Data for the below chart is from the Weekly Petroleum Status Report.
Here we have a three year WTI price comparison chart. You can see that the 2014 price collapse began at almost the exact same time of the year as the 2008 price collapse. The 2008 collapse was a lot more dramatic and fell faster and slightly lower than the 2014 collapse. The 2008 collapse bottomed out around Christmas of that year and the 2014 did not pause until late January 2015. However by late October 2009 the WTI price was already in the $80 range. This time however we are still stuck below $50.
From Short-Term Energy and Winter Fuels Outlook
The EIA expects US crude oil production to drop by 400,000 bpd and NGLs t increase by over over 300,000 bpd. That’s how they get “Total Liquids” to remain almost flat.
Wyoming oil production not expected to maintain 23-year high amid 16-year low in drilling
A peculiar divergence in Wyoming’s oil industry over the past several months — oil production soared to a 23-year high while drilling for new oil fell to a 16-year low — can’t last for much longer, experts said.
Houston-based oilfield services company Baker Hughes tracks drilling with a nationwide and state-by-state weekly tally of drilling rigs actively exploring for oil and gas. Wyoming’s rig count on Friday was 26 but in June and July fell as low as 21.
That was Wyoming’s lowest rig count since 1999 and down from a 5-year high of 63 a year ago this week.
Oil Guru Andrew Hall’s (Astenbeck Capital) July Letter to Investors
There is about 72 million bpd of conventional non-shale crude oil and condensate production globally, with about 42 million bpd of this outside of OPEC. Without constant reinvestment this production would decline by about 5% per annum on account of reservoir depletion. For example the wells that were producing 60 million bpd of oil back in 1995 produce barely 20 million bpd today assuming an average annual decline rate of 5 percent. That is a loss of 40 million bpd to decline and depletion from the wells that were producing at the beginning of 1995. Similarly, over the next 10 years, 30 million bpd of production will be lost to decline and depletion from the wells that are producing today. In order to offset this loss, about three and a half million bpd of new production annually needs to be brought on stream.
But with $70 Brent much of the conventional non-shale production is uneconomic and the investment needed to achieve this level of new production additions will not be made. The international oil companies, who account for much of this conventional non-shale production outside of OPEC, were failing to grow production even when oil prices averaged over $100 during the past four or five years – despite a dramatic rise in their capital expenditure.
Now that these companies are reducing their capital expenditure, production decline is likely to accelerate. New projects in high cost resource plays are being postponed or canceled. The impact from these decisions will not be felt before 2016 because of the long lead times involved. But that also means such lost production cannot be quickly recouped should the market need it.
_____________________________________________________
Notice: I had hoped that the Texas RRC data would be out today but no such luck. I will be out of pocket until late Wednesday or early Thursday. So if the Texas data comes out tomorrow it will be late Wednesday or early Thursday before I have a post out.
This Andrew Hall is a guy who seems to be willing to look depletion straight in the eye.
I posted this link right at the tail end of the last main post.
About the only thing that scares me as much as a world with thousands of conventional new nukes is a world without them.
But it DOES seem to be possible to build a new generation of nukes that will be relatively safe in terms of accidents and pretty much proof against producing fuel for atom bombs.
http://www.theatlantic.com/video/index/410029/the-company-determined-to-fix-nuclear-energy/
These people are not crackpots in a garage, they are serious professionals and well funded, at least for the moment.
TerraPower has been talking up their “traveling wave” reactor for at least five years. Some folks (with a competing thorium technology) have described this technology as “a particularly difficult implementation of the fast breeder reactor”.
I don’t believe TerraPower has started construction on a reactor yet. I have my doubts that they ever will, but we’ll keep hearing about it. It takes a long time to burn through even a tiny fraction of Bill Gates’ money.
Is this a troll?
As if we don’t have enough problems; as if nukes don’t depend on a tax-hostaged public and everyone is free and happy to offer their wage-slaved/industrially-parasitized earnings along those lines.
That phrase is shitted out like you’ve never heard of Fukushima, nuclear waste, or our species collapsing our civilizations before; like you’re leaving shortly for some other world and don’t really care about the legacy that’s left behind.
Well, you know, I guess that’s how it happens: Some of us face our fellow members and with straight, diplomatic, “Hi Caelan,” faces they politely inform us that “Alls well in hell, won’t you join us?”.
Real hell includes the illusion of something other than, and diplomacy doesn’t really really exist with the coercive backing of thugs with weapons along an embedded chain of command.
Hi nothing. It’s goodbye for our species.
“The entire output of atomic power in the United States is exactly equivalent to the requirements of the clothes-drying machines.” ~ Bill Mollison
“Premise Ten: The culture as a whole and most of its members are insane. The culture is driven by a death urge, an urge to destroy life.” ~ Derrick Jensen
Yes, Derrick, I agree; this culture as a whole and most of its members are indeed insane.
Caelan MacIntyre said:
Let me assure you, Caelan, OFM is not a troll.
He’s just like the rest of us, struggling to make sense of a crazy, irrational world in his own particular way.
Who needs nukes when there are drones?
https://www.thebureauinvestigates.com/2015/01/07/us-drone-war-2014-in-numbers/
Pakistan
December 2014 actions
Total CIA strikes in December: 4
Total people reported killed: 14-20
All 2014 actions
Total strikes: 25
Total reported killed: 114-183
Civilians reported killed: 0-2
Children reported killed: 0-2
Total reported injured: 44-67
All actions 2004 – 2014
Total Obama strikes: 357
Total US strikes since 2004: 408
Total reported killed: 2,410-3,902
Civilians reported killed: 416-959
Children reported killed: 168-204
Total reported injured: 1,133-1,706
Not Old Farmer Mac, Glenn, but his comment.
But it came on the heels of reading Dennis’ mention of nuclear too, after griping with him about so-called government, but also after his apparent participation on The Oil Drum where there seemed to form a fair consensus– while Fukushima’s Daichi nuke was blowing up– about the non-viability of nuclear power from many angles, including from the startup angle, in part such as what BlackVoid seems to allude to hereon.
Nuclear is just too expensive. Building reactors means digging us into a deeper hole from a net energy standpoint. A dead-end.
Might you be a shill for the UK STA? 😉
U.K. STA: Solar could provide as much power as Hinkley Point C for half the subsidy cost
Chinese President Xi Jinping looks set to include a big announcement on Chinese backing for the new power station at Hinkley Point, the British Solar Trade Association (STA, Milton Keynes, UK) has undertaken analysis showing that solar photovoltaics (PV) could provide the same amount of electricity for half the subsidy cost. [1]
The analysis shows that a combination of solar PV, energy storage and other flexibility mechanisms would cost consumers roughly 50% less than Hinkley Point C over the 35 year lifetime of the Hinkley subsidy.
STA Head of Policy: “Government needs to explain why it is drastically cutting support for solar energy whilst offering double the subsidy to Hinkley Point C”
“We hope this analysis makes people stop and think about how inexpensive solar has become and how competitive it is against other forms of low-carbon generation,” Mike Landy, Head of Policy at the Solar Trade Association commented.
“We are not saying that solar is the solution to all our energy problems, nor that it could completely replace other technologies. However the Government needs to explain why it is drastically cutting support for solar energy whilst offering double the subsidy to Hinkley Point C. It also needs to explain why it is championing overseas state-backed utilities over British solar companies which given stable support would have considerable growth prospects.”
Critics of Hinkley Point C have pointed out that it is thought to be the most expensive power station anywhere in the world to date.
Just sharing a little more on Bakken (ND).
The chart below shows LTO extraction from Parshall (where it all started) as of Jan 08 and per Aug 2015.
So far the 2015 vintage is poorer than the 2014 vintage and below the average for all, but these are still decent wells.
Parshall has likely peaked.
The Grail pool has still some of the best wells, but the pool has been in general decline since end 2014.
QEP has by far the best wells in Bakken.
Mr. Likvern
Regarding the Parshall, especially EOG’s wells, it might be beneficial when number crunching to be aware that a large percentage of EOG’s wells are short laterals, 5,000′ or so.
The Gis map displays this fairly clearly.
In July, in the Antelope field, EOG brought online the Riverview 102-32H. This 4,300′ lateral well was the highest one month producer ever in the Bakken at over 87,000 barrels for the month.
August’s number was just under 40,000 bbls.
This specific type of completion – they are calling it high density – is what EOG (and, ultimately, other operators) will employ in the coming years.
Mr Coffee,
What is your point?
It appears as each time some actual data are presented that does not please you, you start handwaving and draws attention to some unique well in some other field/pool.
Let me try this another way.
Would you put good money on that LTO extraction from Parshall will reach new highs?
The oil industry used to be about profitability, and those who do not play by those rules will go out of business.
Mr. Likvern
When I commented a year ago that EOG had plans to quadruple the number of existing wells in the Parshall field, you responded that you prefer to deal only in data.
Well, Mr Likvern, you or any other reader can pull up the Gis map and SEE the paucity of wells in much of the Parshall.
What is NOT so readily seen is that the benches of the Three Forks underlie the Bakken and will be drilled and developed when EOG determines that the time is right.
And when this development occurs, the production numbers will reflect the completion techniques utilized in the ‘unique’ Riverview well.
coffee. I note per Enno the average Middle Bakken well with a production history of 60 months or more made 190K barrels of oil in the first 60 months.
I assume you agree that such a well is an economic failure if oil prices do not drastically improve?
When over 10,000 wells are drilled there will be outliers on both ends.
I’d like to see the ten best and ten worst Bakken wells completed in the years 2008 or later, that have 60+ months production history, just to show that even in resource plays, there are real risks.
Shallow
At 30 bucks ATW, you and I can sfely assume that just about ALL of these boys in the Niobrara, EFS, Powder River, Bakken would rather be fishing than bustin’ their butts and losing money.
We need not go over familiar ground about the horrific economics as it is both obvious and understandable that the present status vis vis production and business viability is untenable.
My observations on this site, such as the ones up above to Rune, stem from a fair amount of familiarity with ongoing operations in many of the shales.
(As a side note, I was somewhat surprised, and none too happy when Mike seemed to lash out at my comments as if I were some sort of ‘booster’ for the demon shale companies). If you all want to know WHY the current Bakken output is almost 1,200,000 barrels a day, if anyone cares to know WHY the Parshall has barely begun to produce (hint, 90%/95% of the hydrocarbons will still be there 25 years from now with current extraction practices), I may be able to offer some info that can be verified at the source and people can make up their own minds.
Now, a 60 month production history means the well came online 2010 or earlier.
Should anyone care to read up on those early frac’d/completions compared to today’s, there will prove to be a HUGE difference.
Second big point, shallow, is the furious race back then to get the acreage Held By Production.
Please, take a glance at the graphic that shows 60 day output of ALL wells in the Bakken. It is constantly updated by the DMR folks and was recently on page 2 of the 7/29/15 DMR presentation (easily viewable and enormously instructive.
Looking at the color coded lines, one can see a LOT of green, blue, and dark yellow lines indicating poor production.
Shallow, I do not know how many of Enno’s wells incorporate those dogs, but they were drilled years ago and look mighty lonely at the moment.
But wait! There’s more!!
Say you look at that map and peg a price of 80/100 bucks WTI …
Some of those dogs might be lookin’ a little better.
Now, say, you have $100 WTI, you have vastly more effective completion techniques, there is top of the line takeaway infrastructure already in place …
Those dogs are looking like a 2AM, dimly lit, smokey bar beauty.
So, no, shallow, I do not think current economic are at all viable/sustainable sub $50.
I do not think this pricing will last.
There will be further asset sales, some outfits will go bye bye, and the EOGs of the patch will keep on truckin’.
The pricing will last, it will get much, much worse (lower).
Out here on Planet Earth everyone is broke. Oh yea, the billionaires are doing just fine … everyone else?
Nobody has any money; there is little- or no bid for crude. Oil shortages will not improve matters, make people richer.
coffeeguyzz,
The graph which Rune posted above is not the appropriate graph which is needed to make the kind of comparisons to which you refer.
Instead, what is needed is the type of graph which Rune posted on the last thread, comparing well performance year by year.
This sort of graph would give some indications as to whether all the highly touted new innovations in completion technology are bearing fruit or not. And of course, it may be a bit too early to tell.
http://peakoilbarrel.com/bakken-production-down-plus-iea-predictions/comment-page-1/#comment-542718
coffee. I have also looked at the curves on this site, which slow annually that there is a slight improvement early, but that the wells still decline quickly and that 5 year may be better than 190K, but not a huge amount.
I hope you are correct re oil price.
coffeeguyzz,
I would add that, if we look at their earlier predictions and compare them to actual proven, demonstrated performance, the Carbon Utopians do not have a good track record.
Citibank, for instance, back in 2011 wrote a report in which it speaks glowingly of the “shale revolution.”
“Surging supply growth could transform North America into the new Middle East by 2020,” Citibank writes, “driven by growth in shale oil and gas, deepwater and oil sands resources.”
“North American total liquids production could almost
double from over 15-m b/d at end-2011 to almost 27-m b/d in 2020,” the bank gushes, and concludes that, “As North America becomes the new Middle East, this poses a challenge to the future role of OPEC.”
http://csis.org/files/attachments/120411_gsf_MORSE_ENERGY_2020_North_America_the_New_Middle_East.pdf
Following are a couple of graphs from the report to illustrate some of the pie-in-the-sky predictions the Carbon Utopians made.
So I believe the Carbon Utopians have a stigma to overcome, caused by their poor performance in making predictions in the past.
Bottom line: There are good reasons why people are skeptical of these new claims for a glorious future for the shale revolution.
And of course with the Carbon Utopians, there’s never any mention of what the cost of their hallowed shale revolution might be.
..
°°
—
Mr. Stehle
John Kemp, one of the more highly regarded reporters following the oil/gas world, has today – via Reuters – just described the disconnect from output versus projections as you mentioned in the above post … even offering ‘might have beens” with specific numbers tied to higher pricing.
