Norway 2021 Part 1 (of 2): Exploration, Discoveries and Reserves

297 thoughts to “Norway 2021 Part 1 (of 2): Exploration, Discoveries and Reserves”

1. Excellent article. The recommended reading list is useful as well, especially the Finnish study on the resource requirements needed to support energy transition.

   The over-building of wind and solar power infrastructure is a partial solution to intermittent supply, only if such a strategy can be deployed without curtailment. If wind power provides the greater part of generation, as it will in most northern countries, excess power is best stored as heat for end use. Wind electricity production is greatest in autumn and winter and thermal energy storage is cheap in terms of capital cost. A wind and solar dominated strategy with over building, works best if at least some liquid fossil fuelled gas turbine generating capacity is retained for deep lulls.

   Presently, most industrial economies have electricity production between 500-1000W per capita. Electricity demand does not vary by more than 20% above or below average. This is because the huge seasonal energy demands associated with heating and daily demands from transportation, are directly supplied by natural gas and petroleum. This is the principle reason why electricity only constitutes around a quarter of delivered energy use in most developed countries. In the future electricity will need to supply transportation and heating functions as well, using heat pumps and resistance heaters and electric and stored energy vehicles. This will increase electricity demand and will also make it more variable on both a daily and seasonal basis.

   Electric vehicles (road vehicles) are especially problematic if charging is not well distributed throughout the day. The problem is especially severe if rapid charging becomes a mainstream solution. The demand placed on the grid would rapidly overwhelm installed generating capacity in most countries. But I suspect that this is a problem that will not materialise. In a world where the EROI of primary energy sources is falling, battery electric vehicles are going to be less affordable to most people in the future. It is highly unlikely that they will ever reach the number of ICE vehicles on the roads at present.

   In fact, I would point out that electric vehicles have provided a significant fraction of the world’s passenger and goods transportation for around a century. But these vehicles are not cars with batteries replacing fuel tanks. They are rail based systems that draw power directly from the grid, via a catenary, trolley pole, or third rail. Transportation by train or tram, is far more energy efficient than car based transportation, whether that car is fossil fuel powered or battery powered. A Practical electric vehicle revolution needs to be based around collective rail transportation, especially if the energy supply is low EROI electrical power. Battery electric vehicles just don’t make sense from a whole system embodied energy viewpoint, if primary energy EROI is falling. They stem from a lack of lateral thinking, in which people expect new technology to enable living patterns that were established in an era of abundant fossil energy. Unfortunately, this also means that suburban living arrangements established in the fossil era will not be sustainable in the post-fossil era. For Europe and Japan, urban sprawl could only spread within tightly constrained geographical boundaries. For the US and Canada, this was not the case and the transition will be much harder, requiring substantial relocation of people into more collective living arrangements, around nodal transportation hubs.

   1. Good points! As I replied to a co-worker lamenting the cost of electric vehicles (another co-worker has a Model 3) my response was “Not everyone should have a car, at all!”
      But a well functioning public transportation system is needed, I think Alan from the big easy (New Orleans) was a proponent of light rail, which is a very energy efficient way to move people around. I went to Saigon/Ho chi minh a couple of years ago, and the numbers of 2-stroke, gasoline powered scooters were mind boggling, think they have some efficiancy improvements to make there, quite easily. But they are still on the ascent of FF easyness so I can´t blame them. In comparison, the metro in Paris was working quite well, but it took a bit of work, and energy, to get there building it, other examples would be Tokyo, NY, London, you get the picture…

      I might repeat myself, but live well and use less! (and plan ahead)

   2. >For Europe and Japan, urban sprawl could only spread within tightly constrained geographical boundaries. For the US and Canada, this was not the case and the transition will be much harder

      This isn’t really true. Suburbs are only feasible thanks to vast investments in suburban infrastructure, and are not driven by land prices.

      The usual argument revolves around population density. But Sweden has about 25 people per square mile, whereas the US has about 35. Sweden does not have a problem with sprawl. Why? because they don’t waste public money on low ROI suburban roads. Here is an interesting blog article about the financial reality of suburban infrastructure:

      https://www.strongtowns.org/journal/2015/1/29/the-argument-for-less-infrastructure

      Another point is that population density is a poor metric for urban planning for two reasons.

      First, it depends on averages, which make little sense on a national scale. For example, if Alaska declared independence, the population density of the United States would increase significantly. What effect should that have on infrastructure planning in Florida? None. It makes much more sense to talk about medians, not averages.

      Second, nobody every drove a car a square mile, so planning roads based on population per square mile is nonsense. It wildly overestimates distance traveled by looking at its square. It’s just bad math.

      A more sensible measure is median distance between household. And guess what? The numbers look much closer for North America and Europe.

      1. this efect is the same if Scotland left the UK, the population density would dramtically rise but in reality England would still be the same with the same planning issues.

         Forbin

      2. Good points. I will read the article you linked and give it some thought.

         As I young man, I was greatly influenced by J Crawford’s Car Free Cities.
         https://carfree.com/

         It seems a little idealistic now, but with fossil fuels declining in both production and surplus energy, it’s time would appear to me to have come. I doubt that Crawford’s ideas of purpose built rail based cities are practical, as it would require completely reworking established urban environments. But integrating electrified light rail (trams) into urban environments in a way that replaces altogether car travel, provides a workable and demonstrated option. It would allow urban living to continue with high rates of personal mobility, without the need for a drop of diesel fuel. And it is sufficiently energy efficient to be workable with low EROI grid based electricity, such as that produced by wind and solar power, with gas turbines providing backup.

   3. I’m glad this site finally is reasonable and admits we’re all gonna die.

      Even this article is flawed because Norway’s growth is heavy oil.

      https://i.ibb.co/NTXJVQ3/3-D9-B0452-A62-D-4-CD8-947-E-D2-BDC5674999.png

   4. ” If wind power provides the greater part of generation, as it will in most northern countries, excess power is best stored as heat for end use.”

      In Europe another strategy could be to use the large hydro reservoirs in Sweden and Norway (> 80 TWh) as batteries for long term storage of energy.

2. George, during our weekly phone conservation this morning my Norwegian Niece (an active Reservoir Engineer currently still advancing up the ranks) said, based on her somewhat limited observations, she agreed with your assessment of Norway’s C&C situation.

   She also remarked that your finish was most interesting before adding, no doubt experimenting with (or showing off) some English vernacular: “that off-topic stuff of Mr. Kaplan is ‘bloody brilliant’”. I don’t know if it was brilliant or not but there was certainly a lot of fun food-for-thought included there!

   1. Thank you and your niece. Some of the pieces in that list are brilliant I think, me managing to put them together in an almost coherent post obviously isn’t but it seems to have provided some seed for thought, which is probably the best you can hope for in any blog. How are your wildfires doing?

3. Thank you for the update, been putting some faith in Norway during the downslope of FF extraction, but doesn´t look overly optimistic…. (also a good thing I guess (and think))

   How is Troll doing, I think I´ve read that the idea was to drain the gas first, while keeping pressure up, and then get the oil?

   Also another question, on Snövit, I guess the LNG is selling at a premium at the moment, but how about reserves?
   (my brother was there as an electrician a couple of years ago, apparently there are five “747” RR gas turbine engines powering the compressors/coolers, looked impressive on picture)

   The NG from snowhite might also be used as feedstock for the steel industry in northern Sweden, as an H2 supply for direct reduction of iron ore, with or without carbon capture of course, just a side note, we´ll see about that later.

   Best regards!

   /Laplander

   1. Troll III is the opposite than you said, they got the oil rim with clever horizontal drilling while maintaining the gas pressure but have now switched to blowing down the gas so the oil production will drop quite quickly.

      I’ll check Snohvit reserves as I write the next post which will be about production and well bores mainly. I know there has been at least one other discovery nea by that will be tied in. The turbine drives are mystery to me. The compressors there are variable speed electric drives (the only major LNG plant to have them) and I thought the intent was to eventually switch to an external feed from the hydroelectric projects, but so far that doesn’t seem to be proceeding. From UK perspective Ormen Lange might be a bigger concern, it feeds UK gas exclusiely but is over 50% depleted and now reiies on subsea compression. There are a couple of smaller fields tied to the same gas plant but they are going to start to depleting pretty soon (in fact one, Dvalin, seems to be a bit of a dud already).

      1. Did some research on the liqufaction in Melkoya/Hammerfest, apparently they had a bad fire there late last year, starting in one of the gas turbines driving the electric generators (LM6000, an aeroderivative made by GE, not RR as I claimed)

         But apparently they were lucky and could put it out successfully, found some claims that the whole complex could have been lost, but Equinor claims there were no such risk. However the facility has been closed since then, scheduled for restarting next month, but that seems to have been pushed to march 2022 after the investigation by PSA, the Norwegian Petroleum Safety Authority, according to LNGprime.com.

         So this may also have affected the NG prices in Europe, had completely missed this incident.

         1. Tried to edit but can´t attach a file in the editor?
            Anyway, found a picture, courtesy upstreamonline, looked bad…

            

            1. Correct,
               An image cannot be added in the editor, only in an original comment.

            2. I checked the R/P and there’s probably around 18 years left, which makes sense as LNG plants are typically designed to maintain around full throughput for 20 to 25 years (they are much less efficient, and maynot work at all at lower throughputs).

               1. Great Post as usual George. Thank you.

               2. LTO Survivor and anyone interested,

                  Paper linked below suggests 1580 foot spacing is optimal for Wolfcamp Delaware Basin, for maximum 150 day IP and EUR.

                  https://irispublishers.com/gjes/pdf/GJES.MS.ID.000663.pdf

                  Excerpt(from paper conclusion, on page 8):

                  Maximum values for both EUR and IP OIL are obtained when log (ROA) is approximately 12.5, which implies an optimum ROA of approximately exp (12.5) = 268,337 ft2.

                  EUR drops with the increase in overlap between horizontal wells due to interference. EUR shows a linear relationship initially for an overall range of 0-50 %, then decreases sharply due to increase in the communications.

                  The work suggests the higher the overlap (ROA>60%) between wells, the lower expected IP for 150 days and EUR from the well. This leads to a spacing of 10 acres. This leads to a development spacing of 10 acres, This leads to linear spacing between laterals of 1580 feet.

                  The results show a good correlative fit (95% confidence interval) between 150-day oil IP and EUR, and at least in this area of the Delaware Basin, the relationship between spacing (ROA) and well performance is clear.

4. Mr Kaplan , will go through your post tomorrow ( sleep time in Europe ) , but the first paragraph itself was a woozy . ” The increase in remaining C&C reserves that has been seen over the last few years, and has come mostly from growth in Johan Sverdrup, has run its course and there was a significant drop in 2020, even as production continued to climb. The reserve replacement ratio has been 38%, 174%, -24%, -75% for 2017 through 2020. ”
   In boxing terms a “KO ” . Good Night . You sir are a “Gem ” .

5. Thank you for your lucid analysis. This ends the stupid debate and the will of the Greens in France to abruptly shut down the country’s nuclear power plants and instead open 20 gas-fired thermal power plants. What gas will they be supplied with?

   1. Kind of reminds me of those 60 or so planned coal fire and blast furnaces that are schedule to be built in China. They don’t even have enough fuel to run all the current ones much less add 60 more. They are rationing power in China right now not because they don’t have enough power plants. Not because they want to be net neutral carbon by such and such date. But because they lack supply of coal.

      People believe these are temporary problems with supply chains that will be fixed.

      Where does the price of steel go if China can only produce a 10th of what they use to. It goes higher. Just like the price of oil right up until the point where the debt bubble pops. Then the price of everything crashes.

      1. HHH , any thoughts on the crypto ban curve ball thrown by China ? Is it a pre-emptive strike against capital flight in light of the Evergrande fiasco ?

         1. I, too, would like to know, because thus far from the peanut gallery online, I’ve heard everything from “China has been banning crypto since 2013, lol” and “Finally, they’re getting serious.” I was thinking this may have some relevance to the Evergrande situation and be a reminder or actual implementation of new safeguards.

            I also kinda just want crypt to die already.

         2. A lot money that flows into China from the outside world is US dollars. Last thing they can afford is to have to watch US dollars flow out. Due to debt defaults. It not just Evergrande that has recently defaulted on US dollar denominated debts in China. Evergrande is just the largest and most important.

            Most of the dollars that have flowed into China will never leave. Why American billionaires invest there is beyond me. It maybe made sense to invest there 20-30 years ago but not now.

            Property sales have crashed like 65% in China. Loss of confidence. Capital flight happens when people lose confidence. In the UK and rest of Europe have a bigger problem looking ahead as they don’t have the capital controls that China has.

            We are still in the period where everyone believes these energy issues are just temporary supply shocks. Vast majority of people haven’t even considered that these are permanent supply shocks that don’t get fixed.

            There exists a large disconnect between what people believe and what reality is.

            Banning crypto is just the CCP attempt to preserve their power for as long as possible. Capital flight is a threat.

            Don’t forget that real estate prices for the most part don’t crash over night like stock market can. This China situation will take 12-18 months to play out. Maybe longer.

            You will see lack of demand for commodities from China and there will be long list on countries that are effected by that.

            But don’t worry all is fine our central planners said so by saying they’d be tapering QE and raising interest rates soon. Go buy stocks 😂

            1. The Chinese hold a lot of foreign currency because the Chinese produce more than they consume, not because American billionaires invest there.

               IT’s simple really: If you produce more than you spend you export the surplus. In exchange, you get money, typically foreign currency, as that is what foreigners have. Another way to put this is that you are a net saver.

               But you can spend your money on investment as well as on consumption.

               Savings – Investment = Exports – Imports

               As long as China keeps exporting more than it imports it won’t have any shortage of foreign currency. The money keeps pouring in. Consumption is much lower than production, so savings easily cover investment.

               1. I think your ill informed on how China’s monetary system actually works. I won’t fault your for it because most people don’t.

                  China has to have US dollars on hand to expand their local currency base. I know people believe they can print or expand the monetary base by whatever they choose. That belief is not reality.

                  For every $1US currency they have on hand they can expand their monetary base or credit by about 6 yuan.

                  If China decided to bailout Evergrande. Call it $300 billion bailout. It would mean currency peg gets broken. And not by a little because for every 1 US dollar they have there are about 6 yuan. It would drain $1.8 trillion yuan out of their banking system with no way to replace those yuan.

               2. Additionally – China needs to buy/hold foreign currency because it can’t allow the yuan to strengthen too much. It’s very much a managed currency so China ends up holding lots of USD which then is invested in treasuries (among other assets). Treasuries are a whole lot safer than keeping the money in the bank so don’t confuse their UST holdings with a desire for USD assets – it’s because they want a artificially weak yuan.
                  Rgds
                  WP

      2. Chinese energy policy for the last decade, seems to have focused on trying to stretch the benefits of their static coal production from deep mines. I think they are fully aware that time is running out. Their new coal power plants are ultra critical units, with thermal efficiency upwards of 45%. That is some 50% more energy per unit coal than the lower technology, saturated steam plants that they replace. The declining capacity factor partly reflects their use as backup plants for wind and solar powerplants. A lot of people seem to think that this heralds China’s ambition to transition to a 100% renewable economy. More likely, they are attempting to stretch their limited coal reserves long enough to allow nuclear new build capabilities to grow to the point where they can replace coal altogether with nuclear fission.

         1. TONYH –
            I agree that one big reason for building new coal plants in China is to get rid of older plants. More efficient plants are also cleaner. The Communists Party is nervous about pollution because it makes them look incompetent.

            The coal industry is doing terribly however, with very low capacity factor and huge losses. Much of the new building is being done by the provinces despite the plans of the central government. There isn’t a grand plan.

            The recent massive build-out of solar was also done by the provinces against the will of the central government. The provinces built panel production in competition with each other to dominate the industry, and then consumed the output to keep the manufacturers afloat.

            They are still moving forward with nuclear, but Fukushima makes them very nervous. The disaster made the Japanese government look like idiots. The Communists believe they can keep on running the show in China unopposed as long as people have faith in their ability to lead the country. In their view, a single nuclear accident could destroy that faith.

         2. Agreed. China has hit peak coal which means their production costs keep rising from here, which means their selling price keeps rising, in turn blowing out the profit margins of the countries that are selling them coal. It also means that the cost of renewables is going to go up fast than the rate of inflation – because they are all made from Chinese coal. Renewable energy is too expensive to make renewables – we all know that.

            

            1. That graph was from a paper by Chicom academics in 2017. The last four years shows that the production peak has a flat top.

               

            2. It is curious (and likely no coincidence) that China is hitting peak coal just as it’s working age population peaks. Fewer workers means fewer miners. The Chinese demographic situation looks awful. Their population will halve by 2100.
               https://youtu.be/vTbILK0fxDY

               When this is coupled with their energy supply problems, the future begins to look ugly for them. In some ways analogous to Japan. The difference is that Japan hit its peak at much higher per capita income. It also did so at an earlier time, when it could outsource to the rest of the world, which was still growing.

               Who knows, they may come up with a solution. They are clever folk those Chinese. Cleverer on average than white people and harder working as well. Maybe they can grow clones in baby tanks or something? Neccesity is the mother of invention, so to speak.

               1. Eh, remember, this was the nation that was so forward thinking they show trialled all their academics to death, wiped out native pest control leading to famine, and didn’t see any problems with a one (male) child policy. There isn’t enough fentanyl in all of Shanghai to dull the pain from those decisions.

                  Sounds like they’re fucked too. We just get to see them go down in a more interesting fashion while they take all our manufacturing capacity with them and murder the GND. King Coal is dead. Long live… ?

               2. Kleiber —
                  It’s pretty simple really. Electricity is too cheap in China, but the Communists hesitate to raise prices for political reasons. And they are squabbling pointlessly with the Australians.

6. Thanks G. Kaplan!

   The Norwegian population is at sleep as a whole thinking it is BAU. The disappointing developments in the Barents Sea has been known for some time despite the encouraging Shtokman field across the russian border ( yet to be developed). There are more gas reserves than oil reserves in Norway for the next few decades I believe, at substantially lower levels (I do not dare to guess; I am just a layman) when coming down from the high rates in the early 2020’s after a while.

