334 thoughts to “World Crude Oil Exports”

1. I am surprised to see Saudi exports go up. I had done this post in 2011

   27/4/2011
   OPEC report: Saudi oil exports to decline
   http://crudeoilpeak.info/opec-report-saudi-oil-exports-to-decline

   If the OPEC figures are correct, then Saudi local demand growth seems to have slowed substantially

   2009: 8,250 kb/d – 6,250 kb/d exports = 2,000 kb/d Saudi consumption
   2013: 9,700 kb/d – 7,600 kb/d exports = 2,100 kb/d Saudi consumption

   We need to analyse and update what is happening there

   1. I believe that Ron is looking at gross exports of Crude + Condensate (C+C). Based on the net exports metric, using the EIA data base (net exports = total petroleum liquids + other liquids less total liquids consumption), Saudi net exports have been below their 2005 rate of 9.1 mbpd for eight straigh years. Based on EIA production data and BP consumption data, Saudi net exports in 2013 were about 8.5 mbpd, versus 9.1 mbpd in 2005.

      And a key point to keep in mind is that many exporters export crude oil and import refined products, e.g., Mexico. Mexico’s net exports (total petroleum liquids + other liquids) fell from 1.8 mbpd in 2004 to 0.7 mbpd in 2012, versus gross exports of over 1.3 mbpd in 2012.

      Following is my “Gap Chart” for combined net exports from the (2005) Top 33 net oil exporters (Global Net Exports, GNE). I’m estimating that the GNE value for 2013 was around 43 mbpd.

      

      1. What OPEC says it is:
         Notes: Data may include exports of lease condensates,
         re-exports, changes in the quantity of oil in transit.

         However it matches pretty close what the EIA calls:
         Exports of Crude Oil including Lease Condensate (Thousand Barrels Per Day)

         The EIA tracks “Net Imports” for some, but not all, countries. But there is no “Net Exports” category that they track and neither does OPEC. So this is all I have to track.

         1. The EIA had not been updating their net export data, but it looks like they have resumed. Following is their list of the top net oil exporters. The only difference between the data set that I use, versus the EIA, is that they define net exports as total liquids production (inclusive of refinery gains) less total liquids consumption.

            http://www.eia.gov/countries/index.cfm?topL=exp

            I exclude refinery gains for two reasons: (1) It distorts the production numbers for exporters with low levels of production but lots of refinery capacity and (2) It’s a necessary process, but it’s a net energy loss.

            Here is my “Refinery Land” (R) and “Production Land” (P) Model, ignoring refinery gains:

            P has production of 2.0 mbpd and consumption of 1.0 mbpd, but no refining capacity.

            R has zero production, consumption of 1.0 mbpd, and 2.0 mbpd of refining capacity.

            P produces 2.0 mbpd and exports 2.0 mbpd to R.

            R refines 2.0 mbpd, consumes 1.0 mbpd, and exports 1.0 mbpd to P.

            So, Production – Consumption = Net Exports

            For P:

            2.0 – 1.0 = +1.0 (net exports)

            For R:

            0 – 1.0 = -1.0 (net imports)

            1. Jeff, the export data at the EIA link you listed is a lot higher than the OPEC link I used. Your EIA link:

               Saudi exports in kb/d      2011            2012        2013
               Your EIA link              8,448           8,865
               My OPEC link               7,218           7,557       7,571
               

               1. For the EIA, I think it’s due to the differences between total liquids production versus C+C production, plus the fact that the Saudis are burning crude oil in some of their power plants. Regarding OPEC, I don’t know.

                  Saudi total liquids vs. C+C (EIA)
                  2011: 11.3 & 9.5
                  2012: 11.7 & 9.8

         2. Incidentally, I participated in an ASPO-USA meeting with senior EIA/DOE personnel in late 2012, in Washington D.C. (others in attendance were Art Berman, Steven Kopits, etc.).

            The first question I asked the EIA staff was if they had modeled future Global Net Exports of oil, assuming flat to declining production in oil exporting countries, versus rising consumption. The answer was “No.”

   2. Following are the 2005 and 2013 Saudi data (BP consumption data for 2013, other data EIA, total petroleum liquids + other liquids for net exports):

      Production (mbpd) – Consumption = Net Exports and ECI Ratio also shown (Ratio of production to consumption)

      2005: 11.1 – 2.0 = 9.1 & 5.5 (ECI)
      2013: 11.6 – 3.1 = 8.5 & 3.7 (ECI)

      Based on the 2005 to 2013 rate of decline in the Saudi ECI Ratio, they would approach zero net exports around the year 2039. Estimated post-2005 Saudi CNE (Cumulative Net Exports) would be:

      3.3 Gb/year (2005 net exports) X 34 years X 0.5 (area under a triangle) less 3.3 Gb (net exports at export peak) = 53 Gb

      Cumulative net exports in the 2006 to 2013 time period inclusive were 24 Gb, putting Saudi Arabia’s estimated post-2005 CNE at about 45% depleted at the end of 2013.

      As I have previously noted, we saw a similar pattern with the Six Country Case History from 1995 to 1999. Just like Saudi Arabia from 2005 to 2013, the Six Country Case History from 1995 to 1999 showed rising production, rising consumption, a declining ECI Ratio and an enormous decline in remaining post-1995 CNE (down 54% in only four years, as production increased.

      Six Country Case History graph follows.

      

      1. A “What if” Scenario.

         The observed rates of change in Saudi data (EIA mostly, BP data for 2013 cosumption):

         2005 to 2013:

         Production: +0.6%/year
         Consumption: +5.5%/year
         Net Exports: -0.9%/year
         ECI Ratio: -5.0%/year

         The preliminary EIA data showed a slight production decline from 2012 to 2013. For the sake of argument, let’s assume that Saudi Arabia has pulled their last rabbit out of the hat, and they show a -2.0%/year rate of change in production from 2013 to 2023 and let’s assume that their rate of increase in production is cut in half, so their rate of change in consumption would be +2.7%/year from 2013 to 2023.

         The 2023 data would look like this:

         9.5 – 4.1 = 5.4 mbpd (net exports*)

         *Versus net exports of 8.5 mbpd in 2013 and 9.1 mbpd in 2005

         1. Correction: . . . let’s assume that their rate of increase in consumption is cut in half, so their rate of change in consumption would be +2.7%/year from 2013 to 2023 (versus +5.5%/year from 2005 to 2013).

            1. Jeff,

               I noticed that Mexico’s oil production is now falling once again. This will impact their net oil exports to a greater degree in the next few years if the trend continues.

               It’s interesting that their consumption hasn’t really risen all that much since 2005. According to BP statistical review Mexico consumed 2.03 million barrels a day in 2005, but by 2013 it declined to 2.02. Sure, a few years between it picked up… but not much.

               I gather all the corruption and turmoil in Mexico has kept its country from growing its GDP, while its citizens are too poor to increase their oil consumption.

               Either way, Mexico’s net oil exports will probably decline more due to the fall in production rather than the increase in consumption.

               steve

               1. As noted in the prior thread, I suspect that KMZ is starting to follow the same downward trend as Cantarell. Regarding consumption, it’s interesting to compare Mexico’s consumption since 2005, versus the US.

                  And following are the “Net Export (Mathematical) Facts of Life.”

                  Given an (inevitable) ongoing decline in production in a net oil exporting country, unless they cut their internal oil consumption at the same rate as, or at a faster rate than, the rate of decline in production, the resulting net export decline rate will exceed the production decline rate and the net export decline rate will accelerate with time, on a year over year basis. It’s a mathematical certainty.

                  Given an (inevitable) ongoing decline in Global Net Exports of oil (GNE), unless the Chindia region CUTS their consumption of GNE at the same rate as the rate of decline in GNE, or at a faster rate, the resulting rate of decline in ANE (the volume of net exports available to importers other than China and India) will exceed the GNE decline rate and the ANE decline rate will accelerate with time, on a year over year basis. It’s a mathematical certainty.

               2. Mexico has sort of seen the light regarding their NOC’s vast ineptitude: RIGZONE – Mexico's Pemex to Spend $6B to Maintain Output at Cantarell

                  The investment will counteract the natural decline of Cantarell by squeezing out an additional 100,000 bpd per year via secondary recovery over the course of a decade, said Miguel Angel Lozada, Pemex’s Cantarell administrator.

                  A sweeping energy reform passed late last year by Mexico’s Congress ended Pemex’s 75-year monopoly on crude production and paves the way for new operators into the market via potentially lucrative contracts and licenses. While Pemex is expected to keep mature assets like Cantarell under a so-called Round Zero allocation due to conclude in September, the reform will also permit first-ever joint ventures between Pemex and oil majors in new and existing developments.

                  We’ll see how that plays out.

               3. Mexico has been growing pretty steadily at about 4% a year for some time.

         2. One needs to consider the impact the 40 GW of solar PV power planned for 2032 will have on consumption.
            But then the EIA says that Saudi will increase electricity consumption from 55 GW (2013) to 120 GW in 2020, which is about 10% per year increase. And seems to be way too high.
            Does your model use a linear increase in consumption or exponential?

2. Ron:

   Are you retired. Where do you get the time to do such important and informative work?

   1. Yes I am retired and have nothing else to do but putter around with peak oil stuff. I don’t even have a hobby. I did do some kayak sailing. I have a Hobi Adventure Island which I bought 5 years ago but haven’t had it out in over a year.

      Now all I have to do is mow the lawn every couple of weeks. My wife accuses me of “playing on the computer” all day. She has no idea what I am doing. But she is in bad health and has serious short term memory problems so I just humor her.

      I have three sons, all now in their middle age. They all know what I do but only my oldest has ever read my blog. But he does not follow it. He accepts peak oil but doesn’t believe anything bad will really happen to the world’s economies. He had rather not think about it.

      The truth is this peak oil thing has become kind of an obsession of mine. As I have stated before, when you are observing the end of civilization as we know it, it is just damn hard to take your eyes off it.

      1. Ron-
         Thanks for all your good work.
         Many of us feel a bit isolated, and this is a place of refuge from a toxic society, that many try to be comfortable in.
         I can’t.

         1. After LATOC and TOD folded without POB and vodka they would put me in an asylum .Thks Ron .

         2. Hi All

            Thanks as always for keeping up the site, and the momentum!

            Normally I am a lurker here, though recently I did some quickie work in Excel with Dennis.

            While I tend to think Ron’s and Watcher’s estimation of things is more likely than most, I am also keen to OFM’s take on common sense everyday realities. And each day, it seems that even Dennis may be drawing ever closer to the same conclusions.

            Were it not for you guys here keeping up the thought stream, the rest of us with our “day job” lives might be lost to the insanity of the daily life of denial.

            I am so busy with my life, just trying to keep pace with the bills, that I often haven’t the time to do the research myself. Though Yes I do actually attempt to do so, time permitting , I will often come here first as I have determined POB to be my first source of unbiased – or least biased – or at least alternative – point of view, compared to the usual mantra of “drill-baby-drill” and the so-called bull market of the capital markets.

            Still, though I am enthralled with the unfolding story, I am confused what to do next, what should be my next step at every accomplishment, every failure. I have become, at times, reticent to share my concern with others, and still at other times, hopeful, excited, determined.

            I hope you will not give up, that you will continue to believe that your message has made a difference and continues to do so. People like me and so -many others not like me – absolutely need the industry- and intellectual- intelligence that you put out here that otherwise remains absent in the mainstream media.

            1. Hi KC,

               I tend to agree pretty much with Mac’s point of view. Thanks for dropping by.

      2. Is it a hobie adventure island tandem?
         Im planning to buy one next month.

         1. No, it’s a 2009 model. They did not make tandems back then. Email me at DarwinianOne at Gmail.com if you want to talk about it.

      3. Thank you for your time. We appreciate your effort and sharing your knowledge.

      4. Thanks for work and the sharing Ron.

         1. Ron, you have mellowed into a much more polite person since I first started reading your posts more than a dozen years ago. You then reminded me of a in-law relative so I put up with you, got accustom to your ways and look how you have turned out …… you are OK, and your web site work is appreciated,
            Thank you. George

            P.S. Same age as you and I was a F.E. in Houston, hired in 1964

            1. Thanks George. I assume you mean Field Engineer. 64 was the same year I started in the business. I worked in Houston for a short time, at the Space Center.

3. Re: The CSMonitor article

   It was CSM that injected the bit about 16.8 million barrels per day US production. That text does not occur in Andy Tully’s OilPrice article.

   1. Yes, I think you are right. The Tully peace appears below bit about 16.8 barrels of crude production. Therefore it is not part of the article. I guess Tully would be quite upset if they actually inserted it into the article.

      But on news-google search this is what shows up:

      Why gas prices remain static despite oil production surge
      Christian Science Monitor – ‎22 hours ago‎
      Although US oil production has increased to 16.8 million barrels of crude per day, gas prices are projected to stay static in the near future.

      1. I suspect that they thought that gross refinery inputs are equivalent to domestic US production (note the 16.8 number for weekly gross refinery inputs):

         http://www.eia.gov/dnav/pet/pet_sum_sndw_dcus_nus_w.htm

         1. Net US crude oil imports as a percentage of crude oil inputs (four week running average) were at 43% (7.1/16.4).

4. I appreciate your effort. Nice to have a replacement for TOD. I too am retired with seemingly lots of time. But have too many hobbies and thus end up with no time. Population, energy and material resources have been a hobby for more than 50 years.

5. The charts you present week after week speak for themselves but nearly everybody is either oblivious or intentionally blind or so steeped in conventional thinking and tribal loyalties as to be unable to see the obvious.

   Now as it happens I am a doomer but not quite so pessimistic as the evidence taken at face value indicates I should be because I am of the opinion people will adapt considerably faster than most doomers anticipate they will. NOT fast enough to outrun depletion and maintain business as usual by any means but still fast enough to delay collapse of business as usual longer than hard core dormers anticipate.

   Right now we have a fascinating opportunity to watch and see how importing countries manage ever increasing imported energy costs. Some have basically lost the battle and are not likely to get back to anything like the norms of the last few decades, the PIIG’s being the classic examples.If subsidies from the rest of the developed countries were to be cut off they sure would be ” up the creek without a paddle”.

   Now here in my community in the mountains of the American south-Applachia- I have been watching people who are petroleum dependent do what they have to do to maintain their way of life as best they can.So far this is what I am seeing.

   Maybe ten percent of us are fast slipping into deep poverty and once in that situation getting out if it can be nearly impossible. Ten percent near the top of the money pyramid are still driving new four by four full sized trucks and Caddys and flying for social purposes.

   The eighty percent in the middle are coping with greater or lesser degrees of success. I now have numerous neighbors who habitually ride 50 cc scooters.

   ( In the event anybody is thinking about buying one I STRONGLY recommend staying away from Chinese scooters. No parts no service. Throwing away a fifty dollar tool is one thing. Junking a two grand scooter two years old is another altogether.)

   Hardly anybody is buying an American hot rod car such as a Mustang or Camaro anymore unless it is a luxury make such as a BMW. The kids have to get by these days with ” tuning” four bangers because of the cost of gas in relation to wages.

   People are taking vacations close to home and people who I never thought would spend the money are putting on insulated vinyl siding and installing double or triple glazed windows and heat pumps.Wood heat is making a big comeback- as supplementary heat in most cases to be sure but people are finding it worthwhile to buy pickup truck loads from folks out of work who will cut it and deliver it at rock bottom prices.

   Curiously enough gardening is declining. It is actually cheaper to buy a lot of stuff from local farmers in bulk than it is to grow it if you count your time as worth anything at all. So while lots of local women are busy canning tomatoes this week they are buying them from local farmers who grow them by the acre rather than by the ” row”. ( These women in many cases still have the ”row” for daily use during the season.)

   Older folks who have time to burn used to go shopping in the closest town two or three times a week. Now they are going once a week or once in ten days.

   There is little doubt in my mind that once hybrid cars are a bit more common they will be eagerly bought by local people. We have half a dozen used Priuses on the local roads near my house now and the owners simply never quit bragging about how cheap to run and reliable they are.

   I do not doubt at all that once a few Leafs make it here- used of course- that they will be shortly eagerly sought after if they prove to be reliable.Personally I believe the reason people don’t buy electric cars is limited range but rather lack of familiarity with them and price of course. Laying out over twenty grand for a car that might give lots of trouble and have poor resale value is a big risk in the eyes of conservative people and when it comes to THEIR OWN MONEY the biggest liberals I know are as conservative as Baptist preachers.

   Most people around here live in nice houses and have two or three cars and manage doing so by being damned good managers of their relatively low incomes compared to other parts of the country. Once they see somebody driving a Leaf for a year or two and constantly hear about near zero running costs except for tires and five bucks worth of electricity going as far as twenty bucks worth of gas they will buy Leafs for their daily business of getting to work and errands and keep the conventional car for longer trips until it is old and raggedy and giving trouble.

   Maybe I am wrong but once the fear of reliability and poor resale value fade away and gas goes up a couple more bucks I believe Leaf’s and similar cars will sell like ice water in Hell.Ditto Volts which do not have the range problem and are thus suitable for one car owners.

   Back to the main point here . It may be possible for people in the US in particular on average to adjust to peak oil faster than most of us expect. We are still going to have one hell of a deep and super long lasting depression though under my most optimistic scenario and that is my MOST OPTIMISTIC guess as to what the future holds.

   1. Wood heat, at least here in Minnesota, if you have to buy it ready to burn is the most expensive heat source there is. I am constantly amazed that almost no-one ever does the numbers.
      An average pickup load of wood is about 800 pounds. All wood (inc wood pellets) has about 7000 BTU per pound! [Note: Ya, I know oak has more BTU per cubic foot that pine has per cubic foot – because oak is more dense than pine and therefore has more pounds per cubic foot than pine]. Wood burned in a modern wood stove on average is about 50% efficient. So, 800 x 7000=5,600,000 BTU/2= 2,800,000 BTU per pickup load of heat into the house.
      An average price for a pickup load of wood here in southern Minnesota is $100 delivered and stacked. So to get cost per 100,000 BTU divide 100 by 28= $3.57 per 100,000 BTU for wood.
      Propane has 91,800 BTU per US Gallon and currently costs $1.59 per gallon. It burns 90% efficient so there is 82,620 BTU per gallon heat going into the house. Divide $1.59 by 82,620 and multiply by 100,000 gives $1.92 per 100,000 BTU for propane. At $5.00 per gallon for propane the cost per 100,000 BTU goes to $6.05 per 100,000 BTU. (But the price per pickup load of wood tends to go up when the price of propane goes up.
      I made up a chart with all the energy sources charted out at cost per 100,000 BTU for various prices for each energy source. Makes for some very interesting reading – And is very simple to do!
      Considering the cost of chain saws, chains, bars, chain oil, gasoline, log splitters, pickup/tractors to haul it, pile covers/buildings to store it in and all the other little necessities of cutting,splitting and transporting fire wood even if you own your own wood grove it is still getting costly to burn wood (and that is not including your labor time).
      As Professor Albert Bartlett stated, Don’t take anyone else’s word, run the numbers yourself.
      If everyone had to cut down the trees and process it into firewood and burn the wood for all of their heat for just one year they would suddenly get a whole lot more appreciation for the bargain that petroleum energy is (even at the current high? prices). And I doubt that most people are fit enough to put up and burn wood for a year, even if they wanted to? Post petroleum is going to come as a very big and very cold shock to most?

      1. Jon K. Wrote:
         “Wood heat, at least here in Minnesota, if you have to buy it ready to burn is the most expensive heat source there is. I am constantly amazed that almost no-one ever does the numbers.”

         I am pretty sure most frugal people do the math. I think most people that burn wood are doing to save money as either source there own wood (from their own woodlot) or scavenge fallen trees. I see lots of people in my region stack wood after a major storm blows down trees. Only Rich Guys with “Money to burn”stock retail split wood. Occasionally I run into people that have patio wood fire pit that by retail wood, Rarely do I see a person buying retail split wood for winter heating. I think people only turn to retail wood if they run out or have a bad year that prevented them from obtaining enough wood for the winter season.

         Also a Wood stove can heat a home when there is no power. In rural parts, power outages are common so people turn to wood when they have no power to operate the furnace. It beats running a generator all night long and running a generator is expensive. Lots of Wood stove also have water coils that can be connected to the furnace loop to improve efficiency.

         Jon K. Wrote:
         “Considering the cost of chain saws, chains, bars, chain oil, gasoline, log splitters, pickup/tractors to haul it, pile covers/buildings to store it in and all the other little necessities of cutting”

         People own chain saws not just to harvest firewood. Lots Of people own them to remove fallen trees after a storm, or for landscaping. Same with pickup trucks. People own Pickup truck for other things besides hauling wood.

         Jon K. Wrote:
         “And I doubt that most people are fit enough to put up and burn wood for a year”

         Right, thats pretty much the reason why people choose Petro over Wood or coal. Petro is far, far more convenient.

         “Post petroleum is going to come as a very big and very cold shock to most?”

         Yes it will.

      2. Jon, you might want to try 60% efficiency for a new wood stove, 8,500 Btu/Lb, and 80% efficiency for propane with distribution losses in a typical system. In my area, a cord of softwood, 2,400lb, is about $180 split and delivered and propane is in the $2.50 to $3.00 range.

         As TechGuy says, in rural forested areas a chainsaw is a must so a sunk cost. If someone enjoys cutting wood or needs to, firewood can be cheaper than $180 a cord.

         1. 6 years supply of wood heat stacked, dry, and under cover…..less than $100 for chainsaw gas and bar oil. Time spent doing it extremely enjoyable. No gym membership required. Gas spent with the hauling using small tractor…$100? Not much, anyway. I use a home made splitter now, but used to do it by hand. Gas for the splitter? Maybe $5.00 per cord…128 cubic feet.

            Plus, the heat is awesome and cozy. Our house is warm with low humidity regardless what we are cooking. Water is pre-heated with jacket before going into HW tank.

            There is no greater sense of satisfaction knowing we will be warm for years and years despite what the economy does. When the power is out we are toasty and cook on a wood cookstove as opposed to using the wood heater. When it is really cold and stormy, we fire up both stoves.

            If we had to rely on store bought heat such as propane or fuel oil….electricity, I don’t think I could enjoy being warm. We have to open the windows once in awhile when running the woodstove.

            Paulo

   2. Keep in mind the problem isn’t so much personal transport, it’s the world economy. How does a system relying on growth suddenly begin contracting (once every fiscal trick in the book has been tested and used until they no longer work) and remain viable? The question becomes particularly troublesome once the descent from peak reaches 3-5% per year.

      Also, It’s fine to purchase crops from local farmers, but if the economy tanks then what are they purchased with?

   3. Hi Mac,

      I pretty much agree with all of your comment.

      I am slightly more optimistic than you in the following sense. In the US and Canada the Great depression that you anticipate is likely to be very bad indeed, but I think the high unemployment which results (let’s say 30% for a nice round number) will result in the government acting to build (or facilitate the building of) railroads, light rail, solar, wind, nuclear, High voltage DC transmission lines, I think it could be a wake up call to resource limits in general and there may be a push to change habits for recycling, soil practices, fishing regulations, and carbon taxes. All of the attempts to mitigate the liquids energy shortage and general resource constraints will tend to slowly increase employment and the situation may gradually improve.

      Note that I don’t believe that this will necessarily happen, but if we envision a nation (or World) in crisis as in World War 2, amazing things can happen (both bad and good). There is a possibility that good things (as in the Allied forces in WW2) rather than bad things (as in facism) could result.

      I do think we will see a Depression at least as bad as the 1930s, maybe Keynesian economics will make a comeback.

      1. Dennis, “The past is not the future ” When the great depression happened there were not 7 billion on this planet, no globalisation , no instant wire transfers ,no JIT etc,etc . To take lessons from the Great depression and apply them to this time and age is irrelevant and useless . Just because “Carl Lewis was the greatest athlete does that mean he will be the best(leave alone greatest) footballer, cricketer, or ice hockey player” . What worked then will not work now . The problem is that Bernanke and now Yellen are schooled just at that . Just like most of the rules regarding the fall of the Roman empire will not apply to the decline and fall of the American empire since they would occur under a different set of conditions

         1. “The past is not the future.” In 1943 as a ten year old, I spent a week as a guest in a ‘blue collar neighborhood’ located less than a mile from the center of Houston Texas. Every back yard had a garden and laying hens. A few had a little jersey cow and several had a couple of pigs. An ice truck visited the neighbor hood three times a week to refill the ‘ice boxes’. There were few obese folks in that or my rural community but they were tough and possessed essential skills.

            There was no social safety net as we know it today. The FDR ‘New Deal had just come into existence a few years previously but there was no Medicare, Medicaid, extended unemployment, WICs, section 8, etc.
            As a result people were resilient and because the society was far less mobile family was near by to take up the slack. Most importantly we were a more homogeneous society. Tribalism is real and powerful. When resources are plentiful, tribalism can be held in check but when resources are limited, the tribe comes first.

            OFM and his neighbors may be able to cope, but the millions toiling in high rise office buildings are going to be SOL. They lack the skills, resilience, and relationships to survive. A more valid vision of the future in my opinion is 1930’s Ukraine.

            1. About 10 years later, while on a Public Health rotation at Baylor, I was told that approximately 5,000 outdoor toilets remained in Houston. They were becoming less common.

               1. Deceptive stat. I’ve seen it before. It counts RVs in driveways that grandparents may live in and it counts portapotties at construction sites.

                  Surprised me when I first saw it, too.

               2. This was early 1950’s. My impression was that the Houston Public Health Dept, was actually referring to actual outhouses within the Houston City Limits.

               3. Cool, you know, it may still be that number via pop gain.

               4. It wouldn’t surprise me if there are more than that now. Houston is such a giant, sprawling city, with areas that are little better than shantytowns. My partner taught for a time in a poor school in Fort Bend ISD, some of the kids w/o electricity and running water.

                  I’ve visited the cabin my grandfather was born in, well built and still standing. At least it has a well with fresh water.

         2. Duh. Perhaps the name “hole in head” is apt.

            JIT inventories did not happen overnight; nor will worldwide ruination from JIT come overnight. Just as JIT came into fashion over time, so will it go out of fashion over time. Doesn’t take a knucklehead to figure it out.

            Certainly what works now might not work in the future. Yeah. The Romans figured that out.
            Ok so?

            Duh…. Change course! Is it so difficult to see? Come on!

            Ok perhaps if things fall apart overnight, maybe next week , that’s one thing; probably no economy could survive it, period.

            Dennis is no idiot, and has proved his merit on this site too many times to count on two hands and two feet. That you or anyone else might suggest that Dennis or others here are such stooges as to have not given considerable thought to their analysis is sheer stupidity itself.

            Give the guy some credit. Besides that, if you cannot give constructive, meaningful criticism beyond the negative slugfest that you have presented here, keep your mouth shut.