All in all, I think his perspective is dead on acurate.
With all the attention on debt financing, contracted production, unsustainable operating parameters, there is one aspect that is not getting sufficient attention, namely the plummeting cost of drilling and completing many of these wells.
A smaller outfit, Bonanza Creek, is claiming it can drill a horizontal well in the shallower Niobrara for $3 million … and several bigger operators say they can do it for $4 mil.
Main point being, as Kemp emphasizes, the know how exists and the genie cannot be put back in the bottle.
Edit: BTW, if you folks have not heard, Oasis, the company depicted in the above graph, just had a ‘mini blowout’ in the Bakken these past two days.
Seems like a well being frac’d blew out the hardware on an offset well.
Just completely contained hours ago with minimal, contained fluid loss.
Challenging field, hydrocarbon production.
coffeeguyz,
Since Rigzone published the article by John Kemp, I had already read it. Here’s a link to the Kemp article:
http://www.rigzone.com/news/oil_gas/a/141177/Kemp_OPEC_Has_Stalled_The_Shale_Revolution/?all=HG2
In a separate artice published by Rigzone, we see the bankers did not take the shale guys’ punchbowl away. Given that the banking sector has been on life support by the U.S. government since 2008, I don’t see how this could have happened without regulatory forebearance from the Fed. In my opinion, this will have more to do with the “resilience” of U.S. shale producers, as Kemp puts it, than what he attributes their “resilience” to: “The shale sector’s ability to cut costs and sustain their output in the face of plunging prices,” having “wrung extra efficiencies out of their operations and pulled rigs back to the most prolific sections of existing plays.”
As Rune demonstrates, the wells completed in the Bakken in 2015 have not demonstrated superior performane to wells drilled in previous years.
And I have heard these claims of cutting drilling and completion costs by 50% or more before. Will those predictions come true? Personally, I think it’s so much hot air, and given the Carbon Utopians’ dismal past performance in making predictions, I remain highly skeptical.
As to Kemp’s comparisons of what in reality did happen to what “might have been,” what can I say? In a contest between reality and speculation — between reality and what might have been or what might be in some glorious or apocalyptic future — speculation will always win out. As Hannah Arendt put it in “Lying in Politics”:
Lies are often much more plausible, more appealing to reason, than reality, since the liar has the great advantage of knowing beforehand what the audience wishes or expects to hear.
“US Shale Firms See Smaller-Than-Expected Cuts To Credit Lines”
http://www.rigzone.com/news/oil_gas/a/141076/US_Shale_Firms_See_SmallerThanExpected_Cuts_To_Credit_Lines#sthash.Mt8jCz4t.dpuf
U.S. shale oil and gas producers have seen smaller-than-expected cuts to their credit lines, a sign that banks could be relaxing their lending standards to help companies avoid technical defaults.
Companies that hold nearly a third of the energy industry’s $100 billion or so in reserve-based loans – borrowed against their oil and gas reserves – have reported a 1.4 percent net drop in credit lines.
Most analysts were expecting at least a 10 percent cut to credit lines after the bi-annual process of revising oil and gas reserve valuations based on current prices.
“I think there is concern … if (lenders) put too much pressure on the E&Ps, we could see a wave of bankruptcies, and no bank wants to take over operatorship of these assets at $50 oil,” Oppenheimer analyst Robert DuBoff said.
Companies such as SM Energy Co and Oasis Petroleum Inc have reported a net reduction of $425 million in credit, according to a Reuters analysis based on public disclosures.
Of the 31 companies that have disclosed information on loan resets so far, banks have cut credit lines of 10 firms by just over $1.15 billion and raised them for six companies by about $725 million.
Shale companies are also pushing lenders to package credit lines in their favor.
For example, while lenders last week cut Oasis Petroleum’s credit line, the company is seeking relief by inserting a provision that will allow it to borrow as much as possible under the current facility.
Coffee, as you probably know, a few months ago I suggested that contractor and supplier costs would come down. This is a simple price response to reduced demand. Contractors will squeeze employees, their suppliers and subcontractors, and their profits. But that impact has a limit. Those contractors can thread water for a while, but eventually they disappear or shrink, and the extra low price environment vanishes.
This is why some companies drill now and don’t complete, or wait to complete wells they were drilling. At this point costs are close to rock bottom, and this isn’t going to last. If prices rebound contractors will stop offering bargains. This isn’t really about better technology, it’s mostly about the survivors being tougher and desperate.
The chart below shows normal distribution of the productivities for wells (defined as first 12 months totals) for all wells in Bakken(ND) by vintage.
Note that the normal distribution has changed little with time, exception being the 2014 vintage and so far the 2014 vintage appears to converge to the average for ALL as these ages.
At present prices ($45/b, WTI), about 15% of the 2014 vintage is on a trajectory to become profitable. The 2015 vintage is on a similar trajectory as the 2014 vintage.
When will the high grading show up in actual data?
A sustained lower price will with time increase the portion of ALL wells that moves into an unprofitable trajectory.
Just to weigh in on this: Three Forks is less productive and more expensive than Middle Bakken. You even say yourself it underlies Middle Bakken – you need to drill deeper to get to it.
”We apply fight-or-flight reflexes not only to predators, but to data itself.”
–Chris Mooney
Coffee said;
”When I commented a year ago that EOG had plans to quadruple the number of existing wells in the Parshall field, you responded that you prefer to deal only in data.”
Below is a plot showing developments in cumulative for the average well by vintage for EOG based on NDIC data as per August 2015. (These are both Middle Bakken and Three Forks)
Note how the 2014 vintage as it ages approaches the average for ALL.
The 2015 vintage has so far closely followed the 2014 vintage. At present prices ($45/b, WTI) these wells (which are good by Bakken standards!) will struggle to become profitable
So far no signs of results from improved completion techniques………..but they surely will show up at some point in the future.
Rune, looks like the years to brag about are 2008 and 2013. Any ideas as to why those years are superior?
shallow, as of now I have not dived that far into the data, but with time….with time
Nice quote Rune.
Predatory data?
Saudi Arabia Said to Delay Contractor Payments as Oil Slumps
http://www.bloomberg.com/news/articles/2015-10-19/saudi-arabia-said-to-delay-contractor-payments-after-oil-slump
“Companies working on infrastructure projects have been waiting for six months or more for payments as the government seeks to preserve cash, the people said, asking not to be identified because the information is private. Delays have increased this year and the government has also been seeking to cut prices on contracts”
I am likely not the first to comment that the Saudis are not running low on funds. This type of article is a PR stunt concocted by their PR company. Yes, they are worried about their image, their hold on power, their existence as rulers of their land – as well they should be. Fairly soon, the sprawling House of Saud will want to limit social services and expand the tax burden for the poorest of the Kingdom. They need this to go over smoothly and for all the peons to believe that everyone is suffering equally. Perhaps the recent vacation that “rented out” the French Riviera for a week was not such a great idea. Neither perhaps was the 10,000 fleet (or somesuch ridiculous number) of Mercedes limos that was rented while at a stopover in Washington.
Then again, it might also be the the Russians who just arrange for some band of Houthis to launch a few rockets into those new Saudi refineries…
The IEA 2015 report Energy and Climate Change
The IEA proposes a bridging strategy that could deliver a peak in global energy-related
emissions by 2020.
The Bridge Scenario depends upon five measures:
Increasing energy efficiency in the industry, buildings and transport sectors.
Progressively reducing the use of the least-efficient coal-fired power plants and
banning their construction.
Increasing investment in renewable energy technologies in the power sector from
$270 billion in 2014 to $400 billion in 2030.
Gradual phasing out of fossil-fuel subsidies to end-users by 2030.
Reducing methane emissions in oil and gas production.
These measures have profound implications for the global energy mix, putting a brake on
growth in oil and coal use within the next five years and further boosting renewables.
The full report is here:
https://www.iea.org/publications/freepublications/publication/WEO2015SpecialReportonEnergyandClimateChange.pdf
WIKIPEDIA: India is in the midst of a rapid expansion in coal-fired power plant capacity. According to an August 2011 study by Prayas Energy Group, 590,000 megawatts (MW) of projects have received or are expected to receive environmental clearance. A table provides information on 554 proposed projects representing 617,399 MW of capacity and an estimated 3.7 billion tons of annual carbon dioxide emissions.
As is Vietnam…
Vietnam imported 1.065 million mt of coal in September, surging 596% year on year and up 88.7% from August, according to customs data released Thursday.
Traditionally a coal exporter, the country has actively turned to coal imports to meet rising domestic coal demand, particularly from the power sector.
State-owned Vietnam Electricity said October 6 it added 2,324 MW of electricity from new coal-fired power plants over January-September.
These power plants consume about 6.6 million mt/year of coal.
India is looking to more than double its total coal output to 1.5 billion tonnes by the end of this decade, with 500 million coming from the private sector. Coal Secretary Anil Swarup said India is working out details to open up the nationalized sector and allow private companies to mine and sell coal.
The turnaround in India’s coal industry has been a highlight of Prime Minister Narendra Modi’s tenure in office since May last year, and the prime minister is keen that output grows further.
“We are reasonably satisfied (with the coal resurgence), though there is still a long way to go,” Swarup said.
Plans are not deeds. Keep us informed of any progress.
DHARNAI, India—One year ago, environmentalists hailed this tiny village as the future of clean energy in rural India. Today, it is powered by coal.
Dharnai, a community of about 3,200 people in eastern India’s Bihar state, had been without electricity for three decades. So when activists with Greenpeace set up a solar-powered microgrid in July of 2014, the excitement was palpable. But, residents said, the problems started almost immediately.
When the former chief minister of Bihar state visited to inaugurate the grid, villagers lined up to protest, chanting, “We want real electricity, not fake electricity!”
By the way, here is a link to the interesting article in Scientific American that describes the difficulties Greenpeace faced when setting up a solar microgrid in a rural Indian village…
http://www.scientificamerican.com/article/coal-trumps-solar-in-india/
Yes, interesting!
Now contrast these two staments from Arceu’s recent posts.
Reality in India:
M.V. Ramana, a physicist at Princeton University who has studied energy access in India, questioned the ethics of foisting an expensive solution on the poor, who’ve historically contributed so little to global warming.
Fantasy in Saudi Land:
Fairly soon, the sprawling House of Saud will want to limit social services and expand the tax burden for the poorest of the Kingdom. They need this to go over smoothly and for all the peons to believe that everyone is suffering equally. Perhaps the recent vacation that “rented out” the French Riviera for a week was not such a great idea. Neither perhaps was the 10,000 fleet (or somesuch ridiculous number) of Mercedes limos that was rented while at a stopover in Washington.
Tim Minchin: FUCK THE POOR!
https://goo.gl/QOE9TP
Oh, and when you’ve listened to that, read this!
http://www.huffingtonpost.com/david-oualaalou/a-possible-coup-in-saudi_b_8325456.html?ncid=txtlnkusaolp00000592
A Possible Coup in Saudi Arabia Signals the End of US Dominance in the Mideast.
Then go listen to what Vadimir Putin had to say about what the world needs to do about Climate Change in his recent adress to the UN.
Or you can read it here:
http://www.newsweek.com/transcript-putin-speech-united-nations-377586
FUCK THE POOR!
Fred,
When it comes to FUCKING THE POOR, the Green Utopians, in their unholy alliance with the German oligarchs, can flaunt a pretty darned good report card too.
Glenn the poor in Germany aren’t even on the same playing field as the ‘POOR’ in India or other similar countries. Let’s get, real nobody in Germany regardless of their social status does without access to electricity.
While Germans pay a high price for domestic electricity, they DO have a generally high standard of living, especially compared to other countries with similar endowments of one time thru natural resources.
German export industries pay the bills in Germany, for everybody, its as simple as that. If they pay higher rates for industrial electricity, they might just find themselves with fewer jobs.
I don’t usually defend big business, but the whole damned world economy seems to be such these days that just about everybody is getting subsidized one way or another by somebody or everybody else- excepting the really poor people of course.
Virginia is a pretty hard nosed state as insofar as welfare bennies are concerned, but poor people here are generally living in houses that are warm and eating ok (if they have sense enough) and their kids are getting free school books and lunches etc.
I personally know people who are getting more subsidies for their kids in public schools, mostly out of farmers property tax money, than the average farmer has made in this county over the last few decades.
In most countries where living standards are fairly high across the board, the bottom tenth or so collects a substantial subsidy from the people a little farther up the economic ladder.
I have not had much luck trying to inform myself about the actual circumstances of the bottom ten percent of the German population, given that I cannot speak the language. Perhaps somebody who does, and knows a good bit about current day German society, will tell us just how poor most poor Germans actually are.
I have read a couple of books within the last three or four years about European health care systems and by all accounts with which I am familiar, Germans get excellent health care even if they don’t make a lot of money.
I have said this a lot of times before, but maybe it needs saying again. Germany is going to be way the hell ahead, competitively,compared to other countries in otherwise similar circumstances, as the prices of oil, gas and yes coal too, go up.
And the prices of fossil fuels are sure as hell GOING to go up, eventually, unless the entire world economy falls apart-AND IN THAT CASE, Germany wouldn’t have two coppers with which to pay for imported fuel ANYWAY.
But at least they will have fuel free renewable juice enough to keep a few things running – refrigerators and a couple of lights. The LESS you have, the more VALUABLE the last little bit becomes.
It doesn’t really matter PRECISELY WHAT German working class people spend their money on, so long as they have ENOUGH money. Evidently they have as much or more as anybody else in European countries in similar circumstances.
Smaller countries such as Norway with oil riches are not comparable.
OFM,
Since German policymakers set the country down the mercantist pathway in 2003-2005 with the Hartz “reforms,” Germany’s net international investment position has grown from nothing to over 1 trillion euros.
At the end of 2014, it amounted to over 15,000 euros for every man, woman and child in the country.
This is money that came out of the hides of German workers, and the manufactured goods exported to earn it were goods that German workers themselves could have consumed.
