Dennis Coyne, an editor and frequent contributor to this blog, has suggested that we are not at peak oil. He argues that there is likely to be a dip in production starting next year but higher prices will cause things to turn around and we will surpass the 2015 peak by 2019. He commented a few days ago:
If we take some of the larger producers that have been increasing output and compare with the rest of the world(ROW) using EIA data from Jan 2004 to June 2015 (using the trailing 12 month average to focus on the trend) we see ROW decline has been relatively modest (1.4% based on the trailing 12 month output in June 2015). The eight increasing producing countries I have chosen are Brazil, Canada, China, Iran, Iraq, Russia, Saudi Arabia, and US and ROW=World minus the 8 countries just listed.
One possible scenario is that output is flat for the Big 8 in 2016 so that World C+C output falls by 485 kb/d in 2016 (average output for the year compared to the 2015 average). Over the 2009 to Jun 2015 period the Big 8 increased output at about 1300 kb/d per year, if we assume this rate slows to half the previous rate to a 650 kb/d per year increase (1.4%/year), then the peak is surpassed in 4 years in 2019. On a per country basis this would be a little more than a 80 kb/d increase in average annual output for each of these countries, though I doubt it would be divided equally.
So I have taken close look Dennis’s “Big 8” countries as well as “The Rest of the World”, and looked at their JODI data charts. The last data point is October 2015.
First, the rest of the world.
This is the world less Brazil, Canada, China, Iraq, Iran, Russia, Saudi Arabia and the USA. As a group they peaked in October 2004 and have been in decline ever since. They have declined in times of low oil prices and high oil prices. And barring a miracle they will continue to decline.
Okay, here is where the action is. You can see, from the price chart below, that they peaked in July of 2008 right when the price peaked, then fell when oil prices collapsed and did not breach their 2008 high until October of 2010 when oil pries reached $85 a barrel.
The decline in 2008 production was largely due to OPEC cuts.
Brent price went above $100 in February of 2011 and remained there, with just a couple of dips below that number, until September 2014. That price did nothing for “The Rest of the World” as charted above.
Strangely $100 oil did not do much for the three OPEC members of the Big 8 either. They stayed pretty much on the same plateau that they had been on since 2004. It was only after prices collapsed to below $50 a barrel in March of 2015 did Saudi Arabia and Iraq really begin to increase production. Since February 2015, these three, mostly Iraq and Saudi, have increased production over 1,300,000 barrels per day. Even though sanctions will soon be lifted and Iran will increase production, I don’t think there is a chance OPEC will hold their present level of production. In fact the OPEC 2015 World Oil Outlook has OPEC crude falling by 400,000 bpd from its 2015 average to 2019. Remember, just like our “Rest of the World” chart above, most OPEC nations are in decline.
The Non-OPEC 5 of the Big 8 was affected very little by the 2008 price collapse. The spike down you see in late 2008 was primarily due to Hurricanes Gustav and Ike in the Gulf of Mexico. But higher oil prices did bring a lot of high cost production on line. And if prices do return to above $80 a barrel some of that production will no doubt return. But the decline in the shale oil patch is extremely steep. Enough may come back on line to slow, or halt the shale decline but I doubt if enough will come back on line, fast enough, to make shale grow again. Or at least not nearly as fast as it has grown in the past.
Just one more note about Russia. First a few links and comments:
Siberian oil output to be supported by tax overhaul
Russian energy minister says more than 70 million (billion) barrels of oil uneconomic at this point.
Russian Energy Minister Alexander Novak said oil production in Western Siberia, once a major contributor to overall output, was declining at an average rate of around 1 percent per year. Changes in a tax system, where so-called excess profits will be taxed at 70 percent, will make Western Siberia commercially viable.
Oil production in Russia’s Khanty-Mansi Autonomous District to decline by 2.1% in 2016
Oil production in the Khanty-Mansi Autonomous District in 2016, according to the forecast by the Federal Subsoil Resources Management Agency, will fall by almost 2% to 238.1 million tons, the regional government told TASS Wednesday.
This is Western Siberia where about most of Russia’s oil is produced.
West Siberia is Russia’s main oil-producing region, accounting for about 6.4 million b/d of liquids production, more than 60% of Russia’s total production in 2013.10 One of the largest and oldest fields in West Siberia is Samotlor field, which has been producing oil since 1969. Samotlor field has been in decline since reaching a post-Soviet era peak of 635,000 b/d in 2006. However, with continued investment and application of standard enhanced oil recovery techniques, decline at the field has been kept to an average of 5% per year from 2008 to 2014, significantly lower than the natural decline rate for mature West Siberian fields of 10-14% per year.
I think it is very obvious that Russia has peaked. I think China has peaked also and Brazil is very close to peaking if it has not already.
I just don’t see the promise of a resurgence in 2019 oil production that will surpass the 2015 peak in world oil production.
But we shall see.
_______________________________________________________
Note: I am prone to typos. If you spot any in this post please advise me at DarwinianOne at gmail.com and I will make the correction
Art Berman has a graph on undulating conventional oil production in this post:
http://www.artberman.com/the-crude-oil-export-ban-what-me-worry-about-peak-oil/
The focus is too much on the global peak. We have so many oil peaks in countries and regions. Their economic, financial and geopolitical impacts pop up everywhere.
30/12/2015
Fireworks Calendar 2015
http://crudeoilpeak.info/fireworks-calendar-2015
For example Egypt, which peaked in the 90s and where production has somewhat stabilized, is always 5 minutes near an immediate foreign exchange crisis:
23/12/2015
Egypt budget and current account deficits – Can Saudi Arabia bail out Cairo?
http://crudeoilpeak.info/egypt-budget-and-current-account-deficit-can-saudi-arabia-bail-out-cairo
My post on crude oil and product stocks:
29/12/2015
Where actually is that much-hyped global oil glut?
http://crudeoilpeak.info/where-actually-is-that-much-hyped-global-oil-glut
I suspect that we actually have a condensate glut, at least in the US, and perhaps globally.
I’ll send you some beans and rice if you’d do a guest post and update us all on the GNE situation with the most recent data 😉 I’d be very interested to see how the big 8 vs ROW look from a GNE point of view.
Yeah,
Can we also have a scenario if Russia pulls their exports off the market to increase their negotiating leverage with NATO?
thanks!
I wonder if the Russians are actually capable of simply shutting off oil and gas exports for any length of time. I suspect they could manage it, by going to a war footing economic scheme, at least for a fairly substantial period of time.
Methinks I will mosey over to the CIA fact book and see just what Putin and company is importing these days.
And this is what I found there:
“complete range of mining and extractive industries producing coal, oil, gas, chemicals, and metals; all forms of machine building from rolling mills to high-performance aircraft and space vehicles; defense industries (including radar, missile production, advanced electronic components), shipbuilding; road and rail transportation equipment; communications equipment; agricultural machinery, tractors, and construction equipment; electric power generating and transmitting equipment; medical and scientific instruments; consumer durables, textiles, foodstuffs, handicrafts”
I have little doubt Russia can or at least could produce just about everything necessary, domestically, necessary to maintain a functional economy.
Imports listed:
machinery, vehicles, pharmaceutical products, plastic, semi-finished metal products, meat, fruits and nuts, optical and medical instruments, iron, steel.
Exports listed:
petroleum and petroleum products, natural gas, metals, wood and wood products, chemicals, and a wide variety of civilian and military manufactures
Sanctions can accomplish only so much.
If there happens to be any particular item they simply MUST import, they would build up a substantial strategic stockpile before playing the ultimate hard ball game.
Russian built machinery is scarce in this country, and I have no experience with it, but my old soldier friends tell me they have always had exceptionally tough, simple to maintain, and reliable equipment from small arms to trucks and tanks. They will not run out of trucks or tractors or any sort of essential machinery.
Bottom line, they could probably get along without the rest of the world easier than the rest of the world could get along without them so long as the world remains addicted to oil.
What would be the purpose of Russia starting the war? Certainly not oil resources. Food resources?
Russia can be self sufficient in food, no problem at all, excepting such things as tropical fruits.
The only reason I can see for Russia deliberately starting a widespread war would be that Putin and company might go on an empire building binge, but the odds of that happening appear to be very close to zero, in my opinion.
But wars have a way of happening, due to bad luck and stupidity or miscalculation on the part of politicians and businessmen and bankers. There are always some people around who WANT a war, for various reasons. There are plenty of that sort in the Middle East right now.
Putin is a master statesman. I think he can get his way and still sell gas/oil to those who oppose him. I wouldn’t underestimate the toughness of the Russian people or the cynical and calculating leader that they have. France, Germany, Iran, Pakistan, China and India are pivoting to Russia. I’d keep an eye on the that. USA will be out in the cold and able to play spoiler but not much more.
http://intersci.ss.uci.edu/wiki/eBooks/Articles/1904%20HEARTLAND%20THEORY%20HALFORD%20MACKINDER.pdf
I am not an expert, but my opinion is Russia wants to rebuild the Soviet Union, but a more democratic version of it.
I don’t think he is gonna go hitler on the place.
The formation of the Eurasian Economic Union on Jan 1st of this year is a move consistent with that vision.
Syria (imo) is about NATO trying to get Russia out of the Meditteranean Sea and having dominant access to Saudi Arabia and Iraq.
Then NATO would control the sea and have a good position in the middle east.
Russia is over there blowing up guys who are trying to get Assad out of power.
“my opinion is Russia wants to rebuild the Soviet Union”
What has been undone, cannot easily be re-done. The geopolitical trend still seems to be more balkanizing though, and I have seen nothing to indicate Putin wants war. Yes, Russia has a very powerful military, but Putin seems to understand that the great benefit to that power is in never having to use it. In the most recent dustup in the middle east, Putin comes across a quite credible, restrained and statesmanlike while Obama seems quite the opposite. My guess is that Putin will work within the global system to achieve his aims.
Soviet Union was just a period (1922-1991) in a much longer Russian history. Russian Empire predates Soviet Union. This is when real Russian expansion took place. In fact, Soviet Union conceded some of the Russian Empire land grabs: Finland, Poland, parts of Turkey. This is barely compensated by taking East Prussia from Germany, South Sakhalin and few tiny islands from Japan upon WW2.
In my opinion, I don’t think Putin is a terribly bad. I recall reading that Putin was never part of of the communist party. For the most part, he just wants to make Russia a great country and put its past behind it. I very much doubt there is any interest in expanding its borders when it already has more land than it can possible use.
The West should have permitted Russia to help the Ukraine, which is complete basket case. the EU/US has enough of its own problems to deal with. The West would have been better off working with Russia on many issues, and slowly let the Russia become more integral part of Europe instead of isolating it.
Yes, Russia has its problems, especially with corruption and its oligarchs, but isolating Russia isn’t going to help matters.
Maybe because they are being surrounded by a MISSILE SHIELD?
Of course, one has to wonder….given that Russian submarines aren’t blocked by the “Shield”….perhaps it is an OFFENSIVE weapon.
Some PR guy in the military said, “If we call it a shield no one will be able to figure it out”
For example,
If NATO was really vulnerable to being OIL EMBARGOED….then the only thing they could do to ESCALATE would be to threaten nuclear first strike attack.
Militaries think in terms of escalations. They are trying to achieve escalation dominance, however futile that would be in our minds.
NATO are oil IMPORTERS. They have the bad hand here.
There are no options other than military muscle.
Putin is a smart cookie. He isn’t dumb. Look at his moves.
He is pushing forward IMO because NO ONE CAN stop him once peak oil bites.
NATO are oil IMPORTERS. They have the bad hand here. There are no options other than military muscle
Well, there is the option of eliminating oil imports by switching to electrically powered transport.
That would be extremely effective, and far, far cheaper than the military option.
This kind of military calculation makes it clear that oil is very, very expensive. People talk about oil being cheap, but a very large military is very, very costly, and war is far more expensive.
Build up cash reserves ( they had about 300 billion before NATO sanctions were employed).
Wait for a cold winter or peak driving season and then have a “pipeline” malfunction for about a week.
Or………..
Build pipelines to China and India and sell it there instead.
Ask the Ukrainians how Russians use energy for power….
Of course the Yankees and the Pommies would do the same thing if in same boat…
“If there happens to be any particular item they simply MUST import, they would build up a substantial strategic stockpile before playing the ultimate hard ball game.”
Spare-parts for agricultural machines are that “particular” item.
Those are currently not affected. If those come onto the list of sanctioned items it would mean a bit time escalation of the whole game. But at such a point Russia might cancel gas exports to the EU / NATO member states.
I don’t know much about Russian agricultural equipment, but I doubt they are importing much in the way of really important farm machinery.
Russia unquestionably has the engineering capacity and industrial capacity to build anything necessary in the way of agricultural machinery.
And for that matter, spare parts can be stockpiled too.
Russian history provides the Russian people with plenty of reasons to do what is necessary to maintain a strong defense, which includes the domestic manufacture of any and all critical machinery that might not be available in the event of a war.
Again, I think the odds of Russia deliberately starting a wide spread war are just about ZERO.
But shit does happen.
“I don’t know much about Russian agricultural equipment”
Some of Russia’s leading manufacturers of agricultural equipment:
http://en.rostselmash.com/
http://www.agramacholding.ru/
@AlexS
Very interesting: “RSM 161 features a high-power and fuel-efficient 6-cylinder Cummins QSL8.9, L6, 380 h.p., St-IVf engine.” – http://en.rostselmash.com/products/grain_harvesters/RSM_161
I may wonder how depended the Russian brands are on imported key parts for their products – like for the Cummins (Columbus, Indiana) engine..
@Florian (further below)
Yes, I got my hints based on information concerning similar brands/products.
Ert,
in the past, all their products were manufactured with 100% locally-produced parts.
When the Russian market was open for foreign competition, they thought it is more efficient to import some parts.
With the sharp devaluation of the rouble, it might be again more economically justified to use locally-made parts.
Ert,
http://www.ymzmotor.ru/en/
YMZ produces engines of old designs and new localized versions of Western designs.
Right now, the price of imported engines is much more prohibitive than any sanctions. “Replacement of import with local analogs” is the most popular buzzwords in press-releases of corporations.
Syndroma, nice link to the YMZ website! I’m sure the Russians are quite capable of producing high quality ICE engines locally and much cheaper than importing them or even their parts. At least for now.
BUT, Whenever I see that kind of manufacturing plant I can’t help but think how energy intensive they are and how wasteful any manufacturing process is, that depends cutting and removing metal.
That is still the old linear consumptive economic model. It is a model that is unsustainable for the long term.
Here is some food for thought. Typical ICEv has about 2000 precision made moving parts and only about 17% thermodynamic efficiency of converting fossil fuel into work.
EV, computer on wheels, about 20 moving parts and and about a 95% conversion rate of converting energy contained in a battery into work.
Are the Russians planning for disruptions of the old linear economic model to a circular economic model?
http://www.ellenmacarthurfoundation.org/
Or is the plan to just try and maintain the old ways for as long as possible?
Fred,
Yes, they call it “closing the nuclear fuel cycle”. And it involves building a fleet of fast breeder reactors. The first one was connected to the grid a few weeks ago.
Syndroma,
Yes, they call it “closing the nuclear fuel cycle”. And it involves building a fleet of fast breeder reactors.
That’s interesting!
Are these U-238 based or Thorium-232 based?
Though my original question was more about the redesigning of the entire extractive economic model and a moving away from the linear consumptive model.
Basically redesigning the entire current economic model from the ground up.
As in: Re-thinking Progress: The Circular Economy
http://goo.gl/i2uzsD
Fred,
http://www.world-nuclear-news.org/NN-Russia-connects-BN800-fast-reactor-to-grid-11121501.html
U-238 -> Pu cycle
I understand that your original question was more general. But energy is the foundation of any activity. If your energy production involves once-through mining, there’s not much sense in optimizing your economic model. The technologies of closed nuclear fuel cycle make use of all the depleted uranium already mined. It may last for millenia. Also they solve the problem of spent once-through nuclear fuel by reincorporating it in the cycle.
Current Russian plans is to develop fuel for BNs with uranium-plutonium-neptunium-americium mix from reprocessed fuel. I think it suits your “regenerative by design”.
Fred M,
Is there any place using Th-232 reactors?
China, India, Russia I think and maybe Oak Ridge are working on developing such, but I don’t know that any are at the stage of deployment.
I think thorium reactors would be an improvement over uranium ones but I’m not up to speed on the current state of development.
I’ve got a small Belarus tractor. It is built like a tank. A Kubota looks like a Miata alongside it…tinny and fragile. It was 1/3 the price new compared to a small Kubota, and that was importing it through Arkansas into Canada and paying the freight. Of course, our dollar was at par when I bought it 8 years ago.
I have heard about a few Belarus tractors in this country, and the owners are apparently satisfied, except when they need parts.
You can reasonably expect to keep a new car ten to fifteen years before it depreciates no just about ZERO. Industrial machinery and farm equipment is different. Once you have problems getting a critical part quickly, even for a twenty year old machine, then you will never buy that make again.
Word gets around fast.
No farmer will buy a five or ten year old used tractor unless they expect to be able to keep it running another twenty years.
Tractors SIT AROUND a lot, which is one reason they are kept in service fifty years or more. Mine are all domestic makes fifty years old or more, and will continue to give excellent small farm service for another twenty five years at least. Our OLIVER is no longer suitable for ” front line ” duty however, because OLIVER went out of business decades ago.
But if it were a car, I would not hesitate to take a cross country trip in it.
If Belarus had succeeded in establishing a customer base, the company would likely have done well in the USA.
I have a friend who is representing Claas in Russia and Belarus. They are specializing in harvesters. He has been telling me for about a year that the only business in Russia has been some spare parts but very limited. So without proper replacement, harvesters are coming to a standstill after a while. He thinks that the ones that have survived so far can last another harvest (2016) but after that its over. Reason beeing the low Ruble/USD rate which makes parts very expensive.
I am not in that business and do not know if this applies to other suppliers (John Deere et al) as well.
There’s a sea change in the world of spare parts. With the exception of certain parts which require very high mechanical strength, nearly anything can be 3-D printed these day. Most of the very-high-strength parts are very simple things like axles. So it’s getting easier and easier to maintain old stuff…
Are the neocons peddling more “let’s have war with Russia” bullshit? Or are we letting our imagination roam after playing computer games?
SatansBestFriend says:
The Brazilian journalist Pepe Escobar discounts the possiblity of that happening, since it would be playing into the hands of the War Party:
Jimmy, where does the line form for the beans and rice? I’m there. I’ll bring the tortillas, jalapenos, and hot sauce to share.
Still waiting on updated liquids consumption data from the EIA.
However, condensate has one of the steepest decline rates – at least in Texas. As November and December 2014 production has been very high, the rates are very likely much steeper in November and December 2015, reaching record decline rates of 50% (see chart below).
Fracked wells have an extremely sharp production curve which maxes out in the first year and has a decline rate approaching 50% per year. Of course we have a condensate glut. But production will drop very quickly as the frackers go bankrupt and stop drilling.
“29/12/2015
Where actually is that much-hyped global oil glut?
http://crudeoilpeak.info/where-actually-is-that-much-hyped-global-oil-glut ”
Ha. If one has an extra 2 or 3 days of wages in cash, does it constitute a glut of money?
The EIA has raised a lot of the 2015 production numbers today. April is back up to 9,694 mbpd from 9,585 mbpd published last month.
I don’t understand how the numbers can vary so much on monthly updates.
Hi Ron and all,
Just to be clear, the title of the post says “Doubting the Peak”.
Not a great title imo, because it implies that I doubt there will be a peak, which is not the case.
I think the peak will be between 2021 and 2025, with 2023 being my best WAG.
“Doubting the Peak in 2015” would reflect my previous comments more accurately.
I only say this because many people read no further than the title, the content of the post itself makes my position quite clear.
“Doubting the Peak in 2015” would reflect my previous comments more accurately.
Done.
Thanks Ron.
The possibility of a global recession in 2016 must be taken into account in any scenario, given how weak is the economic situation of the world.
A global recession in 2016 probably means the peak oil in 2015 will last for at least 10 years, and probably forever.
The peak will last forever? Yeah ok PhD guy lol
It was a confusing sentence, but I think he meant the peak record year of 2015 would probably last forever.
Yes, that is what I meant. Thanks.
Recessions are seldom predicted in advance. All possible scenarios cannot be covered.
The severe recession in 2009 slowed growth a little from 2011 to 2014 relative to 2002 to 2007.
The recession you anticipate may start between 2025 to 2030, 2016 not very likely.
Recessions are hard to predict, however it is clear that they are a periodic feature of our economic system.
Probably low oil prices have saved us from a recession in 2015 because the deterioration of the world economy since 2013 was very fast. However the “solution” has placed all the commodity exporting countries in recession or close to it, while the advanced economies are not taking off despite low oil prices. So we essentially are at the edge of recession hoping that a general recovery that so far has eluded the world economy will sustain a commodity and oil price recovery that would let us go through a few more years before the next recession. However any shock during this period would plunge us directly into recession. All bets are off.
Hi Javier,
You are correct that minor recessions are a periodic occurrence in the World economy, with unknown frequency in the future, the nature of the cycles are far from a simple sinusoid. Severe recessions are quite infrequent, in the past 100 years there have been 2 periods when World economic GDP growth was negative (1930-1935) and 2009.
The World economy has been growing at an average rate of 2.6 % from 2011 to 2014, based on IMF data (using market exchange rates rather than PPP). From 1980 to 2014 the average World GDP growth rate was 2.8%, so the idea that the World economy is doing very badly is not very accurate (in 2014 World GDP grew at 2.7%).
IMF forecasts for 2015, 2016, and 2017 are 2.5%, 3%, and 3.2% respectively for World GDP growth at market exchange rates.
http://www.imf.org/external/pubs/ft/weo/2015/02/pdf/tblparta.pdf
See World Growth Rate based on Market exchange near bottom of table.
The World economy is not as weak as you seem to believe.
Dennis,
GDP is a terrible measure to follow economic performance in real time.
The global situation is not bad, it is worse. It is as bad as it was in 2012, except that 3 years later in the business cycle.
It’s Official: Global Economy Back In Contraction For First Time Since 2012 According To Goldman
The Global Leading Indicator has turned again negative in 2015. OECD industrial production is very weak. The emerging markets haven’t been this bad since the great recession. China hasn’t been this weak in decades.
If the situation gets worse we will fall into global recession again. Our saving grace is low oil prices. The economic situation is not worsening fast, so we might still avoid recession, for a time.
HI Javier
GDP is far from perfect but the best measure we have.
It is how recessions are determined.
A recession is possible, but not more likely than 50/50 imo.
GDP looks at recessions through the rear mirror with over six months delay from when they really start. We could be falling into recession right now and you would not know it through GDP until mid-July.
A 50% chance for 2016 is not consistent with your prediction of recession by 2025. By then the probability would be 1-(0.5)^9 = 99.8% that it had taken place before.
Hi Javier,
I did not say the chance of recession is 50% every year from 2016 to 2025, only for 2016, and I said the chance in 2015 is not higher than 50/50, in other words, the probability is greater than zero and less than 50%. Read carefully.
Fair enough Dennis.
In this matter, everybody’s opinion is probably worth the same. Even the experts have an appalling record at predicting recessions. The boss of ECRI embarrassed himself enormously in 2012.
The state of the global economy however is not debatable. You can see the glass half empty or half full, but the amount of water that it contains is not what we would like.
Hi Javier,
I use the World Bank and IMF to assess the World economy.
http://www.imf.org/external/pubs/ft/weo/2015/02/pdf/c1.pdf
Above we have the IMF forecast,
World Bank data below
http://data.worldbank.org/indicator/NY.GDP.MKTP.CD/countries/1W?display=graph
Dennis: look back before the aberration of the 20th century, and really severe recessions are really common. The “long recession” of 1878 – 1900 is one example. Prior to the industrial revolution, they were arguably the *norm*.
It’s actually only good government policy — money-printing, mostly — which has prevented the severe recessions from being more common in the 20th century.
An alternative explanation is that recessions were made less common and less strong by a stronger economic growth fueled by fossil fuels.
Matt, excellent. Thanks.
There is no global “glut” of oil in terms of (1) Jeffrey Brown’s Export Land Model and available net oil exports and (2) yours truly’s metric for US, Japan, EZ, and China’s post-2007 differential trend rates of oil consumption to final sales and the deceleration of growth of final sales, i.e., implying that at least 70-75% of world real GDP per capita is at stall speed and thus constrained by the supply and price of oil consumption to GDP and the level of gov’t spending and net debt services to wages and GDP.
Not only is there no effective global “glut” of oil (the perceived glut is the result of unprofitable, unsustainable shale and tar oil production in the US and Canada), especially per capita in the West and worldwide, the price of oil in the $30s against decelerating real final sales/GDP per capita is not “cheap”, requiring a price of oil at, or below, $20 for 5 or more years hereafter to permit 70-75% of world real GDP per capita to avoid further deceleration hereafter.
These factors (and many others) are the definition of Peak Oil and associated “Limits to Growth” (LTG), and by extension, the “End of Growth” (EOG).
Looking at absolute levels of oil production without accounting for population growth, available net exports of oil for world consumption per capita, and the price and level and rate of change of oil consumption to final sales/GDP misses the principal factors that indicate and entrain the effects associated with Peak Oil.
That is, without understanding the foregoing metrics, one does not ACTUALLY understand Peak Oil, and not understanding Peak Oil implies that one does not fully perceive the implications of Peak Oil, which further suggests that one is not prepared for the consequences of Peak Oil (and the end of the Oil Age epoch) hereafter.
“Not only is there no effective global “glut” of oil (the perceived glut is the result of unprofitable, unsustainable shale and tar oil production in the US and Canada), especially per capita in the West and worldwide, the price of oil in the $30s against decelerating real final sales/GDP per capita is not “cheap”, requiring a price of oil at, or below, $20 for 5 or more years hereafter to permit 70-75% of world real GDP per capita to avoid further deceleration hereafter.”
If that’s true, BC, then we are up sh!tcreek, but is it true? I guess we’ll find out soon enough.
Is this the 545289658th time that someone has claimed that Russian oil production has peaked?
In any case, oil production is a function of primarily price. If the price is right, then there will be oil for many decades ahead. Oil production is also a function of geopolitics. Also a function of technology and also a function of alternatives. Ron seems to be missing the point that for decades, oil rich countries have no choice but to defer to a great extent to Western oil production. Those that are included in the Western security and financial system (GCC) have an extra incentive to do so, saving their oil for the future.
Is this the 545289658th time that someone has claimed that Russian oil production has peaked?
Don’t be a fucking smart ass. Make your point without stupid exaggerations.
In any case, oil production is a function of primarily price.
Really? Look at the chart above marked “The Rest of the World”. Now tell me, at what point did very expensive oil increase production.
Oil production is also a function of geopolitics.
Bullshit! Oil production is affected by geopolitics. But it is not a function of geopolitics. Oil production is a function of the cost of production versus the price of oil… but the most important function is the availability of oil in the ground to produce. If the oil is not there then geopolitics or the price of oil counts for nothing. And that is what Stavros fails to understand.
Ron seems to be missing the point that for decades, oil rich countries have no choice but to defer to a great extent to Western oil production.
What in the hell are you talking about? Since when has Saudi Arabia deferred to Western oil production?
Those that are included in the Western security and financial system (GCC) have an extra incentive to do so, saving their oil for the future.
Give me a break. Every country is producing every barrel they possibly can. Which country was holding back when oil was over $100 a barrel? Saving oil for the future? They are in recession right now. Most of them anyway. No one is hording oil. A lot of oil is not being produced because of the very low price of oil but everyone is still trying desperately to meet their budgets by producing every barrel they possibly can at the cost they can afford.
Ron,
OK. Let’s assume there is no geopolitics here. But then why Saudis are damping oil at such a low price.
In 2015 they exported over 7.3 Mb/d and got 118 Billions. In 2012 they exported something between 7.658 Mb/d (CIA, probably crude only) and 8.42 mb/d (Bloomberg, probably crude and refined products) and got 336.1 billion.
http://www.bloomberg.com/news/articles/2013-07-29/saudi-arabian-2012-oil-export-revenue-gained-5-as-iran-fell-12-
If they just cut 1 Mb/d and that allows to preserve 2014 average price of oil (not even 2013 average price) they would get 125 billions (and preserve 12 Mb from their depleting wells for moment of higher prices which will eventually come.)
In any case they managed to achieve almost 3 times drop of revenue from 2012. Three times !
Now they have almost $100 billion budget deficit in 2015 (and almost the same, 86 billions estimate of deficit for 2016) and only around 600 billions in reserves.
Questions:
1. Why they rocked the boat?
2. Where is the logic in their actions, unless we assume that they want to destroy Iran (and hurt Russia) ?
3. Why MSM spread all this BS about Saudis defending their market share ? Does it look like they are defending something else ?
To tell you the truth, I haven’s a clue.
If the leadership in Saudi Arabia is aware of its own paper barrels
http://crudeoilpeak.info/opec-paper-barrels
they are running out of time
Matt, your link says:
Opec believed to overstate oil reserves by 70%
Of course they are. I have been thrashing this straw for 10 years. Why are folks just catching on now?
Hi Matt,
You do understand that there are different categories of reserves, proved, probable, and possible, I hope.
There are also speculative resources that move into the reserves category over time as the discovered fields are understood better over time as more wells are drilled and data is gathered. Prices and new technology also effect the assessment of reserves.
So it is entirely possible that with no new discoveries that increased oil prices and improved technology can result in discovered reserves and resources gradully moving from speculative resource to possible reserve, then to probable reserve, and then to proved reserve over the course of 35 years.
This is commonly called reserve growth and in the United States, where data is more transparent, proved reserves grew by 7.27% each year on average from 1980 to 2005 (before the LTO boom).
If we assume no discoveries in OPEC over that period and use EIA data for output and reserves from 1980 to 2005, then reserve growth for OPEC would have been 4.38%. Actual reserve growth would have been lower as there were some OPEC discoveries over this period (I just don’t have the data).
If we assume 5 Gb of discoveries in OPEC nations on average each year from 1980 to 2005, then the annual reserve growth falls to 3.53%, less than half the US rate of reserve growth for proved reserves. If OPEC reserves grew at one fourth the US rate, then proved reserves for OPEC (assuming 5 Gb/year of discoveries) would only be 562 Gb in 2005, about 327 Gb less than reported by the EIA.
The actual level of OPEC proved reserves is unknown and is likely to be less than the reported level. My guess is the proved plus probable OPEC reserves may be roughly the level of reported “proved” reserves. It is unfortunate that there is a need to guess.
Door number two looks damned good from my pov.
Some reasons why, from my pov.
http://peakoilbarrel.com/opec-2015-world-oil-outlook/comment-page-1/#comment-553273
It’s one click there, one click back.
One theory afloat is that the US and Saudi Arabia are allies in an economic and political war against their enemies. According to this narrative, the intent of Saudi Arabia dramatically increasing oil production during a world oil glut, and sending oil prices into a tailspin, is to shipwreck the economies (and the polities) of US and/or Saudi enemies — e.g., Venezuela, Iran, and Russia.
The war, however, is not being conducted without inflicting significant damages on US allies — e.g., Mexico, Canada, Saudi Arabia, Colombia — and domestic US production as well.
Ambrose Evans-Pritchard, for instance, published an article a couple of days ago about the immense economic damage being inflicted on Saudi Arabia’s economy and polity:
We’ll see who blinks first, or who is left standing after all the bloodletting takes place.
“According to this theory, the intent of Saudi Arabia dramatically increasing oil production during a world oil glut…”
Saudi Arabia hasn’t dramatically increased oil production. Their most recent peak in June of 2015 was only a couple hundred thousand barrels per day more than the previous peak back in mid-2013. That’s about 2-3% increase over two years. I wouldn’t call that, dramatic.
http://peakoilbarrel.com/opec-crude-oil-production-charts/
I think you’re arguing semantics.
Would you also argue that the Saudi response to the glut in 2009 was the same to its response to the glut in 2015?
Ron is basically correct. The people who think that oil production is a function of the price are assuming that the oil is there to produce. Now, unless there are a few supergiant fields out there, already discovered and waiting for some State Oil Company or some multi-national oil company to make a Final Investment Decision, that assumption is incorrect. There is a handful of locations which could potentially have supergiant oil fields that are so far undiscovered, I’m not that confident that they are there to find, since discovery in the last couple of decades has been a long way short of consumption, even after the price went sky high and everybody and their dog was spending big on exploration.
What interests me is the bit from the previous post, where OPEC projected prices based on their estimate of what it cost to produce the marginal barrel. I think that is a good line to take, until it reaches the point where governments of OPEC countries decide that, with Peak Oil passed and production in irreversable decline, they are going to start hoarding production and make the rest of the world go short.
The thing to realise with projecting prices based on the cost of production of the marginal barrel is that it should be taken as a tendency working on a 5 year or even decadal scale. In time periods short of that, you can get price wars sending prices down below the marginal cost and price spikes producing windfall profits even for the highest cost producers. The price wars lead to national and multi-national oil companies cutting back on capital expenditure, which eventually leads to stagnating or declining production and a recovery in prices. Price spikes lead to huge resources being spent on exploration and development as everybody wants to cash in.
OPEC’s production assumptions are a lot less sensible than their price projections. They assume two things:
(a) That the oil is there to increase global production; and
(b) Most of that oil, from 2020 to 2040, will come from OPEC countries.
Conventional crude oil production is flat out right now and, as I said above, unless someone is hiding a few undeveloped supergiant fields somewhere, it’s got nowhere to go but down. Let’s look at unconventional sources, then.
1. Polar and deepwater oil. A huge amount has been spent exploring for this and the results have been underwhelming. Sure, they’ve found oil, but not in anywhere near the quantities needed. Shell recently pulled out of the Arctic because of the combination of environmental protests and poor exploration results. If they were discovering heaps, they’d just tough out the protests – as anybody who knows the first thing about corporate capitalism could tell you.
2. Canadian tar sands. Production of these has been expanding, but it hasn’t been to the rate that one might imagine from the published resource data. This is because the rate of production is subject to certain limits, due to inputs. The relevant inputs in this situation are water and natural gas – and it is water which is the harder limit. Basically, they can’t produce more oil from the tar sands than the rivers of the region can support. These limits will sooner or later, and I believe sooner, put a ceiling on Canadian production. Absent a huge shift in consumption caused by climate change mitigation action, it will keep at that limit for many decades to come, but it won’t exceed it.
3. Venezuelan extra heavy. This is the factor about which I know least, but there doesn’t appear to be a lot of it on the market yet. There seem to be a lot of obstacles in the road of high production.
4. Tight oil. One thing that everybody who is knowledgable admits is that there is a lot of “oil in place” in this category. The question is how much of this is recoverable in a practical sense. This industry has developed in the US, primarily because it brings a number of environmental hazards with it and, outside the US, landholders are blocking exploitation because of environmental concerns. In the US, landholders have a financial interest in ignoring these concerns, because mineral royalties are vested in the landowner.
Tight oil has been developed in the US on the basis of unrealistic projections of ongoing production, due to depletion rates being vastly higher than admitted when spruiking to investors. Sooner or later, it was bound to run into problems. These problems have arrived sooner, as opposed to later, due to OPEC’s price war, which is aimed at sending the tight oil industry broke. Producers have cut back on drilling and concentrated with increased intensity on “sweet spots”, where production is likely to be highest. They have also introduced technological progress that has cut the price of drilling substantially and thus cut the break-even price for a well of a given production level, but the industry is still losing money. A loss-making industry is unsustainable and, therefore, will not be sustained. Something has to give.
Eventually, the price of oil will recover to be equal to or greater than the marginal cost of production. At this point, what will be relevant is just how extensive the sweet spots in the tight oil formations are. Having been burnt once, investors will be working on much more careful examination of likely decline rates and won’t support drilling wells just to keep production up, if those wells won’t recover their costs within the time frame of the investment horizon. The $64 thousand dollar question, therefore, is how long the US tight oil industry is going to be able to keep finding sweet spots where they can extract sufficient tight oil to pay back the cost of drilling.
What’s going to happen in other countries? Not a great deal, I predict. Opposition from the local population, led by local landholders, will delay and minimise production from tight oil reservoirs. It won’t completely prevent a tight oil industry developing in many other countries, but it will ensure that it never develops the dimensions of the current oil industry. Tight oil production will be a buffer for production on the way down, but it won’t counteract the declines caused by the depletion of conventional oil fields.
In summary, the price of production of the marginal barrel of oil is going to go higher – a lot higher, but the marginal barrels won’t be additional ones. Rather, rising prices will cause demand destruction. It is already doing so in OECD countries, and it will start doing it in Third World countries too, as existing fields deplete and have to be replaced by new and extraordinarily expensive oil.
Perhaps I’m misguided and naive. BUT! No matter how hard I try I just can’t see a continuation of the age of oil. Not from a social political and economic perspective. Not from a geopolitical perspective. And certainly not from a purely geological perspective.
