Oil Forecast From a Reputable Firm

Had to take the post down folks, the reputable firm threatened to sue me. Sorry.



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417 Responses to Oil Forecast From a Reputable Firm

  1. Good scoop. Did they break out heavy oil?

    • No, they just showed crude and NGL totals for OPEC and Non-OPEC. They did not even break NGLs out by country.

    • I realize it’s a freebie, but I tend to look at these forecasts as just another item for the bug collection unless they show the NGL and the heavies separated.

      As you know, I worked in Venezuela, and we relied a lot on Canadian know how, consultants, etc. Late I moved on to consult in Canada (very short term jobs), so I have a grasp of both. And my impression is that many forecasters don’t gave the full system in mind. Heavy oil requires a lot of planning, takes forever to develop, and it doesn’t have the same product yields unless the upgraders and/or refineries are set up to handle it.

      This leads me to recommend the Venezuelan and Canadian crudes lower than say 10 degrees API be handled separately. When this is done several hundred billion barrels listed as “reserves” in these estimates is taken away from the total oil pool. The result stretches out the profile, reduces the peak, and also lowers CO2 emissions.

      I suppose they may be reading this, if so maybe they’ll comment on how they handle these crude streams.

  2. VK says:

    Beware Economics 101. The peer review mechanism has horribly failed.
    When you read Krugman, this is what he and our central bankers believe.

    “The problem for early would ­be neoclassical macroeconomists was that, strictly speaking, there was no microeconomic model of macroeconomics when they began their campaign. So they developed a neoclassical macro model from the foundation of the neoclassical growth model developed by Nobel laureate Robert Solow (Solow 1956) and Trevor Swan (Swan 2002). They interpreted the equilibrium growth path of the economy as being determined by the consumption and leisure preferences of a representative consumer, and explained deviations from equilibrium – which the rest of us know as the business cycle – by unpredictable ‘shocks’ to technology and consumer preferences.
    This resulted in a model of the macroeconomy as consisting of a single consumer, who lives for ever, consuming the output of the economy, which is a single good produced in a single firm, which he owns and in which he is the only employee, which pays him both profits equivalent to the marginal product of capital and a wage equivalent to the marginal product of labor, to which he decides how much labor to supply by solving a utility function that maximizes his utility over an infinite time horizon, which he rationally expects and therefore correctly predicts. The economy would always be in equilibrium except for the impact of unexpected ‘technology shocks’ that change the firm’s productive capabilities (or his consumption preferences) and thus temporarily cause the single capitalist/worker/consumer to alter his working hours. Any reduction in working hours is a voluntary act, so the representative agent is never involuntarily unemployed, he’s just taking more leisure. And there are no banks, no debt, and indeed no money in this model.”

    Prof. Steve Keen, Debunking Economics.

    • Taking leisure at Sharm el Sheikh, for example.

      Egypt update: Net oil importer and Chokepoints

      The fight for strategic positions around Middle East oil is in full swing

      No economic theory needed to know what the outcome will be

      • Paulo says:

        Very interesting, Matt. Of course, tourism is well on the way to being a fond memory for an angry Egypt.

        • oldfarmermac says:

          And what will take the place of tourism in order to pay for imported necessities?

          DON’T get caught in Egypt.

          Egypt is my chosen poster child when it comes to collapse.

          The last place anyone with a brain should choose to be is an extremely over populated country with nothing of any consequence to export to pay for imported food.

          Sooner or later an overachieving nut case is going to put his hands on an obsolete old ground to air rocket, and get close enough to the air port to down an airliner taking off or landing. There must be a hundred such rockets, at least, already in the hands of various outfits such as ISIS. He might even manage it with a machine gun, if he is skilled in the use of it. Put it in the back of an open topped truck, and get under the flight path, it would not be hard to do.

          Egypt may be only one rocket from economic collapse.

          • Javier says:


            Not much different of what recently happened at Sharm el Sheikh (Sinai, Egypt) with a Russian airliner. Matt Mushalik has an interesting analysis with the link above in his post.

    • Dennis Coyne says:

      Hi VK,

      No this is not what Krugman believes at all. There are some economists that think in these terms, in the US it is primarily in the interior of the country, the economists on the east and west coast, (this includes Krugman and many others) would not think in these terms at all.

      Have you ever read anything by Krugman?

      • VK says:

        Read Krugman for years. The basic neoclassical models are founded on the representative agent model with the above assumptions as core. Look up the PhD text book on economics – http://www.amazon.com/Microeconomic-Theory-Andreu-Mas-Colell/dp/0195073401

        Krugman gives assessments based on the representative agent models, with its no money, no debt, no banks assumptions. Very linear models, no dynamic modeling.

        Economic theory and modeling is stuck in the 19th century. Rest of the hard sciences, physics, chemistry, atmospherics moved on with Poincare and later Lorenz to dynamic simulations.

        • Dennis Coyne says:

          Hi VK,

          Economics, has a little difficulty running experiments, for social sciences in general this is a problem, experiments in the lab are pretty difficult.

          The piece that you gave was a discussion of modern macroeconomic theory which tosses out Keynesian economic theory because it lacks a “microeconomics foundation”. Krugman is a Keynesian economist and would agree with the piece that you presented.

          Your claim that Krugman would agree with it is false. If you have read Krugman, you did not understand what he was saying.

  3. VK says:

    To Dennis Coyne, debt levels matter because “loans create deposits” and not vice versa. Bank of England published a paper last year on modern money creation http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf

    The fractional reserve banking model taught in economics is absolutely empirically wrong. Because banks have the power to create credit money, they can issue in excess.

    Under the empirically correct credit money creation model, there can be an excessive build up of debt. Hence the more than 250 sovereign and domestic govt debt crises since 1850.

    • Dennis Coyne says:

      Hi VK,

      Rune Likvern posted the link and I read the paper. US textbooks through 1990 covered this exactly as in that paper, so it was a good refresher, but not different from what I had learned in the past.

      There can be excessive debt and banks can fail due to poor lending practices combined with a severe recession. Nations can also default. The question is how much debt is too much debt. In economics there are different opinions on this question. When I was studying economics the focus was on public debt crowding out private debt when an economy was close to full employment.

      Now there seems to be more focus on private debt, which nobody in economics used to worry about.

      It may be that the lack of banking regulation and the rise of shadow banking has made this more of a problem, I am out of date on the latest research.


      The article at the link above suggests up to about a 150% debt to GDP ratio is a safe level for public debt.

      • VK says:

        U.S. Textbooks don’t cover this at all. The assumption that Paul Samuelson used in his seminal undergraduate textbook that millions have studied was the fractional reserve lending model which is empirically false.

        The whole of economics is empirically false, it would be a laughing stock if people looked under the hood with its assumptions that are meant to preserve straight line thinking rather than dealing with reality, which is highly non-linear and dynamic.

        Private debt wasn’t a concern in economics because they assumed away the role of banks to preserve the equilibrium models. Once you incorporate reality into the models, which is what a true science would do, you find that private debt levels matter.

        What economists think: Saver lends to borrower. Saver loses purchasing power, borrower gains purchasing power. Purchasing power hasn’t changed in the economy. Just a shift

        What really happens: Saver puts money in a bank, has access to his money anytime. Borrower wants money, bank issues a credit and writes loan amount as asset. Purchasing power as a whole increases across the economy as both saver and borrower now have money to buy goods and services with.
        That’s how the economy grows – bank issuance of credit. And it can easily be in excess.


        • Jef says:

          Thanks for hanging in there VK.

          I tried to explain this to my father in law who is an attorney specializing in finance and accounting. He simply could not accept it or even wrap his head around it even after reading the bank of england piece.

          It is fraud plain and simple and the cost to humanity in both financial terms and lives lost is huge.

        • Glenn Stehle says:

          Paul Krugman is a quintessential neoclassical economist.

          Neoclassical economists threw the notion that economics should deal with empirical or factual reality overboard quite some time ago.

          Perhaps no one was more explicit in articulating this notion that science should discard factual reality than Milton Friedman.

          Any number of critics have pointed this out. For instance,

          Economists often invoke a strange argument by Milton Friedman that states that models do not have to have realistic assumptions to be acceptable — giving them license to produce severely defective mathematical representations of reality.

          –NASSIM NICHOLAS TALEB, The Black Swan


          Economists as a rule do not deny that their assumptions about human nature are highly unrealistic, but instead claim, following Friedman (1962, 1982), that the absence of realism does not diminish the value of their theory because it “works,” in the sense that it generates valid predictions….

          Most important, philosophers of science have almost universally rejected Friedman’s position (Boland, 1979). It is very widely agreed that the purpose of a theory is to explain. Otherwise, [predictions] are unable to foretell under what conditions they will continue to hold or fail.

          AMITAI ETZIONI, The Moral Dimension

          With the advent of the Great Financial Crisis, which began in 2007 and continues to this day, the neoclassical models did fail. And they failed in the most spectacular way.

          Nevertheless, for those like Krugman who are in love with orthodox economic theory, when facts don’t conform to theory, so much worse for the facts.

          • Glenn Stehle says:

            It should be added that not everyone who rejects the orthodox, neoclassical theory of exogenous money creation and its “available funds” theory of banking, as Keen calls it, believes that debt matters.

            A very good example of this is the MMT school, which even though it rejects the orthodox theory of money creation, nevertheless discounts the importance of debt, or at least public debt.

            The distinction between private debt and public debt, however, is not a clear one. We all saw, for instance, the ease with which private debt was converted into public debt in the cases of Ireland and Spain in the wake of the GFC.

          • Dennis Coyne says:

            Hi Glenn,

            Krugman does hold relatively mainstream views, but there are significant differences of opinion within economics. Many economists reject Keynesian theory, Krugman does not. The piece that VK posted by Keen was essentially a rejection of the macroeconomic theory that was formulated to replace Keynesian theory. Krugman would make many of the exact same criticisms.

            The “debt doesn’t matter” theme is carried a little too far, nobody really argues this. The argument is that when the economy is doing poorly due to low aggregate demand (during a severe recession) and monetary policy is not effective because interest rates are near zero (so that the federal funds rate cannot be lowered any further), cutting fiscal deficits is poor public policy.

            Perhaps you disagree?

            • Glenn Stehle says:


              Are you unaware of the famous debate between Krugman and Keen, and what it is all about?

              Perhaps this article by Ann Pettifor will help:

              The debate between these two economists on the role of banking and specifically the creation of credit is of fundamental importance in understanding the shortcomings of orthodox economic thinking – and why it was so ill-equipped to handle, let alone predict, the crash of 2008.

              Many rightly applaud Paul Krugman for using his platform at the New York Times to defend further fiscal stimulus in the US–against a hostile political crowd, not to mention the downright opposition of neo-liberal economists–and we commend him for that.

              However, because he has such an important platform, it matters more to many monetary economists (including the editor of this series) that he appears to lack a proper understanding of the nature of credit, and the role of banks in the economy.


              I very much recommend reading the entire article, and much more can be found by Googling “Keen vs Krugman debate.”

              • Dennis Coyne says:

                Hi Glenn,

                No I disagree. Krugman understands how banks work just fine. There is an upper limit to how much money can be created unless reserve requirements for commercial banks are zero. For large banks in the US 10% of liabilities (in net transaction accounts) must be held in reserve.

                So the Central bank can influence reserves by buying or selling securities, as well as through the interest it charges commercial banks on loans.

                I am sure it is clear to Krugman that the Money supply is not always at this Maximum level (banks can choose to hold more reserves than required). I am also sure that Keen recognizes that the money supply cannot grow without limit.

                The debate was much ado about nothing, mostly a matter of terminology.

                Consider the following example: A customer at a bank has a $50,000 home equity line of credit at their bank and interest rates are low (3% say), they are aggressive investors and choose to take this loan (creating $50,000) and put it in their brokerage account to invest and earn a higher rate of return than 3%. There has been no increase in aggregate demand in this example.

                Krugman agrees that usually borrowed money would not be used in this way, his point is that we cannot assume all borrowed money leads to an increase in demand.

        • Dennis Coyne says:

          Hi Vk,

          There are many of us who have studied beyond the introductory level. In my introductory courses, I believe we were taught this correctly, but that was long ago, I know when I instructed the introductory students as a grad student what I was teaching was essentially what I read in the paper you cited. Perhaps the “textbooks” have improved over time, I haven’t read an economics textbook for many years.

          Have you read any economics papers lately, perhaps there has been more progress than you think. A fundamental problem with economics is that how we understand the workings of the economy can affect the way people behave. People will always try to game the system and this then effects the system. It is a difficult modelling problem not faced by chemists and physicists.

          If you solve it you should publish a paper.

        • Dennis Coyne says:

          Hi VK,

          You said:

          What economists think: Saver lends to borrower. Saver loses purchasing power, borrower gains purchasing power. Purchasing power hasn’t changed in the economy. Just a shift

          Economists don’t think this way at all. These kinds of lessons are often presented in introductory economics courses to show how economists once thought things worked in 1803 when Say introduced “Say’s Law”.

          Then the economics professor goes on to explain how a modern economy actually works (which we don’t understand all that well.)

          Generally speaking economic growth is considered a good thing, and banks lending to borrowers that are likely to be able to repay the loan (not true leading up to the financial crisis due to poor regulation and lending practices), is not a problem in a well regulated banking sector (in the US this went away in the 1980s).

          So yes debt is a big problem with a poorly regulated banking industry (financial industry really because of shadow banking).

          Debt is like a lot of things in life, too much or too little can be a bad thing.

          The central bank can certainly influence the amount of lending by raising interest rates, as long as inflation is moderate, there is not much reason to do so.

      • Rune Likvern says:

        ”US textbooks through 1990 covered this exactly as in that paper, so it was a good refresher, but not different from what I had learned in the past.”
        And what is the title of those textbooks?

        ”Now there seems to be more focus on private debt, which nobody in economics used to worry about.”
        Was it US public or private debt that started the GFC in 2007/2008?

        • Dennis Coyne says:

          Hi Rune,

          It has been 30 years or so since I have looked at a textbook for economics, so I don’t remember the titles. Here is a link to a current textbook, essentially the same as what I remember learning,


          Perhaps there are introductory textbooks that get this wrong, often things are oversimplified in introductory texts. That doesn’t mean that is what economists believe (the stories in introductory level textbooks).

          For example, most introductions to Physics don’t go too deeply into the subject as there is much to learn, economics does much the same thing at the introductory level.

          The problem of 2007/8 was poor banking regulation and lending practices and a housing bubble( which was in part caused by the former).

          You are correct that private lending was the problem leading to the GFC, economists were mistaken in thinking it couldn’t happen, possibly fooled by their model of the rational economic person.

  4. Did they predict the decline in 2014-2015 in prices….then maybe it is worth the price.

    • I have no idea. The document I received was the first document I have seen from this firm. But I doubt anyone predicted the 2014-2015 price collapse.

      • “But I doubt anyone predicted the 2014-2015 price collapse.”

        What about Steve Ludlum’s “Triangle of Doom”?

        Two older posts:


        A more recent post:


        • BW Hill says:

          We stated our position in May of 2014, and put up this page in September.
          The date is on the second graph:


        • _mgd says:

          Mike Maloney said so even before 2010. There is a presentation on YouTube to the Russian banking & political class from that year, where he tells them so in no uncertain terms. One can feel the embarrassment of the Russians in the room when he said so.
          I once wrote to say that, with all respect, he had got his energy wrong, and have been meaning to write again and say I was wrong.

          Mike believes that this period will force considerable but uneven contraction, even to the brink of total collapse, to counter which the central banks’ response will only stabilize the situation if it’s powerful enough to lead to hyperinflation, once things stabilize.

      • oldfarmermac says:

        The whole goddamned republican red neck Neanderthal party predicted low oil prices for YEARS if only we would DRILL BABY DRILL.

        We drilled Baby, and oil is sure as hell cheap.

        ALL yer commie socialist liberals can pretend otherwise if you want. 😉

        This comment IS INTENDED AS HUMOR.

        • Ves says:

          Good one Mac 🙂
          But hey Mac don’t give all the credit to the red pill team. It was the blue pill team that was in charge in the last 8 years that followed through with “Drill Baby drill” policy of the red pill team and drilled the Bakken like Swiss cheese 🙂

          • oldfarmermac says:

            Most of the time in matters of business and technology it doesn’t really matter who is in control in Washington.

            Democrats are little tougher with businesses when environmental considerations are at stake.

            But both parties are in the vest pocket of the big banks and otherwise too big to fail businesses.

            So far as tight oil is concerned, it is imo impossible to make a case for either party taking credit.

            Democrats are not nearly as anti business as the republicans like to pretend. They do however play favorites with DIFFERENT businesses.

            So far as the oil industry is concerned, with the exception of the Arctic Refuge and some off shore up the east coast is concerned, the dim rats have pretty much allowed to industry to do to suit itself.

            Republicans would have us believe differently of course. The facts are otherwise.

            The real opposition to off shore drilling on the east coast has come from the PEOPLE who own businesses and property worth megabucks up and down the coast. Half of them , more or less, are republicans, probably more. Nobody wants his view spoiled , or his high rise waterfront hotel sitting empty due to an oil spill.

            Most of the opposition to offshore up Martha’s Vineyard way etc in the northeast is coming from super wealthy democrats who don’t want THEIR views spoiled either.


            • shallow sand says:

              OFM. The states regulate drilling on private lands. Therefore, it is no surprise to me that TX and ND had a drilling boom while NY and CA did not.

              Admittedly, however, the geology matters much, much more.

              • oldfarmermac says:

                Precisely. The decisions when it comes to oil are mostly NOT made in Washington.

      • Jeffrey J. Brown says:

        Someone posted this link a few days ago:

        Oil could hit US$130 as U.S. output ‘falls off a cliff’: Analyst

        Emad Mostaque has had a profound change of heart on oil prices. The analyst with London-based consultancy Ecstrat says US$130 per barrel crude could be less than a year away for the European benchmark as lower prices drive demand in both emerging and developed markets, while a weakening stream of capex dollars constrains new exploration and production.

        “What we are seeing is supply is about to roll over dramatically. Demand is continuing to rise,” he said an in interview with BNN.

        Unlike many analysts, he says U.S. shale production is set to decline, and as such won’t provide the necessary stop-gap to supply the increasing appetite in world markets.

        “U.S. production is about to have a Wile E. Coyote moment where it literally falls off a cliff. One-hundred-and-twenty-thousand barrels, maybe even next month, will drop off,” said Mostaque. He says the notion that shale producers can suddenly boost their output as needed is a common misconception.

        The controversial call pushes against bearish sentiment from Wall Street titans like Goldman Sachs. The investment bank’s head of commodities research, Jeff Currie, said last month that he does not see the price of oil breaking above US$50 a barrel in the next year.

        Mostaque was early to bet against oil, forecasting between US$50 and US$70 per barrel last summer. He raised concerns about the commodity’s price stability before oil started its dramatic decline in 2014.

        Now he’s calling prices to rally as four to five million barrels disappear from global markets over the next four to five years, and throwing cold water on many of the scenarios where inventories remain oversupplied long-term.

        Mostaque says the lack of capital means the estimated $30 to $40-billion annual price tag to ramp up Iranian oil most likely isn’t in the cards.

        “What we think is happening right now is we’ve seen mass definancialization of the market, with Brent in particular. All of these massive funds have exited because they lost huge amounts of money,” he said.

        And a link to my comments, following this article:


        • BC says:



          Jeffrey and all, Tejas and the awl bidness are unequivocally in recession as of spring-summer this year. Tejas ain’t fixin’ to go into recession, y’all are already in recession.


          There is a technical target projection for WTI in the mid- to upper $20s by winter/spring 2016.

          The oil/commodity cycle has turned negative as in 1986 and the early 1960s, implying WTI in the $20s-$30s in the years ahead and US oil production at 5-6Mbd.

          But rather than the cycle turning negative with low debt, reflationary prospects, and demographic tailwinds, we’re facing a deflationary cycle with record debt to wages and GDP, fiscal constraints, and peak Boomer demographic headwinds for the foreseeable future, and the trend for global real GDP per capita of ~0% vs. 2.1-2.5%.

          Any jobs available at Dairy Queen these days, Jeffrey? I’m gonna to need some gas, food, and hooch money to finance my car camping and drivin’ (parkin’?) while blind.

        • TechGuy says:

          Re: “Oil could hit US$130 as U.S. output ‘falls off a cliff’: Analyst”

          FWIW: I don’t see that happening. Prices are falling because demand is falling as the Emerging Market (EM) has reached Peak Debt. Who is going to be able to afford $130? The Broke EM’s, the Broke EU, or the broke US? In my opinion, at best Oil “may” rebound into the $70-$80 range (except for a spikes caused geopolitics).

          I suspect that when Oil prices so start rising again, that consumption will decline and price/demand will reach an equilibrium point in the $70-$80 range. At higher prices, it will cause demand destruction, and lower causes supply destruction (as drillers cut back on investments).

          I think we will start to see some big liquidations come this spring as shale drillers and even some non-shale drillers go bust. These liquidations will likely keep prices low as assets are purchase for pennies on the dollar, thus the Purchasers of these assests can sell production well below capex costs (The investors/bond holders take it on the chin). We will see higher jobs losses and more banking failures, which will pludge the US economy into a deeper recession, and decrease demand for Energy.

          I also think that future production will be much lower that forecasted. Without higher prices, its going to prevent a lot of future development. We won’t see drillers developing projects that are above the $90 per bbl because consumers won’t be able to afford it. If projects costs are capped around the $90, considerable much less oil is economically recoverable. No Deep sea, No shale and no arctic drilling projects.

    • Sydney Mike says:

      I can’t remember anyone confidently predicting such a fall. The whole problem with peak oil predictions is that we are all tapping in the dark as to actual resources. There is no doubt it will happen probably sooner rather than later but predictions are really just guesswork.

  5. Javier says:

    They might get production more or less right, but I seriously doubt they get price right.

    There are two possible scenarios for future oil prices if peak oil takes place (as I believe).

    – Permanent low prices due to depressed demand as the economy stops functioning in growing mode. This is Gail Tverberg’s view.

    – High volatility scenario with big price swings as mismatches in production and demand take place due to alternate production destruction and demand destruction cycles in an economy that is contracting in bouts. This is my predicted scenario.

    A scenario where prices take off to sky-high levels due to scarcity is not only unrealistic but lacks understanding of an economy response to a spike in a major energy source prices, when we have already been through that.

    • BC says:

      Javier, agreed.

    • Arceus says:

      Their oil prices look fine to me, BUT this assumes a significantly weaker dollar. I believe this has a good chance of happening but it is far from certain. Yellen and company will do everything they can to keep the dollar strong.

    • St. Roy says:

      I go with Gail. We built a world to run on <$10/PBO. We printed money to keep it running at $100. Reality set in. Now it's down to $40. Most of what's left will stay in rage ground. Econ 101 stuff does not work for energy as it gets harder to find an more expensive to extract. Welcome to the end of happy motoring, suburban living, cheap food/water and air travel, not to mention pandemics that will wipe out 90% of humans plus most other vertebrates.

    • Caelan MacIntyre says:

      If recalled, Gail’s scenario includes some volatility.

  6. Javier says:

    World population

    5 minute video showing over a world map how population has evolved in the last 2000 years and to 2050. Looks to me like a disease spreading and taking over. I found it interesting.


    • Doug Leighton says:

      Just think, we’re a biological weapon. Wreck a whole planet in 2500 years, awesome. I suppose its part of God’s plan but it does makes you wonder what His ultimate goal is: perhaps algal mats? They were popular from about 3,500 million years ago and have been an important member and maintainer of the planet’s ecosystems for a long time. Yup, that’s what I recon. We’ve been put here to prepare for the return of algal mats.

      • Synapsid says:


        Prokaryote mats, bacterial maybe plus archaeal, are the ones that have been around for three billion plus years. Algae were latecomers. Prokaryotes would be the last ones…er…standing. As it were.

        So to speak.

        • Doug Leighton says:


          I stand corrected. Actually, I haven’t thought about Algae mats or Prokaryotes for 50 odd years and that was probably only for some exam or other.

          Cheers, Doug

        • polecat says:

          we’re all future material for stromatolites……….we just don’t realize it!

      • BC says:

        Doug, or our population overshoot condition is really no problem at all because it offers the “solution” of our evolving along the path to “Soylent Green” or “The Time Machine”.

        The racially/ethnically/culturally diverse, democratic, universalist-humanist cuisine: Soylent Green, Pink, Brown, Black, and Yellow/Gold is of, by, and for the people.

        So, love your neighbor and have him and his for dinner often.

        Human apes will never starve as long as we have each other to rely upon.

        It’s been said that human ape infants are particularly tender and juicy when slowly roasted over an open flame and frequently basted; and there’s very little preparation required, including fur removal.

        So, rather than f&$king ourselves to mass die-off, we could be f&$king ourselves to sustainable food abundance.

        It’s just a matter of taste.

        If Amazon, Google, Facebook, Twitter, LinkedIn, Ebay, and Netflix can cannibalize the global economy, then surely we can cannibalize the human ape population in an equally efficient manner at similar scale to benefit billions of human apes.

        Motto for the 21st century: If you can’t beat ’em, breed ’em and eat ’em.

        Bon appetit!

        • VK says:

          The purpose of all life it seems is to get the universe to where it wants to be: Thermal equilibrium.


          We are simply fulfilling our biological prerogative to increase entropy. Just following the rules, however dismal they may be.

          • polecat says:

            “You are a fluke…of the universe….you have no right to be here….and whether you can hear it or not….. the universe is laughing behind your back”

            • R Walter says:

              Funny stuff, you know.

              Spell Syllables
              Word Origin
              noun, plural polecats (especially collectively) polecat.
              a European mammal, Mustela putorius, of the weasel family, having a blackish fur and ejecting a fetid fluid when attacked or disturbed.
              Compare ferret1(def 1).
              any of various North American skunks.


    • Hickory says:

      Thank you Javier. Good video.
      I purposefully have had no children, and am actively planning my
      means of exit at a much earlier age than average.
      Strange how one species can be so ingenious, yet so stupid.
      So kind, but so much more cruel.
      So thoughtful, but so needlessly destructive.
      Certainly the ugliness has won out.

  7. R Walter says:

    Japan is paying $37.33 per barrel today. It is basically free oil for them at that price.

    The price has to rise above 85 USD before 2017, time is running out, 2019 -2022 can’t stay stuck on 80 USD. Somebody put God in charge of these markets, someone who can make a difference. The market is not being very kind and is more worry than work.

    My wild burro guess is oil goes above 100 before the end of next year. Soon after the US elections.

    Politics and all of that nonchalant jazz is suppressing prices. I know I’m right.

  8. Bill says:

    There must be price assumptions built into the model.

    Without knowing what they are, it’s difficult to give the charts much credence.

    • Well, if you would look at the very first chart posted on this post, you would see what those price assumptions are. It is right up top. How on earth did you miss it?

      • coffeeguyzz says:

        Mr. Patterson

        If the starting date of the new year is dead center between the four digits in that first graph (eg. 2016), than the trough in pricing should occur in a few weeks?
        (Chart interpretation is not my forte).

  9. Watcher says:

    You can get more oil out if you don’t care if it’s profitable.

    And if you have to have it, and you do have to have it with no way around it, ever, then that’s what you’ll do.

    So the peak is going to be hard to find and define. All oil getting nationalized is a pretty credible scenario in scarcity. There is a downside to non economic oil flow by decree. When the descent arrives there will be no price movement to moderate the slope. Nationalized oil is sharkfin oil.

    • Watcher says:

      If the nationalized infrastructure has been defined and the fin unfolds, rationing will get a LOT more easy to do.

