April 30, 2008 11:53AM
Peak Oil Fallacy: They’ve Been Singing This Song For Decades
By Cody Willard
Quick, guess what year these lyrics are from:
I’ve been waiting for years to buy a brand new cadillac
But now that I’ve got one I want to send it right back
I can’t afford the gas to fill my luxury limousine
But even if I had the dough no one’s got no gasoline
Who needs a car and a seven-forty-seven
When you can’t buy a gallon of gas
Who needs a highway, an airport or a jet
When you can’t get a gallon of gas
There’s no more left to buy or sell
There’s no more oil left in the well
A gallon of gas can’t be purchased anywhere
For any amount of cash
You can’t buy a gallon of gas — The Kinks
And those words were written in 1979.
One of the main reasons I’ve gotten so outright bearish on oil and have tried to call a top in oil around the $120 range is in large part because I can’t believe all these people who think this ongoing boom part of the energy cycle is somehow “different” and sustainable “this time”. It’s not, and there are so many great anecdotes and stories and histories to look back at as to why this cycle is just like all the others we’ve seen in energy for the last century and a half.
For example, as I walked from Fox HQ to the Waldorf for the show last night, my iPod randomly brought up the song “A Gallon of Gas”. That reminded me of another song I like…so when I got home last night, I pulled it up on the iMac. Wanna guess what year these lyrics were written?
There’s only so much oil on the ground
Sooner or later there won’t be much around
Tell that to your kids while you driving downtown
That there’s only so much oil on the ground
Can’t cut loose without that juice
Can’t cut loose without that juice
If we keep on like we doing things for sure
Will not be cool - It’s a fact
We just ai’t got suffiecient fuel
There’s only so much oil in the ground
Sooner or later there won’t be none around
Alternate sources of power must be found
Cause there’s only so much oil in the ground
Sounds like that “Peak Oil” theory that everybody and their dog can cite to explain how this time, in 2008, we really are running out of oil. I hate to burst all you energy-lovers’ bubbles, but those lyrics about alternative sources of power were written by Tower of Power in the antiquated year of…1975. Yes, the 1975 that happened 32 years ago. Wonder if ToP felt silly singing about peak oil after energy prices collapsed a few years later. Ray Davies recently brought back his lyrics from the Kinks song above.
But really, maybe it REALLY IS DIFFERENT THIS TIME! Or not.
Comment by stan
Apr 30th, 2008 at 1:35 pm
Well, some things are different. The two songs you cite were written after artificial oil shocks, when producers withheld supplies from the market. This time the price is rising mostly because of demand increase, though there is also some speculation in there. One third of the human race suddenly wants to drive and is in a position where they can do something about it. So no, we’re not going to run out of oil in the next 10 years. But the chances of seeing $20 or $30 per barrel are greatly reduced. More demand implies higher price given reasonably constant supply, the situation we are in.
Now, if Iraq gets their act together in the next 5 years and starts producing like they are capable of, 8 to 10 million barrels of oil a day, that will drive prices down to $40 to $50 per barrel for several years. I wouldn’t be surprised if OPEC is financing the insurgents in Iraq to prevent just that scenario. And it would explain Iran’s willingness to fund Iraqi militias while their own population is so impoverished and suffering such hardship.
Comment by Dittmer from PA.
Apr 30th, 2008 at 2:47 pm
Absolutly correct !
This will all end as soon as we can break up the conspiracy by the Dem’s to put the economy in the toilet to try to embarrass the President.
Here we are with the largest economy in the world and with all of our oil and gas reserves on both coasts and Alaska frozen. What do the dem’s say, (burn our vegatables and wait for a windy day)
I am only perplexed by the unbelievable patience of the American public to put up with this nonsense from these disengenious political hacks we have in Washington DC.
We do not need to produce every drop of oil needed, we only need to produce a sufficient amount to control the global market for oil.
Signed,
burn your veggies and eat your oil.
Dittmer from PA.
Comment by Chris
Apr 30th, 2008 at 2:59 pm
Cody - I’ve been watching your show for a while, just found your blog. I’m looking forward to following and learning.
Comment by Mike
Apr 30th, 2008 at 4:04 pm
Nice post Dittmer! What planet have you been living on? The current administration, ahem a Republican president, hasn’t done squat about this situation either. Both parties can accept the blame on this one. Just ask the Pres and others in congress how much stock they own in oil companies. Looks like BP and Shell Oil have been pulling in some decent returns. Maybe congress should pour that oil over their veggies before consuming them. Bon Apatite
Mike
Comment by Dan
Apr 30th, 2008 at 5:01 pm
Peak oil is real. The exact timing has been in doubt. What you are missing is the repercussions of doing nothing about it. Whether peak oil started 3 years ago or 10 years from now we are facing an affordable energy shortage with all its inherent social political and economic disruptions. The Pentagon is predicting Energy Wars this century yet there is no political will to do anything about it. Go ahead and keep making jokes about peak oil but seriously you sound like the Emperor who fiddled while Rome burned. It already may be too late to make the huge investments necessary to move to a hydrogen/solar economy.
Comment by Kevin
May 1st, 2008 at 12:05 am
The reason oil prices subsided in the early 80’s is because the interest rate was raised to 20%. The reason the oil prices have spiked in the past year is because the two LIBERALS that are George Bush and Ben Bernake have implemented the inflationary policy of cutting interest rates to 2%. They did this by repurchasing government bonds and increasing the money supply. They repurchased those bonds by either printing money or borrowing from foreign countries. The increased money supply destroyed the value of the dollar, which in turned caused the rise of commodities prices. All of this has been done so that the responsible people in this country who have tried to save the pennies they make by either buying a home they could afford or by renting until they could afford to buy could end up footing the bill for the irresponsible people who bought a home way out of their price ranged and lived in luxury for a few years. This “inflation” is no more than a backdoor tax to bail those parties out. Because the inflationary policy does not seem to be ending anytime soon, oil prices will not subside anytime soon. Only if we raise the interest rates again.
Comment by Larry
May 2nd, 2008 at 10:57 am
The peak oil debate reminds me of the housing bubble in 2005. “Doom sayers” had been saying prices where too high for a number of years, this got twisted around as “doom sayers have been repeatedly wrong”, no they where right all along.
What changed since the 70s is that the US has become almost entirely dependent on imported oil. So dependent that we can’t even talk about blockading Iranian oil exports in response to nuclear weapons work. Like the housing bubble, the doom has come but we’ve ignored it, in the housing bubble the doom was people who took out mortgages they could never pay back, it was only when they started defaulting that people noticed. In this case its been the utter refusal to deal with the energy issue while the rest of the 1st world has. Now that increasing demand and global flat supply are driving prices up people finally notice energy again.
We need to switch away from liquid fuels, wind, solar thermal, electric trains, cars and hydrogen powered aircraft, thats the future. Anything else is debating over making a meal out of crumbs.