The latest OPEC Monthly Oil Market Report is out with all the OPEC crude only production numbers for January 2015. There were very little revisions in the December numbers this month.
Total OPEC production of crude only was down 53,000 barrels per day in January to 30,153,000 barrels per day of crude only.
Algerian production has leveled out in the last year and a half but down slightly the last couple of months. January production slipped 13,000 bpd to 1,130,000 bpd.
Angola had a big increase in January, up 122,000 bpd to 1,777,000 bpd.
Last month Ecuador looked to be heading for a new high but slipped slightly in January, down 1,000 bpd to 553,000 bpd.
Not much ever happens in Iran these days. Iran January production was down 25,000 bpd to 2,754,000 bpd.
Iraq had a big decline in January, down 279,000 bpd to 3,353,000 bpd.
Kuwait had a big increase in January, up 78,000 bpd to 2,777,000 bpd.
Libya’s problems continue to get worse again. Their production was down 132,000 to 343,000 bpd.
Things are about the same in Nigeria. Their production was up 44,000 to 1,940,000 bpd.
Qatar’s production continues to slide. Their crude only production was down 7,000 bpd to 680,000 bpd.
Saudi Arabia increased production in January, up 93,000 bpd to 9,683,000 bpd.
UAE made a new high in January, up 64,000 to 2,841,000 bpd.
Venezuela continues to tread water, going nowhere fast. Their crude only production was 1,000 bpd in January to 2,231,000 bpd.
There continues to be about an 850,000 bpd difference between what OPEC’s secondary sources say OPEC produces and what the countries themselves say they produce. Most countries say they are producing a lot more than the secondary sources report, especially Iran, Venezuela and the UAE. Only Iraq says they are producing a lot less than the secondary sources report.
OPEC has world oil production peaking, so far, in October 2014.
OPEC predicts non-OPEC total liquids supply to be up 850,000 barrels per day in 2015 and 890 ,000 barrels per day of that increase is to come from the US and Canada. The lions share of that, they say, 82,000 bpd, will come from the US. That is a downward revision of 420,000 barrels per day from last months projections.
Almost everyone, including OPEC, thinks Russia has peaked. They see Russia dropping about 200,000 bpd from the 4th quarter 2014 to the 4th quarter 2015.
From Platts: Considering Russia’s crude oil production in 2015
The Russian Energy Ministry announced last week it expects crude output in the country to fall 0.6% in 2015. The IEA also said recently it is preparing significant negative revisions to its forecasts for Russian crude output, going so far as accusing some Russian industry officials of complacency over the country’s ability to sustain production in the current economic and political climate.
Russian crude production can be difficult to predict, however, and many analysts continue to forecast flat or even some output growth this year…
The key factor in Russia being able to maintain its output has been its ability to offset declining production rates at mature fields with new production at greenfield sites. From the middle of last year, analysts speculated that 2014 may mark the last year that Russian companies would be able to pull this off.
Regardless of what happens, things are getting interesting in Russia.
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Hi Ron,
Let’s assume OPEC cannot increase production beyond where it is at present and Russian output falls by 0.6% in 2015, if that estimate is correct that is 60 kb/d, we might see a peak as you predict, but if oil prices rise to $80/b by Sept 2015, LTO output in the US may be able to make up the difference, it will be interesting to see how fast the oil patch recovers once oil prices recover.
It would be interesting to get the take of Doug, Mike, ManBearPig, Fernando and other people who have lived through these booms and busts in the past, their collective “gut feel” would be much better than any guess I would make. How fast would things recover if oil prices gradually rise from Brent $58.69/b today to $80/b in Sept 2015 (about a 4.5% per month average monthly increase in price)?
Dennis, I don’t put much faith in “gut feel”. As the late Carl Sagan once said, “I try not to think with my gut.” My analysis is from about 15 years of tracking and plotting each of the world’s major oil producers, analyzing their past production as well as their future possibilities.
I picked 2014-2015 as the peak before the price fell. I am holding to that prediction even if the price rises to its former height… or higher. I believe US and Canadian production will be slighter lower than predicted and the rest of the world production will also be slightly lower than predicted.
However I welcome anyone else’s estimate for the timing of peak oil, including yours.
Hi Ron,
Your prediction assumes US and Canadian future increases cannot match declines in the rest of the World. So far OPEC is holding steady around 30 Mb/d, Russian decline in 2015 is expected to be small, so the question is whether the World excluding OPEC, Russia, US, and Canadian output of C+C falls more than any increases in US output over a 12 month period.
The people who actually work in the oil industry have a better guess than me about how quickly the industry might recover from a bust than I do. My suspicion is that LTO output could recover pretty quickly as the lead time is pretty low and there will be a bunch of stacked rigs looking for work (along with the guys that run the rigs).
From comments that ManBearPig has made there may be some room for growth in the Permian when oil prices recover, there is more room for development in the Bakken, I am not sure about the Eagle Ford, they may be running out of drilling slots in the sweet spots (perhaps Mike would know more).
So I am not looking for a peak prediction as much as how quickly can LTO drilling activity be ramped back up in response to oil prices rising by 4.5% per month for the next 7 months. It may be that these companies will take it slow on the rebound and plan for $60/b oil (or less) rather than $90/b oil.
Dennis
In the oil crash in the mid 80s US production fell by around 700kbpd in less than a year, which was a decline of around 10%. If we were to see similar declines in mature areas today that could easily chop a few million barrels a day off world output. Shale would really struggle to make that up.
I agree. The crash on a World level in the early 80s was due to the Iranian revolution and the Iran Iraq war where 10% of world output was removed from the market over a 2 or 3 year period.
I doubt we will see that on a World basis in the near term, but a Great Depression would do it. Output of C+C fell a little in 2009 but not much(1.6%). Even if prices stabilize around $55/b US (for 2015 only) US C+C output will be flat or fall less than 1%.
The people who actually work in the oil industry have a better guess than me about how quickly the industry might recover from a bust than I do.
Dennis, this is only partially true. Drillers know a whole lot more about drilling than you and I do. Frackers know a lot more about fracking, people who build pipelines know more about pipelines and so on. And people in Texas know more about decline rates in the Permian and Eagle Ford and how much oil just might be left there.
But future production capability in Azerbaijan, Brazil, Russia or wherever is a totally different matter. Here we are talking peak oil, not drilling techniques. In fact I think most oil company executives and former oil company executives haven’t a clue about peak oil. Well, most have a clue, just the wrong clue. Leonardo Maugeri is a perfect example.
Oil: The Next Revolution
THE UNPRECEDENTED UPSURGE OF OIL PRODUCTION
CAPACITY AND WHAT IT MEANS FOR THE WORLD
Kemp has an article on Rig Zone which addresses the stress Latin American production is under due to low prices. Rig count fall there from 7/14 to present is higher than all other areas except North American per the article.
Ron,
What you’ve just said is absolutely true. You likely know more about PO than 99% of oilfield professionals. The only people (or groups) who may know more would be those with proprietary knowledge about reserves and depletion rates on an international scale and I’ve no idea who these people or groups might be. The CIA?
I’ve worked with major and junior companies none of who would share the time of day with another company (or agency) unless required to do so by law. And I spent more than 35 years, directly and indirectly, in the oil industry and with rate exceptions never heard PO mentioned. Well, maybe there was lunchtime chatter about those Peak Oil freaks. 🙂
Doug,
They may not have been thinking “PO” but they were well aware of the increasing difficulty of “reserve replacement.”
Doug, we access the data via the IHS data bases. I understand IHS purchases the production information as well as other data from the oil ministries in each country. Their subscription service packages the homogeneized product, and sells it to oil companies and other outfits. I have participated in study groups which used the IHS data coupled to the Wood Mac reports. But we were focused on benchmarking our exploration efforts, not necessarily looking at peak oil.
There’s another company I can’t mention which gathers both production and capital and OPEX data. I consulted for them and they have a really valuable data base, but you would have to buy the company to get your hands on it. They see it as a strategic information device.
Thanks Fernando. I`d never heard of the IHS data base before but, of course, there is no reason I would have. I do remember working for an oil company based in Calgary Alberta who had a Scouting Department that nobody was allowed access to. These guys were sort of Industrial Spies and no doubt had access to a lot of stuff mere mortals never got to see. At the time all I really cared about was the latest signal processing algorithm. I`m still a bit like that.
It’s not industrial espionage. The internal memos refer to “competitor analysis”. But to the outside it’s called something harmless like “surplus equipment disposal” or “econometric analysis”.
Here’s their link
https://www.ihs.com/industry/oil-gas.html
”My suspicion is that LTO output could recover pretty quickly as the lead time is pretty low and there will be a bunch of stacked rigs looking for work (along with the guys that run the rigs).”
Never been near an oil rig but this jibes with my experience in construction in general.Getting men and machinery back to work doesn’t take long at all if the work is there and the pay scale is good.
It is my impression that in the tight oil fields at least in North Dakota that going back to drilling is basically going to be as simple as paying for a permit which will probably be issued pretty damned quick- assuming somebody has the money to pay for the rig and the men.
Is there any reason it SHOULD take a long time to ramp up the drilling of new wells again?
The roads are there the housing is there the government agencies are in place and staffed etc.
This should be like going back into an approved new subdivision and getting back to building houses again after a housing slump. A ” scratch ” subdivision might take anywhere from a couple of years to ten years or longer to assemble the land and get the various necessary studies done and actually get the zoning and general approvals from local and state authorities and financing and some roads in and some land graded so as to build the first house.
But once all that is done- you can buy a permit and start a new house in a week or less.
Things might be different in the oil industry though.
OFM. Nothing to keep them from cranking back up when price recovers except available financing.
I compare the shale boom to the housing boom that preceded the great recession. Houses are being built now, but not at the frantic pace seen during the housing boom. The reason? Tighter lending standards. No more “liar loans”. No more interest only loans. No more belief that home values can only go up.
Shale liar loans= exaggerated EUR
Shale interest only loans=no principal payments till 2020 or beyond
Shale valuation assumption=oil will never go below $80 again.
Yes, sounding too much like Watcher. Think Watcher is right on the financing issues w shale.
Hi Shallow Sand,
A lot of the lending is not simply loans by banks. It is long term bonds sold to investors. There are not a lot of great investment opportunities for high yield investments.
I am sure when prices go up, some of the stronger oil companies will be able to sell bonds, but the borrowing costs will be high.
So the drilling will be slow (fewer new wells per month) until oil prices get back to $90/b.
I agree, Dennis, but like the housing boom, the return to frantic drilling will not occur absent a spike well over $100.
Hi Ron,
In the previous post I did a scenario for 3500 Gb URR for C+C which most probably missed. I combined the 3000 Gb scenario and 3500 Gb scenario into one chart.
Both scenarios leave extraction rates close to 2014 levels rising less than 0.2% in both cases above the 2014 level (6% for 3000 Gb and 5,5% for 3500 Gb), the extra heavy oil is 500 Gb for both scenarios (and is shown in the chart), extraction rate is for C+C less extra heavy oil (2500 Gb and 3000 Gb). I think reality will fall between these two scenarios, around 3250 Gb, with a peak in 2017/2018. Chart below.
Hello Ron.
I posted this on the EIA’s Great Expectations page in reference to tight oil’s very low EROEI. I wanted to get your opinion.
Here is a wacky idea.
Since US tight oil has been the only thing keeping world oil production growing for the last few years, is it possible that as the market has been flooded with very low EROEI tight oil, the world actually reached peak net energy? That might explain the sudden onset of the collapse of the entire commodities complex, including oil, beginning around June/July of 2014. This makes sense since it would be logical to expect to reach peak net energy at some point before peak oil, since overall EROEI is declining. And since we seem to be at peak oil right about now…
Come to think of it, this is not such a wacky idea after all.
Futilitist, I agree that we have, very likely, reached peak energy. In fact that point was likely reached some time ago.
On a related subject, I would like to recommend this podcast. The link was posted yesterday by TechGuy. It is well worth your time to listen.
Why Today’s Shale Era Is The Retirement Party For Oil Production
Hi Ron,
Did you mean peak “net” energy? This is not easily measured, for the World primary energy per capita has been increasing, net energy as in EROEI probably has peaked and I think is what you meant.
Yes, I meant net energy. Of course coal energy has been increasing as more and more coal fired power plants are being built.
Hi Dennis.
I meant peak net energy. Like you say, is not easy to measure. I don’t think your graph is accurate, since the EROEI of any energy source is really just a best guess. But the US frackers have added a tremendous amount of oil to the market at very low EROEI, or even perhaps negative EROEI. The world economy seemed to be improving somewhat in the Spring of 2014. Then, very suddenly, in June, the world economy turned sour. My theory to explain the sudden downturn is the that world passed peak net energy in June, 2014. As I said before, this timing would make a lot of sense if we are at peak oil about now.
Also, the heavy financialization of oil production has magnified the economic effects of reaching peak net energy. It might have been a more gentle transition otherwise.
Dennis.
Your graph is energy per capita not net energy. Net energy gain is the difference between the energy expended to harvest an energy source and the amount of energy gained from that harvest. Total world net energy is the sum total of all energy gained from all sources. I believe that is what peaked in June of 2014.
Also, for what it is worth (though I seriously doubt people are ready to contemplate this), peak net energy means the onset of collapse. This is because net energy must rise in absolute terms. There is just no way to financialize energy at this level, meaning that, in physics terms, all debts are due the moment the energy is used. Civilization has never, ever existed under these conditions. It simply can’t. That is why collapse will be sudden and extremely rapid.
If I am right about the timing, the collapse has already begun. Let’s see how quickly it picks up speed.
Hi Futilist,
The chart is indeed gross energy. Net energy is very difficult to measure (where do we draw the boundry?)
One can claim that we have reached peak net energy, but your claim that LTO, tar sands produce no (or negative) net energy is likely to be false. The thesis that World peak net energy was reached in mid-2014 is rather difficult to prove. World growth was pretty good in 2014, income distribution is certainly a problem, but the crash in prices was due to increases in supply which were greater than increases in demand which caused the market to be oversupplied. World GDP grew at 3.3% in 2013 and 2014 according to the IMF.
http://www.imf.org/external/pubs/ft/weo/2015/update/01/index.htm
peak net energy means the onset of collapse.
I think you need to re-educate your intuitions about energy.
Here’s a good, basic example: you can get to work in a 10MPG SUV, you can get to in a 50MPG Prius, in a 200MPG Volt, or in a Leaf which uses no G (gallons), just electricity (but at a rate of about 10% of the BTUs used by the SUV).
You can commute to work using zero oil and 10% of the BTUs – you still get to work just fine.
Or you can relocalize, work for yourself and your community, learn new skills, not pay taxes to support an economic-governance model that is killing the planet and stripping democracy, and share an old rust bucket if you absolutely must with the rest of the community who are also not working at jobs that pay taxes to support foreign killing and coups in your name.
US frackers have added a tremendous amount of oil to the market at very low EROEI, or even perhaps negative EROEI.
What leads you to that conclusion?
Don’t forget, 90-95% of the cost of the inputs for drilling wells is labor, not diesel. For instance, the cost of, trucking in water is mostly the time of the drivers, etc.
Unless drivers are making at least thirty five dollars an hour the cost of running an eighteen wheeler- even an old one not well maintained – is more fuel depreciation repairs and maintenance than it is drivers wages. This is a rough estimate of course based on trucks actually being DRIVEN most of the hours that drivers are actually PAID. It might be off by five bucks either way.
Sometimes you have to pay a driver for three or four hours for every hour his truck is actually moving. In that case wages are the primary expense.
Gravy work for a trucker is getting paid by the hour to wait in line and listen to the stereo and bullshit on the radio.
Old farmer mac,
Your post has nothing to do with anything.
Not really, It has a lot to do with life and business.
Hi Futilist,
Better manners please. Old Farmer Mac rambles a little, but he is one of the most knowledgeable people here, if you don’t want to learn from him, you can choose to ignore what he posts.
If you do not want your own comments to be ignored, then be polite.
When you have nothing to add, say nothing.
Hi Dennis.
Thanks for the advice, but I prefer to keep things on an intellectual level. I think that placing too much emphasis on politeness and manners engenders Groupthink. It also serves to obscure and soften the stark contrasts amongst the various opinions being expressed, especially to any outside observer. There are real serious disagreements here that deserve to be hashed out without inhibition. If I think an argument is stupid, I will say so. If I think an argument is really stupid, I will openly make fun of it. Humor is another thing that tends to be inhibited by strict adherence to codes of politeness.
And I will not ever agree to disagree.
Hi Futilist,
You can choose to be impolite. I will choose to ignore your comments. Very simple.
Dennis,
You said:
You can choose to be impolite. I will choose to ignore your comments. Very simple.
I said I think you place too much emphasis on politeness. I am not being impolite. You are just trying to make others believe that I am. That is just a rhetorical trick.
You can ignore me if you want. It won’t help your case.
Hi Dennis,
Futilitist is talking about OFM’s comment; you, on the other hand, are suggesting that OFM ‘rambles a little’.
I also seem to recall OFM’s self-description of something along the lines of ‘proud redneck’ and do recall some of their comments as what some might suggest as being less-than-polite.
Nick G,
What leads me to that conclusion? Estimates of the ERoEI of tight oil come in at only 5% or less, and they may not be very accurate. I only said perhaps negative. And it doesn’t have to be negative to be a problem anyway.
Why do I need to remember that 90-95% of the cost of the inputs for drilling wells is labor, not diesel; or that the cost of trucking in water is mostly the driver’s time? That has nothing to do with what we are talking about!
You are just trying to change the subject and distract people with rhetorical tricks. Nice.
Oh, I just thought you might have been misled by the lack of dollar ROI for LTO at the moment.
Any case, the idea that LTO has close to negative E-ROI doesn’t sound right to me, so do you have a source, and a link to it perhaps?
Dennis,
Could you give us the links for your sources?
Thanks.
Hi NickG,
http://www.bp.com/en/global/corporate/about-bp/energy-economics/statistical-review-of-world-energy.html
http://esa.un.org/unpd/wpp/index.htm
Dennis, I don’t put much faith in “gut feel”. As the late Carl Sagan once said, “I try not to think with my gut.”
Carl Sagan was also famous for saying, “Extraordinary claims demand extraordinary evidence.”
Here’s an extraordinary claim: Oil production will soon fall, economies will collapse as a result, and there will be a mass die-off of humanity.
Where’s the extraordinary evidence?
And surely if there is such evidence, there must be a wide scientific consensus about it.
Didn’t the Black Death wipe out about one third of Europe’s population?
Looks like extraordinary something.
Worldwide, the population fell from 450 million down to 350 million.
http://www.uwgb.edu/dutchs/westtech/x14thc.htm
“Rumors of a terrible plague supposedly arising in China and spreading through Tartary (Central Asia) to India and Persia, Mesopotamia, Syria, Egypt, and all of Asia Minor had reached Europe in 1346. They told of a death toll so devastating that all of India was said to be depopulated, whole territories covered by dead bodies, other areas with no one left alive. As added up by Pope Clement VI at Avignon, the total of reported dead reached 23,840,000. In the absence of a concept of contagion, no serious alarm was felt in Europe until the trading ships brought their black burden of pestilence into Messina while other infected ships from the Levant carried it to Genoa and Venice.”
http://www.uwgb.edu/dutchs/westtech/x14thc.htm
Couldn’t have been much fun.
Anonymous, the extraordinary claim is that the earth can go on supporting 7+ billion people while every ecosystem on earth is in decline. Ocean fish stocks are declining, water tables are dropping all over the world, topsoil is being washed and blown away, rivers, lakes and inland seas are drying up, natural resources, like petroleum is being used up and I could go on and on.
Is there extraordinary evidence that the population can avoid collapse after all these life support systems have collapsed? I submit that this extraordinary evidence does not exist.
I never made the claim that you state. You’re just avoiding answering the question by asking a different question.
This probably means that there is no extraordinary evidence of–and no scientific consensus for–the extraordinary claim that oil is going into permanent decline soon and that this will lead to a mass die-off.
Anonymous, I am sorry that you feel the need to hide behind anonymity. But I never made the claim that oil decline will lead to mass die-off, only that it will exacerbate the problem. I have long claimed that die-off will happen even if oil never declines.
That oil will decline is just common sense, it needs no extraordinary evidence. For oil never to decline the supply would have to be infinite. I think there is extraordinary evidence that the supply of oil is not infinite.
As to how soon oil will start declining, well crude oil peaked and began to decline outside North America several years ago. What kind of proof do you think I would need to show that North America cannot keep increasing faster than the rest of the world is already declining?
Anon, peak oil isn’t something scientists know that much about. This phenomenom can be understood using an integrated geoscience-engineering-economics approach. It helps if you understand math and statistics.
The proof is rather simple: we already peaked in quite a few regions (for example the North Sea).
The debate is more about timing, and how nasty it’s going to get, how high will the prices rise, and whether alternative non crude oil sources can fill the gap.
The debate is more about timing, and how nasty it’s going to get, how high will the prices rise, and whether alternative non crude oil sources can fill the gap.
Exactly. *Everyone* agrees that oil will peak, it’s when, how fast, and what the impact will be.
Perhaps we all can agree that we should move away from oil ASAP.
Sure, but soon as possible isn’t that fast. For example, the USA congress isn’t about to pass a $2 per gallon supplemental liquid fuel tax.
Sure – the political obstacles are the big problem.
But, still, it’s useful for people in places like this to agree on good Public Policy, even if we know there are very large obstacles to getting it past TPTB.
Hi Fernando,
You are correct, the politicians will do little until a crisis hits. In the mean time higher market prices will help, but it will not be as fast acting as we need.
Ocean fish stocks are declining, water tables are dropping all over the world, topsoil is being washed and blown away, rivers, lakes and inland seas are drying up
This isn’t ecosystem collapse. It’s not good, but it’s not collapse.
-many fish stocks are declining, but not all. More important, fish only provide a small percentage of world calories.
-water tables are indeed dropping all over the world, but AFAIK direct precipitation provides the majority of ag water. In the US irrigation provides perhaps 1/3 of ag water, and maybe 1/3 of irrigation water comes from acquifers like the Oglalla.
-topsoil is being washed and blown away, but ag production hasn’t been materially affected by it, and no-till production is growing.
-Some rivers, lakes and inland seas are drying up, but not all.
One solution to ag water problems: stop growing rice in deserts, like in California. Maybe don’t produce quite as much beef, which consumes something like a thousand times as much water as eating grain directly.
The average person in the world is overfed: 3x as many people die from obesity as from hunger.
We could lose half of world ag potential production, and still be able to feed everyone.
We are in freefall. Kindly don’t state the obvious, that we haven’t yet hit the pavement. It’s insulting and makes your comments look positively idiotic. The likes of you want tech to fix tech and gov’t to fix what gov’t caused. You want a racket to fix a racket. You want your head up your ass, try as you might.
By your logic, we could administer liposuction to all the obese and redistribute the resulting fat to the hungry. Problem solved. But that would be snarky and those who ask for it hate it the most. Gee, what a surprise.
Hi Caelan , you sure seem to be in a foul mood. Things are not as good as Nick seems to believe but they are not entirely hopeless either.
Generally speaking though I am afraid Nick is way too optimistic.
Ask the species that have already become extinct if it’s hopeless and if they feel optimistic and then get back to us what their response is.
Optimistic is the last thing I would call advocating the continuation of a setup that clings in a number of ways to the unethical global government-industry symbiosis that is relatively responsible for this ecocide.
Hi Caelen,
It is not at all clear that anarchy would lead to better outcomes. Your idealistic view of how the world should be organized is unlikely. Do I think things should change? Absolutely. Hopefully that will happen before the ecosystem is destroyed. Nothing can be done about past extinctions except to learn from them.
A non-hierarchical anarchy, is pretty difficult for most people to understand.
Perhaps a well regulated representative democracy capitalist system with a social safety net is the best we can do.
Dennis,
Anarchy is the natural human state of the tribe or band– the easiest to understand– and it has existed for far far longer than this current overcomplex/out-of-scale disaster that you might call ‘the best we can do’. It’s the worst that we can do, and is, to boot, in fundamental dissonance with our small-scale, laterally-hierarchic tribal wiring.
-many fish stocks are declining, but not all.
90% of the large fish stocks in all the oceans of the world are gone. They all are declining.
Big-Fish Stocks Fall 90 Percent Since 1950, Study Says
That was over a decade ago. 95% are gone now.
More important, fish only provide a small percentage of world calories.
Typical anthroprocentric reply.
More important! No, the calories they provide are the least important thing. Your attitude is the typical anthropocentric attitude. Only humans count, if all the fish species in the ocean go extinct you ask “how many calories did we lose?”
Ocean life faces mass extinction, broad study finds – ‘We may be sitting on a precipice of a major extinction event’
But the calories they provide are the most important thing. Yeah right, give me a fucking break.
Yes, the topic here is anthropocentric: your comments above suggest that we know that there’s a direct line of causality between these mass extinctions and the collapse of human society.
Mass extinctions are a tragedy, and one can certainly imagine they create serious risks for ecological networks, some of which support humanity. But, do we know what those risks are? I’m not suggesting it’s a good idea to take those risks, but…
Do we have evidence that they’ll cause inevitable collapse of human society?
Hi NickG,
The precautionary principle suggests that humans should tread carefully.
The question should be reversed, “Do we know that mass extinctions will not cause general ecological collapse?
My limited knowledge of ecology suggests that it will not reduce the chance of collapse, rather the reverse would be true.
Humans really should be required to study ecology as a science, perhaps in place of biology in high school, perhaps it would change attitudes to some extent. Unlikely however.
All problems are not so easily solved as you suggest. Perhaps the destruction of the environment by humans will be without consequence, but that proposition seems rather unlikely.
It seems a little more like the 1960s claim that smoking is good for you.
There is not a chance in hell that a person can understand ecology well enough to have an informed opinion without taking at least one year of REAL biology classes at university level. Otherwise they will have to take the word of somebody on FAITH.
This is the problem with so many people failing to understand ecological and energy and environmental problems in general. They have a few cherry picked facts at their disposal but they NECESSARILY must take SOMEBODY’s opinion or claim on faith.
Since the stereotypical ignorant redneck conservative HAS to accept somebody’s claim or opinion – given that he is a naked ape – he makes the obvious choice and accepts the opinions /claims of the business as usual/ Koch brothers crowd.
I don’t have a solution to ignorance.
Most of my liberal acquaintances ( I maintain contact with people from my long hair and teaching days ) take it on faith that we should all give up our right to own a firearm to give a counterexample.
I don’t trust big brother to that extent. My second ( Jewish ) wife lost most of her extended family to the NAZIS. So far as we ever found out none of the ones who lived in Germany survived WWII. Nor do I have that much faith in the police. I called them once when they failed to show up for an hour when they were desperately needed in two minutes. And I have been in court and watched convicted crooks laugh at their victims when they got probation instead of jail time.
AND while her parents were died in the wool NYC liberals when they got ready to retire I almost busted a gut laughing. They moved to a place within a few miles of JESSE HELMS hometown . Low taxes low crime ya see. Low cost of living. Previou to that their favorite political punching bay was old JESSE. Just about EVERYBODY in NC at that time out in the country owned a couple of guns.Both her parents and all her sisters thought guns ought to be outlawed. All of them were university educated. Critical thinking is a rare thing.
Hi Old Farmer Mac,
You are probably correct, the idea would be to at least introduce people to the subject.
An ecologist would probably tell us that one would need far more than a single year of biology and a couple of courses in ecology to have an “informed” opinion about ecological matters.
Most stuff taught at the high school level is very introductory, and it would be nice if people were at least introduced to some of the concepts, if they found it interesting they might take a few courses at University.
Off topic question.
Fernando threw out biofuels output at about 8 times present levels of World wide production levels as being a reasonable upper limit. Does that strike you as being a little optimistic?
Just how few other species do you think human ecology permits us to survive with?
Do you know if it is 100,000 species, 10, or 1 million?
Do you know what those species are? Their needs, distribution and requirements for continued survival?
Do you know how the game of ecology Jenga gets played with such precision that you know all of which pieces can be removed without the tower of life falling over?
These are the questions that you need to be able to answer Nick without sounding, well, like a fool to be polite.
Humanity is running a great experiment with its current course of action. We know from the geological record that past experiments have been run before (there are 5 or 6 other mass extinctions, including one in which 95% of all lifeforms went extinct, yet life went on). I think we also know that in past mass extinctions, no sentient mind was involved in the process (I’d be happy to be proven wrong on that point).
This time around, we know it is us causing mass extinction. We have some conception of how mass extinction is being driven by humans and we have some idea of how it could be stopped.
We have never really known what species survive mass extinctions other than a blanket kind of answer (those which are adapted well enough to survive the bottleneck) which offers no precise answer on whether this or that species will survive.
Furthermore, to better focus your mind on this question, so far as I’m aware, humans themselves almost went extinct within the last 100,000 years. These are humans that are essentially identical to us today, just without the same accumulation of knowledge and technology. The cause is believed to be a supervolcano eruption. The human species went down to as few as (if I recall correctly) 10,000 individuals or so. There are multiple lines of evidence for both this event and the tiny number of humans that existed (mainly genetic).
Do you have any idea why humans survived that event? Do you know any other species that survived that event or why they survived? Do you know which species went extinct (if any) and why they went extinct?
Until you can answer that question about a relatively simple event (a volcanic eruption) that almost wiped us out, it seems like the height of ignorance and foolishness to speculate on humans easily surviving the multiple calamities humanity is inflicting on the world right now and will be doing for the foreseeable future. Things like changing the ph of the ocean, changing the chemical composition of the atmosphere (which has happened before, much to the dismay of the lifeforms that previously dominated the earth), monoculturizing a huge fraction of plant life on the surface of the world, halving the number of invertebrates in the world in less than 40 years, increasing the rate of extinction, changing the pattern of energy use on the planet (through agriculture), altering food chains en mass the world over, having a creature of our size as numerous as we are (I think we’re the most numerous creature of our size (~150 lbs) of a single species that has ever existed. I could be wrong about that. There’s more of us though than any other animal of a similar size than just about anything else on earth except our domestic animals cows, goats, pigs), and so on.
All of these things have never happened before. What effect will they have? What species will go extinct as a result? Will we go extinct as a result of this great experiment?
If you know the answers to these questions please let us know. Otherwise, please stop being so glib about the possibility of our extinction because of the awesome degree of turmoil the human species is causing in the world.
And remember, when answering these questions, please try to think in terms of thousands if not millions of years. Human lifespans aren’t really relevant in this discussion. For the ease of discussion, let’s keep it to 100,000 years. That about the length of time since our species faced a bona fide extinction threat, so it seems like a reasonable time frame in which to answer the questions I’ve posed above.
Thanks!
I agree. That’s why I said ” one can certainly imagine they create serious risks for ecological networks”. I’m particularly worried about Climate Change, in all it’s manifestations.
My point: there’s a big difference between large, unknown risks and Certain Collapse.
Ron’s first article said: “”These are the megafauna, the big predators of the sea, and the species we most value. Their depletion not only threatens the future of these fish and the fishers that depend on them, it could also bring about a complete re-organization of ocean ecosystems, with unknown global consequences.”
That’s not good. That’s something that’s very important to avoid. But, it’s not Certain Collapse of Human Society.
Ron’s 2nd article said: ““We may be sitting on a precipice of a major extinction event,” said Douglas J. McCauley, an ecologist at the University of California, Santa Barbara, and an author of the new research, which was published on Thursday in the journal Science.
But there is still time to avert catastrophe, Dr. McCauley and his colleagues also found. Compared with the continents, the oceans are mostly intact, still wild enough to bounce back to ecological health.
“We’re lucky in many ways,” said Malin L. Pinsky, a marine biologist at Rutgers University and another author of the new report. “The impacts are accelerating, but they’re not so bad we can’t reverse them.”
So, the article is talking about possible catastrophe for ocean systems. But, that’s not exactly the same as catastrophe for human societies, and it’s avoidable.
Again, there’s a big difference between large, unknown risks and Certain Collapse.
So, rather than saying things are hopeless and nothing can be done, it’s better to say:
Fossil fuels are risky, dirty and expensive. We should phase them out as fast as possible.
Right?
The is little that is optimistic in the ceaseless/mindless/come-hell-or-high-water advocation of nuclear energy; in grid-tied (gov’t-control-tied) alt energy; and in asinine EV’s to drive to equally-asinine ‘job’s (and thus support the status-quo via taxes [theft] and labor [slavery]).
No, there is passive-aggressive contempt for all that lives on this planet.
To truly avert catastrophe, if we are serious and ethical, is to collapse the current crony-capitalist plutarchy– the elite/1% modus operandi/status-quo/BAU.
And I don’t see that happening, not willingly, nor smoothly.
Smooth and willing mean real democratic handovers and stuff like across-the-board industrial democratic laterally-hierarchic cooperatives. Tomorrow, 9am sharp.
I am optimistic that Mother Nature will do it for us if no one does, and that it’s going to hurt like hell.
Anonymous,
You said:
“And surely if there is such evidence, there must be a wide scientific consensus about it.”
Since civilization began, there has always been a strong social taboo against speaking out loud about the possibility of collapse (speak no evil, don’t be the bearer of bad news, don’t rock the boat, etc). Scientists, being human, are also subject to this strong social taboo. Thus, there will never be a wide scientific consensus about about the collapse of civilization.
Plus, peak oil isn’t really “science”, or let’s say the concept of peak oil is very basic science, but then for the date, it is all about data data data, and not data you can look up with a satellite, mostly secrete data (like reserves for KSA or Russia).
Yep, seems to me our friend is a bit lost, seeking “scientific consensus”. Must have been reading Cook et al 2013.
Hello Fernando.
Here is what Anonymous asked:
“Here’s an extraordinary claim: Oil production will soon fall, economies will collapse as a result, and there will be a mass die-off of humanity.
Where’s the extraordinary evidence?”
You said:
“The proof is rather simple: we already peaked in quite a few regions (for example the North Sea).”
An interesting thought experiment would be to wind the clock back to, say, 2001. Imagine where the debate was back then. You could not have answered the question with your proof above. You would have only had a theory that I suspect you would have been greatly at odds with.
Flash forward to today. My, how times have changed. We now have excellent evidence exactly confirming many of the predictions made by the original doomers. It would seem to be unfolding basically as they predicted. Interesting.
You suggest:
“The debate is more about timing, and how nasty it’s going to get, how high will the prices rise, and whether alternative non crude oil sources can fill the gap.”
I would submit that the near term onset of the absolute peak of world oil production clearly now cancels any chance that alternatives can ever fill the gap. Alternatives cannot possibly ramp up fast enough to offset the oil decline. Period. This is also as predicted by the original doomers. I would suggest that the debate is moving passed you. (again?)
Now that the final nail is in the coffin on the alternative energy debate, the REAL debate is moving toward when the economy will collapse, and how rapid the die-off will be. Much more interesting and exciting things to talk about than so called alternatives. Enough already. We are getting seriously close to the end of all debate.
(Have we reached peak debate?)
Ramping up renewables to the point of replacing oil in a business as usual economy within the time frame available is certainly out of the question as a practical matter.
But it is a mistake to assume that alternatives cannot be developed fast enough to prevent an overall economic collapse. Coal to liquids for instance is a technology that is well understood and there is plenty of coal to support business as usual even with a move to coal to liquids on the grand scale for at least a half a century or so.
Expensive?True but nobody has demonstrated that ctl is so expensive as to necessarily bring about collapse.
It HAS been conclusively demonstrated that we can build cars that go twice as far on a gallon as current cars and houses that use half as much energy for heating and cooling etc.
Doing this will cause some pain in the auto industry but this pain will be offset by gain in the construction industry.Needless to say the insulation and doors and windows and new heat pump will outlast the foregone new car by a factor of five or more.
And given the power of Leviathan to compel people to do things Leviathan’s way – cars WILL be built to go twice as far on a gallon and houses WILL be built to use half as much energy.We don’t even need new technology to double fuel economy or halve heating energy needs. All that is needed is a decision to proceed.
There are plenty of good reasons to believe that collapse is baked in -EXCELLENT reasons. But peak oil is as Ron points out only ONE of these reasons.
I think a huge part of the world WILL suffer economic and ecological collapse within the next half century but another huge part of the world is already well developed and is close to experiencing a population peak even as I type these words.
Change is going to be a royal pain in the backside but it is by no means impossible.If for instance the average homeowner in this country gives up the luxury of owning just ONE nice new car that frees up enough money to install the very best quality heat pump and add lots of extra insulation and install top quality windows and doors and so forth.And with pv costs coming down and the industry ramping up the vaunted AMERICAN worker will EVENTUALLY be able to install a pv system as fast and as economically as a German worker- meaning system costs are cut in half. USING TODAYS TECHNOLOGY .
Here is another fact that gets overlooked again and again in the renewables versus fossil fuels debate. Providing back up for renewables is not impossible. The problem is not the tech but the expense.
Now in the absence of renewables one basically one hundred percent of our power comes from fossil fuels – counting uranium as a fossil fuel for convenience. It isn’t but it is not renewable.
So – renewables enable us to use LESS fossil fuels to the extent they produce net energy. The ONLY REAL PROBLEM with back up is PAYING for back up. This is a political and economic problem rather than an engineering and technical problem.
I do not know how much energy we might be able to generate with renewables a few decades down the road but I have asked a few physicists and none of them say there is any thing in the fundamental laws that would preclude a renewables based economy . The ereoi of renewables according to these guys is sufficient to eventually giterdone. None of them were willing to predict it WILL be done however.
Folks such as Wimbi have amply demonstrated that business as usual is NOT necessarily necessary. We CAN live and live quite well if we CHOOSE to do so on a minor fraction of the energy we use today per capita.
I just went looking for a new washing machine yesterday. Damned near every one of them has a computer in it nowadays. Adding the ability to turn itself on and run a load whenever it gets a green light that wind or solar power is available is going to be a trivial additional expense once the smart grid and time of use pricing is common practice.DItto the water heater and probably the ac as well by adding some thermal mass – sand thermal mass is dirt cheap and NEVER breaks down.
There is no reason that LED lights for domestic and some commercial uses cannot be mandated universally TOMORROW with time allowed to ramp up production. Subsidizing the price of them down to a buck apiece would be a WORLD CLASS investment.
We CAN get by with cheaper beer and fewer premium channels and eat chicken instead of steak and cut OTHER corners to the extent necessary to afford more expensive energy without NECESSARILY suffering an economic collapse.
I suppose I need to keep repeating a few common sense facts that doomers tend to overlook. Power and resources are not equally distributed in the world. Income is not equally distributed. There is STILL a hundred fifty pounds of wasted energy fat on the carcass of our current three hundred pound lard butt sofa potato fun flying drive everywhere economy in rich western countries.
At some point we are going to listen to people like Jeff Brown and Ron and Fernando and get our asses in gear and start doing things that are WORKABLE. (Guys like Fernando are going to be the ones who make sure that big investments in renewables are as well thought out as possible rather than boondoggles.)
Lots of people who never thought they would quit smoking have quit after having a stroke or coronary event and having that eye to eye heart to heart talk with their physician about living and dieing.
Leviathan is a lethargic hide bound bone headed monster but nevertheless -Leviathan IS capable of fast and furious action once aroused.
If I were given god like powers to rewrite existing law I could get a few smart folks to help me and change things so we could cut our oil needs by a third in a few months.It would take longer to implement the changes but some of them are as follows.
Mandate the production and sale of ten percent of all cars be subcompacts stripped down to the bare bones -with even a heater being an option.Fifty horsepower max and fifty five the max speed.
All insurance policies on cars and drivers providing reciprocal coverage in the event of sharing rides. This would actually be profitable for the industry because it would reduce traffic and there would be FEWER accidents per driver and per car. With just about everybody having a smart phone in his pocket and able to transmit a picture of the car he or she is getting in as well as the driver to a friend or second personal phone located elsewhere kidnapping and rape and robbery are not going to be big problems.
Large employers could be mandated to allow people who live near each other to have identical schedules. It would not burden a Walmart manager with fifty part timers to put some of them in groups of three or four each with schedules allowing them to carpool.
Anybody able to pass a criminal and driving record background and health checkup should be allowed to buy an insurance policy and start his own bus service using a van. This would allow a LOT of people who work in factories on fixed schedules and commute a long way to get to work in just one vehicle as opposed to half a dozen or more. Riding such a bus is more convenient that carpooling and more reliable since the driver is making a buck or two and has a bigger incentive to be dependable.And since he would be running only once a day – at a time he would be making the SAME trip anyway – he will waste no fuel like a city bus running it’s route empty – passenger free- much of the time.
I could go on all day.
Hi Old Farmer Mac,
David Rutledge estimates under 800 Gt of coal URR, and Steve Mohr expects coal to peak by 2030. Your assumption that there is “plenty of coal” may be incorrect.
I have done a coal output scenario with an assumption of 985 Gt of coal and with reasonable assumptions output peaks in 2020. Natural Gas, under reasonable URR assumptions peaks in 2030.
Heavy investment in CTL and GTL is not a good idea, except possibly where liquid fuels are required (no substitute can be found for farming for example), we should conserve and move to electricity powered by non-fossil fuels as quickly as we can.
It is not just about peak oil, it is peak fossil fuels, and it will be here between 2020 and 2030 or about 5 to 15 years from today.
We should get to work.
Folks such as Wimbi have amply demonstrated that business as usual is NOT necessarily necessary. We CAN live and live quite well if we CHOOSE to do so on a minor fraction of the energy we use today per capita.
My view, too. Until we go through these steps, I am not prepared to claim all is lost. I think living a less energy intensive lifestyle is a positive, not a negative.
Go on all day- and profitably too. This society is so wasteful that even a little thinking can go a long way in saving energy and improving chances of surviving climate change.
I am continually surprised at the energy along those lines in my little town. People are talking about innovations of the kind you mention- and taking action.
BTW, I hear so many remarks about humans being endlessly selfish and bottomless in their greed.
I have asked my friends to number how many such people they can cite as good examples- answer, not a one.
And I and my wife know no such people. She knows a lot of people.
What’s the matter here?
It’s the system, wimbi!
People are prodded with invisible/system-embedded pitchforks by what they call the law and by the threats of imprisonment– by force if need be. That’s ‘government’. Your pimps.
If you are born into and play, by force, in a game of greed– a cockfight– even though it is not part of your nature, you will cockfight.