            1. I know JIT did not happen overnight ,but does it’s dismantling have to be a “bell curve” . It will be a ” Seneca Cliff ” . You a build a building “brick by brick” but the dismantling is always the wrecking ball and never ” brick by brick” .
               The Roman’s figured that out . Good for them . But what was the use of figuring this out if you choose inaction ? They went down the tube inspite of figuring it out .
               In an earlier post I have already pointed out that we know that we have to change course since Hubbert (+50 years)raised this issue . Where are we today ? ” Up the creek without a paddle ”
               Now ,where have I said or indicated that Denise is an idiot? But just for your confirmation I know his inputs are invaluable and just because I have another POV does not mean he is wrong and I am right, it just means we are different . Anyway my comment was not to downgrade Denise (as an individual) and nor was it an effort to criticize him . The POV is that arithmetic fails in front of human behavior .
               As to “shutting up”,sorry I will refrain from answering to that . My Guru told me ” Your bad manners are only exceeded by your bad manners “. I hope you get the point .

               1. Hole in the head,

                  I do not think the World will adjust easily to declining oil output.

                  In a world where JIT inventory management is the norm, there will be a lot of disruption. Do you think that businesses will be unable to change their inventory practices in response?

                  I expect another Great Depression, possibly much worse than the 1930s with 30 to 40% unemployment.

                  I also expect the government will attempt to do something to get people back to work and economists may relearn the Keynesian economics that they once knew. If not and we follow early 1930s economic advice, the depression will be about 10 to 20 years longer than necessary.

   4. Your adaptations might be theoretically possible but in the real world with real human beings aren’t going to happen. Real human beings when faced with resource scarcity go to war. There is historical evidence for this. The Japanese when faced with an oil embargo in WW2 didn’t just go back to using rickshaws, they went to war. The buildup to WW3 is under way right now in Ukraine.

      Once serious hostilities between the major powers commence (i.e. nuclear weapons are used) all bets are off. You won’t be able to buy a Leaf or a scooter.

      You need to think about how we can prevent people from going to war over resources. I don’t think you can.

      1. Let me second this point generally.

         Discussions about adaptations are very useful and have been done many times since knowledge about peak oil has become a little more commonplace.

         Very few doubt that human beings, when pushed, will make the transition to a lower energy lifestyle if forced by circumstance.

         But the overall doomer view takes in much more than that. It really is about the diminishing marginal returns on complexity, which indeed is happening to our global civilization. When you think about it in these terms, all bets are off. You can no longer safely assume that a combination of things such as electric transport or insulation will save the day. They work on an individual level, but they don’t scale up, because anything of scale is debt and waste dependent.

         The idea that WW2 was won with a combination of Yankee ingenuity and communal spirit in hard times is only partly right. It was won because the victors more successfully employed scale to use a tremendous amount of resources to fight the war. America and Russia had the oil.

         If one saves resources, it only allows somebody else to use them. It’s all game theory. Ask anybody in Iraq or Ukraine right now what they feel about the soft decline from peak oil.

         Fossil fuels are concentrated power. It always makes sense to burn them, it never makes sense not to. As such, everything that will be produced will be burnt by somebody, somewhere in this world, and that somebody will have light, heat, and power, and anybody who opts out of the game won’t.

         1. “Very few doubt that human beings, when pushed, will make the transition to a lower energy lifestyle if forced by circumstance.”

            It’s not very difficult with a body temperature of 75 degs F.

   5. OFM Wrote:
      “Once they see somebody driving a Leaf for a year or two and constantly hear about near zero running costs except for tires and five bucks worth of electricity going as far as twenty bucks worth of gas they will buy Leafs”

      I very much doubt Electricity will remain cheap. The primary reason why Electricity is cheap is because about half of the Power Generated in the US is from coal. Since the gov’t is clamping down on Coal, All those coal fired plants will need to be replaced costing billions and will be replaced using a more expensive fuel source (most likely Nat Gas). The higher consumption of Nat Gas will also cause prices of NatGas to rise.

      Realistically, It just makes sense to purchase a more fuel efficient vehicle.

      OFM Wrote:
      “It may be possible for people in the US in particular on average to adjust to peak oil faster than most of us expect. ”

      I doubt it. Lots and lots of people will lose their jobs, and there are an awful lot of people depending on gov’t entitlements and the gov’t already is dead broke and insolvent. We are not just facing an Peak Oil problem, we are facing, a Debt problem, Aging Workforce, Lack of workers with appropriate skill sets, Peak Water, Peak NatGas, Aging transportation infrastructure, etc. It would be difficult to tackle Peak Oil by itself. Add in the long list of other problems and its impossible.

      We are already past Peak Cheap Oil and the US economy is in the toilet, heading for the septic tank. We waste Trillions on boondoggles to fulfill pointless political agendas that only exacerbate the problem. Make Self-reliance Plan A, and hope for the best.

      1. I think overall the electric car stuff will die of obvious failure as soon as someone braves the Tesla counterattack and starts quoting results in New England January rather than San Francisco.

         But if you really want to achieve fame and fortune, have a talk with John Deere about lawn tractors that run on these magical batteries. Those don’t have to charge up every night. Your basic Briggs and Straton on one of those is only 20 horsepower. 745 X 20 = what, 14.5 kilowatts? Let’s see one of those that runs for just 1 hour every week and fits nicely in the same size and weight form factor.

      2. Hiya Tech,

         You write
         ”We are already past Peak Cheap Oil and the US economy is in the toilet, heading for the septic tank. We waste Trillions on boondoggles to fulfill pointless political agendas that only exacerbate the problem. Make Self-reliance Plan A, and hope for the best.”

         If you have been following my comments closely you will realize that you are repeating after me. LOL.

         Now that part in the middle -”We waste Trillions on boondoggles’ ‘–is what gives me reason to hope we Yankees and a few other lucky people are not NECESSARILY headed for the septic tank.

         We are still incredibly rich and still have a simply mind boggling endowment of natural resources in North America and less than five hundred million of that seven billion reside here.

         I would like to hear JUST ONE well though out argument from the doomer camp explaining WHY we will not as a country get our sxxt together once we are FORCED to do so by circumstances. There is no doubt about the coming crisis.

         But Hobbe’s Leviathan – the modern nation state – has proven itself to be as tough as cockroaches and nations don’t just generally roll over and die without a fight. When the fecal matter hits the fan Uncle Sam is going to get his butt in gear and institute some very tough new rules that are going to bring about more positive change in a year or two that market forces have brought about in as many decades.

         Oversized personal trucks will be outlawed as far as new sales and old ones will be forced off the road by rationed fuel.IF you want a new F250 you will have to have a legitimate business use for it or risk getting it confiscated by the cops the first time they see you cruising in it.

         I agree that electricity is going to get to be more expensive but it is apt to always be a damned sight cheaper than gasoline and renewable power is going to continue to grow. IF I had to I could put up enough solar panels out of pocket to keep a Leaf charged adequately for my own personal needs ninety percent of the time – but I don’t commute and could leave it hooked up in the middle of the day most days.

         A hell of a lot of the millions of people who are going the be unemployed are going to be put on government payrolls doing useful work (at least part of the time!) such as building bike paths and street car tracks and adding insulation to existing buildings and installing heat pumps and organizing community agriculture and a million other jobs.

         The mandated fuel economy of a new car is going to be eighty mpg or more and the mandate will stick.It is bullshit that such a car cannot be built economically but it is true that it will be very small very slow and very ugly by current day standards. On the other hand if it is all that is available…it will sell.

         Some groceries will be rationed. Some will simply be outlawed or taxed out of markets. We can live on half or less very easily of what we put into food production these days.I raised apples and peaches and beef cows before I retired.If I could have sold apples that were not as visually appealing I could have sold them for half price.Chickens gain three times as much weight as cows per unit of feed.We can eat chicken and beans instead of hamburger and roast beef.

         And we can pay for it all – the parts of it that HAVE to be paid for- out of the waste you rightfully point out. I am not saying it is a foregone conclusion that we will get our act together but it is more likely that we will once forced to than that we will just bitch and whine and shoot each other for the last loaf of bread in a neighborhood store.

         Incidentally I have a substantial hoard of guns and ammo in case it comes to that. I think the possibility is real but actually rather low- less than five percent in my area over the next couple of decades which is as long as I can reasonably expect to live.

         (Beyond that I expect guns and ammo to appreciate faster in value than just about anything else as times get worse which is why I have more than I ever expect to actually use.One of these days I will trade them off one at a time to younger neighbors for beans and firewood. )

         Now in Detroit or LA the odds may be substantially worse…. even though I expect welfare programs to prevent starvation and exposure from being substantial problems here in the US.

         Of course a little bad luck and mismanagement is all it would take to make the worst doomer scenarios come true. I would never deny that possibility.

         1. OFM Replied:
            “Now that part in the middle -”We waste Trillions on boondoggles’ ‘–is what gives me reason to hope we Yankees and a few other lucky people are not NECESSARILY headed for the septic tank.”

            Let me rephrase a bit. “We borrowed Trillions for Boondoggles and lack the resources to pay it back”. America lost is era of exceptionalism 40+ years ago. We had made historic achievements by prompting liberty and entrepreneurship by convincing the worlds brightest and hardworking individuals to immigrate to the US. Now we attract the worse in people seeing entitlement, and imposing socialism and authoritarian government.

            “A hell of a lot of the millions of people who are going the be unemployed are going to be put on government payrolls doing useful work”

            1. It doesn’t work that way. The Unemployed on long term gov’t payrolls turn in couch potatos.

            2. Its very probable that the majority lost their jobs is because they were not very productive or had no useful job skills. I work as an independent technical consultant. It never ceases to amaze me how lazy and incompetent workers and managers are. Fortunately, I am paid well to fix all the Frack-ups they make, and business is booming!

            OFM Replied:
            “We are still incredibly rich and still have a simply mind boggling endowment of natural resources in North America and less than five hundred million of that seven billion reside here.”

            The US is in deep population overshoot. We import energy overseas and from Canada. We are literately reaching the bottom of the barrel by sweeping up the little remaining oil in old, depleted fields with horizontal drilling. We are also literally squeezing Oil from a stone with LTO fracking from source rocks. When we can’t import enough or squeeze enough out the rock, its going to fall to pieces in short order. We should have begun mitigation programs decades ago. In my opinion, we’ve already leaped off the cliff, but just have smacked into the ground yet.

            Most of the population now lives in cities which is dependent on an aging farming population (avg is about 59 years) and 99% of city dwellers know zip about farming. Farming isn’t something that you can learn overnight by reading a few chapter’s in a book. My best guess is that it takes at least 10 years of on the job learning. Younger generations have opted for the City life and have avoided continuing the family farm. I don’t see how this will end well.

            OFM Replied:
            ” I am not saying it is a foregone conclusion that we will get our act together but it is more likely that we will once forced to”

            The most likely outcome is mass riots in the streets, when the system begins to fall to pieces. Look to At Europe to see what happens under austerity. They riot in the streets and demand that their pensions and entitlement be fully funded. For now in the US, they still get SS, EBT, subsidized housing etc, all on borrow or printing money which for the moment has avoided major riots in the US. Almost have the population is receiving gov’t subsidizes, assistance, or gov’t employment. They will never understand reality, otherwise we would be in the situation to begin with.

            OFM Replied:
            “The mandated fuel economy of a new car is going to be eighty mpg or more and the mandate will stick.It is bullshit that such a car cannot be built economically but it is true that it will be very small very slow and very ugly by current day standards. ”

            That’s not a car, your describing a Moped or a go-cart. Passenger car fuel economy is irrelevant. Its the farming equipment and trucks that bring food and other resources to the masses that matter. Its not possible build an electric tractor or a truck that can get 80 mpg. Once the JIT long distance food haul gets disrupted than its hard to believe anything else will matter.

            1. Hi Tech guy,

               So instead of building trucks and roads, we build railroads which use fuel more efficiently and can be electrified. A lot of mining can be done with electric equipment, farming uses very little fuel overall and could potentially be fueled with biofuels if necessary.

               1. Tech Guy has made up his mind that the current ” bau rules” are natural laws rather than just descriptions of the way we do things NOW.When things change enough the old rules no longer work at least after a fashion new ones are fashioned to deal with the new circumstances.

                  Dyed in the wool thinking is almost impossible to change.

                  As to oil supplies: We produce as much per capita as rich Germans consume and can probably maintain that production or close to it for a long time.

                  As for eighty mpg cars being go carts, those same Germans have already built lots of cars that do almost that much if driven very gently, and I am old enough to remember the ”double nickel” when I dared not put a road tractor in ” high” gear for fear of inadvertently exceeding 55. When the crisis hits a second conviction for speeding will be treated the way drunk driving is NOW.Loss of license.Jail.The speed limit may be lowered to 45 this time.

                  But yes a hundred mpg car will be narrow and low and a two seater fore and aft. VW built some a while back using exotic materials that were hybrids that get well over 200 mpg equivalent.I can provide a link if anybody desires it.There is nothing to prevent them being built out of ordinary steel and still getting eighty percent of that 200 plus mpg.

                  Personal auto fuel economy is not irrelevant- most of us are compelled to commute and this is not going to change for decades no matter what although we are already gradually getting away from commuting. SLOWLY.

                  Anybody who has read some history will understand that nation states don’t just roll over and die and that the people who live in them come together in times of crisis.

                  The old Stalinist USSR had one of the worst and worst feared and hated governments in history, and for the very best of reasons.

                  But when WWII started the people there pulled together and did what had to be done.

                  Now as to all that borrowed money: It is NEVER going to be repaid. The people who own the debt are what we country folk describe as SOL Sxxt out of luck. The federal government of this country is big enough and powerful enough to change the rules at the business end of rifles and will do so as necessary when it becomes necessary.

                  The Egyptians built the pyramids with little or no money involved.Probably no money but I have seen differing opinions on this matter depending on how money is defined.

                  Money is only a bookkeeping device for real wealth which consists of man(and woman) power and brains and natural resources.

                  When we go to war and have a draft union craftsmen and professional athletes get paid a few pennies on the dollar as soldiers. And a good many chips of old rich blocks actually join up and tote rifles.

                  When the building of new houses comes almost to a standstill carpenters will be damned glad to work on a state or federal program for very low wages helping renovate existing houses and buildings for energy efficiency given that choice and the choice of no unemployment benefits.

                  Will there be riots? For sure.Will there be anarchy? I have not ruled it out. I often mention the possibility of martial law followed by a police state.

                  In case anybody does not know what a police state is Nazi Germany, the old USSR, and China under Mao are excellent examples.Riots were met with machine guns if necessary but not many people tried it once those police states were well established.

                  The population of the US is higher than it ought to be considering the long term but we are not in very deep in overshoot on a a short term basis.And when the fecal matter hits the fan history indicates the borders will be closed with a very final hard bang for the duration.I don’t know how the births per woman issue will play out but my guess is that birth rates will decline fast rather than increase. Birth control is very cheap compared to diapers and groceries.

                  Farming is no harder to learn than any other sophisticated profession or trade. The biggest difference is that it takes longer because of the annual business cycle. Houses get built in a few months and a new carpenter can work on a dozen start to finish in two or three years. Observing a dozen years of crop production takes a dozen years.

                  People start doing useful work in other trades and professions within a matter of days of being hired as a rule and the ones with brains and good work habits progress rapidly if there is room for progress in the field. I could supervise a dozen beginners without much trouble at all and grow fine crops the first year.Driving a tractor or combine doesn’t require extensive training.Farming as such is about on a par intellectually with running a garage or a small construction business.

                  Lots of mistakes are made by beginners but despite the mistakes some succeed in becoming experts.We are at any rate never ever going to revert to a nation of small farmers- at least not within the next fifty years. The places the farm land exist and the places the teeming hordes exist are different places and there is hardly any infrastructure in farm country beyond what is necessary to support the local population. The absence of housing and roads and water lines and sewers etc etc guarantees the millions mostly stay put in the cities.IF they don’t they will perish of exposure in the country.

                  This is not to say that small scale farming will not make a comeback but the ”to the horizon fields” in the American farm states are not well suited to growing fruits and veggies.

                  If I were a young guy and a city dweller I would give serious consideration to moving close to a small town where I could buy a very large lot with soil and climate suitable for growing some food.Managing a ten mile commute may be easier than paying for fresh and varied food that can be grown at home and growing your own stretches the family income during hard times.A young guy can do ten miles one way on a bicycle and a scooter will do it for a whole week on a gallon of gas.

               2. Mac,

                  You make a lot of sense.

               3. DC Replied:
                  “So instead of building trucks and roads, we build railroads which use fuel more efficiently and can be electrified. A lot of mining can be done with electric equipment, farming uses very little fuel overall and could potentially be fueled with biofuels if necessary.”

                  Come on, even you got to realize this is fantasy land. If your going to go that route, why not throw in Mr. Fusion from Back to the future or Zero Point Energy. We’ll all be flying cars like in the Jetsons! There be piece on Earth. The Palestinians and Jews will join hand and live like brothers and sisters, etcetera, etcetera.

                  OFM Replied:
                  “VW built some a while back using exotic materials that were hybrids that get well over 200 mpg equivalent.”

                  Yup, They built a 200K coffin. Do you have any idea how expensive and energy intensive it is to manufacture Carbon fiber? If you willing to throw unlimited funds, just about anything is possible. But the average American isn’t going to be able to afford it. Lets use a little common sense here, please! Would you really put your life on the line getting into an accident in one of these tiny cars?

                  OFM Replied:
                  “But when WWII started the people there pulled together and did what had to be done.”

                  The global population and the US population was considerably smaller. Back then there was significantly fewer cars and trucks, and what 10% to 20% of the population was in agraculture and 40% of the US population lived in Rural regions. Today less than 2% of the Population works in Agraculture, and about 70% of the population lives in Cities or the Suburbs. We tore up a lot of the best Farm land in America and built strip malls and suburbia.

                  OFM Replied:
                  “Money is only a bookkeeping device for real wealth which consists of man(and woman) power and brains and natural resources.”

                  No, Money is indirectly related to Energy. Money is a means to transfer value that originates from the use or production of energy. Even manual labor uses Energy as it takes energy to grow and transport the food consumed by the workers. You just can’t create value out of thin air. There has to be source of energy to make it all work. The more expensive energy becomes the more dear real money becomes (ie value of money excluding inflation, or devalation by gov’t). You can’t product goods or services without energy. The less energy you have the more difficult it is to employee everyone.

                  OFM Replied:
                  “When the building of new houses comes almost to a standstill carpenters will be damned glad to work on a state or federal program”

                  Any is the gov’t going to stand by the workmanship of these gov’t salaried workers. If I was a carpenter on the gov’t dole. I would bother with quality. I would do the bare minimum needed to complete the job, and if the home or building collapses, its not my problem. This is why gov’t can’t fix this problem. Gov’t is the problem, not the solution.

                  OFM Replied:
                  “Farming is no harder to learn than any other sophisticated profession or trade. The biggest difference is that it takes longer because of the annual business cycle. ”

                  Exactly so why are you arguing with me. You understand that your not going to replace the aging farmers with City dwellers.

                  “Tech Guy has made up his mind that the current ” bau rules” are natural laws rather than just descriptions of the way we do things NOW”

                  No i have not. I am just a realist. I don’t try to sugar coat, “what if” scenerios. Its not going to happen. Your being an old fashioned romantic to think that we can just revert to times long gone, as if you can just turn a switch and instantly people can change thier social behavior, adapt, and learn new skills overnight. its not going to happen. Apply some critical thinking and think this through more.

                  OFM Wrote:
                  “We produce as much per capita as rich Germans consume and can probably maintain that production or close to it for a long time.”

                  Germany never built its transportation system on a federal highway system. Unlike the US that had oil priced in dollars they remained frugal and invested in Rail and set up their economy over the past 50 years to minimize the need to import Oil. Germany also built its economy around its Coal reserves, which is nearly depleted. Germany is resorting to destroying towns in order to grab the last of its coal that is sitting under these towns. Germany is also depend on NatGas Imports (mostly from Russia) to run its economy.

                  OFM Wrote:
                  “Now as to all that borrowed money: It is NEVER going to be repaid. The people who own the debt are what we country folk describe as SOL Sxxt out of luck. The federal government of this country is big enough and powerful enough to change the rules at the business end of rifles ”

                  So Solders are going to “protect” and defend the gov’t for free? When the US defaults its game over. The only thing the gov’t has is the US dollar (Read about Alexander Hamiliton and the Connential bonds to understand how the Federal gov’t rules by the US dollar). Once the value of the dollar is gone. People won’t fight its battles, they won’t sell the gov’t goods and services any more, and all of the entitlements go unpaid. Do you think the ~160 Million Americans recieving gov’t checks are simply going to accept this and not get angry and riot. Come on! Apply some critical thinking, please!

               4. Tech ,
                  You have obviously made up your mind and it is perfectly clear to me at this point that NOTHING could ever convince you to change it.

                  ”Come on, even you got to realize this is fantasy land. If your going to go that route, why not throw in Mr. Fusion from Back to the future or Zero Point Energy. We’ll all be flying cars like in the Jetsons! There be piece on Earth. The Palestinians and Jews will join hand and live like brothers and sisters, etcetera, etcetera.”

                  Sarcasm is fine but when you compare electrified rail to fusion you are displaying a level of either ignorance or plain old bone headed mulish refusal to think that is hopeless.

                  Sarcasm is one thing and fine but comparing electrified rail to fusion is not sarcasm. I can’t think of a word that works here that is not offensive and just won’t say any more.

                  Electrified rail is very real and widely used and totally everyday off the shelf technology. FUSION is as most people have heard the ” energy source of the future forty years from now and always will be”.

                  I know from other things you have posted you are not ignorant but actually pretty smart. I can’t understand why you are so adamant that our country and society will do NOTHING to save itself in face of a crisis since this would be totally contrary to all the history I have ever read.

                  I will not respond again to your comments or remarks. It is not possible to DISCUSS possibilities with an ideologue who is utterly convinced ( or maybe just unwilling to admit he may be wrong?) he is right about such matters no matter what contrary evidence can be presented.

               5. +1

               6. OFM Wrote:
                  “Electrified rail is very real and widely used and totally everyday off the shelf technology. FUSION is as most people have heard the ” energy source of the future forty years from now and always will be”.

                  I was not trying to be hurtful, The issue I see with electrified rail is where does the energy come from to power it? Hense, the Mr Fusion analogy. To be honest I was hoping you would have thought it be funny, and I assumed you would get the connection about providing the power source for migrating to an all electric economy.

                  DC also also include text electric mining, leading that we can simply electrify everything as if simple as counting 1, 2, 3. For one, the Grid is barely holding together as is. To switch all energy demand to electricity it would need to increase capacity by 5 to 10 fold. Sorry, but its not going to happen.

                  FWIW: I am just trying to get you guys to see that you can’t simply make wild assumptions with applying critical thinking on the issue. Please don’t take any of my comments as a verbal attack. Despite my long winded post I am do make an effort to try to be brief, and my comments may come across as abrasive. I am trying to communicate complex issues without writing a 100+ page book.

                  Thanks for reading.

               7. Hi Techguy,

                  It is pretty clear that switching to more electric will require both greater energy efficiency (better buildings with more passive solar and heat pumps) and more electric output. Until we can ramp up wind, solar, and nuclear power we will need to use coal and natural gas.

                  There will need to be a huge investment in upgrading the grid, that is why I always mention more HVDC transmission which will reduce losses when electricity is transmitted over large distances.

                  In addition, just expanding the rail capacity we have to replace most long distance trucking without converting to electric will use energy more efficiently.

                  I do not think this will be easy to accomplish, I do think it is possible. In fact when the economy is in a depression, there will be many unemployed people that will be willing to work. If private investment cannot get them to work, as in the great depression, then the government can undertake the investment, they can hire private companies to do the work or form public private partnerships, give tax incentives or do the investments directly.

                  Or for those that dislike government, we could just let the market work, like 1929 to 1933.

               8. OFM, as an independent observer who does not live in the US so has no skin in the game as far as US is concerned you are a way too optimistic on the outcome’s for US citizens (yes, you as an individual are well positioned) . I think that +/- 50 % of the US is obese and also + 35% are on anti depressants . Who is going to save them ? Will they go bonkers when they don’t have their insulin and valiums or prozacs . I remember reading ( I think it was JHK) , “the US Is two coastlines connected by airways and the highways ” .The railroads run mostly North to South (what I understand, not being a US citizen) . So 50% of the battle is lost when the airlines start curtailing ( 42 gallons of crude gives about only 4.5 gals of ATF and the USAF will want that) . All operations have a “break even” or a “MOL” . You breach them and the party is over . You do not have to go to “zero”. I have often given the analogy that the human body is 80% water but you have to loose only 20% to die because of organ failure . This is talking from my personal experience as a cholera victim .
                  All your arguments are clouded by two important factors :
                  1. You look how well you are positioned ,and then you presume that other’s are :or will follow the same path . Believe me , I am happy for you .
                  2. You absolutely discount the “break even” and MOL factors which are crucial .
                  Just as a rider I make it a point to always read your POV , and your contribution is greatly appreciated .

                  P.S : My friends accuse of not talking to much . My answer to them ” I talk to improve on the silence “

               9. >Money is a means to transfer value that originates from the use or production of energy.

                  Heh, Don’t tell that to the gold bugs. They think gold is money (or the other way around, not sure).

                  >You just can’t create value out of thin air.

                  Of course you can create value out of thin air. That is what trade does.

                  For example, if I’ve got more firewood than I need, and you’ve got more potatoes than you need, then we can trade a few potatoes for some firewood. The trade makes sense for both of us, because the potatoes are worth more to me than the firewood and the firewood is worth more to you than the potatoes.

                  Boom! Free value out of thin air.

                  Here’s another example. Lets say everyone in town agrees to drive on the right side of the road instead of down the middle or wherever. Suddenly the traffic gets a lot faster, and the road is much more valuable to all users.

                  Boom! Free value out of thin air.

                  Or let’s say we all agree to use the same network protocol. We could have a huge worldwide web hooking up millions of databases around the world. Suddenly all that data is so much more valuable.

                  Money is a store of value but value is an ephemeral and even subjective thing. Economics has no Law of Conservation of Value like physical laws that conserve mass or spin or hadron number or whatever.

               10. I’ll just chime in here. I fall in to the doomer camp although I agree that a police state is a fairly inevitable outcome for current strong modern states.

                   A couple of issues that haven’t been discussed are:

                   1: China owns $1.2 trillion of U.S debt. I can easily foresee that they will come calling for payment in kind if the U.S chooses to default. Chinese efforts to beef up their naval capabilities is worrying. Whether they’d ever go to war over the debt is questionable but they would find an arrangement convenient to them.

                   2: The U.S is a very divided nation. How well do the recently arrived immigrant populations / disenfranchised non-white populations come out of the police state? The society could easily fracture with ghetto-like situations forming. I doubt that they will receive all the federal bailouts. They’ll be a constant thorn in the side.

                   3: Youth unemployment(16-24 yr old) is high (at 16.3% in July 2013) although not at European levels. I don’t know if there are any studies but it seems a generally held view that if young people do not find employment during those first 8 years of their career they will find it hard to enter the workforce later. Another problem waiting for future generations to deal with.

                   4: OFM mentions birth control being a cheap way of keeping population under control. Birth control requires the population to go along with using it. Here in Peru birth control is free but people here fight to defend their right to breed like guinea pigs. The aforementioned minorities (maybe majorities) will not appreciate a predominantly white government informing them they are having too many babies.

