OPEC’s 2015 World Oil Outlook

The OPEC 2015 World Oil Outlook came out a few days ago. They basically produce two outlooks, a medium term outlook to 2020 and a long term outlook to 2040. I found their medium term outlook pessimistic in some cases to optimistic in others. But I found their long term outlook to be wildly optimistic… in most cases.

In all cases below I chart crude when it is available and “liquids” only when no other option is available. The data is in million barrels per day.

OPEC Med. Term Outlook

Here is their medium term outlook chart. Notice they expect both OPEC and Non-OPEC crude to decline in 2016 but Non-OPEC crude starts a slow recovery in 2017. They say OPEC crude will not start their recovery until 2019.

OPEC Long Term Outlook

Here is their long term outlook. Notice the tremendous growth in “Other Liquids”, whatever that is.

OPEC Outlook Non-OPEC Crude

OPEC expects Non-OPEC crude to be down in 2016 but to begin a slow recovery in 2017. I think that outlook is way too optimistic.

OPEC Outlook OPEC

OPEC thinks their short term production has peaked and will decline by 100,000 barrels per day next year and hold on a flat plateau until sometime after 2020.

OPEC Outlook World Crude

Adding OPEC and Non-OPEC crude we see that OPEC thinks World crude production will decline next year but begin a slow increase starting in 2017. Also notice that OPEC’s estimate of current crude production is well below what the EIA says is being produced and even below JODI’s production numbers. I think this is because OPEC does not count Condensate. Other than that I do not have an explanation.

OPEC Outlook Russia

OPEC expects Russian liquids production to decline by 100,000 bpd next year and hold at that level for five years, or perhaps longer. They expect Russia to increase production by 200,000 bpd over the next 20 years.

OPEC Outlook China

OPEC thinks China will peak next year, 100,000 bpd above the 2015 level. I think that is just a tad optimistic.

OPEC Outlook Brazil

I find OPEC extremely overoptimistic concerning Brazil. So does Petrobras. Petrobras’ troubles highlight bleak prospects for Brazilian oil production to 2020

The analyst adds that Petrobras’ recent revisions to its production plans, forecasting 2.8 MMbpd by 2020, 1.4 MMbpd less than 2014, will be adjusted further. This is due to more recent Petrobras CEO statements indicating less capital expenditure and a larger divestment strategy. One key change in the investment plan for pre-salt production has been a significant reduction in the number of FPSOs brought online by 2019.

OPEC Outlook US & Canada Chart

It is with the US and Canada where OPEC is most optimistic. They see US and Canada liquids production continuing onward and upward with not much of a pause.

OPEC Tight Oil Outlook

OPEC expects light tight oil to increase in 2016. They only show a slight uptick in LTO in 2016 but an uptick nevertheless.  I just don’t believe that is possible. They actually pick US LTO peak, 2023.

Tight crude production from the US plays increases from 3.8 mb/d in 2014 to about 4.9 mb/d by 2023. It declines slowly thereafter to 4.2 mb/d in 2040. While the Canadian plays are not as prominent as the US plays, they increase their tight crude production throughout the forecast timeframe from under 0.2 mb/d in 2014 to less than 0.5 mb/d by 2040.

OPEC Outlook LTO

Here we see the actual LTO production figures that OPEC is expecting. They have Light Tight Oil increasing by 100,000 barrels per day in 2016. They are saying the price collapse only slowed down the growth in LTO production and it will pick back up in 2017, though it will still be increasing at a much slower rate than in years past.

OPEC Ourlook US Less LTO

Okay, if LTO has been responsible for the huge gains in the US and some in Canada, what does OPEC’s production look like if we remove LTO from the picture.  Well production just keeps on increasing… according to OPEC anyway.

Production just keeps increasing and increasing. Counting LTO the US and Canada peaks around 2025 but that is only because of the decline of LTO. The rest, which was declining before the advent of LTO, has now turned around and just keeps increasing into the far distant future.

But what about prices. Are not prices killing production in the oil patch, especially in the USA? Well the 2015 World Oil Outlook does not present any price charts or tables. But they do tell us what prices need to do in order for their reference case predictions to be fulfilled, all on page 8. Bold mine.

In this Outlook, the price of the ORB is assumed to average $55/b during 2015 and to resume an upward trend in both the medium- and long-term. The medium-term foresees a $5/b increase each year so that a level of $80/b (nominal) for the ORB is reached by 2020, reflecting a gradual improvement in market conditions as growing demand and slower than previously expected non-OPEC supply growth eliminate the existing oversupply and lead to a more balanced market. This, in turn, will provide support to prices. Translated into real prices, the oil price is assumed to be $70.7/b by 2020 (in 2014 prices).

The long-term price assumption is based on the estimated cost of supplying the marginal barrel which will gradually move to more expensive areas. This continues to be the major factor in the period through to 2040. The price of the ORB in real terms is assumed to rise from more than $70/b in 2020 (in 2014 prices) to $95/b in 2040 (in 2014 prices). Correspondingly, nominal prices reach $80/b in 2020, rising to almost $123/b by 2030 and more than $160/b by 2040. It should be noted that these are not price forecasts, but working assumptions to guide the development of the Reference Case scenario.

They are saying that if prices increase by $5 a barrel a year, from $55 a barrel that they assume will be the 2015 average, then all will be well after only a slight dip in production in 2016 and 2017. So in 2016 we should see prices averaging $60 a barrel if they get their “Reference Case” started off on the right foot.

It is also interesting to note that they see Non-OPEC production peaking around 2025 but OPEC still increasing production, not just enough to offset the Non-OPEC decline, but enough to keep world oil production increasing through 2040.

C+C Production

Just one more chart with data from the EIA’s latest Monthly Energy Review. The EIA Monthly Energy Review has November US C+C production at 9,181,000 barrels per day. That is 404,000 bpd below the peak in April 2015 of 9,585,000 bpd and just 7,000 bpd below the production of November 2014.

US production is clearly declining and that decline will, far more likely than not, accelerate in 2016.  The point is that OPEC projection of US crude oil production is clearly in error. It is just flat out wrong, no other way to say it. I know, the production numbers for 2016 are not in yet, but the chance that US 2016 crude oil production numbers will be above the 2015 production numbers is slim to none.

OPEC has tried to hedge their bets by combining US production with Canadian production. But even that will not work. US plus Canadian 2015 production, in my estimation, will clearly be above US plus Canadian 2016 crude oil production.

I may be wrong with this prognostication, but that remains to be seen.

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464 Responses to OPEC’s 2015 World Oil Outlook

  1. Does a barrel of NGL have the same BTU as a Barrel of Crude or Condensate?
    If not, converting all into BTU would show whether total BTUs provided are increasing or static.

    • Rune Likvern says: NGLs have around 60 – 70% of the volumetric energy (heat) content of crude oil.

      However peak oil will happen when oil peaks, not NGLs. Liquid transportation BTUs should not be mixed with other types of BTUs. Otherwise we would need to count BTUs from coal as well.

    • Jeffrey J. Brown says:

      Some EIA million BTU (MMBTU) conversion factors:

      https://www.eia.gov/forecasts/aeo/pdf/appg.pdf

      Of course, what the EIA calls “Crude oil” is actually Crude + Condensate (C+C), and condensate can’t be used to meet crude oil contractual obligations at Cushing. I assume that the listed value for gasoline, 5.2 MMBTU, is a pretty good approximation for an average value for condensate.

      For the first nine months of 2015, the EIA estimates that the ratio of US Lower 48 condensate* to US Lower 48 “Crude oil” Production, i.e., C+C, was 22%, or 2 million bpd of Lower 48 condensate production:

      EIA expands monthly reporting of crude oil production (i.e., C+C) with new data on API gravity:
      https://www.eia.gov/todayinenergy/detail.cfm?id=23952

      These numbers are consistent with some estimates that I used in the following comment, where I tried to come up with an estimate of actual global crude oil production (45 API and lower crude oil, i.e., the stuff that corresponds to the global price indexes), versus global condensate production, using the only available data, some EIA API gravity estimates for the US and EIA/OPEC data for the OPEC countries.

      My premie was and is that we have been on an “Undulating plateau” in actual global crude oil production, while global natural gas production and associated liquids, condensate and NGL, have so far continued to increase:

      http://peakoilbarrel.com/jean-laherreres-bakken-update/comment-page-1/#comment-534101

      After showing similar rates of increase from 2002 to 2005, global NGL production was up by 26% from 2005 to 2014, while global C+C production was up by only 6% over the same time period (EIA).

      *Condensate with API gravity of 45 degrees or more

      • Anton Koffield says:

        What is condensate used for?

        • AlexS says:

          most of condensate is mixed with crude oils as a refinery input;
          some is used as petrochemical feedstock

        • Jeffrey J. Brown says:

          Condensate is basically natural gasoline.

          My principal point is not that condensate doesn’t produce the full spectrum of refined products that we get from 38 API gravity crude oil; my principal point is that the available data strongly suggest that actual global crude oil production (45 API and lower gravity crude oil) has been on an undulating plateau since 2005, as annual Brent crude oil prices doubled from $55 in 2005 to the $110 range for 2011 to 2013 (remaining at $99 in 2014).

          In other words, I think that actual global crude oil production effectively peaked in 2005, while global gas production and associated liquids, condensate and NGL, have so far continued to increase.

          Note that based on the following chart, it’s very likely that about 40% of 2015 US Crude + Condensate (C+C) production exceeds the upper limit for WTI crude oil (which has an API ceiling of 42):

          https://www.eia.gov/todayinenergy/detail.cfm?id=23952

          • Anton Koffield says:

            I take your points.

            If Condensate is basically natural gasoline, can one infer that the amount/effort of refining required to produce retail gasoline is fairly ‘easy’?

            If this is so, and if gasoline is the primary refined product from crude oil (measured in volume, sales price, and/or ‘importance’ to the economy) then is this not a ‘good’ thing? And does this help explain why gasoline prices are rather low in the U.S. presently? Is it not preferable to refine ‘natural gasoline’; in to ‘retail gasoline’ rather than process heavy oils, some perhaps contaminated with sulfur and vanadium or whatnot?

            Of course I don’t posit that this situation will go on for the long term, not that it is a ‘good’ thing wrt long-term energy planning (or lack thereof due to short-term thinking referencing current low price signals).

            • Jeffrey J. Brown says:

              As noted above, my principal point is not that condensate doesn’t produce the full spectrum of refined products that we get from 38 API gravity crude oil; my principal point is that the available data strongly suggest that actual global crude oil production (45 API and lower gravity crude oil) has been on an undulating plateau since 2005, as annual Brent crude oil prices doubled from $55 in 2005 to the $110 range for 2011 to 2013 (remaining at $99 in 2014).

              • Anton Koffield says:

                I take your point.

                Perhaps either or both of these things have happened since mid-2014:

                1) The ‘system’ has adjusted somehow to effective use the current crude + condensate + NGL ratios being produced at the wellhead.

                2) The World economy has become unsound/fragile enough that it cannot support a crude oil price, not for long without lurching into recession or worse, than the current Brent market price of $37.89/bbl.

                Perhaps since gasoline comprises some 53% of U.S. finished products from crude oil, then having a goodly amount of condensate which is ‘natural gasoline’ has contributed to the rather low prices for retail gasoline seen in the U.S. over the past year.

                I wonder what the price trends have been over the past years for distillate fuel oil and kerosene and other non-gasoline products? Have they gone up in price (as opposed to gasoline)?

                U.S. Petroleum & Other Liquids Product Supplied:

                http://www.eia.gov/dnav/pet/pet_cons_psup_dc_nus_mbblpd_a.htm

                The bumpy price plateau for Brent (which I take it as a marker for Brent production in your example?) has been a bumpy plateau from Q1 2011 through nmid-2014, after which it nosed-dived to the current $37.89 price.

                http://www.nasdaq.com/markets/crude-oil-brent.aspx?timeframe=10y

                Surely the actual global crude oil production (45 API and lower gravity crude oil) has not spiked since early 2014, has it? If not, then the Brent price is not a reliable proxy for such production. See my conjectures (#1 & #2) above. There may be other conjectures which may be valid. Of course none of these ideas may be mutually exclusive.

                Please note that I am scoping much of my commentary to the U.S. situation…although Brent and WTI and other price constructs are supposedly indicative of the World’s supply and demand situation, yes?

                • Perhaps since gasoline comprises some 53% of U.S. finished products from crude oil, then having a goodly amount of condensate which is ‘natural gasoline’ has contributed to the rather low prices for retail gasoline seen in the U.S. over the past year.

                  53% is little high.
                  How many gallons of diesel fuel and gasoline are made from one barrel of oil?

                  Refineries in the United States produced an average of about 12 gallons of diesel fuel and 19 gallons of gasoline from one barrel (42 gallons) of crude oil in 2014. Many other petroleum products are also refined from crude oil. Refinery yields of individual products vary from month to month as refiners focus operations to meet demand for different products and to maximize profits.

                  However condensate, or naphtha, or natural gasoline, three names for the same thing, is not really gasoline. Gasoline is primarily octane or C8H18. Naphtha is primarily pentane, or C5H12. (Though naphtha does contain a lot of other hydrocarbons.)

                  Condensate is the lightest liquid petroleum product. That is it is a liquid at sea level pressures and room temperature. You can burn it in your car like gasoline. But your car will knock terribly, and your motor will not likely last very long.

                  • oldfarmermac says:

                    Some farmers who were located in oil producing areas in the twenties and thirties made a regular practice of burning condensate in their tractors, because they could get it for next to nothing, and actually FOR NOTHING in some cases.

                    All they had to do was just put a bucket under a drip on an oil rig sometimes!

                    Tractor engines back in those days would run on almost anything, once you got them warmed up. They ran slow, at low temperatures and had very low compression ratios. So they usually stood it ok.

                    There are numerous stories about folks trying to run Model T’s and Model A’s on condensate and getting their arms broken for their troubles trying to start them with the hand crank. Condensate would probably destroy a modern engine in very short order.

                • Anton Koffield says:

                  Ron,

                  Thank you very much for your accurate clarification.

                  I was working off of this EIA Table:

                  http://www.eia.gov/dnav/pet/pet_cons_psup_dc_nus_mbblpd_a.htm

                  I divided 8921 (finished gasoline) into 16969 (finished petroleum products) to get the ~53% figure (I rounded down to the nearest whole number). The numbers express thousands of barrels per day.

                  However, to your point, when one divides 8921 (finished gasoline) into 19106 (Total Crude Oil and Petroleum Products) I get ~ 46% (again rounded down to the nearest whole number).

                  This is in agreement, to the tolerances of casual conversation, with the reference you provided of 19 gal of gasoline from each 42 gallons of crude, which is ~ 45%.

                  You run an excellent site and I wish you and the participants and readers a fine New Year. It is a shame that the MSM does not provide thought-provoking information and analysis as is found here and on several other sites…I suppose that ignorance is bliss and bread and circuses are the order of the day, have been so for quite some time, and will continue to be so.

  2. Sarko says:

    No way that oil price will be average $60 per barrel in 2016. Russian budget assume base scenario $50 but they will lower on $40-45 average in 2016. Russians said they not expected that average oil price be over $60 till 2018, they are very pessimistic on oil price.
    I have one question: what is really number for LTO reserves in USA(USGS and EIA) on price around $60-70(in 2015 $)? Because, if it is around 30-35 billion barrels this all charts(not only OPEC but EIA) for US LTO production are mathematically impossible. They have average US LTO production on 4-4.5 mb/b but when you calculate that on 25 years period reserves need are around 40 billion barrels.
    4.25mb/d x 365 days=1.55 billion barrels per year
    1.55 barrels/year x 25 years=38.7 billion barrels.
    I’m something miss or badly calculate?

    • likbez says:

      “Russians said they not expected that average oil price be over $60 till 2018, they are very pessimistic on oil price.”

      They don’t. My impression is that most Russian analysts expect mass bankruptcy of shale companies in the USA and $50-$60 on average in 2016

      http://www.finanz.ru/novosti/valyuty/chto-budet-s-cenami-na-neft-i-kursom-rublya-v-2016-godu-1000971038

      http://www.vestifinance.ru/articles/65848

      Google translate is your friend 🙂

      • Sarko says:

        It is not government prediction but private funds and Lukoil, biggest private oil company in Russia. This is official government prediction, unfortunately it is on russian.
        http://i73.fastpic.ru/big/2015/1201/b8/df6cd754ec0dc3da1e6480127c206fb8.png

        First row is projections of price, two scenarios:
        Base price for Ural(around $2 discount on Brent)
        2016: $50
        2017: $52
        2018: $55

        Pesimistic
        2016-2018 average price $40.
        All budget plans, GDP, CPI are project on this oil price projections in Russia.
        So russian goverment don’t see oil price on brent over $60 in 2018.
        And if i’m correct, Russian Central Bank and finance/economic minister now make plans for $30-35 average price for 2016.

        I just see official numbers of EIA for LTO reserves in USA and that is around 14 billion, if that is true all predictions about US LTO production on 4mb/d in next 25 are imposible, they even imposible if there is increased of 200% in LTO reserves from today level.

        • AlexS says:

          Russian oil company, Gazpromneft, recently said that their current operations will remain profitable at $15 per barrel, and at $20 they will drill new wells

          • zaph says:

            oil companies may remain profitable, yes, but $15-20 oil for several years means severe budget crisis, economy going strongly south and rising risks for social stability
            it is unclear if oil companies could function well under such circumstances

            • AlexS says:

              What they said – is that they can withstand a short period of very low oil prices by limiting investments to maintenance capex. Nobody thinks that oil prices can remain at $15-20 levels for a long time.

              • zaph says:

                “they can withstand a short period of very low oil prices”

                depending on how long that ‘short period’ is everyone can lol

                “Nobody thinks that oil prices can remain at $15-20 levels for a long time”

                I think they actually can. Thats not likely but if global economy is weak enough then higher prices (in constant dollars) might not be affordable long enough.

                • shallow sand says:

                  $15-20 for a long period of time?

                  Guess we should give up here in the US. Almost no one survives that. One year of prices averaging $49 WTI, which followed 5 years of very strong prices, has caused several BK and put many more companies in distress.

                  Unless, of course, you believe Mark Mills, who thinks US LTO will soon be profitable at $15-20 WTI through technological advances.

                • oldfarmermac says:

                  . I suppose there is quite a lot of legacy oil, meaning oil in fields that are already developed, that can be gotten out of the ground for less than twenty dollars a barrel. Twenty ought to be enough to cover day to day operating costs in a lot of oil fields.

                  But my wild ass guess is that such oil probably represents only a rather minor fraction of daily world wide production.

                  It seems obvious that many American stripper wells for instance are running deep in the red at less than twenty to OVER FORTY bucks, on a day to day basis. If prices will stay in this range, the owners of such wells are going to be FORCED to give it up.

                  Hopefully somebody who crunches numbers can throw a little light on this question.

                  Now insofar as subsidies being used to maintain production, yes, paying producers extra money will get some extra production.

                  But this is merely a BULLSHIT argument, because the producer is STILL getting the price HE must have to continue to produce. WHERE the money comes from is irrelevant, in terms of his staying open for business.

    • Dennis Coyne says:

      US lto URR will be about 30 to 40 Gb if Oil prices follow the eia reference case

      • Sarko says:

        https://www.eia.gov/forecasts/aeo/images/fig_21.png

        This?
        If that is true, 30-40 billion barrels LTO reserves, they chart and predictions are useless because all LTO will be extracted by 2040.

        • Dennis Coyne says:

          Sarko

          EIA forecast is too optimistic

          My guess for LTO is based on USGS and David Hughes work. Decline will be steep after 2023 for US LTO.

          • Sarko says:

            It’s not matter is i’m optimistic or pessimistic, it is not mathematically possible. I don’t speak about geology, steep decline of wells etc. I talk about reading chart which EIA presented. If there is 40 billion LTO recoverable reserves on $60-70 barrel(EIA in 2013 put 14 billion, on $100, so i put numbers nearly 3 times greater because of technology, costs squeeze etc.) it is not possible be on 4-4.5 mb/d on average 2015-2040.
            4.5mb/d x 365 d x 25 years= 41 billion barrels.

            • AlexS says:

              Sarko,

              According to the EIA Annual Energy Outlook 2015 (base case), technically recoverable resources (TRR) of LTO in the U.S. are 78.2 billion barrels (+35.8 bbls of NGPLs).
              In AEO 2014, these estimates were 59.2 billion barrels and 27.6 billion, respectively;
              In AEO 2013: 47.1 billion barrels of LTO.
              I do not know where your number of 14 billion comes from?
              To note, estimates of technically recoverable resources do not depend on the price of oil, and the EIA does not provide estimates of economically recoverable resources.
              I am not saying that the EIA projections are correct, but at least their LTO production forecasts correspond to their TRR estimates.

              • Sarko says:

                http://oi66.tinypic.com/2mzmctv.jpg
                U.S. Crude Oil and Natural Gas Proved Reserves
                With Data for 2014 | Release Date: November 23, 2015 |
                https://www.eia.gov/naturalgas/crudeoilreserves/

                US tight oil reserves 2014: 13. 365 Gb

                And yes they claim resources on 78.2Gb(until this year was 58 Gb, how is possible so much growth on resources in this price environment is mystery for me), but that is potential resources no proven reserves which for now stood on 13. 365 GB.
                But in end it is not matter what they claim for potential resources, they can claim 1 trillion barrels but what is matter reserves and for now they are 13.3 GB, i put 3 times greater number and 4-4.5 mb/d average 2015-2040 is mathematically not possible in that case.

                • AlexS says:

                  Proved reserves is a completely different category.
                  EIA production projections are based on TRR

                  • Sarko says:

                    OK
                    Thank you for that clarification.
                    Also, i use data which Dennis Coyne put on 30-40 Gb, which is pretty optimistic for proven reserves, you must admitted that.
                    That is Hamm 24 Gb projections in Bakken, plus 100% growth proven reserves in Eagle Ford plus 4 times greater reserves in Niobara and other plays(outside of Bakken and EF) than now. Pretty good.

                  • AlexS says:

                    Dennis’ numbers are for TRR as well.
                    He says that his “guess for LTO is based on USGS and David Hughes work”

                    But, unlike the EIA, USGS updates estimates for shale plays resources relatively seldom. And David Hughes’ past forecasts of LTO production have proved too conservative.

                  • Dennis Coyne says:

                    Hi AlexS,

                    I use USGS for the Bakken/Three Forks, Hughes for the Eagle Ford (which might be too conservative, I would use USGS estimates if they were up to date), the Permian and other US LTO plays I have assumed will be 20 Gb for LTO, which is just a guess, but 40 to 50 Gb is probably in the ballpark for URR, based on wells drilled to date. The EIA tends to over estimate resources using private forecasts which are not very good.

                    Remember their Monterrey shale estimate?

                • AlexS says:

                  “how is possible so much growth on resources in this price environment is mystery for me”

                  TRR estimate is not dependent on price.
                  It is calculated based on the “Area with Potential” (in sq. miles), average well spacing (wells/per sq mile) and average estimated ultimate recovery (EUR) per well

                  • Dennis Coyne says:

                    Hi AlexS,

                    The EIA seems to base their TRR estimates on investor presentations, their LTO TRR estimates are very optimistic. Probably 20 Gb total from Bakken and Eagle Ford and about 20 Gb from the Permian LTO and other US LTO plays for a total of 40 Gb is reasonable. The 80 Gb TRR estimates are likely to be high by roughly a factor of 2 in my opinion.

                    We will see a steep decline in US LTO output between 2020 and 2025.

                  • AlexS says:

                    Dennis,

                    the EIA’s EUR estimates for all tight oil plays are much more conservative than in companies’ presentations. It seems that the increase in TRR estimate was due to tighter assumed well spacing. But the actual well spacing in currently producing subplays is in many cases even tighter than the EIA assumptions.

                    I don’t want to guess what is the right number of TRR because of too many uncertainties (including potential impact of technologies on LTO recovery rates).

                    What may have a negative impact on LTO production is not TRR, but low oil prices + poor economics of shale companies.

                  • Dennis Coyne says:

                    Hi AlexS,

                    The tighter spacing is likely to result in lower EUR for the tightly spaced wells. The USGS is smart enough to realize this is likely to be the case, the EIA knows less.

                    Another flawed assumption is that the tight well spacing will be profitable throughout the play and that the quality of the wells will be uniform throughout the play.

                    A cursory look at the Bakken data shows that these assumptions are not very good. The tight spacing will only be profitable in the sweet spots with high oil prices.

    • Most oil exporting nations prepare a budget based on what they think is a very conservative oil price forecast. The surplus is placed in a savings fund, or is used to supplement the budget. The one thing you can deduce is that Russian government experts think the price will be higher than $50 per barrel.

      • AlexS says:

        Russia’s budget is based on $50/bbl in 2016, but there are stress scenarios assuming $40/bbl and even lower

  3. Ovi says:

    Ron I note that in the post, some places use the word Supply and in others, Production. In OPEC terminology, Supply adds processing gains to Production. Could this be part of the difference you mention between EIA and OPEC?

    • No, I don’t think so. In the charts that I copied and pasted, they say supply and, in this case anyway, they mean total production. And I was comparing only the supply marked as “crude”. This does not include anything except crude. OPEC’s total “crude” is way less than the EIA’s or even JODI’s “crude + condensate”.

      World crude oil production according to the EIA, JODI and OPEC in million barrels per day.
      	2014	 2015	
      EIA  	77.9  	79.7 	  Avg. 1st 6 Months
      JODI	74.1 	76.1	  Avg. 1st 10 Months
      OPEC	72.7 	74.2	
      
  4. oldfarmermac says:

    The actual net energy available on a per barrel basis, the way the accounting is done, including ever higher percentages of very light oil, condensate, natural gas liquids, etc, MUST be falling off significantly.

    How we should account for this loss in energy density is debatable, in terms of the peak oil debate. But in the real 3D world, it is no doubt already a big enough loss that it should be accounted for in forecasting future consumption measured in barrels.

    If oil production is going to actually increase , for another couple of decades, in the face of the depletion of today’s legacy oil fields, then the exploration guys are going to have to work some miracles, finding oil in substantial amounts, in places that have been combed over multiple times already. And the production guys are going to have to come up with some miracles too, in order to keep the per barrel cost in constant money below a hundred bucks.

    Now being a practical old farmer, I do believe in ” miracles”, having witnessed half a dozen or so over my life time,for example cell phones, no till planting, genetic engineering, etc. But I don’t believe in PREDICTING they will come to pass within any given field, within any given time frame.

    I am with Ron, I believe all these rosy forecasts are nothing less than ridiculous, in terms of increasing total production annually going forward, especially at the prices mentioned.

    • oldfarmermac says:

      Here is a bit of timeless wisdom, the work in plain language of a genius who FORGOT more about the socalled mind of the naked ape than the combined social science faculty of most universities these days knows COLLECTIVELY.

      This just might be a perfectly good explanation for these rosy forecasts- assuming they turn out wrong. If they do hold true, nobody will be able to laugh at me, or Ron, because we are going to be beyond such troubles. 😉

      Read it for insight and for pleasure.

      http://www.paulgraham.com/cornpone.html

  5. oldfarmermac says:

    Incidentally,

    Merry Christmas to one and all, it is the thought that counts, not the mythology.

    It would put a real smile on my face if somebody will explain to me PRECISELY and EXACTLY how to link to an old comment,using plain English, no jargon, without copying and pasting the comment itself. .

    I am always glad to get another little present, lol.

    • R Walter says:

      If you do a search, google, for instance, peakoilbarrel, poster’s name, the following results will be from an old peakoilbarrel post. When you find the old comment in the comments, there is a date, click on the date and the comment will appear, the url will have the comment number, copy that, you will then link to the comment. I hope it helps or at least ‘splains how to it is done.

      http://peakoilbarrel.com/us-production-by-states/comment-page-1/#comment-544642

      • oldfarmermac says:

        Thanks Ronald,

        So utterly SIMPLE, but just not at all obvious or intuitive. Find the comment, click on the date, and the URL displays. Copy it.

        You can look for this answer a week in computer help forums,and guaranteed, it will take everybody who posts in them at least three pages of jargon to say the same thing.

        Yesterday we had a good discussion ongoing about the case for disruption and RR’s current positions involving the future of renewables and of the oil industry.

        I have a LOT of respect for RR, but he has to make a living, like most of us. Keep in mind WHERE he posts these days, and that he consults for businessmen who are necessarily concerned with short term and medium term results.

        http://peakoilbarrel.com/all-roads-lead-to-peak-oil/comment-page-1/#comment-552507

    • Jonathan Madden says:

      Best Sentiments of the season to Ron and everyone here. I wish there were a few more hours in the day to keep up with all the Ronposts and comments.

  6. Glenn Stehle says:

    Could this be a head fake on the part of OPEC, an attempt to appeal to the wishful thinking of Western policy makers (e.g., the sublime promises coming out of Cowboyistan and Planet Green) and to lure them into believing they have OPEC by the short hairs?

    If so, OPEC has plenty of takers, such as Anatole Kaletsky:

    Assuming that a combination of shale development, environmental pressure, and advances in clean energy keep the OPEC cartel paralyzed, oil will now trade like any other commodity in a normal competitive market, as it did from 1986 to 2005. As investors appreciate this new reality, they will focus on a basic principle of economics: “marginal cost pricing.”

    In a normal competitive market, prices will be set by the cost of producing an extra barrel from the cheapest oilfields with spare capacity. This means that all the reserves in Saudi Arabia, Iran, Iraq, Russia, and Central Asia would have to be fully developed and exhausted before anyone even bothered exploring under the Arctic ice cap or deep in the Gulf of Mexico or hundreds of miles off the Brazilian coast….

    [W]ith OPEC on the ropes, the broad principle applies: ExxonMobil, Shell, and BP can no longer hope to compete with Saudi, Iranian, or Russian companies, which now have exclusive access to reserves that can be extracted with nothing more sophisticated than nineteenth-century “nodding donkeys.”….

    For Western oil companies, the rational strategy will be to stop oil exploration and seek profits by providing equipment, geological knowhow, and new technologies such as hydraulic fracturing (“fracking”) to oil-producing countries….

    There are two reasons why this has not happened – yet. Oil company managements still believe, with quasi-religious fervor, in perpetually rising demand and prices. So they prefer to waste money seeking new reserves instead of maximizing shareholders’ cash payouts. And they contemptuously dismiss the only other plausible strategy: an investment shift from oil exploration to new energy technologies that will eventually replace fossil fuels.

    Redirecting just half the $50 billion that oil companies are likely to spend this year on exploring for new reserves would more than double the $10 billion for clean-energy research announced this month by 20 governments at the Paris climate-change conference. The financial returns from such investment would almost certainly be far higher than from oil exploration….

    As long as OPEC’s output restrictions and expansion of cheap Middle Eastern oilfields sheltered Western oil companies from marginal-cost pricing, such complacency was understandable. But the Saudis and other OPEC governments now seem to recognize that output restrictions merely cede market share to American frackers and other higher-cost producers, while environmental pressures and advances in clean energy transform much of their oil into a worthless “stranded asset” that can never be used or sold….

    OPEC seems finally to have absorbed this message and realized that the Oil Age is ending. Western oil companies need to wake up to the same reality, stop exploring, and either innovate or liquidate.

    https://www.project-syndicate.org/commentary/marginal-pricing-end-of-western-oil-producers-by-anatole-kaletsky-2015-12

    • Quoting Anatole Kaletsky:

      In a normal competitive market, prices will be set by the cost of producing an extra barrel from the cheapest oilfields with spare capacity.

      No, that is simply not so. I have heard this claim made many times in the last 15 or so years. That is the claim is that: “Oil is priced on the margin.” That is, as Kaletsky believes, the price of oil is set by the cost of producing the highest price barrel. And every time that is proposed, it gets shot down by people a lot smarter than me.

      If the cost of producing that extra barrel is, say $80 a barrel, but only 80 million barrels can possibly be produced and the world could use 90 million barrels, then the price will rise to a lot higher than $80 a barrel.

      Oil, just like everything else in the world, is priced by supply and demand and not what it costs to produce the highest priced barrel to produce.

      Note: There are a few exceptions to the supply an demand rule. Rationing for example. Or price controls… or if you can corner the market on any one product like a life saving drug. Or another example: Congress says Medicare is not allowed open bidding for drugs but must pay the price that big Pharma asks. Big Pharma bought your congressman and demanded that the “no bid” clause be wrote into the bill. They did as they were told by the money that bought them their election.

      The Veterans Administration is allowed to bid for the lowest price on drugs and as a result they get their drugs at a far cheaper price than does Medicare.

      • oldfarmermac says:

        Hi Ron, and from one old sinner and heretic to another, lol, Merry Christmas, it’s the thought that counts.

        “If the cost of producing that extra barrel is, say $80 a barrel, but only 80 million barrels can possibly be produced and the world could use 90 million barrels, then the price will rise to a lot higher than $80 a barrel. ”

        This would be true in the SHORT TERM, and maybe out into the medium term.

        But I maintain that if eighty million barrels can be produced for eighty bucks, a few more million barrels can be produced at a HIGHER PRICE, although there would be a significant time lag involved.

        One thing is FOR SURE. MORE money can bring on more production, if if enough time is allowed and enough money is spent, at least in the oil industry, in the medium time frame.

        Maybe at a hundred twenty five bucks, ninety million barrels would be easily possible.

        But if the economy cannot support the one twenty five price, then less will be sold, and in the LAST analysis, it can be maintained that the cost of the marginal barrel DOES determine the price- allowing for time lags of course.

        Such arguments are very much like the contest between checker players when both players are down to two kings each. Winning is damned near impossible, if the opponent knows the game.

        You win in the short to near term, because it takes a good while to ramp up production. I think I win in the longer term, allowing the industry time to spend my hypothetical additional capex.

        • Money isn’t purchasing power, Mac.

          The drillers can charge what they like but that does not give their customers the means to meet the price.

          Okay … you can change the numbers. $25 becomes $80 … overnight. The number changes and nothing else. The purchasing power of $80 is the same as what $25 used to be.

          The driller uses the same inflated dollars as the customer. He must pay no more $79 to extract the same barrel of oil and still make a profit.

          … Oops, he’s not making a profit. He hasn’t for years. Only if the customer pays $80 for $25 oil does this plan work. It isn’t just the US: all the other businesses in the country and around the world would use the same inflated dollar. Hard to see how that would work: the economy would crash due to the effect of 320% hyperinflation.

          It could be worse. The price change would be proportionate, the drillers costs would increase the same proportion as the final sales price. If the driller pays $79 to wring each barrel out of hard rock NOW he would need over $250 to extract each barrel in the higher cost future … the same barrels he might hope to sell for $80 … a $170/barrel loss on each and every barrel.

          If the price rose slowly over a period of year, it would not have the desired marginal effect on extraction. Just like lower prices are not immediately reducing extractive output, today.

