World Oil Production as of March 2019

Ron Patterson Uncategorized

The data for the charts below were taken from the EIA’s Monthly Energy Review. It is crude plus condensate through March 2019 and is in thousand barrels per day.

World C+C was down 281,000 barrels per day in March.

Non-OPEC was up 218,000 barrels per day in March.

World less the USA peaked in November 2016 while the 12-month trailing average peaked in August 2017.

Non-OPEC less the USA is highly erratic. Nevertheless, the 12-month average trend is down.

The big surprise in March was China, up 115,000 barrels per day.

This is the EIA’s estimate of Canada through March with Canada’s National Energy Board’s estimate through December 2019. Notice the increasing gap between Canada’s estimate and the EIA’s. The separation a few years ago averaged about 130,000 bpd. Now the separation is over half a million barrels per day.

Canada reports its production in cubic meters. The conversion rate is 6.2898 barrels per cubic meter. So the discrepancy cannot be the changing weight of Canada’s tar sands.

Mexico continues to trend lower,

Norway, after an increase in 2016, trending lower.

The United Kingdom seems to be holding up and trending slightly higher lately.

The Persian Gulf nations, according to the EIA, peaked in 2016, so far anyway.

And I just had to include this one. It’s all up to the big three Non-OPEC nations. Notice that the downward slope started in January 2017, a year and a half before the Iranian sanctions kicked in.

The data for the above chart is from the Russian Minister of Energy and is through June 2019. Russia had an increase of 42,000 barrels per day in June, a slight recovery from the pipeline disaster.

All USA data below is from the EIA’s Petroleum Supply Monthly and is through April 2019 and is in thousand barrels per day.

US oil production was up 246,000 bpd in April.

The largest increase came from Texas, up 107,000 bpd.

The second largest gain came from the Gulf of Mexico, up 77,000 bpd.

Oklahoma was up 32,000 bpd in April after being relatively flat for 8 months.

Colorado recovered slightly in April, up 14,000 bpd.

New Mexico was down 3,000 bpd in April but that was after being up 41,000 bpd in February and 25,000 bpd in March

Alaska was down 6,000 bpd in April.

North Dakota is on an 8-month plateau. No one expected this. Does this mean North Dakota has peaked? There is little doubt that Eagle Ford has peaked. Will North Dakota be the second major shale basin to peak?

 

 

 

 

265 thoughts to “World Oil Production as of March 2019”

  2. Well, if I’m reading these graphs correctly there is no such thing as Peak Oil. It would appear to this layman anyway that there is still quite a lot of oil out there and as I’m well past 70 years of age I very much doubt that there will be any significant loss of hydrocarbon fuels to impact me personally in the time left to me on this planet.
    Please correct me if I’m wrong and point out if there are serious errors in my thoughts on this matter.
    Grateful for any arguments for or against my simple reading of matters Peak.

    1. Well, if I’m reading these graphs correctly there is no such thing as Peak Oil.

      There is nothing in any of the graphs that even remotely suggest there is no such thing as peak oil. That is just your opinion, nothing more.

    2. Davebee,

      Try the following to get a better appraisal.

      https://royalsocietypublishing.org/doi/full/10.1098/rsta.2013.0179

      and

      http://peakoilbarrel.com/oil-shock-model-scenarios-2/

      It is likely that the ultimately recoverable resource (URR) for crude plus condensate (C+C) aka oil will be 3400 Gb or less and likely the peak will be reached by 2028 (greater than 2 in 3 odds). So if you die before 87 (if you are 75 now), you will not be affected. Depends on your health I guess, my Dad lived to almost 93.
      The world has already consumed 1360 Gb of oil, if the URR is 3400 Gb and peak is reached at about 50% of URR that would be 1700 Gb for cumulative output. The world used about 30 Gb of oil in 2018, for simplicity we will assume that continues until 50% of URR is reached.
      So 1700-1360=340 Gb and 340/30=11.3 years, so a peak in 2029, in that simplistic scenario.

      There are some people with children and grandchildren who are concerned with their future welfare.

      1. Good solid reply Dennis, thanks.
        Hope I don’t linger around cluttering up the place too much more in any case.
        I have no children or even relatives so it would seem I can indeed enjoy a couple more years of hedonistic Industrialized Civilization and no guilty feelings.
        Fortunately all the men in my family tree all had the good grace to put their wheels up loooong before their 80’s.
        Hope that tradition prevails.

        1. Davebee,

          No worries then, the World can start to address problems when those who are old and short sighted pass on.

      2. ” The world used about 30 Gb of oil in 2018, for simplicity we will assume that continues until 50% of URR is reached”

        As the late good old Prof. Al Bartlett used to say, projections like that are fine at current rates but oil consumption is growing. The two most populous nations on Earth between them sold over 30 million new cars last year. In China at least, the vast majority of those will be not be replacing older units that are falling out of use. While in China, the growth in sales of “new energy vehicles”, that is hybrids and electrics, outpaced the growth in conventional cars (conventional car sales actually declined), the trend looks like a lot more fuel consumption over the coming years.

        Obviously the graphs you post all the time do not show flat oil production through 2030 but, what makes you so confident that the oil industry will be able to continue to grow production in the face of what I see as pretty obvious geological constraints (declining oil finds)?

        1. Islandboy,

          See http://peakoilbarrel.com/oil-shock-model-dispersive-discovery-simplified/

          The scenario in that post was based on Jean Laherrere’s estimate for crude oil resources from 2013 2200 Gb of conventional resources (excludes extra heavy oil) and 500 Gb of unconventional resources (extra heavy oil).

          This post was updated in July 2015 at the link below

          http://peakoilbarrel.com/oil-shock-models-with-different-ultimately-recoverable-resources-of-crude-plus-condensate-3100-gb-to-3700-gb/

          In this case I used a Hubbert linearization for C+C less extra heavy oil to arrive at a 2500 Gb estimate for conventional oil and continued with the 500 Gb extra heavy oil estimate suggested by Jean Laherrere.

          I noted that Mr. Laherrere’s estimates for conventional oil seemed to have increased over time (1800 Gb in 1998, 2000 Gb in 2004, 2200 Gb in 2013, and now 2500 Gb using the HL method often used by Mr. Laherrere). It seemed to me that Hubbert Linearization has a long history of underestimating World URR in an environment where demand for oil is increasing. So I picked an estimate roughly between the 2500 Gb HL estimate and the 3000 Gb estimate of the USGS in 2000.

          Note that recently Mr. Laherrere has produced a revised HL estimate for C+C less extra heavy oil between 2600 Gb and 3000 Gb see June 2018 chart, p 18 at link below.

          https://aspofrance.org/2018/10/03/updated-extrapolation-of-oil-past-production-to-forecast-future-production/

          In the paper above Mr Laherrere revised his extra heavy oil estimate to 215 Gb (from the earlier 500 Gb estimate), so his range of estimates would be 2815 Gb to 3215 Gb for World C+C URR.

          My most recent estimate uses 2750 Gb to 3700 Gb for World URR, with
          C+C-XH-LTO in the 2500 to 3100 Gb range, XH from 200 to 500 Gb, and LTO from 50 to 85 Gb.

          See http://peakoilbarrel.com/oil-shock-model-scenarios-2/

          There are a lot of contingent resources and possible reserves that can be developed (these show up as reserve growth and can be added to reserves without any new discovery, higher oil prices often make this a reality).

          As process rise oil reserves are developed more quickly and extraction rates often rise.

          Note that from 1983 to 2018 oil production has risen linearly at an annual rate of 800 kb/d each year on average.

          The very simple explanation I gave earlier was for someone not at all familiar with peak oil. My expectation is that oil output will continue to grow but at a slower rate than the past 35 years, I expect a peak of about 86 Mb/d in 2024 to 2026 and I expect oil prices will rise as the rate of increase in oil output slows. This in turn may lead to a faster uptick in demand for BEVs and will speed the transition to non-oil transportation fuel.

          Scenario below shows supply vs demand for a realistic EV transition scenario.

          Demand is a little more than supply, enough to drive the transition from 2025 to 2047, high oil prices will drive demand down to meet supply (less driving, more car pools, more use of public transport and higher uptake of EVs than the demand scenario assumes, in addition high oil prices might boost supply to some extent. The difference between supply and demand is at most 2.3 Mb/d in 2035 to 2037 (supply is short by 2.3 Mb/d), but the demand scenario assumes a very slow transition to EVs, high oil prices might speed the transition.

    3. It’s never been a question of running out of oil except for simpleminded people. There is plenty of oil in the crust, the question is at what cost to society.

      Peak Oil is at the intersection of economy, geology, technology, and politics. Society might decide to continue extracting more oil despite an increasingly negative overall return. However as we’ve picked the low hanging fruit, oil extraction becomes increasingly more costly to society. The net energy obtained from oil keeps decreasing.

      So there is a perfect storm brewing. (1) Energy becomes more costly over time. (2) The world economies become more indebted, resulting in zero or negative interests that cool the economy. Let’s not forget that future obligations will be defaulted. (3) The demography becomes a drag on the economy as the population ages.

      The only possible conclusion is Peak Oil and very serious economic and social turmoil.

      Will you be safe being +70 years old? Who knows. It appears the day of reckoning never comes, but when things start to deteriorate the process quickly accelerates leading to a collapse. It is the Seneca principle.

      To me the process started in late 2015, when the natural response of oil producers to the 2014 fall in prices to produce more oil to compensate for lost revenue did not work. The world did not respond to the fall in prices with an increase in demand so the increase in production decelerated with a price that did not satisfy producers. I knew then Peak Oil was approaching fast. We are about to be hit by the delayed consequences of the big cuts in capital expenditure that took place since 2005.

      If the economy did not take off with the low oil price, what do you think will happen when it increases a lot? And a bad economy will require less oil. Then depletion will become a too strong force to contend, thus Peak Oil.

      2. I think that there is not much correlation to declining prices and the economy taking off. Oil/energy is a big factor. It is in the price of virtually everything. [For example, look around your house inside and outside and point to the items that you have that NEVER spent any time on a truck.] In fact, depressions correlate more to lower prices, not so much to higher prices. In a low price environment, consumers put off purchases to buy cheaper later. With rising prices, they tend to accelerate purchases. I guess that is why the FED has a 2% inflation target that they want to achieve – not too high and not too low.
        Costly oil may lead to a break through in a new energy source. Look up Quantum computers on WIKI. Some insanely intelligent people actually are actually working on some things that might lead to that. https://en.wikipedia.org/wiki/Quantum_computing

        1. Oil isn’t really useful as a source of energy — it’s much too expensive. That is why diesel is only used to generate electricity in a few niches, such as islands.

          Oil is useful for storing energy in moving vehicles, and in that role it is wasted flagrantly. A decrease in total available supply would not harm the world economy. It would simply encourage conservation.

      3. oil extraction becomes increasingly more costly to society….So…Energy becomes more costly over time.

        Oil is not the only form of energy. As oil becomes more expensive (and as we recognize the high cost of oil pollution and unreliable oil supplies) we will replace it with electrification, powered by low cost sun and wind.

        It happened to kerosene lighting in the 1880’s. It happened oil-fired generation in the 1980’s. It’s happening to transportation right now.

        Our descendants will wonder why we ever used oil.

        1. …”we will replace it with electrification, powered by low cost sun and wind.”

          Nate Hagens nailed it when he re-termed those alt-energy types as “replaceables” not “renewables.”

          I’d love to see a full cycle, cradle to grave to cradle, replaceables experiment run. Set up a bunch of solar and wind, as much as you like, but then run everything needed to replace them 100% off of the electrical output from the same systems.

          And I mean everything. The vehicles, worker’s food and lodging, all the component parts right down to the last diode and 6″ base nut. Everything.

          Then I’d think these things were not simply the equivalent of dragging one’s ski poles in an attempt to make the run last a little longer.

          1. Nate Hagens nailed it when he re-termed those alt-energy types as “replaceables” not “renewables.”

            Do you have a link? I’d be curious to see what he actually said. A quick google search came up with nothing, and on the face of it the word “replaceables” is a bit opaque.

            I found an interview that you did with Nate from around 2011, and was disappointed by how out of date it was. The idea that declining net energy from oil will cause disaster is something that was somewhat understandable 30 years ago. It was pretty clearly out of date in 2011, and it’s even clearer now, with the dramatically declining cost of solar and wind since then.

            As a starting point, would you agree that electric vehicles can replace ICEs for passenger transportation?

            1. Longer-Term, Ethical & Realistic Perspectives

              “All of the points mentioned have known technical solutions.” ~ Fred Magyar

              But are they really solutions, such as in the long run?
              Or do they simply ‘seem like good ideas at the time’?

              “Photovotaic Panels and Electric Cars For Everyone!

              Dennis, lots of things can be done (sorta kinda maybe), (and ‘seem like good ideas at the time’) like traveling to and living on Mars, industrial agro/the ‘green’ revolution, pseudorenewable energy, or maybe even traveling to the stars or blimping Jupiter’s high-altitude clouds (what the hell, ay?), but we have to be realistic too, and fair/ethical. A little understanding of history and/or human psychology can help in that regard too.

              “I only occasionally have been in Colorado for ski trips…” ~ Dennis Coyne

              Let’s have everyone on the planet who wishes, fly on ski trips whenever and to wherever they please and let’s make that kind of declaration from our armchairs and positions of privilege.” ~ Caelan MacIntyre (edited)

              Also, what’s in it for Gaia?
              Beating her up less brutally with pseudorenewable energy than with fossil fuel energy?
              If so, then there is really nothing in it for her is there?

              It is not that we need electric cars or an electricity-powered notion of ‘civilization’ to survive and thrive, but that we need to be integrative to and supportive of nature to survive and thrive.

              I also have a hard time accepting the mere idea that all we need is for Earth to have enough capacity to absorb our pollution or so-called, externalities. I prefer to also see the issue as something along the lines of how can we make it win-win and enhancing for the other lives occupying the planet, vis-a-vis our own.
              No one really seems to talk about that, but I think that’s one of our main existential issues that too many are completely missing or ignoring.

              “It seemed like a good idea at the time.” ~ James Howard Kunstler

              “…companies supplying renewable energy systems are also a vested interest. They want state support and have their own story to tell based on responding to climate change – but are also partly dependent on playing down certain disadvantages and problems inherent to renewable power…

              Unfortunately the necessity for, indeed the inevitability of, degrowth is one of those ‘inconvenient truths’ and you either mention the inconvenient truths or you play down real issues.“ ~ Brian Davey

              See also this thread.

            2. “As a starting point, would you agree that electric vehicles can replace ICEs for passenger transportation?”

              Actually, no…and I live in a Province where all electricity is renewable Hydro, and we have surplus.

              Some Problems: Range, vehicle purchase costs, proprietary software limiting jobber swaps for parts including batts, cold temperatures..to name just a few things. Then, the fact that EV is getting a free ride on roads paid by ff gas taxes which will have to be addressed. Charging times. The list is very long.

              But the big grind? Complexity and weight. Everyone talks about how simple an ev drive train is until computers and components need replacing. Teslas weigh 1800 kg. 4,000 lbs to move a 200 lbs commuter to and from a short distance with a 40-60K purchase price. Nooooo.

              My opinion is to tax the living shit out of ff, even more than it already is where I live, (BC). $3 per litre, the price of bottled water. Use the tax for transit improvements. Stop EV subsidies and let the market price it all out. I would like to see super light weight simple cars…go for 100mpg. Think Tata, not Tesla. Finally, additional costs will help to redesign cities, lifestyles, and improve rail and transit. Stop unnecessary air travel with fuel surcharges.

            3. Some Problems: Range, vehicle purchase costs, proprietary software limiting jobber swaps for parts including batts, cold temperatures..to name just a few things. Then, the fact that EV is getting a free ride on roads paid by ff gas taxes which will have to be addressed. Charging times. The list is very long.

              Seriously?! Aside from the fact that private ownership of motor vehicles is probably a doomed idea anyway, think electric trains and EV buses for mass transport, and ride share apps or electric scooter rentals, the rest of that list is pure bullshit!

              Case in point:

              I would like to see super light weight simple cars…go for 100mpg. Think Tata, not Tesla.

              Why?! I think I’d much prefer a ride share in a Sono Motors Sion…
              https://www.youtube.com/watch?v=wLZKdkgB85k&t=255s
              Sono Motors Sion | Fully Charged

            6. Talking about noise, I spent some time over the weekend watching the livestream of the Goodwood Festival of Speed. The stream is still on, running replays at:

              https://www.youtube.com/watch?v=N5RuJ1k82zU

              Extreme petrol-head porn, lots of v8s, v10 and v12s, lots of smoking tires, lots of sideway driving (drifting) and donuts.

              I watched it to see the VW IDR take the win and the record. The video below is that record setting run and is all over very quickly (39.90 seconds)!

              https://www.youtube.com/watch?v=8il5ohB8FYk

              It was interesting to hear the presenters fawn over the sound of the internal combustion engines.

            7. Paulo,

              What the heck difference does it make if your province supplies all electricity with hydro? That is not a solution for the World.

              I agree fossil fuels should be taxed and agree a different method of paying for roads makes sense, such as miles travelled and the gross vehicle weight for every vehicle on the road. The road damage increases by a factor of 16 for a doubling in weight, so if an average vehicle weighs 5000 pounds and pays $100 for 10,000 miles travelled, a 2500 pound vehicle should pay 16 times less per 10,000 miles and a vehicle weighing 10000 pounds would pay 16 times more.

              Also agree with eliminating subsidies and using taxes on fuel for incentive to move to alternatives.

              Agree also more public transport, cities that are designed for pedestrians and bicycles are additional solutions.

              For the average US vehicle that uses gasoline and is in a state like Illinois that has total fuel tax of 56.4 cents per gallon and travels 12,000 miles per year, the fuel tax is $271 per year if the vehicle gets average fuel economy of 25 miles per gallon. The US average is a bit less at about 22 miles per gallon and 11,500 miles per year which would be about $294 in fuel taxes, which in theory is used for road repair.

              A better system is needed for road repair fees that reflects the damage caused by heavier vehicles, easiest to collect this when the car is registered annually or at inspection.

            8. “Germany’s Volkswagen, one of the largest manufacturers of petrol and diesel engines, has said it will develop its final generation of combustion engines by 2026”
              “The company is retooling 16 factories to build electric vehicles and plans to start producing 33 different electric cars under the Skoda, Audi, VW and Seat brands by mid-2023, transforming the industry’s supply chain. ”

              https://www.reuters.com/article/us-autos-suppliers-consolidation/emissions-rules-and-electric-shift-to-spur-car-engines-ma-idUSKCN1U423P

          2. I’d love to see a full cycle, cradle to grave to cradle, replaceables experiment run. Set up a bunch of solar and wind, as much as you like, but then run everything needed to replace them 100% off of the electrical output from the same systems.

