Why we are at Peak Oil Right Now

In this life nothing is certain. Therefore I am not declaring, absolutely, that we are at peak oil, only that it is a near certainty. But I am putting my reputation on the line in making the claim that the period, September 2014 through August 2015 will be the year of Peak Oil. Below are my reasons for making this claim.

First of all, Peak Oil is not a theory. The claim that Peak Oil is a theory is more than a little absurd. Fossil hydrocarbons were created from buried alga millions of years ago and they are finite in quantity. And as long as we keep extracting them in the millions of barrels per day, it is only common sense that one day we will reach a point where their extraction starts to decline. In fact most countries where oil is extracted are already in decline. So obviously if individual countries can experience peak oil then the world as a whole can also experience peak oil.

All charts below are in thousand barrels per day of Crude + Condensate with the last data point September 2014.

World Less USA & Canada

First I want to deal with the portion of the world that reached peak oil about four years ago, in January 2011. That is everywhere else in the world except the US and Canada. I am not saying that every country outside the US and Canada has reached peak oil, but combined they have reached peak oil

The world outside the United States and Canada has been on a bumpy plateau for ten years now and now, even with that last September 2014 surge, is still 1,670,000 barrels below the peak of January 2011. However only a few countries is responsible for this plateau.

The bumpy plateau actually began back in 2005 where the peak was in July. Since them, outside the USA and Canada, there have been 15 countries with production increases and 21 countries with production declines. Here is a look at the 15 winners outside the US and Canada.

Winners

Dealing with the winners one at a time:

Iraq: The EIA has data only through September but Iraq has actually increased production by about 300 kbd to December. but word is they are slightly down in January. That puts Iraq up almost 1.5 million barrels per day since they started their massive infill drilling program in 2009. Iraq still has some upside potential but their downside risk now even greater.

Russia: Russia has peaked, even according to Russian analyst. They will decline only slightly in 2015 but their decline will accelerate after that.

Brazil: Brazil has some upside potential and a lot of downside potential. The finances of Petrobras are a damn mess. Moody’s has downgraded them to Baa3, just one notch above junk status and further downgrades is expected soon. To increase their pre-salt production much more will require a lot more borrowed money. That is not very likely.

Qatar: The EIA says Qatar C+C production increased by 598,000 barrels per day between July 2005 and September 2014. The OPEC Monthly Oil Market Report says their crude only production declined by 78,000 barrels per day during that time span. The chart above was made with EIA data which counts condensate as oil. OPEC reports only crude. On the char below the EIA data is through September, the OPEC data is through December 2014.

Qatar

The EIA says Qatar has increased condensate production from her massive natural gas fields. Qatar crude oil production is in decline and has been since 2008. Qatar crude will continue to decline and their condensate is likely at a peak also.

Angola: Angola peaked in 2009 and 2010 and is now in decline. However some of the decline is caused by political problems. Those problems will likely get worse.

Colombia: Colombia’s production has doubled in the last 8 years but they reached their peak in 2013 and have held almost flat for the last two years. Colombia has peaked and will decline, though that decline will likely be very slow. I have included Colombia in the chart below that shows four countries that have recently peaked.

Kazakhstan: Kazakhstan is at peak of currently producing fields. Production will likely decline until Kashagan comes on line sometime in 2017. This field that once promised to produce over a million barrels per day is now expected to barely produce 300,000 barrels per day… if it ever manages to come on line. But nothing spectacular is expected out of Kazakhstan, especially since its old fields are expected to start to decline soon.

China: China peaked in 2010 and has held pretty well steady since then. I expect China will start to decline soon.

Azerbaijan: Azerbaijan peaked in 2010 and has been in steady decline since.

UAE, Oman and Kuwait: All three of these Middle East countries have implemented massive infill drilling programs in the last decade or so. But all three have now peaked. These three nations, along with Colombia, show a beautiful increase in production then a rounding peak at the top.

Four Country Peak

These four countries are responsible for 1.5 million barrels per day of the increase since 2005. They have all four now peaked, or at least very near their peak.

Saudi Arabia: Saudi has brought their last mothballed field on line, Manifa. Now they have none. Saudi is producing flat out. They might, with great effort, produce a few more barrels per day, but basically they are at peak right now.

And a look at the 21 losers.

Losers

I have changed the negative numbers to absolute numbers in order to make it easier to read. But basically these are the nations that have peaked and are now in decline. A couple, Iran and Libya, because of political problems, have declined a lot more than they would have without that conflict. However neither is likely to recover very soon. And even when they do, it will be to a point lower than they were before their problems. Syria and Sudan, including South Sudan, and Yemen are others that will not recover in this decade, or until long after we are on the down-slope of peak oil.

That brings to the US and Canada.

US and Canada

The USA and Canada are responsible for about 120% of the increase in world oil production since 2005, even though they did not begin their grand ascent until 2009. Canada’s over 400,000 bpd increase in September is responsible for that last spike upward. But can this continue?

In a word… no. The gain has been almost all LTO and oil sands. And low prices are killing both. If prices stay low both Canada and the USA will begin to decline by the second half of this year. But even if prices return to the $70 ti $80 range, (it is not likely they are going higher than that), their production will still not increase fast enough to offset the decline in the rest of the world.

But what about those massive reserves still in the ground? Many say we have not yet produced half the URR, the Ultimate Recoverable reserves, and until we are at least that half way point, we cannot be at peak oil. Well, there are a few really serious problems with that logic. First, what is meant by the word “recoverable”? And at what price? Let’s look at really important chart.

The 2014 data point on the chart below is the average January through November.

Historic Oil Price

Here is a chart of Historical Crude Oil Prices. The average price, the blue line, is the average price of oil for that year. The orange line is the average price from 1946 to any point on that line. For instance the average price of oil for the 34 years from 1946 through 1973 was $23.68. And that in today’s dollars. From 1946 through 1973 oil companies were getting an average of $23.68 a barrel for their oil, and they were making a pile of money at that price. Today, the price is more than twice that amount, and many of them are losing a pile of money.

So let’s get back to reserves. The reserves produced in 1973 and prior years was very profitable at less than $24 a barrel. Then all hell broke loose in the Middle East and prices skyrocketed. Then for the next dozen years oil companies made windfall profits. But in 1986 oil prices came down to normal. Between 1986 and 2002 oil prices averaged $30.42 a barrel. (Not shown on the chart.) Even at that price oil companies still made huge profits. But today they are losing money at $50 a barrel.

The problem is with those “reserves”. Today’s reserves are just not the same as those earlier reserves. All the good cheap stuff has already been sucked up. We are now left with dredges at the bottom of the barrel. All today’s new oil is harder to find, depletes a whole lot faster, and cost many times as much to produce. None of the cheap stuff is left except in a few old super giant fields that are undergoing infill drilling like there is no tomorrow.

Once again, we are at peak oil right now. The peak will straddle the 2014 and 2015 time line. 2016 will be the first full post peak calendar year. It really doesn’t matter how many barrels of oil is left in the ground. The point is we will never again pull it out of the ground at the same rate we are pulling it out right now.

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768 Responses to Why we are at Peak Oil Right Now

  1. I wouldn’t bet so hard on a peak just yet. Assuming oil (C&C) production will start declining by mid to late 2015 is reasonable. But this decline will trigger renewed activity. The low interest loans to usa independents will bear a higher interest, the drlling and completion costs will be slightly lower. The sum of these effects should be a much lower decline, or even an increase in production.

    So the key is price expectations, and the response time. And this is really hard to model. As you know, I already bet that oil prices will rebound. This implies tight supply, which leads to more investment. I’m not sure we can be sure such investment won’t allow production to increase slightly.

    Stepping out of the real crude oil realm, If prices rise beyond $100 per barrel, I also expect the biofuels industry to go bananas increasing production. And refineries will shift to making more light products, swelling the “refinery gain” (this is the reason why I had asked how you planned to handle refinery gain, I think there’s a slight potential to increase yields by adding hydrogen).

    • SW says:

      I think the problem with that analysis is that North American production has to increase more than slightly to off-set declines elsewhere. It is pretty tough to see enough increases in North America, if they happen to offset production declines in the rest of the world anymore.

      • You are assuming the sum total of all nations other than Canada and the USA can’t hold production flat. That’s the big unknown, I suppose.

        Recall that I also mentioned refinery gains and biofuels? If these take up the slack then we have reached peak crude and condensate for sure.

        I guess the big question is whether oil companies anticipate what Ron predicts. If they do we should see a fairly steady deep water drilling pace.

        One other comment: the typical reaction by companies in dire straits (such as Petrobras) is to give up shares in their projects. Sometimes they also give up operatorship. I wouldn’t expect the Brazilians to sit still and wait for lawsuits to unfold. They will react. And I expect this will lead to really large companies with quality technical capability, cash flow, and credit to step in. I wouldn’t be surprised to see something big happen in Brazil.

        • ChiefEngineer says:

          Well the internets have been around long enough now that we all remember the posts at TOD about how we are now at peak oil. No one was talking than about a few states and a shale play that would produce 4 million additional barrels a day.

          “The problem is with those “reserves”. Today’s reserves are just not the same as those earlier reserves. All the good cheap stuff has already been sucked up. We are now left with dredges at the bottom of the barrel.”

          Ron, you sound like Gail Tvarberg on a bad day. Very short sighted and the prospective of time of a teen age boy finding is manhood his first time.

          I’m with Fernando and think your premature gett’en your peak on .

          • The Universe says:

            I recall several predictions from TOD that claimed oil production would go up so long as price could go up.

            It seems that is exactly how it played out.

            So if we’re not at peak now then oil prices must be headed north here pretty quickly. How do you suppose that will happen, and when?

        • The Universe says:

          “You are assuming the sum total of all nations other than Canada and the USA can’t hold production flat. That’s the big unknown, I suppose.”

          That is a known. If the rest of the world could keep production flat we would have seen it happen while oil prices were sitting comfortably at $100 per barrel.

          If high prices didn’t get the oil out of the rest of the world then how do you expect low prices to do it?

          • You are assuming the sum total of all nations other than Canada and the USA can’t hold production flat. That’s the big unknown, I suppose.

            Universe, you are correct. The sum to total of all other nations other than Canada and the USA have not held production flat. It is no great assumption to assume that this trend will continue.

            • The Universe says:

              Thanks!

              I greatly appreciate your work on this issue. Resource depletion is even more misunderstood than climate science and your work does a good job of trying to correct that.

          • Timing. Projects take time to engineer and execute. The high price environment kicked in around 2007, there was a hiccup in 2008, then it regained ground. Oil companies don’t usually change their internal price forecasts to a high side unless they are really convinced it’s going to last.

            I have seen this lag really mess with projects. But let’s face it, I don’t get an insight on how many projects were launched in 2009 through 2014 and are just now getting ready to start production.

            The question always comes down to expectations. Keep an eye on large solid companies to see how many people they layoff. That should be an indicator.

    • Ovi says:

      I would hope that the U.S. drillers have learned their lesson and suck on the straw a little slower and enjoy the associated higher prices longer.

      I recall a phrase in “Blade Runner” along the lines of “The brighter it burns, the shorter it lives”.

      • Ovi says:

        Actual quote

        Tyrell: The light that burns twice as bright burns half as long – and you have burned so very, very brightly, Roy.

        • Anonymous says:

          My candle burns at both ends

          It will not last the night.

          But oh my friends and ah my foes

          It gives a lovely light.

    • I wouldn’t bet so hard on a peak just yet.

      Yeah, but this is not your bet, it’s mine.

      • Nick Hail says:

        The biggest threat to your whole theory is a black swan event. The most probable cause of this is technology. I know of 2 techs being tested that have the ability to render the whole production curve as we know it wrong.

        Just like a prediction of peak oil was valid right up until horizontal drilling took off.

        • coffeeguyzz says:

          Nick Hail, What are the two techs?

          • Nick Hail says:

            Cannot say as it is in testing. May or may not prove out but if it does it’s gonna be ugly for non US companies.

            • Why ugly for non US companies? For example, is this newfangled technology forbidden to Total, ENI or BHP?

              • Old farmer mac says:

                Beyond legitimate use by western companies any new tech will also be used by Russian and Chinese companies probably without even bothering with asking for a license.

        • Jeffrey J. Brown says:

          So, you are arguing that the finite sum of the output from high decline rate tight/shale oil wells will show a perpetual rate of increase in production?

        • Horizontal drilling just didn’t take off, it has been around for decades. Saudi Arabia started horizontal drilling as infill drilling projects well over a decade ago.

          What took off was the fracking of source rock. That is source rock that was so tight that the oil could not escape. Fracking source rock is very expensive and the production from tight source rock declines extremely fast. In other words, it is scraping the bottom of the barrel.

          Oh, and fracking was not a black swan event, it was a price event. The price of oil rose high enough to make tight oil fracking economical.

          • Huckleberry Finn says:

            Ron,
            Black Swan Events are likely to help than hurt your cause. I see the likelihood of countries like Venezuela and Russia declining by 4-8% plus as very high considering that they have NO money to drill.

            • AlexS says:

              I am not sure about Venezuela, but as regards Russia, it seems that you are only reading Westerm mainstream media, and do not know nothing about the Russian oil industry.

              • Huckleberry Finn says:

                “do not know nothing about the Russian oil industry.”
                So I DO know something?
                Look at the investments made in the last 3 years to achieve the growth they did.
                Calculate the amount of Inflation adjusted roubles at current price.
                Subtract amount to pay debt in USD coming due
                See how much is left.
                Extrapolate decline based on how much is spent.
                Not too complicated.

                • AlexS says:

                  Each year since mid-2000s I’ve seen forecasts that Russian oil production is about to decline. I’m not saying that it will continue to increase at tyhe current oil price levels, but a decline of 4-8% p.a. is absolutely out of reality.

                  Read, for example, this article to understand why:

                  Goldman Sachs Busts Myth Of Impending Russian Oil Collapse

                  By ZeroHedge
                  Posted on Tue, 27 January 2015
                  http://oilprice.com/Energy/Crude-Oil/Goldman-Sachs-Busts-Myth-Of-Impending-Russian-Oil-Collapse.html

                  • Two Russian, state sponsored, think tanks predicts Russia oil peak by 2016.

                    GLOBAL AND RUSSIAN ENERGY OUTLOOK TO 2040

                    Or read My Blog on the subject.
                    Sorry, posted the wrong link. This one is to my Russian blog.

                    Like BP, OPEC, the EIA and the IEA Russia also publishes an annual energy outlook. It is called the Global and Russian Energy Outlook to 2040. It is published by The Energy Research Institute of The Russian Academy of Sciences and The Analytical Center for The Government of The Russian Federation. I have no idea who these guys are but their titles sound impressive and they seem to be Russian think tanks funded by the Russian Government. But that is just an assumption of mine.

                    It is a very large 175 page PDF file that appears to be very scholarly and well researched. However they appear to be very optimistic in their prediction of the future oil supply out to 2040. In one scenario they are not optimistic at all for coal production however.

                  • Huckleberry Finn says:

                    Great article Alex. Thanks for sharing.

                    I think one point here that Goldmann Missed is that Inflation is over 30% in Russia. They are delusional if they think finding costs in Roubles will remain static.

                  • AlexS says:

                    Huckleberry Finn,

                    CPI (consumer price) inflation in Russia has risen above 11% in Dec14 and Jan 2015, but is likely to moderate by the end of the year.
                    PPI (producer price) inflation if much lower (5.9% as of Dec 2014).
                    (Official data from Goskomstat).
                    Oil services costs may have risen slightly in ruble terms, but they are certainly sharply down in dollar terms due to the ruble devaluation. Meanwhile, the large part of the revenue base is dollar-denominated. Coupled with the Russian oil tax system this supports company margins and cashflows.

                    The article below is not about Russian oil companies. But it mentions two of them as having the best Free-cash-flow yield among global oil producers:

                    “Free-cash-flow yield, a measure of how much cash from operations a business generates relative to its share price, is another way to compare producers, Hubbard said. By that measure, Woodside and ONGC rank behind only OAO Rosneft, Valero Energy Corp. and OAO Tatneft.”

                    http://www.bloomberg.com/news/2015-01-19/woodside-ongc-among-world-s-best-protected-from-oil-s-plunge.html

                  • Ves says:

                    Hey AlexS,
                    Do you have any idea/guess what would be price to income ratio of real estate in the second/third tier cities in Russia?

                  • AlexS says:

                    Ves,

                    Sorry, I don’t have this data

          • Nick Hail says:

            I never said fracking was the black swan event. You implied that all by yourself.

          • TechGuy says:

            “Oh, and fracking was not a black swan event, it was a price event. The price of oil rose high enough to make tight oil fracking economical.”

            And cheap and easy credit to finance it. If interest rates were normal (ie 5%) it would not have been as easy for frack drillers to obtain the capital they needed. The costs to drill would have been higher if the borrowing costs were higher. Most of the frack drillers are deep in debt, and borrowed almost every penny needed to fund drilling operations.

            Even if oil prices move back up, frack drillers will also need low borrowing costs to continue to drill.

            • You know, lending at 5 % may be justifiable if the entity receiving the loan is locked to say 50 % equity (the hurdle discount rate for this type of investment could be as low as 10 %). You guys seem to know quite a bit about finances. I wonder what such a deal would look like to a lender who also asks for 70 % of the first year’s oil production to be covered in the futures market?

              I haven’t run the numbers, but it seems to me such lending could make sense. What do you guys think?

              • Duanex says:

                Just look at the way the Linn deal was structured with DrillCo. They’re getting a far cry more than one year’s coverage in the futures market.

          • Ryan C says:

            The points you folks make regarding LTO extraction, profitability or lack thereof, capital structure, recoverable reserves etc. are fundamentally distorted by the generality of your assumptions regarding the business model. Unconventional reservoirs have no more heterogeneity than the operators who currently control them. In other words, not all companies are created equal. It’s true in all other sectors of the economy, certainly no different here. To say the shale “revolution” is only made possible by cheap credit is just stupid. Oil and gas bidness is the most capital intensive business outside of space exploration- so ,of course, access to capital is critical for innovations in production to occur. Incentives for investment in energy have always existed in one form or another. Commodity prices, in this case, were the catalyst for the initial development of shale fields and infrastructure. High prices will not be as necessary going forward. The operators who secured the commercial acreage are not relying as heavily on high-yield financing as are the small fries who came to the party late. Economies of scale make LTO work and unfortunately the access to cheap credit and high commodity prices let a bunch of diluted, second rate operators in the marginal areas of the plays. These guys will be wiped out by the credit crunch and lack of overall commerciality of there positions. Who gives a shit. This is the nature of the beast. If anything, it did the EOG’s of the world a favor by delineating the economic windows of the play. Most of this was done during times of unusually high prices so the in-ground assets of the failed operators are probably close to neutral in terms of NPV (if you factor in some salvage value). The chain of M&A’s will be kicking off soon and the rest of the commercial acreage will be absorbed by those with the lowest cost structure and ability to continue without being levered up out the eyeballs. Public companies will use a mix of equity, debt, and free cash flow to develop their leasehold at a reasonable pace and will earn an adequate (not huge) return. In the interim, service companies will capitulate and overall prices will moderate. The real unknown lies in the performance of in-fill wells and the ability to successfully down-space. IMO, no conclusive data is being presented in the major plays to make the case one way or the other. The long-term profit driver for these companies is the ability to manufacture repeatability at minimum spacing after the infrastructure build out and common lease facilities have been largely paid off. In the grand scheme, US shale reserves are small potatoes. The chicken littles screaming the I told you so’s about the shale biz aren’t saying much. It is what it is. It will work as a moderately profitable model for a decent period of time for SOME and others it won’t. It will not make the US energy independent and it won’t change the world. It’s not a black swan or a revolution or anything that dramatic really. It’s a nice tale of dedication, perseverance and American ingenuity but its net neutral at best in terms of economic plus or minus.

            • Ryan, please learn how to use paragraph brakes. Your post is very hard to read without them. And indicate who you are replying to?

              To say the shale “revolution” is only made possible by cheap credit is just stupid.

              Who wrote that? I did not. However I would not argue with that logic. A lot of small drillers would not be in business without the money from low yield junk bonds. Now junk bonds are yielding a lot more, it will be a lot harder for them to borrow money.

              US shale reserves are small potatoes.

              I don’t know about reserves but US shale production is definitely not small potatoes, it is the one thing that has kept the world from hitting peak oil way back in 2005 or 2006.

              • Ryan C says:

                Ron,
                Apologies. And thanks for the advice on forum etiquette. Paragraph breaks dually noted!

                My response was supposed to be directed at this post by Northwest resident which was a carry-over argument from a post SRSrocco made. I am new to this forum and am having trouble following the spider web of comments which seems to pile up at a precipitous rate.

                “We couldn’t afford it. It was a “boom” charged to credit with no way to repay. It was like somebody who knows he’s going to file for bankruptcy anyway, so why not go out and max the credit cards before filing. If you ask me, the whole shale revolution was an engineered event to buy a little more time, to throw one last really wild party before the lights go out. Now here we are, no more credit, buried in debt, and no more time. Lights out!”

                Anyway, my point is that most successful LTO producers are major, public companies who do not rely solely on bonds to finance their drilling efforts. I can’t cite credit ratings for individual entities but I doubt most of them are junk status. The high yield financing is more symptom than cause. Like any market segment, you have winners and losers. Most drillers who relied on high yield debt to finance operations were late establishing positions in commercial areas of the plays which has been and will continue to be the only way to earn a decent ROI and ROE in the unconventional realm. The others simply did it because it could be done and people would lend them the money to do it. Because shale is somehow viewed as a revolution or phenomena, we tend to extrapolate the notion that it is either a success or an abject failure. The correct conceptualization is more akin to conventional production in that capital investment may work for one company and not for another depending on the result of operations. The only difference is conventional development is mainly subject to geological risk and unconventional subject to economic risk. In this sense, there is very little significance to North American LTO production outside of the confluence of factors that allowed for many incapable and unsustainable entrants to the plays which ,in turn, caused a significant production spike from the US. On a go forward basis, high commodity prices ($85-$100+) are not necessary for good operators to succeed.

                “I don’t know about reserves but US shale production is definitely not small potatoes”

                The “sweet spots” in the two major plays (Bakken & EF) are limited in scope. The Permian still has questions surrounding economic recovery rates and thus proven reserves. Given decline rates and the correlation between commodity prices and CAPEX, US proven reserves are very small in comparison to SA, Venezuela and other low cost, high reserve countries. Correct me if wrong, but I believe EIA estimates US proven reserves around 40 billion. IEA estimates put SA and Vend at nearly 200 billion MORE THAN US! When you put it in perspective, there is nothing all that significant about US unconventional production aside from how quickly it ramped up. We should stop viewing it in the light that its some exceptional, world-altering discovery. It’s more comparable to tech companies in the late 90’s. A bunch sprung up. A bunch failed. The good ones consolidated and are still around today. The major difference being that eventually commercial shale fields will deplete and the companies still standing will have to look elsewhere.

                • Most of Venezuela’s oil resource is in the Orinoco oil belt. That oil is similar to Alberta’s “bitumen”, but it has a lower viscosity. Under current circumstances a lot of those booked reserves can’t be produced. And even if one tries to move ahead it would take years to turn things around.

                  The way I see it they got the brazilian fields, ITT in Ecuador, Vaca Muerta in Argentina. I can think of a few other places, but the other reserves they have will require lots, lots of wells. It’s going to get busy in a couple of years.

        • Boomer II says:

          Unless the technology they have created can produce oil over an extended period of time at an affordable price, then it probably isn’t going to change anything.

        • Name says:

          Nick Hail > The biggest threat to your whole theory is a black swan event. The most probable cause of this is technology. I know of 2 techs being tested that have the ability to render the whole production curve as we know it wrong.

          “Sustainable Energy – without the hot air”
          http://www.withouthotair.com/Videos.html

      • I linked this post at Judy Curry’s “week in review”. I think you’ll have some new visitors.

      • Allan H says:

        Ron, excellent presentation. I believe you are correct in calling peak oil in the near future. The fact that the Saudis are investing billions for fracking their shale oil deposits is an indicator that even they see the end of their enhanced oil recovery in historical fields
        But just to play devil’s advocate, I do not see a huge plunge in oil production worldwide. As it starts to fall, the Russians, Chinese and Saudis will push shale oil production. This will slow the fall in production and might even cause a second hump or plateau. Further development of North American shale and tar sands as well as some EOR will ease the drop on this side of the world.
        As price rises, exploration will increase and some new finds will come on line.

        All in all though, this does look like the top. One does have to be wary of new “accounting” methods for oil that might make things look better than they are.

        We can always hope the new method for low temperature conversion of CO2 to methanol comes out of hiding again. That and some other methods will ease the change. It will be quite interesting to see the response when oil descent becomes obvious.
        Storage solutions:
        http://www.vtnews.vt.edu/articles/2013/04/040413-cals-hydrogen.html
        http://www.technologyreview.com/view/512996/a-cheaper-way-to-make-hydrogen-from-water/
        http://cleantechnica.com/2015/01/31/citigroup-predicts-battery-storage-will-hasten-demise-fossil-fuels/

    • TechGuy says:

      Fern Wrote:
      “This implies tight supply, which leads to more investment…Stepping out of the real crude oil realm, If prices rise beyond $100 per barrel, I also expect the biofuels industry to go bananas increasing production. ”

      Its very likely that this dip in price, even if short lived will have a more lasting effect on CapEx spending. Investors and Oil majors will be reluctant to jump back in with both feet, fearing another price collapse. It very unlikely the global economy can sustain $100 oil. As prices creep up, consumers will cut consumption causing demand destruction. This cycle will repeat until the economy finally collapses or World War 3 breaks out. The primary reason why oil prices have fall is because demand has fallen. It appears to me that the massive amount of Central banking has been able to prop up the global economy. The first round of QE implemented ZIRP (Zero Interest Rate Policy) has come to its conclusion. To keep the economy afloat, Central banks will need to implement NIRP (Negative Interest Rate Policy). However I don’t expect NIRP to last as long as ZIRP, and there once NIRP is done, there is not else left to prop up the global economy. ZIRP and NIRP are the equivent of eat ones seed corn. Once all of the capital savings are gone the economy will die. ZIRP was an attempt to get savings spent to keep the economy running. NIRP is designed to force the reaming capital to be spend (either spend it or lose it).

      Biofuels are not an energy source, and need other energy resources for the conversion. Plants require petrochemicals for productive yields. It takes energy to harvest and process the crop and even more energy to convert it into a usable fuel. The cost of biofuels is considerably more expensive than fossil fuels.

      The beauty of fossil fuels is that they all originate under-ground and allowing the surface of the planet to be utilized for other uses. For instance. land can be used to raise crops for human and animal consumption, and grow trees for lumber. With the exception of fracking, Water is not required to extract and process fossil fuels. If the economy was to switch to biofuels. Land, water and other resources must be diverted from other productivity (ie growing food) to fuel production. Large scale biofuel production to preserve BAU is walking dead man. Biofuels are also a disaster for the environment as it cases massive deforestation and farmers cut down forests to make room for biofuel crops. The World needs more trees since the are a natural carbon sink and also absorb air and water pollution. Trees are nature’s all purpose cleaning system.

      In conclusion. Not only have we reached Peak Oil, Peak Energy Extraction, we also reached Peak CapEx for Energy resources.

      • Boomer II says:

        Once all of the capital savings are gone the economy will die. ZIRP was an attempt to get savings spent to keep the economy running. NIRP is designed to force the reaming capital to be spend (either spend it or lose it).

        I think another issue we have to deal with is that even if oil were cheap and plentiful, these financial tricks haven’t encouraged the rich to invest that money in activities that benefit the middle and lower classes.

        So even if we had cheap plentiful oil, if most of the world’s population has little money to spend on it, then demand goes down.

        There’s enough income inequality that I don’t think cheap oil alone can drive economic growth these days. If you want to pay the poor to buy the cheap oil, then you can keep things running. But if they have no money to buy, then it doesn’t matter how cheap it gets.

        Or you could pay the oil producers to generate cheap oil and then they can give it away. However, in order to pay those producers, the governments either have charge the rich more taxes, or the governments have to create more debt.

        So we have a combination of economic and resource problems.

      • Stu from New Jersey says:

        The point about the underground source of fossil fuels is beautiful. I’ve been looking at this problem (peak whatever) for over a decade and did not encounter it. A simple mental construct that should immediately impress upon a reader the unlikelihood of using alternate sources to completely replace fossil fuels.
        Thanks.

        • Stu, I guess the idea is fairly simple: fossil fuels do run out, as they do we must have replacements, if replacements don’t compete on price with fossil fuels the cost of energy increases, this leads to either population reductions and/or a less energy intensive lifestyle.

          My concern arises because I read unrealistic assessments about renewables, way too optimistic and utopian.

          I also see the USA president is being advised by people who advocated de-development 40 years ago. De-development can be a Troyan Horse used by communists who realize their system leads to poverty. This introduces a political factor into the equation I don’t like at all. After seeing what communism does close up I’d rather be dead than red.

          • Colin Boyle says:

            “After seeing what communism does close up I’d rather be dead than red.”

            Given that communism has never been implemented (not even by so-called “communist” regimes), I do wonder how you managed to see it.

            • Boomer II says:

              Yes, that is my thought, too. I don’t know any “communists” other than a few hippies who used to live on communes.

              • Old farmer mac says:

                Call them what you please but the people who controlled Russia and the twentieth century Russian empire called themselves communists.

                And while they were not quite as evil and bad as bad as Hitler they certainly gave him a run for the money when it comes to being bad characters.

                And Chairman Mao called himself a commie too. He isn’t usually mentioned in the same breath with Jesus or Gandhi or other famous good guys.

                One reason I will never think of myself as a liberal is that back when I was at university in the dark ages the liberal establishment had its head out of sight up Soviet Russia’s ass. This was such an obvious crock of shit that I just about puked for many years even thinking about it..

                We were supposedly the bad guys but just about anybody could come to or leave the US back in those days. The lefties who controlled the intellectual debate on American campuses were for some reason unable to acknowledge the existence of the Iron Curtain.

                • Boomer II says:

                  There have been religious fundamentalists that would never call themselves communists but who have been known to rape, kill, and oppress. So I don’t think economic labels tell us much. There are evil people who may call themselves whatever they want, but what they have in common is the willingness to use power to serve their ends.

                  I think any of the “it’s a communist conspiracy” comments in this forum tell us nothing. As I have said before, they might as well say it is Satan who is doing this.

                  We’ve got people saying the “communists” are behind the bike riding movement: Bike paths are a plot to take away our cars.

                  Of course, roof top solar must be a communist plot to lessen the influence of utilities. It is more American to give your money to oil companies, coal companies, and electric power plants than to have roof top solar. Yeah, right.

                  • Old farmer mac says:

                    It is certain that roses no matter the name smell the same.

                    I agree that labels are of limited use but where would we be without them?

                    People who think of renewable energy and especially user owned renewable energy as a commie plot are just reflexively shooting off their partisan mouths.

                    People of that sort are too ignorant to talk to as a general rule but some of them have brains. The ones with brains are just cynically manipulating public opinion in favor of their own political faction to the extent they can.

            • Muppet says:

              Brings to mind the last sentences of a well-known book…

              “Twelve voices were shouting in anger, and they were all alike. No question, now, what had happened to the faces of the pigs. The creatures outside looked from pig to man, and from man to pig, and from pig to man again; but already it was impossible to say which was which.”

            • TechGuy says:

              FWIW: The concept of Communist (or Marxism). Is completely flawed. In human nature, no body is going to work there butt off if they can’t keep the fruits of their labor. Venezuela is a classic example of the failure of Communism. When production is taken away from the producers to share with the poor, the producers simply stop working and the whole system collapses. Why should I work my Butt off, if I get nothing out of it? why work hard when you can do nothing and someone else will provide for me?

              The majority of people believe that capitalism is evil, and don’t even understand it. No where in the world at this time is there pure capitalism. Its all manipulated by the politicians that have set up a system of deep inequality. Its the manipulated system that causes deep inequality and politicians use propaganda to blame capitalism for inequality.

              Karl Marx was a horrible, horrible person, and in no circumstance should he be a role model for human society and development. Karl was clearly mentally disturbed.
              https://www.youtube.com/watch?v=yA2lCBJu2Gg

              • Boomer II says:

                No where in the world at this time is there pure capitalism. Its all manipulated by the politicians that have set up a system of deep inequality. Its the manipulated system that causes deep inequality and politicians use propaganda to blame capitalism for inequality.

                Karl Marx was a horrible, horrible person, and in no circumstance should he be a role model for human society and development. Karl was clearly mentally disturbed.

                And nowhere in the world is there pure communism.

                What we do see is a power grab by people at the top, no matter what they system. Pointing to “communists” as the problem isn’t helpful because there are no “communists” in power in any country. There may be dictators and there may be a power elite, but they aren’t “communists.”

                • Nick Hail says:

                  What about socialists that are just commie light for people like Marx. It’s a stepping stone. To the Utopia that ends up killing millions.

                  • Boomer II says:

                    What about socialists that are just commie light for people like Marx. It’s a stepping stone. To the Utopia that ends up killing millions.

                    Oh, God, please. Can we hit the delete button?

                    What about farm co-ops? Are they commie fronts?

                    What about babysitting co-ops? Are they commie fronts?

                    Are homeowners associations commie fronts?

                    People form groups and share ownership all the time. Is that commie light?

                    I suppose the sharing movement, where people rent cars, tools, bicycles, and such, rather than own them is the first step toward the slippery slope of sharing ownership.

                  • ezrydermike says:

                    not to mention the impurification of our precious bodily fluids

                • Alexis Tsipras is a communist. Nicolas Maduro is a communist.

                  The Chinese Communist Party is run by people who were raised in a communist dictatorship but realized communism sucks. They want to keep the repressive machine alive but are tuning to a dirigiste form of fascism.

                  The same applies to the Cuban dictatorship, which has a very strong personality worship culture tied to a very repressive regime. In their case, they hope, with Obama’s and corporate interests, to morph into a fascist regime, with emphasis on links with foreign multinationals which use Cuban slave labour.

                  Don’t forget I was trained in Cuba as an “internationalist”. This means I know communist dogma, methods, and practices. And I also know they are quite willing to murder and commit terrorism to achieve their ends.

                  So when you deal with me you do have a problem. I have lived inside the monster, and I know its entrails. And I know you are a naive follower of a system you really know nothing about.

                  • Boomer II says:

                    And I know you are a naive follower of a system you really know nothing about.

                    And what system am I a follower of?

                    It appears your training has made you very dogmatic in some areas. Whenever we get on certain topics (e.g., alternative energy), you shoot them down. You see plots where there aren’t plots. Maybe because of your background you don’t realize, for example, that there are private property owners in Nebraska who don’t want a pipeline across their land. They aren’t funded by Venezuelans. These are people who have owned the land for generations. PRIVATE PROPERTY. They don’t want a Canadian company to come in and legally force them to allow a pipeline (which may leak) across their land.

                  • The landowners aren’t funded by the venezuelan dictatorship. But the other hangers on sure are. Look, it’s fairly easy to track the relationships. Just this morning I read a very reliable source naming names and discussing cash flowing from Venezuela’s dictatorship to Tsipras. I sure wish you guys could speak Spanish to listen to material like this

                    http://dieta-politica-religion.blogspot.com.es/2015/02/pte-de-la-asamblea-nacional-de.html

                  • Boomer II says:

                    But if you don’t understand why the landowners are fighting the pipeline, then you don’t understand the issues on the ground. There have been enough pipeline accidents that farmers and ranchers don’t want the possibility of oil leaking on their property. And they definitely don’t want a foreign company to use US laws to FORCE them to have pipelines on their property.

                  • The idea That this is a farmer movimiento is bogus. Its driven by watermelon politics and financed by the venezuelan dictatorship because it wants to avoid competition to the oil it ships by tanker.

                  • ezrydermike says:

                    Fernando, you should like these people know where they can get some of that venezualan cash

                    http://boldnebraska.org/about/

                  • The Punisher says:

                    Fernando-The Ted Cruz campaign has hereby requested you personally. Pleaase pack your bags and leave this evening. Amen!

                  • Who is Ted Cruz?

              • nNgass says:

                TechGuy have you frequented an US school, maybe in the Deep South?

                • coffeeguyzz says:

                  Boomer II, the farmers’ coops, babysitter/homeowner coops can and do show the strength of collective efforts. They are voluntary.
                  Involuntary collective action, entailing necessaties such as food, have had horrific historic consequences … as the millions of dead Ukrainians from the 1930’s can attest.

                  • Boomer II says:

                    So, how is it that allowing people to own/lease roof top solar is “communist” but forcing them to get their power from a monopolistic utility isn’t?

                • TechGuy says:

                  “TechGuy have you frequented an US school, maybe in the Deep South?”

                  No, unfortunately, the exact opposite. Fortunately, I avoid taking the socialism pill and developed critical thinking to cut through all of the propaganda and BS.

              • Opritov Alexander says:

                “FWIW: The concept of Communist (or Marxism). Is completely flawed. In human nature, no body is going to work there butt off if they can’t keep the fruits of their labor. Venezuela is a classic example of the failure of Communism. When production is taken away from the producers to share with the poor, the producers simply stop working and the whole system collapses. Why should I work my Butt off, if I get nothing out of it? why work hard when you can do nothing and someone else will provide for me? ”
                ——-
                Yes of course
                Main.
                in order to all work.
                and to
                factory owner
                shared money
                with society
                it does not matter as it will be called
                though communism

              • Political Economist says:

                “When production is taken away from the producers to share with the poor”

                So the “poor” are not producers? And “producers” are only the top 1% or 5%?

                Before you criticize Marxism, if would be helpful if you know about what Marxism is about.

                • TechGuy says:

                  “So the “poor” are not producers? And “producers” are only the top 1% or 5%?’

                  Perhaps I should have used “non-productive portion of the population”. There are indeed some poor people that are hardworking, in most causes their efforts eventually remove them from poverty. Lots of people are stay poor because they don’t want to work or are manipulated to believe they can’t get out.

                  On the other extreme, there are people in top 5% that manipulate the system and built their “empire” on the backs of the productive workers and preying on the poor. These are generally, but not limited politicians that obtain power and use it to enrich themselves. There are extremes on both ends of the spectrum.

                  Handing out money blindly to the poor never works. I rather see resources be directed to making the poor productive, whether through education, and motivation that gets then interested in doing some productive. Creating a generation of people utterly depend on gov’t handouts is self-destructive and creates feedback loops. The politicians that promise the most handouts always win elections. The US has followed a path of wealthfare for 50 years, since then, poverty has increased substantially. We now have multigenerations of broken families (single mother families) that survive on wealthfare. Its become the so ingrained in their lives that its become a prison from which they are unable to escape. I am deeply sadden that these people are trapped in a system of dependency that is designed to prevent them from ever escaping.

                  • Boomer II says:

                    Creating a generation of people utterly depend on gov’t handouts is self-destructive and creates feedback loops. The politicians that promise the most handouts always win elections. The US has followed a path of wealthfare for 50 years, since then, poverty has increased substantially. We now have multigenerations of broken families (single mother families) that survive on wealthfare. Its become the so ingrained in their lives that its become a prison from which they are unable to escape. I am deeply sadden that these people are trapped in a system of dependency that is designed to prevent them from ever escaping.

                    Politicians aren’t really going to cut government spending. There are a lot of people depending on Social Security, Medicare, military jobs and retirement, and so on. If the government stopped all its payments to people, the US economy would collapse. I doubt you’ll see it happen.

                    A lot of people don’t realize that the conservative states are the most dependent on Federal money. They tend to be the states that pay less in taxes to the Federal government than they get back in government money. So the ones where people most bitch about Federal handouts are often the ones benefiting most from them.

                    You can see a map of states that get a higher percentage of money here:

                  • Boomer II, I don’t see any map.

                  • Boomer II says:

                    Did the link to the article not work? Here is a link to the map image.

                    http://voices.washingtonpost.com/ezra-klein/mapstatestaxes.gif

                    And here is the link to the article again.

                    http://www.ussc.edu.au/blogs/Are-red-states-addicted-to-government-spending

                  • Boomer II says:

                    Sorry. I didn’t realize I hadn’t posted the link. However, in my previous message I posted a link both to the article and directly to the map.

                    We’ve got a whole lot of states that benefit from government money. Interestingly, these are the states that tend to vote for politicians who say they want to cut government spending. However, if government spending does go down and these states see less money coming to them, I would expect the states would change their tune.

                    It’s like comment or placard attributed to a Tea Party protester, “Keep the government hands off my Medicare.”

                  • SW says:

                    Oh Christ. Another self taught expert on human nature. It’s either bootstraps or the folly of failing to choose the right parents. Spare the world your sermons. From the dawn of civilized society there have been two means by which the human species advances. Individual effort and collective action. Only a fool or a mouthpiece for self interest denies the necessity of both components. Ideologues and charlatans have been making hay out of our inability to see both of these things simultaneously. So you want to add your voice to that madness? Knock yourself out.

                  • Boomer II says:

                    From the dawn of civilized society there have been two means by which the human species advances. Individual effort and collective action. Only a fool or a mouthpiece for self interest denies the necessity of both components.

                    A same comment, for once. As the world gets tougher, I think you will find that people will form groups precisely because it is in their self-interest to do so. Pooling talents and resources has always been important.

                    And if people here think humans only listen to themselves, then they are discounting the centuries of religion, kings, leaders, and so on.

                  • Boomer II says:

                    From the dawn of civilized society there have been two means by which the human species advances. Individual effort and collective action. Only a fool or a mouthpiece for self interest denies the necessity of both components.

                    I meant to say a SANE comment in reference to the above quote.

              • Old farmer mac says:

                I disagree thoroughly. Marx was an oddball of course but he was a man to be reckoned with as a philosopher.

                There is even today a good bit of insight to be gained from study of his writing.

                People who don’t understand Marx generally lack an understanding of the world as it existed in his time.

                Capitalism today is a far kinder and far gentler animal than it was in his day- having been mostly tamed and domesticated by government.

                But as smart as he was he didn’t understand some key facts about human nature and his overall vision was fatally flawed.

                • TonyinPDX says:

                  Several years back, I spent some time reading some Marx. And I also read Adam Smith’s The Wealth Of Nations. After reading, talking, and pondering, I found that my suspicions were correct: a lot of people who revile Marx and revere Smith have read neither.

                  Someone once observed that while Marx was exactly right about capitalism, he was exactly wrong about communism. I’ve always liked that observation.

              • The Punisher says:

                Tech Guy, are you exhuming Karl Marx? Gott im Himmel! If you really think that all this garbage about the “invisible hand” is anything more than a talking point for the Chicago School than you are the kind of fool that Marx wrote so eloquently about. Put down your copy of Atlas Shrugged, better yet throw it into the fire.

                • Old farmer mac says:

                  Only a blind fool who has not actually read ATLAS SHRUGGED would ever suggest throwing it in a fire. Or throwing ANY book in a fire.

                  Of course a lot of fools are incapable of reading a novel as philosophy and commentary rather than as a blueprint- the socialist leftist element has demonized Rand as thoroughly as the laissez faire crowd has demonized Marx.

                  And of course a lot of fools on the right wing have put Rand on a pedestal that is built out of mud and sand with no mortar.

                  Rand sucks as far as her prose style is concerned but she was a pioneer – maybe even THE PIONEER in writing a widely read book that had a woman as the key character – a woman who crashed thru the glass ( concrete in those days) ceiling to the very top and proudly proclaimed her personal freedom as a human being to be her own person in every respect including who she chose to sleep with.

                  The socialist leftist element in American politics has so thoroughly crapped on Rand that I have found it necessary to introduce her as a writer to a number of sharp liberal young women who had no idea AT ALL what the book is actually about.

                  Now as far as her political vision as expressed in this novel is concerned – let us remember THREE things.

                  ONE- she knew communism first hand thru her family as it was practiced then.It wasn’t pretty. Having seen it she understood it was a capture of government by big business interests – that government and business morphed into one. Call it the capture of business by government if you please it amounts to basically the same thing. Power concentrated in the hands of a very few people concerned with their own problems and desires and to hell with everybody else for the most part.

                  TWO – She missed the way just about any businessman or big business AS SUCH can and gladly will fuck over anybody and everybody.But it is only a novel and within the constraints of her plot and her own background she did ok.

                  THREE – SHE ABSOLUTELY NAILED IT DEAD CENTER in the TEN RING when she wrote the book the way she did with BUSINESSMEN AND GOVERNMENT COLLUDING TO FUCK OVER THE COMPETITION WITH ZERO CONCERN FOR THE CONSUMER OR THE COUNTRY.

                  All together now children- can we say GOLD IN SACKS and TREASURY or FED in the same sentence without acknowledging they are getting pretty damned close to one and the same?

                  Can we say ” teacher” and NEA and monopoly in the same breath?

                  Do we have a law enforcement judicial prison industry that exists in large part for the benefit of the business people involved in it? ( Pot being against the law etc )

                  Incidentally Fernando is absolutely and one hundred percent correct in his general description of Venezuelan and Cuban politics. He may or may not be correct in terms of any specific detail but I am more than willing to give him the benefit of the doubt.

                  I have been reading what has been published by PEOPLE who LIVED in communist countries as it became available for fifty plus years.

                  I strongly recommend that anybody who wants real insight into economic and political reality read both Marx and Rand as well as serious history a couple of evenings a week instead of watching football.

            • I saw what commnists achieve in real life. You see, the system can’t be implemented. When communists try to do it, they botch it. Because many of them think like you, they try to tweak things. This usually leads to torture, murder, and other unspeakable human rights abuses. So I can vouch for it. It’s evil. It floats psychopaths and other individuals with very sick minds right to the top echelons.

              • ezrydermike says:

                “Because many of them think like you, they try to tweak things. This usually leads to torture, murder, and other unspeakable human rights abuses.”

                sounds disturbingly similar to the MIC in the USA

                • John B says:

                  Well he was a Communist Party supported candidate. Although they were smart enough to change their name to the “New Party”.

                  In practice there are only 2 forms of government. Democracies, and Oligarchies. No 1 person can run a country, it takes a group. Dictatorships are actually Oligarchies.

                  Certainly Democracies are the lessor of evils. However, when the Plebs decide to start voting themselves free stuff, the country is pretty much doomed. E.g. Greece.

                  I suppose it’s only fitting that the world’s oldest Democracy, would be the first to destroy themselves at the ballot box.

                  • TechGuy says:

                    “In practice there are only 2 forms of government. Democracies, and Oligarchies. No 1 person can run a country, it takes a group. Dictatorships are actually Oligarchies.”

                    Unfortunately, democracies don’t exist in the real world. All of the “democracies” are representive gov’ts where the people “allegedly” elect bureaucrats to make all of the decisions for them. In just about all instance elected officials drop their campaign promises and act to benefit the oligachs and themselves.

                    In some “democracies” there is only one ruling party as the other parties never obtain significant control. Japan is an example, since the end of WW2 the “Democratic party of Japan” has ruled the country.

                    The US has a two party system which locks voters into two extreme views. For the most part, US candidates are selected by oligarchs by supporting selected candidates with campaign contributions and control of the media. I don’t believe in all of American history that the US elected an independent president or that one of the independent party held any significant number of seats. It very like that American democracy or free elections is just an illusion, deluding the public that they have some input into the decision process. Notice the Bankers and wall street still largely written the laws, and they also appear to be above the law. They allegedly pay a fine when caught with fraud, that is appeal in the courts for decades and later dismissed. Very rarely has a banking executive ended up in jail. the same is true with all of the mega-corporations.

                • I don’t know what MIC means. However, there’s a huge distance between the hardcore communists (Castro, Ho Chi Minh, Pol Pot, Maduro, Mao, Stalin), and USA government leaders. I suppose by now you realize I don’t exactly like US policies in many areas. I consider Bush II to be a war criminal, and I had better leave it at that because I may get censored.

                  But the naive comparisons just show those who defend commnist regimes or advocate communism are mostly naive and unaware of what really goes on.

                  The USA does have committed communists who work actively and openly to defend these horrible regimes.

                  Some are more covert, and others are wide open reds (for example there’s a very active communist cell active in the University of Michigan which seems to be financed by the vnezuelan regime).

                  • ezrydermike says:

                    military industrial complex – MIC

                  • Old farmer mac says:

                    Fernando is pretty much dead on when it comes to communist regimes. The history books are there for anybody willing to read them.I have been reading them for decades.

                    This is not to say communists have not gotten some things done in certain respects in some instances. Just about everybody in Cuba for instance gets a basic education and basic medical care.

                    This is certainly not true of a lot of countries that were at about the same level of development as Cuba when the commies took over there.

                  • Boomer II says:

                    The USA does have committed communists who work actively and openly to defend these horrible regimes.