Now granted that where I am in Florida for the Holidays gasoline at the pump is supposed to drop below $2.00 after New Years. Everyone is out and about shopping and celebrating. Last Night I made the huge mistake of driving down A1A a 12 mile ride to my girlfriend’s home on South Beach that took me almost three hours in bumper to bumper Traffic. I was surrounded by gigantic SUVs pickup trucks, muscle cars, luxury cars etc… Every one was leaning on their horns cutting each other off and coming close to dangerous road rage. Probably most of these people were slightly inebriated and who knows how many were packing… I’d guess a lot more than I wanted to know.
The American populace is either completely clueless or everything I have read on this site, on TheOilDrum and a few others over the last decade or so was/is completely wrong. So how long can this party continue before reality hits. Again I could be completely off the mark but I have a hunch that even when the price of oil goes back up high enough for shale fracking in places like the Bakken a lot of the oil companies involved will have gone belly up and it will take a long time for others to come in and fill vacuum created.
Then in the rest of the world we still have Jeffrey Brown’s ELM to deal with.
Yet everywhere I look I just see people merrily planning for a BAU future based on fossil fuel. I keep trying to understand what I’m missing.
I put this little parody of the consequences of ELM theory together a few years ago so it is a little dated but things haven’t gotten much better anywhere that I have seen.
https://drive.google.com/open?id=0BxK2xt5iKFTAcUh0d1gtOXRDWlU
So in closing, yes, I know that alternatives such as wind and solar will not and cannot maintain BAU but neither can oil. 7+ billion humans wanting ICE powered lifestyles and US style consumption can’t be maintained and a good example of this is the reduction in the Chinese economy’s growth rate, I’d go as far as to call it a crash. So anyone have any thoughts on when this party will finally end and reality set in?
Happy New Year!
“I was surrounded by gigantic SUVs pickup trucks, muscle cars, luxury cars etc… Every one was leaning on their horns cutting each other off and coming close to dangerous road rage.”
Therein lies the rub Fred; the reality of human nature, the real reason for our pessimism. Here its F-350s, all in some kind of a race: sorry, no EVs as far as the eye can see. Status trumps sense; guys with F-450s who wouldn’t carry a box of cornflakes on the back for fear of marring the paint and women taking toddlers to playschool in the meanest SUV available because “its safer for the little guy”.
Friend of mine working on a customer’s pickup, its got something in there that’s turbo charged and produces 750 hp. But if you have a small penis/brain, I guess that’s what it takes to compensate for it…
My assumptions about Texans driving large pickup trucks: They just got laid off from their job, their wife left them, their dog died, they just left a bar, and they have a loaded handgun.
Safety first, eh?
Do the risk assessment and stay away!
Here in sodden north of England the weather is discouraging at least some of us – combined with our nasty cold viruses. And some of it, it seems, has come all the way from Texas and is heading for the North Pole. But I am sure the dopamine reward system lives on. Like Fred for the life of me I wonder if I am missing something! I guess the water will close over us (metaphorical and real) when OFM is looking the wrong way! ;-). Florida looks as though it could show the way with sea-level backed-up all the way from the North Atlantic.
Roll on the Year – Have Fun
Phil
Hi Phil,
If you are located more than a hundred feet above sea level, you are personally safe for at least a century or two. Longer than you are apt to live, for SURE. 😉
Talking TOO MUCH TOO LONG about sea level and climate troubles may actually be counter productive in terms of convincing the average man on the street that sea levels ARE going to rise sharply within the next hundred years or so.
Cry wolf often enough and lay people actually cease to believe in real wolves.
It might be better to try to convince the man on the street to cut back on carbon by indirect means, by appealing to his own shorter term and more personal interests.
It IS to his advantage to cut back on burning coal on health and security grounds, and force the growth of renewables based on such economic arguments as local employment, local taxes, national security, better balance of trade in importing countries, etc, etc.
Nobody wants to be preached at, endlessly.
Appealing to a man’s own interests is a better strategy.
Talking TOO MUCH TOO LONG about sea level and climate troubles may actually be counter productive in terms of convincing the average man on the street that sea levels ARE going to rise sharply within the next hundred years or so.
LOL, you should talk to the average person in the street in South Beach Miami during one of our ever more frequent floodings of Collins Ave. I think most of them are already convinced…
http://www.miamiherald.com/news/local/community/miami-dade/miami-beach/article41534928.html
We all know that the average person has the answer, Fred.
But the question is how much of that is due to rising sea levels and how much to land subsidence, because after all land subsidence due to heavy coastal development is 100% anthropogenic, but 0% climate.
American Scientist: That Sinking Feeling. Dense development can complicate projections of land subsidence in coastal regions.
60 years of global warming separates those two pictures of Miami, yet if anything, it looks like Miami has expanded its area and has a lot more beach. Damn evidence, we should see Miami getting smaller.
We all know that the average person has the answer, Fred.
For crimminies sake! Please, Javier, my comment was intended as a bit of good natured ribbing towards OFM. I could have posted a bunch of pictures of the average person in the street standing ankle deep in salt water on Collins Ave on a sunny day during high tide.
Quite frankly I couldn’t give a flying fig what the average person in the street thinks about anything, so just drop it already, Ok?!
I know all about land subsidence and I have lived in the greater Miami area for almost 20 years. I’ll bet I know more about what is happening in Miami than you do. Especially when it comes to water tables, aquifers, flooding, local coral reefs, spiny lobster, sea grass in the bay, fish like Tarpon, the manatees, alligators, and American Crocodiles etc, etc…
Whatever the proximate cause I can assure you that the flooding of streets in South Beach is very real and that it also affects the entire coast and has become more and more common in the time I have lived here.
I also know what you think about climate change and sea level rise, I’m done debating this topic with you or anyone else for that matter. And I don’t care what you or anyone else thinks of my views on this subject. It just isn’t important to me anymore what people think.
At the end of the day what I really care about is all the ecological damage I see everywhere I look! And the one thing I can tell you 100% for sure, is that almost all of that damage is a consequence of all the people living the good old American consumptive lifestyle! So as far as I’m concerned at this point whether or not climate change is anthropogenic and if it is or isn’t causing sea level rise in Miami for all practical purposes is moot. It is definitely people who have been and are continuing to cause damage to the local ecosystems…
We all know that the average person has the answer, Fred.
For crimminies sake! Please, Javier, my comment was intended as a bit of good natured ribbing towards OFM. I could have posted a bunch of pictures of the average person in the street standing ankle deep in salt water on Collins Ave on a sunny day during high tide.
Quite frankly I couldn’t give a flying fig what the average person in the street thinks about anything, so just drop it already, Ok?!
I know all about land subsidence and I have lived in the greater Miami area for almost 20 years. I’ll bet I know more about what is happening in Miami than you do. Especially when it comes to water tables, aquifers, flooding, local coral reefs, spiny lobster, sea grass in the bay, fish like Tarpon, the manatees, alligators, and American Crocodiles etc, etc…
Whatever the proximate cause I can assure you that the flooding of streets in South Beach is very real and that it also affects the entire coast and has become more and more common in the time I have lived here.
I also know what you think about climate change and sea level rise, I’m done debating this topic with you or anyone else for that matter. And I don’t care what you or anyone else thinks of my views on this subject. It just isn’t important to me anymore what people think.
At the end of the day what I really care about is all the ecological damage I see everywhere I look! And the one thing I can tell you 100% for sure, is that almost all of that damage is a consequence of all the people living the good old American consumptive lifestyle! So as far as I’m concerned at this point whether or not climate change is anthropogenic and if it is or isn’t causing sea level rise in Miami for all practical purposes is moot. It is definitely people who have been and are continuing to cause damage to the local ecosystems…
So just leave me out of this discussion from now now on, TKS!
It’s called beach nourishment.
https://en.wikipedia.org/wiki/Beach_nourishment
The photo is before and after the restoration project of the Florida coastline.
Fred Magyar said:
My thoughts exactly.
Here’s a somewhat harsh critique of Nicholas Stern’s book Why Are We Waiting?. Its written by an environmentalist who understands how sticky the problem is, and how the current crop of environmentalists is not tackling the problem:
I think that is a good line to take, until it reaches the point where governments of OPEC countries decide that, with Peak Oil passed and production in irreversable decline, they are going to start hoarding production and make the rest of the world go short.
That is a point I have tried to make for years. Back in the days of The Oil Drum, I made that point over and over but no one seemed to understand.
When it becomes obvious to the world that the peak of world oil production is in the past many countries, not just OPEC countries, will decided that they need to hold onto as much of their oil as possible, for their own benefit.
Now I know some people will say that countries. like Saudi Arabia, must sell their oil in order to by food for their people. That is correct however if the price doubled they could still sell only half as much and still have the money to feed their people. And countries like Russia could sell a lot less oil if it looked like hoarding oil would be to their advantage.
Were we a rational society, a virtue of which we have rarely
been accused, we would husband our oil and gas resources.
– M. King Hubbert
In the face of ever declining oil resources, almost every oil producing nation on earth will suddenly become far more rational than in the past concerning their oil and gas resources. And this will drastically exacerbate the problem for oil importing nations.
At that time it can be predicted that any importing nation or group of nations having sufficient oil and military power to wage war will go to war. This is the same situation that Japan faced in 1940.
Of course instead of alleviating the problem a war will make it worse for everybody affected.
Javier said:
Jonathan Schell, however, in The Unconquerable World claims that two developments put an end to the “logic of war”:
1) Nuclear War:
2) People’s War:
That wars cannot be won has never been an excuse for not fighting them.
Javier,
You may be right.
Maybe I’m giving the human animal too much credit, and its capacity for rational behavior is even less than what I believe it to be, which isn’t much.
Maybe active nihilism will rule the day, and man will go out in a nuclear holocaust.
And while it is not considered polite to mention it, because it offends the hell out of just about everybody, the fact is than non western people CANNOT defend themselves via people’s wars against either major western powers, or rising industrial non western powers.
“Kill’em all and let God sort’em out used to be a figure of speech.
Killing them all now, or close enough to all, is perfectly feasible, if a country with a large modern military establishment chooses to wipe out a smaller less powerful neighbor. The only hope of a real underdog would be for allies to come to the underdog’s defense.
Even machetes and spears are adequate to the task, if the manpower and the will are adequate.
I think Al Qaida is winning. The war is going to take several hundred years. Thus far they have the USA and a few allies bogged down in Afghanistan and Iraq, have tendrils in Northern Africa, and are introducing moles into Europe and the USA.
According to a CIA analyst whose writings I read, the main danger the USA faces is porous borders, but the American elite is perceived as suicidal, they allow a free flow across borders, and it’s only a matter of time before a nuclear device is exploded inside a us city.
This CIA analyst believes the USA has simply boxed itself in by offering unconditional support to a lawless Israeli government which controls USA politicians via the Israel lobby. Thus the USA pits itself against the Muslim world’s restless masses, loaded with huge numbers of young people willing to die to defend their religion and territory.
The problem I see is that, while to the CIA, and to me, this coming debacle is quite evident, we know the subject can’t be discussed too much without ruining careers or even being arrested. I mention it because I’m old, and this has been hammered in me after reading what I did from the above mentioned CIA analyst (who by the way is retired).
Oldfarmermac: “the fact is than non western people CANNOT defend themselves via people’s wars against either major western powers, or rising industrial non western powers. ”
So that explains, I assume, why Iraq’s government is aligned with Iran rather than being its enemy like Dubya would have preferred. And it also explains why most US troops have been withdrawn from Afghanistan at a point where the Taliban are the strongest they’ve been since 2001.
It’s one thing for the US, or some other imperialist power, to invade a country and knock over its government. It’s another thing altogether to pull off a successful occupation in the teeth of popular opposition. I’m no fan of either the current Iraqi government, or of the Taliban. But Uncle Sam’s preferred solutions haven’t been popular on the ground – and have lost out.
Let’s see… China could conquer and confiscate Iran while Russia could do likewise to Iraq. The EU would be given Libya, and the U.S. would take Venezuela. Of course, it would be done with the express intent of providing “the world” with needed oil.
Did I miss any key areas? Nigeria perhaps. Kazakstahn?
SatansBestFriend says:
“Can we also have a scenario if Russia pulls their exports off the market to increase their negotiating leverage with NATO?”
oldfarmermac says:
“I wonder if the Russians are actually capable of simply shutting off oil and gas exports for any length of time”
Arceus says:
“What would be the purpose of Russia starting the war?”
oldfarmermac says:
“The only reason I can see for Russia deliberately starting a widespread war would be that Putin and company might go on an empire building binge”
“Again, I think the odds of Russia deliberately starting a wide spread war are just about ZERO.
But shit does happen.”
Glenn Stehle says:
“A fitting Russian response would be Moscow defaulting on all debt to Western banks in retaliation for the sanctions. An extreme step would be blocking natural gas shipments to the EU….”
Arceus says:
“Let’s see… China could conquer and confiscate Iran while Russia could do likewise to Iraq. The EU would be given Libya, and the U.S. would take Venezuela. Of course, it would be done with the express intent of providing “the world” with needed oil.
Did I miss any key areas? Nigeria perhaps. Kazakhstan?”
Gentlemen, what are you smoking today??? :)
LOL – personally, I do not believe there will be a war over oil. The primary actors that might consider a war to gain access to oil will have enough energy resources to avoid that – at least for a while.
Like Dennis, however, I also do not believe we have hit peak oil yet and that will occur in the next decade. There is still some economic sleight of hand that can postpone the reckoning for a bit longer.
Alex S,
What are you trying to say, that countries haven’t used state violence in the past to control natural resources, or won’t be tempted to do the same in the future?
And what Pepe Escobar said is that Putin will not be lured into making some brash move, even though that might be “a fitting Russina response,” because he rejects the war logic of the War Party.
I can’t speak for anyone else, but I wasn’t smoking anything.
I was drinking new years beverages though…LOL.
I agree that Russia is unlikely to pull all their exports off the market
But if world oil production starts declining, I have no doubt oil exporters will try to use that to their advantage.
How that manifests itself, I guess will have to wait and see.
thanks for the dialogue.
You missed the part where an Iranian resistance force defeats a 2 million man Chinese army using suicide warriors, fighting like Hezbollah did to defeat the Israelis in 2006.
Two things Ron.
First I believe it is reasonable for oil producers to take a different perspective than yours wrt peak. Approaching peak or even at peak can be seen as a time to sell while there is still any semblance of a market left.
Second you assume that at a doubling of price the economy would not flinch and continue to burn at current rates. Neither producers nor banking/finance are confidant that that will be the case.
Approaching peak or even at peak can be seen as a time to sell while there is still any semblance of a market left.
No, we are talking about well after the peak. We are talking about the time when everyone realizes that the world’s oil supply will now decline forever. You are talking about “approaching the peak”. That was last year. And “or even at the peak”. That is right now. Very few seem to know that so everyone is trying to pump and sell every barrel they possibly can.
And even if I am wrong, even if we are not yet at peak, the point is that when we do reach the peak no one will know that so they will not behave like they would if they knew the world’s oil supply will, from this point on, decline forever.
Second you assume that at a doubling of price the economy would not flinch and continue to burn at current rates. Neither producers nor banking/finance are confidant that that will be the case.
Again, I was speaking of the time after the peak when world oil production has dropped perhaps 10 to 20 percent below peak levels. Producers, banking/finance have no idea what they would do because they have never faced that position before.
Also, burning at the current rates, or a much lower rate, have nothing to do with anything. We are talking about a point in time when we are obviously well past peak oil.
And please don’t insist that the early 80s we faced such a situation. We did not because everyone in the world, except a few imbeciles, knew the reason for the drop in production was the Iran – Iraqi war, and the associated “Tanker Wars” in the Persian Gulf, not peak oil.
The point is Jef, how will producing nations behave when they realize that the world’s oil supply will now decline forever… but… but… they still have oil and every other nation in the world wants it.
Ron,
You are assuming that demand for oil will be at that point above supply. I am not saying that won’t be the case, but there is the chance that global economy will be so messed up at that point that there won’t be that much demand for oil. Hoarding in that scenario makes no sense. Future humanity might not have much use for oil because most people would be jobless and penniless and concerned mainly with finding food. An 80% reduced demand for oil could be easily satisfied despite peak oil.
I am not saying that reduced demand way below supply capability is what is going to happen, just that we cannot discount that scenario.
Javier, are you and Jef the same person? Anyway…
Yes, you are correct. If the world goes completely to shit before the world becomes aware that the peak of world oil production is in the past, then all bets are off. There is no way to predict chaos or the outcome f chaos.
My scenario does not take into account the total collapse of the world as we know it before serious oil decline. I must assume that does not happen. But if it does, then nothing else matters anyway.
I am not saying that reduced demand way below supply capability is what is going to happen, just that we cannot discount that scenario.
On this I’m with Javier and Tony Seba.
The reason we can not discount this scenario is because of a perfect storm combination of disruptive technologies coming together and completely changing the current paradigm.
If you take deep learning algorithms, to create viable driverless technology, couple that with computers on wheels which are what EVs are and you introduce businesses such as Lfyt, Uber and Zip Car you could conceivably disrupt the entire current paradigm of private car ownership which most still seem to take for granted will continue.
Personally I don’t think it will. So if that scenario comes to pass oil and private cars become obsolete in the not too distant future. So it might not be guaranteed to be oil, oil oil forever.
Clean Disruption Interview – US Embassy Wellington, New Zealand
Tony Seba
https://goo.gl/AXie72
All of the necessary technologies for this scenario to come to pass are already in place. many of my urban friends have already begun to give up private car ownership because it is cheaper and more efficient to get around by Uber.
While I don’t have any hard data I’m sure that all the people who get picked up by even one Uber car during any day must be using less fuel because that alone eliminates their private cars from the roads and they no longer need to buy gas.
This is Uber’s stated current vision.
https://newsroom.uber.com/nyc/taking-1-million-cars-off-the-road-in-new-york-city/
At Uber, our vision for the future is one of many fewer cars on the road. We believe traditional car ownership can be a thing of the past. Why own an extremely expensive asset, worth tens of thousands of dollars, that sits unused most of the time?
So I have to ask. Why couldn’t this scenario come to pass and be expanded upon to every urban center on the planet.?
IMHO I would not be putting money into oil or automobile manufacturing companies at this juncture in global events.
Fred,
“So I have to ask. Why couldn’t this scenario come to pass and be expanded upon to every urban center on the planet.?”
Because 98% of us who have a personal vehicle and the 90% who don’t, don’t want to wait for and than sit in a community transport. It’s a lot like the same reason your home beats the hell out of living in a motel or taking the bus.
Because 98% of us who have a personal vehicle and the 90% who don’t, don’t want to wait for and than sit in a community transport.
Sorry, not buying it! I’ve lived in places like Manhattan and currently have been spending time in Sao Paulo. I never had a problem taking public transport, walking or more recently Ubering. I can get an Uber car to pick me up in less than 5 minutes whenever I really want to sit in a car.
I’ve been spending the holidays in Miami which doesn’t have the best public transport system in the world yet taking the TriRail down to Miami is still almost always faster than driving on I95 and they have WiFi on board and I can work while riding.
BTW as far as sitting goes I just can’t understand why people seem to prefer sitting for hours in bumper to bumper traffic in the so called comfort of a private car. I think they have been watching too many car commercials portraying the imaginary pleasures of the freedom of the open road.
Perhaps that has been one of the most positive results of my having given up watching television over a decade ago. I’m not as brainwashed by consumer advertising and artificially created desires and I can see actual reality for myself without the rose colored glasses.
BTW I now cringe, every time someone tries to refer to me as a ‘consumer’. I prefer to be addressed as a person…
The pleasures of private car ownership are IMHO grossly overrated while the costs of such ownership are glossed over.
Your mileage may vary 🙂
Ok Ron, I see what you meant now but I believe (and I believe that producers and banking/finance believes) that when production is down 10 to 20% and “…when they realize that the world’s oil supply will now decline forever…” its game over for humanity so it doesn’t matter what they sell it for or if they can sell it at all as all markets will be in collapse.
Jef: “I believe … that when production is down 10 to 20% and ‘…when they realize that the world’s oil supply will now decline forever…’ its game over for humanity”
Way too doomerish! The world (and this is particularly the case in the US) is extravagant in its waste of oil. In the short term, oil demand is price inelastic, because it is a side effect of decisions people have spent big money on and need big money to change. If you drive a thirsty SUV, or have a crazy 500 km/week commute, you scream blue murder about rising petrol prices because you have no alternative but to pay them.
In the longer term, however, people adapt. What do they replace the SUV with when it reaches the age of the previous car they sold? Will people decide in favour of a 500 km/week commute when they’re choosing a job or buying/renting a home? Even in the US, you’re getting city and State authorities building public transport systems, something unthinkable 20 years ago.
Oil production will have to fall a lot more than 20% before there is any threat of social breakdown.
Ablokeimet,
Our economy is sustained over that extravagant oil waste. The interconnections between recreational oil industries (leisure, tourism, restaurant, etc) and the rest of the economy are inescapable.
Spain is a poster child of what happens after peak oil. Our oil consumption has reduced by 25% respect to peak value in 2007. The entire country has gone up against the punch bowl being taken away to reduce deficit and limit debt growth, to the point that now it is ungovernable and we are going to have to repeat elections.
And this happens even though our economy has been sustained by a guarantee from ECB that has prevented the worst from taking place. Despite that unemployment remains >20%.
Spain has been very lucky to experiment peak oil while most of the world has not yet. Thanks to ECB the worst has been avoided, yet the people are furious and voting radical options and Catalonia wants to break free.
Adaptation is not possible. Once the world goes down 15% in the use of oil it is going to be changed in a multitude of ways that most people are not going to like at all. The Soviet Union broke down after its peak oil. We can only imaging that on a global scale.
I don’t think we are going to see many wars or a world war. When nations are on dire straits they seldom wage wars.
Javier and I have our differences but I will have to say he hit the nail on the head here.
Just pointing out waste in the system is completely misleading. Millions of people depend on that waste for their livelihood. The entire tourist industry depends on it. Bar and restaurant workers depend on it.
All that wasteful spending and wasteful use of oil generates a living for many millions of people. People who just write them off are just not very deep thinkers. And that is being kind.
Ron,
I think you and I should concentrate on our coincidences that are many and not in our differences that are basically one. It looks strange that little disclaimer you put every time you agree with me, unless it is some type of honor 😉
Sorry Javier, but if a man says evolution was the already the accepted theory by all academics at the time Darwin published his Opus, then I must qualify my every reply to this man. Otherwise they just might think I agree with him on that position also.
God, that would be embarrassing.
Ron,
It is a pity that you are so close minded to anything that contradicts your beliefs even if it comes from somebody who knows more than you do about biology, being a biologist, and is willing to provide evidence of everything that he says. I always take the opportunity to learn from anybody.
After living in the states for 5 years I think I understand a little how the political debate between creationists and science defenders has shaped the evolutionary thought there, to the point that Darwin has become a sacred cow and science history before Darwin has been forgotten or erased. In Europe evolution is not challenged, so we have a more enriched view of the evolutionary debate before Darwin as it was carried out almost exclusively in Europe.
The first evolutionary writings were already in the 18th century by Comte de Buffon and Charles Darwin’s own grandpa, Erasmus Darwin. They lacked a mechanism, but the idea was already expressed very clearly. Erasmus Darwin “Zoonomia; or the Laws of Organic Life” (1794) already develops many evolutionary ideas like:
“would it be too bold to imagine, that in the great length of time since the earth began to exist, perhaps millions of ages before the history of the commencement of mankind, would it be too bold to imagine, that all warm-blooded animals have arisen from one living filament, which THE GREAT FIRST CAUSE endued with animality, with the power of acquiring new parts, attended with new propensities, directed by irritations, sensations, volitions and associations; and thus possessing the faculty of continuing to improve by its own inherent activity, and of delivering down those improvements by generation to its posterity, world without end?”
This is a very accurate description of evolution without a mechanism. In 1794. By Charles Darwin’s grandfather.
To anybody in biology it became very clear during the first half of the 19th century that evolution was a fact. Geologists had developed the Unitarianism theory that explained a slow transformation of the Earth. Different fossils filled every epoch. The succession of species was accepted by almost all. They didn’t call it evolution because that word meant a different thing by then.
“Biologists in the mid-1800s largely accepted that evolutionary science could provide accurate explanations for the history of life and for biological diversity” (pg. 614, first paragraph)
Evolution, Medicine, and the Darwin Family
Michael F. Antolin. Evo Edu Outreach (2011) 4:613–623
Russell Wallace was younger than Darwin and already an ardent evolutionist, because most biologist were evolutionists already before “The Origin”. What was lacking was the mechanism. Lamarck, The leading world expert on invertebrates of his time, had proposed one in 1809. He was the first to do so, but he got it wrong. Darwin’s merits are enormous, but he built on predecessors work, including his grandfather, as almost always happens in science.
“By the middle of the 19th century biological evolution was a widespread idea. There was strong empirical data that the earth was much older than was proposed by Biblical literalists and also strong data that very different forms of life had lived on the earth in the ancient past. Although a belief in a young earth and the literal truth of biblical creation were the norm among the European population at large, these views were not held by most scientists of the time.
Evolutionary ideas had been proposed by several people but generally they lacked a mechanism to drive evolutionary change or if, in the case of Lamarck, they did propose a mechanism, it was demonstrably incorrect. Malthus’ work on populations in conjunction with the applied sciences of medicine and agriculture had lead several scholars to the idea of natural selection but they had not generally linked it to a larger evolutionary view.”
History of Evolutionary Biology Part 1: Evolution Before Darwin
If you really want to get into what was the European evolutionary scene before Darwin published “the Origin” you can get an idea on how many people were publishing evolutionary thoughts in:
Before Darwin: Transformist Concepts in European Natural History
Pietro Corsi
Journal of the History of Biology (2005) 38: 67–83
So to set the record straight:
– Evolution understood as the succession of species by common descent came first and was widely accepted in Darwin’s time prior to his publication of “the Origin”.
– Lamarck provided the first mechanism in 1809, but despite being a great scientist he got it wrong.
– Darwin’s great contribution was to propose natural selection as partial mechanism and he got it right. He also did a lot of other contributions like sexual selection, an idea he also got from his grandpa. But Charles was far superior to Erasmus in natural history.
– Darwin’s hypothesis of natural selection as driving force lost popularity during the 1880-1920s, but got reinstated with honours by the modern synthesis of the 1940s.
Now open your mind and embrace new ideas that challenge your core beliefs. It is refreshing. I do it often.
Had not animal breeders, throughout ancient history through to the modern era, a strong knowledge of the concept of natural selection through their own work with selective breeding. Were humans during Darwin’s era, not instinctively aware of their own choices for mate selection? Granted, Darwin elevated the topic to a scientific level, but I would find it hard to believe that many of his age and much earlier were not aware of this concept intuitively.
Ron Wrote:
“And this will drastically exacerbate the problem for oil importing nations.”
To add (not a rebuttal):
If Peak Oil is recogonized in the Financial markets that its pretty much end game. Since the economic will be in permanent decline, Interest rates are likely to increase, Banks and other lenders will cut back on lending, especially for new home construction. Companies will cut back on operations instead of expanding production. The Global is already awash in a sea of debt. Hard to believe debt & credit growth would continue BAU. I suspect that gov’t will enact to raise taxes and try to micromanage their economies thinking that they know how to solve the problem, which will only exacerbate the crisis.
At the moment, the debt & aging population crisis dwarf Peak Oil. I think these two giants will put any concerns about PO to back corner as gov’ts, populations and business deal with usustainable debt loads, and unfunded retirement benefits (both Gov’t & Corp) to the Boomers. I suspect that Peak Oil won’t become a crisis in the next 5 years or so as the Debt & demographics crisis put constraints on global oil demand, thus keeping oil prices and declines below the radar.
HI Ron
In that scenario oil prices would rise a lot and there would be significant disruption to the economy.
It would also lead to more rapid adoption of public transport using electricity and more efficient vehicles.
The oil exporting nations might be stuck with very low priced oil that nobody wants as the world transitions rapidly away from oil.
Oil would quickly rise to $170/be if Oil exporters stop exporting oil.
The oil exporting nations might be stuck with very low priced oil that nobody wants as the world transitions rapidly away from oil.
Oh good grief, are you going to join that crowd now? It is oil, it is oil, it is liquid transportation fuel. We will not get away from that. The idea that we are going to transfer to some other type of transportation or whatever is just stupid. It is not going to happen. It is all about oil, oil, oil.
We transitioned fairly rapidly from less efficient to more efficient transport. Horses required huge inputs from agriculture and provided relatively slow transport, limited range and lots of crap to deal with. This transition took place during a growing economy.
To transition away from fossil fuels to mass transport, given the current state of energy and technical knowledge, will require moving from a high EROI fuel to something with less energy return in a shrinking economy. How do we make such a transition at all?
Hi Ron,
Well it is going to take some time for the World to realize that we are past the peak. In a different comment you suggested 10% to 20% below peak output, I will use 15% and assume the peak is about 80 Mb/d of C+C output in 2015. Using a very conservative scenario with a medium URR of 2900 Gb of C+C through 2100, output falls to 85% of the peak (68 Mb/d) by 2036, by that time World GDP will have grown and if 5% of World spending on oil does not cause a recession, an oil price of $256/b in 2014 dollars could be supported.
The high oil prices will lead to a transition away from oil use in transportation as the World economy builds more electrified rail, light rail, busses on overhead wires, as well as plugin hybrids, EVs, better designed cities where walking and biking are more feasible.
It will not happen overnight, gradually oil prices will rise as supply becomes more constrained (due to current low prices), high prices may keep output from declining very rapidly (or possibly on plateau for a few years), eventually both demand will fall as society transitions away from oil and price will fall causing supply to be reduced.
It is possible that by 2060 we will see a sharkfin decline in oil output because of a lack of demand with falling oil prices. At that point oil will be like the buggy whip. This might take till 2070, but 2080 is quite doubtful.
Oh good grief!
Hi Dennis and Ron,
“It is oil, it is oil, it is liquid transportation fuel. We will not get away from that.”
I find this statement hard to believe coming from a man who’s email address is DarwinianOne at gmail.com. I believe we will evolve to new personal EV’s in 10 to 15 years. I’ve driven and rode in the future of transportation. The Saudi’s understand the writing is on the wall.
Personal EV’s are low hanging fruit and a game changer. It’s a done deal ! The internal combustion engine is very inefficient.
Of all the cars on the road in 2010, what percentage were EV’s? Of all the cars on the rad in 2015, what percentage was EV’s?
At that rate of increase, how long will it take to get to 100% EV’s?
Oh hell, at that rate of increase how long will it take to get to 50% EV’s.
Shocking isn’t it?
It will be exponential Ron, 10 to 15 more years.
Cheers, to 2016 !
It will be exponential Ron, 10 to 15 more years.
There is no reason to believe it will be exponential. When you can just make up your own data you can make any argument seem logical… no matter how illogical it really is.
Your argument that it will be exponential is totally absurd.
Of all the cars on the road in 2010, what percentage were EV’s?
Zero, or very close to zero. The first of the modern production BEVs went on sale in December 2010 with 19 units sold.
Of all the cars on the rad in 2015, what percentage was EV’s?
According to an IHS press release “U.S. Light Vehicles in Operation (VIO) Hits Record Levels at Nearly 258 Million”. Cumulative sales of BEVs between December 2010 and the end of November 2015 are about 198535 so, percentage wise about 0.077 percent or 77 out of every 100,000.
Oh hell, at that rate of increase how long will it take to get to 50% EV’s?
Unlike Chief Engineer I don’t automatically assume it will be exponential for the next fifteen years. As a matter of fact the attached graph could be seen to imply BEV sales are being constrained pertly by the supply of vehicles. A graph I attached to a comment to Ron’s previous top post, shows how BEV sales are heavily influenced by the sales of the top three models (those which have sold more than a thousand units in any single month over the period). Tesla’s Gigafactory is a recognition that BEV production is going to be constrained by battery production and even those batteries produced there will be divided between stationary and BEV applications.
There is also the issue of Lithium availability even though Mexico apparently has significant reserves and the country with the largest known reserves, Bolivia, does not appear on the list of the worlds producing countries. This article The Geopolitics of Lithium Production from GreenTech Media discusses the uncertainty surrounding future Lithium production and mentions Bolivia but, does not acknowledge reserves in Mexico or those alleged to exist in Afghanistan. Lithium supply constraints may or may not constrain future BEV production and change the growth curve from exponential to logistic.
Shocking isn’t it?
Self driving cars and mobility as a service have huge potential to disrupt the traditional forms of car ownership and use. In a comment to the last top post, I tried to create a picture of many of the disruptions I have witnessed in my lifetime. At least two and possibly three of my former occupations do not exist any longer. So yes disruptions tend to be quite shocking and by their very nature, tend to catch very many people by surprise!
This just in, the future is the past! The electric car never got much beyond 40% of the fleet back when it was a thing (alongside steam, and gas-powered cars) before it collapsed in the market due to, as you state, competition from the very inefficient internal combustion engine. This was some 100 years ago. Now gussy up that marketplace failure up with lithium intead of lead, and suddenly, somehow, it can go exponential? If the marketplace failure that is the electric car can go exponential, why not also the horse and buggy with a carbon fibre hansom and LED blinkies?
I’ve evolved a $0 transportation budget on the year, and for that trouble was nearly run down by a quite glazed-eye gentlemen in a Tesla. Perhaps with less car sitting, they might get more blood to their brains? One can dream.
If the marketplace failure that is the electric car can go exponential, why not also the horse and buggy with a carbon fibre hansom and LED blinkies?
Of course it could. Just put the Amish in charge and you are there! But a few among us who will still find a Tesla P85D with insane mode a lot more fun than that horse and buggy, so if I were you I’d get out of the road…
Disclaimer: I will never own a Tesla and prefer my bamboo bike though I might eventually electrify that. So you probably don’t have to worry about me running you over 🙂
The ICE was a disruptive technology back in the early 1900s and it beat out both the horse and buggy and the electric car for obvious reasons. However to claim that the EV is a marketplace failure at present may be slightly premature.
“If I had asked people what they wanted, they would have said faster horses”
Henry Ford
thrig said:
If the marketplace failure that is the electric car can go exponential, why not also the horse and buggy with a carbon fibre hansom and LED blinkies?
Marketplace failure? That’s a little premature isn’t it? Let’s look at this “marketplace failure” in the $70,000 and over segment. I’m using as reference data from hybridcars.com September 2015 Dashboard and figures from the following web page:
The 10 Most Popular Cars Americans Are Buying Over $70,000
I’m assuming that, since the Cheatsheet article is dated October 28 that, the figures included are up to the end of the third quarter of 2015.
The single model from Tesla had sold more units than the bottom five of the 10 most popular cars in or above it’s price category combined! In that top 10 list there were two Porsche models. The Tesla sold more than the two models of Porsche combined. BMW had the number five and six on this top ten list with it’s 6 Series in coupe, convertible and sedan body styles and it’s 7 Series sedan. The Tesla sold more units than BMW’s 6 and 7 Series combined.
Finally and most ironically of all, Tesla sold about 70% more units (17,700) than the number one car on the list, the Mercedes S Class (10,580) and in fact sold more than the two Mercedes models that made the top ten combined. This makes me wonder if the title of the article should have read, “The 10 Most Popular Cars Americans Are Buying Over $70,000, That Are Not A Tesla Model S“. I find it odd that this list of the 10 most popular cars for over $70,000, completely ignores The most popular car in the category. I guess reality isn’t real and the Tesla is a market failure.
Hi Sweethearts. Happy 2016. May it be disruptive to you and your loved ones. ^u’
BTW, I am wondering if it is not just disruptive technology, but disruptive vested interests.
On an alternative Earth, for example, would they have/evolve the same kind of society? Are what we have now inevitable and/or results of emergent properties or the laws of physics, chemistry and biology on this planet?
islandboy — There are no supply constraints whatsoever on lithium, and there’s lots of room to bring down the mining costs.
If you really want to worry about supply constraints for electric car batteries, look at cobalt. Everything else is trivial to supply.
Ron — electric car deployment is following an exponential growth curve, just like solar panel deployment and wind deployment.
Solar panel deployment is following a VERY FAST exponential growth curve, with deployments doubling every two years (this is crazy fast) — as a result, solar power will be supplying 100% of current US electricity needs around 2030. (Electricity demand has been dropping, thank you LED lights.)
Electric cars are following a somewhat slower exponential growth curve, and are starting from a lower baseline as of 2015, so they won’t take over the entire new car market until around 2035, and then it’ll be another 10 years before the existing cars are replaced.
Now you know.
Hi Ron,
Reading some of Fred’s comments, it occurs to me that autonomous vehicles (AV) could really change things, where the most fuel efficient models will be purchased by “taxi” services that could transition to the most cost effective means of transport, whether it be EV, plug in hybrid, hybrid, or ICE. Private vehicle ownership may be reduced to those living in rural areas, while cities and suburbs may rely on AV and public transportation by light rail and bus. The world may change very rapidly in response to peak oil and rising liquid fuel cost.