          Let us now consider, the numbers aren’t changed for their own sake but instead reflect real purchasing power … every customer will earn 320% more in order to pay the much higher real price for petroleum! That’s great: Joe Stiglitz and Matt Bruening would approve. How will it happen? Driller purchasing power and the finance industry that props it up would lose purchasing power equal to that gained by workers!

          In the end, the workers would be fooled as their purchasing power would be reduced or eliminated. This is because driller failures would mean less ‘goods’ to purchase. Even if their purchasing power increases … it declines. Do you see the feedback loop?

          Most people can’t, that’s why they believe in electric cars and other bits of ‘technology’, unicorns and fairies.

          Keep in mind, wage trends (all wages being borrowed from the employers’ customers and their bosses’ customers, etc.) are pointing to outright deflation. Eventually, employees will be outright slaves like those shrimp peelers in Thailand. They aren’t going to afford anything, much less $80- or $50- or even $20 fuel.

          • oldfarmermac says:

            Hi Steve,
            I do not dispute most of what you have said, but you have NOT addressed the original question. You are engaging in pounding the table, rather than pounding the facts or pounding the law, as my good fishing buddy and attorney puts it.

            It is patently ridiculous to claim or assume that the cost of production of all the oil produced is the SAME. A NEW barrel in a great spot in Iraq, if the country settles down, might cost twenty dollars, all told , to produce. A NEW barrel from someplace up in Canada, tar sands oil, might cost seventy or eighty, a new field in the North Sea might need a price well over a hundred to justify production.

            Various producers all over the world will have various costs, most likely none being less than twenty to thirty bucks for new production. No new oil will be produced at over a hundred ( for now) except if management is willing to GAMBLE the price will be over a hundred by the time production starts, or there are major cost overruns.

            Some oil will always be produced at a loss, because once you have sunk enough money into the new field, finishing it, rather than abandoning it, will be a better decision.MISTAKES WILL BE MADE.

            I have said NOTHING whatsoever about purchasing power, except to say only so much oil will sell at any given price, according to what the economy can afford.

            HOW MUCH or HOW LITTLE oil SELLS , at WHAT PRICE, is utterly irrelevant to the question as to whether the price of the marginal barrel determines production.

            Such arguments are always somewhat circular in nature, but if oil stays at a given price for any substantial period of time, then producers who can produce for less, will produce, and make a profit.

            Those who cannot produce at that given price will eventually give it up, but only after holding on for a while hoping prices will go up.

            Somewhere along there, in the production cost continuum, that PRODUCTION COST is the SAME as the prevailing price, allowing for time lags etc.

            THAT cost, unless I am now totally senile, which is a possibility, is by DEFINITION the cost of the MARGINAL BARREL.

            EVERYTHING ELSE is noise. Rationing is noise, subsidies are noise. Politics in general is noise,because what is put in, or taken out, of production via politics is PAID FOR, by some means or another.

            If for instance a national oil company produces at a loss, then the loss should properly be attributed to the government, which instructs it to do so. There can be good reasons, such as keeping men employed, or harming enemies, but these are still real costs, paid for by SOMEBODY. In the last analysis , the citizens of the country pay for such policies.

            A new TESLA does NOT cost ten grand less because you can get tax credits. It still costs the goddamned same, you are just getting a gift from the government when you get the tax credit. You can’t keep it, you MUST surrender it to TESLA , or you DON’T get the car. OR the credit. TESLA gets PAID THE SAME , tax credit or none. It makes no difference to TESLA.

            I have never even HEARD of an economist who is taken seriously who does not believe in marginal costs determining production level in a competitive industry-Allowing for subsidies, price wars, business cycles, etc, all of which introduce enormous amounts of NOISE.

            In industries where producers have PRICING POWER, production costs may have very little to do with selling prices and volume.

            Diamonds are the classic example. But even so any producer more or less has to accept the price the diamond cartel offers for his production, since the cartel pretty much controls the marketing of diamonds.

            This means diamonds too have a marginal production cost, which determines the upper limit the miner can spend to work a given deposit, per diamond or per carat or whatever. If his costs are less, he produces, if higher, he holds off.

            The cost of production of diamonds will vary from place to place, just like anything else produced by making holes in the ground. .

            There might be plenty found in one spot, hardly any a mile away, then plenty again another mile away.

            It is INSANE to assume there is a lack of competition in the world wide oil industry, especially at this time, when it is in the throes of a cutthroat price war, with blood everywhere, and a lot of producers already in bankruptcy and plenty more headed there soon.

            OF COURSE some deep pocketed producers will deliberately run at a loss, hoping to force out some competition, and maybe buy up some assets at fire sale prices, and make up their losses with plenty to spare, when prices go up again. THAT is noise too.

            • The cost of extraction is irrelevant to the end-users whose only concern is the availability of funds.

              The ‘utility’ of fuel or other resource being offered is irrelevant to the miner/driller whose concern is likewise the availability of funds.

              Both driller and customer are competing for the same funds. If driller needs more funds due to geology or some other reason the customer will be deprived of them. If the proportion of funds allocated to drillers and customers remains unchanged, the driller is effectively denied funds and there will be a shortage due to depletion. When the greater proportion of funds is allocated toward drillers the customers must do without … as they must right now. The ongoing decline in fuel price speaks for itself.

              Nobody in the fuel industry has purposefully set a low price. If drillers could gain more $$$ they would. Instead they are hunting for a market which is increasingly deprived of credit … deprived by the drillers themselves answering their own credit needs. When the regime breaks down and credit is (ultimately) gone what will be left to bid is use that offers an actual economic return.

              That means agriculture and some emergency use. Everything else is discretionary/recreational.

              That means the bid is likely to be a negative number … it’s also where the fuel price will ultimately sink to, a negative number. Oops! Bye, there goes the entire oil industry! That is what is underway right under everyone’s nose!

              We desperately need to invent a better use for fuel besides to waste it for fun. Looks like we will run out of fuel before we can come up with something.

              🙂

              • Fred Magyar says:

                Oops! Bye, there goes the entire oil industry! That is what is underway right under everyone’s nose!

                True dat!

                But when anyone, tilts their head forward, to see what is under their nose, it is no longer under their nose so they can’t see it 🙂

                • wimbi says:

                  — Can’t see it” modify to “can’t see what’s NOW under their nose.

                  Fred, I always admire your logic, so similar to mine. Does that earn me promotion to honorary Hungarian?

                  So, having maybe got your attention, I get to the point. Can any of you Hungarians explain what I, a mere saxon deep in the dark, wet hills, cannot fathom.

                  1) no choice, we gotta get off ff’s real quick
                  2) that given, we gotta leave those megabarrels we already know about right where they are.
                  3) so, whatthehell are we doing looking frantically and expensively for yet more of them that we gotta leave in the ground?
                  4) seems to simple me cheaper by far to not bother with finding them, and leave them in the ground, than find them at great cost and THEN leave them in the ground.

                  Yes? No? I seek enlightenment; for some reason, it’s abnormally dark around here, even for this time of year.

                  • Fred Magyar says:

                    “The Martians” was the name of a group of prominent scientists (mostly, but not exclusively physicists and mathematicians) who emigrated from Hungary to the United States in the early half of the 20th century.[1] They included, among others, Theodore von Kármán, John von Neumann, Paul Halmos, Eugene Wigner, Edward Teller, George Pólya, and Paul Erdős. They received the name from a fellow Martian Leó Szilárd, who jokingly suggested that Hungary was a front for aliens from Mars. (This is analogous to Enrico Fermi’s answer to the question whether extraterrestrial beings exist: “Of course, they are already here among us: they just call themselves Hungarians.”) Source Wikipedia

                    We welcome you to join us on our home world, wimbi! 🙂

                    Alas, as for logic and critical thinking skills, very few humans possess those skills… perhaps a few Richard Feynman’s here and there or a Daniel Kahneman or two, an E O Wilson and a few others…

                  • wimbi says:

                    Yet another one was my favorite prof, Egon Orowan, who gave us wonderful insights on how science really works, from anecdotes from the early part of last century before Hitler bestowed all of those guys on USA & GB.

                    When asked by a bolder than usual student why his lectures contained near none of the putative subject matter, he replied:

                    “I have written what I know about that in the book, you have read it, so now we are free to talk about important things.”

            • Dennis Coyne says:

              Hi Steve from VA,

              The amount of funds available are not fixed, they grow as the economy grows. So your competition for funds explanation does not really hold in practice. In the long run the price of a product will tend to be near the marginal cost of the most expensive producer. If there is not enough demand for the product at that price, the price falls and the most expensive producer goes out of business.

              Available funds have nothing to do with this story. That is all about money and banking and the central bank setting interest rates that allow the economy to operate close to full capacity (low unemployment rates).

              One could argue that the economy will tend to underutilize productive capacity especially when governments cannot implement expansionary fiscal or monetary policy when needed (as in European nations that are part of the Eurozone.)

              That is indeed a problem which might eventually be recognized by Europeans. A choice needs to be made between a strong central European government under the present system or returning to individual nations with separate monetary and fiscal policies. The present arrangement will not be stable in the long run.

          • oldfarmermac says:

            Hi Steve,

            I will not dispute most of what you have said, but none of it is relevant to the question of the relationship between production, price, and marginal costs, in a competitive marketplace.

            You are pounding the table, as my good fishing buddy and attorney would put it, rather than pounding the law or the facts. That’s what you do when you don’t have a case, you try to distract the audience.

            When all is said and done, allowing for time lags, political manipulation, etc, some producers have costs low enough to sell at some given price, say seventy bucks. If their costs are higher, they eventually give up. If lower, they continue to produce.

            Some are going to have costs just a hair under the example, seventy dollars. They will produce the last marginal units,- in a truly competitive market.

            FOR SURE some producers will run at a loss for a long time, hoping to drive competitors out, maybe buy up assets at fire sale prices, etc, and make big profits later. Some may produce at a loss because their sovereign governments give them no choice in the matter, for various reasons.

            But in the end, in the last analysis, in a competitive marketplace, some producers have cost equal to the going market price. This cost by DEFINITION is the marginal unit cost. They make money if price goes up, lose money if price goes down. After a while they usually quit unless prices go up at least a little, leaving them with a slim profit margin.

            • oldfarmermac says:

              This eight seventeen comment is posted because the one above it seemed to have gone astray. Comments usually appear right away, but the earlier one did not show for me.

              • Mac, sometimes the spam filter catches your comments because of the extreme length of the comment. If you would shorten them a bit they would not get caught.

                Also a lot more of your comments would get read if they were shorter. Very few people bother to read those very long rambling comments.

                Brevity is the soul of wit.

                • Hannity@FoxNews says:

                  Mac is the Saudi of comments. Flooding the market place and fighting for his share of comments with supertankers of them sitting on the edge of his finger tips. Ready to pollute the internets until the lights go out. Just waiting for the other posters to go out of business. After he has destroyed us all, he’s going to rise the price of his comments and we will all bow to him as the God of comments. This is all part of Donald Trumps capitalist-fascist plot to make America Great Again.

                  Only Nick G can save us and our freedoms with his solar powered EV propaganda machine.

                  Now pay no attention and go shop until you drop !

                  Paid for by Amazon

        • Dennis Coyne says:

          Hi Old Farmer Mac,

          I agree.

          When people talk about marginal cost pricing, it is the cost that a high cost producer will be willing to produce a product for in the long run.

          If the price needed to balance supply and demand rises above the marginal cost of the most expensive barrel then over time more expensive resources are produced until the cost of the marginal barrel rises to the higher price.

          Ron is correct that supply and demand always determines the price. Marginal cost pricing is all about the decisions of the suppliers in maximizing profits at any given price level. many people don’t see this until intermediate level microeconomics so it is not commonly understood.

          • oldfarmermac says:

            Hi Dennis,

            And like bugs circling a light, the whole affair is circular in nature, to a large extent. What customers can and will pay determine price at the upper limit, but what determines prices the REST of the time, is the cost of production of the commodity.

            If I could truly control the supply of apples, I could get two dollars a piece for them at the farm. But we shut down the family orchard mostly because other growers , with larger operations and lower costs, ran us OUT, given that we are too old to be expanding.

            At least one orchard within a few miles will be “shut in” PERMANENTLY this year, because the trees are old and cost of producing it is now above the going wholesale price. The land is also a bit too steep for the latest generation of machinery, so it won’t be reset with new trees.

            As Shallow Sand often reminds us, you can’t just turn off the lights and lock the door and go back in a year or two, you have to spend a lot of money, meantime, and MORE THEN, in order to reopen an oil well.

            I am not surprised after learning about the costs of temporary abandonment of wells that producers are so reluctant to shut them in, preferring to gamble on prices going up.

            • Dennis Coyne says:

              Hi Old Farmer Mac,

              I agree on already producing wells.

              What I can’t figure out is why they continue to drill and complete new wells in the LTO plays at these oil prices.

              There is much I do not understand, but it seems they are hoping that prices will go up and that the other oil companies will stop completing new wells.

              Kind of a game of the last man standing, perhaps.

      • Nick G says:

        If the cost of producing that extra barrel is, say $80 a barrel, but only 80 million barrels can possibly be produced and the world could use 90 million barrels, then the price will rise to a lot higher than $80 a barrel.

        Ron,

        Read what he said carefully. He said “prices will be set by the cost of producing an extra barrel from the cheapest oilfields with spare capacity.”

        So, he’s talking about a situation where current production is below it’s short-term capacity. You’re talking about a situation where current production is above it’s short-term capacity.

      • Lightsout says:

        Hi Ron.
        There is a great deal of debate on the blog about price at the moment but all things financial post 2008 are subject to manipulation.
        Surely the only important factor from a peak point of view is the cost of extraction in energy terms when it costs one barrel to produce one barrel the cost is too high.
        Clearly oil can be drilled and extracted at huge financial loss as we now see but if credit remains available then this does not curtail production and the fed has unlited ability to create credit.

  7. AlexS says:

    Ron,,

    What they call “OPEC crude supply” is not projected actual production, but “the requirement for OPEC crude”, i.e. global demand less non-OPEC supply. OPEC NGLs and OPEC other liquids (mainly GTL).
    Actual OPEC crude production will most likely be higher (Iran, Iraq, Lybia)

    • Alex, I just quoted the barrels they said OPEC would produce. I cannot get into their heads and ascertain their reasoning for making those projections. But I sure do not agree with your scenario.

      OPEC’s long term projection most certainly does include higher production from Iran, Iraq and Libya. And I think that long term production will be far lower than they project. Just where in the hell do you think they are going to get an extra ten million barrels per day? Or even more if you are correct in that that they will produce even more than they are predicting.

      • AlexS says:

        Ron,

        This is how all OPEC forecasts, including MOMR and WOO, are structured. They never make projections for OPEC members’ production.
        Rather, they are projecting “requirement for OPEC crude” (see page 1[28] of the report).
        Similarly, the IEA is projecting the “call on OPEC crude” in its OMR and Medium-Term oil market reports.

        My personal view is that, based on spare capacity and new project schedule, OPEC could add up to 3 mb/d by 2020. However, the actual increase will be much lower, due to production decisions, low oil prices and political instability. I agree that further increase to 40 mb/d by 2040 looks very speculative.

        OPEC liquids production forecast: OPEC WOO 2015 vs. EIA AEO 2015

        • Dennis Coyne says:

          Very interesting AlexS.

          The EIA and OPEC seem to be on the same page.

          • AlexS says:

            Yes, Dennis

            All what was said about allegedly over-optimistic OPEC’s production estimates can be attributed to the EIA, IEA and most other LT energy forecasts.

        • They must be assuming a large increase in Venezuela. Rather than write a bunch about Venezuela, here’s an old post I wrote about the current problems they face

          http://21stcenturysocialcritic.blogspot.com.es/2014/10/is-venezuela-running-out-of-oil.html

          Here’s a bs set of forecasts I prepared:

          http://21stcenturysocialcritic.blogspot.com.es/p/venezuelas-oil-reserves.html

          This purely imaginary set of scenarios includes one case with regime change and a steady $160 per barrel, which allows total country production to increase from 2.1 to 8.3 mmbopd (roughly) by 2050. The increment in 2040 would be about 4 mmbopd above this year’s rate.

          Note that I’ve actually planned developments for up to 1.2 mmbopd. We had a smaller project and investment in mind, but pdvsa had shown plans for 1.2 incremental, and I needed a solid study to show them the huge amount of infrastructure they needed to consider. To scale up to the 8.3 mmbopd I simply stacked more “pseudo projects” delayed in time in lesser quality areas.

          There are significant technical issues involved in a mega project like that. I can’t really spill what I know, but it should be clear that the pace of development has a limit. To be honest, if I were consulting for the government I wouldn’t recommend a peak higher than 6 mmbopd for the whole country. And even that may be contrary to the country’s interest.

          • AlexS says:

            The EIA expects most of incremental OPEC liquids production to come from the Middle East: + almost 10mb/d between 2014 and 2040;
            North African OPEC members are expected to add 1.56 mb/d;
            West Africa: 1.16 mb/d
            and South America only 0.72 mb/d

            OPEC total liquids production forecast (mb/d)
            Source: EIA Annual Energy Outlook 2015

          • Alex, the EIA may have a better idea, but I wonder what OPEC projects for Venezuela?

            This morning I saw a message from a friend in KSA, who saw my comment about my Venezuela estimate, and passed it on to his circles. I’ll wait a few days to see if I get feedback from either Saudi or Venezuelan veterans.

  8. Glenn Stehle says:

    Ron Patterson said:

    US production is clearly declining and that decline will, far more likely than not, accelerate in 2016. The point is that OPEC projection of US crude oil production is clearly in error. It is just flat out wrong, no other way to say it.

    So why would OPEC publish something which flies in the face of factual reality, and so blatantly?

    Surely they have people on the payroll way smarter than any of us who know that what they are publishing is not true.

    Why would they make such a glaringly false claim?

    • Sarko says:

      OPEC always miss on demand/supply by 2-3 mb/d in 10 year period. For example, demand before crisis 2008/09 are overestimated by 2-3 mb/d for 2015 but after crash 2008/09 underestimated for 2 mb/d. That is pretty much because that might mean $40-50 or $80-90 price. If you don’t believe just look on OPEC site WOO from 2007 onward.
      I don’t call that they make huge failure in projection, i think that supply in future will be lower 1-2 mb/d per decade and demand higher but only marginally, max 500kb/d, per decade. But like a stated today oil is trading on 1-2 mb/d margin on supply/demand difference and that mean big difference in price.

    • Why would they make such a glaringly false claim?

      Oh good god, they do not do it intentionally. They make mistakes, not false claims. And their projections, like the projections from the EIA or the IEA, have always been off by a considerable amount. And like the EIA and the IEA, their projections have almost always been off on the high side. They always project that far more oil will be produced than actually will be produced.

      I have no explanation for this except that the people who’s job it is to do this seem to always have an optimistic bias. These people flat out do not believe in peak oil so nothing in their projections can indicate that oil will peak. How could they possibly project something they firmly believe will never happen? Well, not in their lifetimes anyway.

      • Javier says:

        The simplest explanation is that projections about anything are usually quite conservative. There are two very good reasons for that. Conservative projections are on average more probable to be right than radical projections. And if you end up being wrong, a conservative projection will never get you in trouble. Also, the people doing projections tend to use group thinking, because they don’t want to be outside of the pack and be proven wrong.

        That’s why you can never trust projections about anything from professional casters. On a changing world they are almost always missing by a wide margin.

    • oldfarmermac says:

      “Why would they make such a glaringly false claim?”

      ONE-Institutional inertia. Ya don’t contradict your boss the supervisor who wrote the LAST forecast and the one before that to any extent greater than necessary .

      TWO-The people producing the forecasts work for bosses much higher up the ladder, bosses with agendas having to do with politics and the long term fortunes of their countries and their industry. Truth is dispensed or ignored in such circumstances as suits the agenda.

      Forecasting cheap and plentiful oil for decades to come is an excellent way to delay the adoption of renewable energy, and electrified transportation, to substantial extent, at trivial expense.

      This is DAMNED GOOD for the material fortunes and physical security of the House of Saud, which dominates OPEC, and which depends on the military might and good will of the USA to ensure it’s continued existence, other than as refugees and prisoners.

      There are plenty of people in the USA who believe we are necessarily addicted to imported oil. I am one of them myself, if we assume a time frame of less than fifteen to twenty years. I don’t think we have ANY real hope of weaning ourselves off of imported oil any quicker, and maybe not much hope even after that. Circumstances will FORCE us to adapt to importing less and less ever more expensive oil as time passes imo.

      So- Even though I hardly care at all, except in the abstract, about what happens to the denizens of ” Sand Country” , I think it is in our Yankee interests to try to keep things on as even a keel as possible “over there” which means supporting our oil exporting business associates in that part of the world. I hesitate to refer to any of them as our FRIENDS. They aren’t, not really, not in my opinion, at least.

      Bottom line, forecasting cheap oil out the ying yang is imo damned good politics on the part of OPEC.

      YMMV.

    • dfens9 says:

      I find this discussion interesting and naive.

      OF COURSE they make false claims. False claims are the basis of finance, accounting, marketing, business, and politics in the whole world.

      Our world is filled with false claims. Everybody is making false claims, all of the time.

      As people who are supposedly objective thinkers and skeptics, you should recognize this. But your belief in the “goodness” and honesty of the system prevents you from understanding this.

      • But your belief in the “goodness” and honesty of the system prevents you from understanding this.

        That is absolute bullshit. As May West said, “Goodness had nothing to do with it.” You mind is just filled with the stupid idea that everybody is lying every time they open their mouth. It is the duty of all oil monitoring agencies, the EIA, IEA, OPEC, etc, to make predictions. And predictions are extremely difficult. But some people with tiny minds seem to believe that every prediction they make is part of some kind of conspiracy theory… so therefore of course they are lying, or so you think.

        No, these are just fallible people trying to do their job the best they can. But the world is full of conspiracy theory nutcases that believe everything is some kind of conspiracy and therefore everything any agency like OPEC says has to be a lie. But your belief that everyone is lying about everything prevents you from understanding this.

        • oldfarmermac says:

          Hi Ron,

          In addition to pointing out institutional inertia and political considerations, I should have added your response, which is also a good solid answer.

          Because they believe in oil. Religiously, almost.

          All the evidence in the world has no more effect than rain on a duck’s back if the person in question refuses to look at it. A duck never gets wet, no matter how hard it rains.

          😉

          • Glenn Stehle says:

            oldfarmermac said:

            Because they believe in oil. Religiously, almost.

            But the guys from the Domestic Energy Producers Alliance certainly are not guilty of making the same mistake OPEC did.

            https://www.eia.gov/conference/2015/pdf/presentations/hamm.pdf

            And you would not argue that the guys from Cowboyistan don’t have the oil religion, would you?

            There seem to be some schisms appearing within the church.

            • oldfarmermac says:

              My comment was in response to Ron Patterson’s comment, indicating I agree with his personal explanation for such bullish oil production forecasts out until 2040.

              Ron said, “I have no explanation for this except that the people who’s job it is to do this seem to always have an optimistic bias. These people flat out do not believe in peak oil so nothing in their projections can indicate that oil will peak. How could they possibly project something they firmly believe will never happen? Well, not in their lifetimes anyway.”

              I agreed, saying ” Because they believe in oil. Religiously, almost.”

              We weren’t discussing DEPA forecasts.

              I am glad to see you post stuff from DEPA, some of it is new to me, and throws some light in previously dark corners.

          • Glenn Stehle says:

            The Domestic Energy Producers Alliance says OPEC has declared war on US domestic oil producers.

            I suspect it’s a lot more complicated than that. But that’s what the word is coming out of Cowboyistan.

        • dfens9 says:

          How did I know this response was coming?

          Utterly predictable.

          You have a valuable blog, Ron, but you have a giant blind spot. You actually believe in the honesty of the system. There are many other doomers and peak oilers who understand how manipulated everything is.

          I’ll leave it at that.

          • No, I just don’t believe everyone is lying all the time.

            Really, it must be a terrible world you live in. Everyone in the oil business is lying about everything. Everyone working for OPEC, the EIA, IEA, JODY, Platts, etc. etc. are lying. The media is lying with every word they print.

            As I said, you live in an awful world.

            Some people do lie and some people do tell the truth. We know executives must put up the best front they possibly can without it being obvious they are lying. Sometimes it is obvious as in: “Tobacco does not cause cancer.” But those lies are soon found out. They don’t say that anymore.

            You must be realistic. Only if you are realistic can you even have a clue as to when people are lying and when people are telling the truth. But if you believe everyone is lying all the time then there is nothing real in this world. Don’t ever read anything or listen to the news because it is all lies. People like that should just curl up in the fetal position and wait for death because there is nothing but lies in the world.

            • oldfarmermac says:

              Dead on Ron,

              The world would screech to a halt pdq if everybody was lying most of the time, never mind ALL the time.

              Most industries can get away with bending the truth to some extent to suit their own agendas, some of the time, but the truth generally rules, and almost always comes out, eventually.

          • Arceus says:

            Commodities in general are highly manipulated imho. Naturally, Chinese buyers of copper, iron ore and other commodities have an interest in talking down the Chinese growth story. Why pay more?

            OPEC was founded largely to gain pricing control over multinational oil companies, effectively drawing a line in the sand pitting the middle east and venezuela against the West.

  9. OPEC wants us to feel fine, avoid energy saving measures or consider reducing dependency. Maybe the global warming issue comes into play in USA and Europe behavior, they want to reduce dependence but can’t say it openly?

  10. Stavros Hadjiyiannis says:

    These estimates are totally meaningless and I believe that all insiders are fully aware of this fact. In all probability, these estimates are either designed to obscure what is really going on in the global energy industry from the general public, or are just some token effort to provide some kind of forward “guidance”. I would not take them seriously at all.

    • Glenn Stehle says:

      Stavros,

      Well that’s certainly my take too.

      I’ve been hanging around old oil men and card sharks for way too long to take anything they say at face value. In my younger days, I was quite an accomplished card player myself.

      When I first graduated from college I was working for Cities Service Oil Company as a junior engineer. I was making $800 a month from Cities Service, and two to three times that in my spare time playing cards.

      Poker is a game based on information availability. We don’t ever know for sure how good or bad another player’s hand is, often until it’s too late.

      A poker player gains an advantage if he observes and understands the meaning of another player’s tell, particularly if the poker tell is unconscious and reliable. Sometimes a player may even fake a tell, hoping to induce his opponents to make poor judgments in response to the false poker tell. After all, poker is a game of deception.

      After working for Cities Service and a couple of other independent oil companies for a few years I went to work for a couple of third-generation Hunt boys. H.L. Hunt, they said, had also prided himself as being an accomplished poker player.

      One of the landmen I worked with was one of the old timers that had worked for H.L. Hunt in the early days. He told me that Dad Joiner, the promoter who drilled the discovery well for the East Texas Field, teamed up with a self-trained geologist by the name of Doc Lloyd.

      Lloyd had drawn a map which supplied the “scientific” information necessary to justify the drilling of the discovery well for the East Texas Field. The map had all the major producing oil fields at the time located on it, and Lloyd drew lines through these. The point where these lines intersected Lloyd called “the apex of the apexes.” And that’s where Joiner drilled the Daisy Bradford No. 3.

      H.L. Hunt had lease holdings to the east and south of the Daisy Bradford No. 3, but he had drilled a dry hole on his leases. However, to the west Deep Rock Oil Company was drilling a well, and Dad Joiner owned almost all the leases in between the Daisy Bradford No. 3 and the Deep Rock well. If the Deep Rock well struck oil, then there was a good chance all the leases between it and the Bradford farm contained oil beneath them.

      At that point, Hunt still didn’t know how good Joiner’s holdings were, but he set up an arrangement that would tell him before anybody else knew. He assigned one of his scouts to hang around the Deep Rock rig and get information about what was underground. As soon as he knew something he was to call Hunt.

      Hunt, his business associate Pete Lake and his attorney J.B. McEntire began a high-pressure campaign to isolate and entertain Dad Joiner. The old hustler was kept from contact with anybody outside the hotel and there was constant partying with women and booze for the old man, who, even at an advanced age, led an active life. Hunt finally received the call from his scout: The crew at the Deep Rock well had reached sand, and the scout had seen the drilling samples from the well which indicated a rich oil find. That meant that the field, however big it might be, extended westward into the major part of Joiner’s lease.

      With this information in hand, Hunt was now ready to relieve Joiner of his lease block. Hunt of course did not mention his scout’s call about the Deep Rock well, but he did remind Joiner of all the oilfields that had been flooded by water and otherwise played out soon after their discoveries. Joiner had been around long enough to know that was true, and in a few hours, he accepted Hunt’s offer.

      The old Hunt Oil landman told me Joiner had oversold his leases by several hundred percent, so it took years to clean up all the legal mess.

      In retrospect, nevertheless, the worst that can be said about the coup that Hunt pulled off against the old oil promoter was that he had conned a con man.

      Hunt called that deal “the greatest business coup” of his career. And indeed it was. It laid the foundation for an oil and gas empire which was to eventually make Hunt the richest man in the world.

      • SW says:

        A really loathsome piece of work who as you seem to be pointing out has been the template for several generations of ‘self made men’.

  11. So I think this is a brilliant report.
    Anyone in OECD holding out for higher prices makes decisions based on this then even the 3 million barrels of additional supply, which is 600,000 barrels per day per year, will not happen.
    Even if that does, at $55 demand should grow in excess of 1 million barrels per day per year.
    The best part about this is if SA has the biggest hand in getting this report done, and I have no reason to believe otherwise, all OPEC members should be ready to cooperate with cuts.
    At $55 half the OPEC members get bankrupt in 5 years, including Saudi Arabia.

    I think once December 31st passes OPEC might cut. Why December 31st? That is the price the auditors will use to assess the value of the oil in the ground for US shale companies. A low price then assures they will not get any credit increases till December 2016 even if the price rebounds.
    If they are going to cut, it will be after December 31st.

    • likbez says:

      “The best part about this is if SA has the biggest hand in getting this report done, and I have no reason to believe otherwise, all OPEC members should be ready to cooperate with cuts.”

      Saudi Arabia is a vassal state and such decisions should be approved in Washington. This is approximately $500 billion stimulus for the US economy in two years (may be slightly less) and low oil prices are probably the best chance to avoid sliding into recession in 2017 and for FED to prepare for it by raising interest rates in 2016.

      That suggests that they will be kept low as long as possible. If statistics needs to be manipulated to achieve that so be it.

      Also low oil prices keep Russia and Iran on the ropes using lifting sanction as a Trojan horse, which is an explicit goal of Obama and neocons, who surround him:

      https://www.washingtonpost.com/business/economy/as-crude-oil-prices-plunge-so-do-oil-exporters-revenue-hopes/2015/12/23/ed552372-a900-11e5-8058-480b572b4aae_story.html?hpid=hp_hp-top-table-main_oil-910pm:homepage/story

      === quote ===

      At a time of tension for U.S. international relations, cheap oil has dovetailed with some of the Obama administration’s foreign policy goals: pressuring Russian President Vladimir Putin, undermining the popularity of Venezuelan President Nicolás Maduro and tempering the prospects for Iranian oil revenue. At the same time, it is pouring cash into the hands of consumers, boosting tepid economic recoveries in Europe, Japan and the United States.

      “Cheap oil hurts revenues for some of our foes and helps some of our friends. The Europeans, South Koreans and Japanese – they’re all winners,” said Robert McNally, director for energy in President George W. Bush’s National Security Council and now head of the Rapidan Group, a consulting firm. “It’s not good for Russia, that’s for sure, and it’s not good for Iran.”

      … … …

      In Iran, cheap oil is forcing the government to ratchet down expectations.
      The much-anticipated lifting of sanctions as a result of the deal to limit Iran’s nuclear program is expected to result in an additional half-million barrels a day of oil exports by the middle of 2016.
      But at current prices, Iran’s income from those sales will still fall short of revenue earned from constrained oil exports a year ago.

      Moreover, low prices are making it difficult for Iran to persuade international oil companies to develop Iran’s long-neglected oil and gas fields, which have been off limits since sanctions were broadened in 2012.

      “Should Iran come out of sanctions, they will face a very different market than the one they had left in 2012,” Amos Hochstein, the State Department’s special envoy and coordinator for international energy affairs, said in an interview. “They were forced to recede in a world of over $100 oil, and sanctions will be lifted at $36 oil. They will have to work harder to convince companies to come in and take the risk for supporting their energy infrastructure and their energy production.”
      Meanwhile, in Russia, low oil prices have compounded damage done by U.S. and European sanctions that were designed to target Russia’s energy and financial sectors. And when Iran increases output, its grade of crude oil will most likely go to Europe, where it will compete directly with Russia’s Urals oil, McNally said.

      • Ha….the conspiracy theory ideas.
        That 500 Billion of stimulus is really $250 billion as the shale “miracle” dies in house.
        And what does the $250 Billion cost?
        Well SA is bleeding $10 Billion a month at current prices. So over 2 years that is $250 Billion. So that is net zero impact.
        But wait….SA economy is 1/20th that of the US.
        So this $250 Billion is 20 times worse for them as it is good for the US. Seems a very painful way to give everyone 50 cents more off a gallon.
        Yeah…don’t buy those theories for a second.

        • likbez says:

          True, thanks. I was wrong as for “stimulus”. It is a mixed blessing. Also this theory presupposes really poker players level of intelligence in Obama administration. So it must be wrong.

          But still stand by my point that KAS is vassal state and as such can’t make a major decisions with explicit or implicit Washington’s approval.

          BTW the term “conspiracy theorist” was invented by CIA for those who accuse them in complicity in JFK murder, so I am in a good company ;-).

          From Wikipedia: “the U.S. political elite ‘silences and stigmatizes’ legitimate questions” by unfairly labeling such views as conspiracy theories.[19]

          === quote ===
          Blaskiewicz criticizes recent claims that the phrase “conspiracy theory” was invented and deployed by the CIA in the 1960s “to discredit those who dared to question the Warren Commission” and expose covert activities. Blaskiewicz notes that such claims have existed “since at least 1997”, but due to having recently been promoted in a book by Florida State University professor Lance deHaven-Smith, “conspiracy theorists have begun citing this work as an authority”.[18] Speaking in support of World Trade Center controlled demolition conspiracy theories, deHaven-Smith claimed that “the U.S. political elite ‘silences and stigmatizes’ legitimate questions” by unfairly labeling such views as conspiracy theories.[19]

  12. Sez OPEC, the peak is out at least 25 years.

    No worries, America! You’ve gotten the good news, run down to your local dealer and buy a new car!

    OPEC sees a 2+ billion car fleet by 2040 with the vast bulk of these being petroleum-powered. Sadly for the prognosticators, OPEC does not make or sell cars. It can only guess. As for the source of OPEC’s giddy fuel forecast they started with the car sales and reverse-engineered their prediction from there.