                   Just a few thoughts that came to mind.

               11. Lots of potential problems. Clearly there is not a way to overcome having a lot of immigrants, especially in a nation of immigrants 🙂

               12. Hi Inglorious,

                   You bring up some good points.VERY good points.

                   On one: China is an up and coming super power if she doesn’t collapse first.We are still the big dog militarily though and probably will be for a good long while yet.

                   If and when it comes to a showdown major countries at war don’t pay debts owed except to their allies.At any rate we are deep into financial overshoot the world over and fiat currencies always fail at some point. The dollar will not last forever. The pound sterling didn’t.War at several levels from economic to border clashes to flat-out nuclear is possible and in the cards for sure.Hopefully MAD will prevent the wide scale use of nukes.

                   TWO : Our recent arrivals are not so numerous YET as to represent a major threat in terms of stability under emergency conditions.Most of them are integrating rather well.IF the worst comes to the worst they may be escorted to the borders or interned or just shot out of hand along with any body else who refuses to go along with the new reality.

                   I am only argueing that we have a good shot at maintaining something resembling modern day business as usual rather than saying everything is going to be ok.I do not use the terms martial law and police state lightly.

                   Three : Unemployment is going to be one of our very biggest problems and not just among disenchanted and economically disenfranchised young people.A huge part of our population is going to be on permanent welfare and the allotment is not going to be a generous one no sireee!!! All those unemployed and angry young men are the timbers out of which a police state may be built.

                   Four:

                   I have not acquainted myself with your local culture to any great extent but ours is so far different as to figuratively be another world:Your history is so far different from ours that drawing comparisons is almost impossible in using one country to predict the future of the other.

                   OUR Catholics laugh at the Pope when it comes to the use of birth control and our society hardly even bothers to consider female promiscuity a bad habit let alone a sin any more.I know dozens of Catholics and of them all there are only two families with four or more children. ONE or two is the norm with them locally at least.

                   Except for a very few ”Native Americans ” with very little influence and only a handful of followers we don’t have anybody here who is convinced the government or any body else is out to exterminate them.

                   I live in the heart of what we call the Bible Belt here and can say with complete assurance that it is virtually unheard of for one of our Protestant leaders lay or professional to say anything at all against the use of birth control within the institution of marriage although most of them promise the girls who ” do it” before they are married that they are going to burn it hell forever.

                   Damned few of the girls pay any attention to them when the hormones are raging.

                   I might be wrong but I am not much worried that we will have a problem with large families unless some religious nut cases come into political power and outlaw easy access to birth control which is actually dirt cheap if provided as socialized medicine and socialized medicine is the future here.

                   This is not to say our population will not grow for a few more decades yet.It almost for sure will.

                   But we no longer have a culture that prizes children as old age security measures or child labor to help on the farm etc.

               13. A little late to respond but I’ll put it up anyway.

                   As I said I think the police state is fairly likely and the answers OFM gave are pretty likely results. And yes Dennis, immigration is part and parcel of the U.S. It’s just the new immigrants aren’t the right sort. The quality has just gone downhill 🙂

                   Just one thing, Peruvians don’t have babies because they’re Catholic. They have babies because they’re poorly educated, a situation which will worsen in the U.S as things take a turn for the worse. It’s not that they actively want more babies, reject birth control out of hand. It’s just something they don’t do. I imagine there are many similar poorly educated communities in the U.S and the type of people who have more babies than the standard.

                   Anyway, not saying that the U.S won’t weather through but it’s going to be unpleasant and I can imagine many people coming out on the wrong side of things when things turn bad. In my opinion I can see much greater independence occurring as the years go by. Maintaining a country such as the states in one will be a challenge – regional blocs with similar interests will likely form. The idea of the states may continue but power will likely be devolved.

               14. Inglorious,

                   As I understand it, when a contractor is looking for a good days work, they tend to find it from recent immigrants. I am in complete disagreement that the quality has gone down hill.

                   Do you think the illegal immigrants come to the US to collect welfare, they don’t get that, they find the jobs that many citizens find too hard or too low paying.

      3. There are several things I disagree with in your post.

         The American government is far from insolvent. Furthermore more investment on infrastructure would be better for economy, because private spending is down. The whole idea of needing to “tighten your belt” is misleading. Energy efficient infrastructure would be a smart bet.

         A lot of people are leaving the labor force as the boomers retire, but productivity is still increasing.

         Complaints about “government entitlements” sound sensible, but “entitlements” is simply a reference to arcana of the budgeting process. The term has no economic meaning, it is just something the Republicans have been using as a propaganda tool.

         The price of energy is less important than the price of energy services. About 14% of electricity at home is used for lighting. With conservation and LEDs you could reduce that 80%. 18% is used for air conditioning. Solar panels, efficient air conditioners and raising the temperature a few degrees could half that. Heck my (Japanese) father-in-law leans a big ole bamboo mat up against the South side of the house when it gets too warm. Another 8% is for refrigeration. I think people will buy smaller fridges if electricity gets expensive. It isn’t the end of the world. The same applies to heating, electronics etc.

         (Energy use source here: http://www.eia.gov/tools/faqs/faq.cfm?id=96&t=3)

   6. OFM, my experience is that electric cars are far more reliable than gasoline cars.

      We have had a Nissan Leaf for 3 years and a Chevy Volt for 2+ years. The only maintenance we have actually needed was to replace a cabin air filter.

      I used to pride myself on a good set of automotive tools, and some 30 years ago I was working on a car every weekend, because the cars broke down a lot. Now my tools are gathering dust and I’m out of that business. I can’t work on the electric cars, but I also don’t need to.

      I consider myself pretty frugal, and I still think the electric cars were a good investment.

      1. I wouldn’t be surprised if electric cars are more reliable. Not as many moving parts, and not many fluids under pressure.

6. Thanks Ron!
   It looks like the peak of oil export has already happened in the past 5 years. If all the forces of calm, capital and ingenuity came together it is possible that the peak could be surpassed one more time, but highly unlikely.
   This measure is much more important than global oil production, since it reflects factors such as how much internal consumption a producing country has, as well as the ability of consuming countries to pay for the output of high cost oil products.

   Interesting set of headlines in past several days from Kurdistan-
   The first tanker of Kurd Crude was purchased by Israel, after having trouble finding a buyer.
   “Israel accepts first delivery of disputed Kurdish pipeline oil”
   http://www.forbes.com/sites/christopherhelman/2014/06/23/iraqs-kurds-sell-oil-to-israel-move-closer-to-independence/

   Next , the second tanker has approached the US gulf , but Iraq has obtained a court order to seize the oil-
   http://www.bloomberg.com/news/2014-07-29/iraq-gets-u-s-court-order-seizing-tanker-crude-off-texas.html

   This morning, a US judge has acted on the motion by the Iraqis-
   http://www.reuters.com/article/2014/07/29/us-usa-iraq-kurdishoil-idUSKBN0FY0KX20140729
   “(Reuters) – Acting on a request from the central government in Iraq, a U.S. judge has signed an order telling the U.S. Marshals Service to seize a cargo of oil from Iraqi Kurdistan aboard a tanker off the Texas coast,,,,”

   Interesting times.

7. This ought to be interesting. U.S., EU Ready New Russsian Sanctions as Fighting Rages

   The sanctions target “key” Russian industries — energy, defense and finance….

   The International Monetary Fund cut its forecast for Russia’s 2014 economic growth last week to 0.2 percent from 1.3 percent, citing capital flight fueled by the Ukraine conflict.

   1. Ron, your Russian chart looks significantly different from the mazamascience graph of the same thing based on BP data. They quote 7+ mbpd for Russian export. Any chance of a metric ton vs barrel issue?

      Russian output 10.X mbpd. Consumption looks under 4.

      1. Any chance of a metric ton vs barrel issue?

         No, not a chance. OPEC uses “barrels per day” and so does the EIA. And you must have noticed that the EIA and OPEC pretty much agree on Russian Crude Oil Exports.

         Perhaps the BP is quoting total exports including refined products. Or perhaps they are including NGLs. Neither the EIA or OPEC includes either NGLs or refined products. In 2010, according to the EIA, Russia exported 2.3 million barrels per day of refined products. If you add that to their crude oil exports you get closer to the BP number.

         1. Could be.

            But while that would fuzz things up in one direction for other countries (who are refining oil imported from elsewhere before exporting the gasoline, eg, Venezuela US), for Russia it fuzzes in the reverse direction.

            For Russia’s export of gasoline/diesel, say, to Belarus, it would be from Russian crude.

   2. http://www.bbc.com/news/business-28539284

   3. The name of the game is “resilience”.As things stand today the Russians are more resilient than the EU volks(people) .I refrain from commenting on the activity of the US because they have already shown how dumb,stupid they are in the Ukraine fiasco . Russia does not have to go to a hot war with the US .All it has to do is bring the EU to it’s knees and the battle + war is won . Putin understands this(I presume) and plays his cards accordingly . By the way when the EU is down on it’s knees then so is NATO . You kill two birds with one stone . Just as a side note from some one who lives in Belgium , whenever I pass from the new HQ of NATO in Brussels , I wonder what war are they fighting ? It is an eyesore monsterity and as with all govt projects way over budgeted costs by 100% . What a waste of resources .

      1. Russia GDP about 2.3ish Trillion from the wiki.

         Oil exports and gas exports look like about $500 Billion a year. About 22%.

         This is where the silliness has lots of room for fuzziness. The west will trumpet falling GDP and Russia can report growth.

         You do that via implicit price deflator, with the IMF inventing their own or the economy minister inventing his own.

         With a constant deflator and a 10% price rise of oil and gas, that’s 50B / 2.3 T = 2.2 GDP growth JUST FROM THAT if they want to subsidize for domestic consumption to hold the deflator down. And guess what sports fans, that subsidy would be G in the GDP equation and raise GDP further.

         Sorry, unless you make people starve, economic sanctions are going nowhere, and there ain’t no one going to starve in Russia. In fact, they’re eating hot dogs on the Crimean beaches this moment.

   4. Hurray! Germans come to the rescue! Perhaps a US-Russia Showdown is going to get cancelled:

      Land for gas: secret German deal could end Ukraine crisis
      http://www.independent.co.uk/news/world/europe/land-for-gas-secret-german-deal-could-end-ukraine-crisis-9638764.html

      “Germany and Russia have been working on a secret plan to broker a peaceful solution to end international tensions over the Ukraine.”
      “More controversially, if Ms Merkel’s deal were to be acceptable to the Russians, the international community would need to recognise Crimea’s independence and its annexation by Russia, a move that some members of the United Nations might find difficult to stomach”

      I will keep my fingers & toes crossed that the US Proxy war in the Ukraine will get canceled. I think the Germans have “wised up” and realize that the US is undermining world stability and peace. Hopefully, Merkel can get more EU nations to follow and stop agreeing to the disastrous US foriegn Policy. I am sure Barry is not pleased at all that Germany is working behind his back to resolve the Ukraine crisis.

8. Hi all,

   Ron suggested how he thought decline rates would look after the peak. He did not state when the peak may occur, in the scenario below I have assumed that decline begins in 2020 (my assumption, not Ron’s). I tried to create a scenario where C+C URR is 3000 Gb (500 Gb of this total is extra heavy oil from oil sands and the Orinoco) that roughly matches the decline rates that Ron believes are most likely.

   The depletion rates after 2020 were chosen to make the decline rates about 1% in 2021 and increasing to between 3 and 4% a few years later. The scenario assumes that “all hell breaks loose” in 2035 and this causes depletion rates to fall more rapidly until 2040 (they fall from 3% to 2% over 5 years) and then fall more slowly from 2040 to 2048 reaching 1.5% and remaining at that level.

   Decline rates rise from 3.4% in 2035 to 6.4% in 2040 and then fall quickly to 2% in 2045 and to zero by 2050 and then slowly rise to 0.7% by 2080.

   It is unclear what would cause depletion rates to fall starting in 2020 in this scenario, my expectation is that depletion rates will remain at present levels of about 5% for crude less extra heavy oil (extra heavy oil is modelled separately) or that they will rise somewhat in an attempt to maintain or increase C+C output levels. For those interested a medium and high scenario (or optimistic scenario) are presented at the link below:

   http://peakoilbarrel.com/anticipating-peak-world-oil-production/comment-page-2/#comment-49715

   Chart below

   

   1. Isn’t 3.5% even more optimistic a decline rate than IHS/CERA and Maugeri? Some kind of terminology issue.

      1. Hi Watcher,

         The average decline rate of fields that have started to decline is about 8%.
         Not all of the oil fields in the world are in decline and we are talking about the decline rate of world C+C production.

         For the World decline rate to be 8% we would have to have all fields declining and drill no new wells. Also some of the output is from extra heavy oil which is developed slowly and declines slowly as well.

         1. The average decline rate of fields that have started to decline is about 8%.

            Well not exactly. From Saudi Arabia eight years ago:
            Saudi Arabia’s Strategic Energy Initiative: Safeguarding Against Supply Disruptions

            • Without “maintain potential” drilling to make up for production,
            Saudi oil fields would have a natural decline rate of a hypothetical
            8%. As Saudi Aramco has an extensive drilling program with a
            budget running in the billions of dollars, this decline is mitigated to
            a number close to 2%.

            The natural decline rate for fields in decline is indeed 8%. But that decline rate can be greatly reduced by massive infill drilling. Virtually every giant and super giant field in the world has, over the past decade, experienced massive infill drilling with horizontal wells creaming the top of the reservoir. This has massively reduced the decline rate in Saudi Arabia, Russia and just about everyone else with old giant declining fields.

            Of course a slow decline rate means a massive increase in the decline rate once water hits those horizontal wells near the top of the reservoir. That will cause a shark fin decline curve that will be way above the natural 8%.

      2. Another thing is that usually it is assumed that depletion rates do not fall as in the pessimistic model above, most analysts would expect them to either remain constant or rise over time, though it is unlikely that the World average depletion rate would rise above 9% and I think 7% is a more realistic limit, they will fall eventually though as resources become so difficult to extract that the effort is abandoned. The decreasing depletion rates of the pessimistic scenario are more likely in 2050 or later than in 2020 unless an economic collapse occurs.

   2. Dennis, I think you are really hung up on reserves and depletion rates. True reserves are unknown and which means, of course, that depletion rates are also unknown. What matters are decline rates. Decline rates are something that we can measure. As has been said over and over by a few peak oilers: “It’s the size of the tap, not the size of the tank.” For instance take the Orinoco Bitumen, there the tank is enormous but the tap is tiny. Ditto for the Canadian Tar Sands.

      I think your “Pessimistic World C+C Scenario” is very optimistic. I will go on record right here in saying that the decline will begin no later than 2016 and “all hell will break loose” no later than 2025. That is my optimistic guess.

      1. Hi Ron,

         Future decline rates are unknown. Currently World C+C is not declining, though the increase can certainly be estimated (as we do not know the output levels exactly).

         The oil shock model is based on physical principals and estimates of oil discovery (mostly from Jean Laherrere) and production data. The model matches output data fro 1960 to 2013 very well and the modelled depletion rates are shown in the chart I presented, the modelled “mature reserves” are very similar to proved producing reserves.

         Jean Laherrere estimates a World C+C URR of 2700 Gb with 2200 Gb from crude less extra heavy and 500 Gb from extra heavy. A Hubbert Linearization on World crude less extra heavy oil results in a URR of 2500 Gb and in a recent paper by Laherrere his Hubbert linearizations of OPEC and non-OPEC (each done separately) gave a result of 2600 Gb for world crude less extra heavy. I use the 2500 Gb estimate for crude less extra heavy. My model for extra heavy oil actually has a lower peak than Jean Laherrere’s model so the tap for that is very small (or smaller than assumed by Jean Laherrere).

         I assume that Jean Laherrere’s analysis is basically correct except for a slight underestimate (by 10%) for the World C+C URR and it is the starting point for the oil shock model analysis.

         Your optimistic scenario is decline by 2016 and “all hell breaking loose” by 2025.
         Could you give me your best guess? Also after 2016 you expect the decline rates you gave earlier? 2017-1%, 2018-2%, 2025-3.5% is that about right?
         Maybe your best guess would be decline in 2014 and all hell breaks loose in 2022?

         1. No, I choose to remain optimistic. My optimistic scenario is my best guess.

            1. Ran into this a few months ago. The ongoing process of obfuscating definitions is in play.

               Decline in production from already existing/producing wells got semi-erased by the concept of, instead, decline in production from already producing fields — which allowed in-field drilling to reduce that quoted decline rate number.

               Reduce that number and people can’t multiply it by 75 mbpd globally and get ugly mountains to climb for new fields.

            2. Hi Ron,

               I did not realize that you considered yourself an optimist.
               So the decline rates are what you had suggested earlier, I assume.

               1. Dennis, the optimist is kind of joke. Whenever I write about the collapse I always say I am an optimist because I believe there will be survivors. But yes the decline rate I quoted earlier is about as close as I will estimate.

               2. Thanks Ron,

                  I didn’t realize when you claimed that my views were Pollyannaish that they were meant as a compliment 🙂

               3. Let’s make this more clear:

                  “The average decline rate of fields that have started to decline is about 8%.
                  Not all of the oil fields in the world are in decline and we are talking about the decline rate of world C+C production.”

                  See fields vs wells? This allows in-field drilling to pretend to define wells as declining less severely in total in a given field.

                  The usual-in-the-past concept was decline of presently producing fields absent in-field drilling defined The Number. Then all additional drilling / production, regardless of where, was presented with total global production X The Number as the mountain to be climbed.

               4. Hi Watcher,

                  We can use wells if you like, the 8% number was based on studies of oil fields.

                  Do you think that all wells behave like Bakken LTO wells?

                  If so you are mistaken.

                  Many wells ramp up then stay on a plateau for a while and then decline.

                  Even when we have very high decline rates as in the Bakken and eagle ford, output can increase. As we are talking about the decline of World C+C output looking at the individual well level is not helpful.

                  If you think World output will decline by 8% or more in the near future then you also assume that depletion rates will fall from 5% world wide to maybe 2% over a short period of time.

                  I doubt this will be the case unless WW3 starts and it is a full scale nuclear conflict.

                  That may be what you expect, I hope you are incorrect.

               5. I think you missed the point.

                  Which is, if you want to have fields decline at 8%, then exclude in field drilling. The decline rate of presently producing wells systemically prevented in-field drilling from defining decline rate to be a lower number.

                  The generic number is 4-6%. Period. Multiply that by global production and that’s how high the mountain is for new wells coming online. It’s not rocket science.

               6. Hi Watcher,

                  The world analysis is done very differently than my Bakken or Eagle Ford models.

                  I do not have an average well profile for world oil output and also have no data for the number of new wells which are completed each year. If I did, I could figure it out the way you suggest.

                  http://www.theoildrum.com/node/2376

                  http://www.theoildrum.com/node/6255

                  The most detailed explanation can be found at

                  https://drive.google.com/file/d/0B4nArV09d398TW80QXJqV0xLdms/edit?usp=sharing

                  warning large PDF see chapters 4 to 7

         2. Dennis,the problem is that our calculations do not count when it comes to human behavior . We are only fine tuning , this is not important . The question is what happens when the world panics ? Try shouting “Fire” in a movie hall and you will see what it means .People rush to only one door (why I do not know) I am a survivor from this incident,so “been there done that ” . How will the world react when the issue of decline rates, depletion rates etc (which we on this forum take for granted) ? I will tell you how,they same way they reacted in the fire as mentioned above leading to panic and death of +100 people dying . To illustrate my point , the human body is +80% water , but do we have to loose all the water to die ? I have had this “near death ” experience because of cholera in India .You loose +20-25% you will have organ failure and pop off . All your projections on decline rates become invalid in my POV as to how human beings react . My basic premise is (being an atheist) is that we are animals who are still governed by the 5 F’s ” Food,Fear,Fight, Flight, F***” . When the reality dawns on the public at large the first four elements are going to take action and in my thoughts ( I hope I am wrong)we will have the same scenario that I witnessed live in the movie theatre fire in India . Not to insult or degrade your argument ,but at that moment of time arithmetic is off the table

            1. There is no doubt that humans can react badly to stress, but sometimes humans can be amazing as in the reaction of some bystanders to the Boston Marathon bombing (they aided others, often total strangers, rather than fleeing), no doubt there were many who just ran away, that is the most natural reaction.

               There are some who rise above and lead others in the right direction (Churchhill and FDR come to mind), it does not always work out that way, I think warning others of difficult times ahead can be helpful, but I try not to overstate the case.

               1. DC Wrote:
                  “There are some who rise above and lead others in the right direction (Churchhill and FDR come to mind),”

                  Look at the other side: Hitler, Stalin, ToJo, etc. Civilizaton will not survive the next round of charismatic dictators. For a leader to “rise above”, there always need to be someone on the opposite side.

                  DC Wrote:
                  “sometimes humans can be amazing as in the reaction of some bystanders to the Boston Marathon bombing”

                  +95% ran away. FWIW: Most people do not care and do not want to know. The Majority of people are glued to the TV or thier gaming console and do everything in their power to escape reality.

               2. Lotsa history revisionism.

                  Hitler would have been a great statesman if he’d won.

               3. Hi Watcher,

                  Yes and murder would be sanctioned by government along with rape. Luckily that is not the world that most of us live in.

               4. What does sanction mean? Murder is a legal term, not an act. Killing people is an act. Ditto rape and sex.

                  People are killed all the time and often the killers are either praised or not criticized, by society or govt. How is this new material?

               5. DC Wrote:
                  “Yes and murder would be sanctioned by government along with rape. Luckily that is not the world that most of us live in.”

                  Not sure which world that is, but we live in a world full of murder and rape. Even in the USA murder and rape happens frequently. In the case of the US gov’t, it exports murder and rape abroad. In Iraq, over 100K people have been murdered and torture (Abu Ghraib), We also help instigated the crisises in Libya, Egypt, Syria, Yemen, Qatar, Ukraine, etc.

               6. Hi Techguy,

                  Yes, apparently the US is much worse than Nazi Germany 🙂

               7. DC Replied:
                  “Yes, apparently the US is much worse than Nazi Germany”

                  Perhaps not, but it sure has a lot of blood on its hands. The US seems to start off with these grand Nation building exercises but never finishes them and abandons the nations it invaded or destabilized leaving anarchy and even more terriorism. Would you disagree?

               8. Hi Techguy,

                  You said,

                  “Perhaps not, …”

                  Is there really a “perhaps” in your mind in this matter?

                  If you are referring to Iraq and the bungling of the situation by the Bush administration and the fact that there was no reason whatsoever for the US to be involved after 9/11, I would agree that the US should never have gone to war in Iraq for the 2nd Gulf War. I think 41 was a much better president than 43.

9. Based on Ron’s input I have created an “optimistic” scenario for World C+C based on a URR of 3000 Gb (including extra heavy oil from oil sands and Orinoco).

   I still fail to see what would cause depletion rates to fall to half of their historic levels over the 2016 to 2040 period, I would expect them to either remain flat or to rise as oil output declines. Eventually depletion rates will fall, but not when we are less than halfway through World URR.

   I do not think this scenario is very realistic.

   

   1. That orange line looks like a shark breaking the surface with its mouth open. Otherwise it doesn’t look like anything, certainly not any kind of decline rate. It makes no sense whatsoever.

      Extra heavy oil will have a very slow decline rate because only a tiny fraction of it will be recovered each year. It will be the opposite of deep water oil or oil from tiny fields. These both have an extremely high decline rate.

      Dennis, it will be the X factor that is going to bite us in the butt. That is the unknown political factors that are beginnign all over the world today. What is going to happen in Russia, Iran, Iraq, Libya or almost any other place in the world. And have you even considered the consequences of those creaming horizontal wells in Ghawar and every other giant field in the world, the source of over 60% of the world’s oil.

      You seem to see a slow decline curve come hell or high water. There will be no X factor, there will be no shark fin decline curve on giant fields, there will be no political problems that shut off oil from Russia or Iran or wherever. Everything will go smooth and therefore the decline rate will be very slow and smooth, starting in about 2025 or 2030 or… actually I have forgotten when you said peak and decline would start but I know it was no way soon. But it really doesn’t matter because the decline will be so slow, and the population will be declining also, that we will all adjust.

      Everything will be fine, nothing really bad can ever happen to the human race in general in Dennis’s world. I dearly wish I could live in that world but I cannot.

      1. Extenuating circumstances. That’s life. World oil production is, of course, subject to religious beliefs, political agenda, border disputes, shipping lanes, nuclear development, war, typhoons, blah, blah, blah. Domestically, in North America, oil production is subject to political agenda, border disputes (if you are a Texan, lol), an angry public set on increasing regulatory restraints on the oil and natural gas business, at whatever the cost; water, steel, interest rates, hurricanes, money, money, money, blah, blah, blah. How do you model extenuating circumstances? You don’t. Dennis is a scientist, however; quit raggin’ him. Most of all you “enlightened” folks really don’t know any more than he does. You think you do, but you don’t. Me neither. I don’t know jack what is going to happen next week in the world we live in. I could not have imagined in my wildest dreams we would be in the pickle we are in this week, worldwide, last week. If you think you did… raspberries.

         We pretty much all know that with regards to hydrocarbons, the world is toast. By summer 2016 the bloom will be falling off the shale bush in the U.S. and coupled with all the good work that guys like Ron, and Jeff, and many others do, things will begin to get a little clearer to even dumb Americans who believe that technology, and shale, will save the day. The days of flying home to see Grandma at Christmas will be over very soon. Come summer of 2016, whichever candidate that mans up and tells me the truth about energy in the world, and Grandma, that person gets my vote. Period.

         So which of the presidential candidates is going to step up and face the music, who will tell dumb Americans how the cow is going to eat the cabbage about the coming energy crisis? Donkeys or elephants? Republicans (to which I R) can’t stand the idea that less government control and “free market” principles failed us in the end of the fossil fuel era. I thought you guys at EOG and CHK and Continentalwhatchamacallit said we were headed for energy independence? We hung in there with you guys on the depletion allowance, whatdaya mean we’re out? No way, man.

         Will Hillary tell the truth? Does she have the huevos to tell the American public the party is over? She might, if she can BS everyone and say she’ll fix it. How is she going to fix it? Never mind, 52% of Americans will believe her even if she is lying thru her teeth. They have to. They don’t want to face the music.

         I embrace the notion of peak oil production rates. I am in the business, I know how it works. We are going down, period. Let us in the community quit focusing on planting the flag at the summit of peak oil, what difference does it make? Lets start discussing how to cope with it. Not the doomsday horseshit, that is not going to happen, not for a awhile.

         Who is going to lead us out of this energy mess? Beginning, by the way, during the next presidential election in 2016? Republicans or Democrats?

         Its a poll, y’all!

         1. Your ideas mean nothing if you’re not elected. You can achieve nothing for your people if you’re not elected. You can’t do anything about energy, either, if you’re not elected.

            No way in hell any such statements will be made to an electorate. What would be the point?

