Peak Oil Media: Simmons Says Raised Saudi Oil Output Is 'Drop in Bucket' on Bloomberg

(The Simmons video is 7 mins). Anyone have a link to T. Boone's comments (or other peak oil media) this week? If so, put it in the comments.

What is the cut-off point for a 'drop in the proverbial bucket'? 100,000 bpd? 200,000 bpd? 500,000 bpd? Can we call production declines in Mexico and Russia a 'drop in the bucket' when taken in context of the global oil supply? At what point does a drop in the bucket become a leaky faucet? At what point does a leaky faucet flood the house? Its funny how the street never seems to run both ways...

200,000 is a mere 0.23% of the daily "production" of 88,000,000 barrels.

That's just a drop in the bucket, nothing significant at all.

Its funny how the street never seems to run both ways...

The situation is not symmetrical. Post peak, production declines are permanent. Whereas, any increase in production is temporary and unsustainable when you are dealing with mature regions of the world that have been producing oil for many decades.
Secondly, demand generally rises with population and economic growth. So any decline in production in the face of rising demand is always serious. Any increase in production however may not be of much help unless exports increase at the same rate as demand.

A couple of questions for you:

Global exports have been declining at an accelerated rate since 2005.
Do you agree or disagree?
Global exports are unlikely to increase in the future.
Do you agree or disagree?

Global exports have been declining at an accelerated rate since 2005. Do you agree or disagree?

Agreed. Rising consumption and stagnant/slowing rising production ensure that it does.

Global exports are unlikely to increase in the future. Do you agree or disagree?

Disagree. And for THREE reasons! First, and we are already seeing this trend, consumption is being subsidized in numerous countries (even the United States of America). An elimination of subsidies will result in a decrease in consumption in many countries. That would boost exports. Second, production globally IS rising whether you like it or not! If production increases faster than consumption at any point, exports must rise. Lastly, the increased price pressure will force people to use oil more efficiently, resulting in lower consumption of oil. Even with stagnant oil production, a decrease in consumption over all will lead to an increase in exports, lowering prices until they are balanced again.

These are simplified answers, obviously. I could go into much greater detail if asked the right questions :)

Oh no..not another one.

I'm certain you can do better than that! Perhaps you would like to invoke Jevons Paradox for the remainder of this discussion?

Its just Hothgar again.

I think there is a real possibility that this site might shortly be swamped by the uninformed angry motorists looking for scapegoats and someone to lynch. Some will make simple minded conclusions without bothering to research all the materials and collected knowledge here and some will actually stop, take a deep breath and learn the real reasons behind the high oil prices. I find both the assumptions and the reactions from more seasoned TODérs very interesting.

Uh, dude, cutting off subsidies in importing countries will not increase exports. If the price in China rises to world rates, they will buy less, lowering their imports. Evey barrel that isn't imported is a barrel that isn't exported.

I buy a meet in the middle thing where prices and imports (which by definition equal exports) both go down, but that is not what you said.

It's this whole math thing. Not a strong point of East Texas or anywhere else in Dixie.Jesusland

If the price in China rises to world rates, they will buy less, lowering their imports. Evey barrel that isn't imported is a barrel that isn't exported.

If the price in China were to rise to world rates, we would see an immediate effect in that a good portion of their population would cut back on oil consumption. Remember, China produces oil too! The greater the percentage of oil their domestic production satisfies, the more 'oil' that is added to the global economy. Only an ill-informed person would suggest that a drop in oil consumption in a country that produces oil would not increase global oil exports!

ELM in reverse.

God, I think you actually got dumber in your absence.

Only an ill-informed person would suggest that a drop in oil consumption in a country that produces oil would not increase global oil exports!

China is a net importer. They do produce oil, but use a lot more than they produce, hence net importer.

If China imports less, it does not increase the amount other nations export. How in the world could it?

It might free up some of those exports for other countries, but that's not what you wrote.

Net exports depend entirely on countries that export oil.

Since oil is fungible and you figured out what he meant, it seems you're agreeing with each other.

I'm not agreeing with him, I'm correcting him

Note how this got started

Global exports are unlikely to increase in the future. Do you agree or disagree?


Oh, oil exports probably will increase at some point in the future.

It will be a relative increase and a temporary one, but it is almost a certainty that it will happen sometime.

It's almost a certainty, but not an actual certainty.

It is a certainty that export levels will drop over time, without recovering.

I will do my best to explain this to you in a rational, logical method that even you can follow. As we call agree, oil is a fungible product.

Lets look at a facsimile of real world oil production:

Global oil production 86 million barrels per day.
Global oil exports are 38 million barrels per day.

Lets look at the hypothetical country X.

Country X produces 3 million barrels of oil internally.
Country X consumes 2 million barrels per day.
Country X exports 1 million barrels per day.

Following me so far?

Country X subsidizes fuel prices, making them one half the global average.
Country X ends subsidies and its citizens must then pay the world price.
Country X citizens cut back on consumption, and now only use 1.5 million barrels per day.
Country X now exports 1.5 million barrels per day.

Still with me? What does this do to our global oil picture?

Global oil production 86 million barrels per day.
Global oil exports are 38.5 million barrels per day.

That gives us 500,000 barrels per day 'extra' oil on the world market in the form of exports. If that isn't an example of the ELM in reverse, I do not know what is.

And when some oil-exporting country actually does cut subsidies, let us know.

You said China could increase net exports.

Remember, China produces oil too! The greater the percentage of oil their domestic production satisfies, the more 'oil' that is added to the global economy. Only an ill-informed person would suggest that a drop in oil consumption in a country that produces oil would not increase global oil exports!

But now its "Country X".

Can't you just admit you were wrong?

this is barely related to your original point, your argument was that China (net importer) could increase world exports by decreasing consumption.

Your argument above is about an net exporting country cutting consumption, that's not happening, Most of the large exporters have subsidies still (and are very unlikely to stop them, it would be silly to).

Even if what you said were true, it's not even applicable to this argument...nice try though...

If you knew what the ELM was you'd know it doesn't go in reverse...

If you understood what a reduction in consumption does to a oil exporting nation, you would know that ELM can go in reverse :P

Seems reasonable to me:)

We reversed Iraq's export trend.

Next up, we'll try to reverse Iran's export trend also.

In theory, a nation can strangle it's own economy in order keep exports high. but I know of no case where a nation sacrificed itself voluntarily.

Nigeria for instance has kept internal consumption low, at the behest of the oil industry and actions taken by mercenary forces. This has not been done in Nigeria's interest.

Pigs can theoretically evolve into flying mammals. But the probability that it will occur in my lifetime is so remote, I'd never consider putting money on it.

The net trend will not break it's 2005 peak, no way in hell, but why not in Cornicopian fantasy land. Look there is not going to be a reverse in consumption in Saudi and friends because the high price of oil drives a lot of economic growth in Saudi and elsewhere, If you knew anything about the ELM, it accelerates due to this.

Well, demand destruction is happening now. But so far we have no major relaxation of tension between supply and demand. The IEA is predicting an 800,000 bpd increase over 2007. That said, we do have downward revision month on month, so it seems we are well into demand destruction land.

If oil countries were to cut domestic demand in the face of demand destruction abroad, the net result may well be a glut in oil and falling prices. If oil countries were to bias their position so that they were able to, as whole, keep oil off the markets and result in net export decline, the result might still be levitated prices in the face of demand destruction. At this point, you have oil price racing against reduced demand + innovation. The question is, how fast can demand destruction + innovation run? And we really just don't know the answer.

Now we may see artificial cases of reverse ELM in the event that countries are leaned on diplomatically to control their internal consumption. That said, as in Indonesia, this sort of thing would increase internal tensions and unrest over fuel costs would be likely to emerge.

I don't think a reverse ELM is likely to take hold until a net loss in oil revenue began to emerge. At that point a country, as in the case of Indonesia, would have to choose between economic growth and assuaging its populace with low fuel prices. But with prices so high at the moment and a long way to go before places like Saudi Arabia cut significantly into exports, I think ELM will rule so long as demand outpaces supply or we have shortages.

One other point, you may want to look at Iran as a case study for reverse ELM. Iran recently rationed fuel in order to control growing domestic demand. My thought is they did this to protect export revenue.


The question is about likelihood not remote possibility.

Your first and third reasons are essentially tied together and based on the fantasy that the US (and OECD) would like for oil producers to make decisions in the best interests of the consumers. Personally IF I were an oil producer who could see the end in sight I would be increasing subsidies in an attempt to build a stronger non-oil export dependent economy as soon as possible in the hopes that someday I would still have an economy. I would hope that companies from around the world relocate to my country to strengthen my economy. I wouldn't see why the people of my country that are gracious enough to export their oil should have to pay global market price when they have the opportunity of obtaining what the US did through exploiting Texas (et al). They need the money too but probably one reason they do export is threat of military force by the US. Hence, basing your hopes on elimination of subsidies is at best fantasy. Reason #3 reduces to #1 because you say overall consumption reduction but if subsidized consumption remains or grows then the balance of consumption is only import consumption and that seems pretty unlikely to reduce exports. It may reduce price pressure but I see little hope that it would soon cause export reduction.

Reason #2 is silly. Any remaining growth in production now is meagre as a percentage. Yes, if production rises faster than consumption then blah blah, ya. See my first point about the question being about likelihood not remote possibility.

Second, production globally IS rising whether you like it or not!