   There are a lot of prioritation issues going forward. Can we have a green aluminum/ferro silicium/silicon/copper industry in Norway going forward based on hydro/wind power or must all electricity be exported to who (UK, Germany, Netherlands, Denmark) and when? For what purpose? To keep the lights on? A half way solution must be worked out. We got a socialist government now in Norway. They are always going to go for a compromise when dealing with Europe (as did the more right side government “Høyre” the last 8 years)” There is a spoiled population in Norway – it could be nationalistic vibes if living standards go too far down. That is why the extensive electrification policy of transportation may be a way to keep most people content with less gasoline/diesel consumption. The Norwegian state is very powerful and we will probably see substantial more offshore wind power and rework of hydro projects in addition to electrification of transportation subsidised in a big way going forward. Rather that, than infuriating Norwegians.

   “From previous civilisation decline studies (e.g. by Tainter, Costanza) it seems that simplification is possibly the best way to avoid complete collapse”

   I agree very much the statement above. The purpose of the energy transition is maybe to prolong the fossil fuel age, and to enjoy a more simplified life rather than complain about it?

   1. I think that you should be “sig self nog”, with the exception of us poor swedes! (leaving us not supporting you very well during ww2 out of the picture…) Anyway, Sweden has been exporting power, by a 2-4 kMwh basis, with quite a bit of it wind of it, as well as Norway has, but mostly hydro I guess in your case (give or take, a bit lower numbers perhaps for Norway)
      This was for last month to mainland europe, from what I can see from Nordpoolgroup.com, it´s free access for all it seems, lots of interesting numbers there.

      So perhaps maybe we should form an alliance, letting the southerners freeze in the dark!

      Just kidding, main reason from my point of view for the high electricity prices in EU is less gas from Russia and Norway and other european countries, in the Russian case maybe they are also a bit annoyed by the NS2 debacle…Dropping a fuel rod during maintenace in a swedish reactor, prolonging standstill might not have helped… (but should be shut down permanently anyway, so I don´t mind)

      Wood stoves are underrated!

7. Just the ABSTRACT of that thar REES paper is a fucken DOOZY.

   “Green New Deal proponents are appallingly tolerant of the inexplicable.”

   LOL

8. George, you might want to reconsider the link to “Megacancer,” unless you really think SARS-CoV-2 is a “plandemic.”

   ‘They’re hacking you now with an engineered virus and mRNA “vaccines”.’

   ‘Fess up now, or GTFO.

   1. I don’t think I should only suggest authors who I agree with in all things, in fact I doubt if any exist, Ellroy certainly wouldn’t be there however entertaining I find him. People can make their own minds up about the content of any of the things above. We probably all have some areas where we find it impossible to apply proper logic. It’s a problem if that can end up having a malign effect on others but I doubt that’s the case with a sparsely read blog like that or maybe any blog except those that appeal to fashions, which can change quickly and be easily swayed. My main problem with climate deniers, for instance, is not the drivel they spout but how mind-numbingly tedious, repetitive, unimaginative and ewe-like they all are (and cowardly, but that’s a different objection).

      I don’t get why Covid and vaccinations seem to make so many apparently sane people go slightly bonkers (or more than slightly in some cases). It may have something to do with “my body is a temple at which I worship” or that medicine is so far from an exact science (much more so than earth sciences, even given however complicated they are). Chris Martensen is another who can write mostly good stuff but not for Covid – although I did notice he interview David Icke who was a professional goalkeeper and well respected TV presenter but is now a full time wacko who believes in lizard people, so I’m not sure I’ll be going there again.
      I don’t think I should only suggest authors who I agree with in all things, in fact I doubt if any exist, Ellroy certainly wouldn’t be there however entertaining I find him. People can make their own minds up about the content of any of the things above. We probably all have some areas where we find it impossible to apply proper logic. It’s a problem if that can end up having a malign effect on others but I doubt that’s the case with a sparsely read blog like that or maybe any blog except those that appeal to fashions, which can change quickly and be easily swayed. My main problem with climate deniers, for instance, is not the drivel they spout but how mind-numbingly tedious, repetitive, unimaginative and ewe-like they all are (and cowardly, but that’s a different objection).

      I don’t get why Covid and vaccinations seem to make so many apparently sane people go slightly bonkers (or more than slightly in some cases). It may have something to do with “my body is a temple at which I worship” or that medicine is so far from an exact science (much more so than earth sciences, even given however complicated they are). Chris Martensen is another who can write mostly good stuff but not for Covid – although I did notice he interview David Icke who was a professional goalkeeper and well respected TV presenter but is now a full time wacko who believes in lizard people, so I’m not sure I’ll be going there again.

      1. Thanks. The reason I asked: The woman below is someone I grew up with. She believed some of the bullshit that Megacancer spouts, refused to get vaccinated and is now dead because of such ignorance. It’s personal now:

         https://www.kentucky.com/news/local/education/article254490102.html

         1. I can’t help but notice that most of the people dying from COVID under the age of 70, are heavily overweight. That includes the two women pictured in the link. Whilst I don’t doubt that getting vaccinated will reduce individual risk, shouldn’t this crisis also be a wake up call to the terrible metabolic health of people in the US? This is the principle reason that the US has been hit so hard and also why the UK has been hit harder than Sweden, which never took any coercive measures to confront COVID-19.

            The American people are out of shape and their immune systems just cannot cope with the infection. The food industry has developed in toxic ways; producing high calorie density foods, full of ingredients like corn syrup and palm oil, which are ruining people’s health. And it is leaving them wide open to disease. Instead of fixating on people that declined to take poorly effective vaccines, which is really just scapegoating, this crisis should bring home to you all the importance of improving fitness and nutrition across the nation. No one wants to talk about this, because it is so hard to confront. It is easier just to find convenient people to blame and vent your frustration upon. But the fact is that bad food is causing catastrophic increases in heart disease and cancer, that are now seriously damaging human life expectancy. Vulnerability to COVID is just another disease to add onto a very long list.

            1. Agreed 100%, Tonyh. I have been overweight and prediabetic for several years.
               I started intermittent fasting 3 weeks ago. Completely eliminated sugar (not that I used to eat a lot of sugar). Now I eat just 2 meals a day with zero snacking between meals. Time interval between dinner and next day’s lunch is 16 hours.
               I have already lost 5-6 pounds. This is now going to be my lifestyle for the rest of my life (there will be rare days when I eat sugar or eat snacks).
               If Americans were metabolically healthy (sensitive to insulin) Covid would have killed so few people we would not have noticed there was a pandemic.

               1. SUYOG,
                  Pre diabetes and type II diabetes are completely reversible. It calls for a change in our eating habits. So no bread, sugary drinks, cake, ice cream and even no potatoes or corn. Insulin acts on protein and especially to carbohydrates. It has zero action on fats. Its all the carbs that Americans eat that do us in. Best of luck to you.

               2. Thanks Docrich. I agree with you 100%. I have watched a large number of YouTube videos from top of the line scientists and doctors. Some illustrious names are: Dr Robert Lustig who is a pediatric endocrinologist working at U of California. He has absolutely fascinating lectures on the damage done to the human body by consuming fructose. Dr Jason Fung who is a nephrologist practicing in Toronto. I have learnt so much from these people. I will always be grateful to them.

      2. Hey George, your buddy at Megacancer is even crazier than I imagined:

         The virus and lock-downs may be designed to put Western nations on a semi-war footing so that people can be managed in what will be a very challenging time. The virus may be a means to reduce population too…

         I want to thank you for advertising his blog here at POB.

   2. I side with George on the topic of censorship.

      On the topic of the pandemic I have heard people say what I consider to be very misleading things on all sides, including Anthony Fauci. (A link to my little blurb on the pandemic: https://www.math.univ-toulouse.fr/~schindle/articles/pandemic.pdf)

      Matt Taibbi has looked at the topic of censorship rather closely. Here is a link to some of what he has to say on the topic with a link to a video of an interesting debate on the topic of free speach with Nadine Strossen and Amna Khalid on “Fire”: https://taibbi.substack.com/p/responding-to-on-the-media-on-free

      1. No one said anything about “censorship,” schmuck.

         If someone is going to post bullshit about being “hacked” by vaccines, I’m going to bitch about it, especially as I know someone who refused to be vaccinated and died. G+K is a dumbass for passing such shit around.

         And by the way, go fuck yourself. Censor that.

      2. Schnizy, from your link:
         Our aim is to examine a simple model to determine which policies should be
         adopted in order to end the pandemic with as few vaccinations as possible.

         This paper is antivaxx bullshit. We are in the midst of a pandemic that is literally killing people by the thousands. Vaccinations are the only way out of this pandemic. We need to stop all the deaths. So please do not post even one more antivax post on this blog. Not one more.

         And slandering Fauci will not help either.

         1. No Ron, you are wrong. This is not antivaxx bullshit.

            This is a modification of the standard model epidemiologists use to compute the percentage of vaccinated individuals in a population that will end either an epidemic or a pandemic. What the paper says is that unless the vaccinated social distance, a large percentage of those who are not vaccinated will die. You get vaccinated to save your ass, but it will not stop the pandemic. The paper indicates that the rate of vaccinated individuals needed to end the pandemic is higher than we were originally led to believe.

            If you look at Norway for example, the average number of excess deaths since the beginning of the pandemic is negative (https://ourworldindata.org/excess-mortality-covid). They accomplished this with severe precocious lockdowns. Then they vaccinated a large percentage of the population (currently around 63%) and opened up. But the pandemic did not end. I originally heard estimates that a 60% vaccination rate would end the pandemic.

            I object to blaming the non vaccinated for endangering the vaccinated. They are not endangering the vaccinated by dying except, perhaps, by overloading health care services. I think it is the vaccinated who are endangering the unvaccinated if they do not social distance.

            Vaccination does not magically end the pandemic. Indeed, it is possible for the pandemic to persist with a 100% vaccination rate. Vaccination does save lives. Some say that vaccination encourages the development of vaccine resistant strains of covid. I have not looked at this carefully, but I currently don’t see why this is not a possibility.

            1. Good points. I would add that this viral outbreak should have been the wake up call that America needed to improve its nutrition, metabolic health and reduce obesity. The generally poor metabolic health of the US population has left them vulnerable to infection. And there are bound to be other disease vectors in the future that pose even greater risks. Even if this virus were to miraculously disappear with high vaccination rates, the fact remains that the US population is facing a real pandemic of cancer and cardiovascular disease that is killing millions before their time and ruining lives years before it takes them. For some reason it doesn’t cause the same national panic as this virus, even though it is the most significant factor behind the high US mortality rates from COVID compared to other countries.

               I wonder how the US population would have faired, if the COVID virus had arrived in the 1980s. Would the mortality rate have been anywhere near as bad? Would there have been the same hysteria, lockouts, mask policies, forced vaccinations? We will never know for sure. But the much lower obesity rates back then would have dramatically shrunk the mortality rate.

               This paper indicates a J-shaped correlation between obesity and mortality from COVID-19.
               https://pubmed.ncbi.nlm.nih.gov/32783686/

            2. Then this pandemic never ends, and we perpetuate these curbs on normality indefinitely.

               Thanks, but I’ll take my chances with the virus. Unlike some people, I had to work all through the lockdowns risking myself as a key worker and was promised vaccinations would be the gateway to normality again. If America wants to die on the hill of liberty because “my body, my rights” over vaccines, then so be it. The rest of the world is happy to move on.

               Look at the US’ case rate compared to everywhere else. That said, there is little room for the virus to manoeuvre as many doomsayers (I can’t believe I’m the one shining a ray of hope here) seem to think it has infinite variability to evade vaccines. This is patently not the case, because it can only vary the ACE2 spike protein ligand to the degree that it can try and weasel out of antibody detection, but still act within the receptor matrix. Given Delta has by far out competed all other variants of interest and concern, and is being held in check by the vaccines with negligible mortality or severe sickness across all cohorts, I think it’s safe to say we open up.

               Anyone who hasn’t taken the jab now? Too bad.

               1. Pandemics are characteristic of the end of civilizations (see https://www.resilience.org/stories/2020-05-14/global-boom-pandemic-crash-is-history-just-repeating-itself/)
                  Decreased biodiversity increases the probability of pandemics (see https://books.google.com/books?id=RMmxxYUBQhgC&printsec=frontcover&dq=spillover: animal infections and the next human pandemic&hl=fr&sa=X&ved=2ahUKEwjRmuKfl57zAhU0CjQIHWI8A-4Q6AF6BAgHEAI#v=onepage&q=spillover: animal infections and the next human pandemic&f=false).
                  This is probably one reason pandemics characterize the end of civilizations. Civilizations tend to be efficient at destroying biodiversity.

                  There are two ways to end the pandemic (see https://www.math.univ-toulouse.fr/~schindle/articles/pandemic.pdf). The fastest way to end a pandemic is via quarantine. Everyone gets tested frequently and is immediately quarantined if sick. A vaccine giving lasting sterile immunity (the reproduction number of those vaccinated is 0) will end an epidemic or pandemic quickly if a sufficiently large portion of the population is vaccinated. The vaccines available for COVID 19 do not give sterile immunity. They could help to end the pandemic, but how much we don’t know because the data is not available to estimate the reproduction number of those vaccinated. I spoke with an epidemiologist last week who complained about the lack of data which should be collected. Another way to end the pandemic is to do nothing. The population is culled of those at risk and the virus and population become adapted to each other.

                  We are learning more about our immunization system. For example we are learning that our microbiome is responsible for a large part of our immunization (70% according to this author: https://book.umanaidoomd.com/). These authors say that the global food business favors pandemics (and otherwise makes us sick): https://us.macmillan.com/books/9780374602529
                  Best for your health eat food produced using agroecological methods.

               2. There are lots of corona virus types in cirulation – many of then are the backbone of the common cold.

                  This one will stay, too. It can survive in animals, it’s easy to spead.

                  But with the vaccine it’s less deadly – and when there is a new variant there will be a new vaccine. Biontech said they need only a few weeks now for the vaccine – getting the approval is longer.

                  There are new vesions of the flu every year – so you don’t need to be a prophet to see that there will be new versions of corona, too. They have a new vaccine for flu every year (it’s much worse than the corona vaccine, but it helps).

                  Here the mass dying stopped from the vaccined people – so it helps a lot. Most people in hospital because of Corona now are either not vaccinated or have a completely broken immune system.

                  Living more healthy helps with anything – not only Corona.

9. Thanks George, always lots of food for thought.

10. Brought forward from the last thread .
    HOLE IN HEAD
    IGNORED
    09/24/2021 at 10:19 am
    Baggen , what is your thought about Richard Duncan’s ” Olduvai theory ” , which lays out a scenario based on decline of per capita electricity . Just dusting some books and see he had electricity shortages starting in 2012 . Suddenly electricity shortage is in the news .
    https://oilprice.com/Energy/Energy-General/The-European-Energy-Crisis-Is-About-To-Go-Global.html
    https://www.zerohedge.com/commodities/china-enforces-power-rationing-major-industrial-hubs-amid-shortages-and-climate-push

    1. The current blip in European gas prices is meaningless in the long term. It is just part of the general supply chain disruptions caused by the pandemic. It doesn’t prove that renewables will save us, and it doesn’t prove the sky is falling.

       The same is true of the current worldwide chip shortage. Does it mean that there will never be enough chips again, or that we have to find an alternative to chips? No and no. It proves nothing.

       History is just “one damned thing after another”. Trying to attach an narrative to every little jiggle in prices is a fool’s errand.

       1. I don’t know. I’d say the culmination of so many factors lately is indicative that not all is so rosy as many of our supposed benefactors would make out. The financial system, the HGV and other professional supply chain worker shortages, the increased cost of living in food, consumer goods and now all forms of energy, the housing markets of many nations, natural resource constraints from water to minerals. These all point to the situations prior to the pandemic finally coming to the fray with a vengeance, things which were on the horizon or already in play, but which either got delayed by the pandemic or came back harder because of the consequences of throwing that spanner in the works.

          In the UK, everyone is blaming Brexit for things which are evident on the continent. I’m sure many Americans who didn’t vote Biden will blame him for the state of affairs over there. People will find their own narrative explanations for what is, at the end of the day, a simple matter of a complex super-organism experiencing a heart attack from which it may find it very hard to recover. The knock on effect of the semiconductor shortage alone is financially costly to many industries, but I’d be more concerned with the gas situation now given the writing on the wall.

          Any one thing isn’t evidence of things being great or going Mad Max, I agree. But all of them together? That’s a potent brew. And I didn’t even factor in the more prominent appearance of climate related disasters over the last 18 months.

          I’m watching to see how people overall react to this. Whether we turn to the usual accusations of the other tribe being incompetent or corrupt, or people awaken to the idea that something needs to change systemically.

          1. Kleiber, I live in the UK too. We have a shortage of lorry/truck drivers. 100,000.

             EU also has a shortage of drivers, about 400,000. But with a population of 450M, this a lot less than the UK with a population of 67M.

             The EU shortage does not produce shortages in the supermarkets. The UK one does.

             The UK also has a shortage of cheap EU migrant labour. So crops are rotting in the fields. Don’t think this is happening in the EU.

             So yes, I’m blaming Brexit for problems in the UK which either don’t exist in EU or exist at a lower level.

             I’m attaching a graph of UK wholesale electricity prices v France & Germany. Not blaming this on EU however…

             

             1. As this is the FF thread, here’s UK nat gas storage…

                

             2. Britain does not and never has had a shortage of unskilled labour for agricultural work. What is does have is an overabundance of people who sit on their hands and expect to live for free from taxpayers money. These people will moan incessantly about how little money they have and how cruel the government is for not taking better care of them with tax payers money. A large number of them are obese, smoke, live on a diet of fast food and seem to lack any personal initiative. The idea that they should get out in the fields and work for a living, is something that simply would never occur to them.

