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  1. #1
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    Socialist oil death spiral

    Article published Nov 6, 2007
    Socialist oil death spiral


    November 6, 2007


    Richard W. Rahn - Socialism always plants the seeds of its own destruction, and state-owned oil is no exception. Most people do not realize that about 90 percent of the world's liquid oil reserves are controlled by governments or state-owned companies. Exxon Mobil, the world's largest privately owned oil company, owns only 1.08 percent of the world's oil reserves, and the five largest private global oil companies together own only about 4 percent of the world's oil reserves.

    There is enough liquid oil in the ground to last generations; and when oil sands and oil shale are included, there is enough oil to last centuries. If there were a truly free market in oil, with both the reserves and production owned and controlled by many competitive companies, the price of oil would be a fraction of today's price.

    The high price of oil is a direct consequence of artificial supply constraints imposed by the Organization of Petroleum Exporting Countries and other countries, including the United States, and the incompetence and mismanagement found in most state-owned oil companies. OPEC is an international government cartel made up of Iraq, Iran, Kuwait, Libya, Angola, Algeria, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. These nations control about 77 percent of the world's known liquid crude oil reserves.

    Most of these countries and other major oil producers that rely on mainly state-owned companies, such as Russia, have underinvested in exploration and development of new production facilities and mismanaged the ones they have. (If politicians understood the facts and were truthful, they would rant against "greedy" socialists rather than private oil companies.)

    Venezuela, despite having perhaps the sixth-largest oil reserves in the world, has falling production because of the mismanagement by the Chavez government. Mexico also is suffering from falling oil production because the government refuses to allow private oil exploration and production companies, and the state-owned oil company, Pemex, is corrupt and incompetent. By contrast, the U.S. only has about 2 percent of the world's oil reserves, but produces little more than 8 percent of global production, largely because they are privately owned and managed.

    A decade or two from now, the socialist states will have severe regrets for their current misbehavior, and this is why. When prices rise, people seek alternative sources and substitutes for the high-priced commodity. When oil prices are above $30 or $40 a barrel, suddenly the Canadian oil sands and Colorado oil-bearing shale become economic, and those reserves are larger than known liquid oil reserves.

    The short-run problem is that development of oil sands and oil shale requires enormous up-front investment and many years. Canadian oil sand production is now ramping up rapidly, but it will be a few years before it can replace most of North America's needs for oil from outside the continent.

    Recently, there has been additional good news. Shell Oil has announced its new in-situ (i.e., in-ground) extraction technology in Colorado could be competitive at prices of more than $30 per barrel. However, it will take quite a few years to get into major production.

    Despite the current infatuation with biofuels, they are unlikely to ever produce more than a small share of the market because they are not price competitive with liquid, sand and shale oil when all attendant costs are taken into account, such as higher food prices. Petroleum accounts for about 40 percent of U.S. energy supply and about two-thirds of it is imported. Most petroleum is used for transportation, which accounts for about 28 percent of U.S. energy use.

    Now, for the really good news. The new car you purchase a decade from now is almost certainly to be totally electrically powered. Huge strides are being made in battery technology, and even existing batteries have just about reached the point where they are sensible for automobiles. Mitsubishi has just come out with an all-electric car, the sport MIEV. And Nissan and Renault have announced they will be in full-scale production of electric cars by 2012.

    As people move to electric cars, the need for gasoline and imported oil will quickly disappear. Nuclear and clean coal plants must expand to produce the additional electricity, but they produce energy at a fraction of the cost of petroleum. The new battery technology will also help solar and wind power become more economically feasible because they will be able to store it. Even so, solar and wind will only be a small part of our energy future because of their inherent production limits.

    In sum, a decade from now, the world will no longer be held hostage by the socialist OPEC cartel. Liquid fuels (oil) are mainly needed for transportation; but when electricity takes over much of that market, America, Europe, China and Japan will find they can produce all of the electricity they need from nuclear, coal, hydro, biomass, geothermal, solar and wind resources.

    North America will also be independent from foreign oil because of the oil sands and oil shale developments, which are likely to be protected from drastic reduction in world oil prices. OPEC and its fellow travelers will be left with a far less valuable commodity, because their present, shortsighted, high oil price strategy is causing their customers to develop economically and environmentally sound alternatives more quickly than if there had been a truly global free market in oil.

