Picture essay: The terrible legacy of biofuels

[Submariner]

"... A biofuels company has acquired 8000 hectares of the villagers land in Kisarawe ..."

How did this happen? Was there as exchange of money?

[Annuvin]

Originally Posted by ca_north

I assume you know that "Peak Oil" is the real problem, since oil depletes in a bell-shaped curve. The global oil production peak is already behind us, as of 2006 per the International Energy Agency. It peaked for the very same reason that we can never physically get it all out of the ground.

I don't subscribe to the theory of "peak oil". When it comes to resources, the price is determined by supply and demand. If the supply drops or demand increases, the price goes up. Alternatively, if the supply increases or demand drops, the price goes down. This is one of the most basic economic principals whether you are selling houses, cars, oil or gold.

The best indicator of the value of oil is its comparative cost in relation to gold. This is because currency values can be manipulated by any number of factors that can cause prices to increase. However as the price of gold is also manipulated in exactly the same way, we can use its value to determine what a barrel of oil is truly worth. The easiest way to do this is to look at how many barrels of oil an ounce of gold will buy. Historically, this number has been 14.77 barrels per ounce. Now let's compare the cost today:

$1582.22 (gold) / $107.80 (crude) = 14.74 barrels

If peak oil was a real factor, this ratio would be much lower than the historic average, and the relative price of oil would be steadily increasing since the 2006 peak as production would in no way be able to meet demand. Seeing how the oil/gold ratio is remaining basically the same, we can deduce that the reason the increased price of both crude and gold is due to currency devaluation.

[thecoalman]

While I'm not disagreeing with your assessment on the current oil market peak oil is going to occure at some point in time. The major issue with the accuracy of any of these estimates when this will occur is lack of data on the worlds major oil fields most of which have been producing oil for more than half a century.

Peak oil in Texas was accurately predicted a decade before it happened in 70's, since then it has "unpeaked" for many wells because of modern techniques. The major issue is as these wells age it becomes becomes more energy intensive to extract the oil, at some point it time it requires just as much energy to get the oil as the oil can produce. If you're using a gallon of oil to produce a gallon of oil it's no longer viable. All of the worlds largest oil wells mostly in the middle east were discovered more than half a century ago and they have been pumping oil since then, at some point in time they are going to fail and when they do fail it's a very rapid decline. If many of these large wells are to fail at once there could be some serious issues.