It's CERA Week -- Houston, we have a problem

It is CERA Week and, consequently, there is a steady stream of nonsense emanating from Houston. In this brief note, I will talk a bit more about what the concept Peak Oil is.

My remarks are in reaction to Running out of oil may not be the issue at all by Kristen Hays, reporting in the Houston Chronicle on February 14th on statements by John Watson, head of international exploration and production for Chevron, at the CERA conference.

All the talk of when the world will run out of oil could be rendered irrelevant because of geopolitical issues that block access to untapped reserves, the head of international exploration and production for Chevron Corp. said Wednesday.
Here are some of the details as reported in the Houston Chronicle.
John Watson told energy executives and analysts that the so-called peak oil debate focuses on the level of resources below the ground. He joined the prevailing view of speakers at the Cambridge Energy Research Associates' annual conference in Houston that the planet won't run out of oil anytime soon despite opposing theories that a peak and subsequent drop-off in production is imminent or even ongoing.

"Every time we say we're about to be tapped out, we find new ways to squeeze more out of reservoirs," he said.

Or, companies find new wells in hard-to-reach places, like Chevron's huge [ultra] deep-water Jack discovery last year about 270 miles southwest of New Orleans in the Gulf of Mexico.

But worldwide oil production could still lag behind demand if politics get in the way of access, Watson said....

"Above-ground peak oil will trump below-ground peak oil every time," Watson said.

Let's examine this point of view.

Despite much searching on my part, it is hard to find good evidence that the global recovery factor (URR/OIP) has increased much. But, assuming a higher recovery factor, and regarding "squeezing more [oil] out of reservoirs", Watson's statement says nothing about the rate at which this putative extra recoverable oil is lifted out the ground. Framing this mathematically, no statement has been made about dQ/dt, where Q is the cumulative production and t is time. If you can "squeeze out" more oil, but you can only do so at a very small rate measured in barrels per day, then the recovery factor over a very long time period (measured in decades) is irrelevant to the issue of "peak oil". Concomitantly, if you apply enhanced oil recovery (EOR, eg. gas injection) or improved oil recovery (IOR, eg. horizontal drilling) — techniques meant to maintain previously achieved production rates or boost production after it has peaked in a field or basin — then it is important to remember that such techniques have a limited warranty attached to them. In other words, they are guaranteed to work for a relatively short period of time, measured in some small number of years. Witness what is happening at Cantarell after the use of Nitrogen injection.

However, even if one grants a higher recovery factor, it still seems to be the case that most increased world production since the year 1996 —to pick a date— has come from either 1) new fields discovered sometime in the last 20 years or 2) additions to fields discovered further back in time — this is called reserves growth. Remember, world oil discoveries peaked in the 1960's. In the first case, older basins like the Caspian have been re-explored, which has led to new fields like the Azeri-Chirag-Gunashli. In other cases, technology has enabled development of deepwater fields like Dalia (offshore Angola). Given the historical discoveries curve, there appears to be a limited horizon under which such production can replace, let alone surpass, current declines in existing production, which most estimates place at 4 to 5% per year.

Deepwater and Some OGJ Data

While ultra-deepwater holds some promise, it is still the case that all deepwater fields ramp up quickly, peak and then fall off rapidly, and the shape of this curve further depends on the field size. Look at this graphic compiled by my European colleague Euan Mearns in The architecture of UK offshore oil production in relation to future production models.

UK Offshore Production — new field additions
have reduced the overall decline rate from 13% to 7.6%
Click to enlarge

As usual, the larger fields were produced first. After an interruption — which I shall discuss below — a large number of smaller fields were put on stream. All these offshore fields show the same production profile, but the smaller fields produce less oil, just as they peak and decline more quickly. You can expect to see this historical trend in the future in the other prolific deepwater basins — the Gulf of Mexico, Brazil (Campos & Santos basins) and West Africa (Gulf of Guinea, Nigeria, Angola). Therefore, future ultra-deepwater fields will likely provide only replacement barrels for declining deepwater production at best, hype about Jack #2 aside. In any case, new fields will have to be constantly found and completed to maintain production rates. This trend is obviously unsustainable.

As for this —

CERA released a report last November that took aim at theories that the world has hit or passed the peak of oil production. CERA argues that information from the U.S. Geological Survey shows the world has 3.7 trillion barrels of oil, both tapped and untapped, rather than the 1.7 trillion barrels estimated by some peak-oil theorists.

CERA's outlook includes conventional oil, or that extracted from the ground or in shallow waters offshore, as well as unconventional oil, or that derived from oil-soaked sands, natural gas liquids and coal turned to liquid and shale.

— it is sufficient to note that discoveries have not kept pace with USGS predictions and that oil from shale, various sands (including Canada) and coal-to-liquids conversions will not make major contributions in any time frame we care about.

Some recent data: according to the Oil & Gas Journal (February 5th), the worlds natural gas liquids supply in 2006 (10 month average) was up over 2005 (same period) by 83.0 kbd, a rise of 1.04%. Outside the Middle East, the world was down 34.0 kbd. According to the OGJ (February 12th), the world oil (crude + condensate) supply in 2006 (11 month average) was up 479 kbd, a rise of 0.66%. If it weren't for the former Soviet Union (FSU), the world would have been substantially down. These numbers amount to no significant change, given margins of error in the data. The data indicate failure, an inability to grow the world oil supply. Is this being discussed at CERA Week in Houston?

Lovell: Houston, we've had a problem.
We've had a main B bus undervolt.
The Oil Drum team studies the glitch.

Stochastic Factors

Now, as you can see, the UK offshore production shows a "double hump" in the historical profile. Why? The short answer is that shit happens. The longer answer was provided to me by Euan.
The first peak is built on the back of giant fields — Forties, Brent, Piper and Ninian. The oil price crash of 1986 led to a slowing in investment, the postponement of several new field developments and a hiatus in exploration, which in turn led to a bi-modal discovery history.

The Piper Alpha oil rig explosion of 1988 that led to lost production from this hub for 4 years, and reduced production from a number of fields while sub-sea control valves were fitted to production wells in the wake of this disaster.

The rise from the valley between the peaks was caused by postponed projects being re-instated, large new fields being developed — Nelson Miller, Scott — and the end of forced maintenance retrofitting safety valves.

So, considering what happened in the North Sea, and getting back to Watson's remarks, the important thing to understand is that there is a stochastic component to oil production. In the modern geopolitical world, it just happens to be the case that most of the world's remaining reserves are currently in unfriendly or dangerous places. The geographical distribution of the world's largest oil-bearing basins is an artifact of events (for example, plate tectonics) that occurred in geological time, as well as the inherent randomness in human history that drew those country boundaries and the populations that live within them. That's just the way it is. This observation must be qualified by a more recent historical fact — the West has already used up most of its easy oil. See the last section.
Watson said other above-ground risks include gaining access when national oil companies control about 80 percent of reserves.
Watson can complain all day long that Hugo Chavez has a bad attitude or that Kuwait is lazy, but the simple fact remains that concerns about peak oil are not limited to geological constraints, which themselves were subject to the vagaries of deep time. Our concerns also encompass random, non-deterministic "above-ground" elements. Ask Vladimir Putin what it means to get lucky. Actually, perhaps it would better to ask the EU or the Ukraine. We also need to acknowledge the injurious effects of random geopolitical events — the Iraqi civil war, Iranian leadership & policies, western leadership (W) and policies toward Iran, Venezuelan politics, Nigerian rebels — and then move on. If Al-Qaeda hadn't bombed the World Trade Center, we wouldn't have invaded Iraq, which wouldn't be falling apart.... There is always this stochastic element in human history, just as human nature never changes. It is a form of unreality for Watson & others to bemoan the lack of a perfect world for oil production where there are no wars, national politics, catastrophic equipment failures, economic recessions, price volatiliy, conflicts between social groups, etc. Get used to it.

The oil price provides special cause for concern as another stochastic "above-ground" factor. There is apparently no guarantee that the oil price will provide a reliable signal of supply & demand fundamentals over short time periods (up to several months, perhaps longer). All sorts of irrational market "perceptions" and random events influence the oil price. Unless there are guarantees that the price will remain high, the oil companies will not even bother to produce ultra-deepwater fields or other difficult-to-produce resources. Even price depressions lasting short periods of time can do lasting damage to the world oil supply — this is the destructive effect of volatility.

Really, what Watson should be addressing is why the oil industry is such a mess. Inflation is eating up new E&P investment, there are equipment and skilled labor shortages. The infrastructure supporting existing production is aging and not being maintained (see Prudhoe Bay or use of rigs that should have been retired).

Keeping Our Eye on the Ball

Returning again to geology, we get this statement —
Joseph Bryant, CEO of Houston-based exploration and production company Cobalt International Energy, said at Wednesday's peak oil panel that the industry continues to develop new resources — just not "super giant" fields.

Bryant said that until technology shows there is nothing new to find, it's difficult to conclude that the planet is running out of oil.

"I do not think there's an endless supply of super-giant fields," he said, but they may not be needed if producers tackle more fields more efficiently.

It's good to know Bryant finds it difficult to conclude that the world is runnning out of oil. We've reached the same conclusion at The Oil Drum. It's also heartening that Bryant does not think there is an endless supply of super-giant fields, because this indicates some connection with reality. And, if we define "super-giant" as being in the same size range as Burgan, Ghawar, Samotlor, Daqing or Cantarell, then we can most likely conclude that there are no fields of this type left on Earth. We know that "super-giant" is not as big as it used to be. As to the idea that we may no longer need such fields if we "tackle more fields more efficiently", I am not comforted by the conjecture that an envisioned increase in the global recovery factor in many smaller fields will provide enough oil in a timely manner, and do so indefinitely until unknown substitutes come onstream, thus rendering the peak & subsequent decline of world oil production a non-event.

Another thing not spoken, which is little understood by the public, is that we already ran through most of our oil here in the West, and what a shame it is that those uncooperative people in the rest of the world won't play by our rules — and give us what we want. This dilemma is compounded by the fact that some uppity countries in Asia are being quite assertive of their rights to a significant share of what oil remains. This "argument", if you can dignify it with that term, presumes that it is only a matter of allowing the international oil companies to produce huge untapped resources in the large producing countries. Blame is assigned — the exporting nations are culpable for withholding their oil, either from greed, hostility or incompetence. Thus, the presuppositions — that 1) there are vast, untapped resources ripe for the picking and 2) these riches could be easily brought on stream in a timely way to satisfy ever-growing world demand — are not questioned.

Until Chevron's Watson or Cobalt's Bryant or organizations like CERA start dealing with reality — and leveling with the public — instead of engaging in wishful thinking or complaining about things they have no control over, we will have to listen endlessly to this empty discourse while doing nothing to mitigate the effects on world economies of a peak & decline of available oil supply, regardless of its causes. Let's keep our eye on the ball.

Dave Cohen
Senior Contributor
The Oil Drum
davec @

Release the hounds!

Al Qaeda Publication Calls on Jihadists to Attack Oil Facilities That Supply U.S.,2933,251942,00.html

Bah, a previously US backed group may or may not, as a group decided to attact "us providers". Or is asking for others to kill themselves attacking oil infrastructure.

How about the 'dump the dollar' movement - far MORE of a threat than 'evil terrorists'
If the world opts to stop accepting US Dollars for trade, what is the US Gonna do? Shoot the merchant class like 'the terrorists' have been shot (at)?

Other concerens for Americans is the people who will suffer in a deep recession/depression, the life changes from that and end up thinking and acting like Samuel Byck.
People who feel they have 'done everything right' and are shocked when things in their life end up 'wrong' - how many will lash out in societally-destructive ways?

I guess that Samuel Byck, being Jewish, cannot be called a terrorist!

Release the hounds!

No no, Q-Tips! Fetch my cotton swabs!

See, there's oil on the bearings of this pumpjack! We're saved, the world hasn't run out of oil after all!

What's all this about a peak?

The Lower 48 and North Sea Case Histories

Based on the HL method (crude + condensate):

The Lower 48 peaked in 1970, between 50% and 52% of Qt and has shown a net decline rate of about 2% per year since peaking.

The North Sea peaked in 1999, between 48% and 52% of Qt and has shown a net decline rate of about 5% per year since peaking.

Both regions were developed by private companies, with no restriction on production, other than the Maximum Efficient Rate and regulatory limits.

Two, regions, 29 years apart, developed by private companies, same result--pretty much all out drilling efforts have simply slowed the post-peak decline rate.

The simple hard cold reality is that we find the big fields first, and the smaller fields that we subsequently find post-peak cannot offset the declines from the old, larger fields.

This does not mean that we stop finding oil. It just means that can only hope to slow the rate of decline.

Lets not forget that Texas, which at one point provided nearly 35-40% of the oil for the US, was considered a Cartel until its peak in 1972. Clearly there were SOME restrictions in at least one of those regions :P

As I have outlined several times, IMO, Saudi Arabia is to the world as Texas was to the Lower 48.

Based on EIA crude + condensate and the HL models, Saudi Arabia and the world are now declining at the same stages of depletion at which Texas and the Lower 48 respectively started declining.

BTW, the Kashagan startup has been once again pushed back--this time to the 2012 time frame, which suggests that the earliest that we will see peak (one mbpd plus) production from Kashagan probably won't be until after 2022. This is the only new one mbpd and larger field on the horizon.

At a 5% underlying decline rate, we need about 3.5 mbpd of new C+C production every single year--just for production to stay flat.

Well WT things seem to be going basically as you have predicted so far. We will know I think later this summer of the world has peaked on oil passes 70. Barring of course enough of a economic slow down to cause significant demand destruction. I think at least in the first half of 2007 the economy will stay strong enough that demand issues will not hide peak oil. The key is to get KSA in a situation where that either have to open up the spigot or admit they can't.

My prediction of a peak in prices between Feb 15 and March 15 seems to surprisingly be on course. Time will tell.

The model I used was pretty simple I considered the price of oil to behave like a rock dropped into the center of a round pool. The trick is guess the size of the pool. Once the initial wave reaches the edges it returns causing a spike.

Peak oil or supply is modeled as a shrinking pool.

So far so good. The trick is of course the size of the pool is decreasing so the spikes should both come more often and go higher over time.

My assumption was that oil price in this model was moving on a 8 month scale. If the pool is shrinking on average by half between the peeks that means the next peak would be in 4 months after the top of the comming peak. Then 2 months then I think it repeats. I'm not sure the model is good enough to handle all the issues but we will see. I think its a pretty good simple model for the price of oil at peak and it has a simple prediction that the time between peak prices will shorten until in a sense the market is exhausted resulting in a long period then the cycle repeats. The exhausted market represents either the boundary moving back or the scale reducing
as a significant number of players leave the market.

The idea came from looking at prices at peak and realizing they matched up to 1D slices over time in the above 2D model.

In any case the next two years should show if I'm right.

As I have pointed out on numerous occasions, there have been 7 different instances since 1980 in which oil production reached a plateau or declined. In two such instances, oil production declined by more then 1 million bpd, AND it took almost 3 years for production to surpass the previous high. We will know in another 18-24 months if we truly are at peak oil or not. Until then, rampant speculation does nothing but irk proponents on either side.

Let the data do the talking. And that doesn't mean how you chose to fit the data WT.

Actually the pool/rock model works for these cases also.

In this case the pool is getting larger faster than the price/demand ripples are moving. And return wave is muted and basically undetectable. Like dropping a rock in a large lake or the ocean. Only at peak do the size of the pool i.e. supply start having a big effect on prices causing a semi-periodic forcing.

In the past price dropped until oil was so cheap it was not worth expanding the pool. The key difference today is years of high prices have not resulted in any significant expansion of the pool.

If we are not at peak then plenty of oil projects should be profitable at 30 a barrel and we should have seen prices drop into this range by now. At the minimum a lot of project that are profitable at 30 should be coming online rapidly by now. Most people mention a higher floor price of 40-45 with confidence.

With almost 7 years of oil trending upwards production should have continued to increase at a steady clip. Yet we have had 2 years of stalled production without prices dropping to the 30 barrel level or even 45 for that matter.

So far I've not seen anything that rebuts WT model.

And if things continue as they are we have a chance to find stronger support for WT within the next 6 months.

Also I might add that the fact will speak for themselves
WT has made a great case given the information we have.
I don't understand the constant need to needle him.
He has made a prediction its testable and so far its passing all test that have been offered. The strongest test is of course when oil crosses 70 a barrel and KSA does not increase production.

If they do then WT is wrong so far he has not been wrong.
I'm sure we will know this summer.

And all this BS about 60 a barrel being comfortable is just that 45 a barrel is fantastic for KSA they should be pumping like mad. China is booming India is booming the world economy is growing faster than ever before the chances of them actually causing a price crash below 45 is slim to none. US producers have far higher costs and I don't see them slowing production.

So far at least revenue lost from lower production basically matches any gain from higher prices. KSA would probably have to drop production by at least 2 mbpd to get significant price increases that over revenue loss from lost production.

I guess I don't buy into these relatively small "cuts" that OPEC has made. If they want the price higher cut production by 2-3 mpd eliminate the glut then raise it slowly to a comfortable level.


memmel...good commentary. I have asked Robert (where is he lately btw?) many times this simple question...if things are just dandy and oversupplied in the oil industry, why is crude still $60 a barrel....I don't think I've heard a simple answer yet.

I think I asked him that question a few months ago and his response was, "if we are past peak, why is crude not at $100?" or something to that effect.

But the price of oil is only an imaginary number created by human psychology. Even if for some insane reason the price drops as we peak (super demand destruction), it won't change the underlying geology, or the fact that the human population is still growing, while energy resources are dwindling.

This leads to the argument that $60 oil has not appreciably hurt the economy. Which in turn leads to a possible conjecture that $60 oil is not 'expensive' oil given all other economic metrics involved such as growth in GDP, inflation, etc. Which in turn gives credence to RR's answer on the price likely being 'painfully' higher if we really are/were at/past peak. As has been said, $60 (or $50) is the new $40 (or $30) price that we accept as... acceptable.

60 is hurting our economies and so did 70+. I believe that last summers oil prices was the pin that pricked Americas housing bubble. The additional expense of gasoline caused enough people to pause in the migration to ever distant suburbia that the housing bubble collapsed. At that point in the bubble the last people buying houses could not afford the additional cost of gasoline and a crazy loan package. Things got that out of control. Thus people in the 25-35K a year income bracket did not buy 300K houses. The few hundred a month extra for gas stopped the ponzi scheme at the bottom.

