OPEC, except for Iran, Has Peaked

The OPEC Monthly Oil Market Report is out. OPEC took a hit in December, down 205,000 barrels per day. After examining the past and present production numbers, I believe that OPEC, except Iran, has peaked. That is, the combined production from all the other OPEC nations, has peaked. And any additional production from Libya is likely to be in tiny increments that won’t make much difference in the big picture. Other OPEC nations may show a slight increase from their current level. But the combined production from all the other 11 OPEC nations, 12 if you count Indonesia, has peaked.

Of course there will be some small increases from the other 11 OPEC countries from time to time but overall, in 2016 and beyond, I believe it will OPEC will be from flat to down, with a greater chance of being down. That is we are at, or near, the peak right now. There might be a slight uptick of their combined production in the coming months but not enough to get excited abut.

All Data in the charts below is through December and is in thousand barrels per day.


OPEC production, in the chart above does not include Indonesia. OPEC 12 was down 204,000 barrels per day.

Secondary Sources

OPEC uses secondary sources such as Platts and other agencies to report their production numbers. These numbers are pretty accurate and usually have only slight revisions month to month. The biggest changes were from Iraq, Nigeria and Saudi Arabia, all down.


Algeria peaked in November 2007 and has been in a steady decline since that point.


Angola has been holding steady since peaking in 2008 and 2010.


Ecuador appears to have peaked this year. It is likely production will be down, but only slightly, next year.


Sanctions were just lifted, in the middle of January, on Iran. I expect their production to be up by about half a million barrels per day, or slightly more, by year’s end. However I believe Iran will be the only OPEC nation with any significant production increase in 2016. 


Iraq increased production more than any other OPEC nation in 2015.


I expect Kuwait will continue its slow decline from its peak in 2013. 


Libya is struggling with their own Arab Spring. There is no way of knowing when, if ever, peace will break out there. I think it extremely unlikely they will produce as much as 1,000,000 bpd within the next 5 years or so.


Nigeria is struggling with their own political revolution. But it appears they are in decline regardless of their political problems.

Saudi Arabia

I believe Saudi is producing every barrel they possibly can. They will be lucky to hold this level for much longer.


Qatar has lots of natural gas but their oil production has clearly peaked and is now in decline.


From 2005 through 2010 the oil rig count in the UAE averaged around 12. In November their oil rig count stood at 48,  4 times their average. They have managed to increase their production about 11% above their 2008 peak. I believe UAE production is about to follow Kuwait’s lead and rollover. The UAE’s rig count dropped by 4 in December.


Not much can be said about Venezuela. Their conventional oil is in decline but their bitumen production is keeping production relatively flat.

The below chart is in thousand barrels per day.

OPEC Production Change

This is where the OPEC action was in 2105. This chart will look entirely different in 12 months. Only Iran is likely to show any significant increase. Well, that’s my opinion anyway.

OPEC Non-OPEC Supply

Here is what OPEC is expecting Non-OPEC countries to produce in 2016. They are expecting total Non-OPEC total liquids production to decline by 670,000 barrels per day. I expect the C+C decline will be closer to one million barrels per day. And I think it is likely that the total liquids decline will be close to that mark also.

Notice that they are predicting US total liquids to drop by only 380,000 barrels per day in 2016. I think this is overly optimistic. I am predicting a Non-OPEC production decline of at least one million barrels per day.

Indonesia, though they are a net importer and in decline, became an OPEC member this month. They have no “crude only” history so I will have to take their EIA chart and subtract their estimated percentage of condensate production and go from there.

Indonesia Comparision

Here the EIA data is through June, the JODI data is through October and the OPEC MOMR data is through December. Again, the MOMR data does not include condensate while the JODI and EIA data does. It looks like condensate is about 12 percent of Indonesia’s production.

OPEC less Saudi & Iraq

And I just had t add this for those who think there is little chance of OPEC peaking. OPEC less Saudi and Iraq peaked in 2008 and is down over 2,800,000 barrels per day since that point.

Just in: The Highlights of the IEA’s Oil Marker Report came out Tuesday. Normally the highlights gives the IEA’s estimate on Non-OPEC oil production. However this month they failed to do so. But all is not lost, Canada’s Financial Post was kind enough to give us the IEA’s estimate of December Non-OPEC production. Bold mine.

As OPEC pursues its policy of gaining market share and driving down prices, most non-OPEC producers have curtailed spending to weather the prolonged downturn. Non-OPEC production in December declined sharply by nearly 650,000 bpd to 57.4 million bpd— its lowest level since September 2012, according to an International Energy Agency report published Tuesday.

That is alarming. Perhaps my estimate of Non-OPEC production decrease of one million barrels per day is too low. “its lowest level since September 2012” is obviously a typo. What they meant was “its largest single month decline since September of 2102”.

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535 Responses to OPEC, except for Iran, Has Peaked

  1. Petro says:

    Thanks for the post Ron.

    I hope the ones who still think that KSA has millions of barrels in spare capacity read it and read it well…and let us hope they understand it in the first place.

    stock futures this morning way off;
    10 year note yield below 2%:
    oil below $28/brl;

    We are in for rough times ahead…

    Be well,


    • Jeffrey J. Brown says:

      Based on EIA/BP data, Saudi total petroleum liquids + other liquids production was 11.5 million bpd in 2005 and 11.6 million bpd in 2014. Because of rising domestic consumption*, Saudi net exports fell from 9.5 million bpd in 2005 to 8.4 million bpd in 2014.

      EIA data put Saudi production at 11.9 million bpd for the first half of 2015. If we assume 2015 annual production of 12 million bpd and no change in consumption, Saudi net exports in 2015 would be at about 8.8 million bpd in 2015, versus 9.5 million bpd in 2005. In other words, it’s almost certainly true that Saudi net exports have been below their 2005 rate for 10 straight years.

      *EIA shows 2005 Saudi consumption at 2.0 million bpd; BP puts 2014 consumption at 3.2 million bpd (EIA consumption data for 2014 not yet available for Saudi Arabia)

      And a link to some comments about the current situation in Saudi Arabia, in regard to the royal family:


    • Nathanael says:

      It’s very hard to be sure about anything in Saudi Arabia because:
      (1) it is generally believed that they conceal their best data on their oil as state secrets;
      (2) they have a consistent history of manipulating production levels for political purposes.

      I would go so far as to say that Saudi Arabia is a black box. Maybe they’ll run out tomorrow. Maybe they have millions of barrels in spare capacity. The secretive nature of the dictatorship/aristocracy in Saudi Arabia means we are very uncertain. By contrast we really do have pretty good data on everyone else.

      • oldfarmermac says:

        Personally I believe that there are no real secrets when it comes to Saudi capabilities, at least not when it comes to well informed industry insiders, and to intelligence agencies.

        There are too many outside contractors, too many outside suppliers, too many people tracking international trade, too many people staring at satellite photographs.

        Now as to who has access to all this data-I should say for instance Exon has access to enough of it, considering that Exon buys so much in the way of goods and services, and a salesman finds it necessary to accomodate his BEST customer , especially one that buys by the tens of millions over and over.

        For sure outfits like the CIA, etc have enough data to figure it out.

        I have never heard that the Saudis have anything much in the way of a native IT industry.Some of what they are using is sure to have back doors allowing the people that created it, and spy agencies, to take a look.

        And there are always turncoats, for one reason or another. A denied promotion, a personal vendetta, a man is out on his ass with no money, and blackballed in the industry within his home country…………. SOMEBODY will be very glad to provide such a man with a living in exchange for what he knows.

      • Lee Grove says:

        Spot on, Nathaneal!
        As I was reading the article, I was thinking, every time he said “I think” this or that, how fuc*ing absurd, as all you really know is something you heard/read from someone else who said “I think…” If you ain’t been there–EVERYWHERE–fully armed with the technical knowledge to assess EVERYTHING then you don’t “know” shit. In fact, nobody knows shit: there are just too many variables–and a few of Rumsfeld’s unknown unknowns to boot.

        We live in a virtual reality world, and our understanding of reality is what “they” want it to be.

        • Lloyd says:

          As I was reading the article, I was thinking, every time he said “I think” this or that,
          So your thinking (“I was thinking,”) is valid, but anyone else’s thinking (‘he said “I think”’)is invalid.

          I’ll let the meta-stupidity of your comment sink in.

          A direct reading of your text seems to advocate for a world with no discourse or commentary (’cause it requires thought, eh? (Though we would have to ignore your comment, of course, as very little thought seems to have gone into it.)) I suspect that you merely want a world where no one posts anything you disagree with, as a world with no commentary would, by definition, not allow your comments…perhaps you propose some sort of mental telepathy, so we can avoid thinking, writing, or publishing anything you disagree with.

  2. AlexS says:

    Thank you Ron.

    Below is a summary of the recent (January 2016) global GDP growth and global oil demand projections

    • AlexS says:

      Oil price forecasts (January 2016 revisions)

    • Dennis Coyne says:

      Hi AlexS,

      I prefer the World GDP based on market exchange rates rather than PPP from the IMF.

      These are 2.5% in 2015, 3% in 2016, and 3.2% in 2017.
      From 2011 to 2014 GDP growth was between 2.4% and 3% (3%, 2.5%, 2.4%, and 2.7%).
      The lack of oil affordability at over $90/b is somewhat of a myth based on World growth rates from 2011 to 2014. The hypothesis that low oil prices will boost the World economy also seems to be incorrect based on 2015 data and the 2016 forecast (which may be too optimistic).

      • AlexS says:

        “The lack of oil affordability at over $90/b is somewhat of a myth based on World growth rates from 2011 to 2014. The hypothesis that low oil prices will boost the World economy also seems to be incorrect based on 2015 data and the 2016 forecast ”

        I agree with both assertions.

        Interestingly, OPEC and IEA expect global demand growth to decelerate in 2016, despite higher economic growth and lower oil prices.
        And this table from Goldman Sachs research shows that demand has been weakening in 2H15:
        (source: http://oilprice.com/Latest-Energy-News/World-News/Iran-To-Drive-Oil-Prices-Lower-Still.html )

        • Dennis Coyne says:

          Hi AlexS,

          They may believe that greater fuel efficiency and the cut backs in subsidies in some nations will reduce oil demand, forecasts of oil supply and demand are difficult, probably the average of several forecasts is the best guess. One could also extrapolate the recent trends for GDP vs oil consumption to get some idea, but trends often change.

          Or we could have some monkeys throw darts at a board, probably just as accurate. 🙂

      • Stilgar Wilcox says:

        “I prefer the World GDP based on market exchange rates rather than PPP from the IMF.
        These are 2.5% in 2015, 3% in 2016, and 3.2% in 2017.”

        Dennis, what are those GDP numbers if stimulus i.e. QE and other fiscal policies to generate GDP are subtracted out?

        • Dennis Coyne says:

          Hi Stiglar Wilcox,

          The short answer, probably lower.

          I don’t know by how much.

          Let’s say most governments reacted to the global financial crisis in the way Herbert Hoover dealt with the stock market crash of 1929.

          No fiscal or monetary policy, let the economy heal itself.

          I do not have data for the World, but for the US real gross domestic product fell by 25% from 1929 to 1932, so perhaps if the World as a whole had tightened their belts and balanced government budgets we might still have had lower real GDP than in 2008 by 2014 (it took 7 years for US GDP to reach 1929 levels, and this was only with 4 years of fiscal stimulus from 1933 to 1936), it is hard to know how much longer growth would have been negative without the New Deal.

          I for one am glad some nations have the good sense to pay attention to what Keynes taught us long ago. If not the GFC would have become Great Depression 2.

          Now we may still see another Great Depression as the World tries to adjust to peak oil (from 2025 to 2030), some think it is inevitable and will begin very soon. I think the 2015 peak will be temporary and will be surpassed by 2020, with the final peak around 2025+/-2 years. Decline will be gradual at first, but by 2030 or so we may see a severe recession or GFC 2, this could become Great Depression 2, if the poor economic policies that Europe chose in response to the GFC are followed Worldwide.

          • Stilgar Wilcox says:

            I agree Dennis that lessons were learned from the Great Depression and the resulting fiscal policies were important in avoiding a similar scenario. We both agree GDP would have been less (than listed in your post I was replying to), and once taking that into account, does it not reduce estimates of URR? Regardless of how much it may be reduced, I agree with your projections for a higher peak by 2020.

            • Dennis Coyne says:

              Hi Stiglar Wilcox,

              No the URR would not really be affected, it is assumed that oil not produced today because GDP was lower will be produced later when the economy grows.

              In addition I expect nations will behave in a rational manner and learn from past mistakes so I expect fiscal and monetary policy will be used appropriately to increase aggregate demand where possible.

              It is possible that URR will be lower due to a transition to alternative transportation and energy. For example a recent model has C+C output at 2500 Gb by 2060, it is conceivable under optimistic assumptions that the 900 Gb that are still technically able to be produced (under a high oil price scenario) will be far lower because demand falls due to more wind, solar, nuclear, EVs, public transportation, plug-in hybrids, etc., maybe the URR falls to 3000 Gb or less in this scenario.

              I am not sure if that is what you mean, but if so I agree URR would be lower if oil prices are limited to $80/b (2015$) long term due to a reduction in oil demand for whatever reason.

              It is difficult to estimate how much lower the URR would be. A rough guess would be extra heavy oil URR falls from 600 Gb to 300 Gb and C+C less extra heavy oil falls from 2800 Gb to 2600 Gb for a total URR of 3100 Gb under a low oil price scenario ($100/b or less in 2015$ after 2060).

              • oldfarmermac says:

                I personally believe there is a high probability that the world population will be falling by 2060, and that most countries that are well to do now, and manage to remain well to do, will have LOWER populations than expected, and that demand per capita will also be lower than expected , in such countries, due to adoption of alternate technologies, and changing lifestyles.

                Now as to whether the people in currently poor countries are going to continue to get richer, on average, as they are NOW, that is an open question. I expect some countries will do ok , while others will implode or collapse due to (LOCAL ) overpopulation, lack of domestic natural resources, and lack of any thing that can be exported to pay for imported essential goods.

                I am a LONG WAY from a cornucopian, but only a fool can possibly refuse to recognize that WE CAN COLLECTIVELY get double or triple the ESSENTIAL ECONOMIC BANG from a barrel of oil, as compared to today.

                Electric cars WORK, there are already hundreds of thousands on the road, giving good service. They may be, they still are more expensive to buy, but they are unquestionably superior to open to the weather bicycles or STANLEY STEAMERS.

                I can remember myself when it was a rare thing for an older car to last a hundred thousand miles without making numerous major repairs, such as overhauling the engine, replacing the clutch, rebuilding the differential and drive shaft, replacing wheel bearings and ALL the components of the brakes, putting on new tires every ten thousand miles max, etc etc, as a matter of course.

                ELECTRIC CARS ARE GOOD ENOUGH NOW for the world to get by with them.

                Get rid of most or nearly all the oil burning personal transportation, and there will be plenty of oil to run essential trucks, farm equipment, etc , for the rest of this century, more than likely.

                It really is possible that a good bit of heavy oil will never be produced. OR it could turn out that due to the need for it to run trucks and farm machinery, it will be economical to produce it even at a current day dollar cost of two hundred dollars or even more.

                A substantial part of what gets hauled these days is of negligible value. You can put twenty tons of potatoes in a big truck, in burlap bags, on pallets, or four or five tons of potato chips in card board boxes and plastic bags, on pallets, in the same truck. Potatoes are arguably an essential staple food. Potato chips are NOT.

                We can afford to pay double or triple the current price of diesel fuel , if it is burnt wisely, without breaking our collective economic back.

                The bottom line is that any prediction about the amount of oil we will be using,and the amount we use ultimately, and for what, decades down the road, is hardly any better than outright guesswork.

                There are simply too many variables. The one thing that is for sure is that there is less in the ground every year, and so it is going to cost more, on average, to get it out and to market.

                • Hickory says:

                  Got me to thinking, OFM, there are an awful of things like shipping potato chips that we could surely get by without, that require liquid fuel. Here is a few just off the cuff- nascar, all the sports teams that fly/drive all around the country and their fans, all the driving to entertainment venues (from movie theaters to amusement parks, and even disney), and certainly a large bulk of the various consumer goods we hoard.
                  Got to keep in mind that a consequence of cutting down on all these discretionary forms of liquid fuel use would result in an economic depression if the transition was quick.
                  BTW, the new Chevy Bolt looks promising if someone is looking for a small commuter car-

            • Dennis Coyne says:

              Hi Stiglar,

              If oil prices are lower after 2060 (under $100/b in 2015$) due to a transition to a different energy and transportation system, URR would be lower.

              My recent model has about 2400 Gb of cumulative C+C produced through 2060. Low oil prices in the future might reduce extra heavy oil to 300 Gb (from 600 Gb) and C+C less extra heavy from 2800 Gb to 2600 Gb for a total URR of 2900 Gb.

              Such a scenario is very optimistic, the eventual URR will be somewhere between 2900 Gb and 3400 Gb depending upon the speed of the transition.

              Model has about 150 Gb of cumulative extra heavy oil produced through 2060.

      • TechGuy says:

        DC Wrote:
        “The lack of oil affordability at over $90/b is somewhat of a myth based on World growth rates from 2011 to 2014.”

        Back then (2011-2014) the Fed was doing QE and the Emerging market economics were gorging themselves with debt. Its easy to buy expensive things using cheap and abundant credit. However, at some point the creditor will start knocking and demand you pay them back.

        My guess is that the Fed will soon return to QE, and commodities prices will start rising again. But this has nothing to do with afforability and everything to do with treating the patient (debtors) with heroin (cheap credit) to prop the system up. Its completely unsustainable. Like a heroin addict, it will take increasingly larger dosages to keep the financial pain away.

        The Fed raised interest rates by a tiny 25bps and the market almost immediately began tanking. While I don’t believe the tiny increase is the direct cause, it was likely the straw the broke the camels back.

        “These are 2.5% in 2015, 3% in 2016, and 3.2% in 2017.”
        Fantasy, No way will the world GDP be 3% in 2016 or 3.2% in 2017. At best the Central banks will print money and buy worthless assets giving the appears of growth, when its really a slo-mo collapse.

        The Fed reserve “Velocity of Money” shows that the US economy has been in a long term recession since about 2000. If the economy had any real growth we would have seen it increase, but it shows nearly continuous decline for more than 15 years. It only temporary reversed during the Fed induced global real estate bubble, and rapid accelerated lower after the bubble popped.


        • Dennis Coyne says:

          Hi Techguy,

          The decrease in the velocity of money is simply due to an excess supply of money sitting in banks. This is what happens when monetary policy runs up against the zero lower bound and further increases in the money supply no longer boosts aggregate demand. Under these conditions the velocity of money tells us very little about GDP growth. Real GDP growth hasn’t been great in the US, but better than Europe because of better fiscal policy.

          • Glenn Stehle says:


            Countries that do not have the world’s leading reserve currency don’t have the same luxury of fiscal profligacy the way the US does.

            • Dennis Coyne says:

              Hi Glenn,

              Any country with its own currency can use monetary and fiscal policy. Possibly you are referring to Japan where the problem there is the demographic transition which is a conundrum which economists are struggling with.

              The UK chose a silly policy of fiscal austerity simply because of free market ideology, it had nothing to do with the British Pound.

              For those nations that are part of the Eurozone, they gave up their control over monetary and fiscal policy to the Germans, an unwise decision at best.

              At some point either Europe will become a single nation along the lines of the United States where areas that are doing badly economically (think savings and loan crisis in Texas) receive help from the central government with no strings attached or the Euro project will be abandoned.

              The current system is unlikely to remain stable over the long term in my opinion.

              • Glenn Stehle says:


                The United States has been a chronic debtor nation since the 1970s. In the past 40+ years the US has not experienced a single year in which the US has not ran a trade deficit.

                The question thus becomes: How has the United States been able to do this for so long? What has contributed to the US’s seeming immunity to debt-trap dynamics?

                On the last thread someone posted an answer to this question that sounds quite plausible:

                The U.S. dollar has reigned supreme since the end of WWII, when the Bretton Woods system gave it is initial power. With Bretton Woods’collapse in 1971, oil became its new saviour and kingmaker as the U.S. dollar became the prime currency for crude oil transactions.

                In 1973, the U.S. made a pact with the Saudi King to conduct all crude oil trades in U.S. dollars—in return for U.S. protection of its oil fields. Because of the global hunger for crude, the demand for U.S. dollars experienced a similar, sustained hunger.

                The major producers of crude oil had an abundance of dollars, which was recycled back into the system to purchase dollar-denominated assets. The consumers pay for crude oil in dollars; hence, they always have to keep a steady reserve of dollars, thereby maintaining a high demand for the the currency….

                Over the past few years, countries such as China, Russia, Iran, and Brazil, Russia, India, and China, and South Africa (the BRICS nations) have begun to pose a challenge to the current system, forming pacts to transact oil in local currencies, bypassing the petro-dollar.

                The U.S. has dealt with all earlier challenges to its petro-dollar system with a strong hand.

                A key reason for the wars in Iraq, Syria, and Libya, was in response to an attempt to find an alternative to the petro-dollar.

                With China and Russia leading the most recent attack on the U.S. dollar throne, the battlefield is moving to a new and much broader front….

                The current strength of the U.S. dollar shouldn’t be taken for granted.


              • Dennis Coyne says:

                Hi Glenn,

                The US current account deficit is not very large as a percentage of GDP, a high of 6%.

                As the US weans itself from oil use as oil prices increase, this will become smaller, in any case if others are willing to lend, we can continue to run current account deficits, by using less oil and importing fewer goods in general (or exporting more) the problem can be solved.

                The following paper suggests it is not much of a problem:


                An excerpt:
                Other industrialized economies have incurred much larger external obligations as a percent of GDP without precipitating crises. For example, Australia’s negative net investment position reached 60 percent of GDP in the mid-1990s, Ireland’s exceeded 70 percent in the 1980s and New Zealand’s hit nearly 90 percent of GDP in the late 1990s. Notably, these economies have recently been among the most successful—in terms of economic growth—in the industrialized world. The combination of rising external obligations and prospects for robust growth is entirely consistent: Capital flows toward countries that can make productive use of it.

          • TechGuy says:

            DC wrote:
            “The decrease in the velocity of money is simply due to an excess supply of money sitting in banks. ”

            Money Velocity started falling well before the banks were parking money. The US and the rest of the West has implemented ZIRP for the past 8 years. If there was any real growth since then, then rates would have normalized a long time ago.

            Bank reserves Peaked in Early 2014 and plateau’d until the Fall in 2015 when Bank Reserves declined by about $800B. Yet Money volocity continued to steadly decline.


            “Real GDP growth hasn’t been great in the US, but better than Europe because of better fiscal policy.’

            I disagree. The issue is that the US printed and borrowed a heck lot more money than Europe did. The US has a very poor fiscal policy. Since 2008, the US Debt (on the books) as doubled. This isn’t by an measure “better fiscal policy”. Its simply postponing an even bigger crisis in the future. The US will need to return to QE very soon to avoid postpone another major crisis.

            • Dennis Coyne says:

              Hi Techguy,

              Money velocity is not very important. Low interest rates have been in place since the GFC.

              You understand very little about macroeconomic policy if you think the solution to a recession is a balanced government budget.

              Try reading the General Theory of Employment, Interest, and Money by John Maynard Keynes.

              The reason Europe has done so poorly is a misguided attempt to reduce budget deficits in the face of a severe recession.

              The “printing of money” doesn’t matter as long as inflation is low, which it has been in the US.

              Yes the US government has borrowed money at very low interest rates, exactly what it should have done in the face of a recession.

              At this point the US economy is doing well, balancing the budget by raising taxes (preferably on income over $200,000 per year) and cutting military spending (or something else, maybe congressional salaries) would be fine with me.

              Personally I think a carbon tax would be the best policy of all, maybe combined with all forms of income being taxed at the same rates (dividends and capital gains receive no special treatment) as wages and reducing corporate tax rates to zero. Such a policy would include things that both liberals and conservatives hate and might serve as a compromise, not sure where the best place is to cut spending, maybe just level fund everything and any increases on one category have to be met with reductions in other areas.

  3. Euan Mearns says:

    Ron, my latest:

    Oil Price Crash: How low will the oil price go?

    Re your post, what would happen to OPEC production if oil went to $150 and stayed there for 5 years?

    • Re your post, what would happen to OPEC production if oil went to $150 and stayed there for 5 years?

      I have no idea. What would happen to OPEC is oil went to $10 and stayed there for 5 years? I cannot answer hypothetical questions that have no chance of actually happening.

      • Euan Mearns says:

        Don’t know what to make of your answer Ron. Have you convinced yourself that Peak Oil is now at a time of glut followed by permanently low price? Scarcity will return towards the end of this year, price will recover strongly and the industry will begin a new cycle that could include a doubling of operational rigs in the ME.

        • Not likely. Of course prices will recover. But the deep investment in exploration and production will not return. They were burned once and lost billions. Do you think they are stupid or something?

          Some investment will obviously return, but the wild and almost free money will never return. And other things are happening. China is slowing down and there has been no recovery, so far, of the recession that is gripping many European countries.

          And more investment will not necessarily mean more oil. Only in the US and Canada has massive investment led to a massive increase in oil. And that party is likely over.

          Euan, I simply do not believe prices are not going to go to $150 a barrel and stay there.

          • Ablokeimet says:

            Ron Patterson: “But the deep investment in exploration and production will not return. They were burned once and lost billions. Do you think they are stupid or something?”

            Once bitten, twice shy. But the third time, they won’t be able to help themselves. Eventually, high prices will tempt people into the drilling game The question is how high and for how long does it have to stay there before greed outweighs fear?

            The US tight oil industry has been built on false assumptions, but it could become viable at $150/barrel. The viability price for US tight oil looks, for the time being, to be a ceiling on the oil price.

            • Greenbub says:

              It’s a little difficult to imagine $150 a barrel and an absence of exploratory investment.

              “I simply do not believe prices are not going to go to $150 a barrel and stay there.”

              What would bring the price back down?

              • Dennis Coyne says:

                Hi Greenbub,

                Two things could bring down the price, either an oversupply of oil relative to demand (like the present situation) or a recession which reduces demand relative to the available supply.

                I suppose these amount to the same thing too much supply relative to demand.

                The only difference is that in one case supply grows too quickly and in the second case demand contracts (assuming supply is unchanged).

                Once we have reached peak output price only falls if demand falls faster than the decline in output.

                If Ron is correct that we have already reached the peak a recession is the likely reason that demand would fall faster than supply.

                The optimist might say demand falls due to a rapid transition to more fuel efficient transportation, I think this is unlikely before 2050 ( and 2060 would be a more reasonable guess).

            • TechGuy says:

              Ablokeimet wrote:
              “The US tight oil industry has been built on false assumptions, but it could become viable at $150/barrel. ”

              Its unlikely that Oil prices can be sustained anywhere near $150 bbl (adjusting for inflation of-course). The issue is that consumers & business can not afford to spend that much for Oil. Probably the max the global economy can afford without QE and other financial shenanigans is about $60. As soon as the US began tapering QE Oil prices began falling. If the US returns to QE again at the same levels as the 2009-2014, the max Oil prices can be sustained is likely about $100.

              In additional the current LTO/shale oil sweet spots have been largely exploited. Unless there is are other untapped sweet spots (ie places outside of Permian, Bakken, Eagle-ford, etc) , its unlikely LTO/Shale will have any significant impact in future production.

              Ablokeimet wrote:
              “Once bitten, twice shy. But the third time, they won’t be able to help themselves.”

              Very rarely do bubble re-inflate after they pop. In the late 1990’s it was the DotCom bubble, in 2004-2008 it housing bubble. Neither of these bubbles re-inflated. Investors moved on to other investments bubbles, such as energy and emerging market debt markets (2010-2015). These two investments will pop and investors will find some other bubble to chase after. That is, if they have any money left.

              I suspect that at lot of the investor money was being sourced from retirement funds, either pensions, 401k’s, etc. Boomers are in the process of mass retiring now. I think they’ll start hording what ever capital they have left, rather than risk it chasing after returns. Taxes are also likely to rise significantly soon, as broke gov’ts will need more revenue to pay for the promised retirement entitlements. In the US, I expect the payroll tax to increase by 2% next year, and US states will also raise taxes to cover soaring pension outlays as state workers (boomers) are retiring. In the US, consumer and Business are struggling with the soaring costs of Obamacare (Healthcare). The business I work with, are in the process of switching to automation and outsourcing overseas to reduce labor. These are large multi-billion companies.

              I think the next thing in Oil & Gas industry is that the remaining sound companies will buy up the assets of the failed companies at pennies on the dollar instead of investing in CapEx. When that is done, I expect the remaining sound companies merge, as they seek reserve replacements instead of pouring money in expensive CapEx projects. I doubt we will see any grand CapEx projects going forward unless they are subsided by a gov’t. The only remaining Oil resources left will be incredibly expensive (ie +$50Billion USD)

              On the Global economic front, I expect long term weakness as the Boomers retire and go from paying taxes to consuming entitlements. We will like see much more turmoil in Europe and Asia as high youth unemployment takes its toll and unsustainable debt load prevent any recovery. The World now has turned 100% Japanese, which has been in a state of deflation for over 25 years. Too much debt, severe demographic problems, and depletion of cheap and abundant resources will force the unsustainable conditions to revert into a long term crisis. This is will be an economic environment that will not support long term expensive CapEx projects.

              • Ablokeimet says:

                Tech Guy: “Its unlikely that Oil prices can be sustained anywhere near $150 bbl (adjusting for inflation of-course). The issue is that consumers & business can not afford to spend that much for Oil.”

                People in industrialised countries have been becoming more efficient in their use of oil over the last few years. It would take quite a few years of very low prices to reverse that. In the Third World, oil consumption is increasing, off a very low base. In particular, the number of cars on the road has been expanding rapidly. This has been taking up the slack caused by declining consumption in industrialised countries.

                You’d be surprised how people would adjust to $150/barrel oil.

                Tech guy: “In additional the current LTO/shale oil sweet spots have been largely exploited.”

                This has been a significant and open question in my mind – how much longer the LTO industry can keep finding sweet spots. I don’t know the answer and I’m far from convinced Tech Guy has it either. I hope he’s right, but I haven’t seen any evidence of it yet.

                Tech Guy: “I think the next thing in Oil & Gas industry is that the remaining sound companies will buy up the assets of the failed companies at pennies on the dollar instead of investing in CapEx. When that is done, I expect the remaining sound companies merge, as they seek reserve replacements instead of pouring money in expensive CapEx projects.”

                It all depends on the oil price. At present prices, you get a lot more bang for your buck if you do your drilling on Wall St. When the price recovers, however, so will the share prices of oil companies with substantial reserves and/or prospective acreage. This will create the incentive to go out and drill somewhere new. Because people got burnt badly in shale oil, there will be a more or less prolonged pause before the gold rush starts, but it will start eventually, with investors taking whatever precautions they feel necessary against repeating their previous mistakes. If the the incentive to drill is insufficient at $150/barrel, falling production because of depletion of existing fields will cause the price to rise further – until such time as CapEx levels rise again.

                • Glenn Stehle says:

                  Ablokeimet says:

                  This has been a significant and open question in my mind – how much longer the LTO industry can keep finding sweet spots. I don’t know the answer and I’m far from convinced Tech Guy has it either.

                  What shale demonstrated is that, if the global capitalist system can withstand $150+ oil and $8+ natural gas without collapsing, then there are vast quantities of oil and natural gas out there which can be exploited at that price.

                  • Dennis Coyne says:

                    Hi Glenn,

                    All that has been demonstrated is that at $110/b over three years about 80 Mb/d of C+C can be produced. We do not know how much more can be produced at $150/b, it might be more than 80 Mb/d, maybe 3 or 5 Mb/d, but old fields continue to deplete.

                    Would you care to guess how vast the quantities of oil might be at $150/b (2016$)? My guess remains 3400 Gb for the URR of C+C (about 1300 Gb of C+C has already been produced, leaving about 2100 Gb (590 Gb of this is extra heavy oil with API less than 10). Scenario below shows one possible way this could play out (if there is no GFC2, and oil prices rise to $150/b by 2023 and remain at that level (say $140 to 160/b) until 2040.

                    Sorry for small chart (not very readable). I’ll try elsewhere.

                  • Glenn Stehle says:

                    Dennis Coyne said:

                    Would you care to guess how vast the quantities of oil might be at $150/b (2016$)?

                    I really don’t know.

                    The EIA’s most recent estimate (updated September 2015) for technically recoverble shale oil and gas uses figures from a May, 2013 study. At that time it came up with a little bit more than 400 billion barrels of oil and 7,500 TCF of natural gas worldwide.


                    Then there’s the Orinoco.

                    And there are Canadian sands.

                    But perhaps the biggest unknown is that there’s a real dearth of knowledge when it comes to the world’s conventional oil fields. How many fields have secondary recovery been implemented in? Tertiary recovery? Secondary and tertiary reserves can dwarf primary reserves.

                    Most of the world’s oil and gas reserves are in the hands of national oil companies, which complicates getting reliable information.

                    Many things become possible with $150+ oil and $8+ natural gas.

                  • Secondary and tertiary reserves can dwarf primary reserves.

                    1. What are you calling secondary and tertiary recovery methods?

                    2. What evidence do you have that the reserves left in the world’s giant fields can be dwarfed by any recovery methods that have not already been implemented?

                    Edit: For some reason I thought it was Dennis who posted this truly absurd statement: Secondary and tertiary reserves can dwarf primary reserves. It was not Dennis but Glenn. My apologies to Dennis. Sorry.

                  • Glenn Stehle says:

                    Ron Patterson says:

                    What are you calling secondary and tertiary recovery methods?

                    Secondary recovery would be waterflooding.

                    Tertiary would be something like CO2 or polymer flooding.

                    Below, for example, is a graph of the Denver Unit in the Permian Basin.

                    It looks like oil production was about 13,000 BOPD in 1965 when waterflooding began.

                    By 1975 oil production had increased to 150,000 BOPD.

                    CO2 injection began in 1984, at which time oil production had declined to about 50,000 BOPD.

                    Production from the Denver Unit is currently about 25,000 BOPD.

                  • Glenn Stehle says:

                    Ron Patterson said:

                    What evidence do you have that the reserves left in the world’s giant fields can be dwarfed by any recovery methods that have not already been implemented?


                    Let me reiterate what I said:

                    But perhaps the biggest unknown is that there’s a real dearth of knowledge when it comes to the world’s conventional oil fields. How many fields have secondary recovery been implemented in? Tertiary recovery? Secondary and tertiary reserves can dwarf primary reserves.

                    Most of the world’s oil and gas reserves are in the hands of national oil companies, which complicates getting reliable information.

                    Do you have information as to what stage of recovery the world’s major oil fields are in?

                  • Dennis Coyne says:

                    Hi Glenn,

                    The EIA does not estimate TRR very well, the 400 Gb of LTO worldwide, is not going to happen, at best it will be 100 Gb (maybe 40-50 Gb from the US and optimistically 50 Gb from the rest of the World).

                    I have included 350 Gb from Canadian oil sands and 250 Gb from the Orinoco belt (Fernando believes this is too optimistic and he is very familiar with Venezuela’s oil industry).

                    I don’t know what URR will be, it is an estimate roughly midway between the HL estimate(2500 Gb) and USGS estimate (3100 GB) for C+C less extra heavy oil (Canada’s oil sands and Orinoco.)

                    You sound a lot like Sergeant Shultz (I know nothing.)

                  • Glenn, I know what secondary and tertiary recovery is. I just wanted to know what Dennis was referring to. But to be honest I have no idea what you mean by polymer flooding. Hydrocarbons are polymers, polymer strings. So…..

                    Oh we may not have much information on the production of most national fields but we have plenty of information on their water injection, when it started and how many million barrels per day they inject. Saudi has actually publishes that information from time to time.

                    And almost every old giant field in the world, many years ago, began waterflooding. Russia has done it in their tired old giants, starting with the very oldest one.