That’s more money for the elite, so more property for them, and backed by their law and their force. That’s why the police are said to protect the elite.
BTW, we’ve entered what I, for some reason, automatically call the ‘Native Era’. I type this at the public library here in Halifax where they seem to have some kind of native dance and chants going on upstairs. We are all natives of the planet of course. The natives, world over, have fought, long and hard, losing battles with fundamentally, feudalistic western governments, but people in general are waking up to that and beginning to side with their brothers and sisters and opposing the status-quo. What do you think the Occupy Movement was about? It hasn’t gone away and won’t. This is just the beginning. In a way, I am very optimistic.
What do you think the Occupy Movement was about? It hasn’t gone away and won’t. This is just the beginning. In a way, I am very optimistic.
I supported the Occupy Movement and did some marching in my own community.
I am concerned, though, about the people who get their news from Fox. They are angry, understandably so, but I see them blaming the wrong people. I am concerned that the Kochs are heavily influence politics and laws in the US to further their own ends.
Could there be some sort of angry mobs? Yes, but I am afraid they will be attacking the powerless rather than the powerful.
That’s cool, Boomer II and good on you. Solidarity.
I was in small towns at the time, but often joined in live, via UStream & Livestream’s videoside chats.
I’m inclined to agree with the ‘battle for mindshare’. Apparently, it can be the immigrants, for example, that often get the brunt of hostilities– ‘stealing jobs’ accusations and all that.
But perhaps the Occupy Movement was also a success in that regard in delivering, to the streets, the kinds of messages that count while at the same time circumventing the hijacking of mindshare from the likes of the Koch brothers and Fox. I think we’ll see more of that.
A. By 1992 I already knew we would reach peak oil (based on information I can’t show you, but which you can purchase). The question has always been the timing. And this isn’t a “scientific issue” or a “theory”. I would say it’s more like the law of gravitation or thermodynamics laws. To be brief: stuff runs out.
The renewable debates exist. Silencing such debates isn’t appropriate. Some people think it’s doable, others think it’s impossible.
Agreed. I enjoy the debate.
barriers often result in better solutions
Yup, constraints, better designs…
I am working on a 3D model design of a treehouse, using only wood from palettes (skids) as the design constraints. So far, it looks better than maybe anything I might have done given no constraint.
Hi Fernando.
You say:
The renewable debates exist. Silencing such debates isn’t appropriate. Some people think it’s doable, others think it’s impossible.
I am one of those that thinks it is impossible, so I am not trying to silence your debate. I am debating you. My position is that your precious renewables debate has now become irrelevant! This is a valid position to take since we are at peal oil now, and renewables can’t possibly ramp up in time.
Hi Futilitist,
This comment will probably appear someplace it makes no sense but it is in reply to yours about mine and truckers wages as a part of the cost of trucking making no sense.
That comment was in response to yet another comment about the relative cost of diesel fuel etc versus wages in the trucking industry. It somehow got misplaced.
It is important to have a realistic idea of where the money goes in discussing energy intensive industries. The cost of drivers used to greatly exceed the cost of fuel but in more recent times drivers wages are actually down even in nominal dollars and fuel costs are up again substantially excepting the last few months of course.
Trucking is no longer a lucrative career choice but it paid very well a few decades back.
The energy dollar cost component of the industry is growing larger in as time passes again disregarding the last few months.
Never the less money spent on trucking does set an upper limit on one very important slice of the cost of producing tight oil. The cost of diesel fuel cannot exceed the cost of hiring a truck even if the driver and the truck are FREE.
So – let us say for a wild ass guess that the two thousand trips it is supposed to take to do a big well frac consume fifty gallons each. Thats a lot of diesel but still only a rather small part of the production of an average Bakken well. Most of the trips are probably not too long given the sand etc is delivered to the area by rail.Fifty gallons will take an eighteen wheeler two hundred to three hundred miles depending on the road.
Personally I think the ereoi of a typical Bakken well is probably high enough that it is not a problem. The first months production probably more than covers all the direct energy inputs such as running the drilling rig and powering up the FRACKING pumps.
Building a rig etc no doubt consumes a hell of a lot of oil but on the other hand it will drill at least a hundred and probably two hundred wells before it is worn out and then it will be recycled. That sort of heavy machinery can be economically refurbished and kept running for decades cheaper than buying new but newer designs eventually mean older machinery still becomes obsolete due to not working fast enough or requiring more skilled man power.
AN EXAMPLE -You used to have to be able to drive a stick shift with unsynchronized gears to get a trucking job.This is a skill that is expensive to teach or learn given that mistakes can result in EXTREMELY expensive repairs and even in accidents.
About twenty years ago automatic transmissions started getting popular in dump trucks.
They are more expensive to purchase and more expensive to maintain but drivers wages dropped a couple of bucks an hour as a result since it makes it SO MUCH easier to train a novice driver.
Women who can’t be bothered to learn how to drive their husband’s stick shift Mustang can now drive dump trucks.And generally speaking they are BETTER drivers – more apt to show up on time and so forth and less likely to have accidents.
Old farmer mac,
You said:
It is important to have a realistic idea of where the money goes in discussing energy intensive industries.
I’m sure on some level that is true. But it still has nothing to do with what we were talking about. We were talking about the ERoEI of tight oil. I’m sure (?) you agree it is important not to conflate the two.
http://www.rsc.org/chemistryworld/2014/02/peak-oil-not-myth-fracking
The energy return on energy invested (EROEI) is worse for all unconventional oil production methods than for conventional oil.
This means that more energy must be invested to maintain output. As a rough comparison, conventional crude oil production has an EROEI in the range 10–20:1, while tight oil comes in at 4–5:1. Oil recovered from (ultra)deepwater drilling gives 4–7:1, heavy oil 3–5:1, and oil shale (kerogen) somewhere around 1.5–4:1. Tar sands is around 6:1, if it is recovered by surface mining, but this falls to around 3:1 when the bitumen is ‘upgraded’ by conversion to a liquid ‘oil’ substitute.
As conventional oil production has fallen, so has oil’s EROEI as we recover it from increasingly inhospitable locations, and with new technologies. The price of a barrel of oil has trebled over the past decade, but output has effectively flatlined. We may be close to the ceiling of global oil production, and the prospect of filling the gap with oil from alternative sources is daunting.
That’s more what I was talking about.
I had to read through a lot of colorful, irrelevant, folksy, home spun wisdom to find this tidbit:
Personally I think the ereoi of a typical Bakken well is probably high enough that it is not a problem.
That’s nice.
Personally I think the ereoi of a typical Bakken well is probably high enough that it is not a problem.
er, eo, i ~Old farmer mac or Old MacDonald?
(sorry, I couldn’t resist)
An E – ROI of five: one is very very different from an E – ROI of “zero or negative”.
And, I’d be curious to see to see the source of this five: 1 E – ROI, because that suggests that a well with an EUR of 300,000 barrels would require an input of 2 1/2 million gallons of diesel to produce.
2 1/2 million gallons does sound like a pretty big number, so I did the math, too. It checks out. About 2 1/2 million gallons of diesel are needed to produce 300,000 barrels of tight oil (figuring 5:1 ERoEI).
It might seem to you like an unbelievably big number, but that doesn’t make it untrue. You are making an Argument From Incredulity.
Yes. It doesn’t sound right.
We don’t have an original source with calculations, just a popular article with a compilation of familiar PO arguments.
Think about it: it doesn’t make sense, even if all of the fracking water and produced oil are each trucked 1,000 miles (which they’re not).
Let me extend that argument.
A tanker truck might have a capacity of 8400 gallons http://www.wellservicingmagazine.com/featured-articles/2011/07/crude-oil-truck-transport/ and get about 7 miles per gallon. That means that they can transport that oil 58,800 miles using the energy in its cargo.
Frakk water tends to be roughly equal in volume 2 produced oil. Both water and produced will travel maybe 250 miles each, for a total of 500 miles. So that’s a net energy of about 99%, or an E – ROI of 100 to 1.
There are a lot of other energy inputs, but I don’t see any others that are significantly different from conventional oil. There’s the diesel used to do the fracturing, I’d be curious to see that, but it’s not going to be on the order of magnitude of 2,500,000 gallons.
Hi Dennis,
“It would be interesting to get the take of Doug…..”
I can’t imagine why you’d want my “take” on this since my economics insight equals zero. True, we (our family) have witnessed several business cycles that seem to have averaged about seven years in length. And, the fluctuations have occurred around a long-term growth trend, as you normally point out. Perhaps post PO, and with diminishing EROIs, long-term growth trends will reverse (or collapse as Ron is wont to say). There must be a dozen plus people here who could (no doubt will) provide constructive input based on REAL economic knowledge. If you want any guidance on pulsar physics however…………
PS: Being a geophysicist and geologist has had me in close proximity with real oil guys (sorry Nikki, and gals) for a long time but any rubbed off (transferred) oil knowledge is pretty thin. You must have observed this?
Hi Doug,
You have much more insight than you give yourself credit for, I just figured even without knowing economics you had seen what happens in the oil patch over your career during booms and busts. On the economy slowing down, I think on a per capita basis things have been approaching zero and may turn negative, but if population levels off and declines, maybe the declining per capita income will not be as steep as some assume. Chart using IMF gdp data (purchasing power parity 2005 constant dollars) and UN population data (medium fertility 2011-2015).
I think the big companies like CLR now realize that they over produced and wrecked the market. I hope that they got the message from OPEC and that when prices go back up and they start drilling again they will do so at a more moderate pace as to not upset the supply/demand balance. Hopefully the smaller drillers will also wake up.
As others have said, I agree that the banks will also have a say this time around.
I have no idea when prices will recover, but they will go back up. And after they go up, they will crash again. Its how the industry works, you simply accept it as a fact of life and go about your business.
As for whats left, its my opinion that the Permian has the largest amount of LTO reserves remaining out of any of the American plays. This isn’t based off of being a Texan, it based off of being geologist who has studied core from all of the basins. Granted I have spent most of my time with Permian conventional fields, but I have still had exposure to the American LTO plays outside of Texas. The Bakken or Eagle Ford might have more reserves then a single play in the Permian, but there are enough LTO targets in both basins to make up for it. If price allows for the maximum amount of LTO extraction, based on current technology, I think >10 BBO will come from Permian LTO formations. Price is the limit that can keep the actual number below that, not the hydrocarbons.
Hi MBP,
Thanks. At $90/b (2014$) or higher, would that 10 Gb for the Permian LTO output be about right?
Do you think if oil prices recover like they did in 2009/2010, that drilling activity in the LTO plays will pick back up to mid 2014 levels by mid 2016? For reference WTI went from $39/b in Feb 2009 to $75/b in July 2010. In Jan 2015 WTI bottomed at about $48/b for the month, if oil prices follow the 2009/2010 trajectory we would expect $92/b in June 2016, and $86/b by August 2015.
Let’s assume that my oil price WAG is correct, if it were I would think drilling activity in the better LTO plays to recover fairly quickly (12 months or less). Does that sound reasonable?
Id say $90 sounds about right (assuming similar costs to now) to get to 10 BBO. I’m not sure drilling levels will pick back up to what they were. Someone else had mentioned a similarity to the housing crash in 2008 and how though house building has picked up, it is not at the levels it was before the crash. The same could be true for the LTO drilling. The small players might not get the loans they did before, so only the big players will be able to do large scale drilling. The 10 BBO might be produced, but it will be at a slower rate then before the price crash.
Thanks MBP.
The post says, intriguingly, “There continues to be about an 850,000 bpd difference between what OPEC’s secondary sources say OPEC produces and what the countries themselves say they produce.”
So are the numbers shown in this post from secondary sources? Or from direct reports by the countries?
Hi Mason,
Ron uses the secondary sources, the direct communication numbers from Venezuela and Iran are not very reliable, those two countries account for about 700 kb/d of the excess production in the direct communication numbers, though there are others that are both higher and lower than the secondary sources. Most agree the secondary sources are better estimates.
All my charts are from OPEC’s secondary sources. OPEC, up until about a year and a half ago, only published numbers from secondary sources. But at every OPEC meeting Venezuela would complain that the MOMR was underestimating their production by almost half a million barrels per day. The publishers of the OPEC MOMR, knowing that Venezuela was just lying about their production, decide to appease them by publishing two sets of numbers, one from “secondary sources” and the other from “direct communication”. But sometimes they cannot get the necessary input via direct communication so they just leave it blank for that month. That is why Venezuela and Angola shows no “direct communication” data for January.
The reason Venezuela lies about their production numbers is they want to show that the strike and the firing of so many oil field workers had no effect on production.
Interesting. Thanks, Ron and Dennis.
Dennis. My simplistic view re shale is that the drilling will pick up only if the companies are able to borrow more money to do so. Most were required to borrow heavily from 2010-2014 when the oil price averaged well above $80. They are still burning through cash, so there will not be much new drilling out of cash flow. Maybe the really big ones, like XTO, Burlington and Marathon will continue. EOG might also, but they borrowed a lot.
However, as I have stated, I have a bias against shale, due to the continued hype of, “10% IRR at $10 below whatever the current price of WTI” that finally seemed to stop when WTI went sub 50. It will be interesting, but my prediction is that oil rigs will continue to decline. If you look at 2008-2009, there was about at 3-4 month lag time between WTI bottom and oil rig count bottom. Same thing happened in 1999 and 2001. Further, prior to 2010, there were rarely more than 400 oil rigs running in US since early 1990s. Seems likely that oil rigs will drop below 800, maybe even below 500.
Agree there are people who post here that know more than I and have studied numbers more closely, you being one of them.
Hi Shallowsands,
I agree with all of your observations, but have reservations about the last part of the following (in bold) 🙂
Agree there are people who post here that know more than I and have studied numbers more closely, you being one of them.
As a retired accountant [Maybe Watcher is also an accountant? I think that is a slur, so I take that back.], most analysis fails to recognize the practical result of the collapse in prices. The companies with excessive debt [in a matter of a few months] went from telling their bankers “we will dedicate X% of our revenues to debt,” to telling them that the % so dedicated is now zero. And, they need more debt. So, as long as the payback % remains at zero, the bankers [who are human] panic. They are re-scheduling debt payments and shooting as much BS as they can at their higher ups in the bank that everything will be okay [to save their own ass from being fired]. I think that Grantham said that shale drilling will come back in an instant if prices increase. I think that he is wrong. The bankers have an internal record of what amount of payments are in arrears [sure, they will negotiate a more favorable payback, but that is just to delay publicly disclosing a loss on a loan (setting up a reserve for losses)] so they will require the arrears to be paid, prior to restarting increases in loans for new drilling. This will take awhile. And, some would say, a long while.
Watcher is clearly not an accountant. Too much imagination 😉 , and too little talk of debits and credits
Watcher knows about magnetohydrodynamics and thermonuclear shell flashes so my guess is he’s a physicist come analyst, recruited by the CIA and now retired with one remaining aim in life: To drive us all crazy. In other words: retired spook.
I haven’t examined his comments in detail, but I suspect Watcher reads a lot of zerohedge.com. Me too. (Our CIA handler insists that we do!)
As far as tight oil production being able to recover rapidly after the coming wave of bankruptcies, I doubt it. The collapse of US tight oil production will cause a whole lot of real damage to the US economy, and oil prices might not recover quickly enough (or at all), since the world economy seems to be slowing considerably.
Futilitist: “…and oil prices might not recover quickly enough (or at all), since the world economy seems to be slowing considerably.”
It won’t recover. It’s a death spiral now. Low price means lower oil supply, which means weaker economy, and even lower oil price.
Hi Kam,
Interesting. so you expect the oil price will fall to zero?
That is where your logic leads.
Dennis,
You said:
“Interesting. so you expect the oil price will fall to zero?
That is where your logic leads.”
Wrong. That is not where this logic leads at all. Obviously, the price of oil cannot reach zero. The economy will be gone before that could ever happen. We are already in collapse. That is where this logic leads.
Dennis, you have a blind spot. You can’t accept the possibility of a collapse. And so you never factor that possibility into your thinking. That is why you cannot understand where this logic leads.
No, it will fall to -10 usd.
Hello Kam.
Yes, I completely agree.
Wait a second. I agreed with Kam’s first post only. Kam’s post about oil falling to -10 usd posted after I agreed with the first post, but it appears out of sequence above, making it seem like I agree that oil will fall to -10 usd. I do NOT agree with that.
For the record:
Kam: “It won’t recover. It’s a death spiral now. Low price means lower oil supply, which means weaker economy, and even lower oil price.”
Futilitist: “Hello Kam. Yes, I completely agree.
Futilitist (to Dennis): “Obviously, the price of oil cannot reach zero.”
Kam: “No, it will fall to -10 usd.”
Futilitist: “I do not agree with that, Kam”
HELLO DENNIS,
You said:
“Hi Kam,
Interesting. so you expect the oil price will fall to zero?”
I brought the whole thing up. Kam agreed with me. So you asked Kam the question above.
My question to you is: Why didn’t you choose to ask ME the question? I have addressed several comments and questions directly to you over the past few days. You have yet to answer me directly on a single one. Why?
I await your answer.
Hi Futilist,
It is pretty clear that the logic of Kam’s post leads to a price of zero for oil. This assumes that the market price of a “good” like clean air, cannot be negative.
He proposed a positive feedback loop, it is simply a matter of logic that the price of oil would be zero.
I have never said collapse is impossible, I think it unlikely.
What does it mean that there is no economy? Do you mean that it will change? I agree that there will be change, but believe that it will be different from what you envision. Nobody knows what the future will look like.
I agree with you that the price of oil will not go to zero, I was trying to get Kam to think. Can you explain how Kam’s first comment can be correct and the price of oil does not go to zero?
If you think about, it both comments cannot be correct, so if you agree with
Low price means lower oil supply, which means weaker economy, and even lower oil price.
In a real economy, lower supply leads to higher prices, not lower prices. The higher prices may lead to increased supply which then lowers price and eventually a balance is found. If geology results in the new market price being much higher than before, then people make different choices, they buy more fuel efficient cars, move closer to work or a place that has better access to public transportation.
Goods get transported by rail rather than truck (for long hauls). All of this takes time, but as prices increase this is what will happen.
From 1970 to 1980 real oil prices rose by a factor of 10, economic collapse? Not really. Economic recession? Yes.
From 2001 to 2008 real oil prices rose by a factor of 3 (annual prices for Brent from BP), again recession, but no collapse.
I do not think either of us will convince the other, I think a severe depression is likely when fossil fuels peak. Prices of fossil fuels will rise and everyone will realize that peak fossil fuels is a reality and things will change. I think the scenarios that Old Farmer Mac spins look pretty realistic, global collapse as Ron Patterson describes it is not a high probability event in my view.
Dennis, I have responded to your post below where the thread is wider.
You are not clueless at all clueless. I think you are on the money.
If oil price stabilizes here for the year, average annual price will be the lowest since 2014. My guess OPEX is double 2004.
There will not be a quick drilling response.
Since 2004.
Hi Shallowands,
We are operating under different assumptions. I do not expect oil prices to stabilize at these levels, the World economy was in much worse shape in 2009 than in 2015 and in 2009 prices went from $39/b in Feb to $75/b by September.
If your assumption that prices will remain around $50/b is correct, the rest of your scenario follows. The world economic outlook is for growth of 3.5% in World GDP in 2015 see
http://www.thestar.com/business/economy/2015/01/19/imf-lowers-world-economic-outlook.html
The agency now believes the global economy will grow 3.5 per cent in 2015. That’s 0.3 percentage points higher than in 2014, but also 0.3 percentage points lower than its October forecast.
For 2016, the IMF has also revised its forecast downward to 3.7 per cent.
The forecast may be too high, but in 2009 growth was zero, I doubt real GDP growth will be at 2009 levels in 2015, so I expect oil prices to recover at least as fast as they did in 2009.
I don’t disagree with you, Dennis. I think we have to go higher soon absent a worldwide DECREASE in demand.
I am pointing out many are predicting WTI to average $50 or so for 2015 and oil production in US to continue to grow. I do not think that can happen. My point is that $50 WTI for 2015 would be below the 2009 average coming out of the great recession. The last year to average less was 2004. OPEX in my view has doubled since 2004.
I do not see how US can keep enough rigs running at $50 WTI to grow production. In fact, I am surprised at all of the media types, including the oil experts on CNBC and the like who are calling for production increases to continue and an oil price hitting the 30s or even 20s in the second quarter. Those guys are hitting that idea hard.
Hi Shallowsand,
I agree in full, if prices stay around $50/b US output will stop growing and will decline or remain flat (slow decline is most likely).
The $20/b stuff is just silly.
Hi, Dennis.
It seems to me that the world economy may be weaker than you, or the IMF, etc., suggest. The economic modelers/ TPTB, have never accurately predicted a recession or depression. The collapse of 2008/2009 was not foreseen, or, at least, declared, though some organizations clearly saw it coming, and creating and sold garbage against which the shorted. I would suggest that the activities of central banks and governments have made the situation more perilous than was the case leading up to the financial crisis, and that this weakness will only be recognized in retrospect. The confidence fairy is essential.
Perhaps the present perceived growth will prove chimerical. The banks getting insurance for their derivative books looks like preparation for the next bank bailout.
Hi Jabberwocky,
I agree that economic forecasting is often wrong, if we look at World Real GDP Growth from the IMF from 1995 to 2014, most years were pretty good, with the exception of 2009.
So far the disaster that was supposed to occur in the US due to quantitative easing has failed to materialize, had Keynesian policies been followed in the US and Europe rather than austerity, economic recovery would have been much swifter.
So I disagree that things are worse at present, when peak oil hits in 2018 and peak coal in 2020 and peak natural gas by 2028, things will get worse economically, but it will get us started in the right direction, attempting to transition away from fossil fuels. It will be messy and difficult and we should have started in 1980, there is nothing to do but do the best we can with the time that is given too us (as Gandalf would say.)
I forgot the chart for World GDP growth from the IMF.
http://www.imf.org/external/datamapper/index.php
The economic modelers that work for public agencies know that their jobs and pensions depend on failing to notice an approaching depression.
This comment is only half sarcasm. The other half is cynicism. 😉
Clueless, not all oil companies package their development activities tied to a financing deal. A large company will use internal cash flow and borrow money to have the appropriate amount of strategic gearing. I was taught we should strive for a 25 to 30 % debt ratio, to have highly rated bonds.
A company run on this basis only worries about project financing for a mega project (Kashagan, the Baku-Ceyhan pipeline), mostly for political reasons. The shale plays attracted the medium and small players, but if they start going broke the larger companies will muscle in and buy the mineral rights.
”The shale plays attracted the medium and small players, but if they start going broke the larger companies will muscle in and buy the mineral rights.”
I have zero experience in the oil industry but I have no difficulty understanding this common sense observation from a real oil man.
Why do so many people have trouble understanding it ?The cost of operating in the tight oil fields has been established. If the rights to the oil are up for sale and the price of oil is high enough the majors can buy the rights and finance the work out of their own cash flow.
I think the majors will buy some possibly, but not all shale areas are the same. Some is profitable at the current price, some is not at $100+.
The majors divested of most of US onshore production in 1980s and 1990s. Those assets were still profitable, and when prices went up in the last 10-12 years, a lot of small producers made a lot of money operating those properties.
The majors appear to have certain asset requirements. Fernando and others here would know more detail than me. Some US shale may fit those, some not.
I’m not sure companies like Exxon will buy into the shales. I do believe larger companies which need to diversify will try it. For example, are there any European oil companies involved in the Bakken play? I can see a company like Repsol , ENI, or possibly the Australian BHP to start buying distressed shale drillers. Those guys will just buy the whole company, if they can settle the debt and make a profit at $60 +
Guys, Exxon – thru its’ $31 billion purchase of XTO, Conoco Phillips owning Burlington Resources, BHP buying Petrohawk, already show the big boys are involved in the shales.
As some on this board have indicated, most notably OFM, deep pocketed entities are ready, willing, and able to swoop in and purchase any and all distressed operations/properties if the economics work.
The talk of well abandonment, ‘walking away’ from known tens/hundreds of billions of barrels of hydrocarbons displays gross ignorance.
Coffee. I’ve never agreed with the idea that many shale assets will be abandoned anytime soon. I am also aware that the majors you cite are in shale. Shell in in Marcellus and Utica. Marathon Oil is a very large company and they are big in Bakken and EFS. Shale is pretty much a big boys game at $5-12 million per well.
The key is what you post about majors swooping in, if the economics work. I wonder if major producers will want the more marginal stuff, which will be under the most stress. Seems Shell was burned on that kind of deal in the EFS already.
Shallow,
BHP also got burnt. They made Petrohawk very rich, something like $12b, and then 12 months later were making write downs, due to low gas price and not all of the areas being as good as thought.
They say they are now moving into “production mode”. So we will see next year whether they can actually make money on the their (my) investments?
I don’t think any of the big oil companies have really made a killing in shale. There seems there are more stories of their bad investments, than their good ones. I wonder how the history book will read in a few years time?
Shallow, exactly right … and for that matter BHP kinda whiffed – partially – for the same reason Shell stumbled, namely, coming late to the dance, buying high-priced tickets at the door (marginal land at the margins), and wondering why all the good lookin’ girls (sweet spots) are with the other guys. This stuff ain’t rocket science.
As you may recall, I focus on the operational aspects and this respite in the pace of torrid production drilling should allow the fuzzy heads to improve greatly the efficiencies of the entire process … most specifically the fracturing.
If each 5,000’/10,000′ wellbore might be considered its own ‘micro-reservoir’, going forward, each individual STAGE will be treated for its own, unique properties, a ‘micro-micro’ reservoir.
It seems widely acknowledged that over 1/3 the perforations/sleeves produce little to nada hydrocarbons. That’s a lotta nada. Stages are being shortened to 100′ or less, down from 300/350. The more productive payzones are being identified whole drilling and targeted with the completion schemes. The days of cookie cutter, geometrically designed fracs are becoming a thing of the past.
A Westhorford rep said there have already been 1,500 horizontals re-frac’d (seems high to me), and the experience gained – especially with the recently introduced ‘diverting agents’ to temporarily block the larger fissures – may play a role in the CO2 EOR process which is to have a field trial in the Bakken this summer.
What I’m gettin’ at shallow, is that a lot of land in the shales that is in varying degrees marginally productive right now has the potential to be viable in the coming years … and that would also hold true for other plays.
Total just took 6.5 billion write down, mostly on North American shale and tar sands.
Bought high. Evidently the time to buy is when things look grim. On the other hand if we see these companies make such risky investments we can be sure they don’t have exploration prospects they think are worth pursuing.
Shallow, Total may have just taken a world class haircut, but, as per Fernando, the French sure can put on some fancy holiday meals on their offshore rigs. So, there’s that …
Speaking of haircuts, check out Apache write downs and rig reduction.
The Permian is an area that works for the size of larger producers. Much of the LTO is located on the same acreage as conventional production, so it allows them to concentrate on different types of drilling based upon price.
Hi ManBearPig,
Do you think if oil prices slowly rise from$48/b to say $60/b (at least) by June, that Permian output will not decline much? Are there still quite a few wells being completed there each month? It is tough to get a handle on what is going onin the Permian because there is a mix of vertical and horizontal wells being drilled.
I don’t see there being any significant LTO drilling until price is back to at least $70-75 bbl. Quite a few single play operators that I know of have laid down all of their rigs. Even new conventional wells don’t have great economics at $50 bbl since drilling prices are/were tied to the LTO market. Most of the work that will be done at this price will be workovers, so that what I see most of the rigs working on for the time being.
Hi ManBearPig,
Very interesting, so with very few completions we would be expecting a pretty steep drop in Permian output. Have they also stopped fracking, or is it mostly the drills have stopped turning?
It should drop, but not as steep as areas that are LTO production only like the Bakken or the Eagle Ford. Fracs are usually set 6 months in advance, so previously scheduled jobs should mostly still happen. After about Mach, I see there being a pretty steep drop in fracs. Though there will still be refracs since economics on those work ok even at these prices.
Mineral rights can be bought if there is a seller, you can’t buy them if the owner of those rights doesn’t sell. Right now, the offers are in the five grand per acre range. If they increase to 20 to 40 grand per acre, the owner will probably just laugh again.
When you have mineral rights, they include all of the minerals, not just the paltry sum of oil that everybody goes nuts over.
The coal is included in those rights, so is the potash. Both exist along with the oil in the Williston Basin. Resource rich is what they say.
Closer to 90 grand per acre as a starting point to sell, the owner might think about it, but probably not. No deal. The mineral buyers can go fly a kite.
Better to hold the minerals for future potential income from other minerals.
Only one problem with your post, as soon as the banker sees the guy next to him getting a good ROI on the newest round, he jumps right back in. It has done this my whole life.
It’s the herd mentality at it’s finest.
I think that this is the key point, and I wonder if Saudi Arabia is primarily targeting the shale play drillers’ “Supply lines,” i.e., the flow of borrowed money, in sufficient quantities and at affordable interest rates.
Isn’t this, more-or-less, the point Watcher’s been harping on about, ad nauseam, since about the time Noah launched his ark? Not that we want to give Watcher credit for anything — least his head explodes. No disrespect shallow sand.
Greece news over the weekend should have smashed the Euro today (which would elevate the dollar) but it looks pretty clear the ECB (and maybe a cooperative SNB) has intervened and prevented any further Euro erosion for now.
With the dollar a tad weaker, oil was not able to fall much today. It’s being reported as “up”, but it was in the 53s at close on Friday and closed today 53.xx. The definition of “closed” is being tweaked a bit.
err closed today 52.xx.
Not quite sure as to mechanism for refinery strike impact, but there is a strike underway.
http://america.aljazeera.com/articles/2015/2/8/united-steelworkers-widens-oil-refinery-strike.html
“Greece news over the weekend should have smashed the Euro today (which would elevate the dollar) but it looks pretty clear the ECB (and maybe a cooperative SNB) has intervened and prevented any further Euro erosion for now.”
Most likely the markets believe that something will be worked out. In my opinion, neither Germany or the ECB will budge. Greece is going to default, probably before the spring. There is no way the Greece gov’t is going to continue Troika, and there is no chance of a bailout\debt cut since Germany and ECB fear the rest of the PIIGS will demand the same deal.
I recall reading a lot of hedge funds invested in Greek Debt for the high yield returns. All that paper money vanish in instant when Greece defaults. There are likely derivatives attached to the bonds held by the hedgies, which should make thinks interesting (especially if big bets have been placed on the anticipation of a Greek default).
I believe the ECB QE program was intended for Greece’s Exit from the Euro, but I have my doubts its big enough. Perhaps if the Fed Reserve comes to the rescue to provide Liquidity as they did in 2008/2009.
As an observation, I noticed that the Fed has been out of the game since Jack Lew replaced Turbo Timmy. Based upon Alan Greenspan’s comment back in December, I am reasonably confident that the Treasury Sec. calls the Fed shots. The 1934 Federal Reserve Act, states the Treasury Sec. has control over the Fed. The idea that the Fed is independent is likely illusion. I think Jack Lew is not a fan of QE and and probably won’t want the Fed to bailout Europe (at least not until thinks get bad).
http://www.bloomberg.com/news/videos/2015-01-23/lew-strong-dollar-good-for-u-s-shows-economic-strength
For those that think I am crazy to believe that Europe will go fascist again. Here’s Senator Sanders take:
http://www.enewspf.com/latest-news/latest-national/latest-national-news/59019-senator-bernie-sanders-asks-fed-chief-yellen-to-help-greece-overcome-austerity-policies-which-are-destroying-their-economy.html
“It would be a terrible mistake for the world to forget what happens when a democratically-elected government, as was the case in Germany in the 1920s, is unable to relieve the severe economic suffering of its people. We must remember that waiting in the wings should this recently elected Greek government fail is the neo-Nazi party Golden Dawn party. We cannot allow fascism to come to power in a European country due to our unwillingness to reverse harmful austerity policies,” Sanders wrote
Bernie Sanders has solid left credentials. Syriza’s DNA is populist/communist. Therefore it’s not surprising to see Bernie come out and defend them. I do wonder if he realizes Syriza has received funding from the Venezuelan dictatorship?
Fern,
whether he pro-communist isn’t of interest. His point about Germany’s WW1 reparations leading to fascism is right on target. The reason why Syriza has one is because the Greek people are being oppressed and desperate for a solution. If Syriza fails (which it probably will) the Nazi party will win the next election or overthrown Syriza. What do you suppose the outcome will be in states under Troika?
Fascism in Greece isn’t going to be the end of the world, the trend of extremist gov’ts in Europe will continue to grow. Spain is very much a likely candidate as well as Italy and France.
Consider that we haven’t breached the the decline of Oil and energy production yet. Either very close or at the Peak and the world is growing very unstable. Its not difficult to imagine that on the backside of the peak, that the problems will grow much worse and the people will be pushed even further into a corner.
Whether he’s communist is of extreme interest to people like me. I really really despise them. I ran away from Cuba when I was 14 years old. Alone. It’s very personal.
http://www.bernie.org/
Fernando,
Bernie Sanders is no more communist than you. What you need to fear is unregulated capitalism. It’s the opportunity that breeds communism. The 99% don’t want to live like slaves for the 1%.
I’m not discussing Sandees. I’m discussing Tsipras. Whether Tsipras is a communist or not is a key data point for me. I think he’s a communist.
Fernando, just curious what exactly do you mean when you say the word ‘communism’? I don’t even think that the five remaining official communist states practice it. Well maybe the North Koreans come close. Personally I’m much more worried about fascism and ultra right wing groups proliferating in European countries than I might be about communism… For the record many of my relatives emigrated from Hungary after the revolution in 1956. I can’t think of a single one of them for whom communism is a preoccupation today. The Neo Nazi Jobbik party on the other hand is a lot scarier even though they are supposedly anti communist, go figure, eh?
“Communists and anarchists are working for the same eventual goal of a society without hierarchy. In one way communism and anarchy are pretty much the same concept: a stateless, classless society in which no one rules over others. Communists [with some exceptionz] just believe that hierarchical means (the state, perhaps ruled by a Communist vanguard) can be used in the transition to this end, while anarchists believe in using only non-hierarchical, decentralized means.
As an anarchist my personal opinion is that the ends don’t justify the means, and that only non-hierarchical organization can bring about a successful revolution to a non-hierarchical society. I just don’t think it’s very realistic that any government, Communist or not, would voluntarily step down from power.” ~ Eleutherios
Fred, communism:Marxism. Im not Hungarian.
Fernando,
communism:Marxism.
Really?! Yeah, I know that… but to me that is a strawman boogeyman. It’s a lot like being afraid of ghosts. They only exist in your mind.
There are some very real big bad wolves out there that worry me a lot more.
I have a good friend who is known to a bunch of the old TOD hands who have migrated here who I refer to as the alien biologist in our conversations since this is the way he looks at the world and everything in it- as if he were a research biologist from another world just looking and listening and taking it all in.
Getting back far enough from the trees really helps in seeing what the forest looks like.
I will not argue that the Saudis are not glad that current low prices are putting a hurting on the American tight oil industry but I am far from convinced that crippling American tight oil is more than some welcome sweet icing on the very sour LEMON cake of low prices.There are OTHER reasons the Saudis are not cutting production and we have no way of knowing how much weight they put on any given reason . All we know is that all reasons combined for maintaining production are sufficient reason in their judgement to maintain production.
Everybody who has taken time to look into Saudi society deeply enough to have some insight into reality on the ground there seems to agree that the country is a powder keg and that there are lots of idiots around waving lighted matches.It could be that the people who run the country ( my guess is that a couple of dozen senior royal family members- maybe fewer- make all the important decisions ) have decided that cutting production in order to raise prices would actually endanger the royal family.
The average person doesn’t seem to realize that the House of Saud owes it’s position to none other than the American people due to our federal government cutting a deal with them. They supply oil. We keep them on the throne and in their palaces. Pissing off the American electorate by taking away our cheap gasoline during hard times might not look like such a good policy to the ruling clique right now. I am NOT saying this is THE reason they are maintaining production but just throwing it out as one possible reason that is generally overlooked. One among many.
In my estimation they know that once oil prices recover sufficiently to actually generate a real profit in the tight oil patch SOMEBODY will finance the drilling of new wells.
Now I am most assuredly not an accountant and my computer skills are minimal to put it as gently as possible. So I can’t say how much difference it makes to drilling a tight oil well if interest rates are three percent or or six percent annually. But it is my impression that a typical tight oil well produces enough oil at a price in the neighborhood of a hundred bucks to generate a profit so long as interest rates are not over five or six percent or so.
When oil prices go back up and they get high enough to justify the investment there WILL be plenty of people who can come up with ten million bucks.PLENTY of people. If the banks don’t want to loan the money to Tom Dick and Harry then the likes of Warren Buffet are always out there and looking for a profitable place to park a few hundred million bucks for a few years.
But I do agree than liars loans are history in the tight oil patch.
Old farmer, the real hurdle rate is the return the investor requires to keep stock value and dividends on target. An oil company can do very well at 8 % RISK WEIGHTED return on average cash employed. A solid company can sell its general bonds at say 5 %.
The key is to understand RISK. The business can be very risky. This means companies tend to plan on a high return on capital employed. However, companies using a 15 % to 20 % hurdle are just ignoring more sophisticated risking methods.
The demand for oil in basically inelastic, the production numbers bear out that proof. Less here, more there, that’s all. All the production does is telegraph demand, it’s the first indicator of what is going to be needed, even if that demand ends up in storage, it is still demand, just unused at the moment. Demand trumps supply, increases with oversupply because oversupply leads to price reduction; price elasticity is more volatile than demand volatility. If oil goes to 100, the demand for gas doesn’t decrease by fifty percent or even sixty percent, maybe five percent. Rock crushes scissors. The irrepressible force meets the immovable object. Demand wont budge. Supplies might begin to decline 25 years from now, remains to be seen. When the supply begins to decline noticeably, there will be trouble in River City. Can’t stop drilling for oil, just wouldn’t be prudent.
There still will be some coal, maybe more nuclear, fewer emissions with nuclear, maybe.
Time to digress.
In the absence of nuclear, wind and solar are causing a multitude of problems in Germany. Without nuclear power, energy costs are more expensive, especially with wind and solar FIT, feed in tariffs.
Looks like wind and solar are being heavily criticized. Wind and solar cause more carbon emissions, not less, wind and solar dependency result in more coal-fired power generation not shuttering. A black-eye for wind and solar, and it needs a punch in the snoot. Wind and solar propaganda is bad enough already. I support wind and solar, but not it can’t do the job alone. Pie-in-the-sky nonsense. Wind turbines need a serious engineering re-structuring, they’re not going to work.
Green Energy Bust:
http://www.dissentmagazine.org/article/green-energy-bust-in-germany
I support wind and solar, but not it can’t do the job alone.
edit: I support wind and solar, but it can’t do the job alone.
Hi Ronald,
You are correct that eliminating nuclear as an option does not make a lot of sense. I am all for nuclear, as long as it is near your house (as long as you don’t live near me.) 🙂
We can use wind and solar to provide 90% of load hours as long as we have a widely dispersed system and we can use a combination of fuel cells, batteries and vehicle to grid for energy storage to make this 90% possible. At slightly higher cost up to 99% of load hours can be provided and this is before load management measures are taken to reduce peak power needs by using peak pricing and other types of smart grid management. Nuclear power has a number of problems (such as nuclear waste) and future advanced reactors may solve some of these, but so far such reactors have not become commercial. For now natural gas can be used for backup until there are future advances in batteries, and fuel cells, biofuels could also potentially used for backup if such advances do not occur and natural gas depletes, or we could use a limited amount of nuclear power for backup for the 10% or 1% of load hours which need to be covered. Though demand management is likely to make the need for backup very small.
“I support wind and solar, but it can’t do the job alone.”
Go tell those silly Belgians (neighbors to Germany, wouldn’t you know!).
They went and built an Antarctic research station powered by sun and wind.
http://www.antarcticstation.org/station
http://www.antarcticstation.org/station/renewable_energies/
Sure they have some backup generators, one would like that for life safety. But I guess there is a certain convenience: the sun shines all summer and the wind blows all winter.
What next – EVs in Antarctica?
Ha Ha ha ha ha
http://www.antarcticstation.org/station/improvements
(down at bottom)
Or for Greenland…
http://polarpower.org/PTC/2013_pdf/PTC_2013_Dahl_CSC.pdf
http://polarfield.com/blog/challenge-ethan-brodsky-clean-snowmobile-challenge/
Oh never mind.
It’s not the only wind and solar powered thing in Antarctica.
The Automatic Geophysical Observatories have been for a while now.
http://polarpower.org/PTC/2014_pdf/PTC_2014_Jeffer.pdf
more examples at:
http://polarpower.org/examples/index.html
Maybe the big picture is being missed here. Without any backup generators to come to the rescue, the renewables are an iffy deal. Large ships and airplanes help set up shop down there in Antarctica.
A few questions:
How many people live in Antarctica?
What energy sources were used to transport the personnel to Antarctica?
What energy sources were used to develop those renewable energies?
My guess is fossil fuels and am probably correct. You won’t get there any other way, sorry.
Dependency on fossil fuels is a must, even with renewables available.
One more question: How can they feed themselves in such a harsh environment?
They must have some source of sustenance. I’ll bet supplies are flown to those bases, especially food supplies. They are wholly dependent upon fossil fuels, it won’t happen any other way.
Yesterday, I saw two flocks of flying pigs. It was a sight not soon to be forgotten, my lying eyes were amazed.
Hi Ronald,
We will need fossil fuels, that is true, they are limited so we should use less. There are many ways to do this, more travel by rail, and light rail and public transportation in general, more fuel efficient vehicles, more biking and walking. Better designed cities with less urban sprawl, more EVs, more wind, solar, and geothermal, as much as possible to conserve fossil fuel, at some point we will have to find a way to get off fossil fuels all together, but they will get more expensive as they deplete and that will give the correct market signals to find ways to substitute.
This is the part where people think I believe this will be easy, I think no such thing, it will be exceedingly difficult and it is likely that a depression will result due to economic disruption during this transition.
I think there is potential for collapse in some parts of the world, but I agree with Old Farmer Mac’s thesis that for some of the stronger nations a collapse may be avoided, but it will not be a cake-walk by any means.
I believe that wind and solar as useful to the Global economy as $150 to $200 oil.
