On May 5, 2011, IFO What a great day – oil just closed at UNDER $100! So much for Peak Oil. This is the free market at work, though many do not understand how it happens.”
Today, the WSJ writes in “Oil Falls Below $50 a Barrel”:
The world’s benchmark oil price fell below $50 a barrel Monday for the first time in six months as a sluggish global economy and rampant oil boom keep crude markets crashing.
Monday’s selloff comes after oil spent July plunging into a bear market. Record production in the U.S. has led to an international competition to produce even more, cut prices and fight for customers around the world. The past week brought signs that production is still going strong, dashing hopes that low prices may force producers to slow down.
We are getting pretty tired of the constant predictions of “Peak Oil” – the idea that we have reached, or will very soon reach, the highest production of oil that we ever will. Soon after that, petroleum will be all used up, alarmists say.
Peak Oil has been predicted regularly ever since about one year after the first gusher in Titusville, Pennsylvania, more than 100 years ago. Not long ago, the prediction was that oil production would start to fall off dramatically in the year 2000. Well, you see how THAT worked out.
But a current website entitled “Peak Oil” doesn’t mention the original thesis in the posts visible on the front page today. Sure, lots of disasters predicted, dire warnings issued, and irrelevant articles posted: our favorite: “Mysteries of Eleuthera.”
The “mystery” the authors say with a straight face, is that “[2300 ton] boulders, we now know after extensive research by many geological experts, were dredged from the ocean floor, taken up and over a cliff and left there like Easter Island statuary, in a great storm event during a past interglacial warming epoch.”
The “extensive research” by “experts” meme should be a clue to watch out for a coming whopper. And sure enough, turns out it was caused by…, wait for it… CO2!!! The article is a rehash of a “seminal” piece by none other than James Hansen and co-authors.
Yes, he’s still at it after being busted and debunked many times over. We leave the debunking to our readers. Just Google James Hansen and learn from contrarian “experts” where he has gone wrong.
Our favorite takeaway from this absurdity is this sentence: “It is hard to imagine that the air we exhale lifted these huge boulders, but indirectly, it did. ‘CO2 is the principal determinant of Earth’s climate state, the “control knob” that sets global mean temperature,’ Hansen’s group says,…”
BTW, the link to the referenced “seminal” article mysteriously failed. If you are surprised, you haven’t been reading IFO long enough.
But back to the fall in oil prices. It’s not warmists who are off the mark in understanding natural climate processes, economists and analysts never seem to get economics right. Their predictions are almost equally as bad. Just what is the word “hopes” doing in that WSJ article?
Hope is just another word for prediction. One thing you can say about economists, they’ve gotten smart enough not to make outright predictions any more. At least THEY have memories. Warmists don’t even have that.
But then, Economics is not a religion. Warmism is. IFO definition of “religion” – belief in something with no proof whatsoever, and none desired. Faith, belief without evidence, is required. If you have evidence, you are using Reason.
The battle between Faith and Reason is ongoing and unrelenting. See any Star Trek episode where Spock and McCoy interact. McCoy thinks faith means emotion and is the opposite of reason, which to him (McCoy) means unfeeling. Spock has no idea what he is talking about.
What do we learn from this? If you own oil stocks, don’t worry about falling stock prices. The companies understand the oil business, knew this was coming, and have provided for it. They will maintain their dividends (barring management incompetence) and your rate of return will simply go up. If you don’t sell, the falling price(s) are simply paper losses.
Also, look for a price rebound, but enjoy lower gas prices if you can. After all, the bears are out in full force:
- Oil Giants Confront Long-Term Price Decline; Cramer Sees Drop to $43at TheStreet(Mon 12:27PM EDT)
- Oil bear predicts another 10% pullbackCNBC(Mon 12:22PM EDT)