I am not confident that this will happen as quickly as some futurists believe, but I also remember when the idea that everyone (in an advanced economy) would have a cell phone seemed ridiculous to me (say in 1985 or so) or that most homes would have their own computer (in 1975 this would have seemed absurd).
Things can change pretty rapidly and most times the direction this change takes is hard to anticipate.
Perhaps you foresaw how things would change back in 1975, I didn’t. Nor do I expect I can perceive what will happen in the next 40 years any more clearly than I did 40 years ago.
There is one big problem with the electric car – the lithium battery technology is not close to ready for widespread adoption. Very few will buy a car and charge it overnight in their garage if it has a known issue of bursting into flames. Far too dangerous. The lithium battery technology has had this problem for some time and there seem to be no improvements (as of yet).
Gasoline cars spontaneously burst into flames a LOT more often than lithium batteries do — like, 20 times more often.
So that’s a non-issue. People are already happy to put cars in their garages which have a “spontaneously burst into flames” problem.
Ron – Why would the hoarding only happen at a global peak, rather than for the country peak? A few major producers in OPEC (Kuwait, Nigeria, Ecuador, UAE, Indonesia) and outside (Oman, Brazil, Russia) look like they are approaching or past peak but all are producing flat out. I think just as likely as hoarding will be rampant corruption and pillaging by the elites (see recent news from Nigeria, Brazil and Venezuela) before they leg it to some secure enclave leaving the country to collapse completely.
For starters I never said hoarding would happen at global peak. No one knows when that point is. I said hoarding will happen well after the peak when it becomes obvious to everyone that world oil production is in decline and will decline forever.
When a country peaks everyone, even in that country, believes there is still plenty of oil for everyone. If they get in a pinch they can just import all the oil they need.
When the leaders of an oil exporting country are forced to take a hard look at their future, and knowing that they have oil but other countries do not, they will then, very likely, reassess their situation.
But I agree with you that some countries, and their corrupt leaders, will just grab all they can get and say “to hell with their citizens.” However those “secure enclaves” will likely be very scarce in a time of global collapse.
“However those “secure enclaves” will likely be very scarce in a time of global collapse.”
You must be talking about California and Germany with their EV’s and solar panel economies. California also has a lot of oil and NG for non transportation use after the Tverberg Caelan global collapse. In addition, California has enough water to grow food for it’s self. But not enough to export to all those who refused to evolve and ignored Climate Change. California will need to build a Trump Wall to protect it’s self from about 47 other states.
Those who fail to plan, plan to fail
“Everybody has a nice plan – ’til dey get punched in the mouth.” Mike Tyson
Your right, forget the Beautiful Trump Wall. Go straight to plan B with the Ted Cruz carpet bombing.
Venezuelan heavy is $10/bbl to produce raw, but $30/bbl to “upgrade” to be usable as a crude oil replacement. That’s $40/bbl and that price won’t go down unless people figure out how to use the stuff directly. So it’s uneconomical at current prices and will probably be shut down by Saudi/Iranian production just like the Canadian tar sands and the US fracking.
Eventually the Saudis will have to back off and let prices rise (they’re burning through their currency reserves and will run out around 2019). The question is whether any of these unconventional oil sources will come back on line at that point. Everyone will have been laid off for several years, so it’ll be slow even if it does come back…
Give me $200 per barrel and I guarantee I can increase worldwide production to 100 mmbopd. But I don’t want to worry about the marketing side. You have to convince Pakuistan, India, Indonesia, and Egypt to pay the price.
You have to convince Pakuistan, India, Indonesia, and Egypt to pay the price.
Yeah, but even if you convince them, they can’t pay the price because they don’t have the money.
If you are dying of thirst and I offer you water at $5.00 a gallon and all you have is $4.99 you will still die…
Hi Fernando,
Interesting, I don’t think 100 MMb/d is really possible even at $200/b (2015$).
In the past you have suggested my “medium scenario” of 3400 Gb URR for C+C seemed reasonable. Do you mean 100 MMb/d of C+C output or are you talking “all liquids”?
I doubt World C+C output will rise above 83 MMb/d. In the scenario below with URR of C+C=3400 Gb (600 Gb from oil sands) cumulative output is 2600 Gb through 2070 with a peak in 2031 at 83 MMb/d od C+C output. Note that I think this is too optimistic and I think a peak of 80 to 81 MMb/d in 2023 is more reasonable.
I also think that you don’t really think $200/b is very realistic (and if so I agree).
“In any case, oil production is a function of primarily price. If the price is right, then there will be oil for many decades ahead.”
I do not understand the rationale of this ‘argument’. If the price is high, then there is no need to develop additional resources for the major players that produce at low cost (e.g. Saudi Arabia).
Why should I worry, when I get a lot of extra money for basically doing nothing, can pay my expenses and worry most of what to do with the glut of extra money?
Rising prices are only attractive for high-risk play of new players in the field that focus on formerly unproductive endeavors (e.g. Shale). But for this, prices must be relatively high which in turn affects global demand.
So from my reasoning and/or point of view high prices are not a panacea in them self – there will be a point, where high prices will destroy (i.e. not allow) additional demand.
Ert – Good point!
Producers as well as banking/finance would need to believe that those high prices will stay that way for a long time without adversely effecting demand/economy in order for it to have any effect of production and in my opinion no one believes that will happen.
@Jef
Thanks & good additional point!
So I currently believe that Ron will be proven right: “Peak-Oil” in terms of production in barrel/day is around now. We may skimp along a plateau for a while, but when it then goes downhill – it will not reach the current production again.
On the other side I see tons of unnecessary and unproductive consumption everywhere. People around me (Europe) buying more and more SUV’s. The average motorization in Germany for a new car is over 140PS, the average top-speed approx 120 miles an hour. 20 years ago it way 95PS average.
Why does it happen? Because people can afford it. Money earned will be money spend – that’s it…. for now.
Hi Ert,
Yes high prices will destroy demand, but if a lower price results in supply that is too low to satisfy demand then the oil price will need to rise to a level where the supply is adequate to meet demand at that higher price. Basic Econ 101.
Hi Dennis,
yes, as i wrote: ” there will be a point, where high prices will destroy (i.e. not allow) additional demand.”
The 1000$ question is now: What is this magic “$ price vs. barrel/day” relation? How much $ at how much maximum barrel/day demand?
This equilibrium is off course also determined by the price of the ‘energy’ substitutes for part of the oil consumption – like coal, gas and electrical energy.
For most in the US 5$/gallon may be to high to be attractive to spend for cruising around to the next drive-in burger place. An Indian, US (or other) farmer may pay that price to get the gasoline for his water-pump and outbid lots of people in the OECD states that use a huge part of the oil consumed only for recreation or “fun” stuff. Probably most of us here will see the outcomes in our lifetime….
Hi Ert,
I agree that nobody knows how this will play out. As oil prices rise there will be a tendency for substitutes to become more competitive with oil and less oil will be used at any given level of GDP, but GDP will continue to increase so demand for oil will continue to increase faster than supply, this will lead to higher and higher oil prices, until high oil prices lead to a recession.
It is impossible to know exactly how this will play out, how fast will oil prices rise and how much will the high oil prices reduce oil demand in the long run, those are great questions and nobody knows the answers.
A key point is that the price of substitutes is dropping. Fast.
Well, Norway keeps producing much more than necessary for them and invests the extra proceeds with their sovereign wealth fund. They plan to use it when they run out of oil and natgas. Why do not they slow down their production instead to have more oil in the future? Currently people value money and paper assets more than physical oil sitting under ground. They are happy to exchange their finite oil reserves for a number of extra zeroes on their bank accounts. For some reason it does not occur to them that when the global economy runs into serious energy shortage all these zeroes might vaporise momentarily.
So- Some of the regulars here believe the peak may be delayed a few more years yet.
My gut feeling is that Ron is right, or damned close. Depletion marches on, the economy is sluggish, and it will take a while for the many and large recent delays in investment to be reversed. My wild assed guess is that even if the price of oil recovers strongly, it will take a year or two to make up for lost time in bringing new production online. So – this leads me to think the odds are tilted at least a little in Ron’s favor.
Any domestic troubles above and beyond ” the usual” in oil producing countries will also tend to hold down production , and I don’t see any reason to think things are going to run more smoothly in the Middle East, Mexico, or Venezuela than usual. I would bet on MORE domestic troubles in troubled oil exporting countries, rather than less, for the next few years.
Now this question is off the immediate topic, but it definitely relates to peak oil consumption, in countries that already have lots of cars and trucks.
Does anybody have or know where to find detailed figures on the rate at which older model cars and trucks are scrapped ?
Even if a new car or truck buyer opts for one of the larger models, it is still apt to be as fuel efficient as a somewhat smaller vehicle from ten to twenty years old. And in the case of the buyer who chooses a similar sized vehicle, on average there will be a significant improvement in fuel efficiency if he trades in a car or truck ten or more years old.
Some folks have made a big thing out of the fact that the new vehicle fleet average economy is stalled or down somewhat. My opinion, for what it is worth, is that the average fuel economy of the entire vehicle fleet is slowly but steadily improving, right along, despite the current low price of gasoline and diesel.
There are still millions of gas hog cars and trucks in service, because people short of money have opted to drive them, in spite of poor fuel economy. A car that runs with a very modest or no payment is MUCH cheaper to drive on a month to month basis than one that gets twice the miles per gallon, unless you put a hell of a lot of miles on it.
But these older cars and trucks are getting to be REALLY old now, close on to twenty years in a lot of cases, and even older sometimes, and a serious repair costs so much the owner can get a newer vehicle, around ten years old, for no more than the cost of a major repair such as a transmission replacement.
With regard to peak oil, I have always [perhaps incorrectly] put most of the weight on the charts/graphs of “new discovery quantities” by year, for the past 80 years. Put those graphs against consumption graphs for those same 80 years. Looking at those two in conjunction should give pause to most people. Unless they believe that there dozens of elephant fields out there somewhere that have not been discovered and which will be economic at some price below $75.
The fact that Saudi can produce oil at $5 per barrel is meaningless, since they have created a country with a growing population that needs over $75 per barrel to survive as a country.
Hi Old Farmer Mac,
Ron may indeed be correct and he is definitely close, just early by 5 to 8 years 🙂
I expect 2016 to 2018 may be below 2015 output and by 2019 (for the 12 month average) the full year 2015 output will be surpassed, with the final peak some time between 2020 and 2030 at between 81 and 83 MMb/d for C+C output. The precise level and timing are impossible to predict. By 2035 it will be clear that we are past the peak in C+C output, though a severe recession might obscure the truth and we may not be sure until that recession ends (or maybe some will never be convinced that at some future date a new peak will be reached).
I’ve seen peer-reviewed papers which put the Saudi field peak at 2028 (assuming no geopolitical interference), although the Export Land Model shows that their exports peaked in 2005. This argues in favor of a later global peak.
I think an important aspect of electric car adoption is the lower maintenance; people don’t really believe it yet. I think about 2023 it’ll become obvious that it’s real.
I offer up this. Peak is not important because it can be dodged by revoking “laws” of economics and pumping non-economical oil. You can do this how long?
You do it as long as you must to avoid starving.
Thus, oil scarcity will destroy civilization, soon, regardless of a peak of production. Production may be increasing in years to come via rifles held to the heads of oil workers forced to work as slaves — because no economics can support the extraction of more and more difficult oil. You will have rising oil production but a complete change to society. Until even uneconomical oil can not flow.
Then the mother of all shark fins arrives, and 6 billion deaths over a period of maybe 6 months.
America has a huge strategic lipid reserve stored among its citizenry. Talk of starving is far-fetched.
“America has a huge strategic lipid reserve stored among its citizenry. Talk of starving is far-fetched.”
Damned I wish I had thought of that first!
There was a group of doctors in the greater Miami area a few years ago that were making biodiesel out of the medical waste resulting from their liposuction practice. Human fat has a very high energy content.
This is also a problem for the funeral and cremation business… or perhaps it’s a resource waiting to be exploited?
As you may realize, when a morbidly obese person is cremated, there’s a danger of what can only be called (in layman’s terms) a “grease fire.” In the past — especially in America — such fires have prompted crematoriums to purchase larger retorts (a retort is the “oven”) and to use different methods of cremating morbidly obese persons. – See more at: http://www.calebwilde.com/2012/06/morbid-obesity-cremation/#sthash.NwqtwUyW.dpuf
@Watcher: “. . . and 6 billion deaths over a period of maybe 6 months.”
Quoting Grady of Sanford and Son, Good goobly goop! I thought I (and Jack Alpert below) was (were) maladjusted and predisposed to extrapolating the gloomiest of gloom-and-doom scenarios, but Watcher, brother, you peg the gloom meter this time.
http://skil.org/Qxtras_folder-2/rapidpopdeclineorbust.html
http://www.skil.org/Qxtras_folder-2/overpopulationmeansImurder.html
https://www.youtube.com/watch?v=fcQYI4yo8mM
https://www.youtube.com/watch?v=QfYCrLq1DJU&feature=youtu.be
6 billion deaths over 40-60 years are not unlikely, but 6 months?! YIKES!!! 😀
Happy New Year to you, too! 😀
I didn’t point out how zero transportation of significance among the remaining enclaves and no pharmaceuticals ensures epidemics in those enclaves knock them off one by one over a period of a century.
The remaining billion will live 100 yrs. Then extinction. Grow or die, and growth won’t be possible with the oil gone.
There is absolutely no reason humans should go extinct after 100 years. But if you have one I would love to hear it. People who believe in human extinction seem never to give a reason. The word “extinction” just rolls so easily off the tongue that it seems that it just does not need a reason. Everyone in every niche on every continent? Makes no sense whatsoever.
Grow or die is not a reason. You are thinking of economics, not survival. Millions of species have survived for millions of years without their numbers growing. Of course their numbers wax and wane over the centuries but not necessarily growing.
Oh, and I think 6 billion in 6 months is a bit excessive. The 6 months part anyway. I would give it several years, but I would never venture a guess as to how many years.
6 billion deaths whether in 6 months or several years guarantees a meltdown of most if not all of the 400+ nuclear reactors and that would indeed mean extinction. And thats if it all goes smoothly, add in some thermonuclear warheads and ……..
The scenario is disease. 21st century medical knowledge with 19th century tools. Antibiotics disappear from lack of transport. 1 billion remaining people can’t conduct activities the way they do today. No drugs.
No vaccination.
Medical knowledge would permit quarantine of disease, but antibiotic resistant tuberculosis will assert itself with no antibiotics at all to slow it down. Childbirth fever returns. Farming will have to be local, and pretty good chance the oxen/cattle will have been wiped out during the initial sharkfin event. So no beasts of burden to support that local farming.
Not to mention that the breeds of such are now all about meat, not pulling. Whereas they used to require 1 acre out of 3 be planted in hay rather than human food to get them through the winter, now it’s 1 of 2.
But the overall scenario is how epidemics sweep enclaves that are isolated by no transportation. The absence of oxen forces them to be smaller and smaller enclaves because food transport won’t exist. The smaller the enclave, the less useful the quarantine.
Extinction is credible. The volcano bottleneck is laid out as a low population faced with a nasty event. Extinction events get easier and easier.
It’s credible.
As for 6 billion deaths, can you breathe air choked with flies growing from corpses? Consumption suppression wars are at diabolically bad latitudes. A Shanghai strike . . . or the whole Chinese coast . . . drifts east to shut off whatever remaining Texas oil production there is. And a week or two later the same radioactive fallout drifts over the Middle East.
Shrug. 6 billion is credible. The mother of all sharkfins.
Extinction is credible. The volcano bottleneck is laid out as a low population faced with a nasty event. Extinction events get easier and easier.
No it is not credible at all. Disease did not cause extinction in the human species for the 200 thousand years Homo sapiens have existed. Why would you expect it 100 years from now.
There will always be isolated niches where the disease does not reach. Arctic enclaves come to mind. Or the forests of the Amazon or New Guinea or…
Also there are always a few who are immune. Even AIDS, there are those that are immune.
No, extinction in 100 years is far, far from being credible. Extinction in a million years? Who knows? But people who talk about extinction are talking about in the next few hundred years at most. And they never come up with a credible reason.
Prior to the First and Second Industrial Revolutions (aided by the increasing utilization of fossil fuels), the population growth was 0.4-0.5%/year and the average male lifespan was ~40-45 years.
Since the 1930-40s, population growth has accelerated to 1.6%/year, peaking in the 1970s at a super-exponential rate of growth around 2%/year. Had the rate of population maintained at the pre-1800 rate, for example, the human ape population today would be ~2.6-2.9B instead of 7.2B.
The bubble of human ape population growth dwarfs credit, debt, and asset bubbles. All bubbles burst and take prices or numbers back to the level at which the super-exponential rate of growth commenced, and not infrequently overshooting to the downside. Should a similar trajectory occur for human population this century, population will peak in the 2020s-30s and crash by at least half and do so over ~35-40% of the time required to reach the peak. That implies at least a halving of the population by the last quarter of this century, taking the population back to no more than the level of the peak rate of growth in the 1960s-70s.
The majority of the deaths will occur in Africa, SE Asia, Central Asia, the Middle East, and parts of Central and South Americas.
Increasing racial/ethnic/relgious conflict and violence and mass population migrations associated with the global structural effects of Peak Oil, overshoot, and LTG are already occurring and will only increase in scale, requiring states to pull up the drawbridges to avoid being overrun and exacerbating the emerging domestic constraints.
None of this should be a surprise, as the LTG authors and subsequent researchers’ work anticipated these developments decades ago, as did US Pentagon planners and myriad gov’t agencies.
BC: “Since the 1930-40s, population growth has accelerated to 1.6%/year, peaking in the 1970s at a super-exponential rate of growth around 2%/year. ”
World population increase in the period 1990-2008 was 1.34% per year. From 2008-25, it is projected to be 1.06% annually. Professional demographers know that you can’t just project past increases in total population into the future, because there are many factors involved:
(a) Increased life spans result in an increased population, even without increased births. There aren’t many people who would argue for shorter life spans.
(b) The world has had a tendency, going back at least to the 1960s, of a falling Total Fertility Rate (TFR) – i.e. the number of children that the average woman will bear. It is the TFR which is the real driver of population trends, because changes in it take decades to show up in the totals, but the changes are irreversable.
(c) Falls in neo-natal mortality have the effect of reducing the TFR, as people gain more confidence that their children will live until adulthood and thus don’t need to have a couple more “just in case”.
(d) The rise of sex-selective abortion in places like India is having an effect of making the effective TFR measurably less than the published one. For example, adjusting India’s TFR of 2.48 for its skewed sex ratio of 940 women per man gives an adjusted TFR of 2.40.
The world’s TFR is continuing to decrease and will, in the next few decades, fall below 2.0. Once that happens, it is a matter of time until the population maxes out. If we want to bring that day forward, it is best done through measures which are desirable in and of themselves – improving the education of girls and providing better access to reliable and affordable contraception.
“940 women per man”
I want my share 😉
“940 women per man”
Oops! I meant 940 women per thousand men.
There are not many permanent settlements. Everything gets burned and if there are spare calories, rebuilt. If there are no spare calories, they don’t get rebuilt.
It’s like all growth. You can grow, then shrink, then grow again. But there only has to be one shrink event that reaches zero and there can be no growth from there.
There’s a pretty good theory about disease . . . that all disease events have a “burn out” end that correlates with food production. Plague in Europe appears to have burned out because of some good crop years, building immune systems. There were famines in England just before 1348 when the black death started.
They had oxen to get the calories when weather improved. Post sharkfin, maybe no oxen.
I’ll give you this. New Guinea is south of radioactivity path from the China strikes. Maybe they hang on forever as primitives.
A loss of 80-90%+ of the human ape population would not technically be “extinction”, but I suspect that many of the survivors would perceive the die-off as catastrophic so as to effectively seem like “extinction”.
Then again, if the survivors are the top 0.000001% Elysiumites, they might perceive the mass die-off as an imperative required for their long-term evolutionary success in the post-Oil Age, post-die-off epoch.
I think all you folks aren’t factoring in one important clue to post-oil world.
That’s the people living in it right now. A huge number of them, the so-called extremely poor.
Aren’t extinct. Far from it.
I live in a sorta poor place. I know lots of people around here with astounding ability to live on near nothing and still look fairly normal.
My very good shop assistant lives on about 3kW hrs/day from his little PV, totally off grid in an abandoned van.
He says he gets along fine and likes it.
Never went to a doctor.
He comes in every day looking clean and neat, dressed in rags – clean and neat ones.
I think all you folks aren’t factoring in one important clue to post-oil world.
That’s the people living in it right now. A huge number of them, the so-called extremely poor.
There are people living without oil but not the ones you are talking about. Some people live deep in the jungle, totally without oil.
But the extremely poor depend on oil for almost everything. The food they eat is grown with oil and delivered with oil. Everything in their life depends on oil even if they are extremely poor.
Ron. Wrong wording on my part; my referring to the off-oil people living right now as “the extremely poor”.
Wrong. Not necessarily poor, just living with little or no oil. Everybody used to be that way. Just a few hundred years ago.
Today, there are still no small number. The people in those south asian villages I used to go to were mighty close to no-oil. All the food they got, they got themselves.
When offered a gift honda bike, they would not take it. No money for fuel.
Watcher is being a ridiculous idiot.
Here’s the actual human extinction scenario. Runaway global warming and ocean acidification causes the following problems:
(1) plankton can’t form shells and the ocean food chain collapses. This has happened before in the P-T extinction. No more seafood.
(2) High CO2 causes C3 plants to have an advantage over C4 plants. C4 plants have an advantage in low-CO2 environments. Unfortunately many of our crops, such as maize and sugar, are C4 plants. So this causes major crop failures.
(3) High global temperature causes many of our major C3 crops, such as rice, to die of drought.
(4) Increased photorespiration reduces crop production further
(5) High CO2 and high temperature and drought gives CAM plants an advantage, and they will move in on our crop fields. We can’t eat most of them.
(6) It becomes too hot in the tropics for humans to cool themselves in the shade. This causes the evacuation of the tropics, and the removal of the food supply from the tropics as well.
So, basically, we have a global food shortage.
Step two is that the global food shortage causes wars.
Step three is that the wars cause a breakdown in the medical system. So the death rate from disease increases, on top of the already very high death rate from the food shortage.
It’s this situation with humans already facing mass death from famine, with war and disease on top of it, where an unlucky disease hit or crop failure can perform the “coup de grace”.
If we can suppress global warming, this won’t happen. The key thing is to maintain the climate in the range which makes our food crops (ocean and land) work.
What do you mean by “actual”?
That’s the fantasy scenario from an apocalyptic doomer disconnected from reality.
It is remarkable how conservative governments in Australia, Canada, and the U.K. have by their actions (and inactions) both exacerbated climate change and left citizens unprepared for the consequences. Here is a good example from the U.K.
UK flood prevention: the missing billion
Mainly Macro, Monday, 28 December 2015
More from Simon Wren-Lewis…
How Osborne and Cameron turned a crisis into a disaster
Here’s some context…
Insurers face bumper payouts as Britain braces for more floods
Reuters, LONDON | By Noor Zainab Hussain and Simon Jessop, Tue Dec 29, 2015 2:10pm EST
Yet somehow what the data shows is that global weather-related disaster losses as a proportion of GDP have been on the descent for decades. Over 23 years the reduction has been of 25%.
One would think that with many decades of global warming, it would be fairly easy to demonstrate that extreme events are becoming more frequent. Curiously the statistics show no significant increase in extreme weather events over the past decades. It is funny to see such disagreement between a popular belief and the evidence.
However when you check major floodings associated with the strong El Niño of 1997-98, you can see that there was flooding also in the UK together with many other places in South America, like Uruguay and Argentina, that are also suffering floods right now.
If instead of learning what causes the floodings we blame everything on climate change, we leave ourselves unprepared for the next strong El Niño.
Oh I guess everything’s just peachy then. I have a feeling that one day starving hordes will be kicking Javier’s front door in and he’ll be pointing to a graph that says it isn’t so.
The floods in Spain are rather small and localized. Farmers like the water. I live in a dry area on the Eastern Mediterranean, we prefer to see more rain. And this El Niño is bringing wonderful weather. Today it’s sunny and the high is expected to hit 22 degrees C. We have tourists in the water, and they say this weather will stay for a few more days.
Maybe you want to read this:
http://cccep.ac.uk/wp-content/uploads/2015/10/economic-trends-insured-losses.pdf
There’s a good reason the chart starts at 1990. If it started at 1980, the trend would be up. (and climate is defined as the 30 year moving average, not 21 year…)
“extreme events are becoming more frequent” IS shown in the count of the events themselves.
Taking insurance losses as a percent of GDP as a proxy for extreme weather events is both unnecessary and misleading, for several reasons:
1. building codes keep getting better, so new structures get less damage
2. extreme weather events can only take down any particular weak structure or tree once, subsequent events don’t “see” as many weak buildings…
3. mitigation responses prevent future losses – see pg 16 of link about flood defenses in Hamburg, but typically after a big loss that triggers action (c.f. Katrina and New Orleans dikes) so the losses trend down, even as actual events trend up.
If one counts weather events and geophysical events (fig 4, pg 14 of link), weather events are going up, geophysical events nearly flat. So it’s not just “people moving into new areas or more reporting”, or both categories would be rising at the same rate.
Sunnnv,
Maybe you want to read your own liked article. The conclusion of the global study is in page 13:
“annual inflation-adjusted economic losses from reported weather-related events increased between 1980 and 2009 by about $US2.7 billion per year on average, thus tripling over the 30-year period. However, when these losses are normalised using the method of Pielke and Landsea (1998) there is no significant trend over time, while the method of Neumayer and Barthel (2010) shows a downward trend over time that is marginally significant. Hence the rise in economic losses of US$2.7 billion per year can be attributed to the increase in population and wealth per capita that is exposed to weather-related events.”
Their conclusion is just the opposite of yours and in line with what I defended.
There are more economic loses because we have more to lose, not because extreme weather events had increased.
The number of weather events increases because we get better at detecting them. We have categories that include even the mild ones that were not counted before, and we detect the events even when they happen in a place were there is nobody to look at it and report it.
When a normalization is made for Accumulated Cyclone Energy that gives more weight to the big ones that everybody notices the result is the following graph.
If anybody tries to defend that cyclones have increased due to global warming, is going to have a hard time doing it based on evidence, and obviously any claim that any particularly destructive cyclone is due to global warming is obviously wrong. The same goes for droughts, and floods, and that is why IPCC acknowledges that there is no confidence that they have increased due to global warming in their attribution chapter. Something that the media and some scientists conveniently forget.
Javier, I can reach the opposite conclusion when I hang upside down. It’s just perspective.
See my post below. Increasing payout costs against slowing global economic growth and 0-2% returns on assets render the insurance industry non-viable for the long run.
You said:
“One would think that with many decades of global warming, it would be fairly easy to demonstrate that extreme events are becoming more frequent. Curiously the statistics show no significant increase in extreme weather events over the past decades.”
The actual count of events IS HIGHER.
If one counts weather events and geophysical events (fig 4, pg 14 of link), weather events are going up, geophysical events nearly flat. So it’s not just “people moving into new areas or more reporting”, or both categories would be rising at the same rate.
Losses are lower on the various normalized bases for the reasons given in the report.
You are cherry picking (again).
The actual count of events is HIGHER because we count DIFFERENTLY.
When we count only the higher category weather events as in the graph for toenadoes that I posted below
http://peakoilbarrel.com/doubting-the-peak-of-world-oil/comment-page-1/#comment-553495
Then the count is NOT getting HIGHER.
Unless you are proposing that global warming is only increasing lower category weather events, that is.
Javier,
I am mystified by the alternate reality in which you reside.
Breaking the tragedy of the horizon – climate change and financial stability
Mark Carney, Governor, Bank of England; speech to the insurance market Lloyd’s of London
Alternate reality? It looks like you have been abducted by the media depiction of climate change.
The data about insurance payments has to be adjusted by the amount being insured, otherwise it becomes meaningless. Same about losses. As we become richer and more populous the losses increase, this is only to be expected even if weather events remain constant.
Weather events increase because of the way we count them. We are a lot more conscious about anything happening in any remote corner of the world since we have satellites watching everywhere.
After many decades of global warming there is no indication that the weather is getting any more dangerous. I challenge you to prove otherwise. Why are we predicting that it is going to become more dangerous from now on is above my head. Obviously the facts do not get in the way of the media blaming climate change for every weather event that takes place. For being a rational species we are a laughable stock.
I could personally attest that this December was unusually warm in my region. But since it is about zero centigrade instead of average minus fifteen centigrade, I see nothing dangerous in this fact but only good and pleasant.
I see a Peak Oil/Climate Change (Gl*b*l W*rm*ng) double whammy heading our collective way. Based on how the average folks behave towards one another at a Black Friday sale that’s short on the goods I’m suspecting our overly armed population is going to get a little testy. It’ll be hurricane Katrina on a national level. Electric cars will not fix this.
The insurance situation is part of the LTG dynamic and will exacerbate the constraints.
The modern insurance industry began after WW II, enjoying the benefit of 6% nominal GDP growth, 1-1.25%/year population growth, and increasing productivity and labor share for a generation or two.
Now the industry is faced with increasing payouts against an aging population, peak population/overshoot, and mature, high-cost infrastructure but with the prospect of 0-2% returns on assets for the foreseeable future, if not effectively permanent.
Then add climate change, increasing scale and cost of natural disasters, and risk of terrorism, and the industry is not viable for the long term.
As insurers merge, consolidate assets and capacity, and fire workers and further automate to reduce costs, they will have little choice but to increase premia significantly, adding yet another prohibitive cost to firms, households, and gov’ts, reducing investment, production, employment, wage growth, profits, etc.
Oasis had maybe five wells on the daily activity report at the NDIC today. Rig count at 61.
It has to be peak oil now, it can’t be later. A 100 million bpd production goal does not look realistic.
6 billion people dying within six months is die-off. Collapse, meltdown of economies. A rather bleak scenario.
Nobody will believe such a dramatic turn of events could ever happen. It is massive denial, can’t be ignored, but the problem is it is being ignored. Nobody wants to think about it.
Since it is now overshoot, too many people using too many resources, the idea of such trauma would be devastating to the human race, ‘fraid so. Too many deaths in a short period of time will cause permanent post traumatic stress disorder. Humanity will feel hopeless, it will be dire. Besides, Mother Nature is going to have her way with it all in the end.
Probably won’t be an extinction, but there will be land masses that might become uninhabitable due to nuclear meltdowns, restricting survivors to small patches of land that will sustain some humans.
It is believed that humans were reduced to 1000 mating pairs, and to as high as 10,000. A volcano, Toba, went ballistic and caused a mass die-off of the human population. There will be plenty of resources for the survivors.
http://skeptics.stackexchange.com/questions/23715/did-humans-almost-become-extinct-about-70-000-years-ago
It can happen, meanwhile, I have to consume resources to stay alive.
That is just how it is on this earth.
R Walter,
You are a hardcore doomer, I see.
Humanity has already gone through pretty rough times. Widespread famine killing an important part of the population, like in Northern Europe in 1696, or the Black Death. It certainly could happen again, but humanity deals with it.
The Toba explosion hypothesis of human genetic bottleneck is highly controversial, and although popular with the media most scientists reject it altogether.
– It appears that the Toba explosion wasn’t that bad and it only caused a few bad years without actually changing the climate or causing widespread extinction.
Science magazine: Giant Eruption Cut Down to Size
Live Science: Supervolcano Not to Blame for Humanity’s Near-Extinction
– It is also not clear that the genetic bottleneck was at that time.
Mol. Biol. Evol. 2000: Population Bottlenecks and Pleistocene Human Evolution
Mankind went through several speciation events during Pleistocene, and each of them might have constituted a genetic bottleneck due to the founder effect.
So all in all a good story very likely to be wrong.
“You are a hardcore doomer, I see.”
Don’t take Ronald too seriously. What he says literally , and what he actually means, may be two very different things.
I can read this particular RW comment as droll sarcasm as easily as I read it literally.
Stupid he is not.
That’s just your opinion, Javier.
I am a realistic hardcore optimistic doomer. har
Or, better yet, I am a hardcore realist.
Maybe I am being too hardcore. lol
Have to be plain old brutally frank.
‘Extrasomatic energy’, the availability, will be a problem.
http://peakoilbarrel.com/energy-human-evolution-2/
“While no single energy source is ready to take the place of fossil fuels, their diminishing availability may be offset by a regimen of conservation and a combination of alternative energy sources. This will not solve the problem, however. As long as population continues to grow, conservation is futile; at the present rate of growth (1.6% per year), even a 25% reduction in resource use would be obliterated in just over eighteen years. And the use of any combination of resources that permits continued population growth can only postpone the day of reckoning.” – David Price
My opinion on you is shaped by your opinion, R. Walter, you make me look pretty optimistic.
6 billion deaths in 6 months requires extreme very hard to meet conditions. You seem to forget that we have had already experiences with collapse. In North Korea they had a terrible situation and millions of people starved, but when people face death they don’t just sit down and die. They eat grass, they eat cats, they eat birds and bugs. Some starve quickly voluntarily so there is more food for the rest. Over such a short period you end up losing 10-30% of the population at most. You also seem to disregard regional differences. For a 6 month die-off things have to be pretty uniformly bad everywhere at the same time.
I think that due to the energy crisis and the decline of the industrial civilization we are going to lose about 90% of the population over the next centuries, with a big share due to insufficient births and infant survival, not to massive die-off.
On top of that we might lose an additional 90% (99% total) over the next 50 millennia due to the next glacial period and its effect on agriculture. I really don’t think the world can support more than 100 million humans on harsh glacial conditions in a low energy environment.
Yet 6 billion in 6 months looks completely disproportionate to me.
Collapse of the ocean food chain could be quite quick and could cause a pretty high rate of deaths, but the land food chain will collapse more slowly, yes.
I think I have a global solution to our predicaments.
Since we all seem to be stuck in an ‘Us vs. Them’, mentality anyway, let’s everybody start by eliminating THEM!…
Problem solved and the lions and the lambs can lie down next to each other again in the garden of Eden.
“And the lion will lie down with the lamb,
but the lamb won’t get much sleep…”
~ Woody Allen
http://www.smithsonianmag.com/smart-news/how-mouse-utopias-1960s-led-grim-predictions-humans-180954423/?no-ist
<B<How 1960s Mouse Utopias Led to Grim Predictions for Future of Humanity
https://www.youtube.com/watch?v=0Z760XNy4VM
Some folks with real expertise are quoted in this WSJ piece as believing oil will go up again before very long.
http://www.wsj.com/articles/from-oil-glut-to-shortage-some-say-it-could-happen-1451499384
Discussion about the glut is starting to remind me of discussion about climate change. Irreconcilable differences.
Irreconcilable differences.
That usually results in divorce…
The view from inside Russia
http://www.theatlantic.com/international/archive/2015/12/russia-putin-miroporyadok/422196/
Based on popular request, I had another look at the refracked wells in North Dakota.
Based on several articles, and contact with authors, I updated the rules to detect possible refracked wells.
I found especially the following article enlightening:
Refracking Is the New Fracking.
I now think that I overestimated the number of refracked wells in ND in my last post on this. I therefore put further constraints on the estimated refracks (based on the length and size of the production since refracking, compared both with the initial production, and the recent production). I now estimate that 201 MB+TF wells, that started between 2008 and April 2013, have been refracked. This includes 88 MB wells that started in 2008 & 2009, which is very comparable with the 80 MB wells that the Bloomberg study above found. Especially because these 88 also includes 15 wells that appear to have been refracked this year, while the Bloomberg study was performed this July (and they wanted several months of production history after the refrack). Therefore, I think my current estimate of refracked wells is probably somewhat on the low side.
The following chart shows the average of all these 194 of these refracked wells (I omitted 7 wells that even appeared to be refracked 2 times). Besides showing the number of wells, you see 3 graphs:
1) [red] The average daily production of the refracked wells for months before and after refracking
2) [green] The average daily production of the refracked wells when they started initial production
3) [purple] The average daily production of all MB+TF wells from 2008 to 2012.
The following chart shows the daily production of all MB+TF wells in ND since 2008, per decile (determined by the daily production per month).
The following chart shows the same information, but the 201 wells that appear to have been refracked are removed.
What can we learn from this:
– Despite that just 11% of the 2008 and 2009 MB+TF wells are removed, we can see that the decline in the later years is sharply higher. This shows that it is important to consider the effect of refracking when looking at the production profiles during later years. To me, this looks like the decline in production is much more exponential (indicated by the straight line of decline in this semi-log chart), than hyperbolic, which is the model typically used by the operators.
– I think this refutes the suggested halo-effect. At least the decline in wells still appears significant when just the few estimated refracked wells are removed.
– The production profile from refracking appears quite similar as from the original completion.
– I estimate that the extra return from refracking is about 80 kbo (by considering 50 bo/d the base, and looking at the excess production during the 30 months after refracking).