                    Russia’s Oldest Oil Producing Field Marks 65th Anniversary

                    First discovered in 1943, Tatneft’s Romashkinskoye oilfield was the first of Russia’s mega fields of platform type geology to be produced using contour waterflooding.

                    My point was, to Dennis, that he is way off in his estimate that secondary and tertiary could dwarf primary reserves.

                    No, there is not a dearth of knowledge concerning the world’s very old giant fields. We know that they all are now undergoing waterflooding and infill drilling. And that in spite of that almost every one of them are in decline.

                  • Glenn Stehle says:

                    Dennis Coyne said:

                    You sound a lot like Sergeant Shultz (I know nothing.)

                    But you do?

                  • Glenn Stehle says:


                    I really didn’t know what the recovery status of the world’s major oil fields is.

                    Iran and Iraq’s oil fields, for instance, are reputedly stuck in some time warp due to political factors and haven’t had much investment for years.

                    Saudi Arabia, on the other hand, like the United States probably employs the most advanced methods and technology in the world.

                    It sounds like Russia is no slouch.

                  • AlexS says:

                    Ron Patterson says:

                    “to be honest I have no idea what you mean by polymer flooding.”

                    From U.S. DOE website:

                    Chemical injection, which can involve the use of long-chained molecules called polymers to increase the effectiveness of waterfloods, or the use of detergent-like surfactants to help lower the surface tension that often prevents oil droplets from moving through a reservoir. Chemical techniques account for about one percent of U.S. EOR production.


                    Chemical methods focus mainly on alkaline-surfactant-polymer (ASP) processes that involve the injection of micellar-polymers into the reservoir. Chemical flooding reduces the interfacial tension between the in-place crude oil and the injected water, allowing the oil to be produced. Micellar fluids are composed largely of surfactants mixed with water. Goals of polymer floods are to shut off excess water in producing wells, and to improve sweep efficiency to produce more oil. Chemical field trials by industry indicate that surfactants can recover up to an additional 28% of reservoir oil; however the economics have not been favorable when the price of oil is factored against the cost of surfactants and polymers. Chemical flooding technologies are subdivided into alkaline-surfactant-polymer processes, polymer flooding, profile modification, and water shut off methods.


                    Ron Patterson says:

                    “almost every old giant field in the world, many years ago, began waterflooding. Russia has done it in their tired old giants, starting with the very oldest one.”

                    Ron, there is nothing wrong with waterflooding, if it used properly. The example of the Romashkinskoye field shows it. Tatneft, the company-operator, was able to stabilize production there at around 15 million tons/year (~300 kb/d) since the 90-s.

                    Oil production at Romashkinskoye field, kb/d
                    (Volga-Urals oil province, Russia, discovered in 1943)

                  • Ron, there is nothing wrong with waterflooding, if it used properly.

                    Errr… did I even hint that there may be something wrong with waterflooding? Are you trying to read something into my replies that is not there?

                    Of course there is nothing wrong with waterflooding. Without waterflooding Khurais, in Saudi Arabia, was producing less than 80,000 bpd. So they shut it down. But then they started injecting about 2 million barrels of water per day and now Khurais is producing about 1.2 million bpd.

                    No, waterflooding is the saving grace of every tired old giant field. It works beautifully. But the point is, everybody has already done it. Today’s very high production from OPEC, Russia, and a lot of other places, is the result of waterflooding that began at least a decade ago. Decades ago in the case of Saudi Arabia.

                    We will not get more oil due to waterflooding, the high oil production we are getting today is the result of waterflooding. It is not something that will save us from peak oil in the future, it is something that has already saved us from peak oil in the past.

                  • Dennis Coyne says:

                    Hi Glenn,

                    No I do not know the future, but I am willing to estimate what I think might happen. Let’s try this,

                    Do you think the URR of C+C will be more than 2700 Gb? How about 3100 Gb? 3400 Gb? 3700 Gb? 4100 Gb?

                    How about what you believe to be a reasonable range?

                    Nobody knows the answer, my guess is the C+C URR will be between 3100 Gb and 3700 Gb, does that seem to be a reasonable range to you? Note Jean Laherrere’s estimate is 2700 Gb and the USGS about 4100 Gb.

                • I’m going to write this because the comments are too skinny: EOR can add reserves, but it doesn’t add as much to rate.

                  When a field has been water flooded and water cut is above 90 %, adding junk to the water can help, but it’s better to do it at a lower water cut.

                  If a field is depleted below bubble point and gas to oil ratio is high (say triple the initial GOR), water flooding it never achieves the results we get if its started before bubble point is reached.

                  CO2 injection makes produced fluids very corrosive.

                  Polymers are simply a rate acceleration add on, but the economic limit can change things to make them add real reserves.

                  There are fairly low tech EOR techniques we can apply outside the USA but the politics make project implementation very difficult. Lack of co2 is a problem.

          • Dennis Coyne says:

            Chart for scenario with prices going to $150/b by 2023 and remaining there (140 to 160/b in 2016$) until 2040. This is for World C+C rather than OPEC only.

            See comment above in reply to Glenn for more explanation on the underlying URR (includes 600 Gb of extra heavy oil).

        • Dennis Coyne says:

          Hi Euan,

          I do not think that Ron believes oil prices will remain low forever. I think he believes the World economy will not support oil prices at $150/b (2015$) in the near term. If you had proposed $120/b in 2019 (2015$), he might think that is reasonable (or at least I do).

          I believe oil (C+C only) will peak between 2020 and 2030 at between 80 and 85 Mb/d, even if oil prices rise to $190/b (2015$) (which I believe is about as high as the World economy will support).

          That estimate is based on a URR estimate for all C+C (including oil sands) of 3400 Gb.

    • Jef says:

      “…what would happen to OPEC production if oil went to $150 and stayed there for 5 years?”

      Well as an economist I would say this…first assume everyone in the world is rich and getting richer…

    • Jeffrey J. Brown says:

      As annual Brent crude oil prices doubled from $55 in 2005 to an average of $110 for 2011 to 2013 inclusive, OPEC 12 net exports of oil fell from 29 million bpd in 2005* to 27 million bpd in 2013 (total petroleum liquids + other liquids, 2014 EIA consumption data not yet available).

      *Incorporating revised 2005 EIA Saudi production number, but otherwise based on EIA data compiled in late 2014

      • Peter says:


        That is because the United States production went from 8.3 million barrels per day to 14 million. If one of the biggest importers does far less oil, this leaves spare production all over the world and many countries had to cut exports.

        • Ralph says:

          Cut exports when oil was selling for over $100/barrel for 3 years running? Wow.
          OPEC really must have been running a tight ship.

          • Peter says:


            The United States increased production of C&C by 4.3 million barrels per day. Also Europe consumption declined, taking all countries that increased imports. OPEC had no choice but to cut production, there was no one to buy the that spare oil.
            This is something Jeffrey seams determined not to understand, yet it is not too difficult to follow, it is simply export land model in reverse!

            • Jeffrey J. Brown says:

              And you are arguing that annual Brent crude oil prices doubling from $55 in 2005 to $110 for 2011 to 2013 inclusive reflects weak demand for global net exports of oil? So, a doubling in the price of commodity reflects weak demand? And a doubling in the price of a stock reflects weak demand for the stock?

              I guess this makes sense to residents of Fantasy Island.

              Note that the volume of GNE* available to importers other than China & India fell from 41 million bpd in 2005 to 34 million bpd in 2013.

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

              • Peter says:


                Your argument does not hold any oil.

                Global demand for oil today has never been higher. Yet the price of oil has fallen to as low as $27.
                So your argument that price is an indicator of demand is simply wrong.
                Your stupid comments about fantasy island is fit for a junior school and should be beneath you.
                Unfortunately too many people resort to childish put downs instead of presenting clear logical thinking.

                The price of oil is determined by various factors, financial sentiment being a very big factor.

                When oil was $100 OPEC was not trying to destroy US shale production, they were happy to maintain the price. Now they have adopted a different policy of flooding the market. Your ELM simply does not work when countries are manipulating production. Unfortunately you obviously have given little thought to what happens when an importer like the US rapidly increases production and requires much less imported oil. Perhaps you need to go away and think about it.
                Less childish put downs and more logic is required.

                • Jeffrey J. Brown says:

                  Always nice to have visitors from Fantasy Island.

                  In any case, the fact remains that the volume of GNE available to importers other than China & India fell from 41 million bpd in 2005 to 34 million bpd in 2013, as annual Brent crude oil prices doubled from $55 in 2005 to $110 for 2011 to 2013.

                  So, the other importers had to divide up a declining supply of what I call Available Net Exports (GNE less Chindia’s Net Imports). Some importers, like the US, showed a large decline in net imports (due to rising production and due to declining consumption, mostly rising production). Some of the other importers, e.g., the UK and Indonesia, showed rising net imports.

                  None of that negates the fact that the supply of GNE available to importers other than China & India fell by 17% in 8 years.

                  • Peter says:


                    You are exactly what happens to a person who only focuses on one thing. Utterly blinkered to any other evidence and hence totally incapable of reassessing your position. Resorting to childish insults to cover up you shortcomings.

                    So I will say this real slow again just for you.
                    Europe oil demand declined, therefore the exporters who exported that oil had to cut production.
                    The US increased production by over 4,000,000 per day. The exporters had to try and find new markets for that oil. Not all of them could do that, so many cut production in order to maintain price.
                    Exports fell because demand fell. It really is not that difficult.

                • Global demand for oil today has never been higher. Yet the price of oil has fallen to as low as $27.
                  So your argument that price is an indicator of demand is simply wrong.

                  Peter, the price of oil is a reflection of supply and demand. That is not only economics 101 it is also just common sense.

                • oldfarmermac says:

                  Hi Peter, and anybody else who does not believe in supply,consumption, and cost of production , etc, determining price:

                  Although I am not an economist, or a big time banker, etc, I have some basic courses in the field, and a lifetime of experience observing commodity prices, having been involved with selling commodity goods as a producer since I was a CHILD.

                  Now there are MANY factors that interfere with the workings of what we refer to as supply and demand, and these factors often trump the workings of supply and demand, for a while, forcing prices up or down, temporarily.

                  But in the end, prices simply cannot be supported at “high” levels without SOMEBODY having a way to withhold product from the market, and doing so.

                  Likewise , prices cannot be forced to remain at ” low ” levels, except by rationing , or by subsidizing the production and distribution of the product.

                  A LOT of things are so SIMPLE , in the end, if you once understand them, that you want to smack yourself upside the head, and say why did it take me so long to understand something so SIMPLE?

                  When producers bring more of their product to market than the end user wants, under prevailing circumstances, the price FALLS.

                  In the case of a product such as oil, which is desperately needed in the USUAL quantity by a given end user, but nearly worthless to that same user in LARGER THAN USUAL quantities, the price falls LIKE A ROCK.

                  If apples get cheap enough, at retail, people will buy more apples, and less pears, grapes, oranges etc. In the case of oil, they cannot easily substitute oil for other fuels, as they can apples for other foods. So the price of oil REALLY crashes.

                  Joe Sixpack needs a certain amount of gasoline every week, and has a hard time getting by with less, and will pay anything his purse will stand for THAT much gasoline.

                  But Joe has VERY LITTLE USE for MORE gasoline, than usual, to put it bluntly , because he just has NO USE for it. He can slip in an extra weekend at the lake, with his boat, maybe, if he has one, but Joe just does not have TIME or opportunity to use a lot of extra gasoline, in the short term, or even in the near to medium term.

                  It is as simple as falling off a log, the oil industry as a whole is producing more than the world WANTS at any price higher than the current price. In order for the world to consume as much as it is consuming NOW, the price had to fall to what it IS NOW.

                  The why’s of over production are a separate question. Producers of any commodity tend to expand production when prices are high, and profits are also high, until they “oversupply ” their customers. The customers respond by buying from whichever producer offers them the lowest price.

                  I have personally had to lower the price of my own production of apples and peaches to zero a few times, without being able to find anybody to take my production at ANY PRICE.

                  Shutting in an orchard is as hard as shutting in an oil field. So you keep producing, even when you are losing your ass, hoping for the price to go up again.

                  The price ALWAYS goes up, eventually, when enough producers lose their ass long enough, and quit. There is NOTHING fundamentally wrong with classical economic theory when it comes to supply, consumption, cost of production, and prices, etc.

                  A lot of oil producers are losing their ass right now, and doing what they can to cut back on production, but this is a slow process, due to the nature of the industry.

                  Now is it possible that some producers are deliberately selling at very low prices in order to achieve goals OTHER than making a profit?

                  This is very possible. This sort of thing happens all the time, and many people will argue that it is happening at this minute.

        • No one cut exports deliberately. If they cut exports it was because their production declined, or their domestic consumption increased, or both.

          • SatansBestFriend says:

            I assume you mean domestic consumption.

            Hoarding and embargoes happen under special circumstances.

            I’ve never understood why Saudi Arabia doesn’t hoard.

            I would think someone in the royal family cares about the future?

            I am sure I am missing something though.

          • Peter says:

            I refer you to my answer above

        • I suggest you exclude NGL and refinery gains.

        • That is because the United States production went from 8.3 million barrels per day to 14 million. If one of the biggest importers does far less oil, this leaves spare production all over the world and many countries had to cut exports.

          Peter, that is just bullshit. Damn, you should know better than that. No country in their right mind would cut exports when oil was selling for over $100 a barrel.

          And watch your insults, especially where Jeffrey is concerned. He is the most knowledgeable oil geologist on this blog.

          • Dennis Coyne says:

            I would recommend people refrain from insults in general, except Ron, it is his blog, he can insult anyone, including me (though he usually saves that for when I say really outrageous stuff.) 🙂

          • Jeffrey J. Brown says:

            Since Peter is a visitor from Fantasy Island, he appears to believe that all production and/or net export declines are voluntary.

            As I noted down the thread, he therefore appears to believe that the (2005) Top 33 net exporters voluntarily increased (at about 6%/year) their net exports from 2002 to 2005, in response to one doubling in annual crude oil prices, but voluntarily cut their net exports from 2005 to 2013, in response to the second doubling in annual crude oil prices. And he asserts that three years of annual triple digit oil prices, 2011 to 2013, reflect weak demand for Global Net Exports of oil.

          • Peter says:


            You mean like telling people what they say is bullshit.

            You need to learn manners yourself.

            Telling someone they cannot see the obvious is not rude. Especially when their predictions have been utterly proved wrong.

            So you think exporters to the US would force the US to take their oil.


            So you think exporters to the US would force the US to take their oil.

            • You need to learn manners yourself.

              Hey, fuck off asshole. Where the hell are your predictions? How good were they? Any prediction would be one hell of a lot better than yours. It is so goddamn easy to criticize other peoples predictions when they cannot examine yours.

              • Peter says:

                I will pay you a visit soon. You can say that to my face.

                • R Walter says:

                  Just who in the hell do you think you are?

                  What? Are you some sort of disciple or somethun?

                  I could write words like ‘hey, now look, goddammit’ or ‘hey, fuckface, get off his back’ or ‘quit being a dumbfuck, shithead’ or ‘kiss my ass, motherfucker’ or ‘hey dumbass, go fuck yourself’ or just a plain old ‘fuck you, asshole’, that one always works.

                  I could write it all down in words, use invective, expletives, all insults and ad hominem, do it all with reckless abandon.

                  If I were to tell it like it is, it might not be all that nice, might not be mannerly, but then, you’d know, wouldntcha? That would be just too bad.

                  Just another waste of time, so I won’t.

                  Except for this time.

    • Euan, when we use empirical evidence from previous crashes we do need to factor in the real increase in the cost to produce the marginal barrels. Since 1998 those marginal barrels are much more expensive.

      I’ve also learned that oil prices don’t necessarily drive all producers, they seem to be driven by oil price forecasts. Thus the key is to see producers think that oil prices next month will be below production cost enough to make shut in worthwhile (operators have fixed costs which don’t disappear simply because the wells were shut in).

      But prices have dropped enough that shutting in for a couple of months may be worthwhile. Plus we have Venezuela’s looming problem. As long as Iran doesn’t start tossing barrels into the market we may see enough supply reductions over the next four weeks for the oil price to bottom out. Maybe.

      • Euan Mearns says:

        WTI down 7% today to $26.76. Dennis tried to make the cost of marginal barrel to me which in the circumstances I just don’t get. Its relevant when prices are rising and companies are evaluating prospects and investments. I just don’t see the relevance on the way down. Companies will sell all they can for whatever they can get because xbbls*$20 is better than 0bbls*$20.

        Oil is caught in an over-supply broad market crash vortex.

        • Dennis Coyne says:

          Hi Euan,

          Eventually companies realize that when you are in a hole, the first rule is to stop digging.

          In other words, cost matters because at a higher cost of production (say $50/b) you are losing $25/b on every barrel you sell at $25/b. If the cost of production is $30/b, you are only losing $5/b on each barrel produced.

          The more money you lose, the less likely you are to invest more, this eventually reduces supply due to depletion.

          So yes, the cost of the marginal barrel matters. If it did not, oil would have a price of zero.

          • Joe Clarkson says:

            The cost of the marginal barrel is relevant only to the cost of new production. Operating costs are the only limitation to production from existing wells. As Euan notes, oil produced at prices above operating costs produces revenue. Shut in wells do not. This means that existing wells can produce oil at prices far lower than those needed to justify drilling new wells. When the world needs new oil wells, the price will rise enough to allow them to be drilled at a profit. That price may be very high indeed.

            • Dennis Coyne says:

              Hi Joe,

              Yes you are correct that producing wells might not get shut in, although some older wells may not be profitable to maintain at low prices and will be shut in and producing oil fields decline in output at an average rate of 6.5% per year if no new wells are drilled.

              My point is this, very few new wells will be completed at very low oil prices and oil supply will decrease. That is why cost matters, it affects investment in new wells.

              As I said before, if the cost to produce oil is zero, then the price will be zero, otherwise it will be a positive number which will approach the marginal cost in the long run.

              The higher the cost of producing the marginal barrel, the more money one loses producing it at any given price below the cost of production. The bigger the monetary loss the less likely it is that more wells will be drilled.

            • AlexS says:


              You have a rather simplistic view on the interaction of prices, costs, investments and production.

              At $35-40/bbl, the vast majority of the current global oil production remains profitable.
              At $25-30/bbl, there are indeed fields in various parts of the world, where operating costs are above those levels. But companies do not take decisions based on daily or weekly fluctuations in oil prices. Only after several months of oil price staying below $30/bbl operators may decide to shut in non-economic wells. Despite headlines in the MSM with projection of $25, $20, $15 and even $10 per barrel, none of institutions such as IEA, EIA and OPEC, investment banks, energy consultancies and individual experts is projecting annual oil price below $30. The lowest existing forecast is from J.P. Morgan at $31.5/bbl. The majority is in the range between $37 and $50. Goldman Sachs which was mentioned as forecasting $20 oil, is actually projecting $40 by mid-year as the base case scenario. They say that under certain conditions prices may drop to $20, but only for a short term. Ed Morse from Citigroup and Daniel Yergin from IHS have also recently said that current prices are unsustainable and that there will be an upward correction in the second half of the year. Not to $75, as you are or were projecting, but to $40-50, which would support all of the current production.

              There are well shut-ins and there will be more, but these are mostly wells with very low daily output, especially stripper wells in the U.S. And that will not have significant impact on global oil production. Also note that shutting current oil production may prove more costly than producing at a loss due to high decommissioning costs and potential damage to the reservoirs.

              Investments also will not drop to zero levels even at $25-30, as there are a lot of projects at final stages of development, which will be completed with relatively modest additional investments and will be generating cash.

              As I have said earlier, it is important to take into account a significant cost deflation, which lowers breakeven prices for new projects.
              We have already seen this in the 80-s. In 1980 it was estimated that the most costly new projects, such as the North Sea and Alaska, had breakeven costs at $25-30 ($70-85 in today’s money). But as prices started to decline from 1981 and dropped to $10-12 lows in summer of 1986 ($23-27 in today’s dollars), all of the new projects in the North Sea, Alaska, Canada, Mexico (Cantarel) continued to increase output for at least 2-3 year more. This was largely due to declining costs. Non-OPEC production started to decline only by the end of the 80-s, after several years of low oil prices.

              Non-OPEC production (mb/d) vs. oil price ($/bbl), 1970-1990

              • Dennis Coyne says:

                Hi AlexS,

                Thanks. Your view is indeed quite sophisticated.

                I believe that you may think that my argument is that no new wells will be drilled. It is not, my point is that if Euan Mearns forecast for oil price is correct, oil investment is likely to be lower.

                Mearns oil price forecast is that Brent remains under $37/b until Dec 2016 with a bottom of around $15/b and oil prices remaining under $20/b at mid year, he does not give an estimate for an average oil price for the year, but it would be somewhere between $20/b and $37/b [maybe $29/b (2014$) for 2016.]

                Under the scenario above I would expect some wells might be temporarily abandoned because the oil price might not cover OPEX, I would also expect that investment in new wells would be lower than at higher oil prices, rather than zero.

                Thank you for pointing out how simple minded I am. 🙂

                (Although in fact I knew all that, and I agree that it is quite unlikely to be the case that all investment in new wells will be discontinued.)

                I think it equally unlikely that there will be no change in oil investment if oil prices remain under $40/b for the first 6 months of 2016 (average oil price over those 6 months), but I would never accuse you of such simplistic thinking. 🙂

                On falling costs. Do you think the cost of the marginal barrel has fallen from about $70/b in 2012 to $40/b in 2016 (nominal dollars)?

                Is there any evidence to back that up?


                The article above suggests about 1.5 Mb/d of output becomes unprofitable at $40/b or less.


                The article above suggests also that under $40/b will be problematic for sustaining output.

                At one point I was estimating $75/b by years end, but I have been convinced that may be too high. I think $50/b for an average 2016 oil price with a December level of about $65/b or higher is reasonable, I think at average prices matching the EIA’s short term outlook World liquids output will be lower than the EIA forecast for World liquids output.

                • AlexS says:

                  Your powerful mind brilliantly covers a broad range of issues, many of which are too complicated for me given my limited intellectual capabilities. But in some cases we have to consider so many industry-specific details that a broader top down approach doesn’t work properly.

                  • Dennis Coyne says:

                    Hi AlexS,

                    You are the brilliant one, and I appreciate what you have taught me about the oil industry which you understand far better than I.

                    The top down approach I use is intended to be a rough approximation, I do not have access to enough data or the time to put together a detailed bottom up analysis of the oil industry.

                    Not sure how well it would work, because the EIA, IEA, and OPEC already do this and somehow they seem to create oil supply out of nowhere to fill the oil demand they expect to see. So I rely on a combination of Hubbert linearization and USGS estimates along with guidance from people in the know like Fernando, Doug, Ron, Shallow sand, and AlexS to create scenarios using Webhubbletelescope’s oil shock model.

                    I agree 100% with your analysis, except I am a little more pessimistic about oil supply at $40-50 per barrel than you are and believe oil prices may be a little higher than you do.

                    In the end you will probably be correct, I have consistently underestimated how resilient the LTO output would be and oil supply keeps surprising me on the upside.

                    Perhaps the EIA’s AEO 2015 with C+C output of 99 Mb/d, will even be correct, but my guess is that will be about 25 Mb/d higher than actual C+C output in 2040, the peak will be 85 Mb/d at most between 2020 and 2030 (probably closer to 2021 if it is that high and closer to 2030 if the peak is only 81 Mb/d.)

                    Do you have an estimate of URR for C+C, I assume you believe 3400 Gb(including 600 Gb of extra heavy oil) is too low?

              • Dennis Coyne says:

                Hi AlexS,

                Another difference between today and in the 1985 to 1990 period is that the non-OPEC output increases were primarily coming from various mega projects which were ramping up at the time. Today about 5 Mb/d of World output is from very flexible LTO projects which are pretty near the breaking point at under $30/b. If there is turmoil in the LTO plays due to lack of funding we could see a 20% drop in LTO output (1 Mb/d), along with decreased output elsewhere in the World as higher cost output is reduced (maybe 500 kb/d from US stripper wells and 500 kb/d from other high cost areas throughout the World) for possibly a 2 Mb/d reduction in output.
                This might be offset by a 600 kb/d increase in Iranian output, but we would be left with a 1.4 Mb/d decrease in World output. Possibly increases in the Gulf of Mexico and North Sea offset these declines partially and we are left with only a 500 kb/d decline in World output.

                My guess is that this could happen at $50/b for an average 2016 oil price, but at $40/b it does not happen and decline is 1 Mb/d.

                • oldfarmermac says:

                  Hi Dennis,

                  Anybody who thinks investment in oil production is going to continue at the usual level at current prices must also believe that oil companies have or have access to two things I have not YET heard about.

                  ONE, awesome amounts of cash of their own, or access to similar amounts of cash on the easy never never plan.

                  Two , whole SHIPLOADS of them there new ROBOTS we keep reading about in the sci fi section of the business press, the ones that are smart enough to take over the world. Their assigned task of course is to take the place of all the oil men who have been laid off, and continue to be laid off, by oil producers.

                  THEIR PLAN, meaning the robots, is to take over the world by taking over the oil industry, as their first step.

                  Incidentally, as a serious matter, I do believe there is a significant possibility there WILL BE mobile robots capable of doing most kinds of trade work, eventually, maybe another forty or fifty years from now, assuming Old Man Business As Usual continues to stagger along, and Luddites don’t manage to burn down the robot factories and outlaw the manufacture of them.

            • oldfarmermac says:

              “Operating costs are the only limitation to production from existing wells.”

              This is true when the need for current cash income is overwhelming and most oil companies are in that position these days.

              But suppose you are making only five bucks on a barrel, in net cash, at say thirty five bucks a barrel.

              If the price goes to forty, you DOUBLE your net cash income.

              Anybody who can AFFORD to shut in production ought to be doing so, unless I am a complete dunce. No industry can run in the hole forever, not even the oil industry.

              Oil will go up again.

              So, the question is, who has money enough in the bank to cut back now, so as to make a substantially larger profit, later on?

              The Saudi’s, and maybe a couple of their good tight buddies come to mind. Is there anybody else big enough to matter?

              The Russians have an authoritarian government that will remain in power if the Putin regime were to decide to cut production.

              So take out the Russians, and THEN who is left?

        • Euan, I went through this in the 1985-86 crash. We had dozens of field operations, each of them was studied carefully, and I learned a lot seeing what we did, as well as the results.

          As I wrote, behavior is dictated by what we see and forecast. An operator who knows opex breakdown can segregate it into “fixed” and variable. Even fixed isn’t that fixed as we expand the time horizon. So the analysis should look at options such as contract term changes, salary cuts, dividends suspensions, and tax cuts (that’s fairly common in some countries, where the government will cut taxes to help people stayed employed).

          Thus when we look at say, the $22 opex in a faja field in Venezuela, we have to factor in what’s the actual cost reduction from shutting in, how fast can further cuts be made by cancelling contracts, laying off people, etc.

          In many cases the decision is made to keep producing at a loss because shutting in causes even bigger losses. What we do is avoid work overs, pump changes, or any expenses we can cut. In shoddy operations maintenance goes to hell. Some contractors are called in and told to share the pain or else. And all of this is dictated by price forecasts. Evidently producing at a loss can’t go on forever.

          Thus say you think prices will stay at $25 for a year, but will increase to $50 in 2017, then you produce even if this generates a $5 loss. You do need to have the $5 to stay alive. I look at it as an investment in the future. And I bet that’s the way most operators are looking at this current debacle.

        • oldfarmermac says:

          “Companies will sell all they can for whatever they can get because xbbls*$20 is better than 0bbls*$20.”

          When you are broke, this makes sense. You eat the seed corn, and burn the furniture, last thing before you freeze and starve to death in a mid winter famine.

          But my neighbors keep hay in the barn, and beans in the silo, and beef cows in the pasture, for sale next year, to the extent they can, when prices crash this year.

          The ones who make it long term are the ones with a barn full of hay, beans in the silo, and a pasture full of cows when prices go back up.

          I have never sold a single load of logs in a down market, except a couple of times the trees were in the way, preventing me from using that particular spot of ground as a building site.

          Unfortunately, apples don’t store well, which is a primary reason I have recently been switching to cows, although mostly retired.

  4. Dr. Don says:

    Twilight in the Desert Ron.
    Thanks for the post!

  5. Frugal says:

    Oil below $30 fans wipeout fears among U.S. shale survival artists

    YORKTOWN, Texas (Reuters) – Across oil fields from Texas to North Dakota fears are growing that crude’s plunge below $30 a barrel is more than just another market milestone and marks a countdown to an endgame for many shale producers that so far have braved the 18-month downturn.

    The bleeding continues ….

  6. AlexS says:

    “After examining the past and present production numbers, I believe that OPEC, except Iran and Libya, has peaked”

    Ron, do you really think that Iraq has peaked?

    • No, that’s not what I said. The combined production of the other 11 OPEC nations, 12 if you count Indonesia, has peaked. Some OPEC nations will increase production and some will decline. But the combined production of all other OPEC nations has peaked.

      I have clarified my position in the first paragraph of the post.

      Individually, they have not all peaked. Libya obviously has not peaked.

      • Thomas says:

        Iran and Libya are peaked in 70’s Ron

        • Iran and Libya are peaked in 70’s Ron

          That has absolutely nothing to do with my position. I am talking about the combined production of all OPEC nations except Iran. Is that so goddamn hard to understand?

          • Thomas says:


            Combined production OK

            You are wrote ” Libya obviously has not peaked” WRONG

            You believe Iran as a only OPEC country has increase a production this is a prediction not reality.

            • You believe Iran as a only OPEC country has increase a production this is a prediction not reality.

              What is wrong with you? Where did I make such a prediction? In fact I specifically pointed out that such was not the case.

              As for Libya, I thought it was obvious that I was talking about current production, not historical production. Quit nitpicking.

      • AlexS says:

        O.K., I would agree if you say that OPEC ex Iran, Iraq and Lybia has peaked

        • Of course they have not peaked. I have tried desperately to explain my position but some people still don’t seem to understand. I am talking about the combined production of all OPEC nations except Iran. The combined production of all other OPEC nations will decline faster than any increase in production of any nations that have not peaked… except Iran.

        • Iraq plus K8 peaked.🐸

  7. Bob Nickson says:

    Relevant article in the Guardian this morning:


    It’s not a particularly important fact in the article, but I did find it interesting that the king of Jordan imported Tesla EV’s for himself and his top ministers.

    • Jordan doesn’t produce oil. The King is a rich kid, it’s normal behavior for those types to buy rich kid toys.

    • Glenn Stehle says:

      Electricity produced from wind, without subsidies, only reaches parity with electricity produced from natural gas with gas prices around $10 to $12 per MCF.

      For oil, oil will have to rise to $60 to $70 per barrel for electricity produced from wind to compete (on a cost-of-production basis) without subsidies.

      For solar, the prices that natural gas and oil must rise to in order to achieve parity, without subsidies, are higher. For solar to compete on a non-subsidized cost-of-production basis, natural gas prices need to be in the range of $12 to $30 per MCF, depending on the type of solar technology deployed. For oil, its price would have to rise to $70 to $175 per barrel.

      Obviously these countries in the Middle East see a future for oil and natural gas, with much higher prices for oil and natural gas to come. It is the exact opposite of the spin Team Green puts on the situation. To wit:

      Even so, Anthony Hobley, chief executive of the Carbon Tracker Initiative, said the moves indicate the beginning of the end for the dominance of fossil fuels. “The writing is clearly on the wall that we are facing the end of the fossil fuel era, and if your economy depends on that it would be prudent in the extreme to plan for that transition while you still have respectable revenue,” he said.”

      • Nathanael says:

        The natgas price from the point of view of an electricity generator has to include transportation, however. This means that the gas price will continue to vary by region.

        And by date! While most spot prices are in the $2-3 range at the moment, New York 12-Jan is $6.81. Think about that; the price volatility is very high.

        Wind and solar prices will start dropping below localized natgas prices very soon. Both continue to drop in price. The fracking collapse will cause natgas prices to go up a lot in the next 5 years anyway.

      • Ulenspiegel says:

        Here you extrapolate from the US situation. However, in most parts of the world onshore wind generates already cheaper electricity than NG turbines, sorry. In Europe only lignite is cheaper, hard coal and esp. NG are much more expensive than onshore wind, the same in many parts od Asia.

        • oldfarmermac says:

          Furthermore, the only place in the world , at the present moment, where natural gas prices are REALLY low, is the USA.

          And with the industry being privately owned, and the government of this country being committed to exporting anything possible, including the kitchen sink, gas will not STAY cheap even here.

          Gas depletes like everything else that comes out of holes in the ground, and between depletion and growing consumption in a world with a growing population, and hopefully tighter pollution controls, the cost advantage is shifting to wind and solar power, leaving gas as the necessary backup fuel of choice for electric utilities.

          The fossil fuel industries are just going to have to get used to the fact that their days at the top of the heap are coming to an end within the foreseeable future, and in historical terms, the future is tomorrow or next week, next month at the latest.

          In human terms, fossil fuels will dominate for a couple more generations.

          The ff industry is already screaming bloody murder of course, but the best they can hope for is to slow down the exponential growth of the renewable electricity industry, and the electrified automobile industry.A few dollars spent on mouth pieces is an excellent investment on their part, for them.

          Fossil fuel shills focus on price almost exclusively, because current day prices are just about the ONLY point in their favor.Public health COUNTS , a cleaner, nicer environment COUNTS , peace between nations COUNTS.

          The balance of trade matters, especially in countries that will be importing ever more expensive fossil fuels forever, unless they go renewable while they still have the means to do so.

          Nobody who is serious thinks we can get just QUIT using fossil fuels cold turkey, or give them up entirely even over a period of many decades.

          But we can go renewable to very substantial extent, thus EXTENDING the life of our one time endowment of fossil fuels, and at the same time taking much better care of our one and only home. Nobody is going to be moving to a better planetary neighborhood anytime soon, lol.

          LOCAL employment, and LOCAL property tax collections matter.

          • Glenn Stehle says:

            oldfarmermac said:

            The ff industry is already screaming bloody murder of course, but the best they can hope for is to slow down the exponential growth of the renewable electricity industry…

            OFM, the only place where the chiliastic battle between the fossil fuel industry and the renewables industry exists is in your mind. You really do relish playing that “Us” vs. “Them” card.

            One of the world’s best known oil men, Boone Pickens, has long been a proponent of wind.


            Texas — and it doesn’t get any deeper in the heart of oil country than that — passed its renewables mandate in 1999, six years before California did in 2005.

            Texas and California offer quite the study in contrasts when it comes to renewables.

            In Texas renewables projects are undertaken for very mundane economic reasons: to capitalize on the generous subsidies the federal government bestows on wind. Wind projects, first and foremost, must make economic sense for Texas ratepayers.

            In California, however, there’s a differnt ethos, and a different priority. Renewables projects are sold by appealing to a higher purpose — saving the planet. Mundane economic considerations are thrown to the wind, with the result being that California ratepayers end up paying though the nose. Doing God’s work comes with a hefty price tag, or as we put it in Texas, “Praise the lord and pass the plate.”

            And of course there are plenty of entrepreneurs, like Warren Buffet, lined up to take advantage of the “gold rush of subsidies” in California, as the New York Times calls it:


          • Glenn Stehle says:

        • Glenn Stehle says:


          If what you’re saying is true, then it should be possible to remove all the state subsidies for wind, and the business continue to flourish.

          But, in practice, this never happens.

          Instead, the minute that state subsidies are withdrawn, investment in wind grinds to a halt.

          This is just as true in Europe as it is the United States. For examples of this one has to look no further than Spain or Italy, which were the first to attempt the type of ambitious renewables programs Germany is now attempting. When these programs were abandoned and the subsidies removed, investment in renewables ground to a halt.

          And on top of this, natural gas prices in Europe were, up until very recently, already in the $10 per MCF range, whereas in the North American market they have been in the $2 to $3 per MCF range.

          The minute that renewables, including wind, were removed from state life support, they die.