                As for hauliers, there are shortages across the EU and within the UK for the same reasons. It is a difficult job, that requires long hours and days away from home. It is not conducive to quality of life. As HGVs have grown bigger, driving them has become more challenging and training and qualification requirements have increased. A lot of the financial cost of training falls on the trainee. So there generally aren’t enough new entrants into the industry to make up for losses due to retirement. With is why the average haulier is over 50.

                As a Marxist, Norris naturally looks for an open borders solution. It appeals to his pet prejudices. But that clearly would not have been effective in this case, because the problem is endemic across the EU. The solution, if indeed there is one, lies at home. I would suggest that it is likely to consist of a number of measures: (1) Better government support and industry partnerships for haulier training; (2) Shifting more transportation to rail; (3) Use of smaller vehicles for transportation (for shorter road transit distances); (4) Relocalisation of food production and distribution infrastructure.

                Relying on immigration from other nations to fill skills gaps is a foolish proposition. Firstly, it is not morally responsible. The UK NHS takes large numbers of doctors and nurses from third world countries, leading to a brain drain and poorer medical services there. Secondly, it pushes down wages for the UK workforce and contributes to the lack of skill base in the native populatikn. Thirdly, the constant influx of foreign immigrants, undermines the cultural integrity of the UK.

                None of this will concern Norris of course, as the idiot has already said that he won’t read anything that I write. He is a typical small minded Marxist, who starts with an uncompromising prejudice and then looks for evidence and arguments that validate his narrow minded point of view. One thing that you do notice about these people is that they cannot tolerate people that don’t agree with them. They lack the emotional security to even consider that there might be other ways of looking at things and are threatened by people that don’t agree with them. This is why they are called ‘Snowflakes’. Their fragile egos are easily damaged. You see a few of them on this board. Norris, Hickory. I am giving Ron Patterson the benefit of the doubt.

                1. Wow, you are such a psychoanalyst!

    2. Hih,

       Im not familiar with it and i dont have time to look at it now either.

       Im just looking how things is playing bout in Sweden and how the same thing is happening in rest of Europe and will get even worse as time progress.

       Nobody seems to be willing to acknowledge the fly in the soup, oil/gas cunsumptipn is actually increasing in the countries that are supposed to be the fore front of our transition. And how will it look when they have even less support from neighbors in the future.

       It will get a lot worse before people understand i suspect.

       Personally i shifted some of my capital into gas at the beginning of this year as i expected this result due to “green” decisions. Short of another corona surge or global economical meltdown i expect this situation to stay or get even worse especially if we get a cold winter in Europe.

       Just have a feeling it will get cold this year.

       1. Tks Baggen , no problem . Take care .

11. R/P for C&C dropped significantly to 9.4 years (490 weeks), the first time it has been below ten years.
    Natural gas R/P continued to fall and is now at 8.4 years
    Thanks George . Makes me go ehemmmmmmm .
    What , me worry ? Alfred E Neuman

12. I need to buy Rafael Nadal’s yacht . 🙂
    https://www.reuters.com/business/energy/europe-needs-long-term-energy-plan-eni-ceo-says-2021-09-25/

13. Interesting commentary by EIA at link below

    https://www.eia.gov/petroleum/weekly/archive/2021/210922/includes/analysis_print.php

    An excerpt:

    We based this analysis primarily on the published financial reports of 54 publically traded companies, so the results do not necessarily represent the sector as a whole because the analysis does not represent the financial situation of private companies that do not publish financial reports.

    U.S. oil producers have benefited from higher oil prices as evidenced by the higher revenue and increased cash flow from operating activities (also known as operating cash flow, or OCF) reported by these companies. Despite higher OCF, these companies have not increased capital expenditures to 2019 levels, which has contributed to higher free cash flow (FCF), the financial measure found by subtracting capital expenditure from OCF. As a result of positive FCF, many oil producers have had the ability to pay capital expenditures by using OCF rather than by raising debt or issuing equity. Through 2Q21, companies have also not significantly increased oil production, instead drilling fewer wells and accessing their inventory of drilled but uncompleted wells (DUC) to complete new wells at reduced costs.

    According to their publically filed financial reports, the 54 U.S. oil producers that we analyzed have reversed their financial trends since 2018. Their FCF had been persistently lower than zero, but since 3Q20, FCF has become positive and has been increasing. Capital expenditures have trended downward and have remained lower than OCF since 3Q20 (Figure 2). With positive FCF, producers can pay for capital investment programs and use cash for other financing activities, including debt reduction, dividend increases, or share repurchases.

    This suggests that the lower availability of financing for the oil and natural gas sector may be less of a problem than some people believe if current oil and natural gas prices levels continue (no increase) or increase further in the future.

    1. The discipline shown towards capital investment in this sector does seem to be sensible, as rapid production increases would crash the price of oil and undermine profitability. With interest rates lower across the world than in 2007, economies should be able to tolerate higher oil prices for a while. The problem is that this is pushing up inflation, which will eventually induce central banks to raise interest rates. When that happens, the number of bad assets on the balance sheets of banking institutions will explode. And oil prices will collapse back down to $30/barrel.

       Gail Tverberg observed a few years ago now, that there is no price for oil that is both affordable for consumers and profitable for producers. This is how peak oil will occur. Prices will ultimately be too low for producers to remain profitable. It stems from the EROI of the oil being too low to meet systematic energy requirements of our economic infrastructure. Low interest rates are an attempt at delaying the day of reckoning. But low interest rates cannot prevent the ensuing economic consequences that are the result of surplus energy falling below what is needed to operate a system that grew up on abundant High EROI energy. By cutting rates to zero 12 years ago, central banks were playing extend and pretend, hoping that something would turn up.

       1. >Gail Tverberg observed a few years ago now, that there is no price for oil that is both affordable for consumers and profitable for producers.

          Strange, my guess would be just the opposite. Saudi oil probably costs less than $30, and $120 oil barely dented US consumption.

          In my view the huge gap between the cost of oil and the value of energy storage in a moving vehicle is responsible for the incredible amount of waste of oil resources. Seriously, Americans drive a three ton vehicle several miles to buy a pack of chewing gum. Happens all the time. The doesn’t seem to be any squeeze going on at all.

          1. Yes. But remember that debt introduces a time lag between rising oil prices and the economic consequences of those prices. And we have been living with interest rates beneath inflation for 12 years now. Unfortunately, rising inflation is going to call time on those low rates in the relatively near term. But have you noticed that over the past 10 years, most people have been getting poorer? That is a direct consequence of high energy costs. The effect will be even more apparent when rates finally do rise.

          2. It’s baffling that on the same day I’m seeing people queue for petrol they presume to be running out here, they’re also all driving vehicles twice the size of mine and on the motorway at 70+ MPH.

             People have so much waste going on in places they don’t even think about, I wonder if they’ll ever cotton on to what they need to do should rationing become a thing again.

             Which, cool story: https://apple.news/ANxjLAahnTsCfpQ4CXUYgTw

             Looks like a north-western UK refinery is going kaput soon unless it’s bailed out.

             1. As you said below you have to account for human nature and as such nothing makes sense unless it is seen in the light of evolution, most of which happened for us in tribes of groups of families of hunter gatherers in resource limited savanas. Even trying to explain modern behaviour in the light of previous evolution is difficult enough; trying to predict how traits picked up then will manifest in behaviour now is virtually impossible, Most arguments seem to start with, or include somewher, that first and foremost we try for a comfortable life, but what ultimately drives us is reproductive success – i.e. attracting a mate, having children and ensuring they get to reproductive age while ensuring our genes don’t get out competed by others. Add in a large predilection for fairness and tit-for-tat revenge and things can get complicated and probably quite nasty when the environment becomes resource limited again, as it is just starting to do.

                1. George I do like the way you articulate your thoughts and couldn’t agree more. Alambiquated suggested that this is all a blip in the road which may be right if we somehow discover the next affordable energy source that is abundant, fungible and clean. I personally believe the pandemic exacerbated an already fragile global economic eco system based on and fueled by unlimited amounts of debt borrowed at unsustainably low interest rates. Scarce Resources that we have grown addicted to are beginning to dry up. How the world copes with a Mad Max scenario will be quite interesting.

                   Today I met with some of my old energy investment banking friends and we were asked by some folks at lunch not in the Energy game what my four favorite oil stock are today. Frankly we could only name only two because of our similar views on the short life ahead for the Shalecos. There are no exits for many companies because there are no buyers and no new capital coming in to buy and develop.

                   I know the MSM keeps believing that the Shale Co’s are chomping at the bit to ramp up and bring on a slew of new production. The real reason they aren’t ramping up is only partially due to “corporate discipline” but the true reason is because (1) the child wells are mediocre ( ie. suck)(2) the GOR is rapidly rising. Most CEOs know their only chance for survival is much higher oil prices, pay down debt ASAP and consolidation. This is what I faced and I know every other CEO is seeing the same thing.

                2. LTO Survivor,

                   Any estimate as to what 12 month average price for crude oil might lead to increased completion rates for Permian basin tight oil producers?

                   I have read that private companies that don’t need to worry about public shareholder sentiment have already started increasing their completion rates. I would imagine $75/bo or perhaps $85/bo might entice those who have waited to join the party. Though hedges might be holding some producers back from increased rates of development.

             2. Kleiber , on the sidelines . Essar refinery is owned by the Ruia brothers from India . The Essar group (refinery , steel, shipping etc) is on the list of willful defaulters of the Reserve Bank of India . The passports of the two brothers (Shashi and Ravi ) have been impounded . They are evidently in dire financial straits in the UK also . Just a titbit.

       2. Dennis and Tony H , FCF means f****** shit if you are up to your eyeballs in debt . I did not say this , the oilman Mike S did . As Richard Pryor says ” Whom are you gonna believe me or your f*****g LYING eyes ” when his wife catches him in bed with another woman . 🙂

          1. Holeinhead,

             The higher cash flow can be used for CAPEX and paying down debt. The concept is really not hard to understand. For the Permian basin this can easily be accomplished at well head oil prices of $67/bo (lower than current oil prices which many energy analysts expect to go higher in the future).

             Note that LTO Survivor has told me that he expects oil prices to rise. He is also surprised that Permian basin output continues to rise, as oil prices rise further, Permian output will increase at an even greater rate, despite pressure depletion (which is expected) and water disposal costs (which I expect to rise). Note that my scenarios all predict higher OPEX over time as the Permian basin matures, part of this is due to rising water disposal costs, as costs rise there will be more recycling of water.

14. From the paper by Bill Rees-
    “Not only is the [Green New Deal] technically flawed, but it fails to recognize human ecological dysfunction as the overall driver of incipient global systemic collapse. By viewing climate change, rather than ecological overshoot—of which climate change is merely a symptom—as the central problem, the [Green New Deal] and its variants grasp in vain for techno-industrial solutions to problems caused by techno-industrial society.”

    This statement leaves hanging the question- ‘what other response to the situation is at all rational or at all effective?’

    Surely the biggest problem in this world is the massive human population overshoot.
    5-7 billion human beings in excess of some level of earth carrying capacity.

    All of the other problems are a consequence.
    Lets be clear- no energy policy is going to cure population overshoot and the ecologic and human catastrophe that is a direct consequence.

    What can an attempted energy transition towards electrification on the front and back end accomplish?
    1. blunt the extremely rough and catastrophic period of peak human population/energy that will be encountered in this century. Embrace no illusion- this time of peak population approach and plateau will not be met by a humble, kind, deferential humanity. Rather humanity will behave in the just the same it has always behaved when faced with shortage, poverty and gross inequity. Think ethnic cleansing.
    But any blunting of the effects will be very patchy (some places much more than others) and partial.
    2. partially limit the degree of climate instability. Switching from coal to wind and or solar is a real difference in the trajectory of climate change. But make no mistake- the extent of climate damage is only a matter of severity. Human beings will resort to burning the worlds remaining forests and coal if they can’t get enough fuel elsewhere.

    If anyone has a rational plan for population and economic contraction that is not simply a recipe for bloodbath or forced euthanasia, bring it on. And best luck with getting humanity to buy in the program.

    1. I do. And I think there is much that is sensible in the Green New Deal, as well as much that is not. The shift towards electrification is inevitable. It is only a question as to how it is done. Whether the future energy system is nuclear, renewable or nuclear fusion, the fact remains that all produce electricity. Producing synthetic fuels to burn in combustion engines has terrible exergy efficiency. With cheap nuclear energy, there are scenarios where it could be made to work, affordably, within the scope of existing transportation infrastructure. But it is a long shot I think.

       But you will note that the parts of the world where human beings reproduce out of control, tend to be the poorest. They are places where women have no prospects of doing anything other than reproducing. What humanity really needs is a cheap and abundant energy source. This will allow the prosperity that will naturally reduce fertility rates by providing women options for careers and prosperity. You will not find that in low power density ambient energy sources like wind and solar power. These energy sources, wherever they have been used, have functioned only as a means of reducing fuel consumption in fossil fuel powerplants. And their physical resource requirements are huge, a fact that leads directly to poor EROI.

       The solution to overshoot is to provide cheap and plentiful energy through closed fuel cycle nuclear fission reactors. A more wealthy humanity, would shrink its population as a natural result of declining fertility rate. Coercion is not necessary.

    2. The article is pretty clear in section 4.2 on population reduction. The paper says single child but in other places I’ve heard them endorse a one or none birth policy as the only solution to the problems, with payments not to have children etc. It may be a theoretical solution but it’s never going to happen. I don’t see any solutions but I think people should be presented with the data and facts that has allowed me to come to that conclusion so they can make their own decisions and not be spoon fed greenwashed propaganda through rose tinted spectacles (people have told me I mix metaphors but I say as one door closes it’s never too late for a leopard to change its spots in mid stream).

    3. It’s all the money we are willing to spend that will get us what we really need as society or else things will only get worse. The data suggests that more and more Western countries now enjoy prosperity but without more babies our beloved standards of living will simply collapse.

       1. Angeleyes,

          Nations can allow people to immigrate to their nations if there are not enough people. A fairly simple solution.

          The world is not suffering from a shortage of humans, the reverse is true.

          1. Actually, the high IQ nations of Europe and East Asia are suffering birthrates beneath replacement rate. The places where birthrates remain high, Middle East and Africa, are not places capable of providing large numbers of high IQ people that are useful in technologically advanced economies.

             The solution to insufficient birthrates in white countries is for white European people to have more children. Not to import low IQ immigrants from the third world. That simply results in more mouths to feed that are unable to pull their weight. When London councils announced that they were no longer prepared to pay for social housing in London, the black population in surrounding counties suddenly jumped considerably. These people do not generally have the ability to hold down well paid jobs and afford their own shelter. The average black IQ is about 80, versus 100 for whites and 105 for East Asians. This awkward little fact pisses a lot of people off. It is a hard but intractable fact of life. It is not something that can be changed by better nutrition or schooling. It is due to genetic inheritance. On the other side of things, there is no point blaming them for something they have no control over. But these people are not going to be useful in filling in labour shortages in high income white western economies.

             As for importing immigrants from high IQ East Asian countries, their demographics are even worse than ours. Some do choose to come here. But you have to ask yourself if draining the shrinking talent base of these other countries is the ethical thing to do. And regardless, importing people from ethnically dissimilar countries, undermines the racial and cultural integrity of your own nation, by importing large, resident foreign populations. All in all, this isn’t a very good solution to population or skill shortage problems. The solution is: have more children!

             1. Yeah, for example, Germany allowed two low IQ Turks to come into the country. They founded the company Biontech and invented an mRNA vaccination for the Covid-19 virus, which further exacerbated the world’s overpopulation problem.

                Worse, these low IQ immigrants are now testing a cancer vaccination, which could lead to an unmanageable fall in death rates.

                We need to orient ourselves on high IQ individuals like the governor of Mississippi, who pointed out that Mississippians aren’t afraid of death, because they are Christians. He never immigrated anywhere, just stayed where he was. Visionary thinkers like these can solve our overpopulation problem.

                1. Racial IQ measurements are about averages. There will be high performers in low average IQ groups and low performers in high IQ groups. It is the average that matters in so far as their contribution to the economy. And I would add that the Turks are not a low IQ nation, although their average is beneath West European levels.
                   https://h2oisrael.blogspot.com/2018/05/national-iq-set-updated.html

                   If western countries are to import labour at all, East Asians would be the best contribution to long term demographics. Japan, South Korea, China. But they don’t have any surplus to spare and importing resident foreign populations that are culturally and ethnically dissimilar from your own people, is a bad idea.

                2. I’m… not going to wade into the eugenics quagmire that seems to be forming here (and yes, I’m well aware of the IQ variance based on “race”, whatever that even is).

                   But if anyone thinks mass immigration into these developed nations is going to happen, they’ve not been paying attention. Japan is a pretty good example of just what the UK is now going through. And even relatively open France and Germany are much less happy to take in masses of foreign peoples to prop up their economic growth.

                   This is how you get the far right voters mobilised. Open those borders at your peril, because some people are simply not going to embrace such a thing given the last five years in Western Europe. I’m living in a country that is literally bringing in emergency visas to bring in vital HGV and fruit picking labour from outside because we decided against having foreigners coming over here en masse.

                   This is only a “simple solution” if one were to ignore all human nature. May as well tell people war is over if we want it (spoilers: we don’t).

                3. What you wrote was of course the expression of crazed European progressive ideology in full swing, willfully mischaracterizing what Tony wrote and wrongfully attacking something he did not say. And with your own misbegotten example, no less. You even got your ideas regarding the geographic location of the two Turks completely wrong, and nonetheless ran with it.

                   Let me distill it down for you, since you are incapable of doing it for yourself; he said statistically there are populations that fall below 80, and are not capable of holding down jobs in high-tech countries. Furthermore, Turks are not from those areas with the sub 80IQ, they are from mostly Asia. From Google “The vast majority of Turkey’s territory is in Asia, but a small part of it is in Europe. Most of Turkey consist of the region known as Anatolia, or Asia Minor. A small part of Turkey, however, is situated in a region known as Thrace, which is the southeast corner of the Balkan Peninsula”

                   A simple check with Google would have saved you the egg on your face.