Hi Jef,
That is exactly when they will be most useful, but it would be better to not wait until prices are that high to start ramping up wind and solar. Oil will be $150/b or more in 2015$ by 2020, possibly even 2017.
That is what you meant right? 😉
The dissentmagazine article is old (2012), and you didn’t look at the reply in there.
Their ignorance about renewables and “shock” at their lower capacity factors speaks volumes about their cluelessness (or their hidden agenda).
Their “renewables cause more carbon in 2012” is in fact a lie.
While true that lignite (+7%), and hard coal (+9.8%) were marginally higher 2012 vs 2011,
gas was DOWN 17.8%, and solar up 44.5%. Without the renewables, carbon would have been higher.
THe latest data is from 2014, except December:
http://www.ise.fraunhofer.de/en/downloads-englisch/pdf-files-englisch/data-nivc-/electricity-production-from-solar-and-wind-in-germany-2014.pdf
page 7,
brown coal down 4 TWh,
hard coal down 11.3 TWh,
gas down 6.3 TWh
So you still want to argue that renewables cause more carbon emissions?
Why are the pro-nuke people blaming renewables for the politicians shutting down nukes?
If they’re really low-carbon focused, they should be celebrating all low/no carbon electricity sources instead of fighting wind/solar – the real enemy is coal.
Sure there are populist renewables advocates who adopt a no-nukes line,
but the nuclear industry needs to look in the mirror, not try to blame others.
The nuke industry shined on the waste problem and safety, while telling the people “trust us, we’re the experts”. Well, they shattered that trust.
Three Mile Island – denied the known pilot operated relief valve problems were that serious, and spent million on lawyers to minimize the safety critical domain under the NRC purview, but can’t be bothered to spend a few tens of thousands on enough instrument air capacity to avoid contamination of their system with water in the shop air lines (on repeated occasions), or hydrogen recombiners in the containment. While most people don’t get the technical details, they get there was greed going on.
Chernobyl – what an asinine design, graphic moderator tipped control rods, no containment, … .
Fukushima – let’s ignore the experts telling us tsunamis can be higher than we’d like to believe, and put our emergency generators in the basement. But forgive us, we’ll avoid all mistakes in the future.
So given this history, why is the industry fighting to do away with hydrogen recombiners?
Do they really cost that much to run? Be serious.
N.B. Vogtle has yet another delay/cost overrun
http://www.powermag.com/even-more-delays-and-cost-overruns-for-vogtle-expansion/
Did the high-cost, fancy fuel assembly light water reactor community have anything to do with the planned destruction of the nation’s stock of U-233? (Not sure of current status.)
Naw – we don’t want the cheapness, ease and simplicity of adding/removing a bit of metal salts from time to time – we prefer to put tons of precision made zirconium tube assembles in tons of water, so every single time we over-temp a reactor, not only do we have fission product release, we get lots of nice flammable hydrogen too!
The nuclear industry needs to really get to work on cleaning up its house, they may very well have blown all their public credibility, which is a shame for the molten salt/thorium folks,
as well as anybody who gets the need to de-carbonize our energy supply.
The best valuation is emissions in country/energy consumed in country. Does anybody have that figure?
Hi Fernando,
You can get that from the BP Statistical Review of World Energy
http://www.bp.com/en/global/corporate/about-bp/energy-economics/statistical-review-of-world-energy.html
The Excel Workbook can be downloaded at the page above, it gives CO2 emissions and primary energy consumption by nation.
Thanks. I keeps their excels. But I don’t usually get into his topic. Maybe I’ll write a bs post pseudo paper in my blog making fun of solar power reducing emissions?
Hi Fernando,
Any coal or natural gas displaced by wind and solar is a reduction in emissions, if nuclear gets shut down, that makes it more difficult to reduce carbon emissions, but if a nation chooses to reduce nuclear, that is their decision. Clearly if there were no wind, solar or nuclear power, carbon emissions would be higher. You can write whatever you want, but if one is going to argue that no wind and solar (and no increase in nuclear power) would reduce carbon emissions, they would look pretty silly.
They have other rational alternatives. For example, they can provide subsidized financing to build hydropower in theBalkans. That reduces emissions, and costs a lot less.
Hi Fernando,
It is up to each country how they want to spend their money, I imagine many Germans might say building hydro in the Balkans would not be the best idea, that is their choice. There is definitely a limit to how much hydro can be built. German solar and wind manufacturers can sell goods to the World after they have built as much as they want in Germany. Prices of solar have come down a lot, and will continue to fall.
dennis, the Germans belong to the EU, and I live in Spain, also an EU member. This puts my skin in tha game when it comes to the Germans being stupid. Putting hydropower in the Balkans is a much more sensible solution than their silly solar panels.
“silly solar panels” ?
Your going to eat those words in time
Hi Fernando,
Do Germans decide how the Spanish government allocates its resources?
My understanding is that the German government is elected by Germans. Do you vote in German elections?
Dennis, the European Union has a Parliament, a joint bureaucracy and a Supreme Court. There is also an eurozone, and political parties from different sides of the spectrum form alliances, do horse trading, and struggle for reaching a consensus on common policies. This means that residents in one country can and do try to influence events in other member countries. Some days I see more local TV coverage about Merkel than I see about Rajoy. If the Germans screw up with their policies it can definitely ruin everybody. And if they push their cockamamie solar power ideas and the others don’t oppose then the EU economy is toast.
Hi Fernando,
I am ignorant of how the whole EU system works. My impression was that except for monetary policy the EU bureaucracy has very little real power, maybe some influence, but basically nations are free to decide their policies. Not everyone views solar in the same negative light as you. Demand management, nuclear, wind, solar, and an integrated HVDC transmission grid, with wind overbuilt by a factor of 2 or three with some pumped hydro storage in the Balkans and Scandanavia would work fine.
These are not problems that cannot be solved.
The EU has quite a bit of power as a matter of fact. I don’t know where the idea comes from that it doesn’t. EU law is enforced by the courts of the member states, whether the government likes it or not.
But maybe the idea comes from the fact that EU directives are implemented as national law in the individual countries. This makes it look like the countries are doing it of their own free will, but actually it binds the countries even tighter.
For example, the Little Englanders sometimes dream of quitting the EU, but what would that even mean? The UK would still have tens of thousands of pages of laws based on EU directives on their books. And the EU would still have a huge amount of leverage to continue passing new laws. All they would have done is say they would no longer participate in the decision making.
Another example: Turkey and Israel sometimes engage in loud public arguments with the EU. Membership is off the table. But both countries continue the “harmonization” process, meaning they too are ruled by EU law in many aspects of daily life.
Nearly every other country in the world is in the same boat to a greater or lesser extent. The EU has developed a method of exporting governance independent of direct political control. All it requires is the rule of law in the target country.
Fernando may be thinking of the Directive on Electricity Production from Renewable Energy Sources, which the German Red/Green coalition pushed through back in 2000. It sets binding targets for renewables generation in EU countries to be implemented by 2020.
The EU Renewables Directive requires Spain to generate 20% of its electricity from renewable resources by 2020, and it is legally binding for the Spanish government under Spanish law.
why the Balkans? seems like a long distance away. Do any of these countries want to be Germany’s hydro storage location of choice? Why not in Germany or Switzerland?
They wouldn’t be Germany’s “storage system”. They would simply serve as renewable back up for local needs. The “isolated country” approach is irrational when the EU presumably aims to function as a united political and economic entity. As Korhola points out, the EU approach is flawed. And somebody needs to inject common sense into it.
“In the absence of nuclear, wind and solar are causing a multitude of problems in Germany.”
They sure are but, “Without nuclear power, energy costs are more expensive, especially with wind and solar FIT, feed in tariffs.” doesn’t seem to be the explanation.
German wholesale prices continue to plummet
“In 2014, prices on the German exchange dropped by 13 percent on average for baseload and 15 percent for peak prices. But January 2015 was a record month for wind power production in Germany, with 9.776 TWh having been generated for the month as a whole (244 GWh of which was from offshore).
The record wind power production has stretched the gap between prices in the Phelix zone and neighboring France and Switzerland, as the chart from EPEX’s press release shows. Baseload power in Germany cost more than 1.2 cents less than in France, while peak power was nearly a cent cheaper in Germany as well.:”
It is the low wholesale prices that are one of the causes of the multitude of problems, in that the fossil generators are having a real challenge to make a profit. It will be interesting to see how the situation in Germany plays out.
Alan from the islands
My guess is they will have to do what they did in Spain and stop allowing new subsidized solar power using the old subsidy rates. This in turn has stressed solar power investors. There’s an ongoing set of lawsuits over this issue in European courts.
The Feed in tariff in Germany for solar depends on when the installation was made. The Government offers 20 year contracts. The rate for new contracts has been falling steadily since 2004.
German wholesale prices continue to plummet
Hopefully I got it right this time!
Alan from the islands
Alan:
The retail prices to customers remain high. The wholesale drops when they have excess wind energy, but this doesn’t get to the customers because they have to pay for the fossil fuel generators kept on line due to wind intermittency.
The headlines we see from these renewables websites usually distort the full story. The Germans just need sounder grid design. They got too much renewables, not enough grid, and they definitely need a lot more pumped storage. They need to make some kind of deal with Austria.
The cost of renewables (EEG-Umlage) is less than 10 percent of the consumer electricity bill. It’s about half as much as the electricity tax introduced to discourage waste (and used to fund social security). Also it is now falling a bit.
It simply is not true that renewables are costing the germans a lot of money.
Really. That’s not what I read lee where. I suspect we are getting a lt of chinese solar panel makers writing propaganda about solar power. I just did an analysis a couple of hours ago, and it shows solar in particular is a huge money loser.
Fernando,
You are very conservative, and what you read reflects the general conservative view point that renewable energy is a leftist plot.
So of course what you have read confirms your views, that is why you choose to read it.
We all suffer from this problem to some degree.
I would not take articles from Der Spiegel seriously, any more than I would material from Fox News.
You would probably feel the same way about the New York Times.
Fernando has an agenda. When I started seeing him comment here after witnessing his endless needling of climate science bloggers, I knew enough to discount what he had to say. YMMV.
Hello WebHubTelescope.
Fernando has an agenda. When I started seeing him comment here after witnessing his endless needling of climate science bloggers, I knew enough to discount what he had to say.
Fernando knows nothing. His purpose here seems to be to distract anyone else from knowing anything.
Fernando has forgotten more than most people will ever know..
He acknowledges peak oil and peak resources. He has made a comment in this forum that indicates he thinks the US ought to add a couple of bucks a gallon tax on gasoline. He has commented that individuals should adopt a lower energy lifestyle.
He advocates nuclear energy at least to the point of running existing plants rather than shutting them down prematurely. I agree and will add that the only thing that scares me more than a lot o nukes is the lack of them.
He just happens to take an engineers hard nosed attitude that doing things requires paying for the things that get done and that a lot of what we are doing with renewables is not generating enough return to justify the expense in terms of current day customers paying the bill.
I find that as much as I DON’T like it he is unfortunately right that the economics or renewable power are not at this time good enough to justify the investments being made in a hell of a lot of cases.
We tend to talk about things in this forum the way a bunch of pilgrims on an old time sailing ship might have talked about all the problems they would have once they reached America.
Fernando talks like the captain of the ship who knows full well he has all he will have to work his ass off just reaching port.Back in those days lots of ships never made port.
A good many of the regulars here are convinced that renewables will never scale up far enough and fast enough to prevent collapse. Nobody condemns these people as ignorant when they say this.
But when a man with an engineering background and a lifetime of experience comes along and says the same thing -that renewables are just not economically viable to the degree that we can get away from fossil fuels.
Well certain ones of us label him as ignorant and or a mouth piece for business as usual or worse.
We are DAMNED lucky he comments here.
INCIDENTALLY I have high hopes that we will be able to scale up renewables fast enough to prevent an outright collapse at least in a few countries. We aren’t going to run out of fossil fuels overnight. We have a few decades yet in places such as the US to get our act together in terms of avoiding COLLAPSE as opposed to the FAILURE of business as usual.
Fernando is basically saying business as usual is a dead man walking and that expecting renewables to save him is naive.
I believe he is right.
But he is also the sort of man that can provide the guidance needed to make sure that critically limited available capital is put to good use keeping the ship of society afloat and headed to port.
The VERY LAST THING we need is a huge renewables project or program that doesn’t work as advertised. It would provide all the ammo the Koch brothers types need to sabotage public investments in renewables.
He just happens to take an engineers hard nosed attitude that doing things requires paying for the things that get done and that a lot of what we are doing with renewables is not generating enough return to justify the expense in terms of current day customers paying the bill.
But the US government spends a lot of money on projects which aren’t required to pay for themselves. The military comes to mind.
If you sell an idea as important for strategic or defense purposes, you can often get support for it, even if it is taxpayer money in and nothing coming back in return.
So you agree a lot of that renewables investment is ill considered. That’s a step forward.
Dennis, an economic analysis doesn’t belong to a political party. Solar power just doesn’t fly very well unless it has limited penetration and the nation has a wad of cash to pay for it. Those who advocate the mindless use of solar power are either unable to grasp the figures or are writing commercial propaganda for the solar industry (which happens to have a very powerful lobby).
I don’t know much about the potential for hydro in the Balkans but if they have good potential hydro resources then they sure as hell should be developing them rather than going the solar route. The bang for the dollar will be IMMENSELY louder.
I have consistently supported renewables of all sorts as well as conservation and efficiency measures pedal to the metal since I first posted years ago at the old TOD site.
HOWEVER- Altogether too many of us here are prone to forget that when it comes to doing the ” RIGHT THING ” you have to take into account the ability to pay for it in real time and recover the COST of doing the RIGHT THING in a reasonable amount of time.
Sometimes I am utterly convinced that I am one of only two or maybe three regular posters here who have EVER had only a little money and thus have a down in the guts understanding of POVERTY close up and personal. Now in recent times I have had a little more money and have been able to spend some of it on things such as triple glazed windows and heat pumps.
But let me put it in plain language.
There are a hell of a lot of people in my neighborhood who are burning kerosene in space heaters to stay warm at three times the cost of running a heat pump -WHO CANNOT AFFORD A HEAT PUMP.
It would be foolish of me to encourage them to get a heat pump but I do encourage them to get a roll of insulation as they can afford it for the attic.
Telling a very poor man he ought to get his kids to a dentist is a total fucking waste of time.
Fernando is a climate doubter. OK . NOT a problem for me. In my ENTIRE life I have met only one person who in my own opinion has NEVER been wrong on any serious question that I discussed with him. ( NO NOT YOURS TRULY. I have swapped ends on the entire political and half the scientific spectrum of questions at least TWICE over the last half century plus.)
There ARE some people who actually are intellectually and morally honest who doubt the current climate science consensus..
My lawyer does not believe in peak oil in the sense we do here in this forum. He has a SUPERB education – in the law. He knows I know MY field.
So – Despite his degree from a snooty school or two and the parchment on the wall that says he can practice before the Supreme Court I KNOW he is ignorant when it comes to fossil fuel questions. This DOES not mean he lacks credibility when it comes to OTHER questions.
It is a serious mistake to judge a person who agrees with you about such an issue as fossil fuel depletion and yet questions climate issues on the basis of his questioning climate projections.
I personally believe the climate is very likely going to CONTINUE to heat up ( where are the cold years out of the last fifteen that should be there if the warm ones are random occurrences?) and that it is going to get a LOT hotter.
But this does not mean an engineer has his head up his ass when it comes to questioning the CURRENT DAY AFFORDABILITY of solar and wind versus gas and coal and hydro.
I am going against the doomer consensus prevalent in such forums as this one (although I have a few allies here at Ron’s blog ) when I argue that collapse is not necessarily going to be universal in time and place.
I am neither so starry eyed nor so pessimistic as to believe the world can afford to go renewable for now or that fossil fuels are going to just DISAPPEAR over the next few years.
Wind and solar are great options for people and countries wealthy enough to afford them large scale and for people who can’t afford a grid but can afford a little bit of intermittent power.
Let’s hope they keep on getting cheaper. In the meantime I would prefer not to pretend they are a lot cheaper than they actually are.
Wind and solar are great options for people and countries wealthy enough to afford them large scale and for people who can’t afford a grid but can afford a little bit of intermittent power.
And those are precisely the uses I have been talking about.
Solar is the best solution in some cases. In others, it is as reasonable a use of long-term money as building more roads, or funding a massive military/industrial complex.
We don’t have a lot of Silicon Valley types posting here, but since some of them lean Libertarian, those folks would love to end dependence on a utility monopoly. Even if they have to pay more for their energy to do so, they would prefer to control their own power than having to go through a utility. And some of them are likely hoping to find solutions that can then be marketed to other people.
Solar can’t be discounted because it isn’t the best solution for everyone. The places where it is being used most often right now are solutions for those people, whether it be less carbon, less pollution, more flexibility, less dependence on the grid, and so on.
And yes, when you are talking about the fact that the poor can’t afford solar, keep in mind that many of you are also talking about the fact that the poor can’t afford high priced or non-existence fossil fuels, either. You’re conceding that the poor around the world are probably screwed no matter what. So solar may be a solution for those who can afford to survive.
Old farmer, what the heck is a “climate doubter”?
Hi Old farmer mac.
You say:
I am going against the doomer consensus prevalent in such forums as this one
What doomer consensus? When I look around the comments section, I see mostly very long short stories by you, and many graphs by Dennis Coyne, which look great but are based on questionable assumptions. And Fernando everywhere! And the three of you work work like a team, mutually reinforcing each other. If I were a casual reader, I doubt I would know what to make of it all. But I sure wouldn’t think there was anything like a doomer consensus around here. I would probably just get confused (and bored) and move on. Is that the general idea?
Hi Fernando,
Economic analysis has everything to do with underlying assumptions and those are all about politics. Why do you think the economic analyses from the right and left of the political spectrum are so different? People on the right only listen to economists whose analysis is “serious”, where “serious” means it comes to the conclusion a conservative would like, people on the left do the same thing to just as large a degree.
To claim that economics has nothing to do with politics is naïve.
Here’s a map to show you why solar power in Germany is a pretty dumb idea
Hi Fernando,
Perhaps solar power in Germany is a bad idea based on your map, it does not mean it is a bad idea everywhere. Does Germany not have much wind power potential, usually that is a cheaper way to go (onshore) and even offshore wind might be cheaper than solar in Germany. Certainly a German engineer is perfectly capable of running the numbers.
I don’t follow Germany and power at all, but since it keeps coming up here, this is a relevant article from yesterday.
Germany’s utilities have come up with very different strategies in response to the energy reforms and depleted profits.
Eon, Germany’s biggest utility by market capitalisation, is taking the radical step of spinning off its power generation businesses based on fossil fuels and nuclear, and will instead concentrate on renewables. By contrast, RWE will focus on slashing costs while maintaining a single, integrated business.
http://www.ft.com/intl/cms/s/0/51a8468a-87a4-11e4-9cd9-00144feabdc0.html?siteedition=intl
Dennis:
I don’t think the Germans really modeled their system before they passed legislation to encourage solar power with subsidies and rules. I have an advantage over you in the sense that I live this everyday. For example, this morning I sat and discussed my electric power contract with my Iberdrola representative. Because I think the cost of fuel will go up I signed up for a fixed price guarantee for a year. But it’s the everyday instances and articles I read here which allow me to visualize how german miscalculations can impact my electricity price.
The discount rate on Fernando’s opinions are 50%.
Don’t make me laugh.
I saw someone mention today the “ultra-rich green groups” — also known as “URGG!”. When you say this, try to grind your teeth.
well those climate scientists driving their limos to lavish Hollywood parties to get those Marxist government grants….
sometimes you got to catapult the propaganda
Compared to the auto industry lobby or the oil lobby or the banking lobby solar has hardly any lobby at all at least here in the US.
But only a fool could possibly think that an industry without serious lobby artillery could get the amount of public money spent that has been and will be spent on solar in this country.
And in a great many other countries especially Germany and Spain the lobby has demonstrated ENORMOUS power.
A good part of Fernando’s arguments involve excessive investment – too much too fast too uneconomic in solar power.
You have to make port before you do great things in the new promised land. Fernando is mostly talking about getting the ship to port.
Hi Old Farmer Mac,
I think Fernando’s knowledge of the oil industry is great. In other areas he is confident that he knows more than everyone else, but I am skeptical of his renewables expertise. You have noticed that for solar he thinks it is basically a waste of money, there are places where this may be the case due to weather (Seattle, Washington for example). Perhaps it does not make sense in Germany, but nobody is talking about 100% solar power and a mix of wind and solar can work vey well.
In the case of biofuels he is an optimist thinking that we could ramp up biofuels to 8 times present output. Not quite sure why there would be such a difference in attitude. There are different opinions about the potential for wind and solar and how well they can be integrated into the Grid, a widely dispersed network over a large area with excess wind and solar capacity is able to solve most of the perceived problems.
Oil drilling in shale plays will pick up when customers get rich … right after hell freezes over.
Any money the drillers borrow must be repaid by the drillers’ customers. The more the drillers borrow the further underwater they will find themselves because their customers are broke.
All this talk about ‘production’ misses the point: all our problems are all on the consumption side. We have burned up a trillion barrels of oil and have nothing useful to show for it … nothing that can replace the oil or match its utility.
Ironically, with all this talk about ‘peak oil’ what turns out to be peaking is credit, something that is technically infinite. However, credit (or money) is nothing more than a claim against purchasing power. Increasing credit doesn’t increase purchasing power, which is shifted by way of the process from one group (customers) to others (drillers and their lenders. This is because the drillers/lenders gain more claims than do customers). The drillers are rich = so what?
Purchasing power is tightly bound to the good that is being purchased. When the intended good runs short, so does purchasing power. That prices have collapsed in the oil markets indicates diminished customer purchasing power, not just in the US but in the EU, China, Japan, Russia, across Latin America and in commodities in general. Diminished purchasing power suggests resource constraints as well as purchasing power shifts, regardless of media claims of a ‘glut’.
Prices cannot rise to reflect perceived shortages (supply vs. demand), instead prices decline even as the means to meet them declines faster.
EROI does not matter so much as EROC (energy return on consumption). Turns out that is a negative number.
Hi steve from virginia.
Great post. I think you are absolutely correct. And the situation should be easy for enough for people to understand, but people will generally refuse to understand things (intellectually) that they cannot first accept (emotionally). I think it is wildly optimistic to begin talking seriously about a recovery in tight oil at this point, since we don’t even know yet where or when (or if) oil prices will bottom out.
Hi Futilist,
We know that they will bottom out. I suggest the oil price will not go below $0/barrel.
So there is no if about oil prices having a bottom, when it will happen and at what level are definitely an open question. If you look at what the futures market expects
http://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html
at the time I am writing this March 2015 futures are at about $51/b and December 2015 at $60/b.
When the four week average of US output starts to fall, prices will go up, so far the 4 week average of US C+C output has continued to rise slowly, at some point the cut back in active rigs will start to bite, probably in March or April. I doubt WTI will close at less than $40/b for front month futures and will be above $60/b by June 2015.
Hello Dennis,
You suggest:
“We know that they will bottom out. I suggest the oil price will not go below $0/barrel.
So there is no if about oil prices having a bottom, when it will happen and at what level are definitely an open question.”
Of course the oil price will not go below $0/barrel. If there is a market, oil will always fetch some sort of price. The real question is: will there be a market?
You then assert:
“If you look at what the futures market expects…”
The oil futures market is extremely desperate these days. They sure hope oil goes up. I don’t think the oil futures market is predictive of anything.
You also claim:
“When the four week average of US output starts to fall, prices will go up, so far the 4 week average of US C+C output has continued to rise slowly, at some point the cut back in active rigs will start to bite, probably in March or April. I doubt WTI will close at less than $40/b for front month futures and will be above $60/b by June 2015.”
I’ll bet you are very wrong. I think that oil is about to tank (and so is the stock market). The current spot price for WTI light sweet crude is $50.26.
Here is what Citigroup had to say about the subject (via zerohedge):
“The recent rally in crude prices looks more like a head-fake than a sustainable turning point, suggests Citi’s Ed Morse, noting that short-term market factors are more bearish, pointing to more price pressure for the next couple of months and beyond. While the shape of the oil price recovery is unlikely to be ‘L’-shaped in their view (more likely ‘U’, ‘V’, or ‘W’-shaped recovery), Citi warns the oil market should bottom sometime between the end of Q1 and beginning of Q2 at a significantly lower price level in the $40 range (perhaps as low as the $20 range for a while) – after which markets should start to balance, first with an end to inventory builds and later on with a period of sustained inventory draws.”
So, we will see.
Hi Futilist,
We will see, perhaps we will see $40/b, once better EIA data comes in, around May for March monthly US output numbers, US output will be lower and prices will rise. Unless there is a clear indication that there is an oversupply or we run out of storage space for oil worldwide (which would be the same thing) prices will stay where they are. Eventually supply will decrease enough that the market will be balanced. If we saw $20/b it would be very temporary. Oil prices will go up, Morse is wrong.
When the four week average of US output starts to fall, prices will go up, so far the 4 week average of US C+C output has continued to rise slowly, at some point the cut back in active rigs will start to bite, probably in March or April.
Dennis, I do hope you realize that the US weekly production numbers by the EIA are nothing but a wild ass guess. The EIA gets their production numbers from the states but no state reports production numbers weekly and some, Texas, don’t even report all of them monthly. And when they do report them they are two months behind. We don’t yet have the December numbers for the states yet.
Hi Ron,
I was looking for something to reconcile the Citi claim that oil output in the US was still rising. I am guessing that they used the weekly EIA numbers. I do realize that the weekly estimates are rough estimates which do not get revised, using Nov 2014 monthly data, US output was still rising, but I was looking for recent data. Do you have a different guess?
using Nov 2014 monthly data, US output was still rising, but I was looking for recent data. Do you have a different guess?
Well no, that’s not quite right.
Crude Oil Production
US production
Oct. 9,051,000 bpd
Nov. 9,020,000 bpd
And no, I do not have a different guess than the EIA. I was just pointing out that it was a guess.
Ron,
Oops. Right, falling by 0.3% per month for one month.
In the EIA’s Short term energy outlook they say:
Total U.S. crude oil production averaged an estimated 9.2 million barrels per day (bbl/d) in January. Forecast total crude oil production averages 9.3 million bbl/d in 2015. Given EIA’s price forecast, projected crude oil production averages 9.5 million bbl/d in 2016, close to the highest annual average level of production in U.S. history of 9.6 million bbl/d in 1970.
http://www.eia.gov/forecasts/steo/
I think the 2016 forecast is too high, and 2015 may be a little to high if their oil price forecast of $58/b for an average oil price in 2015 is correct (I would expect flat output at best).
They estimate that production in January has increased, probably what Citibank was using to claim that output was increasing.
Your point that this is a WAG by the EIA is absolutely correct and it may be revised downward.
Note that the Dec 2014 Short term energy outlook estimate for November 2014 crude output was 9.0 MMb/d, perhaps a lucky guess.
Ron, how does the EIA come up with those weekly production numbers. For lack of a better term, how “scientific ” is the process?
I have no idea how the EIA comes up with their weekly numbers but I would bet my Social Security check that they just guess. They just see how thing are trending and continue the trend. Then after several weeks if they find themselves too high or too low, they just make a huge adjustment in this weeks numbers. When that happens, and you often do, you will see the weekly figures either jump or drop in excess of 100,000 bpd. It happens frequently.
Pennsylvania’s Department of Environmental Protection, the agency that regulates hydrocarbon drilling in the commonwealth, requires operators to report production data biannually, and it is then published in mid Feb and mid Aug.
Interesting article on Steve’s website, which has also been posted on Peakoil.com:
http://www.economic-undertow.com/
That article ends without the obvious closing line- “so take the investment out of fracking and put it into solar/wind. They will STAY valuable, since they produce what we will always need- energy, clean energy.
I put not a lot of money into PV, and I’m set for life.
Gotta add that I don’t have much life left. Maybe I should have said- and my daughter too, for a good hunk of hers.
An excerpt from my ELP article, which was originally written in 2007:
The ELP Plan: Economize; localize & produce
http://www.resilience.org/stories/2011-08-08/elp-plan-economize-localize-produce
That’s exactly the point i have been making over and over- MOST of the energy used in USA is WASTED on frivolous, useless, or downright HARMFUL activity. I see this everywhere, from my neighbor and his huge lawn, huge power mower, and huge fat ass sitting on it, down to row after row of total crap in the big box stores down over the hill there.
Do what I did yesterday, helped wife get groceries, and walked down an isle with maybe a hundred different kinds of breakfast cereal, when we have eaten nothing but bare oatmeal for half a lifetime and have never bought any of those cereals at all. And we are still alive to tell the tale.
What could be more useless than a container ship from China loaded with fuzzy teddy bears? And the truck trip to get them to the christmas tree and hence immediately to the huge pile of unused fuzzy teddy bears already stacked in the basement corner?
Keeps the economy going? What kind of economy is that?
Again, my recommendation is simply quit cold all the useless running around, and switch all those copious freed up resources to go to wind/solar and whatever else is proven to be good.
And then, when the work’s all done, sit on the porch and invent lies to tell your buddies, like everybody used to do when I was a kid. Harmless! Lotsa Fun! No fossil fuels!
And, biggest benefit of all, no need to spend your day in the -40 wind digging holes in North Dakota. Would any sane human choose to do that?
Let that wind dig those holes.
Of course, one person’s waste is another person’s job. Following is another excerpt from my ELP Plan article, linked above:
Yes, I know full well. But there are also not insignificant numbers who accept the curtailment idea easily, and even practice it to great or small degree. There are a number of such folk right around me, who perhaps are motivated by the Pope’s statement that global warming is unethical.
I think the ethics approach is more persuasive for most than any appeal to science.
Hi Jeff,
The best single line of economic advice I have heard in the last ten years or so is probably this one:
“Get thee hence to the non discretionary side of the economy.”
I think maybe I heard it from you first. 😉
Longtimber wrote:
http://grist.org/climate-energy/naomi-klein-on-why-low-oil-prices-could-be-a-great-thing/?utm_source=newsletter&utm_medium=email&utm_term=Daily%2520Feb%25209&utm_campaign=daily
Or Else, now what?
Link to Economist editorial
http://www.economist.com/news/leaders/21639501-fall-price-oil-and-gas-provides-once-generation-opportunity-fix-bad
This may have been more pertinent for the previous post, but I think it will get lost there.
Kurt Cobb, among others, is def unhappy with the EIA and IEA. I wonder if he lurks here.
“The ever so slowly growing divergence between the EIA and IEA and the advent of well-funded independent original research suggest that the day of looking solely to the two governmental energy entities for energy information are over. Both failed to predict constraints on oil production in the last decade and a half, and both now continue–despite their seeming differences–to assume a business-as-usual future when it comes to energy, if not climate change. This is despite the growing evidence and chorus of experts calling such complacency into question.
Now, those experts are beginning to garner enough financial resources to create in-depth independent, data-driven analyses and disseminate them to a broad audience–one that no longer has to take either the EIA or the IEA at its word.”
http://resourceinsights.blogspot.de/2015/02/alternate-opinions-worlds-energy.html
Friends, I think there’s a need to model the competition’s ability to fill in the gap between what the market wishes to have, and their ability to supply it. Peak oil is much more likely anytime if these competitors do compete.
To begin with, I propose the following substitutes, also the time lag before they can supply large incremental volumes (assume oil price is expected to reach $xxx per barrel in 5-10 years):
1. Ethanol from sugar cane 3 years to produce an incremental 1 Mmbpd
2. Natural gas compressed 3 years to produce an incremental 2 Mmbpd
3. Natural gas lng in vehicles and replacing heavy fuels 3 years 1 Mmbpd
4. Electric vehicles, subsidized with hybrid and plug in 3 years 1 Mmbpd
5. Gas to liquids 5 years 2 Mmbpd
6. Coal to liquids 5 years 1 Mmbpd, 7 years another 2 mmbpd,
Now estimate the price for these technologies to be competitive and get permits in the countries where they may be used. I think most of these are viable at $100 to $120.
This means that if oil isn’t able to keep up and prices increase to $100 per barrel these competitors will kick in. I argue the overall supply if oil and all these products peaks and then efficiency starts reducing demand growth.
I don’t have a model built, but I think a more accurate prediction needs to consider these factors as well as the future conversion of the still bottoms to liquid fuels rather than asphalt and coke.
I think such a model can be built, but it’s going to be very inaccurate, it has too many variables.
Hi Fernando,
If your estimates are correct and I understand them, we are talking about 8 MMb/d if all of these are started simultaneously when oil gets to $130/b, say in 2018, they could mitigate the decline somewhat, but I would think there are limits to how much sugar cane can be grown for fuel, land will still be needed to produce food. Natural Gas and coal will also peak and decline and the prices of these inputs will rise making GTL and CTL less competitive. You are correct that there are too many variables and unknowns to make such a model feasible. It would likely be cheaper to move to electricity produced by wind, solar and nuclear and build out the rail and public transport network, and to work towards greater efficiency through insulation, passive solar heating, heat pumps, combined heat and power, HVDC transmission, and other stuff I am missing.
Dennis, you are probably right. I tossed out the idea because peak oil in part requires that those other options fail to show up in time, and when they show up energy prices will be higher.
You know I think the classic renewables discussed here aren’t really that viable unless the energy market price is a lot higher. There’s also lag time and the global warming problem to consider. This makes me lean towards a time of oscillating production with price volatility.
Unfortunately, this model can’t deliver a useful product. But it sure would be fun to work on it. The ethanol from sugar or the coal to liquids sections are a huge challenge.
“This makes me lean towards a time of oscillating production with price volatility. “
Yes, my expectation as well. In fact, I hereby present my Oil Price Feedback Oscillation Model (OPFOM) whereby we now enter an Utterly Unpredictable Era: The Utterly Unpredictable Era lasts until the Neo-Chaos Epoch. Anyone not up to speed on these scientific models, OPOM is analogous to noise, itself the equivalent of microphone screech in audio feedback. Are you paying attention Dennis. 🙂
Hi Doug,
I fully expect there to be oscillations of oil prices and output and they may be worse than they have been in the past because there is no cartel attempting to regulate output (this assumes OPEC will choose not to lower output and does not have the ability to raise output significantly, so it really has no purpose).
There is no model which could predict such oscillations, but the actual effect on output has been relatively small except in 1979 to 1983 when a combined 6 Mb/d from Iran and Iraq where removed from the market over a short period (10% of World C+C output at the time).
There was also an increase in real oil prices (2013$) from $11/b in 1970 to $104/b in 1980 (about a 24.5% annual increase over those 10 years.)
This was followed by a nearly as rapid drop in real oil prices through 1986. Since that time the price oscillations have caused only minor oscillations in C+C output over the 1986 to 2014 period.
Any models I present can be thought of as a general trend in output, if the assumptions are correct, and output will wander above and below this trend as oil prices go up and down.
Prices are not a part of my World models, it is assumed that market prices will adjust so that demand and supply balance and that oil companies produce all the oil they profitably can at prevailing prices.
Currently with OPEC not cutting output and with it appearing that they are producing all they can, the perfectly competitive market assumption may not be a bad one.
Hi Fernando,
I think we may need all of these things, but think biofuels are a bad idea due to rainforest destruction (basically they cut down some of the Amazon rain forest to grow sugarcane and there is a net increase in carbon emissions). CTL an NGL assume that coal and natural gas are plentiful, but all fossil fuels are likely to peak by 2030 (see Steve Mohr thesis summary) so we want to be careful not to waste too much capital based on the illusion of plentiful coal and natural gas.
I definitely agree that alternatives will require higher fossil fuel prices, but these will be here by 2025 at the latest.
From Steve Mohr’s thesis for all fossil fuels, case 1= low, case 2= best guess, case 3=high:
Combined fossil fuels: For CASE 2, peak production year remained almost constant at 2016–18 for STATIC, DYNAMIC and INDEPENDENTLY DYNAMIC options, with peak production varying only marginally between 509–525 EJ/y. Similarly, for CASE 1, peak production year was essentially same at 2012–13 for all three supply and demand interaction options. For CASE 3, peak production year varied from 2021 to 2029 across the three supply and demand options. In all scenarios it was found that natural gas offers the biggest future potential, and not coal.
http://www.countercurrents.org/mohr220710.htm
I think we may need all of these things, but think biofuels are a bad idea due to rainforest destruction (basically they cut down some of the Amazon rain forest to grow sugarcane and there is a net increase in carbon emissions).
The destruction of the Amazon rain forest to grow sugarcane pales in comparison to the destruction of the rain forest in Malaysia to grow palm trees to make palm oil. Almost all the tree cover of Borneo is now gone, the last refuge of the Orangutan. The Orangutan will be completely extinct in just a few more years. That is not to mention all the other creatures that make Malaysian Rain Forest their home.
Images of Malaysian Rain Forest Destruction
Hi Ron,
Is the palm oil grown for biodiesel or mostly just for food?
In other words was this something that changed after Kyoto or has this been going on longer than that?
Mostly for food and cosmetics but the demand for biodiesel is fueling the expansion of palm oil plantations.
Palm Oil
Demand for palm oil is growing – and fast. At the moment, most of it ends up in hundreds of food products – from margarine and chocolate to cream cheese and oven chips – although it’s also used in cosmetics and increasingly, for use in biodiesel.
Biodiesel fuelling palm oil expansion
Commitments from various governments to increase the amount of biofuels being sold are pushing this rise in demand, because they’re seen as an attractive quick fix to reduce greenhouse gas emissions. By 2020, 10 per cent of fuel sold in the EU will be biofuel and China expects 15 per cent of its fuel to be grown in fields, while India wants 20 per cent of its diesel to be biodiesel by 2012.
Thanks Ron.
The destruction of the Amazon rain forest to grow sugarcane pales in comparison to the destruction of the rain forest in Malaysia to grow palm trees to make palm oil.
This thing about destroying the Amazon to grow sugarcane is a huge misconception. It really annoys the hell out of me to keep seeing it repeated over and over. There are plenty of real agricultural issues in Brazil but this is NOT one of them!
http://sugarcane.org/sustainability/preserving-biodiversity-and-precious-resources/detailed-map-of-sugarcane-production
Almost 90 percent of Brazilian sugarcane production takes place in South-Central Brazil, with the remainder grown in Northeastern Brazil. Both producing regions are located some 2,000 to 2,500 km (1,240 to 1,550 miles) away from the Amazon. That is roughly the distance between New York City and Dallas, or Paris and Moscow. Find out for yourself by exploring the interactive map below to see precisely where sugarcane is grown in Brazil.
See link provided for map…
Hi Fred,
The argument (which is probably incorrect because I don’t know Brazil) is basically this. There is a limited amount of arable land, some is used for food, some is used for farming.
Let’s assume that an increase in ethanol produced from sugar cane results in more land being devoted to sugar cane production and some poorer farmers get pushed to more marginal areas as land is bought up or leased to produce sugar cane. It is my understanding that there are areas at the edge of the Amazon rain forest where land is being cleared for farming, if that is correct, then it doesn’t really matter where the sugar cane is grown in Brazil, it is the allocation of farm land for different uses in the country as a whole.
If there is a large amount of arable land which is not being used for any farming at all in Brazil that can be put into production for sugar cane, then you would be correct that the Amazon is not affected.
What would your estimate be for the amount of ethanol that could be produced in Brazil if there were no trade restrictions in the US? Could the US corn ethanol production be displaced?
In 2012 Brazilian ethanol output was about 450 kb/d and US output was about 940 kb/d.
Is sugar cane ethanol really that competitive? Total petroleum liquids consumption was 2900 kb/d in 2012 in Brazil (EIA data), so if we assume no exports of ethanol by Brazil about 15% of consumption of petroleum liquids was ethanol. In any case my expectation is that oil prices would need to be considerably higher before we see a big move to biofuels.
Sugar cane is certainly better than corn as a source for ethanol.
Have you seen any estimates for realistic output potential for ethanol in Brazil?
Dennis, some of the information I have seen is confidential. I do know ethanol from sugar cane can easily displace usa corn ethanol. In a lot of countries they have suitable land, but they lack the gathering pipelines. And as I mentioned a lot of land is used for a few cattle.
Hi Dennis,
I don’t have the numbers at my finger tips but there is no doubt that Brazil could easily displace US ethanol production with sugarcane. I do have an friend in Brazil who is an agronomist and a specialist in sugarcane cultivation
Just to reiterate what I said previously, there are many real problems with land use and agriculture in Brazil. Sugarcane cultivation and Amazonian rain forest destruction are not one of them.
Fred,
Thank you.
I will take your word for it, there are many myths out there. There is a problem with rainforests being destroyed, perhaps the Amazon is not at risk at least for this reason (climate change might have an effect at some point, but that is pure speculation on my part).
Based on Ron’s comment it looks like Malaysia is a problem and perhaps there are others, I would have to research it.
Did some quick research, there are serious problems with the Amazon, but as Fed says it has nothing to do with sugarcane.
It seems logging and soybean farms are the problem.
http://environment.nationalgeographic.com/environment/habitats/last-of-amazon/#page=1
Biofuel myths are quite common. I learned quite a bit about it because I had a coworker researching biofuels. Later, I helped a graduate student prepare a system analysis for the sugarcane biofuels industry. And the findings were really interesting.
How exactly are you going to replace 1 million barrels/day of US corn Ethanol with 500,000 barrels/day of Brazilian Ethanol?
Brazil can expand sugar cane production. I have estimated that Cuba could produce about half a million barrels of ethanol per day, but it requires $100 per barrel and importing labor during the harvest.
I think you guys are a little confused. Sugar cane grows well in some areas used for grass fed cattle. For example, in Cuba there are very large tracts of land which used to be planted for cane, or had cattle, which are now fallow as a result of the Castro family dictatorship communist policies. But we need to force the communist oligarchs out of power before cuban agriculture can be rationalized.
I’ve also seen large areas being used for a few cattle in Venezuela and other nations, which are very suitable for sugar cane.
My take is that you guys formed your opinions based on a flawed understanding of the terrain. On the other hand I have seen studies which overlay current use, water, soil type, etc, and it’s easy to see there’s potential, not all oil companies ignore ethanol as a future business line.
