$100 oil, peak oil, energy crisis

8 replies [Last post]
Broker7's picture
Offline
Joined: 2007-02-23

I had a meeting  yesterday with a client who worked for an oil company in the 70's and 80's in the exploration of new reserves.  According to him, US production peaked way back in 1971, and we are currently producing about half that peak amount today. He told me that 10 years ago, his colleagues felt that $50 oil would mean we are near a worldwide "peak oil" situation where production can keep up with demand. Now that we are pushing $100/barrel, he is afraid of the upcoming global recession for his kids and grandchildren.
With the industrial revolution, energy, transportation, manufacturing, medicine, food all being dependant on oil, what can he do to protect his assets and his family from the upcoming crisis.  I didnt have much to tell him other than the situation is dire, and on the topic of oil and energy, he is more of an expert than I am. I did mention on the investment end,  solar energy stocks have been doing very well.  I have another meeting with him in 2 weeks, I would like to add or elaborate to the conversation.   Any insight or input would be appreciated.

Big Taco's picture
Offline
Joined: 2006-11-16

I was watching "Modern Marvels" this weekend.  It gave me a lot of hope for the future.  It was a 2-episode segment about green technology.  It seems that it's getting to the point where people can start putting lightweight windmills on their homes, companies are planning ambitious solar power plant projects, cars are in production that run for over a hundred miles on nothing but compressed air-- if the energy that compresses the air is made "greenly", then it truly is a zero emission situation. 
 
Also, it seems that private equity is financing some of the more experimental ideas on saving the planet, as they hope to recoup their investment through carbon credits.  I hope that fixing environmental problems is also a commercial success most of the time, because as soon as it is, the solutions will probably become much more innovative and timely, IMO.

bspears's picture
Offline
Joined: 2006-11-08

Water....On the oil front, I've read recently about a new oil find off the coast of Brazil/Argentina?, which is located below a large deposit of salt??.  New technology has helped to see through this obstruction, so thoughts of more finds is suggested.  Several billions of anticipated oil.  Russia's oil reserves are more than Saudia Arabia, but with no where near the infrastructure, same with IRAQ.  The US has under goverment control a very large deposit of oil shale in the Colorado, Wyoming area.   It has been off limits to exploration until recently.  Canadian oilsands is another large area of oil.   My personal opinion is there's plenty of oil, but we have to develop infrastructure to get to it.  The easy oil has peaked, its the other that we need to get to. 
 
I like the idea of trying to conserve as much as possible.  Solar is a great thing and the best of all the alternative energy resources.  It has a cost to it and until the cost comes down to the level it can pay for itself in a shorter time frame, without government tax breaks, it won't be widely used.  I was in Mexico recently visiting some Mayan village, and they had a little shop set up with solar running its computers.  I was freaked. 
 
Ethanol is a fad IMHO.  It consumes more energy than it produces, and just pushes up the cost of end product of the crops.  Good for the farmer, bad for the cosumer and enviroment.
 
I personally think companies like Proctor/Gamble, McDonalds, Pepsi/Coke as far as international plays.  Just think of all the Micky Dees they could put in China and India...toilet paper, the great taste of Doritos.  ATOMIC

troll's picture
Offline
Joined: 2004-11-29

Big Taco wrote:I was watching "Modern Marvels" this weekend.  It gave me a lot of hope for the future.  It was a 2-episode segment about green technology.  It seems that it's getting to the point where people can start putting lightweight windmills on their homes, companies are planning ambitious solar power plant projects, cars are in production that run for over a hundred miles on nothing but compressed air-- if the energy that compresses the air is made "greenly", then it truly is a zero emission situation. 
 
Also, it seems that private equity is financing some of the more experimental ideas on saving the planet, as they hope to recoup their investment through carbon credits.  I hope that fixing environmental problems is also a commercial success most of the time, because as soon as it is, the solutions will probably become much more innovative and timely, IMO.

So much of it is about changing mindsets...outside of Manhattan, Chicago, Philly, and maybe Boston, most people in most cities in this country still get in their cars (by themselves) at rush hour to drive to work.I am on the verge of leasing new office space that is so close to home that I can walk to work in about 15 minutes, and I'm pretty excited about it.  (To note, I am not in one of those areas listed above-I used to be.)  It is very telling how most folks here don't see why I am so excited about that location, while my old clients from the East Coast think I'm crazy like a fox that I don't need to get in a car to get to work.

Big Taco's picture
Offline
Joined: 2006-11-16

bspears wrote:Water....On the oil front, I've read recently about a new oil find off the coast of Brazil/Argentina?, which is located below a large deposit of salt??.  New technology has helped to see through this obstruction, so thoughts of more finds is suggested.  Several billions of anticipated oil.  Russia's oil reserves are more than Saudia Arabia, but with no where near the infrastructure, same with IRAQ.  The US has under goverment control a very large deposit of oil shale in the Colorado, Wyoming area.   It has been off limits to exploration until recently.  Canadian oilsands is another large area of oil.   My personal opinion is there's plenty of oil, but we have to develop infrastructure to get to it.  The easy oil has peaked, its the other that we need to get to. 
 