The current price of oil is relentlessly sapping the real economy i.e. production of real goods and services. The only thing keeping the economy afloat now is the sloshing of all those petrodollars and china dollars back into the US as investments generally buying up US debt.

In our current whacked economy China/Japan/OPEC gets dollars that we print like crazy going into debt buying their goods then the nuts invest it back into the US. Allowing us to borrow more money. Sooner or later this game will end.

Core economic indicators housing manufacturing all started down when oil hit 70+. Most American companies are in reality Chinese /American with as many or more employees in China as in the US.
The current record profits simply reflect that these companies are playing both sides of the game.

Look at the P/E's of the stock market its been a speculative bubble for some time.

Whats amazing is how long the jugglers have managed to keep all the balls in the air not that the world economy has long since lost touch with reality.

If you look under the covers just a little bit you will see that the US economy is in the worst shape it has ever been in since the Great Depression. Now its just a matter of when it collapses and what the trigger will be.

Look at the trade deficits
Negative savings rate
Housing bubble crashing
The American consumer recklessly spending on credit.

Neither China nor Japan working to balance trade.

In short we are in for a long hard depression. The chance for a recession is gone.

My only question is what is the trigger.

Hedge Fund blow up
Yen carry trade unraveling
Oil hits 80+ a barrel
petrodollar collapse
Massive wave of BK's from the Housing bubble.

Thats the tough part. I'm just hopping to see if we last long enough to call KSA's bluff.

Dont be surprised if the catalyst is GMAC finance. I read an article this morning (can't find it now) that basically laid bare several facts about their "investment" portfolio. By investment I mean loans for homes. They are really out of whack in terms of risk management and their sub prime portfolio is blowing up in their face. Combine that with the purchase by Cerbrus....damn I need to find the article.....oh Mish had it.

Guess how these banks are going to find the reserves to pay for the losses? Pull money out of their equity accounts of course.....

tate, interesting idea but wont the taxpayers ultimately "cover the losses" ?
as a side note gmac is offering online money market accounts paying in the range of 5% for basically a saving account. gmac states that the money market account if fdic insured ?????

"60 is hurting our economies and so did 70+. "

I agree that the high(er) oil price may be a 'stealth' drag on the economy. Along with all the other such drags, such as increasingly unservicable debt, spells hard times. Whether tomorrow or in 5 or 10 years who knows. I would bet on a within 2 years time frame. Hopefully in time for GW to get more of the blame he so richly deserves, even if his policies are not directly related to the long term problems.

A few quick points to make.

"In short we are in for a long hard depression. The chance for a recession is gone." There are far too many variables in play at present to make such a conclusion. Notably the FED has a few arrows left in its quiver. Until the quiver is empty, count on the FED continuing to act so as to squish market volatility in every direction.

Don't bank on a hedge fund blow up causing a 1929-like event. LTCM didn't thanks largely to the FED organizing an orderly fire sale of positions. Amarath didn't, thanks to Citadel and JPM. Hedge funds are SWIMMING in cash at present. Any mess-up will likely be resolved just the way Amaranth was: large-scale buying of the portfolio by other hedge funds/banks at discounted prices. Some hedge fund investors lose, others win, and the market moves on.

The runup in oil pices the last few years was from demand growth via growing economies, not from a large drop in supply. Thus, when some talking head predicts a recession when oil hits $X, ignore them -- how we get to $X matters. A supply shock can easily cause a recession (like the Arab oil embargo of the 1970's), but not a rise in oil prices due to strong economic growth against roughly level oil production. The rise in oil in such a case simply reduces growth.

The aggregate American consumer still has several months left on the "credit card". The slowdown in housing should result in a drop in the home-as-an-ATM-machine (cash-out refis, etc.) driven spending. The best case scenario is for income gains to make-up for the drop in home-equity "bonus cash". Will income gains be this large? I doubt it, but the US economy is still chugging forward. The US economy may get a little lucky this time around.

The dumb-dumbs in the media babble on and on about the trade deficit, but they almost never discuss "cash flows": America earns as much on its foreign investments as foreignors do on their US dollar holdings. Prior to 2005, America was cash flow positive in spite of the "face value" of foreign investments in the US far exceeding the "face value" of US investments abroad. (Borrowing from the Asians at 4% to make equity investments abroad that return much more than 4% is not such a bad thing. Risky? Yes, but not necessarily stupid.) The US is roughly cash-flow neutral at present. Worry when America gets cash flow negative. Since the cash-flow situtation has been steadily deteriorating the last several years, it's almost time to start worrying. I strongly recommend immediately reducing, if not completely eliminating, the debt side of your personal balance sheet. No need to panic, but now is NOT time to lever up. Just my $0.02.

I'm off to Mexico for a holiday. Have a great weekend.

From what I read in the WSJ, JPM was directly involved with and facilitiated the Amaranth failure. They would not release Amaranth's margin funds and they were the clearing house of record. They made the most money (of all players) salvaging and reselling the remnant positions. It was an incredible conflict of interest.

Very interesting thoughts...would like to hear more when you return.

You are doing great Memmmel, this goes along my lines (way to answer, thoughts and clarity). Nice.

Thanks ..

A drum could also be used as the model but this is already the Oil Drum :)

I wonder how many complex 1D systems can be modeled as a 2D wave with reflection and a time scale. The model is empirical but on the same hand it seems to make price changes clearer.

The trick of course is that the pond or drum thats bounding the 2D wave is itself changing in size. I did not do the numerical analysis on the system but I think it can be chaotic for certain parameters.

Also note that the model predicts that record highs must be followed by crashes. Since the pond cannot shrink any more and must expand. Permanently high plateau's are impossible.

A few other things it predicts. Unexpected or external events to the market cause a new stone to be dropped in the pond if its a negative event or the pond to get larger if its positive. Smaller negative events are modeled as a slight contraction of the sides of the pond. Really big negative events are both a contraction of the pond and a new stone.

So event like and embargo basically reset the whole system.
This model predicts this and its exactly what happened in the 70's the whole oil industry reset after the Arab oil embargo.
Sure texas had peaked but the important factor was actually political. The peaking of texas prevented the US from expanding the pond. Not till the North Sea came online did we go back to the expanding pond situation. So we had a full market reset.

It is a qualitative model but if you get the parameters right it has some empirical predictive powers.

I've been reading all the voodoo Elliot wave and technical analysis cruft and of course pricing at peak and I think my model is far simpler more intuitive and predictive than anything else I've seen. I've never seen another model that forces a crash to happen after large peaks. The fact mine goes to infinity as the size of the pond approaches zero or the size of the rocks splash approaches the size of the pond is not modeled by other approaches as far as I know.

Note it does predict a price crisis happening at some point with a depleting resource. You are going to get into a situation where the parameters are sensitive to the creation of a really big splash or wave. So according to my model we will see a price spike to hundreds of dollars a barrel causing basically a system reset to new parameters.

So if I'm right a 70's style shortage embargo situation is coming but its not for political reasons but because of depletion.

It will pass but after its over the market will reset.

From WT export land model this is when the pressure of internal consumption plus the need to export plus the wealth of consumers meets at a crisis point.

If I had to guess today when this would occur I'd say Mexico will initiate the next crisis with the populace of most oil producing regions responding unfavorably to the realization that the oil export money won't last forever.

WT export land model actually predicts internal crisis in each of the oil producing countries as they are forced to either give up exporting or radically change their subsidy strategy for internal consumption.

Also Bush could bomb Iran.

So basically we are going to go from crisis to crisis over the next 4-5 years with the mother of all oil crisis happening when parameters reach the right values. So according to my model we are due for the big one. After that the market resets.

In reality the pond model is not a pond but the tightening noose of a hangman's rope.

Excellent thread and Kudo's to all involved.

Dave, well reasoned critique of CERA and its statements. An ability to increase daily supply is not the same as running out of oil no matter how many times they try to make the two equal.

Westexas, I agree your assessment of the geology and impact of supply have been the best predictor for close to 2 years now. Keep hammering your basic message so that new readers come across it. You have the patience of Job to put up with Hothgar. Ignore him as I do now.

Memmel, A really excellent and creative way to show how markets interact with supply/demand and prices. Good way to track and predict price swings based on true supply versus artificial supply based on someones profit motive to increase or decrease the commodity. I now have a pictorial model for economics rather than mathematical formula. Very handy. Thanks for sharing this concept, wether you invented it or not.

All in all the very best of what TOD provides in content for understanding oil supply and when that pesky peak might become evident. Thanks to all, keep it up your message does get through all the irrelevant posts.

Do the rocks dropping in the pond get larger over time, also causing larger spikes? Perhaps as more people begin to appreciate that perhaps CERA ain't telling it like it is?

Thats why the model is qualitative not quantiative you have to many knobs to turn :)

The only two fixed quantities is it takes X amount of time for a super tanker to sail from the producer to consumer. And the edge of the pond represents the total amount of oil. The two conditions give a natural cycle of 3-4 months with 3 big peaks each year.

External events like and attack on Iran or collapse of Mexico are big rocks that overwhelm the natural cycle your free to toggle the model as you wish. Change the size of the rocks the timing change the rate that the total pond size changes etc etc. The model would generate any waveform you desire. The only new factor is the reflected wave coming back to create secondary peaks. This concept of a echo peak caused by resource depletion is I think novel.

This reflected peak is caused by high prices demand destruction price reduction and increased demand. Thus once supply is constrained every price peak spawns the next one.

If supply where too increase you would not get the reflected wave but it would dampen out as the bounds or pool size increased.

Thuis pre-peak we would never see this reflected wave. And also the natural cycle demand driven is for two peaks in prices once in winter and once in summer. The prediction of a third and basically final peak in fall is new. Along with the prediction that attempts for the market to move to 4 peaks results in a reset. The argument is that the sailing times of tankers places a intrinsic restriction on how much oil we can move and how fast. Of course at some point post peak these tankers simply won't have any oil to deliver this leads to the 4 peak crash.

Anything more than this would entail doing a really good job of tuning the model to sync it with reality.

One more time :)

If the model is right and we are post peak we will move to 3 peak pricing seasons followed by a aborted attempt to move to 4.

We will never again see low prices in the fall and inventories should be at all time lows in early fall along with major SPR draws in the summer. Eventually of course we will have summer walking season not driving season as people move to use buses and trains and other public transport for summer vacations.

Obviously the vacation industry will be the first to die.
Or at least one based on car/air travel. Local vacation spots should fare quite well.

It of course makes sense that the most frivolous industry on the planet is the first to go.

your model makes a lot of sense, and the pond may be infinite acting (as the cornucopians assume). ..............and now a disclaimer:past performance is no guarantee of future returns.

The price of oil in the near term might behave differently than a Peaknick might think.

We are headed into the shoulder period - the time between peak heating and peak driving demand. Though we are not there yet, the crude futures market is in a condition of significant "contango", in which the spot price is lower than the futures price, indicating, at least temporarily, oversupply.

If the futures market market exhibited the opposite, "backwardation", that would indicate a shortage. Prices would move accordingly.

I like your analogy/model of the rock in a pond, and will happily consider it in my trading.

In the end demand may no longer drive supply as it did in the past, but demand will drive prices. If the economy were to experience any type of contraction, demand would be decreased and it would be my expectation that the price would fall, all else being equal That leaves us back with a "chicken or the egg" scenario:
Did diminished oil supply cause demand destruction and a recession, or did a recession cause demand to fall. Even with the benefit of hindsight, I am not sure if i would be able to determine the difference.

"...the crude futures market is in a condition of significant "contango", in which the spot price is lower than the futures price, indicating, at least temporarily, oversupply..."

Another anology that was here reciently was short term interest rates were higher than long term ones(inversion) It doesn't make sense but it can and does happen.

I have often considered the same thing PO might be covered by economic factors and it might be that we will never recognize it.


I like your handle...

The "natural state" of futures markets is contango. After all, future(s) prices should be higher to reflect sorage, maintenance, and transportation costs. Inverted yield curves, while not unheard of, are far less commone then positive yield curves, and ussually indicate a recession if the inversion lasts for greater than a certain period of time.

Speaking of which, the currrent yield curve has been in this condition for longer than has been traditional to predict a recession - yet, as yet, one has not materialized. Clearly, this is not an exact science.

The fingerprint of fiat currency manipulation is all over our current economy. Nothing is natural right now. Give it time.
The only thing playing games with money causes is for the eventual downturn to be far harder than necessary.

We did succeed in creating a real global economy over the last ten years the problem is its out of control. Thanks mainly to Japan China and the US. EU economic expansion is the only real growth that has happened not that they are not playing games too.

Chinese economic growth is a myth. Its fueled by deficit US spending and Japan trying to maintain and export economy in competition with China. All three economies will implode taking South America out as collateral damage. Europe should survive as the strongest economy it will have a lot of problems but it will be better than the rest.

In Arkansas their is a saying.. Thank god for Mississippi.
This comes from Arkansas repeatedly beating Mississippi and ranking 49 instead of 50 in a lot of metrics. Yes their is a fight at the bottom :)

I think Europe will be the Arkansas economy of the future. The strongest of the weak.

Assuming the global economy does not implode for other reasons peak oil is certain to cause it.

"Chinese economic growth is a myth. Its fueled by deficit US spending..."

Agreed, and do they care if all the factories are on thier turf. I guess the factories could be bombed in a mutual game of screw you.
We traded alot of security for low Walmart prices.

Don't forget all the pollution we have let them have.

What use are the factories they only need a tenth of what they build for their internal economy. For a balanced real global economy maybe 30%.
Next the have no way to handle the waves of layoffs once the trade unravels.
Despite what people say about the US we are the real bastards in the world and we hoodwinked China into chasing the American dream.

No matter how bad it gets in the US no doubt in my mind it will be far worse in China.


Chinese economic growth is a myth. Its fueled by deficit US spending and Japan trying to maintain and export economy in competition with China.

is true, then how do you explain China trades more with the EU than the US? Let's be a bit more honest. China is not wholly dependany on any one nation any longer. Catch up on some current Chinese reading and you'll find bits a pieces of your point, but your blanket statement is not true.

China-EU trade accounted for 15.5 percent of China's total foreign trade volume last year, and EU remained the top trade partner of China, according to MOC statistics issued on its website.

China's exports to EU reached US$181.98 billion last year, a rise of 26.6 percent year-on-year, and its imports from EU went up by 22.7 percent year-on-year to hit US$90.32 billion.

According to EU figures, EU's imports from China was 135.6 billion euros, 4.6 billion euros more than its imports from the United States. China has replaced the United States to become EU's largest import market.

I won't argue over Japan, they are indeed idiotic to say the least right now. Also on China, keep this in mind. They are in a desperate race to get farmers into the cities and transform the country. This is a delicate balancing act and they accomplish it by building anything, anywhere. They have hundreds of auto manufacturers, hundreds of ball bearing plants, etc etc. Resources are being wasted in such ways we may be put to shame. This will cause a glut of overcapacity and CHEAP assets but thats years away IMO. Yes it's interconnected, but it's not as dependent as we still think. This complex environment can do anything at this point!

I don't disagree its a complex subject and I am aware of the trade balance with the EU.

As far as I know the EU does not have a massively negative trade imbalance with its partners overall. Nor does the population have a negative savings rate. And China is not buying up EU debt to support deficit spending. And finally most of China's reserves are still in dollars. I mentioned a few times that Europe looks like the strongest of the weak western economies.
A wild guess is that China/EU trade might be 25% of what it is today for political reasons I think a lot less.

But your forgetting that we are a huge trading partner with the EU also so if we go down China/EU trade is certain to decrease Also I think their will be a strong backlash in the EU against Chinese imports if the US falters. Localization will happen.
Or put it this way the global economy is at a cross roads either the current trade imbalances are settled in a friendly manner or they will be settled via a big unwinding. I think France and Germany will force the EU to focus on internal trade or they will break up the EU.

The problem is we now have created this huge unbalanced global economy which cannot last.

Needless to say it is a complex topic maybe I should add a few caveats to my strong statments...

Naw :)

I don't disagree its a complex subject and I am aware of the trade balance with the EU.

As far as I know the EU does not have a massively negative trade imbalance with its partners overall. Nor does the population have a negative savings rate. And China is not buying up EU debt to support deficit spending. And finally most of China's reserves are still in dollars. I mentioned a few times that Europe looks like the strongest of the weak western economies.
A wild guess is that China/EU trade might be 25% of what it is today for political reasons I think a lot less.

But your forgetting that we are a huge trading partner with the EU also so if we go down China/EU trade is certain to decrease Also I think their will be a strong backlash in the EU against Chinese imports if the US falters. Localization will happen.
Or put it this way the global economy is at a cross roads either the current trade imbalances are settled in a friendly manner or they will be settled via a big unwinding. I think France and Germany will force the EU to focus on internal trade or they will break up the EU.

The problem is we now have created this huge unbalanced global economy which cannot last.

Needless to say it is a complex topic maybe I should add a few caveats to my strong statements...

Naw :)

I stress that the model is qualitative not quantitative. If you get lucky and plug in the right numbers you get a prediction that is accurate over basically any time scale. The smaller the time scale the more "rocks" or really pebbles are being thrown in. Note that at the smaller scale reflected waves from previous peaks are not relevant. Only theoretically does the model have predictive powers.

Notice I predicted a price peak between Feb 15 and March 15 a time that as you mention should not result in a peak. According to conventional wisdom we should not be having a price spike over the next few months. My model said we would get a reflected wave spike about now from this summers peak.

The natural oil price cycle seems to go from April to April with a peak in the summer and a peak in the winter.

My model is predicting a change to three peak price points not two.

1.) Late Winter peak ( timing controlled by global warming )
2.) Spring Early summer peak ( attempt at a driving season )
3.) A new fall peak ( Hurricane fear driven political responses peak oil)

More important the new fall peak is directly related to peak oil it only happens because the pond is getting smaller. Also notice that the warm winters are saving us to some extent by pushing the winter peak a bit later.

In my opinion this new peaking of prices in the fall should show up next year.

Once it goes to four peaks as you can see we are headed for trouble. We don't have room for four peak price points since a pricing/supply cycle takes about 4 months for logistic reasons
you just cannot contract and move oil beyond the rate a tanker fleet can sail.