I am not sure why you feel the need to pretend you are conversing with people who somehow desire oil production to fall. Since falling oil production would most likely lead to a collapse in civilization it makes no sense to assume that anyone outside of a small group of elites (ie Bilderbergers, Illuminati, etc) would want oil production to fall. So the question is .... who do you think you're talking to?

But the real question is not whether oil production is rising, but whether or not it is rising fast enough to sustain the global economy. The growth rate in oil production over the past 5 years is only about 0.4% annually, even despite the huge price increases. That is only 1/4 of the rate required.

Said by suyog:

Global exports have been declining at an accelerated rate since 2005.
Global exports are unlikely to increase in the future.

Because I have not been able to locate complete data on crude oil exports after searching for several months, I am not certain. Net Oil Exports: May 2008 Update only graphs the top 20 producers which constitute 93% of total exports. The error in the graph is around 3 Mb/d which overwhelms the detail. I see a 1.5 Mb/d increase last fall and into last winter. The production capacity of some of the exporters is something of a mystery. The global production of crude oil in February 2008 of 74.66 Mb/d exceeded the old record in 2005. All of these variables make it difficult to have confidence that we are past peak in either global production or exports. I get the impression that we are still undulating around a plateau. The main difference between regional and global peak oil is that price skyrockets at the global peak which may spur greater efforts to recover oil. I am not sure which will dominate over the next few years but suspect that we will have an extended peak. I believe Matt Simmons said that one can not positively identify the peak until 5 years after it.

I believe Matt Simmons said that one can not positively identify the peak until 5 years after it.

And I don't believe Matt Simmons ever made such a statement. He did say something to the effect that the peak may not be detected until it is in the rear view mirror but I don't think he ever said anything about five years.

We have been on an undulating plateau for three years and non-OPEC has been on a plateau for four and one half years. However non-OPEC production is down in 2008 about half a million barrels per day from its February 2007 peak. And if the IEA is correct, April non-OPEC will be down about one mb/d from that. And the IEA has world production recovering 490 kb/d in May but 395 kb/d of that comes from OPEC. That means non-OPEC remains down.

The rise however comes after extensive downward revisions to 1Q08 non-OPEC production and lower biofuels and NGLs for the rest of this year.

Ever the optimist they predict non-OPEC production will recover later in the year. I am predicting it will not. Non-OPEC production fell off that over four plateau in April 2008 and it's all downhill from here.

Ron Patterson

See this is where I can not agree with the general prognosis of future global oil production. I sit here, day after day, listening to WT and others talk about how there is no major oil fields left to be found. That all the biggest and most promising basins have been found, and that we have effectively found and used half of the oil that we will ever use yesterday.

Then there are people, perhaps yourself, that agree with this assessment, yet throw out ridiculous statements such as 'I am not sure which will dominate [decline or higher prices for increased recovery].' Do you not know? Did you not follow one line of thought to its relentless conclusion? If we ARE on the downward spiral, NO price point will lead to an increase in oil production. The 'law of receding horizons' is RELENTLESS in this regard, and ensure that only the decline rate can be influenced.

No, I prescribe to an entirely different outlook on where the world will be headed.

* There will be an elimination of fuel subsidies, starting FIRST with the countries that import the most oil, and last with the countries that export the most oil. We are already seeing this in the US ($1 to $4 gallon gas) and in some Asian countries (an end to fuel subsidies).

* There will be a push for increased biofuel production at great cost a number of less fortunate human beings. Again, already taking place.

* Poor ERoEI will eventually necessitate a shift from ICE powered transportation towards PHEVs. What are the major automotive companies ALREADY working on?

* Eventually, the price point will be so high and goods so expensive that governments will have to intervene and start a massive push towards mass transit. Europe is ahead of the game, and the US Congress recently approved more Amtrak funding. Additionally, several billionaires such as Warren Buffet are investing heavily in Rail.

* As consumption crashes but the world itself does not, the wealthy elite will start driving purely Electric Powered vehicles. Tesla Roadster anyone?

* A collapse in oil price will lead to a collapse in the prices of other commodities. Its a whole new ballgame at this point, assuming we haven't blown ourselves up! Unfortunately, I would imagine a large portion of the human population will be living in poverty or have died due to starvation at this point.

Is that an end of the world scenario? Hardly. The only question is how fast the economy will react to the price points and how hard the fall will be. Doomerbate to the untold horrors all you want. Nothing is preventing us from muddling through this issue over the next 30-40 years while demographics take care of the global population issue. I'm not losing much sleep over this issue as things seem to be unfolding rather nicely.

I would imagine a large portion of the human population will be living in poverty or have died due to starvation at this point.

...Nothing is preventing us from muddling through this issue over the next 30-40 years while demographics take care of the global population issue. I'm not losing much sleep over this issue as things seem to be unfolding rather nicely.

Nice to see you be so clear.

And he calls us doomers...

I guess it's not doom if it happens to somebody else.

If I'm not that somebody else, I am surrounded by them! Everyday that I go out on to the streets and see very poor, young girls with babies I think, "what happens when they get priced out of the market for food and energy". I live in a country where the gap between the rich and the poor is as large as in any other country but, the poverty is obvious and it is every where. There are very few rich or even middle class people that do not have to drive past pockets of extreme poverty on their way home from work. It's going to be ugly because these pockets of poverty are the first to erupt into protest when they see a reason to.

Our friend Brandon might think that, the folks at the bottom of the food chain are just going to quietly find a nice little corner where they can starve to death without bothering him. Good Luck!

Here's hoping for a peaceful die off!

Alan from the islands

You skip by this argument and that is global society will look pretty much the same with fewer people. Of the crash scenarios what decrease in population do you find likely? 50%? 80%?

With the depopulated and pretty much "on your own" aftermath, just how and who is going to produce and maintian those PHEV's? You? Or how about those other technologies that we rely upon that so few people know much less understand how to operate and maintain?

Sounds like you really are a doomer (you think a large number of people will end up in poverty or die of starvation).
The only difference I guess is that you think it is not a big deal because you are assured of your personal survival.

Let me guess, you vote Republican?

Can't take it anymore. You rail at the "doomers", yet, as noted by others before me, you provide a pretty doom-filled scenario. Your "Let them eat cake" moment says all needs be said. You're a hypocrite and an ass.

I think that within the context of the interview, to be more than a drop in the bucket a production increase (or consumption decrease) would be one that would make a significant move in the market price. The market reaction to the Saudi announcement (or pre-announcement, or whatever it was) was little more than daily volatility. Seems like a drop in the bucket to me. OTOH, a fire at a North Sea platform that produces 90,000 bpd was enough to spook the market by a couple of bucks, at least for a few hours.

We see various world-wide decline rate estimates. A 4.5% decline rate against 87 million bpd would mean 3.9 million bpd in new projects to maintain output (and thus market price). That comes to 75,000 bpd of new projects each week. So this was not quite three week's worth.

That of course is based on the assumption that the global production decline will be 4.5%, and not 8%, or 1.5% or 3% or any other number. Hard facts should be used, not conjecture.

'Hard facts should be used, not conjecture.'

Empty point. By the time we have hard facts, it'll be all over. You have to decide IF that might be a waterfall roaring up ahead where the current has sped up, and get your boat to the banks.. you want to take the ride? Fine, but don't drag me with you..

An empty point on your hand. What facts can you present that the world will in fact be 'all over' by that point? Is it not possible that prices reach such a level that we begin to see a massive push towards more fuel efficient vehicles, electric cars, biking, mass transportation and a cut back on total miles travel? Couldn't the world function under that circumstance?

Stuart Staniford seemed to think so in one of his articles!

Would we use bicycle powered irrigation to grow our crops?

Would we make fertilizers, using bicycle power?

Would we import vegetables into our cities using bicycles?

The myth that we only need fossil fuels to power our commuting lives, gives us a myopic view of our world.

When oil runs so low that we all need bicycles for travel, there won't be anywhere we need to travel to.

I should have been more explicit. "It'll be all over.." was intended to mean that we would have passed the peak, and with it a majority of our opportunities to make significant preparations for it, while you would have been tying up the argument insisting on 'hard numbers' for the rate of decline. The Fact of decline is the point. Exactly how much or precisely when might be gravy, but shouldn't preclude us from deciding at earliest warnings to take action.

Conjecture is necessary when hard facts are unavailable. The cautionary principle depends on it.

What's a "drop in the bucket"? Well, think of daily oil production as like daily income.

What's it now? 86.8 million barrels a day, something like that.

Well, imagine that you earned $86.80 a day, and you found that not enough to pay the bills. So you go to your boss and ask for a raise. He says, "We'll make it $87.00."

Would it help you much?

Going from 86.8 to 87 million barrels a day is like getting that extra 20 cents. It's a nice gesture, but so what?

It's an extra $27 million a day for the Saudis, though. Another $10 billion a year. That's bigger than a lot of national budgets. Not bad.

So - another 200,000bbl/day of oil benefits the Saudis a lot, and the world not at all.

Simmons sings the song of oil depletion to its conclusion. The problem is, at 4% of household income, the cost of fuel is breaking the back of many in the US. If oil were 95 cents a cup, gasoline would cost us $20 per gallon. That's $200 to fill up an economy car and $600 to fill up an SUV. More than most new car payments. How many people could afford that? I'd guess maybe 10-20 million.