            Fair enough! But to keep things on a level playing field how long did it take for things starting back in preindustrial times to evolve to our present day highly energy dependent global supply chains?!

            Assuming you agree that a fossil fuel based global industrial civilization is going to come to an end in the not too distant future whether because of Peak Oil, Climate Change or Human Ecological Overshoot, whether we want it to or not we will have to either give up on civilization as we know it, create a completely different system or maybe just go extinct.

            So if wind and solar are not sufficient to power an industrial civilization and fossil fuels are going to become more and more difficult and expensive to acquire what’s plan B, or is there one?!

            Do the privileged few just cross their fingers and hope lethal wet bulb temperatures cull most of the population in Pakistan, India and Africa?

            1. Chris makes a valid point in wanting a working model and/or prototype. That’s just good science or common sense if you will. And I second Chris’ recommendation. Otherwise, and to paraphrase James Howard Kunstler, it seems like just ‘blowing green smoke’.

              But let’s be honest: Some people don’t seem interested in any plan that has anything to do with anything other than some sort of greenwashed BAU, Ver. 2., and despite if they might posture to the contrary.

              If they did, they’d be talking far more about things like permaculture, rewilding and/or the like.

          3. Chris,

            There is far less waste heat when the energy is provided by wind and solar, just a matter of doing it. Note that all of the current system has these inefficiencies built in at every step. For ICEV its about 25% to 30% of the primary energy does any work, for thermal electric power the average is about 38% of primary energy is converted to electric power, just do the math, it is clear that it can work, just because it has not been done does not mean it cannot be done.

            Are you one of those people that thinks that if man were meant to fly, we would have wings? 🙂

            1. Dennis,

              Isn’t the efficiency of solar panels ~ 15-20% ?
              And for wind i believe the max theoretical limit is 59.26% .

            2. Iron Mike,

              Yes that is correct, but typically there is no input cost for wind energy or solar energy, typically the focus is on output.

              After the capital is installed, there is no energy input cost for wind or solar, unlike a fossil fuel power plant.

              Typically with fossil fuel we look at the total energy of the natural gas or coal in Exajoules.

              The average for World thermal electric power plants is about 38 EJ of electrical output for 100 EJ of fossil fuel input. So to replace those fossil fuel power plants we would need wind and solar power that can produce 38EJ of electric power to replace about 100 EJ of fossil fuel input to electric power plants.

              Solar has plenty of potential to provide World power needs.

              See https://dothemath.ucsd.edu/2011/12/wind-fights-solar/

            3. Ah Ha. So you want to use the source gathering energy, ehhh?
              Well how much sunlight on this planet over the eons did it take to produce the fossil fuels?

              Iron Mike, you are looking at an efficiency of fossil fuels at near zero for all practical purposes, since mountains literally had to be moved to produce them and huge amounts of sunlight/time. The amount of energy needed was so vast that it is not even worth calculating.

              In comparison, PV and wind are infinitely more efficient, if one wants to go back to solar source energy.

              Or to put it in real time, what is the current generation rate of fossil fuels per unit of sunlight per square meter per day? Near zero. Compare that to the output of PV or wind/day/ area

              No one uses source rates (solar energy) in efficiency calculations.

            4. but typically there is no input cost for wind energy or solar energy, typically the focus is on output.

              Dennis, really. So to make a wind turbine or solar panel the input cost is typically $0.00. Is that what you are saying? I don’t think it is, so please clarify what you mean.

              GF,

              The EROI of fossil fuels were much greater at one point, and technology has reduced the energy input required for extraction etc to a point.

              Yes they took a long time to form and that is why they are a concentrated form of energy and can be centralized within power stations.

              Efficiency is another ball game. Once you can use the source of energy efficiency comes into the picture. Efficiency is the useful ordered energy/total energy output from combustion(for FF). Regardless of the millions of years and geological conditions and changes it took to make the respective FF. That fact is unnecessary to know in an efficiency calculation, you can include it in EROI for curiosity and/or interest but it would be mighty complex.

              For a solar panel, the efficiency i.e. the capturing of sunlight and it’s conversion to electrical energy is important to know.

              I think one of the biggest factors is the lack of centralization.

              Bottom line is, if renewables were so cheap and so effective as you both argue, they would overrun fossil fuels in a very short time. The western world is a capitalistic system, and anything cheap and effective would quickly come into play and overtake old inefficient systems. Look how quick smartphones took over the older generations. Something doesn’t seem right here. Either the capitalists business opportunists are blind or you guys are wrong.

            5. Iron Mike,

              No I said given the capital cost which includes all inputs needed to produce a wind turbine or PV utility scale project, no further energy input is needed beyond the very low mainenance cost over the life of the asset.

              Are you arguing that the capital costs of fossil fuel is lower?

              Not at all clear what you are trting to say.

              The LCOE cost of wind and solar are competitive with fossil fuel see lazard 12.

            6. “Bottom line is, if renewables were so cheap and so effective as you both argue, they would overrun fossil fuels in a very short time.”

              Well, it does take time.
              In some locations, such as very windy or very sunny zone, solar and wind are cheaper than coal right now, if you are starting out from scratch. But if you already have a big coal mine/train/plant infrastructure in place, you don’t just scrap it. Its like an older car. You use it til it needs replacing.
              Same with all the petrol burning vehicles of the world. Its going to take a decade or two to wind that down, even once electric vehicles become an obvious winner for the majority of trips.
              Not overnight.
              And not in all zones.
              It would take a hundred years to pay off a wind turbine where I live, for example.

              You see many countries or states declaring renewable energy mandates. For example Calif has set the goal of 100% renewable electric power by 2045. Well, 2045 is not overnight. Its a 26 year timeframe to get from about 20 to 100%. Its doable, but its not overnight. And this does not address petrol use.
              Not as crazy a goal as some would say. Others would say its too slow.
              If you look closely at these goals, you realize that for many places, getting to 80% can happen much more quickly, and the last 20-30% can be much more expensive. Thats why nat gas is a useful component of a system.

              https://www.powermag.com/california-mandates-100-renewable-energy/

            7. Hi Iron Mike,

              There is a lot of inertia in the system and it takes time for things to change.

              The cost of PV solar has come down pretty rapidly. As I said check out link below

              Phttps://www.lazard.com/perspective/levelized-cost-of-energy-and-levelized-cost-of-storage-2018/

              It will take time for capitalists to take advantage of this low cost resource.

              Also look at nrel sunshot program.

              Fossil fuel will be toast by 2030 to 2035. The transition will be faster when intelligent people like you get on board.

              Capitalists usually don’t know much physics, just a bit of economics.

            8. Iron Mike,
              What makes you so sure wind and solar electrical generation WON’T “over run fossil fuels in a very short time”?

              It’s only over the last few years that wind and solar generated electricity has come down in cost to the point that it’s competitive on a purely dollars and cents basis.

              Mighty oaks do indeed grow from little acorns.

              The wind and solar electricity industries are now good sized saplings and just starting to put on some REAL growth.

            9. IM, if you are going to use the point where solar energy is converted to electricity in PV as your efficiency then you must use the amount of solar energy it took to form the plants and erode the mountains to bury the plants to make the fossil fuels. Otherwise the calculation is purposely biased through erroneous comparison.

              “if renewables were so cheap and so effective as you both argue, they would overrun fossil fuels in a very short time”
              How did P.T. Barnum put it? Oh yes “A sucker is born every minute”. Maybe you should educate yourself about the huge omissions in classical economics.

              Sadly, millions of people are paying the price each year with their health and their lives along with trillions of other creatures to subsidize the cost of fossil fuels. This will soon turn to billions of people and much of life on earth if this “cheap” way of life continues much longer.
              A cheap price to pay for getting our butts moved around and having all those nice powered gadgets, ehhh?

            10. I have just placed a few comments…
              ( 1, 2, 3, 4 )
              …over at the non-petroleum thread related to this subthread’s discussion. They are of course nowhere near the last word nor all-encompassing in their scope on the issues of concern surrounding non-renewable renewables, electric vehicles or some notions of ‘transition’, etc., but of serious significance nonetheless.

            11. Dennis,

              I am not saying anything just questioning and just adding the efficiency of solar and wind as you mentioned ICEV efficiency, but failed the mention renewables have poor efficiencies too.
              I disagree with LCOE calculation as they can be misleading due to its simplicity. Even Lazard admits this in his paper and even mentions a lot of the factors they haven’t taken into account.
              For e.g. right now gas is taking over electricity production around the world. Due to an oversupply gas prices at the moment are very low and i think new technologies has brought efficiency ~ 60%.(read this somewhere and not quite sure about it).
              Gas prices are volatile, something which LCOE doesn’t take into account at all.
              You cannot simply use one metric and assume it is correct. In reality the world is much more complex hence the metrics are deceiving. That is all i am arguing. I am not pro and anti anything.
              I agree with a lot of the points mentioned here on LCOE:
              https://www.sparklibrary.com/9-reasons-why-lcoe-can-mislead/

            12. Iron Mike,

              I agree the world is complex.

              Let’s say one was aware of climate science and realized that environmental damage was not accounted for in LCOE calculation, let’s also say one was aware that fossil fuel resources are limited and are likely to peak and become very expensive.

              Someone who is aware of these high probability events might realize that wind and solar are the most practical way forward. At least in my humble opinion.

            13. Iron Mike,

              As Gone fishing suggested, the efficiency of producing fossil fuels from solar energy is also very low efficiency.

              So you seem to have set two very different bars for converting solar energy into a form that can be used for work.

              Perhaps you could consider all the solar energy that has hit the planet over the past 300 million years and see how much has been converted to the 93,000 EJ of fossil fuel that is likely to ever be extracted (range of estimates is about 45,000 to 93,000 EJ for URR of all fossil fuel). Then consider the thermal waste which is at minimum 50%, leaving perhaps 46,500 EJ of exergy (work).

              Each year about 84 million EJ of solar energy strikes the Earth, so over the past 300 million years this would be about
              2.5E16 EJ, so we would have roughly an efficiency of 46500/2.5E16=1.8E-10 % for conversion of solar energy input to fossil fuel energy that can be used for work.
              Let’s say a PV panel is 20% efficient and that with various transmission and conversion losses it is reduced to 10%, still far better than fossil fuel, by a factor of 544 million.

          4. Chris,

            I know Nate Hagens has used the expression “rebuildables” for installations harvesting and converting energy from wind/solar.
            I am now more siding with those who refers to wind/solar (and other so-called “renewables”) as fossil fuel extenders.

            One of Nate’s videos uploaded to YT in Feb 2019, start at around 3:30 for rebuildable (total length about 16 mins).
            https://www.youtube.com/watch?v=zqSV06Bxcm8

            1. Renewables are bad news for the fossil fuel industry because they produce energy a zero marginal cost. This is a profit killer.

              The question of which is “more expensive” or “more efficient” or “better” doesn’t matter as much as the change in business model zero costs at the margin implies. It is simply impossible to take market share away from renewable energy by selling fuel, no matter how cheap the fuel is, because renewables still get delivered as long as prices are zero or higher. Even if a solar power plant goes bankrupt, it will still continue to crank out energy. There is never any incentive to stop.

              But of course, renewables aren’t available 24/7. The question is whether fossil fuel can compete with storage. If it can, it could survive. But fossil fuel can’t compete with renewable energy, because marginal costs set prices in a market economy.

              The fourth player in the game is conservation. For example, EVs have much smaller storage capacity than ICEVs, because batteries are less energy dense than liquid fuel. To compete, EVs have to be significantly more efficient than ICEVs. Since electric motors are 90%+ efficient, this is already the case. Efficiency reduces the demand for stored energy, making it harder for fossil fuel to compete.

              The same applies to the question of what happens when the sun doesn’t shine and the wind doesn’t blow. There are three options: A niche existence for fossil fuel, non-fossil energy storage, and conservation. Both competitors of fossil fuel involve zero marginal costs.

              I predict that the fossil fuel industry will get less and less profitable in coming decades, and eventually peter out as investors lose interest and government crack down on the externalities.

            3. Hydro, a renewable infrastructure built with ff, is indeed available 24/7. Hydro Quebec and BC Hydro produce vast surplus quantities which they sell to US consumers. They could produce far more but likely won’t due to protests and large upfront costs requiring finance.

            4. alimbiquated Wrote:
              “Renewables are bad news for the fossil fuel industry because they produce energy a zero marginal cost. This is a profit killer.”

              Sorry that’s a fail: A lot fo Fossile Fuel companies use PV: Power for remote Oil & Gas site monitoring systems. BP use to sell PV panels before the 2011 Gulf Oil spill, and many other Companies invest in renewal energy R&D

              https://www.bloomberg.com/news/articles/2018-11-28/oil-giant-exxon-turns-to-wind-solar-for-home-state-operations

              “Exxon will buy 500 megawatts of wind and solar power in the Permian Basin, the fastest growing U.S. oil field”

              https://www.greentechmedia.com/articles/read/exxon-reportedly-eyeing-clean-energy-contracts
              “Exxon Is Looking to Buy Cheap Renewable Energy”

              Energy Companies don’t care about the source, All they care about is the means to deliver it to customers & make a profit provide energy & services.

              alimbiquated Wrote:
              EVs have much smaller storage capacity than ICEVs, because batteries are less energy dense than liquid fuel. To compete, EVs have to be significantly more efficient than ICEVs”

              EV’s are fossiled fuel power, since the Grid is about 70% powered by fossil fuel power plants (Coal & NatGas). about 19% comes from from nuclear and the rest from Renewable (mostly Hydro). Kinda pointless to argue EV over ICE when they both really use use Fossil Fuels. The difference is that the EV have more steps.

              As far as efficiency: You excluding most of the losses: transmission & Voltage conversion loses (about 10%). best NatGas Plants are about 50% (thermal efficient) and Coal about 60% (for super Critical Steam). Then there is the transportation of fuel from the source to the power plant (i would guess another 10% to 15% loss). Then there is the charger which has about a another 10% to 15% loss :depending on the charge voltage, charge rate and voltage balancing of each cell: When a cell has fully charged, but other cells in the pack are not, the excess voltage is bleed into a resistor to prevent overcharging the cell BMS Battery monitoring system). Also Lithium batteries have a self discharge rate of 5% per month.

              I am sure your going to argue that people could spend 10s of thousands setting up there own PV panels. But good luck for 80% of the population that lives in dense urban regions with no yard or roof space for PVs. Or maybe the argument that your only discussing range, but that is still irrelevent if EVs are just using fossil fuels for the electricity used to charge them.

              alimbiquated Wrote:
              “I predict that the fossil fuel industry will get less and less profitable in coming decades”

              I don’t know what the future of profitabily of fossil fuel companies will be. I suspect when energy prices soar, gov’t will impose price controls or super-sized taxes on them. Also the smaller fish will continue to get eaten up by the larger companies. Currently Most major Oil companies are drilling Wall street with Stock buybacks instead of drilling for oil anymore. The Shale Drillers are doing it, but using investor money to subsidize drilling.

              My prediction is that world plunges deep into a permanent recession\depression as debt, demographics and rising energy costs kill all economic growth in the not too distant future. After that there will be a overwhelming number of very angry people that hand over control of nations to Charismatic nationalists (think Neo-versions of Hitler, Mao, Stalin) who make grand promises and plunge the industrial world into civil and\or global war. Once the Nukes start flying its game over, and 7+ Billion people perish in a few weeks.

              Also read this:

              https://www.pv-magazine-australia.com/2019/06/17/theres-a-looming-waste-crisis-from-australias-solar-energy-boom/

              “. By 2050 the projected amount of waste from retired solar panels in Australia is over 1,500 kilotonnes (kT).”

              FWIW: I believe Austriala already disposes of about 400,000 PV panels per year do to high failure rates of PV panels

              https://www.nytimes.com/2013/05/29/business/energy-environment/solar-powers-dark-side.html?pagewanted=all

              “SolarBuyer, a company based in Marlborough, Mass., discovered defect rates of 5.5 percent to 22 percent during audits of 50 Chinese factories ”

              https://www.abc.net.au/news/2019-05-27/australias-obsession-with-cheap-solar-derailing-market-insiders/11139856

              “Wollongong resident Rex Leighton spent $8,000 installing a rooftop solar system in 2015, which he expected would last for at least 25 years. It only lasted four and a half years.”

              And its not just the PV panels that have high failure rates but also inverters.

            5. > A lot fo Fossile Fuel companies use PV

              That helps them cut costs, but they are still stuck trying to sell fuel into a market that includes zero costs at the margin. This squeezes their profits.

              >EV’s are fossiled fuel power,

              In this section I wasn’t talking about renewables. I was talking about storage and conservation. Storage and renewables are often confused in this kind of discussion, but they are very different things. For practical purposes, the sun doesn’t shine and the wind doesn’t blow for moving vehicles. They are strictly storage driven, like renewables based households on a windless night.

              I do not view oil as a viable source of energy at all. It’s much too expensive. It does provide storage in moving vehicles, however. So it competes with batteries (plus conservation).

              The point here is that oil has vastly better energy density than batteries, but this advantage helps less than you might think in EVs, because they use a lot less energy. This shows how conservation can replace storage, and thus shore up its weaknesses.

              >As far as efficiency: You excluding most of the losses:
              Again, this misses the point. The losses incurred outside the moving vehicle have little influence on the design of the vehicle. The problem EV manufacturers have is that batteries are poor medium for storage compared to oil. Their solution is to use (and waste) much less energy inside the vehicle. You might argue that waste outside the vehicle increases costs, which is true, but electricity from just about any source is a lot cheaper than oil anyway.

              >I don’t know what the future of profitabily of fossil fuel companies will be. I suspect when energy prices soar

              I doubt energy prices will go up much, thanks to conservation. If prices become a problem, people will just waste less.

              The last part of you comment refers to total system costs. But they do not effect the price point at which a renewable producer decides it is not worth producing electricity. That point stays zero whether renewables are a good idea or not. Even if I am losing money or broke, any price greater than zero brings me cash of I can sell my solar on the grid. If I have a gas plant, I have no incentive to sell electricity if electricity prices fall below the equivalent gas price, and I don’t get fuel at all if I am bankrupt.

              Solar is a lot like software: The dream of every developer is to write a program he can sell on a CD (or for downloading these days I guess) for $99, and sell a million copies. It’s a very different concept from making shoes and selling them at a 35% margin. To make more shoes, you build a factory, but then you have to buy leather and pay your factory workers and all that for every single shoe you make. This puts a lower limit on the price of shoes. The lower limit to the price of software and solar energy is zero (plus transmission costs).