                    The US has had small groups of communists since the Russian Revolution. But they haven’t ever been taken seriously by the country as a whole. They are seen more as a religious cult.

                  • Boomer II says:

                    I’ll also point out that concern about Communists has certainly encouraged politicians to make war and monitor activities within the US because of this Communist threat.

                    That’s been a question in the US since the Russian Revolution. To what extent should the US wipe-out other countries and to what extent should it monitor all communication and activities within the US to protect against “Communists” or other enemies.

                    The more people play up the “Communist threat,” the more armed and the more of a surveillance society the US is likely to get.

                    One has to keep things in perspective here. If you start trying to accuse people of being “Communist sympathizers” you are falling into the McCarthyism trap that made life in the US ugly for awhile.

                    There are definitely evil people in the world. And in some cases we can go to war and wipe them out. But in other cases, it is beyond the capability of the US to control what happens elsewhere. While we seem to have been in a state of perpetual war since 9/11, channeling American money and American lives into fighting a never-ending war takes its toll.

                  • Boomer II says:

                    I’ve got more to say about this whole “communist” issue in the US.

                    Usually when a politician talks about “communists,” it means giving the US government MORE power. In order to stop “communists” we get more military spending, more wars, more surveillance, and these days, more local police power.

                    If stopping “Communists” means turning the US into a constant war machine and police state, not everyone wants to do that.

                    So when people try to say solar is a communist plot, I just want to roll my eyes. As if allowing consumers some little opportunity for some energy independence is a communist plot that then justifies even more government control, I think the fears are much worse than the reality.

          • Boomer II says:

            De-development can be a Troyan Horse used by communists who realize their system leads to poverty. This introduces a political factor into the equation I don’t like at all. After seeing what communism does close up I’d rather be dead than red.

            I live in a very affluence community with lots of renewable energy supporters.

            I don’t see any “communists” around me.

            • That’s probably right. Hogweed, this doesn’t mean there aren’t people out there who are unlike your neighbours. You write like a pretty normal fella. What I found is that idealists like you are the first ones to get shot. You are too honest. But I’ve been around the merry go round way too many times, I’ve seen them in action. More than once. Trust me, you really don’t want me to ruin this blog describing what I have seen.

              • My stupid spell checker called you Hogweed. It was supposed to read however.

              • wimbi says:

                Gawd! How many times have I heard all this commie chatter identical to all of above.

                ENOUGH! We know that and all other systems are bad, all we have to do is look around and see the results. All over bad bad, like everyone keeps pointing out in numerical detail after detail.

                START OVER FROM SCRATCH. First, lay down the general characteristics of an economic structure we would want. I will start it right here:

                1) Makes the world better, not worse
                2) Gives everybody enough
                3) Everybody has immediate daily access to employment that they can feel proud of doing, is good for everybody, and makes them want to get up in the morning.
                Said employment doesn’t have to be anything glorious, anything satisfying those criteria is good enough, it’s just gotta be there.

                Etc. You fill in the rest, and if you draw a blank, hire an economist to do it for you. After all, those people gotta do something to justify their oatmeal.

            • Old farmer mac says:

              North Carolina – a state often ridiculed for being bright red – is a leader in solar energy and if the state had a good wind resource- which it does not compared to the plains states – it would no doubt be a leader in wind too.

            • Old farmer mac says:

              This reply intended to Boomer’s two forty six pm comment:

              Well said and dead on !!!!!

              These things are never simple but most people are unable to bring themselves to think enough to see beyond the first layer of the onion.

              And the people who are in control of our government- being IN CONTROL- naturally just use any opportunity to gain ever more control and power.

              Darwinian evolution may not explain everything but it doesn’t miss much!!!

              We are no more and no less than NEKKID APES under our clothes and the nature of the alpha ape is to gather in as much power as possible.

              About the only real difference I can see is that in chimps the bands are smaller and the alpha usually stands alone.

              Chimps HAVE however evolved the technique of two or three second tier chimps banding together to kick the alpha’s ass if necessary.

              In humans the alphas have learned to band together and share power collectively each having a great power concentrated in one area (ownership of money maybe etc ) and sharing in overall control.

      • nNgass says:

        “The primary reason why oil prices have fall is because demand has fallen. ”
        How come when the graph shows that demand is rising.

        • OECD demand has gone down. Graph in this post

          2/2/2015
          Peak affordable oil
          http://crudeoilpeak.info/?p=6817

        • gerry from piedmont says:

          Because “demand” means one thing to economists, and another thing to everyone else. To an economist, a man with no money and dying from thirst has no “demand” for water. To everyone else, he does.

          Ignoring the relatively small factor of storage, “demand” for oil is equal to production of oil. The ability of consumers to pay for it is something else altogether.

          • Gerry, you hit the nail on the head. Demand equals consumption. The two terms are totally interchangeable.

            • Old farmer mac says:

              Hi Ron,
              They are interchangeable to people smart enough to see thru the smoke and mirrors.

              Unfortunately the evidence seems to indicate there are not very many who can.

              Of course this is just to elegant and beautiful and simple a truth to be comprehensible to people who want to believe shadowy characters control the price of things such as oil day to day.

              Your ski boat analogy is the best one I have ever come across.

          • Allan H says:

            Americans consumers (USA) spend about 400 billion dollars on entertainment and entertainment related services every year. They spend about 829 billion dollars per year on food. However they spend 1.1 trillion dollars per year on transportation.
            The only expenditure category that trumps transportation (Bureau of Labor and Statistics) is housing.
            This is just consumer spending, not business or government.
            Transport in the US is so big and is fueled mostly by oil. Oil prices are very volatile toward the high side and vehicle prices keep rising.

          • Ves says:

            Gerry,
            The ability to pay for it exists in FIAT system. The problem is that in the process you devalue units of purchasing power not only for average Joe but also Mr. Buffet. And there are only so many “farms on New Zealand” or “Oil Wells in North Dakota” for everyone with substantial purchasing power to have it if you know what I mean 🙂

      • My analysis shows sugar cane biofuels are pretty good. I’m trying to lobby the USA government to allow me to ship ethanol from Colombia. But I can’t find the right congressman willing to receive my campaign donations.

        • ChiefEngineer says:

          Do you know anything about Cerrejón and the $2 billion new infrastructure project being completed to increase coal exports ?

          • I sure don’t. I’m not from Colombia. But several years ago I worked with a guy who was researching biofuels for a large multinational. He focused on a South American target area, and showed me how biofuels were produced in Brazil.

            I concluded they were very viable, and I suggested a graduate thesis for a student at a Venezuelan University. The thesis work outlined a systems analysis for biofuels (a model using I Think software) and it concluded biofuels in the USA were losers because they used corn, but that biofuels in Latin America were winners using sugar cane.

            It also concluded they helped reduce poverty, and emphasized the land use should be regulated to switch zones used for cattle grazing into sugar cane growing areas.

            If the FARC are defeated in Colombia it may be viable to plant sugar cane in the Llanos, but this is only a concept.

        • The Punisher says:

          Fernando-please go back to trolling the Drudge Report.

      • Allan H says:

        “The beauty of fossil fuels is that they all originate under-ground and allowing the surface of the planet to be utilized for other uses.”

        That would be nice if it were true. Just in the western US the government has leased and offered the equivalent land area of Colorado for oil and gas development. This does not include pipeline areas, storage or refinery areas.
        If that amount of area was covered with solar panels at 15% efficiency they would produce 15 times the amount of electricity produced by all sources in the US (4 kwh/ day/ m2 insolation assumed).

        The Marcellus in Pennsylvania has new gas wells being fracked at better than 2000 per year. From what I recall, the sites take up about 4 acres each. That is 8000 acres lost (11.5 square miles) per year and that does not include the roads leading into the site, the pipeline areas, pumping or storage facilities.
        Pennsylvania law does not allow a building or residence within 500 feet of a well. That is 20 acres minimum off limits right there for every well pad.

        Surface mining for coal alone has disturbed (means mountain tops blown off, streams buried, etc.) 8.4 million acres of land. New land “disturbed” each year amounts to 104,ooo acres. Just mountain top removal has “disturbed” 1.2 million acres and 774 miles or streams destroyed.
        Solar thermal is estimated to need 84% of the land “disturbed” by coal and wind would power would use only 4% of the land “disturbed” by coal to produce equivalent energy. Of course, those two could not produce equivalent pollution that coal does or destruction of streams.

        • Boomer II says:

          Yes, both solar and wind are often put into areas that haven’t been fully utilized (e.g., roofs) or in areas that allow multiple uses (e.g., farming around turbines).

          Biofuel is a waste if crops are growing to burn rather than to eat, but if biofuel involves utilizing waste products, it might free up more land (e.g, landfills).

        • TechGuy says:

          “That would be nice if it were true. Just in the western US the government has leased and offered the equivalent land area of Colorado for oil and gas development. This does not include pipeline areas, storage or refinery areas.”

          Oh Please! your nit-picking. In the early 20th century, most of the developed regions of the world had been denuded of trees in order to support the demand for firewood for fuel. After Oil production and coal mining (at the time most of it mined underground not open pits) the woods regrew since it was no longer been striped for firewood. Just about all of the open pit coal mines are in undeveloped land that would be very marginal to grow crops. In the context of biofuels (in response to Fern’s comments about biofuels), Biofuels need the same high yield farm land used to grow crops. Switching to biofuels will need to complete with land currently being used to grow crops.

          Solar PV systems are a low density energy resource. It takes many square miles of PV panels to equal the output of a single baseload fossil plant that occupies less than a 100 acres of land.

          In the case of of Nat Gas drilling. The top side of the land is still available for farming (presuming the soil and ground water has not been contaminated).

          “Solar thermal is estimated to need 84% of the land “disturbed” by coal and wind would power would use only 4% of the land “disturbed” by coal to produce equivalent energy.”

          That state is completely wrong. PV and Wind which are intermittent power sources can’t make up more than 7% of grid output. Any further increase would destabilize the grid.

          • Boomer II says:

            PV and Wind which are intermittent power sources can’t make up more than 7% of grid output. Any further increase would destabilize the grid.

            Putting solar in where it doesn’t plug into the grid is a good use of the technology. There are lots of places where that can be done.

            • TechGuy says:

              I gotta ask this: Why are you and the others that believe PV and wind can replace fossil fuels here? I figure if you really believe PO can be solved with renewables, you have nothing to worry about. Why waste your time reading and commenting about PO when there is nothing to fear? Why not just go about BAU and forget the whole mess?

              • Boomer II says:

                Why are you and the others that believe PV and wind can replace fossil fuels here? I figure if you really believe PO can be solved with renewables, you have nothing to worry about. Why waste your time reading and commenting about PO when there is nothing to fear? Why not just go about BAU and forget the whole mess?

                I believe a greater use of renewables can reduce the amount of fossil fuels we use, thus postponing their decline.

                As for why I am here. I live in an area where fracking has been moving into heavily populated areas, and some of those communities have been trying to block it.

                I have wanted to understand the economics of fracking to know whether this will be a boom-and-bust situation. If so, then I believe communities are wise to think twice about disruptive practices by companies that might go bankrupt and then not be able to pay any damages they might create.

                • You can hire me pro bono to help you tame the lion. There are options galore to minimize social and environmental impact. But you will need state government cooperation.

          • Allan H says:

            That is why so many new companies are forming to provide storage solutions.
            Seems that somebody always says it can’t be done, and then it is.

            • Sometimes we say something can’t be done. And then it can’t. Those tend to be buried. Take fusion using the Tokamak. Or the USA space shuttle achieving low launching costs. Or Thomas Gold finding oil in Sweden. Or building the giant gas pipeline from Alaska. Or finding dark matter.

          • Cave Bio says:

            That state is completely wrong. PV and Wind which are intermittent power sources can’t make up more than 7% of grid output. Any further increase would destabilize the grid.

            I have mentioned this company/technology here before and of course it was completely ignored. This is not the only company claiming to have solar thermal technology that allows a solar plant to produce energy 24/7. I am trying to convince a buddy of mine that works for a major American power company to give them a look.

            So far he has been dismissive because, like so many here, he has a preconceived notion of what is true and so he refuses to even look at the data.

            http://www.bren-energy.com/

            • Boomer II says:

              There are enough people who want to have their own solar power and there are enough off-grid uses for it that right now it doesn’t matter the extent it dovetails with the grid.

              In fact, I am guessing that with the people objecting to solar as an entire category, there must be some worry that it is actually threatening utilities. If solar is such a minor consequence and will never amount to anything, then let it develop on its own, without the protests. If solar is nothing more than a hobby, then let the hobbyists continue to play around with it.

              And what can be less “communist” than allowing people to develop their own power? Seems to me that forcing people to buy from a monopolistic power company is closer to “communism” than having lots of people own or lease their own systems.

              • Your guess is wrong. If you want to have a solar panel farm and use it in an isolated power system you are helping those of us who don’t. If you want to sell the electricity or have the grid back you up then you are impacting my costs and freeloading, and I object to it. I sense this difference escapes many solar panel advocates.

                • Boomer II says:

                  If you want to sell the electricity or have the grid back you up then you are impacting my costs and freeloading, and I object to it. I sense this difference escapes many solar panel advocates.

                  If I want to generate electricity and not sell it to the grid or get off the grid entirely, that shouldn’t be a problem for you.

                  • It’s not. Just don’t expect backup when it rains. Or when you get sand blowing in from the Sahara and it covers your panels.

                  • Boomer II says:

                    Just don’t expect backup when it rains. Or when you get sand blowing in from the Sahara and it covers your panels.

                    If I make arrangements to purchase additional power when I need it, I should very well be able to get it. It is entirely possible to have solar not feed into the grid, but to still be connected to the grid for occasional use.

                    But I assume you mean that if solar results in the demise of the grid, there won’t be a grid for backup. Fair enough. People will do without when there isn’t enough solar, or they will have their own backup systems. And it could be a community-wide backup system rather than a per-house system. These are problems that can be dealt with in on way or another.

                    People have snow days when it becomes too snowy to get around. They have blackouts when storms knock out the power lines. They take those days off. It can actually be fun when the world stops and you can’t do anything for a few days. If you anticipate this happening a lot, you put up enough supplies to get through it. You have a supply of saved water. You have a supply of dry food and canned food. You don’t keep too much in your refrigerator, so that if your power goes out for several days, you won’t lose anything. And so on.

                  • Its posible for you to self generate, and parchase excess electricity the grid has available for you. But you will have to stand in line. You see, if a lot of people put up solar panels and start demanding electricity in cloudy weather the grid could collapse.

                    And we really can’t afford to keep generators turning just in case you happen to demand your juice.

                    Those who insist on getting electricity on demand are freeloading. This is the real conflict. A conflict I see gets ignored by all those chinese agents who sell solar power

                  • Boomer II says:

                    Its posible for you to self generate, and parchase excess electricity the grid has available for you. But you will have to stand in line. You see, if a lot of people put up solar panels and start demanding electricity in cloudy weather the grid could collapse.

                    You realize, don’t you, that people are talking about the system collapsing anyway. The grid system probably isn’t the best way to distribute energy in the future.

                    Distributed, but intermittent power, may turn out to be better than centralized power that has its own set of problems.

                  • People talk about zombies, ufo’s, ghosts, etc.

                • Wake says:

                  I am? Does my tie to the grid for intermittent use put on the same strain as someone using more consistently, and for longer distances>? Does my electricity generated out the same strain on the grid, or is it distributed locally?

                  If I generate and sell electricity at peak afternoon hours is that more or less cost effective for others versus building out peaking capacity?

                  • It depends. In general people with solar panels who sell to the grid and expect back up are freeloaders. They cost everybody else a bunch of money. And in this world not everybody can be a social parasite.

                  • Boomer II says:

                    In general people with solar panels who sell to the grid and expect back up are freeloaders.

                    Are oil and coal producers who sell to utilities also freeloaders?

                    Seems like the system may just need to be finetuned. If utilities buy resources for energy generation, then why not buy from individual homeowners as well?

                  • Boomer II says:

                    What you are seeing with many new Internet business models are people with something to sell being connected with people who need to buy.

                    At some point it will be reasonable to assume that people who generate excess electricity can be connected with people who need excess electricity and a transaction can be brokered between them.

                    Utilities are currently operating on an old business model based on centralized power generation, but I anticipate that different business models will develop that they will either adopt or that will replace them.

                  • Because they are freeloaders. Tell you what, why don’t you build a system dynamics program? Buy a software package called “I Think”, train yourself using simple simulations. Then ask engineeers and economists to help you refine it. You sound like you are smart, but need to understand the system dynamics.

                    http://www.iseesystems.com/Softwares/Business/ithinkSoftware.aspx

                  • Boomer II says:

                    I think the world is moving toward distributed power generation. Whether the grid fails because of declining fossil fuels, concern about pollution, political or security reasons, or some other reason, distributed power generation is happening bit by bit. In places with no grid to begin with, people can create an entirely different system from the ground up. In places where there is a grid, individuals are likely to continue to find ways to exit the grid.

                    And in places where the only way to make the grid continue to work is to upgrade it and continue to pump more money into it, people may decide distributed power is better.

                    In a world were many of us talk about the end of business as usual, maintaining a power grid is perhaps one of the biggest examples of thinking in terms of business as usual. If BAU is coming to an end, then the grid is likely to be affected too.

                    In some respects it doesn’t matter if alternative energy technology is comparable to the grid. If the grid quits working because the entire world economic system has changed, then alternatives will be sought.

                    Alternative energy technologies don’t have to replace the grid right now. But as more people work with them, they will be there as the grid suffers its own set of problems.

                    And is it possible that alternative energy technology will bring down the grid? Yes. That is a plus if you believe it is the disruptive technology that will bring about big change. And it is the fear if your wealth is invested in the grid.

                    http://www.eenews.net/assets/2014/02/25/document_gw_02.pdf

                  • Boomer II says:

                    The thing about solar is that it is happening. And because it can be done on a small scale, hobbyists and DIY types can continue to use it even if it isn’t embraced on a large scale yet.

                    You can charge your phone with solar. You can have electricity out in the middle of nowhere with solar. There are advantages to solar that are going to keep the technology moving forward.

                    There was a time when no one thought the home computer market would take over mainframes. However, the home computer market eventually got cheap enough and widely enough installed and powerful enough that it changed the entire industry.

                    Trying to move the big ship of centralized power will take awhile. But if many of the gaps are filled in with small scale solar, it becomes a bigger force to contend with eventually.

                    Solar can trickle into people’s awareness even if nothing else changes around them. They see street signs powered by solar. They stop at a phone charging station powered by solar. Then maybe they stay at a friend’s cabin powered by solar.

                    It becomes familiar.

            • TechGuy says:

              Because its BS. Solar is a low density energy source and have large conversion inefficiencies. There will always be a few pilot plants, but these will never go wide spread. Had the proper engineering and economic assessment been done, this plant would never gotten built. its all about OPM (other Peoples Money) and it works like this: A bunch of people prey on the Public’s attention to global warming and they get some investors suckers to buy into their “grand” vision. They build the plant, collect a salary, bonus, etc, and then leave the debt and losses to the investors. The prey on people that don’t understand the technology well enough to know its going to be a failure. Many of the mangers of these “grand” idea projects do not fully understand the technology and fail to perform a proper assessment. This has been going on since the 1970s when the first boom in renewables was kicked off.

              Remember when Oil prices started to climb up: back then it was going to be biofuels (corn, switch grass) and hydrogen. It all ended up losing money and helped destroy the environment, when farmers started slash burning forests to make room for biofuels in Asia and south america. What ever hair brained scheme they come up with retain the BAU lifestyle is doomed to fall and also worsen the problems they are trying to solve (resource depletion, pollution, climate change).

              When this project reaches is conclusion it will not perform as advertised, have severe cost overruns and end up as a nightmare for anyone that invested money in it. Most of the time the gov’t is the investor because they can never find enough suckers to finance it.

              • Boomer II says:

                They build the plant, collect a salary, bonus, etc, and then leave the debt and losses to the investors.

                Aren’t people now saying this about fracking companies, too?

                • Yes they are. However, these light tight oil producers are very competitive even though they pay royalties and state and federal taxes – if the price is $100 per barrel. Solar power isn’t competitive, needs subsidies, and doesn’t generate nearly as much employment.

                  I realize this last point is lost on people who like to treat those who work in oil and gas as if they were criminals, but the jobs do pay well and yield more benefits than having chinese slave laborers building solar panels.

                  • Boomer II says:

                    Solar power isn’t competitive, needs subsidies, and doesn’t generate nearly as much employment.

                    And in the areas where solar no longer gets subsidies, are you still going to bitch about it?

                    As for employment, installing solar will take people.

                    I realize this last point is lost on people who like to treat those who work in oil and gas as if they were criminals, but the jobs do pay well and yield more benefits than having chinese slave laborers building solar panels.

                    What about those Chinese who build so much of what America buys, including products that use oil? If you are going to complain about unfair labor practices, you need to consider all the Chinese jobs that American businesses support. Bitch about Apple, for awhile.

              • Old farmer mac says:

                So Tech Guy I suppose you think fossil fuels will last forever – but there are many worked out coal mines near where I live.

                And despite your rant there are plenty of places in the world where the local people are skipping out on building a big old centrally powered grid and just going directly to solar power.

                Just like they skipped land lines and went directly to cell phones in so many places.

                When you get right down to it most Chinese are skipping the ice revolution and going directly to electric transportation in the form of bicycles and trains and street cars etc.

                Now I have trucks on my place . And for years we got by without a car by just using a pickup truck instead. But when gasoline hit a couple of bucks the first time we got out our pencils and some old grocery bags ( betcha ya didn’t know farmers can cipher !! ) and came to the conclusion we needed a car in order to save money on fuel. So we got one- one that got over twice the miles per gallon the truck gets. The current car get three times the mileage the truck gets.

                Before too long Saudi Arabia is going to be looking at selling oil again for a hundred bucks or more per barrel and Saudi bookkeepers are going to come to the conclusion that building some big old solar farms will be an extremely lucrative undertaking.

                However much juice the farms produce you see is that much less oil they will have to burn to stay cool and desalinate water. Oil that they can sell for a hundred bucks again in a couple of years probably.

                And Sky Daddy alone knows how much they will be able to get for that oil in ten or twenty years.Maybe two hundred bucks in twenty years?

                I have a very good friend that has a pv system that cost him about fifty grand( no subsidy ) that will probably last thirty or forty years. It is saving him two hundred bucks a month NOW in grid juice.

                Wonder how much it will be saving him when juice goes up next year ? And again every year or every two or three years at the most for the next thirty years?

                The only real reason I have not installed a pv system on our farm is that the prices of the necessary components are coming down so fast I am better off putting it off from one year to the next.

                I will be putting in a ten or twelve kw system when I think prices have about bottomed out.

                • TechGuy says:

                  “So Tech Guy I suppose you think fossil fuels will last forever – but there are many worked out coal mines near where I live.”

                  OFM, you haven’t read what I’ve been writing. Just the opposite, I expect fossil fuels to be depleted.

                  For some reason, the major of you are trying box me into some narrow category. Either I am a right winger, a religions nut, or some other misconception.

                  To put it simply:

                  1. Peak Oil is near and so is an economic depression, if not another global war.
                  2. Renewable system cannot substitute fossil fuel depletion.
                  3. I am not right-winger or a religious nut, I am a peace loving athetist, in both religion and politics, and just about everything else.
                  4. I am an engineer and realist. I am also a hobby farmer, am machinist, welder, electricial engineer (design\repair electronics), etc. I spent many years researching renewable systems (as well as nuclear) and applied critical analyst when examining all of the data and proposed models. In additional I also study economics. When I read an article about some new technology or process I always play devil advocate and pursue the issues that are never discussed. When have you ever read a renewable article that discuss the problems? All of them always focus on the benefits, but never the challenges and issues. Especially when the implementation needs to be interconnected to other complex systems.

                  5. Since renewables (all low density systems with high operational costs) can’t complete with high density, low cost fossil fuel systems, a collapse of the BAU is certain. The only variable at play is “when” it falls apart. I therefore pursue a future of abandoning BAU, and switching to self-reliance: growing my own food, providing for my own energy inputs. In that sense I am adopting renewables much more than probably 99% of the readers on this blog.

                  • On the other hand it may be possible to shift budgets to renewables and nuclear from the military industrial complex. Many of you don’t realize it but from the outside the USA has a very militarist shade. It also seems to be evolving into an oligarchy with two suposedly opposed parties focused on pleasing the same tiny elite.

                  • Boomer II says:

                    Many of you don’t realize it but from the outside the USA has a very militarist shade. It also seems to be evolving into an oligarchy with two suposedly opposed parties focused on pleasing the same tiny elite.

                    Oh, I think most people here realize it. We have a lot of government money going to support military contractors.

                    That’s why I point out to those who complain that the current government spends too much money that the next administration will do the same. In fact, what is interesting is that your concern with Communists is a reason why politicians can continue to advocate more military spending. They’ll say the US has lots of enemies in the world and we must protect ourselves against them: Communists, Muslims, etc. We’ve got to be heavily armed to defend against them.

                  • Boomer II says:

                    I therefore pursue a future of abandoning BAU, and switching to self-reliance: growing my own food, providing for my own energy inputs. In that sense I am adopting renewables much more than probably 99% of the readers on this blog.

                    I can related to the preppers. I loved the old Whole Earth Catalog which had lots of articles on how to homestead, grow your own food, etc.

                    I think stockpiling a year’s worth of food is a great idea for anyone who has the space. While I don’t think it will carry people too far into the future, I still think frugal, conservative living is a good thing.

                    If more people planned for when oil will become scarce and life will become different, we’d probably be better off now, too.

                  • Old farmer mac says:

                    Hi Tech,

                    Of course I am jerking your chain but it needs jerking sometimes – mine needs it too.

                    We share a hell of a lot of common interests and I agree totally about the fact that as things stand RIGHT NOW renewables are generally not cost competitive.

                    But I also tend to take a rather long range view of future history and besides being technically savvy and dollars and cents savvy I am historically savvy as well.

                    Every engineer who manages to hang onto his professional license builds a substantial safety margin into his designs right?

                    NOW GIVEN THE WAY SOCIETY WORKS :

                    We are looking at business as usual continuing on the current fossil fuel dependent path with renewables such as wind and solar growing only very slowly in situations where they ARE currently cost competitive.

                    The problem with waiting for markets and for business and industry to solve the fossil fuel dependency problem in the face of depletion is that the TIME SIGNAL is maybe/ possibly/ probably/ certainly going to come to late.

                    We really are NEKKID APEs under our business suits.The odds in MY estimation are substantial that we are going to come up CRITICALLY short of oil and gas and maybe even coal within the easily foreseeable future and if this happens we are going to be way up shit creek without a paddle.

                    Building out a renewables based economy AFTER the energy supply shit hits the fan is going to be pretty close to impossible in my estimation.

                    It would take too long starting from too low a base capacity of manufacturing capacity and skilled workers.

                    So – as I see it – we need to push right along on deploying renewables for the very same reasons we have aircraft carriers and armored divisions – as safety measures .

                    It does not escape me that aircraft carriers and armored divisions are also quite useful in a time of serious resource shortages as tools useful in just taking resources from who ever may have them. The big dogs eat and the little ones starve in nature when food is short.I have watched a bigger dog take a smaller one’s food many a time.

                    So now -just how confident are you that engineers employed by business as usual fossil fuel companies and banks and automobile companies are going to convince their employers to get moving on building out a few tens of millions of electric cars and a few thousand wind farms and solar farms BEFORE it is too late?

                    HOW ABOUT THE SAFETY MARGIN??????

                    I never hear people who are business as usual partisans saying much about money being spent on all sorts of essentially useless undertakings from auto races to football games to ski trips to the Alps to winter vacations in the tropics etc etc etc.

                    We employ millions of people on non economic bullshit. The money spent on teaching kids to play musical instruments or speak French in public schools is not going to generate much of an economic return- and damned little in terms of a cultural return.

                    But wind and solar farms are better insurance than no insurance at all against energy shortfalls.

                    I have gone on vacation and freely spent a couple of thousand bucks and forgot what I spent it on within two months.

                    But the last couple of hundreds that I kept aside in my wallet came in very handy indeed when I had car trouble on the way home. I spent that two hundred just hiring the car towed in with me and my girl in the cab of the tow truck.We both made it to work without renting a room for the night.

                    AND we made it home inside the vacation budget.

          • Anonymous says:

            “Oh Please! your nit-picking. In the early 20th century, most of the developed regions of the world had been denuded of trees in order to support the demand for firewood for fuel. ”

            Re-writing history will not change the amount of land “disturbed” or the amount of pollution that occurred. The land was denuded for farmland. Most of the denuding occurred in the 1800’s not the 1900’s. Coal was a primary fuel source in the 1800’s with wood fading away.
            Deforestation started occurring centuries, even millennia before coal came around. By the early 1900’s the US was starting to set aside forests for future use.

            The coal power station occupies it’s land plus the water source, the air it pollutes, and the mine that supplies it. The continuous pollution from mining and railroading also occur.
            They also occupy the ash waste pits that must be available for their waste products. The two power plants near me occupy hundreds of acres and would be perfect for solar power.
            Quiet, non-polluting wind and solar are so much less intrusive and damaging than coal, natural gas or nuclear.

            • Allan H says:

              Above post should be from Allan H.

            • TechGuy says:

              “Re-writing history will not change the amount of land “disturbed” or the amount of pollution that occurred. The land was denuded for farmland. Most of the denuding occurred in the 1800’s not the 1900’s. Coal was a primary fuel source in the 1800’s with wood fading away.”

              No, I have pictures of entire mountains denuded for firewood and where no crops were ever planted (on mountains) from ~1910. The process began in the 1800s and continued until the early 1900’s (~1920’s) when coal and oil became more easily transported across long distances.

              • Allan H says:

                The primary long term deforestation process was the increase of farmland. In the eastern US, between 1830 and 1900, 250 million acres were cleared for farmland. We now have 970 million acres of farmland in the US out of a total of 1, 944 million acres of land.
                Lumber for construction, railroad ties, mine props, and telegraph poles was a huge business. Much of that was allowed to regrow or turned into farmland upon clearing.
                By 1900 both the US and the world were using more energy from coal than from bio-fuels. USA wood use for fuel peaked in 1880 at 2893 Quadrillion BTU, was passed by coal in 1885 and has currently fallen to 1260 quadrillion BTU. Currently the world uses about 4 times the energy from coal as it uses in bio-fuels. In 1900 bio-fuels represented slightly less than half the energy used, while currently bio-fuels represent about 5 percent of total world energy.
                However there is a disturbing trend starting, wood pellet exports to Europe doubled in 2013 as demand for bio-fuels increase there.
                The United Kingdom alone went from 1600 short tons of wood pellets to 3700 short tons of wood pellets, 2012 to 2013.

          • sunnnv says:

            Which denier website did you get the 7% number from?

            PV and Wind surpass 7% in several countries/states.
            Oahu is at 10% PV penetration right now, no real problems observed in actuality (though power company is freaking out since their earnings are down), NREL says 20% is trivial.
            http://www.greentechmedia.com/articles/read/How-Much-Solar-Can-HECO-and-Oahus-Grid-Really-Handle

            PV made 10.8% of Italy’s electricity in May 2014, since the sun doesn’t shine at night, daytime penetration had to be over 20%, right?
            http://www.spsistem.com/en/2014/06/english-solar-pv-meets-10-8-of-italian-electricity-demand-in-may-2014/

            In Spain, around 14:00 today, wind was 27.9% of electricity power – the largest single source!
            https://demanda.ree.es/demandaEng.html
            (cursor over the “real” (yellow) line until you find the time, then click. Then go to the pie chart – wind is green. n.b. PV is hidden in “other special regime” ).

            In Germany:
            On June 6, 2014, solar peaked at 24.2 GW, or about 35% of peak power.
            The 212 GWh was about 18% of total German electricity use that day.
            The grid did NOT collapse – though wholesale prices no doubt did, trashing the profits of dirty coal, leading them to spew all kinds of propaganda.
            On Dec. 12, 2014, German wind peaked at 29.7 GW, or about 40% of peak power, and provided 562 GWh (about 37% of all electricity used that day).
            On April 14, 2014 solar and wind together peaked at 37.8 GW, about 50% of peak, and providing 40% of the electricity that day.

            (pages 266 – 268 of)
            http://www.ise.fraunhofer.de/en/downloads-englisch/pdf-files-englisch/data-nivc-/electricity-production-from-solar-and-wind-in-germany-2014.pdf

            At least the “renewables can’t provide more than X %…” number keeps moving up. In 1993 the German (monopoly) power companies dissed renewables by saying it was 4%.
            See the image under the section “Why amusing, you wonder?” in this:
            http://cleantechnica.com/2013/06/17/the-breakthrough-institute-why-the-hot-air/

            • Boomer II says:

              If solar will forever remain a marginal player, then it is hardly worth “warning” people about.

              I don’t think a person can say both that its use is minimal and that it is also somehow an communist threat. If solar is minimal, it isn’t a threat, right?

              I suspect it is perceived by a threat by those who do see it currently or potentially cutting into their own businesses.

            • TechGuy says:

              “Which denier website did you get the 7% number from?”

              No, its from periodicals for the the utilities, such as “Power” Magazine, “Transmission & Distibution” magazine, “Electric, Light, and Power” magazine, etc, as well as whitepapers (not freely accessible on the Internet such as IEEE). Some quote more and some less, but it appears to be at about 7%. These are publish articles from industry engineers that operate power plants and power distribution systems. I am confident that grid engineers understand grid stability issues. On the other hand, the articles you’re reading, are written to entice readers, as much as popular science foretold lunar colonies and other outlandish possibilities. How often do you read a pro-renewable article that discusses problems and challenges? You end up picking one side and ignore the rest, because you want to believe.

              “On June 6, 2014, solar peaked at 24.2 GW, or about 35% of peak power.”

              Picking a single summer day does not factor in weather or the long term trend. Your cherry-picking a single day, and it was only for a short period during that day. PV certainly wasn’t producing 24 GW at midnight. Yes, on some days and at certain times, PV output can exceed 7%, but overall and average through out the entire year (24/7/365), it will probably max out at about 7%. Why is it so difficult for you to see that peak performance does not mean average performance? This is basic, basic math!

              As discussed Germany is building 10 or more Coal fired plants for baseload electricity production. If PV and renewables were really taking over and there were no issues with intermittent power sources, then Germany would not be building new coal fired power plants.

              As far a Oahu, I have not done a full assessment, but it looks like its topping out to 10% and the power company is running to instability issues:

              http://www.greentechmedia.com/articles/read/How-Much-Solar-Can-HECO-and-Oahus-Grid-Really-Handle

              http://www.hawaiicleanenergyinitiative.org/imported-20101004182628/2014/10/5/power-customers-opt-to-go-off-grid.html

              “There are 4,500 people on Oahu waiting for approval for rooftop solar systems as a result of a September 2013 rule change where HECO required customers and contractors to be OK’d by the utility before installing photovoltaic panels. Some customers have waited as much as nine months for approval and are afraid they may miss out on lucrative tax credits if they don’t act fast.”

              I see hundred of articles on Google that discuss Oahu grid stability problems. How does Oahu provide power during Nighttime? I bet its not PV! Oahu also has a better than average daylight compared the continental US. Since most of the CONUS gets far less sun than sunny Oahu, its likely the CONUS instability will be worse. If Oahu PV system is about 10% during peak daylight hours and zero at night than its real output, averaged over 24 hour (full day) period is close to only about 4%. You can’t cherry pick peak performance as the average!. I see Oaha having grid trouble when fast moving rain storms blow through causing quick changes to PV output. Brownouts when the overcast comes in, an overvoltage when the storm leaves.

              Reliance on residential or other small distributed system make stability difficult because the utility can not directly control the output of thousands of individual systems. Its like trying herd thousands cats. All those systems have independent control systems which will not act uniformly consider that even minor system differences such as unit firmware version can cause non-uniform control for the same exact products. Firmware bugs and equipment operating out of spec is also going to be a big problem. In a central power source, the utility has much more control and can apply changes to the power source to improve grid stability.

              I suspect the if Oahu increases distributed power permits, they will be enforcing limits in a attempt to limit instability (ie customers are limited to 1 to 2KW of PV power that is distributed onto the grid. Australia was forced to do this with there distributed power customers. So its not just an issue of mis-management by Oahu’s Utility operator. It will also be interesting to see how reliable the consumer equipment is. I suspect much of it is poor quality, originating from China that uses substandard components that will fail within 5 years after install. Consumer tend to choose the lowest cost products with the most features over long term reliability. We live in a throw-away society.

              I also suspect that intermittent power systems on the grid will impose excessive wear and tear on distribution components (transformers, power lines, stabilizers, etc). As the PV output shifts do to weather, it will increase the stress on these components as the endure frequent thermal changes. brownouts (low voltage) conditions cause load to increase current demand, which can exceed a power line, or transformers rating, leading to failures over long periods. Over-voltage conditions can also increase voltage break down in transformers. Perhaps these issue won’t appear for years, and then all the sudden frequent failure begin to pile up, as the equipment ages. Since wide spread use of intermittent power systems on the grid is relatively new, these issues may not be immediately apparent.

              I betchya in five or six years PV and other intermittent power system will fad away as happened with ethanol as the fuel of the future, or hydrogen powered cars. Renewable intermittent power systems simply will not replace fossil fuel systems in any significant manner.

              It should be painfully obvious to anyone that intermittent systems are inherently, unstable! Putting two or more intermittent systems does not make them more stable, it increases instability. Again, basic math stuff here! Think! Don’t blindly believe what read in a pro-renewable article.

              • Ilambiquated says:

                Germany is shutting down coal fired plants faster than it is building them. The utilities are getting out of the conventional energy business entirely.

                http://www.dw.de/german-energy-giant-eon-to-focus-on-renewables/a-18103057

              • sunnnv says:

                Most of my links were to official power production numbers. They proved your statement of “7% max solar + wind” is false – by multiple existence proofs.

                You missed the point about a few years ago, the power companies in Germany claimed 4% was the max. Traditional utility guys tend to be very conservative, to the point of sometimes being reactionary. Their jobs are threatened, both by resource depletion and renewables.

                One can also find IEEE papers on much higher renewables penetrations. No reasonable person would believe there won’t be challenges, but there is no fundamental impossibility of 100% renewables for most places, with a grid as reliable as the current one, only economics and policy issues.

                “the utility can not directly control the output of thousands of individual systems.”
                Germany has rules whereby (for now, only large ones) inverters for PV and wind are controllable by commands grid operators send on the power line.
                http://www.sma.de/en/partners/knowledgebase/sma-inverters-as-grid-managers.html

                I think you’re innumerate, and don’t have a good mental picture of how much power renewables, in particular solar and wind, are generating in certain countries right now. Gigawatts – billions of watts – is not a “fad”.
                In the 1st 11 months of 2014, PV generated twice the power as hydro in Germany, and more than gas. page 6 of:
                http://www.ise.fraunhofer.de/en/downloads-englisch/pdf-files-englisch/data-nivc-/electricity-production-from-solar-and-wind-in-germany-2014.pdf

                Utilities have bought wind solely because it’s cheapest.
                Perhaps you haven’t heard of Austin Energy’s 5 cent/kWh PV – cheaper than their estimate for gas.
                http://www.greentechmedia.com/articles/read/Austin-Energy-Switches-From-SunEdison-to-Recurrent-For-5-Cent-Solar

                And what Ilambiquated said about German utilities – renewables are materially affecting their business. Hard coal down 11% in 1st 11 months of 2014 – page 8 of the Fraunhofer pdf linked above.

                Or do you think coal, oil and gas will last forever?

                n.b. US coal mined by total energy contact peaked back in 1998.
                http://en.wikipedia.org/wiki/Peak_coal#Energetic_peak

                “Putting two or more intermittent systems does not make them more stable, it increases instability”
                More hysteria.
                check out pages 27 & 28 on the Fraunhofer pdf.
                solar and wind complement each other seasonally.
                They do some nice summaries of diurnal complementarity starting on page 101.

                • islandboy says:

                  SMA has designed this neat litle feature into their grid tied inverters. As far as I understand it, the inverters for some time now have the ability to ramp down their power output in response to increases in grid frequency. This was done to facilitate the use of their grid tie inverters as a power source for their off grid inverter/chargers in what the company describes as an AC coupled system:

                  http://www.smainverted.com/2012/10/11/coupling-options-for-off-grid-solar-arrays/

                  The off grid inverter can limit the power output of it’s AC coupled grid tied inverter by increasing the “grid” freqeuncy. If large blocks of grid tied inverters are configured to respond to increases in grid frequency by reducing their output, it produces an automatic negative feedback for oversupply situations on the grid. If the grid has an oversupply, the spinning generators tend to speed up, increasing the grid frequency which will in turn reduce the power being produced by this particular type of inverter. Nice! (if it can be made to work properly)

                  Alan from the islands

              • Boomer II says:

                I betchya in five or six years PV and other intermittent power system will fad away as happened with ethanol as the fuel of the future, or hydrogen powered cars. Renewable intermittent power systems simply will not replace fossil fuel systems in any significant manner.

                I don’t think solar will fade simply because it is the best solution we have for places where centralized power isn’t a good idea. And taking advantage of wind in places where it blows seems to me to be worthwhile. Wind has been pumping water in some countries for a long time.

                And they may never “fossil fuel systems in any significant manner” but that’s okay, too. It’s part of getting the world to downsize its energy consumption. We can’t support our current system. Something will replace it. It will probably be a non-growth, low energy use lifestyle, but perhaps that is the natural state of mankind, both in the past and in the future. The oil age may have been a brief moment in time over the course of human history.

              • Thirunagar says:

                Ok.. Does this count?
                Wind energy covers 39 per cent of Denmark’s electricity consumption
                In 2014, Danish wind farms covered 39 per cent of Denmark’s electricity consumption. Growing capacity and increased efficiency are behind this record year.

                http://www.copcap.com/Newslist/2015/Wind-energy-covers-39-per-cent-of-Denmarks-electricity-consumption

                You know.. its for the whole year.

              • Ulenspiegel says:

                Tech Guy,

                why don’t you get hard data and avoid stupid nonsnese like:

                “As discussed Germany is building 10 or more Coal fired plants for baseload electricity production. If PV and renewables were really taking over and there were no issues with intermittent power sources, then Germany would not be building new coal fired power plants. ”

                Fact is: After 2011 not one new coal power plant came into the pipeline. At the moment older projects die like flies.

                We saw 2012/13 a shift from NG to hard coal, but this happens in the USA in a much larger scale, too. Hint: NG price not the REs are the culprit.

                In 2014 we saw a nice reduction of coal use in Germany and at the same time record installtions of onshore-wind capacity.

            • Cherry picked points in time. What counts is the overall performance. And goofy sources. Clean technica is a website run by a guy who makes a living selling solar propaganda. It’s slick, but it’s not an useable source in serious discussions.

              • Ulenspiegel says:

                You could instead use data published by Fraunhofer Institutes in Germany. 🙂

                Could it be that you have problems to face reality?

            • travelin_rn says:

              You left out that PV is 100% on Mars. 😉

              • TechGuy says:

                “You left out that PV is 100% on Mars”

                Nope. Curiosity is nuclear powered.

            • Mike, Sydney says:

              If Germany of all places can make solar work, then most places can. Germany is a high latitude country with very short days in winter.
              Solar power is reliable, the sun rises and sets most days… In some countries with intermittent power you can buy fridges that store the cold for half the day. A hot water tank works the same way. My laptop stores electricity for hours of use. So you don’t actually need constant power to drive your gadgets if they are designed for it.

              • I do. In winter we get less sunlight hours, it can get gloomy and cloudy for several days at a time. I can’t have a refrigerator thawing just to please the solar power lobby. And I like lights, watching football, listening to music, and being able to take a warm shower. The idea that we ought to agree to such an arrangement is truly bizarre. It shows just how disconnected you are from normal people.

                • sunnnv says:

                  “less sunlight in winter … ‘fridge thawing…”

                  Certainly the variability of solar is an issue, but doesn’t have to be fatal.
                  Wind is often complementary to solar.
                  And when it is not, hydro power can pick up some slack, as can air-cooled geothermal in those places it can be used.
                  Then there are batteries, pumped hydro and other storage, demand management, efficiency, and biomass fired backup. Natural gas for a while, and biogas fired peaker turbines as backup. Rational nuclear (read “molten salt reactors”) too, if the politics allows.

                  Solar sized to run air-conditioning in summer can often provide a decent output to keep ‘fridge and lights on in winter (less load on the ‘fridge), even under cloudy conditions.

                  How many watts is your stereo?
                  An iPod is a watt or two, a trivial load for a single solar panel.
                  How much light do you need? Do you use LEDs?
                  A few watts is all one needs to get around.
                  How efficient is your ‘fridge?
                  http://www.greenbuildingadvisor.com/blogs/dept/musings/choosing-energy-efficient-refrigerator

                  What do you suggest to replace fossil fuels?
                  Do you get that peak fossil fuels is pretty near?

                  Would you prefer the solar lobby just pack up and leave your fate in the hands of depleting fossil fuels?
                  I myself would rather have some solar power (thermal too), batteries, and an efficient ‘fridge.
                  Maybe keep the volume in it maxed out with frozen or chilled water bottles to maximize efficiency (low air exchange when the door is opened) and provide thermal buffer for grid power hits.

          • Stan says:

            “PV and Wind which are intermittent power sources can’t make up more than 7% of grid output. Any further increase would destabilize the grid.”

            Places with 100 percent renewables exist. Major grids have over 40 percent renewables already. The whole idea that intermittency makes renewables untenable makes no sense anyhow. The whole grid is designed to handle power plants going off line without advanced notice to the grid operator. Every power plant needs backup. Those huge nuclear plants go off line and take gigawatts of production with them. They need back up equivalent to the amount of power they make. But the most ridiculous part of this statement is that the load itself is intermittent.

        • Nick G says:

          Allan,

          That information seems useful. Could you give us links to sources for it?

          Thanks.

            • Allan H says:

              Another site, this one on farmland statistics
              http://www.farmlandinfo.org/statistics

            • Nick G says:

              Thanks. Here’s my version:

              Renewables aren’t low density – not if you compare apples to apples.

              Wind and solar generate a very high “density” form of energy, electricity: electric wires can carry very high energy density thousands of km, to where its needed. On the other hand, wind and solar require a “catchment” area which is no larger than the overall land requirements for producing oil and other fossil fuels. For instance, the US government leases about 35 million acres of land for a minority of US oil production (http://www.ewg.org/oil_and_gas/execsumm.php), and since 1982, the federal government has leased or offered 229 million acres of public and private land in 12 western states for oil and gas drilling, an area greater than the combined size of Colorado, New Mexico and Arizona. Another way to look at it: the US has about 500,000 producing oil wells, each of which requires access and working areas, as well as water disposal wells, etc. – these require a minimu of 1 acre per well, and perhaps much more. There are about 120,000 gas stations in the US, at perhaps 1 acre per (some cities require a minimum of 1 acre). The wells and gas stations add up to a minimum of 720,000 acres.

              Of course, we also need to include 185,000 miles of oil pipelines – at 75 feet of right-of-way, that’s 1.7M acres. Then there’s storage, refinery and port facilities. Not to mention dry/abandoned/capped wells, of which there are probably several million. – 2.5 million acres total for the US industry appear to be a minimum.

              If 2,500,000 acres are required for 9M bpd oil production, that works out to about 20 watts per sq meter, much less than solar power.

              Looks like oil is pretty low density!

              What about Coal?

              Estimate: Solar thermal energy requires about 16.4% less land than coal, and wind power requires about 96.3% less land than coal, to produce a given amount of electricity over a 60-year period.

              http://www.sourcewatch.org/index.php/The_footprint_of_coal

              • Allan H says:

                Good one Nick. The more detail, the worse it looks for fossil fuels. Add in the pollution of all streams and waterways, the changing of the whole atmosphere causing drought flooding and destruction, the need for huge medical facilities due to pollution effects. the reduction and loss of species and the extreme downside as they run out. Also the miniscule replacement rate. Looks very bad for fossil fuels.

    • Duanex says:

      Fernando, I don’t understand how an increase in interest rates helps production in any way. Can you elaborate? Secondly we had $100 for 3 years, what do biofuels do during that period, and why do you think it’s going to be different this time?

      • DUanex the higher interest rates don’t help production. I assume you are referring to my comment about a 5 % loan being a good deal if it was set up with restrictive covenants? Think about it. If I lend you at 5 % but I have you tied down to make sure you pay, then it’s not a bad deal. If you don’t pay I get your business and sell it at a profit.

        Regarding biofuels, I believe they did increase worldwide. Biofuels just get more competitive as prices increase. I noticed people in the USA tend to think of ethanol from corn, which happens to be a lousy deal. However, ethanol from sugar cane us pretty good. At a steady $100 per barrel it could be a huge money maker in Colombia. They just need an ethanol pipeline to the refineries and to export points.