    Richard W. Rahn is a senior fellow of the Discovery Institute and an adjunct scholar of the Cato Institute.
    http://www.washingtontimes.com/artic...012/commentary

  2. #2
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    sounds like good news for everybody, a win-win situation.
    the middle east has the west stop meddling in their affairs (good for middle east)
    the west develops alternative energy and becomes independent of middle east oil (good for west)
    the environmentalist have alternative energy being developed (good for environmentalists)
    the libertarians get to write a polemical article smearing the word 'socialist' (good for libertarians).
    "Must silence the discord!"
    -System Shock 2 Zombie

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    Quote Originally Posted by Windjammer
    sounds like good news for everybody, a win-win situation.
    the middle east has the west stop meddling in their affairs (good for middle east)
    the west develops alternative energy and becomes independent of middle east oil (good for west)
    the environmentalist have alternative energy being developed (good for environmentalists)
    the libertarians get to write a polemical article smearing the word 'socialist' (good for libertarians).
    My sentiments as well....

  4. #4
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    Chewie,

    you are the dumbest shyte on the planet Jabpn excepted

    Read this retart:
    There is enough liquid oil in the ground to last generations; and when oil sands and oil shale are included, there is enough oil to last centuries. If there were a truly free market in oil, with both the reserves and production owned and controlled by many competitive companies, the price of oil would be a fraction of today's price.
    That's your article, and it is completely full of shyte, just like you, you phucking mental coward.

  5. #5
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    So many assertions, so little reference of authoritative sources.
    We all get it in the end.

  6. #6
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    Quote Originally Posted by Wasatch Walt
    Chewie,

    you are the dumbest shyte on the planet Jabpn excepted

    Read this retart:


    That's your article, and it is completely full of shyte, just like you, you phucking mental coward.

    From the guy who resorts to name calling and cursing in everyone of his posts.

    Just how old are you Walt ...I am really starting to wonder

  7. #7
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    Quote Originally Posted by SCC
    From the guy who resorts to name calling and cursing in everyone of his posts.

    Just how old are you Walt ...I am really starting to wonder
    He can't help it, all he knows is leftist speculation. His lashing out is
    a reflection of his confidence in his thoughts-He has none.

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    Quote Originally Posted by SCC
    From the guy who resorts to name calling and cursing in everyone of his posts.

    Just how old are you Walt ...I am really starting to wonder
    Obviously there are not any links. Its an editorial.... If Wonderous Walt has some links to negate this editorial, please, by all means. Aren't you a geologist walt? Don't you work for big oil? I have posted an oil related article before, Walt did nothing but berate me and nash his teeth.

    So Walt, like SCC asked how old are you today?

    No wonder you made 20,000 posts. Crap like that anyone can do it that has nothing else to do.... My measly 1200+ posts have more substance then your 20,000.

  9. #9
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    Quote Originally Posted by Chewie65
    Obviously there are not any links. Its an editorial.... If Wonderous Walt has some links to negate this editorial, please, by all means. Aren't you a geologist walt? Don't you work for big oil? I have posted an oil related article before, Walt did nothing but berate me and nash his teeth.

    So Walt, like SCC asked how old are you today?

    No wonder you made 20,000 posts. Crap like that anyone can do it that has nothing else to do.... My measly 1200+ posts have more substance then your 20,000.

    You're a complete stupid, not worth snail slime fool Chewie.

    Why?

    Because you believe in ideology FIRST, and then based on what you WANT to believe, you construe lies, distortion, and fairy tales together to make your case.

    Who wants to be around a person that dispenses with facts the same way Hitler did?

  10. #10
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    Quote Originally Posted by chas_martel
    He can't help it, all he knows is leftist speculation. His lashing out is
    a reflection of his confidence in his thoughts-He has none.

    it has nothing to do with leftist

    you can produce all the oil within the earth, but it will cost you more energy to get it out than you get by burning it

    you idiots never ask the right question, and that is "at what price" and we can include not only the monetary price, but also the environmental cost

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    Avacado boy is NO geologist.

