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High Steel Prices: A Preview of Peak Oil

Jim Kingsdale, Seeking Alpha
I use the phrase “Crunch Time” to denote the period after Peak Oil during which oil prices are so high due to production shortfalls that the normal functioning of economic activity is curtailed. Not only are the poor – and eventually the middle class – kept from buying the oil products they need, but industry’s capacity to ameliorate the problem by making what is needed to free society from the grip of oil is also greatly slowed, thereby extending the Crunch Time.

Such necessary products fall in two categories. First are those consumers can use to free themselves of oil: cars, trucks, and trains that operate on electricity instead of gasoline or diesel. Second is the capital equipment needed to make both such consumer items and to obtain more oil and other energy sources. Steel is one of the inputs to those products.

A hint of Crunch Time is in this report from Brazil and a sample is also described in today’s Wall Street Journal. The headline is, “Fast-Rising Steel Prices Set Back Big Projects.” The article starts, “Relentless increases in the price of steel are halting or slowing major construction projects world-wide and investments in shipbuilding and oil-and-gas exploration.”

Stripped of the human dimension the essential formula is:

global demand growth -> high oil, food and steel prices -> high costs to build rigs and ships -> higher energy prices -> higher oil, food and steel prices

(16 May 2008)

Peak Oil Doomsters debunked, end of civilization called off

Fabius Maximus
Summary: a brief analysis of Matt Savinar’s Life After the Oil Crash. Are we doomed? Probably not. My title is, of course, fun but absurd. Peak oil is too vast a subject, the range of expert opinion too wide, for any blog post to pose as more than a introduction – showing one perspective of the many possible. Still, I believe this makes a good case for betting that peak oil will not result in depression and war.

… Conclusion

Much of this post is over-simplified for brevity and suitability for a general audience. Also, I may have incorrectly represented Matt Savinar’s assumptions. On the whole, however, I hope this post shows the weak and speculative basis of “end of civilization” and “die-off” scenarios about Peak Oil. …

Unfortunately there is an information shortage about Peak Oil. There is too-little good research (Hirsch and his peers are grossly underfunded), and even less reliable information for the public. Neither is a good indicator of our readiness for peak oil.

The faster we prepare, the easier the transition will be to peak oil. Other nations already have strong programs in motion to prepare for peak oil. We are among the world’s laggards. Civilization will continue even if America falters as a result of peak oil, just as it survived the fall of the Spanish Empire. We have the ability to adapt, but so far lack the will and awareness of the need. Over-dramatizations like “life after the crash” are part of the problem, in my opinion, not part of the solution. They are too easily dismissed, and unfortunately the awareness of peak oil often gets dismissed with them. Equally unfortunate, their facile certainty about the future discourages the need for research and modeling about our energy resources and consumption – necessary to efficiently marshal and apply resources for rapid mitigation programs.
(8 May 2008)
About Fabius Maximus. Re-posted at RGE Monitor

Peak Oil: Alive and Well
Eric Sprott and Sasha Solunac, Sprott Asset Management
Although it’s been a year and half since we’ve written an article devoted to the Peak Oil/Hubbert’s Peak theory, rest assured we haven’t forgotten about the subject. Quite the contrary, the topic is alive and well and currently playing at a theatre near you.

When we first wrote about Peak Oil exactly four years ago (“Slipping and Sliding Down Hubbert’s Peak”, April 2004), there were those who thought we were off our rocker. After all, the price of oil back then was $35 per barrel and, save for a handful of visionaries, the problem of imminently peaking global oil supply was on nobody’s radar screen.

How things have changed since then! We believe there is no more compelling vindication of the Peak Oil theory than the situation the world finds itself in currently. Namely, in the midst of a global financial meltdown resulting from the popping of the credit bubble, a recession in the world’s most oil-intensive economy, and housing prices that are falling throughout the world, here we are with oil prices hitting record highs topping $115 per barrel, up $30 in the past three months and almost doubling over the past year. Who would have thunk it? The tie between economic cyclicality and the price of oil seems to have been thrown to the wind.

We believe only Peak Oil can explain this phenomenon, and as such are writing this article as an update to what we’ve already written about in the past, taking into account recent developments. Although there are those who blame high oil prices on a combination of US dollar weakness, geopolitical risk, and speculation, we believe the real problem is one of peaking oil supply. Our main argument, and the argument of those who are expert on the subject, has always been that, at its core, Peak Oil is all about the decline rate of producing conventional oilfields.
(April 2008)
List of other Sprott Reports.

Peak Oil Australia

Sam Hopkins, Energy and Capital
Australia is quickly becoming a hub for nearly every global energy trend, starting with Peak Oil.

Investors have an appetizing array of energy strategies to choose from, based on three major market movements playing out in Australia right now:

* National oil production is topping out
* Natural gas production is on the rise
* Renewables are just revving up

A government report released recently forecast a 7% rise in Australian crude oil production for 2008-followed by a double-digit pullback in 2009.

Australia’s expected jump in this year’s crude output is something most OPEC nations would salivate over. But the country is heading for dryer times, as the Australian Bureau of Agricultural and Resource Economics reports:

Beyond 2008/09, Australia’s oil production is projected to decline… as falling production from some mature fields offsets anticipated new additions to capacity.

But we aren’t about to witness Australia’s oil production peak…

Peak oil already happened in 2000, as we see in this chart from the U.S. Department of Energy:
(17 May 2008)
Contributor Michael Lardelli writes:
The view from overseas of OZ energy is particularly rosy. By the time we wake up we’ll have sold all our coal and gas to the Chinese.