                4. Stop this genetic sub 80 IQ population bullshit.

                   Most of it is education and family. I know quite a few adopted or fully integrated africans here. One of them is a colllegue of mine – a fancy and intelligent young man, working as a software developer. I don’t think we need people under 130 here in this company.

                   We speak here of “welfare nobility”, too. Welfare dependency is passed on like a king’s crown in the family. No matter if white or brown. Family matters. Much damage is already done before school. It matters if you speak with a kid and feed it’s curiosity or if the parents drink and park it in front of a TV.

                   I claim if you would have measured IQ in middle Europe so round about 1700 in an average village or small town you would have measured abysmal values, too…. it’s all about stimulation.

             2. TonyH,

                Sounds kind of racist to me, there are plenty of high IQ people everywhere, much of it comes down to educational opportunity.

                The World does not need more people, that is a low IQ comment. 🙂

                1. Dennis, your assertions on this matter appear to be guided by dogma and attitude rather than fact. There are large disparities in average IQ levels between nations. Whether you think it is racist or not is irrelevant, it is the truth of the matter. Facts don’t change just because you don’t like them or because they don’t align with some left wing dogma about universal racial equality. You can search up IQ maps yourself.

                   There are strong correlations between average national IQ and GDP per capita, just as there are correlations between IQ level and average earnings for individuals. The Chinese could not have grown as fast as they have and developed into a rival to the US, without the intelligence quotient that allowed the to dominate manufacturing industry. A large fraction of professors and PhD students in US universities are Chinese. They are rapidly becoming masters of all human technology. You don’t get to that by being stupid.

                   Nigerian population is around two-thirds that of the US and growing fast. Yet nobody in the US worries about being eclipsed by Nigeria. Those folks are never going to dominate the computer industry, or compete with the West in developing microchips or nuclear reactors or space launch vehicles. We all know why. The same is true for India. It is stuck with GDP per capita less than a tenth the US. It is making impressive strides in limited areas, but there is no possibility of India developing technological hegemony over the US. China has continuously outgrown India. It isn’t a coincidence that they have a higher intelligence quotient than India (or us).

                   Other things come into play of course. Japan has slipped down the GDP/capita ranking due to its imploding demographics and lack of native energy sources. Yet they remain amongst the G7. Saudi Arabia and UAE have high GDP per capita thanks largely to their per capita energy resources. They are not really known for technological dominance and will sink into irrelevance as soon as their stored hydrocarbons are depleted. Need I go on?

                   There are some facts of life that are hard to swallow. The idea that you are bound by limitations that are prescribed by genetics before you were born, for example. Some people will be cleverer and stronger than you by design, no matter how well you eat, or how hard you work. It is a tough pill to swallow, but it is true.

                2. TonyH,
                   Your theories are glib but fall apart under scrutiny. Until 30 years ago India and China were equally poor and backward. Did the Chinese IQ suddenly increase in one generation? China is a dictatorship. If they want to kick the peasants off their land to build something it gets done. The Indian government on the other hand has to worry about winning the next election. PM Modi wants to build a bullet train connecting Ahmedabad with Mumbai. The problem is that land acquisition in India happens at the speed of a glacier and the state government of Maharashtra (run by the Shiv Sena party which is a rival to Modi’s BJP) hates Modi. Hence there is a delay of several years and the project is stuck in a limbo (similar to the bullet train situation in California). There was a similar situation in the Indian state of Odisha several years ago when a large S Korean company wanted to build a giant steel plant. It never happened because the aboriginal people who lived there didn’t want to move (google POSCO Odisha). There are many such stories of projects getting canceled or delayed.
                   In China they would simply put a bullet in the back of your head if you get in their way.

                   With all its shortcomings I prefer India to China where until a few years ago you were dragged to an abortion clinic if you got pregnant with a second child.

                   The problem with assuming that some people are inherently inferior is that it affects how you treat them. If you were a school teacher would you treat all your students fairly or would you give up on black and Indian students because they are inherently stupid and cannot be improved ?

                3. TonyH,

                   Perhaps you have cause and effect reversed in your analysis. Note that correlation and causation are different things. Data alone is not enough, some thought is required.

                4. Anyway it seem likely to me that African countries will eat everyone’s lunch by mid-century, not least because they will have so much of the world’s working age population.

                5. The world needs more high IQ people, not low IQ people. Clearly, Coyne, you can understand that much without putting a smug self-righteous spin on it.

                6. Mike Sutherland,

                   First IQ is a poor measure of intelligence, second the claim that white people are smarter than others is specious in my opinion as well as sounding quite racist.

                   Do you dispute my claim that correlation is not the same as causation?

                   Most intelligent people agree on that.

          2. I’ve never understood just what is so great about immigration for society as a whole. If we took the concept and applied it toward non-human species, wouldn’t that roughly be describing the concept of a so-called “invasive species”? Certainly I think Native Americans and other Aboriginal groups would not describe immigration in a positive manner as a “fairly simple solution.”

             1. Dan,

                We are all the same species, another dumb comment.

                1. Yours is the dumb comment. You seem to think that human beings are like interchangeable parts in a machine. We are more like cells in a larger social organism.

                   Human beings are naturally tribal. And divergences of race, religion, culture are all barriers that reinforce tribal division and prevent human beings from living and working together as one happy family. Race is the most intractable. This tendency to tribalism and division, is actually human evolution in action.

                   This tendency of human beings to prefer ‘their own kind’ is something that should be accepted and respected, not obstinately and arrogantly overpowered by one-world totalitarians. It doesn’t mean that we have to be at the throats of the rest of humanity or deny them compassion. But it does mean respecting certain boundaries and not treating different people like interchangeable cogs in a social and economic machine. We are more like cells in a larger organism. Trying to put someone else’s cells into your body will cause trouble with your immune system. Trying to put racially dissimilar people into a society will cause trouble with society’s immune system – something that lefties call ‘racism’. You would not accept an organ transplant and immunosuppressive drugs if you didn’t have to. Why would you force the equivalent onto society?

                2. TonyH,
                   If you truly feel that way then maybe your kind should not have colonized the American and Australian continents and not acquired colonies in Asia and Africa. Or do you feel that you have an inherent right to rule others because you belong to some sort of master race? You come across as somebody who thinks he is ubermensch. The S Asian and Caribbean immigrants in the UK and Algerian/African immigrants in France are fruits of colonialism. If you don’t like it then maybe your ancestors should have stayed home. Your ancestors were the invasive species or transplanted organs outside of Europe.

                   The other absurdity is your claim that skin color diversity automatically gives rise to strife. For centuries the Europeans slaughtered each other on an industrial scale and Europe was knee deep in blood. There were no dark skinned people in Europe back then and yet you had massive amounts of violence. It is well known how badly the English treated the Irish or what the Danes and Vikings did to the English; both sides had light skin color. If you could make all the dark skinned people disappear then you will go back to being “Protestant”, “Catholic”, “English”, “Scot”, “Irish”, “French”, “Dutch”, “Spaniards”, “Italians”, “Sicilians”, “Portuguese”, “Catalan” and “Basque” again and resume fighting each other. The tribal divisions will persist until the thinking evolves.

                3. Suyog is right. If it’s not nation states and empires, it’s religions, ethnicities, or economic models or football teams. People are inherently tribalistic and “The Other” is always relative. You can team up with your enemy from the next town over when a foreign invader enters your domain. And you may all band together with that foreign invader when you find a larger outside threat, or it may all break down along smaller fractures in ideology. But in the end, it’s extremely lucrative for the elites to have one expend energy fighting amongst comrades.

                4. Suyog, you seem to be assuming things that are not supported by what I said. I made it clear that racial average IQ was not the only constraint on the economic performance of countries, see my point about Japan. But it does set an important boundary to what individual nations can hope to achieve. Nor does one nation being cleverer than another on average IQ measurements infer any inherent right to subjugate its people. Why would it?

                   As for European states slaughtering each other, I posit that this only confirms the tribal nature of human beings. And these were people that were relatively similar. They have struggled to resist killing each other none the less. If they were even more dissimilar, they would have had even less chance of seeing eye to eye.

                   Anyway, I’m off to bed. I blow too much time on this board.

                5. TonyH,
                   Correlation does not imply causation. It is correct that there is a correlation between per capita GDP and average IQ (barring natural resource exporters, of course). However we don’t know that a higher average IQ increases per capita income. It is more likely that when a nation prospers it provides an enriching and safe environment to more of its children and that increases average IQ. What would you have concluded about average Chinese intelligence 30 years ago when it was still poor and backward? What if India experiences a growth spurt over the next 30 years and Nigeria after that?
                   We already have countries like Rwanda (yes, Rwanda) that look very promising. Rwanda could become Africa’s Singapore over the next 20 years.
                   Even at an individual level a higher IQ does not automatically lead to greater personal wealth or power. Several other factors such as access to networks of influential people, access to capital and knowhow, role models within one’s social circle, people skills, and willingness to completely abandon family life for greater success are more important.
                   Regarding immigration, I think sovereign nations have a right to set immigration policy that works for them. I never said that everyone has a right to immigrate when and where they please. However your tendency to classify a broad swath of people as genetically inferior because at this particular time in history they are not well off is dangerous. It is this type of thinking that eventually leads to people being herded into boxcars.

                6. TonyH,

                   Lots of assertions, but very poor analysis. Sounds like rationalization for racism.

                   Not buying it.

    4. This is where it’s a predicament, not a problem, because there is no feasible way we voluntarily reduce our numbers and/or consumption to fit into a singles, sustainable Earth quota. We’re going to keep on playing musical chairs until all the chairs are taken away at this rate.

       I’d rather we didn’t get eco-fascists or nuclear war put on the table as alternatives to climate collapse and total anarchy, but here we are. Those may be natural paths from people doing all they can to avoid paying the piper.

    5. If anyone has a rational plan for population and economic contraction that is not simply a recipe for bloodbath or forced euthanasia, bring it on. And best luck with getting humanity to buy in the program. Covid-22

       1. It’s a predicament, not a problem.

          1. Not to nitpick but the two words, predicament, and problem, are not mutually exclusive. We have a problem without any possible solution by man nor governments. That’s called a predicament. But nature will eventually have a soluution. Nature always has a solution. There are no predicaments in nature.

       2. Lightsout,

          As people become educated and women have more equal rights, birth rates fall (as they have in half of the World’s population) to below replacement rate. For the other half of the World population will eventually see their fertility rates fall and World population falls, as it does economic growth also slows.

          So a focus on education for girls and women and women’s rights are the solution to excessive population.

          The paper below focuses on human capital (essentially education) rather than womens rights.

          https://www.pnas.org/content/116/26/12798

          1. We have run out of time Dennis. I know you want the world to jog along as normal with a few tweaks here and there but it can’t and massive and unpleasant change is almost if not already upon us.

             1. Lightsout,

                I agree there are likely to be significant changes, just suggesting potential paths forward.

                Some nations such as South Korea went from 5.6 births per woman in 1965 to about 1.1 births per woman today, it can be done, much of it through education.

                See https://data.un.org/Data.aspx?d=PopDiv&f=variableID%3a54

                1. Dennis this has also happened in India, which is the poster child for overpopulation. The fertility rate in India is now just 2.2/woman and is rapidly falling. In large S Indian states the fertility rate is now 1.6/woman and is below many European countries. In a few years the N Indian states will catch up. I can see this collapse in fertility everywhere. My grandparents had 6-8 children. My parents had just 2. Me and my brother have just 1 child each. If my nephew and my daughter don’t get married and have children this is the end of the line for us. Most of my cousins have 1 child each. A few have 2 children. And ours is just a typical family. I personally don’t know any young Indian family with 3 or more kids.
                   What is remarkable is that the low IQ Indians were able to do this without forced abortions or coercion, unlike the high IQ Chinese 🙂

                2. Suyog, wherever countries develop high living standards, they seem to find it difficult to achieve a balance with fertility. Ideally, it would be advantageous to see a controlled decline in fertility, that allows population to gradually decline, say 2 children per woman and reduce environmental stresses. This allows enough spare resources to educate a large fraction of people to university level. And God knows, the world needs more scientists and engineers.

                   But the sort of demographic collapse that we are seeing in countries that have achieved some level of development, is devastating. It will eventually result in massive deflation as working age populations collapse and countries turn into old folks homes. I don’t honestly know what the solutions could be, beyond coercion. And no one really wants to live in a state where they are forced to have more children. In many ways, a three child policy is as bad as a one child policy. Not all women are healthy enough to have a lot of children.

          2. “So a focus on education for girls and women and women’s rights are the solution to excessive population.” And a solution to energy production, as well.

             Who do you think gives birth to those strapping farm boys that run the rigs? You know, the same ones that Shallow Sand laments are no longer available for hire? And do tell, Coyne, are those educated, empowered, liberated girls now working the rigs in place of the farm boys that are no longer available?

             It appears that Shallow Sand can’t find any of those educated girls for hire, either. When it comes to the tough working conditions of a rig, well hey, those girls were educated for something better, right? Right?

             1. Mike Sutherland,

                Girls can do fine operating rigs, both Mike Shellman and Shallow sand have claimed as much.

                Your comment is not very relevant to the problem of over population which was the subject under discussion. The earth will not be able to sustain 7 to 9 billion humans for very long, the solution to that problem is lower total fertility, about 1.5 babies per woman on average worldwide would gradually reduce human population, this is well understood.

                Read research by Wolfgang Lutz a recent paper below

                https://austriaca.at/0xc1aa5576_0x003bbdcb.pdf

                He has published a lot see link below

                https://iiasa.ac.at/web/home/research/researchPrograms/WorldPopulation/Staff/Wolfgang-Lutz.en.html

                1. Correction,

                   I should have said that women can operate rigs based on comments by Shallow sand and Mike Shellman.

       3. Everything will happen naturally. 90-95% of oil, gas and coal will be produced in the next 100-200 years, regardless of the “green agenda”. The population in large cities and the planet will be reduced by dozens of times The production of energy and food will be reduced in the same way. It will become impossible to transport food and fuel for protection from the cold and cooking over a longer distance. Globalism will die. The distribution of the population on the planet will correspond to the possibilities of regions to feed themselves, and of course wars will break out in the struggle for survival.

          1. Transport of food was possible in the roman age over the distance of up to 1000 km – and during the age of absolutism crisscross through Europe.

             By simple sailing boats. It wasn’t lettuce and milk, just plain grain, perhaps a bit of cheese and beef. But it was enough to dampen hunger by a big deal – after this time hunger was mostly a social and poverty problem.

             You need very little oil when you take a today freighter and go only half speed. So no more cheap plastic toys and cheap tshirts, but base trade will continue. When oil is too expensive, companies can even fall back again to computer guided sailing ships with only a backup engine. But a human constant will continue – world trade will survive. Flint stone from the north coast in Europe has been distributed up the Egypt. 3000 bc.

             1. Yes, of course, in the Roman Empire and in the Middle Ages, this happened. But keep in mind this only concerned maritime trade (of course, river trade). And today the transportation of grain or coal is expensive and becomes completely unprofitable when it comes to distances of more than 500 miles. Silicon in the ancient world was probably valued on a par with gold now and weighed relatively little. Caravans from China went along the “Silk Road” but they carried expensive goods. Perhaps in 200 years sailboats will carry grain to Europe from Canada, but I doubt that it will be on a large scale and will last long. Manufacturing something on a large scale makes it cheap, but transporting bicycles from China by sailboats, for example, will kill profitability. They will transport things that cannot be produced elsewhere, for example oil (or derivatives from it), although the level of oil production will probably drop a thousand times and it will be used exclusively as a chemical raw material.

15. A good read from Kurt Cobb . To the point .
    http://resourceinsights.blogspot.com/2021/09/its-all-connected-natural-gas-market.html#more

16. You don’t demand , you beg when you are on an empty stomach . Stupid bureaucrats .
    https://www.zerohedge.com/markets/iea-demands-russia-deliver-more-gas-reeling-europe

17. The UK still exists , don’t worry . I post this just to explain what the ” Seneca Cliff ” is . Two weeks ago nobody could imagine this scenario .
    https://edition.cnn.com/2021/09/23/business/bp-fuel-supply-driver-shortage/index.html

18. TonyH, Please, no more antivax posts! Put that shit on Facebook where it belongs, not on this blog.

    1. Amen. Thanks Ron for bringing posters back on topic.

19. A mistake that many people make is confusing the issues they see locally with the state of the world at large.
    At the country level this is particularly common.
    What is true in one region is often false or a weak trend somewhere else-
    For example
    People in Europe right now may think the world is running out of natural gas, whereas in Russia and the USA it doesn’t seem to be a big problem.
    People in sunny zones may think that solar is brilliant, whereas for those in cloudy Europe north of the Alps they see it as marginal (as it is there).

    And then they jump to conclusion regarding solutions to problems that are inherently wrong just because the baseline presumptions are false.
    Other than a poor grasp of facts and realities in areas that are outside the sphere of their personal expertise, it is one of the biggest sources of poor thinking that we see presented here, and in the public discussions at large.
    And of course we also see huge distortions of reality based on preconceived notions and beliefs systems (which includes partisan ideologies).

    It is a sad moment in human history, to see so many with access to information, experience and expertise, but failing in the ability to sort truth from trash. Squandered unique moment in the evolution of life, the history of humanity.

20. Thank you George, but this post is not encouraging at all for the Dutch.
    The Dutch gasreserves will be gone in 5,3 years. And now I read that the reserves of our Norwegian neighbours will last just 3 years longer (about 400 weeks).
    I have always known that we would run out of natural gas during my lifetime, but I hoped it would be after 2030.

    1. Hans,
       with this scenario facing your country what is the country doing to prepare for the energy shortfall that is coming?