    Right now, ‘iffy’ car loans in the US to unqualified borrowers total over $1 trillion. These and student loans are components of $12+ trillion in consumer lending. Talk about borrowing for nothing! These same consumers are not borrowing enough to support a bid for crude, or to retire the drillers’ loans. That the consumers’ borrowing efforts are inadequate is reflected in the price.

    People can sleep in their cars …

    http://www.wsj.com/articles/total-u-s-household-debt-rises-to-12-1-trillion-in-third-quarter-1447948826

    There is no doubt that collapse of consumption side borrowing will ultimate ruin the extraction side. This dynamic is taking place right now, under everyone’s nose. The more the drillers borrow the further underwater they will find themselves as their customers cannot hope to keep up. The drillers can take off the well-head chokes and pump as much as they can — to make up their losses with volume — but only for a little while.

    At some point credit will be fatally impaired and the car sales will evaporate.

    • Ves says:

      Steve,
      I agree with your post about market dynamics between customers having to pay through their purchasing power in order to retire loans created by financial industry for oil companies. But there are a few things that make this oil crash little bit “strange” to say at least:

      1) OPEC (and mainly Saudis + GCC) did actually something by not doing anything and that is refusing to cut their production. Well that is “man made” decision as Oman oil minister said and not decision by invisible hand of market. I interpret this mainly as political decision and not economical.

      2) Second. Wall Street was pretty much shocked if not pissed by that Saudi decision. I interpret that to be political reaction as well.

      3) There is no worldwide collapse of demand that justify 65-70% fall of the oil price. I am sorry but Wall Street is creating ninja loans for cars, student loans, mortgages from the thin air with the same speed in the US. I would say that is political decision as well. Worldwide collapse is not happening as of now either that would justify 65-70% drop of price. Contraction is happening in Europe but very very gradually except in some marginal countries like Greece, and war torn countries in ME and Africa. But these marginal countries did not even have any big consumption to begin with.

      4) Shale oil producer based on their balance sheet were bankrupt from Day 1. Why LTO even got the loans to begin with? That is also political decision and not an economic. Why are we waiting even a year after low prices for any major mergers, buyouts or bankruptcies? I am sorry but 100% of LTO are bankrupt so why Wall Street is extending and pretending and keeping them on a life support? Well it is again political decision.

      So yes there are some market dynamics around this oil crash but there are a lot of political dynamics as well.

      • likbez says:

        Ves,

        Thanks for the post. I agree with your reasoning.

        To me too such a dramatic drop of oil prices looks like an engineered event, and is not only the result of supply and demand discrepancies. I think coming online way too many projects served a role, but not a decisive role. There was a political will to achieve that result.

        One factor that might be in play ( it is NOT 100% reliable info) is that Saudis appropriated all or large part of Iran quota during sanctions period.

        So on July 14, 2014, when agreement about lifting sanctions was reached, Iran asked to Saudis to compensate them for all this period. Saudis refused and started all this fun with declarations that they will defend their market share by all means possible.

        Obama was surprisingly strongly “pro-deal”: On Tuesday Obama promised to use his veto on any domestic attempts to undermine the deal. “I am confident that this deal will meet the national security needs of the United States and our allies, so I will veto any legislation that prevents the successful implementation of this deal,” he said.”

        Subsequently “sell as much as you can” regime for all OPEC members was instituted during the last OPEC meeting — no countries quotas anymore. Which, in a way, is the dissolution of OPEC.

        So this “conspiracy theory” presupposes that this was the way Saudis reacted to lifting Iran sanctions, which threatened their share of oil market and also empowered their bitter regional enemy due to high oil prices. And they probably were angry as hell about the US administration duplicity — betrayal of the most reliable ally in the region, after the same trick with Mubarak.

        Also it might well be that the agreement to lift sanctions from Iran was explicitly designed as a perfect Trojan horse for dropping oil prices to ease pressure from G7 economies which were in “secular stagnation” state. With Europe suffering from the cut from Russian market. In this case this was a real masterpiece of “divide and conquer” strategy.

        • Ves says:

          Thanks likbez.

          I don’t pay too much attention to the price because the price is just the consequence of what buyers and sellers agree on. So there is no “engineering” in the classic sense of how we interpret in the real life.
          What bothers me is the amount of new and unprofitable shale oil that come to the market in the relatively short period of time. Well that is political engineering.

          I thought for a while that this is all classic bubble of greed but then that did not make sense either. We know that bankers like bubbles because they always make money on swings, either going up or down. And that is ok with me; I accept that is how things work on this planet. But they could make bubbles with tulips and make money too? It has been done before. Oil is little bit different. You don’t piss oil on these swings when you are not making any money even on upswing.

          So it is kind a troubling to see what is really going on. It looks to me that some breakdown of communication happened between major oil producers and major bankers. But time will tell.

      • Heinrich Leopold says:

        Ves,

        In my view, the role of shale is to stabilize the US dollar through a much reduced current account and trade balance. The trade balance of industrial supplies (see below chart) improved by around USD 15 bn per month or close to USD 200 bn per year over the last years. The lower oil price has improved also China’s trade balance by around USD 200 bn per year giving China more power to buy treasuries. This has very much underpinned the strength of the USD. However, on the other side of the ledger there are increasingly high costs from bond and equity losses of shale companies. Who will pay for this ? The current loss is paid by existing investors, yet who will invest in future drilling? It looks like Big Oil is not willing or able to invest more. At least this is what the bond market is telling me. In contrast to housing, which needs little maintenance, oil drilling needs constantly fresh cash, which makes also the FED an unlikely investor.

        • Glenn Stehle says:

          Heinrich Leopold said:

          …China’s trade balance by around USD 200 bn per year giving China more power to buy treasuries.

          And on the last thread you posted a chart which shows that the US Total Production Index has slipped into negative territory.

          http://peakoilbarrel.com/all-roads-lead-to-peak-oil/comment-page-1/#comment-552370

          And yet, in the face of this, Janet Yellen is raising interest rates.

          One of the biggest beneficiaries of the higher interest rates will be foreign banks:

          Big Winners as Fed Raises Rates: Foreign Banks

          Some of the biggest beneficiaries of the Federal Reserve’s recent interest-rate increase will be foreign banks.

          Units of foreign banks this year received nearly half the roughly $6.25 billion in interest the Fed paid banks on the money, called reserves, they park with the Fed, the central bank’s data show.

          The Fed’s interest payments to banks are likely to roughly double next year because in mid-December it raised the rate it pays on reserves to 0.50% from 0.25%. The amounts could rise even more in coming years if the central bank continues lifting the rate, called the interest on excess reserves rate or IOER.

          Foreign banks receive a disproportionate share of the interest payments because they own an outsize share of total reserves….

          For the week ended Dec. 2, foreign firms had parked closer to $1.2 trillion at the Fed, or 47% of total reserves.

          http://www.wsj.com/articles/big-winners-as-fed-raises-rates-foreign-banks-1450909844

          And what about the trillions of U.S. Treasuries that countries like China and Japan own? Will not the U.S have to pay higher interest on those?

          Shouldn’t one expect that the higher interest rates will make for a more expensive dollar, which will exacerbate the trade deficit on goods even more?

          It seems like none of this bodes well for the US’s current account.

          So how does one make sense of all this?

        • Ves says:

          Heinrich,
          I think your view of the role of shale in the big picture has a merit. I look very much in the same way the recent raise of the interest rate. Keep the $US propped up as a last defense at least for the ones who don’t have a debt. And we know very well it is not majority of us who don’t have a debt. Extra money for debt servicing due to the rates rising will not come from the Fed pocket. Austerity is coming.

      • The only thing about this current crash is that peak oilers did not predict it.

        Shortages are supposed to make the price go higher, right? Those who are left without petroleum supply are supposed to bid ever-greater dollar amounts for the diminished amounts 0f fuel that are available at any given time. This bidding pushes the price higher = supply and demand.

        Afterward, the higher price (of the marginal barrel) X multiplier effect stimulates ‘production’ across the industry, increasing output which then causes the price to decline.

        This presupposes there is a static money supply, a hoard of funds is waiting on the sidelines in the hands of customers, waiting for a trigger event that causes the money to be deployed. When the event takes place the funds are removed from the hoard — dissaved — and offered on the market at auction. In this way customers disgorge their funds to the drillers while customers gain (what remains) of the fuel.

        If the static supply model works, the funds ultimately wind up in the hands of drillers. The customers would be broke because their savings hoard is gone.

        The dynamic model has a ‘just in time’ money supply; credit is offered from banks (out of thin air). Funds are continually lent to drillers and their customers (provided they are credit-worthy). When the drillers get their proportion of funds — they are bankrupt from Day 1, remember — the customers’ proportion is reduced. Should the customers gain more credit, the drillers’ proportion is reduced. At any given instant there is a finite amount of credit; what matters is the proportion allocated between drillers and their customers. Right now the drillers have the greatest claim against credit and they are gaining the bulk of it: they are firms, they are run by tycoons, they are large(r) enterprises possessed of collateral. However, when financiers extend credit to the drillers (and themselves at the same time) they take on enormous risks. Consequently, both industry and their creditors are continually subsidized by central banks. The consequence of the lending trend is the shift of borrowing capacity away from customers toward the drillers and the finance industry. Every dollar of industry support comes from the same people the industry utterly relies upon to retire its own (the industry’s) debts!

        Oil price crash is a consequence of QE, ZIRP, NIRP and other ‘stimulus’ on the customer. It isn’t just the industry that is bankrupt, it is the industry’s customers. Only, it isn’t the customers savings that have been depleted, it is their access to credit. They have been rendered non-creditworthy.

        The oil price decline since summer of 2014 by itself indicates a worldwide collapse of demand … by itself. It isn’t just oil. Copper, iron ore, coal, agricultural goods, shipping/trucking rates, retail, high-yield bonds … all these other things have crashed/are crashing. A claim is made that the current crash is Saudi Arabia’s or Russia’s fault. Russia does not control the copper market, Saudi Arabia has no iron ore exports. If there was a political decision in the US to cut the funds to the energy industry there would be a discussion about it. No politician — Obama, Congress — would take such a risky step, to destroy their own country’s oil industry without a broad consensus which would take years to achieve if such a thing could be possible.

        What is underway is unraveling of the credit market. Imagine the price of a house without credit (mortgage). There is some ‘shelter worth’ to a house, maybe a few thousand dollars. The rest of the price of a house is the ‘mortgage worth’. Shift that concept to other economic sectors. A part of the price of fuel and all that is needed to use it is ‘credit worth’. Strip away the credit and what remains is the actual economic return on the use of fuel. Driving a car cannot pay for it unless the car is a farm tractor, a fire truck or a delivery- or transit vehicle. The ‘convenience worth’ or ‘status worth’ of a car is zero. Because of unaccounted costs, the actual return on the use of fuel is a negative number. The problems the car is intended to solve are made up, imaginary and completely serving of a handful of tycoons who own auto factories or the hedge funds that own auto- construction- military- insurance- real estate company shares. What pays for the car is debt … in almost unimaginable amounts. We’ve been borrowing hard for over a hundred years and there is no way to repay the debt … in 2015 we are reaching the limits of what we can service by way of borrowing. All we can think to do is strip what remains or our resource capital and dump it onto markets and pray for a miracle.

        The reason peak oilers didn’t predict the price crash is because they tend to obsess about ‘production’ or extraction output. What matters is consumption. All of our problems, economic AND political, emerge from the consumption side, they are at the end of your driveway. After hundreds of years, the only thing we have figured out to do with our precious, non-renewable resource capital is to burn it up for nothing. We’ve squandered a trillion-plus barrels of the best energy source on the planet an we have nothing to show for it … besides some junk cars and smog.

        • The only thing about this current crash is that peak oilers did not predict it.

          Nobody predicted it! Cornucopians did not predict it either. So why do you single out peak oilers for not being oracles?

        • Javier says:

          The oil price decline since summer of 2014 by itself indicates a worldwide collapse of demand … by itself.

          No so fast, Steve. Demand has been growing since 3Q2009. I can see a slowing in demand growth, but not a worldwide collapse of demand

          • Fred Magyar says:

            Well, when I look at that chart I see growth until 2010 then a collapse in the growth rate followed by an anemic growth rate more like an undulating plateau. However in a world where growth is the ultimate goal and where supposedly the Chinese alone are selling millions of cars and their economy was supposed to be growing by 9% a year you would expect the cheap price of oil to really shoot global demand off the charts. So even though technically there is still some marginal growth in demand for all practical purposes it looks, walks and quacks like a collapse in demand.

            • Javier says:

              Fred, I know you tend to use your own definitions which makes it very hard to argue as you seem to be talking about something completely different that has no relation with the real world.

              Now an annual growth of 1% is a collapse.
              You are outdoing yourself.

              • Caelan MacIntyre says:

                “Fred, …you tend to use your own definitions… an annual growth of 1% is a collapse.” ~ Javier

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

                “Where did you get that definition that you have in quotes?” ~ Caelan MacIntyre

                “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?” ~ Caelan MacIntyre

                “English is not my first language…” ~ Javier

                ‘u^

              • Fred Magyar says:

                I know English isn’t you first language but this is what I wrote/said.

                “So even though technically there is still some marginal growth in demand, for all practical purposes it looks, walks and quacks like a collapse in demand.

                Perhaps you need to work on your reading comprehension skills a little, eh? If you prefer I can write in Spanish!

                • Synapsid says:

                  Fred M,

                  Portuguese, if not English then I would prefer Portuguese.

                • Javier says:

                  An increase is never a decrease, not matter what language.

                  • oldfarmermac says:

                    In the language of politicians and businessmen, and partisans of many sorts, an increase can be a decrease.

                    Many impossible things can happen before breakfast if you work hard at believing in them. ( paraphrased from Alice in Wonderland. IIRC, the queen said she often managed six before breakfast. )

                  • Synapsid says:

                    OFM,

                    It’s from Through the Looking Glass. The White Queen says that when she was young she could remember six impossible things before breakfast.

                    These things are important–got to get them correct.

                  • Fred Magyar says:

                    Think of it as a dead battery that doesn’t hold a full charge. If you put it on a charger the voltage increases a little but but the battery still doesn’t have enough power to crank the engine. So even though the charge increases, the battery is for all practical purposes dead. So to argue that the voltage has increased, is true! And you are correct. But it is a pointless argument in any language…

                  • Glenn Stehle says:

                    Javier,

                    Anybody with two working brain cells can look at the empirical data and see that global oil demand has not collapsed. Hell, it hasn’t even decreased.

                    But you know how it is dealing with the Ministry of Truth:

                    INCREASE IS DECREASE
                    BAU IS COLLAPSE
                    WAR IS PEACE
                    FREEDOM IS SLAVERY
                    IGNORANCE IS STRENGTH

                  • Glenn Stehle says:

                    Javier,

                    Speaking more technically, the psychological strategy being used by Fred Magyar is what is known as “reverse blocking.”

                    Here’s how the psychologist Andrew M. Lobaczewski explains it in Political Ponerology:

                    Reversive blockade: Emphatically insisting upon something which is the opposite of the truth blocks the average person’s mind from perceiving the truth. In accordance with the dictates of healthy common sense, he starts searching for meaning in the “golden mean” between the truth and its opposite, winding up with some satisfactory counterfeit. People who think like this do not realize that this effect is precisely the intent of the person who subjects them to this method.

                  • Fred Magyar says:

                    Anybody with two working brain cells can look at the empirical data and see that global oil demand has not collapsed. Hell, it hasn’t even decreased.

                    I never said growth in demand has completely stopped what I said was that compared to what should have been happening if things were ‘NORMAL’ it has been significantly reduced from what was expected. But you love putting words in other people’s mouths and twisting their words to suit you agenda.

                    Steve Kopits has explained what is happening quite well.

                    https://goo.gl/R4vWwt

                    Reversive blockade: Emphatically insisting upon something which is the opposite of the truth blocks the average person’s mind from perceiving the truth. In accordance with the dictates of healthy common sense, he starts searching for meaning in the “golden mean” between the truth and its opposite, winding up with some satisfactory counterfeit. People who think like this do not realize that this effect is precisely the intent of the person who subjects them to this method.

                    LOL! Pot calling kettle black? That sure as heck sounds like an exact description of you.

                  • Glenn Stehle says:

                    Fred Magyar,

                    Well gosh, Fred, let’s recap so people can make up their own minds whether you agreed with steve from virginia’s claim that global oil demand has collapsed:

                    steve from virginia said: The oil price decline since summer of 2014 by itself indicates a worldwide collapse of demand … by itself.

                    Javier said: No so fast, Steve. Demand has been growing since 3Q2009. I can see a slowing in demand growth, but not a worldwide collapse of demand.

                    Fred Magyar said: So even though technically there is still some marginal growth in demand for all practical purposes it looks, walks and quacks like a collapse in demand.

                  • Javier says:

                    Fred,

                    “Steve Kopits has explained what is happening quite well.”

                    I don’t think Steven Kopits means what you think he means. He predicted a strong increase in demand a year ago, not a collapse in demand.

                    I also don’t think Steven Kopits understands what is happening that well. His prediction of a strong surge in demand did not turn out that well.

                    From his blog at Prienga on January 20, 2015:
                    Supply minus demand explained

                    This graph was his prediction. I have annotated demand data from last IEA OMR. There is a problem with the baseline not being the same for the last quarter of 2014 as it should, but we can clearly see that IEA was spot on, as was OPEC, EIA did not get it so right, but Kopits completely failed his bet on a strong surge in demand.

                    But at least Kopits and I agree that no collapse. You need a strong recession for a collapse.

                    (right click on the image if you want to see it bigger).

                  • ‘Marginal’ cuts a number of ways.

                    Consider: consumption is relatively high b/c prices are low. If prices were higher consumption would decline. Somewhere out there is a marginal customer who isn’t buying. (He’s likely to be in a country which is subject to QE … )

                    The only way for consumption to increase is for prices to decline further. This adversely affects both drillers and their lenders. The question becomes; how low do prices have to go before consumption increases enough to push prices higher again?

                    Here is the internal contradiction the petroleum industry is stumbling over: Prices have to be high for the drillers while being low for customers at the same time.

                    From the price standpoint consumption has collapsed b/c the worth of consumption today (in dollars or any other currency) is about half of what the same- or similar consumption was worth early on in 2014.

                    Schroedinger’s market …

                  • Ves says:

                    Steve,

                    ” how low do prices have to go before consumption increases enough to push prices higher again?”

                    In short term price can go lower or stay lower for longer if the rate of relentless drilling of unprofitable oil is higher than rate of consumption increases. On other hand if you stack 700-800 (pure speculative number) of unprofitable rigs worldwide as of today the price will go up eventually in a hurry.

                    “Prices have to be high for the drillers while being low for customers at the same time.”

                    I think this is what is happening: Prices have to be high only for marginal drillers to stay in business and low enough only for marginal customers in order to keep circling around in their cars. And as this Titanic of world economy goes up and down it throws out first gradually marginal drillers of the boat and signs up marginal customers in a food-stamp line.

                  • Caelan MacIntyre says:

                    “…as this Titanic of world economy goes up and down it throws out first gradually marginal drillers of the boat and signs up marginal customers in a food-stamp line.” ~ Ves

                    Cool description/metaphor, Ves.

            • AlexS says:

              In 2010, there was a cyclical rebound in global demand after a drop during the Great Recession of 2008-09.
              In 2015 demand is expected to increase by 1.8 mb/d, well above multi-year average. In 2016 demand growth is expected to slow to 1.2 mb/d, still slightly above average.

          • Anton Koffield says:

            Clearly The chart Javier posted shows a positive growth rate since 2010 through the present.

            Since 2011 the year-over-year increase in demand has averaged (eyeballing it here) ~~ 1.5%. In 2010 the demand increase spiked briefly to 4%, and probably averaged ~~2.5% that year.

            So…demand has been increasing, period.

            Now if Fred is stating that the historical, long-term rate of increase was more similar to that experienced in 2010, then his point is that people’s economic behavior is based on expectations of future tends, even more so that current numbers.

            But…demand is still increasing…and price has fallen significantly…yet the average cost of production surely is increasing…strange!

            Perhaps the World economies are so structurally unsound that they cannot tolerate a price much higher than current for long and still show official growth indicators?

            Certainly World governments pulled out all the stops to ‘revive’ the global economy after the near-miss with depression in 20087/2008. Engineered low oil prices may be a strong part of these desperate financial machinations to continue driving BAU…perhaps through an almost imperceptible (at the time) series of step-downs.

            I also wonder what the per-capita consumption growth curve looks like? Perhaps that is negative?

            Increases in efficiency can prop up material wealth…but for how long before many people face doing less with less?

        • Ves says:

          Thanks Steve. I agree with your post and that is how “market” dynamics work as a big picture in the loooong run. But let’s just talk about few hard facts that are not jiving with this long term explanation as of now.

          Steve: “It isn’t just the industry that is bankrupt, it is the industry’s customers.”

          If industry customers are bankrupt, and they are, and oil can command only $38 barrel than how the customers are not bankrupt at the same time for buying millions and millions of cars just in 2015 year. A-ha, there is that credit that allows this to happen. Of course they are bankrupt even though they are buying these cars BUT the average price of the car has never been higher in the history. Where is that deflation in the car prices?

          Oil producer cannot produce oil below cost for long term and the same time car producer can keep producing cars with a profit. It is impossible. When I see that price of average new car 65-70% less then today than I would say “Okey that $38 per barrel is all what our customers can afford”

          • While a car is collateral for a car loan, the fuel is collateral for nothing at all.

            The fuel is burned … ‘poof!’ … it’s gone. If the borrower does not repay, the fuel cannot be ‘repossessed’.

            What is collateral in the fuel business are the firms themselves. The firms can find more oil(y substances), extract and bring it to market. That the firms exist … is the reason to lend to them. The process is self-amplifying: the firms exist, they gain credit, the borrowing process by itself becomes collateral for more loans, etc.

            The collateral is actually a fantasy; that technology can solve the basic physical problem of entropy. The fuel markets are actually pricing the worth of that collateral.

            There is absolutely no doubt at all whatever that the collateral price of our waste fantasy as ‘discovered’ within markets free- and otherwise will be zero, maybe not tomorrow but soon enough for people alive today to see it happen.

            The only possible solution is to reduce entropy. With regard to petroleum the only possible strategy is to conserve, to not use the petroleum, leave it in the ground. Maybe in a thousand years or so someone will come up with something to do with petroleum other than burn it up for fun, to enrich a small handful of tycoons.

            We refuse to entertain the conservation approach, trying out instead every alternative no matter how spurious. Meanwhile, in the background the conservation is imposed upon us by the passage of time and increase of entropy.

            • oldfarmermac says:

              Steve somewhere up thread you apparently said that the price crash was brought on by collapsing demand.

              Sometimes you have something to say, but methinks your understanding of economics is limited, if you do not understand that when a commodity displays highly inelastic demand, the price WILL CRASH with just a little ” excess ” production coming to market.

              I have been in the position of the excess producer many times, as have most farmers.

              When we produce too much, sometimes we can’t even GIVE our stuff away.

              There has been many a time I would have been VERY GLAD to get half of last years average price.

              I will not argue that the overall economy is not in the doldrums, but ninety five percent of the people working just before the price collapse are still working, about the same number of trucks are rolling, about the same number of planes flying etc.

              CONSUMPTION HAS NOT CRASHED.

              The price has crashed because there is MORE OIL on the market than the market WANTS at the previous higher price.

              It is that simple, there is not a whole lot more, nor a whole let less, to it.

          • The car is collateral for the car loan. The fuel isn’t collateral for anything, not even for storage companies.

            After all, the fuel is burned up … POOF! … it’s gone, can’t be repossessed if the borrower does not repay.

            • Ves says:

              Car only seems like collateral for the car loan if there is a credit for consumers to buy fuel to burn.
              Once there is no credit for fuel that car as collateral and car loan also go – POOF 🙂 Without fuel to burn that car is just piece of metal/plastic junk.

              • Fred Magyar says:

                It will be fun to walk down the street and see all those cars going POOF!

                http://thumbs.dreamstime.com/z/junk-car-sequence-2645660.jpg

                • Ves says:

                  Funny photo. lol

                  But life is full of paradoxes so we just don’t know what is going to happen in what corner of the world. Maybe 18 mill people in LA will be biking every day on 20 lane highways if there are any jobs to bike to in the first place. Who knows?
                  All I know it is more comfortable to ride on a bus/train/tram/trolley/subway for 30 miles than ride a bike.

                  • Glenn Stehle says:

                    Ves,

                    So true.

                    But those in love with disruption soon come to the conclusion that any disruption will do, regardless of how destructive and painful to adapt to it may be.

                  • Fred Magyar says:

                    But those in love with disruption soon come to the conclusion that any disruption will do, regardless of how destructive and painful to adapt to it may be.

                    Glen, what the fuck makes you think I or anybody else, is in love with disruption?!

                    And yes, disruption can cause pain and destruction of the status quo and it could certainly be very painful for a lot of people. Adapting to disruption can indeed be very difficult.

                    Does that mean we should pretend it isn’t happening and that way it will just go away?

                  • Glenn Stehle says:

                    Fred Maygar said:

                    Glen, what the fuck makes you think I or anybody else, is in love with disruption?!

                    Comments of yours such as this one:

                    I work daily with small to medium sized startup companies and entrepreneurs in Brazil. These are people and businesses who are creating disruption to BAU in hundreds of different areas.
                    http://peakoilbarrel.com/all-roads-lead-to-peak-oil/comment-page-1/#comment-552407

                  • Fred Magyar says:

                    Glen, just because I work with companies that are creating disruption it does not logically follow that I’m in love with disruption per se.

                    Doctors work with patients that are ill, are you saying they are necessarily in love with diseases? That would be a rather perverse twisting of logic.

                    For the record I do see disruption happening all around me and I have clearly stated on numerous occasions that I am agnostic as to whether or not a particular type of disruption will have positive or negative consequences. I really don’t know how things will shake out.

                    Generally speaking they often have both positive consequences in some cases and negative in others.

                    BTW most of my work involves communicating a company’s goals and vision. I’m not the one tasked with creating that vision, I just tell their story. I’m the messenger.

                    You keep confusing the message of these companies with the messenger, me! These two things despite your insistence are not one and the same.

                    How hard is it to understand this? Quit trying to kill the messenger just because you don’t like the message or the realities behind it.

            • oldfarmermac says:

              In the broadest terms, big picture terms, I actually agree with Steve about oil and the way we use most of it.

              BUT BUT BUT BUT, we have not YET run out of credit. World wide bankruptcy has not yet stopped the wheels of the world, John Galt style. NOT YET.

              But eventually, world wide bankruptcy will become a reality, this being just be another way to describe the crash following overshoot, using economic and legal terms, rather than environmental terms.

              But in the short term, though, the explanation for the low price of oil is simple as pie. Production has increased faster than consumption, and the world does not actually WANT QUITE SO MUCH as is coming to market. Oil is an expendable, like milk. You just don’t buy more than you need, and you don’t pay more than necessary.

              Farmers get themselves into this same jam year after year. FOREVER, in one crop or another.

              Farmers have FORGOTTEN more about over production and price crashes than the oil men will ever learn, because the oil price cycle seems to take at least about a decade to play thru.It happens to us at least three times as often. AT LEAST. LOL

    • Frugal says:

      In often wonder how much an average car would cost if you had to pay cash. One third of today’s price?

      • Ves says:

        If you would sell cars for cash in the current monetary system the price of the car would be exactly the same as today because of built in price inflation in the monetary system. That flaw is what causing the “problems”. But the number of sold cars would be dramatically less if you would sell them just with cash. Way less.

      • You have to wonder how much a barrel of oil would cost if you had to pay cash.

        It would be a negative number, nobody does anything with the oil that offers a real, economic return.

    • islandboy says:

      Looking at the pretty picture, somebody’s suffering a serious case of delusion. Either these guys in OPEC are out of touch or Tony Seba is completely out of his mind.

      For the benefit of those whole say battery electric vehicles will never amount to anything significant, I present exhibit A below, a graph of BEV sales since they re-started in December 2010. I included stacked columns for the sales of the three models that have exceeded 1000 units at any time during the period to illustrate that the three top selling models make up almost all BEV sales. Before the Tesla Model S went on sale BEV sales were almost all Nissan Leaf. The data was compiled from http://www.hybridcars.com Monthly Dashboard pages with the latest showing sales for twelve different models of BEV of which five are only available in states that follow the CARB rules (compliance cars).

      One interpretation of the graph below could be that BEV sales are partly being constrained by availability. Only the manufacturers of the three top sellers have made any real effort to manufacture and sell BEVs. Truth be told, none of the other manufacturers have bee able to come up with compelling BEV offerings partly due to the high cost of batteries. The question remains as to how the top three sold as many BEVs as they did, despite having to deal with the same battery cost issues as everybody else.

      My point in posting the graph is that it shows what should be a disturbing trend to those who compiled the OPEC WOO and other oil producers. There are now several more BEVs in the pipeline including the Chevy Bolt and a few rumored offerings from luxury brands, probably in a effort to take the fight to Tesla. Manufacturers like Ford and VW are apparently waiting for batteries to reach some magic price point before going all in. This BEV thing is not going away and IMO it is more likely to go the way Seba projects than the OPEC projection.

      I just had to pay for a rebuild of the diesel motor in the vehicle I own and I am anxious to get rid of the infernal combustion engine and switch to EVs as soon as more of my EV of choice end up on the used market in the UK, hopefully at lower prices than those prevailing now. Methinks that, as more people come to the same conclusion that I have, that is, the low running costs of an EV will probably make the higher purchase price worth it or as the downward trend of EV prices brings them within striking distance of their ICE powered counterparts, a tipping point is going to be reached and the BEV market will grow very quickly. It might even be the case that the speed of the transition might catch optimists like myself by surprise. This is a clear case where, those disrupted will not know what hit them!

      • Glenn Stehle says:

        islandboy said:

        Looking at the pretty picture, somebody’s suffering a serious case of delusion. Either these guys in OPEC are out of touch or Tony Seba is completely out of his mind.

        It’s not a case of Tony Seba or OPEC being “completely out of his mind,” but both being out of their minds.

        Team Carbon and Team Green like to pretend they are the opposite of each other. But in reality they are the mirror image of each other.

    • Clueless says:

      Steve from math challenged Virginia – Over $1 trillion of “iffy” US car loans to unqualified buyers. At $20,000 per vehicle, that is 50 million vehicles and buyers. Now I will not be able to go to sleep! I cannot stop laughing.

    • islandboy says:

      Just to add to my comment a little further up, has anybody else noticed how the only technologies that experience growth in the size of their fleets, are the ones based on oil and gas? Even hydrogen fuel cells which depend on hydrogen most of which is produced by steam reformation of methane (NG) don’t register. I guess the composers of this report don’t see how hydrogen manufacturing can grow their industry so fuel cell vehicles are paced in the same category as BEVs.

      One of the things that has been most constant in my life is change, so I have serious doubts about whether several of the products and services we now use will remain with us. As a child my mother took my siblings and I to the UK, the country of her birth, to meet our grandparents and her friends and family there. We went to the UK and back, on ships transporting bananas to the UK and bringing machinery and other goods back. My first airplane trip was as a baby in 62 but, the first one I remember was in the summer of 1985.

      Before I entered adolescence, my Dad was the headmaster (principal) of a high school in a rural area on the other side of the highest peak in the island from the capital city that, couldn’t receive TV signals so, the family did not have a television till we moved in 1974. Video entertainment was the occasional 16mm film rented from the capital city and played on the school’s Bell & Howell projector on movie nights arranged for the staff, most of whom lived in staff housing on the campus. I still remember watching Butch Cassidy and the Sundance Kid on one such occasion. At nights we couldn’t receive the local AM radio stations so, my dad used to listen to shortwave radio on an old vacuum tube radio and we used to play records on the old turntable. Down at the local corner store there was a bar with a jukebox that we could sometimes play songs on, if we had ten cents to spare. My bigger sister bought us our first modern transistor based AM/FM receiver back in 1976 on one of her visits from attending university in London. My mom used to sew a lot of her own clothes using her old pedal powered Singer sewing machine until a cousin of mine that worked with Sears in the US sent her a Kenmore electric sewing machine.

      My first job was with repairing typewriters (remember those?) at IBM in 1985, four years after they introduced the IBM PC to the world and in a few short years, having changed to mainframe operator at the local company office, I could sense that client server computing was going to disrupt the mainframe business, as it did. I lived through the local satellite dish craze and actually worked installing C-Band satellite dishes just before they were disrupted by DirectTV/Dish Network and the advent of subscriber cable services.

      I have seen transistors replace vacuum tubes and then be replaced by ICs. I have seen compact audio cassettes come and go. Who remembers VHS vs Betamax or 8 track tapes? I have seen vinyl records replaced by CDs which have given way to digital media players and streaming multimedia over the Internet. I have seen several systems in vehicles replaced by electronic and/or computer controlled systems. The $100 smart-phone I carry around is far more capable than the first IBM PC I owned, which cost me over a grand in the 80s. I have seen Cathode Ray Tube based TVs and monitors replaced by LCDs with a new technology (OLED) poised to displace LCDs in flat screens.

      So to those who say things about people being in love with disruption, I say give me a freaking break! Disruption has been part and parcel of my life for as long as I can remember and in some cases I rather liked the things that were disrupted. This whole comment is littered with references to companies and technologies that are now fading memories. I have come to accept disruption as a facet of modern life and would like to think that I have seen enough to know when a disruption is at hand. I expect that disruptions will continue, not the least of which will be those brought on by Peak Oil.

  13. Sarko says:

    I have another two questions, so maybe someone can answer: why US import today more oil, some 6-7% more, on yoy basis? I that asked because statement from EIA said that storage is much more full on yoy, so, why don’t draw-down first that oil exceeds in storage capacities and then increased import?

  14. Pingback: OPEC’s 2015 World Oil Outlook – Olduvai.ca

  15. Frugal says:

    Eyeballing the tight oil graph labelled “Global tight crude supply outlook Reference Case” we get:

    4 million barrel/day x 365 days/year x 25 years = 37 billion barrels

    Because of the high decline rates of tight oil wells, this is going to require a herculean drilling effort.

    • AlexS says:

      42.3 billion barrels in 25 years between 2016 and 2040, based on OPEC projections.

      The U.S. LTO output is now ~ 4.5mb/d; do you think that requires a herculean drilling effort?

      The problem is not how many wells need to be drilled and completed.
      The problem is if they can be drilled and completed profitably, especially with low oil prices.

      • Sarko says:

        It’s not question of 4.5mb/d today but sustainability of that production on 25 years. Is there 14 billion in recoverable reserves, like EIA stated, or is 35 billion or 55 billion or 75 billion in LTO reserves.
        Let assume it is 55 billion, it is 35 years of production on 4.5 mb/d, but like we know it is not possible because od geology, curve is like Bell curve and it will falling how fields are mature and will be longer in production but on lower levels.
        Second problem is so called sweet spots, what happend when everybody exhaust sweet spots because of low price?

