From The Oil Drum.

Peak Oil Day - July 11
by Richard Heinberg

On July 11, 2008, the price of a barrel of oil hit a record $147.27 in daily trading. That same month, world crude oil production achieved a record 74.8 million barrels per day.

A belated Peak Oil Day.

Lol? I nearly started!

The Fed and peak oil ``Laurel Graefe, a senior economic researcher working for the Federal Reserve Bank of Atlanta has written an excellent overview of peak oil, “The Peak Oil Debate”. I consider this a must-read piece, as much for armchair oil experts as beginners, and as much for who published this as what it contains. This should be very high on your list of “brother-in-law” documents, the ones you can safely recommend to co-workers, neighbors, or, well, your brother in law.''

http://www.frbatlanta.org/filelegacydocs/er0902_graefe.pdf

Do reporters hope that you don't look at charts? In the same day you can see contradictory headlines, neither of which suggest that the price is stable around $70/barrel despite how easy it is to see on a chart of NYMEX light crude prices.

Oil Prices Remain Weak - Falling demand pushing prices down again

Oil rises in spite of IEA cut in its demand forecasts

Gazprom seals $2.5bn Nigeria deal ``The new firm, to be called Nigaz...''

Cornell University is the proud new home to a state-of-the-art Biofuels Research Laboratory, lauded as a unique research, educational and economic development facility rolled into one.
Advertisement

"This research facility will catapult Cornell to the forefront of biofuels research," said Dean of the College of Agriculture and Life Sciences Susan Henry at a ribbon-cutting for the lab Tuesday.

http://www.theithacajournal.com/article/20090624/NEWS01/906240358

This story is also on Reuters: http://www.youtube.com/watch?v=US26B0KPW6A

Oil prices in America are rising at alarmingly sneaky rate.
So what does Obama do about it?





How is this man supposed to help us in the Oil Industry with such redundant actions?

I believe we need to start getting federal grips loose. This way, we can't blame Obama for the gas prices falling or rising; we can only praise ourselves whenever it falls and never rises (okay, okay, it's obnoxious, but hey, I can only hope this to be true one day...)

85mbd x $20/barrel = $1.7 billion/day (where $20 was the middle of the old price band)

85mbd x $147/barrel = $12.5 billion/day (where $147 was the peak price of NYMEX Light Crude)

So an additional $11 billion a day world-wide had to come from somewhere.

$1.7 billion x 365 days = $0.4 trillion

$12.5 billion x 365 days = $4.65 trillion

about another $4 trillion a year.

GWP (gross world product): $62.25 trillion (2008 est.)

0.4/62.25 = 0.6%
4.65/62.25 = 7.4%

So we had to divert 6.8% of the world's economy away from other things. I wonder what they were? Couldn't have been anything important, right?

I was going to pontificate on this but it appears so much easier to just aggregate content since the relationship between Peak Oil and stagflation appears to be a popular topic to write on these days.

Ray Grabanski: Connecting 'stagflation' with a commodity price boom ``In fact, this current commodity boom has played out eerily similar to the 1970's, with first a boom in oil prices followed by a boom in grains.''

Stagflation and Peak Oil: How Related Are They? (Part I) ``The disruption of oil in 1973 (causing an extreme spike in the price of crude) caused Stagflation for much of the decade, resulting in an extreme hike in the price of almost everything, while salaries weren't going up to match. This was repeated in the early part of the 1980s. Since then, inflation has been very much in check.''

Stagflation and Peak Oil: How Related Are They? (Part II) ``Consumer discretionary stocks normally take a beating, as people can barely afford to eat, heat their homes and put gas in the tank...''

Stagflation concerns in U.S. rising along with oil's price ``Stagflation plagued the U.S. economy during the the 1970s, when initially government spending for the Vietnam War combined with the first oil shock to accelerate inflation. The quintupling of oil prices in 1973-74 plunged the U.S. economy into a recession, but high inflation remained.''

Oh, never mind--we'll just blame it on China. It's always their fault these days.

Stagflation may be next nightmare ``What’s pushing up commodities instead is growth elsewhere, particularly in Asia, Hamilton said. India’s economy grew at a 5.8 percent annual pace in the first quarter. Chinese manufacturing picked up in May.''

Wow! A car that can go as fast as 45 mph and has a whole 20 mile range!

Don't you want one?

BP Statistical Review of World Energy 2009

``Global oil consumption declined by 0.6% in 2008''

US Oil production falls to 6.736 million barrels per day.

``Global proved oil reserves in 2008 fell by 3 billion barrels to 1,258 billion barrels, with an R/P ratio of 42 years. Declines in Russia, Norway, China and other countries offset increases in Vietnam, India and Egypt.''

World Oil Reserves Fell for First Time in 10 Years, BP Says

``World primary energy consumption – including oil, natural gas, coal, nuclear, and hydro power – grew by 1.4% in 2008, the slowest growth since 2001''

Yet...

World production rises to 81.82 million barrels per day.

``OPEC production increased by 990,000 b/d despite production cuts instituted late in the year, Saudi Arabia saw the largest production increase, with output rising by 400,000 b/d. Russian production fell by 90,000 b/d, the first decline since 1998. OECD production fell by 750,000 b/d, with Mexico registering the world’s largest decline (310,000 b/d).'' -- Hey remember the The OPEC/non-OPEC crossover event? It's creeping up on us.

And strangely enough, Iceland's electrical generation increased over 37%.

Will we see $70 today? Will it close above $70? Will the short sellers on CNBC claim the price is caused by "speculators"? Once oil passes and closes above the psychological barrier of $70, what will it rise to before stabilizing again?

peebeebaynut pointed out today on SVD that it is obvious from the chart of historic oil prices that the world passed peak oil in 1970 when the USA became a net importer thanks to the land-export model and its own hot economy. I wonder: is peak oil most important to the worlds leading economy rather than overall production? If that's the case then we've been in peak oil since before I was born and the crash is far slower and more insidious than we imagined. At least the complaints by the social conservatives about morality are on-target. Do you think this will make them happy?

Watch Bloomberg.com/Energy for updates on the oil price. It should be an interesting day.

The Peak Oil Crisis: Watching a Mega-Crisis ``Most believe our current economic problem was caused by the extension of too much credit, too freely, and to the wrong people, over the last 30-40 years. Some, however, are suspicious that the many-fold run-up in oil prices from their historic $10 or $20 a barrel that sopped up so much consumer purchasing power may have had more than a little to do with our current economic problems.''

Oil did NOT reach $70/bbl last week after all. I thought it would. It came very close, but all that bad news dropped it back to $68 at the end of the week. Perhaps this coming week we'll see a stable $70/bbl closing price. Gasoline is $2.85/gal for the cheap stuff.

Do you think there will be one gianourmous "Oh Shit!" moment or a bunch of little ones?

Does it look like there will higher oil production rates?

Oil investment falls by $170 bln ``Oil producers have cancelled or delayed 170 billion dollars' worth of investment in recent months, the IEA said in comments published Monday, underlining the impact of the economic crisis.''

IEA warns of slide in energy investment -- Foresees 21% drop ``The economic downturn is cutting investment in energy supply, raising the risk of higher prices in future that could hamper any recovery, the chief economist of the International Energy Agency said.''


Nobody said that Peak Oil would have to be geological. It's more like geo-econo-socio-political.

2008 was clearly the peak. Production rates will not return to that level again ever.