I’d be interrested to hear why you believe this arrangement has been a good thing for German workers.
https://www.bundesbank.de/Redaktion/EN/Downloads/Statistics/External_Sector/International_Investment_Position/sdds_auslandsvermoegen_jahr.en.pdf?__blob=publicationFile
Fred,
Well I suppose that if you can convince the people in Germany who have to work for a living that they’re not getting the screws put to them, then more power to you.
But real wages in Germany have been essentially flat since 2000.
The flat wages are due to the fact that all the growth in Germany’s national income, plus some, has accrued to the ownership class, as labor’s share of the national income pie bites the dust.
http://faculty.chicagobooth.edu/brent.neiman/research/KN.pdf
German workers have lost a greater share of their nation’s income pie than any other country in the G7.
http://faculty.chicagobooth.edu/brent.neiman/research/KN.pdf
The sales pitch that workers in the developed countries were peddled is that they have to give up something so that workers in places like India can have more. “Don’t hog the world’s resource pie,” they’re told.
This, however, didn’t happen. Most of the economic gains in places like India (the exceptions being Russia and maybe Brazil) have accrued to the ownership class, and workers in these faraway lands gained very little from the workers’ sacrifices in places like Germany and the US.
http://www.ilo.org/wcmsp5/groups/public/—dgreports/—dcomm/—publ/documents/publication/wcms_398074.pdf
And because almost all the economic gains which have been made in India have accrued to the ownership class, workers in India are still stuck making about 3% of what the same worker in the United States makes.
http://www.bls.gov/fls/india.htm
Well I suppose that if you can convince the people in Germany who have to work for a living that they’re not getting the screws put to them, then more power to you.
Come on Glenn, are you really serious?! Yeah, I guess you could substitute ‘Germany’ for just about any other country on the planet. BUT can we please just get real here, for a minute? Being ‘POOR’ in Mumbai is still NOT the same as being poor in Hamburg, for crimmini’s sake! It just plain ISN’T!!
Why in dog’s name do you suppose all those refugees from Syria are trying to get into Germany instead of heading to India?
Last I checked this was still a finite planet with limited resources and a population of 7 plus billion that is still increasing. Guess what, the whole world is hitting those limits and that is going to have consequences everywhere. We are all of us playing a game of musical chairs. After every round there are always more people than there are chairs!
None of this should come as a big surprise to anyone who is a regular on this site in particular! Remember the scenarios of the Club of Rome?
http://www.clubofrome.org/?p=326
The results show that the world is tracking pretty closely to the Limits to Growth “business-as-usual” scenario. The data doesn’t match up with other scenarios.
As Limits to Growth concluded in 1972:
If the present growth trends in world population, industrialisation, pollution, food production, and resource depletion continue unchanged, the limits to growth on this planet will be reached sometime within the next one hundred years. The most probable result will be a rather sudden and uncontrollable decline in both population and industrial capacity.
°°°°Fred Maygar said,
BUT can we please just get real here, for a minute? Being ‘POOR’ in Mumbai is still NOT the same as being poor in Hamburg…
Can you demonstrate where screwing workers in Germany has caused there to be fewer poor people in Mumbai?
°°°°Fred Maygar said:
Why in dog’s name do you suppose all those refugees from Syria are trying to get into Germany instead of heading to India?
Because things for workers in Germany are improving?
This is the same argument that American exceptionalists use to defend the deteriorating siutation for workers in the US: “Just look at all those people in Mexico clamoring to get in,” they exort. “Things for workers in the US must not be as bad as the left-wingers paint it.”
But of course if we look at some actual empirical data, what we find is that Mexicans don’t want to immigrate to the US because things in the US are getting better for workers. The reason they want to immigrate to the US because things in Mexico are getting worse for workers:
1.2.2 Causes of migration from Mexico to the United States
The recurring six-year economic crisises, acute rural crisis, the failed industrial restructuring, the high dependence of the maquiladora industry, are among the economic factors that explain the lack of alternatives thousands of Mexicans confront, and expain why so many see their survival strategy and lifting living standards in international migration, despite the high costs of entering hostile territory illegally,
At the microeconomic level the main cause of migration from Mexico to the United States is generated for the necessity to find work (Table 1.4). INEGI (2002) revealed that 92 of every 100 males migrate in search of employment….
While the collective imagination conceives our northern neighbor as an inexhaustible source of jobs and a Wonderland…, the main causes of the migration of our countrymen are for job opportunities.
http://www.eumed.net/tesis-doctorales/2009/adg/Causas%20de%20la%20emigracion%20de%20Mexico%20a%20Estados%20Unidos.htm
Personally, I find this cheering on of the race to the bottom for workers around the world to be unacceptable.
°°°°Fred Magyar said:
Last I checked this was still a finite planet with limited resources and a population of 7 plus billion that is still increasing. Guess what, the whole world is hitting those limits and that is going to have consequences everywhere. We are all of us playing a game of musical chairs. After every round there are always more people than there are chairs!
Well it looks like Fred and friends have certainly staked out an ironclad claim on their chairs.
http://www.mcdonaldsindia.com/m/
At least the poor have a chance to visit a McDonalds there.
Probably some decent food compared to the McDonalds food in the US, which is all inedible.
Alms for the poor! Methinks the poor have been around for a long long time.
Yes, of course. Why didn’t I think of that?
“Let them eat Big Macs!”
You may actually check the monthy electricity bill of German households, it is on average smaller than that of US citizens. But this would require a little bit work on your side, shouting is easier.
If this comment is directed at me, first, I’m not shouting, I’m just trying to add intonation and infection to my comment, admittedly not an easy task when using a written medium . Second, I have family in Germany, both my brother and sister are married to Germans and have raised families there. So I have a pretty good idea as to what life in Germany is like, including the fact that the typical German household’s electricity bill is less than a typical US household’s.
Just curious, are you saying you disagree that being poor in Mumbai is different from being poor in Hamburg?
Ulenspiegel,
Does the ability of the Green Utopians to depart from factual reality know no limits?
Arceus said:
So there’s trouble in pardise?
Tell me it ain’t so.
Brace yourself for a hail of pious, self-righteous indignation for shining a light on the underbelly of the true believers’ Green Utopia.
Hi Glenn,
At some point coal will peak and coal prices will rise, at that point the poor will be better served by wind, nuclear, solar, hydro and geothermal (with a little natural gas backup). We can simply wait for coal prices to rise, but then we have invested a lot of capital in coal plants with 40 to 60 year lives and the poor will have to pay high electric rates as coal prices rise. The following is a likely scenario for fossil fuels based on the estimates of Steve Mohr (case 2) for fossil fuel resources, see
http://www.theoildrum.com/node/6782
for a summary or link below for full thesis
http://ogma.newcastle.edu.au:8080/vital/access/manager/Repository/uon:6530
The scenario assumes there is adequate demand for fossil fuel to keep fossil fuel prices high enough to make production profitable.
Dennis,
I actually agree with you.
And if we add some of the externalities like AWG and the amount we spend on our military in order to suction up 25% of the world’s oil supply, the balance would probably already tilt in favor of renewables.
Nevertheless, it seems to me like the party’s over. To tell people that they won’t have to make sacrifices in the austere energy future that’s staring us in the face is a lie.
Furthermore, the sacrifice should be shared equally, by everyone, rich and poor alike, and not just by the working class.
Hi Glenn,
I never mean to imply that transition away from fossil fuels will be easy, on the contrary, I believe it will be difficult, perhaps exceedingly so. Nor do I believe we are headed to a Green Utopia, I just think we need to combine energy efficiency (and less comfort) with a move to whatever the cheapest substitute energy source that is available when all social costs (both internal and external) are considered to minimize human suffering.
I absolutely agree it would be best if any sacrifices are shared equally between rich and poor (or better yet, that the rich bear the greatest burden). Unfortunately this has rarely happened in the past, and is unlikely to be the case in the near future. If it could somehow be accomplished without trampling on the rights of the minority (the wealthy), I would be all for it.
°°°°Dennis Coyne says:
I absolutely agree it would be best if any sacrifices are shared equally between rich and poor (or better yet, that the rich bear the greatest burden). Unfortunately this has rarely happened in the past, and is unlikely to be the case in the near future.
Well I suppose we all have our utopian strivings towards our own holy grail. Mine is greater political and economic equality.
°°°°Dennis Coyne says:
If it could somehow be accomplished without trampling on the rights of the minority (the wealthy), I would be all for it.
In The Virginia Statute of Religious Freedom, It’s Evolution and Consequences in America History, you might enjoy reading Lance Banning’s essay, “James Madison, the Statute for Religious Freedom, and the Crisis of Republican Convictions.”
Banning explains that in his design of the U.S. Constitution, Madison was most interested in protecting the rights of two specific minorities:
1) Religious minorities, including atheists and agnostics, and
2) Economic minorities (the wealthy)
Of course these constitutional protections have since been extended to other minorities: racial minorities, ethnic minorities, sexual and sexual-preference minorities, etc.
Few probably realize that the constitutional structure which Madison devised to solve the “democratic riddle” and “the fundamental paradox of every liberal democracy,” which protects religious minorities, also protects economic minorities (the wealthy) as well.
The “democratic riddle” now seems to be how do to get the wealthy to want to sacrifice for the good of their nation, or for their universe.
Mine is greater political and economic equality.
However, to achieve that would likely require either faster consumption of resources to give a better lifestyle to more people, or lowering the standards of the current upper and middle classes so that they are equal to the poor.
(Or finding a way to improve lifestyles for everyone while using fewer resources. Some of those who hope to do this you label green utopians.)
I’m not in favor of income inequality, but it might be better for the environment.
So there’s trouble in pardise?
Not really! There is a certainly lot of trouble in India.
But sorry, India with a population of 1.2 billion, where millions do not have access to running water, let alone electricity, does NOT, by any stretch of the definition, qualify as a ‘PARADISE’… With the possible exception of India’s middle class which comprises about 250 million or 20 per cent of the country’s population in 2015, you could safely characterize most of India as a living HELL!
To expect renewables or anything else for that matter, to solve India’s energy troubles is to misunderstand the multiple nested dilemmas that face humanity at this particular juncture in our collective history!
BTW, Just in case anyone missed the point, Tim Minchin’s ‘FUCK THE POOR’ is intended to satirize the modus operandi of the Western way of life which includes, the left, the right, the greens, the conservatives, etc… etc… with guilt spread equally in all directions!
Cheers!
Yes, it’s strange to hear people from the West pontificating about people and places where most of the population live in shelters made of cardboard boxes, shipping crates and wood pallets. I recall a trip from when I was working in the Philippines driving for over three hours through such a “community”. Kids there couldn’t possibly go to school because most suffered severe mental issues and brain damage owing to malnutrition.
Sounds like there may be some trouble in that paradise as well, eh?
Yeah, I suppose that attaching solar panels to those cardboard boxes might be a bit problematic.
On the other hand connecting those same cardboard boxes to a coal powered grid might not be all that easy either. Unless of course you use special waterproof high voltage polymer based connectors…
I recall seeing a single room cabin, in the middle of nowhere in South America. A robbed electric connection and the families prized possession – a TV.
The Indian project failed because of failure to apply the military 7Ps, plus the greed of the wealthy. The cost of the grid connection plus the transformer would, probably, have paid to upgrade the solar system. The chants of ‘fake electricity, real electricity’ make me wonder if a fossil fuel agitator was involved. I suspect an official or two are slightly better off than before the grid was connected.
NAOM
The chants of ‘fake electricity, real electricity’ make me wonder if a fossil fuel agitator was involved.
I thought something similar.
I can’t see that there is any particular reason why an area without electricity would care if it came from solar or the grid, as long as they get it.
A grid just keeps them tied to a central utility and to coal that someone supplies. Solar has the potential to allow them to be more autonomous.
Fred is right. Glenn might want to think harder about the situation the whole world is in. German working class people are apparently doing about as well as working class people anywhere in the world and a damned sight better than working class people almost everywhere.
In some ways it really matters WHO owns the money, the stocks and bonds and the real estate. In others, what really matters is how well the typical citizen LIVES..
Now I come from a Scots Irish backwoods Baptist background, and a truly FUNDAMENTAL part of my culture is to live modestly and save and accumulate assets.
And even though I have “loafered” more than half my life away, rather than actually LIVING that work and savings ethic ,when I could have been WORKING, I still have managed to accumulate some assets. Most of the people I have known from other backgrounds own a house and maybe some nice furniture and maybe a nice car or two, even though in most cases they have made a LOT more money than I did, over the years. I have a nice house and some nice furniture and some assets worth a hell of a lot more than a couple of nice cars.
But they have eaten more meals in better restaurants, driven newer cars, taken more expensive vacations, worn nicer clothes, spent money on jewelry, etc ad infinitum. Now by most folks standards, these days, they have lived better lives than I have.
( This is not to say I have not lived well. When a couple of old acquaintances realized I had been living in the woods in a camper for a year straight and started getting a little condescending about my lack of material living standard, I just pointed out that I owned both the woods and the camper, and that they themselves only owned a camper- which they used to vacation in the woods and at the seashore a couple of weeks a year.I got in a two decades worth of two weeks vacation within a calendar year. The other twelve weeks I worked on the farm or at a nuke or whatever. I passed a lot of them different days on the way to work- with my canoe on top of my car on the way to the river. )
Glenn’s arguments just don’t hold water so far as I am concerned. You can prove anything you want with statistics if you are skillful at looking for them.
Somebody show me some English language real life stories about how hard up the German working class is. The relative handful of papers and magazines that cover international affairs I can read free online these days don’t print very many if any sob stories about how hard up working Germans are.
And let us not forget that Germany is only one generation away from reunification- which has been an extremely expensive and extremely long term hard haul.
When anybody starts in on anti renewable rants without acknowledging both the pros and the cons of the issue, I start wondering if maybe I have run across somebody with a hidden agenda.