        • Glenn Stehle says:

          • Dennis Coyne says:

            Hi Glenn,

            An alternative explanation is that Italy and Spain ran out of favorable locations for Wind Power. Despite the reduced subsidies Wind power output increased by almost a factor of 4 from 2004 to 2013. Data from BP statistical review of world energy. Workbook can be downloaded at link below.


            Chart for Italy and Spain’s Wind Power consumption in Mtoe/year below.

            • Glenn Stehle says:

              Dennis Coyne said:

              An alternative explanation is that Italy and Spain ran out of favorable locations for Wind Power.


              Well it looks like we’ll see soon enough if wind energy in Germany can stand on its own two feet after the training wheels come off:

              German lawmakers backed an extensive revision of the country’s EEG clean-energy law to curb subsidies and slow gains in power prices that are the second-costliest in the European Union.

              The legislation…introduces limits on how much onshore wind and biomass capacity qualifies for the full subsidies…



              Germany will cut subsidies for onshore wind farms…starting in January, the nation’s grid regulator said….

              If net installations of onshore wind farms stay within the target range, subsidies will be cut 0.4 percent each quarter.


              • Dennis Coyne says:

                Hey Glenn,

                Do they subsidize wind in Texas? You seem to like the way they do things there.

                Personally I am all for whatever works best, eventually we will need some wind and solar, might as well get to work.

            • Denis, Spain’s power generation kit includes hydro. When I look at the detailed power gen data the hydro system is used to fill in the solar and wind gaps. But hydro is topped out. They have mini hydro but the greens fight it, so permits take 7 years.

              The grid works fine now, it’s overbuilt and has spare capacity. Adding wind or solar would be nonsense unless the juice can be exported to Germany or the uk.

          • oldfarmermac says:

            GS trots out the same old arguments, as usual, doing everything he can to convince anybody willing to listen to him that fossil fuels will be cheap and plentiful forever, and that it follows renewables are a waste of our time and resources.

            His bullshit arguments are so simple minded even most SCHOOL AGED children can see thru them. I have company at the moment, but I will point out just one. He says the example of Boone Pickens being an oil man, and into wind energy, indicates I am making a simple minded us versus them argument.

            Pickens being a wind advocate simply proves that SOME oil men understand that oil and gas are going to get to be ever more expensive, as time passes, where as wind power will get CHEAPER as time passes.

            Pickens is one of the early oil and/ or gas men to see the writing on the wall, and “join’em if you can’t lick’em”.

            Of course sometimes people are ahead of the times.

            The battle between renewable and fossil energy is raging, with renewables being very much the smaller warrior , but growing fast, while depletion is SURE to eventually mean the end of the dominance of fossil fuels, although that day is many decades, or maybe even centuries,in the case of coal, away.

            In actuality , just about all oil men understand that unless they can find one new place after another to produce oil, their children are not going to to follow in Daddy’s footsteps.It is easy to understand that not many oil men are willing to say so in public, as this would not be career enhancing thing to say.

            I will be back later, as it amuses me to point out just how low his opinion of the audience here is. He certainly writes for simpletons, which indicates in my opinion he thinks there are enough simpletons reading this site to make it worth his while to post his never ending “fossil fuels are good, renewables are bad “bullshit here.

            He is not ignorant, or stupid, far from it. He is simply determined to do whatever he can to convince people to stick with fossil fuels, and is willing to use any argument he can come up with to do so.

  8. Ref Venezuela: As I mentioned, Reuters says Pdvsa lacks the money to pay for diluent it needs to dilute the 8 degree API crude (sorry Ron, but I don’t use the term bitumen for crude like the one they produce). I can confirm the Reuters story is solid. Also, some multinationals did extend loans last year to keep the fields going, but that seems to be changing this month.

    Should the oil companies refuse to finance pdvsa the government has to make a very hard choice between paying for diluent of paying for food. Even if they pay for food, the Venezuelan diet is going to be very slim.

    Given the choices I believe pdvsa will have to cut. The OPEC third party figures are a bit fake. Once production starts to be shut in they’ll be in a world of pain.

  9. oldfarmermac says:

    We do seem to have a couple of real economists who post here from time to time.

    I would love to hear the opinions of any who willing to say, as to how fast they think the world can adapt to higher priced oil.

    It is perfectly obvious even to a farmer like me that as time passes we can use oil MUCH more efficiently. The question is HOW fast can a country that makes a real effort reduce oil consumption without seriously damaging the national economy?

    I never see it mentioned , but it is obvious that any country with a population that will soon peak will not need as much oil per capita going forward , because there will be an excess of heavy, more or less PERMANENT infrastructure such as highways, reservoirs, water and sewer systems etc, in place.

    These things need a lot of maintenance , but maintenance cost peanuts compared to new construction PLUS maintenance.

    My gut feeling is that the USA will be able to afford oil at one fifty, a decade down the road, in constant money, as well as we were able to afford hundred dollar oil a year or two ago.

    • Chris says:

      Hi Mac,

      Not an economist, but here is what I think.

      Adaptation to high oil prices will depend from one country to another. In Belgium, when oil prices were high, people tended to buy smaller more efficent cars or leave with one car instead of two, install solar panels (thermo) and change heating system to gas, wood or heat pumping systems. Other started to better isolate their house.
      This is the first step. If prices stay high enough, then people take bus or train more often.

      Now, in Europe, due to fixed taxes, the price of oil is already high. In Belgium, gasoline is currently at around 1.15€ per liter (4.75$ / gallon) in cheaper retailers. The highest price in 2008 was around 1.80€ per liter. You see that with a five fold decrease, gasoline is only at 64% the highest price.
      So the future increase will have a lower psychologic effect than in the US, for example.

      In Europe (EU-27) the main sector for oil consumption in 2010 was transportation, representing about 75% of oil consumption. This could be decreased within a few years with smaller more efficient cars, less cars, or hybrid/electric cars. People will adapt, there are plenty of other solutions than consuming oil.

    • Hickory says:

      The USA could adapt to oil at $150, certainly.
      Measures that could/would be taken-
      less frivolous car trips,
      shift of consumer spending towards fuel and away from discretionary spending like fashion, travel, restaurant meals, fancy vehicles,
      more coal burning, solar build-out in the south, and more electrification of the vehicle fleet.

      People can learn to live a lot closer to home, and two families can live in a home.
      Things like that.

      Also, at $150/barrel, there will be a lot more heavy oil coming to market I would suppose, from Canada and Venezuela.

  10. AlexS says:

    Douglas-Westwood (DW) expects total oil production in Saudi Arabia to increase steadily over 6 years, reaching more than 12.1 million b/d in 2021.


    I am not sure what they mean, but I suppose they include total Saudi C+C+NGL output, which was 11.5 mb/d in 2014.
    If they mean only crude oil, that’s too much, in my view.

    • Dennis Coyne says:


      I agree the Saudis will not increase output by 2 Mb/d over the next 6 years, possibly 500 kb/d as you suggest seems more likely, which would bring crude output to about 10.6 Mb/d, if your guess is correct.

  11. Peter says:

    OPEC is NOT at peak oil.

    OPEC particularly Saudi Arabia has increased production in order to drive some or most Shale oil companies out of business. Once they achieve this they would fill the gap left by these producers. How on earth can they fill the gap if they are at peak oil.
    Saudi Arabia has around 2 million barrels of spare capacity which they can use some of that to take market share.


    Iran will certainly increase production and reap the benefit at some point. There is no firm evidence to suggest that Iraq will not continue to increase production for some while.
    If OPEC is at full production they cannot take advantage of the fall in US production. If OPEC cannot fill that gap then prices will rise rapidly and new shale drillers will step in pretty sharply. The pain of low prices would have been a stupid futile own goal.
    I am willing to bet OPEC will be producing 2-3mmbld more in the next few years.

    • How on earth can they fill the gap if they are at peak oil.

      Fill what gap? The point is they started producing flat out in order to drive high cost producers out of business, or at least that’s one theory. When they go out of business they will make more money producing what they are producing today… or less.

      Saudi Arabia has around 2 million barrels of spare capacity which they can use some of that to take market share.

      And how do you know this. I know, the EIA or the IEA told you so. But that doesn’t mean it’s true. Saudi spare capacity is a joke.

      If OPEC is at full production they cannot take advantage of the fall in US production.

      Absolute nonsense! A fall in US production would mean the price of oil would increase. That means they get a whole lot more money for what they are currently producing. And they would still get more money if their production even declined.

      And only two countries, Iraq and Saudi Arabia, increased production by any significant amount. Most of the other countries are either flat or in decline.

      The below chart is where all that fantastic increase in OPEC production has come from.

       photo Saudi  Iraq_zpsortqqwhi.jpg

      And here is what the rest of OPEC has done.

       photo OPEC less Saudi amp Iraq.jpg_zpscwlqyrxe.png

      OPEC less Saudi and Iraq is down more than 2,800,000 barrels per day since 2008. One would have thought that oil above $100 per barrel for four years would have reversed this trend.

      The reason it did not reverse that downward trend was because they were all already producing flat out despite an all out increase in capex and oil rigs. All that just kept them from declining faster.

      • Chris says:

        Hi Ron, you can also argue that from your graph, Saudi+Iraq is on a plateau since ~June 2015.
        The production reserves in Saudi Arabia was probably in the large production increase from 2009 to last year. Currently, they seem to follow a decline curve at ~3% per year.

      • Peter says:


        If you are so sure how about a little wager.

        The cost of a barrel of oil at the end of 2018.

        I say OPEC will be producing over 1 million barrels per day more than now at some point during 2018.

        • I don’t bet with real money. And I doubt that this blog will still be alive in December of 2018. Hell, I will be 79 at that point, I may not be alive either.

          But if I were a younger man I would definitely take that bet. The OPEC decliners will likely be down by one million barrels per day by that point. That means that the gainers will have to be up by two million barrels per day for that to happen. And that is definitely not going to happen.

          Did you forget that there are several OPEC nations that are clearly in decline?

          • Peter says:


            Of course you will be around then, only the good die young, ha ha.

            I have not forgotten, I just think those increasing will be greater than those declining. At least til 2020.

        • Dennis Coyne says:

          Hi Peter,

          Ron did not say that OPEC had peaked, if Iran increased its output by 1 Mb/d by 2018 it would be consistent with what he has said and he would be betting against himself, not really a smart bet.

          I agree that OPEC has not peaked, but I doubt OPEC C+C output will reach 37 Mb/d by 2029 (which is the EIA’s AEO 2015 estimate when Indonesian output is added). The EIA also forecasts World C+C to rise to 99 Mb/d by 2040, my estimate is about 29 Mb/d lower (70 Mb/d) with a peak in 2023 at 83 Mb/d.

    • Where is this peak Saudi capacity?

  12. Clueless says:

    If by the end of this year Iran is producing 500,000 bbl/day more oil, I am curious how much of that will be available for “net export?” By net, I mean using Jeffrey’s methods. That is, I believe that a lot of Iran’s current oil production is exported and then returned to them as refined product.
    I would note that Iran’s population is currently over 80 million people, about 10 million more than in 2005. I think that the least amount that anyone has for use internally by Saudi Arabia is 3 million bbls/day, and that is with a population of only 32 million. So, if Iran is going to invest the $100+ billion, which was just released to them, on infrastructure projects, I kind of have a gut feel that they might themselves use most of their own production. But, I am puzzled even by current figures. I do not understand how Iran can net export oil with current production of around 2.8 million bbl/day. Besides having 2.5 times the population of Saudi, I am of the impression that they have a much more western style economy. That is, they probably have a decent manufacturing base in order to construct nuclear reactors, guided missiles, ships, most of their own military weapons, roads, cars, etc. and to support a decent sized army of their own. Are they heavy into wind, solar and battery power??

    • Clueless, if by the end of the year Iran is producing an extra nickel, it won’t offset the decline in fields being erased off the map at $65 per barrel.

    • Ves says:

      It is not about how much Iran can export now, but 3-5-7 years from now. Today we have this oil price conflict that is shaping the future of OPEC in 3-5 years. It is conflict for majority control of the cheapest exporting oil within the OPEC. Which group of countries have the majority control of that oil will have a controlling oil policy within the OPEC and outside of OPEC.

      • likbez says:


        Iran with its young and fast growing population faces internal consumption problem similar to what Malaysia have and might well stop to be the major oil exporter in a couple of decades.

        So your statement “It is not about how much Iran can export now, but 3-5-7 years from now” should by slightly amended by the fact of growing Iran internal consumption. Also it is unclear how much of their fields are depleted and how effective will be investment into their oil infrastructure. They will remain major gas producer, but whether they are capable to became again a major oil producer is much less clear.

        Why do you think that this is “conflict for majority control of the cheapest exporting oil within the OPEC.” OPEC to a certain extent is gone after Saudis decision to lift quote regime. It remains some kind of umbrella organization, but it is no longer a cartel — they are unable to act as a single unit in their own economic interests.

        I think that this conflict is exaggerated by Western MSM, who literally push one country against the other trying to find and amplify any statements to this effect. The main claim of Iran to Saudis was “we want our OPEC quota back” to which Saudis responded by lifting the quota system effectively disbanding the OPEC. Now Iran leadership is making statements which essentially play into Saudis hands promising to flood the market with their oil (selling it for peanuts; not a very wise policy). In other words they act as allies (in self destruction).

        My impression is Saudis are dumping their oil on the market due to some non-economic considerations.

        Financially they are committing a suicide depleting their foreign reserves and winning very little (if at all) in terms of market share while their fields are aging fast. Essentially what they are doing is stealing oil from future generations making the mere existence of the country problematic in 50 years or so. The diversification of their economy is very difficult to implement. Politically they also alienated a lot of countries who might be able to help them. Especially during the rule of a 30 years old deputy crown prince Mohammad bin Salman

        Iran is quite a different story. They probably will continue to exist even if they stop to be an oil exporter and became an oil importer. So for them becoming a major oil exporter again is not a survival issue. It would be nice, yes, and will increase standard of living in the country.

    • Hickory says:

      Do we have any good data for ‘net export’ by country? Perhaps I have missed it.
      I believe net export capacity if far more important than overall production numbers.

      • Ves says:

        Yes, export capacity is the most important and that is what everyone is missing. And at the same time if you have the least expensive oil you are suddenly “swing” producer but not in the sense that you control the price but that you can outlast the price downturn.

        • likbez says:


          Not only data are very difficult to come by, but the accuracy is low. I think well below 1%. So all talk about “glut” of less then 1 Mb/d is essentially a talk about statistical noise. In no way “glut” of less then 1 Mb/d can be reliably detected from those figures as with world production of over 90 Mb/d their accuracy does not allow such a detection. In other words it is equal to balance. Similarly deficit below 1 Mb/d also can not be reliably detected and is equal to a balance of supply and demand.

          If you look closely at methods by which EIA collects their information 1% accuracy is a very charitable estimate. Even in the USA, they rely of states data.

          That introduces tremendous lag. So only with time their figures about foreign countries probably became close to 1% margin of error, if at all. My impression is that more recent figures are often not more then educated guesses or propaganda (and EIA is partially a propaganda/political organization of the US goverment; it was created as a reaction to Arab oil embargo with a specific political agenda). So as for foreign countries their “last month” data are probably not much different in accuracy from their short term forecasts.

      • Jimmy says:

        Pick the country from the drop down menu and select oil, gas, coal, etc for type of energy.

        I find this link interesting. Argentina and UK look to be soon tipping from exporter to importer.


        • Hickory says:

          Thanks for that link Jimmy. I took this graph from it.

          It looks like global oil export peaked in 2005!, if the data is correct.

        • Jeffrey J. Brown says:

          Argentina and the UK are two of the six countries that I incorporated into the Six Country Case History, i.e., the major net oil exporters that hit or approached zero net oil exports from 1980 to 2010, excluding China.

          Their combined (total petroleum liquids) net export peak was 1995. From 1995 to 2002, their combined production fell by 7%, but their combined net exports fell by 35%. The kicker is that in only seven years they had shipped 84% of their combined post-1995 CNE (Cumulative Net Exports).

          In other words, a one percent per year rate of decline in production corresponded to a post-1995 rate of depletion of 26%/year in their remaining supply of post-1995 CNE.

          Note that their 1996 to 1999 production exceeded their 1995 production level, but because their rate of increase in consumption exceeded their rate of increase in production, net exports fell. And as production rose from 1995 to 1999, they had already shipped 54% of their post-1995 CNE.

          In other words, a 0.5%/year rate of increase in production from 1995 to 1999 corresponded to a post-1995 rate of depletion of 19%/year in their remaining supply of post-1995 CNE.

        • Argentina’s policy has been to secure energy independence. Thus when they start importing oil they cut taxes. In this case they would have to increase subsidies. Or they can legislate to cut the anarchy caused by the Kirchneristas, which really hurts operational efficiency.

  13. Guy Minton says:

    Good info, Ron. Like you, I think the 380k drop in the US is not only too optimistic, as the EIA is predicting 500k. I actually think that both are way too optimistic. The sharp drop now, is hitting producers at a time when they are counting pennies towards new wells. I think most predictors are assuming that if oil hits 40 by mid year, then the producers will be drilling madly. Get a grip. Where is the money going to come from? US production is going over the cliff, that has, at least a year, before they can get a response out of the accelerator pedal.

    • Dennis Coyne says:

      Hi Guy,

      In the Eagle Ford and Bakken, if output falls by 500 kb/d (combined for the two plays), only about 200 new wells per month will be need to be completed to keep output flat, note this is not drilling madly, they were at about 400 new wells per month (total for both plays) when they were “drilling madly”.

      I would agree that rational oil companies would not be completing many wells at $40/b.

      So far we have not seen very rational behavior in the LTO patch, perhaps that will change.

  14. How can OPEC say in the report that Inventories declined in November and then imply that demand is two million barrels per day less than supply?

    • daniel says:

      that is indeed the question. the more i look into the numbers the more it looks to me that the market is at balance at the moment….. should be a wild ride if this is true.

    • Jeffrey J. Brown says:


      My premise is that US (and perhaps global) refiners hit, late in 2014, the upper limit of the volume of condensate that they could process, if they wanted to maintain their distillate and heavier output–resulting in a build in condensate inventories, reflected as a year over year build of 100 million barrels in US C+C (Crude + Condensate) inventories.

      Therefore, in my opinion the US and (and perhaps globally) C+C inventory data are fundamentally flawed, when it comes to actual crude oil inventory data. The most common dividing line between actual crude oil and condensate is 45 API gravity, although the distillate yield drops off considerably just going from 39 API to 42 API gravity crude, and the upper limit for WTI crude oil is 42 API. . . .

      Note that (in 2015) 22% of US Lower 48 C+C production consists of condensate (45+ API gravity) and note that about 40% of US Lower 48 C+C production exceeds the maximum API gravity for WTI crude oil (42 API).

      • Mr. Brown.
        Just so I understand what you are saying,
        Crude plus Condensate Inventory build have been higher because mainly of Condensate as EIA is no longer properly distinguishing the difference?
        If that 100 Million number is true, we might see $100 oil this year I think.

        BTW the last two weeks saw some massive builds in “Blending components for gasoline” while the amrket went wild because it looked like actual products were building.

      • likbez says:


        This is a very important observation and IMHO it holds one of the keys to the understanding of the current oil slump.

        Thank you !

  15. Watcher says:

    Sweeping the old eyeball across the columns of Ron’s Table 5.7 above from the 2014 column at $110/b to now, y’all do realize this should not be happening? Those numbers are pretty flat, with a few mild declines and a few mild rises.

    That’s 73ish% cut in price and no signif impact on production.

    How quaint.

    • Doug Leighton says:

      “How poor are they that have not patience!
      What wound did ever heal but by degrees?
      Thou know’st we work by wit, and not by witchcraft;
      And wit depends on dilatory time.”

    • oldfarmermac says:

      ” How quaint.”

      A fast ocean liner at full speed looks like a humming bird , compared to the oil industry, when it comes to stopping and reversing course.

      Give it time.

      Price cycles in agricultural goods take as long or longer to influence production enough to reverse a rising or falling price trend, and individual farmers don’t have to answer to nearly as many outsiders as oil executives.

      A year ago I predicted here that oil would go back up quickly. Since then I have come to realize that the oil industry moves even slower than ” molasses in January”.

      • Doug Leighton says:

        “Give it time.” Heh, I already said that, or rather, Shakespeare did. 🙂

        • Watcher says:

          But, it’s been nearly 20 months.

          Remember how shale’s rapid drilling and “response to price” was the meme du jour? Remember how 100+ new oil wells per month were going to provide high feedback coefficients in the control loops?

          Waiting long enough for some other event to generate a change, like maybe bombing Iraq’s oil fields and KSAs, and noting that their production falls and declaring . . . see? we just had to give it time . . . is not real valid.

          Of course, one would expect an emotional price spike in such an event, the response to which would then appear to be reduced production.

          tra la

          • Joe Clarkson says:

            Take a look at any number of the charts of oil rigs vs oil production in the US (http://www.zerohedge.com/news/2015-02-20/us-oil-rig-count-tumbles-july-2011-lows-pace-slows). While rig count is affected almost immediately by oil price changes, production change lags about 30 months behind rig count.

            While production will continue to drift down, the big plunge in US production will happen the middle of next year, about thirty months after rig counts plummeted. Production will drop like a stone. Before the sharp drop is over by the end of 2017, US production will be less than 6 million barrels per day, about what it was the last time rig counts were as low as they are now.

            Unless demand craters or someone else makes up for the plunge in US production, prices will go through the roof. When they do, we will learn whether a new peak will eventually be established a few years later.

            • While rig count is affected almost immediately by oil price changes, production change lags about 30 months behind rig count.

              I found nothing in your Zero Hedge link to support this assertion. How did you arrive at this 30 month lag time? Two and one half years? That seems about 18 months too long.

              Got a link, or anything that supports this 30 month lag time?

              • Joe Clarkson says:

                Rig count started going up pretty steadily in mid-2009, after the financial crisis, but oil production didn’t go up until the beginning of 2012, about 30 months later. That’s where I got the 30 months.

                Rig count leveled off in mid-2012 and then drifted slightly up for about 2 1/2 years and then started plunging in late 2014. Oil production didn’t level off until recently, long after rig count mostly leveled off. If the 30 month delay holds true, we can expect oil production to plunge in 2017.

                • Watcher says:

                  Nah, as alluded to above you can’t start talking about cause and effect over very long time periods — for almost anything.

                  Giving things lots of time gives them time for other factors to because causative.

                  For example lotsa people got jobs in the military starting late 1941 and the government started buying lots of guns — but if you like you could say economic decisions/actions of 1938 just needed 3 or 4 years to bear fruit. Obvious silliness.

                  Libya was a big event between 2009 and now. Its oil is rich in diesel. All kinds of contortions took place — not in “the market” — in supplies, to deal with disappearance of such a diesel supply. Oil rig count had nothing to do with Libya or its consequences.

                  • Joe Clarkson says:

                    The graph I linked to was all US data, no other country included.

                    If there is a relationship between oil rig count and oil production, which most people would agree there is, especially for LTO, then significant changes in the number of rigs should make for significant changes in production. If one is careful to avoid aliasing errors, matching inflections in the rate of change for both variables should give a realistic estimate of the delay between cause and effect.

                    Keep in mind that the effect is known only after data are reported to us, so if the time delay in the collection and dissemination of production data is different from the delay in rig data, it may affect apparent delays between cause and effect.

                    For example, if active rigs are reported when they go under contract, but before they actually start drilling and then delays in fracking and completion are followed by long delays in collecting production data, the effect of a change in rigs may not be seen for a long time.

                    I am not involved in the oil industry, but I can read a chart. What surprises me is that the delay between rig count and production for oil and gas in different plays is not well known by all the experts commenting here. I would certainly defer to their expertise, especially if they presented their corroborating data.

                  • Watcher says:

                    Well, there is a case to be made that you can’t get any oil out unless you drill an oil well.

                    That is, unless you already drilled a zillion of them and are waiting to frack them. Then a combination of choke and frack rate will define production and probably obscure drill rig influence — probably long enough for something else to become definitive.

                    Best to trust no conclusions at all.

            • AlexS says:

              rig count is affected with a 2-4 month delay.
              Oil prices peaked in June 2014 and started to decline from July. The decline accelerated in November 2014. But US oil rig count peaked only in October 2014, and the decline accelerated in early 2015.
              There was a modest oil price spike in the 2nd quarter of 2015, that was followed by a modest rebound in drilling activity in the 3rd quarter when prices were already falling.
              U.S. lower 48 onshore production (a proxy to LTO) has peaked in March 2015, 5 months after the peak in oil rig count. That’s exactly the time needed to drill, frack, complete the well and start production.
              Another thing is that the decline in production was negligible compared with the decline in rig count. However even a very slow decline represents a big shift in trend compared with a 1.1 mb/d growth in LTO production in 2014 (with a flat oil rig count).

            • Jeffrey J. Brown says:

              The Haynesville Shale Gas Case History:


              Of course, because of pipeline requirements and pipeline constraints, it frequently takes longer to get a gas well on line than an oil well, but it’s still an interesting case history.

  16. 2015 is warmest year on record, NOAA and NASA say

    (CNN)Last year was the Earth’s warmest since record-keeping began in 1880, the U.S. National Oceanic and Atmospheric Administration and NASA said Wednesday.

    It’s been clear for quite some time that 2015 would steal the distinction of the hottest year from 2014, with 10 out of the 12 months last year being the warmest respective months on record — and those records go back 136 years.

    While it wasn’t necessarily a surprise that 2015 finished in first place, its margin of victory was startling — it lapped the field, with the average temperature across the entire planet 1.62˚F (0.90˚C) above the 20th century average, more than 20% higher than the previous highest departure from average.

    • Doug Leighton says:

      Well, if that doesn’t bring out the denier trolls nothing will.

    • Glenn Stehle says:

      Well if the warmists are right, we’re going to burn the damned place down.

      The poster child for the buen vivir or “circular economy” movement was Bolivia’s Movimiento al Socialismo (MAS) party, which rode to victory with the election of Evo Morales in 2005.

      Bolivia, with it’s large indigenous population that retains many cultural priorities which are at odds with those which underpin Western capitialism, provided the perfect backdrop to road test the circular economy doctrine.

      But it looks like the circular economy is much more difficult to achieve in practice than in theory.

      A recent article in The Journal of Sustainable Development breaks the bad news:

      The outcomes of MAS’s rise to power have been disappointing for Bolivians and onlookers who hoped that Bolivia (and other Latin American countries undergoing similar processes) would become the site of lasting anti-capitalist experimentation for large-scale and long-term system change.

      The initial commitments by President Morales to improve well-being without replicating historically unsustainable and destructive pathways to industrial development created a politics of possibility around these proposals, as did notable redistributive economic policy measures, nationalized natural resources, constitutionalization of principles of sustainability (e.g. rights of Mother Earth, plurinationality, noneconomic conceptions of quality of life such as Buen Vivir, etc.), spearheaded regional integration through ALBA, UNASUR, CELAC, etc., and upheld environmental justice agendas in international arenas (e.g. equal but differentiated responsibilities, prior informed consent, right to development, climate debt, etc.).

      However, notwithstanding these achievements, Bolivia continues to be characterized by fiscal dependence and macroeconomic prioritization of growth-centric policies sustained by natural resource extraction.


      • Well if the warmists are right, we’re going to burn the damned place down.

        Warmists??? I would not call them warmists, I would call them “those who believe in the scientific method and alter their position when science proves their previous position wrong.”

        Which led me to ask myself this question: With the mounting scientific evidence for global warming now becoming an avalanche, is there a chance that a few deniers may start throwing in the towel?

        Naw…, to them it is a matter of faith, not science. I am reminded of a quote by Martin Luther and a reply by Eric Hoffer:

        So tenaciously should we cling to the world revealed by the Gospel, that were I to see all the Angels of Heaven coming down to me to tell me something different, not only would I not be tempted to doubt a single syllable, but I would shut my eyes and stop my ears, for they would not deserve to be either seen or heard.
        Martin Luther:
        Table Talk, Number 1687.

        * To which Eric Hoffer replied:

        It is the true believer’s ability to “shut his eyes and stop his ears” to the facts that do not deserve to be either seen or heard which is the source of his unequaled fortitude and constancy. He cannot be frightened by danger nor disheartened by obstacle nor baffled by contradictions because he denies their existence.
        Eric Hoffer: The True Believer.

        The True Denier cannot be frightened by danger nor disheartened by obstacle nor baffled by contradictions because he denies their existence.

        • Arceus says:

          I am sure I am a bad person and a fool as I am enjoying the benefits of this mild winter.

          I don’t mean to tramp on your viewpoint, but it’s a bit of a stretch to call global warming skeptics “true believers” when the opposite is likely the case. To be a true believer, you generally have to have a strong belief in something. Muslims, of course, would quality as true believers which is why they will overpower secular Europe which no longer has a strong belief system.

          Global warmers, similarly, will most likely overpower global warming skeptics. The global warmers are well-funded, well-connected to the elite, and have a strong belief system which borrows elements from Christianity, animism, “science,” and sun worship, etc. Global warming skeptics, on the other hand, mostly have just a few simple data points on their side. The man in the street is armed only with the belief that “global warming” is yet another scam to separate him from his money.

          • I don’t mean to tramp on your viewpoint, but it’s a bit of a stretch to call global warming skeptics “true believers” when the opposite is likely the case.

            Naw, you are way, way out in right field here. A true believer means a believer in his/her ideology. A true believer can very well be a skeptic in science. Creationists are the perfect example here. They are totally skeptic of the science of biology just like climate change deniers are totally skeptic of the climate science. I am often amazed at how much climate deniers resemble creationists.

            The global warmers are well-funded, well-connected to the elite, and have a strong belief system which borrows elements from Christianity, animism, “science,” and sun worship, etc.

            Oh good grief, I have never heard such a line of complete bullshit in my life. I am talking about evidence, like the link I posted above. That is evidence. And you want to change the subject, comparing those who believe in scientific evidence with some stupid ideologies instead of discussing the evidence.

            Like I said, the evidence has now become an avalanche. And the true believers in their ideology will “shut their eyes and stop their ears” to any and all evidence because they deny its existence.

            • Arceus says:

              If the “global warmers” are serious (and I have every reason to believe they are), then the solution is not difficult. Simply add a large tax to any product using gas or oil. This would include cars, lawnmowers, all sorts of machines, etc. Also require all new homes to provide 80% of electricity from solar. All existing homes will have five years to generate 80% of their electricity from solar or wind. Anyone not complying will be taxed significantly. Tax coal producers, tax oil producers, tax natural gas producers.

              If the planet is in dire straights, this is the only sensible thing to do.

              • Arceus says:

                Moreover, anyone over the age of 40 should have half of their assets confiscated immediately. Those funds will be used to clean up the planet. As people of that age have contributed greatly to global warming, it is only fair that they foot the bill. There should be a gas surchage of 100% on gasoline. Too expensive to drive to the store? Walk. All air transportation should be shut down immediately. 95% of that is non-essential anyway.

                I’m sure there are other things that can be done and no I’m not talking about buying a TESLA.

                • Joe Clarkson says:

                  I know you are being sarcastic, but your solutions are closer to the truth of what is needed than many would think, especially you. If anything they aren’t comprehensive enough.

                  I know also that nothing near what is needed will be done, so human overshoot will be stopped by some rather horrific forces rather than by our concerted effort to mitigate the impacts of our population.

                  I know it’s hard to believe it’s possible, but I’m probably more of a doomer than Ron.

              • Jimmy says:

                what a troll lol

                • Arceus says:

                  Troll? If the planet is dying as many believe, then there should be no half-measures. Honestly, I don’t think I went far enough.

                  People over 70 should immediately and by force if necessary “donate” 80% of their net worth to the planet.

                  People over 60 should forcibly “donate” 70% of their assets and so on and so on.

                  If AGW is true, these people almost singlehandedly killed the planet with their babies, their cars, their reckless spending, their large houses, their conspicuous consumption. They should lose everything and even that would not be punishment enough.

                  • Oh goddammit, it is obvious that you do not understand one damn thing about human nature. The world has about 7.3 billion people. Proposing what they “should do” is just fucking stupid. Goddammit, such fucking stupidity really pisses me off.

                    People are born into this world and react to it as any other animal would. They have no idea what they “should do” in order to save the world. They are concerned only with their own survival and the survival of their offspring. This is just human nature. To propose what they “should do” is just fucking ignorance gone to seed.

                    I apologize for my gross language but sometimes gross stupidity just pisses me off. Especially after this old man has had his afternoon toddy. And it’s usually a strong one, 5 to 6 ounces of Canadian blend. LTD, the smoothest stuff in the store. The fact that it is also the very cheapest stuff in the store is purely a coincidence. 😉

                  • Glenn Stehle says:

                    Ron Patterson says:

                    Oh goddammit, it is obvious that you do not understand one damn thing about human nature. The world has about 7.3 billion people. Proposing what they “should do” is just fucking stupid. Goddammit, such fucking stupidity really pisses me off.

                    And yet, when someone on Team Green makes equivalent departures from reality about what people “should do,” they get a free pass, or at least they get treated with kid gloves. They certainly don’t get their ideas blasted as being “fucking stupidity.”

                    Let’s take the “circular economy” which Fred Magyar talks about ad nauseam on this blog, for instance. On the last thread he posted a link which describes the circular economy:

                    Circular economy is all about closing resource loops, mimicking natural ecosystems… We also have to take into account the social and ecological impact of our actions, and use renewable energy to make the transition towards a circular economy happen.


                    Below are some illustrations from the link which illustrate what the advocates of the circular economy say should happen.

                    But what are the chances of these things actually happening?

                    Certainly they are no greater than the chances of Arceus’ proposal happening.

                    And yet these proposals are not excoriated as being “fucking stupidity” and “fucking ignorance.”

                    Why the double standard?

                  • Glenn Stehle says:


                  • Glenn Stehle says:

                  • Bullshit Glenn, any post that suggest the behavior of 7.3 billion people should change is pure bullshit, regardless of who proposes such a stupid solution.

                    I have always maintained, since my days on The Oil Drum, that you cannot change human nature. Any person, Green or otherwise, who suggests that the answer to our problems is for everyone to behave differently, just does not know one thing about human nature.

                    No one on this blog gets a free pass if they suggest that humanity must change its behavior.

                    I have heard my dear old Dad say more than once: “Wouldn’t it be a wonderful world if everyone were honest.” Of course it would be better if everyone just behaved differently. But they won’t. Suggesting that the solution to our problems, or any problem, is for just everyone to behave differently, is just stupid regardless of who suggest it.

                    And all your little symbols above are just stupid as well. Sometimes greens can be just as stupid as cornucopians. In fact being green is a form of cornucopianism, and it is just as stupid as believing that our natural resources will never run out.

                    I don’t think you understand a fucking thing about my position Glenn. I am not a believer that being green will save the world. Did you not even bother to read my “Confessions of a Doomer” post?

                  • Glenn Stehle says:

                    °°°°Ron Patterson said:

                    And all your little symbols above are just stupid as well.

                    They’re not my symbols, they’re from a link Fred Magyar provided on the last thread:

                    WHAT IS A CIRCULAR ECONOMY ?



                    °°°°Ron Patterson said:

                    Did you not even bother to read my “Confessions of a Doomer” post?

                    Well yes I did.

                    And I also read your post titled “Of Fossil Fuels and Human Destiny.”

                    And I agree that your portrayal of how “natural ecosystems” behave in this world is realistic. The graph from the post (reproduced below) illustrates the point perfectly. And when it comes to our current human condition, all evidence points in this direction.

                    The remoteness of this reality from ideologies like “sustainability” and “circular economy,” however, is not lost on me.

                    To bring about “sustainability” or a “circular economy” would require a complete overhaul of human nature.

                    Am I missing something?

                  • Am I missing something?

                    Yes, you are missing something. You fail to understand that my position is not the same as Fred’s, or yours, or Nick’s, or Dennis’s. The one person on this list who probably agrees with me the most is Doug Leighton. But even he may differ with me on some points.

                    My position is accurately reflected in my post: “Confessions of a Doomer”. And also in the pages: “Of Fossil Fuels and Human Destiny”, “The Competitive Exclusion Principle” and David Price’s essay “Energy and Human Evolution”.

