Comments on: Energy security http://indianeconomy.org/2005/08/23/53/ Issues & insights Thu, 29 Apr 2010 07:45:12 -0500 http://wordpress.org/?v=2.8.2 hourly 1 By: kaushik http://indianeconomy.org/2005/08/23/53/comment-page-1/#comment-147 kaushik Fri, 26 Aug 2005 14:21:03 +0000 http://indianeconomy.org/?p=53#comment-147 Prashant: There are may different factors at play. There is of course the peak oil theory to which I am somewhat sympathetic. But more important in the short run is the fact that none of the oil majors appear to have invested seriously into exploration over the last so many years. We do not have the bandwidth necessary to meet the any serious increases in demand. No one really knows how the increasing Asian appetite for oil for play out. But as you pointed out, I have not really described my reasons for arriving at that conclusion. I would have a follow up post on the subject. Prashant:
There are may different factors at play. There is of course the peak oil theory to which I am somewhat sympathetic. But more important in the short run is the fact that none of the oil majors appear to have invested seriously into exploration over the last so many years. We do not have the bandwidth necessary to meet the any serious increases in demand. No one really knows how the increasing Asian appetite for oil for play out. But as you pointed out, I have not really described my reasons for arriving at that conclusion. I would have a follow up post on the subject.

]]> By: anon http://indianeconomy.org/2005/08/23/53/comment-page-1/#comment-140 anon Fri, 26 Aug 2005 00:25:52 +0000 http://indianeconomy.org/?p=53#comment-140 <blockquote> there’s an equal probability of oil prices going down or up..</blockquote> The fluctuation in oil price is not a random walk. Specifically, note that 5 year oil futures were trading at $58 last week, compared to $35 a year ago: <a href="http://money.cnn.com/2005/08/18/markets/goldman.reut/" rel="nofollow">link</a> to CNN Money.

there’s an equal probability of oil prices going down or up..

The fluctuation in oil price is not a random walk. Specifically, note that 5 year oil
futures were trading at $58 last week, compared to $35 a year ago: link to CNN Money.

]]> By: Prakash http://indianeconomy.org/2005/08/23/53/comment-page-1/#comment-127 Prakash Thu, 25 Aug 2005 07:38:10 +0000 http://indianeconomy.org/?p=53#comment-127 Having read a little about the peak oil issue myself, let me explain what are the main uncertainties in this situation. Supply numbers are not known clearly. The main suppliers, the saudis, have not had an international audit of their oil wells for a long time now. The market is playing out this scenario of how long the saudis can resist pumping away any extra capacity they have. thus overall, The market is only very slowly coming to a realisation that oil might be peaking, primarily because despite much higher prices, the kind of supply that can bring oil back to even the sham "targetted price" of opec is not visible in the market. If this price of oil is a mania, why isn't more supply coming into the market? If one looks at the market the way it truly is, with information gaps, hunches, herd mentality, etc, one can realise why information will take time to move around. And this is not necessarily a bad thing as it is the basis of entrepreneurship. Having read a little about the peak oil issue myself, let me explain what are the main uncertainties in this situation.

Supply numbers are not known clearly. The main suppliers, the saudis, have not had an international audit of their oil wells for a long time now. The market is playing out this scenario of how long the saudis can resist pumping away any extra capacity they have. thus overall, The market is only very slowly coming to a realisation that oil might be peaking, primarily because despite much higher prices, the kind of supply that can bring oil back to even the sham “targetted price” of opec is not visible in the market. If this price of oil is a mania, why isn’t more supply coming into the market?

If one looks at the market the way it truly is, with information gaps, hunches, herd mentality, etc, one can realise why information will take time to move around. And this is not necessarily a bad thing as it is the basis of entrepreneurship.

]]> By: Prashant Kothari http://indianeconomy.org/2005/08/23/53/comment-page-1/#comment-124 Prashant Kothari Thu, 25 Aug 2005 04:01:23 +0000 http://indianeconomy.org/?p=53#comment-124 Kaushik says <i>I believe that over the next several years oil prices will continue on an upward spike </i> A fallacy there, Kaushik... not sure how you arrive at this conclusion. Today's price incorporates any such expectation... just because oil prices have sky-rocketed in the last few years doesn't mean they will continue rising. Ex ante, there's an equal probability of oil prices going down or up.. Kaushik says I believe that over the next several years oil prices will continue on an upward spike

A fallacy there, Kaushik… not sure how you arrive at this conclusion. Today’s price incorporates any such expectation… just because oil prices have sky-rocketed in the last few years doesn’t mean they will continue rising. Ex ante, there’s an equal probability of oil prices going down or up..

]]> By: Umesh Patil http://indianeconomy.org/2005/08/23/53/comment-page-1/#comment-120 Umesh Patil Wed, 24 Aug 2005 18:14:44 +0000 http://indianeconomy.org/?p=53#comment-120 American Inability to solve Oil Problem http://21stcenturypolitics.blogspot.com/2005/08/inability-to-solve-oil-problem.html American Inability to solve Oil Problem

http://21stcenturypolitics.blogspot.com/2005/08/inability-to-solve-oil-problem.html

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