something to read on a Sunday for us quantoids...

Check out Mobjectivist's post from yesterday on the derivation of the distribution function of the peak oil supply curve. I will warn you now, it is equation heavy, but for us quantitatively-disposed folks, it's an important discussion, especially regarding the shape the curve post-peak.

Also, we've already had a discussion here that kind of discusses the ideas of what the shape of the post-peak world will look like without the quantitative parlance a month or so ago, so check that out as well if you wish.

Go to the postings for today

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IMO, arguing over the shape of curves in such abstract terms is utterly pointless. Looking at the problem this way makes a critical, implicit assumption: We'll run full-speed off the cliff. If anything, looking at the current tight oil market, thanks in no small part to a stunning lack of infrastructure investment over the last few decades, I think we can make a very good case that we're on an artificially-induced (intentionally induced?) plateau, at a production level lower than would be a true peak. In other words, a crisp peak and decline is far less likely than is relatively steady production for 2 to 5 years.

If the plateau view is accurate (and I believe Jean LaH. also sees a "bumpy plateau"), this will still mean a lot of upward price pressure on oil and oil derivatives, of course, but it's actually good news, since it would slow us down before we reach the cliff.

I know, this sounds like Star Chamber conspiracy theory stuff. But if you assume that the decision makers at the oil companies and in OPEC 1) are rational and 2) knew peak oil was coming, this is precisely how you would expect them to act, even if they were looking out for only their own self-interest. They don't want the world's economy to crash and burn any more than we do; there's no business to be done on an economically dead planet.

This also calls into play, yet again, my argument that we can't look at just geology or just economics; and we sure as hell can't look at just highly theoretical economics and ignore the marketplace and the psychology of all participants, especially the decision makers who wield so much control over the oil industry.

Lest anyone think I've lost my mind and decided that we should all just relax and put our fate into the hands of OPEC and the oil companies, let me make it insultingly clear that that's NOT what I'm saying. Matt Simmons says we need to resort to pulling "all levers" to make it through peak oil (conservation, alternatives, good policy, etc.); I agree, but I think the concept needs to be extended to include participation from all levels of economic decision making, from Saudi Arabia and ExxonMobil down to every consumer.

What I modelled does not show a steep decline. It does take into account rate-constrained extraction. I don't pretend that it predicts the global situation, but if you want to understand a simple model where rate is proportional to how much is left in the ground, there you go. For example, I finally understand how U.S. stripper wells continue and will contine to provide a low-level source of oil for years to come.

On the other hand, what I get spooked by is natural gas depletion. That's the one that drops off the cliff.