In any case, the kind of demand destruction that would occur at that price would be massive. Furthermore, gasoline, which is already more expensive than electricity for an equivalent amount of energy, would become the dinosaur of fuel sources.

Finally, this guy is completely invested in the oil system. He does not support viable alternatives and those alternatives he mentions are red herrings.

Simmons plays a good poker game. But he's clearly interested in only the oil side of this equation. For my part, I think we'll see shortages and rationing before we see $300 oil, much less $600. People would rather have access to some oil than be entirely priced out. 95 cents a cup is far too rich for the survival of a civilized economy. These people are profiting from disaster.

How many people could afford that? I'd guess maybe 10-20 million.

I think nearly everyone could afford it. Many people would just need to make it last a long time by not driving very much.

He does not support viable alternatives

He does not seem to have investigated viable alternatives (like nuclear). But give him his due. He has done a tremendous amount of good and he is an oil man after all.

He does not seem to have investigated viable alternatives (like nuclear).

Nice nuke car you have there.

Nuclear's not even a viable alternative to nuclear, let alone fossil fuels.

Yeah, it's not as if a major country like France were getting most of its electricity from nuclear at rates way below the European average, is it?
You seem somewhat confused as it is renewables which are completely untested as a viable way to run large parts of society.
They have good potential to contribute to a solution, but if you want a proven way of generating low-carbon baseload, it is spelt nuclear.

In my opinion, nuclear + alternatives should be a large part of the solution. I think the US would do better by fast tracking renewables and new nuclear while pushing incentives for V2G technology and plug in hybrids. I also think that the current drilling push is a boondoggle primed for political gain in an election year.

Nice nuke car you have there.

See the discussion on electric vehicles down thread.

I agree that he's done a lot of good sounding the alarm on peak oil and Saudi production. But you can't make oil the solution to your oil depletion problem if oil is in inevitable, irreversible decline. The wisdom of warning, in this case, does not match the wisdom of response.

The problem is, at 4% of household income, the cost of fuel is breaking the back of many in the US.

I'm sorry, but the problem is not that 4% of household income is devoted towards fuels. By historical standards, this percentage is much lower than it has been even a few decades back!

The problem is that US Households continue to their frivolous and unnecessary consumption of goods and services that they do not need. It was painful watching people adopt a consumption mentality, and it will be equally painful watching the economy adjust to a dramatically lower discretionary spending ratio.

People eat out less, have stopped buying SUVs, many have stopped buying new cars altogether, and hundreds of thousands have lost their homes. These consequences are beyond mere frivolity. Furthermore, cutting back on 'frivolities' has the impact of putting some out of paying jobs.

According to Simmons, the oil is so important the economy should be dominated by it. But if energy is too expensive, you have no economy.

I've always enjoyed editorial cartoons. Saw a really good one in my local paper the other day. Tried googling for a good site that had editorial cartoons on oil..found this one..not very conveniently traversed...but some really good ones can be found here:

The video archive of the Senate committee with T Boone Pickens is at (RealPlayer format)

Some comments he made were (from memory at the time)

[Edit: Replayed it now and the quotes seem fairly accurate]

"I think the issue is so critical - we are in an emergency...They (oil producers) don't have as much oil as they say they do. It isn't there...And I do believe in Peak Oil. We have peaked out."
"We are caught in a trap...We have got to go to renewables there's no question about it."
"Could we drill our way out of it? No - there's no way we could do that...Don't have the idea our problems will be solved with a big discovery in ANWR!" (he gave a little geology lecture explaning why)

- T. Boone Pickens to Senate Energy and Natural Resources Committee.

His submitted testimony (text) is Here (Word format) and includes this quote: "World oil production, I believe, has peaked, and the world’s current oil fields are declining at the rate of 8 percent a year."

Can someone with a bit more knowledge of Senate procedure tell me was it strange that the Senate Republicans all left (to go to a hastily arranged party meeting) during the part of the session where Pickens made all his peak oil comments? Or at least that's what I think happened. Someone correct me if I misinterpreted.

It would have seemed strange to someone no matter what the subject was when they left. So I wouldn't make too much of it. Politicians are nothing if not overscheduled.

Yes, but they left an energy committee meeeting to attend an unplanned party meeting on... guess what..."energy issues". Then returned as soon as Pickens was finished. That's really unfortunate scheduling.

Hello TODers,

I would suggest to Bloomberg [plus the other MSM], that if they want to increase their ratings: that they get rid of idiotic, ignorant hairdos, then set up a format where Peak-informed people like Jeff Rubin regularly interviews Matt Simmons & T. Boone Pickens instead--so a lot more Peak Oil information can be broadcast in these short segments between the stupid 'Iron Triangle' commercials.

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

Simmons really rocked that "news reader" back on her heels a couple times. Was revealing to hear her stutter a couple times when receiving information she obviously didn't understand and wasn't part of her script. Great job Matt!

I have been watching her for ten years, going back to CNNFn. I don't agree she is just a "news reader" as she is quite knowledgeable about the bond and stock markets. She may be out of her league on peak oil, but then she has lots of company. We cannot all be Matt Simmons. Also, many of her questions may have just been of the devil's advocate variety.

Oh, yes please! Feeling a bit lonely these days...

I really respect Matt's contribution to the understanding of our critical energy situation. I read his presentations on his web site and have gained a lot from them but he was really off his game in this interview. His answers did not address the majority of the questions adequately given his depth of knowledge on the issues. The old "x cents/cup" bargain price analogy is getting to be an old mantra even if it is changing his brainwaves while he's in a meditative state. Hope it's not in response to Old Grandad.

Yes, I too have greatest admiration for Matt's contribution, of course.

And he was "off", as was the interviewer.

kyop, what would you say he should say? What is the three or four word summary that he could use to get across the point of "peak oil"? and "peak oil is now"? And "here is what we should do now?"

Without listening again, it's hard to make a constructive comment.

She did have a couple of questions that practically begged for the answer "We are most likely at the beginning of a decline in supply that will not end. We need to undertake massive conservation measures immediately. We need to prepare ourselves for supply disruptions and severe economic downturn. We need a - (my current favorite proposal) - comprehensive study by the NAS to help guide our lawmakers on how to cope with the unprecedented change." Or, whatever Matt's recommendation is.

The entire "target price" line of questioning...kind of misses the boat. It might be nice to have in mind a way to use the question as a platform for what he really wants to say.

My suggestion to Matt would be to have three or four sentences - an additional "mantra", other than the price per cup thing (which isn't bad but doesn't really convey to anyone what the real problem is).

Eg. I've been working full-time at my own expense to help warn the world since 2004. This is how serious the problem is. It is a matter of life and death.

We need to prepare for economic downturn. We need to change how we feed, clothe and shelter ourselves if we want to preserve what we hold most dear about our civilization. We are facing the limits to growth - of energy resources and natural resources. We need to immediately stop some things - new roads, big cars, unnecessary military expenditures. And start doing other things: re-localize agriculture, car-pool and immediate measures to help with the day we see shortages. We need an agricultural policy that helps promote food self-sufficiency. We need a comprehensive policy towards a more sustainable economy.

Hmnn...or however one might say it. I'm sure Matt can do it best.

The entire "target price" line of questioning...kind of misses the boat.

Yeah, like it is going to peak in a few years and then come down again because the supply could not possibly go into continuous decline. She does not get it that it just going to go up and up until we are almost all converted over to electric cars.

Hi again, Ms Aniya!

Personally, I'd like to hear the words (or read them on the front page of a popular national newspaper), "The World Is Running Out Of Affordable Oil" (pop in the word "fast", or a timeframe, if you like). Then go on to explain the basics in simple terms with simple answers; for example, "Sure, we can get ten million barrels a day from the the tar sands in Canada. But we have to burn the the equivalent of eight million barrels (or whatever) AND destroy the local environment to get there. Is it really worth it?".

When you guys and gals start mentioning terms such as EROEI, ELM, etc, Joes and Janes like myself reply, "What the?" and only a bare few of us will investigate further.

"KISS", I believe is the phrase; "Keep It Simple Stupid".

Regards, Matt B from Down Under

Good for you, Aniya.

The old "x cents/cup" bargain price analogy is getting to be an old mantra

seriously, nobody fills up their car with coffee and almost nobody buys coffee by the gallons.

Trying again,

Here are some rough excerpts (in order) - to try to get a feel for the way the interview went:

Matt: All this is a state secret and that’s wrong…it’s time to open up, and get field by field transparency…this is starting to get serious.

Interviewer: Ok, in terms of your price target…$200 a barrel, doable – why?

Matt: First of all, look at the speed at which we've come…to effectively 140…our markets are very tight…the supply in too many parts of the world is in decline…demand is still growing…oil is still inexpensive on any sort of comparable basis to any of the other things we buy…

Interviewer: In terms of gasoline, what’s your target there Matt?

So, the direction of the interview went from a "this is starting to get serious" to a focus on price.

The idea that a price is "doable" - hmnnn...not quite the right word. It's *not* "doable" to have a very high price of oil and run the economy as we are used to it running.

So, the idea of a "target price" - does this mean a price that will make everything better?

This is perhaps the impression of the naive viewer.

The spotlight went to the price.

Not to what a high price means. Or why it is desirable. Or not desirable, for that matter.

If desirable, then - for what end?

The moment was lost, in a way. I suppose it depends on the information the viewer might already possess. Taken as a whole, the interview doesn't lay the foundation for an understanding of what's going on.

