@jayson,

Why do you assume the primary reason why we should make oil part of a basket of energy carriers is environmental?

Ralph

Jayson

the fact that they mention the discovery of a 1Billions Barrel oil field indicate that there is a problem, do you know with your brilliant intellect what one billion barrel represent ? I guess you don't : 2 weeks of world consumption. So please educate yourself a bit before being so opinionated.

Who benefits from 'peak oil propaganda'?

I am actually a trained economist, so education is not really lacking. The problem I see is that most people who are environmentally minded are not educated in finance or economics. I realize that the stated reserves of this field are a drop in the barrel of world consumption, but in concert with discoveries such as Brazil, ever-advancing extraction technology, and the likely reserves in the arctic there is small probability for a crisis. The reason we use oil as our primary transport fuel is that it is the most cost effective alternative at this point in history. When it no longer is there will be a transition. Who benefits from peak oil lies? The folks who wish to force via mandates and laws their social engineering ideas on the rest of society. The rent seeking for grants and subsidies in "green energy" that cannot be sustained by the market benefit as well. Look at Germany and solar power. That boondoggle only exists because of distorting subsidies. Wind is kind of a joke, look at the money spent on the offshore wind power in Great Briton the cost the power produced is more expensive than nuclear! Along with the fact that we will still need just as much base load power production as the sun only shines at most half the day and the wind is not constant while demand is. I stated that peak production is possible, but the invisible hand of the market will be our salvation. For the record, I do believe that there are negative externalities that are underpriced in fossil fuel production. I also believe in the greenhouse effect, the earth is round, and evolution.

Jayson

I tend to agree with soltesza... really you beleive in the "magic invisible hand" of the markets that will self-correct everything ? the ability of markets to self-correct is only valid for limited fluctuations, we have seen that markets can not self correct major externalities like major resource exhaustion or environmental limitations or major crisis, worse they can even self-destruct themselves by inventing product that turn into poison.
The problem of economist is that they use theories that have been build as if the world was infinite, they are unable to take into account environmental degradation or limits or resources constraint system. Most economist agree, economic theories have to be reviewed to includes these factor but so far nobody knows how.
There is many flaws in modern economics and markets, therefore relying solely on their ability to self-adapt is a deceptive illusion.

Actually economics exist because of scarce resources and unlimited desires for resources. Economics goal is to study and advise the most efficient use of these scarce resources. The hypothetical economist in your world would agree that there are only 10 coins, but would believe that the likely increasing marginal cost to find the final coins would precipitate an increase in the market price of the resource (coins) leading to the exploration of alternative resources to coins. It would likely end up that the final coin('s) may never be extracted due to the high marginal cost, and the use of alternatives. Please look into economics; it is defined in the field as the study of the allocation of scarce resources to a world of unlimited desires! While there is a finite amount of oil in the ground at this time, I do not believe we will ever "run out" of oil. Just as in the example I cited above the marginal cost and suitability of alternatives will make exploration and extraction of these final reserves uneconomical. So fear not petroleum lovers we will never "run out".

This 'giant' oil field is less than 1/100th of the world's largest oil field; Ghawar in Saudi Arabia.

The Peak Oil theory readily accounts for new oil fields being found, even large ones.

It has been a couple of years since I followed the PO debate, but I seem to remember that there was some consensus among both PO believers and oil companies that the total estimated oil ressource is around 6,000 Gbbl (billion barrels), also called 'original oil in place'. At present, humanity has consumed about 1,000 Gbbl. Recoverable ressources at this point is around 2,000 Gbbl, defined as proven and probable ressources at present economical value. This value could probably be increased to ultimately 3,000 Gbbl by sticking straws in every tiny pocket that can be found (at a cost of around $300M a pop) and increase the recovery rate significantly. This estimate assumes vast increase in investment in the oil sector, which will no doubt be warranted. When our cars go 200+ mpg, no-one will sneeze at 20+ $/gallon oil prices.

Increasing the 'area under the curve' from 2,000 to 3,000 Gbbl does not postpone the midpoint (where all kinds of bad things are supposed to happen) by very many years. And a significant departure from the bell curve production profile is not realistic under any scenario, and most certainly not desirable!

What I think many fail to recognize is that the ability of supply to keep up with demand (at a reasonable price) stops quite a while before the mid point. The first third or so of the bell curve is roughly exponentional - like the natural increase in demand. From the 1/3 point until the halfway point, the daily output does not increase too much and the world experiences supply restrictions of increasing magnitude, since the natural demand increase is still exponential. Clearly, we are somewhere between the 1/3 point and halfway point right now.

