Peak Oil

edit: Rambo is the man

No question that new reserves are getting harder and more expensive to find. We may even be at "peak production". But we have decades of known reserves left, and as F&D technology advances we are finding ways of extracting additional hydrocarbons from wells we thought were depleted, or from areas where it wasn't previously possible. A major shift away from oil is inevitable. But I think it will happen the way we see it happening right now - a gradual increase in prices slowly providing incentives to shift to different fuels. These apocolyptic scenarios seem alarmist and unrealistic. We're not just going to wake up one day, realize we're out of oil, and kill everyone.

Politicians won't do a damn thing about it-it's not "their problem" once they're out of office. We should be able to sue them for things like this. The proximate cause of the end of civilization as we know it in the future is the inaction (inability or apathy) of politicians and energy companies to the future oil crisis. 

Again, oil's a finite resource- we WILL run out, it's a question of WHEN, not if.

"We are lawyers! We sue people! Occasionally, we get aggressive and garnish wages, but WE DO NOT ABDUCT!" -Boston Legal-

Think it's a bit over the top, and would definitely not mention it in IBD interviews.  Sure, we'll run out of oil someday and all the geopolitical factors (China, slowing oil supply in middle east etc.) are contributing to oil depletion, but the chances of an apocalypse are pretty low.

Prices will keep rising - I think the real question is where's the breaking point?  Will oil hit $500 a barrel?  $1000?  At what point does it start to actually impede economic growth?  That's what we need to be concerned about.  If it gets so high that the Chinese government stops subsidizing oil, we might be in trouble.

the major integrated oil companies are doing something.  Just because alternative technology is not commercially available right now doesn't mean they have not been developing it- they know its coming and they all want to be the leader when it emerges.  A friend of mine has driven a hydrogen powered truck at a BP event. 

Also, President Bush just tried to get an alt energy spending bill through, but Congress shut it down. 

Eventually oil will get expensive enough and scarce enough to the point where building a new infrastructure will be necessary.  I am not too familiar with alt energy, but from what I have heard hydrogen seems pretty feasible. 

But the alt energy transition will be slow enough that people will have plenty of time to adjust and will not panic.  Chances are that when we stop using oil it will be because it is too expensive, not because we are out of it. 

On that same note, if anybody has any good alt energy resources (Websites, research/primers), please pass them along.  I would love to learn more about the subject.

Thanks for the correct website Stern.

So, what are you doing about it? Anything? Let's say there are two extremes: 1) do absolutely nothing different, or 2) do as the man in the WSJ article is doing (stocking up on gas, learning to produce his own food via gardening, stocking up on water and canned foods, preaching the Peak Oil story to anyone who will listen, waking up in the middle of the night in a cold sweat - worried about the future). Where do you fall between these two extremes?

With what the previous posters have said thus far, it seems that at a minimum, you should be long an oil ETF/mutual fund for the long term. Do you have your money where your mouth is?

My understanding is that many alternative energy & oil sources are already profitable. The problem is that energy companies are afraid to make serious infrastructure and capital investments because energy prices are so volatile.

They won't make investments because Wall Street demands short term profits. As in next quarter's profits must be higher than this quarter's. Worry about the subsequent quarters later.

I mean no offense toward Wall Street analysts.

"We are lawyers! We sue people! Occasionally, we get aggressive and garnish wages, but WE DO NOT ABDUCT!" -Boston Legal-

wall street doesn't demand short term profits, its one of the biggest myths ever. Just be logical, look at all the companies, such as Amazon, that had their stock price soar when they were making ZERO income; or even Apple and Google Etc who's stock price is also based largely on the expectations of profits in the future, NOT on short-term net income or the expectation of short-term net income. It's true investors expect to make a profit on their investment, but thats based on the raising of the stock price, which can move quite independently from the income/profitability of a company (although there is a limit due to have to discount cash flows).

This is a great site for anyone interested in the topic

http://www.theoildrum.com/

Oil companies do make a lot of investments. The main thing investors look at for oil companies is the reserve report. If an oil company didn't invest in finding any new reserves to replenish old ones then the company eventually has to close shop.