Cheap oil peaked in 2005. Since then, a re-definition of oil to 'liquid fuel' magically increased world production by 10 million bpd. Then massive debt-fueled investment raised "production" a little bit more. Now, we are in the falling net-energy trap for oil. Every day it costs more joules to get a joule. If all the externalities of oil are included net-energy is likely negative, especially in tarsands.
Negative net-energy means that it costs more than 1 joule to get 1 joule. How is that economic? Well, it's not. But transportation, and hence the developed economy, needs liquid fuel. So debt and oilwars will increase.
Currently there is a glut because of three things.
Negative net-energy means that it costs more than 1 joule to get 1 joule. How is that economic? Well, it's not. But transportation, and hence the developed economy, needs liquid fuel. So debt and oilwars will increase.
Currently there is a glut because of three things.
- price war for market share
- debt-fueled production in difficult areas
- weak economies in developed countries
