How will peak oil effect the share market and global economy?

[gentletexture989]

How do you think the share market and global economy will be effected by peak oil, which according to leaked Bundeswehr reports will be here sooner than expected?

How will shares in oil companies like BP be effected.
http://www.spiegel.de/international/germ...38,00.html
P.S sorry for my bad English.

[John W]

The date for peak oil is a constantly moving target as there are new finds and more reserves are brought online as well as changes in demand. The current estimate for peak oil is sometime during 2011.

When peak oil occurs, very little will change as the peak is merely when the rate that oil production can be increased can no longer keep up with the increase in demand. It only affects the marginal increase in oil demand. It's likely to be a long stretched out period as focus is placed on maximizing production from known reserves and on reducing energy use. There is plenty of room for the reduction of energy consumption so as more resources are diverted to that, the countries with access to the technologies, that can develop the technologies and have minimal overhead in replacing or refurbishing existing facilities will benefit the most. There's opportunity for developed nations in the development and marketing of newer more efficient technologies but developing nations like India have already demonstrated technical competence and do not require replacement or refurbishing of existing infrastructure. Whether that is a sufficient hindrance to give the BRIC an edge is another matter.

We've already seen the effects of peak oil occurring, aside from the subsalt reserves, the focus has shifted from exploration to production. Reservoir management is a more likely market for seismic imaging than exploration for land seismic which leads to more permanent geophone installations. Whether or not that means the oil companies will continue outsourcing seismic to service companies is questionable, it may make sense for them to internalize seismic as an operation but there has been such a history of outsourcing and competition that it's doubtful that consolidation by acquisition of service companies would be allowed. Production scaling such as with the Oil sands have developed in an outsourcing model as well giving rise to an increase in Engineering, Procurement and Construction companies. It would seem that the oil companies are reluctant to take on anything that may leave them with the unpleasantness of laying off a workforce after the capital development has been done.

The workforce of seismic exploration companies tended to be nomadic, particularly the trades and labour sectors whereas the trades and labour sectors of EPC companies are site located for the duration of a project which can be decades. You'll see the emergence of company towns much as we did with coal mining and perhaps the re-emergence of corporate sponsored retail, indeed the now defunct Montgomery Ward was once a corporate sponsored retail operation. Of course that need may be obviated by the emergence of web based retail. The provisioning of logistics will become prevalent and with new technologies there will be a focus on increasing efficiencies through business intelligence and inventory tracking. This also means that the demographic shifts incurred will be more permanent and more noticeable than that from exploration so this will impact infrastructure and social provisioning more. The Atco trailer camp of predominantly male workers will give way to generic suburbs for single families.

I don't think there will be a dramatic improvement in the share prices of oil companies but there will be a change in focus in the companies that the oil companies out source to.

The rhetoric around peak oil may make you believe that there is a sharp demarcation that will bring drastic changes but the changes though profound will hardly be so noticeable by the general public. Plus the changes have already been occurring.

[Jim Z]

As oil rises, it will affect the economy negatively. It always does. It takes money out of the pocket books of people preventing them from buying goods and services that they have to put into gas and oil for their cars , and heating oil for their homes. Less goods, means less jobs and higher unemployment.