Also, Matt asks for independent verification as his only specific request (here, anyway).

What if this never happens? Does he have any other recommendations?

Some 2-cent feedback in case this might help Matt (or others) in the future.

The interviewer has spent her whole career asking about price,price of stocks that is. The other favorite question, of course, is how can we make money on this. The purpose of these shows is not to illuminate the peak oil problem but to tell people how they can make money and when we reach the bubble point, when to get out. To expect more is not to understand that this is a financial network watched by people who are interested in making money, not saving the world.

Well, if Simmons is right, of course, making money for awhile will not be terribly difficult by just getting long oil.

To expect more is not to understand that this is a financial network watched by people who are interested in making money, not saving the world.

but within reason making money is saving the world.

So money's ongoing failure to save the world (eg, Fish Stocks depleting in the oceans, increased Carbon spewing into the atmosphere, profligate cancer, cardiovascular disease and diabetes rates, a money-driven resource 'occupation' in Iraq, countless impoverished families and communities racing towards a new winter with outrageous heating costs, razor-thin fuel supply-lines and dwindling grain reserves..) is all OK, since it's outside of the 'reason' that money wants to have any responsibility for?

It's like you're playing an Economists Video Game or something..

So, the idea of a "target price" - does this mean a price that will make everything better?

yes because in the end it's all about price. that's how we allocate scarce resources.

The free market doesn't actually care if the price is so high 20 million people starve to death. Just saying..

It is about water not oil, but the current Business Week has Boone on the cover. If he can move some of that water to Dallas perhaps it can be used by the oil industry. Also Boone will need energy to pump, transport and purify that water.

Also Boone will need energy to pump, transport and purify that water.

he should build some windmills for that!

The second link is slightly over a week old but I am impressed with the depression era picture of Pampa Texas, where Boone Pickens plans to install windmills at a projected cost of 10 billion US dollars. If the dust bowl ever returns to the Texas Panhandle will it be difficult to maintain the windmills?
Boone recently turned 80. He doesn't believe in retirement.

Hello TODers,

Since ESPN is now covering Peak Everything in their pages [example link below], I hope an ESPN-Peak reporter gets to ask Tiger Woods a few probing questions such as these below:

Reporter: Congrats on winning the US OPEN, Tiger, it was truly a marathon event. Is your family equally prepared for the postPeak marathon? Do you compost and have an organic vegetable garden at all of your sprawling estates? Have you talked to Richard Rainwater yet?

Tiger: ...Uhh?...

Reporter: Tiger, I am truly sorry your just operated on knee is giving you severe pain and mobility problems. Do you think this will prevent you from graciously driving the first tractor to plow under Augusta National as a postPeak Master Gardener?

Tiger: ...Uhhh?....

Reporter: Okay, let me ask you something easier. Are you aware of how many Formerly-Very-Well-Off aging Roman Olympic athletes were cut down from behind by the invading hordes because their sports injuries hobbled their escape speed and mobility? How fast do you think you can run when you are fifty, sixty, seventy years old if you have bum knees and a bad back?

Tiger: .....Uhhhhhh?......

Has NIKE approached you yet to be their key marketing person to push Nike-brand pickaxes, shovels, water-filters, pitchforks, garden hoes, sledgehammers, wheelbarrows, scythes, axes, misery whipsaws, etc,... or do they want you to endorse Nike-brand swords, sabers, daggers, machetes, crossbows, spears, iron-maces, etc?

Tiger: ....Uhhhhhhhhhh?.....

Now that is the kind of sports interview I would like to see on TV. ;)

[Just change the above interview to your favorite multi-millionaire sports athlete, then post here on this thread!]

ESPN link:

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

Quite seriously, though, they need to at least green up golf courses by going green by getting rid of the herbicides, pesticides, and artificial fertilizer. It can and has been done in Bandon, Oregon, for example. And then there is the outrageous water use, especially in places like Phoenix and San Diego.

But I guess we will have to wait a bit for Tiger to get it.

Hello Tstreet,

Thxs for responding. Yep, I got to agree that golf courses in the postPeak Southwest do not make sense, but there is tremendous societal inertia to be overcome.

As far as I can tell, the Zimbabwe golf courses are still up and running while the rest of the country is going into a Living Hell:
MacDONALD IS 2008 ZIM AMATEUR CHAMPION [Golfzone: 12 Jun 2008]

My guess is that Pres. Mugabe considers overshooting an immaculately trimmed and manicured green to be a much more difficult problem to solve than Zimbabwe's Population Overshoot. :(

1. Tiger plans to tear down the main house and build new. Perhaps he will also plant a victory garden.
2. Peak Oil by twenty lengths.


Dead Heat on a Merry-Go-Round

FYI, our friend Brandon is our once good friend, Hothgor (he is not making any secret about it). And I suspect that "Just Another Statistic" and "Blue Twilight" are also pseudonyms for Brandon/Hothgor. On the other hand, Cornucopians are rampant, so perhaps they are just cousins.

Cornucopia ... isn't that the capital of the State of Denial?

You are completely out of line. It is time you removed yourself from this forum. Respond to what people say, not who you think they are.

This is simply more evidence of your lack of credibility. You have no ability to deal with counter arguments. You need to remove the people involved.

Reminds me of Saddam Hussein. No Person. No problem.

You, Sir, are a fraud.

I rest my case.

I don't think I recall ever seeing this level of vitriol before, starting with Dave's truly weird comments.

Let's see, I am:

(1) Singlehandedly killing the Peak Oil movement:

(2) Responsible for getting Hothgor, Freddy, Oil CEO, et al, banned;

(3) Equivalent to Saddam Hussein.

(4) A fraud.

Who knew I was such an evil, powerful figure?

It does make you wonder whose feathers I have ruffled.

In any case, since you--an anonymous poster who has been a member for a few weeks--continue to accuse me of fraud, would it be too much trouble for you to offer some specifics regarding my high crimes and misdemeanors?

Somebody is scared sh*tless of the implications of peak net oil exports, and they are more than willing to attack you because of these implications.

I would argue that the way forward for this forum might be to make people register their real names - if confidentiality is needed so that industry insiders can post etc then the real name should still be registered with the people running the site, even though a handle is used for public display.
These inane ad hominem posts are seriously clogging up the forum.

A while back I changed from a pseuodnym on several forums to "Kyle Aaron" - my first and middle names. I don't put my full name in, so that if someone does a google looking for me or my writing they can find that, rather than finding endless forum and blog comments from me. By clocking on my name you can see my email, which is my first and surname.

Anyway, what was interesting was that when I went from pseudonym to real name, the number of people just abusing me dropped quite a lot.

It was funny, I hadn't intended that. I just had this strange urge to a kind of openness and honesty, I didn't expect it'd make people more polite to me.

I dunno, it makes no difference to me. I don't mind if someone calls me a prick, really. Abuse as well as reasoned argument is fine, it's only abuse instead of reasoned argument that annoys me, because I think, "well, that was a waste of my reading time."

Practically speaking, I don't see how you'd force people to give their real names. I could be John Smith, who knows? Should we send in ID? :)

I think best is what I've suggested before, if we have a proper forum rather than simply comments on articles, then we have useful things like ignore functions, so that you don't see the comments of people you've listed.

It's easy to enforce and is done on several forums, for instance some of the pro photography forums- to post a comment you have to register, and your registration has to be cleared first.
I believe that hotmail accounts and yahoo etc are not allowed, so spammers have a hard time.
Of course it is impractical to carry out full checks, but in practise abusive posts drop to just about zero, and real discussion can resume.

What in the world, telling Westexas to leave theoildrum, is like telling the pope to leave the vatican..

You, Sir, are completely retarded

Seconded !


At least Jeffrey uses his own name. He's opinionated, but he's no fraud. Who are you?

You insist upon credibility based in keeping to salient arguments, and then you toss in Sadaam Hussein comparison?

"Respond to what people say, not who you think they are." We all must gauge people by what they say and have said in the past. If it seems that a 'new face' is a returning member who has felt that a namechange will magically make a history of objectionable and contested remarks go away, they seem to often get caught in the same tangles as before. As much as the supposed anonymity makes it sometimes appear to be 'pure thought and argument', it still comes from real people, and you can only know what a person is saying if you can develop a little history with them. Hard to do with Shifting Avatars. You need to know who you're talking to, to get between the lines of what they are saying.

(And that 'Sir' stuff has got to go. Mock Gallantry is the hollowest of flavors to use with text. This isn't D&D. )


Yes, we seem to have a whole new crop of disruptors all of a sudden--all about 3 weeks old here. I guess Jeffrey has been getting too much attention in the mainstream media.

It's interesting that the primary topic that seems to bring out the cornucopian goon squad in full force is anyone who takes the position that the decline in Saudi oil production was mostly involuntary.

I guess many here would label me a Cornucopian. That said, it seems very likely to me that Saudi production is in decline.

Saudi decline is likely happening
ELM is a valid enough based on historical precedent to warrant a very serious consideration
World Peak oil age is likely 2005-2012

Even people who are hopeful in finding solutions to the problems need to first acknowledge them before moving forward. Can we add a new kind of Cornucopian? Denialist Cornucopian, perhaps?

Hothgor is a beserker, most probably trying to increase PO awareness and activity through inflammatory and supposedly thought provoking posts/comments.

Typically calmed by thoughtful direct communications. Has a strong tendency to outlandish posts/somments/claims in public forums.