              What happened in the software business is that everyone dreamed of $99 products, but then had to cut prices to $49 when they noticed that their product had thousands of competitors. Then it was $0.99, then it was freeware. Now everybody switched to subscriptions, a sneaky way of getting a customer hooked and charging him a fee for being to lazy to switch. There is less scope for this in energy.

              Phone companies used to charge by the minute for long distance calls, but that business is dead. Energy companies are faced with the same dilemma. We are moving to a world where customers will pay a flat fee to be on the grid, and the grid will cover all you energy needs. The driver is zero marginal cost energy. The industry will have to start paying you NOT to use energy.

            6. Rune – you are correct, I misheard “rebuildables” as “replaceables”.

              I got it from his Earth vs Amoeba talk, which is just brilliant as far as I am concerned. (April 2019)

              [link] https://youtu.be/oVdGqKMBcHw

              I think both words work, however. I like ’em both! But I’ll be sure to correctly attribute Nate with the word he used, so thanks for that.

            7. Chris, thanks.

              In your linked presentation, Nate in an admirable way shows what ″a big picture thinker” is about.
              It is a tiresome process to put together the complex relations about how/what/why our societies have evolved into, probable outcomes and proposals about what to do.
              It is also a challenge to communicate these findings/truths in a world where the average attention span increasingly approaches 140 characters.

              Disclosure: Nate and I have communicated a lot since we first met in 2007.

        2. Oil is not the only form of energy. As oil becomes more expensive (and as we recognize the high cost of oil pollution and unreliable oil supplies) we will replace it with electrification, powered by low cost sun and wind.
          Energy is becoming more expensive also for countries that are expanding their sun and wind capacity. Energy in Australia and Western Europe has become a lot more expensive.

          Important sectors of the economy, like tourism, are completely dependent on oil. Quite a few countries are very dependent on tourism and a big decline in tourism would seriously damage their economy. As the economy is globalized, that would affect other countries economies as well.
          Our descendants will wonder why we ever used oil.
          Or they might wonder why we used it up and curse us. Hard to know.

          1. Oil is not the only form of energy.

            To be clear oil is not a form of energy at all! It is a fuel which needs to be burned to produce heat energy. So at the end of the day a pretty lousy inefficient way to get energy. In the early days when it was easily accessible and had a high EROEI it masked the downsides, now it is becoming more and more apparent that it may no longer be the best deal in town, especially not for the long term!

          2. Energy is becoming more expensive also for countries that are expanding their sun and wind capacity. Energy in Australia and Western Europe has become a lot more expensive.

            Well, no. Residential electricity prices have gone up for various reasons (it’s complex – there’s some historical investment in early wind and solar buildout, and there are new taxes and fees), but the overall current cost hasn’t gone up in the same way. An instructive comparison is to look at European industrial/commercial power pricing, which is much lower.

            Important sectors of the economy, like tourism, are completely dependent on oil.

            Well, transportation does primarily use oil now. But that can change. Rail can be electrified (most trains are already using electric motors); passenger cars can be electrified; and aviation can be made more efficient, partially electrified, and can use synthetic liquid fuel.

            There are several ideas in that paragraph, and this kind of discussion can be very complex and lengthy, so let’s try to keep it simple, and start with just the first idea: do you agree that rail can be electrified?

            1. Global air travel, measured as passenger-kilometers, doubles every 15 years and is already above 7 trillions. That’s an important part of the global economy.
              https://254155-841844-raikfcquaxqncofqfm.stackpathdns.com/wp-content/uploads/2017/02/Graph-of-global-air-travel-passenger-kilometres-historic-1936-2016.png

              The global travel and tourism industry is the third of the world in importance, with a total contribution of about 8.3 trillion USD to the global economy, close to 10% of the Gross World Product.

              Its dependency on oil and oil prices is huge and it is difficult to think that is going to change over the next decades. If/when oil troubles start the global economy is going to take a huge hit just from this, to add to the many hits from many other aspects of the economy that depend on oil.

              The demand for oil products from the aviation industry is growing very fast, despite using bigger planes and better fuel efficiency engines. Those savings are approaching their practical limitations and contribute to the Jevons paradox.

              Unsustainability is going to get us. Downsizing in a crowded world is going to be extremely painful, and a few windmills aren’t going to change that. Lots of windmills wouldn’t either and they would be very detrimental to the environment, particularly to flying animals.

            2. Aviation fuel use (commercial aircraft) was running fairly flat up until 2012 where is started to rise. From 2005 to 2011 fuel use varied between 68 million gallons per year to 72 million gallons per year.
              It has now risen to 97 million gallons per year (2.3 million barrels). If the miles double every fifteen years that means that commercial aircraft have done that doubling by increasing fuel use by 42 percent. The rise in miles coincides with the rise in Asia income and the increase in LTO production. As Africa moves it’s standard of living upward, that will increase demand. As LTO production slows that will decrease demand.

              We have not even scratched flight efficiency, alternative fuels and alternative power and new design concepts in aircraft. Efficiency can easily be doubled and in some cases being studied now quadrupled (without pollution). The most efficient aircraft can sustain flight using thrust equivalent to 2 percent of their weight.
              Compared to passenger ships, aircraft are extremely efficient. So what is the alternative?

              All that aside, Jevons Paradox is based on an assumption, demand increases as the cost goes down. First, what principle and data indicates flying will be less expensive in the future(especially using fossil fuel based products)?
              Secondly, within an energy and material constrained world increasing demand increases costs and decreases capability to expand. Oil and other fossil fuels will become increasingly more difficult to obtain, thus prompting alternative energy and synthetic fuels. So I see cost increases for liquid fuels in the future that will reduce demand.
              Third, there are many indicators that population increase will stall and even go quickly negative in the not too distant future. The global village is likely to disintegrate under such conditions and flying globally may be the least of our concerns (projections past 2030 are generally not valid),

              The primary energy use of computation, communication and the internet will be of great concern as limits are reached, since all advanced operations are now fully dependent upon them, including aircraft and most transportation.
              As previously discussed on this site previously the internet consumes about as much energy as aircraft transport and is rapidly increasing in demand. But that is another story to be continued elsewhere. Maybe it is time to discuss the techno-paradise where energy is not a limiting factor.

            3. Global air travel, measured as passenger-kilometers, doubles every 15 years and is already above 7 trillions. That’s an important part of the global economy…

              …Unsustainability is going to get us. Downsizing in a crowded world is going to be extremely painful, and a few windmills aren’t going to change that. Lots of windmills wouldn’t either and they would be very detrimental to the environment, particularly to flying animals.

              Sure! However anyone who seriously believes that rate of expansion and growth has a snowball’s chance in hell of continuing is smoking some really strong shit! Either that, or Peak Oil and just about everything discussed on this blog is bullshit.

              Case in point:

              https://www.msn.com/en-us/travel/news/why-dutch-airline-klm-is-telling-customers-to-fly-less/ar-AADKYmS

              Why Dutch airline KLM is telling customers to fly less

              The Dutch airline KLM launched an environmental campaign titled “Fly Responsibly.”

              The campaign, which encourages travelers to consider packing lighter, buying carbon offsets, or even flying less, is likely a response to the growing “flight shaming” movement in Northern Europe. While commercial aviation only contributes 2% to 3% of total global emissions, that number is likely to increase without intervention. Visit Business Insider’s homepage for more stories. The Dutch airline KLM has launched a new campaign to confront the environmental impact of air travel.

              Of course meanwhile we have this ongoing global idiocy of airport expansion!

              https://www.constructiondive.com/news/7-giant-airport-projects-around-the-world-take-flight/539244/

              7 giant airport projects around the world take flight

              Airports around the world are experiencing major renovation and expansion initiatives as well. A recent GlobalData report valued global airport construction projects at $737.3 billion, with the Asia-Pacific region accounting for $241.4 billion of that figure.

              From Asia to Europe to the U.S., airports have ambitious growth plans to process more passengers, get more planes flying and make travel more comfortable and efficient. Here are seven of the biggest airport construction projects around the world.

              1. Al Maktoum Airport
              Location: Dubai, United Arab Emirates
              Cost: $32.67 billion

              2. Heathrow Airport
              Location: London, England
              Cost: $18.5 billion

              3. Los Angeles International Airport
              Location: Los Angeles, California
              Cost: $14 billion

              4. Beijing Daxing International Airport
              Location: Beijing, China
              Cost: $13 billion

              5. John F. Kennedy International Airport
              Location: New York City, New York
              Cost: $13 billion

              6. Mexico City International Airport
              Location: Mexico City, Mexico
              Cost: $13 billion

              7. Istanbul Ataturk Airport
              Location: Istanbul, Turkey
              Cost: $12 billion

              Plus, one to keep an eye on:

              Long Thanh International Airport
              Location: Long Thanh, Vietnam
              Cost: $14.7 billion

              I’m pretty sure none of those costs include environmental impacts…

              Anyways, just for shits and giggles use this app and take a quick look at the airspace above any of the airports on the list above.

              https://www.flightradar24.com/50.62,1.92/7

              And somehow the folks who think renewables can never substitute oil call the proponents of solar and wind delusional. They are fractally wrong because once the current global industrial civilization collapses and it is a matter of when, not if, then the only game in town will be solar and wind!

              Of course at that point it may well come to pass that humans will no longer be playing much of a role in shaping the ecology of the planet as they may be extinct and in a few million years there will be a completely new ecology!

              Cheers!

            5. Lets imagine a world in which petrol was so expensive that flying was no longer economically feasible for the majority of trips/miles.
              Sure there would be economic depression for certain locations dependent on airline manufacturing, airport operations, and tourism.
              But humanity overall would not be threatened in the least.
              Same if people had to resort to electric vehicles for getting around.
              The world economy could survive with 1/2 the miles (air and land) consumed by human beings each year, I propose.
              Its a survivable scenario with much less energy.
              Its all about decision making to make the transition to a slower, cleaner, and less populated world, as quickly, and smoothly as feasible. First step is acknowledging the challenges. Most people aren’t willing to look at things straight up.
              There are big innovations still to be deployed, from heat pumps to electric vehicles, to changes in building practices.
              Made in the USA-
              The Deliverator
              https://www.arcimoto.com/deliverator/

            7. Hickory Wrote:
              “Lets imagine a world in which petrol was so expensive that flying was no longer economically feasible for the majority…But humanity overall would not be threatened in the least.
              Same if people had to resort to electric vehicles for getting around.”

              LOL 70% of the US grid is fossil fuel powered. EV’s solves absolutely nothing.

              FWIW: Back in 2007-2008, We had a brief taste of how high energy prices effect the economy:

              1. States looked to cutting schools from five days a week to three days week.
              2. People starting stealing fuel from parked vehicles. They drill holes in to people gas tanks to drain the fuel out. Even happened to entire bus fleet of a town back in 2008.
              3. Poor people could not afford to go to work, (Not earning enough to pay the gas bill needed to commute).
              4. We saw wide spread riots in poor nations and even in some European nations.

              Fortunately the crisis did not last, but I think these events will happen:
              1. Crime will soar. Police & ambulance services will be cut back.
              2. Unemployment will soar, and so will loan defaults (car loans, Mortgages, Credit cards).
              3. People unable to afford to heat there homes will freeze leading to health issues if not death. People while use make-shift heat sources which will result in increase residential fires
              4. People will not be able to afford medical services or drugs, leading more drug resistant diseases as well as wider distribution of diseases like the flu. & possibly pre-20th common diseases. Poor nations will like face epidemics & pandemics.
              5. Gov’ts will impose price controls, which only exacerbate problems by creating shortages.
              6. Some Gov’t will use their militaries to grab resources (this is already underway as the USA is grabbing any major Oil exporters not under direct influcence of a nuclear power: Currently targeting Venezuela & Iran).

            8. Quick fact check, the last time more than 69% of US electricity came from FF sources over a period of a year was 2010. The FF contribution has been as low as 62.83% in 2017 and was 63.62% for 2018.

              The last time the contribution from FF to the grid was more than 70% over a period of a month was August 2016. In April 2019, the most recent month for which data is available, the contribution from FF was 56.27%.

              If renewable sources of electricity (primarily wind and solar) continue to grow at anything similar to recent rates, we could well see the US generating less that half of it’s electricity using FF on an annualized basis within the next decade.

              The rest of your comment is difficult to argue with except to say it did not have to be that way. If only warnings about Peak Oil and Global Warming had been heeded and the transition away from FF started in earnest sooner………

              If wishes were horses……….

            9. “EV’s solves absolutely nothing”. EVs are about 3 times as efficient as fossile fueled cars and have thus less energy consumption than a regular car. It also has no local pollution.

            10. LOL 70% of the US grid is fossil fuel powered. EV’s solves absolutely nothing.

              EVs function perfectly well on non fossil fuel generated electricity.

              It is highly doubtful that the US grid will be always be powered mostly by fossil fuels.

              When Peak Oil really hits ICE cars won’t run…

              Cheers!

            11. Its 63.5% I didn’t recall the *EXACT* number. Still 63% is still more than 50%. Again Nitpick the *EXACT* figure, but ignore the message.

              https://www.eia.gov/tools/faqs/faq.php?id=427&t=3
              “Last updated: March 1, 2019”
              “About 63% of this electricity generation was from fossil fuels (coal, natural gas, petroleum, and other gases”

              Tom Wrote:
              “EV’s solves absolutely nothing”. EVs are about 3 times as efficient as fossile fueled cars and have thus less energy consumption than a regular car. It also has no local pollution.”
              Did you bother to read what I wrote: Summary: US grid is powered mostly by fossil fuels, and EV efficiencies ignore all of the losses getting the power to charge the EV.

              islandboy:
              “If renewable sources of electricity (primarily wind and solar) continue to grow at anything similar to recent rates

              Solar (total): 1.6%
              Wind: 6.6%

              At current PV growth rates its will take about 35 to 40 years before PV is able to match coal. By then we’ll be deep in Oil production declines. Maybe if we where adding 5% to 10% of total grid consumption per year, it might me enough, But adding about 1% of PV over 10 years, and about 6% of Wind over 10 years isn’t going to cut it.

              Bottom line: the US is sleep walking to a major energy crunch in the mid to late 2020s.

              You can hope & dream all you want that PV & Wind will save the global economy from a collapse, all you want but its not happening. When FF’s roll over, so will the global economy, unless the Debt & demographics cliff kick it off earlier.

            13. “At current PV growth rates its will take about 35 to 40 years before PV is able to match coal.”

              I have a spreadsheet set up to do projections like this and it already had a projection starting from the 2017 base figure. I prefer to use the estimated total since utility scale makes up about two thirds of the total and I feel it is misleading to ignore one third of the total. Starting from a base of 1.92% in 2017, a growth rate of 20% takes us to 2.3% for 2018 and projecting forward at that rate takes us to a contribution of 29.6% by 2033, more than the 27.4% contributed by coal in 2018 in a period of just 15 years. If I plug in an annual growth rate of 10% and start with a figure of 2.3% in 2018 the contribution from solar grows to 27.4% by 2044, 26 years from now.

              So, PV growth will have to slow considerably for it to take 35 to 40 years to match coal. This is against the background of it being one of the least cost sources of electricity available. How likely do you think that will be?

            15. Techguy,

              For the past 10 years the annual growth rate for solar power output for the World has been 37.96% each year on average.

              I am assuming you are familiar with the exponential function. If the rate of growth continues at 39.96% per year from 2019 to 2030 then Solar output is more than all World electricity output in 2018 by 2030.

            16. Tourism and commercial airlines will take a big hit when the price of oil significantly raises ticket prices.

              But life for the average person will be fine. Trains will work for some trips and other trips can be eliminated.

            17. Important uses, like heavy machinery, certain cargo, and emergency services, will have petrol for a long time, even if it is no longer cheap enough for frivolous or optional uses.

            18. Another major problem is the rise in long haul small planes. Airlines only profit from business class. The tourist class is basically zero profit and only exists to fill planes big enough for long flights so the airlines can sell seats to business flyers. As smaller planes become capable of long flights, small business-only flights will replace the big mixed commercial flights, and tourists will have to pay more.

            19. Shut air travel down, imho. And tourism? Well, where I live in coastal BC we have witnessed the degradation of many many places due to Tourist Chamber booster types who want to make a buck at every turn and experience. Backpackers and boats 20-30 years ago were great. Now, it’s rental RVs and trailers, trucks towing giant boats, and people wandering around looking to buy a momento. Germans (mostly) fly to Calgary or Edmonton, rent an RV, drive out to the coast, then a group does it in reverse. If that’s what we need to attract to make a living, then God help us. Apparently Iceland has more tourists than residents 60:40. Iceland.

              It’s an awful future to contemplate.

    4. You need a lot more than these graphs to decide whether peak oil is
      happening or not. People look at things like discovery rates, estimates as
      to the quantity of ultimate reserves, decline rates of oil fields currently
      in production, oil producing projects under development, the financial
      health of exploration and production companies, oil prices and the cost of
      production, political stability in oil producing countries, and more.

      What is interesting is that the International Energy Agency (IEA) in its
      2018 World Energy Output warns that
      the number of projects with Final Investment Decision in conventional
      fields is not enough to satisfy projected demand out to 2025. They say
      that unconventional fields such as US LTO must more than double
      production to satisfy demand. This sort of warning from the IEA is new.

      1. ” This sort of warning from the IEA is new.”

        Yes, sort of. IEA has changed their language quite a lot over the years. I think it was in 2016 they had a graph showing that supply was unlikely to meet demand in 2020 unless investment increased a lot (an discoveries but this was assumed to increase if enough capital was allocated to exploration). As George K. used to write here, increased exploration dosen´t matter if there is no (or very little) oil left to find.

        I´ve read the 2018 WEO and I think I watch one of the presentations/launch events too. I interpreted the message as: “There is a gap, it is possible that US LTO can fill it but unlikely it will”. But I´m biased.

        1. You are correct Jeff, the warning was not entirely new. In 2016 the IEA suggested that the oil was there but investment had to be stepped up to get it out or there would be problems in the early 2020’s. In 2018 they essentially said that conventional projects in the pipeline are not sufficient for whatever reasons, US LTO could fill the gap, but probably won’t.

  3. Ron,

    Bakken might have peaked, but could remain on a plateau for a few years or might go a bit higher if oil prices rise due to OPEC holding back supply and sanctions on Iran and Venezuela. I agree Eagle Ford is not likely to reach the 2015 peak in the future, but according to the EIA’s tight oil estimates output has remained on plateau for the past few months. Note that these estimates look suspicious because the output has remained nearly unchanged for several months.

    From Feb to May 2019 we have the figures below in kb/d for Eagle Ford Tight oil output from EIA

    1212.888
    1212.983
    1213.078
    1213.173

    So only 285 b/d higher output in May compared to Feb an increase of 95 b/d each month on average. Peak was March 2019 at 1619 kb/d.
    Average output for the past 12 months has been 1207 kb/d.

