As the price of oil climbs through $85 a barrel, it reminds me of the explanations flying around a little over two years ago as oil went to this level for the first time. "It's all the funds chasing the hot commodity, the only game in town" was the refrain. It's all a bubble and we will have stable oil at $35 soon - that's what Steve Forbes and many others said. But now, as oil goes through $85, it's not the only game in town. In fact, it's been the dog underperforming just about everything. No desperate performance chasing mania is driving the price of oil today as we threaten $100 again. Could those peak oil nuts be right? Could the Great Recession be camouflaging a real supply peaking process?
There is an interesting article out just yesterday over at The Post Carbon Institute by Tom Whipple. He states:
What? A conventional oil peak happening in late 2005? That's what nuts like Ken Deffeyes and me were saying back then. Overall barrels of what is classified as "oil" isn't peaking. But conventional oil was peaking then, and that's where all the net energy is. As Tom Whipple's article points out, it's net energy that is missing from the equation of energy planners. And, as I wrote in an article about back in April, this miscalculation is a potential nightmare waiting to engulf us. CNBC had just started showing their "Beyond The Barrel" story, and this prompted me to post "Beyond The Barrel - And Over The Cliff" on my blog where I look at this whole conventional vs nonconventional, net energy peak thing. This is the post:
CNBC premiered "Beyond the Barrel - the Race to Fuel the Future". This is a look at the alternatives to the crude oil bursting forth from the ground that has spoiled us for decades with cheap, abundant energy. One thing that will probably be missing in the discussion is the major issue EROEI. What is EROEI? How do you pronounce it? Well, I don't concern myself with pronouncing it, but I do get vexed by how much attention is being paid to it.......Read the entire article.
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