– I have no reliable information on the cost of refracking, so I cannot estimate how worthwhile this is. Also, it is likely that only a certain population of the wells make for good refrack candidates.
– Most refracks appear to have been performed in 2014 (87), and also 2015 (64 until Oct), vs just 32 in 2013 and 20 in 2012.
Disclaimer : as mentioned, I only use the production profiles to determine possible refracks, and have not used other sources (like the Bloomberg study did). The NDIC couldn’t provide refrack data, as they are not storing this information yet, unfortunately.
Pretty good work Enno.
Refracks are proppant intensive and that plus the pump is serious money.
If 80 kbo is all you get, even at $50 / barrel oil this is only $4 million pre royalties/taxes/opex etc. Hard to see profit in this.
I got a message from oilman Mike, who has commented here in the past. He does oil economics for a living, and he estimates that with the current oil prices, about 130 kbo return is needed just to break even on the estimated $1.8 – 2.5 m cost for refracking.
Enno
Wow. You must have put a LOT of time into this and I, for one, want to thank you for your contributions.
I have some questions concerning some of the numbers and interpretation of same, but I’ll be able to go over them more closely later.
I’m guessing the operators would like a lot more of those 100bbl/day wells after 84 months … and are doing their best to bring it about.
Once again, thanks for the efforts, time, and great info.
Hi Enno,
Thanks.
What is the rate of decline of the average well when the refracks are removed from the dataset? In my model I use hyperbolic decline out to about 84 months and exponential decline at 9.4% per year after that. EUR is 320 kb over 280 months (after that the average well is assumed to be abandoned, output at shut in is 7 b/b.
Dennis,
in the Jan NDIC update I will add some information that can identify the suspected refracked wells. That should allow you to determine the effects of them as well. 🙂
Thanks Enno. Can you tell us what exponential rate you see?
It is hard to guess from a semilog chart, maybe 21% from 21 to 60 months and 13% from 60 to 84 months, so somewhat higher than my estimate (where refracks have not been rmoved).
I find the lack of coverage of Venezuela in the MSM to be an utter disgrace. There is no excuse for it, that I can see.
Since Venezuela is home to a hogs share of the remaining oil, ……..
Here is some of what Fernando has to say in his personal blog.
xxxxxx
Raúl Castro tells Maduro to get tough
Posted: 31 Dec 2015 12:47 AM PST
So we see Maduro return and start a ruthless attack against the National Assembly, including the use of the fake Supreme Court justices to take down the opposition’s veto proof majority.
I believe Maduro’s disappearance from public view was caused by a visit to Cuba, to receive advice (orders?) from Raúl Castro and his Venezuela experts.
To figure out Maduro’s behavior you have to think of him as being guided by Cuban military and intelligence personnel coordinated by Raul’s son, Alejandro “el Tuerto”. Alejandro is said to be somewhat of a psychopath, with average intelligence, and raised as a princeling. I’ve met these new generation communist oligarchs, they truly resemble 15th century nobility.
Alejandro Castro Rus, current head of Cuban
dictatorship security and intelligence services
Unfortunately for Venezuelans, the information and suggestions Raúl is receiving from his people embedded in the Chavista regime are all filtered and shaped by Alejandro. My guess is that Raúl, Alejandro, and their nomenklatura feel they can have Maduro get away with anything. Why? Because Latin American, European, and other nations, and Obama, are being quite friendly towards their dictatorship in spite of its continuous human rights abuses.
Obama’s badly conceived move to befriend
Castro has misfired because it encouraged the
tyrant to move against Venezuelan democracy
This means Venezuelans are about to face relentless Stalin/Hitler type repression, carried out by desperate thugs who know no limits and are convinced that eventually they’ll regain full control…and get away with everything.
Leopoldo Lopez, opposition leader condemned
to 14 years for protesting Maduro’s policies
The following links provide an excellent overview of the ongoing struggle
http://daniel-venezuela.blogspot.com.es/2015/12/judicial-coup-Venezuela-annulling-assembly-majority.html
http://devilexcrement.com/2015/12/31/stage-set-for-first-constitutional-constitutional-clash-in-venezuela/
Most articles in the English media report the wrong figures. The opposition won 112 seats versus 55 for the socialists. We are also seeing very few comprehensive updates.
http://www.aljazeera.com/news/2015/12/opposition-wins-majority-venezuela-legislature-151207051359021.html
http://news.yahoo.com/venezuelan-socialists-fight-election-opposition-lawmakers-232123519.html
Meanwhile the Roberto Rincon corruption case keeps unfolding. This case is relevant because it could allow tracing millions of dollars stolen and laundered by the Chavista upper caste and their boligarchs. Some of this money was used to finance political parties and buy positive media coverage in the USA, Europe, and elsewhere.
The pictures in his email did not copy and paste.
Regardless of what one may think of Fernando’s politics, his blog is worth subscribing to just for the news links about Venezuela .
“This means Venezuelans are about to face relentless Stalin/Hitler type repression”
Didn’t they just have an election? I prefer my sources to have future trends analysis based on reality and appropriate historical context. This dudes a fanatic. It’s easy to see. Venezuelan is a failed state, dystopian yes but not an Orwellian. That’s not hard to see.
I just don’t see Cuba as having as much power to influence world affairs as Fernando seems to think they do. They are more of an annoying pimple on the world’s ass than anything else. Furthermore given that Venezuela already appears to be a failed state I don’t see how Cuba is going to continue benefiting from Venezuelan oil either. There is a reason Cuba and the US have been opening up their diplomatic and business relationships. I have friends in the hotel renovation business in Miami, they are the go to people for all the big luxury chains. Everyone is making plans to do work in Cuba. Not one of them is even remotely concerned about things like ‘Communism’ and the Castro regime. It is not even on anyone’s radar. The Cuba, Castro, Communist bogey man thing is apparently not scaring anyone away from the prospects of doing business in Cuba these days.
Disclaimer: I’m not in any way suggesting that this is a good thing. I would stay as far away as possible from the hotel business just as a general principle. I strongly suspect that life in both Cuba and Venezuela are not going to be very pleasant in the coming years but it won’t matter who is in power. The shit is just going to hit the fan regardless!
Why Venezuela would take marching orders from Cuba is beyond me. It must be some evil conspiracy lol
It is a well known old truism that birds of a feather stick together, and there is a long history of substantial cooperation between the two countries.
For instance the exchange of doctors for oil, etc.
Now as far as what is going in Venezuela NOW is concerned, only a goddamned FOOL could possibly believe that the Maduro regime is even remotely interested in anything except hanging on to power at any cost.
http://www.bbc.com/news/world-latin-america-35198665
“Outgoing National Assembly president Diosdado Cabello called a number of extraordinary sessions last week at which 13 new Supreme Court judges and 21 substitute judges were named.”
Now just how many of these judges were properly vetted with the opposition being allowed to question their records and their political ties to the existing regime?
WHY would even a REMOTELY decent government pack it’s courts in such a fashion- except for the sole purpose of maintaining it’s hold on power no matter what?
Is anybody stupid enough to think that the opposition could keep a Maduro ally out of office by appealing to courts that have been packed with ideologue judges since the early days of the Chavista regime ?
This OUGHT to be a front page headline at every damned paper that covers international news in the world.
But somehow, Maduro gets a free ride.
Castro seems to have a lot of friends among liberals who get their panties in a hell of a bunch over the least little thing in a place like the USA, but they never seem to have much if anything to say about the fact that there has not been a free election in Cuba since Fidel came to power.
Even in the old USSR during the latter days of that country, the government tended to lock up and isolate anybody brave enough to oppose the government rather than put them six feet under. That is bad for relations with the rest of the world, and much harder to hide than just jailing or exiling opposition members.
The Maduro regime is about as low life as any on the face of the Earth at this time, possibly excepting North Korea.
Anybody that thinks otherwise is either stupid as a fence post, or unwilling to actually LOOK for the news about that country that DOES make it into the msm.
Hey OFM, I’m not sure who is actually in power in Cuba these days but I have a hunch it is no longer the old Castro brothers. They may still be there in name and as figure heads but as for real power, I dunno. As for Venezuela that place is and will be a basket case for a long long time to come with or without Cuba’s help. I think the Venezuelan people will get rid of the Maduro regime in the not too distant future but whoever takes the reigns of power won’t be able to fix things either.
Hi Fred,
You are probably right, just about for dead sure right, that power in Cuba has passed on to a new generation but imo the people holding it are most likely high ranking younger members of the Castro regime.
I hope opening up relations works better and faster than the old isolation strategy.
With a little luck, the whole damned old commie system will crash of it’s own weight, once there are enough tourists and businessmen around to make it hard or impossible for the bosses to target any new political opposition without too much negative publicity.
Some folks say that in the old USSR, even the fairly well to do upper level bureaucrats eventually figured out that truck drivers in the west lived as well or better than factory managers under the soviet system, and every body just got to the point they were not willing to pretend they believed in the commie system any longer. At some point the secret police and crooked cops simply have to give up.
You can’t lock up EVERYBODY, and if you are cop you go home to find that your own kids hate your guts.
It is hard to say what might happen in Venezuela AFTER the Maduro regime collapses, but it WILL , eventually , in my opinion. Hopefully it will go down without a full fledged civil war.
In one sense, is too damned bad Venezuela has not declared war on the USA, meaning we don’t have a good excuse to invade, kick Maduro’s ass, and help the country get back on it’s feet the way we did Germany and Japan after WWII.
Venezuela would probably a good candidate for that sort of thing, if it were still possible, given that the people are apparently not not divided into nut case religious and ethnic factions, and they have at least HEARD OF the concept of rule of law.
My sarcasm light is BLINKING.
Our current day political leadership can hardly manage a three car funeral procession, but it can destroy an anvil with a rubber hammer.
I don’t see this as anybody’s fault, in particular. The world is beginning to spin out of control in a lot of respects. Keeping things on an even keel is getting tougher every year.
It is very hard to accomplish anything NEW and USEFUL when all your time and energy are consumed putting out fires, and things are so bad these days most national leaders spend about all their time putting out fires.
But I do not believe in giving up.
With a little luck, the people of both Cuba and Venezuela have a bright future, for at least for a few generations. Both countries are well situated to prosper, even in a world running short of a lot of critical resources.
Hi Jimmy, Cuba has been pretty much an economic basket case ever since Fidel first took power, supported by the old USSR subsidizing Cuba, and when the USSR gave up, the Chavistas stepped in.
It is a family sort of affair. The Castro regime has FORGOTTEN more about running an authoritarian or police state government, and staying in power permanently than anybody else in the world. The Chavistas went there early on for advice and support, and Castro supplied them with doctors, security expertise, etc.
Perhaps it would be more accurate to say the Chavista’s and the Maduro regime went to the Castro regime for friendship, mutual advantage and EXPERT advice and personnel , rather than “marching orders”.
Of course understanding this depends absolutely on the listener understanding and accepting that the Maduro regime is totally rogue, interested in NOTHING except remaining in power, and willing to do ANYTHING it can hope to get by with to stay in power.
If the fact that the eight new members of the national assembly who are having trouble getting seated are all opposition members, and the old assembly just added a whole slew of new judges to the national supreme court at the last possible minute, with no previous announcements, etc, does not convince you of the nature of the regime, then it is a total waste of time to discuss it with you.
If the leaders of the populist governments of the South American countries (e.g., Venezuela, Brazil, Argentina, Bolivia and Ecuador) were cut out of the same cloth as populist cauldillos (strongmen) like Castro, Putin, Vargas, Peron or Cardenas, then there wouldn’t be any opposition around to give Maduro, Rousseff, and Fernandez a hard time. The opposition leaders would have long ago found themselves six foot under, in prison or in exile.
And even the evangelists of neoliberalism, like Wells Fargo Bank, admit that the economic and political problems being experienced by these countries, whose economies rely inordinately on the exportation of primary materials, are being caused by low commodity prices. A recent study by Wells Fargo says that the Kirchner’s ability to bribe the electorate, for instance,
So Argentina’s new right-wing, neoliberal government is burdened with the unenviable task of taking the punch bowl away.
And as the New York Times reported, this isn’t what the electorate had in mind when it elected Macri:
“If the leaders of the populist governments of the South American countries (e.g., Venezuela, Brazil, Argentina, Bolivia and Ecuador) were cut out of the same cloth as populist cauldillos (strongmen) like Castro, Putin, Vargas, Peron or Cardenas, then there wouldn’t be any opposition around to give Maduro, Rousseff, and Fernandez a hard time. The opposition leaders would have long ago found themselves six foot under, in prison or in exile.”
Bullshit.
When things get BAD ENOUGH, it is no longer possible for such a government as the Maduro regime to imprison or kill or exile the opposition. That would involve so much violence and such economic mayhem as to destroy the regime outright.
The ability of the world to look the other way is amazing, no doubt, but there ARE limits even to willful blindness.
When things get BAD ENOUGH, the opposition has nothing to lose anymore,and when ENOUGH people say ENOUGH, it is no longer possible to murder or imprison or exile most the opposition leadership.
Furthermore, even the ordinary man and woman on the street supporters of an authoritarian government tend to get nervous when their leaders start killing and locking up and exiling TOO many people. It is easy to believe or at least pretend you are on the side of the GOOD GUYS so long as you get your preferential treatment, but not so easy when you must face up to the fact that if you step out of line, YOU may disappear into a prison for decades, or just disappear altogether.
Witness the history of Solidarity in Poland for instance.
It took a long time, but eventually the opposition was able to overcome the controlled press, the captive courts, the secret police, etc.
Oldfarmermac: “When things get BAD ENOUGH, it is no longer possible for such a government as the Maduro regime to imprison or kill or exile the opposition.”
Would that, perhaps, be why the Venezuelan government allowed the election to go ahead on time and in conditions that allowed them to get voted out? Plenty of governments with a good deal less support than the PSUV have found ways to call off or manipulate elections so as to stay in power. Heard of Zimbabwe? How about Burma? Venezuela has a much lesser amount of political repression than most Third World countries, something doubly remarkable considering the number of Right wing coups and attempted coups it has had to deal with.
In the event that the renewables transformation does indeed happen, South America could become the new Middle East, with Argentina, Bolivia and Chile making up the core of the new OPEC of lithium.
Almost 60% of the world’s lithium resources are in South America. As the United States Geological Survey explains, these could eventually become economical to produce if lithium prices get high enough:
Glenn wrote:
“These could eventually become economical to produce if lithium prices get high enough”
That’s sort of an oxymoron. If prices get high enough, it becomes non-economical to produce.
Unfortunately Lithum batteries are not a long term solution. They are danagerous (risk fire), they have limited number of recharges. Better than Lead-Acid, but not better enough. I believe the answer is develop a battery that does not rely on a chemical reaction with the electrodes.
Lithum battery development was driven by the handheld gadget market (ie smartphones and small portable electronics) that need a high density/low weight rechargable battery. However a Battery for grid storage/home off-grid storage does not need a light-weight battery. It just needs to be cheap and provide a very large recharging cycles. The money pouring into Lithum battery R&D is sucking resources away from other battery tech.
Hi Techguy,
On the lithium battery use for grid backup I agree, the batteries for grid backup do not need to be lightweight, nickel metal hydride or even lead acid might work.
In any case research on all types of batteries is needed, though the best solution to intermittency of wind and solar is excess capacity and widely dispersed resources connected by an HVDC grid.
Cruddy low quality lithium based batteries are definitely a fire hazard, but so are gasoline and diesel fuel. I have seen PLENTY of conventional cars that burnt up, but then I am an old gearhead, and used to spend a lot of time in garages and wrecking yards. My guess is that cars such as the Chevy Volt and Nissan Leaf will prove to be as safe or safer, taken all around, as other comparably sized cars.
The Chevy has both the big battery and gasoline on board, but otoh, it has a lower center of gravity, and will be less prone to rollover as a result than other similar sized cars.
We don’t know yet how long lithium batteries will last, at least not in automobiles, but indications are that they will give good service on average. One hundred fifty thousand miles seems to be a reasonable estimate,for the ones being built TODAY, and incremental improvement is a given.
A Leaf or Volt with a socalled worn out battery might still go another fifty or more thousand miles on battery power, but just not as far on a single charge.
Nor do we know how much it will cost to recycle ev batteries. There are not enough of them out there yet for anybody to scale up the technology, or even put much effort into developing it-YET.
We do know that if an EV is well designed, swapping out the battery is going to be only a semi skilled labor job that takes only a couple of hours max.
If battery prices come down substantially, putting a new one in an electric will make it functionally near new for another hundred thousand miles or more. NO transmission, No radiator, no this that and the other to give trouble , just the electric motor and the battery and one set of gears.
Well made electric motors will outlast the original owners in most cases. One of my neighbors has a refrigerator that has been in continuous service for seventy five years now, no motor repairs. I have electric motors over fifty years old in regular use that have never been repaired.
Round and round beats the hell out of up and down.
I am not predicting that electric vehicles are going to save the life of Old Man Business As Usual, but they certainly have the potential to keep him out of the cemetery for some time beyond his former, pre electric vehicle expiration date.
LiFePo4 ( 3.2 V/cell ) are fairly stable. Different chemistry and flat discharge curve. In some applications they can even be deployed without Special Battery Management. They are allowed in many applications where LiPo (3.7v/cell) are not. Electro-Chem energy storage is what it is. Watt/hours more expensive than the Energy itself.
LiFePo batteries aren’t cheap and still suffer from degradation. They also have a very slow recharge rate of about 0.2C Unfortunately its just a “better” buggy whip, not a real solution.
FWIW: Despite some its short comings (low recharge efficiency & high self discharge) Nickel Iron batteries still appear the best option since they can be recharge about 10,000 times, about 5 times more than LiFePo batteries.
For my off-grid system (not implemented yet) I am going with NiFe batteries coupled with supercap banks. Supercaps can provide a lot of immediate power demand (ie motor startup) and reduce stress on batteries.
Modern ones can charge at 1C. However I would never charge any Li Battery at more than .5C. A123 was sold to the Chinese, which was unfortunate, since LiFe cells have major advantages over Lipo in many applications. It seems like LiFe cells could be more economical than Lipo’s if mass produced. They sure are easier to deal with. http://en.calb.cn/product/show/?id-629
Most of the lithium will be in the form of lithium salts used as medication to treat the depression that 9 billion humans will have 365 days per year.
South America has 58 percent of lithium deposits so all of humanity will migrate to Patagonia just to have a ready supply of anti-depessants at their disposal.
And some rye ergot to provide an adequate supply of hallucinatory spells for those afflicted with short-term bouts of sanity. Add some Jimson weed too, Hopi medicine men administered Jimson weed to unruly mean-spirited braves. Jimson weed will tame even the most surly of them all.
And the rye whiskey, too, of course. If the ocean was whiskey and I were a duck, I’d dive to the bottom and never come up … tree don’t fall on me, I’ll live ’til I die. Sing it, Tex Ritter. ?
As Bugs Bunny used to say, ‘agony, agony, agony, agony, agony … agony … agony … agony.
Lead acid batteries will just have to do after all that oil is gone in 45 years.
Lithium will have to be solely used by and for the pharmaceutical industry.
No exceptions!
Just keep in mind that Lithium just stores energy, it is not a source of energy.
Lithium batteries are recyclable. And nobody actually knows how many charge cycles they’ll last for when maintained in proper temperature conditions, because they haven’t failed due purely to age yet. (They’ve routinely failed due to temperature-based deterioration.)
Ron, you must include in equation 2 mb/d from Iran and Libya and also around 500 kb/d from iraqi Kurdistan in next 2 years. Iraqi Kurdistan is main reason why we in 2015 don’t see rebalancing, from mid 2014 to end 2015 iraqi Kurdistan put 1 mb/d oil on market.
You must also understand that oil is question of national security of US. What you think why Obama want so desirable Iran to be lifted sanctions on oil? Look, they introduce new sanction on Iran but not on oil.
So, if we have 1.5mb/d oversupply and put more 2.5 mb/d in next 2 years, that is 4 mb/d that must be “clean” from market. If non-Opec drop 700kb/d in 2016, peak will not be this or next year. But around 2020. we can see a lot smaller increase in production. But that is not 100% certainly
Ron, you must include in equation 2 mb/d from Iran and Libya…
It is estimated that Iran could possibly bring 500,000 bpd on line within one year of sanctions being lifted. Their fields are in terrible shape and depletion has continued without any new infill drilling to offset that. How long will it take Iran to bring more than half a million bpd on line? There is no way of knowing but it will take years… if ever.
As for Libya, there is no way of knowing when, if ever, they will get their political problems fixed. It is likely that they will have problems for many years. It is extremely unlikely that they will bring enough new oil on line, within the next few years, to make any difference whatsoever.
Iraqi Kurdistan produced about 636,000 barrels a day in November and hopes to produce up to 1 million bpd by the end of 2016. That is doubtful but even if they make it that will not be enough to offset the decline from the rest of OPEC.
So, if we have 1.5mb/d oversupply and put more 2.5 mb/d in next 2 years, that is 4 mb/d that must be “clean” from market. If non-Opec drop 700kb/d in 2016, peak will not be this or next year. But around 2020. we can see a lot smaller increase in production. But that is not 100% certainly.
Okay, that 2.5 mb/d is just not going to happen. An extra half million from Iran plus an extra 370,000 bpd from Kurdistan will still put the number at less than one million bpd. And you completely ignore the decline from the rest of OPEC and from Non-OPEC nations.
Why do so many people count only the increase in production from a very few countries and completely ignore the decline from the rest of the world?
From the Iraqi Kurdistan link I posted above:
Production growth in the northern Iraqi region is dependent on a steady stream of payments flowing to the investors. Genel cut its 2015 output forecast in October citing payment delays, while DNO said Tuesday its Kurdish volumes have fallen by 50,000 barrels a day since the spring. Gulf Keystone says it won’t invest to boost Kurdish output until arrears are paid.
“We could have been at 1 million barrels a day by now had it not been for the ISIS disruption for 2014, which slowed down all the activities,” Hawrami said at the conference. “We are one year behind, but it will happen through 2016.”
And that depends on a whole lot of things that are really not likely to happen.
Hi Ron,
In my comments I explicitly considered the rest of the World that is declining at about 500 kb/d each year since Jan 2009. The big 8 have been increasing at about 1.5 Mb/d each year from Jan 2009 to June 2009 based on EIA data. In each case I looked at C+C data only. In your post you talk about OPEC decline so I looked at the “Big 3” (Saudi Arabia, Iran , and Iraq) that I think will be able to increase output in the future compared to the “rest of OPEC”.
From Jan 2009 to June 2015 I have plotted each of these two groups (kb/d) using EIA data. The rest of OPEC has been relatively flat with the big 3 rising over that period.
If the Big 8 (add US, Canada, Russia, China, and Brazil to the OPEC 3) can increase output by more than the decline in the rest of the World, then the 2015 peak will be surpassed. If we assume the Rest of the world declines linearly rather than exponentially (which is slower) at the same rate as 2009 to 2015 (500 kb/d annual decline), then the big 8 only need to increase output enough to offset the decline from the rest of the World.
Lets assume the big 8 simply maintain 2015 output in 2016 and the rest of the World declines by 500 kb/d, let us also assume that the rest of the World continues to decline at the 500 kb/d annual rate until 2019, so this would mean output falls by 2000 kb/d in total over 4 years. Let us also assume the big 8 increase output by half the 2009-2015 annual rate of increase of 1500 kb/d (so 750 kb/d) from 2017 to 2019. That is a total increase of 2250 kb/d over three years and a new peak would be reached in 2019, 250 kb/d above the 2015 peak.
Chart below with OPEC big 3 and rest of OPEC.
Lets assume the big 8 simply maintain 2015 output in 2016…
Good grief Dennis, we cannot possibly assume such a ridiculous assumption. That will not happen. Let me repeat, that will not happen. The big 8 will show a serious decline in 2016. End of story.
Hi Ron,
The “big 8” have been increasing output at about 1.5 Mb/d each year from 2009 to 2014. I am suggesting this rate of increase will be zero (or 1.5 Mb/d less than the recent past). How much do you expect the “big 8” will decrease in 2016? Note that my scenario suggests World C+C will decrease by about 500 kb/d in 2016 (12 month average) relative to 2015 average annual C+C output.
How about you put your cards on the table and say what your expectation is for World C+C output in 2016 will be?
It is pretty clear that World C+C output of 78.9 Mb/d in 2016 (assuming about 79.4 Mb/d in 2015), would be too high in your mind as you think my scenario is too high.
Could we have your estimate for World C+C output in 2016, mine is 500 kb/d less than 2015 average C+C output, what is yours?
How about you put your cards on the table and say what your expectation is for World C+C output in 2016 will be?
Less than it was in 2015.
Hi Ron,
Well that covers a lot of ground, it could be 1 b/d less or 50 Mb/d less,my estimate is about 550 kb/d less in 2016, then output will gradually climb by 200 kb/d on average from 2017 to 2019 and 2019 will surpass the 2015 peak.
Naw, it just ain’t gonna happen Dennis. What you are not figuring into the equation is the natural decline in production between now and 2019. The decline will be greater than any increase in production.
2016 production will be less than 2015.
2017 production will be less than 2015.
2018 production will be less than 2015.
2019 production will be less than 2015.
Crude oil production for the rest of time will be less than 2015.
Understand I am not talking about natural gas liquids, or any other kind of liquids. I am talking abut crude oil, which very unfortunately must include condensate because only OPEC and a couple of other countries gives crude only production numbers.
So I am talking about crude + condensate. C+C peaked last year, 2015.
Hi Ron,
Time will tell.
The Big 8 have been increasing annual production at about 1500 kb/d each year from 2010 to 2015, the rest of the World has been declining at about 550 kb/d each year on average.
My conservative scenario suggests the rest of the World continues to decline at 550 kb/d and the big 8 takes a one year break in increase with increases in Iran and Iraq offsetting declines in the US and Canada and the other 4 remaining flat as a group.
Then the big 8 resume their increases at half the previous rate (750 kb/d) which results in a new peak by at least 2019. If oil prices rise more quickly and the World economy grows at the rate forecast by the IMF, a new peak might be reached in 2018, would be surprised if a new peak is reached on 2017 and am confident that 2016 will be lower than 2015.
Your prediction could be read as 2019 being 4 b/d less than 2015, which would be a plateau as far as I am concerned.
If that were to happen it would be because of a minor recession keeping demand low and prices low, possible, but not a high probability in my view.
We will see whose guess is better in a few years time, by 2030 things will be clearer.
If i can get be involved.
I expect more oil from Iran, Libya and Iraq(together 1-1.5 mb/d more), less oil outside these 3 countries, 600-700 kb/d less, so world production will be higher in 2016 for 300-500 kb/d than in 2015.
But i see higher demand than IEA projected, 1.5-1.6 mb/d demand. Surplus supply on end of 2016 around 750 kb/d-1 mb/d from today 1.5mb/d.
Only marginal higher prices, $40-45 range.
oil from Iran, Libya and Iraq(together 1-1.5 mb/d more)
Iran may increase production by as much as .5 mb/d. Iraq, not much, Libya, likely none. Do you really expect peace to break out in Libya? On what grounds do you make this assumption?
oil outside these 3 countries, 600-700 kb/d less,…
That’s less than 1% of the remaining world’s crude oil production. You expect a 60% decline in the price of oil to cause a 1% decline in production… in the second year after that decline.
It takes about a year for the decline in rig count and upstream investment to hit. The year of that hit is 2016. To expect only a tiny, 1% or less decline in production, I believe, is totally unrealistic.
On experience of 2014 and knowing that bunch of groups in Syria controls, behind the scene, Saudia Arabia, Qatar, some western countries…
This happend in 2014,
http://cdn.oilprice.com/images/tinymce/Evan1/ada590.png
Oil Slips as Libyan Production Returns
http://www.wsj.com/articles/crude-oil-price-falls-on-high-supply-concerns-about-demand-1411382733
Look how they rump up production nearly 600kb/d even if war not ending.
Reason for this was pressure on oil price because Russia in Q4 2014, when Russia have huge debt payment on foreign debt.
With QE and low rates everything is possible. You think that this level of USA oil production today sustainable without cheap money pour in?
Also, do you believe that IEA, EIA or OPEC will admitted that there is not enough oil on market?
In december 2014, IEA make prediction of 900 kb/d increase in demand through 2015. In december 2015 IEA said it is 1.8 mb/d in demand for 2015, 100% miss prediction of demand side. You think that is not intentional huge miss? I understand 20-30% miss but 100%…
There is war brewing there.
Another chart with Big 8 and Rest of World (ROW) using EIA C+C data in kb/d from Jan 2009 to June 2015.
series 10 is Big 8 (Saudi Arabia, Russia, US, China, Canada, Brazil, Iran, and Iraq)
series 11 is Rest of World
Problem is Dennis, they all end in June 2015. In about 5 hours from now it will be 2016. The Big 8 are down after July 2015, down a lot.
Hi Ron,
Notice how the line through the data is below actual output through June 2015, even if the decrease from July to October is below that line, the decrease would need to be over 300 kb/d each month for the August to December period for the 2015 average to be less than the average for the linear trend.
Uhhhh… I guess so Dennis. But we don’t even have the first iota of 2016 data yet. That will be what I will be looking at.
Hi Ron,
The past is not hard to predict 🙂 The drop in output in the Jodi data will drop the average output for 2015, I think it quite unlikely that the World will abruptly stop the increasing oil output which has been an average rate of roughly 950 kb/d from 2010 to 2015. There will be a temporary dip in 2016 of about 500 kb/d, this is a change of 1450 kb from the rising trend from 2010 to 2015 or about 1.8% less than the trend. This drop in output may be enough to get the oil market back in balance and then oil prices will rise and investment in new wells will increase.
Hello Denis, OPEC decided to lower production at lot in 2009 (from Q2 2008). What happens to your graph when you include pre 2009 years ? For example 2007 and 2008.
Hi Chris,
World output was pretty flat over the 2005 to 2008 period, I picked 2009 as the starting point because that was the year output started to increase.
I do not expect that trend will continue, I expect the slope will decrease until a maximum is reached in 2023.
In Jan 2010 World C+C output returned to the average level of 2005 to 2008, so using the trend from Jan 2010 to June 2015 we have an average annual increase in output of 950 kb/d. Chart below shows the big 8 increased at about 1500 kb/d each year and the rest of world decreased at about 550 kb/d over that period.
Thanks for your reply (and for your work and contribution to this site). I think we are close to the peak oil. 2015 could be a local or global peak. It is difficult to know for sure currently.
The current trend is oil production increasing (at least until half 2015). 2016 will probably be lower following the huge #rigs decrease. The big question is how low prices will impact global production.
For the US, it seems oil companies are more and more in financial troubles.
Russian Federation seemd to increase production at the end of 2015.
There is a risk of increased tensions between SA and Iran/Iraq. What will be the impact on oil production and price?
Doubting the peak in 2015 is scientific thinking. We don’t have to over interpret data. Most of Ron’s arguments are however valid and we will most probably have a decrease in production this year (as in your model). Predicting next years is difficult in this world where all producers are not playing the same game with the same rules.
I am very curious about the future production in Saudi Arabia and US. These two big players could be in a very bad situation by the end of the year. How will they recover is a big question.
Hi Chris,
Happy to oblige. Ron is correct that oil will peak, we only disagree about whether it will be 2015 or some later year (such as 2023). I think the 2015 peak will be surpassed by at least 2019 (it might be 2018, but 2017 is not that likely).
We probably wont really know until oil prices are above $130/b (2015 $) for an average annual oil price. If that happens by 2020 and the 2015 peak has not been surpassed (during the 12 months with high oil prices), it may be that 2015 is the global peak, we won’t know until 2020 or beyond (possibly even 2025).
It seems Russia and Saudi Arabia will be in good shape in 2016, drops in output in the US and Canada may be matched by increases in Iraq and Iran. Brazil and China will probably be flat, overall I expect flat output from the “big 8” in 2016.
It seems Russia and Saudi Arabia will be in good shape in 2016,
Dennis, one thing that bothers me about your optimism is your apparent complete disregard for the mechanics of how both Russia and Saudi Arabia have been exploiting their oil resources. My understanding is that both countries have been using enhanced oil recovery and massive infill drilling to maintain or increase production from supergiant fields that have been producing for more than forty years.
My gut feeling is that baring a miracle, Ghawar and it’s equivalent in Russia could quite suddenly “water out”, resulting in a very rapid decline in world crude oil production that will be impossible to hide, especially if they both started declining rapidly within months of each other. This idea of a supergiant field suddenly experiencing a shark fin decline does not seem to be accommodated in your (webhubbletelescope’s) models. Am I missing something?
Am I right in saying that sudden (unexpected) discontinuities can really mess up models?
“Am I right in saying that sudden (unexpected) discontinuities can really mess up models?”
No, you are wrong. There is a natural decline in Gwahar and Samotlor (which may be called Russian equivalent of Gwahar), but decline rates at such supergiant fields do not accelerate suddenly and dramatically, unless there are some above “ground factors”.
Besides, Gwahar is not the only Saudi field.
And as regards Russia, there are hundreds of currently producing fields in different stages of development, and several new relatively large, mid-sized and small fields start production each year.
Alex, you appear to not understand what has been happening. Both Gwahar and Samotlor have a natural decline rate of somewhere between 8 and 19 percent. However massive infill drilling has reduced this decline rate to somewhere around 2 to 3 percent. They are drilling horizontal wells that takes the oil right off the top of the reservoir. This dramatically changes the decline rate until… until the water hits those horizontal wells right at the top of the reservoir.
That was what Islandboy war referring to, not the natural decline rate which you appear to believe has been happening. Infill drilling has dramatically slowed the decline rate while increasing the depletion rate. That will eventually lead to a shark fin decline in production.
To illustrate the point I am trying to make, I searched for images of enhanced oil recovery. I found an image at the following url and resized it to attach to this post:
http://energy.gov/sites/prod/files/styles/borealis_default_hero_respondlarge/public/co2_eor.jpg?itok=tq3q4rQs
I may be making a gross oversimplification of what happens with EOR but, looking at the illustration, when the area labeled “Miscible Zone” reaches the production well, as a layman, my feeling is that, it’s game over. Now unlike the illustration, oil fields are not flat and based on descriptions of what is going on at Ghawar that I have heard (from TOD days), the typical producer is a horizontal well in the upper portions of the reservoir, with EOR driving the oil/water boundary up, towards the producers. Unless I’ve got it all ass backwards, that makes matters even worse!
There will be nothing “natural” about the decline at some point, if my understanding is even remotely correct.
Edit: While I was composing the above, Ron explained what I was getting at but, the illustration still helps to make the point.
To further illustrate my point, I did an image search for “Ghawar oil field” and came up with one that shows “Sections of the Uthmaniyah region of Ghawar showing the water flood progression. (Original source: Figure 12 of Al-Mutairi et al, Water Production”
Now, if there is are aspects of Peak Oil that would cause sleepless nights, those images would have to be amongst them.
Hi Islandboy,
I don’t think it is quite as simple as you imagine. There are many wells and many fields in both Russia and Saudi Arabia.
If there was one well and one well in each country your fears would be justified. Old wells are watering out and new wells are being drilled all the time.
At some point the output from new wells will not be able to replace the declines from old wells, but the process will be gradual, not sudden. Keep in mind that we are talking about many thousands of wells and statistically I am sure you would find it implausible that they would all be shut in simultaneously (or even in the same year).
It would be a little like having 1000 people flip a coin and expecting 900 of them to be heads.
Naive question: what will world C & C production be the next time we see WTI at $80/barrel?
re Canada future production
Unless oil price skyrockets to the moon, I don’t believe Canada will increase production from their Oil Sands/Tar Sands. Reading our news clips there are a few new developments beyond the (not so) simple economics of production and sales. 1) The new NDP Govt. is no longer going to simply underwrite infrastructure costs in Alberta without raising the Royalty Rates and changing the Royalty Regime. Right now it is extremely complicated but the perception is that a cheap lunch is provided for foreign multi-nationals. (Not completely true). There also may very well be a ‘sales tax’ in Alberta which might also change the cost of construction. 2) The Paris talks and our new Trudeau Govt. indicates a change from Harper’s “Everything for Alberta Tar Sands Industry” is our priority. A common mindset by a majority of folks not employed by the Oil Industry is that Bitumen is a dirty and climate changing product and that maybe plans for increased production should be left in the ground and on the drawing boards.
Excellent Royalty Explanation Site:
http://andrewleach.ca/oilsands/your-oilsands-royalty-primer/
“For a project in development, a change in royalty regime lowers the expected net present value of the project, and so has the potential to affect the decision to proceed with the project. All else equal, you would expect higher royalties to lead to a lower pace of development, with the impacts being larger the larger are the changes in the royalty rate. Some potential projects will be bankable at much higher royalty rates, while others will not. In the long run, there is also an important effect in terms of lease sales – the amount firms will be willing to pay for a lease is determined by the net present value expected from future development on that lease. Higher royalties lower the expected value for the proponent, and so will lower the amount of land sale revenue (of course, we’ve seen the reverse effect with conventional oil – lower royalties are partly responsible for record land sale revenues in the province).”