       “Natural gas and oil are the most important fuels in the Dutch energy supply. In 2018, TPES came from natural gas (42%), oil (37%), coal (11%), biofuels and waste (5%), and small shares from nuclear, wind, solar, hydropower and geothermal. The Netherlands is still one of the largest gas producers in Europe; however, domestic gas supply and gas exports are rapidly declining..”

       https://www.iea.org/reports/the-netherlands-2020

       All countries need to look at the energy efficiency gains by the Netherlands, while still growing the economy-
       “From 2008 to 2018, the population of the Netherlands increased by 5% and gross domestic product (GDP) grew by 9%. Over the same period, energy demand declined by 5% thanks in part to a 15% improvement in the energy efficiency of the economy.”

       1. We, the Dutch, are insulating our houses and buildings like there’s no tomorrow. And putting solarpanels on the roofs, quite useless in December and January, but at least it is something.
          If natural gas-supply runs low, we can take the gasfired electricity-production of line and import electricity from Germany and France. And people are getting used to work from home (ever since COVID), we can save some energy when we stop commuting.
          We’ll see how we manage.
          The governement keeps saying we build windpower-farms because of climate-change. But we know the real reason 😉

          1. ”we can take the gasfired electricity-production of line and import electricity from Germany and France.” Please say that on the facebook page of EELV and of Yannick Jadot, because these people are dreaming stupidly to close the nuclear power plants of France.

          2. “The governement keeps saying we build windpower-farms because of climate-change. But we know the real reason”

             The real reason being depletion of Nat Gas, and/or inability to rely on affordable importation of Nat Gas?

             1. Yep

                1. Mee eens.
                   I just looked at your blog – I will add it to my reading list.
                   It would be interesting if you also could display energy consumption on a either (or both) GDP basis or a per capita basis.
                   Just a suggestion.
                   Bedankt,
                   WP

21. Dennis,
    I am sorry for the level of discourse here.
    You have made a noble effort to keep things civil, intelligent, factually oriented, humble and constructive,
    and to set a very good tone.
    I know you have gradually influenced me in this regard.
    Thanks for that. Growing up in Philly I am not used to having discussions with strangers where the base presumption is one of respect.

    Hope things somehow improve. These issues are important, and the drift towards partisan, frivolous or unscientific commentary seems progressive.

    I would like to see a ban on political commentary. But perhaps that is not practical.

    1. Hickory,

       Email me with any concerns or specific suggestions.

       Often people have strongly held views.

       I do not read every comment carefully so may miss stuff.

22. Brent futures gapped open about $1 down. At $77.05 WTI currently not reflecting what is going on.

    To me it looks like inflation has some room to run. Or more like it’s going to run regardless if it’s unwanted or not.

    Looks like next stop for oil is in the $80’s

    My only question is how will oil respond to monetary tightening. Bond yield are on the rise currently. Wherever they top out at. Could be 2.5% on 10year. But wherever it is. Is where I believe you’ll find not only a top in stock market but also commodities including oil will also find a top when bond yields peak or slightly after bond yields peak . Dollar should have at least one more run lower. Maybe make a lower low maybe not.

    Wherever the cycle high in bond yields is at will mark where prices start to peak then start to slip backwards into deflationary mode.

    Rising bond yields are a sign money is actually flowing through the economy like it should. Falling bond yield are a sign of tight monetary conditions and money isn’t flowing through the economy like it should.

23. WTI currently at $75. Anybody know what’s going on?
    https://oilprice.com/oil-price-charts/

24. Frugal

    Possibly this GS new price target.

    SYDNEY (Reuters) – Asian shares got off to a cautious start on Monday as a jump in oil prices to three-year highs could inflame inflation fears and aggravate the recent hawkish turn by some major central banks.

    Oil pushed past its July peaks as global output disruptions forced energy companies to pull large amounts of crude out of inventories, while a shortage of natural gas in Europe pushed costs up across the continent. [O/R]

    Brent added another 62 cents on Monday to $78.71 a barrel, while U.S. crude rose 71 cents to $74.69.

    “We forecast that this rally will continue, with our year-end Brent forecast of $90/bbl vs. $80/bbl previously,” wrote analysts at Goldman Sachs (NYSE:GS) in a client note.

    “The current global oil supply-demand deficit is larger than we expected, with the recovery in global demand from the Delta impact even faster than our above consensus forecast.”

    https://www.investing.com/news/stock-market-news/asia-shares-hesitant-as-oil-hits-3year-highs-2626808

    1. Well, apparently, they have not any faith in the oil production predictions of the EIA and of the OPEC.

       1. Jean-Francois,

          Perhaps demand is higher than expected as well, along with hurricane outages being difficult to predict (so supply ends up lower than expected).

25. Permian water injection restrictions.

    https://www-mrt-com.cdn.ampproject.org/c/s/www.mrt.com/news/local/amp/RRC-tells-Midland-operators-to-reduce-saltwater-16485217.php

26. The EIA Monthly Energy Review is just out. Flat since May and down 119,000 barrels per day in August. However, the July and August numbers are subject to revision.

    Mar-21 11,160
    Apr-21 11,230
    May-21 11,312
    Jun-21 11,307
    Jul-21 11,300
    Aug-21 11,181

    

    1. So much for the post-covid rebound. Oh I forgot about the hurricanes.

       1. Gets even better: driver demand is up too.

          https://mobile.twitter.com/GasBuddyGuy/status/1442475185790087173

       2. Frugal,

          The EIA expects output will start to increase after Hurricane season, the MER beyond June 2021 simply reflects the EIA’s STEO estimate for L48 output, plus output changes in Alaska, which has fairly up to date output numbers. Alaskan output dropped by about 71 kb/d in July 2021 from June level. The MER also may be using estimates of the drop in output from IDA for their August estimate. Alaskan output increased by about 43 kb/d in August 2021 from the July level.

          Alaskan data at lnk below

          http://www.tax.alaska.gov/programs/oil/production.aspx

    2. The Monthly Energy Review is never very accurate for the last two or three months. North Dakota was down 55.7 KB/D in July and that is yet to be reflected in any of the EIA’s data.

27. So. SPD wins narrowly. As best I’ve been able to sniff out, they have an array of anti American staffers who are quite senior. I would expect US actions to obstruct coalition forming and get Merkel’s party back in the controlling seat with a minority govt.

    This is a VERY BIG deal because even though Nordstream II is complete, there remains a bureaucratic step to approve German licensing for ops. There is some licensing commission for this. I would expect the US to want the commission staffed with whoever from SPD is NOT so rabidly anti American. My overall impression is SPD will want Nordstream licensed just to spite the US. Maneuvers underway to dodge that and stop flow, and make no mistake here, the Biden admin has gone quiet but absolutely has not rejected the Trump approach of trying to stop Nordstream II.

    The current shortage isn’t going to help with that.

    There is also a pre-emptive GAZPROM strike fired. They released a report showing they are shipping more gas than before blah blah but it looked to me to be fairly specific — like being first to climb Everest . . . on a certain route in a specific season. Mostly it was dodging complaints they had not increased flow thru Ukraine to supply more to Europe.

    No real need for that if German licensing proceeds.

    1. A higher flow through Ukraine might possibly incur some mysterious losses?

    2. Watcher , if my memory serves me correct but isn’t Gerhard Schroeder on the board of NordStream 2 ? Should not be a problem to issue a license with him at the head of the table . Anyway whosoever becomes chancellor he/she knows that Germany’s goose is cooked if they don’t get Russian gas . Just some update received from my associate in Netherlands . The govt is thinking of restarting 5 pits they had earlier shutdown in Groningen . Expected to take a decision by 1st Oct . Some big factories closed down because of gas shortage .

    3. Watcher- ” My overall impression is SPD will want Nordstream licensed just to spite the US.”

       That is just silly. When Nordstream II gas pipeline gets operating license it will have absolutely nothing to do with the US.
       Its about Europe getting access to a bigger stream of Nat Gas.

       1. … and without the Ukraine and Poland sitting on their chokes.

          That’s the political dimension.

28. https://wolfstreet.com/2021/09/26/suppliers-in-china-for-apple-tesla-intel-nvidia-qualcomm-nxp-infineon-ase-tech-forced-to-halt-production-amid-chinas-energy-crackdown/

    Problematic if you happen to rely on China for things.

29. WTI settles at new recent high $75.45 today. Previous high was $75.25 on July 13. Previous high before that was $76.41 on October 3, 2018.

    Interesting view on speed of energy outlook and blackouts in China and what could happen in India/

    https://www.forexlive.com/news/!/the-speed-and-intensity-of-the-energy-crisis-is-shocking-20210927

    

    1. Ovi, nothing much happening in India on the economic front . Malaise .Today was a general strike so most business was closed . Called by farmers who have surrounded Delhi for 10 months . The movement is spreading and bringing in new supporters . Headache for the govt . Unemployment data continues to be frightening . 40-45 % youth unemployment . Gridlock across the nation on all facets .

    2. Slightly different look at front month futures contract for WTI, longer perspective from Jan 3, 2005 to Sept 21, 2021.

       Average price was $69.91/bo, median price was $65.85/bo. For 36% of trading days the price was above $75/bo, for 30% of trading days the price was less than $55/bo, and for 34% of trading days the price was between $54.99 and $75.01 per barrel. My guess is that between Sept 21, 2021 and Dec 31, 2030 the front month futures contract for WTI will mostly be more than $75/bo, my guess would be at least 60% of trading days.

       

30. China desperate for coal.
    https://www.reuters.com/world/china/china-energy-crunch-triggers-alarm-pleas-more-coal-2021-09-28/

    1. One thing I want to point out is let’s say they find a willing seller. It’s going to cost them 3 times the amount of dollars. US dollars that is as it did a year or two ago. And that is just for the coal. Shipping cost are also through the roof.

       If I were to guess I think they’ll try to make due with the lights being off.

    2. Not only China ,but also India running low .
       https://theprint.in/economy/indias-coal-stockpile-dangerously-low-as-inventories-dry-up-lowest-since-november-2017/741284/

31. Tar and condensate aren’t oil. The light oil without stripper wells is all the api 30-40 Gulf of Mexico wells. The bulk of the real oil is imported and this is recorded from Belgium and other random ports.

    There’s no simple, cited source of how oil is consumed. Ethanol allows tar to be refined at some bad eroi. A fall in the actual, light oil supply can’t be directly traced but shows up in three ways. One, consumption simply falls. This doesn’t happen because Canada. Two, food is cut to give ethanol. This doesn’t happen because farming is an interest group. The last way is for residential electric cut and more energy devoted to refining tar. This is what happens.

    America consumes 10% less residential electricity than last year. The economy has three sectors: the oil industry itself, heating and cars. Cars are still running and gas is available. The oil industry is consuming more electricity for the same output. The cut is in heating because utilities, already strung by renewables and other regulations, die first.

    NGL is in a 300k bpd deficit. This means 2mbpd American conventional light production, 15% is in deficit. NGL will be gone in a year and then you should be rather fucked.

    It’s anticipated that Saudi will die around 2025. That means we should see a 20% annual decline in living standards. The NGL deficit heading into a utilities crisis is the first sign.

32. Brent is now topping the round 80.

    I think things will be interesting this winter – do we get another la nina winter (cold northern hemisphere) together with empty gas caverns?

    I hearde the pro nuclear votes in Sweden rised sharply after shutting down some of the atomic plants and energy prices started to go ballistic. They even fired up a cold reserve old oil burner plant from the 60s and use it as base load – very cheap and very enviroment friendly.

    We have this here in Germany next year. 4 atomic plants will go offline. A chart is better to see here:

    https://energy-charts.info/charts/power/chart.htm?l=en&c=DE&stacking=stacked_absolute_area&interval=month

    I don’t know how they want to replace it – gas caverns are half empty, and alternatives are not there yet to replace it – and there is no storage beside a few pumped hyrdo from the 80s. Time to power up the last coal burner – and they want to close them, soon. Perhaps a few rolling blackouts in the winter will drive some sanity back into at least a few heads.

    The brown coal is the only energy we don’t import – this is domestic and under heavy barrages from enviromentalists because it’s the most CO2 intensive energy. And it’s running full throttle already now – not enough wind most time of the month as you can see.

    For oil prices this winter, my 2 cents: When it gets cold, several countries will power up mothballed oil burners as a last resort. Then we can see oil prices going to the moon, too.

    1. Good post. From the chart that you linked, it is quite clear that German baseload is absolutely dominated by coal and nuclear power, in that order. The German renewable energy transition is now 20 years old. From that chart, it has clearly been a failure – to displace coal and nuclear power would mean over-building wind and solar power capacity several times over what you have already. And it has taken 20 years to get this far. And you would still need some natural gas to fill in the lulls in production.

       And this is just electricity. It says nothing about heating and transportation, the two biggest energy consumers in North European countries. Does Germany even have the space for that much additional wind and solar capacity? Does it really have the cash?

       I don’t see any realistic option here for replacing nuclear power with anything other than coal. There is simply no sane environmental argument for doing that. The air pollution health hazards of burning that much coal, are equivalent to the effect of about a dozen Chernobyl style nuclear accidents every year. And even then, new coal powerplants and coal mines are long lead investments. They don’t just appear in weeks or months, they require years of planning. The energy depletion wolf is scratching at Europe’s front door. What Germany is doing with energy policy is the equivalent of calling the wolf and then kicking the door from the inside. They run the risk of freezing to death, whilst choking on coal smoke.

       1. There are good months, where wind is blowing and replacing coal, as in January 20:
          https://energy-charts.info/charts/power/chart.htm?l=en&c=DE&stacking=stacked_absolute_area&interval=month&year=2020&month=01

          But there is no overbuild, and no storage. It’s completely insane, beside a forced fast deindustrialization (the green youth wants that, beside going vegan for everyone).

          We have vast geo energy ressources, and could go nuclear – it’s all CO2 free and will remove the strain from fossiles.

          And for coal: There is a law to close down the last coal power plant 2038. Not even keep it as a cold reserve, it has to be teared down completely. Until then everything should run on solar and wind, and a few gas peaker plants are still allowed.

          I don’t see this. Still no plan (money, a place and a technology) for a storage, and slow increase in solar + wind.

          1. Eugenspiegel,

             https://www.oilystuffblog.com/forum/forum-stuff/energy-policy-and-virtue-signaling

             Here is one year worth of play by play from me how i predicted it would play out in Sweden and what has happened.

             We are indeed now running what used to be our backup capacity an oil burner att full throttle and it has been in operation most of the year. Our new backup is a garbage burner plant.

             I recommend reading it from start to todays date, its interesting and i would say educational also as this is the path we will press on, termination of more nuclear without any viable option leading to increased consumer costs and ofc also increased oil/gas consumption.

             Germany and France looks to be selecting similar paths, imagine when France no longer will be able to act as backup for neighbors.

             More wind wont help, in fact it will make things worse (and it will also have shitty economy in operation) but that is what we are going to do, so the only sane thing you can do is plan and position yourself with that knowledge in mind.

             1. Germany already burns a lot of household waste. Like Sweden, they have shut down their landfills, so there is nowhere else to put it.

             2. “More wind wont help, in fact it will make things worse”

                Please explain your rationale that increasing energy power available from wind ‘will make thing worse’

                btw- great energy charting site shared by Eulenspiegel. You can select to see the charting data from any European country, and many options for choices of data display-
                https://energy-charts.info/charts/energy_pie/chart.htm?l=en&c=DK

                1. Hickory,

                   The argument is that the wind blows similarly all over Europe (I do not know if this claim is accurate) so excess wind capacity does not solve the problem of a lack of power when the wind is not blowing, solar is not much help in much of Northern Europe, particularly in the winter. So if the issue is backup for wind, more wind does not help, Baggen prefers nuclear power, possibly “windgas” produced during windy periods when more power is produced than can be utilized is an option that can be utilized in thermal power plants as backup in the future.

                   What is frustrating to many is that existing nuclear power plants (which are environmentally preferable to coal and natural gas fired power plants) are being shut down before viable backup options are put in place.

                   The argument seems sensible to me.

                2. Dennis,
                   there are methods to store excess energy, as you know. We are a long way from having to worry about that.
                   But I am not sure that excess wind energy was Baggens point at all.

                3. Hickory,

                   Often Windfarms will produce enough power to drive prices below zero in the Northern European area. The point is that when the wind does not blow the wind farms produce no power, if periods of low wind are the problem as Baggen claims, more wind farms in that specific location does little to improve things unless a storage solution has been built. It just leads to an unprofitable wind industry, in fact it will make that industry even less profitable (making that specific problem worse).

                4. Dennis,

                   Yes Dennis has probably read the whole thing and understood it as well.

                   Dennis i dont have a favorite power source in that sense if i had it would be hydro but lets be practical we cant cover our needs in Sweden with it. So keeping and developing nuclear would have been the sane approach but it dont win any votes in comparison to wind and “renewable” that bring in the herd.

                   Sure we export power, in fact we do so on almost every day that is not my point or issue.

                   Yes there are several issues with more wind, as mentioned we have the same weather in northern Europe, wind in Denmark is not gonna work as backup for wind in Sweden or Germany and so on.

                   Wind doesn’t deliver wery well when its most needed, on really warm days not much wind, on the coldest days not much either and even if it was windy it destroys the economy, you will have write offs and maintenance eclipsing revenues.

                   Yes building more wind is gonna make it worse, it gives a false sense of security, that we are on the right track. It draws capital away from base load, its political and because of it other stuff gets punished (nuclear). And economy will get worse the more that is built, everyone sells electricity on the same European spot market, when it blows spot prises crashes or will go negative this will always be the case with to much wind so it will be capital wasted for no practical use.

                   We already produce about 30-35% from wind on a windy day, i say its more than enough. Lets keep it there and add whats needed more base load. But that won’t happen, the path has been decided long ago and we are going to follow it over the cliff.

                   We are now burning 160.000 barrels per day, easily avoided and yes the cover story is “because of high prices” like that just happened out of nowhere. If we didn’t terminate our nuclear we would not have our oil burner in full blast today.

                   In all it don’t matter, path has been selected i know where we are heading and only thing i can keep doing is position myself accordingly. As always reality will come knocking at the door, probably a lot of them this winter.