                    If you read those three pages there can be no doubt where I stand. And if you think my Doomer post and those three pages are giving Green’s a free ride, then you have a real serious problem.

                • Arceus says:

                  Troll? You think I’m a troll?

                  Let me explain to you what a troll is. It’s a guy now in his sixties or seventies. He grew up in an era unlike any the world has ever seen. Dramatic economic growth. Lots of high-paying jobs. Luxuries almost beyond his imagination.

                  Now he’s retired and at the sunset of his life. He has spent a lot but has also squirreled away a bunch of money and is living high on the hog – medicare if he’s sick, social security payments, dividends, condo, vacation house, golf, world trave, – you name it, he’s got the whole nine yards. No generation in the history of the world ever had it so good.

                  Now this fella and his buddies who used more fossil fuels per person that anyone that ever lived on this planet now decides things have got to change. He made his money, cashed in his chips and left the game, but now has the audacity to tell the following generations they gotta fix everything he and his buddies f&&ked up. Yeah, he’s telling this to the future generations with no jobs, no growth, no money, no nothing but the backwash of stale beer to suck on. “Buck up young fellas, you got a planet to save,” he says. “Good luck with it. I’m counting on you.”

                  Now that, my friend, is a troll.

                  • SW says:

                    Just bugger off. You make a huge leap recognizing the reality of the situation to imagining what the response to that reality is going to be. Which, if you think about it simply validates the fact that you can’t serious refute the reality of situation since you are so hysterical about your assumptions about what is required. Denial is your only option since anything you can conceive of to deal with the reality is simply unacceptable to your worldview. Well, you know what? Reality doesn’t give a shit about what you think. The facts are cruel. And unfair. That doesn’t alter them. You, everyone are going to have to deal with them one way or the other. You can live through this experience with your fingers in your ears and eyes closed chanting that it isn’t really happening. That is of course your prerogative. Good luck with that.

                  • oldfarmermac says:

                    Arceus and company are Wormtongues, skilled in pushing the hot buttons of poorly informed people they see as cannon fodder for their side in the fossil fuel versus renewables wars.

                    They NEVER have any thing to say unless it is a totally one sided defense of their position. Never will you hear one of them admit, unless forced into a tight corner, that air pollution matters, that mountain top removal matters, that depletion matters, that resource wars matter.

                    Their goal is to lead people too ignorant to think. and too lazy to think, around by their ignorance.

                    Their primary technique is to simply repeat the same obvious lies over and over and over, until people’s eyes glaze over.

                    Unfortunately, this technique works, because most people are ignorant and lazy.

                    But it will not work in a forum such as this one, where most of the members are scientifically and culturally literate.

                    Some of these trolls like to dress themselves up like waiters in a hoity toity restaurant, in tuxedo’s , quoting endlessly from various ( irrelevant ) stuffed shirt figures most people have never heard of, trying to pass themselves off as intellectuals, and so SMARTER than the rest of us.

                    But a waiter in a tux is still just a waiter, and most likely as ignorant as the dishwasher. As a matter of fact, the dishwasher is apt to be a LOT smarter on average, because he or she may be a youngster working thru university.

                    A waiter is always at the beck and call of his master the customer, it is impossible for him to be his own man.He makes his living kissing ass.

            • islandboy says:

              The global warmers are well-funded, well-connected to the elite, and have a strong belief system which borrows elements from Christianity, animism, “science,” and sun worship, etc.

              Oh good grief, I have never heard such a line of complete bullshit in my life.

              To which I might add, I don’t think the funding of the “warmers” can compare to the funding provide by FF interests for the denial (skeptic) camp. It seems that wherever denial exists, it can be traced back to some organization with a vested interest in the burning of FF, think Koch 0r Exxon. Is their any privately funded polar opposite to The Heartland Institute or The Institute for Energy Research?

              • Arceus says:

                You’re kidding, right? The big oil companies are embracing the global warming movement and see themselves as big beneficiaries of it as it will put most if not all of their smaller competitors out of business. Corporations are very flexible and know how to survive with the changing winds. Yes, there may be a few outliers with independent thinking, but most of us go with the herd whichever direction that will be.

                • islandboy says:

                  The big oil companies are embracing the global warming movement

                  Which ones? I haven’t seen or heard of that.

                  • Arceus says:

                    Which one? All of them. Every single one are “on board” to do everything they can to combat global warming. Every corporation believes in the cause. Name one major corporation that has gone on record doubting global warming.

                  • islandboy says:

                    Now you’re kidding!

                    I would think that the idea of Cui bono would apply. Who profits most from the burning of FF (as opposed to the use of renewables) and who stands most to loose from attempts to mitigate global warming by curbing carbon emissions? Climate scientists or FF industries?

                    I can’t remember ever hearing anything in support of global warming from Koch Industries.

                • ezrydermike says:

                  wait, what?

                  California Atty. Gen. Kamala D. Harris is investigating whether Exxon Mobil Corp. repeatedly lied to the public and its shareholders about the risk to its business from climate change — and whether such actions could amount to securities fraud and violations of environmental laws.

                  Harris’ office is reviewing what Exxon Mobil knew about global warming and what the company told investors, a person close to the investigation said.

                  The move follows published reports, based on internal company documents, suggesting that during the 1980s and 1990s the company, then known as Exxon, used climate research as part of its planning and other business practices but simultaneously argued publicly that climate-change science was not clear cut.

                  Those documents were cited in stories by reporters for Columbia University Energy and Environmental Reporting Fellowship, published in partnership with the Los Angeles Times. The nonprofit InsideClimate News also published several stories based on the documents.

                  Shortly after the news reports, Harris’ office launched the investigation in response to the findings, the person said. New York’s attorney general also is investigating the oil company as a result of the published reports.


                  • Arceus says:

                    Ancient history. This was in the very early days long before “climate change” became consensus opinion. At the time, it was the purview of “hippies” and radicals. That has all changed. Now Wall Street runs the game, and all the corporations, all the politicians, all the media, all the academics are on board. Lotsa money to be made in global warming.

                  • Glenn Stehle says:

                    Arceus says:

                    Now Wall Street runs the game, and all the corporations, all the politicians, all the media, all the academics are on board. Lotsa money to be made in global warming.


                    When the Masters of the Universe, or some backwoods preacher at a tent revival, start preaching that you need to ante up to save humanity from Armageddon, you’d better grab hold of your wallet.

                    There’s no better way to fleece the flock than convincing the faithful that their donations are a way of saving their fellow humans from hellfire and damnation.

                    Warrent Buffet certainly has figured out that there are big bucks to be made in the renewables “gold rush,” as the NY Times called it.

                    “Buffett Ready to Double $15 Billion Solar, Wind Bet”

                    “A Gold Rush of Subsidies in Clean Energy Search”

                  • Lotsa money to be made in global warming.

                    Complete absolute unadulterated bullshit. Global warming costs companies money, it does not make them money. That is, it cost them money to correct the problems of emissions and such. That should be obvious to anyone with as much as two brain cells.

                    Are deniers just fucking stupid or what?

            • Javier says:

              Regarding climate change it is very important to distinguish between fact and belief. I think much of the debate comes from contamination from people that think that their beliefs are facts, when they are not.

              The planet has been warming for the last 350 years. Global warming is 350 years old. This is a fact that many people forget or don’t know.

              Of course after 350 years of warming we are at the warmest time in many centuries. This is also a fact. We should expect every year to be warmer than any average that includes several decades.

              Human produced greenhouse gases have only been a significant factor in the warming of the atmosphere between 1976 and now. That’s only 40 years or 11% of the warming period. That is also a fact. Prior to 1950 their concentration was much lower and rising much more slowly and between 1950 and 1976 there was cooling, not warming.

              That the warming becomes dangerous depends on assumptions and hypothesis that have not been demonstrated, and therefore is a belief. The rate of warming in the 21st century is lower than during 1976-2003 despite one third of the CO2 produced by humans being released in the 21st century. For the last years the increase in emissions has been going down, not up.

              One should not attack other people because of their beliefs, as that constitutes bigotry. I believe that people that believe that we are going towards a catastrophic climate warming are misguided. I don’t think they are idiots. I think they are just buying the alarmism that is being bombarded on us from the mainstream media. I used to believe the same myself, but the evidence has changed and we know more about the climate now, and the more we know, the less reasons we have to be alarmed.

              Of course fear is a useful feeling to be imbued in the population. That makes them more manageable.

              • Glenn Stehle says:

                Javier said:

                Of course fear is a useful feeling to be imbued in the population. That makes them more manageable.

                Have you seen the documentary film The Power of Nightmares, which aired on BBC and can be seen here:


                • Javier says:

                  No, I haven’t, thank you.

                  There’s nothing new in this. One only has to read George Orwell’s 1984.

                  And the sad thing is that it still works so well. You get a lot of do-gooders really scared about the climate, spreading all sorts of misinformation that leads to the conclusion that we are in danger unless we let the governments sort it out.

                  Of course the climate is never going to become dangerous, so governments are going to be saving us all the time from this fabricated crisis.

                  Until nature decides to change cycles and start cooling. Then we will have the opposite climate change crisis.

              • Caelan MacIntyre says:

                There has also been much deforestation and for a lot longer than the mass burning fossil fuels. This, along with ‘everything else’, is exacerbating issues surrounding anthropogenic climate/global change/warming (AGW) and assorted deleterious anthropogenic effects.
                Deforestation puts both a lot of C02 in the air and limits its subsequent uptake.

                There have been a lot of different forms of effects of humans on the planet which aren’t relegated to climate effects alone, but are still large parts of them.

                While there are those who may argue that AGW and many of its deleterious effects are ‘inconclusive’, it is possible that by the time they ‘come around’ (if they ever do), far too many conclusions in that regard may have been reached, and acting proactively on them may be far too late. This is probably why it may be most prudent to act on these supposed ‘inconclusions’ before they ‘conclude’.

                • Dennis Coyne says:

                  Hi Caelan,

                  Well said. There are many things that effect climate change. When we look at global land-ocean temperatures some of the warming is masked by the ocean (a very large heat sink). If we focus on land temperatures of the globe (such as the BEST temperature data), we get a better idea of how CO2 levels may have affected land temperatures. Using a scenario where 1200 Gt total carbon emissions from fossil fuels, land use change, and cement production are released by 2100 and assuming carbon is sequestered at rates consistent with 1850 to 2010, we get the following temperature change in degrees Celcius (with temperature after 2012 modelled).

                  • Javier says:

                    That is belief, not fact. You believe you know that warming has been due mainly to greenhouse gases. You believe you know what the climate sensitivity is. You believe you know that no other forcing or internal variability is going to dominate the system. Nothing of that can be demonstrated.

                    You are very much likely to be wrong. It is my belief that we are not going to see much warming from now on for the rest of the century.

                  • Dennis Coyne says:

                    Hi Javier,

                    The chart is based on a simple correlation of the natural log of atmospheric carbon dioxide and temperature to develop the “c model”, this correlation gives the climate sensitivity to an increase in atmospheric CO2. Then future CO2 in the atmosphere is estimated based on future emissions og roughly 700 Gt of carbon from fossil fuels, land use change and cement production (about 500 Gt of carbon has already been emitted).

                    There are many other factors that effect temperature, such as ENSO, volcanoes, solar output, and changes in the angular momentum of the earth.

                    It is you who will be wrong about significant global cooling before 2500, the planet may gradually cool to the level of 1950 after about 50,000 years.

                  • Javier says:


                    You don’t know that.

                    You mistake your opinions and beliefs with facts.

                  • Dennis Coyne says:

                    Hi Javier,

                    You said your belief would be correct, I disagree and the science suggests that my belief is more likely to be correct than yours.

                  • Javier says:

                    No Dennis,

                    I did not say my belief was right, because it is a belief, and hence not supported by evidence.

                    Science doesn’t suggest your belief is more correct because science doesn’t say anything about beliefs.

                    You seem to not understand the difference between fact and belief. Many of the things that you say about climate are not facts, but beliefs because they have not been demonstrated.

                    For example you say that the Earth has warmed X degrees since 1900. That is a belief based on guesses and estimates, because the measured temperatures from a few dispersed stations don’t say that. The data is treated in many ways by many algorithms and masking, infilling, kriging, you name it. If there are significant errors in the guesses and estimates then the warming is not X. As the warming X changes significantly over time due to database revisions and changes in the guesses it turns out that X is a variable, and then it has to be wrong most of the time.

                    Now you want to cling to the fiction that you know how much the Earth has warmed since 1900, but you can’t. You can only belief that you know that.

                  • Dennis Coyne says:

                    Hi Javier,

                    That is quite clever, so there are no facts.

                    For we could claim that every measurement has some degree of imprecision so we really don’t know anything, it is all just belief and we cannot judge which beliefs might me more correct than any other.

                    Is that what you are trying to argue?

                    I find it decidedly unconvincing.

                  • Javier says:

                    Dennis, the fact is that the planet has warmed since 1900.

                    We have good measurements through a variety of techniques of the warming since 1979 of about +0.4°C, and we know that there was cooling between 1940 and 1976.

                    The warming since 1900 could be between +0.5 and +1°C. With the quality of the available data all the rest is belief.

              • Very well written. A plus.

            • Fred Magyar says:

              Glen says:
              And yet these proposals are not excoriated as being “fucking stupidity” and “fucking ignorance.”

              Why the double standard?

              Gee Glen, you sound upset. I would have thought that at the very least you would have some profoundly irrelevant philosophical quote to offer in lieu of your expletives.

              So you think all the people involved with these global corporations are just idiots? I guess you didn’t get the memo that the circular economy is simply more efficient than a linear one. It may not save the world but however you slice or dice it it still saves those who implement these principles a lot of money!


              The Ellen MacArthur Foundation believes that business innovation sits at the heart of any transition to the circular economy. The Foundation works with its Global Partners (Cisco, Google, H&M, Intesa Sanpaolo, Kingfisher, Philips, Renault, and Unilever) to develop circular business initiatives and to address challenges to implementing them.

              In 2013, with the support of our Global Partners, we created the world’s first dedicated circular economy innovation programme, the Circular Economy 100 (CE100). Programme members comprise industry-leading corporations, emerging innovators (SMEs), affiliate networks, government authorities, regions and cities. The CE100 provides a unique forum for building circular capabilities, addressing common barriers to progress, understanding the necessary enabling conditions, and piloting circular practices in a collaborative environment.

              Yep, there sure must be a lot of major idiots leading those corporations listed above.

              • Glenn Stehle says:


                Me upset?


                I’ll leave getting upset to the folks who believe they can “transform” the world.

                For me, it just isn’t worth the effort to get upset.

                After all, in a few years both you and I will be dead. And in a few years after that everyone that might remember us will also be dead.

                There may be some old photographs of us laying around after that, but these too, in a few years, will end up in the garbage.

                Those will be the consequences of our existence.

                Nietzsche sure got it right when it comes to human nature. Humans don’t do reality, he claimed, nor do they do doubt. What they do are mythologies, which they believe in and defend with the utmost of certainty.

                Science, Nietzsche asserted, is just a higher level of fooling ourselves, much better in this regard than its predecesors: religion and metaphysics.

                In The Birth of Trajedy Nietzsche already attacks the scientific optimism of his time under the guise of “Socraticism.” The “theoretic man” pursues truth in the delusion that reality can be fathomed, and even purged of evil, by rational thought and application.

                But faith in the omnipotence of reason shatters, for the courageously persistent thinker, Neitzsche warned, on the positive apprehension that reality is irrational. “We are illogical and therefore unjust beings from the first, and can know this: that is one of the greatest and most insoluble disharmonies of existence.”

                What makes Nietzsche so exceptional is that he was one of the few intellectuals of his time who saw the dark clouds gathering: WWI, the Great Depression, WWII. Most of his contemporaries were caught up in the spirit of la Belle Époque. It was an era in which, as the historian Jacques Barzun explains, “high society lived in their world of creation, criticism and delight in the new.”

                “We are capable,” Queen Victoria confided to her diary after visiting the Crystal Palace Exhibition held in London, “of doing anything.”

                So no, I don’t get upset. I just set back and take it all in, the circus. The human circus. It is, after all, the best show in town.

                • Fred Magyar says:

                  Really now?! Well, the next time you’re not upset, perhaps you will also refrain from spouting expletives and complaining about a non existent double standard, eh? After all, I grant that you do have a point. We are all just remnants of star dust on a minuscule pale blue dot floating in the cosmos.

                  From this distant vantage point, the Earth might not seem of any particular interest. But for us, it’s different. Consider again that dot. That’s here. That’s home. That’s us. On it everyone you love, everyone you know, everyone you ever heard of, every human being who ever was, lived out their lives. The aggregate of our joy and suffering, thousands of confident religions, ideologies, and economic doctrines, every hunter and forager, every hero and coward, every creator and destroyer of civilization, every king and peasant, every young couple in love, every mother and father, hopeful child, inventor and explorer, every teacher of morals, every corrupt politician, every “superstar,” every “supreme leader,” every saint and sinner in the history of our species lived there – on a mote of dust suspended in a sunbeam.

                  The Earth is a very small stage in a vast cosmic arena. Think of the rivers of blood spilled by all those generals and emperors so that in glory and triumph they could become the momentary masters of a fraction of a dot. Think of the endless cruelties visited by the inhabitants of one corner of this pixel on the scarcely distinguishable inhabitants of some other corner. How frequent their misunderstandings, how eager they are to kill one another, how fervent their hatreds. Our posturings, our imagined self-importance, the delusion that we have some privileged position in the universe, are challenged by this point of pale light. Our planet is a lonely speck in the great enveloping cosmic dark. In our obscurity – in all this vastness – there is no hint that help will come from elsewhere to save us from ourselves.

                  The Earth is the only world known, so far, to harbor life. There is nowhere else, at least in the near future, to which our species could migrate. Visit, yes. Settle, not yet. Like it or not, for the moment, the Earth is where we make our stand. It has been said that astronomy is a humbling and character-building experience. There is perhaps no better demonstration of the folly of human conceits than this distant image of our tiny world. To me, it underscores our responsibility to deal more kindly with one another and to preserve and cherish the pale blue dot, the only home we’ve ever known.
                  — Carl Sagan, Pale Blue Dot:

                  But somehow, your statements give me the impression, that you much prefer, to do anything, other than cherish, our tiny pale blue dot.

                  • oldfarmermac says:

                    I am with you all the way, Fred, and with Ron ninety percent of the way. I just don’t see ALL of modern civilization NECESSARILY collapsing in the near to medium term, which is where I differ with Ron.

                    Now Fred knows this stuff already, so the rest of this comment is for everybody else.

                    It in perfectly obvious to anybody who actually knows a little about both history and science that FRED has forgotten more about science AND history than folks such as GS can ever hope to learn, unless they have a Paul on the road to Damascus experience, and switch religions, giving up the worship of fossil fuels for the worship of Mother Nature. I AM laughing myself at this observation, although most folks might not get the joke.

                    I may be the ONLY person in this forum who not only grew up in a backwoods fundamentalist society, who still lives in one, in constant intimate contact with true believing fundamentalists, and additionally devoted well over four years studying the physical and life sciences at the university level. I try to read at least one serious history book at least every couple of months these days, having slowed down with age. I used to read one not less than once a month.

                    History tells us that extraordinary change virtually always catches almost everybody by surprise, and that those who see overwhelming change coming, correctly, are always ridiculed by those comfortable with the status quo.

                    Philosophers and theologians have been in continuous retreat in the face of hard science advancing for the last five hundred years.

                    It is true that human nature does not change much, if at all, but it is also true that science and technology have in recent times given those who master them the power to control the behavior of humanity, collectively, to an extent unimaginable a century or two ago.

                    Will this power be used for good, or for evil? Noboby can say, for sure, which use will be more prevalent, but the power will be used for BOTH good and evil.

                    And now that the creative and productive powers of man can be harnessed in ways unimaginable even to lovers of fantasy, a century ago………………

                    Well, who knows? There is in my opinion at least, a significant chance that some portion of humanity will pull thru the coming baked in collapse and create a sustainable economy.

                    It won’t be business as usual,afterwords, no siree!

                    But it will be better than going back to the stone age, or to medieval times.

                    Those who believe that technology cannot POTENTIALLY save our collective ass just don’t want to look at the evidence with an open mind.

                    The price of JUST ONE nice car will soon ( ten years maybe ) suffice to pay the purchase cost of personal photovoltiac systems on FOUR houses, systems big enough to cut the need for grid sourced juice in those houses by eighty percent or more.

                    Human nature does not change much, it is true, but human behavior can change within the space of a generation to such an extent that grand parents and grandchildren can hardly find anything in common, except the family tree.

                    There is no need to give up. Giving up is for people who have lost hope. Some of us, not me, I am old already, will pull thru, depending on how old we are, and have kids who pull thru, and live reasonably dignified lives, ……with a little LUCK.

          • Glenn Stehle says:

            Arceus says:

            I don’t mean to tramp on your viewpoint, but it’s a bit of a stretch to call global warming skeptics “true believers” when the opposite is likely the case.

            I agree.

            For more on this, I recommend this essay for some general philosophical background about the skeptic and atheist movements. It is written by Massimo Pigliucci, professor of ecology, evolution and philosophy at CUNY:

            “Reflections on the skeptic and atheist movements”

            And zeroing in on the subject of global warming, this essay is more germane:

            “Why Skeptics hate climate skeptics”

            • Nathanael says:

              Bullshit. You just discredited yourself.

              Self described “global warming skeptics” are true believers. They’re just ignoring an absolute mountain of evidence.

              If you haven’t bothered to learn the chemistry (I did), physics, biology (I did), and geology (I did) evidence which backs up the fact of global warming caused by fossil fuel burning — then you have two choices.
              (1) Listen to the people who *did* study all that evidence
              (2) Deny reality and choose to believe what you want to, like a true believer.

              It’s a free country. People are allowed to be head-in-the-sand denialist idiots. It does mean I will tend to ignore what you write because you’ve proved that you’re a fool, though.

              A “skeptic” is someone with a scientific approach to the world. Global warming denialists aren’t.

              • oldfarmermac says:

                Ron says,
                “Are deniers just fucking stupid or what?”

                Well of course that is my immediate response as well, when I run into some local hayseed who has heard that there is enough oil off the coast of the Carolina’s to run the world for a hundred years, or that the coal mines of West Virginia are NOT depleted, but only shut in due to the so called war on coal etc.

                But when we are dealing with folks such as GS, and Arceus, we aren’t dealing with stupid people. We are dealing with propaganda artists.

                Their stock in trade is the BIG LIE, endlessly hammered, endlessly repeated. Their cynicism knows no bounds. They are never going to admit any fact IS a fact, unless it supports their positions, except for a very few exceptions they make to this rule so as to provide themselves with a fig leaf’s worth of credibility.

                I suppose I should mention that sometimes these folks DO believe in their own bullshit, but Arceus and GS seem to be just a little too smooth and polished to fall into that category imo.

                • wimbi says:

                  OFM, Fred, Ron, and all the other good buddys from the ancient TOD days, an attempt toward wisdom from grandpa here.

                  Essential facts, easily understood by people who are open to understanding.

                  FF’s deplete because anything finite does.

                  Solar and wind do not deplete, hardly, because we are getting a nice steady inflow of energy every day, all day from our local friendly fusion reactor.

                  As always, we naked apes get better at what we do the more we do it. So, we get better with solar/wind every day because we have just started getting better. (as a lowly radar operator at tail end of WWII, I remember every time I got used to one, another one came along that was MUCH better).

                  So, bottom like to the honest but not bright citizen, FF’s use gotta go down, SW gotta go up, no further need to be said.

                  If further need said, don’t bother. After all, those types usually don’t vote.

                  Back to fun in shop.

              • It all depends on how you define a skeptic. I think global warming isn’t that serious a problem, simply because w run out of cheap fossil fuels before it gets really bad.

                I tend to agree with Javier that we read and hear wads of global warming bs. For example, the current climate is better than climate 50 years ago. But if we allow the flood of bs issuing forth we get brain washed into thinking things are really bad.

            • Glenn Stehle says:


              I posted the wrong link.

              Here’s the correct one.

              “Reflections on the skeptic and atheist movements”

        • likbez says:

          Hi Ron,

          There are “true believers” and there are Lysenkoists. See, for example,


          True believers are brainwashed folk. Brainwashed to the extent that they becomes isolated from the facts on the ground. True believer is essentially a fanatic with a cause who “is perpetually incomplete and insecure” and thus uses uncompromising action and personal sacrifice to give meaning to his life. They often include the “New Poor” for they recall their former wealth with resentment and blame others for their current misfortune.

          Lysenkoists are those who support the idea for money and power. IMHO most “climate change deniers” belong to the second category, not to the first.

      • Fred Magyar says:

        You don’t understand what the ‘Circular Economy’ means. You are a proponent of continuing the linear model. Unfortunately that model doesn’t work. But systems design and thinking has never been your forte…

        • Glenn Stehle says:

          Fred Magyar,

          Continuing “the linear model”?

          You want a perfect example of “the linear model”?

          Well look no further than wimbi’s comment above:

          As always, we naked apes get better at what we do the more we do it. So, we get better with solar/wind every day because we have just started getting better.


          • Dennis Coyne says:

            Hi Glenn,

            Fred means a linear economic model, where we dig stuff up, we use it and then bury it in a landfill. In a circular economic model we use the stuff we have dug up in the past and we continue to use and re-use through recycling as much as possible (it probably is more complex than this). We minimize the use of energy sources such as fossil fuels which are used once and then cannot be reused and replace them with energy efficiency, demand management, wind, solar, geothermal, and hydro.

            I think I have asked this before when do you expect fossil fuels to peak?

            Still waiting on an answer. It is not enough to claim you believe in peak fossil fuels because you may believe the peak will be in 5000 CE.

            • Glenn Stehle says:

              Dennis Coyne said:

              I think I have asked this before when do you expect fossil fuels to peak?

              Still waiting on an answer. It is not enough to claim you believe in peak fossil fuels because you may believe the peak will be in 5000 CE.

              My answer is: I don’t know.

              Peak oil, because it deals with human behavior, is a very, very complex phenomenon, far more complex than if we were just dealing with the physical world.

              What is it about “critical ignorance,” as James H. Hyslop called it, that you find so unacceptable?

              Believe it or not, Dennis, there is a difference between disbelief and nonbelief.

              Nonbelief is a state of suspended judgement; neither believing something is true nor believing it false. [The Web of Belief, W.V.O. Quine & J.S. Ullian, 1978, p12]

              So for instance you can say, “Peak oil will occur in 2020.” I don’t disbelieve that is true. I simply don’t know if it’s true or not.

              • Dennis Coyne says:

                Hi Glenn,

                That is a clever way to avoid the question. Clearly nobody knows when peak oil will occur (although I am speaking more broadly of peak fossil fuels.)

                You argue as if you think this will either never occur or it will occur so far into the future that it is of no consequence.

                Or perhaps you are a free market fundamentalist that thinks the free market will always solve every problem with just in time solutions to any problem.

                So let’s try a hypothetical, suppose you believed that peak fossil fuels would be in the year x (this can be any year that seems sensible), what do you think is the wisest course of action, just keep doing what we are doing and hope for the best?

                Just asking, you seem very passionate about the evils of renewable energy, it would seem you think it best to delay any action to adapt to a World which will have less fossil fuels at some point (as you acknowledge an eventual peak), why?

                • wimbi says:

                  Dennis. Another hypothetical. This guy is a hired gun, he gets paid for ANY response to his taunts. Logic being that he’s hired to mess up, infuriate, confuse, misdirect, etc etc with intent to reduce effectiveness of any opposition to FF’s.

                  I think this hypo is actually the case here, and therefor the right response is NO RESPONSE AT ALL, EVER. No matter what the provocation.

                  I don’t think we stand to loose one iota of useful info by that non-response. ?

                • Glenn Stehle says:


                  I did not avoid the question. I answered it. And the answer is, I don’t know when peak oil will occur.

                  I’m not the one with this compelling need to know that peak oil is imminent, so I will have a reason to impose my political and economic agenda on other people.

                  • Glenn, just how does one “impose their political and economic agenda on other people”? And just how does having an opinion concerning the timing of peak oil empower them to do that? That is, why does one with an opinion on the timing of peak oil have more power to “impose” than someone without such an opinion on the subject?

                    In all honesty Glenn, I think you are trying to “impose” a motive here where such a motive does not exist. No one in their right mind would believe that simply having an opinion on the timing of peak oil would somehow give them more power.

                  • Glenn Stehle says:


                    Peak oil and climate change are the main arguments invoked to justify the need for state mandates to curtail fossil fuel usage.

                    State intervention to reduce fossil fuel usage carries with it a multitude of socio-economic and political implications, not least of which it makes the renewables industry more viable.

                    Peak oil has “gained support, especially on the left,” Arun Gupta explains in this essay on Alternet, as

                    many leftists embraced peak oil during the Bush era. It was a secular version of end times in the post-9/11 world. If movement building seems insurmountable, then it’s tempting to find solace in building post-carbon, do-it-yourself communities and wait for the wells to run dry at which point everything from the “war on terror” to climate change is resolved.

                    But waiting for peak oil, Gupta bemoans, has been kind of like waiting for Godot. His patience has reached its limit.

                    Gupta therefore argues the left should dump the peak oil argument, and go strictly with the global warming argument:

                    Oil consumption needs to drop dramatically because of the dangerous planetary effects. But that has nothing to do with peak oil. It’s a matter of how we reorganize our society and economy on the surface of the earth so we stop using the stuff that’s under it.


                  • Peak oil and climate change are the main arguments invoked to justify the need for state mandates to curtail fossil fuel usage.

                    Bullshit! Invoked by whom? Peak oil is argued by no one except a few of us peak oil die-hards. And there is no such person or organization as “The Left”.

                    There is a scientific consensus that the planet is getting warmer and it is caused by human activity. There is no scientific consensus concerning peak oil however.

                    Believing in peak oil gives no one anywhere any power. Dammit Glenn, you sure can come up with some stupid shit sometimes.

                  • Glenn Stehle says:

                    Ron Patterson said:

                    Peak oil is argued by no one except a few of us peak oil die-hards….

                    Believing in peak oil gives no one anywhere any power.

                    Opinion polls paint a very different picture.

                    There exists a rather large minority that believes energy security is a salient political issue. And appealing to, or growing, that constituency can give a political entrepreneur political power.

                    This from Polling America by Samuel J. Best and Benjamin Radcliff, for instance:

                    Because the availability of energy so directly impacts the consumer, public opinion on energy issues can have considerable influence on national politics….

                    In general, there appear to be few, if any, dispassionate sources of energy information, leaving the public to draw its own conclusions….

                    Thus, a fundamental aspect of public response to energy-related issues has to do with opinions, both tacit and expressed, about the severity of the energy situation. Implicit in many assessments of public opinion about energy is the assumption that there is a problem (e.g., a shortage or crisis)….

                    Remarkably, some of the most extensive public opinion opinion data about energy pertains to this very issue….

                    On the whole, the evidence suggests that the American public believes there is potential for an energy disruption, depending on current world events, but that the situation has not yet reached a crisis proportion….

                    Energy policy also relates to environmental policy….

                    [T]he move to…replace conventional transportation fuels is really two-pronged. On the one hand, there is a growing need to ensure energy security, and, on the other hand, there is increasing demand to clean up the environment and address global warming….

                    Past research that addresses issues of this nature suggests…that a minority of approximately one in five of survey respondents appears to believe that there are actual, persistent energy problems, that oil and natural gas will eventually be exhausted, and that higher costs for oil, natural gas, and electricity should be expected.

                  • Glenn Stehle says:


                    And more recently there’s this from Matthew Schneider-Mayerson’s new book, Peak Oil, which indicates you may not be so out of the mainstream of expert and public opinion as what you indicate:

                    Since there is a finite amount of petroleum on the planet, peak oil is not so much a theory as a geologic fact — the question is exactly when it will occur and whether it matters….

                    While I remain agnostic on the timing of the wolf’s arrival and the size of its bite, peakists’ broadest claim — that human activity and life are dependent on material resources that are not infinite — is opposed (among those who consider such questions) only by a small minority of futurists, economists, science-fiction authors, and other extreme techno-utopians. As Shane Mulligan put it, oil has become “an essential element of human ecology,” and, therefore, “the energy resources on which our economic system relies may be as essential to human life, in their way, as water, biological diversity, or an intact ozone layer.” Whether it is imminent or two decades away, the threat of energy scarcity should be taken seriously….

                    As such, the peak oil phenomenon cannot be written off as another case of misguided American apocalypticism but must be understood in the context of what most scientists and scholars are coming to understand as the basic ideolgical, social, and philosophical challenge of our time: the bedrock incompatability of our high-energy, high-consumption way of life with a planet of fundamentally limited natural resources….

                    Peak politics is primarily about the political and environmental implications of the peak oil movement’s response to the threat of ecological crisis, but it is also by necessity about oil itself, rightly labeled “the most powerful fuel and versatile substance ever discovered.” While peakists were mistaken about the immediacy and gravity of the oil peak, their assertion that petroleum depletion has the potential to cause “the end of our American way of life,” as a Virginia peakist put it, was not.

                • Glenn Stehle says:

                  Dennis Coyne said:

                  You argue as if you think this will either never occur or it will occur so far into the future that it is of no consequence.

                  Dennis, how many times do you plan to trot that strawman out?

                  I have never said any such thing.

                • Glenn Stehle says:

                  Dennis Coyne said:

                  …you seem very passionate about the evils of renewable energy…

                  No, I am very passionate about the truth about renewable energy.

                  Just because I don’t share your faith that it’s the silver bullet that’s going to slay the energy vampire, doesn’t mean I believe it’s evil.

                  • Dennis Coyne says:

                    Hi Glenn,

                    You are correct, you have never said that you don’t think fossil fuels will deplete.

                    The truth is that they will do so.

                    What do we do then?

                    Nobody on this blog has proposed that renewables are a silver bullet on this blog, that will lead to some Green Utopia (a straw man you often trot out yourself by the way).

                    Now you can claim that we cannot possibly know the exact date of peak oil, peak coal, and peak natural gas, and I would agree with you.

                    They will all occur at some point and even if there was no issue with climate change there is still a problem of energy scarcity that will need to be addressed. What is your proposal?

                    Wait until fossil fuel prices are very high due to scarcity and then begin to ramp up our use of alternatives?

                    Seems to be a bad plan, unless you own a lot of fossil fuel interests, in which case it would be a great plan.

                    So is that why you argue so vociferously against wind and solar power.

                    It seems the fossil fuel industry has never met a subsidy that it didn’t like.

                    So the only good subsidy is a fossil fuel subsidy, does that about sum it up?

                  • Glenn Stehle says:

                    Dennis Coyne said:

                    Nobody on this blog has proposed that renewables are a silver bullet on this blog….

                    Oh really?

                    Then what is this?

                    If that’s not a utopian vision, then what would it take for something to be considered utopian in your opinion?

                  • Fred Magyar says:

                    Then what is this?

                    Energy: All Energy is derived from renewable or otherwise sustainable resources.

                    If that’s not a utopian vision, then what would it take for something to be considered utopian in your opinion?

                    That is a goal, a setting of the bar so to speak. And those graphics are illustrative and meant as a simplification and targeted at a general lay audience. But as usual all you can do is set up strawmen and attack them.

                    For the record, generally speaking one doesn’t present a technical PhD. dissertation on a highly complex topic to those who do not have the necessary background to understand it. But you have no intention of addressing the merits of the entire concept of a circular economic system so you cherry pick and attack a graphic. No surprise there, for you are a master of the superficial soundbite.

                    Not that you are interested in looking but here’s a few case studies of implementation of circular economic principles:


                    BTW! Despite your claims, nobody on that list is claiming any kind of utopia, that is your spin on an otherwise serious discussion by people who don’t buy your dsytopian vision!

    • Javier says:

      2016 might be even warmer than 2015 as the El Niño moves from the sea surface to the atmosphere.