    1. Hillary Mann Leverett thinks Trump has grand plans for US shale oil (at 19:30 min in this video):

      “…The diametrically opposed goal of Trump which is also important to understand is that if he can’t get a bigger or better deal with Iran which he can tell is his own then I think he is fundamentally looking to weaken if not destroy Iran and I think he is willing to burn the Persian Gulf along with Iran. That will give him a good opportunity to focus on domestic – here in the US – domestic oil and gas drilling and fracking which he really sees as important for his re-election for the US to
      become an energy super power, an energy dominance on the international stage….”
      https://www.youtube.com/watch?v=3QfZZz-RrfE

      1. My take on the Iran situation is that if there are any incidents leading to a prolonged escalation, oil prices will skyrocket and tank whatever hopes of a Trump re-election in 2020. I feel very strongly that Trump knows this and that is why he “called of the retaliatory strike” after Iran shot down the drone.

        What I worry about is what Trump might do if he sees no chance of being re-elected. He might just kick over the card table, so to speak, like the spoiled brat he is! Just so he could watch whoever gets elected battle with an unholy mess he will leave them.

        1. 100%, that’s why on an earlier post i said i think it would be kind of in Irans interest for U.S to get involved in a conflict with them, so he won’t get re-elected and they could negotiate with another U.S president (possibly).

          1. Iron Mike,

            And as I said before, sometimes people choose to support their leaders in a time of war. Trump is a master manipulator of the media. I hope a war does not begin, and I do not think it is clear a war hurts Trump’s chances of being re-elected. There are many opinions on this, it may be that Trump is unsure himself, maybe he is trying to time it right. George H W Bush won the first Iraq war too quickly, the economy tanked and he lost his re-election bid.

            Not sure about US appetite for war, I almost always think it is a bad idea, but my view is not always the majority view.

            1. I think it is in Trump’s nature to try to win a game. He surely would prefer to get a better deal with Iran than dropping bombs. But it’s also in his nature to risk everything. And I doubt that people like Bolton share Trump’s ambitions to make clever deals. So things could go very, very wrong.

            2. If you were running Iran and could not sell your oil while watching your Country decline every day, would you ensure not one drop passed through the Straits?

              If you were China, wouldn’t you buy every drop of oil Iran could pump just because?

              Hang on.

            3. Dennis says: “Trump is a master manipulator of the media.”

              Finally, a rational explanation of why CNN, MSNBC, the NYT, and the Washington Post etc. fawn all over him. Thank you!

            4. MSNBC does not flatter Trump much, they do give him plenty of airtime.

      2. The whole point of targeting Iran is so the US can control Iranian Oil. Trump has already be debriefed that the Shale revolution will come to an end in the 2020s, and that US needs to secure more foreign Oil sources. The DoD wants to turn Iran into the next Iraq. The US is also building a lot of Military bases in Africa near Oil resources. Venezuela is also on the target list.

        1. Iran and Venezuela don’t seem to be working out so well for the US.
          Bolton, and the rest of the neo crazies, seem stumped.
          Even when backed by MSM, the dialog is starting to slip.

        2. The whole point of targeting Iran is so the US can control Iranian Oil.

          Bullshit! The whole point is the Iran treaty was negotiated by Obama, a black man whom Trump hates and wants to undo everything Obama has ever done. Trump wants credit for everything and will not concede anything to a Democratic black man.

          The DoD wants to turn Iran into the next Iraq.

          More bullshit! This Iran thing has nothing to do with the DoD, this is Trump’s game and nothing more. And why “the next Iraq”? We gain nothing from Iraq except the great expanse of keeping thousands of troops there. We do not want the expense of another Iraq. But Trump just might want that because he is just too fucking stupid to realize what is really going on.

          The DoD is helpless and impotent in dealing with Trump. They know full well he is an idiot. But nevertheless, he is still Commander in Chief and they must obey his every command. All they can do is wait another year and one half and hope this will all pass.

          And I am hoping too… because our survival depends on it.

          EDIT: We do not control Iraqi oil and we will not ever control Iranian oil. We have no control of oil produced by any foreign country. All oil is sold on the open market.

          Trump: We should have taken the oil. He was speaking of Iraq. That just shows what a goddamn idiot that man is. And he calls himself an extremely stable genus. Yeah right!

          2. Iran has been on the hit list for a very long time.

            ReadWatch the Wesley Clark interview from 2007. Obama did not stop Syria or Libya. The same plan has been on going since at least 2001.

            https://www.globalresearch.ca/we-re-going-to-take-out-7-countries-in-5-years-iraq-syria-lebanon-libya-somalia-sudan-iran/5166

            Regardless of whom you wish to put blame, it does not change the fact the the US is going after Iran & Venezuala, Primary for energy resources. You can blame Trump, Bush, etc. its irrelevant to me. Personally I think every politician sucks. That said, if it was just Bush or Just Trump, everyone would have put up roadblock much worse than the immigrationwall showdown. Obvious a lot of people in the DoD want this to happen or there would be massive push back. Where is the Wesley Clark(s) of 2019 standing up against this nightmare?

            Edit: I am not the person you should be ticked off at. I am not your enemy, & we probably agree on 95% of issuesproblems.

            1. Regardless of whom you wish to put blame, it does not change the fact the US is going after Iran & Venezuala, Primary for energy resources.

              That is sheer nonsense. How would we get Iranian oil? How would we get Venezuelan oil? All oil is sold on the open market. If we wanted Venezuelan oil or Iranian oil, we would lift all sanctions and let them sell it on the open market.

              Did we get Iraqi oil? Obviously not even though that idiot Trump said: We should have taken the oil.

              We do not do that! We do not just invade a country and take their oil. You should know that. Even though that idiot Trump thinks we should, you are a lot smarter than Trump. You should know better.

              I am in no way ticked off at you. I am just a little shocked that you think we are after Iranian or Venezuelan oil.

  4. I wonder if Iran sells its oil to China on a discount now that they’re struggling to export their oil because of US sanctions. If their oil exports are limited to zero, they will eventually have riots and possibly a more aggressive foreign policy. It might escalate to war if Trump gets a second term and he can do what he wants as he doesn’t have to fear about a re-election. Iran does however have a steady consumption of about 2 Mbpd so I guess their production will not go to 0.

  5. U.S. Shale Oil Production is likely to fall quite rapidly, out of the blue, much worse than what analysts or the market expect. There are several reasons for this. However, one reason that isn’t taken into account is some funny business (fraud) in the overstating of production by one or more of the shale oil companies.

    If you look at the change in production, quarter to quarter, you will see that some companies have had some remarkable increases, with not that much of an increase in CAPEX or the well count.

    Furthermore, if we look at some of the Refracked well data from just North Dakota Dept of Mineral Resources, Monthly Data, these refracked wells are experiencing declines orders of magnitude much worse than a new completion.

    In addition, it seems that many companies in the Bakken are resorting to CO2 injection for recovery as it is much cheaper than doing a refrack, but the amount of oil recovered is considerably less than a refrack.

    By the way, one of Continental Resources new wells in the Bakken saw its production fall 62% in three months DEC 2018 (37,496 barrels) to MAR 2019 (14,066 barrels). With that sort of decline rate… it’s going to be interesting to see how Bakken production performs this year.

    There seems to be a lot of ROT GUT taking place in the Shale Industry and if oil and gas prices head lower when the extremely over-valued stock market finally corrects lower, along with a recession, let’s check back and see how shale oil production reacts.

    Steve

    1. Two systemic reasons it could drop quickly, beyond capital restrictions for losing money that is.

      1. Cost-inensitive drilling. Since little of this had been pursued for being cash flow positive in the first place, I am skeptical that “higher price = more production” modeling works. With the exception of outright cash-cost negative oil prices, the frackers go full blast, at logistical max if not beyond.

      2. In all basins the good well areas, sweet spots, are much smaller than the total drilled area and are vastly smaller than the EIA’s play boundary estimates. Once the sweet spots are saturated and/or depleted, there is no reason to believe comparable high quality wells can be drilled outside those areas. So replacing the last round of sweet spot production- and there will be a last round- will be vastly more expensive per barrel.

      This also translates into the EIA’s total resource estimates per basin being absolutely ridiculous, but that isn’t news.

      1. Propoly,

        As far as price sensitivity we have the fact that US tight oil production decreased when prices crashed, which seems to contradict your assertion.

        If it were true that the frackers go all out regardless of oil price or profits we should have seen no decline in tight oil output from March 2015 to September 2016, the fact is that output decreased by 12% or 587 kb/d (4891 kb/d to 4304 kb/d).

        I do agree the tight oil producers do seem to lack discipline with a few exceptions such as EOG and perhaps the majors.

    2. Steve, sorry I forgot to post your link. Please feel free to post your links in the comment section. We are always looking for good petroleum links and comment.

    3. Steve,

      Cherry picking is not a good method of analysis. Industry wide averages are important. Individual well results, not so much.

      1. Dennis,

        Thanks for the most insightful advice in regards to “Cherry Picking” data. You’re a PEACH. However, the overall shale industry is heading for a brick wall, whether I throw a dart at Continental Resources, Whiting, Oasis, Concho, Pioneer, Occidental, Hess and the list goes on and on and on.

        As for the Major’s becoming successful in the Great Shale Oil Bubble, I have my doubts. Except for Chevron, Exxon reported a miserable Q1 2019 in U.S. upstream earnings in regards to the huge amount of CAPEX they spent. It will be interesting to see what their U.S. upstream earnings will be for Q2 2019.

        Regardless, the industry is now resorting to 15-K wellheads to deal with the increased pressures and volumes of fracking sand and fluids. They say that this is super-enhanced-enhanced horizontal technology, while I call it what it really is… just MUCH MOE MONEY being spent for wells that production depletes even faster.

        Ron, no worries, here is the link to my newest energy article. I imagine some might say I was cherry picking the data, but the amount of graphs in the article, which all come from the EIA, provide an interesting perspective on the notion of the U.S. as a NET OIL EXPORTER.

        THE UNITED STATES A NET OIL EXPORTER?? The Dirty Little Secret

        https://srsroccoreport.com/the-united-states-a-net-oil-exporter-the-dirty-little-secret/

        Funny, the U.S. is producing 3.6 mbd more oil since 2014, but it’s crude imports are nearly the same. What gives… ah?

        LOL… Steve

        1. Steve,

          Focus on the industry as a whole. Anecdotal evidence of a single well that did poorly is easily countered with another well that did very well.

          I will call out cherry picking in either case. Cherries are yummy, but not so good for serious analysis imo. 😉

          1. Yes, cherries are quite nice and among my favorite fruit. ^u^

  7. If you guys were buying a new heating system for your home, would you get gas or oil heat? I think we are too far north (Vermont) for a heat pump but maybe we should consider that too. Which one do you think will be more affordable for longer? I think you all would say gas but I don’t want to assume…
    Thanks all,
    Karen
    Not sure if this question should be in the non petroleum thread.

    1. If heat pump you can look for geo energy if you are not living on rock. Under your house the soil has always enough temperature.

      Otherwise piped gas and a good isolation.

      1. Isolation is not necessarily a bad thing, even in Vermont. Though I think you meant ‘insulation‘ 😉 Which, BTW, should not be confused with ‘insolation‘
        Mein Deutsch ist viel schlechter als dein Englisch!

    2. Have you looked into air-based heat pumps? They used to be inadequate for heating in Vermont, but that’s changed – they’re used well into Canada these days.

    3. Karen,

      Consider a ground source heat pump, also upgrading insulation and/or windows and doors is a good idea along with an energy audit to look for envelop leaks which can be sealed. If ground source heat pump is too expensive, air source heat pumps might work (some people use them in Maine I have heard). If you want oil or natural gas, natural gas would be cheaper currently, in the future the heat pumps may prove to be the better choice because by 2035 natural gas will peak and become expensive.

    4. The mini-split air-source heat pump industry now has “high heat” versions that make full-rated heat down to – 5 deg. F and at least partial heat to -13F. All the major players have them: Fujitsu, Daikin, Mitsubishi, Toshiba.

      That is about technological limit for the current refrigerant cycle used.

      If you need to burn fossil fuel for true northern winters, stick to NG or LPG if possible. That is where the all the high efficiency heating equipment engineering has gone to. Burns cleaner + the fuel cost/BTU is a lot lower than distillate liquids like kerosene.

      1. HVAC Man, Any Experience with Gree? They have a super efficient unit now. We are sticking with the Fujtsu RLS for Off Grid in Southern Latitudes installs but love to learn about developments. Do you have any comments on which brands inside units are easiest to Clean/Wash down with a bib? These units displace tons of Fossil Fuels especially when powered with overbuilt PV Arrays. It will be interesting to see which brands will be manufactured outside of China.

      2. Hvacman,

        Would ground source heat pump make sense in northern Vermont (Burlington)? Or would air source make more sense?

        Assume the home will be kept for 20 years.

        1. Dennis,

          Depends on the house, you cant just say one is superior to the other its situation dependent.

          As you probably have guessed i live in Sweden, 300km north of Stockholm. So we get about -20 -30 degrees Celsius in winter here.

          I had an air/air heat pump installed yesterday, and will also drill for ground heat to replace my piped heating system witch is current main system. I am able to switch since heating system is water based otherwise it would be a no go or way mor expensive and a lot crappier ROI.

          Size, layout etc are also factors to consider. In my case ground heat will for sure be the best return on capital around 15-20% yearly on investment. Air pump will have similar figures but it has more limitations, range, no hot water but one big plus the AC.

          1. Baggen,

            Most Vermont homes would likely have a water based boiler heating system probably oil fired at present, so the question would be for that location (Burlington Vermont) would air source or ground source make more sense for a long term investment (20 years or more). Note that northern Vermont doesn’t really need air conditioning. I would think that rule also applies to Northern Sweden.

            1. Dennis,

              And the answer will still be “depends on the house” no matter the time period you use.

              Yeah i installed it since i dont need it, i just mentioned it had the + of coming with an AC balancing some of its shortcomings compared to ground heat.

              We do get summer days with about 30 degrees Celsius, i dont know if that gives me your approval or not?

              Note that i didnt install it mainly for the AC, i did it for the heat and saving energy/money during winter.

            3. The part I didn’t understand is the need for both ground source and air source, but this must have something to do with the way your house is designed, perhaps there was an added room with a wood stove that is not serviced by the hot water heating system.

              The length of time has to do with pay back, sometimes it is hard to recoup costs on renovations when selling a house, so if one was going to sell a home in 5 years and the investment had not broken even, then one might lose out on the money invested as the new heating system might not add extra value to the home over a traditional fossil fuel system (at least in the US).

            4. Dennis,

              “The part I didn’t understand is the need for both ground source and air source, but this must have something to do with the way your house is designed, perhaps there was an added room with a wood stove that is not serviced by the hot water heating system.”

              Now i am impressed, i was wondering if you were going to notice that contradiction :D.

              Yes its more complicated, i have a fairly big house (by Swedish standards) 270 square meters and the layout of it has been changed so it is now separated as two separate complete apartments with their own entrances and everything.

              I live in one apartment myself and i rent the other one out since i really dont need that much space for myself and my daughter. The house has water radiators as heat distribution system but the system lacks capacity during coldest winter days My tenant who has “free” electricity and heat included in his monthly rent (since we share the same systems) ofc go full blast on his radiators (i would also in his situation) and i get the leftovers on my top floor as i am at the end of the water loop 😛

              I also occasionally rent my own apartment out for certain events and then i dont want to have a “weak spot” and get complaints about lacking heat. So the Air/Air pump is for redundancy and being able to ensure i get decent heat up at my floor and as a bonus i am now also able to use the “has AC” if i decide to rent it out during the summertime.

              “The length of time has to do with pay back, sometimes it is hard to recoup costs on renovations when selling a house, so if one was going to sell a home in 5 years and the investment had not broken even, then one might lose out on the money invested as the new heating system might not add extra value to the home over a traditional fossil fuel system (at least in the US).”

              Totally agree with you, i will probably own this one for the rest of my life even if i decide to move so that gives me a favorable position in that regard.

            5. Baggen,

              Very interesting, thanks. I simply have a single family home. It is an unfortunate situation to have “free” heat for your tenant.

              I have never rented with that situation, but no doubt there would be a tendency to overheat in winter.

              I had an apartment once where I used so little gasoil that the boiler repair person accused me of stealing oil (not directly, but it was implied). I dress warmly indoors in winter and keep the house at 15 C when my wife is away. Kind of silly really.

    5. Other alternative options are an outdoor coal or wood boiler. Coal is better since you can load up a hopper that would provide a month or more of fuel. Wood Boilers need to be feed at least once a day. You should be able to order a truckload of Penn. Coal (about 22 Tons) which will probably last a couple of winters unless you heating a very large and leaky home. Cost would be about $4K for about 22 Tons. I presume you get two winters worth which you annual heating cost would be about $2K.

      That said, the best option to consider is moving out of NH into a temperate region (US Mid Atlantic) where winters are mild and summers are not brutal. This will reduce you heating & cooling demand.

      Also it would be a good idea to either build new or retrofit a home to be energy efficient.

  8. I would look for Okla to start slowing soon. They are down on rig count over 30% since last year.

  10. Thank you for this work Ron.

    The world less USA obviously is on a plateau for more than three years now. I really doubt it will be able to surpass it in the coming three years, especially not with the OPEC’s situation; not even mentioning its dire members Venezuela and Iran (And no, nor do I think there will be any positive surprises from Russia, China or Brazil).

    So everything depends on the USA. But I also doubt they will get far more than 12 million barrels a day out of their ground. For the next couple of years, there seems to continue the plateau, give or take half a million barrels. In an oil-thirsty world, this is very close to a peak situation.

    If Dennis is right and there’s still enough oil in the ground to push the peak to 2028, then higher prices have to arrive very soon so oil-producing countries can deliver. And in the case prices go through the ceiling, I really doubt the world economy will hold steadily. So we might be facing a lose-lose situation ?, despite sufficient quantities of oil left in the ground.

    1. Yeah, good analysis, but I think a typo on lose, lose?
      But, all projections are loose, at best. Yet, it is rewarding to be, at least, half assed right (like me),huh?

    2. ….“despite sufficient quantities of oil left in the ground.“

      For Davebee, and others, just a reminder of what Peakoil is all about: it is about the VELOCITY of oil extraction. You have to look at world total recoverable reserves indeed, as pointed out by Mr. Coyne and many others like Hubbert, but it is the oilprice that determines at which velocity the remaining recoverable, more difficult to extract oil will be ‘produced’. How high oilprices could get before world economy slumps (again) ?
      Consumer debt in the U.S. is now about as high as in 2008.

