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Peak Oil Myth?

March 21, 2011

I have to say that I haven’t ever really thought of oil as a “fossil fuel” and that dinosaurs decomposed to create it. I have thought of it as a finite resource, and that made me believe in peak oil theories. Today I began to think about the consequences of peak oil being a myth, and how that changes your entire world view.

Let say for a second that oil is a renewable resource, created inside the earths core. That would mean that large fields that are available like saudi arabia could renew themselves at some rate (again for argument) perpetually. Energy controls the world, and its supply and demand causes price fluctuations that control economies and lives. Inherently there is this “bid” in oil because many believe it to be a finite resource.  Take a look at the chart below, and figure that demand has certainly risen many multiples over the past 50 years. The argument here is that the oil prices in the last 10 years were driven by speculation, from many different sources. What an incredible political policy tool, if you can control the price of oil even though supply is constant. Want to slow down an economy? Rise up the oil price. Want to crush a foreign economy? Play with their oil prices.

The world becomes a different place when seen through this lens. If price is artificially controlled as opposed to through demand the politics and wars are a world apart from where they seem.

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