Old Farmer Mac said:
If you prefer anecdotal information over empirical information, you might want to listen to what the German policymakers say, and how Gregor, a worker from Berlin, responds. It’s towards the end of this video:
http://www.cbsnews.com/news/growing-backlash-for-migrants-in-germany/
regarding OFM statement: “German working class people are apparently doing about as well as working class people anywhere in the world and a damned sight better than working class people almost everywhere.”
One major reason for this is the utilization of workers in Germany as an asset as opposed to a debit/cost in the USA. In short, Unionization. Imagine, a business actually listening to someone on the shop floor, as opposed to an ‘Owner knows best’ philosophy.
from: http://www.aicgs.org/issue/labor-relations-in-the-u-s-and-germany-volkswagen-chattanooga/
“Franklin Delano Roosevelt’s New Deal included provisions, specifically the Wagner Act of 1935, that guaranteed the rights of unions to organize as well as the right to collective bargaining, and unions saw a rise in power and influence as a result. Specifically, unions were able to compel companies to only employ dues-paying union members. The Taft-Hartley Act of 1947, however, introduced the concept of “right-to-work.” This new legislation meant that employment could not be terminated simply because a worker did not join the union or pay union dues. The decision to adopt the practice of “right-to-work” was left to the individual states. Since then, twenty-four states—including nearly all the Southern states—have adopted right-to-work laws. As a result, private sector unions have seen a steady decline in America, with union membership peaking in the 1950s. According to the U.S. Department of Labor, 11.3 percent of workers in the combined public and private sectors belonged to unions in 2013. In 1983, it was 20.1 percent.
German labor unions are stronger than their U.S. counterparts. Following a system of co-determination (Mitbestimmung), German labor unions are cooperative by nature, intended to facilitate conflict resolution between employee and employer, and provide a more “democratic” way to run a company. Labor representatives are included in the decision-making process alongside shareholders. Workers form “works councils” on the floor level, which then choose labor representatives to put forth their interests at a managerial level. The representation of workers’ interests goes all the way up the chain of command. Such a system is beneficial for employees, and it can also be argued to be beneficial for employers, as it provides a venue for avoiding confrontation or strikes. The laws in place—specifically the Works Council Constitution Act—force collaboration between employer and employee, with the result that about 26 percent of German workers are trade union members.
Labor relations are encountering an increasingly globalized marketplace, with profits and jobs on the line. The experiences of a German automobile manufacturer in the U.S. could well shape labor relations in the future.”
and: “Politics also played a role in the outcome. In the politically conservative South, several Tennessee government officials, with the help of anti-union action committees, were able to lead a successful campaign against the union. Some lawmakers warned that VW might not receive new tax incentives to expand in the state if the UAW was successful at the VW plant. ”
In a Cheech accent: ” we don’t need no stinkin’ Union”.
My dad and Grampa had to work in a slaughterhouse killing pigs in The Great Depression. I also used to work in non-union avaition, now one of the worst industries in North America. Where I worked on the BC Coast we were actually unionized in many cases. I was a Teamster, other companies were CBRT, IWA, and even Operating Engineers. Then came de-regulation. Then came de-certification of unions. This was 30 years ago. The wages have stayed the same or worsened and accidents have increased. My last flight, even though I was extremely well treated and well paid, was in 1995. Never looked back.
From Forbes: ( recent VW pollution fiasco, notwithstanding)
In 2010, Germany produced more than 5.5 million automobiles; the U.S produced 2.7 million. At the same time, the average auto worker in Germany made $67.14 per hour in salary in benefits; the average one in the U.S. made $33.77 per hour. Yet Germany’s big three car companies—BMW, Daimler DDAIY +% (Mercedes-Benz ), and Volkswagen—are very profitable.
How can that be? The question is explored in a new article from Remapping Debate, a public policy e-journal. Its author, Kevin C. Brown, writes that “the salient difference is that, in Germany, the automakers operate within an environment that precludes a race to the bottom; in the U.S., they operate within an environment that encourages such a race.”
Doug, it looks like just India could wipe out any decreases the US could make in carbon pollution.
What do they need all that electricity for, they did without it for thousands of years and all that lighting will only attract bugs?
Of course this type of thing does seem to attract the hope-vampires and the losers from the high school debate teams.
An unfortunate article for many “true believers” no doubt…
M.V. Ramana, a physicist at Princeton University who has studied energy access in India, questioned the ethics of foisting an expensive solution on the poor, who’ve historically contributed so little to global warming.
“I strongly encourage [microgrids] for urban, upper classes of people who can afford it,” he said. “But [I would] not do it on the backs of people who are poor and who can’t afford these experiments.”
At present, solar power in Dharnai costs at least three times as much as grid power. It can support only expensive energy-efficient appliances, such as CFL bulbs. A CFL bulb in India costs 700 rupees ($10), while an incandescent bulb costs 10 rupees (15 cents).
Grid power, which in India’s case is mostly coal-based, generates enough electricity to power factories, agricultural processing, hospitals, schools and malls, all of which drive human development and create jobs, said Alex Trembath, a senior analyst at the California-based Breakthrough Institute.
Groups that claim that solar microgrids can fuel similar levels of development are “conducting clean energy and climate policy on the backs of the global poor,” he also argued.
Grid power, which in India’s case is mostly coal-based, generates enough electricity to power factories, agricultural processing, hospitals, schools and malls, all of which drive human development and create jobs, said Alex Trembath, a senior analyst at the California-based Breakthrough Institute.
Wouldn’t it make more economic, and definitely more environmental sense to run cleaner power plants in parts of the world where they are economical, and then just provide India with many of the goods that India might want to create in its own country?
Why put coal plants in India because that is all that India can afford in order to feed and employ its people? Why not find global solutions which don’t require coal?
For that matter, wouldn’t it make more economic/environmental sense just to give India the necessary solar equipment and help running it rather than requiring India to buy it?
In the greater scheme of things, it will cost the entire world if India and other similar countries need coal to survive. The cost of solar might be cheaper than the cost of the extra carbon, pollution, and transportation of coal.
Right. Coal is cheap only if you don’t count the cost.
Best to send whatever it takes to all the sources of billions of migrants to give them a chance to stay where they are. Then slam the gates shut.
I see no other way out. The only defense possible.
Put the bill on the defense department budget where it belongs.
For all intents and purposes in terms of the BIG PICTURE the gates HAVE BEEN or WILL BE SHUT.
Germany for instance may allow in a million immigrants over the next YEAR.
If the gates were truly open, a million would arrive next month, and more and more every month after that, once the word really started getting around in the places people are fleeing.
There simply isn’t any way any country can absorb millions of mostly ill educated immigrants not even able to speak the local language in most cases by the millions short term without suffering explosive economic, crime, and security problems.
No democratic government could withstand the political backlash.
The problem is that the Global coal resource may not be as large as many think. I agree we should focus on bringing costs for solar and wind down (and ironing out grid problems). At some point coal is not a great option, nuclear would probably make more sense as there will not be as much of a problem with rising future fuel prices. Coal also is not great for health, just ask the Chinese.
The GRID is not going to reach most of the billion or so citizens of India anytime soon- where as some pv can and will provide them with SOME electricity.
Now maybe an incandescent bulb really is only fifteen cents in India- I have no idea. But if an led bulb is ten bucks, it sure as hell is the fault of the Indian government rather than businessmen -other than the ones bribing the relevant government officials of course.
A little bit of electricity is priceless. A small pv panel, a durable battery, a radio and a couple of led lights would be almost beyond price in the eyes of most REALLY poor people.
A simple solar powered pump that would run for a few hours in the middle of the day most days bringing up well water would likewise be almost priceless.
There are proponents of India adopting solar-powered microgrids across the country, however.
Justin Guay, climate program officer at the David and Lucile Packard Foundation who was previously with the Sierra Club, was a strong advocate of solar for India.
Guay said that even a single light bulb powered by a microgrid is valuable to someone without power while noting that using a centralized grid is like using “whale oil,” and that solar microgrids are solutions of the future.
“It has everything to do with progress,” Guay said. “I don’t think you will see a single person say that the poor should continue to use whale oil in the 21st century and call that ethical and progressive.”
In Spanish slang “Justin Guay” translates to “Cool Justin”.
I’m not sure about India, but everywhere I’ve been, and I’ve been in dozens of countries, anything that’s in a poor area, has value, and can find an easy resale market has to be put behind steel bars.
I put myself in the shoes of a poor guy living in a slum in a location with a rainy season, where sunlight sucks for three-four months and is definitely not available the 14 hours a day when juice is most needed….and my draw is to sell the solar panel and electric set up, the light bulb, and buy a tricycle.
Until my family got to be prosperous enough to afford supermarket fruits and veggies, we had fresh produce only during the local harvest season.
We were still damned glad to have tomatoes even if we could have them only from July until mid October.
Now dealing with thievery in a slum is always likely to be a really tough nut.
As I see it, the thing the really poor people in places such as India need is free birth control and leaders capable of convincing them to use it.
18/10/2015
Saudi Arabia’s fiscal break-even oil price to be around $US 100 mark for
the foreseeable future
http://crudeoilpeak.info/saudi-arabias-fiscal-break-even-oil-price-to-be-around-us-100-mark-for-the-foreseeable-future
Alaska Railroad first in nation to be given permission to haul LNG.
http://www.alaskajournal.com/2015-10-15/alaska-railroad-gets-lng-approval
Solar panels drain sun’s energy:
http://nationalreport.net/solar-panels-drain-suns-energy-experts-say/
Rather startling news. You can’t win, even when the energy from the sun is free, photons are more important. More depletion and decline, now from the sun itself. This is getting serious.
Just one more thing to worry about. Now all production of solar panels will have to be halted to prevent the sun from burning out too soon. What are we gonna do?
Edit: I switched to R to avoid any confusion in the future. har
Ron. I like that you compared 2008-2009 to 2014-15.
Think that a comparison to 1985-86 and 1998-99 would also be appropriate.
Each time, oil prices collapsed by more than 50%. Each time, within no more than 18 months from the beginning of the price collapse, OPEC cut production. Each time the oil price at least doubled within one year of the OPEC cut.
12/4/15 meeting will be about 18 months since the beginning of falling prices in 6/14. It is clear OPEC members are suffering economically.
The consensus is there will be no cut. I think a cut 12/4 is possible, if not then possibly next spring.
Will be very interesting to see what happens.
Shallow, It’s not Ron Patterson here, it is Ronald Walter. I thought it would end the confusion, now it’s worse than ever.
R Walter
Solar panels drain sun’s energy:
But, but, I thought puny little humans couldn’t even affect the 100 Km deep atmosphere of our tiny planet, yet we have the power to drain the the Sun’s energy?! Oh well, I just knew solar panels and harvesting energy from the sun was one of those too good to to be true ideas! I guess we’ll just have to go back to burning coal.
Wait until scientists discover how the sun is very energy inefficient. Most of the energy it produces misses the earth. Even if you consider the other planets, most of the energy misses the plane of the ecliptic. What a waste. If the sun was more focused it could operate at very low energy and still get the job done.
Who designed this system?
Coal is expended photons, former energy from the sun, burning coal can’t in any way deplete the sun’s energy, so burning coal is more responsible than using solar panels that deplete the sun’s energy immediately.
The choice is obvious, coal does not burden the solar system like solar panels do. Less energy from the sun might possibly reduce the sun’s gravity and the entire solar system might just fly apart in all directions.
Green energy interests would have a lot of explaining to do.
The International Space Station should be mothballed.
How about I’m not buying the idea that solar panels reduce the sun’s energy level?
The International Space Station should be mothballed.
Why? Just power it with coal!
R Walter said :
” Coal is expended photons, former energy from the sun, burning coal can’t in any way deplete the sun’s energy, so burning coal is more responsible than using solar panels that deplete the sun’s energy immediately.”
Coal is one of the biggest sun suckers there is. It is responsible for about a 10 percent drop in sunlight at the earth’s surface. Yikes, get your “facts” in order.
Solar panels reflect a nice blue light that enhances the sky glow and do not cause any problems at night. Coal burning slowly kills millions day and night, choking them to death. During the day it sends back huge amounts of sunlight that we could use for heating.
Everyone should know that the National Report is a satirical site. The article worked. It had me laughing. The right wing has enough crazy “think tanks” that it can seem slightly plausible that one of them might be this crazy. It is a bit like an over the top Stephen Cobert skit on his old show.
Anyone who read that article and thought it was a serious piece, rather than a satire, really has serious problems, and likely problems that extend way beyond the world of science.
Let’s collect some thoughts from above:
1) If an oil producing country were outright communist, grew its own food, built its own cars, and bought as few as possible TVs from outside the borders, would it matter to them what the price of oil is? In fact, they might choose not to export any. Keep it for themselves. Think carefully about this. The genie was let out of the bottle in 2009.
2) India builds coal fired plants because they have coal. Period. They don’t sit down and wring their hands about morality this and that and kindness to Mother Gaia. They have coal. They’ve been mining it over 200 yrs, and output has been increasing probably about that long. Why in hell would they have any other sort of power that makes them depend on something outside the borders?
3) coffeeguy hasn’t figured it out yet. There is no money to be made there. There is no law of the universe that says price will arrange itself for profit. The oil is there and if it is required, and it probably will be, it will flow, regardless of price, regardless of profit, regardless of financing, regardless of who runs what company. The game began to end in 2009 and amid relentless scarcity, there is nothing anyone can do about it.
2) India builds coal fired plants because they have coal. Period. They don’t sit down and wring their hands about morality this and that and kindness to Mother Gaia. They have coal. They’ve been mining it over 200 yrs, and output has been increasing probably about that long. Why in hell would they have any other sort of power that makes them depend on something outside the borders?
But that’s not a solution or India would be fully electrified by now. If all that is required is to have local coal to mine, then India would have had a reliable grid system for everyone throughout the country by now. But it doesn’t.
Watcher, ref ” If an oil producing country were outright communist, grew its own food, built its own cars, and bought as few as possible TVs from outside….”
