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DrumBeat: January 5, 2007
Posted by threadbot on January 5, 2007 - 10:05am
Europe lays out plan to tackle energy dilemma — but will governments and consumers balk?
An energy crunch that chokes fuel supplies, dims the lights at homes and workplaces, and ravages Western economies may no longer be the stuff of 1970s history books. It could be a vision of the near future.The 1970s oil crisis gave Western countries a glimpse of what life is like when the energy supply isn't enough to go around. Worried that an even bigger crisis lies in wait, the European Commission is presenting an energy "roadmap" on Jan. 10 that aims to steer the bloc's 490 million people in a different direction.
Oil and tensions bubble beneath the surface
"The production of natural resources is liable to give rise to various types of political frustrations within a country." That is the view of such leading economists as Jeffrey D. Sachs, and Nobel Prize winner Joseph E. Stiglitz, writing in the introduction to 'Escaping the Resource Curse' a book to be released by Columbia University Press in June 2007, which cites Principe and Sao Tome as one country at risk.The authors warn that, "resource-rich countries grew less rapidly than resource-poor countries during the last quarter of the twentieth century." Plus, they said, "[research suggests] a strong association between resource wealth and the likelihood of weak democratic development, corruption, and civil war."
Fort Lewis College to Host Lecture on the Future of Oil and Natural Gas
On Tuesday, January 9, at Fort Lewis College, Noble Hall Room 125 from 7-9pm, Southwest Colorado Renewable Energy Society and Fort Lewis College Environmental Center will present a free talk by Steve Andrews entitled “ Peak Oil and Natural Gas Update.”Andrews will present the most current information about the evolving peak oil and natural gas challenges and intelligent responses to those challenges. Andrews is co-founder of the Association for the Study of Peak Oil and Gas (www.aspo-usa.com) and a Denver based energy consultant. ASPO is a nonprofit, nonpartisan education outreach organization.
Independence Day: Toward Energy Self-Sufficiency
As our energy supplies decline and environmental challenges escalate, we can expect that our energy networks - our fueling stations, electrical grid, and natural gas pipes - may become less reliable than they are today. Currently, our buildings and transportation systems are extremely brittle and susceptible to energy instability.
Shortage of Oil Rigs Triples Prices in India
Reliance Industries and Oil & Natural Gas are among Indian explorers that expect to pay more for deepwater rigs this year as shortages caused prices to triple in the world's second-biggest market for the rigs."This is the tightest rig market I have seen in my entire career," U.N. Bose, a director at Oil & Natural Gas, who has spent 31 years in exploration, said in a telephone interview from New Delhi last Thursday.
India against bringing oil assets under state control
New Delhi: India today said it would not follow the Russian model of 'Resource Nationalisation' as confining oil and gas reserves to public sector can breed inefficiencies through sub-optimal utilisation of resources.
Russia, Belarus say oil row won't hit Europe supply
MOSCOW/MINSK - Russia and Belarus promised on Thursday to keep pumping oil to Europe, after Minsk slapped a duty on transit shipments of Russian crude in a trade dispute that has shaken the ex-Soviet states' strategic alliance.
World's Largest Gas Pipeline Proposed to Run Through Amazon
Plans to build the world's largest natural gas pipeline through 5,000 miles (8,047 kilometers) of South American wilderness are prompting warnings of environmental calamity.
Energy corridor designation falls behind schedule
The designation of thousands of miles of “energy corridors” through 11 states, mandated by Congress in 2005 and meant to be implemented by August 2007, is proving to be more difficult than anticipated.
GM Picks Hybrid Battery Partners
GM wants to double the fuel efficiency of the SUV and has committed to lithium ion batteries as the technology of choice.
Southern Africa: 2007 a Watershed Year for Region
The next 12 months are set to be a watershed period for southern Africa as it marks the dawn of a potential energy crisis as well as the official start of the home-stretch towards a unified regional economic bloc.
BISSAU, Guinea-Bissau — China paid for the marble and tile parliament building soaring above the crumbling homes of this former Portuguese colony, and is also promising a dam and a military hospital — all with none of the political strings Western donors might attach.Intent on cementing ties across Africa, China is active even in impoverished Guinea-Bissau, a small nation with little industry, no oil and few exports.
China Turns Mekong Into Oil-Shipping Route
BANGKOK - As energy hungry China turns the ecologically fragile Mekong river into an oil-shipping route, green activists and environmentalists in South-east Asia worry that spillages could destroy the livelihoods of millions of people residing along the lower reaches of the region's largest waterway.
UK: Calls for more spending on renewable energy
LONDON - The government must put more money into renewable energy if it is to stand any chance of meeting its target of getting 20 percent of its energy from those sources by 2020, industry associations said on Friday.
Texas: Environmentalists Want To Slow Push For Coal Plants
Legislators returning to Austin next week will be met with a growing controversy. A plan by TXU to build up to 19 new coal-burning power plants across the state continues to stir up debate.A coalition of environmental groups will ask legislators to stop the plan for these coal plants. They want more time to figure out the best way to handle the state's looming energy crisis.
SANTA MONICA, Calif. (MarketWatch) -- Polar bears may be put on the endangered species list because of global warming. What else may become extinct? How about oil, water, trees, fish and food?The way in which we buy and consume -- create our economy -- is going to have to change; we are running out of the resources to support it. And that means more ethical choices will have to be made with regard the products we buy and the companies in which we invest.
Another interesting feature of the crude markets last year was continued robust global economic growth. However, this was not matched by corresponding growth in oil demand. Conservation finally seemed to be playing its role. A particularly mild winter, rising prices and the removal of subsidies in some developing countries, dampened oil demand growth, resulting in progressive downward revisions in demand forecasts as the year unfolded.
IEA's New Head Says He Will 'Avoid Confrontation,' Help OPEC
The International Energy Agency will avoid confrontation with OPEC and help oil-rich nations cut dependence on earnings from crude, the agency's next executive director said."Confrontation won't resolve anything," said Nobuo Tanaka, 56, a former Japanese diplomat who has been chosen to replace Frenchman Claude Mandil in September 2007. "Dialogue will help the two sides get mutual benefits."
UK Oil Sector Had Bumper Year in 2006, Despite Pressure on Costs
"We've never had it so good," was the refrain from Aberdeen's oil and gas sector when businesses reflected on 2006. Operators, service companies and industry employees all enjoyed one of the busiest years the industry has seen.
Profit from alternative energy
The world's economy can't afford to keep growing by using old fossil fuels and old ways of burning them for energy.
ComEd is behind 'consumer' warning
The commercial, in a foreboding tone, suggests that the lights may go out in Illinois if an electricity rate freeze is extended."We don't need a California-style energy crisis in Illinois," cautions a voice representing Consumers Organized for Reliable Electricity.
It may sound like the campaign of a grass-roots consumer group, but it is not.
Poor face bigger disservice than higher taxes on autos
Washington -- My liberal friends have asked me to consider the poor. Their request comes in response to my proposals for increased taxes on gasoline, a tax on engine horsepower, and higher fees on other automotive items and services that would make American consumers pay closer attention to the kinds of vehicles they are buying and the amount of energy they are using....To paraphrase my late father: Use your brains. The nation that is ignoring the poor now, when there is fuel to be had, will be even less inclined to pay attention to them if there is too little fuel available for everybody's transportation and life-support needs.
Wisconsin poised for new growth in biodiesel fuel
GREEN BAY — Municipal vehicles in Barron County in northern Wisconsin use 10,000 gallons of fuel a week, much of it diesel oil for dump trucks, snowplows and machinery.Until recently, all money spent on fuel left the area. But the county recently switched 10 percent of its fleet to run on biodiesel fuel, which is produced from renewable crops by local farmers.
Norway 2007 Oil Output to Drop 5.6 Percent, Directorate Says
Norway's oil output will drop by about 5.6 percent this year as companies such as Statoil ASA and Norsk Hydro ASA struggle to make up for dwindling North Sea output, the nation's petroleum directorate said.
Democrats Hope to Take From Oil, Give To Green Energy
WASHINGTON - House Democrats are crafting an energy package that would roll back billions of dollars worth of oil drilling incentives, raise billions more by boosting federal royalties paid by oil and gas companies for offshore production, and plow the money into new tax breaks for renewable energy sources, congressional sources said yesterday.
Not surprisingly, the API isn't pleased: Oil Group Blasts US Democrats' Tax Agenda
U.S. House Democrats' plan to snatch back billions of dollars worth of tax incentives from Big Oil will reduce domestic production and make the nation more dependent on foreign oil, industry officials say.
Crude settles at lowest level since 2005
NEW YORK - Oil prices shed more than $2 Thursday to settle at their lowest level since June 2005, after the U.S. government reported higher-than-expected inventories of gasoline, heating oil and diesel fuel amid warm winter temperatures.
EU to call for a ‘new industrial revolution’
BRUSSELS - The European Commission will call next week for “a new industrial revolution” in the energy sector to boost competition, protect the climate and ensure security of supply, a draft paper from the EU executive showed.
Pearson accuses airlines of failing to take climate change seriously
LONDON - Environment minister Ian Pearson has accused British, Irish and US airlines of failing to take global warming seriously, branding Ryanair "the irresponsible face of capitalism".
Nuclear agency head dismissed for lapses
WASHINGTON - Tens of millions of dollars and repeated security reviews haven't stopped embarrassing security breakdowns in the government's nuclear weapons program — and now the man in charge has been sent packing.Samuel Bodman on Thursday ousted the head of the National Nuclear Security Administration, which maintains the nuclear weapons stockpile and oversees the nation's weapons research laboratories.
"I have decided it is time for new leadership at the NNSA," Bodman said in announcing that the agency's chief, Linton Brooks, would resign within the month.
India leftists to campaign against U.S. nuclear deal
NEW DELHI - India's main communist party, which shores up the federal coalition, said on Thursday it would launch a campaign against a controversial nuclear deal with the United States, saying it was not in the country's interests.
Zimbabwe: ZESA Workers Strike, Cut Off Power Supplies
ZESA Holdings workers yesterday downed tools demanding a salary increase of more than 1 000 percent and expressed their anger by disconnecting consumers in the central business district, mostly shops and takeaways.The workers reported for duty yesterday but did not work arguing that the 144 percent increment offered by management was "too little".
Peak oil isn't bad for everyone
While some energy companies are worried about dwindling reserves, Schlumberger Ltd (NYSE: SLB) stands to gain enormously as oil and gas become harder to find.
One thing stands in the way of secure and abundant supplies of oil: Government.
Collapse of civilisations linked to climate change
The downfall of the one of the greatest Chinese dynasties may have been catalysed by severe changes in climate. The same climate changes may have simultaneously led to the end of the Maya civilisation depicted in Mel Gibson's new film Apocalypto.
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OK, this one goes out to Freddy and Hothie:
December U.S. Payrolls Increase 167,000; Incomes Grow (Update2)
http://www.bloomberg.com/apps/news?pid=20601087&sid=apYZ3QT.P5W0&refer=home
Odd NFP report considering the ADP report earlier in the week said a -40,000 jobs. Wonder which one is more accurate?
Ya...it's been frustrating because lately the industry statistics that have been released have been confusing and contradictory. Some are adjusted/corrected weeks after their release. Hard to make business plans based upon them.
Since 1958, the usa economy has averaged a four year business cycle as determined by Monetary Policy via the Fed. Six years since 1970. And now almost undetectible, as the Fed masters the art of soft landings.
The usa is likely within 120 days of the current biz cycle peak which commenced in 2001Q3 with 911. As with other downslopes from the crest, there will be very many contradictory signals as different sectors enter and leave their natural cycles.
The most misunderstood are the housing and automotive sectors. The Fed (and central bankers in most of the g-20) use low short term interest rates to fuel these two industries, both heavy in labour intensity and prompting the purchase of durable goods. But they are also the sacrificial lambs at the end of the cycle when it comes time to dampen overheated economies and the critical mass in play. Ever cognizant of the evils of Inflation, most central bankers strive for a Real GDP of 3.5% and Inflation of 2%. Concern for Unemployment is merely a sideshow to these metrics.
Over the coming 24 months, the Fed will attempt to match its superb soft landing of the late 90's and the cycle renews.
Unfortunately, this good news is not translating into a DOW surge today for some reason.
Hello Dragonfly -
Do you figure these numbers include or exclude the boost from malls, restaurants etc. hiring extra help for the holidays ?
Those are the kind of details that often get conveniently left out of the discussion by some (MSM mostly)...
Well, it's a mixed bag and I am not sure how temporary workers are factored into these reports. I do know, anectdotally, that during the holidays, the lines at Target moved quite well. Immediately afterwards, the number of cashiers dropped dramatically and there were much longer lines. Did Target reduce their staff/shifts right after Christmas?
Here's another article discussing the data in more detail:
U.S. Economy: Job Growth, Wage Gains Beat Forecasts (Update1)
http://www.bloomberg.com/apps/news?pid=20601087&sid=avepX6htpoX8&refer=home
NOTE: Retailers cut 9,200 jobs (not geared up for Xmas?)
And, of course, like it says above, these numbers could be revised down at a later time.
Payroll growth in December? - Santas in the Malls.
Incomes growth? - Christmas Bonuses
The bloomberg one leaves out some things.
I agree with Peter Schiff's take take on this in one of his 1 page summary's.
More Consumption Less Production
http://www.safehaven.com/article-6644.htm
and his great analogy,
The result of the above truth is this reality.
That's a better look at it.
I don't believe the jobs report was good news.
Now if the media delineated the Breakdown of the jobs with these kind of summaries:
What percent of the new hires is being paid less than the last job.
What percentage of the new jobs did the person get a (say) 15% raise in the new job.
What percent of the new jobs were for 40 Hrs ave. work week.
and things like that.
What KIND of jobs were gained/lossed
John
Proof for TOD gloomers that manufacturing jobs are down the toilet:
Hold on Tootie Fruddy,
They did teach me to read in grade school.
Assuming the graph is for real, it says
"Per cent change from year ago"
all the way over there in the fine print on the left.
So let's see if I got this right.
In the year 2000, "growth" of jobs was barely over 0%. Let's say we have 1000 workers that year.
So in 2001 we're at -2% right? 980 workers left.
And in 2002 were at -7% relative to that right?
93% x 980= 911 workers left
And in 2003 were at -4% relative to that right?
96% x 911= 875 workers left
And in 2004 were at -2% relative to that right?
98% x 875= 858 workers left
And in 2005, 2006 were starting at that lower base number and barely climbing above 1% . Whooptie Do!