                5. Baggen,

                   I agree the transition is being handled badly. If people want to shut down nuclear power, they need an adequate replacement. Europe should develop a plan where the entire continent is interconnected with HVDC so solar from southern Europe can be exported to the North and excess wind can be exported south. In addition excess wind and or solar can be utilized to charge batteries, for pumped hydro, to create synthetic fuel or hydrogen and that fuel can be utilized for backup.

                   The plans need to be developed and working well, then is the time to shut down nuclear power if that is the choice of the citizens of the nation, but doing it before a plan is in place seems to put the cart before the horse.

                6. Thank you for the explanation on your feelings on wind and nuclear energy policy Baggen.
                   Each country has a different set of energy challenges.
                   Nuclear may be good for Sweden, and I’m sure solar would be marginal.
                   I wish your country good luck in decision making.

                   For the US, we have a different set of challenges/resources, and therefore different mix of options. We have a huge untapped resource of wind and solar, and nat gas.
                   Yet in regard to nuclear we have been poor at policy and development for the past 40 years. Still no high level radioactive waste storage (just temporary holding ponds in almost all states) – nobody wants it in their area. The cost to build plants is extremely high, and there had been some major bankruptcies costing ratepayers billions. In 1983 there was failure of a project under construction- 5 nuclear plants in WA state and is the biggest municipal bond default in US history. In the last 30 years only 1 plant has manged to be commissioned (Votgle 3 at a cost of about $12 B!).

                   Meanwhile in year 2020 [covid slow year] the USA added the electricity output equivalent to over 7 full size nuclear plants (1000MW) with new land based wind energy production.

                   I’m sure many countries can do better with nuclear than the US has. Hopefully much better.

                   The US has permitted one new reactor design recently, and the first unit is well into the planning phase, hoping to be operational later in this decade. It is a small modular reactor- NuScale
                   It has been talked about on the other thread several times before.
                   https://www.energy.gov/ne/articles/nrc-approves-first-us-small-modular-reactor-design

                7. Baggen
                   > everyone sells electricity on the same European spot market, when it blows spot prises crashes or will go negative this will always be the case with to much wind so it will be capital wasted for no practical use.

                   There is no particular reason why energy prices should not be negative. Consider the following:

                   1. The price of matter is sometimes positive, and sometimes negative. For example, gold is worth more than zero, but human excrement is worth less than zero, in the sense that massive investments have been made to remove it from people’s houses, and nobody considers that a waste of capital.

                   2. Like matter, energy is often worth less than zero. The most obvious example is cooling and air conditioning, a vast industry whose entire function is removing unwanted heat energy. Like the plumbing that removes human excrement, cooling infrastructure removes energy whose value is less than zero, and nobody considers it a waste of capital. I for one am glad I have a fridge.

                   3. Negative prices in the electricity grid are caused by traditional thermal plants with a large thermal “momentum” that makes it hard for them to curb production. Renewable sources including solar, wind and hydroelectric can simply switch off production when prices dip below zero without losing momentum. The problem is the complex multi-step process of boiling water to expand it, to harness the mechanical energy, to make electricity. Running plants to keep that water hot pushes electricity prices under zero.

                   4. By far the biggest waste in electricity infrastructure is cooling towers, vast structures designed to get rid of negatively priced heat generated by power plants. Overbuilding renewables can’t compete with this level of waste.

                   5. The ideology that energy prices have to be positive is driven by the desire for profit from selling energy, not the desire to fulfill demand for energy services such as lighting, temperature control, transportation or computation. When the sun is shining or the wind is blowing, energy prices should approach zero, because ambient energy far outstrips demand.

                   7. For historical reasons, current industry is not prepared to absorb large quantities of intermittent, low-cost energy. That will probably change. Also extremely low prices for energy are not the end of civilization, even if they are the end of some traditional industries.

             3. Wrote a reply yesterday but it got lost in cyberspace… Anyway, yesterday, in the early morning Sweden produced ~6300 MW of wind power while exporting ~5400 MW of it, so not negliable at all. Granted, that was an unusually good production number but the relative balance has been roughly the same for the last month or so. The reason that the 600 MW Karlshamn oil powerplant is running, and they are open about it, is that the margin price is high and there is a market. So no, we are not having rolling blackouts in Sweden as you makes it sound like. (The Fraunhofer charts don´t show Sweden from what I can see, but Nordpoolgroup.com has the numbers for us, Norway, Finland etc.)

                

                1. No offense . Whom am I to believe ? Laplander or Baggen ? Any gentleman like to guide me thru this information overload regarding Sweden ?

                2. HiH, no more reply lines availible in the thread (edited)… It depends of your point of view, is it Me, my wallet, Me again, I, and then future generations?

                   My stance is, following the issue for quite a few years, isn´t leaving “stuff” behind (to put it mildly) just so you can presently have a bit lower power bill just a little bit egoistic, and/or (not mutually exclusive) a bit stupid? Regarding power price and “stuff”, read up on Flamanville 3, Hinkley point C, Olkiluto 3, the Swedish KBS3 clusterf… etc.

                   But my power is still on, if the frequency of the grid goes down too much I think Svenska Kraftnät, who manages most of the national grid will shut exports off, so the Finns will likely notice first.

                   Be well!

                   (to new readers, Baggens answer is nuclear)

                   Addendum, since I´ve been following the whole energy issue for 15 years I´m well into the acceptance phase,

                3. Laplander ” HiH, no more reply lines ” . I respect this .
                   You also “Be well ” .

          2. It’s interesting. I just heard ol’ Greta lamenting the lack of movement by gov’ts globally on CO2, and here we are, with even the poster children of renewables like the UK, Germany and China, begging for more gas, oil and coal just to keep the wheels from falling off.

             I think if this winter is a new Winter of Discontent for everyone, not just the UK, then there may be a great undoing of any climate progress lately to save the economy. I’m doubting people will be amenable to learning about limits to energy and climate when they’re freezing in the dark.

             1. They whistled back Greta when she once mentioned “nuclear power”. Nuclear power is much much worse than climate change. So we all will switch on our coal and oil burners…

                Parts of this green “Greta” movement has deindustrialization in thought – they dream of a socialistic paradise with unconditional balsis income, open borders and a maximum of diversity. They want the wheels to fall off.

33. Goldman Sachs has raised their forecast for end of 2021 Brent price to $90/bo, due to faster demand recovery than expected and lower oil supply growth than expected.

    https://oilprice.com/Energy/Oil-Prices/Goldman-Sachs-Hikes-Oil-Price-Forecast-To-90.html

    There is also an expectation that tight oil producers may start ramping up output.

    https://oilprice.com/Energy/Energy-General/US-Shale-Is-Finally-Ready-To-Drill.html

    With WTI at $76/bo, Permian producers will do very well, if WTI rises to $86/bo (consistent with the Goldman Sachs forecast for the end of 2021), Permian tight oil producers will do very very well. Add to this the high prices at the Waha hub for natural gas in W Texas ($4.22/MCF on Sept 27, 2021) and it may just be too tempting not to increase the completion rate in the Permian basin for tight oil producers. For my model scenarios for the Permian basin I assume $2.50/MCF for wellhead natural gas prides from Jan 2021 to Dec 2052, which may prove to be very conservative at least for the next 15 years, after that we might see natural gas demand start to fall faster than natural gas supply and prices might drop below the price I have assumed for natural gas.

    Prices for Waha at link below

    https://texasalliance.org/daily-market-information/

    1. Wasn’t an article about steel pipe shortage here a few weeks ago? Drilling without pipes is kind of impossible … so only competing more DUCs in the short time.

       Or other important parts ordered in China and waiting in an oversea container for unloading in some port? Here are often some random construction materials in short supply. And for drilling you need everything, you can’t just install some of the plumbing later when it’s down hole or security relevant.

       It’s not that easy – just ordering more rigs for everyone won’t work when global logistic chains are still in disorder. I think that’s part of the “new discipline”.

       1. Eulenspiegel,

          There is a pipe shortage and prices are expensive, about 41% higher than the recent peak in 2018, this might explain the lack of drilling. A smart company would have bought steel pipe when prices were low and stored it for future drilling, no doubt that there may be some larger companies that might have made such a move. Those companies will drill new wells, others will wait for steel pipe prices to drop. This may be a small factor in overall well costs, I do not know.

          1. So not much additional oil from the USA this winter – when Asia will start the Diesel generators because of the blackouts oil prices will go kaboom soon. I think the Opec is locked, too – not much infill and development drilling the since COVID. They have to do this to increase production to old levels – and this is slow.
             When they have pipe shortage, too – this will be interesting.

             1. Again,

                Steel pipe stores pretty well, smart NOCs would have bought steel pipe when prices were low and stored it for the eventual return of oil demand.

                I agree oil prices are likely to rise, this will destroy some demand as well as lead to higher output as new development ramps up. Infill drilling can be done fairly rapidly, new offshore development (requiring a new drilling platform and other facilities) and Arctic development has longer lead time (roughly 5 years or more). Tight oil can ramp up pretty quickly (as it did in 2018), also production from large OPEC producers such as Saudi Arabia, Iraq, UAE, Kuwait, and Iran (subject to sanctions relief) can likely be ramped up relatively quickly.

       2. I live right next door to the old Mannesmann factory in Düsseldorf. Mannesmann invented seamless steel tubing. The plant, now owned by Vallourec is working flat out. So is the specialty steel plant in Duisburg, just north of here. I took a walk on the river last Saturday up there and the plant was running full blast. That’s where they get all that fancy steel they bury in the oil fields. But I suspect that most of the output of the Duisburg plant is going to the tube factory in Youngstown to reduce shipping costs.

    2. Dennis

       I looked up a couple of companies here in Canada. They have hedged close to 50% of their NG at $2.50 per thousand cubic ft.

       This price rise has fooled a lot of companies.

       1. Ovi, they are not the only ones . This gas crunch has taken the majority of O & G experts and followers of the topic by surprise . All is well until it’s not .;-)

          1. Hole in Head

             What surprised me is that they hedged some out to December 2021 and December 2022. One company that had both oil and gas only hedged the oil out to December 2021. I guess the NG providers want longer term contracts.

             1. Ovi,

                At least they get a good price on the other 50% of their natural gas.

                The shortage was indeed unexpected, the Russians may be a big part of the problem and their games may result in Europe importing more LNG in the future so they are less dependent on Russian natural gas. There were other problems with natural gas from Norway and LNG from GOM facilities affected by Hurricanes, a perfect storm of low storage levels of natural gas and higher than expected demand for natural gas. The problem is likely to be temporary.

34. Government bond yields are blowing out this morning. UK’s Currency getting hammered. Dollar is up on everything besides oil and gas Which I find interesting.

35. ‘Unprecedented’ power cuts in China hits homes, factories

    The rationing began on Thursday amid coal shortages and took place without advanced warning, the Communist Party-owned tabloid said, adding that the lack of power has sparked public anger and shut down traffic lights and 3G mobile phone coverage in some areas.

36. OPEC World Outlook 2021.

    0:52 AM EDT, 09/28/2021 (MT Newswires) — OPEC in their World Oil Outlook 2021 released Tuesday said global primary energy demand is expected to increase by 28% between 2020 and 2045, while non-OPEC liquids output is set to decline from 2030.

    Global energy demand is seen to rise from 275.4 million barrels of oil equivalent per day in 2020 to 352 mboe/d by 2045, according to the report. This increase is mostly driven by growth in non-OECD primary energy demand, which is expected to constitute over 70% of global primary energy demand in the long term.

    OPEC forecast an increase in global oil demand of 17.6 mb/d between 2020 and 2045, growing from 90.6 mb/d in 2020 to 108.2 mb/d in 2045. However, global oil demand is set to plateau during the second half of the outlook period, around 2035 onwards, OPEC said.

    The demand boost will be driven by a doubling in size of the global economy and global population growth of 1.7 billion people by 2045, the report said. Renewables will see the largest growth among all energies, followed by gas, but oil will still be at the number one position in the energy mix, according to OPEC.

    OPEC said that in the long term, after US liquids supply peaks, total non-OPEC liquids output is forecast to fall from a peak of 71 mb/d around 2030 to 65.5 mb/d in 2045, which is level with pre-pandemic 2019.

    Quote from the report:

    US tight oil is a key driver of growth in the medium-term but peaks around 2030

    “Supportive market fundamentals should incentivize a return to growth for US tight oil production from 2022, which is expected to rise from 11.5 mb/d in 2020 to 14.8 mb/d in 2026. Tight oil output is expected to peak at 15.2 mb/d in the late 2020s, with US total liquids hitting a maximum of around 20.5 mb/d around the same time.”

    This projection appears to be consistent with Dennis’ projection.

    1. Ovi,

       Up to about 2028 or so it is roughly similar to my medium scenario for tight crude plus condensate (light brown shaded area). One difference is my expectation that completions will drop off rapidly after 2032 and tight oil output drops rapidly after 2033 reaching 2000 kb/d by 2040.

       The OPEC scenario reaches about 8000 kb/d in 2040.

       

       1. There’s two parts to Wolfcamp. Phantom and Delaware.
          Phantom died. It’s over. It followed the hubbert curve.
          Delaware is same curve lagged three years.
          Also shale is useless and all condensate. Canad and America grew prod a lot since 2000 and gas consumption didn’t change because it was all condensate and garbage.

       2. Dennis

          Looking at the picture below, to me your model is essentially the same up to 2033.

          1. https://i.ibb.co/rfLbmGV/8-E7-A65-E3-70-E5-4-D63-822-C-DC9-F722-C4770.jpg
             Texas Wolfcamp is obliterated. We’re waiting on New Mexico.
             It’s all following the hubbert curve perfectly.

          2. Ovi,

             Yes they look similar up to 2033, I agree. I was simply pointing out that from 2033 to 2045 the scenarios are quite different.

       3. Dennis,
          https://www.eia.gov/dnav/pet/PET_CRD_API_ADC_MBBLPD_M.htm
          The api 30-40 oil is what matters, as you see the vast majority outside GOM and stripper wells is stuff that isn’t oil.
          Even though the WTI benchmark is 40 api in theory in reality it can’t possibly be that good. Your projections are pretty indefinite if they include things that aren’t oil.
          EIA does not care about API and although you’ve attempted to consider this there’s more work to do.

    2. I just don’t buy any of it. Plus I don’t believe the current economic system will hold up under the weight of low priced huge corporate debt. So many smart prognosticators are predicting a return to business as usual but I don’t buy it. The amount of capital needed to create 108 million barrels per day is staggering and as long as ESG investing rules the day, this will never occur. I am currently drilling two new gas wells in East Texas. We bought our pipe 3 months ago. We have ordered pipe for our next two wells and we were told that there is at least a six month back log. Most of the new steel being produced and used is being dedicated to building Amazon fulfillment centers.

       1. LTO Survivor,

          My premise is that the economy will adjust, usually people underestimate the ability of humans to adjust to changing circumstances. If I am wrong, and WTI oil prices never rise above $66/bo in 2020 $, from now until 2052 then the scenario for tight oil would be different. See chart below and note that all of my scenarios assume new wells completed after June 2021 are financed using operating cash flow, not from new debt. I assume a relatively high annual interest rate on existing debt (7.5% per year) and assume 25% of net revenue is paid out in dividends, average new well EUR is 400 kb of oil (this excludes natural gas and NGL output) where I assume wells are permanently abandoned at 20 bo/d and also assume linear spacing of 1320 feet (4 wells per section width). In addition this scenario reduces assumed Permian basin mean TRR from 75 Gb to 50 Gb, by eliminating the less productive Permian benches from the analysis. It is a very conservative scenario for the Permian.

          If the economy collapses as it seems you are predicting, then output would be lower than this scenario, it would depend how low oil prices go.

          

       2. Note for clarification-
          As of 2021 there is over $50 Trillion dollars in the public global equity market that is under absolutely no ESG restriction or mandate. And that does not include the vast capital that is under private management or held by corporations.

37. Picture

    

    1. Yeah that’s pretty ridiculous, this forum takes everything at face value. In reality tar and condensate are not oil. The oil is all GOM and it’s nearing death.
       Here’s the GOM curve.
       https://i.ibb.co/JB6xW2k/7-F10626-A-1-FBF-475-C-9-DFA-974-D0-CA93-F92.jpg
       Saudi
       https://i.ibb.co/NTXJVQ3/3-D9-B0452-A62-D-4-CD8-947-E-D2-BDC5674999.png

       1. Hey Mustang Bob!

          Same tune again?

          1. Also it just so happens Tesla abandoned LICO batteries in favor of LFP. Literally everything I predicted happened.

    2. Ovi , tks for the graph . My take on this composition .
       Other liquids Crap
       Biofuels Crap
       Conventional NGL Crap
       Other crude What the f*** is this ?
       Alaska crude OK but declining
       GOM crude OK but peaked
       Unconventional NGL Crap
       Tight Crude For me is Crap being about or above 40 API . Some will disagree . Anyway this has also peaked .
       Net result ; 80% is Crap .
       A clown show .

       1. It truly is a house of cards. America’s 20m barrel daily product supplied is GOM 1-2M then the rest a ethanol game.

          Still depletion of already finished NGL inventory is catastrophic. You might not realize how scary this graph is.

          https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=W_EPL0XP_SAE_NUS_MBBL&f=W

          NGL is in 300k per day deficit. If the real oil is 1-2 million barrels then that’s a 15% of consumption running on inventory. This inventory fell half in the past year.

          Also, electricity consumption can go up if it comes out of residential heating and goes toward refining and EROI. Currently the residential electric consumption is falling while industrial is going up (even with car industry collapse) so this is a direct sign of the shell game rapidly deteriorating.

          Data https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_01

       2. GoM increasing to 2025 and then staying above 2000bpd for 20 years and beyond? That implies there’s a whole new basin that is going to be discovered and all the projects approved this year. Shale NGLs increasing imples gas production is increasing, seems unlikely to the extend and for the period shown. Is this some kind of premptive excuse so that when oil supply starts to fall and OPEC can’t cover the gap they can say, “look, USA could have done it, you just didn’t invest enough”?