  2. Don says:

    Your mis-use of the word “theory” bothers me. Peak Oil is, in fact, a theory, in the true scientific meaning of the word. (as opposed to the layman’s use of the word, which tends to mean something like “just some harebrained idea I had.”)

    • SW says:

      Einsteins’s Theory of Relativity and Quantum Theory are pretty useful tools. I read Ron’s post as a sort of response to Sheik Yerbootie’s latest pronouncement on Peak Oil.

    • Frugal says:

      You’re right, the meaning of the word “theory” has been transformed in the last couple of decades to something totally different from its original meaning. When you hear people say that Peak Oil is just a theory, they tend to mean that it’s just a silly idea hatched in the heads of doomers.

      I prefer to call Peak Oil a logical outcome of extracting a finite resource. The no way you can counter that with logic.

    • Your mis-use of the word “theory” bothers me.

      You shouldn’t let it bother you. I know what theory means. Like the theory of gravity. Gravity is not a theory but the exact why and how of gravity is a theory. The part of gravity that is known is not a theory, the part that is unknown is a theory.

      Likewise, it is known absolutely that oil production will peak. That is not a theory. And anyway we are talking about the everyday use of the word here, not the deeper scientific meaning. When people say peak oil is a theory, they mean that the production of oil may never peak, that the production of oil may continue to increase forever.

    • MikeB says:

      Even though I never comment here, I have to disagree with this, because the whole issue about whether “peak oil” is a “theory” is bothersome.

      Peak oil is not a theory–but not for the reasons the author thinks. He is declaiming the popular definition, that is, “hunch or guess.”

      Peak oil doesn’t even come close to being a theory in the scientific sense of the word. It doesn’t deserve the designation. A theory is a well-tested hypothesis, one that has so much data backing it that it serves as the accepted explanation for a phenomenon.

      Peak oil, on the the other hand, is a prediction, and one based on terrible data, in my opinion, because it depends on too many unknowns. Does anyone really know how much recoverable oil is in the ground, and at what price? Does anyone really know what future technological advancements will bring? Does anyone know what future consumer behavior will look like? I certainly don’t. No one does. Those who claim to have better “knowledge” to make such predictions are fooling themselves and a whole lot of others.

      Theories are supported by predictions; in fact, the prime test of a theory is prediction. For example, Neil Shubin, et al., tested Darwinian theory with the prediction that a critter that was a transitional form between fish and tetrapods would be found in a certain rock formation in Northern Canada, and by goodness, he was right! He and crew found Tiktaalik. It is one of the most remarkable predictions ever made, and it secured Darwinian theory even further.

      By contrast, what prediction have the peak oil tribe made that is as astonishing? Nothing. I watched it all implode around 2009, when my favorite “experts”–Simmons, Hirsch, etc.–lost their minds. Simmons said “All we can do is pray” and that the Gulf coast would have to be evacuated during the Macondo disaster. Hirsch came out as a climate change doubter. One prominent peak oil spokesperson said on the radio that everyone who was currently on medication would soon die. Several others turned out to be 9/11 conspiracy theorists. All the dire forecasts on the popular film “The End of Suburbia” turned out to be false. If anything, these prognosticators falsified the notion that peak oil is a thing and that it is imminent. The whole thing was utterly embarrassing.

      Which of these pundits predicted the rise in LTO? Not one. I look at the indices of all the peak oil books I have on my shelf, and “Bakken,” “light tight oil,” “shale oil” never appear.

      Now, Ron might be right about peak oil. I have no idea. But I’m not taking any bets, and I’ve learned not to worry about it.

      What’s the next unforeseen factor waiting in the wings to fuck up all the predictions, like LTO? No one can know this.

      I recommend that people here read Daniel Kahneman’s book “Thinking, Fast and Slow,” particularly Part III, “Overconfidence,” which is about economic forecasting, and “The Illusion of Validity.” The data on predictions will shock, and perhaps enlighten you.

      • Frugal says:

        Peak oil, on the the other hand, is a prediction, and one based on terrible data, in my opinion, because it depends on too many unknowns.

        I’ll repeat, Peak Oil is a logical outcome of extracting a finite resource. It doesn’t matter how bad the data or predictions are, or how many unknowns there are, oil will still peak because it’s a finite resource. Why is this so difficult to understand??

        • Philip Backus says:

          Frugal, I don’t think the problem lies in understanding or not but in accepting the ramifications of less and less oil each year. This includes at best a lower standard of living possibly featuring the disappearance of conveniences that are generally taken for granted by the majority of the population. I think it is similar to accepting one’s own mortality.

        • Ilambiquated says:

          Ron’s remarks about peak oil are correct and useful, but could use some refining.

          However, it doesn’t take much refining to see the problem. For example, lets assume oil output will continue growing. How big will it get?

          It it grows by 2% a year, which is about the minimum I can imagine as tangible growth, it will double by 2050. Does anyone expect that?

          What is the maximum level anyone reasonably expects? Nobody thinks it will get 10x the size it currently is. So it will peak at or below that level.

          • Dennis Coyne says:

            Hi Ilambiquated,

            I don’t expect too much growth in C+C output, we might get to 78 Mb/d in 2016 to 2018, it depends on oil prices and demand for oil.

            The EIA’s 2014 International Energy Outlook predicts 99 Mb/d of C+C output by 2040 which would be about 1% growth from 2015 to 2040. This does not mean there will be no peak, but the EIA thinks it will be in 2040 or later. I think the EIA is too optimistic.

            • Dennis Coyne says:

              The EIA’s IEO low oil price case has C+C output at 104 Mb/d in 2040.

      • Peak oil is not a theory–but not for the reasons the author thinks. He is declaiming the popular definition, that is, “hunch or guess.”

        No, that is simply not the popular definition of a “theory”. The popular definition, not the scientific one, is that a theory is an unproven hypothesis. That is not what a theory is.

        Peak oil, on the the other hand, is a prediction, and one based on terrible data, in my opinion, because it depends on too many unknowns.

        Yes there are a lot of unknowns in the oil world. My prediction does consider those unknowns but it is based primarily on the knowns, not the unknowns. The data, while far from perfect, is not terrible. We know, approximately, how much oil is produced every, day, month and year. Not exactly but close enough. But more important we know how much it cost to produce that oil. And we know how the price of producing a barrel of oil has risen over time. Those are hard known facts.

        Does anyone really know how much recoverable oil is in the ground, and at what price?

        No and it simply doesn’t matter. What we do know is that all new discoveries get smaller, deeper, and far more expensive every year.

        Does anyone really know what future technological advancements will bring?

        We know they won’t bring miracles. And we know they will not likely arrive this year, in time to head off peak oil.

        Does anyone know what future consumer behavior will look like? I certainly don’t. No one does.

        Bullshit! That is the one thing we do know. Consumers will behave in the future exactly like they have behaved in the past. We have centuries of history to tell us how consumers behave. They will continue to believe everything will be fine until it isn’t fine anymore. Then they will panic, creating runs on banks and stores. Human nature doesn’t change.

        Those who claim to have better “knowledge” to make such predictions are fooling themselves and a whole lot of others.

        I am not claiming any special knowledge, just the facts that are right there before our eyes. Economical and geological facts are there. Pretending that they are not there is a fool’s game.

        If the water is rising behind the dam, exceeding the limits of what the dam was engineered to hold back then people will start predicting when the dam will break. One person may say the dam will break when the water is two feed above the safe level. And he was wrong. Another said the dam will break when it is five feet above the safe engineered level. And even though cracks start to appear in the dam he was wrong. Another predicts a higher level and so on. And even more cracks appear. The point is we know the dam will break if the water keeps rising. Therefore every wrong prediction only increases the odds that the next one will be right. Only a damn fool would believe otherwise.

        So tell me about Simmons and Hirsch and whomever. Go ahead, I really don’t mind. Because I know that even if I am wrong that only increases the odds that the next peak oil prognosticator will be right.

        • Anonymous says:

          Thanks for responding. You might be right. The question for us lay observers is, whom to believe.

          I believed my geology professor, but he was wrong:

          http://www.theoildrum.com/node/2364

          I still think he was a great teacher.

          • MikeB says:

            I didn’t mean to post anonymously.

          • MikeB says:

            I didn’t mean to post anonymously.

            From Kahneman:

            “…high subjective confidence is not to be trusted as an indicator of accuracy.”

      • SRSrocco says:

        Mike B,

        Makes some true and interesting points However, Mike B fails to consider the massive monetary printing and over $30 trillion currency swaps between Central Banks since 2008. It wasn’t horizontal drilling that allowed LTO Shale Oil to be extracted, it was the high price.

        Furthermore, it wasn’t the high price (alone) that allowed this high-cost Shale oil to be extracted… it was the ‘Propping up the world’s economies by the Central Banks.” Basically, the world was able to afford crap tar sands and shale oil due to Central Bank intervention.

        I hardly doubt Simmons et al could foresee this sort of Central Bank Insanity. Word out of the world economic summit in Davos this year is that many of the Wealthy Hedge Fund Managers are buying up homes and farmland in countries such as New Zealand. For some reason, they see something nasty on the horizon.

        Maybe they are wrong. Who knows.

        Anyhow, the notion that clever humans were able to bring on GARBAGE LTO OIL to allow this already dead Zombie Economy to continue a bit longer isn’t WISDOM, it’s INSANITY.

        So, Mike B, if you are bragging that humans may have another TRICK up their sleeve to continue industrial civilization to push us firmly into ABRUPT CLIMATE CHANGE, well then you get the GOLD STAR.

        steve

        • Doug Leighton says:

          “ABRUPT CLIMATE CHANGE” Christ Almighty Steve, you shouldn’t have said that. It’s a gold plated invitation to “God Will Provide” goofs. Damn, I have used the G-word.

        • Ves says:

          What is that thing about New Zealand? Everybody is moving to New Zealand. I have no idea why would someone pick New Zealand? Lamb shanks 🙂

          • coffeeguyzz says:

            Isn’t that where Middle Earth is and the Age Of Man and all that stuff?

            • Patrick R says:

              Much as we love you all you can’t all fit here. Folks, there ain’t no planet B, we’ve got to work a lot harder at not phaaarking this one up quite so efficiently…

              Do visit though, preferably on a sailing boat (ha!). We’re getting ready for a less auto-dependent world, a bit at a time. For example, today’s post:
              http://transportblog.co.nz/2015/02/02/celebrating-recent-auckland-cycling-and-walking-projects/
              Remember the vast overconsumption of liquid fuels is essential a transport issue. We can and will use a whole lot less by addressing this waste. Electric Transit and freight linking walkable and rideable urban centres…

          • Patrick says:

            This might be a good reason: Nuclear power plants around the world

            • Patrick says:

              replied to: What is that thing about New Zealand? Everybody is moving to New Zealand. I have no idea why would someone pick New Zealand?

          • MicroHydro says:

            I moved to New Zealand in 2005, in part because of peak oil. What I could not anticipate is the relentless property bubble, which barely paused in 2008. Our cost of living is extraordinarily high, as are taxes!

            I also failed to anticipate the general lack of rule of law (methamphetamine labs, gangs, violent thuggery, livestock theft) in much of the rural North Island. So it is only a good destination for the very wealthy, who can afford large estates and private security.

            • Jeffrey J. Brown says:

              I remember similar comments a few years ago from a couple who bought some rural land in the US, and started gardening, only to belatedly realize what kind of neighbors they had (methamphetamine labs, etc.).

              They elected to move to a small town, and started doing intensive gardening on a town lot, in an area where lots of other people did the same thing.

            • AliveandWellin NZ says:

              Ha, Been in NZ for 7 years and I have yet to see a large estate with private security. ?? Now I’m on the South I, and the biggest perhaps wealthiest properties around here tend to be vineyards. Most of those welcome right in for a tasting. Mind you, that dairy farm with the bloke outside in gumboots is worth a lot too…

          • Cheap housing, friendly english speaking natives. I looked into it, but decided I would do better in Eastern Spain because I hate weeds.

          • WelshFarmer says:

            Ves – if you have no idea why someone would pick New Zealand, I deduce that you have never been there.
            My brother and family emigrated there from the UK ten years ago and he has never looked back. Pristine environment, fertile land and a low density of people who share common civilized values.
            What other region can boast that combination of plus points ?
            (BTW, the orcs aren’t such a great problem as you might think).

            • Dave P says:

              Mate, I’m from NZ and it’s not without it’s problems.
              I concede it’s a better place to live than many but most of our low-land rivers as unsafe to swim in due to nitrates.
              We have a right-wing government who are hell bent on pouring money into useless motorways (which their own modeling have shown as cost-negative in terms of economic benefit).
              Inequality is definitely on the increase. House prices are astronomical. General wages are low and cost of living high. Don’t get me wrong, I love the place but it is not without it’s share of problems.

        • Northwest Resident says:

          SRSrocco said: Basically, the world was able to afford crap tar sands and shale oil due to Central Bank intervention.

          Steve, I totally agree with your analysis. Despite all the technology, all the toughness and know-how of the oil industry and even despite the high price of oil, they could never have pulled off the “shale boom miracle” without a massive flood of liquidity injection into the global economy. And may I also say, they could never, ever have pulled it off without an equally intensive and well planned Public Relations campaign — tsunamis of hype and polished B.S. to convince the legions of muppets to invest and invest big in American Energy Independence. And one final things, they needed ZIRP to pull it off — forcing investors out of “safe” interest earning bonds where they could not longer earn a measly dime due to ZIRP and into all those higher yielding junk bonds where they could at least get a little bang for their investment buck.

          But seriously, when you write “the world was able to afford crap tar sands and shale oil”, shouldn’t you be putting “afford” in quotes? Because, in fact, we really couldn’t afford it, not even close. No more than some sucker with a new credit card can afford to go max it out on a frenzied spending spree when he barely makes enough money to pay the interest on the card, much less pay down the principle.

          We couldn’t afford it. It was a “boom” charged to credit with no way to repay. It was like somebody who knows he’s going to file for bankruptcy anyway, so why not go out and max the credit cards before filing. If you ask me, the whole shale revolution was an engineered event to buy a little more time, to throw one last really wild party before the lights go out. Now here we are, no more credit, buried in debt, and no more time. Lights out!

          • WelshFarmer says:

            NWR – try explaining that to the UK government.
            They are doing everything possible to duplicate the fracking “boom” over here.
            It’s a bit pathetic really.

      • Anon says:

        Peak oil is a mathematical fact unless you believe in infinite regeneration of oil. Which has no scientific basis, sorry abiotic loons…

        There is a certain quantity of what oil exists. There is a subset of that which is all of the oil that can be extracted at realistic energy and financial resource costs.

        You will eventually extract the first 50% of this subset, because it is a nonrenewable resource. This does not necessarily have to form a Hubbert curve – but with how humans produce oil (constantly increasing RATE of production), it does. This is very well empirically established.

        • Anonymous says:

          Thanks, Anon, I totally get these concepts. In fact, I learned them in a course called Geology and Human Affairs, at the University of Toledo in 1980.

          The point is when, and how, and what does it mean?

          I even suspect Jeffrey Brown might be right that conventional oil peaked in 2005; but if that’s true, it has not meant what many, many voices said it would mean up to the point that it happened. That’s what makes me suspicious of any pronouncements about peak oil, especially as there is no scientific consensus to consult about it.

          I can’t go to the AAAS or the NAS for guidance, as I can for such issues as vaccinations, GMO safety, and “alternative” medicine. What about the Geophysical Union, or the Geological Society of America? Do they issue consensus statements about peak oil other than “it will happen one day”? I’d love to see them.

          For all we know, “peak oil” might come and go without notice–like Comet Kohoutek (for those who remember it, “The Comet of the Century”).

          • Mikeb says:

            ONe of these days I’ll learn to post here properly.

            • Mike, estimating reserves or resources isn’t something a specialized society can do. To tackle this properly one must have a group of professionals. But I must agree, the geophysicist is man’s best friend. I never go anywhere without at least one.

            • Old farmer mac says:

              Just sign in and stay signed in. It doesn’t cost anybody anything.

            • Old farmer mac says:

              There are good reasons you can’t go to AAAS or NAS besides the excellent one mentioned by Fernando – that it would require specialists to work on this particular question.

              There are questions that are off limits politically to organizations that are involved with the government. There are many questions for instance that MEMBERS of the NAS are eager to look into that they cannot investigate under the auspices of that organization due to political pressure.

              But they have a lot to say about these questions in their capacity as individuals or faculty at universities etc.

              The Congress and the executive branches of our government are controlled by politicians who owe their jobs to campaign contributions from businesses that don’t WANT some questions investigated.

          • Jeffrey J. Brown says:

            To clarify slightly, I’m not arguing conventional versus non-conventional.

            I’m arguing that the available data seem to be consistent with a peak in actual global crude oil production (45 and lower API gravity crude oil), while global natural gas production and associated liquids (condensate and NGL) have so far continued to increase.

            • Mikeb says:

              thanks. I’ve always admired the patience and consistency of your arguments.

              Not to mention the laconic tone.

              • Laconic, I had to look it up:

                adjective
                1. using few words; expressing much in few words; concise.

                Exactly, I love it. This comes to mind from Shakespeare’s Hamlet:

                Polonius:
                My liege, and madam, to expostulate
                What majesty should be, what duty is,
                What day is day, night night, and time is time,
                Were nothing but to waste night, day, and time;
                Therefore, since brevity is the soul of wit,
                And tediousness the limbs and outward flourishes,
                I will be brief. Your noble son is mad. . . .

                • Ilambiquated says:

                  Named after Laconia, the region of ancient Greece that included Sparta.

                  Philip of Macedon once wrote to the Spartans, “If my armies march into Laconia, Sparta will be destroyed and never rise again.” The Spartans answered, “If”. Philip never attempted the invasion.

        • Stan says:

          Any product subject to consumption at a rate faster than it is a created is a mined product. Peak production is a function of any mined product. Oil is a mined product. It will have peak production.

      • Watcher says:

        The thing is, technological marvels are symmetric. They don’t have to have positive results. They can be equally negative.

        As suggested, a nicely funded effort to extend upwards the temperature of activity of oil eating bacteria used in oil spills. Have them happy to eat at hot temperatures and start getting them injected into major oil fields. Corporate competition might do this. Certainly national competition. Or outright nihilists. Presto, technology advance reduces oil output, not increases it.

        Techno advances don’t have to improve things.

        • We tried that. But it requires injecting a bunch of other chemicals to keep the bacteria munching on the oil. The little bastards were supposed to make CO2, lower oil viscosity, but it didn’t work.

      • John B says:

        I can see Ron’s point about “Theory”. There is no question that oil production will peak some day. I think the “Theory” part has to do with “when” oil production will peak. Hubbert’s 1956 paper stated oil production would peak in 2000. He later moved that date up to 1995. So it is correct to state that Hubbert’s Peak Oil Theory was wrong, IMO.

        There is also some debate about whether oil production will peak because of supply, or because of demand. Hirsch, etc. claim that Geology is the controlling factor, and supply will diminish. I think that is wrong. If supply were to diminish, the price would increase to quash demand. So oil production will more likely peak because of demand, and not supply. The gas lines of the 1970’s were more likely caused by Nixon’s price controls, than a lack of supply.

        Another interesting phenomena of oil production is that if the supply does diminish, the price increases, and because of the increased price, more oil becomes recoverable. So you have this built in negative feedback. Also, as the price increases, alternatives become more attractive. So all of these factors come into play. The oil end game is likely declining production, do to a loss of market share to alternatives. This has already happened with electricity production in the US, which now relies on very little oil fired generation.

        The real question is what the effect of Peak Oil will have. An entire industry has grown up around “the collapse of civilization”. With many books, and movies published. And websites selling survival supplies, etc. But reality could be much different than what the doomers have predicted. US oil production peaked in the 1970’s, yet the country keeps humming along. World conventional oil peaked 10 years ago, yet suburbia has hardly ended.

        The end result of Peak Oil may be cheaper, cleaner energy. And less air, water, and noise pollution. The transition to alternatives is well underway right now.

        • Political Economist says:

          The negative feedback will work only to a certain degree, up to the point when the surge of oil price breaks the world economy

          • John B says:

            The surge didn’t break the world economy last time, I doubt if it will break the world economy next time either.

        • nNgass says:

          “US oil production peaked in the 1970’s, yet the country keeps humming along. ” John B, is it perhaps that the US imported millions of barrels of crude a day?

          • Nick G says:

            That’s part of it, but not the biggest part.

            The biggest part is increasing efficiency: US cars use half as much fuel per km. The US uses about as much fuel now as it did in 1979, while GDP is 2.5x larger.

            And, even better, that can be repeated. For instance, a Chevy Volt, which costs less per mile to own and operate than the average US vehicle, uses about .013 litres of liquid fuel per km (200MPG).

      • Bruce Stephenson says:

        Mike B. exhibits the very human trait of thinking on a human time frame, not a geologic time frame. We’re dealing with events on a geologic time frame. Here it is 2015, and he writes that predictions from 2009 have been proven ‘false’. Nonsense! In human-scale time six years seems like a long time, and if a prediction all of six years ago has not happened yet, then it must be false. In geologic-scale time six years is a brief instant. For example, nothing in The End of Suburbia has been proven wrong. That’s a ridiculous claim! Yet, thinking only in our human-scale time frame, it might seem so.

        • Anonymous says:

          No, I’m merely exercising critical thinking.

          Bruce, your comments exemplify what Kahneman says about those who make predictions that fail but who won’t acknowledge it:

          “…experts resist admitting that they had been wrong, and when they were compelled to admit the error, they had a large collection of excuses: they had been wrong only in their timing, an unforeseeable event had intervened, or they had been wrong but for all the right reasons. … they bristle with impatience toward those who don’t see things their way, and are confident in their forecasts. They are also reluctant to admit error.”

          And so on. Once again: I have no idea whether Ron is right or wrong. Only time will tell. But the above analysis is spot on. It encompasses nearly everyone who crowed about peak oil in the last decade–and who sold lots of books and movies.

          • MikeB says:

            Sorry. Did it again.

          • Tom Tommsen says:

            “Critical thinking”

            I did not die to this day, therefore I am immortal.
            That pretty much sums up your reasoning/critical thinking skills.

          • MikeB, I, along with hundreds of others, in 2008 expected prices to continue to rise until they reached at least $200. I have stated many times, on this blog and on TOD, that I wuz wrong!

            I have always believed and stated that I thought Peak Oil was near. However this is the very first time I have ever given a specific date. And if I am wrong I will freely admit it and very quickly after the fact. However…

            Past wrong predictions about the date of peak oil only increase the odds that the next prediction will be correct. I laid that case out here:

            Peak Oil and The Blibbit Principle

            • Mikeb says:

              Thanks. And remember that I never said your prediction is wrong–in fact, “you might be right.” I would have to assume to know more than you to say your prediction is wrong.

              It’s that this is coming on the heels of a history of error in the peak oil movement, and also in the wake of a tide of absurd claims that culminated around 2010.

              As I said in another response, there is NO scientific consensus for a lay person like me to consult. Also, the parallels with what Kahneman says about “The Illusion of Validity” and his whole chapter on predictions make me very wary.

              Peak oil is an utter dilemma for a lay person — unlike issues such as evolution, climate change, and genetic engineering, where there is a broad consensus.

              • Jake. says:

                NASA and the NOAA crew use false, manipulated and cherry picked global temperature’s to build that so called ‘consensus”, about the climate change beast. Unfortunately the hardworking taxpayer’s of this blessed Nation are the one’s that have to bear the brunt of the bad politically motivated data, because they pay through the nose with all these hairbrained new climate rule’s and regulation’s. Simple solution, no democrat’s should be in any leadership role in government period. EVER.

                • Preston says:

                  The military industrial complex uses false, manipulated and cherry picked so called terrorist organizations to build that so called ‘consensus”, about wars. Unfortunately the hardworking taxpayer’s of this blessed Nation are the one’s that have to bear the brunt of the bad politically motivated data (1 trillion and counting in IRAQ), because they pay through the nose with all these hairbrained new wars against the wrong enemy. While our environment is destroyed. Simple solution, no republican should be in any leadership role in government period. EVER.

                  • I believe Hillary Clnton was a strong iraq war advocate? Bill got the USA into a rather dumb intervention in Yugoslavia, and sent US Rangers to a glorified defeat in Mogadishu. Now we see Obama playing with fire in Ukraine.

                    As far as I can tell it’s a national problem. Most Americans tend to swallow government bs as served up by the media.

                  • Preston says:

                    Good point Fernando, Obama beat Clinton long ago in the primaries largely because he sounded less hawkish. But once elected, it is hard to tell the difference.

                    The scientists at NASA and NOAA are professionals who like most scientists dedicate their life to finding the truth. I’m pretty sick of these climate deniers making them sound like scoundrels. Politicians, lawyers, and right wing talk show hosts on the other hand lie for a living, anyone like Jake getting their science from them is a fool.

            • Ron, I’m not sure if this was discussed here, but if oil prices go over a certain value then coal to oil and renewables do kick in. I think that price comes before $200 per barrel. This of course leads to higher coal prices. And eventually we reach peak coal.

            • WelshFarmer says:

              I think that Peak Oil proponents (in the noughties) failed to take due account of the fact that the global peak is fundamentally different from that of a single oil domain (e.g. North Sea, Gulf).
              Precisely because oil is the Master Resource of our current civilization, everything that is humanly and politically possible is and will be done to shift the decline phase into the future.
              Because uranium is also in terminal decline, we will get nothing like the symmetric oil production curve that Hubbard envisaged, but instead something resembling a shark fin. This will be catastrophic for humanity. Ron’s analogy of water relentlessly building up behind a dam is spot on.
              Fusion, which I was involved with in the 80s, was the only realistic solution to our energy predicament, but it remains decades away. Same applies to solar on a global scale. The colossal investment required dwarfs our present (energy, metals) resource base.

              • Precisely because oil is the Master Resource of our current civilization, everything that is humanly and politically possible is and will be done to shift the decline phase into the future.

                Exactly! Everything, or perhaps almost everything has already been done to shift the decline phase into the future.

                Massive infill drilling was the first thing done, then horizontal source rock fracking was the last rabbit to be pulled out of the hat. Both efforts had a huge impact but there are no more rabbits left. Or that is my opinion anyway.

                • Dave P says:

                  Ron, do you have any examples of fields that have been subject to massive infill drilling which are now in decline?

                  I understand that the decline should be steep, it would be nice to see a real world example though.

                  • Dave, I don’t have a source for individual fields. The data is available, apparently, because the IEA examined 1,600 fields and found the decline rate to be 9%. This is, apparently, without infill drilling. There are institutions that publish this data, for a huge premium of course.

                    The 9% decline rate is an increase over past surveys, about double in fact. I suspect this is due to infill drilling.

                    I strongly suspect that Ghawar, or at least the northern half of the reservoir, has gone into steep decline. Khurais and Manifa have made up the difference. Also Qatar’s fields are likely in steep decline, or at least their crude only production is.

                  • MBP (ManBearPig) says:

                    With zero investment most conventional fields would decline at around 15%.

        • John B says:

          “The End of Suburbia” was produced in 2004, not 2009.

          Here are some the predictions:

          It’s the end of the age of oil.
          It’s the end of the American way of life.
          There are no bus lines in the suburbs.
          The suburbs would not exist without cheap oil.
          Oil in Texas was cheaper than water.
          People live miles and miles from where they work, and where they get their food.
          Now we’re stuck up a cul-de-sac in a cement SUV with an empty gas tank.
          There is no other way of life that uses more energy than suburbia.
          There will be no new gas power plants built.
          There will be nothing to power any new gas power plants with.
          There is no way to generate any revenue with a gas power plant.
          Natural gas is becoming more scarce.
          Natural gas is no longer able to be extracted out of the ground at the same rate as it has been.
          Natural gas supplies are in decline.
          Future growth in electricity supplies is not possible.
          The 2003 blackout was caused by a shortage of energy supplies.
          All oil well production follows a bell curve.
          We have already reached Peak Oil (2004), and will shortly (if not already) enter decline
          Once oil has peaked, every barrel afterword will be of a lesser quality of oil.
          The books on oil have been cooked as much as the books at Enron.
          We are going to run into a serious problem by 2010.
          We’re going to have to downsize everything we do.
          The ability of the North American continent to produce food will diminish.
          It’s going to be a matter of not being able to feed your children.
          Farming is going to become more labor intensive.
          Trucks will start breaking their axles in a 3,000 mile journey.
          It’s the end of trans-continental trucking
          We’re going to have to do retail at a local level.
          Suburbia has very poor prospects for the future.
          Oil price increases will have a devastating effect on suburban communities.
          There’s going to be a great scramble to get out of the suburbs.
          There’s no combination of alternative fuels that can run the US.
          Hydrogen is a delusion. Hydrogen is a myth. Hydrogen vehicles will explode.
          There will be new urbanism. The trend is away from traditional subdivisions.
          New urbanism will be the only urbanism.
          The suburbs will have 2 families living in the same house, and crops growing in the front yard. The grid is going to go down.

          https://www.youtube.com/watch?v=Q3uvzcY2Xug

      • TechGuy says:

        Mike B:
        “What’s the next unforeseen factor waiting in the wings to fuck up all the predictions, like LTO? No one can know this.”

        Presume Ron is right and you’re unprepared, whats your plan? Most people have some form of insurance: home insurance, car insurance, health insurance. On any given day the odds are low that I will ever need to use any of them. But I have them anyway since over my lifetime the odds increase that I will need one of them.

        If you go on believing that BAU (Business as Usual) can continue indefinitely, and you can avoid taking measures you will be sorrily mistaken.

        FWIW: I do believe Ron is correct, and I have come to the same conclusion on my own, and perhaps to some small extent, my comments to Ron make have re-enforced his own work that we have peaked in 2014 or 2015. Its not just Geology that is likely to impact extraction but economics. The world’s economy has managed to hang on from the massive amounts of QE and ZIRP that all of the central banks have contributed. These policies are unsustainable and will fail in the long term. If it wasn’t for central bank manipulation the world would have already plunged into a deep depression. Gov’t and CB can delay “economic” judgement day, but they can not stop it.

        • Nick Hail says:

          I do believe we have a historic market crash coming. I also believe we have a major boom the decade following.

        • Mikeb says:

          “Presume Ron is right and you’re unprepared, whats your plan?”

          Thanks for the question, TechGuy.

          Planning is a delusion.

          I have been aware of this issue for a LONG time. My partner and I once fancied ourselves amongst the “prepper” contingent. However, 2015 looks nothing–and I mean nothing–like we expected it to look ten years ago.

          I have since asked myself a fundamental question (it’s a rephrasing of your question): Suppose oil does peak in my lifetime–what exactly am I supposed to be prepared for?

          Preparing for “collapse” is self-deception because you don’t know what you’re preparing for. It’s a dream–a delusion–to imagine that you’re “self-sufficient” when all you need is one illness or injury to remind you how dependent you are on the existing system.

          I was an EMT for 12 year, and my partner is a Type 1 diabetic. I know about “long emergencies.”

          • Ves says:

            You are correct on this one. Once you lose job and cannot find another one, your energy foot print goes back to zero and because of that fact you are fully dependent on food stamp type of welfare from the government for survival. Buying Farms on New Zealand or oil wells in Montana (according to Mark Faber’s paid newsletters 🙂 ) is all just nonsense for 99% of us.

            • Boomer II says:

              Buying Farms on New Zealand or oil wells in Montana (according to Mark Faber’s paid newsletters 🙂 ) is all just nonsense for 99% of us.

              I think that is the point. If you are very wealthy, you can start preparing for the future by buying land in a safe place. The rest of us don’t have that option, which is the point. The wealthy aren’t likely to go where the rest of us might go. The wealthy might figure that if they put a lot of water between them and the masses, it will act as something of a moat.

              • Ilambiquated says:

                Montana would be more or less uninhabitable without roads and cars. Post-apocalyptic scenarios that include taking your bank account, land ownership and mobility with you are just fantasies.

            • TechGuy says:

              “You are correct on this one. Once you lose job and cannot find another one, your energy foot print goes back to zero and because of that fact you are fully dependent on food stamp type of welfare from the government for survival”

              Surviving on food stamps isn’t surviving. The idea is to develop skills and resources so that you won’t lose your job and that you don’t need to fall back on food stamps. For instance working for an airline, travel company would be a poor choice, working for a employer (or becoming self-employed) providing non discretionary services or good will likely help significantly avoiding losing a job and also avoid severe hardships if you do lose your job.

              As I see it I have two choices:
              1. Except that the future is going to be radically different in the past and work to distance myself from path of dependence.

              2. Party on until the music stops and expect to turn to a drug dependence (alcohol, anti-drepression prescriptions, illicit drugs) to treat symptoms of depression. Expect to be exposed to severe violence (if not murdered) as the BAU system fails.

              Rather than except defeat, and self-pitty, and I choose distance myself from dependence. Perhaps after the collapse happens, and I do manage to survive I can try to help pick up the pieces. Perhaps its a delusion to believe I will survive. But if don’t try there is no chance, which would be even more delusional to accept.

              As far as the Wealthy, I am pretty sure there are lots of people that don’t rely on the system. For instance, the Mennonite and Amish manage to survive without dependence on the system. They are almost self-reliant and are able to feed, house, and cloth themselves without help from the outside world. They don’t collect food stamps or need gov’t wealthfare to survive. They are certainly not wealthly. That said, please don’t turn this into a thing about religion. Just because I am referencing them does not mean I am suggesting to follow their reglious beliefs. Its just an example.

              To be honest, I think your attitude is a cop-out. Simply because applying yourself to avoid dependency is too much effort, and you rather avoid and forget the whole ordeal. You would much rather go out to dinner, watch TV, go on vacations or what every you do, than change. Change is hard, BAU is easy.

              As far as the Wealth making it: they will probably be unsuccessful. The majority of the wealthy are utterly dependent on the system and there money to provide for themselves. If they have to rely on others to feed, house and cloth themselves, they will be utter doomed no matter where the run to. Sooner or later the resources they rely on will disappear and their “wealth” will vanish with it. If they fail to obtain the skills and resources to be self-reliance they will not survive.

              FYI: This guy is from the middle class and is becoming self-reliant. He certainly isn’t “wealthly”:

              http://twoicefloes.com/

              • Ves says:

                Hi TechGuy,
                I am afraid that you have lots of seeds of Fear that you have watered for long time and that Fear is not allowing you to have AWARENESS. Key is to be MINDFUL every living moment and that will shine the light on REALITY around you.

                It is good to think about future available jobs especially if you are young BUT you have to be AWARE that you don’t know the future so ultimately you don’t know what kind a jobs will be in demand. So what is the point of losing the sleep about next career training if you don’t know what kind of jobs we will have? My opinion is that we will not have many jobs and figuring out what jobs in the future we will have is like picking individual stock on the market. Impossible. You will lose. Guaranteed.

                There are not just 2 choices available that you mentioned. If that is the case life would be so boring, but it is not. There are many, many shades of gray between black and white.

                My attitude is not to cop-out. My attitude is to live day by day in the PRESENT. No PAST and NO FUTURE. Just in the present. Because only present is reality. By living in the PRESENT you don’t have to fall for all the cravings of the life. You don’t have to eat out for dinners, you don’t have to watch TV, you don’t have to go on vacations. But if you do some of these things from time to time, it is not big deal as long as you AWARE that these are cravings.

                I agree with you on one thing. Change is hard. Change does not happen when you are in comfort zone, when you have status quo or laying on the beach of Mexico. But change will happen when the pains come but there is no point of worrying about that because you don’t control the time of happening.

          • TechGuy says:

            “Preparing for “collapse” is self-deception because you don’t know what you’re preparing for. It’s a dream–a delusion–to imagine that you’re “self-sufficient” when all you need is one illness or injury to remind you how dependent you are on the existing system.”

            Not self-sufficient, but self-reliant, where you can distance yourself from the BAU system. Its better to be self-reliant than be hopelessly dependent on an unsustainable system. As much as you believe preparing for a collapse is delusional, its even more delusional to believe an unsustainable system will last.

            • Mikeb says:

              “Not self-sufficient, but self-reliant, where you can distance yourself from the BAU system.”

              You’re splitting hairs.

              And no you can’t. One injury or illness is all it takes.

          • Old farmer mac says:

            Some planning is possible and prudent when it comes to making life style and economic choices taking into account peak oil and other peak resources.

            EVERYTHING ELSE HELD EQUAL – It is probably better to choose a career that is not dependent on cheap energy – Tourism sucks when people can’t afford plane tickets.

            Trains are probably going to reclaim a large portion of the freight business from trucks – especially long distance freight. It might be good to avoid investing in the trucking industry expecting continued growth.

            If you are a home body and plan on staying put you are absolutely going to earn a return – via savings on utility bills – if you spend money on new windows and extra insulation etc. How much ? Impossible to say but you WILL save money year after year.

            Gardening is hardly worth my while even though I have all the machinery needed, excellent land, room to store canned and frozen food , and expertise out the ying yang given that I grew up on a small diversified family farm and took my degree in agriculture. The reason it is not worth my while is that I can get plenty of fresh produce from local farmers in season far cheaper than I can grow it in small quantities myself. I can earn money doing other things several times faster than I can save it gardening.

            BUT BUT BUT- If I didn’t have other things to do I would be doing a LOT of gardening to save money. When I lived in the city I kept a twenty by fifty foot backyard garden that was the envy of the neighborhood because it was a satisfying and remunerative hobby and I COULDN’T get free tomatoes and peppers from relatives.

            So – Everything else equal – gardening is a much better hobby than a lot of others – it will generally return an actual cash profit as well as paying off in spades in satisfaction and honest exercise.

            Most of us don’t realize it but life is one long gamble and we are constantly making bets as to what the best course of action might be.

      • Nick Hail says:

        Peak oil imploded in 2009? Welcome to the party, you’re about 2 decades late. We went through all this peak oil crap back in the 70’s again in the 80’s and then in 2000’s again.

        It has been wrong every time.

        • WelshFarmer says:

          You tell me I’m going to die ? Welcome to the party, you’re about 2 decades late. We went though all this mortality crap back in the 70’s again in the 80’s and then in 2000’s again.
          I am still alive and I’m going to live for ever.

      • nNgass says:

        Mike B you look at an extremely short term period, the ups and downs of oil depletion, discoveries, and technical advances. The world produces about 90 Million barrel per day, every day from a finite resource. How long can this be kept up, despite what you say “Does anyone really know what future technological advancements will bring?” Even if future drills can drill to the center of the earth and oil is chilled by ice at -10 degree Kelvin from the Jupiter’s moon Europa and lifted by anti-gravitational device. But one day, there is no more.

        Perhaps you believe in abionic oil creation? That, of course, would solve the problem but only in the long run since it is a slow process and will take millions of years to produce the large volumes needed if this theory is right.

        • nNgass says:

          Sorry for the typo.Abionic should read abiotic

          • Mikeb says:

            For gosh sake, no, I don’t believe in abiotic oil.

            Kahneman talks about a phenomenon inherent in the human psyche which he calls WYSIATI: “What you see is all there is.”

            That’s why economic predictions fail, even amongst experts. That’s why you always here, “well, we never could have foreseen,” blah blah.

            Tested repeatedly, the best experts never score greater than chance.

      • travelin_rn says:

        Does anyone really know how much recoverable oil is in the ground, and at what price?

        My advice is to do an internet search for the largest oilfield finds since 2000; the answer is Kashagan at 37 billion barrels, but the recoverable amount is far less. You can seach each year since 2000 or leap to 2010 and 2013. The largest oil field discovered since 2010 is Libra at 7.9 billion barrels of recoverable but is in ultra deep waters of the south Atlantic, over 10,000 ft depth. In 2013, the largest oil field found was Shenandoah-2 in the GOM at just over 31,000 ft total with 0.5 billion barrels of recoverable oil. Each year we are finding less and less oil and have to go deeper and deeper to get at it.

        • I was around when the Kazaks offered the deal to participate in the Caspian 3D that covered Kashagan. I talked my boss’ boss into staying out of the consortium. At the time my boss was really worried about the former USSR being a trap, so he used to let me put together arguments to keep out of the “great deals” we kept being offered. Afterwards, I was criticized. Hell, some explorers wanted to crucify me. But I felt the structure was huge, had a lot of oil, and it also was incredibly hairy. I guess I was right?

      • Anonymous says:

        A: earth is a sphere
        B: sphere’s are bounded and finite
        C: many different types of matter make up earth.
        D: earths matter is a subset of earth oil is bounded and finite.
        E: continuous consumption of any finite substance will end in depletion of substance.
        F: QED – peak oil.

    • Patrick says:

      It’s a phenomenon. Can be observed on wells, fields, and countries.
      wells + wells = field
      fields + fields = country
      countries + countries = world
      Pretty simple stuff after all.
      Why some people keep saying 2 +2 is not equal 4 I will never understand (stupid? might be an explanation).

  3. Doug Leighton says:

    Well, Russia will almost certainly peak in 2014. They have stated that they are depending on the Bazhenov Shale and Arctic offshore just to keep production flat in 2015 but with sanctions and low oil prices that’s not going to happen (in the near term). Being the largest producer of crude oil in the world this has to be a big factor in supporting your peak conclusion. If Russian production were to decline at just 2 or 3% per year the cumulative effect would be very significant.

    • Doug, are you aware of serious cuts in Bazhenov appraisal activities? I ask because the large oil outfits operating in Western Siberia won’t miss a beat if they are working on a long term strategic plan.

      The USA sanctions are in a sense helping the Russians, they will develop their own tools and technology. I’m not sure if they will hit the ground running, but if oil prices do go back up I have the faint suspicion they’ll tackle the Bazhenov in a massive scale.

      • Watcher says:

        Russian fracking technology predates American fracking. They don’t have to develop much of anything, other than a proppant source.

        • coffeeguyzz says:

          As I mentioned on the previous thread, Gazprom just announced that two test directional wells were successfully frac’d in the Bazhenov. They are now drilling horizontals 600 feet long and about to start multi stage fracturing.
          The Bazhenov covers an area comparable to Texas and California combined, thickness ranging from 30′ to over 100′, and the center area has a Total Organic Content ranging from 9% to 15%.

        • I’m not sure. I haven’t worked in Russia since I transferred to Venezuela. But they didn’t have homegrown coil tubing units. Are those under sanction?

          • coffeeguyzz says:

            If they are unavailable through the West, (and I do not know if they are), I would think the Chinese would be able to supply them at some point.

            • Old farmer mac says:

              I don’t even have a very good idea of what a coil tubing unit IS BUT I am willing to bet it is a lot easier fabricated than say a rocket motor or a supersonic fighter plane.

              I will remind everybody that the Russians are quite capable of building space ships and nuclear submarines.

              I seriously doubt if they will have any trouble putting their hands on some to use as samples saving them the time and expense necessary to develop their own designs if they haven’t already. Does anybody seriously think the Russians are unable to manufacture such industrial machinery as they need to extract oil? They might have trouble manufacturing it as fast as they would like to have it but they are not going to do without because of sanctions.

              Russia is still not very far from the old command economy days and if the people at the top want it that way then Russian engineers may find themselves compelled to work for a western burger flippers wage as long as necessary.

              Now a hell of a lot of people have jumped on the Yankee Saudi jerking the Russians around bandwagon but I ain’t buying it.

              There is no doubt in my mind that a lot of people in Foggy Bottom and Riyadh are happy the Russians and the Iranians are hurting but personally I think anybody DELIBERATELY engineered an oil glut.

              I am always glad to hear about my business competitors having a bad year but to think the Saudis would deliberately give up the amount of money they have lost in the current glut staggers the imagination.

              And to think that our OBUMBLER in chief – well intentioned as he might be- or more specifically his administration -is capable of organizing and implementing such a move is BEYOND BELIEF.

              The Obaama administration has shot just about all the toes off the Democratic party in the three years. NOBODY in his right mind could be naive enough to believe such an undertaking could be kept secret or that Democratic incumbents would go along. So far as Republican incumbents …… I had to stop typing a minute to laugh at my own joke.

              I doubt there would be as many as six congress critters of both parties combined that would risk their career on such a harebrained undertaking. Even congress critters are not THAT stupid or that sure they can get away with ANYTHING.

              • Old farmer mac says:

                There should be a ” don’t ” between I and think in the above comment.

              • A coil tubing unit is a huge reel of special pipe. It’s used in horizontal well completions. Consider it like a very useful giant Swiss knife.

                Read this, or focus on the photograph mid way down

                http://www.drillingcontractor.org/european-shale-gas-a-long-road-ahead-9929

                The Rusians can build one, but the question with Russian equipment has always been reliability. And I assure you, I saw how these units evolved over time, the ones we have now are like BMWs, compared to the ones we had 25 years ago.

              • Ilambiquated says:

                When did talking trash about politicians start passing for intelligent conversation?

        • Nick Hail says:

          There techniques are crude and unproductive compared to ours. They still rely on many American companies to deal with their major sour gas problems.

      • Doug Leighton says:

        Well, yes and no, mostly no. I did work in the Bazhenov quite a few years ago (helping convert Russian reserve numbers to ones acceptable to Western regulatory agencies) and hence got to know some of the players there. The main take away, for me, was that there are potentially serious facies change issues across fairly short distances greatly complicating fracking plans; all plans. So, on the one hand, yes the “frackable” region is huge BUT within that key region all is not equal. Is it ever?

        But, remember I’m not a real oil guy, more a geophysicist with some geology training on top. The only reason I was roped in on some of this stuff was because I could read Russian adequately. I read Chinese too, sort of, which had me doing similar stuff in China at the same time. My minimal Chinese came from fluency in Japanese who use Chinese characters but with MAJOR differences to many words.

        Anyway, for what it’s worth, Bazhenov will be constrained by geological complications more than anything, the caveat being that I’m NOT really an oil guy so my opinion has very limited value. I did look at some core from holes not all that far apart and was able to see the (potential) problem(s). Of course the gringo world is small in Asia so I’m not talking entirely from my own observations here. I think any cuts in appraisal activities would be from geological concerns as much as anything.

        • I worked a little bit on Western Siberian projects. Let’s think this through without discussing anything confidential.

          For example, wouldn’t it be sensible to get a high graded Bazhenov area under an existing field, drill a couple of pilot holes, and just add slots to an existing row? There must be good over pressure Bazhenov all over the place.

          • Doug Leighton says:

            Fernando,

            I’m sure it would be sensible to get a high graded Bazhenov area under a field and go from there; I’ve no doubt that a lot of successful fracking will happen in the Bazhenov. I’m just pushing back against a tendency by some people to draw a gigantic oval on a map and presume all’s well (or equal) down there. You know as well as anyone that it’s not.

            I’ve never seen a fracked hole location and know nothing about LTO but it’s impossible for me to believe that, owing to it’s very complex geology, Bazhenov shale exploitation will be a cake walk. That’s all I’m saying, all I’m qualified to say.

            • You are right. It won’t be easy. But neither will it be so difficult if they focus on drilling from existing oil pads. I do wonder if the Bazhenov oil won’t be too paraffinic.

    • Synapsid says:

      Doug L,

      BP just bought a little over 46% of Eurasia Drilling, the largest drilling company in Russia. I’m guessing that that is going to be important.

      Pretty sure it was BP, anyway.

      • Doug Leighton says:

        Synapsid, Yes Eurasia Drilling are major league dudes and it’s interesting that BP would be taking a big chunk of them. Fernando might have some useful input on this? My guess is that Eurasia have a lot of Arctic experience that would appeal to BP. But that’s just a guess.

        • Synapsid says:

          Doug L,

          I was thinking about expertise that BP could provide, in the context of the discussion of Russia being unequipped to produce some of its stuff.

          It was impressive to see BP do such a thing as this investment, what with recent speculation that the poor fellows might be a takeover target, and such. Rumors of their demise etc.

      • That sure sounds pretty strange. Where did you pick that up?

      • Synapsid says:

        Doug L,

        Schlumberger not BP. Same point though, about expertise available to help the Russians with the challenges they face in some regions.

        • Toolpush says:

          Synapsid,

          Schlumberger not BP, makes more sense. The oil companies used to do their own drilling, many moons ago, but these days seem happy to allow service companies to do all the hard work for them.
          On the other hand, Schlumberger, did buy into Sedco, who had a fleet of offshore rigs. Their plan was to be able to contract to drill a complete well for the oil company. The plan didn’t work too well, as down time affected the whole contract, and not just the individual operating units.
          Schlum were happy to offload the Sedco offshoot to Transocean when the opportunity arrived. We will have to wait and see how their Russian drilling adventure works out?

          • I remember seeing Schlumberger land rigs. I can’t remember where, but I recall these were big 3000 hp super tall derricks with 15000 psi blow out preventers?

