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    #26
    Peak Oil

    No, you're right, it's not a part of the famous peak oil graph. I meant that the impact of peak oil on price is non-linear partly because the cost of extraction increases.

    The market didn't factor it in before because the (spot) market is very myopic.

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      #27
      Peak Oil

      And a re-reading of the definitions shows that consumption doesn't factor into the curve at all: it's only based on the rate of new discovery and the depletion of old reserves. Increased consumption would, presumably, be an overlay on the curve graph would likely show the exponential price increase.

      What I found interesting in a documentary on the subject was that some detractors try to discredit the theory by saying that Hubbert was wrong on his peak year. In fact he was off by 5 years, which (oddly) was how long the oil embargo lasted. In other words, he was right but for an unforeseen and artificial circumstance.

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        #28
        Peak Oil

        Ginger Yellow wrote:
        I mean, if in 2005 we knew (roughly) that we'd depleted 49% of the world's oil and oil was $50 a barrel, and in 2008 we know (roughly) that we'd depleted 51% of the oil...
        We didn't and we don't. Peak oil, if it is valid, is not something that you can accurately judge ahead of time. And again, it's not about the amount of reserves, but the amount and cost of extraction/refinement. Part of the reason that prices have skyrocketed is massive global growth with only limited increases in extraction and almost no new refinery capacity, combined with external shocks. On top of that, the boom in most commodities prices and the fall in the dollar was a recipe for rising oil prices, regardless of peak oil considerations.
        You can't even judge it absolutely accurately afterwards, as you never know if more reserves are to be found. But the guy credited with coining the term "peak oil" (Hubbert) did, in fact, predict it in advance for the US back in the late 60s.

        The rest of your post makes sense to me: refineries, extraction costs, war, the dollar, increased demand from Asia - those are all good reasons for the price to increase. I get that. But of those, only extraction costs seem to me to be in any way related to "Peak Oil", and they seem to me to be a fairly limited factor (as I understand it, the marginal price of the most difficult barrel of oil to extract is about $50 - which doesn't account for oil at $100). Other, non-Peak Oil factors would seem to be more factors in oil's recent rise (though long-term, obviously the effects of Hubbert's rule will kick-in sharply at some point).

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          #29
          Peak Oil

          Oh yeah, I'm not at all claiming those are all peak oil related. I was just explaining some of the reasons oil has shot up.

          On the extraction cost front, though, I think it is linked more than you suggest in that high extraction cost sources attract limited investment unless extractors are sure prices will be high in the long term and many refineries can't cope with their products, hence the lack of spare capacity in refineries or oil fields, making prices more volatile to variations in demand.

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