Gee, I wonder why the Dept. of Labor would create such a deceptive graph and why you would flaunt it as if it proves something?
Lester Brown had a news release yesterday. Some excerpts:
The New York Times covers the study, and says that over 50% of all corn in 2008 may be used for ethanol production. Brown calls for a moratorium on ethanol plants. (By 2008 Iowa will have facilities to handle 100% of its harvest, and Michigan 80%.)
Another example that it's time to change the name of our planet to "Bizarro World".
Those 11 billion bushel. Is that estimate based on 2008 not being drought year?
Hello Hurin,
If farmers stop growing the ingredients for beer to grow corn instead---> the beer drinkers of the world attacking ethanol plants will make the Jihadists look like cookie-selling Girl Scouts. =)
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Drought in Australia has already hit barley crop. One of the few things that may cause global warming awareness.
Hello OldHippie,
One of the cultural traditions I am trying to spread is people shouting out Peakoil when their 'Nectar of the Gods' beermug reaches half-empty. Sadly, that will be very difficult to do if there is insufficient hops, barley, etc to even fill the mug in the first place. =(
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
How will they feed all the cattle and hogs in Iowa?? Not to mention the cost of feeding all our hogs and cattle.. Boy do we have a mess on our hands..
Guess it's time we start feeding people, and stop torturing animals ;)
or continue feeding animals and start torturing people?
Like putting them in tiny rooms with a flickering light source in front of them, and forcing them to make small pointless movements the whole day, on pain of losing their means of subsistence?
Great idea!
The Tsunami washing across crop and livestock agriculture
Here's how - from Distillers Grains for Beef Cattle
Distillers Grains Byproducts in Livestock and Poultry Feeds "Your one stop site for the most current information related to using DDGS in dairy, beef, swine and poultry feeds"
For much more, a start is Googling "Livestock distillers grains"
(Oops, broke the resolution about blog posting. Again)
JMG3Y,
Please read this interview with Pimentel at the following link:
Biofuel Skeptic Extraordinaire
Cherenkov:
Thanks for your suggestion. Over the past 3 years I've read a considerable amount of Pimentel's and others work on this topic, preferably from the scientific literature when I can find it. My response above was to the question about how the livestock in Iowa were going to be fed, not whether I thought this shift was a good idea or not.
What might be the result of very high corn prices?
The farmers will rape the land. Cutting all the fence lines and border trees. Hogging out new land to cultivate. Letting soybeans go by the wayside. Planting the CRP land and grassy erosion strips. Even the HEL land(highly erodable land). That is if the government controls come off and even then it might not matter because who needs price supports IF the price is high enough.
This is called 'wildcatting' when you put new land into production that does not have a existing 'crop basis' and ignore the FSA(USDA et.al.) You just go to the 'spot market' price and be damned with all the rest or contract it and don't worry about the government loans and the rest.
Farmers want the dollars. They will do what they can do and they have the heavy earth moving equipment to do as they like. Most big farmers are way into that aspect already with trackhoes and dozers in their inventory and have been for some time.
I already see a lot of trees dozed down and burned on the spot(no one cuts the wood for heating nor gets a chance to).
The market will dicate their practices IM-very humble-O.
They sense that 'their time has come around at last' and they will jolly well take it as they can.
Many do not realize the value of the foodstuffs that corn imparts its value to. How much ADM squeezes out the very essence and markets it.
I pity 3rd world countries who might depend on corn exports from the USA. Corn is a very very big food staple, is my understanding.
As someone said earlier on TOD:
"A new(not better) world starts to unfold right before our very eyes."
The $30 / boe ethanol subsidy reminds me of Jimmy Carter's tax breaks for synthetic fuel. There are plants operating today which reap tax credits for spraying coal with a thin layer of oil. The government is adept at making a few wealthy at the expense of the majority
According to my calculations 60 Million tons will produce 363,000 Brl’s/D. Currently US production is 333,000 Brl’s/D, 60MM tons equals 20% of the 2007 corn crop.
According to my calculations 60 Million tons will produce 363,000 Brl’s/D.
Your calculation is correct. I get 350,000 BPD, but I used 2.5 gallons per bushel, which was the average across the entire country. Many use 2.7 or 2.8 gallons per bushel, but this is not the overall average, and that 2.7 gallons often includes the gasoline used to denature the alcohol.
The Cosmic Log Blog covers the story:
Food vs. Fuel?
Judging from the comments, we're doomed.
My response to Mr. Brown.
First off, the reader is left with the impression that the USDA, RFA, BBI and other industry participants are somehow involved in some vast conspiracy to obfuscate the ‘true’ number of ethanol plants in the various stages of operation/construction/ground breaking. This is an absurd assertion.
If one visits the RFA website, he would note that as of Dec 29, 2006, a total of 110 plants are in operation, 73 under construction and 8 are under expansion. EP magazine meanwhile, goes so far as to break down every new ethanol project at every stage i.e. ‘dirt work’, ‘concrete work’, ‘tank construction’, ‘energy center enclosure’ etc. all the way down to ‘ribbon cutting’. For a fledging industry that has doubled capacity *twice* in the last 6 years, I don’t know just how much more expedient or detailed Mr. Brown would like the ethanol industry to report back to him aside from data being streamed in real time.
Next up is the following line, “... easily 200 ethanol plants were in the planning stage at the end of 2006. If these translate into construction starts between January 1 and June 30, 2007...”.
Drummers, this is an absolute huge ‘IF’. Mr. Brown is talking about possible construction starts that equate to a doubling of the entire North American operational plant base within a 6 month window. The likelihood of this coming to pass is slim for a number of reasons, namely, the price of corn, the price of ethanol, concrete and steel costs, environmental assessments, construction, equipment and labor backlogs, rail switch development, tank car capacity and a host of other elements brought on by the boom that can easily delay if not outright cancel any project before it even leaves the drawing board.
“With corn supplies tightening fast, rising prices will affect not only products made directly from corn, such as breakfast cereals, but also those produced using corn, including milk, eggs, cheese, butter, poultry, pork, beef, yogurt, and ice cream.”
Here we go again with the scare tactics. Just how much corn goes into a box of corn flakes? About 4 cents worth. From to coke to cheezie poofs and all the other pre-processed, pre-packaged bonanza of generic convenience foods we eat, corn counts for pennies in the total price. And for those of you who think that if only ethanol production were stopped our food prices would stay what they are… guess again. At 10 calories of fossil fuel per calorie of food, it’s the price of the hydrocarbon inputs (not corn) that has and will continue to have the greatest impact on future food prices by a long shot.
Oh and in case Mr. Brown didn’t notice, according to AgCanada and the Canola Council of Canada, North America is soon to be facing a glut -that's right- A GLUT of protein feed on the market thanks to DDGS - the high-protein byproduct of American ethanol production. Expect prices for feed to be heading south folks… not up as Mr. Brown and some here at TOD have unfortunately pined.
Mr. Brown would also have us believe that there is a ‘epic’ battle brewing over food vs. fuel in the developing world – an assertion that could not be further from the truth as I have oft pointed out here at TOD.
First world trade policies are far and away the primary protagonist of 3rd world agro-economies while biofuel production is aptly suited for most developing nations that almost all feature tropical climes and abundant labor. Ethanol production from sugar cane for example, can be one of the very best crops to grow in these environments and it provides farmers with not one but two markets for their products.
The above notwithstanding, there are 2 elements where I agree with Mr. Brown. The first, being the need to hybridize our auto fleets (although I propose bio-hybrids with carburetors that take advantage of ethanol's superior combustion point, horsepower and torque advantages). The second, being the need to put much more emphasis on developing 2nd and 3rd generation biofuel production paths that can both complement and overtake commodity-based feedstock usage.
Drummers… keep in mind that anyone can quote how much food would be utilized if ‘x’ were used instead or if ‘x’ policy was fostered in lieu of some other. In fact, I’ll give you one from 1961.
“We pay for a single fighter with a half million bushels of wheat.” – Dwight D. Eisenhower.
Edited your post to fix the open tag. Please leave the HTML to those who know how to use it.
That's a bit harsh and unnecessary, isn't it? Especially coming from one of the site's editors.
I think it is necessary. Our new software apparently can't deal with open tags. One open tag makes the whole page a mess.
And it's not necessary to use HTML. Your post will be perfectly understandable without it.
I'm serious - I'm discouraging people from using HTML unless they know what they're doing. At least until SuperG gets this fixed.
As a developer I find it unacceptable for any software to allow this to happen. What if I decide to post JavaScript for example? If this is a temporary situation I'd suggest the editors announce it at some visible place or forbid HTML until it's fixed. You can not go after every user that makes an HTML error, it should be neither yours nor the user's responsibility to do that.
I don't think Javascript is allowed. (But please don't test it.) Only the HTML tags SuperG specifically permitted work.
SuperG is on holiday at the moment, so he can't fix it. I'm sure he'll get on it as soon as he returns.
Thanks for enlightening me. I now understand why open tags are a serious issue. Perhaps we could all keep in mind that everyone makes mistakes, even the most experienced HTML authors. Given that, per LevinK's suggestion it might make sense to let people know that they should be extra careful with HTML tags until this can be fixed.
That is what I was doing.
From what I saw of the code, I assumed it was someone fooling around pasting in the codes listed under the reply boxes, not just a mistake. It's perfectly natural to do that, since all the acceptable codes are listed, but it's causing problems. Those who understand HTML notice the problem and edit their post to fix it, but those unfamiliar with HTML have no clue what's wrong.
I guess people are feeling more comfortable with the new interface and are starting to experiment...
Leanan:
An idea - put the proper HTML sequences for the major pairs (links, block quotes, bolding, italic) together in the "Allowed HTML tags:" below in their simpler forms with spaces between them so that they can be cut and pasted by those of us less knowledgeable about HTML. Those skilled in HTML will know the additional options (STATA comes to mind) in a pair.
Forcing "preview" into the posting sequence, which many other blogs do, would also show errors, such as a missing closing tag.
Thanks for your efforts, by the way.
I can't do that. SuperG is the only one who can. I imagine he'll just block any post with open tags when he gets back. That would be the easiest way to deal with it, and is what most message boards do.
Syntec,
Biofuel is a pipedream, a masterly scam that will show its foolishness soon enough.
Please check out the physics behind biofuel by reviewing refereed scientific journals or by speaking with the scientists who do the research. Do not use propaganda from those who stand to benefit monetarily.
Yes, we will unfortunately get ethanol from fossil fuel intensive processes. NO, they are NOT net energy producers no matter how you slice the sludge. Third world countries will grow fuel and further devastate their environment, that much is true. Yes, a few multinational corporations who will be running the plantations will make scads of money that will immediately leave the country. Yes, this will cause further starvation. No, technology will not solve the problem which revolves around resource limits which we have reached, and the destruction of our habitat, which proceeds apace, and the effects of global warming which promises to do what we will not, which is to control our population.
Many on this site focus on a narrow specialization that revolves around their particular bailiwick, whether that means making fiat money through the markets, ( I know there are several market people who lurk and often participate); or pimping biofuel, said people being farmers, biotech people, ethanol plant investors, builders, financiers; nuclear nuts who honestly believe that the way to go is to create nuclear hotspots, which require vast amounts of raw materials that are dwindling in order to build them, and which will run out of fuel just as we will run out of oil and sooner than you may think; the cornucopians who believe that there is plenty of oil but its production is constrained by some factor other than geology -- politics, economics, social factors, but who admit, yes, we will run out sometime; the engineers who believe that we are only a machine or two or five thousand away from solving everything, just let us WORK DAMN IT!; to the electricity buffs who believe somehow that just by building trolleys, trains and electric bikes that we will be good to go, that growth can keep right on marching; and the coal lunatics who actually believe that releasing billions of years of carbon is a good idea, and which is subject to the same problem of running out as all fuels suffer. I am sure I have left out a niche group or two, and I apologize.
Unfortunately, the problem sums up to a fundamental conflict with nature. We are too many for this space bus. Our population cannot be supported, let alone grow, without fossil fuels. The desire to continue that growth, to maintain the population, to maintain the tech is insupportable. ALL OTHER ARGUMENTS ARE FROTH. Sure they are fun to make. Sure they are what people with particular interests pursue--that's what they know. It makes them feel like they are valued, and the invisible sky-being knows that the last thing we want to do is damage someone's self-esteem even if it means wasting precious time and thousands if not millions of lives. Sadly, each of these arguments are specifically and cumulatively harmful if they do not directly correlate with the main problem (overpopulation) in a helpful way. We must head towards reintegration with nature. Every analysis of every process, technique, theory, or deployment of material in the built environment must be with this axiom in mind. HOW WILL THIS MOVE US TOWARDS FEWER PEOPLE BETTER INTEGRATED WITH NATURE?
Please read this interview with Pimentel:
Biofuel Skeptic Extraordinaire
Nice speech (Really!), but why does it have to end in nonsense like "We are too many for this space bus."????
If they US would learn to share its energy waste with a billion people, we would use the same amount of energy but would have a billion well fed, healthy well educated and well motorized people more on this planet and not one person would be able to tell the difference in quality of life in the US.
As to the question: how many are too many? We don't know. We certainly know that the planet can support six billion and we know that it won't have to support many more than ten billion. As too how much energy do we have to support these people: just using solar energy as the baseline, we can have approx. ten times more than we are using, right now. With fusion, it might be another factor of two or three more. Beyond that, I am afraid, we are limited by what the planet can radiate away into space without adding to global warming and we would have to install a space based sun shield first to grow further. Since we have approx. a factor of three or four of waste in our current energy usage, the net effect we can expect to see from that energy is therefor some 30 or even 40 times larger than what we are getting today. I think that is pretty good, would't you say? Not infinite growth, of course, but an order of magnitude is still in the cards for everyone.
How do we know that the earth can sustain six billion people over a considerable length of time? There is not one whit of evidence to support such a conclusion. Indeed, abundant evidence presented on TOD suggests that with current technology the sustainable population of the earth is probably less than half of six billion, perhaps substantially less.
When you take cheap fossil fuels away, Malthus walks back in through the door. He won't go away.
Get back to me when the trillion tons of uranium starts to dwindle.
A hundred trillion tons of high-grade uranium ore will not help poor countries--where Malthusian positive checks are already increasing death rates.
Uranium will help rich countries.
infinite possibilities: just a ? what are your claiming "radiates back into space" ? you mention global warming and obliqly talk of solar energy ?