Virtually all forecasters predict continuous increase in Canada’s liquids production.
—————————-
NEB: Oil sands production to reach 3.3 million b/d by 2020
12/16/2015
http://www.ogj.com/articles/2015/12/neb-oil-sands-production-to-reach-3-3-million-b-d-by-2020.html
Canadian oil sands production is expected to reach 3.3 million b/d by 2020, up from 2.5 million in November, the National Energy Board said (OGJ Online, Nov. 11, 2015).
In situ production will be responsible for the majority of the increase, but production from mining will also increase.
The November oil sands production number represents 60% of Canada’s total oil production of 4.1 million b/d.
Overall expenditures to build or expand major oil sands projects in 2015 are expected to be $15 billion, down more than 30% from 2014. NEB said cancelled or deferred projects due to low oil prices now total more than 700,000 b/d.
—————————-
IHS examines oil sands costs, competitiveness
HOUSTON, Dec. 16
12/16/2015
By Paula Dittrick
OGJ Special Projects Editor
http://www.ogj.com/articles/2015/12/ihs-examines-oil-sands-costs-competitiveness.html
Canadian oil sands costs had moderated following years of cost escalations, but an IHS report said realities associated with the 2014-15 oil price collapse could see shift in oil sands’ relative competitiveness with other key sources of supply.
The new IHS oil sands dialogue report, entitled “Oil Sands Costs and Competitiveness,” explored past, present, and future trends and what a changing business environment could mean for the future competitiveness of oil sands investment.
“Prior to the oil price collapse, oil sands were competitive with other key sources of supply in the medium to high cost range, depending on the type of project,” said Kevin Birn, senior director of IHS Energy. “Lower prices are now lowering costs globally—including in the oil sands. In this paradigm, oil sands’ competitiveness position may shift—for better or worse.”
Oil sands production more than tripled—from 600,000 b/d to more than 2.3 million b/d—in 2015 from 2000, making oil sands a pillar of global supply growth.
IHS expects oil sands output will continue to rise to 3 million b/d by 2020, largely through the completion of projects that were already under construction.
Canada’s liquids production forecast: OPEC WOO 2015
A good resource for the oil sands is http://www.albertacanada.com/business/statistics/oil-sands-quarterly.aspx
At the moment there are maybe four largish projects in construction. Suncor Fort Hills (180 kbpd peak), Hebron (offshore – maybe 130 to 170 kbpd peak – covered by CAPP rather than Alberta oil sands report), CNRL Horizon phases 2B and 3 (up to 120 kbpd peak) and (I think – but may have been cancelled or delayed) Cenovus Christina Lake last phases (peak about 70 kbpd). These come on line 2016/2017 – after that nothing but lots of “On-holds”, “Announced” and “TBDs” in the project statuses. It takes about 5 years for major oil sands or offshore projects to go from pre-feed and FID to start-up at the best of times, but there are new national and provisional governments, new royalty regimes, lots of layoffs and company closures, and off-course oil prices about a third of what is needed to make a profit. I think OPECS figures are entirely demand driven and take no account of supply and financial realities, and in part might be politically motivated too – in order to back up the statements about requiring $10 trillion investment in exploration and production by 2040.
Japan is paying 28010¥ today for a metric ton of oil, 31.97 per barrel.
http://www.bnsf.com/about-bnsf/financial-information/weekly-carload-reports/
Petroleum cars at 7,595 hauled by the BNSF in week 51 of 2015.
Week 51 of 2014, petroleum cars were at 10,555.
Coal cars were off by some 13,000 in week 51 of 2015 compared to 2014’s carload report.
Ronald,
I feel the numbers for oil cars are about to get a lot less.
With the equalizing of WTI and Brent, there is no incentive to send Bakken oil to the Atlantic coast for refining. I feel as much as possible will be looking for a pipeline to the gulf coast, rather than a train trip to the east coast!
https://rbnenergy.com/express-yourself-dakota-kochs-bakken-crude-oil-pipeline-plan
The Koch Brothers seem to think the same will happen.
So they are behind it all! It’s a conspiracy to bankrupt Warren Buffet! lol
I am being sarcastic, I’m serious.
BNSF employees are being laid off, Williston has lost 6,000 inhabitants. Appears as though the handwriting is on the wall with the price of crude at give away levels.
At 37 dollars per barrel, 12 of them to ship by rail, you’re more than likely spot on.
Three billion barrels have been pumped out of the Williston Basin since 1951, so there is another four billion left in the ground. It is then a waiting game for decline and depletion to hit hard for Russia, KSA, Brazil, etc. The Mother of All Peaks is going to happen, after that happens, the remainder of Bakken crude will be in high demand. Just my opinion from observations.
The Bazhenov shale formation is in its infancy, the development is in the works now. Everything could change once again in five years.
https://www.oilandgaseurasia.com/en/news/core-analysis-helps-model-bazhenov-formation-deposits
Thanks for the reply.
Hey, watch this video: John Howe’s Triple Crisis of Civilization – Work in Progress
This is a video by a solar man. His web site is: Solar Car and Tractor.com But I find his views on oil far closer to mine than to your average solar advocate.
He has a book out: The End of Fossil Energy and Per Capita Oil
I will have a lot more to say about John and his book in later posts.
Ron
Ron, thanks for the video. I have passed it around here as an example to prove there are other guys thinking/doing the same things I do. But, both of us are R&D engineers and think of all that as fun, which it is.
Hopes for POB in new year.
1)When Horatio Hornblower and lucky Jack Aubry get into the third round of hurling ever more heavy broadsides of cusswords into each other, and are grabbing up their cutlery for boarding, the ref blows the whistle and cuts out the war game, noting we are in fact all on the same side and should act that way.
2)When people go on and on and on about price of oil, they make a little nod toward the fact that both first and second derivatives of price point to inevitability of solar/wind getting ahead real fast in near future.
3) Especially when all the powers and potentates right up to god’s rep. himself have spoken of that as an imperative (hence–carbon tax for certain sure soon).
You know . . . I’ll bet there are solar blogs where solar people can post and not complain about an oil blog talking about the price of oil. I’ll also bet no one talks about proppant there.
Find them. Have fun there. Bye.
Our gracious host Ron has made it clear he has no objection to comments about alternative energy, or overshoot, or any other topic that relates to the peak oil question.
Hi Old Farmer Mac,
Yes and that is why many of us keep coming back. Watcher is free to find a blog that discusses peak oil exclusively.
I personally love the wisdom shared by Wimbi and others that realize that fossil fuels will peak and alternatives will be needed.
And he doesn’t just talk about it, he does it.
Happy new year to all.
No complaint about price talk. But price of oil has gotta be strongly influenced by price of competition, no?
And so, talk about price in future should talk about influences on price, like, for example, probability of tax on it.
Last I looked, a tax on X had some sorta influence on the price of X.
And so also with the price of not-X, being the alternatives to X.
Well it looks like the price of not-X just got a lot cheaper in Nevada:
And at the same time X got a lot more expensive:
So it looks like it’s time for solar PV to sink or swim.
It’s the latest in what has become a world-wide trend (exceptions include Germany and China). As one of the commenters noted:
The power generating bureaucracies will not be able to keep their hands off the new solar toys, and in fact, see it as a way to expand their mission to serve the community.
The good news, perhaps, is that the federal subsidies for solar are now good until 2021 (and beyond) so any upgrades to new gizmos will still be subsidized. Yeah?
Arceus,
It looks like federal subsidies, which amount to 30% of the initial up-front investment, are not enough. On top of these, generous state subsidies, like those in California, are needed if much distributed PV capacity is to be achieved.
https://www.eia.gov/todayinenergy/detail.cfm?id=23972
So what you’re saying is…
[img]http://i.imgur.com/yeHW05M.gif[/img]
Arceus,
Your link doesn’t work.
The graph from Germany really tells the story:
2004:
Feed-in tariff: 0.58
Production cost FF: o.09
Residential rate: 0.17
Difference between feed-in tariff and residential rate: 0.41
Result: large number of distributed PV installations
2012
Feed-in tarriff: 0.36
Production cost FF: 0.10
Residential rate: 0.26
Difference between feed-in tariff and residential rate: 0.10
Result: small number of distributed PV installations
The people who invest in distributed PV do so mostly for self-regarding economic reasons, and not so much to “save the planet” as they so often scream from the top of their lungs.
When the state does not make these self-regarding economic reasons sufficiently attractive, through its rate-fixing regime, then all of a sudden these “planet savers” aren’t so interested in saving the planet anymore.
They’re only interested in saving the planet if they can do so on somebody else’s dime, plus another dime or two for good measure. Their motives are not so benevolent and other-regarding as they would have us believe.
I’m not saying that others don’t use these sort of deceptive, self-serving, self-reputation enhancement tactics too. What I’m saying is that all the holier-than-thou rhetoric which emanates from Team Green should be taken with a rather large grain of salt.
In short, here’s what I’m saying….
In Germany, the number of distributed PV installations plummeted when the feed-in tarriff was reduced from 53 euro cents to 35 euro cents.
Yeh, “Team Green” freaks me out too http://www.army.mil/article/160392/2015_marks_science__technology_breakthroughs/
As usual Glen likes to cherry pick data and post charts and information completely out of context to support his strawman arguments. The constant portraying of an evil Team Green to be fought against because of how they are fleecing the poor rate payers is but one example of his tactics. I find it tiresome and hypocritical to say the least and it adds nothing to honest discourse between adults.
To be clear there are certainly pros and cons to alternative energy such as wind and solar and Germany’s experiments with a nationwide transition to an ever greater percentage of alternative energy production have not been without problems and there are still many hurdles to jump over.
But the facts and the whole truth are very far from Glen’s ideologically based agenda of painting this transition as inviable and evil .
Glen’s claim that the current reduction in FIT corresponds to drop in rooftop solar installation is true, but so what?
That fact in and of itself tells us very little about the overall state of Germany’s very successful continuation in transitioning away from fossil fuels and nuclear energy.
Solar and wind compared to fossil fuels are relatively new technologies and their implementation has required financial incentives, again, so what?
This should not be a surprise to anyone with half a brain. The goal was to start the transition and it has worked. Now those incentives, BTW, they are NOT subsidies, are being phased out. That always was the ultimate goal.
So for those interested in the full story and not just in Glen’s Team’s Agenda, here is a link to the full PDF file from whence his chart came, titled:
Recent Facts about Photovoltaics in Germany
https://goo.gl/tXUm7I
The grown ups and honest brokers on this site can if they so wish read that PDF and come to their own conclusions about the state of PV in Germany.
Edit: The following information is found in the PDF. Just thought I’d put it here because I also find it very tiring to keep hearing about how alternative energy is being subsidized in Germany. It seems that is untrue, while fossil fuels and nuclear are indeed subsidized!
5. Subventions and Electricity Prices
5.1 Is PV power subsidized?
No. The support is provided through a surcharge. The investment incentives for PV power generation are not supported by public funds. Whilst fragmentary reports often quote figures relating to past and future PV power feed-in tariff payments that amount to hundreds of billions and term these “subsidies”, a true subsidy is provided by public funds. The EEG, on the other hand, makes provisions for a surcharge in which energy consumers make a compulsory contribution towards transforming the energy system…
5.2 Are fossil fuel and nuclear energy production subsidized?
Yes.
Policy makers also influence the price of electricity generated by fossil fuel and nuclear power plants. Political decisions determine the price of CO2 emission allowances, conditions
for filtering smoke and, where necessary, for the permanent storage of CO2 (carbon capture and storage, CCS), the taxation of nuclear power as well as insurance and safety requirements for nuclear power plants. This means that policy makers decide to what extent today’s energy consumers must bear responsibility for the elusive risks and burden of producing electricity from fossil fuel and nuclear sources…
Another interesting PDF file that also contradicts Glen’s arguments and cherry picked data!
This one from Stanford
Steyer-Taylor Center for Energy Policy and Finance
https://goo.gl/bggjqo
A Tale of Three Markets Comparing the Solar and Wind Deployment Experiences of California, Texas, and Germany
Felix Mormann, Dan Reicher, and Victor Hanna
VII. Conclusion and Outlook The preceding analysis compares the solar PV and onshore wind deployment experiences and policy approaches of California, Texas, and Germany to gain insights into what has worked well – and what hasn’t. In the process, we contextualize and clarify some of the most prominent (and controversial) themes in the transatlantic renewables debate, including soft costs, grid stability, intermittency, policy tailoring, and electricity costs. Notwithstanding the visibility and importance of these themes, they represent but a modest subset of the kaleidoscope of factors to consider for successful deployment and integration of solar PV, onshore wind, and other renewables. We hope that our work will inspire future research to include other jurisdictions,
technologies, and policy issues, such as the critical question
of the Energiewende’s overall impact on Germany’s greenhouse gas emissions. And we hope that this research will find its way into thoughtful policy-making and market mechanisms on both sides of the Atlantic.
To be clear, what I am saying, is that we really can do without stupid cartoons about the evils of the imaginary Team Green.
Facts and adult discussions is what I’d hope to see in this coming New Year. Political and ideological agendas have no place here.
Cheers!
Happy New Year!
Fred, you have the patience of a saint.
Having said that, I look forward to posting my monthly updates from the EIA’s Electric Power Monthly to what effect, if any, renewables are having on the balance of electricity generation in the US. For all I know, it could be the trends in this data that are causing such vehement attacks on renewables from certain quarters on this blog.
I have also compiled a spreadsheet of battery electric vehicle sales (as opposed to all plug in vehicle sales) in the US which I will be updating each month to try and spot any important, emerging trends and will post if/when I spot anything particularly interesting.
May I take this opportunity to wish everybody Happy New Year!
To be clear, what I am saying, is that we really can do without stupid cartoons about the evils of the imaginary Team Green.
I agree.
Fred Magyar,
Re: Subsidies
I really don’t care what you call them. You can call them “subventions,” “support provided by a surcharge,” gifts from Santa Clause or money the Tooth Fairy left you under your pillow.
The bottom line is this: The money that is lavished on renewables doesn’t grow on trees. Somebody is forced — by the long arm of the law — to pay it. Here’s how Bloomberg puts it:
That growth [of wind and solar capacity] was fueled by massive subsidies. Last year, German households paid 23 billion euros ($24.3 billion), about 572 euros per family, in feed-in tariffs, or surcharges on energy bills that guarantee “clean power” producers can cover their costs.
http://www.bloombergview.com/articles/2015-11-30/wind-and-solar-are-gaining-ground-in-germany
And what do ratepayers get for the “massive subsidies” they must pay?
To quote Bloomberg again:
Though solar generation accounts for 19 percent of Germany’s total capacity, it produces just 5 percent of the country’s electricity. For wind, these shares are 18 percent and 8 percent, respectively.
Tsk, tsk, tsk, Glen,
You were the one who posted the FIT chart from this PDF, not me…
Recent Facts about Photovoltaics in Germany
https://goo.gl/tXUm7I
So I went there and read the full document. That definition and explanation is straight from that PDF document. It wasn’t my definition it was theirs. And you were the one who referenced that document.
5. Subventions and Electricity Prices
5.1 Is PV power subsidized?
No. The support is provided through a surcharge. The investment incentives for PV power generation are not supported by public funds.
Got it?!
So please don’t complain to me about what it says or how it defines something, Ok? If you don’t like it take it up with the good folk from the Fraunhofer Institute.
I’m sure they will be happy to explain to you why they chose to use those words specifically.
Fred Maygar,
So let me get this straight.
If someone uses empirical data cited in a study, that means they agree with everything the authors say, including inconsequential assertions about semantics?
If someone uses empirical data cited in a study, that means they agree with everything the authors say, including inconsequential assertions about semantics?
No, first, I don’t think you have ever been interested in empirical data, as an honest broker, your goal seems to be to promote an anti renewables agenda at all cost, as to why, I truly don’t know, and don’t really care but it seems to be politically motivated. You are both a demagogue and an ideologue! And for as far back as I can remember you have been doing your utmost to promote this agenda. Maybe you get paid to do it maybe you are a true believer it doesn’t matter to me what your motivation is other than the fact that you are being dishonest and I’ve decided to call you on it.
Second, your modus operandi has been to consistently twist what anyone who does not share your views says. Worse, you attribute authorship of comments and or quotes to individuals who haven’t said what you claim they say and you engage in this tactic willy nilly.
Case in point regarding the statement from the Fraunhofer Institute regarding PV installations not being subsidized in Germany. They actually go to great length in that PDF to explain precisely why there is no subsidy, they clearly explain the difference between a subsidy and a financial incentive and also explain at length how this story of a subsidy is often mischaracterized in the media by individuals and organizations who for one reason or another have an anti renewables agenda… apparently people such as yourself! The are not shy about calling a spade a spade. They absolutely do not merely consider this an inconsequential assertion about semantics?
As for you, not content with putting your own spin on what the Fraunhofer Institute’s actually says, you then put your personal spin on Bloombergs words:
The bottom line is this: The money that is lavished on renewables doesn’t grow on trees. Somebody is forced — by the long arm of the law — to pay it. Here’s how Bloomberg puts it:
Really now?! Nice choice of words though, or are you just playing games with semantics there. The Fraunhofer Institute report also goes into explaining at great length why that is simply not true either. Shall we just call it a bold faced lie on your part. I say we should because that is precisely what it is!
That growth [of wind and solar capacity] was fueled by massive subsidies. Last year, German households paid 23 billion euros ($24.3 billion), about 572 euros per family, in feed-in tariffs, or surcharges on energy bills that guarantee “clean power” producers can cover their costs.
Fraunhofer Institute again explains why that statement is a twisting of the truth by omitting pertinent information and using the word subsidy out of context. Basically Bloomberg has a political anti renewables agenda as well, no big surprise there.
So no Glen, this isn’t about a minor semantic quibble you are basically a liar, maybe you are just deluded and in denial and actually believe what you write/say to be the truth. Frankly I find that increasingly hard to believe. At the very least you might be drinking the Bloomberg Koolaid.
Who knows maybe your friends over at Bloomberg feel threatened by what is happening with the continued growth of wind and solar. Perhaps they have no option but to fight dirty.
http://goo.gl/PjWoRT
Wind, solar power soar in spite of bargain prices for fossil fuels
By JoWarrick
The Washington Post
Published: 01 January 2016 09:52 PM
Updated: 01 January 2016 09:58 PM
Wind and solar power appear set for a record-breaking year in 2016 as a clean-energy construction boom gains momentum in spite of a global glut of cheap fossil fuels.
Installations of wind turbines and solar panels soared in 2015 as utility companies went on a worldwide building binge, taking advantage of falling prices for clean technology as well as an improving regulatory and investment climate. Both industries have seen stock prices jump since Congress approved an extension of tax credits for renewables as part of last month’s $1.14 trillion budget deal.
Orders for 2016 solar and wind installations are up sharply, from the United States to China to the developing economies of Africa and Latin America, all in defiance of stubbornly low prices for coal and natural gas, the industry’s chief competitors.
Who would have thunk it, eh?
Fred Magyar,
Like I said above, it’s of little importance to me what name we call the funds the government coerces ratepayers to cough up in order to pay for renewables. But since names seem to matter a great deal to you, we can call them “NOT subsidies” as you do, if that makes you happy.
For my part, I’m much more interested in reiterating the “bold faced lies,” as you have named them, than I am in engaging in endless and fruitless debates over semantics.
“Bold faced lie” #1: When the “NOT subsidy” for solar PV in Germany fell below 35₡ euro per Kwh, the number of these installatations all but ground to a halt, as can be seen on the graph you so graciously provided us.
“Bold faced lie” #2: Last year, German households paid 23 billion euros ($24.3 billion), about 572 euros per family, of “NOT subsidies” on their electric bills. These funds were subsequently redistributed to “clean power” producers.
http://www.bloombergview.com/articles/2015-11-30/wind-and-solar-are-gaining-ground-in-germany
“Bold faced lie” #3 German industry pays none of these “NOT subsidies,” as households are forced to pick up the entire tab,
“Bold faced lie” #4: As a result of the “NOT subsidies” German households are compelled to pay, they end up paying more for electricity than just about anybody else in the world.
“Bold faced lie” #5: For all the generous “NOT subsidies” showered on “clean energy” producers, only 13% of the total electricity produced in Germany in 2014 came from solar and wind.
http://www.iwkoeln.de/infodienste/iwd/archiv/beitrag/versorgungssicherheit-nicht-ohne-fossile-energietraeger-243705?highlight=Energiewendce
Hey Glen, Those poor hapless German rate payers in your picture sure look like they are truly suffering under their dictatorial government. I don’t know how much time you have actually spent in Germany but if you read the two PDFs, both the Fraunhofer and the the three examples of California, Texas and Germany comparison, you find that despite all those surcharges and fees most Germans households still pay LESS than most US households for electricity despite a very deliberate decision by the German government to make electricity expensive!
BTW,Should the German ratepayers for any reason not like the laws in Germany they can decide to exercise their rights and change them.
5.4 Does PV power generation make electricity more expensive for householders?
Yes.
However, private households bear many additional charges within their electricity bill.The German legislature sets the principles for calculating and distributing the EEG surcharge,and other taxes and fees, the effects of which are currently detrimental to householders.
Figure 17: An example showing components making up the domestic electricity price of 29 €-cts/kWh in 2014 (CHP: German Combined Heat and Power Act; German Electricity Grid Access Ordinance (Strom-NEV): easing the burden on energy-intensive industries; concession fee: fee for using public transmission lines).
A typical three-person household with an annual power consumption of 3,500 kWh paid roughly 29 €-cts/kWh in 2014. Figure 17 shows the breakdown of this electricity
price in an exemplary manner. The electricity levy was introduced in 1999. According to
2015_Oct_16_Recent_Facts_about_PV_in_Germany.docx05.11.15 24 (87) the law, the levy intends to make electricity more expensive; the proceeds go principally into the public pension fund. Private households must pay value added tax on the electricity levy and the EEG surcharge.
Maybe you should go live in Germany for a few years, apparently the hapless ratepayers there need you to save them from their oppressors!
But for now please stop posting this stuff you are just embarrassing yourself! And yes, you continue to misrepresent the truth and distort it!
BTW this is from your Bloomberg Link:
In Germany, however, there’s continued public and political support for the subsidies. They were slightly reduced in 2015, but they will increase next year as wholesale energy prices fall (the total energy bill for the typical family will thus remain the same). There’s a good reason why the German government feels confident about pushing on with renewables development. Energy storage may soon be able to level out the weather-related supply jumps at prices that will make it attractive to energy companies.
Despite Bloomberg’s insistence on talking about ‘SUBSIDIES’ which Fraunhofer Institute has gone into rather extensive detail explaining why that is NOT what they are. The majority of the Germans apparently are still in full support of their government’s policies regarding alternative energy.
Oh, final note: Since you live in Mexico why don’t you worry more about helping the Mexicans, it seems to me the Germans are doing just fine and aren’t in need of your help.
In most of the US much of the action is behind the Meter, so Some positive unintended consequences for the Party(s) behind the meter. What happens behind A ONE WAY meter is NONE of the Utilities business. Examples: A – System hardware is evolving to support multiple microgrid mode(s). One is where the grid can be just an input ie. Outbacks Grid Zero modes. B – http://www.solaredge.com/files/pdfs/products/feed-in_limitation_application_note.pdf Defection is a utilities worse nightmare.
http://www.zerohedge.com/news/2015-12-31/billionaires-battle-buffett-beats-musk-nevada
Follow the Money. PV is great when Buffet owns them, but you can’t play in my sandbox. It aint over till it’s over.. Wonder about Nevada’s re-allocation of Powerwall’s . IIRC, The Monthly Meter subscription covers distribution costs in many states, especially ones with little ice and hurricanes.
Gotta wonder what his motivation might be? Given that he is one of the wealthiest individuals on the planet, is 85 years old has had a bout with prostate cancer and has pledged to give away 99% of his wealth. Why would he be against helping the average home owner who has installed PV in Nevada. What exactly does he have to gain in this matter.
Was this a personal vendetta against Elon Musk? Something is rotten in the state of Nevada and it just doesn’t add up!
Warren’s Job is to protect BH shareholders. One of the disruptions of DG is that that it is often paid for only once. Generation resources by IOU’s are effectivly mortgage and can be paid for multiple times over by Rate payers. In the case of one utility, they are garanteed 10% ROI ON TOP of all costs. So the effective rate can be like 14% after they do all stuff they think they have to do. ie. Buy politicos and Teslas, sponsor Ball Games, 5k’s, Shelters, Girl Scouts, etc.
I’ve know about John and his solar tractor for a long time. He reminds a bit of wimbi. 🙂
To me his thinking and views speak directly to my personal ongoing tension between hope and doom.
I agree with him that there are too many people on the planet and that the American lifestyle is the least sustainable lifestyle of any people on the planet. I wish people would understand and embrace the fact that we can not continue to use fossil fuels as we have until now. That means profound changes in the way we live and the choice of technologies we choose going forward. Those who are against the coming transitions because of their ideology will find themselves on the wrong side of history.
Americans will soon have to come to terms with the fact that their lifestyles are indeed negotiable. And that maybe the alternatives are actually better than what we have now.
Hi Fred,
Agree 100%. Higher prices through depletion and/or taxes will help the transition happen. Better education for women worldwide will help with the population problem.
It is pretty simple, educated women have fewer kids, so education is key.
You also have to (a) legalize contraception and (b) make it legal for women to work and save their own money.
Educated women have fewer kids *if* they have the *option*. If they’re economically totally dependent on men (as in Saudi Arabia, though the rest of the world has mostly legalized women working and owning property) they don’t have the option. If they don’t have any access to contraception, they mostly don’t have the option (since most people are not willing to live without sex).
Fred Said – “Americans will soon have to come to terms with the fact that their lifestyles are indeed negotiable.”
And the other 7 billion who desperately want and are demanding that lifestyle too?
Hi Jef,
My point is that most Americans really believe that their lifestyles don’t have to change and that they never will.
BTW most of the other 7 billion people on the planet do not live anywhere close the American lifestyle in terms of total energy consumption.
While there are a few nations on earth that are even more energy hogs than Americans, very few societies on the planet consume as much energy on a per capita basis as Americans do and the vast majority of the population of the planet seem to be able to make do with significantly less and apparently are not be all that worse for the wear because of it.
To be clear I’m talking about industrialized societies. I’m not talking about the billions already living in extreme energy poverty around the world without access to basic sanitation, water and food who are living on the edge of starvation.
Fred – I know the other 7 billion people on the planet do not live anywhere close the American lifestyle in terms of total energy consumption.
But they damn sure want too.
Jef: “But they damn sure want too (sic).”
As they say, there’s no country as insular as a big one. If Jef was correct, all of Europe would be clamouring to migrate to the US. But they’re not. The world would be perfectly happy with European living patterns, which are vastly more energy efficient than US ones. Yes, I know that even European oil consumption isn’t sustainable, but it goes to show how very large adaptations can be made with little or no deleterious effect on living standards. There is vastly more slack in the system than most people, especially in the US, imagine.
For example the US wastes billions every year on heating uninsulated houses. The Europeans… insulated their houses. Insulation gives a *higher standard of living* which *costs less money*.
Better. Yes! Less, a lot less general busyness, is in my experience a LOT better. I am far better off not doing a lot of stuff my friends are doing. Esp. flying all over the planet a couple of times a year.
I am guessing that with judicious choices of what we do and don’t do and what tech we use and don’t use, max. happiness peaks out at somewhere around 10% of the energy/person use of the present average in USA.
That’s still a huge amount relative to a huge number of people today, but it’s well within reach of energy tech we know how to do right now. real simple energy tech, fab. from “junk”.
Can I sellya a real steam engine, not a toy, having NO parts other than ordinary plumbing?
Can I sellya a real steam engine, not a toy, having NO parts other than ordinary plumbing?
Um, that’s sounds good but could you also me make a Stirling engine with a parabolic solar concentrator?
Happy New Year!
http://sunpowerinc.com/wp-content/uploads/2014/08/Doc0028-60-Cycle-AC-from-Sunshine-Solar-Stirling-Engine.pdf
Old idea. Been done many times. Problem, $ relative to a Briggs engine.
I got an old Briggs and Stratton flat head garden tiller engine running on nearly straight ethanol once, in the form of John Diesel, which you could once upon a time buy in the local liquor store at 190 proof. All I did was enlarge the openings in the carburetor main and idle jets.
It was hard to start, but once hot it ran ok with just a little gasoline mixed in with the grain alcohol. I believe it would have run fine on straight ethanol, once started and warmed up.
Producing small amounts of ethanol for really important work,such as running a tractor, would not be out of the question.This would be substantially more efficient than feeding a mule or steer year around just to work that animal a few days plowing etc.
You do after all have a lot of first class chicken and cow chow left over after you ferment grain .;-)
Hell, you could eat it yourself, in a pinch.Mash is high to very high in good quality protein, depending on what kind of grain you start with.
Fred. After a cuppa tea I wake up a little and realize i should not brush off the solar stirling idea so off-handidly as an oldie and not so goodie.
Then was then and now is now. Now people might want to pay more attention to those little engines. They were actually damn good, albeit absurdly expensive, as anything sponsored by NASA has got to be. Outstanding efficiency and life. Some of them are still in orbit after 15 years.
The Sunpower library is actually a goldmine of good info on their design, all of it now long since in the public domain. Maybe some guys in Brazil or Germany or some other place might want to grab up this free gold coin and run with it.
On expense, the intrinsic expense was not super high. I once heard a mass manufacturer quote $300/kW for one of the more elaborate engine/alternators in large scale production.
The simpler versions should be a lot less expensive.
OT but very cool information about our planet’s geology, natural history and continental drift etc… Has some implications for oil prospecting.
Scientists have used groundbreaking technology to figure out how the Earth looked a billion years ago
http://goo.gl/V9Uw2k
Fred I cannot get an email to you, they bounce back.
Drop me a line using my handle here in this forum at gmail.
Thanks for this link!
Sent!
From the link Fred posted:
“He convinced few contemporaries. Around the world, especially in the United States, hostile geologists denounced Wegener as a dilettante, a superficial interloper, and just dead wrong, according to Mott Greene, the author of a new biography of him. The coastal likenesses were a coincidence, they said. In 1930, the discredited Wegener died on Greenland in yet another attempt to find physical proof of the theory.”
People are prone to being totally trapped, intellectually, inside the box of their own professional expertise.
Some extremely famous astronomer, who must necessarily have been WELL VERSED in math in order to be a leading astronomer, once said that the odds of an eyeball evolving were comparable to the odds of a tornado assembling an airliner out of a pile of scrap airliner parts.
This man, although he was obviously a brilliant scientist, was simply totally ignorant of the way evolution works, and so made a fool of himself. Any freshman biology student at any real university understands that evolution builds on it’s accomplishments, a bit at a time, over vast periods of time, and that between first cell that could sense light, and a human eye, there were countless millions of intermediate steps or versions of eyes , with the improvements being generally preserved, the duds being generally discarded on the basis of fitness.
I had a math professor who got a lot of belly laughs out of the lack of mathematical sophistication of the people who refused to accept the evidence for continental drift up until the sixties.
He correctly pointed out that any body with “elementary” ( to a math professor ) math skills could have told them they had two choices. They could either ACCEPT DRIFT , and look for the explanation , or BELIEVE that although the odds were a billion to one in favor of drift, according to the massive amounts of evidence clear and unequivocal, drift was not reality.
There is a hell of a moral to be gleaned from this story.
Experts do not necessarily know doo doo from apple butter when they venture to tell us what is, and is not, possible.
If solid science from one given field conflicts with solid science from another given field, the only conclusion that can be drawn is that some authorities, perhaps from either or both fields, are barking up the wrong tree.
Never say never without adding a few weasel word qualifiers to give yourself an out.
OFM,
The famous astronomer was Fred Hoyle. He worked out the basics of how elements are created in stars, to be available to form other stars after the first ones went supernova. Probably deserved a Nobel.
He later espoused and defended the idea of a steady-state Universe instead of an expanding one. Lost that one, along with panspermia and his contention that the fossil of Archaeopteryx in the British Museum was a fake. This is called Going Emeritus. (We have prominent examples of it today in Freeman Dyson, and incipiently, in Stephen “We must settle Mars!” Hawking.)
His first two novels, The Black Cloud, and Ossian’s Ride, are very entertaining.
Most of the critics of Wegener’s proposal of continental drift were in the Northern Hemisphere, where there was little evidence apparent at the time to support the hypothesis. There was also the point that, if continents moved they should leave tracks on the sea floor and they don’t. Cogent point. Most of the supporters of the hypothesis were in the Southern Hemisphere where there was much more accessible evidence in its support. They still couldn’t account for the lack of tracks on the sea floor, though.
Turns out that the picture of continental drift was wrong. Continents don’t move, plates do. Continents and sea floor together make up the upper parts of the plates. The evidence that cleared this up came from the Northern Hemisphere.
Science works this way, you see.
Hi Synapsid,
Perhaps I see more clearly than you think.
MY point about Dyson , thanks for his name, is that he made an utter fool and total fool of himself, because he lacked the depth of understanding of evolution REQUIRED of a freshman biology student, never mind a fully trained biologist.
The evidence WAS available to any scientist in the Northern Hemisphere who was willing to actually consider it.
It is true that the continents sit on plates, and the plates do the moving, but that does not change the fact that self satisfied know it all geologists flat assed REFUSED to pay any serious attention to good sound evidence, preferring to ignore it because they could not explain it within the framework of their own “we know better ( than you or anybody else ) ” arrogance.
My point stands. The dissenting geologists, the soil scientists, the biologists, etc, ALL had compelling evidence that the continents WERE once joined. AND in the end, they were proven right. The continents DO move in relation to each other, and the fact that they do so sitting on top of plates does NOT change that fact, it merely illuminates it.
My math professor made no bones about it whatsoever. He said pure and simple, the odds against the distribution of animals, plants, soil types , stone types, etc, being explainable by chance were ASTRONOMICALLY HIGH-AGAINST.
This sort of thing is not resolved like a chemistry experiment, which can be repeated easily in thousands of different laboratories all over the world. It is resolved by either saying the people pointing out certain evidence are charlatans, or incompetents, or by just ignoring them outright. Or by hearing them out. They did not get their hearing, for a very long time.
A biologist does not generally consider it necessary to go to another country for instance to verify the presence a particular species of animal,or plant, if reputable biologists working in that country report its presence, repeatedly.
A climatologist in America does not find it necessary to go to India to check up on the honesty of Indian climatologists who tell us how much rain fell there last year.
Now if you mean by ” Science works this way, you see” that scientists are just naked apes under their clothes like the rest of our species, I totally agree . 😉
Real science is about coming up with explanations of observations , rather than denying the validity of observations out of hand.
OFM,
Hoyle, not Dyson.
“…the odds against the distribution of animals, plants, soil types, stone types being explainable by chance…”
By chance? That would have been an odd thing to say. I wonder if anyone did?
Samuel Pepys pointed out in the 17th century that a map of the Atlantic Ocean suggested that the continents on the two sides would fit together. He didn’t account for how they could but I expect that he was just pointing to the appearance. Wegener was a meteorologist; he wanted to find evidence that the continents across the Atlantic from one another had in fact been juxtaposed at some time past. In the South Atlantic there’s a good deal of evidence to support the idea: the distribution of a little fossil called Mesosaurus (italics to be supplied by the reader) in two fairly small regions one in Africa and one in South America which fit together when the continents are placed together; ages and lithologies of rock sequences that likewise fit; same for regional patterns and ages of deformation. Things aren’t as tidy in the North Atlantic but an explanatory framework had been developed that seemed to give a satisfactory understanding of the data that were at hand. There was no reason a priori (italics etc.) to abandon that framework for the South Atlantic one, and as you’ve pointed out positions tend to become entrenched. The geophysicists continued to point out that there was no mechanism proposed for the continents to move, particularly without plowing through the sea floor. They were not doing so out of arrogance–they made a vital point.
That’s the way the problem remained until the 1960s. Two separate lines of investigation made it possible to supply a mechanism for, in effect, producing the Atlantic Ocean and dividing the New World from the Old. One was a proposal to explain dipping zones of earthquake foci (called Benioff zones) such as the one that extends eastward and downward from the west coast of South America; the other was mapping magnetic anomalies on the floor of the North Atlantic and dating the crust there.