Hi Fernando,
There may be potential, the important question is how much, will it really move the needle. In 2012 US and Brazilian ethanol output were about 1300 kb/d combined and about 87% of World ethanol output (1500 kb/d). Total World biofuels was about 1900 kb/d in 2012, about 2% of World total liquids output.
If we compare to World C+C of 76,000 kb/d in 2012 and adjust ethanol for its lower energy content per barrel, then on an energy equivalent basis ethanol was about 1.4% of World C+C output or 1050 kboe/d in 2012. Even if this can be doubled (which I doubt), it will be of minor influence. Biofuels are not the answer.
Well, I tossed out we could get 1 Mmbpd in my original comment. Like I wrote, an effort has to be made to put in pipelines from the sugar regions to the nearest refinery or location where ethanol can be exported by ship.
Hi Fernando,
As prices go up lots of things will be tried, I just question if this will help a lot. Brazil and the US have been at this for a decade and we have about 1 million boe/d of ethanol ouput, perhaps we could get another 1 Mboe/d in 5 years, but I think we would start to run into limits on how much can be produced, what would your guess be for an upper limit over 15 years at $125/b in todays dollars?
I would guess the worldwide potential could be 15 million barrels of ethanol and biodiesel per day.
The systems model I helped prepare predicts a reduction in rural poverty, less tendency to urbanize, and higher food prices. The higher food prices are what reduces rural poverty. There’s also a plus if government’s encourage the development of ethanol pipeline grids, dual fuel vehicles, and the use of cattle grazing land for sugar cane (this only applies in some areas).
Hi Fernando,
What portion of that estimate is sugar cane ethanol?
Biodiesel tends to lead to rainforest destruction and is a net negative with regard to climate change and general ecological destruction. Currently(2012 is latest data from EIA) about 70% of biofuels output is ethanol, if we assume that proportion stays the same, we would have about 7 MMboe/d of ethanol and 5 MMboe/d of biodiesel for 12 MMboe/d, in 2012 World output was about 1.4 MMboe/d, so your estimate is that we could increase output by more than a factor of 8.
What happens to urban poverty when food prices rise? Does the rural poor get displaced by sugarcane production and have to move to the city to look for work?
What oil price would be required for this to happen? High prices in 2011 to 2014 resulted in very little increase in biofuels output worldwide.
This kind of estimate makes the solar and wind people look conservative 🙂
Fernando,
I would say numbers 3 & 4 are already in the works. The US consumes 3 1/2 to 4 mbd of diesel and most of that must be going into class 8 trucking. In addition, the US is swimming in NG. The heavy duty engine manufactures already have NG prototypes on the road. The tractors have lots of room for CNG tanks and travel over thousand mile intervals between fueling. It’s a match make in heaven.
10 years from now America will use a lot less diesel than it does now. The average life cycle of a highway tractor is 5 to 8 years at 125,000 miles per year and 6 mpg. There are almost a million of them on the road currently.
Do the math
It is true that theres room to be found for bulky natural gas tanks on over the road trucks – especially ones that hual DENSE cargos that bump up against weight limits without filling up the cargo box or flat bed.
But I don’t think anybody anticipates putting enough fuel on board to go thousands of miles between refuelings. Four to six hundred miles is typical using diesel fuel and that is far enough given that drivers need rest breaks and meals. It doesn’t seem too likely that natural gas tanks large enough to go much farther than that will be added to most commercial trucks.
It actually costs only a little more to build a truck to run on EITHER diesel or natural gas than it does JUST natural gas and dual fuel is most likely what will be commercialized over the next few years. Then if a truck is near a natural gas station it can get a refill of gas – which promises to be cheaper than diesel per mile. If not the driver can just fill up with diesel.
Personally I think the only thing really holding up a switch to gas fueled heavy trucks is skepticism on the part of truckers that gas will stay cheaper than diesel.
There are PLENTY of trucks that return to a home base on a daily or even twice daily basis that could be refueled easily at home base once the equipment needed is in place. Such trucks are typically driven less than six hundred miles any given day because a lot of the day is consumed loading and unloading. If the company runs two shifts then refueling could still be done between shifts.
You cannot do CNG for 500 miles, unfortunately as it would take up I think roughly a third to two thirds of a trailer. You have to do LNG, which has its own issues with infrastructure.
http://www.greentruckassociation.com/TechnicalResources/GTAAlternativeFuelsKnowledgeCenter/NaturalGasCNGandLNG/tabid/129/Default.aspx
Many commentators on here could do the math with the PSI and the weight, but it is a lot. The tanks are heavy too
You can do local fleets, 50 miles a day, but then you save less. It is common in refuse where you can capture landfill gas
LNG works, but generally I think it is like your points on farming. The value of diesel is very large. Farming, mining are nearly impossible to shift, though LNG may end up being possible. Even rail would take decades to change to LNG. Trucks are close behind.
Autos need to change, and by change I mean be driven less
Wake,
You cannot do CNG for 500 miles
Sorry you can!
Freightliner and Saddle Creek Transportation are talking up CNG-fueled Cascadia 113 tractors with a new fuel tank assembly that’s expected to yield true 700-mile range and, with lower costs because of fewer tanks, an ROI as low as three years.
snip
It would be difficult to overstate the importance of the 11.9-liter ISX12 G engine to the natural gas truck market.
http://www.fleetsandfuels.com/fuels/cng/2013/07/saddle-creek-freightliner-gen-iv-cng/
Saddle Creek have been pushing the limits, and this was from 2013, when Cummins had just come out with the 12G. In Australia they were also been experimenting with a 5000psi system to extend the range even further, but I am not sure how far they have got with that.
hmm, thank you, I had not seen that one. I have seen LNG purveyors and truck manufacturers, talking about how CNG cannot do it, seemingly not correctly if this setup works. Still likely to be a bit heavy.
Wake,
CNG will obviously work better when the hauling bulky materials, where volume is the limit, rather than denser item where the weight is the limiting factor. The Cummins ISX 12G which is the spark ignition is limited to 400 hp. The minimum for a full weight tractor trailer. Volvo was going to bring out a 13l 450hp compression ignition engine along with Cummins with a 15l spark ignition engine. Both project are on hold.
You are correct LNG will be better suited to these more powerful engines but currently CNG seems t be the more popular.
Hi Toolpush and Wake,
The US has a lot of natural gas and it is currently cheap. Did either of you read the report Drilling Deeper by David Hughes(Link below)?
http://www.postcarbon.org/publications/drillingdeeper/
Based on EIA data http://www.eia.gov/dnav/ng/ng_prod_sum_dcu_NUS_a.htm
Shale gas output has increased from 2.9 TCF/year in 2008 to 11.9 TCF/year in 2013, the rest of US natural gas output (non-shale gas) decreased by 4.4 TCF/year. At some point the rate of increase in shale gas will decrease to the point where natural gas output will peak and decline, so the expectation that natural gas will be cheap forever is likely to be incorrect.
Remember that the EIA’s natural gas forecasts are just as optimistic as the oil forecasts.
Chart for shale gas from Drilling Deeper p. 302 below.
Hughes shale gas output estimate for 2040 is about half of 2013 US shale gas output. If Hughes estimate is correct (and I think it will be much closer than EIA estimates), my expectation is that natural gas prices will be considerably higher by 2040. For the US peak natural gas will be around 2016. Chart from page 299 of “Drilling Deeper”.
I will repost this at the bottom of the thread so it is readable, sorry.
Maybe Dimethyl ether (DME) will emerge as a diesel supplement. It can be used in a Diesel engine. But DME is made using natural gas. It has nearly zero soot emissions, and that’s a big plus. But the engine does need diesel to lubricate the valves. This is why we never did push DME in the past.
Fernando,
Volvo, nearly launched DME 13l engine on the US market last year, but pulled out at the last minute. It is always a chicken and egg thing when trying to launch a new fuel system, The market seems confused enough between CNG and LNG, not to thrown another Nat Gas product at them in DME.
But DME is fully compatible with diesel. I looked at DME a lot (I used to look into gas commercialization out of the former soviet empire). I almost got my boss interested into trying to sell a huge DME plant, but we needed to diversify supply. We also saw the bus trials using DME run into some engine problems, so the idea went to hell.
Fernando,
It looks like Volvo is still pushing ahead with their DME engine.
http://www.truckinginfo.com/article/story/2014/09/dme-companies-testing-alternate-alternative-fuel.aspx
Aiming for 2017 for a low number production run. The fuel tanks need to be 1.8 times the equivalent diesel tank and a few engine lubrication issues to to be sorted out. Nothing insurmountable.
I believe there are currently 1 million barrels/day of corn Ethanol, 500 thousand barrels/day of sugar cane Ethanol, and another 500 thousand barrels/day of Biodiesel being produced.
Also, if you add the fuel savings from the current number of CNG, electric, and hybrid electric vehicles on the road today, that would amount to another 1 million barrels/day.
Probably the easiest way to replace oil, would be to expand the number of battery electric vehicles on the road. A large number of charging stations already exist.
http://www.afdc.energy.gov/fuels/stations_counts.html
I believe the near term future of the electric car is going to be dominated by charging at home.
A home charger does not necessarily cost anything at all if it is a slow charger.The average homeowner has an electrical outlet outside. And a lot of people have garages that already have wiring sufficient for a fast charger.
The electric car naysayers generally conveniently forget how many people who can afford a new car own two or even three or more cars. ( For now and for the next few years there just isn’t going to be such a thing as a second hand electric car on the typical dealership or used car lot.)
The new electric car will be the go to utility vehicle in two or three car household. Very few people actually plan on going anywhere much after a day at work except maybe to the store or out to eat or to a school function for the kids and given the average commute is less than forty miles round trip an electric that is charged over night will suffice almost every day.
Once the manager at the local Walmart or Lowes or Home Depot looks out across the parking lot and sees a few electrics out there almost anytime he will get an itch to install a charger or two or six that operate on credit cards or store issued chits. Buy a washing machine get a free half hour charge next visit. Chi chi restaurants will offer free charging and will be easily able to afford it considering this will bring in the occasional party of four or five that spends a couple of hundred bucks or more.
From there charging stations will eventually pop up almost everywhere there is a parking lot with enough business to justify a card operated charger.
OFM,
I totally agree. Electric vehicles are waiting in the wings to put a cap on any possible oil price rise. The coming spike in oil prices in the next few months or years will be ameliorated by the beginning of the electric car boom. With 200 mile range vehicles being mass-produced from 2017 model year and beyond (Tesla, Bolt, etc), one electric car and one gas car for most households will be the norm, supplementing additional urban commuter options like carpooling and busing. When prices skyrocket, there will be options, and people are flexible, they will use them.
Of course production costs for oil will be ever rising (just as production and storage costs for renewables will be ever falling). I am a die-hard peak oiler, following this (and the intertwined issue of climate disruption) since 2002. Last decade peak oil would have been a major big deal, probably leading to collapse in many countries around the globe, if not all. Now I believe the solutions are too readily available. Personally, I’ve worked my life to help individuals figure out how to use less fossil fuels, but I have to give a serious shout out to the folks in the Bakken, Eagle Ford, and the Permian for their hard work. Their time has likely passed, but they also probably saved civilization as we know it. Thanks and sorry for the hard times ahead.
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John B, there’s plenty of ethanol from sugar cane potential. But the USA and Europe impose tariffs and limits on it to protect local producers.
I could do a lot of these numbers but what it comes down to is a long time. Fleets are hesitant to bet on new technologies, there is just tremendous conservatism baked into all the knowledge and support chains of existing tech, even when a change is fairly trivial, like gas for diesel.
Anyway, to take one of them. LNG for trucks. 1 million barrels a day is, I believe, 15 bn gallons a year. Assume a long haul truck uses 21,000 gallons in a year. (7MPG, 500 miles a day, 300 days). That would be 150,000 miles. Trucks can be run up to 250 a year. So, to get to that 1 million barrels a day is about 715,000 trucks, If I get my arithmetic right. The North American heavy truck market is 250,000 trucks a year, the fleet of trucks running is 2-4 million. I think natgas trucks sold last year were on the order of 10,000, CNG mostly.
So, even if you solve fueling issues, and get LNG on all routes, and open up the market quickly, say capture 10%, that would be 25,000 trucks, and then you are looking at a great many years to get to a similar size.
The European market is of a similar size, though I do not think there is cheap natgas so no current incentive. Other markets would struggle to build the infrastructure.
CNG is similar but the trucks might run 50 miles a day instead of 500, so you would need more to make a dent.
Producing therefore is easier than using it.
And I think that is one difference between those who see more trouble versus less. It just takes a lot of time to turn the infrastructure, a lot of energy to do it, and we have less of both.
The good news is carpooling would be extremely easy now that we have iPhones, and could save all of your categories combined with ease.
Though you would need a little bit of government support for all the destroyed industries
My guess is that the railroads will recapture most of the long distance shipping currently done with trucks within the next ten years. In times past you couldn’t load lettuce on a train in California and know that the car would get to New York before it rotted in the car but that is changing fast-it has changed already.
But a lot of trucks for now are actually driven as much as twenty hours a day or even more although not legally on long distance routes and the trucking companies have gotten very good at what they call ” hook and drop” meaning the load is ready, the box is sealed up and all the driver has to do is sign for the trailer and hook up and go. Two drivers means up to twenty legal hours on the road and as much as twelve hundred miles a day.
And when the truckers get home the company is apt to turn the truck around with a new team the same day. So the potential for fuel savings is huge so long as natural gas is cheap.
And there are plenty of loads that are very heavy that leave room for large fuel tanks. Beer and steel for instance. But nobody will want to haul potato chips in a truck with a good bit of the cargo space occupied by large tanks.
Fueling a farm tractor with compressed gas is not generally practical but a lot of tractors used to be built to run on propane back when it was dirt cheap. These tractors were mostly sold in the midwest where the propane didn’t have to be hauled too far.
I always picture this as a worldwide issue. Some countries, for example Bolivia, have large surplus volumes of natural gas available. The same applies to Iran, Turkmenistan, Canada…
And I wouldn’t focus too much on the figures I tossed out. I used them to get a discussion about the subject.
Hi Fernando,
It is expensive to move natural gas around, Qatar and Iran have a lot of natural gas (over 30% of proved reserves of natural gas), but it is expensive to liquefy and then transport. The URR of natural gas may be less than you think, we will see a World peak by 2030 in Natural gas. It is not just oil that will peak, oil will be first, then coal, and then natural gas, that is why trying to ramp up wind, solar, geothermal, and nuclear as quickly as possible makes sense.
Dennis, I don’t want to move it around. In a typical country with local stranded gas I just wanted to sell local. Say 25 thousand barrels per day equivalent at peak rate. That’s a nice little gas development project, plus we get the condensate and NGLs. The usual problem is local government lack of vision.
Hi Fernando,
It is expensive to create the infrastructure, so the projects have to be large enough to make it worthwhile to produce the gas.
For example if you are talking about a place that has not produced gas before, why would you invest in a power plant if there is not enough gas to support it for it’s useful life.
When you said you look at the World and you start talking about Iran and Qatar, I assume you are talking about LNG. If Iran and Qatar use their gas locally, it will last a long time, but it won’t help the rest of the World very much.
I’m not discussing places where gas hasn’t been produced before. For example, bolivia has had gas production over 50 years. Has large pipelines going to brazil and Argentina. But they have a lot of gas they can’t produce.
Hi Fernando,
Again small projects here and there may mitigate decline a bit, but the fossil fuel will run out, better to focus in real solutions to a big problem, in my view.
Why can’t the gas be produced? What kind of URR are we talking about?
There are plenty of countries with stranded gas, or gas they export at low prices. Bolivia has very large gas reserves, and a lot of additional pitential. But about 10 years ago the Morales government was talked by Chavez and the Cubans into nationalizing the industry using their JV terms (venezuela copied cubas system, and the cubans were trying to expand their system and influence into South America). The nationalization was a botch, the Bolivians upset the brazilians by reneging on existing gas contracts, and since then nobody wants to buy Bolivian gas if they can avoid it. This is a changing landscape because brazil and argentina also have serious internal problems and a very erratic performance.
Hi Fernando,
Bolivia’s gas reserves are not very large, based on EIA data, this will barely move the needle
World Natrural Gas reserves are about 7000 TCF, Bolivia about 10 TCF or 0.14% of World Natural Gas reserves.
Ethanol is a bit easier. One issue is that the US is more or less using all it can, since the pumps and such are not certified for e15. Probably there would be no problem, and probably the same for cars, really almost certainly, but you would need someone to take the liability, i.e. government.
You seem to believe in ethanol, and you may well be right, but the last time I looked into it it was more expensive than it seemed. Brazilian sugarcane is efficient, in that you can plant once and harvest 5-7 times unlike corn which is once and once. Other sugarcane markets are less good, and you have to replant every 2-3 years, losing some of the value.
Even with that and with cheap labor I am not as sure as some. I recall back a decade or so ago Brazilian sugarcane was said to be profitable with oil at 35, but all the mills were losing money with oil at 60. It is pretty complex with tax and local fuel prices, though, and I am not sure of the current economics.
The US is not really using all it can because E85 is legal. In fact there are a large number of E85 stations. There are also a large number of factory flex-fuel vehicles on the road now, and conversions are rather simple.
https://www.change2e85.com/
Hi JohnB,
The flexfuel vehicles get pretty poor mileage due to the low energy per gallon of E85, fill ups need to be more frequent and E85 is not widely available, maybe in the Midwest but I have never seen an E85 pump in the northeast (nor have I looked for one).
The fact is people do not buy E85 for the most part and the whole corn ethanol thing in the US is a bad idea, we should just import ethanol from Brazil and remove the mandates and subsidies for corn ethanol. It is just bad public policy.
Hi Dennis,
I believe there are over 3,000 E85 fueling stations in the US. And over 16 million flex-fuel vehicles that can use E85.
http://www.ethanolrfa.org/pages/e-85
I believe there is also some ethanol being imported, but it would not be possible to replace 1 million barrels/day of US corn ethanol, with 500 thousand barrels/day of Brazilian ethanol. Brazil also uses a lot of their own ethanol for domestic consumption.
Ethanol has always had it’s detractors. I suspect a lot of the anti-ethanol campaigners are actually funded by oil companies.
With regards to deforestation, the US and the EU have largely replaced their forests with agricultural production. I think it’s a little hypocritical to ask developing countries to preserve their own forests. Biofuels like ethanol, and palm oil, are successful industries. I would expect them to continue, and expand.
We’ve used E10 since 2006, and haven’t noticed any degradation of fuel economy, or engine damage. I believe Saab, or some EU country has developed an engine that gets equivalent mileage running on ethanol, or gasoline.
The growth of biofuels is probably one of main factors, that has kept the economy humming along, since oil production peaked in 2005, IMO.
Hi JohnB,
There is still quite a bit of forest in the US, Russia, and Canada.
I suppose we could cut down all the forests of the World without effect. There is a big difference between a rain forest and a forest, so deforestation is a problem, destroying rain forests is a much bigger problem. World biofuel production amounts to 1.4 MMboe/d when we reduce ethanol barrels by 70% to account for their lower energy content.
Biofuels has been a minor contributor to overall World liquids supply, which is about 85 MMboe/d when we reduce the ethanol and NGL barrels of output to account for their lower energy content.
There are 3000 E85 gas stations in the US, that is very convenient, that is about 2.5% of all gas stations.
About 6% of all vehicles are flex fuel vehicles.
Also about 13 kb/d of E85 fuel were purchased last year of about 9300 kb/d of gasoline saled in the US, or about 0.13% of gasoline sales.
I checked New England for E85 stations, there is one in Massachusetts and no stations in the other 5 New England states.
Biofuels are not the answer. Subsidies, mandates, and tariffs to protect corn ethanol in the US are a mistake.
I suppose we could cut down all the forests of the World without effect.
I do hope that was sarcasm.
Yep, reducto ad absurdium at its finest!
Hi Dennis,
You are repeating a lot of “anti-ethanol” myths, that I’ve read before on Peak Oil type forums. That doesn’t make them true.
According to most Peak Oil advocates, biofuels don’t make sense, yet we have ever increasing quantities. So obviously, you have lost the argument.
Hi JohnB,
So how quickly do you think biofuels can be ramped up to 30 MMboe/d from the 2013(BP data) level of 1.3 MMboe/d? They have increased by a factor of 6 in the past 12 years. So we could just assume they will continue to increase at this rate so 24 years is all we need. Do I have that right?
Or there might be limits to how much biofuels output can grow and the 3% annual rate of growth from 2009 to 2013 may be more realistic. At that rate of growth (3%/year) we would reach 30 MMboe/d in 100 years and biofuels would be at 10 MMboe/d in about 68 years.
The environmental destruction would yield very little liquids fuel growth so this is not a great solution.
The data shows there is very little E85 use in the US. About 0.7 MMboe/d of corn ethanol is produced which provides 3.5% of US total liquids petroleum use. For the World the data says we produce 1.3 MMboe/d out of a total of 85MMboe/d of total liquids or 1.5% of total liquids.
Biofuels will do very little to help, from a climate perspective the biodiesel may be counterproductive due to rainforest destruction in the Asian Pacific.
There are 31 gallons of gasoline and diesel produced from a barrel of oil.
That’s 1.17 million barrels/day with 2013 production numbers.
http://www.eia.gov/todayinenergy/detail.cfm?id=11331
With regards to growth, I suspect there is a LOT of room for growth outside of the US and Brazil. E.g., China is ramping up production. But there are many other countries that can produce Ethanol.
I don’t see Ethanol replacing all oil consumption, it doesn’t have to.
You have Ethanol replacing some gasoline consumption, Biodiesel replacing some diesel consumption. Electric cars and trucks replacing some gas and diesel consumption. CNG vehicles, Hydrogen vehicles. Solar Power replacing oil fired power generation, etc.
What has peaked is oil demand. That’s why the price is falling. Your graphs are only showing the demand curve. I doubt if the peak oil community will ever accept that.
http://www.ethanolrfa.org/pages/statistics
Hi JohnB,
The other ideas for replacing liquid fuels are better, can you be a little more specific about “a lot” of growth. That could be a lot of diferent things, do you mean double? That sounds reasonable. A factor of 10 times present production, not so much.
You are correct that I was wrong on ethanol effecting the Amazon. Everything else is just data from the EIA and BP.
What do you see as an upper limit to biofuels liquid output in millions of barrels per day of oil equivalent. Biodiesel I figure at 1 to 1 and ethanol at 0.7 to 1 due to lower energy content relative to crude.
Hi Dennis,
The IEA projects a tripling of Biofuel by 2035.
http://www.iea.org/media/files/WEO2013_factsheets.pdf
And a potential for 25% primary energy from Bioenergy in 2050.
http://www.unep.org/climatechange/mitigation/Bioenergy/Issues/EnergySecurityBioenergyPotential/tabid/29465/Default.aspx
Burlington’s 100% renewable power production includes 35% Bioenergy.
Not all Biofuel is used for transport.
Ethanol from sugar cane is definitely profitable at $100 per barrel. And I’m pretty sure the oil price will exceed this price in the future. This means countries with grassland and climate suitable for sugarcane can start laying out the ethanol pipeline grid they need to route the ethanol to refineries, mixing yards, and export points.
it may well be, and it certainly should be
still, a lot of mills went bk over the past year on a local glut, drought, weak sugar, and I assume inability to export
http://www.unica.com.br/news/3747562592033266204/in-the-middle-of-the-greatest-crisis-in-their-history-por-cento2C-sugarcane-producers-await-the-finalization-of-public-policies-that-will-benefit-the-sector/
http://www.unica.com.br/news/37475625920343585770/drop-in-agricultural-productivity-and-smaller-crush-to-result-in-revenue-loss-exceeding-r-por-cento243-billion-in-the-2014-por-cento2F2015-season/
There is obviously a world oversupply of energy from various technologies.
Hi Fernando,
There are better alternatives, biofuels are not really very good public policy.
It was once considered “Green”, but the destruction of rain forests that results from the promotion of biofuels leads to a net increase in carbon emissions, this was one of many failings of the Kyoto Agreement.
Dennis: Biofuels have a place in the great scheme of things. When the Cuban people can get rid of the Castro family dictatorship, the trials are over and the guilty parties have been jailed, the country can move to clear the weeds and the marabù, plant sugar cane, and become energy self sufficient. And I don’t think what the Japanese in Kyoto think about will really influence what happens in Cuba.
Hi Fernando,
Biofuels can be produced in Cuba if that is what Cuba wants.
In the grand scheme it will help very little.
Well, the proper way to put it is “what the cuban people want”. But the island is ruled by a harsh hereditary commie dictatorship. And communists are well known to destroy agriculture, which is exactly what they did in Cuba. So first we have to work to force the communists out of power, put on trial and jail the worst of the communist party oligarchs, rewrite the constitution and rebuild the economy. And if my numbers are right the nation can achieve full energy independence via a wind/bio ethanol combination.
”And if my numbers are right the nation can achieve full energy independence via a wind/bio ethanol combination.”
Those of us who fail to read carefully should have to copy this on the blackboard a hundred times.
Fernando is not a bau mouth piece.He just tells it like he sees it.
Fern wrote:
“2. Natural gas compressed 3 years to produce an incremental 2 Mmbpd
3. Natural gas lng in vehicles and replacing heavy fuels 3 years 1 Mmbpd
4. Electric vehicles, subsidized with hybrid and plug in 3 years 1 Mmbpd
5. Gas to liquids 5 years 2 Mmbpd
6. Coal to liquids 5 years 1 Mmbpd, 7 years another 2 mmbpd,”
I don’t see NatGas displacing Oil. Prices of NatGas remain low as long as demand doesn’t increase. Gas to liquid is bust (see the Qatar Gas to Liquid project – Mass cost overruns and the plant was never ever able to convert as much fuel as planned) If Oil substitute to NatGas happened people mught start freezing to death. In the US about 70% of residential and commerical building use NatGas for heating and Domestic Hot water.
Coal to Liquids is also DOA. very expense (ie ~ $150 bbl to $200 bbl). CTL will also be banned in western countries do to climate change\pollution. RenTech did few pilot plants about 5 to 8 years ago. They cancelled development since it wasn’t economical. CTL could never scale up to the volumes you propose because its difficult to run hundreds to thousands of CTL reactors. You quickly run into the Red queen syndrome as too many reactors need servicing before you can build more.
“This means that if oil isn’t able to keep up and prices increase to $100 per barrel these competitors will kick in.”
Unfortunately that aren’t competitive at low oil prices. and Oil prices can’t say low because demand would natural increase. If prices do remain low, its because the debt bubble is burning and nobody can afford to buy oil. Oil is by far the cheapest source for transportation fuel by a large margin. Personally I don’t like the idea of cutting down rain forest to plant sugar cane. rain forest or tropic forests are one of the best carbon sink available. That said, I very much doubt we’ll see investment capital pouring into to ethanol production.
Hi Techguy,
I agree.
I have not done the research on this, but my guess is that if CTL and GTL were competitive at $100 to $120 per barrel we would see more of it.
US ethanol output is only as large as it is because of mandates and protection from Brazilian imports and is bad public policy in my view.
This will never change because Iowa holds the first presidential caucus, it would be nice if about 10 states all held caucuses and/or primaries on this same date so that Iowa’s influence on Presidential politics wasn’t so large.
Coal to liquids is viable at $100 per barrel. The technology is really old, there are existing plants already running. I suspect we will see a coal to oil plant built in Colombia at Santa Marta in the next ten years. The Indians and Chinese will probably build a couple of plants as well.
http://www.chinapetroleummap.com/theprojects/coal-to-oil.htm
http://www.bloomberg.com/news/articles/2013-11-27/coal-to-oil-20-billion-projects-said-to-stall-corporate-india
Hi Fernando,
I think that may depend on the price of coal, coal prices will start to rise if Dave Rutledge’s estimates for coal URR= 740 Gt are correct.
See http://rutledge.caltech.edu/
Also Steve Mohr’s Thesis predicts a peak in coal output by 2020 to 2030, see
http://www.countercurrents.org/mohr220710.htm
for a summary (error in summary for natural gas Case 2 where 3034 should be 2034) and
http://nova.newcastle.edu.au/vital/access/manager/Repository/uon:6530
for full thesis download.
Hi Fernando,
Do you have a source for the $100/b estimate? Oil was at $100/b for 3.5 years and as far as I know very few CTL plants were built over that period (2011 to mid 2014).
Existing plants in South Africa were built because of an embargo to force policy changes in South Africa, and the Nazis used it in World War 2 because they could not get enough oil. Are there other examples where CTL has been used where there were not such extenuating circumstances?
Dennis, a CTL plant costs upwards of $5 billion. The typical project life for such a plant is about 7 years. The first three years are devoted to engineering, environmental impact statements and permits in a fast track location (ie Colombia).
I’ve been involved in Gas to Liquids, LNG, heavy oil upgrader projects front end planning, and I assure you we don’t get management approval unless they PeRCEIVE a steady price and political environment. This is why I mentioned the lag time issue. I happen to know SASOL has the engineering ready for a plant in the USA. This work can be turned around and used for a plant in Colombia. And if they see oil prices hovering at $90 per barrel they will probably seek partners and get the coal supply contracts to build a 100,000 BPD plant.
Hi Fernando,
Prices were around $100/b or more from 2011 to 2014, maybe your cost estimates are on the optimistic side? What is the assumed cost of coal? Coal prices have been rising due to Chinese demand.
They are not my cost estimates. A plant cost depends on size and other issues.
Here’s some propaganda
http://www.rand.org/pubs/research_briefs/RB9342/index1.html
http://www.exxonmobil.com/Apps/RefiningTechnologies/files/article_CoaltoLiquids_HydrocarbonEng.pdf
http://www.fluor.com/projects/pages/projectinfopage.aspx?prjid=156
On the two links by Fernando.
Chinese project phase 1 is for 120 kb/d, Indian project (which has been cancelled as of Nov 2013) was for 160 kb/d. As far as I can tell only 20 kb/d of CTL is operating in China so far with another 80 kb/d under construction.
I found a source suggesting that 120 kb/d of CTL had been completed in China by 2010.
Link below:
http://www.hydrocarbons-technology.com/projects/shenhua/
Supposedly SASOL estimates CTL costs $67 to $82 per barrel to produce.
It is not clear what happens to these estimates if coal prices rise.
Chart for World Coal prices from BP from 2002 to 2013 with linear trend line.
Dennis, I haven’t reviewed a classic SASOL project, but I think they aren’t too sensitive to coal price. There’s a slightly different approach which uses methane to deliver the hydrogen, that one is more sensitive to methane price.
The key to these projects is going to be having the coal nearby and a government with a positive attitude.
By the way, a retired Exxon chemical engineer suggested a 4 degree API still bottoms could be fed into a similar plant at a profit. This would be done to avoid making petcoke.
And here’s the junk I threw on the wall to Seeif it stuck
1. Ethanol from sugar cane 3 years to produce an incremental 1 Mmbpd
2. Natural gas compressed 3 years to produce an incremental 2 Mmbpd
3. Natural gas lng in vehicles and replacing heavy fuels 3 years 1 Mmbpd
4. Electric vehicles, subsidized with hybrid and plug in 3 years 1 Mmbpd
5. Gas to liquids 5 years 2 Mmbpd
6. Coal to liquids 5 years 1 Mmbpd, 7 years another 2 mmbpd,
So the question for the audience: what do you think will happen when oil and condensate peak and prices start going way up? Which alternative starts kicking in, how much will it deliver?
Hi Fernando,
Coal will peak within a few years of oil, so I think coal to liquids will not work because coal prices will go up in response. Natural Gas will peak in 2035 and natural gas prices will also rise making CNG, LNG, and GTL too expensive, possibly it would be used for ships. Sugar cane is likely to provide 5 MMb/d tops (but 3 MMb/d is more likely). The best option would be rail, light rail, and EVs, with a ramp up to as much wind and solar as is feasible, with a sprinkling of nuclear if absolutely necessary, natural gas would be used for backup along with batteries, fuel cells, and vehicle to grid. Also natural gas heat would need to be replaced with heat pumps and ground source heat pumps (in the far north). Buildings would need to be refitted with better insulation, doors, and windows. New construction should be to Passive House standards. Petroleum consumption could be cut in half in 10 years with an aggressive program. Build out of wind and solar might take 30 years to reduce coal and natural gas use by half. There would be efficiency measures as well so that the energy actually needed could be cut substantially as well.
This would all require a World War 2 like effort.
CTL will work up to a point because syncrude will be a lot more expensive than coal. It’s a value added enterprise, and the added value product price is going to increase faster.
The drawback is the CO2 issue. I think we will see more plants as companies move to learn and optimize the technology, but eventually they will indeed see the price differential drop to the point that investing won’t be worth it.
I think all of those items I put on my list, and others I didn’t think about will have a market niche. This is the natural outcome of peak oil. And by the way, the corporate giants are all looking into these or investing. Shell likes GTL, SASOL sells CTL technology, Petrobras and others invest in biofuel production, and a few are doing intensive research into biofuel from waste products. What you won’t see much is giant oil companies trying to build solar or wind plants. That’s not their strength.
Fernando,
These may all have a niche, it is impossible to predict how it would play out because we don’t know what will happen to oil, coal, and natural gas prices as the peaks in each of these fuels occurs.
Once peak oil is an understood reality (the man on the street realizes this is real and not concocted by those liberals). At that point people may take seriously the notion that maybe coal and natural gas may peak as well.
The uncertainty over when this occurs and how quickly supplies will decline and the effect on prices may stifle investment in CTL, and GTL, biofuels might tend to be the winner, but I believe there are limits to how far biofuels can be ramped up. My WAG is much lower than yours maybe triple today’s level (1.4 MMboe/d).
Hi All,
It would be great to get the perspective of someone who is an agricultural expert on how high biofuels might be ramped up.
What is a realistic level? Currently liquid biofuels (biodiesel and ethanol) are at about 1.3 MMboe/d (2013 data from BP).
How much higher can we go, considering resource limits?
I have been under the impression that the big push was to go with algae, which would produce oil and wouldn’t require farmland (though it would require something to grow the algae in — which could perhaps be something vertical rather than on land).
Interesting timing, the “end of Opec” and “Oil could plunge to $20” meme circulating today.
see: http://finance.yahoo.com/news/citi-oil-could-plunge-20-172206724.html
And these Citi comments picked up and echoed around Bloomberg, CNBC and the usual MSM outlets.
What could possibly be the point (though I believe there must be a point for a helicopter drop like this) in jawboning “down” the price with the retail community. Just seems like the entire financial industry would be interested in promoting the opposite of what is being promoted here. Disconnect. Which I’m sure only in hindsight will begin to make sense.
It is difficult to see where Citi is coming from when you see the chart below. WTI is currently above the 20 day MA and almost ready to take on resistance at the 50 day MA. With such a sharp turnaround on Jan 15 from $44/bbl to $52/bbl today, $20 does not seem to be a bit of a stretch.
Correction: Last line should read: $20 does seem to be a bit of a stretch.
Citi’s theory is that storage fills up and the price collapses.
Hi Gerd,
There is a lot of storage, Citi is probably trying to talk down the price because of some bad bets it has made.
And the spot oil price drops under $50!
About $50.03 at 5:00 am 2/11/15.
Lowest so far on the current drop was about $49.74.
Head fake!
I wouldn’t put too much faith in technical charting.
And oil hits the $48 handle!
showing $48.91 at 9:55 am EST
And falling fast.
Technical charting is how bankers read tea leaves.
I wonder about that too. My thought is the lower it get hammered down the higher it goes up later on, after the big banks change their bets. Why limit profits to 400% when you can get 800%. The pure financialization of food and fuel commodities is not good IMO.
Michael Lynch had a similar call, in August, 2009, when he predicted that oil would soon be back “Closer to $30.”
The average price of Brent fell from $97 in 2008 to $62 in 2009. The monthly low was $40, in December, 2008. By the time that Lynch issued his call for a decline to the $30 range, Brent was averaging $73, in August, 2009.
In the subsequent five years after Lynch’s August, 2009 call for a decline to the $30 range for oil, Brent averaged $80 in 2010, $110 for 2011 to 2013 and $99 in 2014, for an overall five year average of $102, for 2010 to 2014 inclusive.
‘Peak Oil’ Is a Waste of Energy
By MICHAEL LYNCH
Published: August 24, 2009
http://www.nytimes.com/2009/08/25/opinion/25lynch.html?pagewanted=1&_r=3&emc=eta1
Forecasts Of Oil Price Bottom And Recovery
By: Michael Lynch
2/9/15
http://www.forbes.com/sites/michaellynch/2015/02/09/forecasts-of-oil-price-bottom-and-recovery/
Based on Lynch’s track record and based on his current revised forecast for a $50 to $60 price range (about twice his previous prediction), I suppose that we could expect an average Brent price of about $150 to $180 for the 2016 to 2020 time frame.
Hi Jeff,
I think that was tongue in cheek, but I seriously think that $150(in 2014$) in 2018-2020 is a pretty good bet, but $180 will push the economy into a recession or worse in my view, we might get to $160 before a crash, it depends on the size of the World economy at the time and whether Hamilton’s 4% rule applies to the World (it is based on US experience which might not apply to the World). The 4% rule is that oil expenditures of more than 4% of GDP leads to recession, at least in the United States.
I googled Michael Lynch and hit upon the Wiki for Michael Lynch (philosopher):
Lynch is most well known for his pluralist theory of truth. He holds that truth is a functional property, i.e. that it is characterized by a particular function that can be realized in many different ways. For instance, some truths might realize truth’s function by corresponding to reality while others might do so by cohering with a larger set of propositions
Different Michael Lynch, but it made me laugh.
Lynch is most well known for his pluralist theory of truth. He holds that truth is a functional property, i.e. that it is characterized by a particular function that can be realized in many different ways. For instance, some truths might realize truth’s function by corresponding to reality while others might do so by cohering with a larger set of propositions
Ha ha. That is about right. And the holder of the larger set of propositions is highly likely to be completely unaware of the existence of many of the very propositions they themselves hold!
And since many of their proposition are largely unconscious, they are very likely to project mirror versions of their unconscious propositions onto others. Especially onto those whose truths more closely correspond to reality. They tend to be seen as a threat.
And most interestingly, DuaneX, you just said:
What could possibly be the point (though I believe there must be a point for a helicopter drop like this) in jawboning “down” the price with the retail community. Just seems like the entire financial industry would be interested in promoting the opposite of what is being promoted here.
Some interesting propositions there. The truth is not that complicated. Was bringing Michael Lynch into this discussion perhaps a Freudian slip?
Hi DuaneX.
You say:
What could possibly be the point (though I believe there must be a point for a helicopter drop like this) in jawboning “down” the price with the retail community. Just seems like the entire financial industry would be interested in promoting the opposite of what is being promoted here. Disconnect. Which I’m sure only in hindsight will begin to make sense.
They are not jawboning the price down, although their analysis will effect the market. They really are saying where they think the oil price will go. The entire financial industry isn’t effectively promoting anything (lots of individuals promoting different things tend to cancel each other out). The entire financial industry just wants to make the right bet. Remember, there is money to be made on either side of the oil trade, up or down.
Oil is not like the stock market. Oil is a zero sum market. That means that for every winner, there has to be a loser. Basic game theory prevails. On a daily basis, buyers and sellers of oil each try to make money off of each other, each based on their individual sense of where the sum total of all of the buyers and sellers will drive the price next. Very hard to predict, especially in the long term.
But the current psychology definitely points lower. Over the last two trading days, this has been the minute by minute pattern: When the oil price begins to rise, it will naturally attract sellers, meaning the volume of oil available to the market will rise. That makes perfect sense. But when the oil price begins to fall, the volume of oil offered to the market will rise even faster than when the oil price is rising! Why? Sellers are only sort of glad when the price is going up, because they really need it go a lot higher. They don’t trust that the rise will last, and they want to wait for a higher price. But when the price is going down, the sellers offer up even more oil because they immediately begin to panic, thinking that the price will keep falling. Buyers smell fear. It is easy for them to push sellers around. Thus it has been a buyer’s market, at least for the last two trading days.
As long as this current pattern of trading prevails, the price of oil will continue to drop. How long will the current trend last? Nobody knows.
One last thing (I need some breakfast):
As far as Lynch is concerned, science has a way to try and tease out which side is carrying a truth cohering with a larger set of propositions. It is called Occam’s razor. The simplest explanation is generally presumed to be right.
Ok, last one.
As far as the oil market is concerned, there has also been a another pattern recently. A weekly one. Oil keeps dashing the speculator’s latest ‘hopes and greed’ inspired run up at 10:30 every Wednesday when the latest oil inventory report falls more or rises less than expected. After the drop, the whole process begins again. Lather, rinse, repeat.
I think I am going to start trading oil.
That should read:
Oil keeps dashing the speculator’s latest ‘hopes and greed’ inspired run up at 10:30 every Wednesday, when the latest oil inventory report falls less or rises more than expected.
Heads up from Ron’s direct data.
Angola.
They are a seriously big supplier to China. They, oddly, are the swing producer, militarily. If their output erodes, those tankers headed to Japan get more and more tempting.
Desert Sunlight went “live” today.
http://www.latimes.com/local/lanow/la-me-ln-solar-farm-20150209-story.html
http://www.firstsolar.com/en/about-us/projects/desert-sunlight-solar-farm
2.94 persons per house in california
1.05% growth per year in population
Hence, this project supplies power for the population growth for 1.15 years in California.
project cost: $1.46 billion
size: 6 square miles (16 km2)
Maybe a few panels on every house is a better idea
panels on houses is a great idea. probably need both.
http://www.resourceinsights.blogspot.com/2015/01/us-department-of-energy-our-forecasts.html
I’m not sure if you’ve seen or discussed this post on the discrediting of the EIA.
Interested in comments on this.
I think the best part are the projections for natural gas prices under $5 through 2024 and under $6 through 2029. Didn’t the EIA predict oil prices for today in the $20s ten or so years ago? Good article. Makes me concerned that US is just shutting down coal. Doubling electric rates won’t help oil production, much of which relies on electric power.
Environmentalist groups with radical leanings and actions need to be more kind, not so violent. Actions speak louder than words.
Some food for thought, soul searching material:
“When you call yourself an Indian or a Muslim or a Christian or a European, or anything else, you are being violent. Do you see why it is violent? Because you are separating yourself from the rest of mankind. When you separate yourself by belief, by nationality, by tradition, it breeds violence. So a man who is seeking to understand violence does not belong to any country, to any religion, to any political party or partial system; he is concerned with the total understanding of mankind.” – Jiddu Krishnamurti
@ Ronald
re: “Because you are separating yourself from the rest of mankind.”