  16. 70%H2O says:

    Not related to this article per se, but.
    Can anyone tell me what 38 dollar oil is doing to shale drilling? I mean for new wells.

  17. coffeeguyzz says:

    Sarko

    The fact that 90% + of the existing liquid hydrocarbons are not recovered by present methods never seems to arise when these type of projections/discussions occur.

    There has been and continues to be an extensive, intensive amount of work – both operational as well as ‘laboratory’ that is and has been underway to increase recovery rates.

    This ‘shale revolution’ is still in the early stages.

    • Sarko says:

      OK
      So why EIA give any number and people believe in that? I even agree with you but why i or anybody else believe in any EIA, OPEC projections? People trade on that numbers, huge amount of money is lost or get.
      On other hand, maybe there be huge crisis and any new technology will be not made.

      • likbez says:

        “People trade on that numbers, huge amount of money is lost or get.”

        Unless you can buy a tanker of oil or two at the bottom for arbitrage and have reliable contacts to help you to determine the bottom independently of EIA data (which means that you are TBTF institution, or oil producing country government) you should never get even close to oil market. This is a market for big sharks only. And even in this case you can lose your shirt. For example, I heard that Mexican government hedged all their oil production for 2015. I do not know who was the counterparty but I do not envy those guys.

        Those people who try (via ETNs such as USO, OIL, USL, etc) will lose their shirt in no time. 100% guaranteed. But it looks there are not much such people in any case judging from the size of the funds that I mentioned. Most trades are HFT trades in any case. So you can view it as the battle of machines and related algorithms.

    • Dennis Coyne says:

      Hi Coffeguyz,

      Perhaps oil recovery will be higher. There is a long history of trying to increase recovery rates, and there has not been a lot of progress in the last 10 years or so (though I will be corrected by those like Fernando who have forgotten more about oil production than I will ever know).

      The USGS and experienced geologists like David Hughes and others, have used reasonable recovery rates rather than the wishful thinking found in investor presentations.

      Lots of things could happen, we could develop a fusion reactor, but I doubt that just as much as a significant improvement in LTO recovery rates.

      • coffeeguyzz says:

        Dennis

        While I do not much follow the conventional side of the industry, I do keep track of quite a bit of the goings on in the unconventional world. And, as an aside, I take keen interest in the proven data (frequently in the form of verifiable production numbers) that are regularly presented in various presentations by the operators.

        If you wish to get a glimpse of enhanced recovery rates from unconventional operations, please check out Granite Oil’s work in the Alberta Bakken using re-injected gas.
        Improved recovery? How about Crescent Point’s water flooding their unconventional fields for years with continuing success?
        Tell me what you think of EOG’s recording/effecting over 4,000 seismic events (fractures) per 1,000′ of lateral in their latest iteration of completion? … you know, like the record setting Riverview 102 32H that has produced over 200,000 barrels of oil its first 91 days online?

        You guys spend a lot of time looking at data, crunching numbers, making evaluations/projections … and I respect that.
        Folks like Mr. Leopold (and others) focus greatly on the financial aspect, both macro and micro.
        I’m primarily interested not only in who is doing stuff, but HOW they are doing it, and possible/probable future applications and improvements of same.

        It was in 2008, barely seven years ago, that Continental drilled its first North Dakota horizontal well, and they used an existing vertical wellbore to save money in the operation.
        This ‘shale stuff’ is still in the early stages.
        You might be a little less dismissive (or not) if you expanded your base of knowledge.

        • Sarko says:

          Technology is great but what happened with technology development when companies are cash flow negative? True, most of today fracking technology come online during 2003-2008 period, when price go from $25 to $140 per barrel.
          Also, do you believe is there over 100 billion barrels in US oil reserves? I don’t know, i ask you, because i see you are in industry on some way and OPEC and EIA future projections for production in mb/d suggest just that.

        • shallow sand says:

          Coffee.

          We’ve discussed tech v economics a lot, of course.

          If you have answered this before, and I have forgotten, I apologize.

          Do you own an interest in any oil and/or gas wells? Do you own any stocks or bonds in any E & P companies?

          If the tech is working wonders, why is $38 WTI and $2 Henry Hub so devastating?

          I wish you would at least focus on the whole of well productivity, and not just the record setting stuff.

          Per NDIC, the highest Bakken per well barrels of oil per day field wide was 11/08 at 146. 143 per day was achieved 10/12.

          10/15 it is now down to 108.

          108 x .75 = 81. 81 x 365 = 29,565 barrels of oil per year to the WI owners.

          29,565 x $28 = $827,820.00.

          Subtract $82,782 for production taxes. Subtract $268,000 for OPEX. Subtract $75,000 for G & A.

          The average well nets $402,000 in the above scenario.

          Say you borrowed $5 million of the cost of this average well at 6% interest. It comes due in 2020. $300K interest.

          You now have $102,000 left to put towards principal of $5 million. Thus far, you likely haven’t put any of that meager amount towards principal, if you are US shale. You are still putting it towards trying for a record setting well.

          You have likely sold your conventional production for 1/3 of what it would have brought in 2013, also to achieve said record setting well.

          Coffee, I hope someday you realize that high IP is really not that important.

          I also hope you understand why those of us who actually own an interest in US oil production grow tired of hearing about the supposed technological wonders.

          • Glenn Stehle says:

            shallow sand,

            I do not take issue with what you say.

            However, I do take issue with the grotesque double standard operative on this forum.

            Those who are overly optimistic about technological breakthroughs in the oil business get crucified on this forum.

            But those who are overly optimistic about technological breakthroughs in the renewables business get a free pass. Not a voice, or a hand, or even an eye is raised to some of the most outrageously nonsensical and outlandish claims made by the advocates of renewables.

            And to top it off, anyone who dares to question the glorious future of renewables is met with a hail of viscious personal attacks.

            So why doesn’t coffeeguyzz get a get-out-of-jail-free card like the advocates of renewables do? Isn’t what’s good for the goose good for the gander?

            • Glenn, I understand where you are coming from. First let me say I pretty well give everyone a free pass on what they can post. The only things I don’t allow are wild ass conspiracy theories. (Mild conspiracy theories are okay.) 😉

              But concerning those overly optimistic renewable theories. I have been on forums in the past where they were the ones persecuted. The Energy Resources mailing list is a good example. And I was really shocked to see those tables turned on this forum.

              As for my opinion, I believe those “Solar and wind power will save the world” theories are pure nonsense. But arguing with these folks is a little like arguing with a biblical fundamentalist. They believe with all their heart they are saved. (That means Glory Bound.) Likewise renewable fundamentalist believe with all their heart that renewables will save the world. Arguing with them is an exercise in futility. Very similar to arguing with a biblical fundamentalist.

              I gave up arguing with either.

              My opinion for what it’s worth: Renewables will, in the long run, have little effect. But what effect it does have will only prolong the agony. That is allowing the population to expand that much more, allowing the destruction of the earth to continue a little longer and assuring the collapse will be just a little more devastating when it finally arrives.

              Now many true believers will argue with this position. Go ahead, I will not reply. As I said, I gave up arguing with fundamentalist true believers some time ago.

              • SW says:

                Well, I have worked on renewable energy for over thirty years and I can’t count myself among the true believers. I don’t think they are going to save anyone from anything. But you have to do something and I think they can help. As can being smart about what we do with fossil fuels. Because it is an immense and most likely intractable problem. But it is in my nature. I go down swinging.

                I do research. I am not a huge fan of subsidized deployment. But I understand the rational for it. It isn’t really the black and white case that you, Glenn seem to want to make it out to be. The argument is quite simple. If you believe that CO2 emissions are problematic, then the cost of those emissions should be included in the fuel you burn. If we lack the political will to do that, we need to level the playing field by subsidizing those forms of energy generation that don’t emit CO2 so that their greater cost of production is compensated for since we are giving dirty forms of production a free ride. Impose a carbon tax and there should be no subsidies on renewables. The subsidies are a function of political cowardice not some evil scheme perpetrated by ‘team green’ as you would have it. Rather the inability to stand up to the fossil fuel lobby.

                If you believe that CO2 emission are problematic then we need to curtail the use of coal. So, should we embrace the bounty of natural gas opened up by tracking? I would say no way if you care about the future. Natural gas is our premiere heating fuel. And it is still finite. Burning it for generating electricity is a form of generational warfare. It means that in the future people will have to heat their homes with coal! I think it means that we have no choice but renewables and nuclear for electrical generation. If we are really serious about CO2 emissions and we care about future generations. And that makes me nauseous. I guess that is a pretty long winded way, at the end of a long career of saying, I’m with Ron!

                • Glenn Stehle says:

                  °°°°SW says:

                  The argument is quite simple. If you believe that CO2 emissions are problematic, then the cost of those emissions should be included in the fuel you burn….

                  I think it means that we have no choice but renewables and nuclear for electrical generation. If we are really serious about CO2 emissions and we care about future generations.

                  But the reality is, after 40 years of Team Green pounding on the table and warning of the grave dangers of global warming, that a majority of Americans do not believe as you do.

                  The public has consistently demonstrated that it is not willing to make the sacrifices and pay the cost necessary to ween itself off of fossil fuels.

                  So what now? Do you advocate going the Naomi Oreskes route, and suggest implementing an authoritarian regime like China has?

                  °°°°SW says:

                  The subsidies are a function of political cowardice….

                  A failure to commit political suicide by enacting a carbon tax is not “political cowardice.”

                  It is what is known as political survival.

                  • Fred Magyar says:

                    But the reality is, after 40 years of Team Green pounding on the table and warning of the grave dangers of global warming, that a majority of Americans do not believe as you do.

                    There are Americans who believe the earth is flat and that it is only six thousand years old, should we now take them seriously too?

                    Reality is not influenced by opinion polls and by what people believe. Most Americans still believe in a deity or sky daddy…that doesn’t necessarily prove that one exists!

                  • Glenn Stehle says:

                    Fred Magyar says:

                    Reality is not influenced by opinion polls and by what people believe.

                    Political reality sure to hell is influenced by opinion polls and by what people believe, at least in a democracy.

                    Has everyone on Team Green thrown the American way overboard, and concluded that the Chinese way with a dictatorship headed up by a cental committee is better?

                  • SW says:

                    Let me just get this straight. You do not believe anthropogenic climate change is a serious problem?

                  • SW says:

                    Your data sucks. The American people overwhelmingly recognize climate change as real problem and are willing to do something about, support renewable energy overwhelmingly in every public opinion poll every commissioned. If you wish to invoke public opinion in this matter you had better be more in tune with it. http://environment.yale.edu/climate-communication/article/american-opinions-on-global-warming-a-yale-gallup-clearvision-poll

                  • Glenn Stehle says:

                    SW,

                    My “data sucks,” you allege?

                    It is certainly true that public opinion polls can be easily manipulated to solicit the responses that the pollster wants.

                    Consumer behavior, however, is not so easily manipulated.

                    So while the public in some cases has been quite good at talking the talk, it’s not been so good at walking the walk.

                    In Polling America, Samuel J. Best and Benjamin Radcliff note that the difference between what polls such as the once you cite predict and how people actually vote with their pocketbooks and their feet is enormous. As they explain,

                    extensive polling has been conducted on customer willingness to pay (WTP) increments on utility bills for power generated from renewable sources… Majorities of residential customers say they are willing to voluntarily pay a modest amount more per month on their electic bills for power from renewable sources… It should be noted that WTP data cannot be used to predict actual market response. Hypothetical questions have been criticized for producing hypothetical answers.

                    Although majorities indicate they are willing to pay an increment on their utility bills for renewable resources, only a small percentage of customers actually pays an increment when offered the choice to do so by their utility company. In 2003 the customer participation rates in the top 10 utility green-pricing programs ranged from 3.9 to 11.1 percent.

                    And if one needs any more evidence, just look at how the public is voting with its pocket books and its feet in the charts I posted in my response to oldfarmermac below.

                • Glenn Stehle says:

                  °°°°SW says:

                  The subsidies are…not some evil scheme perpetrated by ‘team green’ as you would have it.

                  Then why do they invariably end up being reverse Robin Hood schemes which entail robbing from the poor to give to the rich?

                  If the members of Team Green are so convinced of the rightness of their cause, then why are they not willing to sacrifice for it? Why is it always somebody else who must make the sacrifices?

                  • Fred Magyar says:

                    Then why do they invariably end up being reverse Robin Hood schemes which entail robbing from the poor to give to the rich?

                    If the members of Team Green are so convinced of the rightness of their cause, then why are they not willing to sacrifice for it? Why is it always somebody else who must make the sacrifices?

                    Glen when will you get it through your thick skull that ‘Team Green’ is purely a figment of your imagination! Either that or you have an ideological agenda to keep saying that.

                    As for reverse Robin Hood schemes that perfectly describes our current global financial model at all levels. Most of all the fossil fuel and oil business backed up by the banking system and Wall Street.

                    Compared to what is happening there everything related to alternative energy pales in comparison.

                    And last but not least there is no ‘CAUSE’!

                  • Glenn Stehle says:

                    Fred Magyar said:

                    As for reverse Robin Hood schemes that perfectly describes our current global financial model at all levels. Most of all the fossil fuel and oil business backed up by the banking system and Wall Street.

                    Compared to what is happening there everything related to alternative energy pales in comparison.

                    Good grief, Fred, is that the best you can do?

                    Your argument is what is known as the Adolf Eichmann rationale. As Hannah Arendt said to Eichmann in Eichmann in Jerusalem:

                    What you meant to say was that where all, or almost all, are guilty, nobody is. This is an indeed quite common conclusion, but one we are not willing to grant you…

                    [G]uilt and innocence…are of an objective nature, and even if eighty million Germans had done as you did, this would not have been an excuse for you.

                  • Fred Magyar says:

                    What you meant to say was that where all, or almost all, are guilty, nobody is. This is an indeed quite common conclusion, but one we are not willing to grant you…

                    You really are quite a piece of work Glen! I do have to hand it to you. Your mastery at twisting what I say is is indeed impressive!

                    However that is NOT what I said and it is beyond presumptuous of you to say I meant something which I did not say nor did I intend to mean any such thing.

                    First of all I’m not trying to compare guilt. What I am saying is, that if the Foo Shits wear it! And and the Foo really shits really well with respect to the fossil fuel/banking business being the epitome of an example of the rich fleecing the poor in a reverse Robin hood scheme. To suggest that an imaginary Team Green is involved in such blatant thievery is what I meant as being beyond the pale.

                    Then to top it off by suggesting that my comment puts me in the same league as Adolf Eichmann is not something I will put up with. You have crossed all lines you are a slimy little piece of cowardly shit! Fuck You!! asshole!!!

                  • Don Wharton says:

                    Hmmmm, I see that Fred has figured out what Glenn is all about.

                    My thanks to Fred for his good work in pushing back against Glenn’s viciousness.

            • shallow sand says:

              I wasn’t too hard on Coffee and I am sorry if I am off base on that view. He and I get along ok on here, I think.

              As for renewables, if I felt qualified to comment more, I would.

              I will say I invested some in an ethanol plant many years ago and it has been a very profitable investment at times, but also very volatile. Seems few here are in favor of ethanol.

              I will also say until the Teslas and Solar Cities of the world make any profit, I will remain skeptical.

            • Fred Magyar says:

              Those who are overly optimistic about technological breakthroughs in the oil business get crucified on this forum.

              The first problem is being ‘OVERLY OPTIMISTIC’!

              But mostly because there aren’t any technological breakthroughs in the oil industry worth speaking of. And even if there were they would only have the same effect on long term oil production that better fishing technology would have have on fishing of depleted fish stocks. You’d just be fishing harder and faster to get the last fish and the fishing industry would be just as dead.

              I know you don’t like the truth but the oil industry as you have known it is dead man walking right now. We are entering a very difficult transition period into completely unknown territory. Clinging to the past is not a viable plan!

              Anyone with any sense understands that the only possible way forward is to build a global economy that is based on alternatives to fossil fuels.

              • wimbi says:

                Indeed so. Only way. And, unlike most here, I think it ain’t so hard to do.

                1)Quit enough of the silly things we do to give us those resources to go to where we want to get. We do a LOT of silly things we would be much happier not doing. Wars come to mind, esp those in places we don’t understand at all, um, like Vietnam.
                2)With those resources, try out some things that might work and see if they do. Go with the ones that do work and chuck those which don’t. Pragmatism is it. No prejudgement, please. Just try it and see.
                3)Keep an open mind and keep finding more open minds– and give them a boost. Who knows, maybe they know more than we do.
                4) Don’t go hopeless on us. Hopelessness is illogical, we don’t know enough, and never will, to justify hopelessness. Surely it’s obvious that if you cannot know the future, you cannot say it’s hopeless.

                As for me, I see lots of hope springing up all over, as us old guys die off and the young ones take over. Some of those young ones I happen to know and/or am related to are VERY competent.

              • Glenn Stehle says:

                °°°°Fred Magyar says:

                But mostly because there aren’t any technological breakthroughs in the oil industry worth speaking of.

                But there are technological breakthroughs in renewable energy that are earth shattering?

                Where, pray tell, are these revolutionary energy technologies, which have upended the global energy landscape, to be found?

                • oldfarmermac says:

                  “Where, pray tell, are these revolutionary energy technologies which are upending the global energy landscape to be found?”

                  Well, believe it or not , they are just about any place you care to look these days.

                  OF course fossil fuel true believers, who are akin to fundamentalists of the religious sort, CAN’T see them.

                  There is a filter between their lying eyes and their brain that filters out all the sights the brain does not wish to see.

                  In order to see these technologies, you have to come to grips with the hoary old truism that mighty oaks do indeed grow from little acorns.

                  The fossil fuel industries feed on a shrinking endowment of once thru gifts of nature.

                  The renewable energy industry feeds on wind and sunlight.

                  Anybody who understands the a,b, c’s of biology knows which industry MUST shrink, and which can at least potentially continue to grow, long term.

                  Rechargeable batteries are in my power tools, there is a solar domestic hot water system in my house, solar panels are now glinting in the sun on houses nearby and before too much longer I will own some myself.

                  Wind and solar farms are popping up like mushrooms after a spring rain, over large parts of the world.

                  A dozen or more (former ) members of my extended family are entombed forever in old coal mines in nearby West Virginia.

                  There are hundreds of exhausted coal mines within a four hour drive of my home.

                  A totally blind man cannot see the noon day sun.

                  • Glenn Stehle says:

                    oldfarmermac said:

                    Well, believe it or not , they are just about any place you care to look these days….

                    Wind and solar farms are popping up like mushrooms after a spring rain, over large parts of the world.

                    The rhetological fallacies you employ are what are known as 1) use of anecdotal evidence and 2) spotlighting. They consist of discounting evidence arrived at by systematic search or testing in favor of a few firsthand stories, and throwing a spotlight on unusual but highly memorable events or happenings.

                    The truth, however, is that aggregate investment in renewable energy is in freefall, as this graph from the Frankfurt School of Finance and Management shows:

                  • Glenn Stehle says:

                    And this graph from Bloomberg shows what’s happening to investment in clean energy in Europe:

                  • Glenn Stehle says:

                    And sales of plug-in vehicles in the United States have declined:

                  • Glenn Stehle says:

                    And the decline in plug-in car sales comes in spite of the fact that overall car sales in the US are booming:

                  • Fred Magyar says:

                    The truth, however, is that aggregate investment in renewable energy is in freefall, as this graph from the Frankfurt School of Finance and Management shows:

                    Glen, you still don’t get it, do you?!

                    The truth, however, is that aggregate investment in ALL FORMS of energy is in freefall… Especially investment in OIL!

                    You keep posting these charts as if it is proof that renewable energy is dying and the glorious old days of oil were coming back, get grip already!

                    The entire global economy is completely fucked because of its dependence on oil do you somehow not understand that?! And yes, that does have an effect on investment in renewable energy as well, how could it not?

                  • Glenn Stehle says:

                    Fred Magyar said:

                    The truth, however, is that aggregate investment in ALL FORMS of energy is in freefall… Especially investment in OIL!

                    But the freefall in clean energy investment began in 2012. This was well before the rout in oil prices, which didn’t occur until two years later, in 2014. The freefall in oil investment didn’t begin until after the precipitous decline in the price of oil in 2014.

                    So your “logic” (actually paralogic) can’t even get the correlation part right, much less the causation part.

                    What caused the freefall in clean energy investment which began in 2012? It certainly was not the fall in oil prices.

                  • Fred Magyar says:

                    What caused the freefall in clean energy investment which began in 2012? It certainly was not the fall in oil prices.

                    Glen in case you didn’t get the memo, the global economy crashed in 2008 and it hasn’t recovered! Nothing has been working the way it used to before that date.

                    Why don’t you watch Steve Kopits’ lecture and try to understand what the implications are, ok?

                    If you really believe that investment in renewable energy is dead for the foreseeable future and there will be a renaissance in the oil industry and things will go back to a smooth sailing BAU then more power to you bro. I think the likelihood of that scenario coming to pass is slim to nil. Either way I don’t think we will have too long to wait to see which way the cookie will crumble. So go ahead place your bets!

                  • Glenn Stehle says:

                    Fred Magyar said:

                    Glen in case you didn’t get the memo, the global economy crashed in 2008 and it hasn’t recovered! Nothing has been working the way it used to before that date.

                    Well again, Fred, you can’t even get the correlation part right, much less the causation part.

                    If one looks at both those graphs on clean energy spending, there is a dip of spending in 2009. This was caused by the Great Financial Crisis, which began in 2007, but had its most devastating impact in 2009. Then in 2010 and 2011 spending on clean energy recovered, and surged upwards.

                    This correlates very nicely with the graph of growth in global GDP below.

                    But there is no negative growth in world GDP in 2012, 2013, 2014 or 2015.

                    So what caused global investment in clean energy to go into a freefall in 2012? It certainly wasn’t caused by the world going into a global recession.

                • Glenn Stehle says:

                  oldfarmermac said:

                  The fossil fuel industries feed on a shrinking endowment of once thru gifts of nature.

                  The renewable energy industry feeds on wind and sunlight….

                  Rechargeable batteries are in my power tools….

                  The sustainability of energy produced from wind and sunlight is a delusion.

                  It’s pretty clear you and Fred Magyar drank the same Kool Aid when it comes to believing in the “sustainability” of renewables. Fred said something very similar to you in his comment above:

                  [T]here aren’t any technological breakthroughs in the oil industry worth speaking of. And even if there were they would only have the same effect on long term oil production that better fishing technology would have have on fishing of depleted fish stocks. You’d just be fishing harder and faster to get the last fish and the fishing industry would be just as dead.

                  So let’s take a little closer look at those rechargable batteries that come in your power tools that you believe will provide mankind with the “sustainability” we hear so much about these days.

                  The only proven battery technology currently in existence that meets the needs of most applications is the lithium ion battery technology. It is used in cell phones, laptops, power tools, and EVs, as well as battery back-up systems for home and factory.

                  Elton Musk has bet the farm on the technology and is building the Telsa Gigafactory in Nevada. It will manufacture 35 Gwh of the batteries when it reaches maximum capacity in 2020.

                  But here’s the rub: the batteries require a mineral called lithium, which is not in infinite supply.

                  • Fred Magyar says:

                    So let’s take a little closer look at those rechargable batteries that come in your power tools that you believe will provide mankind with the “sustainability” we hear so much about these days.

                    Whoa, whoa, whoa!!! You do not get to claim that I believe any such thing! Stop fucking trying to put words in my mouth!
                    I have never said that. Those are your goddamn words not mine! Stop this shit man!

                  • Enough with the “Team Green”, GS . All you seem capable of is creating strawmen that you then try to bat down.

                  • Glenn Stehle says:

                    Fred Magyar,

                    If you will read that comment carefully, you will see that my comment is directed towards oldfarmermac, and his comment about the “rechargeable batteries” in his “power tools,” and not you.

                  • Caelan MacIntyre says:

                    Hey pea-pod peas! ^u^

                    I have been skimming some of this as my laptop’s frayed adapter cord gets a slight extension on its life via some electrical tape… (The adapter is only 2 years old and its wires are already breaking down. This is their [‘our’] uneconomy for you. Made not to last.)

                    But anyway, if the price of oil is relatively down for the count and with the Gigafactory thing in the background, etc., I smell desperation in the air.

                    Glenn, some of the GDP and other numbers may be in massage-mode right now. I wouldn’t stake my life on them.

                    Renewables and EV’s don’t look like they will be powering any kind of BAU/GOV-as-we-know-it, and they know it. This is unless– at least as they might believe– they can wrest control of the remaining fuels, for military apps/projections-of-power, from the rest of the population by popping them into EV’s and heat-pumped houses.
                    If oil can no longer be relatively-inexpensively taken out of the ground, the stuff already extracted/produced will be redirected away from the population in ‘creative’ ways…

                    The ‘cool’ thing about ‘self-driving’ cars of course is how they can be centrally controlled, by a central authority while the police cars remain ‘ICE’ and ‘autonomous’. ‘Disruption’ can, naturally, work ‘both’ ways.

                  • Fred Magyar says:

                    Caelan,

                    (The adapter is only 2 years old and its wires are already breaking down. This is their [‘our’] uneconomy for you. Made not to last.)

                    What do you do with your adapters? Do you use them to drag large logs to your fire place?
                    I have adapters that are over a decade old and have outlived their original laptops and I use them as spares. They are still in perfect condition.

                    I mean I know that consumer goods are designed not to last but two years on an adapter seems a little too soon to degrade as much as you have described…

                  • Caelan MacIntyre says:

                    Fred it is indeed a very short time for this to happen and my older things simply don’t break or degrade like this. This society is definitely getting out of control.

                  • Glenn Stehle says:

                    Caelan MacIntyre says:

                    Renewables and EV’s don’t look like they will be powering any kind of BAU/GOV-as-we-know-it, and they know it.

                    Caelan, I’m not so sure whether “they know it” or not.

                    Typical of those caught up in the spirit of the California Ideology, Elton Musk doesn’t seem to think the physical limits of the planet apply to him.

                    When the new Gigafactory begins coming on stream in late 2016 or 2017, it will put a great deal of strain on existing global supplies of lithium.

                    Musk has made no attempt thus far to lock down supplies from existing lithium producers. Instead, he has elected to deal with startups who are promising innovative new technologies to produce lithium, and at prices well below current market prices.

                    As Financial Times explains:

                    “The current strategy seems to be no direct investment but leveraging the Tesla name by signing ‘contingent’ contracts at unachievably low prices with junior mining companies who have never produced lithium chemicals,” says Joe Lowry, a market expert and founder of Global Lithium, a consultancy.
                    http://www.ft.com/intl/cms/s/0/4a924a64-99df-11e5-987b-d6cdef1b205c.html#axzz3vcT8yYUg

                    So it will be interesting to see how this plays out. Unless there is a world-wide recession which depresses lithium demand, it’s not at all certain where Musk’s litium will come from.

                    Bloomberg did a segment which asks this very question:

                    “Is There Enough Lithium for Tesla’s Gigafactory?”
                    http://www.bloomberg.com/news/videos/b/3abb52e4-ea59-4ed9-8525-80e5765c701c

                    As Bloomberg points out, almost all global lithium production outside China is controlled by four companies. But Musk has refused to deal with these.

                    Since the cost of lithium is not a very great part of the cost of producing a Telsa automobile, but is absolutely necessary for the production, the Financial Times believes Musk is running a great deal of risk for very little potential gain. As it notes:

                    “Raw material availability is probably the biggest challenge facing the Gigafactory outside of the need for basic demand,” says Benchmark Mineral Intelligence, a consultancy in London.

                    But I suppose these low-ball estimates on what Telsa will pay for future litium supplies look good on current financial statements. Making it happen in the future, however, will be much more difficult.

                • Glenn Stehle says:

                  If lithium production were to be increased so that 100% of 2015 car production could be replaced by EVs in 15 years, as islandboy suggested in this comment, phenomenal growth in lithium production would be required.

                  http://peakoilbarrel.com/all-roads-lead-to-peak-oil/comment-page-1/#comment-552106

                • Glenn Stehle says:

                  And at a rate of consumption of 470,000 tonnes per year, current global reserves of lithium would be entirely depleted in less than 30 years.

                  So even if the herculean chore of increasing lithium production so quickly were achieved, the only thing that would be accomplished is to kick the can down the road a bit.

                  The sustainability problem will not have been solved.

                  Lithium: World production and reserves
                  United States Geological Survey

                  • oldfarmermac says:

                    HI GS,

                    YA THINK it might be just a tad on the hypocritical side talk about lithium depletion while consistently AVOIDING any discussion of oil depletion?

                    Lithium can be recycled, you know, or maybe you don’t, and the same old argument that oil true believers keep on trotting out- that better technology and higher prices turns potential resources into economic reserves- applies to lithium just as it does to any other mineral.

                    And even a little can go a long way. As oil depletes,and mass transit expands,and cars shrink, an electrified auto with a rather SMALL lithium battery will meet the needs of a growing number of people on a day to day basis.

                    When I last lived in the city, a car with a twenty mile range would have met my needs every single day,excepting days I had a yen to get out of town. Ten or twelve miles would have sufficed, but at the price of some inconvenience.

                    Your arguments ” don’t hold water any better than a sifter bottom ” as my dear departed old country woman Mom used to say.

                  • Glenn Stehle says:

                    oldfarmermac said:

                    Lithium can be recycled, you know, or maybe you don’t…

                    Lithium certainly can be recycled.

                    But once again, at what cost?

                    The word “cost” apparently has been banned from the vocabulary of Team Green.

                    Here’s what Battery Univeristy has to say on the subject:

                    Battery growth lies in Li-ion but the difficulty to retrieve precious metals makes this chemistry less attractive and a financial breakeven may not be possible. Although alkaline and carbon zinc amount to over 90 percent of batteries consumed in the United States, these batteries have little precious metals content and the toxicity is low….

                    Li-ion and most other chemistries yield too little in precious metals to make recycling a viable business without subsidies.
                    http://batteryuniversity.com/learn/article/battery_recycling_as_a_business

                  • Glenn Stehle says:

                    oldfarmermac says:

                    [T]he same old argument that oil true believers keep on trotting out- that better technology and higher prices turns potential resources into economic reserves- applies to lithium just as it does to any other mineral.

                    Which is exactly the point I’ve been making, that Team Carbon and Team Green are not the opposite of each other, but the mirror image of each other.

                    Also, the price of lithium has more than trippled since 2000, which so far has not caused an over-supply. It could be that bringing new lithium production online is a costly proposition.

                  • Glenn Stehle says:

              • Glenn Stehle says:

                Fred Magyar says:

                Anyone with any sense understands that the only possible way forward is to build a global economy that is based on alternatives to fossil fuels.

                And just where are these consecrated “alternatives to fossil fuels,” other than in your very active imagination?

                • Fred Magyar says:

                  And just where are these consecrated “alternatives to fossil fuels,” other than in your very active imagination?

                  You keep thinking I’m talking about things that I’m not all that concerned about. My focus is on disruption which you apparently don’t want to or are unable to grasp.

                  You are either delusional, an ideologue or suffering from early onset dementia if you want to ignore the potential consequences of the kinds of disruption that are happening everywhere, right now.

                  You keep saying things about Team Green and that I am divorced from reality by talking about a “Glorious Future” based on alternative energy or some other such nonsense!

                  I keep telling you that is NOT what I’m talking about nor do I in any way shape or form think that the future is destined to be glorious. I have repeatedly said that I am completely agnostic about what will happen because I don’t have a clue as to how things will actually shake out. But to completely ignore what is happening right now, like you and a few others here is a sign that you really don’t understand what is happening! You are in denial of reality.

                  Here’s an example of the tip of the iceberg of what I’m talking about. And Uber is already 100% committed to a driverless future.

                  http://www.vox.com/2015/12/26/10647418/uber-new-york-taxi-medallions

                  Try wrapping your mind around that. The oil age is dying by a million cuts and you keep telling me things I already know not to be so! The old economic model is dying and all you have to offer is a lashing out at windmills such as Team Green!
                  Even Don Quixote eventually figured it out but you have your head so deep in the sand you can’t distinguish reality from what you wish were true.

                  BTW, just to be clear when I say the only way forward is to build an economy based on alternatives to fossil fuel what I mean is that the economic model which includes things like private car ownership and all the industries, especially the oil industry and infrastructure that go along with it and the financial system that needs infinite growth to keep it going can’t and won’t be able to continue.

                  • oldfarmermac says:

                    Hi Fred,

                    So you and I are as clueless as toddlers that have wandered off into the woods!

                    Did you ever read Douglas Adam’s books?

                    It’s been a long time for me, but dead black glasses were very popular in his imaginary worlds , as they enabled people worried about things to simply NOT SEE what worried them.

                    I wonder where GS buys his. 😉

                    If I had a pair handy I could sleep better.

                  • Fred Magyar says:

                    Did you ever read Douglas Adam’s books?

                    Oh yeah! They were fun 🙂

                    But whatever else you may think of him you have to give Glen credit for sticking to his plan of non stop obfuscation and twisting of whatever anyone who doesn’t share his views might have to say.

                    He is never interested in a true dialog or exchange of ideas. It’s always an attack on an imaginary Team Green and especially on the idea that alternative energy has a role to play in our futures and oil has a very diminished role in that same future.

                    He is stuck in the past and can’t seem to accept that change is happening now. He doesn’t like that change so he lashes out at anyone who talks about it.

                    Whatever!

                  • Glenn Stehle says:

                    Fred Magyar says:

                    You keep thinking I’m talking about things that I’m not all that concerned about. My focus is on disruption which you apparently don’t want to or are unable to grasp.

                    Oh there’s going to be disruption alright, but my focus is on energy, because I was under the impression that this is a peak oil blog, and not something akin to the Royal Academy of Lagado, with its solemn “projectors” laboring to extract sunbeams from cucumbers, build houses from the roof down, and restore the nutritive value of human shit, all convinced of the value of their work.

                    And when it comes to energy, the Uber comparison doesn’t cut it. It’s a paralogalism called false equivalence. Producing energy, or any commodity as far as that is concerned, isn’t the same as marketing a service.

                  • Fred Magyar says:

                    And when it comes to energy, the Uber comparison doesn’t cut it. It’s a paralogalism called false equivalence. Producing energy, or any commodity as far as that is concerned, isn’t the same as marketing a service.

                    If you think that disruptions caused by Uber have nothing to do with energy consumption and therefore energy production or demand collapse then I will leave you alone because you are an example of one of the blind men examining the elephant. You just can’t imagine what the whole elephant is like and you keep insisting that it’s a tree, or a snake, or a wall.

                    And while this is certainly a blog about ‘Peak Oil’ that has never, at least as I understand it, been it’s sole focus. But for what it’s worth I would love to learn more about extracting sunbeams from cucumbers, please tell us more!

                  • likbez says:

                    “The old economic model is dying and all you have to offer is a lashing out at windmills such as Team Green!”