      If your state color has its guy in office, it will get supplied first.

      • BC says:

        Watcher, agreed.

        Real GDP growth per capita and build out of “renewables” will give way to maintaining fossil fuel extraction and the necessary infrastructure at any cost, including de facto, or actual, nationalization of the energy sector everywhere, including the US and UK.

        • Dennis Coyne says:

          Hi BC,

          It will not really matter as the national industries will not produce enough so oil will need to be imported and oil prices will rise, eventually natural gas and coal will peak as well and those prices will also rise. If lower prices are “decreed” then there will be shortages. Hopefully policy makers will see the futility of such policies which are only likely to make matters worse. Government intervention is not always a positive solution, on that point I am in full agreement with those on the right.

          • BC says:

            Dennis, yes, thanks. I was not advocating nationalization, only that it’s conceivable, de facto or otherwise. That is, the gov’t, Fed, and Wall St. will borrow, print, lend, subsidize, securitize, etc., to the extent necessary to keep domestic production going, profitable or not, and whatever “the market” determines for price.

            We know that the correlation between price and US oil production is near zero, but price correlates highly with the change rate of drilling and the change rate of production over the oil/commodity/Juglar cycle.

            Thus, the oil/commodity cycle suggests that price will fall with falling rate of change of demand, drilling, and eventually production in the years to come.

            Moreover, the rate of growth of net energy per capita of oil production in debt-money and GDP terms will continue to decelerate, leaving less usable oil net energy per capita (exergy) to fuel economic output hereafter.

            IOW, US oil production per capita, down 45% since 1970, will continue the inexorable depletion trajectory until late this decade or early next decade when the decline per capita will reach and surpass 50%, and along with available world exports per capita, will preclude marginal growth of oil imports per capita, permanently constraining US real GDP per capita and global trade forever (world trade is already in a recessionary condition).

            The structural constraints of Peak Oil per capita that began in the US in the 1970s-80s are now occurring for the world, which will exert a permanent constraint on real growth per capita of credit/debt, investment, production, employment, purchasing power, demand, gov’t receipts, and the capacity to sustain oil production and demand, as well as the ability to continue the build out of so-called “renewables”.

            • Nick G says:

              That’s just silly.

              Oil is not essential. Electric vehicles get you to work just fine.

              Trains get freight to their destination, and they use 1/3 as much fuel. They’re already electric, and at some point they’ll get their electricity from the grid, and not from diesel generators.

              Renewable electricity is a good idea, but it’s not essential to dealing with peak oil: coal electricity, nuclear, hydro, wind, solar..they all work just fine to power your electric car. EVs are non-denominational: they don’t care where the power comes from.

              • thrig says:

                Odd, Congress voted to dedicate 90% of freight funds in their recent transportation bill to moving stuff by truck, not rail. Also, nary a gas tax raise, but that horse is now really well beyond glue, and looks to remain so out to 2020. Nor is there any means for states to put a toll on those sweeping free-ways, nor to place congestion charges to deal with induced demand, but I doubt those Departments of Moving Humans Only By Car will care, given that every state will be a net recipient over what users pay in fuel taxes…

                • Nick G says:

                  Yup, at the moment progress on rail is slow.

                  And, low gas prices don’t help with EV progress. Fortunately, US CAFE and EU CO2 standards continue to rise, and Tesla continues push the higher end care companies.

                  We’re making progress, though not as quickly as we’d all like…

      • TechGuy says:

        Watcher wrote:
        “If the nationalized infrastructure has been defined and the fin unfolds, rationing will get a LOT more easy to do.”

        Nationalizing Oil production will only decrease production. Gov’t Bureaucrats have little incentive to increase/improve production. Most Nationalize Oil production is rife with corruption (See KSA, VZ, Iran, Soviet Union, etc).

        Rationing, aka “price controls” also has the same problem only worse! When gov’t imposes price controls below production costs, supply falls off the cliff. It also causes crime and fraud to soar as businesses and consumers turn to black markets.

  10. shallow sand says:

    My comment is they must see more stupid money flowing to the LTO basins, given none are predicted have production dropping much in 2016 and 2017. This is despite a price prediction for 2016-2017 that causes almost all wells in those basins to be money losers.

    In particular, I did some math regarding the Bakken, assuming a 250K barrels of oil and 250K mcf of ng in 2016-2020, 20% royalty, using standard LOE and G & A, and 5% interest on a $7.5 million well. I used their oil prices minus $7 at the well head and started 2016 with $2.00 gas and escalated it up 50 cents each year.

    Said well does not pay out and is still in the hole around $2 million dollars at the end of 2020.

    I guess everyone will be happy with that and will be extending 5% credit in order to drill such wells?

    • shallow sand says:

      For those of you wondering,

      I assumed production as follows:

      2016 110,000 gross oil bo 110,000 gross gas mcf
      2017 70,000 gross oil bo 70,000 gross gas mcf
      2018 35,000 gross oil bo 35,000 gross gas mcf
      2019 20,000 gross oil bo 20,000 gross gas mcf
      2020 15,000 gross oil bo 15,000 gross gas mcf

      10% severance and extraction taxes


      2016 $40 oil $2 gas
      2017 50 2.50
      2018 75 3.00
      2019 70 3.50
      2020 70 4.00

      G & A $2.50 per BOE.

      LOE/OPEX years 1 and 2 $24,000 per month plus $100K down hole repairs (more water to haul)
      years 3-5 $14,000 per month plus $100K down hole repairs

      Interest $375,000 is assumed each year – no principal is paid. I do not see how LTO companies could reduce principal under the production/pricing scenario assumed above.

      Should note that other than 2016, the prices predicted above are above the WTI futures strip. I guess lenders will just ignore the pathetic WTI futures strip next year?

      Feel free to play around with the numbers. I am not saying I am correct, I think maybe the decline from year 1-2 is too light. In any event, I come up with us being short year 5 of $1,738,733, may want to check my math on that. Did in a hurry.

      In any event, I think production will fall more than estimated if we are at $45 or so WTI all of 2016. But who knows, I always underestimate the efficiencies, etc.

      • Watcher says:

        Nobody has any idea what is coming. There were as many analysts looking for a bounce in late 2014 as there are now saying lower for longer.

        Probably the same guys too.

        • Doug Leighton says:

          “Nobody has any idea what is coming.” EXACTLY

          • Doug, not true. We do not know exactly what is coming. But we can look at trends and make an educated guess.

            Some things we cannot know. We cannot know the exact consequences of our actions. But we can know the approximate consequences of our actions.

            Prices are a lot harder to predict than production. We should keep that in mind when commenting on the talents of prognosticators of oil production. They don’t have to know the exact price of oil in the future to predict that depletion of oil will continue.

        • Dennis Coyne says:

          Hi Watcher,

          I agree. I certainly don’t know what will happen, especially to the price.

          One mistake I made (besides making any prediction at all) was thinking that the low prices would result in fewer wells completed. There has been a small fall in the well completion rate in the LTO plays, but far less than I expected.

          This resulted in higher output than I expected and with the high supply, prices have remained low, I also didn’t expect that OPEC would increase output as much as they have, or that Russia would increase output as much as they have.

          It is unclear to me how much longer this will continue, but if the past is a guide, it will be the opposite of what I think. Some of the experts thought it might be this fall when US LTO output would finally crash (Mike the oil man), I just don’t know.

          • oldfarmermac says:

            Terminally ill patients do occasionally live a good while longer than their physicians think they will.

            LTO has not exactly CRASHED, YET, but it sure as hell is not growing like crabgrass in hot wet weather anymore.

            I thought the entire industry would slow down a lot faster than it has, but now I understand that the industry is so slow and big and ponderous that it truly is like an ocean liner when it comes to changing directions, or speeding up, or slowing down.

            It’s like an ocean liner so unimaginably big that takes a couple of YEARS just to slow down, and once slowed, it may take as long or longer to ramp up again.

            LTO might ramp up considerably faster since the infrastructure is now in place for the drillers to get right back to work when the price goes up.

            • Dennis Coyne says:

              Hi Old Farmer Mac,

              The ship analogy is a good one for big oil, I made the mistake of thinking these smaller companies would behave differently. I wuz wrong. Unfortunately I will also make mistakes in the future.

              • oldfarmermac says:

                Hi Dennis,

                My amateur seat of the pants opinion is that the smaller companies have dug in and stubbornly resisted cutting back on production and investment, to the extent they have been ABLE to avoid cutting back, for easily understood reasons.

                First off management most likely expected the price of oil to go back up soon and certainly before now.

                Second, they are playing what some people call the extend and pretend game, gambling every thing on pulling thru this price crash.

                If you are knocking down good money as a manager, at any level, you are going to be very reluctant to do anything that eliminates your OWN job when the entire industry is in the doldrums or worse. Nobody is going to hire you.

                Nobody wants to admit they were wrong in making the decisions they made before the price crash, if they can possibly avoid doing so.

                If they surrender, they lose out. If they hang tough and make it, they still have nice jobs.

                This would even apply to a certain extent to bank managers. If they admit they MADE BIG MISTAKES, they are out on their ass. If they hang tough, they may pull thru and collect most of the money they loaned. If they hang tough for another six months and then get fired, well, they collected another six months salary and bennies.

                This comment is intended more to give insight into the way individuals perceive their own interests than otherwise.

                Think about the concept “tragedy of the commons” whereby any individual’s own best interest is to abuse the commons at the expense of every body else.

                There are similar elements in play.

          • Watcher says:

            “I agree. I certainly don’t know what will happen, especially to the price.”

            Imagine that.

  11. Nick G says:

    Prices have currently fallen below the 2016 level in this forecast. If we believe this forecast, then we’re at the price bottom right now, this second!

    There’s a lot of money to be made in going long on oil futures (and EVs)….if we believe this forecast.

  12. Mario says:

    There is a bit of a disconnect to me. If production really does significantly contract in the next few years, its unfathomable to me that we don’t get a very significant price spike.

    I don’t believe we will see that level of production contraction this soon.

    • twocats says:

      I agree, isn’t the decline going below current consumption? Granted, its not hard to imagine 1) a global economic recession, which could slow, if not reduce, demand, 2) the recession strengthening the dollar, making oil cheap in $ terms. But still if production comes within a million barrels of consumption, it’s going to be a factor, right?

      • Dennis Coyne says:

        Hi Twocats,

        Good point. Remember there is a fair bit of oil in storage (roughly 300 million barrels above normal levels), so it will take 10 months to bring those levels down (assuming supply falls 1 Mb/d below demand for 300 days). Then either supply increases or demand decreases due to a recession, for a supply increase we would need higher prices, the forecast does predict a rise in oil prices in 2017. The flat part of the price curve does not make sense with declining oil output, I would expect prices to continue to rise as output falls. I usually get the price predictions wrong however.

  13. SatansBestFriend says:


    Baghdad demands Turkey withdraw troops from Iraq.

    • Jeffrey J. Brown says:

      I guess while they are at it, they could demand that ISIS withdraw their troops too.

      • twocats says:

        Well, but you’ve got US special forces assisting Iraq in the fight against ISIS. If Iraq goes to “defend the sovereignty of its borders” does that mean US is now going to assist in attacks against Turkish forces operating in Iraq? Blue on blue? Or better yet, now that they’re inviting Russia in, they could have Russia bomb Turkish forces on their behalf.

      • BC says:

        I propose we withdraw sand from Iraq and Syria, sell it to China and India, and take the proceeds and lend at 2-3% to ISIS for 100 years to relocate them to Saudi Arabia and the Gulf emirates where they can be employed full time as security and executioners for the Saudi and oil emirate royals.

        Contract the Israelis to train ISIS in the fine art of Nazi-, Apartheid-like oppression and violence against “the enemy” within, and subsidize the US and UK war profiteers to provide the necessary hardware and technical assistance.

        A win-win-win outcome for all.

        • Hickory says:

          BC. No other country treats its sworn enemies as gently as Israel does.
          If you are unaware of this after watching the news and observing history, then it is time for you to acknowledge that you have allowed your hateful tendencies to taint your intellect. Sad for you. Who taught you to be hateful? Parents, friends, clergy?
          You may want to ask them for an apology. A huge apology. Teaching hate is the worse form of brainwashing.

          • BC says:

            It’s called sarcasm and irony, not hate.

            The Israelis don’t need you or anyone else to defend them. They are ruthlessly efficient in defending themselves (with the assistance of trillions of dollars’ worth of US loans and loan guarantees for 60+ years, of course).

            Spend your love, time, and intellect defending those who need it.

            Happy Hanukkah and Christmas.

        • R Walter says:

          You need a more upbeat message when dispensing justice in all forms, how it’s done.

          A positive outlook helps a lot.

          Here is how it was down way out west in the days of frontier justice:


          This is an actual sentence handed down by Judge Roy Bean

          Jose Manuel Miguel Gonzales, in a few short weeks it will be spring.
          The snows of winter will flow away, the ice will vanish, the air will become soft and balmy.
          The annual miricle of the years will awaken and come to pass.
          The rivulet will run its soaring course to the sea.
          The timid desert flowers will put fourth their tender shoots.
          The glorious valleys of this imperial domain will blossom as the rose.
          From every tree top, some wild songster will carol his mating song.
          Butterflies will sport in the sunshine.

          But you will not be their to enjoy it. Because I command the sheriff of the county to lead you away to some remote spot, swing you by the neck from a knotting bough of some sturdy oak and let you hang until dead.

          And then Jose Manuel Miguel Gonzales, I further command that such officers retire quickly from your dangling corpse, that vultures may descend from the heavens upon your filthy body until nothing is left but the bare, bleached bones of a cold-blooded, blood-thirsty, throat-cutting, murdering S.O.B.


          It is all in how the message is delivered that counts. Judge Roy Bean had a way with words.

          • Glenn Stehle says:

            When I was just a kid, my dad took my brothers and I to see Judge Roy Bean’s “courthouse.”

            There was a small store nearby, and out front was seated an ancient old man who regaled us with tales of his adventures with Pancho Villa. And as long as we kept paying for the beers, the yarns kept coming.

            He called himself Old Teal, and he claimed he knew where there was a cave with old rifles and buckets of silver dollars burried. He said he had hidden them there when riding with Pancho Villa. My brother (the one closest to my age) and I were hot to trot, ready to go look for them.

            My father and much older brother were very amused, and said we shouldn’t believe everything we hear.

            Man, those were the days!

    • Ves says:

      Well looks like the Russians dramatically increased the Turkish breakeven price of illicit oil extraction in Syria so the Turks are now latching to their remaining illicit oil trade in northern Iraq. “Freedom fighters” don’t fight for free these days. So you got a have credit lines backed by some oil collateral.

      • Glenn Stehle says:

        If you speak Spanish, you might find this interesting. I lack sufficient knowledge to know how much of it is true, but I think it pretty accurately articulates Russia’s position:

        “Lo que no te cuentan sobre los ‘rebeldes’ en Siria”

        • Javier says:

          Yes, it is interesting. I don’t know about the details, but in essence what they tell is true because it is recognized by many countries and published in many newspapers.

          Syrian civil war is a war by proxy where Saudi Arabia, Qatar, and Turkey, with the blessings and help from US, France, UK, and Israel are fighting the Syrian army through a plethora of terrorist groups that includes ISIS, while the Syrian army is supported by Russia and Iran.

          It is something like this:

        • Ves says:

          Thanks Glenn, but I don’t speak Spanish besides “Una cerveza por favor?” 🙂
          But as soon as I get out of this hamster wheel economy that I am currently stuck I will move to Buenos Aires and learn Spanish 🙂

          Based on the Javier post below I have idea what they are talking in that link. But I think it is little bit more complicated than that. I think that great deal of interest are diametrically opposite within the “allies” on the both sides than what we are led to believe in MSM media and that makes this conflict very unpredictable.

          • Glenn Stehle says:


            There was an article in one of the Mexico City dailies today, written in response to the shootings in San Bernardino, that cited some numbers that were news to me:

            1) The United States is the #1 small arms manufacturer in the world

            2) 83% of small arms manufactured in the world are manufactured in the United States

            3) The US’s closest competitor is Russia, which manufactures 11% of the world’s small arms

            4) Small arms are the US’s third largest export product, surpassed only by aircraft and agricultural products

            5) The US market itself consumes 15 million small arms per year, and there are 300 million small arms currently in the posession of US private citizens

            6) Saudi Arabia, however, is by far and away the largest small arms consumer in the world, and purchases 33.1% of all small arms produced in the world

            7) Saudi Arabia then re-distributes these small arms to its allies in Syria, Lybia, etc.

            8) So far in 2015, there have been 351 “mass shootings” in the United States in which 447 persons have been killed and another 290 wounded

            9) The world’s leading human rights organizations never speak of the bloodbath ocurring around the world due to the proliferation of small arms, much less the United Nations Security Council.

            10) Both the United States and Russia seem quite content to keep any talk of small arms proliferation off the agenda.


            • Javier says:

              8) So far in 2015, there have been 351 “mass shootings” in the United States in which 447 persons have been killed and another 290 wounded

              Number 8 looks bogus to me.

              – Number of wounded usually is higher than number of death in mass shootings.
              – The average is 447 death/351 shootings = 1.27 death/shooting. That does not fit the definition of mass shooting, so they cannot be speaking of mass shootings, but of any shooting with casualties.

              However I read somewhere that the number of death in US by firearms is about 82 per day. This coincides with Wikipedia that lists 10.5 as firearm-related death rate per 100,000 population per year. Compare that to 0.62 for Spain (17 times less). But a lot of Central and South American countries have far more relative gun-related deaths than US. Looks like the New World is still pretty wild.


              • Glenn Stehle says:


                I tried to track down the source of those figures.

                Ilán Semo cites David Brooks and this article (Note: This is not the infamous neocon, David Brooks, who writes for the New York Times, but a different David Brooks):


                Here’s how Brooks explains where he came up with his figures:

                Aunque el número de víctimas en San Bernardino hace que sea el peor incidente de tiroteo masivo desde la masacre de 20 niños y 6 adultos en una escuela primaria en Connecticut en 2012, es sólo uno más de los 351 incidentes de tiroteo masivo ocurridos en lo que va de este año en Estados Unidos, de acuerdo con un conteo de ShootingTracker.com (no hay una lista oficial y hay varias definiciones diferentes de qué conforma un incidente con múltiples víctimas). Según este conteo independiente, el total de víctimas antes de este último incidente en 2015 llega a 447 muertos y mil 292 heridos.

                El proyecto de Gun Violence Archive, una ONG especializada en la violencia con armas de fuego, ofrece un cálculo más conservador de tiroteos masivos, 309, en 2015, pero registra que el número de todo tipo de incidentes con armas de fuego de este año ya numeran 48 mil 366, con el saldo de 12 mil 235 muertes y 24 mil 753 heridos. [http://www.gunviolencearchive.org].

                De hecho, como recuerda el columnista Nicholas Kristof del New York Times, en los últimos cuatro años más gente ha muerto en Estados Unidos por armas que el total de estadunidenses que perdieron la vida en las guerra de Corea, Vietnam, Afganistán e Irak combinadas.

                So I suppose we’re talking semantics here.

                Nevertheless, I think we all agree that, when it comes to violence committed with small arms, the United States is a blood bath.

                And perhaps the takeaway lesson here is that, despite the perceptions created by the MSM, only a tiny, tiny number of the incidents involving gun violence are politically motivated.

                • Javier says:

                  OK Glenn,

                  That’s one source of error. The author mixes letters and ciphers for figures. I don’t know if that is common in Mexico. It is simply not done in Spain unless the letters come at the end, like in English.

                  So “mil 292 heridos” is 1,292 wounded.
                  and “24 mil 753 heridos” is 24,753 wounded.

                  So those figures might be correct after all. It depends how they are counted, as always.

                  Still 1.27 deaths/shooting looks pretty low. If real it indicates most mass shootings are carried out by really bad shooters that don’t kill anybody.

                  It is my impression, based on no data but my own recollection, that most mass shootings are carried out by people that were not criminals prior to the shooting.

                  So if one wants to reduce mass shootings it is clear that he should concentrate on disarming non-criminals. I know it sounds shocking, but that is how is done in Europe and it is only logical.

                  In Spain with a very low firearm-related death rate, most that die from firearms wounds are delinquents, because criminals preferentially kill other delinquents.

                • Glenn Stehle says:


                  For a very incisive study on how the MSM creates the large gaps between perception and reality, regardless of whether they do this deliberately or not:

                  “young people, crime and
                  public perceptions”

                  As the study concludes, “the degree of concern can be unrelated to the scale of crime.”

                  As I noted before, the number of incidents that are politically motivated (“terrorist” attacks) is infinitesimally small in comparison to the total number of incidents involving gun violence.

                  You seem to be more interested in the elephant in the room rather than the fly on the elephant’s ass. Most Americans seem to be just the opposite, having drawn a bead on the fly and ignoring the elephant.

              • Fred Magyar says:

                Total Number of Incidents 48,646
                Number of Deaths(1) 12,315
                Number of Injuries(1) 24,872
                Number of Children (age 0-11) Killed/Injured(1) 645
                Number of Teens (age 12-17) Killed/Injured(1) 2,440
                Mass Shooting(2) 309
                Officer Involved Incident(2) 4,057
                Home Invasion(2) 2,092
                Defensive Use(2) 1,140
                Accidental Shooting(2) 1,764
                Gun violence incidents collected/validated from 1200+ sources daily – source links on each incident report.

                1: Actual number of deaths and injuries
                2: Number of INCIDENTS reported and verified

                Numbers on this table reflect a subset of all information
                collected and will not add to 100% of incidents.


                Data Validated: December 06, 2015

            • Nick G says:

              The United States is the #1 small arms manufacturer in the world

              And people say that US manufacturing is dead…

        • I put up a post about Syria. Its copied from an anonymous author, intended to be serious and funny.

    • Synapsid says:


      Turkish forces have been training Peshmerga fighters in northern Iraqi Kurdistan for two or three years. These troops are said to be part of that.

      • AlexS says:

        You mean Turkish forces have been training Peshmerga fighters by fighting them?

        • Synapsid says:


          Left out “are said to” have been…

          Surely you don’t think that “senior Turkish officials” would have said anything to Reuters that isn’t true?

      • SatansBestFriend says:

        Get Ya Popcorn Ready!

      • Synapsid says:


        There are lots more statements in an article on Bloomberg today.

        It looks like Turkish troops may really have been training Peshmerga fighters, and Arab fighters too. The government of Turkey is said to get along just fine with Barzani’s regional Kurdistan government–it’s the PKK that is anathema, along with the Syrian Kurd movement. If this is correct, then the Turkish officials may have been at least near to the truth.

        They never cease, the miracles.

  14. oldfarmermac says:

    I for one am not buying the oil stays cheap long term meme.

    This is after all a peak oil site, and I do believe in depletion and all that sort of thing- although I must admit I thought oil production would peak some years ago. Of course at that time I didn’t think things all the way thru, just being focused on the peak and an associated collapse.

    Over the last ten or fifteen years, we have seen the price of oil go up about five times, before crashing back to double or so the price then. Five times the price did eventually – after a decade- bring on enough new production to glut the market.

    But given geological constraints, I doubt even two hundred dollars would be enough to result in production coming even close to doubling again. Two hundred dollars might get us a few more million barrels a day for a few more years.

    A lot of us seem to think supply is going to hold up better than consumption, keeping prices low.

    I am thinking that supply may decline EVEN FASTER than the economy, in the event that the world wide economy actually DOES go into a long ,slow, more or less permanent decline. In that case , oil could go up quite a bit even as we all go broke.

    So far as the economy EVENTUALLY going belly up is concerned, I am SURE this is in the cards. But I am NOT sure WHEN.

    Maybe Old Man Business As Usual has a few more good years left in him, barring accident. Personally I think the odds are pretty good he does. The economy might not fall apart for another ten or fifteen years or maybe even longer.

    If the economy declines at one percent, and oil production declines at two percent, we may see the price going up, more or less steadily, this being possible because increasing efficiency will allow us to pay higher prices even as our incomes decline.

    Increasing the efficency of use of oil a couple of percent a year is doable.

    But I don’t think there is any serious possibility we can transition AWAY from oil on the grand scale anytime soon. We aren’t likely to build pure electric and plug in hybrid cars fast enough to significantly reduce oil consumption within the next decade.

    We gotta have it, and when you gotta have it, you cut back on something else less important to get it.

    If I had money to gamble, I would invest some if it in oil futures.

  15. Anon says:

    So they have a pretty swift decline starting in 2015 – with positive assumptions about US LTO, Iraq (very!) and Russia.

    That doesn’t look very nice if you drop those assumptions down to (1) US LTO can’t retake its peak coming off a crash for logistical reasons, (2) Iraq will be lucky to break 5 million, let alone 7 between all their problems, and (3) Russia will have a shark fin peak due to how they’ve kept production up.

    Merry Christmas…

    • Anonymous says:

      The decline really isn’t that fast – 1.5% per year average to 2020 and 1% per year to 2025. If the natural decline rate is 4%, which is about the average from IEA etc., then there is a lot of new production that needs to be brought on-line to fill the gap. Given how much budgets have been cut over the last two years it’s unclear to me where that would be coming from at least before 2020 and even after if the prices stay as low as indicated through 2021. The charts seem to indicate big rises in Brazil (PetroBras has junk bond status and the country is in deep depression, it will be interesting to see whether the olympics hold up), Saudi later (but their recent development announcements have concentrated on gas and solar to replace local in use), Iraq (has recently told the oil companies there to slow down and is currently being invaded from various sides). Saudi, Iran and Iraq might be only one really bad world wheat harvest away from going down the Syria or Libya route; Nigeria, Venezuela and Angola might be edging to full blown breakdowns as well. I think Russia and maybe USA again might surprise on the upside though.

    • Jeffrey J. Brown says:

      And then there are the mathematical certainties inherent in what I call Net Export Math. I assume that the analysts that prepared the production forecast didn’t address Net Export Math, but here are the mathematical facts of life regarding net exports:

      Given an ongoing, and inevitable, decline in production in the net oil exporting countries, unless the exporting countries cut their liquids consumption at the same rate as, or at a faster rate than, the rate of decline in production, the resulting rate of decline in net exports will exceed the rate of decline in production and the net export decline rate will accelerate with time. 

      In addition, while we are currently seeing signs of weak demand in China, given an ongoing, and inevitable, decline in GNE*, unless China & India cut their net oil imports at the same rate as, or at a rate faster than, the rate of decline in GNE, the rate of decline in the volume of GNE available to importers other than China & India will exceed the rate of decline in GNE, and the rate of decline in the volume of GNE available to importers other than China & India will accelerate with time.  

      For example, from 2005 to 2013 the rate of decline in the volume of GNE available to importers other than China & India (2.3%/year) was almost three times the observed rate of decline in GNE from 2005 to 2013 (0.8%/year).  

      And a massively under-appreciated aspect of what I call “Net Export Math” is that the rate of depletion in the remaining cumulative volume of net oil exports, after a net export peak, tends to be enormous.  Saudi Arabia is showing a year over year increase in production and net exports, but based on available annual data through 2014, Saudi Arabia’s net exports fell from 9.5 million bpd in 2005 to 8.4 million bpd in 2014 (total petroleum liquids + other liquids), and I estimate that  Saudi Arabia may have already shipped close to half of their total post-2005 supply of cumulative net exports of oil.

      *GNE = Global Net Exports of oil, combined net exports from (2005) Top 33 net oil exporters, total petroleum liquids + other liquids (EIA)

  16. oldfarmermac says:

    This link is off topic, but it is worth reading for a couple of reasons. One is the actual data in it, which will surprise the hell out of most people.