Harry Hess at, I think, Columbia suggested that the Benioff zones might be caused by ocean floor sliding beneath South America and sinking into the mantle. He called the idea geopoetry, as he didn’t have an explanation for how that could happen. Vine and Mathews (I don’t remember their home institutions; one was American and one English I think) found that there is a pattern of magnetic anomalies of reversing polarities locked into the crust beneath the Atlantic Ocean south of Iceland, and that the farther a given section of crust of a given polarity is from the ridge down the middle of the Atlantic, the older the crust was. Viewed together with Hess’ suggestion, the picture is of oceanic crust being created at the Mid-Atlantic Ridge and spreading away from it either into a Benioff zone (east edge of the Caribbean) or to the edge of a continent (North America and Europe.) The model quickly gained acceptance, Northern Hemisphere as well as Southern, as it was found how many things could be explained by it (though there were holdouts, of course.) The geophysicists, for instance, could turn their attention to what made the plates move, now that there was solid evidence that it could happen without digging up the sea floor. And predictions could be made that could be checked, such as the leading edges of continents ought to be tectonically active and the trailing edges quiescent and if so then we could explain the presence of mountain belts within continents as zones of old collisions between continents, and…
A theory that yields testable predictions gets followed out, and the theory of plate tectonics was. The older theory of the South Atlantic wasn’t nearly so fertile and applicable in a straightforward way to a wide variety of observations. Sure, many workers presented with a proposal that seems outlandish will reject it out of hand; some will be intrigued and look into it; some will let it alone and concentrate on matters in hand, and wait to see if the proposal gains solid support or if it is supplanted by further work. All three occurred in the case of the idea of continental drift. Its successor, the theory of plate tectonics, was accepted rapidly and applied widely because 1) it supplied a mechanism, not just a description, and 2) it could be used.
Synapsid,
That is the old fight between hypotheses based on evidence and hypotheses based on mechanisms. In this case Wegener presented his hypothesis based on evidence, but there was no mechanism to explain it and theory acceptance was delayed until there was one. There are lot of examples of this confrontation.
Darwin proposed his hypothesis of evolution based on evidence, but at the time there was no explanation for the basic mechanisms required for evolution to work. It was needed a source of variability (mutations) and a mechanism to distribute that variability within the progeny without dilution (unnoticed Mendell laws, genes, and genetic recombination) on which selection could act. Much of the resistance to Darwin’s hypothesis by academia was from lack of mechanism. Darwin was acutely aware of that limitation and his “On the origin of species by means of natural selection”, which I read with great pleasure, is a compendium of evidence over hundreds of pages. Lots of evidence without mechanism was convincing to some scientists at the time, but not all.
On the opposite side Milankovitch presented his hypothesis on glacial cycles based on orbital changes as explaining mechanism in the 1920’s. Acceptance of his theory was delayed until 1970’s for lack of evidence that glaciations were taking place at a pacing compatible with his hypothesis.
What many people and scientists fail to understand is that proposed mechanisms are based on our incomplete understanding of nature, while evidence is not subject to our limitations. That is why hypotheses based on proposed mechanisms that lack solid evidence are often wrong, while hypotheses based on solid evidence that lack a mechanism are usually true in the end. That’s Darwin’s and Wegener’s history.
In the current climate change conundrum we have a similar confrontation between mechanism and evidence. There is ample evidence that the Sun’s variability has a disproportionate effect on climate. There are thousands of scientific articles on the issue. Yet we lack a mechanism that can explain it. We measure total solar irradiation (the energy that arrives to Earth) and the changes are too small to account for the observed climate variability. The academia has sided with the mechanism objectors as it did in Wegener’s time. I have no doubt that in the end those that defend a much bigger role for the Sun’s variability on climate change based on evidence will be proven right. Our knowledge of climate is just too imperfect to give much weight to a lack of mechanism that speaks only of our limitations. When solid, the evidence is always right.
The implication of a bigger role for the Sun is a smaller role for CO2, of course.
Darwin proposed his hypothesis of evolution based on evidence, but at the time there was no explanation for the basic mechanisms required for evolution to work. It was needed a source of variability (mutations) and a mechanism to distribute that variability within the progeny without dilution (unnoticed Mendell laws, genes, and genetic recombination) on which selection could act.
Javier, I think you are putting far too much weight on the “mechanism” here. Or more correctly, you are putting it in the wrong place. True, Darwin did not know the mechanism that caused variation. But he knew, with rock hard certainty that there was variation.
This rock hard certainty that there was variation was also known throughout the scientific world. And though the mechanism that caused variation was not known, the mechanism that enabled natural selection was known, it was variation in the offspring of every species. Thus evolution, or natural selection, was accepted by the entire scientific world long before we knew about genes or DNA.
Thus: The mechanism that caused evolutionary change in species over time? … Known… It was variation… which enabled natural selection.
The mechanism that caused variation? … Unknown… Or unknown in Darwin’s time anyway.
I respectfully disagree, Ron.
The idea of evolution had been accepted by many if not most of the academics in Darwin’s time. What was lacking was an understanding of the mechanisms. Different ideas were floating around like those of Lamarck and even natural selection was proposed previously to Darwin but not in a serious and scientific way. But if it not had been Darwin it would have been Wallace who would have developed the natural selection hypothesis. However despite the huge amount of evidence, natural selection was not immediately accepted as the mechanism driving evolution because it did not explain the generation and inheritance of variability upon which it acts. In fact we have evidence that there were scientists that accepted natural selection as simply one of several mechanisms upon which evolution was based. After all a synthesis between Lamarck and Darwin was proposed by some, like P. A. Kropotkin, and Darwin himself was Lamarckian in his proposal of pangenesis as a mechanism for heredity.
Due to the lack of a viable mechanism to explain the origin of variations and their heredity, between 1880s and 1920s, it took place what it has been called The eclipse of Darwinism, “the state of affairs prior to the modern evolutionary synthesis when evolution was widely accepted in scientific circles but relatively few biologists believed that natural selection was its primary mechanism“.
Like Columbus did not set out to prove the world round, because that was already accepted by all academics of the time, Darwin did not set out to prove evolution, because that was already accepted by all academics of the time. He set out to demonstrate that evolution took place through natural selection. He had the evidence but he lacked a viable mechanism, only a partial one. He really triumphed only after the modern synthesis provided the mechanism.
Javier, you said you had read “On The Origin of Species”. Darwin very clearly explained the mechanisms of evolution. The idea that “few biologists believed that natural selection was its primary mechanism”, I believe is just not accurate. Well, if you count high school biology teachers then that might be correct. Most biologist, at the high school level, believed God did it all, one way or the other. But here are the alternatives, given on your link, that biologists did accept:
Theistic evolution was the belief that God directly guided evolution. (This should not be confused with the more recent use of the term theistic evolution, referring to the theological belief about the compatibility of science and religion.)
The idea that evolution was driven by the inheritance of characteristics acquired during the life of the organism was called neo-Lamarckism.
Orthogenesis involved the belief that organisms were affected by internal forces or laws of development that drove evolution in particular directions.
Saltationism propounded the idea that evolution was largely the product of large mutations that created new species in a single step.
These are all bullshit examples. Only nut cases believed such crap.
You wrote: Darwin did not set out to prove evolution, because that was already accepted by all academics of the time.
Oh my god! That is just so fucking wrong. I will discuss this subject no further with you Javier.
It is too bad that you won’t discuss it further Ron,
I am not too versed in the history of science, having just picked things here and there as it was never a subject of my studies, however I did study about the resistance to the scientific acceptance of the natural selection theory prior to the development of the modern synthesis.
Perhaps you will find it easier to accept it if I leave it to the words of one of my evolutionary idols, Ernst Mayr:
“I do not know of another scientific theory that had to wait as long to be accepted by the leaders of its discipline as Darwin’s theory of natural selection… During its first 60 years after its publication in 1859, natural selection was accepted virtually only by naturalists. I do not know of a single experimental biologist prior to 1920 who was a consistent selectionist. It was not until the 1940s, that is, 80 years after the publication of the Origin, that the so-called modern Synthesis was formulated owing to which the majority of biologists agreed that selection was the only factor that could account for adaptation.”
The ideological resistance to Darwin’s theory of natural selection.
Ernst Mayr 1991.
There’s a bit more to the story about Wegener and the North Americans.
http://www.goodreads.com/book/show/243408.The_Rejection_of_Continental_Drift
“Why did American geologists reject so adamantly an idea that is now considered a cornerstone of the discipline? And why were their European colleagues receptive to it so much earlier? This book, based on extensive archival research on three continents, provides important new answers while giving the first detailed account of the American geological community in the first half of the century. Challenging previous historical work on this episode, Naomi Oreskes shows that continental drift was not rejected for the lack of a causal mechanism, but because it seemed to conflict with the basic standards of practice in American geology. This account provides a compelling look at how scientific ideas are made and unmade.”
Basically, the American academic practice of the time preferred to do a though review of the evidence, then a humble proposal of some direction a theory might take. Wegener and other Europeans essentially did the opposite: he starts off with a bold grand theory in no uncertain terms, then reviews the evidence that supports it.
The book’s a great read – I’ve been meaning to read more of Oreskes
_Merchants_of_Doubt_
_Plate_Tectonics:_An_Insider’s_History
Ron, just did a last edit and it got suppressed as spam.
Don’t know why this was put at the end, the editing was of the extinction comment.
Fixed it. But I will see your notice a lot quicker if you post me direct rather than posting it here.
Nod. Doesn’t matter. It all happens regardless.
Hi Ron,
Maybe you should ignore comments like those and wait for an e-mail, then some people might get the idea.
Some people prefer to at least try to maintain some semblance of anonymity…and these people are not doing that because they are nefarious…they are doing that because other people are nefarious (and just to be clear, no, we are not talking about either Ron nor you).
Out.
“It happens regardless” refers to extinction.
Aren’t you done humiliating yourself yet?
I want a Peakoilbarrel arch-nemesis also, and I’m going to pick “wimbi”.
Wimbi: Hey everybody, I rode my bicycle from my teepee to my compost pile and if we all did this, everything would be swell!
Gee. what an honor! Until now I always have had the impression that my occasional little mumbles here are simply ignored!
Minor correction – I live in a VERY comfortable house, with up-to-date all-electric everything, using around 15-18kW -hrs/day. Near half of that is the car.
All of it comes from the sun, and a yearly surplus of about 3000Kw-hrs/yr goes back into the grid, gratis.
PS, If I appear to be holier-than-thou, maybe it’s just because I am.
Just the facts, M’am, just the facts.
Debt and the end of the world.
http://theautomaticearthcrap.blogspot.com/2015/12/how-bad-is-household-debt-canada.html
Debt just gets defaulted on, cancelled, forgiven, jubilleed. We’re going to see that in the next 30 years most likely.
Petroleum Supply Monthly is out:
– US #crudeoil production down to 9.347mbpd in Oct15 from an upward revised 9.460 in Sep15
– Texas #crude production down to 3391000 b/day in Oct15 from a revised down 3417000 b/day in Sep15
here is a plot of my corrected Texas RRC data (published 2 weeks ago) vs the latest EIA monthly data
here is a plot of my corrected natural gas Texas RRC data (published 2 weeks ago) vs the latest EIA monthly
Thanks Dean,
Interesting that the EIA is now below your estimates for Texas C+C. Your estimates are by far the best for Texas imo.
Thanks! …and Happy new 2016!
Thank you, Dean
Thanks and Happy new 2016!
The Baker Hughes Rig Count is out. US oil rigs down 2. Canadian oil rigs down 32 to 12. Last year at this time they were at 52.
The interesting facts to me in this report are not the drops, but the increases.
Permian up 6 and Haynesville up 1.
With both oil at $37 and gas spending time well below $2, who would be wanting to spend money expanding capacity and engaging new drilling contracts, especially with Haynesville which has been quoted to have a break even price of over $5 per mcf? If that number can be trusted.
Drilling, in order to perpetuate some leases, is perceived to be less painful than letting the leases expire and writing off Proven Undeveloped Reserves?
Yep. We add the positive pv10 from future wells to the negative pv10 from wells drilled to hold leases. It’s similar to the strategy we use with offshore exploration wells drilled in say 100’meters water depth.
http://trib.com/business/energy/top-wyoming-oil-companies-write-off-billion-in-assets/article_d380f763-962e-587d-9d9a-2af39b1e166d.html
Top Wyoming oil companies write off $41 billion in assets
“he write-offs, known officially as impairments, represent a recognition that many wells will have shorter productive lives than initially anticipated, analysts said. It also reflects an acknowledgement that companies may have to pay for the cost of plugging and abandoning wells sooner than they expected, they noted. ”
“Chesapeake Energy, Wyoming’s fourth-largest oil producer, reported impairments of $15.4 billion through the first three quarters of 2015. The Oklahoma City-based producer’s woes are primarily tied to natural gas. ”
“Oil patch bankruptcies have accelerated in the fourth quarter of 2015 as a supply glut keeps prices stuck below $40 a barrel. Ten firms, with more than $2 billion in debt, have closed their doors since October, according to the Federal Reserve Bank of Dallas.
Capital spending has fallen 51 percent since the third quarter, the bank said. And the global supply glut may linger into 2017, it noted, pointing to estimates that production will outpace demand by 600,000 barrels per day through 2016.”
Other point to mention: declaration to SEC in early 2015 was based on 2014 average price of ~95$. What will happen with an average price of ??? 55$ in 2015 for 2016 declaration?
“Top Wyoming oil companies write off $41 billion in assets”
These write-offs are going to make corporations a lot more careful about putting money into tight oil the next time prices go high. I doubt there will be major investment in that area until world oil production is well down from the peak.
http://my.chicagotribune.com/#section/-1/article/p2p-85437707/
U.S. companies led the world in debt defaults in 2015, S&P says
“More U.S. companies have defaulted on their debt this year than issuers from any other country or region, S&P analysts led by Diane Vazza wrote in a Dec. 24 report.”
“Looking ahead, S&P expects the U.S. corporate default rate will rise to 3.3 percent by September 2016 from 2.5 percent a year earlier. The bulk of the failures will come from companies in the oil and gas sector, which accounted for about a quarter of this year’s defaults.“
Baker Hughes rig count is out today. US oil down 2 rigs overall. North Dakota down to 53. Canada mostly shuts down for the holidays so oil rigs down 32 to 12 (but compared to 52 last year).
Some notes on Supply and Demand from one of the few economists who make sense to me http://www.calculatedriskblog.com/2014/12/a-comment-on-oil-prices.html
Just before Thanksgiving I posted a prediction of a higher peak between 2016-2018, so I need to give the nod here to Dennis Coyne’s prediction of a higher peak out to 2019. Although the world economy is growing at a slower pace than in previous years, it still requires more oil and if the price is high enough, the big oil producers will have the capacity for greater production. The rest of the world’s smaller producers may be past peak but that is much less significant than the biggest producers.
https://app.box.com/s/vvt8ywyh6w3xxtgvv39myfny2jhgnu0e
https://app.box.com/s/xywlbqm8wswzhfmxh0paiil9cysh8cmk
https://app.box.com/s/h0p6s4ye96k6cx7smn0r2te0giganyy1
https://app.box.com/s/xcult10g1qfq3qi9wobow4j4l6j0pu0o
https://app.box.com/s/z1397clp0wr9uu6y7odf5i5rppygaldm
Oil is still not “cheap” in terms of US oil consumption to final sales/GDP vs. the secular change rate of final sales/GDP.
Hi Stilgar Wilcox,
Thanks. Note that the scenario suggests that we would see the 2015 peak surpassed by at least 2019 if the big 8 increase in output falls to half the Jan 2009 to June 2015 rate of increase from 2017 to 2019.
If my “medium” estimate for World URR of 3400 Gb (including 600 Gb of oil sands) is correct, the final peak in oil output will be between 2022 and 2024. The actual peak date will depend on many factors, lower output pushes the peak to later dates and higher output would cause an earlier peak.
The actual level of output will depend on the World economy and the speed of the transition to alternative forms of transportation (public transportation, better urban design, EVs, plugin hybrids, autonomous vehicles [AVs], and bicycles)
There is no possible way to avoid the physics of 60% reduction in rig count….what happened to the theory that discovering and drilling would have to substantially increase just to maintain current production? Nothing! The seeds of a severe and prolonged production interruption are being sown.
Happy New Year to all!
Just a remark and please feel free to comment.
Conventional Oil: 80 million barrels – give or take. Depletion 5% = 4 million barrels p.a.
Unconventional: 17 million barrels. Depletion 10% (Tar sands close to 0% – NGL´s/Shale Oil at least 20%) = 1.7 million barrels
Total: 5.7 million barrels.
Some have mentioned that only a few hundred thousand barrels extra oil are needed in order to avoid the Peak. But don´t have these 5.7 million barrels have to be overcome first before any additons can actually take place? I mean – 5.7 million barrels that is an enourmous amount that has to come online before any addition can be counted.
Somewhere upthread I read that approx. 4,000 shale wells have been drilled in the US but are uncompleted. Taking Enno Peters´s excellent study: the best wells will yield 800 barrels per day. So 4,000 x 800 = 3.2 million barrels at best. Still 2.5 million barrels remain to be covered just to break even.
Where is this amount of oil supposed to come from?
Iran: 0.5 mbpd
Iraq: 0.37 mbpd
Libya: x?
???
Am I missing something?
Again, please feel free to correct me.
Well, you didn’t mention Russia. My question is where are the half-million Iranian barrels coming from? Are there idle wells with unemployed technicians sitting around hoping for sanctions to end?
I suppose it is POSSIBLE there are four thousand drilled but uncompleted wells in the USA but that seems like an extraordinarily high estimate.
How about it?
Some of you guys that crunch numbers ought to have an idea at least, how many there might be.
And the average production of all new domestic wells for the first year seems to be well under three hundred barrels per well per day, and even worse after that.
OFM – Agree, it is impossible.
Hi Florian,
First, let’s ignore NGL because both Ron and I focus on C+C. Remember that when we look at LTO, and consider depletion we need to look at the whole field rather than only new wells, for all producing wells, depletion is likely between 5 and 10%, let’s call it 8%.
The fact is that from 2010 to 2015 the World brought enough new wells online to offset depletion plus increase annual output by 950 kb/d on average. The current low oil prices will reduce investment and balance supply and demand, there is no reason that the World cannot continue to increase output once oil prices rise, and they will, but I don’t know when, though 2017 seems a good guess for when they will start to rise imo.
http://www.arklatexhomepage.com/news/sick-of-el-nio-you-aint-seen-nothing-yet-warns-nasa
Ron: Congrats to you for predicting the peak. In the debate between you and the doubters my reading of the data on this site suggests you are correct. But we won’t know for certain for many years yet. I think the economy will go into recession, demand will fall and the fact that we have reached peak will be obscured. The majority viewpoint is that once the economy recovers oil supply will also recover. When that belief is shown to be false I think an economic crash will occur. So doubt is good. It gives us more years to enjoy the present and prepare for the worst.
The Saudis are reducing domestic fuel subsidies:
http://www.ft.com/intl/cms/s/0/fbbc4b56-af00-11e5-993b-c425a3d2b65a.html#axzz3vznxftIX
Jeffrey J Brown: “The Saudis are reducing domestic fuel subsidies”
This provides the occasion for me to demonstrate that there are two different versions of the Export Land Scenario (for the sake of analysis – in the real world, a country will occupy some point in between):
1. Country A exports oil at the world price, but allows domestic consumption at cost price. The export income finances high economic growth, while the low domestic price allows high consumption patterns to be built into the economy as it grows. This means that, in the absence of substantial new discoveries, exports will decrease and do so with increasing rapidity. Jeffrey emphasises the consequences for the rest of the world having to make do with less oil. I don’t dispute that, but I’d also like to point out the consequences for the oil producing country concerned when consumption rises above production. Financially, it will hit the wall – and the more reliant on oil it is for its exports, the worse the consequences will be.
2. Country B exports oil at the world price and also charges the world price at home. The export income finances high economic growth (higher, in fact, than Country A due to higher government revenues), but oil consumption patterns are suppressed by relatively high prices. The point here is that per capita oil consumption will increase, even if oil intensity per unit of GDP doesn’t increase, because of the higher economic growth than in oil importing countries. Exports will still decrease and eventually cease, but at a much slower rate than in Country A.
The House of Saud is obviously trying to shift away from Country A towards Country B, but the political consequences will be massive. The sooner this regime falls, the better. Even if what immediately succeeds it is worse, the fall of the House of Saud is a precondition for progressive political developments across West Asia and North Africa.
It has been demonstrated time and again that when an autocracy, like Gaddaffi, Sadam Hussein, or al-Assad is toppled by outside force the end result is worse.
The House of Saud will be toppled by inside forces.
In any case, the mathematical facts of life regarding net exports:
Note that Indonesia, which subsidizes petroleum consumption, and the UK, which heavily taxes petroleum consumption, both showed accelerating rates of declines in net oil exports, as their production fell–because in both cases they did not cut consumption at the same rate as, or at faster rate than, their respective rates of decline in production. And as I frequently point out, an accelerating rate of decline in net exports implies an enormous rate of decline in post-export peak CNE (Cumulative Net Exports).
Indonesia and the UK were two of the six countries that comprised the Six Country Case History (the major net oil exporters that that hit or approached zero net oil exports from 1980 to 2010). From 1995 to 2002, their combined production fell by only 7%, but their net exports fell by 35%. However, the killer is that in only seven years they had already shipped 84% of post-1995 CNE:
As we start 2016, I have a couple questions:
Concerning Iran, where is the 500K+ barrels of oil per day coming from? Drilled but uncompleted wells? Wells that have been completed, but are shut in? New wells that need to be drilled and completed? Oil in storage? A combination?
Next, I just read an article which argues India is where China was in 2004 with regard to oil consumption. So, if India ramps up the way China did, and all these long term projects are shelved, where does that put things?
African production and consumption gets little attention. For 1.2 billion people and growing, will Africa be the next India, and then next China, on in terms of oil consumption? Is there still a lot of oil to be discovered in Africa that will offset this?
As for Iran oil, my impression is that this is mostly condensate stored in tankers.
Hello Shallow,
“Concerning Iran, where is the 500K+ barrels of oil per day coming from?” …? ….?….?
I suspect it won’t take much for Iran to ramp up production. We are talking one of the lowest cost and simplest places in the world to produce. This is not about fracking shale or deep sea. In addition and probably most important. Iran once produced over 6 an a half barrels per day. About twice current production. Which tells me the infrastructure from field to market is in place. The Iranians are also getting lead time currently to prepare to go to market. I expect the oil to be ready to flow when the sanctions come off.
But what is the reason for them to hurry with the current oil prices ? They do not have the problem that Russians or the USA have of multiple oil companies doing stupid things to survive and please investors (Rosneft with Sechin as a head is the primary example here; they were really caught without pants by the current slump). They are more like Saudis with the state company that is a monopoly. So they can wait.
And to whom they can sell oil? Saudis shut for them the opportunity to return to the market without losing revenue by refusing to shrink their share, the share they obtained due to sanctions. . To try to cut Russians and Saudis in China? This is dangerous as it can antagonize Russia. Or try to get into overcrowded European market to decimate Norway? I am not sure EU will allow that.
The only way to sell more oil now is to engage in Saudi self-destructive game of dumping oil at prices below the market to help to implement Goldman $20 per barrel scenario. I doubt that this is a wise policy.
A better deal would be to get technology they need while they can ( for example horizontal drilling) and wait a proper moment to put this oil on the market. There is not much West can offer them now that they do not already know or can’t replicate themselves after surviving years of sanctions. Also I think some Iranians leaders already suspect that they got into the trap West set for them intentionally (whether this is true or not)
Iran doesn’t have to hurry, but they’ve been under embargoes for a while, and I suspect the population would like to import a lot of stuff, which means they need some foreign currency.
All of the above, I imagine. Iran does have some untapped or poorly developed fields. But the last time I looked at those was sometime around 1988.
Venezuela update: natural gas exports to Colombia were supposed to start today at about 40 mmcfd, but deliveries were cancelled, and pdvsa didn’t announce a new starting date. Pdvsa claimed the deferral was being caused by dry weather which reduces hydropower generation.
The opposition Unity faction announced the “judicial coup” being attempted by the Maduro regime will fail. They will meet on Sunday to elect a new Assembly president, and all 112 opposition deputies already certified by electoral authorities will be present on January 5 to start the new legislative session with a veto proof 2/3 majority.
I anticipate demonstrations and some unrest on Jan 5 and thereafter. This crisis is associated with the way the regime candidates were run over by a huge anti Maduro vote on December 6, and the Maduro-Cabello faction’s refusal to accept results. Thus far they have tried several moves to overturn the popular will, but it seems the army brass isn’t supporting moves to circumvent the constitution by brute force.
I read an opinion piece which said the author anticipates a risk of civil war or rebellion. The fight could be amongst Chavista factions, which include 100,000 men armed with rifles and grenades by Chavez. Those 100,000 are outside military control, as are about 20,000 thugs who work in outfits known as “colectivos”. These groups appear to be split, as are some factions in the national guard. Any fighting will necessarily impede oil production because Venezuelan oil wells require a lot of care (they are on pump or gas lift and need lots of personnel in operating centers).
I just checked the BBC news site.
“Venezuela’s Supreme Court has suspended the inauguration of three opposition MPs who were due to take office next week.
The move follows legal challenges by the governing socialist party of President Nicolas Maduro. ”
“Venezuelan Foreign Minister Delcy Rodriguez defended the legal challenges, saying: “We also have to be careful and vigilant over the law. These legal challenges are revealing that there were concrete irregularities which could have altered the results of (the elections). We are using legal means and we have not called for violence.”
It does not escape my notice that the xxxxxxx foreign minister of the Maduro regime makes a POINT of saying the regime has not ” called for violence.”
”called for violence, YET”, is the REAL message.
The opposition may have no real hope of displacing the Maduro regime other than violence, because the rest of the world is pussy footing around pretending everything is OK in Venezuela.
The fate of an entire nation is second or third or fourth fiddle in the news to half a dozen people killed someplace today in the Middle East.
Working in true show trial fashion, they did not forget to provide themselves with a fig leaf by questioning the election of ONE of their OWN candidates. It is perfectly safe to say that candidate will either be seated, or if not seated, it will be because he was already on Maduro’s shit list for some reason.
From todays TELEGRAPH:
” The opposition had already been enraged by government moves to curtail its new power. Mr Maduro has announced a “people’s parliament” to run alongside the Assembly, and last week used an extraordinary legislative session to appoint 13 new judges and 23 substitute judges to the 32-member Supreme Court.
Ahead of the court’s decision, the opposition called on the international community to stop what it called “a procedural coup attempt against the Venezuelan people’s decision”.
“The ruling party’s irresponsible behaviour is pushing the entire country to the brink of disaster, which would have grave consequences for the entire region,” Jesus Torrealba, MUD executive secretary, wrote in an open letter to Ban Ki-Moon, the United Nations secretary general, and other international representatives. ”
The Maduro regime is pulling just about every classic trick the Stalinists and the Nazis invented when it comes to underhanded politics.
And yet from the political lefties of the world who get their panties in a panicy pinch whenever a right wing regime pulls such a trick………. thunderous silence.
Thing is, the Supreme Court Justices who made the decision were sworn in illegally one week ago. Furthermore, the deputies were already certified as properly elected by an Chavista controlled commission, the CNE, a separate power under the Venezuelan constitution. In addition, the constitution states the National Assembly is the one which decides whether its certified members should be unseated. Thus the move by Maduro, which he took one day after visiting his boss in Cuba, is illegal. It amounts to a coup against the National Assembly.
As I wrote before, the National Assembly response is simply to ignore the Supreme Court. This is heading towards a serious clash on and after January 5th. Lesson learned: communists are indeed a serious threat to democracy. They use the system to get power, and will do anything to hold it once they are at the top. They are also corrupt, venal evil doers. And this is why I despise them.
Fernando Leanme: “Lesson learned: communists are indeed a serious threat to democracy. They use the system to get power, and will do anything to hold it once they are at the top. They are also corrupt, venal evil doers. And this is why I despise them.”
1. Maduro is not a communist. He isn’t even a socialist. He’s a Left populist with authoritarian tendencies, albeit a lot less authoritarian than most Latin American caudillos of the last century. If the Chavistas were really socialists, they would have nationalised at least the commanding heights of the economy. They didn’t. They even allowed the private sector media to keep operating, with full freedom of the press!
2. Far from “do anything to hold [power] once they are at the top”, the Chavistas held democratic elections on schedule, and under credible conditions, for over a decade. Even when they knew they were going to lose this year, they didn’t call them off or falsify them. Their attempts to stack the Supreme Court are reprehensible, but don’t go anywhere near justifying Fernando Leanme’s characterisation. For that, you’d have to look at Chile under General Pinochet, at Argentina’s Dirty War, or at the Death Squad Democracies of Central America in the 80s & 90s.
3. In evaluating the situation in Venezuela, the context must be remembered. Not only have the Right wing opposition staged several attempts at overthrowing the government by means of popular movements combined with economic action, but at one stage even mounted an actual military coup. All their attempts failed, due to the fact that the Chavistas had strong support from the population. PSUV support fell because of a range of reasons (primarily the consequences of the low price of oil and the growing corruption of the bolibourgeoisie), but that didn’t change the nature of the Right wing opposition, which has never accepted the legitimacy of any of the Chavista governments since 1998. My guess is that Maduro’s attempt to stack the Supreme Court is a panic reaction due to fear that, with its super-majority in the Parliament, the new government will change the rules to ensure that the PSUV can never again be elected. And I’m far from convinced that those fears are unjustified.
” If the Chavistas were really socialists, they would have nationalised at least the commanding heights of the economy. They didn’t. They even allowed the private sector media to keep operating, with full freedom of the press!”
It is perfectly obvious you don’t have the foggiest idea of what has been going on in Venezuela in recent years.
“The “commanding heights” of the economy in this unfortunate country consist of the nationalized oil industry.
There is not much left in the way of a free press in Venezuela, hardly anything at all, actually, compared to a country with a free press. What is left is well aware that it might be shut down any day by Maduro thugs. Most of the remaining media are thoroughly state controlled.
If the country had a free press, there would be frequent little news clips, live , coming out. NADA.
Have you noticed that when news comes out, there is seldom the name of a reporter or on site correspondent associated with it?
If you have actually read any thing recently SOURCED out of Venezuela, it would have been a leftist puff piece praising Chavista and Maduro as freedom fighters kicking imperialist yankee ass out of their country.
There IS a certain element of truth in that assertion, they did kick yankee ass out, but it sure as hell did not result in the people of Venezuela living better lives.
OH MY GOODNESS, the nice little ain’t commies, ain’t socialists, “authoritarian populists” are panicing and packing the national supreme court because they think they may not be able to win an election ever again -GIVE ME A FUCKING BREAK.
We MUST MAKE SURE there are NO communists in the world any longer,since communism gave socialism such a bad name, and nobody will ever be allowed to sully the hallowed, sacred, descriptive term “socialist” by associating it with crooked, self serving politicians, if you get your way.
They allowed a SOMEWHAT free election, with only a few of the top opposition leaders jailed, etc, because they thought they would win it, considering the fact they had just about everything stacked in their favor, except they are among the world’s most incompetent and crooked managers of a national government.
If the Maduro regime manages to steal this election after the fact, by making the extra judges trick stick, and by contesting six or eight opposition wins ( but only one regime winner for fig leaf purposes) I am sure you will post a comment to the effect
“SEE!I knew it, the opposition are the crooks and bad guys, and Maduro and company are the GOOD guys.”
While dangerous and corrupt (I have friends recently back from Venezuela), I would say a observation with much equanimity.
Venezuela will not return to it’s US Client State status of the past, and learned the lesson of the lockout during the coup attempt.
For much of the period (not the case now), 80% of the citizens benefited from the reforms, economically and politically.
Let them have their revolution– it may take a while to get it right.
South America is the political bright spot on the planet (IMHO) at the moment, with only Colombia still under the thumb of US interests on a major level.
We shall see what the mess in Venezuela turns into—
For much of the period (not the case now), 80% of the citizens benefited from the reforms, economically and politically.
While I have never even visited Venezuela let alone lived there the very same thing could be said about Brazil today.
So while the PT party, Lula, Dilma et al have been corrupt like all other political parties before them, the 80% that constitutes the underprivileged population have had vast improvements in their economic, political and social conditions in Brasil over the last few decades. This is not something to be taken lightly. The people do not soon forget that!
The other big factor in South America’s future is that they have yet to take their rightful place on the global economic stage, but they will! You can bet your very last dollar on it. Petrobras scandals notwithstanding.
I’m just not all that concerned about the evil communists rising to power in South America, that is not the direction things have been going in.
There are currently a large contingent of young highly educated, politically savvy entrepreneurs coming into their own who are finding ways to bypass the entrenched political systems in South America and they are definitely not into old school communism. Democratic Socialism, yes, and I happen to I think that is a very good and positive development.
Disruption is happening all over South America as well and the power brokers of the old world order are losing their grip. Good riddance!
Venezuela isn’t Brazil. Mr Idaho is full of shit.
I can confirm the National Assembly TV station has been taken from the National Assembly. The communist regime doesn’t want what happens in National Assembly sessions to be seen by the people, but arrangements are being made to circumvent the regime media blockade.
As I mentioned,Maduro is working for Raúl Castro, and the Cubans are experts are repression. So in a sense what we are observing is a stealth invasion.
I found Venezuelans to be quite unable to grasp they were indeed being colonized. But Maduro’s trip to Cuba and what’s going on since he returned has broken a dam, I hope. They do need to understand what’s going on, so they can block the airports at Maiquetia, La Carlota, Charallave, etc, from getting Cuban reinforcements. These are being sent in civilian uniforms, as “medical personnel cover”.
Meanwhile we will try to put pressure on the Castro dictatorship in Cuba. I realize they got moles everywhere, so they know the moves. And we know theirs. The path we follow will depend on the Venezuelan military. If the Cubans can get to them in the next four days, Venezuela will be a failed state.
MEANWHILE Obama is being his usual super sucker self and smiling at Raúl Castro.
Venezuela isn’t Brazil.
On that much we agree 🙂
I would like to make it clear that I do understand that in the earlier days, things were WORSE in Venezuela, Brazil, and many or most other South and Central American countries when they were governed by OTHER bad guys, and that the bad guys in the old days were quite often on very friendly terms with Uncle Sam.
So- At first, yes, the Chavistas and that sort were very much a positive change for the local peoples.
The trouble is that once they got to be in power, they liked power and privilege ALL TOO WELL, and started changing their ways so that they are now in the case of the Maduro regime not a whole lot better than the old time dictatorships.
It does not matter what they are called.
Mac, you happen to be wrong. Chavez benefitted from a huge oil price surge as he took office in 1999. This allowed his regime to destroy the country and at the same time give some handouts to the poor.
Today, Venezuela is a disaster, with much higher poverty than in 1999. And the destruction is horrible.
If I may make an observation: as it turns out, the left has incredible moral flexibility, it defends the ugliest abuses, theft, corruption, and just about anything…if it’s committed by some imbecile claiming to be a communist and waving a red flag. The shit I have seen in Venezuela would never been accepted if done by a right wing regime.
If I may make an observation: as it turns out, the left has incredible moral flexibility, it defends the ugliest abuses, theft, corruption, and just about anything…if it’s committed by some imbecile claiming to be a communist and waving a red flag. The shit I have seen in Venezuela would never been accepted if done by a right wing regime.
Surely you are joking Mr. Leanme?!
Are you completely oblivious of what happened throughout South America under a string of Military dictatorships and Juntas? How about 1964 in Brazil? Not a communist in sight there, eh? Wasn’t exactly a bastion of protection of human rights. Or how about Pinochet in Chile, real nice right wing guy, wasn’t he? Ever hear about the ‘Desaparecidos’ courtesy of the military Junta in Argentina? Were those guys just communists in disguise? And how about Mexico under Luis Echeverría and José López Portillo?!
Let’s be perfectly crystal clear I’m not in any way shape or form a left wing or communist sympathizer but your one sided and one dimensional proselytizing about the left is really getting quite tiring. And to top that off by saying this:
The shit I have seen in Venezuela would never been accepted if done by a right wing regime.
Is truly beyond the pale. Try taking off your blindfolds and seeing the world as it really is for a change! BTW for your information most of those wonderful military dictators had the full support of the US government in the name of being anti communist.
That is one of the main reasons your constant claim as to how horrible the communists were or still are sounds rather hollow to someone like me who happened to live under the right wing military dictatorship in Brazil!
So give it rest already!
Final note: If you still don’t understand that both the left and the right are just different flies on the same old shit then you sir are just another ignorant patsy.
“The shit I have seen in Venezuela would never been accepted if done by a right wing regime.”
Surely you’re joking. My best friend and his wife were kept in prison for two years and tortured by the right wing Pinochet regime in Chile.
Their crime: “participating in an “illegal” protest” even thought they were both home in bed while said protest was going on. He’s an engineer and his wife is a nurse.
The chavista torturers are worse.
Fernando, your personal bias against Chavez and Maduro is embarassingly ridiculous. It means I don’t believe a word you say. It’s pretty clear Maduro’s been good for the country if the only people complaining about him are making lunatic complaints like you are. We know he hasn’t done anything *remotely* like what Pinochet did.
You sound like the Cuban emigre lunatics who supported that monster Batista. (Yes, Castro was an improvement over Batista; everyone knows that.) Are you, by chance, from one of the ‘fifty families’ who were an aristocracy in Venezuela previously?