                    I already heard such statements during dot-com boom. So in a way you can be considered as the second generation of red eye dot-com enthusiasts.

                    Are you sure that your driverless cars will consume less fuel then regular cars ? If not then this is just increase of rate of profit for Uber and trucking companies and increased poverty of people who became unemployed as a result.

                    What will fundamentally change, if you remove the driver from the car? You just eliminate salary of the driver if he/she is an employee. That will not solve the problems of congestions of traffic in the morning, or the problem of fuel efficiency of the cars/trucks. Home office (telecommuting) solves this problem for some categories of workers, but for some reason you do not advocate it.

                    And crashes while more rare can be more severe and involve more cars simultaneously. Complex software always has bugs so in complex situations it will misbehave. BTW who will be the guilty party in this case? Google?

                    As for your desire to change the existing economic model, I am with you, but good luck. As Margaret Thatcher said neoliberalism is here to stay (probably until hydrocarbons are gone). She formulated this principle as TINA (“there is no alternative”) and it is connected with the power of the alliance of transnational elites and financilization of the economy that neither driverless car not alterative sources of electricity are capable to break.

                    Google it if you are interested.

                  • Glenn Stehle says:

                    Fred Magyar,

                    Not even the guy who wrote the Bible on disruption, Harvard scholar Clayton Christensen, believes Uber is a disruptive undertaking, as he explains in an article in the Harvard Business Review:

                    Is Uber a Disruptive Innovation?
                    Uber is clearly transforming the taxi business in the United States. But is it disrupting the taxi business?

                    According to the theory, the answer is no. Uber’s financial and strategic achievements do not qualify the company as genuinely disruptive—although the company is almost always described that way. Here are two reasons why the label doesn’t fit.

                    Disruptive innovations originate in low-end or new-market footholds.

                    Disruptive innovations are made possible because they get started in two types of markets that incumbents overlook. Low-end footholds exist because incumbents typically try to provide their most profitable and demanding customers with ever-improving products and services, and they pay less attention to less-demanding customers. In fact, incumbents’ offerings often overshoot the performance requirements of the latter. This opens the door to a disrupter focused (at first) on providing those low-end customers with a “good enough” product.

                    In the case of new-market footholds, disrupters create a market where none existed….

                    A disruptive innovation, by definition, starts from one of those two footholds. But Uber did not originate in either one. It is difficult to claim that the company found a low-end opportunity: That would have meant taxi service providers had overshot the needs of a material number of customers by making cabs too plentiful, too easy to use, and too clean. Neither did Uber primarily target nonconsumers—people who found the existing alternatives so expensive or inconvenient that they took public transit or drove themselves instead: Uber was launched in San Francisco (a well-served taxi market), and Uber’s customers were generally people already in the habit of hiring rides.

                    Uber has quite arguably been increasing total demand—that’s what happens when you develop a better, less-expensive solution to a widespread customer need. But disrupters start by appealing to low-end or unserved consumers and then migrate to the mainstream market. Uber has gone in exactly the opposite direction: building a position in the mainstream market first and subsequently appealing to historically overlooked segments.

                    Disruptive innovations don’t catch on with mainstream customers until quality catches up to their standards.

                    Disruption theory differentiates disruptive innovations from what are called “sustaining innovations.” The latter make good products better in the eyes of an incumbent’s existing customers: the fifth blade in a razor, the clearer TV picture, better mobile phone reception. These improvements can be incremental advances or major breakthroughs, but they all enable firms to sell more products to their most profitable customers.

                    Disruptive innovations, on the other hand, are initially considered inferior by most of an incumbent’s customers. Typically, customers are not willing to switch to the new offering merely because it is less expensive. Instead, they wait until its quality rises enough to satisfy them. Once that’s happened, they adopt the new product and happily accept its lower price. (This is how disruption drives prices down in a market.)

                    Most of the elements of Uber’s strategy seem to be sustaining innovations.

                    https://hbr.org/2015/12/what-is-disruptive-innovation

                  • Fred Magyar says:

                    Are you sure that your driverless cars will consume less fuel then regular cars ? If not then this is just increase of rate of profit for Uber and trucking companies and increased poverty of people who became unemployed as a result.

                    No, and it doesn’t matter, this is what you guys don’t seem to get. What we are talking about is the complete elimination of private car ownership and a massive reduction of cars on the road. At that point how much fuel a particular vehicle employed in transportation consumes in fuel, or if it is an EV that uses no fossil fuel at all, becomes almost irrelevant and moot.

                    Cars if they exist at all will not be owned they will be shared so there won’t be a need for billions of them. So global demand for fossil fuels, assuming these vehicles are still using fossil fuels will cause global demand for such fuels to plummet. This is just one of many many nails in the coffin of the fossil fuel industry.

                    We aren’t talking about Uber disrupting the taxi business, sure it is doing that right now. But that is not the ultimate consequence of the disruption it is causing. We are talking about the end of the automobile industry as we know it today. And all the ripples that will cause throughout the current global economy.

                  • Glenn Stehle says:

                    Fred Magyar said:

                    What we are talking about is the complete elimination of private car ownership and a massive reduction of cars on the road.

                    But driverless cars would do nothing to achieve that goal, which I agree is an admirable goal.

                    What would help achieve that goal is car pooling and/or ride sharing.

                    But what does car pooling and ride sharing have to do with driverless cars? It’s a completely different issue.

                    Maybe driverless cars could eliminate a few parking lots and garages, but no more.

                  • Fred Magyar says:

                    But what does car pooling and ride sharing have to do with driverless cars? It’s a completely different issue.

                    Actually it has everything to do with car pooling and ride sharing. Uber, Lyft, ZipCar and others are all about a business model built on car sharing as opposed to private car ownership. They all want these vehicles to be driverless. That is a secondary goal they all share.

                  • Synapsid says:

                    Fred M,

                    For your sake, mostly, and for the peace of mind of the rest of us who have to scroll past this stuff, will you please stop trying to reason with Glenn S?

                    Consider two things:

                    The actual content of Glenn S’s posts;

                    and

                    The observation that you spend an awful lot of your time pointing out that what he says you said is not in fact what you did say.

                    Why would anyone act like that? And is there any reason to spend energy trying to reason with someone who does act that way?

                  • Fred Magyar says:

                    Synapsid,

                    For your sake, mostly, and for the peace of mind of the rest of us who have to scroll past this stuff, will you please stop trying to reason with Glenn S?

                    You are right and I should have stopped a long time ago! I have broken all my personal rules about this kind of discussion.

                    Though being compared to Adolf Eichmann was a little more than I could take!

                    But I’m done, GS is truly not worth a bucket of warm spit!

                  • islandboy says:

                    But I’m done, GS is truly not worth a bucket of warm spit!

                    Hey Fred! I came to that conclusion the day he posted a comment containing a link to an analysis at the Charles G. Koch funded Institute for Energy Research and attached a graph from the article to bolster his argument which was:

                    “I have no problem with subsidies for renewables. If the public is given honest information about the comprehensive cost of renewables and decides it is worth that cost, then so be it. What I have a problem with is:

                    1) The dishonesty of the Green Utopians in telling the public what the real, comprehensive cost for renewables is, and

                    2) Forcing the poorest and most politically disenfranchised segment of society to pay for the cost of renewables. “

                    Bold mine. Now this individual talks about “If the public is given honest information about the comprehensive cost of renewables” having used “facts” from a source that has a definite anti renewable, pro coal agenda, hiding behind a veil of impartiality! It was clear to me from that point that there was no point in having discussions with him. I found trying to have a discussion with him extremely exasperating and have come to the conclusion that he is. at the very least, a troll and very possibly a paid agent of some fossil fuel interest or the other, just here to make sure that, what he refers to as “green utopianism” doesn’t get a “free pass” as he calls it.

                  • Fred Magyar says:

                    hey islandboy,

                    Thanks for reminding me of that background information. I do recall reading it when you originally posted it though it didn’t really register then.

                    I very rarely get really upset at anything anyone posts or even when they try to misrepresent what I say or call me names like communist, socialist, greenie, watermelon etc.. etc… That’s par for the course and water off my back.

                    But when Glen tried to pull the Adolf Eichmann card on me and equated what I had said with the Nazi atrocities of the Hitler era, in my mind that crosses any and all lines of civil discourse. That is the lowest level of scumbaggery that anyone can pull!
                    Godwin’s Law still applies.

                    If ever anyone should be banned from posting here for any reason that IMHO qualifies as a transgression that deserves such a consequence!

                  • Lloyd says:

                    Hi Fred.
                    Just so you know, I usually read your stuff.
                    I don’t read Glen’s. His irritating, pedantic manner- the endless quotes, trying to suggest learnedness and prior settlement, the off-topic responses, and the general lack of anything substantive- have allowed me to skip his stuff without pain.

                    Your responding to him- and I know this kind of barrage is something you feel you have to respond to- causes me to have to read some of his stuff– the quotes in your responses.

                    Back on the Oil Drum, I got into this kind of thing once or twice, and the answer (imposed on me by my wife, because my anger spilled over into real life) was to not respond to the person in question.

                    Ever.

                    For any reason.

                    So I think we should all listen to my wife.

                    Perhaps we could have a standard response: my suggestion is TBTRTTILS (Too busy to respond to this irritating little shit.) Or maybe OJGFY (Oh just go fuck yourself) as it’s easier to remember.

                    The responses in this thread show that you can ignore him without having your honour impinged. We do, after all, consider the source.

                    -Lloyd

          • likbez says:

            From http://peakoilbarrel.com/peak-oil-open-thread/comment-page-1/#comment-545393

            === quote ===

            http://www.forbes.com/sites/arthurberman/2015/11/03/only-1-of-the-bakken-play-breaks-even-at-current-oil-prices/
            note it goes on for 6 pages…
            “Only 1% of the Bakken Play area is commercial at current oil prices based on my analysis that follows.
            Only 4% of horizontal wells drilled since 2000 meet the EUR (estimated ultimate recovery) threshold needed to break even at current oil prices, drilling and completion, and operating costs.
            The leading producing companies evaluated in this study are losing $11 to $38 on each barrel of oil that they produce, the very definition of waste. …”

    • What they need is a way to drill a mini well with 4 1/2 inch casing and magic super strength perfectly round sand with a 1.1 gram per cc density.

    • Fred Magyar says:

      Earth Fart?! LOL!

      Well, more like another fossil fuel industry fart. Try that with a wind turbine or a solar panel.
      When are we going to see the people responsible for these disasters locked up and the keys thrown away.

      • SatansBestFriend says:

        LOL!

        Honestly, I am surprised this isn’t getting more media attention. It seems worse than the BP oil spill.

        • aws. says:

          It’s invisible. Out of sight, out of mind.

        • It’s not. As far as I can tell it’s a chicken shit well. Exaggerated by the usual suspects.

          • Synapsid says:

            Fernando,

            According to Tom Whipple in today’s Peak Oil Review the leak is 500 feet down in an old well in an old oil field used to store NG.

            • ezrydermike says:

              I posted some news articles at the bottom of this thread. From the SoCalGas website…

              Relief Well

              Efforts to drill the relief well are progressing. Crews are actively working on Phase 3 of a 5 phase process. This potentially time consuming phase is critical to the overall success, and encompasses positively identifying the leaking well with active magnetic ranging technology. Once identified, the relief well will follow the leaking well to more than 8,000 feet deep and intercept it near its bottom. Once we intercept the well, we will pump heavy mud and fluids into the leaking well to stop the flow of gas from the reservoir and into the well. Once the flow of gas has been stopped, we will pump cement into the bottom of the well to permanently seal it. The drilling process continues around the clock, and is expected to be completed by late February to late March.

              As of December 27, we have successfully located the leaking or target well using the active magnetic ranging tool and are preparing to resume drilling. We have currently drilled approximately 3,800 feet of measured depth. From this point on, we will be interchanging drilling and ranging equipment as needed to increase the precision of the relief well in relation to the target well’s location and to follow it down at the appropriate distance, angle and orientation.

              We are also initiating a secondary relief well as backup to our ongoing drilling of the primary relief well. Grading of the drilling pad for the secondary well should be complete in early January. At that point a drilling rig will be moved in and set up. Drilling is slated to begin in late January.

  18. Here is an interesting article that tries to explain why some companies just keep drilling wells in spite of the very low oil prices.

    Hoping for a Price Surge, Oil Companies Keep Wells in Reserve

    Their well, one of hundreds drilled by Anadarko Petroleum in eastern Colorado’s Wattenberg field this year, could someday gush as many as 800 barrels of crude oil a day. But Anadarko is not planning to produce a drop of crude from the well for at least another year because the price of oil is now so pitifully low.

    The well here is just one of more than 4,000 drilled oil and natural gas wells across the country producing nothing, but ready to be tapped quickly……….

    But the incomplete wells are also another reason many analysts say a recovery in the oil price is nowhere in sight. Together the well backlog could produce as many as 500,000 barrels of oil a day, about the same amount of oil that Iran is expected to add to the glutted global market after it complies with the recent nuclear deal by the end of next year.

    Some analysts say oil companies like Anadarko, EOG Resources and Continental Resources may collectively risk suffocating the very price revival they anticipate by releasing abundant new supplies once prices inch up. Others say the eventual impact would be small and short-lived, but since the industry has never used this strategy before, no one can be sure……….

    On the completion side, fracking crews are easier to come by and their contracts tend to be more fluid. Now those completion costs have also come down — meaning that the uncompleted wells will eventually be brought on line at a lower cost, executives say.

    • shallow sand says:

      Well that’s just great.

      The article touts how smart this strategy is.

      The company focused on, Anadarko, lost $2.2 BILLION last QUARTER.

      • oldfarmermac says:

        Hi SS,

        If you have or can raise the cash, it makes sense to drill now and produce a year or two down the road-IF you believe prices will be up. According to what I read here, the costs of drilling a well may be down by a third, due to so many men and machines and so much steel and sand etc , “looking for a home”.

        I don’t know if this is “one third off” drilling sales event is totally for real, it might be only a quarter or a fifth off. Hopefully somebody who crunches tight oil numbers will have something to say about it.

        Tight oil production brought on by drilling now and producing later is not going to noticeably affect the price later.

        • Tight oil production brought on by drilling now and producing later is not going to noticeably affect the price later.

          By what logic did you arrive at that conclusion?

          The article states: But the incomplete wells are also another reason many analysts say a recovery in the oil price is nowhere in sight. Together the well backlog could produce as many as 500,000 barrels of oil a day, …

          Now I think an extra half a million barrels per day would noticeably affect the price.

          • oldfarmermac says:

            A half a million barrels WOULD be enough to influence prices.

            An individual company does not expect it’s OWN production to influence the market price- unless maybe the company is a REALLY big one maybe.

            If any given company drills say fifty such wells, that would be only twenty thousand barrels a day, maybe less- most definitely not enough to move the market price needle.

            It’s not the industry as whole, but individual companies that make the decision.

            I DID not go into Christmas trees, personally, for fear the industry was setting itself up to CHOKE itself on excess production. I was wrong about that, I could have made a LOT of money in Christmas trees, not enough people took the gamble to glut the market.

            Wine grape growers took the gamble and are asshole deep in grapes that won’t sell for enough to cover production costs in a lot of places these days, including my neighborhood.

        • shallow sand says:

          OFM.

          What you say may make sense of you are using cash and have little to no debt. It may make sense for ExxonMobil.

          Most LTO companies don’t have cash. Most have a gob of debt. I don’t think sinking cash into wells that will generate $0 revenue for a year or two is a good idea, especially given the financial shape LTO is in already.

          Also, the entire premise is that there will soon be a steep rise in the price of oil. That is a total crap shoot.

          So they are strictly gambling that oil prices will rise steeply in the next couple years? Is that a good business strategy for multi-billion dollar corporations to undertake, especially when the futures market says otherwise?

          Ask Harold Hamm how easy it is to predict the future price of oil.

          • oldfarmermac says:

            Hi SS,

            I am not an expert, but I HAVE read a representative sample of the books you read to get your MBA.

            Read me for insight, or comic relief, but DON’T bet more than beer and cigarette money on MY opinions. 😉

            Things DON’T always make sense. Under their suits and hats, corporate managers are just naked apes. 😉

            Since you are a hands on guy, I expect at some point you have gotten into some soft ground off the highway with a truck, and realized you are were in trouble and that IF YOU STOPPED, you would be walking out for SURE.

            SO – you put the pedal to the metal, and hopefully got thru. If not, you were STUCK ANYWAY.

            This could be thought of as a NO DOWNSIDE BET-IF you are convinced you are apt to go broke anyway.Win, you get to keep it all, lose, you are not going to pay ANY OF IT back anyway, it’s somebody else’s money, and your company is in bk court.

            The size of the gamble is offset by the size of the potential winnings.

      • shallow sand says:

        I looked up Anadarko on CO state website.

        Operate under Kerr McGee.

        Assuming 4,800 operated wells, by my math the average well is producing 23 barrels of oil and 112 mcf of gas per day, gross.

        Assuming 25% royalty burden, and remembering the basis spread in CO for both oil and gas is horrible, it looks like GROSS revenue per well at current price would be in the neighborhood of $200K per year.

        I keep begging, and will again. Someone come on here and explain how drilling, but not completing 13,000′ horizontal wells that won’t cum. 100,000 BO in 40 years makes one lick of sense?

        • AlexS says:

          shallow sand,
          I agree with you. There is no sense in drilling but not completing wells, especially as they are spending borrowed money.

          • JN2 says:

            >> There is no sense in drilling but not completing wells <<

            So why are they doing it?

        • coffeeguyzz says:

          Sarko

          When any company in any industry runs cash flow negative, one of two things inevitably occurs … they get better or they get gone.

          In the US unconventional field, the ‘get gones’ are lining up at the exit doors with their list of assets to sell to the ‘get better’, who are in the process of emerging from this downturn with a ferocious degree of resilience that will shock many, especially the far off be-robed sheiks who will be fortunate to not have their own heads lopped off as well as worldwide idealogues pining for an emergence of their ‘inner peasants’ (h/t to Fernando for that apt phrase).
          As for future reserves, see my response below to shallow re the Riverview well, and apply the principal to hydrocarbon bearing shales and ‘tight rocks’ on a global scale.

        • coffeeguyzz says:

          Shallow

          I’m having a hard time posting on my ‘stupid phone’.

          Some responses …
          I have no financial interest of any kind in any company whatsoever – oil/gas or otherwise.
          The operational and technical advances have indeed played a major role in the current situation as a quick glance at any production chart shows huge increases.
          You well know, I hope, that I have always questioned the financial underpinnings of these operators vis-à-vis their motives/goals with their continual drilling despite horrific price realizations. (Oilandgas360dotcom has an excellent article, dated Dec 23 3015 called “Why Drill?”. It picks seven Appalachian operators and describes the motives/circumstances of each. Info filled piece).
          I mention the Riverview well in response to Dennis’ comment re lack of recovery improvement. Actually, the Riverview may be far more significant, akin to the Jake well in 2009 (by EOG), the Renz well (2004, Range), and the recent Scotts Run well (2015, EQT) in opening up to he Niobrara, the Marcellus, and the Deep Utica.
          The particulars of the Riverview’s completion (previously displayed in the EF) will not only be emulated by other operators, it will INCREASE the number of wells per section providing far more resource recovery.

          • shallow sand says:

            Coffee, I know where you are coming from. I do agree that drilling two miles down and two miles out and doing all those frac stages can be pretty cool.

            I have made known several of times I am biased against shale, because it rained on my parade. So anything I post should be viewed in that light. It makes a huge difference if one has a financial motive or not. If I had sold out in 2013 like maybe I should have, I would not give a crap about shale and like 99.5% of the US, would be loving $1.75 gasoline at the pump. Heck, I get a charge out of filling up my truck for $35 even though it is hurting on the other end. That is one place where we are seeing a reduction in OPEX, fuel cost for trucks and other equipment. Way down. My friend who owns a trucking company is making record profits. They are adding more trucks. I suspect demand growth of 1.2 million bopd in 2016 is on the low side. I doubt $30 oil was utilized in making those predictions.

            However, I do try hard to stick to facts. I also am most focused on economics, because no well IMO should ever be drilled without economics in mind.

            A small segment of the US economy is being hurt by low oil and gas prices. However, the vast majority is taking off because of it IMO, just like the late 1980s and 1990s.

            The same cannot be said for Russia and OPEC, no matter how they try to spin it. Low oil prices hurt FSU and the Middle East in the 1990s and it is again.

            As long as GCC can’t get along with Iran, Iraq and Russia, US will be happy about oil prices. Non-oil people I talk to here think that the lack of cooperation on the part of those countries is great for the US.

            Gasoline is not a huge part of families’ budgets in the US. Housing, including utilities, is way more. So is healthcare. So is secondary education for those who go to college. We spend more on food than fuel.

            So if the oil exporters want to keep digging and bury themselves, the populace in the West says more power to them.

            • oldfarmermac says:

              HI SS

              “Gasoline is not a huge part of families’ budgets in the US.”

              This is true, no question.

              BUT gasoline IS a life or death purchase for tens of millions of American families, because the family car is their ONLY means of getting to work and the supermarket.

              I personally know a LOT of working poor people who find themselves in the position of either buying gasoline or getting their kid’s teeth fixed.The collective result is that the dentist has to drive his three year old Caddy another month or two.

              This might have a LOT to do with the reluctance of politicians to even mention a higher gasoline tax.

        • coffeeguyzz says:

          Shallow
          Re Anadarko
          Several thousand of those wells are legacy vertical wells from their 2000/2006 acquisitions from Union Pacific Resources and Kerr McGee.
          Anadarko’s output from 2010 thru 2015 (not full year), 7.1Mmbo …8 Mmbo …10.8 Mmbo …16.8 Mmbo …27.9 Mmbo … 26.9 Mmbo

          Gas output doubled from 80 Bcf to 152 Bcf (not full year).

          Virtually all Anadarko’s holdings are Land Grant given to the Union Pacific railroad 150 years ago. I do not know the precise impact on royalty payments, it is a significant reduction. (Several Appalachian Basin operators have similar leasing circumstances).
          These Niobrara guys are popping in wells at $3 million per … including completions. Still, $35 WTI would seem to be way low to be feasible.

          • shallow sand says:

            Coffee. I recall Enno Peters recently did an analysis on CO LTO recently. As I recall the wells have a steeper decline than Bakken, are more gassy, and EUR is much less. I am sure you are correct, that they are cheaper.

            I agree with you on current economics too.

          • shallow sand says:

            Looked closer at Kerr McGee horizontal wells.

            Gravity of liquids is 55 degrees, more or less? Is this considered oil?

            Also, in Anadarko company Q3 operations update, says company continues to reject ethane until margins improve. What does this mean?

            Anadarko appears to be primarily a gas company. 38% of production is oil and condensate, the remainder is gas and natural gas liquids. They realized $26 per BOE in Q3.

            They have $16 billion of long term debt v 787 BOE of daily production, and production is falling. They intentionally drilled and elected not to complete 180 wells. They curtailed gas sales in the Marcellus.

            They look in similar shape numbers wise to CHK. Wonder why their stock hasn’t collapsed?

            • coffeeguyzz says:

              Shallow

              “…wonder why their stock hasn’t collapsed”.

              Ss, didn’t you get the memo? We’re living in bizzaro world now with all the crazy financials in the O&G world.

              Are you sitting down?
              A few weeks back, Anadarko tried to BUY Apache, one of the biggest outfits around with over 500,000 boepd production and almost six MILLION acres in OK and Texas under development.
              You just can’t make this stuff up.

              Ethane rejection, versus ethane recovery, is foregoing the processing and capturing of the normally more valuable ethane due to low/non existant profitability.
              When the processing/handling costs are high, ethane pricing low, or some combination, producers will leave the ethane in with the much higher proportioned methane.

        • Lightsout says:

          They do it for the same reason that airlines continue to operate loss making routes. They hope for better times to arrive and they maintain the illusion that the business is a going concern.
          If activity is continued further credit can be sought nobody lends to a company with chained gates and all the former employees on welfare.

          • Not all companies work on credit. I was taught to assume we would never ever exceed 30% debt to equity. When we approached 26 % we cut costs to the bone. Next in line is dividends. But company viability does require having a steady hand on the wheel. This means companies work from an oil price forecast deck, and that can assume higher prices in the future.

    • As i wrote early this year, drilling a well and waiting sure seems like a viable strategy. I believe contractor prices must be down 25 % or so, and the slow project pace really improves overall performance. Reading over the article I also see the ny times writer misses subtle points. But that’s fairly understandable.

  19. Glenn Stehle says:

    “Oil price lows prompt Chinese gas pipeline deal”

    Chinese state-owned oil company China National Petroleum Corp has concluded a complicated asset shuffle that allows state-owned steel mill Baosteel, two Chinese insurers and a number of funds to acquire stakes in three mammoth pipelines carrying gas across China.

    CNPC has long resisted plans by bureaucrats in Beijing to force it to open the pipeline network. But a sharp drop in oil prices has hit revenues at both the state-owned CNPC and its Hong Kong-listed unit PetroChina.

    Income at both entities has dropped “dramatically” this year, PetroChina president Wang Dongjin said in a statement on CNPC’s website this month….

    Beijing has presented such asset reshuffles as part of economic reforms but has proven very reluctant to throw open the strategically important oil and gas industry to private investment.

    http://www.ft.com/intl/cms/s/0/23c6ba12-aa3f-11e5-955c-1e1d6de94879.html#axzz3vPaetVRD

  20. Longtimber says:

    Ukraine’s Looming “19 Fukushimas” Scenario
    “What is a bankrupt Ukraine, which just stiffed Russia on billions of sovereign debt, going to do when the time comes to refuel those 19 reactors?”
    ” One of the worst things that can happen to a nuclear reactor is loss of electricity supply. Yes, nuclear power stations make electricity—some of the time—but they must be supplied with electricity all the time to avoid a meltdown. This is what happened at Fukushima Daiichi, which dusted the ground with radionuclides as far as Tokyo and is still leaking radioactive juice into the Pacific.”
    http://www.zerohedge.com/news/2015-12-24/ukraines-looming-19-fukushimas-scenario

  21. AlexS says:

    $15-20 for a long period of time?

    Let’s look at it from a historical perspective.

    In today’s dollars (adjusted for inflation) annual average oil prices have not been below $20 since 1998 ($18.5), and below $15 since 1972.

    Brent oil price in 2014 dollars, 1970-2015
    Source: BP Statistical Review of World Energy June 2015, my estimate for 2015

    • AlexS says:

      Monthly average oil prices (in today’s dollars) have been below $20 from February 1998 to March 2009 (14 months), of which slightly below $15 from December 1998 to February 2009 (3 months).
      During the most recent global recession, the lowest monthly average oil price (in 2015 dollars) was in December 2008 ($40.1) and January 2009 ($41.4).

      Monthly average U.S. imported oil price in 2015 dollars
      Source: EIA

    • likbez says:

      Everything is possible in the world where the price of oil is determined by Wall Street (despite some people having illusions about supply and demand equilibrium; this is just a factor and probably not the decisive factor).

      But I think even at $40 per barrel the US shale production will be decimated in a year or two. They managed to get financing for 2016, but that’s about it. And that’s over 3 Mb/d. Additional cars that were bought in the US, India and China in 2015 will be on the road for another 10 years or so.

      In this sense EIA prediction of $50 average in 2016 does not look completely outlandish. But to achieve such average from low start of $38 per barrel and typically low prices in the Q1 you need at least half of the months to be above $50 by $10. That’s looks less probable now.

      • AlexS says:

        Unlike $35-40, $20/barrel is below cash operating costs for many conventional producers worldwide.
        That means that, at that price, not only upstream investments would be severely cut, but also a large number of the currently producing wells will be iddled.
        $20 is almost twice as low as the current price, and supply-side response will be much stronger than what we are seeing now.
        Oil price may temporarily touch $20, as Goldman predicts (although this is not their base scenario), but it will not stay at these levels for long term.

        • likbez says:

          “Oil price may temporarily touch $20, as Goldman predicts (although this is not their base scenario), but it will not stay at these levels for long term.”

          Thank you. That’s exactly my point.

          The key consideration here is that the Wall Street instruments create a strong positive feedback loop that destabilized the system and amplifies any price movements. So oscillations became more and more powerful creating more and more moments with absurd prices. Right now on the down side.

          $20 per barrel is such an absurd in the current circumstances price, but it is not that outlandish estimate of a short time minimum possible in the destabilized system, especially in Q1.

        • Goldman Sachs knows little about the oil business. They are social parasites.

          • oldfarmermac says:

            Damn it all Fernando,

            Sound bites are the utter and absolute DEATH of understanding!

            I know you know your business, and what you MEANT to say, I think, was that Gold in Sacks lacks hands on expertise in RUNNING an oil company, which is no doubt true.

            Tell ya what, though, other than hands on expertise in actually running the machinery, or interpreting the results of a seismic survey, and that sort of thing, it is extremely likely that there is NOTHING Goldman Sachs does not know about the oil business, if Gold in Sacks wants to know.

            You mention being bound by confidentiality agreements not to disclose a lot of things you know, which is entirely understandable.

            But when the company that owns that info wants to borrow ten million bucks, or a hundred million bucks, who do you think is going to see it?

            Who has money enough to hire as many oil men as consultants as they please, if not a super bank?

            The tentacles of super banks extend everywhere in the business world. If a Gold in Sacks executive wants to know how many rolls of toilet paper a given oil company bought and had shipped to PODUNK , North Dakota , yesterday, he will probably have the answer within a quarter of an hour. I exaggerate of course ,but only to make my point.

            Don’t pay much attention to ME, all I know about the oil business is what I have learned reading a few books and following a couple of blogs.

            BIG BROTHER IS REAL.

            He IS watching the oil industry , as sure as sun rise.

            • Glenn Stehle says:

              oldfarmermac,

              I don’t think the masters of the universe at Goldman Sachs, “doing God’s work” as Lloyd Blankfein put it, are nearly as good as you beleive they are.

              When their risk control isn’t so good, however, they always know they have the US government captured, and can fall back on the US taxpayers to bail them out, just like they did in 2008.

              What the masters of the universe are truly good at is controlling our lawmakers.

              • oldfarmermac says:

                MR GS,

                I never said they were GOOD at anything, except putting their hands on whatever information they might want.

                You are getting to be about as bad as anybody else who has ever frequented this forum, when it comes to twisting what others have to say.

                Someday you are going to say something both relevant and accurate, but it will be by accident.

              • oldfarmermac says:

                Go home and play with yourself, GS.

                You NEVER have anything remotely honest to say, not that I have noticed.

                You make a CONSISTENT habit of twisting what anybody else has to say into a pretzel.

                God’s work my ass, you brought that up, not me.

                I never said Gold in Sacks is “good ” in the sense you imply I did. I never implied Gold in Sacks is competent in any fashion, except maybe in gathering information.

                I said they have access to just about any information they want about the oil industry, because if oil men want to borrow money from GoldinSacks, they have to open their books.

            • Mac, a while back I had a consulting job, it involved talking to investment banker types, answering their questions. The people who asked the questions were all banker types, accountants, lawyers, etc. I could tell from the questions they lacked the ability to do nuances. Basically they are arrogant, think of themselves a lot, are condescending with the universe, and know how to make money trading paper. But they do so because they built the environment in which they thrive. I also saw them try to step out of their own little world and fail miserably. So in a sense they are parasites. They don’t bring value added, and not only are they unable to learn, they don’t have the volition or the mindset to do so…..they do make money because they wrote the rules for the game they play, and are embedded in a system designed to ensure their individual survival. One gas to be incredibly stupid to fail to make money in that environment when given such a golden spoon.

  22. Clueless says:

    Somewhat off topic, but I have a couple of questions on automobiles. It may be important based upon the movement to driverless smart cars. I know that there a lot of smart people on this site, and perhaps one of you knows the answer.
    First with respect to cars that have “collision avoidance” systems, I understand that they use radar. And, I assume that all driverless cars will also use it, only more intensely. Since they already screw up radar speed detectors [I know first hand with my Escort], what is the prospect for a country with 300 million cars on the road, each with their own radar system? Will they screw each other up? Or, is there enough bandwidth [if that is a correct/useful term] such that each will have a unique signal that will not be disrupted by other radar signals?
    Second, for as long as I can remember [back to the 1960’s] people of been concerned/hysterical with electronic signals. My first recollection is of the many farmers who claimed that power lines were killing them and their farm animals. Today, it is claims that cell phones cause brain tumors. And even worse, the new smart meters that the utilities are installing in their customer base are causing a whole laundry list of alleged ailments from “concerned” homeowners. So, what is the prospect for an adverse reaction from the public by the prospect of being bombarded by radar every minute of the day that they spend in their car or outside in public where there are autos?
    PS: Just as a humorous note, I understand that the Google cars try to follow the rules too closely. I can envision 20,000 cars, all Google, outside the stadium in the parking lot when the Dallas Cowboy game ends. Currently, cars move at inches, or fractions of inches, at a time to nose out into a lane to get out of the parking lot. Might they be permanently stuck until they can be “freed” one at a time?

    • oldfarmermac says:

      Clueless, you ain’t. At least not all the time.

      You can bet your last dime there will be a cottage industry born out of the ( remote imo) possibility radar may result in the birth of three headed babies, or worse.

      Now as far as the self driving cars getting tied in knots in traffic jams- I predict there will be robotic traffic cops to tell them when they have, or do not have, permission to move.

      The robot cops will probably look at least superficially like humans,at least in some localities, with big old eyes that can change color just like traffic lights, and arms like human cops arms, to hold traffic with one hand and direct it right or left with the other.

      The robo cops at big time sporting events will be dressed in the colors and costumes of home team mascots. So at my dear old Alma Mater, they will look like giant turkeys.ROFL!

      Making them manlike will make it easier for humans to understand and obey their instructions, and help tamp down frayed tempers.

      If such a robotic traffic cop sees you, a human, fixing to run a red light, his eyes can instantly grow ten times as big, and red, and luminous as usual, like the lap dog when it gets pissed in the Ren and Stimpy cartoon show.That MIGHT get your attention. 😉

    • R Walter says:

      Driverless cars will be subject to and vulnerable to vandalism. Raising hell just for the hell of it has always been a sport, so slashed tires, broken windshields, tail lights, deliberate accidents just to make driverless vehicles useless will probably take place, so the idea will be abandoned due to idiocy and nonsense. In the final analysis, the costs will be higher, repairs, more tires, windshields, vehicles disabled etc. will end up the norm. Humans know how to make it all an unbelievable mess and don’t care.

      That is the way it will go moving west.

      Uber is another dead man walking. har

      • Fred Magyar says:

        Hmm, perhaps, I know subways in New York used to be covered with graffiti…

        But what makes you think driverless cars will also be defenseless and therefore vulnerable to attack? I don’t think it is much of a stretch to imagine they might be able to take matters into their own hands and fight back and defend themselves or at the very least call the cops.