    The other one is that it goes to show us that what we are reading and hearing about constantly, no matter the topic, is not necessarily what is ACTUALLY HAPPENING on the larger scale.

    We have spent enormous amounts of time talking about tight oil, when it is only a small part of the big picture, tight oil has gotten our attention way out of proportion to its actual importance.


    • Patrick R says:

      Peak gun-death: 1980! Who of us would have picked that?

      • oldfarmermac says:

        Statistically speaking we are at an all time high in terms of safety from violence..

        Hardly anybody knows , but Stephen Pinker demonstrated it beyond doubt in a recent book which I have read.

        • Javier says:

          As long as we stay at home. The list of countries where it is possible to travel safely is reducing. And the number of tourists killed by violence is increasing.

          Tunis, Egypt, Syria, Pakistan, Afghanistan, Yemen, half of Africa, soon the entire Muslim world, are no longer safe for westerners. My parents used to travel in the early 50’s, a completely different and much safer world.

          • Synapsid says:


            You quote, far down the page, a penn museum article on human capability for speech that is more than eight years old. A great deal of work has been done since then and the position that only modern humans are capable of our level of speech has lost support. The topic would be worth looking into; John Hawks might be a good place to start.

            A still older paper by McBrearty and Brooks has stood up well, providing a good deal of evidence that there was no cultural revolution 50 000 years ago caused by modern humans becoming, um, modern. Follow out subsequent research–there’s a great deal of it.

            • Javier says:

              Hi Synapsid,

              While far from being very knowledgeable in the transition from archaic to modern humans, I was not supporting any cultural revolution. I understand that evolution is a very complex issue and the closer you look the more grain appears confusing the picture.

              I was talking only about the evolution of speech that I consider to be the most important character driving modern human evolution. Obviously I don’t care much about where the consensus is right now. The consensus is almost always wrong simply by probability analysis. Between the many hypothesis at one point, only one or none will be correct. That’s why the consensus keeps changing with time, and given that most researchers are average by definition (mediocre is too strong a word), that’s the quality of the consensus in my view.

              Speech did not arise by single mutation, so probably many Homo were capable of complex language, however speech evolution has been incredibly fast, requiring many anatomical and development changes. Others here may not know that babies are physically unable to talk and lack sounds because they need to be able to suck and breath at the same time, so they have a different ape-like larynx.

              Now it is fashionable to defend that Neanderthals were as capable of speech as us, with very little data to support it. Certainly they must have been capable of complex speech, but there is a strong piece of evidence that indicates that Neanderthal talk was not up to human standards:

              “Both studies also discovered vast numbers of Neanderthal genes that none of the contemporary humans carried. “We find these gigantic holes in the human genomes where there are no surviving Neanderthal lineages,” says Akey. This is a strong indication that the genes were harmful to human–Neanderthal hybrids and their descendants, and were purged as the descendants continued to mate. “Most of these variations were removed in a couple of dozen generations,” Reich says.

              Akey’s team found that one large chunk of modern-human genome that bears no Neanderthal contributions is the one that encompasses the gene FOXP2, which is involved in speech in humans.”


              Neanderthal speech capabilities were “toxic” to modern humans and as strongly selected against as infertility genes, because probably talking like a Neanderthal meant you did not reproduce.

              Upper Paleolithic girls considered that a good level of speech was an essential character in their mates. It was probably less choosy human males that mated Neanderthal females that produced the hybridization.

        • Glenn Stehle says:

          Well if Steven Pinker, or for that matter any of the establishment’s other scientific rock stars, said it’s true, then it must be true “beyond doubt.”

          • oldfarmermac says:

            Hi Glenn,

            I would go easy on the sarcasm in this case.

            The statistics are easily obtainable and nobody questions them. For the USA they are published by federal agencies and the states.

            World wide they are published by sovereign governments and outfits such as the UN.

            Pinker is a rock solid scientist rather than a rock star.

            I am wondering , do you EVER make a positive comment about anything or any body ? I can’t recall one, at least not immediately.

            Now it is certainly true that just because the AVERAGE citizen of the planet is statistically safer than ever, not every body is safe.

            Tens of millions of people are in significant danger of their very lives at this minute.

            • Glenn Stehle says:

              oldfarmermac says:

              The statistics are easily obtainable and nobody questions them. For the USA they are published by federal agencies and the states.

              OFM, I know from some of your past comments as well as this one that you believe whatever Pinker says is sure truth and beyond dispute. But let me assure you, there are plenty of people who question Pinker’s work.

              If you doubt the veracity of that statement, I suggest you try getting your hands on a copy of War, Peace, and Human Nature, edited by Douglas P. Fry and published by Oxford University Press.

              Speaking of Pinker’s recent book, The Better Angels of Our Nature (2011), here’s what the authors have to say:

              Given all the publicity for the book, it will surely be widely read, and that is why this chapter is titled Pinker’s List.

              Archeologists carefully slogging through the evidence must realize this is how the findings of their discipline are being portrayed and used to make sweeping claims about human nature and society. Archaeological findings are said to prove that prehistoric people in general were plagued by chronic warfare and that regularly claimed about 15 percent of total population, and a quarter or more of the adult men. These numbers have become axiomatic. The point of this chapter, along with chapter 11, is to demonstrate, with abundant evidence, that this “fact” — as widely invoked as it is — is utterly without empirical foundation (see also Dye, chapter 8; Haas & Piscitelli, chapter 10)….

              This chapter shows that Pinker’s List consists of cherry-picked cases with high casualties, clearly unrepresentative of prehistory in general. Chapter 11 shows the results of a more representative approach. By considering the total archaeological record of prehistoric populations of Europe and the Near East up to the Bronze Age, evidence clearly demonstrates that war began sporatically out of warless condition, and can be seen, in varying trajectories in different areas, to develop over time as societies become larger, more sedentary, more complex, more bounded, more hierarchical, and in one critically important region, impacted by an expanding state….

              War does not go forever backwards in time. It had a beginning. We are not hard-wired for war. We learn it.

              OFM, have you ever stopped to question why it is that these guys like Pinker get to be the scientific rock stars that they are? Or on a similar note, why preachers like Billy Graham get to be theological rock stars? Has it ever occurred to you that people in high places might like what they have to say?

              Christopher Simpson, writing in the Science of Coercion, put it bluntly:

              The state usually did not directly determine what scientists could or could not say, but it did significantly influence the selection of who would do the “authoriative” talking in the field.

              Do you remember the Judith Miller scandal, and how the NY Times uncritically published her stories about Iraq’s WMD, which were being fed to her by the government, and were later determined to be completely bogus?

              Do you believe that was an abberation, and is not reflective of how the government and other powerful actors influence how the MSM chooses the “authorities” who get to do the talking, or who gets thrust into the limelight?

              • oldfarmermac says:

                Changing the subject to Pinker’s possible short comings is not making your case.

                Prove Pinker wrong on his modern statistics if you can.

                You know damned well you can’t.

                Pinker might or might not have cherry picked some historical statistics. I do not believe personally that he did. I have read most of his books, and they are entirely consistent with what I have learned in other studies.

                I am not an academic,AS SUCH, but I have read about as deeply and as widely as anybody I have ever met, including a fair number of academics, and Pinker’s work is generally consistent with what I know is true.

                The world is full of authors and professors who don’t really know shit from apple butter.

                I strongly suspect the ones you mention today fall into that category if they are in any sort of fundamental disagreement with Pinkers generally stated positions.

                WAR as SUCH, the way the public defines the term, is impossible previous to the birth of the nation state.

                Brothers otoh have been murdering brothers, and people have been killing each other with enthusiasm since before the first man realized a rock in a fist is a lot more lethal than a fist. Small tribal bands have been fighting each other since such bands evolved , which was well before we have any written history. Larger bands and tribes, ditto.

                There is now plenty of evidence to prove this is the case, where as there is NONE to prove it was NOT the case.

                There NEVER WAS ANY to prove we are peaceable creatures.

                People such as Fry just ASSUME that we are peaceable creatures at heart, like cows. Cows ARE fairly peaceable creatures, the females anyway, but the males, aka known as bulls are LEGENDARY for being violently aggressive.Ya don’t get between a bull and his cows and calves if you have good sense. The fact that this unproven assumption was allowed to stand for centuries in certain philosophical circles and then for a century or more in some so called scientific circles just makes the people who fell for it look even more foolish.

                Even CHIMPANZEES organize themselves into troops and attack and defend as necessary.

                It would be at least as accurate to say that people learn to KEEP the peace, rather than that they learn to break it.

                The details are always messy of course when dealing with history and social sciences.

                ANYBODY who does not understand the general human tendency to violence is ignorant of the abc’s of evolutionary biology, right across the range of social species that come to dominate in their environments, and then begin competing INTRA species.

                A hell of a lot of people in the social sciences and some other fields have yet to accept that we are APES, tool using apes. Apes. No more, no less. We fight over females, we fight over food, we fight over land , we fight over our material possessions we kill each other, and only a damned fool academic would ever argue it has ever been otherwise.

                The French have a saying about such delusional thinking. which goes something like this,

                “Only a fool or an intellectual could believe such a thing.”

                There is nothing intrinsic about our species that separates us from the rest of the animal kingdom.

                Anybody that believes otherwise is behind the times by a couple of centuries.

                Academics are pretty much free to publish what they please.

                You have to sort thru a lot of chaff to find the wheat sometimes. I have sorted it to my own satisfaction when it comes to the history of violence and war, and I am in PINKER’S camp.

                I learned about intertribal academic warfare when I was a freshman ag student back in the dark ages. The biology professors thought the ag professors were delusional or worse in certain respects. Time has proven them correct in saying the ag guys were wrong about a lot of things.

                The ag guys however are STILL laughing at the biologists in respect to some other particular issues.

                My money is on PINKER. Every last dime.

                Having said all this, violence up to and including hot war is only temporarily at low levels, in terms of population versus victims.The victims are numerous indeed.


                We are in overshoot, and a major part of the consequences thereof will be widespread long lasting violence, beginning at the level of brother against brother and perhaps culminating in a flat out WWIII between the major powers.

                • Glenn Stehle says:

                  oldfarmermac says:

                  Prove Pinker wrong on his modern statistics if you can.

                  You know damned well you can’t.

                  Well actually, it’s not at all difficult to marshall empirical evidence to demonstrate that Pinker is mistaken in his use and manipulation of statistics.

                  Here, for instance, is how Azar Gat puts it in War in Human Civilization:

                  But did liberal democracies really demonstrate greater aversion to war than other regime types, or was this merely ideological propaganda and self-delusion, a familiar manifestation of the general bias towards the self? Scepticism seemed more than justified… [S]cholars tended to be highly sceptical of a self-professed democratic aversion to war….

                  Not only were these ideological arguments intricate and slippery, but the hard record seemed to support no particular peaceful inclination on the part of liberal democracies. Although liberal/democratic countries have indeed been found to have fought fewer inter-state wars, they fought more ‘extra-systemic,’ mainly colonial, wars, against non-state rivals.4 As a result of their far-flung colonial empires and consequent ‘colonial wars,’ old liberal/democratic powers such as France and Britain fought far more wars and war years than non-liberal great powers, such as Austria and Prussia/Germany in the ninetheenth and twentieth centuries. The USA, too, after her largely forceful expansion across the North American continent during the nineteenth century, fought extensively during the twentieth century, arguably on the frontiers of her own ‘informal empire.’….

                  The Industrial Revolution constituted a quantum leap in human cultural evolution, comparable only to the advent of agriculture and animal husbandry millennia earlier….

                  The explosive surge in technologically induced production translated into an explosion in military power of the same order of magnitude, as the two became virtually inextricable. Military force capability increased exponentially, with those in the lead economically opening a similar gap militarily. Consequently, as Paul Kennedy ably demonstrated, there was a clear correlation in productive capacity and military victory….

                  This is a sobering thought, making the world created by these struggles appear much more contingent — and tenuous — than unilineal theories of development [like Pinker’s] and the Whig view of history and Progress would have us believe.

                  • oldfarmermac says:

                    The statistics , the ones Pinker used and the ones that I am talking about VERY CLEARLY show that in terms of the total population, violence is at historical low.

                    ANY claim to the contrary is bullshit.

                    You can dance around this fact like a witch doctor until you collapse from fatigue, it will remain a fact.

                    Yes war is more destructive than ever, but it is actually resulting in a LOWER PERCENTAGE of the total world population dying as a result in modern times.

                    This does not mean things are hunky dory of course.

                  • Glenn Stehle says:


                    So why don’t you enlighten me as to what these mystery statistics that “Pinker used and the ones that I am talking” are? Perhaps then I will know exactly what you are talking about so you can’t keep moving the target, even though it’s pretty clear to any sentient human being where the bull’s eye is.

                    In The Blank Slate Pinker made his evolutionary position clear, “Hobbes was right, Rousseau was wrong,” and then goes on to approvingly quote William James:

                    We, the lineal representatives of the successful enactors of one scene of slaughter after another, must, whatever more pacific virtues we may also possess, still carry about with us, ready at any moment to burst into flame, the smoldering and sinister traits of character by means of which they lived through so many massacres, harming others, but themselves unharmed.

                    Then in Our Better Angels Pinker argued that the primitive impulses of Hobbes’ brutish savage have been thwarted and controlled by the forces of modernity.

                    So, “Leviathan is alive and well in our policy textbooks,” as Elinor Ostrom puts it. “The state is viewed as a substitute for the shortcomings of individual behavior and the presumed failure of community.”

                    But here’s the rub, as Ostrom goes on to point out:

                    Somehow, the agents of the state are assumed to pay little attention to their own material self-interest when making official decisions and to know and seek “the public interest.”

                  • Glenn Stehle says:

                  • Fred Magyar says:

                    Well there are some scientists, such as Joan B. Silk, who would very much disagree. To wit:

                    Really?! Have you ever read any of her research?

                    OFM is 100% correct in that she would support what he is saying.

                    There is nothing intrinsic about our species that separates us from the rest of the animal kingdom.

                    Anyone who thinks otherwise is suffering from severe Dunning-Kruger effect. Glen, your are way out of your depth here.


                  • Fred Magyar says:

                    Fred, instead of blowing your top and calling other people names,

                    Says the guy who said OFM had taken leave of reality…
                    Pot calling kettle black maybe?!

                • Glenn Stehle says:

                  oldfarmermac said:

                  There is nothing intrinsic about our species that separates us from the rest of the animal kingdom.

                  Anybody that believes otherwise is behind the times by a couple of centuries.

                  Well there are some scientists, such as Joan B. Silk, who would very much disagree. To wit:

                  Strong reciprocity in humans seems rooted in a deep sense of fairness and concern for justice that is extended even towards strangers, but we have no systematic evidence that other animals have similar sensibilities.

                  JOAN B. SILK, “The Evolution of Cooperation in Primate Groups”

                  So tell me, OFM, is Joan Silk “behind the times by a couple of centuries”?

                  • oldfarmermac says:

                    I have not yet read her, but so far as I can tell from hearing about her work, she is not saying anything fundamentally opposed to Pinker.

                    Altruism, reciprocity, etc are foundation stones in the field of evolutionary psychology.

                    Now here is a little excerpt from Wikipedia.

                    “Frans de Waal and Barbara King both view human morality as having grown out of primate sociality. Many social animals such as primates, dolphins and whales have shown to exhibit what Michael Shermer refers to as premoral sentiments. According to Shermer, the following characteristics are shared by humans and other social animals, particularly the great apes:

                    attachment and bonding, cooperation and mutual aid, sympathy and empathy, direct and indirect reciprocity, altruism and reciprocal altruism, conflict resolution and peacemaking, deception and deception detection, community concern and caring about what others think about you, and awareness of and response to the social rules of the group.[8]

                    Shermer argues that these premoral sentiments evolved in primate societies as a method of restraining individual selfishness and building more cooperative groups. For any social species, the benefits of being part of an altruistic group should outweigh the benefits of individualism. For example, lack of group cohesion could make individuals more vulnerable to attack from outsiders. Being part of group may also improve the chances of finding food. This is evident among animals that hunt in packs to take down large or dangerous prey.
                    Social Evolution of Humans[9] Period years ago Society type Number of individuals
                    6,000,000 Bands 10s
                    100,000–10,000 Bands 10s–100s
                    10,000–5,000 Tribes 100s–1,000s
                    5,000–4,000 Chiefdoms 1,000s–10,000s
                    4,000–3,000 States 10,000s–100,000s
                    3,000–present Empires 100,000–1,000,000s

                    All social animals have hierarchical societies in which each member knows its own place.[citation needed] Social order is maintained by certain rules of expected behavior and dominant group members enforce order through punishment. However, higher order primates also have a sense of reciprocity. Chimpanzees remember who did them favors and who did them wrong.[citation needed] For example, chimpanzees are more likely to share food with individuals who have previously groomed them.[10] Vampire bats also demonstrate a sense of reciprocity and altruism. They share blood by regurgitation, but do not share randomly. They are most likely to share with other bats who have shared with them in the past or who are in dire need of feeding.[11]”

                    You have made a BIG mistake in saying that there is anything FUNDAMENTALLY exclusive about the behavior and morality of the NAKED APE.

                    I am almost DEAD sure SILK would agree with me, but as I said before, I have not yet read her books. Maybe this winter I will get a couple of them, but they are not in my local library and the state lending library has only a few copies and they are reserved.

                    Pinker is quite well aware of such stuff as Silk apparently turns out , and while the two of them may or may not disagree on some points, Pinker gives reciprocity, altruism, cooperation, etc plenty of consideration in his work.

                  • Glenn Stehle says:


                    Sorry, but I’m not buying into the fictions you are peddling.

                    When you make statements like “There is nothing intrinsic about our species that separates us from the rest of the animal kingdom,” it demonstrates that you have completely taken your leave from reality. There are stark differences which separate humans from other primates. Here are only a few:

                    1) Other primates do not organize themselves into groups of millions or hundreds of millions of individuals over geographical spaces that cover millions or hundreds of millions of square miles.

                    2) Other primates do not exhibit strong reciprocity. (Granted, as both you and Joan Silk point out, they do perform a variety of altruistic behaviors which can be explained by kin selection and reciprocity. But these are very different behaviors than strong reciprocity.)

                    3) Other primates have no capacity for symbolic thought

                    4) Other primates do not use written communication

                    5) Other primates do not create art works

                    I don’t know how you came about formulating your fictions and your theories to justify them. Did you first fall in love with irreality and then go shopping for theory to justify it? Or did you first fall in love with theory and later modify reality so that it fit what your theory predicted?

                    And you are hardly alone in these practices. Many scientists practice their trade exactly as you do.

                    Nevertheless, creating or justifying fictions is not what science, in my humble opinion, should strive for.

                  • Javier says:

                    To me there is only one fundamental difference between humans and primates, and all the rest are secondary effects arising from this difference.

                    That fundamental difference is the change in brain structures that allowed the emergence of complex language as a substitute for grooming behavior to grease social relations and hierarchy, positively selected by sexual selection.

                    All the rest derives from that, starting by the increase in group size beyond what grooming can handle in primates.

                    So if you want to get the girls, you have to do the talk. A side effect is that it allows specialization, organization, cultural evolution and the development of complex civilizations. Mighty side effect, but getting the girls was first.

                  • Glenn Stehle says:


                    Joan Roughgarden takes a wrecking ball to that theory in this talk at The Science Network (beginning at minute 25:00):

                    If you do look at the science of gender and sexuality in science, it’s almost surely incorrect top to bottom. It’s a worldview of nature that postulates…that courtship between males and females amounts to deception of various sorts….

                    The human brain is explained as the human equivalent of the peacock tail, which of course poses a problem for why women have brains, because female peacocks don’t have a tail, so the existence of a male ornament in a female is problematic evolutionarily. So of course the answer is that females have brains to admire the brains of males. And you see the ludicrousy and the idiocy that is associated with this ever enlarging body of narrative and not data about sex roles…

                    Basically sexual selection theory is locker room bravado projected onto animals and then retrieved from animals as though a fact of nature.

                    So I invite you to see the extent to which there is bias and prejudice within science.


                  • Javier says:


                    What Roughgarden is criticising has nothing to do with what I say. Sexual selection driven evolution is a mechanism so well stablished in evolutionary theory, that even if you fail to detect it you cannot say that it is not taking place. In fact sexual selection driven evolution only has one requirement, and that is that one of the sexes decides mating by non-randomly choosing the other. So it is more probable that sexual selection has played (is playing) a role in human evolution, than it has played no role at all.

                    Anatomically Modern Humans originated very recently, about 50,000 years ago, were the only ones capable of producing the full range of sounds that we now produce
                    (http://www.penn.museum/sites/expedition/tracking-the-evolution-of-language-and-speech/ ), and quickly replaced archaic humans worldwide, while driving to extinction all remnants of the Homo tree.

                    Whether language and sexual selection played an important role is hypothetical, but not a wild theory at all. I have not found another hypothesis that I consider a better explanation. Sexual selection is one of the most powerful forces in evolution, as it has been demonstrated over and over. It is capable of selecting very disadvantageous characters for individual survival, so when selecting for advantageous characters it is capable of driving very fast evolution.

                  • Fred Magyar says:

                    When you make statements like “There is nothing intrinsic about our species that separates us from the rest of the animal kingdom,” it demonstrates that you have completely taken your leave from reality. There are stark differences which separate humans from other primates.

                    Glen, I’m sorry, but you truly know nothing and are merely an ignorant arrogant fool! You seem to have zero understanding of your own biological origins, let alone do you have the slightest understanding as to how evolution works! Your placing of Homo sapiens on a pedestal all by themselves separate from all other species, with special exceptional qualities is to demonstrate your total cluelessness of the natural world and our place in it. Before you earn the right to tell OFM that he has taken leave of reality, YOU, sir, need to understand what reality is! And the only way to do that is to get a deep education in the biological sciences first!

                  • Glenn Stehle says:

                    Really Fred, is that the best you can do?

                  • Glenn Stehle says:

                    Fred, instead of blowing your top, calling other people names and trying to shout other people down, you might try taking a look at what different scientists actually write and say. To your and OFM’s great surprise, you might discover that not all scientists march in lockstep with what you, OFM and Steven Pinker believe.

                    Here, for instance, is what Joan Silk has to say:

                    Primates do not donate to National Public Radio or give blood, but they do perform a variety of altruistic behaviors….

                    Evolutionary theory predicts that altruism will occur when benefits increase the actor’s own inclusive fitness (Hamilton, 1964) or when benefits are exchanged by reciprocating partners (Trivers 1971; Axelrod and Hamilton 1981). Thus, examinations of kinship and reciprocity have dominated efforts to account for the distribution of altruistic behavior among primates (Gouzoules and Gouzoules 1987; Dugatkin 1997; Silk 1987, 2002). Data that do not coform to predictions derived from these models have been discounted, denied, or simply ignored because they do not fit into our theoretical paradigms. However, empircal and theoretical work in experimental economics suggests that humans cooperate when standard evolutionary theory tells us they should not. Efforts to develop systematic explations of human behavior that explain these anomalies have generated new models of the motives that give rise to human cooperation , including strong reciprocity (Gintis 2000, this volume)….

                    Even those who have argued most forcefully for the emergence of moral sentiments in monkeys and apes have drawn their evidence from the interactions of close associations with long-term social bonds, not interactions among strangers (de Waal, 1996; Flack and de Wall 2000).

                    The idea of strong reciprocity emerged from carefully designed experimental studies on humans that revealed surprisingly high levels of altruism in one-shot interactions with strangers. It is hard to imagine obtaining comprable data on interactions among strangers in non-human primates. Most primates live in stable social groups where they restrict peaceful social interactions maninly to known group members. Close associations with strangers are fraught with tension, generating aggression and avoidance, not cooperation….

                    In conclusion, the literature suggests that primates reserve cooperation mainly for kin and reciprocating partners… The ability to interact peacefully in one-shot interactions with strangers may prove to be one of the most remarkable traits of our own species.

                    JOAN B. SILK, “The Evolution of Cooperation in Primate Males”, Moral Sentiments and Material Interests, pp. 43-64

                  • Glenn Stehle says:

                    Javier said:

                    Sexual selection driven evolution is a mechanism so well stablished in evolutionary theory…

                    But isn’t it that exactly the sort of dogmatism and lack of skepticism in evolutionary biology that Roughgarden is taking aim at?

                    What happened to the great skepticism you exhibit regarding climate science? When it comes to evolutionary biology, it seems to have taken a holiday.

                  • Fred Magyar says:

                    Sexual selection driven evolution is a mechanism so well stablished in evolutionary theory…

                    But isn’t it that exactly the sort of dogmatism and lack of skepticism in evolutionary biology that Roughgarden is taking aim at?

                    Nope! As I mentioned before you are totally clueless. You might as well be skeptical about the theory of Newtonian Gravity. The TOE is undisputed fact and the basis of all modern biological science. You can’t understand humans if don’t understand evolution. Humans didn’t just fall out of the firmament! They evolved and so did their behaviors.

                    My disagreements with Javier about climate science notwithstanding. On this topic I think he and I both agree!

                    BTW I don’t think Joan Silk says what you seem to think she does.

                    What are friends for?

                    For humans, and perhaps for other primates, the capacity to form and maintain close social bonds has an important impact on health and happiness. Human friendships seem to transcend the calculus of kin selection or reciprocity. This kind of relationship defies the logic of evolutionary theory, but seems to play an important role in our lives.I am interested in the evolution of these kinds of relationships in humans and other primates.

                    She is studying the evolution of human and other primate behavior. She is not in any way shape or form denying or doubting that basic facts of our evolution and how we are closely related to all other great apes.

                • Glenn Stehle says:

                  oldfarmermac said:

                  The world is full of authors and professors who don’t really know shit from apple butter.

                  I strongly suspect the ones you mention today fall into that category if they are in any sort of fundamental disagreement with Pinkers generally stated positions.

                  OFM, do you really believe resorting to ad hominem enahnces your argument?

                  • oldfarmermac says:

                    Accusing somebody of ignorance or error is not a personal attack. You will note that I qualified this remark by saying ” if ” about her work, in respect to being out of the mainstream in evolutionary behavioral research. I do not know that she is, but if she is , then she is fundamentally out of step with the entire biological sciences community, and yes behind the times.

                    But not quite two centuries. Darwin didn’t publish his own books QUITE that long ago. 😉

              • Glenn Stehle says:

                oldfarmermac said:

                You have to sort thru a lot of chaff to find the wheat sometimes. I have sorted it to my own satisfaction….

                I think that’s the problem.

                Confirmation bias, anyone?

                • oldfarmermac says:

                  Confirmation bias? Maybe.

                  That just might depend on which of us is biased.

                  LOL, but accusing you of bias would be like accusing a lawyer of bias, you never really say what YOU actually think, you just post excerpts from other folks work.

                  I go where my intellect leads me, and I started in on this stuff back about the time E O WIlson published his earlier books,and have been reading in the field, pro and con, off and on ever since. I read Darwin before I ever read Wilson.

                  Somehow I doubt you have personally read Pinker. You would not likely have posted the comment you did about his work if you had read him.

                  Sometimes people ,including academics, and old farmers, are wrong.


                  I am totally confident the evolutionary psychologists are kicking the old psychologists asses, and that they are now THE mainstream.

                  All that is really left of the old “blank slate humans are something unique and sublime” bullshit is mopping up and waiting for a few old tenured farts to die.

                  If I am proven wrong, I will be glad to own up to it. So far as ten minutes of down and dirty googling tells me Silk is in the mainstream,or at least on the fringes of it, and thus ok with me.

                  If she is not, she is still probably a fine human being, but WRONG.

                  Sometimes you have to have faith in your own positions and beliefs.