You are a bit delusional, my friend who first left a right wing dictatorship in Cuba, in which you got your elitist butt kicked, to Fascists Spain under Franco.
Would not of been my first choice.
This is just a primary observation, and causality is present.
I can see why you have “issues”
But I do appreciate your analysis on topic—
Just saying!
This morning I received a message from Venezuela. It was written by a friend who lives in a poor area. Tells me the people there feel they are being kept in the dark. They know the government lies, nothing they hear or see on the official tv can be trusted. They hope the National Assembly can be taken over by the Unity faction, and that their first move will be to declare a recall referendum to force Maduro out of power.
In other news, there are now two groups being organized to march to the National Assembly on January 5th, the Unity faction and the Socialists.
The Unity spokesperson, Chuo Torrealba, announced the government had dismantled tv equipment at the National Assembly building. This move was illegal, but the Maduro regime doesn’t want any media coverage the people can see. There will be alternative means to try to deliver a signal from the building. The unity faction also invited the international media to be present. They are also making arrangements for these media invitees to be given video equipment, because the government confiscated every piece of equipment being brought in for the December 6th election.
In other news, the Pharmaceutical Association announced there’s a crisis in medical supplies.
Disruption is happening all over South America as well and the power brokers of the old world order are losing their grip. Good riddance!
I was just in Argentina, and the feeling is obvious.
I agree, the Venezuela populace will not forget the gains in political power and services.
Not saying things are not a mess now– just things are different from the neocolonialist past.
There were no political gains. Services are worse now than 17 years ago, when your buddies took over.
I take it you think you are a Venezuela expert. Do you read Spanish?
Duncan’s Maduro: “He’s a Left populist with authoritarian tendencies.” Just like Stalin and Hitler.
Hitler was a right-winger. Make no mistake about that.
Left-wing authoritarians included Stalin and Mao, and maybe Pol Pot (though his ideology was so crazy bizarre that I’m not sure it qualified as left-wing). Hitler was pure right-wing.
Welcome to the New Year of 2016 fellow travelers.
The harsh reality, and the interesting challenge, is that none of us here, not anyone else we can reference on the great wide Inter-webs, seems to know whey oil prices have behaved as they did in the past, why oil production, demand, and price are what they are right now, and for darn sure no one knows what these factors will be in the future.
Underground factors, above-ground factors, downstream, upstream, ‘the market forces’, geopolitics…no one seems to have a handle on the model of how this all works…it is too complex…perhaps too many crucial hidden and unknown variables…too many dependencies.
I doubt anyone here will make a serious prediction about the amount of oil consumed, the amount of vehicle miles traveled, and/or the proce of crude and NG for that matter, either 6 months from now, one year, three years, five years, 10 years, let alone any further out than that.
We do know that the Earth is finite, and we know that oil and NG and coal are finite. We know how these things are produced, and how they are used, and we know a thing or two about how these FFs were formed and where to look for them.
Beyond that lies the challenge of further research, analysis, and prognostication.
it seems that we are always ‘behind the jet’, holding on the the tiger precariously with one hand, being drug across the ground and through the thorns, with only a dim idea of where we are going and when we might get there.
A toast to the persistence of intellect and the magnetic pull of curiosity, and the perseverance of our spirit!
I picture of the methane plume (infrared) gushing in California:
http://vvattsupwiththat.blogspot.com/2015/12/infrared-ink.html
Ron and everyone, Happy New Year!
There are long-term trends and short-term flucuations. It is very difficult to predict short-term fluctuations of oil price and production, sometimes wild fluctuations. The “short-term” may be as long as 5 to 10 years. But in the long run, geological factors will dominate, reinforced by the requirement of climate stabilization.
The possibility of a 2015 peak of world oil production cannot be ruled out. But I feel it’s a highly risky bet. I think in the coming years, the risk is on the upside. It would be safer to predict a oil production peak around 2020, given that by then, according to David Hughes, the US oil production is likely to have permanently passed the peak and the various short-term factors (Iraq, Iran, oil price) are likely to have run their course so that the long-term trend will begin to dominate.
http://artofgears.com/2016/01/01/tesla-model-s-burns-to-the-ground-at-norway-supercharger/
Bad news for Tesla, but the supercharger station appears to have been a stop gap, not actually built by Tesla. Apparently Tesla has subbed out some charging station installations in order to get them built faster.
Now here is an interesting question. Since the car is apparently capable of storing diagnostics and performance data to be uploaded to Tesla at any time the company so desires–I am wondering if the car might have PHONED HOME . Maybe the online thing is only for downloading updates mostly, but my impression is that Tesla gathers real time data on a regular basis.
If you can get an update or a security patch for your Tesla, without plugging in, then it must be a wireless system. So – does Tesla pay somebody – an internet service provider- to help them with this ? How would it work otherwise?
Sooner or later there had to be a fire associated with a fast charger. The current in the cables appears to be high enough to burn you, except that they are thermally well insulated. The next generation supercharger is supposed to actually have water cooled charging cables.
Lithium ion battery technologies have this pesky tendency to burst into flames – it seems there may be work work to do in this area. Perhaps the newer aluminum batteries will be the answer.
I don’t think anybody has yet invented a rechargeable aluminum based battery that appears to be suitable for large scale production.
We will have to live with lithium batteries for a while yet, maybe for good.
Airliners used to crash quite often but crashes due to mechanical problems are very rare these days.
Sufficiently strict quality control will likely be enough to manage the battery fire problem in electric autos.
OFM, each Tesla Model S requires a high speed, wireless, data connection to the Internet. They use cell phone networks to achieve this and while the car does not require connectivity to operate, I suspect some mapping functions and anything that depends on them may not work, if connectivity is lost. Autopilot may be one such capability. The car itself has a mobile wifi hotspot built in that, can share it’s data connection with other devices in and around the car. The car is basically always connected to the Internet in the same way that smart phones that, are quickly becoming ubiquitous, can be always connected or the way the 3g broadband wireless modem that I use to connect to the Internet is always connected. In one case, where a Tesla was stolen, the owner was able to use her iphone to connect to the car , track where it was and even find out fast it was being driven.
It sort of redefines how you think of a car and supports the idea of a car as a computer on wheels. Kinda weird, isn’t it? Tesla could have been aware of the fire before the owner was and if they were not, that can be changed through a firmware update that would “phone home” in the event of a fire. Apparently there is a screen at the company HQ in Hawthorne, California with real time data on supercharger use as they try and refine their supercharger roll out.
Island Boy, Thanks,
The wireless connection is obvious. I suppose Tesla pays for it, after some fashion or another, because nobody ever mentions being billed for it.
So- the way it works is that your Tesla has what is in effect it’s own cell phone number.
This service could add up to a good bit of money over the life of a car, especially one that will probably be kept on the road over twenty years. I wonder what sort of deal an auto company can get on that service, but it is sure to be sharply discounted over retail.
My “real” question is whether the car sent a final message home, detailing what was going wrong. It it was NOT programmed to do so,I expect there will be updates going out to every Tesla on the road within a few days, so that in the future, any Tesla that has a fire will be sending data home even as it burns.
So- the way it works is that your Tesla has what is in effect it’s own cell phone number.
In effect only. To understand it fully, you have to think in terms of the three services cell phone service providers advertise, text, talk and data. If you’re not using a smart phone, data has very limited value so a plan that doesn’t include data is fine.
In my neck of the woods, data (Internet connectivity) is sold as a separate service entirely so, you there are various price plans for talk and text and separate plans for data. In my case I have a 500 Mb, 30 day data plan on my smart phone that allows up to 500 Mb over a thirty day period for a little about US$5 a month. I no gave up my land line over a decade ago so my home internet comes via a cell phone network using a 3g broadband modem. In this case, it is data only and is probably quite similar to the system that Tesla uses. The plan I use for home internet cost me about US$30 per month for unlimited data.
I found this over at the Tesla Motors forums:
Tesla announces free data connectivity and Internet radio for four years
One poster floated a figure of $10 for month but, it looks like for now, Tesla is footing the bill for the data connection with the caveat that customers will be charged for “extreme data use”. Reading through the comments, one said, the car “does not offer a hotspot ability through the built in 3G connection.“, contrary to what I posted further up but, “It can be tethered to a phone or home’s WiFi.” So, it behaves pretty much like any smart phone except that it does not share it’s own data connection with other devices, as currently configured. I guess the price and functionality of data plans in cars will change over time but, at some point, car owners might be charged separately for the data connection in their cars.
I suspect Tesla gets a very good deal on its bulk data plan. The data transferred isn’t that large (mostly Google maps); they can afford to eat the cost of it. It’s probably less than the cost of electricity for the superchargers.
Debt and deflation part 2.
http://theautomaticearthcrap.blogspot.ca/2016/01/how-bad-is-household-debt-canada.html
Russian oil output hits post-Soviet record high in December, 2015
Jan 2, 2016
http://www.reuters.com/article/us-russia-energy-production-idUSKBN0UG02S20160102
Oil output in Russia, one of the world’s largest producers, hit a post-Soviet high last month and in 2015 as small- and medium-sized energy companies cranked up the pumps despite falling crude prices, Energy Ministry data showed on Saturday.
The rise shows producers are taking advantage of lower costs due to rouble devaluation and signals Moscow’s resolve not to give in to producer group OPEC’s request to curb oil output to support prices.
But the rise will contribute to a global oil supply glut and exert continued downward pressure on oil prices which hit an 11-year low near $36 per barrel last month, having fallen almost 70 percent in the past 18 months.
For the whole of 2015, Russian oil and gas condensate output rose to more than 534 million tonnes, or 10.73 million barrels per day (bpd) from 10.58 million bpd in 2014.
In December, Russian oil output rose to 10.83 million bpd from 10.78 million bpd in November. In tonnes, oil output was 45.782 million last month versus 44.115 million in November.
The increase in production defied many expectations of a fall in Russian oil output which has been on a steady rise since 1998 apart from a small decline in 2008.
The Energy Ministry had expected output to fall to 525 million tonnes in 2015 due to the exhaustion of mature oilfields in Western Siberia, which account for over a half of the country’s total oil production.
But medium-sized producers, such as Bashneft, cranked up production. And Gazprom, the world’s top natural gas producer, increased production of oil, mainly gas condensate, by 5.3 percent for the year.
However, oil output at Russia’s leading producers declined.
Production at Rosneft edged down by 0.9 percent, while output at Lukoil’s Russian assets fell by 1.1 percent last year.
According to a Reuters poll, Russian oil production in 2016 is expected to rise to a new post-Soviet yearly average high of 10.78 million bpd despite price falls as new fields come online and producers enjoy lower costs due to rouble devaluation.
—————————————————
Note: using 7.3 (rather than 7.33) barrels/ton ratio, C+C output in December was 10.78 mb/d
Russian C+C production (mb/d)
AlexS. Interesting that Russian production was falling in the first half of 2014, when oil prices were very high, and then began rising once the price began to fall.
The highest output yet came last month, with oil prices the lowest since early 2004.
Is all Russian oil profitable on an operating basis at current prices? I suspect many conventional water floods and CO2 floods in the US are not. Doesnt Russia have quite a bit of similar mature production? Is the ruble devaluation keeping this production above water? I suspect the cost of labor in the US is much higher than in Russia, I do think we have discussed this aspect before.
As I have stated before, I believe that US conventional onshore oil production is falling fast, the number of vertical production wells being drilled is likely the lowest in modern times (post 1970).
It is interesting to me that Russian conventional onshore oil production is so much more resilient than US, given the similarities. Or maybe the production is not so similar?
I appreciate all of the oil information you provide. Any detail you are able to give on Russian production is very much appreciated by me, and I suspect many other persons here.
shallow, tell me honestly, what you think why Russia cut production in july 2014 and why oil price start falling same months?
Sarko. I don’t know? What do you think?
If I remember well, there was a big maintenance explaining the drop in Russian production in July 2014. So this point should not be taken into account (unless there is something else hidden).
Around this time was when Rosneft and Exxon “discovered” oil in the Kara sea, and perhaps there was some discussion about where to allocate drilling resources. Not sure if this was a factor or not.
This project was postponed due to the sanctions
Yes, but at the time, I had the feeling that the Russians felt the sanctions might be eased perhaps due to the billions Exxon had already committed to the project. However, in hindsight the Russians (if they felt that way) were wrong on many accounts. The price of oil quickly dropped and Obama was soon to go on an anti-fossil fuel rage which would decimate much of the U.S. e&p space. And the rest, as they say, is history.
SS, separating the onshore production from the G of M provide a better understanding of what is happening in the US. Using the latest October PSM data, one can see the steady decline in onshore production from May to October, 303 kb/d. However, from June to September, Gulf production increased by 251 kb/d. October saw a drop of 80 kb/d from September. Would this be the result of a platform shutting down for maintenance?
I think that many, myself included, thought that the LTO was not dropping off as fast as expected.
Gulf chart
Ovi. I have noticed GOM production is increasing.
However, I also suspect that onshore conventional has droppes more in percentage terms than onshore horizontal.
My guess is that onshore US conventional dropped from 2.6 million 1/15 to around 2.1-2.2 million 12/15, and it will go below 2 million before the middle of 2016.
Some projects due in 2016 were advanced to this year – Marmalard, Gunflint, Dunzler and Son of Bluto. Big Foot, due this year, has had problems and start-up is delayed to 2018. By this March’s EIA report the only projects due next year are Tahiti II and one more well for Marmalard, but Julia field was also planned for this year originally and is not mentioned. Shell’s FPSO for Stone’s should be hooked up this year as well. Production at the moment is slightly higher than predicted by EIA – more like next year’s expected figures.
shallow sand,
The decline in Russia’s oil production in the first 7 months of 2014 was due to a combination of several factors:
– Lack of significant new project start-ups;
– Temporary decline in drilling volumes (-7% y-o-y in 1H14), as several large companies for various reasons cut their drilling. Thus, Rosneft was renegotiating its contracts with drilling firms and consolidating its own drilling assets in order to reduce drilling costs.
– Bigger than normal production declines in July 2014 due to maintenance, particularly at the offshore production-sharing projects (Sakhalin). As the chart below shows, Russia’s oil production declines each July, but in 2014 the decline was -158 kb/d vs. -75 kb/d in 2013 and – 60 kb/d in 2015.
In the second half of 2014, crude oil production recovered post July maintenance, and especially due to expansion of several new projects, particularly Trebs & Titov (Bashneft). This year, there was also a number of new projects.
Russian oil companies are largely insulated from the effects of lower oil prices due to the sharp devaluation of the rouble and Russia’s oil tax system. The average lifting costs for the Russian oil companies were well below their North American and European peers before last year, and have significantly declined in dollar terms in 2015.
All Russian oil companies are profitable on an operating basis and generating free cash flow at current prices.
Comparative lifting costs per barrel
Tensions are on the rise in the middle east.
http://www.bbc.com/news/world-middle-east-35213244
Saudi Arabia has executed the prominent Shia cleric Sheikh Nimr al-Nimr, the interior ministry said.
I hear it’s a Sunni versus Shiah conflict. Russia is siding with the shiah (Iraqi Shiah-Iranians-Syrian Allawites-Hezbollah). The Saudis lead the extremist wings, but they have rogue elements associated with AlQaida and the Iraqi Daesh.
The USA, as usual, is floundering, bound in chains by the Israel lobby and its rather pusillanimous European allies, who are busily engaged allowing terrorist cells enter Europe.
If there’s anybody left, the ones with pen and paper will write very interesting analyses of these 21st century theocratic wars, Jew versus Muslim, intramuslim, and possibly an all out orgy of destruction putting the USA in an unwinable position.
Egypt might be facing further difficulties as well. They have lost a lot of tourist income because of the Metrojet bomb and may be in danger of losing significant foreign aid from Saudi Arabia as they cut back on spending. And they have a large population of educated, unemployed young men.
ME version of the 30 years war is gradually unfolding; for that conflict at least 7 million dead, 40% population reduction (a lot from famine), all participants bankrupt in the end.
WSJ: Saudi Arabia Cuts Its Diplomatic Ties With Iran
Might be a good time to invest in a lot of solar panels…
In retrospect the lifting of the oil export ban seems to have been ill-timed.
The usa has been and is a net oil exporter. Only a loose wheel like Obama would have kept it. I can see an individual like you lacking the information, but Obama could have a one page memo outlining why oil exports make sense for the USA.
Net oil exporter?
“unwinnable position”
…there is nothing to win.
The United States (nor its cheerleaders) has not learned anything from U.S. involvement in the ME. Not one damn thing.
There exists NO scenario or scenarios where the U.S. ‘sets things right’ in the ME.
The ME is a tar pit…quicksand…an incinerator in which we can continue to shovel mountains of money and thousand upon thousands of lives…lost, or affected for life by physical and/or mental injury.
We have NO IDEA who the ‘good guys’ are, or what the factors comprising a sustainable outcome would be. Most of us have only the dimmest idea of their language, religion, culture, and history. Even of the tiny minority who do know about such things, the delusional hawks hold sway.
So will we keep fucking around in ‘the sandbox’, pissing away an open-ended amount of treasure and squandering U.S. allied, and ‘countries of interest’ lives without limit?
Do NOT spout any baloney about how we don’t have a plan…there exists NO plan to ‘fix’ the ME!
Do not preach about a lack of commitment or ideals…the smartest thing we could do is to stop trying to play ‘sandbox cop’…let the Rus and/or the Chinese try their hands…ask Russia how successful their decade-long debacle in Afghanistan turned out. If they want to pour gasoline on the charcoal grill of their own ME blow-back, they can have fun with that.
People learn nothing…how much blow-back have we already baked in the cake from our ‘involvement’ in the ME? Iran 1979 and on…look back to Iran 1956. Recall OBL and his screed against the U.S. military being stationed in KSA.
To have any chance of having as good as possible situation going forward in the undeniable paradigm of the Limits To Growth, we in the U.S. need to understand and take action on endeavors that have a worthwhile expectancy value, and absolutely not ‘invest’ in losing propositions.
Long ago during the debates about the Vietnam war, I heard a great lecture by Edwin Reischauer quoting a Chinese general of a very long time ago, writing to his Emperor about his occupation of Vietnam:
“This is a hot and miserable place, we don’t understand the people, we see nothing here we want , nor significant military threat, our expensive efforts so far have gone nowhere, so I suggest we just walk out now, and leave them to their own mess.”
I don’t remember whether the Emperor took his general’s advice. Emperors usually don’t.
Actions with worthwhile expectancy value. Like maybe just getting less dependent on oil, the only thing anybody wants from the ME?
And, by the way, I notice that Saudi Arabia is the saudi arabia of solar energy. Rent it out from them. Should be cheap. They aren’t using it.
Middle East BAU
Hi Ron,
Much appreciation for your analysis, as always.
I have a question for you, and any others that may have the expertise and knowledge.
We witnessed an extraordinary increase in oil derived from tight shales in the US in the past years. Is this likely in other countries? Do they have favorable regions that might be exploited if and when the oil price rebounds? Or, is the U.S. unique in this capacity? I understand that exploiting shale is also dependent on factors such as cheap credit, high returns expected on junk bonds, and high prices. I wonder if the phenomenon might be repeated, and thus delay the peak. If such potential exists, would it have the capacity to offset the aggregate decline in conventional fields?
Liquids Frackworld 1.0/2.0 not practical in other countries so far ?? 1. Lack of hundreds/thousands of independent resourceful E&P outfits with mountains of deployable specialized gear. 2. Private ownership of resources provides HUGH driving factor in US. 3. Many countries are densely populated where the “oil” might be – who wants a mining operation in the middle of their village? 4. Are National Oil co’s crazy enough to execute operations that are cash flow negative even at high prices. 5. Which countries could mobilize such prodigous resources, ie. Railroads, Trucks, High Tonnage roads, Exotic Sands, Water, Water disposal, Know How, etc to the required sweet spots?
Consider the USA map:
thus far the “shales” seem to be commercial at fairly high prices in Texas (Eagle Ford, Permian) and Montana/North Dakota (Bakken). Large oil producing basins such as the USA gulf coast, & California, aren’t that attractive, not even with the attractive tax and legal, and cost environment in the USA.
Once we move overseas we tend to see higher taxes, higher costs, more complex bureaucracies, and rather low quality prospects. This means we may not see much beyond the Western Siberian plays, a few in other areas in Russia, the Vaca Muerta, and so on. I think you may pencil in a few million BOPD from these non USA shales, but it just takes too much money.
What I do to develop my opinion is observe the large and medium multinationals. See if they say they are starting shale exploration and testing in places like Australia or Kazakhstan. That should let you know if they think a lot about it.
There are several other places of Earth where shale/tight oil are present in large quantities. Tar sands are a form of shale so the answer is yes.
Well no, tar sands oil is not tight oil, not by a long shot. Tar sands oil is basically bitumen in very “un-tight” sand. And sand is not shale.
You are right about tight oil. It has nothing to so with oil sands.
But shale oil is to a certain extent an economic term and encompass a variety of sources. From Wikipedia
=== Start of the quote ===
Oil shale, an organic-rich sedimentary rock, belongs to the group of sapropel fuels.[10] It does not have a definite geological definition nor a specific chemical formula, and its seams do not always have discrete boundaries. Oil shales vary considerably in their mineral content, chemical composition, age, type of kerogen, and depositional history and not all oil shales would necessarily be classified as shales in the strict sense.[11][12] According to the petrologist Adrian C. Hutton of the University of Wollongong, oil shales are not “geological nor geochemically distinctive rock but rather ‘economic’ term.”[13] Their common feature is low solubility in low-boiling organic solvents and generation of liquid organic products on thermal decomposition.[14]
== end of quote ==
But they are quite close to oil sands and the only difference is age/maturation:
== Start of the quote ===
Oil shale differs from bitumen-impregnated rocks (oil sands and petroleum reservoir rocks), humic coals and carbonaceous shale. While oil sands do originate from the biodegradation of oil, heat and pressure have not (yet) transformed the kerogen in oil shale into petroleum, that means that its maturation does not exceed early mesocatagenetic.[14][15][16]
… … …
A 2008 estimate set the total world resources of oil shale at 689 gigatons — equivalent to yield of 4.8 trillion barrels (760 billion cubic metres) of shale oil, with the largest reserves in the United States, which is thought to have 3.7 trillion barrels (590 billion cubic metres), though only a part of it is recoverable.[2] According to the 2010 World Energy Outlook by the International Energy Agency, the world oil shale resources may be equivalent of more than 5 trillion barrels (790 billion cubic metres) of oil in place of which more than 1 trillion barrels (160 billion cubic metres) may be technically recoverable.[3] For comparison, the world’s proven conventional oil reserves were estimated at 1.317 trillion barrels (209.4×109 m3), as of 1 January 2007.[26] The largest deposits in the world occur in the United States in the Green River Formation, which covers portions of Colorado, Utah, and Wyoming; about 70% of this resource lies on land owned or managed by the United States federal government.[27] Deposits in the United States constitute 62% of world resources; together, the United States, Russia and Brazil account for 86% of the world’s resources in terms of shale-oil content.[24] These figures remain tentative, with exploration or analysis of several deposits still outstanding.[4] Professor Alan R. Carroll of University of Wisconsin–Madison regards the Upper Permian lacustrine oil-shale deposits of northwest China, absent from previous global oil shale assessments, as comparable in size to the Green River Formation.[28]
Dont use Wikipedia. You are confusing light oils trapped in very low permeability rocks with immature shale oil. They aren’t the same stuff.
The kerogen (aka “shale”oil) resource is very large. The production of this oil is expensive and requires a lot of water for the process.
The Green River shale will be constrained by both the cost and the lack of water in the Western United States.
It is unlikely to be a significant source of oil until oil prices are $200/b in 2015 $ (maybe in 2050 or so), if oil prices ever reach that level demand will be low enough that other oil resources (LTO, deep water, arctic, oil sands, and conventional oil) will meet the supply and the kerogen resources may be left in the ground.
Bloomingdave, OPEC has already made that assessment. Check it out at the link below. I agree with them, that the vast majority of shale oil resources are in the US, but not as to production. Shale oil production will be down in 2016 by a significant amount. Not slightly up as this chart indicates. And long term production will not be anything close to what they are projecting.
Global Tight Crude Supply Outlook
Thank you, Ron. It seems that the majority of the potential production lies within the U.S., but it does seem unbelievable that we would expect (as OPEC does) that shale oil would render over 4mbd production clear through 2040! Perhaps it might be imagined with a return to high prices, but my impression is that, even then, the Red Queen scenario has been playing out, with well productivity declining over time.
So, it seems that shale oil will continue adding very little relative to total world production, and not able to offset declines in existing conventional fields.
“the flood’s most adverse economic impact may be on oil, which may see an even greater increase in stockpiles as a result, pushing the price of oil even lower.”
http://www.zerohedge.com/news/2016-01-02/stunning-drone-footage-midwest-flooding-wreaking-havoc-us-oil-industry
Looks like ZeroHedge guy is short on oil 😉
Likbez
Oil shale, as is described in your post, is a completely different ‘animal’ from shale oil. The similarity in terms can lead to much confusion.
I think that Ron may have been a trader. If he was, he may be able to confirm my recollections. My recollection is [contrary to what anyone would expect], if refineries are disrupted [hurricane Katrina, e.g.] the price of products goes up, but so does the price of oil. I really cannot explain it, but maybe he can.
Any weather event bad enough to shut down refineries over a large area is also going to shut down oil production, especially deep water oil.If the roads are flooded, and the power is off, field workers aren’t going to work even on dry land oil wells.
There are no deep water oil fields close to refineries. Offshore fields may get shut in by hurricanes. Large floods can shut down pipelines at river crossings. I never saw anything shut in for rain. I did see shut ins for very high winds and snow. But in general that’s because the intense cold makes hydrate plugs in field gas lines. I also figured out we would get very low fuel system pressure on very cold nights because the gas shrunk. Low fuel gas pressure can shut in some fields.
Not sure if it’s been mentioned elsewhere but Swift Energy declared bankruptcy today (40th USA energy company since price crash) – $1 billion assets, $1.35 billion debt.
Chapter 11. $75 million in DIP money. The DIP money is coming from senior creditors.
Reorg will do a debt for equity swap and it looks like present shareholders will be buried down to 4% of the new company. The bondholders are essentially getting it all.
3 months to emerge. The clock will then start ticking on the next filing.
Please clarify “The bond holders are getting it all”. According to the press release:
“Swift Energy Company (OTC PINK: SFYW) (“the Company”) announced today that it has reached an agreement with holders of a majority of its senior notes to convert all senior notes to equity”.
To me this sounds like the bond holder get shares, which may be close to worthless. In the meantime the “Company has also arranged up to $75 million of debtor-in-possession (DIP) financing from a group of senior noteholders to provide additional liquidity to fund the business through the Chapter 11 process.”
As I read this, it appears the big money bond holders get a $1B company for $75M. The little guy bond holders get shares, which may be close to worthless and have no interest obligations.
I guess this is what they call “High Finance”
So, are they going to produce any less oil?
Greenbub,
What is different with shale companies from other bankruptcies, is that there are nearly no assets in form of producing wells left. Legacy rate for shale oil stands at over 4 mill b /d and year. This means that a company has to re-invest for its production every year from scratch. So, most would be better off to form a new company and start drilling from scratch again. This is also why the bond market imploded as most bonds are not backed any more by any assets (cash flow from producing wells). The decline rates are just too high.
The really interesting question is when the *investing market in general* will figure this out. Because as soon as they figure that out, *nobody will finance a fracking company* and that’s the end of the industry.
If you have the same bond series, you get the same deal if you own a $1000 bond or if you hold $100 million of the bonds. It is proportionate to your holdings. But, most likely, as the equity was going to zero the bonds were going for 10 cents on the dollar. So, as I said in a previous post, the banks will not suffer a loss. The speculators bought the bonds for pennies on the dollar and they will own the assets. Since they are exchanging their debt for equity, they now own a company with some value and very little debt. The bonds were for sale to anybody that would buy them. You could have bought some. Or not. It is America.
Seems to me that the DIPs who put up the $75M are in control and the first thing they are going to do is get back their 75M from the oil produced.
After that they collect management fees and continue to look after themselves. As for the share holders, hopefully they can sell their shares for a few pennies.
I have followed SFY for a bit. It is a typical shale Ponzi. It will blow through the $75mm pretty quickly. Its wells need a much higher gas price. Bond holders want equity when the company should be liquidated. Bond holders think the world will go back to the time when people believe the shale companies and they will be able to foist their new shares on some idiot. In the meantime, the company will continue to drill unprofitable wells and claim that the wells make money.
Is a financial crisis possible if the number and size of bankrupties are increasing?
Is a human crisis possible if the number and size of beheadings are increasing?
Chris,
We are certainly on the brink of a financial crisis (see below chart). Every time when growth of US industrial production fell below zero, we had a financial crisis. This was the case in 2002 when the internet bubble burst and 2008 when the housing bubble went bust. Step by step the bond market realizes that many oil and gas bonds are not backed by assets due to high depletion of oil and gas wells. The unfolding implosion of the high yield bond market shows already some spillover to the overall economy. We will know more over the next few months.
http://boingboing.net/2016/01/02/free-stanford-course-on-survei.html
Anybody interested in privacy issues will probably want to sign up for this course. The opening page says no computer expertise is necessary.
http://www.thenational.ae/business/energy/the-energy-subsidies-dam-has-finally-broken-in-the-middle-east
Some good background info here about changing energy subsidy policies in the Middle East.
http://www.cnbc.com/2015/12/31/shotgun-weddings-in-energy-to-boost-ma-in-2016.html
A LOT of charts in this article from a reputable source. If I had money in oil,I would read it very carefully indeed.
OFM. Thank you for the post. The charts are very telling.
WTI averaged about $49 in 2015. It is at $37 now, so much lower. I estimate most in US are receiving in the $30-34 per barrel range for light sweet crude. Those in the Rockies and many heavy crude oil sellers are below $30.
Prices here or lower for the year will really shake things up, I agree.
Much of US conventional is underwater. Many were in great shape headed into 2014, little to no debt, wide operating margins. Now it is a case of watching production slowly decline, and trying to decide whether to borrow money to keep operating or not.
As for US shale, as Rune pointed out recently, a large percentage of cumulative US LTO and natural gas production has been sold at a loss, and at $37 WTI, virtually all will be sold at a loss. Even at much higher prices, almost all will be sold at a loss, as steep cost reductions didn’t kick in until 2015, and the vast majority of wells were drilled and completed pre 2015.
I don’t even feel like doing my simple math today, no reason to when the working interest owners of LTO oil wells will not even have GROSS REVENUE equal to the cost to drill and complete a well at these prices.
I did fill up for $1.58 yesterday. I wonder how much gasoline US drivers will conserve at that price?
The USA MSM, and especially CNBC, is probably the least reliable source as for any forecast. CNBC talking heads (aka presstitutes) should not be trusted: too much cheerleading, too little analysis.
What they practice is “Fact free reporting”. Note that they never mention the fact that most shale/tight oil producers now operate at a loss on each barrel they produce and that situation is not sustainable. Also Saudis exported around 7.3 Mb/d in 2015 and 7.54 Mb/d in 2013 and those guys are talking about Saudis flooding the world with oil.
I noted an amazingly high correction in their stories for the last six months or so. As if some “talking points” on this topic exist and distributed much like State Department talking point about coverage of foreign events.
None mentions loss of employment and wealth destruction from this event with states where shale/tight oil boom happened sliding in deep financial distress. As well as hanging over their heads junk bond debt of shale companies which at current prices will not be repaid as cash flow is mostly negative. I wonder what percentage of this debt is due in 2016.
It is a very interesting idea of the US oil glut that happily coexists with rising US oil imports. Doublethink as it is called in 1984.
These days with gas at two dollars and the use of coupons, my gas costs one dollar per gallon.
About what it should be. My hope is that oil falls to 20 dollars per barrel, gas at the pump at .99 cents, and with coupons, my gas in the tank will be 49 cents per gallon. 1975 prices.
The oil e&p companies can go broke because they are going to anyways.
The Production Tax Credit raised the basic rate for my electricity usage from 8 dollars per month to 32 dollars per month. That is a 300 percent increase.
I have to subsidize wind and solar, forced to pay.
If I can buy gas for a dollar per gallon, in a roundabout way, oil companies are being forced to subsidize wind and solar along with costs of my electricity usage.
I have zero sympathy for wind and solar entities, and with any good luck, they will all go belly up too.
The crocodile tears shed will flood the Mississippi all year round!
Over at Santa’s blog, Santa always says at the end of each and every reply, “You be good now”.
Fred should head over to Mexico and have lunch with Glen just to smooth out their differences.
A pleasant conversation over a bowl of pazole with some cabbage on top would help a lot! Two heads are better than one, even if one is a cabbage head. har
What will Santa do if there is no coal for those who have not been nice?
A war on coal is a war on Christmas! lol
LOL!
What will Santa do if there is no coal for those who have not been nice?
He can stuff the bad little uns’ stockings with solar powered scientific calculators. I’m pretty sure the average kid today would really hate one of those…
Fred. After doing a lot of driving in the US plains over the years, it is amazing how many windmills there are.
I have no idea how efficient they are, but there sure are a lot of them. Interesting at night to see thousands of airplane red warning lights all blink at the same time.
Hey shallow sand,
I haven’t driven through the plains in the US but I have seen similar sights in Germany and Austria.
I have seen figures of between 30 to 40% average efficiency.
27 % is more like it. Really good areas do hit 35 %.
Hi Fernando,
The US Plains are “very good areas” for Wind, so a new Wind farm (installed in 2015) is very likely to be able to produce at 35% of capacity, possibly higher in some areas of the US plains.
See the note on gross capacity factor and so on here:
http://apps2.eere.energy.gov/wind/windexchange/wind_resource_maps.asp?stateab=tx
It says 30 % for the USA. An electrical engineer I know told me that for planning purposes it was better to use 27 % because of other factors, such as excess generation capacity when the wind blew very well on holidays.
Hi Fernando,
Yes the average would be 30%, the better areas are higher, the Great plains in the US is one of the best US areas for onshore wind power.
For the better areas (2/3 of the total) the average is about 35%, with the best states as high as 40% (South Dakota, North Dakota, and Nebraska) data from 2012, newer turbines tend to be better so this may have improved.
Two ducks a gallon!
Highway Robbery!
In my fair city, at the high-price station near my home, regular gasoline is now $1.79/gallon.
Gasbuddy.com showing the 15 lowest-priced stations at $1.63-$1.69/gal.
No coupons required.
Enjoy it while it lasts!
I am about ready to let the Venezuela issue rest for a while, but I just ran across this at Quora.
It seems to me to tell it about like it is, or was, in the days of the Chavistas, and later.
I do understand that times were in some ways even worse previous to the Chavista regime and that it DID bring about some general improvements in conditions for a lot of poor people.
xxxxx
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Answer written •
Economics
• Dec 16
Is Venezuela a good example of why Bernie Sanders would not be good for America?
Carlos Matias La Borde
Carlos Matias La Borde, Half Venezuelan
4.7k Views • Upvoted by Lucas Karl Hahn, United States citizen since 1990
Carlos is a Most Viewed Writer in Venezuela.
Venezuela is a good example of why a dictatorship and stupid leaders with too much power doing dumb stuff doesn’t work. It has nothing to do with socialism. Chavez played around with Venezuela like it was Candy Land.
He was always doing random, stupid nonsense. Like “our currency sucks, so I’m making a new one, instead of the bolivar, it’s called the strong bolivar, and it’s worth 4 to a dollar”. Then when that started to decline like crazy, he was like “it’s illegal to accept less than 4 bolivars to their dollar equivalent”. Because he doesn’t get economics.
So then overnight, the black market scalps every single plane ticket and starts selling them on the down low, marked way up. So it was actually impossible to leave the country without going through the black market.
The insane “socialist” government that his administration ran was complete rubbish. The government just seized all sorts of buildings arbitrarily to house the homeless or poor, rather than coming up with a sustainable way to improve the economy, create more jobs or build state housing.
When I was there some years ago, next door to my uncle’s house some people were building a large mall. The government just grabbed it a few years later, still in the middle of construction and passed it off to the homeless. This kind of thing ensured that they got voters, and destroyed the economy and the “free” market.
Some cousins had invested in a few Venezuelan companies, out of the blue, they get seized, all of the stock holders get nothing.
Then people wonder why no one invests there, and why the economy is rubbish. It did stuff like this over and over and over again. People invest and start a business, government steals it. Eventually people stopped investing and the economy tanked even harder.
The government was a freaking joke. And they had so much oil that we could fill up a tank for 50 cents, and the subway cost 2.5 cents. Literally.
That’s not an example of socialism. It’s an example of an incredibly unstable government with far too much power ruled by the equivalent of a toddler jacked up on Adderall. Thank God the opposition finally took the Senate at least…
It has absolutely nothing to do with Bernie Sanders.