      ProPoly’s points 1. and 2. are good examples of Peakoil theory put into practice, though shale oil has its own rules.
      Translated to conventional oil: how many deep water (small) oil fields, small land oil fields, Arctic oil fields will ‘forever’ remain undeveloped ?

      So, if this (part of ProPoly comment) is true:
      “Once the sweet spots are saturated and/or depleted, there is no reason to believe comparable high quality wells can be drilled outside those areas. So replacing the last round of sweet spot production- and there will be a last round- will be vastly more expensive per barrel.

      This also translates into the EIA’s total resource estimates per basin being absolutely ridiculous, but that isn’t news.”

      and if the post of SRSrocco is NOT cherry picking, then the next decade could become ‘exciting’ rather sooner than later. Guessing 2024-2026

      1. Take a look at shaleprofile.com

        For lto so far there is little evidence based on hard data that new well EUR is decreasing.

        Note that I have been predicting such a decrease since 2013 so far I am still waiting. Perhaps 2019 will be the year it happens. That is my current prediction for Bakken and Eagle Ford. We won’t know until 2021 if my guess is correct. I expect Permian new well eur will decrease in 2023, won’t know about that guess until 2025.

    3. “And in the case prices go through the ceiling, I really doubt the world economy will hold steadily.”

      GFC2? From what I’ve read of some folks ideas for the future, high oil prices/GFC2 is when everyone goes out and buys an EV, with whatever they have left in the bank at that time I suppose. Seems a little dreamy to me.

      1. “Seems a little dreamy to me.”
        Compared to the “dream” we have now?

        1. “The reason they call it the American Dream is because you have to be asleep to believe it.”.
          –Carlin

      2. GFC2? From what I’ve read of some folks ideas for the future, high oil prices/GFC2 is when everyone goes out and buys an EV, with whatever they have left in the bank at that time I suppose. Seems a little dreamy to me.

        I believe that is just your own personal opinion and you don’t have anything from the real world with which to actually back it up!

        Having said that, assuming the global economy somehow manages to continue on for a while longer, given that both the renewable energy and EV businesses are already well established from a technological perspective it would not be a huge stretch of the imagination to expect strong growth in those sectors of the economy should oil become increasingly expensive and difficult to acquire.

        https://www.forbes.com/sites/davidnikel/2019/06/18/electric-cars-why-little-norway-leads-the-world-in-ev-usage/#62a53dbe13e3

        Electric Cars: Why Little Norway Leads The World In EV Usage

        Almost 60% of new cars sold in Norway during March 2019 were entirely electric-powered. It’s the latest record-breaking statistic involving Norway and electric vehicle (EV) records as the Scandinavian nation looks to stop sales of fossil fueled cars by 2025.

      3. High prices will do it.

        GFC2 may or may not happen. With proper policy, more like US less like EU the recession will be short lived.

        1. Yes, Dennis. I think it’s not about IF there will be a GFC2 but how much of an impact it will have. Maybe after a financial clean up, the world is finally ready to confront its energy problems. In fact, fracking somehow bought the world time to jump on the renewable train and with that industry’s growth being exponential, the next decade will be one of huge changes: For good or for bad. Probably both ways.

  11. “North Dakota is on an 8-month plateau. No one expected this.” The least I can say is: I’m not surprised.

    1. Verwimp,

      Have you revised your original model? Seems the prediction was for about 500 kb/d in 2019 unless I am reading the chart incorrectly.

      I am also not surprised. With current prices and completion rates the plateau may continue, if oil prices rise we might see a small increaseat an annual rate of 100 kb/d each year until 2022, then output will decline.

      1. Hi Dennis, no I haven’t upated anything. This is still the same chart. (Extra data, but no tinkering on the model.) I had two reasons to show it here:
        – To be honest: my initial prediction lasted for 3 years but not a second longer.
        – To show that I’m starting to recognise the same pattern in the blue line (change in daily oil): that’s the yearly winter dip versus the summer growth. Winter dip might prolonge and become deeper, summer growth might become less high and shorter in time. Strenghening of these two possible trends (as they did before) must lead to overall decline.

        1. Verwimp,

          The story the first time the ND Bakken/Three Forks declined was that fewer wells were completed because oil prices crashed. Then output rose as prices increased and more wells were completed. If we see another reduction in the level of oil wells completed each month either due to a fall in prices or a fall in new well EUR or some combination then we will again see a fall in Bakken output.

          The centered 12 month average ND Baken/TF completion rate below.

  12. I was taking a look at Bond yields. 10year US treasuries have likely hit a low. Technical indicators are pointing to a significant amount of yield steepening in the next few months. Likely a move back to 3% on the the 10year.

    This will bring a significant amount of dollar strength with it. Don’t be surprised if this alone moves oil price in a downward direction.

    1. Thanks HHH. I appreciate the your technical perspective on these things.

    2. HHH,

      Perhaps this will be correct but may be counteracted by a shortage of supply.

      You keep daying oil prices will fall to $45/b or lower. What is your prediction for the Brent average price fom July 2019 to june 2020.

      My guess is 75 per barrel.

      1. Gees Dennis, Brent is at what 65 ish right now so lets just say Brent started moving upwards. And maybe it took half a year to reach $75 in order for it to average $75 we’d need price to keep heading up over the last 6 months of that time period to what? $85 maybe to give us a average for the year of $75

        If the US economy continues to do well or fairly well compared to elsewhere. Which i expect it will. There are no reasons for rate cuts. Rate hikes will be put back on the table. If nothing military comes of the situation in Iran and Brexit is kinda a short lived event. Yields on treasury bonds are going to rise. Dollar will likely breakout to the upside like a rocket from here. What does that mean for the price of oil?

        Without a actual oil shortage which isn’t going to happen in your time table. Oil price is headed down. Not up.

        That $45 is trendline support on the WTI chart by the way. So Brent would likely be $6 higher at about $51. That is just where support is currently and will be for a couple of months. 6 months from now support will be a little higher than $45. That trendline has to hold at some point in the future in order for price to rebound.

        IMO there is just too much overhanging technical resistance for price to go straight up from where it is currently.

        Average price will depend on how long it takes price to reach trendline and if it holds or not. But i don’t see $75 during that time period at all even if trendline support is reach and it holds. Not even for one day unless major War breaks out.

        Oh, and since you don’t seem to like Mr. Steve too much his long gold trade is likely to blow up in his face when treasury yields start steeping. Last weeks highs were actual the perfect time to sell gold.

        I do believe a major pullback in Global equity markets is coming. I look around at stock indices. The Chart of New Zealand 50. Their stock market. Go look at a monthly chart going back to at least 2002. There are 4 supporting trendlines and the current one is almost vertical as in 90 degrees vertical. Probably 80-85 degrees vertical. Major pullback is coming. Maybe that will be localize maybe not.

        1. HHH,

          Perhaps there will be a crash in World equities, bears always predict this and eventually they are proven correct, they typically are right about 1 out of every 10 years or so and for a severe meltdown like GFC or worse the odds of being correct are about 1 out of every 60 years.

          I don’t try to predict financial markets, that is a loser’s bet.

          My guess is that oil supply will be short by about 1200 kb/d for 2019 average output relative to demand, this will push oil prices up. Note that the historic Brent/WTI spread is more like $8/b rather than $6/b for the past 4 years. I doubt a strong dollar will change the demand for crude substantially. Brent has been at $110/b for years (in 2017$) demand was strong.

        2. HHH,

          I never get oil prices right.

          I was a bit confused by your comment perhaps.

          Comment below was in response to needing tight oil output which might never recover with low oil prices ($46/b for WTI) at that time (November 28, 2016.)

          I agree, we will need it. When oil prices rise to $95/b and stay there these LTO wells can be drilled profitably, I think. Though land costs will need to fall a bit perhaps, for the Permian Basin, transport costs are pretty low. I would have to run the numbers to check and have not done so for the Permian. There is some price that will make these wells profitable ($50/b is too low, my guess is that $100/b will work). Eventually we will see $100/b oil again, probably in late 2018 or early 2019 and on average oil price will remain $100/b or higher on an annual basis until 2030.
          I believe that you think we don’t know future oil prices, no doubt you are right. I am guessing that demand for oil will increase and that supply will be flat or down so oil prices will rise and eventually reach $100/b or more.

          Seems I expected oil prices would rise to $100/b by now as I expected tight oil production would be flat and this would drive oil prices up.

          I was wrong about tight oil output, it increased strongly in 2017 and 2018 and oil prices did rise from $46/b to about $75/b by Oct 2018, but $100/b was not needed to increase the completion rate for tight oil producers, though many of them are still not profitable as they have overproduced yet again.

          Many of the tight oil focused companies may have dug too deep a hole and may go under, it seems the money has dried up for many of them and there may be no way to come back.
          Some oil pros have suggested that hoping for higher oil prices is not much of a business plan and I believe they are correct.

  13. OPEC Oil Production Dips To 2014 Low

    Saudi Arabia, OPEC’s largest producer, boosted supply by 100,000 bpd in June over May, to 9.8 million bpd, the survey showed.

    Despite the increase, Saudi Arabia was comfortably below its 10.311-million-bpd cap under the OPEC+ deal as it had been overachieving in its share of the cuts by 500,000 bpd in the previous months.

    The Saudi production rise, however, was not enough to offset declines in Iran and Venezuela, which are exempt from the production cut pact but which continue to see their output drop because of the U.S. sanctions on their respective oil industries.

    Production in Angola, Iraq, and Kuwait was also lower in June compared to May, while Nigeria raised its output, according to the Reuters survey.

  15. Since the 2004-2005 peak in conventional oil the world initiated a process of de-globalization. This is the logical result since globalization is essentially run on oil.

    As ECRI points:
    “Since the GFC, however, structural de-globalization has emerged as the dominant force, as our measure has been almost exclusively negative since 2011
    …
    our globalization measure has plunged to its lowest reading since the GFC, and its worst reading on record away from recessions.”

    https://www.businesscycle.com/ecri-news-events/news-details/economic-cycle-research-ecri-lakshman-achuthan-business-cycle-ecri-de-globalization-diagnosis-predated-trade-war

    https://ecri-prod.s3.amazonaws.com/downloads/190628__Globalization_W495.gif

  16. If we look at non-OPEC minus US minus Russia minus Canada from March 2015 to March 2019 the trend is an average annual decline rate of 411 kb/d each year over that period.

    1. Yes, that’s the average, but according to the chart above, it is going over the cliff. Canada and Russia are plagued with pipeline problems, and you are well aware of US production problems. Add em up, it ain’t pretty.
      Long term may look better, but it takes time. I don’t expect OPEC cuts to make it to the end of the year, but I wouldn’t expect OPEC increases will sustain a low of $75 into 2020, except with some additional mis-analysis, which wouldn’t hold up. US production won’t increase rapidly due to price increases, the independents are sick or dying. Big oil will pick and choose, but they are not very interested in exporting it. It’s what I have been saying for awhile, and by now, time is on my side. Damage has been done to Iranian production, regardless of the ultimate outcome. Ven. could take ten years to turn around, period. Peak oil 2018 and 19. And every bit of that, is due to Thumper He’s guaranteed his own Presidential loss in 2020. Biden is in. All he has to do, is talk about stupidity and point to the pump, as long as he keeps both feet ou of his mouth. And, I certainly wouldn’t be too concerned with his opponents for Dem. nomination, the middle of the road will rule. Er, that is, gasoline prices will rule.

      1. GuyM,

        If prices go up, there is a chance Trump makes a deal with Iran and eliminates sanctions,
        Iran was able to ramp up production pretty quickly the last tome sanctions were removed, not clear it cannot happen again. Russian problems are likely temporary, eventually Canadians will ship their oil by rail if pipelines cannot be built. I agree on Venezuela, output there won’t recover until 2030 at the earliest. Perhaps there will be a peak by 2022, doubtful it will be 2018 or 2019 in my opinion. Average US annual output in 2019 is likely to be 1000 kb/d higher than 2018. If OPEC continues to produce at March 2019 levels through Dec 2019, then OPEC 2019 output will be 1700 kb/d lower than 2018. Doubtful the 700 kb/d deficit is made up by Canada and Russia and we have the 400 kb/d annual decline from the rest of non-OPEC, so 1100 kb/d would be needed. The World output levels are likely to ride above 2018 output levels by 2020 or 2021. So 2018 may be a temporary peak in World oil output if OPEC does not increase output this year, eventually higher oil prices will lead to greater output from OPEC, US, Russia, and Canada in my opinion.

          1. GuyM,

            I have been thinking that would be the case since 2015, I have given up. 🙂

            Eventually oil prices will go up, and many of the tight oil companies may become profitable, the majors, especially Chevron will be very profitable.

            1. Yeah, the majors can’t lose, but they are not looking to export. You have a handful of independents that will be able to increase. I think Oxy is looking for adoption. EOG could last another 5 to ten years (why wait?). It is much smarter to buy a well run company, with good assets for a higher price, than you can lay out for cheap junk. The rest (and they are called legion) can’t borrow, and there is insufficient income to even provide capex for a few wells, at best. They will mostly implode, majors will definitely buy up some acreage, but the rest of the companies’ financials are garbage. Majors don’t do garbage, usually. I think we have passed over the Rubicon, and the majors knew it was coming. “All’s fair in war and bidness”? WAG.

              P.S. why would Permian increase and EF stay stable, and Texas not increase much? Check what data Eno has on Austin Chalk and conventional decline. EOG has not completed much in the way of monster Austin Chalk wells, lately, and all of that stuff was in District 2. Don’t know what source has conventional Permian and other production data. If it’s there, which I doubt. And that stuff may be hidden in future declines.
              Texas production is much more involved than the EIA production estimates. Which is pretty narrow in scope.
              This only a small part of the picture:
              https://oilprice.com/Energy/Energy-General/Is-US-Shale-Cannibalizing-Itself.html

              It’s much worse. And most of these companies are in the Permian. This spreads much over a year, and I know I keep trying to put too much in one post. But, it’s fundamental, IMO.

            2. GuyM,

              Yes if we look at Texas output from Nov 2018 to April 2019 the growth has not been very strong. If it continues at the Nov 2018 to April 2019 rate it is likely that World storage levels will begin to fall. One thing I have noticed with OECD commercial stocks is that some proportion is LPG and ethane and I believe the proportion is rising. This hides some of the decline in stock levels for crude, gasoline, jet fuel, and diesel, those are the numbers that should be tracked.

              Unfortunately the numbers tend to be rolled up.

    1. The Cretins have unfortunately taken control of the Gov—-
      Maybe it will hasten the fall? (trying to keep positive)

  18. Global oil production has fallen by 2 million barrels per day over a short period of perhaps 8 months Which signifies nothing at all.

    From November 1979 to Feb 1983, a period of 39 months oil production fell from 63.6 to 49.8 and did not regain the 1979 production level until Feb 1996.

    From Nov 2000 to April 2002 oil production fell from 70.5 to 66.2 and did not regain it’s Nov 2000 level until Oct 2003.

    When global oil production cannot meet demand, oil prices will start to increase. The price increase will depend on the gap between production and demand and who wants the oil.

    OPEC and Russia have cut production to support prices, that should tell someone even with a remedial understanding of supply and demand, that peak production is still some way off.

    1. I disagree. I believe that peak oil is a low price problem, not a high price problem. I believe peak oil is about extraction prices rising faster than market prices. I think the law of supply and demand is the most overrated law in economics. You can’t use it to predict future prices, nor can it be used to predict future supply. What’s it good for?

      1. In the last 3 years the price of oil collapsed. It collapsed because US oil production increased substantially and OPEC increased production to grab market share. Can you name one product which is scarce and in demand yet the price is low?

        Anyway my main point was oil production has previously fallen by far more and longer in the past. It is also a fact that OPEC and Russia have cut production. This production can come back online when The US, Canada, Brazil production increase cannot meet demand growth.

        1. “Can you name one product which is scarce and in demand yet the price is low?”

          I will give my take on this and look forward to read a reply from Schinzy.

          It’s not that “demand” is high and price is “low”. Consumption declines because the product is not affordable for the marginal consumer at the marginal production cost. Consumers are therefore forced to reduce their consumption, like it or not. In today’s society consumers will probably start with maxing out their credit card and hope the sky will look brighter in the future (kick the can). This works until it don’t. In the long term producers have to pass on their production cost to the consumer otherwise it’s a loss making industry that will not survive.

          One example might be food during the 30’s. Farmers had to close down b/o production cost > market price was. Yet, people were hungry. There is perhaps a similar story soon to be told. Many farmers are struggling to make both ends meet yet they have low costs for capital and inputs. What will happen if interest rates increase (or financing becomes more expensive even if interest rates are low), cost of inputs increase (e.g. energy) and/or consumers are forced to buy lower cost food (less meat and dairy which is less profitable for the farmer)?

          1. Jeff

            It is true what you say about the Great Depression, but most of the misery was caused by the Fed restricting the money supply. Once deflation set in, banks and people started hoarding money making things even worse.

            I do not see the same thing happening to make oil unaffordable, but in a complex world anything is possible.

            1. Hugo Wrote:
              “It is true what you say about the Great Depression, but most of the misery was caused by the Fed restricting the money supply”

              Not really, at that time the US was on the gold standard so the only way to “increase the money supply” was to deflate the dollar which happened when the Treasury Dept. devalued the dollar from about $20/ounce to $42/ounce. Primary cause of the great Depression with go’v’t interference. (Progressive tax rate up 98% of income), confiscation of personal & business accounts (via 1933 bank holiday act: no one dared to keep money in the bank, thus preventing loans, fearing a second round of a bank holiday). The Tariff wars also didn’t help the economy.

              Hugo Wrote:
              “Once deflation set in, banks and people started hoarding money making things even worse.”

              That’s not going to happen. Fed is going to issue more Quantitive easing (aka Money printing).

              My guess is will continue to see stagnation, where a large pool of unskill\low skill workers chase a dwindling pool of low skill\no skill jobs (retail) which prices for good & services continue to increase do to rising taxes, tariffs, input costs. etc. The Fed will continue to keep interest rates low indefinitely and we all just turn Japanese (30 year perma-recession\stagnation).

              Hugo Wrote:
              “I do not see the same thing happening to make oil unaffordable”

              Depends on which class people are apart of. Currently prices of fuel are too high for the poor. Look at the rising number of homeless in the US As well has the Suicide rate. I expect this trend to continue to increase.

              As far as parallels to the 1930’s and farmers:
              1. Farmer Bankruptcies at decade high & tracking to match the highs of the 1980’s: https://www.politico.com/story/2019/06/24/trump-trade-farmers-loans-1547826
              2. Trade wars 2.0 (Last time was in the 1930s)
              3. Severe weather events: In the 1930’s it was the Dustbowl, this year its too much rain.