1. Communist countries don’t have the capacity to grow their own food.
2. Cars built in communist countries are smoke belching rust piles on day one.
3. Communist countries import very little because their system destroys the economy.
Don’t know about that. I spent seven years coming and going from communist Vietnam; best food I’ve eaten anywhere — including France. And, the country is also a major rice exporter.
Vietnam isn’t communist. It practices a blend. That rice they grow isn’t farmed in state owned communes directed by communist party commissars, is it?
I’m not personally a huge fan of China’s politics and economic policies but…
Is China no longer considered a communist country?
I think they have the capacity to produce food and even cars that aren’t exactly smoke belching rust piles…
China’s imports in dollars in 2011, Source: United Nations Commodity Trade Statistics Database Total: $1,450,642,919,354
http://www.indexmundi.com/trade/imports/?country=cn
I think with all it’s problems China still has a somewhat functioning economy, no?
Here’s a good one for you, Fernando: NYT reports that even thieves in Venezuela insist on dollars, and refuse the Bolivar.
The black market Bolivar sold for 8-9 to the dollar in 2010. Today it swings between 800 & 900. But they haven’t issued large denomination bills. Robbers don’t get to tell victims to carry dollars, but I bet they demand dollars for kidnap victims. Otherwise the ransom has to be delivered in suitcases.
Venezuela has moved through the looking glass. It’s a bizarre mix of communism, corruption, anarchy, and madness. I hear things in Cuba are starting to fall apart, a significant fraction of their economy depended on oil and cash they siphoned from Venezuela, but it’s drying up. I hear Venezuela’s oil sales are very low quality, are fetching $40-41 per barrel, and the rate is dropping steadily.
The Castro Mafia is the factor keeping Maduro’s Mafia in power, they have thousands of secret agents in Venezuela, keep control of the armed forces and the secret police (the Sebiners).
But Obama seems to have a lousy foreign policy, he’s tossing the Castro Brothers Mafia a helping hand in a moment when they are ready to kick the can. Obama is like Carter, I think he’s a nice guy, smart, but is also an idiot. I don’t think the republicans are much better, but if Marco Rubio or Bush win the race they’ll shred Obama’s foreign policy moves with Cuba, and that in turn will liberate Venezuela from this nightmare.
Marco Rubio’s Ideas About Climate and Energy Are Terrifyingly Stupid
http://nymag.com/daily/intelligencer/2015/10/rubios-ideas-about-energy-terrifyingly-stupid.html#
Oh Fernando, your so 60’s. Give it a rest. And by the way, Bush’s campaign is dead and can’t even get up to justify his brothers actions. Beaten by Trump, how embarrassing. Next, Rubio.
Godwin’s law is so passe. I’d like to propose Fern’s law: if a Ronpost goes on long enough ( 2-3 days?) Fernando will begin ranting about the communists.
Considering Chavez is long gone, Fidel is frail as my 13 yr old labrador and Starbucks is laying plans for Havana, you’d think this would be Fernando’s happy time.
The deep water offshore industry, which is very expensive, delicate, and technical will not move without profit. Bermuda will not nationalize the rigs that are registered there.
2)India builds coal fired plants because they have coal. Period. They don’t sit down and wring their hands about morality this and that and kindness to Mother Gaia. They have coal. They’ve been mining it over 200 yrs, and output has been increasing probably about that long. Why in hell would they have any other sort of power that makes them depend on something outside the borders?
⌚er
They need money first.
In India, government officials drive down the streets in cars with pa systems asking, demanding people to pay their electricity bills.
The approach must be working, there must be fewer spaghetti wires hanging from power lines and more systematic control of the distribution of electricity. The citizens did the right thing and paid their bills. The demand was higher than collected revenues realized.
Finally, they got the picture.
Hence, the increased capacity.
Natural gas winter outlook, fairly well done, likely to be of interest to Heinrich who seems to be fairly bullish on ng this winter…
https://www.youtube.com/watch?v=SCDknmepPs4
Arceus,
Thanks for the link. At least I have a point. Otherwise there would be no such an effort to discuss this issue. The speaker did not really say why there will be more natgas production. At least so far yoy% natgas prodction fell continuously over the year and growth is at the lowest point for over a year. This is very controversal to predictions that natgas production will soar over the summer due to less pipeline constraint. Announced revolutions will not happen, neither on the downside nor on the upside. Change will happen when nobody expects it. So I am very happy with this presentation. It will very much depend on how much money natgas producers have available for expansion. This is the key variable (other than weather) and it depends on how much money investors will pour into natgas. However, if prices will be staying low, where is the case for investing here? I am expecting a spike in high yield bonds over the next few months, which will constrain cash flow for producers and banks. This is what actually nobody can predict for sure, yet it is in my view very likely. An implosion of the bond market can be very violent and it will be impossible for producers to ignore it. From product prices, producers do not get money anyway.
Heinrich
I am fully expecting a bond market disaster on the horizon. Don’t the shale oil guys have mostly junk rated bonds at this point? I know all bonds are different but as rates rise won’t this have a big effect on the shale oil bonds? As in a very bad way?
Sorry, but I live in the real world and have always had to pay cash for my business investments. I know, I’m such a fossil.
HR,
Many E&P production companies are financed in the bond market. Also big companies like Exxon have been increasingly relying on the bond market. A weakening bond market does not matter much in the short term as the companies simply do not issue debt. Yet it matters over a time span more than six months as companies cannot rollover maturing debt. A rate hike would be a serious mistake in this respect. I think the FED knows this and is therefore very reluctant to raise rates. The FED cannot target directly oil prices, yet it can support oil companies over the bond market and a weak US dollar. Nevertheless, if the FED raises rates it would be in my view the final straw to bring many oil companies down to their knees.
Arceus,
To complete my above comment there has been a confirming signal from today’s market announced at bentekenergy.com: Marcellus is down a staggering 1bcf/d to just 19.38 bcf/d. Texas is down to 19.3 bcf/d – a multi-year low and down from 22bcf/d in July. This is also down an incredible 20% from last year. Total US production is down to 70.5 bcf/d. It is indicated that the reason is maintenance and not the sign of a long term trend. However, this is the first yoy% decline in natgas production since January 2010. So, the signs are growing that natgas production is starting a downward spiral.
Mr. Leopold
At 70 cents per mmbtu, those Appalachian Basin guys are truly giving it away for nothing.
When it gets back to the $4/$5, or, maybe even $3 range, Noah’s ark won’t be sufficient to ride out the ensuing flood.
Hi Coffeeguyz,
What do you expect will happen to the price of natural gas during such a flood?
What happens to output in that case?
Dennis, Coffee,
Companies are currently relying on bank loans alone. The bond market and also private and public equity are basically shut. The question is how long they can do it. In the Marcellus, probably a few months longer. As this is the subject of national pride. The real danger for supply is the rest of the US. Conventional gas projects simply do not get any financial support. This is in my view the reason for the dramatic supply shortfall in Texas.
Hi Heinrich,
The data coming out of Texas is based on RRC data which is always incomplete, any data newer than 12 months is not very reliable. Using EIA data there has not been a significant drop in Texas output of natural gas (using trailing 12 month average monthly output through July 2015).
Dennis,
RRC has not yet issued numbers for August, September and October. My numbers are from bentekenergy.com. However, if you go to http://www.rrc.state.tx.us/oil-gas/research-and-statistics/production-data/texas-monthly-oil-gas-production/……..you can see that for June total gas production is already down yoy by over 5%.
Heinrich,
Bentek probably gets data from drilling info and they get data from the rrc. The rrc data is only accurate through August 2014 after that it is
Incomplete. The eia data is far better.
Coffee Wrote:
“At 70 cents per mmbtu, those Appalachian Basin guys are truly giving it away for nothing. When it gets back to the $4/$5, or, maybe even $3 range, Noah’s ark won’t be sufficient to ride out the ensuing flood.”
Even at $4 to $5, Shale gas will flow as long as drillers can obtain credit. Most of the Nat Gas Drillers are deep in debt, and will fold when they reach their credit limit. NatGas need to go to $10 to $16 and stay there, to be profitable.
Techguy, my guess is that if drillers in the Marcellus could even get the $2.50 range we see at Henry Hub we would see another 10 bcf/d. Marcellus wells are quite productive at modest costs.
Don,
According to my information Marcellus wells – and even more Utica wells – are productive for the initial first three months, yet experience dramatic declines during the following months. This is due to the high depth and high pressure of these wells. This has led to a lot of confusion about economics and potential reserves. As it is difficult to assess the wells from outside, my barometer for economics is the share price for these companies. Rice energy (RICE) is a poster child of these plays and the stock is down two thirds since its inception one year ago. This is not exactly a proof of highly economic and productive wells.
Don Wrote:
“Techguy, my guess is that if drillers in the Marcellus could even get the $2.50”
Don,
My guess is that when the credit these drillers are using vanishes, so will all future Marcellus drilling.
http://marcellusdrilling.com/2015/02/19-oilgas-companies-on-death-list-8-are-in-marcellusutica/
Techguy and Heinrich,
David Hughes is in general highly critical of the EIA for extravagantly positive estimates of recoverable fossil fuels. However, for the Marcellus he was correctly accurate in criticizing them for their lowball predictions. In the latest DPR report from the EIA they had to very significantly revise their number higher for the Utica. There are three major pipelines that are providing increased takeaway from the Appalachian region toward the Gulf region and one toward the west. Apparently there are a total of nearly 40 pipeline projects in the works that will massively improve the ability of drillers to get their product to market. The logical implication will be a massive reduction in the differential between this region and Henry Hub with perhaps a doubling or more in the revenue from particular wells. There is substantial investment in export options and local use options which can be expected to add to revenue for local drilling operations.
I fully agree that it will take a while to understand the magnitude of reserves and the operational economics of the Utica. However, the DPR revisions changing from a 2.6 bcf and declining view to an over 3.0 and rapidly increasing view should not give comfort to those who expect or want a decline in output. The scale of the Utica seems to be quite similar to the Marcellus. In addition this detailed review with map is suggestive of a possibly massive supply to come:
http://seekingalpha.com/article/3509186-natural-gas-the-dry-gas-utica-a-rival-to-the-marcellus?li_source=LI&li_medium=liftigniter-widget
If I were you I would not be wanting to bet against the productivity, economics or output from this region.
Correction for above: The Utica was declining from a September peak of 2.793 bcf/d in the prior DPR report. The current DPR has it increasing from 3.02 bcf in October to 3.08 bcf per day in November.
Don,
Go look at the debt load of the Marcellus drillers. Its virtually astronomical. This is not a sustainable business model. Perhaps someone well end up up buying the assets for peanuts after bankruptcies hit. However i very much doubt the future owners will sell NatGas at $4 to $5.
In addition, Domestic Drilling is at at least a 10 year low. regard less of how economically Marcel. drilling has become, I am sure its not economical in other regions and its doubtful tha Marcel. Drilling can supply 100% of US demand.
[See NG Drilling
http://marketrealist.com/2015/05/natural-gas-rigs-drop-gas-demand-slows/
I would expect that the coal plant closures as well as Coal boiler retrofits with NG inserts is going to increase demand and cause NG prices to start rising. I am reasonably sure that the NG glut will end next year and prices will rise until it tips off demand destruction.
Techguy,
I understand your point re debt. I’ll leave it to others to pursue that thread of investigation. I concur with you projection that owners of these assets will not receive $4 to $5 for their product. But if they get $2.50 to $3 that may be 2 to 3 times what they received in the past. We need to wait to see the implications of that.
The number of drilling rigs may be at a 10 year low. However, that does not mean that effective drilling is also at a 10 year low. Wells are drilled far faster and more efficiently than in the past. The current total of 192 drilling rigs is actually 30 less than the article that you referenced. This may still be adequate to cause a further leg downward to $2.00 for nat gas. Marcellus drilling is unlikely to ever go much above 40% of national production even with the most extreme future scenarios. However, do not forget the general increase in gas/oil ratios as fields age. This may help to keep gas supply level even as oil supply declines about 10%.
Hi Heinrich,
The weekly data is very noisy(and not all that accurate) and even the month to month fluctuations are fairly large. Looking at monthly data and taking the 12 month trailing average to smooth the data, there is little sign of sustained natural gas decline through July 2015. See Chart below which charts gross withdrawals of natural gas.
Dennis,
Please check from below table that total dry gas production in Texas has definitely declined yoy from April on. You are using gross withdrawals, which contain NGL production. It is true that weekly numbers are volatile, yet there is definitely a trend here. I cross check all my numbers from the EIA, Bentek and the FED production numbers.
TEXAS TOTAL NATURAL GAS PRODUCTION (MCF, includes Gas Well Gas and Casinghead Gas) bcf per month
MONTH 2014 /2015
JANUARY 696 /712
FEBRUARY 630 /648
MARCH 713 /713
APRIL 704 /684
MAY 735 /692
JUNE 715 /659
JULY 736 /* 656
AUGUST 741
SEPTEMBER 709
OCTOBER 737
NOVEMBER 711
DECEMBER 742
ANNUAL tot 8,574 /4,767
Natural gas production includes gas going into storage. The storage volume is very high, this can cause reduced demand and lower production. The lower production isn’t linked necessarily to lower well capacity.
Dennis,
In addition to my previous comment, I want to post the production chart and the annual change from the FED Index https://research.stlouisfed.org/fred2/series/IPG211111N
It is a very reliable index and it is from September, so it is very up to date. It summarizes oil and gas production and shows that the growth rate has come down from nearly 20 % per year and is now close to zero. If there is no dramatic change in the environment (oil price, USD) it is very likely that growth rates will be zero by this month and by at least -15% by next mid year.
Oil is down, if the index is flat that suggests natural gas is up.