                  Do you really believe Pinker is wrong when he says we are at the present time statistically safer than ever before?

                  ANSWER the question, for once, instead of supplying another link to somebody who believes differently.

                  • Glenn Stehle says:


                    I can see where you would have a problem with lawyers, because in trials, somewhere between the opening arguments and the closing arguments, is the evidence phase of the trial.

                    And furthermore, there are very clear laws and rules which govern which evidence is allowed to be presented.

                  • Caelan MacIntyre says:

                    While I haven’t read the whole back and forth between you guys (as if we all have time to read that and Pinker too), we have already had a discussion hereon about Pinker’s work WRT contemporary ‘violence’ which you may wish to look up. Google Search field: (include quotes)

                    “any putz can write a book”

                    Old Farmer Mac, a read of a particular work or works risks predisposing them toward a bias for it, to the exclusion of other works, such as to their contrary.

                    Incidentally, as an aside, I seem to recall reading something along the lines that humans have been doing agriculture wrong for the past 7000 years. Unsure humans can do it right, but whatever.

                  • Glenn Stehle says:


                    You, as an avowed anarchist, it seems would be at the opposite end of the ideological spectrum from those like Fred Magyar, OFM and Pinker who celebrate the Leviatan and advocate a large, powerful state to keep the stupid, ignorant hoi polloi in line.

                • Fred Magyar says:

                  Fred Magyar, OFM and Pinker who celebrate the Leviatan and advocate a large, powerful state to keep the stupid, ignorant hoi polloi in line.

                  Really?! That’s certainly news at least to me! The last thing I have ever argued for is a powerful state to keep the stupid, ignorant hoi polloi in line…

                  If anything I have argued for a decentralization of many things, including government, business monopolies, corporate power, energy generation, small scale local agriculture, etc… etc… so in many ways I’m probably closer to being a non ideological anarchist. I have been quite vocal about my belief that we need systemic change and that BAU is not sustainable.

                  I have expressed approval of socialist democracies such as Denmark. Denmark is not perfect but they are implementing circular economic systems in all the areas I mention. I certainly don’t view their government as an example of a powerful centralized model.

                  I may have my idiosyncrasies, foibles and occasional inconsistencies in my views but generally speaking I think I manage to express views and opinions that are genuinely mine and which are derived from a combination of having had a reasonably decent education, a chance to travel the world, and the willingness to continue learning until my last breath. I don’t have what can be defined as a fixed ideology.

                  • R Walter says:

                    Near as I can figure, you have a fair amount of knowledge, paleozoology, seems to me. Far be it from me how much edumaction you do have, but more than the average Einstein Phd, me thinks.

                    And another thing, well, never mind.

            • Glenn Stehle says:


              • oldfarmermac says:

                We are arguing from authority.

                You accuse me of making up facts and theories.

                I accuse you of being WRONG on the facts.

                I am perfectly confident that my authorities are better respected, better known , and better scientists than yours.

                You accuse me of making up stuff as if I were an imbecile. I will restrain myself and simply say that I think you are in intellectual waters too deep for you , and desperately trying to avoid admitting you don’t know much if anything at all about Pinker’s work. It seems rather unlikely to me that you have actually read any of his books. I have.

                Silk by the way appears to be in the evolutionary psychology camp, and a scientist who understands that we are just highly evolved apes. You made a mistake in bringing her up. She will under examination be more useful to me as a witness than to you.

                Now if you believe there is a FUNDAMENTAL difference between a Model T and a late model Ford, then you may believe there are fundamental differences between humans and chimps. Silk may even think of these differences in degree as being fundamental.

                I don’t know any engineers who really think there are FUNDAMENTAL differences between a Model T and a late model Ford. The late model is certainly more ADVANCED in terms of subsystems , but that is really about the size of it.It still has wheels, ic engine, transmission brakes etc and still does the same job using the same BASIC technologies.

                My belief, and that of the biological sciences community as a whole, is that if you stand far enough back to take a GOOD look, you will conclude that we are more alike than different, and that just about every thing we do, chimps do too, just to a lesser extent. They communicate by vocalizations for instance.

                You have made a fool of yourself by accusing Pinker of using deceptive or fraudulent statistics, which is the origin of this discussion, and then ask ME to point out WHICH statistics.

                I made it clear that the statistics are those gathered by just about every major government and ngo there is , statistics that are freely available, dealing with violence in all its forms in recent times.

                If you want to question them, we can go over them one at a time, but you pick out which ones, since there are so many, and THEN I will have something to say.

                • Glenn Stehle says:

                  oldfarmermac said:

                  I am perfectly confident that my authorities are better respected, better known , and better scientists than yours.

                  I’ll bet that’s right. Doubt and lack of certainty don’t seem to be part of your repertoire.

                  And I’m quite sure that what Christopher Simpson documented in the Science of Coercion won’t bother the champions of Leviathan in the slightest:

                  The state usually did not directly determine what scientists could or could not say, but it did significantly influence the selection of who would do the “authoriative” talking in the field.

                  You know, OFM, not everybody likes to be led around by the nose like a bunch of trained goats, even if someone as putatively illustrious, well read and knowledgeable as you is the trainer.

                  • Nick G says:


                    Why are you focused on state coercion?

                    This seems to be a basic element of disinformation being spread by those who are trying to prevent the regulation of pollution: pretending that trying to regulate pollution is really an assault on civil liberties.

                    It’s highly unrealistic.

                  • Caelan MacIntyre says:

                    The State is a racket, Nick G, and pollutes majestically all on its coercive own. As if you don’t already know that, and yet you persist.

                    Pollution regulation? What’s that? The left hand slapping the wrist of the right hand?
                    I have already posted about the percentage of State-owned oil companies for example.

                    “I think as the years roll on, more and more people will understand that we actually need to change the DNA of this country to have any chance. I think that as the ball starts rolling faster, more and more people will clearly see how the structure of law operates and the necessity of changing it.”~ Thomas Linzey, Esq.

                    Select the image if it is too small to view for a larger one.

    • VK says:

      The caveat, for now only. Statistical models can only give us inference about the past. Human history is filled with periods of peace followed by large scale conflicts.

      • oldfarmermac says:

        Society is going to fall apart someday. When that day comes, if I am still around and not in jail, I will be well armed .

        The cops are not necessarily going to be on your side. There are PLENTY of places where the cops are your worst enemy.

        I would not want to attract the attention of a cop if I lived in Venezuela, especially if I had anything worth stealing, such as food. He might have put his kids to bed last night with next to nothing in their little tummies.

        I do not expect things to go to hell in a hand basket here in the USA or western Europe within my lifetime, but I do believe in the precautionary principle and self determination.

        • Javier says:

          That’s your personal choice. I rather bribe the police with my surplus and let them handle the violence. As anything else, violence is better left to professionals. You cannot compete with them.

          • oldfarmermac says:

            I don’t want to COMPETE with the police.

            I just want to know that I am not at their mercy in the event they turn rogue, which has happened more or less continuously throughout history and is happening today in numerous places.

            People do sometimes manage to overthrow rogue governments, even when they have been disarmed. I would be utterly helpless competing with cops and soldiers as an individual, no question.

            I have great faith and respect for my LOCAL police. But we elect the sheriff, and he is a man who you can get on the phone. There is no cops union making sure the cops look after themselves first and the community second.

            In a place like Chicago, where the cops routinely get away with murder and the cops union and the city administration do everything possible to prevent the cops being held to account………. the local people are not THAT FAR from living in a police state already.

            Thankfully places like Chicago are the exception rather than the rule.

            • oldfarmermac says:

              Places like Chicago are the exception to the rule in countries such as the USA and western Europe. There are as many people or more living in places where the cops ARE NOT your friends.

      • oldfarmermac says:

        Hi VK,

        You are correct in saying that large societies occasionally coexist peacefully for a time, sometimes a long time, without war in the usual sense.

        But what the evidence shows, such actual evidence as we have, is that violence is until very recently as much the NORM as otherwise. There may not be as much as a single given day documented as being peaceful on a world wide basis.

        And of course wars are being fought at the SMALL scale in countless places TODAY, from Chicago at the little end to Sand Country at the big end.

        BUT in terms of the total population of the world, STATISTICALLY speaking, things are about as safe or safer than they have ever been.

        This is what Pinker demonstrates, and the proof is unquestionable, unless you deny the legitimacy of just about every government agency, etc.

        • Javier says:

          I have no problem believing that, Ofm,

          Absolute violence increasing, relative violence declining.

          We have the same thing for poverty, or hunger. In absolute terms still increasing, but in relative terms decreasing.

          If you are a pessimist you focus on the first, if an optimist on the second. In both cases you are limiting your view, and thus increasing your chances of reaching the wrong conclusions.

          The key is the incredibly rapid expansion in population. That we have been able to keep up is amazing, even though we have been helped by global warming and CO2 increase that have boosted agricultural output. But the strain that population growth has put on resources is completely unsustainable at a much shorter time span that population can stabilize and start decreasing naturally.

          So all those trends are also temporal and unsustainable. It is all part of the retirement party for industrial civilization.

          • oldfarmermac says:

            Good morning Javier,

            We are on the same page almost all the time. About the only real difference between what you believe and what I believe, so far as I can tell from reading your comments, is that I think forced warming is a large and more or less short to middle term danger on the grand scale, where as you think the danger is less. I certainly do agree that resource depletion, over population etc are greater by far immediate problems.

            And I do recognize that you MIGHT be right about warming.

            As I see it, the climate probably is going to warm up a couple of degrees at least,as a result of our burning so much carbon, and while in terms of the grand scale of geological and biological history, this is not that big a deal, in terms of the lives of men, over the next few generations, it is a hell of a big deal, if it happens. I think it will, and it might be more than two degrees.

            This reminds me of a very young guy who just lost his girlfriend, the first one willing to sleep with him. His older brother tries to console him, telling him that he can soon get another girlfriend, perhaps even within a week or two.

            The younger kid burst out crying again, wailing ” What about TONIGHT?”

            Being a practical minded old farmer, I am extremely concerned about “tonight”, the next century or so.

            The planet and the biosphere will take care of itself, in the biological long term. No Sweat.

  17. Caelan MacIntyre says:

    Continued from here and here

    “I have a problem with many Social Sciences studies.” ~ Javier

    You also seem to have a problem with climate change studies. ‘u^

    “They set a preconceived theory, they build a model, and without any real data they claim their model supports their theory.” ~ Javier

    From what is understood, the model, at least the initial one, came from NASA.

    “For a start they are supposed to be working with collapse, yet they clearly have no idea of the meaning of the word collapse, and have no functional definition of it to work with. They say things as ‘The Roman Empire’s dramatic collapse.’ When exactly did the Roman collapse took place? We have known for centuries that the Roman Empire declined and fell (to put it in Gibbon’s words). That is not a collapse. It is more like a long disease that ends in death.” ~ Javier

    Well they did qualify it in parentheses:
    “The Roman Empire’s dramatic collapse (followed by many centuries of population decline, economic deterioration, intellectual regression, and the disappearance of literacy)”

    “The idea that excessive draw on essential resources breeds collapse is so obvious as to not merit any discussion.” ~ Javier

    Since it was/is apparently a model or simulation, ‘essential resources’ seem to be variables that need to be included. But one question is, ‘How?’. ‘Excessive draw’ (or anything else) doesn’t happen devoid of context.

    Anyway, it seems to be formative, and did they qualified it as a ‘thought experiment’? That seems to be how science works, what experiments are in part for; to test hypotheses, etc..

    ” But the idea that inequality breeds collapse is slightly more original…

    If the principal thesis of the work was true, and inequality breeds collapse, then we would have some evidence by now that egalitarian societies should be more resistant to collapse as they don’t suffer from ‘scarcity of labor’.

    Egalitarian societies should be more abundant. They clearly are not.”~ Javier

    Over time they may be, but to get there currently, such as if we can’t manage with the current numbers, we may need a dramatic reduction of the population…

    “Bands have a loose organization. Their power structure is often egalitarian and has informal leadership; the older members of the band generally are looked to for guidance and advice, and decisions are often made on a consensus basis, but there are no written laws and none of the specialised coercive roles (e.g., police) typically seen in more complex societies.” ~ Wikipedia

    “Much to the contrary I believe there is not a single example of a complex egalitarian civilization without an extractive elite. I would like to be proven wrong on this, but even small tribes have a chief, and a chief’s family, and if big enough they have a nobility.” ~ Javier

    Indeed, while there’re some significant differences between small-scale tribal or band setups and larger complex civilization setups, if we can’t get our acts together with regard to ethics (lack thereof) that can seem to underpin complex civilizations’ issues, then we may find this one also going the way of the others.

    “To say that we have to develop an egalitarian society without an extractive elite to avoid collapse (which is a statement not supported by evidence) is the same as to say that we have to grow wings on the shoulders to avoid collapse from peak oil. It just is not going to happen.” ~ Javier

    Maybe this time it’s different, what with it being global in scope and therefore, for example, with nowhere else to go/collapse to; no extra planet Earth. Nevertheless, I am sorely tempted to agree.

    “We have to be specially skeptical of ‘scientific’ articles that claim to demonstrate what we believe to be true. It is one of the ways of fighting confirmation bias.” ~ Javier

    Sure, but it does dovetail with and support, along with other material, a case I’ve been making.
    Just because we might think or suspect that we can’t do or change some things doesn’t necessarily mean we shouldn’t try; be responsible, ethical, and try to change or transcend a system that is not.
    Or maybe we are indeed just not smarter as a collective than rats on an island or yeast in a petri-dish in overshoot; that our so-called intelligence, alone, will not be enough to transcend some fundamental law of nature; a parasitic elite; or this planet, to continue to flourish elsewhere.

    That appears the real challenge. And this study, among other indicators, seems to suggest that it won’t be met through technology like renewables or electric vehicles, at least not alone, but through simple, shared ethics (care of Earth; care of people, etc.) .

    • Javier says:

      Sure I do have a problem with many studies. I am not satisfied with reading something that confirms what I believe to be true. It takes training to reach that point.

      Most people here talk about collapse without giving a thought to the word meaning:
      “a sudden failure of an institution or undertaking.”
      They extrapolate to any failure regardless of the time involved.
      But science is all about precision in the language. That’s why we have our own language called scientific language, and that is why we restrict the definition of common words beyond how non-scientist people use them.

      The Roman Empire did not collapse. You cannot set a date for when it went from normal functioning to failure. Depending how you set the last date for normal functioning, the fall of the Roman Empire took from 200 to 450 years and that doesn’t fit any definition of sudden. Along that process they had huge crisis and we can point to about a dozen. None of them can be identified as the one that took the Empire from its height to its fall.

      We could say that Yugoslavia collapsed as it was a functioning country in early 1991, and completely split and at war by 1992. See the difference?

      Even for a thought experiment, if you want any conclusion to have any validity, you need to ground it in evidence. They fail to do that. Clearly history is not their strength as any civilization passing is branded a collapse and tagged a non demonstrated cause, shortage of labor or shortage of resources. And shortage of labor is the most ridiculous cause for a civilization failure that I have ever heard of. Can you seriously defend shortage of labor as a cause for civilization failure without breaking up with laughter?

      Maybe this time it’s different, but probably it is not. You are tempted to agree with them because you want to avoid civilization failure or collapse as anybody else. Any solution that involves a change in human nature, a global collaboration that sets aside any sort of personal or group interests, is sadly outside our reach. We know by experience that when problems arrive they will be met with beggar thy neighbor policies. We are going down fighting each other exactly as we raised.

      • Jef says:

        The Roman empire has nothing to tell us about collapse.
        The WORLD is involved in this one.
        Finite resources are a reality.
        The Biosphere is reaching its limits in absorbing our waste stream.
        The world is connected and more complex by several orders of magnitude.

        But hey don’t let reality get in your way…you haven’t so far.

        • Javier says:

          Straw man, Jef

          I have not refuted any of those, have I?

          • Caelan MacIntyre says:

            “Increasing pressure from ‘barbarians’ outside Roman culture also contributed greatly to the collapse… The reasons for the collapse are major subjects of the historiography of the ancient world and they inform much modern discourse on state failure” ~ Wikipedia, ‘Fall of the Western Roman Empire’ entry

            intransitive verb
            1: to fall or shrink together abruptly and completely : fall into a jumbled or flattened mass through the force of external pressure (a blood vessel that collapsed)
            2: to break down completely : disintegrate (his case had collapsed in a mass of legal wreckage — Erle Stanley Gardner)
            3: to cave or fall in or give way (the bridge collapsed)…
            refreshment, rejuvenation, rejuvenescence, revitalization”
            ~ Merriam Webster online dictionary

            • Caelan MacIntyre says:

              “Most people here talk about collapse without giving a thought to the word meaning:
              ‘a sudden failure of an institution or undertaking.’…

              The Roman Empire did not collapse.” ~ Javier

              Where did you get that definition that you have in quotes?

              “Societal collapse is the fall or disintegration of human societies. Societal collapse broadly includes abrupt societal failures such as that of the Mayan Civilization, as well as more extended gradual declines of cultures, institutions, or a civilization like the fall of the Western Roman Empire.” ~ Wikipedia

              “But science is all about precision in the language. That’s why we have our own language called scientific language, and that is why we restrict the definition of common words beyond how non-scientist people use them.” ~ Javier

              Fair enough, then where would the scientific consensus on the precise definition/semantics of (societal) collapse be?

              • Javier says:

                Gradual decline and collapse have completely different meanings. Decline involves gradual impairment while collapse means fall. Therefore a collapse cannot include a gradual decline as Wikipedia says there.

                In medicine collapse is a sudden and often unannounced loss of postural tone (going weak), often but not necessarily accompanied by loss of consciousness. If the episode was accompanied by a loss of consciousness, the term syncope is used.

                Ecological collapse refers to a situation where an ecosystem suffers a drastic, possibly permanent, reduction in carrying capacity for all organisms, often resulting in mass extinction. Usually, an ecological collapse is precipitated by a disastrous event occurring on a short time scale.

                In engineering a collapse is the falling down of a structure.

                All this terms are quite precise. In engineering they even go to define “imminent collapse” as a badly damage structure that has not collapsed yet, but could do so in any moment.

                In all these definitions collapse refers to its Latin origin, meaning to fall. And to fall is the abrupt transition from a state of higher potential energy to a state of lower potential energy. When the transition is not abrupt it is called a descent.

                It is clear, unless you are once again arguing for the sake of it, that collapse generally requires a relatively short period of time. Otherwise it is not a collapse.

                • Glenn Stehle says:

                  This debate between you and Caelan sounds a lot like the Gibbons v. Peter Brown debate.

                  It was Gibbons who, in the 18th century, spun the tale about catastrophe, collapse and how “the high point of human achievement, the civilizations of Greence and Rome,” was destroyed by “the barbarians” at the gate.

                  This two-world narrative is of course purpose-driven, and very much served the interests of militarism, imperialism, and its fortress mentality.

                  The subtext is that it’s us vs. the barbarians, from which the debate launches into what is defensive war and what is offensive war.

                  This narrative came under fire in 1971 when Brown published The World of Late Antiquity.

                  A Guide to the Post-Classical World, published by Harvard University Press, asks us “to treat the period between around 250 and 800 as a distinctive and quite decisive period of history that stands on its own,” rather than as “the story of the unravelling of a once glorious and ‘higher’ state of civilization.”

                  As Bryan Ward-Perkins notes, “This is a bold challenge to the conventional view of darkening skies and gathering gloom as the empire dissolved.”

      • Arceus says:

        When people speak of a “collapse” I believe what they are thinking of is not a Rome-style slow disintegration but a Soviet-style collapse in which a seemingly stable superpower disintegrated in only a few short years.

        In 1989, also without losing on the battlefield for fifty years, the Soviet Union lost control over Eastern Europe which completely negated the results of WW II – something unthinkable just four years earlier. The collapse of the Soviet Union began September 13, 1985 when the Saudi oil minister announced the country was altering its oil policy. The Saudis stopped supporting oil prices and instead increased production fourfold. Oil prices collapsed and as a result, the Soviet Union lost approximately $20 billion per year, money without which the country simply could not survive.

        The former superpower eventually had to go cap in hand to the West, begging for loans to feed its people.

        • AlexS says:


          You repeat primitive cliches of the western MSM. The collapse of the Soviet Union was caused by much more complex set of factors, mostly internal.

          • Arceus says:

            My short post was not intended as a comprehensive reasons for the collapse of the Soviet Union – it was merely to illustrate how rapidly a “superpower” can fall. The collapse in the price of oil was quite likely the straw that broke the camel’s back, but make no mistake the camel was close to death anyway. But without question, the suddenness of the move took the USSR so completely by surprise they were than out of options (options that the politburo would approve anyway).

            The parallels to what happened back then and what is happening now are interesting. History will not repeat. The Russia of the late 1980s is not the Russia of today. Putin will not be undone by what worked in the past. It is quite possible that the U.S. will be the superpower to fall this time, and a sudden collapse in the dollar may leave the U.S. going cap in hand to Japan and China.

      • Caelan MacIntyre says:

        Javier, I am not even sure we necessarily need scientific models or studies, at least in a way…

        I mean, if we have a system that cheats, then anything is game.

        Then I can cheat too. (And, along with others, I’ll likely be doing it on the ‘nitrous oxide’ of fury and resentment that some– maybe most– can feel when they wake up and realize that they’ve been cheated.)

        So if sufficient numbers of (livid) people catch on, if they get out from under the cheating system’s ideological indoctrinations (that it’s not a cheat and that, say, coercive taxation, kid-killing cops and corporate parasites are all well and good and for our benefit), and find out that the game is really one big nasty rig/scam/dupe/hoodwink, what do you think will happen?

        Let’s run the model/simulation and see.

        • Javier says:


          Cheating behavior is included in game theory. I don’t see why a good scientific model or study could not include it.

          I don’t think most people are aware of it, but the number of parasitic species far outweighs the number of free species. Even parasites have parasites and each host usually has an order of magnitude or more parasites. Parasitism is the most successful strategy in nature. Hardly a lesson in moral and ethics, but nature only cares about success. Once I read that bacteriophages (bacterial parasites) are the most numerous organisms on Earth.

          I was also told the story of a researcher working on lambda bacteriophage research that requested a phage from a competing lab. In the best tradition of science they should have provided it, but instead they sent a letter of rejection. The researcher simply cultivated the envelope of the letter and was able to isolate the phage in question.

          So Caelan, all those cronies and parasites rigging the system are just nature’s work. Every available niche will be occupied in a competition that has been going on forever and will continue going on forever. That’s why as a biologists, when someone comes telling me that the solution to all our problems is building a better society, I either laugh or cry depending on my mood.

          • Phil Scanlon says:

            “The researcher simply cultivated the envelope of the letter and was able to isolate the phage in question.”

            Hi Javier, you might be repeating urban myths here. Due to my love of beer, I know this story as the researcher who wanted samples of the yeast used by major brewing companies. Cheers!

          • Glenn Stehle says:

            Javier said:

            Parasitism is the most successful strategy in nature. Hardly a lesson in moral and ethics, but nature only cares about success….

            So Caelan, all those cronies and parasites rigging the system are just nature’s work. Every available niche will be occupied in a competition that has been going on forever and will continue going on forever. That’s why as a biologists, when someone comes telling me that the solution to all our problems is building a better society, I either laugh or cry depending on my mood.

            Javier, it sounds like the biologists you speak of were schooled during what David Sloan Wilson calls “The Age of Naïve Individualism.” It was a time when cooperative strategies were ridiculed and competitive strategies celebrated.

            The era began with the work of Bill Hamilton, George Price and George C. Williams and was later popularized to a mass audience by Richard Dawkins’ 1976 The Selfish Gene. And as Sloan Wilson notes, it “lasted for the rest of the 20th century and in some respects is still with us.”

            Furthermore, as Herbert Gintis et al point out in Moral Sentiments and Material Interests, orthodox biology “settled in the same place” as orthodox economic theory, “although the disciplines began from very different starting points.”

            The central axiom shared by both orthodox biology and orthodox economics, largely based on Mancur Olson’s the Logic of Collective Action, is that human nature precludes humans from solving their collective action problems. But this assumption has since been demonstrated to be untrue, or at least prartially untrue.

            Here’s how Dan M. Kahan explains it:

            [W]ealth-maximizing individuals, [Olson] argued, will rarely find it in their interest to contribute to goods that benefit the group as a whole, but rather will “free ride” on the contributions that other group members make. As a result, too few individuals will contribute sufficiently, and the well-being of the group will suffer.2 These are the assumptions that dominate public policy analysis and ultimately public policy across a host of regulatory domains — from tax collection to environmental conservation, from street-level policing to policing of the internet.

            But as a wealth of social science evidence (much of it appearing
            elsewhere in this volume) now makes clear, Olson’s Logic is false. In collective action settings, individuals adopt not a materially calculating posture but rather in a richer, more emotionally nuanced reciprocal one. When they perceive that others are behaving cooperatively, individuals are moved by honor, altruism, and like dispositions to contribute to public
            goods even without the inducement of material incentives. When, in contrast, they perceive that others are shirking or otherwise taking advantage of them, individuals are moved by resentment and pride to retaliate. In that circumstance, they will withhold beneficial forms of cooperation even if doing so exposes them to significant material disadvantage.3

            This behaviorally realistic picture of human motivation suggests not only an alternative account of when collective action problems will arise, but also an alternative program for solving (or simply avoiding) them….


            • Javier says:


              Very interesting information, specially the first link for me. I have never been very found of Richard Dawkins evolutionary theories and I regard his studies on religion as noise.

              Curiously I was wondering recently about the role of religion in evolution in last post here:

              As a biologist I am puzzled by the biological basis of faith. Is it a subproduct of a complex brain or does it hold some unknown adaptative value? Perhaps is some sort of social glue and the Moon-goddess clan can only survive by sticking together against the Sun-god clan.

              There is some evidence of this, as two of the most resistant social groups, Jews and Amish, have a very strong religious base that sets them apart.

              If I ever organize a survivalist group I’ll have to include a strong religious component. It is going to be difficult going from agnostic to high priest.

              So it very much agrees with what David Sloan Wilson says and he provides a third example, Jainism.

              Group evolution is a complicated stuff and it is better to keep an open mind about it, but none of what Sloan Wilson says changes even a iota of my diagnosis of our predicament. In my opinion any solution that involves cooperation on a global scale is destined to fail, and this is because it does not only require within group cooperation but inter-group cooperation, and people from different groups lack the necessary trust to cooperate.

              • Glenn Stehle says:


                I think maybe Sloan Wilson is more optimistic than you, but I’m not sure by how much.

                For instance, in Darwin’s Cathedral he writes, “Confront a human group with a novel problem, even one that never existed in the so-called ancestral environment, and its members may well come up with a workable solution.”

                Later in the book, however, he writes that:

                Moral conduct among groups can evolve in principle, but only by extending the hierarchy to include groups of groups… Perhaps history will reveal the rudiments of moral conduct among human groups struggling to emerge against opposing forces, rather than the total absence of moral conduct among groups. Even so, we should expect far more naked exploitaiton among groups than within groups.

                One thing I don’t get from Sloan Wilson, however, is a sense of determinism. He seems to keep a pretty open mind.

                • Glenn Stehle says:

                  Oddly enough, the theologian Reinhold Niebuhr came to a conclusion similar to that of Sloan Wilson almost a century ago:

                  [I]t is impossible to justify the degree of inequality which complex societies inevitably create by the increased centralisation of power which develops with more elaborate civilization. The literature of all ages is filled with rational and moral justifications of these inequalities, but most of them are specious… The inevitable hypocrisy, which is associated with all of the collective activities of the human race, springs chiefly from this source: that individuals have a moral code which makes the actions of collective man an outrage to their conscience. They therefore invent romantic and moral interpretations of the real facts, preferring to obscure rather than reveal the true character of their collective behavior… As individuals, men believe that they ought to love and serve each other and establish justice between each other. As racial, economic and national groups they take for themselves, whatever their power can command.

