Many (but not all!) railfans are also believers in Peak Oil. The basic idea is that production and extraction of oil will peak and oil will eventually become super expensive through the law of diminishing returns. Many railfans see peak oil as something that is not only in there self interest because if oil becomes super expensive more goods and people have to be shipped by rail thus ushering in a golden age of rail. However this is a flawed world view as railroads still largely run on oil fueled vehicles and would initially be hurt by it as well and much of what freight railroads ship has to with oil and my products made from oil. If peak oil were to happen trains would run significantly less often with significantly less cargo. Also consider that during the 70s energy crisis railroads fared pretty horribly just like other transportation systems did. Even though rail might be more efficient at utilizing other forms of energy, doesn’t mean that it is the only mode that can. The bottom line is that super oil prices and the general de-industrialization of society is equally bad for railroads as it for all our other transportation systems.
Doesn’t matter what the business or product or even service. Each has its own lifespan or is cyclical within that life span. Transportation services seem to have a continuous lifespan which adapts to the cyclical nature of other businesses. The smart railroader knows this and plans ahead knowing what has to be changed and when and when one has to give up and leave for more productive track.
Speak for yourself. Many railroad forum members recognize overt trolling for what it is- an attempt to get people riled up at each other, buy introducing hot-button topics onto the forum in the guise of railroad discussion. What were your screen names the last few times you were on this forum?
Well put, Murphy.
“PEAK” oil, sounds like a new term, whatever it means, have you not seen production numbers from Saudia Arabia? depletion is not a problem there, in fact production has increased every year for decades, remaining reservoirs of oil, don’t worry about it in your lifetime, Texas has not dried up either, new discoveries every year of vast amounts of oil reserves, Canadaland has not even begun to exploit its tar sands reserves, and remember, the largest portion of the tar sands are in Saskatchewan, Bakken reserves are immense with a huge portion of it in Alberta and Saskatchewan, new methods of discovery, new methods of extraction new methods of environmental methods will be forthcoming, your grandkids will still be cruising around in gas powered autos in the future. Australia has found vast reserves also, the list goes on.
I don’t think you have a very good grasp of the concept of “peak oil”.
It does not make the prediction that all of a sudden with no warning the oil supply will dry up.
The current accurate view is that what is happening is the end of relatively inexpensive oil. Many of the initial predictions of the end of oil did not take into account the new technology of advanced oil extraction which is allowing previously untapped deposits to be developed,such as what we are seeing in the Bakken and Marcellus shale.
Another factor you are not considering is that there are large reserves of natural gas that can be used as vehicle fuel. The railroad equipment industry is investing a great deal of money in developing conversion
[quote user=“Murphy Siding”]
Murphy Siding [tup][tup] said:
“… Speak for yourself. Many railroad forum members recognize overt trolling for what it is- an attempt to get people riled up at each other, buy introducing hot-button topics onto the forum in the guise of railroad discussion. What were your screen names the last few times you were on this forum?..”
To onthe BNSF: Your mention of the Oil Crisis of the 1970 was a reminder to me of a period in my life when I began to realize some political realities… IMHO the “Oil Crisis of '73” was never a crisis on no oil… it was only a shortage of CHEAP oil.
The crisis started in 1971 when Richard Nixon when Nixon and his advisors took the then used “Gold Standard” used in International Oil Trading off the table in conjunction with its use as a currency denominator and valuation as related to the US Dollar by the aftermath of the " Bretton Woods Regime"
This link is a relation to how that set of events played out between the members of OPEC (and their use of the Oil as a Weapon) and the 1973 Yom Kippur War… @
“Speak for yourself. Many railroad forum members recognize overt trolling for what it is- an attempt to get people riled up at each other, buy introducing hot-button topics onto the forum in the guise of railroad discussion. What were your screen names the last few times you were on this forum?”
I get the impression “Bucky” may be back.
Please, Don’t feed the Troll. They just keep coming back for more.
[quote user=“carnej1”]
I don’t think you have a very good grasp of the concept of “peak oil”.
It does not make the prediction that all of a sudden with no warning the oil supply will dry up.
The current accurate view is that what is happening is the end of relatively inexpensive oil. Many of the initial predictions of the end of oil did not take into account the new technology of advanced oil extraction which is allowing previously untapped deposits to be developed,such as what we are seeing in the Bakken and Marcellus shale.
Another factor you are not considering is that there are large reserves of natural gas that can be used as vehicle fuel. The railroad equipment industry is investing a great
BNSF,
While you are probably correct to expect the economy to contract due to real and sustained price increases due to the world passing the point of peak oil production, your conclusion as to overall impact on the railroads is totally wrong.
Consider the fact that fuel is now in the range of 7-8% of rail rates and roughly three times that percentage of truck rates. Take today’s rates as an index of 1.0. Now imagine that the price of oil doubles. The rail index goes to 1.07 while the truck index goes to about 1.2. Note that the truck index will not triple, since I assumed that highway fuel taxes remain constant. Double oil cost again and rail goes to 1.14 while truck goes to about 1.4.
That increasing spread will encouraqe shippers to shift traffic away from truck and to rail. How much and how fast I can not predict but the degree and direction of the cost curves are very clear. There is always traffic that is on the margin, meaning that a small shift in service quality and/or price will move it from one mode to another. The rails now have a decent intermodal product, and that is where I would expect most of the ex-truck traffic to go.