It took me a while to wrap my mind around the idea that the price will not go up again because the whole machine is breaking down, and it doesn’t need oil that costs more to produce than it can make for the end users. It used to be that you could leverage a dollar into 10 by using fossil fuels, but nowadays it costs more to get it than you can make with it. Therefore the rest of the world is using less and less of the stuff. They can’t afford it, and therefore the price has to go down to reflect that. I use the metaphor that if you are a builder and you made 5000 a week before the recession, you could afford to pay the workers a thousand a week. Once the recession hit you couldn’t even make a thousand a week for yourself. Why would you pay someone the same wage you paid them during the boom times? So it is with oil. It used to do a lot of work for us, but not so much nowadays. Here’s a graph of what the price will do in the next five years:
http://www.thehillsgroup.org/depletion2_022.htm
You can see that the price that the market is willing to pay for oil goes down and down.
Cheap gas is the absolute *worst* thing that can happen to a bike/ped advocate. At nearly $4/gal, change was in the air; even the good ‘ol boys were buying small cars and leaving the pickup home. People began looking at other options, like transit, ride-sharing, bicycling to work, etc. Our streets were noticeably quieter, just given fewer hard accelerations.
At $2, it’s nearly impossible to make any headway promoting sustainable transport, especially with those who can make a difference (planners, engineers, DOT). And they refuse to raise the gas tax even a dime to fund infrastructure rehab and improvements. My State, Delaware, will be #1 in the nation this year in per-capita pedestrian fatalities.
The whole thing sux, and I was hoping that Peak Oil would help push things in the other direction. I just can’t buy the argument that somehow, cheaper gas is somehow showing decline in resources. I have never seen more huge pickup trucks, SUVs, etc on our roads. And the VMT is noticeably increased out there. This is hardly indicative of a decline in oil production.
Frank W wrote:
“Cheap gas is the absolute *worst* thing that can happen to a bike/ped advocate. ”
When Cheap fuel disappears, so will cheap food. For every calorie you eat, about 10 to 100 Calories of fuel is used to grow (farm machinery, Pesticides, Fertilizers, Irrigation), harvest (farm machinery, grain driers), transport, processing, and packaging.
The World eats fossil fuels indirectly.
By far the biggest fossil fuel calorie input to the average American meal is that you put into the tank of your SUV as you drive the food home from the store.
In the UK most supermarkets now offer online shopping with delivery for groceries, and delivery is booked for a one hour time slot, typically $4-8$ for any quantity of food, and free for unpopular time slots. The delivery vans will have a similar mpg to an average SUV and hold food for 20-30 deliveries.
“In the UK most supermarkets now offer online shopping with delivery for groceries, and delivery is booked for a one hour time slot, typically $4-8$ for any quantity of food, and free for unpopular time slots. ”
How much food does the UK import?
http://www.foodsecurity.ac.uk/issue/uk.html
“Britain…imports 40% of the total food consumed and the proportion is rising”
Yeah, Just go for a light swim across the English channel, or across the big pond called the Atlantic. Food in the UK does not originate in grocery stores!
Franky, Ralph I don’t think you have a clue. Why not do some real world analysis instead of pulling something out of your rear!
My comment had NOTHING to do with food security or imports. The food miles for UK food are still lower than US food miles, with most of our imports coming from Netherlands, France, Spain, all less than 200 miles at their nearest point to our shores. In fact, the energy intensity of many Spanish food imports are lower than the UK grown product, due to higher solar input and shipping by sea. It is cheaper to ship products from China to London, (distance 8000 miles) than it is to truck them from Birmingham (150 miles).
I stand by my statement, I cannot immediately find the online reference I read, but the numbers are easy enough to calculate.
How many food calories in the average trip to the shops? How many miles, at what MPG? I think you will find it a depressingly
large number.
OK say I travel 10 miles each way to the shop to buy a week’s food for a family of 4, vehicle does 20mpg (US).
Average food intake 2,500 kCal /person /day = 70,000kCal
Car uses 1 gal (US) = 4 litres = 40 KWh = 35,000 kCal
So I was talking rubbish in that it is possible to drive to the shops to get food in an SUV using less energy than the food contains, but only by being organised and efficient.
However, if I was shopping for myself, one 20 mile round trip would use more energy than contained in a week’s worth of food.
How many calories consumed powering a bike to an from the store? Must account for the load groceries. Presumably your using a cart attached to your bicycle to carry them home.
The Amount of energy transporting food from the grocery store is a drop in the bucket compared to the fossil energy consumption needed to get from the farm.
My original statement is that when Cheap fuel disappears so will Cheap food since so much energy is required to produce and deliver it to your local grocery store.
Generally when food become difficult or too expensive, the natives begin to revolt. A recent example is Arab spring.
Food calories need to be multiplied by 10 because that is how much external energy went into the food that powers the bicycle.
Also, one bike trip would not bring home a weeks worth of food for four.
Now if you put a 1 horsepower motor on the grocery cart and rode that back and forth to the store, it might be very efficient. 🙂
Food contains between 4 and 9 kCals per gram. Allowing for fluids and packaging call it 1 cKal. So 70,000 kCal is 70 Kg.
That is a heavy load but is pullable in a cycle trailer. I used to pull my kids in a double trailer until they got to about 40Kg combined weight, so make it two trips to the shop.
Cycling burns 31 kals per mile, add the extra load and call it 50kals. That makes 40 miles 2000 kCal, or one extra day’s food,
Even at 10 fossil calories per food calorie, it is still less than driving, and as a good vegetarian my food uses a lot less than that to produce. I have never seen an estimate higher than 10 calories per calorie for processed food delivered to the plate.
Guys to are missing the Point. That is as fuel prices rise, so will Food prices. Not sure why you keep going on about transporting food by bicycle.
The hillsgroup stuff is really not very good. The amount of energy in the barrel of oil does not change. For average gravity crude it is about 5.8 million BTUs per barrel. As long as he oil can be produced at a profit, it will be produced. Many of the energy inputs to the production, refining, and distribution of oil products comes from coal, natural gas, hydro power, nuclear, and renewables so we need to look at the energy inputs and outputs of the entire economic system, not simply the petroleum production system (which is what the Hill’s group does).
Oil prices are low simply because the supply of oil has grown faster than demand for oil. In a few years the oil market will be in balance and oil prices will rise, unless there is a financial crisis due to excessive debt (or a speculative bubble in the stock market) in the interim.
DC wrote:
“Oil prices are low simply because the supply of oil has grown faster than demand for oil. In a few years the oil market will be in balance and oil prices will rise, unless there is a financial crisis due to excessive debt (or a speculative bubble in the stock market) in the interim.”
Demand is falling, not falling to keep up with oil production. Not only is the price of Oil fallen, but so has every major commodity (Copper, Steel, Wood, Cement, etc). It appears the Emerging market has reached peak debt and demand can no longer be sustained. Grow in the past 20 years was fueled by debt which permitted gov’ts, corps, and consumers to spend beyond their means. Now the debt piper is calling.
Also consider much of the growth in Oil production was achieved with massive amounts of debt, which also must be paid back. The world is now headed for a depression. Perhaps the Central banks can defer it for another cycle, but maybe not. It will be much hard this time to defer it.
The Middle East is drifting into a major regional conflict, driven by a combination of excessive over population, group rivalries (Sunni vs Shia) and gov’ts, struggling to keep civil disobedience under control. Then throw in Proxy wars (US-Russia, Israel, KSA-Iran, etc) just to keep things interesting. Sparks are flying in the powder room, its just a matter of time before it all blows up.
Oil demand is increasing, not decreasing. It will continue to increase as the world economy grows. It appears demand keeps growing until prices reach at least $120 per barrel.
I guess this is sort of energy related.
ALASKAN BOREAL FOREST FIRES RELEASE MORE CARBON THAN THE TREES CAN ABSORB
“A new analysis of fire activity in Alaska’s Yukon Flats finds that so many forest fires are occurring there that the area has become a net exporter of carbon to the atmosphere. This is worrisome, the researchers say, because arctic and subarctic boreal forests like those of the Yukon Flats contain roughly one-third of the Earth’s terrestrial carbon stores.”
http://www.sciencedaily.com/releases/2015/10/151019122428.htm
Definitely energy related.
OIL PRICES CONTINUE TO WIDEN STATE’S [Alaska’s] FISCAL PROBLEM
“…Alaska’s budget is based upon a forecast of oil averaging $67.49 per barrel and production of at least 500,000 barrels per day in fiscal year 2016, which began July 1…. Worsening matters, North Slope production has averaged 466,931 barrels per day — about 6.7 percent below the spring forecast….”
http://juneauempire.com/state/2015-10-15/oil-prices-continue-widen-states-fiscal-problem
Natural feedbacks are taking over.
Yukon flats doesn’t represent an iota in the world’s carbon cycle. The carbon sinks are working nicely.
http://www.esrl.noaa.gov/gmd/ccgg/trends/mlo.html#mlo_growth
The why does the CO2 growth rate keep increasing?
Hi MarbleZeppelin,
The “concept” that an increasing amount of CO2 in the atmosphere can be held accountable to observed global warming is collapsing as we speak, even while the propaganda coming from the IPCC is at all time highs in advance of the Paris soiree next month.
Please refer to this following paper.
Electrical Engineer’s Discovery Will Change the Climate Debate
A MATHEMATICAL discovery by Perth-based electrical engineer Dr David Evans may change everything about the climate debate, on the eve of the UN climate change conference in Paris next month.
A former climate modeller for the Government’s Australian Greenhouse Office, with six degrees in applied mathematics, Dr Evans has unpacked the architecture of the basic climate model which underpins all climate science.
He has found that, while the underlying physics of the model is correct, it had been applied incorrectly.
He has fixed two errors and the new corrected model finds the climate’s sensitivity to carbon dioxide (CO2) is much lower than was thought.
It turns out the UN’s Intergovernmental Panel on Climate Change has over-estimated future global warming by as much as 10 times, he says.
“Yes, CO2 has an effect, but it’s about a fifth or tenth of what the IPCC says it is. CO2 is not driving the climate; it caused less than 20 per cent of the global warming in the last few decades”.
His discovery explains why none of the climate models used by the IPCC reflect the evidence of recorded temperatures. The models have failed to predict the pause in global warming which has been going on for 18 years and counting.
“The model architecture was wrong,” he says. “Carbon dioxide causes only minor warming. The climate is largely driven by factors outside our control.”
There is another problem with the original climate model, which has been around since 1896.
While climate scientists have been predicting since the 1990s that changes in temperature would follow changes in carbon dioxide, the records over the past half million years show that not to be the case.
So, the new improved climate model shows CO2 is not the culprit in recent global warming. But what is?
Dr Evans has a theory: solar activity. What he calls “albedo modulation”, the waxing and waning of reflected radiation from the Sun, is the likely cause of global warming.
He predicts global temperatures, which have plateaued, will begin to cool significantly, beginning between 2017 and 2021. The cooling will be about 0.3C in the 2020s. Some scientists have even forecast a mini ice age in the 2030s.
This is obvious troll BS.
Of course it is. Evades the topic and question, then drones on about some engineer that has overturned over a century of physics. If anything the IPCC underestimates sensitivity.
There is no paper, just a blog article with fantastic claims and nothing to back it up. The site is JoNova Skeptical Science for dissident thinkers. Can it be more aptly named to flag it as a denier site?
I am sure this “discovery” will get all the attention it deserves.
A MATHEMATICAL discovery by Perth-based electrical engineer Dr David Evans may change everything about the climate debate, on the eve of the UN climate change conference in Paris next month.
Wunderbar! Another Engineer has made a discovery that turns all the research done by climate scientists so far, on it’s head. All those years of studying for their PhDs for naught! Those climate scientists must be feeling pretty darn foolish right about now!
BTW, Leo, if you are going to link to a ‘Paper’ at least do so, so we can actually see the work and the math! what you linked to is not a paper. To be fair I tried to find a link to the actual work but wasn’t able to do so.
Marble, I assume you mean the CO2 concentration? The CO2 concentration increases because emissions exceed the sink capacity to take co2 out of the air. If co2 emissions increase the sinks don’t necessarily track such increases. The sink ability to remove CO2 is a function. Of co2 concentration. Such ability so far, seems to be working nicely.
One large sink noted by satellites is the vegetation growth. Thus while natural fires do reduce the net vegetation uptake the overall sink into vegetation seems to be very active. My suggestion is that you consider the data rather than anecdotes about a fire in a particular area.
If the world was still going like it did back a couple of years ago it would absorb this oil and create more consumers like the US did in the 60’s. I am afraid that the world isn’t creating as much demand any more. I could be wrong, but it doesn’t look like it.
Hi Revi,
A paper by Brad De Long estimates World GDP per capita for much of history. See
http://delong.typepad.com/print/20061012_LRWGDP.pdf
I will use his preferred estimate for World GDP per capita from 1900 to 2000 and will plot the natural log of World GDP per capita over time to show the exponential growth. It is roughly 2.4% per year (with a dip during the great depression and WW2). Chart below.
I will use his preferred estimate for World GDP per capita from 1900 to 2000 and will plot the natural log of World GDP per capita over time to show the exponential growth.
Unfortunately, exponential growth is not sustainable! It always stops when limits are encountered. Which in and of itself might not be a such a big problem. Of course if you deliberately construct an economic system which depends on infinite growth for its continued viability, well, then you do have a problem!
“The greatest shortcoming of the human race is our inability to understand the exponential function.” – Prof. Al Bartlett.
Hi Fred,
I expect it will slow down and think De Long may have overestimated the growth rate. Keep in mind that population may peak in 2060 or 2070 and then begin to decline, so real GDP at some point could level off or decrease depending upon how quickly population declines. Also as resources become scarce, prices will rise and the limited resources will be used more efficiently and recycled, energy use will be more efficient and if more wind and solar are used, less resources will be needed. Energy prices will rise and energy will also be used more efficiently.
Will any of this happen smoothly and easily? I doubt it. Is it possible that humans might move in this direction eventually? I believe there is a chance this could occur, but the chances are about 50/50 in my opinion. Perhaps after a great depression wake up call.
2060 or 2070?
Kinda like the Austrians in 1913 planning for their next Hapsburg Ruler.