Personally, I like to choose my human associations and prefer to be separated from our mass group-think needless consumer driven society. Just saying.
Individualism is real, alive and well in my rural working valley.
OIL OUTPUT STILL GROWING, AS CITI PREDICTS A DROP TO $20 US A BARREL
https://ca.news.yahoo.com/oil-output-still-growing-citi-193933404.html
“Citibank is now predicting oil prices as low as $20 US a barrel later this year as the glut of oil grows. That’s an additional 55 per cent drop in the price of crude.”
Shit, Guess you should delete this Ron as it`s referred to above. Sorry
Trucks! hahahahah
http://finance.yahoo.com/news/truck-driving-may-be-america-s-most-popular-job–182859840.html;_ylt=AwrTWVXJcNlU4HgA7XaTmYlQ
In 29 states truck drivers made up the majority of full-time working adults in 2014, NPR found. The trucking industry, it seems, is immune to the effects of globalization and automation — two trends that have sent blue-collar jobs in the U.S. spiraling toward extinction over the last four decades.
Behold the subtle underbelly of the Wreckovery — that text above . . . “full time”.
The IEA just came out with a new report. Highlights:
1. Brent average for 2015 $55
2. Brent will slowly rise to $73 by 2020.
3. US will continue to grow LTO production into 2020.
Wow?!?
I need to find out what those chaps at the IEA are smoking.
Steve
Speaking of which, got run statements in the mail today for January, 2015. Ouch. You know the short check is coming, but the reality sets in when you see things in print. 40% of what you had gotten used to since 2011.
Q1 2015 earnings are going to be a nightmare for shale guys, both oil and gas. IEA says $55 average on Brent 2015, so $50 for WTI? Oil rig count will be sub 300 end of 2015 and massive losses IMO. Heck Q1 will be a nightmare for anyone selling crude oil or natural gas, unless 90%+ hedged pretty high.
I hope we all realize IEA has no idea what the price will be for 2015. None whatsoever. Someone else is trying to justify a paycheck.
Hi Watcher,
Only you know what the oil price will be in 2015 🙂
My guess is $80/b or higher for WTI by Dec 2015, what’s yours?
Seems a little high. When is the last time the price of oil increased 60% in 10 months? Only when there is panic about Mideast politics.
I think markets are getting numb about that. The feces are already in full contact with the ventilator blade without any dire consequences for ROW.
So you’ll have to think of a different motor for rising prices.
Hi Ilambiquated,
Prices doubled from Feb 2009 to Nov 2009 in the midst of a bad recession.
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=rwtc&f=m
The motor is increased demand and reduced supply.
“Prices doubled from Feb 2009 to Nov 2009 in the midst of a bad recession”
Yes, but that was due to:
1/ A sharp cut in OPEC crude production from 31.6 in 4Q08 to 29.1 in 2009
2/ A sharp increase in global demand from 84.5mb/d in 1Q09 to 87.0mb/d in 4Q08
Sorry, it should be
2/ A sharp increase in global demand from 84.5mb/d in 1Q09 to 87.0mb/d in 4Q09
Hi AlexS,
We will just have to see, we may see a fall in output (or flat output for 2015) and a rise in oil demand due to lower oil prices, time will tell. Perhaps oil prices will remain $50/b for a long time. The EIA suggests $58/b for the average 2015 Brent price. In Jan Brent Spot prices averaged about $48/b, if we assume prices rise linearly this would imply about $68/b in Dec 2015.
I think the EIA’s estimate is based on rising output in the US, which is not very likely at this price level, that is why I expect prices will be higher, due to slower US supply growth than expected by both the EIA and th IEA.
I could be wrong we will find out in December. I still think $80/b or higher is a good guess for average Brent spot prices in Dec 2015.
Hi Shallow sands,
If number 1 and 2 are correct, then number 3 is wrong, we might keep LTO decline rates pretty low at those prices (overall US LTO output may decline slowly), but believing that LTO output will increase requires some serious smoking 🙂
Dennis. I agree. I made
some of my basic calculations for
a Bakken well costing $7 million and another costing $10 million under the IEA price scenario. Without getting into the details, it appears to me a $7 million well would need to produce 450,000 boe to break even in five years and a $10 million well about 620,000 boe to break even in 5 years if the $ to drill and complete is borrowed at 8%. I assumed 20% roualty. I think very few Bakken wells are capable of producing these amounts in 5 years. What do you think?
Hi Shallow sands,
The average well is between 350kb and 400kb over 25 years, these numbers are typically about 80% of the boe numbers, lately the average well profile has been increasing so the 450 boe is not too far fetched, the IEA price estimates are likely to be incorrect, US and Canadian output will be flat at those price levels and world C+C output will fall, that will tend to drive prices up. We will see $70/b by Dec 2015 (at minimum) and $85 by Dec 2016 (also a minimum).
It’s not IEA’s oil price forecast, but just current futures curve:
“As with previous editions of this Report, the price assumptions (not forecasts) used as modelling input are derived from the futures curve. These averaged roughly USD 55/bbl for 2015, ramping up gradually to USD 73/bbl in 2020. “
Thank you for pointing that out Alex. I wish the CNN story I read would have indicated that.
Somehow I doubt the MAJORITY of jobs either full or part time in ANY state are driving jobs. Drivers might be the most numerous or common type of worker which sounds reasonable enough depending on how you slice and dice job descriptions.
Calling everybody who touches a steering wheel a trucker is like calling everybody who uses a computer an IT tech.
I doubt if truck drivers will be immune from automation. They are already being replaced.
http://www.wsj.com/articles/SB10001424127887324144304578624221804774116
Trains are already much more automated than trucks
Chris Martenson interviews Arthur Berman:
Why Today’s Shale Era Is The Retirement Party For Oil Production
https://www.youtube.com/watch?v=5tOVp1vSeVA
Quick synopsis: LTO needs to be about $90 bbl to break even. Cheap credit fueled Shale boom. Shale Oil sweet spots identified decades ago. Shale Oil reserves only provides two years of US consumption. There are only about handful of Shale plays that are economical worldwide. Oil prices need to rise back up to about $120 bbl for oil majors to increase CapEx. Dip in Oil prices won’t last.
Another good read by Gail Tverberg:
http://ourfiniteworld.com/2015/01/06/oil-and-the-economy-where-are-we-headed-in-2015-16/
Here is another voice Mirror my concerns about future Oil CapEx:
“Inability to restart oil supply, even if prices should temporarily rise. The production of oil from US shale formations has been enabled by very low interest rates. If there is a major round of debt defaults by the shale industry, interest rates are unlikely to fall back to previously low levels. Because of the higher interest rates, oil prices will have to rise to an even a higher price than required in the past–in other words, to more than $100 barrel, say $125 to $140 barrel. There will also be a lag in restarting production, meaning that high prices will need to be maintained for some time. Bringing oil prices to a high level for a long time seems impossible without crashing the economies of oil importers.”
And she also subscribes to my idea on how to get past the mounting and unsolvable problems:
“One possible solution is that a small number of people with survivalist skills will make it through the bottleneck, in order to start civilization over again. Some of these individuals may be small-scale farmers. The availability of cheap, easy to use, local energy is likely to be a limiting factor on population size, however. World population was one billion or less before the widespread use of fossil fuels.”
That said I presume she reaches these conclusions independently.
Gail’s problem is she has no perspective of time. She has been calling for collapse for more than three years at any time. Her bottleneck scenario could take two hundred years.
Don’t really know what the definition of collapse is.
But in general the concept of asymmetric price for destruction vs restart of the industry looks pretty legit. Defaults are coming and they will change the flavor of the soup next time. Nobody is going to want to get burned twice so lenders will demand higher interest, more collateral, or best of all, leave the money in their pocket.
That’s just one tidbit. Next time around the leases (which will have expired by then, one suspects) will be getting negotiated with landowners who aren’t going to be receptive to “now you have to understand we don’t really know if there’s anything there so that justifies this lower price we’re offering”. The oil is known to be there. The landowner can get a higher take than in last negotiation.
The landowner will take what somebody is offering which will be substantially LESS next time around – AT LEAST DURING THE EARLY STAGES OF A TIGHT OIL COMEBACK -or he will grow older with the oil under his land still there and doing him no good whatsoever.
The first people back into the tight oil fields are going to find PLENTY of people willing to lease for less rather than leave the money for the better life style in the ground . The price of all the inputs going in again except actual money will be LESS rather than more. Interest will be the sole exception.
Rents will be less for housing. Truckers out of work will work for less. Every body will work for less in order to get back to work.WELDERS PIPEFITTERS ENGINEERS SURVEYORS RIG OWNERS. EVERYBODY.
Hi OFM,
The other thing that Watcher is missing is that for most of the productive areas a producing well already exists which is enough to hold the lease. There have been claims by Watcher that large numbers of these companies will go bankrupt, has this happened to many oil companies so far in the Bakken, Eagle Ford or Permian Basin? There may have been one report of a bankruptcy for a small US oil company, but so far most companies are weathering the storm and oil prices appear to have bottomed in January 2015.
You are correct that any new leases (which will be in relatively unproductive areas for the most part) will not be expensive relative to leases signed in 2013 or 2014. Watcher may be comparing to lease prices in 2009 and might be correct, the smart companies will offer a fair price and walk away if a higher price is demanded.
I don’t think anyone was expecting bankruptcies by February. The restructuring people have all been saying Q2 is when the tricks run out and it’s BK time.
Right now, people are completing projects at what would have been full-cycle loss prices for cash flow, and stacking future drilling and exploration to save money. That can only go on so long before one has to start drilling again or see cash flow evaporate as the wells go through first year decline.
“Don’t really know what the definition of collapse is.”
Exactly, kind of like the word love. Everyone uses it and has a different meaning every time except after a roll in the hay.
End of electricity supply is a collapse.
I think that the resources could take quite some time, the economy and social systems are not currently well structured for continued contraction. The financial system even less so. Gail presumably has spent a lot of time thinking about how all the insurance contracts underlying her actuarial work are predicated upon continued growth, and will not deliver without it. That would put all financial structures at risk, and the economy is a fairly complex set of interconnected financial structures
I also think she is too gloomy, but then no one hires an optimistic actuary.
Gail’s problem is that she is barking mad. She has the collapse narrative baked into her head so hard she can’t think straight. She doesn’t know the difference between value and energy. She probably thinks ice cream is more valuable hot because it has more energy in it. And you’re right, she has zero fantasy. She cannot imagine technical change.
I gave up following that blog because it promotes one theory of the future and can’t accept anything else.
Debt is a bookkeeping concept. The idea that debts which can’t be repaid will permanently collapse the world economy forever overlooks all other possible scenarios.
I too gave up regularly following Gail’s blog. At first I followed it heavily (Along with Ron’s) but I grew weary of the one-note ‘end is nigh next year or maybe the year after that’ refrain. I check in on her musings to the tune of about once per month now…she has some interesting and likely valid ideas, but she is a little too rigid in her thinking, and can be pretty snippy when someones even appears to think about goring one of her sacred oxen (her belief in a higher power having a master plan for humans is but one example).
Tverberg is worth reading but I find her rather one dimensional in that she has little imagination—– although she may actually be a lot smarter in actuality than she appears to be. People of her sort have a message to sell and selling the message means staying ON MESSAGE.
Look around the net and just about every body publishing falls into an easy to pick category. Her sort seem to believe that the laws of finance are written in stone for eternity but this is patently not true. When things get really bad then the old rule books will be thrown out the windows.. and the people who currently own and operate the banks may follow the rule books. Assuming they are brave or foolish enough to go near the bank buildings.
I do agree that things are going to get pretty bad within the easily foreseeable future but there is no reason to insist that industrial civilization world wide is headed to hell in a hand basket. Resources and power are not equally distributed and some countries are apt to come thru the energy and resource crisis pretty much whole if a lot leaner.
It is like it or not a dog eat dog world and the big dogs will eat while the smaller ones starve. By an incredible stroke of luck I happen to live in the one country that is better situated to weather peak resources than any other-the USA.
Financial chaos is probably baked in . But the consequences of this chaos are not going to be what the doomers think.
JUST THINK for a minute.
Suppose twenty five million home owners can’t make their mortgage payments. Does any body have little enough sense to think the federal and state governments of this country will allow twenty-five million families to be put on the street? It ain’t gonna happen that way folks.
Some how or another that twenty five million families will stay in their houses.NOBODY in this country is ever going to evict people on a wholesale basis right across the board.The people would rightfully murder any cops who tried to enforce evictions on a truly massive scale. There would be riots that would make all riots in the past COMBINED look like church picnics. The most blockheaded rock ribbed Tea Party type would come out for amnesties on debts and food stamps for everybody for fear of being tossed on the trash heap along with the bankers.
And if things go mad max ? What use will a bank have for a house that it cannot possibly sell? A house with crack addicts living in it might be in more danger of burning down than an empty house but an occupied house is one that is a far less tempting target for vandals and arsonists and thieves.
In a collapsed economy a bank will necessarily take what it can get from anybody willing to pay anything at all.And everybody will get some sort of welfare check. It won’t buy much but it will buy SOMETHING.A few dollars out of it can be used to make a token payment on the house.
If things get so bad there are no welfare checks there won”t BE any cops to evict anybody. So they will stay put rather than live in a car or a cardboard box.
OFM Wrote:
“Suppose twenty five million home owners can’t make their mortgage payments. Does any body have little enough sense to think the federal and state governments of this country will allow twenty-five million families to be put on the street? It ain’t gonna happen that way folks.”
I think you missed something important. The reason why those 25M home owners can’t make their payments is because they don’t have jobs or are making much less money. If 25M home owners got gov’t help, they are still likely out of work. They will also be spending less, which means other jobs will be lost since other people have jobs that depend on those 25M buying goods and services. FWIW: I am reasonably sure that since the 2008 housing bust more than 25M already lost their homes.
I think what will happen is that the average household size will start increasing as it will take more people contributing to the household expenses. Kids will move in or stay with their parents. Perhaps couples will pair up (ie two families living in the same home) More single family homes will be converted into multifamily homes. Less money per worker means more workers need to pull resources. As you likely recall, in the 1970’s a single worker earned enough to raise a family. In the 1980’s/1990’s it took two incomes per household as wages stagnated as expenses increased. The logical path is that it will take 3 or more workers to support a single household.
OFM Wrote:
“In a collapsed economy a bank will necessarily take what it can get from anybody willing to pay anything at all.And everybody will get some sort of welfare check. It won’t buy much…”
It won’t buy anything after a while. The US as well as just about all of the developed world is insolvent (US federal Debt Tops $18.1 Trillion growing by about $1Trillion per year). It was QE and ZIRP that prevented the collapse from starting back in 2008. Debt loads have only increased since then. The only way everyone can get a wealth fare check is if the gov’t cranks up the printing presses. Consider that Venezuela switched to a wealth fare state, and since as deteriorated to the point of near collapse. And VZ is an oil exporter! I doubt VZ will last beyond 2015 unless it switches back to a market economy. FWIW: I think QE has nearly run it’s course. States will need to switch to NIRP (Negative Interest Rate Policy) to defer an economic collapse. I don’t think NIRP will last as long as ZIRP. At this time, I would guess we have perhaps two or three years before the global depression begins.
My thesis is that when the state of the economy is in shambles and remains that way for a couple of years, that the people will seek out charismatic leaders that promote strong nationalism and promise of a strong economy (ie the world of the 1930s). These awful people will get elected, and make good on their promises by seizing absolute power and using that power to seize control of resources need to restore the economy. When people are under stress and desperate, they will do anything to rectify their situation. If that means electing the next Hilter or Stalin, they will out of desperation. Consider that Germany was the most educated country in the world in the 1930’s and they elected Hitler.
I am not yet so senile as to forget unemployment. LOL
And while twenty-five million is probably a high estimate a lot of people HAVE lost houses already. BUT NOT all at once. There are remarkably few homeless people in this country who once owned houses who aren’t homeless due to personal issues such as alcoholism.
And of course I realize that welfare checks are in essence going to be printed money but we are printing money and PRETENDING that big debts are going to get paid already. Greek debt for instance will probably be managed by the Greeks making token interest payments. The debts themselves will most likely eventually be inflated out of existence. In actual fact if the principle amounts are ever repaid they will be repaid with money so depreciated that the TRUE MEASURE of the haircut will be in the area of ninety percent plus.
There is in my mind absolutely no question that the government is eventually going to crank up the printing presses. This will not actually solve the insoluble problems associated with collapse but it will postpone the day of the final reckoning for a while- depending on how skillfully it is managed perhaps for many years. This printing HAS IN FACT already postponed the day of reckoning about debt for decades.
How much longer this will work is hard to say your guess is as good as anybody’s but I have hopes the debt scheme will not fall apart for another five or ten years.
If you have spent any time on the study of Nazi Germany then you know that the situation in Germany that resulted in Hitler gaining power was TRULY desperate.
And you will know that Hitler solved the problem of existing debt basically by ignoring it and confiscating the ownership of it etc.
Inflation is preferable to grim austerity in that it is an easier sell to the public by a factor of a thousand.
But in the end our destiny is controlled not by pieces of paper or electrons called money but rather by available resources and how wisely we make the collective decisions as to how they will be used.
I foresee very tough times just about everywhere but not universal collapse.
An American Hitler cannot be categorically ruled out but hopefully we will have better luck.Hitler was able to seize power as the direct end result of Germany losing WWI and the reparations package forced on Germany. It was impossible to pay it and there were millions of soldiers primed to accept him as their leader.
I don’t foresee this country losing a hot war on the home turf.Not for the next half century at least.
Hi Old Farmer Mac,
You said,
An American Hitler cannot be categorically ruled out…
Usually your comments are pretty lucid, in this case not so much 🙂
Would you grant that the chances of a Hitler-like fascist leading the US are between slim and none?
re: “Would you grant that the chances of a Hitler-like fascist leading the US are between slim and none?”
You are kidding, right? They might not have the goose step tight uniforms but don’t kid yourself, Dennis.
When I was a kid my folks, (both WWII vets by the way) had some good friends from Germany. They would come over once a month or so and have some drinks and snacks and talk about their war experience. The husband described his 12 year old joy of being in a Russian POW camp and said he vowed to never be hungry again. His wife talked about Hitler. She described how her family had nothing and was beyond poor. “I know what Hitler eventually did was wrong, but when he came to power we could kiss his feet we were so thankful. We had enough to eat, we had jobs, we reagined our pride”
I think it is highly likely that a militarist tradition of good old USA would ripen into fascism.
This is just a snippet of Wiki definition, but….”Fascism rejects assertions of violence automatically being negative in nature and views political violence, war, and imperialism as means that can achieve national rejuvenation.[9][10][11][12]
Fascism borrowed theories and terminology from socialism but replaced socialism’s focus on class conflict with a focus on conflict between nations and races.[13] Fascists advocate a mixed economy, with the principal goal of achieving autarky to secure national self-sufficiency and independence through protectionist and interventionist economic policies.[14″
Carter Doctrine? ME meddling? Encircling Russia? Trade pact bullying? Corporations controlling Govt and military? You don’t recognize the seeds? Add a real and hunger inducing downturn what do you think will happen, everybody make nice and figure out together what to do? When the only jobs and 3 hots and a cot are mostly found in the military, what do you think will happen?
Paulo, I will have to agree with Dennis here. Hitler came to power after the worse economic crisis in Germany in centuries. There was deep resentment by the German people toward other nations whom they blamed for their problems. And of course they blamed the Jews also. The situation was perfect for a hate monger to come to power.
We don’t have anything remotely resembling that in America.
And your rant about Carter and what we are doing in the world as some kind of “seeds” is nothing more than pure bullshit and not worth further comment.
I’d forgotten what the Carter Doctrine is.
It was from a State of the Union speech in which he said:
The US will use military force to protect its national interests in the Persian Gulf region.
Imagine that. It’s Democrat policy.
Watcher, when Kuwait was invaded by Iraq and Bush 1 kicked them out, that was protecting our interest in the Persian Gulf region. He was a republican but any democratic president would have done the same.
I will not defend what his stupid son did. That was not Carter Doctrine, that was one stupid asshole who was elected, or selected, by a lot of other stupid assholes.
But the Carter Doctrine was and is welcomed by Kuwait, Saudi Arabia and many other Middle East countries.
Don’t point to a few words by President Carter and use that to show that the US is a bully. What we do now, and under Carter and Clinton, we do at the request of Saudi and other friendly nations there.
dood, I didn’t say anything other than what I said.
The Iraq War Resolution was also supported by many Democrats.
The Resolution would not have passed without Democrat support.
http://en.wikipedia.org/wiki/Iraq_Resolution
I am shocked! 🙂
There is a first time for everything.
Hmm, maybe Paulo is right 🙂
No, definitely not.
Interesting how Americans are viewed, we have done some dumb stuff(invade Iraq, torture), but we do some good as well (Marshall Plan comes to mind.)
He’s just pissed that the Bruins beat the Canucks in the finals a few years back. Remember, it’s only a game.
Hi Paulo,
Would you expect a Hitler-like figure to come to power in Canada?
DC Wrote:
“Would you grant that the chances of a Hitler-like fascist leading the US are between slim and none?”
Americans are human, just like Germans, Russians, Chinese, or any of the other nationalities that brought extremist to power. America is still populated by the same humans. The issue is that the US have a vast amount of resources and plenty of room to grow. When America endures similar hardships as Europe did in the 1930’s all bets are off. Its really a matter of how bad the economy gets and how desperate the people get.
Tech, of course if everything collapses, if people begin to starve, if food riots break out in every major city in the in the US then all bets are off. Martial law will have to be declared then anything could happen.
But you cannot conclude that simply because we are all humans that we will behave like a certain group of other humans behaved in the 1930s. You may as well compare us to how the French behaved during the last days of Louie the 16th, or how the Church behaved during the days of the Inquisition. That is they were humans and we are humans therefore….
Naw… you gotta do better than that.
Martial law is another collapse. A word that can’t be defined in the context of the subject.
Sending out troops to keep order doesn’t work well when they get a call on their cellphone from their mom and dad back home asking how they can get food. A lot of troops are going to go help mom and dad. Their 2nd or 1st Lieutenant commanding officer would try to persuade them otherwise, except he got a phone call too.
Ron Wrote:
“But you cannot conclude that simply because we are all humans that we will behave like a certain group of other humans behaved in the 1930s.”
I think I can! 🙂 Humans haven’t changed. We are making the same mistakes as we did during the 1930’s. In fact the situation is worse because the debt levels today exceed the debt levels of the 1930’s. Consider that we very close to the brink of another global depression in 2008. I strongly believe its merely been postponed. Sooner or later we’ll run out of road to kick the can.
Western civilization is less resilient today than it was in the 1930’s. Back then 2/3’s of Americans were self-reliant, and only about 1/3 lived in urban regions. Today 2% of the population feeds 100% of the population. Any disruption to the Just-In-Time delivery model will result in disaster.
As I stated we are very near the peak. Things are likely to get more chaotic and dicey once we start on the decline slope. That said I don’t think the US will be the first to fall prey to totalitarianism, but its certainly not off the table.
To be honest, I am somewhat surprise that you don’t agree with me on this point. I thought you would have been supportive.
I think I can! 🙂 Humans haven’t changed. We are making the same mistakes as we did during the 1930’s.
No you cannot. Humans are the sole product of their heredity and environment. Now their heredity will be only slightly changed since the 1930s but their environment has changed dramatically. Nothing is as it was in the 30s.
If Germans had the same environment as they had in the 30s they would, every one of them, be really pissed off and might turn to someone like Hitler. But no one on earth has the environment that Germans had in the 30s. Not even close, nothing like it exist in the civilized world. So they, nor any other country of people, will behave in such a manner.
But, as I explained earlier, after the collapse conditions for everyone in the world will be terriable. Then all bets are off. Under such conditions I would never attempt to predict human behavior.
Today 2% of the population feeds 100% of the population.
If you mean 2% are farmers I would not argue with you because I actually don’t know what the percentage really is. But if you 98% leach of the other 2% then that is… is… not worth a reply.
Ron Wrote:
“No you cannot. Humans are the sole product of their heredity and environment. Now their heredity will be only slightly changed since the 1930s but their environment has changed dramatically. Nothing is as it was in the 30s.”
I don’t think you understand the point. When conditions deteriorate people will do what ever it takes to meet ends. People are just a stupid today (if not worse than they were in the 1930s). When the store shelves go bare and their children are hungry people will turn to extremes. Has it happened today in the West, No, but its moving in the direction. Not tomorrow, not next month or next year, but at some point its inevitable.
“But no one on earth has the environment that Germans had in the 30s.”
Russia, and China, also had the same issues at the time. They also fell under the spell of charismic leadership.
The world we live into today is headed for the same direction. Too much debt, Globalization, Completing for an ever greater size of resources. Soon the world will have to deal with declining resources, pushing more people into crisis mode. This year it will be greece. Maybe next year it will be Italy or Spain. Gov’ts and running out of road to kick the can, and that have set the world on a path that ill prepared for the challenges ahead.
Hi Techguy,
Things were bad everywhere in the 1930s. Some countries decided on dictators, others on some semblance of democracy. Roosevelt did some dumb stuff like imprisoning Japanese-American citizens, but not German-American citizens (pretty blatant racism, which was also very common at the time, and is no excuse), but I would choose him over Hitler, perhaps other people would choose differently.
DC wrote:
“Things were bad everywhere in the 1930s. Some countries decided on dictators, others on some semblance of democracy’
Sadly, Democracy and Liberty was badly oppressed in much of the world in the early 20th century. Europe was split between Communism and Fascism. Just about every European state had a Fascist party or a Communist party. Not all these extremist managed to obtain absolute control. Asia also had trouble. Japan started invading anything in its reach and China fell into a civil war which ended with the communist winning. Communism spread through much of Asia (North Korea, Vietnam, Cambodia, etc).
The point of all this, is that when people fall in hard times they go to extremes to find solutions. Desperate people make poor decisions. That hasn’t changed in the our modern era.
As you point out, the US is not exempt from shame. After all the US had slavery during the 19th Century, and had use oppressive tactics against minorities well through the early 1960s. The US had instigated share cropping and many business used oppressive tactics such as paying workers in company tokens so they became entrapped as pseudo slaves.
Hi Techguy,
I think the history is somewhat more complex than everyone went to extremists to the right or left. There is the US, Canada, Great Britain, Australia, and New Zealand and the many countries that were conquered but had strong resistance movements. Most of the World was not fascist or communist at the time, just a handful of nations.
To follow on from Paulo’s response…
These “14 signs of Fascism” can be found in many places on the web. Difficult to find the list on a site that won’t trigger someone’s ire, but the 14 pts. speak for themselves.
http://www.thirdworldtraveler.com/Fascism/14_Characteristics_Fascism.html
Ron and readers,
I did not mean to equate the current reality of living in the US as parallel to living in Germany in 1930, therefore a rise to facism is inevitable. However, the slope is slippery. Your site often mentions collapse. You often mention collapse. Others mention collapse. My point is that much of the groundwork has been laid…NSA, Homeland Security, most of the 14 points listed in Cliffman’s link exist in the USA. Some do not.
I have a couple of points that are not total bullshit, imho. The German people were a good and generous people and still are. They made mistakes and had onerous war reparations imposed on them. Their unfolding collapse in the thirties, as well as the blow to their national pride, in 20/20 hindsight laid an almost inevitable path towards facism. My point is that the hijacking of US Govt by corporate and military interests has tilled the ground. If a collapse occurs and people are hungry and in the streets as the term implies, then creating scapegoats can not be far behind. We already hear it about ‘those illegal aliens’, ‘Mexicans,” foreign workers taking my tech job’, and we are in a supposed recovery!!
There is already a lot of external demonizing going on including that of Putin, while support has raged for past military dictators too many to list. (Pinochet, Marcos, Mubarek, The Shah, Saddam…to name just a few). The term democracy is trotted out only when suitable for conquest or ‘regime change’, (whatever is best for corporate interests).
I remember being a kid in ’68 when we were going to move to Canada, (my mothers home). I was admonished to say absolutely nothing about the move except to say to my friends that we were moving to the Pacific Northwest. At that time the IRS literally persecuted those who left and/or protested the Viet Nam war. That is where I am coming from.
This is your blog, and a damn fine one to boot. But my bullshit is no deeper than yours.
Paulo, your bullshit is blaming America for half of everything that is wrong with the world. What is my bullshit?
Edit: That you blame the US for just half of everything that is wrong in the world is just a wild ass guess. It might by 75% or even 95%. It could even be less than half. But I seriously doubt that. 😉
Dennis, please read this…and notice the author and where this PDF is stored:
http://strategicstudiesinstitute.army.mil/pubs/parameters/Articles/2010winter/Dunlap_Jr.pdf
Fernando, the article is a work of fiction. Anyone can write fiction and make up any kind of story or scenario they want.
Sooooo…. what’s your point?
That essay was chosen as the winner of the USA armed forces essay competition for the year. The chairman of the Chiefs of staff awarded the prize, and the essay was distributed around Washington by senior military personnel, who were very pointedly telling the civilians to stop militarizing the country, and overusing the military. This was ignored by Clinton AND Bush. I see a significant risk in the future if the neocon influence continues to increase.
Okay, I get your point with Bush, but how did Clinton do to militarize the country? And how is the country being militarized? I was not aware that it was. I thought we still had a civilian government. This comes as a shock to me.
And why would the military want the country to stop militarizing? That just don’t sound like the military.
I know. Most of you don’t see the creeping militarization. It’s a very subtle process. Clinton, of course, decided to use troops and bombs in Somalia and Kosovo. But it goes way beyond. Read the essay. The military brass perceived it in the 90’s, and today it’s worse.
I visit TomDispatch.com often. Here is an article by Tom Engelhardt.
A Self-Perpetuating Machine for American Insecurity
Welcome to the National Security State of 2015
http://www.tomdispatch.com/post/175939/tomgram%3A_engelhardt%2C_feeling_insecure_in_2015/#more
I think the chances of a Hitler like fascist gaining control of the USA are VERY SLIM but not ZERO if we use a time frame of the next ten or twenty years.
Beyond that …Anything MIGHT happen- including a total collapse. But my opinion is that the odds of a Hitler in this country are slim even for the next century or longer.
OFM Wrote:
“I think the chances of a Hitler like fascist gaining control of the USA are VERY SLIM but not ZERO if we use a time frame of the next ten or twenty years.”
Based upon what do you believe its not possible?
As long as the gov’t keeps on obtaining more authority and the people become ever increasing dependency on a central gov’t, the likelyhood of a totalitarian gov’t increases. Perhaps it won’t be a fascist state or a communist state, but some form totalitatian gov’t.
Since the early 20th century the US federal gov’t has grown in size and has obtained more authority. Just about all retirees are dependent on Federal gov’t entitlements (Social Security & Medicare). The poor have also largely become dependent on the Federal gov’t (about 50M americans are on food stamps). The only group that isn’t dependent on the Federal gov’t is the shrinking working middle class which is slowly getting squeezed out of existence. Once 80%~90% (guessimate) of the population is dependent on the Federal gov’t the odds favor some form of totalitarian state. If you had a time machine an brought an american from the early 19th or late 18th century, and showed them america today, they would probably consider that US democracy has failed and fallen into a totalitarian gov’t. The US revolted against England over a mere 3% tax! Today the Average middle class worker pays close to 50% in taxes (including all federal, state and local taxes).
The only chance I don’t see the US falling into a totalitarian gov’t is if there is a fast crash that caused the US gov’t to collapse along with it.. If the US federal gov’t is unable to dig itself out of major crisis, it may result in the country breaking into a group of region states that are more agile and better suited to cope with the crisis . ie NorthEast, SouthEast, MidWest, Pacific regional powers. Consider that when the Dollar was tanking a few years ago there were groups taunting the idea of secession in several states.
A Totalitarian Government with over 300 million privately owned firearms? That would be interesting.
Hi JohnB,
The military has bigger guns and better trained forces, I think that battle would be lost by the “rebels”. Those that opposed the government would be labelled terrorists, it would be a mess for sure, but the government would be able to maintain control.
Yes, I would bet on the police and the military over the US gun owners. For one, right now they support the police and the military, so who would they shoot at?
And too, some of those gun owners don’t seem very sophisticated in their use of guns and might end up shooting each other.
The only way the Government would win, would be to nuke the whole country. But that would be somewhat of a pyrrhic victory, wouldn’t you say?
There was an armed standoff recently BTW, and it was the Feds that backed down.
https://www.youtube.com/watch?v=a_XqdQjTflc
The only way the Government would win, would be to nuke the whole country.
My impression is that the people most often talking about arming themselves against the government lean very far to the right. And they seem to support the police and the military. They may not like the President, liberals, and environmentalists, but they see themselves on the side of those military factions with guns.
So, are these people actually going to take up arms against the government? Are they planning to take on the local police, the National Guard, the Border Patrol, the Armed Forces?
Hi Boomer II,
If the US Military, and Police started oppressive activities against the public, I think they would lose support from most gun owners.
In fact, the likely first order of business for any Totalitarian regime would be gun confiscation.
If the US Military, and Police started oppressive activities against the public, I think they would lose support from most gun owners.
You know, I think some black folks might say that the police are already using oppressive activities against them.
And I’ll bet that if black folks tried to participate in open carry, they’d be shot in an instant, either by the police or by “good citizens” protecting their neighborhoods.
Well there’s the paradox right there: the people who are taking away civil rights and moving towards a totalitarian government are precisely the politicians who gun owners support.
As long as they push the right buttons, say by opposing abortion, gay rights, and gun control, gun owners see them as the good guys, and don’t seem to realize that their right to free speech, privacy, democratic government by the voters and not by the wealthy, and right to not fight in oil wars, is being taken away from them.
Based upon what do you believe its not possible?
I said very slim close to zero but I did not say IMPOSSIBLE.
Hi Old Farmer Mac,
We are on the same page. It is not that you said a Hitler-like figure coming to power was very likely, just that it could not be ruled out, and that is correct, almost anything is possible. We have been on somewhat of a downward slope since 9/11 as far as putting too much power in National Security Agencies to spy on US citizens, but I really haven’t delved deeply into that subject. That assessment might be overblown.
I also agree with Ron’s assessment that though the US is by no means perfect and has done some stupid stuff, it is by no means the source of most evil in the World which sometimes is implied by the comments people make.
I also agree with Fernando that the neocon narrative has lead to some pretty poor US foreign policy, though that was more apparent during the Bush II administration than during Obama’s presidency.
Agreed.
And in terms of the big picture considered over a period of years Fernando is definitely right that this country is getting to be more and more militarized.
This scares me although it also in one sense comforts me. Bodygaurds in a dangerous world are a necessity but they do occasionally turn on their employers.
The MIC in this country has way too much power for my peace of mind and it is in my opinion growing and the lust for more and more power is now pandemic among state and local police forces.
I absolutely do not want a bunch of gung ho black uniformed armor wearing machine gun toting cops on the local payroll.
One or two military style swat teams and a couple of helicopters should be plenty every couple of hundred miles. And no actual need has yet been demonstrated for even this level.
Flanders’ Fields by John McCrae
‘In Flanders’ fields the poppies blow
Between the crosses, row on row
That mark our place; and in the sky
The larks, still bravely singing, fly
Scarce heard amid the guns below.
We are the Dead. Short days ago
We lived, felt dawn, saw sunset glow,
Loved and were loved, and now we lie
In Flanders fields.
Take up our quarrel with the foe:
To you from failing hands we throw
The torch; be yours to hold it high.
If ye break faith with us who die
We shall not sleep, though poppies grow
In Flanders fields.’
Life would change for the worse for the German people after the First World War ended.
During the Weimar Republic, liberal Jewish intellectuals campaigned for gun control legislation. They achieved the goal, guns were outlawed in Germany. After the Weimar Republic went kaput, the Austrian with a toothbrush mustache became chancellor. The liberal Jewish intellectuals learned the hard way the lesson of unintended consequences. Disarming a populace does wonders for those who wield power.
Liberal Jewish intellectuals got what they wished for, gun control. Soon after Mr. Hitler assumed the reins of power, the gun control legislation won by liberal Jewish intellectuals was turned against them. Not a wise move to have gun control laws, you will rue the day. Exhibit A is the proof in the pudding.
The industrialists, capitalists, took advantage of the plight of the German citizenry. Impoverished masses, the Treaty of Versailles made it all worse for Germany. Mr. Hitler led the Germans out of poverty and the economic miracle that happened was the hallmark of success, legendary. From 35 percent unemployment to more or less full employment in about two to three years. Time’s Man of the Year. Didn’t Adolf study the Indian Removal Act and base his plan for the Jewish people from an Act of Congress signed by President Andrew Jackson? Adolf just got carried away. I knew somebody else would possibly be culpable along with Hitler.
Hitler bought art masterpieces, gold, had it all. The most admired man on the face of the earth. What could go wrong? From a king to a jack, one-eyed, to boot. The bunker mentality has its drawbacks, some flaws, a particle of risk involved. Pride goeth before fall.
Got to have a scapegoat and an eight centimeter Star of David on your lapel made you a mark.
Four of Sigmund Freud’s sisters died in German concentration camps.
Anna got the ball rolling again for the family and studied with a crew of misfits, grown children with eye glasses who had a few thoughts about humans and their crazy hare-brained schemes.
Ruling the world is number one on the list of crazy hare-brained schemes.
From the Age of Reason to the Age of Insanity.
Far out
https://www.youtube.com/watch?v=Ts70b3MUJAo
I have little faith in the US political system, but wrt this observation “…in the 1970’s a single worker earned enough to raise a family. In the 1980’s/1990’s it took two incomes per household as wages stagnated as expenses increased.” – I have been pointing people to Elizabeth Warren’s talk entitled “The Coming Collapse of the Middle Class” since she was just a Harvard law prof. IMO, she nails it.
https://www.youtube.com/watch?v=akVL7QY0S8A
I grew up in the 40’s and 50’s, graduating high school in 1959. All of the comparisons of wages (single earning father) raising a family are bogus. In those days, families had more kids and they were a family asset after about age 12. Most had summer and part time jobs and contributed something. I worked and had to buy all of my own clothes and pay for all of my entertainment from 9th grade on. At age 12, a $2 baseball, a $5 bat, a $9 glove, and a $3 basketball was good for 4 years of recreational expense. No cell phones, no cars, no video games, no cable TV fees, no internet fees, no I-pods, no I-pads, no computers (pencil and paper). Graduating class was 240 and no “girls” had cars and maybe 20 guys did. Now, fewer kids, who mostly want all of the amenities, plus summer camps, baseball trips, soccer trips, – no work done and none expected. Due to the massive change in lifestyle, it now takes two people to support a family. And, look it up, but I am going to guess. Middle class average in 1959 – say 6-7 people living in a 1400 sq ft frame house with no air conditioning. Now, for 3 or 4 people, a 2100 sq ft brick house with granite counter tops and air conditioning, etc. It would take a 200 page book to track the day-to-day differences in living back then to now. And, for better or worse, most of the changes cost more money. Another simple one. Mother cooked breakfast, dinner and supper. We were solidly in the middle class, but maybe went out to eat once a year as a family. Sure, there were A&W drive ins, but there were NO fast food restaurants – No Pizza, no tacos, no McDonalds – well you get the picture. So, if I would have had half of what kids have today, my mother would have had to go to work. I would bet that Farmer Mac could confirm most of this and maybe a lot more since I was raised in a “city.”
I will confirm the above and I grew up in 1970s early 1980s. However, we were transitioning. For example our family bought an Atari video game console. When I was 5 we became a two car family. When I was 11 my parents put a small TV in their room. McDonald’s came to our small town in 1981. Most teenagers had a vehicle, although they were mostly beaters.
The kickers are the cost of higher education and healthcare.
My dad paid for his college in the early sixties by working construction in the summer. My parents saved a modest amount from my birth and paid the housing and tuition, I paid the rest from summer jobs. We have saved a fortune for kids from their birth who are going now and it still won’t cover the cost. I made $6 an hour in mid 1980s summer job, 40 hours a week. My oldest makes $8, as do his friends, most of whom can’t get more than 20 hours a week.
My first health insurance out of college, $300 premium for one year, $500 annual deductible. Paying over $10,000 with a high deductible is now the norm.
I won’ t go quite so far as Clueless in placing the blame on rising living standards for the rise of women working but he absolutely no question makes a rock solid case. The rise of the welfare state has a lot to do with it as well.When I say welfare state I mean the whole shooting match from my social security check and medicare to the bum down the street who has his kids on food stamps and free school lunches because he finds life more convenient that way.
I will add that back in those days ESPECIALLY in farm country but in town as well women did work that was as often as not worth just as much to the family living standard as the man of the house. They just didn’t get paid wages.Unless they had money from an inheritance or something or their husbands made lots of money just about all women in those days pulled their economic weight by doing dozens of jobs well that are no longer that important from making clothes at home to cooking from scratch. Farm women are still generally intimately involved in the actual work and pen and pencil or computerized management of farming- unless they are too busy to be bothered due to supporting their husbands farming habits working as teachers nurses lawyers real estate sales persons ad infinitum.
Not to involve myself in yet another Hitler discussion, which people on this site seem to find so fascinating, but Hitler wasn’t really elected. He never got more than 30% I think.
Hi Illambiquated,
Hitler was a pretty pivotal figure in World events in the 20th century. Generally he is used a representative for fascism as he is most well known. Just ignore comments referencing him if you prefer.
I don’t remember the history, but he was elected to the parliament, I guess he must have managed to come to power in a coalition and then convinced the legislature to give him extraordinary powers, I forget a lot of my European history (clearly).
Nobody seems to remember the history, but everyone seems to have an opinion anyway. And feel a urgent need to talk about it. It’s a very American passion.
Hi Ilambiquated,
I believe that there are many (such as Old Farmer Mac) who may know the history quite well. I can understand that Germans probably prefer not to mention Hitler. There are a few Canadians, Australians, and New Zealanders(?) who post here as well. So perhaps it is a non-German thing.
Hello TechGuy.
FWIW: I am reasonably sure that since the 2008 housing bust more than 25M already lost their homes.
Foreclosures actually started rising in 2006 (peaking in 2010).