Cherenkov...you're wasting your time. Look at his profile. Syntec is a biofuel company. I don't know if he's a pump and dumper or a true believer, but he's impermeable to evidence when it comes to biofuels.
"Look at his profile. Syntec is a biofuel company"
A research laboratory to be specific - one of a but a handful in the world focused on developing a 2nd generation ethanol production path.
"impermeable to evidence when it comes to biofuels"
Hardly. My discussions here at TOD (especially with Robert) have greatly honed my arguments and forced me to be extremely critical of my own work irrespective of the audience; scientific, governmental, corporate or otherwise.
Your comments OTOH and insofar as my posts are concerned, leave much to be desired as evidenced yet again today.
Like this discussion with Robert on the Dec. 1 Drumbeat, when he responded to you as follows:
Jobs galore, new rail development, increased land prices, increased grain prices, increased rural incomes, strengthened rural communities, increased skill and labor set, positive (albeit minimal) environmental/GHG impact, net decrease in petroleum usage...
So, you support this fiasco? I thought you were a gasification guy. Let's run some numbers. Right now, we are making around 4.3 billion gallons per year of ethanol. At an energy return of 1.3, that means we only net 0.3 BTUs of output for 1 BTU of input. Therefore, you consumed 3.3 billion gallons worth of ethanol to produce 4.3 billion gallons. So, the net of the 4.3 billion gallons is only 1 billion gallons. Of course that net includes massive amounts of animal feed co-product, which you can't burn in a car. In reality, the fossil fuel input is almost equal to the ethanol output. That's per the USDA's most recent estimates.
But I am going to give the benefit of the doubt and give you 1 billion gallons of net ethanol. Since ethanol has 65% of the BTU content of gasoline, the energy equivalent number is 650 million gallons of gasoline. We use about 140 billion gallons of gasoline, so the gasoline displacement is only 0.46%. Apply that only to our oil imports, and the displacement is down around 0.3%.
But wait, there's more. We paid a $0.51/gal direct subsidy on the ethanol. Not the net, mind you, but the gross which is mostly recycled fossil fuels. So the direct ethanol subsidy, from taxpayer pockets, is $2.2 billion dollars a year. Of course we also have a multi-billion dollar per year corn subsidy. To be extremely generous, we are paying taxpayer costs of $3 billion a year to displace less than half a percent of our gasoline usage. That's about $3.60 in federal subsidies (of course most corn states throw in their own subsidies) for each gallon of gasoline displaced.
But you get bonuses: Like depleted water tables, increased pesticide and herbicide runoff (responsible for a large dead zone in the Gulf of Mexico), increased soil erosion (wait til we have a drought - Can you say "Dust Bowl"?), and the kicker: Higher food prices for everyone and reduced corn exports. (Hope nobody needs extra corn this year). All of this to displace 0.46% of our gasoline consumption and line the pockets of some farmers, ethanol producers, and ag conglomerates! And that's presuming you could burn animal feed in your car.
For that kind of money spent and those kinds of externalities, I would sure hope some jobs have been created.
And people wonder why I get worked up over this boondoggle.
Heh, heh. I was looking for that just a couple of days ago, and couldn't find it.
Actually, I find Syntec to be a pretty reasonable poster. But I did strongly disagree with his defense of corn ethanol. This is going to be a fiasco.
sadly, very few here consider top soil.
I know it's hard. But try to think about top soil and renewable at the same time.
Earldaily,
You are exactly right. The physics of the soil cycle preclude an ethanol future. If you remove the "wastes," as so many inappropriately call it, you essentially destroy the soil. Once it becomes sterile, only the application of anhydrous ammonia can provide enough nutrients to grow a crop. Of course, once natural gas runs out (the primary feedstock for anhydrous ammonia production), the soil becomes instantly worthless. No more corn-based, or switchgrass based, or whatever based ethanol. And, as a bonus, that section of land can no longer produce food.
Several groups are now looking at algae based ethanol production which suggests a much more efficient conversion of sunlight into sugars, and in some cases, directly into alcohol. However, this does not address all the other resources which are being taxed. Once again, we return to the population problem.
Right on! Who was it, Scipio? who ended every speech to the Roman senate with "Carthage must be destroyed"?
Maybe everybody commenting here should be required to end their entry with:
"The human population must be reduced".
And then put in their own desired fraction. Mine is 1/5th. Then all the widgets I like to play with (stirlings, solar thermal, ground source AC, etc etc) might actually make us happier without destroying our grandkids' world.
Now here's a chance for somebody to yell "Ok go kill yourself". No problem, nature will do it right quick as a matter of course--. Anyhow, all we gotta do is have no more than two kids each. Not all that hard, and does the job--but maybe not fast enough.
"Unfortunately, the problem sums up to a fundamental conflict with nature. We are too many for this space bus."
I think Cherenkov has hit the nail squarely on the head. People cheerfully talk about bizarro-world mega-engineering projects to save the Earth from GW, or to provide "limitless energy", or whatever cornucopian pie in the sky nonsense that puts off the day of reckoning. But it seems that any mention of population control is off the table as being impossible.
Sure! We'll put up gigantic orbital space mirrors to reflect the sun's rays, or dump zillions of tons of iron fertilizer in the oceans to promote plankton growth to take out CO2, or send up a fleet of jumbo jets spewing SO2 to reflect sunlight! Nukie plants! Unlimited fusion power! Ethanol! Hoo Ha! Whatever! What unmitigated nonsense! Anything but face the real problem, which is population. Somehow, we can't even consider controlling our own population.
Who cares if PO was last year or happens next year or a decade from now - we are nowhere near facing the real problem. Everything else is indeed FROTH, without population control. Rearranging deck chairs on the Titanic. We are already overshot, so let's don't talk bullshit about how "as societies become more affluent, their birthrate drops". As societies get more "affluent", their per capita resource use skyrockets to vastly more than make up for any birthrate drop. The concept you want to explore here is "ecological footprint".
Until we start thinking in terms of biology/ecology/carrying capacity instead of heroic engineering "solutions" to maintain our insane status quo, we are avoiding facing the real problem.
There, I feel better now :-)
- sgage
"But it seems that any mention of population control is off the table as being impossible."
Well there may be ways of somehow enforcing mandatory birth control but seems to me that unless you do it surgically and with force that you are not going to have an effect. Who is going to create a police state in order to perform surgery on folks?
'Touch my vagina and your toast'!
N.O.W. is going to stand for this? The worlds toughest organization...except the islamists get by with treating their women as they like and N.O.W. doesn't say shit. Why is that I wonder.
Anyway I think birth control is a nonstarter. The RCC has been on this like forever and still is failing at it. "IF YOU DO THIS YOU ROT IN HELL"..doesn't seem to work...Lake of Fire shit..ya know?
Yet market a good pill and they rush to gobble them down...I dunno know. its weird. Blame it on the Meskins then? Mostly all catholics. In N. Carolina its stated that RCC membership has skyrocketed. Thru the roof. There is the problem perhaps.
Nice rant Cherenkov... and pretty much what I would expect.
Your pandering to Pimental (the entymologist who asserts that even with a 30% increase in efficiency, corn ethanol STILL has a negative EROEI) is pathetic.
The University of Michigan applied Pimental's model to gasoline production and guess what... a 45% negative energy return while coal to electricity received a whopping 240% negative energy return!
90+% of the scientific community disagrees with Pimental's work and yet you continue to post it at TOD as though it were gospel.
Next week while you waste everyone's time blathering about your all is doomed, inevitable return to a Little House on the Prairie life, I'll be in Washington at the behest of the DOE, discussing North America's liquid fuel options with some of top minds in the world - colleagues of mine who just so happen to be the very same scientists you idiotically claim that I need to be speaking with.
I'll give you two hints as to what you can do with your 'propaganda accusations'... and the first one doesn't count.
So, what are the refereed journal articles you wish me to read?
I assume that you and your esteemed colleagues have plenty of answers. Let's hear them.
As for the other elements of my "rant," physics is unforgiving. There is a limit to eveything whether you like it or not. I'm sorry that I do not know about Little House on the Prairie. I assume you mean the House of Representatives when it was controlled by the republicans.
Thanks to everyone who came to my side to support me and to warn me that he was a shill. I really appreciate that.
namaste
He is a shill.
You are warned. Too late thouhgh since you have been chastened by a DC eggspert.
He likes DC. So what does that tell you?
DC The pinnacle of power and greased owlshit. They appear to mix well.
Syntec
Your whole drive and purpose is to support "2 cars in every garage" mantra. Whether it's gasoline or ethanol permant growth.
With what I have lived thru in the last 40 years of highways becoming over crowded and more and more housing development, and malls and and... Exponential growth.
I think Bartlett's papers on population growth and it's effects on the whole is very sobering.
You "Develop Hammers" it is not surprising that everthing needs to be "Hammered".
You hob nobbing with, how did you say it?
discussing North America's liquid fuel options with some of top minds in the world
Your attention, success, and self esteem most naturally comes from "Solving this problem".
The error is that the premise is wrong. The Age of " *MORE "
is over. Your entire drive is to support the current American
ethic, which is;
If Some is Good,
More is Better,
And, Too Much is Just Enough.
Mother Nature Bats Last.
peace
John
Syntec,
While you are in Washington, please attend this seminar that has a KEY part of the solution (reduced need for "liquid fuels").
Best Hopes,
Alan
I have a question.
Is the following statement true or false?
Peak Oil (the most oil produced in one month) will be (or has been) determined by a multitude of factors. For example, available oil reserves, available supplies (drilling rigs, manpower, etc), world and local politics, world price of oil, and world demand for oil.
Thanks in advance,
Rick
Maybe
That would define a logistical peak, but not a geological peak. A true geological peak will never see oil production increase again. A logistical peak could be temporary. However, it is also true that the geological peak will be subject to the factors you mentioned.
Let's say that the most oil produced is 86 million barrels per day. However, during that time there was some reserve capacity due to pipeline constraints. This, then, is not the most that could have been produced, so in effect the peak was logistical. But once worldwide depletion falls below the ability of the logistical constraints to make up the shortfall, game over: The world has peaked.
I think the separation between logistical and geological peak is artificial. The peak of oil production will be (or maybe was) entirely logistical. The role of geology comes down to driving logistical costs steeply upwards, once a certain level of depletion is reached. To illustrate this - it is feasible to imagine an almost infinite production rate but it will be coming at almost infinite production costs - therefore it does not happen in reality.
Oil production, like any other production is determined by the balance between marginal costs and marginal revenues. Producers try to optimize the difference between the two of them and this drives how a reservoir is managed. At some point it loses economic sense to invest in increasing production no matter what the price is and the reservoir is allowed to start declining. Technical and economic arguments like not damaging the reservoir or sparing it for the future (which in economic terms would mean to have low discount rates) may bring this point forward or backword. But it is a purely economic decision in the end.
I agree. Politics, weather, labor issues, etc., have always been part of the oil industry, and always will be. We can probably expect those factors to get worse in the light of peak oil, since high prices will encourage production in more dangerous areas, and embolden both workers and TPTB of oil exporting countries.
Trying to separate logistical from geological peak makes about as much sense as arguing that we're really way past geological peak, since we'd have extracted lot more oil by now, if not for "political factors."
Politics, weather, labor issues, etc., have always been part of the oil industry, and always will be.
Which is what I said. Geological peak will certainly be accompanied by logistical factors. But:
Trying to separate logistical from geological peak makes about as much sense as arguing that we're really way past geological peak, since we'd have extracted lot more oil by now, if not for "political factors."
I sharply disagree here. If we look at the current peak, I think it is very important to figure out if the peak is logistical or geological. If it is logistical, then we may see production turn back up and have a few more years before true peak. If it is geological, then that's it. It is very important to determine what the actual situation is. If there is currently 2 million bpd of spare capacity in the world, then this peak is logistical with the potential to be temporary.
Robert, you are right, the geological peak is a separate issue.
However, the factors that can determine the logistical peak, from weather to warfare, can be so influential in oil production and consumption that it makes setting a date for the geological peak a useless exercise.
We still live through times where production can be maximized to a certain extent , but there is not guarantee that that will continue. An expanding war in the ME can leave a lot of oil in the ground.
Such events would set back the peak date, theoretically forever. Which means the geological peak as you define it may never show at all.
How much beer a bartender can pour per hour is a nice statistic, but meaningless when there are no clients, or when there's no electricity, or the beer-lines are blocked, or.....
There is always some limiting factor - otherwise production would be limitless. I think what you are asking is that we need to identify what exactly is the limiting factor and I agree that it is of crucial importance. If it is some temprary hickup like pipe capacity etc. it would mean that production will likely grow up when it is overcome. If geology is the underlying reason it will likely show up as chronic shortage of rigs. I know that we are currently in such shortage but you can not know if this by itself is a permanent one or just a more longer to handle "hickup".
I think what you are asking is that we need to identify what exactly is the limiting factor and I agree that it is of crucial importance.
Yes. That's why I am saying that the issue of logistical versus geological is important. If we mistake a logistical peak for a geological peak, we have egg on our faces if production turns back up.
Robert,
IMO the most important peak is what you have identified as Peak Lite.
So what if production goes up two percent? If global demand ("demand" being used as economists use the term) goes up four percent per year, then we are in a world of hurt and soaring prices.
I'm not saying geological peak is unimportant, but rather that it is not AS important as the difference in growth rates between supply (capacity for production) and demand (amount of oil that people are willing and able to pay for at a certain range of prices).
I'm not saying geological peak is unimportant, but rather that it is not AS important as the difference in growth rates between supply (capacity for production) and demand (amount of oil that people are willing and able to pay for at a certain range of prices).
Don, I agree with that. As long as demand is growing faster than we can bring new production online, then we have a problem. Spare capacity dries up at first, and prices increase. This is what I think has happened over the past few years. I think we will get a reprieve this year, as high prices have destroyed some demand and we have a little bit more cushion.
But going forward, the combined growth from India and China will outstrip our ability to bring new capacity online, IMO. That behaves for all practical purposes like a peak, with the exception that panic will not yet ensue because production may still be increasing, albeit inadequately.
Don, why do prices have to "soar" if demand exceeds supply?
Let me ask another question - can you quantify exactly how many of the world's poor were driven completely out of the world's oil market by the change from $30 to $50? From $50 to $60? From $60 to $70? I don't think you can quantify that and that is why I don't think we can do more than simply observe that prices will rise. Soar? Maybe but maybe not. Maybe $75 per barrel will drive out more of the world's poor than is necessary to let supply meet demand. Maybe $80 will do the next trick after that. Is $80 "soaring"? I think the OECD nations could easily weather $80 per barrel for an extended period. I'm not saying life will be peachy keen (in the OECD nations) but it won't be mad max. The first nations to experience anything like "mad max" will be the poorest - witness Somalia.
