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What Can the Commodity Market Tell Us about Peak Oil?
Gail the Actuary and Shunyata, The Oil Drum
Can we tell who is driving the price and what does this tell us about our spot on the Peak Oil timeline? Of course no one really knows and the trinity of supply, delivery, and demand makes it difficult to decipher what is driving futures prices.
How Do Oil Futures Actually Behave?
So how do futures prices actually behave in the market? Can we tell who is driving the price and what does this tell us about our spot on the Peak Oil timeline? Of course no one really knows and the trinity of supply, delivery, and demand makes it difficult to decipher what is driving futures prices. Furthermore, our ability to construct a posteriori explanations is limitless, rather like seeing animals, faces, etc. in cloud patterns. Nonetheless, let’s see what we can divine.
Oil futures prices are usually LOWER than today’s purchase price. Sellers usually agree to sell their oil tomorrow for less than it is selling today. This situation is called ‘backwardation’ of futures prices. This pattern is shown in Figure 2 below. Prices tend to decline between early contract dates and later contract dates.
Oil Futures Prices Under Peak Oil
Under peak oil, we would expect to see more upward sloping futures prices (sometimes called contango), even when there are not price dips.
The linkage between long-dated futures and spot prices is erratic indeed. As an individual, I may be willing to commit my capital to erratic, long-dated futures just so I have the insurance. For corporations, however, this noise makes quarterly earnings reports messy and no one is interested in that. Instead they buy their insurance one quarter at a time.
(4 October 2007)
Steve Andrews on upcoming Houston ASPO conference (Video and Audio)
Julian Darley, Global Public Media
Steve Andrews of ASPO-USA talks with GPM’s Julian Darley at the 6th Annual International ASPO Conference in Cork, Ireland. Andrews recaps the peak oil events of the last year and discusses the upcoming 2007 Houston World Oil Conference, happening October 17-20, 2007.<
Speakers at the 2007 Houston World Oil Conference include T. Boone Pickens, Matt Simmons, Henry Groppe, Chris Skrebowski, Roscoe Bartlett, Robert Hirsch, Roger Bezdek, David Hughes, Peter Tertzakian, Debbie Cook, Stuart Staniford and many more. For more information, visit the ASPO USA website.
(5 October 2007)
Book Review: Peak Everything
Graham Strouts, Zone 5
Peak Everything- Waking up to the Century of Declines By Richard Heinberg 224 pp New Society (2008)
“Our central survival task for the decades ahead, as individuals and as a species, must be to make a transition away from the use of fossil fuels- and to do this as peacefully, equitably, and intelligently as possible.” (from the introduction.)
Richard Heinberg is the acceptable face of Peak Oil. His uncompromising message of the impending collapse of modern society due to resource depletion in his previous books The Party’s Over, Powerdown, and The Oil Depletion Protocol is delivered with too much eloquence and compassion to earn the sobriquet “doomer” and yet he is not afraid of taking on the “difficult” issues of population and collapse.
His latest book, Peak Everything, due to be published later this year, is no exception. This series of essays, some of them previously published on his Museletter website, is not “an introduction to the subject of Peak Oil; Instead it addresses the social and historical context in which Peak Oil is occurring, and explores how we can reorganize our thinking and action in several critical areas to better navigate this perilous time.”
…Peak Everything is a really enjoyable and informative look at the cultural, socio-political and psychological aspects of the all-time peaking of energy and resource availability for humanity, a period which we are living through right now. Heinberg puts this experience in context and provides a voice for our generation and our times.
(4 October 2007)
Graham Strouts has just written a booklet with Colin Campbell, called Living Through the Energy Crises.
OPEC’s Growing Call on Itself (Slides in PDF)
Jeff Rubin, CIBC World Markets
19 slides that illustrate Rubin’s take on the Export Land Model. For background, see Export Land Model (ELM) goes mainstream at Energy Bulletin.
The Energy and Environment Round-Up: October 4th 2007
Stoneleigh, The Oil Drum: Canada
(4 October 2007)