Snappledagain's Blog

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“Slumps”

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The evening news this week described the price of oil as being “in a slump”.  A slump? Not sure that is the correct word to describe current oil prices. The price of oil is exactly where it should be, according to markets that establish the price according to, among other things, supply and demand. Supply is currently being described as abundant. No kidding. No kidding because certain “market” forces at play during recent years have done everything in their power to convince us the stuff was rare, hard to obtain, and bad for us. Turns out they have been lying to us all along, and are now just trying to deliberately screw us.

 

The rare “bit” first. Oil is, as it turns out, anything but rare. Canada may have more of the stuff than Saudi Arabia ever had. Russia, Australia, Venezuela, Mexico and numerous others have begun to tap into resources they have always been sitting on, but were never extracting in a meaningful way until now. The Arctic too supposedly contains some 20% of the world’s total available supply, and none of it has even been touched yet. Now revealed is that the notion of “peak supply” was nothing but a fairy tale created to drive up prices. Closely related is the tale about it being derived from dinosaur bones. Far more likely is the probability that the earth is constantly brewing the stuff up in a chemical reaction within the Earth’s crust, and that it will never be depleted. What if that turns out to be correct? Where would that leave us? With a new paradigm, that is where. Oil has no value because there is actually an endless supply.

 

Hard to obtain? Well sure, if you only have one supplier. That guy (the Saudi’s, originally, but O.P.E.C. in general during the last thirty or so years) was able to call the shots entirely during that era. But in the modern era there are more suppliers than buyers, and it is unlikely we will ever again see threats to our way of life that are derived from energy crisis’. Well established shipping methods, including ships, and pipelines, and although one of the oldest methods, rail, which is also now seeing something of a rejuvenated demand for service. Say you have a falling out with your old buddy (again, the Saudi’s) there is no longer going to be a supply problem during the dispute. You just place an order from one of your other good friends instead. Or, as is happening in the United States right now, simply begin producing oil again yourself.

 

Finally, the sales job that it is bad for us.  Perhaps. This remains to be seen. While there are certainly health risks associated with the consumption of fossil fuels, there have also been enormous health gains. Heating and air conditioning derived from oil consumption, safer travel in airplanes and automobiles, better hospitals that are all properly supplied, equipped, lit and run by energy. Food production is better and safer and more efficient. The list of benefits is long and impacts and benefits every person living in a modern country today. We live longer, and better and achieve more than ever, thanks to oil. That paradox, that oil is bad for us yet we live longer than ever before, cannot be reconciled.

 

As for the arguments about how the consumption of “fossil fuels” is apparently warming the planet. Well, again, perhaps. But at least some of the warming that is occurring must be attributed to natural warming as we are, after-all, only fairly recently (in geologic terms) emerging from the cold and darkness of the most recent ice age. We still have something like an average of twelve degrees overall to warm up still before we are at the point of heat that occurred between the two most recent ice ages. And that heat wave had nothing to do with driving SUV’s. But the lefties never seem to want to acknowledge this inconvenient truth. Is climate change occurring? Yes, sure, whatever. Apart from all the people that live within ten feet of sea level though (three billion people??) the rest of us will mainly enjoy a nicer climate with shorter winters. That sounds like a good thing.

 

Is it possible that everything we have been told about oil and gas in the last fifty years has been nothing but marketing hype designed to make the stuff more valuable? Seriously, ask yourself what you know about oil and gas production first hand, and what you know because you have been taught by marketing experts. chances are that nearly everything you know about oil and gas comes either from advocates of the product, or opponents of it. Science is in short supply. Certainly, we are taught very little about it during grade school. You probably recall being taught about the orbit of the planets, and Greek mythology (both irrelevant in daily living).  You probably even learned trigonometry, and took a gym class. But what makes the lights come on? Zilch.

 

The days that oil marketers, big government, and environmental activists get to influence the price of heating, transportation, health care, food distribution, safety, military operations, and so forth with arguments about oil should now be left behind. People, in particular market investors have begun to wise- up. It is enormously difficult to establish a price for something that is, as it turns out, more abundant than fresh water.

 

Although a half a litre of water is a now over $1.50.

 

Interesting reading (if you’re still reading here even):
http://en.wikipedia.org/wiki/Ice_age#Glacial_stages_in_North_America
http://en.wikipedia.org/wiki/100,000-year_problem
http://www.eia.gov/beta/petroleum/imports/browser/#/?vs=PET_IMPORTS.WORLD-US-ALL.A

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Written by snappledagain

04/01/2015 at 16:48

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