He said, “the demand for oil is increasing at a faster rate than we are currently able to supply it”

That is not the same as you saying, “So long as our rate of consumption doesn’t exceed the rate at which the deposits accumulate, assuming that biotic or abiotic theories are correct, it doesn’t really matter,”

He is saying it does not matter because the rate or new “supply” is not equal to or greater than our current rate of extraction and consumption.

I think that I have to chime in here based on previous comments that Clarity of thought made towards Mr. Jackson previously accusing him of not understanding economics. In my opinion, as an economist, it is Clarity of thought that does not understand economics and is using basic, text book, entry level definitions of supply and demand as taught to neophytes and thinking, incorrectly, that he or she understands enough on the topic to comment.

What is considered supply actual is not as cut and dry as what is simply available on the market for purchase as Clarity of thought implies but is indeed more broadly defined as known and proven reserves when it comes to feed stocks like petroleum. This is different than how supply is defined in practice and reality from things made from those feed stocks. Example, automobiles in supply are not defined by the numbers of body panels awaiting assembly.

Mr. Jackson discusses actual supply versus artificially limited supply based from actual supply and is very much correct in his description if not his usage of terminology.

Proving this to one’s self is easy. When large new finds of petroleum, a feed stock, are discovered and those finds are reachable by current technology they are considered be part of the supply. If petroleum prices are rising, they tend to stabilize or not rise as fast on such news. If these prices are already stabilized they tend to start falling. For futures of course not current on demand delivery. Now, as Mr. Jackson explained, outside factors may inhibit the deliverability of that supply but the supply itself is not affected. Those factors which most certainly include government interference artificially deflect the demand portion of the equation and not the supply portion.

Simple example of this is the old time closed system of the diver and his air hose fed by a compressor. Under normal conditions the diver gets the air he needs from the available supply through the delivery system of the hose. But if someone steps on the hose and prevents the delivery of the air the true supply of air has not been changed at all. But most certainly the demand for the air at the diver increases rapidly as time passes. But in the overall schema the diver is only a smally defined sphere and it would be false to assume that the supply of air has been alter by this action.

There is still the same amount of air but only its availability, not its supply as defined economically, has changed. Supply has differing meanings to differing people so this is important to note. Supply in economic terms is the exploitable amount of a resource in existence which has not been changed in this case by the air hose being interfered with or in the example of petroleum government preventing people from accessing known reserves. Availability is defined as local supply and the problem with using availability (or local supply) as the basis is that it can change depending on how you arbitrarily define the “local” area. In the case of worldwide traded commodities, a narrowed sphere only distorts the perceived supply and ignores that what is being looked at is just local availability and not supply as we economists define it.

The people in Cuba have a problem getting enough fish to eat but the supply of fish in the ocean remains true. Local availability is impeded by a government scared that if fishermen get on their boats to go and catch fish they will not stop until they hit Miami. This is a complication of economics often overlooked by novice economists.

There is another reason why Clarity of thought’s definition is faulty. The ban on offshore drilling prevents the United States from accessing a lot of petroleum. However many of the wells are already dug but just capped. You can see how defining supply as only that which is actually already pulled from the ground and ready for delivery becomes even more problematic in this instance. Simply uncapping these wells results in production but once again supply has not changed at all. The amount of petroleum is still the same only the location has changed. It has not been processed or changed into something else. The fact that this oil exists exerts a current and downward pressure on world prices even though it is not currently on the market regardless. The reason for this is because the world market knows that under the right circumstances it could become nearly immediately, in economic sense, available to the market. If it was not considered as part of the supply then this would not be true and prices would not be affected by it.

Another example of how impedance of delivery is not an indicator of scare supply and only effects the demand side would be if a man in his house needs bread but the store, fully stocked with bread, is 50 miles away while his car is broken down leaving him with no means to get to the supply of bread. Let’s say for the sake of argument that he cannot walk there or get someone else to take him. Is there considered a shortage of bread in this instance? There is not. But demand on the man’s part does most certainly increase as time passes. However if you define your sphere of supply and demand conveniently enough and say that that sphere is the man’s house then you would falsely be proclaiming that there is a shortage in the supply of bread and draw false conclusions.

There is more to economics than just supply and demand. There is everything that happens in between and while a local availability of a good may be scarce because of the impedances and because you misdefine your sphere for convenience, it does not necessarily mean that supply is affected.

Hope this clears some things up and educates some people. I’ve tried to explain it in as much layman’s terms as possible.

Here is the funny part. If you strip out all the taxes and fees on gasoline that government has raised and raised over the years including both direct and indirect taxes, the true cost to bring one gallon of gasoline to market is about $1.50 per gallon right now. Considering how little oil these freaks complain that we have and with ever increasing demand as nations come onto the industrial scene that is literally peanuts when you consider refining costs.

They yammer about how it costs so much to get at some of these deposits. But when you take that cost and look at the total gallons they are getting out of the stores it comes out to be just about $.01 to per gallon (rounded up) than they are paying to get a gallon of oil currently because of technological advancements.

I have a really hard time getting excited about the “end of oil” as so many are proclaiming. And having worked in a refinery for nearly 20 years I am well enough versed in the chemistry of making useful products from all segments of an oil to know that abiotic theory which is basically the creation of light hydrocarbons and then heavier ones not only is plausible in the deep earth but absolutely likely because we do that daily in the plant.

If scientists are correct in their detection of hydrocarbons on the surfaces of moons in our solar system where there has never been life then there is only two explanations for its creation. First it was created in space and two it is created abiotically.