Harsh immediate pressure on the OECD nations would probably require massive drops in oil supply, perhaps more than 10mbpd. And the data so far suggests that will not occur for quite some time, years after geologic peak in fact.
So I come back to my question - how do we know that that demand outstripping supply will force prices to "soar" rather than just slowly climb? I personally suspect that western civilization will be more like the proverbial frog in a pan of water as the heat slowly increases. And that's another reason why I think we'll be in deeper trouble - when really bad times hit, we'll have pushed ourselves even higher out on the limb of petroleum dependency, meaning the fall will be that much harder.
Prices will soar for two very solid and well-established reasons:
1. Price elasticity of demand for oil is HIGHLY inelastic.
2. Price elasticity of supply for oil is HIGHLY inelastic.
Visualize a very steep demand curve and a very steep supply curve with an initial equilibrium--call it P (2007). Now shift the supply curve just slightly to the left. All of a sudden there is a new and much much much higher equilibrium price, P (20XX). I want to emphasize that a small decrease in supply results in a huge increase in price--and this can happen in a matter of days, as expectations can change at nearly the speed of light. Expectations, not realities, determine prices.
I do not buy much into the idea that oil demand is highly inelastic. I think we had that discussion... the time scale matters. A lot can happen in two years time: the neighbor buys a smaller, more efficient car and suddenly you look like a fool driving that hog. And three months later, with oil prices up another notch, you don't just look like a fool but you also feel like one... On the two year time scale a lot of fool-feelings can be generated by high priced gasoline. And once these feelings snap, the personal demand of the person subjected to the tension goes down by 40% in an instant. In two years time this can happen millions of times.
I can't say where this snapping of souls will stabilize prices. I can say that it will have a prolonged and substantial effect on US oil demand because there is so much room at the bottom of our waste. One could say that the long term demand elasticity is somewhere around 40-50% right now, increasing a couple of percent every year thanks to technological options.
With the magic wand of unspecified techological advances to wave, we can come to most any conclusion we want to.
Economics works using the scientific method of "ceteris paribus," "other things staying the same."
Other things staying the same, the supply and demand for oil is highly inelastic over a period of two years; it is still highly inelastic over five years. Over a period of a hundred years, my guess is that both price elasticities will be about one.
(By convention, price elasticities are expressed as decimal amounts rather than by percentages.)
I wouldn't call "The Prius" an "unspecified technological advance". I don't think that is what they are calling at at GM headquarters... they might be calling it "The Headache", though.
You can personally buy your way out of PO at any Toyota and Honda dealership today. No big deal. And since you said you like to ride your bike, you have found a zero oil alternative (minus chain oil), yourself.
And I hope you will agree that it does the US economy a lot more good to buy a new vehicle than to waste money on imported oil driving an old one. It actually might show up as a boost for GDP...
"You can personally buy your way out of PO at any Toyota and Honda dealership today. No big deal. And since you said you like to ride your bike, you have found a zero oil alternative (minus chain oil), yourself."
IP, how does buying a car buy your way out of PO. It will take more than that. How much energy does it take to construct a new car? How about driving less and conservation instead of buying and consuming more goods??
There will be society wide impacts from Peak Oil that an individual cannot shield him or herself from easily.
Perhaps the collapse of the US $ ?
Or a severe recession/depression ?
Individual actions are, of course, good and they help. But they are not enough.
Best Hopes for Collective Action,
Alan
So let me ask again, Don - can you quantify exactly how many of the world's poor were driven completely out of the world's oil market by the change from $30 to $50? From $50 to $60? From $60 to $70?
Those price changes were "soaring" in the eyes of those forced out of the market. To those in OECD nations plus India and China, those price changes were simply mildly annoying.
Again I ask, can you quantify this? If you can't then all you can do is guess. You may be making a very good educated expert guess but it's still a guess, versus having a testable (and falsifiable) hypothesis.
I can't quantify either but I've been surprised by the stability of price over the last few years in the face of rising global demand, hence my question about whether we can really know what new high price will cause sufficient demand destruction in poorer nations to allow demand to equal supply.
The numbers we both want cannot be obtained, because nobody has them. The poorer the country the poorer the data--and the less there is of it.
We know that in some countries death rates have gone up substantially over the past ten years. For some of these countries, such as Russia, rising oil prices are not to blame for decreased life expectancy. However, for the poorest countries in the world (many of which are in Africa) I think the evidence (sketchy as it is) suggests that rising costs of diesel fuel and fertilizer are contributing to higher death rates.
The Green Revolution is based on cheap fossil fuels. I think Kuntsler is wrong: Suburbia is not the greatest misallocation of resources in history. My conjecture is that future historians will conclude that the Green Revolution was the greatest misallocation of resources which eventually caused the greatest increase in misery for the greatest number in all of history.
'Somalia' is probably more a problem of drought than the price of oil. Let's not mix dates with oranges.
IS
I wonder what the on the ground reality be in Somalia and others if Gas was 10 cents a gallon and widely available?
Would pumps/wells, Desalination, other things be done to have improved their state?
Maybe Somalia is a bad example, maybe other countries that didn't have a drought. Central America? the Islands? Other African nations.
My point is if gas started at 1 cent a gallon nearly everybody could afford a gallon now and then.
Wouldn't it be great to know:
Who would be shut out at 30 cents a gallon?
Who would be shut out at 75 cents a gallon,
and so on till you get to 20 Dollars a gallon.
Who dropped out when? What Countries (The Bill Gates of consumers so to speak) would be impacted greatly last?
Would those "Richer" countries buy the gallons that previous lower priced buyers would have gotten.
What is the drop off of countries being shut out
And What is the drop off of depletion.
Does the Depletion drop off rate out run the Shut out?
That's where sharp price increases would happen it would seem.
Just some thoughts on a progression of "Dropping Out Rates"
Peace
John
Maybe $75 per barrel will drive out more of the world's poor than is necessary to let supply meet demand....
More and More I am coming to this conclusion lately.
I had been a firm believer in sharp higher prices but Lately I am more inclined to your position.
I picture a bunch of ants floating on the surface of pond. Sure there are some ants "High and Dry" but more and more are "Below the Water Line" even though those on top, don't notice them...
Since we seem to know that many (if not most) oil producing countries are experiencing significant declines in their producing fields and since we seem to know that most (if not all) new production expected to come in over the next few years will be smaller than these accumulated declines, is it not unlikely that a peak observed now, even if affected by logistical factors, will ever be exceeded in the future, even if those factors are mitigated?
Does that make sense?
Very nicely worded. Yep, it makes sense to me.
So, using that logic, would it be safe to say that the peak is in the past when the 3 month moving average (for the last 3 months) is 10% lower than the peak (unless something really awful happens during the past 3 months that could easily be corrected)?
By the way, the current 3 month moving average for Crude and Condensates is 0.9% lower than the peak of May 2005.
Rick
I think the separation between logistical and geological peak is artificial.
Entirely logistical. Were there to be oil on Mars, it would not benefit humans. A dying tubercular patient who cannot switch on the oxygen valve can no longer sustain himself though the canister may be right at his side.
But between Mars and the canister right there needing only one human, animal or machine to flip a switch, there is bewildering leeway, many imponderables, that Gvmts. and oil companies have exploited to the hilt. :)
Geological peak ‘on its own’ is not a vital concept. Well, I take that back, theoretically and scientifically it is important, gotta fix the parameters and the conditions and all that.
I agree also. There may be obviously logistical factors and there may be obviously geological factors, but there is a huge gray area in between. If one includes technology factors in the logistical side, then any oil extraction at all is due to 'logistical' factors.
I am coming to the conclusion that changes in demand for oil will be more "interesting" than declines in supply.
I guess my thinking was prompted by Kunstler’s recent statement to the effect that Third World buyers are dropping out of the market with oil at $60. It seems like I’ve seem similar claims here in the past, though I don’t know exactly how to see if this is true, because any country-by-country import figures I’ve seen are 2005 or earlier and don’t seem terribly precise. While this seems intuitively correct, I think the statement simplifies what it a complex strata of oil consumers with varying degrees of income, geographic considerations, available substitutes, etc. The poor in this country might end up “dropping out of the market” at a price point not much higher than the Third World poor. Price gyrations will be the result, with supply-driven run-ups followed by demand-destruction and price retreats. Focusing on the reaction of particularly vulnerable classes of consumers should be able to give us an even clearer forecast of our Peak Oil future as a focus on the geological/logistical/export capacity decline.
Leanan posted this link yesterday, but Tom Whipple addresses (qualitatively) the poor/rich issue:
http://www.energybulletin.net/24350.html
Published on 4 Jan 2007 by Falls Church News-Press. Archived on 4 Jan 2007.
The peak oil crisis: 2006 in review
by Tom Whipple
The "Oil Scene" column I posted up top mentions some of the ways "efficiency" is dampening demand. Such as developing nations reducing or eliminating their traditional fuel subsidies.
I am going to carry this over from the Saudi thread below, because it is sliding down the page. The discussion started here. My argument is that the claims from KSA that their cuts are voluntary are supported by the data. A couple of people responded with graphs and comments. I will respond to a couple of those here.
SaturnV wrote: But Robert SA production was already falling even in the face of high prices.
I responded to this: Add inventories to that and you will have the complete picture. My point here is that if prices are high, but inventories are full, you aren’t going to be able to sell as much product. It’s just the opposite of the gas station with the best prices in town, but no product to sell.
Jkissing responded with a graph, and wrote: We can see from the posted chart that decline of SA output was well underway in 4q05, even tho it was not so apparent then.
This simply isn’t true. In October 2005, they stepped production down by 0.1 million bbls/day. They then essentially held that production rate constant for the next 5 months. The real drop-off didn’t start until the spring of 2006. What do we see from the graph that Jkissing linked to? Inventories in the spring of 2006 were at record levels, and rising. That is when the Saudis made the announcement that they weren’t finding buyers for their crude.
So, some questions I would ask before jumping to specific conclusions. What did inventories look like when the Saudis made this announcement? If they were low and falling, then one could argue strongly that cuts didn’t make sense, and therefore were not voluntary. In fact, inventories were high and rising, supporting the Saudi claim that they couldn’t find buyers. What was going on as cuts continued? Were inventories falling? No, they continued to rise to all-time record highs. So, we saw more Saudi cuts, and prices began to fall as inventories continued to swell. Inventories eventually began to be drawn back down, but by then prices were well off their highs.
At some point I should probably write an essay documenting all of this, but I did document most of it in my response to Jeffrey in our debate. I just can’t see that the moves that Saudi has made have been anything other than consistent with what market conditions would have dictated. Until someone can point to them cutting production in the face of rising prices and low or falling inventories, then the claim that the cuts are involuntary is simply not supported by the evidence we have.
So, how would I know that the cuts were involuntary? I certainly would not expect to see prices well off their highs, especially given that Saudi has now taken almost a million barrels a day off the market. I would expect to see intense pressure on prices. The market signals – with the price of oil continuing to drift down – imply that the market is still slightly oversupplied. When supply tightens back up, and prices head back up, if the Saudis don’t start to increase production (provided inventory space is available) then we can conclude that the cuts look involuntary.
Robert,
Just wanted to say how much I appreciate your clear-headed analysis. By and large, the people who frequent this site are "peakniks" and tend to view the data from that perspective. You've been able to maintain a certain emotional detachment that's helped me see the situation more clearly.
Unless, of course, Jeffery is right. Which is why I think we'd all do well to assume that he is.
ELP. In the face of uncertainty on so many fronts, it's the smartest thing any of us can do.
Unless, of course, Jeffery is right. Which is why I think we'd all do well to assume that he is.
This is why I would prefer to move the debate from "Has Saudi peaked" to "We can't afford to rely on Saudi". But as long as people are saying that Saudi has peaked, as long as I think the evidence for that is weak, I will continue to argue that point. But by no means does this mean that we should trust Saudi to provide our oil needs.
Hi Robert,
I don't think anyone at TOD really trusts the KSA. People seem to either think we have peaked or will soon and the world will suffer, or believe that we will develop other technologies to produce more oil or replace oil. So I don't know why the debate would be about relying on KSA.
I do have a question though. Did KSA really tell Asian purchasers that they (KSA) would not fulfill their contractual obligations to deliver predetermined amounts of oil to those purchasers? If so, why? I don't think that decision would cause purchasers to trust the KSA as a dependable producer.
Thanks,
Lonnie
I would also like to add that I also see nothing wrong with your analysis of events. Almost inevitably any series of observations are open to a variety of interpretations - your take on what has happened to SA production seems reasonable at this stage.
As has been pointed out elsewhere - we need a surge in the oil price coupled with say shut down from another major producer (say Nigeria reaches meltdown) to see whether SA can once more step into the breach.
Mystik SA famously has different people reaching very different conclusions from the same data. To facilitate looking at the data I presented, I repeat the link you referred to here:
http://www.energyeconomist.com/a6257783p/wpsr/graphs/WTESTUS1.gif
When I look at it I see that US stocks began to increase above their one year band 6/06, To me this shows that buyers were probably not yet concerned of rising stocks. In addition, it was in june, I think, that eia showed that the larger oecd stocks were at a ten year low. Meanwhile, by June SA production had already fallen from 9.6Mb/d to 9.2Mb/d.
Extending your discussion of stocks a little more, consider that rising stocks - when accompanied by rising prices - are a sign that buyers are still buying with gusto, so buyers should logically have been buying at least until prices began falling in aug, and maybe even until stocks began falling in oct; falling stocks - when accompanied by falling prices - are, after all, a better sign that buyers have lost interest in buying and have decided to run down their stocks. So, one might then conclude that buyers were losing interest in buying sa oil somewhere between aug 8 and oct 15. For further evidence that sa was lying when they claimed they had no buyers in a rising price environment, consider that other large suppliers - russia (which passed sa to grab the #1 spot during the period, surely not pleasing to sa), angola, libya, algeria, kazakhstan, and brazil were all increasing exports (helping to make up for sa decline) and having no apparent difficulty finding buyers for their oil. The evidence might not convict in a court of law, but is convincing to me.