  12. #12
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    Quote Originally Posted by Wasatch Walt
    Chewie,

    you are the dumbest shyte on the planet Jabpn excepted

    Read this retart:


    That's your article, and it is completely full of shyte, just like you, you phucking mental coward.
    I hate to be seen defending Chewie65, but there is some truth to the article. When one includes liquid oil, tar sands, and coal, there is a lot of energy in the ground. The peak oil theory only looks at liquid oil. Peak oil may be correct in that there is a declining amount of liquid oil. But peak oil does not consider tar sands and coal, of which there are vast reserves.

    The idea that much oil will be left in the ground after technology replaces it is a little far fetched. That oil will simply be less profitable, but it will still be used. New technologies and greater efficiencies will not eliminate oil as an energy resource. They will simply drive prices back to levels that we saw before the Iraq war. Oil companies(and their partners under 'socialist' management), were still profitable then, and they will be afterwards, with oil prices much lower.

  13. #13
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    Quote Originally Posted by warfaminepestilenceplague
    I hate to be seen defending Chewie65, but there is some truth to the article. When one includes liquid oil, tar sands, and coal, there is a lot of energy in the ground. The peak oil theory only looks at liquid oil. Peak oil may be correct in that there is a declining amount of liquid oil. But peak oil does not consider tar sands and coal, of which there are vast reserves.

    The idea that much oil will be left in the ground after technology replaces it is a little far fetched. That oil will simply be less profitable, but it will still be used. New technologies and greater efficiencies will not eliminate oil as an energy resource. They will simply drive prices back to levels that we saw before the Iraq war. Oil companies(and their partners under 'socialist' management), were still profitable then, and they will be afterwards, with oil prices much lower.
    I think he mentioned "but it will cost you more energy to get it out than you get by burning it".

    Kinda like the whole ethanol issue. Hydrogen too. . .

  14. #14
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    Quote Originally Posted by Shin Music
    I think he mentioned "but it will cost you more energy to get it out than you get by burning it".

    Kinda like the whole ethanol issue. Hydrogen too. . .
    Stop trying to confuse us with logical arguments!
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    Quote Originally Posted by warfaminepestilenceplague
    I hate to be seen defending Chewie65, but there is some truth to the article. When one includes liquid oil, tar sands, and coal, there is a lot of energy in the ground. The peak oil theory only looks at liquid oil. Peak oil may be correct in that there is a declining amount of liquid oil. But peak oil does not consider tar sands and coal, of which there are vast reserves.

    The idea that much oil will be left in the ground after technology replaces it is a little far fetched. That oil will simply be less profitable, but it will still be used. New technologies and greater efficiencies will not eliminate oil as an energy resource. They will simply drive prices back to levels that we saw before the Iraq war. Oil companies(and their partners under 'socialist' management), were still profitable then, and they will be afterwards, with oil prices much lower.
    "some truth in the article"

    yeah, there is "some" truth in the article ... just not all that much

    we are STILL in the liquid oil phase (Hubbert Curve) and *just started* transitioning into the unconventional, and already the price is $100 a barrel

    Hello!
    Is anybody in there!

    Oil shale, for instance, has the same energy content per volume as a baked potato. DWF couldn't hit the bag for five minutes and it would be gone. Gasoline has 31,000 calories per gallon. We could make DWF climb on his bike from his house to the top of Pikes Peak about 7 times by drinking one gallon of gas.

    Do you understand what I am saying headcold?

    Shell's gambit is to drill about 100 holes over some little area, insert electrodes, turn them on, wait 3 years ... and drain off the oil that has gone from wax to liquid by the heat .....

    Hello?

    Is anybody there?

    You could put up a small tower and plaster it with PV cells on everyone's roof in the US for the same effort.

    Hello?

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    Quote Originally Posted by Wasatch Walt
    it has nothing to do with leftist

    you can produce all the oil within the earth, but it will cost you more energy to get it out than you get by burning it

    you idiots never ask the right question, and that is "at what price" and we can include not only the monetary price, but also the environmental cost
    Well that question was asked, when is it profitable to pull that oil out of the ground? $30 barrel seems to be a line for the harder to get oil. Why don't you enlighten us with your knowlege about the shale oil and sand oil?

    Its not like I ask for you opinion everyday.

    Why can't you be mature enough to say hey, ok article but it stinks here and here...... and back it up rather then have a fit and call me names?

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    Quote Originally Posted by FrozenK
    Stop trying to confuse us with logical arguments!
    Sorry, , , it'll not happen again

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    Quote Originally Posted by Walt
    Hello?