            1. If our ideas about energy don’t mean anything what’s this blog all about? If I can speak at a Lions Club luncheon, about peak oil, and get someone thinking about it, I have achieved something.

               So, by summer of 2016 the Bakken and the EF will be rolling over the hill and hydrocarbon decline throughout the world will be way more obvious than it is now. And you think no presidential candidate will even bring it up?

               The “point” would be to face the truth and begin to make a plan, finally, about the energy future of America. A realistic one.

               1. The only way it would be brought up is if Lynn Helms caps production for flaring. Then the GOP candidate will have a government blame opportunity with which to attract some right wing votes presently choosing to stay home on election day. I suppose the Democrat candidate could mine the same event for some left wing extreme enviro types presently staying home because the DNC has done nothing to stop fracking.

                  Otherwise, it would be the sort of vote getter you might have by making campaign speeches telling people their children will have a miserable future.

               2. Lynn Helms is just a commissioner with only administrative powers. He can only tell the oil companies what North Dakota law requires. The governor can do that also but only the state legislature can change the law. But there are already laws:

                  North Dakota governor warns on gas flaring

                  BISMARCK, N.D. — Gov. Jack Dalrymple told a huge oil industry conference Wednesday that North Dakota would no longer allow flaring of natural gas from oil wells in the Bakken region for longer than one year.

                  Speaking as part of the Williston Basin Petroleum Conference, which has more than 4,000 people registered, Dalrymple said that North Dakota law allows flaring for one year after production at an oil well begins. After that period, the company must either seek an exemption to continue flaring or install equipment to capture the gas.

                  In the past, North Dakota has routinely granted exemptions to the flaring limit.

                  “Those days are over,” Dalrymple said. “We’re not going to do that anymore.”

                  However Helms can grant exemptions if the Governor allows him to do so. And he says he is not going to do that anymore.

                  And by the way, the way, the Governor, Jack Dalrymple is a Republican.

               3. That won’t matter. To get Mike’s event, a GOP presidential candidate trying to make hay will brand that guy as not Republican enough.

                  I’m not happy with that rule, btw, as regards generating the rollover. The Enno guy had the best graph of the past several months on the Bakken that laid out 60% of production is from wells less than 18 months old. So if you let someone flare for a year and then waive him for 6 months, by the time you restrict flaring he wasn’t pumping much oil anyway.

               4. Mike wrote:
                  “So, by summer of 2016 the Bakken and the EF will be rolling over the hill and hydrocarbon decline throughout the world will be way more obvious than it is now. And you think no presidential candidate will even bring it up?”

                  Not if they can find away to avoid it, or blame someone else. Every president since Nixon talked about energy independence. I am sure the few remaining presidents will continue to repeat the message and find numerous ways to distract the public. No politician is going to get elected by being honest as long as the other candidate will lie and make grand promises.

                  FWIW: I suspect as oil shortages start to unfold the US will increase its belligerent stance as they been doing since the past 13 years since Oil prices began rising:

                  1. Drum up more terrorism to put the fear into the American people so the US federal gov’t can continue to remove rights and liberty, for their “own safety”. Finsish off what they already started, by turning the US into a full police state.

                  2. Use Military power to target regions rich in oil. The Middle east was an obvious target but the pesky locals sort of made it more difficult to liberate their oil then anticipated. Its far too expense to secure ME oil and it’s not as abundant as they thought. Plan B: switch to other, softer targets that have Oil. Probably Latin America (Venezuela sticks out like a sore thumb) Of course invading Vz isnt going to do anything since they are tapped out, but Politicians are never very bright.

                  3. More promised socialism for the masses. Politicians win elections by making promises and it doesn’t really matter if they follow through. They can just blame the other party for interfering with their grand plans. All a President needs to do is put up a good show! What is important is that they win the election, the people and the future of the country is irreverent.

                  4. More Money printing and inflation to get anyone with any saving left to spend. Print money to support entitlements and other wealthfare spending because that what voters really want.
                  And continue disasterous foriegn policies and Miltary campaigns. The US needs also distract the rest of the world too. Continue poking sticks into Hornet nests until WW3 Pops out. The politicians can blame instability in the ME and other Oil rich regions for the high cost of Oil. And of course no one really recongizes that the USA has been the primary force behind ME instability.

                  Mike wrote:
                  “Who is going to lead us out of this energy mess? Beginning, by the way, during the next presidential election in 2016? Republicans or Democrats?”

                  Its very simple: Which ever candidate best lies to the American public. My guess is that the DNC will win. The RNC will put up another uninspiring candidate like Bob Dole or Romney. Probably Ted Cruz. I doubt Hillary will be the DNC nominee. It will be another off the radar candidate like Obama that becomes the nominee in 2016. The DNC will go full hog on socialism in 2016: blame the rich, the oil companies, capitalism, etc and promise even more free stuff, which is very easy to sell to an unemployed, dumbed down public. The RNC will become a divided party as it continues to fracture (ie Tea party or some other new splinter group) and loses control of the House.

                  I believe next president will follow in the footsteps of Hugo Chavez, by nationalizing energy companies and other key industries in order to plunder them to finance socialism. The gov’t will install political insiders into them, and turn them into entities of the party. We’ll see much higher taxes for the working class to support the unemployed and the economy will grind to a halt. That is if they don’t manage to start WW3 first.
                  Mike Wrote:
                  “. Not the doomsday horseshit, that is not going to happen, not for a awhile.”

                  Depends on what you mean by “not for awhile”. At some point the economy will breach a tipping point and it will suddenly collapse faster than most people can imagine. Look back at 2008, In just a few months, the economy did a tailspin. Fortunately it avoid a complete meltdown. We almost lost the economy and the country in 2009. It may not survive the next time.

                  There is simply too much incompetence, debt, aging population, etc to stop the boat from sinking. The only realistic option is to get in a lifeboat and distance yourself from the sinking ship.

         2. Thanks Mike,

            I invite the criticism, even though I get defensive at times.

            Let’s assume for a moment that the average world depletion rate is x (Ron is correct that we cannot really know what the “real” rate is). From your perspective as someone who actually produces oil, does the idea that the worldwide average rate of depletion of crude plus condensate would be cut in half to x/2 in the next 10 to 15 years seem plausible?

            1. Dennis, I am not much on predicting and modeling and planting a flag at the summit of Peak Oil mountain. Part of the problem with getting the message of peak production out where it belongs, in the street, is that we focus too much on detail and…all the cynicism and the sky is falling stuff clouds the message. As I talk to people about peak oil issues I find they are turned off, and tuned out because of the cynicism; often people tend to associate the notion that oil is “running out” with
               dooms dayers, woodstoves, razor wire and canning squash. The message is then lost completely.

               The idea that we can’t do anything about that peak production message, unless we are elected officials, is not true. We can do a lot. We can demand from our elected officials the truth, and a plan, for one thing. We can quit yacking amongst ourselves and yak to others. I think by 2016 declining oil resources will be a bigger issue than it is right now swimming in an ocean of LTO from the Bakken and Eagle Ford. I am simply curious what people think about the politics of peak oil and which party is going come out of the closet first. I don’t believe it won’t make any difference. I believe it will make a big difference.

               When old farts like me get into the 4th quarter of life we take inventory of what we have to get us to the end of the game. Most of us have to cut back on our life style, be a little more frugal with the inventory. Our energy future is the same; we are in the 4th quarter and we better start conserving what’s left of the inventory.

               My answer to your question is no. I think rates of depletion (production decline) in existing conventional fields will actually continue to increase and I believe that unconventional shale resources will just be a little speed bump in overall worldwide liquids depletion. There is an incorrect assumption, in my opinion, that the world is full of infield development wells waiting to be drilled, EOR potential, that CO2 can be bought at the local 7-11 and crammed down any oil well, new technology, Ghawar like horizontal legs above oil water contacts can be drilled everywhere, yakity yak.

               Oil folks are pretty smart. We have been at this for 140 years; there are very few rocks that we have not turned over, many times, looking for more, or very few things left to do to squeeze more blood out the turnip. Nobody, certainly not governments in control of their own resources, is holding back because they don’t need the revenue. The worldwide oil business is going wide open right now. Can we cut the current decline rates of existing fields by half over the next 10 years? No. Not even with 200 dollar oil.

               Mike

               1. Hi Mike,

                  There is a subtle distinction between depletion rates and decline rates that I am sure you, Ron, Doug, and most others who comment regularly here understand.

                  For the lurkers or new visitors that may believe that depletion and decline are synonyms (they sure sound the same), that is not true for oil fields.

                  The decline rate is 1 minus output this year (out2) divided by output last year(out1) times 100.

                  Or

                  decline rate = [1 – (out2/out1)] x 100

                  The depletion rate is how fast we are producing proved developed reserves. If there were 560 Gb of proved developed reserves in the world last year and we produced 28 Gb of oil last year, the depletion rate is 28/560 or 5%.

                  So for Mike I was asking not if we can cut decline rates by half, but if it makes sense that depletion rates will decrease.

                  In the past I have used the term extraction rate instead of depletion rate to avoid confusion, but people were unfamiliar with that term. I use depletion rate and extraction rate as synonyms.

                  So do you think the rate that oil is extracted from proved developed reserves will decrease by a factor of 2 (from 5% to 2.5%) in the near term (10 to 15 years)? I agree that decline rates will increase, the world decline rate for C+C is currently less than zero, but it will be positive in the next few years.

                  The oil industry has kept the extraction rate at close to 5% (4.6 to 4.9%) since 1993, from 1951 to 1991 the extraction rate was above 5%, the worldwide oil industry has been going full out and the extraction rate has been on a slow upward trend since 2002 (increase from 4.6% to 4.9%), I expect this trend to continue or for the extraction rate to remain constant over the near term.

               2. The decline rate is 1 minus output this year (out2) divided by output last year(out1) times 100.

                  Or

                  decline rate = [1 – (out2/out1)] x 100

                  Geeezus? That is correct but is it really necessary? Is there an easier way to present it other than using mathematical jargon? Try this:

                  The decline rate is how fast the oil coming out of the ground is declining? The depletion rate is how fast the oil left in the ground is declining?

               3. Hi Ron,

                  It is very easy to misinterpret words, your way of putting it works pretty well.

                  As long as we agree on the definitions that is fine, but many people get confused about depletion vs decline.

                  I like your way of putting it better, thanks.

                  For those who tend to think in mathematical terms, they may find my contorted explanation equally useful (if they were not familiar with the concept already.)

               4. Or, the rate of change in production varies (it can go up or down), but depletion is a one way street, and as Ron noted, an increase in production means an increase in the depletion rate.

                  My favorite example, in terms of net exports, is the Six Country Case History. As their combined production increased slightly from 1995 to 1999, they had already shipped 54% of their post-1995 CNE (Cumulative Net Exports), a post-1995 CNE depletion rate of almost 20%/year. And on a year over year basis, the remaining post-1995 CNE depletion rate accelerated.

                  Looking at global data (Global Net Exports of oil, GNE), by definition the remaining supply of post-2005 CNE has declined. I estimate that in just seven years we burned through about one-fifth of post-2005 Global CNE.

               5. Hi Jeffrey,

                  The depletion rate in the oil shock model (also called extraction rate) is the depletion from proved producing reserves rather than 2P reserves (some of which are undeveloped).
                  Consider the following simple example.
                  proved producing reserves (PPR) are 500 Gb in year 1 and depletion rate is 5% so 25 Gb of oil are produced. Now let’s assume that 50 Gb of reserves are added to the PPR from the development of non-producing proved reserves so that in year 2 the PPR is 500 Gb – 25 Gb + 50 Gb=525 Gb. Let’s assume that the depletion rate remains 5%, output would be 26.25 Gb which is 1.25 Gb more than year 1 and the depletion rate has not increased.

                  New proved producing reserves are continuously being added, if we assume a constant depletion rate, output falls when the amount of proved producing reserves added in a given year is less than the oil produced.

         3. Barring un foreseen new developments in politics and the economy I believe that the Republicans are very very likely to own Washington DC after the next elections.I am not happy about it but that is the way I see it.

            As far as Hillary goes I am firmly of the opinion that the reason Obama is president today is that a huge portion of the democratic core to put it mildly as possible detests her and want ” anybody but Hillary” as their candidate.

            It is pretty well accepted in Republican circles that she will be the easiest of all possible Democratic candidates to beat and virtually every hard core republican I know hopes she will get the nomination.In times past the republicans were not able to really get the message across about her baggage but she has so much they are drooling about the possibility of telling the country about it twenty four seven for the last six months before election day.

            Of course they didn’t have to because she didn’t get the nomination.That baggage was enough to wreck her among the more middle of the road members of her own party as I see things. I for instance have a liberal sister in the medical profession who was livid at her plan to socialize medicine when she was ” copresident”. It would have almost for sure put her on a government payroll and lowered her income had it been passed and she and nearly all of her professional colleagues understood that.

            I have yet to see a mathematically literate Democrat read the known and undisputed facts about Cattle Gate and come away without having to deal with the fact that she is a crook- or used to be at least. I have seen a couple of young women (who would spit on Romney or Bush or Reagan ) with some training in statistics turn pale and get very very quiet after reading about Cattle Gate.

            I know it seems strange that I keep describing myself as a conservative but in the end it boils down to this. Protecting the natural world that provides us with our living and living space is the most conservative of all possible policies and the most critically important issue bar none from here on out. Anybody who is truly scientifically literate must understand this regardless of his other convictions no matter what they may be.If he has any sense at all and gives a hoot about his kin and the rest of the living world then he must vote accordingly.

            The so called conservatives that dominate on the right these days just don’t get it in this most critical of all respects (A few do of course ) and so I expect to vote for the Democrats. They are at least willing to consider what needs to be done and make some efforts in that direction.

            So being a realist rather than either a conventional liberal or conservative I am basically an ” anybody but Hillary ” Democrat for now.

            1. It is pretty well accepted in Republican circles that she will be the easiest of all possible Democratic candidates to beat and virtually every hard core republican I know hopes she will get the nomination.

               You must be kidding. Even Fox news will tell you that is not true.

               Fox News poll shows Hillary Clinton beating Christie, Paul, Bush by big margins

               The Overall Numbers

               Hillary Clinton (50 percent) versus Gov. Chris Christie (40 percent)
               Hillary Clinton (52 percent) versus Sen. Rand Paul (41 percent)
               Hillary Clinton (52 percent) versus fmr. Gov. Jeb Bush (39 percent)
               Hillary Clinton (54 percent) versus Gov. John Kasich (35 percent)

               Anything can happen between now and November of 2016 but if the election were held today Hillary would win by a huge landslide. Every potential republican candidate is hoping something will happen to Hillary or that she decides not to run. They all know she can beat then. Now anyway, as is said anything can happen between now and the election.

               1. More women vote than men. Big plus.

                  But the Obama campaign for the nomination had men going around chanting “bro’s before ho’s” and that can last. Black turnout won’t be what it was. She got move votes, btw. She was backstabbed.

                  Weeks are lifetimes in politics. Years are centuries. A few months ago this year’s election was going to turn on Obamacare. Then it was going to turn on Ukraine. Then it was going to turn on illegals flooding in.

                  Odds pretty good the actual decisive issue is not even known yet. In early 2008, Obama beat Hillary by being more dovish on Iraq (a position he then abandoned after winning, roughly quadrupling the time of pullout that had been promised in the debates), and up to September the election’s key issue was presumed to be Iraq. Iraq didn’t make the top two in post election polls. Lehman’s explosion in September and subsequent disasters eclipsed all other issues in the election. It wasn’t even on the radar screen for the nomination campaign.

               2. But the Obama campaign for the nomination had men going around chanting “bro’s before ho’s” and that can last.

                  Watcher, there were likely men saying that. But you are not correct saying the Obama campaign had the men say that. Everything that happened during the campaign was not orchestrated by the campaign.

               3. I doubt Hillary is going to be the Nominee. She has some significant health issues that will become apparent during the campaign if she decides to run. She lost her bid in 2008 and she lacks the inspiration to win the DNC nominee. The DNC will easily find a challenger in its ranks that will sweep in 2016.

                  In my opinion, the DNC Nominee will be another unknown like Obama was back in 2007. RNC will not win in 2016. The RNC is becoming a fractured party (ie the Tea Party) as it losses it solidarity over multiple issues . The RNC will lead with another non-inspiring candidate (another Bob Dole or Mitt Romney) in 2016. None of the RNC leaders are capable of winning a Presidental election. The RNC’s mixed/split policy views (Pro-immigration/Anti-Immigation Military, Pro-Life, Religion, Spending, etc) will prevent it from winning an national election. Bush won in 2000 (barely) and in 2004 on lower taxes but increased social spending (ie Medicare drug coverage). It seems unlikely that cutting taxes will win the next election since so many are out of work and depending on gov’t social spending.

                  The DNC will win with bigger social and wealth fare program promises and attacking Big business and moving torwards nationalizing Big Business, Especially Oil. The higher fuel costs make it the easier it is to attack the oil industry. The poor economy means more people are dependent on Gov’t Social programs, so any increases will be welcomed by voters.

                  The RNC is divided as the Old RNC leaders want to retain/increasing SS/Medicare to win over retirees and boomers. The newer RNC leaders (ie Tea Party) want to cut entitlements to reduce deficits, which alienates Boomers who are counting on SS and medicare for retirement. For the RNC to win a presidental election the party need to be united, and has to convince the majority that they will be better off, which isn’t going to happen in 2016.

                  FWIW: Younger generation voters are irrelevent. A lot of younger voters don’t vote and they are outnumber by the aging boomers. Most younger americans lack understanding of economics and have a deep belief that capitalism is evil and gov’t can fix all problems. The Boomers have no savings and the anemic economy will drive them to support bigger gov’t social spending. Boomers are the largest and most import voter block. They choose presidents. The issue is that there the gov’t can’t finance the existing social programs, especially now as the boomers are retiring and beginning to collect entitlements. The gov’t will be forced to print and increase taxes to meet obligations, causing the both the value of the dollar to decline and further reduce employment in the US as companies flee overseas to avoid tax and regulation increases. As more big companies go out of business (because the can’t relocate), caused by declining sales, higher taxes, lack of skilled workers, poor product quality, the gov’t will nationalize them in order to keep jobs as well as to prevent pension defaults. These companies will turn out poor products that no one will buy except for businesses and gov’t agencies under gov’t mandates.

                  The US will become the next soviet-like system, minus the gulags as the economy become increasing micro-managed by the gov’t and the gov’t nationalizes big companies (either because they are failing, or because they make a lot of money).
                  Sooner or later the economy will breach a tipping point and collapse like the Soviet Union did in 1989-1990. That is if they avoid starting WW3.

               4. TechGuy, I don’t understand your reasoning at all. First Hillary doesn’t have any serious health problems that are known. Some republicans, along with Fox news, are spreading the rumor that she does, that her fall caused some very serious problems. I, along with most people, think that is pure bullshit.

                  Second, the DNC does not pick the candidate, folks who vote in the primaries do that. Likewise the RNC does not pick the republican candidate. The principal job of the DNC and the RNC is writing the platform presented at the convention and supporting the candidate that the delegates elect. They do not run either campaign, the candidates themselves do that.

                  I think you will be surprised at how many of the younger generation will vote. Nay, I think you will be shocked at how many of the younger generation will vote. And they vote democratic by a wide margin. The aging boomers however, usually vote republican.

                  The Generation Gap and the 2012 Election

                  That is an old article but the gap is growing. The younger generation is still leaning heavily democratic and their numbers are growing. The older generation is dying. 🙁

                  

               5. Ron Replied:
                  ” I don’t understand your reasoning at all. First Hillary doesn’t have any serious health problems that are known”

                  She has a couple of bad falls in the past 18 to 24 months. Bill Clinton in a interview back in Late May Early June said she was still recovering from her last fall, and is not sure if she will run.. She also on Heart Medicine and her falls have been attributed to her heart problems:

                  http://thehill.com/blogs/ballot-box/presidential-races/210194-book-hillary-has-heart-problem

                  I think these health issues will be visible on the campaign trail since campaigning isn’t easy. That said, she had her chance in 2007/2008 and lost. I think the Nominee for 2016 will be another unknown that does have any known baggage or dirt on them (ie no scandals). Hillary is also likely to get grilled during the primary debates about Benghazi , and Obama’s very poor foreign policy that will taint her chances.

                  Ron Replied:
                  “Second, the DNC does not pick the candidate, folks who vote in the primaries do tha”

                  Yes, by DNC choosing the Nominee, I am referring to the primaries. In order to vote in the DNC primaries one must be registered with the party. Its is not if RNC voters or independents are going to vote in the DNC Primaries. The DNC party members will choose their nominee by voting.

                  “I think you will be surprised at how many of the younger generation will vote. Nay, I think you will be shocked at how many of the younger generation will vote”

                  Only about 54% of younger people are even registered to vote, and much less vote regularly.

                  http://fusion.net/leadership/story/poll-young-people-vote-157540

                  Almost all of the population of the eldest generations vote, and vote often! Retirees always vote for more entitlements.

                  Ron Replied:
                  “That is an old article but the gap is growing. The younger generation is still leaning heavily democratic and their numbers are growing. The older generation is dying. ”

                  The WW2 Is dying off, but the Boomers are just beginning to retire. FYI: boomers 1946 to 1964. We got at least another 15 years before they all reach retirement age.

                  I believe that the Boomers voting is going to switch from RNC to DNC. Previously the Boomers were working, Buying homes, putting their Kids through school and they wanted lower taxes so they can keep more of their earnings. However, now that they don’t have enough money saved, and interest rates are at zero, they will vote for the candidates that provide the most entitlements, and that is not the RNC.

                  Yes, the younger generations are voting DNC (as I stated in my post above), as they go through school learning that capitalism is bad, and bigger gov’t and socialism is good (taught in public schools). That said, there is a chance that they may side with the Libertarian movement after 2016, as once the see how much of their paycheck is used to fund entitlements for the boomers. I am not saying this will happen, but there is a chance. I read a few articles that Millenials don’t like Big gov’t and Rand Paul is being invited to speak college campuses.

                  Ultimately the US will devolve into a single party State. The RNC may lip along for a decade but its power will erode and only manage to hold a small majority in Congress/Senate and never obtain the presidency again. Probably something like Japan where Japan’s DNC party has ruled since the end of WW2 and the other minor parties never manage hold any power.

                  Socialism is an easy sell. Nobody really wants to work hard and everyone wants something for nothing. Of course Socialism never lasts. Sooner or later the working class throws in the towel until the entire population is on the gov’t dole and the economy implodes. Venezuela and Argentina are prime examples. The Socialism in the US will probably last longer than Argentina and Vz, Although Oil shortages or War, make cut it short.

               6. TechGuy, she fell once. And you quote the Drudge Report. Drudge! My God, give me a break. Next you may be quoting the Limbaugh Letter.

                  Yes, by DNC choosing the Nominee, I am referring to the primaries. In order to vote in the DNC primaries one must be registered with the party.

                  No, you are dead wrong here. States run the primaries, not the DNC. Some states, not all, require you to either register as a democrat or as a republican to vote in each primary. The DNC has absolutely nothing to do with it.

                  There is no such thing as a DNC primary! There are state run republican primaries and state run democratic primaries, both are usually held on the same day when there candidates on both tickets. And people, ordinary people, like you and me, vote in these primaries. Ordinary people, who are usually, but not always, registered as either a democrat or a republican.

                  People, ordinary people, do not register with the DNC or the RNC, they register their party affiliation with the state, but only in states that require them to do so in order to vote in the republican or democratic primaries.

                  Again, ordinary people vote in republican primaries and elect the republican nominee for President. Ditto for democrats. The RNC and the DNC have absolutely nothing to do with it.

                  Incidentally, and this is very important, just a few years ago no one was required to register their party affiliation before voting in the primaries. But some people were “crossing over” voting for the least favorable candidate of the opposite party, in order to give their parties candidate a better chance in the general election. That’s how Lester Maddox got elected Governor of Georgia. Republicans crossed over and voted for him in the primary because they thought he would be very easy to beat in the general election. They were wrong.

                  So not long after that, states started, one by one, requiring people to register their party affiliation before voting in the primary. This change took place over many years. Now almost all states have this requirement, but still not all.

               7. Ron Replied:
                  “TechGuy, she fell once. And you quote the Drudge Report. Drudge! My God, give me a break. Next you may be quoting the Limbaugh Letter.”

                  Sorry Ron, Google has thousands of articles about this including non RNC sites. I picked one of these articles on the first set of pages. I am sure if you do you due diligence you can find an DNC affiliated article about Hillary’s Health issues. I just didn’t want to send two hours to find article that is directly alligned with DNC. As your aware there are millions of articles and pages regarding political candidates, and its extremely difficult to find one that is completely unbiased. I do try but its not easy! Hope you understand.
                  She’s definitely has fallen more than once. Here is an article from 2011 about a minor fall.

                  http://www.huffingtonpost.com/2011/01/12/hillary-clinton-falls-yemen_n_807849.html

                  Maybe you don’t like the Huffman post but I sure there are other reports at other news agencies. I just don’t want to spend hours looking for a news article that meets the unbiased “smell test”. The hill article despite its affilation does summarize the issue pretty fairly.

                  Of topic, I find it funny that you refer to god in your comments when you find someone comments odd, or wrong. Atheist using god references? Good heavens! 🙂

                  Ron Replied:
                  “No, you are dead wrong here. States run the primaries, not the DNC. Some states, not all, require you to either register as a democrat or as a republican to vote in each primary.”

                  In most states you need to be register with the party to vote in the primary. Regardless. the nominee is selected at the party convention where each state announces who they selected the nominee which is based upon the primaries. To put is more simple turns, RNC voters don’t vote in DNC primaries unless they trying to rig the primary with a weak candidate. Rarely will a DNC voter or RNC voter switch sides and actually want the other party candidate to win.
                  The majority of voters in the Primaries are registered\affiliated with the party. Don’t get mad at me.

                  “Again, ordinary people vote in republican primaries and elect the republican nominee for President.”
                  Not here in the North East. As an independent, I had tried to vote in the primaries but I was denied. I can only vote in the real elections. But like I said I choose to avoid any party affiliation.

                  I did some digging: Your state happens to support open primaries, but this is not the case for all states, Certainly not in mine or any of the neighboring states:
                  http://www.fairvote.org/research-and-analysis/presidential-elections/congressional-and-presidential-primaries-open-closed-semi-closed-and-top-two/
                  (Hopefully this map is reasonably accurate)

                  ” This change took place over many years. Now almost all states have this requirement, but still not all.”

                  Right.

                  The bottom line is there is nothing wrong with DNC party members choosing their nominee. I am not sure why this is a big deal for you. For example, It wouldn’t be right for voters in NY to participate in an election that chooses the Governor of California (yes this is extreme, but I can’t think of a better analogy at the moment. Hopefully you can read in between the lines and understand my point).

               8. TechGuy, my problem is your use of the letters “DNC” to describe anything any democrat does. Or RNC for that matter. You referred to the Drudge site as an RNC site. It is not. It has absolutely nothing to do with the Republican National Committee. It is just a site owned by a republican just as my site is a site owned by a democrat. I will guarantee you my site has nothing to do with the DNC.