        Zip Car seems to do OK and many countries in Europe have public bicycle programs and while I’m sure there is some theft and vandalism, as far as I know it isn’t a major issue.

        I dunno, but I don’t think Uber can be a ‘Dead Man Walking’, because one, it drives, and two, there is no man to kill if it goes driverless… 🙂

        • oldfarmermac says:

          Luddites will always be with us, and Ronald is right, some driverless cars are going to be vandalized.

          But every last one of them will have cameras on board, and when one broadcasts an sos, every one for blocks around will start recording video. Getting away might be a bit tricky.

          Autonomous cars might actually prove to be VERY good friends of honest citizens. I am not advocating that the cops be able to seize such video without warrants or that sort of thing, but I would gladly volunteer any that belonged to me, in the event it might identify a robber or murderer etc.

          And when the car sets off the owners alarm app on his smart watch, the owner might just poke his piece out the window and shoot first, and worry about asking questions later

          People who are rich often drive or ride in non descript vehicles in order not to attract attention.

          I know a couple of low life types with too much money who drive such cars because they learned in The Graybar School of (Criminal) Business Administration while getting their MC (riminal ) BA that flashy cars attract the attention of cops and tax collectors.

        • Paulo says:

          Drove home yesterday after a Christmas visit at my daughters. It was snowing pretty hard and the highway over ‘the mountain’ was packed snow, slippery, and quite treacherous. Not only are there not enough sensors in the world to compensate for the nuances of winter driving demands, there is such a thing as experience and judgement inherent in choosing speed, gear used, and planning for conditions further along. Computers can’t do that, sorry. They react or act according to set parameters.

          The day there are driverless cars on the highway is when I outfit my car like James Bond and run them off the road.

          • Fred Magyar says:

            Computers can’t do that, sorry. They react or act according to set parameters.

            Oh yes they can! https://goo.gl/g56Fdr
            You need to understand deep learning algorithms and yes there are more than enough sensors right now.
            https://goo.gl/dL6VCo

            • Paulo says:

              Not buying it, (literally). There is too much complexity in the concept and execution. Right now, when a current type vehicle needs repair, the first step is the $100 hook up to a reader. Then, when the diagnostic is completed chips and/or sensors are replaced as needed. Then, other repairs are made. It is extremely expensive at $95/hour shop time. Simple brake jobs are often $1,000+. Head gasket and machining +$2,000. Transmission glitches? cheaper to throw the car away. A problem with the AI unit for driving would equal a nightmare tow after shut down or a crash repair. Who would be liable for any accident? The owner? The software makers? The programmer? The dealership? The manufacturer? Cars are damn near unaffordable right now for wage earners. Increased complexity will only raise purchase prices and maintenance costs.

              I’m going the other way, soon. I will be parking my 30 year old Toyota 4X4 when something major goes and replace it with a 660cc used mini-truck from Japan, basically an ATV with a cabin, crank windows, and heater. The pollution standards are excellent compared to traditional models, the vehicle is light light light in weight, and built only for utility. I use my current ride for materials and launching my small boat. This rig will do it all for around $10,000 Cdn.

              Here are a couple of sites for pics and info.

              http://www.japaneseminitrucks.ca/
              http://www.superlauto.com/sla.html
              http://www.rockymountainminitrucks.net/

          • Homo Fossilfuelus says:

            Your boast is pure hyperbole.

            For surely not too many days (if that long) after you beginning your quest to run driver-less cars off the road you will be introduced to new, and less pleasant, accommodations.

            Voice your dissatisfaction through civic and political engagement, not through vigilantism.

            If you were trying to be droll through sarcasm, the World has too may violence-prone mental cases out there for that.

            I have seen far too much real-world road rage to give you a pass…I will take my chances with well-engineered, tested, and proven driverless cars than take my chances with with human road-ragers, thank you.

            • Paulo says:

              You are someone with little sense of humour. Of course it is pure hyperbole. Perhaps you live in an area where driverless cars will one day be all the rage. Let me know where it is so I can be sure to stay away and save both the irritation of meeting.

              One question, if you have to travel to pick up your driverless car, will you be travleing there in a pilotless aircraft? I didn’t think so.

            • Donn Hewes says:

              What to say? I think driverless cars and drones (and smart? phones) are the epitome of everything that is wrong with our consumptive and consumer culture. I once had a fantasy that peak oil would solve the problem of idiots on snowmobiles in the winter, but I now realize only the actual collapse can do that. Same for giant lawn mowers and driverless cars.

              • Wait until you see my giant self driving & solar powered lawnmower/snowplow/dry leaf vacuum super Zamboni.

                • Donn Hewes says:

                  Fernando, I think you have forgotten to compact the leaves with a 6000 psi baler and burn them to biochar before depositing them on the lawn as a carbon positive amendment. loved your response by the way. D

                  • Fred Magyar says:

                    Maybe you could use something like this to compact those leaves…

                    http://bigbelly.com/how-l-a-works-smart-trash-cans/

                  • wimbi says:

                    I get along fine stuffing my biomass into my pyrolyzer with a nice heavy log of the right diameter. Whack whack. Done.

                    BTW,Pyrolyzer puts out gas to run the honda genset and carbon to stuff into the potty, resulting potty char goes out to the grateful trees.

                    Circular – all the way around and around and around.

                    The world is saved, yet again.

              • Fred Magyar says:

                What to say? I think driverless cars and drones (and smart? phones) are the epitome of everything that is wrong with our consumptive and consumer culture.

                No, you have it backwards, the problem is 7+ billion humans on a finite planet aspiring to living in a consumptive culture. Especially a linear consumptive economic model. We need to design circular regenerative models but even then we still have the 7 billion plus humans problem/predicament. So there is no easy way out. Physics and biology still take precedence. Sooner or later there will be a population correction.

                BUT, If anything, smartphones and driverless cars could be useful in reducing linear consumption and make it easier to share and recycle resources in a circular economic model.

                http://www.ellenmacarthurfoundation.org/circular-economy

                • Nick G says:

                  Fred,

                  There’s no reason humans can’t learn to stop trashing their environment.

                  As long as humans aspire to eliminate all other major species, and turn their world into one big lifeless english garden, we’re in trouble. It won’t matter if we reduce our population by 50%, or 99%, we’ll still be in trouble because we’ll still be more than capable of endless pollution and extinction of other species.

                  On the other hand, if we learn to stop eliminating habitat, polluting, consuming our environment (e.g., with zero-GHG energy, recycling, etc), etc., etc., we can certainly prosper with our current numbers.

                  It’s a choice, both for individuals and, even more, for our society as a whole. As individuals we can choose to live better in order to set an example, but individual efforts can never be truly effective: only decisions at a societal and governmental level can re-set the rules we all live by, and deal with the “tragedy of the commons” and competitive descent to the lowest common denominator that governs the behavior of nations and business.

                  We have all the tech we need. We need to implement it. That means we have to work to educate our friends, neighbors, coworkers, media and governments.

                  Social change. That’s what it’s all about.

                  • Fred Magyar says:

                    Nick, I agree with most of your points except this one and on this one I disagree in a major way!

                    It won’t matter if we reduce our population by 50%, or 99%, we’ll still be in trouble because we’ll still be more than capable of endless pollution and extinction of other species.

                    It makes a huge difference to the sustainability of our species and the planet whether we reduce our population by 50% which probably is still not sustainable if we continue on our current wasteful consumptive path. However if we reduce our population by 99%, that might even allow our current wastefulness to continue. Assuming we could even maintain an industrialized civilization with such low numbers.

                    Before anyone jumps all over me let me clearly state that I am not promoting wasteful wantonness! I would like to see an end to our current patterns of consumption and a transition to a sustainable circular economic model.

                    BUT from a purely biological and population dynamics standpoint reducing our population by 50% or 99% makes a very very big difference indeed.

                    A 50% reduction from 7 billion is still 3.5 billion.
                    A 99% reduction from 7 billion leave us with 70 million humans on the planet.

                    Those results are astronomically different in terms of what that would mean for our impact on the planet.

                    I’m not sure you thought through the implications of those numbers and I guess you were trying to make a somewhat different point. I think you were trying to say that even a very few humans could still cause a lot of damage.

                    I think that is why you said that ‘Social Change’ is what it is really about. And I do agree that is very important.

                    But physics and biology do matter. Ecosystem thermodynamics, ecosystem integrity and ecological overshoot can not be ignored and assumed that it is possible to work around them with technology alone. There are real physical limits that need to be contended with.

                    I don’t pretend to know the actual number of humans that could live on this planet in a sustainable manner but I certainly don’t think that 7 billion plus is in any way shape or form sustainable regardless of the technology we end up using. I find numbers of 9 or ten billion touted by some to be beyond ludicrous.

                    At the end of the day I still expect a population correction to occur in the not too distant future.

                  • wimbi says:

                    Social change. Yep, but that’s one hell of a lot easier when there are few people and lots of resources.

                    By good luck and good (wife’s) planning, I happen to live in a place with few people, and lots of what’s really needed, including highly competent people who can and do get along on what’s here.

                    So it’s easy for us to say “let’s kick the BAU stuff and get together to do what we agree is best for everybody” since if and as we do that, we are even better off.

                    I sure don’t feel any pain from getting on to solar/biomass and off of coal electricity.

                    But, alas, not everybody lives in the middle of a well-watered wood with a mere scattering of others around.

                    And, needless to say, it’s not at all the same where my EV and my computer come from. I’ve been there and know that full well.

                    I’m just saying that even those places could be just as happy as mine if there were fewer people and lots more trees there.

                    It was not long ago when, I was told by the elders, that the villages of India and Africa I had been visiting had forests right there with monkeys to be caught with little effort. Now, nothing to be seen but bare dirt with human feet on it night and day. Ug!

                    And already unbearably hot.

                  • R Walter says:

                    There are an estimated three trillion trees on the planet. Clearly, trees are in overshoot and a fifty percent reduction in the number of trees would do wonders for the ecosystems on the planet. 1.5 trillion trees would reduce the CO2 absorbed from the atmosphere by half or something like that.

                    The grass biomes are too large, the Great Plains should be reduced by half also. There are just too many grasses and too much room for grasses to grow. Same goes for the planktons.

                    Denuding the Amazon forest to half its size will be a benefit, more room for humans. The planet should be able to house another 7 billion humans if we could just reduce the tree population by half. 14 billion people, 1.5 trillion trees, there are just too many trees by 100 times the number of humans. At the current 7 billion humans and 3 trillion trees, the trees out number humans by 400 times! It is an outrage!

                    A new summit to reduce the trees on the planet is required. We need tree change to save the planet! Now!

                    The facts speak for themselves. A new ‘war on trees’ or a ‘war on autotrophs’ by Team Green is next in line. Free chainsaws for Siberian loggers. The taiga needs to be reduced by 90 percent or even 95 percent is better. Just too many plants stealing CO2 from the atmosphere.

                    I’m serious. 😁

                  • Fred Magyar says:

                    R W says:

                    I’m serious. 😁

                    There are some here who think you are…
                    But what you suggest would be a losing battle because if you increase the amount of CO2 in the atmosphere the planet would produce even more trees than it had before. After all as we all know CO2 is life for plants! You just can’t win 🙂

                  • farmboy says:

                    R Walter

                    Asumming your ratio of 400 trees to 1 human is correct. There would be 1600 trees for every family of 4. give trees an ave of 50 years to mature, means if the population would stop increasing, every family could sustainably harvest 32 trees per year as long as enough trees would be allowed to grow again.

                    So where are the folks saying that if we burn firewood for heating that all the trees would be gone in 2 to 4 years?

                    The vast majority of buildings do not need to be at 70 F more like 40 to 65 would do for most. And switching to high temp combustion stoves, with heat storage capacity, takes care of the pollution.

                    So what is wrong with this scenario?

                  • wimbi says:

                    High temp stoves. Big opportunity. High temp to heat our bottom after a cold walk is like using water from a high peak to flush a toilet- a huge waste of potential energy.

                    It’s “easy” to make a heat engine for that hot stove that pumps out electricity and then dumps less hot heat out to your bottom. So you get both for the price of one.

                    “Easy” meaning ” Know many ways to do it, but, might not have done it just yet, on accounta way too busy with foolishness”

                    Awful lot of those easy things just sitting around waiting, and waiting – and waiting.

                  • Nick G says:

                    However if we reduce our population by 99%, that might even allow our current wastefulness to continue.

                    Fred, I understand where you’re coming from, and I sympathize.

                    But…what was the population of Australia, when incoming humans wiped out all the large mammals? What was the population of N. America, 10,000 years ago, when they did the same? What was the population of Europeans in N. America when they wiped out the passenger pigeons, and almost wiped out the buffalo. It took relatively few hunters to wipe these out, in relatively few years. OTOH, what’s the current population of the US, which is bringing back wolves in Yellowstone?

                    If humans want to wipe out most competing species, they can do it with 1% of our current numbers, and quite quickly. If humans want to preserve wilderness and native habitat, they can do that as well: it’s perfectly doable to maintain the density of Manhattan, or Hong Kong, or Singapore, or even Seattle. It’s just a social decision.

                    One other thought: don’t forget exponential growth. China’s current growth rate of 7% would double the economy in 10 years. In 50 years, that’s 7 doublings, or an increase of 128 times: more than enough to compensate for a 99% reduction of population.

                    Just 50 years.

                  • ChiefEngineer says:

                    Hi,

                    Nick’s right, no matter what. Man has to clean up his act. If he doesn’t, a billion humans will destroy the plant.

                    It doesn’t matter if it’s 3.5 billion or 70 million. We need to turn the ship in the right direction in both aspects and start paddling. There is no correct number.

                    “Denuding the Amazon forest to half its size will be a benefit, more room for humans.”

                    Walter, that head is in all the way to it’s shoulders.

                    I’m serious. 😁, your not funny

                  • Nick and Chief, it’s not what humans want to do, or what humans will do or even what humans could do if they wanted to.

                    You guys speak of the human race as if it had a rational mind and could decide to do this, that or the other. Nonsense! We, all seven point three billion of us, behave the way we do because of our nature. We have always behaved this way and always will. There will never be any great change in the way we behave.

                    Humans did not intentionally wipe out all the megafauna in America or Australia or anywhere. Sure we killed a lot to eat, or for their fur, but mostly they died out because we took over their territory and by doing so took away their resources.

                    We are currently, and always have been, in competition with other species for territory and resources. When we expand our territory theirs shrink… and they die.

                    To suggest what we could do, or must d0, is just silly. We will continue to do what we have always done. It is just our nature to do so. One person, or even hundreds of people, can change their mind and clean up their act. But over seven billion people behave in accordance with their nature. It’s called human nature. And it is not going to change.

                  • Fred Magyar says:

                    So what is wrong with this scenario?

                    farmboy, hopefully that is a purely rhetorical question and you are just responding to RW’s sarcasm with more of the same.

                    Otherwise, the simple answer to your question is: ‘EVERYTHING’ is wrong with that scenario!

        • oldfarmermac says:

          Hi one more time Fred, and anybody interested in av tech, sustainability, renewables, etc

          I have posted a long comment at

          http://peakoilbarrel.com/all-roads-lead-to-peak-oil/comment-page-1/#comment-552823 so as not to make too big a pig of myself in the current comment section.

          Please add any thing you think worthwhile, and if I ever get published, you will get some credit right up front in the dedication, along with RON and just about everybody else, even including GS.

          Thanks in advance.

  23. oldfarmermac says:

    Off topic, but a great short read for those interested in the history of science.
    http://news.nationalgeographic.com/2015/12/151227-meteor-meteorite-space-asteroid-chelyabinsk-ngbooktalk/

    I will be ordering the book.

  24. IanH says:

    Art Berman’s latest thoughts (12/27/2015) on Peak Oil:

    http://www.artberman.com/the-crude-oil-export-ban-what-me-worry-about-peak-oil/

  25. oldfarmermac says:

    From here on my plan is to post SHORT replies to any comments I find interesting, and post my longer comments at the last previous main post. I will put a one or two line description and the link in the current main post.

    I am sure some people will be happy not to be bothered with scrolling past my long rambles, while anybody interested in a bit more nuance and depth can just click.

    • Javier says:

      I don’t think that is a good idea, olfarmermac,

      That you write long is part of your idiosincracy. I don’t mind at all. If I am interested in what you are saying I’ll read it, and if is about something I’m not interested, I’ll skip it. It is no problem really to scroll down, as Ron’s posts always get a mile long because of the hundreds of comments.

      By distributing your comments over different pages you make it harder to read them, you branch out the discussions so the conversation suffers from holes here and out of the blue postings there, and in essence you practice a self censoring that nobody asks, nor wants and that results in a lot less people reading your comments. People that are reading them voluntarily now but they are asked by you to choose between continue reading the page or start hoping around.

      Frankly I don’t see who wins with your decision to distribute your comments over different pages.

      Just my two cents. Cheers.

    • Nick G says:

      I agree with Javier – keep your comments in one place.

      Here’s a suggestion: structure your comments to make them more readable. There are lots of ways to do it – here are a few:

      1) number different ideas;

      2) use topic sentences;

      3) use foot/end notes;

      4) separate major topics with long dashes:

      ————————————————————————-

      and so on.

      • oldfarmermac says:

        Hi Nick, Javier,

        I can’t please everybody, and I owe it to Ron, as our host , to please him, and he is not too happy about my posting so many long comments in his current lead articles.

        A while back I found myself a whiz kid who was going to get me up to speed on blogging tech, and maybe help me set up a site of my own, but he took off, and now I am looking for another tutor.

        All it takes to read comments in the LAST previous lead post is to click on my link, and hopefully anybody interested will be willing to just click it.

        Personally I am not much interested in sound bite level commentary, and want to get into more nuance, and more depth.

        Nobody will be bothered by long involved potentially off topic discussions at the tail end of the LAST main post,and the software allows new comments for at least a couple of weeks or more.

        • ChiefEngineer says:

          Hi Mac,

          I agree with Javier and Nick. Please just post your comments on the current page. Scrolling past them is not an issue. Titling them or any of Nick’s suggestions would help the readers save time. I know I don’t have time to read everything, but flipping back to old topic pages isn’t a time saver either and I could miss something I wish I didn’t. Be yourself, that’s who we love. But keep in mind sometimes we aren’t looking for love, just a quickie.

          Happy Holidays !

          • robert wilson says:

            oldfarmermac: Recalling a recent Volgograd post, I sometimes think that you could use an editor and a fact checker, especially for your new book. And perhaps type a little slower.

  26. R Walter says:

    Oil will eventually lose more ground to other forms of energy, it has to happen until overshoot collapses everything. It is now a Catch 22. Massive denial going on there in the overshoot nightmare staring everyone in the face, the 800 pound gorilla in the room that occupies the entire planet. You laugh to keep from crying.

    http://electrictractor.com

    Electric utility tractors are here.

    http://www.steffes.com/off-peak-heating/commercial-systems.html

    Electric thermal storage is viable and efficient.

    “The road of excess leads to the palace of wisdom” – William Blake

    http://www.goodreads.com/quotes/665209-the-road-of-excess-leads-to-the-palace-of-wisdom-you

    All written in song too. One of my favorite country songs with a Christmas theme goes something like this: “Please, Momma, don’t get drunk this Christmas, I don’t want to see my Daddy cry.”

    Can’t remember the words exactly, but the words have wisdom. har

    It is still Christmastime.

    • Jef says:

      That is NOT a tractor. That is a golf cart with a mower deck attached, which by the way my uncle and I built about 40 years ago.

      Only good for hard packed, well groomed lawns. Except when sit down mowers are really needed is with all the 2+ acre lawns like we have around here and I am not so sure battery would hold up. Better to buy a cow or some sheep.

      • wimbi says:

        Better to get entirely rid of the whole dam lawn, one of the worst examples of frivolous uses of FF’s– to maintain a biological desert.

        Quite a while ago I told wife that I was tired of fixing lawn widgets, so we stopped lawn and let it return to a jungle. Far more interesting to watch and FAR easier on the environment and pocket book.

        I have not yet sold the idea of importing a cougar to cull the deer, but we do already have foxes, coons and possums, lots of snakes and frogs, and occasional coyotes, who only howl when at a polite distance.

        Brave new lawn. No carburetor.

  27. ChiefEngineer says:

    Tverberg vs. Krugman (actuary vs. economist, right vs. left, conservative vs. liberal)

    Who do you want to sleep in the White House ?

    Krugman –

    “But now we’re witnessing a revolution on multiple fronts. The biggest effects so far have come from fracking, which has ended fears about peak oil and could, if properly regulated, be some help on climate change: Fracked gas is still fossil fuel, but burning it generates a lot less greenhouse emissions than burning coal. The bigger revolution looking forward, however, is in renewable energy, where costs of wind and especially solar have dropped incredibly fast.”

    “True, I’m still waiting for flying cars, not to mention hyperdrive. But we have made enough progress in the technology of things that saving the world has suddenly become much more plausible. And that’s reason to celebrate.”

    http://www.nytimes.com/2015/12/25/opinion/things-to-celebrate-like-dreams-of-flying-cars.html?rref=collection%2Fcolumn%2FPaul Krugman&action=click&contentCollection=Opinion&module=Collection&region=Marginalia&src=me&pgtype=article

    Tverberg-

    “I will admit I do not fully understand this whole issue. If we could suddenly convince the world that US has more opportunities for profitable investments than anywhere else in the world, theoretically our problem could be solved. But I don’t see this happening. Some have claimed that the recent improvements in oil and gas drilling make the US a more attractive place for investment, but I am doubtful that this is a true solution. Many of the assessments seem to be based on very optimistic estimates of future oil and gas production from “fracked” wells. And the amount of the effect is likely small.”

    “Perhaps we need to be thinking more about what infrastructure investments can truly last beyond the system itself. The names “Renewables” were given to our current high-tech wind turbines and solar PV to give us the impression that they can last beyond the system themselves, but I am doubtful that this is really the case, since they depend on the availability of the electric grid and other support systems. Perhaps we need to be focusing more on lower tech applications that can be repaired with local materials and will truly provide lasting benefit.”

    http://ourfiniteworld.com/2011/12/19/can-we-invest-our-way-out-of-an-energy-shortfall/

    • Glenn Stehle says:

      Tverberg “right”? “Conservative”?

      I guess that’s why she gets invited to places like Cuba and China to give seminars.

      • ChiefEngineer says:

        Wow Glenn, how quickly you throw your own under the Tverberg conservative infrastructure stagecoach

        • Glenn Stehle says:

          I don’t have the slightest idea what you’re talking about.

          I believe it would be a great honor to be invited to Chinese or Cuban universities to give seminars.

          And these countries are hardly bastions of rightism or conservatism.

          • ChiefEngineer says:

            Still don’t know the difference from right or left Glenn ?

            • Glenn Stehle says:

              So what are you trying to say? That Cuba and China are right-wing bastions?

              I don’t think so.

              • ChiefEngineer says:

                What I think is that you come to the wrong conclusion from an isolated view like most conservatives

                • Glenn Stehle says:

                  And what I think is that if you want to brand Tverberg with the stigma of being a conservative, you don’t know what you’re talking about.

                  Right-wing conservatives don’t get invited to universities in places like China and Cuba to give seminars.

                  Sorry, but your attempt to stigmatize Tverberg as a conservative because she doesn’t buy into your glorious Green Utopia is a misfire.

                  • ChiefEngineer says:

                    Your confusing your opinion with reality

                    “Right-wing conservatives don’t get invited to universities in places like China and Cuba to give seminars.”

                  • Caelan MacIntyre says:

                    ChiefEngineer, you seem to have a thing for Gail.
                    Frankly, she does strike me as pretty bright and even keel, so I can understand.
                    Why, she might even make some people seem like they’ve had a few too many.

                  • ChiefEngineer says:

                    Caelan, my post isn’t about me. It’s about two opposing views of the future.

                    Mac said it perfectly “giving up is for losers”

                  • Glenn Stehle says:

                    Caelan,

                    What does ChiefEngineer’s argument consist of?

                    It consists of labeling Tverberg as a “conservative.”

                    And if he can portray the enemy as the face of evil, her arguments can then be dismissed out of hand, without ever having to actually counter them with factual evidence and logic.

    • oldfarmermac says:

      I attended a conference once where she spoke. She repeats the same old , same old canned talk over and over.

      I don’t pretend to know what she actually THINKS, but she has a BRAND to sell, and sells it well.

      Personally I am convinced she is blinded by her own considerable expertise, which seems to be a problem for most of the experts in this world.

      Having said this much, I think myself that the window of opportunity in respect to going renewable is closing fast, and that most of our species is NOT going to squeeze thru the window in time.

      It is possible NONE of us will, but giving up is for losers.

    • Javier says:

      Krugman is a favorite of one of the main newspapers here in Spain, so I get to read him from time to time.

      Economy is such a curious discipline. The guy must be very clever to have a Nobel prize, but it is funny to see how his basic beliefs are so completely wrong. Apparently stimulus and quantitative easing are so good that you cannot have too much of them. To him the main reason behind European economy poor performance compared to US economy is that the ECB did not print enough money. He seems completely unaware of the contribution to US economy of the fracking bubble that Europe completely missed, and he is clearly unable to differentiate short term consequences from long term consequences. He is really dangerous and very much a representitive of the kind of short sighted people that have piloted the world into our present predicament.

      I would take Tverberg’s common sense over Krugman’s complete lack of it any day.

      • Glenn Stehle says:

        Javier says:

        I would take Tverberg’s common sense over Krugman’s complete lack of it any day.

        I’ll second that.

        I don’t know if Tverberg’s theory will predict the future very accurately or not. But at least her theory is based on a great deal of empirical evidence and sound logic, and for that reason it has merit. It passes the first of an unending series of tests it will eventually be subjected to.

        Tverberg argues that debt matters. Krugman argues that it doesn’t:

        “Dismantling Krugman’s “Debt Doesn’t Matter” Mantra”
        http://www.zerohedge.com/news/2015-02-14/dismantling-krugmans-debt-doesnt-matter-mantra

        Tverberg argues that an abundant supply of cheap energy matters. Many peak oilers argue it doesn’t:

        The only theoretical solution would be to create a huge supply of renewable energy that would work in today’s devices. It would need to be cheap to produce and be available in the immediate future. Electricity would need to be produced for no more than four cents per kWh, and liquid fuels would need to be produced for less than $20 per barrel of oil equivalent. The low cost would need to be the result of very sparing use of resources, rather than the result of government subsidies….

        M. King Hubbert talked about a very special situation–a situation where another cheap, abundant fuel took over, before fossil fuels began to decline….

        Many peak oilers missed this important point. We certainly are not in a situation today where another very cheap fuel has taken over.

        “We are at Peak Oil now; we need very low-cost energy to fix it”
        http://ourfiniteworld.com/2015/12/21/we-are-at-peak-oil-now-we-need-very-low-cost-energy-to-fix-it/

        Or in other words, what Tverberg is saying is that BAU is over unless some genuinely revolutionary breakthrough in cheap energy production can be found.

        Team Green argues with absolute certainty that with renewables it has found, or in the future will find, a genuinely watershed breakthough in cheap energy production. But there is no empirical evidence to indicate that this is true. Renewables, to date, have not even been able to compete with $100 oil, much less $38 oil.

        In addition, as Tverberg argues, renewables are not sustainable, because they too require natural resources for their production, and the supply of these natural resources is not unlimited.

        These observations are anathema to the peak oil theory proselytized by Team Greeen. Caelan MacIntyre hit the nail squarely on the head when he wrote:

        Some of you don’t really want disruption. You want a greewashed BAU.
        http://peakoilbarrel.com/all-roads-lead-to-peak-oil/comment-page-1/#comment-552854

        This helps explain the flood of paralogisms, the failure to marshall empirical evidence, and the Orwellian arguments which have become the hallmark of Team Green.

  28. oldfarmermac says:

    Some things worth thinking about in respect to EV battery recycling

    http://peakoilbarrel.com/all-roads-lead-to-peak-oil/comment-page-1/#comment-552905

    • ezrydermike says:

      have you seen this from the Energizer?

      http://www.energizer.com/ecoadvanced

      • Longtimber says:

        Recycled content in Tier 1 Batteries is a bad Idea.
        DOUBLE A in 3.7V Lithium would be referred to a 14500 – 14x50mm
        Many newer devices can use any chemistry.
        The Battery to rule is a Panasonic 18650 3400ma.. for years of service.
        Note if you ever discharge any Li cell below 2V – They are toast.
        Use a protected version is an unattended application in an dumb device. Better than Ammo for Barter.

  29. oldfarmermac says:

    http://www.seatrade-maritime.com/news/europe/bahri-buys-secondhand-vlcc-pair-for-$155m.html

    So the Saudi’s have a just bought a couple of VLCC’s for a bargain, and have a dozen more new builds under contract.

    It looks like they are determined to do more than just pump and sell oil. Lol

    • ezrydermike says:

      this is on Bloomberg right now…

      Saudi Arabia released a more tightfisted budget for 2016, reflecting scaled-back revenue expectations and lower spending on subsidies because of sinking oil prices and its involvement in the war in neighboring Yemen.

      Seventy-three percent of this year’s 608 billion riyals in revenue came from oil, down 23 percent from 2014 and below the 715 billion riyal target. The government says it may resort to local and foreign borrowing to bridge the budget deficit.
      Economy Minister Adel Fakeih said Monday that 20 billion riyals of this year’s spending overshoot was due to increased military and security spending related to the military operation against Shiite Houthi rebels in Yemen.

      The government, headed by King Salman bin Abdulaziz Al Saud, pledged to take action to shore up public finances, including the possible sale of government entities and the revision of fuel, water and power subsidies over the next five years.

      It immediately rolled out the first batch of revisions after the budget announcement, raising the prices of water and electricity supplied to households and the cost of gasoline, ethane and gas. The revisions focused on “directing subsidies to those who really deserve it,” Fakeih said

      The Ministry of Finance said its 2016 budget is based on “extremely low oil prices” that prompted Gulf states to cut spending.

      http://www.bloomberg.com/news/articles/2015-12-28/a-breakdown-of-the-2016-saudi-budget-and-its-implications

  30. islandboy says:

    Not sure if this is OT but, over the past couple of weeks there has been an increasing amount of complaints in Jamaica regarding damage to vehicle engines, which mechanics are ascribing to bad fuel. I may have been a victim and have a sample of the fuel that my mechanic removed from the fuel tank.

    Country to get bad gas report tomorrow

    “The country is expected to know by tomorrow, the extent of the bad gasoline problem which has been reported across the island and what actions are to be taken against perpetrators.

    Energy Minister, Phillip Paulwell, says a meeting is scheduled for 10 a.m. tomorrow to discuss the findings of a report on the matter.

    Paulwell says he wants to hold talks with key stakeholders before going public with the details.

    He says based on the report, it is clear that changes will be needed to the regulations governing the sale of gasoline.”

    This sort of thing is one reason to switch to EVs . I would rather not have to worry about whether or not some unscrupulous person or persons has adulterated the fuel I am buying. My repairs cost $1,500 and when I was at the Consumer Affairs Commission earlier today, the person who took my report said she had a case of a brand new BMW facing a possible $4,000 plus repair bill!

    • islandboy says:

      Highlights of the fuel quality report

      ” The Gleaner has a copy of some aspects of the report arising from investigations into recent news of the sale of contaminated fuel in the Jamaican market. Here are highlights of the report.

      – The market is open to all manner of manipulation both from foreign marketers and local alike, because of a lack of uniformity within the sector.

      – Monitoring agencies are useless due to a lack of testing facilities and rampant bribery. Possible conflict of interest at Petrojam as the only agency that can do certain tests.

      – Contaminated gas is being introduced into the trade at illegal mixing stations located in St Catherine, Kingston, St James and St Thomas.”

    • Javier says:

      It is curious that the bad fuel problem would come at a time when fuel prices are lowest in many years. One would think that the incentive to falsify fuel would be higher, the higher its selling price.

      This problem, if widespread, must affect demand in a big way, both from damaged vehicles and people’s fear. I doubt Jamaica is the only country affected.

      • islandboy says:

        Hmmm! Something just occurred to me. In a post further up Ron wrote:

        However condensate, or naphtha, or natural gasoline, three names for the same thing, is not really gasoline. Gasoline is primarily octane or C8H18. Naphtha is primarily pentane, or C5H12. (Though naphtha does contain a lot of other hydrocarbons.)

        Condensate is the lightest liquid petroleum product. That is it is a liquid at sea level pressures and room temperature. You can burn it in your car like gasoline. But your car will knock terribly, and your motor will not likely last very long.

        OFM responded immediately below Ron with:

        Some farmers who were located in oil producing areas in the twenties and thirties made a regular practice of burning condensate in their tractors, because they could get it for next to nothing, and actually FOR NOTHING in some cases.

        All they had to do was just put a bucket under a drip on an oil rig sometimes!

        Tractor engines back in those days would run on almost anything, once you got them warmed up. They ran slow, at low temperatures and had very low compression ratios. So they usually stood it ok.

        There are numerous stories about folks trying to run Model T’s and Model A’s on condensate and getting their arms broken for their troubles trying to start them with the hand crank. Condensate would probably destroy a modern engine in very short order.

        If there is a glut of condensate in the US right now, might something close to pure naptha be available for purchase at a significant discount compared to gasoline and diesel? Might somebody in Jamaica have found a source of naptha at a good price and got the bright idea that they could make some money by blending it with gasoline and diesel with the hope that nobody would notice? I ask because I have been wondering what fuel the culprits would have access to that would cost less than gasoline and diesel and contribute to all the problems that are being experienced by vehicle owners in Jamaica.

        In my case, I am running a fairly modern (2006), Japanese Domestic Market (JDM), turbocharged, direct injection, diesel motor (Nissan ZD30). I use only Ulra Low Sulphur Diesel fuel as opposed to the high sulphur stuff that comes out of the local refinery since high sulphur diesel is known to cause premature failure of vehicles bought from the JDM . The ULSD was introduced in the middle of 2013 to satisfy the requirements of modern diesel vehicles, with vehicle manufacturers refusing to supply Jamaica with some models because the local diesel fuel did not meet the specifications required. The other issue was the premature failure of diesel motors in used vehicles imported from the JDM.

        My damage occurred when, approaching a 4 mile, 8% incline, I felt a sudden loss of power and the the motor started to make a bit more noise than usual (I actually found a video on youtube with the same model vehicle, same year, same motor, making exactly the same sound as mine. See 2006 nissan caravan engine knock). When the motor was opened up, the mechanic found two damaged pistons that had scored the engine block and some damage to the crankshaft and connecting rod bearings. Mechanics in various parts of the island are reporting fuel injection system failures among other problems.

        I’m just trying to understand what liquid fuel could be used to adulterate regular motor fuels that would be cheap enough to make somebody want to do it and would result in the problems being experienced in Jamaica?

        • oldfarmermac says:

          Hi Island Boy,

          You have probably nailed it. It would appear at first glance that there simply isn’t any liquid fuel cheaper than gasoline, excepting maybe ethanol, depending on tax subsidies etc.