The actual total number is a little hard to find. They always want to show monthly numbers, so getting a total is cumbersome. I found a graph of from RealtyTrac that showed annual numbers for the years 2006-2013. That total was 15,116,649. Separately, RealtyTrac had a 2014 summary. That total was 978,726.
So, if I did the math right, the total number of US foreclosures for 2006-2014 is:
16,095,375
(I just got curious. I was also expecting a higher number. But 16,095,375 is still pretty high)
Futilitist Wrote:
“So, if I did the math right, the total number of US foreclosures for 2006-2014 is: 16,095,375”
That would mean more than 25M people lost there homes. Most homes are occupied by at least 2 people. A lot of people also did short sales to avoid the “foreclosure” mark on their credit.
FWIW: I don’t think we are out of the woods. I’ve noticed that home prices have started falling again. I think the Oil boom/bust is going to take a toll in US home sales this spring. The only thing I found that might cause a turn-around is that Fannie Mae and Freedie Mac have lowered the downpayment to 3% of the purchase price (http://www.housingwire.com/articles/32268-fannie-rolls-out-3-down-payment-option-for-homebuyers).
Old Farmer Mac,
Yeah… what’s with all the doom and gloom. I got a much better imagination than Gail.
I think ALIENS will come down from the heavens and give us FREE ENERGY technology. So peak oil or owning precious metals will no longer be necessary..
Thus… Ron and I could go spend our time on more rewarding activities such as discussing FREE MONEY & FREE IQ’S for everyone.
Steve
Hi Steve,
I do believe things are headed to hell but not on a universal basis.
And I would suggest that you have a second and third identity well prepared and that you devote a ton of work to figuring out a way to hide your gold bug tracks from all the various crooks in the world as well as all the various spy agencies operated by Big Brother these days.
If you succeed you may be able to hold onto enough of your gold to swap some to me for beans and corn meal. Otherwise somebody is either going to rob you or the government is going to confiscate it.
My farm is going to be harder to steal than your gold given that it cannot be physically moved.I have neighbors who will bring me food while I hide in the woods sniping at anybody who manages to evict me so it will have to be murder as well as robbery. Of course the bad guys will not hesitate to kill. They seldom ever have except to lower the chances of a really thorough effort being made to catch them.
You sure as hell need to hide your gold – most of it – someplace well away from all your known haunts. Don’t forget there are data banks these days that retain just about everything including every address and telephone number you have ever used electronically or in the mail.Storage is getting so cheap that ten years from now some yahoo sheriff in Podunk is going to be able to run your vehicle vin and search his files to see if your vehicle ever passed thru his jurisdiction – if so when and which way it was pointed.
I trust that you ARE smart enough to have PHYSICAL possession of your personal gold.
IEA predicts 5% drop in Russian oil production by 2020, that is down 750 mbd from 2014 prediction. Article in French:
http://www.lefigaro.fr/conjoncture/2015/02/10/20002-20150210ARTFIG00002-petrole-la-russie-sera-le-grand-perdant.php?a1=DOL-3648099&a3=77-18515205&a4=DOL-3648099-77-18515205.
Sorry, the units are bad. I copied them from the article without thinking, should be kbd.
Hi all,
I have reposted a chart from a comment above because it was too small to read.
Hughes shale gas output estimate for 2040 is about half of 2013 US shale gas output. If Hughes estimate is correct (and I think it will be much closer than EIA estimates), my expectation is that natural gas prices will be considerably higher by 2040. For the US peak natural gas will be around 2016. Chart from page 299 of “Drilling Deeper” by David Hughes.
http://www.postcarbon.org/publications/drillingdeeper/
The peak rate is about 12 TCF per year, 2013 shale gas output from the seven plays in the chart above was approximately 88% of 11.9 TCF/year or 10.5 TCF/year, US natural gas output has increased about 1.5 TCF/year over the last 12 months, if we assume 100% of this increase (I don’t have the data to confirm this) came from the 7 shale gas plays analyzed by David Hughes, then we would have reached the peak predicted by Hughes in 2014, it is possible that Mr. Hughes underestimated the peak (or that my assumption that all of the output increase was from just the 7 shale gas plays is wrong), but Hughes peak date will probably be within a year of the correct date (2015 to 2017 for US natural gas).
Dennis,
I note from your graph, the max flow from shale was suppose to be 33bcfpd. So the US shale gas industry is currently past peak as according to the EIA they are producing 39 bcfpd.
http://www.eia.gov/naturalgas/weekly/img/ShaleGas-201412.xlsx
Oops! hit post by mistake.
The dynamic going on in the US Nat gas market is the Marcellus/Utica, is pipeline constrained. The gas price in the Marcellus is around $1 /mcf, and production is still rising. As pipelines are reversed, built and interconnects are put in place, this cheaper gas has displaced gas from higher priced regions.
When you see the Marcellus price beginning to increase with out strong production increases, then you can start to say the limits are being reached. But at this point a lot of higher priced gas will start to find a market.
As you feel the US will be running short on gas in the very short term. If the price of oil is high enough to encourage Nat gas to be widely used as a transport fuel, and the increased demand starts to force the price up, then it will the Nat gas fired power stations that will take the first hit, as their main competition is coal and renewables.
Hi Toolpush,
It is possible the natural gas power plants may be the first to reduce demand, but my main point was that the low natural gas prices will come to an end and may make the investments in natural gas trucks and ships less worthwhile in the long run, ships may make sense if bunker fuels get restricted by emission standards, but I think trucks will lose out to trains in the long run for long haul, for short haul, natural gas will compete with EV, but as natural gas prices rise, EV may win this battle, hard to say. In the very long run we need to wean society from fossil fuels, higher prices will help this to happen, but it will not be pretty.
Hi Toolpush,
If we match the 7 plays in David Hughes chart with the same 7 plays in the EIA data, in Dec 2014 we are at 32 BCF/d, so close to the peak, if Hughes estimate is correct and if the EIA data is correct. The Utica has been growing rapidly, and Marcellus and Eagle Ford are growing as well, if the non-Shale gas declines at a similar rate to 2013 we would expect about a 4 BCF/d increase in natural gas output for 2014, which is impressive. Note that many of the Shale gas plays showed rapid increases and then flattened out as the sweet spots got drilled up and the Red Queen effect took hold (Woodford, Barnett, Haynesville, and Fayetteville plays). Eventually all of these plays will flatten out and US natural gas output will peak when the increases in shale gas are equal to the decreases in non-shale gas(in 2013 the decrease was about 2.5 BCF/d).
It is amazing how much natural gas is being produced at very low prices, it is amazing that they continue to drill more wells.
Remember that EIA forecasts are usually pretty optimistic, but their data is pretty good.
Dennis,
Note that many of the Shale gas plays showed rapid increases and then flattened out as the sweet spots got drilled up and the Red Queen effect took hold (Woodford, Barnett, Haynesville, and Fayetteville plays)
You have to remember what was going on with price, for the above shale plays. They were brought on in an environment of high Nat gas price, similar to what has happened to the oil shale plays. Once the price dropped, these above mentioned plays went into survival mode as are the current oil plays, and production dropped as the rig count dropped and and the so called sweet spots were targeted.
The difference I see in the Gas to oil plays, is that the Marcellus/Utica has been able to increase production in this low priced environment, indicating they are different. I doubt that we will see the same in the oil plays, so I feel oil production will drop and balance the market and allow a price increase. Also the oil plays do not have the same transport issues as the gas play. Oil can always be loaded onto a truck, train or just carried away in buckets if you like.
So the Marcellus is different, it has many drilled wells waiting for local pipelines as well as large interstate pipelines to be built. The companies have been continually drilling at $2.50 mcf, local price, and do not seem to be cutting back at $1 mcf local price.
Once the increase takeaway capacity comes on line then we will have a much better idea on how sustainable this low price is, but remember the other areas that have been shut down due to price, will still be able to come back once the price has increased. To me this indicates the US has a fair way to go before hitting peak nat gas.
Of course in principal nat gas production will peak at some time, but I highly doubt that is going to be this decade as your attached report suggests.
Just as a counter I have attached a Morninstar report on what they found in their studies. It is hard to believe two in depth reports can come to such different conclusions.
I am not saying either report is 100% right or wrong, but the the fact that production has increased so much so fast, at such a low price, speaks to me much louder than any report.
http://marcelluscoalition.org/wp-content/uploads/2014/03/Morning-Star_EnergyObserverFebruary2014.pdf
To better understand the key drivers of the Marcellus, we tracked the performance of close to
6,000 wells across Pennsylvania and West Virginia dating back to 2009. Based on our analysis, two
character-istics—each somewhat unique to the Marcellus—emerged as likely factors in the
industry’s ongoing underestimation of this play: first, the significant improvement in median IP rates,
from less than 3 MMcf/d in late 2011 to 5 MMcf/d by mid-2013; second, the ability of these wells to
sustain their high rates for a period of several months beyond initial production. See Pages 6–11
I would suggest these wells have been choked back due to limited takeaway capacity!
Hey, Push, not only did that report say bout half the median wells produce close to 100% 24hr IP after 6 months, on page 7, it actually states that three counties – Greene, Susquehanna, and Wyoming produce 10%-30% MORE six months into production than first 24 hrs. Unfreakingbelievable!
Hi Toolpush,
I wonder if you have read the drilling deeper report.
http://www.postcarbon.org/wp-content/uploads/2014/10/Drilling-Deeper_PART-3-Shale-Gas.pdf
The two reports seem pretty consistent, Hughes also expects the Marcellus not to peak soon, he just thinks the falls in other shale plays will result in a peak by 2016. The Morningstar report does not go beyond 2015.
The main difference in the two forecasts for the Marcellus is that Morningstar expects the drilling rate to be higher than Hughes estimate. Hughes expects at most 1200 new wells per year to be completed from 2015 to 2040. The bear case for Morningstar predicts a rate of 1500 new wells per year for the first 6 months of the forecast and for the drilling rate to decrease to 1350 new wells per year by the last 6 months of 2015. Take a look at figure 3-98 on page 279 of the Drilling Deeper report, the peak for the Marcellus is expected in 2018 or 2019 at about 14 BCF/d. That level is similar to the bear case in 2015 and is due to the different drilling rates assumed. Note that the drilling rate was about 1300 wells per year in 2013, but dropped to about 1100 in mid 2014, so Hughes assumed rate may be more realistic at low price levels.
Overall the drilling Deeper report goes into far more detail than the Morningstar report. Another important difference is that the author of the Morniningstar report is a financial analyst, David Hughes is a geologist with a lot of experience in the Canadian Geological Survey. I will take the geologist’s analysis every time.
Dennis,
All I can say is if the US shale gas plays peak in the next one to two years, there going to be a lot of red faces as 6 bcf/d of LNG plants are due to come on line during that time, all with long term take or pay contracts. This does not count the numerous ammonia plants, gas fired electrical plants or the conversion of the North East house heating from oil to gas.
Massive changes are taking place in the pipeline network, reversing pretty much every pipeline running through the Marcellus region. Pushing gas back to Texas, Louisiana, Canada, and the Rocky Mountains. All these moves are predicated on the shale gas producers, coming up with the goods.
If you are correct and the shale gas suppliers fail to deliver on these long term commitments, in just the first few years, then the feathers will really be flying.
You may be correct in the longer term, and shale gas may have bitten off too much to chew and may struggle later on in their delivery, but in the short term, no way. There is enough inventory in uncompleted wells to keep them going for the time period you are talking about, and now there is plenty of rigs to drill any extra wells, just sitting back at base camp looking for a job.
Hi Toolpush,
It seems everyone is buying the hype, as natural gas prices rise when pipeline capacity becomes available it is possible that drilling rates will increase which would change the shape of the production curve for the Marcellus, it would have a higher narrower peak and a steeper decline.
The resource is limited, the sweet spots will get drilled up, output per well will fall once that has occurred and no amount of drilling will be able to keep output flat once ne well EUR starts to decrease. Surely you have seen this before, it has happened in every oil and gas field found so far, I do not expect the Marcellus will be different.
Dennis,
I am not arguing the concept, of production up, peak decline. Yes it will happen with all extraction resources. I am just disputing the timing.
Oil can be produced and shipped relatively easily. Transport, trucks and trains can be brought into service quickly, which has encouraged the gold rush mentality of the current shale oil plays.
Gas on the other hand requires pipeline and other long term investment, with take or pay contracts. That puts the onus onto the producer to provide. These people are on the hook for quite awhile, with huge liabilities if they can not provide. I can not believe they will be that far out.
By your timetable, we will not have to wait long to find out.
Hi Toolpush,
I think they believe there own hype.
My guess is that a lot of the LNG plans, will remain plans. The analysis for the US is David Hughes analysis, did you read it and find it lacking? I did read it in full and it looked pretty solid to me. Supposedly there is another study from the University of Texas which I have not read, which has similar findings to Hughes analysis.
Dennis,
If you are still around. I did read through the report, but I do not consider myself qualified to pick flaws in it. That is why I posted the Morning star, just a s counter, and not passing judgement.
The 6bcf of gas for LNG, is not in the planning stage. That is the capacity that is currently under construction. There are plans for pie in the sky numbers, but the 6bcf is committed and someone is going to have to pay, if the gas is not available. I can not believe the industry will be that in such a short of time frame as you suggest.
Longer term maybe, in the next year or two, would be unbelievable, especially when a the current and future prices are so low for Nat gas, indicating over supply not under supply.
For most of us who’ve been closely following PO for a decade or more, things have played out a bit more slowly than anticipated. But if NG peaks within a year of oil, the pace of events may pick up a bit. Interesting times, indeed.
Some gas data that I posted previously:
Some interesting EIA annual Louisiana natural gas data, through 2013:
2012 to 2013 annual rates of change:
Overall Dry Gas Production: -21.0%/year
Gross Withdrawals From Three Sources of Gas:
(Non-shale) Gas Well Production: +6.5%year
Associated Gas Production: +4.9%/year
Shale Gas Production: -32.8%/year
Data: http://www.eia.gov/dnav/ng/ng_prod_sum_dcu_sla_a.htm
It seems to me that this is an interesting case history of a reduction in overall drilling in a shale play, the Haynesville Shale Play in this case, while they presumably focused on the “sweet spots.” Note that these rates of change are all net changes, after new wells were added. The gross underlying decline rate from existing shale wells in 2012 would of course be higher.
Citi Research puts the underlying gross decline rate in existing gas production in the US at about 24%/year. At a 24%/year gross decline rate, in order to just maintain existing US gas production for four years, the US would have to put on line the productive equivalent of about 100% of current gas production over the next four years. In round numbers, a 24%/year gross underlying decline rate requires that the US put on line roughly the current gas production from the Marcellus Play, every year, just to maintain current production.
Of course, at a 24%/year decline rate, existing production would be down to 38% of the current level in four years, since we would be declining against a declining volume (and the decline rate from existing wells would probably fall with time too), but I am stipulating a “What if” steady state production scenario.
Incidentally, note that Louisiana shale gas production was increasing at 55%/year from 2009 to 2012.
At the 2009 to 2012 rate of increase in Louisiana’s shale gas production, Louisiana’s shale gas production would have met 100% of US natural gas demand by the end of 2017.
At the 2009 to 2012 rate of increase, Louisiana’s shale gas production would have met 100% of global demand by the end of 2020.
Is CNN Money just making this crap up?
http://money.cnn.com/2015/02/09/investing/oil-prices-shale-opec-end/index.html?iid=TL_Popular
I have been following the peak oil narrative for the past couple years now and I feel it holds up quite well compared with the “oil independence” narrative, but it still confuses me how articles like this can be written???
Are they just in denial?
There have always been these sorts of articles, in 1999 “The Economist” had a cover story called “Drowning in Oil” where prices were expected to fall from $10/b to $5/b. It turns out that the bottom was around $10/b, this time the bottom (on a monthly basis) will be around $48/b for WTI, Morse is wrong.
Oh, a monthly basis now, is it.
Hi Watcher,
Yes it is monthly because it is easier to scan the monthly EIA data, I really don’t think the daily or minute by minute price gyrations are of much interest. On a daily basis, for futures contracts it is the current bottom about $45 and I doubt we will see a daily close for front month futures for WTI below $40 in 2015.
Would you like it by the nanosecond?
They are not in denial and they are not just making up crap. They really believe this crap. Truth is however neither OPEC nor shale oil has much of a future.
OPEC has lost its power. There is too much squabbling among members. They cannot agree on anything and those that have a different opinion refuse to yield on anything. A cartel is not a cartel unless they all agree to act in unison.
The one thing that sets apart the peak oil narrative is the hard data. The ‘ oil independence ‘ narrative just seems like is throwing around bold claims that just don’t hold up to the cold hard facts. That’s what does it for me.
One thing that I have pondered, however, is what drives the amount of oil a given nation is putting out? Are they actually driven by current demand or are they pumping all they have, like there is no tomorrow?
If its true they are pumping as much as they can, then we are absolutely at peak oil.
Cornucopians tend to make qualitative objections to quantitative arguments.
Pretty much. Numbers presented: 99082374129038470481247
Reply: What you wackos don’t consider is the innovation of humans and how they have always been able to solve problems with new technique.
(In the case of shale, the new technique is high yield paper)
π = 3.141592653589793238462… currently calculated to over 13.3 trillion digits
If we set aside for a moment the fact that the earth is actually an oblate spheroid and for practical purposes we idealize it as a perfect sphere we can then calculate it’s volume by the formula V = 4/3(πr^3) and even though π is an infinite irrational number, the sphere’s volume is pretty much set in stone and whether and we like it or not, it is a finite quantity.
Therefore, one would expect any rational individual, to grasp the simple concept, that if we want to continue to grow our economy based on an energy source that is a but an infinitesimally small fraction of the total volume of that sphere then at some point in time one must expect to encounter physical limits to our current civilization as we use up that resource, no?
Yet our fearless leaders, politicians, economists, corporate leaders, financial wizards, etc… etc… almost without exception, insist on beating the drums of never ending growth! Isn’t it time to loudly proclaim “The Emperor is Butt Naked!”?
This is actually the correct scale
Good luck with this!
Fred, you distress yourself unduly. It is so wonderful that we have the Biblical promise that God will provide our needs. Your duty is to be fruitful and to multiply, not to fret and distress yourself with mundane matters. Oil food, water will be there for you, providing you`ve been properly Baptized of course!
Your duty is to be fruitful and to multiply
Thanks, Doug, I think I’m going to quit going by my real name and start signing in under a new handle, I shall hereby be known as, drum roll please, Drosofila melanogaster >;-)
Hi Fred,
What is S and T at six o’clock? Probably having a senior moment but nothing comes to mind.
Now one or another redneck comedian has pointed out that modern day intellectual types are the only known examples of superbly adapted creatures that have voluntarily decided to choose extinction for their personal bloodlines.
Mother Nature doesn’t believe in BRAKES. Her philosophy is full speed ahead and damn the torpedoes. Overshoot will take care of any EXCESS success when it comes to breeding like rabbits on the part of tent dwelling sheep herding desert dwelling nomads. Assuming some other tribe doesn’t manage to kill them off fast enough that overshoot doesn’t come into play.
For what it is worth-I come from an Appalachian backwoods redneck Scots Irish community where the churches are about as thick as they are anyplace in America.
I have NO DOUBT that our local preachers are as ignorant as any priests ANYWHERE. They actually used to BRAG about their ignorance of everything except the contents of the KJB. They couldn’t possibly know any less and still be able to read and find their way home after church.
But the history of my own family is consistent with the history of the local community and so far as I can tell the entire membership of the Primitive ( yes that is the actual name ) Southern Baptist Church.
Grand parents had numerous siblings but fewer children than great grandparents. I have or had a round dozen aunts and uncles. But I had only four siblings and all the other aunts and uncles had families of four or less.
In my generation the birth rate continued to drop, The average number of children in my generation in the part of the family known to me is about one point eight or so. SO my generation has strayed so far from the Holy Word that we are joined up with the well educated atheist types in voluntarily extinguishing our own blood line.
The average birth rate among my known nieces is well under two per woman and that is among the women of the family that are now past child bearing age. The younger women are generally adamant that they will have NO MORE than two kids and so far are not averaging more than about one point four.Indications are that the birth rate will drop even further- this prediction being based on conversations with younger family members.
The preachers have a lot to say about extramarital sex but I have never personally heard one say anything negative about birth control which is seldom if ever mentioned from the pulpit.
And ya gotta admit that a taboo on extramarital sex is a hell of a useful adaptation when it comes to controlling the spread of venereal diseases-thus improving community health and reproductive fitness — although this taboo is honored about as often in the breach as in the observance. But every little bit helps.
I believe the same dramatic drop in birth rates is has also taken place in nominally Catholic Brazil as well as just about every nominally Catholic European country.
And as Woody Allen put it thank God sex is dirty or it would be so much less fun. 😉
I wish I weren’t so old. They tell me the girls are so liberated these days you don’t even have to chase them they will chase you if you are good looking. And I was – back in the dark ages.
A century from now the inventors of the birth control pill are going to get the recognition they so justly deserve.
Hi OFM,
S&T = Science and Technology… >;-)
That’s a lot of Hydrogen for cars, and residential fuel cells.
http://www.greentechmedia.com/articles/read/japans-big-bet-on-hydrogen
The article does not state there is a lot of hydrogen. In fact there is no *free hydrogen anywhere. Hydrogen, right now, is mostly created from natural gas. But when eventually it must all be created from water. That is an extremely expensive and an inefficient use of electricity.
And why on earth would there be “residential fuel cells”? It takes electricity to create hydrogen. Fuel cells simply create electricity to turn an electric motor. It would be far more economical just to use the electricity you have to power the motor rather than use the electricity to make hydrogen to make electricity to power the motor.
*By free, I mean hydrogen not bound to other molecules like water, methane or other petroleum polymers.
Hi Ron,
My comment “a lot of Hydrogen” was referring to Fred’s oil/water graphic.
I’ve never heard of residential fuel cells in the US, but apparently they are being deployed in Japan.
From the article:
However, another reading of the situation is that Toyota is responding to interest in the hydrogen economy in its home market. By December 2014, there were 100,000 residential hydrogen fuel cells already installed across Japan.
The nation is aiming for 5.3 million households, or roughly one in 10, to have fuel cells by 2030. Manufacturers such as Panasonic are leading the charge to release compact and cost-effective products for the residential market.
I believe one of the advantages of the residential fuel cell, is that in addition to providing electricity, it also provides heat for hot water, and home heating as well.
It’s interesting that Tesla/Solar City is pushing their battery for home use, whereas Toyota/Panasonic is pushing fuel cells for home use.
I have a friend in the HVAC business in the US midwest. He says the old home heating oil furnaces were very efficient, but they are being replaced mostly with electric heaters.
Fred,
Is the large water sphere all water, the smaller one fresh water, and the smallest one available (not in ice caps) ‘available fresh water’?
Hi Anton,
The original graphic is from the USG.
There are only two spheres of water depicted. The large one is all water available on earth and the smaller one is fresh water alone. The small blue dot I believe is just an artifact.
The big sphere of water has a diameter of 1385 km. In contrast to all the proven reserves of oil…
Proven global oil reserves 43 cubic miles of oil roughly 70 cubic kms
70 cubic Kms = 1.333 (3.14 x r^3)
52.5 = 3.14 x (r^3)
16.7 = r^3
r = 2.6 Km diameter = 5.2 Km
Which gives us that tiny little black dot inside the red circle. Our entire civilization wants to continue running on that!
Cheers!
Fred, glad to see you retain skill in arithmetic, which I do not.
Now, for the amusement of the multitude, calculate and compare the equivalent size of the ball of easily available solar/wind in the USA over the next half century.
My very good prof in grad school spent some serious time getting us up on quick order of magnitude estimates. A sphere was a cube of sides some convenient number slightly less than the diameter, etc.
So the problem- how many golf balls fit in the planet we are on- took a few seconds and was not that far off– well within a useful engineering estimate.
I have a grandson who can and does calculate the “correct” number almost as fast.
Hard to believe, but a fact.
Fred,
Thank you very much.
This is a powerful graphic.
I take it that ‘USG’ is the U.S. government?
Hi Anton,
It should have been USGS.
US Geological Survey.
Ron Wrote:
“They are not in denial and they are not just making up crap. They really believe this crap.”
Isn’t that the definition of denial, believing in something that does not exist? FWIW: I am sure you’re aware, but most humans don’t want to except a future of hardship. Its far easier to deny problems than address them head on.
Yes, I believe they really believe this crap, and that they are making it up. The majority of humans always see rozy long term terms using short term data. Nassim Taleb wrote a book titled “Fooled by Randomness” about how human trick themselves into believeing trends that don’t really exist.
Imagine the system described here:
http://www.bbc.com/future/story/20150209-the-network-that-runs-the-world
functioning without oil.
Considering this for awhile reveals something of the nature of our predicament.
Or am I totally mistaken?
Beyond that, just enjoy the read for the read. This is a description of the backbone of modern life that you don’t often see or understand. It’s remarkable and noteworthy for that reason alone.
Those are some bad boys spinning those props under the water line. I think I did a calculation some time ago indicating a battery of mass equivalent to total payload of the ship (no containers allowed aboard, all battery) powering the same horsepower engines would drain in about 3.3 seconds and move the ship 2 inches.
I’m guessing sail powered cargo ships will be making a comeback in the not so distant future, eh?
Actually, I did a little thinking on what a modern sail cargo ship would do, and it looked to me to be entirely good enough, and I am sort of surprised they aren’t being used right now to get those teddy bears to here from China.
Yes, I know about those kite ships. Sounds like fun for sure. To me, that idea sounds like a really good one, given enough work to get it right.
Well, there are a few very modest attempts worldwide and I have a hunch that we will see a rebirth of cargo sailing ships in the not too distant future.
http://news.nationalgeographic.com/news/2013/11/131101-shipping-freight-sailboats-green-transportation/
Do you mean something like this?
http://hhpinsight.com/marine/2015/01/vindskip-would-be-lng-and-wind-powered/
You could call this motor sailing!
In actuality ship designers talk trash about eventually just hanging a couple of big outboards on giant ships given that the horsepower needed to propel them drops of exponentially as the displacement of the ship increases.
I can see no reason we cannot have a coal based and gas based economy for a few decades or maybe even a century so long as the supply of oil doesn’t drop off TOO FAST.
It takes time to adapt. The thing that scares me most about peak oil is that we are getting started too late and won’t have time when the shit hits the fan.
If we manage a transition to coal and gas then we will also probably manage a transition to renewables as well. This will result in a ” new normal” involving much much lower energy consumption per capita and a much smaller population but life will probably be pretty good for a billion people a century from now barring nasty bad luck.
Hi Old Farmer Mac,
I have said this in several places and possibly you choose to ignore it.
Coal and natural gas are also going to peak, coal around 2020, natural gas probably around 2025, transitioning from oil to coal or natural gas would be a good plan if they were not limited as well. World Coal Model with BP coal data in Mtoe (millions of tonnes of oil equivalent) below.
For Natural Gas the model is below URR=16,500 TCF or 410 Gtoe, peak in 2037 with very optimistic extraction rate assumptions (rising from 5% in 2013 to 14% in 2080, with 8.4% in 2037). At some point I will re-do this with more reasonable extraction rates, but for now we will call this scenario optimistic, a peak closer to 2030 would be more realistic.
Dennis, you are doing really good work. And as I mentioned, once we put these curves into a carbon cycle we have a peak CO2 atmospheric concentration way below the IPCC “business as usual” projections. This means the end of fossil fuels is a more critical problem than global warming. The two themes are synergistic.
This means the end of fossil fuels is a more critical problem than global warming. The two themes are synergistic.
The end of fossil fuels is an easier problem to point to, although we currently still have a lot of people who believe those will never run out as long as we have no regulations monitoring their extraction and use.
The ones who think we will never run out are wrong. So is the IPCC when it uses oil production peaking at 175 mmbopd in 2075. I don’t think much of the iPCC process, and a lot of my thinking is due to my observation of their “business as usual” oil production forecast. When I consider the sum total of what I know the end of oil is a much more serious problem. Overpopulation ranks second.
Hi Fernando,
I think all three are equally important and also agree that there are synergies amongst the three problems of climate change, peak fossil fuels, and overpopulation.
I also agree that many of the IPPC scenarios assume more fossil fuels than are likely to be recovered based on scenarios by those who do not believe in resource constraints. Not everyone agrees on the ultimately recoverable resources of oil, natural gas, and coal. So the IPCC devises scenarios that will please the cornucopians by having ridiculously large amounts of available carbon to show that if the cornucopians are correct, we better do something about limiting carbon emissions. Even with the more realistic URRs that I use, there will still be problems if the estimate for ECS of most climate scientists (around 3C for a doubling of CO2) is correct.
Hi Fernando,
Even if these scenarios are correct (they might be too low), it would lead to atmospheric CO2 of close to 2 times the preindustrial level of 280 ppm of CO2. If the best guess of the climate scientists is correct (which I understand you think is wrong) that would lead to 3 C of warming above the pre-industrial average temperature from 8000 BC to 1750 AD. My guess is that you have never studied ecology and possibly very little biology. When scientists suggest a rapid increase in temperatures over 300 years is a problem for ecological systems to adapt to I believe that they are correct. Both peak fossil fuels and climate change are important problems and there are solutions which tackle both problems at once (or attempt to do so). I would suggest it would be best to focus on solutions which address both problems (wind, solar, hydro, geothermal, and nuclear).
Dennis, the 3 degrees being a “best guess” is questionable. I also need to see much more serious work regarding impact. Other than sea level rise I don’t see such a big problem. We get a lot of bs about impact. But it’s mostly an anal extraction estimate.
how about ocean acidification?
Ez, ocean ph changes are a concern, but I don’t think the impact is as bad as the sea level rise. Today’s CO2 is 400 ppm, and I expect a peak at 630 ppm. At the same time temperature should rise about 1 degree C over today’s value. At that point the Arctic should have a much higher tempeature anomaly, and the Antarctic will have a lower temperature anomaly. The Arctic will absorb less CO2. And the Antarctic and southern ocean waters should absorb more (this means the highest ph will be seen around Antarctica). Overall one can’t design a better system to deflect the ocean ph problem. And we also have to research ocean seeding to see if it works.
hmm, I am concerned about how this is playing out biologically.
anyway, this site might interest you…
http://www.pmel.noaa.gov/co2/
Hi Fernando,
Your estimates of temperature rise are based on a very low climate sensitivity. Should we build bridges with a factor of safety of 0.33 and research hover craft?
Hi Fernando,
At a 3C Equilibrium Climate Sensitivity (ECS) a 630 ppm atmospheric CO2 results in 3.5C warming above the 8000 BC to 1750 AD average temperature.
When ecologists say 2C above pre-industrial is the “safe” limit pre- industrial refers to Holocene temperatures before 1750 AD.
In 2014 we are already 1.2C above the pre-industrial (Holocene before 1750AD) average temperature, so even 1C above current temperatures is above the safe limit (but barely). What is the ECS that you are assuming? Are you confusing the transient climate response (TCR) with the ECS. It will take some time for the oceans to warm and water vapor levels to rise in response which will cause temperatures to rise even after atmospheric CO2 levels have stabilized. The data suggests that the TCR is around 2C which corresponds with an ECS of around 3C.
Hi Fernando,
Then read. Am I correct that you have never studied ecology? How many university level courses in biological sciences? I am not convinced you are qualified to judge which work on ecological impacts is worth reading. Read work in peer reviewed journals, not Der Spiegel, to get serious analysis.
Sailing is a low energy transport mode. It has provided for more than 2000 years, and will for ever be providing in the more than foreseeable future, societies with goods from somewhere else. Bottleneck might turn out to be the infrastructure on inland waterways. Nowadays locks and bridges are designed to be operated with highly concentrated energy. Once that concentrated energy is no longer available, these structures block the waterways.
For those who know nothing of sailing, be aware optimal wind direction is from the side, not from behind. A sailing vessel with wind behind it of 8 knots will accelerate to about 4 knots and that will be as fast as it can go. It’s all about “apparent wind”. Wind from the side and slightly bow-ward is somewhat optimal. Apparent wind in that instance is faster than the windspeed and well designed vessels can actually go faster than the wind.
But this is not the stuff food transport is made of.
But this is not the stuff food transport is made of.
Actually it is exactly the stuff food transport is made of! Check out the link I provided.
A LOT faster than the wind.
And it can go any direction regardless of wind direction. How? Simple- wrap the kite cable around a shaft driving a generator, send generator power down to a motor- propeller driving the ship in the usual manner.
All that, with a small amount of storage, and a combustion engine boosting the kite power as needed, and now you got a ship plenty capable of toting all that crap from China to store in your garage forever after.
I believe Wimbi is right about kite sails. It will take a while for them to be perfected and then to be put into large scale production but the oceans are wide open spaces and the technology is now basically one hundred percent off the shelf even though a lot of the components – maybe half of them for a wild ass guess will have to be purpose built.
A wide open ocean means no permits of any sort are needed to utilize wind power. And the winds are highly predictable at least in certain areas especially at higher altitudes so the equipment will have a high capacity factor once far enough from the coast to avoid low flying aircraft collisions and that sort of thing.
I don’t do believe.
There is not much understanding of Grashof, Bernoulli or parasitic drag here.
Ballpark. 40 newtons/meter^2 of muscle at 11 knots of wind.
1 horsepower = 746 newton-meters/sec.
Those bad boys have over 100,000 horsepower in them.
Figure out your surface area reqd. Have a nice day.
Tell it to Maersk- and Magellan
Yes they have huge engines. But they use huge engines mostly so they can go fast.
But with the exceptions of fresh produce type foods and flowers etc hardly any of the stuff shipped across oceans is PERISHABLE. It will hardly matter to the consumer if his new phone is six weeks in ocean transit rather than six days. The delay might add a penny or a dime to the price of the phone at retail. .
A forty thousand dollar car will probably cost a hundred dollars or so more due to the extra time involved in shipping it by slow boat. Interest on the money.
I don’t think ships will RELY on sails anytime soon but rather use them to minimize the cost of fuel within the next couple of decades – unless it turns out that fuel remains cheap. I expect fuel prices to rise sharply which would be the only real justification for adding sail power.
However much you add is that much less fuel burnt.
We can bring out all the charts and graphs we want, but I think Art Berman summed it up nicely. With the proven and probable reserves (over-optimistic) we have about 8 years of shale gas remaining at current rates of consumption.
steve
Ah, Greece. Attacking the core of the entire system.
“The ECB announced two weeks ago that they were going to create Euros from nothing in an amount of 1 Trillion Euros over about 18 months. How can it be moral to demand that Greece inflict extreme pain on its citizens to repay something created from nothing?”
No one really wants to think about that.
Greece is a pimple on the EU’s ass.
Total greek debt is about 400bn. Total EU GDP is about 14,000bn (14 trillion). Even if half of that debt, accumulated over years and years has to be written down to zero (so that would be 200bn) it would be a 200/14,000= 1.4% hit to GDP. If that size hiccup is problematic something else is going on.
The numbers indicate that it would not be that big of a deal (though certainly not fun) so then why are the responses to dramatic?
Rgds
WP
And note that the 400bn is total debt, not government or external debt. a good part of that is owed to itself.
rgds
WP
Then paying (paying, not lending to) Greece not to make noise should be no problem.
http://headlines.ransquawk.com/headlines/sources-say-exxon-is-to-postpone-colombian-shale-projects-after-fall-in-crude-prices-10-02-2015
Another good article about what we may be facing in the future:
http://www.slate.com/articles/health_and_science/science/2015/02/nrc_geoengineering_report_climate_hacking_is_dangerous_and_barking_mad.html
I must admit, with respect to geo-engineering the climate, I never thought of some of these issues. Geo-engineering become rather like problem of maintaining nuclear reactors for millennia to avoid catastrophe. That is a commitment that this species cannot make. If we start down that road and fail in the commitment, we burn.
I support geoengineering research. Don’t forget we will be running out of fossil fuels. My climate model runs project we only need a 100 year life span for geoengineering to cool things down. After that, in about 1000 years we need to reverse the process and try to warm up the planet.
Hi Fernando,
The CO2 stays in the atmosphere for a long time, I thing geoengineering is a bad idea, too many potential unforeseen consequences. Once we get the atmosphere up to 450 ppm, it will take 5000 years for it to naturally fall back to 280 ppm, the ice age cycles were on the order of 50,000 years, so we will have some time to figure things out, we may need to move south or get some solar panels to keep warm.
We don’t have to have 280 ppm CO2. That’s just a number. I think 450 ppm is really nice. Canadians and Russians will like it.
Hi Fernando,
The 450 ppm leads to about 2C of warming if the climate sensitivity estimate of 3C is correct, a lot of people think the uncertainty should make us a little more conservative and attempt to keep CO2 levels from rising any more (or as little as possible). If we burn all the fossil fuels we will not be at 450 ppm.
“NAS support for geoengineering research creates a political space that could lead multinational oil companies and their governments off the hook. Precisely at the moment when climate denial is losing steam, it’s crucial to prevent it from being replaced with unicorn-like fantasies of magical technologies that allow the status quo to continue.”
http://www.commondreams.org/views/2015/02/10/plan-b-what-happened-plan
Yeah, Common dreams is a really good site for kumbaya and commie type essays. I used to post there for a while, but they snuffed my ID because I pointed out the democrats backed the Iraq invasion. It’s inbred, they censor anything outside their goofy world.
Common Dreams is not a Dim site.
Liberal Dim’s are the worse.
Radicals are a thorn in the side of our one party state.
Our climate has changed time and again throughout human history and prehistory and will continue changing no matter whatever humans do. Anyone who plans to stubbornly stand on the same coastal location for centuries might notice a change. However all REAL people will go on developing and redeveloping our coastal regions to take advantage of changing shorelines and shifting land — JUST as we have throughout the history of human coastal habitation.
So there’s no need to pour more of my hard-earned money confiscated through taxes to some “geoengineering” fraud to counter human-caused global warming, the granddaddy of all these taxpayer funded frauds. If the earth’s climate were so incredibly fragile that human activity could ever upset it, then our planet’s history of volcanism, collisions with extraterrestrial objects, and solar and magnetic variations would long ago have left this place uninhabitable.
It HAS been uninhabitable for most of geological time and even in recent geological time most of the Earth has been uninhabitable for various periods.
The truth is that world wide climate IS wildly variable over extended periods of time precisely because minor variations in certain conditions produce major changes in climate.
Like it or not the concentration of CO2 is one of these variable conditions and we are burning enough fossil fuels to booger the finely adjusted climate – which JUST HAPPENS to be highly suitable for is as it is NOW.The odds of messing randomly with the adjustments of any complicated machine making it run better are a million to one against. But the odds that changing adjustments randomly will make a well adjusted machine run WORSE are very high indeed .
Anybody who doesn’t get the green house effect warming the Earth is either ignorant of the elementary science involved or has simply made up his mind that climate science is a plot on the part of liberal democrats in collusion with crooked scientists to rob poor hard working conservatives of their hard earned money.
I am incidentally a very conservative person but the cold hard fact is that the conservative leadership we have these days is rotten to the core and more than willing to lie like hell about any issue that will keep an ignorant but honest hard working person voting republican.
Tell ya what. Ask your physician what he or she thinks about air pollution and your health or cigarettes and your health. You may be old enough to remember than the republican establishment stood with the tobacco companies when the evidence of the link between smoking and cancer was BEYOND DISPUTE. Ask any young relative who is studying engineering or math or biology or just about any field of science what he or she believes.
I am afraid you have identified yourself as belonging to the latter camp. You will not find an audience here since the people who hang out in this forum are invariably well educated. We understand the science and we know global warming is not a leftie plot.
If YOU were well educated in the basic physical sciences you would change your tune.
Irony alert! Comparing CO2 to tobacco or smoking is sophistry of the basest sort. CO2 is essential for life on earth. The biosphere has always been starving for more of it and now that it is on the increase, is responding very favorably.
Also sounds like you have been consuming too much of the deeply liberal biased mainstream media: The world stopped warming 17 years ago. And the CO2 phobic Chicken Littles started wetting their panties at 350 PPM. We are now at 400 PPM with no problems whatsoever. If the global warming hucksters haven’t yet figured out that their game is all over, they are going to be in for a rude awakening when some of the top tier Republican presidential candidates like Scott Walker, Rick Santorum, Mike Pence, Mike Huckabee, Ted Cruz, Rand Paul, Rick Perry, Bobby Jindal, Peter King, and Marco Rubio start filing multiple lawsuits against the junk global warming science.
And you wondered why Republicans defund education
Nah, this guy is either a paid shill or a troll, the only thing I can’t quite figure out is who he thinks his audience is on this site.
CO2 is essential for life on earth
Yeah, and so is water but if you get too much of it, you can fucking drown in it!
Probably one of those times for Ron to implement one of his “ban, bar and preclude” moves. Parker sounds a lot like computer generated feedback noise.
However all REAL people will go on developing and redeveloping our coastal regions to take advantage of changing shorelines and shifting land
REAL people was an interesting touch, don’t you think?
I hate having to bail out REAL people whose property gets messed up by hurricanes and floods.
I know it sounds too simple to be true but so help me sky daddy there are a lot of people out there who actually believe this sort of stuff. They know just enough odd cherry picked facts about environmental science to be dangerous. This one may be entirely serious.
He is in over his head when he says that any serious republican candidate for president is going to file a lawsuit accusing the scienctific establishment of fraud.
A couple of them may actually take Christian dogma seriously but generally they are just paying lip service to keep the Christian voting bloc on board in order to get traction in the primaries.
Of course nobody ever says much about this sort of thing when a Democratic candidate totes around a KJB or a black politician describes himself as a pastor.
Tricky Dick explained it very well. A republican runs as hard to the right as he can to get nominated and then back as hard as he can to the center to get elected. A democrat runs to the left to get nominated and to the center to get elected. This is broad brush painting but in is also basic political wisdom in terms of American politics.
Even if there is a republican candidate dumb enough to file such a lawsuit the party itself is smart enough to either block the candidate or find a way to disown him.
The republicans ARE cynical enough to use fear and doubt to protect their bau cronies but they AREN’T dumb enough as a rule to actually take their anti environmental rhetoric to court. There is too big a chance of coming out looking like a fool when a dead serious judge starts asking questions .