                  There is no such thing as a DNC voter unless you are one of the 200 or so actual members of the committee.
                  Democratic National Committee
                  Under the leadership of Debbie Wasserman Schultz, the DNC is composed of the chairs and vice-chairs of each state Democratic Party Committee and over 200 members elected by Democrats in all 50 states and the territories.

                  You have the silly habit of typing DNC or RNC whenever you mean democrat or republican. That is just wrong and you should get out of that habit.

                  Yes, yes I believe the Huffington Post and everything that article said. she tripped and fell . That was what I said. She fell once not a couple of times as you said. And she fell because she tripped. That could happen to anyone. And that’s all the article said. The article did not mention all that bullshit that Drudge talked about. That was nothing but pure bullshit that Drudge, not the RNC, but Durdge made up. And a lot of Drudge ditto heads repeated what he said. Or perhaps it was Limbaugh that first made up all that other bullshit about Hillary having health problems.

                  She does not and all that talk about her health problems is nothing but ditto head bullshit. The RNC had absolutely nothing to do with it. 😉

            2. Hi OFM,

               During the last election, I could not vote for either Romney nor Obama and didn’t.

               Back in 2003(?) my carpooling buddy and I stopped off at a Dunkin Donuts. The owner was kvetching that DD wanted wanted him to upgrade his place for $500K. It was a hole in the wall place. He said he could do what they wanted for $200K and for $300K he would have a really nice place. I did not think much of it at the time. Shortly there after, all 3 Dunkin Donuts in our area went out of business as a DD Franchises.

               Fast forward to the last election. I read where Bain Capital had merged Dunkin Donuts with Baskin Robbins and took their cash out in exchange for “management fees” (debt). Basically, Bain was a leverage buyout company. To make up for all this debt, the franchise owners were being coerced into accepting outrageous upgrade costs. This is what that owner was complaining about. This was Romney’s old company where he had pulled that same practice earlier on other companies. And he was going to support small business??? BS!!!!

               With respect to Obama, there was a purported minimum of $4 trillion of fraud on the Federal Books. At the time, the Federal Gov’t collected about $2 trillion in taxes or $2 of fraud for every dollar of tax collected. I don’t know what you paid in taxes but for me, this is fraud with a capital “F”. The take away is that no one of significance has gone to jail. I could not vote for Obama without taking a long GI shower.

               I think it boils down to setting your own standards and **not** voting for anyone who does not come close. I wrote to the RNC, DNC, and my Senators and Representative and told them that I changed my affiliation from one of the major parties to independent and WHY. I noticed that some of the TBTF have received massive fines recently that have been diluted by charge offs. It’s still not good enough considering the train wreck this economy has become.

               I want my country back.

               1. Hi PeterEV,

                  That is too bad, intelligent people such as yourself sometimes have to choose the lesser of two evils. Did you choose not to vote or did you write in somebody? To be honest there wasn’t a viable third party candidate that I remember. In my view in the US presidential elections that I have participated in any vote that was not for a Democrat or Republican was essentially the same as not voting. In an imperfect world, we have to make a choice in my opinion and if we do not others choose for us. There are times, such as Florida in 2000 where a few votes makes a big difference. Without those few votes (maybe for Ralph Nader) maybe we would not have Roberts and Alito on the Supreme Court.

               2. Hi Dennis,

                  Why vote for mostly evil? That is the question I had to answer. By not voting en masse, it removes the legitimacy of that part of the system. If the final tally was 2 votes for A and 1 vote for B, we would have A as leader, but with what mandate? I did a write in for C who at least had voiced concern about the malfunctions of our financial system. It was a way of saying “none of the above” but this maybe a better way. Jon Stewart had a segment on his Daily Show where a recent poll was taken where head lice had a higher approval rating than Congress.

                  We still have High Frequency Trading, Naked Short Selling, bankers and stock brokers who should be in jail, derivatives that have never built a factory. We are still hoping for change and all we seem to be getting is chump change.

                  Congress could legislate a public stock market that allows only one mass trade in each stock per day. Everybody who participates enters either a buy or sell order for that stock. A submit window is closed. The stock orders are tallied, a discovery price is made following a set of rules and an hour later, the transaction is made. The orders are exposed for public viewing so as to prevent any hanky-panky or deviations from the rules. Everyone is required to have the stock certificates in their name or the cash in escrow. People or organizations could still short but they would have to have the certificates “in hand”. We don’t and can’t think and analyze in nanosecond times. This would slow things down to the point where we can think: “Is this a good thing?” “Can it be done better?” Instead of trying to create algorithms to out do one another, our energies and times could be focused on building businesses and solving real problems.

                  Toward the end of the Roman Empire in 410 AD, the Roman farmers were so alienated that when the Goths showed up in Italy, those farmers pointed the way to Rome. It was not done out of fear but out of disgust/contempt for what the system had become. No one was willing to lift a sword to fight the Goths. The rich had became richer by enacting laws that benefitted themselves to the detriment of the local farmer. I see the parallel today and I know we could do better, much better.

               3. I agree we can do better. That is why I vote for the lesser of two evils for presidential candidates.

                  Otherwise a lot of evil can be done by poor choices of supreme court justices.

         4. The solution to the problem is using less energy to get the same job done. There are plenty of role models for america to follow — Europe, Japan, increasingly China.

            Dick Cheney said “The American way of life is non-negotiable”. It will be a hard for the US to swallow its pride and admit that it no longer represents the Spirit of the Age. But the post-WWII choice to invest in sprawl and faith in abundant resources led to 70 years of bad infrastructure investments that will have to be undone.

            It is funny that so many Americans say we have to spend less money all the time, even though there is no real limit to how much money there can be — but very few say we have to use fewer resources, even though there are clear physical limits in this area.

      2. Hi Ron,

         There are two shades of orange in that chart, are you talking about the decline rate only rising to 5% is too low?

         When all hell breaks loose what do you expect the decline rate will be?

         Note that the super giant giant fields no longer produce 60% of the World’s oil because many of them have declined. The output today is spread amongst many more fields. Clearly some fields will decline rapidly as Canterell did, but this will not happen to all fields and obviously they will not all decline at the same time.

         Did I say that everything will be fine? Please find me a quote. There are those that would get very upset about having words put in their mouth 🙂

         1. There is one red or pink line and one yellow or orange. Okay, call one orange and the other yellow. In that case I am talking about the yellow. It makes no sense whatsoever. It comes up straight from the bottom, makes a few jerks then heads almost straight down again.

            When all hell breaks loose there is no way of even making an educated guess of the decline rate because of the X factor, the politics and insurrection factor that is. I mean things like are happening right now in Libya, Iran, Syria, Yemen and soon to be happening in Russia and perhaps Iraq.

            Well no, you did not say everything would be fine but you have always told of ways things would be almost fine. The population would naturally decline, we would go to wind and solar. The oil that’s left would be used for agriculture and so on. By fine I mean you think things will be rather difficult but nothing catastrophic.

            1. Hi Ron,

               I think Mac’s ideas are pretty sensible, I think the Great depression was catastrophic and I have stated that I expect that Mac is correct that we will see worse than that in the future. Perhaps that is not catastrophic enough for you. I think your “optimism” is not very realistic. It is possible that things could be much worse than Mac’s vision of the future and he says so, I don’t think it is the most likely outcome.

               1. Just to make myself clear: The Great Depression was a very pleasant picnic compared to what is coming. That bad spell was brought on by nothing more than mismanagement of banking and international politics.Physical resources were not a critical issue except in a few countries such as Germany and had we not imposed such impossibly tough terms on the Germans after WWI they would not have had unmanageable issues with resources themselves.They have a lot less now and they are still getting by just fine.

                  The BIG ONE coming is going to be the result of mismanagement of banking and international politics just to start. The real issues this time around are not going to be so easily dealt with and last time we dealt with them by fighting WWII and after that the Cold War.

                  This time we are looking at all the old problems plus general biological overshoot of our species. WWIII is not going to fix any part of overshoot except maybe over population. Nukes would be quite effective as means of reducing population.

                  BUT we are still NOT NECESSARILY looking at the end of industrial civilization and with a measure of good luck people in the US will mostly live thru the coming hard times with food enough and clothing enough and maybe even a ”go cart” in the driveway in most cases.

                  Synthetic gasoline made from coal at ten bucks a gallon will still get you to work affordably if you are fortunate enough to have a job and own a car that gets a hundred mpg.

                  There is absolutely nothing to stop Ford or GM from manufacturing such a car next year except ill considered safety regulations and the conviction ( correct for now) that it would not sell.

                  What would it look like? Low and narrow and two seats fore and aft and very well streamlined.Ugly as sin and scary small compared to todays ordinary cars.

                  BUT it would not need any technology not strictly off the shelf and it would not have to be built out of exotic materials such as carbon fiber-although using such materials would boost the fuel economy even more. Steel, aluminum and plastic are more than satisfactory given the necessary downsizing and reduction of frontal area.

                  Our grand children ( with a little luck ) are going to be driving such cars as a matter of course and think no more of it than we do now about our grandparents owning farms while we live in apartments or maybe on quarter acre lots.

                  Most of the world is headed to hell in a hand basket of course.

               2. Hi Mac,

                  As I said before it will be worse than the Great depression, I agree. I wonder if the fact that we know about Keynesian economics now, might make a difference so that appropriate government policy would be enacted without waiting 4 years (as in the 1929 to 1933 period). Possibly this might result in things only being 1.5 times as bad as the Great depression with unemployment rates at 37%. Or does 50% sound more reasonable?

               3. Not exactly up on my economic theories but isn’t one part of Keynesian ecomomics saving during the good times?

                  We’re doing a good job at spending our way out of a crisis right now, does anyone foresee the powers that be throttling back significantly once the boom comes back around?

               4. Really? You expect boom times to come back around again? I think the canary in the coal mine, Greece, is dying.

                  Greek recession slightly deeper than expected

                  (Reuters) – Greece’s economy has shrunk by almost 24 percent over the past six years in the deepest and most protracted peacetime recession in its history, according to revised gross domestic product data released on Tuesday.

                  Greek GDP shrank 3.9 percent in 2013, from an estimate of 3.7 percent in February, statistics service ELSTAT said.

                  Exacerbated by the austerity policies imposed by international lenders who bailed Greece out, the recession’s main driver since the financial crisis hit in 2008 has been a 26-percent slump of household consumption, as record unemployment and wage cuts slashed family disposable incomes.

                  Greece also saw investment collapse by almost two-thirds over the same period as home-building activity virtually ground to a halt, Tuesday’s figures showed.

                  With households and companies cutting spending and investment, imports of consumer goods and equipment sank last year to almost half their level in 2008.

               5. Hi Ron,

                  According to Wikipedia World GDP Growth in 2013 was 2.9%, the Eurozone is doing badly with -0.4% growth, US 1.9% and developing countries 4.5% (all 2013 numbers).

                  http://en.wikipedia.org/wiki/Gross_world_product#Recent_global_growth

               6. I’ve paid $10 for a gallon of gas before. Now I pay about $8. It wasn’t the end of the world. It did encourage me to reduce consumption though.

               7. World Real GDP Growth (constant dollars) from the April 2014 IMF World Outlook

                  Chart below

                  

               8. Hi DC, can you dig up a chart showing World gov’t deficit spending to go along with that global GDP growth chart?

                  I suspect that it growing considerable more than the World GDP by percentage. The issue is that if gov’t takes their foot off the petal, the world falls back into recession or worse.

                  Food inflation is also a growing concern world wide. The primary reason for the beginning of the Arab spring was food inflation. I suspect that food prices are also rising faster than Global GDP.

               9. Hi Techguy,

                  Government deficit spending is really much less of a problem than you believe. In fact in the Eurozone, where they have tried to reign in government deficits, that is where the economies are suffering the most (of the advanced economies).

               10. Increasing food prices are sort of a good thing because the very poorest are primary food producers, so it improves their terms of trade and increases equality.

                   The claim that food prices caused the Arab Spring is nonsense. There were a few protests about food prices along the way, but it was about freedom. Anyway, the Arab Spring was a good thing.

10. The following is a more realistic scenario in my opinion.

    

    1. On second thought, the scenario above is only realistic if there are no major shocks to the system, which is not a realistic assumption. In the previous optimistic scenario “all hell broke loose” at about 21 Gb/year of C+C output, in the unrealistic scenario above we are at about 22 Gb in 2040 where we should have a decrease in the rate of depletion due to war, recession, political unrest or some combination of the three.

       1. Hi Dennis,
          Are all of these projections about global production really meaningful, compared to the global export numbers?
          For example, the USA is a big producer of oil in its various forms, but is a huge net importer. For other countries, and for the USA itself, it is the oil available on the market for sale that is the key metric when considering economic growth and global pricing trends.
          The data presented in this article by Ron shows a clear peak in global exports having already occurred, with a small decline in the past 3-5 years.
          Regards, Hickory

          1. Hi Hickory,

             I think that the global export problem is interesting, but I think it is even more difficult to predict what will happen with consumption. Note that Ron’s analysis ignores petroleum products, I think the analysis by Jeffrey Brown which includes petroleum products is better.

             Here is the problem with looking at crude only exports. If country A produces 5 billion barrels of C+C in a year and did no petroleum refining, but consumed 2.5 billion barrels of petroleum products which they imported from a country with refineries, we would say that the net exports of crude were 5 Gb, but the net exports of crude + petroleum products would be 2.5 Gb.

             1. Dennis, this post is not an analysis. I don’t give an analysis anywhere in this post about World Oil Exports. I just quote and graph the damn data. That is far from any kind of analysis. When I do give an analysis you will know it.

                OPEC, at the link I posted at the very top of the post, does give:
                World exports of crude oil and petroleum products by country (1,000 b/d)
                Click on “Oil & Gas Data” then on “Table 3.21”.
                Here is some of the data:

                                 2010         2011           2012        2013
                Canada          1,852	     2,062	    2,213       2,523
                USA             2,105	     2,595          2,759       2,966
                Russia          6,890	     6,709	    6,737       6,833
                Saudi           7,595	     8,120	    8,419       8,365
                World          63,015       63,513	   64,262      63,975
                

                I’ll bet you didn’t know the US was an exporter of almost 3 million barrels per day. Or that the world exported about 85% of all oil that was produced.

                The crude oil and petroleum products export data does not tell us anything, it is useless, because it double counts. It counts exports and products that are imported then refined and exported again.

                1. Ron,

                   Following is my Production Land and Refinery Land Model, from up the thread, where I define net exports/imports as Production less Consumption:

                   Here is my “Refinery Land” (R) and “Production Land” (P) Model, ignoring refinery gains:

                   P has production of 2.0 mbpd and consumption of 1.0 mbpd, but no refining capacity.

                   R has zero production, consumption of 1.0 mbpd, and 2.0 mbpd of refining capacity.

                   P produces 2.0 mbpd and exports 2.0 mbpd to R.

                   R refines 2.0 mbpd, consumes 1.0 mbpd, and exports 1.0 mbpd to P.

                   So, Production – Consumption = Net Exports

                   For P:

                   2.0 – 1.0 = +1.0 (net exports)

                   For R:

                   0 – 1.0 = -1.0 (net imports)

                   Alternatively, you could define net exports as gross exports less gross imports.

                   Based on the foregoing, Production Land has 2.0 mbpd of gross exports and 1.0 of gross imports, so net exports = 2.0 -1.0 = 1.0

                   And based on the foregoing, Refinery Land as 1.0 mbpd of gross exports and 2.0 mbpd of gross imports, so net exports = 1.0 – 2.0 = -1.0 (net imports of 1.0 mbpd).

                   So, you get the same answer by defining net exports as either Production less Consumption or as Gross Exports less Gross Imports.

                2. How about taking OPEC crude imports table 3.23

                   http://www.opec.org/library/Annual%20Statistical%20Bulletin/interactive/current/FileZ/Main.htm

                   They peaked in 2006 at 45.555 mb/d. In 2013 crude imports were down to 42.759 mb/d

                   Crude imports should be crude exports. Maybe some trans-shipments in large ports like Singapore? But Singapore’s crude imports peaked in 1994-1997 at 1.1 mb/d and were down to 784 kb/d in 2013

                3. Hi Matt,

                   Look closely at Jeff Brown’s comment right before yours, it is spot on in my opinion.

                   To understand net exports you have to look at both crude plus condensate and petroleum products. If a country A exports all its crude to country B, which then refines the products and then exports half the products back to country A, if country A produced 3 Gb per year, its net exports would be 1.5 Gb. If we looked at crude only the net exports would be 3 Gb.

                4. Hi Ron,

                   I apologize for referring to your post as an analysis, it was not meant to be disparaging and I guess it was a poor characterization.

                   Yes I did know that the US exports petroleum products and as long as we count everything if the US imports 8 Mb/d of crude and exports 3 Mb/d of products then the net imports are 5 Mb/d of crude + petroleum products.

                   Jeffrey can correct me if I am wrong, but he would say the US net imports are about 5 Mb/d (roughly, he includes NGL and other liquids in his data analysis and the numbers would change somewhat due to NGL and other liquids).

                5. Latest four week running average data:

                   Net Crude Oil (C+C) Imports: 7.2 mbpd*
                   Net Total Liquids Imports: 5.7 mbpd

                   http://www.eia.gov/dnav/pet/pet_sum_sndw_dcus_nus_4.htm

                   *Net imports were 44% of C+C processed in US refineries

                6. Hi Jeffrey,

                   Thanks. Do you have annual numbers for 2012 for Net C+C imports and Net total liquids imports for the US? I was curious if the difference matches the OPEC number of 2.8 Mb/d.

                7. Imports breakdown:

                   http://www.eia.gov/totalenergy/data/monthly/pdf/sec3_9.pdf

                   And more data:

                   http://www.eia.gov/totalenergy/data/monthly/pdf/sec3_9.pdf

                8. Sorry, meant to add this file, which shows production by liquids, and net imports on a total liquids basis:

                   http://www.eia.gov/totalenergy/data/monthly/pdf/sec3_3.pdf

                9. Thanks again Jeffrey.

                   Which of those links do you think better represents net exports?

                   This is your thing and I imagine you have given it a lot more thought than I have.

                   The two links give slightly different net export numbers, do you have a preference?

                10. I’m really just focused on the supply of GNE and on net import demand in the Chindia region., but if you round off to the nearest 0.1 mbpd, both data sets show 7.4 mbpd of total liquids US net imports for 2012.

    2. How can the “optimistic” scenario give 12,000 Mb/a in 2040, and the “more realistic” scenario give 22,000 Mb/a in 2040. I thought “optimistic” was the best possible outcome, and that more oil is better.

       1. Canabuck, Dennis was poking fun at my “optimism” when he posted that graph. He actually thought it was way too pessimistic and used the word “optimistic” as pure sarcasm. Actually I do think the chart is quite optimistic and his later “more realistic” chart is way off in dreamland.

       2. Hi Canabuck,

          Yes in my comment I said that I did not think the “optimistic” scenario, which attempts to match Ron’s decline rates, but I believe Ron thinks the decline rates when all hell breaks loose are not high enough.

          The more realistic scenario is too optimistic in the sense that no future shocks are included, it assumes we continue along as we have since 1995 with depletion rates remaining about 5% and oil output declining at the rate shown.

          At some point ( and people can give me there guesses) the World economy will not be able to adapt to lower oil output after 2015 and “all hell will break loose”. My guess is that will be at about 24 Gb/year (or 66 million b/d) of C+C output. In my model above that would be 2035. I will attempt that model with depletion rates decreasing by half from 5% to 2.5% over 10 years, this is a 50% decrease in the depletion rate (note that in 1973 the depletion rate was 9% and fell to 5% by 1992, a 45% decrease over 19 years).

11. I am a long term reader of your site and previously TOD and now a first time contributor. Please be kind(sensitive feelings). Am now 65 years old and a physician at an occupational clinic(work comp injuries) in Colorado. I know this is anecdotal, however increasing numbers of patients are coming to our clinic for injuries and for disability claims. People just seem more afraid overall with their jobs and the uncertainty of their jobs. I think it is due to the persistent high oil costs to the average person. Almost a subconscious intuition if you will. Finally, I too want to thank you Ron for keeping the site focused and clean. It is a pleasure to read your blog site and of your contributors. Thanx-Doc Rich

    1. Lotsa statistics about the explosion in disability claims since the great smash of 2008. Like one helluva a lot of things, the fingers leap into the air to point at older and older population.

       But similarly, for a great many things, the slope of the relevant curves steepen a LOT in 2008. People didn’t just start getting old in 2008.

       1. Oh btw, how is shale fracking playing in your senatorial campaign there? There’s some fracking in your east?

    2. Doc Rich, maybe it’s a case of people being pushed financially to the point in which they start weighing two scenarios; the first being living with an injury and continuing to work, or giving into that injury (or creating one from a minor discomfort) to accept disability benefits. The human brain is great at weighing risk/reward, and it just may be a case of more people determining all financial pressures considered, their better off being laid up.

12. I think WestTexas is clear about this, the Export Land Model is just a very simplified model of real world production and trade, and all the better to get its message across for that. Mexico, for example, is not following the model by cutting consumption even as production falls.

    However, in one aspect even the Available Net Export model is overly optimistic, in that it does not explicitly take into account exporters who become net importers as production falls. When UK production fell to the point of exporting zero oil, production did not suddenly stop falling, nor did consumption suddenly start falling as fast as production. We have become an oil importer, and imports are growing steadily, even as our total consumption gradually declines. The number of importers is increasing, even as the available exports are declining, meaning that existing importers are facing more and more competition for every barrel. The US has managed to cut imports impressively (if temporarily) using shale oil production. If the downslope of US shale curve is as steep as the upslope, the US is in for a huge oil supply shock, as they will find that the exports they didn’t need last year found ready markets in previous net-export countries.

    1. We’ve had lots of discussion about the impact of rising production in net oil importing countries, e.g., the US. Curiously enough though, the Cornucopians never seem to mention the impact of falling production in net oil importing countries/regions, e.g., the UK.

       In any event, my point is that fluctuations in production and consumption in net importing countries have an impact on the demand for Global Net Exports of oil (GNE), but by definition, said fluctuations have no impact on the supply of GNE*.

       Of course, where I do look at the demand for GNE is in regard to Available Net Exports (ANE, or GNE less Chindia’s Net Imports, CNI), and here is our problem:

       Given an (inevitable) ongoing decline in Global Net Exports of oil (GNE), unless the Chindia region CUTS their consumption of GNE at the same rate as the rate of decline in GNE, or at a faster rate, the resulting rate of decline in ANE (the volume of net exports available to importers other than China and India) will exceed the GNE decline rate and the ANE decline rate will accelerate with time, on a year over year basis. It’s a mathematical certainty.

       *However, some countries that were major net exporters in 2005, e.g., Vietnam, are now net importers. For the time being, I’m still using all 33 countries in the (2005) Top 33 data base, but to paraphrase a line from the movie “The Longest Day,” the problem with being one of the few, is that they keep becoming fewer. However, for the time being, it’s really a rounding error in the Top 33 data base, but going forward more and more countries will join OFPEC–Organization of Former Petroleum Exporting Countries. I suppose I could calculate the data two different ways, the original top 33 group and then all countries, by year, with 100,000 bpd or more of net exports, but as noted, right now it’s not a material factor.

    2. “Mexico, for example, is not following the model by cutting consumption even as production falls. ”

       If you worked at an air factory and it shut down, you would not stop breathing.

       Oil consumption has two components. Survival of the population and GDP growth. Complicating it, GDP growth derives in a powerful aspect from population growth. Absence of oil production doesn’t really affect either of those categories.

       1. You know, I’m gonna edit myself. One helluva lot of trains and trucks are driving around North Dakota, so oil production is nudging GDP at least a little bit. Mexico’s production profile, though, is not activity focused. They don’t have wells that die in a year or two.

13. I have modified the depletion rate profile for the high decline rate and low depletion rate model.

    Ron will still think these decline rates are too low, I believe that unless we have a nuclear holocaust between now and 2040 that depletion rates are unlikely to fall by a factor of 5 between 2015 and 2040 as in the model below, they will decrease when all hell breaks loose, but not by this much.
    Chart below

    

    1. Dennis, I think I now understand your decline curve. But your depletion curve is useless because there is no way of knowing what the depletion rate really is nor is there any way of really knowing how much oil is left in the ground. Talking about depletion rates only muddies the waters and gives us useless information.

       No, it will not take a nuclear holocaust to make the decline rate fall faster. How fast has the decline rate of Iran or Libya increased? Or Syria or Yemen or Sudan? And none of these nations have experienced a nuclear holocaust. That should tell you something. There is nothing that says the same thing cannot happen in Saudi Arabia, or Russia, or in any of the oil exporting nations. It can happen. It can very easily happen. In fact as the economic situation in oil exporting nations gets worse, it is very likely to happen!

       1. It’s also useless to project 46 years into the future. In fact, I graduated from university 46 years ago and we were still using slide rules at that time. No one (even Dennis) has the faintest idea what the world will be like in 46 years and to make projections that far ahead is total nonsense. Doing so immediately destroys the credibility of ANY model.

          1. Of course when I say ANY model I’m referring to oil production-depletion, etc. That’ in case someone mentions planetary motion, etc.

          2. Hi Doug,

             I can change the scale on the graph to anything you like.

             Many agencies project to 2040. Jean Laherrere makes projections to 2100.

             You are correct that nobody knows what will happen tomorrow, never mind 46 years from now.

             Should there be no estimates of the future in your opinion?

          3. Models don’t handle externalities well, especially over long periods of time. Oil is so heavily dominated by events that can’t be predicted from data, principally civil wars and NOC statements about national reserves, that any modeling is fraught with downside risk.

             This Iraq situation is extraordinarily serious and more or less came out of nowhere. We knew Maliki was being dumb, but dumb and rotten enough to lose a third of the country, endanger Baghdad and permanently bisect future pipeline routes in a matter of weeks??? Well, all the projections on Iraqi production just went POOF.

             Russia has defied predictions by engaging in rampant infill drilling and cannibalization of future years. Again, political decision driven by the necessity to keep up oil revenue in the budget. Now Russia’s best case Arctic and shale scenarios will be set back further because of other political decisions.

             Libya is turning into Somalia. Who knows.

             Venezuela is facing economic collapse under political mismanagement of PDVSA that has led to all the foreign partners wanting to get the hell out. Complete mess.

             I do note that with the exception of US shale fracking – arguably an entirely different resource – there have been no positive externality surprises in a very long time. Which makes sense with how advanced exploration and refining have gotten.

             1. Hi Anon,

                The beauty of the oil shock model is we can add future shocks to see what would happen.

                Hi Ron,

                Note that the extraction rate (or depletion rate) is necessary to the oil shock model, you can ignore it if you like, but for anyone who wants to match up the analysis with their own oil shock model, the extraction rates have to be included.

                Again we simply start with discovery data from Jean Laherrere then make assumptions about the average fallow, build, and maturation periods for a discovery in this case I use 10 years for the average for each of these and we use the maximum entropy principle of Jayne to determine the probability distribution for the time that a discovered barrel of oil spends in the fallow, build, and mature stages. Once the oil reaches the mature stage it is produced at a rate proportional to the mature reserves.