                  –REINHOLD NIEBUHR, Moral Man & Immoral Society

                • Glenn Stehle says:

                  Oddly enough, the theologian Reinhold Niebuhr came to a conclusion similar to that of Sloan Wilson almost a century ago:

                  [I]ndividuals have a moral code which makes the actions of collective man an outrage to their conscience. They therefore invent romantic and moral interpretations of the real facts, preferring to obscure rather than reveal the true character of their collective behavior…

                  As individuals, men believe that they ought to love and serve each other and establish justice between each other. As racial, economic and national groups they take for themselves, whatever their power can command.

                  –REINHOLD NIEBUHR, Moral Man & Immoral Society

                • Glenn Stehle says:

                  Oddly enough, the theologian Reinhold Niebuhr came to a conclusion similar to that of Sloan Wilson almost a century ago.

                • Javier says:


                  I have only thought about this things, while you have studied them and remember a lot.

                  I can only put my thoughts for whatever they are worth.

                  Part of human social evolution has been the enlargement of groups to much higher levels. From small tribes with different languages, to big nations that share common languages, and religions that are recognized as a common element by hundreds of millions.

                  If one is optimistic, can think that the natural evolution should be to join everybody in a single supergroup of groups. However when difficult times come, what we see is the exact opposite. Groups that were collaborating in harmony break down into smaller groups with more cohesion.

                  The break-up of Yugoslavia and Soviet Union are examples. Syria has already broken also. Nationalism is on the increase and Spain and Great Britain are also in danger now. This is related to current crisis and things are going to get a lot worse. Collaboration is going to become more difficult, not less.

              • Ablokeimet says:

                Javier: “In my opinion any solution that involves cooperation on a global scale is destined to fail, and this is because it does not only require within group cooperation but inter-group cooperation, and people from different groups lack the necessary trust to cooperate.”

                That’s an important statement, since Javier has noticed a big problem. There is a way out, though it is unfashionable at the moment.

                One group which is capable of uniting on a global basis is the working class. I’m not saying it’s easy, but it’s possible. The fact that international co-operation is needed for production to occur makes the necessary international co-operation in defence of wages and conditions possible. Shipping and aviation are inherently international, but these days the bulk of the manufacturing sector is inextricably linked to the world market, as is a significant and growing minority of the service sector.

                The key point is that, by uniting globally and eliminating capitalism, the working class can actually abolish its adversary. It will become the human race, thus solving the problem of inter-group competition.

                Note that the bad result in Russia will be used as a learning experience – a fault to avoid. Lenin and the Bolsheviks came to power there through a unique set of circumstances that cannot be repeated. Lenin’s modern followers will find themselves bypassed by people committed to democratic process all down the line.

            • oldfarmermac says:

              “So Caelan, all those cronies and parasites rigging the system are just nature’s work.”

              I would for clarity insert the words “part of ” just before nature’s work.

              Anybody who believes otherwise is ignorant and getting close to a couple of centuries behind when it comes to truly understanding human nature.

              I very strongly suggest that anybody who thinks of Steven Pinker as a “rock star” rather than a rock solid scientist go to wikipedia and check out the facts.

              It is very easy, you just type S T E V E N P I N K E R into the little box up top right. LOL

              I am about done with this particular discussion, but GS, since you dragged in an insult referring to my not understanding law, here is one little tid bit from my life long old drinking and fishing buddy and personal attorney, who has entertained me with many a story about courtrooms when the fish were not cooperative.

              When the law is on your side, you pound on the law. When the facts are on your side, you are pounding on the facts.When neither the law nor the facts are on your side, you pound on the table. Sometimes pounding on the table works and you win your case.

              BUT NOT this time. Pound on the table so long as you please. You can pound it to splinters, but the facts will remain the same.

              You are just blustering and bloviating and trying to distract attention from your earlier mistakes.

              You may even be poorly enough informed and far enough behind the times to actually believe your own arguments.

          • Caelan MacIntyre says:

            Which doesn’t quite answer my question.

            In fact, neither does your other response. Seeing as you seem to like to espouse scientific rigor, then let’s have it. (That is unless that’s not really your motivation.)

            A parasite is only a parasite until its host wakes up, recognizes it for what it is and manages to eradicate it or turns it into a symbiotic relationship or turns the tables and it into a host. I think this is called adaptation and evolution. Ethics is part of it with the human animal.

            Our initial fork was of course from a study that involved a predator-prey model.

            But of course, Human predators/parasites on human preys/hosts are a different kind to what we can get in the rest of the animal world and is what I am referring to.
            This of course goes back to my question: What do you think will happen if the host wakes up? Like with regard to increasing science-based concerns about anthropogenic climate change; increasing protests and social unrest; Edward Snowden; Julian Assange and Wikileaks; the Occupy Movement; and so forth.

            And do you think the predators/parasites will be additionally motivated to send out some FUD sentinels? (more NSA activity?)
            Like to instill fear, uncertainty and doubt about anthropogenic climate change, or about studies that model collapse vis-a-vis equality, or even about the word, ‘collapse’, itself?
            Sound familiar?

            But so, ok, let’s insert into the simulation a bit of code that defines the predators’/parasites’ sentinels…

            Hell, let’s even give the code a name: How about ‘Javier’?

            “That’s why as a biologists, when someone comes telling me that the solution to all our problems is building a better society, I either laugh or cry depending on my mood.” ~ Javier

            Animals have parasites, parasites have parasites, and humans have parasites, but human human parasites are a whole other can of worms. Attempts to conflate that kind with others and/or to rationalize it away, along with any attempts at ethical responses to boot seems as corrupt as the human human parasites, themselves.

            It’s long past due for a thorough recognition, description and prescription, like an equally-thorough de-worming, before that parasite kills both its host, along with its own planet.

            “A successful parasite is one that is not recognized by its host, one that can make its host work for it without appearing as a burden. Such is the ruling class in a capitalistic society.” ~ Jason Read

            • Javier says:


              I have trouble following you as you seem to be talking using metaphors, and double meanings. English is not my first language so a lot of your subtlety might be lost on me.

              Social sciences and social experiments do not interest me that much. I am not convinced at all that they are going to have any answer when the triple crisis hits us in full. After all we only have to look to history to know how people react to those things.

              You are right that class war is an obvious way, and radicalism. We are already getting a taste of it in Europe. We only have to look at the revolutions of the past to know how that plays out.

              Humans have changed little in the last 50,000 years. We have been tamed by three generations of abundance. Take away that abundance and we are back to square 1.

              • Caelan MacIntyre says:

                Those things are more or less in part why I wrote Permaea.

                From its manifesto:

                “Self-domesticated Humans– fundamentally wild– ostensibly evolved within simple, small-scale, visceral, laterally hierarchic band and tribal hunting-and-gathering free-roaming contexts. As such, they seem in fundamental dissonance with the symbolic, layered, distancing, detached cage of systemic (‘dystemic’) complexity that they have welded like a prison around and between themselves and nature. Over time, they have managed to become increasingly and dangerously out of scale, out of synch, out of control, and out of touch with their world, their spirit, and their complex manifestations, like Fukushima’s ongoing nuclear disaster, via their capacity for complexity– amplified and exacerbated by their complex sociopolitical/hierarchical and usually-illegitimate contrivances that tap status, control and fear dynamics– king, knight, pawn; leader, police, employee…”

    • Ablokeimet says:

      Caelan has it right. Javier is right to be wary of confirmation bias, but that’s just as applicable to pessimistic and conservative approaches as to optimistic and progressive ones. I have only a couple more points to make (one longer than the other):

      1. Australian Aborignal cultures were complex and egalitarian. There was not a lot in the way of material privileges because there was little to spare. People instead worked within the land’s carrying capacity and enjoyed a high-leisure society.

      2. Egalitarian societies weren’t particularly “abundant” because there was little incentive to save production to invest for expanded future production. Increases in productivity were generally responded to by increased leisure time.

      With the development of class society, the ruling class appropriated the production above the levels necessary for subsistence. Some of this surplus was devoted to luxury consumption, which was, after all, the motive for the exercise. Society was producing enough for some to live in comfort, but not enough for all to live in comfort – so, sooner or later, a minority was going to find some method of being the comfortable ones. Some of the surplus was devoted to supporting military forces necessary to keep the ruling class in power. And some of the surplus got put to work in projects which the relevant ruling class people thought would bring them even better benefits in future.

      Under class society, therefore, greater inequality has until recently led to greater accumulation of wealth in society. Society gets richer because the rich appropriate a higher proportion of production and prevent it from being consumed. It’s also the typical neo-classical economist’s justification for inequality.

      What’s changed is that the increasing domination of society by the money economy* means that, increasingly, production only takes place for sale rather than for use. Inequality, by restricting consumption, increasingly acts to restrict production as well. This phenomenon is aggravated by the financialisation of the economy, so that more social resources are being dragged into unproductive activities like financial speculation, which are about re-distributing claims on production rather than about increasing aggregate real wealth.

      There is only one way out of this, although it is unfashionable at the moment. Capitalism has done its historically necessary work in increasing the productive forces of the world and the social productivity of labour to the extent that it is now possible for everybody to live in comfort**. Lenin and the Bolsheviks were premature in their analysis, which is one of the two fundamental reasons things went pear-shaped in Russia (the other reason being their dictatorial predilictions, but analysing that would take us too far away from the topic at hand). Europe, North America and the British White Dominions were ready for a post-scarcity economy, but the majority of the human race wasn’t. Now, however, the world as a whole is ready – those parts which aren’t yet ready are balanced by regions with a superabundance of productive forces. The consequence of this is that inequality has losts its role as an inescapable tragedy and has become a voluntary crime. We can have a world of freedom and equality, if we want it. At the moment, however, equality has a bad press – particularly in the USA.

      * It’s not widely realised that, even as late as the 1990s, the US was the only country on Earth where a majority of economically useful production took place in the money economy – and even there, it was a small majority.

      ** Yes, even in a world of Peak Oil, we have enough for everybody to live comfortably. There’s not enough for everybody to drive SUVs, commute 500km per week and be generally extravagant with resources, but there’s enough to feed, clothe and house everyone comfortably, with good health care and sufficient leisure, in sustainably designed cities with sustainable transport and energy systems.

      • Javier says:

        If your main point is that subsistence societies are egalitarian. We can all agree on that. Probably that’s the type of society we will have in a distant future.

        • Caelan MacIntyre says:

          “…even small tribes have a chief, and a chief’s family, and if big enough they have a nobility.” ~ Javier

          “If your main point is that subsistence societies are egalitarian. We can all agree on that.” ~ Javier

          You sure?

          • Javier says:

            Well, inequality does need some extra resources beyond subsistence to be siphoned away by extractive elites, doesn’t it? Some tribes are richer than others. But you know that. All this is trivial except for argumentation.

        • Ablokeimet says:

          There were four points, one of which Javier has mentioned. The final point is the topic of much dispute amongst Peak Oilers:

          1. Subsistence societies are necessarily egalitarian.

          2. Societies which produce enough so that some people can live in comfort, but the rest only have subsistence, are sitting ducks for the development of a ruling class. They are almost always inegalitarian.

          3. The world is now sufficiently productive so that everyone can live in comfort. It is now possible to move from an inegalitarian society to an egalitarian one.

          4. Peak Oil does not require a return to subsistence lifestyles. An egalitarian, sustainable society can still be one in which it is comfortable to live, but extravagances will not be available.

      • wimbi says:

        Bravo! And add to that your new world of freedom and equality could be a lot more fun.

        Think of it, how dare those Abbos using increased productivity for more leisure!
        How totally un-american. Real stone age kinda behavior.

  18. The Baker Hughes Rig Count came out yesterday. US oil rigs down 10, gas rigs up 3. Gulf of Mexico rigs down 5. Canada oil rigs down 4, gas rigs down 3. Permian down 4, Williston down 2.

     photo Baker Hughes.gif_zpsyrykax6u.jpeg

  19. Someone tell me why an energy transportation company, pipelines, rail, etc., is having such dire financial troubles? They don’t have any rigs, they just ship and store the stuff. Why would the oil price crash have such an effect on the company? US oil production has not fallen that much. It is still well above the 2014 average. There is still a lot of oil out there to be shipped. What’s going on?

    Kinder Morgan’s Death Spiral Puts The Unthinkable Squarely On The Table

    Kinder Morgan’s stock seems caught in an ever increasing death spiral with no end in sight.
    The company was recently put on credit downgrade watch by Moody’s.
    Shareholders are seemingly running for the exits. The stock’s deep descent has begun to pick up steam.

    Who is Kinder Morgan?

    Kinder Morgan is the largest energy infrastructure company in North America. We own an interest in or operate approximately 84,000 miles of pipelines and approximately 165 terminals. Our pipelines transport natural gas, refined petroleum products, crude oil, carbon dioxide (CO2) and more. We also store or handle a variety of products and materials at our terminals such as gasoline, jet fuel, ethanol, coal, petroleum coke and steel.

    The revolutionary shale plays across the United States are creating a tremendous need for more energy infrastructure, which bodes well for us. We invest billions of dollars each year to grow the company by building new and expanding existing assets to help ensure that a variety of energy products get delivered into the marketplace.

    Kinder Morgan is the largest midstream and the third largest energy company in North America with an enterprise value of approximately $100 billion.

    • R Walter says:

      Well, the PE is 32. Strike 1.

      They are invested in the oil sector, strike 2.

      If the PE is supposed to be between 10 and 13, the current price is too high at 16.82. A 52 week high of 44, it don’t look too good. Strike 3.

      A lower price target is inevitable. 52 cent earnings per share, a share price for a PE of 13 is in the 7 dollar range.

      Maybe won’t happen, but it could.

      I’m having the same problem with a different company in the same kind of business. It is very troubling, a problem. I don’t like it at all. You are not going to win them all.

    • shallow sand says:

      Ron, Kinder Morgan does own quite a bit of upstream oil production that is all CO2 flood. I had a post a couple weeks ago that referred to this. There was a non-operated working interest for sale in their SACROC unit in Scurry County, TX. The joint interest billing to the non-operated working interest owner was running at $48 per BOE.

      Kinder Morgan operates the SACROC unit, the Yates Unit and the Goldsmith Unit, all are CO2 floods. They are losing their butt on all of these I suspicion. They add up to about 80K BOEPD gross. Not sure of the company net, but I think they own a large majority of each unit.

      The bigger problem could be that they have borrowed a ton of money to build the infrastructure to transport what was assumed to be another additional one million barrels of oil per year in US, plus and additionally large quantity of natural gas and CO2 which isn’t going to be needed anytime soon. I assume they spent a ton on rights of way for pipelines that now may not be built.

      Just speculating. I still do not think many outside of the industry have any idea just how bearish things are and how much energy debt is now totally unsecured due to the assets being worthless or close to worthless.

      • shallow sand says:

        One thing to keep in mind regarding the industry is how many millions of acres of leases and rights of way have been idled by this crash. Almost 100% of the funds paid for these rights were borrowed, will never be ANY income generated from any of it.

        I’ll give an example. In the Illinois Basin there was a belief that something akin to the Bakken underlies the shallower producing zones. So in 2011-13, there was an enormous leasing boom. Landsmen descended on dozens of court houses in three states, and leased up millions of acres. Rates of $100-$1,000 per acre were paid.

        Guess what, a few wells were drilled and so far a total bust.

        Google the Illinois fracking debate. You will find Chicago politicians actually believed that fracking could bail the state out of its fiscal mess. So they passed a fracking law with some pretty onerous financial terms. Thousands of hours spent on that effort; all for naught.

        I hope I am not exaggerating too much as to the money squandered in this “boom”.

        • coffeeguyzz says:


          In Pennsylvania, despite having generally five years time to start production after signing (and paying hefty cash bonuses) primary leases, there are tens of thousands of acres that won’t be locked in due to no drilling.
          Instead of the landowners/mineral rights owners being happy to get one time ‘free money’ – the signing bonus – there is growing fear that the gas beneath them is many years away from being developed, and no ongoing royalties with said production.
          The e&p guys spent a LOT of money tracking down and signing up mineral rights … and that investment is looking mighty shaky.

    • John Keller says:

      Well, where to start with Richard Kinder’s Ponzi/Carry Trade? The MLP borrowed cheap and bought yielding pipeline assets. Now, the cost of funding is going up and the value of the pipelines is going down. Pipeline throughput is going down for natgas as well as oil. Because 0f overcapacity, rates are coming down. With high leverage, KMI’s cash flows are really hit by these two things. Furthermore, Mr. Kinder has used some ridiculous if not fraudulent metrics to keep his plates spinning up in the air. Debt to EBITDA is way over 8, not below six which the ratings agencies keep believing. Also, Mr. Kinder likes to talk about “distributable cash flow”. He leaves out all of the capex he’s taking on. In reality, there is zero cash flow. So, to pay its dividend of 4billion a year, Kinder has borrowed money and sold shares. Recently, he had to sell preferreds yielding 10%. Unfortunately, he can’t borrow anymore without downgrades which will come anyways. KMI could very well collapse.

    • aws. says:

      From last year…

      Kinder Morgan, MLPs and the sell case

      Izabella Kaminska, FTAlphaville, FT.com, Aug 18, 2014 14:30

      In time the stock price will begin to reflect the fact that the company’s profits are insufficient to maintain dividends at current or projected levels, particularly if a bargain acquisition is not forthcoming.

      So the previous recommendation to sell KMP now applies to KMI. From his latest note (our emphasis):

      “Kinder Morgan figured out long ago that it could manage the market prices of its own equity securities with outsized dividend payments. A dividend is, of course, subjective, and at the discretion of the management/board of directors, but investors will capitalize it nonetheless. Kinder Morgan virtually tells the market what its Company is worth, and as long as the market nods in approval, Kinder Morgan can issue its overpriced equity to make dividend “accretive” investments and acquisitions. This was how Kinder Morgan played the MLP game for 15 years using KMP equity. But that positive feedback loop began to break down in 2012/13. In order to survive, Kinder Morgan had to get it going again. To quote John Steinbeck, “When the monster stops growing, it dies. It can’t stay one size.”

    • aws. says:

      Kinder Morgan’s impossible equity/dividend situation

      Izabella Kaminska, FTAlphaville, Dec 07 15:45

      Here, in any case, is the latest from Hedgeye’s Kevin Kaiser, who saw this KMI situation coming years ago (our emphasis):

      The market has suddenly come to appreciate many of the risks and issues with Kinder Morgan, Inc. (KMI) that we have discussed for more than two years. KMI was down 30% last week and is now down 60% YTD on heightened concerns surrounding its debt leverage, dividend sustainability, business model, and valuation. And because KMI is a bellwether in the North American midstream sector, the recent declines of its stock and bond prices are reverberating through its peer group, as evidenced by the Alerian MLP Index falling 11% last week. While some investors will be tempted to catch the KMI falling knife, we continue to strongly advise against it. In our view, there is still substantial downside to fair value, which we believe is less than $10/share.

  20. That is an incredibly strange price forecast.
    1-2 Million barrel shortfall in 2008 drove the price up to $145 and here year after year of declines, and assuming demand would “want to grow” a million barrels each year, leading to a deficit over 12 million barrels by 2021, the price stays under $100!

    • Greenbub says:

      Incredibly strange, indeed.

    • Watcher says:

      1-2 million bpd shortfall? Who starved in 2008? Anyone remember any gasoline lines in the US?

      Egypt was years after this.

      So who didn’t get 1-2 million bpd in 2008?

      • shallow sand says:

        Yes. OPEC storing 3-4 days production in US facilities has dropped the price.

        What happens if 6-8 days OPEC production is not shipped to the US over maybe a 3 month period?

      • Who did not get the 1-2 Million?
        U looking at it backwards. The price rose from $80 to $140 to prevent shortages and cut of 1-2 million barrels of demand.

  21. Rune Likvern says:

    Ron, thanks for your work.

    I expect the US total (C+C) to be in general decline starting in 2015.
    The regrowth with a projected start in 2018 for Western Europe Crude (primarily the North Sea) appears strange and I suspect the 2019 figures is very much influenced by Johan Sverdrup, which now is scheduled to start to flow late 2019 and reach plateau some time after that. North Sea is in general decline.
    Norway will have a YoY growth of about 4% in 2015, but most expect crude to decline. There may be some future uptick, but the magnitude is not supported by present sanctioned developments.

    The OPEC forecast looks strange with the huge build starting in 2021.

    Looking at World C+C (allowing for some adjustments for NGLs) that is very at odds with Dennis Coyne’s predictions.

    • I suggested we try to get a heavy oil broken out, because that may have a bunch of it coming in after 2020. .??

      • Rune Likvern says:

        To me the best approach has been and is a bottom up analysis of every single oil producing contry/region.

        (I did this [with BP, World Oil, EIA data] some years ago, never published the results. [Also several others like Campbell, Statoil using IHS data])

        This analysis should take into consideration estimates of recoverable reserves at some year end, Reserves to Production ratio (using the same base year) [R/P], discoveries and the likelihood of future discoveries.

        Further, it should split it into conventional oil, oil sands, heavy oil, tight oil and others as deemed necessary.
        Then some price assumptions should be applied, allowing due consideration to the health of the balance sheets for (as far that is possible) for the major oil companies (both private and state operated).
        I suspect the results would very much take the shape of what was presented in one of Ron’s charts.

        The further the analysis spans the wider the span of uncertainty becomes, but it should be possible to arrive at a good projection for the next 10 years.

        • Dunno. When i was working on heavy oil I found very few people really grasped the full complexity. It took me years and I had top notch teachers and colleagues.

    • Dennis Coyne says:

      Hi Rune Likvern,

      My “predictions” are based on extraction rates from producing reserves continuing to increase.

      I call them scenarios because I do not know what future extraction rates will be. Based on the medium natural gas scenario I have presented in the past and the assumption that the barrels of NGL produced per cubic meter og natural gas produced is unchanged, and the further assumption that extraction rates remain at 2015 levels until 2025, I get the chart below for World C+C+NGL in millions of barrels of oil equivalent.

      • Rune Likvern says:

        What does the extraction rate in your charts express?

        • Dennis Coyne says:

          Hi Rune,

          The model assumes discovered reserves on average take about 39 years from initial discovery to become producing reserves up until 2010. Reserve growth is backdated to initial discovery date. After 2010 it is assumed that much of the “new discovery” (about 75% of total) is reserve growth and that the time from discovery to production will be reduced. The extraction rate is for proved producing reserves of C+C less extra heavy oil. In 2010 this was about 348 Gb and Laherrere estimates about 850 Gb of 2P reserves in 2010 (C+C less extra heavy oil), this is about 41% of 2P reserves producing, similar to US levels from 1997 to 2009.

  22. Venezuela update: elections tomorrow. Part of the country has Internet cut off. I just read an interesting item: the regime apparently will try to cheat, but the poll results show a 30 % opposition advantage. The regime has a cheating structure in place to cut the implied 65-35 defeat to a 55-45 “win” they get by gerrymandering the districts. Thus they achieve a majority of seats in spite of losing by 10 %.

    However, if their cheating is blocked, and the opposition gets a 60-40 win, they do get a bare majority, and do elect the National Assembly president. Plan B involves ignoring the assembly and having Maduro rule with communes. Problem is the clique in power is divided. And the communes may also end up being opposed to the regime. A move to communes and ignoring the National Assembly means a coup. So at that point the country will be in complete chaos.

    I know enough about what goes on inside pdvsa to expect significant sabotage carried out by playing stupid. Right now the pdvsa management is red. But those reds are incompetent hacks. The heavy lifting is being done by 30 to 35 year olds who are mostly opposed to the regime. And all they gave to do is act stupid. I expect pressure vessels to explode, wells to stop producing because somebody shot holes in the wrong place, etc. so I would expect the January Venezuela production to be about 2.0 mmbopd.

    • Opposition won in a landslide. Apparently Maduro considered a self coup last night, but the defense minister refused to go along. The regime is still trying to cheat by avoiding a complete count for 22 seats. But the opposition will have anywhere between 99 to 113 out of 167 seats.

    • Another up date: the unity party defeated the regime by a huge margin. But the regime is covertly using the electoral authorities it controls to whittle down the Unity Party seats in the Assembly. The key number is 111. With 111 seats the unity party can change Supreme Court membership. This is critical because the Reds packed it with their people (they did so illegally) and the Supreme Court has become a poodle for the Maduro-Cabello regime.

      Reports keep coming out that on December 6 Cabello urged Maduro to pull out a well armed militia or shock troops they have and execute a self coup, but the Defense Minister said the Armed Forces would not back it. Cabello is the National Assembly president, defeated in the election, so now he’s a political lord and drug kingpin.

      I saw a tweet by Eulogio Del Pino addressed to Maduro saying that pdvsa employees “will defend revolution knee in the ground”. This means they would assume firing positions. But I’m getting messages that within pdvsa over 80 % are opposed to Maduro.

      So although there are signs of instabilities it could be Cabello has been defeated. The regime now must face the fact that on December 16th the two presidential nephews will plead in my court to drug trafficking charges. They are said to be making a deal to turn in some of the upper ranks. But that implies they will turn in their cousin Malpica Flores, who apparently disappeared.

      I would expect Venezuela to lose production in December and forward for at least six months.

  23. Watcher says:

    Libya’s warring factions are very close to a deal on forming a unity government and could sign a long-awaited accord in a month, the new U.N. envoy said.

    Western governments are pushing for the U.N.-backed agreement as the only way to end the chaos in Libya, where two rival governments and their armed factions are struggling for control.

    Present output quoted 380K bpd. Pre-upheaval output looks like about 2 mbpd.

    FYI the official recognized govt operates out of eastern Libya, having been driven out of Tripoli.

  24. oldfarmermac says:

    Off the immediate topic but relevant to the larger topics of sustainability and collapse.

    Bananas are apt to be damned expensive before long- if you can even find one for sale.


    Breeders will eventually succeed in developing a resistant banana but maybe not for years or even decades.

    Fortunately to the best of my knowledge banana is the only really important food, globally, that is so lacking in genetic diversity that it is in real, immediate danger of simply being WIPED OUT.

    But while corn, wheat, rice, soybeans ,etc are comparatively better diversified, and not in any real danger ( short term and globally at least, and for now at least ) there is a distinct possibility that we could lose a crop any given year right across a given continent. Wipe out most of the corn or wheat grown in the USA for a year and there would be plenty MORE kids going to bed hungry.

    • We have different bananas. The genetic diversity is there. But Americans are used to thinking that bananas are unique because they get that specialty type originally raised in Guatemala and Honduras.

      • Caelan MacIntyre says:

        Thirty Thousand Pounds of Bananas

        “The song is based on an actual truck accident that occurred in Scranton, Pennsylvania, in 1965…
        For some reason, probably failure of its brake system, the truck cruised into Scranton at approximately 90 mi (140 km) an hour, sideswiping a number of cars before it crashed (probably as a direct result of Sesky deliberately flipping it over to avoid killing any pedestrians or motorists, or striking an automotive service station on Moosic Street that, had it been struck, would have exploded in flames and caused greater loss of life), killing Sesky himself and spilling bananas everywhere when the rig came to rest.” ~ Wikipedia

        Yes! We Have No Bananas (Cute old cartoon with the song! ^u^)

      • oldfarmermac says:

        Yes there are many cultivars of bananas but none of them except the ONE is remotely so well suited to large scale commercial production and shipping.