            2. TechGuy

              You are trying too hard to prove how clever you are and failing.

              You first say I am wrong, then explain that part of the problem was banks not giving out loans and people stashing money at home. WHICH is what I said in the first place.

              This is table of money supply during the vital years of 1930, 1931 and 1932.

              http://www.sjsu.edu/faculty/watkins/depmon.htm

              As you can see money supply fell during the vital years 1931, 32 and 33.

              Also the bank holiday act did not steal people’s accounts.
              It gave the government time to prop up banks, giving security to savers. If this had been done in 1930 much of the distress would have been avoided.

              https://en.wikipedia.org/wiki/Emergency_Banking_Act

              Hopefully you are not a teacher, teaching pupils your rewritten version of historical facts

        2. Hugo,

          I agree with both of your comments above. Eventually we will see peak oil and initially we are likely to see high oil prices (likely $100 to $150/b) as oil producers struggle to produce enough oil to satisfy demand at $80/b (Brent Price in 2018$) in 2021, consumers will bid the price higher until enough consumers decide to drive or fly less so that the amount of oil consumed is close to the amount of oil produced. Oil resources will continue to deplete and less oil will be profitable to produce at any given oil price as this occurs so oil output will fall unless oil prices rise enough to allow the more expensive resources (tight oil, oil sands, and ultra deepwater oil) to be produced profitably, but still oil output will fall after 2024-2026.

          Eventually (by perhaps 2033-2037) high oil prices will have driven the transition to BEVs in both personal and commercial land transport to a level that demand for oil starts to fall below available supply at $125/b (Brent in 2018$), then we will see falling oil prices and the decline in oil output will accelerate as fewer oil resources will be profitable to produce.

          Eventually the climate crisis might lead a transition to non-fossil fuel air transport and water transport and eliminate the combustion of most fossil fuel as the World transitions to mostly wind, solar, hydro, and perhaps a bit of nuclear power (this would require research to perfect small nuclear reactors that shut down safely in the absence of any electric power, afaik such reactors remain theoretical at this point and no such commercial nuclear reactors exist.)

        3. Jeff’s response is essentially the same as mine. But I will take your example of oil in the 1970s and 80s. Observe Figure 1 in this article: https://link.springer.com/article/10.1007%2Fs41247-016-0016-6. Oil production rose by about 7% per year in the 1950s and 60s. The price decreased during this time. Starting in 1970, the rate of increase in production fell and the price rose slowly until 1973. Production in 1974 was equal to that of 1973 and the price kicked by over 100%. Both price and production fell in 1975. Price and production rose slightly from 1976 to 1978. Then production increased in 1979 and the price kicked by over 100%. In 1980 production fell and price rose slightly. Production continued to fall until 1983, with price falling concurrently.

          The law of supply and demand continues to hold, but a priori gave no indication as to how price would behave with respect to changing production between 1973 and 1986 (when price collapsed). The law of supply and demand doesn’t tell you what demand will be, it tells you what it was.

          The more essential an item is for economic production, the more likely a shortage of the item could lead to lower prices because a shortage of an essential item to economic production causes a contraction of the economy, possibly with a time delay. For example a shortage of an essential item could lead to a deflationary debt spiral.

          I will add that Jeff’s example of a shortage of food making life more difficult for farmers is a common occurrence back to the Roman Empire. See Secular Cycles by Turchin and Nefedov. This phenomenon is occurring today in Venezuela where the government is forcing farmers to sell below cost.

          I will also add that I think it was an excellent example to bring up the changes in production rates in the 1970s and 1980s in comparison to today. It gives an excellent perspective!

          1. Schinzy

            The 1979 oil price spike was caused by the Iranian revolution, which was a big jolt to the global economy. The idiot Feb response to the ensuing inflation was to hike interest rates. This crippled the housing market and industrial investment.

            Many of the worst recession have been so bad due to incompetent government policies.

            At the moment there is plenty of oil and hybrid cars would enable people to do more with less. The United States would use 5 million barrels per day less if all cars were plug in hybrids.

            2. The law of supply and demand does not make predictions. If you knew what the supply was, and if you knew what demand would be, then you could make very accurate predictions about the future price of oil. But you know neither.

              Supply and demand absolutely determine the price of oil. The problem is that no one can accurately predict what the supply will be or what demand will be.

            4. I think the problem is that the law of supply and demand as presented in text books gives a false impression of what moves prices. For example many people (including myself at one time) believe that peak oil is a problem of high prices and that it is an investment opportunity (in oil stocks) because scarcity of oil implies higher prices. I stopped believing that in 2008. Now I believe that peak oil is about extraction prices rising faster than market prices. For me, the best investments are investments that lessen my dependence on oil before it becomes scarce. Note that this type of investment decreases demand, lowering prices precipitation peak oil. Believing makes it so.

              I think much of LTO production is a marketing phenomenon. If oil production can be created through marketing, it can also be destroyed through marketing.

              The law of supply and demand is not false, it is just useless for predicting future prices and future production. It gives the impression of an orderly self regulating system when the self regulation can veer out of control. That’s why I call it overrated.

            5. Schinzy,

              I agree that the system is not self regulating.

              The perfectly competitive markets envisioned by Adam Smith in Wealth of Nations might be relatively self regulating. That is not the World we live in.

              The mistake that some people made was believing the hype that oil had no substitute, that assertion has been to a large extent been proven false, in my opinion. Oil and other fossil fuels are not the only form that energy can take.

              Energy is essential, oil is not.

            6. Also, with oil, substitution isn’t just about finding a different energy source. Substitution can also involve not driving at all. We don’t need to maintain our current lifestyles.

            7. Boomer,

              Yes we can drive less, use public transport, by more fuel efficient cars, car pool, combine trips, take fewer flights, eat less meat, buy goods that are built to last forever and buy fewer goods in general.

              All of this will reduce our need for energy, in addition there are very large solar and wind resources that could potentially be utilized, though it will take time to undertake the required investment.

            8. Schinzy

              In the UK we do not pay market prices, tax is nearly 2/3 of the price of a gallon of petrol or diesel.
              We give £25 billion a year to foreign countries which we could keep and cut fuel taxes.
              Oil could easily be $150 per barrel and we would not notice the difference.
              Poor and corrupt countries would be in trouble.

            9. Schinzy,

              I agree with Ron and Hugo.

              The “law of supply and demand” is simply a description of how markets work, it is not intended to predict anything.

              If we knew with certainty the future supply and demand curves for crude plus condensate, we could predict the future price, we do not, so we cannot.

            10. D.C. Energy is essential, oil is not.

              Dennis,
              What about power?

              Food is essential – but not sufficient if you have too little.

              Similarly, for infrastructure energy is essential but not sufficient.

              Cities, for example, need enough power to get in supplies and remove waste every day.

              Oil has energy per unit of weight and volume that is hard to match. Therefore, it also has power that is hard to match with other energy sources.

              Without sufficient power our built infrastructure can not function.

              It is not only energy. It is energy per unit time that is needed if today’s lifestyle is to remain.

              Without adequate power we will need a very different infrastructure.

              Energy = Power * Time.

              If power declines, time must increase. We will simply have to slow down.

              Regards,
              Paul Isaacs

            12. Paul,

              Oil and other fossil fuels are limited resources. On a society wide basis if they become so difficult to produce t they deplete that net energy is close to zero, we are helped very little by using them to provide energy.

              Yes oil has a large amount of energy per unit volume and per unit mass.

              For tight oil the EROEI on average may be 3 units out for one unit in (and this may be optimistic.) That is for a unit of gasoline ready to be put in the tank of your car. So from a societywide viewpoint we only get 2/3 of a gallon of actual energy. What we want is work moving a vehicle down the road. In that case the average car converts about 25% of the energy in a gallon of fuel to work moving the vehicle so we are left with about 17% of the original energy that is converted to work.

              In any case the work can be provided with far fewer heat losses by utilizing solar and wind power converted to work using batteries or the grid in the case of public transport for densely populated areas. More rural areas can use batteries or possibly main routes services with overhead wires powering buses and ridesharing with BEVs to go the last mile.

              As fossil fuel resources deplete we will have to be creative.

              Wishing we had easily available fossil fuel will not make it so.

              Lots of solar power hits the planet every day, it simply needs to be collected with PV panels.

      2. Schinzy,

        Part of the problem is a lack of good data for the oil market. The supply and demand situation only becomes clear after storage data is available and the storage data is not transparent in real time. Once the market becomes aware that storage levels are low (as over the period from 2011 to early 2014) and the market is undersupplied then oil prices rise, likewise when oil storage levels are too high (oversupply) as in the period from 2015 to 2017, then oil prices fall. Producers sometimes respond in irrational ways and try to increase market share in a falling oil price environment which takes the market further out of balance and reduces oil prices and profits even further.

        You are correct that in a sense prices are “too low” for producers, however on could always claim that oil prices are lower than producers wish for and that likewise prices are higher than consumers would wish. The ideal oil price for consumers is zero and for producers it is infinity, the market price will be somewhere between these so that the amount consumers are willing to purchase at that price is about the same as the amount of oil that producers can profitably produce at that price.

        The “law” of supply and demand says no more than this, nothing can be predicted in economics, the system is too complex and human behavior is influenced by social theory, which quickly makes any social theory obsolete.

        1. Russia The Soviet Union Did It

          2019: Zombie Markets Before The Fall

          “…markets need price discovery as much as price discovery needs markets. They are two sides of the same coin. Markets are the mechanism that makes price discovery possible, and vice versa. Functioning markets, that is. Given the interdependence between the two, we must conclude that when there is no price discovery, there are no functioning markets. And a market that doesn’t function is not a market at all…

          …we must wonder why everyone in the financial world, and the media, is still talking about ‘the markets’ (stocks, bonds et al) as if they still existed. Is it because they think there still is price discovery? Or do they think that even without price discovery, you can still have functioning markets? Or is their idea that a market is still a market even if it doesn’t function?”

          The Recline and Flail of Western Civilization

          “By and large, the tests facing the economy have little to do with markets and everything to do with central government. Over the last 30 years, as the Fed and the Treasury colluded to rig the financial system in totality, wealth has become ever more concentrated in fewer and fewer insider hands. The effect over this latest period of expansion has been a disparity that is so magnified few can ignore it.

          Imagine Cuba’s Special Period going global.

          “If there is indeed a major problem with the viability of money, all brought on by debt problems, then the market economy, which is mediated by monetary exchange, may fail rapidly. In that case, the only way to manage the physical economic assets needed to keep people alive (energy production, industrial agriculture, the electric grid) will be by a command economy.

          You ask, ‘Have we ever really believed that benign apparatchiks can manage things better than people can do for themselves?’ Perhaps not, but try managing things for yourself without any money at all. We may very well depend on apparatchiks to manage things for us if the global market economy has a meltdown. Imagine Cuba’s Special Period going global.” ~ Joe Clarkson

          “My hunch is that the Fed is trying to let this happen in slow motion…” ~ drtimmorgan

  19. Several things. The 10 yr treasury note interest rate has been in decline for 30 yrs. Not clear at all what magical new reality exists that would change that — and there are plenty of pressures pushing it lower (Germany’s 10 yr bond is -0.37% interest rate, Japan is -0.17%, minus for both) Those are countries with far lower debt than the US, and far higher debt than the US. Doesn’t matter. Why would they not pull US yields down? Clearly the US did not pull them up.

    The Bakken ultimate recovery Enno is showing for 2017 wells says 400-500K. These are the longest stage counts on average of the field. The earlier year wells are not going to achieve that because the stage count is lower (and so was the proppant / water hauling cost). Bakken well prices are lower than WTI and always have been. We’ve gone thru all the numbers before with owner royalty and interest rates and OPEX blah blah. The overall problem is not that the price of WTI is falling. The problem is it already fell. Oil flow already sent to refiners is gone from the ground. It didn’t get $100 pricing. It’s gone. It somewhat doesn’t matter that future wells might earn a profit. What matters is past wells didn’t, and the money is still owed.

    It’s right and proper to ignore good wells and bad wells in oil fields. The average is what matters there. But it’s not the average that matters for global production and consumption. Countries don’t share and share alike. The US got embargoed in the 1970s. At any price. It’s happening now to Iran and Venezuela. It will happen again and again, and price won’t be affected or matter. Argentina is teaching a VERY IMPORTANT lesson right now with their internally declared price of oil. Make it flow and nothing else matters.

    1. Currently Japan and Germany have a buyer that can pay any price. Until Fed starts buying again the US does not. Yields will rise until they force the FED to buy again. That won’t happen until there is a crisis by the way.

      Something very rare is likely to happen before FED steps back in and buys. Both stocks and bonds get sold at the same time.

      The demographic pension fund crisis that has no answer will trigger this. Stocks and Bonds are both at or near all time highs and retirement funds are still woefully underfunded. There will be a run on those funds. Those that get their money out early will get their money. Those that don’t won’t be able to get their money out. Only question is timing.

      The oldest of the Boomers are in their early 70’s so this happens between now and 2030.

      Make no mistake about it there will be a race to cash. Because that is what the majority of people who own assets will need.

      The source of capital that most companies that are doing these massive share buybacks are pension funds. As is the source of capital that is funding shale oil. Shale oil is going off a cliff at some point unless Fed actually funds it. Pension money is going to leave and never come back at some point.

      Guess who owns the largest share of US government debt? More than twice what the FED owns. And 5 times what either China or Japan owns. i’ll give you a hint it starts with a P.

      Pension funds also don’t have 30-50 years to fill in a $5 trillion hole. Those promises come due pretty much in next 10 years.
      Higher taxes are a drag on economy as are cutting benefits or payouts. MMT will be kicked around as a solution i’m sure.

      1. The Norwegian SWF (and others) can dwarf pension funds, or be called pension funds themselves, and they buy bonds hand over fist. MMT will be floated in Chicago, but none of this matters. View all things through the prism of oil. Only oil matters. That’s where Norway got their $1T.

      2. HHH

        I think it would be prudent if everyone read your comment and thought about the demographics of the USA for a really long time. And I think you are right about the Fed eventually stepping in and ultimately funding the Shale Co.s

  20. Ron,
    Thanks very much for putting these interesting reports together. Very interesting stuff for a retired oil industry worker like me. I worked in the Canadian oil and gas industry and I saw there is a fairly big discrepancy in your chart on NEB estimate of Canada production versus EIA estimate of Canada production. I am familiar with the sources of data used by the NEB to produce their oil production estimates. They come from the provincial regulators who produce very detailed monthly reports of oil and gas production in their provinces (these reports are published by the provincial regulators on their websites). The NEB numbers do indeed exactly reflect what the provincial regulators report.

    I think the discrepancy arises from the NEB’s treatment of field condensate and pentanes plus production from gas processing plants and fractionated NGLs– the NEB includes these volumes as oil production. In the first 5 months of 2019, these C5+ and condensate volumes averaged 420 k Bbl/d. From what I can tell, the 420 kBpd is split about 25 to 30 % Field condensate and 70 to 75% Pentanes Plus from Gas plants and NGL fractionation. It looks to me that EIA is excluding these volumes from their estimate.

    1. Which would coincide with how they report US production. Good info, thanks!

      1. Rapinoe is a great soccer (football) player, but might not be a great president, though the bar has been lowered so that a two year old could clear it. 🙂

        We could hardly do worse than Trump.

        1. True–
          But I have never hated any politician as much as I hate the despicable Trump. Personally he is utterly devoid of conscience or of empathy for others. Mean and cruel, he is completely self-centered. Devoid of honor, he breaks laws and ethical norms, big and little, and sells out friends and associates (and ”his” country) without a qualm. He sees women as things to be used. He is a racist. He cannot keep from lying on matters important and unimportant. While he has a certain sly cunning, Trump is ignorant, incurious, and stupid. He makes stupid decisions—not just from my standpoint but from that of U.S. imperialism.
          -Wayne Price
          Reformist politics is way in the rear view mirror.

          1. Remember when GW Bush was a chimp with no curiosity and low IQ? And racist?

            1. Watcher,

              Yes, G.W. Bush looks like a genius standing next to Trump.

            2. Never thought I’d say this but next to Trump, Bush is also kind and compassionate!

              lucky for the planet that Trump is dumber than a bag of rocks because if he had even two functioning synapses he would go down in history as being among the most despicable of evil tyrants.

            3. Bush’s ‘No Child Left Behind’ education initiative sounded like good old ‘compassionate conservatism’ on paper. Didn’t roll out so well, but the heart was in the right place.

  22. https://www.reuters.com/article/us-volkswagen-electric-batteries/vw-to-deepen-alliances-with-battery-suppliers-for-electric-push-idUSKCN1U30I8

    I have occasionally posted comments, not recently, to the effect that the top management of any large corporation routinely maintains a research staff responsible for keeping management informed of the many various changes taking place in the world, political, economic, technical, and believe it or not, natural as well.

    Now whether the bosses read the reports put on their desks, and take them seriously, is another matter altogether, but it’s obvious that some times they do and take action.

    You have to wonder, if you have any imagination at all, just how seriously companies in the automobile and truck industry take peak oil.

    My personal guess is that by now, they’re taking it seriously indeed, taking it as something that’s a real problem for them within ten years or maybe less. Maybe sooner than they can have at least a few new electric cars in all their dealers’ showrooms.Maybe peak oil is taken FAR more seriously in automotive and truck corporate board room closed door sessions than anybody here might guess.

    But don’t look for the legacy manufacturers to run ads showing cars lined up to buy gasoline!

    Tesla on the other hand, and a few other companies that will be all electric manufacturers, will be big enough one of these days that running such ads will be sweet revenge on all the people who shorted them!

    I sure as hell have never heard of any motor vehicle manufacturer going into joint ventures with companies that produce any of the OTHER components of their vehicles, in order to secure adequate supplies…… other than batteries. Once in a while car companies do jointly produce a few components, such as transmissions, because no one company wants enough of one particular NEW transmission to justify setting up it’s own in house operation.

    Truck builders routinely buy some of their engines and other drive train components from other companies, but that’s because they can’t justify the expense of building their own due to lack of sales volume, or because the customer wants his new truck with a different make engine.

    Flip side, the serious work done here by Dennis, WHT, and some others has convinced me that we won’t likely have to deal with a crash and burn economic scenario due to peak oil, as I once believed. It really does look, to me at least, that the supply will plateau and decline gradually enough that the world economy can adapt to it.

    The adaptation process will be extremely painful at times, but it’s unlikely to be fatal, so long as the day to day supply of oil declines at only one or two percent annually over a period of ten to twenty years.