Updated Dec 18 • View Upvotes
xxxx
Everything I have ever run across mentioning Venezuela that was not obvious propaganda, or partisan political rhetoric, indicates than the Chavista regime was utterly incompetent, taken all around, and then when downhill from utter incompetence to childish.
So far I have not been able to discover any reason why anybody would support such idiots and scumbags as the Maduro’s, excepting two. One , they are the recipients of Maduro largesse. That would apply to people INSIDE the country, the ones who do get the scarce food, the government paychecks, the near non existent medicines, etc.
Two, such people, those outside the country, have a gut level hatred of capitalism, as opposed to socialism, and are utterly incapable of admitting they are just flat assed wrong about one of their socialist hero leaders or countries.
Such behavior is of course par for the course for naked apes.
OFM,
Two, such people, those outside the country, have a gut level hatred of capitalism, as opposed to socialism, and are utterly incapable of admitting they are just flat assed wrong about one of their socialist hero leaders or countries.
With all due respect what is happening in Venezuela has zero to do with socialism. Maduro is nobody’s socialist hero and his regime is not a socialist government and despite what has been said around here it is not a communist government either. It is the epitome of an incompetent power hungry government that is desperately trying to hang on to power at all costs to the detriment of the entire country.
For the record, my models of socialist democracies are countries such as Denmark, Finland, and the Netherlands and all of them are engaged in a transition to Capitalism 2.o which is the circular economic model and one which I strongly support!
Venezuela under Maduro is a cesspool of corruption and incompetence! Compared to him even the most corrupt Brazilian politicians look like the most ethical of people.
Hi Fernando,
I agree, socialism can be like a cancer.
But pure capitalism can be as bad, and maybe even worse. I have no doubt I would commit murder in order to obtain the money necessary, if I were in a tight enough spot, unable to pay for essential medical care for myself or a loved one.
If enough people get to be poor enough, while the rest of the people of a given country continue to live well, or even better, the result is apt to be civil unrest which can and does occasionally evolve into outright civil war. That is not good for ANYBODY, except maybe people who make their living as security guards.
I cannot see any real evidence that hard core capitalists as a group give a flying fuck about the welfare of people who are just shit out of luck in terms of employment and the day to day essentials of life.
It is true that once in a while one of them donates his fortune to building hospitals and universities, the really hard up people mostly get access to such places as janitors, rather than as patients or scholars.
“With all due respect what is happening in Venezuela has zero to do with socialism”
I agree.
This is WHY I posted the quote from Quora, not to defend or detract from Sanders, but to further illustrate WHY things are so bad in Venezuela.
But so far as that goes, I would far rather see Sanders in office in the USA than HRC, or the Trump CHUMP.Sanders wouldn’t be able to move the needle far enough toward the socialist model to harm the country and would be good for the country in some respects. HRC provably has the ethics of an alley cat, and not much in the line of actual judgement, in my opinion. IF there is such a thing as an old time MACHINE POLITICIAN in the modern day Democratic party, SHE is the undisputed champ.
As for TRUMP – well, I can hardly say anything about him without cussing excessively.
The problem is not socialism as such, but rather the capture of the government of Venezuela by people who came to power by REPRESENTING themselves as socialists. They aren’t, most of them, but the lower ranking members of the regime at least, might have ONCE BEEN socialists.
Some former supporters of Maduro and company no doubt ARE still socialists, but any of them with brains and data enough to think must by now realize that the Maduro regime consists of mad men obsessed with their own power and positions, men who do not give a crap about the people of the country.
Capitalists are no better, when it comes to the ethics of individual politicians and parties. Things might actually be WORSE if the government of Venezuela had been captured by socalled capitalists who were equally lacking in competence and equally despicable at the personal level.
Having said this much, I still have never come up on a better quote in respect to the trouble with socialism than the words of Margaret Thatcher, who said the problem with socialism is that eventually you run out of other people’s money.
I am so far as I know, the only reasonably well educated, reasonably articulate person in THIS FORUM who GREW UP in close contact with both the low life underclass, as well as the poor people of the working class, and lived my life in actual HONEST contact with both groups.
A social worker ( I have relatives and friends who ARE social workers, and in PRIVATE they will get drunk and admit the truth. ) never has a CLUE, they are necessarily BLIND to reality. Seeing and admitting reality would mean having to give up the somewhat cushy job, with nothing ever heavier to lift than a pencil, government bennies, govt pension,lifetime security, etc . Who was it that said a man cannot understand anything incompatible with his station in life? My memory ain’t what it used to be!
Socialism is like a necessary drug, say a pain killer. Some is good, but excess access to it is DEADLY. I know numerous individuals, TODAY, that CHOOSE to take it easy, compared to holding a REGULAR job, and live from one day to the next on welfare.
The actual truth of the matter is that considering the fact that they get free school lunches, rental assistance, almost free medical care, and have no expenses getting to and from work, they live a damned sight easier and almost as well, day to day, than my own parents lived the first two thirds of their lives, working their asses off daylight to dark and well into the night.
I am NOT judging them, at least not when I am in a dispassionate or disinterested mood, because at heart I am Darwinist,and believe life adapts to fill every available niche.
I would JOIN them, if my circumstances were different, and do not mind admitting I DID join them, periodically, back in my working days, when I could earn a high five figure income, sometimes a six figure income, working in nukes on shutdowns. When I got laid off, my unemployment bennies were there for the taking, and AMPLE for me to retreat to my paid for camper in my own little piece of paid for forest, without touching my savings, because I was NOT obligated to take a lesser paying job than the one I lost. I took the checks. Incidentally I also did quite a bit of work, building equity in my own property, which was perfectly legal, so long as it generated no cash income. So I played by the socialist rules. The people at the unemployment office told me specifically that I could work on my farm pond,etc, which generates no income, to my hearts content. It does however generate some fresh bass and bluegill for the table. 😉
Socialism is a mixed bag. So is capitalism.
Mac, right now things in Venezuela are much much worse than ANYTHING seen in over 50 years. Today’s conditions were caused by Chavez. Maduro inherited a mess, he made it worse. But Maduro was chosen by the Cubans to replace Chavez. Those of us who gave seen the monsters in Havana do their thing can see they are trying to make Venezuela another Cuba. They are worse than any dictatorship ever seen in South America. Pure cancer.
Hi Fernando,
I believe you and I are the only two people in this forum to have devoted any serious study to the nature and day to day realities of communist governments, the way they operated, etc. .My experience however is limited to reading every book, at one time, which I could find, about communism, especially books written by REFUGEES from commie countries.Yours is more relevant, being first hand.
So I am generally very much in agreement with you when it comes to Cuba and Venezuela.
I am willing to take your word for it that the Cubans at the very least had big hand in orchestrating the rise of Maduro to power. It makes perfect sense,given the history between the countries, that they would have thrown their weight into the contest, and picked a winner, who would be thereafter in their debt.
And while I do recognize that the Castro regime has accomplished a few good things, such as training enough doctors to provide BASIC medical care to the Cuban people, I DO NOT FORGET that they are low life dictators, who have never and will never allow a free election, or a free press, etc, until SOMEBODY kicks their asses out of power and hopefully into dungeons, for the duration.
The willful blindness of a stereotypical liberal to this absolutely unquestionably true assessment of the Castro regime is enough to make me PUKE , and has a hell of a lot to do with the fact I can never bring myself to think of myself as a “liberal” in the sense of the typical person I used to meet at university faculty functions.
I also have no reason to doubt that things are worse now in Venezuela than at any time within the last fifty years. I suspect that things have NEVER been worse, in relation to the prevailing conditions in other nearby countries at the same time, in past times.
What I am trying to say is that conditions in Venezuela were probably not worse than average, compared to other South and Central American countries, more than fifty years ago. But conditions there are FAR worse now than any other country in South America.
Politically correct I am not, and never will be.
So far as I am concerned, people who believe all cultures are equally worthwhile are idiots, pure and simple. They want to play the absurd game of being able to judge and look down on and condemn who THEY please, while denying the same right to every body who disagrees with them.
Now did the people of Cuba want to see us Yankees kicked out?If I were a poor person in Cuba in those days, I would most likely have believed in the Castro revolution.
I believe they did, but I do not think they wanted WHAT THEY ACTUALLY GOT.
Unfortunately Cuba got caught up in the same situation that has been the bane of POLAND for much of history. Smaller or less powerful countries located in places where bigger more powerful countries come into conflict are apt to suffer mightily thru no fault of their own.
If it had not been for the old Russian commies supporting and subsidizing him until Castro could establish his police state so firmly it could not be over thrown by the Cuban people, I think it is very likely there would have been a second revolution, and he would have been out on his ass within a decade or two of gaining power.
And yet Nelson Mandela, Bernie Sanders and Pope Francis love him…
Pope Francis is a morally flexible businessman with left wing tendencies. But I think he’s primarily immersed in trying to help the Catholic Church survive. Allowing married priests seems to be the better solution, but he’s got a lot of medieval bullshit in his head.
Castro’s a dictator, yeah, but so was Batista, and Batista was much much worse.
Castro actually didn’t kick anyone out; the US proceeded to put an embargo on Cuba because Cuba had rejected the US’s pet dictator-torturer. The US has a really, really bad record here.
It’s worth keeping perspective. People badmouth Lenin, but he was so much better than the Tsar that there’s no comparison.
I actually think that Castro was propped up by the US embargo. Exposed to a friendly US, I think the people of Cuba would have tossed Castro out. Isolated from the US, they looked to Castro to fight the power.
In Vietnam, Ho Chi Minh wanted to ally with the US (documented historical fact, he made repeated overtures) but the US refused and supported colonialist France (!!!) so Ho Chi Minh allied with Russia. Entirely the fault of the US.
The Cuban situation is actually quite similar, though there was no patriot like Ho Chi Minh.
I am not sure what the OP has to do with Bernie Sanders, other than his name is mentioned at the neginning and the end of the post.
?
Somebody ask the question, whether Venezuela is proof that Bernie Sanders would be bad for the USA if elected.
The answer indicates that incompetence and cronyism, etc , are the real problem in Venezuela, rather than socialism.
I agree, although I am a small government, libertarian sort of conservative. Socialism can work , capitalism can work, neither works well in the pure form. A mixed economy , so far as I can tell, is the best for everybody, as a general rule.
Some problems can only be effectively dealt with at the sovereign government level, including pollution control, national security, and public health issues.
Sometimes the capitalist model fails to work because the people in a certain industry manage to set themselves up as a monopoly or a cartel, or something similar. This is the case in medical care here in the USA.
It is literally impossible for a poor person to afford any sort of extensive medical care in the USA, or even basic preventative and maintenance dental care. Some would argue, let them suffer and die, but that argument does not wash on ethical or practical grounds. Everybody in the country, as a whole, will be better off once medical care is socialized,or more tightly regulated at least in respect to costs, and it will be, eventually, as it has been in other rich western countries.
It is cheaper to help poor people stay healthy than it is to support them on welfare because they cannot work, or to have them turn to crime, for lack of money for health care. I personally know somebody who went into dealing drugs to get money to get his teeth extracted. It does seem fair to mention that his teeth NEEDED extraction because he ruined them doing meth.
My dentist is very reasonable, as far as dentists fee schedules go, but he still appears to make three hundred thousand bucks or more, net, every year. It is patently not morally tolerable that he charge a poor man two weeks take home pay for half an hour to forty five minutes of his time.
And I am not interested in hearing about how high his expenses are, he has three techs cleaning teeth at ninety bucks a pop, who bring in way more than enough to cover ALL his expenses except maybe income taxes.
Some people argue that the extensive training needed justifies the cost. I don’t think so. An MD has to know everything possible, but a dentist generally does the same damned thing over and over and over. An auto mechanic does not have to be a qualified mechanical engineer, or physicists, to fix cars. Results for patients would probably be just as good, statistically, if ninety percent of all dentists spent half as much time in school, and referred any patients showing possible signs of disease requiring more sophisticated treatment than fillings, crowns, extractions, etc to other dentists or medical doctors as such.
It ought to be flatassed against the law for a doctor, dentist or hospital to charge an individual more for a given treatment than he gets paid by an insurance company. They virtually all require cash on the spot, and the costs of taking in checks and a little cash and depositing it in a bank is less than the cost of dealing with insurance companies.
Capitalism is FINE, except when the capitalists capture the system. For all intents and purposes, there is very little cost competition in medical care these days, in the USA, because between the medical people themselves, the insurance industry, and the legal industry, they are all latched on to the body politic like ticks, rather than competitors. The only real competition is to see who can gouge the deepest.
A casual question asked , by me, to my dentist’s personal assistant, revealed that she shoots enough ex rays to just about cover her estimated salary and benefits. So far I have not been able to find out how much one piece of film costs, but I am confident it is very little.
OFM,
Thanks for the clarification, and for your post.
I think you are a pretty sharp knife in the peakoilbarrel drawer.
“A mixed economy , so far as I can tell, is the best for everybody, as a general rule. ”
Yea, this was taught in my Econ 101 class so many moons ago.
Although I do not agree with every thing you say (many things though), I enjoy your writing…I will go on the record as hoping you continue to write your fine posts, and do not cut them down.
Mixed economy is the best, absolutely.
Without a healthy dose of socialism, capitalism destroys itself as a small elite builds monopolies, takes power, and turns themselves into feudal lords. (This is happening right now in the US.)
Without a healthy dose of capitalism, socialism degenerates into “entrenched bureaucrats decide what to do”, you get the corporate bureaucracy disease nationwide and you stop being able to produce food effectively as happened under Brezhnev.
Mac, socialism is like cancer. I don’t want to get into it anymore. But the only thing that’s worse is those Daesh savages.
By the way, the new President of the Venezuelan National Assembly will be Henry Ramos. He is about 74 years old, leads the left of center Democratic Action faction within the Unity alliance.
I saw a tv interview he had a couple of weeks ago, sounded very firm and said the people had tired of the socialists, they had asked for change, and he was going to work to deliver it. So far the government works very hard to keep him off tv, but I think some station managers are smelling that they have to change sides, so we may see him at least on venevision. If he gets on ill tape it.
The left-right paradigm is a stage set for idiots to argue upon about how they should best be enslaved.
Right now I’m worried about the left simply because they destroyed Cuba, where I was born, and Venezuela, a country where I lived for many years. When I get a right wing threat as menacing I’ll deal with it. Thus far the most extreme right wing threat I can see is Netanyahu, but that’s fairly low on my bitching list.
Oh, claiming that “the left destroyed Cuba”? So you’re a Batista supporter? Also known as a right-wing idiot?
Most credible historians agree that the US policy of setting up puppet governments in banana republics destroyed Cuba.
Fernando ,
Let us pray, figuratively, that the new majority government will actually be able to take control of the country.
I don’t think there is very much left in the way of a tv station or newspaper in Venezuela that is managed by people brave enough to contradict the Maduro regime, which has proven itself perfectly ready , willing and able to trump up bogus criminal charges, or arrange for the electricity to go off at the station, or prevent news print from being delivered, etc.
I have read a great deal about how such things are accomplished by such outfits, ranging from Hitler’s goons, to Stalin’s to Maduro’s.
But at the same time, it does become obvious even to dyed in the wool regime partisans that things have degenerated to a naked power struggle at some point, and so the regime in power has to be somewhat careful not to over do the thuggery in silencing the opposition.
The opposition is now strong enough in Venezuela that in my opinion the Maduro regime is finished, but the end game may take a good while yet to be played out.
Mac, I’m seeing a change over the last 72 hours. This morning Caracas is militarized, there are troops everywhere. And it APPEARS they were deployed to protect the population from the Chavista brown shirts, known as “colectivos”.
Some colectivos have announced they will try to block the National Assembly deputies from entering the building. This was encouraged by Tarek el Aissami, a Syrian-Venezuelan who appears to be associated with the Assad regime, a really radical guy who is governor of a small province about 150 km from Caracas.
General Padrino López is a Chavista who appears to be in control of the military. I say appears because Maduro asked for his resignation, but there’s no way to tell if he did or not.
Padrino López was the guy who stopped the Maduro-Cabello coup attempt on December 6, Election Day. The socialists knew they were way behind in the polls, but they felt they could do ballot stuffing in close districts. Padrino López was the one who ordered his troops to adhere to electoral law and stop Chavistas from keeping ballot boxes accessible so they could be stuffed. The opposition also used electronic interference devices to stop Chavistas inside the voting venues to communicate their status, which allowed the extra voters to be taken to such sites.
Thus Maduro had intended to win at any cost. But Padrino López seems to have stopped him, he also stopped a later proposal by Cabello to deploy militias and declare themselves the winners. This eventually forced the electoral commission to declare the first 99 winners.
So, I’m getting into way too much detail here, you guys can’t absorb it. Let’s just say there seems to be an internal struggle, the military seems to think Maduro is tainted, said to be a Castro agent, and some news channels are carefully allowing some information out. I’ll see what they load on YouTube today, unfortunately it’s all in Spanish.
Mac, new news: yesterday a privately owned tv channel cut away from a Chavista commentary show 4 minutes after it started. They started showing the Ramos announcement straight from the Unity site. After the announcement they cut back to regularly scheduled programming, but the Chavista talking head had left the building.
The two widely distributed private tv channels exercise strict self censorship, but this seems to have cracked in the last few days. They still seem to give government officials more coverage (even though the government has four channels spouting propaganda all the time). Hopefully they will cover tomorrow’s events. I have a contact in a poor area away from Caracas, I’ll see if they get to see anything.
An interesting article about air pollution from diesel engines.
http://www.nytimes.com/2016/01/03/opinion/sunday/the-dirty-truth-about-clean-diesel.html?action=click&pgtype=Homepage&clickSource=story-heading&module=opinion-c-col-left-region®ion=opinion-c-col-left-region&WT.nav=opinion-c-col-left-region
I am glad that the U.S. small vehicle fleet is mainly gasoline-powered vice Diesel-powered.
I have occasionally seen giant pickup trucks driving down surface streets in the large city where I live…trucks with the giant stack or stacks anchored to the front of the bed…when the driver stomps on the accelerator, the stack(s) belch great clouds of dirty back diesel particulate-laden smoke.
I have not seen one of these for a few months now, so maybe the police are doing their job and ticketing these cretins.
Modern diesel engines do not blow visible black smoke, unless they have been either tampered with, or very poorly maintained. That smoke is the leftover of unburnt WASTED fuel- and the only real purpose in having a diesel engine is greater fuel economy. Such smoke is a redneck “look at me” display, pure and simple.
I never lose an opportunity to remind Yankees that they will NEVER recover the additional EXTRA cost of a diesel engine in a pickup truck unless they drive the living hell out of it for ten or fifteen years,and maybe not even then.
Diesel engines that are built to INDUSTRIAL ENGINE standards, like the ones that go into eighteen wheelers and bulldozers, generally last twice or three times as long as the ones installed in cars and pickups – which are on average not going to outlast ordinary gasoline engines.Wrecking yards are sitting full of wrecked pickups that HAD diesel engines in them- they sell as fast as they come in, indicating that they go bad on average faster than ordinary pickup truck engines, which are readily available at wrecking yards. You pay an outrageous price for a used diesel and still often have to wait for it.
For that matter, a hell of a lot of cheap new tractors will not last very long at all.
Just about all the major manufacturers are guilty of selling consumer junk masquerading as the real stuff nowadays. If you want a tractor, you BETTER buy one identical to the ones you see working on actual farms, where the same model was or is built for ten years or longer, and marketed all over the country, and preferably all over the world.
There is a little so called special purpose Ford diesel sitting at the nearest garage in need of a motor overhaul, and the parts are going to cost more than the tractor is worth, as much as the owner can buy a similar used tractor for in a one running order. If it had been a Ford marketed to farmers, rather than golf courses, etc, it would cost a third as much for the parts, so help me Sky Daddy.
Ford is one of the very BEST makes when it comes to affordable, readily available spare parts.
Beware the capitalist marketing system. It will sell you a Chevrolet in a suit and call it a Cadillac in a heart beat, and laugh at you all the while.Beware any name brand that suddenly shows up in big box stores, which was formerly only available at dealerships. You can safely bet the new models are consumer throw away products, rather than commercial quality.
High fuel taxes in Europe are apparently enough to tilt the overall cost of ownership and operation in favor of diesels.
OFM,
I have seen, on the internet, pictures of diesel pickups, putting out huge amounts of black smoke on demand. Some sort of after market gadget, to make them into smart arses. But when I was in Wisconsin, at different times, I saw two different diesel trucks accelerate away blowing black smoke. Is was not the intense smoke, I saw on the internet, but seemed more consistent with bad injectors. These days of electronic common rail injectors, it is very unusual to see much black smoke.
Is it common to see black smoke from modern diesels in pickups in the US? If so what are the most likely reasons, apart from deliberate tampering!
http://www.bloomberg.com/news/articles/2016-01-03/iran-won-t-harm-oil-market-with-post-sanctions-production-boost
Another million a day within 6 months.
“In the first phase, Iran will raise exports by 500,000 barrels a day within a week after the removal of international sanctions, he said Sunday. The country will add another 500,000 barrels a day in a second phase within six months after the curbs end, Zanganeh said. “
Bloomberg (like most other US MSM) consistently use fear mongering about Iran oil that soon will flood the market. And provide only selective quotes from Iran officials and no facts about their industry and fields. Which reminds me Baghdad “We will push those crooks, those mercenaries back into the swamp” Bob. If this is so easy then why they gave up their share on china oil market to Saudis?
http://oilprice.com/Latest-Energy-News/World-News/Iran-Denies-Reports-It-Plans-To-Resume-Oil-Sales-With-Steep-Discounts.html
http://oilprice.com/Energy/Crude-Oil/The-Mirage-Of-An-Iranian-Oil-Bonanza.html
Bloomberg (like most other US MSM) consistently use fear mongering about Iran oil that soon will flood the market.
Oh get real here. Bloomberg, (like most US MSM), just wants to report the fucking news. The idea that Bloomberg is part of a giant conspiracy theory, in cahoots with the government, or whomever, is just goddamn stupid.
Comparing even with the British coverage the statement “Bloomberg, (like most US MSM), just wants to report the f**king news.” is very weak.
In foreign events coverage they want to propagate a certain agenda and are very disciplined in pursuing this goal. That does not exclude that sometimes they report important news with minor distortions. But to assume that they “just wants to report the f**king news” is extremely naïve if we are taking about foreign events.
Remember all those fancy dances pretending to be news about Iran sanctions. Truth is the first victim of war. Unfortunately this war for world dominance now became a permanent business for the USA. And Iran is considered by US establishment as an enemy.
I would recommend to read AMERICAN EMPIRE by Andrew J. BACEVICH
Harvard University Press, 2002 – 302 pages
18 Reviews
In a challenging, provocative book, Andrew Bacevich reconsiders the assumptions and purposes governing the exercise of American global power. Examining the presidencies of George H. W. Bush and Bill Clinton–as well as George W. Bush’s first year in office–he demolishes the view that the United States has failed to devise a replacement for containment as a basis for foreign policy. He finds instead that successive post-Cold War administrations have adhered to a well-defined “strategy of openness.” Motivated by the imperative of economic expansionism, that strategy aims to foster an open and integrated international order, thereby perpetuating the undisputed primacy of the world’s sole remaining superpower. Moreover, openness is not a new strategy, but has been an abiding preoccupation of policymakers as far back as Woodrow Wilson.
Although based on expectations that eliminating barriers to the movement of trade, capital, and ideas nurtures not only affluence but also democracy, the aggressive pursuit of openness has met considerable resistance. To overcome that resistance, U.S. policymakers have with increasing frequency resorted to force, and military power has emerged as never before as the preferred instrument of American statecraft, resulting in the progressive militarization of U.S. foreign policy.
Neither indictment nor celebration, American Empire sees the drive for openness for what it is–a breathtakingly ambitious project aimed at erecting a global imperium. Large questions remain about that project’s feasibility and about the human, financial, and moral costs that it will entail. By penetrating the illusions obscuring the reality of U.S. policy, this book marks an essential first step toward finding the answers.
Bloomberg has no agenda other than to be the mouthpiece of Goldman Sachs. Thought most people knew that.
Arceus, post your evidence of just shut the fuck up. And NO, most people don’t know about your very stupid idea that Bloomberg is just a mouthpiece for Goldman Sachs. You just made that shit up in order to sound like you had a few more brain cells than you obviously have.
Arceus, how does this figure into your theory?
http://www.vanityfair.com/news/2015/09/goldman-sachs-bloomberg-terminal
“the latest would-be Bloomberg competitor is a foe it knows well. It’s one of its most important clients: Goldman Sachs.”
I would recommend to read AMERICAN EMPIRE by Andrew J. BACEVICH
Likbez, your “American Empire” article does not mention Bloomberg, whom you accuse of having an agenda other than reporting the news. Your charge was against Bloomberg, and all other MSM news agencies. Make your case against them without quoting other conspiracy theory articles if you possibly can. But I seriously doubt you can do that, owing to your obvious limited cognitive abilities.
Sorry for being so blunt but you conspiracy theory nuts just piss me off.
“Make your case against them without quoting other conspiracy theory articles if you possibly can.”
Let’s compare Bloomberg coverage with FT coverage of Mr Zanganeh position on the issue with Blomberg.
I will use the following article
http://www.ft.com/intl/cms/s/0/74d30686-9d92-11e5-8ce1-f6219b685d74.html
From FT article it looks like the same minister is saying quite opposite things. It looks like Iran does not want to play the role of trump card that will allow to keep oil prices low for another year or two — the implied message of Bloomberg article, which implicitly supports those who want to drive the oil market lower (which, of course, includes GS)
== start of the quote ===
“Some of the Opec members believe it is better to go along with this level of production,” Iran’s oil minister Bijan Zanganeh said after the meeting of ministers in Vienna on Friday, in a thinly-veiled dig at Saudi Arabia. “I didn’t have any other expectation.”
Mr Zanganeh has been among ministers calling for action to stem the drop in oil prices that have this week collapsed to near seven-year lows. His requests, like those from Venezuela and others, have been rebuffed by the group’s de facto leader and largest producer.
The kingdom’s veteran oil minister Ali Al Naimi and his inner circle have made clear that Saudi Arabia will not cut its output without participation from Opec rivals Iran and Iraq, as well as non-Opec countries such as Russia. Until this time, it would continue to defend its market share and sell as much of its oil as it can.
Pressure to limit production as Iran rebuilds its oil industry after years under sanctions has not gone down well in the country, which is targeting output growth of 1m barrels a day after restrictions are lifted.
In a countermove, Mr Zanganeh has said countries that have accelerated output over the past year — Saudi Arabia has increased its production to above 10m barrels a day in 2015 — should pull back to make room for Iran’s production.
== end of the quote ===
So I stand by my point that there is a bias in Bloomberg coverage, who very selectively quotes Mr Zanganeh to push the agenda they favor, while in reality Iran is pushing for cutting production by OPEC to raise the price to $80 level, which they consider fair, not selling its oil at the cost futures markets now dictate like Saudis do. That’s a big difference.
Bloomberg along with most of the large media conglomerates in the U.S. have a bias that is reflected subtly and sometimes not so subtly in their editorial decisions in their straight news and often in cartoonish fashion on their editorial pages (The Wall Street Journal is perhaps the poster child for this). But this is hardly so sort of conspiracy. It is simply who these people are. It reflects their perspective. Their self interest. This is precisely why media consolidation in the hands of a few large corporations is not in the public interest. Because it doesn’t require a conspiracy to severely misinform the population.
Goldman has Iran coming back at 100k per day and increasing to 500k by the end of the year. Considering they’re not even taking bids on their projects until late february, it’s gonna take them a while.
I figure if these types would have Middle-Eastern-sounding names or have a skin color other than white they would be either in jail or dead.
https://www.washingtonpost.com/news/post-nation/wp/2016/01/03/armed-militia-bundy-brothers-take-over-federal-building-in-rural-oregon/?hpid=hp_hp-top-table-main_no-name%3Ahomepage%2Fstory
I love how these ‘patriots’ are taking direct action to protest land use decisions from over a hundred years ago…just the same as in the Cliven Bundy situation.
I wonder if these ‘freemen’ would support the rights of the native Americans to rise up to rectify the injustices of over a century ago?
I would love to embrace OFM’s hope that the U.S. will be able to improvise, adapt, and overcome the ever-growing challenges stemming from declining availability of economically extractable resources and the overtaxing of industrial civilization’s by-products’ sinks…but I am afraid that as ‘the economy’ continues to decline due to humanity’s over-extension, increasing numbers of armed demagogues may try to take advantage of the situation.
I hope the U.S. Government nips this armed rebellion crap in the bud.
Give them 1 hour to come out with their hands up or send in the F14’s. It’s only a building.
Hey guys, I can understand the sentiments, but there are a couple of things we ought to remember. One, we don’t yet know, not really , what is going on. There is sometimes justification for such behavior. If you actually read the news, you know that there are rogue cops, and occasionally ever entire rogue police departments, even here in the USA, and that cops are notorious for covering up crimes on the part of other cops. There could be something along these lines in play in this case. This is or was not a building that is even in use, it was sitting empty, no kidnapping etc.
I have been reading the news, and know of at least three cases of what I will describe as murder pure and simple on the part of cops just within the last few months, and half a dozen more that are highly questionable. In two out of three of those cases, the other cops on the scene lied their asses off to protect their guilty buddy.
The other is that the last thing people who understand good police management of such affairs want is to see the cops go blazing in, creating martyrs and maybe killing some innocent people. There might even be some little kids in that building, or somebody’s senile grandmother.
Killing one person in that sort of encounter breeds a hundred more of the same type.Kill the hundred, and you have ten thousand. Better to round them up peacefully over a few weeks time, they will get what they want, a hearing in the court of public opinion, and then they can be charged with trespassing, resisting arrest, etc, without any real violence. Society wins this way.
The local cops appear to understand this calculus and appear to be prepared to take as much time as needed.
I personally believe that nearly all the mass murder situations, of the sort we have with mentally unbalanced high school age kids, is the result of these kids getting fixated on the constant endless coverage of previous shootings of that sort, looking at the never ending, never going away coverage on the internet, and copycatting. Adults are less prone to copycat, but still do it.
I say put concertina wire around the place and rename it a Federal Prison. Cut the power and confiscate their vehicles. Then see how long it is before they are are begging to be released. Bunch of ignorant peckerwoods.
I’ve followed the history of the Bundys. They’re just criminals, plain and simple, who want to graze their cattle illegally on government land, even when it’s damaging the ecosystem.
Take them to prison and repossess their property to pay the fines. That’s what needs to happen to the Bundys.
How about four centuries ago?
The Manhattan tribe should extirpate every New Yorker from Manhattan Island. Oh, that’s right, the Manhattans were extirpated and exterminated a long time ago. The Last of the Mohicans Manhattan style. First we’ll take Manhattan, then we’ll take Berlin.
Remediate Manhattan Island and restore it to its pristine condition. Tear down every building and skyscraper on Long Island. Hows about that?
The Manhattan tribe has first dibs. Too late, they are all dead, just like every human deserves to be dead and they will be, the sooner the better. It will make the Great Spirit happy.
We don’t need no stinkin’ Native Americans in America. It is so yesterday. Euro-peons don’t know their ass from a hole in the ground.
“You want everything. You want our land, you want everything.” – the words of a Native American
Freakin’ stupid hypocrites deserve to die. That means everybody, humans can go extinct, it will be a blessing in disguise.
eia released petroleum supply monthly 123115. It makes some pretty large revisions to last months info.
This piece at Forbes is well worth a careful reading.
http://www.forbes.com/sites/timworstall/2016/01/03/bps-bob-dudley-oil-will-be-lower-than-you-think-for-longer/
Almost as if on cue, good ol’ Bob Dudley of BP. Creator of the popular catch-phrase “lower for longer,” darling of the financial media for oil price comments, and co-defendant with Goldman Sachs against oil fraud charges stemming from when oil rocketed to $147 per barrel.
The actual article is more ABOUT what Dudley says than WHAT Dudley says.
Titles are often designed so as to be “click bait” which is somewhat the case this time.
But Dudley is no fool.
“There are all too many people out there claiming that the low price of oil tells us that the global economy is stalling, even about to fall off a cliff. It’s even possible that this could be true: but a low oil price is not ineffably a signal of that. It’s the balance between supply and demand that produces that price, not demand itself. Thus a low price could be simply a symptom of an increase in supply, not a fall in demand. We cannot thus simply take a change in a price as an infallible indicator of anything at all: other than that the balance of supply and demand has changed.”
I believe this is nothing less than a bedrock solid observation, as it is entirely consistent with my own lifetime experience in farm commodity markets, and with what is taught in basic economic courses.
Supply sometimes does outrun consumption, and in the case of a commodity such as oil, the price crashes, it is as simple as that. All the hot air in the world that has been expended on explaining the oil price crash, in total, lacks the explanatory power of this single paragraph.
Dudley may be less than a role model for your kids, to put it politely, but he is nevertheless an extremely smart man.
But aside from predicting a low oil price for the near term, what he says about the current valuation of oil stocks is in my opinion FAR more important, to anybody interested in the stock market and in investing in stocks.
The argument basically too long and involved for me to summarize in a clear fashion in a few words, but anybody actually INVESTED in, or interested in investing in oil stocks MOST DEFINITELY ought to read it, carefully.
Basically Dudley is saying the market has oil in the ground at a near zero value , present day, but that oil is going to sell for thirty years or more, at decent prices, and that the cost of extracting it is going to be modest, in comparision to what it will sell for, and that in order to produce and sell for that thirty years, the extraordinarily huge investment NEEDED TO MAINTAIN PRODUCTION PAST THIRTY YEARS yakked about by oil bears WILL NOT BE NECESSARY – if the industry does indeed only last that long, it is going to generate a ton of gravy most of those years.
This makes sense to me, because I do not think we will adapt to scarce oil fast enough to keep the price of it down.
Nobody who is thinking about investing in a given stock today is really going to give a shit about the price of that stock thirty years from now, if he thinks it is going to generate excellent profits for most of those years. He can always bail out while the going is still good, and probably at a nice profit.
Hi Old Farmer Mac,
I have not read the article, but will assume you have summarized the article correctly. Some of the oil in the ground can be produced profitably, if the market is able to balance supply and demand correctly. The problem is that a capital intensive business like oil production does not respond quickly enough to market signals to keep the oil market in balance so it requires market regulation.
This is why the RRC of Texas was formed in the 1930s and essentially regulated the World oil supply until 1970 with Texas acting as the “swing producer”. Then OPEC took on this role in the 1980s with Saudi Arabia being the main “swing producer”.
Until a new way to regulate the oil market evolves we will see booms and busts in the oil industry with oil price volatility.
Oil companies that can time such a volatile market correctly will be very profitable, but proper timing requires an inordinate amount of luck and I doubt that oil companies that focus on exploration and production will be a very good investment. Even refineries will be a bad investment as oil peaks because there is too much capacity which tends to reduce profits.
Dudley of BP is talking his book.
Solid prediction I can make here: Oil will not be sold in commercially significant quantities 30 years from now. It’ll be like anthracite — a specialty product at most.
30 years from now is 2045. By the early 2030s solar panels will be producing the world’s electricity. By the late 2030s all new cars sold will be electric. Oil sold in 2045? Really? Demand will have dropped a lot.
The oil industry would indeed generate a ton of gravy if they simply stuck to pumping what they already have and selling it.
But they are instead wasting the profits on exploration, which makes the oil companies big losers. I await management saying “We are shutting down all oil exploration activities” — that’s an oil company I’d consider investing in.
Saudi has cut diplomatic relations with Iran. Asian stocks are falling through the floor. Effects of midwest floods seem to be getting worse and worse. Interesting days ahead.
Ron,
I believe that when IOC defaulting to the point of that oil investments will be losing money on every investment. I see Central Banks stepping in to own the oil assets to keep BAU going. They can print money to offset losses. Here’s the example I will use:
Around 2030, after a last surge by countries to produce oil due to high prices of oil, $150-$250 per barrel of oil, destroying global economies. The Federal Reserve will start to buy up assets, when bubble pop like in 2009, to keep the economy stimulated by offsetting financial loss with QE by injecting money into the economy, causing a rapid inflation, eroding the poor, middle, and upper class, starting civil unrest. The US government will be forced to seize the assets for national security reasons from the Federal Reserve, most likely causing a civil war. The US government will have to use Marshal Law to maintain order where it can and suspend the constitution. If the government doesn’t, then the US will have to breakup like Soviet Union did in 1992. Whether the US has a military coup or not, a totalitarian regime will keep oil production for military purposes, similar to what the Germans did in the latter stages of WW2.
I remember you were projecting that the US and Russia would produce oil around 1 mbd by 2040. It would be enough for totalitarian regimes to maintain control of their population.
I have no idea what is likely to happen in 2030. There are too many variables that come into play between now and then.
I remember you were projecting that the US and Russia would produce oil around 1 mbd by 2040. It would be enough for totalitarian regimes to maintain control of their population.
NO, I most definitely made no such projection. You had to get that from somewhere else.