        I am absolutely not a banana expert, but I have been following this story, being an agriculture guy, for a long time, and from what I read, hardly any of the many cultivars grown all thru the sub tropics are promising candidates and none are expected to fill the gap without substantial time consuming work.

        It seems just about inevitable that all the existing commercial growers who ship internationally are going to be wiped out.

        Replacing their plantations is going to take a few years.

        There is some hope, maybe a lot of hope, though, for small scale locally grown and consumed bananas. The blight will not necessarily afflict every local variety, and any place that does not have a lot of traffic between it and other banana producing areas might escape the blight for a long time. It is spread mostly or totally by people transporting it inadvertently on cuttings, shoes, machinery, packing crates and boxes etc.

        ”Yes, we have no bananas today ” is going to be on signs posted by a lot of supermarket produce managers. 🙁

        Some of the ones with even better developed sense of humor may also post signs saying we had bananas yesterday and we have bananas tomorrow, but we have no bananas today. ( In Wonderland, Alice could have jam yesterday and tomorrow. )

        This won’t matter very much at all to well off people, but it is going to be a disaster for countless poor people who eat bananas the way my folks ate beans and potatoes back in the Great Depression- every day, day after day.At both dinner and supper ( lunch and dinner to you city slickers. ) At least they had plenty of both. Not everybody did.

        This is not going to end well.

        • Fred Magyar says:

          Hey OFM there are at least a hundred or so local varieties of bananas that I’m personally familiar with here in Brazil. I can purchase at least 20 different types at the street market a block from my home in Sao Paulo. ‘We have plenty of bananas today’, so I’m not particularly worried about running out anytime soon. As far as mono cultures of any sort, they are a really really bad idea, as I know you are very well aware!

          The total number of cultivars of bananas and plantains has been estimated to be anything from around 300 to more than 1000.
          Source Wikipedia

          • wimbi says:

            I spent a little time in Africa, around Rwanda, during yet another failed solar business venture, and found a huge variety of bananas, all of course local.

            Since we are working hard to turn USA into sub-sahara africa, might soon have lots of bananas infesting us too in that exciting new world toward which we strive.

            Apropos of energy – Famous quote from that venture, from village chief:
            “Why should I want a thing that uses sun only to pump water up to the village? That’s just women’s work.”

            And my daughter doing the interpretation!

            • Fred Magyar says:

              Apropos of energy – Famous quote from that venture, from village chief:
              “Why should I want a thing that uses sun only to pump water up to the village? That’s just women’s work.”

              I think you should have told him that Ra, the sun god, will burn him and all his crops to a crisp! Just women’s work, indeed! 🙂

          • oldfarmermac says:

            Hi Fred,

            Yes- lots of them- and nearly all of them probably susceptible to the same disease, if it is inadvertently transported into the local area where these local varieties grow.

            Yes, monocultures are a risky proposition, but they are also by far and away the most cost competitive way to produce most crops on the grand scale.

            That is the primary reason why all the growers have settled on this one susceptible variety. It produces like crazy, ships well, etc.

            It’s the unquestioned, unchallenged champ. Finding a replacement that works is not going to be quick or easy, otherwise it would have been done already.

            Sometime back I read a piece about consumers in Merry Olde England being forced to pay exorbitant prices for dinky little bananas that are more peel than banana- because the Limey powers that be mandate the importation of this variety from some little country or another that used to be a colony. That is the only kind that grows well THERE.

            • Fred Magyar says:

              Yes- lots of them- and nearly all of them probably susceptible to the same disease, if it is inadvertently transported into the local area where these local varieties grow.

              Perhaps, but because of the genetic diversity the likelihood of there being a resistant variety or two or three is quite high.

              That is the primary reason why all the growers have settled on this one susceptible variety. It produces like crazy, ships well, etc.

              It’s the unquestioned, unchallenged champ. Finding a replacement that works is not going to be quick or easy, otherwise it would have been done already.

              I guess my main point was that I don’t have a huge amount of sympathy for either the growers or the system that doesn’t want to implement change. I’m pretty sure that there will be bananas in Brazil for a long long time to come. In supermarkets in Nova Scotia, maybe not so much… tough noogies. Let them eat cod! Oh wait, because of over fishing and AGW, it seems they have a problem with that as well. Maybe a few well done engineers on the barbie will tide them over for a while… 🙂

              • oldfarmermac says:

                Back atcha Fred,

                At the end of the day, we are virtually always on the same page, or at least within a page or so of the same place in the same chapter.

                Yes again, it is very likely local people in Brazil will continue to have locally produced bananas. Some of them will find it necessary to switch varieties.

                The poor people in some of the larger cities may wind up doing without.

                Barring the collapse of business as usual SOONER, I think it likely that breeders will eventually manage to introduce the necessary genes into the Cavendish variety to render it resistant.

                This may involve a little TINKERING of the sort referred to as genetic engineering.

                • Fred Magyar says:

                  This may involve a little TINKERING of the sort referred to as genetic engineering.

                  Yep! I have very little doubt, that that, is exactly how it will go down! Though it may well be that some local resistant variety will be modified to look more like a Canvendish. After all, stranger things have happened.

    • Anonymous says:

      The banana we mostly eat is I think called the Cavendish. It’s main attribute for supermarkets is that it travels well. There is no diversity in it because all plants are hybrids from cuttings from an original plant, from the West Indies somewhere (that is why they all look pretty much the same and all ripen together). Before WWII we mostly ate something called Gros Michel which were supposed to be bigger and better tasting. They all got wiped out by a fungus as is happening now with the Cavendish. There are a number of research facilities working on finding a new alternatives once the current disease gets to South America. I think there are very stringent entry, cleanliness requirements at a lot of plantations to keep the disease out, but eventually it will get in.

      • I remember my dad used to say the Yankees preferred the worst tasting bananas but they sure looked pretty.

      • oldfarmermac says:

        Washing down cars and trucks,forbidding visitors, sanitizing foot wear, prohibition of the movement of machinery without washdown, being reused, etc all work FOR A WHILE.

        But all it is going to take is a few bird droppings or a flood- or a single employee who is REALLY pissed off due to being fired for no fault of his own.

  25. oldfarmermac says:

    I just copied this from a longer piece at the Huffington Post. It was written by a former high ranking Maduro government official.


    “Nicolas Maduro, Venezuela’s president, recently announced that if the opposition were to gain a majority in the National Assembly in elections this Sunday, “We would not give up the revolution and … we would govern with the people in a civil-military union.” To ensure that no one would accuse him of not being a true democrat, he clarified that “we would do this with the constitution in hand.” The president conveniently ignored the small detail that the constitution does not have any provision for a “civil-military” government, nor does it give the government the option of disregarding the outcome of an election. What Maduro did stress however was that “if the revolution fails, there will be a massacre”–a threat he has repeatedly made throughout the campaign. He usually follows such threats with reassurances that this violence will not ensue, as it is impossible for opposition candidates to win enough votes for a legislative majority, which Maduro’s party has enjoyed for the past 17 years. ”


    This piece goes on into some considerable detail and is well worth the time to read it.


    I suppose the outcome of the brewing revolution in Venezuela could mean as much as a couple of million barrels of oil a day, either way, on world markets, within the next few years.

  26. oldfarmermac says:

    Out west here in the Land o the Free, they used to say whiskey is for drinking and water is for fighting about.

    Nowadays the water wars in this country are fought by lawyers. Surface water has been litigated and legislated for centuries, in many countries, and hence surface water law is mostly settled.

    Groundwater is another story altogether. There is next to nothing in the way of law regulating the use of ground water.

    But there will be ground water law on the books soon, because a bunch of cases are headed to the Supreme Court.


    This is a rather long article , but like most stuff in the Atlantic, it is well researched, well written, and loaded with solid relevant information.

    Anybody interested only iin sound bites ought to pass it up.

    Those who wish to UNDERSTAND water issues, and the way they may play out will find it worthy of careful reading.

  27. R Walter says:

    The graph of the GOM, Permian, Eagle Ford, Bakken production to 2024 does not coincide with Rune’s prediction for the Bakken, which he expects a steep decline in production.

    “A near steep decline in LTO extraction from the Bakken is baked into the cake due to the financial dynamics created by a lasting low oil price.”


    Somebody is going to be wrong. Either the reputable firm or Rune Likvern.

    • Heinrich Leopold says:

      R Walter,

      There is increasing evidence that the shale bubble bursts (see below chart). In my view this is not only the case for Bakken, yet also for Eagle Ford, Marcellus and Utica. There has been a huge crash of the share price of Rice Energy – the posterchild of Utica – this week (down 12 %), which indicates that something is deeply wrong in this sector and shale companies simply are not economical at these prices. As in previous bubbles, there is still widespread denial – even from the central bank. Over the next few months, it will be interesting to see how far this develops. An interest rise will certainly worsen the situation.

      • Javier says:

        Undeniable, but the question is how that is going to affect production, because unlike houses or internet stocks, oil is still used and bought during economical crisis, just a little less and at a lower price.

        I agree that the production curves for US tight oil look too optimistic. To sustain production you have to drill more and more wells and that is incompatible with less and less rigs and less and less money. Rune’s estimates look more realistic.

        A future scenario where oil production becomes constrained in the midst of a global economic malaise looks to me as the perfect storm.

        • Ves says:

          ” because unlike houses or internet stocks, oil is still used and bought during economical crisis, just a little less and at a lower price.”

          But shale story is little bit different then houses and internet stocks with inconvenient thing for bankers and that is a geology. When the price was $100 oil companies always drill first “sweet” spots and gradually move away further to the less desirable spots. Then when price was $40 shale guys continued to drill the “sweet spot” even harder because interest payments are always singing “Tic-Toc” song and you have to feed the bankers on timely basis. Now, how long the price will stay this low? Who knows? But when the price gradually turns around there will be no more sweets spots left for shale guys. Shale guys will be all dressed up but nowhere to go.

          As with OPEC “no cut” decision that it was very obvious to me that will happen, this is also very obvious once you tune out from daily bombardment of useless and misleading analysis from MSM financial news.

      • shallow sand says:

        I, for one, am waiting on what should be the mother of all write downs by Continental Resources. Looks like it should be in the ball park of $25 or more.

        If the stock goes down in any significant manner after the write down, it will show me that wall street is still not paying attention. They telegraphed this almost one year ago.

        If there is no big write down, there should be an SEC investigation.

        • Jeffrey J. Brown says:

          My previous comment on “Net Cash Flow Math.”


          Net Cash Flow math is actually quite similar to Net Oil Export math, to-wit, given an ongoing decline in gross cash flow from production sales, unless total costs (lease operating expenses plus G&A overhead) fall at the same rate as, or at a faster rate than, the rate of decline in gross cash flow, then the resulting rate of decline in net cash flow will exceed the rate of decline in gross cash flow and the rate of decline in net cash flow will accelerate with time.

          As noted below, this has “Interesting” implications for the remaining cumulative net cash flow from developed producing properties. Of course, the gross cash flow from producing properties can decline when (not if) that production declines and/or if the price declines. This implies a tremendous mismatch between remaining cumulative net cash flows and debt levels.

        • shallow sand says:

          CLR PDP PV10 will likely fall below its long term debt of $7+ billion.

          There could be up to a $2 billion dollar deficit between SEC PDP PV10 and long term debt at 2015 year end.

          • Enno says:

            I am not so sure about it Shallow. I do think that would be the appropriate thing, but they might still be able to play the exaggeration game a bit longer. To see why, have a look at Synergy Resources in the Niobrara. Their wells are performing worse than CLR, and their financial book year ended end of August. So they had to account for $60 WTI. The result was a very minor write down. It may need a bit bigger disaster before the SEC gets into action?

            • Watcher says:

              The more obscure the maneuver, the less noticed.

              In 2009 the US FASB (Financial Accounting Standards Board) declared that banks holding mortgage backed securities in their balance sheets need not mark them to market (value them according to what they would fetch were they sold on the market). Rather, FASB quietly said that GAAP would allow the bank to value the paper at what the bank judged the price would be “in more normal circumstances”. (“valuing these securities at zero is in the best interests of no one”)

              The SEC could very easily do this bailout similarly — permitting valuation of lease collateral to be what it would be in more “normal” circumstances — and banks and lenders would leap to agree.

              • BC says:

                Watcher, I suspect that’s precisely what will happen.

                The Fed and the federal gov’t will continue to implicitly guarantee everything, including the kitchen sink.

                To the extent that there is a “market-determined” price of assets of various kinds, “the market” now is the Fed’s capacity to print and the gov’t’s capacity to borrow as a result of Fed printing, which implies de facto socialism; and that means particularly rentier-socialism, given the extent to which the economy is hyper-financialized and the overwhelming share of net gains since 2000-07 has got to the top 0.001-1% owners of the net financial flows.

                We’re all subjects of rentier-socialism now, only the vast majority of us have no capital from which to receive rentier flows.

            • shallow sand says:

              Enno. CLR has a very high per BOE enterprise value. Nearly $100K per flowing BOE.

              That seems to me to be more than double where it should be, looking at other LTO companies.

              The only SCOOP lease operating statement I have seen for CLR was the 11 well Poteet high density drilling unit where 100% of the drilling and completion cost was over $12 million per well. It was mostly gas with some 60 gravity API condensate. These wells were no where near economic.

              I have seen some seeking alpha posters alleging the books are cooked. Something about a small firm doing their audit plus the lack of quarterly reserve write downs.
              I am not alleging that, but merely mentioning what I have read elsewhere.

              However, CLR was most definitely a Bakken leader in activity. Yet, they do not have the prime acreage that EOG, Whiting and QEP have. They drilled many non sweet spot wells 2007-14 for $10+ million per. Their average well lags most other companies in the Bakken.

              • shallow sand says:

                Enno. I am always asking you to do work for free, so I’ll understand.

                However, you had posted info field wide re Bakken wells by year.

                I bet CLR is below average?

                • Enno says:


                  I don’t have access to the data at the moment, but from memory:
                  Before 2014 the average CLR underperformed the average Bakken well. 2014 and 2015 wells seem to match the average Bakken well.

                  I am not disputing that their assets need a serious impairment. I belief Synergy Resources is using the same external company for the reserves evaluation, and I also expected a major impairment for them that didn’t happen.

                  These are just my initial impressions, maybe someone else can shed more light on this. The proved reserves and the stated oil/gas reserve ratios don’t seem to match actual well results. As Coffee has stated as well, there are huge rewards for those having an extremely optimistic view on their operations. Whether the annual reserves review process is objective enough to deal with this is unknown to me, but the Synergy Resources case makes me doubt it.

                  • shallow sand says:

                    Enno. Thanks for the comment. I guess we will find out in about 2 1/2 months what CLR will do.

                    However, they did disclose that their 2014 PV10 would be much lower using 2/15 oil and gas prices, I think around 60% less. I think that is in a footnote in the 2014 10K, not in the Q1 10Q. I’ll try to dig that out later and post exactly what was disclosed.

                  • shallow sand says:

                    Per 2014 10K, CLR total PV10 was $22.7703 billion.

                    $12.1813 billion PDP, 342.8 million PDNP and $10.2462 billion PUD.

                    Standard Measure, which takes into account income taxes was $18.4330 billion. This is all found on page 4 of the 2014 10K.

                    4th quarter average BOEPD was 193,456. This is on page 2 of the 2014 10K.

                    On page 29 of CLR 2014 10K: “Holding all other factors constant, if commodity prices used in our year end reserve estimates were decreased by $40.00 for crude oil and $1.00 per mcf for natural gas, thereby approximating the pricing environment existing in February, 2015, our PV10 at 12/31/2014 could decrease by $13.8 billion, or 61%.

                    Also on page 29 it is disclosed that the pricing used was $94.99 for oil and $4.35 for gas.

                    That translates to $54.99 per bbl WTI for oil and $3.35 per mcf for gas.

                    I think they will actually be using $50 for oil and $2.60 for gas.

                    I assume they are going to take a tremendous cost benefit due to “efficiencies” in the 2015 reserve report. They will be ending with about the same BOEPD that they ended 2014 with.

                    Looking forward to what they report.

          • shallow sand says:

            Bloomberg reports cashing the hedges cost CLR over $1 billion or about 40% of the amount of REVENUE CLR will realize in 2015.

            Anyone that has SCOOP well data for CLR, please let me know.

            • BC says:


              Charge-offs and delinquencies for C&I loans have begun increasing YoY, accelerating faster since Q1-Q2 to the levels of 2007 and 1998 and 2000.

              A growing share of C&I loans since 2012-13 was to the energy and energy-related transport sectors, which are now in recession.

              Therefore, the charge-off and delinquency cycle is just getting started, which is suggestive of a recession having begun earlier this year.

              If the Fed and TBTE banks want a recession and bear market, they could not choose a more opportune moment to begin raising rates.


  28. Arceus says:

    More Driverless Car Predictions…

    An analyst at Audi is predicting that self-driving will decimate the short- and medium-haul airline industry as the hassle of going to the airport is eliminated. The seven hours spent at the airport for a two-hour flight will be a thing of the past. As travelers elect to sleep in their cars, related hotel and car rental businesses will be negatively impacted.

    • oldfarmermac says:

      Most of the people I know personally, if they are able, would rather drive eight hours or even ten hours one way, this is to say up to about five hundred miles, than bother with a plane. Of course most of the people I know live a good way from an airport, and would have to rent a parking spot or have somebody to drive them to the air port,ditto renting a car at the other end, etc. or taking a cab wherever they want to go, which is also apt to be well removed from the airport.

      I haven’t had occasion to fly in recent years. My impression is that you need to be at the airport a couple of hours early to get on a plane these days, on average,just to be sure, but that it takes less than half an hour to collect baggage etc and be headed out the gate.

      Is this seven hour figure realistic ?

      Methinks fully autonomous cars will not be very common, and legally acceptable to states and localities, for a rather long time yet, maybe as long as twenty years or more.

      What is possible, and what is politically acceptable , are two different things in a lot of cases.

      Back when I was a young guy, I met an old man who was one of the very first truck drivers.

      He took his truck from Richmond Va to someplace up in Maryland, where he was stopped by a local cop who wanted to see his drivers license. He didn’t have one, because Virginia had not yet started issuing them. The cop let him go but told him not to come back until he got a license to drive……………

      I bet the lawyers are going to have a LOT to say about driverless cars.

      • Arceus says:

        >>>Is the 7 hour figure realistic?

        Might be a bit of an exaggeration. Say an hour drive to airport parking, take shuttle to airport, purchase tickets, check luggage, stand in line for security check, walk to gate, check in again, sit and wait, boarding process, wait on plane until cleared for takeoff, delays, arrive and land, drive to depart gate, deboarding process, head to luggage, wait to find luggage, car rental, proceed to business meeting. After meeting, return to airport and do the same thing all over again to return home.

        Hard to say when driverless cars will appear, but sooner rather than later is my guess. As Elon Musk said, driving a car is too dangerous to leave to humans.

        Now many analysts (Morgan Stanley, Columbia, PricewaterhouseCoopers) have been forecasting significant reductions of U.S. vehicles – some say autos will be reduced by a factor of ten (from 245 million vehicles to 2.4 million vehicles) as everyone transitions to automated taxi service.

        Perhaps… but I don’t believe that will be the case. In the same way analysts forecast a paperless society with the advent of the computer (and were wrong, of course) predictions surrounding a future of driverless cars with little to no vehicle ownership also seems possible but unlikely.

        The entire space inside the vehicle will look completely different with the steering wheel gone. This will change the car from a mode of transportation to something else entirely.

        • oldfarmermac says:

          Gotcha, if you include to and from the air port time , parking, shuttle time etc, seven hours is a very reasonable estimate. It might even be a conservative estimate.

        • Time to train station: 20 minutes.
          Time to my seat on train: 20 minutes.
          Time to Madrid: 2.5 hours
          Taxi or metro 20 minutes
          Total 3 1/2 hours

          By car 4 1/2 hours in off peak hours

          • Dennis Coyne says:

            Hi Fernando,

            I wish we had decent public transport in the US. Your fair city is (or was in 1981) a beautiful place. The trains weren’t quite so fast back in 81, and I didn’t have much money so took the slow trains.

      • Fred Magyar says:

        I bet the lawyers are going to have a LOT to say about driverless cars.

        They won’t have much to say given driverless cars are by far superior to human drivers.

        Google has a driverless car that has driven over a million miles on regular roads without any issues whatsoever. To understand driverless cars you need to first understand deep learning algorithms. https://goo.gl/D9GBCB

        • oldfarmermac says:

          Hi Fred,

          This battle is not going to be about safety, in terms of the legal profession and vested interest.

          It’s going to be about lawyers INCOME. In my state, a few years back, the legal system consumed more of the average insurance settlement paid out in automobile accidents than the medical industry and the auto repair industry combined. So far as I know this has not changed.

          Label me a short term pessimist and a long term optimist.

          • Longtimber says:

            Missouri ? I once overheard that Florida has more Lawyers than all other States Combined, maybe other states have caught up. Who’s counting Lawyers anyway.

    • Jef says:

      As a 30 year veteran of industrial design I have to ask, What the hell does driverless cars solve for?

      By far the biggest impetus for car driving is the very personal desire for power, autonomy, independence, individualism, etc. Driving is a religious experience, one that everyone on the planet hopes to experience. I don’t know a single person who wishes they didn’t have to get a car. I’m sure there are some but 99% of the population want it.

      Its like the segway scooter, I ask what is it solving for? People walk too much and need an alternative? Bullshit (one word).

      I don’t understand people who say “oh it will come, I don’t know when but it will”. More bullshit.

      Yeah! soilent green, chip implants in everyone, robots replacing the workforce, debt prison, one world order, what else? it will all come, don’t know when but it will right?

      • Ralph says:

        I am sure that a driverless car will be a more efficient car than the average driven one, because the average driver is not a very good driver, and also almost invariably exceeds speed limits. It may also be a safer driver on average. This will considerably increase total miles driven, as very long journeys will be practical , and people who marginal driving skills will drive further as they gain confidence in the technology. So the the technology will hit Jevon’s paradox, and oil consumption will go up.

        As for reduced car ownership, I think this is unlikely. In most industrial countries, most workers commute by car. They all need to be at the office at the same time, and they cannot risk that a driverless taxi will not be available on a normal working day. They will still own a car and they will drive it. Also, for every occasional driver who does the maths and dumps the car, there will be 5 marginal drivers (typically the old affluent) who keep their car longer because it can drive them to their destination regardless of their skill or state of health. It will be a huge social lifeline.

      • Fred Magyar says:

        You obviously don’t grasp the concept of ‘DISRUPTION’

        I don’t know a single person who wishes they didn’t have to get a car. I’m sure there are some but 99% of the population want it.

        You must only know old people living in the USA and even there there are plenty of people who no longer want to OWN a car. People want access to transportation, they do not want all the costs and hassles that come with owning cars. If you can get cheap personalized transportation services via Uber 24/7 on your smartphone, or rent a ZIP car by the hour when you need it, why in god’s name would you still want to own a car?!

        • Glenn Stehle says:

          Fred Magyar said:

          You obviously don’t grasp the concept of ‘DISRUPTION’….

          You must only know old people living in the USA and even there there are plenty of people who no longer want to OWN a car. People want access to transportation, they do not want all the costs and hassles that come with owning cars.

          Fred, can you marshall any empirical evidence to back up that claim, or is that just more denial and wishful thinking?

          I don’t know a single young person here in Mexico who doesn’t aspire to own his or her own car. A car and the latest smart phone are by far and away the #1 consumer objects of desire.

          And if we look at some actual empirical evidence, it seems to confirm my anecdotal observations:

          GUADALAJARA, JALISCO (22 / Sep / 2013) .- In the last decade public transport lost about half of its passengers who chose instead the private auto for their transportation needs.

          The number of vehicles used in public transport in the metropolis increased by only one fifth over the past 11 years.

          In contrast, the number of private cars increased from 720,713 units in 2001 to 1,782,030 cars in 2012.


      • Lloyd says:

        A driverless car is a taxi (for those of you under 25, a taxi is an Uber-like conveyance from the previous century that follows all applicable laws) that you don’t have to wait for or tip. And you can send it home or to a cheaper parking lot when you get out, saving more time and money over a conventional car.

        It might have cheaper insurance too, now that I think about it…never speeds, never breaks a traffic law, and never drives drunk or distracted.

        I want my teenager in one of those, rather than learning how to drive (or my having to pay young driver insurance rates.) Won’t happen soon enough, though.


        • Lloyd says:

          And it gets worse.
          You don’t need a driver’s license to drive one, so anyone over the age of 10 (in Ontario, the legal point at which they can be “at large” without adult supervision) can have their own car.

          Grade schools will need bigger parking lots.

  29. Glenn Stehle says:

    PARIS (AP) — The cold hard numbers of science haven’t spurred the world to curb runaway global warming. So as climate negotiators struggle in Paris, some scientists who appealed to the rationale brain are enlisting what many would consider a higher power: the majesty of faith.


    It’s not God versus science, but followers of God and science together trying to save humanity and the planet, they say. Physicist John Schellnhuber, founder of the Potsdam Institute for Climate Impact Research in Germany, said he has been coming to these international talks for 11 years and essentially seen negotiators throw up their hands and say “sorry guys we tried our best.” And no one protested. But this time, with the power of Pope Francis’ encyclical earlier this year calling global warming a moral issue and an even more energized interfaith community, Schellnhuber feels the world’s faithful are watching and will hold world leaders accountable….

    “The environment movement, which has primarily been a secular one, has realized that over the last 30 years or so it’s not been that successful in achieving its goals,” Joe Ware of Christian Aid wrote in an email from the Paris talks. “Increasingly it has looked to faith groups for help in mobilizing a broader movement of people calling for action on climate change. They are actually natural allies as almost all faiths have a theology of creation care at their heart.”….

    In some ways, the enlisting of the faith movement is a sign of scientists’ desperation, but it’s also a realization of the need for a moral revolution on climate, said Ramanathan.

    • Javier says:

      It is not enough to enlist the Pope.
      They have to pray to enlist God.

    • Arceus says:

      This “natural alliance” may come as a shock to many global warming activists, but they share many similarities with religion – in many ways the global warming movement (really more than a movement and closer to a new age religion) uses a reconception of Christian theology combined with tribal religious beliefs and the patina of science to gain followers.

      Consider that with global warmers there is much talk of a coming apocalypse, a day of reckoning brought about by man who is inherently destructive and evil. The fossil fuel companies are the evil among us, darkness of coal, their black smoke stacks and crude oil has come to symbolize the sins of man and the destruction he has wrought on the earth.

      The opposite of this black imagery, of course is the light, the solar-powered goodness whereby man can gain salvation. And if the commoners do not mend their ways, they and their children and their children’s children will end up burning in the hell fires of earth for eternity.

      While man is, by his nature, a destoyer, the earth, the flora, the fauna is sacred and the represents all that is good.

      One can not help but see that global warmers use a moral imperative to convince the flock to turn away from fossil fuels.

      And the global warming movement includes its preachers (Al Gore, Obama) who in tone and heavyhandedness resemble the television baptist preachers – both groups of whom efficiently line their pockets and live like royalty while commanding the commoners to live like St. Augustine.

      There is, of course, a religious zeal to purge and destroy heretics of the movement – the deniers. For their own part, a child-like faith is expected in the computer model that mysterious program that warns of the impending downfall of man.