    Twenty years is long enough for the old dug in farts who control things to die or retire in sufficient numbers to allow a new generation of people to change the way things are done. Long enough to change zoning laws that FORCE people to drive everywhere for instance, long enough to build charging stations, long enough to allow businesses that are paper and management oriented businesses to disperse their work right into the homes of their employees to a truly substantial extent, or to buy some smaller office buildings in places with lots of cheap housing very close by………. and move some of their operations into these buildings. If current employees don’t want to move, they can be easily replaced at the new office…… by people who live close enough that even a twenty five mile range electric minicar will be more than adequate to get them to work.

    Long enough for autonomous cars to deliver just about everything from groceries to prescriptions, maybe even long enough for the autonomous car or light truck to come with a robot capable of unloading heavy items such as bags of mulch or furniture……… but that’s not important, because there will be MILLIONS of men available, cheap, and plenty of them will be GLAD to work at any job at all.

    Long enough for building codes to mandate super insulation for new construction jobs, and tax laws to be changed to give direct tax credits for refurbishing older houses and buildings to modern energy efficiency standards.

    Long enough for even rednecks like most of my current day acquaintances to quit laughing at solar panels and solar hot water heaters and laugh at people who don’t yet have them. Long enough for the ones who will never admit times have changed to die or move into nursing homes.

    Long enough for the birth rate to fall off a little farther than it has already.

    This is not to say that the leaky , rotten, over loaded and under supplied old ship known as industrial civilization will make it to port before it sinks beneath the waves….

    But maybe we are close enough to port that some of the lifeboats might make it!

      1. Hightrekker,

        In a bankruptcy all assets can be sold to pay back debt.

        It is not always the case that assets are equal debt especially in a bankruptcy.

        So debt is not always paid off sometimes the debt is written off the books.

        You crossout the billion dollars owed and change the number to zero.

        If you consider that debt is “paid” maybe you could lend me a billion or 2. 😉

        1. Oh, I don’t need that much, but I’ll gladly pay you Tuesday for a hamburger, today.

    2. I agree OFM.
      If oil production can stay up above 75 mbpd for 10 yrs, much of the world ‘who happen to their house in order’ will have the chance to deploy electric vehicles at scale by the end of the decade, I expect.
      A more difficult and expensive challenge may in fact be keeping living and working space both warm and cool enough for affordable decent living. Building retrofit is expensive.
      A whole other discussion is what is meant by ‘who happen to have their house in order’.

    3. You have to wonder, if you have any imagination at all, just how seriously companies in the automobile and truck industry take peak oil.

      I think there are only three major automobile manufactures who get it! They are in no particular order Nissan, VW and Honda.

      The rest all are still stuck in the past and mistakenly think Tesla is in the automobile manufacturing business. It isn’t, it is a Silicon Valley tech company start up and it launched it’s first limited edition computer on wheels, the Tesla Roadster, only a decade ago. It is currently on track to deliver 360,000 vehicles in 2019. Rumors of its impending demise notwithstanding, it has recently built its own AI chip for autonomous vehicles in house, leapfrogging over NVIDIA.

      Here’s a clue they should all be very worried about!

      https://www.ibtimes.com/amazons-jeff-bezos-very-excited-electric-cars-rivian-investment-grows-2793920

      Amazon’s Jeff Bezos ‘Very Excited’ With Electric Cars As Rivian Investment Grows

    4. OFM says: “I sure as hell have never heard of any motor vehicle manufacturer going into joint ventures with companies that produce any of the OTHER components of their vehicles, in order to secure adequate supplies…… other than batteries. ”
      I wonder about that. Usually the auto plants are referred to as “assembly” plants. I thought that almost every component was/is manufactured by other companies – from tires, to seats, to radios, to computers, to suspensions, to transmissions, to, well almost everything. General Motors used to advertise ” body by Fisher,” etc.
      I guess I will research it later. Maybe your statement hinges upon the term “joint ventures” rather than suppliers.

      1. The old Ford Ranger and Mazda B2000 (I think) had the exact same engine. Not a joint venture, but def some joint assembly and production.

        1. Hi Survivalist,
          I probably should have used different words. Auto companies do use the same supplier for some major components, such as engines and transmissions, with one manufacturer supplying another, or both getting the component from a third party. My once upon a time AMC had a Chrysler transmission and a GM electrical system, and if you raise the hood on a Rolls, you may be surprised to see GM ac components on some of the ones built a few decades back.

          They do most definitely get a large portion of the smaller component parts from various suppliers that can manufacture them cheaper and better quality due to higher volume, by selling to lots of other companies.

          Timken bearings for instance are found in virtually every sort of machine you will ever work on that requires a high quality ball or roller bearing, and in just about every make of car and truck, one model or another, excepting those built overseas, and Timken bearings are sold with other names on them….. so your German built Mercedes for instance might have Timken wheel bearings.

          Even GM and Toyota, etc, aren’t big enough to do a truly efficient in house job of making all the small parts.

          The Mazda pickup was basically a rebadged Ford. I never encountered a part on one that wasn’t interchangeable with the usual Ford part, other than trivial stuff.

          Chevrolet sold rebadged Toyota Corollas, I forget the name Chevrolet put on them, Geo Prism iirc. This is a common practice in the auto biz.

          Sometimes you could find a Prisom for peanuts, because it said Chevy on the outside, but on the inside…….. it was a real Toyota,.

          I suppose when two or more companies contract together to develop a new engine or transmission or other component, or a new technology, or share in the ownership of a manufacturing facility, that would be properly described as a joint venture.

          Mechanics get to know a hell of a lot about such things, because if you want a hood for a particular car, you may find that you can get one that says Chevrolet on the box, that is a perfect fit, and as likely as not came off the same assembly line, as one that says Buick…… for half the money. You don’t as a rule tell the customer, lol, or the insurance adjuster, unless you are interested in taking home a smaller paycheck.

          When I was in body work, years ago, all you had to do to turn a two hundred dollar Chevrolet hood into a four hundred dollar Oldsmobile hood was to drill one hole in it, which took about five minutes.

          So far as I know, Fisher was is or was owned entirely in house by GM for most or all of the history of the company. So the ads saying Body by Fisher were just bullshit, like Ford describing their bottom of the line pickup as having a “custom cab” for many years.

  23. Weather models are showing a tropical system meandering west through the main Gulf of Mexico production areas at the end of the week. Potentially a lot of shut in production.

    1. dclonghorn,

      Agreed. GuyM has been pounding that drum for a while.

    1. Guess up to June. Texas up a little to flat. NM up a little. Bakken flat to down. Okla down a little. Wyoming? Does it make a difference? Alaska and GOM? No fair, they are not shale. Overall, fairly flat to up a little.
      Oil price? It ain’t going to change until cupboards are bare. It’s quite unnatural, and being manipulated somehow. But, it won’t last until 2020. But, we will be hearing about the “shale explosion” until way into 2020. When some of the shale players are coughing up blood. My guess.

      1. As I’ve written before: You can manipulate the oil price with paper trades, until there is only black goo left in the tanks. Than it wil shoot up on the spot price, and paper will have to follow – propably inducing an epic short squeeze additional when the vultures gather.

        Since paper trade is 10-20 times bigger than real trade, there is a lot of space for manipulating.

        1. Eulenspiegel,

          Eventually the traders will notice that stock levels are going down, then they will go long on oil and prices will move in the proper direction in sync with market fundamentals. The investors are not I this to lose money, when they get good information they eventually make the proper trades. Otherwise they find another line of work where they make money instead of losing it.

          1. What I describe as paper games:

            When your scenarion happens by still somewhat filled storage tanks – traders going long can be used by others to induce a sharp down movement by selling future contracts – and making money when the longs are emergency sold because of margin calls.

            That I describe as paper games. They only stop when the supply situation is very stretched.

            1. Eulenspiegel,

              I was thinking more of the futures market where there are puts and calls rather than long and short positions. Yes lots of paper games can be played right up to expiration and then the fun begins for another month. If the futures market gets too far from the real market, those with positions reflecting reality will make money and others in fantasy land with prices too far above or below the spot price of oil will lose their shirts.

              That is my limited understanding of the futures market. It is often far from the mark, but eventually adjusts to reality.

              Those that play the paper game well, know that eventually the supply and demand for real oil is what matters, those that get this right make money.

            2. Dennis, you can have both long and short positions in the futures market, just by providing margin (ie you don’t have to pay the full price, just the [small] percentage the exchange deems sufficient). And then there are also options on futures where you can buy or sell puts and calls on futures contracts. It’s the Wild West and addictive. I lost about $70k back in the ’90’s…

            3. Thanks,

              Got it, I was confused on options market, they no doubt have options on the options. 🙂

              Not a game I play, obviously.

      2. GuyM,

        So far the Permian is holding up pretty well for new drill oil completions. The average new drill oil completion rate in the TX Permian basin for the past 18 months has been 367 new drill oil wells completed per month, in June there were 442 completions. The 18 month trend has been an annual rate of decrease of 23 per year, or roughly 2 fewer completions per month (though there is much volatility with a low of 209 and a high of 561 over the past 18 months).

      3. For Permian Basin output (including Texas and New Mexico) for the past 8 months the annual rate of increase has been 487 kb/d and for the past 12 months Permian basin output has increased at an annual rate of 707 kb/d so the rate of growth has slowed lately.

        For all of US tight oil output the annual rate of increase in output for the past 12 months has been 1069 kb/d, for the past 8 months US tight oil output has decreased to less than half the rate for the past 12 months and to less than the rate of growth for the Permian basin to 480 kb/d. Essentially all growth in US tight oil for the past 8 months has come from the Permian basin.

        1. To me, this is most crucial. I often hear talk of technology unlocking ever more shale, but when I look at US tight oil production, the Permian is the only game in town, the combined production of the Bakken and the Eagle Ford has been flat for 5 years. If technology has been such a panacea and cost is going down one would expect the combined Bakken and Eagle Ford production to have widely exceeded its previous 2014/2015 peak. If there was no Permian, it would have been game over for US shale soon after OPEC hit back in late 2014.

          1. Joseph,

            There is some evidence the Permian rate of growth has slowed.

            From Jan 2017 to Sept 2018 the annual growth rate of Permian output was 43% per year, but from Oct 2018 to May 2019 the annual rate of growth slowed to 15% per year, I think linear rather exponential growth is more likely going forward at 500 to 700 kb/d per year over the next 2 or three years with a gradual slow down to zero growth in Permian basin output by 2027, for all of US tight oil the peak will be 2024 to 2026 and this will likely be the World peak in C+C output as well.

            A low oil price scenario due to economic recession might result in an earlier peak in 2022 to 2024. Depending on the severity of the recession we might see a double peak (for severe recession with quick recovery) or an undulating plateau, a mild recession with slower recovery. An endless number of possibilities exist.

  27. Somewhere up above people were talking about all debt has to be paid in some fashion. Thinking so derives from a presumption that it all is logical. It’s not. Why would it have to be?

    You can probably find a wiki for monetizing debt. You can certainly find a wiki for quantitative ease.

    Monetizing debt is the oh so very horrible act of a government spending more money than they have in tax revenue, not finding a lender for the difference, and having their Central Bank be the lender. The central bank creates money from thin air and lends it to the government to spend on whatever their priorities are. If you ask the government what they are doing, there will generally be no answer or the answer will be that it’s a temporary arrangement to get past a temporary difficulty.

    In contrast, quantitative ease is the oh so very admired act of a government spending more money than they have in tax revenue, not finding a lender for the difference, and having the Central Bank be that lender. The central bank creates money from thin air and lends it to the government to spend on whatever their priorities are. If you ask the government what they’re doing the reply will be forthright and unashamed and it will be that this is a temporary situation to address a temporary difficulty in GDP and is intended to stimulate GDP growth and most definitely not simply to allow the govt to spend more (which btw is GDP stimulative).

    The difference in the two is very strictly a difference in what is said. There is no difference in what is done.

    Now, as the debt matures within the confines of the Central Bank, we have seen that the government is not required to repay it. The bonds, aka debt, expire and the govt never mentions them again.

    Do not think that debt always gets repaid. The stuff was created from thin air originally. Why should it have to conform to arithmetic? We will see this in oil. We already have.

    1. In a true real world accounting, not a counting of MONEY as such, but an accounting of REAL resources, be they labor, land, water, minerals, etc, EVERYTHING is paid for in REAL time, and as a rule, monetary debts are also paid for in REAL TIME, meaning a real short time, time enough for the bill to be tabulated, sent, the borrower’s check cut, and the money put into the bank account of the person who provided the REAL labor, land, minerals, etc….. this is the SHORT time frame of course.

      Now in the LONG TIME frame, the real goods and services that are consumed in the short term, and also paid in the short time frame with more or less imaginary, as Watcher points out, money ARE STILL PAID FOR……in the REAL WORLD LONG TERM …….because they are removed from the overall supply of goods and services that the public, the people of the country, could have bought with money in already their possession or money to be earned in the future.

      Public debts don’t necessarily HAVE to be paid for by way of actual tax collections and checks being written on the treasury. They can be and often are paid for, in the REAL world, as opposed to the FINANCIAL world, simply by lowering the living standards of some or all of the people of the country in future times, long or short.

      Consider this thought experiment. Suppose there’s a little isolated community, with an ample supply of small coins available for local transactions, and that the community economy is stable and sustainable, not growing, not shrinking. Let us suppose that eggs are a penny apiece.

      Now let us suppose that an enterprising local crook finds a way to make counterfeit pennies, and starts buying an extra egg once in a while, an extra chicken once in a while, a day’s help so he won’t have to do so much of his own work once in a while, etc.

      So long as the number of counterfeit pennies he passes is small, relative to the local economy, prices won’t change much, if at all. But somebody else eats one less egg once in a while, and one less chicken once in a while, and hires that helper one day less, because he’s occupied helping the counterfeiter that day. Collectively, the community pays the debt created by the COMMUNITY level counterfeiter, or as the case may be in the case may be, the central bank or other bankers, in the case of COUNTRY level counterfeiting.

      Of course there’s a fairly hard limit on the number of counterfeit coins that can be put into circulation. Once a lot of people have an extra coin or two, above or beyond their true savings or true earnings, in relation to the REAL economy, well, they feel a little richer and spend a little more than usual, and if productivity doesn’t rise fast enough to offset the spending of those counterfeit coins…….

      Well, in that case, prices start creeping up. Prices can creep up pretty damned fast, as illustrated currently in Venezuela if the government creates enough so called money out of thin air, or allows enough counterfeit to be put into circulation by other players.

      The flip side is that a little counterfeiting, either legal or otherwise, is generally considered to be good for the economy, which is why the Fed has a two percent inflation target. A little inflation helps make sure the price of various assets doesn’t crash.

      And such a crash is a very real possibility, as productivity increases. Most industries produce a little more efficiently every year. It wouldn’t do for brand new houses to be selling cheaper than houses built ten years ago with twenty years to go on the mortgage, EVERYTHING else held equal. Not that EVERYTHING.

      If you could get a brand new house, equal in EVERY respect, cheaper than a ten year old house, you
      wouldn’t even look at the older house …… UNLESS you could buy it for considerably less.

      The owner of that older house, and the holder of the mortgage on it, would be in big trouble.

      The whole damned country would be in big trouble.

      We can deal with the price of some things coming down, no problem at all, and even celebrate the new lower price……. but things that are financed long term and that represent a substantial part of the economy….. no siree, UH UH, that way lies a disaster, a deflationary crash.

  28. What are they talking about here? Unconventional well “pumping” @ year 30?
    “According to the WSJ, Encana’s “cube development,” which saw 33 wells drilled from one location, “is on track to pump about 300,000 barrels of oil over 30 years,” which is “about half the amount of oil Encana said a typical well would pump in late 2017.” It’s also half the 60 or so wells the company originally planned to drill.” How many Shale wells in this area expect to be pumping in 30 years?
    https://oilprice.com/Energy/Energy-General/Is-US-Shale-Cannibalizing-Itself.html

    1. Er, zero, probably. Shale wells have half that life, at best. And half of that lifespan is a trickle.

  29. API data

    Crude Inventories: Crude: -8.129M Gasoline: -0.257M Distillates: 3.690M Cushing: -0.754M

    U.S. crude stockpiles fell more than forecast last week, while gasoline inventories decreased and distillate stocks built, data from industry group the American Petroleum Institute showed on Tuesday. Crude inventories fell by 8.1 million barrels in the week to July 5 to 461.4 million, compared with analysts’ expectations for a decrease of 3.1 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub fell by 754,000 barrels, API said. Refinery crude runs rose by 8,000 barrels per day, API data showed. Gasoline stocks fell by 257,000 barrels, compared with analysts’ expectations in a Reuters poll for a 1.3 million-barrel decline. Distillate fuels stockpiles, which include diesel and heating oil, rose by 3.7 million barrels, compared with expectations for a 739,000-barrel gain, the API data showed. U.S. crude imports fell last week by 63,000 barrels per day to 7.1 million bpd.

  30. Ron said:

    North Dakota is on an 8-month plateau. No one expected this. Does this mean North Dakota has peaked? There is little doubt that Eagle Ford has peaked. Will North Dakota be the second major shale basin to peak?

    If we assume the average completion rate of the past 12 months continues into the future, that oil prices rise as I show in chart bellow that the mean TRR for the ND Bakken/TF is about 11 Gb with 42k wells completed then we get the scenario below, ERR is 9.5 Gb with about 33.3k wells completed. I assume new well EUR starts to decrease starting in Jan 2019 and the rate of decrease is dependent on the completion rate.

  31. https://oilprice.com/Energy/Energy-General/A-Red-Flag-For-Oil-Chinas-Crude-Consumption-Is-Faltering.html

    You have to think a little more about this than current consumption. China is already preparing to work around US tariffs. They are probably just as global, or more than the US. It’s a pain in the ass, now, but they can overcome it, and keep growing to surpass the US GNP. In the interim, they are much more oil dependent than the US. They are constantly expanding their inventory capability. They will keep buying oil at the same pace, or greater. They just upped the teapots buying this month. Sorry, US, but China is not behind the US, they are more knowledgeable and don’t have the stupidity of leadership that we have. They are storing nuts for the winter, and we are relying on a garbaged up underground storage system, and far, far behind on EVs. We are just lucky to have some shale production, but it is far from the Superman as advertised. China is an ignorable consideration on world inventory drops.

    1. Stockpiling oil is the only sensible strategy to me. Especially when the US is eager to sell its supplies below cost, in many cases.

      Plus the US is blowing a lot of defense money on weapons rather than strengthening its infrastructure, encouraging the transition to renewables and energy efficiency, and better preparing for cyber and propaganda warfare.

      It’s kind of like being in the middle of the Fall of Rome. We see where this is headed, but between smarter foreign countries and a dumb administration, and just enough voters to keep Trump and the GOP in office, it might be hard to turn this around. I think even under the best of circumstances, US will share global power with the Chinese. More than likely they will find ways to supplant us everywhere. They are playing a long game and we are looking at the next two years.