Will any of this happen smoothly and easily? I doubt it. Is it possible that humans might move in this direction eventually? I believe there is a chance this could occur, but the chances are about 50/50 in my opinion. Perhaps after a great depression wake up call.
We, the participants, of our 21st century global civilization, continue to try to navigate the world using a tool set and a way of thinking that is based on a deeply flawed and outdated model of reality. As a consequence we seem to have fallen into the trap of thinking mostly in terms of supposedly predictable, simplistic, linear and mechanistic systems.
That is absolutely not how the real world works! The real world is composed of multiple webs of interconnected and highly complex, non linear chaotic systems where feedback loops can have completely unpredictable results on the overall stability of the system. We urgently need to update our thinking and our models.
I think this is the main reason our business as usual paradigm is failing us. It is also mainly why my personal view is, that attempting to put things in a right vs left or conservative vs liberal framework, is a complete intellectual cop out. You can’t use 19th century thinking to solve 21st century problems. We are living in an age of rapid and inexorable disruptions. I think if we manage somehow to survive, what emerges will look very different from what we have done until now!
https://goo.gl/FDDoQ1
Ken Webster – Systems Thinking, Education & the Circular Economy
“Our argument is simple. For too long, politics and economics has been dominated by the metaphor of a machine: self-enclosed systems of rationally calculating agents whose collisions of selfishness would yield an efficient equillibrium… We believe instead that the right way to see things is through the metaphor of a garden: that we live and govern ourselves in complex systems that require tending: that the role of government and citizens alike is to seed feed and weed the gardens of our democracy, Once you start there, everything looks different.”
Nick Hanauer and Reic Lui
“…on a deeply flawed and outdated model of reality. As a consequence we seem to have fallen into the trap of thinking mostly in terms of supposedly predictable, simplistic, linear and mechanistic systems.
That is absolutely not how the real world works! The real world is composed of multiple webs of interconnected and highly complex, non linear chaotic systems where feedback loops can have completely unpredictable results on the overall stability of the system. ”
Anybody who REALLY understands the basic sciences is necessarily going to be in complete agreement.
When I was in “cow college” back in the dark ages, I was enrolled in real calculus, real chemistry and real biology my freshman year- in the same classrooms and labs at the same hours as the math majors, the chemistry majors and the biology majors, in addition to the usual freshman stuff.
Fred knows whereof he speaks.
Unfortunately not more than a minute percentage of the people in this world ever study all three basics, meaning math, chemistry/ physics, and biology, at a serious level.
Everybody else is basically in a position of having to rely on other people to tell them the score, unless they put in years becoming self educated, rather than keeping score for themselves.
I have found it impossible to explain to an engineer, or an accountant, why schemes such as growing switch grass or jatropha for energy just aren’t going to work very well if they work at all.
(The fact that the occasional ag professor is working on such schemes is proof only of the fact that any research that gets funded will be done- and SOME good will come of it, so the money is not wasted.The data collected can be put to good use for a number of purposes. )
It would be about as easy to teach a person who cannot add and subtract to balance a checkbook.
Now IF a person UNDERSTANDS biology and biological productivity, he does not NEED to be told why a desert cannot be made to bloom and produce grass or oil by the ton via technological magic.
It CAN be done, but only by the brute force methods employed by industrial farmers. Bring in the water and the lime and the npk and the machinery and the fire suppression and the weed killers and the insecticides, and you can grow all the fucking switch grass or jatropha you want.
But by the time you put all this stuff and manpower IN, and haul out the oil or dry grass, the odds are you you will gain little or nothing in the way of net energy.
Mother Nature has been working her own magic for a billion years and there are PLENTY of jungles, forests and prairies to prove it. If the necessary conditions were met in a desert for it to be HIGHLY productive of plant and animal life, IT WOULD NOT BE A DESERT but rather a forest or a jungle or at least a grassland.
Hi DC,
Can you create a chart with World GDP and World Debt? I think you would find a very surprising graph, especially if the World Debt estimate included unfunded liablities (ie entitlements, pensions, etc).
HI Techguy,
I will let you do that. I think debt should be looked at relative to wealth rather than income.
DC Wrote:
“. I think debt should be looked at relative to wealth rather than income.”
That sounds silly. Its the income that services the debt, and most assesses are way over priced and do not reflect real world value.
Hi All,
In September there were 220 wells completed in the Eagle Ford in Texas.
On Oct 1,2015 there were 9322 oil wells on the schedule, on September 1 , 2015 it was 9102 see
http://www.rrc.state.tx.us/oil-gas/major-oil-gas-formations/eagle-ford-shale/
It is surprising that the completion rate has not slowed down yet.
Dennis,
probably this chart from Rystad Energy can explain the resilience in well completions.
They say that “Eagle Ford experienced a decrease of nearly 30% in DUCs since the end of last year.”
Hi AlexS,
Thanks. I guess my thinking is that at these oil prices, completing the wells may be a money losing proposition. I know it is physically possible, but economically it does not seem sustainable.
Yes, but this chart shows the contrary.
“may be a money losing proposition”
That is way easier to hide than a drop in production 🙂
Besides that, with money already spent on the well, the decision to complete a well faces a lower hurdle. It would be more strange, as Alex mentioned earlier, to drill, but not complete, unless there is a marvelous offer on the table to drill the well, cash in the bank earning nothing, and a rising future oil price (contango).
Exactly, especially as nobody currently expects a significant rise in oil prices later this year or in 2016
Suppose the lender doesn’t demand repayment, and offers another loan of magnitude (repayment of old + more drilling/completing)
The lender’s income statement might be addressed by packaging the loans, concealing their nature, and selling them to buyers. And if a real problem appears, the Fed might be the buyer.
Come on, guys. Look at what’s happening. Every single one of you knows this is all operating at a huge loss and it’s been well over a year now. You KNOW perfectly well more money is flowing to keep the wheels turning. You KNOW they go into the bankers and tell them that if they can just keep operating everything is going to be great . . . someday.
Unsustainable. “Can’t be much longer”. “Eventually”. All terms to provide you cover for not staring reality in the face . . . that economics has been corrupted and no longer functions. They can keep that oil flowing as long as they get money they don’t repay. When you have someone else covering all your costs, revenue = profit. Think that’s capitalism?
Watcher. Borrowing money to keep wells operating or to hold un drilled acreage might make sense.
Borrowing money for new wells that have a low probability of economic success, when the companies are already cash flow negative, makes no sense, at least if you are a quaint yesteryear person like me, who has borrowed money with the intent on paying it back, and usually had to sign that personal guarantee.
I assume Harold Hamm has personally guaranteed $0.00 of Continental Resources loans. Think he would have personally guaranteed over $7 billion worth?
Enno, my analysis shows its “cash in the bank earning 5%”. The key is to delay completion, put that cash to work at 5 %, make sure the completion costs are fairly locked in, and (here’s the dicey part) expect prices to increase by ~50 % within a reasonable amount of time.
This decrease in DUCs seems extremely important to me. It suggests production declines have been masked, or at least buffered somewhat, by many more wells being completed than new wells being drilled.
Am I missing something?_
Perhaps there is a somewhat better way of expressing the reasoning of the people still drilling tight oil wells that are just about dead sure to be losers at current prices.
You can’t get any deader than dead, or any broker than broke. IF the drillers are in sink or swim deep water already, and this appears to be the case for virtually all of them, according to what I read, THERE IS NO DOWNSIDE for them. They are headed for broke either way, working or shutting down. It hardly matters at all if you go into bankruptcy owing one million or twenty million or two hundred million, you are never going to pay the judgement in any case.
Whereas, IF Sky Daddy wills it, you manage to hang in until the price of oil goes up again, IN THAT CASE, you may have made a KILLING on your NO DOWNSIDE BET.
WHY? Because most of your expenses are temporarily down. Diesel fuel is down, rental rates on equipment are down, lots of experienced men are out of work and can be hired for less than usual, etc etc etc.
If you can save anywhere from ten to thirty percent of the cost of drilling a well NOW,and pay only a couple of percent interest on the money ,you might make out like a bandit, ASSUMING the price of oil is up enough within a couple of years.
And as Shallow Sand points out, a hell of a lot of the money is already in the pot ON THE TABLE, and the only possible way to get it back is to HANG IN THERE. If you fold, you lose whatever you have already paid in cash sweat and blood.
Unless Old Man Business As Usual has a heart attack, the odds seem good that the drillers who manage to hang in will win that bet.
IF OMBAU does wind up in the hospital long term, well, the drillers were dead men walking ANYWAY.
From here it looks as if the tight oil people still drilling really have only that ONE choice, as a practical matter.
With Abandoned Gas Wells, States Are Left With The Cleanup Bill
http://www.npr.org/2015/10/19/449976530/with-abandoned-gas-wells-states-are-left-with-the-cleanup-bill
“Companies put up bonds to cover their cleanup costs in the event they go bankrupt. But the bonds they pay upfront are almost never enough. Right now, companies only have to pay $75,000 for all of their wells on private land in Wyoming.”
That’s the reason I have been concerned about fracking into areas where it isn’t sustainable and where it competes with other land uses.
If it is going to be a short term thing and leave a mess behind, and if local communities don’t want it anyway, then I don’t think fracking should be forced upon them.
Test
?
“North Dakota regulators suspect the breach have been caused by from hydraulic fracturing operations at nearby well that was being drilled by the company.
Hydraulic fracturing, or fracking, is a process that uses pressurized water, chemicals and grit to break open oil and gas bearing rock up to two miles underground. The technique is credited with allowing the development of the rich Bakken shale and Three Forks formations in western North Dakota.
Suess and North Dakota Department of Mineral Resources spokeswoman Allison Ritter said the blowout had the characteristics of what drillers call a “frack hit” or “downhole communication” between wells because oil and saltwater spewed downward at the well instead of vertically. Such incidents are unusual in North Dakota, Ritter said.
“Communication” between wells happens when fractures of separate wells intersect. North Dakota does not allow well bores to be within 1,300 feet from each other to guard against it, Ritter said.”
http://www.pennenergy.com/articles/pennenergy/2015/10/workers-cap-out-of-control-north-dakota-oil-well.html
first time I heard of a “frack hit”
“Suess and North Dakota Department of Mineral Resources spokeswoman Allison Ritter said the blowout had the characteristics of what drillers call a “frack hit” or “downhole communication” between wells because oil and saltwater spewed downward at the well instead of vertically. Such incidents are unusual in North Dakota, Ritter said.
“Communication” between wells happens when fractures of separate wells intersect. North Dakota does not allow well bores to be within 1,300 feet from each other to guard against it, Ritter said.”
– The tighter is well spacing, the higher is the probability of such incidents
I question whether the 1300′ rule given the investor presentations which tout spacing, which at times, is tighter than we are allowed on 900′ vertical holes.
Mike mentioned this issue many times.
Probably the distance specified is how close the drill rigs can be placed to each other. Likely no rule for the horizontal path.
That article has several errors, so it is hard to know what is correct and what is not. That is the problem of having non technical people write about things they do not have a clue. It is a shame they never taught roughnecks how to write! Smiles
I hope they added a little barite in their mud to weigh up the mud to be able to kill the well.
“because oil and saltwater spewed downward at the well instead of vertically.” I always thought downward was vertical? I don’t know what that is suppose to mean.
http://news.yahoo.com/north-dakota-oil-well-spewing-weekend-blowout-225229807–finance.html
Thick gray smoke rose from the Helling Trust 11-15H well site
https://www.dmr.nd.gov/oilgas/findwellsvw.asp
17636 117636 3306100873 OG A 10/4/2011 20204 NWNW 15-154-94 OASIS PETROLEUM NORTH AMERICA LLC HELLING TRUST 11-15H ALKALI CREEK
http://bismarcktribune.com/bakken/well-blowout-spills-contaminants-in-white-earth-valley/article_d0ec80d1-a476-55d5-8d00-2af573afec5d.html
The incident was caused when Oasis hydraulically fractured another nearby well, apparently causing this one to blow, even though it had been shut in to safeguard against exactly that outcome, said Oil and Gas Division spokeswoman Alison Ritter. She said oil companies have to provide notice when they’ll be fracking within 1,300 feet of an existing well, so operators can take necessary precautions.
HELLING TRUST 11-15H, seems to spend a lot of time shut in. No production in Aug, and only 20 days in July. Looking at the ArcIMS Viewer, the well runs in a SE direction, cutting across many wells that run in the more traditional North South axis. Making it very exposed to any of these other wells to communication while fraccing.
The fact that it blew out while shut in is a real worry. A pipe or flange must have failed.
It will be interesting to watch, as more information is made available.
If it communicated while the big pump was fracking . . . maybe the pump has enough muscle to destroy the shut in procedure.
Watcher,
That is what it sounds like, which is a worry. It was an old well, for the Bakken shale at least, Maybe had they used lower pressure rated equipment?
The blowout/spill was reported by a passing truck driver, not the frac crew or oil company! So there is another worry if the oil company was not aware of the breach, but maybe they were just delaying notification, until they got their act together.
BTW the 1300ft rule, appears to be all wells within 1300ft of the well being fracced, must be shut in.
thanks for the follow up info
trouble with Tesla?
Consumer Reports withdrew its recommendation for the Tesla Model S — a car the magazine previously raved about — because of poor reliability for the $100,000 electric sport sedan.
The turnabout comes after the influential consumer magazine handed the luxury car a “worse-than-average” rating in its annual report on the predicted reliability of new vehicles issued Tuesday.
The news sent Tesla Motors stock plunging as much as 10% before recovering to close off 7% at $213.03 Tuesday.
http://www.latimes.com/business/autos/la-fi-hy-consumer-reports-tesla-models-20151020-story.html
Bad news for the company, and for electric cars in general, in the short term. But if the problems are not in the battery, then they are in the end going to be easy to solve.
From what I have read, Tesla has had to replace quite a few electric motor and gearbox units due to their being noisy and eventually failing or at risk of failing. But electric motors generally only fail due to overheating, given that the only parts actually subject to WEAR are the bearings that support the armature.
