But you expect higher prices, right?

Oil prices can only rise so high. Too high and they choke off economic growth and the economy stalls and sputters (like it is doing now). The price of oil is inherently self limiting. Virtually every enterprise assumes a business-as-usual supply of “affordable” oil. So I'm not convinced of Jeff's argument here. Me-thinks oil prices will remain about where they are now and perhaps rise a little bit if production declines or demand increases but I doubt that oil prices will go very low again – too many new car buyers in Asia, etc.

Excuse my cynicism, but i offer the following for digestion:

I think china views the U.S as a strategic competitior, and is following its classical strategies of taking the U.S down without fighting it head on. Chinese investment in the oil sands is simply to deny U.S control of them, should the U.S seek to use it as the main source of oil. Its chilling to consider this prospect, but if you look at it from Chinas point of view, there are potentially 20 million barrels of oil a day that become available if the U.S were to suffer a catastophic financial crash, and if the U.S went down, the extra oil would lower prices, and china could mop it all up because they have the cash/commodities to exchange for it. very clever.

China are locking up the resources for nuclear power, have the rare earths for wind power, and the manufacturing capability for solar, not to mention the land management skills of 900 million self sustaining peasants, who if they turned to growing hemp, and converted it to methanol, would become pretty well off in terms of earthly wealth. I think the key is connection with nature and ability to get the most beneficial exchange from it, and the chinese culture is pretty good at it, apart from the odd famine every now and then.

Industrial hemp could offer a source of energy to offset crude oil production decline, but there seems to be a lack of real momentum to get it implemented large scale, which is needed to ensure there are no shortages. Surely there are some capitalists out there who see the opportunity?

I remember growing up with the dirty black lumps of coal my parents uesd to heat the home
we kepted a big wood blue box in our porch filled with coal and its really dirthy…get any on your clother and try to remove the dirtty stuff.. I myself didn”t like adding the coal to the kitchen stove I thought it was so dirty and messy .at night dad would fill yhe kitchen stove and the coal would burn all night and give off so much heat heat, yes coal has it”s positives and negatives like the Tar Sands and like everythung else in life today ..Electricty is going sky high in price add that to pluggin in the electric car ..there is no winwin solution here its all going up in price if we use it or not and some young teen down the road is going to invent other means of fuel but not in out time..

Classic strategy aside I doubt a drought prone country like China will suddenly take up hemp production to offset the decline in crude. More likely a world wide phenomenon of oscillating cycles of demand destruction, liquidity pumping by government, deflation, inflation will continue until world consumption of energy resets to a lower sustainable level. We need to decide as a civilisation whether it will be painful and violent or somewhat progressive… renewables can help with the transition but only if we ratchet down consumption.

Jef you rock! Endnoten are the best!!!!!