                These mature reserves may not match the “true” proved producing reserves exactly which as you said are unknown. Given the oil that has been discovered this is an estimate of how the complex world oil production process plays out. The model matches the data quite closely over the 1960 to 2013 period and cumulative output also matches the data pretty well.

                The model has proved producing reserves at about 550 Gb in 2012 and Jean Laherrere has proved plus probable resources at about 830 GB in 2012, so about 66% of 2P resources are proved producing reserves. For the US this number is about 75% in 2012 and we would expect the world number to be somewhat lower. If the true reserve numbers are different than the model output, the depletion rates would simply need to be different to match the output data.

                In order to make any guess at all about future output, a guess at reserves is needed as a sanity check that we don’t forecast more output than can reasonably be expected to be discovered. I use a reasonable URR of 3000 Gb (2500 crude less extra heavy and 500 of extra heavy).

                Note that Jean Laherrere’s extra heavy model predicts 5.5 Gb in 2070 for a peak, where my extra heavy model is more conservative with a 3.4 Gb peak in 2050 (Laherrere’s model is 4.4 Gb in 2050). The extraction rates in my models apply only to crude less extra heavy output, the extra heavy oil is modelled separately.

                Cumulative output for the oil shock model is 1200 Gb by year end 2013.
                The half way point for crude less extra heavy is in 2015 and for all crude in 2025.

          4. Doug,

             I miss slide rules. They enforced reality on calculating–no specious accuracy.

          5. Hi Doug,

             Clearly I know much less about oil than Jean Laherrere, but he often models output out to 2100 as in the chart below. Personally I think his work is some of the best I have read and I would certainly not refer to it as nonsense, my work is obviously not as good as Jean Laherrere’s, but I think it is a tad better than nonsense.

             

             1. To compare Jean Laherrere’s Jan 2013 model with my recent shock model I added the brown W crude-XH curve to the black W XH curve for 2013, 2020, 2030, 2040, 2050, and 2060 by estimating the values from Jean Laherrere’s chart, I call this JL Model. The average decline rate from 2020 to 2060 for Jean Laherrere’s model is 1.7%.

                

       2. Hi Ron,

          The model tracks the data pretty well from 1960 to 2013. The reserves and depletion rates of the model may not match the “true” reserves and depletion rates, but as long as the model is consistent it really doesn’t matter.

          Ok there were specific events that caused the decline in those specific countries.

          So that we do not get the cart before the horse, what is the specific world wide event that will cause the depletion rates (extraction rates) to fall in 2016? If extraction rates remain at 2013 levels, output declines very slowly, why would the economic situation get bad in Saudi Arabia, and other OPEC nations, I can see Russia, maybe though oil prices could rise as a result of sanctions and end up helping the Russian economy.

          In 2009 there was the worst recession since the great depression (first time world GDP was negative in a long time), the World average depletion rate barely moved (4.8% to 4.7%).

          How much has world C+C output declined 🙂 ?

          1. So that we do not get the cart before the horse, what is the specific world wide event that will cause the depletion rates (extraction rates) to fall in 2016?

             Are you joking? Did I mention “world wide events”? I was talking about events such as happened in Libya, Syria, Iraq, Russia. It does not have to be a world wide event. And anyway I don’t have a crystal ball that can foretell even local events, not to mention world events.

             However I made no reference to anything happening by 2016. You completely missed the point. I meant that after the decline starts, and things get tough all over, political insurrection and conflict becomes far more likely than it is right now. And right now it is bad enough but as things get worse civil conflict becomes far more likely. In some countries where they are on the edge right now, it becomes very likely.

             Think about it. When all the social subsidies start to decline or completely disappear the public will get restless. And of course food prices will increase and in some places food will just not be available.

             This, below, was what I was talking about, not some specific worldwide event.

             Global riot epidemic due to demise of cheap fossil fuels

             If anyone had hoped that the Arab Spring and Occupy protests a few years back were one-off episodes that would soon give way to more stability, they have another thing coming. The hope was that ongoing economic recovery would return to pre-crash levels of growth, alleviating the grievances fueling the fires of civil unrest, stoked by years of recession.

             But this hasn’t happened. And it won’t.

             1. Hi Ron,

                In order for decline rates to be as high as you think they will be then depletion rates must fall by 2016, otherwise the decline rate will be relatively modest until 2025 or so.

                There have been lots of specific events that have reduced oil output in Iran, Iraq, Syria, Yemen, and Sudan, but so far the depletion rate has been increasing.

                So again I ask, what do you think will change to make the depletion rate fall by a factor of 5 by 2040?

                1. In order for decline rates to be as high as you think they will be then depletion rates must fall by 2016,

                   I think you mean depletion rates must rise. Falling depletion rates mean less depletion. But it really doesn’t matter. Depletion is just what happens when you pump oil out of the ground. The rate is determined by how fast you pump it out of the ground. The more you pump the higher the depletion rate.

                   There have been lots of specific events that have reduced oil output in Iran, Iraq, Syria, Yemen, and Sudan, but so far the depletion rate has been increasing.

                   Increasing in those five countries? No, that is impossible. The less you pump the lower the depletion rate, the more you pump the higher the depletion rate. It is simple grade school physics.

                   So again I ask, what do you think will change to make the depletion rate fall by a factor of 5 by 2040?

                   Dennis, I am not concerned with depletion rates. I am only concerned with decline rates. The decline rate in Norway has been between 7 and 9% for over a decade. That is important. That is what is very obvious when looking at Norway’s chart. What is Norway’s depletion rate? I haven’t a clue, not a clue, and don’t really care.

                   

                2. Hi Ron,

                   I said,
                   “In order for decline rates to be as high as you think they will be then depletion rates must fall by 2016”

                   I will rephrase so that this is clearer.

                   You suggested decline rates would rise to 1 % by 2017, then 2% by 2018 and then after a couple of years to 3 to 4 % and then all hell would break loose by 2025 at the latest. In order for decline rates to be this high, depletion rates must fall from present levels of about 5% to 2 % or less.

                   No, not those 5 countries, the depletion rate for the world has been increasing.

                   The depletion rate for Norway is about 12% and has remained at that level since the peak.

                   A Norwegian would care very much what the depletion rate is, because rather than just assuming that the decline rate will continue at 8% per year they can estimate what future decline rates are likely to be.
                   For example, using Norwegian discovery data that I got from analyses done by Rune Likvern and the Norwegian petroleum directorate, I used an oil shock model to estimate future Norwegian output.

                   

                3. From 2001 to 2013 the average decline rate in Norway for C+C output was 6%, not 7 to 9%, based on EIA annual data 2001 to 2013.

                4. Hi Ron,

                   You are correct that the more you pump, the higher the depletion rate, however the more you pump, the lower the decline rate.

                   You suggested decline rates would be higher than my models suggested, that is you thought there would be less oil pumped from the ground, this implies a lower depletion rate. I can give you a numerical example if you wish.

                5. Dennis, the decline rate is rising in Russia because production is falling. The fields are depleted. I have no idea what the Russian decline rate is, only that the fields are depleted.

                   What is happening right now in Russia is what will happen all over the world. The decline rate will rise. The World decline rate has been flat to positive for almost 10 years, now it will start to rise.

                   The Russian decline rate has been positive since they started to recover from the disaster they suffered from the breakup of the FSU. But their depletion never stopped. I Have no idea what the decline rate was.

                   But what is happening in Russia will be happening to the entire world. The decline rate will increase because production will fall. What the depletion rate will be, I have no idea. I have no idea what the world depletion rate is right now.

                   We can know almost exactly what the world decline rate is and will be when production starts to fall. We have never known the world depletion rate. It can only be estimated based on various guesses as to the world URR. And the world depletion rate is only a guess.

                   For that reason I am not in the least concerned with the various guesses as to what the world’s depletion rate is. But I am watching the world decline rate like a hawk.

                6. Hi Ron,

                   Yes you will always be able to find the rate of decrease or increase in oil output after it has happened, not really all that difficult. Guessing what the decline rate will be in the future is more problematic, you think it will increase rapidly, using the discovery data of Jean Laherrere and the oil shock model of Webhubbletelescope, I have shown you what the extraction rate from proved producing reserves would look like if the world decline rates behave as you envision.

                   We agree that output will decline, we do not agree on the rate of decline. Time will tell whose guess is closer to reality.

                7. Ron Wrote:
                   “I think you mean depletion rates must rise. Falling depletion rates mean less depletion.”

                   I think DC is referred that if social events slow down extraction that field depletion rates will slow. Social events can add or remove oil from a field. If extraction rates slow so will depletion.

                   FWIW: The whole issue that its not possible to model future production. E xtraction rates will decline more rapidly than geology or technology can permit because of geo-political and geo-economic events that have begun to unfold.

                   Perhaps a more realistic model can be put together by including a regional stability factor. For instance for the near term, North America production will not be impacted by geo-political events. North Dakota and Fort Murray are unlikely to fall under siege from radical militants. Although it is subject to economics.The Middle East (ME) is inheritely very unstable. Each region would need to have a factor applied to its stability so that the future production profile can include these risks. Although this endeavor would take considerable time and also be subject to huge inaccuracies, since it will very difficult to model nation/regional instability factors.
                   I am not suggesting to take on this approach, but just how a more realistic model could be created.

                8. Hi Tech guy,

                   Not a bad idea. I try to model the “X factor” by having extraction rates decrease from 5% to 3% from 2025 to 2043, this decrease is assumed to be caused by unspecified political and economic problems throughout the world as oil output declines. Your idea would be much more precise, but I don’t have the data I would need for each specific region so it would not be possible. At this point I can do a few countries with good data like the US and Norway, but the Middle east is pretty much a black box.

                9. Dennis, one cannot plot the unknown or the unforeseeable. I am really surprised that you would even try. You may have a million to one chance of getting it right… but I doubt it.

                10. Hi Ron,

                    True. We can make reasonable guesses about reserves, and reasonable assumptions about future discoveries, like Jean Laherrere does and then see how output would look, with and without future shocks. The modelled depletion rate using Jean Laharrere’s discovery data and the oil shock model to model actual output from 1960 to 2013 shows that depletion rates (aka extraction rates) have been between 4.5 and 5% (for the World) from 1992 to 2013 (from 1960 to 1991 the extraction rate was above 5%).

                    The question is, how much will depletion rates drop when “all hell breaks loose”?

                    I think it will be around a factor of 2 at most, when I present models where it drops by a factor of 5 (from 5% to 1%), you still claim that it is much too optimistic.

                    Again I think such a drop is unreasonably pessimistic, but I agree that it will drop, possibly in 2025 as you have suggested, more likely in 2030 in my opinion, but I think it will fall to about 3% (by almost a factor of 2) rather than by a factor of 5 or more.

14. The EIA’s Weekly Petroleum Status Report has US C+C falling 122,000 barrels per day this week to 8,443,000 bp/d. We are now below the level of June 6th.

    The drop was all in Alaska. Alaska production went from 469,000 b/d to 347,000 b/d.

    1. Senatorial campaign in Alaska this year. Not good for the incumbent, whoever he is.

    2. 347,000 b/d.

       Is that not close to MOL required for Alaska Pipeline?

       1. I am guessing this decline was caused by pipeline maintenance. They have to occasionally run the pig all the way down the pipeline and this causes some decline in throughput.

          1. On 2nd thought, a bit odd.

             NoDak has its own linear “estimate” that doesn’t waver from a very straight line. Alaska . . . doesn’t?

             1. You are a little confused here. It is the EIA that draws a straight line, not North Dakota. And they draw the straight line for Texas, not North Dakota.

                1. I meant EIA, and I thought we found all kinds of straight lines from EIA for NoDak. Certainly the decline rate looked straight, but I thought outright production also was pretty smooth. Maybe not.

          2. Yes, there are a whole series of production issues dealt with in the summer that invariably reduce flow for awhile (including pipeline maintenance). I was told there was a spill as well and cleaning this up could conceivable contribute to a hiatus in the “normal” flow rate of about 500,000 barrels per day. Of course the North Slope production rate continues to drop but oil will certainly be flowing for a few years yet. My guess is 6 to 7 years.

             1. Alaska citizens get a few thousand dollars a year just for living there to distribute proceeds from oil flow. If that’s going to disappear, so are some politicians, and then probably citizens.

       2. dunno antipodes, I first heard of the wax in the pipe when someone claimed minimum flow was 600K bpd. But that’s supposed to apply to winter.

15. Orlov goes off the deep end. ClubOrlov – Saving face

    The initial knee-jerk allegations, voiced by Obama, by the screechy UN representative Samantha Power, by John Kerry, Hillary Clinton, and any number of talking heads, were that the downing of flight MH17 was all Putin’s fault. These were swiftly followed by a complete and utter lack of official evidence of any Russian involvement but lots of strange, unexplained coincidences pointing to Ukrainian and American involvement.

    Got that? Russia had nothing to do with it. It was a conspiracy, the US and Ukraine conspired to bring the plane down. This is the same guy that, right after the Boston Marathon Bombing, said the brothers Dzhokhar and Tamerlan Tsarnaev were patsies set up by the police to take the blame.

    Is this guy nuts? Or is he just a conspiracy theory nitwit?

    1. Why would Russia have anything to do with the downed airliner in Ukraine? Do YOU have stonewall evidence of their involvement? I’ve seen Kerry making claims that turned out to be either lies or unsubstantiated – perhaps you know better though ?

       Just because you dislike his opinion (as an admitted lifelong democrat and frequent clinton/obama defender no less), means that you go out of your way to call him a nutjob ??
       OK

       1. Robbo,

          “stonewall evidence”?

    2. “Is this guy nuts? Or is he just a conspiracy theory nitwit?”

       Ron, have you watched the Russian news conference on the MH17? It was presented by two high-ranking military officials. They did not make any accusations or speculations, just presented some facts, most importantly that there was a large deployment of ukrainian anti-aircraft forces right under the Boeing, and a high level of radar activity which culminated on the 17th. Secondly, there was what seemed to be a ukraininan military aircraft nearby the Boeing.

       Yes, they could have made it all up, but they also stated that the full evidence was sent to the investigators immediately. I doubt they would completely fabricate the evidence, but it is of course possible.

       On the other hand, as of yet, there was ZERO direct evidence presented by the USA or Ukraine. No satellite pictures, no rebuttal of the russian claims, nothing. Furthermore, there is complete silence regarding the air traffic control recordings from Dnipropetrovsk. I mean, everybody is waiting for the black box recordings, but a lot of that information is there, on the tapes at the airport, and could have been evaluated and presented within a day after the tragedy. Yet nobody even mentioned those in the two weeks since.

       To wrap it up, two days after that press conference, the russian news agency Ria Novosti presented a theory that there was a Ukrainian military exercise going on that somehow went wrong and resulted in the tragedy. Does it sound like a conspiracy theory? Maye it does, but it is totally consistent with the russian military data from that news conference, and also with the sorry state of the ukrainian military forces, who are mostly composed of recruits and volunteers with no experience or training. There is also a lot of confusion in the ukrainian chain of command, with the Ministry of Defense and Ministry of Interior Affairs having separate agendas and separate armed forces under their command.

    3. here’s the video of the conference:

       https://www.youtube.com/watch?v=Mz_KNS1nyNk

       and here are the presented docs:

       http://www.mid.ru/brp_4.nsf/newsline/F6C3BBD89AC2532D44257D1D00203CCF

       It may be all lies, but at least they show something. Ukraine has shown absolutely nothing so far, except for some “social media” crap.

       1. It was an accident. Whichever side fired the missile, by accident, the missile was Russian made. Not that easy a shot, either, that high at full cruise speed.

          But not anti-stealth — nothing is, really.

          But odds high it was Russian made. So there is Russian involvement. American made weapons mowed down a lot of folks in Cairo’s center and no one blamed . . . well, not true, most Egyptians blame America for most things, but oh well. Regardless, so there was American involvement in Egypt killings.

          The good old USS Vincennes executed a surface to air missile attack on an airliner and killed a bunch of people. They didn’t do it on purpose, either. Easier shot for them, as I recall. Lower altitude, and they shot 2 missiles for the kill.

          It’s sort of meaningless in the big picture. It won’t be any special turning point of anything. It’s being milked. Some excited 20 year old pressed a button by mistake and that’s that. Happens somewhat often every few decades. It won’t affect the various pursuits of triumph.

       2. Hey guys, Robbo and Strummer, we know exactly where the rocket was fired from, we have the separatist leader bragging on the phone about shooting down a Ukrainian cargo plane, we have him being called back and being chewed out by his boss telling him he shot down a passenger plane. The goddamn separatist would let no one near the plane until they destroyed all the evidence. No one could get near anything to find parts of the rocket.

          You guys need to get real and stop listening to Russian propaganda. Too many people want to believe in some kind of US conspiracy. Too many US haters or Obama haters simply want to believe that he planned the whole thing. That is just goddamn stupid and anyone is stupid to believe such a very stupid thing.

          I am sorry but it really pisses me off when someone blames the US for complicity in shooting down this plane. That is just down in the dirt stupid.

          1. “we know exactly where the rocket was fired from”

             Kerry claims that it was shot from a position near Snizne. There was no evidence presented to back up this claim. None. The ukrainian army positions in Zaroscenskoje are documented on those russian satellite pictures, and those positions are just a few kilometers away from Snizne and had a much better range to the Boeing. So no, “we” don’t know where it was fired from. If the US had actually shown those satellite pics to the world, this point would be moot.

             “The goddamn separatist would let no one near the plane until they destroyed all the evidence.”

             This is a blatant lie, sorry. The OSCE monitors have repeatedly said that there was no destruction of evidence, the black boxes have been given to Malaysia unharmed, and the Dutch have confirmed that the bodies of the dead have been handled “exceptionally” and that the locals did “a hell of a job”, considering the brutal situation on the ground. For a description of that situation, I’d recommend this WSJ article:

             http://online.wsj.com/articles/after-flight-17-crash-agony-debris-and-heartbreak-in-ukraine-villages-1406335532

             Finally, I’m not talking about a “US conspiracy”. But a Ukrainian army accident during a exercise is a plausible possibility that should not be discounted yet, given the total lack of any evidence from the Ukrainian side.

             1. This is a blatant lie, sorry.

                No, that is not a lie. Sure the black boxes were turned over by the the rebels but they were the ones that found them. And they were unimportant. It was the rocket that they wanted. Its pieces were never recovered. Why?

                The Evidence

                There is little or no doubt that the aircraft, which was flying above eastern Ukraine at 33,000 feet, was shot down by a Russian-designed surface-to-air missile, almost certainly a Buk missile (known as the SA-17 in the West) or just possibly a more powerful S-300 (designated SA-10 by NATO). Both systems are in use by Russian and Ukrainian forces. It appears that the missile was launched from Chernukhino, near Snezhnoye, about 80km from Donetsk, in territory controlled by Russian separatists and about 20km from the main crash site. That is easily within the range of even the earliest Buk systems which were developed in the 1970s by the Soviet Union.

                There is no doubt that the Russian separatist shot this plane down. Anyone who denies that is just not looking at the facts.

                And goddammit don’t call me a liar again. The separatist are still patrolling the crash site with machine guns, letting only a few in…. after they have hauled off any pieces of the rocket that might have been found.

                1. “Its pieces were never recovered. Why?”

                   The pieces (at least some of them) are embedded in the wreckage and will not be easy to find. None of the wreckage itself was “recovered” yet, due to the main investigation team being held up in Kiev, due to the ukrainian army offensive going on in the area. For a lot of details about the mechanism of the missile and where it might have ended up, this is the best discussion I could find:

                   http://www.pprune.org/rumours-news/543733-mh17-down-near-donetsk-53.html

                2. “the missile was launched from Chernukhino, near Snezhnoye, about 80km from Donetsk, in territory controlled by Russian separatists”

                   Sure, but again, there has been zero evidence released to back up this claim. Showing at least some of the evidence would shut up most of the doubters. There’s an atmosphere of distrust worldwide, after what we’ve seen with the made-up claims about Bin Laden’s underground bunkers, Saddam’s weapons of mass destruction and lately Assad’s chemical attacks, all of which turned out to be complete fabrications. The US should understand that and provide at least some hard evidence in this case.

                3. Why don’t you get real and stop listening to Moscow propaganda. They have the trajectory, they have the evidence, they have the intercepted phone calls.

                   From the link I posted above:
                   Last night Ukraine’s intelligence agency, the SBU, released audio from what appeared to be intercepted phone calls between rebels and a Russian intelligence official. In one call, a separatist leader, Igor Bezler, says that they “have just shot down a plane”. In a later call, apparently from the crash site, another man says that Cossack militiamen have shot the plane down and that it was a passenger airliner. When asked if there are any signs of military equipment among the wreckage, he replies “absolutely nothing”.

                   The evidence is absolutely overwhelming. You are just so dammed brainwashed you refuse to acknowledge the obvious.

                4. We’ll see what the investigation will bring. I would definitely not label the current evidence as “overwhelming” when in fact NO direct evidence was shown. As for the Ukrainian SBU, I would advise you to take a look at ALL the claims they have made in the recent weeks, not just the few that were widely reported. That can give you a clearer picture on their credibility.

                5. Just an FYI, missiles almost never hit targets. The tracker gimbal has a max slew rate and when it is exceeded the warhead is triggered. The debris hits the target, after the missile destroys itself, somewhat. It will be many feet away.

                   So missile debris in significant quantities will be considerably distant from the crash site. If anyone really wants to find it, look somewhere else.

                6. Oh and btw, Ukraine is screwed. They claim that territory, whether there are rebels on it or not.

                   Reparations are owed.

                7. Ransquawk:

                   http://www.independent.co.uk/news/world/europe/land-for-gas-secret-german-deal-could-end-ukraine-crisis-9638764.html

                   The deal (pre plane crash) seems to be Russia provides Ukraine with a gas security/stability deal and $1 billion to compensation for naval base rent no longer being paid — and Ukraine, the EU and US will accept Russian sovereignty over Crimea.

                   Also the separatists will be given devolved powers of self government, but not join Russia. Ukraine must sign some document saying will never join NATO.

                   Story doubts UK or US will sign on to loss of Crimea.

                   Shrug, stranger things have happened. Looks like a deal of sorts out of Merkel.

    4. Ron Wrote:
       “[Sarc] It was a conspiracy, the US and Ukraine conspired to bring the plane down.”

       Why would Russia target a Civilian Plane? The last thing the Russians would want to do is add more fuel to the flames. If Russia was going to down a plane they would have launched fighter jets to do the job.

       Why did the Ukraine air traffic control deliberately order the jet to reroute to fly directly over the war zone, and also drop its attitude to 33K feet? The US refuses to release any damning evidence that the Russians or the Rebels caused it, they are only referring to social media as evidence. This stinks of political manipulation and a false flag incident.

       http://www.themalaymailonline.com/malaysia/article/ukraine-traffic-controllers-instructed-mh17-to-fly-lower-mas-says

       The US instigated the Ukraine crisis by paying Ukraine students to riot. Didn’t you hear the leaked audio from the state dept:

       http://www.reuters.com/article/2014/02/07/us-usa-ukraine-tape-idUSBREA1601G20140207

       Remember Syria, how the it was Assad’s army that used Chemical weapons and how quick the US state dept. jumped all over it. Even McInsane (John McCain) was already to launch another major US miltary campaign in Syria. And which nation defused the crisis? Russia by offering to removing Syria’s Chemical weapons. Even the UN released reports that the Rebels had fired the chemical weapons. Then 1 to 2 months after the embarrassment in Syria, Ukraine suddenly destablizes which just happens to be on Russia’s doorstep. Coincidence?

       Youtube video showing rebels firing improvised chemical weapons in Syria:
       https://www.youtube.com/watch?v=wGtE2GdKIxY

       The Ukraine (Kiev) gov’t would have a huge political advantage if they did down the plane and blamed the rebels since they would gain support from the US and the EU. All the rebels wanted was general regional election to consider to split.

       FWIW: Kiev is made up extreme right wing (fascists), and they are not very nice people:

       http://www.globalresearch.ca/whos-who-in-ukraines-new-semi-fascist-government-meet-the-people-the-u-s-and-eu-are-supporting/5372422

       The Separatist rebels fear the Kiev gov’t and feel they have nothing to lose. Either the fight them, be imprisoned or executed by the Kiev gov’t. Once Kiev consolidates power, they will either expel or commit ethic cleansing in the region.

       Time and time again the US has backed dangerous militants in for foolish foriegn agendas. ISIS was financed by the US and the UK to fight Assad. ISIS slaughtered just about all of the Christians, Jews, Kurds, and even Shittes in Syria. The US is still has training camps in Jordan training Militants to fight in Syria. This is pure non-sense.

       Do you really believe that the US gov’t are angels and peace makers? You don’t trust the EIA and other gov’t reports, yet you trust the rest of the US gov’t?

       I don’t think Putin is a nice guy, but he isn’t shooting up the middle east (like the USA) and he isn’t training and arming radical militants.

       1. Why would Russia target a Civilian Plane? The last thing the Russians would want to do is add more fuel to the flames.

          Wherever did you get that idea? Russia did not target any plane. The stupid Russian separatist thought they were shooting down a Ukrainian cargo plane.

          1. Ron Wrote:
             “Wherever did you get that idea? Russia did not target any plane. The stupid Russian separatist thought they were shooting down a Ukrainian cargo plane.”

             Still doesn’t make sense that the Ukraine air traffic ordered the flight path change. The “Stupid” Separatists would not have the skills to target the plane using the Buk Missile system.

             Perhaps we’ll get more details in the weeks to come. At this point I don’t believe the separatist shot down the MH-17. Everyone was too quick to judge without any concrete evidence and I simply don’t believe a word from the US state Dept.

             1. The “Stupid” Separatists would not have the skills to target the plane using the Buk Missile system.

                You are exactly right. Yet they had the Buk Missle System. They have photos of them there. They have photos of the systems crossing the border into the Ukraine. They have more than one of these systems. They have shot down several planes with these systems. That means they have Russian advisers, or actual Russian soldiers, operating these systems in the Ukraine. But it was a mistake. The operator, or the clod who gave the order to shoot, made a mistake, he thought it was a Ukrainian military plane. From the New York Times:
                The Ukrainian Foreign Ministry sent reporters a link to the edited audio of the calls, with English subtitles, posted on YouTube by the S.B.U.

                According to a translation of the Russian audio by the English-language Kyiv Post, the recording begins with a separatist commander, identified as Igor Bezler, telling a Russian military intelligence official, “We have just shot down a plane.”

                Hey, just listen to the audio of the phone calls.
                Intercepted Audio of Ukraine Separatists

                1. As I said earlier, it would be great to have at least a tiny bit of DIRECT evidence, instead of youtube videos coming from the ukrainian SBU (which has been making all sorts of ridiculous claims in the recent weeks, most of them are ignored by the western media). I find it quite surprising that someone who does such amazing work on this site, sorting fact from propaganda, is so easily convinced by such lacking “evidence” in this case.

