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Wednesday, November 23, 2005

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Note that Kenneth Deffeyes predicted that Thanksgiving 2005 would mark the date for worldwide peak oil.

I don't doubt that Deffeyes will get arbitrarily close with this date but a few mitigating circumstances can work to prolong the peak. First off, worldwide peak does not behave the same way as a local peak (such as USA lower-48) would. Any local peak can occur with barely a whimper, as the oil suppliers transition to a different source depending on the current supply and demand. However, globally we have no alternatives and the response just about has to involve a ramp-up of extraction rates. This could extend the peak temporally, though not likely indefinitely. More likely, we will see the same effects that we see with UK North Sea oil or New Zealand natural gas or how the FSU plays out.

Secondly, we really have no idea what the hurricane season has wrought. No way that Deffeyes could have predicted the effects over the last few months, with the interesting caveat that it could work in favor of his prediction (a strong dip in production) or that it could lead to future spikes in supply. Either way, Deffeyes will get painted in one of two ways: (1) Wrong or (2) Lucky.

In other words, I see no winners in this race.


Professor Blogger SW said...

He wins. The Hurricanes make him unlucky. Made the peak earlier. We are in an interesting period right now where the market price signals are completely disconnected from the production constraints. Call this the "Groppe effect". There is 20 million barrels per day of demand in the developing world that goes to heating and electricity generation that is being priced out at $60 per barrel. So even though production has reached its peak there will be an apparent increase in supply at this price point.

5:59 AM  
Professor Blogger monkeygrinder said...

I agree with SW.

There is actually a fair amount of crude floating around, what with the American refineries offline in the gulf coast.

12:04 AM  
Professor Blogger WHT said...

"Floating around"

As in floating on top of the surface?


2:13 PM  

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