      Satellites do not see 2015 as the warmest year on their record. Perhaps they’ll all agree on 2016.

      • Armitage Shanks says:

        There have been a number of problems with satellite measurements, including as fundamental as having a sign wrong in a correction formula and differences in how satellite decay is handled. Have these now all been fixed and are there no more possible error sources?


        • Taylor smi says:

          The presence of scientific community’s desperation in how they report their satellite measurements and such is now very obvious when they have to pull silly things out of their hat to prop up their long-standing mission of using climate change to push the ideology of taxing the United States middle class to oblivion – through Man-Caused-Climate-Disruption (or whatever name they call it now). At universities across this land you will find a large collection of mad scientists, the kind you thought existed only in badly made movies.

        • Taylor smi says:

          The presence of scientific community’s desperation in how they report their satellite measurements and such is now very obvious when they have to pull silly things out of their hat to prop up their long-standing mission of using climate change to push the ideology of taxing the United States middle class to oblivion – through Man-Caused-Climate-Disruption (or whatever name they call it now). At universities across this land you will find a large collection of mad scientists, the kind you thought existed only in badly made movies.

        • Taylor smi says:

          The presence of scientific community’s desperation in how they report their satellite measurements and such is now very obvious when they have to pull silly things out of their hat to prop up their long-standing mission of using climate change to push the ideology of sending United States middle class to oblivion through higher taxes. At universities across this land you will find a large collection of mad scientists, the kind you thought existed only in badly made movies.

          • Caelan MacIntyre says:

            (rough draft/on-the-fly)
            It’s the
            business-as-usual way-of-death that’s desperate, to the point now where apparently it’s attacking the scientific establishment and where nothing is sacred anymore, except
            labor-pimping and
            land-grabbing and
            Upheld by the seeds–
            The pseudo-‘law’;
            the legal deeds–
            No law of nature
            Subtracting needs
            Through mumbo-jumbo
            The ‘governments’,
            AKA governpimps
            Or pseudogovernments–
            The scaled-up vestiges of the
            vested interests of the
            Bizarre things
            Called kings and queens.

            Feudalism 2.0

            Can you get any more desperate than that?

            It’s not just anthropogenic climate change,
            But environmental change,
            And the worst kind of change.

            …Can we get a songwriter/rapper? Is there a rapper in da house that’s down with this?

            • mr.razler says:

              Good one, have you booked time in a recording studio yet?

              when you do, here’s another one for you…

              (sung to the TV theme song “green acres”)

              A “green planet” is the place for me!
              I’m a fool!…and with Gore, I agree!
              Air, polluted with the CO2!
              Libs like me want to end it all for you!

              We kill babies ‘fore they’re given birth!
              And we’ll kill you just to save the earth!
              Science be damned, we have captured hearts!
              We’ll put an end to your breathing,
              your endless beating of hearts!

              • Caelan MacIntyre says:

                What’s this killing babies before they’re born stuff? Is that some sort of pre-emptive strike? Whose babies?
                How about, instead, you replace that passage with a bit about killing innocent civilians– including babies (that are both already born and not born because the would-be parents are also killed)– with the State military apparatus– paid for perhaps in part by pick-pocketing you.

                But if you really want to keep the killing babies before they’re born bit in more of an abortive sense, then I’d suggest considering adding a line about depleted uranium ammunition, since it might have that effect, or worse.

        • Javier says:

          Satellites cannot have big mistakes for two reasons:

          1. Up to 2005 their degree of coincidence with surface datasets was very good. Then surface datasets started to be changed. Agreement continued being very good with HadCRUT3 until 2013 when it got changed too.

          2. satellite measured temperature changes agree quite well with outgoing long wave radiation measured by the Ceres satellite. This is independent confirmation from a different technique.

          • Dennis Coyne says:

            Hi Javier,

            Not very good in 1998 though. Perhaps your “belief” that the satellite temperature data is better is incorrect. The satellite coverage of the higher latitudes is not very good and the warming anomalies have been higher in those areas, perhaps that is part of the difference.

            Your faith in the satellites is interesting.

            I found this post:


            So, given that RSS is now the denier’s outlier, Tamino has graphed it against the balloon thermometer record known as RATPAC, and shows this:

            {Graphic below}

            As Tamino says:

            They’re in excellent agreement until recently. Lately there’s a strong divergence, one which seems to be growing, after about 2012. It’s hard to believe that the problem is with balloon data; yes there are important calibration issues with them, but thermometers are still thermometers, and there are just as many serious issues if not more with the satellites’ microwave sounding units, including merging over a dozen different instruments, disentangling the signal from different levels of the atmosphere, and changing orbital drift and timing — issues about which different teams do not agree…..

            The RSS data simply fail to show the recent warming which is plain to see in the balloon data — the data from actual thermometers.

            • Javier says:


              It is very good in 1998. You have to consider that the satellites measure the lower troposphere, essentially the bottom 3 km. Therefore when there is a strong El Niño, they detect the higher warming of the atmosphere. That is a feature, not a bug.

              You cannot use weather balloons to conclude that satellites are not good, because weather balloons are not reliable enough. They have very bad coverage and they require a lot of adjustments. If they do not coincide, probably weather balloons are wrong, not the other way around.

          • Dennis Coyne says:

            Hi Javier,

            If we compare Best land-ocean temperature with the UAH temperature (annual means) using 1981-2010 average temperature set to zero for both data sets.



            The result from 1979 to 2015 is pretty close see chart, a slightly higher trendline for the best data, but probably not a significant difference.

        • That’s bullshit from skeptical science, a propaganda site. This type of crap is what makes discussing the climate a real pain in the neck. NASA uses two groups to develop global troposphere satellite temperature estimates, these are calibrated by balloon programs.

          This attacks against NASA satellite data emerged recently because the troposphere isn’t warming as predicted by models. The Warmist camp is full of model worshippers whose main hobby is either distorting data, cherry picking data, or badmouthing data they see doesn’t fit their bullshit models.

      • Glenn Stehle says:


        Beware or you may find yourself on the wrong end of the law for your heretical teachings regarding global warming.

        Any sign of doubt or skepticism, when it comes to the one true faith, is strictly taboo. And if some of our leading climatologists get their way, questioning sure truth will not just make you a social pariah, but land you behind bars too.

        This, for instance, from Physics Today:

        In a May 2015 Washington Post op-ed, Democratic senator Sheldon Whitehouse of Rhode Island asserted, sort of, that climate-consensus-denying business interests have earned scrutiny through the lens of RICO, the Racketeer Influenced and Corrupt Organizations Act. It originated nearly a half century ago to send mobsters to prison…. [A short time later] 20 climatologists—including Kevin Trenberth of the National Center for Atmospheric Research—resurrected Whitehouse’s idea in a September letter to President Obama,


        Not to be outdone by his fellow global warmists across the Atlantic, Trygve Lavik of Norway’s University of Bergen philosophy department began calling for “a statutory ban on climate denialism.”

        Lavik’s 6400-word essay appears in the Nordic Journal of Applied Ethics with 16 endnotes and 33 references, among them works by Greenpeace, Philip Kitcher, George Monbiot, and Naomi Oreskes. The abstract requires quoting:

        In this paper I claim that there are moral reasons for making climate denialism illegal….

        The main arguments are: Climate denialism is not beneficial because its main goal is to produce doubt, and not truth….

        Climate denialists bring harm, by blocking necessary action on climate change.

        Primarily they harm future generations and people in developing countries.

        As the Physics Today article goes on to explain, Lavik defines “illegal climate denialism” as

        “a well-organized and well-funded campaign by a person or group with authority in society, which keeps repeating the same untrue and damaging claims about climate change, without mentioning conclusive counter arguments.” He targets three levels of denial: that there’s a warming trend at all, that it stems from human causes if it does exist, and that it will cause harm.

        • Nathanael says:

          Glenn’s a True Believer with his head in the sand. No point in reading the crap he’s spewing. It’s a pity you have such fools on this otherwise intelligent comment section.

          • islandboy says:

            You must be new round these parts!

          • oldfarmermac says:

            No, it is as obvious as the sun at high noon, to me at least, that GS is not a true believer. He is a propaganda artist with a fine understanding of the art of political campaigning and advertising.He has an agenda, and it is to slow down and disrupt the growth of the renewable energy industries to whatever extent he can.

            I suppose there is a SLIGHT chance he believes his own bullshit, but it is a SLIGHT chance only. He is too good at staying on message not to be a pro.

            • Clueless says:

              OFM – When GS indents, and puts statements in a different font, I am quite sure that what you call “his own bullshit,” is actually from other sources. And, I guess that you think all of them are full of bullshit. As usual, you make a very compelling argument. LOL

              • Dennis Coyne says:

                Hi Clueless,

                Perhaps you find Glenn convincing, to each his own.

              • oldfarmermac says:

                Hi Clueless,

                In broad terms, whatever GS quotes is PART of his bullshit.

                His quotes generally have NOTHING to do with the science of climate,or geology, or the technologies of renewable energy.

                He just sticks all this irrelevant stuff in to make himself look like a wise man. If you actually understand the abc’s of the physical and life sciences, and a little about the way humans BEHAVE, his quotes make him look like a stuffed shirt pompous fool.

                Of course that does not matter to him, because he is a foot soldier, well actually maybe a low ranking officer, specializing in propaganda, on behalf of the fossil fuel industries.

                He does not CARE if most of us understand that everything he says is bullshit.

                His goal is to keep any fossil fuel, status quo true believers who read this forum coming to church on a regular basis. So long as they hear his sermon every Sunday morning, with a little luck they will continue to believe.

                He knows all about true believers, believe me. Part of the game is to convince his OWN flock that THEY are rational, but that folks such as yours truly, Fred Maygar, Nick, etc are THE true believers, the deluded.

                I have never been a preacher, but I can quote the KJB, and in a pinch, I have found it expedient to counsel a grieving friend , a fundamentalist Baptist, that God really is on his side, if he continues to have faith, and that he WILL be joining his dead kid in Heaven one day, along with his deceased parents, and all his other friends and family who accepted Jesus and lived right.

                I have had this same counseling session with my own ANCIENT and partially demented DADDY many times in the last few months. It comforts him greatly, and costs nothing. He believes I will join him eventually, myself, someplace up in the sky, where we will all be healthy and happy. WHY should I disillusion him?

                I personally worry about as much about burning in hell forever for being a heretic as I worry about winning the POWERBALL lottery, and I have never bought a ticket for it, not even once. I believed when I was a little kid, because everybody around me believed.

                The real difference between my playing this game and GS playing this game is that I play it only to make life a little easier, and less painful, for the very small handful people I occasionally counsel in this fashion, on an individual basis, and then only rarely. I am after all NOT a preacher, but I am the friend of quite a few believers , and the preacher is not always handy.

                GS plays the game in order to serve SOMEBODY’s vested interests. It is easy enough to see that these interests are his OWN, either directly, or because he collects compensation, after some fashion.

                He is too good at staying on message, like a professional advertising man,or political campaign manager, to conclude that he is NOT a pro, or closely guided by a pro.

                Notice that he almost NEVER admits any fact that contradicts his position to go unchallenged AS a fact, no matter how obvious it may be, or how contrived his rebuttal of it might be.

                Folks such as Fred Maygar do not deny obvious facts.

            • Jeju-islander says:

              “He is too good at staying on message not to be a pro.”
              Yes, strange but seemingly true.
              While most of the denialist trolls are stupid. GS is extremely smart.
              It is easy to assume that most of the trolls are either bots or unemployed Indian graduates paid 10 cents an hour by the Koch brothers to write nonsense. A Turing test fails to tell the difference.
              But GS is different. He seems to be a single real person. A person that smart would surely find it easier to make a high salary in a proper job than waste such a huge portion of his time on this site for a meagre Koch corporation salary.
              Either way I recognise GS as a really smart guy and enjoy his writing however much I disagree with his denialist propaganda.

        • Javier says:

          Yes, Glenn,

          It is very worrisome that they are trying to resource to the law to decide a scientific matter. We have the precedent of Galileo and know how that went. As in the Galileo case, some scientists are taking the side of those that propose prosecuting people for expressing contrarian views as a way of winning the debate.

          Luckily I live in a country where we have such respect for free speech and thought that nobody would dare to publicly speak of using the law to prosecute people that express heretic views on climate change.

          • GoneFishing says:

            Javier, the exercise of free speech implies responsible exercise of free speech. If the message being put out by some people will lull them into believing they are safe when indeed they are in great danger, the message is irresponsible and dangerous to the public welfare. Making that message illegal is not a limitation on the responsible exercise of free speech, it merely limits the irresponsible and obviously dangerous actions of certain people. Words can destroy people, no one has the right to do that. That action is outside the rights of a citizen in a free country.

            • Javier says:

              You don’t understand free speech.

              ” If the message being put out by some people will lull them into believing they are safe when indeed they are in great danger, the message is irresponsible and dangerous to the public welfare.”

              If the message being put out by some people will alarm them into believing they are in great danger when indeed they are safe, the message is irresponsible and dangerous to the public welfare.

              • GoneFishing says:

                OK Javier, let’s examine both sides of the argument about free speech in a global warming context.
                From reading your comments, you take a stance that the current global warming is not due to greenhouse gas increases or man-made greenhouse gas. You appear to believe that the current warming trend (last hundred years or so) is due to natural causes such as orbital cycles, sun cycles, ocean heat exchange, etc.
                In that case, the increase in temperature and resulting melting of ice caps causing sea level rise should be ignored as it will play out slowly and reverse as we head toward the next glaciation. Call that the “natural case”. It also seems to assume that the large increase in greenhouse gases has no or little effect on global warming.
                The “anthropogenic case” which accounts for increased CO2 and resulting increase in H2O and
                CH4 in the atmosphere as a result of man-made changes, assumes that we can change our ways and make reductions in atmospheric CO2 to prevent or reduce a long term dangerous change in the climate system of earth.
                So what happens if the “natural case” is true and we reduce our pollution of the atmosphere and reduce our destruction of the natural landscape, falsely assuming that the “anthropogenic case” is correct?
                1) Since CO2 has little effect on global temperature, reducing it will not change the natural progression of temperature
                2) The reduction of elimination of fossil fuels and the reduction of natural area destruction, along with changes in farming would make a much less polluted, much less warlike world. All that sulfur, particulates, radioactive materials from coal burning would be gone. The tremendous pollution of rivers and streams would be mostly eliminated.
                3) We would have non-polluting, quiet sources of energy that use little or no water.
                4) Vast areas of the landscape would not be further wrecked and industrialized.
                5) People would modify their lifestyles to a more sane and local existence.
                6) The horrible consequences of running out of usable fossil fuels would be eliminated since the transistion would be made in a controllable and extended fashion.

                What would happen if the “natural case” was wrong and we just kept up BAU because there is no incentive to change it?
                1) We would run through the peak oil, peak fossil fuel scenario which many think leads to the collapse of civilization (no real plan B)
                2) the world would continue to be polluted and wrecked
                3) Continuing BAU just runs the environment and materials to the limits
                4) Global warming would keep increasing and the climate of the earth would be dramatically changed for thousands if not hundreds of thousands of years. Many millions of people would face drought, migration due to sea level rise, and starvation due to climate change and loss of soil properties.

                Ignoring GHG induced global warming and continuing BAU as in the “natural case” appears to be the worst case scenario and much more dangerous than trying to make the already needed move away from fossil fuels and ecological devastation.

                Please feel free to comment in a logical and reasoned fashion.

                • Javier says:


                  You got me wrong. I readily recognize that the increase in CO2 has caused some warming, but superimposed and dominating the warming are the natural climate change cycles that are poorly understood but the evidence indicates that they are very powerful and dominate the climate change.

                  Now let’s not mix different issues.

                  Regarding CO2, if the climate is dominated by natural variability any reduction that we could make will essentially have no effect. In fact some scientists that believe in the CO2 hypothesis also believe that not much will be accomplished even with the proposal reductions.

                  I also believe that we are going to be putting less and less CO2 into the atmosphere in the near future. The data seems to support me since in 2014 the increase in CO2 emissions was only 0.5%, and it has been low for several years now.

                  We have to consider also the beneficial effect of CO2, that is increasing the vegetation in semi-arid areas (greening effect) and helps the agriculture to become more productive.

                  Regarding pollutants I am totally in favor of environmental controls. We should try to recover as many natural spaces as possible and try to defend what is left of wildlife populations. The many to fight climate change should be directed to that. We are going to depend on nature a lot more in the future, so we better take good care of what is left.

                  Regarding fossil fuels, I believe that peak oil took place in 2015, and I support a transition to renewables because we are not going to have much energy to go about. I am just a realist. I think renewables are not up to the task and we are going to fail the transition, but the more we get the better we might be afterwards, so I do not oppose them in principle. I oppose magic thinking and stupid decisions that can jeopardize the access to energy by millions of people.

                  We simply have nothing to fear from climate change for a few centuries. It is good not to have that problem, but some people like a good thrill, and thinking that we are in danger of being cooked by a global warming that we caused does it.

                  • woodsy_gardener says:

                    We have to consider also the beneficial effect of CO2, that is increasing the vegetation in semi-arid areas (greening effect) and helps the agriculture to become more productive.

                    Is that your belief or can you give a link to scientific evidence? I seem to recall a study showing that more CO2 is inhibitory to plant growth.

                  • GoneFishing says:

                    Well, I am glad you explained yourself Javier, I had some mistaken impressions about you.
                    I do agree that CO2 reduction will be tougher than most people think. The ocean has absorbed a lot of CO2 and a good portion of that will move back into the atmosphere as the partial pressure of CO2 drops. So basically CO2 levels will fall slower than expected. Probably the best ways of CO2 reduction will involve using soil to absorb the CO2, which means large changes in agricultural practice. Mechanical and chemical means may be too expensive.

                    I have to disagree as to the current activities not causing problems. Everything we do to enhance atmospheric GHG currently will determine the near and much further future predicaments. The changes in ecosystems and life are happening fast now, I doubt if the ecosystem will not completely destabilize if this current rate of change continues.

                    But you will be right in the long run, natural changes will take over that will override human induced changes.

                  • Javier says:


                    The fertilization effect of CO2 is both well known and stablished. For example:
                    Impact of CO2 fertilization on maximum foliage cover across the globe’s warm, arid environments
                    “Satellite observations reveal a greening of the globe over recent decades. The role in this greening of the “CO2 fertilization” effect—the enhancement of photosynthesis due to rising CO2 levels—is yet to be established. The direct CO2 effect on vegetation should be most clearly expressed in warm, arid environments where water is the dominant limit to vegetation growth. Using gas exchange theory, we predict that the 14% increase in atmospheric CO2 (1982–2010) led to a 5 to 10% increase in green foliage cover in warm, arid environments. Satellite observations, analyzed to remove the effect of variations in precipitation, show that cover across these environments has increased by 11%. Our results confirm that the anticipated CO2 fertilization effect is occurring alongside ongoing anthropogenic perturbations to the carbon cycle and that the fertilization effect is now a significant land surface process.”

                    Also if you look at the IPCC fifth assessment report it is also there:
                    Box 6.3: The CO2 Fertilization Effect
                    “Elevated atmospheric CO2 concentrations lead to higher leaf photosynthesis and reduced canopy transpiration, which in turn lead to increased plant water use efficiency and reduced fluxes of surface latent heat. The increase leaf photosynthesis with rising CO2, the so called CO2 fertilization effect, plays a dominant role in terrestrial biogeochemical models to explain the global land carbon sink (Sitch et al., 2008), yet it is one of most unconstrained process in those models.”

                • Fishing dude, I wouldn’t spend so much time writing about what Javier thinks. Tell us your opinion, that way we get less clutter.

                  • GoneFishing says:

                    Fernie dude,
                    I notice in your comments that you are always ordering people to do things.
                    Are you a member of the Spanish Inquisition?

    • ezrydermike says:

      The State of the Climate Summary Information is a synopsis of the collection of national and global summaries released each month.


      • Doug Leighton says:

        And, “There is no evidence that [the] warming trend has slowed, paused, or hiatused at any point in the last few decades.” Gavin Schmidt, Nasa Goddard Institute for Space Studies

        • Javier says:

          None if you don’t want to see it.

          • Dennis Coyne says:

            Easily accounted for by other factors besides CO2.

            • Javier says:


              The problem is not to fit the model to the data. The problem is then for the model to predict future temperatures.

              • Dennis Coyne says:

                Hi Javier,

                Let me know when future El Ninos and volcanic eruptions and changes in total solar irradiance, and changes in the length of day and I can make a reasonable guess of carbon emissions and give you the result.

                The C model by itself with no big changes in the other factors gives the general trend, which is probably close enough, variation in the other factors cannot be predicted with any certainty, as far as I know. Though Webhubbletelescope is working on ENSO.

                • Javier says:

                  It gives the wrong general trend. It does not show cooling between 1940 and 1976, a period that it is very well known to have undergone a significant cooling.

                  You think you have the climate figured out. You have not. You don’t even include things that we know about, like the 60 year temperature and climate cycle, the multidecadal oscillations AMO, and PDO. Our knowledge of climate is imperfect. You do a half baked exercise in curve fitting and you think that you have it figured out.

                  In just a couple of decades you are very likely to see just how wrong you are, as the cooling phase of the 60 year cycle continues putting CO2 climate to shame.

                  • Hickory says:

                    Javier admits the planet is a globe in year 1697.

                    On a serious note, Javier, why do you keep banging your head against this wall. Of course you might be right (13.9% chance), but then again you might be wrong (49.3% chance) +/- 20%.
                    But I don’t think you have any chance of changing world policy.
                    So, pay your carbon tax, install some photovoltaics, enjoy your garden, and watch the show.

                  • Dennis Coyne says:

                    Hi Javier,

                    No I do not think I have climate figured out.

                    It is a very simple model, and no model is likely to match the complexity of nature. Other factors can be added, I was trying to keep it simple.

                    What is the physical basis for the “60 year cycle” or was that just a curve fit with no physical explanation?

                    So I have never made any claim to have “figured climate out”, this exercise was to test Webhubbletelescope’s CSALT model, which is a surprisingly simple model with a physical basis that matches a few of the known factors with global temperatures using a simple linear regression on several variables using an excel spreadsheet and data that can be found on the internet.

                    Your “belief” in a future cooling cycle, might be correct, but the underlying warming will make the upward trend be a stairstep process, these 60 year cycles may be tied to changes in the length of day, which is included in the CSALT model.

                    You are correct that the model is imperfect (and I never claimed perfection) and there are undoubtedly many other factors which might be included, including those you mention.

                  • Javier says:

                    Dennis, we don’t know the physical basis of the 60 year cycle, because we are very ignorant about the climate.

                    There is a good hypothesis about it, but without enough data to demonstrate it. It is called the Stadium Wave hypothesis.

                • That graph of cmip5 ensemble versus actual is like a kick in the belly, isn’t it?

                  Let me give you a hint: go to KNMI and pick out the E2 Russel model and run its match and predictions to 2100. That model version has a much better match, yields a much lower climate sensitivity. The Russel version has more ocean energy uptake. This simply warms the abyssal water by one-two tenth of a degree more than other models. And that seems to match data much better. 🐸

    • ezrydermike says:

      Global Temperature in 2015 19 January 2016

      James Hansena, Makiko Satoa, Reto Ruedyb,c Gavin A. Schmidtc, Ken Lob

      Global surface temperature in 2015 was +0.87°C (~1.6°F) warmer than the 1951-1980 base period in the GISTEMP analysis, making 2015 the warmest year in the period of instrumental data. The 2015 temperature was boosted by a strong El Niño, nearly of the same strength as the 1998 “El Niño of the century”. The updated global temperature record makes it clear that there was no global warming “hiatus”. Global temperature in 2015 was +1.13 (~2.03°F) relative to the 1880-1920 mean. Accounting for interannual variability, it is fair to say that global warming has now reached ~1°C, almost ~2°F.


      • Taylor smi says:

        All right, so what’s the plan then from all these scientists and the politicians they influence? raise my taxes? redistribute global wealth? And how long will it take before we can expect a nice sunny three-day weekend of 72 degrees? But, oh, gosh – what if we spend too much, and it never rains again? Or spend too little, and we get tornadoes and hail storms? Good thing we know everything there is to know about the science. And, knowing our dysfunctional government will be in full control of the weather just gives you a warm, fuzzy feeling, don’t it?

        • SW says:

          Eat your babies.

        • Dennis Coyne says:

          Hi Taylor,

          Even if we assume that climate change is not a problem (this is likely only if fossil fuel resources are much lower than most mainstream estimates or if most mainstream estimates of equilibrium climate sensitivity are much too high), there is still the problem of fossil fuel depletion.

          At some point in the future (my estimate is around 2030) the total production of all fossil fuels (oil, coal. and natural gas in millions of tonnes of oil equivalent per year) will peak. Society will need to find other sources of energy to replace the energy provided by fossil fuels as their output declines.

          No political conspiracy is needed, energy will become more expensive when the peak arrives and society will gradually transition to other forms of energy (wind, solar, geothermal, hydro, and nuclear power). Also gasoline will become more expensive and people will buy smaller vehicles, hybrids, plug-in hybrids, and EVs, they will move to cities that are designed for walking, biking, and public transportation. The World will be different and resource depletion in general (including clean water, good, soil, and various other essential resources) will lead to a transition to a circular economy where all resources are recycled where possible (including transforming sewage to fertilizer).

          All of this is true whether climate science is correct or not.

          • ArkTech says:

            Whether you know it or not, what you’ve reasoned out here is what many conservatives realized a long time ago: climate change isn’t really about climate, it’s about control. At the core of the science is a cabal of left wing elitists and environmentalists who want to control all the resources we use – what resources we use, how much we use, and who gets privileged access.

            Like the stock market, you can’t gain control unless the participants recognize some change is taking place. Doesn’t matter if the change is real or not, it only has to be perceived. Once a systematic change is perceived then people make huge bets on it. That’s the way money and power shifts hands.

            So climate change is all about instituting a perceived change to gain control of resources, of man’s efforts, to enable accumulation of the ultimate proxy resource: oil.

            • SatansBestFriend says:

              Wow! That is foolish.

              The Greenhouse Effect has nothing to do with American Political control.

              Sometimes I wonder if it is actually good that such foolish opinions exist, makes me seem smarter!

              • Dave P says:

                The obvious answer is that the laws of physics are working in collusion with those leftie scientists.

        • Synapsid says:

          Persistent troll?

          YOU decide.

        • Jimmy says:


          The plan? I stock up on ammo. You guys can circle jerk in the comments section until the starving masses kick your front door in. Good luck with that. If I’m wrong I’ll either sell or have a great year at the range.

      • Bruce Grano says:

        Right now I live in Phoenix. I’ve lived here for 21 years. Global surface temperatures have gotten 1.6 degrees warmer (we can round up to 2 degrees) according to your news article, yet I’m still here doing fine and many more people move in everyday without noticing anything different. What that tells me is if it gets another 2 degrees hotter I’m going to still live in Phoenix, which I can do because of the inexpensive energy that powers air conditioning. So that brings up the question – what would you believe is worst off for humanity, a temperature increase of 4 degrees or getting rid of inexpensive plentiful energy and all the great things it provides to us?

    • Armitage Shanks says:

      Some years ago there was a group of researchers who proposed that we could switch to permanent El Nino conditions if the Pacific kept warming. It didn’t happen at the time and I hope it isn’t happening now, but the last big El Nino in 1998 did seem to trip the currents and wind patterns in the Arctic and Pacific into different states.
      Despite all the brouhaha in COP21 I have not seen a single indication of any government doing anything practical to back up their commitments. And despite all the backslapping last year about maintaining growth without increasing CO2 emissions the Keeling curve looks like it just had the biggest ever y-o-y increase.

      • Keeling curve responds to El Niño. This subject is better resolved looking at long term trends. As fits those who believe in the scientific method and alter their position when science proves their previous position wrong.

        2014 was a weak or borderline Niño year, 2015 kicked off a strong event on top of the warm water leftover from the 2014 event, and the first half of 2016 is the climb down period. This includes a tropospheric peak we should see in April 2016, with a good probability we will enter La Niña conditions by September. In which case the anomaly will go colder than average.

    • Tom J. says:

      Digital instruments are fairly new in temperature recording. In the past, due to the technology, analog instrument had to be used (as there was nothing better), but because the readings were necessarily subjective, they weren’t as accurate. So, whenever temperatures records are reported as broken, you have to wonder about the data, and what was used to record the initial readings way back when.

      • Nathanael says:

        We have error bars on the accuracy levels of the old instruments, and the new ones. If you haven’t looked into it (which I have), you might get the mistaken impression that this is an issue.

        Nope. We are breaking global temperature records routinely, well outside the bounds of the error bars.

        • Tom J. says:

          Mean global temperatures have been remarkably stable over a very long time frame, particularly over the past two decades. Believe me, I have “looked into it,” thank you very much, due to my years as a programmer sitting in a building within eyesight of the huge NOAA weather data complex in College Park. Do you need me to explain how numbers are manipulated via statistical analysis? Do you need me to explain that anybody, even PhD scientists in which we are supposed to place all our trust, can spout whatever numbers they want in the research literature? That much has been made clear by the fact the the NOAA and IPCC climate models (among others) have proved themselves worthless by their failure to even remotely predict the linear divergence of global temperatures from CO2 levels over the past two decades or so.

          Further, subjective errors caused by usage of the analog instrumentation of the past and even today (many manual weather stations around the world continue to use analog instrumentation subject to human interpretation) is, despite your assurances to the contrary, a real problem, as is the inconsistency in the siting of thermometers and other instruments over the past century and more of record keeping. Anybody who says otherwise is either lying or woefully misinformed, considering that only a cursory glance of the research into this important topic will bring up examples of daily temperatures 100 years ago being recorded at sites disproportionately warmer or colder than the immediately surrounding area. Even today, the problem is still real, and curious scientists in fields other than climatology have discovered official daily temperature measurement being taken, evidently without concern, at such inappropriate locales as next to air conditioning units, in the middle of asphalt-covered parking lots, on tarred rooftops, and so on. Of course the real problem here is that any one inconsistency in data acquisition will have an impact on the final numbers ultimately reported by the media.

        • Tom J. says:

          [Trying again…my first post got hit by the spam filter. Luckily I saved what I wrote.]

          Mean global temperatures have been remarkably stable over a very long time frame, particularly over the past two decades. Believe me, I have “looked into it,” thank you very much, due to my years as a programmer sitting in a building within eyesight of the huge NOAA weather data complex in College Park. Do you need me to explain how numbers are manipulated via statistical analysis? Do you need me to explain that anybody, even PhD scientists in which we are supposed to place all our trust, can spout whatever numbers they want in the research literature? That much has been made clear by the fact the the NOAA and IPCC climate models (among others) have proved themselves worthless by their failure to even remotely predict the linear divergence of global temperatures from CO2 levels over the past two decades or so.

          Further, subjective errors caused by usage of the analog instrumentation of the past and even today (many manual weather stations around the world continue to use analog instrumentation subject to human interpretation) is, despite your assurances to the contrary, a real problem, as is the inconsistency in the siting of thermometers and other instruments over the past century and more of record keeping. Anybody who says otherwise is either lying or woefully misinformed, considering that only a cursory glance of the research into this important topic will bring up examples of daily temperatures 100 years ago being recorded at sites disproportionately warmer or colder than the immediately surrounding area. Even today, the problem is still real, and curious scientists in fields other than climatology have discovered official daily temperature measurement being taken, evidently without concern, at such inappropriate locales as next to air conditioning units, in the middle of asphalt-covered parking lots, on tarred rooftops, and so on. Of course the real problem here is that any one inconsistency in data acquisition will have an impact on the final numbers ultimately reported by the media.

        • Tom J. says:

          Well I tried responding to these claims twice, but the spam filter wouldn’t let my post through.

        • Tom J. says:

          Subjective errors caused by the use of analog instruments in the past and even today (many weather stations around the world continue to be manually operated using analog instrumentation subject to human interpretation) is, despite your assurances to the contrary, a real problem. Believe me, I have actually “looked into it” too, just like you state you have, thanks to my years as a programmer sitting in a building a stone’s throw away from the huge NOAA weather data complex in College Park.

          However, as bad of a problem as the instrumentation is, an even bigger concern is the inconsistency in the siting of said instruments over the past century and more of record keeping. Anyone who says otherwise is either telling a lie or woefully misinformed, considering that the most cursory of investigations into the research of this important topic will bring up examples of daily temperatures 100 years ago being recorded at sites disproportionately warmer or colder than the immediate surroundings.

          Remarkably, the problem remains a significant concern today, and curious scientists predominantly in fields other than climatology have discovered official daily temperature measurements being taken, evidently without concern, at such inappropriate locales as next to air conditioning units, in the middle of asphalt-covered parking lots, on tar-paper rooftops, and so on. Naturally this is a real problem because any one inconsistency in data acquisition will with certainty impact the final numbers ultimately reported by the media.

          • oldfarmermac says:

            How about some links proving these bad stations are plentiful? I hear a lot about them, but you seldom or never see anybody post a PICTURE of one of them.

            If you know doo doo from apple butter, you know that even if measurements are taken by eyeball, from an analog instrument, the errors are quite consistent,averaged, statistically, over time, and so any TREND reported in the data is STILL a real trend.

            People who keep such records these days might be motivated to cheat a little, in either direction, depending on their personal agendas and politics, but in TIMES GONE BY, there was no incentive for people to cheat either way.

            • Clueless says:

              There is a web site that documented most of the bad sites, pictures and all, a couple of years ago. But, in the past, you have indicated that you disdain that site, so there is no point in mentioning it to you.

              • Dennis Coyne says:

                Hi Clueless,

                And there are many studies that show if you leave those “bad sites” out of the analysis there is very little effect on the global temperature anomaly. See


                • Javier says:

                  And there are studies that show that about one third of the warming in the contiguous US is spurious and comes from using data from non-compliant class 3 to 5 stations.


                  • Dennis Coyne says:

                    Yes Javier there are many studies, I am not going to read them all, the paper I cited discusses many different studies and eliminates the urban and near urban sites.

                    There is no difference between the full data set result and very rural data set. Read the paper, if you are not convinced, then you aren’t.

                    The physical scientists mostly agree that it is not a problem.

                  • Darth Festinger says:

                    The cognitive dissonance is strong with this one

                  • Javier says:


                    “There is no difference between the full data set result and very rural data set.”

                    There is a big difference between compliant class 1-2 weather stations’ data and non-compliant class 3-4-5 weather stations’ data, according to this new study.

                    That Urban Heat Island effect, something that we all experience with our own senses, does not affect temperature data from urban stations defies common sense. I am sorry. I don’t believe it no matter what those studies say. I exercise my right to be skeptic about that.

                  • Fred Magyar says:

                    That Urban Heat Island effect, something that we all experience with our own senses, does not affect temperature data from urban stations defies common sense. I am sorry. I don’t believe it no matter what those studies say. I exercise my right to be skeptic about that.

                    Well, that right there, is the most profoundly unscientific statement I have seen you make to date!

                    As a scientist you of all people should know better than that! Your personal beliefs and what you experience with your own senses do not in any way constitute solid scientific evidence.

                    As Richard Feynman used to say:
                    The first principle is that you must not fool yourself and you are the easiest person to fool.

                    You don’t ‘BELIEVE IT’ no matter what those studies say… Really?! So all this time it has really been about what YOU believe. You have been trying to find ways to make reality conform to what you BELIEVE!

                    However if you’d like RealClimate makes their data and code available for anyone to do their own analysis here:


                    In our paper (Hausfather et al, 2013) (pdf, alt. site), we found that urban-correlated biases account for between 14 and 21% of the rise in unadjusted minimum temperatures since 1895 and 6 to 9% since 1960. Homogenization of the monthly temperature data via NCDC’s Pairwise Homogenization Algorithm (PHA) removes the majority of this apparent urban bias, especially over the last 50 to 80 years. Moreover, results from the PHA using all available station data and using only data from stations classified as rural are broadly consistent, which provides strong evidence that the reduction of the urban warming signal by homogenization is a consequence of the real elimination of an urban warming bias present in the raw data rather than a consequence of simply forcing agreement between urban and rural station trends through a ‘spreading’ of the urban signal to series from nearby stations.