This is why opec took 3/4 months to study the effects of their cuts you have that much slop if you will in the actual supply of oil.

Notice that the fall peak from Katrina in 2005 was and outlier
my prediction is that over the next two years it will become permanent. When the system tries to move to 4 peaks a year it fails. The intrinsic maximum number of peaks possible without a market reset is 3. Since at 4 we go to plateau and thats not allowed.

So if I'm right we will see a price spike or peak this fall.
This is a peak oil signal no matter how they spin it.

One more thing :)

The driving force for the fall peak is refilling of reserves esp the SPR in the US and chinas new SPR. Everyone will have one in the next few years. They will be drawn down in the summer and maybe some in the winter to soften the natural price spikes but refilling them in the fall will be the main cause a new spike.

So we should be seeing record low inventories in late summer from now on out if peak oil is upon us.

If we get hit by a hurricanes in the gulf ouch...

I'm sure we will know this summer.

As much as I'd like to think we can be more certain by as early as this summer, reality has an unfortunate way of muddling things beyond belief. The long-predicted recession may pick up steam and the economy may sag in such a way that demand drops more-or-less in concert with oil supply. This could muddle the picture for several years into the future, especially given the big push to invest in new spare capacity which will likely smooth out the curve into more of a plateau.

My own fatalistic sense is that those eager for an obvious set of signs pointing to a geological peak are due for another case of 'peakitus-interruptus' thus forcing us to, once again, put off that after-the-fact satisfying smoke.

Yeah we need the economy to hang their for one more year.
I agree. If it tanks we might not know for years what happened.
Or if Bush bombs Iran.

I don't believe in conspiracies but dang the timing is just to good. America is in the perfect position to trash the world economy by tanking the dollar or increasing interest rates or both forcing Japan and China to unpeg. And if you don't think Japan has the yen pegged to the dollar ...

My theory is that the US will either tank the world economy or bomb Iran to maintain the illusion of plenty of peak oil if the powers that be really fear peak oil as much as they seem too.
They are already pushing hard that their is plenty of oil just those pesky governments won't let us pump it.

If we are lucky we will get a glimpse of 80+ bbl and no increase in KSA output before the waters are muddied.

By lucky I mean a chance to confirm peak not lucky in the traditional sense :)

You don't believe in conspiracies? Do you mean you don't believe that people say one thing and do another? Really? Sociology is amazing! Step back from the culture and examine basic human behavior. Read the 48 laws of power. #3 - conceal your intentions. Why should we know what's going on, we're stupid remember? It happens all the time and to honestly whitewash all ideas as conspiracies only seeks to undermine the facts by using a highly connotative word.

Test: How many "Rules of Acquisition" are there?

sa failed this test last summer when oil passed thru 70 and their production declined. Over the past year sa has steadily reduced production, regardless of whether oil was above 60, 70, or at a record (broken continuously thru aug 8), or whether oil was falling. Price, up or down, has not had any significant effect on their production, now down twice their agreed cuts.

1980 was 27 years ago - 27 years to suck alot of oil out of the ground. To use this as a reference flys in the face of this comment by the CEO of Chevron David J. O'Reilly - "the era of easy oil is over".

I know just how smart you think you are, and, how you will never be used as "fodder" because of your greater intelligence. I just wonder how anyone so vastly intelligent can look backward at "a full 27 years" of "easy oil" and use that as a refernce for future results.

Maybe you should be the one running Chevron because Mr. O'Reilly seems to think it isn't going to be as easy as it was in the past. Chevron desperately needs you as thier leader.

"My prediction of a peak in prices between Feb 15 and March 15 seems to surprisingly be on course. "

I don't know how you can say that. Today, on Feb 16, oil is at $58/barrel. For your prediction to come true it has to exceed $78/barrel in 4 weeks. Barring at attack on Iran or some such catastrophic event, I don't see oil going up by $20 in just 4 weeks.

Can you elaborate?

Not a absolute price peak but a peak in prices. The low was back in what Dec, Jan. Our highest prices will always I think be in summer.

The model I have is not quantitative but qualitative. I was lucky to even be able to predict a peak about now.

Also not according to my model the actual peak should occur within the next 30 days. So we should see a trough in april/may with the big summer peak starting to go full steam then.

Next a new fall peak will start occurring as SPR releases are made over the summer then refilled in the fall and early winter.

Just predicting the timing of the peaks is a hard thing for my model forget about the magnitudes its not that good.

But even saying that the movement to 3 peaks a year followed by a attempt to go to four resulting in a market reset is a non trivial result.

To repeat if my model is correct and we are actually post peak in oil we will have summer SPR draws followed by a fall peak as these are refilled. Once this runs into 4 peaks we plateau and the market resets. Rinse and repeat at a higher base price.

The natural market post peak seems to be three periods of peak prices with the highest in the summer. Global warming is helping push the winter peak later coupled with a peak oil induced reflected price upswing from summer highs.

Understand that a hurricane in the gulf will now be potentially devastating if the SPR is drawn down in the summer. Basically the strategic part of the SPR will no longer work.

Also note if I'm right then this is one big factor that Bush would have to consider before going to war with Iran. We will be lucky to make it though next year without the SPR becoming a oil bank for smoothing prices. My prediction is we will see significant draws to calm the market. From now on out we are basically one hurricane away from real shortages in the US.

So time will tell I've laid my cards on the table.


I like your logical approach and the guts to put your hypothesis in public so that it can be tested. (Also denigrated, torn apart, laughed at, etc. if you are the tiniest bit off on your model.

I have the same kind of 3 period swing in my head that I have been monitoring over the last few years. You seem to have a much clearer picture than me. I have been predicting an oscillation of prices on a gradual upward trend until "a bad thing happens" to change that trend.

As you say, we'll see this summer. Excellent posts and follow up.

As I have outlined several times, IMO, Saudi Arabia is to the world as Texas was to the Lower 48.

Why do you hate our freedoms?

Right on time--after WT

EDIT. This was supposed to be a reply to Hothgor's 7:25 posting. Somehow it ended up way downthread.

WT, I think that your analysis which compares these two regions is compelling.

It also seems that comparison of SA to these regions remains compelling.

SA -- and the multinational oil companies -- all seem to use smoke and mirrors to hide their actual proven reserves, and to create PR hype about potential reserves or new finds, a la "Jack 2." So that makes it hard, as so many have noted, to talk with more certainty about what's going on.

Even so, knowing what we do about the behaviour of past fields and the behaviour of nations and corporations today, we can say that remaining resources are diminishing and thus recognised to be of incalculable value.

Why enter into such costly and terrible Resource War if petroleum resources are abundant and easily accessible?

Great analysis, Dave!

In your second last paragraph you say "what a shame it is that those uncooperative people in the rest of the world won't play by our rules — and give us what we want."

This is exactly what Sam Bodman, US Energy Secretary, said at CERA week.

Regarding increasing oil nationalisation, he said "Changing oil deal terms and wresting control away from international oil majors will harm producer nations in the long-run by dampening foreign investment". This will certainly harm the oil international oil majors!!

He also said "Moves to restrict foreign investment and increase the reach of state-run energy industries limit access to capital and to the expertise needed to unlock new resources,". Really, Saudi Aramco doesn't seem to have a problem with capital and expertise. Once again, the increased reach of state run energy industries will harm international oil majors.

For clarity, I think an event name change is required.

Change "CERAWEEK 2007" to


Current reserves score:
International Oil Majors 20%
State Owned Oil 80% (Watson's number)

Wonder what the score will be for CERAWEEK 2008

Angola has joined OPEC, Sudan will probably follow
Ecuador might decide to also join OPEC,1,7269880.story?col...
Maybe other countries will join OPEC.

These new members of OPEC may decide to increase state control of their hydrocarbon reserves.

Projected reserves score:
International Oil Majors 15%
State Owned Oil 85%

I wonder how Sam Bodman, Rex Tillerson and John Watson will respond?

If enough countries join OPEC so that OPEC controls not only most of world's reserves but also most of the world's production, OPEC could decide which customers should get oil supply increases and which customers should get decreases based on OPEC's own criteria.

The competition for oil reserves between the oil majors and state owned oil will increase. As oil production decreases, the competition for oil supply between countries will also increase.

By blaming state owned oil for reducing reserve access for the oil majors, CERAWEEK 2007 might be acting as a catalyst which increases the motivation of state owned oil to increase their rate of reserves and production ownership.

I agree that Dave did a terrific job with this post.

I also find that the CERA Show seems to be a very obvious propaganda ploy. In a complex world where too many people are competing for too few resources, various elites will develop narratives to push nations into war for access to those resources.

CERA seems to be a propaganda agency masquerading as business consulting on petroleum resources. CERA is participating in the development of a view of that all those who have any kind of energy resources must roll over and let the multinationals extract the resources at terms favorable to the multinationals. Any nation or leaders who resist this approach are increasingly demonized.

By framing the resource debate in terms of "Good Corporatists vs. Evil Nationalisis" rather than in terms of "too many people competing for too few remaining resources" CERA promotes the agenda of Resource War and encourages continued waste of resources on devastaing overconsumption.

Our species in this way continues to act as one with: "Stone Age emotions, Medieval self image, and godlike technology" -- three characteristics which combine to cause us to self destruct rather than to plan for a sustainable future. (Quote and interpretation of E. O. Wilson, "The Creation.")

How do we respond to such well funded propaganda efforts?

My "Iron Triangle" Theory:

I think that we are seeing an "Iron Triangle" of sorts defending the status quo concept of ever expanding energy supplies: (1) most housing, auto, financing and related companies; (2) Most MSM companies that are selling advertising to Group #1 and (3) some major oil companies, major oil exporters and energy analysts that are working for the major oil companies and exporters.

The housing/auto group wants to keep selling and financing large homes and SUV's.

The MSM wants to keep selling advertising to the housing/auto group.

In my opinion, some major oil companies are afraid of punitive taxation, and some exporters are afraid of military takeovers. This group of oil companies, exporters and their analysts provide the intellectual ammunition for the other two groups, i.e., promising trillions and trillions of barrels of conventional and nonconventional oil reserves.

Interesting theory.

I have a few more.

If the government was up front with people, many would realize the "gig is up" with regards to the fantasy of infinite growth/expansion since cheap/abundant oil makes it so. If they realize the gig is up, they will be rushing to get out of the stock market and any US debt instruments that they know will not get least not with dollars worth anything.

Also, there would be those that would bail from the petrodollar in a heartbeat, and gold would likely skyrocket -- setting off alarm bells everywhere. In other words, the whole huge ponzi scheme collapses unless the populace, as a general whole, remains convinced that everything is fine and will continue to be business a usual. If the govt is up front, we likely will have chaos. So why bother telling the people? We will let it out in little bits and pieces, and if it gets really bad we just declare martial law and institute the totalitarian government we've been creating.

Whenever I try to discuss peak oil with folks, they are either in disbelief or they believe that technology will solve it so there is no reason to be concerned. They truly believe that if there is a problem, their government would tell them. None of them even begin to grasp the scope of it. They seem to think the only thing it will affect is driving, and that's easily solvable with electric cars. No big deal -- don't worry about our already broken grids.

As for me, I'm hunkering down for hard times. The way I figure it, even if times don't get hard, it's good to conserve energy/water, good to grow food, good to be out of debt, and good to save for a rainy day. Sounds a lot like our grandparents who are long gone...

"Also, there would be those that would bail from the petrodollar in a heartbeat"

China is doing this now - reducing its reserves of US dollars in exchange for strategic reserves of many commodities - gold, oil, bauxite, chromium, copper, manganese, tungsten and agricultural products.

There was a time when paper currency could be exchanged for gold now it's just worthless paper!

When I mention peak oil in a discussion, most people are unconcerned. People usually function in a reactive rather than proactive way. Global warming is becoming accepted as truth, thanks partly to Al Gore's sensationalist documentary.

A price shock has to occur first to get people's attention. The admission of decline of Cantarell by Pemex is a start. If Russia or Saudi Arabia starts to show clear evidence of an irreversible oil production decline and gasoline prices increase by 50% then people will react and become aware of peak oil.

Clear evidence from Russia or Saudi Arabia could emerge later this year if Iran's oil production is disrupted by Middle East conflicts, severe hurricanes occur in the Gulf of Mexico or next year's winter is very cold.

US Congress has just expanded Iran sanctions which will not help Iran's oil production. These sanctions further reduce the supply of capital to Iran's energy industry. In addition, capital is reduced not only to petroleum production but also now to petroleum byproducts and natural gas.

And then there's crap like this from the MSM to feed the president's arguement that Iran needs to be dealt with:

Iran’s stealth force: Accused of backing Iraqi militias, elite Quds corps deeply enmeshed in Iraq

Yep. Russia is already bailing from the US dollar, right along with China. Add in many of the middle eastern countries, other Asian Countries, and European countries that are also bailing at this time. It doesn't get much press because they'd prefer you not know--and that goes for both sides. These countries hold huge amounts of the US$ and they don't want it to crash before they get out or at least protect a portion of their reserves. For several years the fed has been buying up our excess debt instruments (referred to as "monetization of debt) to keep the bubble pumped up.

The US govt really decided to attack Iraq when Saddam started selling oil in Euros. They not only wanted Iraq's oil, they wanted to put a stop to anything that might threaten the sovereignty of the petrodollar -- no matter how small the threat. When you understand that, you understand the string of lies about the "reasons" we invaded and occupy Iraq. Bush actually screwed up about six months ago and admitted that we can't leave "because we need the oil."

Iran has been "threatening" to open an oil bourse and trade oil in Euros, so we have a very parallel situation here. We want to control their resources and put a stop to any "nonsense" that might usurp the US$ in any way, form, or manner.

Politics is about lies. All politicians know that giving the populace bad news is the death knell for any chances at re-election. I don't believe anything that any politician says.

"...Whenever I try to discuss peak oil with folks, they are either in disbelief or they believe that technology will solve it ..."

While I tend to side with Hothgor and think that the jury is still out on how well the HL predicts the KSA's production profile (or actually the precision of the estimate), I do feel that PO and its consequences represent the most pressing issue of the day (or year).

But when I bring up the issue of exponential growth of a finite resource with folks, I get the same reaction that you do. Yesterday a guy that I was testing (I do medical work) said that he just likes having 6000 lbs of steel around him when he drives (and he was about 120 lbs). The folks around here just don't make the connection between the gas pedal and the geologic limits of oil production, the economic drain on the users, and the transfer of wealth (well, bits of paper) to countries that hate us.

Damn those pesky Canadians:)

I agree with your assesment about "don't spook the herd". I think now is the time to get prepared before "peak awareness" hits the masses. Look at China and thier stockpiles nat rescources.

So do I--and I wanted to get ahead of the heard. That's why I packed up my husband and I and moved to HI. I didn't give him much choice, but then again, he wasn't likely to complain. We bought 2 acres of agricultural land and have been busting out butts. In less than a year, we've planted more than 50 fruit trees and have a huge, prolific vege garden. The climate here is great for growing food, and the papaya trees that my husband grew from starts were heavy with fruit in less than 9 months. I'm sure glad the old man has a green thumb.

I cashed in a bunch of investments and paid off all of our debts and am using my monthly retirement income to invest in items for self-sustainability. We put in solar hot water. Next up is solar pv and a small windmill. Since we live in a rain forest area and are on catchment, I'm trying to figure out a way (that isn't too ugly) to harness the hydro power of the catchment system. It often rains so hard that the catchment system can't keep up and it sounds like we are under a huge waterfall. There's got to be something we can do with that other that just let the catchment tank and gutters overflow. If nothing else, it should flow to another tank that is raised so that we have running water when the power is out. That way we could flush the toilet without carrying buckets of water---getting too old and beat up for that.

This is an interesting place...very 3rd world-like. The power goes out frequently when it gets windy, and we get a taste of what peak oil/peak gas/peak clean water might be like. Since we are on catchment, our pump quits and we have no running water. No running water-no indoor plumbing. Since we have to filter the water (it runs off the roof and picks up lots of debris -- like bird crap -- along the way), it's hard to function without a pump. There are no street lights here either, so when the house lights are out it is VERY, VERY dark unless there is a full moon and the skies are clear. When they are, it is a treat with the power out. The stars are incredibly brilliant and you feel closer than ever to the heavens. Also, when the power is out, there are no potential adjacent areas with any "glow" of light. It's just you and the night feel like you could touch the moon. But now I know why out ancestors went to bed when it was dark.

Electricity and gasoline are very expensive here -- the highest in the country. We have our gasoline use down to about 20-30 gallons per month and try to go to town (Hilo) only once every 2 weeks and to Kona once every 6 months. We have our electricity use down to about 400-500kwh per month and don't use any form of heating. It does get cool in the winter, but we just bundle up. In the summer, we just sweat.

I don't know when peak oil will hit. But I do know that it is inevitable that it will happen as it is a finite resource on a finite planet, and I suspect it will happen sooner rather than later. I was in a hurry to get established partly due to our age (both 58) and partly to do it before the panicked masses want the same equipment we want. The physical work has been killer, and I'm not sure we could have pulled this off if we waited even 3 more years. We are pretty exhausted, but it's all coming together nicely, and once it's all in place it will be mainly maintenance. This way it should all be in place before we are too old to do the physical labor. It would be cost prohibitive if we had to pay someone to do all of this work.

We met a lot of neighbors that are into gardening and we share a lot of food. The joke is always the rounds the avocados make when in season. After moving from porch to porch, they are likely to end up back at the originators doorstep. There are just too many to eat. But even these people don't really believe peak oil...or they believe technology will just solve it -- not matter how gargantuan the scope and scale of the problem is. My biggest worry here is health care and getting medicines/treatment if peak oil gets really bad. I figure there won't be a lot of air shipment anymore, and items that come in will come via cargo vessels that are very slow. That means everything will have to be planned out in advance. Other than our screwed up joints and backs, we are fairly healthy, so here's knocking on wood. But the place has the added attraction of being beautiful with lots of hiking, snorkeling, fishing, etc. You could die in much worse places -- like Iraq.

Agreed. I have invested in the martkets for many years and have kept on in my office what was originally FNN and now its successor. I was thinking just this morning how FNN used to give a lot of coverage to the commodities markets and how its successor gives very little analysis of commodities since the bull run began. Oil and natural gas are covered some, but skewed in a negative way.
It is hard for the reporters to contain their glee when either natural gas or oil sells off. In short,objectivity is gone and what exists now is almost an infomercial for buy, buy, buy stocks.