Tends to drift away when ignored.

I too give Matt great credit for telling the truth about peak oil. But I have two areas where I differ:

One. I don't think it's reasonable to expect openness in terms of reserves on the part of the oil possessing countries when there is such a coercive climate (putting it mildly) on the part of the US and its allies. They'd have to be complete fools.

Two. While Matt is good in calling for conservation, I think he lets the gov't off the hook in the totally negative leadership it hs given on the issue. People need to be told by the gov't what we are facing and they need the help of the gov't in adjusting to this new reality: more mass transit, help in relocating nearer to jobs, and more broadly help in retructuring our whole way of life so that everyone can survive on a radically reduced resource budget. Instead, war to the last drop -- of blood or oil, whichever runs out first.

But I'm asking too much. His telling it like it is in his area of expertise is a big enough contribution.

Conservation is a good thing, and don't get me wrong friends, I am a beeeeeeeeliever. BUT, as soon as we are on the downside of the peak, like right about now, it does not matter how much we conserve, because the rest of the 3/4ths of the global demand will consume oil at the same rate. Thus depletion will occur at the same rate, sad but true. Once we are down to just 84 million barrels per day, demand will not fall below consumption. And not too far down the curve, there will not be enough oil to maintain the Interstate highways or the highways in Europe, Australia, etc., nor can the power grid be maintained without out oil. And that's it folks, no food and nothing will work. So, I bailed out of the cold north and am living in a nice sustainable wet pleasant place in Mexico. It is not what you think. Anyone want to retire here and grow some macadamia nut trees, figs, bananas, citrus, veggies, beans and live in a nice place at the same time? clifford dot wirth at yahoo dot com

nor can the power grid be maintained without out oil

why not? we can use the grid's electricity to power cars.

What’s the conversion time frame for heavy transport equipment? Toyota has issues making passenger cars - what manufacturer is working on electric maintenance equipment?

Well, there is the Tanfield Group who make a variety of electric vehicles through their subsiduary Smith Electric Vehicles. They have a partnership with Ford, coming to the US soon I believe. Change can happen rapidly when rational business decisions are being made. I believe a large supermarket group in the UK, Sainsburys, plans to move to all electric home delivery vehicles by 2010. These vehicles do not have very long range but are perfect for delivery vehicles as they get around 100 miles per full charge. Combine this with electrified rail freight, renewable and nuclear electrical generation and I believe we've got the post-peak infrastructure in the pipeline.

It takes a lot more to keep the power grid up, like snow plowing with big diesel driven equipment, the Interstate highway system, etc. What happens when a bridge goes out and there is no steel girder, as all maufacturers are bankrupt. Same with high tension wire, who will make it??? The government, ha, look at the New Orleans record. Hundreds of thousands of giant pylons, 250,000 kilometers of high tension copper wire, hundreds of thousands of transformers, hundreds of thousands of parts from all over the world. It all moves on the 256,000 kilometers of highways. The grid is on the brink of collapsing now. If it happens this winter, you could be without heat, food, clean water, sanitation, and nothing will move on the highwats. Why not read my report and get a basic education?

I thought it was going to hit $300? ;)

In about 18 months GM is going to start selling the Chevy Volt. Assuming no further increase in battery tech, these cars will go about 40 miles on an overnight charge, thereafter they will get about 50mpg as a small ICE(internal combustion engine) will run a generator to reload the battery. As far as commuting goes this will cover about 75% of the populace. All the other major car manufacturers are committing huge dollars towards electric vehicles. In 5 years it is likely that no one will be buy new cars with ICE's as their main power source. Demand for liquid motor fuels is going to collapse and with it peak oil.
Peak whales was a long time ago and the only folks that really care seem to be the Japanese and that is for gustatory reasons not energy ones.

Hello David_in_CT,

Uh, don't you think the rising global problem is insufficient diesel for heavy-duty trucking, mining, shipping, farm equipment, irrigation pumping, electrical generation [where the Grid goes down], etc?

Recall that I consider heavy-duty, short-haul, battery-electric delivery trucks to move vital goods from Alan's RR & TOD ideas more important than the rich driving around in Chevy Volts.

If I am correct, but they build the Volt and short-haul trucking collapses: I would anticipate that the angry mobs to quickly make most Volts undrivable. We will see.

Well, Smith Electric Vehicles make short haul electric delivery trucks.

Hello Crobar,

Thxs for the fascinating link--I hope they become a huge, global success!

If we are all buying our next car as a Volt type with 50mpg 5 years from now and this would represent say half of all the cars on the road, then the change in mileage from an average of 25 mpg now to the 50 mpg, assuming that cars and trucks are about 80% of our 20 mbpd U.S. oil habit, would equate to a reduced demand of 4 mbpd over 5 years. That's about 4% per year. Right now, the net exports to the U.S. are dropping by about 6% per year and accelerating! We're probably going to have to do better than this type of big car switchover just to stay even with the net export decline rate in 5 years.

"Demand for liquid motor fuels is going to collapse and with it peak oil."

If you know anything about the subject of "Peak Oil", you would not make this statement. Peak oil will not collapse. If demand for oil does decline and with it the price, the oil that cost more to produce will not be produced (like the tar sands at $70 to 80 per barrel). This will cause production to decline and therefore Peak Oil will be more evident. Peak Oil means peak production; get it?

Even if EV's become common place, it won't make peak oil disappear. Huge demand reductions of oil will actually bring on Peak Oil by definition as the supply will decrease rapidly from its high point, never to return to it as there is no longer any need. Even if we have huge supply capacity for centuries afterwards, there will come a point, which no one may bother recording, at which we lose completley the capacity to ever produce oil above the peak.

Peak Oil is not a problem if there is an alternative to it. Until the alternatives are proven, I'm going to err on the conservative side. We should proabably think about how we use this stuff and take it seriously that right now, we don't have any alternatives that is going to allow us to power even a fraction of the current motor vehicles on the roads.

Drive less, Use Less, Grow More

As the price of energy goes up, electric vehicles and plug in hybrids will cost much to manufacture. Who will be able to buy them when the trade-in value of the old SUVs continues to head for the floor? And unemployment will rise rapidly as oil production declines, starting about now.

Don't forget CJ, that all those unemployed people will be part of a cheap labor force, eager to learn new skills so they can eat.. and then there will be all those scads of abandoned 737's, ATVs and Escalades waiting to be stripped and turned into umpteen-brazillian Wheelbarrows, Chowderpots and Ebikes. I bet a lot of those Pete Seeger songs will be getting sung again, too!

I'll trade you some Maple Syrup for some Macadamia nuts though!


but thats the whole point. the price of energy has not gone up nearly as fast as the price of oil. electrical energy costs have gone up quite slowly. leaving aside the climate change issue, peak coal is way way in the future and peak nuke so far in the future as to not be worth talking about now because the technology change will make any current discussion meaningless.
the current electrical conversion to gasoline equivalent assuming about a 20mpg car is well under $1.00 per gallon. This is a multi trillion dollar arbitrage and you can be 100% certain that the market is going to find a way to get this done and in a hurry.

peak coal is way way in the future and peak nuke so far in the future as to not be worth talking about

I think you are mistaken about coal. I think the worldwide peak is about 2022 and the US (the Saudi Arabia of coal) has already peaked in terms of energy content produced. Fortunately peak nuke is at least in the millions of years.

If youré alking about the big fusion reactor in the sky then we've probably got a few billion years until we hit Peak Sun, but peak uranium hear on Earth is unlikley to wait for a million. Ifnuclear does ramp uparound the world then we couldbe out of uraniumin less than a hundred years. Anew technology will be required but this is not "Back to the Future" so I think I'll stick with the known at this stage. Hope for the best, plan for the worst.

Here is a chart by Ken Deffeyes from Scientific American that shows that there are a trillion tons of Uranium that can be extracted with EROEI of between 16-32 or higher. Current light water reactors use about 200 tons a year but use only about 2% of the available energy. Proven reactor designs are available that could use much of the rest. There is also about three times as much Thorium. Millions of years is a very conservative estimate WITHOUT considering fusion.

The Uranium reserve numbers you are using are the inventories of a very depressed industry that has done hardly any exploration. The also only consider economic viability at current low prices and not what would be competitive with expected alternatives at expected prices.

Yes, and to mine and transport uranium you need oil.

A lot of uranium is extracted by leaching rather than digging.
In any case, if you wish to make it an EROI calculation you could use some of the uranium to extracted to crack water to hydrogen via a nuclear reactor and produce a liquid fuel from that to get more uranium and still have a massive energy surplus.
Shortages of fuel for reactors are are pretty imaginary.
The problem in any case is how we will keep our industry working and homes heated in the shorter term, as renewables will undoubtedly come to represent a larger portion of our energy supply by the time the hypothetical shortages of fuel materialise, which seems anyway extraordinarily unlikely.

Or electric powered vehicles. There is a solution here.

"Recall that I consider heavy-duty, short-haul, battery-electric delivery trucks to move vital goods from Alan's RR & TOD ideas more important than the rich driving around in Chevy Volts."

It wont be rich people it will be everyone. The battery costs are ballpark 10k per vehicle at the moment. Saving $3.00 per gallon, means that you get back the cost of the battery in 3000 gallons or 60k miles at 20 mpg. These numbers are only going to get way better as the tech improves and economies of scale kick in.