                    Go ahead Javier, examine the data and code.

            • D. Graham says:

              I live in Albuquerque. One day about 20 years ago, a local TV meteorologist (yes, she had/has a degree in meteorology) announced to much confusion that as of the next day, the city would be warmer. The answer was the weather station at the airport was switching from a somebody reading a thermometer to an automated system with the result being that the automated system consistently produced temperatures 1 to 2 degrees F higher than what the person read. I asked a friend who works for the National Weather Service about this, and he said that she was correct. So how can the old temps and new temps possibly be reconciled for the change in technology?

              The other thing is there is a range of over 1200 feet in elevation within Albuquerque city limits, and clearly temperature changes significantly with elevation. The official temperature is taken at the airport, which is about at the midpoint. An article I read last year identified Albuquerque as being the second largest urban heat bubble in the country. Its not uncommon this time of year for a morning temp where I live near the eastern boundary of the city of be in the 20’s while my friend who lives near the western edge will be experiencing single digits. How can the NWS come up with a meaningful temp for the city with those kind of discrepancies? And given the growth of the city over the past 60 years, they can’t reconcile pre-heat bubble temps with the growing heat bubble over that time period. I’m sure that there are thousands of other locations around the world with similar issues.

              • Dennis Coyne says:

                D Graham,

                Read the paper I linked in my comment above. There are many different weather stations, they are all used in the global averages, not only airport readings in the center of cities.

                Do you seriously think that scientists haven’t thought of this?

                • D. Graham says:

                  I really don’t have any idea what the scientists have or haven’t thought of, because the big issue is most of the scientists are employed by the government or receive funding from the government, and I refuse to trust anything that comes from the government, especially this current administration. Remember “the nine most terrifying words in the English language” and all that…

                • Synapsid says:


                  I’m getting really tired of issuing troll alerts.


                  Ron’s idea is best: don’t respond. Much quicker.

    • The current El Niño will be followed by La Niña. By late 2016 the temperature anomaly should be down a few tenths of a degree. At that time you could use an empirical trick, take the 1998 El Niño peak, minus the 2015 peak, and divide by the time difference between peaks. That should give you a peak to peak value you can use to check the temperature anomaly slope.

      I also intend to use the 1998 and 2016 Niño peaks in tropospheric temperature reported by NASA contractors (UAH and RSS). The lower troposphere isn’t warming much, but the climate models say it’s supposed to.

      Finally, I’ve found a climate reanalysis tool that gives the temperature at 2 meters elevation. Check here


      • Dennis Coyne says:

        Hi Fernando,

        Are the two El Nino events identical? If not, the trick doesn’t tell you much. Of course there are many factors to consider besides carbon dioxide and the southern oscillation index(or some other measure of the anomaly).

        • Denis, the data is still coming in. What one needs is the extra energy reaching the surface from the warm water swinging from east to west in the tropical pacific. NOAA doesn’t report it in a summary, so we have to either use Tisdale or pick it up as raw data. Unfortunately NOAA shut down the NOMADS server and this makes it harder to get to it.

          This makes me add that NOAA in general really needs housecleaning. Under the Obama regime they have decayed, turn out a lot of crap verbiage but there’s little effort to allow easy public access to data.

      • Javier says:


        If you are into reanalysis you should check ECMWF ERA. They are supposed to be the best around.

        • Javier: I like reanalysis as a learning tool. As you can imagine we use something very similar to reanalysis in oil field models. Data just doesn’t get acquired where we don’t have wells, so we fill in with reanalysis tools. These tools even alter the physical system description to allow a cuter match.

    • Jimmy says:

      Hi Ron, check out this link to temps in Greenland.


      Plus 10 degrees C at 61 degrees north latitude. Plus 4 degrees C at 65 degrees north latitude. Unbelievable!

      It’ll be an interesting summer if a high pressure ridge parks itself over the ice sheet for several weeks.

  17. R Walter says:

    The DJIA is getting thumped today. All because oil is under 27 USD?

    You would think it would be soaring with low oil prices, but no, it does a black swan dive!

    • oldfarmermac says:

      It is very easy to find so called financial analysis on any given day, concerning any given aspect of the economy, such that various commentators come to diametrically opposite conclusions.

    • IanH says:

      Sovereign wealth funds selling to raise cash?

    • Nathanael says:

      Without a lot of inside information (which is usually only available years later), nobody can say for certain what causes a particular short-term move in the stock market. High-speed program trading has enormous destabilizing effects causing massive swings which don’t mean much. Well, they mean that there’s a lot of high-speed program trading and that the programs suck, but that’s all they mean.

  18. Petro says:


    market and oil today looks like a climax washout… at least in the short run. Plus, today is the closing of the old contract and the opining of the new (March I believe it is).
    We might have another day or 2 like this, but it is going to bounce here soon…for a while.
    The point is that the “biggie” has already begun”’

    The link from yesterdays comment just showed up:

    Be well,


    • The point is that the “biggie” has already begun

      ??? What’s a biggie? Biggie Wall Street collapse?

      but it is going to bounce here soon…

      Biggie oil price bounce? I don’t think so.

      • Petro says:

        you are correct to be confused. My mistake, I should explain!
        I was referring to my comment exchange with Sh.S. in the past few days and I assumed that only he would reading…
        “Biggie oil price bounce? I don’t think so” ~ R. Patterson
        I have made my view on oil very clear so I will not expand on that here.

        What I meant was that today is the contract change on oil futures from February to March. Usually this exacerbates the trend already in place and normally is a sign of washout climax and a counter trend following ….for a while.

        By “biggie” I mean the global depression/deflationary collapse in progress of which I have been clear in my writings here before, as well.

        Thank you for reminding me to clarify and thanks for the post.

        Be well,


      • SRSrocco says:


        Remember you were telling your son to sell everything last year. Well, it just took a little longer for the fundamentals to finally kick in. I believe 2016 will be quite an interesting year.

        Ironic that two of the only things that are GREEN today are GOLD & SILVER.


        • Petro says:

          “Ironic that two of the only things that are GREEN today are GOLD & SILVER”

          Steve ,
          …and VIX and Treasuries ( actually the 5 and 10 year notes are the biggest gainer of all).

          Don’t count on it just yet…
          Gold and Silver shall shine in all their glory – no question about it!
          When they do in earnest however, you and I and everybody else will have bigger concerns than counting bars and coins…

          Be well,


          • SRSrocco says:


            Of course the U.S. Treasuries are in the GREEN. You can thank the Fed for buying up the global dumping of U.S. Treasuries over the past 6 months. But how long can the Fed & U.S. Treasury prop up the markets??

            That is the question.


            • Petro says:

              No Steve,
              there is no “conspiracy” here…

              The Dollar and Treasuries are in the green , for they are perceived to be the safest things out there (the key word being: “perceived”) and capital is pouring into them.
              Market trades on sentiment and expectations – NOT fundamentals!

              When that perception will change – and it shall- you shall have your gold and silver shine….. but then, Heaven help us all!

              Be well,


            • SRSrocco says:


              Who said anything about a conspiracy. Twasn’t me. World reserves of U.S. Treasuries fell from a peak of $12 trillion last year down to $11 trillion. Who the hell bought em… LOL.

              China’s been dumping U.S. Treasuries along with many other countries. So, why in the living Hades are U.S. Treasury rates going down???

              By the way, the Fed has to roll over $212 billion of its U.S. Treasuries on its balance sheet in 2015 and this continues until 2019. Basically, the Fed has to monetize $1.1 trillion of U.S. Treasuries on its own balance sheet not including the Trillions it has monetized and those it will continue to monetize in the future.

              No conspiracy here. Of course, U.S. Treasuries are the safe haven when the FED is backstopping the entire market…LOLOL

              What’s wrong wit you’s Noggin Petro??


              • Petro says:

                let us agree to disagree, shall we?

                “Of course, U.S. Treasuries are the safe haven when the FED is backstopping the entire market…LOLOL” ~Steve

                That is where you are wrong!
                By that logic the Bank of Greece or Portugal, or (you put the name here…)…can backstop their bonds, as well.

                US Treasuries and the Dollar are the safe heavens, for what US economy, USGovment and USA as a country have been and what they have meant to the whole World in the past 80-100 years…
                The absolute confidence in/on them, especially when things get tough, is the REAL reason!!!

                Be well,


                • SRSrocco says:


                  Is that why China and Russia (and rest of the BRICS) continue to work on an alternative currency system around the Dollar. Because they have confidence in the Dollar?

                  LOL… U a fricken Hoot.


                  • Petro says:

                    No, is because they think they are big enough and resent US leadership and the confidence markets have on the US Dollar…and they want to challenge it!
                    Plus, right now they need DOLLARS more than they need air…!
                    Contrary to the simplistic way you (and the hyperinflationists) know things to be, there is a dollar SHORTAGE world wide….
                    Money does not work exactly as M.Maloney and C. Martenson think they work…
                    Again, let us not call each other names and let us agree to disagree.

                    Be well,


                  • Syndroma says:

                    The Central Bank of Russia increased its gold holdings by 206 tonnes in 2015, a record.

                • oldfarmermac says:

                  The banks of Greece and Portugal are not backed up by the Yankee military industrial complex. Greece and Portugal don’t control most of a very rich continent.

                  There is no real need to wonder why the Yankee dollar is perceived to be the last great safe haven for cash money.

                • Ves says:

                  Petro: ” By that logic the Bank of Greece or Portugal, or (you put the name here…)…can backstop their bonds, as well.”

                  The Bank of Greece or Portugal outsourced that job to ECB and ECB did backstop their bonds.

                  • petro says:

                    The same reasoning applies to ECB…
                    replace Greece with ECB….
                    Reading Mac’s comment above helps…
                    Be well,


                  • Ves says:

                    Well I will repeat again the fact: ECB or Dragis “Whatever it takes” backstopped Greek’s and Portugal’s Bonds. You can’t argue against the fact.

                • Nathanael says:

                  Petro, Bank of Greece and Portugal don’t print their own money (they’re in the “euro shackles”). Perhaps you should have used Bank of Venezuela or Bank of Brazil or Bank or Iran or Bank of Russia as examples instead.

                  • Ves says:

                    Exactly. I have answered Petro but my comment did not show up. ECB is FED clone 🙂

                  • Petro says:

                    “they’re in the “euro shackles”…

                    Nathanael and Ves and everybody else,
                    that is why you guys are confused: you think eurozone is the same as US.
                    They unified their currency, but NOT their sovereign debt.
                    That is why there are german bunds and french bonds and italian bonds…and they all have different yield.
                    But besides your ignorance and confusion on the matter, both of you are missing the point why I replied to Steve the way I did…and the explaining will be too long and very likely futile.
                    Therefore I will stop there.
                    US treasury/debt market is the second largest and most liquid in the world…second after…you guessed it (or maybe not!): the dollar market(currency marked actually, of which the dollar comprises 67%-70%).
                    If you cannot draw the distinction between the treasury market and the rest…well no point continuing the discution, is there?
                    Be well,


                  • Ves says:

                    No need to open 5 unrelated issues about eurozone in order to write something that wasn’t even the topic of discussion.
                    For the last time: ECB backstopped PIGS bonds last year and did their QE1 (like the FED) contrary to what you said. It’s okey if you overlooked that fact. No biggie.

                  • Petro says:

                    …you got it!

                    Be well,


                  • Ves says:

                    Namaste 🙂

          • Dennis Coyne says:

            Hi Petro,

            Why do you believe that the depression and deflationary spiral that you foresee will be permanent? Is there something special about oil that as it becomes scarce prices will not increase, if there was a shortage of oil eventually wouldn’t you expect that substitutes (from other types of energy) would be adopted, even if for some reason the oil price remained low (for reasons that I cannot fathom).

            Note that it is not enough to assert that the old rules of supply and demand do not apply. If you want anyone to pay attention you have to give some reasonable justification for such an assertion.

            • Nathanael says:

              I’m sure he doesn’t mean *permanent*. Extinction of a species is permanent, but is anything else on this Earth really permanent?

              There was, not so long ago, a 22-year depression by some measures — starting in 1873 and going until 1896. We might well get one of those. It would still qualify as “the biggie” or a global depression.

              • Dennis Coyne says:

                Hi Nathaniel,

                The only thing that is permanent is change. I am pretty sure we do not have very good World data for GDP. The US economy was in a recession after the civil war, but I do not believe this was true for the World.

                Economics was not very good in the 19th century (it still isn’t, but it is better now than then). In fact economists were under the mistaken impression that the economy was self adjusting and that there could never be a lack of aggregate demand leading to a depression. Keynes explained how this could occur and how deficit spending by central governments could speed recovery from a recession.

                There are many problems in practice of implementing such policies, the only thing worse would be not following this advice and reverting to 19th century economic policy.

            • Lloyd says:

              Why do you believe that the depression and deflationary spiral that you foresee will be permanent?
              I think the reasoning is that the likely outcome of the deflationary spiral is the end of industrial civilization and a massive die-off.

              Petro doesn’t think we will return to the current global GDP (or per-capita GDP.)


              At least that’s what I think he means. 🙂 (Emojiclarification: I’m amused at trying to parse Petro, not at the end of the world.)


              • Dennis Coyne says:

                Hi Lloyd,

                As Petro answers by suggesting I read every previous comment he has written (which I will not do). Perhaps you could explain this end of days view.

                Do you find this view convincing? I can certainly envision a scenario where every possible wrong decision is taken and civilization goes down the tubes, I just don’t think it is a likely scenario.

            • Petro says:

              “(for reasons that I cannot fathom).” ~ Dennis


              You said it best yourself!
              That is the reason, right there in that sentence of yours…

              I tried to help on many occasions, so at your convenience read my prior replies/comments addressed to you.
              It might help to “fathom” better.

              Be well,


              • Dennis Coyne says:

                Hi Petro,

                Your explanations are difficult to follow, it seems you assume we will have a permanent collapse, but it is not clear why that would be the case. That’s fine, we can simply disagree. Nobody knows what the future will bring, I believe human society is more adaptable to changing circumstances than you do.

        • Heinrich Leopold says:


          The high yield bond crash – as a consequence of the bursting of the shale bubble – triggers lower US economic growth and thus lower interest rates. Lower US interest rates lead to the unwinding of the gold/silver carry trade. If this goes to an extreme (i.e. negative US interest rates), gold/silver forward rates could be higher than interest rates on paper money, which could lead to soaring lease rates and thus to the unwinding of hundreds of billions of gold/silver loans. The consequence would be a manifold increase of the gold and silver price.

    • Petro says:

      are you clearer on the interest questions after seeing 10 year note drop below 2% today?
      It is ~ 40 basis points (0.4%) lower today then when FED “increased” the interest on December 17…
      As I said: do not get caught on headlines!

      10 year is going to 1% before goes to 3% no matter how many times Fed “increases” the rates:
      enter QE4….44….44444… and NIRP

      Be well,


  19. AlexS says:

    Comparing two long oil price cycles: 1970-1998 and 1999-…..
    Are we in the beginning of a multi-year low oil price phase (like in 1986-1998)?
    I think this time it will be much shorter, but who knows for sure ….

    Annual-average oil prices in 2014 dollars

    • Dennis Coyne says:

      Hi AlexS,

      I agree it will be shorter this time, somewhere between your guess (2017 process start to rise?) and mine (oil prices start to rise by third quarter of 2016). Definitely agree that nobody knows.

      • Nathanael says:

        I’m guessing it’ll be a minimum of 5 years because I think the Saudis have the ability to keep prices down that long. And because I think their power to do so gets stronger every year as renewables take market share. And because I think Iran’s government is smart enough to hold off on really heavy overseas sales until the price goes back up a bit — so rather than forcing prices down to $10/bbl, they will keep prices at $30 or $40 for longer. So I’m betting 2020 or later.

        • Dennis Coyne says:

          Hi Nathaneal,

          I do not think oil supply will be adequate at $40 to $50 per barrel until 2020, US output would decrease by 2 Mb/d or more, Canada would also decrease by o,5 Mb/d and I doubt demand will not grow over the next 5 years, I doubt OPEC will be able to increase output enough to make up for declines in non-OPEC output at those prices. What are you assuming for World real GDP growth rates with oil prices remaining at that level? We would need World real GDP to be under 1% per year over the next 5 years to make your price forecast reasonable, in my opinion. So in a Petro scenario, possibly we get $40 to $50/b or possibly $10/b would be more reasonable in Petro’s view (which is pretty nebulous) in 2020. I find such scenarios to be low probability (1% or less imo).

      • Schinzy says:

        Hi Dennis,

        The question I have is what will production be when prices start to rise. Will production be like today, 2% below todays production, 5% below todays production? What will production be the next time we have WTI at $80?

        My guess is that production will be at least 5% less than average production in 2015 before we see WTI at $80. I would also guess is that the longer it takes for production to fall, the lower production will be when when prices finally start to rise. In other words a quick decrease in production would lead to higher prices sooner and at a higher production point.

        • Dennis Coyne says:

          Hi Shintzy,

          I don’t think production has to fall that much, probably 1% would do it, demand will continue to grow so even flat output would eventually bring the market back into balance. I agree a quicker decline in output will bring prices back up more quickly. Our estimates of both supply and demand are not very good so it is all very much a black box. If most of the oil price forecasts are correct, I expect the supply forecasts will be too high and the demand forecasts may be too low, of course that will make the price forecasts too low as well.

          We will have to wait and see.

  20. ezrydermike says:


    • Very interesting article Mac, thanks. This shoots the hell out of the noble savage theory.

      • oldfarmermac says:

        Back atcha Ron,

        Damned right!
        The evidence for men being aggressive has always been there, although not very easy to find in prehistorical times.

    • thrig says:

      So were they hatfields, or mccoys?

    • Caelan MacIntyre says:

      Wasn’t my tribe. They got the wrong tribe. It’s a cherry-pick.

      Parable of Violent Tribe

      past tense: usurped; past participle: usurped

      take (a position of power or importance) illegally or by force.
      “Richard usurped the throne”
      synonyms: seize, take over, take possession of, take, commandeer, wrest, assume, expropriate…
      take the place of (someone in a position of power) illegally: supplant.
      “the Hanoverian dynasty had usurped the Stuarts”
      synonyms: oust, overthrow, remove, topple, unseat, depose, dethrone; More
      supplant, replace
      “the Hanoverian dynasty had usurped the Stuarts”
      encroach or infringe upon (someone’s rights).
      ‘the Church had usurped upon the domain of the state’ ” ~ Google dictionary

  21. Stavros H says:

    While I am not petroleum geologist or oil engineer, in my opinion, several OPEC countries have been deliberately under-producing for many decades now. This may be so due to several different reasons:

    a) First of all, the GCC countries, take their orders from the USA. The USA does not want its allies/subordinates of the GCC (KSA, UAE, Kuwait and Qatar) to be producing at maximum capacity. First of all, that would have kept prices relatively lower during the period after 2000, which will have meant that no shale or tar sands boom would have ever taken place in North America.

    b) The GCC countries themselves, do not wish to produce and sell the bulk of their oil reserves cheaply. They both have to defer to what Western powers demand, and also save oil for the future. They rationally wish to spread their production over as many decades as possible.

    c) The oil rich countries that are on bad terms with the US/NATO, meaning Russia, Iran, Iraq, Kazakhstan, Venezuela and formerly Libya, have been/are/will be under pressure from the financial power centers of the West so as to minimize their own production. The pressure from the West against these countries ebbs and flows according to the tactical and strategic imperatives at any given moment in time. For example, for many years, it was Iraq that was the main target of the US & allies. Then it was Iran and now it’s Russia.

    If what I say above is correct, then it seems plausible to argue that both GCC and Russia/Iran/Iraq etc have much more oil potential than Ron Patterson seems to believe.

    • likbez says:


      This is an unconvicting argumentation.

      The high oil price is one of the key factors in “secular stagnation” of Western (G7) economies. So it’s unclear to me why would the USA encourage high oil prices via limiting oil production in any country, even in view of “shale boom” of 2010-2014.

      As a county importer of oil the USA generally is interested in lower oil prices. And it looks like the current administration does not mind sacrificing its own shale industry. Note the Obama administration did little to nothing to help shale players (may be some nod-wink to banks as for loans/bonds, but that’s about it).

      Low oil prices also undercut two countries that does not want to march to the tune of Washington drummer: Iran and Russia. The latter is the real obsession of Obama administration as in Carthago delenda est (Carthage must be destroyed) . The level of hate of Russia in Obama administration is probably unprecedented for the post Cold War period, including strong personal antipathy of Obama toward Putin.

      The only negative is that the same policy helps China, which is probably the most important threat to the USA world dominance and also decrease flow of “oil money” into US treasuries. But China can be dealt later, if Russia and Iran fall in line.

      • Stavros H says:


        Let us imagine that there is a roughly efficient global market for oil extraction. I claim, that under such a scenario, the price of oil would have never risen to $100/bbl. This would have meant several things:

        a) Production in wealthy western countries would have been much lower during the entire post-2000 period, and especially the past 10 years or so, even more so, during the past 5 years. US shale, Gulf of Mexico UDPW, Canadian tar sands, the North Sea would have either never produced a single barrel of oil, or would have been producing at massively lower rates than they have/are currently producing at.

        b) Production in other relatively expensive areas, West Africa offshore, Latin America offshore, where production is done by Western oil majors, would also have developed more modestly.

        c) This deficit from currently producing marginal areas outlined above would have been covered partly by the GCC (KSA, Kuwait, UAE) and partly by countries outside the US/NATO alliance system, such as Russia, Iran, Iraq, Kazakhstan and Venezuela.

        d) This would have meant not only a great financial hole for the wealthy/dominant US/EU axis, but also extreme strategic weakness vis-a-vis their privileged allies at the GCC and even more crucially in relation to Iran, Iraq, Kazakhstan, Venezuela and worst of all, Russia.

        If the price of oil remains prohibitive for Western countries and oil majors in the coming years and no regime-change is inflicted upon Russia/Iran, the scenario I am describing above may very well play out to a considerable degree.

        The reason why the US/NATO is being so hostile against Russia, has nothing to do with emotions or antipathy towards Putin’s personality. It’s about geostrategy and leverage. While Russia is an economic lightweight, geostrategically is a potential lethal threat against the US superpower or even NATO in general. This is not so much about economic size, it’s about leverage. If Russia is treated half-fairly in its interaction with the global economy, her economy will rapidly shift to rapid growth. Even so, a growing Russian economy will never approach the absolute size of the EU, US or Chinese economies. But as I said earlier, this is not about sheer economic size, but about leverage. A reasonably prosperous Russia would be impossible for any power, or even any combination of powers to pressurize. There would simply be no leverage. Russia has all the resources it needs, has all the nukes to deter all enemies, actual or potential and its smallish population (especially in relation to its colossal resource base) is actually an advantage in the 21st century. The revenue from resource sales could then be partially diverted to the military-industrial complex and maintain a state-of-the-art military branch.

        In a way, Russia (due to her unique geography) is the antithesis of countries such as Germany, Japan and Korea. The latter 3 were given all kinds of trade privileges and aid from the US in the post-war period, because due to the global presence of the US military and influence, they are all powerless strategically. They are all resource poor and geographically constrained, hence have little choice but to generally accept US imperatives, especially since they were given a good economic deal after 1945. The US (or other powers for that matter) cannot treat Russia in the same way, because Russia is neither geographically constrained, nor resource poor, in fact Russia is the exact opposite of that and therefore we have the current global situation.

    • a) First of all, the GCC countries, take their orders from the USA.

      Is it possible that there still exist such ignorance among people who can actually read and write.

      • Stavros H says:

        That’s amusing!

        You seem to completely fall for MSM propaganda and the nonsensical narrative that they have been pushing for several years now.

        Feigning weakness and loss of control is the strategy du jour for US “informational warfare” It simply suits US interests best to pretend that they have lost their tight grip on some key Middle Eastern allies. This is so for several reasons:

        a) It puts an “imaginary” distance between the good Western democracies and the savage, head-chopping dictatorships of the GCC. The US gets to maintain control, the considerable financial perks (via weapons sales, Treasury sales, GCC investments in Western stock markets etc) while pretending to have little, if anything to do with it.

        b) It obscures US motives, tactics and strategy in the Middle East and beyond. If the world (especially the naive public North America and Europe) falls for the lie that the GCC states act on their own volition, then NATO’s dirty work in the Middle East gets to keep plausible deniability. “Don’t look at us, we are not the superpower of yesteryear, those Sheikhs are their own men now”.

        The way to tell where the GCC owes its allegiance to, is (as always) to follow the money. Where do they buy weapons from? Where do they recycle their petrodollars in? To whom do they provide bases? Who are they fighting against?

        Now, I am not saying that the US/NATO have 100% control over the GCC. No, imperial power does not work that way. But, at the end of the day, it’s clear who the boss is. GCC are simply some of the US Empire’s most privileged vassals.

      • Clueless says:

        Ron, I think that we have a President and a former Secretary of State that believe that.

  22. AlexS says:

    Good article in Reuters:

    Oil below $30 fans wipeout fears among U.S. shale survival artists

    Wed Jan 20, 2016

    Just one quote:
    “If anybody says they are making money in the oilfield they are lying”

    • Ves says:

      Yup. But we already knew where this is heading 8-9 months ago. You can see how broad market reacted with sudden enlightenment of very low prices for longer than it was hoped.

    • shallow sand says:


      I picked this up out of a Seeking Alpha article by Traveling Investor.

      2003, ConocoPhillips average oil price was $27.47 and gas price $4.07. Production costs were $4.98 per BOE.

      2014, production costs for ConocoPhillips were $15.52, per BOE.

      Excepting international gas, which I am not sure of re pricing, COP is likely grossing less than $20 per BOE today.

      I am sure production costs are down from 2014, however, triple from 2003 is in line with our experience.

      • AlexS says:

        shallow sand,

        IHS upstream cost indexes show an increase of 2-2.3 times from 2000 to 2014, and a decline of 11-21% between 3Q14 and 3Q15.
        Of course the increase in costs in 2000-14 and the decrease in 2015 were not uniform across various countries and segments of the oil and gas industry.
        .I suppose cost inflation in the U.S. onshore was higher than global average due to rapidly rising demand from the shale industry. But various sources show that the decline in input costs from late 2014 was also quicker in the U.S. market

      • AlexS says:

        upstream operating cost index

      • Clueless says:

        I am of the opinion that a lot of the decline in production costs are not sustainable. I believe that there are many service companies that have cut their prices to break even (no profit). That is what many companies across many industries do in a downturn in order to keep the lights on. But, they are not in business to operate in that mode forever.

        • Enno Peters says:


          that is also my expectation. I guess that many service companies had very fat margins, which they were willing to cut. But at the current prices, I would think that it has been cut all the way to the bone and then some (which can be seen from the large lay-offs). That means that prices first have to become stable & very attractive again before service companies are willing to scale up again, especially as the downward risks are fresh in memory. I expect the same holds for most external creditors.

        • Ves says:

          True. But here is the thing.. when you run away from the bear you just have to outrun the last guy. So if you are driller in ND you just have to outrun the driller in Texas or Canada or vice versa. You don’t have to worry about outrunning drillers in Kazakhstan or Nigeria.

    • likbez says:


      Compare with GB take on the situation:

      === quote ===


      As crude oil prices collapse below $30 per barrel and metals trade near record lows, Goldman Sachs (GS) forecasts that 2016 will nonetheless bring a “new bull market” for commodities.

      • AlexS says:


        GB or GS?

        Goldman is not alone in predicting a bottom in oil price cycle in 1h15, with a gradually rising trend from the second half (I am not sure about all commodities).

        From my comment above:

        Goldman Sachs which was mentioned as forecasting $20 oil, is actually projecting $40 by mid-year as the base case scenario. They say that under certain conditions prices may drop to $20, but only for a short term. Ed Morse from Citigroup and Daniel Yergin from IHS have also recently said that current prices are unsustainable and that there will be an upward correction in the second half of the year.

        And it seems that this view is shared by many oil analysts and experts, including the EIA. But the majority is projecting a relatively slow recovery in oil price, unlike the V-shaped rebound in 2009.
        While I know that consensus oil price forecasts are rarely correct, I concur with the view that by the end of this year prices will be higher than today, 2017 will be better than 2016, and 2018 better than 2019.

  23. dclonghorn says:

    Nexen’s Long Lake oil sands facility had an explosion at a compressor last Friday. One man was killed others injured. This 50,000 bopd project has been shut down for an indefinite time.

  24. Pat says:

    There’s something I don’t understand about SA protecting its market share at the expense of price. According to an IEA item written a few days ago (https://www.iea.org/oilmarketreport/omrpublic/), global supply will exceed production by 1 million barrels in 2016.
    So, all SA needs to do is reduce production by 1 million bpd to send prices shooting back up and stop the rapid depletion of their financial reserves. What do they care about protecting a mere 1 million bpd in market share? As stated above, OPEC has gone well past its peak and it would only be a matter of a 2 or 3 short years before SA would again regain that market share. Let’s not forget also that there has been massive underinvestment from the big exploration companies for the last few years which is guaranteed to have a knock-on impact in the near future – again guaranteeing that SA will regain its market share in the medium to short term.
    Something is afoot, particularly when now they also want to get western interests investing in their oil refining industry.
    If this was a poker game I’d say there’s a major bluff being played here.

    • likbez says:

      Protection of the market share is just a smoke screen for dumping or “undercutting”. They essentially give a discount for their oil for each region from Brent price effectively putting price tag on each barrel. This way they drive price down even without exporting any more barrels. You can get much farther with a kind word and a gun than you can with a kind word alone.

      Actually their exports are close to flat y-o-y ( 2013 7.36; 2014 7.11; 2015 7.4).

      The price plunge represents a huge fiscal headache for the Saudi royal family (they can balance the budget only at $90 or higher) so why they are doing this is an open question. They are depleting their foreign currency reserves really fast to the tune of $100 billions a year.

    • Watcher says:

      So, all SA needs to do is reduce production by 1 million bpd to send prices shooting back up and stop the rapid depletion of their financial reserves.

      Maybe prices would not shoot up if they did that.

      • Jef says:

        “Maybe prices would not shoot up if they did that.”

        …and they would be out $30 million a day, after 10 days or so that becomes a sizable amount…but I guess I didn’t need to say that did I?

      • 3 to 1 odds they do shoot up.

  25. Jeffrey J. Brown says:

    Re: EIA Liquids Consumption Data and Natural Gas Production Data

    Following is a copy of an email I sent to a couple of different EIA contacts, who are usually responsive, but so far I haven’t heard back from them. Anyone have any info on when, or if, the EIA will update this data base, or if there is an alternative source, especially for liquids consumption data?


    Do you know when, or if, this data base will be updated with 2014 annual petroleum consumption data and with 2014 annual gas production data?

    Or is there an alternative EIA data base in an Excel format?


    Jeffrey Brown

    • AlexS says:

      U.S. Petroleum and Other Liquids Consumption (mb/d)
      source: EIA STEO January 2016

    • AlexS says:

      Year-on-year change in US petroleum and other liquids consumption

    • AlexS says:

      Y-o-y change in 4-week average U.S. gasoline consumption

      • Jeffrey J. Brown says:

        I’m looking for international liquids consumption data, e.g., Saudi Arabia, and international gas production data. The title of the EIA website I linked to is: International Energy Statistics.

        • AlexS says:

          My apologies.
          Ron can delete these posts

          • Jeffrey J. Brown says:

            No problem, but I do find the EIA outlook for US natural gas production rate to be interesting, given the collapse in the US total rig count.

            Assuming a 24%/year rate of decline in existing US gas production*, the US has to put on line about 17 BCF/day of new production per year to maintain current production. Based on 2013 EIA data (as noted 2014 data not available), 17 BCF/day exceeds the dry gas production of every country in the world, except for the US and Russia. In other words, to maintain stable output, the US has to put on line, in one year, more dry gas production per year than the 2013 production levels of every country in the world, except for the US & Russia–with a collapsing US rig count.

            Here is the EIA data table for 2013 and 2014 international dry gas production, in thousands of BCF/year (as noted incomplete for 2014):


            17 BCF/day is 6.2 TCF/year (6,200 BCF/year). 2013 dry gas production numbers for three countries:

            Iran: 5.7 TCF/year
            Qatar: 5.6
            Canada: 5.1

            So, I estimate that in order to maintain current gas production, the US has to put on line, in one year, more gas production than the total 2013 gas production from any of these three countries–with a collapsing rig count.

            *Supported by the observed 20%/year net rate of decline in Louisiana’s marketed gas production from 2012 to 2014 (net decline being the decline rate after new wells were put on line)

            • Jeffrey J. Brown says:

              Waiting for high decline rates to have an effect on US gas production has been like “Waiting for Godot,” but on the other hand we have not recently had a sustained total US rig count in the 600 range.

              Doesn’t this represent a clear and present danger to the US economy next winter, or I am I missing something?

              • dclonghorn says:

                Your assumed 24% decline rate is to high. While some new shale wells will decline about 70 % in their first year the average rate of decline decreases or flattens as they are produced longer. There are also old conventional wells which decline very slowly. Some Hugoton wells have been producing over 50 years and decline very slowly.

                • Jeffrey J. Brown says:

                  The 24%/year rate of decline is from Citi Research, and as I noted, after the rig count in the Haynesville Shale Gas Play showed a very large decline, total marketed gas production in Louisiana, from a mix of conventional and shale gas sources, fell at a net rate of 20%/year. In other words, the gross decline rate from existing wells in 2012 and 2013 in Louisiana was significantly in excess of 20%/year.

                  The referenced 24%/year rate of decline would be the gross rate of decline from existing wells in the absence of new wells, and yes I am familiar with hyperbolic declines, but the question is how much new gas do we need to offset declines from existing wells in 2016 and 2017?

                  • dclonghorn says:

                    What we have nationally, in nat gas production is a combination of two very different types of production. There is a lot of established conventional production which has been producing for very long times and much of it has very low decline rates. I don’t have an average number, but from what I remember about that type of well, it might be in the ten percent area. Contrast that with reported average first year declines of 70 percent for shale. Because of this wide variation, I don’t think you can extrapolate an average rate from one group of wells to another, especially when you don’t have good data on the nature of the wells.
                    I do agree with the overall direction of your comment, ie we are probably going to find ourselves running short of nat gas sooner than most expect.

                  • Jeffrey J. Brown says:

                    . . . . two very different types of production

                    That’s my point about Louisiana, which showed a two year 20%/year net rate of decline in production.

    • AlexS says:

      US marketed natural gas production (bcf/d)

      • AlexS says:

        US total marketed and dry gas production (bcf/d)
        Source: EIA STEO January 2016

  26. R Walter says:

    Remember the energy crisis during the late 70’s when President Carter held the office?

    The drunk Nixon resigned because he would walk up and down the halls of the White House talking to former presidents pictures hanging on the walls while drinking an alcoholic beverage. Any idiot can be elected president, and any idiot will be.

    Sarah Palin endorsed Donald Trump, uff da looey. The blind leading the dumb right there. I digress.

    What was President Carter’s solution to consume less oil?

    Set the speed limit to 55 mph, use more coal, set the thermostat in the White House to 65 degrees to burn fewer hydrocarbons. He even donned a sweater and had a few evening chats with the home folk. What a waste that was.

    Then Ronald Reagan was sworn into office and somehow Libya was a bad guy, stealth bombers attacked Gaddafi, since then, it’s been even more war, now the dogs of war are snarling and getting vicious. It has been setback after setback, pyrrhic victories in all of their glory, all for more of the same old same old, and it isn’t getting any better. More yet to come.

    The world has gone gonzo! Begining with a foot of snow in Washington, DC starting some time tomorrow, the entire world will have to stop turning!. Frosty the Snowman makes a triumphant return! har

    Natural gas is a bargain, you can turn up the heat on a cold day.

    The price of oil in Japan today is 22.90 USD per barrel. 500,000 metric ton delivered to Japan everyday!

    The yen needs to strengthen.