I watch it closely and manage my own investments. The market is very scary right now -- it reminds me of 2000 when everything kept going up for no reason. Meanwhile, then as now, lots of really bad economic data come out and no one reacted. Then, all of a sudden, POP. But meanwhile, it's buy, buy, buy.

Agreed on the commodities stuff. Gold has gone up 50% in the past 3 years and it gets no notice. I too see that they respond with glee to drops in prices for oil/gas, but they pretty much ignore the increases.

The fed has been increasing the money supply at an ever increasing rate. There is no "global savings glut." What there is is a huge liquidity bubble as the fed creates new money at an ever increasing pace and all of the other central banks respond in kind. All that liquidity has to go somewhere. The ponzi scheme is doomed to fail when hyper-inflation gets out of control. But I don't think they care anymore. They know that peak oil will stop the infinite growth paradigm, so their only intent is to keep the pyramid going for as long as they can and for the rich to extract as much as possible while it lasts. Meanwhile, don't worry, be happy! Consume! Go shopping!!! Wheeee, what fun!!!

Look at who is advertising on the financial channels.
Mostly managed investment firms adverising people happily (richly) retired flying gliders and such with these s**t eating grins on their face. Discount stock brokerage firms make up most of the balance of the advertisers. Use to see the discount commodity brokers some but I don't recall any lately.
You are right about the liquidity going into the equity markets. Chart
growth has been eerily steady upward. I don't think we have had the blow-off rally yet though.

WT -- yes, the Iron Triangle seems to be working right along the lines you've discussed.

It seems to me that the lies will continue until things fall apart. As people become more desperate, violence will increase, with more lies to rationalise the violence on the part of the disintegrating elites.

Too many people competing for too few resources.

"Stone Age emotions, Medieval self image, godlike technology" leads us to self destruction.

I still say that we can only each do our bit to live as sustainably as we can, to help others become more aware, and then to recognise that the chips will fall where they may. Sounds a bit like a twelve-step program, eh?

Keep on keepin' on, fellow TODers!

"Stone Age emotions, Medieval self image, godlike technology" leads us to self destruction.

Do you mind if I steal this quote and completely "forget" to give you credit?

Not at all, except that the real deal is from Edward O. Wilson, from his latest superb book "The Creation."

(page 10)

"Here is a chimera, a new and very odd species come shambling into our universe, a mix of Stone Age emotion, medieval self image, and godlike technology. The combination makes the species unresponsive to the forces that count most for its own long term survival."

Be sure and go to the CERAWeek webpage and get load of the list of "partners" as you scroll down.

Aren't the NOCs dependent on the IOCs for retailing their production?

Simply changing the name to CERAWEAK 2007 would probably get the message across.

This is a great article and dQ/dt hits the nail on the head (although most people associate dt with delerium tremens, especially those forced to take high school calculus). No where near enough attention is being paid to the rate of future production of any energy source even though the warning has been out there for a long time in the form of the wedge principle.

The SPE is holding a forum on enhanced recovery in Dubrovnik in September:

70% Recovery --- A Dream or Reality: From Smart Water to Microbes

They claim the average recovery factor globally is 32%. Considering the rewards, I'm sure some very astute minds have given this issue a lot of attention over the years, but has the recovery factor significantly increased? Doesn't seem like it.

Good point on flow rate with regard to recovery, although if I understood him correctly Freddy Hutter thinks such considerations are irrelevant:

Until most posters at TOD understand the concept of Reserves and quit navel gazing at Peak Rate, most debate is futile. No ... make that infantile.

Maybe I'm misinterpreting his post, but Freddy seems to be saying that it doesn't matter if you can only pull the stuff out globally at 20 mb/d. The price will simply adjust (and hence so will demand) and the oil will last a lot longer. It's how much you've got that counts, not how fast you can shift it.

Why can't I help thinking there's something wrong with that logic?

Because like so many others on this site, you have been brainwashed into believing that OIL is irreplaceable. I have tried on numerous occasions, backed up by linking dozens of articles from various reputable sites on the WWW to point out that simply electrifying our fleet would cut down globally about 2/3rds of our consumption or more. How strange that would be...only needing around 28 million bpd?

Ok Hothgor,
You state "Because like so many others on this site, you have been brainwashed into believing that OIL is irreplaceable."


First off all this is crass, insulting, and just plain wrong, like so many of your other comebacks. You imply stupidity and a lack of understanding of your valid but niave point that follows.
I guess the point that you either ignore or fail to comprehend is that TPTB(the powers that be) do not want EV's, electric rail, or all the other logical mitigation projects that could make 28 mbpd do-able. So go ask yourself why you think they would act in such selfserving, screw the masses, and the future too, and get back to me.
You are the most insulting poster here IMO, and why? Would you quit telling, implying, or infering stupidity and you might find that the people here "get it"? Your insults should be aimed way up the ladder to industry and polital leaders.
You should ask yourself why I as a business owner can get a 100% to $100,000 this year tax deduction for a VECHILE THAT MUST WEIGHT OVER 7800 lbs. and ask your self how in the fuck we are going to get oil use down to 28 mbpd. Huh? Is this my fucking fault? Come off it, you are pissing up a rope with your insulting comments. I must depreciate a more fuel efficient car or truck but can expense a gas hog - just who in the fuck are you calling brainwashed?
Take solar panels - you get to deduct up to $6,000 OVER 4 YEARS and you wonder why they aren't on every rooftop? You want to get to 28 mbpd then quit pissing off people here and get in the face of polital leaders.
Please respond in detail on stay on the topic's I mentioned or don't waste your time. Thanks,


Score 1 for Hothgor...every time you respond to him like this you have gotten his rocks off. He feeds off anger and now his belly is full. Anyone that still believes this poser is a recent graduate from college is about as naive as they come. Hothgor comes with the facts fast and furious. He is ready for any rebuttal and speaks like someone that would take his best friend out on a hunting trip and shoot him in the face.

Remember what I've said about XOM feeling out TOD's arguements in order to better frame their PR campaign. Keep that in mind ever time you read his posts.

Think about it everyone. How big of a stretch would this be?

Dragonfly said, "Anyone that still believes this poser is a recent graduate from college is about as naive as they come."

You may be onto something.

With 50 billion you think they could hire something a little better.

He responded to WT first comment here in 2 Minuets.

That's nothing, wait until he actually manages to "convinces" (slips a rufie) a woman to sleep with him... I bet he'll beat that record easily.

Hehehehehehehehehehehehe. If he's anything like he comes across in his posts, the woman will be glad it only lasted that long. Sorry, couldn't resist. Ban me if you must.

That was funny. Points for humour.No bans.

Hi Hothgar,

simply electrifying our fleet would cut down globally about 2/3rds of our consumption or more

Fine analysis of the situation; however, I'm a little confused about the irregular use of the word 'simply' in this context. Is there a definition of the word that I am not aware of? Nothing I've found in my dictionary seems to precisely fit your statement.
Otherwise, your post makes excellent sense.
[Let's see how to use this word your way: simply turn lead into gold...simply create hydrogen fusion...simply sprout wings and fly...simply build a moat around low lying countries...yes, I believe I'm getting the idea. What else can we solve this way? Simply elect intelligent, responsible politicians, yes, it really does work!]

"Simply" does not begin to describe the scope of the problem. First, we have an aging electrical grid that could in no way support such a load. And even if it could, the the issue of HOW we would generate the electricity. Since it appears that we may be on the verge of peak natural gas, we aren't left with many clean burning fuels. We're mostly left with coal (forget about any potential environmental or climate issues) and nuclear (it only takes 7-10 years to build a plant and there's the problem of waste disposal). Then there's the problem of replacing all of those millions of gasoline powered vehicles.

IMHO, I do not see any "simple" solutions.

First, we have an aging electrical grid that could in no way support such a load.

Stop being silly.  The grid's limitations related to its peaks, not the average power.  There is more than enough spare capacity during off-peak times to handle at least 84% of our transportation loads, and we would have plenty of time to beef it up to take care of the rest.

And even if it could, the the issue of HOW we would generate the electricity.

Everyone knows that my favorite suggestions are wind and fuel cells fed by biomass.  But if we had shortages in the near future, we could ... burn oil!  Today's intercooled simple-cycle gas turbines are hitting 50% thermal efficiency, and they could probably beat 65% in combined-cycle operation.  Take oil away from 15%-efficient ICE vehicles and feed it to 65%-efficient CC plants and you can get by on a whole lot less.

It also lets you buffer your electrical grid a whole lot better.  Two birds, one stone.  All we need is to get the automakers to put grid-charged electric traction in just about everything rolling off the lines.

You should listen to EP on this matter, as his expertise far exceeds my own. Though I did get many kudos via emails when I brought up the DoE study about 3 months back that reaffirmed my calculations earlier :P

Well, let's see. I've been reading that the grids are going down all over the world in 3rd world countries because they can't FUEL them. Their problems aren't peak demand, they are ANY demand. Once they are down full time, it is just a matter of time before we are too. We may be last because we are the imperial empire, but eventually we'll get there too. You are assuming I said peak will end the world tomorrow or soon thereafter. I did NOT say that. I said no one knows when. It is only through the lens of history that we will know.

I'm not being silly. I know there are solutions. But the scope and scale of the problem make it much more difficult that you try to make it appear. Neither of you say anything about the logistics, time, and expense of getting all of this into place. You say nothing about how we will replace those millions and millions of vehicles. I say, "Get real." We are talking about a planet with 6 billion people on it, not a town in the midwest. I'm sure there are areas that will make it through just fine, but there are others that will never be able to cope.

I would like to see your detailed plans for how to get this all in place to support the massive population of a place like Los Angeles. They don't have enough water either and it's just going to get worse. I would like to see you work out an energy critical path plan and get those millions of people to sign on and cooperate. I'll stop being silly when you get real.

Upgrading the electrical grid is not an insoluble problem and is
within a reasonable order of magnitude of possibility, unlike e.g. powering a significant fraction of electricity demand with win.

Let's recall that as the demand for electricity goes up with vehicle electrification, some of the money which otherwise would have gone to petroleum will now go to utilities.

They'll have the money to spend on grid upgrades, and let's hope the regulators make them do it.

I didn't say it wasn't solvable. What I said is it isn't simple and the scope and scale make it a huge, if not impossible, task. We haven't been talking about tweaks and minor upgrades to the grid, he/she was talking about a grid that can support replacement of 2/3 of our current vehicles with electric vehicles. That's HUGE. And never mind that they've yet to make those electric vehicles (except the ones they crushed). And it takes lots of energy to make new vehicles--let alone to power them.

What's your EROEI with electrification? Coal's range, before transmission loss, is between 2.5-3.0:1 in the US. It's technically possible, but the growth requirement of capitalism predicates constantly growing energy returns, otherwise you experience a diminished rate of profit (which leads to capital flight and contracting economies). I've mentioned this before, but do some reading on the "treadmill of production". The trajectory of capitalism is directly linked to the EROEI of its power sources (the theory I'm advancing anyway).

We have been dealing with a decline in over all EROEI for all sources of energy we currently exploit. To say that we need a constantly increasing EROEI is a very gross miss characterization of what is needed. We only 'need' around a 2-3 to 1 EROEI to maintain our current economic growth. Extra simply allows countries like China and India to have massive expansions very quickly.

"We only 'need' around a 2-3 to 1 EROEI to maintain our current economic growth."

And I thought your fodder comment was a stupid as they come.

Again, I apologize profusely for not using the liberal term of 'jarhead' to accurately describe front line soldiers in the context of your political alignment. Not that that has been said, would you care to explain to us all how an energy resource that nets us a 3:1 EROEI could not allow our economy to grow?

I've been trying to ignore you but you're just so damn grating.

What in the world are you talking about?!? "liberal term of 'jarhead'"?!?

From wikipedia

Military slang for a member of the United States Marine Corps, i.e., a Marine. The slang originated during WWII when the Mason Jar Company started making their helmets, and refers to the similarity that the shape of the helmet shares with a jar as well as the typical haircut new recruits are given. - It can also be argued that the term dates back to the British Royal Marines during the 18th century who stood watch in the crow's nest of vessels. In their watch positions they could not depart to relieve themselves, and did so into a jar. The Naval term for a lavatory is "The Head".

While being in the Corps the Term Jar head can refer to that a Marines head is empty and he only thinks what is put into it. This definition is usually referred to people in the Marine Corps.

They only thing more stupefying than your ignorance is you willingness to display it to the world.

I will take it that you had no family members that served in the Military. Many Vietnam vets were called 'jarheads' by anti-war protesters, and regardless of the wiki definition, it was very much meant in a very derogatory manner. Very clever I must say. Did you add that definition yourself to Wiki? Anyone can edit those things you know :laughs:

If you did not know how jarhead was used in modern times, that makes you ignorant on the matter, and not myself. That therefore disqualifies you from calling proclaiming my 'ignorance' on this subject matter.

First you call combat troops "fodder" and insinuate they are so far beneath you that you would never suffer to serve with them.

Then you come up with this "liberal term jarhead" crap.

1. Jarhead is not a "liberal term".
2. It refers to marines only, not all the "fodder"
3. Nobody referred/s to Vietnam vets as Jarheads.
4. Marines use that term among themselves with great pride.

You've made me so angry I can't type straight. I didn't think is was possible for me to have a lower opinion of you. Boy was I wrong.

I never insinuated that the combat troops were 'fodder'. Thats a gross miss characterization by members of this forum. They twisted what I said to make it out to be vastly more then what it was. I only said that I have the technical skills, and frankly, a high enough common sense value that I would most likely not be used as a front line combatant. I also implied that the vast majority of TODers would fall under that category too.

1. Jarhead was politicized during the Vietnam war.
2. It was applied to virtually every army/navy/air force/marine in that time period.
3. They did, google some of the pictures on the internet and see for yourself.
4. I agree with. Most military men are conservative leaning, and they love to twist something around as a badge of honor to spit at others faces.

You are only angry because you know you put up a ridiculous straw man attack and defense, and you feel humiliated that I dared to call you out on it. Pathetic.

Hothgor wrote:

In a few months, Ill be out of draft age. If they increase the range to 42 years, I have maybe a 1 in 50 shot of ever being drafted, and about a 1 in 20 chance of ever seeing combat. Fortunately for me, I'm intelligent enough to not waste as fodder.

I only said that I have the technical skills, and frankly, a high enough common sense value that I would most likely not be used as a front line combatant.

Yeah, good thing you have common sense, not like that fodder in Iraq.


I never said ANYONE in Iraq was fodder. Period. Thats a blatant manipulation ONCE AGAIN by Rethin on this issue. There was an attempt to invoke in me the 'fear' of being drafted into the military. People tried to use this fear to win a debate and I called them on it. As you can clearly see, I mention the fact that only 1 in 20 US service men ever see combat. I also state on subsequent posts that my 'deroggatory' comment was simply a reflection of the liberal slang 'jarhead' to show them how ridiculous they were being.

So ONCE AGAIN, as was discussed in that drumbeat, I said that I am intelligent enough that it would be a waste to place me as a front line combatant. When you go to a military recruitment office, you take an aptitude test that determines your skill set. Having actually taken this test before, I can assure you that a score in the top 1 percentile usually ensures you get placed on something that requires a high degree of skills a la working in a nuclear facility, military intelligence etc etc. Rethin apparently doesn't understand this concept and is making a bigger issue out of this then is necessary.

So lets get the facts straight once again for all to see:

Rethin thinks the people in Iraq are fodder.
I think I'm intelligent enough to not be a front line combatant.



Could you be any more of a miss characterizing little shit, Rethin? This is my last response to you on this issue. Not only that, but you completely ignored everything else that was said on that thread to start shit here. I am so offended at your blatant manipulation of other peoples words and your disregard for our military that I could almost puke. Fortunately, I have a fairly high degree of restraint in that I actually mean it when I say I wont respond to you on this issue. Yes that means you get the last word. Have at it with your pathetic whining rebuttal.

Edit: And for everyone else, including Dave, I am sorry this crap spilled into your thread. Discussions like these are completely out of context with what this thread was initially about. I can not apologize enough for letting myself be baited into this subject again by the anti-american loons.

Hothgar wrote: "I think I'm intelligent enough to not be a front line combatant."

Nice insult to all us former and current grunts. Thanks. Have a nice day.

Remarkable how you can feel so insulted that I dared score high enough on the aptitude test that my skills would best be used in a field other then combat, yet you make no mention of how Rethin feels our men and women in Iraq are 'fodder'.

Grunts. Leathernecks. Jarheads. All are labels that should only be used by US service men. Those of us outside of the military shouldn't bother with them.

I was insulted because you basically implied that those of us who are/were 'front line combatants' were not intelligent. Yeah, I guess all those SF guys are real stupid. And that volunteer force, yeah all those 11B's are real stupid. Oh, I'm sorry, they're just not as smart as you. Oh, and for the record, yes I do have my combat patch. 1st Infantry, thank you.

I did no such thing. I only stated that my aptitude test suggested I be placed in a field like Military Intelligence. Based on that presumption, it would seem to me to be a waste to go against your tests. You need to keep in mind that I was the ONLY ONE defending the US military and its actions in Iraq yesterday. Your attacking one of the only people on this site who doesn't think your all a bunch of war-crazed republican lap-dog monsters.

The disconnect between what you state and then lamely try and apply to others as really being thier comments is getting blantant.

There is no disconnect. I never called our troops in Iraq fodder and you know it. Only Rethin implied that they were. And that is what is so funny: between you, Rethin and Dragonfly, you make a press release by both political parties look like the no spin zones :laughs:

Hothgor, directly no but implied yes you did, quit playing your stupid word games unless you are disconnected. You want to take that back - it's getting late and you are digging your hole deeper - a simple appology was all that was needed.

I am not so sure this is the case as I have studied the Military recently and it seems to have changed since Vietnam. As I write this please try to recall the Jessica Lynch affair as her supply convoy was over run and she had to be rescued. The Military is putting intelligent people in two places- at the front and in the rear; the fodder is in the middle. The Army needs multifaceted people in the front line to be able to analyze all of the high tech data coming at the grunt and use that data to out gun and out maneuver the enemy. The low ASVABr's are "in the rear with the gear". The grunt is no longer fodder, he is the new "fighter pilot" as he has all of gadgets and data streams that has to be analyzed and then acted upon with ruthless tenacity. Hothgor passes the intelligence tests, but I think he is right, based on his comments he would have been in Military Intelligence and would have been saying that there were WMD in Iraq and not at the Front where the lack of foresight bill gets paid with the life of an American Soldier.