      • Glenn Stehle says:


        I actually like the Catholic clergy’s appeals to fairness, as I’m all in favor of fairness and social justice:

        Bishop Marcelo Sanchez Sorondo, chancellor of the Pontifical Academy of Sciences, said Pope Francis’ encyclical Laudato Si is less about ecology than morality and fairness. “Climate change is a global problem with serious social, environmental, economic, distributional and political dimensions, and poses one of the greatest challenges for humanity,” the bishop said Saturday. “The poor populations are the most severely affected even though they are the least responsible.”

        However, the environmentalists obviously don’t practice what they preach. For wherever we look, from Germany to Norway to California, what we find are scams to use the long arm of the law to reach out and shake down poor and working people, only to shower this booty on the more affluent sectors of society.

        It’s a whole new twist in the selling of indulgences: forcing the less fortunate to pay for the absolution of the more fortunate. Pope Leo X would have been envious.

        And then there’s the thing about how the environmentalists add yet another coating of mandatory sanctimony to a society that already has trouble talking about things frankly and honestly. It is, quite simply, an attack on freedom and autonomy for people to be pressured, or required, to attend chapel and told what it s proper to think, to feel, and to believe. The whole point of the liberal revolution was to free us from somebody else’s dogma, but now the very same people who fought for personal liberation a generation ago are striving to impose on others a secularized religion involving a set of values and codes that they believe in, disguising it behind innocuous labels like “climate science” and “respect for the earth.”

        Puritanism is certainly not dead in America. It just got secularized.

        • Nick G says:

          For wherever we look, from Germany to Norway to California, what we find are scams to use the long arm of the law to reach out and shake down poor and working people, only to shower this booty on the more affluent sectors of society.

          Actually, the reality is the reverse of this: artificially low fuel prices create far larger subsidies than the tiny EV or relatively small wind & solar subsidies you have in mind.

          Fuel price subsidies are called a subsidy for the poor, but they’re really a subsidy for the wealthy and upper middle class, who drive far more than the working poor or really poor.

          And, of course, pollution kills the working poor as much or more than more affluent people who can move away from industrial conditions, and filter their air.

          Pollution is real, right??

          • R Walter says:

            The working poor over in China working in the factory powered by a coal-fired power plant that manufactures the solar panels from rare earth metals that pollute the surrounding environs are to blame for going to work to make a living any way they can.

            Those working poor who die in China from the polluted air, rivers, and lakes in China?

            Just so the Danes can bask in the sunshine of renewables, solar and wind energy, which is completely dependent on fossil fuels?

            Such hypocrisy, such insolence, such ignorance, but that seems to be the zeitgeist.


            Not only that, they must suffer the indignity of a premature death.

            No outrage there though. A travesty of a mockery of a sham.

            Your sthik is wearing thin.

            • Nick G says:


              You are joking, right? PV manufacturing doesn’t have to pollute. Although the lack of pollution controls must help the Chinese manufacturers some, plenty of non-Chinese PV manufacturers achieve pretty similar low cost manufacturing without polluting.

              The fact that China allows any manufacturers of any product, including PV, to pollute so heavily is another statement that pollution is a serious problem, that we should be dealing with rather than trying to undercut efforts to regulate pollution.

              So….you’re joking, right?

              • R Walter says:

                I’m joking and yet not. Call it dark sarcasm. har

                I know that solar is an energy source that will in the long run be a gentler and kinder energy system.

                Another one of those conundrums, you think you can move away from fossil fuels, but you need fossil fuels to have renewables, another doggone Catch 22.

                We need fossils to move away from fossils to prevent becoming a fossil. har

                A comedy of errors, the agony and the ecstasy.

                There are no easy ànswers, moving awày from fossil fuels is not the answer at the present time.

                But, hey, you can promote the best of it all, so no offense.

                • Nick G says:

                  moving awày from fossil fuels is not the answer at the present time.

                  I’m not proposing shutting down all the oil wells and coal mines tonight at midnight. But, we could move much faster than we are, and be far better off.

                  Do we want another $2T oil war??

                  If we were to increase federal fuel taxes by 5 cents per month over a 6 year period, and rebate all of the revenues by reducing Social Security withholding taxes; and increase the CAFE MPG requirements sharply; it would be almost painless but we’d reduce our trade deficit, reduce pollution, reduce the risk of war, and make almost everyone wealthier and safer.

                  There would, of course, be a minority that would be hurt. Rural poor with no reportable income and retirees would require fine-tuning the rebate system. Oil producers, truckers, car makers might need a few transitional subsidies, but we could help people like that, and it would be a heck of a lot less expensive than invading Iraq.

    • Tom J says:

      Sure, the religious leaders and scientists are allowed to believe what they want with regard to climate change (although naturally only inasmuch as they don’t use those beliefs to justify taking away any of my money or freedoms), but unless they can simultaneously come up with a rational proposal to replace carbon-generated energy with something better that also happens to be of equal or lesser cost, they are essentially going to be stuck arguing that humanity needs to return to the 18th century.

      • Fred Magyar says:

        they are essentially going to be stuck arguing that humanity needs to return to the 18th century.

        Guess you didn’t get the memo, fossil fuels are FINITE resources, which means you get less and less of them out of the ground at higher and higher costs until eventually your industrial civilization stalls and crashes… So it is better to plan for some alternative sources of energy while you still have some fossil fuels available. Otherwise humanity returns to 18th century…

        • Javier says:

          On that I think we all can agree.

          The question is to keep the economy going while we attempt the transition, and for that we need fossil fuels more than ever. We have to invest those fossil fuels in alternative energy sources that without them are impossible to develop. Each PV panel has to return the energy invested in making it over many years, but the energy investment came first and was almost all fossil fuel based.

          We run the risk of falling into the energy trap. The concept best explained by Tom Murphy:

          Curtailing fossil fuels due to climate change can kill our only chance. People should be told that we are facing a civilization threatening energy crisis and that sacrifices have to be done to attempt a transition like none done before. But as long as we remain in denial and pursue fake climate change crisis, we are sabotaging our only hope.

          • Glenn Stehle says:

            Javier said:

            People should be told that we are facing a civilization threatening energy crisis and that sacrifices have to be done to attempt a transition like none done before.

            Jimmy Carter tried that in his infamous crisis-of-confidence speech, and look what happened to him!

            Ronald Reagan — the “modern prophet of profligacy, the politican who gave moral sanction to the empire of consumption,” as Andrew Bacevich called him — ate his lunch come election time.

            It’s “morning in America,” Reagan proclaimed, as he militarized US energy policy to a degree never seen before.

            If you ask me, it doesn’t look too good for Team Humanity.

          • hightrekker says:

            “Anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that ‘my ignorance is just as good as your knowledge.’”

            ― Isaac Asimov

            Our friend Javier is ideologically crippled.

          • Nick G says:

            People should be told that we are facing a civilization threatening energy crisis and that sacrifices have to be done to attempt a transition like none done before.

            Well, no. That’s the “drill, baby, drill” message, and it’s unrealistic. Driving a Prius is not a big sacrifice. Driving a Volt is a big step up. Talk to Wimbi – he’ll tell you that his family is thrilled with their Leaf.

        • Otherwise humanity returns to 18th century…

          That is an absolute best case scenario. Worst case, humanity returns to the stone age.

    • R Walter says:

      It is what you call conflation.

      What the hell does the Pope have to do with any of this? What the hell do those godless scientists need people for, even those who follow God? They’re just using them, they dont care about people. They’re the species that is doing all of the harm, if anything, people should be the last mammal on the list to ask for help.

      What the hell? Why in hell are scientists asking for God’s help anyway, for ultimately, that is what they are doing. God is more than likely going to tell them to go to hell. God doesn’t exist until we need him to exist then he can exist. Stupid hypocrites, there is no God unless we say so, and when we say so, then it’s OK to fleece the flock.

      Christ Almighty, you can’t make this stuff up.

      Another follow the money snafu.

      Mankind doesn’t know if it is afoot or horseback when it comes to what must be done.

  30. Hickory says:

    The graph prediction I find most interesting is China. If accurate, they are going to have to purchase a lot more oil. This likely explains their attempts to secure the S. China sea.

    • But the South China Sea isn’t that good. A portion is oceanic plate. And the rocks near the Philipines and Indonesia are humdrum.

      • Hickory says:

        True, but its oil shipping lanes from The Islamic State of Iran (ISI) and its adjacent vassal states (eventual), run right through the S. China Sea.

    • Rune Likvern says:

      Thanks for sharing.
      That is a good article that ties nicely to the subject of this post.

      • Greenbub says:

        Rune, what do you think about their theory?

        • Rune Likvern says:

          To me the dynamics described in the article is right. I am also of the opinion that few realize how severe this low oil price will be for near future oil supplies (offset depletion induced declines and possibly grow total production).

          Oil companies are in the business for a return and several of them have now a lot more debt on their books and need time to strengthen their balance sheets. Many oil companies made a bet that the oil price would remain high ($100/b) and therefore assumed more debt in a bid to grow supplies.

          Major oil companies are structured for big, long lead time projects and needs time to change course (like a fully loaded tanker changing direction).

          Further oil companies rely on predictable prices before they sanction developments involving heavy investments requiring $60+/b to yield a return.
          The longer this low price remains, the deeper the decline will become and the harder to bring supplies back to previous highs.

      • Dennis Coyne says:

        Hi Greenbub,

        Interesting article, I think if prices remain low (less than $50/b) long term (until 2020), then we might se a severe drop in output, maybe as much as 19 Mb/d. I think such a scenario is not very likely. Extraction rates would need to fall pretty steeply to levels not seen since 1966 but over a much shorter period (10 years), this is a larger drop in percentage terms than during the fall in extraction rate from 1979 to 1993 (over a 14 year period). A financial crisis or a war in the middle east among all OPEC producers there would do this, but I guess I am an optimist. Very pessimistic scenario below, which will not come to pass.

    • Caelan MacIntyre says:

      Feedback mechanisms are kicking in…

      • Caelan MacIntyre says:

      • Dennis Coyne says:

        Speaking of sharkfin. The scenario below shows what a 19 Mb/d drop looks like.

        I don’t think this is realistic. Extraction rates fall to 3% of producing reserves in this scenario by 2057, extraction rates have not been that low since about 1947 (about 70 years ago), perhaps they will fall this far with an economic collapse, so for a pessimist this looks very realistic (or perhaps too optimistic). The chart below is for C+C instead of C+C+NGL.

  31. Rune Likvern says:

    Thanks for posting.
    That article ties nicely into the subject of this post.

  32. R Walter says:

    So far, definitely a year where winter weather has been influenced by El Nino.

    Very warm weather for December and the climate.

    • oldfarmermac says:

      I got a nice green pepper out of the garden on Dec 2, a new record for me at least. But it WAS sort of sheltered in a heavy growth of grass. The top of the plant was frost killed a two or three weeks ago, but the bottom foot of it is still green. We very seldom get out of the month of October here without killing frosts.

      I cannot remember it ever being this consistently mild this late into the fall. We think of the first week of December as being the beginning of winter here. Unusually wet too. The stream that borders my farm is running higher than I have ever seen it , other than immediately after a rain.

    • Hickory says:

      If you live for more 30 yrs, you will find this years December weather to be one of the colder ones in several decades.
      And you will be struggling to deal with economic migrants from heavily impacted areas.

      • wimbi says:

        I would modify that “struggling to deal with” to “overwhelmed by”, which I see as dam near inevitable, given these people will have the bad or badder choice of move or die. Lots do right now, of course.

        Can’t believe people here don’t talk about that at all.

        Instead, terrorism is their topic! Jihadists are just nothing in comparison to 500 million starving sick refugees camped in my garage with nowhere else to go.

        • Hickory says:

          I agree, except about the jihadi comment.
          The only thing worse than be overwhelmed by migrants, is being overwhelmed by migrants with extreme hatred and unlimited weapons.

          • wimbi says:

            Hatred, weapons not enough, also gotta be willing to die–right now. Not manyl go for that.

            The hundreds of millions I’m talking about as the problem do go for keeping on living, anywhere, anyhow, rather than dying for sure where they are.

            That’s why I say the ready-to-die folks aren’t near as big a threat as the far larger number of not-ready-to-die kind.

            Sure, lots of migrants are salt-of-the-earth. I worked hard to get some of those here myself, and now their kids are national figures for the right reasons. No kidding.

            What I am talking about is just sheer numbers. Not empathy, not jobs, not talent, not prejudice, not anything but just numbers. Too many numbers. And getting worse by the minute.

      • oldfarmermac says:

        I am already dealing with migrants, who are not causing ME any problems, personally, that I wouldn’t have to deal with anyway. We have plenty of low life local good for nothing people here, there are such people everywhere.

        The migrants arriving here are mostly from Mexico, a few from further south, and mostly good decent hard working people. So far we don’t have the GANG CULTURE migrants here, not enough to attract much attention anyway.

        But they are causing a lot of local people a LOT of pain, and I am about the ONLY person in a forum such as this one who does not forget that when scarce lowpaid jobs are willingly taken by the new comers at EVEN LOWER than usual wages, the locals are shit out of luck.

        I have friends who have rented to Mexicans who were glad to live two or three to a room, and save nearly every dime or send it home, the problem is NOT the migrant person AS SUCH.

        The problem is that EMPLOYMENT for local poorly educated people with few skills find it impossible to support themselves and their families when they cannot find work. When a dozen people are ready to start at say eight dollars, nobody already on the payroll at the bottom end can hope for a raise.

        I don’t have to work for hourly wages, although I HAVE done so, many times, and I don’t have to look for a cheap place to rent, etc.

        But I have relatives and friends and many acquaintances who do.

        Migrants arriving here create really really major problems for these local people.

        I am not much interested in debating mealy mouthed bullshit about how migrants bring on growth and diversity and all that crap.

        We are happy here without more diversity, and interesting in preserving our OWN local culture, which after all is what diversity is really about, unless it is being used as a political club, and the people I am talking about are not fucking interested in jobs ten or twenty years down the road. They need jobs NOW.

        The people who don’t like it are free to leave, or just not come here. THIS IS THE ONLY SOLUTION POSSIBLE TO ACTUALLY HAVING ANY LOCAL CULTURE ANYWHERE, IN THE LAST ANALYSIS.

        The people who yak continuously about diversity don’t actually want diversity, they want to destroy cultures they disapprove of.

        • Clueless says:

          The really sad thing is that for every one person that comes into the US today, within 10 years there will be at least 25 relatives – family, extended family, then followed by family and extended family of the first group of “family and extended family.” It is a failed model, but, apparently, the majority of Americans do not see it.

        • ChiefEngineer says:


          So your unskilled locals don’t like open free market capitalism and want to deny others equal opportunity under the “I was here first culture rule”.

          Education is the key to success not denying others opportunity

        • Silicon Valley Observer says:

          David Ricardo – The Iron Law of Wages

          • Glenn Stehle says:

            I think Adam Smith beat Ricardo to the punch. This excerpt is from the most popular book on economics (that’s not a textbook) ever published in the United States:

            But — and here is the difficulty — accumulation would soon lead to a situation where further accumulation would be impossible. For accumulation meant more machinery, and more machinery meant more demand for workmen. And this in turn would sooner or later lead to higher and higher wages, until profits — the source of accumulation — were eaten away. How is this hurdle surmounted?

            It is surmounted by the second great law of the system: the Law of Population.

            To Adam Smith, laborers, like any other commodity, could be produced according to the demand. If wages were high, the number of workpeople would multiply; if wages fell, the numbers of the working class would decrease. Smith put it bluntly: “…the demand for men, like that for any other commodity, necessarily regulates the production of men.”

            Nor is this quite so naive a conception as it appears at first blush. In Smith’s day infant mortality among lower classes was shockingly high. “It is not uncommon,” says Smith, “…in the Highlands of Scotland for a mother who has borne twenty children not to have two alive.” In many places in England, half the children died before they were four, and almost everywhere half the children lived only to the age of nine or ten. Malnutrition, evil living conditions, cold, and disease took a horrendous toll among the poorer element. Hence, although higher wages might have affected the birth rate only slightly, they could be expected to have a considerable influence on the number of children who would grow to working age.

            Hence, if the first effect of accumulation would be to raise the wages of the working class, this in turn would bring about an increase in the number of workers. And now the market mechanism takes over. Just as higher prices on the market will bring about a larger production of gloves and the larger number of gloves in turn press down the higher prices of gloves, so higher wages will bring about a larger number of workers, and the increase in their numbers will set up a reverse pressure on the level of their wages. Population, like gove production, is a self-curing disease — as far as wages are concerned.

            And this meant that accumulation might go safely on. The rise in wages which it caused and which threatened to make further accumulation unprofitable is tempered by the rise in population.

            ROBERT L. HEILBRONER, The Worldly Philosophers

        • Glenn Stehle says:


          Well you better hold onto your hat, because the “Mexican menance” is once again at the gates..

          After holding flat at about 11 million for the past five years, the number of persons born in Mexico and living in the US once again began its inexorable ascent. The current number is estimted to be 12.13 million, according to the Center for Immigration Studies.

          This mirrors statistics from the Departament of Homeland Security, which show the number of undocumented immigrants living in the United States to have shot up by 419,000 in the first six months of 2015.

          Seventy-five percent of immigrants living in the United States are there legally. Eighty percent of undocumented immigrants living in the United States come from Latin America.


          My maid’s husband went to the US legally. For someone like him — uneducated and unskilled — to have gotten a work visa would have been impossible a few years ago.

          Obviously, the lobbying by US business to ease the immigration restrictions is paying off:

          “Bitter Harvest: U.S. Farmers Blame Billion-Dollar Losses on Immigration Laws”

        • Dennis Coyne says:

          Hi OFM,

          So your proposed solution to the problem is?

          Are all these Mexicans illegal? If so the people hiring them are to blame and the laws preventing illegal immigrants from being hired should be enforced. If the “outsiders” are there legally, there is not much you can do, at least legally.

  33. oldfarmermac says:

    It’s nearly six pm on the East coast and the Google has basically nothing on the elections in Venezuela. The silence is deafening, Maduro must have jailed or expelled every reporter in the country.

    • Javier says:

      The government has extended the poll one hour. They are trying to get more people to vote with calls to Chavez memory.

      • Javier says:

        The opposition wins the elections in Venezuela

        • Fred Magyar says:

          Which as far as the average Venezuelan is concerned changes nothing.
          Same old shit, different flies! I highly doubt the opposition will be able to fix the deeply entrenched economic problems or find a way to keep the populace happy with new bread and circuses. As I have been saying for a long time the problems in the global economy are deep and they are systemic. Most are still trying to prop up the consumptive infinite growth based linear economic model. That isn’t working anymore. It doesn’t matter which group is in temporary power, whether right or left or moderate or whatever political party du jour it may be. No one has any real solutions because what exists is broken beyond repair and what has to happen is the construction of completely new systems built from the ground up based on radically different premises. Deep systemic change is not an easy process because there is no readily available road map to follow.

          • oldfarmermac says:

            ” what exists is broken beyond repair and what has to happen is the construction of completely new systems ”

            In the long run, Fred is as right as rain, as usual.
            But in the short to medium run, if the opposition actually manages to govern, and governs more intelligently and ethically than the Maduro regime, things COULD improve substantially for the people of Venezuela.

            Just because we are at the peak of the fossil fuel age does not mean we are at the end of it, and they can easily sell their oil, once they get their political ducks in a row, and then hopefully spend most of the money on fixing up the country.

            As a practical matter, I see them being able to export oil in substantial amounts for at least thirty or forty years – plenty of time to get the country on the right track economically and ecologically.

            Now let us pray to the Sky Daddy of our personal choice that Maduro and his henchmen don’t manage to totally sabotage the election results.

            When an opposition party candidate won the office of mayor a couple of years ago, he just took away all the mayors authority and created a new city government for all intents and purposes.

            Fred, do you have any insights to offer as to the likely birth rate in Venezuela over the next decade or two?

            • Fred Magyar says:

              Fred, do you have any insights to offer as to the likely birth rate in Venezuela over the next decade or two?

              If they watch Brazilian Soap Operas, the birth rate will plummet 🙂

        • Fred Magyar says:

          Which changes nothing!

          • Javier says:

            If you mean that good government is unable to improve things when the conditions make it impossible, I agree. But do not underestimate the capacity of damage from bad government. Chavez/Maduro regime is pernicious in itself for Venezuelans.

  34. oldfarmermac says:

    I wonder if we will be building a significant number of new nukes in the West. There is little doubt in my mind the Chinese will be building a lot, and some other eastern countries too, most likely.

    Some environmentalists are coming around to nukes.


    The only thing that scares me as much as a big new fleet of nukes is the absence of them.

    • wimbi says:

      The nuclear puzzle. Sigh. Ain’t it obvious what to do?

      1Assemble some smart people who have no personal interest in what wins.

      2) Give them the assignment to look hard at return on investment (including all things biosphere related) of
      biomass carbon sequestration
      other crazy stuff re carbon sequestration (ahem).
      anything else anybody dreams up

      3) The resulting report to be thrown to the wolves for gnawing on to get the fat out.
      4) send the whole package to yet another group from everywhere for final decision, who’s qualifications are a good head, hard life, too old to have any personal concern for outcome, grandchildren.

      That done, ladies and gents, we are happy to announce the winner

      Distributed wind/solar/biomass negative-carbon, scattered all over the place and connected with high resilience grid.

      We thank you for your kind attention.
      Fly fishing, anyone?

      • Dennis Coyne says:

        Hi Wimbi,

        I agree with your assessment. Do you have that written up? We can post it 🙂

        When your done fishin’! Ice fishin’ season starts soon, at least where I live.

        • wimbi says:

          Here in the hills 40 north, no ice in sight. Wife, who has inherited the alles-in-ordnung gene, has records going back to the stone age, showing a big bunch of us each year pounding on the ice, up to as short a time ago as ’77.

          No more.

          Write-up. Maybe hire bright, highly motivated college kid to fill out that skeleton with tons of detail and elegant prose, and post as op-ed. Kid then becomes famous as I continue to relax within my magic cloakofvapors.

  35. Political Economist says:

    According to the Chinese official data, China’s cumulative oil production from January throught October this year is 2.3 percent higher than the same period last year

  36. Peter says:

    There is something rather illogical with the report.
    They have oil prices going up considerably in 2017 and 2018 yet Saudi Arabia will cut production by 2 million barrels per day over that time. Obviously they know Saudi Arabia will abandon it’s aim of maintaining market share. They don’t even have current OPEC production right.

  37. Daniel says:

    Maybe off topic, but I cannot find a proper answer to this elsewhere. Since Indonisia joined OPEC on Friday and the production ceiling of 31.5 MM Bbl has been confirmed, does this not mean an actual production cut of 800,000 bbls/Day?

    • Toolpush says:

      So does that mean OPEC will have to become OPEIC, as in Export/Import counties

    • shallow sand says:

      From what I have read, there is no production ceiling. Some confusion out there for sure.

      • Toolpush says:

        OPEC, I feel see their prey is down, but not out. By having no ceiling they are going for the knock out punch. We will have to wait for the Annual reports no doubt to see, but must be the last straw for many of the oil companies.

        WTI below $39

    • Ves says:

      If US joined OPEC tomorrow then we would have an imaginary “cut” that is difference between US consumption minus US production. So who did a cut? Nobody – because there is no actual cut.

  38. islandboy says:

    My favorite techno-optimist gets mentioned n PV Magazine.

    Paris COP21: Climate talks may not matter, because coal and oil will be redundant anyway

    One thing that Seba and Musk do agree on is the need to remove fossil fuel subsidies, which some would suggest includes the lack of a carbon price.

    “If they achieve that, that is a huge goal,” Seba says. “Some of these targets will be pretty irrelevant. 2C is not a target. Zero emissions is a target. We cannot control 2C, but we can control zero carbon.”

    Seba notes that many critics of renewable energy dismiss the technologies because they contribute so little on a global scale right now, just a few per cent of total electricity in the case of wind or solar.

    “You’ll get mainstream media and politicians and even well-meaning folks complaining that it has taken solar so long to get to 1%. What they don’t see is that getting to 1% is the hard part.

    “Solar has been doubling installed capacity for years. But it started from a small base, so you ask yourself how many more doublings do you need to get to 100 per cent?

    “In the case of solar, all we need is seven more doublings – and that could happen in 13 or 14 years. Clearly, though, many vested interests see this as a threat, which is why they are, with the help of regulators, pushing back on policies – removing carbon prices, cutting renewable energy targets, reducing feed-in tariffs, raising fixed charges, and other means designed to slow the uptake.

    “It is called regulatory capture, and the fossil fuel industry has perfected it,” Seba says. “Because of this regulatory capture, governments and regulatory bodies will push back, but they can’t stop it.”

    That’s because the regulators and the vested interests will lose control. For more than a century, energy generation has been centralized and all the decisions were made by big banks and regulatory agencies. Consumers had no input.

    That is now changing. The uptake of solar PV is consumer driven, and it will be the same with electric vehicles and battery storage.

    “When something is consumer driven and distributed, it is different. The conventional industry either doesn’t understand that, or doesn’t want to understand that,” Seba says.

    While I understand a lot of what this guy says and agree in principle with some of it, someone on this site posted something about types of growth and how in a finite system, exponential growth must give way to logistic growth. I had looked at the growth in installed capacity for solar PV between 2008 and 2014 and came up with the following:

    Year – Percent Growth
    2009 – 40.5
    2010 – 54.3
    2011 – 73.0
    2012 – 77.4
    2013 – 55.3
    2014 – 51.3

    From the above, the growth rate was increasing up to 2012, after which it declined. It will be interesting to see how much installed capacity grew in 2015 when that data comes out but, I don’t think the growth of solar will be exponential over the long term. My understanding is that long term exponential growth implies a fairly constant doubling period or a reasonably steady percentage growth per year, neither of which are evident from the above table.

    • Glenn Stehle says:

      Seba says:

      “In the case of solar, all we need is seven more doublings – and that could happen in 13 or 14 years. Clearly, though, many vested interests see this as a threat, which is why they are, with the help of regulators, pushing back on policies – removing carbon prices, cutting renewable energy targets, reducing feed-in tariffs, raising fixed charges, and other means designed to slow the uptake.

      “It is called regulatory capture, and the fossil fuel industry has perfected it,” Seba says.

      There’s a lot simpler reason why people aren’t breaking down the door to buy into what Seba’s selling, at least in poor countries where the government doesn’t lavish huge subsidies on renewables and electric cars.

      It’s called “money,” or the lack thereof.

  39. Watcher says:

    Several posts back someone offered up a Kemp article about storage. I remember being pressed for time and went through it and found problems or weakness, with the primary issue that he claimed (with no source provided) that there had been 300K or so increased storage over 2 yrs.

    That’s not many bpd. Just about anyone could ratchet down 500 bpd (that’s 500, not 500K) and save the world, yes? But that’s all part of the weakness.


    I skimmed that weeks ago. Gail’s details don’t look good. Suffice just to challenge truths unproven. It ain’t F=ma.

    BTW remember how lower oil prices were going to be economically stimulative?

  40. Florian Schoepp says:

    A question for the hands -on people like shallow: some months ago, some contributors wrote that the service companies in their respective area were beginning to cannibalize their stacked equipment in order to save money. With rig count down even more today, this should accelerate. Any more anecdotal evidence?

    • shallow sand says:

      Rigs here are all stacked except for a few work over rigs. Most work over rigs stacked too.

      Just rod and tubing jobs at this point. Skeleton crews.

    • Jeffrey J. Brown says:

      One point to keep in mind is that the Shale Oil boom was built on the foundation of the personnel & infrastructure of the multiyear Shale Gas boom, and now that personnel and infrastructure base is fading away very fast.

      IMO, it’s going to take a very long time to get back anywhere remotely close to the 2014 level of activity, even with a strong sustained oil price signal. A lot of people have left the industry never to return, or have retired, passed away or become unable to work. And even those that want to return will need a lot of retraining. And lots of equipment is rusting away, and as you noted, being cannibalized.