          1. George,

             The scenario for GOM from OPEC WOO is a peak at 1960 kb/d in 2024 and then decline to 1410 kb/d by 2045. I agree it seems wrong, cumulative output is about 24 Gb from 2005 to 2045.

    3. Ovi,

       In chart below my two recent scenarios for US tight oil for a low oil price scenario (Brent maximum price of $70/bo in 2020 US$) and a medium oil price scenario (Brent rises to a maximum of $95/bo in 2020 US$ by 2030) are compared with the OPEC tight oil scenario from WOO which has a maximum output of 9970 kb/d in 2027.

       Also the 2020-2045 cumulative output of my low oil price scenario is 44 Gb, high price scenario is 57 Gb, and OPEC WOO is 81 b. Much depends on oil price assumptions which will always be incorrect.

       

       1. Typo above, I said high price scenario and should have said medium price scenario has cumulative output of 57 Gb.

38. Gas demand paper: https://www.oxfordenergy.org/wpcms/wp-content/uploads/2021/09/Why-Are-Gas-Prices-So-High.pdf

39. According to the above graph, the tight oil decline rate is very gradual after the peak, which is in stark contrast to the decline rate of individual tight oil wells. They must be predicting a drilling frenzy on the down slope.

40. Demand for oil in China should fall somewhat if they can’t keep the lights on and factories humming at all times. If the factory you work at is closed then you don’t drive to work. My guess is the workers aren’t being paid either.
    Closed factories equals less exports. Less ships that operate on either bunker fuel or diesel.

    Oil price printed a bearish looking candlestick today. While one days price action don’t mean much. A few days worth can form a reversal. To early to call. But oil prices did get slammed later in day today.

    1. Chinas obliterated
       https://i.ibb.co/q98ZGJw/0-F63-F04-E-238-C-4192-A1-C3-C7-BC536-A7-E94.jpg

    2. Biden Administration is selling crude out of the SPR to keep prices low.

       1. LTo , some people never learn from OPM (Other People’s Mistakes) . 🙂

       2. Have to question why the USA did not add to SPR during 2015-2020 low prices.

          Actually, SPR volume is down 100 million BO since 2010.

          We have just added trillions to the national debt, yet failed to use any of that to buy oil when it was $15-30 per barrel last year. Failed to buy any when oil was $25 in 2016. All the deficit spending, yet none to put back some ridiculously cheap barrels for the future.

          Then there are the massive exports occurring even now. With it now being generally acknowledged that we are finished adding 1 million BOPD and likely going to struggle to go much past the peak, if USA does at all. Mike has mentioned this repeatedly for years, and has been ignored.

          That Rees paper is very sobering. Thanks for linking it George. I’d like to see someone refute it.

          Huge problems when the we don’t have electricity here in the USA 24/7/365. I am afraid that is around the corner.

          1. Shallow sand,

             Oil is being exported and imported, the exports occur because we don’t have refining capacity for lighter oil, most of the Gulf coast refineries are designed to handle heavier grades, as you well know.

             Many in the oil industry do not agree that there should be a ban on exported oil. In fact many would prefer that the government interference in their businesses be minimized.

             Generally free trade is a good idea, this has been known since David Ricardo proposed the idea in 1817. See https://en.wikipedia.org/wiki/Comparative_advantage to understand why this is the case.

             I imagine you know this as well, but others may not.

             1. Dennis. I am aware of this.

                I do think it is interesting that the SPR is down significantly from the time USA was producing less than half as much oil.

                Not arguing for no exports at all. But why not step in and buy when prices are very low, especially given all of the debt racked up over the past decade?

                Kind of like my drug treatment comment in the non-oil thread. What’s a few more billion when we are borrowing trillions?

                1. Shallow sand,

                   I agree buying when prices were low would have been sensible. In TRump’s administration they may have bought into the Saudi America hype and maybe the Biden administration thought it was a bad look with the focus on climate change.

                   Not really sure, but I agree filling the SPR when prices were low would have been sensible, but much that our government does is not sensible, so not at all surprising to me.

             2. D. Ricardo was a stupid ideologue in a world totally different from ours. And as his theory was barely worth in his world, it is meaningless in our world. I am surprised that such an early and crude theory on economics is still being exemplified. Especially when we now know that the markets are inherently and hopelessly inefficient and give equilibrium prices based on absurd premises.

                1. Jean Francois,

                   Yes the theory is highly simpified and in modern international economics it has been replaced with other theories.

                   A somewhat dated (1993) discussion of international economics at link below.

                   Bottom line is that free trade will make most people better off.

                   https://www.dallasfed.org/~/media/documents/research/er/1993/er9304a.pdf

          2. Shallow, I appreciate it.

             Naturally, ALL shale producers in the US are in favor of exporting their product to foreign countries; its essentially how they are able to service long term debt and how CEO’s/UM continue to pay themselves 8 figure salaries year after year. Lenders INSIST on exports. What’s best for the shale sector is not always best for America’s long term energy security.

             The SPR has its physical limitations; one of the few benefits to expensive shale oil and gas is its short investment cycle from spud to market; in the Permian for instance, shale oil is 230MM years old; it’ll keep fine until America needs it. Why, for instance, export 500K BPD of Permian HZ tight oil to China, below costs, so THEY can fill their SPR’s with American shale oil? Are we doing that in return for importing COVID?

             The US exports some 15-18 BCF of natural gas every day, LNG and pipe. Its still burning 1.5 BCFPD of associated gas every day…to facilitate oil exports to foreign countries. The prognosis for a harsh winter are in and as we approach that winter HH gas is wandering around $6. That is going put the hurt on lots of America consumers. At the end of the hydrocarbon era perhaps globalization of sovereign resource wealth is not such a good idea.

             Smart people don’t believe in draining America’s remaining hydrocarbons first, extracted on credit, we believe in conservation and prudent management of our nation’s remaining resources. We’re in no need of making a ‘model,’ or prediction work, we care about our country.

             https://www.oilystuffblog.com/forum/forum-stuff/drain-america-first

             1. Yep.

             2. Mike,

                Talk to your representatives in the government, we can stop exporting all oil and gas, you simply need to get the rest of the nation on board.

                From Jan 2017 to June 2021 about 11% of crude exports from the US went to China, if you have a problem exporting oil to China, we could stop exports to China.

                Generally I think free trade is a good idea. I also agree that conservation of resources is a good idea, and again I have no influence over the decisions of the RRC and agree that flaring a lot of natural gas is wasteful. This could be stopped by the RRC and I would recommend that they do so.

                Nothing that I write has any influence on the decisions of producers in the tight oil business.

                The RRC also has the power to restrict the completion rate in the Permian basin if they choose.

                What happens to the US if all nations follow the policy you advise on crude exports?

                The results would not be pretty. We produce about 11 Mb/d of crude and our crude input to refineries is about 16.5 Mb/d, so we would be short about 5.5 Mb/d. The last time the US had a centered 12 month average crude input to refineries of less than 11 Mb/d was November 1970.

                500 MMBPD to china? Is that 500 million barrels per day, must be a typo, maybe you meant 500 kb/d which is the average for 2020. China did import a lot when oil prices were low and this could have been used to fill the US SPR instead, though we probably would have run out of room pretty quickly.

                Likewise we would run out of room for natural gas storage very quickly if the natural gas produced was not exported. Has the US had restrictions on natural gas exports in the past? Are you proposing that we not allow natural gas or crude oil to be exported? I imagine the companies that have spent billions on LNG trains would not be in favor of your proposal.

                1. We have to export our crude because we dont have enough refining capacity in the US to handle the oil produced by LTO. We have t built a new refinery in 25 years. Not in my backyard mentality.

                2. LTO Survivor,

                   In addition we have plenty of refining capacity in the US and existing refineries are continually updated, in fact refineries that are less competitive have been shutting down.
                   From 2005 to 2019 the average annual utilization rate was about 89% for US refineries.

                   Most Gulf coast refineries (where most of the capacity exists) are set up for heavier crude input, early on in the tight oil ramp up most tight oil went to east and west coast refineries which utilize lighter grades of crude oil, that capacity has been maxed out and more than half of east coast refineries have shut down over the past 11 years.

                   Most refiners realize that tight oil will be a temporary phenomenon and do not want to invest billions and later be stuck with a refinery with no inputs, so exports make sense.

                   What do you think of the US reversing policy and returning to no crude exports (still allowing Canadian and Mexican swaps of crude)? How about no longer allowing natural gas exports?

             3. Shallow, I am unable to comment here on AOB anymore without being lectured to by His Holiness.

                Given what we all know about basin maturity, pressure depletion, falling well productivity, GOR and WOR increases, lack of capital, employment and supply chain problems, source water scarcity and so much produced water re-injection its causing earthquakes… I remain hopeful that “smart” Americans will begin to question shale sustainability, even short term, and start to look hard at export levels, even exports at all. Relying on Iran, or Russia, to get us through a smooth renewable transition over the next few decades seems to not be a good plan to me.

                $4 gasoline and $12-15 MMBTU gas in Chicago or Baltimore neighborhoods this winter suggests something with American energy policies have gone terribly a miss. You know how to reach me; thanks again.

                1. Dennis , “In addition we have plenty of refining capacity in the US and existing refineries are continually updated, in fact refineries that are less competitive have been shutting down ”
                   What do they refine ? See my dissection of the graph which Ovi posted and my comment on it . Can you refute it ? All is Crap quality input , I wet my pants when I saw the graph (tks Ovi , but I am billing you for the trousers ) . The graph says the source is OPEC . Is this misinformation ( also called fake news ) or has EIA been pulling the wool over your eyes ? Keep shifting the definition of what is oil until ” piss ” can also be classified as oil . This is the second biggest scam after QE . FED and EIA should be facing the fire squad .

                2. Apologize for butting in because I am not based in USA . See my comments on the graph that Ovi has posted on the composition of US oil ( is it? ) production . There is nothing that looks ,feel or smells like the black goo . All crap . What the f*** is ” other crude ” ?
                   Regret, but the lies are very disappointing and disheartening for someone who was inspired by American entrepreneurs like Ford , Carnegie , Edison etc . The problem is that the US citizens ( a few excluded like the oilmen and commentators here ) are just clueless as to what is coming there way . Best of luck ,you are going to need it .
                   P.S : If it sounds like a rant , well it is meant to be . No apologies for this .

                3. Hole in head,

                   The chart from OPEC was all liquids which is how they and the IEA account for “liquid fuel” output. You can download the data and just look at crude oil output, but I don’t think the OPEC forecast is very good. The input to refineries that I focus on is crude oil, for the US it is about 16.5 Mb/d with recent levels of net imports about 5.5 Mb/d. Refinery utilization rate varies from about 87% to 93% with seasonal variation and some down turns such as during the pandemic in April 2020 when it fell to about 70%. Prior to 2020 back to Jan 1985 the last time utilization rates were under 75% was in 1985.

                   Other crude is crude from onshore L48 that is not tight oil.

                4. Hole in head,

                   The scenario is from the OPEC World Oil Outlook (WOO) not the EIA.

                   For US C plus C the scenario is below (this excludes biofuels, NGL, etc).

                   

                5. Mike,

                   What Energy policy? There has never been an energy policy and those who have been the past Secretaries of Energy knew nothing about energy in a meaningful or useful way. The only energy policy that I know of is “cheap abundant and fungible” energy is the American Citizens god given right. For much of the past decade bottles of water sold as pure drinking water were more expensive than oil on a per gallon basis. The only saving grace for the worlds economy was the promise of limitless shale oil. Had that oil not filled the gap then we would have either much less economic growth or scarce supply and much higher prices. I am dumbfounded why anyone is so surprised that we are facing an energy crisis worldwide. Wind and Sun are promising but will not replace the cheap energy the fueled such lavish lifestyles and reckless government spending.

                6. LTO Survivor,

                   Well said, thanks.

                   I agree wind and solar by themselves will not be enough. Fossil fuel resources will continue to deplete and become more expensive, in addition they need to be scaled back to reduce environmental destruction from a changing climate.

                   We will need better energy efficiency, better insulated buildings, better designed urban environments that minimize the need for transportation, nuclear power, hydro and pumped hydro, geothermal energy, more HVDC transmission, demand pricing for electricity, more air source and ground source heat pumps and enough oil and natural gas to accomplish the transition to a non-fossil fuel world. No doubt there is much I have left out.

                   Better energy policy would help, it is way overdue.

          3. Shallow Sand

             As I remember Trump suggested selling SPR during those heady days when the politicians were saying the US was energy independent and not understanding the difference between Energy Independence and Crude independence. I think he wanted to reduce the US deficit and the trade imbalance.

             As I recall for about one month during those days, the US achieved Crude independence.

             1. Ovi.

                I recall those days.

                I note the Biden Administration again is asking for OPEC’s help.

                What a volatile industry.

                At least we aren’t coal producers. They are even more in the pariah category than us. And, as Dennis notes, Thermal Coal has spiked to over $200 per short ton.

                As for US upstream, the cost of most things is going up again, there still is no labor, etc.

                I am amazed the rig count is going up, wonder where they are finding workers?

                1. Shallow sand,

                   In your convesations with Rasputin, Mike, and LTO Survivor, is everyone experiencing the same difficulty finding workers that you are? Maybe in Texas immigrant labor is being used to fill positions in the oil field if there is a lack of Texas citizens that can fill positions in the oil field.

                   As far as costs going up, how much so far in percentage terms when you add it all up, I think you said you used to be able to be profitable (marginally at $60/bo), with current costs has that risen to $70/bo for your wells (averaged across all of your working interest)? That would suggest a 17% increase in costs, if that WAG was correct.

                   Also I read on Mike’s blog that he just uses old tubing that has been inspected for integrity as there is a lot of it around from abandoned wells in the Eagle Ford.

                2. Here in Germany I found now the first bakery in a supermarket: Open only 8 pm – 1 am, short of workers.

                   Restaurants have trouble reopening after COVID, too.

             2. LTO and Mike S , hello . LTO ” I am dumbfounded why anyone is so surprised that we are facing an energy crisis worldwide. ”
                Einstein when asked if the universe was infinite said ” I don’t know , but stupidity is ” . Don’t loose your sleep over this . Every time I read and say to myself ” nothing can be more stupid ” , comes another bazooka that knocks me out . 🙂 .

          4. Shallow, quite a bit OT for this thread, sorry, but if you don´t have grid power in crucial places 24/7/365 you may have some similar events like the one we had in -06 at Forsmark nuclear plant in Sweden (qualified as an INEZ 2), where a sub-station went out and the plant lost grid connection. The wikipedia article is not totally accurate in every aspect in my view, so I link to the NRC report also so you can judge for your selves, feel free to compare.
             (I think there were some reactors in Japan that lost outside and backup power a couple of years ago, I wonder what happened to them? I think they were GE Mark 1s, don´t you have a couple of them in the US?)

             https://www.nrc.gov/docs/ML1020/ML102070360.pdf

       3. LTO Survivor,

          My understanding is that this was to alleviate bottlenecks in the system caused by Ida. Also the release is an exchange rather than a sale, essentially a loan of oil to be paid back later. The total was 1.5 million barrels, a tiny amount considering that typical monthly crude input to US refineries is about 495 million barrels.

          https://www.cnn.com/2021/09/02/business/gas-louisiana-biden-spr/index.html

    3. The big question is in demand.

       Fact is – natural gas is in short supply. In Europe and Asia the caverns have very low fill grade, right before the heating season.
       The question is now, when oil stays low – will there be some old oil burners fired on to produce electricity, increasing demand. The avove mentioned Swedish oil burner alone needs 20k barrel / day.
       Additional, you can increase output of a coal power plant by oil spraying the coal. This has been done often, too.

       On the other hand, as you said – reduced activity, reduced business driving. Let’s see.

41. Both WTI and Brent formed a spinning top candlestick at close today on daily charts. It’s normally a reversal candlestick. Maybe $80 oil isn’t next stop after all. Odd’s are we get a pull back in price from here.

42. I also want to point out, though this isn’t on topic, that UAE is frauding.

    https://www.worldoil.com/news/2020/9/15/uae-pushes-oil-output-past-opecplus-targets-iea-says

    > In addition, it processed 370,000 barrels a day at local refineries, and 100,000 barrels a day of condensate — a type of light oil — was “spiked” into crude oil streams, the agency said. The agency revised down its July estimate to 2.87 million barrels a day from last month’s report, when it had assessed UAE output at 3 million barrels a day.

    How sketchy does that sound? This has been happening for a year.

    Exports in JODI are barely growing despite large production increase. When the OPEC growth ends it seems catastrophic for export.

    Norway with the new Sverdrup field has a poor api, is likely producing heavy oil.

    https://www.offshore-energy.biz/refinitiv-johan-sverdrup-crude-game-changer-for-north-sea-and-global-oil-market/

    > According to Refinitiv, Johan Sverdrup is expected to have an API gravity of around 28, very similar to the Norwegian grade Grane.

    1. Bob , I think Ron had posted on the lies of UAE . They wanted to increase their quota and simultaneously announced that they are going to cut their exports . Speaking of “Forked tongues ” 🙂

43. Markets can’t handle even slightest uptick interest rates judging buy housing market. Yet FED is cornered in by lack of supply and will have to taper bond purchases.

    This is going to end badly. For all markets including oil.

    1. Natural gas futures NG1 are showing same price action as both WTI and Brent did yesterday at market close. I think price pressures will reside for at least a little while.

       Dollar also broke pattern to the up side. If the dollar had of stayed range bound it would be easier for oil to continue higher. But the dollar is now trending higher. Not good for the oil bulls

       1. It looks like stock market to “think” about throwing another taper tantrum. That will pull down every other marktet with it – including bonds. They will be sold to erase some margin dept for the over leveraged.

          Over leveraged is the key here, why marktets are instable at the moment I think. Stock margin debt is at record levels.