            Anyway, when these deals get made they usually make their money trying to sell an integrated services package. I bet that’s where they see the big profits…the extras they’ll sell on top of the basic rig.

  4. Jeffrey J. Brown says:

    Actually, if we just exclude the US, the rest of the world, including Canada, has been flat to down, as annual Brent crude oil prices doubled from $55 in 2005 to an average of $110 for 2011 to 2013.

    Global C+C, excluding the US:

    2005: 68.7 mbpd
    2013: 68.6
    2014: 68.8*

    *Through September

    If we subtract out some estimates for non-US global condensate**, this of course means that actual global crude oil production (45 and lower API gravity crude oil) has been in decline since 2005, outside of the US, as annual Brent crude oil prices doubled from $55 in 2005 to the $110 range for 2011 to 2013 (and about $100 in 2014).

    **Based on OPEC + EIA data, OPEC alone showed a significant increase in condensate production from 2005 to 2014

    • Watcher says:

      The 45 and lower criterion is lost on 99% of reporters.

      John Kemp might understand.

      • Jeffrey J. Brown says:

        In simplest terms, in my opinion global crude oil production (45 and lower API gravity crude oil), inclusive of the US, probably peaked or hit an undulating plateau in 2005, while global natural gas production* has (so far) continued to increase.

        *Including byproducts of natural gas production, condensate & NGL

  5. Jeffrey J. Brown says:

    A slightly edited version of what I posted at the bottom of the prior thread:

    Following are some comments I sent out to some industry partners last week (in this missive, I used the industry standard of MM for million).

    LOW OIL AND GAS PRICES FOREVERMORE? MAYBE NOT

    The Supply Side

    Global Crude Oil Production Probably Peaked in 2005. Based on some plausible estimates for global condensate production, it’s quite likely that actual global crude oil production (45 and lower API gravity crude oil) has not materially exceeded the 2005 annual rate, even as annual Brent crude oil prices averaged $110 for 2011 to 2013 (and averaged about $100 for 2014). In other words, global crude oil production probably peaked in 2005, while global natural gas production and associated liquids–condensate and natural gas liquids–have so far continued to increase.

    High Decline Rate in Existing Global Oil Production. The IEA puts the underlying gross decline rate in existing oil wells worldwide at about 9%/year. At a 9%/year gross decline rate, to just maintain existing oil production for 11 years, the global industry would have to put on line the productive equivalent of every currently producing oil well in the world, over the next 11 years.

    High Decline Rate in Existing US Natural Gas Production. Citi Research puts the underlying gross decline rate in existing gas production in the US at about 24%/year. At a 24%/year gross decline rate, in order to just maintain existing US gas production for four years, the US would have to put on line the productive equivalent of about 100% of current gas production over the next four years. As an example of why this is a reasonable estimate, the observed year over year decline in Louisiana’s marketed natural gas production from 2012 to 2013 was 20%; this was the net decline, after new wells were added. The gross decline rate from existing Louisiana wells in 2012 would be even higher.

    High Decline Rate in Existing US Crude + Condensate (C+C) Production. Given the high and rising percentage of US oil production coming from high decline rate tight/shale plays, a plausible estimate is that the underlying gross decline rate from existing US oil wells may be on the order of about 20%/year, which would be consistent with the Citi Research gas estimate. In any case, at a 20%/year gross decline rate, in order to just maintain existing US oil production for five years, the US would have to put on line the productive equivalent of about 100% of current C+C production over the next five years.

    Global Net Exports of Oil (GNE) Probably Peaked in 2005. GNE, defined as combined net exports from the (2005) Top 33 net oil exporters, have been below the 2005 annual rate of 46 MMBPD (million barrels per day, total petroleum liquids + other liquids, EIA data) for eight straight years. GNE fell to 43 MMBPD in 2013.

    The Demand Side

    China & India (Chindia) Consuming an Increasing Share of GNE. The volume of GNE available to importers other than China & India fell from 41 MMBPD in 2005 to 34 MMBPD in 2013.

    Surge in Chinese Oil Imports. Credit Suisse reports that Chinese oil imports were up 10% overall for 2014, with late 2014 oil imports surging to a 13% year over year increase, from December, 2013 to December, 2014.

    Possibly Temporary Decline in US Net Oil Imports Contributed to Oil Price Decline. Based on four week running average data, US overall net oil imports fell, primarily because of a surge in high decline rate US tight/shale oil production, from 6.2 MMBPD in the week ending 6/13 to 4.7 MMBPD in the week ending 11/07, a decline of 1.5 MMBPD in the US demand for net imports of oil over a five month period, putting considerable downward pressure on oil prices. However, US net imports have recently rebounded, hitting 5.9 MMBPD in early January, and most recently US net oil imports were at 5.7 MMBPD in the week ending 1/23 (all four week running average data). A significant increase in US liquids consumption has probably contributed to a rebound in net oil imports. The most recent EIA data show that US liquids consumption is up by almost one MMBPD from the same time a year ago.

    Record Global & US Car Sales in 2014. US and global light vehicles sales hit record levels in 2014, and a plausible estimate is that the net increase in global light vehicles is running at about one million new vehicles per week (net being new vehicle sales less vehicles scrapped). In contrast, during the 2008 to 2009 oil price decline, global vehicle sales fell from 2007 to 2009, before rebounding in 2010.

    • Huckleberry Finn says:

      Great points JB.
      I think though that one must not extrapolate 9% production decline in 11 years as 99%. It is 9% of a declining number. Same for US NG.

      Oil US NG
      100.00 100.00
      91.00 1 76.00 1
      82.81 2 57.76 2
      75.36 3 43.90 3
      68.57 4 33.36 4
      62.40 5
      56.79 6
      51.68 7
      47.03 8
      42.79 9
      38.94 10
      35.44 11

      • Jeffrey J. Brown says:

        You might want to re-read what I wrote (hint, I am stipulating a steady state production scenario, with an underlying 9%/year decline rate):

        The IEA puts the underlying gross decline rate in existing oil wells worldwide at about 9%/year. At a 9%/year gross decline rate, to just maintain existing oil production for 11 years, the global industry would have to put on line the productive equivalent of every currently producing oil well in the world, over the next 11 years.

        • Old farmer mac says:

          Hi Jeff,

          Do you know of any credible organization ( in your opinion ) that puts estimates the ”underlying gross decline rate of existing wells world wide higher than nine percent?

          Anybody else ?

          • Jeffrey J. Brown says:

            Not that I am aware of. I think that most of us, including yours truly, were surprised by the IEA estimate of 9%/year. They reportedly based the decline rate analysis on a study of 1,600 oil fields worldwide.

            • Watcher says:

              Yah, that was the most important number of the past year. Well, other than price in the 40s.

        • Huckleberry Finn says:

          JB,
          I know what you are saying, but it still read to me the opposite. Must be just me. Will try again after the caffeine has kicked in 🙂

          • Jeffrey J. Brown says:

            Let’s assume that we have a partially developed oil lease, with several producing wells, that has current production of 1,000 bpd, with a decline rate of 10%/year from existing wells.

            In 10 years, the production from the existing wells would be down to 370 bpd, because we are declining at 10%/year, from a declining production level.

            But let’s assume that we want to maintain a production rate of 1,000 bpd. We would have to put on line 100 bpd every year, in order to maintain 1,000 bpd, with a 10%/year decline rate. So, in 10 years, we would need 100 bpd of new production times 10–or 1,000 bpd of new production–in order to maintain a rate of 1,000 bpd for 10 years, with an underlying decline rate of 10%/year.

          • Jeffrey J. Brown says:

            In any case, Saudi Arabia averaged 9.2 mbpd (C+C, EIA) for 2006 to 2013 inclusive, versus 9.6 mbpd in 2005.

            At a 9%/year global decline rate from existing wells, in order to maintain current production the global industry would have to put on line the productive equivalent of the post-2005 Saudi average production rate of 9.2 mbpd times eight, over the next 11 years or so.

            • Watcher says:

              The gross vs net thing may need polishing in definition for the Saudis.

              We think of gross vs net as being infield drilling dependent. Or more broadly ANY new drilling defining net.

              For KSA, there is water drive and CO2 and lots of other things that maybe work better than an additional well. So for them gross vs net would be hands off, just let the permeability flow at whatever rate. If pressure falls and EOR is req’d, then it gets defined as “net decline”?

              • Jeffrey J. Brown says:

                I mentioned Saudi Arabia just to put the magnitude of the estimated gross decline in global production in perspective.

                Here is the original source for the 9% number, the Reuters column by Jack Kemp:

                Output from existing fields around the world would decline around 9 percent per year in the absence of new drilling or other capital expenditure to increase recovery, according to the International Energy Agency’s World Energy Outlook 2013.

                The IEA’s average 9 percent decline rate was calculated by analysing output from more than 1,600 conventional oilfields around the globe. Shale wells, however, exhibit much faster decline rates.

                Link:
                http://in.reuters.com/article/2015/01/14/us-oil-shale-prices-kemp-idUSKBN0KN07C20150114

                Incidentally, here is some interesting math.

                From a global C+C production base of 77 mbpd, if US production, about 9 mbpd, is declining at 20%/year and if the balance of global production is declining at 7%/year, the total annual decline from existing wells would be as follows:

                US: 1.8 mbpd
                Rest of world: 4.8

                Combined decline: 6.6 mbpd, which would be a 8.6%/year global decline rate, versus the 9%/year IEA estimate.

  6. Anonymous says:

    This post mixes political causes with geological causes. I think political causes will slow the decline after the peak.

    • Anonymous, peak oil is peak oil regardless of the cause. Politics, economics, geology and a host of other things affect the production of oil. But the point of maximum oil production will be the peak regardless of the cause.

  7. eugene says:

    I enjoy the games being played to avoid the core of the discussion ie oil is a finite resource. We have the “change the definition of oil” people, the debate the word “theory” people, the biofuels will save us people, the reserves people, technology people and the god will save us people. Or we have my 50 yr old son in law’s people who just think it’s all BS and just wants to have fun. I have a bit of trouble with a 50 yr old man that still just wants to have fun. After a couple of decades, as a therapist, I see a whole lot of frightened people desperately grasping at change free solutions.

    For me, it’s a matter of cost of extraction and capability to extract at a cost I can afford. I am far from a wealthy man so cost is a very limiting factor. Makes me one of “those”.

    • cytochrome c says:

      Everyone has an opinion

    • Fred Magyar says:

      I have a bit of trouble with a 50 yr old man that still just wants to have fun. After a couple of decades, as a therapist, I see a whole lot of frightened people desperately grasping at change free solutions.

      If you do not change direction, you may end up where you are heading.
      Lao Tzu

      I hope for nothing. I fear nothing. I am free.
      Nikos Kazantzakis

  8. Ernest McCray says:

    I like the graph of oil production shown in Richard Duncan’s “Olduvai Gorge” paper. A blip in history from zero to zero.

  9. Shufling Along says:

    “…just wants to have fun.”

    Well, it’s StooperBowel Sunday…and I I could not care less…but I am in the minority, since it seems to have elevated to status as a top-tier American Annual celebration (of what I am not sure).

    I just finished a business trip with a bunch of highly paid scientists and engineers…when two of them talked a bit about oil and gasoline prices, I discovered that a lot of these folks are techno-cornucopians, and that they don’t know spit about the oil biz…they preached the litany that the ‘new ‘ fracking technology, along with all the other enhanced oil recovery methods, would continue to allow up to get every drop from the ground.

    In their minds, humans are able to continue or perhaps increase production from every oil field, no matter how old, regardless of each field’s geology, by methodically progressing down the ‘punch list’ of enhanced oil recovery: water injection, steam injection detergents, CO2, and more and more clever implementations of fracking and more. They seemed to think that every formation was equally amenable to enhanced recovery from using all the available EOR processes, either in some optimal sequence, or maybe even in parallel combinations.\

    I immediately withdrew from the conversation and changed the subject…”How ’bout them Patriots?”.

    In an unrelated yet interesting vein:

    http://www.alternet.org/news-amp-politics/pentagon-makes-no-secret-wanting-monitor-social-change-activism

    I wonder what things will be like when Super Bowel 59 rolls around?

    Cheers!

    • ChiefEngineer says:

      “In their minds, humans are able to continue or perhaps increase production from every oil field, no matter how old”

      History has proven them correct. The world today has a surplus of oil at all time peak production.

      “I immediately withdrew from the conversation and changed the subject…” to stop listening to highly paid scientists and engineers so that I could put my head into a StooperBowel hole.

      • Chief: How long do you think we can keep producing crude and condensate at last month’s rate?

        • ChiefEngineer says:

          Hi Fernando,

          Now that’s the trillion dollar question. Which none of us know. Clearly at $100 there is a lot more to produce. At $60 we decline from here. We get more productivity(GDP) from every barrel daily. EV’s and Panels could start realistically replacing ICE within a decade. That replaces half the need for our current demand right there. What we see now are oil interests fighting for the future with lower prices.

          • I’m not sure. I don’t see renewables to be that viable at massive scales because the battery problem sets a bottleneck (plus their intermittency leads to high costs). The oil industry is probably fine with renewables picking up the slack. What’s going to be needed is a bit of everything. I agree with your price boundaries. But at $60 we should see much more activity, because most companies can read the looming shortages in the fine print.

            • Old farmer mac says:

              Hi Fernando,

              The thing about engineers (other than those working on renewables ) that bothers me is that mostly they simply dismiss renewables as too expensive and too hard to scale up and just leave it at that.

              I am am glad to see you are personally open minded about fossil fuel supplies running short and getting to be very expensive within the foreseeable future.

              Nobody wants to face up to bad news but the only realistic long term scenarios I can come up with involve a LOT of bad news. Renewables in my opinion are not going to scale up to the extent they can replace fossil fuels in a business as usual economy.

              BUT I do believe they can serve to EXTEND the fossil fuel supply substantially thus giving us a much larger window of opportunity to adapt to a low energy but still basically decent lifestyle.

              I read the Judith Curry links you posted a few days back very carefully. Twice. There was not a whole lot in them that was new to me but they are very well reasoned and very well written and Planning Engineer absolutely and obviously knows his stuff from every possible angle.

              There is no way to argue with his conclusions in the context of present day realities, present day priorities and existing present day infrastructure.

              We are not going to build enough renewables to shoulder the current day fossil fuel load within the next couple of decades and we certainly are not going to integrate forty or fifty percent or more wind and solar energy into the EXISTING grid using EXISTING technology.

              But necessity is one hell of a butt kicking task master and we are going to be making such changes as can be made in the grid as are necessary to enable us to add more renewables. How much intermittent energy the grid will be able to handle is beyond my ability to even guess but given enough investment in renewable s and transmission capacity it might be that we can have a grid that at certain times is running almost entirely on nuclear , hydro, a modest amount of gas and some coal with the gas serving mostly as the hot spinning reserve.

              Barring some miraculous good luck in terms of breakthroughs in nuclear power we are necessarily going to have to get by with substantially less energy per capita in the not too distant future.

              And not only will we be using less we will also be using it to a large extent as it is available meaning when the sun is bright and the wind is blowing.

              But once we accept ( if for discussion purposes only) that we are going to have to get by with a lot less fossil fuel and consequently with a lot less energy then there are some bright spots than are seldom mentioned.

              If we necessarily have to get by with less electricity per capita and with less electricity in absolute terms then the EXISTING conventional generating capacity may be all we will ever need.

              Consider :

              If ten small existing gas peaker plants totaling a thousand megawatts in a given metro area are in use every afternoon to meet the evening peak demand then if that thousand megawatts can be had from wind and solar power most days then maybe eight or nine of the gas peaker plants can be shut down. Maintaining them will be expensive of course but not nearly as expensive as BUILDING and maintaining them.

              Paying the owners for the use of these existing plants and the gas needed to run them is not an engineering problem at all but rather an economic and political problem.

              We can learn and we will learn to live with less energy per capita because as a practical matter we have little or no choice.

              Now this brings me back to a question I have asked many times in many places.

              How much fossil fuel can we expect to save by adding a given amount of renewable capacity to the grid? The answer will have to be in general terms expressed as an average of course.

              In the case of a megawatts worth of solar power in a place such as Nevada or New Mexico displacing a megawatt’s worth of natural gas generation on a nice sunny day for five or six hours I will hazard a guess that the savings on gas might be as high as ninety percent for that five or six hours with the last ten percent being burnt to maintain the extra margin of spinning reserve is needed in case of sudden cloud cover or whatever.

              Now in the case of a wind farm displacing some small hours coal generation that cannot be safely throttled back beyond some point then the savings of coal might be rather minor -maybe only ten percent or so.

              I have just about given up on finding an honest answer to this question. Renewables advocates either don’t have it or refuse to divulge it. Ditto electric utilities. I have queried a bunch of them as well as a number of manufacturers of wind turbines and solar panels.

              It seems to me that any engineer or bean counter who is directly involved in managing generation and cost accounting would have this information at his fingertips and could access it real time with a couple of keystrokes for any given power plant and local utility.At any given minute the burn rate of coal and gas and the production from hydro and nuclear would be instantly available in real time – ditto the total load on the grid.

              Computing the additional amount of gas or coal that would be needed if there were no wind or solar power being fed into the system should be as easy as addition and subtraction.

              • Old farmer, if you look closely at the Spanish power system you may see what you are envisioning in part.

                This system accepted solar development to the point that when its at peak the hydropower plants shut down. Wind covers a little bit, and it’s balanced with negative hydro (pumped storage), exports to France, and gas turbines. Baseload is nuclear and coal.

                But they have built in an irrational subsidy system, so they overbuilt solar a little bit, and they make up for the high cost of solar with coal instead of gas. The problem is simply the cost.

                So I think your ideas have merit. But I don’t think an economy can stand it unless those renewable components are mostly domestic manufactured goods. And that’s the rub. Right now that’s getting imported from China.

                • Patrick R says:

                  Fernando I get that the financial aspects of the recent Spainish renewables build has been a disaster, but I am puzzled why you conclude from that that the technology doesn’t work.

                  For example you complain that solar supply leads to the shutting down of Hydro turbines. And? That is exactly the aim of the wind farms in my country. 1. To smooth out water storage levels (potential energy) so dry periods are less of a threat to supply, and, similarly, 2. To enable our large Hydro resource to be used as a battery. Both sources are intermittent but on different time scales are are therefore an ideal fit.

                  Financially this works as the same generators own both dams and wind farms; it is not the case of one entity killing the other’s business but rather supply planning and balance being rationally delivered via the lower cost and currently available source. Windy? store the water.
                  Distributed solar is indeed truly disruptive, but surely in a good way, however when grid tied there does need to be a financial mechanism to fund and adapt the grid.

                  • Patrick, the renewable technologies we have today don’t work because they are too expensive. The killer seems to be the inability to store the energy. Here in Europe there are other hindrances. For example, we hav suicidal enviromentalists who are strictly opposed to dam construction. It ruins the scenery.

                • Patrick R says:

                  All you are saying is that renewables ‘are not the same as’ thermal. And that is true. ‘Don’t work’ is emotional claptrap, as it is clear they work too well for old financial models.
                  There is much talk on this forum of collapse, which is a version of change, change is observable constantly, and renewables are changing the energy supply sector everywhere.

              • wimbi says:

                Fortunately the USA is by no means a leader in all this. So, we go to look at what the leaders have found out and do that.

                After all, some European countries get big fractions of their power from wind/solar, and are learning how to handle it.

                I am going the route you suggest, and find some things that might be of some interest to fellow back-yard widget makers.
                First, it was not at all painful to get house and car entirely on to PV. No ff’s anywhere in the house. All the electric stuff is way better than what it replaced.

                I know, of course, that the food, clothes etc do involve ff’s but I can’t do much about that just yet. I control only what I can control. One step at a time.

                Second, I play a simple game with the grid. I have such things as photo switches on water heat pump, house heat pump, ovens, etc, so they don’t work in dark situations unless overridden by hand.

                The hard one is the car when wife returns from a trip and plugs it into fast charge to get ready for next one following shortly.

                So I keep coming back to that wood stove, cranking out plenty of good available energy and tossing it into the heat-the-room-only pile. A thermodynamic atrocity that offends me. And right in my own house. Unbearable!

                Problem is, I am still dithering around in deciding which of about 5 good candidates for wood-electricity I will try for. Gotta grab one and get on with it soon.

                Last year, overall, I pumped twice as much solar kW-hrs back into the grid as I took out. Only one month was the wrong way around- Dec-Jan. Took 150 more kW-hrs than gave back. PV package is 8kW grid tied, 1.2 battery only.

      • Tom Tommsen says:

        History has proven them correct?
        History simply proves that we are using more and more energy to increase complexity of our system(s) until energy usage cannot be increased any more for the lack of new sources and then complexity suddenly shrinks.
        Past success does not guarantee future success.

        Most engineers and/or scientists are highly trained specialists. A lot of them (tragically for their profession) lack a holistic point of view or necessary critical thinking skills for that matter.

        • I always train engineers to be more diversified. I also try to make sure they have field experience, which includes spending time with plant operators, warehouse workers. It seems to have helped. Some of my earlier experiments with diversification went way way up in their careers.

    • Watcher says:

      If you are not focused, all you have is the reporters narrative to work from. Those guys are not focused so they parrot the shale technology miracle talk.

      It takes a significant amount of time to look deeper. Just like QE and economics. You have to have looked deeper to realize they are just printing money from nothing.

  10. ChiefEngineer says:

    After four years of $100 oil, increased production and consumption we now have a surplus and a temporary price break. Soon we will continue our journey of exaction to new highs with record vehicle and population. Demand will continue to increase supply because our true god is The All Mighty Dollar.

    Enjoy this small price break while it lasts. Real changing demand destruction is still a decade away.

    • Chief,

      You have a great sense of humor. Rare for the Engineer class… especially from a Chief. Anyhow, while the ALMIGHTY DOLLAR is the biggest BULLY on the block currently, I don’t believe the BRIC countries will allow another decade of Western monetary printing and financial abuse.

      You know the ole Western Philosophy saying, “You work and we eat” probably won’t continue for much longer.

      So, to say that the DOLLAR will continue to suck wealth from the BRIC countries for another decade is an assumption I wouldn’t feel comfortable making. But, hell… it’s a free world.

      steve

      • ChiefEngineer says:

        In macroeconomics the curse of monetary printing is inflation( to much money chasing to few good). After the financial reset of 2008, the consumer mindset of financial security has been moved to fear from carelessness. This has allowed the Fed to print with reckless abandon without fear of inflation. If the middle class ever gets back on their feet again. There memories will be short lived and will spend like drunken fools again. Then the money supply will have to be tightened to fight off inflation. Until than, let the printing press machines roll harmlessly and flood the world with dollars to every corner of the earth. Bank accounts full of dollars keeps everyone invested in the system.

        • Boomer II says:

          Until than, let the printing press machines roll harmlessly and flood the world with dollars to every corner of the earth. Bank accounts full of dollars keeps everyone invested in the system.

          Unfortunately most people aren’t benefiting from these dollars. It’s driving up the price of what the rich buy from and sell to each other, but it isn’t trickling down to everyone else.

          • ChiefEngineer says:

            Because of our deadlocked congress. Fiscal policy which would have been a lot more beneficial for labor has not been an option. Monetary policy has been the only economic tool Republicans haven’t blocked or been able to stop.

            • Nick Hail says:

              Horseshit, The dem policies of spending like true drunken sailors is the vehicle that will crash the whole system. The GOPe simply spend less lavishly.

              First rule of economics: That which cannot continue; won’t. Ignoring the debt will not make it go away and politicians will not deal with it until forced. markets have a way of Making that happen eventually whether the powers that be want it or not.

              • Boomer II says:

                The Republicans have done a pretty good job of creating debt. As I recall, the Bush administration decided debt was okay as long as it was their debt, to pay their special interests.

                I’m fine with eliminating government debt. But I dare the Republicans to cut every government program. One of the best ways to conserve energy is to eliminate all government entitlement programs, all government jobs, and all government contracts. Let’s squash the economy and take away the money from everyone. Energy consumption will go WAY down.

          • Dennis Coyne says:

            Hi Boomer II,

            Inflation has been relatively tame in the OECD, or at least in Europe and the US. A lot of the extra money is just sitting at banks and not being lent so there has been relatively little monetary stimulus. Even at very low interest rates businesses can choose not to invest if business prospects do not look good. Low wages for the middle class is not really a recipe for a robust economy. Fiscal stimulus would be much better at stimulating economic growth, though whether that is necessarily a good thing is open to debate. It is possible that a growing economy might be able to move more easily to other energy sources than a stagnant economy.

      • So you think Brazil, Russia and India count for that much?

  11. Yuzhou says:

    Ron,

    if your analysis above is correct, the Saudis will also be aware of this. Why on earth then would they drive the oil price artificially lower, selling a precious and scarce product below its value? If there is a growing structural deficit of oil in the years to come, why worry about the US shale oil industry? If peak oil is looming we need first of all stable and reasonable prices. Why would the Saudis counteract that?

    • Doug Leighton says:

      “Why on earth then would they drive the oil price artificially lower.” Why do you think the Saudis are driving the oil price artificially lower? They are simply continuing to supply customers (market share). Why don’t you ask: “why are the US frackers driving the oil price artificially lower?” And, “selling a precious and scarce product below its value”. So, what exactly is oil’s true value, in your opinion. But you might ask instead: What about saving a precious resource for future generations? But you could ask the same question of any exporting (producing) country.

    • They want to hold market share. If they cut back they encourage more drlling. I think they want to have the price around $80 per barrel. This curbs the excessive enthusiasm we have seen in the USA and some other countries.

      • Anon says:

        The Saudis still make money from operations at these prices. Cutting just costs them cash flow and supports competitors who can’t make money at these levels (Canada, frackers, new Russian production).

        Production data has been clear, it’s not the Saudis that are causing this. It’s the US shale operations, that have been producing all-out for reasons that don’t have much to do with supply and demand.

    • notanoilman says:

      They have stated that it is to drive out the marginal producers and expect the price to rise shortly.

      NAOM

    • Kam says:

      If Saudis cut oil output, the price will drop in medium-long term, because it will lower World’s oil extraction EROEI, and make World’s economy even weaker than it is now.

      • I don’t see why it should be so. We got lots of unemployed or underemployed people who can work really hard drilling wells, using up steel and other resources and building wind mills, dams, nuclear reactors, and seawalls.

        It sure beats the money wasted invading Iraq or goading Russia over Ukraine to see if we can have a nice little nuclear war.

  12. BC says:

    World oil production per capita peaked in 2005-08 and is down 2-3%, whereas C+C is down more per capita. Peak Oil is history, i.e., it’s in the rear view mirror.

    It’s not a coincidence that the 10-year change rate of world population growth has decelerated from 2% to 1.1% along with US oil production per capita that is down 40-45% since 1970, i.e., a virtual 1:1 correlation. Population growth and its replacement requires a growing supply of the civilization’s primary energy source per capita, which ceased growing 7-10 years ago.

    Therefore, growth of world (un)economic activity peaked 7-10 years and will not continue hereafter, and certainly not accelerate.

    Moreover, that (un)economic activity cannot grow implies that the rate of change of growth of population will decelerate at a faster rate hereafter. In fact, at the current trend rate of deceleration, the rate of population will achieve a first order of exponential decay from the 1970s by no later than the early 2020s. Thereafter, the second- and third-order deceleration regimes will occur in 5-6 and 2-3 years, implying that population will peak no later than the 2020s and begin declining no later than the 2030s. The human ape population will not achieve anything close to 9 billion by mid-century.

    http://www.sustainable.unimelb.edu.au/files/mssi/MSSI-ResearchPaper-4_Turner_2014.pdf

    http://www.esf.edu/efb/hall/2009-05Hall0327.pdf

    http://www.thesocialcontract.com/artman2/publish/tsc_23_2/tsc_23_2_duncan.shtml

    This general primary energy per capita and population scenario fits well with “Limits to Growth” and Richard Duncan’s Olduvai Theory mentioned by Ernest above.

    The overwhelming majority of Establishment economists, politicians, CEOs, and mass-media opinion-shaping influentials are misinformed/uninformed about these critical topics, don’t get paid to be informed or to inform the public, or they are paid not to inform and not to affirm the conditions and likely implications hereafter.

    Our collective ability to adapt successfully will likely not be informed or enabled via the top-down hierarchical structure by which the top 0.001-0.1% rule and from which they primarily benefit. Necessary actions will have to occur among the 1-4% of the population (scientists, engineers, technicians, programmers, tinkerers, hackers, gear heads, architects, techno-savvy creatives/artists, businesspersons serving the bottom 90%, etc.) who are currently well informed about LTG, Peak Oil, and population overshoot and the likely implications, those who are predisposed to collaborate with like-minded individuals via a kind of Technoprogressive movement, if you like. Establishment types have little or no incentive to advocate, enable, and reinforce such a consciously r-evolutionary mindset and to act collectively on it.

    Same as it ever was . . .

    • BC, sometimes I wonder if the hype over global warming may not have a supplemental hidden driver. They want renewables to be ready to replace fossil fuels, but they don’t want people to panic. Or maybe they don’t want to let on they want to be less dependent on the Middle East?

    • wimbi says:

      PPredisposed to collaborate with like-minded individuals”. Great! That’s us right here in this little town. It didn’t take much work to convince some, not a small number, of locals to get together to fund a shift to solar, and to set up workshops to show folks how to make ww11 type simple IC engines, without a whiff of electronics, running on wood gas, and lots of other simple stuff that can be made from what’s lying around everywhere free to pick up.

      City dumps are gold mines. We are NOT gonna go without a little electricity, a little transport, and a lot of real comfortable insulated houses (super easy to do, just work on them instead of that goddam TV)

      No high school kid should be allowed to graduate without passing a course in making do with junk.

      On peak oil. OK, it’s here. Now what? Awful lot of way too much talk except about the only thing that really counts- what do we ACTUALLY DO about it.

      As for the economy as we know it, to hell with it. Never should have come into existence at all.

  13. Phil Harris says:

    Thanks Ron and thanks Jeffrey and belated thanks to Professor Craig Bond Hatfield.

    I was aware of our inevitable fate in the early 70s when I was a young guy – my guess back then was around 2000, which seemed a comfortable long ways off. I thought of my home as looking more like 1947 when I was a small kid in post-war Britain (a difficult year – the country was broke, the Empire finished on all real counts, and the weather so bad we could not move the coal on which we depended for 90% of everything).
    OK I was a young guy and I forgive myself getting the early date wrong. Smile. When I tuned in again seriously in 2005 it gave me the heebie jeebies (on top of climate change I personally had known about since 1985; CC providing an obvious long term finale).

    So, now, I must admit to a little dryness in the mouth after reading this post. Amazing stuff oil – considering China has grown to a huge economy in these last 10 years (the USA not so much). I guess we need another ‘guesstimate’ ranking order for when different economies stop growing and retract. Until some point – perhaps still well in the future in some situations – the economic returns on deploying more oil, even at high price, can still make sense. (The classic example is some Asian vegetable grower who can still increase his profits if he has a secure supply of water and a small diesel pump and can afford a very small amount diesel.) I think it is Jeffrey who has long made the case for there being those who can out-compete many of us for the black gold.

    I have been surprised in Britain how bad things have got since 2008. For some reason I thought we would pull together like we did when I was a kid during wartime. But it is already getting pretty cruel at the margins.
    best
    Phil

  14. Calaf says:

    Thank you Ron.

    You were one of a handful of people for whom I made a point of reading all posts on TOD. And equally now, one of a short list of blogs on this subject where I try to read every post.

    I have young children and I am working to mitigate the potential negative impacts of the downside of the slope (as best I can). ‘Peak’ moves me to the next step of implementation of my plan.

    Even if you are wrong by a year or two, or five; for somebody like you to call ‘Peak’, to me means, at the very least, ‘we are in the window now’.

    Best wishes and thank you again.

  15. Ronald Walter says:

    Peak Oil is definitely a conundrum. One of those phenomenons that is not inexplicable, the only explanation is the depletion of oil will cause problems in the future if some kind of plan isn’t given consideration, the crux of the Peak Oil argument. It is going to be bad for humanity if oil goes gone too soon. If it is or isn’t a theory doesn’t make Peak Oil unsound, it is not crackpot, facts don’t budge. Oil will become scarce at some point in time. Just call it Peak Oil and that is sufficient.

    Ernest T. Bass:

    https://www.youtube.com/watch?v=9jDBiMd3HNI

  16. As a long-time student of Peak Oil (I dare not say Peak Oil theory for fear of inciting a riot), I spend most of my professional life trying to figure out where oil prices will go from here.

    My grand conclusion after pondering this for several years: I really don’t think Peak Oil per se (by which I mean the eventual point of peak rate of global oil production) is nearly as important or interesting as the Peak Oil camp makes it out to be. What’s far more important is when we reach (or already reached) the point in history where the cost of energy becomes a major inhibitor of global economic growth. Many have assumed that peak rate of production necessary equals the moment that a PO-induced financial crisis erupts. I’ve come to realize the two events are only loosely coupled, and that the latter is far more interesting and relevant to the future of society than the former.

    We really do “have the technology” needed to prove Ron wrong on his bet that the peak of global production will come by August. Fracking and horizontal drilling technologies have room to “go global”, and the deep oceans (>10,000′) which comprise fully half the surface of the planet have never even been explored for oil because the technology to do so hasn’t been cost-effective. But it’s not like it hasn’t been invented. A friend of mine in sitting on a bunch of patents for truly deep-water exploration, where the whole rig sits on the ocean floor, run by robots, and is thus immune to surface weather. Just one little hitch – it’s not economic until oil prices go north of $200.

    What remains to be seen is whether the global economy can afford to pay for all the technology needed to prove Ron wrong on his bet. My own bet is no, it can’t. I think there is an “energy price ceiling” above which the global economy simply isn’t viable, and prices rising above that level automatically bring on recession or depression. I think the number is somewhere between $120 and $170/bbl, in 2014 dollars – above that price, you can’t afford to deploy the technology needed to prove Ron’s bet wrong, because the economy contracts markedly in reaction to those energy costs. And I think that once the present supply glut and temporary price collapse runs its course, we’ll see those prices again.

    The key issue here is that we’re used to a system where the cost of energy is, simply put, affordable. As a % of world GDP, it’s a major expense, but it’s still just a cost of doing business. We’re moving into an era where the price of energy will be the principal governing factor limiting global economic growth. Actually, I think we’ve been there for several years now but most economists haven’t realized it yet. The present event will be short lived in the grand scheme of things, and much higher prices that once again threaten global economic growth will return. But next time, all the easy money that financed malinvestment in the shale patch probably won’t be there!

    At the end of the day, I don’t think Ron’s argument that we can’t produce more oil is correct. Rather, I think we can’t afford to produce more oil because the technology required to do so costs more than the affordability ceiling.

    I recently published a third video (free on my website) with my peak oil outlook if anyone’s interested.

    Erik

    • Boomer II says:

      At the end of the day, I don’t think Ron’s argument that we can’t produce more oil is correct. Rather, I think we can’t afford to produce more oil because the technology required to do so costs more than the affordability ceiling.

      That’s how I have viewed the discussion. We’re fracking and squeezing tar sands because the cheap oil is gone or going. No one would bother if there were more cheap oil to be had.

      Sure, we can find yet other ways to get the oil, but most likely they will be even more expensive, difficult, and unpleasant than what we are doing now.

      • I was not aware that I made any argument as to what “can’t” happen or what “can” happen. My whole argument is about what will happen.

        • Boomer II says:

          I have assumed we are talking about what has already happened. To me fracking and tar sands are an indication that we have hit peak cheap oil.

          Sure, there is still oil in the ground, but what it takes to get it out confirms that we have run out of better options in many places.

          • John B says:

            You are looking at the situation backwards.

            Modern tar sands development in Canada began in the 1930’s. Did we peak in conventional oil then? No.

            Electric cars were first produced in the 1800’s. Was this in response to a lack of oil production? No.

            You have markets. And you have different industries competing for those markets. When oil production declines, it will be because of alternatives gaining market share.

        • John Vonderlin says:

          Ron,
          Erik and Mike’s analyses come closest to my thoughts on this subject. I’d summarize my thoughts on your take on this with this reply to the dam analogy you used:
          “We know the dam will break if the water keeps rising”
          Only a “dam” fool never heard of spillways. I’ve even seen dams overflowing all the way across their top without failing. Your analogy is so poor and meaningless that when a Boolean search of “safe engineered level” and various combinations of those words, with and without the word “dam” is done, not one single hit came up on my Search Engine.
          Astronomers agree that Chicken Little will be right eventually, but like the wild-eyed guy on the street corner with a Sandwich Board reading: “The End is Nigh,” I drop a coin in his cup, not head to church to confess my sins.

          • You missed the point by a country mile. I was not referring to dam engineering I was referring to something that, if continued, must happen.
            It is all explained in this post from a few months back.

            Peak Oil and The Blibbit Principle

            And I hope you don’t come back with a bunch of crap about Blibbit engineering.

    • Calaf says:

      Is the argument of affordability not a ‘branched-sub-set’ of the primary point that Ron is making?

      Whether ‘we can’t’ because of EROEI, ‘affordability’, political will, or whatever.
      Some one or more elements have occurred (potentially) and an historical maximum rate of production is reached.

      And your second point of ‘loosely coupled’ is interesting to me. I agree they may be loosely coupled with time, but certainly they are tightly coupled with each other (re the way the current global economy works)? Do you believe that it is possible that ‘economic growth’/’prosperity’ will occur as we have known it in the 20th century with a decreasing supply of ‘affordable’ oil?

      Is ‘economic decline’ (at least temporarily) not a certainty at some point relatively soon after peak production? (eg ’70’s oil crisis, Cuba?)

      Finally, thank you for your videos Erik – I have enjoyed them all.

      • We could devote more resources to energy and less to high explosive delivery mechanisms. Maybe the $1 trillion used to hand iraq to the Shiites could have been spent on coal to oil plants with associated nuclear power heat sources. That would be $10 billion per 100,000 bopd. For. What it cost for Iraq we could be producing 8 mmbopd of coal to gas with reduced co2 emissions.

    • Doug Leighton says:

      “and the deep oceans (>10,000′) which comprise fully half the surface of the planet have never even been explored for oil because the technology to do so hasn’t been cost-effective.”

      Well you can forget that idea because there is no oil located in deep ocean rock. And they have been explored but not for oil because no oil is contained therein.

      In fact, oceanic crust is approximately 6 km thick and is composed of several layers (not including thin sediment) comprised almost entirely of basalt laves. Most importantly, oceanic crust differs from continental crust, which includes oil bearing continental shelves, in several ways: it is thinner, denser, younger, and of different composition. Below the lava are sheeted dikes which served as the plumbing system for transporting magmas to the seafloor: the dikes of course basaltic as well.

      There are two layers below the dike sequence totaling about 4.5 km in thickness. Both are gabbros (basaltic composition but coarser grained. Gabbro represents the magma chambers that ultimately erupt on the seafloor. In places this layer includes pods of plagiogranite, a differentiated rock richer in silica than true gabbro. A lower gabbro layer has a stratified structure and represents the floor (or sides) of the magma chamber. It is referred to as cumulate, minerals settled out of liquid magma. Gabbro cumulate has less silica but is richer in iron and magnesium than upper portions of the oceanic crust. Olivine, an iron-magnesium silicate, is a common mineral in the lower gabbro layer.

      No oil, definitely no oil.

      • Nick Hail says:

        So, what is at or just beneath the salt layer on the continental shelf in the US? There are lots of unexplored locations.

        The main problem I see with all this peak oil doom and gloom is that everyone continues to discount technologies not only making more oil accessible but in fact making oil that was too expensive more affordable to recover.

    • Fracking and horizontal drilling technologies have room to “go global”, and the deep oceans (>10,000′) which comprise fully half the surface of the planet have never even been explored for oil because the technology to do so hasn’t been cost-effective.

      Oil is a product of shallow sea sediment. Alga sank to the bottom of a shallow sea, then was buried by sediment, then more sediment until is was over 7,000 feet deep. Then “coffee pot” temperatures eventually cooked it into oil.

      Therefore oil is found only in sedimentary rock, never in ocean bottom basement rock or igneous rock. There is no oil to be found in the deep oceans. Oil folks, quite obviously, know this though a few people who know nothing about the formation of oil have not gotten the word.

      • John Vonderlin says:

        Ron,
        I’m not an oil man, but if your “no oil to be found in the deep oceans” is true can you explain why somebody has invented this technology?
        7.Spar Platform- Spar Platforms use a large cylinder to support the floating deck from the sea floor. On average, about 90% of the Spar Platform’s structure is underwater. Most Spar Platforms are used up to depths of 1 kilometer (3,000 feet), but new technology can extend them to function up to 3,500 meters (11,500 feet) below the surface. That makes it one of the deepest drilling rigs in use today.

        • Fred Magyar says:

          John,

          The average ocean depth is 2.65 miles.
          http://oceanservice.noaa.gov/facts/oceandepth.html

        • John, all oil is found in sedimentary rock only. That means all oil, in the ocean, must be drilled on the continental shelf. Images of the Continental Shelf

          All of the continental shelf is sedimentary rock. None of the deep ocean is sedimentary rock, though there is a lot of sediment on the deep ocean. It is silt that rains down from above, dead fish, fish feces and such.

          The picture below is from the link posted. It shows oil production on the continental shelf. But there are other images on that page that should explain, in pictures, exactly what the continental shelf is.

        • Here is a better picture of the continental shelf in the gulf of Mexico. The area between the red and the blue is the continental shelf. You can find oil there. Not everywhere there but in a lot of places. There is no oil in the blue area. That is deep ocean basalt.

          • MBP (ManBearPig) says:

            Ron,

            It is true that the subsea basalts are not productive, but there is still a substantial amount of clastic material that has been shed into to middle of the GOM over time. The Wilcox Trend is an example of a series of fields that are off of the shelf.

            • Dennis Coyne says:

              Hi MBP,

              I had asked in the past about Gulf of Mexico (US waters only) URR and I think you suggested that 50 Gb would be too high. There is about 16 Gb of cumulative output and about 9 Gb of 2P reserves at the end of 2011 so 50 Gb assumes another 25Gb of discoveries plus reserve growth. Does 33 Gb sound more reasonable? That would suggest only 8 Gb of discoveries plus reserve growth from 2012 on, which seems a little low to me, but I don’t have a good handle on the geology.

              • MBP (ManBearPig) says:

                Id say 35-40, depending on the extent of the Wilcox stuff. I don’t have any direct drilling experience with offshore stuff, my only understanding comes from papers and some cores that I’ve gotten to examine. I think 50 is probably a little high, and 30 is a little low. >30 to <50 is a big range to work under, but I think with the lack of a consensus on the extent of the presalt formations it will have to do for the time being. But all it takes is one field to make my numbers wrong.

                • Dennis Coyne says:

                  Hi MBP,

                  That is a great help, I suppose I would call this 40+/-10 Gb for the URR of the US Gulf of Mexico as a WAG. Your guess would certainly be better than mine and I think this might mesh with what SoLaGeo has guessed, perhaps Fernando or Doug have some thoughts on reasonable guesses.

                  For the World Fernando thought about another 13% of reserve growth plus discoveries was reasonable, if we applied this to the 25 Gb in the US GOM, that would only be 3 Gb, so Fernando might guess something like 30 Gb. On the other hand a lot of the new discoveries and reserve growth may be in deep water (along with polar oil), so perhaps his guess might be higher than 30 Gb for the US Gulf of Mexico URR.

          • sunnnv says:

            To nit pick here – actually the Gulf of Mexico isn’t real ocean.
            It’s a basin formed as part of the breakup of the supercontinent Pangea,
            so it is underlain with continental crust, and has a BUNCH of sediment (10 km or more) on it.

            At various times, it was closed off, so the seawater evaporated, forming the salt layers -> salt domes. (like Fernando said about the rift between what’s now South America and Africa, a basin opened, and repeatedly filled with seawater, sea level would fall/crust rise, and then the seawater evaporated. Eventually South America and Africa successfully rifted.). When closed off, lots of sediment also washed in, and any water was very salty, hot (shallow sea) and therefore with low dissolved oxygen – ideal for forming oil if/when that layer of sediment was buried deep enough to be within the “oil window”.

            This (more detailed explanation) and the wiki page (simpler) are decent explanations.
            http://deep-c.org/news-and-multimedia/in-the-news/geologic-beginnings-of-the-gulf-of-mexico-with-emphasis-on-the-formation-of-the-de-soto-canyon

            http://en.wikipedia.org/wiki/Gulf_of_Mexico#Geology

            But real oceanic crust is formed from spreading centers as basalt.
            So it is very young, and has NOT had time to accumulate much sediment, never mind enough to have an “oil window” (a few km deep).
            For petroleum formation:
            http://oilandgasgeology.com

            Maps of oceanic crust ages at:
            http://www.ngdc.noaa.gov/mgg/image/crustalimages.html
            (the PDF at the top of the list will do nicely)

            Map of sediment thicknesses (big):
            http://www.ngdc.noaa.gov/mgg/image/sedthick9.jpg
            I will try and post this sediment thickness map…

            You can see that only a few parts of the Pacific have even 1 km of sediment. But the Gulf of Mexico and the rift valley that’s now offshore Brazil and offshore West Africa have 10 km+ of sediment – that’s where oil may potentially be (and is) found.

            But there absolutely is NOT any oil (or oil shale) out there in the middle of the Pacific. Sedimentation rates out there are millimeters per millennia, and for the last so many million years the water is oxygen rich, so organics tend to oxidize, albeit slowly at cold temps.

            • Sunnnv, thanks for the great post and some fantastic links. I am saving that page for future study. I just have one comment about this statement of yours:

              But real oceanic crust is formed from spreading centers as basalt. So it is very young, and has NOT had time to accumulate much sediment, never mind enough to have an “oil window” (a few km deep).

              Some of the ocean floor is not all that young however oil could never form in Pelagic Sediment regardless of its age. That is the sediment formed from plankton, dust, and the remains of everything that lived and died in the ocean.

              • sunnnv says:

                Hmm, I will nit pick a tiny bit more.

                There are pelagic source rocks, though rare admittedly. The example I could recall and found was from the Mediterranean Sea, a basin not unlike the Gulf of Mexico that underwent closure and drying to form 1-2 km thick evaporites (dried up sea salts). Previous to that, at times the basin was also still and anoxic, so thin layers of organic rich rock were deposited.
                http://pubs.usgs.gov/bul/b2204-a/B2204-A.pdf

                But generally it’s true that pelagic sediments don’t make oil.
                I admit my previous statement was not completely correct. There are two reasons pelagic sediment usually doesn’t make oil.
                1) It’s the combination of age and slow sedimentation rates in most places, not just age, that limits the depth of sediment to values that “never” reach the oil window before that seafloor with its sediment is subducted/destroyed/recycled.

                2) There is also the issue that the organics in/on pelagic sediment are oxidized (during most of geological history), and that rate is much faster than the sediment builds up, so “no oil”.

                In fact a lot is oxidized or eaten (including by bacteria) before it hits the bottom.
                This paper’s abstract says 45% of falling organics never hits bottom.
                http://onlinelibrary.wiley.com/doi/10.1029/95GB03525/abstract

                These oceanographers at Texas A&M say deep ocean carbon burial is a whopping 0.4% efficient.
                (under point 2.)
                http://oceanworld.tamu.edu/resources/oceanography-book/carboncycle.htm

                These guys did some experiments with tossing agricultural waste in simulated deep water to see how fast it oxidizes to check out a means of carbon sequestration.
                They found marine plankton oxidized (remineralized is the technical parlance, as in converting from organic carbon to CO2) 19% in only 2 years. At sedimentation rates of millimeters per 1000 years, essentially everything organic gets remineralized (if it doesn’t get eaten first).
                http://www.sciencedirect.com/science/article/pii/S0304420310000903

                This paper says carbon sequestration in deep sediments is < 0.5% efficient. Thus even a sediment that was 50% organic to start with would end up as "source rock" with 0.25% carbon, which is too lean to make much oil by an order of magnitude or two, even if it found its way into the oil window. And note that if oil is too sparse compared to the water in the rock pores around it, it essentially cannot flow, which means it won't collect in economically exploitable traps.
                http://www.sciencedirect.com/science/article/pii/030442039500008F

            • Ilambiquated says:

              The Atlantic is widening and Africa, India and Australia are crashing into Eurasia. It is easy enough to see that with this map.

        • notanoilman says:

          Ok, so they can go to the very edge of the continental shelf.

          NAOM

          • We can go beyond to the continental slope. For example, during the ice ages sea level drops as much as 130 meters. This puts the coast further offshore, and there are places where rivers cut underwater canyons and launch an incredible amount of sand and shale way out in the middle of nowhere. The source rocks are usually a mixture of shale and a bit of carbonate deposited in anoxic conditions. Thus we can look way out in deep water.