You weren't alive during the Vietnam war. How would you be so familiar with colloquial usages?
You know nothing about this. Nothing.

I had several family members who were alive and saw combat in the Vietnam war. After hearing their stories about their treatment when they came home, I have to say yes I am very much qualified to suggest what I have been suggesting. Notice how the lone military man that has posted so far doesn't seem to be denying that it happened.

Too blind and wilful to see that you're making my point and further brandishing your arrogant ignorance.
You aren't going to begin to grow up until you've been hit over the head a few times with something heavier than what travels over the TOD server.

I only said that I have the technical skills

And your technical skills are in?

I am really curious.

As for me, undergrad chemical engineering, masters civil/environmental engineering, and law degree.


Rethin said,
"4. Marines use that term among themselves with great pride."

Well, there's one way to test this theory, go up to the biggest stoutest marine you see, and call him a jarhead, right to his face! If he is complimented, he will smile and say hello! :-)
But if not....:-( (hey, Rethin said it was o.k.!!)
(remember, the Marines use a lot of terms among each other that outsiders wouldn't be expected to get away with..., but as I said test it for yourself....I personally won't and say I did, o.k.? :-)

Remember, we are only one cubic mile from freedom.

And for what its worth, I was visted by one of my friends who is actually in the army. I even asked him point blank if my statement was unfair. He flat out told me it was not. The only ones getting all upset about it are people who simply love to derail threads and instigate flame wars. Because of this, I wish to say one last tid bit on the matter:

If at some point in time I am called upon to defend my country, be it in a war against Iran, or defending our homeland from crazy three horned one eyed mutant frog-men from Alans Dead Sea idea, I will gladly do so. If that means there is a possibility that I may die for my country, I would still do so. Does that mean that I would not be afraid? Of course not, but as an American citizen it would be my duty. I support our troops who are out there fighting for us, regardless of your political or idealogical leanings.

I sometimes wonder if some of you would do so, or would you simply hop a bus to Canada, or Paraguay.

Hothgor: And 'defending your country' is equivalent to 'bashing other people because Bush doesn't like them', as in Afghanistan, Iraq and possibly Iran? Then you wonder why so many people hate the USA?
I would have a lot less animosity if you all told the truth -- 'we want their oil, and think their presencce on this earth isn't necessary to our happiness'; at least, you wouldn't also be hyprocrits as well as murderers and thieves.

Oh: So you are from the Viet-Nam era?

You caught that too...

Recent college grad? Yeah, and my butt looks like it did when I was 20.

I never said I served in Vietnam. Looks like you two are pulling a Rethin. Though if you want to get technical, there were 2 50 year olds who graduated in my class from Baylor :P Alas, I am only 24.

No one said you was in relation to the association with someone of that age.
Maybe you are 24. Your leaps indicate you may be.

24? That explains it. Hothgor you are a kid with a big mouth and no brain. Why do you think you are even qualified to comment on this site? You don't have a background in oil exploration or finance or anything for that matter. You don't know anything. I didn't know squat when I was 24 except how to roll a fattie and talk my way out of a ticket.

Leave this site to people who actually have worked for a significant period of time. You are a poster child for the young, stupid, loud mouths that don’t have enough sense to know when they should shut up.

Finally you are a huge insult to WT. This is a man who works in the industry and has decades of experience. You are not qualified to even correct his punctuation errors.

I didn't realize that this is strictly a site for industry eggheads. Sorry, I'll go somewhere else, seeing as I have no credentials.

My point exactly. People here seem to think that HL are some mystical voodoo magic that deciphers the resource basin underground without ever exploring for it at all. I remember when I first started posting here about how easy it was to do a HL, and even posted my email address to offer to show anyone my own work and explain exactly how it was done. I had almost two dozens emails on the subject, and strangely enough, criticism of my methods in regards to HL simply vanished almost overnight! :laughs:

Anyone with a brain and probably at least an 8th grade education can look at the data and come to many of the same conclusions that myself, or Freddy, or even WT has come to. The difference between WT and Freddy+Myself is that we let history and data do the talking, while WT manipulates the data set to make it say what he wants. Point in case, WT recently mentioned that the lower 48 had no production restrictions: apparently he forgot that Texas accounted for nearly 40% of total US production at its peak AND it was considered to be a cartel for multiple decades. A cartel that curtails production to maintain prices. No restrictions indeed!

But that is the stab that pierces the doomer heart on the issue: anyone who bothers to actually LOOK at the data recognizes that the case isn't nearly as black and white as they try to make it out to be. And thats whats so infuriating! The notion that someone who presumably has many years of excellent work in an industry could be duplicated or critiqued by those outside of the industry. This irrational rage has now spread throughout most of the PO community on many many different web sites, not just TOD. Its very easy to try to blame it on some 'hotshot, loud mouth kid', its not so easy to constantly defend your erroneous assumptions from dozens of people.

Hello Hothgor,

I'm not sure where everyone stands around here, or whether I agree with everything you say on the subject of P.O., but I can't stand the condescending attitude of some. I've been around people in the oil and gas business for years and I have never been talked down to like that. People who start out talking to you by saying: "I have am a P.E. and I have a degree from the University of such and such and I've been in the business thirty years and here's what I think and you should listen to me." are usually getting ready to pump you full of crap as a watered out old reservoir. As you say, an eigth grader can take a set of declining production numbers and extrapolate out twenty years and come to a better conclusion than a PhD in Petroleum Engineering bullshitology who is hot to make a buck from some poverty stricken river delta. I R don't have a masters degree in geology but I can tell you one thing, the only thing an oil man wants to do is clean out your mineral deposits so he can get rich quick. Chavez is smart to kick those cretins out. I've said too much already, conservation is the answer.

"you know, education, if you make the most of it, if you study hard and you do your homework, and you make an effort to be smart, uh, you, you can do well. If you don't, you get stuck in iraq. "

hothgor = john kerry ?????????????

Strangely, the editors of The Oil Drum gave top billing to an analysis of a method for replacing oil (at least for the USA).

I think your claims of brainwashing are projection.

Your probably correct: I was painting the picture with too broad of a stroke to encompass everyone, and not the people that really are very close minded. The editors of this site do an outstanding job for the most part: you rarely find me criticizing their statements. But take the comment I made about the electrification of our auto fleet. You and I both know its entirely possible and very feasible with todays technology. What we lack is the political will to make it happen. But to many people here are overly concerned with killing off the car, one way or another. It's blinding them to other possibilities.

When you start providing doable LOGISTICS for this SIMPLE replacement program of yours, then your statements may gain credibility. Until then, your SIMPLE replacement program is just pie in the sky.

Go to any large metro area and find an observation area where you can see huge swaths of the city. Think about how you are going to implement this simple plan. The SCOPE and SCALE ARE the PROBLEM. Until you address them, you have no solution -- at least not on a massive scale.

As someone who has been working on this is their own small space of 2 acres, I can tell you the logistics and sheer work involved are way beyond the capacity of some close-minded people to envision.

1. If you are a recent grad, tell me please: Have you ever done a hard day's physical labor in your life? Have you ever worked so hard you can't move the next day but you have no choice? Until then, don't tell me how SIMPLE this is or how close-minded I am.
2. Did they teach you how to actually plan and get things done? Or did they just teach you how to toss out a solution with no means to implement it? GIVE ME THE DATA. HOW DO WE GET THERE? Don't just tell me WHAT THE END PRODUCT LOOKS LIKE.

you have been brainwashed into believing that OIL is irreplaceable.

Yes. OIL is VERY 'replaceable'. In the sense that most things oil allow could be done by another method.

The economic system and lifestyle the 'cheap' oil has allowed is what is not going to be replaced without alot of pain.

When Hothgar can show how the economic model and lifestyle model can stay the same when the oil fow ends, she'll be doing better than most of the poster's here.

I await the next post of your Hothgar where you explain how the present economic model and lifestyle model is able to be kept without the oil.

What I see as the core of the dispute between Peak Oilers and CERA is a matter of definition. We define oil as anything too thin to dug out of the ground with a shovel. Cera defines oil as anything that can be converted into a liquid fuel such as bitumen, shale, coal, elephant grass, cowpies, and beer farts. As long as CERA, EIA, and IEA keep changing the definitions then sound public energy policy will be impossible.

I define "oil" as crude + condensate + natural gas liquids + synfuels from the tar sands. These are the fossil fuel liquids sources. Since anything else is iffy or non-existent at this point, my definition is the one that counts. That may change over time, but the question is how much time. Conveniently, I can always use the statements of my opponents to my advantage — this is easy to do, because the data supports my position, not theirs.

Regarding different defintions used for things used at different times, this is an old trick used to baffle & confuse the unwary.

I guess we can be grateful you at least have a much broader basis for oil resources then most others do.

Perhaps someone with the technical savvy could set up a poll of TODers over the definition of crude oil. I do not consider tar sands to be oil because at ambient temps and pressure it can be dug up with a shovel. I would include condensates that form when cooled to room temp and pressure.

petroleum - natural gas, crude oil, etal. literally "rock oil"
crude oil - unrefined petroleum (so i suppose bitumen from tar sand can be considered "oil")
mineral- includes petroleum
actually the supreme court of the us addressed this issue in deciding that oil and gas leases covered coalbed methane - aside from mining leases

My contention is that oil is a liquid straight from the ground along with co-produced flammible gases which condense into liquid form at room temp and pressure. Natural gas is not oil. Bitumen is not oil. As you reported the Supreme Court ruling involved oil AND gas. It did not define nat gas as oil.

well i think the phase of the petroleum in the reservoir (at ambient reservoir conditions) is the deciding factor. although a retrograde condensate will (at least theoretically) condense, or in part condense, to a liquid in the reservoir. this gets sticky , for example, when there is a royalty difference between oil and gas. re: east anschutz ranch field, sw wyoming.
and i suppose on that basis, bitumen being a solid at reservoir conditions, would not be crude oil.

Elwood, your comment about the courts its relevant here. We are dealing with two definitions ... one geo and another legal.

The courts realized their dilemma (in canada also). If sands and shales and methane (and coal) hydrates are not gas and oils, then what are they? To exclude them from the "legal" definition threw the disposition of the non-conv oil and hydrates into a no-man land of jurisdictions. An adverse decision would have required an urgent set of rules and regulations to deal with those resources.

Methinx all of us agree on the geo inspired differences. The controversy arises in the many versions of definitions of what exactly is Conv, non-Conv & synthetic which makes comparisons of data challenging. Thanx for introducing the court aspect.

I've always enjoyed Dave's posts, and this one is no exception. The "readability factor" is very high...anyone who has a moderate grasp of the issues can read this and learn a lot. Thanks for the post.

Dave Cohen wrote:

Until Chevron's Watson or Cobalt's Bryant or organizations like CERA start dealing with reality... ...we will have to listen endlessly to this empty discourse while doing nothing...

I'm not so sure ... neither that CERA's talk is empty nor that nothing is being done.

If what they say doesn't make sense as is, they are likely engaged in politics. And politics is a very necessary business. For instance: I don't think the US public will be in the mood for more hardball tactics unless they believe there is plenty of oil and that they are in some way entitled to it.

The meta-debate in the US is between the pro and anti-empire camps. You, Dave, are in the political game, too. You are anti-empire, and your position is that the US should not use force to open and maintain oil markets.

BTW this debate is not going to end anytime soon. Not even with the Dems in the White House. Dig in for years of trench warfare. And it's a political battle, by the way. There is probably more agreement on the underlying facts than you think.

I don't think the US public will be in the mood for more hardball tactics unless they believe there is plenty of oil and that they are in some way entitled to it.

Here is a tried and true approach:

  1. Fully demonize the leadership of the country hoarding their oil
  2. Profess brotherhood for its citizens yearning to breath free and benefit from trickle-down prosperity from the oil largesse
  3. Paint a picture of unwarranted militarization by said country
  4. Add dramatic descriptors (e.g. "Sponsors of Terrorism", "Complicit in 911", "Communist", "Radical Islam"
  5. Create patriotic nickname for the battle
  6. Set a drop-dead date

They're working really hard on it....


As I read the comments and arguements of Big Oil executives I have found no empitical data to support their positions. It is always "plenty" of oil, or "lots" of oil, if we can just get to it. Too many in the media focus on the "just get to it" part. One cannot define "lots" or "plenty" mathematically.

It seems that Big Oil and CERA are incapable of hiring people with backgrounds in mathematics, statistical analysis, or probability theory, and will continue to have their executives and spokesmen vent the anecdotal rather than the empirical. Your efforts are making a difference.


Excellent post and I thank you for keeping your eye on CERA. One small point, though I may be mistaken:

I read that Bryant, in the quote stating that:

"Bryant said that until technology shows there is nothing new to find, it's difficult to conclude that the planet is running out of oil."

is affirming his opposition to peak oil theory. He is not reaching the same conclusion as TOD.

In the modern geopolitical world, it just happens to be the case that most of the world's remaining reserves are currently in unfriendly or dangerous places.

I see this line repeated more or less unchanged in virturally all publications, left, right and center.

I think that after a bit of thought, we might realize that this statement is both untrue, and self-congratulating.

I agree that the geological distribution of oil around the globe could be thought of as chance.

I do not agree that these places "happen" to be unfriendly.

If I covet your belongings, and continually keep an eye on your belongings to make sure you are taking care of them for me, and occasionally get you to enter into unfair contracts so that I can take advantage of your belongings without fair compensation, and support/install a despotic government that will strong-arm you to give me your belongings, and from time to time attack and kill you or your neighbors just to keep you under my thumb, do you think I can reasonably expect you to keep a soft spot in your heart for me?

Virtually no social group is unfriendly by nature, but many can become so. The surest way to cause a group to exhibit unfriendly behavior is to keep them under stress and fear.

My in-laws in Iran are some of the kindest, most thoughtful, and most caring people I have ever met. I don't begrudge them in the least their jaded opinion of the USA.

Tyan in Seattle

Dave, until u realize that your cheerleaders are your own worst enemy, u are doomed to write this type of nonsense forever. Silly attacks and logic like yours have been tried since 1995. That was the first failed Peak Oil Date (by MK Hubbert). There have been ten since by a cornucopia of geologists and cultists alike.

And really, u must take one of those anger mgmt courses 'cuz your hate of big oil is not helpful in recruiting anyone that matters. And that's what this whole effort comes down to, isn't it? What is the mission of TOD?

To be a soapbox for all the koolaid drinkers? If so, it's a great success. Enuf said.

But if u see a wider role, then this summary of your plight by Credit Suisse this month said it best:
"Personally, we’re a bit of a sceptical about “peak oil” in the following sense: we have not yet seen absolutely compelling arguments that tell us that global production will soon follow the pattern of US production, with net output from older and new fields declining quite rapidly. A longish plateau, and quite possibly from significantly higher levels than we have now, seems equally plausible at current prices. But this is surely one of those areas where Knightian uncertainty prevails: no matter how good our models, we simply don’t have enough information to even calculate the true probabilities.

That leaves plenty of room for alarmist scenarios since, by definition, they cannot be ruled out altogether. Incidentally, that’s equally true of climate change, and one must simply allow for the fact that some people have an almost religious attraction to apocalyptic prophecies."
TOD & its contributers must go thru a maturing process ,or, continue to be dismissed ...

How do you think the investments of an investment bank would fare if they announced: "Shit guys, we are about to hit the decline in our primary form of energy production".

I ALWAYS trust what the major financial institutions have to say--they have my best interests in mind--what about you?

Yup, another example of the rhetoric of losers. And all those big guys that y'all hate don't even have to say a word to stop the debate. It can all be said in one graph:

Hi Freddy,

I like that graph... thanks for the effort taken to compile and publish data from such messy & diffuse sources.

Question: what would we expect to see in such a collection of forecasts in a future (?) world in which oil has peaked, and we're looking back over the historical dataset of predictions from the pre-peak epoch?

Wouldn't you expect the forecasts to converge on reality, and hence on each other in some sense, as the true peak approaches, and more information becomes publicly available about the nature of said peak?

Are the estimated peak dates getting closer together, & should they? What about the forecast peak rates?

To put it another way: does a meta-analysis of the predictions tell us anything genuinely new that the individual predictions maybe don't? For starters, are you correctly sampling the universe of such predictions? Any chance of putting a few CERA profiles on there - if you have them & it's not too much trouble?



Hi Freddy,
I noticed on the same page as the quote you made above:

"Our oil analysts have a more fundamental story, which makes abundant sense. Their
careful analysis of supply and demand trends suggests that global spare capacity is
edging up, and could within five years reach the critical 5% level, where they would expect
oil to trade once again at, or around the marginal cost of finding and producing it outside
OPEC (around $40 to 45)."

Their peak oil analysis is clearly reliant on 'the abundant sense' of their in-house or paid-for analysts. Do you, or anyone else, know what the historical accuracy of the Credit Suisse oil analysts has been? We would need to know just how unbiased these guys have been proven in the past before we can take CU's rather naked claims at face value. The first question to ask is, Are the analysts correct in stating that spare capacity is edging up?


Late answer:

What Freddy?
No answer to "The first question to ask is, Are the analysts correct in stating that spare capacity is edging up?"???

One sentence in a small piece of text is really doubtful, and you believe the rest of the text?
Could you elaborate on that please...


In terms of building spare capacity - this is relevant:

In its latest monthly oil market report, the IEA said it now expected world oil demand to average 86.04 million b/d this year, an upwards revision of 270,000 b/d. Oil demand growth in 2007 is seen at 1.55 million b/d, up from a previous estimate of 1.39 million b/d.

Ian, all the bottom-uppers have been consistent in rising forecasts of production capacity (from 90 to 104-mbd by 2012). It is rare however to see bold statements of what the surplus capacity will be as it insinuates knowledge of where Demand will be in this high price regime we find ourselves in.

My work with modelers says Supply will be 91.3-mbd in 2011. Add CU's 5% (4.5) to that and we're at 96-mbd global MSC. We can allocate half of that to Aramco and the balance to the ROW incl OPEC.