          1. Yeah when you borrow money to buy stocks or oil and gas futures. It’s not like buying the debt of some company. Where the company has cash flow to service the debt. It’s a bet on capital gains of asset . And if price doesn’t go the way you think you get blown out of your position. And in some cases the collateral used to acquire the loan, the margin. Become worthless.

             Without the asset price bubbles everything deflates. As the asset are the collateral for the loans.

             Speaking of collateral and loans. If the UK is unable to fix their current energy shortages. The collateral for all that high priced real estate becomes impaired.

             Being short on energy being short on oil is something nobody is really prepared for.

44. Coal price is up by 260% from a year ago, wow. From $57 per ton to $206 per ton.

    https://markets.businessinsider.com/commodities/coal-price?op=1

    1. China needs coal and is going to get it wherever it can, pollution be damned. They’ve got blackouts in Beijing of all places, so things are pretty bad when major industries like Foxconn and Tesla’s factories are being hit. This will filter down to consumer level soon enough.

45. Enbridge to Start Oil-Sands Pipe Friday After Long Delays (October 1)

    (Bloomberg) — A long-delayed Enbridge Inc. pipeline extending from Canada’s oil sands to the U.S. Midwest will enter service Friday after years of opposition from environmentalists

    The start of Line 3, which can carry 760,000 barrels a day of crude from Alberta to Wisconsin, is happening after Enbridge fought court and regulatory battles for years, delaying construction multiple times. The pipeline was fiercely opposed by many environmentalists and indigenous groups, who argued the pipeline would sully waterways and contribute to climate change.

    The pipeline continues to face legal challenges, including a case filed in tribal court over a Minnesota water permit issued to Enbridge and a U.S. federal court challenge to the U.S. Army Corps of Engineers water permit.

    https://www.bloombergquint.com/business/enbridge-to-start-oil-sands-pipe-october-1-after-years-of-delays?utm_source=bloomberg-menu

    1. Ovi, your last para says it all . ” It’s not over until the fat lady sings ” . 🙂

       1. Hole in Head

          Not sure of the legal status of a tribal court Issuing orders to the state.

46. Five key takeaways from OPEC’s 2045 oil outlook

    Clocking in at a Texas-sized 340 pages, it’s not the easiest of reads, but helpfully the good folks in Vienna tossed us a 30-page Executive Summary as well as an interactive edition.

    Whatever OPEC says about oil, oil demand, the future of cars and everything else fossil fuel-related is going to be discounted, if not openly mocked, given that the organization is one of petroleum-exporting countries. It’s not the renewables-exporting countries, although OREC has a certain ring.

    1. Oil is far from dead
    2. It’s not ‘U.S.’ It’s the world
    3. A renewables boom — sort of
    4. Oil demand will be hit by electric vehicles, but maybe not as much as you think
    5. Texas (and maybe New Mexico) take off again

    There is a link to the actual report and a lot of text below these points. Just click on the link if you are interested.

    OPEC has oil demand growing by 20% between 2020 and 2045 and gas by even more. The chart below, from the report, is very interesting. I hope to see some comments on it.

    

    1. Sorry to say, but regarding the oil part I´m thinking about a well known Everly Brothers song, you may know which one I´m thinking about…

       1. Dream dream dream… [Everly Bros]

          Ron, in the OPEC report they estimate ‘energy demand’

          Do you think this refers to the levels that the worlds population will be able to afford and desires,
          or the levels which they project will actually be available [estimate of expected production]?

          Either way it seems like somewhere between wishful thinking, wild speculation, an educated guess, and a solicitation for geopolitical partnerships.

          1. OPEC’s “energy demand” is what OPEC thinks the world will consume. They believe production will not be a problem, that the world’s oil fields will produce whatever oil the world demands.

    2. Ron,

       The problem with OPEC numbers is they define “oil” very broadly as any liquid fuel, much of it is what you would call bottled gas. I don’t think OPEC’s demand estimates are very good, but it is difficult to judge because of the way they report.

       1. Well, whatever they are calling “oil” they have it at 82.5 million bpd in 2020. C+C averaged 76.1 million bpd in 2020, so that would mean their figures are about 92% C+C. That’s enough. If their figures are close to being correct, C+C will grow at 7 tenths of one percent between 2020 and 2046. That comes out to be just over 530,000 barrels per day, per year increase for 25 years, beginning in 2020.

          That is 13.3 million barrels per day above where we are today and about 6.3 million barrels per day above the 2019 peak world average. And I am sure they would say: “And still rising.” And I am sure I would say: “Bullshit.”

          1. Ron,

             Keep in mind that table is in boe rather than barrels, so NGL and biofuel would be discounted so that each barrel would be roughly 0.6 boe. In the MOMR they typically use barrels and for 2020 they have World demand at about 91 Mb/d. In 2020 OPEC estimates a a stock build of about 3 Mb/d so consumption of crude would be about 74 Mb/d, this suggests about 17 Mb/d of non-crude, at 60% of 17 we get about 10 Mboe/d of non-crude demand and a total of 84 Mboe/d in 2020 demand, this gets us closer to the 82.5 Mboe/d World Demand estimate from WOO.

          2. Ron,

             I have the answer. It seems that the Saudi’s somehow got that Russian Abiotic Oil technology and plan to develop it shortly. This must be the reason they believe the 13+ mbd of demand will be filled.

             No doubt.

             steve

             1. Obviously thats the case, you cracked it!

             2. If we pump out all the abiotic oil from the Earth, the planet will shrivel to the size of a raisin, and real estate prices will skyrocket. We’ll all have to move to Mars.

    3. About oil, they are delusional about oil production forecast. They are forecasting an increase of 15 mboe/d until 2030 while others (shift project report) are forecasting a decrease of production of at least 8 mboe/d until 2030.

       1. Jean Francois,

          Obviously both will not be right, in fact it is likely neither will be correct. Reality might fall between these two scenarios. My guess is below, also likely to be incorrect. I have revised my medium World Natural Gas shock model based on data through 2020 to estimate future NGL output, biofuels assume to be flat at 2019 levels through 2040, if they decrease output would be lower, they account for 0.7 Mb/d of output each year from 2021 to 2040.

          Took a quick look at the shift project report

          https://theshiftproject.org/wp-content/uploads/2020/09/Study_Risk-supply-Europe_TSP-with-Rystad-Data.pdf

          On page 57 there is a chart which shows liquids output at a little over 100 kb/d. So it is not clear where you get an 8 boe/d decrease by 2030.

          

          1. I am speaking of the chart page 168 of the 2021 shift project report. Of course it concerns ”only” 16 supplier countries and for Europe but I don’t see why it would be better by including the rest of the world oil producing countries as the main producers are already included in the package. And, yes, I am taking the low level production scenario for the future production of tight oil in USA. I am pretty sure that Mike S, LTO survivor and other professionals in this field would have observations to make even with this scenario.

             1. Jean Francois,

                Using a subset of World producers doesn’t really tell us much about World output, unless we assume all other producers (grouped together) are assumed to have zero change in output. The nations that export oil to Europe has changed over time any expectation that these changes will not occur in the future is likely incorrect. A lower tight oil scenario might reduce the peak by 1 Mb/d for my scenario, if we assume no other changes from extra heavy oil output or conventional crude output. The peak for tight oil output for the scenario presented is about 9.4 Mb/d

                A lower tight oil scenario with a peak of 8.3 Mb/d and a slightly lower assumed maximum extraction rate for conventional oil after 2020 is assumed for the scenario below, URR for World C plus C in this scenario is 2860 Gb (includes uconventional and unconventional C plus C), the NGL and biofuel scenarios are the same as the previous scenario.

                

             2. Jean Francois,

                Can you provide a link?

                Can’t find a link to report, but found a summary, their US tight oil low estimate is not very likely.

                LTO Survivor suggested to me that 5% annual rate of growth in tight oil output is reasonable. A simple scenario with tight oil output rising at 4.9% per year from July 2021 to mid 2026, then flat output for year followed by 2% annual decline from 2028 to 2033 and then 30% annual decline from 2035 to 2045, we get the scenario below, with URR of about 70 Gb assuming no tight oil output after 2045. My guess is that this scenario is fairly conservative especially if oil prices continue to rise to $90/bo (Brent in 2020 US$) by 2030. Chart below plots centered 12 month average of US tight oil output starting in Feb 2022 in thousands of barrels per day.

                

                1. Here is the complete report. https://theshiftproject.org/wp-content/uploads/2021/05/Approvisionnement-petrolier-futur-de-lUE_Shift-Project_Mai-2021_RAPPORT-COMPLET.pdf The part concerning the US is p.66.

                2. Thank you Jean Francois.

                   I focus on C plus C and typically exclude NGL from my analysis of tight oil (though NGL and natural gas are included in the economic analysis of the Permian basin). My “low oil price scenario is not very different from the average of the low and high tight oil estimates for crude oil found in the shift project report. My scenario has 2027 output at about 8300 kb/d and the shift project report has tight oil output (petrole brut only) at about 8200 kb/d (average of low and high scenarios) in 2027, see top chart on page 87 of report you linked.

                   Note also that Jean Laherrere’s August 2018 estimate for World C plus C URR was about 2900 Gb (including extra heavy oil), the low scenario I presented above has a URR for World C plus C of 2860 Gb.

47. https://www.youtube.com/watch?v=03bCDEwLCTk

    Must watch. Martensen has posted here before.

    CRUNCH!

48. Thanks, Ronald, this is indeed a very good video. It is an alarming video and everyone does need to watch this.

    I used to love Chris for his great videos. But when he turned anti-vaxxer and horse dewormer promoter, I stopped. But his energy videos are still great and welcomed here. But this is no place for his anti-vaxxer bullshit.

    Here is the link again. This is a truly alarming video.
    The energy crunch is going to impact you and your family

49. Here is how French supermajor Total (now TotalEnergies) sees things playing out-

    https://oilprice.com/Energy/Energy-General/TotalEnergies-Expects-Peak-Oil-Demand-Before-2030.html

    “Global oil demand will plateau before the end of this decade and decline strongly after 2030, TotalEnergies said in its Energy Outlook 2021 unveiled on Monday. ”
    “TotalEnergies has made major investments in LNG and renewables and aims to be among the world’s top five producers of renewable energy.”

    1. Thanks, looks like Dennis overall oil projections

       1. Huntingtonbeach,

          A bit difficult to tell as they report “oil” demand without defining oil. They probably include NGL with oil this muddies the analysis. My guess is that their projections are a bit lower than mine, I am not quite as optimistic that changes in the energy mix will occur as quickly as Total’s scenarios. I think demand for C+C will rise above the 2019 peak by 2023 to about 85 Mb/d by 2025, plateau for a couple of years. NGL output will depend mostly on Natural gas which I haven’t looked at closely for a couple of years now (since 2015).

          I would need to work on revising my 2015 World Natural Gas Shock model to get comparable estimates.

       2. btw HB- good observations on COP recently.

50. Natural gas in western Europe trading now at 95.9 euros per MWh, this is 188 dollars per boe. This is extreme.
    https://www.theice.com/products/27996665/Dutch-TTF-Gas-Futures/data?marketId=5285051

    1. From yesterday (before todays 10% rise):

       ‘Desperate choices’ this winter as three more UK energy suppliers toppled by price surge

       Advisers at the charity fear many will face fuel poverty this winter and could end up turning off their fridges and freezers, relying on hot-water bottles for warmth and requesting support to buy extra duvets and blankets.

       1. I think Churchill said something about a period of consequences?
          In this case, if the brittons with a pound to spare would have invested it in improving their poorly insulated brick houses instead of going to Spain buying another one, with the same shitty insulation, the less affluent ones would have access to a bit less expensive energy? (for a while, at least)
          Sorry if I´m being blunt, but thats how I see it.

          And the irony is, in one case you need heating, in the other AC…

       2. “extra duvets and blankets” in the UK is not a bad idea. It never really gets that cold there so you don’t need heating in the winter. Plus aren’t the Brits hardy.

          1. And for comparison, try living at the same latitude as Nome, Alaska!
             (but if the Gulf stream stops, it would be like northern Siberia here, would need more wool underwear…)

          2. Already ordered another blanket to go with my collection, Uniqlo have some fancy Heattech ones in stock now, and their thermal under layers are great.

             My thermostat is always at 20ºC with a weather compensating combo-boiler rated at 98% efficient. I don’t get these people who have their houses at 25ºC or higher, heating all rooms regardless of occupants, and with people wearing minimal layers. When I was growing up, I remember my bedroom’s single glazed windows having frost on them in the winter. Not that our winters are that bad these days, still, temps above 18ºC for bedrooms was rare.

             1. Installed a ground source heatpump a couple of years ago in my old family home, in the old winter days my grandfather would get up and start a fire in the boiler early in the morning, my mother, as a kid then, would then stay in bed for quite a while. When I grew up we used about 3 m3 of heating oil a year, plus some electricity for stove, oven, lighting etc, in the mid 90´s, with wife and kid, we used about 35 000 kWhs of electricity (since the oil got expensive) a year. Now, with the heat pump and second hand three glazed windows it is down to approx. 9 000 kWhs a year, alas as a second home set at 16C when not occupied. Since work in Lappland is scarce, we reside at the bothnian bay coast during the weeks since 20 years or so, in a too big house but with a newly installed air/air heatpump , which reduced electricity use by about 20-25%. So I know there are improvements to be made.
                I can also remotely increase the temperature in the old house, by text to a device I installed a couple of years ago so it´s 20C inside when we arrive at friday evening in Januari, with -25C outside, or colder.
                Edit, writing this however just reminded me of an old Saudi saying…

          3. In Germany it is considered bad style not to dress warmer indoors in the winter.
             Or, as my grandmother used to say, “Waste not want not”.

             1. Why should I buy all the winter fashion when I am not able to wear it? 😉

       3. The Brits may even have to wear sweaters! The horror!

51. Insurance companies are becoming big drivers of ESG policy.
    Cost of insurance for all forms of business are prone to escalation as a result of huge losses due to the progressive episodes of flooding and fires.

    ““Climate change has surpassed insurance companies’ concerns over diseases and pandemics, according to a new report released yesterday by French insurance company AXA,” Nexus Media writes. “The report, which surveyed 3,500 insurance professionals, showed that global warming ranked number one among insurers’ biggest concerns.”
    “The role of insurance commissioner is to protect….Jones’ office monitored insurers’ reserve portfolios, applied different climate-risk scenarios and performed stress tests to examine how certain investments might perform under various future greenhouse gas emission policies, he said. Regulators in the U.S. don’t generally scrutinize insurers’ reserve portfolios for climate risk, but those practices are more common in other countries, he said.
    Those climate risk regulatory practices are the standard among financial regulators in Europe and Asia,” he said. “By and large, both the U.S. insurance industry and state insurance regulators are behind the curve.”

52. WARNING… Get Ready For Rising Domestic Propane Prices

    For those Peakoilbarrel followers, you might want to make sure that you TOP OFF your PROPANE tanks early before the winter hits. With the U.S. exporting about 1.2 mbd of propane to foreigners while our domestic Propane stocks are 27% less than the last two years at this time… expect much higher prices to come.

    Ain’t Free Market Capitalism wonderful… LOL.

    steve

53. Ruh roh.

    https://www.bloomberg.com/news/articles/2021-09-30/china-orders-top-energy-firms-to-secure-supplies-at-all-costs

54. US Post will be out tonight between 8 and 10

55. Coal now up 282% from a year ago.

    https://markets.businessinsider.com/commodities/coal-price?op=1

    Price was $57.35/short ton October 1, 2020 and is $225/ short ton at 9 AM on Oct 1, 2021. Yikes.

    Sorry for fuzzy chart, best I can do, better at link. % change YOY on right hand vertical axis, left axis is price for a short ton of coal in US $.

    Correction, that price is for a metric ton=1000 kg, not a short ton.

    

    1. China can’t make the numbers work but for so long. They paying 4 times price. Then they burn through dollars, what dollars the have available.

       If they don’t or can’t pass on cost then they run out of dollars and can’t manage currency peg. What the are suggesting. Buying at any cost can only go on for so long.

       1. HHH,

          I imagine they may have to let their currency float like most other nations and not try to maintain a fixed exchange rate between Yuan and US Dollars.

          We will see.

          1. Maybe, but if they truly let it float it would likely devalue against the dollar by 30%. Most people believe that China keeps their currency artificially weak. But reality is exact opposite.

             Only thing that gives their currency value is it’s peg to the dollar.

             1. HHH,

                It might also lead to more demand for China’s exports and a higher rate of economic growth. The artificial peg of the Yuan to the dollar simply leads to misallocation of resources and economic inefficiency. I am well aware that the Yuan is held at an artificilly strong position relative to the dollar, but I agree that many people do not understand this.

       2. The idea that the Chinese is about to run a foreign exchange deficit is just silly. Wrong decade.

    2. 60-70% of their electricity production is coming from coal fueled power plant ; Chinese economy is going to dye.

       1. Yep, And China will be epicenter much like the US was back in 2008. Just on a much grander scale. And in a currency they can’t print.

          FED get way too much attention. When it comes to what really matters. It’s the global monetary system. The Eurodollar system as some call it which actually matters. All these dollar based loans made by banks that aren’t even under FED’s umbrella. When these loans are defaulted on there is nobody there to create the dollars needed to bailout these banks.

          The world loaded up on cheap US denominated debt. Why wouldn’t they when money was so easy to borrow and interest rates near zero.

          Lack of energy is just the trigger.

56. Oil Set For Sixth Weekly Gain Ahead of OPEC+ Meeting

    Last month’s output is lower than the threshold that markets are expecting OPEC to increase their production to, and a lot of countries in OPEC do not have the capability to increase production by very much, according to Bob Yawger, director of the futures division at Mizuho Securities USA. But that hasn’t stopped markets from pricing in the possibility that OPEC will go “above and beyond” in output.

57. A new thread for US July Oil Production has been posted,

    https://peakoilbarrel.com/july-us-oil-production-growth-slows/

    A new open thread Non-Petroleum has been posted.

    https://peakoilbarrel.com/open-thread-non-petroleum-october-1/

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