16. I expected to see someone else comment on President Obama’s new sanctions aimed at limiting future production of oil in Russia. It really sounds like he and other western world leaders are really not worried about future oil. I suspect these sanctions will become something that we will come to regret in the next few years. That’s, of course, assuming that Russia cannot go it alone without help from western technology. Even so we may still regret it since we are showing that we do not play fair in global markets. Turnabout is considered fair by those who were mistreated.

    1. I have the same impression of no worry. He’s being fed the company line about NoDak growing forever, or worse, *being* forever and not being an oil person he can’t know the difference. “Your grandchildren will work the oil fields here” is not the same as “oil output will grow for the next 50 years and take care of population gain.” There are still jobs in Alaska’s shrinking oil output.

       The western know how is pretty dumb and he would know better if he had any business background. You lack know-how? You hire it. Even worse is the “cut off financing for oil development” stuff. What do these people think Petrochina is doing? Or the Peoples Bank of China? I can almost guarantee that BP or Total (if Exxon is cut off) will self finance anything they have to do if it means $7/barrel of what comes up from Siberia.

       You either make people starve, or you haven’t done an economic sanction. Nobody in Moscow is going to starve.

17. The model presented below assumes that a slow decline in C+C output from 2015 to 2025 causes recession by 2025 and that by 2030 all hell breaks loose causing the extraction rate (depletion rate) to fall from 4.6% to 3.1% by 2041, the extraction rate stabilizes by 2044 at 2.8% (43% below 2025 levels).
    This is one of an infinite number of scenarios that could be created, the scenario below envisions a World economic depression from 2030 to 2040, hopefully the World will not go to war as it did 100 years earlier. If World War 3 occurs I would hope that it would be fought with conventional (non-nuclear and non-biological) weapons. I do not think such a war is inevitable, but would admit that it is likely. Another possibility (besides war) is that strong nations will attempt to rework their economies to use less liquid fuels, while realizing that resource depletion of other fossil fuels will also occur in the near future. Investment in railroads, light rail, wind, solar, nuclear, recycling, and HVDC will help to get the unemployed back to work and possibly allow a transition to a more sustainable future where protection of the biosphere becomes a priority.
    Does that mean I think that rosy scenario will happen? No, it is just one possible future, we could also see a Mad Max type of future play out. The choices that societies make will make a difference, it may be that we will choose not to make any drastic changes until we are in the midst of a depression, once there we may make poor choices.

    Chart below

    

18. It does get worse!!!
    Newfound Threat to Oilsand Projects

    TYEE EXCLUSIVE: Researchers discover ancient salt formation key factor in Alberta steam fracking disasters.

    By Andrew Nikiforuk, 28 Jul 2014

    1. The link: Newfound Threat to Oilsand Projects

19. The Israelis have had enough of Hamas, so the unleashed dogs of war are at it full bore, and it is one conflict that is going to last for some time to come. Anyway, that is what it looks like right now. Peace is not an option. A ceasefire is nothing of the sort, just a lull to re-arm.

    Bombed power plants and burning refineries are an indication that there is war going on but somebody forgot to tell everybody.

    Hate rules, the rules change quickly, there are no rules when there is war, all is fair. Russian military forces are using direct intervention. Looks like a war footing is taking hold.

    Resources should be shared, not hoarded by use of force, but it seems there is no way out this time around.

    Military forces must be on full alert right now.

    Oil tankers must be flanked by US Navy ships these days.

    Chinese freighters making there way across the Pacific must need some kind of protection, should be protected, anyhow.

    Fighter jets follow Air Force One, US defenses are at their best, even if they don’t look so good these days.

    Looks like Peak Oil is a serious problem, serious problems develop because of Peak Oil, but it can’t be blamed.

    A wiser use of resources is a better choice, total warfare can be avoided.

20. I stumbled upon a rather interesting presentation from NDIC from July 2013, about the Bakken:
    https://www.dmr.nd.gov/oilgas/presentations/NDOGCPC091013.pdf

    Contains a prognosis, info about truck loads/employment/lead times and more.

    1. GREAT

       FIND.

       Here’s what I see:

       50 million gallons of water required for the whole field PER DAY (page 9)

       Pie chart page 14 suggests pipelines are making progress, but is not achieving that 60% avg number (that is the proportion of production from new wells). You can gather from old wells via pipeline. They are almost dead, but there will be a lot of them.

       Page 15 is the first totally official source for 2000 TRUCK TRIPS PER NEW WELL I’ve seen. I don’t know what Bakken 2-4 means vs the upper left “new well”. I thought maybe year 2 thru 4, but it has truck trips for drilling so I don’t get it.

       Page 12 notes a threat we don’t talk about. Refinery limits for this type of oil.

21. I have read OFM and Tech Guys comments about future vehicles. OFM mentioned the Leaf. It and the Tesla get about 3 miles per kilowatt-hour. A pickup will get about 2 miles per kwhr. With my PV array, I generate about 22 kwhrs per day. This works out to an average of about 66 miles of possible commuting each day. This is about twice the max. distance that 95% of commuters travel within each day. I used to be extremely worried. Now I am just very worried.

    There have been some recent announcements concerning Lithium Ion battery development where LG Chem is creating a 200 mile pack for 2016. If we assume that this is for the Leaf and other 70 mile range EVs, this is 3 times the energy density. Lawrence Berkeley National Lab is working on a Lithium Sulphur battery that contains about to over 3 times as much energy as laptop batteries and is much cheaper. To put this into perspective, the Tesla Model S has and range of 265 miles. Three times the energy is just under 800 miles on a charge. That is the rough distance between Raleigh, NC and Boston, MA.

    The maximum potential for Lithium based batteries is approximately 1500 to 3000 whr/kg. Current batteries, for calculation purposes, are around 150 whr/kg. So basically, we could have battery packs with the maximum potential of going coast to coast to back again on one charge. If we compare this to our aviation history, it’s like going from puddle jumping to cross country flights. With the Tesla, we can puddle jump from one super charging station to another and go across the country in about 20 recharges.

    I am not trying to get political here. This is more just for perspective purposes. I read where we spent $1.7 trillion on the Iraq war. I wondered how that would translate to EV miles per day on average if that $1.7 trillion were spent on solar panels:

    250 watts * 1 hr * 2.0 kwhr/m^2/day * 1 kwhr * 3 miles
    panel 1.0 kwhr/m^2/hr * 1000 watt-hours 1 kwhr

    The 250 watts/panel is a typical size or thereabouts. This is based on solar insolation of 1.0 kwhr/m^2/hr
    In December, almost all of the USA, except for a very small portion of Washington State and Alaska receives an average of 2.0 kwhr/m^2/day or greater. Some areas receive 3 or more times that amount.
    The 1 hr multiple was added to convert the instantaneous value of 250 watts to 250 watt hours since the 1.0 kwhr/m^2/hr standard solar influx shines on the panel for one hour to produce the 250 watt hours

    This works out to be a minimum of 1.5 miles/day/panel

    Costs for installing panels has come down to around $5 watt or $1250/panel

    $1.7 trillion * panel * watt * 1.5 miles
    250 watt $5.00 day-panel

    This works out to be 2.04 billion miles/day.
    I have attached a copy of the NERL December Average Daily Solar Radiation per Month but I am not sure where it will appear. Hopefully with this comment.

    We can do the same thing for gasoline powered vehicles. The USA uses about 18 million barrels of oil per day. When refined, each barrel produces about 18 gallons of gasoline. If we assume that the average mpg is 25. This works out to be:

    21 million boe * 18 gallons * 25 miles = 8.1 billion miles
    barrel gallon

    Therefore, we could have been close to “Energy Independence”. The mpg for the USA gasoline fleet is a guess. I usually think of 10 whrs of electrical usage in an EV as being somewhat equivalent to a gallon of gasoline.

    The beauty of all this is that if gasoline costs $3.50 and 10 kwhrs of electricity costs $1.00, the difference is $2.50 for approximately 30 miles. If the EV mileage is 2.1 billion miles/day , that is 70 million recharges/day. The payback is $0.175 billion per day into $1.7 trillion or approximately 10,000 days or 28 years.

    The cost of a Leaf battery replacement pack is $5,500. The warranty is 8 years/100K miles. That is about $700/ year or $58/month or $2/day. Subtract from that $5,500 the cost of oil changes (20 to 30), timing belt replacement (1.5), fan belt replacements (2), air filter(10 to 15), coolant replacement(2), etc., the cost of the replacement pack becomes more of an inconvenience. If you saved your money.

    I hope this helps.

    

    1. Hi Peter,

       Unfortunately most people are not convinced. What is the pay back at $0.15 per kwh at 4% interest rates for financing for installed PV in St Louis , MO (my understanding is that this is close to the average US solar insolation).

       1. assume south facing roof at appropriate angle to maximize collection, but a fixed setup.

          1. Hello Dennis,

             Payback’s a b***h.

             I am working the numbers without Federal or State tax incentives.

             My system cost me $28K. The NREL site says that at our rate that I save $620 a year. I save a little more than this but it varies due to weather. This would be an approximate payback of 40 years.

             If I drive 9,000 miles a year and a Leaf consumes 1 kwhr of electricity every 3 miles, that is 3,000 kwhrs. Our rate is $0.11/kwhr but I will use 10 cents as it makes the math easier. The cost of electricity is $300.

             The Nissan Versa was the mule for the Leaf development and its Consumer Report mpg is 31. Therefore, I am assuming that to go 30 miles, a Leaf uses about a $1.00 in electricity and a Versa (Leaf substitute) uses a gallon of gasoline at $3.50. The savings is $2.50 every 30 miles or 300 * 2.50 is $750.

             The $620 plus the $750 is around $1400. This would mean a payback of 20.43 years. Traveling 12K miles a year would produce a cost savings of $1000 (400 * 2.50) or a payback of 17 years. Two such cars and the payback becomes less than 11 years.

             There are a number of variables. Cost of replacing a roof (I’d go with stainless steel), weather, cost of electricity, cost of gasoline, interest rates, etc. Any payback time is subjective.

             The NREL site has a solar calculator where you can put various numbers into it and derive a cost savings. It’s at http://pvwatts.nrel.gov/. Using a 5 kw array and your general location, $0.15 rate, the system came up with $881 per year in electrical generation without adjusting any of the other numbers.

             While PV is not one of my better investment based on rate of return, I do see it as the best alternative for getting down the road on the other side of Peak Oil.

             For want of a nail, the shoe is loss
             For want of a shoe, the horse is loss
             For want of a horse….

             Not sure how this is all going to pan out but I know some one who has built an EV out of plywood. For want of steel, the car is loss???

             Peter

             1. Peter, you can say “bitch” on this site. I am not concerned with what words schools or libraries may block. They block sites, not words.

             2. Thanks Peter,

                The problem with PV at the residential level is the payback is so long.

                Using simple payback (if I understand your $620 savings correctly), I get 45 years, but at higher electricity rates (say 16 cents/kwh), I would get $902 savings per year, that reduces simple payback to 31 years.
                Let’s say I buy green tags to offset my electricity use at 2 cents per kwh, the savings is then increased to $1014/year, simple payback is now 27 years.

                For many people to go for solar either system prices need to come down or electricity prices need to rise.

                1. Hi Dennis,

                   I hear you. I think you have it right.

                   If there were no PV arrays, the cost of gasoline minus the cost of electricity would still work. It would still save us $750 to $1000 per year/EV for fuel. The difference is that I would be using fossil fuels **only**. The higher the electricity rate, the lower the return to the cost of the EV.

                   With PV inserted into the mix, I can direct those cost savings to paying off the array **or** paying down the total ownership of the EV but not both. When rates are higher, more can be directed to paying off the PV array. When PV is used, the electricity goes directly to the EV or to the household appliances or to the grid or some mix there of. **Less fossil fuels are used.**

                   Overall, the cost of owning an EV theoretically is the insurance, electricity, tires, yearly inspection, and maybe a yearly checkup by the dealer to make sure the system is running correctly and the batteries are in balance. For the Leaf, I understand that is around $150. Brake shoe replacement is further apart as regenerative braking saves on pad wear.

                   In the above calculations and using the NREL figure of $620 as the amount of PV electricity generated, if I use more than what I actually generate, the rest comes from the grid. So if I have 3 EVs that each go 12,000 miles per year at 3 miles per kwhr but my array only produces 8,000 kwhrs, 4,000 kwhrs comes from the grid. The other 8,000 kwhrs comes directly from the array to the charger or it is sent to the gird. Since I am on net metering, the rate is $0.11/kwhr.

                   I think the bottom line is that the power derived from money is based on the productive work of people, their use of knowledge, ability to grow as responsible adults, and of utilizing resources properly. With our oil and gas resources depleting, we need to bring other energy resources on line. The alternatives are not pretty.

                   Duke Energy is switching to using more natural gas to be less dependent on coal, etc. I hate to see us switch to natural gas which is such a wonderful non renewable resource to be wasted on hot showers, trip to buy bobbles and trinkets, and Sunday drives through the country side. This switch is putting pressure on the State Gov’t to grant Duke Energy lower rates; somewhere in the 5 to 7.5 cent/kwhr range. It’s a win-win for the politicians, the poor, industry, and consumers in general but not the solar installation community and any conservation efforts toward our natural resources. I hate to see us use natural gas and end up with more expensive solar panels.

                   The meme is that we will invent something. My push back is: okay, we are hurting due to the effects of demographics and the high cost of finding new crude oil supplies. So where again are these cheap solar panels and 1000 whr/kg batteries with cycle life of 7,000 cycles in packs? We could certainly use them.

                2. I have not met anybody who thinks electricity prices will not rise for one reason or another. Inflation runs up costs which must be passed along. Taxes on utility properties and profits are much more likely to be raised than lowered. And the cost of fuel of any kind is sure to go up over the long run.

                   Now the financial beauty of a solar system of your own (beyond subsidies) is that you may be able to finance it at a low rate of interest and make the payments with inflated money while consuming the energy it produces without paying taxes on it as on purchased energy and not having to pay for ( otherwise ) purchased electricity with after tax dollars.

                   If you are paying third percent or more of your income in federal state and local taxes a gallon of gasoline actually costs closer to five bucks than it does three and a half. Solar juice is soon going to be perceived as a world class bargain by people who can do their own installations.

                   Putting panels on a roof is work that should be attempted only by experienced tradesmen used to working on roofs but there are millions and millions of houses and businesses in this country with plenty of room and good sun for ground mount systems.

                   Pretty much any jackleg half assed carpenter could install a ground mount system and a properly trained electrician could wire it up and tie it into the house in a couple of days in most cases with a helper.

                   Installation costs are going to come way down within the next few years unless I am badly fooled. There is nobody out there really opposed to solar except maybe utilities and when it comes to public pressure for change in the installation rules the trades and construction people are going to win because they represent voters whereas utilities represent stockholders.In the end this is a no contest situation in favor of the construction trades eager for new work.

                3. About ten years ago when solar started getting popular in Germany there was a big wave of bankruptcies among the specialist solar contractors. The reason was that the market had gotten big enough that a lot of small construction companies developed the know-how to do a rooftop installation, and the prices fell.

                4. PV ROI – We get well under 10 years with 30% Fed credit in NW Florida, Current rates plus 2.5% a year rate increase from current. Rate increase has been 8% a year for last 10 years. Now if you have significant south facing conventional roof w/o radiant barrier, PV is a big deal in the south, A 5kW system may reduce the heat gain in the structure more than half, reducing HVAC loads somewhat proportionally. Can actually make a house without AC survivable for blackout periods, there have been studies on this and the specifics depend on the building envelope details, but it almost always major in southern latitudes.

                5. Glad to hear the State is helping out its citizens.
                   With my PV array (5 kw), on average, I am basically a very very slight net electrical energy exporter during the summer months.

                   One of the fellows who comments here has done a bit of PV related projects. At his home, when he replaced his shingles, if I remember right, he had laid down some 1×2’s and filled in the gaps with sheets of Styrofoam. He said it really cut his roof heating. I don’t remember all the details. He and his wife had put together a Power Point presentation.

                   If Stephen Hren is on, maybe he would comment on the details.

                6. When I rebuilt my house, based partly on the experience of Stephen Hren ( a friend of mine), I installed a fully taped layer of polyisocyanurate foil-faced insulation on top of the plywood, then purlins, offset to allow air flow, then light colored steel. It really keeps the heat from penetrating the roof in summer. We live in VA and have no A/C.

                   On the matter discussed above – we converted our 2005 Prius to have plug in capability with 10kWh of lithium cells. We get 3.5-4 miles per kWh, depending on conditions. So the vast majority of local driving is now done on electrons. The PV panels to feed it are next.

                   Good discussion.

                7. That’s great!!

                   I saw a TV show once (or twice) called Life After People. In one episode, there was a scene of a stainless steel kitchen sink in “perfect” condition in what looked like a dried up riverlet. And the narrator said “400 years after people…”. Wow!!! If the sink can last 400 years, why not make a roof out of stainless steel? The first thing to go in abandon structures is the roof. Talk about sustainable houses…

                   I talked to a residential roofer about this and you would have thought I was talking to a Catholic Priest back in the days of the Spanish Inquisition while wearing a tee shirt that said: “I am a heretic, show me what you got!! Asshole.” I can understand his view point. He is in the business of replacing asphalt shingling every 20 years. He feeds his family this way and provides employment and need service to others. Buggy whips.

                   What made you decide to go with steel instead of aluminum, “tin”, or some other material?

                   Are you satisfied with your steel roof?

                8. >> We live in VA and have no A/C.<<

                   How do you keep cool? My biggest problem is not the heat so much as it is the humidity. I've worked several hours outside in the west in the dry air there at over 100 degrees Fahrenheit but have a tough time in the Southeast with dew points about 64 degrees Fahrenheit. It's not the relative humidity but the dew point that seems to effect me most. How do you cope?

    2. Thanks for the info PeterEV.
       While I know there are number crunchers who can point out to us how far deep in a fossil fuel hole we are,
       I nonetheless put my vote to spending like heck on a solar future. Each dollar we spend on that buildout will result in energy that will be dear to anyone who has got it in the next 3 decades or so.
       Better to spending it on solar than military and most social programs.

       1. I think we are in general agreement. I tend to view it like the build up of the aviation industry in which the Federal Government built the airports and the flyways, etc. In this case, the planes are EVs and the airports are “sunports” where our “planes” can “land” to refuel.

          I think the main problem will be that the sun does not shine at night and we want to coordinate with the electrical utilities so we do not break the grid nor the plants. Fossil fuel fired steam plants are behemoths that do not take kindly to ramping up and down of generation. You just can not turn off a boiler and turn it on again.

          Hopefully, as we descend on the other side of Peak Oil, we can replace what we normally use with solar.

          Peter

          1. Where I live we have a very large (2.5 MW) gas fired natural gas plant that is called a “peaking” plant- parts of it are fired up on call by the California State grid operators to keep the peak generation in line with peak demand as best they can.
             Basically it serves to top of the system.
             It seems like having a natural gas generator linked with a large solar station would be a good fit for giving steady juice to the grid. Or. I suppose there is no reason to put them right next to each other.
             I’m no expert in this, but it seems to have some logic.

             BYW, a good friend of mine from college became a solar engineer, and eventually married another one. They started a company about 10 years ago to standardize the panel installation process- make it quicker and less expensive. They got bought out for $158M by Solarcity this past Oct. This is a big industry just getting started.

             1. That’s way more clever than I was exenpticg. Thanks!

    3. We have both a Nissan Leaf and a Chevy Volt. We get 4+ miles per KWH on both. These are measured and reported by the vehicles. This is mostly in-town driving rather than highway, but with some large hills. (And no, Watcher, we do not skimp on heating or air conditioning; these seem to have only a 10% effect.)

       Note that our mileage is energy-equivalent to 140 miles/gallon. The EPA rating is 100 MPG, probably with more highway driving than we do.

       Because of the high efficiency of electric cars, less than 3 years’ cost of gasoline for a 20 MPG gasoline car will buy solar panels to power an electric car for the same number of miles per year for the rest of your life.

       The Leaf and Volt are great cars. We have had them for several years now, no problems, near zero maintenance.

       1. Hi Tech Guy,

          4 miles / kwhr with such a heavy car is very good. The Tesla Model S has a stated range of 265 miles and an 85 kwhr pack for 3.1 miles/kwhr.

          I think you have the idea, easy on the pedal.

          Peter

          1. Smaller bike/car hybrids can approach 2,000 miles/gal. If you’re limiting yourself to individualized in-city transit, here’s a quick plug for the guys three block away from me in downtown Durham, NC who make one such gizmo that’s fun to ride:

             http://organictransit.com/

             1. Durham is getting its act together. I like what I see in Central Park with the Farmer’s Market, extensions to the American Tobacco Trail, new restaurants sourcing food locally, and the presence of start ups like Organic Transit, Scrap Exchange, Kramden Institute (refurbishing computer for needy but vetted kids). I’ve used the trails to get places by bike. The local gov’t is making it easier to get around by bike ala Main Street in front of Duke’s East Campus. Schools use the old Durham Bulls Ball Park for baseball and other types of events. A lot going on. I like the changes I see.

       2. I have forgotten where you live that in your twenty mile commute each way you do not skimp on heating or cooling.

          1. We live in Austin, Texas. 7-mile commute each way, via bike, e-bike, and e-car. Austin does get cold in the winter, and plenty hot in the summer. Quite the incentive not to skimp on A/C, and we don’t. Both Leaf and Volt have a good cold A/C, suitable for 100+ F in Texas.

             1. Well, let’s examine data.

                A proper automotive air conditioner consumes 4 horsepower. 750ish watts/horsepower is 3 Kw.

                Quoting densacar:

                >>Average one-way commute time is 26 minutes (over an average distance of 16 miles)

                http://abcnews.go.com/Technology/Traffic/story?id=485098&page=1

                They report an average one-way commute time of 26 minutes (over an average distance of 16 miles). But the variance is huge: On the best days, the average commute is 19 minutes; on the worst days, 46 minutes. That means traffic, at its worst, can double the average commute time, adding 27 minutes each way.

                And on average — not at its worst, but just on average — workers estimate that traffic congestion adds a half-hour a day to their drive, 15 minutes each way. That’s an impressive time suck.
                >>

                So we’ll call it 45 minutes for the typical American’s air con in the afternoon with the trip home plus the evening trip to the store or picking up kids or whatever. We’ll exclude the morning, being cool.

                Looks like 2.25 KW/hours per weekday just for aircon. Summer weekend trips, especially Labor Day, the 4th and Memorial Day, will be much longer, of course. We won’t mention the 2 week vacation to Yellowstone, and sometime I may redo the heater in the winter computation for the 300 mile trip to Grandma’s at Thanksgiving.

                I’m seeing a Nissan Leaf range of 84 miles in the 2014 variant, up from 76, but text says there is no improvement. There was a software change that lets owners stop charging at 80% and that was blended into the previous year’s 76 number so there is no tech improvement, but we’ll use 84 miles.

                Leaf battery is 24 KW-hr. Should be legit to define this as 24 / 84 or 0.28 KW-Hrs/mile without aircon or heat. The 26 mile afternoon commute will eat 7.3 Kw, the evening trips call it shrug 10 miles store and baseball practice or kids parties for another that’s another 2.8 Kw Hrs. Total 10.1. Air con, 2.25 Kw-hrs, total 12.35 Kw-hrs. Morning commute another 10.1, no aircon for a total of 22.35 Kw-hrs. This looks like it can complete a weekday’s use with less than 10% margin for error or hyped published range.

                BTW my vague recall is a car heater is less than the aircons 2.25 Kw Hrs. My recall was a typical space heater of appropriate size would be 1.5 Kw.

                What this absence of margin means is you can’t fix any special evening demand problem. If you have to drive 20 miles for some special occasion in the evening, you can’t. You can’t go anywhere significant on the weekends. Or on holidays. Or on vacations.

                For that you need another, proper car. So what sense does this make? Why contort people like this?

                1. >>A proper automotive air conditioner consumes 4 horsepower. 750ish watts/horsepower is 3 Kw.<<

                   What concerns me is that you have the AC consuming about 4 hp. I would assume that figure, since its in hp, may have been derived from AC in a vehicle with an internal combustion engine (ICE). If so, the heat from an ICE along with the tail pipe conducts heat into the passenger cabin. In milder climates, some EV drivers can get by with only a fan on the dash. Your AC electrical consumption maybe higher than it should be. But that does not negate your concern.

                   There is a listserv called the Electric Vehicle Discussion List at http://www.evdl.org. After hanging out there for quite awhile, the rough rule of thumb is that AC decreases range by about 5% and heat by about 10%. That data is anecdotal. In a Leaf, 5% of 84 miles is 4.2 miles or about 1 kwhr. Leaf owners may have more concise data.

                   To make the math easier, the Leaf goes 3 to 4 miles per kilowatt hour. The advantage of going slower is a higher miles per kwhr figure. If I had a 26 mile one-way commute, I might not consider a LEAF either. Add 10 miles onto a 52 mile commute and we are up in the 62 mile range. However, if I can consistently drive at 4 miler per kwhr, then I would consider the Leaf. It is a matter of selecting the right tool for the job.

                   LG Chem mentioned that they will have available a 200 mile pack by the end of 2016. If this is for EVs with 70 to 90 mile packs, this is a breakthrough. If this is for the Volt, this is tremendous. No mention was made as to who the pack is intended for. I might wait if I had that 26 mile commute.

                   If I had Techsan's 7 mile one way commute, I would definitely consider a Leaf and I might make it my only car. If I wanted to go to Yellowstone today, I would not do it in a Leaf even if I lived in Cody, Wyoming; just outside the park by about 60 miles. I likely rent a car.

                   The EVDL has an archive of all its messages that you can search.

                   Good luck in finding the data you need.

                2. Good info.

                   Here’s the quote on the air con I used in the crunching.

                   In an automobile, the A/C system will use around 4 horsepower (3 kW) of the engine’s power, thus increasing fuel consumption of the vehicle.[39] From the air con wiki:

                   https://en.wikipedia.org/wiki/Refrigeration_ton#Equipment_capacity

                   You noting that heating is worse is a puzzle, so I did a bit more reading. The compressor doesn’t run full time. Only when the thermostat commands it, and that is all that gets the power consumption down to 4 Hp. If the trip is short the compressor is on all the time and consumes 12 Hp. This is ugly. Short trips actually increase consumption vs long trips, during which temperature hits the thermostat target and stays there, rather than runs full time to get there.

                   I will have to read up on heat.

                   In general tho, this looks like the Leaf is not going to do the job for the average American commuter in a hot or a cold environment — and don’t be real glib about renting a car. There are problems if you cross state lines.

                3. Hi Watcher,

                   I read the reference you referred to [39] from that wiki page link you provided.

                   The heat I was referring to was from the internal combustion engine. The heat in the engine compartment gets transferred to the firewall. The exhaust pipe will also heat the floor pan. The AC piping also gets heated by the heat in the engine compartment.

                   The NREL study was more interested in the glazing and I think that is probably the major source of heating. But the engine compartment is also a source of heating. This comes from anecdotal comments by EV owners. I can attest to some of that. However, I do not have a scaling factor as you have three sources of heat: the sun, the engine compartment heat, and the heat of the occupant(s).

