DR editors' email thread: Another Peak Oil smackdown!
Our editors are once again manning the front lines of the war over Peak Oil. The latest shot from the don't-worry-be-happy cornucopian crowd is an article by the Oxford Club's Alex Green at Investment U. The highlights:
In 1930, the United States had 13 billion barrels of proven oil
reserves. With those 13 billion barrels, the country fought World War
II, energized the post-war economic boom, and fueled Americans' newfound
love affair with the automobile. Sixty years later, how much of that 13
billion-barrel reserve do you suppose was left?
Omitting Alaska, the lower 48 states alone had proven reserves of 17
billion barrels, 31% more than in 1930.
The same thing happened in the Persian Gulf. In 1975, official reports
concluded that the region had 74 billion barrels of oil. This was during
the energy crisis. Americans were told that that the world had only
enough fuel to last a couple more decades.
Yet by 1993, the official estimate was that Persian Gulf reserves
exceeded 663 billion barrels, nine times as much as 20 years before…
So despite the population boom and increasing industrialization, banking
on oil hitting the moon anytime soon is not a particularly sound bet.
And that's a good thing. Unless, of course, you happen to be a Middle
East dictator, a Venezuelan socialist… or some poor sod banking on "Peak
This was more than Whiskey & Gunpowder's Byron King could stand:
I hate to be critical of people just doing their job, but this article is really dumb. "Don't worry about Peak Oil," he says in essence. The geologists are wrong, the science fiction writers are right. "Nanotechnology," which is scarcely out of Star Trek Borg episodes and just coming onto the drawing boards, "will save us." Or something else will save us. We've always been saved before, so whynot again? Heck, we fought World War II, he says, with about the same reserves in the ground as we have today. Somehow, that does not make me
all warm & fuzzy inside. Because we fought WWII using one-twelfth the
daily world oil consumption as now. That is, every day today is the
petroleum-equivalent of 12 WWIIs. Kind of burns those reserves a bit
Still, put your hands in the air, everyone. Are you saved? Do you feel
It reminds me of the revival preacher who told old Mrs. Smith to limp
behind the curtain on her crutches, and yell "I'm saved." So old Mrs.
Smith hobbles behind the curtain and yells "I'm saved."
Then the preacher says "Mrs. Smith, please throw your crutches out from
behind the curtain, and yell 'I'm saved' again."
So out come the ctutches, clattering on the floor, and Mrs. Smith is
back there yelling "I'm saved, I'm saved!"
Then the preacher tells his assistant to go behind the curtain and
holler out to the crowd what she sees.
So the assistant walks behind the curtain, and the next thing you hear
is "Mrs. Smith just fell down on her ass."
Makes you want to say, "Sweet Jesus."
PS— I'm just "some poor sod banking on 'Peak Oil.'"
Justice Litle from Outstanding Investments, who's no stranger to this debate, checks in:
Wish I could play some high stakes poker with these guys… the fish
just love to take a one-dimensional argument all the way to the river.
It's like they can't help themselves.
Justice's co-editor Kevin Kerr, who also heads up Resource Trader Alert, notes the recent fall taken by many energy-related stocks won't last long:
I think this bargain
buying is going to be short lived and I doubt we will hear this argument
again once oil is back around $65 and Israel and Iran are at war.
Dan Amoss of Strategic Investment has some additional thoughts about all this in his weekly update for subscribers. He has the scoop from a conference call held by one of the biggies in the oil-services industry. For instant access to Dan's insights, you can subscribe here.