Yes, i'm ok with this based on present projections and the usual caveats. Further, i will add that given the magnitude, i am ok with the price u quoted also. After all, with the present 3.5-mbd spare capacity, contract prices got down to $45 only a few weeks ago.

Thanks for taking the time to reply, Freddy,
However, what you wrote doesn't really answer my question since I assume from what you wrote, and from the context in CU's report, that the CU's analysts are bottom-uppers and therefore you are simply saying they are correct because they are agreeing with themselves.
What I am asking is where is the extra claimed capacity coming from? If it is sands, or gas, or expected production from shale, then it isn't relevant, in my opinion, and is certainly not what CU's overall story was arguing.
What is the data showing the trend CU claims? My knowledge is limited to reading a few books on the subject (some rational, some extremely less so) and I am pretty much just trying to discover what is really happening so I can make realistic plans for my future - which is why I am reading the material on this site.
PS I notice you kind of endorsed CERA's claims in another post. I'm very dubious about CERA's claims, especially since they include shale as one of the sources. During the first oil scare, I worked with a chap doing his doctorate in organic chemistry on oil from shale - even then with oil more expensive in real terms than it is today, he said shale was worthless as an energy source. According to him the whole thing was a waste of effort until oil got much much higher. CERA's work seems to be more political then science based. By the time shale is viable we'll all be riding pushbikes.
Thanks again,

Yep. I usually agree with myself -- otherwise it becomes difficult to cope. Thanks Ian. Freddie's analysis is based on assumptions for the future, not actual data. I prefer to look at the historical data of how much oil has actually been produced rather than what some "analyst" thinks will be produced. CERA, the IEA, and the EIA are constantly revising their projections. Why? Because when the historical data is released, it shows that their assumptions and projections were INCORRECT.

U are correct that Hubbert, Laherrere, Campbell et al do not have ownership of "revised projections". As i mentioned, theirs are upwardly revised at a rate of 2-mbd and include a pushing back of Peak Date. OTOH, the optimistic projections, while not significantly moving Peak Date forward, they are reducing the Peak Rate at 3-mbd/yr.

The difference between the two groups is that the latter group has an impecable record with looking forward ten years whereas the former groups ten year predictions have bombed. Jean Laherrere stands out alone from that Peakster group as being somewhat correct.

The best of the all the projections remains those by Micheal Lynch. Jean Laherrere's 1997 prediction of an 86-mbd Peak in 2010 gets honourable mention for the former camp.

Agreed. The peakers crystal balls aren't any better than the others. That's why historical data is/are the only real facts we really have to go on. No matter what anyone says or does, just how much did they produce.

FReddy, freddy...

Referring again to your shining star, as you refer to him, at cera -
You concede that SS has been off a lot for various regions, eg north sea, NA, persian gulf etc, but laud him because he guessed about right for 06 while, as you like to remind us, colin and some other peaksters have continuously guessed an early peak. Lets take a closer look at these estimates, say c1995, first to see how and maybe why SS was right and Colin wrong, and second to see if we can learn from these correct and incorrect guesses to better predict the next few years:

Critically, both Colin and SS guessed about the same for one region - deep sea, specifically the s. atlantic basin. Both guessed much too low. And, both guessed too low for ethanol, affecting total liquids. Regarding the mature regions of the world, Colin guessed about right and SS guessed very high... and continues to do so with north sea, north america, and, certainly for last year, the persian gulf. Yes, SS was closer than Colin, but how much comfidence does this provide for the future? From past performance, for SS to continue to be right with his high predictions, we will have to continue to develop large new fields from new regions. Not impossible, of course, but the only bits left are the poles... and there is no indication that large new production will be coming from these regions any time soon. Regarding ethanol, corn is now $4/bushel, and at this price ethanol clearly depends on cheap ng, and might not be penciling out anyway.

So, I see SS as a weather forecaster who has correctly predicted sunny weather for 100 days... but you look behind the curtain and discover that his method is to always predict for tomorrow what the weather was yesterday. For 100 years it has usually been a good guess to predict more production next year. Why might this be different than, say, 1995? Because Ghawar, and all the giants and near giants are ten years older, unlike before all are now in decline, and even near giants have become very few and far between. Why? because 1940's technology was good enough to find giants... new tech, eg 3d, is useful to find small pools missed when the giants were drained, but do not make much difference in overall production. IMO denying that not just traditional oils, but all liquids, will peak when we hit a tipping point of accelerating decline vs decelerating new finds is not just silly but obtusely refuses to recognize that large, cheap fields are developed first (long ago) and that small, expensive fields are developed last (now and in the future.)

So, instead of simply showing the same graphs over and over, how about doing a little research; you have the data and, I would guess, the time. Look at cera's guesses from 1995 for all mature regions and compare these predictions with today's actuals, and do the same for Colin and other peaksters. Then, present the findings. I assume, of course, that you will leave any biases behind... I further assume your failure to do this will indicate that, in fact, ss was hopeless with all mature regions, but that you chose not to show this because of your respect for him.

BTW, some time back I asked a question, checked for an answer, got none, then weeks later reminded you of the question. Your response at the later date was that you had answered it earlier... I don't have time to read thru every drumbeat etc to find things from weeks earlier, especially now when I can't go straight to my own posts. How about this; providing you plenty of time, why not post the results of your research on feb 23 drumbeat.

Their past projections failed on the global scale, which is really just a sum of the regional and local scales. Honestly, I would be shocked if more then 1 in 10 of their regional predictions were accurate.

JK, nobody cares the small stuff. Every forecaster is correct here wrong there. Nature of the beast. In the end and depending on the purpose of the forecast, it's only the grand total that matters.

In that regard, in 1996, Michael Lynch said we'd be at 84-mbd in 2006 and Colin Campbell said 65-mbd. Next year, i'll let u know who did best in 1997.

Accumulating the data for past scenarios is time consuming. It may be a labour of luv, but i march to my own drummer, incl at Drumbeat; and much as i'd like to put everything aside for your Feb23 request, it just ain't gonna happen ... unless u'r blonde, skinny & like watching heavyweight boxing.

That doesn't mean that it may not appear eventually. We've done Campbell and MK Hubbert and want to do more. But there's some other significantly interesting trends that have some priority that i'm working on.

BTW, analysis of forecasting has similarities with the Global Warming debate in that respect. In 2001 we were glad to have any model. Hadley3 from the UK was the best of the first-to-market. While others were learning, they were already doing regional models.

For AR4, even tho the complexity meant the computer runs for GCM's took several weeks, IPCC insisted on seeing the back testing of the two dozen hopefuls for 2007 inclusion.

The global oil Supply forecasts can be similarly reviewed, as i did in 2005 with tracking of the ASPO revisions. This provides two services:
a) Who is great/good/sucks.
b) Is there consistency in their errors?

In my reply to Cheryl, i mentioned some rounded revision numbers that we're noticing on the two PO camps. In much of my survey work, tracking errors can be intuitive to future tries or analysis.

Most of conservative bottom uppers have chosen a route of periodic (eg annual) revisions and are true to their methodology; whereas the more successful optimist camp seem to be building an error component into their models. Neither is right nor wrong. Just different approaches.

While it is apparent to all that i dislike the long term methodology of the optimists, due to inconsistencies with present knowledge of the provinces, it is that camp that gets A's & B's on the scoring in the review of 10-yr-ago successes and failures.

Caveat: the exception would seem to be the Laherrere linearizations. While his early ones are off, he did improve. M King Hubbert's linearizations (diffusion models) did not have this accuracy. Globally, he started at 34-mbd in '56, then 101-mbd and a final try in '76 of 110-mbd. But in fairness, he died too soon. Had Hubbert lived to the late 90's, he may have been within 10% accuracy in the 2006 sweeps as well. Indeed, his (post peak) 77-mbd call for 2006 does get him a gold star for the 30-yr-ago forecasts, eh!!

WRT your request about the modelers success in 2006, i agree the present TOD reply checking ability gets an F. The legacy system was great. My reply to your question is lost in that mess also but the gist was that we only started doing the Scenarios AVG in December. I start the forecasts two years out. Presently, the AVG for 2008 is 87-mbd, 89 for 2009 & 90 for 2010.

BTW, we are considering your request for better resolution in the Pre Peak time frame. It is not something that intersts me, partly 'cuz i'm almost pdf-challenged. Fortunately, others here aren't and i have been given some options for some office requests that were similar to your own. So, we're working on it for future updates...

Freddy, I didn't expect a response, and I didn't get one. Frankly, there's on there there.

Ian, with respect u get are getting way ahead of yourself. The medium term Outlooks and the bottom up flow rate analysis only view the next five to eight years. Each study is specific on the geographic source of growth and/or the category of oil.

Your musings on heavy/shale oils are far too premature. These categories are dependent on $20 to $70/barrel price regimes that are not considered structural at this point in time. The proponents of non-convential oils have the position that URR is 5500-Gb with 1100-Gb past us. Of the remaining 4400-Gb, only 1860-Gb is heavy/shale oils. While the oil pool is a mix of all types, the priority will be the 2540-Gb of uncheap oil that is now presenting itself.

The heavy/shale source oils that will not influence flow rates significantly for a couple of decades.

Hi, again, Freddy,
I assume you are trying to answer my question, in your own way, but I'm really not understanding the basis behind the report claiming a growing capacity. Perhaps if I rephrase it. You wrote earlier:

My work with modelers says Supply will be 91.3-mbd in 2011. Add CU's 5% (4.5) to that and we're at 96-mbd global MSC. We can allocate half of that to Aramco and the balance to the ROW incl OPEC.

Hopefully, the modellers used some basic data, perhaps current rising trends in capacity. Which current capacity trends did they use to provide the 91.3mbd? Is there a source I can see that data for myself.
If there is no source, then what justification is there to state that capacity is growing, and therefore what is the justification in your agreeing with Credit Suisse's report that you quoted earlier:

A longish plateau, and quite possibly from significantly higher levels than we have now, seems equally plausible at current prices.

For a model to have any validity it must be data based. If it's projections based that it will be biased to the modeller's pre-conceived notions.
Thanks again,

Ian, i notice from your profile that it is quite recent. In case u are new to TOD, i will add for your benefit that most or all of the bottom up studies have been discussed here and the concerns that u have were addressed. That's why i said earlier:

"Each study is specific on the geographic source of growth and/or the category of oil."

If u use the TOD search engine or click on the "topics" or "tags" at the top of each thread, u will find excellent background on those studies. Don't bother with Laherrere as it is a math (linearization) based model.

For the time markers up to 2015, each tries to address where the oil they propose is coming from based on corporate announcements. Past 2015 we get into a fuzzy area where they Outlooks still illustrate how many barrels are coming from each producer nation for 2020, 2025, 2030 & 2050, but it questionable on what basis those projections are made. These long term projections start with an overall x-mbd/time marker and then the Outlook attempts to allocate that figure. The "x" is or was often based on GDP projection, not flow rates. I have a huge problem with that methodology.

So your concerns are very valid, but moreso on the long term ... not short and medium term. I have been calling for increased scrutiny on those long term allocations since 2004. Boastfully, i can say those efforts and the feedback are causing a merging of the models, but obviously a view of the comparisions illustrates that there remains quite a lot of disparity.

Once again, thanks Freddy for the time you've taken,
However, time is the problem, to try to go through all the references on TOD would be wasteful, since most of it would not be relevant to my needs and concerns, although I'm certain many would find it valuable.
Simply, what I would like is a simple reference that would show me why, considering the fall-off in production of many major fields, capacity is increasing. Surely oil-field pressure and water-cut is directly linked to productivity and thereby to capacity. Therefore, what I want is a simple past data explanation of how, considering falling production, Credit Suisse can claim:

A longish plateau, and quite possibly from significantly higher levels than we have now, seems equally plausible at current prices.


demand trends suggests that global spare capacity is edging up, and could within five years reach the critical 5% level

This latter is particularly curious since I cannot see what relevance 'demand trends' have on capacity 'edging up'.
Can anyone answer how rising demand suggests 'global spare capacity'?
Does anyone else feel this is an odd thing to proclaim?
Did, for example, it happen when US production neared peak that demand went up which in turn led to increased capacity? It all seems mutually exclusive to me.
If this is explained somewhere on TOD I would appreciate a reference.
Thanks again Freddy,

To expand your partial quote of Credit Suisse, it was actually:

"Our oil analysts have a more fundamental story, which makes abundant sense. Their careful analysis of supply and demand trends suggests that global spare capacity is edging up, and could within five years reach the critical 5% level, where they would expect
oil to trade once again at, or around the marginal cost of finding and producing it outside OPEC (around $40 to 45)."

From this context, i interpret them to be insinuating that because of demand destruction (due to higher prices); and because we know (from Skrebowski's Megaprojects, CERA, Koppelaar & IEA) that there will be about 11-mbd of added capacity shortly, then it is likely that from today's status of equilibrium, we are likely to see DEMAND grow less quickly than SUPPLY CAPACITY over the medium term.

This creates the opportunity for present surplus capacity of 3.5-mbd to grow to more traditional levels (about 5% or 5-mbd). With increased surplus capacity comes the ability to dampen prices even further than we saw this winter; and those lower prices will reverse the present trend of demand destruction.

From here we go to your first quote:

"A longish plateau, and quite possibly from significantly higher levels than we have now, seems equally plausible at current prices."

where they presume that because we will approach the 86-mbd barrier this time with surplus capacity in hand, we will be able to breach that threshold this time without bringing upon the market the high prices of 2006Q3. If producers attempt to increase production too far and exhaust surplus capacity, prices will escalate and the Supply Curve will again deteriorate. But if producers keep within the surplus buffer (5% or so), they will be able to maintain a plateau like Supply level for quite some time ...

They do not speculate at what that level could be at this time.

As usual, I thank you Freddy, but...
What are you reading into the quotes from Credit Suisse?
You interpret demand destruction from rising prices...Credit Suisse says lower prices because of rising capacity...
You mention you KNOW that various hopeful reports (including CERA's which even an idiot like me can plainly see is utter nonsense) 'prove' increased capacity will come 'shortly' whatever shortly means...and ignore facts such as major oil fields involuntarily (Canterell) reduce production...
I have requested in various ways that you provide me with data showing how this capacity increase is to occur and you return with:

...they presume that because we will approach the 86-mbd barrier this time with surplus capacity in hand, we will be able to breach that threshold this time without bringing upon the market the high prices of 2006Q3.

So at least I now know that your KNOWing is based on their 'presumption'.
Then you add:

...if producers keep within the surplus buffer (5% or so), they will be able to maintain a plateau like Supply level for quite some time ...

This does not sound to me that you can justify the arguments you have been making that capacity is going to grow and accept mere presumptions about barries and capacitys based on the hope that producers just may keep within some surplus (where did this come from) buffer???
At last, I think you've answered my question, there is no data to support your thesis or else you are as ignorant as I am about what's going on.
At least, I admit my ignorance (no insult intended)
In any case, thank you,

Ian you are a gentleman. Good to have you here.



Last time someone called me that was...

Actually I don't recall!

Thanks D

Further, i will add that given the magnitude, i am ok with the price u quoted also. After all, with the present 3.5-mbd spare capacity, contract prices got down to $45 only a few weeks ago.

Gotta call you on this went to $49.80 intraday in January and rebounded fairly sharply. Didn't come close to $45. $50 is the floor for the foreseeable future (if not forever)

I don't track Spot or Futures Options that much as neither reflect any relationship with realities. Spot is the better of the two and fluctuates 6% to 28% above acquisition cost of the oilco's.

OECD & EIA track contract price via the Financial Reporting System. This is the price that i have almost exclusively referred to since 2004. A one year graph of the Int'l & USA contract price is available via EIA or the Monthly Stocks Report at my website.

You're telling people that they have to go through a maturing process. Now that's rich.

You've yet to demonstrate the critical thinking skills of a 14 year old. You have not shown the slightest understanding of the relevance of per barrel heat content, much less net energy. Apparently you have stumbled on the notion that demand will drop with supply, but it is obvious that you haven't a clue about the importance of rate of decline of either.

You can't spell. You make stuff up and you tell porkies.

Then you deign to insult people whose intelligence and dignity outshine your dim bulb.

You're a bad joke.

But this is surely one of those areas where Knightian uncertainty prevails: no matter how good our models, we simply don’t have enough information to even calculate the true probabilities.

That leaves plenty of room for alarmist scenarios since, by definition, they cannot be ruled out altogether.

This is a good quote Freddy.

1. Oil and gas are a finite resource that one day will run out - probability = 1
2. 20th Century economic growth as we know it and population growth was built on the back of abundant cheap fossil energy - probability = 1

Combining statements 1 and 2 presents a problem for world political and financial leaders does it not?

Actually not, Euan. As other posters have laid out, the pop'n rose in part due to abundant total Energy, not necessarily FF. Thus as long as Energy rises along with its projections to 2050 (the accepted year of Peak Pop'n), then alarmism seems questionable, especially since concensus tells us that the Supply rate of oil in 2050 will still be 71-mbd. That is a level that does not radically jeopardize present norms in farming methods and ferilizer production. Peaksters at TOD like to imply the well will be dry by that point (in fact very much sooner) but it clearly is not the case.

On your first point of running out. Well, in the present environment that just isn't in the cards yet. The rate of URR growth is growing ... not shrinking. URR has been growing by 111-mbd since 1995. The critics at TOD just don't understand that 'cuz they been watching ASPO's stupid discovery graph for fifteen years. In the meantime, we've watched URR double itself.

It is said that URR gains 100-Gb for each $5 increase in oil prices. By that metric and the same critic's extraordinary claime of $100 oil shortly, that adds another 1000-Gb of URR on the shelf on top of the 2000-Gb there presently (less past usage).

The upper limit on resource growth (discoveries/1P/2P/3P) is determined by the economics of extraction and OIIP (7 to 15-Tb). The former drifts around 35%, indicating that the present 5-Tb URR's are not impossible tho maybe improbable.

These are the numbers that "world political and financial leaders" are pondering. CERA, the Agencies and most of the oilco's are endorsing cautiously those numbers.

When they look at the Peakster argument, it comes with a graph like mine that illustrates a 2-mbd/yr upward revision that is not waning in its growth rate. It is relatively easy to extrapolate that Campbell will be at 100-mbd five years from today.

Looking at the big picture, there may be a few Leaders that will invest in mitigation. Very few. It is more likely that many more will do it due to Climate Change mitigation reasons. There are far more voters and shareholders that will pressure Leaders to jump on the GW bandwagon than the PO toy wagon.