    • Clueless says:

      “Then Ronald Reagan was sworn into office and somehow Libya was a bad guy, stealth bombers attacked Gaddafi,”
      Actually, “somehow” the Lockerbie (sp?) bombing happened that brought down a British passenger jet killing all who were aboard. It was traced to terrorists from Libya. Libya ended up paying reparations to the survivors. Thanks President Reagan!

      • Ronald Deagan says:

        Well I’m sure the dead Libyians have deserved to die more than those in the jet, didn’t they? An eye for an eye, whose eye ever that is.

        And Afghanistan was bombed to shit and many more died in the process than at 9/11. Worth it since they’re on the other side, who cares.

  27. oldfarmermac says:

    We have folks accusing each other of being true believers. The BEST I can say about this is that at least no matter how great the disagreements, both sides DO BELIEVE in true believers.

    Now there is a simple way to tell the difference, in principle. In practice it is not at all simple, because it requires the possession of a mind satisfactorily fortified by a sound knowledge of scientific and technical facts and theory.

    If you possess such knowledge, you can tell the difference as easily as you can tell doo doo from perfume.

    If you lack it, well, you lack it, and are subject to being led around by the nose, by advocates of either side.

    But even then, there is hope, for you can go to various people you respect, and ask them for their opinion.

    I suggest that if the particular question you have in mind concerns the effects of air pollution on your health, you ask a physician, or check the websites of universities with medical schools.

    If you want to know about resource wars, there are tons of books in libraries, but reading enough of them to get a good understanding of resource wars will take a few evenings.

    If you think oil, coal, and gas will always be plentiful and cheap, I suggest you read a history of the oil industry, or the coal industry, and an introductory geology text book.

    You can either think for yourself, or you WILL BE taking the answers to most important questions as a matter of faith, for the rest of your life.

    It is also critical that you remember that while a person may be wrong about one topic, he may be quite well informed and even a great expert in another. A person such as Javier can seriously believe that the consequences of warming are likely over emphasized, while other environmental issues that might be more critical are underemphasized. Note that he DOES NOT deny that warming is taking place, he just thinks it will be substantially less than modeled.He seems to have a sound understanding of at least the abc’s of biology.

    Fernando might be obsessed with the endangered species of politician known as the communist,but he might be right that there are still enough around in a few places at least to represent a potential threat. I have not noticed if he has said any thing stupid in respect to the oil industry, although he is pretty much down on renewables because they are expensive. Well, he does say the price of oil is going up, sometime back he mentioned a hundred fifty bucks a few years down the road as his own opinion.

    So – a person may be a shill or a true believer , or an honest partisan.

    The shills and true believers generally give away their game by sticking on message like stink on doo doo.

    A fossil fuel shill will SELDOM ever mention depletion, or rising future ff prices, etc.

    An honest renewables advocate will readily admit that the necessary eventual transition to renewable energy is going to be costly and troublesome, and that BAU as we know it today is not going to be possible.

    I don’t know of any renewables advocates in this forum who talk pie in the sky, although one or two approach that level once in a while.

    Everybody can judge for themselves.

  28. Caelan MacIntyre says:

    Carried over from here.

    “Don’t let the perfect be the enemy of the good.” ~ Dennis Coyne

    Don’t let aped quips be the enemy of critical thinking, (such as how superset contexts [faulty social structures] can subvert subset contexts [technological responses, often caused by said social structures]).

    In other words, learn to realize when and where our (relatively-superficial) efforts (‘technofixes’) can be in vain because of some (ignored) underlying fundamental (i.e., coercive/undemocratic/elite/plutarchic social structures).

    The problem for civilization is not a technological problem to surmount as such. (And we’ve had enough of their previous collapses/declines to learn from, haven’t we? So what’s the problem? What’s the stumbling-block?) It is a ‘psychosocial-structural’ problem, first and foremost.
    That you might question, whether accurately or not, my own response as Permaea– which there is no onus on me to adequately satisfy to make that point– is irrelevant to that point, incidentally.

    If we cannot solve or provide adequate responses to such issues as poverty, inequality and lack of real democracy, etc., then our failures in those regards will create or correlate to serious drags on our successes in solving our technological problems, and, again subvert those efforts and render many of them in vain.

    Why do you think we have squandered our natural oil wealth or have not already created a human habitat on Mars? Why do you think we even have peak oil/civilization sites like these?

    What does KSA stand for? Some kind of kingdom? What’s that? Is that, like, a place with kings and princes ‘n’ stuff?

    “I can only show you the door…” ~ The Matrix

    • Dennis Coyne says:

      Hi Caelan,

      The problems that beset society are both social and technological. I would prefer gradual change towards a more perfect society, you prefer something else. That is fine. I can focus on different problems than you, and will try harder to ignore what you say.

      • Jef says:

        So the real physical constraints hammering global civilization are just something that we can control by “preferring” one outcome over another?

        Tell me another one before bedtime….pleeeezzzzzz!!!!

        • Dennis Coyne says:

          Hi Jef,

          No, the scarcity will cause prices to increase and people will use expensive resources more sparingly and will move to substitutes where possible.

          Caelan would like the system to change radically, a revolution if you will. I think gradual change ( as gradual as physically possible given resource contraints) is easier for society to adapt to. Change will definitely occur and generally society will resist those necessary changes, but physics always wins and society will make the changes required eventually.

          Giving in to physical reality and making the necessary changes to attempt to make things work is what I hope will happen, resisting that change and clinging to an impossible previous way of doing things (given resource constraints) is a recipe for disaster.

          For some reason people think that I believe a transition will be easy to accomplish. Nothing could be further from my position, except the position that there is no possible way that a transition can ever be accomplished.
          My position is a middle ground somewhat similar to that of Old Farmer Mac and Wimbi and Fred.

          • Caelan MacIntyre says:

            Dennis, we, and therefore our social setups, are all subject to the laws of physics and chemistry and biology.
            Insofar as ‘the State’ may be what was to inevitably emerge, so other things might emerge from it or its ashes. It could be something like Permaea or maybe the State jumps the gun and morphs into something with greater democracy more in line with direct or pure democracy– maybe something like Fresco’s Venus Project.

            In any case, it’s either something unlike and far better than the current State or we go back to little tribes, and therefore, relative anarchy again anyway. So, any way we slice it, anarchy seems to be our ultimate setup and fate. We don’t seem to be able to exist within these large-scale centralized undemocratic elite State structures as they are– at least not for very long. They seem to constantly crash or erode our civilizations.

            I once mentioned– perhaps here– that we are not ants and therefore don’t need a queen. But if The Queen– say, Queen Elizabeth– insisted, it might be possible to still run things kind of democratically or at least fairly or equably. But here’s the rub: She would have to behave like a real queen ant and relinquish her disproportionate privileges. She’d have to stay in Buckingham palace all day and night and pop out kids while the workers arrived from the outside to feed and take care of her. And her clone-like offspring would have to be workers, drones or soldiers or somethings like those. They couldn’t fly around the world in helicopters on the taxpayers’ dimes. But the problem with the human queen, and human elites in general, is that they want to eat their cakes and have them too. But nature doesn’t seem to allow, for very long, more complex organisms like us to have elites that eat their cakes and have them too, so humans seem to collapse their social orders after a time. (But maybe ants do, too?)

            I find it interesting that BC recently mentioned ants as being the survivors into the future or something like that. Ants seem to have a successful social structure, but, despite leaning toward it, we appear too complex to go all the way.

      • Caelan MacIntyre says:

        “I would prefer gradual change towards a more perfect society, you prefer something else.” ~ Dennis Coyne

        This appears another logical fallacy that conflates ‘socio-structural’ change with rapid change; and technological change with gradual change.

        Just because Permaea, for example, might have a roadmap or ‘vision’ as it were, doesn’t necessarily mean that getting there is going to somehow be rapid, and I’ve suggested many times already elsewhere that I’ll likely be long gone if it gets any traction at all.
        Same thing with technological change. Change can be unpredictable and counterintuitive. Besides, what does rapid change exactly mean?

        Incidentally, and since we are on about change and government, if you don’t want a few million anarchic groups of roughly 1000 each as you put it, another option I’ve already suggested is to simply make current so-called government truly democratic. How hard is that? We already seem to have the ‘democracy-facilitating’ technology– Loomio and Efficasync for two examples– and I mention them in Permaea’s manifesto as well.

        In any case, and yet again; if the social is a superset of the technological, then if the social– say, the foundation of a society– is not that which is focused on, then technological change will likely merely be like building on a crumbling or otherwise fragile foundation. This entire culture in many regards is astoundingly already ass-backwards. So why argue for its continuation in that regard? PV’s and EV’s, etc., while sort of fine and nice in a decontextualized sense, are just clueless shiny whitewashed window-treatments on a shaky building that isn’t even standing plumb; or like those shiny-new Chinese ghost cities that are built without any real democratic input and now sitting relatively empty and on the way to unsalvageable decay. That’s what you get. Tragedy. Don’t be part of the tragedy, Dennis. And now, through hardly any breathing on the search button at all, I also have the University of Maryland to back up some of my contentions in these regards.

  29. Greenbub says:

    “Oil surges up on ‘oversold’ conditions, Libya terminal attacks ”


    This is the first time something negative has actually been viewed as negative in a long while.

    • Ves says:

      LOL..yeah.. remember couple of years ago if someone accidentally farted at the Riyadh airport the price of oil would move $5 upwards that day. These days whole ME is blowing up and even bombs are falling on SA proper along Yemen border but oil is just going in one direction – down.

    • AlexS says:

      Oil indeed was oversold, and this is the key. Violence in Lybia was just a purpose to move oil prices slightly up. Lybia is currently producing less than 400 kb/d, and nobody expects it to increase output this year.

  30. Clueless says:

    I apologize if this has already been posted. Yesterday, Devon Energy called a meeting of their employees to the Cox Convention Center in OKC. They said that there were going to be layoffs that they were working on. They said that the companies with weak finances had taken significant steps to cut back, and now, with these low prices, strong, financially solid companies, such as Devon, were going to have to cut.
    So, the cuts are going to be significant. If it were only going to be a few hundred, they never would have called a company-wide meeting. If effect, they were warning everyone “do not buy a car, a house, or any other major purchase until we let you know that you are safe.”

    • Longtimber says:

      Search found this:
      “To maintain our financial flexibility while oil and natural gas prices remain weak, Devon continues to thoroughly examine all options to lower the company’s cost structure,” the company said. “After careful consideration, it’s clear that layoffs will be a necessary part of the company’s near-term cost-management efforts.”
      Devon didn’t say how many people would be affected, but that a majority of the layoffs will come by the end of the first quarter.

  31. Jimmy says:

    A new post from Matt.


    Notice the Saudi exports.

    For what it’s worth (very little) I think 2016 will be the year we really start to get hammered by the peak oil/climate change predicament. By 2023 it’ll be ‘3 chickens for a wagon wheel’ and well on the way to something that resembles 13th century England.

  32. stevek says:

    If oil and gas prices stay low this will cause big jump in demand. Also electric car sales falling like a rock.

    Demand going up. Lots of SUVs being sold here. Chinese driving way more due to cheap gas.

    Now is the buying time of a life time for oil companies that have fiscal stamina. Those in good fiscal shape will clean up when the weak go out of business.

    Dump all your money in oil stocks and wait it out !!!

    Everyone that owns an electric car feels like a fool right now, although many will not admit it.

  33. stevek says:

    Saudi is pumping as much as it can, trying to drive the rest of em out of business. So they can have their one last hay day, before the wells start drying up. They want to make the most of next decade. BUT they didn’t expect prices to fall THIS much. So it’s a big game of chicken now.

    • Jimmy says:

      I tend to agree. I think KSA knew they were going to peak soon so they maxed out the infill drilling and dropped the price for a year or so. It’s s psychological game. In the future they might threaten to raise production to psyche the market, and maybe they will briefly, but I think this is KSA’s last kick at the can and they know it. They’ll decline fast IMHO as the infill drilling has resulted in a longer plateau with a little burst up at the end but the decline rates will be steep.

      FYI the ruling clan does not think in terms of ‘national interest’. They think of their own personal/clan interest. Once they’ve squeezed the land dry they’ll retire to southern France and leave the mess behind.

  34. AlexS says:

    Interesting seasonal patterns in Saudi Arabia’s oil consumption. Demand usually surges during the summer as large quantities of crude and petroleum products are burnt to meet the increases in electricity consumption for air conditioning.

    • AlexS says:

      Lower seasonal demand in the later part of the year allowed Saudi Arabia to increase exports of crude and refined products. It reached record-high volume of 8.9 mb/d in November.

      from Bloomberg:

      Saudi Oil Exports at Seven-Month High as Refineries Return


      Saudi Arabia, the world’s largest crude exporter, shipped the most oil in seven months in November in a sign that overseas refineries were getting prepared to put plants back on line after seasonal maintenance.
      Saudi shipments rose to 7.72 million barrels a day, the highest since April, from 7.364 million in October, according to data on the website of the Joint Organisations Data Initiative based in Riyadh.
      “This is exactly what they’ve been doing for the last year and a bit, whenever there is demand for their crude they will export,” Amrita Sen, chief oil market analyst at Energy Aspects Ltd. in London, said by phone.
      Refineries are usually taken off line for repairs in September and October. Refined products exports from Saudi Arabia rose in November, to 1.18 million barrels a day from 1.09 million, according to JODI.

      Saudi Arabia crude oil and refined product exports (mb/d)
      source: JODI

  35. Sarko says:

    ICYMI – Saudi Arabia says $30 oil is ‘irrational’
    Comments from Khalid al-Falih, chairman of state oil company Saudi Aramco
    The market has overshot on the low side and it is inevitable that it will start turning up”
    He predicts higher prices by the end of the year
    Also reiterated that Saudi Arabia would not cut supply unilaterally, nor would they make way for rival producers
    Saudi Arabia has said it would consider production cuts if other Opec members participated and if the cartel was joined by the largest producers outside the group, such as Russia.

  36. SatansBestFriend says:

    Just returned from my vasectomy.

    Got the boys on ice as I type.

    Jeff can we see an elm scenario with the following assumptions:

    1) Current ELM assumptions.
    2) OPEC declining
    3). Rational hoarding strategies by exporters that now realise world oil production is in terminal decline.
    4). Putin using energy power to advance geopolitical goals.


  37. The Wet One says:

    I post the following link since the 4th last member of this species just died: http://www.abc.net.au/news/2016-01-21/vietnam-sacred-turtle-in-hoan-kiem-lake-dies-communists-gather/7105108 which seems like a worthwhile item to share.

    While there is an attempt to breed a pair in China, it hasn’t worked over the last 7 years: https://en.wikipedia.org/wiki/Yangtze_giant_softshell_turtle

    Personally, never heard of the creature until today. I was sad enough to learn of another creature (one held to be sacred by the Vietnamese, not that that helped the creature at all) that is essentially extinct. I nearly cried. But what’s the point of that? This is just the world we live in and no species was ever going to last forever. That’s just the way it is.

    Carry on.

  38. Jeffrey J. Brown says:

    WSJ: Fears of Venezuela Default Grow Amid Drop in Oil Prices
    Country’s ability to pay creditors seen as increasingly in doubt

    (Do a Google Search for access)

  39. aws. says:

    Demand destruction

    How Energy Efficiency Can Help Manage the Duck Curve

    As an example, in a “duck curve” world, air-conditioning efficiency will no longer be primarily about reducing energy use during the hottest afternoon hours. Instead, grid operators and building managers will need to collaborate on new approaches that use the building like a thermal battery to store cooling energy and coast through the neck of the duck, reducing loads during the most valuable periods.

    You’ll need to do the same in cold climates to manage the late afternoon ramp up in energy demand. Arguably, it is easier to do with winter heating demand. Overshoot the temperature settings in the afternoon, and have the indoor temperature drift back down (nice and slow in a super-insulated building) to reduce the steepness and top of the curve.

    • oldfarmermac says:

      I have been posting comments about using smart appliances and smart houses to reduce peak loads for a long time now, here and elsewhere, and I am by no means the only person to be doing so.

      Thermal mass is dirt cheap added to new construction, and used properly can also serve as a wonderful way to reduce the danger of fires spreading, and as additional sound proofing.

      If I lived in a place where I could get dirt cheap electricity most afternoons, I would build a house with an extra twenty to thirty tons of concrete, made mostly with sand and gravel, incorporated into the floor and walls, inside the insulation envelope, in such a way that ambient air can circulate over it.

      Such a house would be very slow to heat up, and very slow to cool off. With ample insulation, and good overhangs, and good doors and windows, it would most likely not even NEED any juice for air conditioning after five pm or so, maybe even as early as three pm.

      Considering the cost of new appliances these days, adding the capability for them to run when electricity is cheapest will be a trivial expense, and the signal for them to do so can be piggybacked right on the grid supplied ac coming into the house.

      An internet connection is not strictly necessary.

      A Powerwall or similar battery would be a very nice thing to own, but in a typical generously sized Yankee house, a really well made hundred gallon or two hundred gallon water heater would be a MUCH better deal, in terms of saving money on electricity, if you could get your juice at a peanut rate during sunny and windy hours. Tempering valve mechanisms, which allow water heaters to store really hot water, but deliver water at a safe temperature even full on hot, no cold, are affordable and reliable, and a really big water heater is more easily super insulated per gallon of capacity, and can be built to last far far longer than a smaller unit is as well, for the same price per gallon capacity.

      A two hundred gallon water heater, set at one sixty degrees F , would provide more than enough hot water for any body but the Duggars without EVER needing to draw any current during peak load hours, or any current at all, except at times wind and solar farms are producing well, for days and weeks on end.

      The average household in the USA uses about three thousand kWh per year heating water, and pays anywhere from around three hundred dollars to pretty close to five hundred bucks for this juice.

      A two hundred gallon water heater can be built to last twenty or thirty years before rusting out, and being a commercial type unit, you can safely assume small parts such as anodes, thermostats, heating elements, etc will always be available for it.

      AND it can be set up with a small fan and radiator attached, so as to be used for back up heat as well, during hours when heating demand is peaking. I had a neighbor some years ago that had such a set up on his gas fired water heater, that supplied his entire heating needs, without a separate gas furnace. Note this was not a gas furnace that made hot water, but a gas fired hot water heater rigged to supply hot air via a small radiator, circulating pump, fan, and thermostat.

      • wimbi says:

        Yep. Thermal storage is easy. We do all of above, but with a mere 60 gallon tank and 140F, which is not so hot it needs a tempering valve, except on shower where guests might be startled.

        A water coil in our wood stove chimney does more than enough for the heat supply, so much that I put little heat exchanger in bathroom which goes on when water too hot and blows excess into room.

        Tons of easy stuff to do to reduce absurd energy piggishness of USA.

        • oldfarmermac says:

          Damned right, WIMBI!

          Note that the great state of TEXAS , HOME of the redneck republican party anti environmental community, if there IS a state in the Union that can be so described, went forty percent on wind for almost a day, a few days back, WITHOUT ANY GRID ISSUES.

          It CAN be done, and it can be done in such a fashion that even the average Joe Sixpack can call on his plumber and electrician, and giterdone simply by signing a check, and SAVE MONEY over the long term by doing so.

          The reason I mention hundred and two hundred gallon capacity water heaters, is that the bigger the heater, the LONGER you can go on the hot water supply, during a period when the wind and sun fail to cooperate and supply you with fuel free electricity.

          AND the MORE heat you can divert from the water heater, so as to supplement the grid , at times of peak demand for domestic space heating.

          Weather forecasts get to be more reliable every year, and soon we will be able to count on knowing when the wind will return, after a slow spell, and when the clouds will disperse, after a cloudy spell. If we know the wind and sun are going to cooperate next week, we can then pull nearly all the stored heat out of that big old water heater,to supplement the space heating, while knowing we can replace it using renewable juice. .

          If fortune smiles on me, I will be installing a few thousand watts of personal pv on my place, sometime within the next four or five years. The only reason I am still holding off is that the cost of pv, in terms of performance per dollar, is still dropping fast, and I have not yet gotten all my ducks in a row in terms of making PROFITABLE investments in efficiency.

          I am also holding off for a couple more years, maybe a little longer, before I replace my ancient ’91 four by four truck, which is a real gas hog. I drive it very little,using it only on essential trips when the roads are slick , as today, or to haul a load of firewood or building materials etc.

          In two or three more years, I will be able to buy a much more fuel efficient four by four, for a modest price, as the mid two thousand models get more age on them.

          But that old Chevy owns a piece of my heart, and it will still have a place in the backyard, and still be used on the farm, to haul in the firewood, and haul out the fence posts, and the fencing, and take friends on the grand tour of the place, and so forth.

          But I WON’T be using it to check on the cows and fences, unless the weather is rotten. I will use my Honda Fourtrax ” off road utility ” vehicle for that , because it is TEN times more fuel efficient than the truck, at least.

          • wimbi says:

            Easy stuff. Here’s another one.
            Many people, including me, heat with wood. Burning wood puts CO2 into the air, and even tho it came from the air, we can do better.

            Part of my thermal machine hobby is making wood stoves. The latest one does not burn the wood at all, it cooks it in an air-tight oven. That cooking creates a good burning gas, and carbon.

            I take the gas and store it in an inverted tank floating in antifreeze, outside (lots of carbon monoxide in the gas).

            I then use the gas for anything I would use propane for, including cooking the wood. And the carbon (charcoal) is a nice solid that can be stored or burned or put into the ground.

            So all this results in using plants to get energy (gas) and take carbon out of the air – CCS. Easy. Anybody can do it. Right now- no big research program required.

            I really like this whole arrangement. Starts instantly, never smokes, can be controlled just like an ordinary gas heating system. And stores lots of energy for use on demand. No intermittency.

            BTW, none of above is original with me, thousands of people are playing around with the same idea.

            OK, so why haven’t I put it on the web? Lazy, mostly. And fear from wife that somebody, somehow, will kill themselves trying to copy it and we’ll get sued. Surely a possibility. All the stuff I do can be fatal, if you really are unclever about it. This one is nasty because of the monoxide.

            So, help. Some legal eagle gimme a magic disclaimer that survives any possible lawsuit.

  40. aws. says:

    Some really nice charts from BNEF. Alan (Islandboy) may have posted this last week. Worth another look.

    Clean Energy Investment – by the numbers – end of year 2015

    By Luke Mills and Angus McCrone, Bloomberg New Energy Finance, January 13, 2016

  41. Peter says:

    Export Land Model

    and how badly you can get it if you do not have the right data.

    On video 35 minutes. ” In 2005 Saudi Arabia was 58% depleted, when Texas peaked it was 57% depleted”


    That is the first of a line of blundering errors. You many notice that for Russian oil production he mixes up former Soviet Union production with Russia. Former Soviet Union production today is 14 million barrels per day, he has a peak of less than 10 million barrels per day in 2009.

    In the last 10 years Saudi Arabia’s production has gone from 11.4 million barrels per day, down to 10.2 when they obviously cut production due to the global financial crises and drop in demand. Today they are producing 12 million barrels per day.


    I think it safe to say Jeffrey Brown does not have a clue what Saudi Arabia Ultimate recoverable is, according to him Saudi Arabia should have been in decline for the last 8 years at least.

    You will also notice today Iraq is top 5th oil exporter, why was it not mentioned, because Jeffrey cannot predict even what the top 2 would produce in 5 years time let alone number 6 or 7.

    Why do people like Jeffrey Brown get things so wrong? Simple they only listen to people who tell them they are right and never to people who point out their errors.

    Everyone watching the video can see how wrong he has been and should take his future predictions with a big pinch of skepticism.

    • Jeffrey J. Brown says:

      As noted below, there are some things I got wrong, but where I have so far been right is in regard to declining net exports, which after all, is the whole point of the analysis I have been doing since 2005.

      In regard to the Russian data, Sam Foucher compiled the data bases, and he was very aware of the difference between the Soviet Union, Russia and the Former FSU Counties. When he did the work many years ago, Sam believed that he found a Russian only production data base (total petroleum liquids).

      Note that you appear to be conflating Texas crude only production numbers with Saudi Crude + Condensate (C+C) numbers (9.6 million bpd in 2005) with recent Saudi total petroleum liquids numbers (around 12 million bpd circa 2015).

      Based on EIA data (with BP consumption data for 2014), Saudi total petroleum liquids + other liquids production was 11.5 million bpd in 2005 and 11.6 million bpd in 2014. Because of rising domestic consumption, Saudi net exports fell from 9.5 million bpd in 2005 to 8.4 million bpd in 2014 (total petroleum liquids + other liquids). The EIA shows 2005 Saudi consumption at 2.0 million bpd; BP puts 2014 consumption at 3.2 million bpd (EIA consumption data for 2014 not yet available for Saudi Arabia).

      EIA data put Saudi production at 11.9 million bpd for the first half of 2015. If we assume 2015 annual production of 12 million bpd and no change in consumption, Saudi net exports in 2015 would be at about 8.8 million bpd in 2015, versus 9.5 million bpd in 2005. In other words, it’s almost certainly true that Saudi net exports have been below their 2005 rate for 10 straight years.

      As annual Brent Crude Oil prices approximately doubled from $25 in 2002 to $55 in 2005, Saudi net exports increased from 7.1 million bpd in 2002 to 9.5 million bpd in 2005 (total petroleum liquids + other liquids). As annual Brent Crude Oil prices doubled again from $55 in 2005 to the $110 range for 2011 to 2013 inclusive, Saudi net exports fell from 9.5 million bpd in 2005 to 8.7 million bpd in 2013 (and to 8.4 million bpd in 2014). At the 2002 to 2005 rate of increase in Saudi net exports, they would have been net exporting about 20 million bpd in 2013.

      In regard to what I call GNE (Global Net Exports of oil, i.e., combined net exports from the 2005 Top 33 net exporters), GNE increased from 39 million bpd in 2002 to 46 million bpd, in response to the first doubling in annual Brent Crude oil prices, but then fell from 46 million bpd in 2005 to 43 million bpd in 2013, in response to the second doubling in annual Brent Crude oil prices. At the 2002 to 2005 rate of increase in annual Brent Crude oil prices, GNE would have been at about 71 million bpd in 2013.

      10 years ago, this month, i.e, January, 2006, The Oil Drum posted a short essay where I explained a simplistic model that I developed to help me understand what happens to net oil exports given an ongoing production decline in a net oil exporting country, the Export Land Model (ELM). In the essay, I focused on the top three net exporters at the time, Saudi Arabia, Russia and Norway. Their combined net exports rose from 15.2 million bpd in 2002 to 19.3 million bpd in 2005. At this rate of increase, they would have been at about 36 million bpd in 2013, but their combined net exports fell from 19.3 million bpd in 2005 to 17.2 million bpd in 2013. Here’s a link to the original post:


      Here is the concluding paragraph from 10 years ago:

      As predicted by Hubbert Linearization, two of the three top net oil exporters are producing below their peak production level.   The third country, Saudi Arabia, is probably on the verge of a permanent and irreversible decline.   Both Russia and Saudi Arabia are probably going to show significant increases in consumption going forward.  It would seem from this case that these factors could interact this year produce to an unprecedented–and probably permanent–net oil export crisis.

      Clearly, there are some things I got wrong, e.g., recent Saudi and Russian production numbers, but there were clearly inflection points in both cases. For example, Saudi C+C production increased from 7.6 million bpd in 2002 to 9.6 million bpd in 2005, and at this rate of increase they would have been at about 19 million bpd in 2014. In reality, they were only slightly higher than 2005 in 2014, at 9.7 million bpd, and the average annual production rate for 2006 to 2014 inclusive was 9.2 million bpd, versus 9.6 million bpd in 2005. (2015 production appears to be on the order of about 9.9 million bpd).

      However, what I got right (so far at least) was the post-2005 decline in key net export numbers.

      The combined Top Three referenced in the article showed a post-2005 decline in net exports; Saudi Arabia showed a post-2005 decline in net exports and the Top 33 net exporters (GNE) showed a post-2005 decline in net exports.

      Following is a “Gap Chart” showing the growing gap, through 2012, between actual post-2005 GNE numbers and where we would have been at the 2002 to 2005 rate of increase. In 2013, the gap increased to 28 million bpd.

      As I have done additional work on net exports, I found that the “Good News” is declining net exports. The Bad News is the ferocious rate of decline in remaining post-2005 Global CNE (Cumulative Net Exports).

      Finally, you referenced the Export Land Model, which is really just a set of mathematical observations. Are you arguing that the following is wrong?

      Given an ongoing, and inevitable, decline in production in a net oil exporting country, unless they cut their internal consumption at the same rate as, or at a faster rate than, the rate of decline in production, it’s a mathematical certainty that the net export decline rate will exceed the production decline rate and that the rate of decline in net exports will accelerate with time.

      Furthermore, if the rate of increase in consumption exceeds the rate of increase in production in a net oil exporting country, net exports can decline, even as production increases.

      As best that I can tell, as a visitor from Fantasy Island you appear to be arguing that any and all production declines are due to voluntary reductions in production. And as best that can tell, you are arguing that the (2005) Top 33 net exporters showed a large voluntary increase in net exports from 2002 to 2005 (a rate of increase of almost 6%/year), in response to one oil price doubling, but then voluntarily cut their net exports from 2005 to 2013, in response to the second oil price doubling.

      (Note on data: For the (2005) Top 33 net exporters, I used an EIA data base compiled in 2014, with data through 2013 (still waiting on 2014 consumption data from EIA). There have been some data revisions since I compiled the data. I have incorporated the revised 2005 Saudi production number, given the size of the upward revision, but I have not otherwise updated the data base, since the 2014 data will hopefully be released at some point, which would incorporate prior revisions.)

      • Jeffrey J. Brown says:

        Re: Russia

        In the discussion thread following the original 2006 Oil Drum post, Sam Foucher (“Khebab”) and I had a number of discussions about Russian production, and after talking to Sam, I suggested that some point after 2007 we should see a very sharp decline in production. Clearly I was wrong, but on the other hand the post-2007 rate of increase in production slowed, versus 2002 to 2007, and Russian net exports have been on an “Undulating plateau” since 2007.

        Based on EIA data (total petroleum liquids + other liquids for production), Russian net exports increased from 5.1 million bpd in 2002 to 7.0 million bpd in 2007. At this rate of increase, they would have been at about 10 million bpd in 2013 (EIA 2014 consumption data not yet available, but the EIA shows that Russian production increased by 0.1 million bpd from 2013 to 2014).

        From 2007 to 2013 inclusive, Russian net exports have been within a range of 6.9 to 7.2 million bpd with an average value of 7.1 million bpd, versus 7.0 million bpd in 2014, based on the most recent EIA data.

        And virtually flat Russian net exports, combined with the post-2005 decline in Norway’s and Saudi Arabia’s net exports, contributed to the observed overall decline in (2005) Top Three net exports from 2005 to 2013. As I discussed, at the time of my Oil Drum essay, the (then) Top Three net exporters were showing a very strong combined increase in net exports.

        Or let me put it this way. If either Saudi Arabia or Russia had maintained their previous rates of increase in net exports, the combined (2005) Top Three net exports would have been up, not down in 2013, relative to 2005.

      • Peter says:


        You still appear to be utterly incapable of adapting your ELM model when you can clearly see a major net importer requiring 7 million barrels per day less imports.

        What on earth do you think those exporting countries would do with the 7 million barrels per day not required. Then add in Europe that cut consumption by another 2 million barrels per day?

        Taking into account increased demand form China, India etc, global production would have exceeded demand in most of the years since 2007. OPEC did restrain production and has only recently abandoned supporting prices in order to destroy US shale. Prices have fallen because export availability is far greater than export demand.

        A scenario for 2016 you got so wrong as to be painfully embarrassing.

        By now you stated oil prices should be over £400 per barrel, you could not be more wrong if you tried.

        • Jeffrey J. Brown says:

          Yeah, I guess I continue to have problems with an average oil price of $110 for 2011 to 2013 being indicative of weak demand for exports. Funny how the (2005) Top 33 increased their net exports from 2002 to 2005 at about 6%/year, as annual Brent crude oil prices doubled, but then decided to cut their exports from 2005 to 2013 as oil prices doubled again.

          As I mentioned, your basic Fantasy Island belief seems to be that all production and net export declines are voluntary.

          Regarding my oil price prognostications, I believe that I what I generally said was that I thought that we would see a series of oil price doublings, but because of demand fluctuations, the time periods between doublings were very uncertain. In retrospect, I think that virtually everyone’s oil price guesses have been wrong, including mine for a series of price doublings, with uncertain time periods in between.

          Having said that, we actually did see three approximate annual price doublings–from 1998 to 2000, from 2000 to 2005 and from 2005 to 2011/2013 (with some year over year declines along the way).

          But I suspect that we are just boring everyone at this point. I know I’m getting bored with yet another argument with a CC (Crazy Cornucopian).

          In any case, to repeat my question: Are you arguing that the following is wrong?

          Given an ongoing, and inevitable, decline in production in a net oil exporting country, unless they cut their internal consumption at the same rate as, or at a faster rate than, the rate of decline in production, it’s a mathematical certainty that the net export decline rate will exceed the production decline rate and that the rate of decline in net exports will accelerate with time.

          Furthermore, if the rate of increase in consumption exceeds the rate of increase in production in a net oil exporting country, net exports can decline, even as production increases.

          • Peter says:


            The United States and Europe required 9 million barrels of oil less. Do you think the exporters cut production as a response or not?

            If you answer this simple question we might get somewhere.

            • Jeffrey J. Brown says:

              I would agree that most developed countries cut their consumption, as many developing countries, led by China and India, consumed an increasing share of a post-2005 declining volume of GNE, which caused the post-2005 supply of GNE available to importers other than China & India to fall from 41 million bpd in 2005 to 34 million bpd in 2013, as annual Brent crude oil prices doubled from $55 in 2005 to $110 for 2011 to 2013 inclusive.

              Subject to their rates of change in production, some developed countries in this time frame showed declining net imports, e.g., the US, while some developed countries, e.g., the UK, showed increasing net imports–although in both cases high oil prices caused overall domestic consumption to fall, relative to 2005.

              Note that given an ongoing, and inevitable, decline in GNE, unless the Chindia regions cuts their net imports (CNI) at the same rate as, or at a faster rate than, the rate of decline in GNE, it’s a mathematical certainty that the rate of decline in the volume of GNE available to importers other than China & India (ANE, or GNE less CNI) will exceed the rate of decline in GNE and that the rate of decline in ANE will accelerate with time.

              This is exactly what we observed from 2005 to 2013, to-wit, as GNE fell at 0.8%/year, ANE fell at 2.3%/year, because the rate of increase in Chindia’s Net Imports (CNI) exceeded the rate of decline in GNE, i.e., Chindia consumed an increasing share of a post-2005 declining volume of GNE.

              Are you arguing that the following is wrong?

              Given an ongoing, and inevitable, decline in production in a net oil exporting country, unless they cut their internal consumption at the same rate as, or at a faster rate than, the rate of decline in production, it’s a mathematical certainty that the net export decline rate will exceed the production decline rate and that the rate of decline in net exports will accelerate with time.

              Furthermore, if the rate of increase in consumption exceeds the rate of increase in production in a net oil exporting country, net exports can decline, even as production increases.

            • Watcher says:

              Not following this subthread too closely but China and India increased imports by more than the US/Europe decreased (which doesn’t look close to 9 to me). Africa as a whole are nearly breakeven, their surplus (exports) have fallen.


            • Jeffrey J. Brown says:

              Incidentally, I have found that the price of a new Ferrari has caused me not to require one.

            • farmboy says:

              Peter the troll Why can’t you answer with a yes or a no. I think its time a little peeon like me answers your question.

              Anyone not smoking (well you should know what that would be, in your case), can see that the Industries, and consumers of the USA and Europe could not afford those 9 million barrels of oil at $100. Now we can not even afford them at $30. We are broke, our money is all gone and spent on every barrel we could buy at the price at any given time since 2005. Not only are we broke, we have even maxed out most of our credit to hold up our end of creating BAU. What more do you want us to do?