          But given that condensate is being and has been exported, and that it is in excess supply, it PROBABLY IS a LOT cheaper than gasoline,especially the crooks would avoid paying the usual taxes. So some lowlife probably managed to get his hands on a ship load of it, and sell it to crooked wholesalers.

          The profit potential would be simply ENORMOUS.

          It is extremely unlikely this sort of thing could be managed at the retail level.

          Now here is some GOOD advice.

          Unless your personal safety depends on going a little farther to get out of the road, etc, ALWAYS shut off an engine that develops a knocking noise IMMEDIATELY.

          If you had done so immediately, like putting on the brakes to avoid an accident, you could probably have had your fuel system flushed and most likely no other repairs would have been needed.

  31. Anton koffield says:

    I was perusing the ‘RealClearEnergy’ site, and after reading through some of the schlock they offered up, I will not waste my time any more on that site…Zeus Almighty, I though ‘RealClearDefense’ was horrid!

    Check out this amazing pieces of shite offered by that fish-wrapper the Washington Times:

    http://www.washingtontimes.com/news/2015/dec/27/stephen-moore-dead-wrong-on-oil/?page=all#pagebreak

    A few samples of some astounding prose:

    “Technology and innovation account for the constant upping the amount of “finite” oil we can produce. We discover new sources of oil much faster than we deplete the known amount of reserves and so for all practical purposes, oil and natural gas supplies are nearly inexhaustible. Fracking is the latest game changer and the access it gives us to shale oil and gas resources has virtually doubled over night. And this technology boom in drilling is just getting started.”

    I am not sure where to begin…

    And this gem:

    “Many years ago I was quoted in The New York Times as making this point about our infinite oil supply and a high school science teacher wrote me and huffed:” “Even my 14 year olds know that oil is finite.”This teacher is probably now a top science adviser to Mr. Obama.”

    • Stephen Moore is an economic consultant with Freedom Works and a Fox News contributor.

    Note the repeated use of ‘Mr. Obama’…nice touch…

    So, this guy refudiates the concept of finite resources on Earth…awesome! Can he repeal the Second Law while he is at it?

    I bet he can sell his intellectual snake oil to at least half of the U.S. citizenry…

    Per the swami’s sage article, oil, and indeed, farmland and every other resource one can think of, are infinite!

    Huzzah! Happy fracing New Year!

    • Javier says:

      Yes, I have had discussions before with people that think resources are for all practical purposes unlimited. They defend that technology will improve as much as needed to continue extraction, and if not economic pricing and entrepreneurial ingenuity will bring about an adequate substitution of the resource.

      Their main selling point is that humanity has not run out of anything ever.

      Such faith on the system is touching. Reminds me when I was a kid talking to other kids about Santa Claus (our version is the three wise men). You could not argue against his existence. After all the gifts kept coming year after year.

      • Glenn Stehle says:

        Javier said:

        Yes, I have had discussions before with people that think resources are for all practical purposes unlimited. They defend that technology will improve as much as needed to continue extraction, and if not economic pricing and entrepreneurial ingenuity will bring about an adequate substitution of the resource….

        Such faith on the system is touching.

        That certainly seems to be the zeitgeist of true believers in the California Ideology like Elon Musk.

        With his new Gigafactory outside Reno, Nevada, he has bet the farm on his ability to find abundant, cheap supplies of lithium to produce unprecedented quantities of lithium ion batteries.

        If only slaying the energy vampire was so simple:

        Worldwide sources of lithium are broken down by ore-deposit type as follows: closed-basin brines, 58%; pegmatites and related granites, 26%; lithium-enriched clays, 7%; oilfield brines, 3%; geothermal brines, 3%; and lithium-enriched zeolites, 3% (2013 statistics).

        There are over 39 million tons of lithium resources worldwide.

        Of this resource, the USGS estimates there to be approximately 13 million tons of current economically recoverable lithium reserves.
        http://pubs.usgs.gov/fs/2014/3035/

    • Fred Magyar says:

      What else could you expect from someone who says this:

      My mentor Julian Simon and Herman Kahn challenged this conventional wisdom. Today they would be disparaged as “deniers.” Yet on every score these iconoclasts were right and the green scientific consensus was wrong.

      For the record Julian Simon was the brilliant economist who said that if we ran out of copper we could make copper from other metals.

      • Anton Koffield says:

        Mr. Simon certainly sounds like a crackpot.

        I am more familiar with Herman Kahn, and I am no fan.

        His ideas about resources and economics and his future visions of a ‘Star trek’-like panacea are pie in the sky…and don’t get me started about his writings on nuclear war.

  32. Toolpush says:

    http://oilpro.com/post/21126/us-oil-and-gas-bankruptcies-reach-post-recession-high?utm_source=DailyNewsletter&utm_medium=email&utm_campaign=newsletter&utm_term=2015-12-28&utm_content=Article_5_txt

    For instance, Continental Resources Inc. put the Bakken Shale oilfields on the map, but it came at a price. Continental pays almost as much interest on debt as Exxon Mobile but is 20 times smaller.

    • Fred Magyar says:

      That’s just one more really good reason to go completely off grid with PV solar technology and battery backup systems.

      https://www.heatmyhome.co.uk/solar-panels/will-electromagnetic-pulse-affect-solar-panels#.VoKD7hUrLIU

      If a CME were to hit your solar panels, then the inverter that is load-protected and fused would cause your system to shut down automatically. If your inverter has been specified correctly, then in most cases, your inverter will be over-specified for your system anyway. Worst case scenario will mean your inverter will blow a fuse and a simple fuse change will get your solar panels back to full working order.

      Our current centralized power distribution model is really stupid. BTW what happens to all the nuclear power plants around the world that depend on power from the grid if we do get hit by a massive CME. How many Fukushimas can the planet handle all at once!

      • Glenn Stehle says:

        Fred Magyar says:

        That’s just one more really good reason to go completely off grid with…battery backup systems.

        Well it looks like the California Myth — “an idyllic narrative inspired by the state’s beach culture that commonly appeared in the lyrics of commercial pop songs” — is still very much alive and kicking.

        As Wikipedia explains, “The Sound was originally identified for harnessing a wide-eyed, sunny optimism that marked southern California teenage life in the late 1950s and early 1960s.”

        All the leaves are brown
        And the sky is grey
        I’ve been for a walk
        On a winter’s day
        If I didn’t tell her
        I could leave today

        California dreaming
        On such a winter’s day

        And as Wikipedia goes on to note, California Dreaming became a signpost of the California Myth.

        • Fred Magyar says:

          Glen I have to thank you for suggesting that I have things in common with Adolf Eichmann because I actually went and read up on him. First of all let me tell you to go fuck yourself again! And again! You do not get to equate me with Nazis and get away with it!

          Now, with that out of the way I want to say that I finally understand why you need to make up things like ‘Team Green’ or an imaginary ‘California Ideology’, it’s really simple. Because you are an ultra ideologue yourself in the truest sense!

          You must tar me and others who disagree with you as also being ideologues, because your world view only makes sense from this perspective! You only understand an us vs. them kind of world!

          You absolutely can not conceive that people like me eschew all “CAUSES” equally. That we are neither part of the left nor the right that we are not on any team! Your world view is starkly black and white. Which is why you try to fit me into an imaginary ‘Team Green’. Your life only has meaning if you are part of a team and have a well defined enemy. You can’t handle nuance or shades of grey. That is why you to conclude that I am in love with disruption when I say it is happening all around us. For you, one always has to be for or against something in your world it is not possible to be a dispassionate observer of events.

          So now go and crawl back under your little rock, you pathetic little piece of shit!

          • Glenn Stehle says:

            Fred Magyar,

            Lordy! Lordy!

            Now you’ve chosen the “path of the Crucified,” as Nietzsche called it, and descended into an orgy of victimization and recriminations.

            Why does that not surprise me?

            “Since our new-found sensitivity decrees that only the victim shall be the hero, the white American male starts bawling for victim status too,” Robert Hughes quipped in Culture of Complaint.

            But before you get to bawling for victim status too loudly, just for the record let’s recount exactly what was said that sent you down the path of the Crucified:

            SW says: The subsidies are…not some evil scheme perpetrated by ‘team green’ as you would have it.

            Glenn Stehle says: Then why do they invariably end up being reverse Robin Hood schemes which entail robbing from the poor to give to the rich?

            If the members of Team Green are so convinced of the rightness of their cause, then why are they not willing to sacrifice for it? Why is it always somebody else who must make the sacrifices?

            Fred Magyar says: Glen when will you get it through your thick skull that ‘Team Green’ is purely a figment of your imagination! Either that or you have an ideological agenda to keep saying that.

            As for reverse Robin Hood schemes that perfectly describes our current global financial model at all levels. Most of all the fossil fuel and oil business backed up by the banking system and Wall Street.

            Compared to what is happening there everything related to alternative energy pales in comparison.

            And last but not least there is no ‘CAUSE’!

            Glenn Stehle says: Good grief, Fred, is that the best you can do?

            Your argument is what is known as the Adolf Eichmann rationale. As Hannah Arendt said to Eichmann in Eichmann in Jerusalem:

            What you meant to say was that where all, or almost all, are guilty, nobody is. This is an indeed quite common conclusion, but one we are not willing to grant you…

            [G]uilt and innocence…are of an objective nature, and even if eighty million Germans had done as you did, this would not have been an excuse for you.

            Fred Magyar says: You really are quite a piece of work Glen! I do have to hand it to you. Your mastery at twisting what I say is is indeed impressive!

            However that is NOT what I said and it is beyond presumptuous of you to say I meant something which I did not say nor did I intend to mean any such thing.

            First of all I’m not trying to compare guilt. What I am saying is, that if the Foo Shits wear it! And and the Foo really shits really well with respect to the fossil fuel/banking business being the epitome of an example of the rich fleecing the poor in a reverse Robin hood scheme. To suggest that an imaginary Team Green is involved in such blatant thievery is what I meant as being beyond the pale.

            Then to top it off by suggesting that my comment puts me in the same league as Adolf Eichmann is not something I will put up with. You have crossed all lines you are a slimy little piece of cowardly shit! Fuck You!! asshole!!!

            • Glenn Stehle says:

              • oldfarmermac says:

                Exporting industries keep those small scale consumers, and every body else, enjoying a not to shabby German standard of living, and the renewable industries in Germany keep a hell of a lot of people employed directly.

                And every year, as the Germans build out more wind and solar, they reduce their dependence a little more on imported fuel.

                THAT just MIGHT have a hell of a lot to do with German industry remaining competitive in a cut throat world. As time passes, that advantage will grow, rather than shrink.

                They are not too prone to mention it publicly, but methinks a lot of Germans are smart enough to keep in mind that the Russians might not have forgotten WWII in general and the Siege of Stalingrad in particular.

      • oldfarmermac says:

        Hi Fred,

        I am far from an expert, but I used to actually work in nukes, on maintenance shutdowns, and my job involved knowing the basic management and safety scheme.

        American domestic nukes have robust back up diesel generator systems that are in and of themselves possessed of redundancy, and enough fuel on hand to run a month, at least at the half dozen or so nukes where I worked.

        I don’t know much about nukes in other countries, but my personal opinion is the people that signed off on the siting of the Fukushima nukes should all be jailed for life.

        Engineers and bueracrats need to know that their professional positions are not going to protect them from making reckless decisions.

        When I climb a ladder to pick apples, I take my life in my hands, every bushel. Why should engineers get off any easier when they sign off on siting a nuke? Or locating spent fuel storage poorly ? Or even designing a nuke?

        The thought of spending the golden years in jail would lead to more thinking, methinks. 😉

        Having said this much, about the only thing that scares me more than a lack of nukes is the actual PRESENCE of nukes.

        As I see things, we are in an extremely dangerous situation, in some ways comparable to an army in combat. Some risks we simply HAVE to run, as there are no viable ways of avoiding them. We may choose to run other risks, hoping that in doing so, we avoid exposing ourselves to even greater risks.

        So – there is perhaps a case to be made for nukes in the short to medium term. As dangerous as they unquestionably and demonstrably ARE, it is also true that a locality with a functioning nuclear plant is in much less danger from resource wars that might prevent the purchase and or delivery of coal and natural gas.

        Hopefully we can phase them out within the foreseeable future, unless really safe, small, modular nukes can be built that will NOT run away or contribute to weapons proliferation. There does seem to be a distinct possibility that such nukes are possible, at least in principle.

        • Longtimber says:

          “robust back up diesel generator systems” Huh? . complete dependency on Fuel quality, refinery and feedstock control & delivery system. No second chances. Diesel mechanics here at the Boatyard are constantly swapping out entire Gen-Sets. Fuel going bad is a nightmare. ULSD “Modern Diesel” tricky to store. Tier 4 Gen sets are orders of magnitude more complex than earlier units. Worst thing you can do is let them sit. Gen-Sets on the Deep Water Horizon exploded within in a few seconds when they were needed. Humans smarter than Yeast?
          http://www.facilitiesnet.com/powercommunication/article/What-Tier-4-Emissions-Rules-For-Backup-Generators-Mean-Facilities-Management-Power-Communication-Feature–11200

          • oldfarmermac says:

            Sarcasm has it’s place, and I understand where you are coming from. I am not too happy with nuclear plant safety designs myself, but I have some actual first hand experience in nukes, and the ones I have been in are EXTREMELY well maintained when it comes to such issues as back up generators. They are the best money could buy at the time they were installed, and they ARE run on a regular basis, they are not allowed to sit around. Nobody goes NEAR one of them unless he is a first class fully qualified technician, who has passed an extensive criminal back ground test, and been selected out of a large pool of applicants.They are WELL paid. Such back up generator plants in my experience are as clean as hospital operating rooms, and believe it or NOT, there IS redundancy. Machinery is redundant, fuel tanks are redundant, training is regular, practice runs are regular.

            If the shit ever hits the fan HARD in my own lifetime, there is no place at all I would rather be than on a nuclear power plant site, except for the possibility somebody might aim an ICBM at it.

            NOW does all this mean accidents CANNOT happen? No, only a fool would argue that.

            But only an ignorant person would argue that mining and burning coal is a safe and environmentally benign alternative.

            My personal hope is that we can eventually phase out nukes of the sort we have built over the last half century.

            If it proves possible, then I would support the building of small nukes that do not produce materials suitable for making weapons, and that are so designed that they cannot run away.

            NOTHING is absolutely safe.

            Ya gotta take some chances. If you stay in bed to avoid accidents, you take a chance on dying from lack of exercise.

            • oldfarmermac says:

              Now the thought of a nuke being kept in service too long, in a country just about bankrupt perhaps, and unable to import gas and oil, scares the hell out of me. Corruption scares the hell out of me, when I think about nukes in countries FAMOUS for corruption.

              Now as far as being dependent on diesel fuel deliveries etc, yes , but there is enough on hand to ensure a safe shut down.

              Ya think there is a possibility that the delivery of coal and gas might be interrupted to the utility that serves your town?

              If the grid goes down and stays down in LA, or NY, or Mexico City, people will be killing each other by the thousands within a day or two.

              Generally speaking, there is a case to be made for both sides, in discussing issues of public policy.

            • Caelan MacIntyre says:

              “Nobody goes NEAR one of them unless he is a first class fully qualified technician, who has passed an extensive criminal back ground test, and been selected out of a large pool of applicants.” ~ oldfarmermac

              Nun who broke into Tennessee nuclear facility likely to stay free

              “Megan Rice, 85, was sentenced to three years in prison for the 2012 break-in at the Y-12 National Security Complex in Oak Ridge, an incident that embarrassed U.S. officials and prompted security changes.”

              • oldfarmermac says:

                Getting onto the facility grounds is one thing. Getting thru all the people who stand at gates, generally with guns handy, and pass you thru, IF you have the proper badge, and they EXPECT you, to where the actual nuclear plant itself is located, is something else again.

                And so far as that goes, fuel samples are drawn on a regular basis too.

                I have been in over half a dozen nukes, on numerous occasions.

                The security people have no sense of humor at all. Forget your badge, and you will have to crawl on your knees and kiss ass to work that day. Forget it twice, just turn around and call in sick. All the gates I ever saw were just as sturdy and intimidating looking as jail cell doors. The fences are high.

                But is security perfect? Never has been, never will be.

                If you want to talk absolute safety, take it up with other folks who believe in such foolishness.

                Tens of thousands of people die every year as the result of air pollution.

                People are not very rational when it comes to judging risks. We fixate on the occasional plane crash that kills a hundred, one a year maybe, whereas we hardly ever even notice the hundred that die EVERY DAY just in this country alone, in auto accidents.

                I did not set out to DEFEND the nuclear power industry but I WILL so long as I am able, point out the actual facts pro and con of anything that attracts my attention.

                Nuance is everything. Sound bites are for idiots who are either too lazy to think , or incapable of thinking.

                When the comments start appearing in this forum bragging on HOW SAFE nukes are, you can bet I will have something to say about just how bad things CAN go wrong.And how badly things HAVE GONE WRONG on few occasions.

                The world is FULL of idiots who know just enough to be dangerous, who think we ought to do this or not do that, because they are obsessed with one or another ASPECT of a larger problem.

                Big problems such as energy and pollution are not amenable to simple black and white solutions.

                I am perfectly willing to bet my farm than pollution associated with burning coal will kill more people over the next ten years, or twenty years, than nuclear accidents.

                Let’s hope we can phase out nuclear power within the foreseeable future.

                But let’s talk about it like adults in the meantime.

          • Caelan MacIntyre says:

            All this disagreement between everyone and everyone really just seems to illustrate the points with complexity and collapse, doesn’t it?
            We are a simple, short-term thinking tribal/band species ‘writ large’, thus, in fundamental dissonance.

            Elon Musk is, in essence, a ~44 year old kid with a whole lot of fiat currency and fiat backing who ‘we’ are looking to to ‘save the world’.
            Like a lot of corporations, Musk is like a small nation-state, a Vatican, a pope.
            And we all know what some kinds of nation-state/religious setups with the ‘right’ (wrong) kinds of sociopolitical collusions are capable of, right Glenn and Fred?
            While tribal folks like Dennis Coyne and Nick G advocate– with poker faces no less– the State and coercive taxation. They advocate unethics, the out-of-scale and an increased decoupling of The Map from reality- snipsnipsnip– from democratic/personal control, such as from one’s own personal labor. Dissonance; remote-control/drone existence.

            We are not going anywhere and we are going nowhere fast.

          • The DWH generators stopped because they were being fed a natural gas-air mix.

            • Longtimber says:

              Don’t know for a fact but it was noted they quickly over RPMed to destruction before the ignition. Have a friend in the Fuel polishing business. Its very expensive. Rarely gets done as mandated . Management says Fuel what ?

              • Toolpush says:

                Longtimber,

                On the DWH, one of the first things that went wrong once the gas got to the rig floor, was the divertor button was hit, which should have put the gas in the riser, overboard. But someone in their wisdom had designed in another circuit, that diverted to the Mud gas separator. A very low pressure system. When the gas from the well hit the MGS, the burst disk broke and dumped the gas onto the forward deck, just near the air intake for the main engines.
                So to answer your question. Yes we do know the main engines went into over speed due to natural gas ingestion.

                As for your fuel polishing, every rig I have been on has had fuel centrifuges. I have not been closely enough involved with the engine room to know exactly what else was involved, in the generic term “fuel centrifuge”,but it would most likely have included the bells and whistles included in the following link.
                http://www.dieselfueldoctor.com/blog/?p=87

                I would feel very confident, that a nuc plant where long term storage is the main operation, that they would also use similar if not better fuel treatment equipment.
                BTW the older the design of the engine, the more tolerant it will be to variable fuel.

              • Longtimber says:

                “Earlier this month, another large plant was closed after an oil leak. That incident has now, somewhat mysteriously, been blamed on sabotage.” Where is Bart Simpson when you need him?
                http://blogs.wsj.com/brussels/2014/08/22/belgiums-nuclear-fiasco-spreads-panic-sort-of/

                • Arceus says:

                  A leaked document from the national Crisis Center detailed some of the potential dangers of an enforced power outage:

                  Traffic lights, communication channels, and cash points would all stop working, the report says. Water pipes in some areas could burst, leading to flooding; trains could come to a complete standstill. Farmers could see cattle and poultry die rapidly as ventilation systems in barns would stop operating.

                  That scenario was mapped out in early 2013 as an “entirely hypothetical exercise.”

                • Longtimber says:

                  GE – NBC’s Parent Co – said NO MORE Bartman Nuke plant episodes. Stop it.. Some just have no sense of humor at all. How can these people live with themselves :-<

        • Toolpush says:

          OFM,

          As you are the hands on man in the Nuc industry, what type of diesels are normally installed? I would suspect EMDs or Cat 399’s, though medium speed marine engines can also be used.
          Have the original engines been up graded, do you know?
          These older engines are quiet basis compared today’s normal selection. No electronic fuel injection and the like. Designed to run on high sulfur fuel, as that is all they had in the 70’s. Their fuel consumption wasn’t great, but as an emergency backup, who cares.

          • Longtimber says:

            Gotta wonder what China uses? Detroit x71 clones ? Possibly the most reliable engine ever. Who cares if the exhaust has unburned components.

          • oldfarmermac says:

            I am retired altogether now except hobby farming and last worked in nukes a good while back. The engines I remember were Cat’s, too long ago to recall model numbers.

            Somebody would have gotten written up if a supervisor could find enough grease or dirt to make a visible smudge on a new white hanky. IIRC, the backup generators were run once a month for a couple of hours.

            To get into that area, I had to be SENT there by my boss.

            There were no scheduled general maintenance shut downs for that sort of equipment, because such equipment is not ordinarily in use, it just sits there, unless it is needed. . You can maintain it anytime at all, servicing one unit while the others remain on standby as usual. I never actually even TOUCHED one of those generator units myself.

            Otherwise, I typically had free run of the place except probably the turbine building and control room. I had to have specific permission to go to the turbine building for instance. I have never been in a control room.

            I was in and out of containment as many days as not.Containment is where most of the action is during shut downs.

            A great deal of what I know is the result of numerous conversations with the various engineers who were pretty thick on the ground during maintenance shutdowns, which tend to be similar to army campaigns, with lots of hurry up and wait, and then furious activity, then more hurry up and wait. Dry run practices were common, on mockups, so as to ensure every body could do something correctly and quickly when the time came, because getting back on line meant saving megabucks buying coal. Most work was under the immediate eye of a quality control man and a hell of a lot of it was filmed.

            I worked once for two weeks practicing on a mock up in order to work five minutes in a high radiation area helping repair leaking tubing in a steam generator.

            My usual job mostly involved making sure stuff that would be wanted at a particular spot at a particular time would BE THERE.
            This involved some paperwork and occasionally getting together with a couple of supervisors who both wanted something NOW, with the result one or the other might have to reschedule for a few hours or a day. This meant every body found it advantageous to be nice to me, a mere peasant.

            It is easy as pie to strike up a conversation with a bored engineer.I knew enough to ask intelligent questions, which is enough to set most engineers, and most anybody else for that matter, off on a ramble about their favorite topics and biggest challenges.

            I have no personal knowledge of the day to day operations of nukes in other countries.

            People I still talk to occasionally tell me security has been tightened up substantially in recent years.

            And so far as it goes, I am a LONG way from ever having any real in depth knowledge of BIG diesel engines. My personal experience is limited to just seeing one occasionally, when it comes to the ones bigger than commonly used in trucks and dozers etc.

            Any thing I have to say about day to day affairs inside plant fences may be obsolete but it ought to get the flavor across.

  33. Heinrich Leopold says:

    According to the latest top stories of http://www.bentekenergy.com (Production revisions bring year to date low), US natural gas production fell to the lowest in over one year to 68.1 bcf/d and nearly down 10% year over year. Texas production fell to 18.3 bcf/d, nearly 25% down from last year (see below chart). These numbers are staggering and come despite vast pipeline expansions over the fall/summer and very high demand of 92.4 bcf/d and falling inventories. As we have not yet seen a shale gas correction, the slowdown could be far steeper than many expect.

    • John S says:

      Heinrich,

      I want to wish you a Merry Christmas and a Happy New Year! Keep it up! Please!

      • Heinrich Leopold says:

        John S,

        Thank you for your comment. I wish you a successful 2016.

    • What’s Canadian production doing? Is storage getting full? Prices very low?

      It could be simply choking back the wells to wait for higher prices.

      • John S says:

        Fernando,

        You may be right, of course. But wide spread voluntary proration, I think would be accompanied with lots of public patting on the back and even wailing and tearing of the cloth.

        Best to you also in the coming year. You have a very interesting blog.

      • coffeeguyzz says:

        Fernando

        All the operators in the Appalachian Basin are restricting output due, primarily, to low pricing.
        Two transfer points last week, including the huge Dominion South, had pricing at 59/63 cents /mmbtu.
        Inflection Energy said they are choking back up to 70% of their potential output.
        Stone Energy recently announced the total shutting in of their 100 MMcfd Mary field due to pricing.

        I do not know why folks seem to not recognize the decline in output is financially, not geologically, driven.

    • Don Wharton says:

      Heinrich,

      The 68.1 bcf/d reading was for Monday only and due to temporary weather conditions. A good number of us have talked to you before about how you misunderstand Texas data. There is no evidence for anything other than a modest decline in nat gas production. Gas in storage is likely to remain much above the five year average in storage because of the extremely warm conditions that we have on the east coast. The El Nino is likely to have a similar impact for much of the rest of the winter. Spot prices near $1.50 is not promising for a near term change in the supply demand balance.

      • Heinrich Leopold says:

        Don,

        It is simply not true that the 68.1 bcf/d total production data (which is down from 74.5 bcf/d last year) did occur just Monday. On Tuesday production was 68.2 bcf/d (revised up to 68.6 bcf/d on Wednesday) and also 68.2 on Wednesday. So, this is a strong trend. There are some freeze offs, yet it is difficult to say how much this impacts total production. I do not misunderstand Texan data as the 18.3 bcf/d is a Bentek estimate, which is not revised later as in the RRC. There is increasing evidence that shale gas, which has been hailed as the holy grail of energy production, is more and more a pact with the devil: pre-shale, until 2005 volatility was 5% to the up and down, yet with the advent of shale volatility soared to 20% growth followed by a massive decline of 25% so far (see above chart). There is a clear trend towards spiking volatility with a strong downward bias in this chart. As the bond market just collapsed in earnest by mid December, shale gas companies simply do not get any funding at all. Therefore the situation gets much, much worse over the next three months. Furthermore, most shale companies are now hedged at a very low gas price. A sudden price spike will lead to huge hedging losses, which forces shale companies to limit production even further. So, if prices spike over the next months, I expect production to slump much more. Spot prices soared close to 50%, albeit from a low base, yet the turnaround is here.

        • John Keller says:

          I think a lot of the shut ins are old shale wells that are bleeding money at these prices. 1000’s of old shale gas wells lose money on an operating basis and should be killed off.
          I’m in agreement that ng should head much higher in the coming months. The ng rig count continues to drop. There is no more room for price cuts. Any capex cuts will result in much fewer wells.

        • Don Wharton says:

          Heinrich, I looked for the 18.3 bcf/d Bentek number for Texas and I could not find it. Is it behind their paywall? I did find this from a Bebtek post for today:
          US production declined to 68.2 Bcf/d, a drop of 0.2 Bcf/d from Tuesday.

          This does generally confirm your Bentek numbers for today and yesterday. This is new data which does not contradict my claim that your 68.1 number was for Monday only. This is likely to still be a short term weather event.

          I agree with your analysis of market volatility. My experience also agrees with your implied suggestion that such volatility typically is associated with market bottoms.

  34. Venezuela update: another attempt by the Maduro regime to revert election results is taking place in Caracas via the judicial system.

    As it turns out, “President” Maduro had disappeared from public view because he was recalled by his Cuban bosses. He met with Raúl Castro and the old Cuban viceroy, Ramiro Valdes, they laid out the plan for him, and he returned last night. Today they started executing it.

    This time they had the Supreme Court return from vacation, open their offices, and accept six separate lawsuits by six Chavistas trying to revert results for six deputies. This would cut the unity faction from 112 to 106 deputies, which would make the National Assembly unable to overcome a veto.

    This is just taking place right now. I don’t know what’s coming next. But I wouldn’t expect Venezuela’s oil production to stop dropping over the next year.

    • Jeffrey J. Brown says:

      But I wouldn’t expect Venezuela’s oil production to stop dropping over the next year.

      To clarify slightly, you expect the production decline to continue. I had to read it about three times.

    • Arceus says:

      “Pira Energy Group, a firm highly regarded for its energy price forecasts, says that it takes nine months for U.S. companies to bring new production on stream once it becomes profitable to drill again.”

      Hmmm. Ducs?!

      • oldfarmermac says:

        What is meant by “ducs”?

      • The statement is too general. For example, say prices rebound to $80 and a responsible operator wishes to get restarted…the amount of time it takes to start drilling again depends on the available staff, permits, contracts, materials, and cash they want to invest. Evidently a company with locations already built, easy contracting ability, materials in the warehouse, and so on, takes less time.

        My record onshore time from management approval to first oil was 221 days. But we already had the rig contracted and materials coming into our warehouse. But building roads and locations for a multiple well pad does take time.

  35. shallow sand says:

    Maybe I missed it in this post, but I note per NDIC there are 60 rigs running in ND, with four listed as being stacked once the current well is completed.

    Further, of the 56 remaining rigs, 7 are in counties other than the “big four”. Although those wells might be economic (I am not sure how) they likely will not be big IP/first year producers.

    So that means soon we may be looking at 49 rigs running in the “big four” counties of Dunn, Mckenzie, Mountrail and Williams.

    That number may fall further yet as I suspect some long term contracts may be ending soon.

    • Toolpush says:

      Shallow,

      I had to laugh, when I saw article, claiming there won’t be a down turn in drilling rigs this time around, like last year. Due to the fact BH rig count had yet to show a steep decline. As I have stated before,most rig contracts have 30 day cancellation clauses,
      So a time line.
      OPEC makes a decision, and/or oil falls significantly. Call that Thankgiving.
      Next week, Board meeting to decide to cut.
      30 days notice,
      finish current well.
      brings up to around the New Year.

      The BH counts will be worth watching during January. The North Dakota count is just giving us a glimpse into the future.

      The other thing I find interesting, on the ND rig page, is the number of rigs MIRU. After getting used to seeing only 3 or 4 rigs in MIRU, with a falling rig count, we are seeing 6 or 7 lately. Maybe they are going away from pad drilling and trying a last ditch effort holding some acreage?

  36. ezrydermike says:

    Climate Change 2015: The Latest Science
    Saturday, 26 December 2015 00:00 By Bruce Melton, Truthout | News Analysis

    Climate science is way out in front of climate policy. Commitments at the United Nations Climate Conference in Paris pale in comparison to those from the Kyoto Protocol with its beginnings in the Rio Earth Summit in 1992. The cheap and unambiguous solution of removing CO2 directly from the sky has been discredited by the perceived debate. Previously assumed stable ice sheets are disintegrating. It is warmer than any time in the last 120,000 years. The Gulf Stream appears to be shutting down. Nearly 100 submarine glacial valleys beneath the Greenland Ice Sheet tunnel warm subtropical Atlantic water 90 miles beneath the ice. The Intergovernmental Panel on Climate Change (IPCC) says we need to remove more carbon dioxide from our atmosphere than we emit every year (negative emissions). Most importantly, new knowledge about global cooling smog shows that killing coal will create more warming than doing nothing in the most critical decades-long time frames.

    The great delay in climate action has dramatically increased climate change impacts and the amount of carbon dioxide that we must now deal with to prevent even greater impacts. Delay has been caused by the debate casting doubt on climate science in ways that have proven to be effective in similar debates about smoking, acid rain and ozone-depleting chemicals. Because of doubt, fundamentally important new climate science has failed to escape the confines of academia and proceed into the public realm where it can move policy – literally – into the 21st century.

    http://www.truth-out.org/news/item/34152-climate-change-2015-the-latest-science

    • ezrydermike says:

      Now those pesky Russian’s are chiming in…

      Russia is warming at 2.5 times the global average and faces a dramatic rise in related threats—from floods to fires—the country’s Ministry of Natural Resources and Environmental Protection revealed Friday in its annual report.

      http://www.commondreams.org/news/2015/12/25/russia-warming-over-two-times-faster-rest-planet

      • Arceus says:

        Yes, to the surprise of many, Putin has recently transformed himself into a self-described leader on the global warming issue.

        Apparently, everyone is now on the same team with regard to global warming. So much hot air to deal with…

    • Javier says:

      What a bunch of lies.

      Antarctica is gaining ice, not loosing it. Since 2012 Arctic ice is on the recovery and there is more sea ice now than seven years ago. North Atlantic sea temperatures have been dropping for years. It has been warmer than now for certain during the Holocene climatic optimum and probably during most of the Holocene.

      There is no dramatically increased climate change impacts except on the media. Most negative impacts from climate change are imaginary, while many positive impacts are real.

      It is by pushing obvious lies that the public realm is starting to doubt not only climate activists like this guy, but also the academia that produces such dubious ammunition.

      • Caelan MacIntyre says:

        “Antarctica is gaining ice, not loosing it.” ~ Javier

        Apparently there’s something about the continent losing freshwater, which then freezes at higher temps in the ocean, thus creating more ice.

        “Since 2012 Arctic ice is on the recovery and there is more sea ice now than seven years ago.” ~ Javier

        Says who? Patrick Moore (who you once referred to to ostensibly support one of your points)? In any case, this isn’t necessarily long enough to break a trend is it?

        “North Atlantic sea temperatures have been dropping for years.” ~ Javier

        References? How many years? Long enough to break a trend?

        “It has been warmer than now for certain during the Holocene climatic optimum and probably during most of the Holocene.” ~ Javier

        Apparently, it is the speed of warming that is also relevant, perhaps more so. Real science is also about all relevant and related findings, including ones that may be in ‘inconvenient’ conflict with others.

        “There is no dramatically increased climate change impacts except on the media.” ~ Javier

        Which ‘media’ and which impacts are being referred to? Real science is also about specifics and accuracy.

        “Most negative impacts from climate change are imaginary, while many positive impacts are real.” ~ Javier

        Changes in climate can apparently produce conditions for mass extinction events (another of which we seem to be flirting with.) Real science is also about information beyond mere ‘sound bytes’, perhaps like your sentences for example.

        “It is by pushing obvious lies that the public realm is starting to doubt not only climate activists like this guy, but also the academia that produces such dubious ammunition.” ~ Javier

        Obviously, your words here have little-to-no backing, and then there are lies-of-omission. (Did you forget the bit about the Gulf Stream?)

        Incidentally, did we ever find out what your full and real name is, what you do exactly, where you work and what you’ve published? Real science is about ethics and transparency.
        And while we’re at it, have you ever subjected your contentions along the lines of what has been expressed hereon at Peak Oil Barrel, especially with regard to (anthropogenic) climate change, to proper peer review and/or similar analysis and critique, etc.?