Moving back to sa rig count, a favorite subject for me:
For years sa rig count was quite stable, around 18 drilling for oil. Then, in late 2004, they began to sharply increase rigs. Consider... if decline is slowly increasing, it follows that rig count could slowly incrase to make up for a little extra decline. However, they are increasing their rig count so fast that they are bidding up the world price for rigs, apparently willing to pay any price, sucking them out of our gulf and the north sea to drill in theirs. Today's drumbeat has a discussion of how unhappy india is that they can't afford today's rig rates.
A year ago sa announced that they would increase rigs to 80 by end 06. They have so far fallen short, not for want of effort, so far up 3x over 2 years... sadly, so far to no avail. They now rather frantically say they want 130, showing that they are willing to spend far more to achieve their objective, whether it is to increase production or simply maintain it... maybe by next year they will talk about 180, a factor of 10 over 2004.
Earlier, when sa rig count was only up 2.3x, I found the rig argument compelling and wrote a wholly imaginary story, which I used for a little energy newsletter that I write. I posted it at the end of a thread, perhaps you missed it. In the hope that you will find it amusing I will repost it here:
Not so long ago, in a land far away…
In April, 2004, and following a ragged decline in the Kingdom’s output that began from a peak the year before, the young hands (TYH) realized that overall field declines could not be compensated by the number of rigs working in the Kingdom. So, with some temerity, they requested a meeting with His Almost Excellency (HAE), ARAMCO’s No. 2. In due course the meeting was held in HAE’s chilly but cavernous office overlooking hot Riyadh.
After the usual lengthy salutations, TYH produced their charts and data. HAE’s jeweled hand carelessly waived them all away, with the following instructions: “First, we must maintain the Kingdom’s credibility, and there have been some questions. We must increase output to support His Excellency’s and my trip to Geneva next month, where we will reassure the markets. However, I recognize you do have some technical difficulties; you may seek advice from The Wise Old Hand” (TWOH.)
A quiet murmur spread among TYH – TWOH was legendary; it was said he made all important decisions regarding the Kingdom’s oil development, from the time the infidels were kicked out a generation earlier up to his retirement in 2000. None of them had ever even seen him – he had been a hermit even before he retired. Meeting with TWOH would be something they could tell their grandchildren about.
In remarkably short order TYH met with TWOH, crowding into his modest dining room at his Spartan residence in a quiet, middle-class neighborhood in Jeddah, near the Red Sea. This time, salutations were brief and their charts were carefully examined. TWOH began, “the solution is simple; add a stream from the tank farms”, when he was interrupted by one of TYH. “We must save this reserve for dire emergency, such as when Saddam invaded Kuwait!”, at which TWOH thundered, “Silence!”
Beginning again, and this time without interruption, TWOH described his plan: “We are now facing a 10% overall annual field decline, and our 18 drilling rigs can only compensate for a decline of 6%. So, we need 36 rigs to allow a 2% annual increase, or 54 for an 8% annual increase. I propose we triple the number of rigs but meanwhile we tap the tank farms to allow us to meet the Kingdom’s commitments and, at the same time, generate more than enough revenue to fund the increased development. We will be able to stop draining the farms before we get to 36 rigs, and will be able to rapidly refill the farms when we get to 54. Do the math – all we need are a few more rigs.”
And so it was done. Of course, tapping the farms was almost instantaneous, so by June, 2004 ‘production’ was pushed to 9.5mmb/d, where it stayed. New rigs took longer; first, the vaunted SA bureaucracy, including not just His Excellency but most of the other ministries as well as the Crown Prince and his advisors, had to approve a) the request and b) the funding, get bids, have the rigs transported to the Kingdom, etc, but by December, 2004 the first arrived. Indeed, by March, 2006, the number had steadily climbed to 42. However, at this point the farms had drained and were no longer able to add to exports, and meanwhile the overall decline was now above 10% in spite of the new rigs. TYH again requested a meeting with (the new) HAE.
Salutations were briefer, less complimentary, and the office seemed even colder than before. TYH’ spokesman said, “we now have 42 rigs operating in the kingdom, but output is once again declining at 10%/year and the farms are fully drained. We need to consult with TWOH again.” HAE replied, “sadly for us all, TWOH is in paradise. I will advise His Excellency to issue a statement explaining that we have no buyers for some of our heavy oil. Meanwhile, we must continue TWOH’s plan. We will authorize more rigs until production stabilizes and we can refill the farms. All we need are a few more rigs.” Quietly, in a nervous refrain, TYH echoed, “all we need are a few more rigs.”
As an aside, I found the detailed discussion of ghawar in the sa thread shocking... column height down 90% to 150ft, producing acreage down maybe 80%... looks as if reservoir volume is down 98%! Unvelievable, particularly if this is the ghawar sweet spot responsible for a majority of ghawar production... (I printed the map for further review, suggest everybody at least look at it carefully.) Consider, too, that most other fields are just as old as ghawar and that no new fields are under development. Many look at sa as, at a minimum, maintaining 9Mb/d for decades. To me the evidence points to sharp declines that have already begun. If you were a prince running aramco, you'd be lying, too... imagine how much padding can be added to the swiss accounts by clinging to power for just one more year. Others have discussed the sa stock market crash... quite a few apparently decided, rather abruptly, to invest elsewhere. Why might this be, considering that at the time sa revenues were at an all time high?
Anyone else plan on attending the talk by Steve Andrews at Fort Lewis College in Durango Colorado?
^/\swco
Attn Todd & Jokuhl & Leanan, too,
After reading your replies late last night-- I think my abbreviated blurb of my wild & crazy imagination was misunderstood. SO.......
After stoking up to top-speed on a pot of coffee last night, I posted a rather lengthy, but hopefully detailed reply to further elaborate on my concept of flipping Govt. Eminent Domain from supporting [Detritus MPP & infinite growth] to supporting [Biosolar MPP & sustainability] starting with the big island in Hawaii. Please see near the bottom of yesterday's Drumbeat. Leanan, since you once lived in Hawaii, and I have never been there -- I would be interested in what you think too.
I initially wanted to post it here, but I figured TOD would delete it --Heh-heh, been there, done that, got the T-shirt. =)
I really should learn to type someday!
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
There was some description of political/economic systems that used 'Milking Cows, Throwing away the Milk, and Shooting the Cow, etc' to differentiate the effectiveness of various approaches.
By all means, establish a large Biosolar test community, build a wall and train some EarthMarines, if you feel it's an essential part of the program, too. Show people that it works and should expand. But your suggestion of 'taking' Hawaii Isle in Eminent Domain, no matter how dire the future you see would be simply an invitation to instantly create insurrection there, and bastions of protectionism/secession in pools all over the US. Look at what a bit of misplaced force got us in WACO? How many new Radicalized Militias formed to protect themselves from the Fed'l Govt just as a reaction to it? (I have no idea, but it's the same set of issues that has us creating as many new terrorists or more than we are 'extinguishing' with our Furious Anger and Righteous?? Vengeance)
I have a lot of very peaceful and compassionate friends who will nonetheless start their 'world-saving' theories with 'IF I WERE KING'..
Be careful what you wish for.. that gun's got some serious recoil!
Bob Fiske
Hello Jokuhl,
Thxs for responding again. Being a fast-crash doomer myself--I fully understand the point you are making. But recall that the necessary ingredient to safefully and peacefully flip the power of eminent domain to jumpstart biosolar habitats is the FULL SATURATION of PO + GW Outreach. That is what turns it into a Win-Win scenario.
I am not a historian, but I believe prior examples exist. Consider Pres. Teddy Roosevelt setting up the first National Parks. The creation of Yellowstone, Yosemite, Grand Canyon, etc, was essentially the establishment of the first Biosolar habitats because it excluded human development. The protection of these areas was deemed a social good that would benefit all in the long run. A Paradigm Shift in public values accomplished virtually overnight.
http://www.nps.gov/archive/thro/tr_cons.htm
http://en.wikipedia.org/wiki/Theodore_Roosevelt#Conservationist
Now I bet at that time, there were people that owned property inside these areas, but the Govt. was successful in getting them to move outside these newly designated areas. Basically, EVERYONE AGREED on the goal, and a fair compensation system was developed. I don't know the exact details, but the goal was reached.
So, think of turning all of the big island into a national park to create not only a sustainable flora-fauna habitat, but also the integration of sustainable human habitat. Repeating again: it will require full Outreach Saturation to minimize violence.
Imagine the President giving the public the choice of 150 million wheelbarrows or full-on total war against Mexico and Canada with 150 million rifles to grab the last of the FFs. If Outreach is at saturation--I believe we would choose the wheelbarrows and start with Hawaii.
Being a Doomer--I don't think the above paragraphs will ever happen, but I will gladly accept the Cornucopians proving me wrong by making it come true with a peaceful Detritus Powerdown and wildly successful Biosolar Powerup program. So far, it appears to me that the infinite growth plans are sputtering badly.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
The Big Island is not like a national park. There's 160,000 people on the Big Island. (Double the historical carrying capacity, BTW.) Moreover, they aren't all poor peasants or backwoods hicks. It's where the wealthiest of the wealthy live and play. It's the Acapulco of Hawaii. That is not the kind of land that gets taken by eminent domain.
I replied back on the old Drum Beat but I'll do a summary:
1 - Sorry no sale. You are talking about a dictatorship.
2 - I (and I believe most people) have zero trust in TPTB.
3 - Such an action would likely result in Civil War II.
Todd
Now this is a Chinese traffic jam!
Hello Greyzone,
Give that traffic engineer a passport to the US and a big, big raise in salary! What better way to get the Chinese & US back onto bicycles, scooters, and RR & mass-transit? ClusterF*#k Photo of the Week!
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Hello TODers graph junkies, any of you considering the use of THIS?
http://www.washingtonpost.com/wp-dyn/content/article/2007/01/04/AR200701...
White House Postponing Loss of Iraq, Biden Says
By Glenn Kessler
Washington Post Staff Writer
Friday, January 5, 2007; A06
I think Biden is wrong - or perhaps even disingenuous and merely trying to score some short-term political points. There is still the option of waging Total War, an option the US has not yet exercised in Iraq. But is it not reasonable to see Bush's press for a surge of 40,000 troops as the next, stepped-up phase in a lengthy progression leading up to Total War?
Moreover, will the American populace continue to tend to favor withdrawal as it currently does (a sentiment to which Biden is clearly pandering in his remarks) if there is a serious and widespread energy-related crisis that afflicts the US in the next few years? Could such a crisis thus not pave the way for the development of a national will to wage Total War in pursuit of energy supplies?
Phil: I realize in the USA you have the "war on drugs", etc. but technically to have a "war" or wage "total war" you require an opposing army. What you have in Iraq are various rebel groups attempting to resist the occupying force. No tanks, no planes, etc.
I can only assume he means 'total destruction', using draconian measures with no respect, if not outright hostility, to Iraqi life.
Hello PhilRelig,
I hope the US does not go to Total War: 150 million rifles, or worse, and who knows how many kids killed and maimed. Even more dire-- the full-on nuclear ICBM gift exchange.
Far better strategy is 150 million wheelbarrows, bicycles, PVs, etc. Keep our kids home, physically whole and healthy to relocalize and grow the food. Teach them well for the Paradigm Shift to help restore the planet. Don't worry, if the US does this, the rest of the world will breathe a great sigh of relief and happily join us.
The older worldwide generation, of which I am a member, needs to have the moral backbone to cover the 'Peakoil Grenade' to help save the future: which always belongs to the youngsters. We had our chance with Hubbert's warning, the Malthusian Math expressed in Erhlich's 'Population Bomb', and the first oil-shock in the 70s--but we blew it instead on a huge Thermo-Gene Fiesta. Killing the kids and grandkids the world over to try and maintain infinite growth would be truly obscene now.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
The US alliance with Iraq (Baathists who killed communists, Saddam he be our man, to put it briefly), then Iraq sanctions, then invasion, now occupation, all have been, and are, bi-partisan actions/aims. Some democrats (only some) make noises about withdrawal, they know they will not be heard, except by some clueless moralistic voters.
"clueless moralistic voter"
I think not - you must mean yourself - clueless, heartless, unthinking, vengeful Bush voter.
Total War against whom? The government of Iraq? Just clear the slate and start over? That is simply not an option, except to create a bigger and more chaotic mess. Which isn't to say the current morons in charge won't attempt it.
"Moreover, will the American populace continue to tend to favor withdrawal as it currently does (a sentiment to which Biden is clearly pandering in his remarks)"
Biden may or may not be wrong about the administration thinking the thing is lost. It seems evident that they clearly don't have a clue about what to do.
When an elected official recognizes what the American populace clearly wants (as shown in polls for quite some time including the November Elections), and then responds to that "sentiment", you call it "pandering". Some might call it "democracy".
Not that I'm a big Joe Biden fan.
- sgage
I would guess "Total War" means "going Sherman" on them. If there are insurgents in a town, order every man, woman, and child out of the town and then level it. If they show up in another town, level that one until the the populace is so sick of war they won't endure any insurgents in their town.
I'm not endorsing this strategy!
I also realize that this isn't what Sherman actually did, but his strategy was to make the civilian public so sick of war they would stop.
So how did "The Sherman" work out for you in Vietnam? You surely won, didn't you?
:-)
Not going to happen (Total War). Consider the Russian experience in Chechnya. What's the population of Chechnya?... Quite modest. The Russians carpet bombed the land and leveled the capital of Grozny. And still it contiues. Iraq, with its population of around 25 million and a bunch of hecklers on the borders is simply too much of a reach. That is unless we are willing to vitrify it.
And then there's Vietnam, an agrarian society, that held us off until we lost our will.
"Total War" simply won't solve the conundrum that we currently face in Iraq, let alone secure the oil.
The appointment of Gen. David Petraeus, a scholar and expert on counter-insurgency tatics, at least suggests that they've finally figured out the nature of the conflict. Unfortunately at this late state, it's unlikely to be productive. However if Gen Petraeus had been a key player in the planing phase it's possible that Iraq might be more stable now. As it is, the country will have to experience much more violence before the Shiite theocracy is able to secure power. So much for democracy.
I think that this 'surge' is going to be more symbolic where we will end up saying, "Hey, we gave it our best and those Iraqis blew it. It's their fault for failing, not ours. Okay, we can go home now"... where going home is before the next presidential election heats up.
But sure, Biden probably wants a few points.
Byron
How can you wage "total war" when you don't have the troops to send in? In addition, how would you occupy/hold Iraq after you win it???
We don't have the troops. We don't have the equipment. And we'll have to borrow from the Chinese to pay for it.