And for what it is worth- I never hear any democrats bitching about people like Warren Buffet just maybe perhaps possibly knowing that his support of the democrats is helping ensure that his railroad stays busy as a cow tail in fly time raking in money hand over fist for him hauling oil. Is anybody here cynical enough to wonder if blocking the Keystone has something to do with the possibility that certain rich railroaders want it blocked?
LISTEN UP FOLKS.
The behavior of the naked ape individually or collectively has a hell of a lot less to do with facts and brains than it does with tribal loyalties.
One very unfortunate consequence of this fact is that the political left wing in this country happens to be be advocating cultural changes at this time that really piss of cultural conservatives and businessmen with a huge stake in bau while at the SAME time taking the lead on environmental matters.
So- The people on the right being naked apes just naturally and correctly see the people on the left as deadly enemies of their culture – of their values and morals. They additionally see the left in many cases correctly as a threat to their economic security and prospects.
So – being as we are ALL apes we just look at each other as idiots con men and enemies or a mixture of the three.
The FACTS that the democrats/ liberals are mostly right about environmental science and the republicans are often ( but by no means always ) wrong on environmental issues is totally irrelevant to how the right winger reacts. He has MADE UP his mind that the opposition is the enemy and therefore he suspects any and everything the enemy says to be either a lie or at least slanted and twisted to suit the enemy’s agenda.
If proof is needed consider the general tone of comments directed at Fernando’s well supported arguments concerning the costs of renewables. He is not telling us we are going to be burning fossil fuels forever. He tells us he does not have the answers. Advice from such a person should be weighed very carefully indeed as it can prevent megabucks being wasted on schemes that are poorly planned and executed.
But a lot of us seem to think he is an enemy and a mouth piece for bau because he points out just how expensive renewables are at this time. SO ___considering that the regulars in a forum such as this one are a self selected group of critical thinkers ……. I rest my case.
This works both ways of course.
But as a matter of fact right wingers are generally not anti science and are generally not any more ignorant of science that left wingers- with the exception of ENVIRONMENTAL science.
If environmental politics could be separated from liberal social politics we would not have a tenth of the problems we do addressing such issues as climate and resource shortages.
Unfortunately I don’t have a clue as to how this separation could be managed.
But a lot of us seem to think he is an enemy and a mouth piece for bau because he points out just how expensive renewables are at this time.
My main objection to some of what he says is that the issues he cites aren’t really issues.
1. Problems with the grid.
Well, people are either going to avoid the grid altogether, or there are going to be more efforts to fix the grid.
2. Solar is only catching on because of subsidies.
No, solar is catching on because it can do things other energy sources cannot: It doesn’t need fuel hauled in. It doesn’t need to be on a grid to work. It can be very portable (even so small as to fit into a backpack to charge cellphones).
3. Solar is intermittent.
This is not a problem when solar is used in places already used to intermittent power, or if solar is used to to power appliances and other machines designed to work with intermittent power.
4. Solar can’t maintain life as people know it now.
So what? If it’s a choice between some power from solar and no power, I expect people will take whatever solar can provide.
The first thing we need to recognize is that we are talking generalities and that you are talking mostly future/long term while Fernando is talking mostly now /short to medium term.
ONE : A very few people and ONLY a very few are going to go off grid for the easily foreseeable future. Fernando recognizes peak fossil fuels and says he does not have good answers. He is not saying renewables are not part of the answer or that the grid will not be upgraded. He is saying it renewables are AT THIS TIME too expensive and that nobody APPEARS TO BE willing to pay for upgrading the grid NOW.I have not seen any comment on his part saying the grid WILL NOT be upgraded but rather that doing so is going to be VERY expensive.
I conclude that he may THINK it won’t happen due to the expense- at least not in a timely manner.
TWO In general terms solar IS catching on for the MOST part because of subsidies. Probably eighty or ninety percent of all the solar farms in existence would not exist except for subsidies.. Half or three quarters on the planning boards are probably only going to get built SOON if subsidized.
Fortunately this price of construction situation IS changing pretty fast.Folks like Fernando who are hard nosed about such things are needed to make sure that when a solar farm etc gets built it gets built in a place where there is plenty of sun and there is a LOCAL need for the juice at the time it comes out of the panels given that the grid is mostly not up to long distance transmission of intermittent juice.The very LAST thing we want is for somebody to build a humongous wind or solar farm that does not work as advertised with a big guaranteed loan and or subsidy. Solyndra will be forgotten but such a PHYSICAL object would be pictured on anti renewable websites day after day forever.
We are discussing things in a general conversational way in a forum such as this one rather than writing contracts. Cut Fernando a little slack. I have cut you some and recognized that the situation IS changing in respect to solar but the bulk of the evidence SHORT TERM or near term is in his favor. Long term you win.ALMOST for sure.
Three -Solar IS intermittent and this IS a HELL of a problem for somebody who actually is an engineer and has to do something about it NOW when ninety nine point nine nine nine percent of the people want cheap reliable juice NOW. TODAY. Somebody actually does have to pay for the backup capacity needed and the way things are working out right now there are some utilities in a hell of a jam since they are NOT getting paid enough to maintain profitable operations on this ESSENTIAL backup capacity.This is however a political and economic question rather than an engineering question.
I am sure just about any engineer will say that the only problem building and or maintaining sufficient back up fossil fuel fired capacity to support renewables is PAYING for it. I am not a REPUBLICAN or a NEO conservative but Margaret Thatcher did nail it dead center in the ten ring when she said the problem with socialism is that sooner or later you run out of other peoples money.
I run into the same thing when I drop in over at Resilience and the starry eyed folks are all talking about sustainable farming. They are conducting a useful conversation but insofar is ” sustainable farming ” becoming a REALITY within the next fifty years they have their heads so far up their asses they will never ever catch a glimpse of the sun. Sustainable farming is probably technically possible on a small scale – but it just ain’t gonna happen on the grand scale until after collapse because nobody is interested in giving up the urban and suburban lifestyle and going back to the land and digging in the dirt. Not over one person in a hundred thousand anyway. Just one point should suffice to make my argument- housing does not exist out in the farm country boonies for city dwelling wannabe farmers by the tens of millions.
Four. Fernando recommends that people do what they can to cut their energy consumption. He is simply telling you the hard truth about renewables not supporting business as usual.
He SAYS oil is going to keep on going up etc. He is telling you the TRUTH in that people are going to realize that renewables have been vastly oversold and that ( my conclusion) as a result we are going to be living thru some very very tough times.
AS a matter of fact I personally think we are headed into a massive die off mostly as the result of using (climate) and using up natures one time bounty of fossil fuels.Hopefully this country ( USA ) and a few others will pull thru skinnied down but more or less still whole.
One good thing about peak energy is that we will be getting a lot more exercise.;-)
Your points are good ones and I do not wish to dispute in absolute terms. But you cannot really dispute Fernando’s arguments especially if you are talking about present day realities that will have to be dealt with by present day people .
He is simply telling you the hard truth about renewables not supporting business as usual.
And it must be stressed that most solar supporters don’t expect solar to sustain business as usual.
Whenever anyone does have a conversation here about solar, Fernando talks about why it won’t work in countries where, it appears, it is working.
Perhaps we are talking about apples and oranges, but then let those of us who want to talk apples continue to talk apples rather than being told apples won’t work because oranges won’t work.
Discounting solar whenever solar is discussed, no matter what aspect of solar is discussed, seems to be anti-solar.
As I have pointed out, there are companies NOW that are planning to use a combination of energy sources to produce their own power — off the grid. Off the grid is being planned now, NOT down the road. This is important, because you are going to see the politics of energy production and distribution change rapidly as more Silicon Valley types head this way.
The new tech millionaires/billionaires want to do things their own way and will set up their own distributed energy schemes in order to avoid traditional utilities.
Here. I am going to post a link to this article again.
http://www.datacenterknowledge.com/archives/2014/04/16/expands-san-antonio-microsoft-sees-data-centers-transforming-power-grid/
And here is a new one. Companies with huge amounts of money do have it to invest in solar.
http://www.newsweek.com/apple-invests-850-million-solar-citing-climate-change-306191?piano_d=1
Here. Just one more. I don’t want to flood this forum with stuff on distributed energy. However, for those of you who want to pursue it further, there is a lot of stuff out there.
This is an article about a survey of US utility executives. You can see that they are aware of the changes coming and where there are opportunities for their companies.
http://grist.org/climate-energy/utility-bosses-see-change-coming-look-to-clean-and-distributed-energy/
People don’t live in the NOW, they live in the NEAR FUTURE. So when Fernando says something about solar NOW, he’s wasting his time.
He has gotta talk about solar in the near future. Boomer says, and gives lots of support to back it up, that people with big money are betting on solar in the NEAR FUTURE.
Makes total sense to me. Just look at cost trends for solar/wind vs oil over the last decade.
Fernando should get on solar with the same approach he makes on the oil stuff he knows about. There he talks about the near future and makes sense.
He and Watcher have said something like “show me a solar factory using nothing but solar to run it”
Bloody Nonsense. What new tech EVER started off in a factory run by nothing but itself?
When people say stuff like that, I say they lose credibility for good.–Unless they recant on bended knee before the entire Round Table.
To properly prepare for Peak Oil, we needed to start years ago. But we didn’t.
I’m sure people were saying back then that the economics didn’t justify looking at alternative energy concepts. Who needs to plan for a future without oil?
So now some of you are trying to say that solar isn’t practical now because it needs to be subsidized, or it is intermittent, or the poor can’t afford to buy it or less it, or it messes up the grid, and so on.
But then, when we run into a wall with fossil fuels, people will say, “It’s too late now. We should have done something sooner.”
Is anybody here cynical enough to wonder if blocking the Keystone has something to do with the possibility that certain rich railroaders want it blocked?
I just checked to see if there is any connection between Buffett and Keystone XL.
He has gone on record supporting the pipeline.
But he OWNS the railroad. 😉
LOTS of people say things they do not mean.
Who does he donate money to?
Is the party he donates to opposed to the pipeline?
Sure, it did occur to me that he could give lip service to the pipeline while in reality not supporting it.
Hi Old Farmer Mac,
I appreciate Fernando’s comments and by no means think he is a mouthpiece for BAU.
I don’t always agree with his views and he does not always agree with mine.
I try not to dwell too much on the liberal/conservative thing. I think a lot of liberal stuff is silly and some of the current stuff that passes for conservatism is off the wall. I think I prefer the old moderates from the Republican party and the moderates from the Democratic party as well. Give me George Mitchell or Bob Dole over almost any of the clowns that currently make up the US legislature.
And what if Hillary wins?
Then usa democracy will continue its slide as political dinasties with family connections cement their hold on power.
True, no matter who wins, as only a dynasty-owned candidate can win.
Jim
Cracker, I’m referring to actual dinasties. Consider the top candidates over the last 25 years. Clinton and Obama were new blood, but Bush, Romney, McCain, Gore, and now the third Bush and Hillary are family. It’s a bit too much.
Fernando, I understand, but I think the real dynasty is the oligarchy that owns the family. The family provides name recognition and support that helps the dynasty candidates get elected and re-elected. Hillary and Jeb Bush are current examples. Most long term politicians are members of the family.
Obama is new blood. His twice-elected presence is an indication of American disgust with the family, I perceive. However, his actions indicate to me that he is as much owned as the others.
The two US parties are different flavors of the same paragoric, owned by the dynasty. It’s a lot too much.
I don’t see any way for this to change without major disruptions. Maybe there is a silver lining in resource scarcity and overpopulation?
I propose the “one man many votes” constitutional amendment as a solution. The method allows the voter to punch for as many candidates as he or she wants to vote for.
Oops.
Sorry folks. I did not intend to give the trolls an opportunity to come along and pollute the discussion.
Notwithstanding that, in retrospect, I still believe that the article was worth posting about. It certainly does raise some interesting points to ponder with respect to our future.
Art Berman has a new essay looking at Eagle Ford and showing how EUR has passed it’s peak.
Story
That well pattern or layout he shows is really goofy. No wonder they do poorly.
Notice: I have changed the comment settings. Now any one who comments must give name and email address. Your email address will not appear in your comment but your name will or pseudo name will. You can still call yourself anything you like.
Thanks!
Jim
“Oil markets and their transformation”
Presentation by Rosneft’s CEO:
http://www.rosneft.com/attach/0/62/06/rosneft_presentation_eng_10022015.pdf
I don’t know what to make of the claim that widely dispersed energy generation would be really good insurance against sabotage or war. It sounds reasonable but my ignorance extends to grid security lol.
I do know that EMP might wipe us out and hope that our resident astronomy fan Doug will be able to answer this question:
Are astronomers able to get accurate enough readings on other nearby stars to make estimates – even really rough ones- on how often really powerful solar storms occur on average?
We have had only one really big one so for during the electrical age known IIRC as the Carrington Event and one event is not enough to establish any sort of baseline thinking about such matters. Maybe we have just been extremely lucky there have not been a couple more solar storms five times or ten times as powerful.Or maybe these very powerful solar storms are actually rare events and the odds of one big enough to wipe out the grid are one in a million any given year.
Newt Gingrich had a hand in writing a novel based on an EMP bomb being set off over this country. It is not very good- in the same class as cheap fast food – but it is based on a real possible scenario and anybody who likes doomer lit will probably enjoy it.
This article is worth reading. I think we should be taking security questions into account in deciding on renewables policies.
http://www.renewableenergyworld.com/rea/news/article/2015/02/former-ferc-chief-jon-wellinghoff-speaks-out-on-grid-security-and-distributed-generation?cmpid=SolarNL-Tuesday-February10-2015
We were almost hit by a Carrington-class event in July 2012. The sun was just facing away from Earth when it fired.
Ah yes, Carrington type super flares. Let me keep this brief. Nitrate rich layers from Greenland ice cores collected by various researchers provide evidence that events of this magnitude (high-energy proton radiation) occur about once every 500 years and a solar-terrestrial connection seemed well established. Unfortunately (or not?), recent work places this conclusion in doubt. Theres a lot of talk about similar but much more extreme cosmic ray events that may originate outside the solar system (outside the galaxy?) being responsible for these anomalies. In fact, Carbon-14 (and sometimes Berillium-10) is now considered to be the most reliable solar storm indicator but results are still controversial. Note that the Be-10 concentration actually varies inversely with solar activity but is useful because of its relatively long half-life. If anyone wants I can dig a bit deeper into this: My curiosity has been piqued!
It is 2% farmers, in the US, and probably a bit less now. I think shortly after the turn of the century (the 1900) it was 50% farmers, and 30 years prior to that closer to 70%. Just by memory
well shoot. that above on 2% farmers was supposed to be a much upthread comment, and I cannot delete it.
On topic, I am very curious, does the extra solar/galaxy source mean the carrington events from our sun are much less likely than thought?
And that would seem to be a heck of a lot of energy. Probably a good day to wear shades if we could get advance warning through some sort of warp signal
Yes, Sunscreen as well. “…does the extra solar/galaxy source mean the carrington events from our sun are much less likely than thought?” No idea. However, you’d sure want Extra Strength Sunblock for Gamma Ray protection, one inch of lead will work. And remember, extrasolar blasts are still in the “ideas stage” so for the time being just go with the one per 500 yrs extreme solar event. Actually, so much is being learned about the sun these days I’d bet major events soon become much more predictable than weird earth’s weather, if they aren’t already. Google: Chinese Giant Solar Telescope, COronal Solar Magnetism Observatory, and Solar Space Observatories.
Gamma Ray Bursters.
EMP is overrated.
FWIW: Large Solar flare that could cause a disaster on Earth happen somewhat frequently. The Sun gets bombarded by comets all the time, and when the comet impacts the sun it usually triggers a solar flare. The Sun magnetic field also gets twisted up about every 11 years. As the Suns magnetic fields distorts it bounds up magnetic fields that are prone to snapping like an over stretched rubber band. If I recall correctly there were several large CME events during this solar cycle that could have caused a carrington level event, but they were all re-directed away from the Earth.
That said there are two major reasons why Carrington type events are rare. 1. The Earth is a tiny target. Most of the time Flare are directed into space away from Earth. 2. The Polarity of the CME (Coronal Mass Ejection) matters. If the CME is sample polarity of as the Earth’s Magnetic field, its deflected. So even if the Earth is hit buy a solar flare, it may not cause a problem.
The Earth will typically have close to three days to prepare for a CME. If a badCME is detected., Utilities could shutdown the grid and put power plants and distribution transformers in safe mode to avoid them from being damaged. Although its probably not practical to protect the millions of pole transformers that provide end-users with electricity. Regions closes to the Earth’s poles are the most vulerable. In 1989 Canada electrical grid was partially damaged to a solar flare, but the US remained unaffected.
Mercenaries , the Nazi’s in Kiev need you:
http://www.theguardian.com/world/2015/feb/10/ukraine-draft-dodgers-jail-kiev-struggle-new-fighters
Here is a truck that should make the electric fans happy.
Only for very short haul though.
http://www.fleetsandfuels.com/fuels/hybrids/2014/08/volvo-prepares-e-mack-for-ports-project/
Volvo Group Preps e-Mack for
Pinnacle Truck with Smaller Engine for Catenary Trials
The Volvo Group is preparing a modified Mack Pinnacle tractor with a smaller diesel engine and a battery pack affording all-electric range of five to ten miles for the government-sponsored overhead catenary power truck project that’s gathering steam in Southern California.
Econbrowser Post: Sovereign debt scares– is the U.S. immune?
http://econbrowser.com/archives/2015/02/sovereign-debt-scares-is-the-u-s-immune
Very interesting comment by “JBH” follows:
My response to said comment:
Re: Rates of Depletion in CNE (Cumulative Net Exports of oil)
Export Land Model
I constructed a simple little mathematical model, to help me understand “Net Export Math,” that I called the Export Land Model (ELM). I stipulated that domestic oil consumption increased at 2.5%/year from 1990 to 2010. Production increased at 5.0%/year from 1990 to 2000, and then fell at 5.0%/year from 2000 to 2010. The ECI Ratio (ratio of production to consumption) was 2.0 in the year 2000.
The 2000 to 2007 rate of decline in the ECI Ratio for the ELM was 8.0%/year. This corresponded to a 43%/year rate of depletion in post-2000 CNE. In other words, from 2000 to 2007, the remaining volume of post-2000 CNE fell at a rate of 43%/year.
Key observation, based on ELM: Given a declining ECI Ratio, the rate of depletion in post-export peak CNE tends to exceed the rate of decline in the ECI Ratio.
Following is a chart showing normalized values for production, ECI Ratio, net exports and remaining post-2000 CNE, by year for the ELM:
http://i1095.photobucket.com/albums/i475/westexas/Slide1_zps53b4428b.jpg
Six Country Case History
The Six Country Case History consists of the major net oil exporters, excluding China, that hit or approached zero net oil exports from 1980 to 2010. Their combined net exports peaked in 1995.
The 1995 to 2002 rate of decline in the ECI Ratio for the Six Country Case History was 2.7%/year. This corresponded to a 26%/year rate of depletion in post-1995 CNE.
In other words, the Six Country Case History supports what the ELM predicted that we would see, to-wit, that the rate of depletion in post-export peak CNE exceeded the rate of decline in the ECI Ratio.
Following is a chart showing normalized values for production, ECI Ratio, net exports and remaining post-1995 CNE, by year for the Six Country Case History:
http://i1095.photobucket.com/albums/i475/westexas/Slide2_zps55d9efa7.jpg
Saudi Arabia
The 2005 to 2012 rate of decline in the ECI Ratio for the Saudi Arabia was 5.0%/year. This corresponded to a 6.6%/year rate of depletion in estimated post-2005 CNE (CNE estimate based on 2005 to 20012 rate of decline in the ECI Ratio).
Following is a chart showing normalized values for production, ECI Ratio, net exports and estimated remaining post-2005 CNE, by year for the Saudi Arabia:
http://i1095.photobucket.com/albums/i475/westexas/Slide21_zps74c9ebac.jpg
Top 33 Net Oil Exporters in 2005 (What I define as GNE, Global Net Exports of oil)
The 2005 to 2012 rate of decline in the ECI Ratio for the Top 33 was 2.0%/year. This corresponded to a 3.4%/year rate of depletion in estimated post-2005 CNE (CNE estimate based on 2005 to 20012 rate of decline in the ECI Ratio).
Following is a chart showing normalized values for production, ECI Ratio, net exports and estimated remaining post-2005 CNE, by year for the (2005) Top 33 net oil exporters:
http://i1095.photobucket.com/albums/i475/westexas/Slide3_zpse00789d2.jpg
Available Net Exports of oil (ANE)
ANE are defined as Global Net Exports of oil (GNE) less the Chindia region’s (China + India’s) net imports (CNI). ANE, the volume of GNE available to importers other than China and India, fell from 41 mbpd in 2005 to 35 mbpd in 2012. (ANE fell to 34 mbpd in 2013.)
The GNE/CNI Ratio is analogous to the ECI Ratio. The following chart shows 2002 to 2012 GNE/CNI data, with the extrapolation based on the 2005 to 2012 rate of decline in the ratio.
http://i1095.photobucket.com/albums/i475/westexas/Slide20_zps26112103.jpg
The 2005 to 2012 rate of decline in the GNE/CNI Ratio was 9.2%/year. This corresponded to a 11%/year rate of depletion in estimated post-2005 Available CNE (Available CNE estimate based on 2005 to 20012 rate of decline in the GNE/CNI Ratio).
In other words, my data suggest that from 2005 to 2012 we burned through the remaining cumulative volume of Global Net Exports of oil available to importers other than China & India at the rate of about 11%/year.
What is “Interesting” is the steady increase in global public debt, versus the observed rate of decline in the GNE/CNI Ratio and the rate of depletion in remaining estimated post-2005 Available CNE.
Following is a chart showing the GNE/CNI Ratio versus global public debt, from 2002 to 2012:
http://i1095.photobucket.com/albums/i475/westexas/Slide23_zps62b6932a.jpg
Greece can’t leave the Euro.
They HAVE to buy oil and no one will sell it for drachmas. Russia might sell it for drachmas plus other “valuable consideration”, but drachmas are not going to buy oil. Make no mistake here, Russia is an option, and one the EU fears. Greece becomes the natgas pipeline route, with transit fees, and the whole US/EU foray into Ukraine falls apart when natgas flow through that pipeline stops.
Syriza also faces what entices the western Ukraine lowlifes — the EU’s social welfare policies/net, and the right to unfettered travel / immigration (to get work). Syriza could not campaign on “leaving the EU” because that was a losing position. Their campaign was always “we will put the EU in a position where they have to forgive debt, because they need us more than we need them.”
This guy you’re quoting, Jeff, doesn’t understand some things. A “growing balance sheet” at a central bank doesn’t have to mean anything. The reason they can’t forgive debt is mostly political. The IMF made a lot of those loans (and have been silent all this year) and in their history they have never had a loan default. This would be a first and Christine would NOT like such a legacy. Merkel promised her electorate the loans could be repaid. She won’t like explaining they won’t be.
And he does have the Italy/Spain issue correct. Default precedents are dangerous things.
He didn’t mention swaps. No one ever does because they don’t understand. They are why looking at XXXX total and saying it’s a fraction of EU GDP is not a great position.
http://headlines.ransquawk.com/headlines/greek-finance-minister-says-that-greece-will-absolutely-not-leave-the-eurozone-11-02-2015
Hi Watcher,
Then all one does is buy dollars with drachmas and then buy oil, not really a problem. Or buy Euros, British pounds, I don’t really follow you.
Yes, I know.
I’ve been telling you this for some time. They can’t leave.
Furthermore, the ECB would be bonkers to throw the Greeks out, because that would make every euro country a potential target for speculators.. It would be much cheaper to bail them out.
Kinda like the Hotel California,
You can check out any time you like but you can never leave… (cue guitar solo).
Watcher Wrote:
“Greece can’t leave the Euro.”
Greece could easily leave the Euro. All Greece need to do is set itself up as a tax haven and institute constitutional law against bail-in and other shenanigans. Promote free market economics. Greece would have to put reverse capital controls to prevent the Dragma from soaring like the Swiss Frank.
If Greece announced this, the EU would beg Greece not to leave the Euro out of fear other EU members would follow.
The Greeks will exit, they will be poorer and tourism to Greece will be a lot cheaper. Other nations with crazy tendencies will take note.
If they don’t have anything to sell for drachmas then they don’t have anything to sell for Euros either. So if they have Euros then they must be charity Euros unless I am missing something.
I believe Fernando is right but if the Greeks do stay in then the debts will never be repaid. They will make a token interest payment until either hell freezes over or until the principle amounts have been for all real purposes wiped out by inflation.Either way the Greeks CANNOT so far as I can see pay up.
One thing that I have never been QUITE able to truly understand is why ANYBODY ever invests in long term low interest debt- other than that such debt is the best of all bad possible options. Very very few things actually ever get cheaper as time passes excepting certain classes of manufactured goods.
Just about anything that has paid no more than four or five percent during my lifetime has been a loser on average. You get back your principle with interest but you can buy less with the interest added than you could when you made the investment – on average- especially after taking taxes into account.
Greece’s external debt is pretty high, but not exorbitant.
Greece is a spectacularly beautiful country and tourism will always be a source of foreign money.
Another interesting point: Greece is the closest point in Europe to the Suez Canal. The EU has been spending masses of money in Southeastern Europe improving the infrastructure, hooking Greece up to the rest of Europe. And now the Chinese are investing very heavily in Piraeus, the port of Athens.
The Greeks have always been great shippers and now look like they will become Europe’s gateway to the the Indian ocean.
Few things get cheaper? Have we forgotten solar/wind?
I have decided to double my already copious supply of PV, since my existing system can easily stand it. Then I can “waste” electricity by pumping up all the heat things in the house instead of, for instance, having to fool around with that reluctant water heater in the wood stove when I am feeling lazy and would rather goof off writing this.
I was thinking about food shelter medical care education entertainment etc etc . All the things the typical person must purchase to live the bau lifestyle.
You are dead on about renewable energy of course.
No Solar Thermal Panels?
Obviously “JBH” is not an idiot.
I almost never read econbrowser anymore because they tend to be reactive in their analysis like most sites.
One of the things I like about Ron’s site is that a lot of postings are not reactionary to some new datapoint but actually try to be thoughtful and think ahead (with unknown accuracy of course) rather than go into discussions like “the right price for xx is yy”.
The short reply tot he post/quote is that the very nature of money is widely misunderstood, even, or perhaps especially, with those at the controls.
As I pointed out earlier the Greek problem isn’t a very big one by itself. What makes is problematic is that a) other countries like Portugal and Spain may get the same idea b) it undermines the notion of cohesion c) that a default would clarify the nature of money and monetary policy.
There is a disconnect between (a large part of the US) economy, which is doing relatively well, and what is going on in the monetary policy sphere. That disconnect has largely to do with lack of understanding, or the unwillingness to deal with, the nature of money rather than a specific course of (in)action.
Rgds
WP
Brian von Munchhausen is on a six month sabbatical and is training to be a storm chaser in Oklahoma and Kansas. He will dazzle us all when he reports his experiences of being swept up into the vortex of a F5 tornado.
It will give new meaning to the old adage ‘sow the wind, reap a whirlwind’.
He will then become a new contributor to The Onion and it will become the most read news source in America.
He will ascend to the office of presidency.
Later on, he will provide proof positive that he alone solved the grinding problem of Peak Oil.
Nothing to worry about, the future is promising.
A remake of ‘The Life of Brian’ is in the works.
Life is good.
Replying to Dennis from up-thread. Dennis wrote:
I think a severe depression is likely when fossil fuels peak.
No, absolutely nothing will happen when oil peaks. It will be at least a couple of years, likely more, before people realize oil has peaked. But even then nothing is likely to happen except a rise in oil prices. It will take the effects of a declining oil supply and the corresponding rise in oil prices to cause a recession. However that could all happen within a couple of years after the peak. And about other fossil fuels, they will peak at a time much later. What effect that has will depend on the state of the economy at that time, well after the peak and decline of oil.
global collapse as Ron Patterson describes it is not a high probability event in my view.
I think it is very obvious that the world cannot continue to support over 7 billion people for even one hundred more years even if oil or other fossil fuels do not peak and decline. I find it absolutely incredible that Dennis can so casually dismiss what is happening to the world. Dennis puts his faith and hopes on falling fertility rates. Good God, it is way, way too late for that to be any help. It will take at least two centuries to get the population down a significant amount. And even then it would still be way above the earth’s long term human carrying capacity.
Just spend a day browsing this site: Desdemona Despair, Blooging the End of the World
No, absolutely nothing will happen when oil peaks. It will be at least a couple of years, likely more, before people realize oil has peaked. But even then nothing is likely to happen except a rise in oil prices.
I can see this. Of course, the media won’t be able to write any more “energy independence” articles if oil production doesn’t keep increasing. On the other hand, we might have some folks, like those in Alaska, who will maintain it isn’t the lack of oil, but regulations, which is causing the peak. So addressing the real cause of oil production decline might be pushed out further until the companies themselves concede it isn’t there anymore or isn’t worth pursuing.
Now, in terms of global recession, I see that progressing even without regard to peak oil. I keep tossing out the theory that income inequality is already setting the stage for declining consumption. If most people in the world are facing declining incomes, consumption should go down. And even if there was a new discovery of oil or expansion of another energy source, if the rich decide not to hire people or share some of their income, these new energy sources won’t benefit those who have no way of getting it.
In other words, I think the global economy is increasingly favoring the very rich, and that has nothing to do with energy. The rich are mostly getting their wealth through financial means, and they can rig the system to keep wealth coming their way and keep it pretty much detached from industrial production, or job growth, or consumer spending. Their wealth seems less tied into economic fundamentals than it used to be. It’s a system that essentially says they are wealthy, and they are politically appealing to the masses to keep them in power by telling them it is the poor, or the left wing, or the environmentalists who are the cause of the decline of the middle class.
And I suppose as long as the masses don’t read, and they have a preconceived idea of who is the “enemy,” they are going to continue to prop up the wealthy at their own expense.
I think income inequality is “preparing” the world for peak oil, rather than peak oil causing the recession. Yes, I know that historically when the price of oil goes up, we get a recession. But now with the Fed financial tricks, and the corporate stock buybacks, and elimination of jobs through automation, I think the recession is due to more than oil prices. I don’t see what we have been going through as a typical business cycle.
I don’t see the current drop in oil prices doing much to jump start the world economy and keep it going. With income inequality, those economic boosts are going to a relatively small group of people in the world.
Hi Boomer,
I agree with a lot of what you say. The peaking of fossil fuels will lead to higher prices for fossil fuels even before the peak is actually understood, Ron is correct that is will take a few years before it is clear that oil, coal, and natural gas have peaked, but people may be more likely to believe that coal and natural gas can peak once the oil peak becomes clear(around 2020). By 2030 when natural gas is likely to peak, it will be pretty clear to the man on the street that something is amiss and by that point we may already be in the second Great Depression.
Lower oil prices will help the global economy. For the middle class and poor who spend most of their income and are unable to save much, lower gas prices leaves more money to spend on other things, they will do so and this tend to increase aggregate demand and gives the economy a boost. It will be very temporary because oil prices will go back up.
On income inequality, as things get bad, tax policy can change and loopholes can be closed that allow trusts to be set up to shield wealth from taxes and inheritance taxes and high tax rates on income above 500k and regular income tax rates on dividends and capital gains all can help reduce income inequality. I am talking about US tax code here which you may not be familiar with. Basically higher tax rates on the wealthy than at present in the US.
Hi Ron,
I meant the peak of all fossil fuels, not just oil. I have said repeatedly that transition will be very difficult, falling fertility rates will help, my crystal ball is not quite as focused as yours so I don’t know how quickly fertility rates might fall in the future, but a population peak in 2050 and changes in policies in response to economic crisis may lead to change that is very rapid.
Imagine a response to the coming crisis by all powerful nations along the lines of the US response to Pearl Harbor, where Leviathan goes into over gear to attempt to solve societal problems.
You say nothing can or will be done, I say perhaps you are wrong. We will have to just leave it at that.
I have never said that declining fertility rates will solve all problems, I believe that lower population will help to mitigate future problems. Perhaps you disagree, 100 years to reduce population from 8 Billion to 3 Billion (in 2150) and to under 1 billion by 2300, seems a step in the right direction.
Not a panacea, but it will help.
Hi Ron,
I agree that it is declining supply and high prices will cause the recession, to me that is implicit in peak oil and does not need to be spelled out.
How much later do you think the peak in coal and natural gas will be? Are you a pessimist about oil, but an optimist on coal and natural gas? Have you looked at Steve Mohr’s work?
I only have pointed this out because many people say, we will just use coal to liquids (CTL) or natural gas to liquids (GTL) when oil peaks, or we will use compressed natural gas or liquefied natural gas for trucks.
It seems the message is not out that all fossil fuels will peak by 2025, perhaps as early as 2020. Chart below for all fossil fuels.
The chart makes things look dire, and they are, but annual decline rates are lower than they look, less than 1% until 2040 and mostly less than 2% until 2100.
Annual decline rates are for all fossil fuels (sum of output of oil, natural gas and coal in tons of oil equivalent [toe]).
Dennis, I follow the oil production in every major producing country in the world. I do not follow coal at all and only marginally do I follow natural gas. So I am not really qualified to even make a guess as to when either will peak. I will leave that to the coal and gas experts.
I am neither optimistic or pessimistic about either coal or natural gas. I just have no clue.
Hi Dennis,
I found an article on cnbc this morning that I found very interesting.
Top oil analyst: The worst is yet to come
http://www.cnbc.com/id/102414761
One quote in the article was of particular note to me:
He noted that there were about 500,000 wells in the U.S. that produced fewer than 15 barrels of oil a day. “We’re gonna fill up in storage, and it doesn’t appear that there’s any way around that,” Kloza said. “
So if we assume an average of 10 barrels/day production for these 500,000 wells, then we have a relatively stable production (I will call it background production) of 5,000,000 barrels per day. Please correct me if I am wrong, but my guess is that this background production (a little more than half of all U.S. production) could continue for some time into the future at a relatively stable rate, i.e., it has a very low decline rate.
I have been openly scratching my head on this blog as to what is happening with oil and gas for some time–both on the production and price side. Of course the reason for my consternation is what I assume to be the underlying decline rates, which I think one could logically posit should have expressed itself in production numbers by now. For instance, as I asked in another post, who of us that followed oil production closely 10 years ago would have believed that the Saudis would be pumping nearly 10,000,000 barrels/day in early 2015? Of course no one believed that the U.S. would be closing in on all time production highs.
But here we are 10 years post 2005, and yet even with sanctions in Iran, and war in Lybia, Syria, and Iraq, we are pumping out at record rates. My point is that that the global oil industry may have drilled out a background production rate of x number of barrels per day that has a very small decline rate. Of course the fraction of production that is new declines fast, especially early on, but because we do not have to replace all production at such a high rate, we can keep up with declines relatively easily.
I am addressing this to you because I am aware of your modeling in which you see a much longer production tail than many others assume. Is this because your models largely take into account this background production?
Do we have this same type of background production in gas? Gas price given the increases in consumption due to new electricity production, industry, heating, and how long drillers have been in the shale gas game (producing even through low prices) is giving me a headache trying to figure out.
Best,
Tom
Hi Cavebio,
The assumption of many stripper wells at 10 b/d is not quite right.
It is more like 2 b/d for the average stipper well in the US. The decline rate on these wells is probably about 5% per year (maybe more that is a WAG).
The World model that I use is based on Webhubtelescope’s Oil Shock Model with dispersive discovery.
A summary of that model is at the following link:
http://www.theoildrum.com/node/2376
A much longer description can be found at the following link(which takes a long time to load and requires patience):
http://entroplet.com/ref/foundation/TheOilConundrum.pdf
Very briefly.
We start with discovery data(from Jean Laherrere for oil and natural gas) and assume that the average discovery has a maximum entropy probability distribution (following E. T. Jayne) which gives the probability that discovered oil will be producing within x years of the discovery date.
If you read and understood the post I did on my Bakken and Eagle Ford Models, then the following description may make sense.
http://peakoilbarrel.com/oil-field-models-decline-rates-convolution/
The discovery curve is analogous to the curve describing the number of new wells and the maximum entropy probability distribution is analogous to the average well profile in my LTO models for the Bakken and Eagle Ford.
Just as in that LTO post where we could create a production profile, in this case we can create (through the convolution operation) a curve representing the new producing reserves (Webhubtelescope calls these “mature” reserves) which start producing each year.
Each year we add the new producing reserves(n) to the cumulative producing reserves(P) from the end of the previous year and we subtract the oil produced (e) (or extracted) from the producing reserves.
P1=cumuluative producing reserves at the end of year 1
P2=cumulative producing reserves at the end of year 2
n2= new producing reserves added in year 2
e2= oil extracted (produced) in year2
r=e2/P1=extraction rate
P2=P1+n2-e2
The final step is to find an extraction rate (the portion of the producing reserves that gets produced this year from producing reserves at the end of the previous year), which matches production data with the model.
The discovery data is extended based on discoveries to date and on the estimated URR based on a Hubbert linearization.
The main guesswork for the future part of the oil production curve is what the future extraction rates will be, usually I assume the recent trend in extraction rates will be followed for a few years and then extraction rates will level off maybe 0.5% to 1% above the present year’s extraction rate.
If anyone is interested in a post on this I will try to put something together.
Hi Cavebio,
For the US in 2009 there were 363k oil wells with 85% producing 15b/d or less (311k), the average output per well for those 311 k stripper wells was 2.9 b/d and they produced 19% of total C+C output. In other words 15% of the wells produce 81% of total C+C output, these wells decline at faster rates than the stripper wells probably 20 to 25% on average.
What keeps output from falling fast is that we continually drill new wells, without this continued new drilling (and EOR projects) decline would be steep (25% or perhaps even 30% the first year) and after a couple of years would slow to around 9 or 10% per year. It is doubtful that the drilling would ever stop completely (at least over the next 20 to 25 years) so we are unlikely to see such steep decline rates. If my estimates of World Oil URR around 3000 to 3500 Gb are correct, then if we try to match the EIA’s scenarios out to 2040, then we will see very steep decline rates after 2040, around 8 to 10% even with continued drilling, there will not be enough places left to drill profitably to produce oil any faster. I doubt we will be able to reach the levels of output that the EIA predicts(about 95 MMb/d of C+C in 2040), I think more than 80 MMb/d is very unlikely and the 78 MMb/d in 2018 is my WAG.
Forgot link to well data for US
http://www.eia.gov/pub/oil_gas/petrosystem/us_table.html
Thanks Dennis,
I greatly appreciate your thorough and patient explanation. One fact jumps right out at me. IF the article I cited above is correct, then the U.S. has added 200,000 stripper wells in just over five years (or I guess better said that 200,000 additional wells have obtained stripper status).
I will have to take time to read the models more carefully, and think about this. I guess it would not be possible to do a retrodiction given the complexities of oil production, but that would be interesting.
Best,
Tom
I think we have a conflict – the data I saw five years ago was 500,000, and the latest data I’ve seen indicated roughly 600,000 wells currently.
Hi Nick,
Are you referencing all wells or just “stripper” wells?
Best,
Tom
That was all oil wells. I think Dennis had an estimate of 363k.
Hi NickG,
I put some links in the post, 363k is for 2009 with link above.
I did not include the EIA developmet wells for oil in 2010 (15k in 2010).
http://www.eia.gov/dnav/pet/pet_crd_wellend_s1_a.htm
I have no data for 2012 and guesses 20k wells that year.
For 2012 to 2014, Baker Hughes has data at
http://phx.corporate-ir.net/phoenix.zhtml?c=79687&p=irol-wellCountUS
When I looked at this before I failed to notice that this is all wells drilled and does not break it into oil and natural gas wells.
From 2012 to 2014 there were 110,000 oil and natural gas wells drilled.
If we assume half were oil wells (it was less than half in 2010). that would be 55k oil wells plus 35k from 2010 and 2011 (my WAG) for 90k total oil wells from 2010 to 2014. Now we add this to the 363 total wells from 2009 for 453k oil wells in 2014 if there were no wells abandoned from 2010 to 2014.
Now I think it unlikely that all of the 453k oil wells are stripper wells or even that all of the 363k wells from 2009 had become “low producers” of less than 15b/d.
My WAG is that wells less than 15b/d lin 2014 would be 330k to 340k if we assume half of the 2009 wells above 15b/d fell below 15b/d by 2014 and no wells were abandoned.
Here’s a source:
“The total number of producing oil wells in the U.S. increased at a steady pace in 2011, reflecting stepped-up drilling programs spurred by $100/bbl prices. World Oil’s estimate of producing wells, based on surveys of state agencies and company sources, indicates a rise of over 16,000 wells to 535,951. This is up 3.2% over 2010.
http://www.worldoil.com/magazine/2012/february-2012/special-focus/2012-forecast-us-oil-well-counts-rise-in-all-regions
Hi Nick,
Your link is not accessible. My data is from the EIA and baker hughes. One source is incorrect, my bet is that World Oil has it wrong. However the two sources may be similar on total oil wells, if we assume about 18,000 oil wells added per year for 5 years that would be 450,000 oil wells in 2014. It seems unlikely that the EIA would be that far off. It is hard to figure out which estimate is correct, total wells with less than 15b/d output is unlikely to be above 80% of all oil wells, if there are 600,000 wells as World Oil (or somebody) says and 80% for low output wells is correct then we would have 480,000 of them, output would likely average 3b/d or less which would be 1.4 million barrels per day. The average output of all wells would be about 15/b per day and average output of high producers (more than 15 b/d) would be 63b/d.
Bottom line most of the oil (85%) is produced by about 205 of the wells
I have never said that declining fertility rates will solve all problems, I believe that lower population will help to mitigate future problems. Perhaps you disagree, 100 years to reduce population from 8 Billion to 3 Billion (in 2150) and to under 1 billion by 2300, seems a step in the right direction.
Dennis, the collapse will come long before 2150. However, having said that, nothing but a massive die-off would ever get the population down to 3 billion, not to mention the 1 billion you see in 2300.
Hi Ron,
If collapse does not occur as you foresee and fertility rates continue to fall to between 1.25 and 1.5 births per woman, then population falls without the dieoff.