It's sexy to be green. It's suicidal to be a Peakster "out there" in the real world. Does one want to be embraced ... or branded as being part of the lunatic fringe?

Not followed the total energy debate yet - but I'm about to engage.

Total Energy = FF + Newk + Hydro + Food

Or am I missing something?

Looking at the big picture, there may be a few Leaders that will invest in mitigation.

See my comment somewhere down the thread about the UK.

"Or am I missing something?"

I'd add wind, solar, wave/tidal, geothermal, non-food biomass.

They are relative newcomers, and therefore not that large (wind at .8% of US electrical generation, 5.6% of Germany's), but growing very quickly (doubling every two years, roughly).

Renewable electricity, combined with electrification of transportation and home heating, really can replace most of oil's current uses. I would note that this doesn't mean that there might not be serious pain during the transition....

Nick - I get your point.

I was trying to focus on the bigger philisophical point which is:

1 * 1 = 1

Euan, there is an unspoken assumption in the proposed two propositions, which is that fossil fuel energy can't be replaced by renewable energy.

I think it is clear that this premise would be untrue. Alanfrombigeasy and I have developed possible scenarios for 100% renewable energy.

Nick, in the past I've spoken extensively to BigEasyAlan about this - my mind is not made up. I need more time myself to get the proper perspective. But I would admit to a degree of scepticisim.

Are your scenarios published anywhere - I don't read everything written on TOD.

I haven't published my scenarios anywhere besides TOD.

I envision a grid powered by a complementary mix of sources in roughly the following proportions: 40% wind, 30% solar, 15% hydro, 15% gasified biomass. Nuclear could be a significant %, though I don’t think it’s necessary. Other sources such as geothermal and wave/tidal are likely to be important, though they’re as yet unproven. I can give you the calculations for the wind & solar %'s, if you want.

An analysis of the feasibility of renewables might include scalability, E-ROI, cost, capital expense, infrastructure, convenience, reliability, storage and portability. I believe it’s established that wind and solar are scalable, and have good E-ROI. Would you agree?

The other measures are a long discussion, which I’d be happy to have if you tell me which areas you’re concerned about. In the meantime, here’s a quote from a source with credibility on TOD, Kenneth Deffeyes:

"there are plenty of energy sources other than fossil fuels. Running out of energy in the long run is not the problem. The bind comes during the next 10 years: getting over our dependence on crude oil."


Here's something posted by Heading Out

The Oil and Gas Journal give the following numbers for US Energy Demand in 2006

Oil 40.6 Quad
Gas 22.6 Quad
Coal 22.8 Quad
Nuclear 8.3 Quad
Hydro etc 6.5 Quad

So that works out at:

85.4% fossil solar
8.2% supernova
6.4% active solar

Hello Dave Cohen,

Great keypost--I will go to REDDIT shortly.

Here is how I imagined the CERA yellow brick roadshow going down:

All the top level execs half listening, sitting there nodding their heads in pleased agreement thinking, "that's good propaganda for the MSM to spew to the unwashed masses. I think I will send another cheque to CERA to keep up the good work for 2008 too."

But back in their hotel rooms at night: carefully studying TOD, ASPO, EB, LATOC, and Dieoff like Billionaire Richard Rainwater. Then checking with their real estate agent on comparative costs for a:

1. Prince & Gates Four Seasons Condo/luxo-bunker w/complimentary Blackwater Security and armored HumVee limo service.

2. Isolated, but heavily insulated, Eco-Tech Off-Grid PV Ranchette like Bush and Cheney. Comes with a full, two year food & water supply and Biosafety Level 4 Hazmat suits. Sorry, no top-notch Secret Service on this deal.

3. Time-share purchase of a private island like Virgin Atlantic's Branson with confirmed reservations on an escape yacht [like Oracle's Ellison or Microsoft's Allen] with sufficient size, speed, and fuel range to stay within the protective umbrella of a carrier battle fleet at flank speed. Helicopter shuttle service is included.

4. Pricey, but secure subterranean Walton Family Resort living. "Always high prices and high walls to keep the riff-raff out!" Complimentary golf training by Tiger Woods on surface golf course winding over the compound in the hills of Bentonville, Arkansas.

5. Dubai Detritovore Retreat: skyscraper apartment with A/C and electricity powered by natgas from their huge field. Convenient nighttime illumination and comfort long after most of the rest of the world is experiencing the natural darkness of Olduvai. Nightly energy fiestas in the skybars.

Like all the other multimillionaires or better--they prepare to take their bestshot.

Sarcastic humor/off

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

I don't find that sarcastic.
I find that realistic.

Hello JeffreyET,

Thxs for responding. That is what worries me too: I would prefer the rich and powerful leading the charge into the Paradigm Shift like Haym Solomon did back in the Revolutionary War:

I wonder when the high priests: moviestar Mel Gibson, the televangelists like Pat Robertson, and World's 3rd Richest man, Mexican Carlos Slim will pool their money to restart a chain of Mayan Apocalyptos.

If the Rapture never arrives postPeak: "yankin and Yergin" still beating hearts to hold up to the Sun is a proven way to keep the peasants under your control.

CERA Conferences in 2100?

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

Dave - the very fact that PO is being discussed in Houston is a triumph. The main threat as I see it is that Matt Simmons takes all the credit for saving the world.

Main news this week in the real world (east of Ireland, west of Urals) is that the UK government suffered a minor defeat in the courts at the hands of Greenpeace over a botched consultation on Nuclear Power. The government has come out all guns blazing (Blair and Alasdair Darling) but interestingly for me the emphasis of their argument has changed - CO2 is no longer top of the agenda! Top is UK oil and gas running out faster than expected (by who you may ask), UK energy security - and does the public want the lights to be on in 10 years time?

I was aked by the DTI (our equivalent of your EIA) to submit an article on UK oil production and forecasts for posting an a DTI web site. This was submitted about 3 weeks ago - and should appear next week. Blair and Darling could have been reading from my script - but now I'm drifting off into fantasy.

There is still a huge rift between European and US perceptions on Energy - Blair's failed attempt to get agreement this week was because his plans were not nearly radical enough for the Germans and were far too radical for the US - I believe. My bet is that before long PO and energy security will suplant CO2 as the main energy issue in Europe - where we are, as you know, more reluctant to seize energy supplies by force.

Thank you for the nice analysis. Do you have any thoughts on an Exploration Peak? Assume that there are numerous smaller fields that are difficult and expensive to reach. Also assume the dollar does not collapse. It seems that Exploration Risks vs Potential reward will continue increase. If (when) the much hyped Jack field is discarded as not commercially viable, how quick will the majors be to pump a couple more billion dollars into their next project? It would seem that soon the surest new finds will be on Wall Street through acquisitions. Regardless of how much oil really exists in the ground the increase risk with diminishing possible returns will dramatically reduce exploration drilling.

(QUOTE) "If Al-Qaeda hadn't bombed the World Trade Center, we wouldn't have invaded Iraq"

Hmmm... everyone except the White House Press Secretary and Faux News finds this a little more complicated that it seems...

IMO CERA et al are like the 38 year old that goes to the doctor who, looking at his longevity charts, tells him his life is half over. The 38 year can't believe it. Surely he will be one of those who live to be 100. He feels just fine. His earning power has never been higher. He hires and fires people. There is great demand for his product and some even say it is irreplaceable. It just can't be that life has peaked and the end is only 38 years away. That is just unacceptable. The doctor must be making it up. "His charts are lies" he tells himself. "I won't listen to this doctor anymore" he thinks. In fact, to show how healthy I am, I think I'll throw a party in Houston and invite the media, then everyone will know I haven't peaked.

Excellent comparison.

However, even if one grants a higher recovery factor, it still seems to be the case that most increased world production since the year 1996 —to pick a date— has come from either 1) new fields discovered sometime in the last 20 years or 2) additions to fields discovered further back in time — this is called reserves growth.

This comment is right on the target. If we take Skrebowski´s Mega-project list (which BTW is overdue for an update) there is an obvious dearth of new projects after 2010. As large new projects have typical lead times of 4-10 years I reckon the industry should come up soon with some new fields if they want to convince anyone.

To illustrate this I have skimmed a little through oil companies presentations on the search for new projects: This is the last corporate presentation (pdf warning) available on Exxonmobil´s website: On side 13 you can find a list of their forthcoming liquid projects in various stages of developement. Now compare these untapped reservoirs with this older publication back from 2005. On site 39 there is a comprehensive list of their major developement projects going on.

You may take notice that there were no additions in the meantime. On top of that, the project balance gets more and more lopsided towards gas, and a large chunk of new oil comes from deep-water projects with proposed peak production rates of >10% of EUR which accordingly in the next decade will decline as fast as they´re rising now. Looking after the other IOC, you virtually will reach the same conclusion as they all have interest in the same projects and very similar business strategies.

But of course there are those nasty treehuggers and moronic NOC sitting on umpteen Terabarrels of oil, aren´t they?

Good post.
The problem is a lack of new fields/projects. The same is true of most of opec, including all of the persian gulf, and not least SA... the fields avg age is 50 years, nearly all, and all of the older ones, are in decline, and there are NO NEW FIELDS. THe problem extends to NA, the north sea, russia, etc.

One of your best. Thanks to you and others for putting TOD up and keeping it going.

Best to your future,


Agreed. As a long-time lurker and only recently a poster, I truly appreciate all of your efforts to keep us informed with DATA.

I appreciate all the thoughtful comments on this thread — which were made, apparently, by people who actually read & understood what I wrote. I also don't need a chorus of people saying I am right. Thoughtful criticisms are always appreciated. I learn from those. If you agreed with me, though, congratulations! — you are truly blessed  

However, I do not like being insulted and attacked for my efforts. I find it even more disconcerting that people who I respect took the time to respond to the person who found it so important to assault me. Others simply found this thread yet another opportunity to spew venom and display their ignorance.

Being human — and therefore having some feelings and not being impervious to insult — I am actively re-evaluating whether I would like to subjected to be this kind of treatment in the future.

best to some of you --


Being human — and therefore having some feelings and not being impervious to insult — I am actively re-evaluating whether I would like to subjected to be this kind of treatment in the future.


I agree.

PG told me that I was welcome to submit guest posts, to which I responded, thanks but no thanks, at least until the troll problem is dealt with.

I told you guys last year that, IMO, the long term goal of the trolls was to drive people away from TOD. I think that the site was just getting to much attention. As it stands now, I would not dream of recommending TOD to anyone.

Re: As it stands now, I would not dream of recommending TOD to anyone

I'm afraid your view is widely shared. Since I desire that our message get out and — being human, again — I also desire for my own writing to be widely read, it would seem that I have a very serious situation on my hands, a situation which I did not want or ask for. I am sad. The editors & staff here are such great people — even if we have our disagreements from time to time. And, of course, PG, HO and Stuart gave me a forum to write in. I am always be grateful for that.

It's hard for me to see how TOD can avoid some kind of active moderation, and still achieve a fraction of it's possible influence. At this point I simply can't recommend TOD to anybody I know.

In order to fix this problem, personal attacks should simply not be allowed.

I think that Prof Goose feels very strongly about freedom of speech. I agree with him to a point: I wouldn't want to see any category of argument or idea suppressed, even when they are obviously without any kind of rational basis, simply because we should have a fully free "marketplace of ideas".

But, personal attacks should be out of bounds.

Why can't we have an ignore button, that also allows one to ignore all responses to those ignored? Those who want to talk to the trolls, and the trolls themselves, can talk as much as they want. ANd, why can't we have multiple threads, rather than a singel general purpose one, so that those interested in climate, or politics, or war, or whatever can talk about those things while those who want to talk about hydrocarbons without the distractions do that? Or, restrict comments to hydrocarbons... isn't this place called the OIL drum?

The ignore button wouldn't help newcomers.

Here are my suggestions:

User assisted moderation, as is done at Craig's list. Posts would be flagged by users for review by moderators.

Users would categorize their reason for flagging. A flag for "disruptive behavior" (abusive language, obscene language) or "commercial spam" would remove the post immediately for review. A flag for "off topic" (if desired by TOD editors) would require flagging from several users for temporary removal pending review.

Moderators would have automated tools for review of flagged posts, and would have the option to email the post back to the poster for editing and re-submission, or progressive discipline: 1 day suspension, 1 week suspension, or banning. Users who flag would get automated email feedback as to moderator action taken, to finetune their flagging.

What do you think?

OK, WT. I'll let you go on one condition. You have to keep up your commentary elsewhere and let us know where you are doing it. You and Khebab are a great team. His data crunching and your interpretation.

If you don't agree with this...well,'re stuck here...end of story. We will hunt you down and force your fingers onto that keyboard (jk).

It's been very frustrating to wade through the trolls, but I see some simmering of their rants as you guys (RR, Khebab, etc.) have pulled back your posts. I think the silent treatment is effective in pesticide management. Wait awhile and then test the waters again.

TOD will keep going's evolution baby!!!

Hello DragonFly - remember me? This post is directed at a number of comments written above - again you're in the wrong place at the wrong time - heading for extinction I guess?

Well here's an interesting chart

This is the TOD viewing figures for the last 12 months. It looks like viewing figures are set to rise by well over 100,000 / month (63%) from last February.

It seems like people like reading diverse opinions and polite, well reasoned arguments. Pretty boring to turn up and listen to a monolgue after all. And there may well be a multitude of reasons for ill founded perceptions on the posting and commenting habits of TOD regulars.

When you're perceived enemies start to insult you then you've won the argument.

Yeah, whatever. But, who is reading?

Your viewing figures are not "unique visits", which is all that counts in this internet business. No, they are page visits. But, why am I even bothering to write this ... later.

The viewing figures are visits, not page views (I thought I read somewhere that they are unique visits). Most people I guess who visit the site scan the lead article to get a gist of what is being said. The vast majority will never read or leave comments. Who they are - that would be interesting to find out - perhaps a project there for SuperG.

I just ran the Grease Monkey filter on this thread (eliminating three). It deleted 149 out of 241 posts.


Do you have a source for North Sea rig counts since 1999?

Figure 9. UK oil rig count from Baker Hughes. Since the oil price low of 1998, the number of oil rigs operating in the North Sea has been tracking sideways

Lifted from this rather excellent article titled "The forecasting record of CERA and other commentators" which the TOD readership awarded 2 reddit points - thank you so much who ever you are - if I could, I would take these 2 treasured points and put them in my trophy cabinet (a satirical quip).


On an annual basis, it does look like the UK rig count doubled from 1999 to 2002, and then started falling again, before the recent rebound.

I just found it interesting that the years after the Lower 48 and North Sea peaks corresponded to rising oil prices, and in the Lower 48 especially, a significant increase in the rig count. The only discernible result in both provinces was a reduction in the rate of decline.

As I have previously noted, the average Brent monthly spot price in the 20 months after 5/05 is about two-thirds higher than the average Brent monthly spot price in the 20 months prior to 5/05, while the cumulative shortfall, so far, between what the world would have produced at the 5/05 rate, and what we actually produced, is on the order of 320 million barrels (EIA, C+C) through November.

Kind of sounds like the Lower 48 and the North Sea, which I believe is the point that Deffeyes has been making.

Some crude + condensate HL numbers:

The Lower 48 peaked in 1970, between 50% and 52% of Qt, based on Khebab's plot;

The North Sea peaked in 1999, between 48% and 52% of Qt, based on my plot;

The world, In 2005, was between 48.6% and 50% of Qt, based on Deffeyes' plot.

Euan, the ad hominem attacks are just a small part of it. It inititiates the tit-for-tat exchanges. But crucial to TOD ever becoming respectable is its need by either moderation or peer pressure to disallow the gross attacks on institutions.

Often i am surprised in my pvt email with TOD lurkers from organizatons with interest in the Peak Oil discussion. But they are disgusted with the bombarding by the lunatic fringe (and now regular posters) where they sh*t on all Commerce Dept stats, EIA, IEA, Int'l Banks, most IOC's, the Federal Reserve, the usa President, Republicans, IMF, the UN, WTO, Tony Blair, the new Canadian Gov't, etc etc.

We have to listen to ad nauseum posts of economic collapse, fiat currency collapse, concentration camps for mexicans & of course the ultimate and imminent dieoff.

These posts only serve to inflame emotions and invite retorts.

There is no place for them at a specialized venue. And it is not like these folks don't have other soapboxes where they may air their deviant views.

Professionals who regularly soar with eagles will not come and stay and play with the ducks. While i luv the opportunity to the discuss current events, it doesn't have to be TOD. There are lotsa forums where this is welcome.

But at the least the attacks on posters and institutions must stop as a first step. We don't even attempt to block this with a list of forum rules of etiquette. If we had one, it would inspire some peer pressure on offenders. Three levels of discipline could be imposed on constant offenders as evidenced by those member challenges and lack of restraint.

ExxonMobil is not the enemy. CERA is not the enemy. These and other firms employ good and dedicated folks. They should not have to watch their executives get continually trashed at TOD. Dave and/or certain others at TOD seem to bathe in glee at painting institutions and personalities as the dark side.

It is not helpful to the debate nor outreach. And i don't really care if he doesn't like my asking him/them to halt. I am not American yet the practice
offends me greatly. He/they do not seem to understand that and they take joy in pursuing those attacks on a regular basis.

If i can make peace with Samsam, surely others can offer similar sprigs of olive branches by curbing that which is bound to heat emotions. And we can agree to disagree on arguments that find no end.

Re: Dave and/or certain others at TOD seem to bathe in glee at painting institutions and personalities as the dark side

I can see that you were banned and it didn't stick. I can see that you will continue to attack my character. I can see that it is completely pointless for me to make serious analyses of the world's oil situation on this website.

Good night.

Dave, u can analyse the world's oil situation w/o making it personal:

"Until Chevron's Watson or Cobalt's Bryant or organizations like CERA start dealing with reality — and leveling with the public — instead of engaging in wishful thinking or complaining about things they have no control over, we will have to listen endlessly to this empty discourse while doing nothing to mitigate the effects on world economies of a peak & decline of available oil supply, regardless of its causes."

It was u that chose the title of this essay and it was u that chose to do time it with an attempt to embarrass CERA during their Houston event. Was CERA's Peak Oil press release timed to coincide with ASPO-5?

Your analysis can sink or swim on its merits. Your posts at TOD don't need ad hominems against oil industry executives to be complete. I just ask that u show some leadership and example for others here.