The battery tech and electric drive will actually be more useful in heavy vehicles because of the regenerative braking.

As you suggest, battery powered cars are already nearly competitive today while we still have cheap oil. With the clearly available nuclear, wind and solar generation sources it is hard to understand why so many people even here at TOD do not get that this is obviously the future of transportation.

Don't even try to tell me your going to run a semi-truck with batteries, This is one of the most naive things I've heard in a while. I don't think you have enough of a scientific/engineering perspective to realize batteries have too low of an energy density to practically be used in heavy vehicles.

Hello Sword of Damocles,

Thxs for responding. True, I am not an professional engineer, but I distinctly remember reading about WWII diesel/battery electric submarines that ranged quite far, and very silently underwater in battery mode before having to rise and recharge the lead/acid batteries.

I would suspect a submarine's total weight to max cargo ratio to be much greater than a modern batt/electric truck's total weight to max cargo ratio. I strongly doubt that a truck needs the extra steel to withstand the water crush pressure of 1,000 feet, and moving air aside is much less energy-intensive than trying to propel through trillions of gallons of water.

If a truck only needs to make short 5/mile trips or less repeatedly--don't you think the battery packs can be easily swapped out, as needed for recharging, and also the vehicle can very quickly be put back in service? This has been discussed extensively before here on TOD if you wish to check the archives.

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


I think those submarines actually had very short ranges running on batteries. They mainly cruised at night on the surface or ran barely submerged on diesel with snorkels. Once the western allies were able to operate small "jeep" carriers with the convoys, they were able to suppress the U Boat threat pretty well because the planes would catch them on the surface.

But battery technology has advanced a lot since then and more can be expected. Even today it is possible to get over 200 mile range and 5-10 minute charging times with very high amperage (not your overnight windmill). We just need to ramp up nuclear about 20 fold and wind and solar about 40 fold in the next half century or so.


As I posted above, they already do: Smith Electric Vehicles

.. and these will represent Local work/delivery systems. Long Haul will be on water and rail.

"Peak Oil means peak production; get it?"

I'd bet that most people reading this stuff would think that 'peak oil' which happened because there was no more to produce at virtually any price and 'peak oil' which happened because the world no longer used it as an energy source because there were far better and cheaper things to use so left a whole bunch of it in the ground because nobody cared to extract it would be somewhat different outcomes.

But perhaps you going for the semantics award.

First, why don't you learn to use the icon in the lower left of the comment box so others can follow your arguement.

Second, Peak Oil is peak production for whatever reason. My point is that a production peak will occur soon (two to five years IMO) even if caused by a drop in demand and thus drop in price and drop in production. The remaining oil may last longer than originally predicted, but the world will never again produce approx. 77 mbpd crude plus condensate.

Now about that shift to electric cars and plug in Hybrids. Back in 1982 the consumption/production of oil was falling and by 1985 it had dropped nearly 20% from 1979. This was due to two things: industry using oil had declined/went out of business or shifted to more efficient methods. Second, some people became unemployed (1981 and 1982) and nearly stopped using oil, while by 1985 many people that kept jobs shifted to more efficient cars which often cost less than the inefficient cars of the 1970's.

On the contrary today most of the middle class have not seen their real income rise for several years and unemployment is currently rising. Since the new electric cars will cost more (Volt likely around $28K), and cost of replacing batteries being very high ($6 or $8K every five years?), I question how many people will shift to these new cars in the next five years when their current vehicle has little trade in value. My point is that an economic down turn will not allow such a quick fleet conversion to more efficient cars as you predict. And as industry sees business drop it will also have a hard time converting to more efficent trucks and equipment.

The Volt was targeted to cost around $30,000. As of April 2008, General Motors Vice Chairman of Global Product Development Robert Lutz was quoted as saying that the realistic unsubsidised price had risen to $48K,[9] that he reckoned that $40,000 might be possible, without making any profit, and that only government tax incentives could take the price tag nearer to $30,000. When asked directly about the price later, Lutz indicated that this was a misquote - and said "The answer is that we don’t know."

"The remaining oil may last longer than originally predicted, but the world will never again produce approx. 77 mbpd crude plus condensate."

If the world never produces 77mbpd crude plus concentrate ever again because we have switched over to electric transport at an equivalent cost of under $1 per gallon I don't think anyone is really going to care about peak oil. Like I said before, there is not a lot of talk about peak horses, or peak whales, its just not a big issue.

The median age of a US vehicle is about 9 years. Nine year old cars are worth virtually nothing anyway so the trade in value is hardly an issue. Average new car prices are in the mid 20's so nothing outrageous about a 25k sticker.

Price for the battery systems is only going to go down and go down hard in relation to energy storage and lifetime. Just like all other tech.

A switch to electric transportation is going to be a huge jobs generator and a huge boost to the economy. If we knocked out 10 million barrels of oil a day in imports at $130 per, thats about $450 billion a year which is currently around 3.5% of GDP.

Technology reaches a point to where it get exponentially harder to increase efficency, power ect, it does not go on forever like moores law, speaking of which computer processing power is reaching physical limits ( imagine that ) and moores law is no longer holding up.

Price for the battery systems is only going to go down and go down hard in relation to energy storage and lifetime. Just like all other tech.

This is just plain wrong.

Like I said before, there is not a lot of talk about peak horses, or peak whales, its just not a big issue.

This is also just plain wrong, the typical cornicopian response, we transitioned to oil and gas yes, but this process cannot be continued ad infinitum. There is no more free energy with the energy density of fossil fuels, technology uses energy, it does not create it...

if we knocked out 10 million barrels of oil a day in imports at $130 per, thats about $450 billion a year which is currently around 3.5% of GDP.

Were going to cut 10 mbpd, are you kidding me, did Santa Claus come or something?

"This is just plain wrong"
"This is just plain wrong"
"did Santa Claus come or something"

Those are some very cogent and well thought arguments. Thanks for the elucidation.

There is no more free energy with the energy density of fossil fuels

Uranium has about 2,000,000 times the energy density of crude oil and as documented above, we are not going to run out of it any time soon.

A switch to electric transportation is going to be a huge jobs generator and a huge boost to the economy

I agree. That is why I am not buying the inevitability of a big down turn. If we do not do anything or if there were not an obvious solution staring us in the face, then maybe.

Look, the transition will be hard for a generation. People are going to have to get over their unjustified fears of nuclear. As fossil fuel resources decline, society might need to channel all available resources to building the solution. Not some tiny Apollo or Manhattan program but think World War II. The US spent 38% of GDP on the war effort in 1944. Like that time, that would create a great deal of economic activity and we might avoid a significant economic downturn. I am also open to the possibility that the market might be able to do it on its own but I am not wedded to that ideology.

Matt Simmons wants to invest 50-100 trillion dollars in oil infrastructure in the next ten years. Maybe that is necessary to mitigate the downturn but it is not part of the solution. Neither is conservation, although that too is important as an interim measure. We need to get on with building the electric based society with 60% nuclear, 20% renewables and 20% legacy (fossil fuels) by 2050. I am working on an article on this for TOD and trying to get collaborators.

"If we are all buying our next car as a Volt type with 50mpg 5 years from now and this would represent say half of all the cars on the road, then the change in mileage from an average of 25 mpg now to the 50 mpg..."

In the engineering for the volt the first 40 miles is pure electric, and comes from the overnight charge. If you are a commuter and commute under 40 miles per day, or alternatively commute farther but charge your car while you are at work, you will consume zero gallons of gas. The 50 mpg is only if you run the battery down and have the ICE kick in to turn the generator.

The 40 mile number is also version 1.0. Given the amount of money that is at the end of this rainbow you can be certain that in 5 years the 40 will be more like a 100, and the ICE will almost never be used. The 40 could also turn in 250 with some higher tech (ultracapacitors?) and the ICE will no longer be in the car.

What is going to happen is that the 20 million barrels a day is going to go severely trimmed. As it will all over the world. At $4 a gallon there are an awful lot of things that work better than oil for transport fuel. The lead times are slow because of the infrastructure change needed to get it done. However, the ball is now in motion and there is nothing that is going to stop it.


Keep in mind the average lifespan of a car in the US is 16 years, and demand destruction also means people will be losing jobs so they will flat out not be able to buy a car, so the idea we can all just buy Chevy volts in 5 years is quite unrealistic.

Also, do not forget as Gail has been adamantly pointing out lately that the grid is in precarious shape already, trying to double the electricity consumption of every household would be more than a straw on the camels back.

We can be certain? Really? I am not a gambling man, and I would prefer those in higher positions not gamble with peoples livelihoods.

So I guess infrastructure change doesn't require oil? I think it is a little naive to believe that we can drastically cut demand while rebuilding our entire economy.

Solving accelerating problems with increased complexity is not a solution at all, more of a band-aid for a shark attack victim.

The good news is that most cars on american roads can be functionaly replaced with cars that are much smaller and cheaper. Nor are cars typically driven heavily for their entire lifespan. I typically buy a new car every five years and keep it for 10 years (2 drivers in my family). So in 5 years I will be replacing my 27 mpg gas hog with something that gets twice that. If gas went to $20, I would replace it sooner.

The key is that we need to adjust to buying less car. Putting our heaviest drivers in a fleet of Yarises (Yari?) is within our resources.

At $4 a gallon there are an awful lot of things that work better than oil for transport fuel.