        “But science is all about precision in the language.” ~ Javier

        Let’s have it then.

        • Javier says:

          “Apparently there’s something about the continent losing freshwater, which then freezes at higher temps in the ocean, thus creating more ice.”
          The continent is also gaining ice mass according to NASA
          https://www.nasa.gov/feature/goddard/nasa-study-mass-gains-of-antarctic-ice-sheet-greater-than-losses

          “In any case, this isn’t necessarily long enough to break a trend is it?”
          Nor were the previous 30 years long enough to establish a trend.
          Predicted slowdown in the rate of Atlantic sea ice loss
          Now that the Atlantic Multidecadal Oscillation AMO has changed phase we are going to see a lot more ice in the Arctic.

          “North Atlantic sea temperatures have been dropping for years.”
          “References? How many years? Long enough to break a trend?”
          Judge by yourself in the figure below. Data is from NODC.

        • Javier says:

          “Apparently, it is the speed of warming that is also relevant, perhaps more so.”
          Speed of warming has not increased and is quite normal for the Holocene. See graph below from UK Met Office. Maximum rate of warming has not increased from when we were not putting significant amounts of CO2 in the atmosphere. It was and still is 0.4°C/decade.

          “Changes in climate can apparently produce conditions for mass extinction events”
          How many species have we lost to present global warming? Do you have any name?

          “Did you forget the bit about the Gulf Stream?”
          I did. Another lie. There is nothing wrong with Gulf Stream. AMOC changes in strength following the same 60 years cycle as the rest of the Atlantic.

          My real name and credentials are none of your business. I provided them to Ron when he asked me to publish the post on population. Given the sort of personal attacks that I endure and the hostile environment against anybody that questions the official religion of climate change I find it necessary to protect myself.

          I don’t need to publish anything on climate (which is not my field of expertise), because everything I say is based on already published science.

          • Don Wharton says:

            Javier,

            You are both incredibly bright and well informed about the content of global warming science. The problem, in my opinion, is that you are using that intelligence to mine the science for every tiny shred of evidence that global warming and its harm is less than the consensus. In this last chart, I am sure that you know that last year was a new world wide record in surface warmth for our planet. I am equally sure that you know that we are finishing with another year with a higher new record. Obviously this means that the current nine year average must be increasing. When a new record year replaces a lessor year in a moving average the average goes up. Yet you publish a chart saying that the running nine year average trend is less than zero. This is data mining in the extreme, being quite selective in not including 2014 and 2015.

            Do you ever use your critical thinking skills to consider the frame of reference that you use to select the data you attend to? I think you intend to be a person of integrity. However, these examples of extreme data mining just suggest that you a willing to communicate gross summary falsehoods. Do you really want to do that?

            • Javier says:

              Don,

              I am a data-driven person. I always accept the evidence that has been obtained with solid scientific methodology, and I follow it wherever it takes, even if it is not of my liking. Unlike people, the data almost never lies.

              Like everybody else, I assumed that climatologists had nailed the global warming issue. But one day I decided to write about it and started to check the evidence. I was completely appalled. The media and the activists groups were lying to us with the help of a few alarmist scientists about the dangers of global warming. Most scientists do not participate in this scare business, but keep silent about it because of the danger to their careers from being labelled as skeptic. The biggest lies being sold to us are that the science is settled and that 97% of scientists agree on the dangers of global warming. Anybody following the blog can see by the great amount of scientific articles that I have brought to the discussions that those two things are false.

              It is not that I mine science for evidence that diminishes the dangers of global warming, it is that the evidence of those dangers is lacking. The hypothesis that the amount of GHGs that we have put in the atmosphere is going to lead to a dangerous warming within the next 85 years is contradicted by a lot of evidence and has failed the test of making true predictions. The null hypothesis, that the increase in GHGs in the atmosphere is not going to lead to dangerous warming has not been falsified. The dangerous AGW hypothesis has failed but scientists still cling to it because they lack a better explanation for the observed warming.

              Regarding me being quite selective in not including data for 2014 and 2015, I hope you realize that the hypothesis cannot rest on the inclusion of data from the last two years. We are now at peak warming. It hasn’t been so warm in centuries, therefore it is expected that every year should make it to the top warmest years of the record. If you also have a strong El Niño condition, then it should be expected that 2015 is the warmest year on record. There is no new information from those trivial facts. But the problem is that those records are being set by a minimal increase, because from 2001 there has been very little warming. We have put 1/3 of all CO2 in the last 15 years and we are not getting much warming value for all that CO2 investment. According to the hypothesis this should not happen, the warming should be directly proportional (in logarithmic scale) to the amount of CO2, and that is why all the models are running too warm.

              Let me put you another example. According to oil production data, 2015 is going to be “a new world wide record in surface warmth oil production for our planet.” Have we not studied in detail the characteristics of the oil being produced, the situation of the producers, the relationship between demand and supply and the effects of the change in price, we would rightly conclude that almost every year for the foreseeable future oil production would be setting a new global record. Even more, almost every expert and official agency in oil production is telling us that new records await us in the near future. Why do we think different? Because we have looked at the evidence, the data, behind the situation. I have done the same with global warming.

              It is very easy to predict that 2017 and 2018 would be years of below average temperatures, because there is a high chance of that being the case (see figure below). 2015 is not going to save the dangerous AGW hypothesis. Come 2019 the pause is going to be still with us. Nature is telling us that whether the warming resumes or not in the 2020s, the warming is not going to be dangerous within the next 85 years. You may choose to believe whoever you like most. I always go with the data.

              Graph: RSS global temperature anomaly and MEI (Multivariate ENSO index) measure of El Niño. Years of El Niño that greatly increased temperatures above average are indicated by arrows. Two years later coolings are indicated by circles.

              • Fred Magyar says:

                So Javier you disagree with all the scientists on the list I provide below which means you must have a better explanation than they do. Are you saying you have better evidence? Do you have better data? Have you studied this more in depth than they have? So what exactly is your theory? Is it just that all the scientists that work for the organizations on this list are misguided, part of a gigantic conspiracy or what exactly? What is that makes you right and all of them wrong? I’d really like to understand what makes you think the way you do.

                (Scientific Organizations That Hold the Position That Climate Change Has Been Caused by Human Action)

                Academia Chilena de Ciencias, Chile
                Academia das Ciencias de Lisboa, Portugal
                Academia de Ciencias de la República Dominicana
                Academia de Ciencias Físicas, Matemáticas y Naturales de Venezuela
                Academia de Ciencias Medicas, Fisicas y Naturales de Guatemala
                Academia Mexicana de Ciencias,Mexico
                Academia Nacional de Ciencias de Bolivia
                Academia Nacional de Ciencias del Peru
                Académie des Sciences et Techniques du Sénégal
                Académie des Sciences, France
                Academies of Arts, Humanities and Sciences of Canada
                Academy of Athens
                Academy of Science of Mozambique
                Academy of Science of South Africa
                Academy of Sciences for the Developing World (TWAS)
                Academy of Sciences Malaysia
                Academy of Sciences of Moldova
                Academy of Sciences of the Czech Republic
                Academy of Sciences of the Islamic Republic of Iran
                Academy of Scientific Research and Technology, Egypt
                Academy of the Royal Society of New Zealand
                Accademia Nazionale dei Lincei, Italy
                Africa Centre for Climate and Earth Systems Science
                African Academy of Sciences
                Albanian Academy of Sciences
                Amazon Environmental Research Institute
                American Academy of Pediatrics
                American Anthropological Association
                American Association for the Advancement of Science
                American Association of State Climatologists (AASC)
                American Association of Wildlife Veterinarians
                American Astronomical Society
                American Chemical Society
                American College of Preventive Medicine
                American Fisheries Society
                American Geophysical Union
                American Institute of Biological Sciences
                American Institute of Physics
                American Meteorological Society
                American Physical Society
                American Public Health Association
                American Quaternary Association
                American Society for Microbiology
                American Society of Agronomy
                American Society of Civil Engineers
                American Society of Plant Biologists
                American Statistical Association
                Association of Ecosystem Research Centers
                Australian Academy of Science
                Australian Bureau of Meteorology
                Australian Coral Reef Society
                Australian Institute of Marine Science
                Australian Institute of Physics
                Australian Marine Sciences Association
                Australian Medical Association
                Australian Meteorological and Oceanographic Society
                Bangladesh Academy of Sciences
                Botanical Society of America
                Brazilian Academy of Sciences
                British Antarctic Survey
                Bulgarian Academy of Sciences
                California Academy of Sciences
                Cameroon Academy of Sciences
                Canadian Association of Physicists
                Canadian Foundation for Climate and Atmospheric Sciences
                Canadian Geophysical Union
                Canadian Meteorological and Oceanographic Society
                Canadian Society of Soil Science
                Canadian Society of Zoologists
                Caribbean Academy of Sciences views
                Center for International Forestry Research
                Chinese Academy of Sciences
                Colombian Academy of Exact, Physical and Natural Sciences
                Commonwealth Scientific and Industrial Research Organization (CSIRO) (Australia)
                Consultative Group on International Agricultural Research
                Croatian Academy of Arts and Sciences
                Crop Science Society of America
                Cuban Academy of Sciences
                Delegation of the Finnish Academies of Science and Letters
                Ecological Society of America
                Ecological Society of Australia
                Environmental Protection Agency
                European Academy of Sciences and Arts
                European Federation of Geologists
                European Geosciences Union
                European Physical Society
                European Science Foundation
                Federation of American Scientists
                French Academy of Sciences
                Geological Society of America
                Geological Society of Australia
                Geological Society of London
                Georgian Academy of Sciences
                German Academy of Natural Scientists Leopoldina
                Ghana Academy of Arts and Sciences
                Indian National Science Academy
                Indonesian Academy of Sciences
                Institute of Ecology and Environmental Management
                Institute of Marine Engineering, Science and Technology
                Institute of Professional Engineers New Zealand
                Institution of Mechanical Engineers, UK
                InterAcademy Council
                International Alliance of Research Universities
                International Arctic Science Committee
                International Association for Great Lakes Research
                International Council for Science
                International Council of Academies of Engineering and Technological Sciences
                International Research Institute for Climate and Society
                International Union for Quaternary Research
                International Union of Geodesy and Geophysics
                International Union of Pure and Applied Physics
                Islamic World Academy of Sciences
                Israel Academy of Sciences and Humanities
                Kenya National Academy of Sciences
                Korean Academy of Science and Technology
                Kosovo Academy of Sciences and Arts
                l’Académie des Sciences et Techniques du Sénégal
                Latin American Academy of Sciences
                Latvian Academy of Sciences
                Lithuanian Academy of Sciences
                Madagascar National Academy of Arts, Letters, and Sciences
                Mauritius Academy of Science and Technology
                Montenegrin Academy of Sciences and Arts
                National Academy of Exact, Physical and Natural Sciences, Argentina
                National Academy of Sciences of Armenia
                National Academy of Sciences of the Kyrgyz Republic
                National Academy of Sciences, Sri Lanka
                National Academy of Sciences, United States of America
                National Aeronautics and Space Administration
                National Association of Geoscience Teachers
                National Association of State Foresters
                National Center for Atmospheric Research
                National Council of Engineers Australia
                National Institute of Water & Atmospheric Research, New Zealand
                National Oceanic and Atmospheric Administration
                National Research Council
                National Science Foundation
                Natural England
                Natural Environment Research Council, UK
                Natural Science Collections Alliance
                Network of African Science Academies
                New York Academy of Sciences
                Nicaraguan Academy of Sciences
                Nigerian Academy of Sciences
                Norwegian Academy of Sciences and Letters
                Oklahoma Climatological Survey
                Organization of Biological Field Stations
                Pakistan Academy of Sciences
                Palestine Academy for Science and Technology
                Pew Center on Global Climate Change
                Polish Academy of Sciences
                Romanian Academy
                Royal Academies for Science and the Arts of Belgium
                Royal Academy of Exact, Physical and Natural Sciences of Spain
                Royal Astronomical Society, UK
                Royal Danish Academy of Sciences and Letters
                Royal Irish Academy
                Royal Meteorological Society (UK)
                Royal Netherlands Academy of Arts and Sciences
                Royal Netherlands Institute for Sea Research
                Royal Scientific Society of Jordan
                Royal Society of Canada
                Royal Society of Chemistry, UK
                Royal Society of the United Kingdom
                Royal Swedish Academy of Sciences
                Russian Academy of Sciences
                Science and Technology, Australia
                Science Council of Japan
                Scientific Committee on Antarctic Research
                Scientific Committee on Solar-Terrestrial Physics
                Scripps Institution of Oceanography
                Serbian Academy of Sciences and Arts
                Slovak Academy of Sciences
                Slovenian Academy of Sciences and Arts
                Society for Ecological Restoration International
                Society for Industrial and Applied Mathematics
                Society of American Foresters
                Society of Biology (UK)
                Society of Systematic Biologists
                Soil Science Society of America
                Sudan Academy of Sciences
                Sudanese National Academy of Science
                Tanzania Academy of Sciences
                The Wildlife Society (international)
                Turkish Academy of Sciences
                Uganda National Academy of Sciences
                Union of German Academies of Sciences and Humanities
                United Nations Intergovernmental Panel on Climate Change
                University Corporation for Atmospheric Research
                Woods Hole Oceanographic Institution
                World Association of Zoos and Aquariums
                World Federation of Public Health Associations
                World Forestry Congress
                World Health Organization
                World Meteorological Organization
                Zambia Academy of Sciences
                Zimbabwe Academy of Sciences

                • Doug Leighton says:

                  I think you missed a few Fred; no matter, Javier knows more then the lot. Isn’t that amazing?

                  • Fred Magyar says:

                    I think this has a lot more to with ideology than knowledge or science. There is plenty of scientific literature that explains why intelligent people like Javier think like he does. But that is a whole nuther can of worms and a different dissertation altogether. I shouldn’t even be discussing this at all it is truly pointless.

                • Javier says:

                  Fred,

                  You like to make it more difficult for readers of Ron’s blog ¿don’t you? You could have just counted the lines and said that XX world scientist academies support… what?

                  What is that they support that I don’t?

                  – That the world has been warming for the past 350 years. I do.
                  – That mankind has added a considerable amount of GHGs to the atmosphere from 1950s. I do.
                  – That GHGs produce warming. I do.
                  – That humanity is therefore responsible for warming the world. I do.

                  So you see, I do not disagree with all those academies and scientists. We all happily agree.

                  But not a single one of those scientists can present evidence that the warming is going to be dangerous. Some of them believe the warming is going to be dangerous and some don’t. Nobody asks them that. I disagree with those that believe the warming is going to be dangerous since they cannot demonstrate it.

                  Extrapolation is a really awful technique to predict the future, and when applied to cyclic phenomena one is sure to make a fool of himself. Many climatologists are making a fool of themselves.

                  I do not need to present an alternative hypothesis. It is not my job. I am pointing out that current hypothesis is faulty and we need a new one. There are plenty of climatologists working on that. For example Judith Curry has presented his stadium wave hypothesis, and Nicola Scarfetta has presented his solar cycles hypothesis. Climatologists need to work more on alternative hypothesis.

                  • Jimmy says:

                    I thought you were predicting global cooling last time you trolled?

                    Javier says:
                    12/09/2015 AT 7:13 PM
                    “So what. …… I think Greenpeace is going to come out toasted from the climate change debacle once the climate starts cooling in the near future.”

                  • Doug Leighton says:

                    “But not a single one of those scientists can present evidence that the warming is going to be dangerous.”

                    You’re joking. Warming is ALREADY affecting food and water security, health, economies and national security in places like Europe. Furthermore, assuming the world continues to burn fossil fuels at the current rate and global warming rises two degrees Celsius (I believe projected date is 2036) this will be crossing a threshold that most scientists and non-scientists alike think will adversely affect ALL aspects of human civilization.

                  • Javier says:

                    Yes Jimmy,

                    I believe that between 2017 and 2030 there’s going to be zero or slightly negative change in global average temperatures. Try to remember it in case by then you still have faith in IPCC predictions.

                  • Javier says:

                    Doug,

                    “You’re joking. Warming is ALREADY affecting food and water security, health, economies and national security in places like Europe.”
                    Where is the evidence? I live in Europe and I have not seen anything like you describe.

                  • Clueless says:

                    I propose an experiment. Let’s move someone who was born and raised in Ireland to Singapore. Their “climate” change would immediately be 20 degrees warmer. Then we can see how long it takes him to die from the climate change in order to determine how dangerous it might be.

                  • Enno Peters says:

                    Javier,

                    “Where is the evidence? I live in Europe and I have not seen anything like you describe.”

                    How hard have you looked?

                    All-Time Record Heat in Germany

                    “Europeans have been painfully aware of the dangers of extreme heat since the killer heat wave of July 2003,” said weather.com senior meteorologist Nick Wiltgen. According to the United Nations, an estimated 30,000 Europeans (14,000 in France alone) died in that heat wave, making it the deadliest natural disaster of the past 50 years in Europe.”

                    There are so many more examples, in Europe, and elsewhere, but I don’t get the impression that you’re actively looking for them.

                  • Fred Magyar says:

                    Clueless,

                    You forgot the sarc tag.

                    BUT Assuming you are even somewhat serious, then to properly perform the experiment you would need to at least transport an entire functioning Irish ecosystem to the climate of Singapore. I have a hunch that it wouldn’t survive intact…

                    Just because an individual human can handle a 20 degree centigrade increase in temperature that proves nothing about the consequences of a 2C increase in average global temperature.

                    Hopefully you knew that!

                  • Fred Magyar says:

                    Ok Javier, perhaps you right and there is no evidence for dangerous AGW. I certainly hope you are right. The fact remains that the scientists who work for the organizations on that list I posted disagree with you. They pretty much unanimously say that we are indeed entering dangerous territory. It is possible they are all delusional and have been hoodwinked and that none of them can think critically about this issue.

                    Actually it seems that a very large group of those scientists are quite concerned and are suffering from clinical depression due to how they feel about this issue. Yes, scientists are supposed to be unfeeling cold calculating machines. Turns out a lot of them have feelings about these issues.

                    I guess we can put them all on antidepressants and all will be well with the world.

                    Their thoughts are a sign that they don’t agree with your views.

                    Go ahead read some of their letters for a little insight into their human sides.
                    http://www.isthishowyoufeel.com/this-is-how-scientists-feel.html

                  • Javier says:

                    Fred,

                    That only tells us about how convinced are those scientists. But that is irrelevant. Every scientist that has been wrong in the past was so while being convinced of being right.

                    Many of us know how depressing is the conviction of impending doom. I can sympathize with them, even though I think they are very wrong. I wish I could convince them they have nothing to fear from climate. We have been extremely fortunate to have been born during a warming event. The Holocene was getting pretty dangerous for us.

                  • Fred Magyar says:

                    That only tells us about how convinced are those scientists. But that is irrelevant. Every scientist that has been wrong in the past was so while being convinced of being right.

                    Javier, while that may be true that argument goes both ways.

                    My problem with your position is that you seem to be convinced that you are right and just about every other scientist who studies climate science and many in multiple other scientific fields hold positions diametrically opposed to yours.

                    So while it is possible that you are right and everyone else is wrong Occam’s razor suggests that the chances of that being the case are infinitesimally small.

                    BTW, one thing that reading those letters suggests to me is that right or wrong none of those scientists expressing their feelings and opinions come across as being in it for the money or being part of some grand conspiracy.

                    They all sound sincere to me and they all hold doctorates in their respective fields and have put in many years of research in those fields as career scientists.

                    So again I ask you to explain to me, a non specialist but also someone who isn’t exactly a complete lump on a log, why I should take your word over the words of thousands of other scientists who disagree with your position?

                    I mean, would you seek out and consider the opinion of a heart surgeon however qualified, if you needed brain surgery? Or would you get the opinion of multiple brain surgeons?

                    What are the chances that the heart surgeon would provide a better diagnosis?

                    Yo seem to be telling me that for some reason you know something the brain surgeons don’t and I just have an immensely difficult time believing you!

                    And the data and charts and papers you have linked to by scientists such as Judith Curry are for all practical purposes ridiculed and shot down by the rest of the Climate science community.

                  • Javier says:

                    Fred,

                    You are still trying to present the issue as all scientists against me, and a few loonie scientists that are shun by the rest. This is a completely incorrect way of representing the issue.

                    First, you do not know what most scientists think or believe about the issue as they have not been properly polled. The best polls indicate that 66% of climate scientists believe that GHGs contribute to >50% to global warming. Nor you not anybody has the right to disqualify any scientist based on what that scientist believes to be true.

                    Second, it is completely irrelevant for science what most scientists believe. Alfred Wegener and Milutin Milankovitch died without getting their theories accepted by a majority of scientists in their time.

                    Third, what you believe is your problem. All I say is that the evidence does not support any alarmism about climate change, and I present the evidence. You don’t have to believe anybody, not me nor the IPCC. You can examine the evidence yourself and decide. If you rather deposit your faith on someone, again, that’s your problem. I do not want anybody’s faith. I would not know what to do with it.

                    Last, there’s no need for a conspiracy for science to get lost. Science has got lost many times before on many issues. For example physics appears to be lost in string theory for 30 years now. Science eventually finds its way. Science will come around on the issue of climate change eventually. Politics is not helping by siding with the wrong side.

                  • Fred Magyar says:

                    Ok Javier, This will be my last comment on this topic.

                    You said:
                    First, you do not know what most scientists think or believe about the issue as they have not been properly polled. The best polls indicate that 66% of climate scientists believe that GHGs contribute to >50% to global warming. Nor you not anybody has the right to disqualify any scientist based on what that scientist believes to be true.

                    Sorry but that is a blatantly untrue statement!

                    http://climate.nasa.gov/scientific-consensus/

                    Multiple studies published in peer-reviewed scientific journals1 show that 97 percent or more of actively publishing climate scientists agree: Climate-warming trends over the past century are very likely due to human activities. In addition, most of the leading scientific organizations worldwide have issued public statements endorsing this position. The following is a partial list of these organizations, along with links to their published statements and a selection of related resources.

                    This time I won’t post the entire list. Anyone who wants to can go to link above.

                    Disclaimer: I realize that many people today try to tar NASA and it’s scientists especially its Climate scientists as being politically motivated. Over the years I have worn many hats and at one time I worked for a software company that produced a high end scientific graphics application. Part of my job was teach some of NASA’s scientists and engineers to use that application. I have never met a finer more ethical bunch of people than those that I interacted with there!

                  • Javier says:

                    Fred,

                    “Sorry but that is a blatantly untrue statement!”

                    No, it is not. Those 97% studies are worthless and have been thoroughly debunked by other authors. We have already talked about this issue to extenuation. If you are interested in reading why those studies cannot be trusted I’ll look for the links. But it seems a waste of time, because the truth doesn’t seem to sink in you. By the way, NASA has nothing to do with those studies, they were made by climate activists, not scientists.

                  • Javier says:

                    Enno Peters,

                    “How hard have you looked?
                    All-Time Record Heat in Germany”

                    Clearly harder than you, because I am afraid that that is also a lie.

                    We are aware of at least one extreme heat wave and megadrought that took place in Europe in 1540, that was several times worse than those of 2003 and 2010.

                    The year-long unprecedented European heat and drought of 1540 – a worst case

                    In 1540 CO2 levels were very low and the world was having a respite during the Little Ice Age. It is clear that heat waves are a subproduct of climate. Our records are not too good in the past but it is clear that extreme heat waves have been a recurrent phenomena.

                    After 350 years of global warming it should be extremely easy to demonstrate that warming produces an increase in extreme weather events as it has been proposed many times. However nobody has been able to demonstrate so conclusively.

                    So whatever is claimed without evidence, can be dismissed without evidence. There is no evidence that global warming produces an increase in extreme weather events. In fact there is evidence of the contrary. A graph of global weather-related disaster losses by insurance companies as a proportion of global GDP shows a decrease of about 25% in 23 years. This data is inconsistent with the climate having a clear negative effect.

                • Glenn Stehle says:

                  Fred Magyar said:

                  It’s becoming clearer by the day that the vast majority of Americans have turned a deaf ear to the rhetological fallacy you employ, the “appeal to authority” as it is called.

                  This is in perfect harmony with American history and culture.

                  “America has developed a pragmatic approach to political and economic questions which would do credit to Edmund Burke, the great exponent of the wisdom of historical experience as opposed to the abstract rationalism of the French Revolution,” noted Reinhold Niebuhr in The Irony of American History.

                  Man is “too immersed,” Niebuhr continues,

                  in the welter of interest and passion in history and his survey over the total process is too short-range and limited to justify the endowment of any group or institution of “planners” with complete power. The “purity” of their idealism and the pretensions of their science must always be suspect. Man simply does not have a “pure” reason in human affairs.

                  And the tendency of the American people to place pragmatism over abstract theory has served them well. Just imagine, for instance, if the US had not rejected the “scientific consensus” back in the 1930s. We likely would have ended up following the same pathway as Germany:

                  The physicians who had developed this theory—primarily psychiatrists, neurologists, and anthropologists (6)—became Germany’s eugenicists and authored the country’s racial policy, and it was primarily these physicians and their disciples who eventually led the Nazi government’s policy of ethnic cleansing….

                  Although notions of race have a long history, it was ironically the Scientific Revolution followed by the Enlightenment and then the Age of Reason, emphasizing science and rationality, that were the wellsprings for biologically based racism… This concept of intrinsic value or defect (popularized
                  in the 1860s as Social Darwinism) was clearly
                  articulated by Sir Francis Galton (1822–1911) in “The science which deals with all influences that improve the inborn qualities of a race (8).” He coined the word “eugenic” (relating to or producing improved offspring) and proposed that “races” were in a struggle for survival of the fittest….

                  Despite the outrage at Nazi racial policy, Allied authorities were unable to classify sterilizations as war crimes, because similar sterilization laws had been enforced in some states since 1907 and had been upheld by the Supreme Court. In Buck v. Bell (1927), the majority decision, written by Chief
                  Justice Oliver Wendell Holmes, Jr., used modern opinions of science to support the Virginia sterilization law: “It is better for all the world, if instead of waiting to execute degenerate offspring for crime, or let them starve for their imbecility,
                  society can prevent those who are manifestly unfit from breeding their kind. The principle that sustains compulsory vaccination is broad enough to cover cutting Fallopian tubes. . . Three generations of imbeciles are enough.”

                  http://www.fasebj.org/content/22/2/332.full.pdf+html

                  • Fred Magyar says:

                    Fred Magyar said:

                    It’s becoming clearer by the day that the vast majority of Americans have turned a deaf ear to the rhetological fallacy you employ, the “appeal to authority” as it is called.

                    This is in perfect harmony with American history and culture.

                    Glen, I will just say this, I do not recall ever having said anything of the sort. I have no idea where you got that quote nor why you are attributing it to me. It is possible that I am suffering from some form of memory lapse or early onset Alzheimer’s so for the sake of my own peace of mind I request that you please provide a link to where and when I said the above. At least to give it some context.

                    I’d really like to see the link to the specific post where I made that statement. Because if you can’t provide that post and I’m pretty sure you can’t because those are certainly not my words and I don’t even remember making a reference to that quote then I would specifically request that you not address me in any way whatsoever and I hereby will promise to do the same. I’m not going to continue to play your little game.

              • Arceus says:

                There is currently a new global warming theory that explains why the previous models have been incorrect. The new theory states that burning coal cools the planet, and that burning coal should continue to cool the planet for the next 20 years or so before long-term global warming continues. So, if this new theory is accepted by the mainstream global warming groups, they will have bought themselves at least 2-3 decades before they will be held accountable for their predictions. Up until that time, they can be satisfied with claiming any hurricane, drought, tsunami, warmer than usual weather, cooler than usual weather is as a result of global warming.

                • Javier says:

                  Well Arceus,

                  That is one of the problems with dangerous AGW hypothesis. It is abandoning the realm of science by becoming unfalsifiable. It can explain one thing and the contrary. It can predict one thing, come the opposite and still justify it. And no matter if the world warms or cools, the hypothesis can accommodate.

                  It is becoming a religion. Nothing can prove it wrong and you only need faith. It is very fitting that in the times of atheism in traditional religions a new scientific apocalyptic religion would entice the masses. Even the Pope knows he is up for stiff competition and is doing damage control.

    • ChiefEngineer says:

      Hi Mike,

      The Kyoto Protocol, the real crime of the Bush Administration and the Supreme Court on the world. You think the world would be a little different place with Gore ? What a mess. If Trump wins, a cheap room in a hotel will cost $500.

  37. Don Wharton says:

    Freak storm in North Atlantic to lash UK, may push temperatures over 50 degrees above normal at North Pole

    https://www.washingtonpost.com/news/capital-weather-gang/wp/2015/12/28/freak-storm-in-north-atlantic-may-push-temperatures-70-degrees-above-normal-at-north-pole/

  38. R Walter says:

    2020 to 2040 at 100 million bpd would total 730 billion barrels.

    A total of 2750 gigabarrels recoverable, 1250 gone already, leaves another 770 billion to go after 2040.

  39. Frugal says:


    Crude skids toward 11-year low on surprise U.S. stock build

    “We will satisfy the demand of our customers. We no longer limit production,” Naimi told reporters, according to the Wall Street Journal.

    Yes this is straight out of the horse’s mouth. The Saudi’s have finally admitted that they longer limit production, i.e., they’re producing flat out, in other words, they have no spare capacity.

    • Dave P says:

      I wonder when Saudi will peak? That will have some massive implications for their international and domestic policies. I’d love to be privy to Aramco’s data.

      • Watcher says:

        It will have zero influence on their policies, domestic or international. Why should it? They have their own central bank.

  40. Jimmy says:

    Interesting look at the oil stock situation from Matt Mushalik.

    http://crudeoilpeak.info/where-actually-is-that-much-hyped-global-oil-glut

    • Dave P says:

      This one is a must-read given the recent claims in the mainstream media. Thanks for posting the link Jimmy. Impeccable work from Matt as always.

      • Watcher says:

        Maybe he’s wrong.

        Maybe anyone talking about it is wrong. Maybe there is infinite above ground storage.

        And more important than if there is . . . maybe people place orders for oil they do not need just to store it, and not for any intention to sell later at a profit. Maybe they just put it in storage because they like to store oil.

      • Jimmy says:

        You’re welcome. Ron and Matt are my two favorite websites. Matt had some interesting articles on Egypt. Or as I like to call it ’90 million people with no prospects whatsoever’. According to Matt’s analysis of the data Egypt needs 26 billion USD in outside financing this year (2016). KSA promised 8 billion over 5 years. It seems to me that the people of Egypt are doomed.

  41. The Wet One says:

    Someone may have posted this already, and if so, I apologize for the repeat. However, it will be of interest to folks here as it discussed solar power and various features thereof:

    https://www.youtube.com/watch?v=JJ9-jYfpwfw

    I haven’t finished watching yet, but I thought I better post it here before I forgot.

    Merry Christmas and Happy New Year to all.

    Cheers!

  42. Longtimber says:

    H E L L O Where money goes to DIE. “In the aggregate, North American crude oil producers are not cash flow positive, and they haven’t been since the beginning of the shale boom.”

    “In Citi’s words, “Capex has consistently exceeded cash flow, causing some prominent critics to argue the business model of shale production is fundamentally unsustainable.” Before the price collapse, it was expected that producers would have positive returns for the first time in 2015”

    http://energyfuse.org/shales-dirty-secret-citi-on-why-capital-markets-are-the-new-opec/

    • Watcher says:

      So this means no more can be created by the central bank?

    • Greenbub says:

      “if liquidity is ample, the shakeout could take up to several years to work its way through the sector…”

      That is a terrifying theory. Zombies continuing to oversupply the market.

  43. ChiefEngineer says:

    Hi Ron,

    Follow up from above- “To suggest what we could do, or must d0, is just silly.”

    When your 60 years old and the doctor tells you your 150 pounds over weight, with type 2 diabetes and hypertension. Some of us change our ways because we would like to collect on that Social Security and Medicare. We don’t expect losing some weight and taking our med’s will return us to the womb.

    Your point is well taken and I have no real argument. But, I’m not a Tverberg or Caelan ready to give up. I’ve learned in life, one can do more than they ever expected by hard work and making an attempt. I live in a state that is trying to make a difference. Sure there are a few naysayers here, but in general people here don’t complain about trying to do the right thing and enjoying a little exercise with their meds. In fact, a lot of them feel better about themselves doing so.

    There’s a stop sign up ahead. Some of us want to convince the rest to take their foot off the accelerator and enjoy the ride. What people say matters. Look at the Republicans. They repeat lies so many times that they believe them their self. Again, Mac said it perfectly.

    “It is possible NONE of us will, but giving up is for losers.”

    Have a safe New Years !!

  44. oldfarmermac says:

    Door number two looks damned good from where I sit in the audience, lol.

    In addition to putting a hurting on Russia and Iran, the Saudis are also no doubt getting the message across to other exporters, in and out of OPEC, that they will not carry the load alone, if and when they eventually decide to cut.

    There is little doubt in my mind that secret negotiations about cuts are going on every day, day after day, between diplomats from other oil exporters and the Saudis. When the Saudi government gets what it wants, iron clad promises of cooperation, THEN they might be more inclined to cut.Maybe.

    Sometimes something that walks like a duck, and quacks like a duck , and looks like a duck, is never the less not a duck.. Sometimes the resemblance is merely coincidental. Sometimes coincidences are highly advantageous to two or more parties involved.

    Consider for instance that many or most well informed people consider that the House of Saud has managed to accumulate and hang onto the biggest fortune in the world only because the country is a client state of the American empire.

    Otherwise all those princes and princesses would be dead, or in dungeons, or refugees.

    I am NOT saying the Obama administration is colluding with the Saudis, secretly, to keep the price of oil down. I AM saying Uncle Sam is no doubt perfectly happy about oil selling for peanuts, because peanut oil prices are a damned good economic tonic. There must be fifty people happy about cheap gasoline for every one person hurting because he lost his ass or his job in the oil business. Fifty to one. No politician in his right mind can afford to overlook that sort of thing.

    I’m ready to bet the farm that no documentation ever comes to light proving Uncle Sam is trying to force oil prices up at this time. OTOH, Uncle Sam and the Saudis share some very heavy duty common interests when it comes to Iran and Russia.

    Hey guys, it ain’t nothing but zero’s in computers, in the last critical analysis, to the House of Saud. They have more than they can spend (on themselves ) anyway.

    Suppose any one of you happened to have a personal fortune of say ten million bucks, and you discover you are at high risk of having a fatal heart attack. I doubt any of you would hesitate to spend a third or even half of that fortune to avoid that heart attack. You will never have eat beans and rice unless LIKE beans and rice, so long as you still have five million bucks. ( Unless maybe your physician insists!)

    In the minds of the Saudis, the Russians and the Iranians may well represent a literal existential threat .

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