            But never over oceanic crust. That stuff is the sea floor which erupts as lava from a mid ocean ridge, covered with a teensy bit of mud and dead critter skeletons. But it usually isn’t anoxic enough, nor is the temperature high enough to generate oil. And there just isn’t any rock to store it. It’s a wasteland.

            • notanoilman says:

              Thanks for the extra on that. ISTR there are some areas in the GOM, am I correct and, if so, what sort of depths are we talking about?

              NAOM

              • I’m not sure about the GOM, my guess is that 3000 meters is a reasonable boundary if you want to look at a water depth chart. However, if you try to drill in 2500 meters offshore Venezuela’s North Coast you wont find anything. Thats just plain sea floor.

    • Erik Townsend, what would you look for in 10 thousand feet water depth? Are you thinking of tapping the heat from the hot zones in sea floor spreading centers? That’s a bit crazy.

      • John B says:

        I believe the oil offshore Brazil is under some 7,000′ of water is it not?

        • Toolpush says:

          Not all,

          The last well I was on in Brasil in 2002, was 2900m, 9500ft, and that was a discovery well. That rig was up rated by Petrobras from 10,000ft of water to 12,000ft.
          Not sure what came of it. But it would have been one of the first pre-salt wells drilled. But these wells were all continental slope, and not for the plateau that makes up most of the ocean.

        • The deep water Brazil basin was formed as the Atlantic opened up. The initial rift zone was narrow, it got a load of dead creatures sitting at the bottom in anoxic conditions, there was a lot of carbonate and clastics on top, then the sea dried out and a salt layer was draped on top. Later, as the continents drifted apart there was more stuff laid on top. The whole mess subsided and voila.

          Let me see if I can find a cross section to show you. The interesting part is how we find salt from Nigeria all the way down to Angola, and the salt is also in Brazil.

          • MBP (ManBearPig) says:

            I see the aulacogen being of bigger importance then the actual rift that fully opens. The subsea fans from them make great reservoirs, like the Jubilee in Ghana or Hibernia in Canada.

            • But you do need a source. You seem to know this business. Are you a geo scientist?

              • MBP (ManBearPig) says:

                That is correct. I focus on carbonate sequence stratigraphy, but I’ll dabble in trying to understand the unconventionals or the deep water stuff from time to time.

                As far as a source, the sediment that is dumped down the aulacogens, depending on the location, can be on top of shales or organic rich carbonates. Just look at the amount of sediment the Mississippi or the Amazon dumps out each day. If I was drilling for hydrocarbons in the distant future, I’d look for the submarine fans of those aulacogens.

    • Fred Magyar says:

      We’re moving into an era where the price of energy will be the principal governing factor limiting global economic growth.

      Sigh! It frustrates me no end to see that we are all still pushing the levers in exactly the wrong direction! Donella Meadows mentions this in her essay, “Leverage Points: Places to Intervene in a System”

      Peak Oil or the fact that retrieving more oil is becoming uneconomic is just one symptom of the reality, that we are already well into overshoot. To me it just underscores the fact that the entire economic system, to which so many of us continue to cling for dear life, is a fatally flawed system. It can’t and it won’t continue. With or without Peak Oil economic growth as we have come to know it was a very temporary phenomenon… the party for all intents and purposes has been over for a while now! Wiley Coyote has run past the edge of the cliff but he hasn’t looked down yet. To me whether Peak Oil was ten years ago, is happening this year or will be ten years from now, seems a bit like arguing over how many angels can dance on the head of a pin. It really doesn’t matter all that much.

      “The greatest shortcoming of the human race is our inability to understand the exponential function.” – Prof. Al Bartlett

      Are Humans Smarter Than Yeast? Bob Shaw

      https://www.youtube.com/watch?v=hM1x4RljmnE

      So far it seems to me that humans are dumber than rocks!
      Cheers!

      • Doug Leighton says:

        Well said Fred. At my age I can’t become depressed for myself but then there are kids and grandchildren. Sigh. If it were just oil but it’s so much more: Yes, we’ve run past the edge of the cliff.

      • Sam Taylor says:

        Fred,

        Another insight I gleaned from Donella Meadows came from her book on thinking in systems. Specifically, it was a chapter on systems with delays and feedbacks. She used an example of a woman running a car lot, who needed to order in new stock to replace the stock she sold. One of the counter-intuitive consequences of this model was that if there was an uptick in demand for cars, and the woman responded to this uptick more quickly (by ordering in more stock) instead of waiting a week or two to see how stock levels balanced out, it lead to very large oscillations in the stock of vehicles in the lot, because it set up a cycle where she rapidly over and under ordered.

        This is, I feel, analogous to shale oil, which can be turned on and off in response to price signals very, very quickly, which will likely have the effect of much increasing volatility in oil production, as in the example above. We’re probably seeing this now in the current price swings. People always push levers the wrong way!!!

        • I used to run those models. I prepared one for an Arctic oil transport system offshore Russia. But I also prepared some for other systems. For example, I did one for hiring and training engineers. And I could see really strong age and experience oscillations (we saw that in real life). The key was to use contracted personnel, or let other companies operate, rather than go on hiring binges.

          • Sam Taylor says:

            That happens in a lot of industries in my experience. The nuclear industry here in the UK was a prime example. Big hiring back in the 70’s and 80s when the AGR plants were being built, and then everything just stagnated for a few decades. Then suddenly in the early 2000’s they realised everyone with any experience was about 5 years away from retirement and there was going to be a massive shortage of skills and people, and so they went mad and hired far too many people, all of whom are now just giving palliative care to increasingly creaky reactors, while the French do all the actual nuclear physics. Enraging that the same mistakes are always being made.

    • Dennis Coyne says:

      Hi Erik,

      I think your price range may be correct, but it is important to give a date. If oil prices were $150/b in 2016, the World economy would be in trouble, if it happens in 2030, it might be ok, the date matters.

    • So many excellent comments in reply to my post! Thanks, everyone. I’ll post a single reply here that summarizes my reaction to the many comments posted.

      I don’t claim to be a rock expert. I’ll take your collective word for it that the deep oceans are not a viable source for oil. I learn something new every day! 🙂

      But frankly that wasn’t really my point. You could take fracking global (yes, I know it only works with certain rock formation types), you could inject CO2 into all the aging Elephants or drill a network of heater wells around them, and I’m sure somebody someplace is smart enough to figure out other ways to coax more oil flow if you had unlimited money to spend on the problem.

      My point is simply that we don’t have unlimited money, and frankly I think even the relatively “easy” technologies of tar sands and fracking/horizontal drilling tight oil plays are already pushing the limits of how much technology cost we can add to oil production before energy affordability starts to cripple the global economy.

      The present event is an anomaly. Easy money policy (QE) led to malinvestment in the shale patch and a temporary supply glut that will be short-lived. KSA is reacting with an aggressive strategy to shake out its competition, which may or may not prove effective, but which will most definitely not be sustainable over any long period of time.

      My prediction: This is it – right here, right now we’re in an oil price bottoming process (and I don’t think the bottom is in yet despite the last two days’ tape action). But this will be the “last bottom before the big crisis”, or so I predict anyway. I’m not saying the big crisis starts next week – I think 2017-2018 is entirely realistic for how long it could take before prices move permanently above $100 again. But it’s coming, and it’s not going to be pretty.

      Erik

  17. Anonymous says:

    Ron, very nice graphs and arguments, as usual. I’ll later post some graphs on international electricity statistics

  18. dolph9 says:

    Ron, I think you are spot on.

    It is true that we live in an age of information, and so many people who are part of the peak oil/limits to growth/doomer scene are able to share and collaborate online, which was not possible in the 70s through 90s.

    Now the cat’s out of the bag which of course means that making a prediction like this doesn’t have as much weight as it did in the past, but still I salute your blog, keeping the scene alive, and going out on limb.

  19. Patrick R says:

    Ron’s point about the peak period being a time of oil abundance is a breakthrough observation. It also explains how the 2014 price drop is quite likely the key mechanism in revealing peak production. As this is the engine that will surely strip much of the expensive ‘oil-like’ production from the count. LTO, Bitumen, Biofuels, let alone CTL mega Arctic projects etc…

    BAU may think this price drop disproves peak oil theory, but as ever it is just when we’re most certain is when we get tripped up.
    It is worth remembering that every European Monarch in 1913 enthusiastically looked forward to war secure in the expectation of glory and without the slightest fear for the continuation of their sainted line…. No one, absolutely no one, not even Lenin and co expected every single royal hse bar the Battenburgs in England to be swept away by 1918.
    The future is unwritten, and these are interesting times. BAU is (all but) over.

    • Doug Leighton says:

      Hi Patrick,

      So are European Monarchs (in 1913) looking forward to war secure in the expectation of glory and without the slightest fear for the continuation of their sainted line a metaphor for people looking at current “cheep oil” as utopia revisited? Pipe dreams unlimited!

      By the way, I still retain fond memories of sailing to Great Barrier Island accompanied by dolphins. But, I also remember mutton (yuck) though not tasty NZ lamb referred to somewhere above. That would be circa 1959-60, long before you were born I expect.

      Cheers,

      • Patrick R says:

        Hi Doug

        1. Yup, that’s the metaphor.
        2. And sadly that’s only a little before I was born, but in the days when every good thing grown in this country was sent dutifully to ‘Mother England’ including every tasty baby lamb, leaving only mutton for the toilers on the tough but paradisical farm. Of course this loyalty, and that of the two vast wars of that century, was rewarded by the UK joining (sensibly) the EU, and the little ‘larder of the Empire’ was cast upon the slings and arrows of the international market, via mountainous French and Danish tariffs; Ultimately a good thing too: Gotta leave the parental home some day.

        We now send everything we can grow to China. Do we never learn? We are currently enjoying the fruits of that vast new Chinese middle class learning to drink milk and wine and are working on pulling the same trick with India too. Hey ho, all would be easy for the 4.5 million souls spread out on the same size isles as the 55 odd mil in the UK, except we import every damned automobile and damn near every drop of that black gold that y’all are so well informed about.

        So much so that every penny earned from every drop of milk, from our beautiful pasture-fed, rain blessed, free range cows, goes to feed that addiction. A mere single digit percentage of the oil we import goes on farming, forestry, and fishing: the vast majority is used hauling the SUV to the mall to pick up the takeout coffee or, even more stupidly, to take the kids to school, coz that’s what they in California, and anyway there’s so much traffic now it’s unsafe to walk or ride. FFS.

        The Dolphins are still here, and the Hauraki Gulf still great for sailing, but everywhere has its limits; n’est-ce pa?
        Hope that’s comprehensible in one of the miriad of languages under your belt. And just to seriously baffle you:
        Mauri Ora, Kia Ora! (cheers, fair well)

        • Doug Leighton says:

          Thanks for that update Patrick, as said before, I think often, and fondly of NZ. I’ll remember your Mauri phrase and it’s a tad formal but,

          Cela m’a fait grand plaisir d’avoir de vos nouvelles.

  20. Andrew Pate says:

    I very rarely post here or anywhere, but it is damn frustrating to repeatedly read uninformed speculation about the possibility of positive oil developments from Russia. Russia has made very authoritative statements about it’s production status starting in 2010:
    In 2010, the CEO of Rosneft(spelling?) publicly stated that without very massive foreign investment, Russian production would be down 20% by 2020. Shortly after this, Putin, made the same statement in a public media event, also referencing the need for foreign investment, which, btw, has not been forthcoming, and is unlikely at this point.
    In 2014, a Gazprom official stated that Russian production would drop 10% in the next 2-3 years. Shortly after, a Russian academician geologists published that Russian production would be down to about 7.7 mmbbl/d by 2020. I take that to be 23%.
    Anyone could say that this might not happen, but all four statements seem to be read from the same page.
    I think you have to take them very very seriously, in the absence of other events or announcements.
    Does anyone have any information to the contrary? Declarations beginning “I think” aren’t very helpful.

    • Doug Leighton says:

      “it is damn frustrating to repeatedly read uninformed speculation about the possibility of positive oil developments from Russia.”

      My impression is there are more comments quoted here suggesting Russia has peaked than there are projecting significant positive oil developments that would reverse decline. Future decline rate estimates are certainly debatable. Some of us have worked in Russia and I for one respect Russian engineers/geologists and have always found them conservative, competent and cooperative. And open. The Russian Arctic MAY contain substantial reserves but, if so, these well take a decade or so to bring on stream. I read uninformed speculation about the possibility of positive oil developments from here (North America) constantly.

      • Doug Leighton says:

        Russia Confronts Stagnant Oil Output After Crude Price Slump

        http://www.bloomberg.com/news/articles/2015-01-19/russia-confronts-stagnant-oil-production-after-crude-price-slump

        “The world’s largest oil producer will probably see total output flat, at best, over the next two to three years, according to analysts and forecasters including OAO Gazprombank. Others, such as the Organization of Petroleum Exporting countries, predict a decline.”

        “Russia itself expect to keep its 2015 output production at around 527 million tons, or 10.58 million barrels a day, roughly flat year on year, Energy Minister Alexander Novak said last week. Nonetheless, he said there is a risk of Russian producers lowering their output due to low global prices.”

        • Jeffrey J. Brown says:

          Russia net oil exports have been at or below 7.2 mbpd (total petroleum liquids + other liquids, EIA) from 2007 to 2013 (2014 data not yet available).

          Based on the 2007 to 2013 rate of decline in Russia’s ECI Ratio (ratio of production to consumption), I estimate that they may have already shipped, through 2013, close to one-fourth of their post-2007 CNE (Cumulative Net Exports).

      • Dennis Coyne says:

        Hi Doug,

        You at least have some experience in Russia, I do not. It seems like Russia has been about to peak for about the past 5 years. As Ron has said this means it is more likely that the peak will be soon (or has already happened.) I would think that Russia could get some foreign investment from China, which might reduce the decline rate or potentially keep them on an undulating plateau for a couple of more years. Without a lot of investment, oil decline rates could be steep.

        What’s your expectation for how things will play out for Russian oil output, if oil prices rise to 70 to 80 dollars per barrel by the end of 2015? (I believe that is what Ron predicts for oil prices, and I agree with that estimate.)

        • What’s your expectation for how things will play out for Russian oil output, if oil prices rise to 70 to 80 dollars per barrel by the end of 2015? (I believe that is what Ron predicts for oil prices, and I agree with that estimate.)

          Not exactly. I said, something to the effect, that I don’t think prices will rise above this point and at even this price it will not be enough to cause US production to rise enough to overcome the decline in the rest of the world.

          I have given up trying to predict oil prices. Just when you think they will go one way they slap you upside the head and go the other way.

          However, that being said, I am more convinced than ever that there is a limit to how high the price of oil, and transportation fuel, can go before it starts to adversely affect the economy. And this in turn will knock prices right back down. That was largely the cause of the current crash in prices. Though production increased by about one million barrels per day, demand dropped even more due to economic conditions in Europe and China.

          • Dennis Coyne says:

            Hi Ron,

            Sorry I got it wrong. In a couple of places I thought you said stuff about oil prices rising to as much as $90 at the end of 2015 being reasonable, I agree that oil prices cannot be predicted.

            I also agree that at some high oil price level that the World economy will slow down. A lot depends on how quickly oil prices rise,the World economy will be able to handle $150/b oil (2014$) better in 2030, than it could in 2025 because the World economy will be larger and oil output will be lower. I think the World can handle $100/b oil and Brent was at $110 to $120/b for a couple of years without disastrous effects. I think $150 before 2025 will lead to recession or possibly depression, though a gradual increase in oil price may lead to some positive changes. Higher natural gas and coal prices will also help us to move away from fossil fuels. Transition will be difficult, but may be possible.

        • Doug Leighton says:

          Hi Dennis,

          Because I have worked a bit in Russia doesn’t mean I am remotely qualified to have a creditable opinion on when production is likely to peak there. Certainly Western contractors like Halliburton have done a lot to help Russians squeeze more oil out of some of the old fields: I continually underestimate the effect of EOR programs. Remember, I’m not a real oil guy and Russia is a huge country.

          Respecting Chinese investment there is a huge amount of that already, mostly related to gas — at the moment. You can source a lot of this information from Asian news sources such as Asia Daily (in English). Also, I think everyone here, including Fernando, underrates Russian and Chinese technology/expertise.

          Russians and Chinese have a love-hate relationship. China doesn’t trust Russia but Chinese are pragmatic about this. I used to have an office in Dalian, China, where many Japanese businesses are centered. During lunches you could hear the Japanese treating Chinese serving girls like dirt (worse) at adjoining tables and I would translate this garage for the Chinese and ask them how could they tolerate this shit. They always responded: Yes they’re rude and we prefer to deal with Westerners, Russians second, and lastly with them (Japanese). It’s a life goes on philosophy that I don’t come close to sharing.

          As to my expectation for how things will play out for Russian oil output I would say that they are struggling to maintain current production. But, as said above, I’m always overestimating the effect of “creaming” and underestimating EOR.

          BUT, don’t assume I agree with your projections because I don’t. Oil is harder and more expensive to extract every day. A lot being developed is coming from small reservoirs and deep offshore fields that will deplete rapidly or heavy stuff that is hard, expensive, and slow to suck out. Regardless keep posting Dennis. You, like Watcher, help to balance stuff out — a lot.

          • Dennis Coyne says:

            Thank Doug,

            I respect your opinion even if I don’t always agree with it.

            My long term projections are based on work by Jean Laherrere, he uses both creaming curves on discovery data (backdated) and a Hubbert Linearization on World Crude plus Condensate less extra heavy oil(C+C-XH), he models extra heavy oil separately and I follow his example.

            Ron thinks C+C-XH is between 2000 and 2200 Gb, Jean Laherrere estimates 2200 Gb, Fernando likes 2400 Gb, and my Hubbert Linearization(HL) of C+C-XH for 1993 to 2014 suggests a URR of 2500 Gb.

            If we look US lower 48 C+C output the HL URR tends to increase over time and for the World this has aslo occurred with HL in 2005 suggesting 2000 Gb for a World URR, for this reason I think the 2500 Gb URR is relatively conservative and may actually increase to 2800 Gb over the next 10 years, that is equal to Webhubtelescope’s estimate. The USGS estimates World URR of C+C-XH at over 3000 Gb.

            To me we have a number of estimates from 2000 Gb to 3000 Gb, 2500 Gb is right in the middle. For extra heavy oil I use Jean Laherrere’s estimate for a URR of 500 Gb, Fernando agrees with that estimate.

            Using the Oil shock model the extraction rate from estimated producing reserves is about 6% in 2014 (assuming an average for the year of 77 Mb/d). My models assume the extraction rate slowly increases to 6.3% and the remaining resources continue to be transformed into producing reserves at a similar rate to previous history. It is possible of course that this assumption is incorrect, along with the assumption that extraction rates will continue to increase slightly (they have increased about 0.07% per year for the last 10 years) by 0.06%, 0.05%, 0.04%, 0.03% ,0.02%, 0.01% and then remain flat at 6.28%.

            • Dennis, from this link: The decline of the world’s major oil fields

              The world’s 507 giant oil fields comprise a little over one percent of all oil fields, but produce 60 percent of current world supply (2005). (A giant field is defined as having more than 500 million barrels of ultimately recoverable resources of conventional crude. Heavy oil deposits are not included in the study.)

              In the last decade virtually all of those 507 giant oil fields have undergone massive infill drilling programs with horizontal wells near the very top of the reservoir. This will cause them to produce at near maximum production right up until they start their steep production descent curve.

              Now I ask you to think, for just one moment about how this will affect their Hubbert Linearization curve. That’s right, it will cause the Hubbert Linearization to indicate that there is a lot more oil left than is actually there.

              Russia for instance has been drilling 5,000 to 6,000 wells, most of them in infill drilling projects, for many years.

              If you exclude all the drilling activity taking place every year, then Russian organic decline in production is close to 19%. To compensate for that organic decline, Russia drills somewhere between 5,000 and 6,000 wells every year.

              Without this massive infill drilling program, A Hubbert Linearization chart would show that they have a lot less oil. But now, with the massive amounts of oil they are sucking off the top of these tired old reservoirs, a Hubbert Linearization indicates they have massive amounts of oil left.

              They don’t.

              • Dennis Coyne says:

                Hi Ron,

                There was this same infill drilling activity in the US, and the Hubbert Linearization for the lower 48 did not point to a URR that was too high. Even using Jean Laherrere’s estimate of 2200 Gb for C+C-XH (which I think is too low by 300 Gb) does not result in the fast oil decline you envision, declines rates will be under 2% through 2050. And will be less than 1% until 2020 (or perhaps even 2025).

            • DC,
              Yes, as I found and you have verified the Oil Shock Model would not match the production profile with a URR of only 2.1 trillion barrels.

              When I was working it out, I do admit to making some silly mistakes — for example, using an All Liquids production output when I should have been matching to the smaller Crude production curve.

              The pragmatic decision to raise the URR beyond 2.1 trillion barrels was based on extrapolating the discovery curve into the future and in anticipating that backdating previous estimates would raise the tails. I was trying to reconcile Laherrere’s discovery estimates against the more optimistic estimates of Shell Oil and their use of BOE (barrels of oil effective).

              The realization has hit me that we may never get a pure set of crude-only production values ever again. It will always be a mix of crude plus other liquids and the higher URR is a pragmatic response to this reality.

    • Positive oil developments in Russia mean developing new resources to offset decline from existing fields. The statements aren’t rocket science, the Russians are signaling they will need others to share the risk.

      I should clarify that I worked and lived in Russia for a few years, and I have russian friends. And I see the current troublesome relations to be a result of rather aggressive and stupid USA and EU foreign policy. I guess I have rolled around way too much to swallow “western” propaganda bs, and this tends to make me see things a little more objectively.

      • And I see the current troublesome relations to be a result of rather aggressive and stupid USA and EU foreign policy.

        And of course the rather aggressive and stupid Russian foreign policy with the Ukraine had absolutely nothing to do with it.

        • Doug Leighton says:

          Edit: “the rather aggressive and stupid ONGOING Russian foreign policy with the Ukraine…….”

          • Dennis Coyne says:

            Hi Doug, Ron, and Fernando,

            There is plenty of blame to go to both sides of this issue. From a US perspective, what kinds of action would the US take if Russia or China started meddling in Canadian or Mexican affairs? My guess would be that they would look very much like the actions that Russia is taking in the Ukraine.

            • Dennis, give me a fucking break!

              • Ron, it’s useful to read the Russian people’s history and get in their heads. You see, they are Russian. The Russians aren’t Europeans, nor Chinese, nor African. They are Russian. As it turns out, the Crimea and the Donetsk are full of Russian speakers. Also, they like to have running room to be able to fall back when they are invaded.

                By pushing deep into the Ukraine the USA and the French and the Germans have signaled they intend to have the capability to strike deep into Russian territory. And this the Russians won’t allow.

                So right now we are looking at the risk of nuclear war increasing day by day. The moment a usa soldier starts shooting at russians their nukes will be aimed at all of us.

                • By pushing deep into the Ukraine the USA and the French and the Germans have signaled they intend to have the capability to strike deep into Russian territory. And this the Russians won’t allow.

                  Good grief! Do you actually believe that? You are a smart man Fernando but that is one dumb thing you wrote. The US has no intention of striking deep into Russian territory. It is almost beyond belief that a very smart person, living in today’s world, would believe that the US wants to invade Russia.

                  Good God, I have no more words for such an absurd suggestion.

                  • Ron, m not Russian. But I know how they think. I’m explaining their mind set. I read a report distributed to big wigs in the USA elite written by a very respected think tank. It laid out things just like I expected,

                    Take this information, set up your board, and play the game. The Russians see it as U.S. agression. They DO think the USA and the big bad wolf european powers are after them. In the past the Russians saw French, UK, USA, and german troops invade Russia. They had to deal with Lithuanian threats, Polish threats, Swedish threats, chinese threats, the Mongol invasion…this means they take this very seriously. They WILL cut gas to Europe and eat pine bark if they have to. They WILL launch nukes if they feel threatened (I heard there were russian generals proposing a single air burst over the USA Adriatic fleet during the moment when Clark’s mad hatter orders were sent to troops at Pristina).

                  • Fernando, shame on you, you are not giving the Russians credit for having any common sense at all.

                    I don’t know what the Russians may do with their gas. But they will not cut it because they are afraid the US is going to invade. They are just a whole lot smarter than you seem to think they are. They know damn well that the US has absolutely no intention of invading Russia.

                  • YankDownUnder says:

                    http://rt.com/op-edge/us-missile-shield-russia-361/

                    From the article:
                    “As nuclear strategy experts warned at that time, more than eight years ago, deployment of even a minimal missile defense, under the Pentagon’s then-new CONPLAN 8022, would give the US what the military called, “Escalation Dominance”—the ability to win a war at any level of violence, including nuclear war. ”

                    I agree, the USA will not invade Russia. They will however look for “escalation dominance” against Russia.

                    The actions in the Ukraine are about nuclear primacy and MAD arithmetic, however futile that may be.

                    The US Military wants full spectrum dominance and the ability to dominate anyone no matter where the conflict goes.

                    I predict they are anticipating conflicts around the world heating up due to Peak Oil and Climate Change. They aren’t idiots.

              • Dennis Coyne says:

                Hi Ron,

                What did Reagan do in Grenada? How about US support for Contra death squads in Nicaragua? Take off the blinders man.

                • Dennis, just what are you talking about? You see a connection here?

                  The Great Russian empire crashed. The Berlin Wall came down. Now Putin wants to rebuild the Empire. And you want to bring in Reagan or Grenada and Nicaragua into the debate.

                  You don’t have blinders on Dennis, you are wearing a pointed dunce cap.

                  • You are falling for neocon propaganda. I would get a cup of coffee and think it through.

                  • Fernando, I am not the one falling for propaganda. I don’t read either left wing blogs or right wing blogs. But what I do use is common sense. I don’t bring up Reagan for the same reason I don’t bring up Teddy Roosevelt, neither men, nor the Congress of their day, have any relevance in today’s world. To point to Reagan or Roosevelt and to use either of them to justify what Putin is doing in the Ukraine is just fucking stupid.

            • David P says:

              I think you’re bang on the money Dennis. It’s good to see your can see past nationalist propagandha.

              Truth is neither Russia or the USA are saints.

              • Exactly. I made a comment earlier about this problem. I’m used to being insulted (I’ve lived in Texas, where ultra patriotic militarist nationalist right wing beliefs are the norm and where I get really harsh reactions from people I know). But I feel I have to be honest and try to explain what I see. The USA just happens to have a really aggressive military posture whenever it runs into opposition.

                • Dennis Coyne says:

                  Hi Fernando,

                  Often I disagree with your points, but I agree in this case.

                  By getting involved in Ukrainian affairs, the West made a bad strategic move.

                  The US would have acted in a similar manner to Russia in the Ukraine, if Russia had inserted itself in Mexican affairs to a similar degree.

                  • It’s not even close. The population in the area where the fighting is taking place tends to be Russian speakers. Don’t forget the Ukraine has been part of the Russian empire since the 1680’s or so. Kievan Rus was their first kingdom. To many of them this is THEIR homeland. And many of them think Yeltsin was stupid to let it go. The same applies to other areas,for example Aktyubinsk Oblast in Kazakhstan.

        • Миша says:

          We need to return to the Crimea and more than anything. This monstrous injustice with which we live. My parents lived there . There are relatives and friends. Crimea cannot be abroad. There never were Ukrainians. And some fool Khrushchev did Crimea gift.

        • Ron: Russia’s policy with the Ukraine is a given.

          First, let me give you an idea of where I get my ideas: When I was working in Russia I developed quite a few contacts, and this included people who prepare strategic political analysis (I’ve been one of those individuals who get calls to bounce ideas, and confirm certain facts).

          As a result, sometimes I get a courtesy email with reports they generate for their clients. I can’t discuss what I get now, but I can say that around 2006 I saw a report predicting what is happening as a NATURAL Russian reaction to USA and German encroachment.

          This isn’t the blog to get into European geopolitical games, so I’ll just caution you guys that a)there’s a world out there which thinks the USA is the aggressor, and b) this could end in nuclear war. And the fault will be a Nobel Peace Price winner’s. Americans tend to support really crappy foreign policy moves. But you do get crappy information.

          • YankDownUnder says:

            http://www.nti.org/gsn/article/moscow-says-us-nato-actions-show-missile-shield-aimed-russia/

            Not the best article on the subject, just one of them.

            NATO is building a missile “shield” aimed at Russia. If they were successful with this they may achieve nuclear primacy, or have a significant advantage over Russia in MAD arithmetic.

            If NATO were to get a foothold in Ukraine, Russia might get a “shield” on their front lawn.

            If Russia were building a missile “shield” in Cuba, obviously that would be seen as a threat.

            Anybody notice how USA is trying to mend relations with Cuba? curious timing. Why now after all these decades?

            I’m of the opinion that all this is being driven by Peak Oil/Climate Change as the militaries of the world realize the chance of conflict will be going up.

            I may be ignorant, but if the ELM is correct, wouldn’t Russia’s power increase with declining exports?

      • Ronald Walter says:

        The Space Station has a new crew since September of 2014 and there are members both Russian and American. Maybe a brawl will break out on the Space Station too. lol

        As for the US versus Russian diplomacy, it is two big brats in a slap down to determine who is going to herd the goats back to the village.

        Russia and the US both need to stop acting like babies and check-in to reality, i.e. grow up. Those politicians and diplomats are in dire need of a life.

        The idiocy never ceases, flip flop, it never stops.

        • Ves says:

          What brawl, Ronald? The one you are talking about drink 10 Euro Illy espressos in Brioni suites every day 🙂
          No brawl for them.

  21. Watcher says:

    Oil down about a dollar in Asia, $46.xx.

  22. Patrick says:

    ok so 2014-2015 is the year of peak oil, but when will be the year of collapse? you know, that period in time when we’ll have no water at taps/faucets anymore, and supermarkets will be empty?

    • I haven’t the foggiest idea. However I am predicting sometime between 2030 and 2050. However that is nothing but a wild ass guess. With the economy you never know. We almost had a collapse in 2008.

    • I’m a bit more optimistic than Ron, but a while back I was trying to see what would happen to CO2 emissions in the future. I don’t like the IPCC pathways because they ignore the fossil fuel contraints. This means their Integrated Asset Models (the ones used to feed the CMIP5 climate model runs) are designed to focus on policy contraints rather than real life behaviour. And after I shook the data around for a while I saw a peak of CO2 emissions way before 2050. I think I called it “Burn baby, Burn”. You can find it with Google and my name, I think.

  23. Political Economist says:

    If peak oil happens in the near future, electricity will be a major potential substitute, especially in the transportation sector. Even though electricity cannot substitute liquid fuels for trucks, sea transportation, and air transportation. Nor can electricity act as chemical inputs. The growth of electric cars may be further impeded by the shortage of lithium resources and infrastructure limitations..

    According to International Energy Agency’s Key World Energy Statistics 2014, in 2012, electricity accounted for only 18 percent of the world’s final energy consumption. Oil accounted for 41 percent, natural gas accounted for 15 percent, coal accounte for 10 percent, biofuels and waste accounted for 12 percent, and other (direct use of geothermal, solar, wind, heat, etc) accounted for 4 percent. However, the total primary energy consumption used by electricity plants and combined heat and power plants amounted to 4,724 million tonnes of oil equivalent or 35 percent of the world’s primary energy supply in 2012.

    US Energy Information Administration recently publsihed the international electricity statistics for 2012. World electricity generation grew at an average annual growth rate of 3.5 percent during 1980-1990, 2.6 percent during 1990-2000, and 3.3 percent during 2000-2012.

    The attached graph shows the relationship of world economic growth rate and world electricity generation growth rate for the period 1991-2012. Linear trend yields the following result: electricity generation growth rate = 0.0005 + 0.865 * world economic growth rate (R-square = 0.706). That is, for each increase in world economic growth rate by 1 percentage point, electricity generation growth rate tended to rise by 0.865 percentage point.

    • Patrick R says:

      Electric bikes, however….

    • Dennis Coyne says:

      Hi Political Economist,

      There is about a 38% conversion efficiency of fossil fuels to electricity. In 2012 about 524 Exajoules(EJ) of primary energy consumption (when non-fossil fuel sources are converted to a thermal equivalent). Without these thermal losses suffered by coal and natural gas when producing electricity much less primary energy would be needed. Let’s assume about 50% of the coal and natural gas energy is used to produce electricity (about 140 EJ), if all of this was replaced with wind, solar, and nuclear only 38% of the energy would be needed (because thermal losses are small) so 140 EJ becomes 53 EJ.

      Likewise if we assume 50% of oil use is for land transport (87 EJ) and due to the smaller losses using electric trains, buses, light rail, and EVs, then this could also be cut by half or more to 44 EJ.

      For those unfamiliar with the Exajoule it is 10^15 Joules=one million gigajoules or 1.05 quadrillion BTU.

      Main point is that we can do more with less energy as we move away from fossil fuels. Roughly 40% less energy will be needed.

      • Political Economist says:

        Hi Dennis, I’ve been enjoying your graphs and latest projections.

        I am of course aware of the energy loss of thermal power plants. Note that both the final consumption and the primary consumption numbers are taken from IEA. IEA does not directly provide primary energy consumption used for electricity generation. But they have a page for world energy balance, from which the primary energy consumption used for electricity generation can be calculated.

        BP uses 38% as the standard thermal equivalent conversion. IEA has more complect rules with different conversion ratios for nuclear, hydro, solar/wind, and geothermal.

        Yes, replacing fossil fuels by wind/solar will reduce the amount of energy used in term of “final energy consumption”. But if renewables are calculated based on thermal equivalent, it would basically have no impact in term of primary energy consumption. On the other hand, if renewable energies are included in primary energy consumption without the conversion of thermal equivalency, renewable energies would statistically count less and have a even smaller share in the total primary energy consumption.

        I will post more electricity statistics tonight

        • Stan says:

          The conversion efficiency of a windmills or solar panels are completely meaningless with respect to anything but their final cost. Their energy source is free. Wind is generally the cheapest utility scale generating source today. Solar is catching up quickly and it competes at the grid end where it just has to be cheaper than retail. It is already cheaper than retail in most of the globe today.

  24. Paulo says:

    What will helpful blog sites look like after the oil decline is apparent to all?

    This site has certainly eclipsed TOD and regular commenters explain the hidden aspects of the oil industry to outsiders like myself. However, when I try and search outwards for realistic ideas about dealing with a society in decline and/or a society in energy constraint, I don’t find much online. Resilience.org makes an attempt, but it is pretty unrealistic as far as I’m concerned. Wolf Street (Wolf Richter) has an excellent economic blog which covers debt and decline quite well, imho. But beyond the doom and gloom and survivalist prep wackos there isn’t a hell of a lot out there for comparing notes and attitudes. Zero Hedge, always entertaining, is well…..Zero Hedge; full of flippant one-liner comments.

    If 2015-16 is Peak, and I have never doubted Ron’s explanations or reasoning, what will you folks concentrate on after decline sets in? Ron, will you continue to assemble decline data? Mr Brown, where will you take your GNE calculations? Will it be enough to offer data to the public? Fernando, will you continue your career? Others?

    I know Wimbi will still be inventing!!

    I know I will still be building and filling my freezers.

    OFM? How do you see this going forward?

    Ron, I don’t think there are any more hat rabbits to find that will hide PO for much longer. Even the densest talking heads on CNN and MSNBC will ask, “what the hell is going on”?

    Do you see this site, and others evaporating and readers increasingly using search options for tips like, “how to kill and skin rabbits”?

    About 15 years ago I completed a masters degree and loved every minute of it. It was the research I loved and the habits and routines required. I was going to embark upon a PhD until I discovered it would cost me $20,000/yr and my employer couldn’t care less. Then, I stumbled into a few books including The Long Emergency and discovered TOD about the time it started up. Now, I am wondering where this current situation will lead me?

    My wife and I have created our little oasis and I have certainly developed my skills and knowledge base by being a carpenter, welder, and pretty good gardener/provider, but where do we go from here? The Peak Oil date, fascinating for sure….economic tricks and manipulations are mind boggling crimes to behold. Shale fracking and associated finance has been a race to desperation. I am astounded. Now what?

    I have pretty much given up forwarding this information on to others, however, occasionally I am asked about energy issues and often use many of your ideas and explanations as resource, (credit given of course) and have been pleased to do so. But I feel time for doing this is running out and wonder what is the point after Peak?

    Is anyone else considering working on building up and adapting to PO? What happened to Alan from Big Easy and Todd, to name just a few? After the epiphany do we simply move on?

    Thanks in advance….Paul S (Paulo)

    • Paulo, I am 76 years old and will almost certainly blog for only a few more years… if that. If I were not retired I would not have the time to do this. I do find it enjoyable and don’t cost much after the initial start up. I do it simply because I enjoy it and for no other reason. I have no illusions that I can really make any kind of difference. In fact, I often preach against the belief that any of us, or group of us, can actually change the world. The world doesn’t listen to us and could not care less.

      But have no fear, after the decline begins there will be plenty of blogs and places to express your opinions. After the decline starts they will come from every direction, by the dozens. And then I can retire my blog peacefully knowing I am no longer needed.

      • Frugal says:

        Ron, I think you’re underestimating how good you are and how difficult you will be to replace.

        • Old farmer mac says:

          It will be a sad day for me if Ron quits blogging before I quit metabolizing.

          It is impossible to say how big an influence any one person running one blog such as this one might have. Maybe hardly any at all in terms of the big picture.

          But maybe this blog will be the thing that opens the eyes of a couple of young guys or gals who are headed into politics and eventually wind up in Congress or as entrepreneurs who help arrange the financing for an upgraded grid designed to accommodate a much higher amount of renewable energy.

          For me it is an informal graduate school in the geology and politics of energy which will serve me well as I work on a book I hope to publish someday.

          • Old farmer mac says:

            Now as to what I think is the most likely scenario for the next fifty years or so:

            Major parts of the world are going to go to hell in a hand basket barring near miracles such as an unexpected FURTHER drop in birth rates and much greater than expected gains in energy efficiency and agricultural production etc.

            Some parts of the world are going to do ok but growth is going to be very slow or negative – living standards will fall a long way in a lot of places that do not crash.

            WWIII may or may not get nearly all of us.

            A substantial amount of warming is already baked in and some places that are already miserably hot and humid are going to be damned near uninhabitable .

            But technology will march right along and the people who are lucky enough to have been born to the right grandparents will live decent lives. There might be only a few hundred million of them.

            There will probably be another billion leading miserable lives not that far different from the miserable lives of a lot of extremely poor people today.

    • I’m retired. I spend my time trying to overthrow communist governments and write pseudo interviews with African presidents and other characters. I got tired of traveling.

    • wharf rat says:

      Todd’s doing fine. I see him a few times a month. He’s a lurker here, but isn’t commenting on-line at the moment.

    • Todd says:

      Hi Paulo,

      First of all, Ron, you have done a fantastic job!!! I’ve lurked here since the beginning.

      This is my first post since TOD closed down and probably my last. As you know, I no longer feel comfortable posting and emailing. In the mean time, I’m involved with a group I started at my Grange, The Antifragile Group; the name is from Taleb’s book. We discuss “everything”.

      If your email addy is the same as when I was doing the Update, I’ll send you a bazzilion links…just note that you want it in a reply.

      Rat, thanks for your post below that I’m still around. See you Wednesday at the Anitfragile get together.

      The best to everyone!! You are a great group of posters.
      Todd

      • Todd, my email address is the same.

        As you know, I no longer feel comfortable posting and emailing.

        Yes, I know. However I don’t have any problems along those lines. But I would love to have your links.

        I haven’t read Taleb’s “Antifragile” or anything else he wrote. But If I were to read one it would be “The Black Swan”.

        Looking forward to hearing from you.

        • Fred Magyar says:

          Hey Ron, I have read The Black Swan but not Anti Fragile, though I have watched a few of Nassim’s lectures on Youtube. There is a good one of him talking to Daniel Kahneman about it on Youtube

          In any case here’s the short version about 20 mins.

          Antifragile – Nassim Nicholas Taleb
          https://www.youtube.com/watch?v=k4MhC5tcEv0

        • wharf rat says:

          “As you know, I no longer feel comfortable posting and emailing.

          Yes, I know. However I don’t have any problems along those lines”

          Todd read about Snowden, and said, “They are watching me.”
          Rat, OTH, said, “Damn, if they are watching everybody, they suffer from information overload, and are too busy to pay attention to me.”

          • Rat, I really don’t think they are watching everybody, just everybody they think may be a threat.

            However, that being said, I really don’t give a shit if they are watching me. Hell, I hope they are, if so they might learn something about peak oil.

    • wimbi says:

      Paulo. I see you are a kindred spirit. I too keep asking -OK, now what? And find not much, same as you did. So I go on with a little bit of logic–.

      It is absurd to think that I am unique. There’s got to be lots of people around who already see things as I do.
      So- quit wasting time/energy paying any attention to all the others, go find and get together with those people who are already in the same place. And, if you are lucky, you will find some of those are way ahead of you, have a lot more energy and time, and all they lack is a little encouragement ($?)

      So I sent out word into the void that there would be a meeting about sustainable energy widgets. I was astounded at the big crowd that showed up, heavily sprinkled with the local hillbilly types, usually associated only with guns and loud cars. Some of these guys had been living what I talked about for their whole life and were outstanding experts at it.

      It snoballed, and now there are lots of groups around here doing likewise, with absolutely no encouragement from me. They include the Mayor and major personalities with money.

      They even asked me to be one of their directors, as long as I promised to not say much.

      And I set up my Ridge Road Academy –Grad School of Energy Widgets, where people come to try out such things, and then, with any luck, go off and start a business doing it.

      So far. Pyrolyzer burner-space heater- water heater- heat engine heater. Burns Anything, cleanly. Puts out carbon/charcoal as product along with heat. Carbon negative.
      Thing that fuzzes up any discarded fabric, turns it into good insulation like unto blown cellulose.
      Others, very exciting, but too unsuccessful so far to dare mention without hoots from the audience.

      All this is huge fun, and I highly recommend giving it a try by others who, like me, might otherwise be pretty useless.

    • Allan H says:

      As far as what to do after the peak, I think it would be best to look into designing and producing buggy whips and research a chemical mixture with alcohol to make a whiter brighter flame for lanterns. Someone else can manufacture the lanterns. Also producing an efficient coal furnace and boiler might be a possible route to take after the oil descends for a while.
      Here will be the new locomotives for train transport, the German V steam locomotives. Capable of high speed (prototype hit 135 mph), the steam motors are easily accessible and the long drivers with heavy counterbalance in the wheels are eliminated. Essentially a direct drive system. Much less wear and easier to maintain than conventional steam.
      http://www.douglas-self.com/MUSEUM/LOCOLOCO/steamotor/steamotor.htm#19

      There is going to be a big demand for stationary steam engines also.

      Steam cars will be a lot of fun, the Doble brothers had a highly efficient flash boiler that started quickly and conserved water. Probably could be made to run on all that methanol we will be making from the captured CO2 from coal powered steam generation.

  25. Political Economist says:

    Among the possible substitutes of oil (coal, natural gas, biofuels, and electricity), electricy offers probably the best hope to replace a substantial portion of the current use of liquid fuels. However, currently, most of the electricity is generated from fossil fuels. Replacing oil by electricity does not help to reduce greenhouse gas emissions if electricity is generated from fossil fuels (and may lead to more greanhouse gas emissions if oil is replaced by coal-fired electricity).

    Electricity can be generated from many different sources. Compared to other energy uses, electricity generation is a sector where the renewables can make relatively easy penetration. There has been much talk about the spectacular growth of renewables. But what does the current evidence say about decarbonization in the electricity generation sector.

    The attached graph shows the share of world electricity generation by source of energy. In 2012, world electricity net generation reached 21,532 terawatt-hours. Fossil fuesl accounted for 67 percent of the world electricity generation in 2012, nuclear accounted for 11 percent, hydro (including pumped storage) accounted for 17 percent, and the non-hydro renewables accounted for 5 percent.

    In 1980, fossil fuels accounted for near 70 percent of the world electricity generation. By 1986, the fossil fuels share declined to 63 percent. From 1986 to 1999, the fossil fuels share stabilized around 62-63 percent. By 2007, the fossil fuels share surged back to 68 percent. From 2008 to 2012, the fossil fuels share stabilized around 66-67 percent. So much for decarbonization!

    In 1980, nuclear accounted for 9 percent of the world electricity generation. By 1996, the nuclear share peaked at near 18 percent. The nuclear share has declined rapidly since then.

    In 1980, hydro (including pumped storage) accounted for 21 percent of the world electricity generation. By 003, the hydro share declined to 16 percent. Since then, the hydro share has stabilized around 16-17 percent.

    The non-hydro renewables did not exceed 1 percent of world electricity generation until 1989. The non-hydro renewable share exceeded 2 percent by 2003, 3 percent by 2009, and 4 percent by 2011. Despite the rapid growth of non-hydro renewables, its expansion has been more than offset by the absolute decline of nuclear and the relative decline of hydro so that the fossil fuels share has increased significantly since the 1990s.

    • Boomer II says:

      Roof top solar has some aspects going for it that other electricity sources don’t. While it may not replace the current grid anytime soon, it is a good way to add renewable energy in a way that many consumers support.

      • Boomer II says:

        I was wondering how the adoption of energy efficient appliances might give us an idea of how roof top solar might be encouraged down the road. Here’s a chart of market penetration of various appliances.

        Seems like if both government and utilities wanted to encourage people to start switching from grid electricity to localized solar electricity, it could be accomplished the same way people have been encouraged and been given incentives to give up their old appliances for something that might save them some money on their electric bills.

        http://www.eia.gov/todayinenergy/detail.cfm?id=8370

        • Longtimber says:

          While helpful in long term, The bar for Energy Start is quite Low. Often just incrementally lower usage over the previous model. . Not much help when looking for off grid appliances where you are willing to pay for efficiency or true cost of ownership. Utilities do what they must to stop rooftop solar. After all Everyone knows ” Solar is Dumb” . 🙂 http://www.prwatch.org/news/2014/07/12553/utility-trade-group-funds-alec-attack-americans-who-use-solar

          • Boomer II says:

            This growing solar market represents a threat to the long-held monopoly on electricity production held by utilities.

            This is from the press release.

            We’ve got the anti-solar folks trying to scare people with “they are going after your lifestyle” to drown out the voices on the left and the right saying, “Do you want more energy independence?”

            Roof top solar provides more freedom than totally depending on the centralized power generation.

            It’s the same thing happening with cable. Bit by bit consumers are leaving cable TV and finding what they want online.

            • thrig says:

              No need for scare tactics when the decarbonization scenarios make curious assumptions and omit discussing e.g. transportation and industrial conversions, or do not even ask whether society would accept the changes.

              http://onlinelibrary.wiley.com/doi/10.1002/wcc.324/pdf

              • Boomer II says:

                The thing about solar is that it is working now. It doesn’t have to power the world to be a workable energy source.

                It can co-exist with other forms of energy generation and is currently doing so.

                • wimbi says:

                  And on top of that, you can do it yourself, right here and right now, and in as small steps as you want.

                  Around here, lots of people have taken the little time it takes to get the training necessary, and are going around putting small installations all over the county.

                  The ones I know have only one problem– way too busy.

                  • Dennis Coyne says:

                    Hi Wimbi,

                    Are there good resources for this information online? Don’t local regulations require some of the work to be done by an electrician? Or does there just have to be a final inspection by the local code enforcement?

                    Links to websites with good info would be helpful, because there are more websites with bad information than good and you may know the good from the bad.

                    Thanks.

                  • Dennis Coyne says:

                    On re-reading I am asking about self install of PV systems, installations of windows and insulation, I could handle. Info on heat pumps might be useful, but in my original comment I was thinking PV systems and failed to mention it.

  26. Political Economist says:

    Attached graph shows the share of geothermal, biomass, wind, and solar (including solar, tides, and waves) in the world non-hydro renewable electricity generation.

    In the 1980s and 1990s, world renewable electricity generation was dominated by biomass and geothermal. In 2000, biomass still accounted for two-thirds of the world renewable electricity generation and geothermal accounted for about one-fifth.

    In 2012, wind accounted for 49 percent of the world renewable electricity generation, biomass accounted for 36 percent, solar accounted for 9 percent, and geothermal accounted for 6 percent.

  27. Anonymous says:

    Article about Chinese purchases of United States farming capacity.

    Article claims that food is the new oil, and that due to increasing population and stagnant or slowly increasing production, food will increasingly be a source of global conflict.

    http://www.revealnews.org/article/how-china-purchased-a-prime-cut-of-americas-pork-industry/

    I found this article interesting, but I am not alarmed. I recall the huff and puff about the Japanese ‘buying up America’ a few decades ago. That FUD factor came and went. Now the FUD factor is the Chinese.

