rhetorical machinery. But, just as the world transitioned into the Industrial Revolution, it will transition into the Post-Industrial Revolution. It won't be easy, and it certainly won't be pretty, but neither will it be the end of the world.

-Z

Posted by: Zorro on February 21, 2008 at 12:33 PM | PERMALINK
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