Maybe the designers didn’t spec large enough bearings for the motors.
And as far as GEARBOXES are concerned- the Tesla is a single speed and if it is adequate to the job, this is to say, equal to the motor, then it ought to last just about forever. Well made single speed gear reduction systems typically last indefinitely. The single speed rear differential assembly in a modern pick up truck very rarely fails even in three hundred thousand miles- unless the lubricant leaks out. It is commonplace for such gearbox assemblies to last a million miles in heavy duty trucks.
But I don’t know just what the issues may be, other than drive train assembly failure. It seems reasonable to expect a higher number of quality control issues in a low volume start up than in an established make.
Probably just owners hot rodding to show off. Do that often enough with any family sedan and it will wear out or break.
It doesn’t look like a race car, is not built like a race car, it’s not a race car.
Teslas just need a small quality subsidy. I’m sure $300 tax credit supplement per vehicle would do.
You blog’s humor leaks out in your comments sometimes.
BHP 3rd qtr report
http://www.bhpbilliton.com/~/media/bhp/documents/investors/reports/2015/151023_bhpbillitonoperationalreviewforthequarterended30september2015.pdf
Eagle Ford production
Mar qtr 10,837 boepd
Jun qtr 9,363 boepd
Sep qtr 7,700 boepd
They are down to 5 rigs drilling in the Eagle Ford, from 17 this time last year.
If other Eagle Ford producers are the same, then the EIA DPR may just be correct in their drop in Eagle Ford production.
Thanks, Toolpush.
They are also sharply increasing production in the Permian, although from a low base
Recommended reading:
Jim Chanos Nails the Link Between Debt and Energy
Shale firms have relied on eager capital markets for growth.
October 21, 2015
http://www.bloomberg.com/news/articles/2015-10-21/jim-chanos-nails-the-link-between-debt-and-energy
and:
Jim Chanos – Energy Investments After The Fall: Opportunity Or Slippery Slope?
Oct. 21, 2015
http://seekingalpha.com/article/3588396-jim-chanos-energy-investments-after-the-fall-opportunity-or-slippery-slope
Also from Bloomberg:
OPEC Is About to Crush the U.S. Oil Boom
October 21, 2015
http://www.bloomberg.com/news/articles/2015-10-20/after-year-of-pain-opec-close-to-halting-u-s-oil-in-its-tracks
and:
Saudis Risk Draining Financial Assets in 5 Years, IMF Says
http://www.bloomberg.com/news/articles/2015-10-21/saudis-risk-draining-financial-assets-in-five-years-imf-says
Don’t quite get the rationale behind these “The Saudis are going to lose” articles.
Are they saying we can print money better than they can print money?
And btw, if you read these articles from these guys, it’s wise to note that none of them know anything. They are usually selling a newsletter or money management. Rather a lot of quoting of information one sees nowhere other than on this blog/comments.
“Are they saying we can print money better than they can print money?”
As long as the USD remains global reserve currency, and “flight to safety” means buying US Treasuries and other US assets, the US will be able to print money better than any other country. 🙂
Well then Fed better start warming the printing press soon to get to 1700 active drilling rigs because to keep the show going for the rest of the economy 500 rigs ain’t gone do it 🙂
3D printing has come a long way.
What’s the name of the Saudi currency? How much of it do any of us hold? Do the financial channels report its exchange rate in those little pop ups on the right side of the screen?
HOW TO END CIVILIZATION AS WE KNOW IT WITH AN ACT OF CONGRESS
Back in 2008 Congress enacted the Railroad Safety Improvement Act RSIA). The deadline for the implementation of Positive Train Control is Dec. 31.
Due to this deadline Norfolk Southern issued a Notice of Cessation of Service Effective December 1, 2015, for All Shipments of Poisonous-Inhalation-Hazard (“PIH”) Commodities
http://www.nscorp.com/content/nscorp/en/service-alerts/notice-of-cessationofserviceeffectivedecember12015forallshipment.html
Looking at the list of chemicals that would be banned from travel, industry and commercial activity would be strangled. Products would not be made, contractors would not have materials to work with, massive unemployment would occur. These are critical chemicals if we want to continue business and industry.
With only 15% of track miles completed so far, the earliest the rail system can implement PTC and be compliant, would be 2018.
Here is the AAR response with amounts of implementation completed and a timeline for future completion. Costs are also listed.
https://www.aar.org/policy/positive-train-control
And it’s not just Norfolk Southern, BNSF and CSX have declared they will shut down if the timeline for completion is not extended. BNSF is taking a broader interpretation of the law as implying that no trains can legally operate without PTC after Dec 3ist.
http://cs.trains.com/trn/b/fred-frailey/archive/2015/09/09/bnsf-we-will-be-paralyzed.aspx
So keep your eyes and ears open on this one, Congress may not want to destroy the economy and stop up industry.
In a post on 10/10/2015, Heinrich Leopold wrote:
” Germany exports 9.7 TWh and imports just 2.1 TWh, yet Austria has according to my understanding still a net export surplus in Euro. Thus Germany pays much more than four times for electricity to Austria than it gets for selling it.”
Here is a story that suggest otherwise (bold mine):
Fraunhofer ISE: German electricity export prices higher than import; Renewable energy production from solar PV, wind and biomass increased by about 118 TWh
Scientists of the Fraunhofer Institute for Solar Energy Systems ISE (Freiburg, Germany) published data on electricity exports and imports for Germany, indicating that Germany generates additional revenues in the billions each year through electricity exports.
Revenues totaled about EUR 1.7 billion in 2014, for example. Similarly, revenues between EUR 1.5 and EUR 2 billion are expected for 2015.
The graphical analysis also shows that, on average, market prices were higher for electricity exported from Germany than for electricity imported to Germany.
The argument that Germany is selling its surplus electricity to foreign countries at dumping prices is not able to be confirmed.
“Over the past years, Germany was able to secure higher prices for its electricity exports than it paid for electricity imports,” summarizes Prof. Bruno Burger.
While the source may be biased, I am certain that there are any number of people or organizations that, will be more than willing to point out any flaws in the analysis or anything that is factually incorrect.
islandboy,
There is a logical error in the argument of Germany making money in its electricity trade. Even Bloomberg asserts that Germany is dumping electricity on the European market. If the Germans really make money on their wholesale electricity sales, other countries have to dump their electricity at even lower prices. So how can other European countries produce electricity at even lower prices and sell it to Germany? And even if so why do they not sell it on its own home market at such low prices?
It’s Chienese panel maker agitprop. Look at the graph, it’s unrelated and illegible. There’s no link to anything related.
coffeeguyzz- “A smaller outfit, Bonanza Creek, is claiming it can drill a horizontal well in the shallower Niobrara for $3 million … and several bigger operators say they can do it for $4 mil.”
Is this because they are getting “going out of business sale” prices on supplies and services?
Greenbub
I am having trouble posting comments, but short and sweet …
I do not know the specifics but the Niobrara is, in general, fairly shallow (5/7 thousand foot vertical depth) and the laterals are frequently in the 5,000′ range – about half the normal Bakken.
As such, way less steel, proppant and time are needed, plus operational issues can be WAY easier at these depths.
Example, the Marcellus’wells run about 6/8,000′ deep with laterals around 5/7,000′ long. The Haynesville is 10/11,000′ deep in the main and the costs are significantly higher there.
Still, 3 million bucks is mighty cheap for a horizontal well with completion.
Is it with completion?
Fernando
Yes
Slip sliding away… 4th day Slide continues : Brent < $50. WTI testing lows.. – http://www.bloomberg.com/energy
CSX closes shops and yard in Erwin due to decline in coal shipments.
http://www.johnsoncitypress.com/Local/2015/10/15/CSX-closure-ends-more-than-140-years-of-railroad-operations-in-Erwin.html
Saw the following op-ed piece over at insideevs.com and thought the techno optimists (Green Utopians?) around here might like it.
Op-Ed: How to Counter Anti-EV Canards? Just Say, “Never Show a Fool a Job Half-Done.”
One of the ideas also works for solar PV in that, critics make the assumption that because it is not good enough today, by whatever metric they choose to measure “good”, it will never be good enough, ignoring the fact that the technology is improving exponentially.
Here’s a case that shows why solar PV may not be anywhere near the bottom of it’s cost trajectory:
1366 Technologies is a company based in Bedford, Massachusetts that has developed a technique to produce silicon wafers by casting them in their ultimate shape directly in a mold, rather than the prevailing standard method in which wafers are cut from a large ingot. The company’s management predicts that the new approach will be able to produce wafers at costs 40% below current methods.
So what?
PV production: 1366 Technologies announces new Direct Wafer manufacturing facility in New York
1366 Technologies (Bedford, Massachusetts, U.S.) on October 7th, 2015 announced plans to build a commercial solar photovoltaic (PV) wafer manufacturing facility in Genesee County New York, strategically located between Buffalo and Rochester, that will eventually scale to 3 GW, house 400 “Direct Wafer” furnaces, and produce more than 600 million high-performance silicon wafers per year.
Construction of the 130,000 square-foot facility is slated to begin no later than Q2 of 2016 and is expected to be completed in 2017.
So, there is a 40% cost reduction “baked into the cake” as it were, in that the first factory to use the technology is barely past the planning stages. Barring a black swan event, these lower cost cells should start hitting the market big time sometime in 2017.
I would not bet against PV module prices going under 40 cents per watt by late 2017.
In that case my analysis shows ALL solar panel purchases should be canceled until further notice. Once the price decline takes solar plus storage costs below natural gas the solar installations can proceed at a fast pace. ?
Lesson In Solar From A Northern Neighbor
Based on population, Ontario would be the 5th largest state if it were part of the U.S., but its installed solar capacity, 1,500 MW would rank it 3rd. The province has also shut down all its coal-fired power plants. How does a northern province become a solar and climate leader, despite one of the poorest solar resources in North America?
http://cleantechnica.com/2015/10/21/lesson-solar-northern-neighbor/
Islandboy, this is excellent new technology. It can dramatically reduce the waste in refined silicon. However, I think I would bet against “PV module prices going under 40 cents per watt by late 2017.” My guess is that we may see a 15% decline in costs at the module level. I would just be happy to see US prices near 50 cents. The real issue is the soft costs. Installed utility solar capacity in 2014 was slightly over $3 per peak watt. The Sunshot Initiative wanted to see $1 by the end of the decade. There is some small chance that some installations will hit that price point in that time frame. However, we will need to adopt the German model of extreme efficiency in all parts of the process if we want that to be the norm. If that happens then further investment in fossil fuel plants will make no sense whatsoever.
coffee. You should read the article in the American Oil & Gas Reporter, “Building Better Wells At Lower Costs Elevates Eagle Ford.”.
Pioneer is running 6 rigs there through the end of the year, then plans to increase to 8 in 2016.
They say average well cost has dropped from $10 million to $6.5 million.
Sanchez Energy says well costs have fallen from $9 million to $4 million. They plan to reduce capital spending but still increase production about 4%.
Encana says when they paid $3.1 billion for 45,500 acres in EFS in 6/14, wells cost $7.5 million. They now target $5.6 million. Their EFS production will soon exceed 50K BOEPD a 15% increase from Q3 2014.
Encana CEO,”We can do it at $40. Necessity is the mother of invention. If the price is $40 a barrel, we will find a way to drill and complete wells to be profitable. If the price drops, we will find a way to do it even more cheaply.”.
Clearly, the Haliburton CEO hit the nail on the head when he said companies will either drill or die, that they view cessation of drilling as the first step toward dismantling the company.
This price collapse has been truly interesting. The previous two I recall did not seem to have this feel. The 1998-99 and 2008-09 crashes seemed to have the prevailing sentiment, “we are pulling in our horns to fight another day”. Keep in mind, most onshore wells in those times were not multi million dollar investments.
This crash, the sentiment seems to be a true race to the bottom, with the whole goal being maintaining or increasing production, with debt, profits or long term company future being of no consideration.
I suppose given the extreme declines, maybe shale drillers view a certain part of drilling and completion as OPEX. We are just keeping things running. Maybe the current drilling is mostly the equivalent of the small conventional producer who is just keeping things running.
Back to the EFS, Pioneer is touting the 1.3 million BOE EUR, in Karnes and DeWitt counties. However, the ratios are about 1/3 natural gas, 1/3 condensate and 1/3 natural gas liquids. Likewise, Sanchez says it’s primary field, Catarina (acquired
from Shell) is 24% oil, 37% natural gas liquids and 39% natural gas. Seems like 1.3 million BOE EUR is not all that profitable with that product mix, especially is 1/4 of the 1.3 million goes to the royalty owners.
Shallow
I’m having a difficult time posting comments, but I wanted to respond.
I’ll read the AOGR articles in coming days..
Agree completely about ‘race to the bottom’. Things just seem very strange. WHY do these guys keep producing, even increasing?
Strange times, indeed.
Hang in there, shallow.
As per Nietzsche … That which doesn’t destroy me only makes me stronger’. Gerard
A. When they say they can make a point forward profit at $40 per barrel they may be sheltering in tax losses from excess DD&A caused by poor investments made in 2014.
Or
B. He’s full of cow patties, wants to have a job until January.
Or
C. He expects prices to increase to “something reasonable”
Or
D. Has a warped understanding of the type of wells he drills and their decline rates.
Or all of the above.
shallow sand,
Let’s wait for 3Q results. They will reveal the real trends in opex and capex per barrel
U.S. Crude Supplies Jump 7.5M Barrels on Low Refinery Runs
http://www.zacks.com/stock/news/194315/us-crude-supplies-jump-75m-barrels-on-low-refinery-runs
Oilpatch firms in for an ugly 3rd quarter as crude doldrums linger
CALGARY — A bevy of oilsands producers are on deck to report their quarterly earnings over the next few weeks — and industry watchers are under no illusion they’ll be pretty.
It’s been about a year since the price of oil started its nosedive to below US$50 a barrel, and crude has been camping out at that level for months. Few are optimistic that crude will return to triple digits any time soon.