    I recall back when the FUD factor was focused on the Japanese buying out America there were some reasoned articles pointing out that more U.S. property was owned by Europeans….and that perhaps we didn’t freak over that because they resembled the white majority population, and weren’t threatening scary Asians.

    And…what if the World food supply goes to hell in a hand basket, and Chines firms own a lot of U.S. food production? Lots of luck forcing that food to get on ships and sail to China!

    Like I tell my workmates who get all worked up over the Chines ruling the World…I would not trade places with a Chinese citizen, not at all…they are staring down the barrel of serious problems going forward…and no, they all aren’t climbing into landing craft and storming our beaches to take us over…not next year, not ever.

    It was fascinating to see how many folks had to replace the Klingons with the Romulans when the Wall fell…even with the whole Samual Huntington ‘Clash of Civilizations’ thing which cropped up.

    Bread and Circuses and FUD…keep the long, slow changes in reality masked for a long time.

    • Old farmer mac says:

      Japan has never been a real threat to anybody since WWII. Japan is a small country almost entirely dependent on imported raw materials that ships out finished goods to survive.

      Japan Incorporated was a joke and the punch line came when hare brained pundits assured us that downtown Tokyo was worth as much as all the cities in the US.

      China is maybe a little different. Not SMALL. Not paficist to the core. Endowed with a lot of natural resources – not nearly enough of course. Actually bigger economically now than the US in a lot of key areas.

      Keeping an open eye on China is not evidence of paranoia.

  28. Patrick says:

    Personally, instead of trying to substitute oil, I am trying to substitute tap water, supermarket food and central heating for something that does not depend on oil-addicted infrastructures (mines, roads, lubricants, etc.). But it’s definitely beyond the scope of this blog 🙂

    I guess the abcba period will be different for every country/continent. Certainly in Europe we will be suffering the accelerated export decline (duly explained by Mr. Jeffrey J. Brown) soon enough, whereas big oil producing countries will last longer. Does it make sense?

    Electricity infrastructure especially will be hard to maintain without or with much less oil. Nothing really nowadays can work without electricity, everything depends on computers. That’s why I came up with the concept of abcba period: after big collapse, before apocalypse; collapse being the moment when our modern world stop functioning because of oil decline, and apocalypse being the moment when 400+ nuclear power plants start burning or melting worldwide.

    [Alan Weisman, the World Without Us, 15 Hot Legacy, 4. Too Cheap to Meter, p209]
    Used nuclear fuel, some of it decades old, languishes in holding tanks. Oddly, it is up to a million times more radioactive than when it was fresh.
    If humans suddenly departed, before long the water in the cooling ponds would boil and evaporate away.
    As the used fuel in the storage racks is exposed to air, its heat would ignite the cladding o f the fuel rods, and radioactive fire would break out.
    The spent-fuels buildings were intended to be temporary, and their masonry roof is more similar to a big-box discount store’s than to the reactor’s pre-stressed containment dome. Such a roof wouldn’t last long with a radioactive fire cooking below it.
    But that wouldn’t be the biggest problem.
    400+ nuclear plants, several with multiple reactors, would briefly run on autopilot until, one by one, they overheated. As refueling schedules are usually staggered so that some reactors generate while others are down, possibly half would burn, and the rest would melt. Either way, the spilling of radioactivity into the air, and into nearby bodies of water, would be formidable, and it would last, in the case of enriched uranium, into geologic time.

  29. Futilitist says:

    Hi Ron,

    Great post. I completely agree that we are at the absolute peak of world oil production.

    But I couldn’t disagree more with your comment, above, about a time-frame for collapse being somewhere in the range of 2030-2050. If, as you say, we almost had a collapse in 2008, why wouldn’t you logically think that we are due for a much more immediate collapse?

    • Futilitist, I explained that my estimate was just a wild ass guess. And 2030 is only 15 years away. Yes the collapse could be as early as 2017. However there are just too many things to consider when it comes to a total economic collapse.

      Bottom line is I have not one clue as to when a total worldwide collapse will happen.

      • Lloyd says:

        Bottom line is I have not one clue as to when a total worldwide collapse will happen.

        Indeed- if any of us thought we knew, we’d be making plans for our own survival rather than talking about it.

        The exact moment of peak oil is not the answer.

        It’s just another clue.

        -Lloyd

      • Ilambiquated says:

        I think that if the the reason oil production is not increasing is political, as opposed to geological, the downward slope will be slower (because political problems come and go).

  30. yt75 says:

    Thanks for the summary Ron.

    A bit of a pity though, that you stick to the usual song : “Then all hell broke loose in the Middle East and prices skyrocketed.”, regarding the first oil shock.

    A little something happened in 1970 (end of year) : the top producer of the time –BY FAR– peaked.

    https://i0.wp.com/upload.wikimedia.org/wikipedia/commons/c/c5/US_Oil_Production_and_Imports_1920_to_2005.png

    • yt75 says:

      A bit more detailed summary :

      – end 1970 : US production peak, the energy crisis starts from there, with some heating fuel shortages for instance (some articles can be found on NYT archive on that), or :
      http://upload.wikimedia.org/wikipedia/commons/c/c5/US_Oil_Production_and_Imports_1920_to_2005.png
      – Nixon name James Akins to go check what is going on.
      – Akins goes around all US producers, saying this won’t be communicated to the media, but needs to be known, national security question
      – The results are bad : no additional capacity at all, production will only go down, the results are also presented to the OECD
      – The reserves of Alaska, North Sea, Gulf of Mexico, are known at that time, but to be developed the barrel price needs to be higher
      – In parallel this is also the period of “rebalance” between oil majors and countries on each barrel revenues (Ghadaffi being the first to push 55/50 for instance), and creation of national oil companies.
      – there is also the dropping of B Woods in 71 and associated $ devaluation, also putting a “bullish” pressure on oil price.
      – So to be able to start Alaska, GOM, North Sea, and have some “outside OPEC” market share, the barrel price needs to go up (always good for oil majors anyway) and this is also US diplomacy strategy
      – For instance Akins, then US ambassador in Saudi Arabia, is the one talking about $4 or $5 a barrel in an OAPEC meeting in Algiers in 1972
      – Yom Kippur starts during an OPEC meeting in Vienna, which was about barrel revenus percentages, and barrel price rise.
      – The declaration of the embargo pushes the barrel up on the spots markets (that just have been set up)
      – But the embargo remains quite limited (not from Iran, not from Iraq, only towards a few countries)
      – It remains fictive from Saudi Arabia towards the US : tankers kept on going from KSA, through Bahrain to make it more discrete, towards the US Army in Vietnam in particular.
      – Akins is very clear about that in below documentary interviews (which unfortunately only exists in French and German to my knowledge, and interviews are voiced over) :
      http://www.youtube.com/watch?feature=player_embedded&v=fQJ-0jAr3LQ
      For instance after 24:10, where he says that two senators were starting having rather “strong voices” about “doing something”, he asked the permission to tell them what was going on, got it, told them, they shat up and there was never any leak. The first oil shock “episode” starts at 18:00
      The “embargo story” was in fact very “practical”, both for the US to “cover up” US peak towards US public opinion or western one in general, but also for major Arab producers to show “the Arab street” that they were doing something for the Palestinians.

      In the end, clearly a wake up call that has been missed, especially at a time when we are around global peak and the omerta about it is almost complete.

      Note : About Akins, see for instance :
      http://www.washingtonpost.com/wp-dyn/content/article/2010/07/26/AR2010072605298.html

      And his famous foreign affair article :
      http://www-personal.umich.edu/~twod/oil-ns/articles/for_aff_aikins_oil_crisis_apr1973.pdf

      His report to Nixon in 71 or 72 is still classified to my knowledge though, would be interesting to know if it can be declassified now.

      • yt75 says:

        An example of a Nixon speech of the time (before the “embargo” ) :


        “195 – Special Message to the Congress on Energy Resources.
        June 4, 1971

        1971

        To the Congress of the United States:

        For most of our history, a plentiful supply of energy is something the American people have taken very much for granted. In the past twenty years alone, we have been able to double our consumption of energy without exhausting the supply. But the assumption that sufficient energy will always be readily available has been brought sharply into question within the last year. The brownouts that have affected some areas of our country, the possible shortages of fuel that were threatened last fall, the sharp increases in certain fuel prices and our growing awareness of the environmental consequences of energy production have all demonstrated that we cannot take our energy supply for granted any longer.

        http://www.presidency.ucsb.edu/ws/index.php?pid=3038&st=oil&st1=

        (was looking for an even clearer one video, cannot find it back)

  31. Philip Backus says:

    Good Morning Oilers, There is an article on ZH about striking refinery workers here in the U.S. What the Hell will that do to prices both near and longer term? What about the price of gasoline? Surely “cheap”? won’t end so quickly?

  32. Nick S says:

    I don’t really see where the peak is coming from. From where I am sitting, there is still a lot of running room for production growth in the US, Canada and Iraq. The shale continues to show that it is capable of enormous production growth, and the current downcycle might actually help the shale players long run by fixing their cost structure. Canada continues to bring on more and more oil sands and the shale plays there are just ramping up. Iraq has a lot of room for growth. I’m not convinced.

    • Boomer II says:

      The shale continues to show that it is capable of enormous production growth, and the current downcycle might actually help the shale players long run by fixing their cost structure.

      You don’t see decline rates as a factor?

      • Nick S says:

        I agree in the long run the decline rates will lead to slowing growth and an eventual peak, but see little evidence that is occurring now. Downspacing continues to occur with limited reports of interference. The Permian is ramping up. Drilling times are getting faster. Fracs are improving.

        • Boomer II says:

          I think this forum is looking for numbers that prove this or indicate otherwise. If you have numbers to show that what you believe is the case, I am sure everyone here would love to see them.

        • Dennis Coyne says:

          Hi NickS,

          I looked very closely at the Hawkinson wells drilled by Continental, one of the early downspacing attempts in a very productive sweet spot. About half of the wells were fairly productive and the other half were not very good. Data in chart is from the NDIC, there were three early wells and then 11 new wells were added, the original three wells were refracked when the new wells were added. The results in the chart for the original 3 wells are from before they were fracked a second time. Chart at link below

          http://peakoilbarrel.com/rig-count-drilling-less-oil/comment-page-1/#comment-486504

          • Nick S says:

            The proof is out there. Every single company I follow has decreased its capex budget by 30-40% and they all continue to forecast increased production for 2015. The reason they are able to do that is:

            1. Year end exit production is higher than 2014 average production
            2. Shift to sweet spots
            3. More wells per rig, a function of significantly shorter drill times, the result of improvements in drilling steering and multiwell pad drilling

            • Wake says:

              Forecast

              and for 12 months, with presumably the first half higher

            • Boomer II says:

              Isn’t this the stuff that companies are saying to their investors but most of the people in this forum don’t believe?

            • Dennis Coyne says:

              Hi NickS,

              I don’t believe the hype in investor presentations, you can put lipstick on a pig, but it’s not going to win a beauty contest. Average well costs may go down a little and average well productivity may increase a little, but downspacing may tend to reduce the average new well productivity if we use the Hawkinson wells as our guide.

              If oil prices rise, they may be able to increase output a little in the LTO plays, but eventually the drilling slots in the sweet spots will be used up and it will be more and more difficult to even maintain output levels once this occurs. We are likely to reach this point by 2015 to 2016 in the Bakken and may be there even sooner in the Eagle Ford (output looks like it is levelling off in both plays already.)

              • Nick S says:

                I see a lot of folks outright dismiss companies and their investor presentations. There is definitely some good reason for skepticism about certain company claims. Companies tend to highlight their best wells and ignore their underperforming wells in presentations. They also exaggerate the EURs of the wells. However, I will say it is the rare company that is trying to actively put out bad annual forecasts. They may try to obfuscate some of the things going on under the hood, but when they issue annual production guidance, those numbers are usually accurate estimates of expected production growth as Wall street is holding these firms accountable to the numbers.

                Regarding downspacing, the jury is still out and it is a clear ambiguity in when these shales will peak. Regarding Hawkinson, you have to separate out the Three Forks v the Middle Bakken. The MB is clearly more consistent that the TF. That said, I don’t think the companies are going to spend $10mm to drill a downspaced well in the long run unless that is NPV positive. Time will tell on these spacing tests.

                Dennis, I think you understimate the improvment in drilling days. Operators are seeing a significant improvement in drilling costs.

                Attaching some data from recent Carrizo investor analyst day:
                https://www.evernote.com/l/AB7sJdXXt8pIHaUZG49ftLLIDfXsALOG18M

                • Mike says:

                  I live and work in the middle of the Eagle Ford trend; it takes a minimum of 21 days to MIRU, spud, set surface casing, make the turn, drill the lateral and run production casing. I count days a rig is on location, or rather use to count days because there isn’t half the rigs running their use to be anymore. Day rates for 1500 HP rigs that can drill those kinds of laterals are just now passing south of 17K a day. When you add all the bells and whistles, from porta potties to caterers, to BHA’s and LWD’s, there is no stinking way a drilled EF well costs 2.3 million dollars. Add pad costs, land costs, a couple of days of lost returns or stuck DP and they are waaaayyyyy more than that.

                  Dennis, you are not underestimating anything. I have been gone for a month and I see the bullshit hype for shale oil is still alive and well and titty deep round here.

                  And by the way, down spacing, re-fracing, gas pressure maintenance and waving a pink, headless chicken over a wellhead while chanting in Jamaican does not work either. I have seen all that stuff; nothing helps. I’ve got the royalty checks to prove it.

                  Significant improvement in drilling costs my ass.

                  Mike

                  • Nick S says:

                    I assume you are talking about Gonzales and Karnes counties. Carrizo is in Lasalle, which has much lower depths than the East Eagle Ford.

                    Also, of note, these numbers are drilling only, not completion.

                  • Mike, glad you’re back. But I must disagree with you. I think waving a headless chicken over a wellhead while chanting in Jamaican would work. Provided, of course, that you were chanting the right incantation.

                  • Mike says:

                    That’s LaSalle, with a big S, and I know the difference in drilling, completion and drilling and completion costs, thanks. Carrizo plays the high GOR/liquids rich window in the southern part of the county; depths are similar on strike to the NE in the oil window. Lower depths generally mean higher well costs, BTW. Mox nix, costs are not “significantly” lower in LaSalle or anywhere else yet. There must be club or something for folks to join that can’t give up on shale oil, even at 45 dollars, complete with a secret decoder ring.

                  • Ves says:

                    Mike, just move the rigs to the sweet spots. 🙂

                  • Mike, I’m not debating this specific well cost, but I was wondering what savings are achievable from multiwell pads? I’m used to multiwells, minimum 18 wells per pad for three zones, 6 wells per zone. Three drill up dip, three down dip.

                  • Watcher says:

                    What does catering cost? Is that pizza or caviar?

                  • Nick S says:

                    I guess since Mike talks brashly, he must be right. I am wrong. We are at peak oil for sure.

                    I don’t think it is much of argument to say that now that oil is at $45, we have definitely peaked since shale is no longer economic. The second prices go back up, the shale floodgate will reopen, so that is not peak oil, that is a temporary decline in production.

                    I’m not sure why drilling a shorter total depth leads to higher drilling costs. Can you explain that? Not intuitive.

                    Also, as an fyi, Carrizzo is in NW LaSalle, thanks for the spelling correction, which is more shallow the Southern LaSalle.

                    Best,
                    Nick

                  • Watcher says:

                    The core issue is what you have touched on, probably wrongly.

                    Is it permanent? Will it all restart with a price rise, if the fall lasts a year or so?

                    Maybe not. The whole activity is funded with high yield bonds. If the present bonds are defaulted on, the next generation of bonds are not going to find buyers. More than anything else, THAT could make it either permanent or hugely raise the shale restart oil price.

                    Think about it.

                  • Nick S says:

                    I continue to think shale will be viewed favorably by the Street. Shale can ramp up and ramp down quickly in response to price unlike other oil and gas projects and the companies can lock in returns using near term hedging.

                    You likely will not see the high yield market funding wildcat plays in these markets, but there will continue to be a market for funding proven shales with reasonable IRRs locked in by hedging.

                  • Mike says:

                    Nick S:

                    I speak rather brashly sometimes because I have over a half century of experience in the oilfield doing my own work, my own geology, engineering, land work; spending my own money to drill and complete my own wells. I have interest in stinking shale wells. I know what they cost, and what they make. The bullshit that public shale oil companies put on their websites, that apparently some people soak up like sponges, is an embarrassment to me. When I hear people like yourself embrace the shale oil industry, or the shale gas industry, even at 45 dollar oil and 2 dollar gas, it makes the hair on my head stand on end like Buckwheat’s.

                    By the way, to an old hand like me, “lower depths” mean deeper depths and higher costs. “Shorter total depths” means shallower depths. If you mean less footsies in TMD, from surface to lateral toe; yes, costs are less for those kinds of wells. Carrizo, with one z, is a good company; but their wells are no cheaper than anybody else’s along regional strike to the east and when you add in pads, roads, land damages, leasehold costs, water costs, etc. etc. their drilling costs are not “significantly” less than anybody else in the trend.

                    Besides, a few hundred thousand bucks here and there, so what? 20% IRR over 20 years, for 7 million dollar CAPEX, give or take a percent here and there, still sucks air. Would you do that with your IRA?

                    Would you borrow 7 million dollars for 20
                    % IRR over 20 years?

                    I didn’t think so. Nobody can do that and come out whole on the other end.

                    Mike

                  • Nick, I don’t think you understand how hedging works. A producer can only hedge, economically, at a price at or below the current price. If oil is $55 a barrel, then you cannot hedge, with puts, at a higher price unless you pay any intrinsic value the put would have.

                    Of course the futures have a set price, according to the price at the moment, which, if oil is in contango, you can get a slightly price than it is right now. But then you are locked in. If the price goes highe than your contract price, you still must sell at the contract price. But you are always bound by the price of oil today.

                  • Nick S says:

                    Some of what I am saying is being mischaracterized.

                    Just as a reminder, the burden of proof is not on me, because I am not the one staking my reputation on peak oil. I am simply expressing some skepticism about some of the key premises.

                    Mike says I have “embraced” the shale industry even at $45. I don’t think that is true. I am fully aware that most shale wells have very thin IRRs at these price points.

                    Let me restate some of my arguments:

                    I stated that I continue to expect production growth from the US, Canada and Iraq.

                    I have stated that I expect 2015 production growth from the US on lower capex. I gave my reasons – 1. 2014 exit production was significantly higher than 2014 average production 2. Move to sweet spots 3. Improved drilling efficiency (for the same capex, more wells and lateral feet are being drilled)

                    Before the $50 decline, I would argue the shale was on track for another year of massive growth as the Permian Basin continues to ramp up significantly.

                    So far, I have been labeled a blind shale supporter and have been told my drilling assumptions are wrong.

                    So am I wrong that drill times are shorter and laterals longer? Am I wrong that effective lateral per $ of capex has improved significantly? I provided some evidence from a Carrizo analyst day slide showing that cost per lateral foot has gone from $400+ in 2011 to $290 at year end. And this is before any pricing concessions from service companies. This was just based on improved operating performance.

                    My general point is that most companies are cutting capex by 30-40%, but even with a 30% reduction in capex, the companies will be able to drill more wells in 2015 for each dollar of capex, so net net a 30-40% reduction of capex does not translate into a production decline.

                    Here is a 4th reason. Public companies feel pressured to show production growth, so even if a portion of those wells is not economic, they will still drill it.

                    I have also argued that any price increase will reopen the shale floodgate. 2015 was going to be another year of large shale growth until the price decline. The Permian Basin was just starting to really ramp up, especially the Delaware Basin, which I don’t see too much discussion of here.

                    Based on what I am seeing, I see significantly slowed growth, resulting from price, with the potential for a significant ramp in growth the moment prices increase.

                    Ron, I understand hedging. Most companies will put in a costless collar (sell calls and buy puts) to offset the put premium you mention, or do a swap with a specific price. I think my point remains that shale is an extremely flexible short duration form of drilling that can be hedged with rates of return that can be locked in (assuming the right price). This lends itself to debt financing. My point is more on the thought that shale co’s will never get financing again even if oil prices go back up. This is not true. The capital markets will continue to fund hedged shale co’s in proven plays.

                  • Nick S says:

                    Mike,

                    Can I please add you to my rolodex? I would love to be able to pick your brain via email occasionally? Can I get your email, or could Ron perhaps introduce us?

                    I appreciate the education on these topics.

                    Best,
                    Nick

  33. Anonymous says:

    I agree with Nick S. Between “peak oil is now” and “peak oil is dead
    ” there’s a lot of middle ground.

    • Anonymous says:

      quote from the above article:

      “As for “easy oil,” that’s relative. In 1947 when the first commercial oil well was built out of the sight of land in the Gulf of Mexico it was an engineering marvel and in all of 18 feet of water.”

    • Chris says:

      If peak oil is now, then peak oil is dead… Peak oil is not the end of the world. There are a lot of “renewable” resources to develop. I am confident for the future but the transition after peak oil (and gas later) will depend on the decline rate and the possible adaptation of the Human Society. I guess that the next 10-15 years will be necessary to change the world of energy.

      • The next 100 years. And if we don’t do it right you may get to meet Mad Max.

        • Wake says:

          But as you do not believe in renewables I am not sure what you see changing to? Coal then nuclear?

          And why 100 years? do you think peak/plateau lasts 20-30 years? I have seen you reference a longer view many times, but I am not sure you have fully expounded your position, I’m curious

          • Renewables aren’t a religion. Thus we really don’t have to believe in them. Renewables aren’t ready for prime time. Because oil takes a long time to run out after peak, and we will be scrambling trying to renewables work, the transition should take 100 years or so. By 2115 we should have ended the major wars and the survivors should be adapted. I think. Maybe.

            • Old farmer mac says:

              ”By 2115 we should have ended the major wars and the survivors should be adapted. I think. Maybe.”

              Fernando I begin to see that we have reached MANY conclusions in common. Your remarks about diverting some effort from war making capacity to energy capture capacity are especially right down my alley.

            • Techsan says:

              So renewables aren’t ready for prime time?

              Last night the electric grid went down for over 2 hours, during prime time. Our solar/battery system took over seamlessly, so that our house was the only one with power in several square miles of city that were totally dark.

              • Caelan MacIntyre says:

                That’s anecdotal. Works for you for now via a complex multilayered state-industrial system.

  34. Futilitist says:

    Ron,

    You are, of course, correct that accurately predicting the exact behaviour of complex non-linear systems is basically impossible. But it does seem pretty clear, now that oil production is on the verge of irreversible decline, world economic growth must finally come to a halt. Just the recent slowing of growth of energy supplies has already caused a great deal of economic damage. The entire system is getting much more fragile and unstable with each passing day. Given these conditions, it seems logical to expect that the onset of collapse should be fairly soon. In other words, I think there is enough evidence available to do better than a “wild assed guess”. And since the verdict is finally in on the timing of the oil peak, what else is there to talk about?

    • Caelan MacIntyre says:

      “…it seems logical to expect that the onset of collapse should be fairly soon…” ~ Futilitist

      OMG Futilitist is back! ‘u^

      Some might argue that collapse has already begun, only fractally. So I guess it’s just wait ’till peak oil really kicks in…

  35. Cave Bio says:

    Am I the only one here that is stunned by the current price of natural gas?

    http://data.cnbc.com/quotes/%40NG.1

    • Boomer II says:

      That’s what is the real threat to coal companies. With natural gas being so cheap (and cleaner) it makes it more appealing than coal-fired plants.

    • No you are not the only one, I have been stunned by it for months now. Gas drillers said they were losing their shirts a year ago. Now they are losing even more I suppose. I just don’t understand how this can continue. Why is anyone still drilling for gas?

      • Game of chicken.

        • Paulo says:

          Interesting Gas development in BC (These are very large ships)

          Headline: COMMISSIONER APPROVES PLANS TO CONVERT
          SPIRIT CLASS VESSELS TO LIQUEFIED NATURAL GAS (LNG) TO REALIZE MAJOR SAVINGS
          BC Ferries will be operating five vessels on LNG

          site:
          http://www.bcferries.com/bcferries/faces/attachments?id=877833

          • Toolpush says:

            Paulo,

            Due to the new pollution laws coming in for shipping in Europe and Canada with in a certain range of their respective coast lines, shipping affected shipping either has to burn MGO, marine gasoil, (expensive) install scrubber units if burning Heavy Fuel oil, or as is becoming popular , burn LNG. All of the large ship engine builders either have or are working on Natural gas engines.
            This is a good site to keep up with what is going on with Natural gas use in the heavy engine market.
            hhpinsight.com

        • coffeeguyzz says:

          In the Marcellus region, there are over 1,000 wells that are drilled, completed, fractured, tested and shut in awaiting takeaway pipelines. In the past three months, there have been a few pipelines built, reversed, or close to being made operational. Several more fairly short pipelines (100 to 400 miles long) are in the early stages of planning to supply the northeast corridor. The pipeline companies require long term supply commitments from E&P companies before they embark upon their expensive build out of takeaway capacity.
          At a depth of 5/6k feet, and laterals under a mile in length, Marcellus operators have relatively low development costs compared to other shale areas.

      • Cave Bio says:

        Why is anyone still drilling for gas?

        And please correct me if I am wrong, but given shale gas depletion rates and the increase in natural gas consumption for electricity and heating and industry etc., there must be a significant amount of drilling going on to keep up with all of that.

        • Jeffrey J. Brown says:

          An excerpt from my comments up the thread:

          High Decline Rate in Existing US Natural Gas Production. Citi Research puts the underlying gross decline rate in existing gas production in the US at about 24%/year. At a 24%/year gross decline rate, in order to just maintain existing US gas production for four years, the US would have to put on line the productive equivalent of about 100% of current gas production over the next four years. As an example of why this is a reasonable estimate, the observed year over year decline in Louisiana’s marketed natural gas production from 2012 to 2013 was 20%; this was the net decline, after new wells were added. The gross decline rate from existing Louisiana wells in 2012 would be even higher.

          Or, at a gross decline rate of about 24%/year from existing wells, in the US the industry has to put on line roughly the productive equivalent of the current gas production from the Marcellus Play, every single year, just to offset declines from existing production.

          • Cave Bio says:

            As always excellent information Jeff. And it is excellent information that is exactly the point!!–high depletion rates combined with what I understand to be an increase in the use of natural gas over the past decade or so. So the question remains, what is going on with price?

            Best,
            Tom

            • Jeffrey J. Brown says:

              A hangover from the temporary–and unsustainable–surge of gas production coming from companies drilling in liquids rich gas plays.

    • Toolpush says:

      Cave Bio,

      Maybe someone didn’t tell them it is winter?

  36. ezrydermike says:

    shout out from Mr. Heinberg…

    “Ironically, just as the rate of the world’s liquid fuels production may be about to crest the curve, we’re hearing that warnings of peak oil were wrongheaded all along. The world is in the midst of a supply glut and prices are declining, tireless resource optimists remind us. Surely this disproves those pessimistic prophets of peril! However, as long-time peakist commentator Ron Patterson notes:

    Peak oil will be the point in time when more oil is produced than has ever been produced in the history of the world, or ever will be in the future of the world. It is far more likely that this period will be thought of as a time of an oil glut rather than a time of an oil shortage.”

    http://www.postcarbon.org/after-peak/

  37. Jayden Milward says:

    Peak oil is most certainly not happening now, and won’t for a few decades at least, if not centuries,:

    Technological development in exploration and extraction have been greatly accelerating in the last few decades and the size of the worlds oil reserves is continually increasing as a result. We are seeing an age of rapid access to new areas (Offshore, Africa, Arctic), new types of oil that were previously inaccessible (oil-sands, shale oil, and other types of unconventional and heavy oils), and well reclamation (extracting from previously unproductive or dry wells).

    As a result of technology, oil production is nowhere close to maturing, and the worlds oil reserves are increasing not decreasing. I don’t see how we can talk about hitting peak oil in the near future (decades) when year after year there is more oil available than previous years, and the rate of growth is accelerating. And no it won’t last forever, but exploration and extraction technologies are nowhere near saturated, it’s increasingly clear that there is a lot more oil to be found (unproven and theoretical reserves are staggering in size this very moment, for example).

    Keep in mind also that as our usage of oil becomes more efficient, peak oil only gets pushed further ahead. I mean what happens when oil consumption plateaus in a few decades, while supplies keep increasing? All in all, we are probably talking about a timeline of centuries, not decades. The world wont need oil long before we are close to running out.

    • Chris says:

      Only time will tell, but the assumption of Ron seems correct.
      For your information, the reserves are not growing, reserves are only decreasing as we extract more more oil than the current oil production rate.
      URR is possibly growing with the price of oil, but it is not certain that people can afford oil at current $200. So unless you have very lost cost labour and “free” energy to extract oil, I don’t see oil production increasing (much) in the future. At the contrary, you will have increasing prices and lower production. If we don’t use oil for transportation and heating house, oil price can be multiplied by a factor 10 and while remaining affordable (for example in plastic production).

    • Mikeb says:

      “Peak oil is most certainly not happening now, and won’t for a few decades at least, if not centuries,:”

      I’ve expressed some skepticism towards Ron’s forecast here: but this statement takes the cake for inanity.

      You can’t possibly know this.

    • Peak oil is most certainly not happening now, and won’t for a few decades at least, if not centuries,

      Decades at least, if not centuries. Wow, we have a wild eyed optimistic cornucopian here. And he thinks the world’s oil reserves are increasing. No, world oil reserves are not increasing. We are pumping the oil out several million times the rate nature is creating more. I know, he is talking about known reserves but that is just the kind of Freudian slip cornucopians make all the time.

      How does a guy like this explain why oil has peaked outside the US and Canada. After all we are over 1.6 million barrels per day below the peak outside US and Canada. And even the IEA is expecting further declines from these guys this year. And they are correct. By the end of 2015 the world outside the US and Canada will be down well over 2 million barrels per day below their peak of four years ago. And that downward trend will continue.

      • Anon says:

        First time poster. Appreciate all the work you do, Ron.

        I hate to take a “middle-of-the-road” stance here, but I think it is the correct one.

        There are a few issues at stake here:

        1) How much CO2 can be burn before we create run-away warming that threatens the ecology necessary for industrial civilization (and most of the population) to live? The answer: a lot less than the total amount of oil we could extract if we really wanted to. Probably less than the total amount of proven reserves, too.

        2) If we disregard the first problem and go full steam ahead, how much capital will extraction eat up? What percentage of national and the global economy can be dedicated to energy extraction before it undergoes massive contraction? This, if I recall correctly, the main hypothesis of LTG under the BAU scenario.

        3) Can we transition, with some form or another, to a more sustainable future? At some point, demographic AND economic growth much approach or reach zero. It’s simple physics. Can capitalism survive such a transition? Should it? Will the entrenched powers that be allow us to transition?

        4) Will the next economic crisis, either as a symptom or cause of these other issues, knock us down for the count?

        We’re in quite a bind, aren’t we?

        • Statement number one is highly questionable. When you think of this you should treat the fossil fuels separately. Also, that statement is based on a climate response value which may be too high. And then there’s the rather fuzzy 2 degree limit which doesn’t seem to have a sound basis. For example, right now we are doing much better than in 1850. The climate is better.

          I’ve read with amusement this statement, which seems to have come from the UN? Poor Christiana, she is in way over her head.

          • Just in case, so I don’t get lectured as if I were uneducated, here’s a thesis you may wish to read

            http://dare.ubvu.vu.nl/handle/1871/52184

            • Anon says:

              Well, yes, I meant to include oil, natural gas, and coal reserves. Burning up all proven reserves is enough to doom us; or at the very least, the risk is certainly too high to go full steam ahead. Fossil fuel companies will at some point need to write them off.

              I find your statement that we are doing better than we did in 1850 rather dubious. By what measures is the climate doing better?

              The 2 degrees limit is an arbitrary one, and a conservative estimate of where we’ll be at century’s end. The world is already experiencing weather events that were statistically much less likely than 50 or 100 years ago.

              Unfortunately, you come off as a bit of a denier. To be frank, I don’t care what individual theses you drop. Once the global scientific community shifts in your direction, I’ll have no problem believing you. Until then, I’m of the mind that climate change represents an existential threat for many nations and a large portion of humanity. The era of fossil fuels will and must come to an end. Whether that necessarily involves a return to a pre-industrial life or not is an open question.

              • By what measure are we doing better? It’s warmer. It’s also a bit more humid. Plants grow better.

                You have an opinion, I have a different opinion. You prefer to insult people with the denier tag. I happen to think I’m more educated and know more about the subject than you do. So we should leave it at that.

    • SRSroccoj says:

      Jayden,

      I would imagine if we rendered the fat from dead people instead of burying them…. then refine it into a pleasant smelling biodiesel, we could push back PEAK OIL for another century on top of the two centuries you figured.

      Steve

  38. Stephen says:

    Why couldn’t places like Libya and Iraq increase production?

    • They can, and will. But not soon enough or by enough to affect the peaking of world oil production over the 2014-2015 time period.

    • Jeffrey J. Brown says:

      It’s when, not if, that the contributions from new wells can no longer offset the declines from declining wells, and the available data seem to be consistent with a peak in actual global crude oil production (45 and lower API gravity crude oil) in 2005, while global natural gas production and associated liquids (condensate and NGL) have so far continued to increase.

  39. Political Economist says:

    Electricity generating capacity is different from electricity generation. Electricity generation measures the amount of electric energy that is generated by power plants or other power-generating facilities. Electricity generating capacity is not a measure of energy. It is a measure of the production capacity of electric power plants.

    World electricity generation is often measured by terawatt-hours (billion kilowatt-hours). By comparison, electricity generating capacity is often measured by gigawatts (million kilowatts). One gigawatt of generating capacity can generate one gigawatt-hour (one million kilowatt-hour) of electricity during one hour of operation. If one gigawatt of generating capacity operates all year round (100% capacity utilization), then theoretically it can generate 8,760 gigawatt-hours or 8.76 terawatt-hours of electricity a year (24 * 365 = 8760).

    As of 2012, the world’s total electricity generating capacity stood at 5,550 gigawatts (GW), including 3,606 GW of fossil fuels power capacity, 373 GW of nuclear power power capacity, 1,111 GW of hydro power capacity (including 132 GW of pumped storage), and 460 GW of non-hydro renewable power capacity.

    If 5,550 gigawatts operates all year round, theoretically, it can generate 48,618 terawatt-hours of electricity. In fact, the world electricity generation in 2012 was 21,532 terawatt-hours. Thus, in 2012, the world average capacity utilization rate in the elctric power sector was 44 percent (21532/48518 = 0.443).

    Attached graphs shows the composition of world electricity generating capacity from 1980 to 2012. The fossil fuels power plants accounted for 69 percent of the world’s electricity generating capacity in 1980. By 1987, the fossil fuels share declined to 64 percent. From 1987 to 1999, the fossil fuels share stabilized around 64-65 percent. By 2007, the fossil fuels share rose to 67 percent. The fossil fuels share has declined slowly since then and stood at 65 percent by 2012.

    The nuclear share rose from 7 percent in 1980 to 12 percent in 1988. By 2012, the nuclear share fell back to less than 7 percent.

    The hydro share was about 24 percent in the early 1980s. By 2012, it declined to 20 percent.

    The non-hydro renewable share of world electricity generating capacity did not exceed 1 percent until 1992. It exceeded 2 percent in 2002, 3 percent in 2006, 4 percent in 2008, and 7 percent in 2011. In 2012, the non-hydro renewable share stood at 8 percent.

  40. Political Economist says:

    In 2012, the world’s total non-hydro electricity generating capacity stood at 460 gigawatts (GW), including 10 GW of geothermal, 87 GW of biomass and waste, 268 GW of wind, and 94 GW of solar, tides, and waves.

    The attached graph shows the share of geothermal, biomass, wind, and solar (including tides and waves) in the world’s total non-hydro renewable electricity generating capacity from 2005 to 2012. The US Energy Information Administration provides data for the total non-hydro renewable generating capacity since 1980. But for geothermal, biomass, wind, and solar generating capacity, EIA provides data only for the years starting in 2005.

    From 2005 to 2012, the geothermal share in the total non-hydro renewable generating capacity declined from 7 percent to 2 percent, the biomass share declined from 39 percent to 19 percent, the wind share increased from 50 percent to 58 percent, and the solar share increased from 4 percent to 20 percent. Note that the wind and solar share of generating capacity is much higher than their share of generation.

  41. Political Economist says:

    Capacity utilization rate is an important concept for understanding the performance of electric power sector. As intermittent renewable power source account for a growing proportion of the world’s electricity generation, one concern is that the renewables may bring down the world electric power sector’s average capacity utilization rate, underming the sector’s overall performance.

    The capacity utilization rate is calculated as follows:

    Capacity Utilization Rate = Annual Electricity Generation / (Electricity Generating Capacity * 8760 Hours)

    The attached graph shows the world electric power sector’s average capacity utilization rates from 1980 to 2012. From 1980 to 2012, the world electric power sector’s capacity utilization rate generally fluctuated between 44 percent and 48 percent. However, since 2007, it has tended to fall rapidly.

    • Shuffling Along says:

      The right-hand last plot point of this graph is no lower than the lowest point in the rest of the graph.

      Was there a big issue with electric utilities in the 1981-1982 time frame?

      It would be interesting to see this plot through the end of 2014, and also extending back to at least 1960 if not further.

      My first thought was that operating the electric industry at considerably less than full capacity might provide system resilience, although I would qualify that guess by also requirement significant spare capacity in transmission line capacity as well.

      The other part of my brain locked onto the idea that electric utilities would not make as much profit while operating at lower capacity factors…even running at a loss if the capacity factor was too low.

      My next thoughts were: Fossil fuels are being depleted…barring a large scale resurgence of nuclear fission power and/or a breakthrough in nuclear fusion generation technology, the increasing share of non-fossil-fuel, non-nuclear electricity generation sources will continue to grow, and this will be the way of things, and we had better engineer our systems to do the best we can with that situation.

      The idea of power companies being private and profit centers may prove to be a fleeting illusion.

      Profit is a luxury…survival is the imperative.

      • Political Economist says:

        There was a recession in 1982

      • Political Economist says:

        And we are all constrained by data availability. EIA only provides international electricity data from 1980 onwards and the last available data point is 2012. Though they have US electricity data starting in 1949 and updated to 2013.

      • “and we had better engineer our systems to do the best we can with that situation”

        “Gino, two specials, the super giant batteries, no cheese!”

  42. Skeboo says:

    Hi Ron,

    Thanks a for all your posts…

    I heard you claim many times that KSA was producing flat out. Still, the EIA puts its spare capacity at 3-4mbd (http://www.iea.org/ieaenergy/issue7/effective-opec-spare-capacity.html). What is the reason for them putting it so high? Would you know?

    Skeboo.

    • Skeboo, I have no idea why the IEA puts that information out but I would bet they really believe it. After all they also seem to believe that KSA has 264 billion barrels of reserves. But there is one difference in the two, that is Saudi reserves and Saudi spare capacity. That is they are taking Saudi’s word for how many barrels of reserves they have, but the IEA calculates spare capacity themselves. And, from your link, they say 90% of the 4.6 million barrels a day of spare capacity that OPEC has is in Saudi Arabia.

      But that figure is totally imaginary, it was all created with a pencil. And every once in awhile an ARAMCO official slips up and lets the cat out of the bag.

      U.S. Reliance on Oil From Saudi Arabia Is Growing Again

      This is a two page document. You will have to click to page two where you will find the below quote at the very bottom of the page, bold mine:

      Saudi oil experts said the kingdom was merely following the markets.

      “This is strictly, totally business,” said Sadad Al Husseini, a former executive at Saudi Aramco, the state oil company. “Saudi production is flat out. Where you send it is a matter of where you make the best profit.”

      Flat out, that’s what every OPEC nation is doing. The idea that Saudi has 4 million barrels per day of spare capacity is absurd. Only a real fool would believe that. But then perhaps at the IEA…

      • Ron I think the EIA may be using the plant capacity and neglecting the well capacity declines. The report linked above is pretty slim, it doesn’t deal with the time span they could hold a higher rate. I can see them pushing things up 1 mmbopd for say six months. Simultaneously they could move rigs to drill on an emergency basis. So maybe they can shore up gaps by drilling abut more. Internal field storage, re completions and other things could stretch it out. After two years or so they would need to start drilling really marginal spots. It could be one hell of a race. But it’s not really marginal capacity as such. I think their total 100 % efficiency crude and condensate and syncrudes maybe 40 million. But that 10o % efficiency is unreal.

        • Fernando, first we need to define just who it is saying that OPEC and Saudi has all that spare capacity. It is the IEA, not the EIA. Skeboo incorrectly stated it was the EIA when his link was from the IEA.

          In its Medium-Term Oil Market Report 2014, the IEA calculated OPEC implied spare crude oil production capacity at 4.56 million barrels per day (mb/d) in 2013, about 90% of it in Saudi Arabia, rising by 1.23 mb/d on paper through 2016 before plateauing at just above 6 mb/d to 2019. The average over the five years from 2013 to 2019 is estimated at 5.6 mb/d.

          And here is what the EIA states: WHAT DRIVES CRUDE OIL PRICES?

          EIA defines spare capacity as the volume of production that can be brought on within 30 days and sustained for at least 90 days. Saudi Arabia, the largest oil producer within OPEC and the world’s largest oil exporter, historically has had the greatest spare capacity. Saudi Arabia has usually kept more than 1.5 – 2 million barrels per day of spare capacity on hand for market management.

          As you can see the IEA is far more optimistic than the EIA. And it is my opinion that the EIA is way too optimistic. OPEC has, at times in the past, had spare capacity. After they cut production, as they did in late 2008, 2009 and 2010 they had quite a bit of spare capacity. But beginning early in 2011 until today, they have no spare capacity, they are producing flat out.

          • That “spare capacity” is chicken feed. If that’s for real then the strategic reserve may need to be tapped as they prepare 500 drilling pads in the light tight oil target regions.

  43. islandboy says:

    I have wanted to post a link to this op ed piece in my local newspaper since it came out but have been making the fatal error of trying to read through all the comments before I post.
    Biden doesn’t get it”

    “Last Monday, US Vice-President Joe Biden met with Caribbean political leaders and energy experts at an energy summit in Washington. I wonder if VP Biden thought he was teaching Sunday school………. SNIP

    Has it occurred to VP Biden that one of the reasons the Jamaican Government will avoid taking funding from the USA is because they want to avoid both environmental scrutiny and the safeguards against corruption this will imply?”

    Who can guess which comment is mine? In my comment, I linked to another story that I also commented on and this is the actually the reason for my post. A comment to this story by one “mojo6411” and one to the earlier story by one “guest218” simply drove me up the walll. Both of these comments (could be the same individual) were spouting what most readers of this blog would consider arrant nonsense. I have submitted responses to both of these posts which have yet to be published.

    One of them (mojo6411) claims that the US is gearing up for major oil and gas exports and my response has pointed out that according to data I downloaded from the EIA web site, the US has only been a net exporter of crude oil for four months since 1920 and currently imports about 7 million Barrels a day or more than a third of it’s consumption. I had to point out to guest218 that his statement that “we are all going to electric or hydrogen cars” is not backed up by sales figures for EVs, with plugings making up a measly 0.7% of the 17 milion vehicles sold in the US in 2014.

    The point is that there are these folks who are buying into a narrative that flies in the face of the facts as most of us participants on this blog know them. I am just amazed by the amount of people who don’t know and aparently don’t want to know about Peak Oil or any data that suggest it is possible, much less imminent!

    Alan from the islands

  44. Boomer II says:

    This article suggests that younger generations are less interested in owning cars than previous generations.

    http://www.citylab.com/commute/2015/02/urbanization-and-smartphones-are-killing-car-culture/385093/?utm_source=SFFB

  45. Stephen says:

    Hi,

    Where is the evidence that Saudi is out of spare capacity? I have read they still have some.

    Also, oil sands projects will continue to come online even at this oil price, since they have already spent so much money on them. So how will production in Canada definitely drop?

    And if we are at peak oil, why won’t prices go higher than $70-$80?

    Thanks for your feedback.

    • Stephen, a former Aramco official said Saudi is producing flat out. I posted this link above but I will post it here again for your benefit. This is the link to page 2 of the article and below it is the Aramco official’s quote, bold mine:

      U.S. Reliance on Oil From Saudi Arabia Is Growing Again

      Saudi oil experts said the kingdom was merely following the markets.

      “This is strictly, totally business,” said Sadad Al Husseini, a former executive at Saudi Aramco, the state oil company. “Saudi production is flat out. Where you send it is a matter of where you make the best profit.”

      Of course prices will go above $70-$80. It is just my estimate that they won’t go above that level this year. And no one realizes we are at peak oil, but the appearance of a glut is exactly what you would expect to see when we are producing more oil than was ever produced in the history of the world.

    • Jeffrey J. Brown says:

      Where is the evidence that Saudi is out of spare capacity?

      One can certainly review the Saudi net export response to rising oil prices.

      As annual Brent crude oil prices rose from $25 in 2002 to $55 in 2005 (approximately doubling), Saudi net exports increased from 7.1 mbpd in 2002 to 9.1 mbpd in 2005 (total petroleum liquids + other liquids, EIA).

      Saudi net exports have been below the 2005 annual rate of 9.1 mbpd for eight straight years, through 2013 (a pattern which almost certainly continued in 2014).

      Note that Brent averaged $110 for 2011 to 2013 inclusive (which was exactly twice the 2005 annual price), and Saudi net exports averaged 8.7 mbpd for 2011 to 2013.

      I estimate, based on the 2005 to 2013 rate of decline in their ECI Ratio (ratio of production to consumption), that the Saudis have already shipped about 40% of their post-2005 CNE (Cumulative Net Exports).

      So how will production in Canada definitely drop?

      Of course, it’s when, not if. But a regional or global production peak does not mean that all sources of oil have stopped increasing. It means that that contributions from new wells can no longer offset the declines from existing wells.

      Based on the IEA estimate for the gross underlying decline rate from existing wells worldwide (9%/year), in order to simply maintain current global C+C production for 11 years, the global industry has to put on line the productive equivalent of every currently producing oil well in the world over the next 11 years.

      • Stephen says:

        I have read the IEA saying the decline rate for all producing fields is more like 4.5% rather than 9%. I just saw BP’s CEO say he thinks oil can stay in this $40-$60 range for 3 years.

        • Jeffrey J. Brown says:

          Here is the original source for the 9% number, the Reuters column by Jack Kemp:

          Output from existing fields around the world would decline around 9 percent per year in the absence of new drilling or other capital expenditure to increase recovery, according to the International Energy Agency’s World Energy Outlook 2013.

          The IEA’s average 9 percent decline rate was calculated by analysing output from more than 1,600 conventional oilfields around the globe. Shale wells, however, exhibit much faster decline rates.

          Link:
          http://in.reuters.com/article/2015/01/14/us-oil-shale-prices-kemp-idUSKBN0KN07C20150114

          I haven’t looked up the 2013 World Energy Outlook, but Jack Kemp seems to be a pretty careful reporter.

          Regarding oil price projections, the Economist Magazine ran a cover story in 1999 predicting an indefinite period of $5 oil. Yergin, in 2004, predicted that we would soon be back to a long term index price of $38.

          • 9% is significant. Most of the historical numbers have been in the ranged of half this value.

            The only way to maintain a plateau in the face of declining reserves is by ratcheting up the extraction rate. It would make sense that this number is increasing.

            This is described in more detail by the oil shock model — the closest we have to a depletion theory based on a physical process.

    • Jeffrey J. Brown says:

      An interesting admission about Saudi net oil exports, from the Saudi Aramco CEO:

      http://www.reuters.com/article/2015/01/27/saudi-oil-aramco-idUSL6N0V60Z320150127

      “Saudi Arabia has a policy, the policy is set by the government through the Ministry of Petroleum, and they have said that Saudi Arabia will not single handedly balance the market,” he (Khalid al-Falih) said.

      “The math will tell you that our exports… are gradually declining. So the reason for the imbalance in the market absolutely has nothing to do with Saudi Arabia.”

      A chart showing normalized production and net export related values for Saudi Arabia follows, for 2005 to 2012.

      2013 Saudi Data, as a percentage of 2005 values (there were some minor revisions to prior years):

      Production: 104%
      Net Exports: 95%
      ECI Ratio: 70%
      Est. Remaining Post-2005 CNE: 60%
      (See chart for definitions)

      • Stephen says:

        From that same Reuters article on Saudi, this quote says they do have significant spare capacity.

