tag:blogger.com,1999:blog-8861605.post3784683496685953195..comments2024-03-24T11:01:27.668-04:00Comments on Resource Insights: Peak demand: The cornucopians reach for a fig leafKurt Cobbhttp://www.blogger.com/profile/05330759091950742285noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-8861605.post-7139529056220016442010-02-22T17:06:47.572-05:002010-02-22T17:06:47.572-05:00The litmus test of falling demand is falling price...The litmus test of falling demand is falling prices. If the output of oil is falling due to a lack of demand, the price of oil must fall to reflect this, as the most costly production gets shut down.<br />It really is as simple as that.<br />So, any sign of cheap oil out there lately?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8861605.post-23068353796467853802010-02-22T04:44:50.222-05:002010-02-22T04:44:50.222-05:00A feedback mechanism is also at work. Peak oil ind...A feedback mechanism is also at work. Peak oil induced a recession, resulting in unemployment, increased debt defaults, and decreased purchasing power. Make no mistake about it: Most people <i>want</i> to consume, but they are forced to cut back, and that includes energy consumption. This appears to be "peak demand," but it's actually a result of peak supply. A question to be put forward here is: If it's still easy to ramp up oil production but peak demand has arrived, why isn't oil cheaper? And for that matter, why must we have recourse to "junk oil" like oil sands? Junk oil should be grossly unprofitable under the scenario of (1) plenty of reserve production capacity allowing a significant and sustained ramp-up at any time, and (2) peak demand because that would depress crude prices too much.<br /><br />Any way you look at it, the "peak demand" explanation makes no sense.Rice Farmerhttps://www.blogger.com/profile/09172342023074235356noreply@blogger.comtag:blogger.com,1999:blog-8861605.post-67489407231710081372010-02-21T23:16:24.474-05:002010-02-21T23:16:24.474-05:00This issue arises every now and then on The Oil Dr...This issue arises every now and then on The Oil Drum where it gets shot full of holes. Nobody takes it seriously ... except for the business community, politicians and mainstream media.<br /><br />Figures, right?<br /><br />The confusion is between DEMAND and CONSUMPTION. Consumption declines with INCREASES in demand. Demand represents the potential users of fuel who use available credit to bid up the price at any given time. <br /><br />Credit allows consumption to be brought forward from the future. Higher prices constrain consumption as they always have. High and increasing demand plus credit is a form or rationing.<br /><br />The cornucopians have it backwards ... and don't understand that all money is a form of credit. Demand prices fuel upward and the price increase destroys consumption. We are on the upswing of demand which is increasing exponentially. The limits on demand are the availability of credit and ongoing debt deflation that is marooning credit creation.<br /><br />The consequence is distortions in the credit markets. Fuel use today is not particularly remunerative. Most fuel consumption is simple waste by end users, not commerce which is increasingly stranded by high and rising - and demand driven - prices.<br /><br />Lending for no return increases the commodity or speculative value of fuel in contrast to its value leveraging commerce. At some high price - below the current price - fuel is more valuable as an instrument of speculation rather than for the work that can be done with it.<br /><br />This is deflationary and further erodes consumption. <br /><br />I expect fuel prices in nominal terms to decline as less money circulates ... but for the real price to increase.Steve From Virginiahttps://www.blogger.com/profile/04002636865996847926noreply@blogger.comtag:blogger.com,1999:blog-8861605.post-67224502912642718072010-02-21T19:52:00.895-05:002010-02-21T19:52:00.895-05:00Thank you, Kurt
I've been unable to clearly u...Thank you, Kurt <br />I've been unable to clearly understand peak demand for a few weeks. I know it didn't smell right but now thanks to you I'm clear. <br />Steve Austinlegacycenterhttps://www.blogger.com/profile/15603894951643348532noreply@blogger.comtag:blogger.com,1999:blog-8861605.post-45193761280687429182010-02-21T16:07:35.849-05:002010-02-21T16:07:35.849-05:00And this peak demand thing will only work while we...And this peak demand thing will only work while we're still in the plateau phase.Michael Dawsonhttps://www.blogger.com/profile/09353560855423670828noreply@blogger.com