New bumper sticker in Dallas: "Support the troops: Bring them home now"
I have noticed that pro-Bush bumper stickers have virtually vanished, even from large four wheel drive pick-ups.
Total war in this case is simple. Iraq exists on imported food. Cut it off. If smugglers are too good start denying water. Cyanide in Euphrates. Whatever. After the surge fails, if things go that far, someone as mentally defective as Bush will reach for these methods.
This morning, at 1 AM, the temperature in Milford, NH was 50 degrees. It's amazing how rapidly things are changing.
Hello Sunspot,
It was colder in Phx last night--I suggest we swap my A/C unit for your wood-burning stove!
A most sensible suggestion. At the moment anyway... Although I'm a native New Englander, I did live in New Mexico for most of the 90s, north of Santa Fe. Remarkable to see the snow, nothing even close to that happened while I was there. If Albuquerque got a couple of inches of snow it was a big deal! And it would all melt by 3PM anyway.
The forecast for NH next week is much colder. Highs only in the 30's for a couple of days. Which is "normal" this time of year - or it used to be...
For Westexas:
I have just run a new HL of Saudi, incorporating expected production data for 2006. I used actuals through October of 2006, and then assumed 8.8 million bpd for November and December. For the 4th year in a row, the P/Q comes in above the line that you drew indicating URR of 186.3 GB.
So, I let Excel draw a new trendline for me, and it predicted URR has moved to 195 GB for Saudi (from your 2005 projection of 186.3 GB). This moves the % of Qt down from your earlier projections (from 58.1% in 2005 to now 57.4% in 2006). If the URR had not changed, we should now be at 60% of Qt if your previous HL was predicting correctly. Instead, the production trends are moving Qt in the wrong direction. I can run some more projections out a few years, but production is going to require a huge dropoff to avoid continued increases in projected URR.
Bottom line: The HL for Saudi is a moving target, and the trend over the past 4 years indicates the HL is currently too conservative. We are not at 58.1% of Qt. In fact, we are moving down, not up from that number and have been doing so for 4 years. If I had done the HL in 2002, it is likely that we would have been well above 60% of Qt.
I just ran a few more projections and did a few more HLs. I need to document this at some point and show my graphs, but I am just playing around right now to get the trends.
If I restrict my HL to the past 15 years, when the line was pretty straight, URR moves up to 212 GB and that would put 2005 at 51% of Qt. The definite trend is that the most recent data is skewing Saudi's URR to higher levels than you are predicting with your HL, thus lowering the % of Qt that we are currently at.
Therefore, it is wrong to say that we are approximately where Texas was when they peaked. In fact, with URR moving, we don't really know where we are. If the trend continues, in a few years we will be below 50%. The only thing that will prevent this is for Saudi production to continue falling from here, and I do not believe that will happen for few more years. I think the 2007 data will once again see the URR pushed to a higher value. And if the Saudis raise production this year, your HL from last year is shot because URR will be pushed to over 200 GB.
RR, I made a comment about a month back that due to the fact that KSA kept their running average oil production steady from around 1992 to 2001 and it was NOT based on any kind of geological cap, any HL done on their production ratios would be skewed to a number far lower than what WT and others are currently suggesting.
I take it that your own analysis also confirms this?
If they could have been producing at higher rates, but chose not to, then I think that would screw up the HL. Certainly, at that time it would have shifted URR to a higher level.
What I have been doing lately is playing around with the HL for different years, and for Saudi it is certainly moving a lot. So, we have a moving URR that is increasing, rendering %Qt somewhat meaningless since the trend has been down.
Pretty tough to confirm anything regarding sa...
My own idea of how sa flat production came about from mid 2004 to late 2005 is posted in my rather long post above, and has to do with tank farms.
We'll just have to wait and see...
I hope people aren't seriously suggesting that new KSA production increases matched perfectly their decline rate for over a decade...
Your 'flat' production.
I think the graph speaks for itself.
Shikata ga nai.
Robert,
I suggest that you check out the Texas HL plot, which showed an even more pronounced HL flattening, as production went from 2.5 mbpd in 1962 to 3.5 mbpd in 1972. The recent deflection in the Saudi HL data, IMO, was nothing more than the final surge before the peak--just like Texas.
With Saudi production now down by 800,000 bpd, there is no way that the Saudi HL plot is not now reverting back to the long term trend.
As I told Dave yesterday, this whole argument is getting really tiresome.
Deffeyes picked 2006 as the most likely year for a world decline, and world crude production is down.
I picked 2006 as the most likely year for a Saudi decline, and Saudi crude production is down.
I predicted that Saudi Arabia and Russia would join Norway in showing lower exports. I estimate that the combined exports from these three countries are down by at least 10% from 12/05 to 12/06.
Daqing is in a permanent decline, with a 90% water cut. Burgan is declining. Cantarell is crashing, with up to a 40% annual decline rate. Saudi Aramco has not admitted that Ghawar is declining, but the best case is a one-third water cut, after they went to horizontal wells because the vertical wells were watering out.
Apparently, you think that the three (so far) accurate predictions, based on the HL method, are just a coincidence, and you appear to be unconcerned about the near certain simultaneous decline/crash of all four current super giants.
I disagree. Why don't we just leave it at that?
Edit:
The Texas/Lower 48 article, showing HL plots for Texas, Lower 48, Saudi Arabia and the world:
http://www.energybulletin.net/16459.html
Note that we saw the same deflections right before the Texas/Lower 48 peak that we saw before the Saudi/World peak. BTW, all HL plots were done by Khebab, using parameters that he chose.
Damn, I've been waiting for someone to refute your logical and holistic viewpoint for a long time now - but they can't. It seems like some are reluctant to accept the facts only because of the fear of getting egg on the collective Peak Oil face (in the unlikely case peak is in 5 years out and not now).
The basic facts you lay out seem robust. The HL method seems to have a solid track record, and I think the accelerated decline of the largest oil fields should be startling to anyone who really thinks about it! (Not to mention the fact that the preponderance of the world's oil fields have already peaked!)
WT, your posts always succinctly hit the vital points of the issue, and this is the jaw dropper:
"Apparently, you think that the three (so far) accurate predictions, based on the HL method, are just a coincidence, and you appear to be unconcerned about the near certain simultaneous decline/crash of all four current super giants."
No worries, though, the notsofree market will refill those supergiants with the power of cold, hard cash - just remember to click your heels three times.
The basic facts you lay out seem robust. The HL method seems to have a solid track record, and I think the accelerated decline of the largest oil fields should be startling to anyone who really thinks about it!
An HL with a URR that has moved up by tens of billions of barrels hardly seems robust to me. This was certainly not the case with Texas.
"Apparently, you think that the three (so far) accurate predictions, based on the HL method, are just a coincidence, and you appear to be unconcerned about the near certain simultaneous decline/crash of all four current super giants."
In no way am I unconcerned about this. But I believe that he did get lucky with the predictions because I believe the behavior was caused by higher prices (which most would admit would cause the same predictions to come true). What I am really concerned about here is Saudi increasing production in the near future, and Jeffrey losing all credibility and us all being tarred by that same brush. If that happens, we will lose a bit more ability to influence, and people will be more prone to write us off as crackpots. That's my point; not just some nitpick over picking the date of peak.
I am not an oil expert, but I have been reading TOD for a year and a half and it seems that, from what I've seen, even if KSA were to be able to increase production in some emergency it would quickly become apparent that they could not sustain higher levels for very long before the decline in their older fields overcame the increase. This would not be as damaging to TOD's credibility as you seem to fear. The message is that we are there, and long term increases in production are not to be expected.
Regarding Ghawar, I always add a qualifier, "near certain," because unlike the other three super giants (which are, or were, producing one mbpd or more), Saudi Aramco has not admitted that Ghawar is in decline or crashing.
However, a point that a lot of people seem to be missing is that the Saudis did not redevelop the field with horizontal wells just for the fun of it. They did it because their vertical wells were quickly watering out. So, they were forced to redevelop with horizontal wells into a rapidly thinning oil column, between a rising water leg and an expanding gas cap.
So, after redeveloping with horizontal wells, they are still getting (at least) one barrel of water for every two barrels of oil. So, only in the most hyper-technical sense am I forced to say "near certain" decline. The Yibal case history shows what happens when the water hits the horizontal wells, and Ghawar is at about the same stage of depletion at which Yibal crashed.
Down under has some interesting info about Ghawar in the other thread. Insiders do talk...
Pretty interesting--especially the part about the oil column thinning by up to 90% in some areas.
Jim Kunstler asked me what kind of response I got from the Cornucopian and No Near Term Peak crowd when I constantly trot out the "Near certain decline of the four super giants" line.
I told him that by and large I got no response. I told him that I felt like the Tim Allen character in the "Santa Clause" movie, when he kept asking "What happens if I fall off the roof?" and never got any answer.
I suggest that you check out the Texas HL plot, which showed an even more pronounced HL flattening, as production went from 2.5 mbpd in 1962 to 3.5 mbpd in 1972. The recent deflection in the Saudi HL data, IMO, was nothing more than the final surge before the peak--just like Texas.
I have run out several cases, and I think this is worth an essay in the near future. Here is what I see: Over the past few years, the URR for Saudi has moved up substantially (tens of GB) while the Qt% hs moved down. That is not the case with Texas. The points for Texas, once the line started to flatten out, were all right on the line. The last few points from Saudi have been above the line by a fair amount; enough to shift the URR to a higher value and thus lower Qt.
Apparently, you think that the three (so far) accurate predictions, based on the HL method, are just a coincidence, and you appear to be unconcerned about the near certain simultaneous decline/crash of all four current super giants.
I think I have built a pretty solid case that you getting the export prediction correct is coincidence. As I laid out in our debate, exports follow refinery utilization. Refinery utilization follows demand. High prices tend to stem demand. That's what has happened with exports.
As far as your Saudi prediction goes, if they are voluntarily cutting exports, then you do have another coincidence. That's the question, isn't it. In fact, higher prices will cause the behavior we have seen with exports, Saudi cutting production etc. So what I believe you have here are correct predictions, wrong reasoning. The reason the predictions are correct is that prices were high, which stemmed demand. It's like me picking the Cowboys to win the Superbowl because Troy Aikman is a great quarterback. The Cowboys may in fact win the Superbowl, but that doesn't indicate anything about Troy Aikman since he no longer plays. I could have a right prediction, wrong reasoning.
Note that we saw the same deflections right before the Texas/Lower 48 peak that we saw before the Saudi/World peak. BTW, all HL plots were done by Khebab, using parameters that he chose.
That's not true. At Texas' peak, the points are essentially right on the line. That is not the case with Saudi. They have been above the line by a fair amount for 4 years now. Why don't you plug in 2006 data and redo the HL? What you are going to see is that URR has shifted to a higher value, and that %Qt has dropped from last year. This is not indicative of a production peak. I think this is good material for an essay: Comparing the evolution of the HL of Texas around peak time to Saudi now. They do not show the same behavior.
Huh??
Robert, did you even look at Khebab's Texas plot? If I use the implied URR from just the 1962 to 1972 time frame, the URR looks like it's way out beyond 100 billion barrels but it ultimately returned to the same trend line and is closing on 60-65 billion barrels now after several more decades. This is the "dog leg up" that you keep using to say that QT is moving. Jeffrey's point is that this same dog leg up happened with Texas indicating (taken in isolation) a far larger URR than actually ended up happening. This same sort of dog leg up happened to the US and indicated, again, far more oil than it appears we're going to get or have gotten since then.
Look at Texas again. The first linearization would suggest a URR of 45-50 billion barrels. Then the dog leg up comes and suggests that URR is way out beyond 100 billion barrels. Then the collapse comes and URR falls back far closer to the original 50 billion barrel mark than the outer 100 billion barrel mark. A similar thing happens for the lower 48 too.
Now, when I eyeball the Saudi plot, the early data would appear to suggest a URR in the 120-140 billion barrel range. Then the first solid (much more stable) leg suggests a URR around 180 billion barrels. Then comes the dog leg up which is suggesting something way out near 300 billion barrels.
Your entire argument is based on the assumption that KSA will not do what Texas and the lower-48 did - revert back downward. So then you take the data that fits this view while ignoring what has happened in other regions historically. KSA URR might indeed end up being 190 or 200 billion barrels but it's not going to go way out there where the current dog leg line suggests, beyond 300 billion barrels.
Robert, did you even look at Khebab's Texas plot? If I use the implied URR from just the 1962 to 1972 time frame, the URR looks like it's way out beyond 100 billion barrels but it ultimately returned to the same trend line and is closing on 60-65 billion barrels now after several more decades. This is the "dog leg up" that you keep using to say that QT is moving.
The dog leg up that I thought he was talking about was post 1972. If we look at the one before 1972, what happened was that the URR increased by right at 10 billion barrels, meaning you would have incorrectly predicted the peak if you were doing the HL a few years before the Texas peak. It only became really accurate after the fact. That's my whole point with Saudi. The URR is being skewed to a higher value, which will push the peak date further out. Calling peak right now by the Saudi HL would be no different than calling the Texas peak in 1962 based on the HL. If you were doing the HL in Texas in 1962, it would have predicted imminent peak, even though it was still 10 years out.
As soon as I get some time, I will document this. I will show that running the HL in Texas starting in 1960 or so would have called for a peak too soon. Just eye-balling the graph, it looks like Texas was at 50% Qt in 1962 (the URR at that point was about 50 GB). That's what I believe is going on with the Saudi HL.
Robert,
You do recall someone named M. King Hubbert? The HL method is a simplified version of the method that Hubbert used to predict that US Lower 48 production, inclusive of Texas, would peak between 1966 and 1971.
I am not arguing that the Texas plot is not noisy. It is (actually the KSA plot looks a lot more stable). But Hubbert accurately predicted the time frame for the Lower 48 peak. Because of the year, 1956, he only could give an approximation.
If we were arguing about this topic regarding the Lower 48 peak, we would be in 1971, with a rock solid HL plot to work with.
In any case, the whole basis of the HL method is that you do a best fit to a set of data points that fall above and below the best fit line. The data points that you are talking about on the KSA plot are offset by preceding points just below the best fit line. But these small changes in inflection are tiny compared to the noise in the early portion of the data set.
In any case, we saw these changes in inflection on the Texas and Lower 48 plots, right before they peaked.
If we were arguing about this topic regarding the Lower 48 peak, we would be in 1971, with a rock solid HL plot to work with.