Well over here in old fashioned Europe, gas is more like $9 a gallon and - guess what? - oil is still easily the numero uno transport fuel. Gas here has been 2-4 times more expensive than in the US for decades and, while Europe's public transport infrastructure is in better shape than the US, it's still largely dependent on fossil fuels. Until oil prices really start rising towards to the actual value of the thousands of years of stored solar energy in every barrel, people will find ways to afford to waste it in private cars.

The thing about Peak Oil is that it's not about cars. They're the icing on the cake of a world economy currently predicated heavily on a continuing growth in the supply of cheap energy. Take out either word in bold and the economy threatens to go pop. As several other commentators have already said today, when Peak Oil kicks in, fewer and fewer people each year will be able to afford new vehicles of any kind. Only those wealthy enough to be completely immune to gas prices will even contemplate buying private ICE vehicles. But they are the folk who will buy the latest electricals anyway.

Where will that leave mass car manufacturing? Investment will only flow into large-scale electric vehicle production if it sees a return - and that in turn will only happen if electricity is affordable, readily available and in growing supply per capita. None of those things will be the case for several years post peak, making a profitable and easy transition to electric cars highly problematical.

Result: possibly electric cars for the wealthy; oil-fired vehicles for food production and distribution and the military; and walking/cycling/public transport for the masses.

In a month, it will be the middle of July and on a hot day here in So California, I'll be wondering if the power is going to stay on. If a million people plug in a Volt, nobody will have power. If we want to use electric cars in 5 years, we need to start building new power plants and power lines today. Unless things change a lot, we won't even have built 1 in 5 years.

Americans are conditioned to think electricity always comes out of the socket as long as you pay the bill. It isn't so.

The electricity grid is sized for peak demand, if people charge their cars at night, which is likely, there shouldn't be a problem. This could be encouraged by reflecting the actual spot market price of electricity in peoples bills rather than a flat rate.

new power lines?? don't power lines use aluminum cables. that's gonna be spensive!

Towers for support of the lines are made of wood (as-grown or laminated), steel (either lattice structures or tubular poles), concrete, aluminum, and occasionally reinforced plastics. The bare wire conductors on the line are generally made of aluminum (

"Also, do not forget as Gail has been adamantly pointing out lately that the grid is in precarious shape already, trying to double the electricity consumption of every household would be more than a straw on the camels back."

Happily, the vast majority of battery charging would be done at night, where the current demand for electric power is at its minimum so the excess demand on our precarious grid (which seems to work pretty well for me but maybe i have been blessed) will be much less than otherwise.

There seems to be a general consensus here that the economy is collapsing because of $4 gasoline. The vast majority of the economies difficulties at the moment are a function of the breaking of the housing/credit bubble. Given where we are in the cycle for new home construction it is unlikely on a statistical basis to get any worse. Even at $4 a gallon gasoline as a percent of GDP still has not reached its 1980 peak. A very large part of that $4 is speculative in nature and could disappear very quickly.

A very large part of that $4 is speculative in nature and could disappear very quickly.

Can I have some of what you are smoking?

That is true, but still the net effect overall is going to be a lot more stress on the grid, which it is not ready for.

The economy is not collapsing because of 4$ gasoline, but higher oil prices are putting huge inflationary pressures on the economy, stagflation basically. How do you figure most of the price of oil is speculation? Care to back that up, or is that just your opinion like every other person I have seen argue speculation is a more than negligible part of oil prices.

Long only index fund commodity 'investing' has gone from about 0 to 250 billion dollars over the last 5 years. Because oil has a huge weighting (~2/3) in a lot of the indexes there is probably 150 billion dollars of passive money owning crude.
One of the ways that this investment demand is satiated is for the investors to own physical inventory which they do even if they think they only own a swap or a future. At an average price of say 100 per barrel, that would mean that we have had an excess demand for oil of 1.5 billion barrels over the last few years which is 2x what is in the strategic petroleum reserve.
Why do you think nat gas prices have gone from a little over $5 in summer of 2007 to near $13 now? First they collapsed because amaranth a single hedge fund which controlled a huge percentage of the open interest in nat gas got run in by goldman, and since then the spec demand has pushed prices to near katrina levels even though there has been no material change in US supply/demand or from an inventory standpoint. Look no further than Enron for a fine example of a single company completely distorting a market because they could. Go read some articles about electricity shortages in California while they were squeezing the market. It will sound very much like today, where there is lots good reason why oil is $135 and is heading for $200.
We are in a good old fashioned commodity spec bubble with plenty of reality to make all the prices seem rational. If this were truly rational pricing, the ability to take pretty much off the shelf technology in the form of existing batteries and electric motors and knock 75% off the price of transport fuel would not exist.

Well no. Speculators have not created an excess demand for physical oil. It hasn't shown up in inventory. Oil is being pumped and consumers are buying and burning it. You can't just store crude in a safety deposit box.

You could argue that given an inelastic supply and inelastic demand, the price could get set almost anywhere. In reality, there is some demand elasticity in the US but it is being overwhelmed by growing economies in Asia. If the demand wasn't there, prices would fall back.

In California, partial deregulation enabled the electricity squeeze. Wholesale prices were deregulated but most consumer rates weren't so demand was not elastic. The distribution companies were required by law to pay any price.

"Well no. Speculators have not created an excess demand for physical oil. It hasn't shown up in inventory."

There are no reliable worldwide inventory numbers so to say that it hasn't shown up in inventory is just a guess. If there is no physical inventory on the other side of the index funds, who has lost the $100-200 billion dollars being short? Not Goldman thats for sure. No bank has come forward to claim big writedowns for bad commodity investments, nor have any hedge funds collapsed in the space. Quite the contrary, the investment banks and hedge funds have made fortunes off this move which would seem to just add even more barrels to the spec side.

Why would you think that demand elasticity in Asia is less than that of the US?

Speculators cannot possibly create excess demand because speculators do not take delivery. Hedgers sometimes take delivery but more often, if the price of oil goes up, they just settle in cash and buy the oil they need where they need it instead of taking delivery of WTI at Cushing.

Far less than one half of one percent of all contracts result in delivery.

Ron Patterson

"Speculators cannot possibly create excess demand because speculators do not take delivery."

The mechanism for speculators in futures contracts to cause excess demand is quite simple. It works like this.

Spec A comes to market and places and order for a futures contract for 1000 barrels of oil. Commercial B who is a producer is happy to sell oil to the Spec at the current price. B pumps out 1000 barrels, puts it in a tank then goes short a futures contract and is prepared to deliver it to Spec A. This 1000 barrels of oil which has been produced by Commercial B is now sitting in storage as a hedge against the future sale. Depending on the term structure of the crude futures market both the Spec and the Commericial may be happy to roll their futures contracts forward. This will have the effect of keep the produced crude off the market and in storage.

Because there is a vast volume of OTC derivative contracts in this market no one except perhaps the investment banks has any idea how much physical oil is actually being stored against the paper barrels. It is likely immense.

Having been privy to some of this very same activity in other physical commodity markets I can assure you that this mechanism is alive and well.

That is the most absurd thing I have ever read in my life. Producers are Saudi Arabia, Russia, Norway and whomever. They do not sell contracts, put barrels in tanks and hedge against future sales. They load tankers with millions of barrels of oil and sell to the highest bidder. Crude in storage is called inventory. It is held by purchasers of crude oil, not producers. Do you actually believe that Saudi Arabia, Iran, Russia, Kuwait, Nigeria or whomever actually sells crude on the NYMEX, and puts barrels in storage as a hedge against those purchases?

Great scheme David, but it simply doesn't happen.

Ron Patterson

" Do you actually believe that Saudi Arabia, Iran, Russia, Kuwait, Nigeria or whomever actually sells crude on the NYMEX, and puts barrels in storage as a hedge against those purchases?"

No I don't. But if you don't think that there are large trading houses that deal in the physical and act as intermediaries between sovereign producers and other parts of the market including specs then you are vastly mistaken.

I used to run a large quant futures fund for one of the biggest hedge funds around. I have had plenty of discussions with the folks who run the desks in the physical commodities arena and have a pretty good understanding of the business and more than a little direct experience. To believe that hundreds of billions of dollars of crude exposure has been purchased by passive index funds along with active funds and that has no impact on price is truly absurd. Have you taken a look at the gold ETFs? They control more physical gold than most of the worlds central banks. How about Amaranth, that controlled maybe 20% of nat gas open interest. Did you notice that the price of nat gas crashed as they were forced out of the market and lost 6 billion dollars? How about Red Kite which for years has operated hugely in the copper market? So in your view these things only happen in other physical commodity markets but oil is somehow immune to these same pressures?

Or maybe the price of natural gas crashed and they lost 6 billion dollars forcing them out of the market. What is the cause and what is the effect?

Oil and gas aren't like gold where you can put an immense fortune in a room or copper where you can stack it in a lot.

Recent speculation didn't conjure huge storage facilities out of thin air.

The sellers who have been on the wrong end of these deals don't have a lot of incentive to advertise the fact so just because no one in owning up to it doesn't mean it didn't happen.

Don't overlook the producers themselves. There are lots of them. Selling below the current market because they presold their oil will just reduce the increase of income. It won't show up in red anywhre.

My number one problem with Simmons pitch is his comparison of oil to other liquids. being 90c acup, or it's equivalent price in milk, water, detergent, etc....
IF oil is an input cost to all those items, whether it be manufacture or transport, then the price of oil will always be cheaper than those items on a per oz basis, as it should be. without a markup on cost, there would be no profit.