      Meanwhile, for Xmas gifts this year, I’m handing out bags of pinto beans with my favorite bean and rice recipe.

      • Watcher says:

        If you HAVE to have it, and you do have to have it, you’ll do whatever it takes.

        Someone retired or left the industry? If things were desperate, they’ll be brought back at gunpoint.

        This makes “Peak” mechanism hard. If you’re peaking but you HAVE to have it, you’ll get more.

        Until the geology, not the money, precludes it.

        • Czesio z Grajewa says:

          Watcher – What you HAVE to have is a functioning world economy with long supply chains, not sole oil. You can’t eat oil, you can’t maintain the grid only with oil. Forcing oil companies to extract oil that there’s no demand for, will do more harm than good. And if you bail out bankrupting oil companies, oil glut will just get bigger, untill you run out of storage space.

      • BC says:


        Given that Texas is in recession, those holiday gifts are very practical and sure to contribute to a musical holiday season for the whole family. 😀

        But it’s probably best not to light candles to go along with the music. 😀

    • AlexS says:


      Here is the article you mentioned:

      Oilfield cannibals: to save cash, U.S. drillers strip idle rigs

      And here is the link to an article in World Oil, with the data from National Oilwell Varco (NOV):

      Global rig fleet declines in tandem with industry activity
      The North American rig fleet decreases, as a large portion of idle rigs is taken out of commission.
      November 2015 /// Vol 136 No. 11

      A brief summary:
      Last year’s tumble in oil and gas prices forced U.S. rig owners to stack numerous units and downsize operations over the past year. According to the 62nd Annual NOV Rig Census, the 2015 U.S. available fleet has declined significantly, as activity levels plummet. Rig counts were tallied for this year’s census in the early summer, after almost a year of weakened commodity prices. The gap between available and active rigs widened, showing an overall, reduced U.S. market.
      Key statistics from the 2015 census include the following:
      • The U.S. fleet suffered an overall decline of 883 rigs, causing the total available count to drop about 27%, from 3,254 to 2,371 units.
      • This net decrease is the result of 1,120 rig deletions and 237 rig additions,
      • 237 rigs were added to the fleet over the last year, compared to 387 units for 2014, which is a 39% drop
      • The number of U.S. newbuilds was essentially the same for 2015 and 2014 with 182 and 187 new units being counted, respectively. The average age of rigs in the fleet is now much lower, with more than 2,100 new units entering the fleet over the past decade. The rigs entering the fleet are more efficient and cost-effective—qualities especially needed in today’s market.
      • The number of U.S. rigs that were “Reactivated or assembled from parts” dropped significantly in 2015. This year’s count came in at 41, while 193 units were brought back into service during 2014.
      • Utilization of the U.S. fleet (combined land and offshore) declined 19 percentage points, from 70% to 51%.

      The chart below shows that the current reduction in the U.S. drilling fleet is not yet as big as in the 1980s, but quite significant:

      Fig. 1. U.S. available vs. active rigs, 1955-2015.

      • AlexS says:


        “We define an “available rig” as one that is currently active, or ready to drill, without a significant capital expenditure. A land unit must not have been stacked for longer than three years, and for an offshore unit, the period must not be longer than five years. If it can be determined that a rig is cold-stacked, then it is removed from the available fleet. Extensively damaged rigs are also taken out of the available count.”

        Fig. 2. U.S. available rigs vs. utilization, 1955-2015.

  41. Frugal says:

    WTI just dipped under $38. If the price stays at this level, the frackers will go home and the bankers will turn into scrooges.

  42. R Walter says:

    Oil is 35.60 per barrel in Japan today.

    31,930¥ per metric ton.

    123 yen for a dollar, 259 USD per tonne, 35.56 USD per barrel.

    EOX Emerald Oil, 1.13 USD per share today, -61 USD per share earnings. A 52 week high of 33.60 usd per share, a 96 percent decrease in price. They all look bad because it is bad.

    A rout, a crash, cut your losses and run, the jig is up.

  43. Another 88,065 of barrels to be lost in January 2016 in the shale plays for a month on month decline of 1.81%.
    Eagle ford will be down 30% in 9 months. That is something.

  44. ezrydermike says:


    • BC says:

      Mike, as I’ve shared here several times in the past few weeks or month or more, there is a potential WTI target (stop) from a bearish technical pattern of $29 IF the critical support of $37 is taken out.

      There is no major technical support below $29 until the mid-$20s.

      IF $37 is taken out, that implies NYMEX gasoline at, or breaking, a buck this winter.

      That’s recession territory, brother.

      The Fed raising rates at this particular moment given the credit spreads, junk debt bear market, commodity, equity market, and emerging market conditions is simply bizarro and virtually unprecedented save for briefly in the early 1980s with inflation raging; 1937 (the Fed raised reserve requirements and the US Treasury sterilized gold inflows); and 1931 (the Fed raised the discount rate to support the US$ after sterling was devalued 25% coincident with the collapse of Creditanstalt and outflows of monetary gold).

      • Toolpush says:


        Oil has broken $37!

        Currently $36.86

        We will have to wait and see where we end up.

  45. ezrydermike says:

    fwiw…policy statement from Bernie Sanders


  46. shallow sand says:

    How many E & Ps will have write downs in 2015 greater than their current market caps.

    Just let that one sink in.

    • Dennis Coyne says:

      Hi Shallow sand,

      Better sharpen those pencils 🙂

      • shallow sand says:

        Dennis. I guess I should not talk. At today’s closing price, adjusting for our well head price, our PDP PV10 is probably negative. $32 in the field doesn’t work, as they say.

    • ChiefEngineer says:

      Hi Shallow,

      Shouldn’t the write downs be compared to market value loss and not the current market value to understand the relationship ?

      • longtimber says:

        PV10 is kindalike mark2market with 6 month lag… No?

        • shallow sand says:

          SEC uses the previous 12 months prices. Banks typically look at futures prices because banks typically require hedging.

      • shallow sand says:

        Chief. Yes, that makes sense.

        However, the high water marks on a lot of the E & P share prices contained considerable blue sky. I like to subtract long term debt from PDP PV10 to get an idea of value, and many of those should turn negative. I am anticipating a garbage in garbage out situation to some extent.

        I just think it will be interesting to look up a company and see a share price of $5 and a per share loss of $15, for example.

        Hey, at this point, almost all US E&P’s are worthless at the current oil and natural gas futures prices. I’m not just talking privately owned, nor just shale. Look at Marathon Oil, Anadarko, Apache, ConocoPhillips, etc. They are all out of business if futures hold. But then all of the OPEC nations are too.

        So either we will have the great collapse many here discuss, or the futures prices wont hold.

        How the heck would any of us know what will happen. We have sold from $8-$140 since 1999. Pretty wide range. Wonder how close to $8 the traders can push it. They are in full control.

        • shallow sand says:

          CHK. $4.23 per share price, loss per share $38.88, including impairments.

          • Watcher says:

            But why would you expect a futures price change or a collapse when a much simpler and benign alternative exists, i.e., bailout?

        • ChiefEngineer says:


          “So either we will have the great collapse many here discuss, or the futures prices wont hold.”

          You can put me in the camp that current prices CAN’T hold, but this can continue for a while longer. Markets aren’t always rational for periods at a time. I got personally burned by it in 08 buying up refiners to early, but today now it’s E&P’s. My refiners are now golden and I’m in the process of lighting up on them. I learned not to move so quickly this time. I had to hold myself back from the clearance table today, but I did pick myself up 500CRC and 100RDS.A . The way to play this game is to always keep some of your powder dry and be able to buy more tomorrow. The more these stocks go down now, the more I’m going to make when they recover. We won’t know were the bottom is until they have recovered. My biggest fear is buying ones that goes bankrupted.

          The Saudi statement about keeping market share doesn’t make a lot of sense to me. Especially if this post is correct and the Saudi’s cut production a few years from now in the future. Last week now it’s OPEC stating they want to keep market share.

          I suspect what is really going on is an economic war again Russia for it’s actions in Syria and/or the Ukraine. The Saudi’s are up to their ears in the turmoil in the Middle East. Another explanation could also be to slow down the transformation to efficiency because of $100 barrel oil. What doesn’t make sense is not cutting production by 10% and prices dropping 60%. I don’t think we are hearing the truth here.

          I do believe $75 to $85 dollars is about the price a current balanced market should be trading at. I expect the market to continue to trade at it’s current level for a few more months. In the spring, demand should out pace supply. When the people who are buying up the extra production can’t replace their current low cost inventory. I expect the price to rise. Their not buying the current low cost oil now to sell it for the same price six months later. They are going to want to make money on their purchase. The same way I expect to make money on todays purchases.

          Do you think CHK is in danger of BK and disappearing ?

          • shallow sand says:

            Chief. I don’t know about CHK, or any others. I just follow closely to gauge how they are doing in this crash. I buy and hold, mostly mutual funds, as I never know when to sell (as evidenced by the fact I didn’t dump the stripper wells in 2012-13).

  47. aws. says:

    Ideology, duplicity and incompetence.

    Paris, climate change and the UK government

    Simon Wren-Lewis, Mainly Macro, Saturday, 5 December 2015

    What about the UK? While everyone remembers Cameron promising to make his 2010 government the ‘greenest ever’, three and a half years later the Sun reported him as ordering aides to “get rid of all the green crap” from energy bills. Of course actions speak larger than words. The Conservative’s hostility to onshore wind farms is well known, and subsidies are due to be phased out soon. Subsidies for solar also face severe cuts. The government has passed legislation ‘to maximise economic recovery of UK oil’. A scheme to encourage home owners to improve energy efficiency is to end, the aim to make all new homes ‘zero carbon’ is to be scrapped, the Green Investment Bank is to largely sold off, tax breaks for buyers of ‘green cars’ ended.

    Now all this might be understandable if the UK was well ahead in the amount of power produced by renewables. In fact, among EU members, only 3 have a smaller proportion. The government expects its EU target of 15% by 2020 will be missed by a wide margin.

    Does all this reflect climate change denial of the kind we see in the US, with the only difference being that the Conservatives are acting duplicity in still paying lip service to the aims of the Paris summit? Duplicity may be understandable given Cameron’s 2010 ‘greenest ever’ commitment. However the UK government have just signed a deal for a Chinese state-controlled company to help build a new nuclear plant at Hinkley Point. Ministers have undertaken to guarantee for 35 years an index-linked price of £92.50 per megawatt hour. That is more than twice the current market rate, and it is also higher than for every renewable source except offshore wind. Yet unlike renewables those subsidies will be paid by consumers when the plant starts producing around 2025.

    • Synapsid says:


      A geologist in charge of E & P at a privately owned company in the Gulf oil patch, with forty-some years experience (wink, wink; nudge, nudge), says that his wealthy boss is “almost giddy” at the prospect of all the carcasses just waiting for stripping.

      I wonder just how many of these small companies are out there, waiting, and how much difference they will make in coming months. I expect all producing properties to keep producing unless they’re total losses no matter how good you are.

  48. Daniel says:

    US production down by ±100,000 bpd (unless I miss-read the EIA drilling productivity report),
    China Imports up 7.6% from last year and 7.1% from last month with commercial crude stock level showing the biggest fall in years (-4.4%), but crude tanks 6%.
    I know some are making a killing out there by talking oil down, but this is getting insane.


    • Heinrich Leopold says:

      The latest drilling report has confirmed the recent trend of sharply declining US shale production. Legacy decline rates are still very high and are very likely declining even faster as drilling declines further. As I can understand the motivation of Saudi Arabia to squeeze out competition, I am flabbergasted how the US public and policy makers including the FED are destroying its own oil&gas industry. What is the strategy behind the destruction of first the coal and then the oil and gas industry? There will be no flood of natgas and an undulating plateau of oil production, if the base of financing new projects implodes. If there are no companies left anymore, who will actually produce oil and gas? Wind and solar can just provide a minimal share of US energy needs and there is by far no alternative left to replace oil and gas. Do authorities know what damage is done to its own economy and the dollar if US oil and gas production collapses? Obviously not. As always policy makers will only react if the damage is done. As we can see from Venezuela and France, policy makers go as far as to its own extinction. I thought the US would be a little more advanced in this respect. However, the recent events will only speed up my predictions of much higher natgas prices over the next months.

      • Daniel says:

        Hi Heinrich

        Thanks for your answer. I work in the oil industry in Norway and what is going on at the moment is not only destroying the US oil and gas industry, but causing considerable damage worldwide – some of the stuff going on over here is insane (good experienced people being fired, cutting corners to save costs, etc.).
        It is strange that I cannot seem to find the same indications as anybody else about the world “swimming in oil”. I guess we will be in for a rough ride, once the world finds out production is too low and we lack the resources to rectify the same …. but I guess this is what Ron is on about for quite a while now.

        • Toolpush says:


          Yep, destruction all over. Either the doomers are correct and their will not be any demand, or there is going to be a mad scramble in a few years. With all the boomers reaching retirement, there will be a real need for training new people or hiring geriatrics.

          • Daniel says:

            Crazy part is, that we have been there before. I am still in my 30ies and this is now the third downturn I see -starting to look for jobs outside this circus. Every time we fire the good people, only to get promised afterwards that the operators had learned their lessons. Last time the market picked up I had the pleasure to work under a 72 year old drilling engineer, who had been in retirement for 10 years … he was not quite up to speed with some of the technology 🙂

            • Toolpush says:


              I bet that god damn cyberbase drilling must have been a head spin for him, let alone rotary steerable directional drilling.
              While public companies are only focused on the next quarterly report (12 weeks), nobody will ever think of what will happen in the “next” doom cycle. History has shown, when the next boom comes, there is always plenty of money to do what ever it takes to get things going again.
              As for people, we stopped being people along time ago. Haven’t you had your bar code or chip yet?

        • shallow sand says:

          Daniel. I note your comment about cutting corners to save on costs.

          I keep reading here in the USA about how all of the companies are setting records on how fast they are drilling wells. They do so in order to tout cost savings, IMO trying to perpetuate the myth that it makes sense to drill these wells at $30 oil and $2 gas.

          I am all for technological improvement, but I get the feeling this is not safe. I wish they would describe how they cut drilling times so much.

          My experience is with 700′-2500′ holes, so apples and oranges. However, I would not want anyone rushing things that are most importantly unsafe, and secondarily could damage the well.

          Would appreciate to read what you, Toolpush and others think of these “records”.

          • about 14 years ago i was transferred to supervise a team of people that survived a really harsh set of cut backs. The overall performance level was very high, plus they were very motivated not to lose their jobs.

            Drilling a well involves a lot of lost time, some of which can be avoided by a more experienced supervisor and crew. It’s also likely the well plan will be smarter and easier to execute when prepared by an experienced engineer. So indeed going faster is possible. But I wouldn’t expect more than say a 10 % time reduction. The other savings comes from lower charges per unit.

        • Heinrich Leopold says:


          As I am working in the commodity business as well, the steep downturn is on the other side a good sign of a steep recovery very soon as a lot of production is coming out of the market. I am wondering, however, if this could not have been done with a little less damage to all people involved.

      • Glenn Stehle says:

        Henrich Leopold said:

        I am flabbergasted how the US public and policy makers including the FED are destroying its own oil&gas industry. What is the strategy behind the destruction of first the coal and then the oil and gas industry?

        I watched and wondered the same thing back in the 80s as Reagan and Volcker took a wrecking ball to the domestic oil and gas industry.

        The best explanation I’ve come across is from Andrew J. Bacevich in The Limits of Power. He postulates that Jimmy Carter, recoiling from the public backlash that came after his disatrous crisis-of-confidence speech, began the militarization of U.S. energy policy. Reagan then took this ball and ran it through the goal posts. Here’s how Bacevich put it:

        The strategic reorientation that Reagan orchestrated encouraged the belief that military power could extend indefinitely America’s profligate expenditure of energy. Simply put, the United States would rely on military might to keep order in the Gulf and maintain the flow of oil, thereby mitigating the implications of American energy dependence.


        The unspoken assumption has been that profligate spending on what politicians euphemistically refer to as “defense” can sustain profligate domestic consumption of energy and imported manufactures. Unprecedented military might could defer the day of reckoning indefinitely — so at least the hope went.

        And once Reagan had militarized U.S. energy policy, there seemed to be no turning back. As Bacevich goes on to explain:

        Reagan — and Reagan’s successors — mimicked Carter in bemoaning the nation’s growing energy dependence. In practice, however, they did next to nothing to curtail the dependence. Instead, they wielded U.S. military power to ensure access to oil, hoping thereby to prolong the empire of consumption’s lease on life….

        A new national security consensus emerged based on the conviction that the United States military could dominate the planet as Reagan had proposed to dominate outer space. In Washington, confidence that a high-quality military establishment, dexterously employed, could enable the United States, always with high-minded intentions, to organize the world to its liking had essentially become a self-evident truth. In this malignant expectation — not in any of the conservative ideals for which he is retrospectively venerated — lies the essence of the Reagan legacy

        • Nick G says:

          Yes, that was a disastrous policy.

          Much better was Clinton’s approach, which pushed the development of hybrid electrics.

      • Glenn Stehle says:

        Heinrich Leopold said:

        Wind and solar can just provide a minimal share of US energy needs and there is by far no alternative left to replace oil and gas.

        Heresy! Heresy!

        Break out the torches! Pile that wood under the stake high!

        To paraphrase a layman in 1800, “God Forbid!” that an “infidel” and propagator of “carbon principles” should become president of the United States. He not only was no environmentalist, but he “denies the truth.”

        Under the pretext of eliminating environmentalist establishments, heretics like the Virginia politican wanted to destroy environmentalism.

        I urge everyone to join “our great and common cause” in keeping “an acknowledged unbeliever” from the presidency of “an environmentalist community,” implored a conservative evangelist of the environmentalist faith.

      • Nick G says:

        Wind and solar can just provide a minimal share of US energy needs and there is by far no alternative left to replace oil and gas.

        That’s silly. Wind and solar can provide all the electricity the US needs, and electricity is superior for transportation.

  49. Pingback: Energy Facts of the Day | Earth's Energy

  50. Jeffrey J. Brown says:

    Re: The US 2016 election circus

    I’ve thought for quite a while that the most likely explanation for the Trump phenomenon is that the guy is on the Clinton’s payroll. His comments seem calculated to infuriate every voting block except for the AWM vote (Angry White Male).

    • oldfarmermac says:

      If it weren’t for my thinking Trump is just an idiot with money, on a ego trip, I would be compelled to agree with J B.

      There sure are plenty of angry white males around. As a matter of fact, there are plenty of angry women and men of just about any description around.

      My impression for the moment is that the ONLY republican H R C is just about SURE to beat, in case he gets the nomination, is Trump.

      The old political ground rules are changing, and we seem to be entering a time when things formerly considered only remotely possible are becoming common place.

      For now I remain convinced that if the R party could get it’s act together, and run a relatively moderate candidate with a little charisma and not too many negatives, with just enough right wing credentials to get out the base, the R party could mop the floor with H R C.

      I do believe that barring unforeseen and unlikely developments, she will get the D nomination.

      It looks as if Trump is doing all he can to enable the R party to snatch a defeat out of the jaws of an easy victory. I still don’t think he will get the nomination, but I am not so sure about that as I was a few months ago.

  51. Glenn Stehle says:

    Well it looks like Team Green can now take a victory lap:

    “China’s electric car sales will outstrip the US’s this year”

    But if we pull the curtain back to see what’s behind this rosy scenario, what the communist dictatorship is doing to achieve these sales, the picture isn’t so benign:

    “Chinese Electric-Car Sales Booming, But Not Because Buyers Want Them”

    In recent years, the Chinese government and some cities have instituted generous incentives on electric cars, hoping that putting more of them on its roads will curb air pollution….

    But drivers aren’t buying the cars because they actually want them, according to Automotive News China (subscription required).

    While the numbers appear good, the report argues, there still appears to be a significant lack of enthusiasm for electric cars among Chinese buyers.

    Sales are up in Beijing, but that city has also severely restricted the number of available registration slots for non-electric cars.

    The city government offers just 20,000 new license plates available each month, through a lottery, but no lottery is required for electric-car registrations.

    [P]lug-in hybrid buyers in Shanghai still get free registration, avoiding fees of up to $12,000 at that city’s monthly auctions….

    Government enthusiasm for plug-in cars will likely continue to boost sales, as carmakers look for subsidy money.

    In fact, industry trade groups are suspicious that some carmakers in China may be inflating the sales numbers of plug-in models.

    Last month, an official with the China Passenger Car Association reportedly said that certain unnamed carmakers were exaggerating plug-in sales figures–by up to 20 percent, in some cases.

    Carmakers are being pushed by the government to put ever-increasing numbers of plug-in electric cars on Chinese roads.

    Domestic automakers are now reportedly expected to sell 1 million electric cars and plug-in hybrids per year by 2020, and 3 million by 2025.


    Mark one up for the dictatorship of virtue!

    • Nick G says:


      These are governmental measures to recognize the cost of pollution, which kills millions per year in China. The sensible thing would be to slap a pollution tax on the cars and their fuel, but the easier thing, apparently, is to simply restrict the number of licenses available for ICE cars, and provide subsidies for electric.

      Do you really think pollution has no cost? These ICE cars are much more expensive than the out of pocket costs would indicate, right?

      • Glenn Stehle says:

        Nick G,

        “Beware the Leviathan!” is what I think.

        Here’s the conumdrum: If you fail to muster public approval for your cause though the normal democratic means of free debate and persuasion, which so far seems to be the case, then what?

        Do you just abrogate any pretense of democracy?

        What happened to all the high-flown talk about “Vox populi, vox Dei“? Was it all just pablum you fed the people, but only so long as it was convenient to your cause?

        And trust me, I’m fully aware you are convinced that you are doing God’s work, to which John Adams penned this most eloquent rebuttal:

        Power always thinks it has a great soul and vast views beyond the comprehension of the weak; and that it is doing God’s service when it is violating all His laws. Our passions, ambitions, avarice, love, and resentment, etc., possess so much metaphysical subtlety and so much overpowering eloquence that they insinuate themselves into the understanding and the conscience and convert both to their party.

        • Nick G says:

          Who’s this “you” you’re addressing?? You seem to be engaging in a form of “us vs. them” thinking. Who’s this “green team”? How is it different from you?

          I think you’ve got a strawman, when you suggest that the general public does not support measures that deal with oil imports, pollution and climate change. It’s just not true. But…that’s not the most important thing to advance this particular debate. Let’s deal with the basics first.

          Most important: do you, personally agree that pollution has a cost? That asthma, acid rain, smog, and particulates cause illness and death, like the millions reported dying in China? Do you agree that Climate Change is an important risk with real costs??

  52. Heinrich Leopold says:

    Drilling Report Dec 15 published:

    The latest drilling report shows that the dramatic decline of US oil production continues. Eagle Ford production alone declined by – 28% year over year (see chart below). The current decline rate stands at -6% per month and makes it very likely that production has declined over -50% (or below 0.8 mill b/d) by spring. Given the recent decline in oil prices, it is very likely that production from Eagle Ford alone has declined by over 1 mill b/d by summer 2016.

    • Clueless says:

      Note that the “second” 1-2015 and 4-2015 should be 1-2016 and 4-2016.

    • Ves says:

      You have to feel some compassion for the people who are constantly bombarded through media with messages that innovations, efficiency, technological miracles that make shale oil production “exceptional”. They are just being propagandized. So don’t be hard on them. 🙂 Reality and truth will always eventually resurface.

      • oldfarmermac says:

        The large majority of people seem to want others to do their thinking for them. If it takes more than fifteen to thirty seconds to comprehend an idea or a point of view , or to think thru a problem, the average person just wants a sound bite explanation, if he wants any information at all.

        My own wild ass guess is that not even one percent of the people in this country have a CLUE as to what is happening in the oil industry.

        No more than one percent has a clue as to what is going on in the food production industry , excluding farmers.

  53. Mr. Andersson says:

    I never had the chance to read the original article. Please send me a copy to mr.andersson.001@gM@il.com

    You’ve got to ask the most important question out there. Why is Saudi Arabia fighting so hard to keep the price of oil at such low levels? What could they gain?

    I’ll tell you what most seem to have missed. It must be that Saudi and Gulf countries, possibly in cahoots with other Opec countries, although from the comments made by some countries, it does not appear to be so, that these countries are planning to eventually buy up valuable global Oil companies and resources at a huge discount.

    Think about it. They are loosing +80B USD on this move. You do not make such moves without an ulterior motive. Nor do you keep insisting on that move when you keep loosing money.

    The primary purpose must be that they are pushing down the prices in order to eventually consolidate a greater market share and eventually controlling resource currently outside of Opecs clout. You can hardly run those resources and companies to bankruptcy, and even then, someone else will buy them up, who better than you?

    And to add another twist to this, it should be noted that the Saudis hardly came up with this plan of their own. It is the FED that has been orchestrating this move.

    In 2008 the oil price was at 140 USD per barrel, that was an economical catastrophe. Everybody knows that oil is the engine of the economy. In order to get the kind of numbers the FED needs to raise the interest rate, OIL price has to go down, and for a foreseeable future. They sold the idea to the Saudis, that even if the oil price were to go from 80 to 40, the USD and your reserves would in fact go up by 40-50% due to an appreciation of the dollar. As the Saudis have delivered a lower oil price, so has FED on the dollar. So the Saudis are not at all bothered by the development. The thing is that the FED need to improve the economy, and they know that for that to happen more rapidly, the oil price must go down and stay down.

    They see the loss of +80B as only a loss of about 40B which they might even have an agreement with the FED to cover for. For the FED loosing 40B is not an issue. Furthermore, the Saudis will have a greenlight in buying up oil fields and resources, whether in the US or other European countries and they can expand their assets and prolong their own hegemony on the oil markets.

    It has long been noted that the Saudis have been noticing the increase of US shale production and Opecs percentatge of the global oil market have been decreasing. What other way than to plan such a bold move, and even better, have the Fed backing and a potential insurance against losses.

    Likelyhood, the Saudis will start buying at around 30 USD per barrel, I doubt they can push this agenda for more than one more year. Although, I have no idea how far they are willing to take this.

    It should also be noted, that this might also be the primary reason as to why the Obama administration has been so willing to enter into an agreement with Iran. Namely, the Saudi wording after Opec meetings would only have an effect the first or second time.

    The final twist, is going to happen when Iran will actually be allowed to enter the market again and push 4 million barrels more per day. All this seems calculated. So they actually need Iran for the markets to make that final push, and it’s going to be a lasting one.

    Even the Isis oil might have been an attempt at pushing the oil price even further.

    Prediction: Oil will continue to go down, USD up. Eventually Saudis are going to start splurging and buying up majority stakes in Oil resources around the world.

    • Nick G says:

      Everybody knows that oil is the engine of the economy.

      Well, no. Most people disagree, and for good reason: oil doesn’t power the economy. It powers vehicles, not economies. There’s straightforward evidence of that: the Fed looks at the core inflation rate, and discounts the price of energy (mostly oil) as being too volatile to use as a primary economic indicator.

      Right now the core rate is about 2%, while the overall CPI including energy is close to zero. If the fed worried about oil prices, they wouldn’t be about to raise interest rates.

      Why is Saudi Arabia fighting so hard to keep the price of oil at such low levels? What could they gain?

      You’ve got it backwards: KSA simply stopped trying to keep the price of oil at high levels. They realized it would be a losing fight against US light, tight oil.

      Now they’re simply selling all they can: partly to damage the competition with slightly lower prices, partly just to maximize income.

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