Here is my point, and after this I will drop the matter for now. If we were back in 1971, looking at the HL for Texas, could we have approximately predicted the peak? The answer is an emphatic NO! The lower 48 HL was stable for several years prior to that, but Texas, as swing producer, displayed some funny behavior coming up to the actual peak. Texas only became a model for HL years after the actual peak. It looks like it wasn't until about 1977 that the Texas HL had enough points in a row to draw a line through it with a fair degree of confidence.
So, you have often used Texas as a proxy for how Saudi will behave as the most recent swing producer. Yet go back and plot the data through 1971, and see if you can come within 10 years of predicting the Texas peak. My eye-ball tells me that those error bars will be greater than 10 years. But as I said, I will write an essay eventually on this to show the evolution of the prediction of a Texas peak as I use data starting around 1960. I think this will be a case that HL as a predictive tool would have failed badly. I think the best case is that it will be "Peak within 10 years" for about 15 years in a row. Seriously. In 1960 it would have said "Peak within 10 years." In 1975, it would still be saying that. Only in 1977 could you confidently say that your Qt probably wasn't going to change by much more.
Robert,
I am not arguing that the Texas HL plot is not noisy. But Hubbert didn't predict a Texas peak. He predicted a Lower 48 peak.
The Saudi HL plot is vastly more stable than the Texas plot, but since we have a lot of Texas data, we can, in retrospect, pinpoint when Texas peaked. So, we took the historical HL Texas model, and compared it to the much more stable Saudi HL plot.
BTW, Khebab used the infamous "last three" Saudi points when he constructed the Saudi HL plot. So the Qt estimate honors those points.
In any case, this brings us back to the argument I outlined in the Lower 48/Texas article, to-wit, that the world and Saudi Arabia, in 2006, were at the same stage of depletion at which the Lower 48 and Texas started declining.
An Ever Lengthening List of "Coincidences?"
In 1956, Hubbert put the Lower 48 peak between 1996 and 1971. The Lower 48 peaked in 1970 (after crossing the 50% of Qt mark). A coincidence?
Khebab, using only production data through 1970, generated a post-50% of Qt production profile for the Lower 48, and the post-50% of Qt cumulative production through 2004 was 99% of what the model predicted it would be. A coincidence?
Russia produced just above 11 mbpd to just below 11 mbpd for five years before to five years after 1984. Russia hit the 50% of Qt mark in 1984. A coincidence?
Khebab, using only production data through 1984, generated a post-50% of Qt production profile for Russia, and the post-50% of Qt cumulative production through 2004 was 95% of what the model predicted it would be. A coincidence?
The North Sea (C+C) started declining (rapidly) after crossing the 50% of Qt mark in 1999. A coincidence?
Mexico started declining after crossing the 50% of Qt mark on Khebab's HL plot. A coincidence?
World crude oil production started declining after crossing the 50% of Qt mark on Deffeyes' (C+C) HL plot. A coincidence?
As I predicted, Saudi oil production started declining at the same stage of depletion at which Texas started declining. A coincidence?
As I predicted, based on an analysis of Khebab's HL plots, Saudi Arabia, Russia and Norway are all showing lower oil exports, year over year. A coincidence?
Khebab, using only production data through 1984, generated a post-50% of Qt production profile for Russia, and the post-50% of Qt cumulative production through 2004 was 95% of what the model predicted it would be. A coincidence?
The question is "Could he have done it for Texas, the world's swing producer prior to the peak and your proxy for Saudi?" The answer is no.
As I predicted, based on an analysis of Khebab's HL plots, Saudi Arabia, Russia and Norway are all showing lower oil exports, year over year. A coincidence?
I say with near certainty that Saudi was a coincidence, because I firmly believe the data are clear that they cut production in response to softening demand. Time will tell, but don't say I didn't tell you so when they raise production back up. It won't happen until prices head back up, but it will happen.
The thing about Qt, which has become apparent to me from running through these exercises, is that 50% of Qt this year might be 48% or 52% of Qt next year. Qt is not a constant; it is a moving target. Only have several years of consistent HL behavior does Qt start to become constant, and that is not the case with Saudi.
Oh, I forgot to address this above:
The data points that you are talking about on the KSA plot are offset by preceding points just below the best fit line.
But as more points come in above the line, the best fit line will change. Just plug in 2006 data and you will see that URR has increased because 2006 data came in above the line. The former best fit line is no longer a best fit.
Robert,
I am not talking about the best fit line that Khebab did.
The slope of the points right before the 1973 Texas decline is basically pointing toward infinite reserves, which is what we see right before the 2006 decline in Saudi production.
Is this an exact science? Of course not. But it is pretty damn accurate, at least compared to the alternatives.
At my request, Khebab generated post-50% of Qt production profiles for the Lower 48 and Russia, using only production data up to the 50% mark. The post-50% of Qt cumulative production for the two regions through 2004 was 99% and 95% of what the HL models respectively predicted.
This argument is almost surreal beyond belief. You are basically taking a microscope to three or four years of data, trying to counter the HL model, all while Saudi production is exactly following the predicted decline, based on a HL plot that Khebab did. I might add that Laherrere independently came up with about the same Qt.
So, world production is down, despite the prices trading in the highest nominal price range in history, and it's just a coincidence that Deffeyes picked 2006 as the most likely year for a decline?
It's just a coincidence that the Saudis "voluntarily" cut production by 800,000 bpd, in the same year that I picked as the most likely year for the start of the Saudi decline?
And Norway, Russia and Saudi Arabia are all now reporting lower year over year exports, exactly as I predicted one year ago this month. This is all just a coincidence?
Edit: an interesting item from Spott Asset Managment:
This argument is almost surreal beyond belief. You are basically taking a microscope to three or four years of data, trying to counter the HL model, all while Saudi production is exactly following the predicted decline, based on a HL plot that Khebab did.
That's my whole point - that it is not exactly following the predicted decline. The URR is moving, as is Qt. The last few points are all above the line, which pulls the URR up. That does not follow the predicted decline.
As far as me taking 3 or 4 years of data, that simply isn't true. I am updating the HL for 2006, and showing that it is skewing the URR to higher values. Update it yourself and you will see.
But why did the price go high? Because since the end of 2004 the global oil production has flattened while the demand has continued to increase. So the crux of the matter is: why has the world oil production not increased significantly for the last 2 years?
But why did the price go high?
I went into this in quite a bit of detail in my debate response to Jeffrey. I covered the geopolitical factors that were taking place as the price was rising. You had a combination of Katrina, Nigeria, and Iran which all followed a drying up of excess production capacity.
Because since the end of 2004 the global oil production has flattened while the demand has continued to increase.
I think you are wrong about that. No, I know you are wrong about that. If production is flat and demand is increasing, we don't have all time record high inventories. No, there has been demand destruction as prices went up. I believe demand has been flat for some time.
We no longer have record high inventories... they were declining fast even before opec cuts were bruted, and US total stocks are now below 1025Bb, and within the range that prevailed from 5/05 to 6/06.
So, if demand was low while stocks built, would it be logical to say that demand is up 65Mb to account for the stocks fall by this amount since oct 15? Or does rising stocks show falling demand, but rising stocks says nothing?
A reasonable thing to say is that when prices are climbing demand is growing faster than production, and when price is falling the reverse is true... so, prices and production are the same as last year, so maybe demand is unchanged, being destroyed in those places with relatively slow gdp growth such as africa, and still robust in places with high gdp growth like china.
BUt demand is variable; in the us it is more climate than price related, two warm winters in a row are causing us demand growth to stall. This effect is accentuated by low ng price, leading to switching from fuel oil to ng, reducing liquids demand, and stripping all liquids from ng which boosts liquid supply. IMO this is about to change; after falling 6% from the 2001 peak us ng produciton clawed back 1% in 06on the back of 16% more land rigs and 8% more gom rigs yoy. But, gom rigs are already down 17% from 06 peak on account of sa' willingness to pay any price, while land rigs looking for ng are turning to oil... I think US ng production will be down 6% (1000bcf) in 07 while canadian exports decline 300bcf, diverted to oil sands, and rising ng will increase demand for liquid fuels just as drivers boost their own consumption. I expect US liquids consumption up 2% in 07 while china continues apace. Note that when us ng price /mcf climbs past 1/6 of oil price /b, the switching goes the other way, as it did last winter, meaning that extra fuel oil is diverted from diesel to electrical generating plants, increasing the demand for liquids and driving up the price of oil, as happened last spring.
Winters may be trending warmer forever, but so are summers... last year US ng consumption rose 500bcf against teh 5-year avg march thru oct.
Some others put the Canadian decline at 800 to 1,000 bcf in 2007 due to a cutback in drilling along with tar sands use. At these low ng prices combined with high drilling rates it is strategically wise to lower budgets or switch to oil drilling. The gas is worth more in the ground.
With an average conventional decline rate of 28% (according to David Hughes) it won't be long before gas prices move back up.
I found a reference for david hughes saying canadian ng natural decline rate was 20%. Can you provide a ref for the 28% you mention? was this for Canada or us?
tia
Excellent post. I think TOD needs a companion site, The Gasline, to discuss gas issues at the same high level as oil is discussed here.
Robert there have always been periods where global oil production was badly affected by geopolitical events like the Iran/Iraq War, or logistical failures as in the Piper Alpha disaster. However, unlike today, Saudi Arabia as swing producer was able to flood the market within a few months of such incidents and restore order to the market. Many here have no doubt noted that despite many assurances from SA that they would significantly lift production to calm the markets during the past few years (particularly after Hurricane Katrina), none was forthcoming. If anything, the graph shows the contrary occurred, with production starting to slowly decline from October 2005, after that event happened.
Yet in the face of high prices supply did remain flat, contrary to received economic dogma which claims that high prices would provide a signal to the market to supply more of it until the price settled down once more.
Regards,
Tony
From yesterday
westexas:
The guy doesn't like the fact that Saudi Arabia is showing the same production profile as the prior swing producer, so he looks around for a small producing region that has a complex HL plot, trying to prove that Saudi Arabia is not in permanent decline
The readers might find it interesting that people trying to rebut the HL method are forced to scurry around looking for smaller and smaller producing regions, while the large producing regions--like Texas; Lower 48; Total US; Russia; North Sea and Mexico--all fit the model.
No need to go scurrying around, I'll just take a closer look at one of your favorites.
Hubbbert linearization should be more reliable for Mexico. Mexico is not part of a cartel so it production should be controlled by what is happening in Mexico instead of what is happening in other countries as is the case for Saudi Arabia. Lets take a closer look at how well HL predicts Mexicos oil production. Here is Mexico's production up to 1995. Notice the it flattens and starts to dip in the early 1990.
Is this Mexico's peak? Here is the HL of Mexico at that time.
The Hubert Linearization appears to confirm that Mexico was about to go into a permanent decline with a Q/URR value of 60% and a prediccted URR of 40 Gbb.
Now what really happened? Mexico's production continued to increase with a current Q of 36 Gbb. If the prediction of HL is to be believed mexicoes production should be collapsing to zero any day now.
Maybe we should reexamine the HL plot using more data. Here is a current HL of Mexico. Notice that after 1995 the is a dog leg up onto a new slope. Looks like we have another false alarm.
If the HL was repeated in the years after 1995 we would see a slow increase of the URR and a derease in the Q/URR just like we are seeing currently in Saudi Arabia and in world production.
You will also see similar behavior if you started doing the HL in Texas around 1960. It would have predicted imminent peak, which is the point I have been trying to make: Texas did not fit the model until years after it had peaked.
By the way, I want to make it clear that I have no animosity toward Jeffrey, Greyzone, suyog, or anyone else that I am disagreeing with. I like to debate issues. This is how I learn. When others counter my arguments, I am forced to question my assumptions and either modify them or address the challenges. Again, this has always been a most efficient way for me to learn. I learned more about evolution in 5 years of debating Creationists than I could have learned in 15 years of school. This is like a friendly game of chess for me, in which each interaction teaches me to play chess a little better.
Occasionally I am wrong. But not very often. :-)
Robert, any guess on when SA does peak?
With how aggressively they are currently investing in their infrastructure, it looks like they will indeed bring on a lot of new production.
This could definitely give them an extended plateau of sorts - although I'm doubting they will maintain their swing producer status if the world economy stays healthy since eventually demand could begin to outstrip supply.
The basic problem with your early Indonesian and Mexican plots is that the P/Q intercepts are unlikely. The vast majority of HL plots show P/Q intercepts between 5% and 10%.
Most large regions that are past the 50% of Qt mark--Lower 48; Texas; Total US; Russia--and now the world and Saudi Arabia--all have P/Q intercepts in the 5% to 10% range.
You will note that the Mexican HL line that falls between 5% and 10% P/Q intercept shows a Qt of about 76 Gb, versus current cumulative production of about 37 Gb, i.e. around the 50% mark. Journalist and energy analyst David Shields is predicting that Mexican production will fall by at least 800,000 bpd this year. So, your HL plot, using a P/Q intercept that is consistent with most other large producing regions, serves to support my contention that regions, in the absence of political constraints, tend to peak at around 50% of Qt. I appreciate your support for my work.
I see, then production will peak for Saudi Arabia when it reaches 50% of Qt. Seeing that it is now at 57.4%, down from 58.1% last year, I think we can confidently project that Saudi Aribia will peak in 10.6 years when its Qt declines to 50%.
edit fixed typo
As I pointed out in the Lower 48/Texas article, I think that the swing producers like Texas and Saudi Arabia peak later than overall producing regions like the Lower 48 and the world. This was the basis for the (so far) accurate predictions (in support of Deffeyes' work) that world crude production would start declining in 2006 and that Saudi production would start declining in 2006.
Thanks again for your work supporting the HL method.
You can see four HL plots in this article, all of which have P/Q intercepts between 5% and 10%: http://www.energybulletin.net/16459.html
The primary exception to the 5%/10% rule is the exclusively offshore North Sea. It is not impossible for Mexico to have a P/Q intercept over 10%; it's just unlikely.
BTW, anyone else find it odd that Cornucopian types are forced to use regions that are in, or on the verge of terminal declines--such as the UK; Indonesia and Mexico--in an attempt to rebut Peak Oil arguments?
It's just really odd. I first noticed it when I debated Michael Lynch.
In thinking about world bottom up analyses, it seems to me that analysts may be under-estimating coming increases in mature country decline rates.
eg, what is chris assuming for Russia, sa, china, mexico, norway and gb, and how does this compare with assumed us decline rate? The us was produced with old tech, others with eg horizontal wells/simultaneous water floods that imo signal a coming collapse. It might be worth while looking at the non-us decline rate assumptions year by year and see if analyst predictions are in line with reality.