What got me really tired about the PO debate (aside from the fact I felt I had learned as much about it as I wanted) was that debaters were usually entrenched in name-calling and typical dislike across the political spectrum. Nobody with any understanding of physics can deny Peak Oil, but the timing and what to do about it is the source of debate.

Should we anticipate PO and try to mitigate its consequences, or let the free markets play out and have price signals change consumer behaviour and gas mileage? I tend to err on the side that thinks we should anticipate the effects and aim for a soft landing. Long-time followers of this site will recognize that changes are happening to fuel economy, but not as fast as some would like. The big auto industry - the one that matters (forget about the Fisker cars) - has a 5-10 year time lag between market trends and mass production of technology. On top of that, there is the technology lock-in of the existing fleet which mostly hits the less affluent people who get stuck with their gas guzzler trucks and their payments. That is why I think it is a good idea to start practicing lower oil consumption. Since no-one will do this voluntarily, political action is required, althoung not a draconian one. Just enough to let people know and get used to the fact that the era of cheap oil is over! We will undoubtedly see short term drops in oil prices but short of a world economical meltdown (actually not as unrealistic as one might wish) they will be short-lived.

Anyway, this new oil field is great news for Norway but it does not change anything regarding Peak Oil.

jayson, if you think PO proponents think that oil will "run out", then you really don't get it! We all know there will be oil production for another 100 years or more - as stipulated as a central part of the PO theory. We are worried about being caught with our pants down if supply starts dropping faster than we can react to without significant economical consequences (considering that number of oil consumers to split the pie is rapidly growing).

I am actually a trained economist

@danm,
It is likely that petrol price will increase by itself (market forces) on average 7% yearly in the next 10 years, without any increase in petrol tax. In that case, the gov. will just sit back and observe.

However, in order to stimulate private investment in alternative fuel developments, this gradual price increase must be predictable and guaranteed. Otherwise, given the past history of wide fluctuation in prices of petrol, many potential investors will get very nervous and won't invest in alternative fuel developments. Predictably, the economy and our standard of living and social stability will be severely degraded when petrol shortages will occur without alternative-fuel vehicles and infrastructures.

These alternative-fuel vehicles and infrastructures will take decades to gain market share, even when technologies for these are already available today, so we should start NOW, without any waste of time. Our current joblessness and budget-deficit crises will depend on these PRIVATE investments as part of the solution.

TAX is very dirty word in politic, and SHOULD NOT be mentioned at all. Instead of taxation, we could use the concept of a "Price-Adjustment Fund" (PAF) to sell this petrol-price-guarantee idea.
This is how it works: The public will be explained that if and when the wholesale market price of petrol goes down, the gov. will collect the $ different per gallon and put that in a public fund, so that when the wholesale price of petrol will go up, the fund (PAF) will be used to REDUCE the price of petrol to avoid disruption in the economy.

Recall that a major factor in precipitating the economic crash of 2008 was the sudden doubling in price of petrol, causing a cascade of economic downturn and layoffs, leading to defaults in loan payments...you know the rest of the story.

If CAFE really worked, we should have seen a major reduction in petrol consumption per capita in the USA from 1982 to 2006. In 1982, LDV's averaged may be 15 mpg, while in 2006, thanks to CAFE, LDV's averaged 27 mpg. Yet, from 1982-2006, the per-capita daily petrol consumption have been hovering around 2.56 gallons/day. People drive more! However, when the oil shock occured in 2008, the per-capita daily petro consumption took a nose dive immediately, without any change in CAFE...but consumption was reduced drastically when people have to pay $4 for a gallon of gas!

See the following link for details:

http://static.seekingalpha.com/uploads/2010/6/17/saupload_monthly_average_gallons_finished_oil_products_supplied_per_us_resident_per_day_jan_1982_mar_2010.png

@E-P,
U R probably right about the unintended effect of the Price Adjustment Fund (PAF) concept. However, directly raising fuel tax will not be politically feasible, unless followed by a deduction on SS taxes, which actually is quite a good idea. Likewise, an increase in sale taxes followed by deduction on SS taxes would have the same effect of taxing those underground workers.

However, transportation businesses will not like fuel taxes increase, because it will greatly affect their business and profits. They would prefer predictable pricing of fuels so that they can better plan their businesses and invest in the right equipments for long-term planning. Our economy is so dependent on transportation fuels that a price stabilization mechanism will promote much better economic stability.