I have never been banned from TOD. But if it happens tonite, it would say much more about TOD agenda than it does about my opinions. I know my graphs and research displease many here. But there is a reason why my site has visitors & links from 88 nations and only 22 come to TOD. I am willing to show both sides of an issue...


Oh, sorry. I misphrased that. What I actually meant was


but, don't worry about it — soon, you won't have me to kick around (freely on this website) anymore.


Houston, we have a problem...

(he had that coming)

My sugestion. Limit posting to the select few you guys choose. I agree with Prof G. and freedom of speech so here is a compromise - Ban all non selected posters (including myself) but allow some way for questions to be asked and answered from "outsiders". Questions could be shown with replys so "debate" could still be there.

I think TOD main articles are very interesting and the core "oil guys" informative (freddy excluded). I have learned much, but I suspect your site is under multi-format attack by TPTB (You are rocking a 50 billion dollar boat!) and a lonely fruitcake.

I appreciate all that goes into this by you guys. IMHO the message is important.

I wish you guys the best,


You lost me months ago at "Scumbags All," your eloquent description for Matthew Simmons and Kenneth Deffeyes.

Jeffrey Brown

Not only should Freddy be banned, but his more insulting posts should be expunged.

I saw that done recently on an economics blog and it seemed quite effective.

That is the thing that must have eaten Freddy. He talks of a maturing process, well when he came at the other end of that thing he's never been the same.

Hi Euan,

Seriously, there are two plausible reasons why TOD readership has fallen. The oil price has run down a lot recently and I would expect to see some correlation between price movements and TOD readership. The oil patch is pretty quiet right now. The big stuff is the politics of oil and Iraq which is being covered by the MSM.

The other is the Troll problem. Pulling your picture would help ;-)


Alan - I think you mis-read the chart and my point. The Feb 07 figures are for 16 days - and already almost match Feb 06. The trend is quite strongly up. Fortunately I don't think the majority of readers will make it this far down a thread to be put off by what is written down here.

Euan, I stand corrected. I originally thought you were referring to the drop off in Feb this year being caused by off putting posts. I agree that the chart is up strongly on a 12 month basis which is good for TOD. I hope the editors can capitalize on it. This is absolutely the best place to home in on the truth about oil.

Thanks for your contributions as well.

WT don't let them win. These guys are:
1.paid to attack everyone with credibility on this site or
2. pathologically argumentative.
Either way there is no emotion in it for them.
Don't let them get to you.

Every time the price of oil goes up a little I have noticed their
frequency of posting goes up. I have noticed them to be a little more
active this afternoon because:
1. the meeting is over in Houston so they have more time to post
2. the got a raise at said meeting or
3. both 1 and 2.

An earlier poster said the last remaining oilstrikes will be on Wall St via corporate mergers. What are the energy implications of a GM-Chrysler merger?,23636,21240764-31037,00.html
It seems to me this is Powerdown. Fewer models, smaller cars, less manufacturing overhead.

The US market is mostly just shifting to Asian manufacturers, much of which is assembled in the US.

Some of what we are seeing is similar to Walmart, and Southwest Air: a shift from union to non-union labor.

Sadly, the Asian model lineup isn't a lot more efficient than Detroit's. It won't be until gas prices or regulation force the issue. In that regard, please note that Detroit sells many 40+ MPG models, just not in the US....

I don't think it is accurate to attribute this potential merger to Powerdown. Instead it is a reflection of globalization's undermining of the middle class manufacturing portion of the US economy. The big three are still stuck in the preglobalized paradigm, and saddled with union wages, retirement responsibilities and healthcare.

It does have implications for the future. If a country can't compete in manufacturing and exports, they will have a more difficult time competing economically for energy resources.

Hello Dave,

Please don't stop posting. We need all the TopTODers we can get. Take care.

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

Please don't stop posting. Lot's of us really appreciate the postings of the top TOD'ers. I check every day for new posts by you guys. I browse the news, but I READ your posts. Many, many thanks!

Good evening

I have been watching this website for the past 9 months, and copying a lot of the valuable posts into Word Format, particularly those initiated by Stuart, Kebab, and Professor Goose - apologies to the professionals that I have overlooked.
This is my first ever comment, because I do not speak or write unless I have really something to say.
I am a geologist running a Canadian junior, listed on TSX, with operations "outside of Canada" - I really am an an "oil patch CEO', and I'm involved in exploration, the real stuff, by people with oil in their minds (some of you may recognise that Wally Pratt quote) and coloured pencils in their hair, the sort of peole that were killed off in 1986.
This website is watched by industry professionals and analysts, more than you realise. In fact I challenged one of the industry analysts who follows my company to deny he was Mr. X who posts regularly on this site.
There is a lot of regular and valuable analysis published here. It is a high value website, pace Dave Cohen's recent remarks.
But there has also been a lot of frankly ignorant posts, called trolling, over the last little while.
If the trolls do not shut up, and they know who they are, then they should be run off the website and not allowed back under any circumstances, pseudonyms or otherwise.
The website needs to be run in a similar manner to Realclimate. I suggest the moderators visit it.
I do not have the time to waste wading through the verbage and garbage of Freddy Nutter et al. Yes, Freddy, this is an ad hominem attack on you, and you thoroughly deserve it. If you can dish it out to the people who add value to this site, then you must be prepared to take it.
I have only been in the patch since 1973, and I may just know a little more, and have done a little more, and may be a little more historically aware than you (Freddy and Hothgor).
I have a greater need than you for unbiased and up-to-date-statistical information and analysis that is not available elsewhere.
And that, I hope, is the last that you will need to hear from me for a while (until I have finished my next financing).
Yours very sincerely,
"Harry Flashman", P.Geol., B,Sc, M.Sc. M.B.A. Ph.D - incomplete, and a member of AAPG, CSPG, CWLS, and APEGGA

Thank you.

I took a break from reading for a while and now that back I'm disappointed that the same trolls are still hogging the bandwidth. The way I see it The Oil Drum is an incredible resource for those in the general public (like me) who are interested in energy issues. The exchange of ideas and idle banter is an integral part of that resource. I know that this whole subject was discussed ad naseum a couple of months ago, but here is my re-re-take:

The most effective way of dealing with trolls is to ignore them. However...

Telling people not to engage them isn't going to work because (1) we as humans respond emotionally whether we want to or not and (2) it only takes one response to get the whole ball rolling. The trolls can ALWAYS find someone to respond to them. And once the ball gets rolling we get subtrees ten nodes deep with nothing but arguments.

I believe that the most effective way of dealing with the situation will be to provide a facility for a registered user to "ignore" any poster that he or she wishes. Once that poster is ignored, subtrees started by that poster will not appear in any of the comments throughout the entire site. A notification that a post was blocked would be very tempting indeed, so there should be NO indication whatsoever that the post or any of its children were ever made.

I sincerly believe that this is the best solution and will try my best to annoy you all about it anytime this issue comes up.

Great article by the way.

I agree with this approach and it would be the best solution. I would not think that you would try to stifle anyone who would like to post as those that have been lurking or are new provide some excellent insight, such as Harry's. I do not mind wading through the chaff as it allows, for me at least, the ability to see how people respond to the peak oil arguments. In addition the people that are presenting the data may not be the right people to propose the changes that need to be made. The people showing up may be able to use this site as a forum to figure out how to move forward in getting out the word and work on solutions.

I am using this site as a foundation to present the information to diverse groups of people for instance I sent an email to the Montgomery County Commissioners (Dayton, Ohio) concerning energy and environment. I did not make any reference to peak oil, but I did get a meeting arranged to discuss energy, environment and development issues. (I am going to use the Dynamic Cities powerpoint information for the discussion). I am hoping to get the Commissioners to embrace the ELP concept posited by WT in away that can avoid the peak oil argument but prepare for the future. I am hoping to get Dayton to at least identify those local assets that would be valuable to save in a post peak environment. If the proposal is worded correctly I think the County could use Homeland Defense Dollars to put together an action plan that identifies the local food, energy and production resources that could be called upon in the time of crisis. (Typical Scenario in Plan – Terrorists disrupt fuel supplies and Dayton has move food from rail spur to electric trolley lines to re supply local populace and designated grocery stores) The planning would involve discussing the issue with these businesses in the guise of a terrorist attack, but this same plan could be implemented as peak oil becomes a reality. I can see that this type of planning could be proposed at all levels of government and the Presidents new executive order on environment, energy and transportation could also be a wedge for more of the marketing and planning for peak oil. To rip off another poster here he stated that as a consultant he was not paid to plan for avoiding disaster, he was paid to implement a plan after the disaster happened. I think we can start making these plans now, have discussions with key post peak industries now and finance it with Homeland Defense Dollars. There has to be people like me in every major town in America, think global, act local. (Caveat – I live in the same town as Megan Quinn of Community Solutions, but I could not get the Environment Committee of the Dayton Chamber of Commerce to invite her as a guest and I have been trying since 2004! Oy!)

For others I do not recommend this site, but I introduce people to it by linking to certain comments by email and again I think the depth of the site allows for different introductions. The problem with turning off all of the comments or its limitation is that you will miss a classic post like this one. For some people this is the ideal way to introduce the site. For others a different approach has to be employed.

When I go to bible study I introduce the topic of peak oil indirectly by continuing to emphasize God’s mandate to man to ensure that all species should multiply and bear fruit, not just humans. In addition I chastise the Christians for embracing the Way of Cain and that Oil is the strength of the Earth that was denied Cain. I am not well liked at Church and at The Oil Drum one is not well liked for bringing up religion. Here again is it trollish to discuss the topic of religion? Yes, but if you get a preacher or a priest to get on the topic, it can have a great deal of impact.

TOD has recently lost Airdale and the internet has lost Billmon (a huge loss IMO), we cannot afford to lose anymore good ones. Please stay.

I couldn't agree more. What is extremely distasteful about Hutter is his personal attacks on Matt Simmons, Colin Campbell and Ali Samsam Bakhtiari which he has made from time to time on this forum.
I have met all three gentlemen and they are some of the nicest people you could wish to meet and have long experience in the energy industry. I think his ravings are the wanderings of a diseased mind

harry, what company is that ? or alternately, what areas do you operate in (i can probably figure it out)


Well said and thank you for validating this site for those of us who are not in the oil patch but are very concerned about our energy future.

I posted a few months ago that I don't need to be allowed to post anymore. I am not an oil guy and can only contribute logical analysis and maybe some pertinant content on Global Warming. It was fun in the beginning posing questions so that I could get answers but now I am looking for new data, not personal attacks. I would gladly give up posting rights to read thoughtful discussion and analysis of production numbers, technology issues, and the like.

The Oil Drum should be a privilege, not a right. PG, HO, Leanan, Yankee (where have you been by the way), please refocus the content on Peak oil analysis.

Free up the space here for those people who will do that consistantly. It is not imperative that discussions always have all sides represented. The non-peak oil side gets air time elsewhere.

I also disagree that number of visits (or postings) is a good way to determine if the site is fulfilling its mission. How that's tracked is irrelevant. We have discussed this before. A small number of influential people (like Harry) reading this site can have much more impact on the world than thousands of people not truely searching for answers (like Hothgar, to name one) clogging up the thought strings.

TOD editors please refocus the content before you lose your critical mass of qualified contributers.

Thanks for letting me be a part of this but I'll lurk for awhile and see how things shake out.

"I would gladly give up posting rights to read thoughtful discussion and analysis of production numbers, technology issues, and the like."

Me too!
just get rid of Hothgor, freddy, dmathews and anyone else you think should go.

Me too. Given the choice between only being able to read and losing TOD, I choose only being able to read.

I don't have any problem with Freddy's posts though. He has his views and he backs them up with numbers. Up to me to decide what to do with them. Tempers flare and he gets his fair share of nasty attacks from people who don't like his analysis.

No matter what their views, there are a lot of people who do actual work to provide us with valuable information, right, wrong, or in between. Those of us who are just tagging along reading really don't have any business shouting down these views. They are presented for our information at personal cost of time and effort and I am extremely grateful.

The reality is, we are dealing with complex issues. When energy is mixed in with politics and economics the picture is foggy at best. My "work" is to read extensively across a number of fields to form the best picture I can. I don't expect TOD to get it exactly "right" and it unreasonable to do so. Even information that I think may not be entirely correct is more information than I had before and it is up to me to fit it into my picture. At least it gives me something to think about.

To the regular TOD expert contributors I say thank you!!! Most people just lurk, few post. For every negative response rest assured there are a thousand grateful readers. Keep your chins up and your skins thick. TOD is a gem.

Thanks for your post. I agree 100%. I am not in the oil industry, but I have a deep interest in energy issues and "peak oil." I visit the site nearly every day and have been for the past 20 months. Let's keep it going with the same quality. And let's simply ignore those who can't seem to post without personal insults. There is no need to respond to them. I read the quality posts and bypass the known trolls. Again, let's keep the quality posts going. God knows, the world needs it.

So, CERA has finally realized they have been describing the best possible of all possible worlds, one in which all the capital in the world can get at all the remaining oil without any 'above ground' obstacles (like Putin). Welcome to the real world CERA.

I have a conspiracy theory. Bush and his rich cronies know that oil is on the decline. The uber rich are already divesting into other economies, such as the $1B that Cheney diverted out of the good ole USofA into Europe and China. The Feds under Bernanke are manipulating the markets now that the M3 money supply is no longer published. The markets are being raided and subsequently propped up by the treasury, and is getting ready for ... something. My commodities broker friend is worried about the stability of the system and believes a correction is due in March; something akin to "Black Friday". The uber rich are hanging out because $32T are traded on the derivatives markets.

Now I believe that oil will become a problem as early as May because it has been 2 years in May since world oil production peaked. People talk about the Dotcoms debacle, but they know very little about why it happened. My 2 cents is as follows. In 1999, the North Sea oil production peaked, and by 2001, two years later, it became apparent to all the big money that this was not an anomaly. Judging that future growth would be effected by a limit in this oil they withdrew their money from venture capital and the dotcoms without funding collapsed along with most of high tech. They worried that with declining oil even in just the North Sea, that the long term risks of lending money with questionable returns were too great.

In 2001, Cheney with a handfull of the energy people and others crafted the 911 travesty with the idea of starting a "War on Terror"; an undefinable enemy that gives the President a free hand to invade oil rich countries that also happen to be terrorists. So far we have suceeded by gaining a presence in Afghanistan and Iraq even though there has been great loss of life, but these people don't matter to the uber rich; we don't count them.

Now high prices of oil excluded some third world nations, but it hasn't been enough. The glut of oil is temporary, and in fact lower prices are tempting countries to increase their oil useage. The US only has 2% of the world's oil reserves and we are consuming them at an inordinate rate. At the same time we import 17% of the world's oil production. Without an increasing supply of oil, capitalism which runs on interest will falter. Sometime this year, the majors will (like climate change) have to view the disaster that peak oil presents to the economic system in the US. The view is likely to be catastrophic.

So if faced with a catostrophic economic view, what will the uber rich do? Will they let the process unwind and take their lumps on the derivative markets, or will they take preemptive action? Will striking Iran with its ensuing chaos be better than letting the market realization unfold. In the latter, they may lose big-time; the market grokking the enormity of the problem entrench and withdraw their money. In the former, the uber rich can claim that politics has caused the shortage, and hopefully have even more time to rape this country before the fall. I think Bush will have a Tonkin accident in the gulf once he has three aircrafts in the region and we will strike Iran. It will happen after the next "Black Friday", but before the market can sense the direction of the market winds. We will see a market collapse in March, and we will strike Iran in April on false pretense as usual. If things go badly in the US, the uber rich have already hedged their bets in other economies and to hell with the rest of us; we don't count.

Hi BaSE,

Conspiracy theories aren't necessary. The 'sixties kids are doing their exit strategy, those of them that can.

It's much more likely that Cheney and Bush understand oil than they don't. Cheney's speeches before he became VP indicate he does. It was fine holding Iraq's undeveloped fields in reserve in the 90's because there was lots of spare capacity. When they became needed there was a problem because Saddam had an ABA (Anyone But America) oil policy. Mightily pissed off with Uncle Sam, he signed contracts with the French and Russians to develop oil fields once the sanctions were lifted. The sanctions needed to be lifted so Saddam had to go. That was W's 'victory'.

As for your comments on the markets, I agree. All fear has now gone from the equity markets which is a bad sign. Years that end with 7 are amongst the worst for equities. The 20th anniversary of the 1987 crash is this year. The press will pick up on that. Everyone is leveraged to the hilt any beyond.

In China, people are now buying equities on credit cards and are re-mortgaging their property to pile in to the market. There is more fear of losing out rather than plain losing - another sign of a top.

Definitely an accident waiting to happen. Your friend could be right about March but I feel that's a bit early. Sell in May and go away and stay out of the markets until December at least.

Will it really be possible to "..stay out of the markets..." and the effects of the "markets" in this globilized economy if there are a new crash?

I was homing in October as the bad month. It often has been in the past.

And when this wild theory does not come to pass? What will be the reasoning? Let me guess:

Blame the super rich.

Pelosi seems determined to save us from the right wing treasonous travesty. It remains to be seen if she is able to curb a president who is "King for a day".

On reading the posts above, I've pulled me own comments addressed to Hothgor and won't engage him.

In a country where each individual is about to choose sides, it is important to know who your friends are. I wouldn't want you to compromise your values just because you and I see some things eye to eye. Hothgor is really your friend, and you didn't even know it until we had this little discussion.

Dotcoms - I have said aloud that the reason dotcom's failed so much is that it is still esentially mail order with an electronic catalogue. They took market share by selling at a loss and suffered or colapsed.
In my industry mail order prices are 3x wholsale, retail(in store)2x.
Dotcoms were selling below retail and I guess it wasn't meant to be.

I remember this time somewhat. We were booming. Everyday was better than the last, when this one fellow from Bank of America cast a gloomy view on the future. At first there was shock and denial from the other finacials, but in a very short time, the rest of the financials fell in line. Various technical stocks such as Microsoft and Intel plumeted over the next few weeks. These were not mail order companies. The dotCOMs may be as you say, but they were still thriving as were Intel and Microsoft, until that fellow from BofA pronounced their doom. Things unravelled quickly from that point. Intel had experienced a decade or more of exponential growth, which of course couldn't continue if future oil was in question.