        “Falih said production is currently at 9.8 million bpd while production capacity is 12 million bpd.”

        • Jeffrey J. Brown says:

          Actual exported volumes speak louder than words.

          The Saudis certainly chose to increase their net oil exports from 7.1 mbpd in 2002 to 9.1 mbpd in 2005, as annual oil prices doubled from $25 in 2002 to $55 in 2005.

          They either chose to reduce their net exports to 8.7 mbpd in the 2011 to 2013 time frame, as annual Brent oil prices averaged $110 (twice the 2005 level), or they were unable to export more oil, at least not without damaging their reservoirs, as annual oil prices averaged twice the 2005 level.

          Take your pick, but my bet is on Door #2, and I have a hard time believing that an average Brent price of $110 for three years reflected a lack of demand for more Saudi oil exports.

          • Stephen says:

            I think it is plausible that they wanted to keep the price artificially high and maintain their reserves. Exports may have dropped simply because they were consuming more. Where am I wrong?

            • Jeffrey J. Brown says:

              Exports may have dropped simply because they were consuming more.

              That’s a good point. I wonder what happens to net oil exports, given an (inevitable) production decline and flat to increasing domestic consumption?

              In any case, as noted above, you can choose Door #1, they chose to reduce their net oil exports, relative to 2005, or Door #2, they were unable to maintain the 2005 net export rate, at least not without damaging their reservoirs–as annual Brent crude oil prices doubled from $55 in 2005 to the $110 range in the 2011 to 2013 time frame.

          • Synapsid says:

            Jeffrey,

            It’s worth recalling that Saudi Aramco has entered into at least 5 joint ventures for refining and two for combined refining and petrochemical production. These have capacities on the order of 400 000 barrels of oil per day, and all of that is oil that otherwise could have been exported.

            Was it Yanbu that just recently began producing distillate? They will soon produce gasoline as well.

            • Jeffrey J. Brown says:

              Here’s my “Refinery Land” model:

              I’ve used the following example to illustrate the differences between gross and net exports:

              Production Land (P) has 2.0 mbpd of production, but no refining capacity.  Refinery Land (R) has 2.0 mbpd of refining capacity, but no production.

              Ignoring refinery gains and other minor issues, P has consumption of 1.0 mbpd, and R has consumption of 1.0 mbpd. 

              P’s gross exports to R are 2.0 mbpd. R’s gross imports from P are 2.0 mbpd. 

              R refines 2.0 mbpd, consumes 1.0 mbpd, and exports 1.0 mbpd of refined product to P. 

              P’s net exports are production (2.0) less consumption (1.0) = +1.0 mbpd. 

              R’s net exports (actually net imports) are production (zero) less consumption (1.0) = -1.0 mbpd.

              Alternatively, you get the same answer if you define net exports as gross exports less gross imports.

    • Dennis Coyne says:

      Hi Stephen,

      If lower prices cause US and Canadian output to stop increasing and the rest of the world’s C+C output drops, then we have reached peak oil. The increases in World output since 2009 are mostly due to increases in US and Canadian output, Ron believes any further increases in US and Canadian output will be smaller than decreases in output everywhere else in the World. If he is correct we will be at the peak. I think we may see small increases (1 MMb/d or less) or flat output until 2017+/- 1, but time will tell, a lot depends on oil prices and those are impossible to predict.

      The current Dec 2015 option for Brent crude is $64/b and the March 2015 Brent option is at $56/b.
      The Dec 2021 Brent option is at $81/b, this is only a 4% annual rise in nominal oil prices from 2016 to 2021. If 3% annual inflation is assumed that would be a 1% annual increase in real oil prices,which is far too low. I think real oil prices(in 2014$) will be back to $90/b by Dec 2016 and will be at least $115/b by Dec 2021, and may reach $170/b by 2031, though economic recession may limit the oil price to $150/b in 2028.

  46. Mike, Sydney says:

    Ron, you have “arrived”! Richard Heinberg is quoting you. This site has become the gravitational center of current peak oil commentary. Thanks for your hard work and the generosity of spirit, allowing uncensored commentary.

    • Political Economist says:

      Exactly! Since the death of The Oil Drum, I have relied on this site to keep me updated on peak oil.

      • shallow sand says:

        Lucas Energy, ticker symbol LEI, a small public co with EFS and Austin Chalk production, defaulted on its debt today.

        • Mike says:

          Shallow, Lucas was navel lint; they had less production than you do. Them going belly up is just an example of poor business practices and should not be considered shale oil road kill. That’s coming.

          Poor business; kind of like drilling 1000 Marcellus wells, with over 100 million dollars of borrowed money and not having a market for the gas, which by the way is less than 2 bucks an MCF, if and when they can ever sell it. Would you do that with your money?

          Me neither.

          “Stupid is as stupid does,” Forrest’s mom.

          Mike

          • shallow sand says:

            Ok. Not familiar with them. Just passing on a headline I read and saw the were in Eagle Ford.

            • shallow sand says:

              If oil jumps another 15 bucks then stays there would be interesting to see if rig counts in shake continue to fall.

  47. Political Economist says:

    Back to the electric world, the attached graph compares the observed capacity utilization rates of electric power plants based on fossil fuels, nuclear, hydro, and non-hydro renewables. Let me emphasize, these are observed capacity utilization rates not theoretical capacity utilization rates or utilization rates based on technical design. For example, many wind power producers claim their equipment may have a capacity utilization rate of 35 percent or higher. But in actual field performance, it may be 25 percent or less.

    In the 1980s and 1990s, the fossil fuels power plants had average capacity utilization rates mostly between 44 and 46 percent. From 2000 to 2012, the fossil fuels power plant capacity utilization rates fluctuated between 46 and 48 percent. In 2012, the fossil fuels power plants had an average capacity utilization rate just under 46 percent.

    The nulear power plant capacity utilization rate rose from 58 percent in 1980 to 80 percent in 2000. It stayed around 80 percent before falling sharply in 2011 and 2012. By 2012, the world’s nuclear power plants had an average capacity utilization rate of 72 percent.

    In the 1980s and 1990s, the hydro electric power plants (including pumped storage) had capacity utilization rates between 38 and 40 percent. Since 2000, the hydro capacity utilization rates have fluctuated between 36 and 38 percent. In 2012, the world’s hydro electric power plants had an average capacity utilization rate of 37 percent.

    In the 1980s, the non-hydro renewable power plants had very high capacity utilization rates. This is partly due to the dominance of biomass and geothermal in the 1980s and partly probably just because of data error. From 1990 to 1994, the non-hydro renewable power plants had average capacity utilization rates around 60 percent. Since then, the non-hydro renewable capacity utilization rates have declined steadily. But 2012, it fell to 27 percent.

    The declining capacity utilization rates of non-hydro renewable electric power plants reflected the growing share of wind and solar (two power sources with very low capacity utilization rates).

  48. Political Economist says:

    The attached graph compares the average capacity utilization rates for geothermal, biomass, wind, and solar power plants for the period 2005-2012. For these power sources, EIA only provides capacity data for the years after 2005.

    Geothermal powers plants have had capacity utilization rates consistenly around 75 percent. Biomass power plants’ average capacity utilization rate declined from 56 percent in 2005 to 50 percent in 2012.

    Wind power plants’ average capacity utilization rate rose from 20 percent in 2005 to 23 percent in 2011 but fell back to 22 percent in 2012.

    Solar power plants’ average capacity utilization rate stayed around 10 percent from 2005 to 2011 but rose to just under 12 percent in 2012.

    Overall, the wind and solar capacity utilization rates are far lower than those of conventional power plants. The very low capacity utilization rates of wind and solar power may become a singificant constraint on their future growth.

    • islandboy says:

      PE, I’m tryiing to figure out what your angle is with all this. As regards to your conclusion that, ” The very low capacity utilization rates of wind and solar power may become a singificant constraint on their future growth”, pray tell what is going to be used to generate electricity when fossil fuels become scarce and/or much more expensive?

      I would hazard a guess that, the capacity factors of the fossil fuel powered generating plants in my neck of the wods are going to drop precipitously when we can no longer afford the fuel to run them! If you are saying that the low capacity factors of the total installed plant are going to drive up electricity costs, maybe that’s just one of the effects of Peak Oil that we’ll just have to live with.

      Later today, I take delivery of a grid tied inverter for solar PV that, has the ability to feed an isolated 15 amp circuit in the abscence of grid power. When installed at my homestead in the rural parts of my island, it will be very helpfull for pumping water from the tanks that collect rainwater to a tank at the highest point on the property so that when the taps are turned on in the house there is water in them. Tap water is a really nice convenience that far too many people take for granted. There is also the matter of preventing stuff in the freezer from thawing in the event of an extended loss of grid power.

      The point I am making is that, I have invested in solar PV now because I believe that in the future it’s value will outweigh the cost. If one lives somewhere that it turns out never to be the case, one should be very thankful. I am thankful that when I became aware of the spectre of Peak Oil and watched the documentaries on it, events did not play out as fast as I thought they might. In the intervening years, the inverter that I have acquired became available and who knows, if things don’t completely fall apart too soon, batteries may come to market that provide workable solutions to all sorts of Peak Oil related problems.

      To those who say the documentaries were wrong or sensational, in my view, things are playing out almost exactly as portrayed in many of them, just at a pace that is more in line with real life. Movies often condense the events of an entire lifetime into just a couple of hours. Many of the scenarios portrayed may yet happen. Some of them have been gradually unfolding over the past few years. It aint over yet. Hell! It’s just get’n started!

      Alan from the islands

      • Political Economist says:

        Hi Alan, thanks for the comments. My take on fossil fuels/renewables is basically similar to people like Richard Heinberg and Ted Trainer.

        Yes, fossil fuels will be gone. But we’ll not be able to use renewables to reproduce/extend essentially the same life style, economic system, and social system as we’ve had over the past one or two centuries. It will have to be very different and economic growth will come to an end if not become negative.

        As far as these graphs are concerned, of course, they are just data not opinion.

        • We just need a breakthrough to allow us to use geothermal like we use natural gas. Think of it. Super fast high temperature drilling into 300 degree C rocks, fracturing the rocks by injecting water at high pressure, and circulating a cheap workng fluid to generate steam and drive baseload generation….

        • Patrick R says:

          Exactly PE. But the assumption that’s at fault in this conclusion is that it is necessary to have exactly the same quantity, form, and type of energy per person in order for us to live well. This is not the case.

          Energy waste and misallocation in the west is pharaonic. We will not be using energy in the same quantities and ways as this century advances, for the same purposes. We will not be deriving it from the same sources nor moving it it the same ways.

          This is the energy transition and it is already underway. It involves both less energy per person, different form [more electricity as final form], and different networks. Much more local generation and consumption, networks of all sizes, right down to personal generation on our clothing or through our physical motion. The later especially to charge small devices like the one I am using to write this comment on which I often charge directly from a small solar set up.

          The last billion or so people currently without electricity will get it, to their great benefit, but not from huge stations and grids, but locally, from solar and wind, and even great micro devices like the Gravity Lamp. Their liberation from kerosene lamps will be a huge economic and health benefit to the world. This is already happening, especially in India. Africa will be next.

          In the west we will have to retro-fit suburbia for walking, cycling, and Transit, all but abandon the car in cities, and electrify those in the country and ex-urbia.
          This is underway. FF will need to be reserved for the jobs they are best at.

          IslandBoy is right. The timescale of this is long. We have the time, the remaining FF and the capital to do it [I disagree with Gail and Steve about the capital]. Most critics of this transition think that unless it can happen overnight it can’t happen at all. This is a multi-decade project, but the beginnings are underway if you look.

          This is how change happens. The vast majority can’t see it till its all but over. Most suffer from status-quo bias. Fair enough; the future is unimaginable. Until its happened, then suddenly everyone accepts it as inevitable, like the recent oil re-pricing.

          Stuart Staniford says ‘Peak Oil is not synchronous’. This is clearly the case. Its disasters and opportunities will be spread unevenly through time and place. This is already true. For some people, places, and lifestyles these changes will be the same as collapse, here I agree with the doomers. But for other people, places, and ways of living it will be a great boon. It was ever thus. We are not special compared to those who have before us, or who will follow.

          • Boomer II says:

            This is how change happens. The vast majority can’t see it till its all but over. Most suffer from status-quo bias. Fair enough; the future is unimaginable. Until its happened, then suddenly everyone accepts it as inevitable, like the recent oil re-pricing.

            Driving will continue to go down in the US. The Baby Boomers will drive less because they are getting older. Millennials haven’t embraced driving to the extent as previous generations and likely won’t be as interested in acquiring and driving multiple big engine cars per family.

          • Political Economist says:

            It ia not so easy to define what counstitutes “living well”.

            The US economy now certainly consumes less energy than in 2005. The US GDP is now higher than in 2005. By this measure, we have become more “efficient”

            But the average American household, by nearly every measure, now lives worse than in 2005. It appears that energy consumption has a better correlation with well-being of an average household than with GDP, the preferred official measure of economic “well-being”

            • Patrick R says:

              Ho ho, so the Swiss are worse off than Alabamians? Pretty sure they use less energy, and certainly less liquid fuel, per capita.

              Like I say there’ll be winners and losers, and drive-a-lot America gonna change, painfully i suspect, and of course not till it has to. But it already happening at the margins.

              We are going to look back at our fume drenched, highway severed cities with the same boggled minds that currently try to imagine how vile and pestilent were the pre-modern city streets; all horse-dung and human waste.

              The de-carring of the urban realm has well and truly begun in the early adopter cities of Helsinki, Madrid, Paris, London, and others.

              Small steps; it’s going to accelerate, as is the Renewable build-out. Renewables are taking over the lions share of the marginal power gen. Your charts show a small renewable gross share but the trend is clear; In Japan, China, Europe, and the US, the growth in supply is from renewables.

              And as this continues there are going to have to be considerable changes to distribution, storage, and consumption.

              See below for an example of the both the scale of this change, and the problems of the necessary adjustment to this new world for established systems, and especially for established players. If anywhere needs to get off FF it’s japan, with no local supply, it makes sense for an aggressive built out to occur there:

              http://www.bloomberg.com/news/articles/2014-10-09/japan-solar-boom-fizzling-as-utilities-limit-grid-access

              Some assume because renewables make different demands that means they ‘don’t work’ or won’t continue to take market share. That’s not what history tells us that usually happens when disruptive technologies become cost effective. In fact the problem is they work too well for established BAU players. Who will always fight back from powerful positions [Koch]. This is likely to be fruitless however.

              Keep bearing witness to these changes; your charts clearly show this happening in the view back, I’m looking ahead with these thoughts.

    • Old farmer mac says:

      Hello PE,

      Thanks for your input. Nobody else is posting graphs that show so much useful background information about the energy situation in terms of the Big Picture, and while peak oil may be the most important piece of the puzzle it is by no means the only piece.

      Now here is a question you may be able to answer.

      On average how much of the coal or gas that would have to be burnt to generate power is saved by adding wind and pv to a grid?

      This may be too big a question in terms of anybody gathering the information so I will ask it in a different fashion.Is any information available about the amount of coal or gas saved by any particular utility thru adding wind and solar power to the local grid?

      I have seen figures ranging from less than none up to one hundred percent equivalency.

      Here in the US we are now getting about four percent from wind and solar. IF hydro and nukes are held constant then we should be using somewhat less coal and gas to generate electricity, at least at first glance.Idled back hydro might or might not represent ” lost ” energy depending on if the reservoir is full and the water goes over the spillways or if it can be saved to increase out put later over the next few hours or days.

      The question is HOW MUCH coal and gas are we saving annually on a national basis due to wind and solar power in the grid?

      I realize teasing out an answer must be a time consuming job but somebody has probably attempted it.A bean counter at any given utility probably has this info at his fingertips for his own company but I have asked a lot of places without getting an answer.

      • islandboy says:

        Does this help?


        Spanish company to build Wigton III

        “Wigton parent, Petroleum Corporation of Jamaica (PCJ), said Monday that the projected output for Wigton III alone is 63,072MWh annually, and that the project is expected to reduce national oil consumption by over 37,100 barrels per year.”

        and

        “PCJ said in a release that in Wigton Windfarm’s 10 years of operation, the company has saved the country close to $3 billion by reducing oil consumption by close to 406,000 barrels.”

        Wigton Wind Farms Fact Sheet

        While this is information on one wind farm on a small island, hopefully it provides a clue towho might provide the info you’re looking for, the owners/operators/advocates of renewable energy projects. I’m surprised that the EIA hasn’t collated that kind of data. Actually, I think they may have. If you have the total amount of TWh produced by renewables, it shouldn’t be difficult to estimate the total amount of coal or gas that did not have to be burn’t. Sorry, just thinking as I write!

        Alan from the islands

      • islandboy says:

        Mac, I think you’ll find the answer to “The question is HOW MUCH coal and gas are we saving annually on a national basis due to wind and solar power in the grid?” here:

        http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_1_1

        I copied and pasted the annual data to a spreadsheet and produced a graph of the major sources as a percentage of the total. One trend is clear. Non-hydro renewables have steadily increased from just over 2% in 2004 to over 6% in 2013 without skipping a beat. Maybe that explains the consternation coming from certain quarters. After seeing how sujbsidized renewables decimation the profits from fossil generators in Germany, US interests might now be worried that unsubsidized renewables might eventually start affect US utilities.

        Alan from the islands

        • Island, the problem is caused by dual mandates to a) take up all wind and solar generated electricity whenever it’s being generated and b) be prepared to take up the load when wind and solar drop output, while maintaining grid and customer integrity.

          This implies that fossil plants be kept warm and ready to spin up on very short notice. Which in turn requires they burn fuel. The crowing noises from renewable hipsters in many countries ignore these facts. I guess they just lack the training to understand complex systems and economics.

          Jamaica is a different setting, because it consumes oil products to generate electricity. A back of the envelope sketch tells me such a small island can build wind power farms, and manage the intermittency with the oil fueled generators. To reduce the demand on these two, and keep costs manageable, you can build a high efficiency coal plant.

          I realize you understand how this works, but we have too many readers who have illusions, but current technology and real life financial issues just won’t allow developing nations to manage a transition wearing tin foil hats as if they were Hollywood millionaires.

          What really worries me is the emerging influence of solar power corporate propaganda, which seems to find such a fertile ground in the green population. These guys are probably financed by Chinese industrial giants, I see very slick webpages being quoted with the same bs all the time. USA politicians are too polarized to really work the problem in a pragmatic fashion. I sure hope you guys can do better.

          And do try to wean yourselves from the oil loans from the Venezuelan dictatorship. The Chavez & Maduro dictatorship has ruined Venezuela, right now Maduro is scouring for cash because they are running out of food. The Domonican Republic did a really slick move to get rid of the Venezuelan oil loans, they issued bonds and bought the full loan at half price (in other words, Venezuela accepted a 50 % hair cut on bonds they had already accepted at a very low interest rate). If Jamaica uses the same negotiating position it can probably shore up its finances.

      • Political Economist says:

        Hello old farmer, the word “save” is complicated. Unfortunately it depends on your definition of energy. See the discussion I had with Dennis above (right below the chart for global economic growth and electricity)

        It is easier to talk about how much fossil fuels solar and wind can “replace”. That data are directly available from BP. In 2013, the US consumed 9.3 terawatt-hours of solar electricity, which was “equivalent” to 2.1 million tonnes of oil equivalent (about 40,000 barrels per day in term of daily consumption). In 2013, the US consumed 169.4 terawatt-hours of wind electricity, which was equivalent to 38.3 million tonnes of oil equivalent (about 760,000 barrels per day in term of daily consumption).

        Roughly speaking, the total US wind and solar consumption right now has an energy equivalent similar to how much Bakken shale oil is producing now.

        • Old farmer mac says:

          Thanks guys your answers throw a lot of light on my question but do not tell me precisely what I WANT to know.

          All electrical utilities have to maintain a spinning reserve usually called a HOT spinning reserve in case something goes wrong at one or more generating plants. In some cases if enough hydro is available then hydro running at less than capacity can serve as the reserve – meaning in that particular case NO EXTRA fuel is burnt to maintain the instant reserve.But it is my understanding that a couple of gas plants are kept running by most utilities even though the power is not actually needed JUST IN CASE. When gas or hydro is not available then SOME extra coal is necessarily burnt.

          What I am trying to find out is HOW much coal or gas is ordinarily burnt for the purpose of maintaining the necessary near instant reserve under two conditions – ONE being when there are no wind and solar farms feeding the utility and the OTHER how much ADDITIONAL coal or gas is necessarily burnt when wind and solar are added to the supply.

          I understand that these answers must be approximate and will vary substantially from one time to another and from one utility to another for many reasons even without wind and solar input.

          But somebody probably knows what the average is in terms of percentages for a given utility and for the country as a whole.

          Now from a business owners point of view- the utility’s point of view – that reserve power must be paid for – which is only fair of course. Now in business terms this involves capital costs which are more or less fixed at any given time- and variable costs which may be either trivial or substantial.

          The BUSINESS must earn a return on capital expenses and some profit on variable costs as well. Common sense. Other wise it shuts down.

          BUT BUT BUT – in terms of the actual welfare of the body politic – ONE BIG question is how much fossil fuel can we actually save by adding renewables?

          As of TODAY whatever backup capacity that is needed in terms of gas fired plants actually exists – or we would be having blackouts. We aren’t.

          When I drive my old Escort to save gasoline I DO NOT have to leave my old gas hog truck RUNNING.

          But when a utility adds wind and solar power it MUST leave at least some Additional fossil fuel generating plant RUNNING in case of sudden cloud cover or the wind dieing off.

          MORE spinning reserve is necessary for wind and solar than for coal and gas because coal and gas are more reliable on a minute by minute and hour by hour basis.

          The question I want answered is HOW MUCH coal or gas is ACTUALLY BURNT to back up wind and solar ON AVERAGE.

          My wild ass guess is that it on average the NET savings of actual quantities of coal and gas associated with renewables is around ninety percent. What I mean by this is that if a terawatt hour of power is fed into the grid with wind and solar then enough coal and gas must be burnt as spinning reserve to generate a tenth of a terawatt hour.

          The actual figure may be as high as thirty percent or more or as low as a couple of percent depending on time and place.

          The output of a solar farm in Nevada on a day with a clear desert sky for hundreds of miles around is probably as or even more predictable than the output of any coal plant. But a wind farm in Nebraska would not perform so predictably.

          My goal is to come up with as good a description of the potential savings of coal and gas as possible as more wind and solar are added to the grid.

          Global warming aside the biggest problem I see in the future in terms of energy is the depletion of fossil fuels. Personally my guess is that depletion is going to upset the business as usual apple cart a good while before warming makes a serious impression on the man on the street.

          Warming is sort of like the cancer associated with smoking- a problem a long way down the road. Paying for fuel (and cigarettes) is a short to medium term problem.

          My hope is to be able to demonstrate to skeptics who doubt the benefit of renewables is that the cost of current subsidies will be returned with a generous strictly dollars and cents ” profit” in terms of avoided fuel purchases over the life of any wind or solar farm built today.

          As renewables gain generating market share there will be fuel costs saved not only directly via avoided purchases but another way as well.

          The more renewable electricity generated the lower the sales of natural gas and coal will fall- and falling sales have a powerful downward effect on commodity prices.

          I think wind and solar power combined will be at least ten percent of US domestic electricity consumption within ten years. This will result in a substantially lower purchase cost of coal and electricity for generation and for other uses as well such as the manufacture of steel and domestic heating and feedstock for the chemical industry.

          Now if I were a good researcher – which I am not – I could probably turn up some estimates made by professional economists of what all this will mean in dollars and cents to consumers and various industries.

          • Boomer II says:

            I might poke around to see what I can find. This did turn up as one of the first articles.

            http://www.hcn.org/issues/46.18/the-latest-when-wind-and-solar-need-reliable-backup-power

          • Boomer II says:

            This has a benefits chart in dollars. Not sure if this will be helpful to you.

            https://www.greentechmedia.com/articles/read/Energy-Imbalance-Market-from-Buffets-PacificCorp-Streamlines-Wind-and-Sola

          • sunnnv says:

            OFM – did you see my comment back on Jan 26th?
            (in OPEC Crude Oil Production, What’s Next?)

            http://peakoilbarrel.com/opec-crude-oil-production/comment-page-1/#comment-485731

            My comment about South Africa down at the bottom of this current Ronpost is semi-relevant, but the situation there is more of renewables making up shortages than just replacing dirty fossil fuels.

          • Old farmer, I read a study about this topic. The answer depends on the machinery, how closely you have to follow the load, and the grid layout. This means there’s no unique answer. If you want a real life case you can dig into the Spanish grid statistics. Here they publish CO2 emissions as well as contribution from each source. You can take the data, put it in excel, and you can see how the CO2 emissions don’t track the renewables all the way.

            And this is one of the most efficient and expensive set ups around. We have surplus capacity, can shed load to France, have nuclear, a large solar contribution, a huge amount of wind power, and the grid is really sturdy.

            But the only way they find to make this work politically is to burn coal. This is also happening in Germany. They are building coal plants because they don’t see a viable option.

          • Dennis Coyne says:

            Hi Old Farmer Mac,

            At least for the US, we have pretty good weather forecasts and the amount of solar and wind output over a wide area can be predicted pretty closely. So the fluctuations from clouds overhead or the wind slowing down that are different from the weather predictions are not a lot different from the fluctuations in load that happen all the time. The extra coal or natural gas burned over the spinning reserve already in place is likely to be negligible.

            Possibly research what Xcel Energy is doing as they are in that business and are supportive of wind power.

      • Old farmer, it depends on how much hydro you can build, and expand with pumped power. Batteries are no good now. But we use pumped storage.

        So say you can deliver 35 % of your national demand with hydro, you can build enough solar to cover 35 %. Then you have to use the two as complements. Together they give you 35 % but you have surplus hydro. This is used to work against say 35 % wind. When both solar and wind are cranking you have to store water by pumping back to your hydro plants. So I can see the three delivering 50 % at a really high cost. Then you build 25 % nuclear and 25 % natural gas. If you can use geothermal you could cut the gas or the nuclear.

      • Dennis Coyne says:

        Hi Old Farmer Mac,

        Most Coal and natural gas power plants are about 38% efficient, so 100 GJ of primary energy (coal or natural gas) is converted to 38 GJ of electricity. Wind and solar do not have these thermal losses, but they are intermittent.

        Fossil fuel plants produce at about 47% of capacity, but wind produces at only 22% of capacity, roughly half of the fossil fuel rate, but does not suffer from the 62% thermal losses, solar looks like a problem, but in fact there is much more land area where solar can be usefully employed and costs continue to fall quite rapidly for solar PV.

        • Old farmer mac says:

          Heart felt thanks to everybody for all the responses and all the links!!!

    • P. Cheadle says:

      There’s not one single thing I can say in praise of wind energy. The turbines are just ugly, with no redeeming qualities in my opinion. There is also the aspect of how they maim and slaughter migratory birds, some of which are critically endangered, but since the extreme environmentalists who want us all to go on wind seem to be all right with that, I won’t push the issue any further. I do think it shows the environmentalists’ true colors though. Clearly their interest lies more in anarchy than doing anything to help the environment while also sustaining our prosperity and economic growth for future generations.

      • Fred Magyar says:

        You are so right! Wind turbines are so much uglier than standard power plants.
        But clearly the anarchists are winning!

        • P. Cheadle says:

          Funny you should put a nuclear power plant next to some wind junk because I do think that nuclear energy is underutilized in the United States. Boggles my mind to think of how many wind turbines could be replaced by ONE modern nuclear plant, and with FAR less land usage. Which, speaking of low and out-of-sight land usage, ‘fossil fuel’ power plants are clearly at the top, although ‘fossil fuels’ is a misnomer because I don’t think we’re driving around with old dinosaur bones in our gas tanks. On the other hand, I will reiterate that wind turbines are an absolute eye sore that we would not have to look at and listen to if it weren’t for our current socialist president pouring misguided taxpayer-funded government subsidies into wind and solar schemes. Plus, I don’t like to see birds sliced and diced by the millions, as with wind energy.

          • Boomer II says:

            for our current socialist president pouring misguided taxpayer-funded government subsidies into wind and solar schemes.

            Oh, please. Wind has been around longer than Obama. What he has done is supported every kind of energy, oil included.

            You want nuclear? Then you get communities to invest in it. The problem is the expense. When they can put up a gas fired plant, why bother with nuclear?

          • ezrydermike says:

            dinosaur bones in your gas tank causes low mileage

          • Fred Magyar says:

            Oh Man! Nothing warms the cockles of my heart like seeing little birds get sliced and diced by wind energy, heheheheh!

          • Old farmer mac says:

            I am touched – touched I say , P Cheadle by your concern for birds.

            So am I. It just about makes me cry when I see the strip-mined mountains near my home. The coal miners have not only done away with all the local birds – they have gotten rid of just about all the other wildlife as well.

            I am also mightily impressed by your ignorance. It blows me away that you don’t understand that fossil fuels are FOSSILS.

            WHY do you suppose they are called FOSSIL fuels? At least you got the dinosaur bones part correct. Not many BONES were involved – maybe a few. Fish bones.Oil is the remains of microscopic to very small living things that settled to the bottom of bodies of water and were buried nice and deep long enough and hot enough to COOK into oil.

          • notanoilman says:

            Didn’t realise that nuclear power plants needed large mounds of coal next to them.

            NAOM

    • Ilambiquated says:

      The very low capacity utilization rates of wind and solar power may become a significant constraint on their future growth.

      I don’t think so. The main question is how much the electricity that is generated costs, not how much the installed equipment could theoretically produce in some imaginary scenario.

  49. Ronald Walter says:

    Price of oil in Japan is at 41,410 yen today, up from a low early last week of 37,370 yen. Oil imports are their only hope. They are prepared to do what it takes.

    I began prepping about 1980, at the beginning of the Reagan era, gold shot up to 800, untenable foreign debacles, the Marines in Lebanon had a tough day in the early eighties, so did the French compound there in Beirut.

    You see turmoil, you read what is happening, you react. You begin to prepare for what might come to pass, you make plans. You do this, you do that, you write it all down, you do it all. Still prepping 34 years later. It gets old.

    It is delusional, you merely think you are prepared, but when the time comes to actually hope that you are prepared the best you can be, you’ve done everything to prevent anything going terribly wrong, it’ll all go wrong anyway. At the end of the day, you’re more or less helpless if it all falls down, you’ll need help in the worst way.

    You’ll find out that you weren’t prepared at all for what happens. It’ll be a nightmare. It’ll all just be gone, simple as that. You might have to make a few adjustments, prepping won’t do much good, Peak Oil won’t matter.

    What can be cited as an example?

    When German armed forces invaded Norway after Kristallnacht, Norwegian farmers happily donated plenty of foodstuffs to the German military to help feed the German soldiers. Stomachs go empty. What was discovered after Norwegian farmers were without some of their animals on their farms? The incidence of heart disease decreased appreciably in the population of Norwegian farmers. They reduced their consumption of meat and cheese, not by choice, and were forced to eat more vegetables after their farm animals were confiscated and consumed by Germans occupying Norway. Some sacrifice might just be a blessing in disguise, you’ll live longer and regain your health.

    Lutefisk, Lutefisk, Lefse, Lefse, we’re Norwegians, ya, you betcha!

    It is in a documentary entitled ‘Forks over Knives’.

    http://www.imdb.com/title/tt1567233/

    • Doug Leighton says:

      “Norwegian farmers happily donated plenty of foodstuffs to the German military to help feed German soldiers.” You might want to talk to my wife about that: Because her father died fighting Germans as a member of the resistance, Milorg. He hated them but not as much as her.

      • Watcher says:

        Douglas, those guys know how to properly conquer. The definitive information is post surrender France. Worth researching.

        “You must pay for cost of conquest, and cost of garrison.”

        “Very well, sir, we will pay in francs. How much will it be?”

        “You will not pay in francs. We are taking control of your central bank. You will pay in food and labor. The German people must be rewarded for their sacrifices. You will come farm German fields and work in German factories. You will be housed and fed. Your function in life is to serve Germany.”

        “This is an outrage.”

        “Just what did you think surrender means?”

        “There will not be enough food here in France.”

        “Just what did you think surrender means?”

      • Ronald Walter says:

        ‘Happily’ and ‘donated’ is from the German perspective, the positive narrative to convey the perception, not the reality.

        Coal is a dirty word these days, not too surprising, so it would be a good idea to follow the money. Coal is going to be around for at least a couple of more centuries, so it is a no brainer to invest a little tiny bit in coal mining companies. Just my opinion up here from the peanut gallery in the nose bleed seats.

        HKG:0663

        HKG:1277

        HKG:0276

        HKG:0975

        OTCMKTS:MOGLF, Mongolian Mining Corporation

        Mongolia has nine percent of the world’s coal, in the nascent stage of development, looks like a ground floor opportunity. Even if I am just the shoeshine boy in a thousand dollar suit, it looks like something to consider. Just a hunch from left field.

        • Doug Leighton says:

          Ronald, “Mongolia has nine percent of the world’s coal, in the nascent stage of development, looks like a ground floor opportunity.” Well the coal number is correct but don’t count on the “ground floor opportunity” part. Mongols have a bad habit of signing contracts then demanding a bigger slice of pie after you’ve spent a lot of money: speaking on behalf of Chinese friends that had (and are having) personal experience on this count.

          • Doug Leighton says:

            In 2006 Mongolia, out of the blue, implemented a 68% windfall tax: The world’s highest. The tax is related to mining company profits on copper and gold sales. Don’t get me wrong, I love Mongolia and Mongolians but I wouldn’t invest there. And, I wouldn’t go near the place in Winter, where even Russians find it too bloody cold.

  50. Pingback: » Why we are at Peak Oil Right Now Olduvai.ca

  51. Toolpush says:

    I just have to love the American Truck buying consumer. They have obviously heard or seen all the poor oil rig worker being laid off, and are now doing their best to remedy the situation.
    General Motors just released last quarter result, Trucks sales up 40+%, SUVs sales up 30+%.

    Happy days are hear again!
    Happy motoring everybody.
    Love those short memories.

    • TonyinPDX says:

      “No one in this world, so far as I know — and I have searched the records for years, and employed agents to help me — has ever lost money by underestimating the intelligence of the great masses of the plain people. Nor has anyone ever lost public office thereby.” H. L. Mencken

    • shallow sand says:

      It is surprising considering just how prices only started falling 6 months ago and last time price crashed it recovered in less than 2 years.

      I guess Americans just want big.

  52. Watcher says:

    Since the “Greece will fold” narrative started making the rounds late last week, the dollar is falling against all the majors, and sharply.

    Oil has risen with it.

    The latest ZH blurb says Greece won’t fold. A lot of folks would prefer they do and remain willingly in slavery.

  53. Gerd says:

    The EIA think Russian production will fall:

    The IEA is lowering its Russian oil output projections as the crisis over Ukraine and resulting sanctions limit Russia’s access to capital and technology, the head of the IEA’s gas, coal and power market division, Laszlo Varro, told Platts Tuesday.

    Speaking ahead of the IEA’s Medium-Term Oil Market Report, due out on February 10, Varro said some Russian industry officials were complacent about the country’s ability to sustain production amid the sanctions imposed as a result of Moscow’s involvement in the Ukrainian crisis.

    “We do think that the combination of the low oil price and the sanctions on Russia have a very strong negative impact on the Russian oil industry,” Varro told Platts on the sidelines of the GE Oil & Gas Annual Meeting in Italy.

    “Whereas let’s say a year ago, we were quite optimistic on the ability of Russia to maintain 10 million b/d-plus oil production for quite a long time, we are revising our Russian projections negatively quite significantly.”

    Article

  54. Stan says:

    A couple of quick points. I see a lot of people hung up on our ability to pay for oil going forward.

    First, quantitative easing is currency inflation. Inflation is a tax on anything denominated in the currency subject to it. That tax is fully paid. There is simply more currency to the amounts of goods available. On the flip side, Fed purchases of assets only have a value equal to whatever the Fed gets for them when sold. And, there is no inherent value of anything. Value depends solely on supply and demand. Finally, inflation is always better than deflation. Deflation reduces both supply and demand. (As a side note: what is supplied and what is demanded does not have to be unsustainable, entertainment for instance.)

    Second, the amount the global economy can afford to pay for oil is a function of time. Yes, oil is extremely useful, however there are literally thousands of alternatives: biking, walking, car-pooling, telecommuting, paper, etc. However, most of the major alternatives take time to implement in a meaningful way: changes in city planning, transit development, engines designed primarily to burn ethanol, etc. Thus, in the short run demand for oil is highly inelastic (demand does not change much with changes in prices) while in the long run it is very elastic. If the sum total of all the alternatives cost more the economy will be smaller. If alternatives ultimately cost less, the economy will be larger. There are many alternatives that have cost parity well below $100 a barrel (bikes are extremely cheap to run) and yes oil can be completely substituted (even conceivably with minimal materials differences from BAU). A lot of alternatives are already being increasingly implemented: higher efficiency, plug-in vehicles, bio-based plastics. It is very possible for the world to afford $400 a barrel oil. The only questions are how much time and what are the economic costs. With some the promise of some potentially disruptive technologies, it is not at all clear there will be negative economic costs. It really depends on the time scales.

    • wimbi says:

      Many alternatives. Thanks for that. Most people don’t seem to notice- maybe just lack of imagination- or ignorance.

      On the other hand, some people do notice! Thanks for that.

    • Ilambiquated says:

      First, quantitative easing is currency inflation.

      No increasing prices is inflation. We are no having this problem currently. For example, comodities have recently seen falling prices, including oil.

      Inflation is a tax on anything denominated in the currency subject to it.

      No, inflation is not a tax. This meme seems to be a real case of “voodoo economics”, that is, economics based on sympathetic magic. You don’t like taxes and don’t like inflation, but that doesn’t prove that taxes are the same thing as inflaction.

  55. Watcher says:

    BTW today is car sales numbers release day for the US of A in January.

    18% increase y/y, most of which SUVs and light trucks.

    GM reports Silverado truck sales up 25% y/y. Sales of Suburbans up 100%+ y/y. Ford F-series pickup sales up 17+% well in excess of 70,000 units.

    The Chevrolet Volt sold only 542 units in January, the lowest since August 2011.

    The Nissan Leaf sold 1040 units last month. This was the lowest month since February 2013 and down sharply from January 2014’s 1252 units — a 17% sales decline in a winter month not burdened by polar vortex.

    • Old farmer mac says:

      I am willing to make a substantial bet that within three years Volts and Leafs are in very short supply in the dealership system-barring the overall economy being in the hospital.

      I had a conversation over lunch yesterday with a guy I know who was so proud of his week old four by four truck with the biggest engine etc that he told me he hoped I would be able to afford one someday to by way of a left handed compliment.

      I was driving my ninety one model – which was paid for the day I brought it home many years ago. So while I might have had a burger or even the hot dog special I ordered a ribeye.He didn’t get it of course even though he looked sort of sideways at my food as he ate his hot dogs.

      I expect he will be thoroughly sick of the payment on that truck a LONG time before it is paid off. And while it will get close to twice the mileage my ancient Chevy gets he will be compelled to drive it daily or lose it when gasoline hits four or five or six bucks – which I believe will happen within the sixty months his truck owns him instead of the other way around.

      I will be driving my second vehicle – an old Escort which gets over thirty mpg average anytime I don’t HAVE to drive my clunker truck- and the Escort was also paid for the day I brought it home.

      A new set of decent tires for the Escort costs three hundred, a set for my old Chevy truck costs a little over four hundred and a set for that week old new truck costs nine hundred – all comparable quality with the same brand name.

      The state tax alone on gasoline is seven cents higher than the retail price of gas when I first started driving.

      Enjoy it while you can grasshoppers.

      • Watcher says:

        “I am willing to make a substantial bet that within three years Volts and Leafs are in very short supply in the dealership system-barring the overall economy being in the hospital. ”

        Would this not also happen if they stop building them.

    • Ves says:

      Watcher,
      How I read these increased car stats sales as increased sales of debt tranches. Cars, Student loans or whatever are just conduit for the sale of debt. We are being suffocated by web of debt. Debt is the best selling product these days 🙂

      • Ves says:

        Ha-ha I just thought of one constant that is similar to Car buyers, Greece, Shale guys – DEBT. That can not be coincidence 🙂

        • Watcher says:

          Sub prime car loans are the mechanism.

          But it’s hard to make a case for it being the engine. The engine . . . is a desire to own the cars. They ain’t gonna buy the wacko EVs that don’t allow you to drive any sort of distance without worrying about zero range left — and cost 50% more to buy.

          The operating cost BS always leaves out the huge depreciation loss of money. Besides which rational Americans presume they’ll get a pay raise next year and can pay for the operating cost until they trade the car in. Or rather, trade the truck in. Yes, that thing that lets them haul stuff home from Walmart or Home Depot.

          So ya, borrowing money is the mechanism. But the choice to buy the F-150 is the engine.

          • Ves says:

            That mechanism is what people don’t get even after what happened in the 2008. The desire to own the car is just the cravings. And those cravings are default mode in human beings unless you are Dalai Lama 🙂 (who can resist those shiny “Like a Rock” commercials 🙂 )

            but where responsibility comes is in allowing this debt mechanism to repeat every time. But as my friend told me: “Listen, f you want to preach go to the Church, otherwise stick with the program :)”

            • Watcher says:

              Let me paraphrase your friend:

              “If you want the wheels to stop turning, then okay, the debt should stop. If you want the wheels to keep turning, you keep printing money and encourage the borrowing of money — not because that is going to cure anything, but because it will buy time for whatever is wrong (that we clearly don’t understand) to become right.”

              Your friend would this ignore the reality that buying time also buys time for something wrong to get worse. Future miracles don’t have to be favorable in their results.

              You understand a lot of stuff, Ves. And you’re not even American haha.

    • Kam says:

      These car sales numbers are bearish for oil price. It means that our oil usage becomes less efficent. Oil is wasted moving large cars, instead of powering GDP, so result will be lower oil price.

      • Ilambiquated says:

        I don’t think American inefficiency matters that much. The more efficient economies of Asia will drive oil prices up if production prices rise and there are supply shortages.

        Right now (somewhat oddly) average production costs are falling as the expensive suppliers are being kicked out of the market. So falling prices are actually reducing real costs. Producers will have to work hard in coming years to justify increased rent taking.

        Panic about political issues in the Mideast has been one of the main drivers of high oil prices in recent years. I think markets are becoming numb to it.

  56. Jeffrey J. Brown says:

    It’s possible that Dennis might have presciently called the low in oil Brent spot prices. This afternoon, Brent is trading at $57.

    Here is an excerpt from Dennis’ 1/30/15 post:

    Looking at Brent spot prices rather than futures prices, the recent EIA weekly data shows about $46/b for the past two weeks (last data point is week ending Jan 23). The last time we had an oil price crash prices bottomed at just under $40/b on a weekly basis in Dec 2008 and had rebounded to $70/b by June 2009 during a severe recession. I would expect oil prices will recover at least this fast under current economic conditions so we might see $75/b by July.

    • Jeffrey J. Brown says:

      Here was Dennis’ specific 1/30/15 post on the topic:

      Does it look like Brent crude may have found a bottom around $48/b?

      • Dennis Coyne says:

        Hi Jeff,

        Thanks!

        Probably a lucky guess on my part, but for Mike and others in the oil biz, I hope my guess is correct (or too low).

        You know what they, say a broken clock (analog) is still correct twice per day 🙂

        The $75/b by July 2015 prediction (WAG) is based on the assumption that 2015 will look somewhat like 2009 as far as the speed with which oil prices recover towards previous levels.

  57. Longtimber says:

    Game of Chicken??
    Underinvestment leads to a shortage: The Secretary-General said that, “if you don’t invest in oil and gas, you will see more than $200” when it comes to future oil prices. While he didn’t give a time frame, he did note the correlation between investment and future production.
    http://money.cnn.com/2015/02/03/investing/oil-price-rebound-opec-200/index.html

  58. The Wet One says:

    http://www.cbc.ca/news/business/analyst-says-gasoline-prices-heading-up-1.2943372

    Not terribly informative as such things go, but the reduction in the number of drilling rigs is being noted and accounted by many.

    I’ve already been ticked off by missing the very lowest of gas prices seen in years by filling up AFTER gas prices went up about 14%. Sure it was only one tank of gas (the cheapest tank of gas I could have bought since about 2009 and likely earlier) but it still ended up costing me $5.00 more than it would have had I gone and filled up one week earlier. Anyways, enough of my troubles as a gasoline consuming motorist.

  59. Monster says:

    in my decade of dealing with peak oil, I would be cautious to declare peakoil though. your reputation is on the line and your made yourself an easy target for debunkers now. people like matt simmons, c ruppert, deffeyes all made the same mistake, even though they predicted the beginning of the peak. I respect you too much to end up like those folks lol, christ matterson and you are the only peakoil sources i got, the rest are either dead or walked away from it.

    • Monster, I really don’t give a shit. I see every indication that we are currently at peak oil. Non-OPEC C+C combined with OPEC crude only, less US and Canada is down about 2.2 million barrels per day since peaking in 2006. Only shale and oil sands has kept us from peak oil.

      The rest of the world reached peak oil about 9 years ago. Now only the Light Tight Oil from the USA is keeping us from peak oil.

      And pardon my French but I don’t give a flying fuck about my reputation. I have made my call and that is what it is. If it is wrong then it is wrong. But understand one thing, this prediction was not made by me by just pulling something out of the air. I have been watching every nation’t production, every month, for well over ten years. This prediction is the result of my years of study of world C+C production. It is the very first time I have ever picked a specific date. And I am sticking to it.

      We are at peak oil right now One year from now we will be on the down slope of peak oil.

      • Watcher says:

        Odds look pretty high this is accurate.

        But the rules will change. Per Jeff’s BIG 45. The imperative to have a comfy narrative is pretty powerful. It has, since 2008, trumped just about everything, certainly truth.

        • Jeffrey J. Brown says:

          Here’s a different approach to trying to extract some plausible global condensate estimates from multiple data bases:

          OPEC dry gas production increased from 41 BCF/day in 2005 to 62 BCF/day in 2012 (EIA, complete 2013 data not yet available), an increase of 21 BCF/day.

          Comparing OPEC (crude only) and EIA data bases (C+C) implies that OPEC condensate production increased from 1.2 mbpd in 2005 to 2.3 mbpd in 2012, an increase of 1.1 mbpd.

          This would be an increase of 52,000 Barrels of Condensate (BC) per BCF/day increase in gas production, for OPEC, from 2005 to 2012.

          The EIA shows that global dry gas production increased from 270 BCF/day in 2005 to 325 BCF/day in 2012, an increase of 55 BCF/day.

          If we use the 2005 to 2012 OPEC condensate to gas ratio as a guide, this implies that global condensate production may have risen by about 2.9 mbpd from 2005 to 2012.

          The EIA shows that global C+C rose by 2.1 mbpd from 2005 to 2012, which of course suggests an actual decline in global crude oil production (generally defined as 45 and lower API gravity crude oil). Note that the high volume of US condensate would fall in the non-OPEC data set, so in reality, I suspect that the non-OPEC BC to BCF/day ratio is probably higher than the OPEC data set.

          • Dennis Coyne says:

            Hi Jeff,

            I think this might be a pretty good way to do this. It depends on the assumption that condensate output per BCF of natural gas in the non-OPEC countries is the same as for OPEC. OPEC produces a lot of oil but only 23% of World natural gas, so this is a pretty big assumption.

            Almost as big as the assumptions I routinely make 😉

      • Anonymous says:

        And pardon my French but I don’t give a flying fuck about my reputation. I have made my call and that is what it is. If it is wrong then it is wrong. But understand one thing, this prediction was not made by me by just pulling something out of the air. I have been watching every nation’s production, every month, for well over ten years. ,”

        This is why reading this blog is so compelling: The author is not pimping a book or a video, or asking you to join his little religion (read “transition,” etc.).

        But it’s also exactly the reason the peak oil phenomenon is perfectly intractable for the lay reader, for who is “Ron Patterson”? He is “Dude On the Internet!

        DOIT might be right, as I’ve said repeatedly: who am I to say he’s wrong, especially as I know exactly what he’s talking about, having studied it for decades?

        I’ve also watched whole herds of self-anointed analysts; assorted lay “experts” and cranks; weepy-eyed conspiracy theorists; and a plethora back-to-nature, prepper twats go galloping over The Cliffs of Failure over the last ten years:

        “Oil could reach $500 a barrel!”

        “All we can do is pray!”

        “Stock market to drop to 3,000!”

        “In five years we will be beyond Hubbert’s Peak!” [spoken circa 2003]

        “The chance of a gradual decline in oil production is zero!”

        “We’re going to have to start growing turnips!”

        “Everyone now living on medications is going to die!”

        “The die-off is here!”