    Is anybody there?

    You could put up a small tower and plaster it with PV cells on everyone's roof in the US for the same effort.

    Hello?
    Stop trying to confuse us with logical arguments damn it !!!

  19. #19
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    Quote Originally Posted by Chewie65
    Well that question was asked, when is it profitable to pull that oil out of the ground? $30 barrel seems to be a line for the harder to get oil. Why don't you enlighten us with your knowlege about the shale oil and sand oil?

    Its not like I ask for you opinion everyday.

    Why can't you be mature enough to say hey, ok article but it stinks here and here...... and back it up rather then have a fit and call me names?
    $30 / barrel is LOW priced conventional oil that flows easily and you can pump to the surface quite easily

    with something as big as the Athabasca tar sands, and huge capitalization to make vast economies of scale, you can 'mine' those tar sands, IF you use about 20% of the NG supply of Canada .. for about $35-$40 / bbl or so ...

    and that shyte is the EASY tar sand of that location and other massive tar sand locations of the world

    But here is the other catch you people are not understanding .. no matter how much technology you hit it with .. you can't produce it fast enough .. there is a rate of production that the world has exceeded .. which is why the price has gone to $95 ... to slow demand so that production can meet it ....

    and if you look at the exponential growth of humans on earth ... there is no way we can ever meet demand again to lower the price much

    the world is finite, there is only so much oil trapped in the rocks .. and mankind is growing at so many percent a year

    Get a CLUE people.

    Stop listening to idiots like Bush and start listening to scientists who know how to solve y=ae to the kt.

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    Quote Originally Posted by Wasatch Walt
    You're a complete stupid, not worth snail slime fool Chewie.

    Why?

    Because you believe in ideology FIRST, and then based on what you WANT to believe, you construe lies, distortion, and fairy tales together to make your case.

    Who wants to be around a person that dispenses with facts the same way Hitler did?
    Gee Walt, I was gonna say the same thing about you, even more so. But you just trash any and all that you disagree with. How is that diffeent from what you accuse me of? Huh tough guy? I haven't actively berated people until the can't back up their claims or run off at the mouth. Of course, you put your keen mind to the task and came up short, again, and lash out like a 3 year old as a result.

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    Quote Originally Posted by Shin Music
    I think he mentioned "but it will cost you more energy to get it out than you get by burning it".

    Kinda like the whole ethanol issue. Hydrogen too. . .
    That is true, but as long as the market price is high, like it is now, it will be affordable to pull out of the ground, maybe not a lot of profit. But it will stay in the ground until someone can make money pulling it out and processing it.

  22. #22
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    Quote Originally Posted by Chewie65
    Gee Walt, I was gonna say the same thing about you, even more so. But you just trash any and all that you disagree with. How is that diffeent from what you accuse me of? Huh tough guy? I haven't actively berated people until the can't back up their claims or run off at the mouth. Of course, you put your keen mind to the task and came up short, again, and lash out like a 3 year old as a result.

    You're a phocking liar.

    there are things I don't like, but they are true, and I accept them

    that's not how you behave ... things you don't like .. you make up lies and distortion to "pretend" they aren't true

    you're a phocking liar .. you have NO internal honesty whatsoever

    You're a propagandist of the first order. No different than Hitler on that trait.

  23. #23
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    Quote Originally Posted by Chewie65
    That is true, but as long as the market price is high, like it is now, it will be affordable to pull out of the ground, maybe not a lot of profit. But it will stay in the ground until someone can make money pulling it out and processing it.
    You don't get it, do you? You honestly do not understand what they are trying to say.
    Art is the most intense mode of individualism that the world has known.

    Oscar Wilde

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    Quote Originally Posted by FrozenK
    You don't get it, do you? You honestly do not understand what they are trying to say.
    Why don't you tell me what you think i am not getting? I grew up in the oil patch, I think I know a thing or two. Not an expert mind you, but enlighten me....

  25. #25
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    Quote Originally Posted by Chewie65
    Why don't you tell me what you think i am not getting? I grew up in the oil patch, I think I know a thing or two. Not an expert mind you, but enlighten me....
    Quote Originally Posted by Walt
    Gasoline has 31,000 calories per gallon
    If it takes 31,001 calories to produce that gallon where does that leave you???

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