    2. I wonder when China will surpass the US GNP on a per capita basis? I also wonder how smart their leaders are, since they all believe in centralized planning. They make mistakes just like all other leaders: re Hong Kong.

      1. It will be a LONG time, a couple of generations at least, before the Chinese are richer than Yankees on a per capita basis , barring a crash here in Yankee Land that the Chinese avoid.

        But in terms of economic power and influence…… the Chinese are already ahead of us in a number of critical areas, and will soon be ahead of us in even more.

        We Yankees are still the big dog in terms of military power and dug in, long term economic and political ties with more countries, but I don’t expect us to maintain this advantaged position for more than another decade or maybe two.

        The Chinese have a long term master plan, we don’t. There ARE things to be said for an authoritarian government.

        If we had one here, rather than one in me making, and it were controlled by people with good sense, people who know the score in terms of environment and resources, we would be in a hell of a lot better position to survive more or less whole and healthy for the next fifty years, and for the following century.

        Consider…… such a government would immediately halt the production of six and seven thousand pound vehicles primarily used for personal transportation, except a few more for the friends and families of the people in control, of course.

        Such a government would put the expansion of renewable energy infrastructure near the top of it’s priority list.

        Such a government would enact zoning regulations that make it easy for people to live without traveling very far to get to work, or go shopping etc…

        Such a government would put bike lanes into transportation plans.

        1. I think that most of us would agree. An authoritarian government would be a good thing, provided that we were in charge.

          1. Have you ever lived under an authoritarian government?! I have! I wouldn’t wish it on my worst enemy!

            1. Fred,

              You must not have been in charge. 🙂

              I agree, benevolent dictatorships are either non-existent or very rare.

              Democracy is the worst possible form of government, but better than any other form discovered to date.

            2. Hi Fred,

              No, I’ve been fortunate, in that respect, I have always lived in the USA.

              But my parents lived under the war time government we had during WWII, and it had many of the elements of an authoritarian government, such as rationing, price controls, industry forced from civilian to military ends, etc. Defacto slavery, to all intents and purposes, in the form of the draft, for young men and not so young men, in at least one way worse than literal slavery, because literal slaves usually live longer than men in uniform engaged in hot wars.

              My point is that sometimes a democratic government is simply unable to get things done, to make things happen,soon enough and to a sufficient degree, in a REACTIVE fashion.

              It seems to me that a democracy is only capable of fast and decisive actions of the sort that tend to upset lots of people collectively until AFTER a disaster that brings the people together so that they are willing to SACRIFICE TOGETHER AND WORK TOGETHER.

              Pearl Harbor is the example I always use because it’s the one disaster in our history that brought pretty much all of us together and provided us with the necessary boot in the ass to get with it, to go to a war time economy and go to war, on the grandest scale in history, or our own history at least.

              It appears to me, as a casual observer ( but nevertheless better informed than most people by a mile, because most people are paying zero attention ) that China is ONE, obviously an authoritarian state, and TWO, that the people in power running China have an overall plan that involves building up their country, to whatever extent they can, until it dominates any and every possible industry they see as being important to their own future position as a dominant world power, and maybe eventually THE dominant world power.

              Now obviously they must do a lot of things most people would overlook as not the sort of behavior expected of tyrants, such as educate the people, and gradually work to raise the living standards of the people of China… but these two things are essential to one, their own continued status as the leaders, and two, to increasing the power of the country as a whole. Backward countries cannot dominate the world, or even their own neighborhood, more than however far they can send their limited armed forces using their limited transportation, etc.

              So they will keep wages low enough to suck basic manufacturing industries out of richer western countries, and into their own country or into countries under their thumb.

              They will do, and are doing, whatever they can to dominate the basic industries of the future…. such as the manufacture of wind turbines, batteries, and solar panels, etc, subsidizing these industries as necessary to make sure they dominate.

              They will loan money and build stuff for other countries.

              They have already made a mockery of what we Yankees used to call the Monroe Doctrine, while in essence doing all they can to establish a new Monroe Doctrine of their own all thru their half of the globe, etc..

              You are personally one of the best informed people around when it comes to our environmental problems.

              You know that while really good solutions may ALREADY be beyond reach no matter what, there are dozens, hundreds, thousands of PARTIAL solutions that taken together would go one hell of a long way towards making sure our grand kids and great grand kids have a decent world to live in.

              Do you see any evidence that our democratic government is going to implement more than a very few of these countless partial solutions, and then in only a half assed fashion?

              I don’t, unfortunately, until it’s apt to be too late to matter. Many of the regulars here believe it’s already too late, that a big picture catastrophic crash and burn scenario is already baked in.

              I agree with them, with the caveat that the whole world may not NECESSARILY crash and burn. Some people in some places may pull thru this baked in crash more or less whole, but a hell of a lot skinnier.

              I’m not advocating that we have an authoritarian government. I’m pointing out that in the real world an authoritarian government run by and for sophisticated and technically well educated leaders, leaders shaped by a culture that emphasizes the long range, leaders with long range plans, can kick our democratic asses right out of the picture, in terms of running the world.

              I am predicting that our more or less democratic western governments will not get their acts together to the extent that’s necessary to avoid this global crash and burn scenario, even LOCALLY in the WEST, until the shit is WELL AND TRULY in the fan, in ways that are obvious to hundreds of millions of lay people, and that by then it will likely be too late to prevent crashing and burning……. UNLESS.

              UNLESS we get hit upside our collective heads with a series of what I call PEARL HARBOR WAKE UP BRICKS, enough of them to get our collective attention, but not enough to cripple us to the extent we can’t go proactive and do whatever is still possible to preserve our current day industrially based civilization.

              Nobody should underestimate the power of LEVIATHAN, the modern industrial state, once it’s prodded awake and in fear of it’s own survival, if the people are likewise awake and afraid, and willing to make the necessary sacrifices, as they were in WWII here in Yankee Land.

              If by some lucky series of accidents, we get the necessary wake up calls, and heed them, and good leaders, we can solve most of our environmental problems as far as resources and pollution are concerned, at least here in North America, and probably in a number of other parts of the world as well.

              The price of one new car, which we can easily do without, no real sacrifice involved, is more than enough to install a heat pump and put in ten thousand watts worth of solar panels on a typical house. I could go on all day with various other examples of highly practical partial solutions, but I’ve been beating this drum long enough for now.

            3. Its hard to have effective central planning, such as national or regional energy infrastructure, in our system. Partisan politics, with a 4 yr (effectively 2 1/2) time frame, results in generally limp policy making and implementation.
              So we stumble along.
              Certain things, like energy policy or staffing of the supreme court, should be shifted away from the 4yr timeframe process, to a longer term non-partisan committee.

            4. Actually, it would be really good idea to abandon this late enlightenment system of government, with an idiot who received 3 million less votes “leading” us.
              Very hard, with the propagandized populace we have in place.

      2. China has and will make mistakes, but I think our current administration is making more. It and its supporters seem far more focused on re-creating an imaginary past than anticipating global changes happening now and in the future.

      3. Chinese civilization 4000 years and still going, do you think the US will make it to 500?!

        1. China does not have to launch a traditional war against us. It is expensive.

          The war is being fought and will continue to be fought via economics, strategic alliances, and cyber warfare.

          Dropping bombs and sending to troops is an antiquated system. Shutting a country down by disrupting its networks, sowing mistrust (the Russians excel at this), and getting your target country to overspend on outdated military hardware it won’t use, is cheaper and easier.

  32. Been reading about proppant.

    Those who have been around probably remember the famous photo of huge numbers of bags stacked at a railway terminal in NoDak. Printed loudly on the bag was Ceramic Proppant, Made in China.

    Too pricey. Transition to sand. There is a new terminology for sand. “Fines”. This means fine particulates. It’s what happens to “untreated sand” if you pump it down the well being fracked. It does not withstand the pressures after the pump is turned off. The fractures are not held open. Fail.

    Apparently one coats sand with resin to combat this effect, but in general fine generation for untreated sand is 24% of the total volume of sand (24% of the sand pumped in does not hold fractures open), which compares with 8% for those China bags mentioned above.

  33. For HHH:

    The Brent oil price is now at an important medium term chart barrier.

  34. Y’all remember back when we did shale oil breakeven calculations and picked interest rates they would have to pay for the loan that funded drilling/completion?

    I remember scoping out Moodys and Fitch’s credit ratings of the various shale companies to try to guess how far above the US 10 yr Treasury note’s yield they would have to pay. I think we got to something like 5%, with the 10 yr at 2.5%. This would be what high yield debt would have to pay. 5ish%.

    Well, guess what. Y’all also remember the posts of Bloomberg’s links of negative yielding sovereign debt? Germany 10 yrs at -0.37%. Japan at -0.2%. That’s not corportate. That’s sovereign.

    Son of a Gun if a list didn’t just appear on ZH of 14 European HIGH YIELD corporate bond issues that have negative interest rates. One more time for the peanut gallery . . . there are 14 CORPORATE issues rated junk that have a negative interest rate.

    Why would we wonder how new shale drilling is happening? They get paid to borrow.

    If you have to have it, and you do have to have it, you will get it. Y’all do realize new economics need to be looked at for conventional wells that have been capped and abandoned. If someone will pay you to borrow the money to drill out the concrete cap and flow 2 bpd, why not do it. This doesn’t just have to be shale.

    1. Nice article – Permian output is just “resilent”, so it will grow over 8 mb/day in 2030…
      and perhaps 12 mb/day in 2040?

      What are they smoking, or do they expect an endless supply?

      1. Eulenspiegel,

        The numbers almost add up if the Permian basin is currently at capacity, as May 2019 output was 3461 kb/d in the Permian for tight oil alone. Peak may be close to 7500 kb/d, so the 4 Mb/d of capacity may be needed. An extra 500 kb/d probably will not be needed however.

        An optimistic scenario with EIA AEO 2018 reference oil prices has ERR=56 Gb with a peak in 2028 at 7450 kb/d. So output might double in 5 years to about 6600 kb/d and then increase a bit more (850 kb/d) over the next 4 years.

        The are also incorrect that output at this level will continue into 2030s. They probably are making very optimistic assumptions about cost reductions which are unlikely to materialize.

        The scenario below is very optimistic, a lower completion rate reduces the peak and suggests too much pipeline capacity is being built. The Peak might be as low as 5345 kb/d, and in that case would result in a longer plateau possibly until 2032.

        A high and low scenario are shown below. In the high scenario the new well completion rate gradually rises to 725 completions per month from an estimated 400 completions per month in Dec 2018, the lower scenario assumes the completion ate only rises to 460 new wells per month over 3.5 years and then remains at that level for 15 years. Reality may lie between these two scenarios, the average is shown for comparison.

        1. I believe your yellow line will be closer. JMO. Big oil hasn’t finished its aquisitions. More and more of this lite stuff will make it into US refineries and chemical plants, which are being built, or in the planning stage. WTL can be used with the right equipment.

          1. GuyM,

            I agree, thanks.

            The dotted yellow line with Peak of about 6.4 Mb/d is also my best guess, that scenario has a peak completion rate of about 590-595 completions per month from 2023 to 2027 with a gradual increase from about 430 completions per month in May 2019 to 590 completions per month in April 2023, not that the completion rate increased from about 185 per month in mid 2016 to about 400 per month in mid-2018 (increase of 215 completions per month over 2 years) , so that rate of increase in completions (an increase of 260 completions per month over 3.5 years) is not unheard of in a rising oil price environment, which I expect over the 2019 to 2023 period (probably from 60/b to $85/b for WTI in 2019$).

            The annual rate of increase in completions is somewhat conservative in fact at 74 per year vs 107 per year from 2016 to 2018.

  38. I’m looking far an article or essay that explains in layman’s language why money managers are willing to loan money at negative interest rates. Any links will be greatly appreciated, and THANKS in advance.

    I know something about this, but I don’t quite get it, there are gaps in my understanding of it.

          1. Yeah, well, guess I am too old. If interest didn’t pay 5%, I considered it the same as stuffing it into the mattress. Risk was measured by who could compete with your .45, close range.

            2. I qualified in the Navy at 25 yards. But that was 50 years ago. Ain’t easy, but 25 yards is a long, long away target for a .45. You hit anything, anywhere, and they will fly for a while. It’s not used much in the military, anymore. You can qualify in Texas at 25 yards with a .22 now for registration for concealed carry. That’s a duh. No kick or little noise to distract. I don’t need a concealed carry, nor do I think it is a good idea for me. But, have plenty of different types in the house.

              In Texas, it is not illegal to carry a shotgun in your gun rack behind the seat of your pickup. If you can’t hit anything with a 12 gage pump from 10 yards, your totally inept with fire arms. I gave up hunting at 13, because there was really no sport. Killed my first and last deer with a running shot at about 50 yards with a .30 .30., no scope. Of course, that was my Dad’s report. He shot too, with a .270 with a scope, but he said he was sure it was gone before he shot. Still, no warm and fuzzies over killing a deer. “Dressing” it out was bad. That was over 57 years ago. Hunted birds with a shotgun for about 5 more years, but a shotgun makes it no sport, at all. So, by the time I got to the military, shooting was not a big deal. Killing was, and I hated it.
              P. S. I think animals like me for a reason.

            3. My father, a Navy carrier pilot, was issued one.
              Ate a lot of elk in Montana, and a lot of venison in Maui.

            4. You can get “tags” for killing deer any year in Texas. Just takes a small fee. For any idiot. And venison is a lot gamier than beef.

      2. OFM asked ‘why would money managers loan money…’
        I can only guess that they believe they can make money on the transaction, or perhaps be first in line to collect the assets of the newly bankrupt entity.

        I am more curious what the flourishing of the zero interest loan market in Europe says about the state of economic affairs there. Is this a death spiral, last gasp attempt to kick the can down the road? What comes next, a promise to give you back 90% of your capital and zero interest after 5 years- guaranteed?
        [guaranteed by a bank that is insolvent if not for the backing of the Euro Central Bank, which is basically afloat only at the grace of German taxpayers- as I understand it. Please educate me if I’m wrong]

    2. Well, many people would if they had a lot of money. Suppose you had $100,000 cash and all of the banks offered to take your money for a $1000 annual fee. When the bank has the money, it is FDIC insured. If you hold it and it goes missing [stolen, burns up in a fire, mysterious disappearance, etc.] you get nothing since no insurance company insures cash. So, $1000 might be a reasonable charge to keep it safe and also have it available whenever you wanted it back; and negative interest rates support deflation, so you may have increased your purchasing power while the bank holds it.

      The above assumes an individual that is unwilling to buy stocks, bonds, etc.

      Negative interest rates support deflation: In ultimate theory, you could build a $1 million restaurant and borrow 100% of the money with a 20 year term, and a zero interest rate. So, you would have a zero cost of capital for 20 years, and you could under price competitors that had to pay interest and principal. So you could have an extremely profitable business for 20 years, live it up and then declare bankruptcy after 20 years when the $1 million was due. So, in general, more investments are made than are truly economically viable, and thus supply will exceed demand. Shale oil??

  39. Pennsylvania Willing To Let Shuttered Oil Refinery Die
    https://oilprice.com/Latest-Energy-News/World-News/Pennsylvania-Willing-To-Let-Shuttered-Oil-Refinery-Die.html
    “The Pennsylvania government will not finance the recovery of the largest refinery on the U.S. East Coast, which suffered a devastating string of explosions late last month.

    “The administration does not plan expending any funding to maintain the site as a refinery,” the Pennsylvania Governor’s spokesman said in a statement quoted by Reuters.”

  40. Alaska’s Governor is trying to cut the state funding to the state university by 40%. Apparently Alaska is in trouble due to declining oil revenues (lower production and lower oil and gas prices).

  42. Active drilling rigs in North Dakota have been dropping steadily recently. The North Dakota report was pretty steady in the lower to mid 60’s for most of this year, but has recently been declining. It is 56 presently, with three of them in “off” counties and one SWD well. The decline in rigs will eventually reflect in production. DUCs have been declining as well.
    https://www.dmr.nd.gov/oilgas/riglist.asp

  43. Yesterday and last the night dollar index dropped about 60-70 points over a dovish FED. I also watched pretty much every currency against the dollar, both WTI and Brent, and gold along with a bunch of other stuff react to temporary dollar weaken. Then bond market caught fire today. Dollar erased half of yesterday’s loses.

    There is a lot of crap on internet about direction of the dollar. This move in treasury yields has only started. I don’t see FED doing another round of QE just because yields on 10 year treasuries climbs back to 3%. Maybe at 4%or 5% they freaks out and start buying bonds again. But not 3%.

    And if data like jobs continues to be good there won’t be any rate cuts either. A lot of what is on the internet at like Zerohedge is for retail investor/trader consumption. Has as much to do with reality as unicorns.

    Trump can’t have both a weak dollar and low oil price. Trump and the FED likely want a strong dollar contrary to popular belief. From where i stand or sit they keep setting it up to go higher. Everytime they talk it down is another buying opportunity. Until real action is taken.

    Rate cuts will also be temporary weakness that will be just another opportunity to go long USD. Nothing besides actual QE by the FED will change this. Neither rates cuts or QE are coming unless we start getting bad really bad economic news.

    But what investors should really be looking for are signs of uncontrolled selling. Or selling when there is no new to sell. That will be pension fund money leaving both stocks and bonds in an untimely manner.

    Dollar index is made up of all the major currencies for those of you who might not know that. If the British pound collapses on Brexit you’ll see it in the dollar index. So dollar index doesn’t track 10 year yields to the tick. However when treasury yields rise and price falls on US treasury bonds. Value is transfer directly to the currency from the bond. So the move is actually dollar strength and not just British pound weakness say in the event of Brexit. Actual dollar strength will move the index more than British pound weakness. Because it’s a weighted index with the dollar carrying the most weight.

    WTI and Brent are both priced in dollars. It’s really easy to get confused on why markets do what they do. Sometimes moves on WTI and Brent charts are just dollar moves and other times they aren’t.

    1. Weak auction. Coincided with some ECB and bundesbank funding. As long as European yields are negative, and the ones that matter are, it’s a steep mountain to climb for the UST.

      There’s a case to be made for oil moving yields, which of course reverses if tensions with Iran are reduced.

  44. Oil Surplus Makes Surprise Return Despite OPEC Cuts, IEA Says

    World supply exceeded demand at a rate of 900,000 barrels a day during the first six months of 2019 as consumption proved far weaker than expected amid a faltering economy, the IEA said. With the outlook for 2020 also deteriorating, the Organization of Petroleum Exporting Countries may need to reduce output to the lowest in 17 years to keep markets in balance, the agency predicted.

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