                   An EV does not have a radiator nor exhaust pipe. Temperatures in the engine compartment are far less. While the paper mentions 4kw, there is no indication that they took the difference in heat generated between engine types.

                   We get some very hot days here in North Carolina with heat indexes in the low 100’s. I’ll ask around to try to garner some data.

                   >> and don’t be real glib about renting a car. There are problems if you cross state lines.<<
                   Huh? I have not rented a car in years.

                4. I find that heat or A/C decreases mileage on the Leaf and Volt by 5% to 10%. This is an easy experiment to do, just by turning it off. This is measured data.

                   Your assertion “the Leaf is not going to do the job for the average American commuter in a hot or cold environment” is just plain wrong. The heating and A/C do not use as much as you assume. The Leaf has enough range for a 35-mile commute even with heating or A/C, much more than the average commute.

                   With at-work recharging (just needs a plain 120-volt outlet to get 35 miles worth of charge in 8 hours, or a full charge with a 240-volt charger), the range is greatly increased.

                   Having one electric car will work for nearly 2-car family in the U.S.

                5. There was no at work recharging in the calculations provided above. Nor I suspect is there any available for the average American worker, with the average now being a part time employee, though beyond that, I don’t see any at any construction sites or at Walmart for employee use, and neither do you. Why would Walmart shareholders fund someone’s car.

                   Ya I know there’s heat from the engine, but that’s not really the point. The numbers are what is available. I guess a car in motion blows heat back towards the passenger compartment, but hmmmm, on a mild day it doesn’t get hot driving along. Are sure all that much heat gets blown back into the passenger area?

       3. The bomb. Teardown on Volt’s Li Pak on this weeks show. http://evtv.me
          Re: Roof radiant barrier, there is foil-decking-radiant-barrier that can be ordered
          at any building supply store. Solar board is one brand. Installation method is key and
          it’s not obvious, max out on PV if you have the funds, it may take a combo of both since even your N faces have gain in the summer months when the sun path is so far high/north.

22. ExxonMobil missed Q2 production targets by 120k BPD, but actually beat on revenue and earnings. Cost cutting, probably including exploration cuts.

    1. Steve Kopits’ comment on the Econbrowser blog:

       Exxon upstream capex:

       H1 2014: $15.7 bn

       H1 2013: $20.1 bn

       Change: -22.2%

       That’s capex compression!

       1. Check out this article by Steve Kopits on Platts:
          Guest blog: Hamilton has it right on oil

          In a recent article, Professor James Hamilton of the University of California argues that sluggish supply growth, coupled with sustained emerging market demand, will tend to keep oil prices elevated. He writes, “the world of energy may have changed forever…hundred dollar oil is here to stay.”

          This prompted a rebuttal from John Kemp, Senior Market Analyst for Commodities and Energy at Reuters

          Kopits refutes Kemp’s rebuttal.

          1. I added my 2¢ worth on the Platts blog.

    2. My comment:

       If huge upstream spending levels have only kept actual crude oil production (45 or lower API gravity crude oil) on an “Undulating Plateau” since 2005, what happens when upstream expenditures decline?

       1. Don’t think I knew :

          Gasoline API is mid 50s. Simply that.

          Mountrail county API is more or less 42. Diesel API 35-40.

          There are things NOT being talked about as regards Bakken “oil”.

          BTW factoid, energy content of liquid increases 3-5% per API degree. Didn’t know that either.

          1. of oil liquids that is.

             1. I feel so much happier now I unatnsedrd all this. Thanks!

          2. A high API means the liquid is less dense. I would have expected the energy content to decrease as the API value goes up.

23. Ron,

    Incidentally, since you have looked at so many data bases, what you estimate that range of uncertainty is in Saudi production, e.g., Saudi C+C production was 9.5 mbpd in 2011. What would be the plus or minus uncertainty that you would assign to the data?

    For example, would a reasonable assumption be that it was actually as low as 9.2 or as high as 9.8 mbpd in 2011, a gross range of 600,000 bpd, or 300,000 bpd on either side?

    1. Jeffery, averaging the twelve months of 2011 of OPEC MOMR data we get a “Crude Only” average of 9.273 million b/d. The EIA’s International Energy Statistics says Saudi produced 9.458 million bp/d of C+C. If condensate is about 2% of production that would be about right. I have no idea how much condensate Saudi produces however.

       My estimation? Yes 9.3 mbpd would be very reasonable. In fact that is even more than the OPEC OMR says Saudi produced, crude only. But no, I would not think 9.8 mbpd would be reasonable at all.

       1. Your post captures the issue pelycetrf!

24. Over on PeakOil.com Peak Oil: How Soon? How Serious? Video

    Petroleum Geologist Jeffrey J. Brown provides an overview of the global energy picture, focused on oil supply and demand and the impact of peak oil exports. Is the world at or near the maximum of oil production? Can new finds make up for increasing consumption? How might net exporters alter supply?

    1. This was a presentation at UCSB in 2008. For some reason, the Peakoil.com folks are recycling older presentations. Following are the 2002 to 2012 GNE* data, and I estimate that GNE was down to around 43 mbpd in 2013.

       *GNE = Combined net exports from (2005) top 33 net oil exporters

       

       1. http://www.theguardian.com/world/2014/jul/31/argentina-defaults-debt-talks-break-down?CMP=ema_565

          We will be seeing more of this sort of thing in the future. A lot more.

          1. Here’s the thing. I’m surprised the Elliott/Singer team were not killed.

             Greece was poised to take the entire world with it. The swap profile on their debt was so extensive that banks would have folded worldwide if their debt had defaulted.

             Now note that they DID default, and this is important. Bondholders near and far “agreed” to accept bonds of multi decade maturity in the future and lower interest rate in return for the presently maturing bonds that could not be paid. They took a 95ish% haircut. One man’s debt is another man’s asset . . . so why did they agree? Because the EU told them they would have their banking licenses pulled all over the EU if they did not agree. The Troika (EU, ECB and IMF) would not pay them off. They were told to fall on their swords and die figuratively.

             What this did, and this is important, was it provided a way for a country hopelessly in debt to default without credit default swaps triggering. A few bondholders floated a default claim to the agency that decides if default has happened, and that agency laughed at them. That agency’s members are the major banks of the world (who were at risk of systemic destruction). Yeah, one has to wonder what the hell good is a CDS if it can never pay off. Answer: Like so many things, it only works when it does not threaten world destruction.

             Remember, and this is also important, there is no bankruptcy court for sovereign states. You cannot declare bankruptcy and have your debt expunged. You can “default” . . . say you won’t pay, but the bond holder just sits back and says . . . yes, you will. You still owe, regardless of what you say. Have any assets outside the country, I will take them. Prepay a lease for your UN diplomatic staff in NYC? I will take that lease.

             And so, Argentina thought that Greece precedent would hold. In fact, they got a lot of bondholders to agree to such a haircut back before Greece (Argentina was tentatively mentioned during the Greece fiasco) in the early 2000s. But some bondholder did not agree to the haircut and the bonds they held/hold explicitly say they are to be judged by NY law. Argentina agreed to this when they issued the bond. THEY put that phrase in the bond documents.

             So Singer bought the bonds for 2 cents on the dollar and demanded full payment, and went to court, and of course won all the cases. Argentina is saying if they pay Singer, the others who agreed to haircut can return to the table and demand the haircut be undone. The phrasing on this is NOT that. It says if they voluntarily pay any bond holders full price they must pay all bondholders full price. This is anything but voluntary.

             But in conclusion, this guts all countries ability to try the Greek approach. The US could have stepped in and literally killed Singer, or at the least just paid him off. They didn’t. They backstabbed the GM bondholders in 2009, but Singer’s hedgefund was I suppose too well connected in NY. Additionally, if Singer gets paid, no other bondholders will ever agree to a haircut again for any country’s debt. THAT is what should have gotten him killed.

          2. The Argentinian default is interesting because it was and wasn’t a default, or so it seems. They needed to $1.3 billion to avoid the default but if they paid that a clause would have kicked in that meant all creditors (even those who accepted a haircut wayback) would have been owed a full repayment. Argentina would eventually have been forced to default due to lack of funds if they had made this payment so they chose not to.

             The clause expires in January 2015 at which point they will very probably begin making normal repayments of their debt. The Peso doesn’t seem to have been adversely affected today suggesting traders had already come to the conclusion that Argentina was likely to default. Bond yields apparently went up to 9.7% from 8.8%. The Argentine stock market fell 6.5% so far today. It’s not a massive knock to the country (considering it just defaulted) or so it seems, however I think most people had expected something along these lines and a lot had already been factored in.

             1. The clause in question says they owe all bondholders full payment if they choose to pay any portion of bondholders in full VOLUNTARILY.

                This is not a voluntary thing. They milked that clause and leaned on it, and it’s not worded they way they claim.

                The real key is no bondholders will ever again take a haircut like that. I think the Singer/Elliott folks did not factor in the precedent issue paying them off would set. MANY forces will align now to prevent them getting paid.

                1. The ISDA just announced that Argentina is in default and the CDS’s are now triggered . Let us see Monday who made out .

                2. In the interest of oil relevance — note Argentina’s oil production is down 40+% in the last 10 yrs and they are now an importer.

                3. Regardless of the Argentine economy and/or the games the banksters are playing with them, they sure are getting their biggest city sorted:
                   http://www.streetfilms.org/buenos-aires-building-a-people-friendly-city/

                   Meanwhile in other countries people believe they will be driving their cars for ever, because of LTO…

       2. Such a deep anewrs! GD&RVVF

          1. I’d verunte that this article has saved me more time than any other.

25. The Automatic Earth is covering the financial condition of oil companies today. It’s a fairly poor outlook.

26. The oil sands outlook is apparently pretty good for at least one company which according to this article is moving up their expansion schedule.
    http://www.cnbc.com/id/101884481#.

    If the fecal matter hits the fan really hard in terms of depletion of conventional oil the estimated future production increases we usually see for Canadian tar sands oil will be out the window because the owners and capital markets will be getting together and making a lot of whoopee to take advantage of higher prices sooner.

    The world is not a linear place when it comes to such things as the amount of manpower and capital that can be thrown at an industry. IF prices go up say twenty bucks a barrel within the next year or two or three and seem likely to stay there the tar sands are going to look like short term gold and the investment money will pour in.The people will come from other oil fields that are declining and from other areas such as construction. There is not much difference in operating a dozer on a construction job and one at an oil field.

    1. Nah. There is Suncor and there are others with inferior sands. Suncor got the sweet spots in total. They are the CLR of Athabasca.

       And they have problems. Big earnings hit.

    2. There’s only so much you can expand the tar sands and so quickly. It is extremely high production cost and capital intensive, with no good way to get it out of Alberta. Right now, they can effectively only sell to the US, which does no direct good for expanding demand elsewhere versus declines elsewhere.

       Realistically, it would take so long to get another million BPD out of Alberta that it would go right into staving off the US decline in shale. None of this is useful for Chindia.

       1. Money can work miracles at least in relation to development schedules when bankers and investors are rightfully convinced that big profits are within reach. Money builds highways and pipelines and finances new additional production equipment.

          I have not said anything about the tar sands staving off peak oil although it is realistic to think that the tar sands may delay peak oil a year or two depending on how rounded or flat

          the top of the world production curve turns out to be.

          I am simply pointing out that if oil prices go up significantly the oil sands will be far more profitable and highly profitable industries with excellent long term prospects are not much limited by capital costs. If the profits are unquestionably there then the finance community will supply the money.

          Making ten bucks on hundred dollar oil is nothing to brag about but a good steady business. If the price goes to one ten the profit margin more or less doubles overnight although increased competition for men and equipment will eat part of the extra profits.

27. FYI:
    Financial Red Queen Syndrome in fracking.

    1. I’m edging farther into the perspective that money matters less and less.

       If you have to have the oil, government will order the oil to flow out of the ground. If companies say we can’t do that without total bankruptcy, there will be legislation passed like “Oil Security and Stability Act” that essentially pays a premium. The Fed will coordinate activity with the government in big important meetings that essentially say “we’ll print the money and you give it to these companies and the oil flows”.

       So all these economic analyses of what oil doom is looming how it happens . . . nah. At the very most, the VERY most, that can define the problem presented to Congress, but it won’t define doom.

       Doom comes from some physical limits, below or above ground.

       1. The thing about money is that it’s a concept. Whilst people believe in it then it is ok for money to be spun out of nothing and for something real to be brought in to existence. If there is a blow to confidence then that ability to spin something out of nothing stops working – or at least it no longer works in the same manner.

          Eventually you have to pay the piper. The system works by believing that debts will be paid in the future. If there is a realisation that this isn’t the case then it will have a ripple effect with unpredictable consequences. A lot of the investment currently being used to develop the shale boom is probably Fed funny money. The Fed has realised it can’t keep on printing and is cutting back, I don’t foresee another round of QE as it most likely would be ineffective.

       2. Watcher wrote:
          “I’m edging farther into the perspective that money matters less and less.. If you have to have the oil, government will order the oil to flow out of the ground. If companies say we can’t do that without total bankruptcy, there will be legislation passed like “Oil Security and Stability Act” that essentially pays a premium.”
          [Not sure if your being sarcastic]

          Venezuela? Gov’t run businesses are almost always poorly run. They get bogged down with lots of bureaucracy by adding excessive layers of management and paperwork. If you provide unlimited funds at it is going to create lots and lots of waste and fraud. You need capitalism and accountability to keep it in check. Capitalism is what drives innovation as business try to find a cheaper or better way. If you remove capitalism the industry will starve of innovation and is less interested in delivering product at an equitable price. What does it matter if I produce 1 bbl or 100 bbls if I get paid the same. This is while Oil production in Vz collapsed. I think letting the gov’t take over the reigns will speed up the crunch, not delay it.

          Also Oil extraction need to have a postive EROEI to work. Negative EROEI will be a drain on the economy causing severe imbalances that will quickly destabilizes the economy. As you noted with the 2000 Truck trips to drill and frack a well. That’s a lot of fuel to make it work. Its pointless to drill for oil if it takes more fuel to drill than can be extracted.

          Its also pointless to produce oil that consumers can’t afford. They are not going to use $200 bbl oil if they can’t afford it. For the most part, Oil production in the US is at least partially subsidized already. As the energy costs rise, more and more of the economy will be directed at extraction and there will be less and less money\resources for other things, like farming, and maintaining key systems and services. You can’t run an economy where 100% is devoted to energy production. I am exaggerated about the 100%, but I think you’ll understand what I am driving at. Money does matter!

          1. You may have missed the subsidy discussion. Price doesn’t have to matter. Just like costs.

             If it costs too much to get oil out of the ground, the government will cover the deficit the companies run. It’s just a printed meaningless substance so why not?

             If the price is too high after you get the oil out, subsidize it so the masses can consume more and more and more, since that is the path to GDP. Money is a substance whose value depends on agreement by multiple parties — which means its value only exists inside your head and the heads of others. If Apocalypse threatens because of the definition of that imaginary value, change the imagination, by decree. Just print up some more.

             As opposed to joules. They are right there in that oil, regardless of imagination.

       3. ”Doom comes from some physical limits, below or above ground.”

          I agree.

          BUT doom is not happening this week or next and probably not this decade coming up in terms of oil supplies although I wouldn’t bet the farm on it.I do expect a lot of very serious trouble involving shortages of oil and high prices for it within the next decade but not ” doom” in the near term unless the often mentioned possible shark fin decline after peak is actually attached to a real economy eating shark.

          In the meantime if these higher prices come about the tar sands people will be in tall cotton and will have plenty of incentive and access to capital to expand faster. It won’t make a noticeable difference in world oil markets but this increased production will have a helpful effect on our own domestic economy here in the US and Canada.

          1. Suncor has problems.

             The Calgary, Alberta-based company, with U.S. headquarters in Denver and refining operations in Commerce City, said its profit fell to $193.6 million, or 13 cents a share, from $624.2 million, or 41 cents a share, a year earlier. The latest results include after-tax impairment charges of $659.1 million against its interest in the Joslyn oil-sands project, $272.6 million against its Libyan assets and $204.7 million related to other oil-sands assets.

             [They have about 25K bpd worth of Libyan flow when it flows. They don’t expect it to, clearly, but I think it flowed briefly last year at this time.]

             The company cut its planned 2014 capital spending to $6.24 billion from $7.16 billion. The lower spending in part reflects the scaling back of certain activities at Joslyn, an oil-sands mining project in Alberta. Joslyn’s operator, Total SA, said in May that it was halting development of the project.

             [That project with Total was to be about 2 billion bux to expand production. Total is standing down. So Suncor does, too. Interesting tidbit in this, the big guys choosing not to spend reins in spending by smaller guys.]

             In Suncor’s defense, they are pretty much the only company I know of that posts their oil production monthly on their website.

    2. I’m not easily imrdsesep. . . but that’s impressing me! 🙂

28. U.S. Energy Firms Rewarded With Tax Deferrals (Google the headline for link to bypass paywall)

    [Excerpt from article]
    Energy companies are spending billions of dollars a year to drill in shale formations across the country, sending the nation’s daily oil output up by almost 50% in just the past few years. Techniques like hydraulic fracturing and horizontal drilling, which make it possible to tap petroleum in these new fields, make each well cost millions of dollars.

    All that spending has allowed drillers to take advantage of incentives in the tax code for drilling and capital expenditures, deferring billions of dollars in income tax.

    Ultimately, companies will have to pay some or all of the taxes. But as long as they continue to invest heavily, the spending shelters their income and allows them to defer taxes for years, experts say. In the meantime, they can use the extra cash flow to drill more wells.

    Over the past five years, 20 big publicly traded U.S. oil and gas producers paid a combined $15.6 billion in U.S. income tax, or 11.7% of their American earnings, and deferred $16.5 billion, according to the nonpartisan Taxpayers for Common Sense. Together, the 20 had an effective tax rate of 24% on their U.S. income, below the statutory 35% rate and well below the 46.2% those with overseas operations paid abroad, according to an analysis by the watchdog group, which advocates ending subsidies for industries from agriculture to defense.

    Those deferred taxes reflect big increases in capital spending. In 2013 alone, the 30 biggest U.S. oil and gas producers by revenue shelled out $186.9 billion in capital expenditures, 78% more than what they spent in 2009, according to data compiled by S&P’s Capital IQ.

    Energy industry officials say that the trend of companies deferring tax payments is good for the economy, as higher corporate spending creates jobs and other tax revenue. And the wave of spending on U.S. drilling has fed an oil and gas boom and delivered broad economic benefits, driving down energy prices and lessening the country’s reliance on imports.

    Companies are “supposed to act economically and not necessarily in the government’s best interest, as long as it’s legal,” said Mitch Tiras, a partner and head of business tax at Locke Lord LLP in Houston. “Tax benefits out there right now are sufficient that you can legally and pretty easily defer taxes for several years.”
    [End of excerpt]

    1. This story is making the rounds.

       ” In 2013 alone, the 30 biggest U.S. oil and gas producers by revenue shelled out $186.9 billion in capital expenditures, 78% more than what they spent in 2009, according to data compiled by S&P’s Capital IQ.”

       Isn’t this contrary to Kopits? Or Total and Chevron’s CEOs who have said they are throttling back?

       Can CLR really spend so much that reductions from these much bigger companies is countered?

       1. The throttling back in capital expenditures started in 2014.

          1. The msm will without a doubt miss or gloss over this cutting back on CAPEX and will for the most part continue to report rosy results for the oil industry of course. BUT the real pros are probably weighing their choices right now as to getting their own money out of large cap oil and gas stocks and perhaps into some other energy market.

             The msm hardly ever bothers to cover some of the really important developments in commodity markets while focusing on other aspects to the point of exhaustion. The price of grains for instance is constantly in the news but the lack of a substantial year to year carry over inventory is seldom mentioned. That carry over is the only security we have in terms of price spikes and even starvation at the margins in the event of a bad year.

          2. Ahh, good call.

       2. Well done to think of soihetmng like that

29. AP PHOTOS: Building boom in N. Dakota’s oil patch

    [Excerpt from webpage]
    President Theodore Roosevelt once came to North Dakota’s Badlands to find solitude and solace amid the area’s “desolate, grim beauty.” But Roosevelt’s Dakota is barely visible today.

    The area’s oil boom has resulted in an infrastructure-building frenzy as the rush for jobs and oil demands more roads, homes, food trucks and stores.

    The epicenter is a 45-mile stretch of U.S. Route 85 between the towns of Williston and Watford City. Once a sleepy two-lane road across the lonely prairie, it’s being transformed into a four-lane highway with bypasses cutting around towns. In the spring and summer, oil patch roadwork slows traffic to a trickle akin to a major metropolis’ rush hour.

    Oil patch towns — outposts of oil production now struggling to become livable cities — are trying to keep up. And housing, from apartment blocks in front of oil wells and flares to sprawling trailer parks on bluffs, are popping up like weeds across the countryside.
    [End of excerpt]

    Click here to view the Complete Associated Press “Oil Boom Photo Gallery”

    

    1. Behold, the mechanism of the peak coming.

       1. It looks as if the high way is in the process of being widened. A couple of extra lanes will take care of most of the traffic jam unless the drilling pace continues to expand.

          1. Well, the highway is not the bottleneck. The dirt road to the pad would be. Or the entrance to the pad. That .pdf way above shows the timeline for completing a well and it’s not getting shorter unless the pad is next to a pipeline, which most are not.

          2. soon enough, the Bakken boom will fade. Williston highways will once again be lonely – just wider – and there will be tons of cheap housing available as the oil patch workers and equipment move on to other fields or other trades. 20,000 pump jacks will continue to grind away extracting stripper-level oil, but the frac’ing caravans will have moved on. Local governments, late-coming outside investors, and locals who put a lot of capex into buildings and infrastructure will be stuck with non-reneewed leases, unpaid bills, muni bonds without the tax base to service. There will be a lot of finger pointing and some bankruptcies. With every rural boom, especially when based on resource extraction, there is the bust.

             I’m betting the AP will’ check back in 5-10 years and photo these same areas, with a much different story.

             1. Your description of what will happen more or less sums up what did happen to this region in the mid-to-late 1980s following the oil price collapse. A lot of the locals still remembered the pain of those days into the late 2000s, and as a result their initial response to this current boom leaned primarily on the hesitant and guarded side in terms of spending money on infrastructure to deal with the rapidly increasing activity going on around them. However, now that we’ve had a few years of a breakneck drilling pace, the crafting of an assurance that “this time is different because this time is different,” and a lot of newcomers who have never personally experienced a resource-related bust, memories have faded, and ultimately people are probably falling into the same traps they fell into in the late 1970s-early 1980s.

                Though they mostly get lost among all the “economic miracle” rejoicing, there are warning signs out there. Just this week, for instance, an article in the Williston newspaper (http://www.willistonherald.com/news/city-looking-at-billion-in-added-costs/article_6d3e963a-1736-11e4-b954-001a4bcf887a.html) mentioned that the city’s annual budget has increased from $49 million in 2011 to $211 million this year, while the debt has gone to $142 million. Although that is planned to be paid off in “four to five years” with oil and sale tax revenue, the article also mentions that according to the results of $365,000 study the city commissioned earlier this year, the city is expected to be running a $474 million deficit by 2020 as “revenue is not going to keep up with the cost.”

                What should really make the news about these numbers is that they assume the good times of the present will keep going on for decades to come. Of course that is incredibly unlikely as economic downturns and recessions have not been eradicated, nor has the eventuality that at some point the Bakken sweet spots will start to taper off. In either case, what happens thereafter I suspect is what you already stated: the AP will be back to take photographs, but under a quite different set of circumstances.

30. Libya is thoroughly disintegrating.

    http://uk.reuters.com/article/2014/08/01/uk-libya-security-insight-idUKKBN0G023820140801

31. Ransqawk

    http://headlines.ransquawk.com/headlines/chevron-cvx-cuts-fy-14-production-estimate-by-1-2-01-08-2014

    Chevron cuts production estimate for 2014 1-2%

    1. Thanks for strtniag the ball rolling with this insight.

32. So the 7/7 peak oil piece from Michael Lynch in Forbes was posted over on peakoil.com. some of the comments evoked a response from him or at least someone who is posing as him. He doesn’t appear to take critcism well.
    …”Michael Lynch on Fri, 1st Aug 2014 8:59 am

    I spent nearly 30 years at MIT as a student and then researcher at the Energy Laboratory and Center for International Studies. I then spent several years at what is now IHS Global Insight and was chief energy economist. Currently, I am president of Strategic Energy and Economic Research, Inc., and I lecture MBA students at Vienna University. I’ve been president of the US Association for Energy Economics, I serve on the editorial boards of three publications, and I’ve had my writing translated into six languages. What have you all done?”

    The drag of it is, he is reaching a fairly large audience with the “legitimancy” of Forbes.

    http://www.forbes.com/sites/michaellynch/2014/07/07/peak-oil-4-the-urban-legend-of-inadequate-discoveries/

    1. If his claim is he’s so experienced and well versed on the topic, then why is oil over a hundred a barrel, and why even at that price are many major oil companies cutting back on oil exploration, selling assets to offer shareholders dividends?

    2. I have been debating Michael Lynch off and on for the better part of two decades. First on the USENET (he posted as mclynch) then One-List then Yahoo boards and more recently Forbes. He has always been polite. I would say that he takes criticism better than one might expect. I have never been certain to what extent he actually believes what he says. He made some astonishing claims during the late 90’s.

       1. Is that post on Forbes supposed to contain some kind of information? It doesn’t have any metrics backing up its assertion that “inadequate discoveries” is false. And it needs metrics, because the countervailing metrics are that everyone except for unconventional producers is flat or declining in production. Which is exactly what happens when discoveries are no longer adequate first for growth, then for replacement.

          1. Besides which, none, absolutely none of those credentials are technical. No engineering of any kind. No geology.

             Credentials have gotten pretty bogus of late on lots of things.

             1. Prior to posting at Forbes I gave Michael my credentials. (Played basketball at Amarillo High School with Boone Pickens).

                1. Michael Lynch commented at http://peakoil.com as the user “Spike” for several months.

                   He doesn’t seem to have any credentials in research.

                   He is the heir apparent to the recently deceased Morris Adelman, who Lynch studied under.

                2. Did you at any time hear Pickens say “in your face”?

                3. “Did you at any time hear Pickens say “in your face”?”
                   Not that I recall. Why?

       2. Robert, I believe I have seen some of your recent exchanges / comments.

          I think I might have used a poor choice of words. Perhaps something like..he has really dug his heals in on his position…

          To tell you the truth, I’m not sure what his intended audience is. Without putting on my tinfoil hat…I don’t understand the nature of the debate as it seems that some just don’t want to believe that oil production can ever peak or go into decline.

          That shouldn’t even be an issue and the debate or conversation should be on addressing that and making reasonable plans for a post abundant oil society. In fact, we should be moving as quickly as possible to stop burning it.

33. Twitter says

    Pioneer Natural Resources says it is open to sale of Eagle Ford [holdings]

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