Mac McCulloch
I would opine that both Dutch Royal Shell and BP Oil think differently, as both are investing in deep water wells off of the Texas coast, and according to both, if the field is as big as their geologist predict, it may exceed the amount under Saudi Arabia.
And trust me, the Permian basin is anything but dry…Odessa and Midland are booming again!
Your first two sentences are ingeniously crafted, although I would like to see the source of your first statement.
Did someone take a “what railfans think” poll and I just missed the memo?
Your second sentence is in fact, true, but not in the way you express it
At some point in time the extraction of any finite resource, in this case crude oil, will become more expensive than the resource is worth, the price of the resource will rise and peak, then plummet as its usefulness diminishes, but I doubt any of the current forum members will be alive to see that happen…possible our grandchildren, but none of us.
I was going to ask you to cite some sources for your statements, but then I realized facts would simply screw up your trolling, so never mind.
In the 60 years since I could read a newspaper there as been the assertion that we are at the end of our energy resources - and every year new deposits of all our energy sources are foud or new processes are discovered that make extracting additional product from what were previously considered areas that had been exhausted.
While such discoveries will not continue forever, they have not ended and won’t for the forseeable future.
60 years? Just go to Google Books and browse early 1920’s issues of Popular Science… There was plenty of concern back then about running out of oil - one of the things that lead to the Tea Pot Dome scandal in the Harding administration.
- Erik
P.S. This is intended to reinforce Balt’s argument, not dispute it.
The deception there, Erik, is that 60 years ago, despite the warnings of Eisenhower and his advisors, there was the naivete that oil was being found someplace new every day. J.D. Rockefeller had the same fear at Standard Oil when the only place pulling crude from the ground was within site of Drakes Mills, PA. Within less than a decade more oil was found elsewhere in PA, then Indiana, Oklahoma, California, Russia all before the 20th Century began. The Arabian desert sheikdoms believe they have an unlimited supply today while others are saying the reality does exist that we can and probably will run out someday.
I’m not so sure there is a deception as opposed to peak-oil referring to running out of cheap oil. Cheap oil being the stuff that recovering involved sticking a pipe into the ground and letting the reservoir pressure push the oil up the pipe. Oil production in the US in 1970, about the time predicted by Hubbell (spelling?), but that was as much due to the then low price of mid-east oil discouraging exploration and R&D on for new domestic sources along with an ill-advised continuation of price controls for oil after the wage and price controls were lifted for everything else.
Technology has helped immensely, but mainly because prices are high enough that there is money to be made.
My best guess is that oil prices will continue to rise, but oil will not become scarce for a number of decades. Instead there will be a gradual shift away to other sources of energy. Railroads are in a reasonably good spot in being able to utilize non-petroleum based energy sources, where airlines are pretty much stuck with liquid hydrocarbon fuels, with trucking somewhere in between.
- Erik
While oil production is rising, demand is expected to skyrocket with the growing economies of China, India, etc. The rising price of oil is what drives the innovations which have enabled higher production. But among transportation modes, railroads are uniquely positioned to take advantage of electrification, which does not rely on a specific fuel.
Edit: After I posted the above, I saw that in the meantime Erik had more thoroughly cover this. Sorry for my redundancy.
Peak oil, haven’t heard that one for a few years. It was a theory popular a few years ago that said all the easy oil to find was found and that in a surprisingly small number of years, maybe starting already, world production would start declining in a spiral to zero.
Well, they were not familiar with how natural resources work and called that one very wrong, at least for the next few hundred years.
A natural resource like oil or iron ore (or copper or anything else) will always be available for the mutually agreed on price a willing buyer is willing to pay to a willing seller. If the price becomes too high, something else will be found as a substitute. That’s free market economics, the only economic theory that explains successfully what happens in the real world.
What the nay sayers forgot to take into account is technology that can produce more oil from depleted fields make production possible from fields that were previously written off, and use the oil more efficiently. Three examples are the tar sands development in Canada, the Bakken formation in North Dakota, Montana, South Dakota, and Alberta, and the Marcellus Shale in Ohio/Pennsylvania/New York (gas). There are many more. The net result is that instead of being a major importer of oil, the US and Canada taken together are now essentially self sufficient and on the verge of becoming net exporters.
As for efficiency, look at the modern car that gets 25+ MPG compared to the 1973 Chevy Impala that got about 11.
That’s not to say that individual fields like Saudi Arabia won’t decline in production someday, but other sources or substitutes are found to replace them at the current pricing point. Case in point. In the last 10 years several basins have been found around the world that are “as big as Saudi Arabia”, including more than one in the USA.
One of the substitutes for oil production is efficiency. As the price of oil go
“Peak Tree” didn’t sink the British Empire. “How will we heat London homes?” “What will we build our ships from?” Worry, worry, worry…
“Peak Oil” won’t matter much either. The sun is still shining.
+1
[quote user=“ontheBNSF”]
[quote user=“carnej1”]
I don’t think you have a very good grasp of the concept of “peak oil”.
It does not make the prediction that all of a sudden with no warning the oil supply will dry up.
The current accurate view is that what is happening is the end of relatively inexpensive oil. Many of the initial predictions of the end of oil did not take into account the new technology of advanced oil extraction which is allowing previously untapped deposits to be developed,such as what we are seeing in the Bakken and Marcellus shale.
Another factor you are not considering is that there are large reserves of natural gas that can be used as vehicle fuel. The railroad equipme