Tuesday, July 1, 2008

peeking at oil

Despite my lack of faith in the "peak oil" theory, it's quite possible that oil and gas prices will continue the rest of the year. Perhaps they'll peak (as it were) on January 20, 2009. The reason I see higher oil prices in our future is because of the interview I heard last night on the Terry Gross "Fresh Air" show on US National Public Radio: Seymour Hersch, usually a very reliable source, talked about the Cheney-initiated and --led (and Congressionally-approved) covert US operations in Iran, clearly aimed at provoking a response by their government. The special forces are going, with CIA help, to provoke discontent among the ethnic minorities. It may not lead to an actual war (which I see as more likely after the November election) but it will definitely raise oil prices.

I wonder if members of the Cheney gang are buying oil long, hoping to profit from their policies? I wonder if their general attitude that high oil prices are okay (if not excellent) is one small piece of their bellicosity concerning Middle East issues?

(In the recent B movie "Get Smart," by the way, it should be noted that the spies
(CONTROL) report to the Vice President, not to the Prez.)
Jim Devine


Econoclast said...

I'm responding to my own screed in hopes that Blogger will e-mail me other responses. Why isn't this an automatic feature of Blogger?

rosserjb@jmu.edu said...

What the Cheney supported forces are doing in Iran is very unclear, although playing games with the Iranian Kurds appears to be part of it.
As of right now forecasting oil prices is a fool's game. I think there are serious supply problems and we may be near world peak, but there has been a lot of unrecorded speculation through the Enron loophole, maybe as much as 30% of the transactions, which some argue may have added as much as $20-30 to the barrel price. Also, there are all those new oil deals going down in Iraq, finally, which could increase world production by another 2 mbpd within the next couple of years.

Sure, the longer term is up, and any Israeli strike or threat thereof on Iranian facilities will punch prices through the roof. But the base for that "up" is probably the latest estimate of marginal cost of production, which many sources say is around $70 per barrel, about half of today's price. In my own view over the next couple of years, we are just as likely to see the price hit $70 as $200, with it quite likely that we shall see both during that period of time.

As for Cheney's scheming in Iran, why would he want higher prices before the election? And, it is not so easy to control ethnic guerrilla minorities once they get going, especially with regard to such matters as the fine points of precise timing for political purposes. They get going for their own goals, even if egged on and supported by outsiders.

Barkley (back home after three weeks on the road and mostly not looking at the blogosphere at all)

Econoclast said...

I agree (though I am an agnostic on peak oil). I doubt that Cheney wants oil prices to rise a lot before early November. Thus, if they rise, it will be due to forces out of the Cheney gang's control. (Though he's sinister, he's hardly a puppet master.) The attacks (perhaps by Israel) -- and further steep price rises -- is most likely after the election.
Jim Devine

Sandwichman said...

Is there a way to stop this madness? I believe there is.

"The earliest customs of peoples seem to send us a warning that in accepting what we receive so abundantly from nature we should guard against a gesture of avarice. For we are able to make Mother Earth no gift of our own. It is therefore fitting to show respect in taking, by returning a part of all we receive before laying hands on our share. This respect is expressed in the ancient custom of the libation.... If society has so degenerated through necessity and greed that it can now recieve the gifts of nature only rapaciously, that it snatches the fruit unripe from the trees in order to sell it most profitably, and is compelled to empty each dish in its determination to have enough, the earth will be impoverished and the land yield bad harvests" (Walter Benjamin, "Imperial Panorama: a tour of German inflation" in One-Way Street

So what is this "ancient custom of the libation" Benjamin referred to? In the Judeo-Christian tradition it is most explicitly expressed in Leviticus 25 -- the sabbath of the land or Jubilee year.

Leaving aside the specifics, which may be understandably archaic, the general principle was that the land shall have a sabbath of rest. In the Jubilee year, "Consecrate the fiftieth year and proclaim liberty throughout the land to all its inhabitants." That phrase, by the way, is engraved on the Liberty Bell in Philadelphia.

So what is "liberty"? (and, incidentally, what is "wealth"?) It is disposable time ("and nothing more.")

Over the course of millennia, ancient peoples probably experienced "peak land" hundreds of times. They observed those events and passed them on in their oral tradition. The "earliest customs of peoples" were thus often scientific, even if not self-consciously so. Too bad we've become so pseudo-scientific in the modern era that we have to throw out the practical wisdom baby of tradition while often privately clinging to the superstition bathwater in the name of personal religious faith.

With regard to "peak oil", it's not a theory -- it's a projection based on observation. The projection could be wrong. Even if the projections are right, the presumed consequences of peaking could be incorrect. In my opinion, the evocations of 'belief' and 'agnosticism' are applied to wrong side. The arguments against peak oil are the ones founded exclusively on faith -- faith in inevitable 'technological breakthroughs' and infinite factor substitutions. Breakthroughs and substitutions happen, no question. Whether they are inevitable is a matter of faith.

Sandwichman said...

Over the course of millennia, ancient peoples probably experienced "peak land" hundreds of times.

errr... I should have said "peak soil"

Bruce Webb said...

Econoclast I get notified of every comment at my blogger site, which is useful because I don't monitor it and so would generally miss the rare comment that actually occurs. It is not a default because it is set up to be flexible.

To get there you either click on the 'Customize' tab (if it appears) or go into 'Dashboard'. Then click on 'Settings' and then 'Comments'. At the bottom of the screen you will have the opportunity to have notification of comments sent to up to ten e-mail addresses of your choice. The downside is that you will be notified of all comments on all posts regardless of original authorship. To restrict it to posts authored by you would I think require you to do what you are doing here.

A little clumsy, but then again there is always a price to be paid for using a 'free' service.

Anonymous said...

According to this the oil price is completely the fault of speculators:


Saudi Arabia and others decided to base their prices on a new system called bwave, which takes its price directly from the futures market. So unless they change where they get their price from or the speculators are driven out of oil futures oil will continue to rise.

I find it pretty bizarre that economists on blogs everywhere have been dismissing the idea of speculators causing this but none of them seem to have known what they were talking about.

The oil price is nothing more than government incompetence and as soon as the speculator problem is resolved the price can drop and a potential world wide depression avoided. Of course no one at the Bush Administration wants to stop the gravy train for their cronies.