Simmons uses the price of cups to demonstrate how cheap oil is. As the price of cups gets really high, perhaps he will switch to ounces, then grams, etc. I guess his point is that the cheap price of oil/gas has caused us to squander our heritage, which indeed it has. He is making the point that we need to conserve. Virtually everyone here would agree. But that still won't make declining oil supplies go away. He needs to do a better job of answering the question, "what's next?". Anyway, he is to be congratulated for doing a great job of showing the world there is a problem. He, or someone else, will have to show the world what they need to do in response to the problem. He also does a good job of explaining that drilling in place like ANWR, while not necessarily disastrous, are not a solution to the problem. They just slightly delay the peak and do nothing in the short term.

Right now, unfortunately, the politicians are back to the same old arguments about drilling with the Republicans screaming for drilling as if that is going to make a nickel's worth of difference in our short or long term problems. If the politicians could get on the same sheet of music with respect to peak oil, they would realize that these environment versus supply arguments are a dead end. Whether you care about the pristine nature of ANWR or not, you shouldn't be arguing that this a path to salvation. And that includes off shore drilling , too. No doubt oil men like Pickens and Simmons make the Republicans very uncomfortable. Pickens couldn't care less about the environment, but he is also smart enough and honest enough to say that drilling in these pristine areas is a short sighted and misleading approach. Screaming about the need for more drilling is just taking a dishonest stand that more supply will solve the problem.

We are in a box and there is no short term solution and there may not be a long term solution. But can the American people handle the truth. The evidence to date says otherwise.

"Pickens couldn't care less about the environment, but he is also smart enough and honest enough to say that drilling in these pristine areas is a short sighted and misleading approach. Screaming about the need for more drilling is just taking a dishonest stand that more supply will solve the problem."

Pickens is talking his book just like any other speculator. Yes, over the long term drilling for more oil is not going to solve the problem. The longterm problem is going to get fixed by a switch to electric for transport fuel. The increased demand for electric will be met by nukes, solar, wind etc. The economics and tech for this already exists. Its just a roll-out problem now.
If the senate passed new laws for drilling in ANWR and off the coasts the psychology of the market might change and that would be very bad for Boone & co.

Look back at Pickens' statements early this year when he was short the oil market and on the wrong side. Whole different man. Now why do you think he went from short to long? First off he lost a boatload of money, I believe his fund was down something like 14% in the first quarter. Think the long spec crowd had a chat with him.... "well boone, we have more than enough cash to squeeze the crap out of this market and there is nothing that anyone can do about it. see at $100 per barrel and 10x leverage it only costs us $10 a barrel in capital to control the marginal barrel. If Saudi put another 1 million bpd on the market that would only cost us 10 million a day to soak up or 3.6 billion a year. That is chump change my friend. Our little fund group has tens of billions of dollars at its disposal. You can be with us or against us."

When seen in isolation, 200 kbpd from the Saudis does no seem that much compared to what we are consuming, However, when looking at the list of megaprojects for 2008, new supply is composed of even smaller contributions adding up to 7 mbpd:

Even if half of those projects are not producing at full capacity in 2008 or delayed, it still a lot of oil coming and I'm having a lot of trouble fitting the megaproject list with forecasts of imminent supply decline.

Why? Half of 7 is only 3.5... that's less than we lose to decline each year. And taht is only of decline is only 4.5 percent.


It's very unlikely that we will have significant delays, we got a few delays already (especially for tar sands project) that we are trying to track when public information is available. Don't forget also that we are not tracking projects below 50 kbpd so this estimate is probably conservative.

We have been hearing about this "wall of oil" coming down the pike since 2005. It has simply never happened. Why will 2008 be different? The talking heads on CNBC mock peak oilers by saying, sarcastically, "but this time it's different", referring to all the times people have predicted the demise of the oil supply in the past. Are megaprojects different this year? Will that wall of oil finally arrive?

Ron Patterson

I don't have an explanation, I agree that bottom-up approaches have been generally too optimistic (see Skrebowsky forecasts) but I don't know why and it bothers me because they first appear as reasonable and sound methodologies. Note that supply seems to have increase at least for the first quarter of 2008, so some of this "wall of oil" may have reached the market after all.

Note that supply seems to have increase at least for the first quarter of 2008,

True, but this was just OPEC jerking us around. OPEC cut production then ramped it back up early this year. I think they are now producing close to max.

Non-OPEC is a different story however. Non-OPEC production is down 448,000 barrels per day for the first three months of this year verses the first three months of last year. And from the IEA Oil Market Report, non-OPEC took a nose dive in April. Non-OPEC has been on a plateau for four and one half years. Now it looks like they may be ready to fall off that plateau.

Ron Patterson

Khebab, I'm a layman, but everything I've ever read here or elsewhere says it takes time to get a field up to full production. In fact, looking at virtually and production curve for any field pretty much proves this. If first oil is in '08 or '09 then full production is not just a year away, or even two, but is years away. That 7mb/d is really 1 mb/d this year, maybe 2 the next, say 3.5 the next.... and so on, and so on, no?

Some examples (not that you need to see them, but others may):

Only two of the fields in that set come close to or achieve full production in about two years. Others seem to take anywhere from 5 - 10 years.

Am I missing something?


It's an important question, it depends strongly on the field. I derived the following distribution from Norway and UK field database (mostly offshore fields):

only 15% reached maximum production after one year and roughly half have reached some kind of production plateau after 2 years.

Peak date is hard to predict except maybe for tar sand projects.

I wanted to ask you the same question. :) If I understand this correctly the new capacity is derived from the maximum production level projections and does not include the change in production in individual fields. I don't think that it would be possible to even get a good geustimate on the production curves of individual fields.
Also with very high prices and more projects with high capital and O&M costs one would expect that the producers would try to reach the maximum production levels as soon as possible to get the most of their investment. With all the ultra deep water projects, drilling in Polar Regions I would expect companies to use "blitzkrieg" tactics ;). Every day with lower production levels would be a huge waste of money.

So, if we loosely apply that chart to the MPD, we end up getting 7 million online over a period of no less than 5 years, right?

And by then we're another 17 - 20mp/d in the hole due to decline...

This is not a promising metric...


Thanks for this good work!!

And how does this compare to Tony Eriksen's post?? When do you predict the crude production decline will start? Also, I should have included your name for to whom I was directing comments at

@WestTexas, Rembrandt, Ace, David Cohen, and others,

It would be interesting to graph Peak Oil for the USA, factoring in the following: (1) the zero net energy production of biofuels, (2) the Land Export Model, (3) increasing energy inputs to extract oil, and (4) declining U.S. oil production. This would be difficult, but it would be "instructive," as there are no significant alternatives to oil (according to my Wirth Peak Oil Report which researches the best scientific and government studies). Add to that U.S. hyperinflation and the monetary collapse in the dollar. Also, this has to be considered in thinking about Peak Oil: As oil depletion progresses, more and more oil is used to produce oil. When the amount of oil used to produce a barrel of oil equals the amount of oil produced, it is pointless to continue oil production. In addition to the oil used on site to produce and refine oil, energy is used in all of the processes for the machinery, equipment, and personnel used in the extraction, transport, and refining processes. For deepwater oil production, this would include all of the ships, platforms, steel piping (many kilometers of pipes on-site and to onshore locations), and their employees, including the energy used in making the hundreds of thousands of parts, the energy used in the factories that make the parts, the energy used in transportation of all of the parts and employees, as well as the energy that is consumed when employees and stockholders spend their salaries or dividends on goods and services (food, automobiles, yachts, airplanes, recreation vehicles, vacations, consumer purchases, etc.). Because there are a number of confounded energy input variables, it is difficult to measure all of this consumption of energy, but it is an economic reality that is shown in corporate decisions about the profitability of deepwater oil projects. For deepwater, heavy oil, tar sands, and extraction where special techniques are used, the point at which energy consumed equals the energy produced will be reached rapidly. For this reason, some oil that is classified as recoverable (for example deepwater oil, heavy oil, and the Bakken formation) may never be recovered.

With little oil, it will not be possible to maintain the Interstate highways and the power grid. And when they go out, that's it. Nothing coming in on the Interstate and no communications. Soon housing prices will hit the skids making it difficult to sell and move. That is why I got out of NH quickly. Anyone want to retire in a quiet, safe, and sustainable place in Mexico? Call 603-668-4207 my old NH phone number, and the same here with Vongage telly, or clifford dot wirth at yahoo dot com

Cliff Wirth

An oil field called "Blind Faith"? Wonder how Chevron thought up the name!

Shell halts production at 200,000-barrel-per-day oil field in Nigeria after militant attack

I guess that wipes out the SA increase.



Various press releases, reports, etc., see the column Ref for specific references.

Kudos to Ace and others for maintaining this database.

Could everybody on this side please stop using the word PRODUCER or derivitives therof in relation to countries etc. I'm not aware of any country that has produced any oil in the last 250.000 years. Oil is EXTRACTED not produced.

Good luck with that.

Hey, if Aaron Spelling gets to be a producer, then dammit, so does Rex Tillerson!

BULLWINKLE: Now watch, as I produce a Rabbit out of my hat!

Just funnin'..

I agree, it is like saying "mature oil fields," instead of "depleted oil fields." These lies brain wash all of us.