Also, it would also be interesting to see if analysts assumptions of when new fields actually come on line, or the avg delay, and whether past delays have been used to extrapolate future ones.
I'm beginning to appreciate that what HL captures is the increased difficulty that always occurs as about half is produced, of course with the lowest cost, largest and easiest to produce fields gone or fading fast, forcing producers to turn to smaller, deeper fields that are more problematic, eg less porosity more faults. Quite specifically, and as produciton/well declines sharply, there is a sudden need for more and more expensive rigs, more crews, etc. And, we are now entering an era when US gom ng production competes directly with SA oil production for available rigs (we are losing.) SOme fields that were expected to come on line in, say, 2008 may be delayed on account of insufficient rigs...
All we need are a few more rigs...
I frequently point out that biggest drilling boom in Texas history "succeeded" in the Seventies.
We increased the number of producing wells by 14% from 1972 to 1982, as production dropped by about 30%.
We couldn't replace the big fields like East Texas. The huge problem for Saudi Arabia--and the world--is that Ghawar accounts, or accounted, for more than half of their production. (East Texas only accounted for about 7% of peak Texas production.)
1. Saudis have every motive to keep the swing producer role & may have drilled even faster than in the U.S; perhaps briefly defying the HL( the model was developed with data under more reasonable economic motives I would think-?) as this could be about survival for them- certainly immense power & $.
2. since the Saudi's were holding hands with Pres. Bush at Crawford in 5/05 due to rising oil prices( & dropping poll numbers), formed a committee with Saudis & Condi on it etc. they were obviously begged to produce more, then well they did not & prices continued up & shot up with katrina.
even without data to prove anything the dots all seem to line up to me. I will assume this in my preps!
By experience, I observed that the HL result is not very reliable if most of the points used for the fit have P/Q values above 5% which is the case for your first chart. The HL technique is not perfect but predicting a reversal in a production curve is not an easy task!
Thanks for the information. I've noticed a number of the HL plots I've created using BP's data show a gradual decrease in slope. Mexico's you've seen, China's has a similar look. In these cases it seems you could get any URR you wanted by selecting and linearizing the right years. I'll have to take another look at China's now to see if the 5% criteria is useful in its case.
Production in large producing regions will virtually never quite go to zero, so with time the plot asymptotically approaches the horizontal axis, but the production gets so low that it doesn't matter.
Khebab took the production data through the 50% mark for the Lower 48 and Russia and constructed HL models for the post-50% of Qt production. The actual post-50% Lower 48 cumulative production through 2004 was 99% of what the HL model predicted and the actual post-50% Russian cumulative production through 2004 was 95% of what the HL model predicted.
The world, as Deffeyes predicted, is now showing lower crude oil production, and Khebab's work suggests that Deffeyes' estimate that we have about 1,000 Gb of remaining conventional crude + condensate production is quite accurate.
Iran halts gas exports to Turkey. (HT John Robb).
Apologies if the link has already been posted, I couldn't see it if it has.
Posted the day the story broke, Jan. 3, but there wasn't much discussion of it.
I ran across a nice quote, looking on the bright side of PO, by Larry Robinson, former mayor of Sebastopol, Calif.
I'd like to add to the quote above, that the only way I can think of to change the mass mentality of this country is government funding of advertising methods of shifting the things our citizens "value". We've established our current set of values (consume-more, drive-more) through advertising, now to go back we need to establish a new set of citizen values (time, freedom, happiness, social connection). Picture suave ads showing bucolic settings of small organic farms, neighbors visiting across fences while picking grapes in fields shared with sheep or goats; urban areas of bicyclists talking and laughing in front of their local food co-ops; grocery store shoppers reading labels to make sure products were grown within 100 miles; educating and motivating people to work in their local public gardens; and many PSA's about PO, the necessary methods of gradually powering-down, conservation methods, and ways in which people can look forward to the changes which lie ahead. Our advertising industry is huge and sophisticated. Our government needs to utilize it in dealing with public education of PO issues. I know, I know, the iron triangle, etc. It seems impossible, but it would be money better spent than ethanol subsidies, wouldn't it?
Did advertising create the lust for automobiles in China and India?
Advertising tends to amplify what is already out there. People like symbols of success--big cars, big houses, fancy clothes, humongous TV sets. These material things show that you have "made it."
Well, now, I buy my clothes used at Goodwill, have a thirteen year old car and an old TV: How can I prove to beautiful young women how successful I am? (Actually, I can, but it is an effort--have to show I'm a great sailing instructor, great listener, great cook, great commedian. How much easier it would be just to have a top-of-the-line new Mercedes or Lexus . . . .)
Did advertising create the lust for automobiles in China and India?
Advertising tends to amplify what is already out there.
Yes. I don’t know about direct adverts in India/China, but the western, mainly US picture of the ‘good life’ has been transmitted in texts, movies, and in the past 20 years over the TV. That picture is the epitome of rich suburban US living - an individual house with a bedroom each (at least), a garden, several motor vehicles, and ‘power’ toys such as a motorboat, etc.
Action is driving around and being domineering at work, love is being alluring through looks and status, or it is the ‘doomed’ story. I have heard from an Indian friend that Indians are puzzled by the lack of servants!
What if the media had endlessly shown sexy gals meeting guys in the communal laundry? On the walking trail? At the state legislative body? Etc. Now the USSR tried that, I admit, and it worked for a while, but was clearly limited, feeble, unconvincing, badly done or maybe - hopeless to begin with?
Men compete for status. Women compete for men.
I am a big fan of evolutionary psychology. Women find rich fat old men highly attractive. Poor and handsome and charming young men doing their wash at communal laundries (What! No privately owned washing machine . . . ? What failure!) will lose out to the short guy in the Mercedes who has hair growing out of his nose.
It is possible to have high status without wealth--but difficult. You actually need some energy and talent and education can help. The easy way to the symbols of success is to buy them.
By the way, the biggest problems I had with my wife is that she is a materialist who insisted on all the usual status symbols. I like to walk and ride my bike and furnish my house with what others have discarded. So, eventually, she left me for a man who (she thought) would support her in a style to which she would like to become accustomed. Oh well, I got the kids--that's all that really mattered to me.
"It is possible to have high status without wealth"
It all depends upon who you want to have "status" with. If my status in someone's eyes depends upon "wealth", I surely do not need or want their esteem.
It is also possible to simply not care.
- sgage
There have been some experiments In South America and Africa propagating the common sense of birth control by means of soap series. It was very effective. Television is not to be underestimated as a tool to subdue/educate the masses.
I'd like to add to the quote above, that the only way I can think of to change the mass mentality of this country is government funding of advertising methods of shifting the things our citizens "value" -Kalpa.
Absolutely.
The media are not independent (‘Western world’) The media follows, and adjusts to, both the Gvmt. and Corporate line (in the US these cannot be distinguished, footnotes omitted..), and what they ‘believe’ their consumers want to hear about or read.
All this boils down to protecting powerful interests, their own naturally, but as dependent on those who hold the guns (Gvmts. who command the army) and the money (big corps, finance, banks, etc. ) The mainstream media, beyond local news and curiosities and opinions, populist posturing, thrilling scandals, is the number one shaper of opinion, the only entity that transmits supposedly ‘hard’ information.
For a large number, it is the only source of facts. Big Brother telling da real truth in their living rooms on the blue screen is all they know.
So the question becomes, why should the Gvmt. and the Corps. make people aware of peak oil and what could be done to prepare for it, or change?
Could it be that they prefer people to work and shop till they drop while skimming a good % off the top?
You have just described "globalization" very well. The power does not lie in governements any longer, but in corporate entities that are not bound by geopolitical boundaries.
Gov't = media = corporations
Write it in a circle and spin...
Doug Cass over at street.com may have reason for sudden drop in oil prices:
http://www.thestreet.com/_tscana/markets/activetraderupdate/10330882.html
see reason #9 - More hedge funds on the wrong side of trades again?
I once worked with Doug. He was an excellent oil stock picker. Probably still is. There is more money with hedge funds than there are good ideas for them to invest in. They are piling onto the same ideas and following momentum. In this case the momentum changed because of warm weather and they couldn't all fit through the door at the same time. The 9% two day drop in prices has all the signs of panic. Leverage will do that.
Two Strategies for Avoiding Truth: Arnold Kling, post on TCS Daily: Technology Commerce Society Daily
Credit where credit is due - link from Greg Mankiw's Blog: Random Observations for Students of Economics
(and them resolutions again but addictions are tough because they are)
Interesting Article regarding the efforts of California's Governor to "Johnny Appleseed" their efforts to help other states cut GHG emissions.
I just remembered an article in yesterday's Boston Herald - sorry no link, it doesn't seem to be on their website. Anyway, a local solar panel manufacturer is closing due to lack of silicon. They're looking for a buyer to continue with research into ways to avoid silicon, but I guess it doesn't look very promising, no takers so far. Not a good sign for the solar enthusiasts.
"Not a good sign for the solar enthusiasts."
The lack of solar silicon is a sign of ever increasing demand... not one of the bust of the industry. I think how one interprets facts has a lot to do with ones expectations. I do not expect small solar companies to flourish. Solar is a mega business and it will be run by a few mega corporations in the end. When $100 billion annual revenue are at stake, the knives come out. You can expect solar to grow beyond $100 billion over the next two decades.
Silicon is only one material suitable for cells. It will most likely stay the material of choice for another decade because it is well researched and understood. A silicon solar cell is a safe bet and if you are producing a million square meters a year of something, it better be a safe, well understood product. I don't imagine silicon will ever completely go out of business, but it will be replaced in niche applications first and then probably even in the mainstream by more efficient materials. I expect to see some copper thin film cells to come out with a punch.
This one?
Billerica solar plant may shut down
That's it! And I think it's significant, but maybe that's just me...(I guess I have trouble believing in infinite possibilities, because of course nothing is infinite)
I wouldn't read too much into it. The article says that the firm single-sourced their silicon due to its "BB-sized" format and that their supplier found it more lucrative to sell its product on the spot market.
There is no perfect energy source, but solar PV appears to have quite a bit of running room. Here's a relatively upbeat article that appeared yesterday in the New York Times. I did a quick search for it in the last few Drumbeats and couldn't find it; sorry if it was previously posted.
Plugging Into the Sun
Here are a couple of other interesting tidbits in the article:
1. apparently you can connect to the grid or have batteries, but not both - why is this?
2. you can zero out your electric bill, but you are not allowed to make a profit, that is, the electric company does not pay you for any excess energy you produce (although they will accept the excess energy).
My local solar PV purveyor informs me that you CAN have an on grid with batteries system. No real reason why not. It is just more expensive. In effect you maintain a house-wide uninterruptable power supply that stays charged up and feeds your system if the grid goes down and all the appropriate switches throw. Sizing the battery array is a matter of how much down time you anticipate dealing with. There have been huge improvements in the electronic technology in the past decade. Only now are the utilities beginning to catch up.
Whether or not you 'make a profit' depends largely on the billing policies of your local utility (aside from your system size of course). Some are more liberal than others in terms of billing and averaging etc. Some states I think have laws requiring the utility to buy your excess power. The only catch is that they pay wholesale rates which, for a utility, are pretty low.
I can confirm battery backup with grid tie because I went through the same exercise. I opted out of the battery backup because of the added cost and reduced efficiency. Also the batteries wear out whether the backup is ever used or not. NiMh systems for home use are on the way.
Many states, credit you for power going back into the grid at the rate they charge you. There is also a monthly fee for being connected. In our case we use up the credits in the winter. After a year if all the credits aren't used up we lose the balance.
This is from the most recent Defense News. If you have trouble seeing the entire article please let me know.
http://www.defensenews.com/story.php?F=2392933&C=america
*DoD Seeks New Energy Sources*
High Oil Cost, Foreign Dependence Spur Search for Alternatives
By WILLIAM MATTHEWS
When a U.S. Air Force B-52 bomber rumbled into the desert sky over California on Dec. 15, a three-star general was at the controls and senior engineers were monitoring the engines. The reason for the high-level, hands-on attention: all eight engines of the 100-ton bomber were burning synthetic fuel made from natural gas.
The experiment was closely watched by Pentagon leaders, who are increasingly worried about the rising cost of fuel and U.S. dependence on foreign sources. All the U.S. military services are working on ways to cut their energy bills, seeking breakthrough technologies as well as conservation techniques. But there’s a long road ahead.
The B-52 flight itself was uneventful. Maj. Gen. Curtis Bedke, commander of the Air Force Flight Test Center, guided the bomber through two simulated bombing runs, aerial refueling and engine performance tests.
There was no discernible difference between flying with the new fuel and flying on standard Air Force JP-8 jet fuel, Bedke reported after the six-hour flight.
After months of testing, top Air Force officials are increasingly enthusiastic about the future of synthetic jet fuel.
“The tests have been very positive,” said Paul Bollinger, the Air Force secretary’s special assistant on alternative fuels.
The synthetic fuel, a 50-50 blend of regular JP-8 jet fuel and liquid fuel made from natural gas, burns cleaner, is compatible with Air Force fuel tanks, fuel lines and gauges, and promises to be comparable in price to the jet fuel the Air Force has guzzled with abandon for decades.
Now, as the dead of winter approaches, the Air Force is preparing for cold-weather tests to see how the synthetic blend behaves in extreme cold. The key question: Will the engines start? If the fuel passes that test and if future evaluations go well, the Air Force hopes that by 2016, half of the 3 billion gallons of fuel it consumes annually to fly its jets will come from natural gas, coal and other forms of energy abundant here at home.
“We want to get to an assured domestic source of supply,” said Michael Aimone, the Air Force’s assistant deputy chief of staff for logistics.
As the price of oil spiraled up during 2006, so did concern that the petroleum-based U.S. economy is much too dependent on the volatile Middle East. For the U.S. military, the nation’s largest energy consumer, price is a more pressing worry than availability.
Since the military accounts for less than 2 percent of the oil the United States consumes, it is generally assumed that in a national emergency, the military would get whatever oil it needs, at least in the short term.
But rising oil prices bust annual budgets.
“A $10 increase per barrel of oil increases Defense Department costs by $1.3 billion per year,” said Pentagon spokesman Chris Isleib. That means “previously approved programs must be reduced in order to pay the fuel bill,” he said.
Aimone is *optimistic that coal, oil shale and bio-mass can be turned into liquid aviation fuel at a reasonable price.* Bio-mass is organic material such as agriculture waste, animal manure, sawdust, yard clippings and the like.