          • Jeffrey J. Brown says:

            Same consumption pattern shown on this chart continued in 2013 (Chindia & Top 33 increasing consumption relative to 2002, US consumption down relative to 2002). 2014 data incomplete, but by all accounts, Chindia’s consumption increased in 2014 and in 2015.

    • marmico says:

      The ELM exports forecast in 2015 for Saudi was ~5.8 mb/d. Actual is ~8.0 mb/d. Quit a miss.


      • Jeffrey J. Brown says:

        Sam’s outer limit (95% confidence interval) was about 8 million bpd for 2015, although I estimate that Saudi net exports in 2015 were in the vicinity of 8.8 million bpd.

        In any case, we predicted a decline in Saudi net oil exports, and we have seen a decline in Saudi net oil exports, but you guys are complaining that we didn’t nail the exact (lower) net export number 10 years later?

        So it goes with the CC’s (Crazy Cornucopians).

        • marmico says:

          Excuse me. Your narrative was based on the reference case.

          The ELM is an empirical failure. Both the #1 and #2 exporters are exporting greater quantities than the upper limit of the confidence intervals.

          • Jimmy says:

            Start your own blog marm and see if you can get some 10 year predictions nailed precisely. Idiot.

          • Jeffrey J. Brown says:

            Cognitive dissonance is a major factor among the CC (Crazy Cornucopian) visitors from Fantasy Island. The Export Land Model (ELM) is really just a set of mathematical observations, so given that, I think that the following is my favorite Marmico quote:

            The ELM is an empirical failure.

            Also, at the time, 10 years ago, that I outlined my little mathematical model, what I now call GNE (combined net exports from the 2005 Top 33 net exporters) were increasing at almost 6%/year. At this rate of increase, GNE would have been up to about 71 million bpd in 2013 (versus 46 million bpd in 2005). Here was the concluding sentence from my introductory ELM essay that was posted 10 years ago this month:

            It would seem from this case that these factors could interact this year produce to an unprecedented–and probably permanent–net oil export crisis.

            GNE fell at 0.8%/year from 2005 to 2013 (from 46 to 43 million bpd), and Marmico calls this, a swing from almost a 6%/year rate of increase to a decline of 0.8%/year, an “Empirical failure.”

            I can only conclude that the CC’s are incapable of accepting the following mathematical realities:

            Given an ongoing, and inevitable, decline in production in a net oil exporting country, unless they cut their internal consumption at the same rate as, or at a faster rate than, the rate of decline in production, it’s a mathematical certainty that the net export decline rate will exceed the production decline rate and that the rate of decline in net exports will accelerate with time.

            Furthermore, if the rate of increase in consumption exceeds the rate of increase in production in a net oil exporting country, net exports can decline, even as production increases.

      • Jimmy says:

        Hey Marm, It’s spelt quite not quit.

        For example:
        Jeff is quite intelligent.

        Marmico should just quit already.

        It’s called a dictionary. Try it out.

    • Jeffrey J. Brown says:

      Following is a normalized chart for the Export Land Model, assuming a production peak in the year 2000, with declining production and rising consumption (2000 value = 100%). Note the rapid rate of depletion in remaining post-2000 CNE (Cumulative Net Exports).

    • Jeffrey J. Brown says:

      The Six Country Case History consists of the major net oil exporters that hit or approached zero net oil exports from 1980 to 2010, excluding China (China, like the US, is an unusual case history, since both countries became net importers, as production continued to increase.)

      The combined Six Country (total petroleum liquids) net export peak was 1995. From 1995 to 2002, their combined production fell by 7%, but their combined net exports fell by 35%. The kicker is that in only seven years they had shipped 84% of their combined post-1995 CNE (Cumulative Net Exports).

      In other words, a one percent per year rate of decline in production corresponded to a post-1995 rate of depletion of 26%/year in their remaining supply of post-1995 CNE.

      Note that their 1996 to 1999 production exceeded their 1995 production level, but because their rate of increase in consumption exceeded their rate of increase in production, net exports fell. And as production rose from 1995 to 1999, they had already shipped 54% of their post-1995 CNE.

      In other words, a 0.5%/year rate of increase in production from 1995 to 1999 corresponded to a post-1995 rate of depletion of 19%/year in their remaining supply of post-1995 CNE.

      So, the model is shown above, and a similar chart for the Six Country Case History is shown below.

      Anyone see any similarities?

      Note that the 1995 to 1999 time period for the Six Country Case History is analogous to the (so far) post-2005 time period for Saudi and overall Top 33 net exports, to-wit, the rate of increase in consumption outpaced the rate of increase in production, but as noted above, a 0.5%/year rate of increase in Six Country production from 1995 to 1999 corresponded to a post-1995 rate of depletion of 19%/year in their remaining supply of post-1995 CNE.

      • Jeffrey J. Brown says:

        And here are similar normalized values for the (2005) Top 33 net exporters. The post-2005 CNE estimate is based on the 2005 to 2012 rate of decline in the ECI Ratio (ratio of production to consumption).

        A similar CNE estimate (extrapolating the seven year rate of decline in the ECI Ratio) for the Six Country Case History produced a post-1995 CNE estimate that was 23% too high.

        The 2013 values for the 2005 Top 33 were as follows:

        Production: 102%
        ECI Ratio: 83%
        Net Exports: 93%
        Est. Remaining post-2005 CNE: 74%

        To recap, the model showed that remaining post-export peak CNE declined faster than the ECI Ratio.

        The Six Country Case History showed that their remaining post-1995 CNE declined faster than the ECI Ratio.

        And an extrapolation of the decline in the Top 33 ECI Ratio suggests that remaining post-2005 Global CNE are declining faster than the ECI Ratio.

  42. R Walter says:

    8 dollar gas on 08-08-08.

    Crazy Eights! lol

    From the Puget Sound Business Journal:

    Elon Musk, Stephen Hawking receive Luddite Award:

    “If we want to continue increasing productivity, creating jobs, and increasing wages, then we should be accelerating AI development, not raising fears about its destructive potential,” Atkinson said. “Raising sci-fi doomsday scenarios is unhelpful, because it spooks policymakers and the public, which is likely to erode support for more research, development, and adoption.”


    IOW, they’re just as guilty of nonsense and idiocy too.

    More BAU is unhelpful, includes everything, solar, wind, fossil fuels, hydro, nuclear, machines, the whole enchilada. The consumption and use of all forms of usable energy need re-assessments, an examination and scrutiny of priorities, which are misplaced and the goals are dubious.

    In other words, there is no plan.

    The time to speak up has passed, now is the time for senseless bickering!

  43. shallow sand says:

    Oil business is sure hard to plan for these days.

    One strong up day, and another looking that way doesn’t mean much, but what if we do get a strong rally in 2016, after all these unfortunate people have been fired?

    Amazing the price volatility we see if one looks at a chart from WW2 to present. Price barely moved for years, now ridiculous volatility.

    Makes investors in oil question why they chose the agony. Makes smart, educated people stay away from upstream industry employment.

    All the people in industry I know are unanimous, my kid IS NOT going to do this for a living. Of course, you cannot make choices for them, but my teenagers are paying attention, don’t say much, but recently have both commented without prompting that they think the price of gas, and thus oil, is made up. They both drive, can’t understand how price goes from $3.75 to $1.50, especially given the tax component.

    Older one showed some interest, but not now. His comment, “Not going to work in a job where I might get fired due to a bunch of Wall Street crooks.”

    Haven’t told him many other industries likely to face the same problems ahead.

    • Enno Peters says:


      I also find the price volatility astonishing, in comparison with the estimated oversupply. As I have mentioned before, I also have the impression that a large part of this action is caused by market participants who are neither producers nor consumers of oil.

      If I would be in the oil producing business, I would base my plans solely on hedged production, several years out. You might miss out on the spikes, but a sure gain is better than the risk of losing all. You don’t want to find yourself at the mercy of traders who just sold a lot of virtual oil, and are trying to buy it back on the cheap.

      • shallow sand says:

        Enno. Hedging is a very good idea, which we did when we had debt. However, it is not easy to hedge more than 18-24 months out. The cost of puts (floors) becomes cost prohibitive.

        Likewise, SWAPS or costless collars limit upside. That might seem like one is just being greedy, until you look at 2003-2008. In 2003, one could have locked in around $25 WTI. By 2008, the price had spiked so much that one who had OPEX of $12 in 2003 was probably looking at OPEX of $25-30 in 2008. At least that is the way it was for us. The same thing happened again from 2009-2014.

        Further, with SWAPS and costless collars, you better make sure you produce the oil and can post big time margin. Imagine what happens in the 2003-2008 run up if you were hedged at $25, were short on barrels, and had margin calls all the way up to $145 WTI.

        The big boys, including shale, pay $$ bucks for advice on hedging strategy. It wont save them now. Only OPEC or Wall Street can save them. I don’t think relying on either of those groups is a good business strategy.

        It is a risky business. We got complacent, but should be able to get by. But it has not been fun, as you can surely tell from my “emotional” posts.

        • Watcher says:

          Scarcity is not supposed to be about money.

          Remember “the easy oil is gone”? Easy is not a word chosen when cheap could have been.

    • likbez says:

      “Not going to work in a job where I might get fired due to a bunch of Wall Street crooks.”

      That sums the situation up pretty nicely. Thank you.

    • Lightsout says:


      For how much longer do you expect the industry to be a price taker. The late Matt Simmons was of the opinion that the worlds most important industry was crazy to simply accept the price dictated by the short sighted markets.

    • Nathanael says:

      Well, the best plan if you’re in the oil industry is to get out of it.
      Same if you’re in gas. Or coal.
      Same if you’re in most of finance (there are a few stable subsectors — traditional insurance, traditional banking).
      The growth industries are solar, wind, and batteries. And perhaps *materials science*.

  44. islandboy says:

    ‘Oil Hedge Money Down The Tube’

    The Jamaican Government bought coverage to the tune of US$27.9 million ($3.3 billion) for last year, which provided coverage of crude imports to September 2016. Under the insurance-type agreement, if the price of oil goes above US$66 per barrel, Jamaica would be guaranteed a payout from the fund managers.

    “That hedge was purchased in order to provide some degree of protection. If we were badly advised, I would not say so,” Rowe said.

    “Looking back at what has occurred in 2015 is a different place to be than in 2014 when there was great uncertainty with oil prices,” Rowe added.

    Rowe said that in deciding the price at which to hedge, the finance ministry relied on various sources of information, such as the global markets, as well as information from a person who was employed to advise the ministry on the matter.

    World oil prices have fallen below $27 dollars, the first time since 2003.

  45. islandboy says:

    China to slash coal production amidst falling demand

    China to slash coal production amidst falling demand

    In the next three years, China plans to shutter 4,300 coal mines, eliminate outdated production capacity of 700 million tons and relocate 1 million employees, according to the report. The central government has earmarked CNY 30 billion ($4.57 billion) for the relocation.

    In the past five years, China has cut some 560 million tons of coal production capacity and closed 7,250 coal mines, according to the National Coal Association.

    China had approximately 11,000 coal mines at the end of 2015 with a total capacity of 5.7 billion tons. Of these, around 1,000 had annual capacity of more than 1.2 million tons – some 400 more than in 2010.

    The country is nevertheless leading the way in embracing green energy. China was the biggest investor in clean energy last year, channeling $110.5 billion into the sector and accounting for 17% of the total global clean energy investment.

    GTM Research: 59 GW of solar installed in 2015, 64 GW coming in 2016

    Below these top-line numbers are significant changes. The company expects the United States market to grow 80% to 13.4 GW, before a slight drop in 2017. GTM Research expects the U.S. Investment Tax Credit (ITC) extension in December to have a huge impact, with the U.S. share of global PV demand growing 10-15% to 2020 due to the policy.

    Anticipated market growth in India is even more dramatic. GTM Research expects India’s solar market to double this year from around 2 GW to 4 GW, which GTM Research Senior Analyst of Global Solar Markets notes is a conservative estimate. In the process, India is expected to move from the 5th to the 4th-largest solar market in the world.

    China Reports 331,092 New Energy Vehicles Sold In 2015 (Excluding Imports)

    Chinese New Energy Vehicles production and are sales surging to the point at which it takes global lead (basing on absolute values).

    In 2015, Chinese manufacturers produced 340,471 all-electric and plug-in hybrid vehicles (cars, buses, trucks) and sold 331,092. That’s not all, because sales of imported cars (like Tesla Model S) are not included in those figures.

    The growth is tremendous compared to 2014 – well over 300% up.

    Most of those sales comes from pure electric vehicles, which grew more than twice as much as plug-in hybrids in China:

    The bulk of NEVs sales are passenger cars – 207,382, while the rest are classified as commercial vehicles.

    It’s interesting that the commercial segment is growing much faster – up by over 1,000% year-over-year and mostly (5:1) those are BEVs.

    The largest manufacturer in China and the company with the top selling NEV in China is BYD.

    Their Qin model attracted 31,898 sales in 2015 and 46,787 combined with 2014 sales and December 2013.

    BYD is also the first manufacturer that crossed 10,000 sales of plug-in electric passenger cars a month, but they sells other types of EVs too – mostly buses.

    One might ask why I post stuff like this on a Peak Oil site? I do it to provoke the trolls from Team Koch 😉

    Seriously though, since all I know about oil production and the oil markets is what I have learned from this site and TOD, I prefer to address factors that might have some bearing on the demand for oil going forward. So the first story highlights the fact that China is doing something about their coal consumption. They are closing coal mines as a result of declining demand. Maybe they will start shutting down coal electricity generating plants next. The last story shows that, plug-in vehicles may start to affect Chinese oil consumption at some point. The second article points to continued growth of solar PV in the US electricity sector which may begin to affect the demand for both coal and NG at some point, if it has not already happened.

    If I express an opinion then so be it but, the data speaks for itself. IMO what is driving the trends is not as important as the trends themselves but, what I think isn’t really important. I could think that Julia Roberts or Halle Berry have the hots for me but, that wouldn’t change the reality that they don’t even know I exist one iota.

    What I find interesting is how some folks think it is so important to ascribe ulterior motives to what they call “team green”. What “team green” says or thinks isn’t all that important. If renewables are destined to displace FF, we will all know in time. If EVs are going to disrupt ICE powered vehicles, we will know when it happens, or doesn’t happen. I just watched an interview with Tony Seba by Youth Climate Report and he seems pretty confident that current cost trajectories of PV, batteries and EVs will drive the disruption, even without subsidies, within the next fifteen years. He claims the status quo will be obsolete within that time.

    As for Global Warming, we will know what’s up soon enough. My anecdotal observation is that, in my neck of the woods, last year felt hotter than normal, which jives with what the NOAA and NASA said. Let’s see what happens this year.

    • Hickory says:

      From 204 to 2014 China’s coal consumption doubled. India is on the verge of a massive ramp up in coal consumption.

  46. Greenbub says:

    Oil rig count down by 5. Not much reaction to extremely low prices.

  47. Longtimber says:

    “it appears Schlumberger CEO Paal Kibsgaard unleashes some very uncomfortable truthiness on his audience this morning during the earnings call, in which he revealed what likely was a wake up moment of truth for the US energy sector: ”

  48. Clueless says:

    I keep reading paragraphs in various articles that point out how easy it will be for the drillers to turn it on if prices “spike” over $40. I know that most here would agree that is not going to happen. The money will be a killer. And, we have all seen this movie before, only in a different industry.
    When the housing bubble burst, for at least the next 4 years, I read dozens of stories about how people could not buy a house because it would not appraise for the price that both the seller and buyer had agreed to. Appraisers were petrified of sticking their necks out. No way were they going to go along with a “V” shaped housing price recovery.
    If oil prices rise to $60 by year end, we all know that the drillers will be clamoring for money to let them gear back up. The drillers will throw out rosy price forecasts. However, human nature will put an end to that. The employees at the banks who are in charge of establishing “price decks” for their bank will probably raise their deck to something like $40. They are not going to have their job threatened by another plunge in prices. And, there will not be one single bank that will want to become known as the “go to bank” because they have a higher price deck than the other banks. In my opinion, absent some sort of energy emergency (e.g., a real war), it will be 3 or 4 years before the banks will have relatively the same price expectations that the drillers will have.

    • Watcher says:

      Don’t underestimate the bond sales desks at JPM and Morgan Stanley. They could place shale bonds issued because they can sell ice cream to eskimos.

  49. Clueless says:

    Yesterday’s EIA natural gas report points out that we are saying goodbye to coal. We do not talk much here about natural gas, but there are some who say it is going much higher. From the EIA report:
    “Since January 1, consumption of natural gas for electric power generation (power burn) has averaged 26.0 billion cubic feet per day (Bcf/d), 24% greater than the five-year average and 3% higher than the five-year maximum. While power consumption is typically highest in summer to meet air-conditioning demand, about 39% of all households in the United States rely on electricity as their primary heating source. In the Southeast, where most of the homes use electricity for space heating, natural gas is a relatively large share of the generation mix. However, the growth in power burn this month has occurred despite electricity-weighted heating degree days that were close-to-average nationally and in the Southeast region.”

    • Clueless says:

      I was remiss in not pointing out that Jeffrey Brown has frequently pointed out the huge amount of drilling that needs to take place each year just to maintain the current level of US natgas production.

    • Synapsid says:


      Coal has lost share of power production in the US with NG prices so low. Its share should rise when those prices rise again, which will happen unless that industry disappears.

      Something to keep an eye on is coal plants in the Midwest, where coal has been the traditional power source. A lot of those plants have top of the line scrubbers and can meet the newer EIA regulations for mercury as well as sulfur oxides; this means that they can burn the high-sulfur coal from the Illinois Basin, and they are waiting for the price of coal to be competitive again with that of NG. I expect that coal isn’t dead yet in the US.

      • Clueless says:

        Synapsid, I agree with you. However, with AHGP yielding over 25% with a well covered distribution, it does make me wonder who is stupid – me for buying, or the guy who is selling to me.

        • oldfarmermac says:


          Generally , you are not, clueless that is.

          But I am pretty the rest of us , mostly are clueless when it comes to AHGP.

          What IS AHGP?

          Whatever it is , it is not near the top of my acronym on line dictionary.

  50. The Baker Hughes Rig Count is out. Oil rigs down 5, gas rigs down 8. Texas down 7, Eagle Ford down 4, Permian down 3.

     photo Baker Hughes.jpg_zpsegeixa6i.png

    • Armitage Shanks says:

      The Canadian rig count has started going up fast recently – maybe the ground has started to freeze up finally. It will be interesting to see how things develop once the thaw starts.

  51. Watcher says:

    One more time.

    Scarcity is not supposed to be about money. We are watching the price, and we are watching bailouts of various sorts, but what really matters is the joules breakeven and we can no longer depend on currency to measure that.

    The oil is there. If you have to have it, you will get it any way you can. Don’t use dollars to define “any way you can” because that’s not the definition. Now, you may have to sacrifice capitalism and free enterprise on the altar of starvation avoidance, but the starving will not object to that.

    The Apocalypse could be a complete change of society away from capitalism (which in the starvation scenario was going to happen anyway).

    • Lloyd says:

      Now, you may have to sacrifice capitalism and free enterprise on the altar of starvation avoidance, but the starving will not object to that.

      As I suspected. You’re a rank sentimentalist, Watcher.

      You and I both know that the last barrels of oil that are drawn are going to be used to air-condition a warlord’s harem.

      Starvers gonna starve.


    • Watcher says:

      “The forecasting error for global consumption was much larger, at an average of 400,000 barrels per day, with a standard deviation of as much as 1.1 million barrels per day (tmsnrt.rs/1S9kIZz).”

      Completely meaningless. Can’t depend on what is compared to.

      It is indeed astounding that oil numbers, the most important numbers for all civilization, are not reliable.

  52. R Walter says:


    Price rose 2.98 USD per barrel across the board. How much you got? We’ll take it all.

    Supply and Demand

  53. Clueless says:

    If this is too much, sorry. Ron, please delete if not appropriate.
    Weekender: Tulsa Tidbits
    Company Highlights With BKEP, MMP, NGL, OKE/OKS,
     A Quick Word On Yet Another Volatile Week. Add the global economy
    (China) and the broader equity markets to the list of troubles plaguing the MLP
    space. We really have nothing to add to the conversation at this point. This is an
    all-out rout and we’re not sure there’s any fundamental way to explain it away. It’s
    gotten to the point that when MLPs (see Targa) just declare a flat distribution, the
    stocks go up (they’re not cutting!). We’re trying to keep perspective, which is not
    easy in this market. One hopeful thought is that we’ve seen a noticeable uptick in
    inbound calls from value-oriented investors.
     What Would Get Us More Bullish? We received plenty of “strong” feedback
    to our outlook piece of last Friday. (No, we did not “go negative” on the group –
    we’ve had a cautious outlook through the downturn. No, we are not “calling” for
    distribution cuts; just acknowledging that there are scenarios where a reduction
    might be considered – $20/Bbl oil for the next year, anyone?). One consistent
    question we received was what would get us more bullish on the group? The short
    answer, of course, is an improvement in oil price fundamentals. The other might
    be trough valuations, levels that even the bears might find hard to argue with.
    Those calling for MLPs to trade for 8-10x EBITDA (in-line with Utilities); well,
    MLPs are now at a median 2016E multiple of 9.3x. So I guess we’re there…
     Tulsa Tidbits. We visited with the management teams of BKEP, MMP, NGL,
    OKE/OKS, SEMG/RRMS. (Since we know you’re wondering, WMB was not
    available to meet). As you’d expect, management teams are in “hunker down”
    mode, trying to reduce capital spending, shore up balance sheets and distribution
    coverage, and moderate growth. No one we met with is contemplating a
    distribution cut. M&A markets are quiet. Everyone’s in cost cutting mode, trying
    to do what they can to live another day until oil markets are better. What follows
    are a few high level takeaways followed by company specific tidbits.
     All Quiet On The M&A Front. The combination of low prices (nobody wants to
    sell) and expensive access to capital (if you can get it) has made the M&A markets
    pretty quiet. We heard of several assets being pulled off the market due to a lack
    of significant bids. While there’s certainly some distressed assets and companies
    out there, for the most part, those potential targets are “cheap” for a reason and
    therefore not necessarily attractive acquisition opportunities. MMP did express a
    continued interest in acquiring crude gathering assets and BKEP is looking at
    several smaller deals. Every management team we met with cited the significant
    amount of private equity capital looking to be put to use. But overall, it’s pretty
    quiet. Outside of the sponsored acquisition market (i.e. dropdowns, etc.), we think
    things will be quiet for a while.
     Dump My Truck. Our Uber driver to the airport was a crude trucker who had to
    switch jobs to make a living. That in a nutshell is the current state of the trucking
    industry. Demand for trucking is low and rates have come way down. One
    company said that crude gathering via truck is being discounted (in some cases)
    to rates in-line with pipelines in order to keep the trucks active (that are under
    lease). But everyone we spoke to that owns trucks/rail is looking to shrink the
    business when possible. As leases come up, they’re not being renewed.
     Counterparties And Contracts. There was plenty of discussion on E&P counterparty risk and the ability
    for producers to re-negotiate midstream contracts. So far, none of the companies we met with are seeing
    producers ask for rate concessions. Some did say that if their E&P customers were under duress, they would
    be open to re-structuring a contract as long as there was a mutual benefit (i.e. lower rate for longer contract
    duration). Counterparty risk is a major focus, which management teams seem to think is manageable.
     Flat Is The New Up. Management teams are in the midst of evaluating 2016 distribution policy and are
    likely to provide some guidance with Q4 earnings calls. While no one (understandably) provided hard
    numbers, we got the sense that most will be focusing on building coverage and maintaining cash flow to
    maintain financial flexibility. Consequently, we’d expect distribution growth for BKEP and SEMG to
    moderate. (Given OKS, RRMS, and NGL’s yields, they will obviously be kept flat.)
    Company Specific Takeaways
    Meeting Attendees:
    ─ Terry Spencer, President and Chief Executive Officer (CEO)
    ─ Walter Hulse, Executive Vice President (EVP) – Strategic Planning and Corporate Affairs
    ─ T.D. Eureste, Investor Relations
     Management highlighted several steps it has taken to improve cash flow stability and liquidity including
    (1) the $749MM equity offering in August 2015, (2) re-negotiating its Bakken contracts to add a fee-based
    floor component to the contracts netting an estimated $100MM of incremental EBITDA), and (3) entering
    into a $1,000MM term loan to address 2016 debt maturities.
     The partnership pointed to the potential for $200MM of incremental EBITDA in 2017+ if ethane is
    recovered (150-180 Mbbl/d [thousand barrels per day]).
     Management continues to like its current structure so its roll-up of OKE and OKS seems off the table.
     OKS still intends to go ahead with its West Texas LPG pipeline expansion as planned. The asset is tracking
    inline with projected acquisition economics.
     Management expects OKE to generate $250MM of free cash flow in 2016, which could be used to support
    OKS (e.g. via IDR [incentive distribution right] waivers or purchase of common units).
     ONEOK management stressed the importance of high grading capital budgets in the current environment
    and only focusing on the highest return projects. The partnership has significantly curtailed capital
    investments for 2016 (guidance of $460MM versus approximately $1,000MM in 2015) and expects to
    earn a return closer to the low end of its traditional EBITDA multiple range of 5-7x. OKS is focusing on
    high return, optimization projects / well connects and tightening the return parameters on existing
    projects. For example, OKS still intends to proceed with its previously announced West Texas LPG
    expansion, but anticipates being able to complete the project for less capital by utilizing excess capacity on
    existing pipelines for a portion of the expansion. With respect to the deferred processing plants in the
    Bakken, management does not anticipate restarting construction of these plants unless crude oil prices
    recover to a range of $60-70/Bbl.
    Magellan Midstream Partners (MMP)
    Meeting Attendees:
    ─ Michael Mears, Chairman, President and CEO
    ─ Aaron Milford, Senior Vice President (SVP) and Chief Financial Officer (CFO)
    ─ Paula Farrell, Investor Relations
     We had an interesting conversation about management’s stated desire to get into the crude gathering
    business. While MMP’s crude pipelines are all currently under take-or-pay contracts (with contracts
    expiring in 3-15+ years), once those contracts roll off, it’s unclear whether contracts will be renewed and at
    what tariff (will likely depend on crude dynamics at the time). Consequently, management believes that
    owning crude gathering will enable the partnership to direct barrels to its own pipeline systems regardless
    of future contract structures. It seems the most likely way to get into this part of the business, in a
    meaningful way, would be via acquisition. Management is mostly interested in crude gathering pipelines
    and not the crude lease gathering business conducted by truck. In terms of growth capital, management
    has targeted some modest refined products investments for 2016.

     On the M&A front, management indicated that multiples have not come down as much as would be
    expected given the macro backdrop. In terms of the risk of take-or-pay contracts being re-negotiated or
    not honored (prior to expiration), management views this risk as very low. This is because (1) the
    partnership’s counterparties are all strong credits (with the exception of one that isn’t currently paying
    anyway) and (2) the reputational risk the shipper could incur if it broke a contract. That being said,
    management did say it would be open to re-negotiation if a shipper was distressed (as long as it could get
    equal value).
     One of the pushbacks on the Magellan story is the risk associated with take-or-pay contract expiration and
    the resulting impact on MMP’s volumes/cash flows. Management indicated that most of MMP’s recently
    constructed crude oil pipelines have contracts with expirations that extend well into the future (i.e. 5-15
    years). In the near-term, only MMP’s Longhorn pipeline has take-or-pay contracts that expire in the next
    2-3 years. While competition for market share is a risk, management believes the industry will be rational
    and not try to compete on rates as this would result in a lose-lose situation for all midstream parties
    involved. Nevertheless, as take-or-pay contracts on crude pipes expire, MMP will be exposed to increased
    volumetric risk (albeit years into the future).
    Semgroup/Rose Rock Midstream Partners (SEMG/RRMS)
    Meeting Attendees:
    ─ Carlin Conner, CEO
    ─ Bob Fitzgerald, CFO
    ─ Alisa Perkins, Vice President (VP) and Treasurer
    ─ Nick O’Connell, Senior Financial Analyst
     Semgroup decided to defer the SemGas drop down given: (1) RRMS’s high cost of equity and limited
    ability to access to the capital markets and (2) cash flow pressure at SemGas (counterparties are
    Chesapeake [CHK] and Midstates [MPO]).
     RRMS has no capital needs for 2016. Growth projects will be funded via the partnership’s revolving credit
     Despite these actions, management still envisions SEMG as a pure play GP on a long-term basis, subject to
    market dynamics.
     Management believes it can generate about 1.0x distribution coverage at RRMS in 2016 even assuming
    White Cliffs volumes go to minimum volume commitment (MVC) levels (Note: we estimate coverage
    would be 0.9x at MVC levels). If needed, SEMG could provide GP support, most likely in the form of IDR
     The company did not rule out dropping SemGas to the MLP down the road once cash flows have
     Management also addressed its exposure to CHK and MPO in the Mississippi Lime play. Even in a
    bankruptcy situation, management believes it would well positioned to continue to be paid given (1)
    current rates are at market, (2) creditors would want to maximize revenues which could only happen via
    sales through the gathering system, and (3) this is Midstates’ primary asset, so the incentive to drill would
    still be high.
     The possibility of volume declines on WhiteCliffs remains a key risk on the minds of investors. In its most
    recent slide deck, management provided additional clarity around the rate structure of the WhiteCliffs
    Pipeline. Management noted that rail could help support volumes. The partnership also indicated that
    crude by rail shipments are so uneconomic that producers that previously committed to rail could incur
    the deficiency payment and still earn a better netback by utilizing pipeline.
    NGL Energy Partners (NGL)
    Meeting Attendees:
    ─ Mike Krimbill, CEO
     Management believes the floor EBITDA of the Water Segment is approximately $72MM. The floor total
    EBITDA for the partnership is approximately $450MM.
     The partnership is looking to further reduce leverage and build coverage. Given its 27% yield on the
    common equity, management views this as the highest return investment it can make (buying back stock).
    Therefore, NGL is exploring ways to increase liquidity to execute a larger stock buyback program. NGL has
    executed on $3MM of its $45MM authorized buyback program.

    Master Limited Partnerships EQUITY RESEARCH DEPARTMENT
     There is no intention to reduce the distribution.
     Management remains confident in the Grand Mesa Pipeline project and is not overly concerned with
    shipper counterparty risk.
     In the water business, NGL is gaining market share. Volumes in the Permian continue to grow, while the
    Bakken and DJ are flat, and Eagle Ford is in decline.
     Although the warm winter is likely to weigh on retail propane sales, management noted that the increase
    in retail margins (due to wholesale propane prices falling at a faster pace than decreases in retail propane
    prices) could more than offset the decline in volumes. This business could surprise to the upside, in our
     Management indicated that $200MM of 2016 capex is non-discretionary (i.e. $175MM for Grand Mesa
    and $25MM for Sawtooth).
     With spreads exceptionally narrow, NGL’s crude marketing business could shrink as NGL lets leases
    expire on existing marketing assets (i.e. rail, trucks, barges, etc.). While this limits upside in a potential
    crude oil price recovery scenario, NGL benefits in the near-term from reduced operating expenses (by not
    renewing leases) and cash proceeds from the sale of small, non-core assets.
    BlueKnight Energy Partners (BKEP)
    Meeting Attendees:
    ─ Mark Hurley, CEO
    ─ Alex Stallings, CFO
    ─ Brian Melton, VP – Pipeline Marketing and Business Development
     The expiration of trucking leases in 2016 and beyond (on a staggered basis) will likely result in reduced
    operating expenses. Given the downturn in oil prices, trucking activity has slowed dramatically. Trucking
    revenue collected from leases does not cover associated operating expenses. The partnership has no major
    counterparty risk.
     The Knight Warrior project needs $55-60/Bbl oil to be viable (Eaglebine economics). 2016 growth capital
    of $20-50MM assumes a couple of small acquisitions.
     Management is actively evaluating bolt-on acquisition opportunities in the $25-50MM range. Multiples on
    these types of deals are more reasonable than multiples on larger packages currently on the market.
    Without those, spending will be at the low end.
     Management expects to be at the high end of its 2015 distribution growth guidance range. BKEP is
    evaluating whether to modestly grow distributions in 2016 or hold them flat to build coverage and pay
    down debt. From a cash flow perspective, management is targeting 2016 EBITDA to be roughly flat with
    2015 levels.

  54. Clueless says:

    Ron, please delete if not appropriate
    The good news is threefold: 1) The market made a triple bottom last week on good volume; 2) Wednesday was a big capitulation day that took out the August 2015 lows and retested the October 2014 lows; and 3) The S&P 500 dividend yield is at 2.31%, above the 10-year Treasury yield. So there is a lot of support at this level, and when the dust settles, money will return to the stock market.

  55. ezrydermike says:

    maybe Wednesday was the price low?

    today @ $32.19

  56. Heinrich Leopold says:

    Is a mini ice age on its way?

    As the deep downfall of the oil price has disappointed many, there is probably another disappointment for many forecasters in the cards. Given the beautiful winter in North America and also Europe recent studies http://www.dailymail.co.uk/sciencetech/article-2541599/Is-mini-ice-age-way-Scientists-warn-Sun-gone-sleep-say-cause-temperatures-plunge.html

    reveal that we may be on the verge of a new ice age. The scenario of a mini ice age is described as a period of cold temperatures between 1600 and 1800 due to reduced sun activities (Maunder Minimum). However some scientists go beyond this period and claim that every two hundreds years we get a mini ice age and this contributed very much to historical upheaval such as mass emigration. As we had a warming period from 1800 to 2000, we are probably at the beginning of a new mini ice age. As climate change is historically a fact – cooling and warming – and few people would contest it, it would also reveal the weak scientific link between fossil fuel consumption and climate change. Although CO2 has a high heat capacity (molecular weight 44 versus 29 for air and high van der Waals activity), the concentration of CO2 in air – 400 ppm is simply way too low to have any material effect on heat capacity of the global atmosphere. In other words the contribution of CO2 towards a global warming scenario is minimal.

    • Jeffrey J. Brown says:
    • Stilgar Wilcox says:

      What a crock of *^#) HL.

    • oldfarmermac says:

      HL is badly mistaken when he ascribes the effect of rising concentration of CO2 as being very small, due to it being based on the HEAT CAPACITY of the CO2 molecule.

      In relation to the heat capacity of the atmosphere, it is trivial, this is true.

      But CO2 acts as DEFACTO INSULATION, rather than as a heat sink.

      It lets in short wave solar radiaton, which heats up the oceans, and the land, and everything else, but BLOCKS the heat radiated by all these things, reflecting it back , keeping it trapped in the atmosphere and land and oceans, because things that are only WARM or MODERATELY hot emit LONG WAVE radiation.

      CO2 is OPAQUE and reflective when it comes to LONG wave radiation.

      I can only conclude that either Heinrich Leopold is ignorant of basic physics, or deliberately misrepresenting the facts.

      Of course there is a THIRD possible explanation, which is that ALL the chemistry and physics texts published for the last century or so are in error, with the authors and editors all being part and parcel of a giant conspiracy intended to take us back to the stone ages for reasons not quite clear to ME at least . ROLLING ON THE FLOOR, LAUGHING MY ASS OFF.

      Having said THIS MUCH, I am open to the possibility that natural variations in climate MIGHT tend to take us into a new LITTLE ICE AGE, if it weren’t for all that extra INSULATION.

      As a matter of fact, natural climatic variation towards a new little ice age could CONCEIVABLY slow down warming, or maybe even stall warming , for a period of time.

      But MY MONEY says it will continue to get warmer, on average , world wide, over the coming decades.

      • Doug Leighton says:

        LOL. Mac, surely you realize that’s all tongue-in-cheek stuff. The van der Waals forces reference being the clincher. Either that or, as you say, all chemistry and physics texts published for the last century or so are in error.

      • Synapsid says:


        Heinrich Leopold is quite consistent in his comments on climate change. His views are clear; the physics and chemistry parts are lamentable, as you say.

        Doug L, on the other hand, can be trusted implicitly. Anyone with pulsars and Thorr always present in his head can be excused from any thought of error. (yellow smiley face goes here.)

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