You say this cannot be, I think that it is possible, Total fertility rates for the world have fallen from 5 to 2.5 from 1962 to 2007, about 45 years. There is nothing magical about 2.1 births per women that total fertility rates cannot go below this level as it has in many nations already.
I will not predict what the average future per woman birth rate might be and I don’t know what assumptions the demographers make in coming up with their projections.
But in the case of my own backwoods fundamentalist evangelical backwoods KJB thumping family the birth rate has fallen to well below replacement level in the generation following me. And the next one ( grandkids if I had any ) promises in no uncertain terms if asked that TWO kids are very unlikely unless there is a divorce or maybe they want to try a second time hoping for either a boy or a girl.
Of course we have been very fortunate to have climbed the socioeconomic ladder quite a few rungs over the last three generations. We even have a handful of one per centers now. Family legend has it that when my my maternal grand father’s Dad arrived here all he had to do to break camp was pee on his fire and call his dog- meaning he had only what he could carry in a sack on his back. No money. No horse or mule no equipment other than a couple of hand tools.
But he had a KJB in the sack and he was very careful to adhere to the advice in it about working hard and living modestly and avoiding loose women and liquor and all that fuddy duddy family value sort of stuff and died the owner of a nice little farm. The most interesting part is that he could not read the Bible but had hopes of learning how as an adult. He never found the time.
The ” funny ” thing about religion is how adaptable it is. If you mention whales swallowing people these days to young folks who are regulars at the local Baptist church they look at you in sort of a distressed fashion and you suddenly realize that they accept such stories as metaphors rather than reality. I don’t think there is a person in the family under sixty who still believes in the story of the ARK. But they still believe in Jesus.Go figure. When Jesus becomes irrelevant they will still believe in SOMETHING.
I personally don’t believe in NOTHING but I am totally unable to answer the most important question of all- WHAT do I believe at the ultimate level –What is the WHY of our existence? Of the existence of ANYTHING at all?
I do believe in the bare toes on the stone test. If you believe you are a figment of your own imagination you kick a big stone hard barefooted and you will quickly change your mind about THAT possibility at least. 🙂
I don’t think we can RULE OUT birth rates falling a lot faster than expected. There could be positive feedback effects that are more powerful than anticipated – or maybe some mega rich guy or girl donates a billion dollars to put a super cheap solar powered miniature tv set in the hands of a hundred million households . Let the women see a few soap operas about other women with jobs and shoes and a couple of coins in their pocket but no kids…….. things could change faster than expected.
And there is definitely a real but fairly slim chance that there will be a massive die off as the result of a new contagious disease evolving or a major crop failure. The world is dependent on just a handful of staple crops and the genomes of cultivated varieties are dangerously uniform.
I have been expecting to hear about the end of the commercial banana industry now for at least a decade. It is a mystery to me that there are still cheap bananas in the grocery stores.
US shuts down embassy in Yemen and evacuates personnel:
http://www.reuters.com/article/2015/02/11/us-yemen-security-usa-idUSKBN0LF1SC20150211
Obama asks for a war resolution:
http://chicago.suntimes.com/politics/7/71/360810/obama-asks-congress-authorize-war-islamic-state
was browsing economist.com and came across this. around $500 billion?!?!
Where is Japan going to get this money?
TEPCO says decommissioning Dai-ichi’s four damaged reactors will cost ¥980 billion, but that does not include the clean-up, fuel storage or compensation. On a broader reckoning, the Japan Centre for Economic Research, a private research institute, puts the bill over the next decade at ¥5.7 trillion-¥20 trillion, but that still excludes compensation to the fisheries and farming industries. A still broader calculation by the same institute puts the entire cost of the disaster at ¥40 trillion-¥50 trillion. Thanks to government bail-outs, the company that so mismanaged Fukushima Dai-ichi carries on. It even says it will make a profit this year.
http://www.economist.com/news/asia/21642221-industrial-clean-up-without-precedent-mission-impossible
“Where is Japan going to get this money?”
They have a central bank. The BOJ is the poster child of QE. Predate the Fed.
It will take so long to clean that mess up that Japan’s budget can stomach it. They are the third-biggest economy in the world, after all.
Japan has much more immediate issues than paying that bill.
Some people with business brains are either willing to spend megabucks on green pr or else they believe that solar is cheaper over the long run.http://www.newsweek.com/apple-invests-850-million-solar-citing-climate-change-306191
Or they want to deflect desires to force overseas cash home.
Just as a counterpoint to our anthropocentric discussions hereabouts, I’ll provide this link (which was, I must say, quite fascinating):
http://www.bbc.com/earth/story/20150211-whats-the-most-dominant-life-form
Wolbachia is a name not to be soon forgotten. That is one hell of an amazing organism.
While we carry on like it’s all about us, it helps to remember that it isn’t. In my view, more likely than not, if humans cause their own extinction (along with all the other things that will go extinct), life will go on on this planet. We may be Homo colossus, but there are other forces and lifeforms at work on Earth.
Landman from Midland, Texas sent me this picture of rigs in one yard near Midland. The rigs are coming in.
20 rigs in one yard. Many others coming soon
haha They’re not coming in. That is just really narrow downspacing!!
I haven’t looked into this course yet but it might be one some regulars here will be interested in.
https://www.coursera.org/learn/sustainabledevelopment1/outline
Hi OFM,
I signed up and watched the intro. I’m favorably impressed so far, specifically because they don’t start by talking about the need forMORE GROWTH and instead they address the problem of human population right off the bat! This could be a great course.
TKS for the link.
Cheers!
Fred
Greece and the EU fail to agree.
Just in case people don’t understand the details of the mechanism here, the issue is Greece has some upcoming loan service payments. The next tranche of, get this, new loans — scheduled incoming via “extension” would be — think carefully about this now — about 92% loan service payment.
Meaning, in order to avoid the declaration of default, the troika wants to lend Greece another chunk of money and almost all of it will go to service the loans already in place. And that new tranche adds to that outstanding total, to be serviced next time. The 8% remainder is for Greek budget deficit subsidy.
The troika could just print the money and hand it to themselves, but the bookkeeping would say Greece defaulted. Isn’t that amusing?
EIA just published their February Short Term Energy Outlook today. They project US crude oil production to reach 9.42 million barrels per day by April 2015, decline to 9.14 million barrels per day by August, and recover to 9.33 million barrels per day by December. EIA expects US crude oil produciton to rise to 9.85 million barrels per day by December 2016.
The graph below compares the historical US monthly crude oil production per day from the monthly and the weekly data and the future monthly production projected by EIA.
The graph below compares the annual change (change from one year ago) of US monthly crude oil production per day from monthly data and weekly data, and the future annual change based on the monthly crude oil production projected by EIA.
The annual growth of the US monthly crude oil production peaked at 1.58 million barrels perday in September 2013 based on the weekly data and peaked at 1.39 million barrels per day in July 2014 based on the monthly data.
Based on the EIA projection, the annual growth of the US monthly crude oil production is expected to decelerate from 1.21 million barrels per day in January 2015 to 0.04 million barrels per day in April 2016, but will re-accelerate to 0.52 million barrels per day by December 2016.
So the EIA saying that the growth in US oil production will continue to grow all the way to the end of 2016, but at a slower rate?
They must have high hopes the shale plays do not shut down toooo much, and the conventional plays keep on keeping on.
Time will tell.
The EIA expects C+C production to slowdown in the first 5 months of 2015 and to decline slightly from June to September. Thereafter output will recover thanks to rising oil prices. The common view is that tight oil production is very price elastic
production WTI price
Dec14 9,08 59,29
Jan15 9,16 47,22
Feb15 9,27 48,00
Mar15 9,35 48,00
Apr15 9,40 50,00
May15 9,42 52,00
Jun15 9,39 53,50
Jul15 9,35 55,00
Aug15 9,19 57,00
Sep15 9,14 59,00
Oct15 9,26 60,50
Nov15 9,36 63,50
Dec15 9,33 66,50
Jan16 9,33 66,00
Feb16 9,36 68,00
Mar16 9,40 70,00
Apr16 9,44 71,00
May16 9,48 72,00
Jun16 9,50 73,00
Jul16 9,55 73,00
Aug16 9,44 73,00
Sep16 9,46 72,00
Oct16 9,66 71,00
Nov16 9,83 71,00
Dec16 9,85 72,00
The entire situation is a mess. I’m really unsure how long the status quo can go on.
Something as to give.
– OPEC cannot pay their bills at current prices. Venezuela is a few months, maybe a year away from collapse. Nigeria is potentially facing civil war if the elections aren’t carried out.
– Shale oil plays are, for the most part, unprofitable under $70. Given high rates of decline and a drop in investment, we should see a precipitous drop in production. I fail to see how the EIA accounts for the early-2016 rebound in production.
The Economist is particularly rosy about this, however:
“OPEC’s wishes may seem to be coming true over the next year. But adversity will eventually make shale stronger. It will prompt a new round of innovation, from cutting drilling costs through standardisation to new fracking techniques that increase output. Dan Eberhart, the boss of Canary, a Denver-based oil-services firm, says the industry has already “pressed fast forward” on saving costs.
And if and when prices recover, new wells can be brought on stream in weeks, not years. America’s capital markets will roar back into life, forgiving all previous sins. “There is always a new set of investors,” says the boss of a one of the world’s biggest natural-resources firms. He predicts a shale crash—and a rapid rebound.”
So, in conclusion, more and better technology will inevitably drive the break-even point down (maybe) and capital markets will flood back into the shale industry even after it has been decimated (probably not). Wishful thinking.
One more time, with feeling:
If there is a Fed bailout, price doesn’t matter.
Men and money are great fools and there will always be plenty of men with money to chase after pretty women who are only pretty on the outside. I grew up next door to one who has cleaned out four local men so far and is still looking for number five but her looks are about gone now and she may have to just give up and live on the couple of million she has stashed.
There will be plenty of money to chase after tight oil again as soon as the price of it goes up.
And it will eventually go well over a hundred dollars a barrel unless the economy world wide has to permanently check into assisted living. I am a big believers in renewables and conservation and efficiency BUT the depletion tortoise is going to win because the adaptation rabbit is taking an extended nap.
We are going to wake up one day – again barring the economy being hospitalized – and hear on the morning news that ”oil has hit an all time new high every day for the previous month and is now one hundred seventy five dollars a barrel”.
The price will crash again. But as Jeff B points out the bottom price of each cycle tends to be higher than previous bottoms. Next time around we will be giddy when gasoline falls back to three or three fifty per gallon instead of two.And it will fall PRIMARILY not because production is up but rather because the economy turns down.
It might even happen in time to help out the folks who are taking on sixty month payments on oversized new pickups that will never haul anything except a case or two of beer and a few bags of ice.
Absolutely the best piece in the MSM I have yet read on the current shale oil situation
http://www.ft.com/intl/cms/s/0/a623e1e8-b11a-11e4-831b-00144feab7de.html#axzz3RUKOausC
”The reason this matters is that US shale oil has been the main driver of global supply growth in the past few years. It has increased by 4.1m barrels per day in the past six years to reach 4.7m b/d in 2014 from only 0.6m b/d in 2008. Indeed, without US shale oil, global crude oil output would have been lower in 2014 than it was in 2005. ”
Financial Times is generally more insightful than the rest of the business media
Oil price in yen this morning is 44,440 yen per metric ton, 120 yen to a dollar, price per barrel is 50.73 usd, now is up another 270 yen, going to be over 52 dollars per barrel in Japan today. Price is at 44,630 yen per tonne.
http://www.bloomberg.com/energy/
81 percent of their imported oil is from Saudi Arabia, Qatar, UAE, Iran, and Kuwait.
http://www.eia.gov/countries/cab.cfm?fips=ja
Oil shipped to Japan is going to keep the Baltic Dry Index from dipping down to 400. Check out the index at Bloomberg, it has lost over 1000 points in a year.
1621 down to the current level of 553 is a fall from grace.
Another major Canadian tar sands company cutting spending and laying off workers.
Cenovus loss widens to $472 million as oil company slashes spending plans
Last month, Cenovus cut its 2015 capital budget by $700 million to between $1.8 billion and $2 billion as it braced for a prolonged stretch of low oil prices.
As I mentioned up thread, check out Apache. Major shale player taking a major whack.
This came out yesterday but I only caught it this morning. Apparently no one has posted it yet.
US shale oil boom masks declining global supply
The reason this matters is that US shale oil has been the main driver of global supply growth in the past few years. It has increased by 4.1m barrels per day in the past six years to reach 4.7m b/d in 2014 from only 0.6m b/d in 2008. Indeed, without US shale oil, global crude oil output would have been lower in 2014 than it was in 2005.
Based on the preliminary 2014 supply data provided by the US Energy Information Administration in its most recent Short Term Energy Outlook, the total world crude oil supply increased by 3.5m b/d over 2005-14, rising to 77.3m b/d from 73.8m b/d. However, if we strip out the impact of rising production from US shale oil, the global crude oil supply actually declined by around 1m b/d over this period, to 72.6m b/d from 73.5m b/d.
The Financial Times is now confirming what Jeffrey Brown has been saying and what I have been posting about for awhile now. The world outside the shale boom reached peak oil ten years ago and when the shale boom is over it’s post peak oil.
The author is Mark Lewis, who is one of the best energy analysts in the world. Mark is willing to take an analytical view of the energy situation, without preconceived bias.
The data do show that excluding the US, global C+C production has been flat to down since 2005, but I think the more important point is that if we exclude some plausible estimates for global condensate production, then it’s very likely that actual global crude oil production (45 and lower API gravity crude oil) has been flat to down since 2005, inclusive of the US, even as the annual price of Brent doubled from $55 in 2005 to the $110 range for 2011 to 2013.
And here are some numbers to contemplate.
I looked up some US C+C, US C+C refinery input and net C+C import numbers for comparison (all four week running average data), with same C+C refinery inputs (15.4 mbpd):
Week ending:
7/3/08
US C+C Production: 5.1 mbpd
US C+C Refinery Inputs: 15.4
US Net C+C Imports: 10.0
1/30/15:
US C+C Production: 9.2 mbpd (Up 4.1)
US C +C Refinery Inputs: 15.4 (Flat)
US Net C+C Imports: 6.9 (Down 3.1)
Note the gap between the increase in production (4.1) and the decline in net imports (3.1).
Another way to view it is as the sum of US C+C production and net C+C imports as a percentage of C+C inputs, 98% for early July, 2008 (15.1/15.4), versus 105% for late January, 2015 (16.1/15.4).
As the Pemex CEO said in the article linked below, they need crude, not condensate.
An interesting chart would be this ratio versus US C+C inventories by time. Note that the net C+C import number would take into account gross C+C exports.
So, if the total data show a sustained excess of C+C production plus net C+C imports versus C+C refinery inputs (and said excess would presumably be mostly condensate), where would the excess domestic production be going?
Just as we don’t know for sure what the Condensate to C+C Ratio is for production, we don’t know what that ratio is for storage, and there does seem to be a mismatch between US crude oil import numbers and storage levels.
If actual crude oil in storage (45 and lower API gravity) is reaching catastrophically high levels, why are we still importing about 44% of the crude oil feedstock for refineries?
Recall what the CEO of Pemex said last year about their need for light crude oil imports, because of declining production, “Condensate is not necessarily what Mexico needs. It needs crude.”
I would argue that this statement is probably true for most refiners around the world, given the heavy global reliance on diesel as a transportation fuel.
Mexico’s Pemex aims to start importing light crude this year (2014)
http://uk.reuters.com/article/2014/08/28/mexico-pemex-idUKL1N0QX2TL20140828
I think that the following chart showing normalized global gas, global NGL and global C+C from 2002 to 2012 really tells the tale. I suspect that a significant portion of the global build in “crude oil” inventories may be rising condensate levels.
“If actual crude oil in storage (45 and lower API gravity) is reaching catastrophically high levels, why are we still importing about 44% of the crude oil feedstock for refineries?”
That’s crazy talk there.
Crazy to question how it can matter that an inventory that drains in a day or two and is replenished could possibly matter.
Oh, and given pipeline direction reversal, can’t really even make a case for Gulf coast imports finding their way to Cushing.
Refineries import crude and export it as finished products to keep up their production levels (profits).
Note the increase in annual ending US C+C stocks (stocks at the end of the year):
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCESTUS1&f=A
Looks like 2014 was 385 mb, about 60 mb more than at the end of 2008.
It seems to me that the only reasonable explanation for why refiners are still importing about 44% of the C+C inputs into US refineries is that they have to in order to produce the mix of refined petroleum products that they need.
In other words, I suspect that an across the board drawdown of US C+C inventories would not give them the refined product mix that they need. They could of course do a selective drawdown of the actual crude component of C+C inventories, but they may not be able to do that, at least not without putting them below a comfortable level of Days of supply of actual crude oil in excess of MOL (Minimum Operating Level).
Ahh diesel. This kind of crazy talk continues to stab at the heart of the crisis is passed narrative.
Things are not normal and never will be again. The future is dark and getting darker.
Hi Watcher.
Yep, “normal” is over. Forever. The gigantic complex nonlinear thermodynamic engine that we call civilization is running well outside its safe operational envelope. It is beginning to shake itself to pieces. From here on, change will be rapid, unpredictable, uncontrollable, and very unpleasant.
I think the rig reduction announced by Apache and the admission by Total that they have made no major oil finds in 3 years are two big stories from today. Ron is looking pretty strong on his call today.
Shallow,
Is this what you are talking about?
Looks like there is worse to come, and a lot of the big shale player are yet to announce their quarterlies!
http://www.zacks.com/stock/news/164226/apache-q4-earnings-beat-plans-massive-rig-count-reduction
Plans Move to Stay Afloat
Importantly, Apache has decided to slash its rig count – from an average of 91 (in the third quarter of 2014) all the way down to an estimated 27 by the end of Feb – as it focuses on controlling costs amid plummeting crude realizations.
Another company cutting back
WPX Aligns Capital Plan with Operating Cash Flow
WPX started the year with five rigs in the Williston Basin and is ramping down to one rig by late spring for the balance of the year.
WPX started the year with three rigs in the San Juan Basin and already ramped down to two rigs for the balance of the year.
WPX plans to deploy three rigs in the Piceance Basin for the balance of the year, including a rig for Niobrara Shale resource assessment. WPX started the year with eight rigs in the Piceance Basin.
– http://www.noodls.com/viewNoodl/26894084/wpx-energy-inc/wpx-aligns-capital-plan-with-operating-cash-flow#sthash.TRxoSDCY.dpuf
I think 500 oil rigs is possible if these companies follow through on their announced plans
Shallow,
You maybe correct, but the faster and deeper they cut, the quicker we can back something normal.
I should have included this piece before, it speaks very loudly as to some of the games that the oil companies are playing, and answer why the completion rate is lagging the drilling rate.
WPX expects its oil production to climb again in 2015. The company is targeting 15 to 20 percent oil growth this year even as it decreases capital spending and builds an inventory of wells awaiting completion for when commodity prices are more favorable.
http://www.noodls.com/viewNoodl/26894084/wpx-energy-inc/wpx-aligns-capital-plan-with-operating-cash-flow#sthash.gfcl5Fva.dpuf
I suppose the drilling rigs are longer term contract, casing and wellhead are bought and paid for. It must be easier to terminate the fraccing than the drilling?
Here, this came out yesterday. I’m not a solar expert by any means, but I have been following the concept of distributed energy for about 15 years, and I have followed Silicon Valley happens for as long.
Distributed energy plans have appeal for them the same way the Internet has had. No central control. If they can’t create a plug-and-play energy grid, then they will likely look for ways to disconnect from the grid.
http://www.greenvilleonline.com/story/news/environment/2015/02/10/duke-offers-solar-proposal/23184751/
btw for the EV crowd, Tesla apparently had the worst in all history conference call post earnings release last night. Musk was firing out profanity and obscenity in response to analyst questions.
Cash burn at monumental rates and an absolutely guaranteed secondary offering or a convertible issuance upcoming (won’t that be dilutive? How DARE you question us!!!! &^%&**$#^!!!!!!!).
Wacko Cramer is declaring it to be “not a real company”.
Musk was firing out profanity and obscenity in response to analyst questions.
I am glad there is a Tesla, but I don’t care for Musk. When a NYTimes reporter wrote a review of a Tesla including some problems he had with the distance the car was supposed to get, Musk blamed the reviewer rather than accepting the fact that if you ask for a review by anyone in the media, you take your chances in what you get in the review.
You can politely respond suggesting that the reviewer’s problems aren’t typical, but attacking the reviewer is a poor approach.
Oh, it was worse than that. The reviewer was an X year veteran reporter at the NYT and had zero history of any writings about cars or electricity. He saw what he saw and the legions of sycophants went after him.
The NYT wound up basically having to admit they fucked over TESLA. Not in so many words but they did and admitted it in a roundabout way. When you have their level of expertise and lawyers you never have to actually admit FAULT. You just admit you made a MISTAKE. Or sort of maybe mighta coulda made a mistake.
If Tesla stock ever gets dirt cheap again I am going to sell a piece of land and buy in. I BELIEVE in peak oil myself.
Having said this much ::
http://hothardware.com/news/200-mile-range-chevy-volt-ev-confirmed-for-production-at-gms-orion-facility
I drive an old Chevy but I would probably never buy a new on on account of the Guvmint Motors charity ball.
“You can politely respond suggesting that the reviewer’s problems aren’t typical, but attacking the reviewer is a poor approach.”
There’s a famous Harvard B school study taught in just about all other schools which involved getting some people together, handing them some money and telling them to buy some products offered in a room.
Then another group had the same thing done in a different room. Same products. Different prices.
Repeatedly done. Different people. Different products.
Over and over the people who paid more for the same product reviewed that product much higher than people who paid less — for the exact same product.
The lesson? It’s not pleasant.
You can affect customer satisfaction with price.
As I noted previously, an estimate I saw put the percentage of electric and plug-in hybrid vehicles worldwide in 2014 at one-half of one percent of new sales.
We need continuing work on EVs even if the adoption rate is still very low. As people realize now, we should have been preparing for peak oil at least as far back as the Carter days.
You’ve got to do a lot of experimentation with new technology to have it ready for prime time when it is actually needed.
And falling.
For the get the facts straight crowd, here is the
<A HREF="http://www.thestreet.com/story/13044208/01/tesla-motors-tsla-earnings-report-q4-2014-conference-call-transcript.html" Title="earnings call transcript".
And here is, wait for it, the profanity and obscenity Musk fired out:
My best guess on the censored expletive is that he said “shitty profitable”, as an adjective, to contrast with “very profitable”.
That’s it. That’s the entirety of the “profanity and obscenity” that Musk was “firing out”, in the entirety of the transcript.
As for the monumental cash burn, it is nothing that Musk has not discussed straight forwardly many times:
They are currently building the largest battery manufacturing plant in the world. The capex is enormous. Musk is clear that they will continue channeling cash flow into capex investment for a long time and to not expect profitability in the near term.
Regarding the “absolutely guaranteed secondary offering or convertible issuance upcoming”, Musk has this to say:
Read the transcript. No spittle flies. It seriously undermines any credibility that Cramer may have, and at least for me, that of Watcher also.
You do know what non GAAP means? Thestreet is a Cramer vehicle, btw.
haha credibility.
Hi Watcher,
Non-GAAP is what non-profitable companies use, I think the LTO producers tend to focus on this and I believe that Amazon operated without GAAP profits for years (I am not sure they have ever been GAAP profitable. The goods still make it to my door.
If you have a hundred grand for a Tesla, why buy one? Where will you charge one besides at your own home or maybe at your work site while you’re in the office filling blanks, punching keys? Tesla sells the sizzle, not the steak.
Hardly worth the hundred grand, might as well go for the pre-owned Leaf at the Nissan used lot. Then you can go buy the gas or diesel engine powered automobile in your favorite make and model, just to make sure you have decent wheels to drive. A hundred grand for a Tesla is throwing money into a money pit. Gotta go for the gusto.
Might as well go for a Maserati or a Lamborghini, something that will shock and awe, not some idiotic battery powered electric vehicle that likely will be of no value when it is traded for something much better. Maybe a Bentley will be the choice, what you should have bought in the first place, chauffeur driven, of course. Go to a Barret-Jackson auto auction and buy one of those old cars or pickups, for fun.
You’re not tethered to the electricity umbilical cord, you’ll be unfettered and alive, as it were.
Park the Lamborghini at the marina parking lot, board the 150 foot 25 million dollar yacht, sail it up to Orcas Island, fly to Boeing field and fly out with your new luxury model 767, don’t want to show off, land in Hong Kong for some lunch. You’ll need 23,980 gallons of jet fuel, that’s all.
Let some one else worry about peak oil, whatever that is.
Hi Ronald,
Not very convenient but there are a couple of places to charge the Tesla
http://www.teslarati.com/interactive-tesla-supercharger-map/
Tesla going to spend staggering amounts on CAPEX in future while currently burning through cash. Where have I heard that business model before?
Teslas have shocked and awed quite a few folks already at traffic lights and drag strips. I know a guy who spent ten grand souping up his hot rod Corvette who got his clock cleaned by a TWO wheel drive Tesla at the drag strip.
People with a hundred grand DELIBERATELY shop for sizzle if you define steak as transportation.
they have sold over 55,000 Models S sedans so far
Why buy one?
Just a guess, but one reason may be that it is a 5 passenger performance sedan with acceleration that matches a Mclaren F1, and it can be powered entirely with photons that you harvest yourself at home if you like.
And fed forever by relatively real cheap PV system. That’s what I do with my Leaf, which I never push to any limit because I never had any desire to- with any car I have owned. I look at cars as I look at a shovel- something to use, not to make love to.
This week end we are having a local show and tell about EV’s and people will be able to ride around in my Leaf, another guy’s Volt, and surprise-a Tesla, which I did not know anybody around here had.
Idea is that we spread the word that these things really exist, and do what cars do, and have amazingly low cost of operation.
e
Some people like Elon Musk, some don’t.
As a marketing guy I have to admire the fact that he has managed to make electric vehicles seem cool and worth spending $100K on. I saw a lot of them in Marin County when I was there.
I saw one in Sonoma valley. A very nice looking car. I can dream.
Question for an oil man or a gas man.
I am checking on some exaggerations in the documentary “Gasland”. In it Josh Fox says a gas well can be fracked up to 18 times. I have corresponded with some people from the oil fracking business and they told me they had never heard of an oil well being re-fracked. But is this the case for fracked gas wells also. If not, how many times is a gas well usually re-fracked?
Fox says it takes 1 to 7 million gallons of water to frack one well once. His math:
450,000 fracked gas wells in the US. X 1 to 7 million barrels of water X 18 fracks = 40,000,000,000,000 gallons of water.
The simplest explanation is the gas land guy didn’t know what a frack stage is
Ron, it seems to me the guy confused a single frac stage with “re fracturing”. His math is a little goofy.
Oil wells are re fracked. Never heard of 18 times. Once around here, maybe, is it. To give you an idea of how small we are, typical frac here uses 5000 gallons of H2O.
Surprised people in fracking business never heard of re fracking an oil well.
Yeah, but those are small pop fracs to get around wellbore damage, right? I’ve done them with acid fracs, and with small amounts of sand to reduce skin. Are you having scale problems?
Fernando. That is a typical frac for a new well. Most of the wells we operate are 800-1500′, have pay of 10-30′. 4 1/2 in casing is common.
We have scale issues of varying degrees. Use scale and corrosion inhibitor chemical.
We don’t typically re frac wells, although some do. We sand pump wells and acidize them to clean up.
Worst problem we have is a few multi zone completions. We didn’t drill them. Always fighting barium due to co-mingling waters from different zones. Wish we had twin wells there. Makes good oil but have problems.
Some new wells aren’t fracked. 250 gal. 15% HCL. Very small potatoes.
By the way, here’s a presentation by George King, one of the industry’s elder statesmen in well stimulation:
http://gekengineering.com/Downloads/Free_Downloads/Alternate_Water_Sources_for_Fracturing_17_Jan_2012.pdf
I’m surprised the industry hasn’t evolved to use more salt water. There’s a need to get a bit slicker about these issues.
How much is forty trillion gallons?
One acre has 43,560 square feet in area. One rod by 160 rods is one acre. 16.5×2640=43,560. I did the math.
If one foot of rain falls on one acre of land, you will have 43,560 cubic feet of water.
One cubic foot of water contains 7.48 gallons.
7.48 gallons times 43,560 equals 325,828 gallons of rain/snowfall.
40 000 000 000 000/325 828=122 764 157
122 764 157 acres of land that has water at a depth of one foot.
One foot of precipitation will grow a corn crop on one acre of land. It does take 300,000 gallons of water to grow an acre of corn. No rain, no corn, unless you irrigate. Metering will be a big help.
As you can see, 40 trillion gallons of water will grow 122 764 157 acres of corn.
Illinois has 23 million acres of land in production.
It is probably the area of Iowa, Illinois, Nebraska, Indiana and Minnesota in agricultural land under cultivation.
When you are using 40 trillion gallons of water in one industry which will impede another, it has to be a cost regulated by a governmental agency, i.e. a charge for the use of a resource.
A tax.
A structured method of taxation is required.
Since the hydrological cycle is closed, the loss of water to fracking will result in a loss of production in field crops. Farmers will need to irrigate, subsidies, more taxes, tax the oil industry to subsidize agriculture.
Translates to a new fuel tax to pay for hydrological cycle maintenance, a tax on water use, surreptitiously disguised as a new fuel tax, but it really is going to be a tax on water.
The new fuel tax can bailout the fracking industry, the fuel tax will pay for the cost of the use of the water. The damage to the ecology can be monitored and regulated too, which will result in another fee with the new fuel tax.
Once again, no matter what, the taxpayer is going to foot the bill.
Gotta pay for it somehow.
For what it is worth most of the numbers you see thrown around involving farming EXCEPT the ones involving irrigation may be in the ball park (more or less) but in terms of understanding reality they are pure scare the greenie wannabes propaganda bullshit.
When it rains on a cornfield that is NOT irrigated the water does the usual thing water does when it falls down out of clouds. Some of it sinks deep and winds up in the water table and reemerges in springs and streams. Some of it evaporates. The amount that is LOST to the local water cycle is basically ZERO. Water that is PUMPED from a stream or river to irrigate may evaporate or it may wind up right back in the river as runoff.
Having said this much we are soon going to be way the hell up shit creek without a paddle in terms of irrigation water.Some aquifers are being depleted at rates that will exhaust them within a decade or two. And the amount of water diverted from rivers is approaching the upper practical limit in many places. Beyond that there are not many places left in developed countries where dams can be built to impound water for irrigation. Taken all around water supplies are a dead serious problem.
And pollution of runoff water from farms and suburban lawns and sewage treatment plants has been causing enormous problems with fisheries etc. We have huge dead spots in places that ought to be teeming with edible fish.
I don’t see any great hope of reducing this runoff pollution enough to cure the problems it causes given that it is so expensive to prevent it. Farmers in industrialized countries are probably going to reduce their runoff about as fast or faster than anybody else since fertilizer is so expensive and they use it for the purpose of MAKING money and are continually looking for ways of using it more efficiently. Homeowners are looking for lush lawns and the amount they spend individually is trivial to most of them. And cities are too strapped for cash to do a REALLY good job of cleaning up sewage discharge.
The law of diminishing returns is a killer when it comes to cleaning up the last little bit of water pollution and unfortunately the last little bit is more than enough to create big problems.
I have spent the day re-watching Gasland, then watching Fracknation and then Truthland. I have come to the conclusion that Gasland is nothing but pure bullshit, full of lies and half truths. Now I am not a fan of fracking but I believe the practice should stand on its own without people like Josh Fox trying to sabotage it with a pack of lies.
I will have more to say on this later on a new post. But right now about the silliness of Fox said about fracking one well 18 times using 7 million barrels each frack. He was obviously confusing fracking stages with fracking wells. The error was obviously pointed out to him because that segment has been removed from the Youtube version of the documentary. But removing it from a released film is much harder to do so it still remains in the Netflix version. It starts at about the six minute mark of the Netflix version if anyone is interested.
Gasland is a bs propaganda film intended to brain wash audiences.
This is pretty common. There are quite a few examples.
“300” was intended to dehumanize Iranians and allow the neocons to instigate a usa war on Iran, serving as a proxy for the Israelis.
When I was young and lived in Cuba I saw Communist Chinese films intended to dehumanize Americans. We can read a lot about nazi propaganda films, but the phenomenom is widespread. “Gasland” is just a bit crummier and lies more.
Dennis Meadows says that collapse is inevitable in the 2015-2020 timeframe.
http://energyskeptic.com/2014/dennis-meadows-collapse-is-inevitable-now-2015-2020/
[Dennis Meadows spoke at the ASPO peak oil conference 2006 in Pisa Italy. Many of the scientists and speakers said Meadows was right about Limits to Growth in their presentations — indeed, his model appeared to be ahead of schedule. Meadows hates to give dates, but when pressed, did say that although he thought 2030 the most likely time-frame for collapse back in 1972 based on various model projections, the exponential use of resources and population growth appeared to have moved the time-frame forward to around 2020. At the “Limits to Growth” conference in 2014 he said the time-frame appears to be 2015-2020].
Dennis Meadows is a co-author of The Limits to Growth. In 1972, the team of 66 scientists he assembled for the original Limits to Growth study concluded the most probable result will be a rather sudden and uncontrollable decline in both population and industrial capacity.
Dmitry Orlov on Dennis Meadow’s presentation at the Age Of Limits conference 2014: “Dennis had agreed to present at this conference reluctantly. He has retired from Club of Rome discussions, and has found more cheerful uses for his time. But he seemed happy with the outcome, saying that this is the first time he faced an audience that did not need convincing. Instead, he took the time to add some details that I think are crucially important, among them the fact that his WORLD3 model is only accurate until the peaks are reached. Once the peaks occur (between 2015 and 2020) all bets are off: past that point, the model’s predictive ability is not to be relied on because the assumptions on which it relies will no longer be valid.”
I took Dennis Meadows’ predictions of dates for collapse and I made a graph of them:
But it didn’t post.
Can someone please tell me how to post a graph I made.
I have it stored with on Photobucket.
Futilitis, store the graph in a file on your computer, not of photobucket. Then click on the “Choose File” box just below the “Post Comment” box. Then a box will open requesting you to name your fie. In the top box choose the file location and the bottom box you type the name of your file. You will know you have done it correctly when the name of your file appears beside the “Choose File” box.
When economies slow down, Meadows explains, fewer products are created relative to demand, and “when the rich can’t get more by producing real wealth they start to use their power to take from lower segments.”
I think that’s what is happening now.
What we aren’t seeing is a plan to overthrow the rich. When we see violence in the more affluent countries, we see it against the poor.
Now, politically I am opposed to this. But environmentally, it may be better for the planet if a massive amount of consumers disappear and we are left with the rich. The very wealthy are a very small percentage of the planet and if everyone but them disappears, we will have greatly reduced both the number of people and resource consumption.
It’s not Darwinian in the idea that the “rich” have better survival skills or genetic assets. I don’t believe that they do. But I think they have been very effective in directing anger away from themselves and toward the poor, the elderly, minorities, etc.
Boomer, I agree that there is a massive propaganda campaign against the poor. How dare they use 1.5 % of the tax money to attempt to survive. Meanwhile the profit making corporations are lining up for government aid faster than the poor.
In an extreme collapse the wealthy become just another group of animals looking for a meal. In a lesser collapse they are somewhat secure as long as they can provide food and services to their hired guards.
I wonder what the definition of “rich” is? On a worldwide basis, I would think that most posters on this site are “rich” compared to the “lower segments” – “the poor, the elderly, minorities, etc.” I would hate to think that us guys (women) are going to start to “take” from the lower segments. Or are we already doing it? I think that the Pope thinks we are.
Well, many of us would qualify as “rich” comparatively.
But the 1% or the .1% is a much smaller group. The very wealthy control a lot of the wealth in the world, and can use that wealth to influence politics.
I know I have posted this info before, but I will do it again.
The wealthiest 1% will soon own more than the rest of the world’s population, according to a study by anti-poverty charity Oxfam.
The charity’s research shows that the share of the world’s wealth owned by the richest 1% increased from 44% in 2009 to 48% last year.
On current trends, Oxfam says it expects the wealthiest 1% to own more than 50% of the world’s wealth by 2016.
http://www.bbc.com/news/business-30875633
I know that it is complicated. But, the peasants that killed all of the upper-class in Russia and seized their wealth ended up with no wealth. If you gave me a $100 million painting or house or yacht, I could not even pay one year of insurance on them. Would have to sell them for what I could get – maybe for a good meal in a collapse.
The “wealth” that I would prefer is to be 18 years old and starving, but have Bill Gate’s or Mark Zuckenberg’s (sp?)MIND/INTELLIGENCE.
Y’all should read about MEFO bills and then think about how you measure things.
Didn’t the peasants get the land?
Thanks Ron.
Looks like we are running out of time.
Or Dennis is running out of time to make good on his predictions…
goodbye to SE Louisiana?
“Scientists now say one of the greatest environmental and economic disasters in the nation’s history is rushing toward a catastrophic conclusion over the next 50 years, so far unabated and largely unnoticed.”
http://projects.propublica.org/louisiana/
Any geologists round to comment on the extremely ragged look of the Mississippi delta in satellite images? Can’t think of another river that looks like that.
It’s scary stuff, the collapse of civilization, apocalypse, Armageddon, even. Terrifying, the utter horror of complete dissolution of human systems can’t be comprehended.
The rain will still fall, birds will still sing, camels and yaks will still wander in the wilderness.
The remaining humans will exit from their below ground shelters and be forced to witness the carnage.
Might not get there for some time to come, so might as well be outside, escape from the doomsday room and get some sunshine.
Vitamin D is low.
Yeah, it’s best not to think about too much. We have plenty of time to worry about this later.
The rain will still fall, birds will still sing, camels and yaks will still wander in the wilderness.
Then again, maybe not…
The rain will still fall
http://www.nature.com/nclimate/journal/v3/n1/full/nclimate1633.html
…birds will still sing, camels and yaks will still wander in the wilderness.
http://www.biologicaldiversity.org/programs/biodiversity/elements_of_biodiversity/extinction_crisis/
fwiw department. This is the solar plant that Apple is planning or purchasing their electricity for the new headquarters.
http://www.firstsolar.com/en/about-us/projects/california-flats
Perhaps one of the last thin film mega plants?? Perhaps the mounting will support 24% Crystal Si PV in a decade? http://www.greentechmedia.com/articles/read/First-Solar-Now-Officialy-in-the-Silicon-PV-Production-Business
More tar sand trouble in the news:
Oil firms cut jobs, budgets as crude drop hit earnings
The sharp drop in oil prices has dramatically crimped netbacks, or returns after royalties, operating and transportation costs, for companies such as Cenovus. An average steam-driven oil sands plant earned about $4.33 (Canadian) a barrel in January, down from about $50 last August and the eight-year average of roughly $35 a barrel, according to TD Securities calculations.
Because of the long lead times, the current drop in capex is bound to affect production for years to come.
Interesting article on oil supplies.
http://upload.wikimedia.org/wikipedia/commons/2/21/Petroleum_Consumption_Enormous_article_in_Tractor_and_Gas_Engine_Review_vol_11_no_05_1918.png
Hello John B.
Great article.
The idea that oil supply would eventually peak and decline was obvious even in 1915. The idea, that our extreme dependence on oil means that this decline would cause severe problems, is also sound. This logic is completely intuitive to any rational person.
Many here would argue that our ingenuity will solve the problem. But it seems obvious to me that oil production did peak and decline in the US, just like the article warned that it would. The ingenious solution at the time was to ramp up oil production world wide.
The world has now reached peak oil. Some here really believe that our ingenuity will rescue us again. This time with alternatives.
Now is the time for people to roll up their sleeves, get their hands dirty, and get down to some serious ingenuity! Hey, I’m not saying it will be easy. Hell, it’ll probably be hard. Real hard. But hell, we’ve done hard things before, hasn’t stopped us yet. Anyway, I’m sure we can do it!
Hi Futilist,
The price of oil, then coal, and then natural gas will rise. No ingenuity required. People will realize, hey there really are resource limits, maybe that F150 is not the best choice for riding around in the suburbs, maybe a heat pump would be better than a natural gas boiler. You get the idea. Fossil fuel output will not fall to zero overnight.
Hi Dennis.
All of what you say presumes that we aren’t already in collapse. Dennis Meadows thinks we are already in collapse.
When our houses and buildings provide their own heat and power, when transport is mostly electric powered, when farming is dependent upon natural sources, then we will have become independent and sustainable to a great degree. Fossil fuels have allowed growth and waste to the point of insanity. Leaving them will be like getting off an addictive drug, very painful but much better for the future.
I do hope those children and young adults are capable of the hard work and ingenuity needed to push ahead. Most of the tools they need are already provided, but society has pushed many of them into a world isolated from the real and natural world through massive use of computers, communication devices and virtual software. I fear that many will look for solutions in the dead-end world of machines and computation, while not even realizing that none of that creates the energy needed to run a civilization.
There is also a massive campaign against solar and wind (and probably anything that slows the use of fossil fuels). As the 1918 article stated that textbooks and scientists declared the internal combustion engine impossible. Now many declare it impossible to successfully switch to renewable energies. That degenerate meme will have to be broken by example. A task that will only be made easier by the failure of oil and other fossil fuels.
Hi Allan H.
Now many declare it impossible to successfully switch to renewable energies. That degenerate meme will have to be broken by example. A task that will only be made easier by the failure of oil and other fossil fuels.
The task will be made infinitely harder by the failure of oil and other fossil fuels.
The truth is not a degenerate meme.
OPEC Calls The Tune And U.S. Shale Producers Follow — By Cutting Production
Across the continental United States, data from Drillinginfo show a gradual 13% decline in new oil production capacity drilled in a given month, from about 600,000 barrels per day (bbl/d) in May 2014 to just under 525,000 bbl/d in January 2015. This means that oil production is still rising, but by smaller and smaller amounts.
New drilling for oil dropped by even larger amount, 32%, as companies shifted their focus toward low-cost, high-productivity acreage. The number of new wells drilled fell from 1,967 in May to 1,338 in January. The largest drop, 24%, came between December and January, as oil prices hit their lowest levels.
Is net or gross additions?
Now ND Directors cut is out. Production and well completions jumped in December.
The latest Baker Hugues report just came on line. Big decrease…