        These are all direct quotations or paraphrases inscribed as epitaphs on the Tomb of the DOIT. I’m not linking to them. You go find them.

        So what’s a lay person to do, especially an informed one? Well, check for the consensus, as you would for any scientific issue, like climate change, or evolution, or genetically modified foods. [Hint: there ain’t one for peak oil.]

        What do the august scientific organizations say about peak oil? [Hint: Nothing.]

        What do the peer-reviewed scientific journals for peak oil say? [There ain’t any.]

        OK, so the geological journals? [I await citations from the more knowledgeable.]

        Well then, check out the skeptics organizations–Skeptic Magazine, The Skeptics Dictionary, etc.–because they never shrink from debunking any notion, no matter how hare-brained–homeopathy, anti-vaccine crankery, ear candling. [But again, nothing.]

        OK. Ron–DOIT–might be right. He makes a persuasive case. Who the fuck knows.

        In the meantime, a great article from a geoscientist and skeptic, from three years ago:

        http://www.skepticblog.org/2012/05/02/news-from-the-oil-patch/

        • Mikeb says:

          Moi, actually.

          • Dennis Coyne says:

            Hi MikeB,

            Before you start a post, try typing your name in the Name box (if it’s empty). You start to look pretty silly if you forget every other time you comment.

            • Mikeb says:

              Thanks. I keep forgetting. Also, I keep this computer’s tracking preferences, etc. all turned off.

      • Dennis Coyne says:

        Hi Ron,

        If you are correct, the down slope will be pretty small initially and the 12 month average C+C output one year from now might be down by 0.5 MMb/d, in a couple of years you may be able to look back and say I nailed it.

        If we think in terms of an undulating plateau of around 76 Mb/d, we would need to fall below 75 Mb/d for the 12 month average C+C output before most people will really see this.

        I doubt we will reach that point before 2018 and possibly not until 2022, it depends upon oil prices and the rate of extraction from producing reserves.

        • Dennis Coyne says:

          I should have said: You will be able to say, “I nailed it!” If your prediction still looks good a few years down the road.

        • Dennis, it all depends on the economy. If the world economy is booming and prices go higher and remain high, the decline will likely be pretty slow. However if the economy stays in the doldrums and the price stays below $70 or so, then I expect the decline to be in the range of 2% or so in the first years of the decline.

    • Futilitist says:

      Hi Monster (Monsta666?),

      Good to see you again.

      I really don’t see how the preservation of one’s reputation should ever factor into one’s quest to understand reality, but, then again, look how far that’s gotten me! Seriously though, in my decade of dealing with peak oil, I have found that social factors, like reputation preservation, are at the root of the optimism bias. I think it is a little late for soft-pedaling collapse. I say: if you see a wolf, cry wolf.

      Oops, I said collapse, above.

      Ok, here goes MY reputation. I believe that the economic collapse of industrial civilization actually began around June of 2014, when the world could no longer afford $100 oil. The world probably hit some as yet unspecified absolute physical/economic limit, and thus the world has tipped, slowly at first, but irretrievably, into the collapse sequence: World-wide economic/monetary collapse, which leads to social collapse and, ultimately, die-off. I believe this will pick up enough speed in the coming weeks and months that it will shock and surprise almost everybody. Reality doesn’t care one bit about our hopes and dreams, or our precious reputations. Punctuated equilibrium is a bitch!
      ______

      Now back to your regularly scheduled Groupthink, already in progress.

  60. ezrydermike says:

    so the EPA is considering oil pricing in the future to determine the impact of building the Keystone X/L….

    “Given the recent variability in oil prices, it is important to revisit these conclusions. While the overall effect of the Project on oil sands production will be driven by long-term movements in the price of oil and not short term volatility, recent large declines in oil prices (oil was trading at below $50 per barrel last week) highlight the variability of oil prices. The Final SETS concluded that at sustained oil prices of$65 to $75 per barrel, the higher transportation costs of shipment by rail “could have a substantial impact on oil sands production levels -possibly in excess of the capacity of the proposed project.” In other words, the Final SEIS found that at sustained oil prices within this range, construction of the pipeline is projected to change the economics of oil sands development and result in increased oil sands production, and the accompanying greenhouse gas emissions, over what would otherwise occur. Given recent large declines in oil prices and the uncertainty of oil price projections, the additional low price scenario included in the Final SEIS should be given additional weight during decision making, due to the potential implications of lower oil prices on project impacts, especially greenhouse gas emissions.”

    http://www.epa.gov/compliance/nepa/20140032.pdf

    • ezrydermike says:

      “In a letter to the State Department released Tuesday, the U.S. Environmental Protection Agency said the Keystone XL pipeline would “significantly increase” greenhouse gas emissions from tar sands—a declaration environmentalists hope will serve as a final nail in the project’s coffin.”

      http://www.commondreams.org/news/2015/02/03/final-epa-review-makes-it-clear-keystone-climate-disaster

    • Their analysis is flawed because USA refineries have already been kitted to use heavy crude. If they choke the Canadian crude the identical Venezuelan mix will be delivered to USA refineries. Thus the emissions will be identical, the risk of a tanker oil spill will increase, and the USA will be dependent on a regime with a terrible human rights record and self declared enemy.

      I bring this subject up once in a while, wrote an unanswered letter to the USA Congressional Budget Office with my analysis, and I usually get absolute silence. This eery silence and the links I see between pipeline opponents in the USA are indicators that we have something funny going on. Pipeline opposition is partly funded by the Venezuelan dictatorship, the USA government is aware, but they remain silent. This issue, of course, will be brought up in the USA senate later this year.

      • ezrydermike says:

        haven’t we been getting Venezuelan crude to the tune of 1 mil bbd since 1993? Drop off in the last 2 yrs or so as their production declined and they started sending to China and India.

        Citgo refineries still operating in the GOM area?

  61. ezrydermike says:

    wow, what is going on here?

    “Workers from nine refineries across the U.S. have committed to the stoppage and, so far, the strike has caused one refinery to suspend its operations—the Tesoro Martinez Refinery in Martinez, California. The strike has been called at five Texas-based refineries, two California sites, and one each in Kentucky and Washington state.”

    http://www.commondreams.org/news/2015/02/03/stand-people-and-planet-over-profit-green-groups-back-oil-worker-strike

    • Commiedreams banned me because I wrote comments explaining most of their energy posts were baloney. It’s the extreme left version of Red States, the ultras who banned me after I mentioned Bush was a terrible president.

    • Dennis Coyne says:

      It is definitely the commies, unions are most definitely a communist plot, everyone knows that 🙂

  62. John B says:

    Brent back up to $57.91 today.

    http://www.oil-price.net/

    • Longtimber says:

      Spot price yanks up , Futures down today ~1.5% on Oilprice.com
      Employment whiplash in the Boom States – Zero Hedge –

      • Eagle_772 says:

        volume picking up this morning went from 16000 to over a million shares in sort order. Buyers must have been listening to the Las Cruces presentation yesterday. Share volume precedes the increased price. Yesterdays volume was almost twice the daily average. Every time these shale guys put down a drill it comes up dripping in oil, but they need higher prices. The facts are always a problem for the naysayers. Keep an eye on the share volume… will be tough to beat yesterday but…who knows. The facts are always a problem!

  63. ezrydermike says:

    Ugo Bardi on why climate debate is going nowhere….

    “As in all clashes of absolutes, debaters think they are speaking the same language and they start from the same assumptions, but they are not. The problem is identified by Adam Dawson on “The Ruminator”in these terms:

    ….. you have to understand that in America there are two different types of science. There’s science that is profitable for corporations, which is good and righteous and rock solid. That’s the Smartphone, the water heater, the GPS, the 700 channels on the 62 inch flat screen, the boner pills, and so on and so on. And then there’s the science that costs corporations money, which is fraudulent, con-artist mumbo jumbo. Under that second definition are things like climatology, pollution measurements, oceanography, and other disciplines that might fuck up the profit margins of energy producers and manufacturers.

    I think Dawson is right on target about the “two different types of science”, but the point is not so much that some types science cost corporations money. Science and technology push for change and change often means that someone will lose money, but that doesn’t mean that change is impossible. The Internet, for instance, is bankrupting newspapers, but the newspaper lobby doesn’t appear to be very effective in stopping the Internet from expanding. Rather, the fundamental point is that scientific fields such as climate science use different methods for gathering data and managing knowledge than, say, the science of solid state devices. It is an epistemological difference: the kind of certainty that can be derived from a well designed laboratory experiment performed on a solid state device is not possible in climate science.

    The different epistemological approach becomes really fundamental when it is question to implement a policy based on the result of the models. Climate scientists mostly agree that there is no simple technological remedy to avoid disastrous climate change. Then, what we are proposing is not hard engineering, but some kind of social engineering based on a general consensus that the danger of climate change is real. Now, how do we obtain such a consensus? To start, we need to share the basic assumptions on how the conclusions of climate science are obtained and validated; this is a question of epistemology. And when we deal with social matters, the traditionally accepted methods of attaining knowledge (and consensus) are not based on the scientific method. The debate becomes political, and the methods used for political debates are completely different. As I said, it is a clash of epistemologies.”

    http://cassandralegacy.blogspot.co.uk/2015/01/a-clash-of-epistemologies-why-debate-on.html

    • ezry, the very large oil company I used to work for always had what we called Metocean Professionals. They were oceanographers, climatologists, and physicists.

      I used to work in offshore projects, and we spent a lot of money taking our own data, purchasing data, and having it analyzed by consultants and our own in house experts. This is required to determine the return periods for both normal and extreme weather events. The analysis used the data as well as models.

      Later I decided to work in the Arctic, and I ran around with the same metocean types PLUS a different group, the ice guys. We had a team which had to work out the same issues PLUS the ice and Arctic climate impacts (for example, I had to know how we could evacuate 150 persons from an oil platform on fire in the middle of a blizzard onto moving pack ice, and what the pack ice would do to the escape vessels).

      Thus real life works in a slightly different fashion than you think. Because it costs so much money, companies only discuss what they are working on selectively. After working on this topic for almost 8 years I had published ONE paper, in Russian. It’s just too complicated to write and avoid telling the competition what we think.

      But I can give you a hint. When Shell goes to the Chukchi and Exxon goes to the Kara they do so after doing a huge amount of work on the climate problem. And if they are willing to move into the ice pack they must a) think oil prices will be extremely high and b) the climate is going to get warmer.

      • Doug Leighton says:

        “..oceanographers, climatologists, and physicists…” Heh Fernando, don’t forget all those cool geophysics dudes, the Point Men. Seems to me you folks wouldn’t even know about plate tectonics if it weren’t for us. 🙂

        • Doug Leighton says:

          Sorry, but I have to say it, John Tuzo Wilson, was a Canadian geophysicist and geologist who achieved worldwide acclaim for his contributions to the theory of plate tectonics. And, a truly great lecturer he was as well — I am privileged to add.

      • ezrydermike says:

        didn’t Shell’s 1st foray into the Artic result in a “mixed bag” of results? I seem to remember an incident with the Kulluk running aground and then having to be towed to Asia somewhere to get repaired.

        Anyway your hint is telling…Artic ice melting as the climate gets warmer allowing for previously untenable oil exploration. Yep maybe Exxon and Shell do know something from all of their climate problem investigations.

        And then there is this….

        “Shell is set to confront the risk that climate change may pose to its future, after backing a resolution from activist shareholders. The move came on the same day it announced $15bn (£10bn) in cost cutting due to plummeting oil prices and said it wanted to resume drilling for oil in the Arctic.

        The resolution, filed by 150 investors who control hundreds of billions of pounds, requires the oil major to test whether its business model is compatible with the pledge by the world’s nations to limit global warming to 2C.

        The 2C target means only a quarter of existing, exploitable fossil fuel reserves are burnable, according to a series of recent analyses. That implies trillions of dollars of oil, gas and coal held by investors could become worthless and that continuing exploration for fossil fuels may be pointless.

        The resolution, also filed with BP, includes a ban on corporate bonuses for climate-harming activities and a commitment to invest in renewable energy. ”

        http://www.theguardian.com/environment/2015/jan/29/shell-urges-shareholders-to-accept-climate-change-resolution

  64. sunnnv says:

    Those “silly renewables” are at it again, this time in South Africa.
    Not only are they saving money, they’re preventing load shedding (blackouts).
    This is horrible news – – – for the fossil fuel industry.

    from:
    http://ntww1.csir.co.za/plsql/ptl0002/PTL0002_PGE157_MEDIA_REL?MEDIA_RELEASE_NO=7526622

    ” The benefits earned were two-fold. The first benefit, derived from diesel and coal fuel cost savings, is pinned at R3.7 billion. This is because 2.2 TWh (terawatt-hours) of wind and solar energy replaced the electricity that would have otherwise been generated from diesel and coal (1.07 TWh from diesel-fired open-cycled gas turbines and 1.12 TWh from coal power stations).

    The second benefit of R1.6 billion, is a saving to the economy derived from almost 120 hours of so-called “unserved energy” that were avoided thanks to the contribution of the wind and solar projects. During these hours the supply situation was so tight that some customers’ energy supply would have had to be curtailed (“unserved”) if it had not been for the renewables.

    Therefore, renewables contributed benefits of R5.3 billion in total (or R2.42 per kWh of renewable energy), while the tariff payments to independent power producers of the first wind and photovoltaic (PV) projects were only R4.5 billion (or R2.08 per kWh of renewable energy), leaving a net benefit of R0.8 billion.

    South African Rand now equal 0.088 dollar, looks about 0.1 dollar in mid 2014 when they based their rand for the study.
    Full study at:
    http://www.csir.co.za/media_releases/docs/Financial%20benefits%20of%20Wind%20and%20PV%20in%202014-%20CSIR%20-%2021Jan2014_FINAL.pdf

    The truly frightening news is that South Africa’s phenomenally incompetent utility
    http://en.wikipedia.org/wiki/Eskom
    runs a nuclear power plant.
    http://en.wikipedia.org/wiki/Koeberg_Nuclear_Power_Station
    (to be fair, Eskom is greatly aided and abetted in incompetence by the government).

    • Patrick R says:

      Good find, expect more of this as the second half of this decade rolls out.

    • They can do well with the first tranche. As renewables increase their share of the total generation capacity the system sees much less savings and the grid instabilities kick in.

      I saw the hype about these solar plants, and found out they were built using chinese solar panels, which are being dumped by the Chinese after they built excess manufacturing capacity.

      So it really makes sense to put in a first tranche, leverage the Chinese dumping practice, and build capacity to about 10 % of national demand. After that they will start having problems unless they beef up the grid. And eventually they need to build coal plants and pumped storage. This allows them to have more renewables, using hydro to cover renewables intermittency. The problem I see is the USA and EU blocking loans for coal. If they keep this practice then the renewables can’t be expanded because the hydro won’t be available for back up.

      • Dennis Coyne says:

        Fernando,

        A widespread interconnected grid using both wind and solar power needs very little backup as long as there is some excess capacity built into the system.

        See

        http://www.sciencedirect.com/science/article/pii/S0378775312014759

        Highlights
        ► We modeled wind, solar, and storage to meet demand for 1/5 of the USA electric grid. ► 28 billion combinations of wind, solar and storage were run, seeking least-cost. ► Least-cost combinations have excess generation (3× load), thus require less storage. ► 99.9% of hours of load can be met by renewables with only 9–72 h of storage. ► At 2030 technology costs, 90% of load hours are met at electric costs below today’s.

        Chart from graphical abstract below

        • Political Economist says:

          I think Richard Heinberg and Ted Trainer will disagree about this. What did the author mean by 1/5 of grid? So how about the other 4/5 of grid?

          Wind is obviously limited by land. So let’s focus on solar.

          For solar, just think about the seasonal difference. Winter output is likely to be a fraction of the summer output. If the system is built to meet summer peak demand, it will obviously fall short of winter demand.

          If the system is built to meet winter peak demand, it has to be over built several times relative to summer demand. Even then the average output will be only 15 percent of peak capacity (actual field performance may be only 10%), so there will still be many times when the solar output falls short of average demand and needs back up

          When you take into account ecological and mineral constraints, the amount of land that is actually available for solar development is not that large. Carlos et al has a paper saying it’s about 3TW in term of flow, or about 18,000 GW of solar generating capacity (based on 15% capacity utilization). That is about the same size of the world’s current electricity generation.

          But I think before that limit is reached, intermittency will be binding. China, with its current small penetration of wind electricity, already has to abandon about 10% of wind available each year.

          • Boomer II says:

            Perhaps we should be talking about a post-grid economy.

          • Dennis Coyne says:

            Hi PE,

            The study focused on about 1/5 of the US grid, most of the renewables over the near term were supplied by Wind due to it’s lower cost. Winter peak demand can be improved with passive solar, more insulation and heat pumps. Engage your imagination.

            • Boomer II says:

              As I tried to indicate with some of the articles I posted, telling people that their chosen energy production activity might not work with the grid may just encourage more companies to find ways to avoid the grid.

              Data centers already have localized backup generation and as some of them decide to generate their own power, and then have a different form of power as a localized backup, they will begin to experiment with the feasibility of off grid energy.

              They won’t be doing one source of energy for both primary and backup power. So what they will be using won’t be 100% renewable. But no one has asked the grid system to be 100% renewable either. (GE is getting into the distributed energy business and it looks like they will be focusing on gas fired generators. Their customers will be in places that need quick set-ups and flexibility.)

              As bigger power users pull out of the grid, either that will free up capacity for home owners, or the grid will start to fail anyway from loss of customers.

              Telling a lot of the high tech companies that what they want to do isn’t feasible because of the grid seems to be telling them the grid is becoming outdated technology and perhaps there are opportunities to avoid or redesign the grid.

      • Longtimber says:

        The Chinese GET IT and are dead serious about deploying serious PV Manufacturing capacity. 96%+ of Global PV deployed is Grid Tie. This will change as needed for markets like Europe, Hawaii, where solar is experiencing some push-back. New PV Gear hitting the market does multiple roles. Alpha/Outback Radian series feature “grid zero”. Outputs to be a Master or Lock on to an AC Heartbeat. SMA’s Sunnyboy US Grid tie Inverter’s feature “Secure Power” – Battery-less 60hz AC Power direct from High Voltage PV Array. Designed in response to Fukushima. North American code officals were stumped by new power flows and SMA had to design several versions before settling on a model that they could cripple enough for North America.
        The are Situations when a 1% fuel shortage/hiccup at any one loaded central power plant can collapse big chunks of “The Grid”. Historically, Operations at a generation plant control rooms are clueless about downstream situation(s) without trucks rolling, They just have to donkey the load no matter what. Centralized Power can be Fragile but slowly evolving/adapting to adapt, but requires major investments that have to be approved by regulators and paid for by new revenue streams. Prepare for Grid Instability ahead. Big Market for new gear to loosen us from the grip of Grid Slavery.

      • Political Economist says:

        I agree. But coal is not very good as back up for renewables. You need natural gas. But China is short of natural gas. Now China has to abandon about 10% of the wind available each year because the excess wind electricity cannot be accepted by grid

        • Dennis Coyne says:

          So they will develop fuel cells, batteries, and hot water and cooling storage to accept the excess energy.

  65. Mikeb says:

    I can’t believe I actually posted anonymously again.

    • shallow sand says:

      If not posted above, ND rig count at 140.

      • Toolpush says:

        Shallow,

        The rig count reminds me of the old elevator drivers,

        “Going Down!”

        • shallow sand says:

          At this rate it could really hit 50 by June, like the local service company owner was quoted by CNN. Seems kind of odd that I kind of would like to see oil stay below $60 WTI for a few months just to see what happens. We have cut back and so far are not in trouble with prices this low, although it is easier with WTI in 50s than 40s, and 30s would be a real problem after a couple months or so.

          • shallow sand says:

            Williston Light Sweet on Plains $36.69 and looks to be lower after today, so not like there has been some big recovery. I guess better than the 20s though. First quarter number are going to wake everyone up IMO.

          • Ves says:

            yesterday WTI +9%, today – 9% – supply & demand my ass
            market is pure science fiction.
            and whoever that guy that said rigs will have go to 50 he is right. it will go and before June.

            • Watcher says:

              tra la tra la

              You have to understand that 9% more oil was burned Tuesday than Monday, and 9% less oil is burned today vs yesterday. Once you understand this then it all becomes clear.

              And part II will be . . . oh, don’t be snide. It’s all something that happens Over A Period Of Time. As time passes supply and demand has control of these things. Well, it’s not EU membership. You don’t get to wait for a period of time that somehow is supportive. You don’t get to keep voting til you get the result you want and then stop voting.

              haha, we teach this stuff to undergrads and unless they go to grad school they never see the exceptions, that outnumber the non exceptions. Why? Because people are more comfortable being told they know something than the reverse.

            • shallow sand says:

              That guy would be Jim Arthaud, CEO of MBI Energy Services. “My prediction is we’re down to 50 rigs by June. I’d say we’ll lose 20,000 jobs by June” Arthaud is a ND native who has been active in the state’s oil industry since the late 1970’s and employs some 2,000 people as roustabouts in operations and in tank trucks per the article which appeared on CNN Money 1/23/15, at a time which. BTW, the rig count was at 161.

              Maybe the guy is wrong, but those quotes hit me when I first read them back on 1/23. Someone local who is in the middle of it and who is his own boss, and therefore not required to spout BS.

              • shallow sand says:

                Ves. When we start having crude inventory draws, the price is going to shoot up like a rocket IMO.

      • Dennis Coyne says:

        From the NDIC rig count page, not only is the count down to 140, 5 more rigs are going to be stacked when they are finished with the current well, so it will soon be down to 135 rigs. It will be interesting to see how many wells are completed, there are still 750 wells waiting on completion services as of the last Directors cut.

        If my estimate that about 130 well completions per month will keep output relatively flat, that is almost 6 months of wells without drilling any more wells, just fracking the wells that have already been drilled. They may slow down to 100 wells drilled per month (which would require about 100 rigs), as prices start to rise, the rig count may stabilize between 90 and 100 until the inventory of wells waiting on completion services falls to under 400, then the rig count may start to rise.

        • Dennis Coyne says:

          100 wells per month would require about 108 rigs, not 100 rigs, sorry.

        • From the NDIC rig count page, not only is the count down to 140, 5 more rigs are going to be stacked when they are finished with the current well,

          Yeah, yesterday the “to be stacked” count was four. I checked this morning and it was down to 3, now it is 5. That means one went to the stacked rack and two more said we are going there next. But a lot of the rigs that list “Undetermined” as their next location will also be stacked.

          • Dennis Coyne says:

            Hi Ron,

            Absolutely correct, the 5 are just the ones we know about, as prices rise, there may be fewer rigs stacked, we will know more in May or June after the mud dries up.

            • coffeeguyzz says:

              Dennis, beyond the number of rigs and wells completed but not frac’d, there are a growing number of wells whose output has dropped dramatically from high production in early fall/late summer … way more than the standard decline curves would indicate.
              I’ve not seen any expressed rationale for this, but the implication would be deliberately restricting high early output due to low pricing. If true, it could play havoc with the production profiles.

              • shallow sand says:

                Coffee. I wonder if that is why. Do you have a published source on this other than just from looking at state websites? I have wondered if the larger fracs may result in steeper decline curve?

  66. Watcher says:

    http://headlines.ransquawk.com/headlines/a-greek-government-official-says-that-they-will-not-accept-further-cuts-to-pensions-or-austerity-04-02-2015

    German document released earlier said under no circumstances will Greece be allowed to reverse course from previous commitments to austerity.

    And this from ZH:

    First, from Bloomberg:

    GREEK GOVT WON’T ACCEPT TROIKA REMAINING IN COUNTRY: OFFICIAL

    And from Reuters:

    EU’S SCHULZ SAYS GREEK GOV’T HAS NO CHOICE BUT TO KEEP ITS OBLIGATIONS TO EUROPEAN PARTNERS

    Oh the delightful upheaval. Raises the dollar (hurts the Euro) and down goes oil.

  67. Pingback: News update | Peak Oil India | Exploring the coming energy crisis and the way forward

  68. dmg555 says:

    Many of the posts here seem to concentrate their observations of driving rates on Americans. Whether the baby boomers or millennials are increasing or decreasing their addiction to driving. It seems to me that this view ignores where the growing demand for cars and driving is occurring. Each day 50,000 new cars in China alone are purchased. Annual demand in China is somewhere in the range of 17-18 million new vehicles. Whether we in the US alter our demand practices is a flutter in the wind compared to the yearly increases in vehicle usage in areas of the globe where the population is buying their first car.

    • Watcher says:

      Pretty much and sorta. Fleshing that out, as has been done before, new Chinese cars are brand spanking new additional oil consumption. New American cars replace an old one (that may get trashed off the back end of the longevity curve) and probably are not entirely new consumption, other than that from population gain and the increased availability of subprime loans — and of course that US car buying is buying higher consumption vehicles than the one trashed, re F150s instead of old Volkswagen Beetles.

      The reason for outlining US sales is to make clear the EVs are not making any inroads of any significance at all, and for the relevant history (history being defined as October onwards when oil’s price collapsed) are going in reverse. Safely ignored in the analysis of the inevitability of war, soon, over the per capital consumption increase unfolding in China.

      • Watcher says:

        MINUS l, that’s an el, not a one.

        • Watcher says:

          BTW Chinese car sales are north of 20 million. They had a 17 million blip down, but latest numbers I think are 20 M plus.

    • Boomer II says:

      Electric vehicles are expected to account for at least 11 percent of all the new vehicles sold in China in the next decade on the back of growing environmental awareness and stricter regulations, a new survey said on Monday. …

      Not content with catching up with more established players in traditional combustion engine technology, China is looking to leapfrog rivals to become the premier market for e-mobility,” said Danny Le, partner and head of automotive at KPMG China.

      http://www.chinadaily.com.cn/business/motoring/2015-01/20/content_19353038.htm

  69. Joe says:

    I have to ask about something that’s been bothering me with this whole notion of peak oil. Why are coal based synfuels/synthetic fuel uneconomic? The whole premise of peak oil rests on coal to liquid synfuels being uneconomic or otherwise difficult to produce at scale, since otherwise we have decades or centuries of coal reserves (the latter if you count undersea coal gasification which apparently can provide the world with trillions of tons reserves), and then peak oil is completely moot in the short run.

    Even if we assume the most pessimistic estimates are correct for the price of synfuel production, every source I’ve seen implies it’ll be economic to take over in the next few years once oil production starts depleting, with price per equivalent barrel of oil in the 2010-2014 price range. Every peak oil site/forum seems to ignore this point. Kunstler mentions it briefly in the Long Emergency of course, but his argument boils down to it only being done on large scale in Nazi Germany and apartheid SA, hence it’s really uneconomic under a free market. Well apartheid ended two decades ago in SA for one, and Sasol still produces large quantities of synfuels, and always manages to sell at the going rate of crude. It seems like a more reasonable interpretation is that crude’s always been incredibly cheap so there’s never been much incentive to switch over to somewhat more expensive synfuels, rather than synfuels being impossible to scale effectively.

    Thanks.

    • Watcher says:

      Sasoil produces. Not large quantities. And they have been doing this forever. So . . . why haven’t they grown?

      Answer: because it’s all crapola and won’t scale.

      As a good macro rule of the universe, any time you want to suggest something that looks like it phrases as “can’t we just”, or “why doesn’t it make sense to (do something that looks like it should have been so for decades) ” or “it’s obvious that we can (do something that isn’t being done)” then just forget the subject and move on. You don’t have the required data.

    • sunnnv says:

      Have you been tracking the history of gas to liquids?

      It’s essentially the downstream portion of a coal-to-liquids plant, with no ash and way less sulfur to dispose of.

      The biggest one in the world is Pearl, run by Shell in Qatar.
      http://en.wikipedia.org/wiki/Pearl_GTL

      Was supposed to cost 5 billion US$, ended up 19 billion US$.
      All for 140,000 bbls per day (against 90 million bpd all liquids, e.g. noise).

      Pearl was many years late, all kinds of problems.
      Shell was going to duplicate it in Louisiana, but ditched the plans, even with cheap gas and 2013 oil prices.
      http://fuelfix.com/blog/2013/12/05/shell-abandons-plans-for-20b-plant-in-louisiana/

      Sasol is delaying their 96,000 bpd GTL plant in Louisiana.
      http://www.nola.com/business/index.ssf/2015/01/sasol_delays_14_billion_gas-to.html

      So – if the two most experienced players in the GTL game can’t make a go of GTL (which is simpler than CTL), due to crazy economics and insane CAPEX requirements,
      what does that say about the real prospects of CTL?

      From 2011, “Coal-to-liquids as a case study of how excessive optimism is our enemy”
      http://fabiusmaximus.com/2011/02/14/24777/

      I have to run, so can’t do much research now, but off the top of the head.
      Think about a refinery vs. CTL/GTL plant.
      The refinery distills crude, then cracks things that are too heavy and reforms things that are too light/linear. Distillation is cheap, heat things and run them thru a distillation column (a big vertical pipe with trays with bubble caps in them). Much output (depending on feedstock/desired product) is just distilled – done, end of story.
      Cracking is more expensive, it takes more heat so more pressure, and you either need to add hydrogen (which means buying natural gas and steam reforming it, then stripping out the CO2) or take out carbon (c.f. recent discussion of petroleum coke). In either case, you through away/sell cheap part of your feedstock.
      Reforming is even more expensive, you need high temps, high pressure and catalysts.
      The catalysts need to be regenerated (heat and usually more hydrogen), and eventually replaced. They’re made of things like platinum and ceramics/zeolite beads to support the precious metal.
      http://en.wikipedia.org/wiki/Catalytic_reforming

      Now GTL – you take your natural gas and partly burn it to make synthesis gas (e.g. you’re throwing away feedstock already.).
      They you need catalytic stage(s) to build up longer chain molecules depending on the route you choose (Fischer-Tropsch or Methanol).
      http://en.wikipedia.org/wiki/Gas_to_liquids
      Because the catalytic processes are imperfect, you then have to distill what comes out,
      and crack the stuff that’s too big, and re-process the stuff that’s too small.
      So a GTL plant is essentially _all_ the most expensive parts of oil refining.

      A CTL plant is all a CTL plant, plus has to handle solids until they’re gasified, and the ash, and often has to deal with much more sulfur (a very potent catalyst poison).

      It’s enough to make one say:
      “Screw that, I’ll go frac for light tight oil and/or steam some oil sands goo….”
      (the combination of these added roughly 4 million bpd in roughly the same time Pearl did its .14 million bpd).

      You also need to be aware that the “200 years of coal” meme is overstated.

      • sunnnv says:

        argh. no edit.

        “A CTL plant is all a CTL plant, plus …”

        should be

        A CTL plant is all a GTL plant is , plus …

      • Joe says:

        Thanks, this is a very good breakdown and exactly what I’ve been looking for. That fabius maximus link is especially useful, in so far as they demonstrate the claim that CTL plants in the west will cost more than $200 000 per barrel/day, and if we’re slated for a decline rate of say 4 mbd/annually, then there’s no way will manage a trillion dollars in CTL plant building expenditures every year, to say nothing of the supporting infrastructure and rising coal prices.

        I’m actually aware of the overstating of coal reserves, and in fact read that peak coal may occur within two decades or so, if we’re not already there. Of course this is peak energy extraction, not peak volume (because of huge difference in energy content, between the various grades of coal) which won’t occur for many decades, and will probably mask peak coal for a while.
        I was thinking more of these claims:
        http://www.resilience.org/stories/2005-12-28/3000-billion-tons-coal-norways-coastline
        It seems so simple on paper, just inject oxygen and extract the syngas, but building just a floating LNG terminal is very expensive, with world’s first, the prelude FLNG, costing $100 thousand per BOE, if there are no cost overruns. And extracting LNG is far simpler than extracting syngas from coal, to say nothing of time and costs for exploration, development, etc.

        • Joe says:

          I meant to say : ” the prelude FLNG, costing $100 thousand per BOE per day”

  70. Patrick says:

    Chris Nelder, in an article of 24 July 2013, said this:

    You’ve got perhaps two good years left of business as usual, and maybe another three or four after that before things really get difficult. I encourage you to use them well, and do what you can to make yourself resilient and self-sufficient.

    http://www.smartplanet.com/blog/the-take/peak-oil-isnt-dead-it-just-smells-that-way/

    two good years left of BAU = 2014-2015
    another 3 or 4 years = 2016-2019
    things really get difficult = 2020-….

    • Doug Leighton says:

      And there’s the quote by Arthur Berman: “Shale Oil & Gas is not a revolution but a retirement party” Berman also says: “Oil companies have to make a big deal about shale plays because that is all that is left in the world. Let’s face it: these are truly awful reservoir rocks and that is why we waited until all more attractive opportunities were exhausted before developing them….”

      http://wolfstreet.com/2014/03/06/shale-oil-gas-not-a-revolution-but-a-retirement-party-2/

      • Doug Leighton says:

        For those who don’t already know: Berman is a petroleum geologist and consultant to the energy sector; former Rotating Managing Editor of The Oil Drum; Associate Editor of the AAPG Bulletin; Director of The Association for the Study of Peak Oil; Published over 100 articles on petroleum geology and technology. Made over 25 presentations in the last year to professional societies, investment conferences and companies.

  71. Watcher says:

    BOOM

    *ECB SAYS IT LIFTS WAIVER ON GREEK GOVERNMENT DEBT AS COLLATERAL
    *ECB SAYS IT CAN’T ASSUME SUCCESSFUL CONCLUSION OF GREECE REVIEW

    What this means simply is that Greek banks are now unable to pledge Greek bonds as collateral and fund themselves.. Greek bank runs will accelerate… and all the worst parts of the bible (or merely a negotiating move to let Greece see just what kind of chaos this will create).

    From ZH. And this, sportsfans, is called brutality. It’s very non European. The Europe way is to walk around in circles for days and hope that things fix themselves, and then when they don’t, agree to extend the circle walking time longer in hopes they will. If they don’t, print money.

    This . . . is a hammer.

  72. Anonymous says:

    This website had a lot more swag before people started posting zerohedge links in the comments.

  73. coffeeguyzz says:

    Shallow, your guess is as good as mine. I am using the NDIC data, but I don’t know how widespread this is. QEP still seems to be going all out.
    Hamm was quoted the other day as saying his oil is where it’s best to be … still in the ground (and not produced/sold @$30).
    Interesting times, but very tough ones for an awful lot of hard working people.

    • Toolpush says:

      Coffee,

      “QEP still seems to be going all out.”

      I am not sure what you mean by this statement. From what I see QEP seems to be shutting down nearly everything they have. Only 5 rigs left, with one of those marked as going to stack. If I read your statement in Australian, it says QED is drilling as fast as they can. Not sure what it means in American?

      BTW, latest count 139 with 5 marked to stack. If the Permian and Eagle Ford follows the same script, we could be in for another record drop in rig count again this week.

      I can’t wait to see the quarterly reports from these dedicated shale plays. It seems we have to wait to around the 25th for most of them. Nobody ever seems to want to race out with bad news, but any good news gets immediate reporting. Nothing personal against the American shale plays, Australian companies act just the same, from my observations!

  74. coffeeguyzz says:

    Push, QEP is one of the mid-sized companies that have operations in the Bakken and elsewhere. I do not know much about them, but two of their wells just came off the confidential list (Bruce Oksol – a Williston, ND native, retired military, has a blog themilliondollarway that tracks Bakken activity several times a day) and these two QEP wells had strong showings. There have been several other wells coming off confidential list that had greatly reduced output in Nov/Dec despite earlier high initial 30 day IPs. Strange goings on there.
    The overall output seems to heading dramatically lower in the shales in the coming months.

    • shallow sand says:

      If I recall correctly in the last 30 days or so Dennis posted information about 5 year average production profiles for certain companies in Bakken and QEP was the highest. Not having heard hype about QEP, as I have about EOG and CLR, I was surprised.

      Coffee, do you think they are choking back flowing wells? How long after IP do these wells flow. I see the media photos of several 640,000 jacks in a row, and I assume these are the recent multi-well pad variety. Therefore I assume wells are put on rod pump pretty quickly in the Bakken? I can’t see restriction of rod pump wells making sense, but I only know what I read about up there, so my opinions not worth a lot on that.

      Guess just would like more on coffee’s opinions as to what is going on.

      • Watcher says:

        Reminder: the popular narrative is “a flowing well has already been paid for” is out there and would suggest . . . sure, we can choke output and wait to sell that liquid for more money.

        But it HASN’T been paid for. It was borrowed money. The money has a maturity date and you have to pay it back incrementally, per year, in addition to interest. 9 million over 5 years is 1.8 million/year in addition to interest. You pay for that well every year. Not just once and done.

        If you choke, you got no cash for the lender. The only motivation for choking is you think you can default and still keep the well, or the lender agreed to suspend repayment (yeah, right).

        • coffeeguyzz says:

          Shallow, watcher, you both hit upon stuff that I don’t have answers for, but I think may be significant nonetheless.
          Shallow, the wells go on artificial lift pretty quickly, do not know exactly when, but sooner rather than later. (Some operators are touting improvements in that area of production, as well). Thing is, if these wells were choked while still flowing, that would seem odd unless they were trying to hold off selling at such low prices.
          If some operators are still going all out on some wells – like QEP’s two – maybe they are getting the higher, hedged price. The thing of most significance to me, however, is IF these guys are restricting output on already producing wells, that is some extreme micro managing of product right there. Talk of rig count and status of non frac’d wells sure have a bearing on production, but wow, if individual, producing wells are being choked back ’cause of price … we may see a bigger drop sooner than later. (On a completely semi contrary view, 11,000 wells averaging, say, 100bpd, still throws off a million/day.)
          Watcher, economics obviously looms large over this arena. While I do not follow the fiscal side of this industry closely, the yearly as well as the quarterly reports go on and on about this stuff and – with a great deal of ignorance on my part – my understanding is the borrowing is somewhat longer term (5/8 year?) and the initial high flow is counted on to repay much of that.

  75. pochvennik says:

    Western liberal ideas of emancipation, education, progress and civil rights is that poison pill. Alike in matrix, if you take the red pill, you learn the truth that there is no god and in this materialistic world you get into the race of hedonism, consumption, struggle for power, career and money. If you give this pill to everyone on the planet, it leads to overpopulation, pollution, resource depletion and environment degradation.
    Dostoevsky was warning about it 150 years ago, and these ideas are main theme of Karamazov Brothers and Demons. Humanity should have gone for autocracy, religion and traditional values, limit education and freedom. That pill of education and liberty should never been for everyone. There is no god, but it should be kept in the secret.
    But I agree it’s probably too late trying to close Pandora box at least on the world scale. But that’s main idea behind what Russian government is trying to do and that’s reason why Putin being right out of Russian novel and big fan of Dostoevsky is defending traditionalist values of religion and spirituality and resisting\reversing westernization. GDP would shrink, but big GDP is a problem in itself. Less consumption, autocracy, traditional values and strong army to defend it, that’s the way to go, while the rest of humanity going full speed into the wall.

    • Allan H says:

      Pov, we called the conditions you desire the Dark Ages.

      • pochvennik says:

        Simply because White Ages of liberty for everyone, even for a billion people is unsustainable even over short-term. Planet Earth can’t handle it.

        • John B says:

          There are other Planets.

          • pochvennik says:

            Humanity will never get to other planets, because wasting all resources on billion people hedonism and wasteful consumption. In my utopia, minority which would have rare privilege of education, would be working on space program and that would be a priority.

            • There is another reason we will never populate other planets. There are no resources to support life on other planets. We would have to carry everything we needed from earth. That would include our food, our water and even the air we breathe would have to be imported from earth.

              Making a space program a priority would be a total waste of time, money and resources. A total waste.

              • Boomer II says:

                Yes, one would assume that if we have the technology and resources to move life from Earth to another planet, we’d probably also have enough technology, resources, and knowledge to maintain life here.

                • That does not change the fact that you still would have to take it all with you.

                  Technology is not air, technology is not water, technology is not food. There is no air or water on other planets and no soil to grow anything either.

                  Technology cannot deliver air, water or food from nothing. There is no such thing as “technology to maintain life there”.

                  If you wanted to maintain life on on other planets you would have to take everything with you, absolutely everything. And that would be a really stupid thing to do.

                  • Boomer II says:

                    That does not change the fact that you still would have to take it all with you.

                    Yes, I agree with you.

                    But I am assuming people who think we can populate a new planet think the planet will have enough resources to recreate Earth once we set ourselves up there.

                    Just sending a space ship to a place like the Moon to live on definitely makes no sense.

              • pochvennik says:

                Could be outside the Solar System, in a habital zone. Tau Ceti, for example, under 12 light-years away. Autocratic technocracy with focus on science could go very far as it would survive on earth much longer, having more time for technological and scientific advancement, including human genetic engineering and building generational starships capable achieving velocities of up to perhaps 10% c

                • pochvennik says:

                  Regardless whether it’s possible or not, at least humanity would’ve tried and that effort of colonizing other planets could be the meaning of existence. What’s a meaning now? Wasting resources on fulfilling billions people selfish desires? I agree human nature is to consume until nothing left and not thinking about tomorrow. But insanity was to give full freedom to that human nature. Human can be brainwashed, e.g. with religion or media, or enforced and dictated to be limited in consumption.

                  • Boomer II says:

                    I don’t mind if some people talk about and explore the science of colonizing another planet. At some point in the distant future Earth will cease to exist. I kind of doubt that people will still be around then, but we do know that whatever life still exists on Earth will need to move elsewhere to survive.

                    But it involves so much technology to colonize another planet (other than shooting something to another planet and hoping it takes root) that I suspect if we can accomplish sending humans to live elsewhere in the universe, we can also make some significant changes here on Earth.

        • Allan H says:

          News Flash – the present situation is the result of over 40,000 years of human progress. The great extinction has been going on that long. Neither democracy or murderous psychopathic dictatorships will change the outcome of human presence on this planet.

          • pochvennik says:

            But we can see some dictatorships with traditionalistic values rising as it becomes apparent that humanity cannot substitute fossil fuels with renewables. I can see Russia doing this, there are still plenty of fossils left, especially coal and with reduced consumption and export cessation, Russia could last for centuries.

            You can read for example this October interview of Patrushev, ex-director of FSB, Secretary of the Security Council of Russia, and Putin’s right hand. Here’s google translate of what’s he saying in one question, talking about confrontation with the west:

            Q: Why the American elite clings so hard the right to control other people’s natural resources, while in the Western community of experts, the importance of developing alternative energy sources was declared, supposedly capable of quickly replace an oil and gas?

            Nikolai Patrushev: In fact, experts are confident that in the coming decades will have no real replacement of hydrocarbons as the basis of power generation. Moreover, in the West dominates the understanding that the total capacity of nuclear, hydro, wind, solar and other renewables will satisfy no more than one-fifth of the world’s needs.

            We should not forget about another important aspect. In today’s world with steady growth of food shortages and drinking water for the growing population of the planet. The lack of the most basic means of subsistence pushing desperate people to extremist manifestations, involvement in terrorism, piracy, crime. It is also one of the reasons for the sharp differences between countries and regions, as well as mass migration.

            http://www.rg.ru/2014/10/15/patrushev.html

    • Fred Magyar says:

      Jonathan Coulton – Re: Your Brains – ASL Song

      https://www.youtube.com/watch?v=UQYjZc7gKXc

      Cheers!

  76. ezrydermike says:

    The 2015 edition of the Sustainable Energy in America Factbook – produced for the Business Council for Sustainable Energy by Bloomberg New Energy Finance, provides up-to-date, accurate market intelligence about the broad range of industries — energy efficiency, renewable energy and natural gas — that are contributing to the country’s move towards cleaner energy production and more efficient energy usage.

    http://www.bcse.org/sustainableenergyfactbook.html

  77. Luís says:

    Hi Ron, this an important post and I welcome your courage.

    I am intrigued by this claim on Angola: “However some of the decline is caused by political problems. Those problems will likely get worse.”

    You seem to be awere of political issues in Angola that are not in the public domain. Would you be able to share this in detail? This is the sort of thing that would justify a post on its own.

    Regards.

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  79. Luis, sorry but I probably was wrong to think Angola had that many political problems. But there is still a seething undercurrent from the previous war after independence.

    Angola’s fearful culture of silence

    But beneath the official celebratory façade lies a divided country still struggling to come to terms with its past and understand its future. A protracted liberation struggle staged by three separate movements, followed by 27 years of civil war, have left deep emotional and political scars…

    The wounds may have been hidden from international view, thanks to impressive economic growth and investment opportunities, but they are still festering.

    What I had in mind when I wrote that was all the political problems in West Africa. However perhaps Angola, due to its oil income, has fewer problems than most of the rest. But now that prices have collapsed things could get worse.

    However I believe all West Africa is a powder keg about to explode, largely to their population problems. When it does Angola will not be exempt from the violence.

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  82. Dr. Joseph says:

    I have written this comment on another site but here it is again for you people who dont believe in peak oil.
    Everywhere i read about peak oil is allways the same that its a theory and its not real etc. etc. Isn’t it logical that if you drink from a cup, eventually its contents finishes……whats the big deal with that? Whats not to believe? Are people generaly so damn moronic or what? So here is my article to you all.
    Part 1
    And the difference between energy and fuel shortage………….
    The problem will be of fuel shortage and NOT energy (one can use nuclear power, coal, wind etc. for energy production). Over seven hundred million vehicles on the world’s roads plus between twenty and thirty thousand airplanes need energy in the form of fuel which will eventually be in very short supply. That is a problem.
    The world’s yearly crude oil usage is around one and a half cubic kilometers. (35 billion barrels). So all these alternative fuels are just a big joke. The amounts of fuel needed for all vehicles and airplanes are enormous.
    I believe we are too late for any alternative energy to be developed in time. We have waited far too long.
    We have been dependant on oil as if it will never end. We were lazy all of these years. We did not innovate hard enough because oil was plenty and easy to get. So our craving for crude stayed insatiable.
    We believed the scientist of the 50’s and 60’s who said that “there is so much of the stuff that it will last forever”.
    If we found a replacement for oil 10 years ago it will still be too late today because the magnitude of converting and/or building new engines to accept a new type of fuel is mind blowing. There is not enough time.
    Car industries should develop vehicle bodies made from solar cells that will drive a large sterling engine and will also charge batteries for night usage. Won’t be good for driving fast but will take you from A to B for almost free. Water driven engines. Air driven engines. All these should be developed.
    People don’t understand how precious the little oil there is left. It should be taken up in small amounts and for the most important usages, like pharmaceuticals, greases, and special oils. And a large amount of it is wasted by our cars?
    What a waste of this so precious a liquid to use it in that way.

    Part 2
    Here is why I think oil prices have fallen………….
    Could it be that the reason for the low oil prices has to do with oil extraction being harder and so more expensive?
    Could it be that the easy oil (to extract) is now nearing its end – its “peak”?
    Maybe. I believe that oil will go to $160 or $180 and maybe even higher due to difficulty (and obviously the costs) in extracting the hard to get crude.
    Or could it be going the food market way?
    Whenever I am abroad I like to go to markets just to see the produce maybe even buy some. What I have come to realize is that at the end of the day’s business whatever produce they (the sellers) have left, they choose one of two things to get rid of their leftover supply of say 5 to 15 boxes of whatever but let’s say tomatoes. Or they try selling it at an extremely low price per box and not per kg anymore like they did during the day.
    Or they will throw the left over into a container near by so as to get rid of it because they know there is not much left not as if they have a truck full of the leftover produce that they can use on the next business day.
    I have seen these procedures over and over again in every country I have visited.
    Now you say what does food markets got to do with oil right?
    Lately I began to compare the price drop of oil to food markets.
    Is it maybe we have passed peak oil for quite some time and we are now seeing the end of oil? Has price of oil dropped because of:
    World recession equals drop in oil demand.
    (we heard that many times before)
    Is it because of shale sand/oil/gas competition?
    (yeh sure as if it is cheap to extract…invest $2 to get $1)
    Maybe to make the Russian economy suffers?
    (no I don’t think so)
    Or maybe keeping what little oil is left for the so called elite folk or globalists that conspiracy theorists talk about?
    (maybe……….who knows what they’re cooking)
    Or maybe just maybe its going the food markets way as I explained above.
    (could be we past peak oil way way back.).

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  86. zero kWh says:

    UAE, Oman and Kuwait: All three of these Middle East countries have implemented massive infill drilling programs in the last decade or so. But all three have now peaked.

    http://www.reuters.com/article/2015/04/21/us-emirates-abudhabi-oil-idUSKBN0NC0O720150421

    The plan is part of the United Arab Emirates’ strategy of increasing its crude oil output potential to 3.5 million barrels per day by 2017-18. The UAE’s actual current production is around 2.8 million bpd.

    Desperately trying to increase production I guess

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