I like the idea of trying to conserve as much as possible.  Solar is a great thing and the best of all the alternative energy resources.  It has a cost to it and until the cost comes down to the level it can pay for itself in a shorter time frame, without government tax breaks, it won't be widely used.  I was in Mexico recently visiting some Mayan village, and they had a little shop set up with solar running its computers.  I was freaked. 
 
Ethanol is a fad IMHO.  It consumes more energy than it produces, and just pushes up the cost of end product of the crops.  Good for the farmer, bad for the cosumer and enviroment.
 
I personally think companies like Proctor/Gamble, McDonalds, Pepsi/Coke as far as international plays.  Just think of all the Micky Dees they could put in China and India...toilet paper, the great taste of Doritos.  ATOMIC
 
I have to agree on ethanol, at least ethanol made from corn.  It's less efficient (I'm told) than using other base materials like switchgrass or sugar cane, and of course it's diverting a lot of corn to biofuel production instead of to cattle, hogs, cereals and other food products-- end result is that our grocery bills are climbing faster than the historic average inflation rate and we get crappy auto fuel that screws up most engines (even engines designed to burn it) and is often costlier than gasoline. 
 
Like you say Spears, good for the farmer, bad for the consumer.

Broker7's picture
Offline
Joined: 2007-02-23

I am not an enviromentalist, but speaking to my client opened my eyes.  Prior to speaking to him, every time I fill up my car, every time record oil prices flash across my computer screen, I had a bit of concern.  But I will now take more intrest in the situation as it is more than our livelihood that is at stake.  It seems like we will know alot more in the next decade.  Yes, easy oil has peaked, that is why we are going into tar pits in Canada at much much higher extraction cost to obtain oil.  At $10 a barrel OPEC, (which was only 8 years ago) little alternative extraction methods were being explored,  but today, it is a different story.  Best case, science and innovation will salvage the situation.  There are alot of viable ideas out there for energy production that will have to be implemented in the very near future.
 
  Worse case, the lack of  oil and energy shuts down the global economy.  Keep in mind that oil has driven he glodal ecomony throughout the industrial revolution.  What would happen to us if the internal combution engine and airplanes became obsolete in the matter of a few years?  Global commerce could not survive it.   Either way, it is time for us to change our mindset,  think and take some action as the events will take place in the next decade.

Big Taco's picture
Offline
Joined: 2006-11-16

joedabrkr wrote: Big Taco wrote:I was watching "Modern Marvels" this weekend.  It gave me a lot of hope for the future.  It was a 2-episode segment about green technology.  It seems that it's getting to the point where people can start putting lightweight windmills on their homes, companies are planning ambitious solar power plant projects, cars are in production that run for over a hundred miles on nothing but compressed air-- if the energy that compresses the air is made "greenly", then it truly is a zero emission situation. 
 
Also, it seems that private equity is financing some of the more experimental ideas on saving the planet, as they hope to recoup their investment through carbon credits.  I hope that fixing environmental problems is also a commercial success most of the time, because as soon as it is, the solutions will probably become much more innovative and timely, IMO.

So much of it is about changing mindsets...outside of Manhattan, Chicago, Philly, and maybe Boston, most people in most cities in this country still get in their cars (by themselves) at rush hour to drive to work.I am on the verge of leasing new office space that is so close to home that I can walk to work in about 15 minutes, and I'm pretty excited about it.  (To note, I am not in one of those areas listed above-I used to be.)  It is very telling how most folks here don't see why I am so excited about that location, while my old clients from the East Coast think I'm crazy like a fox that I don't need to get in a car to get to work.
 
I've really had that car in my head since I watched that program last weekend.  Right now the car in production (not in the US market yet, of course) looks like a toy.  There's also a minivan version.  But in 5 or 10 years (when it's evolved some), I can definitely see myself paying next to nothing (electricity cost of refilling my air tank) to drive more than a hundred miles at upwards of 70mph.  That's truly amazing to me.  Forget hybrids and ethanol, and ESPECIALLY this ridiculous hydrogen idea.  Let's go AIR!
 
On re-reading my post, on the hydrogen idea, the reason I think it's ridiculous is because a hydrogen car prototype costs more than a million dollars to produce.  Also, making hydrogen can be even more pollutive than driving with gasoline.  A pro is that after the expensive and energy intensive process of producing the hydrogen fuel, the hydrogen car has zero emissions, just water vapor.  But I read some material about an enzyme mix that has been discovered whereby someone can dump 10 pounds of starch in their hydrogen-car fuel tank, dump in this enzyme mix (or maybe even a mixture of bacteria that produce the requisite enzymes), and the enzymes break bonds in the starch to produce enough hydrogen to fuel the car (a byproduct is CO2, though, something that we're trying to reduce emissions of, right?). 
 
All in all, I think I need to start investing in etfs that hold renewable energy concerns.  Anyone got some suggestions?

bspears's picture
Offline
Joined: 2006-11-08

proshares...International Global Clean Energy, PBD and Global Water PIO

Broker7's picture
Offline
Joined: 2007-02-23

http://www.youtube.com/watch?v=lweCK8spBX8
Mr Pickens says we've peaked...

what is to come?

Please or Register to post comments.

Industry Newsletters
Investment Category Sponsor Links

 

Careers Category Sponsor Links

Sponsored Introduction Continue on to (or wait seconds) ×